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As summer slowly melds into autumn, it’s time for many of us to start looking ahead. Don’t worry, I’m not talking about getting ready for Christmas – not yet, anyway.
In truth, we have a lot to look forward to as an industry, both literally and figuratively. This month, we’ll be hosting our first InsurTech LIVE virtual event on 18 October. We have already announced some internationally acclaimed speakers, and we have a full schedule of keynote addresses and fireside discussions planned, so be sure to join us for that.
We’ll also be out in force at Money20/20 USA in Las Vegas from 22-25 October, following on from the success of our attendance at the European version of the show in Amsterdam, where we were a media partner and had our own booth. This time, we’ll be roaming the halls of The Venetian looking for the next big things in finance and connecting, hopefully, with as many of you as possible.
We can do some looking ahead in October’s issue of FinTech Magazine, too. This month, we have features on the rise of community banking, which is providing a vital lifeline in trying times; and we look ahead to Crypto 2050, asking what utopia looks like in terms of cryptocurrency adoption. Do enjoy those articles and more in this issue!
“WHAT DOES UTOPIA LOOK LIKE FOR CRYPTO, AND WHERE WILL THE INDUSTRY FIND ITSELF IN 30 YEARS’ TIME?”
14 BIG PICTURE US Federal Reserve launches peer-to-peer, real-time payments service FedNow
16 LIFETIME OF ACHIEVEMENT Ahmed Karsli
20 INTERVIEW WITH Alberto Guerra
28 TOP 10 Fintechs in APAC and MEA
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The Global FinTech Awards 2024 will be celebrating the very best in Fintech with the following categories:
Digital Banking Award
–PayTech Award
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Digital Currency Award
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FinTech Award
–InsurTech Award
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Sustainable FinTech
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FinTech Technology Award
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FinTech Consultancy Award
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Future Leader Award
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Executive of the Year Award
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Project of the Year Award
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Lifetime Achievement Award
Washington DC’s Eccles Building, home of the US Federal Reserve. The US’ central banking system recently launched FedNow, a peer-to-peer real-time payments (RTP) service designed to foster faster cash flow between individuals and businesses.
Companies such as Zelle and Venmo are private RTP services operating in the US, so FedNow will offer a centralised system for transferring funds in real time. There are some high-profile early FedNow adopters too, US banking giants JPMorgan Chase and Wells Fargo included.
The willingness of established institutions to immediately sign-up for FedNow highlights its significance to the US economy.
Ahmed Karslı is the CEO of Papara, the Turkish neobank that has bootstrapped its way to exponential growth and recently became a fintech unicorn for the first time. The company emerged out of the ashes of Turkey’s antiquated banking sector, and from the outset it had a very clear purpose.
Karslı – who himself is a big fan of fintechs including Cash App, Revolut and Robinhood – wanted to drive financial inclusion. “We began as a small but ambitious venture with a vision of offering Turkey an accessible financial service when we saw many being underbanked and underprovided,” he recalls in conversation with FinTech Magazine.
“I founded Papara with a mission of promoting financial inclusion and freedom for all. This foundation remains ingrained in Papara’s ethos, as we firmly believe that everyone deserves access to financial services that cater to their unique needs and preferences. In 2021, over 30% of Turkey’s population was reported by the World Bank to be underbanked and so Papara wants to drive positive change within the industry to establish a financial system that benefits everyone.
“Traditional banking systems often impose barriers through their terms and fees, leaving many underserviced. We’re proud to be leading change in Turkey, offering customers the ability to enter the financial landscape on their own terms, fostering a more equal and democratic environment.”
At a time when many fintechs are reliant on venture capital funding – and some now are understanding the need to rediscover profitability – Papara has done things uniquely. The neobank has bootstrapped its way to where it stands today, with no external investment, having been profitable since 2017.
“I founded Papara with a mission of promoting financial inclusion and freedom for all”
In July, it announced that it was acquiring Madrid-based neobank Rebellion – the first time that Papara has expanded beyond its home market. In so doing, Papara secured the coveted unicorn status for the first time, as the combined group has a valuation in excess of US$1bn.
Explaining the timing of the acquisition, Karslı stated at the time that Papara was “confident that our products, services and vision can compete on a global scale”. It marks the start of a prospective European expansion that he believes will be characterised by acquisitions of this kind, drawing on local market expertise and on-the-ground insight.
“We knew that our first steps for international expansion would be to augment our European position and, during our search for potential opportunities, we explored multiple avenues,” Karslı says. “Rebellion emerged as the ideal foundation on which we could build on our ambitious plan for growth and continue fulfilling our mission of generating financial inclusion for all.
“Rebellion and its team resonated with Papara on multiple fronts. They hold an unparalleled grasp of the local market, which will be an invaluable asset for us as we want to carefully cater to Spanish user’s unique needs. Rebellion’s portfolio of best-in-class products further reinforced our confidence in forging a partnership. However, what truly impressed us was the alignment of our goals with theirs, signifying a shared vision for the future.”
He remains tight-lipped about which markets might be next, but on Papara’s success to date he says: “It has been incredibly exciting to see Papara’s exponential growth since we founded the business in 2015. To see Papara reach over 16m users and become Turkey’s largest
2015 Year Papara founded US$1bn
Most recent valuation
16m
Number of users
fintech company in such a short space of time without external investment has been an exceptionally fulfilling journey. Not only has the growth been a testament to our team’s hard work and success, but it shows that we were right in our founding motivations, and far too many people had been financially excluded for far too long.”
‘Bootstrapping a young startup is exhilarating’
Karslı is a graduate of Istanbul’s Bahcesehir University and Istanbul University, where he studied towards a Masters of Law. Away from
“Bootstrapping a young startup is exhilarating due to the raw creativity that’s required and the sense of building something from the ground up”
the office, he is passionate about history and fascinated by antiques, collecting old items and artefacts that – much like Papara – have their own story to tell.
“These pieces connect me to the people who lived before us and remind me of the journey of humanity,” he says. “It’s like uncovering hidden chapters of our world’s story and feeling a sense of kinship with those who came before.”
So what of the founder experience –and more pointedly, which does he prefer: overseeing a billion-dollar unicorn in modern-day Papara, or leading a plucky
startup like the Papara of yesteryear?
“Both scenarios have their own allure and challenges,” he admits.
“Bootstrapping a young startup is exhilarating due to the raw creativity that’s required and the sense of building something from the ground up. On the other hand, leading a billion-dollar fintech brings a different level of responsibility and impact. It’s about steering a wellestablished ship toward even greater achievements. Ultimately, I find fulfilment in both, as they offer unique opportunities for growth and innovation.”
UniTeller’s CEO, Alberto Guerra, explains the frictions in cross-border payments, the apps that are a source of inspiration in fintech, plus why he doesn’t necessarily believe in luck
» I am Alberto Guerra, CEO of UniTeller Financial Services, a company founded in 1995 and acquired in 2007 by Grupo Financiero Banorte, one of the largest financial groups in Mexico and Latin America.
My journey with Banorte began many years ago in the International Banking Division. Progressing through various roles, from International Banking to Corporate Banking, M&A and Investment Banking, I became the Head of International Banking at Banorte in 2003. In 2005, Banorte initiated a strategic endeavour to expand into the US and created the Banorte USA Division, with the goal of acquiring a Bank and a Company specialising in cross-border payments and remittances.
As Head of the International Division, I had the privilege of working on the Banorte USA initiative, and successfully overseeing the acquisition of UniTeller in 2006, culminating in the completion of the deal in early 2007. As part of this acquisition, I was presented with the opportunity to relocate to the US and assume the leadership of UniTeller as its CEO. Our vision was to transform UniTeller into a gateway for international crossborder payment transactions to Banorte and financial institutions in Latin America and globally. Being the CEO of UniTeller has been an exciting journey, during which the company evolved from a small, traditional remittance enterprise into what it is today: a major gateway and processor for global cross-border payments.
» I have two. The first is more personal in nature, and the second is a fictional character.
On a personal note, I would undoubtedly choose my father as my hero. I always looked up to him and admired him for his achievements. He was a beacon of inspiration with an exceptionally remarkable professional career. He was not in the finance industry. His domain revolved around the heavy metal industry, particularly in the steel industry. His progress was defined by an extraordinary professional career that was achieved by diligently studying, reading, and through his unwavering and honest dedication to his work.
On a fictional note, I admired Superman as a superhero. His strength, his ability to fly, and to time-travel allowed him to bring positive change to help everyone around him. The notion of bringing change in the world captivated me. While I cannot fly, I do recognise the power within me, “the power of my words, the power of my thoughts, the power of my ideas”. So, I try
to channel my inner superhero to shape my world, the company that I work for, and my family. As Superman, I try to use that power to positively influence those around me.
» I’ve been very fortunate to have been guided by exceptional mentors throughout my career, and I hold deep admiration and respect for them. One quote that has resonated with me is “the harder you work, the luckier you get”. Sometimes it’s not about being lucky, it’s all about working hard. This phrase, shared by one of my mentors, serves as a constant reminder of the importance of diligence. It’s a philosophy I’ve internalised to the extent that I even have it written on a post-it note at my desk in my office. Reflecting my father’s influence, I’m a firm believer in the value of hard work. When you work hard and follow the right approach, opportunities follow through.
» There are some people that I hold in high regard that have managed to build very successful companies from nothing, just by having an idea and being committed to that idea and exceling on its implementation. In the remittance space, there are a few leaders that I admire for their accomplishments. Outside of cross-border payments, one prominent figure for me was Steve Jobs. His principles and the frameworks he established can be fully applied to fintech. He excelled in crafting exceptional products with an emphasis on excellence and great customer experience.
There are several companies that have experienced a situation where the mere creation of a product does not automatically generate demand. Steve Jobs wisely said that, at times, people may not realise the need for something until it’s presented to them with the right customer experience and a well-developed ecosystem. This approach cultivates an affinity for products, and occasionally motivates individuals to pay a premium for these products and services. If you translate these concepts into the fintech world, the focal question becomes: how can one build a successful product or service – for individuals or companies? The answer lies in factors such as the quality of the service, the reliability of the service, and the overall customer experience.
» I constantly explore fintech apps. I love to download them and understand the customer experience they provide. One of the apps that really piques my interest is SoFi. What I find particularly appealing
about this app is how it consolidates various services, including lending and investing, in a seamless and efficient way. The integrated experience they provide, along with their proactive follow-up is very interesting.
I enjoy using other fintech apps; Acorns and its intriguing micro-investing business model; Crypto.com, with a captivating value proposition for a debit card, wallet with crypto investing. Revolut is another platform that I’ve used that offers a compelling blend of multi-currency accounts, investing and payments; and our own uLink, an app providing an excellent consumer experience with the best rates and fees for international money transfers.
In essence, I’m an avid user of several fintech apps, and some of these companies
really excel in their approach. At UniTeller, we make a deliberate effort to understand and learn from their business models and how they portray their services to their customers.
Q. COULD YOU DESCRIBE UNITELLER IN 25 WORDS OR LESS?
» We are a leading global cross-border payments service provider with state-of-theart technology, advanced digital capabilities, and a robust compliance platform.
Q. WHAT ARE THE BIGGEST FRICTIONS THAT EXIST WHEN CONSUMERS MOVE MONEY ACROSS BORDERS?
» There’s still a lot of work that needs to be done to achieve frictionless global crossborder payments.
Even within the realm of very large corporate payments, it’s astonishing that in certain cases, the process extends beyond two or three days. There’s still a lot of interdependence of banking networks, structural intricacies of different banks, and liquidity issues around making these payments in real-time. This is still a big challenge that has yet to be overcome.
At times, these types of payments lack transparency with regards to fees and payment times. Fortunately, for low-value payments, we’ve witnessed significant improvement. There are several emerging fintechs, including UniTeller, that are actively improving user experience by facilitating more transparent and real-time crossborder payments.
However, there are still challenges that persist since not all payment networks are built to deliver the value of realtime payments. Despite the presence of companies like UniTeller and others that provide access, the ultimate delivery of payments still hinges on the efficiency of the last-mile infrastructure. Regrettably, in some countries, this final leg of the journey isn’t adequately equipped to deliver such payments. We’re engaged in discussions with multiple business partners in different countries to ensure that we can have a seamless experience in a wider range of countries.
» I believe that the B2B sector is experiencing improvement and catching up. In B2B, especially on the higherticket transactions, liquidity for real-time payments is a problem to solve. For instance, if your company provides these services and needs to make a payment
in a country where you don’t generally make payments, then your counterparty may require advance payment. To execute a real-time payment, you are essentially faced with two options: either have a business partner who is willing to advance the funds to make the payment in real time, or allocate substantial capital within those countries. Both approaches are highly inefficient. There are ongoing initiatives exploring real-time tokens or cryptocurrencies, which aim to enhance settlement efficiencies in some of these
countries. However, for larger-ticket transactions, the complexity intensifies for sure.
PROVIDES A PLATFORM FOR GIFT CARD PAYMENTS. WHAT WILL THAT ACQUISITION DO FOR UNITELLER?
