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REAL-TIME PAYMENTS TO DRIVE REVENUE GROWTH AND PROVIDE LAUNCHPAD FOR INNOVATION, ACCORDING TO MORE THAN 80 PERCENT OF BANK EXECUTIVES IN NEW ASEAN BENCHMARK DATA

REAL-TIME PAYMENTS TO DRIVE REVENUE GROWTH AND PROVIDE LAUNCHPAD FOR INNOVATION, ACCORDING TO MORE THAN 80 PERCENT OF BANK EXECUTIVES IN NEW ASEAN BENCHMARK DATA

ASEAN spending growth outpaces other regions, as financial institutions seek to leverage real-time payments for payments modernization and innovation, per new benchmark data from Ovum and ACI Worldwide

ASEAN financial institutions are focusing increasing investment on payments modernisation, with real-time payments capabilities serving as the first step to digital transformation across consumer and corporate services, per new benchmark data, “2018 ASEAN Payments Insight Survey: Real-Time Payments Modernisation and Innovation,” from ACI Worldwide (NASDAQ: ACIW) and Ovum.

ASEAN member states, driven by market forces and developments in the wider Asia-Pacific region, are looking at how real-time payments can act as a catalyst for payments modernisation and future innovation – though member states are currently at different levels of technical and economic sophistication, as reflected by investment plans.

Enthusiasm for real-time payments, a clear understanding of the benefits of open APIs – used to connect banking services with instant payment-enabled services – and proactive collaboration between central infrastructures and banks put the ASEAN region in a strong position to realize multi-currency, cross-border real-time payments.

Principal study findings include:

Real-time payments will enable innovative new service offerings and drive revenue growth

  • 82 percent of respondents feel that real-time payments will drive revenue growth for their organisations and 77 percent say they will save money.
  • 86 percent of respondents overall (100% in Vietnam and Malaysia) believe that real-time payments have, or will, improve their customer services, and 89 percent have developed or are developing new services for consumers based on instant payments.
  • 78 percent of ASEAN institutions think that real-time payments will replace the use of payment cards over time.

Clear understanding of benefits of open APIs amongst ASEAN banks

  • 97 percent of respondents in ASEAN agree that the business benefits of open APIs are clear, versus 90 percent globally and 88 percent across Asia.
  • ASEAN banks are less clear on strategies for the creation of open APIs for third-party use – 84 percent compared to 87 percent globally and 91 percent in Asia.

ASEAN spending growth outpaces other regions

  • 64 percent of ASEAN financial institutions forecast investment in payments to increase in the next 18-24 months, compared to 56 percent in the broader Asia region and 53 percent globally.
  • Planned payments investment varies widely across ASEAN; 53 percent of Singapore expect investment to increase a lot (5+%) compared to 30 percent in Indonesia and 13 percent in Malaysia and Thailand.
  • Reducing total cost of ownership is a top three investment priority for most respondents (47%), with a move away from in-house development toward customised third-party software or off-the-shelf vendor solutions (from 8% to 13% over the next 2 years).

“Short-term investment plans are setting the base for long-term, strategic developments, as many organizations address core ‘hygiene’ factors to create a sound platform for payments innovation,” said Leslie Choo, GM & vice president – Asia, ACI Worldwide. “Getting the house in order will be a precursor to developing services that enhance the customer experience, and truly reaping the benefits of innovation. The prospect of real-time, cross-border payments in the ASEAN region – and beyond – is another reason why ASEAN financial institutions are increasing investment, and the enthusiasm for real-time demonstrates that bank executives see this as a primary catalyst.”

“The rapid development of real-time payments – in Asia generally but in ASEAN countries in particular – has lessons for banks, central infrastructure operators and merchant service providers around the world, as they work towards the realization for the first cross-border, multi-currency, real-time payments network,” said David Bannister, principal analyst, Ovum. “The survey results show that ASEAN banks are focusing increased investment on ensuring that they are able to participate and compete in the emerging ecosystem; security – a prerequisite in payments – is front of mind for many, but all are looking ahead to the innovation opportunities created by the combination of real-time payments and API-based open banking.”

To receive a complimentary copy of the report, please visit: www.aciworldwide.com/money2020asia

* Methodology and Demographics:

For the 2018 Ovum Global Payment Information Survey, Ovum and ACI Worldwide partnered to run a 22 question survey across a sample of retail banks.

