To learn all about Plutus - a mobile application for making contactless Bitcoin payments, this month Finance Monthly reached out to the company’s CEO - Danial Daychopan.
What is Plutus?
Plutus consists of two interconnected applications:
Plutus Tap & Pay is an Android and iOS app for paying with Bitcoin & Ethereum at any contactless-enabled debit card terminal already in use today. Additionally, every deposit you make rewards you in Pluton, a loyalty rebate token which can then be used to make further purchases without fees.
The PlutusDEX is a one-way peer-to-peer exchange (smart contract) that provides liquidity for the Tap & Pay app. The way this works is that PlutusDEX traders can escrow fiat currency such as GBP or EUR to purchase Bitcoin and Ethereum from the users of Tap & Pay mentioned above.
Our favorite aspect, however, is that the Bitcoin and Ethereum can be bought by other users with zero fees through the PlutusDEX. Our person-to-person system it much easier to add new currencies (both fiat and digital) depending on demand, and a 0% fee trading experience encourages exchanges and blockchain enterprises to use our API as well.
Tell us a bit about yourself. How did the idea about Plutus come about? What were some of the challenges that you faced when setting up the company?
My journey in FinTech began in 2013 when I first started one of the first licensed Bitcoin exchanges, followed by a cryptocurrency merchant payments platform called LazyPay.
Earlier that year, I had seen an invoice get filled within seconds across different timezones, all without the need for a centralised party. After this, I was immediately attracted to Bitcoin and fascinated by the features it had to offer.
At the time, there was already a growing niche of Bitcoin supporters and early adopters who wanted to spend the coins they had earned. However, merchant adoption proved far more challenging than anticipated, stalling due to the logistical and volatility issues. Even the largest Bitcoin companies couldn’t move it forward. Unswayed by rising hype, merchants decided that cash and debit cards worked just fine for them. It was and still is an uphill battle.
We were undeterred and still wanted to be able to spend our digital currencies wherever we wanted. And if possible, without having to get merchants involved altogether. After much deliberation, we finally found a way to do it.
In 2015, Plutus first set out to circumvent the issue of merchant adoption by connecting the blockchain to the Visa and MasterCard networks. This gateway makes digital currencies valid for payment at over 40 million debit-enabled points-of-sale worldwide.
This means that even though you are using digital currencies, the store owner or merchant will receive a bank transfer as usual and will not see any difference when compared to a regular debit card transaction.
What have been the company’s major achievements thus far?
Plutus has come a long way since our inception. When we began, we first wanted to gauge community demand. We knew that we needed the app we were making, but we didn’t know whether other people knew it too. From this idea forth, we decided to crowdfund the project. In a surprising result, we raised over 1 million USD from over 1000 users, and have grown to thousands of subscribers since.
We’ve also built an incredible team of tremendous people, from management to development, and entered into partnerships with leading service providers. Now we are right in the middle of the BETA programme, testing and tweaking our platform with the help of our community, drawing ever nearer to the first production-ready release of Plutus.
What kind of device is required to use Plutus? Do merchants need anything to accept Plutus payments or Plutons?
Pretty much all (relatively) new smartphone have built-in NFC. In fact, finding a smartphone without it
Is actually quite difficult nowadays.
To support Plutus, all merchants need is the regular contactless payment terminal that they most likely already have. This makes Plutus payments valid at over 40 million compatible points of sale in the world by default.
What can you tell us about your in-app cryptocurrency called Pluton?
Our platform Plutus Tap & Pay has an in app token called “Pluton”, which act as loyalty reward points on the platform. However, it is important to note that this is not intended to be a competitor of Bitcoin or Ether.
Rather, Plutons (or PLU for short) are actually a cashback program similar to frequent flier miles. This means that they can be used to make purchases on our platform just like BTC and ETH, with the added advantage of faster deposits and absolutely zero fees. Every time you make a purchase with BTC or ETH, you get 1-3% of your purchase back in Plutons.
Could you tell us more about where you see blockchain technology in the future?
We believe there is huge potential in blockchain technology to positively disrupt our standard methods of payments, trading, and other aspects of our lives. The industry is rapidly growing with a never-ending drive towards more automation, more decentralisation, and less friction. Over the coming years, we believe the use case will reach mainstream products where consumers could have a better user experience without the need to understand or be aware that the blockchain was utilised.
However, that said, private blockchains do not rely on a peer-to-peer network but if an organisation intends to utilise the technology for improved governance, automation and transparency internally then it can work if done right – for now, we remain skeptical.
Do you look at others in the FinTech industry as competitors or do you take a different view?
I have a different view - they help push the industry forward and help us to learn from their mistakes. In many ways, we are doing something completely different.
When you charge your Plutus account with digital currencies, you are actually transferring them directly to a trader on the DEX who has created an order to purchase them in return. This means that our customers can sell and buy digital currencies directly to and from other customers. As a result, Plutus never stores any digital currencies on the platform.
And with recent security concerns on the rise, the benefits of not holding funds are becoming increasingly clear as the blockchain space develops.
What have been the biggest hurdles faced by the company?
Red tape and creating a winning team - both in development and in management. In the blockchain space everyone is competing for talent, while regulators are still very skeptical. This creates a challenging environment.
What is your vision for the future of Plutus? Where do you see the company in 2-3 years?
