Have you ever found yourself rushing to the bank during lunch hour, only to wait in line for a simple transaction? Thanks to virtual banking, those days are becoming history.
Whether you're a busy professional, an entrepreneur, or someone who simply values convenience, virtual bank accounts are revolutionising how we manage money in the digital age.
In this article, we’ll explore how virtual bank accounts are changing the way people manage their finances and why you should consider opening one.
A virtual bank account is a bank account offered by digital-only banks. With no branches to visit or lines to stand in, everything—from checking your balance to transferring money—happens digitally, through your smartphone or computer.
These digital-only banks have gained significant traction, especially in places like the US, the UK, and Hong Kong, where people seek faster, more cost-effective banking options. In different regions, they may go by other names, such as neobanks in the US and the UK and virtual banks in Hong Kong.
Gone are the days of planning your schedule around bank hours. With a virtual account, your bank is always open. Need to send an urgent payment at midnight? Want to save for your retirement while travelling? Everything's at your fingertips, 24/7.
For freelancers and remote workers, this round-the-clock access isn't just convenient. It's essential for managing cash flow and client payments across time zones. Imagine receiving a payment from a UK client at 4 AM Hong Kong time and being able to instantly transfer it to your supplier in Europe, all while you sleep.
Traditional banks often come with fees for everything—monthly maintenance, ATM withdrawals, or even paper statements. Virtual banks take a different approach. By operating without physical branches, they can offer significantly lower fees or even free services for most banking needs.
This cost advantage really shines with international transactions. Whether you're paying overseas suppliers or receiving payments from global clients, virtual bank accounts typically offer more competitive exchange rates and lower transfer fees than their traditional counterparts.
For businesses making regular international transactions, these savings can add up to thousands of dollars annually.
If you deal with more than one currency, virtual bank accounts are a game-changer. These accounts often let you send, receive, and hold different currencies without unnecessary conversions or hidden charges.
Instead of maintaining separate accounts for different currencies, you can manage everything in one place. Receive payments in dollars, pay suppliers in euros, and track your balance in pounds – all from one account number. This not only simplifies your banking but also helps you save on fees and take advantage of favourable exchange rates.
This multi-currency functionality is particularly common among top business accounts in Hong Kong, allowing you to streamline financial management and simplify international transactions.
Virtual bank accounts aren't just about basic transactions – they're packed with features that make money management smarter and more intuitive.
Real-time spending notifications, automatic expense categorisation, and direct integration with accounting software like QuickBooks, and Xero make it easier than ever to manage your finances.
Small business owners particularly benefit from these tools. Tracking expenses, managing cash flow, and preparing for tax season becomes significantly more straightforward when your banking data automatically syncs with your accounting systems.
For individuals, it means better budgeting with insights about your spending patterns and automated savings features that help you reach your financial goals faster.
Speed and security go hand in hand with virtual banking. While traditional banks might take days to clear or batch transactions, virtual banks handle them almost instantly. Whether you're paying salaries, splitting dinner bills, or transferring money between accounts, the process is quick and seamless, cutting down on unnecessary delays.
As for security, virtual banks often lead the pack with cutting-edge protection measures. Advanced data encryption, biometric logins, and multi-factor authentication provide peace of mind without sacrificing convenience. Most virtual banks also offer features like instant card freezing and customisable security settings that give you more control over your money than ever before.
Virtual bank accounts aren't just another tech trend – it's a smarter approach to managing money in today's fast-paced world. Whether you're looking to cut costs, simplify international transactions, or just spend less time dealing with banking hassles, a virtual account could be exactly what you need.
The concept of digital nomadism is a combination of working life and travelling and living these on a regular basis. Unlike the traditional office work schedule tied to a fixed location, digital nomads use technology to do their jobs remotely. Digital nomads can make a living by working remotely and earning income, while also broadening their perspective by exploring the country they are visiting. The digital nomad lifestyle is usually more suitable for those who work in a way that only a laptop, electricity, and a reliable internet connection are enough to work.
However, the digital nomad lifestyle also requires good adaptability and resilience skills. Digital nomads may work according to the time zones of different countries and may need to continue to adapt. In this context, they will need to be people who know how to manage work-life balance and maintain productivity in different work environments. This working option usually requires careful planning, from keeping up with reliable Wi-Fi connections to creating a budget for accommodation.
Becoming a digital nomad is an exciting journey that requires a mix of skills and planning. This lifestyle gives you the freedom to work remotely while travelling the world, but it also requires a strategic approach to succeed both at work and on the go.
First, you should start by assessing your current skills. Many digital nomads who embark on this journey work in a career that is suitable for working remotely, such as web development, graphic design, content writing, marketing, or consulting. Even if you are not currently working in one of these fields, acquiring the relevant skills through online courses, certifications, or self-study is a good place to start.