Overall, the 2018 Ovum Global Payment Information Survey included a total 1,032 executive respondents across 13 industry sub verticals in 19 countries, resulting in over 225,000 separate data points on current perceptions and investment plans around payments technology on a global basis. This includes 277 retail banks, of which 75 operate in the ASEAN countries.

The aim of the survey was to understand the current attitudes, business objectives and operational pain points facing each respondent company, in turn creating a unique viewpoint on the role that investments in payments technology will underpin both the immediate and future objectives of each institution.

The main topics of focus for the survey include:

  • IT investment plans around payment services
  • Core business objectives and priorities
  • Payment systems architectures including SaaS
  • Plans and experiences around both open banking and real-time payments

Fieldwork ran between January 2018 and February 2018, providing a clear insight into current thinking in the industry across financial institutions in the region.

This paper focuses on the survey findings for banks in the ASEAN region. For more details about the findings, please visit www.aciworldwide.com for further information.

*Association of South East Asian Nations (ASEAN) consists of Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia.

Finance

Teaching children about wealth management and why there has never been a better time

Teaching children about wealth management and why there has never been a better time 1

By Annabel Bosman is Managing Director and Head of Relationship Management at RBC Wealth Management

As we approach the end of week sixteen in lockdown, I am breathing a sigh of relief at having successfully navigated another week of juggling work and client commitments with the increasing demands of my children – age six and nine.

My day job is to lead RBC Wealth Management International’s relationship management efforts in the British Isles, but my toughest challenge right now is educating and entertaining my new junior co-workers each day.

While my children’s school has done a great job at setting up daily tasks and learning activities, there is only so much ‘teaching’ they can take from me without World War III breaking out. So instead of rigidly sticking to the school curriculum each day, I have taken the opportunity to educate my young children about a topic that is often not discussed enough in school — money.

Why now?

What I do for a living has become a central discussion in our co-working space — also known as the dining table. I have found that investment concepts can be grasped quite well by young children and this has led to some interesting conversations about which businesses are doing well in the current situation, and those that are not. Children are often more logical than adults, and in my house, this logic is helping them grasp the basics of an investment philosophy. As a result, I have even passed conversations around stock markets off as maths classes!

For young children like my own, helping them learn the basics of managing money is something that will hopefully set them up well in life. There are some great tools to help them do this – we use GoHenry, which provides children with a pre-paid card to learn about budgeting. Likewise, encouraging conversations around how they spend virtual money whilst gaming on apps like Roblox can give some really important lessons around how you look after the money you have earned – and how if something seems to be too good to be true, it probably is.

The most important thing is not to underestimate your children. Whether it is the application of a “mummy-tax” when they want chocolate or applying interest rates (albeit nominal!) if they want to borrow money, teaching our children the basics around money is something we can all do.

Incorporating new lessons

The first step is to identify the best way to approach teaching these topics in a way they will understand. Resources such as the Usborne Money for Beginners are really helpful to start conversations. There are also several YouTube clips and even TikTok channels dedicated to helping children think about money. I tend to think about what is important to them and use that as a catalyst to start conversations; for example, it could be how they can monetise their love of the gaming app Roblox.

Ending the taboo

Any conversation that leads to a greater awareness around financial discipline and security has to be a positive, no matter what the age – and there are certainly parallels with my experience and that of my clients. There seems to have been a shift in HNW and UHNW families’ willingness to talk about money. Whereas previously it was seen as very un-British to speak about money, the pandemic has meant that a more open conversation is taking place.

Whatever our financial position, we often bury our heads in the sand when it comes to money, and don’t always have a clear financial plan, but when we start to put down on paper what’s going in and out, we immediately start to feel more in control, thus becoming more engaged. It can be uncomfortable to have that conversation with your family, but we regularly speak with our clients about all manner of sensitive subjects including putting wills in place, inheritance and protecting loved ones. Naturally, this is also bringing conversations to the fore around succession planning, legacy, philanthropy and even one’s own mortality. When times are good, it’s easy to not have these thoughts at the forefront of your mind, but in challenging times like these, it highlights how essential it is to talk. And just as with my children, there are plenty of apps and websites that can help you take the first steps.

