Rahul Singh, President, Financial Services, HCL Technologies
Looking back, the birth of the credit card was a seminal moment in the history of financial services. A piece of plastic, with no intrinsic value of its own, made vast amounts of money conveniently portable and secure. The credit card brought along other major advantages such as readily available credit and the ability to retain loyalty. But the real reason credit cards succeeded? They virtualised currency, making it simple to use money.
We are now at the threshold of an even more radical era where money is made simpler than ever before at the hands of technology.
All transactions and financial services will be digital, faster and integrated into applications and devices, making money accessible with greater convenience. Physical barriers will vanish. Accurate and simple real time payments will become default. Finally, biometrics could take over, making your hand your wallet. In China, biometric payments already have a face: at KPro, the Chinese versions of KFC in Hangzhou, patrons simply smile at a camera to complete payment.
Technologies such as artificial intelligence (AI), machine learning, IoT, robotics, blockchain, cloud, open environments, fintech and shared environments are helping financial services providers along the path to the ‘Money Made Simple’ future. Along the way, financial services firms are discovering that technologies and innovations are future-proofing them from fintechs. Equally encouraging is the fact that these innovations are making them more customer centric without the need to go shopping for new technology skills. No financial services organisation can resist these upsides for long.
The idea of ‘Money Made Simple’ rests on four factors that organisations need to use as guiding lights in their own transformation:
- Money must move fast. The most important (and often only) thing customers want from transactions is speed.
- Money must be accessible seamlessly. It should be possible to initiate and complete transactions from chat windows, social networking applications, mobiles, cars and just about anywhere the need for a transaction arises.
- Financial services should be networked. Services such as insurance and loans depend on seamless and secure data sharing between third party service providers, making networks critical to the success of one-stop providers.
- Transaction processes/ infrastructure must go digital. ‘Digital first’ is not an empty buzz phrase. It is transforming the retail banking industry where digital channels are making expensive branch sites and ATMs irrelevant.
Money Made Simple in real life
How do these four factors manifest themselves in the real world, and what opportunities do they afford financial services companies?
The convenience of messaging apps for transactions: Millennials’ hunger to merge communication with transactions has led to the development of special tools to automate and integrate payment processes into messaging applications. A scaled-down and simpler version of the same innovation also exists in the form of money transfer via SMS, which can also be used to retrieve account information.
Democratising top quality investment advice driven by AI: Great fund management has so far only been accessible largely to high net worth individuals, but AI can democratise it. Companies have been using technology to personalise AI-enabled investment advisors, which monitor market signals and rapidly take the best decisions for their customers.
Letting out the payments genie with IOT: Today, every time a payment is made, cash is handed over, a credit card swiped or a mobile wallet or an app opened, but IoT is making all manner of payments faster and simpler. For instance, a car can potentially pay for parking, toll charges, petrol, and maintenance by using its own embedded wallet. In essence, networks will make money accessible seamlessly, and forge partnerships that help integrate secure payments into devices. In fact, insurers can already track health data from wearables to accurately calculate health risks, giving better premiums to users with healthy habits.
Using real-time data: By analysing data from endpoint devices and social media in real time, more personalised insurance products can be created and accurate risk assessments can be made, leading to improved pricing and customer satisfaction. Organisations can also deploy intelligent chatbots that support customers in their decision-making process. These chatbots use mobile technologies, voice recognition algorithms and data to create almost-human interactions 24/7, cutting customer support costs dramatically.
Capturing customers with hyper personalisation: Using customer data, loans can be quickly personalised and the paperwork completed remotely, without the need for customers to take time out and visit their bank. Throw in an intelligent chatbot and the customer can have every query answered accurately and without delay.
The future is simple
Without doubt, the future of money lies in “Simple”. One recent research report on new payments, currency and banking said that 76% of millennials are looking for new forms of banking, 63% of US millennial consumers hardly ever use cash and 40% of Chinese consumers would like to interact with their bank using a smart speaker. Against the backdrop of these findings, there is no room for traditional banks. It is time to put all bets on “Simple”.
Sterling gets vaccine boost to hit 8-month high vs euro
By Joice Alves
(Reuters) – Sterling rose to a fresh eight-month high against the euro on Wednesday as Britain’s faster COVID-19 vaccine rollout than in the European Union offered support to the pound.
Although Britain’s deaths from the coronavirus pandemic passed 100,000 on Tuesday, its faster initial vaccine rollout has fuelled hopes for economic recovery.
Sterling was up 0.3% at 88.28 pence at 1049 GMT, after hitting a fresh eight-month high of against the single market currency.
Graphic: Sterling 27 Jan, https://fingfx.thomsonreuters.com/gfx/mkt/jbyvrnbbbve/Sterling%2027%20Jan.png
Geoffrey Yu, senior EMEA market strategist at BNY Mellon, said “the general theme of UK doing well with vaccinations is playing a role” in lifting the pound, which is “not expensive and not over-owned yet”.
