Financial IT Summer Edition 2024

THE CORRESPONDENT OF THE FUTURE: SHAPING INTERNATIONAL PAYMENTS WITH BANK-FINTECH COLLABORATIONS

Roisin Levine, Head of UK & Europe Partnerships, Wise Platform

RUNNING RINGS AROUND FRAUDSTERS: DETECTING AND PREVENTING TRANSACTION FRAUD

Marija Solovjova, Head of Fraud AML Transactions Disputes Oversight Department, Ecommpay

WHY YOUR DATA IS THE BEST WEAPON TO FIGHT FRAUD

Aaron Holmes, Founder and CEO, Kani Payments

Kirill Lisitsyn, CEO and Co-Founder, Torus

FAST, PROVEN, GLOBAL PAYMENTS INFRASTRUCTURE

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Around £100bn+ of the world’s money moves through our infrastructure every year.

Convenient

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Transparent

Retain access to real-time payments tracking via Swift GPI, ensuring visibility into payment flows for your customers and more streamlined reconciliation operations.

For more information, visit www.wise.com/platform

PERPETUAL MOTION AND GLITTERING PRIZES

Fintech – where technology meets financial services – is characterised by perpetual motion. For anyone involved in fintech, the biggest change over – say – the last 12 months will be change itself.

When we asked them in May last year, that was the opinion of the organisers of Money20/20 2023. As this year’s conference – which is also taking place in Amsterdam –draws near, we believe that it is appropriate to consider a different but related question: WHY is the motion perpetual?

In social sciences it is easy to find situations where something (such as

Andrew Hutchings, Editor-In-Chief, Financial IT

demand or supply of a product or service) stops moving entirely. These situations also exist in natural science (such as when an earthquake or avalanche ends, and a new equilibrium is reached). In Fintech, change is constant: moreover, it appears to be constant across the entire panorama of Fintech – wherever one looks.

As ever, this edition of Financial IT does not have contributed articles from across the entire panorama. However, our contributors come from a reasonably broad section of the panorama. Together, they provide clues as to why, in Fintech, motion is perpetual. Those clues – in no particular order – include the following:

• The market for embedded finance apps should grow by 500 percent by 2032. Thanks to the general rise of the Global South, Local Payment Methods in e-commerce are set to rise from 47% of transactions by value in 2023 to 58% in 2028. The corresponding figures for Account-to-Account (A2A) payments are 7% and 16%.

• Global e-commerce should expand by 65% by 2028.

• A quarter of people worldwide are still unbanked.

• Statista reports that, globally, losses from online payment fraud in 2023 amounted to $48 billion.

• Artificial Intelligence (AI) facilitates detection of fraud which, in the UK, is costing businesses over £200 billion annually.

• Open Banking payments in the UK in

the first six months of 2023 were more than double those of the previous corresponding period.

• In spite of the sophistication of the global payments industry, settlement problems give rise to major costs.

• Overpayments by banks and fintechs to the operators of card networks can amount to between 5% and 15% of the payments to the operators.

• In the United States, the number of workers in the gig economy is growing three times as fast as the full-time workforce.

• According to the Federal Reserve, 83% of businesses and 75% of consumers are already using faster payments.

We live in dark times. However, regardless of the economic stagnation, major conflicts in the Middle East, Ukraine, SubSaharan Africa and elsewhere, significant risks of financial crisis and unresolved environmental challenges … the Fintech industry provides hope, and a lot of it. Across the Fintech panorama, it is easy to find markets that are still growing quickly. Those markets will develop regardless of what disasters unfold elsewhere.

Further, the growth of the markets are being driven by the empowerment of individual consumers. People are demanding – and getting – payments services (and much else besides) that are faster, cheaper

and better. Many of the people are in comparatively poor countries where the evolution of payments and other financial services will be completely different to the evolution that continues in the developed world.

A better deal for consumers means downwards pressure on prices for service providers. In aggregate, the costs that can still be reduced are enormous. For the companies that can provide other businesses with better ability to control expenses and losses, the opportunities are correspondingly huge.

Expanding markets, empowered consumers and businesses’ reduction of costs are glittering prizes. Not all the ventures that seek those prizes will be successful. However, the pursuit of the prizes will ensure that, in Fintech, change will be constant.

Perpetual motion is here to stay. It will likely be the biggest theme in Money20/20 Europe 2024 in Amsterdam. We wish everyone who is involved a most successful conference.

Andrew Hutchings, Editor-in-Chief, Financial IT

Although Financial IT has made every effort to ensure the accuracy of this publication, neither it nor any contributor can accept any legal responsibility whatsoever for consequences that may arise from errors or omissions or any opinions or advice given. This publication is not a substitute for professional advice on a specific transaction.

No part of this publication may be reproduced, in whole or in part, without written permission from the publisher. Entire contents copyrighted. Financial IT is a Finnet Limited publication. ISSN 2050-9855

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Editor-In-Chief

Andrew Hutchings andrew.hutchings@financialit.net

Publisher Chris Principe chris.principe@financialit.net

Multimedia Partner Nodira Sadikova nodira.sadikova@financialit.net

Research Abdu Turdialiyev Jamshid Samatov

Director of Sales

David Hancock, david.hancock@financialit.net

Production/Design Timur Urmanov

Project Manager & Marketing Nilyufar Sodikova nilyufar.sodikova@financialit.net

Founder Muzaffar Karabaev

2024 EQUALS 1984

I, like many of you, am concerned about my online security. My main concern is bad actors getting hold of my financial information. This can mean identity fraud, theft, and forgery. My worst fear is waking up to find all my assets, fiat and crypto, drained down to ZERO.

Additionally, I have a nagging fear of having my life watched by our governments. This was drilled into me at a young age after reading 1984 by George Orwell. At the centre of the dystopia described by Mr. Orwell, Big Brother is watching you…and everyone and everything else. Even though Mr. Orwell

died in 1950, just after he had finished the book, he seemed to have gotten much right at that time. Worryingly, he appears to have become even more right as each year since then has passed.

I stumbled upon a release from a company called Babel Street regarding the signing of a license agreement for the use of their products Babel X and Locate X, by U.S. Customs and Border Protection (CBP). It is surmised that several U.S. government agencies – as well as many governments elsewhere – are paying millions of dollars annually to firms such as Babel Street and others. Many companies are also paying for this same type of data as part of the estimated 12-billion-dollar location data market.

Here is how it works…

The Babel/Locate X platform lets a user enter a name, an email address, or a phone number. The platform gives them back information about their employment history, location data, IP addresses, social media posts, social security number, etc. It can offer details about someone’s location, taken from their smartphone apps. It can provide access to publicly and commercially available information in over 200 languages from the “public”, “dark,” and “deep” webs. These tools are "artificial intelligence (AI) -enabled."

Smartphone apps collect all sorts of data from our phones. Apps request access to lots of personal data on your phone—from email addresses and contact

by Chris Principe, Publisher, Financial IT

lists to locations. These data points are sold to data brokers, who sell it to advertisers, businesses, investors, and governments. This data isn’t getting sold in the traditional sense. Instead, brokers are selling access, so that the brokers’ clients can mine and use this precious data from a database. Governments have been able to trace people without using warrants in this fashion. The Department of Homeland Security is using smartphone data to screen travelers and visa applicants – be they U.S. citizens or refugees and asylum seekers. All are monitored using AI technology.

In many places, governments’ everexpanding social media dragnet is certain to scare people from engaging in open speech and associations online. It can be impossible to erase your traces once you’ve hit “Send.” Please think twice about pressing the button...

Today there is no possibility to really live “off the grid”. Our digital lives produce a permanent imprint. Most people have no idea of what is going on. Big Brother really is watching already…

Chris Principe, Publisher, Financial IT.

2 PERPETUAL MOTION AND GLITTERING PRIZES

Andrew Hutchings, Editor-In-Chief, Financial IT

4 2024 EQUALS 1984

Chris Principe, Publisher, Financial IT

8 EXTRACTING MORE VALUE FROM DATA IN CARD PAYMENTS

Kirill Lisitsyn, CEO and Co-Founder, Torus

12 THE CORRESPONDENT OF THE FUTURE: SHAPING INTERNATIONAL PAYMENTS WITH BANKFINTECH COLLABORATIONS

Roisin Levine, Head of UK & Europe Partnerships, Wise Platform

14 RUNNING RINGS AROUND FRAUDSTERS: DETECTING AND PREVENTING TRANSACTION FRAUD

Marija Solovjova, Head of Fraud AML Transactions Disputes Oversight Department, Ecommpay.

16 WHY YOUR DATA IS THE BEST WEAPON TO FIGHT FRAUD

Aaron Holmes, Founder and CEO, Kani Payments

24 HOW CULTURE PROVIDES RESILIENCE IN THE FACE OF EVOLVING THREATS

John Noltensmeyer, Chief Information Security Officer, IXOPAY

28 THE POWERFUL IMPACT OF FASTER PAYMENTS – AND THE SIGNIFICANT OPPORTUNITY FACING FINANCIAL INSTITUTIONS

Doug Brown, Chief product officer, digital first banking, NCR Voyix

30 HOW EMBEDDED FINANCE IS BUILDING A BETTER FUTURE FOR RETAILERS

Nirav Patel, CEO, Andaria

32 THE FUTURE OF COMMERCE PAYMENTS IS LOCAL

Stuart Neal, CEO of the global paytech business, Boku

34 DEFEATING FRAUD: HOW AI IS TRANSFORMING CONTACT CENTRES

Jean-Denis Garo, Vice President Product Marketing, Odigo

38 THE QUICK WORD…ON CRYPTO Nodira Sadikova, Multimedia Partner, Financial IT

18 BANKING REIMAGINED: TOWERBANK ON THE EDGE OF DIGITAL ASSET INNOVATION

Guy Mettrick, Industry Vice President, Financial Services, Appian

Gabriel Campa, Head of Digital Assets, Towerbank International

22 BANKS, PLEASE CHARGE US!

Andy Wiggan, Chief Product Officer, GoCardless

40 HOW EMBEDDED FINANCE IS DRIVING DIGITISATION IN THE B2B FINANCIAL SPACE

Adam Edwards, Product and Growth Director, Satago

44 FROM HERSTATT TO CREDIT SUISSE: BANKING'S FIFTYYEAR CALL FOR REAL-TIME RECONCILIATION

Alex Knight, Head of EMEA, Baton Systems

EXTRACTING MORE VALUE FROM DATA IN CARD PAYMENTS

Interview with Kirill Lisitsyn, CEO and Co-Founder of Torus

Financial IT: Please tell us about Torus.

