Fintech Magazine - May 2022

May 2022 | fintechmagazine.com

FOB 1: xxxxx 2:IVE EEXXFOB CL CLUS US IVE INTER INTE RV VIIEW: EW: xxxxx

Nuvei drives payment future to accelerate merchants’ revenue FOB 3: xxxxxx FOB 3: xxxxxx

Top 10: xxxxxx

President Yuval Ziv discusses the global payment leader's trailblazing tech and partner collaborations

Global FinTech Hubs Distributed Ventures: Value driven by innovation The Standard: Achieving financial well-being and peace of mind

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The FinTech Team EDITOR-IN-CHIEF

JOANNA ENGLAND MANAGING EDITOR

BLAISE HOPE

PRODUCTION DIRECTORS

GEORGIA ALLEN DANIELA KIANICKOVÁ PRODUCTION MANAGERS

PHILLINE VICENTE JANE ARNETA ELLA CHADNEY

CREATIVE TEAM

OSCAR HATHAWAY SOPHIE-ANN PINNELL HECTOR PENROSE SAM HUBBARD MIMI GUNN JUSTIN SMITH REBEKAH BIRLESON JORDAN WOOD DANILO CARDOSO CALLUM HOOD MARKETING MANAGER

EVELYN HOWAT

VIDEO PRODUCTION MANAGER

KIERAN WAITE SAM KEMP

MOTION DESIGNER

TYLER LIVINGSTONE DIGITAL VIDEO PRODUCERS

EVELYN HUANG MARTA EUGENIO ERNEST DE NEVE THOMAS EASTERFORD DREW HARDMAN MEDIA SALES DIRECTOR

RICHARD TURNER

PROJECT DIRECTORS

JAKE MEGEARY MICHAEL BANYARD JOE PALLISER MANAGING DIRECTOR

LEWIS VAUGHAN

CHIEF OPERATIONS OFFICER

STACY NORMAN CEO

GLEN WHITE

FOREWORD

BANKING ON IT With neo and challenger banks knocking customer services out of the park, many local bank branches are seeing dwindling customer numbers

When was the last time you visited a local bank branch?

FINTECH MAGAZINE IS PUBLISHED BY

The last time I went into an actual bank branch was in 2015. I’d moved back to the UK after many years in the Middle East, and I needed a UK bank account. I had to call up the main town branch and make an appointment with a personal banker. Remember those?

They were so busy they couldn’t see me for a whole week. As I’d just landed in the country after 17 years away, I needed an account to do just about anything including buying a car.

So, on the morning of the appointment, I loaded my youngest child into her pushchair, got on the bus and found my way to the branch four miles away.

The account opening process took an hour and lots of paperwork, during which time my overtired toddler had a mega tantrum, throwing cheese puffs and squash all over the personal banker’s office.

I eventually got my account opened and swiftly discovered the joys of online banking. I never went back to the bank again because I simply didn’t need to (it was nothing to do with the cheese puffs - I swear).

Rather, every action financial transaction is now carried swiftly and efficiently via my mobile phone. Frictionless is the word.

So, while some might lament the loss of their local branches, I can’t say I’m too moved: a week’s wait, a four mile bus ride and a meeting with a toddler in tow is now, thankfully, ancient history.

JOANNA ENGLAND

joanna.england@bizclikmedia.com

© 2022 | ALL RIGHTS RESERVED

fintechmagazine.com

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CONTENTS

Our Regular Upfront Section: 12 Big Picture 14 The Brief 16 Timeline: The Story of Ethereum 18 Trailblazer: Cristina Junqueira 20 Five Minutes With: Guus Franke

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26

Nuvei

Nuvei drives payment future to accelerate merchants’ revenue

Banking

Cryptocurrency, Digital DeFi and the future of fiat

46

Western Union xxxxxxxx

The Standard

Achieving financial well-being and peace of mind

68

Distributed Ventures Structurally advantaged venture capital

62

Finserv

Digital wallets and the technologies driving them

84

Payment Solutions

How are challenger banks transforming the banking landscape?

90

MSU Federal Credit Union A year of fintech innovation and collaboration

106

Technology

Defining disruptors in the fintech space

Communication matters now more than ever.

Learn how to effectively communicate with your customers during the COVID-19 pandemic.

Download our eBook

The Cloud Communications Platform

128 Top 10

Global fintech hubs

114

Western Union

Reimagining a financial services leader

140

160

Visa Europe’s ESG on a roll in Procurement and Supply Chain

Transforming challenges into opportunities

Visa

OTP Bank

176

198

Building Asia’s digital banking future

Changing the game in a blink of an eye

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BIG PICTURE Elon all of a Twitter USA

The financial markets spun into disarray over Elon Musk’s US$44bn takeover of Twitter. The social media platform, which is Musk’s latest, (and also one of his largest) acquisitions, has resulted in Twitter once again becoming a private company. Musk reportedly paid $52.4 per share as part of the stakeholder deal - which experts warned could be an over-stretch for the South African billionaire.

Musk, the former CEO of PayPal, made his fortune through selling the company to Ebay in the early 2000’s, also saw Tesla’s shares dipped by 2% following the news.

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May 2022

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THE BRIEF “ACCORDING TO A RECENT REPORT FROM WWF AND GREENPEACE, IF THE UK’S BIGGEST BANKS WERE A COUNTRY THEY WOULD RANK 9TH IN THE WORLD FOR CARBON EMISSIONS” Nicola Mitchell

Head of Digital Marketing Novus, UK neo bank  READ MORE

“DISRUPTORS BREAK THE MOULD, CHALLENGE THE STATUS QUO, INNOVATE, DRIVE CHANGE, AND MAKE LIFE MORE CONVENIENT AND EFFICIENT” Terrie Smith

CEO and Founder, DIGISEQ  READ MORE

“CURRENTLY, THE DIGITAL CURRENCY MARKETPLACE IS UNDERGOING RAPID CHANGE AND INNOVATIVE TOOLS ARE EMERGING”

BY THE NUMBERS WE ASKED YOU: US PRESIDENT BIDEN'S PLANS TO REGULATE CRYPTOCURRENCY HAS THE FINANCIAL WORLD DIVIDED. WHAT EFFECT DO YOU THINK THIS WILL HAVE? 56% Help stabilise cryptocurrency

44% Destabilise decentralised finance

KLARNA LAUNCHES KLARNA KOSMA BNPL giant, Klarna, has launched Klarna Kosma, a sub-brand and business unit to harness the rapid growth of its Open Banking platform

10 FACTS ABOUT CRYPTOCURRENCY IN 2022 With the world of DeFi transforming before our eyes, staying ahead of new changes in fintech and cryptocurrency is key to understanding the current market

Dima Kats

CEO, Clear Junction  READ MORE

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May 2022

HOW WOMEN ARE TRANSFORMING WEALTH MANAGEMENT New financial technologies are enabling innovators to transform the financial services space and enable far greater wealth diversity for women

According to the latest reports, the war on talent in the technology and fintech industry is raging like never before, as the meteoric rise of both industries now sees them fighting to attract new blood.

Furthermore, investors have been pouring cash into UK cryptocurrency start-ups such as Bitstamp, Elliptic and Blockchain.com, as they stake cash on the growing adoption of digital currencies like Bitcoin and digital assets such as NFTs. The rise of cryptocurrency also means that fintechs are directly competing with exchanges for the best talent – with both fintech start-ups and cryptocurrency firms aiming to disrupt the world of traditional finance, albeit with different approaches.

Square now processes card payments at an annualised rate of over $100bn, has a thriving small-business lending platform (Square Capital), and has started to gain serious traction with larger merchants in addition to its core small-business clientele

 PAYPAL PayPal has over 361 million active accounts.

The fallout of the COVID-19 pandemic could even help accelerate PayPal's growth further, as more people are choosing to shop online and send money to friends and family electronically

—  GOLDMAN SACHS Goldman Sachs lost points on its trading recently, following the announcement that Apple will be building its own in-house fintech

 CHIME

MAY22

BAD TIMES

The UK has become a critical figure in the fintech sector, taking the top spot in Europe for fintech investment with more than US$9bn raised in 2021.

 SQUARE

GOOD TIMES

WAR ON TALENT FOR FINTECH

The fintech Chime experienced a 40% share drop earlier this year and has now announced a delay in its IPO plans fintechmagazine.com

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TIMELINE THE STORY OF ETHEREUM Next to Bitcoin, Ethereum is the Cryptocurrency everyone is talking about – and for good reason.

Ethereum is an open-source public service that uses blockchain technology to facilitate smart contracts and cryptocurrency trading securely without a third party.

2013 THE IDEA FOR ETHEREUM IS CONCEIVED Following the rise of Bitcoin, in 2013, Canadian developer Vitalik Buterin announced a new platform concept that would enable decentralised applications to introduce a new era of online transactions. His vision was to develop a decentralised platform that would enable the developer community to create Smart Contracts and Dapps to expand upon the possibilities Blockchain offered.

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May 2022

2015 ETHEREUM IS MINTED Immediately after its first fundraiser, Ethereum launched. 72 million coins were minted and distributed to those who funded the initial project.

While an estimated 65% of those coins remain with the initial investors, Ethereum has become one of the most heavily invested cryptocurrencies in existence.

20 1 4 ETHEREUM CROWDSOURCING CAMPAIGN Ethereum’s co-founders raised US$18mn following a crowdsourcing campaign where they sold participants Ether (Ethereum tokens). The first live release of Ethereum – known as Frontier – was launched a year later.

2 01 7 MORE PROTOCOL CHANGES Since the 2016 event, there have been seven further planned ‘fork’ events that have transformed the Ethereum currency.

The new protocols keep Ethereum running more efficiently and securely and are named events.

They are: • T angerine Whistle - October 2016 • S purious Dragon - November 2016 • Byzantium - October 2017 • C onstantinople - February 2019 • P etersburg (unplanned) - February 2019 • Istanbul - December 2019 • M uir Glacier - January 2020

2016 ETHEREUM AND ETHEREUM CLASSIC As a result of the unplanned and planned protocols that took place on the Ethereum platform, the cryptocurrency split in 2016 to become two separate entities. Reports suggest the split followed a system manipulation that resulted in US$50mn worth of Ethereum being stolen. The event created a ‘fork’, which is now referred to as the DAO Event after the Distributed Autonomous Organisation (DAO) that the cryptocurrency was stolen from.

2021 ETHEREUM VS BITCOIN Ethereum is much faster to mine than Bitcoin. The average block time for Ethereum is significantly less than Bitcoin’s, at just 12 seconds versus 10 minutes. In 2021, only half of the Ether coins were mined (a supply of more than 90 million tokens), whereas the majority of Bitcoins had been mined due to its supply being capped at 21 million.

fintechmagazine.com

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TRAILBLAZER

Leading Brazil’s Banking Revolution Qualified engineer and mother-of-two Cristina Junqueira co-founded Brazil’s first digital bank – Nubank and has also been called Brazil’s Wonder Woman of Fintech

C

ristina Junqueira is famous among the Latin American banking fraternity because not only did she smash the glass ceiling in the fiercely male-orientated environment of the Brazilian financial industry, but her contributions have helped launch a new wave of digital banking and finance in the region.

Born in the former coffee capital of Riberão Preto, Junqueira relocated to Rio de Janeiro with her family as a baby.

A diligent student, she was a noted high achiever throughout her primary and high school years, and moved to São Paulo to study industrial engineering at the city’s well-known University São Paulo.

Post-graduation, Junqueira’s first job was as an associate consultant at the Boston Consulting Group. During this time, she also completed her Master’s degree in economic and financial modelling – a course that was to set her on track for her spectacular banking career.

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May 2022

“ I was just done making rich people richer. I was trying to make a lot of changes to make consumers’ lives better, and failing miserably at it.

And at some point I was like, ‘you know what?

I’m done’”

fintechmagazine.com

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TRAILBLAZER

By 2007, her talents saw her recognised again and Junqueira was selected for the One-Year Accelerated Programme at the Kellogg School of Management in the US. The course proved fruitful for Junqueira and 12 months later she returned to Brazil to be hired by the president of Unibanco, then the largest private banking group in the country, to head up the SME credit sector with a team of 20 executives.

In 2009, Unibanco merged with Brazil’s second-largest private bank, Itaú, to create a financial giant, And by 2012, she had risen to the position of portfolio manager for the Itaúcard.

However, by now, Junqueira had her own opinions about how banks should be operating and what was needed in the marketplace. A keen advocate of customer

servicing – and concerned about the way incumbents were often dismissive of financial inclusion issues, she did the unthinkable and resigned from her stellar position.

The crunch came when she became disillusioned following her proposals for commission-free credit cards and direct communication for clients were ignored.

Junqueira meets NuBank co-founder Thankfully, she was not alone in her opinions, and while considering her next move, Junqueira met David Vélez, who was then working for the venture capital giant Sequoia Capital.

Vélez was also fed up with the banking culture in Brazil, which he saw as an incompetent and over-charging system. It was at this point that the concept for a new type of banking entity began to form.

She and Vélez then partnered with a third co-founder Edward Wible – and the fundraising for their new venture began.

It was a time of huge transition for Junqueira, who at the time was heavily pregnant with her first child. By the time her daughter Alice was born, the pressure had ramped up as the Series A round drew Net worth

US$1.1BN

to a close with Junqueira even signing deals from her hospital bed within hours of the delivery.

Nubank is born The trio of founders decided to brand their new digital banking entity as Nubank because it reflected their desire to create something entirely new – and ‘nu’ in

Portuguese translates as ‘nude’ – another concept they wanted to impart to reflect the transparency of Nubank’s products and services.

The project, just as Junqueira predicted, has been phenomenally successful, and Nubank’s NPS rating of +87 (Itaú’s is +14, and considered acceptable) is just one aspect that reflects its popularity among customers.

With more than 25 million customers on their books in a little under a decade of operation, Nubank is also the world’s biggest digital banking startup.

The fintech was also recently named as the world’s first and only company with a female founder to reach a valuation above $10bn.

Now a mother of two to Alice and now Bella, Junqueira continues to expertly juggle motherhood and her stellar banking career with impressive aplomb. She does not have a nanny – but despite this, has made sure that Nubank’s achievements remain current. The bank recently launched its first product outside Brazil: a no-fee credit card in Mexico.

But ever modest about her incredible journey, Junqueira says, “I want my daughters to grow up in a world where they can dream of being whoever they want to be — and you can’t dream of what you can’t see.” fintechmagazine.com

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5 FIVE MINUTES WITH...

GUUS FRANKE Guus Franke is the CEO and founder of Axiom Partners, which recently acquired Cannock Transaction. He tells us what inspires him in fintech today.

Q. WHO WAS YOUR CHILDHOOD HERO AND WHY?

» A difficult one. However, I think it has

to be Warren Buffet. Having known from a very young age, I knew I wanted to be entrepreneurial, I learned of Warren Buffett and Berkshire Hathaway & then further realised he had dyslexia as I did. He became someone for me to aspire to be. Then my respect developed as his strategy and investment principles evolved then further demonstrated a fantastic method of only investing in industries he knows about that may look prohibitive in the current tech climate. Yet, you can't argue with his success.

Q. W HAT'S THE BEST PIECE OF ADVICE YOU EVER RECEIVED?

» A fantastic CFO told me that I was too

busy solving problems for other departments and colleagues. He believed (probably rightly) that I was distracted with this and wanted to be linear focused on my tasks. He told me, "Guus, everybody is entitled to have his problems, and so have you". Since then, I have used this sentence many times.

Q. W HAT WAS THE LAST BOOK YOU READ - AND WHEN?

» I recently finished ' Covid-19 the 22

May 2022

Great reset' by Klaus Schwab and Thierry Malleret. The principles of his talk at WEF were recently publicly judged negatively by people not understanding his vision or hadn't even read the book. I wanted to understand more about the author's WEF vision their principles. But I could not make an informed judgement without reading the book.

Q. N AME ONE PIECE OF TECHNOLOGY YOU COULDN’T LIVE WITHOUT AND TELL US WHY (EXCLUDING YOUR MOBILE PHONE)?

» I love "the useless box". It has me

completely addicted to the complete uselessness of a switch turning itself off after you turn it on/. It makes me laugh, and it reminds me to do something meaningful.

Q. W HO DO YOU LOOK UP TO IN TERMS OF LEADERSHIP AND MENTORSHIP?

» I do not look up to someone. I did in the past, and every time I was disappointed.

People get my respect. I learned to believe in me/myself and try to be and become the best I can be. Believe in yourself; try to make your own history instead of walking in the path of others. You can only be

authentic if you are yourself, rather than an imitation of others.

Q. W HAT'S THE MOST SIGNIFICANT CHALLENGE/ADVANTAGE YOU'VE ENCOUNTERED IN THE FINTECH INDUSTRY?

» In essence, the biggest challenge for

' Fintech' is that it is so big and spans such a large ecosystem. We invest in fintech companies, So we are constantly challenged to understand the solution's scalability and technology. These then throw up questions; 'How to price an idea early?' and 'how do you build a fantastic team in the market? So, it is a challenge as a 'group' to drive forward with the belief that is made up of a combination of confidence and passion.

Then, with all these ingredients, you must drive forward with the belief the market is looking for this service or product. It's a challenge that we are now used to.

And the upside is worth it, and that drives the market.

market activity over the last 12 months.

We have a great team. Walking into the office, working with fantastic companies, and making a change makes me proud.

Q. WHAT INSPIRES YOU IN FINTECH TODAY?

» The possibility of developing the

solution for today's and tomorrow's challenges. Quite simple.

Q. I S THERE A PERSONAL ACHIEVEMENT YOU ARE PARTICULARLY PROUD OF FROM THE PAST 12 MONTHS?

» I'm proud that Axiom is

slowly getting recognised in fintechmagazine.com

23

12 - 13 OCT 2022 STREAMED & IN PERSON QEII CENTRE, LONDON

SHAPING THE BUSINESS OF SUPPLY CHAIN 3,000+

Participants

2

Days

2

Zones

60+

Speakers

Get tickets

Sponsor opportunities

A BizClik Media Group Event:

Watch our 2021 Showreel

Join us at SUPPLYCHAIN LIVE LONDON Showcase your values, products and services to your partners and customers at SUPPLYCHAIN LIVE LONDON 2022.

Brought to you by BizClik Media Group SUPPLYCHAIN LIVE LONDON, the hybrid event held between 12th-13th October is broadcast live to the world and incorporates two zone areas of SupplyChain LIVE, Procurement LIVE in to one event.

With a comprehensive content programme featuring senior industry leaders and expert analysts, this is an opportunity to put yourself and your brand in front of key industry decision makers.

Get tickets

From keynote addresses to lively roundtables, fireside discussions to topical presentations, Q&A sessions to 1-2-1 networking, the 2-day hybrid show is an essential deep dive into issues impacting the future of each industry today.

Global giants and innovative startups will all find the perfect platform with direct access to an engaged and active audience. You can’t afford to miss this opportunity.

See you on:

12 - 13 October 2022

Sponsor opportunities

Nuvei drives payment future to accelerate merchants’ revenue AD FEATURE WRITTEN BY: JESS GIBSON

26

May 2022

PRODUCED BY: MICHAEL BANYARD

fintechmagazine.com

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May 2022

NUVEI

Global payment tech leader Nuvei discusses how they harness their unique approach in the development of trailblazing tech and partner collaborations

G

Example of an image caption

lobal leaders in payment technology Nuvei has had a rather exciting three-years since it acquired payment solutions business SafeCharge.

Not only has the company been keeping its finger on the pulse of revolutionary fintech advancements, but it’s also been building and implementing its own in-house technology throughout. In March, the company published its latest financial results showing the total dollar value of transactions processed by merchants it supports had risen 121% in the 12 months to the end of December 2021 to $95.6 billion. A few weeks before the results, Yuval Ziv – Nuvei employee of 15 years – was appointed to the role of President at the forward-thinking company.

“Throughout the last 15 years, I've been in a few different positions, including my time with SafeCharge – CCO, COO, compliance, risk and many other payment functions within the related organisations,” explains Ziv, who then proudly goes on to list the company’s credentials.

“At Nuvei, we help our clients to connect with theirs by enabling them to accept payments or to pay globally. We are today the leader in terms of global payment coverage, with more than 530 different payment methods and local acquiring in nearly 50 markets. fintechmagazine.com

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NUVEI

“We have also developed our own proprietary solution that enables the merchants and clients to connect with us and offer the local payment method, the local currency, and the local language in each given moment, device or location.”

In his role as President, Ziv now adopts a number of different hats at Nuvei, all of which take advantage of his core skill set: a passion for technology; a natural problemsolving way of thinking; collaboration and teamwork; and a desire to make the operating businesses simpler and easier.

When discussing what inspired him to enter the world of financial technology, Ziv’s face lights up – it’s clear that both he and, by extension, Nuvei as a whole, have a genuine enthusiasm for the fintech sector.

“Honestly, I think that in a sense the FinTech world came to me almost as a gift, because I was always interested in finance.

I was always interested in technology. And for me, it was just a natural place to grow 30

May 2022

or develop into. I started my career mainly within the risk management and anti-fraud functions of different organisations.

“As the fintech industry kept on developing, I decided to step in. The way I see it, both finance and technology impact the lives of people constantly. And as such, I enjoy taking part in making progress on the actual day-to-day of all kinds of businesses and individuals. I see a lot of fantastic opportunities coming up as well.

