These are just three innovative examples of accessible designing that led to wider adoption, beyond the intended user subgroup. This very theme underpinned the keynote speech during this year’s Diversity Project’s Accessibility webinar on Global Accessibility Day and comes up, recurringly, in research, about improved experiences for diverse groups when we get the design process right for people with a disability.

Change and Transformation

Digital transformation in the investment and savings sector is recognised as being behind; attributed to a culture of traditionalism and inertia, due to a lack of industry diversity.  However, asset and wealth management firms have historically serviced very traditional investor and adviser communities – with their own inertia and habitual behaviours. Technology and regulation also play their part; legacy operating systems lack interoperability and agility, while mandatory post-MIFID changes have hindered more creative-led initiatives. Looking ahead, is change on the horizon as we navigate through a global pandemic and uncertain future?

In 2020, two significant changes brought with them new ways of thinking; mounting pressure on firms to commit to ESG policies and an acceleration of online investors. According to a US study, companies committing to accessible inclusion under their ESG frameworks achieved a 28% higher return, while investment platforms reported significant growth, particularly from home-based working millennials, during the pandemic and periods of market price swing – bringing down the average investor age. Either side of this demographic is a next-generation cohort entering the workforce under auto-enrolment pension schemes, within an ageing population. By 2037, 1 in 4 of us, in the UK, are expected to be aged 65 and over.

Intergenerational needs

This intergenerational spread is transforming and reshaping our population. Future digital engagement requires a coexistent, yet differentiated, model. With more conditions, including Autism Spectrum Disorder (ASD) and Dyslexia, being correctly identified, and diagnosed, demand for accessibility in younger generations is increasing.  Nearly 1 in 5 people live with a disability, with a household spending and saving power of £274 billion.

As our population’s median age shifts towards later years, inclusive design practice must address the contextual and everchanging needs of vulnerable savers and those experiencing ageing functional limitations. As older investors live longer and move through their later-life stages, many will be affected by undiagnosed conditions: visual and hearing impairment, deterioration of fine motor skills and cognitive decline. By 2050, visual impairment in the UK is estimated to affect 4.1 million people, currently 2.1 million. Those aged 55 to 64-years old today, will move into the older age category over the next ten years; many already digitally connected and engaged across social media platforms.  This will shift much of our future focus towards digital experience and retention of older investors.

Practical approaches

Despite legislation and guidelines designed to support protected characteristics, many users remain affected by accessibility challenges. Digital inclusion goes beyond a checklist and disclosure statement. Primarily, it’s about user interaction. Four core experiences that firms should empathetically build into their designs are:

• Physical experience – all user movement as part of the interaction.
• Cognitive experience – time to digest and understand content.
• Auditory experience – sound quality, with alternative option experiences.
• Visual experience – colour contrast/fonts, column structuring and logical ordering.

Accessible designing involves hours of work and effort to adapt formats and channels, across language jurisdictions. Integrating universal design principles from the beginning of a project is less costly and complicated than attempting to adapt post-live products, with a blend of human and artificial intelligence, optimising the investor experience. Prototypes across all media – chatbots, websites, apps, video, print and email – should contain inclusive functionality; while wider test groups will help to capture real-life user experiences, without biased or pre-determined outcomes.

Design concepts should be as much about connecting customer journeys, as they are about making individual touchpoints accessible. A single Customer Communication Management (CCM) platform, integrating multiple data sources, offers greater personalised experiences and, therefore, a higher opportunity for inclusion - from incoming-to-outgoing messages, for both digital and traditional media. While documents should be adaptable to the screen size of any device, the FCA’s newly proposed Consumer Duty principles question how digestible lengthy T&Cs are via digital devices.

The most effective design solutions can still fail to address non-physical barriers. Online mistrust and investment complexity can lead to financial exclusion. Of 3.8 million cases of UK fraud, 15% were committed via digital channels, as opposed to 1%  through postal correspondence.  Developing secure and easy-to-use authentication, email encryption and signposting safety techniques can improve security for retail investors. Language remediation and localised translation can powerfully enhance an investor’s understanding and increase the digestion of information through a simplified or converted format.  This includes the use of plain language, avoiding jargon and reducing heavily formatted content - across interactive, visual and auditory channels for communications including, Key Investor Documents (KIDs) and bereavement instructions.

Conclusion

Inclusive marketing and communications are about creating the right interactions at the optimal time, under an investor-centric approach. Overcoming industry barriers built around institutional practices and regulatory restrictions can lead to adaptive cultural change and harness innovation, as wider technology evolves and improves accessible functionality. Ultimately, this combination will create stronger outcomes across the diverse needs of everyday savers.

John Dovey, Paragon Customer Communications

John Dovey is Client Relationship Director – Asset Wealth & Pensions at Paragon Customer Communications, a leading provider of end-to-end omnichannel services for regulatory and transactional communication solutions for some of the world’s foremost financial services companies.

He has worked closely in the financial services industry for almost two decades, driving customer engagement and outcomes in communication and digital strategy. During that time he has worked with, and supported, various organisations and stakeholders across the industry to deliver outstanding experiences.

With a range of experience and an extensive knowledge in both client and vendor roles within financial services, John is equipped with a deep understanding of industry challenges and regulatory requirements, including changing consumer trends in the market.

Michael Worledge, Head of Financial Services Research at Harris Interactive explains what brands should know about digital transformation in financial services.

Faced with layoffs, job uncertainty, and an economy in flux, consumers worldwide have become far more conscious. They report thinking more about saving and budgeting than they have in the past, and many have prioritized sound investments with well-known providers. At the same time, their once-low confidence around spending is seeing a slow and steady increase.

Recent data shows that consumers are at a point where they’re ready to spend—and save—more. But what about how they’re doing it, and the role that digital financial management plays?  

Let’s look at where consumers are with this digital transformation right now, according to real-time data from our UK Financial Services Sentiment Indicator tracker and our wider Global Barometer. This is especially important for brands because the more understanding and data you can put behind the answer, the better informed your decisions become—and the lower the risk attached to it.

Financial management is forever changed with a rise in “digital first.”

The financial landscape is changing in terms of consumer engagement with internet banking, online payments, digital wallets, and other elements surrounding the transition from traditional to digital financial management.

Digital options play a much more prominent role in normal life than they ever have before. Between the pandemic limiting the ability to visit branches in-person and the resulting pressure on call centres, many have decided that the most remote option is safest. 

