Latest Regulation & Compliance reports and research: Finextra Research

Report

ISO 20022: How banks can avoid becoming a cautionary tale

Transitioning to the ISO 20022 financial messaging standard has been high on the agenda for financial institutions for several years, but as deadlines loom, the true advantage of early adoption means institutions are facing new pressure to migrate, and to do so quickly. By late 2022, institutions across the globe will have begun their migration to the new ISO 20022 financial messaging standard for high-value payments. SWIFT’s timeline delays have somewhat hindered the process for many institutions, but the project is resolutely on track for completion by 2025. The benefits of transitioning to the data-rich standard are well documented, but executing the migration itself is relatively new territory for financial institutions and the counterparties that transact with them. Financial organisations should approach their ISO 20022 projects with an honest view of the strengths and weaknesses of their existing infrastructure, so that avoidable mistakes remain just that. Download your copy of this Finextra impact study, produced in association with OpenText, and find out about four key areas that institutions must address when approaching their ISO 20022 migration to avoid unnecessary complications, and instead build an infrastructure that caters to a data-led, customer-centric future.

04 March 2022 605 downloads

Report

The Future of Embedded Finance 2022

Which European Stakeholders will Win or Lose? Momentum towards embedded finance has been building slowly but surely over the past decade, as demand for seamless e-commerce solutions push both financial and non-financial players to serve their digitally discerning customers more effectively. The arrival of Covid-19 and the significant shift in consumer behaviour served only to accelerate the growth of embedded finance solutions. With the unexpected global lockdown not only of brick-and-mortar retail, but of countries’ entire workforces, the economy was forced to operate differently, and the need for a digital, accessible world became more urgent. With significant market appetite and foundations for payments solutions already established, the pandemic laid fertile ground for embedded finance to become entrenched in the everyday lives of consumers. Brands around the world are now scrambling to strategise, develop, and implement their journey toward delivering more effective payment offerings to their customers. This new Finextra report, produced in association with Solarisbank, includes industry expert commentary from financial institutions such as BBVA, Illimity, Nomo, Orange Bank, and Plaid.

28 February 2022 1283 downloads

Report

The Future of Regulation 2022

From Innovation to Execution The fire for innovation in financial services has long been raging, and regulators, having transformed their modus operandi to keep pace with the force of technological change, are carefully approaching their role in the great rewiring of the financial system. The fear once invoked by terms like artificial intelligence, cloud computing, or data sharing, has been relegated to the past, and the role of technology in the future of financial services is now accepted as being intrinsic to its success. With Open Banking reaching new realms of maturity, players have begun questioning how best to measure its success in a post-pandemic world. While Open Finance edges ever closer to pulling all focus away from the original Open Banking objectives, innovators are looking for ways to unbridle all pretence tied to our traditional view of what finance should achieve. Instead, they are placing impeccable user experience at the centre of their offering. This unbridling is also becoming apparent in the burgeoning appetite for decentralised finance offerings by retail and institutional investors. Central bank digital currencies (CBDCs) inject another layer into this mix, as central banks and governments carefully weigh up the advantages and risks of diving straight into the opportunity they present. Regulators are caught in the middle of these rapidly evolving trends and forces, attempting to stay the regulatory course by ensuring stability and security, while also motivated to remain at the forefront of this technology. Resilience has never been a more important focus for regulators, who are shifting responsibility directly onto market players to ensure strength across intertwined systems. Selecting a handful of areas tied to fintech that are either ripe for, or undergoing seismic regulatory evolution, we’ve compiled a wealth of insights from industry experts who have shared their views on the changes we can expect in 2022. This new Finextra report features commentary from industry experts across a breadth of financial, technology and regulatory firms, which include contributions from Accenture; A&O Consulting; Bird & Bird; Change Gap; Coutts; Herbert Smith Freehills; Hogan Lovells; Plaid; Proskauer; P2 Consulting; McDermott, Will & Emery; Noll Historical Consulting LLC; Société Générale; State Street; and The DPO Centre.

