AWS has unveiled AWS App Studio, a groundbreaking service designed to enable financial institutions, fintech firms, and other organizations to develop applications in minutes, a task that traditionally took professional developers days, according to Finextra. This announcement was made at the AWS Summit in New York this week. AWS App Studio is aimed at technical professionals who lack software development skills, such as IT project managers, data engineers, and enterprise architects. It allows them to quickly create internal apps managed by AWS. This service addresses the scarcity of development resources and the steep learning curve associated with low-code tools, which often require platform-specific knowledge and do not meet security requirements. Users can describe the application they want to build, specify its functionalities, and integrate necessary data sources. If changes are needed, users can utilize a point-and-click interface with guidance from a generative AI-powered assistant. Dilip Kumar, vice president of applications at AWS, highlighted the significance of this service: «AWS App Studio opens up application development to an entirely new set of builders, helping them create enterprise-grade applications in minutes. Designed to meet the needs of the largest enterprise customers and fastest-growing startups, App Studio is a force multiplier for technical employees at any company. Now, using natural language, any user with some technical experience can simply describe the application they want to build, and App Studio takes care of the development process, delivering an application that employees can start using immediately. It has never been easier for technical professionals to build custom applications tailored to the unique needs of their business, ushering in a new world of productivity for businesses of all sizes.»

Open banking‘s progress in the United States, similar to any emerging ecosystem, relies on multiple factors, none of which are guaranteed, as stated in PYMNTS. With insights from international implementations and a clearer regulatory landscape, several important trends are emerging. The central goal of open banking is to empower consumers to control their financial data, enabling seamless sharing with third parties that meet their needs. The Personal Financial Data Rights rule is pivotal, facilitating data portability and enhancing consumer relationships with their banks. This rule, supported by API connectivity, promotes an a la carte approach to financial services from various providers, including FinTechs . The U.S. is taking a consensus approach to setting standards and industry guidelines for open banking, differing from the UK’s top-down method. The Consumer Financial Protection Bureau (CFPB) advocates for an inclusive process involving public interest groups, app developers, and financial firms. The CFPB can revoke recognition of standard setters after five years, ensuring a dynamic regulatory environment. However, whether this consensus approach will lead to effective standards or result in delays remains to be seen. Trust is crucial for open banking’s success. A PYMNTS Intelligence report revealed that approximately half of consumers are willing to use open banking payments for expenses such as bills, groceries, or subscriptions. However, only 11% have used these payments in the past year, with 82% reporting satisfaction. For the 56% of non-users, data security and trust are major concerns, underscoring the need for transparent data usage and revocation processes. Banks might be the primary beneficiaries of open banking in the U.S. due to existing trust levels. The data shows that 43% of consumers trust their banks to provide open banking services. Pay-by-bank solutions, where funds move directly between bank accounts, could be an early popular use case, offering consumers a holistic view of their finances without intermediary charges. APIs in open banking enable instant payments directly between banks using real-time rails. While this presents opportunities, security concerns persist. Despite 46% of financial institutions highlighting fraud risks, 81% believe they can offer secure real-time payments by leveraging artificial intelligence and advanced analytics. The UK’s experience with open banking offers valuable lessons for the U.S. Despite initial high expectations, open banking adoption has been slower than anticipated, with significant authorized push payment fraud. However, new developments like Stripe’s open banking-powered payment method and Klarna’s open banking settlements indicate growing interest. These initiatives suggest that while caution prevails, practical use cases will drive adoption. The evolution of open banking in the U.S. will be shaped by regulatory clarity, consumer trust, and practical applications. The journey is complex, but with informed strategies and lessons from abroad, the potential benefits are substantial.