As a result:

• Two in five people worldwide say they manage their finances online more than they did 12 months ago.
• A growing number of consumers say they’ll never revert back to how they previously managed finances, ranging from 61% in China to 26% in Japan.
• The UK Financial Services Sentiment Indicator shows that 60% of consumers are comfortable with managing finances exclusively online.

Nearly half of consumers have been influenced by the digital transformation so much in the past year that their behaviour has changed significantly—and, most likely, permanently.

Different age groups show different comfort levels with managing finances digitally

The pandemic forced the adoption of digital alternatives to in-person banking across the board. But just because digital financial management has become far more common doesn’t mean that it has been as easily adopted for every demographic. 

While more than half of consumers ages 55+ say they’re comfortable using self-serve, online-only channels to manage their finances, they show more hesitation over other aspects of online money management, including:

• Frequently using their mobile devices to make payments, at 19%, compared to 48% of consumers ages 35-54 and 56% ages 18-34.
• Twenty-eight percent claim a comfort level using social media and apps to communicate with financial providers, which is well below average compared to consumers 35-54 (44%) and ages 18-34 (54%).

Still, 40% of respondents from each of the three age groups studied here all agree on the importance of having physical bank branches—an area where the 55+ demographic is right on par with those ages 18-54.

Digital wallets are becoming more popular

It’s important to remember that consumers can use digital in their daily lives without having to log into providers’ apps and websites. This is evident at checkout, where more consumers are reaching to pay with their phones instead of their wallets. That’s because digital brands are connecting with customers through the digital wallet, as with Google Pay, Apple Pay, and more. 

In fact, the data shows that digital wallets are becoming a way of life:

• In November 2020, 31% of consumers reported having no need for physical credit or debit cards because they can just use their phone — up from 20% just ten months earlier.
• In November 2020, 37% reported that they’d find it difficult to pay for anything without their phone.
• Today, nearly 50% of consumers report using their phone as a payment tool.

The digital wallet has become a key part of life as smart technology becomes the new normal in activities, financial management, and even in communication via apps like WhatsApp.

Regardless of digital options, consumers support brands that align with their values

Values are of core importance to today’s buyers; they want to know what the companies they’re supporting stand for. This is so crucial, in fact, that:

• 38% of consumers report that they’ve stopped supporting brands that don’t align with their values.
• 57% of consumers report being more likely to support brands that reflect their own values.

Regardless of providing digital options that offer convenience, security, and peace of mind, it’s more important than ever for brands to stand for something and to clearly and continually communicate this to customers. Only a quarter of consumers say they’ll keep supporting brands whose priorities don’t align with their own.

As the data shows, digital is here to stay—and its importance continues to gather momentum across countries and profiles. Brands must stay on top of these ever-evolving trends to make lasting, meaningful connections with their target audience.

To learn more about how you can aid your New Product Development, download our latest eBook guide here. 

Organisations have had to rethink their entire business models, new players have sprung up seemingly from nowhere, and consumer behaviour has completely changed. Of course, more transactions are now taking place online and the use of cash is dwindling.  

But while digital payments are dominating the ecosystem in regions such as the Nordics and the UK, there are some key markets in Europe where there is still a way to go. Both Spain and Germany, for instance, still have fairly low rates of card usage and digital payment adoption with cash still used in around 40% of in-person transactions in Spain, rising to 44% in Germany, according to figures from PCM. 

However, while these statistics suggest that digital payments still have a long way to go in these markets, it could also indicate that a boom is set to happen. Indeed, the growth seen in the Spanish e-commerce sector, for example, and Germany’s creation of a common standard for open Application Programming Interfaces (APIs) through the Berlin Group suggest that further revolutionary changes could be just around the corner. Kriya Patel, CEO of Transact Payments, explores the massive untapped potential of the Spanish and German markets, highlighting the opportunities for innovative incumbents and agile new players. 

Spain: Modernisation will drive a boom in digital payments

Spain has a developed payments market, with 86.3 million credit, debit and charge cards used by a population of 47 million for 5.58 billion payments with a value of €210.56 billion via 1.7 million point of sale (POS) terminals and more than 115,000 online merchants. But as mentioned above, cash use remains relatively high suggesting there are still opportunities for cards to replace cash.

The foundations for huge growth in digital payments already exist. Spain’s three major payment systems merged into a single provider, SistemaPay in 2018. As well as rationalising the previously complex infrastructure, Spain’s banks and regulators have upgraded and modernised the technologies that power their payments system. This has led to the enablement of instant payments and other services, while regulatory sandboxes have provided a catalyst for trials of new payment methods between FinTechs and banks.

While all European markets saw a rise in e-commerce during COVID-19, Spain enjoyed the fastest growth in this sector among all Southern European nations at 15%, with e-commerce accounting for double the proportion of national GDP compared to the UK, at 4.5% compared to 2.25% of total GDP.

As well as e-commerce, contactless transactions for in-person payments grew during the pandemic. Spain’s smaller merchants are continuing to open up to electronic payment both in-store and online.

Having previously been something of a desert in terms of opportunities for payments players — largely because of its bureaucratic systems and standard debit-led card portfolios — the outlook is now much brighter. The modernisation of its payment systems and speed of digitisation means issuers could be set for a boom in business over the next three to five years.

Germany: Embracing PSD2 to drive massive growth

Meanwhile in Germany, the growth potential is even more obvious. While the country is unarguably Europe’s economic powerhouse and a global leader in banking, there is still relatively high use of cash, while card use is not as high as some other regions, with 153 million cards held by a population of 84 million people — just under two cards per person. These cards were used for 6.29 billion payments with a total value of €350 billion via 1.15 million POS terminals and online in 2019.

Like Spain, there are solid foundations for digital payments players to build on. Digital transactions are expected to grow at a compound annual growth rate of around 11% in the next few years. While debit cards are most commonly used to pay online, low digital wallet use at just 7% suggests an openness to new solutions other than wallets.

Germany has not sat on its hands when it comes to embracing the EU’s PSD2 regulations. The Berlin Group has created a common standard for open APIs, opening the way for innovative players to muscle into the payments market. With a high number of permissioned intermediaries now able to deliver payments services thanks to the new regulations, smaller companies in Germany now have better options for accepting payments, reducing their reliance on more expensive third-party players.

