- 38% of firms cite Regulation as their top priority with enterprise-level Data Management (14.4%) & Systems Integration (10.6%) coming in second & third
- MiFID II is the top regulatory priority (42.6%) followed by Dodd-Frank (29.6%); potential future Regulations related to tech Innovations like Blockchain and AI are also a top focus (29.2%)
- Innovation and automation remain on every firm’s agenda, with 2017 priorities shifting towards tangible business solutions
Synechron Inc., the digital, business consulting and technology services provider, has today announced its predictions of top Financial Services Trends for 2017, supported by survey data from TABB Group. The survey of over 200 senior-level, global financial services business and IT decision-makers across the U.S. U.K. and Europe found 38% of respondents placed Regulation as their top priority for 2017, followed by Data Management (14.4%), Systems Integration (10.6%), Artificial Intelligence (AI) (9.7%) and IT Business Transformation (8.3%). These results clearly show that while digital innovation remains a long-term priority over the next five years, businesses need these programs to achieve pragmatic results for them in 2017.
Faisal Husain, Co-founder & CEO of Synechron, commented: “While digital innovation is at the heart of our business, financial services firms need immediate solutions to the problems they are facing today. Regulation, cost-pressure and out-dated technology systems and operations are part of almost every client conversation, so it is no surprise these items toped their 2017 priorities list. MiFID II, Dodd Frank, Basel II and FRTB are all driving data and IT changes within organizations and have paved the way for firms to reimagine their business architectures and embrace established techniques in artificial intelligence, systems integration best practices and design thinking. 2017 will be a year where technology is asked to offer tangible business value at an enterprise level.”
Given these survey results and input from Synechron’s global clients across digital, business consulting and technology engagements, Synechron has outlined its predictions on top ten trends and priorities to expect in 2017:
- Regulatory Reigns Supreme – Given that 38% of firms cite Regulation as their top priority for 2017 and Data Management came in #2 at 14.4%, expect data-driven regulations to bea hot-button topic over the next year. This includes regulations like MiFID II and Dodd-Frank which topped the list at 42.6% and 29.6% respectively but also others like the DOL Fiduciary Rule and Basel III which 15.3% of respondents said they’d be focused on over the next year. Regulatory uncertainty related to technology Innovations like blockchain and AI are also a top concern (29.2%).
- Uncertainty Remains – Regulations related to technology Innovations like Blockchain and AI are also a top concern (29.2%) according to the survey; however, in this case, it is the uncertainty of future regulations that could be prompting inaction or staving off innovation. Global events like Brexit, the results of the U.S. election, the threat of Frexit and more, have also created an environment of regulatory uncertainty that will prompt more steering committees in 2017 to assess options and develop plans that can be quickly enacted at the trigger moment. Synechron has released more detailed research on this topic which can be found here.
- Data Management & the Chief Data Officer (CDO) – With 14.4% of respondents focused on enhancing their data management initiatives, we also expect the role of the CDO to continue to gain prominence within the business organization. This will mean a louder voice in the boardroom and stronger authority across the organization to drive forward initiatives and invest in technologies like AI and Blockchain. 8.8% of firms have even designated Blockchain initiatives to sit within their data function.
- Systems Integration – The #3 priority thatrespondents highlighted as a focus for 2017 was Systems Integration at 10.6%. As one of the leading experts in systems integration related to trading technologies like Murex, Calypso, Summit, and others, Synechron is seeing an interest in enhancing systems responsible for liquidity risk management, credit risk management, counterparty-risk and collateral management whereby near-shoring, smart-shoring and offshoring can be employed along with an agile development methodology.
- The Year of the Chatbot – 2017 will be the year of the ‘BOT’. In one chat, banks can do everything from help someone onboard and make an important financial decision, to apply for a mortgage, personal loan or process an insurance policy. By combining hands-on service with some element of automation, alert notifications and auto-dialers, for example—financial institutions can manage customer relationships easier and with a degree of personalization. Expect to see a whole range of customer service and virtual assistant bots going live in 2017 to enhance banking, trading and insurance interactions.