Artificial intelligence (AI) is revolutionizing the fintech and financial services sectors, creating both opportunities and challenges in cybersecurity, according to the FinTech Magazine. Phil Beckett and Richard Grint from Alvarez & Marsal discuss the implications of AI for cybersecurity in financial services. Phil Beckett, Managing Director and Leader of Alvarez & Marsal’s EMEA Disputes and Investigations practice, emphasizes the ongoing battle between cyber attackers and defenders. He notes, “It is essential that fintechs are abreast of the latest challenges and the solutions that are available to ensure that they are best able to protect both their customers and their business.” Beckett highlights the rapid advancement of deepfakes and the potential impact of generative AI, stressing that there is no «silver bullet» solution. He adds, “Improving awareness, research, and knowledge to ensure that practices, procedures, and technologies are implemented to improve protection” is crucial, with a special focus on training and awareness. Richard Grint, Managing Director of Alvarez & Marsal’s Disputes and Investigations in London, discusses the necessity of educating customers about fraud risks. He explains, “Historically, customer education was a neglected element of traditional fraud control frameworks. The emergence of new fraud typologies (particularly more sophisticated APP fraud) has led to a change in mindset in recent years.” Grint emphasizes that robust authentication controls and comprehensive fraud prevention measures are essential for financial institutions to stay ahead. Beckett highlights the role of blockchain and distributed ledger technology (DLT) in maintaining secure transaction records. He states, “Blockchain and DLTs are very powerful and useful technologies that sometimes get a bad reputation because everyone associates them with cryptocurrencies and their associated risks. However, the underlying technology is very useful in maintaining records of fact due to the distributed nature of the technology – there is no single point to attack.” Despite their advantages, Beckett warns that blockchain and DLT should be part of a broader cybersecurity strategy, as they are not a standalone solution. AI’s dual role in fintech cybersecurity underscores the need for continuous innovation and vigilance. Financial institutions must stay ahead of evolving threats by integrating advanced technologies and comprehensive education strategies for both businesses and customers.

Embedded finance has evolved significantly, becoming a crucial tool for boosting customer conversions in both online and offline retail environments, according to PYMNTS.  While the core technology behind embedded finance isn’t new, advancements in APIs have revolutionized its implementation. Sunil Sachdev, Senior Vice President and Head of Embedded Finance at Fiserv, highlighted in an interview with Karen Webster how APIs have enhanced data aggregation and analysis, seamlessly integrating with customers’ daily activities. This integration helps transform interactions into sales, whether online clicks or in-store engagements. Sachdev noted that businesses now have a better understanding of their customers’ preferences and transaction habits, both in-store and online. “We see merchants that are looking for ways to increase conversions,” Sachdev said, particularly amid the recent economic challenges. “They don’t want to be financial institutions, and they don’t want to underwrite credit. But at the same time, they want to be able to help their customers buy more stuff” by offering tailored financing solutions. The strategy for embedded finance varies across the commerce ecosystem. Fiserv is leveraging its extensive capabilities in acquiring, banking, and issuing to offer embedded financial services through various channels like software platforms, marketplaces, and merchant wallets. “We’re seeing a convergence across embedded payments and embedded finance,” Sachdev said. Many businesses, including vertical SaaS companies and FinTechs, are embedding finance into their applications using APIs, despite the technological challenges. These companies, traditionally focused on commerce, must now navigate regulations, compliance, and data sharing to offer banking services. Fiserv, being a regulated provider, brings compliant banking capabilities to a wide range of merchants and FinTechs. APIs simplify system connections, normalize data, and provide access to it. Artificial intelligence further enhances this by predicting the best payment methods for each transaction, allowing for personalized financial services. “We’re seeing the desire to offer the right financing product for the right purchase at the right time,” Sachdev said. Data, along with AI and APIs, helps merchants manage risk, implement rewards programs, and offer flexible payment options. Successful brands, particularly those starting as online marketplaces, are finding embedded finance to be a rapidly growing revenue segment. “For us, embedded finance is about surfacing capabilities within the commerce journey that provide people with the right solutions at the right time, resulting in a better customer experience and driving greater conversion rates,” Sachdev concluded.