There are also plans to bring together Germany’s various instant peer-to-peer (P2P) and person-to-business payments schemes. Instant payments are experiencing very rapid growth in Germany, though with only 20% of banks offering this function the room for growth is obvious. Look out for “PayX” — a merger between schemes like Geldkart, Paydirekt and Kwitt — in the coming months and years.

Overall, there look to be plenty of opportunities for players in the payments space to take advantage of in these two key European markets. While restrictive infrastructure has previously made these two nations something of a challenge for payments innovators, recent regulatory and systemic changes coupled with public appetite for new services make Spain and Germany an exciting place to be right now. 

The benefits of this change are many including time-saving. If your business is a little behind on typing and printing the records or filling out forms manually then it could take a lot of time whereas, by going digital, you can easily save this time. Along with this, there are several economic benefits of going paperless and as more businesses would make the transition towards digital solutions, they would be getting the benefits of cost savings while becoming cleaner and greener. Let’s have a look at the financial benefits of going paperless for your business.

1. Customers Want Everything To Be Digital

Any business would want to make their customers happy and in the 21st century, you would rarely find any customer that would be interested in slow paper-based transactions. Customers find paper-based transactions to be slow, unreliable, and inconvenient in this digital age. No one wants to wait for a long time just to make transactions. Customers expect a quick and seamless experience in all aspects, whether it is interacting with your business, transactions, or any other business aspect. If you want your business to flourish, have a satisfied customer base, and more referrals from your customers then you gotta deliver on what your customers want and nowadays customers want everything to be digital because being able to access everything from their mobile phone or tablet or PC makes this an ideal and convenient choice. If you are not delivering on what your customers want and expect from you then you are basically putting your brand and business at risk.

2. Reduced Stationery Costs

It was a no-brainer for executives who realised that if they made this transition and went paperless then they could save a lot of money over time which would help increase their revenues. For a big business, there are a lot of expenses involved with the documents, including the cost of paper, buying a printer, cost of printer ink, and other factors, however, by going paperless, you are virtually saving all of this money. Plus, when you are going digital then you need to buy any paid tool to make changes or edit the documents as there are tons of free tools available for free in every digital document format out there. For instance, the most popular document format in the world, PDF has a lot of different tools available including PDF Editor, PDF Compressor, Excel to PDF Converter, JPG to PDF Converter, Word to PDF Converter, etc. A company that has a lot of clients can save a lot of money just by making invoices. It has been reported that an apartment management firm, Bell Partners, is able to save up to $100,000 every year after choosing e-invoices over traditional paper invoices. 

3. Saves Time & Increases Productivity

In today’s age, time is everything and while dealing with paper documents, your employees and team members spend a lot of time printing, scanning, faxing, and posting documents. Not to mention the documents that they have to look for here and there and chasing documents that have not yet arrived in the post. All of this can lead to huge amounts of hours wasted every year because of document management.  However, if you were to go paperless then all of this time would be saved as everything would be done digitally. It will allow you to save time and in this age of timelessness, time is money. Plus, it would also enable you to improve the productivity in your office because your team members would be able to focus on more meaningful tasks instead of getting involved in printing documents, scanning documents, posting documents, etc.

4. You Won't Lose Out To Your Competitors

Since most of the companies and businesses around the world have made this transition, if you are making this change then you won’t be losing out to your competitors. Your customers would be expecting a paperless and digital approach from you, whether it is for a sales agreement, invoicing, service contract, or any other thing that the customers require. When you will be providing everything digitally to the customers then you won’t have the risk of losing your customers to your competitors since you are providing your customers with everything that they asked for.

5. Customer Data Is Safe Digitally

By going digital, you are also storing the crucial customer data digitally in the cloud that is actually safer than on a paper document. You can save the document in a safe and secure cloud database where it cannot be accessed by anyone and in this way, the all-important customer data remains secure which affirms the customers that they can count on you.

At the same time, UK firms borrowed more than £100bn last year. While this was predominantly driven by government-guaranteed lending, demand for borrowing is likely to remain strong as SMEs recover and government schemes are withdrawn. Many will return to non-borrowing ways but there is also a case for businesses who may have had their first taste of borrowing and will seek finance to thrive rather than survive - particularly as the cost of borrowing remains relatively low.

Other forms of lending will come to the fore to supplement mainstream solutions such as overdrafts and term loans - asset-based lending is one such model set to play a significant role in offering support to businesses. To meet the rising levels of demand, lenders should be prepared to leverage their digital capabilities to streamline customer journeys, improve risk mitigation and enhance transparency between lender and borrower.

Operational excellence: customer experience and business value

The demand for lenders to create frictionless digital journeys for their customers was growing well before COVID-19, but there is no doubt that the need to streamline communication and digital interaction between lenders and borrowers has become increasingly important and is often the preferred channel for many businesses. With the advent of cloud computing and the drive to greater transparency, led by the Open Banking initiative, the business community is more minded to share data with trusted partners.

But leveraging digital capabilities to improve customer journeys goes beyond just enhancing the customer experience and while borrowers benefit from faster access to working capital, lenders themselves are better able to reduce risk and make informed judgements about the businesses they lend to. For lenders, the access to enhanced data provides superior insight into how they can support customers now and, in the future, and ultimately improve margins.

By utilising online solutions that allow clients to self-serve their funding needs, lenders can achieve excellent operational efficiencies and high levels of customisation, also delivering reliable and secure solutions that offer customers a better overall experience and financial support at the click of a button.

Greater visibility driven by open accounting

In an increasingly data-driven world, lenders are looking towards “open accounting” to provide greater visibility on the financial performance of the businesses to which they are lending. Lending decisions can be made much more quickly by an asset-based lender if they have the trading history of the borrower, with full transparency of sales, purchase ledgers and cash movements at their fingertips.

Open accounting can provide information vital for the lender to manage risk and optimise the funding available. Checks and assessments are completed in a fraction of the time, and with much less friction than with manual processes. Lenders who have access to their clients’ accounting data are in a far stronger position to streamline operations and deliver customer satisfaction.

A modern solution 

Taking advantage of such digital capabilities offers clear appeal to asset-based lenders, but they must ensure they deliver holistic solutions to meet their needs and customer demands, rather than delivering quick fixes which overlook the overall experience and entire digital infrastructure.

By utilising online solutions that allow clients to self-serve their funding needs, lenders can achieve excellent operational efficiencies and high levels of customisation, also delivering reliable and secure solutions that offer customers a better overall experience and financial support at the click of a button.