It’s a very dynamic industry.”

It certainly is – and this was evident when the pandemic accelerated the rate of digital adoption in so many areas of everyone’s lives, and particularly financial services and payments.

Nuvei, at the forefront of payment technology innovation, rose to the challenge with aplomb, benefiting from its focus on high-growth industry verticals including retail, financial services and marketplaces.

NUVEI

“ At Nuvei, we help our clients to connect with theirs by enabling them to accept payments or to pay globally.

We are today the leader in terms of global payment coverage, with more than 500 different payment methods on top of the cards we’re acquiring and our own licences” YUVAL ZIV

PRESIDENT, NUVEI

Progress of digital payments propelled due to the pandemic In March 2020, traditional shopping and social activities were halted and the world, in effect, went almost completely cashless overnight.

Events moved further and faster into the digital realm. Contactless methods of shopping for essentials were introduced. It became mandatory to book a space and pay online for any in-person events.

All of the above posed challenges for businesses across various sectors, as well as people’s everyday lives, so Nuvei launched into action and and helped merchants devise ways around some of the issues.

“When the pandemic just started, we saw that a lot of the UK’s small retailers were facing a big issue. They didn’t have the capability, the resources, the time to go and open a complete new web shop to allow the user to transact online, but they also didn’t want to lose all of their day-to-day transactions.

So, with unique QR codes and pay-by-link capabilities, we enabled these companies to continue trading. Those capabilities brought in at least the opportunity for small UK retailers to save their businesses.”

For Nuvei, it was almost as though the ongoing situation was tailored towards its goals, and staff relished the opportunity to get stuck into the various challenges posed

by COVID-19.

“Think about the summer of 2020: to do anything or go anywhere, you had to all of a sudden book your place and pay in advance – in other words, cashless payments were required almost everywhere. So, together with cities across Europe, we developed the Smart City Platform – customers could book seats and pay online safely and securely, all on one platform,” Ziv explains.

“And this is exactly what I love in this industry,” Ziv says enthusiastically. “The fact that we are engaging, we are helping.

It's not just like a provider and a client. It is a real partnership that we are bringing into the world. And we are helping clients – our clients, yes, but also their clients – to engage.”

2003 Year founded

$724.5mn In the 12 months December 31, 2021, revenue increased 93% to $724.5mn (source Q4 / FY 2021 results released March 8, 2022)

1,350+ Number of employee fintechmagazine.com

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NUVEI

“ Our partnerships are very symbiotic, in that we will grow together with you – that’s the essential difference with our approach”

YUVAL ZIV TITLE: PRESIDENT INDUSTRY: FINANCIAL SERVICES LOCATION: NETANYA, ISRAEL Yuval Ziv has served as MD, Digital Payments since October 2019 after first joining SafeCharge in 2008 and was promoted to President in 2022. Over the course of his tenure at SafeCharge, he held positions of COO, CCO, MD and VP Business Development, in addition to serving as a board member and VP of Operations and Business Development at the Gate2shop division. Prior SafeCharge, Mr. Ziv was an Operation Manager at Formula Telecom Solution, a senior manager at MAFIL, and an Analysis team leader for Cellcom. Mr. Ziv holds a Master of Laws and a Bachelor in Economics and Business from BarIlan University.

NUVEI

fintechmagazine.com

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NUVEI

It’s clear that Ziv and the rest of the Nuvei team’s dedication to resolving issues and helping people has underpinned this push for innovation and smart capability. But how exactly does the company’s leadership team feed into, and champion, this culture?

The inspirational effect of humanised grassroots leadership • Enabling secure real-time payments globally • Real time transaction recovery engine to improve conversions for clients • Unique UI/UX payment page enabling pay-in and pay-out worldwide with localised capabilities • Sophisticated authentication systems developed to support PSD2 and SCA that reduce ‘soft declines’ for payments via 3D smart routing • Decreasing fraud with accelerated verification methods • Faster payment methods for instant pay-in and pay-out using open banking rails • The ability to pay for one transaction with multiple payment methods • And what Ziv refers to as, ‘decline recovery’, a revolutionary piece of smart tech that can not only identify the individual reason for a transaction’s decline, but that can automatically resolve the issue – whether it’s insufficient funds or technical malfunctions • “Today, we’re dedicating a portion of our organisation to maintaining this innovative approach. So it's more than just the innovative lab that we've incorporated within the organisation, allowing every one of our employees or clients to bring ideas into deliveries.

“But it's also about keeping the roadmap very much aligned with where our clients want 34

May 2022

“ Our own proprietary full stack technology is among the strongest in the industry. But we are very agnostic, working more as an orchestration layer” YUVAL ZIV

PRESIDENT, NUVEI

to go and assessing the market constantly,” says Ziv. “It's also about rolling out different features or products that will better serve the industry.”

But what inspires the Nuvei team to continually innovate and think outside of the box? Quality, grassroots leadership and a dedicated, collaborative team.

“I'm super proud of our team. Our HR, human resources, comes first,” Ziv states.

“I believe that we are exceptional in our ‘can do’ approach, which is very different to many other companies in the industry. We remain attentive to what clients need and we are, as a team, very flexible.”

Nuvei’s leadership has a substantial role to play in the cultivation of new technology and payment solutions, with Ziv highlighting the fact that Nuvei Chair and CEO Philip Fayer established this culture of innovation when he built the company – even citing him as an inspiration in terms of leadership style and the nurturing of talent for growth.

“I’ve always admired people that have built their company from the ground up.

They worked hard during this journey, stayed humble and focused, and also maintained

NUVEI

their personal approach with an innovative approach towards life.”

“Our CEO, the way he leads and shares his vision, the way that he can drive the organisation forward; the way that he treats people and welcomes any kind of innovation into the company with a results-oriented mindset – from my perspective, with his combination of maintaining a human approach while driving the business forward in a very progressive way, Phil Fayer is the best,” smiles Ziv, genuine in his admiration for his boss.

It is this ethos of creative, forward-thinking experimentation and problem-solving that has lent itself well to the partnerships

the company has developed over the years. Through this client-led approach to partnerships, Nuvei is able to pre-empt the wants and needs of the fintech market, keeping its ear to the ground to listen out for what is actually needed.

Nuvei’s uniquely agnostic approach to business partnerships Ziv has a very interesting word choice when it comes to describing the nature of Nuvei’s partnerships with clients: agnostic. Whilst unusual, it perfectly captures the company’s casual approach – which drastically sets it apart from its fintech contemporaries. fintechmagazine.com

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NUVEI

“Our own proprietary full stack technology is among the strongest in the industry. But we are very agnostic, working more as an orchestration layer, actually,” Ziv explains.

“All of the technology is developed in-house, maintaining our capability to be very flexible and to deliver very fast – on time and on quality – the needs of the merchant. So, if I'm looking at our global network of payment coverage, at our own full stack technology, those together are bringing us into a leading position in the industry.”

“It’s a crucial point because many of our peers these days are asking for either exclusivity or a certain level of commitment 36

May 2022

from the merchant to choose only one, or to choose a certain portion that will go directly to that company. We are not. We strongly believe that performance comes first. So if we will deliver better acceptance rates, better SLAs, better service, the merchant and the client will choose to drive the traffic into our platform.”

“Our partnerships are very symbiotic, in that we will grow together with you – that’s the essential difference with our approach,” Ziv concludes.

From the volume of partnerships the company has built up with card companies such as MasterCard, Visa and American Express, among retailers across the globe,

NUVEI

Poynt Mission Control Overview

it definitely seems as though this approach is more than a little successful. A specific advantage is that it demonstrates Nuvei’s desire to genuinely help clients and the overall fintech market, as opposed to simply cashing in.”

In Nuvei’s future – and fintech as a whole – there’s set to be many more opportunities and developments on the horizon, for which Ziv himself is excited.

“ This is exactly what I love in this industry – the fact that we are engaging, we are helping.

It's not just like a provider and a client. It is a real partnership that we are bringing into the world. And we are helping clients – our clients, yes, but also their clients – to engage” YUVAL ZIV

PRESIDENT, NUVEI

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“ When we are looking at new initiatives like the Metaverse, I believe that the online sphere will definitely contribute to the way that we transact and to the ecosystem between the clients, the users and the partners in between. The basics will remain though – people need to pay and to get paid. And that’s where Nuvei is key” YUVAL ZIV

PRESIDENT, NUVEI

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May 2022

“We are very motivated. And I'm sure that we will continue to develop and to lead the industry, as we are always striving to provide the best service to our clients, so I believe we’ll continue being at the forefront of the industry.”

“Our platform is among the best out there, and we will simply continue to scale up through distribution, constantly strengthening our marketing channels and product leadership, and building in more partnerships to meet consumer needs, as well as expanding into new geographies,” Ziv predicts, homing in on Nuvei’s consistent dedication to meeting the needs of the market as they emerge.

NUVEI

“We’ve seen a lot of changes by businesses and consumers in the last two and a half years since the pandemic started, which actually accelerated a lot of the change towards digital. So, I believe that within the next 12 or 18 months, we will continue seeing more of the same in terms of the move to digitisation, and Nuvei continuing to grow and lead in terms of technology, products and innovation – which is all so important for us.”

“When we are looking at new initiatives like the Metaverse, I believe that the online sphere will definitely contribute to the way that we transact and to the ecosystem

between the clients, the users and the partners in between. The basics will remain though – people need to pay and to get paid.

And that’s where Nuvei is key.”

“I remain very excited about the industry.

There’s going to be a lot of AI, a lot of machine learning over the next decade. And we can’t wait,” Ziv concludes, echoing the predictions of many in the fintech sphere.

We’ll keep an eager eye on what the future brings for Nuvei, then – it’s bound to be revolutionary, after all.

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BANKING

Cryptocurre and

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May 2022

ency, Digital DeFi d the future of fiat AS GLOBAL INSTABILITY ONCE AGAIN TIPS LEADING ECONOMIES ON THEIR HEADS, WE EXPLORE THE ROLE OF CRYPTO AND THE FUTURE OF FIAT CURRENCY

A

WRITTEN BY: JOANNA ENGLAND

“ AUTOMATION GOES HAND-IN-HAND WITH THE NATURE OF CRYPTO BECAUSE OF HOW IT EVOLVES” CHRISTIAN NENTWICH CEO, DUCO

fter two years of pandemic pandemonium, the world could certainly do with a break. But as ongoing and new conflicts continue to destabilise global supply chains, energy supplies and economies worldwide, the impact on businesses and personal finances has never looked more gloomy.

However, one area of the market that looks set to benefit from the current strife is decentralised finance and cryptocurrency. As fiat currencies – those issued and controlled by national banks – suffer meltdowns, more businesses and individuals than ever before are turning to digital, peer-to-peer alternatives.

Global economy and financial destabilisation Many experts have been left shaking their heads as the chaos of current events shows no sign of abating in the coming months. The political upheavals caused by the pandemic and the recent onset of open warfare are both impacting heavily on all financial areas. fintechmagazine.com

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“ DEFI AND CRYPTO, ESPECIALLY WITH RELATION TO THE METAVERSE, WILL LIKELY GIVE CAUSE FOR THOUGHT OVER THE NEXT FEW YEARS” DAVID MURPHY

PUBLICIS SAPIENT

Nevertheless, Christian Nentwich, CEO of global data reconciliation company Duco, believes the turmoil will simply serve to bolster the popularity and strength of cryptocurrencies, explaining: “If there are further problems with the stock market and inflation this year, which is very possible, we will see huge volatility within digital currencies like the crypto market.

This would create an opportunity for crypto firms to make a huge amount of money – crypto firms thrive in periods of high buying and selling activity.”

But it’s not just about an unstable market. There are now more opportunities in cryptocurrency trading and transactions than ever before, as e-wallets become commonplace and the sector becomes more mainstream. Dima Kats, CEO at Clear Junction, says the rising price of bitcoin during the pandemic has renewed interest in digital money – and the digital currency market is booming.

“Currently, the digital currency marketplace is undergoing rapid change and innovative tools are emerging. Not so long ago, cash was more or less the only way to make an immediate purchase. However, in the post-COVID era, we are now accustomed to using forms of private digital money such as online bank transfers, payment cards, and applications on our smartphones or watches. These are changes that directly affect the role of central banks.”

Katz points out that, while it is unlikely that digital currencies will completely replace existing currencies, the emergence of ‘cryptocurrencies’ and ‘stablecoins’ has prompted the exploration of central bank digital currencies in 2022.

“Crypto companies will be seen as less speculative, opening the finance industry up to the non-speculative users of cryptocurrencies. Crypto was ranked fifth, with 28% of respondents viewing cryptocurrencies as a top concern in a survey conducted by PwC, and banks are looking to increase their investment in fintech for that exact reason. In a study carried out by the

Bank for International Settlements (BIS), 60% of central banks are beginning to consider introducing CBDCs,” Katz says. fintechmagazine.com

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BANKING

“ CRYPTO COMPANIES WILL BE SEEN AS LESS SPECULATIVE, OPENING THE FINANCE INDUSTRY UP TO THE NONSPECULATIVE USERS OF CRYPTOCURRENCIES” DIMA KATZ

CEO, CLEAR JUNCTION

New opportunities in the cryptocurrency marketplace Cryptocurrency isn’t just an appealing product for the technologically-forward companies, either. Rather, traditional banks and financial institutions are also recognising its worth and investing in the space. Nentwich explains: “The growth and performance of digital currencies like crypto has been really incredible – and the time is now for any financial firms wanting to move into this space… Something hugely significant in the industry has been the move of major traditional firms into crypto, with many now offering crypto custody to clients.

It’s this move from niche to the mainstream that is more interesting and more significant than the price of the currency itself.”

He points out that exchanges have also expanded tremendously and proven massively profitable, which has resulted in them starting to rival the numbers seen from some European banks.

“Crypto ETFs were launched, allowing people to buy shares in crypto for the first time, thus legitimising it. However, at the same time, crypto was banned in China, leaving concerns hanging over businesses' heads as to whether crypto is going to be regulated and how this will be rolled out. This has led to a rise 44

May 2022

in crypto firms turning to automation to meet increasing regulation,” Nentwich says.

Crypto and the mighty metaverse Not only is finance becoming decentralised, it is also becoming increasingly virtual, which reflects the rising popularity of cryptocurrency as market trust increases.

HSBC and JP Morgan recently announced their entry into the metaverse – the perfect environment for digital currencies to thrive, according to David Murphy, Head of Financial Services EMEA & APAC at digital

Crypto Goes Mainstream at 2022 Super Bowl, US Figure Skating Team to Accept

Crypto Donations

business transformation consultancy Publicis Sapient.

“DeFi and crypto, especially with relation to the metaverse, will likely give cause for thought over the next few years, especially as traditional investment vehicles do the math on the extent of cash being diverted into NFTs, DeFi and Crypto investment.”

And banks are already beginning to prepare for the prospect of blockchainbased currencies likely eventually becoming mainstream. “Don’t expect high street banks to be offering crypto bank accounts or loans in the next 18 months, but do expect a softening of their stance. They will be closely watching the lead of regulators to discover a new vision,” says Murphy.

The future of cryptocurrency in financial markets As digital currencies come into their own, Nentwich believes that new technologies and regulation will also drive them forward.

“Automation goes hand-in-hand with the nature of crypto because of how it evolves, just as machine learning and future-built technology does. Data automation platforms like Ducos are becoming go-to solutions for control and regulation in the crypto market, as a way to prevent anything going wrong, therefore preventing any regulatory action from governments – or at least delaying it.”

He concludes: “For this reason, crypto firms are volunteering to run themselves better by focusing on controlling risk.” fintechmagazine.com

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WRITTEN BY: GEORGIA WILSON PRODUCED BY: MIKE SADR

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THE STANDARD

ACHIEVING FINANCIAL WELL - BEING AND PEACE OF MIND

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THE STANDARD

An employee from The Standard volunteered for Habitat for Humanity

Example of an image caption

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THE STANDARD

The Standard’s Rachel Henney details the company’s approach to ESG, commitments to simplicity in its procurement processes and strong third-party governance

F

ounded in Portland, Oregon, in 1906, Standard Insurance Company (The Standard) is a leading provider of financial protection, insurance, retirement, and investment products and services for both employees and individuals.

Under its holding company name, StanCorp Financial Group Inc., the organisation has four primary subsidiaries: Standard Insurance Company, The Standard Life Insurance Company of New York, Standard Retirement Services, Inc., and StanCorp Mortgage Investors, LLC. When it comes to The Standard’s core mission, Rachel Henney, Head of Procurement, Supplier Management and Governance, explains her love of its simplicity. “The Standard is a family of companies dedicated to helping our more than eight million customers achieve financial well-being and peace of mind,” she says.

Since joining the company in 2015, Henney reflects on the incredible growth of the group: “When I arrived, revenues were at US$2.9bn. We ended 2021 at nearly US$4bn,” says Henney.

She adds: “We’ve also deepened our investment in technology. And in doing so, we came to understand that we cannot be experts in everything. So, we partner with strategic, best-in-class vendor partners to deliver value to our businesses and customers. fintechmagazine.com

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HCL Technologies helps The Standard achieve their vision Ananth Subramanya, SVP of Digital Business at HCL Technologies, details how the company’s helping The Standard digitally transform now, and in the future

Helping The Standard to digitally transform Like any other insurance company, The Standard is focused on investing in its customer experience. The Standard offers a variety of solutions, including those for retirement, disability, dental and healthcare.

In recent years, technology has taken a central role pretty much everywhere.

As a key enabler for many organisations, having advanced technology within core operations has become a key differentiator for businesses.

“Organisations are no longer simply using technology as a substitute for labour to drive productivity,” says Ananth Subramanya, SVP of Digital Business at HCL Technologies.

He adds: “Technology has become a core conversation in the boardroom.

Now they are figuring out how technology can advance the business and drive the important aspects of the agenda.

Investment in technology is becoming as important as the products an organisation sells.”

Helping organisations achieve their digital transformation vision With COVID-19 accelerating the pace of transformation for many organisations, technology has resulted in significant positive disruption to many regulated industries.

“If you consider dynamically priced insurance industries, there is significant consolidation in the industry that is driving better experiences and modern capabilities; this can also be extended to the optimisation of functions such as underwriting. Those in the industry are using technology to improve the experience and value a customer gains.” says Subramanya.

“Ensuring that they deliver frictionless solutions so that customers don’t suffer from long wait times, as well as innovating and improving fast are key components for the Standard,” says Subramanya.

He adds: “In order to achieve this, HCL Technologies is providing The Standard with significant optimisation capability for their current processes including infrastructure, development processes, and QR automation. With these capabilities, they are able to adopt and improve much faster.

“The Standard has also invested a lot in improving its operations and driving efficiency throughout its local platforms with RPA. HCL is helping to ensure that the entire process in the backend is optimised so that the customer experience continues to remain valuable.”

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THE STANDARD

“Deeper storytelling will be a core element of the report. We’re committed to sharing stories — many of which have not been shared publicly — about ESG activities” RACHEL HENNEY

HEAD OF PROCUREMENT, SUPPLIER MANAGEMENT AND GOVERNANCE, THE STANDARD

“But particularly in the last two years, during the COVID-19 pandemic. We’ve really seen great success with our shift to working remotely while continuing to provide the superb customer service that sets us apart from our peers.”

The Standard and its ESG commitment In the early stages of its environmental, social, and governance (ESG) related work, The Standard’s approach to ESG has always been driven by its vision “to support a healthier environment for all, to strengthen communities, to align corporate values, and ensure we always take the high road,” says Henney.

She adds: “ESG is important and it will continue to be a focus for us.”

Yearly, The Standard reports on its ESG activities, sharing details on its plans to ensure the long-term sustainability of the company as well as its measurement and management of its impact.

While Henney can’t share many specifics in regards to its upcoming 2021 report, she can say: “The 2021 report will be focused on how we ensure the long-term sustainability of the company, and measure and manage the impact our company has on our customers, communities and environment. It will also continue to highlight how we create a workplace culture in which each employee is valued and respected.”

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When asked how the 2021 report will compare to 2020, she adds: “Deeper storytelling will be a core element of the report.

We’re committed to sharing stories — many of which have not been shared publicly — about ESG activities inside our various business units.”

The Standard is committed to multiple United Nations Social Development Goals (SDGs), the adoption of which will help the company to not only track and report on its work, but to tell a more complete and transparent story when it comes to its sustainability.

The Standard’s dedication to supplier diversity With supplier diversity being a core pillar of The Standard’s ESG model, this approach offers the company an opportunity to support its communities. “Supplier diversity is a business imperative; we take this very seriously and promote inclusion of diverse suppliers with our standard workflow for procurement and sourcing events,” explains Henney.

She adds: “We continually grow and promote our supplier diversity efforts by benchmarking activities with industry peers for best practices, leveraging the advocacy organisations that certify companies as diverse (NGLCC, NMSDC, MBENC) for future matchmaking events to grow our portfolio of diverse suppliers.”

THE STANDARD

EXECUTIVE BIO RACHEL HENNEY TITLE: HEAD OF PROCUREMENT, SUPPLIER MANAGEMENT AND GOVERNANCE Rachel Henney is the Head of Procurement, Supplier Management and Governance for Standard Insurance Company. Henney is responsible for leading the supplier management division and for ensuring ensuring a strong and capable supplier base is in place

to support the company’s suppliers of products, professional services, software, hardware and outsourced services.