The aim is to enable users to pay using crypto currency directly with smartphones at any merchants of their choice. And lower the barrier of entry for anyone wanting to buy Pluton, Bitcoin and Ether. This is why we created Plutus Tap and Pay and the PlutusDEX. We also wanted to create decentralise loyalty reward system called Pluton that awards customers for every deposit, which they can then spend anywhere. In the future, we believe the platform will be one of the largest platforms that enables payments via the debit card network in the peer-to-peer market.
We also aim to enable users to make a direct deposit in their Plutus account, using direct bank transfer instead of crypto, who will also receive a reward in Pluton, introducing new users to the blockchain ecosystem.
Initially, we will be releasing physical debit cards, NFC stickers. Our main product will be an iOS and Android app for making contactless purchases, trading and managing your wallets. We plan to add online payments and other nifty features as well.
What are you currently working on?
We are currently working on Plutus Tap & Pay, and the PlutusDEX. Both parts are interconnected and fulfill important roles in our ecosystem. Currently, our live payment systems are already undergoing internal testing. Once the stress-tests have been completed, the PlutusDEX will be released, followed by shipment of the official Plutus Debit Cards.
We are also looking to grow Plutus with new members in key roles - we are currently hiring.
If you could share one piece of advice with young FinTech entrepreneurs, what would it be?
Don't be scared to fail and be prepared to live “the ramen life”.
Website: https://plutus.it
If helping test the platform and coordinating how the future of Plutus Tap & Pay and PlutusDEX will look, why not join the BETA waiting list? http://beta.plutus.it
For more information about Plutus’ long-term ideas, please take a look at “Slingshot from Orbit: The Future Vision of Plutus.it”: https://medium.com/@PlutusIT/slingshot-from-orbit-the-future-vision-of-plutus-it-cf7b69f827ef#.wajh88j3e
Case Study: An Interview with Plutus.it’s CCO - Filip Martinka
Recently, Plutus has been making rounds in London and Berlin, presenting their technology for instant, peer-to-peer, decentralized payment platform. The company’s CCO - Filip Martinka tells us about how the project is coming along.
Why use Bitcoin over Ethereum?
We believe that there are useful aspects to both. The main reason we are using Bitcoin is for its already widespread usage, and Ethereum - for its ability to automate business logic. We want be able to adapt based on demand. Fortunately there are many other projects on the horizon that aim to be natively compatible with the Ethereum virtual machine, so porting the platform may be possible as well.
Why should more merchants accept Bitcoin as payment? What about Ethereum?
We believe that at such an early stage of Bitcoin’s development, convincing merchants is quite challenging. This is why our app is mainly intended for Bitcoin and Ethereum users who are tired of waiting for merchants to accept digital currencies and want to wield the ability to pay regardless of whether the merchant is involved.
Are you planning to integrate with other Decentralized Exchanges?
Initially, our platform will launch with an open API, meaning that 3rd party applications can interface with some features of our system. At the present moment, our development team is focused on finalizing our product. However, once we have a production-ready release, we will look into available options to expand our cooperation with other exchanges, developers and SaaS providers.
What is the reason, in your opinion, that merchant adoption of Bitcoin and cryptocurrencies has been so slow?
It appears that mass adoption is a slow process, and not necessarily a straight line.
Accepting digital currencies still takes a lot of effort, involves friction and regulation, and is often cost intensive. The main problem is that it is not possible for merchants to accurately predict how many Bitcoin purchases they will get in the early stages of adoption. Many get discouraged when they get none, or remove Bitcoin as a payment option for a combination of reasons including training expenses, fees, or technical difficulties.
What can Status do for Plutus?
We appreciate integration into any 3rd party apps, exchanges, or services. All we want is for our users to have optimum interoperability with platforms, and liquidity for our traders. If you have other suggestions please let us know.
How does Plutus benefit from the use of Ethereum?
Our one-way trading gateway integrates an Ethereum smart contract, which makes our platform more transparent and decentralized. Over time, we want to optimize costs, reduce friction, and make the platform more autonomous.
What is the goal you’re hoping to achieve with Plutus?
We want Ethereum, Bitcoin, and other digital currencies to become regular payment options in daily life.
Which other DApps do you think Plutus can benefit the most from?
Exchanges can plug into our platform as well. It will be interesting to see the result.
What do you see as the biggest hurdle(s) in gaining a critical mass for Plutus?
We have to wait for society to get more familiar with digital currencies - until it becomes a topic one can talk about without getting weird looks from strangers. In the beginning, people who earn their income online will be the first to fully adapt to digital currencies. But we believe that this will take less time than most people think.
How do you see Plutus helping people's lives?
Our main goal has always been to provide a convenient payment method, and an easy and affordable way to buy digital currencies.
Is there a level of technical knowledge required by the end-user in order to use Plutus?
Ideally, there will not be more than few clicks required to use any feature. Our team is always thinking of new ways to make Plutus easier to use and navigate.
What is the most exciting feature of Plutus in your opinion?
How it all comes together. The Tap & Pay users deposit Bitcoin and Ethereum, while traders purchase them on the PlutusDEX, and the merchants receive their usual payment from the traders. This makes it possible to add currencies based on demand, and connect other platforms.
What do you think is the most important factor that differentiates Plutus from the non-blockchain(/Ethereum) applications in your field?