Overall, digitalisation has been both a natural solution to reducing friction and increasing efficiency for lenders and clients alike and a key tool in dealing with the intense demands placed on lenders during a challenging economic cycle.

In an increasingly competitive environment lenders need to continue providing advanced digitalisation offerings, such as ever-evolving streamlined journeys which build trust, speak to customer needs, and accelerate outcomes, and look to leverage open accounting to enhance insight into business performance and inform lending decisions. This evolving digital landscape is a benefit to lenders and borrowers alike as they tackle the challenges of a post-pandemic future.

In July, the European Central Bank (ECB) announced its plans to launch a digital currency. In response to a rise in online payments and the potential threat that could come from others issuing a digital means of payment, the ECB has decided to press ahead with its own digital currency. This aims to help protect its monetary sovereignty by attempting to limit the use of rival means of payment.

This will not be a quick process. The next two years will be spent on design and tests, followed by a launch three years later. However, the announcement highlights that traditional fiat currency won’t be the sole payments method in years to come. Of course, this move does not mean the same will happen for the UK, but with Rishi Sunak and the Bank of England making warm noises about digital currencies, it’s unlikely the UK won’t follow suit.

Will Digital Currencies Work as Cash Replacements?

Of course, there are many questions swirling around digital currencies – namely if they’ll be a digital version of cash, if they will eventually replace cash or just simplify cross-border payments – but the fact of the matter is cash appears to be becoming digital, meaning banks need to get ready, even if the day-to-day reality could be years away.

Taking a step back from this new development, it’s fair to say financial services was already in flux, with the pandemic turbo-charging many of these shifts. Previously, banks, building societies, pension providers and wealth management had defined roles within the market, and whilst there was some interaction between the providers, people had their pots of money and tended not to move them around. In short, loyalty mattered. But this, like many other aspects of financial services has now changed. New entrants are flooding the market and offering platforms that bring vendors together thanks to Open Banking enablement. Therefore, consumers are flooded with choice. It’s now simple to amalgamate pensions or to transfer ISAs to get a better rate. Plus, with digitalisation, self-service is now positively encouraged. One clear example being online brokerages disrupting the investment space and allowing consumers to own snippets of companies, instead of requiring payment for full shares. Consumers are used to a digital financial life – so why not extend this to currency?

The world is moving towards a more digitised way of life – and banking, payments, savings and investments are certainly part of this shift.

No matter where a company sits within financial services, it’s clear that if digital currencies become reality, firms will need to accept them, which throws up multiple issues. Integration with fiat currency is perhaps the most pressing.  However, the growth of cryptocurrencies over the last five to ten years and their recent acceptance by large institutions, shows there’s a clear trend. Financial portfolios should no longer be cash, bonds or equities – a small exposure can be digital. For me, this coupled with the concept of digital Pounds, Euros, Dollars or Yen, signals it’s time for banks to start thinking at the very least what measures should be put in place to lay the foundations for adoption. Surely commercial entities could benefit from showing customers they’re ready to take action, and providing an alternative to investment platforms as a source and store of these assets?

But what’s required? Here are five key aspects which can help determine a starter strategy.

1. System resilience

Like any fiat system, digital currencies would need to be considered critical national infrastructure – meaning uptime and defence are impenetrable 24/7, 365 days per year. Aside from this requirement, the new system would need to be protected from cyberattacks, whilst also handling high volumes of transactions. Systems should be able to process transactions immediately (or as instantaneously as possible) along with having strong privacy protections.

For banks looking to support and facilitate a lot of this traffic, leveraging blockchain seems the most logical choice, as the roles they will play in these transactions will be different to a normal transfer. Whilst money may well flow from one account to another, banks will also likely be responsible for updating the record of who owns which Central Bank Digital Currency (CBDC) balance. Of course, technicalities are still to be worked out as to how money will move around, but it’s likely the CBDC itself would be a cash-like claim on the central bank. This way, the central bank avoids the operational tasks of opening accounts and administering payments. Banks can continue to perform retail payment services, meaning there are no balance sheet concerns with private sector intermediaries. This in turn helps boost operational resilience, as this architecture allows the central bank to operate backup systems in case the private sector runs into technical outages.

2. IT infrastructure

The potential introduction of digital currencies will be a testing experience for many – especially while we don’t know if it will come to fruition, or how it will work. Inevitably that will lead to a lot of speculation. One thing is for sure though, it may well require an overhaul of technology to integrate it, which will have repercussions for the IT stack. Unfortunately, technology to support such initiatives are likely to be considered ‘new’ to the majority of existing financial service organisations.

It’s well known that many banks struggle with legacy technology. They are not alone in that and big names across other industries have the same problem. The problem the banks have is that they’ll be the ones facilitating most of the transactions, whereas other players (retailers, for example) will mostly be receiving them. Whilst I don’t believe integration won’t be a problem for newer neobanks, they are in a far stronger position than their older rivals. Now is the time to get on the front foot and start thinking about what transformation will be required to help set the traditional banks on the right path. This includes safeguards which have been a criticism of cryptocurrencies – how to implement anti-money laundering protections, so the same due diligence a traditional banking service provides is applicable to its digital twin.

3. Centralised vs decentralised finance

The whole concept of digital currency is an interesting one, based on the fact they add an element of decentralised finance to the country’s monetary policy. Of course, they will need to comply with current protocols, but they’ll also challenge how these protocols work.

To enable peer-to-peer transactions, digital currencies will need to make use of centralised governance frameworks that are authoritarian in nature — i.e., controlled by a single body. However, centralised blockchains are slower. Decentralised solutions like distributed ledger technology could make transactions quicker and more streamlined. To achieve widespread adoption, transaction speeds need to be efficient (much like an online bank transfer) otherwise consumers will not want to switch.

Decentralisation would also enable individuals to own their own wallets (akin to cryptocurrencies) and have their own private keys to help bolster security. This can help avoid data breaches and reduces risk. If a hack were to occur, it would stop one, single large fund being stolen – just a single person’s funds. Whilst this is a terrible scenario, it would be catastrophic if one pot were accessed. It would undermine any faith in the system.

