Financial IT Winter Edition 2024

www.financialit.net • Winter Issue • 2024

2025: A CLOUDY OUTLOOK, WITH SOME GLIMMERS OF SUNSHINE Moshe Winegarten, Chief Revenue Officer, Ecommpay

DATA TO DECISIONS: HOW TO LEVERAGE PAYMENT DATA FOR BUSINESS INSIGHTS Brady Harris, Chief Executive Officer, IXOPAY

THE EVOLUTION OF OPEN BANKING: REDEFINING CUSTOMER JOURNEY AND RESILIENCE PLATFORM Jason Cao, CEO of Digital Finance BU, Huawei

David Gummer, Chief Product Officer, Redgate

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Founder’s Letter

FINTECH IN 2025: GROWTH, FUNDING CHALLENGES, AND EMERGING TRENDS Fintech is set for continued growth, with revenues projected to reach $1.5 trillion by the end of the decade, according to the Boston Consulting Group. Open Banking is expected to revolutionise payment transactions, handling $116 billion globally by 2026—a staggering 2,800%

increase since 2021. Blockchain remains central as decentralised finance (DeFi) becomes more integrated with traditional finance (TradFi), opening new doors for cryptocurrency and digital transactions.

The World Economic Forum predicts that by 2027, 10% of the global GDP could

be tokenized and stored on blockchain, highlighting its transformative potential, as noted by Reuters.

The past year has been full of surprises.

In the UK, the new Labour government may lead to higher employment costs and taxes, presenting challenges for businesses.

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Winter Issue • 2024

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

Muzaffar Karabaev, Founder, Financial IT

Meanwhile, the unexpected Trump-Musk alliance in the U.S. has taken a more business-friendly approach, boosting both the crypto market and stock valuations.

Major players like Revolut, with a valuation nearing $50 billion, have rebounded, yet questions remain about when firms like Stripe and Klarna will go public. Despite some recovery, high capital costs continue to pressure startups to demonstrate profitability.

The 2024 funding landscape was marked by difficulties, with global investment dropping from $62.3 billion in H2 2023 to $51.9 billion in H1 2024, according to KPMG’s Pulse of Fintech. The second half of the year followed a similar trend it seems. The EMEA region experienced a sharp 40% decline, though the UK led with $7.3 billion in investments. The Americas saw a slight decrease in total funding value but an increase in deal volume, reflecting a complex market. Lower valuations compared to the 2021 peak have pushed startups to adapt, with many conserving cash and facing down rounds. Early-stage investments, especially in Series A and B, remain appealing, but investors are more selective, seeking clear paths to profitability and innovation.

Southeast Asia remains a significant player in fintech, accounting for 14.5% of Asia’s total funding, with Singapore ranked third in the region. Late-stage funding dropped 72% in Q3 2024, yet early-stage

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is a Finnet Limited publication.

ISSN 2050-9855

and seed funding showed resilience, growing by 32% and 40%, respectively.

Key segments such as payments, banking tech, and forex tech led the space, despite payments funding falling 44% from the previous quarter. Although 2024 saw few major IPOs, a rise in acquisitions pointed to ongoing consolidation. The region’s vast consumer base and thriving digital economy promise strong long-term growth.

Digital banking remains the largest fintech segment, with adoption steadily increasing. In the U.S., digital banking usage grew from 61.3% in 2018 to 65.3% in 2022. Global digital payments reached an estimated $11.55 trillion in 2024 and are projected to grow at a CAGR of 9.52% until 2028. China leads in transaction value, recording $3.74 trillion in digital payments. According to Statista, these trends emphasise fintech’s resilience and potential, fueled by greater consumer access, a surge in startups, and expanding adoption. The future looks bright as the sector continues to evolve to meet the digital needs of consumers.

Muzaffar Karabaev, Founder, Financial IT

Finnet Limited 137 Blackstock Road, London, N4 2JW, United Kingdom +44 (0) 208 819 32 53 Publisher Chris Principe chris.principe@financialit.net Editor Suhair Keshodia suhair@financialit.net Research Abdu Turdialiyev Jamshid Samatov Production/Design Timur Urmanov PM & Marketing Nilyufar Sodikova nilyufar.sodikova@financialit.net Founder Muzaffar Karabaev

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Publisher’s Letter

by Chris Principe, Publisher, Financial IT

THE BIG PICTURE At Financial IT, we look to provide a Leaders Vision of the Fintech and related spaces. We look to give you a clear vision providing direction, purpose, and a foundation for your business decisions.

Our efforts are to “make it plain” and suggest that the vision of Fintech should be simple and actionable, understandable by all who read it. Financial IT gives a vision that is clear for everyone in your organization to grasp it and translate it into your vision of the Fintech space.

When our clients, partners, and employees understand the purpose behind Financial IT, business benefits from insights that play a role in how the industry moves forward. Our clear vision becomes the guiding light that helps shape the Fintech culture and drives Fintech innovation forward.

Our vision isn’t meant to sit on a shelf; it’s meant to be lived out. Our vision is provided so that everyone who reads it can run with it. In a business context,

this means empowering your team to take ownership of a Fintech vision and run with it. At Financial IT, we are creating a culture of engagement. We are where both big and new companies can speak to the industry (banks, companies and governments) as the segment experts explaining each’s company’s mission and commitment to their product goals.

A vision should be enduring, but it should also be flexible enough to evolve to ensure it remains relevant and aligned with business. Changes in the market, technology, or team dynamics might require adjustments to the vision, but the core values of being the voice of Fintech will remain consistent.

One of the most daunting challenges in business is navigating uncertainty.

Whether it is the shifting of new markets, evolving technology, changes in market demand, unexpected competition or unforeseen crises, uncertainty is a constant for entrepreneurs and executives. As business leaders, you must resist the temptation to make decisions out of fear.

Fear can lead to missed opportunities, poor timing and loss of leadership. Instead, we call upon you to act courageously, trusting in your wisdom to make decisions based on facts and multiple sources for your information. Financial IT is your trusted source for guidance that can assist you to make bold decisions, invest in new ventures, and step up when the future seems unclear.

Now as we are entering 2025, there are challenges in the world of Fintech both in product innovation, Industry regulations and changing country leadership. Financial

IT is committed to growing with you and for you. As we are finishing our 10th year, we are introducing several new information outlets to benefit you by providing consumable information into the world of Fintech. Our presence extends to your work, your businesses, and your leadership. We are with you at your clients, in the boardroom, at industry events and in the decisions you make daily.

Financial IT is introducing our streaming television show “The Big Picture” which is already live every Wednesday. The new resource for Fintech tracking with the “Fintech PathFinder”. We are pleased to introduce you to the “Fintech Atlas” that will help you understand the whose and where’s of new innovation in the world of Fintech. Additionally, Financial IT is committed to reporting to you from major events as well as many specialty events going on globally in Fintech. We will be there live, capturing these events in a way that lets you feel that you are there. We will provide you with personal interviews with companies and attendees who are important to the development of Fintech.

In today's fast-paced and often challenging business world, together we can set a higher standard. Financial IT, with you, is guiding the positive impact that Fintech has on everyone’s lives.

Chris Principe, Publisher, Financial IT.

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Contents

PUBLISHER’S LETTER

FOUNDER’S LETTER 2

FINTECH IN 2025: GROWTH, FUNDING CHALLENGES, AND EMERGING TRENDS Muzaffar Karabaev, Founder, Financial IT

COVER STORY

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THE BIG PICTURE Chris Principe, Publisher, Financial IT

FEATURED STORY 18 CURRENCY HEDGING: UNDERSTANDING THE BASICS Steve Paul, Deputy Chief Financial Officer, Equals Money

20 CAN OPEN BANKING AND DATA PRIVACY COEXIST? Pedro Torres, CEO and Co-Founder, Youverse

22 THE POWER OF AI TO COMBAT THE GROWING FRAUD CHALLENGE Rachel Levi, Head of Artificial Intelligence, Swift

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THE YEAR AHEAD: PREDICTIONS FOR 2025 David Gummer, Chief Product Officer, Redgate

LEAD STORY 10 2025: A CLOUDY OUTLOOK, WITH SOME GLIMMERS OF SUNSHINE Moshe Winegarten, Chief Revenue Officer, Ecommpay

14 DATA TO DECISIONS: HOW TO LEVERAGE PAYMENT DATA FOR BUSINESS INSIGHTS Brady Harris, Chief Executive Officer, IXOPAY

24 2025 PAYMENT INSIGHTS: TRENDS AND PREDICTIONS FOR THE YEAR AHEAD Rory O’Neill, Chief Marketing Officer, Checkout.com

26 SHAPING THE FUTURE OF FINANCE: WHAT TO EXPECT IN 2025

Che Sidanius, Global Head of Financial Crime and Industry Affairs, LSEG Risk Intelligence

FEATURED STORY 30 PREDICTIONS FOR IDENTITY VERIFICATION SOLUTIONS IN THE UK: A LOOK AHEAD TO 2025 Grigory Yusupov, Regional Director UK & RoW, IDnow

32 EMBEDDED FINANCE IN 2025: KEY TRENDS AND PREDICTIONS Jakob Pethick, CCO, YouLend

34 THE ROLE OF TRANSACTION DATA IN THE ERA OF EMBEDDED FINANCE Joris Lochy, Product Manager, Intix

36 THE EVOLUTION OF OPEN BANKING: REDEFINING CUSTOMER ACCESS AND DATA SECURITY Jonathan Arler, General Manager, Netherlands, payabl.

