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The Future of FinTech: KYC and AML Innovations Reshaping Compliance

The Future of FinTech: KYC and AML Innovations Reshaping Compliance

In the fast-evolving landscape of financial technology (FinTech), innovations in Know Your Customer (KYC) and Anti-Money Laundering (AML) practices are reshaping how financial institutions (FIs) operate and comply with regulations, as outlined in Fintech Global News. A recent event hosted by FullCircl brought together leading authorities in the UK’s financial crime and compliance sector to discuss these crucial developments. The event, held on March 14, 2023, featured a panel discussion led by Warren Russell, EVP Identity Solutions at FullCircl, alongside industry experts Stephen Frame, CCO & MLRO at Caxton; Helen McHugh, BDM at Transact Payments; and Phil Seymour, Senior Risk and Compliance Officer at Payabl. The panel highlighted the importance of leveraging technology to ensure compliance with the UK and Europe’s intricate regulatory frameworks, balancing KYC compliance with customer expectations, and preparing for the impact of AI in KYC procedures. Looking ahead to 2024, Stephen Frame emphasized that FIs are facing an unprecedented regulatory landscape, with new regulations on AML, KYC, politically exposed persons (PEPs), sanctions, and Ultimate Beneficial Ownership on the horizon. This period will also see the implementation of key acts such as the Economic Crime and Corporate Transparency Act and the Financial Services and Markets Act, alongside updates to existing directives and increased scrutiny of cryptocurrencies and Environmental, Social, and Governance (ESG) concerns. The panel agreed that compliance is no longer just a checkbox exercise but a fundamental aspect of FI operations. To meet these challenges, FIs are moving away from manual KYC processes and embracing data analytics, digital identity verification, and continuous KYC/B (eKYC/eKYB) to mitigate financial crime risks effectively and enhance customer experiences. In 2024, FIs are expected to further integrate technology into their AML and KYC processes, balancing regulatory requirements with superior customer service. This shift towards a more technology-driven approach requires increased technology budgets to support evolving regulations and meet customer expectations. To navigate these challenges, FIs are encouraged to form strategic partnerships with RegTech companies that offer innovative solutions and industry expertise. RegTech has become a key ally for FIs, using AI and machine learning to verify identities, streamline processes, and combat financial crimes effectively. FullCircl’s W2 solution is poised to be a game-changer in 2024, offering automated KYC, AML, anti-fraud, and identity verification solutions. As part of the FullCircl group, W2 provides comprehensive support, training, and guidance to help FIs successfully navigate the regulatory landscape. The future of FinTech is being shaped by KYC and AML innovations that prioritize compliance, customer experience, and technological advancement. FIs that embrace these changes and forge strategic partnerships with RegTech companies will be best positioned to thrive in this evolving landscape.

Worldpay Partners with Mastercard to Combat Payment Fraud

Worldpay Partners with Mastercard to Combat Payment Fraud

In a move to enhance security and reduce financial losses for merchants, Worldpay has announced a partnership with Mastercard to offer Ethoca Alerts to its one million merchants worldwide, according to Finextra. This collaboration aims to help merchants resolve transaction disputes faster and with fewer chargebacks. Ethoca Alerts, which works across payment brands, serves as an early warning system to prevent disputes from escalating into chargebacks, thereby reducing potential financial losses due to fraud. The system comes at a crucial time as chargeback volumes are on the rise, with industry-wide figures expected to reach 337 million by 2026, a 42% increase from 2023 levels. Mastercard reports that between 2022 and 2023, Ethoca Alerts prevented $1.6 billion in fraud due to chargebacks. Johan Gerber, Executive Vice President of Cyber and Intelligence at Mastercard, expressed enthusiasm about the partnership, stating, «This partnership with Worldpay extends our powerful technology to even more merchants around the world, reducing fraud.» Gabriel de Montessus, Executive Vice President of Global Enterprise at Worldpay, echoed this sentiment, saying, «We’re pleased to bring this solution to the market in partnership with Mastercard to deliver more value and innovation to our clients.» This collaboration underscores the ongoing efforts within the payment industry to enhance security measures and protect merchants and consumers alike from fraudulent activities.

