In a report published titled "The Future Of Banking: Islamic Finance Needs Standardization And FinTech To Boost Growth," S&P Global Ratings says it believes the global Islamic finance industry will expand slowly in 2018 and 2019.

We think standardization and financial technology (fintech) could help accelerate the industry's growth in the short to medium term. In particular, standard Sharia interpretation and legal documentation could simplify sukuk issuance, while making room for innovation. Fintech, on the other hand, could stimulate growth by making transactions quicker and easier.

However, fintech could also disrupt the market. "In the medium term, we envisage some disruption in the payment services sector, an increase in the number of people using financial services, as well as greater use of regulatory technology for Sharia compliance, and blockchain to support transaction traceability and identity protection," said S&P Global Head of Islamic Finance, Dr. Mohamed Damak.

"We expect the Islamic finance industry will grow by only about 5% on average over the next two years, owing to tepid economic conditions in certain core markets," added Dr. Damak.

We foresee only a marginal influence of fintech on our Islamic bank ratings over that period. We consider that Islamic banks will be able to adapt to their changing operating environment through a combination of collaboration with fintech companies and cost-reduction measures. We also believe that regulators across the wider Islamic finance landscape will continue to protect the financial stability of their banking systems.

(Source: S&P Global)

Nearly 9 in 10 technology professionals believe blockchain technology will be as transformative for business as the internet has been.

New research from Intrinsic Insights commissioned by BTL Group has revealed that after reduced costs, the main benefits of blockchain technology are greater data security and protection against cyber threats.

At a time that concerns over data are at their highest, blockchain technology is considered a very adept way to provide greater privacy.

“In a world of increasing concerns over the security and integrity of our data, individuals and businesses are realising the inherent benefits that applications built on blockchain technology can provide when keeping people’s data private,” said Dominic McCann, CEO of BTL Group. “This research also illustrates just how many businesses are looking at using blockchain and of those that are yet to explore it, there is a significant proportion looking to do so in the next two years.”

After two years of high profile and successful blockchain projects, learning how blockchain can be developed better, on Monday 23rd April, BTL Group will be test launching Interbit its multiple blockchain platform - a next-generation platform that has unique “chain joining” capability specifically created so that developers and businesses can quickly, easily and securely build applications.

Tackling these issues head-on, after two years of development and investment, Interbit’s unique “chain joining capability” has the capacity to inter-connect many thousands of Interbit blockchains per solution, in completely private, secure and horizontally scalable manner, addressing the shortcomings of.

A token-free blockchain platform, Interbit has been developed for ease of use. Whether users be a global enterprise, business innovator or software developer, the platform has been written in JavaScript to produce a level of simplicity that is efficient for users and requires no need to learn new programming languages or tools.

Tom Thompson, CTO of BTL Group Ltd. said: “After two years of successfully completed high profile proof of concepts, significant investment and committed development, we are ready to release our Interbit platform for testing and feedback. What we have built is a next generation blockchain platform that allows users to benefit from our chain joining capability by easily and quickly building fast, scalable and secure blockchain applications. Developers can be up and running on an Interbit blockchain within minutes.”

(Source: BTL Group)

A recent survey shows 64% of organisations have deployed some level of IoT technology, and another 20% plan to do so within the next 12 months. This is an astonishing fact when you consider the lack of basic security on these devices, or any established security standards. Many companies are turning a blind eye to security issues, swayed by the potential benefits that IoT can bring. Here Ian Kilpatrick, EVP Cyber Security at the Nuvias Group, provides 10 key facts on IoT.

1. IoT - a cybercriminal’s dream

Any device or sensor with an IP address connected to a corporate network is an entry point for hackers and other cybercriminals – like leaving your front door wide open for thieves.

Managing endpoints is already a challenge, but the IoT will usher in a raft of new network-connected devices that threaten to overwhelm the IT department charged with securing them – a thankless task considering the lack of basic safeguards in place on the devices.

Of particular concern is that many IoT devices are not designed to be secured or updated after deployment. Any vulnerabilities discovered post deployment cannot be protected against in the device; and corrupted devices cannot be cleansed.

2. IT or OT

IT professionals are more used to securing PCs, laptops and other devices, but they will now be expected to become experts in areas such as smart lighting, heating and air conditioning systems, security cameras and integrated facilities management systems.

A lack of experience in this Operating Technology (OT) is a cause for concern. It is seen as operational rather than strategic, so deployment and management is often shifted well away from Board awareness and oversight.

Nevertheless, the majority of organisations are deploying IoT technology with minimal regard to the risk profile or the tactical requirements needed to secure them against unforeseen consequences.

3. Increase in DDoS attacks

DDoS (Distributed Denial of Service) attacks are on the rise, with 41% of UK organisations saying they have experienced one.

IoT devices are a perfect vehicle for criminals to access a company’s network. 2016’s high-profile Mirai attack used IoT devices to mount wide-scale DDoS attacks that disrupted internet service for more than 900,000 Deutsche Telekom customers in Germany, and infected almost 2,400 TalkTalk routers in the UK.