07 February 2022 1113 downloads

Report

Getting tech right: Selecting the right software products to fulfil the digital demands of banking

While the global pandemic may have been a shock to the system for incumbent financial institutions, it only served to reinforce the growing pressure to digitally transform their operations. Thanks to rapid digitisation of services across industries the profile of the typical consumer is evolving into a far more sophisticated and demanding user. As a result of this evolution, retail consumers and corporate clients alike are hoping to leverage more from the relationship they share with their banks. While younger, digitally native financial institutions are well positioned to adapt and mould their offering in line with this shifting profile, incumbents weighed down by legacy technology and infrastructure are finding the pivot more challenging. Rather than resisting change, incumbents that accept that the ubiquity of big tech and the client-centric ecosystem are permanent, are likely to reframe their mindset into delivering consumer-centric services effectively. Download your copy of this Finextra impact study, produced in association with SunTec Business Solutions, to explore the key trends shaping the push toward a new financial services industry, and the key technologies that banks can deploy to evolve into more customer-centric institutions.

31 January 2022 422 downloads

Report

Open Banking Europe 2022 - What’s next for Open Banking?

Since the European Payments Services Directive 2 was introduced in 2018, open banking has come to mean different things to different participants. Progress, innovation and developments have taken place at varying speeds with varying results. In financial services there has been a flurry of new participants- quite as per the intention of PSD2- and between these, the banks and the often-conflicting, sometimes symbiotic relationships that have emerged, the customer has indeed been the recipient of a richer choice of services and providers. But it is still more limited than it might be. The end user- be that consumer or business customer- has notions of the concept of open banking generally only in the form of new services now on offer. And they have become more attuned to the value and proprietary nature of data. The customer relationship has become the holy grail, and yet no financial service can be launched or be delivered credibly without the unfaltering robust protection and compliance that only licenced banking organisations have the wherewithal to provide. Hence the need to increase access to banking rails for Third Party Providers (TPPs). To this end there has been something of a stalemate, because for many banks, the value proposition is still unclear and the question burns brighter by the quarter- do the relevant bodies need to galvanise efforts by introducing stronger direction regarding infrastructure and accessibility? Download your copy of this Finextra report, produced in association with Worldline, which takes the pulse on the development of open banking initiatives from several stakeholders through one-to-one interviews to ascertain where the biggest opportunities lie now and, crucially, what it will take for them to be fully realised.

18 January 2022 1330 downloads

Report

Will banks use digital security as a post-pandemic differentiator?

Banks large and small, old and new, have come a long way in a short amount of time. Prior to the pandemic there wasn't a bank or financial services provider worth their salt who did not have some kind of digitalisation strategy as a core part of their operations planning. The onset of the COVID-19 pandemic catapulted banks and their clientele into instantaneous cashlessness, forcing many organisations and customers to adapt at speed. A year and a half on, how much of this urgent transition will remain permanent is a key indicator of financial organisations’ success in responding to an unprecedented situation. Furthermore, whether the key pillars of trust and security upheld by banks have not only survived but positively thrived such that they stand taller and prouder, will be a key differentiator in a thoroughly modern banking landscape. These factors will illustrate how consumers and the industry have truly evolved as a result of unimaginable change. We take a pulse on these themes and questions by interviewing senior experts at several banking service providers across Europe and Asia. Download your copy of this Finextra report, produced in association with Feedzai, to learn more.