On the other hand, “the euro is clearly being undermined by ongoing concerns over vaccine rollout speed and supply,” Yu added.
Versus the greenback, sterling was flat at $1.3736, not far off a May 2018 high of $1.3759 touched earlier.
Hopes for a large U.S. fiscal stimulus package has fuelled risk sentiment in markets in recent weeks, benefiting sterling. Market participants are expecting Federal Reserve Chair Jerome Powell to renew a commitment to ultra-easy policy.
“It’s FOMC today so the adjustment in dollar positions may be playing a role as well,” Yu said.
As Britain left the bloc in December, the City of London said the capital’s loss of some financial business due to Brexit has not been catastrophic and it will thrive even if the European Union “irrationally” blocks access.
“For now Sterling continues to trade more on hope, vaccines, than current reality,” said Jeremy Stretch, head of G10 FX Strategy at CIBC Capital Markets.
(Reporting by Joice Alves in VARESE, Italy. Editing by Alexander Smith and Andrew Cawthorne)
Dollar advances as investors shy away from risk
By Saqib Iqbal Ahmed
NEW YORK (Reuters) – The dollar edged higher against a basket of currencies on Monday, as a burst of volatility in stock markets around the globe sapped investors’ appetite for riskier currencies.
Concerns over the timing and size of additional U.S. fiscal stimulus sent major U.S. stock indexes briefly more than 1% lower before they recovered to trade little changed on the day.
The sharp move in stock markets soured FX traders’ appetite for risk, Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, said.
“Your high beta currencies – currencies that are highly correlated with equity markets and global risk appetites – are tumbling in synchrony with equity indexes,” Schamotta said.
Market sentiment turned more cautious at the end of last week as European economic data showed that lockdown restrictions to limit the spread of the coronavirus hurt business activity.
The U.S. Dollar Currency Index was 0.19% higher at 90.396, after rising as high as 90.523, its strongest since Jan. 20.
The euro was down around 0.28% against the dollar. German business morale slumped to a six-month low in January as a second wave of COVID-19 halted a recovery in Europe’s largest economy, which will stagnate in the first quarter, the Ifo economic institute said on Monday.
The Australian dollar – seen as a liquid proxy for risk – was 0.16% lower against the dollar.
U.S. stocks have scaled new highs in recent sessions even as concerns about the pandemic-hit economy remain. Investors are trying to gauge whether officials in U.S. President Joe Biden’s administration could head off Republican concerns that his $1.9 trillion pandemic relief proposal was too expensive.
Despite the dollar’s recent rebound – the dollar index is up about 1.3% since early January – analysts expect a broad dollar decline during 2021. The net speculative short position on the dollar grew to its largest in 10 years in the week to Jan. 19, according to weekly futures data from CFTC released on Friday.
The U.S. Federal Reserve meets on Wednesday and Chair Jerome Powell is expected to signal that he has no plans to wind back the Fed’s massive stimulus any time soon – news which could push the dollar down further.
Sterling strengthened on Monday against the weaker euro as Britain’s COVID-19 vaccine rollout over the weekend offered support to the British currency.
(Reporting by Saqib Iqbal Ahmed; Editing by Andrea Ricci and Sonya Hepinstall)
London and New York financial services treated the same, EU says
By Huw Jones
LONDON (Reuters) – An EU forum for discussing financial services with Britain will be similar to what the United States has, and it must be in place before market access will be considered, the bloc’s financial services chief said on Monday.
Britain’s Brexit trade deal with the EU from Jan. 1 does not cover financial services, leaving its City of London financial center largely cut off from the EU.
Both sides are committed to creating a forum for financial regulatory cooperation by March, but talks have not started yet, the EU financial services commissioner told the European Parliament.
“What we envisage for this framework is similar to what we have with the United States, a voluntary structure to compare regulatory initiatives, exchange views on international developments and discuss equivalence related issues,” Mairead McGuinness told the European Parliament.
U.S. and EU regulators took about four years just to agree on rules on cross-border derivatives.
Trading in euro shares has already left London, along with a chunk in swaps trading. That questions the value of any future EU access given that many banks and trading platforms from the UK have opened units in the bloc.
McGuinness said regulatory cooperation will not be about restoring market access that Britain has lost, nor will it constrain the EU’s unilateral equivalence process.
Equivalence refers to EU access when Brussels deems a non-EU country’s rules are similar enough to the bloc’s.
“Once we agree on our working arrangements, we can turn to resuming our unilateral equivalence assessments… using the same criteria as with all third countries, including anti-money laundering and taxation cooperation,” she said.
Britain plans to amend some EU rules.
“The United Kingdom intention to diverge requires a case-by-case discussion in each area. Equivalence and divergence are polar opposites,” McGuinness said.
“I am optimistic that over time, through cooperation and trust, we will build a stable and balanced relationship with our UK friends.”
(Reporting by Huw Jones; Editing by Dan Grebler)
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