Latest Artificial Intelligence reports and research: Finextra Research

Report

The Future of Wealth Management 2022

A sector at the beginning of its digital renaissance. Increased digitisation of goods and services throughout the 2010s gathered pace long before Covid-19 turned the global outlook on its head. The pandemic served only to reaffirm this shift to digital as a matter of urgency. The wealth management sector was not spared the upheaval; however, it appears to be emerging from the crisis with an invigorated sense of progress. The disruptive forces of digitisation and Covid-19 are now joined by a groundswell of consumer expectation. This is clearly witnessed in the soaring uptake of retail investment tools and applications, greater access to financial instruments and widespread revolt against the traditional inaccessibility of financial services. This report, the Future of Wealth Management 2021 with interviews from Accenture, Coutts, Hargreaves Lansdown, Nutmeg, Oxford Risk, Tilney Smith & Williamson, and UBS Global Wealth Management will explore the forces currently shaping the industry. It will examine not only what these forces are, but how and why they form the structural foundation for a sector which is at the very beginning of its digital renaissance.

10 November 2021 1115 downloads

Report

Addressing the Poverty Premium: A data-led approach

Poverty premium is a term that means so much more than being charged more for certain products and lack of credit history; it can also equate to digital exclusion. With an increasing focus on environmental, social and governance (ESG) agenda, banks do not wish to be seen to be as socially irresponsible. Regulators and authorities are increasingly turning their attention to these issues as well, understanding that the poverty premium is a roadblock to regional and national economic progress. Banks therefore need to find ways to offer more nuanced services, so that fair banking is open and accessible to everyone. And this ultimately works to their advantage as well. Not all of the demographic that is let down by digital services is poor - think millennials without a credit history, or older baby boomers who aren’t digitally savvy- but by being unbanked or excluded from the system, can easily follow a downward spiral and end up badly off. There is scope and opportunity for banks to provide digital educational and coaching services as well, to bring people on board, better educate them and of course, avoid certain pitfalls. With shrewd capturing, processing and analysis of data and technology, banks can take the lead by addressing the tired bias that exists in traditional credit decisioning models against certain credentials or attributes, which is often a result of programming by human bias. Through open banking and shared data, particularly as this theme trickles into other sectors such as energy, insurance and healthcare, fintech startups and neobanks are already driving change in this respect. Download your copy of this Finextra white paper, produced in association with Cognizant, to learn more.

05 November 2021 296 downloads

Report

Five Factors to consider when building Operational Resilience

The term resilience is receiving a significant amount of airtime in 2021. While the pandemic certainly pulled into focus the need for resilient systems across financial services, the push toward financial resilience was first born in response to the 2008 financial crisis. Since 2008, focus has shifted toward building resilience across operations in the financial services sector, by assessing vital business functions, setting levels of tolerance that these functions can withstand, and testing the tolerances at regular intervals. The Basel Committee on Banking Supervision defines operational resilience as the ability of a bank to deliver critical operations through disruption. This ability enables a bank to: Identify and protect itself from threats and potential failures; Respond and adapt to – as well as recover and learn from – disruptive events. Unlike typical risk management or more traditional compliance-based approaches, when it comes to operational resilience, banks should assume that disruptions will occur – and consider their overall risk appetite and tolerance for disruption. In the context of operational resilience, the Committee defines tolerance for disruption as the level of disruption from any type of operational risk a bank is willing to accept, given a range of severe but plausible scenarios. While the ability to predict which areas are likely to cause disruptions was once the purview of a human supervisor, given the shift to digital operations, it is only logical that firms employ tools such as artificial intelligence (AI) and machine learning (ML) to identify patterns and risks within an institutions’ complex technology systems. This Finextra impact study, in association with BMC, outlines five key considerations that financial institutions must be aware of, ahead of impending regulatory deadlines, as well as the technology-based solutions available to assist them in building a robust and compliant operational resilience strategy.