17 January 2022 376 downloads

Report

The Future of Digital Banking in Asia 2022

After the 2008 crisis, the financial services industry faced low interest rates, low credit growth, increased regulation, increased compliance requirements and a lack of trust from customers. This paved the way for banks in Asia to dominate the sector, surpassing the European and US banks that were formerly the largest by assets in the world. The financial crisis and the Asian boom threatened the traditional financial services industry and allowed fintech startups and platform-based companies, that prioritised competition to provide better services for the retail consumer, flourished. Alongside consumers opting to forego visits to bank branches, the more innovative players in banking focused their digital transformation efforts on the utilisation of information technology and big data to offer digital payments and advisory services. The speed at which these digital technologies were adopted was at a remarkable rate and this continued to accelerate amid the Covid-19 pandemic. Of course, Asia was ahead of the curve. While financial players in the region exhibited true disruption and extended banking services to previously underbanked segments of the population, traditional institutions on other continents were left with potentially obsolete legacy technologies, unable to serve the customers they had. To thrive in the future, incumbent banks must keep pace with the fintech newcomers and Big Tech players that have already started to gain market share in Asia. They can do so by leveraging application programming interfaces (APIs) which have enabled faster payments, simplified unbundling of services and improved data sharing for open banking. Also, cloud computing has supported the storage and sharing of data with the aim of improving customer experience and financial accounting in areas such as payments and credit scoring. Integration with mobile devices and digital wallets is equally crucial. In Asia, payment apps serve billions of users across the e-commerce, chat, delivery, food ordering and ride hailing industries. Globally, although Visa and Mastercard retain their lead in the transaction space, the likes of PayPal, Apple and Google are blossoming in the financial services industry. Further, as usage of cash declines, interest in digital currencies is increasing – with Alipay and WeChat Pay facilitating the introduction of cryptocurrencies and stablecoins in the corporate market. Banks now recognise that the route to digital transformation starts with digital payments and digital currencies, and the evolution of digital banking in Asia provides the blueprint for other regions searching for successful paths to innovation. This Finextra report, The Future of Digital Banking in Asia, in association with Infosys Finacle and OneSpan, explores these themes with commentary from Citi, DBS, livi bank, and Mox Bank.

22 December 2021 1017 downloads

Report

Sustainable Finance Live - Supply Chain Traceability: Better Data, Lower Risk

A Visual Record from the Sustainable Finance Live workshops 1 - 2 December 2021 Finextra and Responsible Risk have come together for a thoughtprovoking series of experiential events, welcoming banking and technology ecosystems to collaborate on enabling a wave of change. In 2019, leading banks and the United Nations launched the Principles for Responsible Banking, with 130 banks collectively holding $47 trillion in assets, or one third of the global banking sector, signing up. In line with these Principles, banks committed to strategically align their business with the goals of the Paris Agreement on Climate Change and the Sustainable Development Goals, bolstering their contribution to the achievement of both endeavours. However, this huge volume of capital is trickling from behind a dam created by uncertainty from lack of data, taxonomies, schemas, reporting and products, which, somehow, is robust enough to satisfy the risk register of financial institutions. However, as a result, a lack of confidence around viable options for investing in sustainable initiatives permeates. The solution? Supply chain traceability - yielding dynamic, trustworthy, and secure data from complex supply chains - is required for investors to deliver on the promise of Environmental, Social, and Governance (ESG). Download a Visual Record of the event below to find out more.

20 December 2021 79 downloads

Report

Future-Ready Payments Solutions: Remaining competitive with reusable technology

Over fifty years ago, when the original payment pioneers built electronic funds transfer (EFT) platforms to enable card services, they had a single use in mind. Reliable and secure card payments were achieved, but the architecture was so closely bound to card transactions that it is now becoming incompatible with today’s colourful payment universe. As mobile and contactless payments, Quick Response (QR) codes, digital currencies, Request to Pay (R2P), Real-Time Payments (RTP), Buy-Now-Pay-Later (BNPL) and peer-to-peer (P2P) payment applications take off, banks are forced to build separate in-house silos, in order to process these new payment types. Given a plethora of dedicated systems are already in place to process cash, cheque and card payments, management of these silos and ‘add-ons’ is becoming a complex undertaking. Forward-looking banks are tackling this challenge by deploying modern payments platforms that are comprised of a set of re-useable services. These have the capacity to not only consolidate numerous payment schemes onto a single platform, but they can also future-proof businesses by facilitating easy adoption of new payment types. As the payments race heats up – and banks wrestle with the emergence of new digital currencies, payment instruments, funding methods and payment types – those with the most agile, secure, and reusable platform will be rewarded with a strong competitive edge and improved margins from being able to control when, how deeply and how long to take part in any new payments venture. Download your copy of this Finextra impact study, produced in association with Diebold Nixdorf, to learn more.