Kirill Lisitsyn: We are a SaaS intelligence platform for banks and fintechs which helps them to gain more profits on their card payments business. We focus on the area of so-called scheme fees charged by card network operators like Visa and Mastercard.

Our clients are card issuers, merchant acquirers and processors. We enable them to optimize their operating costs by better analyzing and predicting the scheme fees paid to card network operators like Visa and Mastercard. We also empower them to increase revenues by being more competitive through optimizing their pricing. Torus’ platform calculates transaction level profitability and helps them to identify profitability leaks (for example, loss-making merchants or card products), the root causes and fix them in time instead of accumulating losses.

Our solution is delivered as software as a service (SaaS). It is very quick and easy for our clients to get onboard. Our solution is flexible and scalable. If one of our clients increases its business by an order of magnitude, we can swiftly and easily cope with it.

Financial IT: Great. What is the problem that you are trying to solve?

Kirill Lisitsyn: Globally, banks and fintechs are losing billions of dollars due to over-payment of scheme fees or inadequate passing

on of those fees to their customers. Losses can arise because the banks or fintechs are subject to penalties from the network operators or because they are not using all the extra services from the network operators to which they are entitled. Based on our experience so far Torus’ solution can save banks and fintechs that are involved with card-related payments between 5% and 15% of the costs that they are paying to the card schemes. Any one actual or potential client of ours can look to save a six-to-seven figure amount of money annual through use of our solution.

Using our solution, our clients can get their costs to the optimal level – and then keep their costs at that level in the long run, as the structure of the fees is changed rapidly along with the transactional patterns.

Further they can disaggregate data that they receive from the network operators. Our solution shows our clients how the costs are associated with each of their products and clients. For example, for acquirers our solution predicts the scheme fees daily at a single transaction level, allowing our clients to analyze and control merchant-level profitability of their business as well as provide profit-based (so called interchange ++) pricing for their merchants with a very high precision rate. Our card issuing customers benefit from card-level profitability management, profit-based rewards programs and accurate costs allocation.

This type of transaction analysis typically leads to up to 50% of transactional profitability improvement.

Financial IT: Please comment on your competitive strategy. Kirill Lisitsyn: Our competitors – whether actual or potential –generally come from in-house development. Larger banks have in-house teams of developers who are looking at the issues of costs and profits in payments.

That’s a very good example that the in-depth analysis which Torus’ platform provides to the market used to be available to the largest players only, leaving the others behind in the competition. The main reasons for that are: (1) lack of expertise; (2) technical difficulty to build this type of analytical platform and (3) operational difficulty to keep the model up-to-date and in-line with all the changes from the card schemes side. We bring this solution to the lower part of the market to make them more competitive and the whole card payments market – more transparent.

We target medium-sized banks and fintechs who are more open to using a SaaS solution. We have had situations where banks have tried with in-house teams to get a proper analysis of the fees that they are paying to the network operators – but have subsequently found it to be all too hard. They have then turned to us after deciding that they actually want SaaS after all.

Right now we have 10 clients on-board, having begun the sales process in early 2022. Our momentum is growing. The sales process takes time, but we are working hard trying to shorten that time. The seeds of future business are being planted. Interestingly the pandemic helped us. It meant that a lot of potential clients who would otherwise have demanded face-to-face meetings were prepared to deal with us remotely. We saved a lot of money that we otherwise would have spent on hotel bills, airfares and offices.

For now, we are focusing on the principal members of the card networks. This is because the regional files of data that are compiled by the network operators are the same globally. We can scale up our business across all parts of the world. Looking forward, we could well do business with organisations that are further down the value chain – such as Payment Service Providers, Payment Facilitators and Payment Orchestration Platforms that do not necessarily have access to the data files that are provided by the network operators. We may be able to accommodate alternative payments systems such as crypto. Interestingly margins for payments in the crypto-world are falling quite quickly: the issues of profitability are similar to those in the traditional payments arena.

Financial IT: Taking a two-to-three year view, what do you think will be the highlights for Torus?

Kirill Lisitsyn: We are a two-and-a-half year old company with annual revenues of around EUR1 million. We are in the early stage of Round A funding. Our seed capital was less than USD1 million. So we have learned how to operate with a very limited amount of capital.

Looking forward two-to-three years, we need to find more clients. I like to think that we can take the number of clients to around 50 over that time. We also plan to enter the United States market: currently most of our clients are here in Europe – although we have recently found several customers in the Asian region including our first client in Japan. We will be developing our

solution further so that it can provide better insights. For example we are launching the merchant-leve costs prediction product to be used by the sales teams at merchants acquirers without any transactional data exchange with us.

Financial IT: The Centre for Finance, Innovation and Technology (CFIT) has identified five major challenges for the UK’s fintech sector. In each case, using a single number from 0 (no problem at all) or 1 (minor problem) or 2 (minor but manageable problem) or 3 (medium sized problem) or 4 (large problem) or 5 (huge problem), could you quantify how important is the challenge to your organisation and the protagonists whom you serve? Could you also give a very brief explanation in each case?

Kirill Lisitsyn: On the scale that you have set out, we would give the regulation challenge a score of 0. Regulation is not a problem for us. This is partly because the nature of our business. It is also partly because our solution does not handle data that is sensitive because it pertains to a particular individual. The data that we work with has been anonymised.

The nature of our business – which means that we are not subject to oversight from any regulator – means that we could be based anywhere. Our team is dispersed geographically. As it happens, we are headquartered in Lithuania, where the overall business environment is very supportive.

Funding is a challenge to which we would give a score of 2. We were forced to learn how to live and work with very small funding. We became cash flow positive in 2023. It is not clear that easy access to capital is necessarily a good thing in the long-run: one does not have to look hard to find situations where far too much money was raised and then spent too quickly on the wrong things.

Talent is a greater challenge. Our score would be 3. We are in a specific niche, but we have been able to find the people that we need from our personal networks. Nonetheless, having the right personnel is very important when one is at the early stage of business development.

Barriers to international trade are a small problem for us, so the score would be 1. We’ve set up an entity in the United States that should make it easier for us to do business there. Sometimes we have to provide specific tax reports in different parts of the world –but that is the nature of business.

Conversely, the lack of collaboration is a major challenge. Our score is 4. As discussed, our sales process takes time. In many cases we have to win the trust of the key people in a potential client from scratch.

Financial IT: Are there any other comments that you wish to make?

Kirill Lisitsyn: First, our message for any start-up is to have faith in what you do and stick to it. There will be challenges to be overcome, but the struggle will be worthwhile.

Second, remember that margins in the payments industry are under downwards pressure. Many organisations will need to be more efficient in the way in which they use the data that they already have.

We’re here to help. Our solution can help those organisations to extract the maximum value from that data. Indeed, we think that our solution will change the way in which the entire game is played in card payments.

Financial IT: Thank you.

Roisin Levine, Head of UK & Europe Partnerships, Wise Platform

Roisin Levine, Head of UK & Europe Partnerships at Wise Platform, unpacks the role of bank-fintech partnerships in enhancing global payments services for customers, and how the industry can make cross-border payments as fast and efficient as sending an email.

As the cross-border payments landscape becomes more competitive, banks are pursuing new ways to enhance their international payments services to keep pace. Weighed down by complex legacy infrastructure, banks are increasingly leveraging fintech collaborations to enhance their cross-border payments at speed and scale.

Financial IT: How are you seeing bank and fintech partnerships evolve?

Roisin Levine: Many of our customers move to us from larger banks as they become aware of the faster, more convenient international payment alternatives available to them. It’s this customer expectation for speed that is driving further industry collaboration, as banks seek a fast-track to instant payments and fintechs, such as Wise, look to share their products with a wider customer base.

These collaborations between banks and fintechs work well for a number of reasons. While banks have scale, they can gain agility in non-core focus areas by working with fintechs. Banks don’t have that singular focus, they tend to focus on a sizable core product offering to serve all their customer use cases. Conversely, we can specialise in specific customer problems, such as international payments, meaning we can build high quality solutions that target specific customer pain points at speed.

For the past 13 years, we’ve been on a mission to make cross-border payments faster, transparent and low-cost. We’ve built our infrastructure, Wise Platform, with this objective, allowing banks to leverage Wise’s global payments network to offer faster and cheaper international payments to their customers with ease. We help banks enhance their international payments with our powerful API and via the SWIFT network.

Wise Platform currently works with over 85 partners worldwide, including Monzo, N26, Nubank, Ramp, Brex, and Bank Mandiri.

Financial IT: Can you give us an example of how these partnerships work in practice?