- Artificial Intelligence & Advanced Machine Learning – With 9.7% of firms citing AI as a top priority for 2017, AI has reached a critical tipping point and will be at the heart of a convergence of technologies including Data Science, Internet of Things (IoT), Optical Character Recognition (OCR), Natural Language Programming (NLP) and Blockchain. In 2017 Robotic Process Automation will become a key priority for bank executives looking to do more with less and unique combinations of AI techniques will power new applications. Throughout the year expect the industry to launch a range of hybrid robo-advisor services targeted at millennials and high-net-worths. Also expect that AI will continue to and increasingly be used to address one of the industry’s greatest concerns across the enterprise – cyber security.
- The Future of FinTech – In 2017, we can also expect to see the fall of what were hoped to be future fintech unicorns – as several significant fintech startups will have received more than 3 to 4 years of funding and if the market is not conducive to a healthy IPO, or results are not showing the massive potential once envisaged, the taps are likely to get turned off. This trend will be no surprise given that most technology VCs expect only 1 in 10 investments to pay-off, but it means that the fintech startup scene, and associated hype cycle, may get a little dose of commercial reality and start to feel deflated in 2017.
- Bank APIs and The Cloud – As the Banking Financial Services and Insurance (BFSI) industry moves towards an environment that is fast and agile, runs in the cloud, and where customer acquisition is expected to be lightning fast, many firms will begin to launch their own app marketplaces through Open API programs in 2017. Over the past 12 months there has been a consistent uptake in such platform solutions from leading organizations like Citi and BBVA, and pioneering leaders like Santander have established reliable business models for fintech banking borne out of open APIs. In 2017 open, unified solutions will continue to be launched by banks and insurers and make it possible to deliver new digital products and services, whilst still maintaining a multidimensional customer experience across all digital channels. We are also seeing a rise of the usage of Public cloud technologies in Banking, with firms moving or considering moving risk and IT infrastructure to Google or Amazon. This indicates a major shift, after a gradual adoption of private cloud technologies and recent FCA guidance green-lighting cloud computing.
- Design Thinking – Many financial institutions have embraced a mobile-first strategy or omni-channel strategy, placing mobile design as a critical component of their UX and CX strategies. Design Thinking, which has been around now for over a decade,is a design methodology that helps businesses understand their problem statements better by rooting them in end user research and using that research to influence a more impactful design solution. As financial services organizations look to elevate their brands, communicate authenticity and engage with their customers, design thinking can deliver meaningful data to support those initiatives and is being considered by many as part of an integrated digital strategy.
- More Blockchain – 2017 will continue to be a year of Blockchain experimentation, and whilst we are likely to see the rise and fall of some blockchain consortiums, one trend that will remain is the appetite for banks to work together and leverage blockchain accelerators to run proof of concepts or controlled pilot programs. The biggest challenge facing the industry today is the scarcity of Blockchain talent, not only from an application development perspective, but also from a domain expertise angle in which business use cases are validated and earmarked for blockchain transformation – making real development experience a unique asset. In fact, when asked if their company currently has enough talent capable of implementing blockchain technology, our survey results found 39.3% of respondents answered No – Blockchain technology talent is still difficult to find and 31.3% said No – We’re working with partners, vendors to supplement – as compared with 23.4% saying they would reallocate resources and 6.1% support training.
Black Friday payment data reveals rapid growth of ‘pay later’ methods like Klarna
Payment processor Mollie reveals the most popular payment methods for Black Friday
Mollie, one of the fastest-growing payment service providers, has revealed insights into the most popular payment methods used this Black Friday. The data, which provides a year-on-year comparison of 2019, shows that payment methods allowing customers to pay flexibly – like ‘pay later’ service Klarna – has more than doubled in 2020. The study spans 101,000 merchants across Europe, primarily from Germany, U.K., France, the Netherlands and Belgium.