Next, you need to find a job that allows you to work remotely or on freelance projects. Having a stable income is essential as you make a complete change in your lifestyle as a digital nomad. Update your resume and online portfolio to reflect your skills and experience. Take advantage of job postings on platforms that offer opportunities specifically for digital nomads.
When preparing to become a digital nomad, you should also have the technical equipment you need to work efficiently. A lightweight laptop, noise-cancelling headphones and power banks can make a big difference in productivity when travelling, and it’s a good idea to buy a good travel insurance policy that covers health, belongings and technology.
In recent years, many countries have introduced digital nomad visas specifically designed for individuals who want to live and work remotely without the constraints of traditional employment, in order to facilitate this process of embracing the digital nomad lifestyle.
As the digital nomad lifestyle continues to grow in popularity, the question of which jobs are best suited for this lifestyle becomes increasingly important. Digital nomads can have the freedom to travel while earning a steady income, thanks largely to the variety of jobs available in the digital space.
One of the most popular methods for digital nomads is freelancing. Platforms that post freelance jobs allow people to present their services in written form in areas such as graphic design, web development, digital marketing, and a variety of other areas.
By building a good portfolio and reputation, freelancers can attract clients from all over the world and find the chance to work on projects that fit their schedules and lifestyle. Tools like Ruul.io allow digital nomads to streamline payment processes, giving them the flexibility to receive income in over 140 currencies or crypto, enabling them to quickly access their earnings wherever they’re based. Remote work is also a popular option, with many companies now accepting flexible work arrangements that allow employees to work from anywhere.
Since digital nomads change countries and locations, they tend to invest in different currencies or use alternative methods to earn their income. Saving in crypto, in particular, is a method that digital nomads prefer to use both as an investment and as a means of payment. When freelance nomads receive their payments using Ruul, they can transfer their income in 140 different currencies or directly to their crypto accounts. In this way, they can quickly access their earnings in the country they are in and do not waste time with bank transfers.
When you reach your 30s, investing is a great way to expand your finances and make sure you are doing everything you can for your future. If you have already started, then there could be ways to improve your investment strategies. If you are a beginner investor in your 30s then this will help you find the strategies for you.
If you are a beginner to investing, then you can find out how it works here.
A study by robo-advisor Personal Capital found that the average age people begin investing is 33.3 years. It’s important to understand that starting now can significantly impact your financial future. The earlier you start investing, the more time your money has to grow through the power of compound interest. Compounding can exponentially increase your returns over time, making it one of the most effective strategies for wealth accumulation. Use our compound interest calculator.
Your 30s are a pivotal time to establish or refine your investment strategies. By understanding your limits, seeking diversification, clarifying your goals, considering homeownership, investing in stocks with just a little risk and committing to regular reviews, you can create a strong financial foundation for your future. Starting now will set you on the path to achieving your financial aspirations, no matter when you begin.
So, take a look at some key investing strategies for your 30s.
Check out Investing strategies for your 20s.
Fintech is short for Financial Technology, a term which describes the technology used to simplify and improve financial services. This includes mobile banking, investing apps, cryptocurrency and more. Fintech was created to bring convenience to your everyday financial processes for businesses and consumers. Without knowing it, you have and are using fintech in your everyday finance management.
Fintech is useful for businesses and consumers alike.
From payment solutions to investment platforms, fintech also makes financial services more inclusive by lowering barriers to access. For instance, many fintech applications offer no-fee bank accounts, fractional share investing, and peer-to-peer lending platforms, giving consumers more opportunities to grow their wealth.
For businesses
fintech tools can improve operational efficiency by automating payroll, invoicing, tax filing, and even financial forecasting. It enables companies to streamline their financial workflows, reduce administrative costs, and free up time for more strategic tasks.
For Consumers
Consumers benefit from fintech by having more control over their financial lives. With the rise of personal finance apps, users can track spending, set savings goals, and monitor investments in real-time. The tools provide a complete view of personal finances, helping individuals make informed decisions based on data-driven insights.
Fintech operates through apps on computers and phones, bringing financial services to us. This is used in various ways including…
Robo-Advisors – Helping people create investment portfolios based on their personal goals and risk tolerance. This offers affordable and simple wealth management solutions for consumers
Payment apps – Such as, PayPal, Venmo and Apple pay make it possible and easy for every to send, receive and manage money from our phones. There are various advantages of using PayPal. They eliminate the need for cash and checks for any payments including international.
Peer-to-peer lending – Platforms such as, LendingClub allow consumers to lend money to others without using banks as intermediaries. This can often provide both parties more favourable rates.