Henney joined The Standard in 2015 and has over 25 years of experience in procurement, supplier management and enterprise shared services. She has held previous roles in business consulting and solution delivery, focusing on programme management, simplification, business case realization and strategic vision & planning.

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Business transformation

Human elevation We don’t just create real-world transformation. Driven by our purpose, we amplify the impact insurers have on the world empowering employees and helping communities thrive.

Discover how we can make a difference together.

Genpact helping its clients to insure customers for life Sameer Dewan, Genpact’s global business leader for insurance, discusses how the insurance industry is embracing a new age of data and lifetime customer journeys

is a key partner in helping organisations connect, predict, and adapt to become instinctive insurers and lifelong protectors in their customers’ lives,” adds Dewan.

Genpact is a global professional services firm delivering business transformation by putting digital and data to work to create competitive advantage.

Partnership with The Standard

It’s guided by its mission – the relentless pursuit of a world that works better for people. Genpact is focused on delivering ESG outcomes for both itself and its ecosystem of shareholders, stakeholders, employees, and the communities it operates in. As global business leader for insurance, Sameer Dewan partners with insurers, brokers, and MGAs to drive transformation, develop digital and analytics capabilities at a fast pace, and deliver business growth and efficiency.

State of flux from transactional to lifelong customer journeys The role Genpact plays - as detailed in its report Insurance In The Age of Instinct - is to help the insurance industry tackle challenges such as changing consumer expectations, the explosion of data, and a fast-moving technology landscape.

“How insurers respond today will lay the foundation for future resilience, and Genpact

The Standard provides insurance, retirement and investment products and services, with total assets under administration of USD$45.36 bn. Genpact creates value for them as an extension of The Standard’s team, creating growth with agile operating models that can scale up to meet demand and running operations to ensure they deliver value.

“We started by assessing the current state of operations and customer journeys and the choke points in each. This led to a redesigned operating model, with customer journeys at the heart of designing the new process - driving a better customer experience and growth. But transformation is not a ‘one and done’ project, we also created a transformation roadmap to consciously and continuously drive improvements, meeting The Standard’s goals of growth and profitability over the long term.” said Dewan.

Learn more

THE STANDARD

Allegis Global Solutions Allegis Global Solutions (AGS) is a managed service provider of contingent worker procurement for The Standard. “In the last year, the amount of contingent worker diversity spend was just over 27%,” says Henney.

She adds: “AGS as a company is focused on three Sustainable Development Goals for 2022, including climate, work and economic growth, and reduced inequalities, all of which align with The Standard’s core values as well.”

Dun & Bradstreet Leveraging several services from Dun & Bradstreet, the company provides The Standard with third-party insights.

“With information from their internal certified data, we include unique businesses that have been classified using can be segmented to specific socio-economic classifications, such as minority, women, veteran, LGBTQ, and disabled-owned businesses,” explains Henney.

With this information, The Standard can understand the composition of its existing third-party catalogue.

Genpact As one of The Standard’s primary suppliers, Genpact supports business process delivery across the policy lifecycle. “We share a deep commitment to three key objectives,” says Henney. “Improving our business through simplification, collectively serving our customers’ needs, and increasing diversity.

“They parallel our focus around prioritising diversity and inclusion as published on their website” says Henney. “The results of our strategic engagement with Genpact continue to support not only our company’s vision and mission but also our culture.”

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Commenting on the partnership with Genpact, Brenda Smith, senior director of Workplace Possibilities at The Standard says: “Genpact has been supporting our area for many years now, starting with two important business processes: both case and invoice set up. Through a solid partnership, our relationship has grown and the team has taken on additional processes including document creation and components of correspondence.

All members of the team are hardworking and conscientious, bringing forward ideas for improvement, questions and issues as they arise. Their attention to detail shows in their most recent metric results: 99.41% accuracy and 100% timeliness.”

HCL Technologies Working with HCL Technologies since 2016, The Standard continues to grow its strong partnership with the company.

“Our collaboration with HCL Technologies brings significant value, operational efficiency, and thought leadership to The Standard,” says Henney. “Their operations are well-aligned to The Standard’s culture of transparency, trust and openness.”

During the COVID-19 pandemic, HCL Technologies was a vital partner for The Standard to pivot its operation in the ‘new normal’. “With HCL Technologies alongside our other strategic partners we experienced no loss of productivity, expanded our network capacity, and transitioned to 100% remote working,” says Henney.

She adds: “The partnership between HCL Technologies and the Standard has helped the organisation tap into a larger skill and talent pool enhancing our company’s competitiveness in the market.”

THE STANDARD

The Standard simplifies its processes and drives effective governance When it comes to the simplification of its processes, Henney explains that The Standard leverages a methodology called ‘lean management system’.

She says: “Lean at The Standard is a set of tools and behaviours that focus on continuously improving the value we provide to our customers, with an engaged and empowered workforce.”

The Standard’s goal is to maximise the performance of its systems or value stream to eliminate waste in the value chain. “Asking ‘why’ each step is required, it serves as a baseline for simplification opportunities,” adds Henney.

Choosing a third-party risk governance approach, The Standard uses subject matter experts from across the enterprise covering multiple risk areas — geopolitical,

The Standard’s annual Volunteer Expo in Portland, Oregon

Achieving financial well-being and peace of mind

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Business-led and cloud-forward transformation.

Meet a new kind of digital transformation that helps drive value for insurance organizations faster.

Learn more

© 2022 PwC. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network.

Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

THE STANDARD

“ Change is inevitable, it is one thing that remains constant” RACHEL HENNEY

HEAD OF PROCUREMENT, SUPPLIER MANAGEMENT AND GOVERNANCE THE STANDARD

technology, compliance, fraud, and legal, to name a few.

“This provides a holistic governance approach for our third parties,” says Henney. “These ‘Risk Domain Owners’ work with our centralised TPRM Governance group who act as the central clearing house for TPRM risk monitoring and information management.”

In 2021, The Standard further evolved its Third-Party Risk Management Governance group by leveraging leading practices to expand its TPRM programme.

“Using a risk-based approach, the TPRM Governance programme monitors third-party providers across a wide number of Risk Domains,” says Henney.

She adds: “One of the current focus areas for the programme is to provide enhanced reporting capabilities so business stakeholders have improved visibility to current risk information about their third parties.

The Third-Party Risk Management Governance group works with both business and third-party stakeholders to ensure that risks are monitored and appropriately managed throughout the engagement lifecycle.”

The Standard's strategic suppliers help to simplify processes PwC When it comes to quality, cost and control, strategic suppliers at The Standard work with business leaders to determine where the group should focus its outcomes. “While we want to improve all of these, it’s not possible,” explains Henney.

She adds: “You can’t require that a supplier is fast, inexpensive and delivers sustainable solutions. Choosing two of these as primary outcomes and objectives together help focus operational results that meet expectations.

Our strategic suppliers are integral to core operations and our customer satisfaction.”

As a Strategic and Preferred Supplier, PwC works with The Standard to enable and enhance business intelligence and analytics, transforming our end-user ecosystem. PwC and The Standard defined a strategy to simplify our operating and governance model, modernising technology to complement business strategy. PwC’s approach helped The Standard support sustained internal growth and adoption of transformation, including the creation of an internal delivery structure focused on strategy realisation.

“Change is inevitable,” says Henney, “It is one thing that remains constant. PwC assists The Standard with the pace of change, and as we progress in our transformational journey, we leverage PwC’s insurance industry experience as well.”

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THE STANDARD

“ Over the past couple of years, the pandemic has reshaped our industry and its perception” RACHEL HENNEY

HEAD OF PROCUREMENT, SUPPLIER MANAGEMENT AND GOVERNANCE THE STANDARD

The Standard’s outlook for the future Looking to the future, Henney expects the industry to continue to be impacted by the current global landscape including the pandemic, geopolitical unrest, and employment retention challenges.

She says: “These next couple of years will focus on a deeper evaluation of our supply base, looking at how we can optimise the utilisation of strategic, preferred partners to mitigate inflation impacts.”

She adds: “Future trends are in part defined by a reflection of the recent past; over the past couple of years, the pandemic has reshaped our industry and its perception. We sell a promise to be there for our life and disability insurance customers when they need us.

“The pandemic, sadly, gave us the opportunity to be there for many people and families experiencing the worst.

We're proud of our capability to provide income replacement for people experiencing a disability, and funds to cover expenses and mortgages for families who lost a loved one. The pandemic showed how critical our products are and will continue to be.”

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A group of employees from The Standard volunteered for Habitat for Humanity

THE STANDARD

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DIGITAL WALLETS AND THE TECHNOLOGIES DRIVING THEM

The advance of technology is providing us with new ways to pay.

So what are digital wallets, how do they work and what will their future look like?

WRITTEN BY: ALEX CLERE 62

May 2022

T

FINANCIAL SERVICES

he world of finance is full of confusing jargon but sometimes, happily, you stumble across a word or phrase that almost defines itself – like digital wallets. Put simply, digital wallets allow consumers to store and spend funds digitally. This could be real money, linked to a payment card, or something else like loyalty points or discount coupons.

Digital wallets are becoming an increasingly central component to the way we pay and transfer funds – so how are they being used, what technologies are driving them and what can we expect to see in the coming years?

while payment platforms such as Paypal, Venmo and Cash App, which offer digital wallets to their customers, have grown into some of the biggest financial enterprises in the world.

Aside from their convenience at the checkout, digital wallets have the potential to solve a cross-border banking problem that was traditionally disjointed and difficult to navigate.

Laurent Descout, CEO and founder at payments platform Neo, explains: “When working with traditional banks, opening an international bank account is a difficult, long and painful process – and the transactions themselves can add further days.

What are digital wallets?

Digital wallets differ from simply paying online because they allow the consumer to save payment information for later by adding a debit card into the app. When it’s time to pay, the user can do it straight from their app by holding their smartphone to a card reader without needing to remember or re-enter their payment credentials.

But digital wallets also do much more than just paying bills. As their name suggests, they can accommodate anything a traditional wallet can – from resort passes to boarding cards, movie tickets to loyalty vouchers. The exponential growth of this technology in recent years has allowed consumers to leave their clunky leather wallets at home, accelerating the move towards cashless payment.

As digital wallets have become more integrated into our smart devices, companies like Apple, Samsung and Google – which provide the operating systems for those devices – have become some of the biggest players in digital wallets. Retailers like Alibaba and Walmart have also got involved

“ THE NUMBER OF UNIQUE DIGITAL WALLET USERS IS PREDICTED TO GROW TO 4.4 BILLION BY 2025” JUNIPER RESEARCH “Fintechs are enabling businesses to set up their own international account with a multi-currency IBAN in their organisation’s name. Virtual wallets then ease the process for making same day payments. Businesses can use them to organise funds and store multiple currencies, ready for executing rapid payments or a currency exchange.”

What technologies are driving digital wallets?

Digital wallets start with a digital core, which can be thought of as the building blocks fintechmagazine.com

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FINANCE THAT SCALES WITH YOU Easy multi-entity management and reporting Sage Intacct cloud finance software for financial services

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“ DIGITAL WALLETS HAVE BEEN MOST SUCCESSFUL IN REGIONS WHERE CARD PENETRATION HAS BEEN LOW BUT MOBILE PHONE USE IS HIGH” JOHN MITCHELL CEO, EPISODE SIX

for digital transformation within banking.

In essence, the phrase ‘digital core’ refers to the platforms and applications that an institution uses to transform itself into a digital business. From there, it can make use of open APIs to integrate with digital wallets and payment platforms, allowing them to bring front-end benefits to consumers.

John Mitchell, co-founder and CEO of Episode Six, says: “With these technologies, the world’s leading developers are able to create services and applications that communicate and integrate in a simpler manner. It's these technologies that are driving change in the market and creating solutions for better customer-friendly applications.

“While open APIs are helping to drive innovation today, we can expect to see more from smart ledgers and wallet management systems in the future.

“Smart ledgers, or blockchain, will transform the way people and organisations handle their digital wallets. By offering a way to record, store and transfer alternative digital assets, the smart ledger will introduce a whole new world to digital wallets. fintechmagazine.com

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FINANCIAL SERVICES

Combining this with easily adaptable, APIaccessible wallet management systems, customers will experience a betterintegrated digital payment model all within one single platform.”

Indeed, the rise of cryptocurrencies is one of the most hotly tipped frontiers in the application of digital wallets. Trading in these non-tangible currencies has increased steadily over the last 10 years – Bitcoin for example has risen from $1 in 2011 to more than $42,000 today. And there’s still evidence to suggest that crypto is ripe for future growth.

“What’s different today is the extent of institutional interest, coupled with very strong demand across the wealth management franchise,” wrote Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, in a report published by the company last May. “The product offering is broader as people are looking beyond Bitcoin at the potential of the underlying blockchain infrastructure to transform the way markets behave.

This has sparked interest in other kinds of cryptocurrencies… whose value proposition revolves more around what else can be done on blockchains.”

“ WHEN WORKING WITH TRADITIONAL BANKS, OPENING AN INTERNATIONAL BANK ACCOUNT IS A DIFFICULT, LONG AND PAINFUL PROCESS” LAURENT DESCOUT CEO, NEO

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What does the future look like for digital wallets?

According to UK-based Juniper Research, the number of unique digital wallet users is predicted to grow from 2.6 billion to 4.4 billion by 2025. Markets such as the UK and US will lag behind China and India in terms of digital wallet adoption, with China and India expected to account for nearly 70% of digital wallet transactions.

FINANCIAL SERVICES

John Mitchell, from payment tech provider Episode Six, continues: “Digital wallets have been most successful in regions where card penetration has been low but mobile phone use is high. In regions such as Southeast Asia, consumers have gone straight from cash to mobile wallets and as a result digital wallet providers have done well.

“Where we’ll see digital wallets evolve in the future will be around the types of assets

stored. The world is already rapidly adopting alternative forms of digital currency, cryptocurrency being the most in-demand.

Future digital wallets will not only store and allow for payment transactions but will also provide on-demand and seamless access to these alternative digital assets. Better yet, apart from storing these funds, they will offer the ability to complete financial transactions using these varying payment sources.”

“ SMART LEDGERS, OR BLOCKCHAIN, WILL TRANSFORM THE WAY PEOPLE AND ORGANISATIONS HANDLE THEIR DIGITAL WALLETS” JOHN MITCHELL CEO, EPISODE SIX

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STRUCTURALLY ADVANTAGED VENTURE CAPITAL

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DISTRIBUTED VENTURES

WRITTEN BY: LAURA V. GARCIA PRODUCED BY: JAKE MEGEARY

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Structurally Advantaged Venture Capital Delivering Acceleration and Realisation

D

istributed Ventures is on a mission: to find, fund, and collaborate with visionary entrepreneurs, while combining the powerful vantage point of its strategic LPs, e.g., diversified insurance broker NFP. Shawn Ellis, Managing Partner of Distributed Ventures and operator of its venture investing team, says: "Across our Partner group, we've all operated in various capacities ourselves. We've been in companies from a very early stage to very mature, and we've seen a variety of relevant fact patterns as a result."

In addition to its human capital, Distributed Ventures' strategy of targeting very early-stage companies is another one of its differentiators. "We like to work with companies in the early innings of their journey. We'll target late seed and Series A investments and, in collaboration with our strategic LPs, help to materially accelerate our portfolio companies’ momentum. It’s highly unusual to collaborate as closely as we do with our strategic LPs in support of our portfolio companies. This DNA is embedded in our fund, given that the investment team at Distributed Ventures spun from NFP Ventures, our prior fund, with the full support of NFP. This early partnership with NFP has been a key source of differentiation and advantage, and NFP has been a terrific partner to position Distributed Ventures for success for years to come."

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DISTRIBUTED VENTURES

Structurally Advantaged Venture Capital

"Because of our strong Harnessing The Power “WE'RE NOW AT AN perspective and subject of Strategic LPs EXCITING POINT matter expertise rooted Distributed Ventures’ WHERE WE'RE RAISING in distribution, we help true differentiation OUR SECOND FUND, companies with their comes from the subject DISTRIBUTED VENTURES, go-to-market strategies, matter expertise it taps value propositions, from its LPs, who are AND WE'RE WELCOMING bundling and pricing there from the beginning, CAPITAL FROM models. We also offering expertise to help INSTITUTIONAL PARTNERS help accelerate their optimise potential.

BEYOND NFP” businesses quicker and "We engage our LP become more successful. network throughout SHAWN ELLIS The breadth of agility that the lifespan of a deal.

MANAGING PARTNER, we apply in support of Starting with identifying DISTRIBUTED VENTURES our portfolio companies attractive opportunities is really unique. We built the blueprint – with as we're going through due diligence. We how we tap into strategic support from our very quickly tap into the subject matter LPs – in our prior fund, NFP Ventures." expertise we have within our ranks. Tthen, After spinning out, Distributed after we make an investment, we sit down Ventures’ anchor LP remains NFP, a large, with the company and establish a natural diversified and successful insurance distribution strategy. What are their goals? broker with a large employer benefits How can we help them achieve then exceed consulting business. them? We help them think even bigger by 74

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DISTRIBUTED VENTURES

SHAWN ELLIS TITLE: MANAGING PARTNER INDUSTRY: VENTURE CAPITAL LOCATION: GREATER CHICAGO AREA

EXECUTIVE BIO

integrating them with functional leaders and teams that are forward-leaning across their organisations in various disciplines.

"Our LPs are often aware of these companies and technologies because they've already been part of the evaluation process and have spoken with them. We also have the good fortune to have colleagues who are happy to lean in and really shape the future of this industry, working closely with these organisations.

"We're now raising our second fund, and welcoming capital from institutional partners beyond NFP. It’s exciting to build on the strategic muscle NFP has brought in a distribution context and layer in diverse, complementary contacts from insurance carrier partners, from other brokerage players in the industry and traditional institutional investors. We're really excited about our fund two and growing the innovation that we can accelerate in the market.

"We're growing our team as we raise our next fund, and excited about the next stable of portfolio companies we'll be working with and are already having conversations with a number of companies so we'll have exciting news to share in the early days."

Shawn Ellis is the Managing Partner of Distributed Ventures.

He co-founded and manages the fund.

Prior to Distributed Ventures, Shawn built and lead NFP Ventures, a captive early-stage venture fund sponsored

by NFP Corp, the diversified insurance brokerage. He currently serves as director on the boards of Axio, Vivante Health, Relay, and Wingspan.

Shawn’s investment approach leverages diverse operational, strategic and investment experience.

Previously, as President and founding team member of Zest Health, he led the company’s growth from concept to over half a million paid subscribers and partnerships with several health plans less than three years. Zest was eventually rebranded as Yaro and acquired by Virgin Pulse. Prior to Zest, Shawn focused on healthcare technology investments at 7wire Ventures. He was a management consultant at the Boston Consulting Group and began his career at Lazard Middle Market’s M&A practice.

Shawn holds an MBA from the Kellogg School of Management and a BA in Economics from the University of Chicago. He is a member of the The Economic Club of Chicago and a board member of the Linden Foundation.

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The Future Calls

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“ EXHILARATING TO WORK IN COLLABORATION WITH STRATEGIC, SOPHISTICATED CORPORATE ENTITY LPS, THAT ARE OPERATING AT SCALE YET HUNGRY AND RECEPTIVE TO INNOVATION AND FORWARD-LOOKING BEST PRACTICES” SHAWN ELLIS

MANAGING PARTNER, DISTRIBUTED VENTURES

Partnerships Built for the Long Haul Empowered by subject matter expertise, internally and through partnerships, gives Distributed Ventures an edge, allowing them to better see where the industry is going and to hear the customer and market’s voice.

“We're living in a high-velocity venture market. It's easy to err toward a transactional approach as people tend to work on autopilot. We really like to know our partners. We work closely with them and are supportive. In terms of economics, even speaking to the way we structure our investments, often there's a component where we're helping companies while earning the right to invest more in them by accelerating their businesses, which really matter to founding teams and their other investors.

“It's this notion of finding a balance, understanding value creation and having a long-term view in terms of the partnership.

We build partnerships that are durable and hope to work with founders across multiple businesses and ventures.” fintechmagazine.com

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“WE'RE HAPPY TO WORK WITH COMPANIES IN THE VERY EARLY INNINGS OF THEIR JOURNEY. WE'LL TARGET LATE SEED AND SERIES A INVESTMENTS” SHAWN ELLIS

MANAGING PARTNER, DISTRIBUTED VENTURES

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to the back-end reconciliation process amongst brokers and carriers. Equipped with a dynamic founding team and strong set of investors, we look forward to continuing to support Ascend as they transform the industry."

Ascend Ascend is the first end-to-end platform within the insurance industry that provides automated all-in-one payments, premium financing, collections, and payables. Selling to brokers, carriers, MGAs, and digital native insurtech companies, Ascend condenses the flow of funds timeline improving policy retention, increasing revenue, and moving money (ie commission/premium) more quickly.