At the inaugural hx Live conference, hyperexponential’s co-founder and CEO, Amrit Santhirasenan, discussed the transformative potential of artificial intelligence (AI) in the insurance sector. Santhirasenan, who has a background in software engineering and actuarial work, highlighted how hyperexponential is leveraging AI to enhance insurance operations and decision-making processes, as stated in Fintech Global News.  Santhirasenan emphasized that while the initial buzz around AI is waning, the real potential of AI in the insurance industry is becoming evident. He noted that insurance is critical to the global socioeconomic infrastructure, allowing clients to take risks ranging from homeownership to space exploration. Therefore, insurers must innovate to support societal advancement. One of hyperexponential’s primary missions is to improve pricing processes, enabling insurers to better assess and admit risk. Santhirasenan pointed out a growing gap between clients’ expectations and the value delivered by insurance coverage. Despite serving innovative companies, the insurance industry has been slow to adopt data-driven advancements, making effective risk management a significant challenge. The industry struggles to utilize internal and external data efficiently due to siloed systems and outdated solutions. Companies like Floodflash and Gaia are innovating with IoT sensor data and customer experience, but established players often miss these opportunities due to a lack of technological integration. Santhirasenan highlighted that the quality of decisions in insurance depends on the quality and quantity of data and the depth of understanding derived from it. hyperexponential’s AI framework for Pricing Decision Intelligence aims to improve pricing decisions by leveraging data, extracting insights, and enhancing decision-making. The insurance industry deals with managing outliers and protecting against unforeseen events, which makes reliance on historical data models difficult. Judgemental inputs become crucial, giving companies with the best judgments a competitive edge. The industry is diverse, requiring different techniques, technology, and underwriting workflows. hyperexponential’s hx Renew platform is designed to be versatile and integratable, accommodating this diversity by tailoring AI’s role to different needs. The insurance market’s complexity, with risks often shared among multiple carriers, poses challenges for using models effectively. Despite these challenges, hyperexponential remains optimistic about AI’s potential. They view AI as an enabler of productivity gains, automating non-value-added tasks and allowing underwriters and actuaries to focus on high-value work. Santhirasenan concluded that hyperexponential’s hx Renew platform offers innovative features for simplifying and accelerating data ingestion and decision-making processes. This platform marks the beginning of hyperexponential’s efforts to enable insurers to harness AI’s full potential and drive industry evolution.

Latin America’s fintech landscape has seen rapid growth, with over 1,000 active fintech companies focusing on financial inclusion, as highlighted in The Fintech Times. A notable player in this space is Prometeo, an open banking platform dedicated to enhancing financial inclusivity and access to financial data. We revisited Prometeo to understand the evolution of open banking in the region. Prometeo, co-founded by Ximena Aleman and Rodrigo Tumaián, aims to promote the adoption of APIs across Latin America, providing a single access point for the region’s financial systems. Aleman, co-CEO and co-founder, emphasizes the company’s role in fostering financial inclusion and improving risk management for lenders through open banking. Aleman explains, «Open banking has significantly impacted the credit market by enabling access to customers’ financial information, allowing lenders to offer personalized rates or payment plans.» She highlights Prometeo’s account-to-account payment solutions, which facilitate real-time transactions and improve credit risk management. Countries like Brazil, Chile, and Mexico have introduced regulatory frameworks to encourage open banking adoption. For instance, Brazil’s PIX payments platform, initiated by the Central Bank, has become a preferred payment method. Prometeo’s single API approach has been crucial in these developments, connecting hundreds of financial institutions. Aleman notes, «The user experience has greatly improved, with digital platforms simplifying financial management. Users can now secure loans, open savings accounts, and make real-time payments directly from their bank accounts.» In the past two years, Prometeo has expanded its network to include over 500 APIs across 283 financial institutions in 10 countries, driving a tenfold increase in sales. The company offers account-to-account payments through personalized links and QR codes and supports bank account validations in six countries, covering all banks in Mexico and Brazil. Prometeo’s expansion into Chile and Mexico has enhanced financial inclusion. Aleman highlights the company’s 100% SPEI bank coverage in Mexico and plans for further growth in Chile. Prometeo remains focused on overcoming barriers in Latin America’s financial ecosystem. «Our priority is to generate solutions addressing the challenges of an uneven financial landscape,» Aleman says. The company aims to expand its impact across Latin America and explore opportunities in the US market, leveraging its successes in Brazil and Mexico to further digitization and financial inclusion.