» At UniTeller, we see ourselves beyond the scope of being solely a service provider for remittances. While we have expanded into business payments, we firmly believe in the
potential for a broader use case – a scenario where electronic payments can be sent instead of money, with the ability for these payments to eventually be converted to cash or used at retail stores. The underlying technology extends beyond the concept of gift cards; it revolves around establishing a settlement method at retail locations and building a robust settlement network. We do see a lot of synergies within the remittance space in sending gift cards to relatives. Yet, we also envision the prospect of developing wallets capable of leveraging settlement
networks at retail locations, ultimately leading to even more efficient settlements. It’s an interesting and innovative approach. We perceive opportunities and recognise the potential to leverage this technology not only within Latin America but also to expand its reach across other regions.
Q. WHAT’S THE ONE PIECE OF TECHNOLOGY (APART FROM YOUR MOBILE PHONE) THAT YOU ABSOLUTELY COULDN’T LIVE WITHOUT?
» My laptop is indispensable. When I travel, my cell phone and my laptop are absolute must-haves. While I love my phone, there are certain tasks that demand a laptop to be efficient and productive.
Q. DO YOU HAVE ANY INTERESTING HOBBIES OR PASTIMES?
» I have a love for reading, and I read often – novels, biographies, business books. I also love spending time with my family and my kids. Our conversations are a cornerstone of our interactions, and I particularly enjoy talking to my kids about current politics and social issues. Also, my son plays college soccer, and watching him play has always brought me great joy.
Engaging in physical exercise is also particularly important to me. I make it a point to incorporate daily walks and jogs into my routine, often accompanied by my dog, which helps me maintain an active lifestyle.
I also collect model airplanes. I have always been fascinated by planes and I hope to get a pilot’s licence someday. It is one thing that I’ve had on my bucket list and I’m sure that one day, I will!
Q. DESCRIBE YOURSELF IN THREE WORDS.
» Hard-working, blessed, and persistent.
We run through our Top 10 fintechs from the Asia-Pacific (APAC) and Middle East & African (MEA) regions.
Find out who takes our number-one spot here
WRITTEN BY: LOUIS THOMPSETTWhile the eyes of many may focus on the accomplishments and impressive growth rates of fintechs in the Western world, let’s not overlook the successes and significant financial growth of fintechs hailing from both the Asia-Pacific (APAC) and Middle East & African (MEA) regions.
Read on to find out our Top 10 fintechs from both regions, starting with Egypt’s MNT-Halan…
A burgeoning Egyptian fintech, MNT-Halan is the country’s leading finance ecosystem, and a fastgrowing lender to unbanked and underbanked populations. Founded in 2018, MNT-Halan has grown a digital ecosystem encompassing lending options, buy now pay later finance and ecommerce. MNT-Halan backs its platform with Neuron, its proprietary technology, which sees it serve over 5m customers in Egypt alone. The fintech says it processes over US$100m in transactions on a monthly basis. In February 2023, it secured US$400m in equity and debt funding to fuel its growth on the international stage.
With over 300m customers, Razorpay can count itself among the largest fintechs in India. Founded in 2014 by Harshil Mathur and Shashank Kumar, the company’s aim is to leverage developer-friendly APIs to enable frictionless transactions and overhaul money management for online businesses. Razorpay boasts a workforce of roughly 800 employees and is backed by the likes of Sequoia, Ribbit Capital, Tiger Global and Y Combinator, as it continues to offer fast and secure ways for merchants, ecommerce companies and public institutions to accept and disburse payments online – with services ranging from payments and banking to credit and payroll.
Ke Holdings is a Chinese holdings company engaged in housing transactions and other related services. Founded in 2001, Ke Holdings operates across three segments: Existing Home Transaction Services, New Home Transaction Services, and Emerging and Other services. Its Existing Home Transaction Services provides sales and leasing of existing housing through the online brokerage Beike; the New Home Transaction Services segment provides new housing agency sales for real estate developers; while the Emerging and Other services segment is engaged in financial services and other newly developed businesses.
Dubai-based Optasia is an advanced AI platform enabling access to financial products and solutions for underserved populations. Extending its services to over 30 countries, Optasia’s data engine and algorithms analyse different data from mobile devices to provide instant credit decisions to its partners. Today, the company enables credit decisions for an estimated 88m customers a month, and, as of 2021, had 560m addressable customers. The fintech has partnered with Vodapay in recent times – the financial arm of telecom company Vodacom – expanding its presence in the Democratic Republic of Congo.
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Real-time bill presentment and payment system provider MadfooatCom is a leading Jordanian fintech, enabling consumers to pay and enquire about their bills. Founded in 2011, MadfooatCom partners with banks in Jordan to help them enhance their customer experiences and shorten collection cycles. In fact, MadfooatCom partners with more than just banks, striking deals with telecom companies, government agencies and nonprofit organisations across Egypt, Saudi Arabia, Oman, Palestine, the UAE and Morocco, as well as its native Jordan.
Grab is a Southeast Asian superapp that describes itself as ‘the everyday everything app’. The app allows users to order food deliveries, pay for daily purchases, invest in the stock market, take out insurance for life’s necessities, and even book a hotel room. Since its founding in 2012, Grab has grown to become an app used by millions of consumers daily across Southeast Asia, with a presence in 13 different markets. Headquartered in Singapore, the fintech is currently led by former Harvard Business School graduate Anthony Tan as Co-Founder and CEO.
Egyptian fintech Fawry is a leading digital payments platform in the region. Founded in 2008, Fawry provides electronic bill payments, mobile top-ups, cash deposits and withdrawals to the consumers it serves. The fintech also has an extensive range of investments, savings, insurance, rewards, loyalty and e-ticketing products. Fawry also serves SMEs, enabling them to accept payments through a range of terminals, be it online, mobile, or point-of-sale (POS). The fintech went public in 2019 and has since launched Tamweelak Fawry, a lending platform for SMEs and micro businesses.
Another Chinese company, Lufax Holding is a financial services empowering institution for small and micro businesses operating out of China. Associated with Ping An Group, Lufax’s mission is to foster small business competitiveness, providing SMEs and individuals with inclusive products and services to help institutional partners reach and serve SBOs efficiently. Today, Lufax is partnered with over 550 financial institutions in China, supporting them through its offline-to-online model by leveraging an extensive nationwide direct sales network.
Tencent is one of China’s biggest multinational technology and entertainment conglomerates. The operator of WeChat, Tencent’s platform plays host to a range of embedded finance offerings. In 2018, the company surpassed a market value of US$500bn and is today the most valuable publicly
traded company in China. Today, Tencent is involved in many emerging trends shaping the future of financial services, leveraging advanced AI and large industry models to serve its customers and business partners. Among other ventures, Tencent is one of the world’s largest video game vendors.
Our top fintech in APAC is Ant Group, the parent company of Alipay, and one of the world’s most-used mobile payment platforms. Alipay helps to connect consumers and merchants, supporting both ecommerce and physical transactions. Today, the fintech supports over 2,000 financial institutions in China to provide inclusive financial services – ranging from consumer finance and wealth
management to insurance. It also collaborates with local governments in over 1,000 counties, more than 500 brands, and 1,000 financial institutions. Formerly part of the Alibaba Group, Ant Group was split out in 2011. Recently, the founder of both Ant Group and Alibaba, Jack Ma, gave up overall control of Ant Group amid a whirlpool of regulatory scrutiny.
Convera looks at today’s global economy, analysing the impacts of monetary policy, bonds & equity, credit, trade and geopolitics on FX rates, with an eye to how these may change as we enter 2024
WRITTEN BY: LOUIS THOMPSETT PRODUCED BY: JAMES WHITE
Today, exchange rates are experiencing volatility, with economic headwinds leading to unpredictable impacts on a growing global trade market post-COVID-19. This volatility is affecting cross-border trade for SMEs and large corporations alike.
Interest rates from 155 central banks between August 2021-2023 have risen over 500 times – constituting the most aggressive period of interest rate hikes ever recorded – a reality that has jolted foreign exchange (FX) rates.
The cause of these unprecedented hikes? The need to swiftly contain inflation. Central banks have had to reverse course from their actions during the COVID-19 pandemic when over 200 interest rate cuts happened throughout 2020.
As the gears of industry and trade began turning again in 2021, a regime shift has been mandated to control inflation. But rapidly imposed, successive interest rate hikes have knocked exchange rates; the euro, US dollar and pound sterling have seen much volatility since.
Note: percentages will not add up to 100% due to multiple response options. Only displaying top 5 concerns.
Source: Convera – July 6-7 2023. Displaying responses from 95 businesses across Europe, APAC and NAM. Respondents included industries such as financial services, manufacturing, and respondent job titles included FDs, CFOs, and MDs. Question: “Thinking about the next 6-12 months, what issue(s) concerns you most today?”. ‘Other’ concerns not displayed included Digital transformation/automation.
In fact, Kybira’s 2023 Currency Impact Report examining 1,200 companies found that rising exchange rate risk cost them US$64.2bn in Q3 2022 alone. These FX headwinds were more than three times the fiscal amount of any tailwinds experienced by any of the sampled companies.
Moreover, a Convera survey found that 71% of such businesses counted high inflation and rising interest rates as the most pressing macroeconomic issues they face, with another 49% citing a lack of cash flow and 44% geopolitical trade risks as the most immediate issues. These figures are best highlighted in the graph below.
With these figures in mind, it’s clear that exchange rate risk constitutes a significant point of friction in cross-border trade for SMEs and corporates alike. These headwinds are affecting payments and organisations’ bottom lines.
2024 may mark a turning point, with volatility easing at the back end of the year to keep cross-border trade on a path to growth. Convera forecasts that crossborder business will accelerate some 33% between 2023-2028, reaching US$39.8tn from US$30.3tn in 2022.
Today’s higher for longer interest rate narrative will be challenged if inflation falls to the much-coveted 2% mark, meaning central banks could be compelled to lower interest rates.
In the US, inflation is falling, but economic resilience has resulted in volatile US rate expectations, reducing the US dollar’s 13% fall from its October 2022 high, to around 7% at present.
While falling inflation could constitute a shift in monetary policy from central banks – which in turn could impact FX rates – other factors could contribute to
the broader macroeconomic outlook and the potential for further FX rate volatility: bond and equity price divergence, credit conditions, trade circumstances, and the geopolitical landscape.
This report considers each of these coalescing factors, forecasting their compounding effects on FX rates.
From Convera’s perspective, the key to success for cross-border trading businesses in 2024 will be determined by their ability to mitigate cross-border frictions and volatility, negate losses and maximise growth. Those who succeed will execute sophisticated hedging processes, effectively automating these processes at speed.
Having the right solutions in place will enable global organisations to address cross-border frictions, ensuring they remain beneficiaries of a growing trade industry, amid widening macroeconomic uncertainty.
Exchange rates are experiencing volatility today. This is a legacy of recent crises –from the US-China trade war, the aftermath of fiscal COVID-19 measures and Russia’s war with Ukraine – all leading to the current cost-of-living crisis stretching from 2021 into 2023.
Many economists predicted the global economy would fall under its weight, with high interest rates and high energy prices – the latter a partial symptom of severed trade with Russia following its invasion of Ukraine – seeing consumers’ wallets pinched and the economy heading to a potential recession.
Despite fears, inflation – particularly in the US (as aforementioned) – has started to
fall. With incoming economic data showing resilience, these stagflation risks have subsequently eased.
But where does this economic resilience come from? The pandemic may have had a part to play. Fiscal stimulus measures sparked a global consumption boom that is still influencing the global economy in 2023.
Consumers have accrued excess savings post-pandemic and a shift in consumer preferences may have contributed to the disconnect between lagging and leading economic indicators currently seen.
But this is not the only disparity contributing to an uncertain economy. The potential for further divergence between bond and equity markets could further alter the outlook for FX rates.
Quantitative tightening is gaining more and more attention and could have significant side effects for the economy and, subsequently, FX rates. Bond yields have continued to surge as central banks raise interest rates across the board and actively sell government bonds. The graph below shows how, historically, bond prices fall
Median cross-asset performance after interest rates peak, 7-day moving average
Sources: Refinitiv,
Note: Historical data since 1971. G7 bond price series is an average of individual bond prices for G7 nations, weighed by their respective GDP values. G7 equity index is an average of individual equity indices, weighed by their respective trading volumes. Yahoo Finance, Oxford Economics, Macrobond, Convera – August 2023when the Federal Reserve raises rates but rise once rates eventually reach their peak.
Additionally, equities have surprinsgly outperformed this year and the VIX Index – a measure of equity market volatility commonly known as the “fear index” –has stayed below its long-term index average of 20 for over three quarters of this year. In comparison, we saw the VIX Index above 20 for over 90% of the time in 2022.
This only adds to the picture of an uncertain economy, and the divergence between bond and equity markets could lead to further jolts in FX volatility as we head into 2024.
Quantitative tightening to reduce the economy’s money supply, as imposed by central banks, has been mirrored in the credit space. In fact, one of the most aggressive credit tightening cycles is potentially coming to an end, although the impact of higher credit rates is still feeding through.
The result of this tightening is that 40% of consumers across 28 markets expect their disposable income to fall in the next year, potentially driving down consumer spending.
For years, consumers have relied upon cheap credit. In December 2020, at the height of the pandemic, the world’s negative-yielding debt pile hit a record high of US$18tn and home prices in the US, UK and Germany rose by an average of 30% from the start of 2020 to mid-2022.