“Ascend is rebuilding critical payment infrastructure that has largely remained untouched for the last several decades. As they look to accelerate progress well beyond incremental improvements, Distributed Ventures is helping Ascend enhance the payment experience while bringing efficiency

TrustLayer TrustLayer’s insurance management platform allows companies to automate the verification of insurance, licences, and compliance documents. The company has developed technology to streamline the collection, management and review process through one integrated offering, enabling companies to reduce error-prone manual compliance tasks and quickly identify issues related to noncompliance. TrustLayer’s multi-channel approach to distribution includes selling directly to enterprises (B2B) and leveraging channel partnerships (B2B2B), including brokerages and associations. Trustlayer leverages powerful network effects to grow distribution organically, i.e., vendors and their brokers validating insurance through the platform become top of the funnel leads for TrustLayer to pursue. fintechmagazine.com

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“ONE EXCITING VALUE-ADD WE BRING IS HELPING THESE ORGANISATIONS FIND THE BEST TALENT AND CONTINUE TO FEED IT - AHEAD OF THEIR HUMAN CAPITAL NEEDS” SHAWN ELLIS

MANAGING PARTNER, DISTRIBUTED VENTURES

”TrustLayer is a great example of Distributed Ventures’ ability to invest in very attractive companies that also bear significant strategic relevance to our limited partners. With TrustLayer, connectivity to our investor base has not only helped galvanise conviction for investment but also help us secure a significant allocation in a competitive fundraising process," says Ellis.

Relay Platform Relay is a SaaS platform equipping brokers, wholesalers, and their capacity providers with the leading white-labelled electronic placement solution in both P&C insurance and facultative reinsurance. With exceptional support for mid-market and large commercial lines of business, Relay delivers client-winning proposals supported by best-in-class instant API-based and email quoting capabilities.

Distributed Ventures invested in Relay Platform about two years ago, after getting to know Greg Boutin, the founder, and has since developed a strong relationship. "We really liked Greg’s approach to the market and how he was thinking about bringing efficiency to risk placements in a way we hadn't seen.

I've been a director for the company over the course of this time, working very closely with Greg as he's finding product-market fit for various offerings of Relay, accelerating the business and growing his team. One exciting value-add we bring is helping these organisations find the best talent and continue to feed it - ahead of their human capital needs so it's not just financing helping them grow, but also the right perspectives and cultural alignments,” says Ellis.

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HOW ARE CHALLENGER BANKS TRANSFORMING THE BANKING LANDSCAPE?

WRITTEN BY: ALEX CLERE

PAYMENT SOLUTIONS

What’s the difference between neo banks and challenger banks, how are they disrupting the global banking landscape, and what does the future hold in store?

F

“ New players that combine intuitive user experiences with simple, easyto-understand sustainability features have a chance to stand out” NICOLA MITCHELL

HEAD OF DIGITAL MARKETING, NOVUS

intech is changing – and not just in relation to legacy systems. While the global financial market has always been intrinsically male, the landscape is shifting as more women than ever before are embarking on careers in banking, investment, and payment-related industries.

As the pace of digital transformation in banking accelerates, the scope of what is technically possible to offer consumers is growing – and alongside it, the definition of what it means to be a bank is constantly evolving.

Over the last decade, a range of ‘neo banks’ and ‘challenger banks’ have popped up as an alternative to mainstream providers. It seems that their names are used almost interchangeably to refer to a wealth of fintechs disrupting the banking sector – but what exactly is the difference between neo banks and challenger banks, and what does their growth mean for the future of digital banking?

What’s the difference between neo banks and challenger banks?

In practice, neobanks and challenger banks have more in common than they have differences. They are both disruptors in the banking space, placing a heavier focus on digital technology to bring new products and services to consumers. fintechmagazine.com

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The main difference comes from whether the bank has a physical, bricks-and-mortar presence. Neo banks are entirely cloud-based and reach consumers through either an app or a website, while challenger banks may still retain a small number of The Rise Of Digital Challenger Banks branches – though not nearly as many as traditional highstreet banks.

This means that challenger banks are more likely to hold a full banking licence. As their popularity has grown, this has become more Traditional banks are often bloated by legacy commonplace. As a result, challenger banks systems stretching back several decades, usually offer a broader range of products which can prevent them from rolling out new and services while neo banks may focus features or adopting new platforms. As they on more niche areas or concentrate on are so invested in these systems, with much business customers. of their customer data built on them, legacy banks can find it hard to move away.

How do they differ from traditional banks?

This has allowed neo banks in particular to One of the key distinguishing features be much more targeted with their customer between digital challengers and traditional proposition. Take New York-based Daylight banks is their agility. Challenger banks and for example, the neo bank that is building neo banks are usually smaller, newer and so products and services to meet the financial better placed to take advantage of emerging needs of LGBTQ+ customers; or First technologies and developing trends.

Boulevard, which hopes to build financial solutions to help empower Black America.

Where a particular group or community has specific financial requirements, digital challengers may be better placed to exclusively target those needs.

In addition, they are often more active in sustainable innovation, buoyed by their smaller footprint and tech-savvy audience.

Neo banks have offered everything from carbon offset and tree planting to schemes that share some of their profits with charities.

These are ideals that are quickly gaining PAULA SMITH traction with larger institutions because of PARTNER AND HEAD OF BANKING AND CAPITAL MARKETS, KPMG UK their mass appeal among consumers.

“ Digital banks face an uphill battle of getting their existing customer base to expand into new products”

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PAYMENT SOLUTIONS

Nicola Mitchell, Head of Digital Marketing for UK neo bank Novus, said: “According to a recent report from WWF and Greenpeace, if the UK’s biggest banks were a country they would rank 9th in the world for carbon emissions. At the same time, environmental awareness amongst UK consumers has surged in the past year, with 85% now making more sustainable lifestyle choices, according to Deloitte’s latest Sustainable Consumer research.

“The opportunity is clear: new players that combine intuitive user experience with simple, easy-to-understand sustainability features have a chance to stand out in a whole new way. It’s not about bolting on new products to an existing, already-broken system to put a bandage on a broken arm.

It’s about reimagining the way we bank to make our money a force for good – an idea that opens up a world of possibilities to harness the collective power of our spending and ultimately make a tangible difference in the world.”

For Novus, this means partnering with different NGOs so that consumers can automatically support social and environmental causes when they use their Novus debit card.

“ There is a perception that traditional banks do not offer the customer experience or customer service that challenger banks provide” RICHARD LITTLE

PARTNER AND HEAD OF CHALLENGER BANKS AND BUILDING SOCIETIES, KPMG UK

How will digital challengers transform banking?

So far, challenger banks and neo banks have spurred traditional players into accelerating their digital transformation, particularly during the COVID-19 pandemic, when more functions moved online. We have seen traditional banks roll out new features and cleaner functionality, but they have also acquired fintechs as a faster means of incorporating new products and services into their business. Usually, digital disruptors can reach a broader customer base by partnering with established institutions.

Richard Little, Partner and Head of Challenger Banks and Building Societies at

PAYMENT SOLUTIONS

KPMG UK, told us: “There is a perception among many consumers that traditional banks do not offer the smooth customer experience or customer service that challenger and neo banks provide. Traditional banks are investing millions on technology with the objective of defeating these stereotypes, promoting brand loyalty from their existing customers and being able to secure new customers. They are extending their customer offerings into areas such as purchase protection, loyalty rewards and support with credit scoring.”

And, while challenger and neo banks have grown their audiences significantly in recent years, many are still struggling to claw themselves into profitability.

“Digital banks face an uphill battle of getting their existing customer base to expand into new products,” says Paula Smith,

Partner and Head of Banking and Capital Markets at KPMG UK. “Newer banks have built up large customer bases by offering innovative apps and features linked to current accounts, but they are not converting those customers in significant numbers into mortgage or investment products where they can actually generate profit. Ultimately, profit generation will be required to meet investors’ valuation expectations.”

A YEAR OF FINTECH INNOVATION AND COLLABORATION WRITTEN BY: GEORGIA WILSON PRODUCED BY: JAKE MEGEARY

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MSU FEDERAL CREDIT UNION

T

A year on since we spoke with MSU Federal Credit Union, Benjamin Maxim, VP of Digital Strategy & Innovation, discusses the success of its Innovation Lab

ouching base with Benjamin Maxim, Vice President of Digital Strategy and Innovation at MSU Federal Credit Union (MSUFCU), a year has passed since he discussed the launch of the credit union’s Innovation Lab with FinTech Magazine.

Today, Maxim is proud of the lab's success over the past year and is keen to share the company's journey.

‘BUILDING DREAMS TOGETHER’ As a credit union, MSUFCU’s core mission is to serve its members. Its tagline is ‘Building dreams together’, but when it comes to innovation, Maxim stresses that it isn’t just about the big things like the creation of the iPhone or Tesla, it’s also about making your operations better day-by-day.

“In general as a business, if you are not growing and improving, then there is a good chance you won’t make it long term,” he says. “Innovation is truly the way forward.”

Founded in 1937 during the Great Depression as a way to gain access to loans, Maxim reflects that the service back then was really nothing more than an innovative way to buy financial services at the time.

“Innovation has been at our core ever since,” says Maxim.

When it comes to technological innovations, MSUFCU was one of the first credit unions to tie into an ATM network, one of the first to use Visa cards, and an early 92

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adopter of mobile apps. "At the time these were revolutionary,” says Maxim.

Today the credit union is investing heavily in the fintech industry to keep the organisation moving forwards. “This is where our Innovation Lab comes in,” explains Maxim. “A primary focus of our Innovation Lab is to get our members involved early in our product development, which allows us to utilise our members to find out what they are interested in, how we can help them and to ensure we are developing products and services our members will actually enjoy using.”

THE INSPIRATION BEHIND THE INNOVATION LAB The Innovation Lab was born out of MSUFCU’s need to better serve its growing member base. “We have a track record of building our own technology to serve our customers,” says Maxim. “Almost twelve years ago we launched our own online banking and mobile banking apps.”

Since Maxim started his digital journey with MSUFCU, its membership base has grown from 170,000 to over 320,000.

“With this growth, a lot of work was needed to be done to scale our services and make them work better for the larger quantity of people using them,” explains Maxim, who adds: “When we were a small and nimble team, there was a lot of organic innovation, but with growth, this has become harder.”

1937

Year founded

$85mn Revenue (USD)

1,000

Number of employees

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MSU Federal Credit Union - A year of fintech innovation and collaboration

At the beginning of 2020, Maxim was approached by MSUFCU’s CEO, April Clobes, to establish a formal innovation programme.

“I jumped at the chance,” says Maxim.

“Fintech had matured quite a bit by that point, there were many large fintech unicorns doing great things, which is where a lot of the venture capital was headed.

Meaning there was huge interest in this maturing market and was ripe for tapping its potential.”

Keen to tap into the resources of the industry, MSUFCU set about developing its partnerships and opportunities. “The Lab provided a way to create better partnerships with startups and give us an avenue to test out ideas in a safe way,” says Maxim.

But as with all the best-laid plans, there are challenges. After starting 2020 94

May 2022

with ambitious plans in mind, COVID19 struck. Fortunately for MSUFCU, while the pandemic brought about a few new challenges, it largely acted as a driving force for its Innovation Lab strategy, rather than a hindrance.

Closing their branches for a period at the beginning of the pandemic, freezing budgets and hiring, reprioritising projects and an overwhelming increase in contacts to their call centre and live chat services, all became obstacles to overcome and innovative thinking as an organisation was seen as a way to overcome them all.

Maxim said: “Instead of holding off on our innovation plans, we decided to doubledown on it. We came to the conclusion that innovating would be our path forward out of COVID-19. So we took on our first fintech

MSU FEDERAL CREDIT UNION

partner - a video-banking solution provider called POPi/o. By harnessing the Innovation Lab, something that would have taken 10 months or more, took us just five weeks.”

He adds: “It proved that the Innovation Lab gave us the ability to move quickly and that there was no need for all the deep integration of the past. Not only that, but our members appreciated and benefited from this partnership. We found that our members didn’t really care how deep the integration was or how complete the branding, they just wanted to be able to communicate and interact with us.”

This was a good lesson for MSUFCU, and one that allowed the Innovation Lab team, to get the buy-in it needed to officially launch in September 2020 as The Lab at MSUFCU. Maxim says: “With The Lab, we are also able to get new products to market quicker.

We found that before, pursuing ideas like this would take too long and would sometimes lead to missed opportunities. So with The Lab, we take homegrown ideas, build them into prototypes and get them out in front of our members quickly.”

BENJAMIN MAXIM

VICE PRESIDENT OF DIGITAL STRATEGY AND INNOVATION, MSUFCU

TITLE: VICE PRESIDENT OF DIGITAL STRATEGY AND INNOVATION INDUSTRY: FINANCIAL SERVICES LOCATION: DETROIT, USA

EXECUTIVE BIO

“ In general as a business, if you are not growing and improving, then there is a good chance you won’t make it long term [...] Innovation is truly the way forward”

BENJAMIN MAXIM

Ben Maxim joined MSU Federal Credit Union in 2007 and currently serves as VP of Digital Strategy and Innovation for MSUFCU and as CTO for MSUFCU’s wholly-owned CUSO Reseda Group and its subsidiaries Spave and Ever Green 3C. He is responsible for assessing emerging business trends and technologies, providing strategic direction for existing and future digital channels, and leading their innovation centre The Lab at MSUFCU. He is also responsible for the technology and product pillars of Reseda Group and its subsidiaries.

Maxim began work initially as a Web Developer and in 2014, he became E-Commerce Manager before moving into roles including AVP of Software Development. He earned a bachelor’s degree from Michigan State University and a professional certificate in Innovation & Entrepreneurship from Stanford University.

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CU NextGen extends its relationship with MSUFCU As credit unions vie to adopt new technology, CU Nextgen’s Nextly platform becomes a must-have CU NextGen, the Credit Union Service Organisation (CUSO) dedicated to bringing next-generation technology to credit unions, announced at the start of 2022 that it would be introducing its Nextly platform to the world’s largest university-based credit union, Michigan State University Federal Credit Union (MSUFCU). “We’ve been working with them and their wholly-owned CUSO, Reseda Group for a number of years,” says Nicole Williams, VP of Technology at CS, “but this is taking our relationship to a new level.”

Briefly, Nextly is a highly customisable standalone solution that integrates seamlessly with all of CU NextGen’s solutions. Architected on CU NextGen’s no-code platform, it offers credit unions and their members a robust feature set that’s easy to use, reduces downtime, and guides the user so intuitively that they don’t even have to think about it.

“We’ve been working with CU NextGen for several years and knew that together we could build a digital banking solution that would meet our goals for our members and employees and indeed change the way credit unions think about digital banking,” says Ben

Maxim, VP of Digital Strategy and Innovation at MSUFCU and CTO at Reseda Group.

This phase of the partnership started in the summer of 2021 when the companies joined forces to develop a brand new digital banking platform for MSUFCU, “It’s a very mutually beneficial relationship and strategic partnership,” says Williams. “With their digital banking software paired with our cutting edge technology and development resources we’re producing something truly amazing!”

MSUFCU is helping support the Nextly project through a $4.5 million investment from Reseda Group. Nextly will provide a platform that provides access and control for credit unions while creating a superior experience for members. In providing the seamless, intuitive and comprehensive experience that clients expect these days, MSUFCU in partnership with CU NextGen is out in the lead, and is sure to be followed by many more credit unions in adopting Nextly.

Learn more

MSU FEDERAL CREDIT UNION

INNOVATION ‘WITHOUT FEAR AND PRESSURE TO PRESENT FULLY POLISHED PRODUCTS’ Maxim stresses that their innovation lab isn’t about failing fast, it’s about learning fast and capturing “what went right or wrong and learning from it.”

He continues: “One of the main catalysts for creating The Lab at MSUFCU was our need for a brand that was separate from, but complementary to, our official brand. We specifically use the terminology ‘Lab’ when we roll-out innovation, to show that it is coming from somewhere experimental and scientific.”

He adds: “We have recruited a panel of 500 members that provide inspiration and are also readily available to pilot any projects we are running.”

FORMING AN INNOVATION ECOSYSTEM: RESEDA GROUP, SPAVE, EVER GREEN 3C, AND FORESIGHT GROUP MSUFCU is transforming its innovation lab into a full-fledge innovation ecosystem, starting with the formation of Reseda Group, MSUFCU’s wholly-owned Credit Union 98

May 2022

Service Organisation or CUSO. Reseda Group has been pivotal in the development of this innovation ecosystem with its goal of helping fintechs scale, focusing on the credit union industry as a growth plan.

Reseda Group accomplishes this through its minority investments in fintechs that started as partners in The Lab such as ChanEd, Pocketnest, and Larky; as well as its majority stakes in its subsidiaries Spave, Ever Green 3C and Foresight Group.

Resada Group also invests in technologies and services that will benefit MSUFCU like Akuvo. The company offers cloud-based, API-enabled Portfolio Risk and Delinquency Management Solution and Benefis CU that provides executive benefits to the credit union and its business members to offer to their executive teams.

The first fintech to move from The Lab to Reseda Group was Spave, an autonomous giving and savings platform with the goal to promote financial wholeness through the use of microtransactions. MSUFCU started working with Spave as a traditional pilot.

“We were going to put them in front of our members, supporting Spave like our other fintech partners,” says Maxim. “Along the

“ When we were a small and nimble team, we used to do a lot of organic innovation, but with our growth, it has become harder to continue to innovate organically” BENJAMIN MAXIM

VICE PRESIDENT OF DIGITAL STRATEGY AND INNOVATION, MSUFCU

way, we learnt that there were some banking services that we could offer them to support them, and we learnt that they needed investment to develop their product to its full potential.”

With MSUFCU’s and Spave’s stars aligning, MSUFCU formed the Reseda Group, to invest and support similar projects. Under the Reseda Group, MSUFCU gained 80% controlling ownership in Spave.

Following the investment in Spave, Reseda Group formed a wholly-owned CUSO Ever Green 3C as a vehicle to sell the services & digital products MSUFCU has become particularly skilled at Diversity, Equity & Inclusion (DE&I) training and its financial wellness centre known at MSUFCU as Financial 4.0 – a financial education blog.

As a result, Ever Green 3C is looking for credit unions that would like to take advantage of their DE&I consulting services as well as those who would like to private label the financial wellness centre as a financial education resource for their members.

Finally, its most recent acquisition was of Foresight Group, a traditional print marketing company that was part of MSUFCU’s supply chain that now offers innovative digital products for credit unions who do not have the marketing resources to produce their own digital and print marketing pieces.

By using a service called CU Suite, they can easily add their logos and branding to ready-made marketing pieces on topics like auto loans, mortgages, credit cards and more.

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How Fran the virtual agent is helping MSUFCU boost member satisfaction Using conversational AI to solve the challenge of scaling credit union member service Michigan State University Federal Credit Union (MSUFCU) is the largest university-based credit union in the United States. MSUFCU’s digital member experience was primarily centered around its live chat channel- an 85-person team handling over 10,000 member requests per month. Their challenge was in scaling up support 24/7 as its members were increasingly choosing to interact with it via chat.

The live chat channel saw a 130% increase in volume in spring 2020 and was not sustainable without significantly ramping up resources which would be costly and timeconsuming.

Introducing Fran, the trusted digital advisor In the fall of 2021, MSUFCU relaunched their customer-facing virtual agent - named Fran - on the boost.ai platform. Fran helps answer questions the credit union’s members may have about its range of products and services, providing a friendly and intuitive frontend to MSUFCU’s website. If members are looking for a routing number or a loan application form, Fran guides them directly, instead of needing to click and search through the website.

Initially, MSUFCU was concerned if its members would trust Fran or see the bot as an impediment to them being able to talk

FRAN FACTS:

1,100+ credit union

topics covered Resolution rate:

96%

20% conversation

growth in Q1 2022

The great thing about a chatbot is that people ask it whatever they think it should tell them.

The boost.ai platform makes prioritizing these interactions easy and intuitive. It takes the guesswork out of member service, which is truly invaluable.

Benjamin Maxim Vice President of Digital Strategy and Innovation

with a live agent. Thanks to the boost.ai platform’s conversation analysis tools, the credit union was able to prioritize Fran’s interactions to help frustrated members get the right human help they needed when necessary.

MSUFCU discovered that the more accurate Fran was, the more their members responded positively and trusted her to help. Powered by conversational AI, the boost.ai platform makes it easy to optimize and update virtual agent content in real-time. Common member queries are automatically flagged so that they can be reviewed by human agents and trained into Fran without delay.

The no-code nature of the boost. ai platform means that MSUFCU did not need to hire developers to build and manage Fran.

Instead, they used members of the existing customer service team, leveraging their expertise and experience to ensure that the virtual agent remained an accurate representation of the credit union’s well-loved brand.

A trusted channel between members and credit union MSUFCU’s ability to have total ownership over the building and maintenance of Fran has meant that the accuracy at scale necessary to satisfy its members has been eminently achievable.

To date, Fran can answer questions on over 1,100 topics specific to the credit union with a 96% resolution rate. Furthermore, MSUFCU has seen a 20% growth in the virtual agent’s conversations in Q1 2022 compared to Q4 2021. Members are trusting and turning to Fran as a key channel of communication.

MSUFCU will soon use the boost.ai platform to extend services beyond informational, introducing selfservice functions that interface with member accounts such as transferring funds, checking balances and more. This will extend the credit union’s 24/7 service and further assist with call and chat deflection into the future.