4. ... and ransomware attacks

There has been an almost 2000% jump in ransomware detections since 2015. In 2017, WannaCry targeted more than 200,000 computers across 150 countries, with damages ranging from hundreds to billions of dollars.

While most ransomware attacks currently infiltrate an organisation via email, IoT presents a new delivery system for both mass and targeted attacks.

5. Increasing intensity and sophistication of attacks

The sophistication of attacks targeting organisations is accelerating at an unprecedented rate, with criminals leveraging the disruptive opportunities the IoT brings.

According to Fortinet’s latest Quarterly Threat Landscape report, three of the top twenty attacks identified in Q4 2017 were IoT botnets. But unlike previous attacks, which focused on a single vulnerability, new IoT botnets such as Reaper and Hajime target multiple vulnerabilities simultaneously, which is much harder to combat.

Wi-Fi cameras were targeted by criminals, with more than four times the number of exploit attempts detected over Q3 2017.

6. The effects of an attack

The aftermath of a cyberattack can be devastating for any company, leading to huge financial losses, compounded by regulatory fines for data breaches, and plummeting market share or job losses. At best, a company could suffer irreparable reputational damage and loss of customer loyalty.

On top of that, IoT devices have the potential to create organisational and infrastructure risks, and even pose a threat to human life, if attacked. We have already seen the impact of nation-state attack tools being used as nation state weapons, then getting out and being used in commercial criminal activity.

7. Profit over security

It’s crazy to think that devices with the potential to enable so much damage to homes, businesses and even entire cities often lack basic security design, implementation and testing. In the main this is because device manufacturers are pushing through their products to get them to market as quickly as possible, to cash in on the current buzz around IoT.

Lawrence Munro, vice president SpiderLabs at Trustwave agrees IoT manufacturers are sidestepping security fundamentals: “We are seeing lack of familiarity with secure coding concepts resulting in vulnerabilities, some of them a decade old, incorporated into final designs,” he notes.

8. Can you see the problem?

Another huge problem is that once a network in attacked, it’s much easier for subsequent attacks to occur.

Yet, recent data shows just half of IT decision makers feel confident they have full visibility and control of all devices with network access. The same%age believe they have full visibility of the access level of all third parties, who frequently have access to networks; and only 54% say they have full visibility and control of all employees.

9. Turning a blind eye

Despite security concerns often cited as the number one barrier to greater IoT adoption, Trustwave research shows sixty-one% of firms who have deployed some level of IoT technology have had to deal with a security incident related to IoT, and 55% believe an attack will occur sometime during the next two years. Only 28% of organisations surveyed consider that their IoT security strategy is ‘very important’ when compared to other cybersecurity priorities.

10. Efforts to standardise

In the UK, the government’s five-year National Cyber Security Programme (NCSP) is looking to work with the IT industry to build security into IoT devices through its ‘Secure by Default’ initiative. The group published a review earlier this month that proposes a draft Code of Practice for IoT manufacturers and developers.

While there seems to be some light at the end of the tunnel, it may not be enough. Regulators won’t force device manufacturers to introduce the necessary security regulations and practices before thousands of businesses fall victim to attacks. Turning a blind eye to the IoT security risks could leave your organisation permanently paralysed.

Finance Monthly speaks to Patrick Waldron, the CEO of Fintrax Group - an Irish FinTech company specialising in processing complex payment transactions.

Tell us a bit about the services that Fintrax offers?

Fintrax offers three main products: firstly we process VAT refunds for tourists in over 30 countries, working with 50% of the world’s top 150 luxury brands and Department stores such as Gucci, Dolce & Gabbana, Louis Vuitton, Ralph Lauren, Armani, Valentino, Printemps and El Corte Ingles. The market has been growing strongly over the last 20 years, driven by increased tourists from China, Russia, the Middle East, USA and Latin America visiting Europe and Asia in particular. The outlook for the next 10 years is also very positive with the expansion of the middle class across the world.

Secondly, we offer currency conversion services for travellers in 47 countries worldwide and we are the largest player in this market after the acquisition of Planet Payment in December 2017 for $250m. We also offer multi-currency processing capabilities to a range of specialist companies that need this service for complex payment transactions.

The business was bought by a leading UK Private Equity company, Exponent, in 2012 for €170m and then sold to Eurazeo, a leading French investment company in 2015 for €550m.

What are the challenges or opportunities Fintrax and the Irish FinTech sector at large are facing?

For us, the continued expansion of travel, especially from Asia, the Middle East and Latin America underpins luxury purchases as tourists prefer to buy expensive jewellery and handbags in person on the Champs Elysee in Paris, Sloane Square in London or Via Montenapoleone in Milan.

On the currency conversion side, a recent EU report has recommended greater transparency on pricing and mark-ups which we are very supportive of, as we tend to keep out currency conversion rates in line with VISA and MasterCard. The largest challenge for us is helping our acquiring bank partners to train their merchants well so that they understand currency conversion and make the offer to tourists.

In terms of the Irish FinTech sector at large, it has been a very successful period for them. There are still plenty of opportunities in the payments sector that can be exploited but the largest challenge is regulation with PCI, GDPR, Sapin 2, PSD2 to name just a few and these are requiring the hiring of significant extra resources. Given the stream of data breaches we have seen recently, I can only see compliance and regulation getting more onerous over time.