KPMG Introduces Its New Fintech Platform

KPMG Introduces Its New Fintech Platform

KPMG, one of the ‘big four’ professional services networks, has unveiled its latest innovation in the realm of finance technology with the launch of the KPMG Digital Finance platform, as highlighted in FinTech Magazine. This fintech platform is designed to provide finance teams with a modern and integrated solution, allowing professionals to focus more on value-added tasks rather than laborious back-office finance work. Powered by Aptitude Software and Microsoft Azure and Dynamics, the KPMG Digital Finance platform offers a range of features. It includes a pre-configured and managed finance solution with AI capabilities, enabling easy access to finance and data analytics capabilities as a service. The platform’s modular and scalable cloud-native design incorporates machine learning and generative AI capabilities, making it an easily managed solution for finance teams. Key features of the KPMG Digital Finance platform include: Microsoft Dynamics 365 F&O: Provides financial management, customer relationship management capabilities to organisations. Microsoft Power BI: State-of-the-art data visualisation software with preconfigured finance and data quality dashboards and reports. Azure Databricks: A unified analytics platform for data science and engineering. Azure Cosmos Database: A highly scalable database service that optimises the performance of globally distributed applications. Azure Data Factory: A hybrid data integration service to create, schedule, and manage workflows that can move data between various data stores. Azure Virtual Desktop: A desktop and app virtualisation service that runs on the cloud. David Fourie, Partner at KPMG, highlighted the importance of this launch in the context of increasing technological, business, and regulatory changes. He stated, “Moving to a FaaS model ensures finance teams have a secure, scalable, cost-effective solution that leverages best practices, while also moving finance from mundane, repetitive tasks to forward-facing analytics and informed decision-making.” The launch of KPMG’s Digital Finance platform comes at a time when investment in fintech is on the rise again, following a dip in VC funding for FY2023, as reported in KPMG’s Pulse of Fintech Report 2023. This trend reflects the growing demand from businesses to incorporate gen AI capabilities into all functions of their operations, with finance being a key area of focus. With Microsoft as a strategic partner, KPMG is well-positioned to meet the evolving needs of its clients, offering a simpler, more efficient, and secure finance solution through the KPMG Digital Finance platform.

Mastercard and Alipay Forge Path for Seamless Cross-Border Payments

Mastercard and Alipay Forge Path for Seamless Cross-Border Payments

In an era marked by the relentless march of digital innovation, the landscape of remittances is undergoing a profound transformation. Alan Marquard, head of transfer solutions at Mastercard, emphasized to PYMNTS that this transformation is steering towards digital channels and digital wallets, promising cheaper, faster, and more convenient international fund transfers. Mastercard’s recent collaboration with China’s Alipay, announced earlier this month, represents a significant stride in this direction. This partnership extends a lifeline to bank, FinTech, and corporate clients, offering them a seamless connection to Alipay’s e-wallet, which boasts over a billion users. Marquard underscored that while the practice of sending money across borders is nothing new, the pandemic has spurred a surge in digitized payment methods. With the rise of the gig economy and professionals embracing flexible working arrangements across borders, the demand for efficient international remittances has soared. Concurrently, the proliferation of online platforms has further fueled the need for streamlined cross-border payment solutions. He noted to PYMNTS, «At the end of the day, payment needs drive payment types,» emphasizing that digitized experiences tend to offer superior value compared to convoluted chains of payments laden with fees. Traditionally, cross-border payments have been encumbered by multiple intermediaries within the correspondent banking system, resulting in exorbitant fees averaging around 6% of the transaction. Recognizing the urgency to enhance cross-border payments, the G20 has identified speed, cost, and transparency as critical areas for improvement. Despite cash endpoints remaining prevalent in many remittance corridors, digital wallets are gaining traction as conduits for end-to-end digital fund flows. Marquard highlighted that digital wallets are evolving into cross-border mechanisms, particularly in regions like China, where accessing bank branches can be challenging, especially in remote areas. The collaboration with Alipay builds upon Mastercard’s integration into the Alipay wallet, enabling consumers to utilize cards seamlessly, including through QR codes. Marquard emphasized that this partnership addresses the substantial demand for remittances to China, one of the largest destinations for inbound remittances globally. With a robust infrastructure in place, payments can now be delivered almost instantly, with transparent fee structures ensuring that recipients receive the exact amount needed. The recent announcement underscores Mastercard’s steadfast commitment to enhancing cross-border payments through its Mastercard Move services, which span 10 billion endpoints and cover over 95% of the world’s banked population across 280 countries. For smaller players in the payment ecosystem, including second- or third-tier banks and smaller money transfer entities, the challenge of maintaining a global network with compliance and fraud capabilities has been daunting. Marquard outlined Mastercard’s vision for Mastercard Move as a comprehensive money transfer offering, capable of facilitating various transactions, including payroll cross-border, gaming payments, and B2B transactions. The ultimate goal, he emphasized, is to ensure that every payment to any endpoint can be serviced seamlessly, thereby advancing financial inclusion on a global scale. The partnership between Mastercard and Alipay heralds a new era of seamless cross-border payments, powered by digital wallets and underpinned by a commitment to efficiency, transparency, and financial inclusion.