To learn more about MSUFCU’s story or how you can use conversational AI to improve member satisfaction visit boost.ai

MSU FEDERAL CREDIT UNION

“ One of the main catalysts for creating our innovation lab as ‘The Lab at MSUFCU’ was to create a brand, separate from, but complementary to our official brand” BENJAMIN MAXIM

VICE PRESIDENT OF DIGITAL STRATEGY AND INNOVATION, MSUFCU

To support their CUSOs many MSUFCU employees are joining forces with a small group of employees specifically hired to the individual CUSOs, wearing “multiple hats” with roles at both the CU and one or more of the CUSOs. In addition to his role at MSUFCU leading innovation, Maxim serves as Chief Technology Officer to Reseda Group and its subsidiary CUSOs. TRAINING STAFF, FOSTERING ENGAGEMENT, AND NURTURING INNOVATION For MSUFCU one of the greatest achievements of their innovation lab has been its impact on employee engagement.

Maxim says: “We recruit teams of eight from all over the business, with managers

identifying availability and whether they would be a good fit. Over 20 weeks of workshops, employees learn how to build prototypes and products, as well as learn design thinking, lean startup, and agile methodologies. The hope is that they will take some of this innovative thinking back to their departments and further cultivate an entrepreneurial mindset across the organisation.”

So far, MSUFCU has put 40 employees through The Lab and hopes to increase the number this year, even hiring two full-time employees and an intern to help with the facilitation of the lab programmes.

“Eventually, we want to give everyone a chance to come through The Lab and gain such experiences. Of those that have already done so a few have gone on to create their own miniature version of The Lab within their department. Nearly all of them share that they are more engaged and feel more fulfilled in their work,” says Maxim.

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ENSURING THE LAB DOESN’T BECOME AN ‘INNOVATION THEATRE’ Before going forward with any pilot, MSUFCU vets potential partners not only with its legal and risk teams but also its finance people.

“This is one of the more important parts,” says Maxim. “We do some modelling and projecting as to what we should expect for an ROI before we even begin the pilot project. We then put that into a business case for the pilot itself, based on whether we are paying for it to benefit our members, whether it covers its own costs, or whether it will make a profit.”

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MSUFCU AND ITS PARTNERSHIPS WITH BOOST.AI AND CU NEXTGEN When it comes to its partnerships, the MSUFCU looks for organisations that it can co-create with to mutual benefit. This is the kind of partnership that MSUFCU has with Boost.ai and CU NextGen. “Boost.ai has helped us to create our internal chatbot,” explains Maxim. “At the time we weren’t looking for a chatbot provider. We already had an existing chatbot known as Fran for our members. But Boost.ai presented the idea for creating an internal knowledge-based chatbot, which is

MSU FEDERAL CREDIT UNION

something that I don’t think we would have ever thought to do.”

When Boost.ai presented its ideas to MSUFCU, the world was at the start of the COVID-19 pandemic, as such the credit union had a lot of overwhelming remote service needs for its eService team, its vast numbers of live chat members were growing by the hundreds. “To make it easier for employees that were dealing with those volumes, Boost.ai helped us to build out a chatbot in 10 days, helping us to find a better way forward to manage conversational AI services,” says Maxim.

Out of this project, MSUFCU was also able to train some of its employees to become AI trainers thanks to Boost.ai’s training programme, thus ultimately paving #SameDreamsNewLook – MSUFCU Reveals New Logo the way for creating positions for AI content managers.

“Similar to a website built in 2005, you wouldn’t leave it alone for the next 17 years, we didn’t set up this chatbot three years ago to never touch it again. So working with Boost.ai really helped us to better maintain this service and to be proactive in serving our members,” says Maxim.

Due to the success of the project, MSUFCU moved its member service chatbot over to Boost.ai’s platform, creating an BENJAMIN MAXIM effective ecosystem of chatbots that can VICE PRESIDENT OF DIGITAL STRATEGY AND INNOVATION, MSUFCU work together.

“ With the Innovation Lab, we are also able to get new products to market quicker”

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Similar to Boost.ai, CU NextGen also provides MSUFCU with an ecosystem.

More than 12 years ago, Maxim and his team created the MSUFCU’s own digital-banking products, including online banking, mobile IOS and Android. Fast forward to 2020 and MSUFCU came to a point where it realised it was time for an update. They started searching the digital banking provider landscape to see if there was a good fit or if they would ultimately have to keep building their digital channels in house.

“But we couldn’t find a partner able to give us the level of customisation we needed, at a price that would allow us to grow and be responsive to members,” explains Maxim.

Among the things with which CU NextGen has been helping MSUFCU is

staff augmentation. Like most industries it has become increasingly hard to find talent, coupled with the ‘great resignation of 2021’, MSUFCU has weathered the storm of people seeking pastures new, thanks to CU NextGen’s staff augmentation services.

“They have really helped to make us stronger,” says Maxim. “As we continued through this process with them, we came to the conclusion that we would need to modernise our digital channels ourselves with our new partnership with CU NextGen. In return, CU NextGen presented us with the idea of creating their own digital banking platform but needed help from someone like us who had done this before.”

Combining MSUFCU’s knowledge and CU NextGen’s technology and staffing resources, the two have announced plans

BUILDING BETTER FOR MEMBERS We’re revolutionizing the way credit unions engage with their members and the way members engage with their money.

Learn more

Reseda Group is a wholly-owned CUSO of

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to develop a new digital banking platform, to be called Nextly, which included a significant investment from Reseda Group to move the project along as quickly as it can.

“The new platform will be a competitor for those already out in the market. One of the great features of Nextly - one that I have always wanted but never seen - is the ability to use our website and online banking facilities at the same time. With other similar services, once you log in you cannot easily get back to the website and return to digital banking, but Nextly lets its users effortlessly switch between researching on our website and their digital banking services, without having to log in and out.”

MSUFCU is also looking to implement CU NextGen’s member relationship management (MRM) system, which has a particular focus on credit unions and will help to automate the digital process from Nextly further enhancing the member experience of MSUFCU’s digital channels.

“We have a lot of synergy with CU NextGen,” says Maxim. “Working with them will bring us many new opportunities in both the digital banking space and the automation of our backend processes.”

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Defining Disruptors in the Fintech Space May 2022

TECHNOLOGY

Innovative fintech companies are providing increasingly inventive ways to better serve their customers and meet market demands WRITTEN BY: JOANNA ENGLAND

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tanding out from the crowd and having the confidence to put forward an idea that has never been done before takes great courage. It also takes considerable investment and confidence in your plan of action. We take a look at the traits defining the most disruptive fintechs of today and speak to a range of experts who believe the future of fintech is rooted in disruption.

DIGISEQ’s CEO and co-founder, Terrie Smith, defines disruptors as those companies that think out of the box. “Disruptors break the mould, challenge the status quo, innovate, drive change, and make life more convenient and efficient. Most recently, for example, we’ve seen a sharp transition to a world where everyday payments are conducted

via mobile phone or other smart devices, such as wearable tech,” she says The way in which wearables can be deployed in everyday life has created a positive alternative to traditional payment methods, visibly disrupting both the payments sector and making for more dynamic, interlinked economies.

Smith points out that this recent surge in contactless payments, driven in part by the pandemic, has created the ideal environment for wearable tech to become an everyday part of consumers’ lives. “The secure provisioning of payment credentials into a ring, a wristband, a fitness tracker or pretty much any accessory you can imagine, becomes as easy as a tap on a smartphone.” fintechmagazine.com

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The platform economy is not just changing banking It’s fighting hunger, too.

IMAGE: GETTYIMAGES.COM

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he platform economy is changing the globe, creating and connecting communities in every industry.

Digital access allows new markets to flourish, so that users can share resources, interact and transact with more reach and impact than ever before. As a result, businesses and their customers are forging meaningful relationships that support more than just the bottom line.

Financial services institutions are realising the opportunities this new economy offers.

Recently, Standard Bank Group released the paper The Power of the Platform Economy for Financial Services, which highlighted the need for end-toend solutions and the necessity of building strong partnerships and ecosystems driven by data and insights. The Standard Bank Group is involved in developing such partnerships with fintech and BigTech companies such as Salesforce, Microsoft Azure and Amazon Web Services.

One strategic partnership that has evolved over the past

two years to make a positive impact in communities is OneFarm Share. The platform grew as a response to the challenge faced by many developing countries and amplified during Covid-19 lockdowns: food security and hunger. OneFarm Share (facilitated through a partnership between HelloChoice and Standard Bank Group) provides a digital business-to-business platform that allows emerging and commercial farmers to sell and donate their produce to new markets. By December 2021, 5 900 tonnes of produce had been distributed and nearly 24 million meals provided through the platform. This year, the plan is to distribute 10 000 tonnes of food and provide more than 50 million meals across South Africa.

Visit standardbank.com to find out more.

OneFarm Share is a digital business-to-business platform (facilitated through a partnership between HelloChoice and Standard Bank Group) that allows emerging and commercial farmers to sell or donate their produce to new markets. Since its launch it has provided more than 24 million meals to various communities. Watch our video here.

Standard Bank is an authorised financial services and registered credit provider (NCRCP15).

The Standard Bank of South Africa Limited (Reg. No. 1962/000738/06).

TECHNOLOGY

Fintech Disruption Explained Simply (What, Why, How In 7 Minutes)

From BNPL to Blockchain Alistair Cotton, co-founder of Integrated Finance, believes several traits are present in a fintech that proves to be disruptive. “From my point of view, there are two categories for disruptive fintech. One category is the Aggregators. These are firms combining existing technologies into fantastic, seamless customer experiences with a unique offering e.g. Revolut and market rate FX rates, the BNPL firms incorporating lending directly in the checkouts of retailers. Then there are platforms that are fintechs in terms of infrastructure (e.g. Blockchain, open banking, compliance software), allowing more fintechs to easily build products on top of them.”

Technology is driving fintech disruption But it's not just about original concepts and meeting marketplace demands. Cecil

Edwards, Chief Operating Officer, Global Processing Services (GPS), points out that a combination of technological innovation, culture changes, and demand for real-time services has been responsible for many emerging fintechs answering marketplace calls for something new.

He explains: “Fintech is driving the widespread cultural shifts in attitudes and

“ Fintech is driving the widespread cultural shifts in attitudes and behaviours towards money” CECIL EDWARDS GPS

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behaviours towards money. This change is constant and will continue to be so, as digital financial services keep innovating. Money is moving from a place of money you can touch, to money you can see. Consumers today expect money to be able to move in realtime. Instant transactions are now expected and assumed. Anything less than that is deemed unacceptable to many people. To the younger generation especially.”

He adds: “Those who have never had a cheque book or needed to go into a branch to deposit physical money, the notion of three business days for something to clear is completely alien. They want to pay for something and see it physically leave their bank account immediately, or in reverse, receive the money they are due instantly and see it on their phones.”

Decentralised finance and a new financial climate This cultural change has also resulted in the development of decentralised finance – a space that was originally conceptualised

“ The other thing to watch will be banks beginning to prepare for the prospect of blockchain-based currencies eventually becoming mainstream” DAVID MURPHY

PUBLICIS SAPIENT

in the late 90s by the founder of Bitcoin, which has now become an entirely accepted phenomenon that the conventional financial systems must operate alongside.

Michael Kodari, CEO of KOSEC says DeFi, presents a revolutionary new frontier when it comes to opening fresh opportunities in improving the global financial markets.

“From a utility perspective, its technology alone presents improved speed and security to facilitate financial transactions — internationally. This use case alone is a highly-developed feature that sees the constant pursuit of uptake and improvement by popular cryptocurrency projects such as Stellar (XLMUSD).”

Additionally, he points out that DeFi sets a fascinating new precedent for which access to financial services is enabled.

“While bank accounts are the expected norm within most developed societies, the World Bank

Three disruptive fintechs transforming finance 1) Stripe Yet to file its initial public offering, keeping the investment world guessing, Stripe is the most anticipated IPO of the year, with a valuation of US$95bn. Founded by Patrick and John Collison in 2010, the young Irish brothers knew their idea was brilliant but could not have anticipated the success that followed.

Stripe has transformed the e-commerce marketplace by providing a secure, easyto-use, and cost-effective solution to online payments. The system is so user friendly that it can be set up by non-coding developers, which means businesses of all sizes can manage all manner of transactions through their online portals.

2) Sokin Launched in 2020, Sokin is a relative newcomer to the fintech space, but this payment transfer company makes crossborder payments incredibly cheap and simple, through its subscription-based account service that cuts out the high fees associated with international transfer

payments. Account payees and recipients simply open an account and can send or receive payments instantly. Massively appealing to the global migrant worker populations, Sokin is also tapping into its market potential by sponsoring major football teams. It’s currently partnered with four UK premier league teams and has just signed an agreement with the US-based Miami Dolphins.

3) Robinhood Bringing big-time investment opportunities to armchair players, Robinhood hit the headlines last year when its users played the market over the notorious GameStop shares and almost ended up costing Wall Street investors billions of dollars in losses.

Ultimately, Robinhood capitulated to big business and prevented further trading as the drama unfolded, even drawing comments from world leaders. The company proved that the power of fintech is ultimately down to its user communities, who showed they were true Davids to the Wall Street Goliaths.

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“For those who have never had a cheque book or needed to go into a branch to deposit physical money, the notion of three business days for something to clear is completely alien” CECIL EDWARDS GPS

estimates that up to 1.7 billion people globally do not have access to an account of their own. As a result, the emergent term within discussions around DeFi sees its examples championed by those in favour of how it stands to enable access among users who don’t transact via traditional bank accounts, now commonly referred to as the ‘unbanked’.”

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the swiftly developing space of fintech is the fact that disruption in many shapes and forms will continue to change the financial services and banking industry. David Murphy, Head of Financial Services EMEA & APAC at digital business transformation consultancy, Publicis Sapient, refers to Neobanks as being “the North Star'' of disruptors over the next 18 months and says they will likely grow in popularity, adding new customer experiences and offerings along the way.

However, he adds that DeFi and crypto – particularly with relation to the metaverse – will also give cause for thought over the next few years, “especially as traditional investment vehicles do the maths regarding the extent of cash being diverted into NFTs, DeFi and Crypto investment”.

He adds: “The other thing to watch will be banks beginning to prepare for the prospect of the likelihood of blockchain-based currencies eventually becoming mainstream.

Don’t expect high street banks to be offering

crypto bank accounts or loans in the next 18 months, but do expect a softening of their stance. They will be closely watching the lead of regulators to discover a new vision.”

Smith concludes: “Disruption in payments and financial technology are not only crucial but demanded more and more by today's consumer due to the mass digitised world we live in, leaving wearable tech perfectly placed to make the wallet redundant, money contactless and identification simple and secure.” fintechmagazine.com

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Reimagining a Financial Services Leader

WRITTEN BY: RHYS THOMAS PRODUCED BY: MICHAEL BANYARD

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The launch of a new digital banking platform marks the start of a new era for Western Union, where technology powers customer-centric financial services

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very day, Western Union serves millions of customers around the globe – both senders and receivers of money – across more than 200 countries and territories.

In January 2022, the company entered the digital banking space, marking a new era that Thomas Mazzaferro, Western Union’s Chief Data Officer, says will come to define the future of the financial services sector.

“Being able to offer financial services in a more holistic, customer-centric way is really the future of the financial services industry,” he says.

The digital banking platform softlaunched in select European markets in late 2021. “We've been in a controlled launch since 17 November,” says Mazzaferro. “And in that time, we have done thousands of transactions and thousands of payments across Europe.”

Friends and family from Western Union’s Austrian bank employee base and partner teams were onboarded to test the process and its capabilities, before a full public launch on 9 February 2022.

Through the digital banking platform, customers will have the ability to earn interest on their money, make real-

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“ We are reinventing ourselves to become more agile, to become more customer-centric” HARVEER SINGH

CHIEF DATA ARCHITECT AND THE HEAD OF DATA ENGINEERING, WESTERN UNION

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time payments, hold multi-currency balances, and leverage Western Union’s extensive global payments network.

Banking customers will also be able to use Western Union retail locations to withdraw or fund their accounts with cash. It is the culmination of years of work, Mazzaferro says, to transform the customer journey and modernise Western Union’s processes and capabilities.

“Western Union has done quite a bit of work over the last 18 to 24 months,” he says.

"We've been consolidating our data and our customer repositories to start driving an omnichannel messaging capability, so we can provide a seamless, real-time message and create that real time conversation with our customers. We've also gone on a path of modernising our rewards platform, moving

WESTERN UNION

from a mainframe to a cloud-based platform called RCX, while consolidating all of our messaging platforms into one. We now have one platform to do omnichannel customer messaging, while having a modernised rewards platform.”

HARVEER SINGH TITLE: C HIEF DATA ARCHITECT & GLOBAL HEAD OF ENGINEERING INDUSTRY: FINANCIAL SERVICES LOCATION: COLORADO

Masters of Reinvention The digital banking platform is the latest step in the reinvention journey of Western Union which, since the 19th century, has evolved at the forefront of technology to meet and exceed the demands of its global customer base. Initially a communications company, it commanded the lion’s share of the American telegraphy industry until the technology’s redundancy, and then was quick to shift its focus to money transfer services. Today, it is a global leader in crossborder money transfer and payments.

The company strives to be more customer-centric, building a relationship with customers, rather than acting simply as a transactional channel for payments and transfers. Digital transformation is at the core of this shift, but customer-centricity is its north star.

"We are reinventing ourselves to become more agile and more customer-centric,

$5.1 bn Revenue (USD)

11,000+ Number of employees

EXECUTIVE BIO

1851

Year founded

Harveer Singh serves as the Chief Data Architect and Global Head of Engineering at Western Union where he manages the Cloud Data Platform, Martech & Adtech Platforms, Digital Banking Integrations, Loyalty and Consumer Ecosystem.

He is a technology executive with over 17 years of experience spanning several industries. Previously, he worked in EY’s Financial Services, where he co-led EY’s Next Generation architecture and solutions for Financial Services. Prior to EY, Harveer held various consulting roles at Deloitte, IBM, and Accenture. During his consulting tenure, he has presented and authored numerous professional points of views on Loyalty, Digital Transformation, Platforms, Architecture, Big Data, DevOps and Engineering Factories.

The struggle is real optional.

WESTERN UNION

Western Union HQ

consumer-friendly,” says Harveer Singh, Chief Data Architect and the Head of Data Engineering. “And we are bringing in new products to fit the financial services needs of those customers. People rely on us and trust us to deliver for their loved ones with their hard-earned money, and we want to be a part of their daily lives.”

“We see a real opportunity here,” Mazzaferro adds. “We also want to lean into our digital bank and multi-currency wallet to see how we can scale and expand.”

Best-in-Class Partner Ecosystem Western Union’s digital banking platform is a complex ecosystem of partnerships from across the technology and fintech landscape. Leading fintech, Mambu, provides the platform and engine that

“ People rely on us and trust us to deliver their loved ones with their hard-earned money, and we want to be a part of their daily lives” HARVEER SINGH

CHIEF DATA ARCHITECT AND THE HEAD OF DATA ENGINEERING, WESTERN UNION

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drives the core of Western Union’s new digital bank. Marqueta serves as the card issuer, in concert with Visa, which also helps with fraud and compliance. Deloitte, meanwhile, acts as the delivery arm to build and deliver on the big vision.

“And really key to us is our partnership with Mulesoft,” says Singh. “They power our entire digital bank backbone for data.

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But what’s more important is that they provided us with the flexibility to create new services and new APIs at lightningfast speeds. Their technology is constantly evolving, providing us with new ways to connect different software and technology.”

Singh characterises it as a “modular bank”, an ever-evolving, organic ecosystem that grows and scales from a solid core of

WESTERN UNION

TOM MAZZAFERRO TITLE: CHIEF DATA OFFICER INDUSTRY: FINANCIAL SERVICES LOCATION: COLORADO

partners and technologies. “Mulesoft plays a critical role in everything we do there, and we are constantly looking to bring in new start-ups to partner up with us, like Skill AI, which is primarily powering our chatbots and RCX, which is helping us manage our loyalty programme.”

In banking, a notoriously regulationheavy industry, compliance is another area

EXECUTIVE BIO

Tom Mazzaferro is the Chief Data Officer at Western Union, managing data, marketing, loyalty, enterprise messaging, pricing and banking technology across 200 markets and millions of customers.

Previously Tom held multiple roles at HSBC, including Head of Data & Analytics, Head of Retail Stress Testing and the US Chief Data Officer. Before HSBC, Tom spent over a decade at JP Morgan Chase holding multiple roles including, business unit CFO, COO of technology and Executive Director of Credit Risk.

WESTERN UNION

where this modular approach helps. “We partner with folks like Salt Edge to handle our PSD2 compliance and open banking regulations,” says Mazzaferro. “Snowflake does all our analytics, and there are many others who build and incorporate into the larger digital banking ecosystem we now have in place in select countries in Europe.”

“I would expect there to be a lot of innovation and change coming in the next three-to-five years,” he says. “And, actually, fintech is a great way to partner and get us quickly enabled into those different channels.”

Building for the Future With the foundation in place and the digital banking platform now live, Mazzaferro, Singh and their teams are already thinking about the future, which extends beyond what Western Union is already known for.

Remaining customer-centric will be key to this success, Mazzaferro says, and that goes beyond launching new products to market. It’s also about enhancing customer experience and how Western Union opens new lines of communication.