Fintrax acquired Planet Payment and GB Tax Free in 2017 – can you tell us about the acquisitions?

Before we acquired Planet Payment, 85% of our revenues and profits were generated by the VAT refund product so we wanted to rebalance this. Planet Payment was an obvious opportunity for us and now the revenue and profit mix is 60:40 in favour of VAT refunds. By operating in 57 countries, we also can weather any downturn in a specific country or continent. We also see opportunities for cross-sales with Planet Payment and jointly, we are already pursuing both VAT refund and currency conversion in Russia which is now allowing tourists to reclaim the VAT paid on key goods. Planet Payment have a very experienced management team and this builds extra bench strength for the Group.

GB Tax Free is a much smaller acquisition and helps us build our market share in the UK where we have been underweight.

What do you think 2018 holds for Fintrax? 

2018 is all about integrating the two acquisitions we made in 2017, as well as continuing to develop our Finland-based fully digital business, which we bought in 2017. So the focus is on helping the management teams deliver on their plans and budgets for 2018. The other major focus is on making the VAT refund process as easy as possible for merchants and tourists through the deployment of digital solutions. We have a fantastic management team comprised of deep experience coupled with fresh new talent, so I am excited for the future.

Website: http://www.fintrax.com/

Investors in the Assetz Capital platform are yet to be convinced by cryptocurrencies, with just 16% seeing them as worthwhile investments.

The peer-to-peer lending platform canvassed the views of its investors in the Q1 Assetz Capital Investor Barometer. 43% believe the entire market is on the brink of collapse, while 40% feel cryptocurrencies are still too immature at present with significant risks attached. 14% feel it is a worthwhile investment but only in moderation, with just 2% thinking it is the future of investments.

This follows a period of volatile price swings in the cryptocurrency market, which in February saw the value of Bitcoin hitting lower than $7,000, compared to almost triple that amount in December 2017.

Another blow to the market came in February when a number of banks banned their customers from purchasing cryptocurrency with credit cards, and Bank of England Governor, Mark Carney, claiming that Bitcoin has failed as a currency.

Stuart Law, CEO at Assetz Capital said: “The rise in cryptocurrency over the past 12 months has been driven by consumers’ search for fairer returns on their investments. Traditional banking has failed to deliver in this sense over the last decade, so as technology makes alternative investments more accessible, it is obvious that investors would look elsewhere.

“However, there’s clearly still a great deal of uncertainty amongst smart investors when it comes to cryptocurrency – the market is still in its unpredictable infancy, so the risk and wild daily swings in value of cryptocurrencies is proving too much for many.”

(Source: www.assetzcapital.co.uk)

FinTech companies have been the foundation of innovation in the payments and financial services sphere over the past decade, whilst legacy financial institutions, such as banks, have struggled to keep up. Generally considered in competition with one another, what would happen if FinTechs and Banks joined forces? Prabhat Vira, President of Tungsten Network Finance, explains.

Recent research shows that financial institutions are increasingly forming partnerships with fintechs to create products that streamline and improve the customer experience and eliminate inefficiencies. In fact, when questioned by PwC, 82% of banks, insurers and asset managers said they expected to increase the number of fintech providers they work with over the next 3-5 years. So what is driving this trend and how can commercial banks follow the lead of their retail counterparts?

A symbiotic relationship

Over the last few years, fintechs have evolved the customer experience – prioritising the user experience to connect with and empower customers with alternative finance. Many banks are coming to the realisation that if there is a great opportunity to participate in fintech developments.

In light of this, instead of competing with fintechs, some banks are seeing the wisdom of embracing the dynamic nature of fintechs and are actively collaborating with them. It is a very positive step forward as each party has something significant to offer the other. Fintechs require access to capital, and Banks in contras, are looking for ways to innovate more quickly, provide a slicker customer experience and leverage data to mitigate risk. Collaboration with fintechs enables banks to outsource their R&D to them and bring new products to the market much more quickly and for less cost. Ultimately, the partnerships between banks and fintechs are creating a unique opportunity for the expansion of finance solutions, and thereby adding real value for customers.

Commercial banks following retail counterparts

However, this subject is not purely theoretical for us – we have recently teamed up with BNP Paribas, a leading international bank, to offer e-invoicing linked Receivables Purchase and e-invoicing linked Supply Chain Finance (e-SCF) to large corporates in the USA and Canada. Our customers can now obtain an attractive working capital solution through the same technology provider they use for e-invoicing and procurement activities. It is the first partnership of its type and a sign that commercial banks are following the lead of their retail counterparts in collaborating with fintechs.

By linking e-invoicing with supply chain and receivables purchase, customers are offered a one-stop solution that brings together process efficiency and working capital optimisation in a single portal. They are offered attractive rates in a straight-forward, hassle-free way. From the bank’s perspective, a lot of energy can be spent connecting clients and on the payables side, on-boarding suppliers onto the system. This creates friction in the relationship, and inhibits the supply chain. The advantage for a bank and for the customer is that by partnering with a fintech like us, these trade flows are already on our platform. Therefore, both do not have to onboard suppliers twice and deal with complex technology integrations. Ultimately, the partnership helps to make the supply chain process smoother for all.