Revolutionizing Regulatory Compliance: The Vital Role of Technology

Revolutionizing Regulatory Compliance: The Vital Role of Technology

The landscape of regulatory reporting in the financial services sector is undergoing a profound transformation, marked by escalating complexity and evolving frameworks. Linda Middleditch, Chief Product Officer at Regnology, offers insights into the pivotal role of technology in shaping the future of regulatory compliance, as stated in Fintech Global News.  In today’s dynamic environment, characterized by ever-changing rules and data requirements across jurisdictions, financial entities face unprecedented challenges. The demand for precise, sustainable, and cost-effective compliance reporting has never been more pressing. Middleditch emphasizes the necessity of a collaborative approach between regulators and regulated entities to streamline compliance processes, reduce expenses, and ensure comprehensive and efficient reporting. Third-party service providers like Regnology are positioned as key players in this shifting landscape, leveraging technology to foster cooperation and contribute to the development of a secure financial future. Middleditch underscores the transformative potential of technological innovation, highlighting its capacity to revolutionize regulatory reporting and make it more manageable for institutions of all sizes. The adoption and integration of cutting-edge solutions by regulatory bodies and financial entities are deemed essential in navigating the challenges posed by the current regulatory environment. This shift towards a collaborative and technologically driven approach to regulatory reporting is not merely a trend but a necessity. As the financial landscape evolves, strategies must adapt, innovate, and prioritize transparency, efficiency, and stability. Technology serves not merely as a tool but as a catalyst for change in regulatory compliance. By embracing innovation and collaboration, the financial industry can pave the way for a future where compliance is not only achievable but also facilitates growth and resilience. Linda Middleditch’s insights shed light on the imperative for embracing technology as a cornerstone of efficient regulatory compliance in the modern era.

Visa and Western Union Enhance Global Money Transfers

Visa and Western Union Enhance Global Money Transfers

Visa and Western Union have announced a significant expansion of their partnership, aiming to simplify cross-border money transfers, as stated in Fintech News America. The seven-year agreement will enable Western Union customers to transfer funds directly to Visa cardholders and bank accounts in 40 countries across five continents. The partnership includes the issuance of cards, integration with Visa Direct for faster transfers, and the provision of risk management services. It will also introduce Visa prepaid cards in certain markets, offering a seamless blend of physical and digital payment solutions. Using Visa Direct, Western Union customers will be able to send funds quickly to friends and family worldwide. Additionally, the collaboration will focus on creating disbursement programs to assist humanitarian organizations and governments in distributing funds efficiently during emergencies. These initiatives aim to facilitate emergency relief, cross-border pension, and domestic benefits payments. Western Union’s government and NGO customers will also be able to use prepaid cards for humanitarian relief efforts. This partnership builds upon previous collaborations between the two companies in 2019 and 2022, which enabled customers in the U.S. and Europe to send money to Visa cardholders internationally. The companies also plan to issue Western Union/Visa Debit Cards across North America, Asia Pacific, Latin America, and Europe.