The fact that Plutus does not hold any digital currencies, and simply acts as a gateway to connect users with each other and match their trades. This makes the platform more secure and adaptable. And in some ways, the peer-to-peer nature of our exchange makes it more like “localbitcoins” for example, rather than a regular centralized exchange.
What can people in the Ethereum community do to help Plutus?
The main thing would obviously be to use our app, or to purchase digital currencies through our gateway. If you are a developer or entrepreneur, note that our decentralized exchange will have an open API and 0% trading fees for buying any digital currencies, making it ideal for integration in 3rd party software.
Statistics released by the Republic of Estonia show that the number of e-Residency applications now exceeds the yearly number of births in the country. According to official data, the total number of 2017 births to November was 10,269, compared with 11,096 e-Residency applications for the same period.
“With over 27,000 e-Residency applications to date, we’ve seen the initiative’s popularity grow steadily since launch.” said Kaspar Korjus, Programme Lead, e-Residency. “e-Residency offers the freedom for every world citizen to easily start and run a global EU company from anywhere in the world, and as of October 2017, our e-Residents own over 4,000 enterprises.”
The project has attracted applications from over 150 countries from across the globe. Finland topped the applicant list, with the UK coming in 5th place for the total number of submissions when ranked by country. Of those applying for e-Residency, 41% submitted an application in order to start a location independent international business, 27% were looking to bring business to Estonia, 13% stated they were advocates of the initiative and 8% applied to benefit from the programme’s secure authentication technology.
Kaspar Korjus concluded “Estonia is the first country creating a borderless digital society for global citizens by offering e-Residency. Anyone, regardless of nationality or location, can apply for the transnational, government-issued digital identity and benefit from a platform built on inclusion, legitimacy, and transparency.” Companies founded by e-Residents work in a range of industries. Of these sectors, business and management consultancy, computer programming, non-specialised trade, tech consultancy and business support services proved to be the most popular.
“By launching e-Residency, the Estonian government aimed to make Estonia bigger – to grow our digital economy and market with new customers, to spark innovation and attract new investments. We’re delighted with e-Residency's progress to date; but are even more excited to see how the project will grow in the future.”
About e-Residency
Estonia is the first country in the world creating a borderless digital society for global citizens by offering e-Residency. Everyone can apply for this transnational government-issued digital identity and benefit from the e-Residency platform, which is built on inclusion, legitimacy and transparency. E-Residency allows access to Estonia’s public e-services and a variety of e-services provided by international service providers. This provides the freedom for every world citizen to easily start and run a global EU company fully online from anywhere in the world.
E-residents can: open a company within a day and run the company remotely, apply for a business banking account and credit card, conduct e-banking, use international payment service providers, declare taxes, and sign documents digitally. E-Residency does not provide citizenship, tax residency, physical residency or the right to travel to Estonia or EU. The programme was launched in beta mode in December 2014 so that improvements could be made based on the experience of real e-residents already benefiting from the programme. At first, four visits to Estonia were required in order to become an e-resident, establish a company and open a bank account.
In recognition of the potential of e-Residency to help unleash the world’s entrepreneurial potential, the programme has also partnered with the United Nations Conference on Trade and Development to launch eTrade For All, which uses e-Residency to empower entrepreneurs across the developing world and help them access e-commerce.
(Source: the Republic of Estonia)
Here John Milliken, Chief Operating Officer at Infomedia, delves into the statistics and facts of online, mobile and digital payments, how they differ between regions, and why.
According to a report by UNCTAD - the United Nations body on international trade and development - online, mobile and digital currency payment systems are set to overtake credit and debit cards as the most popular ways to pay in e-commerce worldwide by 2019. The research suggests that the share of credit and debit cards in global payments will drop to 46% by 2019 from the 51% forecasted three years ago.
Last year, China’s mobile revenue hit $5.5 trillion, a figure that is 50 times more than the size of America’s $112 billion market, according to consulting firm iResearch. Similarly, in the last year alone, Japan’s e-commerce market was valued at $89 billion, with half of that coming from mobile.
By comparison, in the UK and US, many brands, from retailers to publishers, continue to struggle to deliver a mobile experience that enables a convenient and simple payment method and encourages consumers to spend. As a result, despite the fact that mobile devices have consistently driven the highest levels of engagement compared to any other platform, it continues to experience the lowest conversion rates.
So, what is it the East is doing differently to the West that has caused mobile revenue to sky rocket?
The Asian Mobile Market
The Asian technology industry - particularly mobile - has pulled ahead of what we’ve seen in the West. China and Japan, like many other developing markets, have not followed the pattern of the West in going from physical shops to PC to laptop to smartphone. Instead many consumers are going straight to smartphones without previously owning a fixed internet connection.
According to Zenith’s Mobile Advertising Forecasts for 2017, mobile accounts for 73% of time spent using the internet globally, however in the UK this figure is just 57%. By comparison, in China, internet users reached 668 million in June 2015, and 549 million of those users (almost 90%) access the internet primarily via their mobile devices. In other words, the number of internet users in China is more than twice the population of the US and almost the population of Europe, and most of those individuals are walking around with a smartphone.