We believe partnerships such as this are shaping the future for businesses and financial institutions alike. They are enabling us to work more smartly and offer added value to customers. Speed to market is of the essence in our fast-paced, consumer-centric world and fintech providers are agile by nature and best placed to bring innovations to the masses. As retail and commercial banks realise the mutual benefits of partnering with fintechs, we are certain we will see more and more collaborations that will delight customers around the world.

Price comparison site finder.com has released its monthly Cryptocurrency Predictions Survey on how the top 10 Cryptocurrencies by market cap and three trending coins will perform in 2018.

Out of the 13 coins, finder.com’s 13 panellists predict that Dogecoin (DOGE) will experience the greatest percentage growth by December 31, 2018 (5,838 percent). DOGE was sitting at $0.003 (£0.0021) per unit on March 27, 2018, and is forecast to reach $0.1938 (£0.14) by the end of the year.

Cardano (ADA) is expected to have the second greatest increase in growth by the end of the year (812 percent), followed by Ripple (XRP) (526 percent).

Despite this growth, Bitcoin (BTC) is still expected to reign as the highest value per unit, predicted to hit $9,100 (£6,464) by May 1, 2018, and reaching $21,485 (£15,261) by December 31, 2018.

Although presently a bearish market, April is the second consecutive month that panellists have predicted no drops in value for these coins by the end of 2018, signalling optimism for future growth.

Comparing the forecast market capitalizations for Bitcoin (BTC), Bitcoin Cash (BCH) and Ethereum (ETH) – the only three of the 13 coins with reported number of coins available –  Ethereum (ETH) is predicted to see the highest growth by the end of the year (234 percent). This was more than double that of Bitcoin (BTC) with a 114 percent forecast increase, and Bitcoin Cash (BCH) at 40 percent.

The 13 panellists in the April Cryptocurrency Predictions Report include:

• Alisa Gus: CEO of WishKnish, a blockchain gamified social market network aimed at helping communities grow, and founding member of the DC Digital Economy Hub
• Clayton Daniel: former tax accountant and financial advisor, author of #1 Amazon Bestseller ‘Fund Your Ideal Lifestyle’, and founder of Sprout Superannuation
• Frank Schuil: CEO and co-founder of Bitcoin-trading platform Safello. Senior adviser for businesses and associations, including CG Blockchain, Rhino Ventures and BitAngels
• Fred Schebesta: Co-founder of global comparison site finder.com, including Crypto Finder. Award-winning entrepreneur, author, mentor, and a global keynote speaker
• Jen Greyson: CEO of Powered by Neureal℠, intellectual property specialist, and named one of the Top 8 Women in Crypto
• Jörg Molt: CEO and Blockchain Specialist of the Satoshi School 1–10 Mitglieder in Bavaria, Germany
• Joseph Raczynski: Technologist, futurist, Joetechnologist.com and Reuters, technology consultant and manager specialising in Blockchain technology
• Kohei Kurihara: President of the Government Blockchain Association Tokyo Chapter. Co-founder and CMO of Collabogate, aimed at bringing people into the Crypto market faster
• Kunal Patel: Business mentor for Startupbootcamp FinTech and SuperCharger Fintech Accelerator. On the advisory panel for YES BANK
• Kyle Wang: head of business development at Hub Token, advisor and consultant to ICOs and blockchain-enabled startups
• Samson Williams: partner of Axes and Eggs, a blockchain and Cryptocurrency mining consultancy, and the CSO for Ireland-based fintech firm, SeedUps
• Sergei Logvin: Co-founder of Rocket ICO, the world’s first decentralised accelerator based on the DAO concept, advisor to Opporty.com, Project Districts, TravelChain and LibertyLance
• Tim Lea: published author and regular speaker on blockchain, the CEO of REFFIND and the director of Veredictum

The full details of the survey, complete with comments from the panellists, can be found here: https://www.finder.com/uk/cryptocurrency-predictions

Jon Ostler, UK CEO at finder.com said, “While the downward trend has continued over the past month for many coins, our panel remains bullish in a presently bearish market, signalling optimism for future growth. This is the second consecutive month where panellists are expecting no drop in value for any of the included coins by the end of 2018. While Dogecoin (DOGE), Cardano (ADA), Ripple (XRP), Ethereum (ETH) and Stellar Lumens (XLM) are expected to see greater percentage growth than Bitcoin (BTC) this year, BTC is still forecast by our panel to reach the highest value of the 13 coins, at $21,485 (£15,261) by December 31. Before considering purchasing Cryptocurrency, it’s crucial to understand that the market is incredibly volatile and will continue to represent high risk. It’s important to do your research, seek professional advice and compare your options before taking the leap into the market.”

(Source: Rooster)

We all know the cloud is leading the way in transforming operations across financial organisations, but while a significant enabler, it represents just one element of much wider digital investment. We hear from Steven Boyle, CEO of Integrated Cloud Group, who discusses how cloud technology is only the beginning of true digital transformation for financial institutions.