Galileo Financial Technologies, a So-Fi-owned company, has launched wire transfer capabilities for FinTechs. The announced new service provides FinTech companies with a fast and secure option for money movement, according to PYMNTS.  Galileo’s wire transfer API connects FinTechs working with Community Federal Savings Bank to Fedwire, which processed over 193 million wire transfers last year. “Galileo streamlines the process of both incoming and outgoing wire transfers, enabling faster, reliable movement of funds,” the company stated in a news release. This service is crucial for large transactions like home sales, tuition payments, and vendor payments. With this new capability, recipients can receive funds on the same day they are sent, with each transaction undergoing rigorous validation processes to ensure safety and integrity. “The demand for Fedwire transfers spans a broad range of use cases, from individual consumers managing personal financial needs to businesses handling large-scale, B2B financial operations,” the release added. In related news, PYMNTS highlighted the growing importance of instant payments for borrowers. According to their report, 44% of consumers who receive borrowing disbursements most frequently do so through instant methods. PYMNTS Intelligence found a notable increase in instant usage for borrowing in the past year, with nearly half of loan disbursements received instantly as of January. The report also noted that consumers highly value instant loan payouts, with nearly three-quarters willing to pay a fee for this service.

In the evolving world of automotive fintech, in-car payments are revolutionizing the way we interact with our vehicles, according to Itexus. This groundbreaking technology allows for seamless financial transactions from the comfort of the driver’s seat, enhancing convenience and transforming cars into mobile wallets. According to industry reports, the global market for in-car payments is expected to reach $12.50 billion by 2028, growing at a compound annual growth rate (CAGR) of over 20.9% from 2021 to 2028. This growth is driven by the increasing demand for connected vehicles and the adoption of advanced technologies like the Internet of Things (IoT) and artificial intelligence (AI). In-car payments integrate financial transactions into daily driving routines. Drivers can pay for fuel, parking, tolls, and even order food directly from their vehicle’s dashboard using digital payment platforms. This innovation is not limited to luxury cars but is expanding across the entire automotive industry. Potential Impact on the Automotive Industry: New Revenue Streams: Automakers can tap into new revenue streams by integrating e-commerce platforms into their vehicles, generating income through transaction fees and data monetization. Advancement in Connected Vehicle Technology: In-car payment systems are a crucial component of connected vehicle technology, facilitating financial transactions and paving the way for future innovations like personalized offers and predictive maintenance services. Data Insights and Analytics: These systems generate valuable data on consumer behavior and spending patterns, allowing automakers and third-party providers to optimize business strategies and deliver targeted marketing campaigns. Collaborations and Partnerships: In-car payments create opportunities for collaborations between automakers, payment service providers, financial institutions, and other businesses, driving technological advancements and enhancing the connected mobility ecosystem. Enhanced Customer Experience: By eliminating the need for physical payment methods, in-car payments streamline the driving experience, leading to higher customer satisfaction and brand loyalty. Leading automakers are actively incorporating in-car payment systems into their vehicles, with partnerships and mobile wallet integrations becoming increasingly common. Security remains a top priority, with advanced encryption, tokenization, and biometric authentication methods being implemented to protect sensitive financial information. The future of in-car payments looks promising, with potential integrations of voice recognition and other technologies on the horizon. As the demand for connected and frictionless experiences grows, in-car payments are set to play a pivotal role in shaping the future of mobility.