With these figures in mind, it’s clear that mobile is prevalent in China - it’s a way of life, not just a medium of communication. On mobile, consumers talk, text, shop, order food, hail taxis, book travel, pay for products and services, deposit money into their bank or transfer money, amongst other things. Most Chinese companies have recognised this, and build their advertising and marketing, customer communication, shopping, purchasing, and even their payment programmes around mobile. In fact, about half of all e-commerce in China happens on mobile, compared to just over a fifth in the US and around a third in the UK.
As a result, rather than focusing on card payments, merchants and mobile operators in China and Japan have worked together to develop truly frictionless mobile payment processes. In China in particular, much of this is driven by mobile payment services via social messaging service WeChat and AliPay, its paypal equivalent. In fact, Alipay recently signed with Starbucks to enable e-payment at all 2,800 Starbucks locations, while at a KFC, diners can pay via Alipay using facial recognition technology. In Japan however, DCB is the most popular payment method accounting for more than 50% of all ‘online’ transactions - a number that has risen consistently over the past five years as more consumers move away from card payments.
It is clear there is an opportunity for brands to deliver the same conversion rates on mobile seen in Japan and China if they are able to adapt to behavioural change. And although the Chinese market appears to be different to the West, it has actually just reached the predicted next stage for all markets quicker. By acknowledging that consumers want the quickest and easiest payment processes, we can also deliver an experience that is frictionless and encourages customers to convert from browsing to spending on mobile. In summary, it is only when brands begin to deliver and offer a mobile first experience that they too, will be able to maximise on the mobile opportunity.
Recent reports indicate some of the biggest household brands have signed up to a new buying service, by which grocery bills could be cut up to 30%, and the need for supermarkets could be eliminated completely.
Companies such as Unilever, Mars, and Reckitt Benckiser have signed agreements to sell directly to their consumers via a new digital platform and tech company, INS. This could also have a direct impact on how brands are able to use customers’ data for loyalty scheme and rewards.
Here, Rob Meakin, Managing Director at Loyalty Pro, comments for Finance Monthly: “The move by brands to offer a more convenient, cheaper service to consumers and cut out supermarkets is a clear attempt to gain some of the market share – and power – of grocery leaders like Tesco and Sainsbury’s and now Amazon, of course. In being able to gather data from their customers more easily, brands are going to create recommendations, rewards and loyalty schemes based on consumer buying patterns. With consumers’ allegiance shifting more away from brands and towards service (same-day and even same-hour delivery), this is an opportunity for brands to reclaim customer loyalty and our advice to retailers is to watch this development very closely and make sure they are prepared to fight for their consumer.
“As data becomes the fuel for any business, retailers need to be actively trying to grow their customer loyalty by utilising the customer data at their fingertips to offer rewards schemes in the same way brands are now likely to. Loyalty points and rewards are a currency themselves, and with household budgets squeezed, consumers will be looking for the best possible deal. They also want to feel valued wherever they shop, rewarded for their custom and loyalty through points, offers and even charitable donations. We live in a society where loyalty can appear dead, but the truth is that it’s simply changed. Consumers still value great service and that can absolutely be delivered by anyone – from a single store high street retailer to a multinational online service. The key is to use data to understand what they want and deliver an experience using personalised and relevant communications which will encourage customer loyalty. With brands about to cut out the middle-man, no retailer can afford to rest on their laurels.”
Russia’s plan to launch its own cryptocurrency, dubbed the ‘CryptoRuble’, is currently unfolding as President Vladimir Putin has given the green light for its go ahead.
This move will put Russia on the digital currency market and consequently allow Russian currency to rival the current cryptocurrency leaders such as Bitcoin, Bitcoin Cash and Ethereum.
Minister Nikolay Nikiforov, the Russian government’s Top Communications Official, says the authorities plan to completely regulate the ‘CryptoRuble’.
“I am so confident to declare that we will run CryptoRuble just for one simple reason: if we don’t, our neighbours in the Eurasian Economic Community will do it in a couple of months,” He told Russia Today.
“When buying and selling a CryptoRuble, the rate will be 13 percent from the earned difference. If the owner cannot explain the reason for the appearance of his CryptoRubles, when converting them into Russian rubles, the tax for him will be 13 percent of the total,” he continued.
However, Andrei Barysevich, Director of Advanced Collection at Recorded Future, seems to think Russia has missed the mark on this matter:
"With the widespread introduction of supporting infrastructure only available to the government-backed cryptocurrency and swift oppressive regulations aimed at bitcoin and other blockchain currencies, the Russian government is frantically attempting to regain the control of the “runaway train" by introducing a legitimate alternative.However, Russian lawmakers seem to be missing the main point.
“Aside from criminals, the majority of the people purchase bitcoins, not because of convenience or anonymity, but rather the staggering profit levels it provides. The Russian Government is unlikely to see a widespread adoption of the CryptoRubles unless Moscow is able to convince people that the value of it will surge."
Do you think governments introducing cryptocurrencies is a strong move in opposition of digital currencies, or that it may actually function via central regulation and oversight?
Odds are that you’ve been hearing more and more about cryptocurrency as digital tokens like bitcoin and ethereum have become valuable commodities. Converts (and investors) say that cryptocurrencies built on blockchain technology represent the future of money, finance, and commerce.
