By Bruno Cambounet, VP Go-To-Market FSI Program, Axway
Over the past decade the digitalisation of the financial industry has led to significant improvements in employee productivity, has empowered workforces and improved customer services. Staff have better access to information, applications and transactional intelligence from anywhere, including their own tablets and mobile devices. But now the challenge is to manage data outside the four walls of the office. Financial institutions need to ensure they have an eye on data as it’s accessed by customers’ mobiles, partner organisations, international banks or industry bodies.
In an ever changing regulatory landscape, however, financial organisations need to stay ahead of newly instituted rules and standards, minimising the costs and disruption along the compliance process. As EU regulatory laws such as the Single Euro Payments Area (SEPA) and the Payment Services Directive (PSD) come into play this year, this will lead to the creation of an EU-wide single market for payments, and the quality of banking services will come to the fore. Financial organisations will be expected to face further checks, particularly in terms of bank transfer transparency and security. This means that quick access to data can prove crucial in the event of an audit, in order for financial institutions to prove that they are abiding the regulations and mandates demanded of them.
In order for financial organisations to keep up with the digital economy and to meet the requirements set by regulatory bodies, they will need a reliable and watertight solution in place. This solution not only needs to be capable of governing the flow of data and keeping critical data safe from point A to point B, but also provide organisations with a complete overview of the lifecycle of information.
Digitalisation of the financial economy
Increased consumer demand for mobile applications and online banking has offered the financial industry a wealth of new opportunities. Only last month, the Paym initiative has meant that 30 million UK banking customers can make payment using only their mobile numbers.
Coinciding with a rise in tablet and mobile sales, set to break the £100bn mark, we are seeing more consumers making purchases, banking and communicating on their mobile phones; opening the door to new means of payment methods and giving rise to omni-channel communication. According to the British Bankers Association, Brits have now downloaded more than 12.4 million mobile banking apps while the number of transactions made using them has nearly doubled in a year, hitting 18.6 million a week in 2013.
These numbers show that these can be the deciding factor when it comes to consumers choosing between one bank and its competitors. A banks’ mobile banking offer can therefore give it the competitive edge especially as the switching guarantee will enable customers to change banks faster and easier.
Managing the risks
However, each technological innovation introduced to the market brings with it new concerns about data privacy, especially when it comes to mobile banking apps. With the protection of their customers’ data a top priority, a data breach or hacking intrusion is every bank’s worst nightmare, whether it’s through paperless desktop transfer or the latest smartphone banking app. The stakes are high with banks not only risking expensive fines but losing the trust of their customers. With the growth of mobile, challenges like this have increased tenfold, particularly as customer finances are regularly travelling through cyberspace, exposing thousands of pounds to hackers and cyber-criminals.
The banking ecosystem is vast and growing by the day presenting financial organisations with an enormous challenge to ensure that all data transfers are securely governed. With increasing interaction from customers, banking is a two way street and data flows must be correctly managed both to and from the customer and onto other organisations.
By implementing an API management strategy, financial organisations can manage the complete life cycle of data. Banks can be sure that customer data is fully protected and monitored from mobile to transaction to the bank or partner organisation and back to the customer. As each transaction passes through an API gateway, it’s authenticated and protected from the protocol level up. This enables organisations to block cyber-attacks, monitor data and prioritise data traffic.
By investing in solutions that offer this monitoring capability, financial institutions can be rest assured that they will avoid reputational damage through the latest cyber intrusion. And, are in a position to significantly reduce the risks associated with loss of customer loyalty if online accounts were to be hacked and also protect confidential corporate data from leakage and data loss.
Financial transparency and risk regulation
An API gateway also has the added benefit of meeting industry standard compliance. Transparency requires financial organisations to validate quarterly statement figures and prove accountancy within departments – all while keeping their customers anonymous. It requires businesses to satisfy more than just traditional, internal auditors – they have to satisfy external, regulatory auditors who are enforcing a slew of new regulations including “Know Your Customer”, “Money Laundering Regulations” and “Prudential Regulation Authority”. This is on top of leveraging payment standardised layers like Single Euro Payments Area (SEPA), Payment Services Directive (PSD) and electronic payments association, NACHA.
With real time insight into data transfers, financial organisations can improve transparency and support auditing requirements. The data available will allow organisations to demonstrate consistency across risk, business and accounting processes within complex organisations, as well as provide the ability to audit trail every automated and manual process.