Investment apps – These platforms make is accessible for more people to start investing. They offer resources and advice for novice investors so that more people can grow their wealth. Find trading platforms you can use to start.
Cryptocurrency Apps - Blockchain, the primary technology for most cryptocurrencies, is a significant aspect of fintech, representing a reorganised way to conduct financial transactions outside traditional banking systems.
Fintech has become a part of daily life for many consumers, even if they’re not aware of it. Here are a few common ways consumers interact with fintech:
Whether you’re using a simple payment app or diving into cryptocurrency trading, fintech brings the tools for managing your finances right to your device. Consumers now have access to tools that explain investment options, track spending habits, and create budgeting plans.
The finance world looks very different than it did just a decade ago. Technology continues disrupting the status quo, customer expectations keep evolving, and innovations happen every day. To thrive in this environment as a finance brand, you need to keep up with the latest marketing strategies if you truly want to rise above your competitors and reach your target audiences.
The good news is that there are a few key strategies that you can use to create standout customer experiences and make your company stand out amongst the ever-growing backdrop of finance brands. From investing in a fintech press release platform to blending physical touchpoints with digital personalization, here are 5 techniques that leading finance brands should have on their radar in 2024. While ambitious, those who start laying the groundwork for these kinds of initiatives now will have a proven roadmap for success.
Press releases have always been a great way for brands to spread major news and build credibility. However, finding a good return on investment can be difficult for finance-focused when using general press release distribution services. The announcements often get lost in the noise and fail to reach key decision-makers in the finance industry.
To get around this, it’s best to go for a service that gets into the ins and outs of the industry. For instance, FinanceWire is a dedicated finance press release platform that has cultivated relationships with top-tier financial publications to guarantee homepage coverage on sites that matter. This includes outlets like TipRanks, Investing.com, Finbold, and more.
The main perk here is instant visibility amongst key decision-makers in finance. This includes stock analysts, professional traders, advisors, executives...the people that can impact market movement or purchase decisions. Sending newsworthy releases on events like funding news, product launches, partnerships, etc. gets your brand on their radar ASAP.
As you craft press releases, optimize them around keywords that these audiences search for. That way you can ensure maximum visibility for your efforts and boost ROI across your PR campaigns.
The lines between physical and digital banking have blurred. Today, you need an omnichannel approach that provides seamless integration between in-person and online experiences. This blending of the physical and digital worlds is often referred to as "phygital" in marketing speak.
Going phygital with your finance services is key. For instance, if a customer starts an application in your mobile app, they should be able to easily finish it at a physical branch. Pull up their data instantly via device syncing and allow them to securely verify info on your tablets. Install user-friendly self-service kiosks as another transitional endpoint between the digital and physical.
Likewise, what they did at a physical bank should be visible in their digital profile. This phygital integration, where digital connections enhance physical touchpoints, breeds brand loyalty as you make their lives easier. As always, you should be aiming to meet users in their channel of choice. This means offering flexible ways to open new accounts, apply for products, or execute transactions whether in-branch, online, via phone call or through chatbots.
Behind the scenes, consolidate data and document signing digitally to enable this seamless, interconnected experience. Empower employees via anywhere access so they have the 360-degree customer view needed to assist visitors to physical branches. Removing friction through phygital connection should be a priority.
One excellent way to generate goodwill is through gamified financial literacy campaigns. These educate your audience about personal finance in an engaging, rewarding way.
For example, you can partner with fintech platforms to create investing simulations using play money. Have contests to see who can build the highest return portfolio that outperforms the market. The top players earn real rewards like gift cards or merchandise.
Or, you could produce a money management mobile game. Make it fun and engaging while teaching skills like budgeting, saving, reducing debt, and building credit. Many of the top fintech brands have some sort of these elements within them, and they can even double down as a compliance box-ticking exercise if you operate in countries such as the UK and US - especially for crypto and blockchain-based services.
Showing that you have taken steps to educate your users and ensure understanding of your products (especially if capital is at risk), is an important element of staying on the right side of regulators.
Artificial intelligence or "AI" is all the rage these days - and many finance brands are wondering how they can harness AI's power. What are some practical applications of AI for marketing? How can it help you engage customers in a more personalized way?
The truth is that AI has massive potential to transform how you promote finance products and services. Specifically, by powering predictive analytics that offers exactly the right recommendation at exactly the right time – automatically.
AI leverages data from your customer relationship management platform (CRM), website, mobile app usage and wherever else you have data sources to identify patterns. Algorithms can determine someone's creditworthiness for a loan. Or assess which new investment product aligns with their risk tolerance based on trading activity.
Deploying this technology through machine learning models gives your system thmarkete ability to get smarter over time. The more data fed in, the better it gets at matching products with people likely to be interested.