Cloud is pulling the strings, but household names such as HSBC, Barclays, Lloyds Banking Group, and the Royal Bank of Scotland are increasingly investing in a host of transformative, agility-enhancing technologies such as biometrics, robo-advisors and artificial intelligence as they pledge to keep abreast with customers’ demands for faster, simplified banking interactions.

I see traditional organisations looking more and more to FinTech startups to build and integrate new functionality and that will improve services, allowing them to focus more on customer needs.

Last year, HSBC launched biometric security for mobile banking in the UK, claiming that it was the biggest rollout of its kind. The bank says that this will enable more than 15 million customers to access accounts, using voice or fingerprint recognition biometric technologies. Lloyds – which is looking at Amazon Echo technology for voice recognition – also passionately believes that such notions have huge implications for Britain’s 360,000 blind or partially sighted, potentially opening up banking like never before.

Certainly, to my mind, it all represents a significant leap forward for biometrics technology being used in the UK banking industry for the secure authentication of account holders.

First off the blocks was Barclays which has been using voice authentication in its call centres since 2013, and in 2014 announced plans to introduce finger vein recognition technology for some.

However, all HSBC customers will have access to fingerprint authentication services using the fingerprint readers that are built into Apple iPhones, in tandem with HSBC’s mobile banking app. Like Barclays, HSBC is using Nuance Communications voice recognition, which analyses over 100 unique characteristics to identify a speaker. Furthermore, once HSBC and First Direct customers have registered their finger and voice prints, they will no longer need to remember security passwords or PIN details. It’s clear to me that such innovations hold the potential to absolutely transform customer interactions.

Then there’s the much-discussed and analysed rise of the robots. The likes of Lloyds Banking Group, Barclays and Santander UK are further innovating with the introduction of digital robo-advisors – essentially, computer-generated recommendations based on online financial questionnaires  – which, it is thought, could help to fill the ‘financial advice gap’ for those with small savings pots who need investment advice but can’t necessarily afford it.

In this instance, the bank suggests how much to invest into certain funds, and then transacts on a customer’s behalf in return for a fee. While not necessarily a solution, it seems to me an important recognition of consumer needs in the wake of the retail distribution review which scrutinised the mis-selling of investment products and made it uneconomical for banks to provide advice. Certainly, platforms like Wealthfront and Betterment have already proved hugely popular – and it’s no coincidence that Lloyds jointly hosted an event entitled, ‘Can I Trust a Robo-Advisor?’ at London’s FinTech Week.

RBS is also reportedly planning to utilise robo-advisors across its investment and protection divisions as part of a cost-saving strategy that is expected to reduce the need for face-to-face advice.

Nevertheless, it should be noted that others are following an alternative path; HSBC is set to unveil a division of investment advisors for all customers, while Santander UK is introducing 225 investment advisors across its branches.

Another parallel disruptor is the rise of artificial intelligence which is set to allow consumers to talk to a device and receive the information they are looking for. In fact, it’s already managing many banks.

A leading proponent of AI – predicated on the belief that data is king for the leveraging of informed decision-making and risk management – has been Barclays, which says that the notion of touching a device could soon be obsolete when it comes to executing transactions. The bank sees digital technology as being crucial to its future and believes that its customers could soon be talking to a robot computer system to perform simple transactions.

Lloyds Banking Group introduced the first networked ATM in 1973, and has continued to innovate, now employing Google analytics tools to analyse customer behavior, allowing it to better understand customer needs and meet them in real time.

Amid this unprecedented period of digital upheaval, the opportunities for the banking sector are effectively limitless – suddenly the walls have come down and there are extraordinary possibilities all around. Big banks are turning to technology for myriad reasons, but at the heart of the drive for transformation are significant economic benefits, matched by enhanced agility, less risk, and a better customer experience.

Those that think heightened technology means less of a customer relationship should, to my mind, consider the idea that it could in fact serve to free up time for banking staff that will actually facilitate, rather than, hinder relationship building. This will, in turn, allow more unique needs to be addressed while the more mundane tasks are quickly and automatically fulfilled.

As data security concerns are increasingly answered by better protection, it all makes for a fascinating road head for the banking sector as it embarks on the journey to new heights of speed, accuracy and efficiency.

Lendingblock, the first cross-blockchain securities lending platform for cryptocurrency, has released research into attitudes towards cryptocurrencies, which reveals that most people believe cryptocurrency is here to stay. Despite the pervasive narrative of the indeterminate future of cryptocurrencies, the survey of 2,000 people through personal data and insights platform CitizenMe found that more than one in five (21%) of respondents already own or have previously owned cryptocurrency. Furthermore, the majority (55%) believe cryptocurrencies will be widely accepted in shops and even on the bus by 2025.

According to the survey, the majority of people would use cryptocurrency, and are positive about its future. While only 20% could say for sure that they think they are a good investment, 56% said they would be tempted to buy them in future - a contradiction that suggests that there is an appetite if the risk was reduced. When asked what would make them more likely to buy cryptocurrencies, better security ranked highest (32%), followed by better apps for buying and selling (28%), and government backing (23%).