Black Friday trends:
- In 2019, Mollie saw a 36% increase in the overall number of transactions on Black Friday versus the previous year. In 2020, this shot up to a growth of 56% on the 2019 numbers, representing a difference of 20%.
- And this year, even in the four days leading up to Black Friday, there was a 58% YoY growth in transactions.
- Use of ‘buy now, pay later’ services on Black Friday (such as Klarna or ClearPay) has more than doubled from 1% of all payments in 2019 to almost 2.5% in 2020.
- Use of mobile payment methods on Black Friday is consistent on the previous year – 0.20% in 2019 to 0.25% in 2020.
“There is a lot of pressure on consumers’ wallets at the moment, which is making people look to payment methods that offer them financial security,” said Ken Serdons, Chief Commercial Officer at Mollie. “It makes sense that fintechs like Klarna, who have performed phenomenally well this year, have been so popular this Black Friday. The increase is in-line with this growing trend towards more flexibility in how consumers pay for goods.”
Beyond Transactions: The Payment Revolution
By Marwan Forzley, CEO of Veem
The uninterrupted disruption brought on by the pandemic accelerated the need for robust, digital-first tools created to support remote teams and accelerate online commerce.
As offices across the US moved to work from home for indefinite periods, specialized back office departments handling sensitive information have had to go a layer deeper to find tailored solutions that support the transition of their in-person workflow. For finance teams, payment approvals, issuance, and general management became a challenge overnight. Particularly for those who — even in 2020 — continued to send and receive paper checks through the mail.
For years and even to this day, millions of small business owners around the world have relied on slow and confusing bank processes to manage their business finances. Every day, they spend valuable time using old, complex and expensive platforms to transact with domestic and international vendors — never knowing where their payment is or even when it arrives at its destination.
With ongoing economic and logistical uncertainty looming as we move into 2021, this old norm should not be expected for much longer. This year has seen small business owners wear more hats than ever before, and has influenced a mass adoption of online financial applications that offer heightened security, save more time, and provide more value as budgets tightened.
A study conducted by Mastercard earlier this year saw online business-to-business payments skyrocket in popularity with more than half (57%) of small business owners across North America turning to digital services since the start of the pandemic to improve cash flow and modernize their payment processes.
If this study is of any indication, the days of making an appointment with a banker or sending a wire transfer through an outdated web portal have passed. And the time for the payment revolution is here.
Putting the user in the driver’s seat
Major world events have always acted as a catalyst for innovation and change. As of a result of the growing pains we experienced this year, in 2021 businesses can finally say goodbye to huge transaction fees and bank-imposed gatekeeping when it comes to managing their financial processes.
The financial technology firms, in partnership card and local bank networks and sometimes even each other, have been building and iterating on products over the past decade that were created to work flawlessly from a desktop or smartphone.
For the first time, small businesses have access to needed, user-friendly financial tools packaged to make their lives easier. No longer reserved for major enterprises, those previously underserved by traditional banks can sign up for applications that consolidate billing, payments, working capital and more to one central dashboard.
With the owner in the driver’s seat, they can better communicate with vendors and customers and reallocate their time previously spent manually sending, receiving and reconciling payments toward growing their business — without ever stepping foot out of their home.
Genuinely seamless and automatic integrations with complimentary functions aligned to core financial activities mark a fundamental change in how businesses will choose to operate moving forward. Not only should experiences be integrated, but the entire lifecycle of the transaction should be digital.
Consider a freelance contractor that uses a time tracking and invoicing software to invoice a client. Through an integration between the time tracking tool and Veem (a complete online business payment tool) the client receives and captures the invoice within their Veem payment dashboard. Because Veem and Quickbooks are integrated partners, as soon as the invoice is received, a bill is automatically created, marked as paid, and reconciled on the client’s accounting software as soon as the funds are issued.