12 October 2021 253 downloads

Report

Competitive Advantage through Cloud Connectivity

Why NaaS is the smartest path to realising Financial Services Innovation in the Cloud. Many financial services firms are still making the shift from their legacy environments to more agile ways of consuming and running IT. Networking is one of the most critical aspects of this transition. It’s the backbone that connects all parts of an organisation and its data, as well as its wider ecosystem of partners, providers, and customers. The speed, reliability, and flexibility of the network directly impacts financial players’ pace of innovation, as well as their ability to provide highly available, customer-centric services. The challenges and limitations of traditional networking are clear in our virtualised, cloud-enabled, data-driven world. It’s slow to provision, expensive to maintain, lacks flexibility and integration, and can’t scale effectively to handle big data sets and analytics workloads. The need to modernise and simplify networks is an imperative for financial services organisations as their infrastructures become more complex and they develop their multi-cloud and hybrid-cloud strategies to support business transformation. Network-as-a-Service, or NaaS, enables financial services organisations to maximise the potential of the cloud as part of their digital transformation. It provides the future-proofed networking foundation that allows innovation and competitive differentiation. Download this Finextra impact study, in association with Megaport, to learn more.

06 September 2021 173 downloads

Report

SMEs Front and Centre

How business needs are driving (Instant) Payments Innovation. According to the World Bank, Small and Medium Enterprises (SMEs) and businesses account for the majority of commercial companies worldwide and are important contributors to job creation and global economic development. Contributing up to 40% of national income in emerging economies, they represent about 90% of businesses and more than 50% of employment worldwide. SMEs will play a particularly important role in the post-pandemic future as human ingenuity and the need to secure a living income will drive new enterprises forward. Technology will be a vital part of that process, with entrepreneurs looking for new ways to meet customer needs for products and services. The opportunity for financial institutions will be to harness the potential created by the growth in SMEs with modern payment rails, and providing value-added services that reflect the needs of the evolving SME segment. Rather than the current product-centric approach, financial institutions need to find ways to establish themselves at the centre of how a business operates, not just enable it to pay or be paid. As payments capabilities are commoditised, FIs’ income from providing such services is eroded over time, making it even more compelling to understand and serve their business clients’ needs. The key is to understand how very different SMEs operate, and what they expect from their FIs. SMEs increasingly are disposed to rely on software-as-a-service (SaaS) models to run their businesses, whether that’s cloud-based finance or outsourced HR and payroll services. They don’t have the large data centres, in-house experts, or technology infrastructures that large corporates invest in, but they do have the same technology needs to support their business and to use data analytics to take the uncertainty out of their financial futures. This white paper from Finextra, in association with Fiserv, will focus on the problems and challenges SMEs grapple with, and how they can operate more effectively when armed with the right toolkit. Such use cases will demonstrate the products and solutions FIs can create with the power of instant payment rails and overlay services.

10 August 2021 524 downloads

Report

Stemming the tide of Social Engineering Scams with Behavioural Insights

Fraud and cybercrime are always on the increase, evading the latest security conventions and morphing into a different approach, following the money. In the same way, banks and financial organisations worldwide need to continuously respond and adapt. Global events create new trends and directions for fraudsters to exploit and the recent Coronavirus pandemic is no different. Social engineering fraud has gripped the industry in the last year and in particular, phone and business email scams seem to be resulting in the highest losses; indeed, according to the US Federal Trade Commission, 77% of fraud complaints reported by consumers in the US involved contact by phone. In the UK, it is more commonly referred to as Authorised Push Payment (APP) fraud, and while measures have been introduced, such as the Contingent Reimbursement Model (CRM) code and Confirmation of Payee, to protect consumers and to detect and prevent scams and illicit funds transfers, more needs to be done in the UK, and globally. The good news is banks can access and utilise increasingly sophisticated technology and expertise to meet the fraudsters’ aptitude, analysing behaviour patterns, for example, to uncover social engineering scams. Behavioural insights can be used to inform new strategies and respond to attacks in real-time where other security controls have failed. With large losses becoming increasingly publicised, and hence reputation brought into question, the industry must respond, and it is incumbent upon all players to collaborate and be proactive around accountability and prevention. This research paper from Finextra, in association with BioCatch, explores the recent uptick in social engineering attacks globally, and how banks can respond using the latest technology and security measures.