But since then, the battle against rising inflation has shifted the landscape of credit in the private sector. Today, shortterm interest rates and mortgage rates in G10 countries have hit a 14-year high, and
“As we near the peak of high interest rates and ponder the timing of future rate cuts, volatility in, and divergence between bond and equity markets could materially alter the outlook for FX rates”
GEORGE VESSEY LEAD FX & MACRO STRATEGIST, EUROPE
we see companies and households having to adjust to a new rate environment.
While we don’t expect credit conditions to tighten much more, the lagged negative effect of tighter conditions is yet to be experienced by businesses and households.
This could be particularly true for mortgage holders. In the UK, mortgage debt has shifted from being responsive to changing interest rates to stagnant over longer periods as many consumers have elected for fixed mortgage rates in blocks of two or five years.
With this lagged impact on consumers in mind, financial conditions – particularly consumer spending – could tighten further in 2024 when both sovereign credit and mortgages come due for refinancing.
We are already seeing tighter bank lending standards due to rising interest rates, which may start to crimp down on credit flowing to businesses and households, particularly those households with mortgages due for refinancing.
In the Eurozone, the Bank Lending Survey (BLS) reported demand from firms for loans or drawing of credit lines in
Change in G5 central bank’s balance sheets as a share of global GDP, in % terms Note: Global GDP forecast taken from the IMF for
the second quarter of 2023 dropped to a record low.
Meanwhile, the share of small US firms reporting it is difficult to access loans rose to a 10-year high in May 2023, and the Senior Loan Officer Opinion Survey (SLOOS) showed that US banks’ tighter lending standards have breached the threshold that in the past was consistent with a recession. This may come into sharper focus once lag effects have run their course.
And yet – to add further fuel to economic uncertainty – while credit may be tightening and bond prices surging, global stocks have bucked the trend seen from other economic indicators that point toward recession – appreciating over 15% year-to-date. US Nasdaq stocks are
particularly noteworthy in their defiance of expectations, surging 40% in large part thanks to the emergence of AI products on the market.
With global stocks healthy, one may assume this lays the foundation for stability in global trade. But is this the case? Yes and no. The value of cross-border global trade, much like stock markets, defied expectations of a downturn. Although global cross-border collapses were feared amid the onset of the COVID-19 pandemic, trade grew 24% between 2019 and 2022 and compared favourably with the longrun average of around 6% per annum since 1995. Nevertheless, a thriving global crossborder trade market does not necessarily rule out volatility, particularly regarding FX rates.
New politically charged trading policies have had a big impact on trade in recent years, as leading Western nations look to diversify from an over-reliance on China. Near-shoring trading has seen India, Vietnam, Mexico and Thailand become key beneficiaries of new trade opportunities as global firms move production away from China.
The US Inflation Reduction Act and the CHIPS and Science Act have both impacted the ability of China to undertake trade with the US and accept foreign direct investment. Chipmaker Intel is one major producer that is considering moving
production out of China to comply with new US regulations.
Today, the difference between Chinese imports into the US compared to five years ago is stark. In the first six months of 2018, Chinese imports into the US sat at US$249bn, but in the same period in 2023, Chinese imports accounted for only US$203bn – a drop of 18.5%.
Decoupling from China, the US has turned to Mexico as its number one importer. Its imports have grown from US$168bn in the first six months of 2018 to US$236bn in the first six months of 2023 –an increase of more than 40%, underpinning
Monthly US imports, USD mln, 6-month rolling total Sources: US Census Bureau,
the geopolitically-fuelled shifts emerging in trade patterns post-pandemic as part of the US-China trade war.
The process of decoupling from China is hastening amid growing geopolitical tensions, something that is bound to have implications for USD/CNY exchange rates.
This could be further complicated, as Xi Jinping looks to diversify his country’s economy, a process that is expected to result in China generating more than onequarter of all global consumption growth – more than any other country.
How the Chinese Yuan will subsequently look against the US Dollar seems all the more uncertain.
Shifting trade conditions are not endemic to just China and the US, Europe has introduced the EU Carbon Border Adjustment Mechanism (coming into force in 2026) to penalise high-carbon imports which, according to Energy Monitor, is likely to have the biggest impact on Russia. Over US$10bn of its largely iron and steel exports between 2015 and 2019 would have fallen under this new CBAM legislation.
Of course, the key driver in these shifting trade conditions is the result of geopolitical decisions and the key role politics plays in economic issues that affect FX rates. And in 2024, some big political events could alter economic outlooks, thus fuelling exchange rate volatility.
No upcoming political event is perhaps as large as the impending 2024 US election, where it is expected that incumbent President Joe Biden will again face off with Donald Trump, the likely Republican candidate.
The outcome of this election could have vastly different geopolitical implications.
“In the first six months of 2023, Mexico overtook China as the largest overseas source market for US imports of goods. Trade disputes or diversification is having consequences for longer-term balance of trade and payments”
STEVEN DOOLEY LEAD FX & MACRO STRATEGIST, APAC
For instance, would another Trump administration roll back any of the severe economic sanctions on Moscow that ensued after Russia invaded Ukraine in 2022?
Such is the polarity in today’s political sphere that the impact of elections on the economy is arguably more unpredictable than ever.
History backs this up. Since 1980, only six of the US’s Congressional 21 sessions (29%) have been led by a unified government, leading to higher policy uncertainty.
Add to that Donald Trump’s 2016 election win, the US-China trade war and pandemic-led economic policy responses, and the polarity only grows. The Global Economic Policy Uncertainty Index has already reached record levels near 435 in 2020 (versus 196 in 2010) and it has never really normalised to pre-pandemic levels.
Such political conditions are not constrained to the US alone either – they are global.
Take the UK, where the British pound collapsed in 2022 because of thenPrime Minister Liz Truss’ poorly received economic recovery plan. And the UK could see further economic shifts in 2025 at the time of its next general election.
That is if it does happen in 2025. There are suggestions current Prime Minister Rishi Sunak could pull this timeline forward should the UK economy remain on a resilient path. And should the British public vote in the Labour Party after more than a decade out, there is a chance this could alter UK-EU trade and business relations.
The scope for election-driven economic uncertainty is everywhere in 2024, with key elections happening in Mexico, South Africa and the EU. There is
“Most forward-looking indicators – like the Purchasing Managers Index, the Conference Board’s Economic Index, and yield curves across government bonds –point to high recession probabilities in 2024, while backward-looking indicators continue to perform well”
BORIS KOVACEVIC GLOBAL MACRO STRATEGIST
uncertainty around the election of a new European Parliament in 2024, with far-right candidates gaining traction in recent months.
Could far-right candidates, if successful, reshape the European landscape for climate policy and lead to a more conservative Brussels?
This adds to today’s economic picture of disparity and uncertainty. The changeability of political policy and shifting trade allegiances, alongside a lag in the pinch on credit, and a divergence between bonds and equities points to an uncertain economic outlook, one which could unpredictably affect FX rates globally.
Most forward-looking indicators –like the Purchasing Managers Index, the Conference Board’s Economic Index, and yield curves across government bonds – point to high recession probabilities in
2024, while backward-looking indicators continue to perform well.
The last four recessions have been preceded by circumstances that are currently in place, such as tighter US Federal Reserve monetary policy, the New York Federal Reserve’s recession probability indicator rising above 30%, the Conference Board’s US Leading Economic Index falling below -5, over 50% of US bond yield curves inverting, and the US’ CEO Confidence Index falling below the key 40 threshold. Nevertheless, consumer spending has remained resilient and global stocks have appreciated, with the Nasdaq surging.
So, amid the divergence and uncertainty today, what outcomes should we expect in 2024, and how could these potential outcomes affect FX rates?
In our full report, we’ll provide an even more comprehensive outlook for 2024, looking at how key markets will be affected in our FX rates analysis and forecast scenarios and recommendations for crossborder businesses looking to successfully navigate international trade as we enter 2024. Register here to receive a copy of our full report, launching at Money2020 US on October 23rd.
Community banks have long been an alternative to larger institutions, but as big bank branch closures rise, is there an opportunity for community banks?
WRITTEN BY: LOUIS THOMPSETTommunity banks have long been among the great alternatives to large banking institutions – depository institutions serving the needs of a local community’s individuals and businesses.
Contrary to the national and/or global ambitions of larger banking institutions, community banks, alongside credit unions or building societies, are tailored to support the specific needs of the communities they serve.
Kin + Carta’s Financial Services Director Europe, Phillip O’Neill, sees community banks as being important for supporting those in underserved communities.
He says: “Because community banks are set up in local communities, they have a deeper, more intricate understanding of the people they serve and can use this specialist understanding to offer people and small businesses access to financing in cases where they would have been rejected by high street banks.”
Head of Payments Infrastructure at OpenPayd, Barry O’Sullivan, adds that while community banks have “fewer business lines than a large bank, focusing mostly on day-today banking, mortgages, and small business loans”, these companies have a deeper understanding of their local communities.
He continues: “Most consumers will be familiar with building societies and credit unions that focus on a specific region.
“These companies rely on knowing their local market better than a high-street bank and reinvest the deposits held with them back into the community. Many will also have some element of community ownership.”
Despite the perks of community banks, the tag of ‘alternative’ has always loomed
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large, and as community-owned ventures, they are only as large as the funds their members put in.
Though community banks may play second-fiddle to national and international banking institutions, recently, community banks have seen an uptick in growth.
This is according to a Wipfli survey, which found that 77% of community banking leaders expect to see 5% growth in 2023, despite a report from S&P Global anticipating a fall in community bank earnings in 2023 of 22.6%.
Amid economic uncertainty, with the aftermath of COVID-19 and the war in Ukraine leading to the collapse of significant world banks – Silicon Valley Bank (SVB) and Credit Suisse included – why do things look seemingly on the up for community banks?
“By partnering with the right fintech infrastructure providers, community banks are now upgrading their core systems and building new digital propositions”
PHILLIP O’NEILL FINANCIAL SERVICES DIRECTOR, EUROPE, KIN + CARTA
One of the key contributors to anticipated growth at community banks is new M&A opportunities; fintechs continue to proliferate the market and many community banks are looking to streamline the experience offered to members by leveraging tech.
Acquiring and integrating fintechs into community banking systems has the potential to boost profitability too by attracting new members, and could make up lost earnings of today in later years.
Perhaps, though, the greatest opportunity for growth at community banks – as the financial world continues to tread the path of
greater digitalisation – isn’t even an initiative led by community banks themselves.
As explained by O’Neill: “The closure of bank branches could see community banks’ importance in local communities grow.
“More than 250 high street bank and building society branches in the UK alone will close this year – spurred by the transition to digital banking, which has lowered overall demand for branch services, as well as to cut costs amid economic uncertainty.
“This is going to impact local communities, people who rely on cash, and small businesses massively, which could see more people use community banks as a replacement.”
So, as national and global banks shift away from in-person to digital customer
engagement, the opportunity opens for community banks to be the local service for community members that need it.
Given the opportunity offered to community banks with the presence of in-person banks receding, the strategies they employ to best use technology are of vital importance.
For community banks, it’s about finding the balance between technological innovation and ensuring customer experiences retain a human touch.
Kin + Carta’s O’Neill notes that while community banks “have been playing catch up to high-street banks in terms of
As more community banks have come to see the value in digitalisation as a means to augment and enhance the customer experience they can offer, so too has their funding in fintech startups.
Data from CB Insights reveals that while fintech funding from VC firms is on the decline, the funding void is being filled by community banks – with an eye to eventual acquisition or partnership with burgeoning fintechs.
In fact, a study from Cornerstone Advisors revealed that, as of 2023, over 500 community banks and credit unions make direct investments in fintech startups.
The data backs this up, detailing the average fintech investment of a community bank in 2022 stood at US$3m, a figure that is expected to rise to US$4m by the end of 2023.
In total, Cornerstone predicts community banks and credit unions will invest US$1.5bn in fintechs by the end of Q4 2023. This would represent one of the biggest-ever years of investment in fintech from credit unions and community banks.
“The closure of bank branches could see community banks’ importance in local communities grow”
PHILLIP O’NEILL FINANCIAL SERVICES DIRECTOR, EUROPE, KIN + CARTA
DO COMMUNITY BANKS NOW HAVE AN ADVANTAGE OVER LARGER BANKS?
It would seem many community banks, credit unions, and building societies share a working model, to implement the latest fintech capabilities while maintaining an in-person, human element to front-end operations.
As international institutions move away from an in-person banking experience, are community banks now at an advantage?
For O’Neill, the advantage is absolute. He says: “Customer service is a core selling point for a community bank; however, historically they may have lost out by not being able to offer the full suite of financial services that people or companies need and can get from enterprise banks.
“By partnering with fintechs to build those offerings, bringing them to their communities and local businesses through their strong customer-centric channels, this would provide a compelling proposition.”
OpenPayd’s O’Sullivan agrees: “Historically, community banks’ biggest strengths – their local focus and relatively small size – has made it difficult for them to invest in technology and infrastructure as the high-street banks have done.
“The growth of fintech companies has completely reversed that dynamic. By partnering with the right fintech infrastructure providers, community banks are now upgrading their core systems and building new digital propositions.