Steve Swain, Co-Founder and CEO of Lendingblock said: “In spite of much discussed uncertainty about cryptocurrency, the public is sure that cryptocurrency is here to stay. Cryptocurrency is a maturing market, and this is exactly what we would expect to see happening at this time as we move from early-adopters to more mainstream awareness and use.

“Before we get there, however, cryptocurrency need to be made safe, and that’s why we welcome the UK Government’s recent recently announced inquiry into investments. What’s interesting, is that this survey shows that the public and the market are aligned in what they think the cryptocurrency market needs next: which is more security, infrastructure and better tools. This is undoubtedly the next step of evolution for the market.”

Other key findings of the research include:

• A considerable gender divide, as nearly 30% of men surveyed currently or have previously owned a cryptocurrency, as opposed to just 13% of women
• A remarkably close alignment between those who identify as “millennials” and those who identify as “household decision makers” in terms of cryptocurrency ownership (22% vs 19%), whether they’d be tempted to buy cryptocurrencies in the future (56% vs 55%) and whether cryptocurrencies will be widely accepted by 2025 (56% vs 55%). In fact, more millennials think that cryptocurrencies will be a passing fad than household decision makers (19% vs 17%)
• Only 10% of people said they would never buy cryptocurrencies, no matter what

“These demographic breakdowns give an interesting insight into where cryptocurrencies have taken hold first,” said Linda Wang, co-founder and COO of Lendingblock. “While you might have guessed it would be millennials, in fact cryptocurrency is an incredibly serious and potentially lucrative market that is getting considerable interest from financial services, which is what is reflected here.

“The gender balance within cryptocurrencies is something I personally care a great deal about, and we at Lendingblock have been working hard to further inclusivity. However, I think there is great potential in cryptocurrency because - unlike traditional financial services - there are no barriers to entry. The “old boy’s club” on the trading floor does not exist in cryptocurrency, you can invest from your home and this has massive potential to open up the market to new entrants.”

(Source: Fieldhouse Associates)

How are banks meant to co-exist, work with or become the initiators of fast-developing fintech when most are so caught up in legacy systems? Below Finance Monthly benefits from expert insight from Kyle Ferguson, Chief Executive Officer at Fraedom, on the potential avenues banks could focus on in the pursuit of tech advancement and the maintenance of a competitive edge.

Legacy systems are seen to be the most common barrier preventing commercial banks from developing fintech applications in-house. That was a key finding of a recent survey conducted by Fraedom. The research that collected the thoughts of shareholders, middle manager and senior managers in commercial banks revealed that more than six out of ten (61%) of banks are being held back by this technological heritage.

The banking industry has historically found it difficult to make rapid technological advancements so in some cases it is unsurprising that older systems are holding them back. However, with this in mind, smaller fintech firms have already started to muscle their way in to help assist retail banks with providing a more comprehensive range of services to consumers.

Banks now have the option to negotiate the obstacle of legacy systems through partnering or outsourcing selected services to a fintech provider. Trusted fintech firms are offering banks the chance to reap the benefits from technical applications that can lead to more revenue making opportunities, without taking the large risk of banks taking the step into the unknown alone.

However, a shift does appear to be on the horizon with only 26% of commercial banks not outsourcing any services 41% of respondents globally stated that their bank currently outsources payment solutions to fintech partners. This was in comparison to 33% who say they do the same for commercial card management solutions and 26% who claim to do so for expense management solutions.

It was also interesting to note that banks are planning to ramp up their fintech investment over the next three years, with 77% of respondents in total believing that fintech investment in their bank would increase. This feeling was especially strong in the US where 82% of the sample stated this belief opposed to 72% of those based in the UK.

This transitionary period is great news for ambitious fintech firms. Banks are starting to realise that established fintech providers can make a big difference in areas of their business by providing technical expertise as well as in-depth knowledge of local markets.

It’s all about selecting key, digital-driven services that will help retain customers and entice new ones. The ability to offer card expenditure and balance transparency can reduce risk and costs for issuing banks. It is a service that can be joined on to an existing business with little overhead costs.

This is just one of several ways that partnering with fintech firms can bring substantial benefits. This increase in agility also helps banks to speed up service choices and improve customer satisfaction.

Forming a partnership can provide banks with a way around the issue of coping with legacy systems and avoid implementation costs. By forming a partnership, outsourcing banks buy in to a product roadmap that will keep their offerings ever relevant as fintechs develop the technology required.

The partnering approach is becoming more appealing to commercial banks. They understand their customers value their reliability, trustworthiness and strength of their brand. But increasingly, they also understand the importance of encouraging innovation to remain ahead of the technology curve, while recognising it is not the bread and butter of their business.

While legacy systems appear to be the most common factor in preventing banks from creating in-house fintech applications, the study did also reveal that a lack of expertise - recognised by 56% of respondents was also a major stumbling block.

To innovate and grow, banks and fintech firms alike must have employees that understand the technology – developers, systems architects and people with a record of solving problems. Taking a forward-thinking approach to recruitment is key.