4. Payments

Simplifying cross border payments could provide benefits in terms of e-commerce, travel and the labour market. However, it will have significant requirements, such as aligning regulatory, supervisory and oversight frameworks, AML/CFT consistency, PvP adoption and payment system access. The eventual international adoption of digital currencies is also likely to proceed at different speeds in different jurisdictions, calling for interoperability with legacy payment arrangements. Whilst this sort of information will likely come from G20 discussions, banks need to start addressing how to facilitate this and how this can be achieved within the current stack.

5. Consumer adoption

Whilst not a technical point, banks will likely share responsibility with the Bank of England in communicating the launch of any digital currency and how it will work. Provision and service is a key differentiation. We also need to acknowledge that the recent volatility in cryptocurrencies may make consumers wary of adopting digital currencies, which impacts their adoption. Being able to clearly communicate how digital currencies will integrate with current offerings and the benefits of this early, will help with customer uptake and acquisition.

Although the adoption is still conceptual, thinking about potential customer provision and how it might be integrated into current platformification/product offerings can help with service design and ultimately, user experience.

The world is moving towards a more digitised way of life – and banking, payments, savings and investments are certainly part of this shift. Financial institutions have had to manage this evolution already, so in some ways, a digital currency is a logical next step. For it to survive, however, the necessary infrastructure must be present for it to thrive, which banks can provide if they put the necessary building blocks in place now. The change will not happen overnight, or potentially in the next five years, but to win the hearts and minds of customers, provision will need to be seamless – placing customers at the heart.

Dare Okoudjou, Founder and CEO of MFS Africa, looks at the fallout of the COVID-19 pandemic and how the world economy can become more adaptable in its wake.

The relentless spread of COVID-19 throughout 2020 has underlined the importance of financial resilience in disasters and unforeseen events. The United Nations Sustainable Development Goals Report 2020 estimated that some 71 million people would be pushed back into extreme poverty in 2020 due to the pandemic, while some 1.6 billion precarious workers in the informal economy – half the global workforce – may be significantly affected.

But while the aggregate reporting may be global, the rapid advance of COVID-19 across the world has also highlighted how economic interconnectedness means that the worst would hit everyone at the same time. Often where one region or country was subject to severe restrictions on movement or activity, another was more open. People have therefore felt the effects of the pandemic at different paces and to different degrees according to where they are in the world. This dynamic provided a path to greater resilience – we can offset economic damage to a badly affected area by funnelling support from one that is doing better. But it depended on the availability of convenient and low-cost solutions that could reach the poorest where they were.

With incomes squeezed and jobs lost due to COVID-19, it has become increasingly important for this group to be able to easily access support from family back home, and likewise to be able to provide this support to family where needed. Remittances can be a lifeline for people in precarious situations and provide flexibility in the face of disaster by enabling money to easily move to where it’s most needed.

Remittances are more than a lifeline

The virus halted all movement of people and cash. As regions put in place different states of lockdown and movement restrictions to curb the spread of COVID-19 – this prevented customers from accessing cash. The virus also rendered cash a less hygienic option, thus states also restricted the opportunities to make in-person transactions. All of this made mobile money infrastructure more important.

The relentless spread of COVID-19 throughout 2020 has underlined the importance of financial resilience in disasters and unforeseen events.

Since remittance payments account for a significant portion of sub-Saharan Africa’s GDP (2.8% in 2019), it was vital to ensure they could be made easily to send money. The pandemic led many African countries to strengthen their mobile money ecosystems and address specific constraints. For example, Ethiopia relaxed its rules for mobile banking and money transfers – opening the market to all local businesses to encourage people to go cashless and control the spread of coronavirus. The Central Bank of Kenya raised its transition limits and Safaricom has lowered their fees, all in an effort to encourage people to ditch cash during the COVID-19 pandemic. These are only a few examples of how the financial services regulators in Africa adapted their thinking to put the safety of citizens at the heart of its operations, whilst also ensuring they have access to the wider global economy. In a few short weeks, a pandemic helped shift perspectives on the role of appropriate regulation in building financial solutions that strengthen consumer resilience.

Digital payments and financial resilience

The pandemic has emphasised the urgency and importance of these digital ecosystems to governments and decision-makers. With restrictions on physical contact and movement during an economic crisis, it has underlined the importance of being able to move money about seamlessly and highlighted the role that digital technology can play when it comes to keeping consumers and businesses connected during a crisis. Just because we have (physically) come to a standstill, doesn’t mean that the economy has to as well.

Although we are continuing record-breaking new cases, there is a silver lining. Recent announcements on successful vaccination trials are signalling the beginning of the end for this pandemic. What is important now is that we don’t retract the positive steps made to support vulnerable senders and recipients of remittances. Unfortunately, we are starting to see some reversals. In my country, Benin, revisions in regulation of cross-border payments have stripped away proportionality in payments, meaning that very small payments are being treated on the same regulatory terms as larger payments.

Africa provides an intriguing vision for what digitally-enabled resilience looks like – and the barriers that stand in its way. The continent is a leader in mobile money, with over 400 million registered mobile money accounts; the technological tools to support its widespread adoption have been in place for over a decade.

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Mobile payments provide a fantastic example of how digital technologies can help us build a more resilient and adaptable world, one that can better see through crises and pandemics and mitigate the economic and social damage of these rare but impactful events. Policymakers, regulators, and businesspeople need to recognise the opportunity: to build a new normal, where digital infrastructure such as mobile payments future-proof our world.

New payment methods have enabled people and businesses all around the world to access the digital economy. But we’re only at the start of reimagining the payment experience.

Here are four trends that will shape the way we pay in 2021.

1. Retailers went digital, but next, they must diversify their payment offering.

Retailers have responded well to the pandemic by pivoting to online commerce this year, but their work is only just getting started. Payment diversification will be a crucial next step in 2021. As consumers continue to embrace shopping online, often engaging with retailers they haven’t purchased from before, we will see growing demand to introduce new digital payments methods that address customers’ safety & security concerns.

Being able to pay on delivery, tokenisation, biometric fingerprint cards, vein scanning or phone-to-phone payments, alongside a variety of more traditional card payment options, help to create a universe where the consumer can make a choice based on convenience, personal preference and knowing they are protected from financial fraud.

2. QR code payments will thrive.

In the quest for truly contact-free payments in the pandemic, QR codes will continue to prove their resilience, especially in emerging markets. We can expect QR codes to dominate in these fast-growing markets such as Asia, over other payment methods such as NFC-enabled cards. Unlike card transactions which require merchants to invest in costly and complex point-of-sale terminals, QR codes are cheap to deploy and easy to use.