“For the first time, community banks can have the best of both worlds: local knowledge and expertise, backed up by world-class underlying infrastructure.”
So, can we expect a greater migration to community banks in the near future? Indeed, the signs look promising for your local high-street banking institution.
“Community banks rely on knowing their local market better than a high-street bank and reinvest the deposits held with them back into the community”
BARRY O’SULLIVAN HEAD OF PAYMENTS INFRASTRUCTURE, OPENPAYD
technology… partnerships between credit unions and fintechs like Engage, Solaris’ community banking division, are evidence that this could change”.
This change may be further along than many think, particularly at credit unions. In the US, MSU Federal Credit Union (MSUFCU) recently launched an AI-driven chatbot, Fran, but rather than replace face-to-face customer service, MSUFCU’s Chief Digital Strategy & Innovation Officer, Benjamin Maxim, says technological initiatives are being employed to augment – not replace –the customer experience.
“Our approach now is combining digital and human service, to create an experience that is both digital and human. Look at the pandemic. We all learned how to use video technology because it was the only choice,” adds Maxim.
“Well, we now have a video banking solution, to more easily connect our members to our employees. This is how we combine technology to better serve and connect with our members, not distance ourselves.”
A similar approach is being taken at Credit Union of America, which is trying to instil an omnichannel approach to customer services.
Its Chief Information Officer, Jon Douglas, says: “We’re trying to bring in technology, utilise and build that technology so that the member that comes into the branch and the member that does things online have the same experience with us, regardless of how they interact with us.”
And, at Virginia-based Farmers & Merchants Bank, the mission is to leverage technology to upgrade back-end systems as well as on the customer-facing side.
The bank’s Chief Experience Officer, Charles Driest, notes: “The future is technology and people, that’s what is going to win the day, not one or the other.
“This is where community banks have a huge advantage, particularly when we are so close to these communities, we provide the human element that AI misses. AI cannot, or has not yet at least, been taught human empathy.”
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WRITTEN BY: SCOTT BIRCH PRODUCED BY: JAKEMEGEARY
Financial Institutions in the US have always prided themselves on delivering personal customer service. With the decline in use of brick and mortar branches and face-to-face interaction, many of these institutions may feel like there is a growing gap between them and their valued customers – but it does not have to be that way. In fact, these financial institutions could provide even better, more individual experiences thanks to advances in online and mobile banking technology.
Apiture is a digital banking company headquartered in Wilmington, North Carolina, that serves community and regional banks and credit unions in the US market. The company’s mission is to empower financial institutions to know and serve their clients with the care of a traditional community institution at the scale, speed, and efficiency required in today’s digital world.
Apiture does exactly that for more than 300 clients throughout the US, delivering comprehensive online and mobile banking solutions that help community and regional institutions level the playing field with larger institutions.
Apiture’s flexible, highly configurable solutions include innovative data intelligence and embedded banking strategies to empower banks and credit unions to attract and retain consumer and business customers.
COO Chris Cox explains that the US banking market is very large and competitive, with up to 9,000 banks and credit unions all competing for the same customers, the same deposits, and the same loans.
“Research clearly shows that for all businesses, including financial institutions, digital engagement is paramount,” says Cox.
“Consumers are willing to change financial institutions for a better digital experience. That means innovation is necessary to allow our clients to compete in the market by creating new and better user experiences and digital engagement. It’s our job to bring that technology to financial institutions in the US in a meaningful way.”
One of the main challenges any fintech faces – especially in a vast market like the US – is having a point of difference, a unique
selling proposition. Digital banking is an increasingly crowded industry, and standing out from the competition is essential to survive and thrive. So what makes Apiture different from the rest?
“One of our key advantages is our ability to help our clients innovate quickly by integrating our solutions with best-ofbreed fintechs,” says Daniel Haisley, EVP of Innovation.
“We can bring those fintechs to the table, while we also continue to enhance our solutions through in-house development based on what we are hearing directly from the market and from our clients.”
The way that community and regional financial institutions serve their customers has evolved dramatically in the last decade. For more than 100 years, relationships were driven through face-to-face interactions,
TITLE: COO
COMPANY: APITURE
LOCATION: UNITED STATES
Chris Cox serves as the Chief Operating Officer of Apiture, overseeing all aspects of business operations. Previously, Chris was the General Manager of First Data’s digital banking business. He also led mobile payment product development efforts at First Data. Prior to joining First Data, Chris was a Principal Consultant at Diamond Management & Technology Consultants and a Staff Consultant at CSC Consulting. Chris has more than 20 years of experience in banking, payments, mobile commerce, product innovation, and technology strategy. He holds a bachelor’s degree in mathematics from Miami University and an MBA from Duke University.
TITLE: EVP OF INNOVATION
COMPANY: APITURE
LOCATION: UNITED STATES
Daniel Haisley serves as EVP of Innovation at Apiture, leading development of Apiture’s Data Intelligence and API Banking solutions as well as other innovation initiatives. Daniel has an extensive background in product and design management. He brings 10+ years of experience driving innovation in technology for financial institutions, previously holding product leadership roles at Live Oak Bank and 1st Source Bank. Daniel is a graduate of Purdue University in West Lafayette, IN, where he earned a B.S. in Financial Counseling & Planning, and the Graduate School of Banking at the University of Wisconsin in Madison, WI.
and conversations with people walking into a branch off the street.
Those physical meetings and interactions have dwindled, so how can bankers go about serving the unique needs of individual customers and members? That’s where Apiture comes in.
“With our data intelligence solution, that’s exactly what we seek to do,” explains Haisley. “We give the bank the insights to understand each customer, to understand their needs, and then execute on those needs through relevant interaction with that customer within digital channels.”
Cox says financial institutions have the potential to know more about their customers than any other business. That’s because financial activity touches every aspect of a person’s life throughout their entire life.
“Financial institutions want to be able to use their data to know their customers better – but mostly they can’t,” says Cox.
“That’s because they don’t have access to relevant data. They don’t necessarily have the ability to turn that data into meaningful
insights, and they can’t always trigger actions from those insights. So that’s what Apiture is doing with its Data Intelligence solution.”
Haisley leads the Innovation Team behind Data Intelligence – a suite of options that helps financial institutions better use their vast amount of customer data. There are a range of options under the Data Intelligence umbrella, such as Data Engage – a no-code toolkit that helps financial institutions see how users are engaging with digital banking and lets them create on-screen tips and guides to encourage engagement with their digital banking solution.
Data Intelligence also allows banks and credit unions to better understand user behaviour and create relevant targeted marketing.
“Innovation is important in the digital banking space, because in the US market, there’s just so much room for improvement when it comes to helping financial institutions to maximise their potential,” says Haisley.
“Every day, the Innovation Team wakes up thinking about how we can do that. How can we bring solutions to bear that will better help the consumers and small business owners understand their finances better, know what decisions need to be made, and execute on those decisions. Innovation drives that.”
Apiture is also exploring the use of AI to deliver tools that will provide a real-time assessment of a customer’s financial standing along with proactive recommendations to improve that standing.
By analysing data such as transaction history, account balances, and engagement metrics, this technology will enable financial institutions to establish a highly personalised, consultative relationship with their customers.
DANIEL HAISLEY EVP OF INNOVATION, APITURE
“In the US market, there’s just so much room for improvement when it comes to helping financial institutions to maximise their potential”
The use of artificial intelligence is not new in the financial sector, but Haisley believes there is huge potential to be unlocked.
“There’s a tremendous amount of data that banks and credit unions have available today, to do things like provide and manage budgets for their customers or members,” says Haisley.
However, historically banks have used that data to look back at customer history rather than use the data to predict what will happen in the future.
“In so doing, you empower your customers and your members to learn the easy way versus learning the hard way,” says Haisley. “And that’s where artificial intelligence and machine learning really unlock an inflection point for digital banking.”
Right now, the Innovation Team is laser focused on helping banks and credit unions to better utilise the data that they already have while also using APIs to empower those financial institutions to create unique experiences.
“By using APIs, we can bring system and people together that otherwise may not have been connected,” says Haisley.
“For example, using APIs to embed banking capabilities in non-financial partners’ software – like a university’s student portal or medical practice management software – is a powerful new way for financial institutions to connect with more customers digitally.”
Apiture has grown since its formation in 2017 as a joint venture between First Data Corporation and Live Oak Bank.
CHRIS COX COO, APITURE
“We built this company specifically so that we could be a great partner to financial institutions in the US market”
The company prides itself on having a team with hundreds of years of collective experience working at leading US banks and credit unions.
Despite its tender years, Apiture provides the operational efficiency of a mature company, coupled with the agility of a startup – something vital in the fast-moving world of fintech.
Company culture is also essential for success. “We built this company specifically so that we could be a great partner to financial institutions in the US market,” explains Cox. “We created a team, processes and tools all geared specifically toward being real partners to our clients. This is a relationship business that we’re in. And we take that very seriously.
“We’ve also focused a lot on our company culture. When we built the company, the idea was if we create a great place to work where people get excited to come to work every day, that directly translates into happy and satisfied clients.
“Our job is to create a seamless digital experience that allows financial institutions to engage with their customers. We do that by building a great solution. We do that by integrating partners and solutions. And we do that well.”
That is clearly the case, with more financial institutions choosing to leverage Apiture’s tech solutions and deliver the feature-rich online and mobile banking experience that today’s consumers and businesses expect in an increasingly digital-first world.
Many Western markets may not be too familiar with the likes of VodaPay or T-Mobile MONEY, but these newly launched telecoms payments options play a significant role in emerging regions.
In fact, when Vodacom – the South African telecoms company half-owned by Vodafone – debuted VodaPay in 2022, this led to a 12.5% revenue jump at Vodacom by Q4 of the same year.
It is, therefore, no wonder OpenPayd’s Head of Product Strategy, Daniel Belda, says digital payment technologies are enabling telecom companies “to take this one step further and improve the engagement with and retention of their expansive customer bases”.
The success of VodaPay and T-Mobile MONEY, as just two examples, proves that providing embedded payment options for telecom companies has led to “increased customer engagement and loyalty compared to other companies looking to deploy a digital wallet or super-app,” adds Belda.
Ericsson’s Head of Mobile Financial Services, Ola Persson, goes one step further, saying the advent of digital payments has “revolutionised the way that customers engage with telecom companies”.
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He notes: “Digital payments help telecom companies meet customers where they are – through their mobile phones – giving them the power to make payments, local transfers, international transfers, give gifts, and more – all while removing the need for a physical card that can be easily lost, or involve a tedious in-person trip.”
It is not just convenience, either, helping telecom companies expand their customer bases through payments. “Financial inclusion is another critical element of digital payments that keeps customers sticky,” adds Persson.
“Approximately 1.4bn people worldwide are unbanked, many of which live in developing countries. However, many of these people do have access to a mobile phone, which is all they need to harness digital payments and gain access to critical, everyday financial services.
“These elements – convenience and inclusion – are what have made the difference for mobile financial services and allowed their popularity to grow so meteorically across the globe.
“And as telecom companies continue to invest in more layers to the mobile money service mix, like personalisation, it’s clear that customer engagement will continue to increase as well.”
What is also true is that customer engagement is heightened by a stronger customer journey, and digital payments provide this type of journey for telecom companies.
In fact, even in EMEs, “consumers have come to expect end-to-end experiences, which is drawing telecom companies towards offering embedded financial services like digital wallets”, says Belda.
“Digital is the next frontier. That is unquestionable and inevitable”
OLA PERSSON HEAD OF MOBILE FINANCIAL SERVICES, ERICSSON
Persson gives e-shopping as an example, where customers “can easily check out using a variety of payment options from credit cards to digital wallets.
“They can even opt for buy now, pay later services, apply coupons and discounts, and receive cashback or loyalty points all in a single transaction journey.”
Digital payments: Reducing costs
It is not just greater customer journeys, engagement and retention that digitalisation offers the payments divisions of telecom companies – it can also help to significantly reduce costs.
By helping telecom companies reach higher operational efficiencies, the cost of payments infrastructure can be significantly reduced.
For Persson, there are two key areas where digitalisation has helped telecom companies reduce their expenditure: voucher generation and distribution costs.
He notes: “In the ‘old days’, and particularly in developing countries, any customer who needed to top up their phone prepaid subscription had to run to the local store and grab, for example, a US$20 paper voucher.
“Digital payments allow customers to self-top-up through their digital wallets, circumventing the need for these paper vouchers and thus removing the untold costs associated with first printing and then distributing millions upon millions of vouchers.
“For example, MTN, a leading telecom operator in Africa, has more than 24% of its airtime sales processed by MTN Mobile Money.
“Digital payment offerings also enable telecom companies to streamline their payment processes, reduce cash handling expenses, minimise late payments and bad debts, enhance customer service, and gain valuable data insights.
“Consumers have come to expect endto-end experiences, which is drawing telecom companies towards offering embedded financial services like digital wallets”
DANIEL BELDA HEAD OF PRODUCT STRATEGY, OPENPAYD
Ericsson’s Ola Persson looks at how digital money is helping to streamline customer payment journeys and, subsequently, customer experiences.
“Digital money has quickly become a strong challenger to cash in no doubt due to its convenience, simplicity, and speed. Digital payments have the inbuilt advantage of delivering a seamless experience from end to end.