38 REGTECH INNOVATIONS: SHAPING COMPLIANCE AND RISK MANAGEMENT IN FINANCIAL SERVICES Lucy Huntley, Banking Success Director, FullCircl

40 2025: THE ONGOING PUSH TOWARD DATA-READY CONTENT FOR END USERS Jonathan Reeve, Head of Product Strategy and Development at Beta, BetaNXT business

28 BRIDGING FINANCIAL GAPS: THE POWER OF REAL-TIME PAYMENTS IN EMERGING MARKETS Deepak Gupta, EVP Product, Engineering & Services, Volante Technologies

16 THE EVOLUTION OF OPEN BANKING: REDEFINING CUSTOMER JOURNEY AND RESILIENCE PLATFORM Jason Cao, CEO of Digital Finance BU, Huawei

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End-to-end Database DevOps Reliably surface value across multiple platforms, faster redgate.com/Solutions

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Cover Story

THE YEAR AHEAD: PREDICTIONS FOR 2025 ‘Tis the season for predictions. And while we don’t have a crystal ball, there are some clear indicators for how technological trends in the finance industry could look in 2025, and how they might impact your data and database management teams.

Unsurprisingly, AI continues to dominate the conversation. Specifically, the top-predicted technological advancement in AI for 2025 is the rapid maturation of agentic AI – that is, AI with agency.

Currently AI doesn’t act on its own. It has to be prompted to perform tasks like generating synthetic data for test data management. And while this process happens through machine learning, it’s still a large step removed from AI models demonstrating agency to act autonomously.

Gartner predicts that by 2028, 33% of enterprise software applications will include agentic AI – an increase from less than 1% in 2024. In the meantime, we’ll continue to see great strides in the advancements and adoption of AI tools which use ever-evolving machine learning (ML), particularly to increase task and workflow automation.

In the data community we’re already seeing tools that employ AI and ML. These tools free up time by streamlining and reducing risk in data provisioning, automating database development, and centralizing database monitoring. AIdriven optimizations in database platforms help automate daily tasks, and present new opportunities for integrating advanced analytics directly into databases. And ML models can now be embedded within

databases to perform predictive analytics on real-time data.

These developments have changed the way database professionals think about applications and data management.

Many now view AI as less of a threat and more of a partner, allowing them to focus on strategic initiatives where human brainpower adds value.

It’s likely that this rapid maturation in AI technologies will continue to outpace regulatory response, and that AI guidelines will continue to vary greatly across regions. Therefore, businesses need to plan ahead; to create and embed robust security measures and best-practice database DevOps workflows to protect themselves and safeguard their data. And data security teams will be wise to remain informed about the evolving regulatory environment, like the new Digital Operational Resilience Act in Europe which requires compliance by 17th January.

Tackling the challenges of rapid advancements in AI and ML will require investment, allowing organizations to stay on top of the game. Forrester recently said that companies are taking an optimistic approach: “According to a Forrester survey, 91% of global technology decision-makers plan to increase IT spending, with over half expecting growth to surpass 5%.”

With this investment, AI systems will become more personalized and secure.

Companies will likely develop their own AI solutions tailored to their specific data and knowledge. But this doesn't mean we won't need database experts anymore. Instead, it will change the way data professionals tackle the ongoing challenge of adapting

to evolving business needs. AI will be a powerful tool for gathering information and planning solutions. But it’s important to remember that although AI and ML can pick up more of the work where human effort doesn’t add differentiating value, data professionals will still need to make use of human ingenuity and creativity for innovation.

No matter what changes AI and ML bring, we’re still expecting the data professionals of the next twenty-five years to need help working efficiently and at pace by automating more of their processes. Investment can’t just be allocated to technology and innovation.

Truly sustainable responses to the everevolving database landscape must include mid and long-term adaptive DevOps approaches with an ongoing focus on skills development.

The technology side of the database industry has changed significantly, but the human side hasn’t. And thus, I’d challenge all technology leaders whose people work with data and databases to consider whether you’re equipping your teams with the best possible tools to make their roles as easy as possible, to reduce manual effort and allow human ingenuity and creativity to add true value, freeing them up to serve your customers and users to the best of their ability.

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David Gummer, Chief Product Officer, Redgate As CPO, David leads product development at Redgate to drive innovation, improve customer outcomes, and accelerate business growth. An entrepreneurial leader with 25+ years of cross-functional experience in the technology sector, David has worked in a variety of global and business unit executive leadership positions and has extensive product management experience.

Along with a track record of driving rapid growth in new and existing markets, he has proven capabilities in creating, building and developing talented teams.

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Moshe Winegarten, Chief Revenue Officer, Ecommpay Joining Ecommpay in 2022 to scale the company’s robust and innovative products, Moshe is a global payments expert with extensive experience in FinTech across consumer and commercial banking and payments, for companies including Visa, Barclaycard and Accenture.

His roles have spanned strategy, product, sales, business development, and customer engagement and management.

An established thought leader within FinTech, Moshe has authored a number of papers, as well as spoken at numerous events around the world, promoting FinTech and payments innovation.

2025: A CLOUDY OUTLOOK, WITH SOME GLIMMERS OF SUNSHINE Back to the Table of Contents

Lead Story

Winter Issue • 2024

Ecommpay Chief Revenue Officer, and self-confessed ‘payments nerd’, Moshe Winegarten, shares his 2025 payments industry forecast As expected, 2024 has been a geopolitically turbulent year. The cost-of-living crisis has rumbled on, squeezing household budgets tighter still and putting businesses under significant pressure. In payments, things may have been less stormy, but they are certainly never dull. At least, not to us payments nerds.

Open banking, Buy Now, Pay Later (BNPL) and marketplaces have all continued to gain traction this year. Crypto has stoically struggled towards mainstream and orchestration remains relevant only to the larger merchants. 2025 is likely to remain similar, but we should expect to see the winds of change begin to make their presence felt.

Exciting things can be seen in the continued growth of globalisation, with merchants servicing beyond their borders.

We are seeing more and more demand outside of Europe for UK merchants, particularly in the Middle East and most recently in Africa.

Market consolidation on the horizon If you asked me 12 months ago, I would have said 2024 would see fewer new entrants emerging. How wrong I would have been. This year has seen more and more new players emerge in the orchestration space, to the point where the market is overcrowded and cannot sustain all these new entrants. We have heard of smaller players bought by larger firms in recent years and have been quietly shuttered during 2024. It is likely that more of this activity will take place in the background during 2025, as the market consolidates.

Changeable at the top Another 2024 trend that is set to roll on into 2025 is the removal of the individuals – the innovators and entrepreneurs – who launched the disruptors, in favour of more experienced and revenue-driven leaders.

In these continuing tough times, investors and businesses are likely to reassess and potentially pivot to ensure continued profitability. And continued, sustainable profitability requires seasoned leaders.

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Heatwaves possible While the outlook appears mild for much of the payments market, there are a number of hot areas. For example, open banking is still growing despite challenges with pricing and a push for profitability. POS-finance and BNPL may have come into their own during COVID. Now they are settling into a new space, including longer term lending and responsible finance to ensure longevity.

We are also seeing more merchants sell through marketplaces, and even the larger providers developing payment solutions specifically targeting currently underserved marketplaces. Growth is also continuing within payment orchestration, with many small providers launching. However, we do expect to witness some consolidation in 2025, as orchestration is folded into platforms and payments stacks to deliver wider benefits.

And this brings me to another area in which we do expect to see strong growth.

Merchants are starting to realise the advantages of working with full stack providers, like Ecommpay. Bringing all elements of payments into a single relationship brings significant cost and resource savings for merchants, while making global expansion simpler and improving the user experience.

Cost-of-living pressures continue to affect spend

One Click payments break through

A warm front for crypto?

Looking ahead to the coming year, I do not expect to see consumer demand pick up, as some are optimistically predicting. We have certainly had a tough year in 2024, especially for homeowners with mortgages.

Increased National Insurance contributions will be putting more pressure on employers, who are likely to respond with recruitment and salary freezes which won’t help household budgets. The good news, however, is that signs do point towards gradual improvement, albeit there is likely to be an 18-month lag before consumers begin to increase their spending.

The latest tech is enabling e-commerce payments to be simplified, streamlined and secured. There are more one click payment options emerging, from e-commerce platforms as well as from Payment Services Providers (PSPs). Mastercard has confirmed its commitment to tokenise all card payments by 2027, pushing its Click to Pay offering which complements e-wallets such as Google Pay, Apple Pay and PayPal. Payments through these services are more secure, more reliable and more convenient for shoppers, resulting in increased conversions.

Finally, what about crypto? In the Gartner Hype Cycle, it’s fair to say that crypto has served a long sentence in the ‘Trough of Disillusionment’. Could 2025 be the year it begins its ascent on the ‘Slope of Enlightenment’, moving steadily towards becoming mainstream? If Central Bank Digital Currencies (CBDCs) make visible progress towards launch, this would bolster crypto and could see development accelerate.

The likelihood is, however, that nothing in crypto will change rapidly and the picture will remain much the same for the next couple of years.

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Featured Story

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Winter Issue • 2024

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Featured Story

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Lead Story

DATA TO DECISIONS: HOW TO LEVERAGE PAYMENT DATA FOR BUSINESS INSIGHTS One of the most valuable aspects of payment data is the wealth of information it provides about customer behavior. Analyzing transaction data reveals trends in purchasing frequency, preferred payment methods, peak transaction times, and average spend per transaction. Payment data can shape business strategies, particularly when expanding into new markets or launching new products.