But skeptics say that digital currencies represent crowd-sourced pyramid schemes or are fuel for another tech bubble. We met with Olaf Carlson-Wee, who was the first employee at the cryptocurrency broker Coinbase, where he famously took his entire salary in bitcoin. Now, Carlson-Wee runs a hedge fund that deals exclusively in crypto-assets. We talked with Carlson-Wee in San Francisco about money, trust, and how he made his friends rich.
77% of UK businesses are aware of fintech products and services and two-thirds (65%) have adopted at least one fintech application, with a fifth (19%) taking on four. These adopters reported saving (on average) over £5,500 a year as result of using the fintech products and services.
Interestingly, a tenth (11%) reported using bitcoins or other cryptocurrencies at some point in the past year in processing payments. Whilst the clear majority (89%) have not used cryptocurrencies, a fifth (21%) of these businesses expect these currencies to feature in their payment transactions over the next 12 months.
Businesses reported using fintech products and services for banking transactions (23%) and foreign exchange services (16%). Meanwhile, one in four (24%) reported using cloud-based software for their accountancy functions and a third (32%) used online lenders for business loans or invoice finance. Only 2% of businesses are using insurtech (insurance technology) services.
Bobby Lane, partner at accountancy firm SSH LLP, commented: “Most of our clients are now using cloud-based solutions and automating many of their routine processes. This means that I have more time to focus on advising my clients on strategic matters. Also, it’s now far easier for us to use fintech services because the ability to integrate with these new systems has opened up huge opportunities for improving processes.”
Business leaders are drawn to fintech because it saves time and money (56%) whilst a third (34%) were impressed by the user experience. Interestingly, a quarter (23%) said fintech’s were more transparent on fees and provided a better customer service.
Jerry Anderson, Managing Director at wedding rings company Allied Gold Ltd, commented: We’re a third-generation family business, I have adopted fintech across the business from our accounting to our banking services. The user experience and service is far superior to what is available on the high street.”
Anil Stocker, CEO and co-founder of MarketInvoice commented: “The expansion of tech-driven digital services has been remarkable over the past 5 years. We know that consumers have been adopting tech applications into all parts of their lives, but our research shows that now UK businesses are also becoming tech-savvy.”
“Fintech applications are revolutionising the way business is being done from how employees report their expenses to the way businesses report their financial performance. Entrepreneurs always seek out the best means to drive their businesses and clearly fintech products and services are becoming a stable part of this approach.”
It’s not only business processes that are benefitting from fintech adoption. Companies are using fintech to engage staff. 62% of businesses use fintech adoptions for staff to report expenses (i.e. Expensify) and for payslips automation. A further 23% are using online pre-paid cards (i.e. Revolut) in allocating budgets to teams.
1 Based on FSB statistics show there are 5.5m businesses in the UK, of which 1.3m are employing businesses. The £4.6b is achieved by multiplying 65% of 1.3m businesses by £5,500 (the average annual savings by adopting fintech services).
2 Results are from a MarketInvoice survey of 3,482 UK businesses conducted in August/September 2017. Respondents were manager, director and C-level post holders. The survey was conducted online and by e-mail.
(Source: MarketInvoice)
Richard Meirion-Williams, Head of Financial Services at BJSS discusses how banks can counteract the threat provided by Google, Apple, Facebook and Amazon (GAFA).
It wasn’t long ago that bank branches used to hold personal, trusted relationships with their local customers. However, since the rise of digital banking and the decline of the branch, relationships between bank provider and customer have weakened. While the financial institutions are under pressure to keep up with digital transformation, at the same time demand for a personalised customer experience is high on the banking agenda.
Google, Apple, Facebook and Amazon, the major technology power players, known as GAFA, are transforming the digital banking landscape as we know it. With a huge pool of customer data at their fingertips, GAFA’s move into financial services is simply a natural extension of their current offering. When you consider the vast amount of data that these tech giants can leverage across social media, mobile, customer purchase information and mapping data, GAFA has the ability to provide a highly personalised financial service experience.
For banks to remain central in the lives of consumers, they must provide consistent and fulfilling customer experiences across the digital and physical environment. It’s not just about having access to customers credit or debit accounts, but also a greater/wider insight into their individual customers.
But time is of the essence. Amazon, Apple, Google, Intuit and PayPal have already formed a coalition called Financial Innovation Now to enhance innovation in the financial industry to satisfy the customer need for convenience. The key for traditional financial providers is to act quickly and respond to emerging digital disruptors like GAFA. Banks need to focus on evolving their business models and developing new revenue streams.
4 steps to challenge the GAFA force
Client on-boarding: Banks need to maintain their competitive differentiation and make products available immediately. Recently banks have focused on improving the front-end process. But what about the back-end? By digitising the full spectrum banks can reap the rewards of full end-to-end capabilities. This will mean customers opening an account can get started up in minutes after completing an online application. Making changes to the digital process will also help improve the processes which co-exist in physical branches.
Personalised services and partnering for suppliers and customers: Customer centricity should be at the heart of every business. Banks need to create personalised services to deliver their products using an agile approach. This can be achieved either through the bank or a third-party.
To meet consumer demand for convenience and choice, banks should also look to offer customers “lifestyle” services that can adapt in real-time to fulfil the everyday needs of the banking user. Not only will this help multiply customer interactions but will also help generate new revenue streams.
Leverage Consumers data: Extrapolate customer insights from the vast amount of structured and unstructured customer data using Artificial Intelligence, NLP and cognitive computing. The customer financial information can be leveraged to create market intelligence and to generate new revenue streams.