If they want to attract and retain the best talent, organisations need to be listening, adapting and trusting each other to work together to resolve issues and frustrations. We believe all the above elements will become increasingly important in any successful business.

Overall, the research represents growing strength within the fintech sector and it is great to see that more banks are beginning to see the value in partnering with a fintech provider. In turn, this is delivering a better service for banks and customers alike and it is a trend that I expect to continue as banks fight to keep on the pulse of technology in the sector.

2017 was a busy year for regulatory compliance and technology across the globe. We witnessed countless mass data breaches, sexual misconduct claims, money laundering scandals, and of course, the Wild West that is the Blockchain. Alongside that, we continue to see significant advancements in Artificial Intelligence (AI) and Machine Learning (ML) technologies across all industries, being applied to automate business functions, gain insights into behavior patterns, and more.This year, the Banking Industry will adopt ML and AI-based automation for enhanced efficiency and data-driven decision making.

Banks were slow to adopt ML based automation in 2017, but to remain competitive in 2018 and onward, banks will have to consider  how adding AI and ML fueled technologies will impact their growth and improve the efficiency of their business processes.

Many financial institutions have been quick to experiment with AI applications in the frontend of the business, for example, to streamline and improve customer service via chatbots. In general, the value proposition is that AI can automate manual and repetitive roles but now, we are seeing AI being applied towards broader data-driven analysis and decision making.

This not only reduces costs and saves time, it also eliminates the risk associated with human prone errors. The machine is well-situated to consume large data sets while also self-learning overtime. But before even considering the tremendous opportunities to implement this technology on the backend of the business, organization leaders will need to educate themselves on how the technology actually works.

AI in the Enterprise

While many AI-based solutions have advanced over years, the financial industry remains suspicious of the science behind the decisions made by such technologies. Now we are seeing a shift towards increased transparency in AI-based solutions, where the science behind machine learning (ML) based decisions can be justified, tracked, and verified. This should help move along industries on the cusp of adoption.

Artificial Intelligence and machine learning in the long term can be applied to reduce costs and time by automating a once manual process.  However, on average, most AI algorithms are only about 80% accurate, which doesn’t live up to the business standards of accuracy. That leaves 20% flawed, which requires human input to bridge the gap. There is an inherent design flaw to any AI solution which does not utilize some human component in development. It is a general understanding that the most successful AI models use the 80:20 rule, where 80% is AI generated, and 20% is human input. This is implemented in the form of supervised learning or human-in-the-loop.

Human-in-the-loop Integration

A best practice in the successful development of AI includes a human component, typically referred to as “Human-in-the-loop” or supervised learning model. The way it works is that machine learning makes the first attempt to process the data and it assigns a confidence score on how sure the algorithm is at making that judgement.  If the confidence value is low, then it is flagged for one or many humans to help with the decision.  Once humans make the decision, their judgements are fed back into the machine learning algorithm to make it smarter. Through active learning, the intelligence of the machine is strengthened, but the quality of the training data is based on the human contributors.

(CrowdFlower Inc, n.d.)

Some data analysis is specific and complex, such as the case with Financial Regulation. The evolving and complex nature of regulation is a tough subject matter to master. AI in RegTech requires an in-depth knowledge and understanding of the regulatory framework and how to read and interpret the text.  In these types of fields, expertise is far more critical than the tool. However, if a tool could incorporate subject matter experts into the machine learning model, then the tool becomes exponentially more viable.

Expert-in-the-Loop takes Human-in-the-Loop to another level. It makes use of subject matter experts to train the machine and flag the machine’s errors. For example, a well trained machine in the RegTech industry could eliminate countless hours a compliance officer takes in researching, reading, and interpreting regulations, by automatically classifying documents into topic-specific categories or by summarizing the aspects of a document that have changed from a previous version.

The Expert-in-the-Loop model differs from Human-in-the-Loop in one major way: Human-in-the-Loop doesn’t differentiate between the aptitude level of the various participants to judge the particular question correctly. Human-in-the-Loop takes advantage of the Law of Averages which states that if many people participate, the average response will yield the correct result. So the response from a college student and a PHd student would be weighed the same. On the other hand, Expert-in-the-Loop , specifically looks at the experience level of the participant to determine how their result will be weighed.  With Expert-in-the-Loop, a human is essentially supervising another human’s qualifications. While the cost is higher than both the unsupervised and the Human-in-the-Loop models, the results of Expert-in-the-Loop models are proportionally more accurate, making them suitable for highly specialized and industry specific topics.

Nearly every industry is exploring how to use AI and machine learning as tools to increase efficiency and streamline data analysis, among other things. The future holds endless possibilities for this emerging technology. It serves as a bridge to close the gap between information and the time it takes to compile results. The speed of data can bring about a new era of understanding and increased reaction time in the Financial Services industry.  There are a lot of unknowns still left to address, but the technology is becoming more intelligent and its applications more advanced. Early adopters will have the benefit of experience on their side once the inevitable industry-wide adoption finally falls in place. Until then, organizations can pilot new applications and evaluate their impact and success. Ultimately, the financial industry will need to educate themselves on the pros and cons, while considering the implementation of this new technology.