Roisin Levine: Our long-standing partnership with EQ Bank, the digital branch of Canadian Equitable Bank, is a good example of how partnerships between banks and fintechs can deliver mutual benefits. EQ Bank realised the need for a better cross-border payments experience early on and was looking for a solution to broaden its existing offering and help differentiate it from other banks. This is where Wise Platform came into the picture. We know that allocating time and resources to international payments is not always easy and that banks don’t want to completely rebuild their infrastructure if they don’t need to. So, we offered EQ Bank a fast, safe and reliable solution. We integrated our infrastructure into their existing network in just a matter of months, which opened up the world to their customers – giving them access to 40+ currencies across over 160 countries. Their customers can now make international payments instantly – as more than 60% of our transfers are instant – meaning they arrive in under 20 seconds. 95% of payments take less than 24 hours.*

This example also shows that Wise Platform allows banks to seamlessly integrate our scalable infrastructure to access a network with 5 direct connections into payment systems and 100+ banking partners. The value of Wise Platform is in the efficiency of our network – meaning we can move money for banks at a low cost, and at high speed without the need to completely overhaul their existing infrastructure.

Financial IT: What’s your international payments strategy and how are new technologies enabling this? How is technology changing payments?

Roisin Levine: At Wise, we believe that international payments should be instant, convenient, and low-cost. We use different methods and technologies that enable us to be quicker and better at what we do. We leverage domestic payment rails to make over 60% of global payments sent via Wise arrive instantly – within 20 seconds.*

In terms of technology, there are an infinite number of possibilities and applications. As a business, we prioritise where we can create efficiencies and lower fees when making international

payments for our customers and partners. And we have been delivering on our mission to reduce the cost and increase the speed of carrying out global transactions – an accomplishment that banks have yet to match.

Emerging technologies like Artificial Intelligence (AI) and Machine Learning (ML) play a crucial role in the industry’s ability to scale efficiently and tackle fraud along with other forms of financial crime. Manual intervention is costly and time-consuming, with AI and ML providing significant cost savings and efficiencies for banks and fintechs alike. For example, AI and ML have enabled us to better detect fraudulent activity, and contributed to a 50% reduction in the amount of money Wise’s UK customers lost to scams last year.

What truly piques our interest is the maturity and evolution of global payments infrastructure. Regional infrastructure initiatives play a significant role in the future of global payments. It’s these kinds of developments that excite us because they align with our mission to move money faster and at a reduced cost.

Financial IT: What technologies will we be talking about in the next 5 years?

Roisin Levine: I believe the industry will make further advancements by embedding payments in more places to solve the specific use cases and needs of customers.

Central Bank Digital Currencies (CBDC) are a good way to make payments instant, but they require a considerable amount of resources to build. This could act as a barrier to wider adoption and scalability.

The domestic payment rails we have today are built to scale and are continuously gaining speed, increasing the number of instant, cheaper payments. We believe that in the near-future our customers will expect international payments to move with the same efficiency as domestic payments and at the same speed as sending an email.

* Transaction speed claimed depends on individual circumstances and may not be available for all transactions.

RUNNING RINGS AROUND FRAUDSTERS: DETECTING AND PREVENTING TRANSACTION FRAUD

Merchants are facing rising fraud attacks, and the methods fraudsters are deploying are becoming increasingly harder to detect and prevent using traditional anti-fraud management solutions. Marija Solovjova, Head of Fraud AML Transactions Disputes Oversight Department, Ecommpay, explains how graph analysis is uncovering complex fraud rings to help combat online fraud.

In the past few years, fraud has been on the rise for consumers and merchants alike. Our recent research revealed that 58% of UK businesses have reported an increase in online fraud or attempted fraud, which has worsened since inflation began to rise in 2021.

For the first half of 2023 alone, UK Finance reported that £580 million was stolen by criminals, with more than 1.2 million instances of payment card fraud. Globally, data from Statista showed the value of e-commerce losses to online payment fraud in 2023 reached $48 billion USD.

Criminal gangs are targeting e-commerce merchants armed with an in-depth knowledge of how to exploit their business processes for chargebacks and refunds, while stealing the card and payment data of consumers through increasingly elaborate phishing and social engineering scams.

The challenges facing merchants

Merchants face many challenges in detecting fraud, ranging from the sophistication of fraudsters to the evolving nature of fraudulent techniques. Fraudsters continually refine their methods, making them harder to detect as they employ advanced technologies and tactics. Without a robust anti-fraud strategy in place, merchants are sitting ducks.

The MRC 2024 Global e-commerce Payments & Fraud Report revealed that 30-40% of merchants identified gaps in fraud

tool capabilities, a lack of internal fraud management resources, and limited data access/availability. These combined factors are significantly impacting their abilities to manage fraud effectively.

Additionally, the report highlighted that merchants struggle to keep up to date on new attacks, risk models, and rule changes, manage fraud across different sales channels and geographic markets, and leverage data and tools to effectively prevent and mitigate fraud. Criminals collaborate well. So well, in fact, that single fraud campaigns are increasingly dependent on a long chain of bad actors supporting and monetising them, and a shared criminal infrastructure.

With all this in mind, it may feel like merchants are fighting a losing battle. However, new anti-fraud solutions are helping them to fight back, providing them with more efficient ways of detecting and preventing fraud.

Running rings around fraudsters

Merchants simply cannot hope to fight modern-day fraud with old methods and mindsets. It’s time for a new approach.

Ecommpay uses a multi-layered approach to fraud detection, leveraging advanced technologies such as machine learning and behavioural analytics, coupled with manual fraud detection. And recently, a new feature was introduced to our arsenal – an advanced graph analysis tool that allows us to detect ‘fraud rings’ which uncover a complex ecosystem of bad actors who are interconnected.

The graph analysis provides the opportunity to visualise the connected payment credentials. This helps to map the relationships between linked entities in a network and identify and stop multiple instances of fraudulent behaviour by spotting suspicious patterns before criminals can take action.

Figures 1 & 2 visualise various fraud rings. In these examples, the red nodes are confirmed fraudsters. The system blocks the red nodes and other connections in the chain. It neutralises the threats, until the criminals stop. If new connections join the chain, or criminals try to start a new chain elsewhere, graph analysis can spot this, flag it for investigation or shut it down.

This technology has already been recommended as a useful tool for detecting fraudulent patterns, even if separate parts of them look genuine. Overall, the graph analysis provides a robust framework for detecting and monitoring fraud by leveraging the complex network of customer interactions in our merchant's traffic. Furthermore, it allows analysts to uncover hidden patterns and connections that traditional methods may overlook.

Marija Solovjova, Head of Fraud AML Transactions Disputes Oversight Department, Ecommpay

With over ten years' experience in developing effective risk strategies and improving security processes for clients, Marija heads up a team of fraud and chargeback specialists. She is also an accredited member of the Association of Certified Fraud Examiners.

Another key element of fraud-fighting is self-learning. Graph analysis relies on Machine Learning to anticipate new fraud attacks and improves over time and data. Models and analysis also improve over time and data, allowing businesses to add historical data to enhance future fraud detection and stop dormant fraudsters in their tracks by preempting potential fraud attacks.

During 2023, Ecommpay's graph analysis has revealed more than 12,000 fraud rings, across over 130 merchants. In total there were more than 25,000 unique customers involved, about 14,000 of them have been reported as fraudsters, while others were part of unreported or unsuccessful fraud attacks.

Graph analysis is just an additional (yet very powerful) tool for fraud detection. However, this forms part of a much wider, holistic approach to tackling fraud.

The never-ending battle

Fraudsters pose a multifaceted and everchanging threat to e-commerce merchants. Fortunately, advanced machinelearning tools such as our award-winning graph analysis can detect these threats. Implementing intelligent, adaptive, holistic, and people-centric anti-fraud strategies gives businesses an advantage in the battle against online fraud.

While the graph analysis tool has proven to be an effective and powerful addition to our existing anti-fraud solution, it is important to note that graph analysis was never designed to function as a standalone solution. A multi-layered approach to fraud prevention requires multiple systems working together to provide valuable information and insights. All of our tools for fighting fraud are constantly being refined to maximise the collective impact when fighting evolving fraud patterns.

The application of AI to combat fraud has been widely hyped as a game changer, too. But you can only build a good Machine Learning model with a good understanding of what and how happens in traffic.

For this reason, one of our core domains is still the work of our fraud analysts, who possess a great amount of knowledge about how fraudsters work and how fraud looks in traffic. Ecommpay’s dedicated team of anti-fraud experts add human insight and 24/7 support to the machine’s existing capabilities without impacting customer journeys or real customers.

Flexibility and customisation are incredibly important. Every merchant is different, and so a fraud solution must be tailored to their specific needs.

Ecommpay has built its own proprietary Risk Control Management System inhouse. This gives us full control over the customisation of anti-fraud filters depending on individual customer needs, which in turn helps deliver high conversion rates and maximises revenues.

Different e-commerce merchants experience different types of fraud depending on what goods they are selling, where they are based, and what sales channels they utilise, which is why a tailored approach is so crucial. For this reason, Ecommpay has 60+ anti-fraud filters which businesses can customise, according to limits, restrictions and scenarios.

A comprehensive approach with a combination of technologies, including AIpowered automated monitoring, traditional rules-based techniques, and hand-on-thedoor interventions, is the key to effective fraud prevention, both now, and in the future.

Aaron Holmes, Founder and CEO, Kani Payments

Aaron founded Kani following roles at Flex-ecard as General Manager, Global Processing Services as Chief Innovation Officer (CINO) & Chief Operating Officer (COO), and NBS Card Solutions (now Wirecard) as Senior Implementation Manager. Building on issuing, program management and transaction processing roles, Aaron now leads the Kani business from its Newcastle upon Tyne head office.