Create an ecosystem: Banks should take advantage of open environments and create new ecosystems. This could be offering external or white-labelling banking services through open APIs and new partnership models with innovative fintechs or working alongside GAFA. Banks need to develop new products and services on distributed ledgers for transactional access on a continual basis and receive data and events from third parties like Amazon or Apple who can distribute and integrate their products in a broader business environment.
This approach will help counter the GAFA threat and create greater cross and upselling opportunities, along with building customer acquisition, retention and cost optimisation, transforming the cost-to-income ratio from the current average of 63% to hopefully less than 50%*. It is critical for banks to think innovatively and act quickly, otherwise they will become a victim of the GAFA dominance which has already infiltrated other industries.
*Calculation made based on reviewing the published accounts of a number of banks.
A recent report form PwC concludes that UK investment in InsurTech in the second quarter of 2017 surpassed that of the previous three quarters, increasing to $290 million (£218m) in the first half of 2017, compared to $9.7 million (£7.3m) the year before.
Global investment in InsurTech by global insurance firms, reinsurance firms and venture capital companies surged 247% to $985 million.
Mark Boulton, Insurance Sector Lead at Fujitsu UK & Ireland has this to say to Finance Monthly:
“This year has been phenomenal for the insurtech industry in the UK, and these latest figures reflect it. Increasingly, we see the market gaining momentum, and the amalgam of data made available is reshaping the industry in an unparalleled fashion. Investors are coming to much better understand the values that lie within a connected world, from more dynamic customer relationships to personalisation and need for tailor-made solutions.
“Fujitsu’s recent research looking into the UK’s digital landscape showed that nearly 40% of people want the UK to make faster digital progress. As such, insurers need to keep up with the rapidly changing dynamics and unlock the power of technologies.
“Although many insurance companies have digital on their radar, it is important for this industry to take advantage of digital innovation by not only creating savvy online apps and improving the digital elements on the consumer-facing side, but by also implementing digital throughout the business. This will help insurers not only save more, but also become more integrated and process efficient. The amount of deals and investment in the past year are a vote of confidence and now is time UK claims its role as a global insurtech hub.”
Ashok Vaswani, the CEO of Barclays UK talks to Katina Hristova about championing digital skills for all and his outlook for the future.
Barclays has a history of innovation and continues to be a leader when it comes to technological innovation in banking services – tell us more about it.
Barclays has been at the centre of British finance for over 327 years, and in that time, the world has changed beyond recognition. However, the reason we have been able to consistently deliver game-changing innovations throughout all this disruption has been a relentless focus on our customers, their needs and aspirations, and being there for the moments that really matter.
We have 24 million customers in the UK; roughly one in two adults. For me, success isn’t about driving the business to get 25 million customers – it’s about becoming indispensable for the 24 million customers we already have, by continuously making their lives easier, offering greater convenience and delivering value for them.
If we can’t do that, we won’t be around for another 327 years, or even 10 years. In this era of disruption, businesses will become obsolete unless they serve a clear purpose. Our purpose is to help people go forward.
What have been Barclays’ biggest achievements in the past 12 months?
We have been at the forefront of reinventing banking through a focus on great technological innovation with a purpose. I think our biggest achievements have been transforming the business and its culture as well as creating Barclays UK; a business that is truly fit to meet customers' needs and expectations in the digital age.
As part of that, we have rolled out a number of technology solutions to make our customers’ lives much easier, such as instant cheque imaging and video banking. Barclays was also the first bank to introduce contactless cash; a completely new way for customers to withdraw their cash using their Android smartphone or their debit card’s contactless technology.
We have also launched automated valuations for home purchases, shaving days off the processing time. Mortgage Agreement in Principle has also been introduced into 338 branches, allowing customers to obtain a mortgage decision in less than 15 minutes.
New digital processes have also helped improve the on-boarding of Business customers, and the introduction of pre-approved credit limits for Business customers has reduced the time required for customers to request an unsecured loan of less than £25,000 from five days to a matter of minutes.
In addition, we have opened 12 Eagle Labs, sites where people can use new technologies such as 3D printers and laser-cutters and which help facilitate small business growth in local communities.
We have also demonstrated a strong commitment to using technology to enhance customer security; Barclays was the first bank to pioneer finger-vein technology in the UK, and we are working to tackle fraud through innovations like voice biometrics, which over 750,000 customers have now registered for.
How would you evaluate the impact that you’ve had on Barclays achieving all of this?
In creating Barclays UK, I have set out three mains goals for the business:
- Continually demonstrating how we are putting customers first by providing value and making their lives easier.
- Demonstrating our commitment to supporting the UK economy.
- Fundamentally rebuilding trust in Barclays and reinstate pride in our profession by putting customers at the heart of everything we do.
Barclays UK has already made significant progress in achieving these strategic aims, and we have done this by putting the customer at the heart of everything we do.
Our investment in technology sets us apart, putting us at the forefront of innovation in the banking sector, delivering products and services that improve people’s experience, enhance accessibility and offer quicker and more convenient choices for customers.
At the same time, we have been working to make sure that no one is left behind in the digital revolution.
Our Digital Eagles have so far helped to support over 100,000 customers to become more digitally confident through dedicated Tea and Teach Sessions in our local branches, as well as delivering Code Playground sessions to teach young people basic coding skills.