Varying generational approaches

There is no one way to educate your children about money — what worked for one generation will not necessarily work for the next. Different generations have had to address the different approaches they might take in thinking about money and try to reach a common language to agree on common goals. Whilst many of us grew up with physical pocket money from our parents after completing household chores, today’s young children rarely even touch money, they receive their allowance on an app.

A 2019 study commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit found that seven in ten younger affluent respondents think that their beliefs about wealth are very different to those of their parents; with a similar percentage, 78%, believing that wealth is less easily attained or preserved today. Early, open and continuous dialogue can only help confront obstacles head on and smooth the path ahead.

These talks also allow HNW individuals and their families to talk about how they can address their non-financial goals, such as fighting climate change or supporting social agendas – something that the younger generation is acutely focussed on. Indeed, more recent social events have led to an ongoing and overdue debate around what privilege looks like and how society needs to change.

What next?

With the summer holidays fast approaching, the struggle to keep children occupied will continue, but without the pressure of the school curriculum. This is an opportunity to continue discussions with children about where money comes from and where its value lies.

I have found it tremendously empowering to talk to my children about money and getting back to basics — it may not be school learning, but it is real life learning. And as I say to my clients, the initial step to start a conversation is always the hardest.

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Finance

From accountants to advisors: changing roles and expectations

From accountants to advisors: changing roles and expectations 2

By Chris Downing, Director for Accountants & Bookkeepers at Sage

The line between strategic advisor and traditional accountant is blurring. Over the last year, 82% of accountants said their clients were demanding a wider service offering, including business and technology implementation advice. In the current climate this transition has only been accelerated.

Clients increasingly expect their accountants to take a more active role in change management and predicting their cashflow months into an uncertain future. This is enabling businesses to tackle the challenges of day-to-day operations, while keeping an eye on what the post-COVID world will look like, and the support they will need to return to strength.

To solve these new and complex, expectations accountants must develop a different way of working. They will be required to increasingly supplement the traditional, compliance and reporting aspects of their work with business advice and consultancy. To do this, accountants need the ability to move quickly and efficiently, with a firm grounding in technology and data control.

Get straight to the point

The priorities of yesterday are very different to the goals of today. Where businesses once focused on driving growth and efficiency, the objective for many now is continuity – understanding what government support is available and for how long. In the current climate, speed of delivery and client care are top of the agenda.

But the way accountants go about this is very important. Rules are changing every day – the definition of an ‘essential business’, government support and bank loan programmes are constantly in flux. In normal times, an accountant’s role is to ensure their clients are aware of and reactant to these changes. Yet, how much value does this create for them in the ‘now’?

To be valuable, new information must be delivered quickly but it should also be succinct. It isn’t useful for clients to be bombarded with email updates, or reports running into hundreds of pages, trying to explain the week’s changes. With so much present noise, it’s the accountant’s task to break through the information overload and provide the client with crucial resource only.

To understand client pain points and get to the heart of what they really need, a running dialogue is essential. Building individual client relationships will unlock the potential to deliver tailored experiences that meet their business demands. Armed with this insight, accountants can then distil complex information into digestible chunks.

A more entrepreneurial spirit 

Sharing insight is only the start.  The other half of the story relies on consultancy. In the Covid-19 environment, the routine aspects of an accountant’s work are being supplemented with the transformative changes they can make for clients. Cashflow projections for the next six months are crucial, but even more so is the advice an accountant can offer on improving the financial outlook of a business.

Chris Downing

Chris Downing

To provide this balance, accountants should embrace a more entrepreneurial way of thinking. Not only advising on how clients can meet current challenges, but also how they can innovate to drive new revenue streams in the future. Part of this means being willing to step outside of their comfort zone. Many firms are already investing in the skills and technologies they need to service novel demands – like advising on relevant accounting and finance technologies.

While many businesses remain closed to the public, even as lockdown eases, they have increased capacity and flexibility to shift operations towards what will be most effective and profitable. Clients will be open to changing their business focus to meet demand spikes in other areas as they do not have to account for a disruption to customer service. For example, many distillers shifted production from beverages to hand sanitiser while bars and restaurants were closed.

With their contextual understanding of client finances, accountants are uniquely placed to advise their clients on change and guide them through the transformation process. Though this requires a more innovative model of accounting, and one that is willing to embrace the latest technologies.

