Banking Technology and Allied areas @ Flip Book

For internal circulation only For

Contents  3 billion reasons voice can transform banking  5 Fintech Trends That Will Revolutionise Banking and Financial Services for 2022 _ Tech Times  5 key FinTech trends to watch in 2022  7 Tech Trends that will Change the Fintech Industry in 2022  7 tech trends to watch in 2022, from crypto banking to biometrics _ American Banker  Financial and Banking Predictions for 2022_ Top 3 Tech Trends  Fintech and automation among 2022’s hottest tech trends - Digital Journal  Fintech Trends That Ruled 2021 And Outlook For 2022  Forbes India - Artificial Intelligence_ Banking On Technology_ Tech Trends That Have Carved A Niche This Year  Global Banking & Finance_ Financial Foursight for 2022  Global-banking-annual-review-2021-the-great-divergence-final  Global-survey-The-state-of-AI-in-2021  Quantum-computing-an-emerging-ecosystem  Metaverses, open banking, agrotech_ the tech trends for 2022  Payment Trends to Watch in 2022  Privacy myths busted_ Protecting your mobile privacy is even harder than you think  QR code scams are on the rise. Here's how to avoid getting duped – CNET  Tech trends likely to dominate banking and FinTech sector in 2022  The-Big-Picture-Banking-2021  Top 10 trends in banking for 2022  Top Trends Transforming Business Banking in 2022 and Beyond  Browser settings to change This is non-priced publication with an objective to update readers with latest development in Technology, Banking Technology and allied areas. Articles/ reports etc. appearing in this publication are obtained from various websites of banking, finance and related publications. We assumes no responsibility for any typographical error or factual mistake nor for the authenticity and reliability of the contents.

3 billion reasons voice can transform banking How voice interaction can revolutionize the future of financial services February 2019

Contents Good morning… ....................................................................................................... 1 Reimagining the customer experience with convenience ......................................... 2 Transform the entire value chain with voice to deliver financial solutions rather than a financial product..................................................................................................... 4 Voice is the tip of a holistic transformation that can unlock large efficiencies ............ 7 The bottom line......................................................................................................... 9 Contacts ..................................................................................................................10 Three billion reasons voice can transform banking Strategy&

Good morning… Imagine a typical morning when you’re getting the kids dressed, putting breakfast on the table, and trying to get out the door on time. Wouldn’t it be nice to be reminded that you have a With technology companies now applying for bill due that day or to transfer funds to cover an banking licenses and banks calling themselves upcoming payment? Wouldn’t it be nicer if this was a technology companies, the battle for retail banking is hands-free reminder from a connected device? clearly intensifying. Organizations are changing their business models and product distribution, and many This may seem futuristic, but voice technology banks are rethinking the role of the branch — all in already has reached a maturity and comfort level an effort to better address how consumers interact that changes the way that business-consumer and use their financial products. relationships are built. In our experience, we’ve found that the opportunity is not just about the voice One example is voice technology. As some interaction, it’s about the related operating model organizations look to use voice interaction for basic changes and integrating the voice interaction with customer support and others consider broader digital touchpoints across the customer journey — operating change, there are several key factors that which could bring upwards of $3 billion in annual cost will separate leaders from laggards. savings. Voice interaction technology is not the future, it is here today Voice-capable devices are quickly becoming pervasive — over 100 million Alexa-equipped devices have been sold in 52%just the first three years of product availability and of all smart speaker owners now use their devices daily.i,ii Comfort with voice technology is very clear—roughly 80% of consumers report satisfaction with the voice shopping experience.iii 20% to 30%Roughly of all mobile phone searches are done by voice and this is forecasted to 50%increase to over by 2020. iv 10%Voice shopping is expected to be around of all mobile e-commerce transactions. Source: See endnotes Three billion reasons voice can transform banking 1 Strategy&