09 December 2021 788 downloads

Report

Don’t go extinct - How Wealth Managers can remain relevant

Transformation drivers and actions to prioritise Until recently, the wealth management industry in the UK has been largely homogeneous, with most traditional firms offering similar products and services to similar customers under similar business models. Fintech has been chipping away at these norms for a few years, but even in 2021, traditional wealth managers with rudimentary digital tools still dominate the market. However, the pace of change has accelerated in the last year. Newcomers are arriving in droves with engaging customer experiences, new technology and convergent services that address the historical limitations of the wealth industry, while opening new doors to new opportunities. Now Covid-19 has put the industry into the spotlight, exposing some enduring weaknesses and highlighting the need for modernisation. In a post-pandemic world, wealth management companies that are willing to innovate will begin to pull sharply away from those that are stuck in the past. Everyone hoping to remain relevant in this space - banks, advisory firms, asset managers, investment managers and technology providers - must be ready to drive transformation or risk extinction. Download your copy of this Finextra impact study, produced in association with Cognizant, to learn more.

29 November 2021 337 downloads

Report

The Future of ESGTech 2022

Employing Data to Deliver on the UN's SDGs The unrealised potential for data to serve fertile, yet dormant, use cases is limitless. Therefore, empowering the reclaiming and repurposing of data is paramount if data is to lead to all people living in peace and prosperity. This endeavour has not progressed due to the entities holding data being unwilling to exchange data over concerns around data protection and security or the prioritisation of the desire to capture direct returns on investment. Others may also be reluctant to share data in hope they gain market power or competitive advantage. In financial services, this has not been the case. With the second Payments Services Directive or PSD2, banks are required to open access to data and share with other organisations. This has increased transparency of pricing, improved security through authentication and verification and encouraged banks to use application programming interfaces (APIs) for this disclosure of information. This shift to a digital economy will continue and will result in an attraction to a platform where financial data can be used to offer value-added services to other industries. One example would be open finance, an API-enabled offering, now facilitates the sharing of financial products, data, and services between independent parties, going beyond the regulatory requirements set out around open banking. By utilising APIs, financial institutions can implement open finance solutions to offer people greater product choice and control over their finances and data. Repurposing different types of data can amplify the impact of data on economic, environmental, or cultural development, can help fill information gaps and cultivate new perspectives. However, the world is behind schedule on achieving the United Nations’ Sustainable Development Goals. This report will focus on specific targets, however, not all, and consider how environmental, social and governance (ESG) data can be utilised by financial institutions and fintech firms to achieve the SDGs and ensure global communities can migrate to a circular global economy.

26 November 2021 620 downloads

Report

The Future of Wealth Management 2022

A sector at the beginning of its digital renaissance. Increased digitisation of goods and services throughout the 2010s gathered pace long before Covid-19 turned the global outlook on its head. The pandemic served only to reaffirm this shift to digital as a matter of urgency. The wealth management sector was not spared the upheaval; however, it appears to be emerging from the crisis with an invigorated sense of progress. The disruptive forces of digitisation and Covid-19 are now joined by a groundswell of consumer expectation. This is clearly witnessed in the soaring uptake of retail investment tools and applications, greater access to financial instruments and widespread revolt against the traditional inaccessibility of financial services. This report, the Future of Wealth Management 2021 with interviews from Accenture, Coutts, Hargreaves Lansdown, Nutmeg, Oxford Risk, Tilney Smith & Williamson, and UBS Global Wealth Management will explore the forces currently shaping the industry. It will examine not only what these forces are, but how and why they form the structural foundation for a sector which is at the very beginning of its digital renaissance.