Insights into customer preferences, regional spending trends, and payment method popularity provide a roadmap for successful market entry and product development.

Payment data can also provide insights into the efficiency of payment processing.

By monitoring transaction success rates, authorization rates, and instances of failed transactions, businesses can identify bottlenecks or issues with specific payment methods or gateways. For example, merchants can choose to offer a digital wallet alongside other options, or if a particular gateway has a high failure rate, the business can route transactions through a more reliable partner to maximize sales.

Payment data is vital in identifying fraud patterns and potential threats before they impact the bottom line. By analyzing the amounts, locations, times, and frequencies of transactions, businesses can detect anomalies that may indicate fraudulent activity.

Challenges in Data Consolidation and Consumption The power of payment data for ecommerce businesses is apparent. What may not be so obvious is how to aggregate data from multiple PSPs and structure it to make it meaningful. Merchants operating internationally may use anywhere from three to 10 payment processors and gateways, as well as other third parties for fraud detection, chargeback management, subscription billing, and more—each with its own raw data presented in different formats at different time intervals that make a holistic view of payment data difficult to achieve. Even at the transaction level, the data fields the

merchant receives won’t be standard across gateways.

In order to simplify the process of compiling and formatting payment data, many online merchants are turning to payment orchestration software. By connecting payment gateways, local and global acquirers, processors, and other PSPs via a single API and automating data consolidation, payment orchestration unifies these disparate data streams into a single source of truth that can be relied on for payment analytics and insights.

How Payment Orchestration Can Help Holistic View Payment orchestration unifies transactions across multiple providers into a single, standardized view. This centralized approach reduces inconsistencies that can arise from managing divergent systems, ensuring data is collected and formatted uniformly across channels and regions so businesses can make accurate decisions with a holistic view of payment operations.

Reduced Administrative Costs Payment orchestration automates processes like data consolidation and formatting and can automatically reconcile settlement data. These features significantly reduce manual effort—saving countless hours and redirecting full-time resources to more critical tasks.

Enhanced Data Fields The best orchestration providers will not only provide meaningful reconciliation and reporting, but also provide supplemental services to enrich transaction data, such as: • BIN data, which passes on additional fields for card payments based on the 6-8 digit bank identification number.

• Payment Account Reference or PAR values provide a non-sensitive reference value that links all tokens representing a single card credential across channels.

Augmenting transaction data using these methods can help merchants track customer behavior, score and identify fraud risk, reduce costs, improve authorization rates, and more.

Optimized Performance Merchants can immediately identify and address issues like transaction declines or gateway downtimes, minimizing lost sales. Based on defined rules, payment orchestration software automatically routes transactions to the most reliable and costeffective providers.

Reduced Fraud Greater levels of usable data mean a better fraud engine. Payment orchestration reduces fraud by enabling real-time monitoring of payment activity. By integrating fraud prevention tools and machine learning models within its framework, orchestration identifies unusual patterns—such as multiple attempts from the same IP address, high-risk geographies, or flagged payment methods—blocking fraudulent transactions immediately.

Improved Customer Experience Merchants can monitor peak sales periods and preferred payment methods, optimizing checkout experiences and resource allocation in real-time. This agility leads to increased conversion rates, reduced fraud risks, and improved customer satisfaction.

For merchants working with multiple providers, managing disparate data sources can impede timely analysis and reduce data accuracy. By automatically providing accurate, standardized data, payment orchestration empowers businesses to optimize performance and make informed decisions that support growth.

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Winter Issue • 2024

Brady Harris, Chief Executive Officer, IXOPAY Brady Harris, a visionary FinTech Executive, has over two decades of experience leading high-growth financial technology and SaaS companies. As the CEO appointed following the merger of IXOPAY with TokenEx, he is dedicated to advancing global payment solutions. Harris employs a hands-on leadership style, focusing on operational excellence and strategic growth initiatives. During his tenure at Dwolla and Payscape, he oversaw significant increases in payment volumes and user engagement and fostered cultures that prioritize agility, high performance, and alignment with core values. Additionally, his expertise in mergers, acquisitions, and scaling companies to successful exits is key as IXOPAY positions itself to become the one-stop payment industry solution. Harris's commitment is not only to enhance enterprise value but also to empower his teams and clients in the evolving digital payments landscape.

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Featured Story

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Featured Story

Jason Cao, CEO of Digital Finance BU, Huawei Jason Cao is the CEO of the Huawei Digital Finance. He manages Huawei's business in the global financial industry. The Digital Finance Team strives to meet the needs of financial industry customers through ongoing innovation, works with partners to develop leading solutions, and aims to shape smarter and greener finance through full connectivity and intelligence.

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Lead Story

Winter Issue • 2024

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THE EVOLUTION OF OPEN BANKING: REDEFINING CUSTOMER JOURNEY AND RESILIENCE PLATFORM Over the past decade, the financial industry has undergone a seismic shift driven by the payment revolution. Digital payments have surged globally, making particular headway in China where mobile payments have become ubiquitous, instant, and incredibly convenient.

This shift has fueled the rapid growth of the digital economy and accelerated the financial sector's transformation. Open banking has further revolutionized the customer journey with personalized services.

Looking ahead to the next decade, Generative AI (GenAI) presents remarkable opportunities. Leading financial institutions are transitioning from Doing Digital to Doing AI, setting the stage for intelligent transformation and sustained growth. By integrating AI, banks can provide tailored services and proactive support through realtime data analysis.

However, challenges like service interruptions and cyber attacks persist. In 2023, top banks in Africa, Latin America, and Asia Pacific experienced service outages lasting over 24 hours. To seize the opportunities and tackle the challenges, financial institutions must adopt AI innovations to reinvent their processes and explore new growth models, while reshaping resilience to adapt to intelligent transformations.

Embracing AI innovations to explore new growth models AI is changing how the world works.

The financial industry's intelligent transformation has progressed from AI assistants to AI agents, the next step on the road to artificial general intelligence (AGI). Huawei's All Intelligence strategy has driven innovation in such areas as intelligent branches, risk prediction, and AI agents.

We've moved from the +AI (AI-enhanced) stage to AI+ (AI-centric), reshaping financial

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applications, terminal interactions, and service models with large AI models.

High-quality data is the lifeblood of AI development. That's why we are so dedicated to enhancing our data capabilities. Our data intelligence solution is adopted by over 100 financial institutions worldwide.

Reshaping resilience to adapt to intelligent transformations While AI innovation is vital, resilience is paramount. Future intelligent applications will be GenAI-assembled APIs, with AI agents invoking services anytime. Legacy systems impede full intelligence, so embracing cloud-native architecture and modernizing to actualize the Four Zeros is essential.

Zero Downtime: Advancing from active/ standby to a multi-active architecture ensures always-on services.

Zero Wait: Speed is a critical factor in attracting customers, be it for instant payments, ultra-fast transactions, or second-level credit approvals.

Zero Trust: Achieving in-depth security across campuses, data centers, and clouds strengthens cyber attack detection, isolation, and recovery.

Zero Touch: Huawei's autonomous driving network solution ensures one-minute fault detection, three-minute location, and five-minute recovery with zero room for human errors.

Mainframe modernization is a key challenge in achieving the Four Zeros. To develop a resilient, cloud-native system that surpasses mainframes, Huawei strengthens infrastructure across hardware, operating systems, and databases, and boosts E2E performance and reliability through fullstack integration and optimization.

Huawei's global digital finance partnerships for new value Huawei is committed to building a global ecosystem for digital finance, involving global leading partners, local industry participants, and segmented scenario innovators. Together, we've developed innovative solutions in eight key industry scenarios, ranging from infrastructure O&M to application systems, from core transactions to big data applications, and from banking to insurance and securities.

Our industry ecosystem and solutions meet customers' growing digital transformation needs.

Since 2021, our Financial Partner Go Global Program (FPGGP) has aimed to accelerate the transformation of the global financial industry.

To date, Huawei has served over 3,700 financial customers in more than 80 countries and regions, including 53 of the world's top 100 banks. We've established strategic partnerships with over 80 large banks, insurers, and securities companies globally, becoming their trusted partner in digital transformation.

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Featured Story

Steve Paul, Deputy Chief Financial Officer, Equals Money Steve joined Equals Money as Director of Finance in 2021, after a career in the commercial and financial sector, leading change projects at major UK banks such as TSB and Lloyds Bank. Steve has significant experience in leading teams through listed company audits, commercial business partnering of market leading product launches, renegotiation of contracts in excess of £100m, finance and MI support for £1bn divestment, company sale process & IPO. In May 2023, he became the Deputy CFO of Equals Money.

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Featured Story

Winter Issue • 2024

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CURRENCY HEDGING: UNDERSTANDING THE BASICS In the world of investing, predicting currency movement in the forex market is one of the hardest challenges. For businesses and organisations that trade internationally, or make international transactions, these unpredictable changes in monetary policy create uncertainty and financial risk. This can make budgeting challenging and, if not mitigated, lead to costly surprises.

There is a strategy that can help reduce or eliminate this risk, but it can sometimes be misunderstood.

What is currency hedging?

Currency hedging can reduce the risks associated with fluctuations in exchange rates.

If your business deals with multiple currencies, it exposes you to the danger of exchange rates moving against your favour, which can create a lot of unpredictability.