06 August 2021 224 downloads

Report

From Surviving to Thriving: Digital Customer Engagement beyond Video Conferencing

During the Covid-19 pandemic, and ensuing national lockdowns, one of the key challenges for financial services professionals involved in customer or client advisory has been ensuring a smooth digital migration – and that consumers are adequately served via video conferencing solutions. Now that the industry has largely adjusted to this ‘new normal’, it is time for those across the retail, private banking, and insurance sectors to think about how to further upscale their online customer journey, client service, and Know-Your-Customer (KYC) processes, by adopting an innovative, omnichannel, digital customer engagement solution. By providing easier online access to financial guidance and advice for existing clientele, financial players assume a more customer-centric approach, which can result in improved customer retention, increased revenues, and maintenance of marketshare. Download this Finextra impact study, in association with Unblu, to learn more.

29 July 2021 206 downloads

Report

Responding to Lending Disruption

Building an ecosystem and new business models. The lending market has been ripe for disruption for some time - and now COVID-19 has exposed the laggards, brought innovators to the fore, and accelerated trends that were already in motion. The global pandemic also highlights just how important lending is – it is critical to keep the economy going - and how lenders need to be responsive in a crisis. Disrupters are making existing processes better (or revamping/replacing them altogether), creating new business models, and targeting new customer segments. In these unprecedented times, traditional lenders need to respond and future-proof their business. Maintaining the status quo is not an option. On the demand side, consumers now have higher expectations of their lenders. After months of lockdown and moving their lives online, consumers expect the same convenience from their lenders as they get with Amazon, Netflix or Zoom. The user experience should be slick, decisions quick, and delivery instant. As banks respond to the disruption in the lending market, and learn from the fintech companies that do this better, they will also have to adjust to the new normal of working remotely. All banks have had massive increases in customer queries as the effects of the pandemic have taken hold. In the UK, for example, the government introduced measures that meant individuals could take a payment holiday of up to six months on their mortgages and other personal finance products. Lenders were inundated with requests, and some found their legacy systems creaking at the seams. While some lenders have struggled, the pandemic is also providing opportunities for nimble plays. Fintech company Kabbage, for example, created a gift certificate programme to help small businesses with their cash flow to tide them over through the worst of the pandemic. Businesses can sell gift certificates through Kabbage Payments, which can be redeemed at any time, with the funds deposited in their accounts the next working day. Last year Kabbage announced a tie-up with Facebook so that businesses could get a wider audience for their certificates by listing them on the social media platform. Download your copy of this Finextra white paper, produced in association with FIS, to learn more.

27 July 2021 605 downloads

Report

The advantage of Machine Learning in preventing fraud

Accurately identifying customer behavioural trends and proactively preventing payments fraud and other criminal activity at the outset can be done with machine learning. Ingesting tens of thousands of complex signals and analysing patterns to monitor activity is more effective than blocking transactions based on hard-coded and antiquated rules. Fraudsters can learn to circumvent these, and trusted users are put at risk, which is why embedded machine learning algorithms can be valuable. Download this Finextra impact study, in association with Sift, to learn about: Payments fraud and how machine learning is being leveraged today, Account takeover fraud, the biggest future threat to banks, and Synthetic ID fraud, the next opportunity for machine learning.