This means you can time personalized email campaigns, in-app messages or printed mailers to align with moments when customers will be most receptive. The system handles the heavy lifting. For example, if a customer set up a college savings plan five years ago, your AI could kick start an automated nurturing track when their child turns 16. This prompts them to consider additional ways to save for impending tuition payments.
The beauty is that this level of personalization scales easily across your entire customer base, and it optimizes itself through continual testing and reporting. Pretty soon you have happy customers who feel understood and marketing efforts that pay for themselves in revenue and loyalty.
In 2024, partnering with personal finance influencers with small but very engaged audiences on social media platforms like Instagram and TikTok will provide an authentic way to promote your banking solutions and products. These "micro-influencers" typically have between 1,000 to 100,000 followers in a specific niche like budgeting, investing, retirement planning, etc.
Identify a handful of relevant micro-influencers in financial verticals you want to be known for. Analyze their follower demographics and engagement metrics to ensure there's alignment with your target customer base. Then reach out to the influencers to collaborate. You can pay them or simply provide complimentary access to your banking tools. In exchange, they will honestly showcase and review your offering to their loyal followers.
You can also encourage user-generated content from your own customers. Prompt them to post testimonials, share their experience onboarding with your mobile app, or demonstrate your budgeting features. With their consent, re-share these posts as social proof. Contests that incentivize user-generated content with prizes or amplification of their post often see great participation. This authentic earned media from real customers goes much further than branded ads alone.
Mass market approaches are no longer sufficient as consumers expect hyper-personalized experiences. New technologies allow you to cater to individual interests and behaviours in a scalable way.
Specialized press release distribution puts your message directly in front of fintech influencers and analysts covering your niche. Phygital integration understands each customer's unique journey across channels. Gamification turns education into a rewarding game. AI predictive marketing delivers the right offer at the right time. Micro-influencer collaborations develop authentic connections.
The through line is relevance. When you demonstrate a deep understanding of what specific segments care about, you build trust and loyalty. This leads to more customer lifetime value as people turn to you first for finance solutions.
Using budgeting apps can be a super helpful tool to keep track of your finances and stick to a budget to help you save or make better use of your money. Lots of people use an app to help them visualise their budget better and get tips.
When using anything which needs your personal details it is important to stay on top of it and be vigilant of any scams.
As budgeting apps often have private details and financial information in them they are a common target for hackers. There are ways to make sure this doesn’t happen to you and you can use these apps stress free.
Find the best budgeting apps 2024 to use to track your finances.
Make sure you take the necessary precautions to prevent fraud when you can.
The amount of fraud cases has been rising and with digital banking becoming the new norm there are many ways someone can get access to your account. It is important to stay aware of scams so you can protect your accounts.
The Guardian reported that fraud cases in the UK more than doubled in 2023 to £2.3bn.
Bank can help you prevent fraud as well as claim refunds if you are a victim to fraud. Some banks such as, Monzo have a high fraud rate as well as being rated poorly for reimbursing their customers which could be a factor to consider when choosing your bank account, especially if all your savings are there.
If you are a victim of fraud, you can report this and seek help from your bank.
The finance sector's shift from paper to digital isn't new but remains a critical transition that challenges institutions and professionals. Gone are the days of towering file cabinets and endless paperwork; digital documents now reign, promising streamlined workflows and enhanced security.
Yet, this transformation extends beyond mere convenience. It represents a fundamental change in how businesses operate, manage data, and interact with clients. The layers of this shift are manifold, with implications for process efficiency, data integrity, and regulatory compliance casting long shadows over an industry once rooted in pen and ink. Let's unpack these layers together.
Paper has been the stalwart medium of financial documentation and accounting since the inception of this practice—meticulously filled ledgers and signed forms were once the bedrock of trust in transactions. However, the relentless tide of digitalization has rendered this familiar method antiquated. Financial institutions are not just migrating to digital formats; they're fostering a revolution.
What kindled this seismic shift? Efficiency is paramount—in processing speed, retrieval ease, and reduced storage costs. Imagine contracts executed without physical barriers, or financial statements accessed with a click rather than a key. This digitization also feeds into eco-friendly agendas, significantly reducing paper use and waste.
Furthermore, data analytics applied to digital documents unlocks patterns and insights previously buried beneath piles of paperwork. It's as if the industry has been handed a new lens through which to scrutinize its operations—a lens that magnifies opportunities for optimization at every turn.
This initial phase of conversion from paper to pixel sets the foundation for what's next—smarter document management systems that blend security with accessibility to transform how we think about financial information.
The transition to digital documentation did not merely alter the format; it revolutionized the lingua franca of financial communication. Where once rows of figures sprawled across ledger pages, now databases and spreadsheets offer a dynamic tableau—alive and interactive.