In the next year, we can expect to see QR code-based payments become even easier for consumers to use. Thanks to integrations with digital wallets, we’ll start to see wider adoption in both developing and developed markets.

Currently, the QR code payment solutions available today require an app, for example, developed by a retailer, that can only be used in its stores. However, in China, where QR codes are wildly popular, consumers can make QR code-based payments using a digital wallet such as AliPay or WeChat Pay. In developed markets, leveraging popular digital wallets already on consumer smartphones, such as Apple Pay, Samsung Pay and Google Pay, will make QR codes more accessible to them. Customers will no longer need to download separate apps but instead can use their favourite wallet to make a purchase with ease.

Offering a safe, convenient and cashless payment method, QR codes will continue to emerge as an important payment method in 2021.

3. COVID-19 will be the catalyst for digitising transport payments infrastructure around the world.

COVID-19 has been the catalyst for national and local governments around the world to embrace digital services. This is becoming particularly visible in transport, where we started seeing individual public transport ticketing systems and piecemeal approach to digitising infrastructure elements replaced with end-to-end services.

We will see the rise of smaller cities in developed countries as well as large cash-based cities in emerging markets easing into joined-up cashless fare collection across different modes of transport. The benefits of a simple tap-to-pay will go way beyond a matter of social distancing, as we expect to see a greater willingness among citizens to use cashless payment methods in other scenarios.

This will be a huge opportunity for the payments industry.

4. Voice-enabled payments will get a boost.

While conversational AI has already made great strides in other aspects of lives, we are only starting to see its application in the world of payments. Chatbots with speech-to-text and text-to-speech features have now become more accessible, bringing the ability to transform how we make in-app payments. Digital banking apps that offer this feature are enabling their customers to instruct on transactions and initiate bill payments using voice alone.

And the potential for this isn’t restricted to banking apps. Voice-enabled payments could be used to confirm payments on other apps such as those of food delivery providers.

We are already seeing some retailers integrate voice-enabled grocery shopping, allowing customers to commence checkout by voice. And as we continually seek out touchless payment options as part of the return to brick-and-mortar stores, voice payments could reimagine that experience in the future too.

While still in its infancy, we can expect to see banks, retailers and others explore voice as an emerging payment method.

This trend isn’t one that is unique to the UK either, far from it. The People's Bank of China is tipped by many to be the world’s first cashless society and is currently conducting extensive tests of a digital currency payment system ahead of a planned launch later this year. Elsewhere, Australia’s Central Bank has announced that it too is looking at the viability of a central digital currency.

Closer to home, however, the decreased need for cash has seen an acceleration of an already steady downward trend in ATM transactions, cash withdrawals and the use of cash more generally. So significant was the trend that it led to the National Audit Office concluding, earlier in 2020, that there was increasing pressure on the sustainability of the infrastructure for producing and distributing cash and that, overall, the current approach to overseeing the cash system is fragmented. It has also led to significant infrastructure changes across the sector that have seen a number of banks announce further branch closure programmes.

When many banks are making significant losses, it is difficult to argue with them trying to reduce their costs, especially amid an accelerating trend towards digital banking - TSB’s own website says that 67% of its customers now use mobile, telephone or online banking.

With forecasters predicting that cash may only be involved with 10% of transactions by 2028, the COVID crisis looks set to rapidly propel us towards a cashless future. But, while convenient for some, this transition will cause significant challenges for the banking sector as well as for governments and wider society as institutions look to adjust to yet another ‘new normal’.

On a more macroeconomic scale, coins and notes have acted as the primary means of payment across the globe and, in times of emergency, central banks have often printed banknotes to hand out to their governments.

The stats are certainly compelling, but they don’t change the fact that many banking customers either don’t have access to digital banking or still rely on cash. What’s more, the targeted impact of a move away from cash was clearly laid out when, in 2018, an Independent Access to Cash Review was undertaken (funded by LINK). The subsequent report stated that “technology is often designed for the mass market rather than for the poor, rural or vulnerable”.

On a more macroeconomic scale, coins and notes have acted as the primary means of payment across the globe and, in times of emergency, central banks have often printed banknotes to hand out to their governments. As such, money has become another tool used to manage the economy, and how these same levers would be pulled in a cashless society is not clear.

As is so often the case though, out of adversity comes opportunity and, in addition to the Post Office and retailers stepping in to support those who still rely on access to cash, there is already evidence that some new players are taking a more innovative look at the banking sector.

OneBank, for example, is a new payment institute that will not charge consumers but will instead charge participant banks to allow their customers to use OneBank’s “bank agnostic” kiosks. Retail bank branches cost between £500 and 700k per year to run so OneBank can justifiably claim to be providing a solution to banks and consumers simultaneously. Interestingly, the platform has its own anti-money laundering (AML) and know your customer (KYC) systems, independent to the banks.

Innovators such as OneBank will undoubtedly be important in the short term, but attention still needs to be given to longer-term and more far-reaching solutions.

Whichever way you look at it, the use of cash is declining, and to try and push against this particular tide now seems futile. The focus must be on harnessing technology to deliver innovative new approaches to overcome the challenges that will face a cashless society – tackling the key questions that need to be asked head-on. This doesn’t mean we are starting from a standing start though, as it is possible to adapt or accelerate the adoption of proven technology to help solve some of these challenges. For example, distributed ledger technology has applications for both central-bank-controlled digital currencies and identity verification to enable the unbanked to more easily access bank accounts.

Each of the major players, both new and old, in the banking sector will have their own role to play but one thing is for sure - the next 12 months will be crucial as the sector looks for new ways to deal with these emerging problems.

Tiffany Carpenter, Head of Customer Intelligence at SAS UK & Ireland, offers her thoughts on how established banks can offer customers a better remote service.

Businesses have faced numerous challenges as a result of COVID-19; perhaps the greatest they have ever had to contend with. However, from a customer experience point of view, there have also been some new opportunities. Across the private sector, SAS research shows that the number of digital users grew 10% during lockdown, with 58% of those intending to continue usage. This represents a whole new dataset of customers with a digital footprint, offering the chance for businesses to engage with them in a more personalised way.

It seems that many businesses have been taking advantage of this already. Across the board, a quarter of customers noted an improvement in customer experience over lockdown. Yet, in the banking and finance industries, 12% of customers claimed that their customer experience had diminished, which was more than the average for the private sector.

