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June Highlights in the Financial Industry

 

 

Let's take a look at what June had to offer us in the banking and FinTech bubble.

HINT: it's mostly about cooperation in the industry, RegTech and open banking, with a dash of cybersecurity and trends.

 

 

Cross-border Cooperation in FinTech

 

After signing a FinTech co-operation agreement with Indonesia earlier this year, Australia pushed the fast-forward button in June and inked 3 more such agreements, with Japan, Malaysia and Hong Kong.

 

The Australian Securities and Investments Commission (ASIC) announced the completion of these co-operation frameworks in order to promote innovation in financial services in their respective markets and more agreements are expected in the following months.

 

Moreover, according to recent research, Australia is significantly ahead of the UK and the US in the payment technology race and their cashless future with instant payments is galloping to become reality.

 

But Australia isn't the only one to embark on the FinTech collaboration journey at full speed. Singapore is breathing down its neck after signing a similar co-operation agreement with Denmark, right after the Money 20/20 Europe conference in Copenhagen.

 



"Financial innovation is not confined

to national borders."



Thomas Brenoe

Deputy Director General, Danish FSA



- on Singapore-Denmark agreement -


 

This collaboration aims to help FinTech companies in both countries expand into each other's markets, as well as explore joint innovation projects together, sharing information on emerging market trends and their impact on regulation.

 

Furthermore, Singapore regulators have recently proposed rules that will make it easier for banks to conduct or invest in non-financial businesses such as e-commerce and digital-payment platforms.

 

Singapore's proposals come as financial technology and e-commerce giants are expanding financial services including digital payments in Southeast Asia as part of their global strategy, thus helping banks to better compete with non-bank firms in the area.

 



"The future belongs to the technological giants and to the banks that copy, acquire or collaborate with FinTechs.

It's neither cheap nor easy, but the alternative is irrelevance."


Brett King

CEO, Moven


 

 

RegTech Status in Asia-Pacific. Brief Pit Stop in Bahrain

 

According to the latest news, RegTech is getting ready for a great start in Southeast Asia, where financial institutions often have to deal with more than a dozen different regulatory regimes. But there are 2 sides to this coin...

 

Though RegTech is meant to maximize financial performance and risk management, some international banks anticipate the costs of complying with the new rules to be so high that they are considering leaving the Asia-Pacific region.

 

Turning to the Middle East, it’s worth mentioning Bahrain's central bank (CBB), who launched on June 18 a regulatory sandbox which will enable FinTech companies to test out their products and services. The bank's governor explained this move as: "We are witnessing how technology is defining financial services and CBB remains at the forefront of these developments to enable the industry to advance similarly."

 

 

 

The Latest Studies in the Financial Industry

 

A. Cybersecurity Insights

 

Cyberattacks impacting financial institutions are largely executed for direct financial gain, very few aiming to hurt the brand or customer loyalty. However, these are prominent side effects, of course.

 

More important is how these attacks take place: 88% of security incidents are either web app attacks, DDoS attacks, or payment card skimmers, with a vast majority targeting ATM machines – 66%. More information on this topic can be found in Verizon's annual Data Breach Investigation Report (DBIR).

 

 

B. Top Trends

 

Can you guess what all the latest buzz is still about? Suuure... Artificial Intelligence, blockchain and open banking. The prediction goes like this: AI will become the main way banks interact with their customers in the next 3 years, blockchain adoption will lead to faster transactions and lower costs, while open banking will keep increasing competitiveness.

 

Another aspect to take into account is the necessary transformation of commercial banks in the direction set out by all those disrupting FinTechs that focus on the customer. This is expected to benefit banks in terms of increased profitability and efficiency, with a plus on the safety and soundness side, building engagement on a digital experience.

 

 

C. Open Banking and APIs

 

This is what the future of banking relies upon: third parties developing new products and services through use of APIs, followed by a FinTech-bank collaboration to leverage their complementary strengths and enhance the customer experience.

 

Recent studies underline an otherwise expected fact: FinTechs are more likely than traditional banks to provide positive banking experiences, and that is partly because they're not dragged down by the legacy technology and the outdated processes that banks still have to deal with.

 

Over 90% of banks and 75% of FinTech companies say they expect to collaborate in the future, since open APIs will likely lead to a more effective use of data, the rise of new business models, and enhanced customer trust. All these and more, in the World Retail Banking Report 2017.

 

 

 

 

Raiffeisen Bank Romania has successfully implemented Allevo’s open source solution for corporate SEPA compliance

EU 260/2012 Regulation affects not only banks, but corporates as well

Raiffeisen Bank Romania, in its continuous efforts to be one step ahead of competition and offer world class services to their business clientele, chose to offer its corporate customers a plug and play solution for ensure compliance to SEPA regulations. Raiffeisen Bank Romania partnered with Allevo to deliver this solution and embarked in an against the clock process to have it promoted live before October 31st 2016.

 

The bank’s business analysts and legal department agreed that the EU 260/2012 regulation, with its latest updates (Romanian law 231/2015), does not only affect banks in relation to their correspondents, but corporates as well. Thus it becomes mandatory as of October 31st 2016 for corporate customers in non-Euro countries to communicate with banks using the pain 001 message type, a subset of the ISO20022 standard.

 

Allevo proposed a stand-alone application that the bank would be able to deploy at their corporate customers, to ensure conversion to this standard. This approach ensured minimal impact on the corporate’s existing systems and processes. On the bank’s side, this initiative achieved a unification of communication at business customer level, making one step ahead towards more interoperability, automation and standardization. It also brought more efficiency in day to day business.

 

The model Allevo chose for creating this application was inspired by FinTP and its existing feature for SEPA compliance. Allevo created an open source application that processes transactions achieves conversion from proprietary or existing formats to the pain 001 format. The GPL v3 distribution model allows banks to offer this white label solution to their corporate customers, without any dependence on the vendor who initially created it, Allevo.

 

 

“We chose Allevo, not only based on the history of collaboration, but also because of the open distribution model, which was not provided by other vendors. The GPL v3 licensing frame brought Raiffeisen Bank Romania full control over the source code of the application and the possibility to offer it to as many customers as we want.”, said Laura Cristea, Business Analyst, Raiffeisen Bank Romania.


She added “We conducted a thorough analysis of the impact of the 260/2012 EU Regulation and concluded the regulator makes it mandatory for corporates to send their payment messages to banks using the pain 001 message type. This is why the Raiffeisen Romania team came up with the idea to create this solution that makes a very smooth and non-intrusive transition on the customer side, while ensuring full compliance to the regulatory requirements.”

 

“It was one of the most interesting projects we have recently worked on, mainly because of the openness to discuss alternatives for finding the best solution that would not only please the bank, but also its corporate customers. We at Allevo are very proud this is another example the business model we practice is fit for this industry. Had we been using a different licensing model, it would have become cumbersome to find a way to offer this type a solution to the customer’s customer, without introducing unnecessary friction and unwelcome costs.”, says Sorina Bera, Allevo CEO.

 

The FinTP SEPA converter for corporates received the e-Payments award on January 31st 2017, acknowledging the joint efforts of both teams to bring this project to life.

Intertek ISO 9001:2008CMMI Level 2ISO  9001/2008 Dun & Bradstreet