In the hustle and bustle of payments, smooth and instant transaction processing is taken for granted. Whether it’s a tapand-go purchase or an online checkout, the ease and speed of transactions mask the complex processes always at work behind the scenes.

One of the most misunderstood aspects of these back-office processes is settlement. Misunderstandings around settlements often lead to costly mistakes for payments businesses. Here, we debunk some of the most common settlement myths we see in our daily work at Kani Payments.

Myth 1: Settlement and clearing are the same

Reality: They’re different processes with different roles

One of the most pervasive myths is that settlement and clearing are interchangeable terms. In reality, these are distinct processes with specific roles in the transaction lifecycle.

Clearing: The exchange of transaction details between the acquirer and issuer, ensuring the transaction is accurately recorded and the fees appropriately assessed. It’s essentially a data exchange process that sets the stage for settlement.

Settlement: The actual exchange of funds. The card scheme calculates the net positions of issuers and acquirers and facilitates the fund transfers accordingly.

Confusing these two processes leads to significant errors, such as misinterpreting when funds actually move, which affects financial planning and reporting.

Myth 2: Settlement errors are

rare

Reality: Settlement errors are common— and costly!

Many across the payments ecosystem underestimate how frequently settlement errors occur and their financial impact. Settlement mistakes can result in hefty fines from card schemes and even disrupted cash flows.

Common errors include:

• Misinterpreting the settlement advisement, leading to incorrect payments

• Delaying payments while waiting for processor data, risking fines for late settlement

• Entering new markets with a limited understanding of local settlement rules, creating compliance issues

Errors stem from a fundamental misunderstanding of settlement processes and the specific requirements of different card schemes.

Myth 3: Settlement terminology is standardised

Reality: Varied terminology regularly causes confusion

Another myth is that terminology used in the settlement process is standardised across the industry. In fact, different payment businesses often use unique terms for the same processes, leading to confusion and errors.

For instance, terms like “settlement date” have different meanings depending on the context. One processor might refer to it as the day the transaction was imported, while another refers to the date funds are settled.

The lack of standardised terminology leads to significant gaps in understanding. Organisations must clearly understand and correctly interpret terms used by their processors and card schemes.

Myth 4: Settlement issues are easy to fix

Reality: Settlement errors are complex and time-consuming to fix

Settlement problems are not only common but also time-consuming to resolve. Incorrect settlement requires thorough investigation to identify the root cause, which involves sifting through and making sense of large volumes of transaction data.

For example, understanding discrepancies in settlement advisements involves breaking transaction data into different cycles to pinpoint those causing issues. The process requires robust data management and reconciliation capabilities.

Myth 5: All settlements should be made in the transaction currency

Reality: Settlement strategies can vary Many across the industry believe settlements should generally be made

in the same currency as the transaction. However, there are strategic advantages to settling in different currencies.

A UK issuer might settle EUR transactions in GBP to benefit from favourable exchange rates and simpler treasury management. Conversely, settling in the transaction currency sometimes provides more clarity and reduced conversion costs.

Businesses should carefully consider their settlement strategies, considering factors such as exchange rates, settlement fees and operational complexity.

Actionable tips to avoid settlement mistakes

To avoid common settlement mistakes, payments organisations should:

1. Educate finance teams: Ensure your finance and accounting teams understand the nuances of settlement, clearing and the specific requirements of different card schemes.

2. Use automated solutions: Implement robust platforms that automate settlement processes, provide realtime monitoring and generate alerts for discrepancies.

3. Understand local rules: Before entering new markets, thoroughly research local settlement rules and requirements to avoid compliance issues.

4. Regularly reconcile data: Follow the FCA’s guidance to reconcile transactions at least once daily, ensuring discrepancies are identified and resolved quickly.

The bottom line

Settlement is a critical yet often misunderstood component of the payments process. By debunking common myths, payments businesses can better navigate the complexities of settlement, avoid costly mistakes and ensure smoother operations. With the right knowledge and tools, settlements can be an operational strength rather than an operational burden.

BANKING REIMAGINED: TOWERBANK ON THE EDGE OF DIGITAL ASSET INNOVATION

Guy Mettrick, Industry Vice President, Financial Services, at Appian interviews Gabriel Campa, Towerbank’s Head of Digital Assets, about Towerbank’s journey towards a digital payment ecosystem that is enabled by the Appian process automation platform.

Guy Mettrick, Industry Vice President, Financial Services, Appian

Guy Mettrick: Why the transformation of Towerbank?

Gabriel Campa: More than three years ago, we were reimagining the bank for the next 10 years. We noticed that all banks were doing the same thing, giving out loans, fighting for interest; there was no differentiation. And yet, crypto was an interesting technology that we haven’t explored. We thought we could offer a new approach.

We've been able to build our new digital platform, ikigii, our crypto-friendly bank in two years, with a very small team and two great partners. It’s expected to launch in June. Not only that, we're also training our people to really understand this new world, how they're going to better serve our clients, and how they're going to do things differently.

We noticed an amazing opportunity, but we really had to change how we do things to seize it. Today, our team spends a lot of time with the client one-on-one. But this needs to change if we want to move to digital onboarding. Our customer service team’s role is by far not going to be replaced. On the contrary, the role is going to expand. The team is going to give our clients a different service, selling a more customized approach, and proactively helping clients with their problems. The client experience will be smoother, faster and less friction prone, with options for clients to self-serve themselves.

Guy Mettrick: What makes ikigii different from your competitors?

Gabriel Campa: ikigii is our digital platform, which–when it launches in June–will be

one of the only crypto wallets that is also a traditional currency account. It will allow customers to conduct traditional bank transactions, like peer-to-peer payments, electronic wire transfers, loans, etc., in US Dollars and, on the same platform, conduct transactions in their crypto currency account.

So, let’s say a family member wants to send you some money and he doesn’t work with crypto. You can convert your crypto into dollars in ikigii and send a wire transfer on the same platform. Or, you want to send crypto to a friend but you only have dollars. You can buy crypto and send it to your friend as crypto in ikigii.

It’s the best of two worlds within a regulated environment. It’s a myth that the crypto community is against regulation. Many people I’ve spoken to in the crypto space believe the currency should be regulated because if it isn’t then banks can’t get involved.

Guy Mettrick: What is Towerbank’s strategic objective?

Gabriel Campa: Our strategic initiative is to create and lead crypto-friendly banking in Latin America. We want to be a bridge between the crypto and [the governmentissued] fiat currency ecosystems. Bridge being the key word.

To do that, we had to build a scalable and flexible future. And we divided it into three sections: front-end, middleware, and backend. The front has two worlds, the crypto world and the traditional finance world. We kept them separate, because our traditional

finance clients and our crypto clients have totally different needs that require different experiences.

The middleware is where everything we've used connects to Appian. We have four cores: our old COBIS core, which is our legacy system; MAMBU, our cloud banking platform; Frame Banking, our payment gateway, and Appian. Appian is our crypto banking core. Everything has been built in Appian.

Guy Mettrick: What made you choose Appian to move this transformation forward?

Gabriel Campa: Reason one: security. Reason two: scalability. As well as orchestration and flexibility, the Appian platform is API native, and a comprehensive ecosystem to support our needs. I think this is very, very important for non-technical people because it facilitates collaboration with non-technical team members.

It is very easy for my IT team to explain to me what has been built and how it works. Not only that, it allows us to show it to our CEO and the president of the bank. So, they really understand what we've built and how it works. It also helps us to understand where the problem is so we can look at the workflows and say, "This doesn't make sense. We might want to change this or that."

Appian is also AI ready, and we're already there. I talked to many companies before I selected Appian, and it gave me a good gut feeling. It felt right because when talking to other companies, there was a lack of understanding which made me less confident that they could really build it.

Guy Mettrick: You mentioned security as one of the reasons you chose Appian. Can you elaborate on that?

Gabriel Campa: People have asked how we make sure we’re following data privacy regulations with the information that Appian stores, and the answer is that Appian is not storing the data. Appian just receives the data and sends it to the data lake in AWS [our cloud platform for the traditional banking space] which complies with regulations. Appian consumes the encrypted data, sends it to the data lake and it disappears. But the Appian platform knows where the data lives so when we need the data it knows where to find it.

Guy Mettrick: I know you had concerns about becoming redundant, but the traditional business model is still very common. How

did you approach the board to embrace this change?

Gabriel Campa: Well, fortunately, the bank is single family-owned and the board is very close to the family. Everyone, from the board to the owners to collaborating banks, was involved from day one.

Another thing is, we've been in business for 54 years. We're very careful about how we do business. Given that, there's a lot of trust behind us. They know that we're going to try to do things right as much as we can, and if we detect something, we'll report it. There's a lot of transparency.

Guy Mettrick: What are your key metrics for measuring success and what results have you had so far?

Gabriel Campa: I think we have over 96% automation now. And just to help you understand what 96% automation looks like, here’s an onboarding example:

When we first started, a bank official would attend to a client for four or five hours, per client. This includes spending one hour to one and a half hours to open the account, and then dedicating three or four hours in the background for paperwork. When we first launched our onboarding process with Appian the time came down to an hour, or an hour and a half, with the client. So, opening an account only took 25 minutes with the client, and 45 minutes to one hour in the background doing paperwork.

Since then, we have reduced the time down massively. Now, it takes 10 minutes with the client, 30 minutes for background work, and the client leaves with the deposit address, bank account, and debit card already generated.

Guy Mettrick: How has process automation helped foster a culture of innovation for Towerbank’s future?

Gabriel Campa: For 2025 and beyond we’re looking at blockchain technology, generative AI, asset tokenization, payments, and eCommerce with crypto.