“ The innovation in our technology really helps to drive not just new products and services, but also how you interface and how you provide that seamless customer journey” THOMAS MAZZAFERRO CHIEF DATA OFFICER, WESTERN UNION

“The innovation in our technology really helps to drive not just new products and services, but also how you interface and how you provide that seamless customer journey,” he says. “There will be a major shift towards hyper-personalisation for the customer at every single part of the flow.”

“We are a global leader for remittances,” adds Singh. “But we are also reimagining our retail experience. We don't want the retail experience to be clunky. We want our retail experience to be as slick as possible so that the customer fintechmagazine.com

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feels good when they’re transacting: it's fast, it's quick, it gives them options, but it also helps them.”

Western Union’s global retail agent network consists of hundreds of thousands of locations, an infrastructure that “no one else in the world has”. “As we accelerate rollouts of our digital bank account/multicurrency wallet across other markets, our retail agents become part of our omnichannel offering. There is no other organisation in the world with that kind of network,” says Singh.

Singh is also emphatic that banks must learn lessons from the past two years.

COVID-19 irreversibly transformed banking and how customers access their money, converting mature markets into cashfree, contactless societies, and creating enormous demand for digital products in emerging markets.

“ Being able to offer financial services in a more holistic, customer-centric way is really the future of the financial services industry” THOMAS MAZZAFERRO CHIEF DATA OFFICER, WESTERN UNION

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“COVID-19 has reignited the fact that the customer has choices,” Singh says. “We want to be their first choice, so our goal will be to keep innovating, to keep bringing better services and new products to our customers so that we can be a part of their lives on an ongoing basis.

And that’s regardless of whether they want to be a part of the retail network, whether they want to be a part of the digital network, or whether they want to be part of our banking network. We want to be a part of their daily lives in some way and some form. We want to use our

brand, which is highly valued around the world, to ensure our customers that we will bring the best of services to them.”

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TOP

10

GLOBAL FIN HUBS

As cities around the world wrestle to become the next big thing in fintech, we look at the biggest hubs and what makes them so attractive to startups.

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or too long, fintechs were concentrated in a select handful of global cities, restricted to the idea that successful startups had to be based in existing financial centres. But with remote working becoming a necessity during the pandemic, the world has become open to the idea that business can be spread out far and wide. So which cities look set to benefit and how are those trusty incumbents faring in today’s fintech scene? We take a look at the 10 biggest fintech hubs globally and ask what makes them such attractive propositions.

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TOP 10

NTECH

WRITTEN BY: ALEX CLERE

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10 Amsterdam

Country: Netherlands Fintechs include: Adyen, Bunq and Ohpen Amsterdam is a hub for banking and business, with brands like Heineken, Philips and ABN Amro calling the Dutch capital home. A vibrant and multicultural city, it attracts talent from every corner of the globe. It is well connected: Amsterdam boasts rail links to destinations across Europe, while Schiphol Airport is Europe’s third busiest by passenger numbers. What’s more, startups in the Netherlands are eligible for extensive government support, including tax relief and other credits, through the ‘Entrepreneur Allowance’ scheme.

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Singapore

09

Country: Republic of Singapore Fintechs include: Grab, Crypto.com and Validus Another of Asia’s large financial centres, Singapore’s modern infrastructure and contemporary feel make it an ideal place to locate a fintech business. This city state has a lot going for it. Singapore boasts low rates of tax for both businesses and individuals, has a strong community of investors and enjoys a relatively light-touch approach to regulation. It is also incredibly well-connected: Changi Airport, one of the world’s busiest, has flights to over 100 destinations.

TOP 10

08

Hong Kong

Country: Special Administrative Region of the People's Republic of China Fintechs include: WeLab, Bowtie and ZA Bank Hong Kong has built a reputation as a financial hub and a centre for innovation. According to the Hong Kong government, it is home to more than 600 fintech companies and has produced no fewer than 12 unicorns. Hong Kong’s Science Park is a huge draw, while the territory boasts the second fastest average internet speeds in the world. But Hong Kong’s recent political unrest has shattered confidence in the city internationally, with foreign businesses moving out after riots and controversial legislative changes.

Boston

07

Country: USA Fintechs include: Flywire, Kensho and Circle Another city that was traditionally overlooked – this time in favour of neighbours Washington and New York – Boston packs a punch on the fintech scene, despite only being the 24th most populous city in the US. Universities like Harvard and MIT provide it with both a strong talent pool and a steady stream of research funding, while an increase in the number of fintech VCs puts Boston in good stead to take advantage of the fintech boom.

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Tel Aviv

06

Country: Israel Fintechs include: eToro, OurCrowd and Plus500 Tel Aviv is a hub for science, technology and engineering thanks in part to high levels of state support for tech startups, including lowinterest loans from the Israeli government. Together with a thriving venture capital and accelerator scene, it makes it easier for young Israelis to start their own business.

Tel Aviv is also home to foreign tech giants including Intel, IBM and Microsoft. While some homegrown companies move abroad, others – like eToro, OurCrowd and Plus500 – stay in Israel.

05 São Paulo

Country: Brazil Fintechs include: Nubank, C6 Bank, Creditas and Unico Brazil’s largest city has been at the forefront of the country’s fintech boom for a number of years, so it’s perhaps unfair that it’s often still considered an emerging hub. A population of over 12 million people means a marketplace of tech-savvy consumers and a talent pool that includes graduates from some of the nation’s largest universities. It is also the ‘venture capital’ epicentre of Brazil, underlined by a massive growth in the number of startup accelerators.

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Berlin

04

Country: Germany Fintechs include: N26, Solarisbank and Billie Berlin is renowned for its history, culture and nightlife but was historically overshadowed by other German cities – notably Frankfurt – when it came to finance. Now Berlin is staking its claim as a global fintech hub and may still emerge as the biggest challenger to London’s European fintech crown. Home to N26 and Solarisbank, Berlin attracts talent from around the world and benefits from good access to Germany’s financial institutions as well as a strong pool of investors.

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New York

03

Country: USA Fintechs include: Payoneer, Moven and Ramp Another city with a global reputation, New York has traditionally lost out to the West Coast when it comes to fintech kudos. The city is home to over 1,000 fintechs including many that have achieved unicorn status. As well as Wall Street – New York’s financial centre – the city boasts a population of more than 8 million and is a huge draw for young professionals, including graduates of some of the world’s most prestigious universities such as Harvard, Yale, Princeton and MIT.

TOP 10

London

02

Country: UK Fintechs include: Revolut, Monzo, Rapyd and Wise

Arguably the strongest competition for Silicon Valley comes from London, a city often regarded as Europe’s fintech capital.

In fact, London dominates the UK’s fintech scene – nine of the country’s ten highest funded fintechs are based in the city. As well as an established banking scene based around Canary Wharf, London also has a large number of accelerator programmes; 35% of the fintechs based in the capital say they have taken part in one of those accelerators at some point.

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San Francisco Country: USA Fintechs include: PayPal, Stripe, Square and Silicon Valley Bank

0

The San Francisco Bay Area has long been regarded as the fintech originator, with Silicon Valley home to more than 400 fintech companies. In fact, the list of global players operating out of the Bay Area reads like a who’s who of the fintech industry – from payments platforms to wealth management, investment banks to personal finance providers. Despite strong growth from many of the other hubs in our list, San Francisco still has a strong claim to the top spot.

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TOP 10

How big tech is dividing San Francisco communities | FT

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VISA

VISA EUROPE’S ESG ON A ROLL IN PROCUREMENT AND SUPPLY CHAIN WRITTEN BY: SCOTT BIRCH

PRODUCED BY: GLEN WHITE

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Visa Europe CFO Rob Livingston and CPO Alisa Bornstein explain how a focus on procurement and supply chain is driving the payments giant’s ESG strategy

T

he Chief Procurement Officer’s engagement with the C-Suite is growing, and increasingly Chief Financial Officers recognise the value that a close relationship between the two executive functions can bring to the business and its commercial goals.

“Over the past two years of the pandemic, we've had the opportunity to take a closer look at the resilience of our supply chain and how closely connected that supply chain is with the communities where we are,” says Rob Livingston, Visa Europe CFO. “During that time, there have been two elements that have leapt to the forefront in terms of how we think about procurement.

The first one is around sustainability and making sure that we have a supply chain that is going to reflect our goals as a corporation in terms of our environmental and other impacts on society.

“The other element that we really focused on is the diversity of our supply chain – making sure that we were resilient and support diverse and small businesses.

Having backup suppliers for the most critical functions is key, as is thinking about diversity in terms of ensuring that we're supporting businesses that are owned by women, or led by women, and minority-owned businesses here in Europe and around the world.

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ROB LIVINGSTON TITLE: CFO INDUSTRY: INFORMATION TECHNOLOGY & SERVICES LOCATION: UNITED KINGDOM

Rob Livingston is Chief Financial Officer for Visa Europe. In this role, he oversees Visa’s financial strategies, planning and reporting, in addition to all finance operations and corporate real estate in Europe. He is based in London.

Prior to this role, Rob was SVP for Strategic Initiatives in Beijing. From 2013-2017, he was Visa’s Country Manager for Canada, where he oversaw the strategic direction, key relationships, marketing, operations and financial performance of Visa’s Canadian business.

Before joining Visa in 2013, Rob worked at Capital One for 18 years in the US, UK, France and Canada, most recently as President of Capital One Canada.

Rob is Past Chair of the Board of Directors of the Boys and Girls Club of Canada. He received his degree in Economics from Yale University.

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“People trust Visa because of what we bring to the global economy” ROB LIVINGSTON CFO, VISA EUROPE

EXECUTIVE BIO

COMPANY: VISA EUROPE

VISA

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“ At Visa, we are focusing on sustainability and diversity in our supply chain. That's the highest priority” ALISA BORNSTEIN CPO, VISA EUROPE

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“This work is central to our purpose – everyone deserves an equal chance at economic prosperity.”

Livingston joined Visa in 2013 to lead Visa’s Canadian business before then moving to China in 2017. He became Visa Europe’s CFO in July 2019 so the majority of his tenure in this role has been set against the backdrop of the pandemic – which has transformed the nature of payments and procurement.

“We were looking to bring procurement more to the centre of our business strategy,” says Livingston.

“So I was thrilled to be able to hire Alisa Bornstein to join Visa Europe as our Chief Procurement Officer. She's got a fantastic background and a deep knowledge of procurement.” fintechmagazine.com

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ALISA BORNSTEIN TITLE: CPO COMPANY: VISA EUROPE INDUSTRY: INFORMATION TECHNOLOGY & SERVICES LOCATION: UNITED KINGDOM

“Procurement is not my profession – it is my passion!”

ALISA BORNSTEIN

EXECUTIVE BIO

CPO, VISA EUROPE

Alisa Bornstein is Chief Procurement Officer for Visa Europe.

Alisa has more than 25 years of international procurement experience, most recently as global CPO at semiconductor leader Arm, before joining Visa Europe in January 2021.

Alisa has also held senior leadership roles at BT, Millicom, and Eriksson, to name just a few.

She has a strong track record of leading and transforming procurement organisations, operating effectively cross-borders in mature and emerging markets and functions.

She is a passionate advocate for value-creating and business-focused procurement, utilising its unique position within the value chain to deliver new sources of value to the business.

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Bornstein made a name for herself in procurement while CPO of UK semiconductor and smart technology design company, Arm, based in Cambridge, England. While at Arm, Bornstein designed and executed a procurement transformation, from maturing the function to digitising and automating end-to-end source-to-pay (S2P) processes.

Bornstein joined Visa Europe in January 2021 and has been tasked with elevating procurement in line with leading practices and standards, including state-of-theart business support. She embarked on a transformation of the function, and continues to advocate the importance of procurement and supply chain as a strategic part of the business ecosystem. fintechmagazine.com

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“This is not about having a seat at the table,” says Bornstein, “but to ensure that we, as procurement professionals, listen, understand and support the business and use the power of the supply chain to deliver value to our organisations. True procurement leaders have shifted from being operational in the past to becoming strategic business partners. Collaboration and partnership is my passion. This is something I believe in, and this is what we have at Visa.”

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The importance of third party suppliers Going back to sustainability and diversity, they are key drivers of the changes being seen in procurement at Visa Europe, and Bornstein says these are big opportunities for many organisations who haven’t yet leveraged their supply chain.

Visa Europe has literally thousands of suppliers and one key area of focus for Bornstein is to better understand the thirdparty suppliers’ ESG credentials to support company-wide objectives and initiatives.

“We were looking here in Europe to bring procurement more to the centre of our business strategy” ROB LIVINGSTON CFO, VISA EUROPE

INSIGHT...

BACK TO BUSINESS The sixth edition of Visa’s Global Back to Business study published earlier this year showed that 90% of small businesses surveyed with an online presence said they were optimistic about the future, with nearly three quarters (73%) saying accepting new forms of digital payments was fundamental to growth in 2022. Since the start of the pandemic, Visa has launched a variety of programmes to help small businesses accept digital payments and gain greater access to the digital economy.

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“As a procurement leader I strive to be a strategic partner to the business. My goal is to drive meaningful impact to the business” ALISA BORNSTEIN CPO, VISA EUROPE

Visa Europe’s ESG on a roll in Procurement and Supply Chain

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“Procurement can drive innovation by utilising suppliers’ knowledge in their own space,” says Bornstein. “It's very well positioned to drive ESG, sustainability and diversity. Visa recognises that third-party suppliers are important stakeholders.

“Today they provide services and products to us, tomorrow they might become our partners and ultimately, as both businesses and individuals, they use our payment solutions.”

To support Visa Europe in its ESG initiatives, the Procurement team has entered into a partnership with EcoVadis to help assess their supply chain. The aim is to provide a better understanding of suppliers: who they engage in their business from an ESG perspective, and how Visa can together improve the communities in which they operate.

That partnership with EcoVadis helps to provide insights into Visa’s supplier base, which fintechmagazine.com

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is more important than ever when it comes to risk mitigation – something demonstrated by the pandemic. However, this spotlight on suppliers goes beyond highlighting potential problems – it has benefits for the suppliers too, with Visa being able to identify those that may need extra assistance or support in these unprecedented times.

“We are focusing on sustainability and diversity in our supply chain,” says Bornstein. “That's our highest priority.

Working with and supporting small businesses is extremely important to Visa Europe and Visa overall, and procurement as a function has a role to play.”

One example of that supportive role is the aspiration to operate in line with the UK Government Prompt Payment code and change SME payment terms to 30 days, to help small companies through tough times and recognise their importance to Visa Europe.

“The pandemic has been incredibly tough on small businesses more than anyone else,” adds Livingston. “What we are trying to do at Visa is to support small businesses as they recover from the pandemic and then accelerate their business in the future, and the main way we can help them do that is by helping them go digital.

“ What we are trying to do at Visa is to support small businesses as they recover from the pandemic and then accelerate their business in the future” ROB LIVINGSTON CFO, VISA EUROPE

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“Even today, less than half of small businesses in Europe have a digital presence for ecommerce, and that's something that creates tremendous opportunity for a rebound in the future. We've made a multiyear commitment to digitise 50 million small and medium businesses around the world and we're already halfway there.”

Visa is able to implement this farreaching initiative by combining its global strength with local knowledge. Operating in more than 200 countries gives Visa unique

1958

Year founded

20,500

Number of employees worldwide (2020)

insight into what’s important to clients, consumers and merchants in each of those locations.

Visa’s sustainability ambitions go far beyond supporting SMEs and promoting ecommerce.

“Visa as a company is committed to achieving net-zero carbon emissions by 2040, which is 10 years faster than the Paris Agreement,” says Livingston.

“The way that we're doing that is the way that all companies do – through offsets and changing behaviour of our employees and

our suppliers. But at Visa we can also provide sustainable products and solutions that our clients’ banks can offer consumers to help them manage their carbon footprint. This has incredible power over the long term.”

The future of digital payments The payments ecosystem witnessed an acceleration in digital transformation during the pandemic, and it is important for Visa to maintain some of the benefits for the future – from contactless payments fintechmagazine.com

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“Driving ESG in our supply chain means we can influence some big changes in the culture, attitudes and behaviours around it, to protect the planet” ALISA BORNSTEIN CPO, VISA EUROPE

to online shopping – while also making preparations for the global recovery.

“We're just at the beginning of cross border travel starting to come back,” says Livingston. “People are feeling confident enough to go overseas on holidays, and those are all good for the global economy and they're good for Visa.

“The speed of that return of business as usual is going to be important, but we can't lose sight of the fact that so much has changed.”

When you accept payments in more than 80 million locations, and process thousands of secure transactions every second, everybody knows your name – but does everyone fully appreciate what Visa does?

“This is what we bring to the table,” says Livingston. “We are a global brand operating locally. We're one of the most ubiquitous brands in the world, but not everybody knows exactly what we do. What Visa does is facilitate commerce each and every day, all around the world.

“We enable consumers to buy things in person at stores or online, and we facilitate money transfer from businesses to businesses, from banks to banks.

“People trust Visa because of what we bring to the global economy. We offer

extraordinarily fast and secure transactions for everyday use and we have the world’s leading security infrastructure governing digital payments.

“There's nothing more important to us than ensuring that Europeans are able to use their card anytime and everywhere they want to be.”

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Transforming challenges into opportunities WRITTEN BY: JESS GIBSON 160

May 2022

PRODUCED BY: MICHAEL BANYARD

OTP BANK

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OTP Bank’s Constantin Mareș details how combining a peoplefirst culture, a courageous mindset and a three-pronged approach stimulated its organic growth

W

hen most of us think of banks, it’s fair to wager that the image springing to mind would be of one of the more traditional, old-style banks: imposing, almost-gothically ornate, stone buildings replete with marble floors and Greek-style columns. But, in our fast-advancing technological world, banking is no longer the premise of the upper-class elite, with significant modernisation efforts across the financial sector in recent years leading to banks that look nothing like their predecessors.

Constantin Mareș, Chief Digital Officer at OTP Bank, in Romania, has been in the banking and financial industry for 26 years – with the last six of these spent at OTP Bank.

“My role is to help OTP become the leading bank in Romania, through automating processes, developing key products as well as a wider portfolio of products, and also improving the customer experience. My main focus is on improving the customer experience, the employee experience, and increasing efficiency.”

During his tenure in finance, he has witnessed the evolution of banking from an industry that’s fairly static to one that is much more fluid and instant, being revitalised by a range of technology to meet the needs of an increasingly digital society. While this may up-skittle those who are averse to change, for Constantin Mareș, it’s his bread-andbutter, what keeps him interested.

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Constantin Mareș fintechmagazine.com

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“Of course, banking itself hasn’t changed too much. We are talking about loans and deposits – I'm sure that no one will receive the Nobel prize for banking in the near future,” Mareș jokes with a wry smile. “But the way we do banking has changed significantly, which is due to the introduction and adoption of technologies and the digitalisation of services.

“This kept me very interested because, throughout my experience, I was balancing business roles. I was responsible, for example, for sales in direct contact with customers, and in technology roles as chief information 164

May 2022

“ You have to provide a superior experience for the customer, no matter the industry” CONSTANTIN MAREȘ

CHIEF DIGITAL OFFICER, OTP BANK

OTP BANK

OTP Bank: Transforming challenges into opportunities

officer or chief digital officer. I experienced both worlds, so to speak, and that positions me very well, on the one hand, to understand what the customer needs and, on the other hand, to deliver a solution that matches what the customer needs,” he explains.

It’s certainly a much more considered, customer-centric approach than typically expected, driven by a dedication to stability – but then, that is the ethos of OTP Bank, after all.

Riding the wave of banking evolution The financial industry, as well as many

others, has undergone a pivotal period of transformation over the past three years that is, at least in part, attributable to the global pandemic. As with thousands of global companies, businesses and banks around the world, a sudden need arose for online digital services that reacted in real-time and instantly met customers’ demands.

Without a digital infrastructure already in place or in progress, many companies – big and small – found themselves floundering and having to make changes, fast.

“We always look at what is changing in consumer behaviour, because things evolve very fast and we are not only compared with other banks in terms of digital banking, but we are also compared with Apple, with Google, with Amazon. So you have to provide a superior experience for the customer, no matter the industry,” explains Mareș. Indeed, in a world where some of the biggest players have a finger in each and every pie, other companies in the sector have to jump that little bit higher, go that little bit further, to be seen in such a market. fintechmagazine.com

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He acknowledges the significant impact of the pandemic across all sectors, in addition to general recruitment challenges and supply chain issues affected by sociopolitical fluctuations in recent months. Despite this, though, the banking sector has continued to evolve at breakneck speed and, with the steady development of neo banks, it’s starting to look like a very different environment.

“During the pandemic period, a lot of problems came with it, but this also meant an acceleration of the digitalisation process.

It also meant that we could be closer to the customer,” says Mareș. “Being a small bank – number nine in the market – we are able to grow faster than the rest of the banks because we are prepared. We just accelerated our digital transformation and are able to launch online flows and better capture the needs of the customer.”

2004 Year founded

7 banks

acquired over the past year – fastest-growing, leading bank in Romania

1,650+ Number of employees

50%

organic growth – 50% in a year (compared to 2.4% in 2020, and 4% in 2021)

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OTP quickly set about creating a digital platform for its customers, in addition to considering the changing wants and needs of up-and-coming generations, and how to best meet these.