“Open APIs also play a large role in enabling a seamless journey. New-age payment platforms with open APIs like Ericsson Wallet Platform enable third parties like merchants and enterprises to integrate with mobile financial services to offer seamless transactions and payments.
“Digital payments platforms are typically much more ‘open’ than conventional services,
meaning they offer increased connectivity and opportunities to create new and novel customer journeys.
“Looking towards the next decade, we expect to see personal finance management (PFM) and robo-advisory tools leveraging AI and ML algorithms with holistic data analytics to forecast future money inflows and outflows and also to provide personalised recommendations for savings and investments.
“Chatbots and voicebots powered by AI and natural language processing will be available to customers through apps and websites 24/7, further improving their journey from start to finish.
“Customer care will become automated and able to provide human-like responses that can meaningfully resolve customer queries and issues.”
“Naturally, these benefits contribute to significant cost savings and operational efficiencies for telecom companies, enabling them to focus resources on improving their core services and driving business growth.”
It is clear modern digitisation of financial services paints a rosy picture for telecom operators offering payments. But what are the downsides? What can a payments or financial services provider offer consumers that a telecom company cannot?
For Belda, while telecom companies are becoming increasingly capable, offering more services in different sectors like payments, smart agriculture, and health tech, “to continue to do so efficiently and effectively [they] need to have the right partners on board”.
He adds: “Most telecom companies don’t yet have a clearly defined financial services proposition.
“By partnering with a payments service provider, telecom companies can focus on their core operations and business growth, diversify offerings and increase customer engagement, all while maintaining a competitive edge in the market.”
Meanwhile, as far as Persson is concerned, the main struggle for telecom companies is keeping up with different regulations. “Adhering to various countries’ sanctions, anti-money laundry rules, and regulations can be a very complex undertaking,” says Persson.
“Ideal digital payments providers will be able to help telecom companies navigate an increasingly complex digital age.
“As digital payments increase, so does the potential for fraud. Most enterprises currently rely on ageing IT infrastructure, but advanced security and fraud management systems are needed.
“By partnering with a payments service provider, telecom companies can focus on their core operations and business growth”
DANIEL BELDA HEAD OF PRODUCT STRATEGY, OPENPAYD
“Such systems should be able to utilise AI, data analytics, and sophisticated rule engines to identify anomalies in transaction trends and curb fraud attempts in real-time.
“They should also be able to perform transaction velocity checks and map, analyse, and block the connections of fraudulent users. To succeed, this level of security and trust is paramount.
“Finally, companies are currently late on the potential of cloud to improve scalability. Through the next decade, expect to see telecom companies seek out a partner that can integrate their digital
financial systems onto cloud, unlocking a new realm of increased scale, efficiency, and seamlessness.”
But is scaling cloud capabilities the only thing in the future relationship between payments and telecom companies?
While cloud migration is an important step, this is just one area where Belda feels telecom companies will move from solely being a telco to a ‘techco’ (a telecoms operator to a technology company).
He adds: “This has been widely discussed across the telecoms industry over the last few years, with the aim of enabling telecom companies to win new business in wider technology sectors including AI, IoT and cloud.
“We’ll likely see something similar happen with telecom and payments companies. Many operators already offer some form of financial service, like paying for a phone in 12 instalments alongside a new subscription –the precursor of BNPL in Europe.
“In the future, we’ll see increased partnerships and collaboration to offer a breadth of services to customers.”
This is echoed by Persson, who calls digital the next frontier.
“More than 160 telecom operators offer mobile financial services today across geographies including the Middle East, Asia Pacific, the Americas, and Africa,” he adds.
“Telecom operator MTN Uganda, for example, sees approximately 29% of its revenue come from fintech services. That is incredibly significant.
“With existing services like data and voice stagnating, there’s no doubt more operators will continue to jump on board as digital payments become a key avenue for companies to diversify their revenue.”
WRITTEN BY: ALEX CLERE
PRODUCED BY: JACK MITCHELL
Practice Leader, Diana Halder, explains how the company is acting as a catalyst for real-time payments
Halder
Practice Leader at EY Canada, a role she has held since September 2019, becoming a full Partner in the firm three months ago. A vastly experienced payments industry executive, she previously spent six years at Accenture, as well as working in payments and global banking at Scotiabank.
When she catches up with us from her office in Toronto, Canada, it’s clear that this experience has set her in good stead. But she acknowledges that, even though she’s been in the industry for over 18 years, she’s always learning new ways to become a better leader.
“Putting people first definitely matters,” she tells us. “It’s important to understand their interests and ambitions to keep them motivated and engaged.” She characterises the tenets of strong leadership as ‘four Ps’ – people, patience, persistence, and being provocative when it comes to innovation.
“You tend to get a lot of noes as a female and as a minority in a male-dominated industry. There can be a lot of ‘no you
shouldn’t do that’ or ‘no you need to wait’.” Her message is all about being persistent and confident in your vision.
Indeed, gender equality and breaking down barriers for women are common threads woven through many areas of financial services worldwide. According to a report published last year 1, women land just 21% of board seats and only 19% of C-suite roles within the sector globally. That figure falls to an astonishingly low 5% when it comes to the CEO position.
It’s an issue that matters both to EY Canada – which has developed a programme called ‘Women. Fast forward’ to address gender equity in the workplace – and to Canadians.
COMPANY: EY CANADA
Diana Halder is a partner at EY Canada, leading the Canadian Payments Practice. She has over 18 years of experience in payments strategy design and large-scale programme delivery. Her domain knowledge in payments spans retail and commercial segments. Diana plays an active role in influencing the payments industry trends and is currently championing the QR code payments standards work in Canada.
Halder works with Canadian and US financial institutions, fintechs and big-techs to bring them in-depth
The country currently has a genderbalanced cabinet, meaning there are equal numbers of male and female members, and the Canadian government has previously introduced disclosure requirements that bring the issue of gender parity in the workplace into the spotlight, whether companies want it there or not. In case you’re wondering, women represent 51% of the workforce at EY Canada including 45% of management roles.
Canada is a vibrant and modern economy that originated well-known firms such as Shopify, Lululemon and Thomson Reuters. But there is sentiment north of the border that Canada is often overlooked in favour of their American cousins, particularly when it comes to industries like fintech and financial services – which, traditionally, have been concentrated around Silicon Valley and Wall Street respectively.
“Putting people first definitely matters. It’s important to understand their interests and ambitions to keep them motivated and engaged”
DIANA HALDER PARTNER, PAYMENTS PRACTICE LEADER, EY CANADA
With more than 400,000 people immigrating to Canada every year to turbocharge economic growth, we’ll likely see that influx of people begin to add extra pressure on Canadian financial institutions and payment service providers to meet the demand for cheaper, faster payments – especially with crossborder payments.
The country is already incredibly diverse, with one of the largest foreignborn populations in the world. Canada has
always embraced new cultures, right from the very beginning, Halder says. “My parents immigrated here from a country hampered with social and political challenges,” she explains.
“In Canada, I got access to free education, free healthcare, and I’ve been able to take advantage of those tools to get me to where I am today. That is one of the reasons I spend a lot of time with minorities and with females to empower and enable them – because I got that opportunity.”
Darrell MacMullin, SVP Products and Platforms at Mastercard in Canada, talks to us about the pace of change within disbursements and cross-border payments.
WRITTEN BY ALEX CLERE
When we dial in virtually to speak with Darrell MacMullin, Senior Vice President for Products and Platforms at Mastercard in Canada, he’s just got off the phone with his telecom provider. MacMullin is constantly evaluating the experiences he receives as a user, and applying those learnings to his role. “I am definitely UX-obsessed,” he admits.
Over the last 5-10 years, he believes several macro trends have redefined disbursements and cross-border payments. These include the rise of the gig economy; the emergence of new verticals in gaming and gambling that are moving into the scope of regulators; greater demand for choice in various different payment use-cases; and more exacting expectations from the general public.
“People’s expectations are on demand for almost everything now,” MacMullin says. “Whether it’s a refund from a health insurance company or a person needing to send money to family back home, they don’t want to wait days for that anymore. The expectation is that it has to happen in near real-time.”
In order to meet this evolving demand, Mastercard has placed a huge emphasis on its Mastercard Send platform, which facilitates secure, near-real time payment transfers between billions of cards, banks and digital accounts. Mastercard has also been investing heavily into new payments infrastructure, applications and services. “We’ve completed acquisitions and integrations of a number of companies and capabilities that give us the ability to reach about 90% of the world’s population with Mastercard CrossBorder Services,” MacMullin tells us. “Together, Mastercard Send and Cross-Border Services can support payments to bank accounts, mobile wallets, cash payout locations, and any card type and scheme whether it’s debit, credit or prepaid. The platform enables banks and fintechs to be able to move money to support multiple use cases including remittances, small business and commercial payments.”
It is clear to see how much her past contributes to her passion for improving the representation of women and other underrepresented groups in the workplace.
Canadian consumers want to see more choice Canada has an annual GDP of roughly US$2tn (CA$2.7tn). Within financial services specifically, much of that activity is concentrated around Toronto, the country’s largest city. According to industry database Crunchbase, the Greater Toronto Region –which extends along the shoreline of Lake Ontario – is home to more than a quarter of Canada’s banks, financial institutions, insurers and fintechs, despite accounting for just a sixth of the national population.
“The future of embedded payments lies in the ability to make the movement of money seamless and contextual”
DIANA HALDER PARTNER, PAYMENTS PRACTICE LEADER, EY CANADA
“I believe we’re similar to California when it comes to population size,” Halder tells us. Indeed, according to the latest estimates, the Golden State has one million more people than the Great White North. “So that’s one state in the US compared with our entire country,” she adds. Despite the smaller population Canada is ideal to pilot new technology, products or services because Canadians tend to be faster at adopting digital solutions.
From a payments perspective, Canada is in the midst of modernising its payment infrastructure and policies. Halder believes the industry isn’t as heavily regulated as other parts of the world – like the UK or Australia – and that the country is influenced
by the bigger banks. “They tend to drive the pace at which we innovate,” she says. This is similar to other geographies that have a big banking footprint.
“There is definitely innovation coming out of Canada, but the pace of this innovation and the level of competition is slower, as compared to other G7 countries.”
Oligopolies exist within sectors like telecommunications, internet service providers, hydroelectricity, and of course financial services. Though there is good infrastructure and services in those areas, competition is quite sparse.
This construct finds its roots in Canada’s origin as a country. It’s in their DNA. The country was a relative early-mover with the
implementation of email money transfer by Interac, a form of faster peer-to-peer payments where deposit instructions and notifications are sent over email. Now the country’s payment ecosystem is moving Canada’s real-time payments into a new era.
“What we’re doing is setting up a centralised real-time payments network with centralised clearing and settlement capabilities on a more modern technology stack,” Halder says. “That would be comparable to the FedNow in the US or AP+ in Australia.”
She says that it would be ideal if Canada had the range of choice that the US has (for example Zelle, TCH’s real-time payments and FedNow), but the lack of competition has made that challenging. “Right now in Canada, we have one option. It would be great for consumers and businesses to have more choices from public or private realtime payments networks.”
A protected financial ecosystem isn’t the only consideration for Canada’s modernisation agenda; the lack of widespread education on the benefits of
“The common themes among impressive fintechs are that they’re all very provocative in the way they go to market. They’re very forward-thinking in their solutions”
DIANA HALDER PARTNER, PAYMENTS PRACTICE LEADER, EY CANADA
modernisation and ageing technology also slow down progress.
“Another challenge is the speed at which banks can transform their ageing infrastructure to enable real-time payments. Functions such as real-time fraud detection and real-time postings to the DDA should be in place for us to have widespread RTP offerings and therefore adoption.”
As with many sectors, the pandemic helped create an inadvertent, but welcome,
acceleration within the payments space. There’s no escaping the impact that the pandemic had on small-and-medium-sized businesses, in particular. According to the Department of Industry, lockdowns and business failures resulted in nearly threequarters of a million job losses by the end of 2021 alone. During the pandemic, EY championed initiatives that helped small businesses get access to support and subsidies from their government. EY brought together some of the most significant players – including Canada’s largest banks,
In this episode of Making Waves with EY, our host Diana Halder explores the latest trends, innovations and challenges shaping the payments industry with Global EY leaders.
PayTechs’ relentless disruption means that only banks and payment service providers that offer “value beyond payments” can compete.
Canada’s largest merchant acquirers, networks and paytechs – to create a new open-source standard for moving money via a quick response code (QR code).
“As a result of the pandemic, there has been a spike in movement towards digital or online payments as small-and-mediumsized businesses looked for cheaper and flexible money movement options.”
She suggests that the impetus is now on everyday Canadians to maintain the pressure on their banks and financial institutions, to be relentless in their pursuit of more convenient and robust payment solutions. “As Canadians, we’re very easygoing. We don’t pound the table when we don’t get what we want. Americans demand innovation, they demand competition. In Canada, not so much. We still have some of the highest telco bills, and we still get charged for our checking accounts.”