17 June 2021 391 downloads

Report

Identity verification’s integral position in evolving digital transformation

Eliminating friction by enhancing onboarding processes with efficient identity verification is of paramount importance to the success of a financial institution. While data can bolster streamlined onboarding and verification, it can also support the delivery of actionable insights for the creation of personalised services. This establishes a comprehensive view of the customer, increases loyalty, boosts sales, and generates revenue. Therefore, in an increasingly competitive market, the transformation of user experience must be prioritised, and identity verification is central to that objective. Download this Finextra impact study, in association with Jumio, to learn how to: Establish a competitive edge with efficient onboarding, Reduce abandonment rates, Utilise biometrics, facial recognition, and AI, Ensure a positive, seamless user experience.

15 June 2021 326 downloads

Report

Sustainable Finance Live - Valuing Nature: Better Assessing Financial Risk

A Visual Record from the Sustainable Finance Live workshops 11 - 12 May 2021. On 11 and 12 May 2021, Finextra and ResponsibleRisk brought together sustainable finance experts to discuss how financial services firms and technology companies can achieve the UN’s Sustainable Development Goals by 2030. Debunking the myth that revenue cannot be generated through trustworthy implementation of ESG measures, this programme of interactive co-creation workshops targeted a number of sub-sectors within financial services, and spoke to the specific challenges and opportunities through a lean back, lean in and learn model. The event explored how providing investors with dynamic data can help define the impact on both natural capital assets and dependencies on ecosystem services. This will be crucial for the future of our planet. In his recent HM Treasury-commissioned review, ‘The Economics of Biodiversity’, Professor Sir Partha Dasgupta stated that when considering this topic, it becomes a study in portfolio management, and we must approach it as asset managers. Today, nature is under-priced and under-valued. The best that each of us can achieve with our current portfolios will result in a collective failure. However, if biodiversity is viewed as a portfolio of natural assets, there will be increased resilience against the impact of shock. Download a Visual Record of the event below to find out more.

02 June 2021 80 downloads

Report

Five Business Benefits for Analysing and Combatting Fraud

A Finextra Research Impact Study in association with Aerospike. With increased financing options at point-of-sale, card-not-present transactions, and contactless payments, comes a resultant surge in fraudulent transactions and financial crime. This increase in digital fraud has been catalysed by the recent Covid-19 pandemic-induced shift to online banking and commerce. Now more than ever, financial institutions must implement payments authentication processes to prevent the long-term risks associated with fraud, including slimming margins and reputational damage. One way financial players can stay ahead is to analyse all available historical and real-time data, and apply artificial intelligence (AI) and machine learning (ML) tools – which encompass a range of algorithmic approaches that derive from statistical methods such as regressions and neural networks – to decipher legitimate transactions from the illegitimate. There are, however, five further business benefits to understanding customer risk profiles. Actionable insights derived from fraud profile analysis can help banks visualise each customer, not as a collection of disassociated data points, but as a mosaic, made up of different characteristics that merge to provide a comprehensive view. This can lead to complex, holistic, and predictive analysis of customers’ behaviour – generating consistent and tailored services. Download your copy of the paper below to learn more.