Central to this change is the concept of interoperability—the ability of diverse systems and organizations to seamlessly connect and exchange information. Imagine how a simple CSV file can traverse platforms, from accounting software to tax preparation tools, without losing its meaning or value. This fluidity is imperative in an industry where timing can be synonymous with opportunity—or with risk.
It's not just about data sharing but also data security. Encryption and blockchain technologies are infusing trust into this new lexicon, ensuring that sensitive information remains shielded from prying eyes while still accessible to authorized users. As these secure protocols become embedded in the fabric of financial systems, they foster greater confidence among stakeholders.
As we stride further into this digitized era, mastering this evolving language becomes critical—not only for staying competitive but for maintaining compliance in an environment with ever-shifting regulatory expectations.
In the digital realm, financial documents become more than static records—they're dynamic assets that require vigilant protection. The guardians of this new era are not simply strongboxes or vaults; they are sophisticated security protocols and systems designed to defend against cyber threats.
Modern enterprises face a dual mandate: ensuring data remains inviolate while making it readily available to authorized parties. Here, encryption emerges as the champion, transforming sensitive information into enigmatic puzzles only solvable with the right key. It's akin to an unbreakable code used by diplomats in times past, except now it shields transactions and client profiles.
Beyond encryption lies a network of other defences. Multi-factor authentication establishes checkpoints at critical junctures, while intrusion detection systems play watchdog, sniffing out any anomalies that could herald a breach.
These technologies collectively form the bulwark against data compromise—a state-of-the-art arsenal that is both a shield and sentinel for the digital treasures they safeguard. In this landscape, robust security doesn't just support integrity; it enables freedom—the freedom to navigate financial domains with confidence.
Secure editing platforms are the unsung heroes in the digital documentation epoch, serving as the nexus where accessibility meets ironclad security. These platforms don't merely store information; they're active environments where professionals can make changes to PDF files, review financial agreements, and collaborate on budgets with a level of efficiency that paper could never match.
The ingenuity of these systems lies in their ability to maintain document integrity while allowing for controlled flexibility. Version control ensures that every edit is tracked and reversible—a digital paper trail without the paper. This feature is invaluable when multiple stakeholders need to contribute to a document without compromising its historical accuracy or regulatory compliance.
Moreover, such platforms integrate seamlessly with existing workflows. Whether it's granting auditors temporary access for review or enabling instant updates to financial models, secure editing software fortifies an organization's agility.
The digital transformation has catalyzed a new frontier for collaboration, where team members can work together symbiotically despite being oceans apart. Investing in the cloud is the future workspace, as it’s a realm where financial documents are not only stored but shared and refined collaboratively.
Cloud-based platforms have dismantled the traditional barriers of office walls and business hours. Documents now live online, accessible to those who wield the permissions—like keys to a shared treasure that grows in value with each contribution. Real-time updates mean that financial forecasts can adjust to market fluctuations with astounding alacrity, and year-end reports materialize through collective input without waiting for interoffice mail.
This collaborative ecosystem also extends to client interactions. Seamless sharing and approval processes demystify finance for clients, enabling them to view their data landscapes with clarity and participate actively in decision-making.
By anchoring finance professionals within this interconnected web, the cloud empowers teams to operate as cohesive units despite physical distances—ushering in an era where collective expertise drives success.
The shift from paper to digital is a transformation that has redefined the essence of financial documentation. As we embrace secure editing platforms and cloud collaboration, we equip ourselves for a future where efficiency, security, and teamwork are not just aspirations but realities shaping our daily commerce.
By Bruce Martin, CEO at Tax Systems
Yet, within this important movement, a key aspect of finance – tax – can often be neglected, with many organisations missing significant opportunities to boost effectiveness as a result.
In reality, this is not surprising. As a constituent part of the overall finance function, tax may not be viewed as a priority area when organisations come to implement digital transformation projects. Moreover, tax is ultimately driven by compliance, so the effects of any changes implemented here are felt much less widely than those in other key areas of finance – which are more likely to have a significant impact across the business. As a result, the percentage of the overall finance budget dedicated to digital tax projects typically pales in comparison to other finance functions.
Think of it this way: in getting Environmental, Social, and Governance (ESG) planning and implementation initiatives off the ground, for instance, businesses tend to do the bare minimum until regulations or other pressures force more urgent change. The same idea can be applied to allocating time and resources to tax transformation. What’s more, the unique needs of each business, its position in the finance and tax lifecycle and the proficiency of the finance team play important roles in the budget allocation relating to digital transformation projects.
In this context, and with many CFOs coming from an accountancy rather than a tax background, it’s simply more likely that they will focus on areas more aligned with their roles and experiences.