With generative AI we can fix those roadblocks in onboarding to make it as easy as possible. We’re going to allow our clients to upload any document. AI will be able to read the document and understand it, which will reduce errors. The error reduction on the first phase of generative AI is, like, 75% and you could bring it up to 95% to 98% once it learns. That’s going to reduce the time of background work significantly.

Gabriel Campa, Head of Digital Assets, Towerbank International

Towerbank International is a 54-yearold bank based in Panama that is re-defining itself for the digital age. Its new upcoming banking platform aims to provide the best of two worlds: a crypto wallet and a dollar bank account—all within a regulated environment, marking a new era in banking innovation.

Andy Wiggan, Chief Product Officer, GoCardless

BANKS, PLEASE CHARGE US!

It’s 2016. The Competition and Markets Authority (CMA) has just told the UK’s nine largest retail banks that a brand new competition remedy will be introduced: open banking.

The CMA’s intention with open banking was to encourage competition in the sector and drive innovation by making the banks’ data sets, historically kept locked away within their systems, available to third-party fintechs. Under a regulated landscape and, of course, with account holder permissions in place, there was a vision of creating three key benefits for the ecosystem.

• Financial services providers would get access to data which in turn provides them with a better understanding of customer preferences and activities, giving them the opportunity to create new product offerings and add to their market appeal.

• Businesses could use these innovations to do away with some of their most timeconsuming manual tasks, opening up new cost savings.

• End customers would get better ways to spend, borrow, and invest and be presented with competitive options from banks and financial service providers.

With these benefits on the table, it may be unsurprising to hear that many fintechs and providers across the financial ecosystem recognised the opportunities available, and the new business it could generate. In fact, we saw a new wave of fintechs that only offered open banking services and payments.

Open banking innovation slows

Whilst fintechs were enthusiastic and dedicating time and resources to exploring open banking, consumer awareness and the adoption lagged, causing some to ask ‘Was open banking overhyped?’ In truth, open banking promised so much in theory that many lost sight of the fact that a genuine shift in the payment ecosystem would take time. Payments don’t have a history of evolving quickly, so why did we put so much pressure on open banking to be different? While the volume of open banking payments in the UK has seen consistent growth, doubling in the first half of 2023 compared to the first six months of 2022 and then hitting a record

high of 14.5million payments made in January 2024, it still hasn’t quite reached the mainstream or delivered the financial revolution a quickly that some may have wished, but that doesn’t mean it won’t.

Many in the industry and even the author of the Government-commissioned Future of Payments Review, Joe Garner, acknowledge that if the UK is to break the card-based duopoly that has merchants in its grips, open banking is still the right way forward. Right now the UK is viewed as an early adopter of open banking that has fallen behind with progress slowing. So, how can we change the narrative and keep ourselves accountable?

Nikhil Rathi, CEO of the FCA, thinks the quality of connections provided by banks today is just not good enough. Banks have been much criticised for treating open banking as a compliance task rather than a commercial activity. And quite frankly, without the right commercial incentive in place, why should it have been any more than that? These connections will never be great without the right commercial incentive to innovate and provide a highquality service.

That’s why GoCardless is asking for banks to charge us for the upcoming roll-out of variable recurring payments (VRPs).

The rise of VRPs

VRPs are powered by open banking, providing the known and trusted payment experience of Direct Debit but with added speed and security built-in. They are set to be a game-changer – consumers will have more control over their payments, businesses get secure and instant settlements, and payment fees are lower.

Last year we saw the launch of VRPs for ‘sweeping’ or ‘me-to-me’ payments, where money is moved automatically between two accounts belonging to the same person or company. Now, the UK is about to introduce commercial VRPs. These are transactions that move money from one person to a third party, like an energy or insurance company. The potential that commercial VRPs offer is huge, finally providing a genuine alternative to cards, something Joe Garner called for in his review as he said conversations with merchants had revealed that they ‘feel trapped because we have to take card payments’.

In the UK, the Joint Regulatory Operating Committee (JROC) are responsible for

overseeing the next phase of open banking and supporting the build of a sustainable ecosystem. They recently proposed that ‘Phase 1’ of commercial VRPs should begin in Q3 of this calendar year. This is a big step forward for open banking.

Despite the value they will provide to businesses and consumers, the suggestion is that UK banks will have to provide this service for free in Phase 1. This may sound like great news for Payment Initiation Service Providers (PISPs) like GoCardless. But in the long run, it’s not.

Why PISPs should pay up

For commercial VRPs to take off and become a competitor to card payments, all market participants must be incentivised to invest and innovate. Poor quality bank APIs have already stunted open banking’s growth. If banks charge for this service, they can improve the payer experience and genuinely compete with cards when it comes to conversion.

Any banks that the regulators don’t mandate to provide commercial VRPs will be reluctant to do so of their own volition if they cannot charge. Without a fair incentive in place, Phase 1 could do more harm than good for open banking, stunting progress that has taken years to reach by damaging merchant and consumer confidence, and affecting long-term adoption. Bank coverage must start high and get higher rather than be low and limited. If banks are incentivised to play their part then the PISPs and AISPs, like GoCardless, who are the main innovators in the space can test robustness and quality of the newly built APIs. We want all players to commit to Phase 1 and then be able to enter Phase 2 with genuine results that can be learnt and iterated from ahead of a mass-roll out of VRP use cases.

Commercial VRPs have real potential to improve merchant and consumer payment experiences. But the rollout has to be right. That means making sure banks and PISPs are incentivised to move in the same direction from the start so that we have a solid foundation for the future. And ultimately, building that foundation means making PISPs pay. We, for one, are ready.

HOW CULTURE PROVIDES RESILIENCE IN THE FACE OF EVOLVING THREATS

Security threats are constantly evolving. As new technologies emerge, so too do opportunities for malicious actors to develop new attack vectors and refine classic exploits. For example, we have seen the use of deep fakes to con people into transferring funds to scammers, and generative AI makes it much easier to create convincing phishing emails – without the telltale spelling errors. But while the nature of security threats changes constantly, the basic principles for combating them remain unchanged.

Knowledge Sharing, Raising Awareness and Data Points

The first step to tackling any threat is awareness. Malicious actors are very good at sharing information, and it is incumbent upon us to do the same. A valuable resource is FS-ISAC. FS-ISAC is a memberdriven organization that shares real-time information on security threats and best practices in the financial sector.

However, it is not enough for security experts to be aware of these threats; they need to be communicated across an organization. The human factor remains the weakest link in the security chain, no matter the current threat landscape. It only takes one employee to click on the wrong link to facilitate a ransomware attack, for example. Ensuring that a company has security embedded into its culture is vital.

Our approach is to hold monthly training sessions where we share information on security threats with all employees. We balance the need to share information and the need to keep things on point – attention spans can be short and we consciously avoid overloading employees with too much information at once. Having regular sessions ensures that we can keep them short and prevents attendees from tuning out.

We also have a security champions group, made up of 1-2 members from each team. Our security team uses these sessions to share information on evolving threats, often received through FS-ISAC. But knowledge sharing is a two-way process. We also collect feedback from all teams on the threats they have encountered. Technical support is often on the front line and the first to see threats in the wild, while our finance team is the primary target for phishing attacks. Our sales team shares insights into their experience from engaging with clients. After the session, attendees return to their teams and share any insights that affect their team’s day-to-day work.

Compliance and Legal Frameworks

As well as keeping up with threats as they emerge, organizations need to create a culture where employees are familiar with their legal and compliance obligations. While

legislation often lags behind the actual threat situation, it lays out requirements such as the need to disclose data breaches and how to do so. Industry standards such as PCI DSS define baseline security standards for protecting sensitive data. Any company handling credit card data must factor in PCI DSS and follow best practices to secure cardholder data.

However, the fintech sector faces challenges beyond protecting just financial data. Personal data is often more valuable, opening the door for identity theft and allowing new accounts to be created in someone else’s name. This personal data must be stored securely and handled in line with data protection laws. This legislation differs from jurisdiction to jurisdiction, adding a further layer of complexity. Privacy laws in the US are currently enacted at the state level, leading to different legislation across 50 states. The EU’s GDPR sets certain baseline standards, but each member state can enact legislation that goes beyond these minimum requirements. Other countries and regions have their own legislation. This leads to a patchwork of regulations, and many businesses opt to follow the most restrictive laws to simplify this challenge.

This leads us to two simple principles to ensure compliance and reduce the impact of data breaches, which have increased by 90% within the space of a year:

• Data minimization: Don’t store what you don’t need

John Noltensmeyer, Chief Information Security Officer, IXOPAY

John Noltensmeyer is a privacy and data security professional with nearly 30 years of experience in information technology. He holds multiple certifications and maintains extensive knowledge of international privacy regulations and industry security standards. Prior to joining IXOPAY, a TokenEx Company, John worked in both the financial services sector and federal government, including technical lead roles at the International Trade Administration and United States Department of Commerce.

• Security measures: Secure the data that you do need, and restrict access to only those who need it

Third Party Considerations

Faced with a multitude of threats and challenges, many organizations choose to outsource aspects of compliance, data security and risk management to third parties. This reduces overheads and the need for a large in-house security team, while putting data security in the hands of industry experts. However, this also creates a business-critical dependency on a third party. When working with third parties, ensuring data availability and integrity is crucial. Data is worthless if it cannot be accessed, for example due to a DDOS attack at an external provider.

Fintechs should therefore not focus solely on cybersecurity at the expense of other aspects of risk management. Protecting your own data and systems will also not insulate you from economic risks, which is where redundancy and fallback options come into play. We saw this in the payments industry with the demise of Wirecard and SVB, with Wirecard in particular serving as a wake-up call for the industry as a whole. Merchants can protect themselves from these risks through third party payment orchestration and PSP-agnostic tokens, and should not ignore these crucial aspects when developing their risk strategy.