20 May 2021 218 downloads

Report

Fintech, ESG and IFCs: Embedding Sustainable Business Models

A Finextra Research Impact Study in association with Jersey Finance. While the landscape for financial services is currently being re-shaped by the twin trends of digital technology and the rapid rise of sustainable finance, leading international finance centres (IFCs), always nimble and adaptable, are seizing on the opportunities. Close analysis of these trends highlights an even more significant intersection at play with both these mega trends converging symbiotically, leading to fintech playing a part in the scaling up of sustainable finance, while the latter in turn accelerates innovation in fintech. Adoption of AI is improving the ability of financial service providers in leading jurisdictions, such as Jersey, to meet compliance needs, while also driving down process costs that might act as a barrier to sustainable finance. Equally, the growth in sustainable finance leads to greater demands for fintech solutions, adapted to the specific needs of IFCs. Evidence of these major trends and their impact on IFCs are included in the findings of this latest Finextra report, a study which Jersey Finance is pleased to support. As an IFC facilitating cross-border investment through our expertise in areas such as fund governance, fiduciary and administration for private wealth, we are focussed on enhancing our capabilities in the digital space, while sustainability is already integrated into our core offering. Furthermore, this symbiotic convergence is becoming a notable factor in firms’ service delivery within Jersey’s financial ecosystem. Firms such as Apex and IQEQ are tailoring their fund solutions to include new data-driven propositions, developing new tools that deploy the latest technologies to collect, evaluate and report ESG data. Sustainable finance solutions like this are seeing strong take-up by managers, keen to meet both the growing investor demands for transparency on the impact of their portfolios and to streamline their regulatory compliance under emerging frameworks, such as the EU’s Sustainable Finance Disclosure Regulations (SFDR). It’s clear IFCs have a vital role to play during this global transition and leading jurisdictions such as Jersey, with long standing expertise in supporting cross-border capital flows and a flourishing fintech cluster, can call upon both these strengths as we gravitate to a more sustainable future. Download your copy of the paper below to learn more.

06 May 2021 292 downloads

Report

Sustainable Finance Live - Reimagining Risk Modelling ESG Solutions

A Visual Record from the Sustainable Finance Live workshops 8-9 December 2020. Debunking the myth that revenue cannot be generated through trustworthy implementation of ESG measures, this co-creation event focused on real-time forward-looking measurement of climate change and nature loss to address transitional and physical risk, following a lean back, lean in and learn by doing model. The workshop detailed how alternative data from sources such as satellites and sensors can augment traditional risk systems and provide insights for the future of sustainable financing. Diving deep into the practical challenges of risk management, the sessions considered using alternative data to inform credit decisions, with speakers providing advice on how to embrace sustainable finance. The interactive forum welcomed a set of cross-functional skills from individuals spanning the technology, business and finance sectors. Initially taking a generalised approach to understand reporting across ESG finance sectors, it became apparent that specific use cases were needed. Richard Peers, founder of ResponsibleRisk and contributing editor for Finextra Research, outlined the key questions for the event: What are the issues and opportunities for risk management working with alternative data to inform credit decisions? How can these decisions be quantified against physical and transition risk? With a top-down approach, a clear focus of the sustainability components and trying to infer the process of assessing the following, the workshop focused on: Using alternative data to inform physical and transition risk How satellite and sensor data can provide insights for investment and governance professionals Plotting the steps to resolution of existing problems and mainstream use of data Identifying how to prevent lack of proper pricing of ESG risk Download the full report below to find out more.

16 April 2021 72 downloads

Report

The Future of Cloud 2021

Evolving the Financial Services Industry. As consumers have come to expect the same experience of their financial services providers that they have elsewhere in their lives, traditional financial institutions (FIs) are increasingly looking for ways to improve customer service and deepen engagement. For many, optimising the digital experience for customers is a priority. From leveraging omni-channel communication strategies to creating more personalised experiences, the goal is to deliver the right message, at the right time, in the right channel. Fintech firms have been faster to innovate. Many, in fact, were created to address consumer dissatisfaction with traditional financial services providers. However, many players across the banking, payments and capital markets industries such as Barclays, Broadridge, Capgemini, Calypso, Collibra, DBS, FICO, Fraud.net, Global Payments, HSBC, IHS Markit, Kx, Mambu, Nasdaq, Numerix, OakNorth, Singapore Exchange, Solarisbank, Standard Chartered and Trading Technologies are increasingly turning to the cloud as a way to accelerate their digital transformation for customers. Shifting away from legacy infrastructure reduces time and resource constraints and financial institutions can innovate and respond to customer needs with the cloud. Banks, payments services providers, and capital markets firms must take advantage of the cloud’s greater elasticity, flexibility and cost-effectiveness. Download your copy of the report below to learn more. Part of the Finextra Cloud Series, in association with Amazon Web Services (AWS).

26 March 2021 850 downloads