Untapped potential
And herein lies a growing problem and an important opportunity for positive change. By overlooking tax transformation, many businesses are missing out on valuable insights and efficiencies. Often seen as a compliance box-ticking exercise, businesses do what's needed to remain tax efficient and compliant. Yet, beyond these core objectives, tax transformation holds immense potential.
In practical terms, what does this mean? Implementing tax transformation is all about enabling tax professionals to focus on their areas of expertise: evaluating tax positions and maximising efficiency, while automation assumes the role of handling repetitive tasks. While this could be unsettling for some, the objective is to use advanced tech tools to boost efficiency and productivity. It’s certainly not – as some people fear – about using AI to replace jobs, and for those people at the sharp end, tax transformation frees them to do the jobs that fit their expertise, not the jobs that automation can replace.
In this situation, tax professionals are empowered to focus on more value-add tasks that can make a material impact on business performance.
These are crucial considerations given that the general direction of travel is clearly in favour of greater digitalisation of the tax function at all levels. This includes HMRC, which is gradually integrating technology more deeply into its capabilities and processes. As they work towards building a “trusted, modern tax administration system,” changes they bring forward will inevitably be reflected in the way organisations interact with them.
Ultimately, using technology to deliver tax transformation can undoubtedly contribute positively to a company's cash flow and overall financial strategy. Organisations can only reap these benefits, however, if they adopt a mindset which sees the tax function as being driven by more than just regulatory compliance.
By viewing it as an integral part of a wider digital transformation strategy, it becomes possible to leverage the capabilities of both tax professionals and emerging technologies for maximum impact. In the future, those organisations that give tax transformation the investment and strategic insight it requires will be ideally placed to deliver on the capabilities and efficiencies that have become synonymous with the digital age.
However, these institutions have long been dubbed laggards when it comes to technology, innovation, and the speed at which they can digitally transform. Much of this is due to the legacy infrastructure in place, the regulatory landscape in which they operate, and security and governance protocols they have been hamstrung by. This means that data is not driving the valuable innovation it can do to improve automation, decision-making and risk management.
In comes synthetic data. This is not ‘real’ data created naturally through real-world events. It is ‘artificial’ data that maintains the same statistical properties as ‘real’ data, generated using algorithms. Whether the aim is to make data available across an organisation or accessible to third-party partners it drives speed to innovation within financial services.
This is already happening as the first banks start to roll out synthetic data across various use cases, from testing to AI model training to cloud migration projects. But in 2023, I believe the sector will open its eyes to the notion of synthetic data and how it can fuel growth, support overcoming longstanding obstacles, and totally rejuvenate the way financial services institutions meet and exceed the ever-evolving requirements of customers and regulators.
According to Gartner, synthetic data will enable organisations to avoid 70% of privacy violation sanctions. Financial data, such as consumer transaction records, account payments, or trading data, is sensitive personal data subject to data protection obligations and is often commercially sensitive.
Structured synthetic data has the potential to revolutionise the way financial institutions use data securely. Because this data preserves the statistical properties of real-life data, the strict privacy and security protocols that have previously blocked innovation can now be navigated with synthetic data. So, because no real individuals can be identified from the synthetic data, data protection obligations, such as GDPR, do not apply. This will undoubtedly be top of mind in 2023 for business leaders, with the fifth anniversary of GDPR in May.
Since privacy compliance and information security regulations will no longer be an issue, the new artificially generated data can then be used to create new revenue streams. The banking sector can take their Open Data and data monetisation strategy even further in 2023 since synthetic data will enable them to package this data and sell it to third parties without the need for express consent.
There’s no doubt that the organisations that are succeeding in these trying times are those that can rapidly scale via the hybrid or public cloud. But well-regulated industries like banking and financial services have been reluctant to go all-in with the cloud. I get it. As soon as data leaves the company campus and servers, the control is lost. Synthetic data allows for a rapid, cross-organisational migration to the cloud without any of the added risks. Something that financial organisations can use to great effect in 2023.
Instead of pseudo-anonymised data (created by traditional processes such as masking and anonymisation) that can still lead to re-identification or redacted data that loses most of its utility, with synthetic data generation, the dataset is totally new and holds no ties to the original. If used, in 2023, financial services can train on their real datasets on-premise – even behind the walls of separate departmental silos. Then, the artificial data can be released into the cloud. And since there’s no personal information in it, the synthetic data can be shared across silos within the organisation — allowing for cross-organisational strategy, insights and analytics like never before.
Generative AI underwent a huge step change in the latter half of 2022. Teams from OpenAI through to StabilityAI have been creating models that can conjure hyper-realistic text and images from seemingly thin air with very minimal verbal prompts. The realism of the responses you can get from these models is in some cases quite creepy and like nothing we’ve seen prior to this year.