The environmental, social, and governance (ESG) FinTech sector is gaining attention, but is it growing rapidly enough? Market value isn’t the sole measure of the sector’s importance, but it provides insight into its prioritization, as highlighted in Fintech Global News. According to Opimas, the market for ESG data is projected to reach $2.1 billion in 2024, up from $1.9 billion in 2023. ESG data is essential for assessing a firm’s impact, investment insights, and supporting ESG reports. Lindsay Schreiber, Head of Data at IntellectAI, highlighted the sector’s growth: «The FinTech sector is thriving, with ESG FinTech emerging as a particularly promising niche. Post-COVID, the focus on ESG has surged, spurring a variety of players in the industry. Financial institutes, corporations, and consulting firms are backing ESG tech startups and developing their own applications and platforms.» Despite this, the sector’s progress is crucial for sustainability and equality in business. Although funding for most FinTech areas declined in 2023, ESG FinTech remained stable at $28.8 billion, according to KPMG’s Pulse of Fintech 2023 report. Schreiber noted the promising trends but questioned the pace of growth: «Growth projections are for the future, yet the need for solutions is immediate. Even rapid growth may seem insufficient given the enormity of the climate crisis.» ESG FinTech is projected to attract $123.7 billion in investment by 2026. Schreiber emphasized, «The time for action is now to mobilize funds and technology to address global sustainability challenges.» ESG FinTech provides powerful tools like carbon footprint tracking, centralized ESG data management systems, sustainable investment platforms, and green lending platforms. These services help companies support the evolving market and new customer expectations while staying compliant with regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD). Financial institutions can play a critical role in combating climate change by integrating climate considerations into their investment decisions. Schreiber added, «A robust, climate-focused FinTech sector can serve as the financial engine propelling us toward a more sustainable future. The time for action is now, and financial institutions must ramp up their investment in ESG FinTech to meet the immense challenge of our changing climate.» As ESG issues continue to attract focus, the ESG FinTech sector is likely to grow. A KPMG report found that insufficient and inaccurate data was the most common challenge firms faced with their ESG processes. To overcome this, banks are adopting flexible target operating models for ESG data, collaborating with ESG FinTech data providers, and building internal data analysis capabilities. Schreiber pointed out the challenges: regulatory and policy cohesion, standardization of ESG data collection and reporting, and technological advancement. «Emerging technologies like AI and blockchain can create more sophisticated ESG FinTech solutions. Collaboration between FinTech startups, financial institutions, and environmental organizations can lead to more effective solutions and broader market reach.»

Compound, a new fintech startup, has officially launched in the Middle East, introducing a unique «save now, buy later» model aimed at helping consumers save for purchases with their favorite brands while earning rewards, as highlighted in The Fintech Times. Compound partners with various brands to offer a proactive savings approach. For example, customers can save for an upcoming vacation with their preferred airline and earn rewards from the brand at each savings milestone. This initiative comes as savings culture is gaining traction in the UAE, with nearly 90% of people setting financial goals for 2024, according to a National Bonds survey published by Gulf News. Similarly, Saudi Arabia has seen its highest savings rate in over a decade, as per 2023 data from the Saudi central bank. Brands are increasingly facing high customer acquisition costs and intense competition. Compound provides these brands an opportunity to engage with prospective buyers early and foster deeper relationships throughout the customer’s savings journey. Shashank Narayanan, the founder of Compound and a founding team member of Sarwa, the leading investment platform in the UAE, emphasized the dual benefits of this model: “It’s about time consumers are given an opportunity to earn better rewards by saving up for a purchase, and we’re able to offer this by helping brands build deeper relationships with prospective buyers,” said Narayanan. “Our goal is to enable financial wellness at every purchase – for consumers and brands alike.” Compound was incubated with HP Spring Studios, a venture studio in partnership with Salica Investments and Bahrain’s Al Waha Fund of Funds. Zainab Khamis, head of HP Spring Studios Bahrain, announced Compound as the first spinoff, highlighting its potential to drive positive change and promote healthy financial habits in the region. She also underscored Bahrain’s emerging role as a fintech innovation hub.