In everything that it does, EY Canada’s objective is to be a ‘change agent’ – as demonstrated in the collaborative approach that it’s been taking in the last few years. “Our mission statement in EY Canada is to be a ‘change agent’ within payments. We want to help bring about change through provocative thinking, innovative solutions
and creative partnering – not just with our clients but also our vendors and regulatory bodies.”
A prime example of this is the QR code work, developed during the pandemic, which will soon be recognised as Canada’s standard by its payments network owner and operator. This open-sourced standard is more accessible and cost effective to acquire and process payments, as compared to existing options. For smaller merchants, a QR code payments system opens up new possibilities because their mobile phones can be used to accept payments without having to pay for expensive infrastructure and technology, allowing financial inclusion for Canadian merchants who still cannot accept card payments.
One of the most promising areas of innovation, as they see it, lies in embedded payments. This API-enabled capability allows household names to offer convenient money movement experiences. It allows non-banks to offer digital wallets; nonlenders to provide credit at checkout or when budgeting; and non-insurers the ability to distribute insurance, when you’re renting
“Our mission statement in EY Canada
Payments is to bring about change through provocative thinking, innovative solutioning and creative partnering”
DIANA HALDER PARTNER, PAYMENTS PRACTICE LEADER, EY CANADA
a car or booking a holiday for example.
Embedded payments effectively remove the need to pull out your card or toggle to a different experience or application to make a payment, but it instead seamlessly initiates the payment as a part of an experience. “Think Uber,” Halder says.
Embedded payments is one area that EY Canada Payments is really focusing on, anticipating that the total addressable market for such services will reach trillions of dollars within the decade.
“You have cheaper tech that’s coming online, making it accessible and available for businesses and individuals to innovate upon.” Halder says. “Group that with the standardisation of payment messages, the spread of openbanking and real-time payments and you have yourself the ideal conditions for embedded payments.”
This will obviously, then, be a huge area of focus for the team at EY. The company itself will be building out its assets and support services so that it can play a key role in that transformation of Canada’s realtime payments industry – and, of course, EY Canada will continue to work hand-in-hand with the diverse list of clients that it already numbers among its clientele. They include financial institutions and credit unions, big tech, entertainment and media companies, ecommerce platforms as well as paytechs and fintechs.
Finally, the company is big on ESG and diversity. With its ‘Women. Fast forward’
programme, EY Canada will continue to champion women in the workplace, bolstered by those impressive figures about the number of female employees in management roles within its own organisation.
But there is still a long way to go. According to a study by Equileap, the vast majority (81%) of Canadian firms do not publish details of their gender pay gap – although this number is inching down year-on-year. When it comes
of EY Canada employees are women, including 45% in management roles, compared to 20% averageacross whole of Canada
to gender parity in the boardroom, although most metrics are moving in the right direction, only 30% of senior managers at top Canadian firms are women. The number of women in the broader workforce is lower than comparable labour markets, including the US.
In fact, such is the state of gender diversity in corporate Canada, there are more CEOs at top publicly listed Canadian firms named Michael than there are women.
Interestingly, the Payments lines of business within financial services has one of the highest rates of female executives, an example that should be replicated across other areas. It’s refreshing to see the payments industry set an example in gender parity.
DIANA HALDER PARTNER, PAYMENTS PRACTICE LEADER, EY CANADA
“You tend to get a lot of noes as a female and as a minority in a maledominated industry. It’s all about being persistent”
1. Deloitte, 2022
Cryptocurrencies have come a long way in a fairly short period of time, so what does the future hold in store for these digital assets 30 years from now?
WRITTEN BY: ALEX CLERE
The crypto industry has grown from a relatively low baseline to one of the biggest and most disruptive trends in financial services in a short period of time. Because of how nascent this technology is, it’s difficult to contextualise the industry’s rapid burst of growth.
So what exactly does the future hold in store for crypto, and how far can the technology go?
Let’s start with the numbers. Various research reports show that cryptocurrency ownership today sits at about 200-300 million people, with Vietnam often touted as the most mature market when it comes to crypto adoption.
According to Allied Market Research, the value of the cryptocurrency market is predicted to treble by 2030, reaching a value of almost US$5bn. The main drivers will be remittances and global payments, Allied says.
So there is the proof, if any were needed, that cryptocurrency is going to continue to grow and become one of the central aspects of our financial lives in the future.
But what exactly does Crypto 2050 look like? Will we be paying for goods on a daily basis using virtual coins? Will cryptocurrencies be a cross-generational concept, as easily understood by young adults and their grandparents alike, or will it be the preserve of the tech-savvy?
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In the aftermath of recent market volatility and the collapse of some crypto players, Daniele Servadei, CEO of e-commerce solution Sellix, told FinTech Magazine that weaker operators would inevitably be shaken out in the longer term.
“As crypto enthusiasts and believers, we need to start looking at our own industry more critically,” Servadei said. “We need to remove the weeds of scammers and swindlers from the very foundation that makes up crypto as we know it today.”
He believes the future of the crypto industry will be defined by trust, and giving
the companies who have already established their trust credentials the room to grow while subjecting newer entrants to inevitable rigour and scrutiny.
“Some regulatory tightening is unavoidable but perhaps that’s a good thing because it can increase industry trust and make investors feel more secure,” Servadei contemplates.
In an 18th-century letter, the American founding father Benjamin Franklin once wrote that “nothing can be said to be certain, except death and taxes”. Perhaps, for the modern era, this should be changed to “death, taxes, and an increase in regulation for crypto”.
It now seems unlikely that digital assets will continue to evade the clutches of regulators for much longer, having been allowed to emerge from a nascent position during a regulatory ‘observe and monitor’ phase.
ALUN EVANS CEO AND CO-FOUNDER OF FREEVERSE
“CURRENTLY, MOST OF THE GENERAL PUBLIC HAVE NO IDEA WHAT A BLOCKCHAIN IS. BY 2050, ALL OF THAT CONFUSION WILL HAVE BEEN IRONED OUT”
Crypto industry stakeholders should prepare for tighter regulation because this seems to be the reality in nearly every jurisdiction. This needn’t be a bad thing, though. Some regulations may stifle innovation and limit innovation, but most crypto regulation will likely be quite rudimentary because the industry has not been regulated much until now.
Expect safeguards for customers and the setting of minimum standards for crypto operators – something which recent events, like the collapse of crypto exchange FTX, have proven necessary.
“In the immediate next few years, we can expect to see more countries developing and implementing their own regulatory and legal frameworks for the use of crypto,” explains Daniel Seely, financial services lawyer at Freeths specialising in cryptocurrency.
“Different countries will inevitably take different approaches to this. Some are already using cryptocurrencies as formal legal tender, meaning it is becoming increasingly embedded into those countries’ economic systems, and also directly exposing more people to crypto itself.
“Other countries may take more stringent approaches, or indeed reject crypto entirely,
which may be down to any number of economic or political reasons. However, given that crypto appears here to stay and will see increasing global use, these governments will eventually need to embrace crypto if they are to compete on the world stage.
“Over time, we may see situations where countries develop formal treaties and international frameworks to oversee the use of crypto. A directive from the European Union, for example, would result in all member states ending up with the same economic arrangements, creating a consistent approach that provides greater opportunities for those looking to use and exchange crypto internationally.
“From this perspective, crypto could be seen as similar to the euro, in the sense of being a single, common form of currency.”
“I
NFTs will be a huge component of crypto growth One form of crypto asset that will continue to grow in popularity is NFTs, which have been used up to this point as the basis for digital artwork, but which have potential use-cases and applications in many practical applications from sport to entertainment.
NFTs allow companies not traditionally involved with crypto to offer collectible, tradable merchandise that increases customer loyalty and brand engagement – meaning they could become one of the most visible forms of digital assets.
“I believe very strongly that by 2050 the concept of ‘owning your digital content’ will be standard,” assets Alun Evans, Co-Founder & CEO of Freeverse,
The latest Global Crypto Adoption Index from Chainalysis shows the state of the crypto market today – and particularly the countries with the greatest level of adoption currently, meaning they take the strongest foundations into the future.
Chainalysis ranked almost 150 countries with sufficient data against five separate metrics to produce an overall ranking of crypto adoption in those nations, and although the tabletopping country has a high smartphone penetration rate and tech-savvy population, it might still come as a surprise as to who it is!
a technology company that is helping to power the future of digital ownership.
“I compare it to the evolution of the internet: 30 years ago, to get online you needed to decide on which ISP to use, how modems worked, what a router was, and so on. This meant that only enthusiasts managed to get online. These days, fast internet, even on mobile devices, is taken as a given straight out of the box.
“In a similar vein, truly owning digital content in the current paradigm requires knowledge of which blockchain to use, which marketplace to use, which cryptocurrency to use, and how to use a Web3 wallet. Currently, most of the general public has no idea what a blockchain is. By 2050, all of that confusion will have been ironed out.”
Evans believes that success for NFTs between now and 2050 will be defined by the percentage of the population who ultimately own and use a Web3 wallet, which is the basic requirement to interact with anything on the blockchain.
“IN THE IMMEDIATE NEXT FEW YEARS, WE CAN EXPECT TO SEE MORE COUNTRIES DEVELOPING AND IMPLEMENTING THEIR OWN REGULATORY AND LEGAL FRAMEWORKS FOR THE USE OF CRYPTO”
DANIEL SEELY LAWYER AT FREETHS
This will be proof of how simple the industry manages to make blockchain participation, in much the same way that most people today have an email account.
He accepts, though, that in the adoption of these emerging technologies, many use cases will require “large-scale, institutional change to industries with very entrenched positions”.
“Take, for example, any creative publishing industry like music, film, books or games. Digital distribution has already revolutionised those industries, but in a very limited way that has arguably devalued the rights of the end-user. By 2050, I suspect there will be further disruption thanks to blockchain and true digital ownership.”
Hope that ‘more deserving’ crypto projects shine Evans says it’s hard to predict which markets or regions will be furthest ahead in terms of NFT adoption by 2050, but accepts that the US and Asia have historically led the way in terms of adoption. “Europe is being very active in providing a clearer legal framework, but I think there is a huge opportunity for developing nations as well,” he adds.
We’ll save the final word for Sellix’s Daniele Servadei, who is optimistic about the future of cryptocurrencies more generally. “I hope that what will emerge from the ashes of FTX may be a more honourable, more transparent and sturdier version of what we all believed it was.
“That the so-called crypto winter may be on its way to a spring defrosting, and that this year may be kinder to the crypto space than 2022 was. I believe that better, more deserving projects will rise out of the collapse of FTX, and I hope I’m right. Only time will tell.”
WRITTEN BY: ALEX CLERE
PRODUCED BY: JAKE MEGEARY
Garrett Olson, Head of Insurance & Risk Management at Wolt
Anybody who lived on planet Earth during the COVID-19 pandemic will be very familiar with the convenience and variety that comes from having food, groceries and merchandise delivered to your door. In the US, companies like DoorDash, Grubhub and UberEats are helping to create a roughly US$25bn economy –buoyed by strong growth during lockdown.
One of Europe’s leading players in the industry is Wolt, a Finnish-headquartered technology company that makes it easy to discover and get the best restaurants, grocery stores and other local shops delivered to your home or office.
Founded in 2014, Wolt has rapidly grown to a 9,000-person company spread across 25 countries and hundreds of cities – from Oslo to Tokyo. Wolt has also expanded from restaurants to multiple verticals, and customers can today order a broad selection of products on Wolt – from medicines to dog food and flowers to cosmetics. In 2022, Wolt joined forces with DoorDash, which operates in 29 countries today, including 25 of them with the Wolt product and brand.
Understanding the demands of courier partners is the first step towards providing a relevant insurance proposition for them – a process which is led by Wolt’s Head of Insurance and Risk, Garrett Olson.
Based in the Danish capital, Copenhagen, Olson has been with Wolt for just over three years. Building simple, relevant and valuable safety nets for the platform economy motivates him. Prior to Wolt, he worked with the Executive Boards at Zurich Insurance Group; the shipping company Mærsk; and FLSmidth, an OEM to the mining and cement industry in strategy, risk and venture building roles.
There is no typical Wolt courier partner. Olson understands each courier partner has their own personality, preference of vehicle and device, and desired hours on the platform. He recognises the various motivations that individuals may have for earning on the platform: sporadic and ad-hoc basis, supplementary or transitional.
Each courier partner has different motivations, and it highlights the importance of one’s flexibility to work around their own situation and schedule. Insurance propositions should be designed for people working flexibly.
“Wolt offers courier partners with insurance during the time they are logged online, making deliveries with Wolt,” Olson says. “When offering this insurance, we have focused our attention on not only the accident, but also the recovery period. We want a healthy, happy courier partner to return to the platform. This safety net enables courier partners to make deliveries with a peace of mind. How you manage this risk is one of the most essential building blocks I’ve seen to generate sustainable value, while strengthening reputation.”
With over 180,000 active courier partners fulfilling millions of orders every year, accidents are bound to happen – and they do. That’s where Wolt’s insurance proposition comes in. Having a very diverse group of people as courier partners across 25 countries underlines the challenge of creating an insurance proposition that would work for everyone.
Wolt’s courier partners want flexibility. They want to be able to log on the platform when it suits them, work for as little or as long as they choose, and know that there’s always going to be enough orders on the platform to earn money. This extends to the insurance piece, too; courier partners want to know they’re adequately covered against accidents or injuries that happen in the course of their work by insurance that is able to respond quickly to the severity of the incident.