The Potential of Payments in Charging Electric Vehicles

The Potential of Payments in Charging Electric Vehicles

As Europe accelerates towards the electric vehicle era, the cumbersome payment experience at charging points has emerged as a potential obstacle. However, this is poised to change with new regulations sweeping across the continent, as stated in FinTech Magazine. The EU recently introduced the Alternative Fuels Infrastructure Regulation (AFIR), mandating that all charging points in EU countries offer more convenient payment options to promote the adoption of electric vehicles. With the new EU rules set to take effect by 13th April 2024, and the UK also contemplating its own legislation, it’s time for charging point operators to reconsider their payment infrastructure. Peter O’Halloran, Head of Enterprise and Digital Commerce at Fiserv, discusses how streamlining payment solutions for charging points can empower drivers. He emphasizes the need for drivers to be able to pay easily with cards or contactless devices, without the need for subscriptions. This shift aims to standardize the customer experience and make the payment process more convenient and familiar. «Depending on where they choose to charge that day, drivers are forced to register for and use a range of apps for each charging point provider to manage their payments,» says O’Halloran. «These closed-loop payment options not only add friction but also require drivers to commit to subscriptions and higher prices to charge their car.» The new rules outlined within AFIR mandate more convenient and familiar card and contactless payment methods to standardize the customer experience. The emphasis is on empowering drivers to use barrier-free payment methods that are convenient and familiar to them. «This presents a big project for any retailer that is hosting a charging point,» says O’Halloran. «Payment providers have an important role here to ease the burden for retailers, but also to help them capitalize on the opportunity ahead.» Retailers are seeking solutions that are easily implemented as they navigate legal and technology requirements and aim to simplify the customer payment experience. Providing a premium payment experience at charging points can help retailers secure a competitive advantage and use their parking space for additional revenue. «Those who offer the simplest experience and a wide choice of payment options can attract new customers and increase dwell time in-store, with the potential to generate even more turnover,» explains O’Halloran. Payment providers that can deliver easily integrated, customer-friendly solutions have an opportunity to effectively elevate the role EV charging payment plays for retailers in the drive for revenue and increased customer loyalty.

A Broad Overview of the Prospects for Mobile Banking

A Broad Overview of the Prospects for Mobile Banking

In today’s fast-paced world, delivering an exceptional mobile banking service has become more critical than ever. Richard Timperlake, SVP of Sales for EMEA at Confluent, emphasizes the transformative impact of mobile banking on financial services, as outlined in FinTech Magazine. Over the past 25 years, it has revolutionized how we interact with banks, making queuing at branches a thing of the past. The rise of digital-only and neobanks has heightened the pressure on traditional banks to innovate. Timperlake warns that while digital banks offer innovative services like real-time budgeting tools, a subpar user experience can harm trust and drive users away. Timperlake believes that the future of mobile banking lies in fundamentally changing how people manage their finances, focusing on empathy and customer-centricity. He stresses the importance of leveraging customer data to deliver personalized experiences in real-time, from account management to loan applications. Looking ahead, Timperlake is excited about the future of mobile banking, which he sees moving towards seamless automation and secure experiences. AI-powered systems will offer subtle nudges and anticipate user needs, providing a personalized and secure financial experience. While mobile banking continues to evolve, Timperlake emphasizes the importance of in-person services, especially for complex financial decisions and financial inclusion. Bank branches will likely coexist with digital banking, catering to specific needs and preferences. In the immediate future, Timperlake predicts the rise of ‘opt-in’ AI options for consumers, empowering users to choose how deeply mobile banking integrates into their lives. This personalized approach aims to foster trust and control, offering a seamless and inclusive digital banking experience.