So how will this development impact business and society? The jury is still out, but what we do know is that these teams are making these models available for anyone to play with for free right now creating the perfect test ecosystem for developers, hackers and anyone who’s curious to test their ideas.
I am certain that in 2023 we will start to see businesses forming around these tools. For example, there are already examples of text or formula auto-completion tools being embedded into Microsoft Office software that could greatly improve productivity and speed up learning curves of users. These types of efficiency-improving tools have the potential to impact businesses much further afield than just financial services.
There are certainly some concerns and legal challenges that still need to be overcome before this technology can be commercialised. Who owns the output of one of a code auto-completion model if it was trained on data under different licences? Who owns the copyright to images generated from a model?
Despite these challenges, there is huge potential in this technology, and I believe we will all be hearing much more about it in 2023.
Personalised nature of financial services has suffered
For years, the financial services market has become much more transactional. In a race to the bottom on price, consumers have been more concerned with who doesn’t charge maintenance fees and who has the best interest rate for their cards or rewards system for their policies than who has the most convenient high-street locations or who provides the best service. This has placed an over-emphasis on digital, particularly as generations have grown up so that now, the thought of going to a branch office is seen as an alien concept to younger customers. There is no question that the banking landscape has dramatically changed from one generation to the next. The relentless march to digital continues to see swathes of branch closures and has ushered in the death of ‘speaking to your local bank manager’. According to recent figures from the European Central Bank, the bank branch network is getting thinner by the day with a decline in 25 out of 27 EU Member States. According to a report from last year, at least one bank branch closes every day in Belgium.
It has created a dichotomy whereby large swathes of society are now totally reliant on digital financial services - a figure that is only going to increase as digital identity verification becomes more widespread. But at the same time, the narrative to consumers is to ‘protect their data’. As a result, it is creating an environment of mistrust, concern and paranoia, rather than an excitement for what safely sharing data can enable.
Humans: The missing link in financial services
Our Digital Frontiers research identified that two-thirds (67%) of European consumers don’t know who has access to their personal data and how it’s used – just 12% do with any certainty, while the majority (59%) of the public are increasingly concerned about the security of their online digital footprints and how purchasing data is used, interpreted and shared. Indeed, 41% now feel paranoid that organisations are tracking and recording what they do on devices.
At the same time, the near extinction of humans in the financial services sector is creating a void that consumers are not yet prepared to take the leap of faith to cross. Yes, our research uncovered an acceptance that technology can play a vital role in managing our finances - 31% of consumers would trust an app to manage all of their finances if it meant it generated greater returns each month, 39% expect their financial services provider to use technology like artificial intelligence and machine learning to help protect their funds and personal details. However, it also highlighted that a fully-digital banking network is a long way away. Only a third (30%) of consumers would choose a different bank or financial service provider if their existing one expected them to visit a branch in person. Indeed, only 37% agree that in-person interaction in financial services is almost dead. According to our research, almost two-thirds (64%) of consumers expect the financial services industry to support traditional and in-person services that they do not rely on but know other people may.
In a race to the bottom on price, consumers have been more concerned with who doesn’t charge maintenance fees and who has the best interest rate for their cards or rewards system for their policies than who has the most convenient high-street locations or who provides the best service.
Whether it is the desire for trust, the ability to solve our problems - especially in light of high-profile scams and cybercrime, or to simply deliver a personalised experience, it’s clear that for digital in financial services to reach its potential, people still need people; not necessarily in the high street, but at the end of a message, phone or video.
Digital-first, not digital-only
What consumers are looking for is for financial services institutions to build their offerings with a digital-first mindset and not digital-only, which is good news for traditional establishments - less so for fintechs and NeoBanks. And who can blame them when it’s something they see daily in other sectors. Retail is starting to blend in-store expertise and service with digital innovations around delivery choices yet in financial services, consumers are being offered chatbots to fix problems and are being turned off as a result. This isn’t a digital versus physical discussion but more about creating a blend where the choice of engagement is down to the consumer: from efficient app-based banking to speaking with a real-life person via chat, phone, video or in-person, when required. Data lies at the very heart of this.
Away from devices and evolving customer expectations, there is another driver of change for financial services at a macro level. Governmental and regulatory expectations have translated into a need for banks to play a fuller role in meeting society’s financial needs. Our digital economies depend on organisations and companies being able to unlock the value of data - using it to improve products and services and improve society as a whole. For example, banks are increasingly expected to improve financial inclusion. According to a recent report, seven million adults in the UK are at risk of financial exclusion, meaning that they do not have sufficient access to mainstream financial services and products - something exacerbated by the ongoing branch closures.