Rather than responding to these changes in the same way as some of the more traditional financial institutes and digging its heels in, OTP Bank took the challenge in its stride, quickly onboarding digital solutions and products while, by proxy, gently encouraging Romanian authorities to evolve along with the times, in terms of lessening restrictive regulations.

At the very centre of this was what Mareș dubs an “opportunity to upscale [our] management style”. The leadership team sought to “transform OTP’s management branding” and “empower employees” – but first, a company-wide culture change was needed.

OTP BANK

Constantin Mareș TITLE: CHIEF DIGITAL OFFICER INDUSTRY: BANKING

EXECUTIVE BIO

LOCATION: ROMANIA Constantin Mareș is Deputy General Manager at OTP Bank Romania and coordinates the new Digital Division, created within the local development strategy of the bank.

His management objectives for the Digital Division include stimulating performance, nurturing the innovative environment in the bank, while creating an optimal working environment for professional development and positioning OTP Bank Romania in the elite of the most desired employers in Romania.

Constantin Mareş has 25 years of experience in the banking system, and in the last 20 years, he has held top and senior management positions. Since 2015, he has been the promoter of cultural change at OTP Bank Romania, a change that has included both the digital transformation and the transformation of the way of working into an agile, collaborative and modern one. He is directly responsible for the success of OTP Bank Romania's Apollo organic growth programme, which focuses on improving the customer experience, process efficiency, and developing key portfolio products.

“ Banks that can best use data will be in best position to offer what is needed by customers – so data is key”

FLOWX.AI, THE EXPERIENCE ORCHESTRATION ENGINE, IS THE SECRET TO UNRIVALLED CUSTOMER EXPERIENCES FOR THE OTP GROUP FLOWX.AI is a leading technology company helping to transform the banking system from legacy stacks, processes, and products to streamlined digital solutions.

FLOWX.AI is one of the leading digital solutions companies to emerge in recent years. The platform leverages an entirely novel architecture enabling 40x faster digital developments and specialises in wrapping and consolidating legacy systems into unified, omnichannel digital experiences for both customers and employees.

Ioan Iacob, CEO and co-founder at FLOWX. AI, explains, “The FLOWX.AI platform was born from over ten years of experience, working with large international enterprises within the digital transformation space.

The biggest challenges are the spiderweb of legacy systems and the talent shortage, especially in engineering, making it slow and expensive for enterprises and banks, particularly, to develop digital experiences that are streamlined and easy to use for employees and customers alike.”

Zoltán Kaszás, OTP’s Managing Director and Group’s Head of IT Strategy and Support, explains, “We are not talking anymore about digital transformation

itself because it was a trendy word in the last ten years. We are talking much more about a hybrid mode of working, meaning how human intelligence will work together with artificial intelligence.”

Constantin Mareș, Chief Digital Officer of OTP Bank Romania, agrees. He says one of the biggest challenges in creating such a transformation is talent. “One of the things that OTP Bank Romania started to do since the digital transformation kicked off three years ago is empower people. And this may sound like a cliché. It’s easy to say, but it’s difficult to implement.

Mareș adds, “We are in a regulated market, and we want our people to believe that they can make their life – and the life of customers easier. We want them to actually change the flow by two clicks and for the customer to benefit from those clicks as a simplified process. That’s why I believe FLOWX.AI as a platform would help us grow our talent into skilled intrapreneurs and contribute to changing the mindset of our employees around innovation.”

OTP BANK

Switching-up thinking: challenges to opportunities “Even before the pandemic three years ago, we realised that we had to completely change our offering – we had to innovate and we realised that innovation equals survival. So we had already started to work heavily on customer experience, process efficiency, the product portfolio, and the employee experience,” outlines Mareș.

According to Mareș, OTP Bank – and the European financial sector at large – was facing three core challenges by the time 2019 had rolled around: • The overcrowded financial market in Romania and wider Europe, where 170

May 2022

numerous competitors and universal banks are present in a small locale, limiting customer reach – “We have about 19 million inhabitants in Romania, a large part of which is not industrialised, and we have around 40 banks in the system, with many of those being universal banks.”

• Loss of talented employees in the digital engineering and technology sector to Western tech giants, limiting the availability of top talent and, as such, innovation.

“All of a sudden they could earn much more, but stay in their homes to do so – relocation was not needed. And this put a lot of pressure on our offerings as an employer at the time,” states Mareș.

OTP BANK

“ Long story short, in everything we do, we put customers in the middle of it” CONSTANTIN MAREȘ

CHIEF DIGITAL OFFICER, OTP BANK

• Lack of digital infrastructure for easy, tech-enabled banking solutions to meet customer demand.

“As a person, I'm a very positive and optimistic one. I see that each challenge also brings an opportunity,” smiles Mareș.

He adds: “We looked at how to combine technology and humanity in this part of the financial industry; to merge these two components into a superior understanding of customer needs and then transform this into a customer experience that is seamless and actually helps them.

“We also looked more at what it means to truly understand our employees, our customers – what do they actually need?

Not only in terms of salaries, I'm talking about a type of leadership style, servant leadership vs smart leadership. We don't hire the best people to tell them what to do; we hire the best people that could tell us what to do.”

By the time the pandemic hit, the company was already wading through the depths of transformation, looking at ways to attract and retain talented employees, extend digital capabilities, and set itself apart from competitors in an overcrowded market.

“We're very creative here. It puts us in the position of looking more closely at product personalisation and how to improve customer experience.”

The bank had already increased flexible and remote working options for employees

by March 2020, but found employee uptake was low; the pandemic gave leadership time to recognise, understand and alleviate the various problems inhibiting uptake.

“There were big problems from anxiety issues to logistical issues. We offered psychological support when employees needed it. We offered them the possibility to take home their chairs, because, usually, you don't have a chair that is ergonomically beneficial at home,” explains Mareș. “So we were really close to people, understanding their needs, supporting them and giving them the tools to work from home seamlessly.”

A central aspect of enacting these changes company-wide, according to Mareș, was shifting the culture and mindset of each and every team member: “We adapted the new way of working that puts the employee in the centre, that puts communication and collaboration in the centre of everything. I would say the biggest cultural change was the culture of fear, because you can’t have innovation if people fear making mistakes and they're afraid of the reaction of their managers.”

“Changing this culture of fear is not easy because it starts with me as a manager and how I react when I see a major mistake from my team. Do I shout, do I ask tough questions or invite people for a dialogue

OTP BANK

to understand what happened and what we can do to avoid the same mistake from repeating in the future?” asserts Mareș, laying bare the typical struggle faced by management teams when errors are made.

“Our response as managers may not be very easy to control because we’re all humans and are programmed to have a negative reaction to mistakes. Now, in our ‘town hall’ meetings, we discuss and share mistakes in front of everybody. I personally share some of my own mistakes in front of hundreds of people just to show that it is normal, it’s human to make mistakes – not to make them isn’t realistic. We did a lot just to break this fear cycle.”

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Oftentimes, it’s nigh-on impossible for leadership to break the cycle of fear – either because it’s so embedded or because there’s a disconnect between management and employees. But, without the ability to fail, it’s difficult to problem-solve or establish efficient, value-producing processes; in other words, fear is the enemy of creativity.

Procuring partners for digital progress An aspirational plan for digital evolution requires top-notch support at all levels – particularly when constructing and running unique, customisable digital platforms.

Although OTP Bank was expanding its portfolio of products and improving its

“ In the last two years, OTP Group has acquired more than seven banks in CEE region and have integrated these acquired banks successfully – which is an unparalleled performance, considering the complexity of such integration and merging banks” CONSTANTIN MAREȘ

CHIEF DIGITAL OFFICER, OTP BANK

customers’ experience prior to the pandemic, it’s fair to say that the worldwide lockdowns resulting from it helped to accelerate and expand OTP Bank’s digital offerings for the better. Integral to the speed at which the company was able to react is FlowX, which

provided “top-notch tech” in the form of an online digital platform for remote banking and AI assistance.

With tech titans such as Microsoft, Google, and Amazon dominating the marketplace, Mareș is level-headed enough to recognise that OTP cannot compete outright. Partnering with FlowX, however, OTP is able to stay abreast of current fintech trends to meet the unique needs of its customers. fintechmagazine.com

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“Our plan was to develop strategic partnerships with smaller fintechs that bring the best technological advancements,” explains Mareș. “The partnership with FlowX is in exactly the same area. We use topnotch technology providing a low code, no code platform for our employees, which means that we can roll out changes and products to the market very fast, before they become obsolete. So we’ve invested in partnerships to avoid this problem.”

And there are more partnerships in the pipeline for OTP, according to Mareș.

Expanding OTP Bank’s physical and digital footprint As established, the franchise area in which OTP Bank currently operates is oversaturated with banking solutions. To compete effectively, the bank needed to expand both its digital and physical presence – in short, it needed to stand up and make itself heard.

As well as constructing digital platforms, OTP sought to expand its physical locations for the more traditional customers.

“We looked – and continue to look – at potential targets for acquisition,” says Mares simply. “OTP is a very strong group in Central and Eastern Europe, with a very strong capital position. In the last two years, we have acquired more than seven banks in this region and have integrated these acquired banks successfully – which is an unparalleled performance, considering the complexity of such integration and merging banks.”

Accompanying customers through each stage of life OTP Bank’s evolution doesn’t just consist of digitising and acquisitions; it also involves a thorough consideration of core customer profiles, to ensure that the products and services offered by the bank match the needs of the population.

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“ Our plan was to develop strategic partnerships with smaller fintechs that bring the best technological advancements” CONSTANTIN MAREȘ

CHIEF DIGITAL OFFICER, OTP BANK

“We thought about what would be our ideal customer and defined some profiles that we can use in our services. From this, we started to understand what these clients’ needs are – and I'm not just talking about banking services,” Mareș explains.

For Mareș, it’s about being there at the important stages of a person’s life, moulding services and products to best-suit the growing needs of customers: “A person that is graduating university would probably need a loan to buy a house or start a career; if they get married and have their first child, they will probably need some additional money to prepare. Savings could work the same

way, because parents might want to invest or put some money aside for their children’s education and for retirement. What is the customer’s stage of life about from their perspective and not the bank’s? How can we help these customers fulfil their needs?”

It’s an unusual, yet not unheard of, approach to banking solutions, but OTP Bank is clearly succeeding across all areas – perhaps because it has its customers and employees at its very heart. “Long story short, in everything we do, we put customers in the middle of it.”

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BUILDING ASIA’S DIGITAL BANKING FUTURE

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Greg Krasnov, CEO and founder of Tonik, describes the journey that’s created one of Asia’s most successful digital banks

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reg Krasnov is no stranger to entrepreneurship. Indeed, the CEO and founder of Tonik has more than 20 years of experience in the field of consumer finance and originally entered the marketplace as a private equity manager working in Europe.

Today, he heads Tonik, an all-digital bank that was launched in the Philippines in 2021, notable for being the first of its kind - also referred to as a ‘neobank’ in Southeast Asia.

Its consumer products range from deposits and payments to debit cards and loans.

Krasnov takes up the story of his journey: “In the early nineties, I was doing consumer finance deals in Central Europe for the private equity funds that I was working for.

It was Poland, Czech Republic, Hungary, Romania. They were all spiking on the middle class development, and that led to a really rapid evolution of retail banking, especially consumer finance. So, that was when I first experienced the sector. I then proceeded to build and sell one of the largest consumer finance banks in Ukraine called Platinum Bank. We became a number three consumer lender in the country. You know, sold it to a local group in 2013, and was backed by international private equity funds and IFC.” The move proved to be a canny one as it resulted in Krasnov moving to Asia, where he discovered fintech, launched a couple of startups, and moved into banking.

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Building Asia’s digital banking future

“It's been a long journey,” he says, "but through that journey I've realised one thing: that when the middle class starts developing in a country, it typically happens at around 3,000 to 5,000 GDP per capita.

Then the disposable income growth is disproportionate to the overall income growth, and that disposable income becomes the engine for fueling this real hockey stick with consumer finance, when 180

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people trade in their current income for getting the goods.”

Krasnov believes this lending trend is on an upwards trajectory in Southeast Asia, and that fintech is powering the drive because it enables businesses to reach customers faster and more cheaply. Another trend is the more prevalent availability of credit scores. Customers that haven't been lent to previously and are new to banking, are now exploring their options.

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GREG KRASNOV TITLE: FOUNDER AND CEO INDUSTRY: DIGITAL BANKING LOCATION: THE PHILIPPINES

“The potential is enormous because of the population of a place like the Philippines – namely 111 million people – where 70% don't even have bank accounts and 95% have never taken a bank loan, which represents an enormous potential,” says Krasnov.

Tonik and digital transformation Because Tonik launched in 2021, it hasn’t experienced the challenges of legacy and

EXECUTIVE BIO

Greg is the Founder and CEO of Tonik, the first neobank in the Philippines.

The neobank operates on the basis of its own digital bank license by the Bangko Sentral ng Pilipinas (BSP) and is backed by top international venture capital funds. Prior to Tonik, Greg co-founded and chaired multiple other successful Asian fintech companies (FORUM, Credolab, FLOW, Solarhome, AsiaKredit) and a consumer bank in Emerging Europe (Platinum Bank). At the beginning of his career, he spent 10 years in Private Equity - Leveraged Buyouts at Bank of America (London) and Innova Capital (Warsaw). A regional fintech thought leader, Greg was recogniszed as Director of the Year at the Asia FinTech Awards 2021 and one of the Top 12 Fintech Leaders in 2021 at Singapore Fintech Association (SFA). He was also recognized as Financier of the Year in Ukraine at the National Awards 2011.

Bridging real life to digital.

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We have been doing this for 25 years, for more than 350 clients in over 100 countries, using the model that best fits the business objectives – be it in house, managed services or complete outsource.

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BPC and financial inclusion in the Philippines and beyond BPC, is one of Philippines’ leading payment systems providers. We spoke to Eugene Gutierrez BPC’s Senior Vice President, to find out more about BPC’s efforts to bring the Philippines at the forefront of digitalisation.

For almost a decade, BPC has been a key partner to organisations in the Philippines that have a core payment service as part of their offerings. Eugene Gutierrez, tells us why the company is playing a key role in the digital transformation of financial institutions within the country and the wider region.

He says, “BPC, as a global payments company, has endeavored to focus on bridging real life to digital; which means designing solutions that solve consumer and business challenges. To do so, we apply an “ecosystem approach” to work with our customers and partners, on their vision and strategy, supporting financial inclusion globally.

“Over 110 million Filipinos, for decades, have been challenged with low banking penetration in ASEAN. However, the pandemic has had a positive impact on increasing financial inclusion in the Philippines.” says Gutierrez, who points out that the Central Bank - BSP has seen a spike in the opening of bank accounts in order to receive cash assistance from the government.

Eugene Gutierrez SVP, BPC

Digital and mobile trends will continue to evolve in the banking and payment space.

Gutierrez notes that historical barriers that made eradicating financial inclusion difficult in the Philippines, are being quickly removed. “These are driven largely from the needs of an agile, more tech-savvy, population who want financial payments, banking convenience, speed, and use personal financial analytics at their disposal,” he says.

Him and various banking clients believe the future of banking in the Philippines is overwhelmingly positive. “Digital and mobile trends will continue to evolve in the banking and payment space.

However, with an impressive velocity in digital adoption that is capturing the world’s attention, the harsh reality is that “Cash is still King” in the present-day Philippines and continues to be the dominant payment method.”

He concludes, “but the convergence of those forces of consumer demand for modern financial services and the efforts of Philippines’ financial institutions that provide these services to all segments of the Filipino society will eventually prevail and will help to improve the lives of our citizens in this new digital financial era.” info@bpcbt.com bpcbt.com

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incumbent-based institutions. Instead, it has instantly been able to cater to the demands of an increasingly digital marketplace.

Krasnov explains: “We were the recipients of the first digital bank licence from the central bank in the Philippines. That was actually the first digital bank licence to be ever granted in the region here, and we already launched on that, so we've been operational now for a year. That actually makes us today the first and only so far operational digital bank licensee in Southeast Asia.”

The process has not been without its challenges, however, because the remit of the bank was so new. “We've faced challenges regarding the fluidity of the regulatory regime because our licence was a pilot one. We work together with a regulator to create the regulatory framework for what a digital bank licence should look like.”

Krasnov says there have also been obstacles to overcome with infrastructure.

As the very first, fully operational, purely cloud-based bank in the Philippines, lots of coordination was required in terms of the regulatory framework which saw regulators working with Tonik’s launch team to ensure the systems were sound. “A lot of technological work went into it with our vendors to make sure that that infrastructure is completely bulletproof and beyond bankgrade, so the people feel safe keeping their money in the cloud, as it were,” he explains.

Launching Tonik during a lockdown While operating digitally and not having the burden of switching from a legacy system to an agile, digital platform, Tonik did have to launch in the midst of lockdowns that were particularly strict throughout Asia. That alone has brought its own challenges, as a number of the bank’s marketplaces haven’t been 184

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2018

Year founded

500-600

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“ We have a unique opportunity to build a very profitable operation. We think that, if we do our job right, then probably sometime next year, we should be hitting overall bank profitability” GREG KRASNOV

FOUNDER AND CEO, TONIK

visited by the team in the year it has been fully operational.

“Up until last month I hadn’t actually been to Manila in two years. I've been operating out of Singapore,” says Krasnov. “I haven't been to Chennai (India) either, and Chennai is where we do all of our R&D. We have 150 people there now.”

In Manila, growth has been even more sharply marked, with the operation expanding from just five employees to 300 employees within 12 months. Despite the lack of in-person contact, the challenges have been managed and overcome with excellent results, proving that digital operations can be just as effective as faceto-face management.

“It's been an interesting challenge to build the business completely digitally and completely virtually. Until last month, I hadn’t met half of my management committee members. I had no idea how tall they were, for example. It's a really interesting way of building a business, but we're born in the cloud, right? We're literally built from scratch this way and that gives us a real big advantage going forward.”

Krasnov jokes that the entire process has had a façade of unreality about it – and likens the bank’s journey to that of virtual fintechmagazine.com

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FLEXIBILITY

“ We're running very fast in terms of growing our loan portfolio, both from the point of view of getting already existing products scaled, as well as introducing new products so we can broaden up the funnel.

That's really our biggest focus in the next 12 months" GREG KRASNOV

FOUNDER AND CEO, TONIK

reality. “We were actually joking with my guys that, you know, here we are for two years, playing 12 hours a day in this video game called Tonik Bank. You know? That's basically what it is, right? You're just sitting on the computer and you have different characters come on and it's a very engaging digital game.”

The culture of a purely cloud bank With such little in-person interaction, managing the cultural expectations of a bank that has expanded so quickly has not been an easy task. But Krasnov is certain that, as the world opens up more in the receding months of the pandemic, the cultural environment of Tonik will flourish.

“We pay a huge amount of attention to culture. The fact that we've been working remotely actually caused us to double- and triple-down on things because it becomes a lot more important that your fighting unit is a cohesive one.”

Krasnov believes cohesion is created by culture and shared values. Tonik has five corporate values that are representative of its position as a technology company, as well as its position as a bank. It focuses on typical banking values like reliability, teamwork, honesty – three values that are more from the banking world. But added to those are also the values ‘street smart’ and a ‘sense of humour’.

He explains: “You cannot be innovative without being street smart and having a sense of humour. So basically, we built a culture where people that join us, will stay with us. They're driven by the need and the desire to create something new, to build something, to be part of that something.

We're looking for risk takers. We're looking for people who are not afraid to grab the ball and run with it.”

To ensure cohesive teamwork, the management of Tonik is acutely aware that communication and familiarity are key in fintechmagazine.com

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“ Trust is an interesting issue and there are a couple of elements to it.

One is from the deposit side. When you keep your money in the cloud, people want to know that the money is safe" GREG KRASNOV

FOUNDER AND CEO, TONIK

building an entity that moves forward with purpose. As such, much work goes into devising ways to help the team get to know each other better.

“A huge amount of work goes into ensuring the staff are working well together, in terms of engagements to bring people together, to have them get together. We have this thing called happy hour water coolers. Because we all work in different places, it's kind of been hard to bring people together, but you still need to integrate. If you don't integrate, then you can't create.”

Tonik innovation and motivations Krasnov is aware that the interpersonal relationships that are developing in his teams will ultimately be responsible for breeding an environment that nurtures growth and enables the bank to scale.

“When you innovate, you have two vectors running against each other, namely the corporation vector and the conflict vector, and the corporation vector is actually created by people being in the same room and sharing the values and the history and the relationships with each other. So when you don't have that, then conflict will overtake and you'll basically 188

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not get the innovation happening. So, you need to be carefully balancing that, and part of the function of leadership in the digital environment is making sure that you can balance those two vectors, even in the digitally challenged environment.”

Tonik and the Metaverse With a number of leading banks all entering the metaverse, it would seem likely that

TONIK

Tonik Bank – which is already operating on an entirely virtual level – will also make that augmented reality move; it’s a step Krasnov is certainly not averse to. “I would quite welcome that, because one of the things we noticed early on in this kind of Zoom world is we are really missing body language.

When you have human communication happening, psychologists say body language is 90% of the message. When you have

no body language, it's horrible, and this is exacerbated if it's a low-trust environment of new employees coming in who haven't been team built together.”