Such changes can impact the value of your international transactions, affect your cashflow in foreign currency and create discrepancies when you need to translate foreign assets and liabilities for reporting purposes.

Currency hedging can act as a shield, protecting your business by increasing stability in these dealings, including the purchase of goods, payment of suppliers, settlement of expenses and the repatriation of assets or profit from overseas operations.

Some business leaders might have hesitations around hedging due to a reluctance to participate in or gamble on the market. In fact, without hedging, you open your business up to market movements and unfavourable currency prices.

With hedging, you can mitigate the risk of either an upswing or downswing in the economies that you trade in by choosing a rate and giving yourself room to plan and predict cash flow.

Who is it for?

Large multinational companies and government organisations that procure

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internationally have been using currency hedging for some time, but most businesses today operate internationally in one form or another, either through their supply chain or with a cross-border customer base. This often means having to be able to receive and pay out in multiple currencies.

Without any hedging, when it comes to making international payments, you’re forced into paying whatever the current exchange rate is for the currencies you are dealing with.

Rates could be more favourable in future than where they are currently, but they could also become less favourable to your market. Not only will this lose your business money, but it also makes forecasting much more difficult, as you can’t be certain how much you’ll have to pay for a future purchase.

For many businesses who are trading internationally or using suppliers overseas, it is advisable to consider currency hedging in the procurement and contract stages of an agreement. For others, it might be considered over a longer term when setting annual or project budgets. The type of currency hedging that ayou chose will depend on the timeframe involved and the flexibility of your budget or cashflow.

Understanding with an example – forward contracts With a forward contract, you are locking in the current exchange rate for a period of time, for example for a quarter of a year or even up to two years. That way you know exactly what your outgoings are in that currency and are protected from any future drops during that time.

Currency options Another common approach to currency hedging might be used when you have a high level of certainty about the amount of foreign currency needed and the date of payment.

Foreign exchange options, or currency options, allow you to buy or sell a particular currency at

a pre-specific exchange rate before the option expires on a specified date.

Two variations on this are ‘European-style options’ where you agree to buy and sell a currency at any point between two dates, or ‘American-style options,’ which specify a particular date.

The benefits and potential risks While it’s a way to protect against negative downturns, it’s important to understand both the pros and the cons.

Hedging does mean a commitment to the rate you’ve booked, regardless of how It moves after the fact. However, many find the stability and certainty of something like a forward contract outweighs the possibility of a rate moving further in your favour. Without hedging, business open themselves up to more risk, which many can’t afford in the long run.

To effectively hedge, you need to have a solid understanding or seek consultancy on your business’ particular risk exposure and tolerance. You want to put in place a strategy that aligns with your business goals, while taking into account the wider market dynamics that could impact your investments and operations.

Navigating hedging Financial instruments and hedging are a crucial element in any toolkit to protect against the unexpected. By understanding the basics of hedging and working with knowledgeable advisors, business leaders can manage their financial risks more effectively and protect their companies from unexpected losses.

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Pedro Torres, CEO and Co-Founder, Youverse With many years of experience in technology, innovation and product design, from large telco companies to medium-size companies and start-ups, and a strong research background, Pedro Torres has worked for the last many years in global executive positions in customer experiences based on biometrics to enable immersive and seamless journeys.

A strong believer in decentralized approaches to privacy, Pedro has been leading efforts to provide the necessary protection and control to users as they authenticate for convenience with their face in multiple services such as proving identity to create a bank account, automatically checking-in to hotels, picking up car rentals or pay for goods and use loyalty in a fully contactless on-the-move fashion.

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CAN OPEN BANKING AND DATA PRIVACY COEXIST? What started as a regulatory initiative to modernize the EU and UK banking sectors has become a powerful catalyst for transformation. Emerging in the mid-2010s, Open Banking has definitely reshaped the financial landscape and unlocked new avenues for collaboration and innovation. As we look ahead, the future hinges on expanding data accessibility.

The primary goal of this regulatory framework was to empower individuals by giving them greater control over their financial data. This control would enable them to share their data with third-party providers of their choice. While fintech companies stand to gain the most from PSD2 and have been active in the Open Banking space, the traditional banking sector has been slower to adapt to this new paradigm because of security concerns.

APIs, a double-edged sword APIs, the digital gateways that enable the seamless flow of financial data between banks, fintechs, and consumers, are the lifeblood of Open Banking.

They facilitate real-time transactions, account aggregation, and personalized financial services. However, this same connectivity makes them a prime target for cyberattacks.

While APIs are usually designed to comply with data privacy regulations like GDPR and the California Privacy Act, the question remains: are they sufficiently equipped to safeguard users from the everevolving threat of digital data theft?

The interconnected nature of Open Banking's API ecosystem creates a vast attack surface. Malicious actors can exploit vulnerabilities to gain unauthorized

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access to sensitive financial information, potentially leading to significant data breaches. A single breach can expose the data of millions of customers, resulting in severe financial losses and irreparable damage to institutions' reputations.

Privacy-preserving biometrics: a solution to the security challenge If a single password or authentication code within the Open Banking ecosystem is compromised, it can potentially expose all connected applications to a data breach.

This could result in significant financial losses, potentially amounting to millions of dollars. The answer? Face based secure customer authentication.

Face authentication, a form of biometric authentication, leverages advanced facial recognition technology to verify a user's identity. By analyzing unique facial features, this technology can provide a highly secure and convenient way to access financial services. When implemented with strong security measures, face authentication can significantly reduce the risk of unauthorized access and data breaches.

However, traditional biometric systems can raise privacy concerns. Privacypreserving solutions mitigate these risks by distributing partial biometric data across multiple nodes. Biometric information reconciliation occurs exclusively on the client-side device, ensuring that only authorized devices under the user's control can access and utilize the distributed matching system for authentication purposes.

So, yes, Open Banking is a significant step towards user-centric banking, it

presents significant security challenges, particularly in authentication. By leveraging privacy-preserving biometrics, financial institutions can enhance the security of their Open Banking systems while safeguarding user privacy. This technology can be integrated into various applications, including mobile banking, online payments, and digital wallets, to provide a seamless and secure user experience.

A future of trust and data protection As an initiative designed to empower customers over their financial data, Open Banking carries a responsibility to prioritize data privacy. Without trust in the underlying processes, neither institutions nor individuals can fully benefit from the opportunities that Open Banking offers.

Banks and fintechs must collaborate to foster trust, ensuring customer data remains secure. This requires implementing robust security measures, such as privacy-preserving biometrics, and transparent communication. By prioritizing data security and user privacy, there's hope for a future of trust and data protection.

To learn more about privacy preserving authentication with biometrics, go to www. youverse.id

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Rachel Levi, Head of Artificial Intelligence, Swift Rachel is the Head of AI, responsible for accelerating and de-risking the use of AI across Swift. She oversees the exploration, deployment, and governance of AI to support the delivery of the company’s strategy—driving transformative initiatives, fostering cultural change, and unlocking opportunities for innovation, efficiency, and resilience.

Previously, Rachel led the Enterprise AI team, where she was instrumental in delivering the company’s first generative AI tools. In this role, she focused on leveraging AI to enhance productivity, improve customer experience, and generate powerful insights to advance the company’s strategy.

Rachel’s recent contributions to the industry in the AI space have been recognized with her inclusion in the Women in FinTech Powerlist for two consecutive years (2023 and 2024).

Prior to this role, Rachel was the Head of Innovation Engineering at Swift, with previous experience at CLS, the world leader in FX settlement solutions.

Rachel holds an MA Hons in Economics from the University of Edinburgh, Scotland.

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THE POWER OF AI TO COMBAT THE GROWING FRAUD CHALLENGE Artificial intelligence (AI) continues to spark significant interest across financial services, with the potential to impact the landscape in a myriad of ways, from services offered to interactions with customers.

In the payments sector, this growing interest in AI is particularly relevant as fraud becomes an increasing concern, with an estimated global cost of $485 billion in 2023 (Nasdaq-Verafin Global Financial Crime Report). As the industry accelerates payment speeds, both domestically and cross-border, the fraud threat – and the need for effective defenses, such as AIdriven solutions – will only intensify.

And the shift towards faster payments is already underway. For example, the European Payment Council’s One-LegOut Instant Credit Transfer scheme, which went live in November 2023, means cross-border payments bound for Europe can now reach beneficiaries in seconds.

Meanwhile the European Commission’s Instant Payments Regulation, which comes into effect in October 2025, intends to make instant low-value payments the norm within the Single European Payment Area.

All institutions in scope must be able to send and receive instant payments.

On the global level, the G20 has set goals to improve key aspects of cross-border payments, including their speed, by 2027.

This year Swift revealed that 90% of cross-

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border payments sent over its network now reach destination banks within an hour, and 50% are received by end beneficiaries within five minutes.

While faster payments bring clear benefits, it is recognised that they also amplify the ongoing risk of fraud. The quicker a payment is processed, the less time there is to detect potential threat.

Regulators are making provisions for this – within the EU’s Instant Payments Regulation, Verification of Payee mandates that payments must be checked for errors and anomalies before they’re sent, giving customers peace of mind that their money is going to the right place and providing a catch for typos.

We think AI can play a major role in giving financial institutions faster, stronger and more accurate insights into the occurrence of potentially fraudulent activity. From January 2025, Swift will be rolling out an AI-enhanced fraud detection capability that aims to help the financial industry tackle increasingly sophisticated forms of financial crime. This development builds on our existing Payment Controls Service and follows a successful pilot with financial institutions across Europe, North America, Asia and the Middle East.