Should they need to make a claim, they expect it to be as simple, intuitive and easy to follow as ordering on the Wolt app.
“How you manage risk is one of the most essential building blocks I’ve seen to generate sustainable value, while strengthening reputation”
GARRETT OLSON HEAD OF INSURANCE & RISK MANAGEMENT, WOLT
As with the customer app, Wolt pays close attention to the hierarchy of information, presenting key details in concise formats which also applies to the partner insurance dashboard – accentuated with graphics, icons and short descriptions wherever appropriate – to make the claim submission process as effortless as possible for courier partners who have had a fall, collision or breakage.
Wolt offers two types of insurance coverage to the courier partners. The first is accident cover that includes “the broad spectrum of risks that couriers face”, Olson tells us – including dislocations, broken bones, and chipped teeth. Although Denmark is one of the world’s most bikefriendly nations, minor injuries like this are not uncommon. But the company also insures the most extreme and unfortunate end of the spectrum as well, from disability all the way up to death.
“We’ve built some unique aspects into our programme, specifically because we’ve listened to courier partners, assessed municipal data and pushed the insurance industry to adapt,” Olson continues. This
“If we fail, it tends to still be forward. We view obstacles as opportunities. We are addressing a new segment, so inherently the status quo will push back”
GARRETT OLSON HEAD OF INSURANCE & RISK MANAGEMENT, WOLT
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GARRETT OLSON HEAD OF INSURANCE & RISK MANAGEMENT, WOLT
includes a death benefit paid out to a dependent of a courier partner, as well as protection against assault.
The second programme revolves around third-party liability for courier partners. The benefits of this are two-fold, Olson says: first it is aligned with Wolt’s commitment to make the cities they’re in better places, as the insurance protects against unfortunate incidents courier partners may have caused. Second, it also fills an unmet gap in the insurance market.
“It’s virtually impossible for an individual courier partner to go and get that type of coverage elsewhere,” he says, “particularly if their mode of transportation is an e-vehicle, a bike, or just delivering on foot.” In most Wolt countries the only component of insurance that courier partners are
responsible for themselves is the mandatory motor insurance – understandable given that riders and drivers use their own vehicles. But incidents that occur after they set foot outside that vehicle, and attempt to deliver the order to the customer, is covered through Wolt.
Being present in 25 different markets, one of the biggest challenges Wolt faces from an insurance perspective is, perhaps surprisingly, not complying with multiple jurisdictions – rather, it’s controlling the claim process. Courier partners want to be compensated promptly so it’s important that, when a claim is submitted in the local language, the third-party administrator or
“I’m comfortable, being uncomfortable”
insurance carrier is responsive and handles the claim transparently and efficiently.
“Courier partners expect compensation in hours – a big shift from the norm of weeks or months. We are down to a few days, but strive to get this down to minutes.”
There are over 30 different languages used natively across the Wolt ecosystem, so it is imperative to have claims handled in the local language for the courier, third party and insurer. It builds confidence with the impacted person to navigate the process in their native tongue.
“Courier partners expect compensation in hours –a big shift from the norm of weeks or months. We are down to a few days, but strive to get this down to minutes”
GARRETT OLSON HEAD OF INSURANCE & RISK MANAGEMENT, WOLT
As the company continues to scale, paying claims quickly and ensuring that couriers continue to receive a positive experience remains a challenge. Consistency is the end-goal, Olson says: “When we expanded our programme into more remote markets from the Nordics, to Kazakhstan and Azerbaijan, we ran into some new challenges. These are not easy markets to operate in because of how insurance is – or isn’t – regulated, how the very concept of insurance is defined, plus how the premium is calculated.”
“When you’re going to the local insurance companies and asking them to build a bespoke proposition for a disruptive business model, even if it’s reinsured outside the country, that’s where the challenges emerge – from building a new offering to processing the claims very quickly. If we fail, it tends to still be forward. We view obstacles as opportunities. We are addressing a new segment, so inherently the status quo will push back.”
The future of Wolt’s insurance proposition lies in dynamically assessing the risk that courier partners face in real time. Presently, risk is determined by how many hours courier partners are online – even if they’re just waiting for their next order. “The data we can’t see will eventually hurt us.” Instead, Wolt intends to use local dynamic data in
a much more granular way to provide a more insightful snapshot of real-time risk exposures – to have relevant limits at a city or even courier level while also lowering the cost of premiums in the process.
“Drawing on that dynamic component allows the insurance companies to really understand risk factors better,” Olson tells us. Those risk factors could include the weather; riders are more likely to slip or trip when it’s icy, or use a car when it rains.
There are also variations between cities –some, like Copenhagen, feature segregated bike lanes, while others, like Prague, have a lot of narrow and cobblestoned streets.
Other cities feature vast and expansive boulevards. Between cities, delivery vehicles also vary; there are said to be five times as many bicycles as people in the Danish capital, but they are less popular in car-heavy Baku – the capital of Azerbaijan.
Finally, exposure to risk will be influenced even by the smallest consideration like who exactly the courier is. Experienced, full-time courier partners are – in theory, at least – less likely to experience a serious crash than those who dip in and out of the app on a regular basis, perhaps going weeks or months at a time without fulfilling orders while they work other jobs or study.
“Those are the things that would be captured if we used dynamic risk data. The brush stroke risk exposure and pricing in reality does not represent the entire spectrum of the risk which leads to overinsuring or under-compensating.”
“The data we can’t see will eventually hurt us”
GARRETT OLSON HEAD OF INSURANCE & RISK MANAGEMENT, WOLT
Who is Wolt’s Head of Insurance, Garrett Olson?
Despite being based in Copenhagen and having an inconspicuous surname, Garrett Olson is not actually Danish by birth. He was raised in Minnesota and spent time studying in Arizona before embarking on a career outside the United States. In fact, Olson comes from a long line of Petersens, Eriksens and Olsons –Danes and Swedes, meaning the Nordic connection has come full circle.
After emigrating almost 20 years ago, Olson has lived and worked in Mexico, the Czech Republic, the UK, Switzerland, Brazil and, since 2016, Denmark – which he now calls hjem. But he has always been imbued with a sense of ‘wanderlust’ – or vandrelyst, if you insist.
“As a kid, my parents would take me hiking in Yosemite and we would travel all over the US,” Olson says. “I think I was months old when I went on my first trip. I think by the time I was five I had been to Hawaii and Canada a handful of times. We travelled a lot.”
That adventurous curiosity continued into Olson’s adult life. Often moving around for work, he claims to enjoy nothing more than the pure confusion that comes from experiencing a new culture inside and outside the office. “I’m comfortable being uncomfortable. The sights, the smells, the food and the feeling of being stranded in a Japanese train station and not knowing what you’re going to do,” he jokes. “Finding your new dentist and barber shop, opening up a bank account and even figuring out the best watering hole to catch a football match is part of the routine of being an expat. ”
But Olson is settled now – both at Wolt, and in his adopted homeland of Denmark. When he and his wife order takeout for the evening (using Wolt, of course), they usually plump for Thai cuisine or sushi. But left alone, he will always take a trip straight back to his roots. “Whenever I have a chance, I order fried chicken sandwiches,” he says. “I think so far I’ve found two places in Copenhagen that come close to the ones back at home.”
“We’ve built some unique features into our insurance program because we’ve listened to courier partners in every country”
GARRETT OLSON HEAD OF INSURANCE & RISK MANAGEMENT, WOLT
Diversity in fintech is now a more central consideration than it once was – but why is D&I important, and what is the black founder experience like today?
WRITTEN BY: ALEX CLEREThere has been a significant mainstreaming of diversity and inclusion (D&I) topics in recent years – from improving the experiences of female and LGBTQ+ employees to advancing the black founder experience.
Yet, this increased focus on diversity reflects that for too long these demographics were overlooked and omitted by the financial system –something that is continuing to work to their detriment to this day.
It’s clear the industry is trying to improve the situation but, at a time when financial services are struggling to provide equitable access to black customers, what chance is there of improving the diversity within the industry itself?
According to the US Federal Reserve, the average black family in the US has a household fortune worth an eighth of their white counterparts, saying that “a lack of access to financial services, specifically
banking and insurance, is both a symptom and a cause of the gap”.
What’s more, historical exclusionary policies and programmes have continued to perpetuate this cycle, where black customers get a different experience from white customers. As many as 47% of black households are unbanked or underbanked, says the FDIC, and black applicants are more likely than white applicants to face credit denial.
“Lenders and investors should take more perceived financial risks to support minority, women and black-owned fintechs,” says Everett Sands, Founder and CEO of Lendistry, a tech-enabled community lender that has connected more than 600,000 small and underserved businesses across the US to nearly US$9bn in equitable capital and relief grants.
“When I say perceived risk, I mean these firms are considered risky just because capital hasn’t flowed to them in the past,
Harness the power of data and leading-edge technology to turn existing know your customer (KYC) and anti-money laundering (AML) compliance challenges into opportunities
so there’s no data to show their potential. But when you look at the numbers, it’s clear that minorities and women – especially black women – are a growing force in small business, and they’re growing fast.
“More established fintechs can help by becoming incubators and accelerators for their black and brown peers. The whole industry will evolve and innovate faster as a result.”
These systemic problems have been baked into the system, particularly in the context of wealth management, as the above research shows.
Devon Drew, CEO of DFD Partners – which provides a data-driven tech platform for asset managers – tells FinTech Magazine: “At the outset, I recognised the dysfunction within wealth management – particularly the limited capital being managed by women and black, indigenous or people of colour (BIPOC) with only 1.3%.
“The minority entrepreneurs who need capital to grow their businesses, and the people who control the capital, are rarely in the same room”
“I set out to raise the visibility and profile of resource-constrained asset managers and financial advisors. I began brainstorming and developing the concept for our technology platform.”
Much like women founders, BIPOC founders face a significant challenge in accessing funding for their business ventures – with only 1% of the US$150bn in venture capital that was provided to startups in 2020 being attributed to black founders, according to data published by Accenture.
“The most significant challenge for us at DFD Partners was raising capital to fund the development of our platform,” Drew continues. “As a minority founder, I faced additional hurdles in winning the hearts of investors. We encountered scepticism and bias, which we had to overcome to secure the necessary funding.”
Drew says this led him to raise money from friends and family initially, beginning with a US$10,000 investment from his mother. Eventually, he was able to leave a stable job at Vanguard and secure DFD’s first client last year, continuously highlighting the positive factors of the startup’s platform to prospective investors.
But, “while growing faster than competitors, offering a better basket of services and delivering results, we still remained grossly underfunded,” he says.
EVERETT SANDS FOUNDER AND CEO OF LENDISTRY“Lenders and investors should take more perceived financial risks to support minority, women and black-owned fintechs”
“I have had the privilege of working with supportive colleagues and mentors who recognise and value my contributions. Encountering inclusiveness within teams and organisations has been a source of inspiration, fostering a sense of belonging and empowerment.”
- Bank teller
“I was fortunate to have a supportive team around me who recognised my talents and encouraged me to pursue further education and skills development. This gave me the confidence to start my own business and invest in the stock exchange.”
- Graduate entrepreneur
“As a black man who has worked for a number of fintechs, my experience has been largely positive. I typically collaborate with diverse teams that span finance, engineering and sales. Through this time, I’ve been entrusted with leadership roles, and both peers and managers have sought my perspective on how to improve company culture and make it more inclusive.”
- Fintech executive
“As a minority founder, I faced and still face unique challenges that many other entrepreneurs might not encounter. Despite these obstacles, I remained steadfast in pursuit of a solution that would revolutionise our industry.”
- Fintech founder
“In my experience, the companies that best serve their black employees are intentional about attracting, developing, and retaining black leaders.”
- Fintech executive
“Subtle biases and stereotyping sometimes pose obstacles to career progression and fair opportunities. Overcoming preconceptions and demonstrating competence have been crucial in gaining recognition for my skills and expertise.”
- Bank teller
Unfortunately, Drew’s experiences are representative of today’s black founder experience, where additional hurdles are placed in the way of black-founded businesses that make it all the more challenging for those startups – and all the more impressive when those challenges are overcome.
Nonetheless, there are glimmers of hope that the picture is improving. According to the database Crunchbase, there are 109 black or African American-led fintechs in the US alone today, in addition to 127 black or African American-founded fintechs.
“In my experience, I see three main challenges we’re still facing,” explains
Everett Sands. “The first is of course the inherent bias that still exists in any racial relationship.
“More broadly, my peer network in the lending space often does not fully relate to the hurdles my team and I are trying to use technology to solve because those hurdles have never slowed them down personally. My team puts in a lot of work to help them understand these hurdles and how technology overcomes them.
“Many capital deployers don’t have experience networking within established minority circles. That means the minority entrepreneurs who need capital to grow their businesses, and the people who control the capital, are rarely in the same room or even seeking out the same rooms.
“There needs to be work on not only relationship building, but relationship procurement that’s specific to entrepreneurship and technology.”
Despite these challenges, Sands is optimistic that diversity within the industry is improving. “There are definitely more black and brown leaders taking the leap of faith and venturing into fintech.