We’ve also introduced the Digital Driving License, a free app through which users can earn a City & Guilds digital skills qualification, boosting their digital skills and confidence.
In 2017, Barclays UK launched its latest campaign to promote digital safety, a major nationwide initiative to raise awareness of cybercrime and help people protect themselves from fraud and scams. Since the campaign launched in May, it has already helped 2.5m people take action to become more digitally safe.
We have also pioneered Beacon Technology, improving the level of in-branch service offered to customers with disabilities, as well as SignVideo, which allows deaf people who use British Sign Language instant access to an interpreter via the in-branch colleague iPads. Talking ATMs, supersize card readers and high-visibility debit cards have also been launched for the visually impaired.
In addition to championing accessibility, we want to ensure we are doing the right thing by society as a whole. As part of our commitment to helping people move forward in their lives, we run a number of skills and employability programmes, for example, the Barclays apprenticeship scheme, through which over 3,000 apprentices have already been offered employment. I also support the Armed Forces Transition, Employment and Resettlement (AFTER) programme, which provides work placements, employment opportunities, CV and interview coaching, and money management sessions, as well as funding for education and vocational courses for service leavers.
We also have the LifeSkills Programme, which provides schools with a range of free, curriculum-linked lesson plans, workshops and resources designed to help 11-19 years olds to develop the skills employers most seek. To date, over 4.3m young people have been reached through the LifeSkills programme via either in-school lessons or directly online.
I believe we are beginning to rebuild the trust and reputation of the banking industry, but I know we still have some way to go. However, by remaining committed to the strategy of putting customers and clients first, serving our economy and earning trust, I want to build a solid foundation on which we can grow. Barclays is creating a bank that is truly good for customers and clients, good for businesses and good for Britain.
As CEO of Barclays UK, how do you ensure you are directing the company in the correct direction? How do you advise your team to make the correct decisions for the company alongside your customers?
The thing I ask myself every time I make a decision is: “are we doing the right thing for the customer?”. I learned a lot from my Mum growing up, and one of the principles that has always stuck with me is that there is no substitute for integrity. Integrity isn’t just about what you write down as your mission statement, it’s also about how people behave when no-one is looking.
When it comes to my team, another thing that my Mum taught me is the importance of humility, that is to be ready to admit I don’t have all the answers, which is why I need many brilliant minds working to deliver our game-changing innovations.
I sincerely believe everyone needs to keep learning throughout their career. We can no longer rely on what we learnt at school to last a lifetime. I encourage everyone at Barclays to keep learning, particularly digital skills, and to develop an entrepreneurial mind-set.
What was your main motivation behind being the CEO of Barclays UK and what is the most rewarding aspect of your role?
The most rewarding thing about the role is the opportunity to work for millions of people.
In terms of how I got here, as a kid in Mumbai, my Mum wanted me to be a Doctor. When I said I didn’t want to do that, she actually took me to see my local bank manager to ask what he thought a good job would be.
I’ve since come to realise that the role of a bank manager is really at the centre of a community, and I have him to thank for the fact I became a Chartered Accountant. After that, I moved to Dubai aged 27 with $10 in my pocket, and met my wife there. That was the start of a fascinating journey working around the world.
What are your plans for the company for the rest of 2017 and beyond?
There are some exciting times ahead, with next year’s PSD2 and data protection regulation set to transform the shape of the digital economy. Barclays has all of the right ingredients to remain a leader in financial services, but we must be prepared and remain agile in order to take full advantage of the coming changes.
In the longer term, customer expectations are no longer confined to one industry – we are being judged not against other banks, but against the best in class from across our customers’ favourite brands. Is Barclays a bank, an information business or a technology company? We’re all three. But we will never lose that central focus on the customer, and that’s how we will thrive in a truly connected world.
By Adam Oldfield, Vice President Sales EMEA Financial Services at Unisys
The financial services market continues to evolve digitally to meet the rising expectations of customers, particularly in relation to their experience with digital and in-store services. Consumers expect banks to be accessible 24/7, from any location, and any device. As a result, security of access continues to be front of mind for everyone in the financial services industry, and the challenges that come with it.
Multifactor authentication built into modern applications, the use of biometrics or analytics as well as artificial intelligence are all needed to be interwoven in the modern environment to keep security capabilities at a high – but why is cybersecurity such a pressing factor in the market over the last few months?
Legislative drivers
It is widely known about the multitude of financial, and reputational, incentives tied to increasing security standards in order to be compliant with a variety of legislative drivers, with the biggest and most impactful deadline being the General Data Protection Regulation. The GDPR brings consistency to the current data protection laws across EU member states, and provides guidance on how customer data should be stored and how companies must respond in the event of a data breach.
It is widely known about the multitude of financial and reputational incentives tied to increasing security standards in order to be compliant with a variety of legislative drivers, with the biggest and most impactful deadline being the General Data Protection Regulation.
The GDPR brings consistency to the current data protection laws across EU member states and provides guidance on how customer data should be stored, as well as how companies must respond in the event of a data breach. As we move towards the 2018 deadline a large proportion of companies including financial services, are still unsure on what they need to specifically do in order to be as compliant as possible.