The new AI-enhanced service will draw on pseudonymised data from the billions of transactions that flow over the Swift network each year to identify and flag

suspicious transactions so that customers can take action in real-time.

And we won’t stop there, we’re also exploring how related technologies – such as federated learning and confidential computing – could enable the global financial community to collaborate and develop a pan-industry defence against fraud. To this end, we’ve been leading a group of international banks to explore how market participants could share intelligence on potentially fraudulent behaviours without revealing their proprietary data in a way that will help enhance detection at a network level.

So far the participants have developed a number of fraud detection use cases which are set to be tested in a sandbox environment in March 2025.

Swift has a long track record of supporting the industry in adapting to technological advancements, both to seize new opportunities and address new challenges. As the industry moves towards the goals set by the G20 in relation to speed, cost, and transparency, we will continue to explore how we can leverage AI in ways that deliver scalable benefits for financial institutions and their customers.

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2025 PAYMENT INSIGHTS: TRENDS AND PREDICTIONS FOR THE YEAR AHEAD The payments industry has been transformed in recent years by digital innovation, regulatory changes and changing customer demands. Against the backdrop of a booming global digital economy – which Forrester predicts will capture 17% of GDP by 2028 – next year will be no exception.

We’re set to see an evolution, I believe, across three major areas: Data will play a bigger role in payment strategies With US ecommerce sales set to grow at more than double the rate of high-street sales in 2025, omnichannel strategies will come under scrutiny. I’ll be bold and predict that 2025 will be the year we drop the false hope that one size fits all, when it comes to payments strategies that serve merchants’ needs.

The reality is that omnichannel success in payments is a data game.

Adopting just one single payment provider is a false economy, because no single provider can excel across all channels. Those who try may begin to see cracks. Just as consumers shop at different stores for unique

needs, businesses benefit from using specialised Payment Service Providers (PSPs) tailored to specific channels, regions, and payment methods.

A multi-PSP approach offers flexibility and cost efficiency, allowing businesses to select the highest-performing PSPs for their requirements. By optimising payments on a modular basis, companies avoid paying for unnecessary services and invest instead in components that align with their goals. For example, a business might leverage one provider for e-commerce and another for in-store transactions, each optimised for those specific environments.

But the crux of the matter is that seamless interoperability does matter.

It's just that it won’t come from one single provider. It’ll come from data.

AI will become tablestakes in the race will be on for better payments performance Between 2019 and 2023 money lost to poorly performing payments nearly tripled according to analysis by Oxford Economics. Unchecked, this trajectory will continue because as the digital

economy grows so does its complexity.

The success of a transaction relies on a precise chain reaction involving multiple players—issuers, schemes, and payment service providers—each with unique rules, preferences, and technologies. These distinct factors combined with soaring fraud rates directly affect payments performance, directly impacting revenue for businesses the world over.

In recent years, Strong Customer Authentication (SCA) exemptions have been one example of a challenge with no consistent, predictable solution for merchants. Methods like direct authentication or exemptions like Transaction Risk Assessment (TRA) and Low Value Transaction are available for a single transaction. But issuer preferences vary widely: among over 10,000 issuers, each favouring a different route or exemption, communicating only through an approval or decline response code.

In 2025 things are set to change yet again as we prepare to see new PSD3 regulations ushered in across Europe.

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Rory O’Neill, Chief Marketing Officer, Checkout.com As Chief Marketing Officer, Rory and his team are responsible for marketing Checkout.com products and services to global Merchants. He's based in our London headquarters.

Prior to joining Checkout, Rory spent five years at Planet, a payment provider for the hospitality and retail sectors. While at Planet, he repositioned the company in the payments sector and worked with the Executive Leadership that sold the business to Advent International in 2021.

Rory has had several global marketing roles in the technology sector at Samsung Electronics, BlackBerry, GXS and General Electrics. He holds a bachelor's degree in Chemistry and masters degree in Economics from the University of Sussex, United Kingdom

Meanwhile as online payment fraud is set to hit losses of $206bn by 2025, the need to balance high-performing payments with robust security will become an ever more finely-tuned challenge.

Only machine learning models can take all of the data, complexity and continuous change which makes up the digital payments landscape – and make real-time sense of the information, continuously adapting and refining, at pace.

Education and skills will take centre stage Jobs in payments are booming, in fact, LinkedIn reported 318,000 open payments positions advertised globally in August, up 45% from the previous year. 58% of senior executives surveyed at 150 $1bn+ B2C businesses globally are employing staff in dedicated payments roles. Payments professionals are responsible for the money flowing in, keeping fraudsters out, the regulators satisfied and customers happy.

A 2023 survey of consumer-facing businesses aimed to understand

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employee education and skills gaps.

Employers flagged ecommerce as an area in which they would like to upskill their teams in, highlighting payments, security, and data analytics as priorities.

This demand should drive high quality educational initiatives designed to upskill payments and ecommerce professionals – equipping them for successful careers in the digital economy. Free courses provided by the likes of Merchant Risk Council are critical. Checkout.com partners with MRC, because we fundamentally believe that thriving begins with education.

From young students and early-stage professionals to nurturing tomorrow’s Chief Payment Officers, as an industry, we need to unite and commit to sharing and building payments expertise throughout people’s career paths.

For all its progress, payments is a relatively young industry, which has grown fast. As an industry we need to hold each other accountable and commit to future progress to ensure we enable businesses to thrive in the digital economy.

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Che Sidanius, Global Head of Financial Crime and Industry Affairs, LSEG Risk Intelligence

SHAPING THE FUTURE OF FINANCE: WHAT TO EXPECT IN 2025

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As we step into 2025, the rapid pace of technological advancements, coupled with evolving regulatory landscapes, presents a unique blend of challenges and opportunities for the future of finance.

We will delve into the key trends and innovations set to redefine the financial sector in the coming year.

Geopolitical Tensions and Sanctions: Geopolitical tensions will continue to impact the financial sector, with sanctions adding complexity to risk management.

Organisations will need to consider the differing objectives and scopes of the multitude of jurisdictions covered by sanctioning authorities.

Cryptocurrencies: Crypto firms are expecting a crypto friendly policy environment in the US following the recent election outcome. In contrast, the EU's new MiCA (Markets in Crypto-Assets) regulations will increase scrutiny on cryptocurrencies, addressing their appeal to fraudsters for laundering money. While crypto exchanges aim to build user trust, this regulatory environment will help ensure secure transactions.

AI and deepfakes: The dark side of technology like deep fakes and AI-driven fraud urges vigilant monitoring and proactive measures. Real-time verification of bank accounts and ownership is key to combating APP fraud, which caused £213.7m in losses in the UK during the first half of 2024. Using facial recognition, document screening, and liveness detection efficiently confirms identities with biometric data and governmentissued documents. LSEG Risk Intelligence noted a 27% rise in phishing attacks in Q1 20241.

In conclusion, the financial industry must embrace technological advancements and regulatory changes to thrive in 2025. By leveraging real-time data, enhancing digital onboarding, and fostering innovation through RegTech, financial institutions can navigate the complexities of the modern financial landscape and deliver value to customers.

Digital Onboarding/Inclusion: The rapid growth in developing digital onboarding tools is helping to ease the challenges of financial inclusion and seamless adoption of digital services. In Latin America, between 2017 and 2021, access to bank accounts increased from 55% to 74% due to the ease of regulations and the penetration of new players with the focus on driving financial inclusion through technology. With the implementation of AI-driven solutions, we can expect financial inclusion to accelerate in months rather than years2.

Real-Time Data and Fraud Prevention: One of the most critical needs for financial institutions will be the availability of near real-time data to combat fraud and manage the complexities of sanctions.

Adopting near real-time data solutions will enhance the adoption of digital financial services, improve customer experience, and ensure compliance with ever-changing regulatory requirements.

According to a report by the Association of Certified Fraud Examiners, organizations that use real-time data analytics can detect fraud 50% faster than those that don't (ACFE, 2022).

increasingly targeted by money launderers and those seeking to evade sanctions.

Stronger controls and an increased focus on due diligence can help to manage risk avoiding reputational damage and enforcement action by the authorities.

Online gaming is also poised to attract significant attention due to its intersection with fraud, child exploitation, and money laundering. In 2022, the revenue from the worldwide gaming market was estimated at almost 347 billion U.S. dollars, but alarmingly, according to a Lloyds Bank study, the identity theft (67%) and hacking (61%) rank as the two most prevalent forms of fraud experienced by young gamers3.

The Rise of Regulatory Technology (RegTech): These new advances are set to play a pivotal role in shaping compliance and risk management in 2025. Publicprivate partnerships will be crucial in fostering a safe space for innovation, enabling the next generation of financial services to offer instant onboarding, due diligence, and services.

Beyond financial services: Sectors like insurance, luxury goods, art dealing, professional services and real estate are

https://docs.apwg.org/reports/apwg_trends_report_q1_2024.pdf https://www.weforum.org/stories/2024/01/ai-is-driving-the-evolution-of-a-more-inclusive-financial-sector-in-latin-america-here-is-how/ 3 https://www.experian.com/blogs/insights/online-gaming-fraud/ 1 2

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Deepak Gupta, EVP Product, Engineering & Services, Volante Technologies

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BRIDGING FINANCIAL GAPS: THE POWER OF REAL-TIME PAYMENTS IN EMERGING MARKETS In the rapidly evolving landscape of global finance, emerging markets are experiencing a transformative shift, driven by the adoption of real-time and cross-border payment technologies. South Africa, in particular, stands at the forefront of this revolution, showcasing how innovative payment solutions can bridge financial gaps and foster economic growth.