A new breed of financial organisations
Banks have to modernise quickly and open up their payment value chains to increase the reach of their banking products and services. This will result in a more complex portfolio of payment services, solutions and applications, prompting financial institutions to assess more carefully how they manage their data.
By perfecting the flow of information in a financial business and analysing each transaction in real-time, several benefits can be reaped at once. Firstly, organisations can open up to new revenue streams through innovative digital forms of banking and can turn regulatory laws into business opportunities. And secondly, data exchange and API management solutions will perfect behind the scenes business management functions such as: auditing, regulation compliance and the management of customer data. Real-time insights allow for quick and informed responses, which can prove critical in the fast-paced world of finance. These solutions will massively improve the data agility of financial organisations, putting them in prime position to deal with the ever changing digital economy, and spurring the rise of a new financial business model, one that is equipped for the ever growing demand presented by technology.
2020: the year mortgages went digital
By Francesca Carlesi, co-founder and CEO, Molo
It’s safe to say that the past year has changed everything. With restrictions in place that limited almost every aspect of our lives, from work to socialising, it’s no surprise that some industries were decimated and others were left severely shaken. The mortgage sector was no exception, as it also underwent a vast transformation which may have changed the course of mortgages forever.
The industry saw a paradigm shift, which was driven by consumers being forced online. This was the case for everything from mortgage applications to online house viewings and property valuations. As expected, this resulted in an increased demand for digital mortgage solutions with more flexibility.
While the industry was already slowly shifting, the pandemic has accelerated this and now the traditional process of getting a mortgage is increasingly coming under threat. We’ve seen a number of somewhat surprising trends over the last year that support this argument and suggest that consumers are embracing the change. For example, compared to March last year, we’ve seen the number of people aged over 45 applying for a mortgage loan increase by 70%. This indicates that consumers who may have previously resisted applying for a digital mortgage saw no alternative option in lockdown.
It seems that this paid off, as our data suggests that overall consumers were more satisfied with the simpler and quicker process.
A shift in behaviour
It’s clear that the pandemic did nothing to discourage those seeking a mortgage from doing so and the industry continued to grow. For example, in October last year, the UK mortgage industry saw a 13-year high, where over 97,500 loans were approved – the highest figure since September 2007, the month at the start of the financial crisis. But what led to this and why?
In a post-pandemic world of financial uncertainty and instability, the idea of purchasing property is now being perceived by many as a safer bet than investing in the stock market or other investment options.
As a result, buy-to-let properties are becoming an increasingly appealing option and Google has now coined it as ‘breaking out’. Not only did Google trends observe a 5000% increase in the search term ‘how to get a buy-to-let mortgage’ last year, but at Molo, our own data also supported this and found a significant rise in the number of first-time buyers who were mortgage hunting.
Despite being introduced twenty years prior to buy-to-let mortgages, let-to-buy mortgages also saw huge growth in 2020. The pandemic has led to increased numbers of remote workers and commuting has become a thing of the past. UK cities are seeing somewhat of a mass exodus as the priorities of city dwellers are changing and many are going in search of more space. Let-to-buy mortgages offer the flexibility to facilitate this. Investing in this kind of mortgage means that families, for example, can afford to rent out their property in the city and move to locations that are more rural.
We’ve also seen the industry pivot slightly in terms of regional demands. While there is continued demand from London and the South East, for example, we’ve also seen growth in areas such as the North West and we predict this won’t slow any time soon. One of the cities with especially high demand was Blackpool, where growth in demand was twice the national average.
Future gazing: 2021 and beyond
We’re expecting that the changes seen across the industry over the past will stick. After all, if even the sceptical customers were happy with the ease and simplicity of the online mortgage application and approval process, why on earth would they go back?
It’s important that we learn from these observations and use them to draw insight into the future of the mortgage sector. For instance, while Coronavirus has certainly caused disruption for lenders and consumers alike, it’s also highlighted the need for a more advanced, digital offering. It’s shown that digital mortgages really have become the best option for customers. The pandemic has been a test run for businesses and has proved that, even after restrictions are lifted, there is no good reason for mortgage providers to return to the traditional but slower business-as-usual.
At least in the property world, 2020 could well be remembered as the year that mortgages went digital. While it’s true that the pandemic was the catalyst for this shift, it’s now gone beyond the virus. The changes we’ve seen over the past year are likely to shape the mortgage industry for years to come.
EU finance chief says UK’s Northern Ireland move a breach of trust
DUBLIN (Reuters) – The European Union’s finance chief said Britain’s decision to make unilateral changes to Northern Irish Brexit arrangements raised questions over whether it can be trusted in future trade negotiations with any partner.