In this flow, the contractor only needs to send an invoice, and the client only has to approve the payment for everything else to move. Thoughtful integrations like these empower businesses to log-in to one application, but benefit from several, ultimately eliminating inefficiencies.
Understanding that old habits die hard, it’s expected that businesses of any size have questions when it comes to moving payments from a bank to an online provider.
Answering these questions with unprecedented product value and relentless transparency is the best way forward to bring more businesses onboard in 2021.
This means providing up front pricing, tracking, choice and flexibility to users. Before, during and after the pandemic, cash flow management remains the most critical part of running a small business. Digital payment providers enable the entrepreneur to have unparalleled insight, visibility, and control over their cash flow.
Through non-bank payment options, businesses can secure their information over a secure data network, watch their money move from origin to destination, and choose the speed at which they would like funds to move. By these tools working in harmony, the user can remove friction and spend more time focused on their business.
Separating the signal from the noise
2020 is a year that changed everything for the global small business community. In a report by Veem issued at the start of the pandemic, an overwhelming 80% of businesses shared that they anticipated COVID-19 to impact their business over the next 12-16 months. Problems surfaced that many didn’t even realize they had. And in finding those problems, businesses turned to technology to support them.
As enabling technology, it’s our job to listen and bring clarity and solutions to those contributing to and growing our local and global economies despite the hurdles and challenges they’ve faced.
Right now, small businesses deserve more. More access, more choice and more credit. In the road ahead we expect online payments and bundled user friendly financial services to play a pivotal role in the recovery of small businesses. The payment revolution will see the continuation of important and meaningful products that value the users time and enable businesses to launch, grow, and scale regardless of what’s to come in 2021.
The UK’s hidden payments crisis: why businesses should rethink their payments strategy
By Edwin Abl, Chief Marketing Officer at Modulr.
As the economic conditions imposed by the Coronavirus endure, businesses are facing a dilemma about how to reduce operational costs while meeting customer needs in as economical a way as possible. And all without compromising on their quality of service.
A recent survey of 200 payments decision makers across the UK, revealed there are hidden costs of payment processing which will have an exponentially greater impact on wider businesses if left untreated. It found, UK businesses are spending an average of £1.5m a year in costs attached to payments – money they simply cannot afford to lose to inefficient processes in these uncertain times.
Businesses need to plug any holes in their boat to avoid sinking. And for many this includes the examination and recalibration of their payments strategy.
The research reveals that the payments process now represents a huge 12% of a business’s total operational expenditure. With two-thirds (64%) of all businesses expecting the cost of payment processing to increase over the next two years.
Two thirds (67%) of payments decision makers surveyed believe the way they process, and service payments has had a direct impact on their customer experience. In fact, 62% of respondents believe the hidden costs of poor payments outweigh the hard costs. This indicates that a poor payments strategy is no longer something business leaders can ignore, as it now has a far greater and unseen impact on wider business mechanics.
The top three hidden costs attached to inefficient payment processes were ‘impact on customer experience/satisfaction’ (38%), ‘influence on relationships with other teams and departments (35%) and ‘impact on competitor differentiation’ (31%).
These findings suggest there is widespread consensus that getting payment operations right, directly creates performance boosts elsewhere in the business. When asked to estimate, as a percentage, the business performance boost received if hidden payment inefficiencies were resolved, the average margin for improvement was +14%, with traditional banking the sector most likely (31%) to predict a performance gain greater than +15%.
The 5 key steps UK businesses can take to drive payment efficiencies
There are five key areas payments decision makers and tech leaders should be looking to change, so that they can drive end-to-end payment process efficiencies:
1 – Locate hidden payment process inefficiencies
Visibility is a key issue. Respondents across large (46%) and small businesses (47%) say they have very clear metrics directly related to payment process costs. Only 8% say that they don’t understand the costs involved. Yet, businesses know they could do better with improved visibility of costs. Both large and smaller companies cite ‘lack of visibility for operational costs’ as the top challenge when it comes to achieving strategic goals around payment process and money services provision.