The evolution of payment technology across Africa South Africa's financial sector is undergoing a significant transformation, with real-time payments playing a pivotal role. This shift is not merely about speed; it's about creating a more inclusive and efficient financial ecosystem. According to a study by Mordor Intelligence, the South Africa Real Time Payments Market size is estimated at USD 0.41 billion in 2024 and is expected to reach USD 2.04 billion by 2029.

The adoption of real-time payment systems is addressing longstanding challenges in the region, such as financial exclusion and the high cost of traditional banking services. By enabling instant transactions, these systems are making banking more accessible to a broader segment of the population, including those in remote areas who have historically been underserved by traditional banking infrastructure.

• Local Investment: By investing in local solutions, traditional banks can ensure that their services are tailored to the specific needs of African consumers and businesses.

• Personalised Solutions: Understanding that one size doesn't fit all, Standard Bank, for example, is developing customised financial products that address the unique challenges faced by different segments of the population.

• ISO 20022 Standards Adoption: The implementation of ISO 20022 standards is a significant step towards enhancing the interoperability and efficiency of payment systems.

Bessy Mahopo, CIO for CIB transformation programmes at Standard Bank shares her perspective: “This represents a pivotal moment in our evolution, built on trust and cultural alignment. The PaaS technology is a perfect complement to our needs, and the shared values and dedication permeate their entire organisation, not just at the leadership level. Together, we are transforming the payments landscape while empowering communities and fostering growth across Africa."

The impact of cross-border payments

Cloud-native solutions are emerging as a game-changer in the banking sector, offering unparalleled scalability, speed, and real-time operational capabilities. These technologies are not just enhancing existing services; they're enabling banks to innovate and create

Cross-border payments are another critical area where technology is making a significant impact. In a globalised economy, the ability to conduct seamless international transactions is crucial for businesses and individuals alike. Each country has its own compliance requirements, which complicates the process of delivering instant, seamless international payments. At Volante, we’re tackling this challenge by offering a phased integration

new financial products tailored to the unique needs of diverse populations.

One prominent example is Standard Bank, Africa's largest bank by assets with a client base of over 19.4 million. It is actively working to bridge the financial inclusion gap through a multi-faceted approach:

approach that allows banks to adopt our technology gradually, making it easier for them to remain compliant across multiple jurisdictions. Our strategy is to simplify compliance through technology, enabling banks to reduce friction in international transactions.

The advantages of cloud-native technology

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A report by Citi highlights that crossborder payments are expected to reach $250 trillion by 2027, growing at a rate of about 5% per year. Payments are moving away from traditional instruction methods, which are tied to batch and files, and moving toward application programming interface (API) connectivity. This is leading to a heightened opportunity for traditional banks to leverage technology and streamline these processes.

The future of banking in emerging markets As Africa's population continues to grow and the demand for digital finance increases, banks that invest in innovative payment technologies are well-positioned to lead the market. By enhancing the speed, efficiency, and transparency of domestic and crossborder bulk and real-time payments, these institutions are not only improving customer experiences but also contributing to broader economic growth and resilience.

The story of Standard Bank serves as a powerful example of how financial institutions can lead the way in making banking more inclusive and tailored to the needs of diverse populations. By investing in local solutions and adopting modern payment standards, Standard Bank is creating long-term value for both itself and the communities it serves.

The convergence of real-time payments, cross-border capabilities, and cloud-native technologies is reshaping the financial landscape in emerging markets. As they continue to evolve, they promise to create a more inclusive, efficient, and interconnected global financial ecosystem, with emerging markets at the forefront of this transformative journey.

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PREDICTIONS FOR IDENTITY VERIFICATION SOLUTIONS IN THE UK: A LOOK AHEAD TO 2025 With 2025 on the horizon, the identity verification landscape in the UK is set to experience major shifts as technologies develop and regulations evolve.

Driven by the latest technological advancements impacting identity verification, including digital wallets and generative AI, alongside regulatory changes, there are many trends that will reshape how individuals prove their identities online and how organisations protect themselves against fraud.

Grigory Yusupov, Regional Director, UK & ROW at IDnow, explores what the year ahead holds for identity verification solutions in the UK – and the critical role they will continue to play in our digital environments.

Digital identity wallets: a new standard in the UK and beyond By 2026, Gartner projects that over half a billion smartphone users will be utilising a digital identity wallet worldwide.

Across Europe, digital identity wallets are already rapidly gaining traction due to regulatory initiatives, such as eIDAS 2.0 – the second iteration of the European Union’s Electronic Identification, Authentication, and Trust Services regulation. eIDAS 2.0 mandates that all EU member states implement digital identity wallets, which will store not only personal identification but also credentials such as university degrees, tax IDs, and even driving licences.

While the EU Digital Identity (EUDI) Wallet is expected to launch by 2026-2027,

the UK is not required to implement eIDAS 2.0, meaning UK citizens will not have access to the EU’s digital wallet.

So, though eIDAS 2.0 benefits EU citizens and businesses by enhancing pan-European digital trust and identity verification, it could introduce added complexity for the UK. As such, UK businesses might need to adopt interoperable solutions to maintain seamless EU operations. This is especially true for digital signature services. Thanks to digital wallets, the issuance of a Qualified Electronic Signature (QES) will become faster and easier within the EU; however, the cross-border validity of QES between the UK and the EU remains a contentious topic following Brexit.

Moving into 2025, we should begin to see how closely the UK’s new government plans on following the EU plans and processes. The key for the UK will be to maintain as many frictionless and secure processes as possible, while keeping pace with the regulatory landscape in the EU.

The continued rise of AI-driven fraud Increasingly sophisticated technologies, particularly generative AI, will continue to pose new challenges for identity verification.

Fraudsters can now execute social engineering attacks or create realistic deepfake images to bypass traditional security protocols with alarming ease.

Another Gartner report outlined how deepfakes can now ‘mimic facial

expressions, blinking patterns and even subtle micromovements with uncanny accuracy, confounding even the most advanced detection algorithms.’

Worryingly, the latest IDnow Fraud Awareness Report revealed that almost half (47%) of Brits said that they do not know what deepfakes are.

So, the identity verification industry and the sectors it serves have seemingly reached an impasse: the rise of deepfake fraud is outpacing consumer education.

In response to the challenges posed by generative AI and deepfakes, the identity verification industry is adopting a multilayered defence strategy.

Advanced biometrics and solutions to document verification, such as employing near-field communication (NFC), are being explored to combat the risk posed by AIpowered fraud.

The coming year will require UK companies to adopt these multi-layered technologies to stay ahead of fraudsters and meet stricter anti-fraud regulations.

Stricter regulations and compliance: AMLR, NIS2, and more The UK’s financial institutions are under pressure to keep up with the stringent compliance requirements being implemented across the EU. To align with the EU’s push for stricter anti-money laundering (AML) standards, the UK is adopting robust regulations to Back to the Table of Contents

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Grigory Yusupov, Regional Director UK & RoW, IDnow Grigory Yusupov serves as the Regional Director for the UK and Rest of World (RoW) at IDnow, where he spearheads the company’s ambitious growth initiatives in the UK and beyond.

Based in London, Grigory brings a wealth of experience to IDnow, having spent nearly a decade in the Know-your-Customer (KYC) industry. Prior to joining IDnow in 2024, he held senior roles at prominenat firms, such as LexisNexis Risk Solutions and Mitek Systems.

Throughout his career, Grigory has demonstrated his expertise in technology across various sectors, including financial services, government, e-commerce, and telecommunications.

Grigory holds a Master’s degree in International Business and Affairs from the Higher School of Economics (HSE), providing him with a solid academic foundation alongside his extensive professional experience.

mitigate fraud risks, particularly in the finance sector.

This will impact UK businesses with cross-border operations, much like the rollout of pan-European digital identity wallets as a result of eIDAS 2.0.

For organisations operating in both the UK and EU, it will be vital to engage with a trusted identity verification partner that possesses cross-border expertise.

The next year and beyond will require comprehensive, regulation-ready solutions that will help businesses to navigate the complexities of compliance, ensuring seamless operations across different jurisdictions.

a new level of security that reduces the risk of data tampering.

The introduction of smart contracts into financial services is another promising aspect of blockchain technology.

Smart contracts enable automated and secure transactions, enhancing the Know Your Customer (KYC) process by reducing errors and accelerating verification.

IDnow’s involvement in the European Blockchain Sandbox project is one example of how the industry is coming together to advance blockchain-based identity verification. The solutions from this project will not only address privacy concerns, KYC and interoperability but will enhance trust in a relatively new technology ecosystem.

over 127,000 cases of identity fraud were recorded between January-June 2024 – a 4% increase on 2023. This was largely driven by significant increases in impersonation fraud in relation to mobile phones (up 102%), personal store cards (up 59%) and personal current accounts (up 19%).

Now, more than ever, banks need to innovate and educate to keep one step ahead of the fraudsters.

We should see more and more banks employing more robust identity verification solutions to reduce fraud, providing consumers and businesses with a safer digital environment.