Truth in the cloud

Business advice needs to be backed by data, especially for accountants engaging directly with the CFO. Scenarios need to be modelled, analysed, tracked and compared over time to arrive at the most effective proposal for the client. This is outside the wheelhouse of traditional accounting, but it’s becoming necessary in an industry heavily disrupted by new technologies.

To keep up with the ever-growing need for rapidly available data and analytics capabilities, more and more accountants are turning to the cloud to consolidate and use their data estate, while automating the time-consuming tasks of data management. Indeed, the majority (91%) of accountants have said new technology has delivered fresh value to their business in the last year, whether it increases productivity or frees up more time to focus on client needs.

Against the backdrop of coronavirus and technological disruption, a new breed of accountant is quickly emerging. Innovation is possible for those who stay ahead of client expectations and are aware of their needs, embrace an entrepreneurial mindset and adopt the latest cloud and automation technologies. In this way, an accountant becomes an integral part of their client’s business.

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Finance

Preparing for the new normal and building a financial plan

Preparing for the new normal and building a financial plan 3

By Donna Torres, director of small business at Xero UK

There is some light at the end of the tunnel for small businesses. As the lockdown continues to ease many retailers and hospitality businesses are now opening up again, or preparing to return soon.

Preparing for what’s around the corner has always been key to business success. Whilst there is still much uncertainty, it’s more important than ever that businesses get in control of their finances and create a solid plan.

Having a strong understanding of your cash flow and a plan for the months to come is vital to helping you prepare for what’s ahead. If you’re unsure where to begin, here are five ways to start:

Take stock

Financial experts Lauren Harvey (Founding Director of Full Stop Accounts) and Jonathan Graunt (Founder of accountancy firm FD Works and Xavier Analytics) recently spoke with Xero about the uplift in businesses taking an interest in their finances and understanding their financial position.

Businesses should be using this time to review their processes and really understand their numbers. It can be helpful to reflect on your original statement – what do you really want your business to do? And has the pandemic changed this? Use this as the fuel to drive your business vision forward.

Consider the risks

The government has provided SMEs with a number of support schemes, but the conditions and capital being offered is changing.

For example, the Furlough Scheme will currently only run until the end of October and the deadline to furlough new employees has now passed. The government will also gradually be reducing the amount it pays under this scheme. Make sure you’ve accountanted for this in your financial plan so you have a clear picture of how furlough tapering off will impact your business and any adjustments you might need to make.

If you’ve taken out one of the Government backed loans, now is the time to start building repayments into your financial plan. Building a solid plan will also help to ensure that you use the money in the best way to support your business in the long-term. It can be tempting to fight the most immediate fires with your capital, but try to think about the longer term health of your business – and where the money is going to have the most impact.

Adapting to a change in demand

Covid-19 has forced businesses to adapt to a lot of changes and SMEs should be thinking carefully about how their customer demand has changed. What do customers expect from you now? For example, many are still apprehensive of shopping on the high street. This might mean some of the options you offered during lockdown like deliveries or online services should remain.

Communicate with your customers as much as possible to get an accurate view of what they need from you now and in the future. How can you fulfil this? Then it’s important to look at the numbers and scrutinise which areas are going to provide the most return on investment.

Financial Planning: where to start?

For financial planning to be effective, it’s helpful to get into habits that will provide an accurate snapshot of how your business is performing. Reconciling bank transactions daily, creating a daily simple cash flow check-in habit and examining your profit and loss statements weekly will give you a better understanding of where your business stands.

Apps like Float or Fluidly will help to give you an accurate look at your cash flow in an easy to read visual. And the recently launched Xero Short-term Cash Flow tool can help you project your bank balance 30 days into the future, showing you the impact of existing bills and invoices if they’re paid on time. You can then work out which invoices you should follow up on.

Some people can find this task daunting, but your accounts aren’t just being kept for reporting to HMRC, they are also there to give you invaluable insight into your business and to plan for the future.

Ask for help

Your accountant is there to help you to understand your finances. This is likely to be one of the biggest economic challenges you have ever faced as a small business owner. Now, more than ever, it is time to lean on your accountant to help create a robust plan.

If you do not understand something, or need guidance or clarification, get in touch and ask for their expertise and advice. If their advice doesn’t help, ask them to explain it again.

You can also check out Xero’s online guide to managing cash flow here.

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