With such reliance on third parties for business-critical services, it is therefore important to carefully vet providers and their accreditations. We ask critical vendors handling financial data for their ISO 27001 certification, PCI DSS Attestation of Compliance, etc. Putting these vetting processes in place is vital for any business to prevent any weak links in the chain. Done right, outsourcing helps reduce liability and legal exposure – a key aspect of any risk management strategy. Storing and tokenizing card data is a classic example; a malicious actor who gains access to a token cannot access the underlying card data. This insulates merchants from the risk of exposing card data, reducing the impact of any data breaches. Having to disclose a serious data breach involving sensitive cardholder data can have long-term repercussions for a business’s reputation.

Strong partnerships can strengthen a business’s resilience in the face of cybersecurity threats. For example, in the world of payments, risk and fraud prevention providers are integral. Similarly, KYC requirements put identity management front and center of many fintech’s strategies. There are many third party providers who are experts in these fields who can support businesses whose core competencies lie elsewhere.

3DS also plays an important role in tackling payment fraud, while benefiting merchants by shifting liability to the payment card issuer. 3DS is mandated for online purchases in regions like the EU, although merchants

can request exemptions such as for low value transactions and recurring billing. While 3DS has not yet been fully embraced by all markets, this is slowly changing. It is now impossible for me to buy a plane ticket in North America without 3DS verification.

Taking a holistic approach to risk

Given the challenges faced by merchants and fintechs in a constantly changing world – with financial organizations the target of a fifth of all cyberattacks – establishing the right culture in an organization and working with the right partners is key to any cybersecurity strategy. With these solid foundations in place, organizations are better positioned to react to both current and future threats, creating long term resilience.

THE POWERFUL IMPACT OF FASTER PAYMENTS – AND THE SIGNIFICANT OPPORTUNITY FACING FINANCIAL INSTITUTIONS

Faster payments are at the forefront of the money movement revolution. According to recent studies by the Federal Reserve, a majority of businesses (83%) and consumers (75%) are already using faster payments.

Systems like The Federal Reserve's FedNow and industry leaders such as Venmo, Zelle, and TCH RTP, which accounted for billions of dollars in real-time payment volume last year, have democratized financial transactions for individuals and businesses, raising expectations and driving demand for speedy, convenient payments.

Consumers benefit immensely from realtime payments. Whether it's splitting a bill with friends, paying rent, or making online purchases, the ability to transfer money instantaneously provides unparalleled convenience and flexibility. Additionally, real-time payments empower consumers to take control of their finances, enabling them to manage their cash flow more effectively and make informed financial decisions.

However, for businesses, particularly smaller enterprises, the impact of real-time payments is more complex. On one hand, real-time payments offer small businesses opportunities for efficiency and growth – faster paychecks, streamlined supplier payments, and easier expense reconciliation. Yet, the elimination of float poses a new challenge, forcing businesses to manage their cash reserves more judiciously.

How financial institutions can help this segment.

Small business owners and gig workers are looking for ways to consolidate disparate

applications to centralize and streamline cash flow management. They want to speed up cash inflow with digital payments and then receive an accurate view of their future cash position with recommended solutions. They’re looking for better workflows, greater personalization and more process automation. And of those looking for new banking relationships, nearly 60% said they would definitely be interested in getting accounting and payments services from their financial institution.

Gig workers are another type of small business that needs better banking support, especially when it comes to banking and cash flow. This group is a vital segment of the U.S. economy – and the fastest growing, expanding 3 times faster than the fulltime workforce. They face unique financial intricacies and limitations, like saving for retirement without a traditional 401(k), medical coverage, and taxes. Budgeting and cash flow management are especially critical to these individuals as their income is likely to vary over time.

To effectively serve these segments, comprehensive financial management tools and sophisticated digital payment capabilities are needed. By enabling better data integrations, institutions can provide small businesses with a clear view of their current and future cash positions while also leveraging this data to deliver actionable alerts with relevant solutions. Cash flow management tools and automated bookkeeping capabilities are other offerings that can help financial institutions become indispensable partners to their local businesses and communities.

But the transition to real-time payments requires more than just technological innovation; education and awareness are crucial in driving adoption among small businesses and gig workers. By highlighting the security, convenience, and enhanced financial control offered by digital payments, financial institutions can empower their customers to embrace faster payments with confidence.

The future of money is here – and it's real-time, presenting both opportunities and challenges for financial institutions and their customers – both retail and small business. Financial institutions must prioritize technology partners that offer modern, cloud-based infrastructure to meet the evolving needs of their customers. Stronger data integration and actionable insights will enable them to deliver tailored solutions in relevant, contextual ways, driving customer engagement and loyalty.

The financial institutions that offer immediate value through practical use cases and enable customer choice in how to pay and get paid – especially when it comes to business payments – will emerge as leaders in their communities and also contribute to the growth of local economies across the country.

Doug Brown is the chief product officer, digital first banking for NCR Voyix, a leading global platform and provider of digital commerce solutions for the retail, restaurant and banking industries.

Doug Brown is the chief product officer, digital first banking for

, a leading global platform and provider of digital commerce solutions for the retail, restaurant and banking industries.

Doug Brown, Chief product officer, digital first banking, NCR Voyix

NCR Voyix

HOW EMBEDDED FINANCE IS BUILDING A BETTER FUTURE FOR RETAILERS

The retail landscape is undergoing a significant transformation fuelled by Embedded Finance. With the market for Embedded Finance applications projected to grow by 500% by 2032, its potential to reshape the retail industry cannot be understated.

The innovative approach integrates financial tools like savings, credit, and insurance directly into the shopping experience, unlocking a number of opportunities for retailers to strengthen their relationships with customers and establish new revenue streams.

Enhanced sales and customer acquisition

Embedded finance offers a strategic edge in attracting new customers and boosting sales. By integrating flexible payment options, such as popular buy-now-paylater (BNPL) services like Klarna, retailers can cater to a wider audience, particularly younger demographics. These methods make expensive purchases more manageable, with the flexibility they provide attracting customers and leading to increased average order value and conversion rates for retailers.

Embedded Finance can also empower retailers by facilitating co-branded credit cards that incentivise loyalty by rewarding customers for shopping within their ecosystem. Imagine a retailer offering a card that doubles points during a customer's birthday month or other calendar events; not only would this drive sales, but it would foster stronger relationships and repeat business with customers.

Streamlined customer experiences and increased loyalty

Embedded Finance streamlines the customer journey by eliminating the hassle of lengthy financing applications for high-value items. It enables on-the-spot financing decisions at checkout, significantly enhancing customer satisfaction. This is particularly impactful in sectors where products are highly valued, such as electronics, furniture, and fashion. Loyalty programs are another area set to be transformed by Embedded Finance. Retailers can say goodbye to physical cards as it allows seamless integration with digital wallets, enabling effortless reward earning and redemption through a single platform. This simplified user experience incentivises repeat purchases and builds stronger bonds with customers.

Data-driven personalisation that drives growth

The inherent scalability of Embedded Finance solutions allows retailers to integrate specific financial services that align with the evolving needs of their business as it grows. Their modular design grants retailers unprecedented flexibility, ensuring that they only pay for the features they utilise. This ultimately optimises resource allocation.

It also offers valuable data insights into customer spending habits. These insights empower businesses to launch targeted marketing campaigns, helping them to personalise product recommendations

for each customer. This data-driven approach translates directly to increased sales, maximising customer lifetime value, and ultimately strengthening customer relationships. By embracing Embedded Finance, retailers are able to respond to changing consumer demands while laying the groundwork for future growth and success.

A renaissance in retail

Imagine a retail landscape where checkout lines don’t exist and are replaced by a secure digital wallet that is seamlessly integrated with every shopping touchpoint. This is what a future powered by Embedded Finance looks like. Customers will be able to effortlessly switch between online browsing, in-store visits, and mobile app purchases, creating a unified and frictionless experience.

However, the benefits extend far beyond the convenience of in-store shopping experiences. Embedded Finance empowers retailers to personalise the shopping journey, creates a deeper connection with customers, fostering brand loyalty and driving sustainable growth.

The future of retail isn't just about transactions; it's about building trust. By embracing Embedded Finance and its innovative applications, retailers can redefine the way we shop and unlock a new era of customer engagement.

Patel, CEO, Andaria

Nirav

THE FUTURE OF COMMERCE PAYMENTS IS LOCAL

Stuart Neal, CEO of the global paytech business, Boku

Stuart Neal brings more than 20 years of payments, banking and innovation leadership experience to Boku, combined with a deep understanding of the Boku business.

He previously served as Boku’s Chief Financial Officer between 2011 and 2014 and again between 2017 and 2019, seeing the company through soaring demand and its IPO. Neal returned to Boku in 2022, where as Chief Business Officer of Boku’s Identity Division, he led the division’s growth and acquisition by Twilio.

During the course of his career, Neal has also held senior leadership positions at companies including Barclaycard, Featurespace, VocaLink, GlaxoSmithKline, and Virgin Media.

As CEO and company director, Stuart will continue to build on Boku’s commercial momentum and drive innovation, as the company executes its mission to enable payment choice globally and unlock new growth for merchants.

The realm of ecommerce payments is undergoing a seismic shift, with traditional payment methods giving way to a new era of innovation and convenience. Once the stalwarts of transactions, credit and debit cards now find themselves overshadowed and overtaken by the emergence of cutting-edge payments alternatives such as digital wallets, account-to-account / real-time payments and Buy Now Pay Later (BNPL) services, and Direct Carrier Billing (DCB). This transformation isn't only being driven by technological advancement; it's a reflection of rapidly changing consumer preferences and highly-localised market dynamics.