Therefore, we are continuing to see the demand for cybersecurity advisory services, personnel as well as solutions at an all-time high - demanding higher and higher shares of annual and quarterly budgets within financial institutions.
The threat landscape and impending legislation has meant cybersecurity has moved from a once discretionary spend to a mandatory one in recent months. Financial services organisations are rapidly restructuring teams, hiring new talent and most importantly seeking advisory services to manage the journey to compliance. Cybersecurity maturity levels held with each organisation in the market also fluctuate, meaning each company has a different set of requirements, goals and timeframes to abide by.
However, legislative drivers forcing financial institutions to treat customer data with the utmost care are not withheld to just the GDPR. The Payment Services Directive (PSD2) and the 2018 mandate set by the Competition and Markets Authority (CMA) are some of the key drivers to raising data protection and security requirements as well as market standards, having a particular impact at the decision making, forecasting and budgeting level.
These legislative drivers will continue to move security up to a boardroom discussion, with advisory services taking the front line of demand as well as budget. As we move towards 2018, the stopwatch is on for new entrants, as well as established players to restructure teams, align ecosystems and improve data management. They must also fine tune effective cyber breach response strategies to ensure the legislations and regulations put in place have a positive impact on their business and customers.
No organisation is immune
Many financial services organisations are aware of technological developments taking place throughout security, as well as the evolving security postures needed to combat threats and reduce routes to entry. Biometric authentication is an example of this that adds an additional layer of personalised security for data and account protection purposes. The plethora of high-profile attacks, such as Petya and Wannacry, highlight how no organisation or industry, including financial services, is immune.
The need for flexibility and responsiveness is paramount in this ever-changing landscape, not only legislatively but operationally, driving companies to pull together best in breed solutions to ensure capabilities match fluctuating threats. Legislatively the PSD2, for example, forces organisations to contract and conduct payments in a certain way, as well as effectively store and protect sensitive data. In comparison, the CMA 2018 mandate is forcing all financial services providers to offer customers the ability to manage their products, regardless of provider, via a single mobile application of their choice. Operationally, customers are demanding seamless payment and verification options with a 24/7 responsive service. A best in breed and reactive approach is capable of managing these demands, meaning flexible and intuitive ecosystems for application roll out can be the route to success, and gone are the days of using one provider for everything.
Oracle and the MIT Technology Review recently released a new study that highlights the importance of collaboration between finance and human resources (HR) teams with a unified cloud. The study, Finance and HR: The Cloud’s New Power Partnership, outlines how a holistic view into finance and HR information, delivered via cloud technology, empowers organizations to better manage continuous change.
Based on a global survey of 700 C-level executives and finance, HR, and IT managers, the study found that a shared finance and HR cloud system is a critical component of successful cloud transformation initiatives. Among the benefits of integrating enterprise resource planning (ERP) and human capital management (HCM) systems is easier tracking and forecasting of employee costs for budgeting purposes. Additionally, integrated HCM and ERP cloud systems improve collaboration between departments, with 37 percent of respondents noting that they use the cloud to improve the way data is shared.
The report also reveals the human factors behind a successful cloud implementation, with employees’ ability to adapt to change standing out as critical. Among organizations that have fully deployed the cloud, almost half (46 percent) say they have seen their ability to reshape or resize the organization improve significantly – as do 47 percent of C-level respondents.
The productivity benefits have also been significant. Nearly one-third of respondents (31 percent) say they spend less time doing manual work within their department as a result of moving to the cloud and that the automation of processes has freed up time to work toward larger strategic priorities.
“As finance and HR increasingly lead strategic organizational transformation, ROI comes not only with financial savings for the organization, but also from the new insights and visibility into the business HR and finance gain with the cloud. People are at the heart of any company’s success and this is why we are seeing finance and HR executives lead cloud transformation initiatives,” said Dee Houchen, Senior Director of ERP Solutions at Oracle. “In addition, improved collaboration between departments enables organizations to manage the changes ahead and sets the blueprint for the rest of the organization’s cloud shift.”
The survey also reveals there is a blurring of lines between functions and individual roles as the cloud increasingly ties back office systems together:
- Increased Collaboration: 46 percent of finance and HR professionals say a full cloud deployment has led to significantly improved collaboration between departments, and nearly half expect a significant improvement in the next two years.
- This extends to IT as well. 52 percent of C-level respondents said the relationship between IT, HR and finance is even better than expected following their cloud implementation
- Cross-Corporate Intermingling: With the new roles of HR and finance professionals requiring them to work more closely with data and the cloud, 43 percent of businesses plan to bring IT people into these departments to help employees take advantage of new technologies.
- New Skillsets: Desired skills respondents want to improve upon include:
- Time management, with 40 percent saying this is currently an issue
- Active learning
- Problem solving, mathematical reasoning and analytical skills
- The IT function also changes. Post-deployment, 56 percent of C-level respondents report that IT has significantly improved when it comes to producing innovations.
Andy Campbell, HCM Strategy Director at Oracle added: “As organizations navigate technological changes, it’s critical for the C-suite to empower its employees to evolve their individual business acumen. Many businesses understand this and it’s encouraging to see 42 percent planning to provide their teams with management skills training to help them break out of their traditional back-office roles. The learnings from the move of finance and HR to the cloud will ultimately spread across the organization as, together, they conceptualize the shape of the next disruption.”
(Source: Oracle)