Although there are no solid plans to enter the metaverse yet, Krasnov and his team insist on one stipulation. “We mandated that video must be always on when you're on the Teams call, and we follow that religiously. So from that point fintechmagazine.com

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“ People are very eager to try out and adopt digital solutions, and I think that's been a nice backbone for us, one that's also been, of course, reinforced by the lockdown” GREG KRASNOV

FOUNDER AND CEO, TONIK

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of view, I would welcome instruments that enable into the digital environment more body language because they just create a smoother communication capability.”

Tonik and unsecured lending opportunities The Philippines is an emerging market, and as such, there are many opportunities for digital operators to tap into markets crying out for new opportunities. The bank is currently addressing the $140bn retail deposit and the $100bn unsecured retail lending opportunities that are available in the Philippines.

“Let's start with the lending market, because the consumer lending market is where we make the money. That's our monetisation. The deposits are just the raw material for the lending that we do,

TONIK

right? When you make something out of something, that something is money and the money is the savings that you take from your consumer.”

Krasnov says that on the lending side, the market that Tonik is operating on is deeply underpenetrated, with only 4% of Filipinos being able to borrow from the incumbent banks. Instead, the culture of lending is interpersonal and 70% of Filipinos that borrow, borrow from each other. Today, the banking total asset class in the banking system for unsecured consumer finance is about $10bn.

Krasnov says: “If you add mortgage and cars, that's another like $15bn, and that's particularly nothing. So, the unsecured alone, it should be like $50 to $100bn if you just run per capita columns to other

economies of similar level of development.

So, even compared to neighbours, you know, Indonesia and Vietnam, which are similar, like three and half, 4,000 GDP per capita, the Philippines should already be 40 to 50 billion, and it's only 10.”

Ultimately, he asserts, current banks don't understand how to lend to new bank clients. They don't understand how to credit and assess them – and so, they stay away.

“They're happily taking the low margin corporate business that is very well secured and they don't want to take that incremental risk. And they don't really have the knowhow to build those scorecards and use the alternative data, to use those really kind of low-cost processes that make it possible to lend a $500 ticket within 60 seconds with high probability of return. It takes quite a bit

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of science, quite a bit of trial-and-error and a lot of know-how – and none of that knowhow really exists in the Philippines’ banking sector today. It just hasn't gotten there yet.”

It’s a frustrating situation for customers when an alternative lending platform isn’t available – but that’s where Tonik stops the very big gap in the market – and it’s taking full advantage of its digital identity by drawing on a huge number of talent pools.

“In Europe, for example, we've had a lot of migration of this know-how from consumer finance banks in Western Europe to Central Europe, and then from Central Europe, you know, further to Eastern Europe. Whereas in the Philippines, you just don't have the same kind of level of expertise migration. So, we've put together a team and actually, you know, we use the skills wherever there are good skills in the world. Our data science team was built in India because you just don't find skilled consumer finance data science people in the Philippines today. We look for skills where we can find them.”

Building trust in a new marketplace As much of the lending in the Philippines is person-to-person rather than bank-to-person, the lack of marketplace trust in financial institutions runs high. Overcoming that challenge is an uphill task, points out Krasnov.

“Trust is an interesting issue and there are a couple of elements to it. One is from the deposit side. When you keep your money in the cloud, people want to know that the money is safe. Thankfully, Tonik is regulated by the Central Bank in the Philippines and deposits are insured by the Philippine Deposit Insurance Corporation (PDIC). So, that helps address a lot of the customer's concerns, because they know that up to roughly $10,000, their deposits are insured by the government.”

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The majority of Tonik’s depositors are not from the wealthy classes. Instead, they are middle-class people with a deposit ticket of about $2,000, which guarantees they are covered by government insurance. Krasnov says trust also has to be earned from a technology point of view – especially in an age when cybercrime is rife, and hacking is an almost daily occurrence.

“The infrastructure that we're running is on a completely new level of IT security to a typical bank app or traditional bank in the Philippines. We've gone through some certifications, which again we're the first bank in the Philippines to obtain that level

of certification for our app security and IT security. We're working with Mastercard on some solutions that are quite unique for the market as well, where people's money is very, very safe. We can consistently communicate that to the consumer, and I think the fact that we've been able to grow our deposits as much as we have shown that they really understand what we do and appreciate what we do,” he says.

The high mobile penetration and young population of the Philippines is also an opportunity for entities like Tonik, because the next generation of spenders are keen to make use of the latest technologies. “The

average age is 24 for a Filipino. It's a very young population and is therefore almost entirely digitally native. The Philippines is the number one Facebook market in the world.

Its average Facebook time is four hours per day per user.”

Krasnov points out that this means moving from one bank – or one technology – to another is an easy transition. In fact, they have embraced the digital banking culture.

“They’re very, very fed up with going to the bank branches. Traffic is horrible. It's very, very hot. Nobody wants to have to go to a bank branch and then spend like three hours standing in a queue. People are very Magazine fintechmagazine.com Weblink in layers

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eager to try out digital solutions and adopt digital solutions, and I think that's been a nice backbone for us, and that's also been, of course, reinforced by the lockdown.”

Strategic partnerships with BPC and Mastercard Currently, Tonik has strategic partnerships with Mastercard and BPC, and they are delivering a virtual card to customers immediately upon onboarding – Mastercard can be used at any point of sale that it’s accepted online. Krasnov describes the collaboration as a ‘wonderful’ relationship.

“We're actually, I think, one of the first banks in Southeast Asia to achieve Mastercard principal status before we even got our bank licence, because typically they start you off on a lower band and then kind of graduate it up to principal. But in order to roll out some of the features that we wanted to have in our MVP, we really needed principal.”

In terms of BPC, Tonik partners with them because they are a good processing operator.

The bank uses their Hungarian processing centre because, although they are a global company, Asia is their biggest marketplace.

Tonik products and services Currently, Tonik's retail financial products include deposits, loans, savings, accounts, payments, and cards on a highly secure digital platform. The product strategy runs in three product groups – namely, lending, savings and payments.

“Within savings, there are three very differentiated products. We have Stash term deposits and Group Stash. Stash is a savings account that's for a specific purpose, so you can create multiple stashes. Just think how at home you'll have multiple envelopes to stash money into, so that's exactly what we're replicating. You can put a picture of 194

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your kids or a picture of that motorbike you really want, or you know, that Paris vacation or whatever it is, and really create an emotional connection.”

The Group Stash, which is a variation of the individual savings Stash, has been created to reflect the cultural preferences of the Philippines when it comes to saving money.

The product enables communal saving so

TONIK

first digital bank in the Philippines to do a term deposit in a purely digital environment.

In most banks in the Philippines, customers would need to go to a branch to avail the term deposits and sign papers. “We're actually making it super easy, and it takes you like 10 seconds to set one up. That's our highest interest rate product, and it pays up to 6% deposit interest,” he says.

The deposits are, essentially, the raw material for Tonik’s loans. Underlying that is a payment capability called TSA, or Tonik account, with a number of different payment options for paying in and paying out. This has been integrated to more than 10,000 cash in, cash out points across the country.

“We're integrated to all the banks in the Philippines basically through the interbank payment system. Obviously, the cards, payment system, et cetera, et cetera. So customers have a broad variety of payment options. We're in the process of adding other payment options such as bills pay, and as I mentioned, digital goods, so that will be rolling out in the course of this year. That's not our core business, but it enhances the stickiness and enables the customer to do more things with us, and as they do more things with, we hope they get more comfortable and therefore eventually avail either on the deposit or the loan.”

that families and friends can save together towards a specific goal. This, says Krasnov, has taken off very well and now provides more than 10% of Tonik ’s deposit balances.

But more importantly, it creates virality because when Tonik users open a Stash, they invite their friends and family to participate with them in the group savings activity Krasnov points out that Tonik was also the

Gamification and its role in banking Gamification is a growing area in the APAC region, with more and more fintechs using gaming tools to create incentives to encourage customers to engage more with their products. While Tonik isn’t specifically using these tactics at the moment, it isn't something they’re ruling out in the future.

“We don't do as much gamification as other entities. We rely on a very different approach Magazine fintechmagazine.com Weblink in layers

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to branding. The Philippines is one of the most emotional nations in the world and that's psychologically proven. Consumers in this region respond to emotional attachment.

A second insight is that they hate the banks because the banks are all gold and marble, and not very down-to-earth or consumerfriendly. So we used this as part of our branding campaign and started a hashtag movement, explicitly saying, ‘Guys, we want you to love us’.

You know, love us, like #DumpYourExBank, basically #NeobankingRomance.

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customers luv and huns. We celebrate monthsaries with them when we send them our statements. We sign our emails and texts with XOXO Tonik. That's not something that people are used to from their banks. But at the same time, a Filipino consumer has proven to be very receptive to this kind of fresh, close and comfortable message.”

Krasnov puts this receptiveness down to the cultural nuances of Filipino culture. He believes the Philippines is a very class-driven society for historical and political reasons.

There's a lot of suspicion towards big

TONIK

“ When you innovate, you have two vectors running against each other, namely the corporation vector and the conflict vector, and the corporation vector is actually created by people being in the same room and sharing the values and the history and the relationships with each other” GREG KRASNOV FOUNDER AND CEO, TONIK

institutions and average, unbanked citizens often believe that the products offered by financial institutions are not for them, because they are not rich. Tonik is breaking the mould in that regard.

The future for Tonik In terms of new products on the horizon, Krasnov says savings will be a key area for development as well as the lending arm of the bank and asset creation.

“We're running very fast in terms of growing our loan portfolio, both from the point of view of getting already existing

products scaled, as well as introducing new products so we can broaden up the funnel.

That's really our biggest focus in the next 12 months,” Krasnov says.

“Getting those lending products to the market, scaling and balancing out our assets and liabilities so that we can actually start making money.

We're in a fortunate position because we can achieve fantastic product level profitability on these lending products.

We have a unique opportunity to build a very profitable operation. We think that if we do our job right, then probably sometime next year we should be hitting overall bank profitability.”

As far as he is concerned, all is well on track and Tonik is looking towards a bright future in the region, because incumbents simply aren’t moving quickly enough to take advantage of the changing marketplace and new customer expectations.

“Traditional banks in emerging markets are very slow to change themselves.

They don't have the tools and the imagination to even execute on it [digital transformation] if they wanted to. So, I think it's going to create an interesting world in the next decade or two with digital contenders like ourselves.”

He adds: “There will be, of course, many more digital contenders, complete with different cost structures, that will be able to compete away a lot of the margin from the big banks, the traditional banks. It's going to be an interesting transformation, where the market share of the digital contenders will grow rapidly, whereas attrition banks' market share will decline.”

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CHANGING THE GAME IN A BLINK OF AN EYE WRITTEN BY: JESS GIBSON

PRODUCED BY: MICHAEL BANYARD

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Capital Bank of Jordan’s Zein Malhas discusses going digital while ditching the jargon with Blink to serve the under-served, changing the face of banking

B

link was launched in February 2022 under the umbrella of Capital Bank of Jordan (CBJ) a bank that has undergone a fair amount of transformation in recent years.

Established in 1995 as primarily a corporate bank, CBJ focused on trade finance and building key corporate relationships, leading to the creation of a strong corporate portfolio for the bank. As a by-product of its corporate business, CBJ had a retail business that targeted highnet-worth individuals and business owners, cementing its status as a fully-fledged commercial bank.

This experience lent itself well to the bank’s more recent transition away from high-networth individuals and corporates into mass retail banking, in addition to its core aim of supporting the growth of SMEs in Jordan.

According to Zein Malhas – who joined in 2018, utilising her prodigious skill to work up to the role of Chief Digital Officer in January 2021 and CEO of Blink just a year later – the bank has, over the years, expanded its remit geographically and into other areas of banking. “Capital Bank of Jordan is basically a group that also encompasses a commercial bank in Iraq – the National Bank of Iraq – of which we own 62% and that has a presence in Iraq and Saudi Arabia, as well as an investment bank, Capital Investments, with presence in Jordan, Iraq, and UAE.”

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“BLINK, AS A NEOBANK, BREAKS FREE FROM HOW TRADITIONAL BANKING IS BEING OFFERED TO CUSTOMERS” ZEIN MALHAS CEO, BLINK

With transformation being the name of the game for Capital Bank of Jordan in recent years, the institution ventured into the establishment of Jordan’s first true digital bank, creating Blink as a means of separating it from traditional banking institutions, instead carving its own unique consumer space in the market to target Gen-Zs and Millennials with a completely new approach to banking.

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The core brand – setting Blink apart Blink is meant to be a bank with a different approach. “Our pitch is that we are doing things differently. So our brand was built on the notion that money is holding us back. We feel that our target market’s perception of banks is that, instead of allowing them to live more, they actually hold them back. It's their money.”

“We make banking easier and fully digital – all of our services are on our mobile app.

ZEIN MALHAS TITLE: CEO, BLINK INDUSTRY: BANKING

Our unique selling point today is centred around unsecured lending. So our first product is instant credit cards.” As such, Blink is the first bank in Jordan to introduce credit cards without the need for salary transfer or providing any form of collateral. This comes as an opportunity to those that are unbanked due to not having a stable income, such as students and housewives, and, accordingly, aims to support financial inclusion in the country.

EXECUTIVE BIO

LOCATION: JORDAN Zein Malhas is the Chief Executive Officer of Blink, a role she assumed in February 2022. Malhas first joined Capital Bank in June 2018 as the Head of Transaction Banking, responsible for establishing the transaction banking function within the bank while introducing institutional clients to cash management and trade finance solutions. In 2019, her role was expanded to include the development and implementation of products and channels for institutional and retail clients, a stepping stone to her promotion as Chief Digital Officer in 2020. Between 2014 and 2018, Malhas managed the global subsidiaries business at Standard Chartered Bank- Jordan, prior to which she worked within the Corporate and Investment Banking Department at the Housing Bank for Trade and Finance from 2007 until 2014. Malhas has a wealth of banking experience that spans over 14 years, with a strong background in corporate and transaction banking, investment banking, products and channels, as well as digital transformation.

BLINK

“WE ARE HERE TO OFFER UNCONDITIONAL LOVE THAT DISRUPTS THE WAY BANKING CURRENTLY IS IN THE MARKETS IN WHICH WE OPERATE AND GIVE PEOPLE THE ABILITY TO LIVE WITH MORE” ZEIN MALHAS CEO, BLINK

“We have a risk model that we’re running in the background – it’s not pre-approved credit, by any means,” Malhas clarifies. “It is a fully-digital experience that allows the customer to obtain a credit card within three minutes and instantly use it in eCommerce,

because it's a virtual credit card. Then we deliver the physical card to the customer for them to use, as well.”

Blink has a clear roadmap in place, with future objectives moulded to simplify banking for younger generations and those outside of financial circles.

“Currently, we're looking at saving accounts, current accounts – basic forms of deposits,” Malhas says. “All of our banking products are going to be offered to customers, then tweaked to their needs and simplified.”

“One of the things we've been really focusing on doing is shying away from the usual banking jargon. An account is an account, you can put money in and manage it. You can open a sub account. Eventually, we will add more products that incentivise savings, as well as a loyalty solution.” fintechmagazine.com

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CAPITAL BANK OF JORDAN BLINK

Even in its approach to loyalty, Blink is changing the game. “Typically, banks have a loyalty programme that is based on points and the burning of these points. So you earn, you utilise them, and then you either convert them into cash or you use them in a certain merchant network. In Blink we are focusing more on engagement. As an unconditional form of love to our customers, we will not ask them to do something to 206

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earn points in return, we will surprise them with personalised rewards that show our gratitude and, with that, you earn loyalty,” she says.

Evolution of Blink Zein Malhas’ role as CDO of Capital Bank has been key to its fintech credentials, kickstarting and fleshing out the development of a neobank: “The objectives

of Blink are based on completely disrupting the banking industry. It was never meant to be just a tick-box exercise.”

Establishing Blink was not about converting Capital Bank’s customers to digital.

Malhas says: “Our strategy for Blink was never a conversion strategy, which means that it wasn’t our approach to Capital Bank’s overall digitisation per se, because the bank itself is still very much focusing on digital

transformation and investing heavily in digitising all of its processes – whether frontend, customer-facing or back-end – in order to increase efficiency and reduce costs.”

“We do not have that critical mass that we intend to shift to digital. Rather, this is more of a customer acquisition strategy – we wanted to tap into markets that have been traditionally under-served, with our focus being to serve the under-banked and the unbanked.” fintechmagazine.com

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BLINK

Contrary to assumptions, ‘unbanked’ doesn’t necessarily refer to lower income, blue collar workers deemed as ‘not bankable’ by financial institutions. Rather, it encompasses the bankable population that are either not digitally native or who are simply intimidated by, or do not trust, banking services. These groups may be under-served in the sense that their current banking solution fails to meet their needs.

The idea for Blink was first conceived when Capital Bank’s Group CEO, Dawod Al Ghoul, called Malhas and stated his desire to launch a neobank – although Malhas initially had reservations: “I was reluctant at first. Retail banking seemed to be a red ocean in that it’s very competitive, and Capital Bank had long embarked on a digital transformation journey that positioned it as a leading digital solutions provider. We were already onboarding customers via WhatsApp, we had invested in a new mobile banking app, and we were investing in digitisation at all levels.”

However, the conversation highlighted the alternative audience that a neobank could tap into to meet the needs of those who are often overlooked. “Those who would like to bank with Capital Bank are not the same as those who would like to bank with Blink,” she says. But why is this the case? “You can add lifestyle elements, you can add a whole different experience and you can address customer needs in a completely different way. Simply put, you can break free from the boundaries of traditional banking, and with that target a whole new segment.”

Another key reason for the decision was how the sheer volume of time and learning required to transform CBJ’s digital solutions would enable it to ‘leapfrog’ into the neobank space: “When Dawod spoke about agility and time-to-market, I was convinced instantly, so immediately after that we 208

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“WE DON'T WANT TO PUSH PRODUCTS IN THE MARKET THINKING THAT THEY ARE THE BEST BECAUSE WE’RE JUST THINKING OF THE COMPETITION OR WE’RE THINKING AS BANKERS; WE WANT TO HEAR IT FROM OUR CUSTOMERS” ZEIN MALHAS CEO, BLINK

started the project. We launched Blink – from the idea to go-live – within six months.

We started from nothing and put it all together within a record time, including the strategy, the branding and the technology.

Pandemic-related shift to digital banking innovations As was the case for most – if not all – businesses in 2020, the COVID-19 pandemic had a wide-ranging impact on Capital Bank.

But while the sudden halting of businesses worldwide and ongoing supply chain issues caused many to falter and redirect their attention, Malhas explains how the pandemic merely sped up what is seen as banking’s natural progression.

“Nowadays, all products are focusing on digitisation, so banks are no longer thinking about introducing products without the digital element, because that's the fintechmagazine.com

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expectation of customers,” she says. “Of course, the pandemic paved the road for all banks to actually ride the digital wave, which was gradually becoming less of a choice, anyway.”

During this period, Malhas came across an overwhelming abundance of solutions and potential partners for Capital Bank: “On a weekly basis, I would meet two or three potential partners that would come and showcase their solutions. Putting all of this within a framework, deciding how to go about it and making sure that, along the way, you don’t forget your customer, was a challenge. The best way to overcome this challenge was Blink.

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“It all came together easily and in a short space of time. We are now in the best position to utilise the ecosystem of partners available to us, within a clear partnership framework that maximises value to our customers.”

Building partnerships to support digital banking transformation A successful digital transformation roadmap factors in the potential partners that can help progress the journey so, naturally, Blink has cultivated a wide range of strategic partnerships in the tech field.

BLINK

Codebase Technologies, which included the core banking system, channel, application, middleware, a rules engine, and other peripheral systems.”

The technology stack provided by Codebase Technologies was built on open banking with over 400 APIs exposed, making integration with third-party solutions seamless and supporting Blink’s plans to maximise partnerships.

“It is extremely agile and easily enabled us to integrate with third parties, which allowed us to launch the bank within a very short period of time.”

“We have many partners, but our main ones are, of course, Codebase Technologies, as we obtained our full technology stack from them,” says Malhas. “One of the things that I personally was extremely passionate about was to have an altogether separate technology stack because, from my experience, riding on your existing technology sometimes pulls you back.

“Of course, this is not the case for every single institution – you have to measure what works for you to assess properly. But for us, we really felt that the way to leapfrog is to have that segregation and, accordingly, we obtained a ‘bank-in-a-box’ kind of solution from

The future of banking – going digital Without a crystal ball helping determine the future, it’s difficult to assess exactly where the world of finance is heading – one thing that is certain, though, is that the future is in digital banking. So how does this relate to Blink’s outlook over the next year or so?

“For Blink, we have a very big roadmap,” Malhas enthuses. “The next 12-to-18 months are going to hopefully include a lot of enhancement in terms of the current minimum viable product that we launched into the market, in addition to introducing daily banking services.”

“But we want to hear back from customers first – so, while we have an aspirational roadmap, we will prioritise and tweak services after hearing back from customers to see what we should improve, what products are more important, etc. We don't want to push products in the market thinking that they are the best because we’re just thinking of the competition or we’re thinking as bankers; we want to hear it from our customers.”

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