Financial Services getting it right
The beauty of this situation is that all the tools and technologies to realise this future are here, today. There are already businesses demonstrating how it can be done to great effect. One example is Achmea, which has a leading position in the Dutch insurance market, with 10 million customers. The insurer makes use of technology and data in a clever way that allows it to quickly add new services or make changes based on customer feedback. Innovations to speed up its claim processes include an app for policyholders to help them find local tradesmen for repairs through to the use of drones to survey weather damage to properties.
Totally secure, friction-free financial interaction
Consumers want totally secure, friction-free financial interaction with absolute trust in how their data is captured, stored and used. But, for a sector that’s designed on digits, people don’t want to be just another number. And in this day and age, these two objectives don't need to be mutually exclusive.
The financial services sector has an opportunity to lead the way globally, demonstrating digital excellence with data to excite consumers, bank the unbanked, connect communities and shape society for the better.
This refers to a banking practice that gives third-party financial service providers open access to consumer banking, transactions and other financial information via application programming interfaces (APIs). The sharing of financial information has enabled customers to access user-friendly interfaces and make faster, easier and more secure payments.
It’s a modern, straightforward and highly effective approach, so it’s no surprise that open banking is so popular, particularly in light of COVID-19 which forced the industry to digitise even faster than originally expected. In the UK, for example, there are currently three million open banking users — three times more than in 2020.
One area of the finance sector that looks set to reap significant benefits from open banking is cross-border payments. Due to the various time zones, intermediaries and legal requirements involved in a transaction, sending money internationally has always been somewhat challenging. However, open banking can go some way in solving the problems financial institutions, businesses and consumers have all traditionally faced, ensuring that cross-border payment services are cheaper, faster and better for all parties involved. Stan Cole, Head of Financial Institutions at Inpay, delves into the topic.
Open banking enables third-party financial services providers to access data from banks and other financial institutions, with APIs offering access to account information services (AIS) and payment initiation services (PIS), allowing apps to directly interact with bank accounts. Although APIs take a great deal of effort to design and implement, they are time-saving and cost-effective in the long term. This is because with these solutions, financial institutions don’t need to create custom solutions for every FinTech they intend to integrate with. APIs also allow new financial services to be developed more quickly around these interfaces.
So, what does this have to do with cross-border payments? Well, in our globalised world, sending money abroad is commonplace, whether that’s due to trade and e-commerce, international investments, global supply chains, or the sending of money via international remittances. And according to the Bank of England, cross-border flows are expected to grow significantly in the coming years, from $150 trillion in 2017 to an estimated $250 billion by 2027. As a result, banks, financial institutions and other global businesses must be able to facilitate these transactions with ease and efficiency if they want to attract and retain their customers. Partnering with FinTechs using APIs can play a significant role in achieving this.
Open banking enables senders and recipients to bypass the intermediaries that would otherwise be involved in facilitating cross-border transactions. For instance, direct access to customers’ bank accounts means that a business or financial institution could verify their identity and creditworthiness without the help of a third party. This results in reduced fees and quicker services. Time and money can also be saved because FinTechs using open banking will provide an efficient alternative to the slow, expensive legacy systems currently in use.
Open banking can make it considerably easier to make cross-border payments. APIs can be designed to provide a streamlined, responsive user interface and thereby provide an excellent customer experience. In addition, open banking makes know-your-customer (eKYC) processes much simpler as they can be entirely digitised, gaining the required information in seconds rather than days.
As well as improving KYC processes, open banking allows banks, financial institutions and businesses to reduce the risks associated with cross-border payments. They can immediately check that customers are able to afford the transaction, for example, and set precise limits. FinTechs using APIs are also likely to have stronger cybersecurity measures in place compared to dated legacy systems.
Open banking means financial institutions and businesses can stay flexible and meet evolving customer demands, with APIs allowing them to offer exceptional customer experiences. As a result, there is increased competition, encouraging innovation and giving customers more choice over the companies and services they use.
Open banking is already making waves in the cross-border payments sphere, with many companies already responding to the clear benefits APIs can bring. Some exciting services to have emerged include API-driven live FX pricing and API-based currency hedging automation, while many big names in the financial services sector (including Visa, Mastercard and Western Union) have teamed up with forward-thinking FinTechs in order to use open banking to improve their cross-border payment services.
The most exciting part of this is that open banking is still in its relative infancy and is continuing to evolve. With new tools regularly launching to accommodate various markets and purposes, financial institutions and businesses can take advantage of this phenomenon to provide the best possible customer experiences to anybody that needs to make a cross-border transaction. However, to do so, they must find the right FinTechs to support them as they strive to bring their financial services into the present day.