By Mark Jackson, Head of Financial Services, at Collinson Group – a global leader in influencing customer behavior to drive revenue and value for clients.

2018 is set to be a game changer for the relationship between banks and their customers. Driven by the European Commission’s second Payment Service Directive (PSD2), which has now been rolled out across the financial services industry, banks that operate in the EU are now obliged to provide open access to account data and payments, to correctly authorised third parties based on the consumer’s consent. Although not yet mandated within PSD2, the means of providing open access in this way will come from the wide-spread adoption of secure Application Programming Interfaces (APIs).

PSD2 is designed to encourage greater competition and innovation amidst banking and payments across the EU. Combined with Open Banking in the UK – which is the UK Treasury and CMA’s own slant on PSD2 which goes further and faster – PSD2 has the potential to fundamentally change the financial services industry, for customers and service providers alike.

Switching rates amongst current account holders are incredibly low, with just 3% of UK customers shopping around for a better deal[1]. Improved engagement, facilitated by Open Banking, could help banks attract new customers and increase the proportion of people looking to switch.

Some traditional banks have been slow to facilitate use of APIs. However, other banks on the continent are already starting to see opportunities from collaboration with FinTechs and other players in a wider banking and payments ecosystem to improve the customer experience and better integrate themselves into the channels customers want to use more regularly.

One example is Brazil’s Banco Bradesco Facebook app, which allows customers to conduct day-to-day banking via Facebook. Meanwhile, Capital One and Liberty Mutual have capitalised on the popularity of Amazon’s Alexa, enabling customers to check balances and pay bills through the voice-activated personal assistant.

1. Provides greater customer choice

Open Banking creates opportunities for banks to share banking and payment data, meaning that customer relationships are essentially ripe for the picking. Any company can compete for customers, from incumbent and retail banks, to fintechs and tech giants such as Google and WeChat. Increasing this consumer choice will shift the balance of power to customers who increasingly demand a smarter, more rewarding digital experience.

Reports suggest that a leading social media company sees its average user spend approximately 50 minutes every day on its platform[2]. In stark comparison, a leading global retail bank spends a mere 54 seconds per day engaging with the typical customer.

Banks must maximise the time given to customers by utilising the wealth of knowledge about them made available by Open Banking. The winners will be those companies that combine payment and banking information with behavioural and lifestyle data to offer new, more personalised services. The resulting experience can help secure customer loyalty and differentiate from competitors.

FinTechs working with the banks can also reap rewards, gaining access to an entirely new customer base. Many of these digital companies are in their infancy, so partnerships with large financial institutions offer scale, scope and opportunity not otherwise achievable.

2. Delivers a more rewarding digital experience

In an ever-changing digital world, customers expect an intuitive, user-friendly and flawless banking experience. Faster payment options, such as mobile wallets from technology brands like Apple and Samsung, mean that customers have become accustomed to an experience based on convenience. This represents a paradigm shift in customer expectations for rewarding loyalty. People want everything to be delivered ‘on the go’ via apps on their smartphones and other connected devices, slotting in seamlessly to their busy lives.

However, some banks are still falling short of customer expectation, not investing enough in technology infrastructure, and seeing customer satisfaction drop as a result. With the provision of open APIs, banks can encourage collaboration with innovative, agile third parties to create new customer-centric, digital propositions. Rather than only seeing FinTechs as competitors, banks should look for opportunities to collaborate and integrate with them as an extension of their own service, offering customers a more fluid approach to their finances.

3. Improves engagement through personalised offers

Customers are typically choice-rich and time-poor, so offers need to be individually tailored. The last thing they want is to be bombarded with irrelevant offers, or spend hours searching online for offers that suit them. A poorly targeted offer is more likely to drive customers away than increase brand loyalty.

Leveraging the power of mobile and data from open APIs, banks can better understand customer preferences and offer tailored rewards, sent in the right place at the right time – giving the personalised experience customers demand.

In addition to customer loyalty, providing compelling, timely and contextually-relevant offers will enable banks to create new revenue streams by upselling at optimum moments in the customer’s decision-making cycle.

Customer behaviour won’t change overnight. Two thirds of consumers in the UK say they won’t share their financial data with a third party[3], but with better education around the issue, customers will soon see the potential.

Open Banking should be embraced, not feared. This long-awaited shake-up places the customer at the centre of the experience, with a focus on engagement and brand loyalty. It could also serve to retain and grow a bank’s customer base, so long as they engage with them in the right way. Whether or not they are impacted directly by EU regulations, those that embrace the opportunities provided by Open Banking will be able to offer customers a greater choice of personalised offers and rewards, delivered ‘on the go’ via apps.

[1] https://www.gov.uk/government/news/bank-switching-to-be-overhauled

[2] https://thefinancialbrand.com/69877/digital-banks-platform-economy-trneds-open-banking-api-psd2/

[3] https://newsroom.accenture.com/news/accenture-research-finds-lack-of-trust-in-third-party-providers-creates-major-opportunity-for-banks-as-open-banking-set-to-roll-out-across-europe.htm