In a recent conversation with S tuart Neal , the CEO of the global paytech business, Boku, we delved into this paradigm shift in the ecommerce sphere, compelling merchants to adapt swiftly or risk being left behind in an increasingly competitive landscape. Drawing insights from Boku's ‘2024 Global Ecommerce Report’, we explored the forces driving the decline of conventional payment methods and the ascendance of local payment solutions, examining the strategic imperatives for merchants navigating this dynamic terrain.

Financial IT: What has been driving the decline in card payments for ecommerce, and which regions are primarily fueling this trend?

Stuart Neal: The decline in direct card payments for ecommerce has been primarily driven by the developing Global South rather than traditional finance market leaders like the US and Europe. This shift is born out of necessity and practicality, with consumers in these regions increasingly favouring local payment methods (LPMs) such as Account-to-Account (A2A) payments.

Financial IT: How is the growth of local payment methods impacting the dominance of Visa and Mastercard in the ecommerce space?

Stuart Neal: The growth of local payment methods, particularly A2A services such as PIX in Brazil, UPI in India, or iDEAL in the Netherlands is posing a significant threat to the long-held dominance of Visa and Mastercard. These local payment methods are growing rapidly within ecommerce, with projections

indicating that they will account for 58% of transactions by value by 2028, compared to just 47% in 2023.

Financial IT: What insights did Boku's commissioned research from Juniper Research reveal about the future of ecommerce transactions?

Stuart Neal: Boku's research from Juniper Research analyzed data from 37 major global markets and 10,500 ecommerce customers across 14 markets. The findings showed a stark decline in direct credit card transactions, which are expected to represent only 11% of ecommerce transactions by value in 2028, down from 21% in 2022. Conversely, A2A payments are projected to more than double, representing 16% of transactions by value in 2028, compared to 7% in 2022.

Financial IT: How are digital wallets, Buy Now Pay Later (BNPL) services, and Direct Carrier Billing (DCB) expected to evolve alongside A2A payments?

Stuart Neal: Digital wallets, BNPL services, and DCB are all anticipated to continue growing alongside A2A payments, taking advantage of the 65% growth in ecommerce expected globally by 2028. These payment methods cater to evolving consumer preferences and contribute to the diversification of payment options in the ecommerce landscape.

What factors are driving the growth of local payment methods, particularly among the unbanked and digitally native populations?

Stuart Neal: The growth of local payment methods is being driven by a combination of necessity and desire, particularly among the unbanked population, which constitutes approximately one in four people globally. Additionally, digitally native users are accustomed to flexible payment methods and prioritize convenience and security, factors that local payment methods often excel in, including state-of-the-art security features such as biometrics.

Financial IT: How can merchants adapt to evolving consumer preferences and capitalize on the growth of local payment methods?

Stuart Neal: Merchants need to be agile and responsive to changing demands in order to capitalize on the growth of local payment methods. Embracing new and localized payment methods will not only enable growth, but also allow merchants to tap into new markets and cater to the latest payment preferences of their customers.

Financial IT: What are the implications for merchants in Europe and the US regarding the shift away from traditional card payments?

Stuart Neal: The trend towards LPMs is not just confined to the Global South; increasingly, traditionally carddominated regions like Europe and the US are witnessing a growing traction towards LPMs. Merchants in these regions are facing a dramatic shift away from traditional direct card payments in favor of local payment methods such as A2A payments and BNPL services. Ecommerce transaction volumes featuring cards are expected to decline significantly, while A2A payments are projected to experience substantial growth. Adapting to these shifts in payment preferences will be essential for merchants to remain competitive and capitalize on the changing ecommerce landscape.

As LPMs continue to grow across the ecommerce payment landscape, merchants that embrace these shifts in the way their customers wish to pay will see significant benefits in line with this growth. The Boku payment network was created to enable payment freedom and choice for everyone. We know that the nature of ecommerce may be global, but its future of payments is very much local. Adapting to evolving consumer preferences and capitalizing on the growth of local payment methods will be essential for merchants to remain competitive and tap into new markets effectively. Therefore, being agile and responsive to changing demands will not only enable growth but also ensure merchants can capitalize on new opportunities and cater to the latest payment preferences of their customers.

DEFEATING FRAUD: HOW AI IS TRANSFORMING CONTACT CENTRES

Fraud is costing UK businesses more than £200 billion each year, with unemployment, health, and pension funds, like banks and insurance companies, being particularly affected.

However, an efficient and proactive use of data through artificial intelligence can considerably reduce the time taken to detect these fraudulent schemes or tax evasion. And the contact centre plays a key role in this fight, particularly in terms of providing support to agents, by enhancing their capabilities and optimising their effectiveness in preventing fraud.

AI tracks down inconsistencies

Let's take the example of carousel fraud. VAT is the main source of tax revenue for governments, yet every year the supervisory bodies report a discrepancy between the predicted and expected VAT and the actual receipts recorded. A loophole exists which has allowed companies to exploit the crossborder VAT invoicing and payment system to swindle administrations out of large sums of money.

Carousel fraud involves a chain of re-invoicing between several companies in different countries. In these cases, AI can automatically analyse transmissions between the tax authorities of the countries concerned (transactional data from the various ministries and countries, as well as data available in open data) and identify patterns to track down inconsistencies in the activities of these companies.

By centralising the data in a data lake, and making a data processing tool available,

we can expose this information to the algorithm. AI can then reveal differences in transactions by checking times, dates, addresses and the parties involved.

AI helps check the identity of individuals

KYC, or "Know Your Customer", is a procedure used to verify the identity of customers. The aim, among other things, is to reduce the risks associated with fraud and to ensure regulatory compliance.

In this context, artificial intelligence will help strengthen KYC procedures. AI offers more in-depth analysis of identification data and facilitates the detection of irregularities through a detailed analysis of supporting documents, whether they’re electricity bills, identity documents, passports or driving licences. It will automate this verification process and detect false documents, alterations or anomalies. As well as contribute to the continuous updating of customer profiles in a CRM by monitoring changes in personal and professional information.

AI is the wonder-tool that supports the agent

In other cases, by correlating and analysing data from different documents, attached in an email, for example, AI will highlight anomalies and thus detect suspicious behaviour or false documentation: different identities or addresses on supporting documents such as those for proof-ofaddress. If data or documents don’t match a

customer's usual behaviour patterns, this can trigger an alert. AI will also detect fraudulent patterns in claims declarations or health insurance claims.

AI can further generate alerts by identifying atypical spending patterns, sudden variations or suspicious transactions. When fraud is detected, the agent is notified while talking to the individual. That agent can then find the corresponding evidence within their interface to support their reasoning, and with the help of generative AI they will be able to benefit from pre-written argumentation. The contact centre agent can also programme an outbound call campaign taking into account typical indicators of fraud. In this way, AI fully plays its role as an assistant to agents in real time (RTG real-time guidance), automating tedious and time-consuming tasks and providing analytical and predictive value.

With the proliferation of data, artificial intelligence is emerging as a strategic partner for contact centre agents, enhancing their capabilities and optimising their effectiveness in preventing and managing fraud. AI will continue to evolve to adapt to new threats: generative models, for example, will be used to create hypothetical forgery scenarios based on existing behavioural models, to better detect fraudulent activity.

Vice President Product Marketing, Odigo

Jean-Denis Garo,

THE QUICK WORD… ON CRYPTO

What are crypto-currencies for?

A cynic with an eye for financial history would probably say that they are a means for speculation. There was a spectacular rise in the price of bitcoin (and some other crypto-currencies) in the crypto summer of 2017. The crypto winter that followed ran for nearly three years – until the final quarter of 2020. Next, there was another crypto summer (with one or two cool intervals) that lasted until the end of 2021. The Annus Horribilis of 2022 bought a brutal crypto Ice Age, freezing out some of the highest profile people in the business. Since December 2022, we have of course been in a crypto heatwave.

Other commentators would suggest that the big change of the last 17 months has been the elimination of excesses and bad actors: crypto-currencies (or at least some of them) are coming into their own as stores of wealth. Collectively cryptocurrencies represent a play on the overall development of technology (and not just fintech) and the likely diminution in importance of some fiat currencies. They should therefore increase in value over time and provide diversification benefits in a portfolio that includes other asset classes.

The next chapter…

If you broadly accept the proposition that crypto-currencies have evolved hugely from being means of speculation to stores of wealth, an obvious question is: what is the next chapter in the story of their development?

Interestingly most of the crypto-related projects that I have been involved with – such as Fireblocks, Ledger, Grapherex and Mercuryo – have focused on the use of blockchain in general and/or crypto-

currencies in particular as payments infrastructure or as a medium of exchange.

The key difference between a traditional payment rail such as PayPal or an automated clearing house (ACH) on one hand and a blockchain-based rail on the other is that the latter is decentralised: there is no one single operator. I would also highlight five other important advantages:

1. Low transaction fees

2. Immediate settlements

3. Borderless transactions

4. No chargebacks

5. Avoidance of intermediary and currency conversion costs

Meanwhile, the emergence of new areas like stablecoins, DeFi, NFT marketplaces and GameFi has resulted in new merchant segments. This has led to the formation of specialised crypto payment companies and products, like Circle, Coingate, Ramp, Coinbase, Kraken, and Ripple – among others – who provide the crypto payment gateways.

Thanks to the increasing regulatory clarity in some jurisdictions, crypto payments are also breaking into traditional market sectors, like e-commerce (for online purchasing), the gig economy (for contract and freelance workers), remittances (for sending money back to your origin country), travel (for bookings and reservations) and online gaming (for in-game item exchange), to name a few.

So, what’s actually in the new chapter?