10 November 2021 1114 downloads

Report

Addressing the Poverty Premium: A data-led approach

Poverty premium is a term that means so much more than being charged more for certain products and lack of credit history; it can also equate to digital exclusion. With an increasing focus on environmental, social and governance (ESG) agenda, banks do not wish to be seen to be as socially irresponsible. Regulators and authorities are increasingly turning their attention to these issues as well, understanding that the poverty premium is a roadblock to regional and national economic progress. Banks therefore need to find ways to offer more nuanced services, so that fair banking is open and accessible to everyone. And this ultimately works to their advantage as well. Not all of the demographic that is let down by digital services is poor - think millennials without a credit history, or older baby boomers who aren’t digitally savvy- but by being unbanked or excluded from the system, can easily follow a downward spiral and end up badly off. There is scope and opportunity for banks to provide digital educational and coaching services as well, to bring people on board, better educate them and of course, avoid certain pitfalls. With shrewd capturing, processing and analysis of data and technology, banks can take the lead by addressing the tired bias that exists in traditional credit decisioning models against certain credentials or attributes, which is often a result of programming by human bias. Through open banking and shared data, particularly as this theme trickles into other sectors such as energy, insurance and healthcare, fintech startups and neobanks are already driving change in this respect. Download your copy of this Finextra white paper, produced in association with Cognizant, to learn more.

05 November 2021 296 downloads

Report

Five Factors to consider when building Operational Resilience

The term resilience is receiving a significant amount of airtime in 2021. While the pandemic certainly pulled into focus the need for resilient systems across financial services, the push toward financial resilience was first born in response to the 2008 financial crisis. Since 2008, focus has shifted toward building resilience across operations in the financial services sector, by assessing vital business functions, setting levels of tolerance that these functions can withstand, and testing the tolerances at regular intervals. The Basel Committee on Banking Supervision defines operational resilience as the ability of a bank to deliver critical operations through disruption. This ability enables a bank to: Identify and protect itself from threats and potential failures; Respond and adapt to – as well as recover and learn from – disruptive events. Unlike typical risk management or more traditional compliance-based approaches, when it comes to operational resilience, banks should assume that disruptions will occur – and consider their overall risk appetite and tolerance for disruption. In the context of operational resilience, the Committee defines tolerance for disruption as the level of disruption from any type of operational risk a bank is willing to accept, given a range of severe but plausible scenarios. While the ability to predict which areas are likely to cause disruptions was once the purview of a human supervisor, given the shift to digital operations, it is only logical that firms employ tools such as artificial intelligence (AI) and machine learning (ML) to identify patterns and risks within an institutions’ complex technology systems. This Finextra impact study, in association with BMC, outlines five key considerations that financial institutions must be aware of, ahead of impending regulatory deadlines, as well as the technology-based solutions available to assist them in building a robust and compliant operational resilience strategy.

12 October 2021 253 downloads

Report

Cost of doing business as usual or an avoidable drain on margin?

Operational loss events related to Execution, Delivery and Process Management (EDPM), and Clients, Products and Business Processes (CPBP) can represent the most financially damaging losses for banks. Yet these often fly under the radar of more PR-friendly talk around cybercrime, money laundering and fraud defences. There is relentless pressure for revenue growth, client acquisition and flow. But margin is just as important, if not more so. Every operational loss event that occurs because lessons have not been learned from previous failures, is a direct and significant hit to margin. While risk management departments might be aware of the scale of the problem, how many people working in data reconciliations, operations or IT could tell you the average cost of a loss event? How much focus is being directed from the board and C-suite to make sure that operations have what they need to improve data quality and flow, introduce intelligent automation and remove manual touchpoints and opportunities for failure? This Finextra white paper, produced in association with SmartStream Technologies, examines what more can be done to translate operational risk measurement into operational and financial margin improvements, and the barriers to overcome.

19 August 2021 193 downloads