Digital banking companies, including lenders and FinTechs, identified ‘lack of visibility for operational cost’ as a challenge when it comes to increasing payment services revenue (37%). This is in comparison with all respondents mentioning other issues such as lack of skills (25%) and constrained resources (25%) as secondary and tertiary challenges respectively.
For many businesses, developing a cost model for current and projected payment process costs, both hard and hidden, is a top priority.
2 – Make payments key to stakeholder experience management
Customer, departmental and even supply chain partner experiences are increasingly intertwined. There is no doubt that customer experience is a top priority for payment services strategy. But enhancing the broader stakeholder experience is a close second, and certainly complements the former.
Employee experience affects customer experience. So, payment services innovation must extend beyond customer touchpoints. Happy employees who feel they are working with effective and efficient payments systems will be best placed to enhance the customer experience. And, employees in commercial roles who have bought into the benefits of efficient payments will naturally want to extoll those benefits to customers.
Companies with a sophisticated and integrated supply chain are likely to be the frontrunners in implementing the integrated payment services that benefit all stakeholders, due to their historic experience. As customer experience management evolves into a broader discipline of stakeholder experience management, including employees and supply chain partners, it will become more crucial than ever to include payment services experience
3 – Integrate and automate to support payment innovation
Payment innovation is driving a culture change, connecting previously siloed functions such as IT and finance. There is increasing integration of systems from customer relationship management (CRM) and enterprise resource planning (ERP), into accounts and payments. The research tells us that payment processes are impacting nearly every department, affecting areas including customer experience, brand, leadership, business agility and ultimately, revenue. Integration enables new business models for paying suppliers and customers.
Automation is key to driving efficiency, replacing manual error-prone and time-consuming processes with real-time and responsive, digital ones. This is particularly the case when it comes to operational and payment processes.
Indeed, 52% of large companies say that team hours spent on payment processes was their biggest hard cost attached to payments, compared with 26% of smaller companies who share that view. This suggests that automation could contribute more to cutting the cost of payment processes in large companies.
A host of payments-as-a-service providers (including Modulr) are supporting customers to do just this by enabling them to stream a whole unified product ecosystem of payments functionality directly into their own software.
4 – Bring business leaders together
Payments innovation is driving systems integration and creating a more collaborative stakeholder ecosystem. As all the C-level roles become increasingly focused on the customer experience, the finance remit now includes overall business operations and its associated risks and opportunities. The role is evolving beyond just accounting, tax liability and funding. Therefore, closer collaboration between senior leaders is key to driving efficiencies and enhancing customer experience.
5 – Innovate by adding finance and payments to vertical services
Companies with a vertical focus are well placed to innovate by offering new payment services. In many vertical sectors, especially employment services, software vendors are increasingly embedding financial services facilities, such as payments, into their technology platforms. Employment services SaaS providers, across payroll, accounting, bookkeeping and more are offering financial services to existing and new customers within their specific ecosystem.
This means they can develop hyper relevant, convenient and delightful financial products and services for their end users through highly flexible, ‘plumbed in’ payments. This creates an ecosystem of stickier products while boosting the lifetime value of each end user.
Moving forward – engaging technology to drive efficiencies
If the onset of the Coronavirus crisis has taught us anything, it is that there are many advantages to investing in technology and having a digital infrastructure as responsive as your customer-facing experience.
However, whilst digital technologies enable companies to provide customer service in new ways during lockdown. These same businesses are failing to transform their digital strategies, with the biggest priority still being cost reduction (41%).
By not shedding legacy technology and shoring up operational efficiency, UK businesses are following an increasingly risky strategy. And one which will have an exponentially greater impact on the wider business if left untreated. Particularly when this widespread failure to act concerns the customer experiences that sit at the very heart of a proposition – the payments.
To find out how you can drive payment efficiencies into 2021 and beyond, download the full report here for all the insight you need.
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