“When I started, I was the only one in the room. Now, we’re not quite filling rooms yet, but there are certainly more of us. I’m excited to see this and hope that my team and I can be a catalyst to their future success.
“More black leaders and fintechs in the room builds not just diversity of race, but diversity of thoughts and ideas. This is what leads to innovation.”
DEVON DREW CEO OF DFD PARTNERS“As a minority founder, I faced additional hurdles in winning the hearts of investors. We encountered scepticism and bias, which we had to overcome to secure the necessary funding”
WRITTEN BY: LOUIS THOMPSETT
PRODUCED BY: JAKE MEGEARY
Iwanted to be a Chief Technology Officer (CTO) the moment I graduated from college”, says REV Federal Credit Union CTO Zac Streelman.
Intending to become a CTO by 40, Streelman is happy to have achieved that aim, even if he did “miss it by a couple of years” when he took the post at REV at age 42.
With his dream job in the bag, Streelman’s focus is “very much looking forward to the future of REV”.
“My role is to champion continuous investment in resources to keep us relevant,” adds Streelman. “There are about 5,000 credit unions in the US and lots more around the world. We don’t just want to be a credit union on the corner. We want to be a key part of this community and promote financial stewardship and wellness here.”
Streelman is integral to REV’s aims of achieving relevancy, leveraging emerging technologies (fintechs) to keep REV at the forefront of innovation. “It’s about looking at consumer habits and what is trending,” says Streelman.
“If the market is trending towards a digital experience, then we should be able to provide one.
“I can say for certain that the next generation is not looking at us because of our branch network. They’re looking at us because of our digital offerings and they want something that stands out. So it’s my job to make sure we do that.”
Fueled by the belief that ‘what you do matters, but how you do it matters more’, Streelman looks for integrity, passion, ambition, and humility as the four key essentials in his team.
Determined to see REV expand its reach to better serve its communities, how did Streelman follow his post-college dream to land the post of CTO at REV Federal Credit Union?
The making of Streelman the CTO
If one thing’s for certain, his path to REV and the finance industry was anything but orthodox. Although he knew he wanted to be a CTO, Streelman wasn’t sure what career path would take him there.
It is no wonder then that Streelman had “12 different roles in nine different industries” throughout his career. These included positions in the insurance,
“I believe that in-person member service and digital services need to coexist”
ZAC STREELMAN CTO, REV FEDERAL CREDIT UNION
software, and manufacturing industries. Streelman was even a computer science teacher at a Hollywood-based prep school.
And, despite the fact he was laid off three times during the dot com crash of the early 2000s, Streelman feels he has been “really fortunate to have gotten a wide range of exposures to different environments, industries, and technologies”.
Streelman adds: “I have always been a technologist. I got my first computer for Christmas in 1990, and by January I had it taken apart and put back together again, which gave me a passion for tinkering and building PCs. Here I am 20+ years later.”
TITLE: CTO
COMPANY: REV FEDERAL
INDUSTRY: FINANCIAL SERVICES
LOCATION: CHARLESTON, US
Zac Streelman is REV’s chief technology officer with over 25 years of experience in a variety of technical roles serving a multitude of industries. Specializing in technical leadership, Zac is keen to make sure the trust that REV’s members place in the safe and secure handling of their financial data is wellfounded, while continually advancing the organization’s technology development.
Zac is passionate about helping others leverage technology to achieve incredible results while enjoying the ride of their life. Over the years, Zac’s contributions to the industry have garnered recognition resulting in landmark case studies in information security, speaking engagements at VMWorld and local tech events, and guest lectures at the George Fox University’s College of Business. Zac holds a master’s in information systems and several internationally recognized security certifications.
While the credit union space wasn’t an industry Streelman particularly envisaged he would enter upon graduating college, he has now found that “credit unions align with my personal value system and it allows me to take care of my family. It’s a very stable environment.”
Streelman: The CTO with a unique perspective
Experience across multiple industries has perhaps enabled Streelman to enter the credit union space with a broader perspective than most.
As REV’s CTO puts it: “When you understand the perspective outside the four walls of your own organisation, it gives you just a different lens that you view the world through.”
“Community connection is what credit unions are all about, it’s the one major difference between us and banks”
ZAC STREELMAN CTO, REV FEDERAL CREDIT UNION
It is this unique lens with which Streelman hopes to take REV forward.
“Traditionally, credit unions have been slow to adopt new technologies or have been behind the curve in some ways,” Streelman notes. “But I’ve come from SaaS companies where I got to understand how the cloud works and how virtualisation works.
“I understand how those technologies can be leveraged to drive significant innovation and adoption within the credit union space.
“If you look at where we are today, with the AI boom and burgeoning fintech ecosystems, those areas play well in a credit union environment. That’s what we’re starting to take note of and act upon now.”
As noted by Streelman, REV is on course to expand its technological reach, as one of South Carolina’s leading credit unions.
But, if you had asked the founders of REV if this would be where the credit union is today, they would scarcely believe it.
Founded in the city of Charleston in 1955, REV was conceived as a credit union for the Charleston Air Force base to serve the financial needs of US armed servicemen.
“The credit union has now expanded its field of membership and made it easier for anybody to join,” says Streelman. “There are no requirements to join REV now, you can join from pretty much anywhere. We’ve also expanded into North Carolina too, and have 15 branches.
“Today, we have a different mindset of what growth means. We want to invest in technology, we want to drive innovation in the industry. I’m now leading the REV tech roadmap, the dedicated digital transformation journey we’re on.
“As part of the roadmap, there are four areas we want to be accomplished in. We want to have a great brand because, without a brand, we don’t have anything. We want excellent member experience, we want a tremendous employee experience, and we need to be financially strong.”
Leveraging a roadmap to greater digitalisation, as well as boosting efficiency, is REV’s way of meeting the member expectations of today.
“It’s important to understand that being digital first doesn’t mean being digital only,” notes Streelman. “We need to marry technology with our efforts on the member service front.
“I don’t think the brick-and-mortar, in-person services we offer are replaceable. There’s a tremendous amount of value that happens when you are sitting across a desk from someone, and I believe that in-person member service and digital services need to coexist.
“Beyond that, we’re not competing with other banks and credit unions. If you really think about it, we’re competing with Apple, Amazon, Netflix and Uber. The consumer expectation is ‘I can go on my phone and I can order my food and someone’s going to bring it to my house right now’.
“We need to understand that because if we’re behind that eight ball, we’ll never get ahead of it. We have to be forward-thinking, and we have to be more proactive in the way that we serve
our members with a digital mindset, otherwise, we’re just not going to be relevant to anybody.”
REV: Leveraging tech the right way
Striking the right balance between in-person member experiences and digital innovation is of utmost importance for REV. For Streelman, the right technology must be
“Especially with AI, there are many areas where you can innovate, but there are certain things you would never want AI to do. You wouldn’t want AI to help you choose a house or give you financial advice – it’s important to protect the elements of member-business relationships where there is an emotional connection involved.
“Community connection is what credit unions are all about, it’s the one major difference between us and banks – the concept of being a member as opposed to a member. Being a member means you belong to something, and belongingness is what creates a strong community.”
Streelman is committed to these values, as he hopes to leverage technology to nurture relational member experiences rather than transactional ones.
He adds: “Having those branches – even
Glia is the provider of the first ChannelLess™ platform for credit unions to manage every type of member interaction - from digital to phone, and from automated to human.
Building community connections is at the heart of everything REV does, it is even accredited for its work by being a registered community development financial institution (CDFI).
“We are dedicated to serving the unbanked and underbanked. We try to fulfil this mission by completing a lot of philanthropy work in our communities. We have an annual REV day, which saw over 1,200 volunteer hours in just a single 24 hours.
“It’s about relationships, not just branding. We’re not just out there trying to get noticed.
We’re out there because we truly believe that a stronger REV makes a stronger community, and a stronger community will benefit REV.”
For Streelman, the key to building a stronger community – and a stronger REV –is building financial literacy skills in the areas the credit union serves.
“One of the things we do at REV that I love is run branches inside high schools – branches that are student-led and student-employed. Students get to be REV employees, and they also have the chance to learn a lot about financial literacy while getting paid for doing it.”
A niche, possibly unheard-of innovation, REV’s work in local schools is helping the next generation learn how not only finance works, but also how the institutions upholding it operate.
Promoting financial literacy, much like REV’s philanthropic efforts, is no mere PR
“We’re out there because we truly believe that a stronger REV makes a stronger community”
Financial ecosystems are in an economic downturn. In the US, Silicon Valley Bank (SVB) collapsed, and there remains a lot of uncertainty.
Not so much for credit unions though, in fact, many credit union leaders expect to report growth this coming year through a series of fintech partnerships and acquisitions, and the benefits new technological capabilities will provide them.
Streelman gives his take on the ways credit unions are bucking an industry-wide trend of a faltering financial landscape.
“In today’s financial economy, I think it’s really important to bifurcate the word FinTech into ‘fin’ and ‘tech’ because there are two types of fintechs, those that want to partner with us and those that want to replace us.
“We want to build a connectivity ecosystem that welcomes the former and helps us compete with the latter because
that’s the reality of it in 2023 – product is not your differentiator in banking.
“You could walk into any bank or any credit union probably and get a mortgage. You can get a car loan. There’s probably a little bit of variance on what you’re going to pay in rate or what your monthly payments are going to be, or maybe some of the terms and conditions, things like that.
“But generally speaking, your products are going to be about the same. Today, nobody wants to just do transactional business like that. That’s why I think credit unions are experiencing or anticipating growth.
“It’s not just because of new tech, it’s because members know they’re partnering with someone good in the community, who cares about the community and is part of your community.
“Credit unions appeal to people’s sense of social responsibility. That’s our differentiator from traditional banking.”
stunt. The credit union recently hosted the former Chair of the NCUA board of directors, Rodney Hood, who called financial illiteracy ‘the civil rights issue of our time.’
This is something Streelman agrees with wholeheartedly, because “as representatives of a credit union, REV bears the responsibility to provide the tools and education necessary for financial literacy”.
“But we also can’t just say that,” adds Streelman, “we have to be active champions of it. That’s what being in the community means.
“Being in the community doesn’t mean you have a building on the corner. Being in the community means you’re actively going out and helping people.”
How, then, can technology be leveraged to better enforce the connection between credit unions and the wider community?
For Streelman, it’s about meeting members’ expectations, expectations driven by the experiences consumers have in other digital engagements.
“If a member can go on Amazon and order something in 30 seconds for the next day, then they better be able to expect the same speed at their bank too.
“At REV, we’re in the middle of a digital banking conversion, as we move onto a new platform provided by our digital partner Alkami. The platform will allow us to present tools to our members, through its open SDK and API environment.
“We now employ a development team, a crew of software engineers that will be able to write code on that open API. We’ve incorporated things in there like savings goals.
“So if a member is saving for a new car, they can allocate the money and it will tell you how you’re tracking toward your goal
in real-time, offering you alerts to help you achieve your goal.”
It’s an accumulation of what Streelman calls “small things”, like a robust alert system, that builds a broader digital member service offering to not only enhance the member experience but also educate members on the financial options available to them.
He adds: “So much of the financial landscape right now is shrouded in dismay. People are despairing about their finances, but it doesn’t have to be that way. If we can be a shining light in our community to try to change that narrative, then I’m all for it.”
REV: A digital service built on partnerships Alkami is not the only partner helping deliver small changes for a big effect at REV Federal Credit Union. The fintech Glia is enabling REV “to do things it could never do before”, according to Streelman.
“With Glia, we can chat with our members, send texts and engage with them in a new way. It is another pretty small thing if you think about it.
“But from our members’ perspective, that’s a huge win because now they have another avenue to talk to a person. It’s another avenue for them to know that they matter. Members want to know that their voice is heard.
“These little things, small transformational moments; they’re not massive shifts in
“At REV, we live life looking through the windshield, not the rearview mirror”
ZAC STREELMAN CTO, REV FEDERAL CREDIT UNION
strategy or direction, but at the end of a thousand small shifts we find ourselves facing a whole new direction.
“Our fintech partnerships allow us to face this new direction, and it’s important to nurture these partnerships because consumer expectations are always evolving, and we need to evolve alongside them.”
REV, then, as part of an ecosystem of partners is looking to the future. “We live life looking through the windshield, not the rearview mirror,” notes Streelman.
“Don’t get me wrong, it’s really important to have a rearview mirror because you have to know what’s behind you, you have to know where you came from.
“But if you tried to drive your car that way, it’d be a disaster – the windshield’s way bigger and clearer for a reason! So let’s go forward.”
Forward is the direction REV is headed. “The next months will see us start to streamline our existing processes, particularly around automation,” Streelman says.
“There’s a tool that we’re looking at right now called OpenBots, which is an AI, ChatGPT-driven solution for analysis and process automation.
“I expect these types of solutions to come to the fore even more in the coming years, and we’ll be there to make the best use of them.
“But, of course, the future isn’t just about AI, it’s also about looking strategically at what our data accuracy levels are, improving our trending and predictive analytics, and growing our development capabilities.
“That’s the future of REV, and I’m very much looking forward to seeing it come to fruition.”
8 - 9 November 2023
QEII Centre, London
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