Taking a six-to-12 month view, I’d suggest that you should look for the following:

• Greater transparency in the use of crypto-currency as a medium of exchange. The nature of the crypto-

world is such that it is difficult to see what is happening within it. It should be possible – in at least some countries – to develop aggregate measures of transfers to/from crypto-currencies from established banking systems that are based on fiat currencies. Such data may be limited in scope and very much high level. Nevertheless it will likely emerge – confirming that the new chapter for crypto-currencies is underway.

• Far more obvious acceptance of cryptocurrencies for payments by traditional merchants. Indeed, if the next chapter in the story is as dramatic as I think it could be, traditional businesses will have no alternative.

• Clear signs of the emergence of a blockchain-based payments rail that is becoming a household name. Most people have heard of PayPal. It remains to be seen what will be the first blockchain-based payments rail that is known to (nearly) everyone.

Nodira Sadikova is a Multi-Media Consultant with Financial IT. She is the founder of Advisorywise, a boutique investment banking consultancy that works with high growth technology businesses. In this capacity, Nodira has built over 10 successful start-ups, with over $25 million in funding and accelerated the development of five new businesses in the CIS region. In addition, she has been a key protagonist in initiatives such as an accelerator program sponsored by the Organization for Security and Co-operation in Europe (OSCE).

Sadikova, Multimedia Partner, Financial IT

Nodira

Adam Edwards, Product and Growth Director, Satago

Digitisation in the financial services sector has notoriously been a challenging journey for many traditional financial organisations, and particularly so, large banks. Old legacy systems and in-depth, often manual, transactions and verification processes have in the past, hampered the ability of many corporate organisations to be agile when it comes to their tech adoption.

Luckily, the tide has started to turn. There are now many financial organisations that would now claim to be ahead of the curve when it comes to IT adoption – but there are still some areas that have moved faster than others. Indeed, one of the most interesting trends we’re seeing currently in this space is around embedded finance with some analysts forecasting a staggering 148% growth in the embedded finance market, predicting it to reach a revenue of $228 billion by 2028.

While banks have been quicker to offer flexibility to consumers in the business-toconsumer (B2C) embedded finance space, offering lots of options for flexible finance in response to high demand, the businessto-business (B2B) market has in many ways been slower to catch up.

I believed there’s huge untapped potential in the B2B sector. So, what can the B2B space learn from how embedded finance has succeeded in the B2C sector –and what are some of the benefits and new challenges that this investment could pose?

The state of embedded finance

When we look at B2C financial services, we can see that traditional banks have had to work hard to catch up with challenger banks. These new competitors have presented consumers with entirely new means to access digital banking, improve their visibility on financial information, and manage their funds and savings with secure API access.

This has forced traditional banks to digitise quickly in the B2C space to remain competitive and keep up with customer expectations – and embedded tools have become a key part of this. There are now multiple ways for consumers to access flexible finance and payment options. For

example, in-app payments and the rise of online marketplaces, have made it easier than ever for consumers to avoid losing flow while making transactions online.

While the B2B financial services industry hasn’t traditionally faced the same level of market pressure to innovate – this is now starting to change. We will start to see the impact in a couple of ways.

I predict we will begin to see rapid growth in the number of partnerships between FinTech companies and B2B lenders. Where banks such as Barclays have already been partnering with the likes of Amazon on the consumer side for a long time to offer flexible payment capabilities, we will see a lot more similar partnerships starting to take place in the B2B space. As a result, I anticipate a rise in the number of online marketplaces dedicated to the B2B space, and for increasingly niche market areas – such as agriculture and dedicated equipment manufacturers, for example.

This will become more prevalent as we see a growing number of digital-native millennials and younger generations, starting to run more companies in the B2B space too. The changing face of the workforce is resulting in a blurring between what consumers want and expect from financial tools for their own personal spending, and how they make buying decisions in their work lives. In this case, once it’s apparent to consumers that the innovation exists, the demand from businesses and organisations will follow.

The opportunities and challenges to come

There are several opportunities to be capitalised on via embedded finance in the B2B space. For lenders that have been held back by legacy systems in the past, they will now be able to offer a more flexible suite of digital finance options to customers. Through integration with expert providers, lenders can also benefit from new origination channels and access new pools of customers for bank accounts, financial consultancy and more.

For the fintech partners and integrators, including those providing white-labelled products to banks, there’s a chance to take

advantage of the trust customers have in their banking providers and the lenders' brand reputations, to increase their own revenue and future opportunities for sale.

Meanwhile, businesses are set to reap the benefits of being able to offer better user and payment experiences to their own customer's further up chain. They too, will benefit from better cash flow management, improved financial visibility and increased flexibility via different working capital tools, just like consumers are able to – all of which will be facilitated by better digital tools.

However, it is worth acknowledging that as the B2B space grows, heightened concerns around fraud risk associated with financial transactions are also likely to emerge. Going forwards, we’ll see more analytics and artificial intelligence built into embedded finance, to feed into underwriting models and support fraud checks. As businesses start to execute more complex transactions and share financial data via embedded finance partnerships, the risks of non-compliance could become ever more perilous, meaning there are certainly challenges ahead.

A competition for innovation in the B2B space

Overall, the embedded finance market in 2024 and beyond can expect to see significant emphasis on B2B players, such as banks and corporate lenders, who are looking to catch up with the consumer market.

As consumers have realised the benefits of seamless, digital financial services for themselves, we’ll now see demand growing as company leaders begin to expect the same innovation and experience when it comes to their B2B financing. Lenders and banks that want to satisfy their business customers will need to be willing to evolve and digitise, or risk missing out on the competition.

Alex Knight, Head of EMEA, Baton Systems

It is tricky to think of another industry where speed and accuracy are of such paramount importance. It is, therefore, even harder to work out why the banking sector is still so reliant on slow, antiquated processes when it comes to payment reconciliations.

Next month marks five decades since midsized German bank Herstatt experienced a sudden collapse due to its involvement in risky FX speculation. The bank had received payments in various currencies from counterparties in different time zones, only to then fail to make corresponding payments in other currencies before it was closed down by rule makers.

The trouble is, fifty years on, the banking sector has ballooned in terms of its importance to the global economy. Many estimates place the banking sector at around 20-25% of the world economy (source: Research and Markets – Financial Services Global Market Report 2021: COVID-19 Impact and Recovery to 2030). Therefore, when stresses to the system emerge, the knock-on effects can be severe. When a globally systemically important bank like Credit Suisse is identified as facing liquidity challenges, as was the case last year, the prevalent use of outdated post-trade processes across capital markets, such as reconciling payments one or more days after settlement, can have serious ramifications. This means, if a full-blown crisis emerges, counterparties can’t determine how exposed they are, because they lack the critical information needed to identify which payments have been sent and received so far that day. A situation, like what happened to Credit Suisse and has also happened to smaller institutions, underscores the urgency for a significant shift towards realtime payment reconciliation systems. Failure to act doesn’t only jeopardise individual firms, but can also propagate systemic risk, leading to catastrophic consequences reminiscent of past financial crises.

FROM HERSTATT TO CREDIT SUISSE: BANKING'S FIFTY-YEAR CALL FOR REAL-TIME RECONCILIATION

When market speculation mounts into tangible threats of liquidity crunches, financial institutions naturally resort to safeguarding their interests. Payment controls are instituted to mitigate settlement risks, albeit in a fragmented and, in some cases, manual manner. This decentralised approach, often controlled at the individual business level, fosters inconsistencies, and could potentially introduce loopholes for errors, posing financial, operational, liquidity and reputational risks. Moreover, a lack of oversight could trigger future systemic instability, amplifying the gravity of the situation.

Central to the issue is the timeliness and accuracy of payment reconciliations. The existing practice of initiating the reconciliation processes only at the very end of each day (once the US dollar market is closed), leaves institutions operating in the dark regarding their exposure. This delay, while seemingly innocuous, can have dire implications –particularly in times of financial stress. The inability to ascertain real-time payment status not only undermines confidence but also perpetuates a cycle of uncertainty, compounding the risks for all parties involved. In certain scenarios, banks may hold all outgoing payments using their manual and fragmented controls. However, the dilemma lies in discerning which payments they've received from the counterparty throughout the day, hindering their ability to release funds appropriately. Without real-time reconciliation, firms may understandably take a cautionary approach and withhold outbound payments to the at-risk counterparty until reconciliation (generally delayed by at least a day, as outlined above) confirms which ones are safe to proceed with.

In addressing this pressing, and frankly longstanding, concern, the imperative is clear: real-time payment insight is non-negotiable. The convergence of business, risk, treasury,

and operations necessitates a seamless flow of information, devoid of manual interventions and time lags. By embracing automated, realtime reconciliation processes, institutions can empower decision-makers with the information needed to navigate turbulent waters confidently.

Imagine a scenario where payment reconciliations occur seamlessly and continuously throughout the day. Armed with real-time information, institutions can accurately assess their exposure and make informed decisions regarding the release of outbound payments. This proactive approach not only averts potential defaults but also fosters market stability by honouring commitments and mitigating systemic risks. However, achieving this transformation requires a departure from complacency.

The notion of ‘if it isn't broke, don't fix it’ is no longer tenable in a fast-moving and inter-connected banking world marred by uncertainties. Financial institutions must acknowledge the inherent flaws in outdated processes and embrace technological advancements to stay ahead of the curve.

Ultimately, the need for real-time payment reconciliations transcends mere operational efficiency — it is a matter of systemic and regulatory resilience. By prioritising the adoption of automated, real-time reconciliation systems, financial institutions can fulfil their obligations, mitigate risks, and contribute to a more stable and orderly market. The time for action is now; the stakes are too high to delay.