Galileo Expands BNPL Offering, Revolutionizing Banking and Fintech Relationships

Galileo Expands BNPL Offering, Revolutionizing Banking and Fintech Relationships

Galileo Financial Technologies, a leading fintech firm under SoFi Technologies ownership, is poised to revolutionize the banking and fintech landscape with its expanded Buy Now, Pay Later (BNPL) offering, as stated in The Fintech Times. This move is aimed at empowering banks and fintech companies to deepen their customer relationships by providing innovative post-purchase instalment payment options through existing debit or credit card accounts. According to a report by The Fintech Times on March 21, 2024, Galileo’s latest API-enabled BNPL service not only facilitates pre-purchase financing but also introduces a seamless post-purchase financing solution. This offering caters to financial institutions seeking to offer their customers enhanced flexibility in financing options, supporting repayment for both debit and credit programs within established financial relationships. David Feuer, the chief product officer at Galileo, highlighted the significance of this development, stating, «This new offering bridges the gap between cards and loans and allows banks and fintechs to establish and deepen customer relationships with innovative, flexible financing options for both credit and debit customers.» He emphasized the commitment to responsible lending and financial inclusion, noting that the post-purchase BNPL service extends across all merchants accepting credit and debit cards. The expansion of Galileo’s BNPL offering brings forth a myriad of benefits for banks, fintechs, and their customers: Market Differentiation: Financial institutions and fintechs can enhance their debit and credit programs with a transparent and flexible financing model, setting them apart in a competitive landscape. Entry Point into Lending: For fintechs primarily operating in the deposit space, Galileo’s post-purchase BNPL service offers a streamlined pathway to enter the lending sector, expanding their service offerings. Incremental Revenue: By leveraging installment fees, banks and fintechs can unlock additional revenue streams, capitalizing on the growing popularity of BNPL services. Financial Access: The democratization of post-purchase BNPL financing ensures that previously exclusive credit account benefits are extended to debit accounts, promoting financial inclusivity. Transparent Payment Terms: Unlike traditional credit card interest, post-purchase BNPL with installment fees provides consumers with a clear understanding of the total cost associated with each purchase upfront, fostering responsible spending habits. Flexible Financing: Post-purchase BNPL transforms conventional debit cards into dynamic financial tools, empowering consumers to manage their finances responsibly and efficiently. This strategic expansion underscores Galileo’s commitment to innovation and empowerment within the financial sector, paving the way for enhanced customer experiences and sustainable financial practices.

The Evolution of Identity Verification: Embracing eKYC in FinTech

The Evolution of Identity Verification: Embracing eKYC in FinTech

In the ever-evolving landscape of financial services, adherence to Know Your Customer (KYC) regulations stands as a cornerstone, as highlighted in Fintech Global News.. These regulations mandate the thorough verification of customer identities and assessment of potential financial risks. However, traditional methods of KYC, often involving cumbersome manual processes, are swiftly making way for a more streamlined approach — Electronic Know Your Customer (eKYC). Alessa, a leading authority in this domain, points out that eKYC solutions are revolutionizing the way businesses onboard customers, offering rapid and precise identity verification while maintaining compliance with stringent regulatory standards. Unlike the traditional methods reliant on physical presence and paper documentation, eKYC harnesses the power of online channels and digital technologies to authenticate customer identities remotely. At its essence, eKYC represents the digital evolution of identity verification, utilizing tools like optical character recognition (OCR) and facial recognition to extract and verify data from electronic documents and ID photos. This shift promises not only efficiency and accuracy but also a more customer-centric approach to KYC. The traditional KYC process, with its manual steps and reliance on physical documentation, presents numerous challenges, including time consumption, error-proneness, and customer frustration. Conversely, eKYC offers a seamless digital workflow where customers can electronically submit their identity documents for swift authentication, reducing verification time to mere minutes and significantly enhancing accuracy. The advantages of eKYC for businesses are manifold. Automation reduces the time and resources expended on KYC compliance, leading to cost savings and improved customer experiences. Moreover, the precision of automated systems minimizes the risk of non-compliance penalties, positioning eKYC as an invaluable tool in regulatory compliance. However, it’s essential to recognize that eKYC is just a part of a broader customer due diligence strategy. Effective due diligence entails a comprehensive assessment of a customer’s risk profile and continuous monitoring for suspicious activities. eKYC serves as the foundation for this process, providing a robust starting point for further diligence measures. For businesses contemplating the adoption of eKYC, the implementation journey involves several key steps, including the evaluation of current KYC processes, selection of suitable eKYC solutions, integration with existing systems, and staff training. Collaboration with compliance experts ensures alignment with regulatory requirements, paving the way for a smoother and more efficient customer onboarding process. The future of identity verification in FinTech lies in the embrace of eKYC solutions. By leveraging digital technologies and automation, businesses can enhance efficiency, accuracy, and compliance, ultimately delivering superior experiences to their customers.