What makes this particularly concerning for banks is that, as an industry, they are one of the most digitally mature. Of all the industries, they had the highest number of pre-existing digital users, with 58% of customers using an app or digital service prior to lockdown. So, the question is: why did the most digitally mature industry struggle to support all its customers through digital channels during the pandemic?

A truncated digital experience

As demonstrated by the sheer number of customers using their digital services and apps, the banking industry hasn’t struggled to get its customers to go digital. However, it has clearly struggled to support all of its customers during the pandemic.

While more customers noted an improvement in the customer experience over lockdown (27%), 12% still felt that it had got worse. Branch closures and lengthy call waiting times to speak to an advisor by telephone won’t have helped. In this age of digital transformation, customers were unable to access immediate support or advice through digital channels and were forced to pick up the phone  or fill out paperwork to complete an action. Many businesses applying for bounce back loans found themselves in error-riddled, drawn-out processes, often waiting weeks with no status update, while customers wanting advice on payment holidays found their bank’s digital communication channels offered no support at all.

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Going the extra mile

Since the scheme was introduced there have been over 1.9 million mortgage payment holidays granted in the UK and, with stricter lockdown measures reintroduced, this number could rise even further.

The problem for banks and customers alike is that much of the decision-making process is manual, such as determining a customer’s eligibility. Automating these decisions would enable banks to deliver support and decisions in real-time to customer applications across their websites and mobile apps, eliminating manual back-end processing tasks and reducing the need for phone calls, paperwork or in-branch communication.

What’s more, automated decisioning does not require a complete overhaul of legacy infrastructure. Cloud-based intelligent decisioning applications allow banks to rapidly deploy solutions that can analyse customer data and behaviours in real time, determine customer intent and needs and arbitrate next best actions across digital channels without the need to rip and replace the current architecture.

While the pandemic remains part of our everyday life, it’s likely that banks will have to contend with sporadic branch closures and/or customers unwilling to either come in-branch for appointments or spend a long time waiting to speak to someone over the phone. Customer feedback has demonstrated that banks have the correct building blocks in place to deal with this effectively. However, they’re still struggling to support their entire customer base. If banks are to compete and succeed both in the short and long term, it’s essential that they complete the ‘last mile’ of their digital transformation.

Matthew Glickman, VP of Customer Product Strategy, Financial Services at Snowflake, examines the benefits that the data cloud can bring to financial services.

In the wake of COVID-19, financial services have had to adapt almost overnight to the economic challenges presented by the pandemic. With cities across the world going into lockdown, consumers expect banking to deliver digital-first experiences that match their usual expectations. Digital innovation is very much at the heart of this transition. To navigate and thrive in the current climate, capitalising on the data cloud will enable fintechs to respond nimbly to customer demands and remain competitive.

According to an Accenture survey, over half of respondents in the retail banking industry believe cloud technologies have the biggest impact on improving operational efficiency, and 40% believe that it can also generate business value for the industry. The data cloud can provide the foundation on which companies can build a technology stack that delivers business agility and growth. Here are three ways financial services companies can benefit from harnessing the data cloud.

Personalising Customer Experiences

The cloud offers companies the opportunity to house all their various types of data in one secure place, enabling them to personalise services for customers. By using the data cloud,  companies have a consolidated governed location for all types of data (for example, clickstream, transactional, and third-party) that can ingest data from new sources such as IoT devices. This enables organisations to gain a 360-degree view of customer behaviours and preferences from multiple inputs.

The cloud offers companies the opportunity to house all their various types of data in one secure place, enabling them to personalise services for customers.

A full customer view is fundamental for a successful personalisation strategy as it enables organisations to pinpoint high-value customers and ensure they have a good experience at every touchpoint. Without real-time visibility into customer interactions, providing the best possible customer experience just isn’t possible.

Over time, digital banking platforms will evolve to incorporate ML predictive models to drive even more personalised banking behaviours. This will only be achievable for organisations who successfully tap into the data cloud, as the success of ML models will require support from ever increasing volumes and access to datasets, both within and external to an organisation. The more an organisation can tap into customer personalisation, the better equipped they will be at customer retention and remaining competitive.

Boosting Data Visibility

To ensure fintechs can continue providing the best possible customer experiences, and adapt to any demands posed by the pandemic, having an acute awareness of all data available will be key for these insights. Adopting a cloud data platform that offers the direct and secure sharing of data without the complexity, cost, and risk associated with legacy data warehouses is one such solution. With simpler, enhanced data sharing, companies can quickly and easily add new data products, and get near real-time insights across the business ecosystem on how this is operating. Offering a standalone data product to data consumers can lead to substantial revenue. For example, financial companies that collect tick-by-tick stock market data can use a cloud data platform to create a data project that they can sell to hedge funds.

A cloud data platform can also reduce the manual effort and copying that is necessary with traditional data sharing tools. Instead of physically transferring data to external consumers, companies can provide read-only access to a segment of their information to any number of data consumers via SQL. By breaking through barriers between disparate data systems, companies will find new sources of revenue and opportunity.

Cross-Collaboration

The rise of digital-first banks, the increased availability of online services and the ongoing surge in mobile banking all represent the modern evolution of how customers now interact with their finances. To meet the demands of today’s customer, financial organisations will see big benefits in collaborating with other finservs through real-time access to data. For instance, if a customer is using a third party fintech to track their finances, a financial institution must share data with that fintech organisation so their customers can access their accounts.

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Last year, 65% of banks and 76% of credit unions said partnerships with fintech companies will be an important part of their business strategies in 2020. These numbers represent an increase from 49% and 60%, respectively, in 2019, showing a clear trend towards a more open banking landscape. Financial institutions that do not take steps to improve the accessibility of its data risk frustrating their customers or losing them to a more agile and collaborative financial institution.

Data collaboration can also help improve instances where investment banks may otherwise have been forced to hold excess capital. This is because aligning on risk exposures and liquidity is executed through nightly correspondances instead of what could be real-time data sharing through the cloud.

With fully governed, secure data sharing, companies can also easily determine who sees what and ensure all business units and business partners access a single and secure copy of their data. Not only does this enhance efficiency, but centralising data into a single source of truth, rather than in separate locations, will boost data security.