Web3 and blockchain technologies: transforming identity verification and fraud prevention

The impact of APP fraud reimbursement on anti-fraud measures

Web3, also known as Web 3.0, is a new version of the World Wide Web that is decentralised and open – a more usercentric internet where people have greater control over their data and can conduct transactions without relying on centralised entities.

Blockchain technology is a key part of

With fraud cases becoming more complex, UK authorities have been cracking down on advanced scams, such as Authorised Push Payment (APP) fraud.

The new APP fraud reimbursement rules came into effect in October 2024 to better protect consumers from being defrauded when using faster payments.

As 2025 approaches, the UK’s identity verification landscape will be shaped by innovative technology, including digital wallet solutions and blockchain, while continuing the fight against generative AI and deepfakes.

Under the magnifying glass of regulatory scrutiny and complex fraud schemes on the rise, our financial institutions and organisations will need secure, adaptable, and regulation-compliant identity verification solutions. This will aid UK businesses in

Web3 and could revolutionise how financial institutions handle identity verification.

According to the World Economic Forum, 10% of global GDP could be tokenised and stored on the blockchain by 2027.

With blockchain, records are encrypted, timestamped, and easily accessible, offering

Financial institutions are now under growing pressure to take preventative action against all types of scams, not just APP fraud.

Cifas’ latest research highlights the rise in cases of facility takeover, identity fraud and misuse of facility: more than

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In conclusion

safeguarding against evolving threats while navigating new industry challenges.

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Jakob Pethick, CCO, YouLend

EMBEDDED FINANCE IN 2025: KEY TRENDS AND PREDICTIONS Embedded finance is reshaping SME financing, making it easier for businesses of all sizes to access the financing they need to operate and grow. Over the past years, a powerful trend has emerged: financial services are being seamlessly integrated into the operating systems that SMEs use and trust daily. For example, businesses who sell online through a retail platform such as Amazon, eBay and Etsy can also receive financing through those platforms when they most need it; restaurants and pubs can do the same through their food delivery platforms such as Just Eat and Deliveroo. This marks a shift from a world where banks were the only provider of financial services.

Looking ahead to 2025, we expect a surge in embedded finance partnerships. Whereas embedded finance used to be adopted mostly by payment companies, today we see a growing range of verticals offering financing, including within travel, tech and procurement, and increasing an overgrowing suite of products from lending to bank accounts and cards for spend. Shopify is a good example of a company who has embraced the embedded finance vision and launched a wide range of products, including merchant financing, bank accounts and debit and credit cards with features tailored to their specific merchants.

In 2025, we will continue to see embedded financing go global. As embedded finance becomes adopted by global players, the ability to offer multi-currency and multi-geography solutions will become even more critical. Platforms will need to provide

seamless, localised financial products to meet the needs of diverse businesses across markets.

There’s also a noticeable shift towards partnering with third-party embedded financing providers rather than building inhouse finance solutions. Many platforms that want to offer embedded financing are often exceptional technology companies themselves and consider building their solutions inhouse. However, they increasingly recognise that partnering with a specialised provider offers a faster route-to-market and frees up time to focus on their core services while leaving overheads such as capital provision, risk modelling and regulation to specialist third-party providers. This approach ensures faster and smoother access to credit for their business users, particularly for companies that operate in multiple geographies.

Finally, we anticipate significant investment in AI and machine learning technologies that can enhance risk assessment by analysing a wider range of data, including behavioural and transactional information. Platforms have access to a plethora of unique data points that will enable embedded financing solutions to reach businesses who were otherwise beyond the reach of the traditional financing system.

Embedded finance isn’t just solving today’s financial challenges for small businesses—it’s laying the foundation for a future where finance is seamlessly integrated into the everyday operations of businesses, allowing business owners to run their businesses at their own pace and with more flexibility.

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Joris Lochy, Product Manager, Intix Joris Lochy is a Product Manager at Intix, where he leads the continuous advancement of the Intix Transaction Data Management platform. With over 20 years of experience in Financial Services and IT, Joris specialises in Payments, Investments, and Credit. His extensive expertise in fintech and innovative banking supports Intix in expanding its platform capabilities.

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Winter Issue • 2024

As embedded finance continues to become an integral part of financial services, the importance of transaction data has never been more relevant. Despite being relatively nascent, embedded finance is already transforming how financial services are delivered by integrating directly into nonfinancial platforms. This powerful innovation offers consumers and businesses seamless, efficient access to services such as lending, payments or insurance exactly when they are needed.

At the heart of this transformation is transaction data. Leveraging the power of data is not only crucial to the success of embedded finance but also essential for driving improved customer experiences and operational efficiency. Reflecting on discussions from Sibos 2024, it is clear that the continued development of efficient transaction data management will be central to future innovation in financial services.

Enhancing Real-Time Decision Making Through Data In an embedded finance environment, the ability to act in real time is crucial.

Whether delivering instant loan approvals, making real-time cross-border payments or providing personalised financial recommendations, banks, fintechs and even non-financial businesses require access to high-quality, real-time data. As financial services decentralise and integrate into third-party platforms, the complexity of transaction data flows increases significantly. Efficiently managing this data and harnessing it for real-time decisionmaking will provide companies with the tools to stand out in an increasingly crowded market.

Take for example the huge benefits associated with consolidating transaction data into a unified view. Through this approach, financial institutions are able to respond quickly and accurately to emerging trends and anomalies. Meanwhile, real-time tracking and analysis of payments allow for faster detection of irregularities, improving

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operational efficiency and enhancing fraud prevention. In today’s competitive environment, this capability has become more essential than ever, with the ability to manage and act on data in real time now a key differentiator for financial services providers.

At the heart of this shift are transaction data platforms. These systems play a vital role by providing a comprehensive view of all transaction data, which can then be coupled with advanced analytics to enable institutions to track, trace, and act on data in real time. This agility is essential for enhancing fraud detection and customer satisfaction, giving institutions a competitive edge in the financial landscape.

Improving Customer Experiences Customer experience is one of the most critical elements in the success of embedded finance. Today’s customers demand seamless and instantaneous services, whether paying for a product, applying for a loan, or investing in securities. When managed effectively, transaction data can significantly enhance these experiences by enabling financial institutions to deliver the right service at the right moment.

For example, data from a customer’s previous transactions can be used to offer tailored financial products or discounts, delivered through embedded finance platforms at the point of sale. By managing transaction data efficiently, institutions can also reduce the friction associated with payment processes, creating a smoother and more intuitive customer journey.

Operational Efficiency Through Effective Data Management Efficient management of transaction data also enables institutions to streamline processes that would otherwise require significant manual effort. By indexing and tracking data from various sources, institutions can achieve greater visibility and

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control over their transactions. This visibility is not only crucial for meeting regulatory demands but also for improving overall operational workflows, allowing teams to make informed, real-time decisions without being hindered by the manual processing of vast data sets.

As financial services become increasingly integrated into various sectors of the economy, such as retail and healthcare, it is essential that the operational side of data management keeps pace with the speed of innovation. With the emergence of new payment platforms, lending models, and financial services within non-financial ecosystems, the ability to manage the sheer volume and diversity of transaction data effectively will become a crucial differentiator for success.

Data is at the Core of the Future of Finance Ultimately, as financial services continue to evolve, the central role of transaction data is undeniable. Embedded finance, in particular, will continue to grow as a dominant trend, integrating seamlessly into various nonfinancial services to deliver personalised, real-time offerings. However, the success of embedded finance depends on an institution’s ability to manage and leverage transaction data effectively.

Adopting more effective and powerful data management systems will not only drive operational efficiency but also enable institutions to offer enhanced customer experiences. Whether through the real-time approval of loans, the processing of instant payments or the mitigation of fraud, the ability to access, process and act on highquality transaction data is key to staying ahead in this competitive market.

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Featured Story

Jonathan Arler, General Manager, Netherlands, payabl.

THE EVOLUTION OF OPEN BANKING: REDEFINING CUSTOMER ACCESS AND DATA SECURITY Open Banking promises to create faster, cheaper and more secure payments. It enables merchants to enhance the customer experience by offering seamless payment options and reducing their own transaction costs. This is made possible by linking directly with customer bank accounts, allowing merchants to bypass third-party card networks and therefore saving on fees and improving checkout speed.

At the same time, Open Banking gives merchants access to valuable customer insights. By securely analysing consumer financial data patterns, merchants can understand spending behaviour, which can then be used to create tailored business strategies.

However, despite these clear benefits, Open Banking faces critical challenges, particularly around stability and security.

Stability, reliability and regulatory hurdles to overcome While Open Banking offers many advantages, it still lacks the reliability of traditional card payments. A lack of unified standards across regions and inconsistent performance across providers hinder its widespread adoption. For Open Banking to effectively gain traction, it must achieve a level of stability on par with credit cards.

The UK has pioneered Open Banking standards, providing robust API frameworks and consumer protections. However, across Europe, there is a lack of consistency due to a patchwork of adoption. PSD3, an

upcoming EU framework, aims to create this consistent standard and address gaps in PSD2, strengthening fraud prevention and enforcing stricter standards for Strong Customer Authentication (SCA). It also introduces improved API quality and interoperability, marking a key step toward harmonising Open Banking across the EU.

Strengthening consumer protection Open Banking payments often run on realtime systems like the UK’s Faster Payments and the EU’s SEPA Instant, which can lack the robust consumer protections found in traditional card networks. This increases the risk of fraud, as instant payments leave limited time for error correction or dispute resolution. For Open Banking to be suitable for large-scale eCommerce transactions, fraud prevention and refund handling need improvement.