“It does open a question mark about global Britain, if this is how global Britain will negotiate with other partners. Our experience has been not an easy one to put it mildly,” Mairead McGuinness, who is negotiating post-Brexit financial services terms with Britain, told Irish broadcaster RTE on Thursday.
“We have to be very clear that when something happens that is not appropriate and indeed in our view breaches both trust and an international agreement, then we have to call it out. It wasn’t a good day yesterday but this morning we have to work for practical solutions, with the UK, not separately.”
(Reporting by Padraic Halpin; editing by John Stonestreet)
The Benefits of Starting A US Non-Profit: The Latest Tax Regulations
Starting a nonprofit organisation can be a very effective way of significantly improving your society’s welfare, and truly assisting those in need. Ultimately, however, understanding all the prerequisite steps mandated to start a nonprofit– as well as the legal obligations and privileges that can be associated with such a process, is crucial before fully committing to and moving forward with your business plan.
Growing a prolific, successful, and impactful non-profit can be a very tedious process and can commonly involve years of consistent effort, diligence, and determination. Consequently, this article will take a deep dive into the relative statutory and federal legislation and critically analyse the plethora of economic, monetary, and social benefits that starting a nonprofit can bring in for you.
Non-profit Organisations: A Quick Overview
Regardless of whether your goal is to address a particular societal issue, form a trade organisation or perhaps create a social club, if you are looking for the opportunity to earn a profit on top of accomplishing your stipulated goals, forming and operating a nonprofit organisation may be the way to go.
Contrary to most social clubs- which are formed to solely provide benefits for their specific members, nonprofits are generally created to provide benefits to the general public. These can include corporations created for educational, scientific and charitable purposes and- as we will further analyse below, are commonly exempt from paying corporate income taxation in accordance with Section 501(c)(3) of the Internal Revenue Code.
The Financial and Structural Benefits of Starting a Non-profit
As briefly touched on above, forming a nonprofit organisation can provide a plethora of benefits for you, these include:
- Tax Exemptions- companies that are categorized as ‘public charities’ in accordance with section 501(c) of the Internal Revenue Code are generally exempt from paying corporate income tax on a state and on a federal level. Additionally, after a company has obtained their aforementioned ‘tax exempt’ legal status, a person’s or company’s monetary donations to them is tax-deductible.
- Grant Opportunities- There’s a prolific amount of both public and private bodies that unilaterally limit their charitable donations and grants to public charities only. This is because nonprofits can- and commonly do, offer tax deductions to such individuals or corporate entities on an exclusive basis.
- Unique Corporate Structure- A nonprofit organisation operates as its own unique legal entity- completely separate from its owners and founders, and consequently is in a position to place its own interests and corporate ethos above the interests of the persons that may be associated with it.
- Limited Liability & Perpetual Existence- On top of having a statutory right to exist in perpetuity, nonprofits also have limited liability under the law. Therefore, any damages that may arise from potential legal disputes are limited to the real assets of the actual nonprofit, and not the assets of its founders and/or owners (subject to specific legal exemptions).
Final Overview: The Potential Disadvantages of Forming a Nonprofit
Despite all the advantages laid out above, it should be duly noted that there are a couple of potential disadvantages to forming a nonprofit that you may want to consider before moving forward with your plan.
Firstly, the process of forming a nonprofit can take a significantly long period of time and this is commonly associated with a great deal of both effort and capital. Moreover, in order to apply for some of the benefits listed above- including federal tax exemption, a monetary fee is required and the process also often needs a present attorney or corporate accountant to serve as a corporate consultant.
Furthermore, there are a couple of practical disadvantages to starting a non-profit organisation. These include: a) excessive paperwork- as all nonprofits are legally required to keep detailed analytical records of their practices and submit them to their relevant state de[artment and to the IRS, and b) limited personal control over the organisation- this is particularly the case in states that require nonprofit organisations to have more than one director.
Finally, nonprofits are commonly subject to prolific levels of public scrutiny- especially in relation to their finances, which may act as a disincentive for some private individuals.
Overall, starting a nonprofit can bring in a plethora of economic, monetary, and social privileges for the individuals involved, and- although the process can come with a few potential inconveniences, they are arguably a small price to pay. Companies like TRUiC advise on the varying benefits of different states when it comes to US formations. It is worth conducting thorough research before making your next move.
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