Data is the lifeblood of the financial services industry. By migrating to and capitalising on the data cloud, companies can build a future-proofed technology stack that delivers business agility, enhanced customer experiences and data sharing capabilities that ensure business continuity during this volatile economic period. Prioritising these digital-first experiences for customers will ensure financial organisations have the competitive edge that these times demand.

Ammar Akhtar, co-founder and CEO at Yobota, explores the steps necessary to the creation of successful fintech.

The first national lockdown in March highlighted the importance of the quality and functionality of digital banking solutions. Indeed, most of us quickly became accustomed to conducting our financial affairs entirely online.

Financial services providers have needed to adapt to this shift, if they were not already prepared, and consumers will continue to demand more. For instance, Yobota recently surveyed over 2,000 UK adults to explore how satisfied customers are with their recent banking experiences. The majority (58%) of banking customers said they want more power to renegotiate or change their accounts or products, with a third (33%) expressing frustrations at having to choose from generic, off-the-shelf financial products.

Consumers are increasingly demanding more responsive and personalised banking services, with the research highlighting that people are increasingly unlikely to tolerate being locked into unsuitable financial products. This is true across all sectors of the financial services landscape; from payment technologies (where cashless options have become a necessity as opposed to a trendy luxury) to insurance, the shift to “quality digital” poses challenges throughout the industry.

Providers and technology vendors must therefore respond accordingly and develop solutions that can meet such demands. Many financial institutions will be enlisting the help of a fintech partner that can help them build and deploy new technologies. Others may try to recruit the talent required to do so in-house.

The question, then, is this: how is financial technology actually created, and how complicated is the task of building a solution that is fit for purpose in today’s market?

Compliance and regulation

The finance sector is heavily regulated. As such, compliance and regulatory demands pose a central challenge to fintech development in any region. It is at the heart of winning public trust and the confidence of clients and partners.

Controls required to demonstrate compliance can amount to a significant volume of work, not just because the rules can change (even temporarily, as we have seen in some cases this year), but because often there is room for interpretation in principle-based regulatory approaches. It is therefore important for fintech creators to have compliance experts that can handle the regulatory demands. This is especially important as the business (or fintech product) scales, crosses borders, and onboards more users.

The finance sector is heavily regulated. As such, compliance and regulatory demands pose a central challenge to fintech development in any region.

Businesses must also be forthcoming and transparent about their approach towards protecting the customer, and by extension the reputation of their business partner. Europe’s fintech industry cannot afford another Wirecard scandal.

Compliance features do not have to impede innovation, though. Indeed, they may actually foster it. To ensure fintech businesses have the right processes in place to comply with legislation, there is huge scope to create and extend partnerships with the likes of cybersecurity experts and eCommerce businesses.

The size and growth of the regulation technology (regtech) sector is evidence of the opportunities for innovations that are actually born out of this challenge. The global regtech market is expected to grow from $6.3 billion in 2020 to $16.0 billion by 2025. Another great example would be the more supportive stance regulators have taken to cloud infrastructure, which has opened up a range of new options across the sector.

Addressing technical challenges 

It is the technical aspect of developing fintech products where most attention will be focused, however. There are a number of considerations businesses ought to keep in mind as they seek to utilise technology in the most effective way possible.

Understanding the breadth of the problem

The fintech sector is incredibly broad. Payment infrastructure, insurance, and investment management are among the many categories of financial services that fall under the umbrella.

A fintech company must be able to differentiate its product or services in order to create a valuable and defensible competitive advantage. So, businesses must pinpoint exactly which challenges they are going to solve first. Do they need to improve or replace something that already exists? Or do they want to bring something entirely new to the market?

The end product must solve a very specific problem; and do it well. A sharp assessment of the target market also includes considering the functionality that the technology must have; the level of customisation that will be required from a branding and business perspective; and what the acceptable price bracket is for the end product.

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Knowing your client

In the same vein, as a vendor it is important to be specific and strategic when it comes to pursuing the right clients. A fintech might consider itself to be well-positioned to cater to a vast selection of different businesses; however, it’s important to have a very clear target client in mind. This will ensure product and engineering teams have a clear focus for any end goal.

The value of a good cultural fit should also not be underestimated. The business-to-business relationship between a fintech and its client (a bank, for example), particularly at senior levels, is just as important as finding the right niche. There must be a mutual understanding of what the overall vision is and how it will be achieved, including the practical implementation, timeline and costs.

Balancing “best tech” with (perceived) “best practice”

Leveraging the newest technology is not always the best approach to developing a future-proof proposition. This has been learned the hard way by many businesses keen to jump on the latest trends.

Shiny new technology like particular architectures or programming languages can have an obvious appeal to businesses looking to create the “next big thing”. But in reality, the element of risk involved in jumping on relatively nascent innovations could set back progress significantly.

The best technology systems are those that have been created with longevity in mind, and which can grow sustainably to adapt to new circumstances. These systems need to run for many years to come, and eventually without their original engineers to support them, so they need to be created in modern ways, but using proven foundational principles that can stand the test of time.

Curating a positive user experience

To revert back to my original point, fintech businesses cannot forget about the needs of the end customer. There is no better proof point for a product than a happy user base, and ultimately the “voice of the customer” should drive development roadmaps.

The best technology systems are those that have been created with longevity in mind, and which can grow sustainably to adapt to new circumstances.

Customer experience is one of the most important success factors to any technology business. Fintechs must consider how they can deftly leverage new and advancing technology to make the customer experience even better, while also improving their underlying product, which users may not necessarily see, but will almost certainly feel.

Another important consideration is ease of integration with other providers. For example, identity verification, alternative credit scoring, AI assisted chatbots and recommendation algorithms, next generation core banking, transaction classification, and simplification of mortgage chains – these are all services which could be brought together in some product to improve the experience of buying a mortgage, or moving home.

Progressive fintech promotes partnerships and interoperability to reduce the roadblocks that customers encounter.

The human side of fintech

Powerful digital solutions cannot be created without the right people in place. There is fierce competition for talent in the fintech space, especially in key European centres like London and Berlin. Those who can build and nurture the right team will be in a strong position to solve today’s biggest challenges.

In all of these considerations, patience is key. It takes time to identify new growth opportunities; to build the right team that can see the vision through; and to adapt to the ever-changing financial landscape. Creating fintech is not easy, but it is certainly rewarding to see the immense progress being made and the inefficiencies that are being tackled.