Collaborative efforts among regulators, banks, and payment providers are essential to create a reliable infrastructure that safeguards consumers while supporting B2C needs. Enhanced fraud prevention features and clear dispute resolution policies are needed to build trust in Open Banking.

Unlike well-known card brands like Visa or Mastercard, Open Banking’s identity is still unclear, which contributes to consumer confusion. For adoption to grow, banks and fintechs must simplify messaging, educate consumers about data sharing, and make security measures clear.

Building consumer trust through transparent communication is key to reducing hesitation and encouraging more people to embrace Open Banking.

Future of Open Banking PSD3 is poised to expand Open Banking into ‘Open Finance,’ broadening its scope to encompass more financial data and transactions. By standardising APIs and improving data protections, PSD3 will establish a consistent regulatory framework across Europe, laying the groundwork for Open Banking’s adoption.

As Open Banking matures, eCommerce merchants, fintechs, and regulators must work together to create a stable, secure system that prioritises consumer protection.

With the right safeguards and clarity, Open Banking can realise its potential and transform the digital payments landscape.

Simplifying the user experience Despite its advantages, Open Banking adoption has been slow due to low consumer awareness and inconsistent branding.

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Winter Issue • 2024

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Featured Story

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Featured Story

REGTECH INNOVATIONS: SHAPING COMPLIANCE AND RISK MANAGEMENT IN FINANCIAL SERVICES Compliance and risk management teams have certainly had their hands full in 2024, and it’s a challenge that’s not going to go away as we head into 2025. They’re balancing a range of competing pressures – a rapidly evolving regulatory landscape, the changing state of financial crime, uncertain economic and political influences, evolving customer demands, and the need to drive improvements in operational and cost efficiency.

It’s perhaps an unspoken challenge but compliance and risk management teams are often also perceived as a roadblock to the delivery of superior customer experiences and therefore growth. In fact, 35% of risk executives report that compliance and regulatory risk present the biggest threat to their company’s ability to drive growth.

This perception certainly needs to be addressed, because, in reality, compliance and risk management can and should have a beneficial impact on the success of financial services.

This is driving unacceptable error rates, delays, inaccurate data, and in some cases even costly (both financially and reputationally) regulatory breaches.

Maintaining compliance and risk management is also incredibly costly for financial services organisations, especially smaller and mid-tier businesses and innovative start-ups. Highly specialised people are spending too much time simply staying up to date with regulatory changes and undertaking routine tasks. As a result, the customer experience is suffering, and even worse financial services organisations are finding themselves in a non-compliance situation or vulnerable to operational risks.

A move away from manual processes and workflows towards a more dynamic tech and data driven compliance and risk management strategy, can help financial services keep pace in a way that balances stringent regulatory compliance with the delivery of superior customer experiences.

• Digital Identity Verification (IDV): Automated, real-time document and identity verification capabilities significantly enhance know your customer (KYC)/know your business (KYB), Anti-Money Laundering (AML), fraud prevention and due diligence activities.

• Automation: AI and machine learning (ML) drives slicker, accelerated processes by analysing vast amounts of data to detect risks more efficiently. Thereby driving a move towards more exceptionbased case reviews, empowering skilled compliance and risk professionals to focus their efforts on more complex cases.

• Real Time Monitoring: Real-time monitoring of customer behaviours and transactions is helping navigate the current complex landscape. Mitigating risks in a more agile way by spotting trends and patterns of fraudulent activity whilst ensuring best outcomes and experiences for customers.

The current status quo

How is RegTech shaping modern compliance and risk management?

• Blockchain and distributed ledger technology: Making it easier for financial services organisations to track funds, as well as supporting the verification of digital identities • Data Analytics: Data analytics have the potential to impact the future in

For far too long compliance and risk management functions have been hampered by highly manual processes, inefficient workflows, high costs, and resourceintensive operations.

RegTech has a key transformative role to play in shaping the future of compliance and risk management in financial services:

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Featured Story

Winter Issue • 2024

Lucy Huntley, Banking Success Director, FullCircl

With over 30 years in the banking industry, Lucy’s expertise covers mortgage advice, wealth management, and commercial banking, having worked at prominent institutions including HSBC and NatWest. At FullCircl, Lucy focuses on improving customer satisfaction, retention, and relationships, particularly in corporate and commercial financial services. She’s committed to fair, sustainable, and ethical customer service, always aiming to help drive growth for clients.

several ways including data matching for enhanced identity and risk identification and pulling together intelligence from a variety of sources including financial data, global watchlists, UBO and shareholder data, and legal information to build a single customer view.

• Risk orchestration: Enabling financial services organisations to manage their processes more tightly, taking consideration of regulatory variance and cultural differences across jurisdictions.

Advanced KYC and AML tools working harmoniously together to detect and prevent fraud and money laundering can serve to reduce risks, enhance compliance, and improve customer experiences.

• Enhanced Regulatory Reporting: The aggregation and standardisation of data from a range of sources and systems serve to make reporting faster and more accurate by eliminating human error.

management functions cannot be overstated. RegTech offers innovative tools to modernise compliance and risk management within financial services by streamlining processes and enhancing efficiency.

And it’s not just the large financial services organisations that are reaping the rewards. RegTech is also serving to level the playing field, democratising access to technology and data to ensure that every corner of the financial services landscape – from large banks to small startup payment platforms – can meet regulatory requirements, reduce compliance costs, and manage risk effectively.

Increased collaboration between financial services teams and RegTech providers will be a key differentiator of future compliance and risk management success, ensuring financial services organisations enhance operations, refine strategies, meet regulatory requirements, and remain secure for the long-term.

Collaboration with the RegTech industry is key to future compliance and risk success

Those that grab the opportunity to collaborate and reshape the compliance and risk management function will not only addresses immediate challenges, but strategically positions them to tackle longterm objectives and future dynamic market and regulatory shifts.

The transformative role of RegTech in modernising compliance and risk

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Featured Story

Jonathan Reeve, Head of Product Strategy and Development at Beta, a BetaNXT business, which is powering the next generation of frictionless, end-to-end wealth management solutions.

2025: THE ONGOING PUSH TOWARD DATAREADY CONTENT FOR END USERS As another year draws to a close, the FinTech industry is undertaking its healthy annual review of where we are going, and what our customers want and expect going forward.

From my vantage point as Head of Product Strategy and Development at BetaNXT, the ongoing digital transformation across financial services has been driving several key trends, which will likely shape FinTech innovation and implementation in 2025: • Sharing Data, Instead of Sending Data: Under the traditional model where data is transferred between independent systems or databases, both the senders and recipients must verify the success, and accuracy, of the transfer. This reconciliation process, while necessary to correct any data mismatches, consumes valuable human resources that could be better utilized elsewhere.

Looking ahead to the coming year, FinTech innovations are set to revolutionize this outdated method. Rather than sending data from point to point, we envision a future where a single instance of data is shared. Currently, when data is sent, it is placed on an empty server for the recipient to download and process, which introduces risks of distortions and inaccuracies. In contrast, sharing data allows both the sender

more will continue to do so next year.

Financial services and wealth management organizations would rather not have to be in the business of owning and refreshing their hardware when they can have trusted experts in that area do so for them.

• Shift to Near-Real-Time Processing: With the introduction of the T+1 settlement cycle earlier this year, and T+0 on the horizon, the stage is set for more timely information in client accounts. Consumers served by the financial services and wealth management sectors are helping to drive the FinTech industry toward its North Star goal of near-real-time resolution and data updates. After all, members of the iPhone generation expect not to have to wait long to see updates to their portfolio positions and records after they transact.

The idea of waiting one, two, or three days to see the result of a transaction on a portfolio is becoming obsolete. Batch processing, where data is grouped for processing, will eventually be eliminated.

Instead, we can envision a world where nearreal-time insights into investors’ financial statements will become the reality.

• Embedding Data Governance at the Source: What we have noticed is that, usually, when

and recipient to access the same version, ensuring its accuracy before any further access is granted—enhancing efficiency and data integrity.

• Cloud Migration: Many FinTech customer organizations are migrating their technology stacks to the cloud, and many

financial services and wealth management organizations build out their infrastructure, they wrap data governance around their systems from scratch—which can make it difficult to track and record the sources and history of the data. Going forward, firms will have FinTech data governance tools, built

into originating systems, at their disposal to provide a full picture of their data—not only sharing the data, but sharing it in a way where pre-wrapped data governance allows them to send the metadata about that data, describing its formula and evolution since its beginnings at its source. In addition, this allows FinTech firms to spend more time building applications for customers, and less time preparing data for sharing—in fact, some of the data scientists we regularly speak with spend between 50% and 80% of their time cleaning, justifying, or even just collating data!

By embracing a share-not-send data infrastructure, taking applications to the cloud, and pushing data governance back into originating systems rather than creating them from scratch, FinTech suppliers and their customers can serve up user-ready, contentrich, and reliable data in near real time.

While the issuance of data governance standards and common codes has been well-intentioned, it has resulted in various templates that may not be able to meet everyone’s needs. Going forward, the above trends will drive innovation for creating a data framework that can receive any data, and flexibly convert it into user-ready content, regardless of different standards.

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Featured Story

Winter Issue • 2024

Grigory Yusupov, Regional Director UK & RoW, IDnow

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