Reimagining the customer experience with convenience Digital-only bank customers are not a happy group: they are the least satisfied customer in all of retail banking.1 Poor communication is a major factor as banks have The top questions handled by voice assistants are lost a personal connection in the transition to digital. basic customer assistance issues. Whether asking Other factors such as frustrating experiences with for transaction history or account balance, the call centers and high fees are slowly chipping away routine nature of these requests provides a simple at bank-customer loyalty. backdrop for institutions to instantly provide the right information at the right time. But this is unlikely to One way to crack the code is to make the customer provide a competitive advantage. Winners will likely experience more convenient, an area financial be those that reimagine the customer journey across institutions have not always emphasized. Instead of various channels, products, and services with having to search for a routing number or worry about end-to-end integration. Organizations that reward an outstanding payment, consumers should be able service, rather than sales, can begin to provide the to quickly get relevant information simply full capabilities of the bank in order to help increase by asking. lifetime value of the customer. Other industries such as retail and media that are further along in their analog-to-digital transition have generated incremental value by developing more convenience in their product delivery and interaction. One-click access to any movie or TV show is far more convenient than having to physically rent or buy the content by typing or searching. Similarly, the way the retail shopping industry has been revolutionized through online and voice ordering and fast delivery highlights the convenience factor versus in-person shopping. In fact, 88% of consumers are now willing to pay for faster delivery, which illustrates not only that consumption needs have changed but that customers are willing to pay for convenience. The financial services industry is addressing the one-click, on-the-go behavior of consumers. The availability of payments is widely embedded in mobile phones and has become a highly convenient payment method, especially when tied to the activity itself (e.g., ride sharing or meal payment). Chatbots have also become popular as banks look to refine their approach to customer experience by providing a natural way for consumers to get information when and where they want.2 This capability will quickly become table stakes. From our experience, the true opportunity lies not in addressing basic support questions with a chatbot, but in truly integrating all branch transactional activities with voice interaction technology. 1 “Retail Bank Customer Satisfaction Strained by Growth of Digital-Only Segment, J.D. Power Finds,” J.D. Power, April 26, 2018 2 PwC 2018 Global Consumer Insights Survey, PwC Three billion reasons voice can transform banking 2 Strategy&

WWhehreetroegettostagrteetd started: 1) Understand implications on the Understand implications on the operating model operating model 2) Be deliberate with your workforce. How Bcwheialldnrgeoelilb?eesWrachtheaatwnaitgrheey?tohueWrchwriaotitcrkaaflorenrcetewh.esHkcoilwrlsi?twiicll arollensew skills? 3) Develop a marketing approach in Ecuodsrutdcoeamtreetrothaeadcowcpoetirlokenfroarctee cinuosrdteormto eacrcelerate adoption 4)IntIengteragtreatteecnhneoxlotg-ygienna ctoesct hefnfeoctilvoegaynd(AseIc,uArePwIasy,by RlPevAer)aigninag cAoPsItseafnfedcRtiPvAe awnithdosuet ccuharengwinagythweithout chcaonregibnagnkthinegcpolaretfobrmanking platform. So, with all this in mind, how do you introduce voice As this groundwork is determined, the organization interaction to improve the customer experience while can then begin to align the business strategy with maintaining focus on the end-to-end efficiencies? deployment plans to engage employees across all You should focus on the implications for the lines of business on customer adoption. The operating model construct on day one. How will the technology architecture, which will be addressed in customer acquisition and servicing model change? a subsequent article, will largely depend on the What are the implications for employees, processes, existing footprint in addition to internal decisions and technology at the branch, call center, and such as internal and external application program innovation centers? interface (API) availability. Three billion reasons voice can transform banking 3 Strategy&

Transform the entire value chain with voice to deliver financial solutions rather than a financial product Technology has enabled per capita delivery of goods and services. The advent of same-day delivery and content customer requests with core banking systems streaming has required wholesale changes to end- without significant technology investments. to-end operations, and it has reshaped consumer behavior. In contrast, the financial services industry Those that make the most of this to realize cost has largely responded to, rather than shaped, efficiencies in the form of straight-through changing consumer behavior. A patchwork of processing or to break out of a narrow, product- individual features from digital channels to chatbots centric approach to better address holistic customer has elevated some specific aspects of banking, but needs will turn traditional customer service from a it lacks the end-to-end operational rewiring that novelty into a competitive advantage. would transform the bank and unlock downstream efficiency levers. Take the case of a consumer asking a voice assistant to open a new account. The initial focus will Addressing customer assistance with voice be on automation that recognizes and verifies interaction technology is an interesting use case, but customer details, sends pre-populated forms to the it is far from transformative unless the downstream consumer, and transposes the information to the end-to-end benefits are realized. Voice interaction system of record. Subsequent opportunities, effectively convert human input into standardized however, rest with developing personalized data structures. This can then lead to process recommendations that can be derived from the now automation and a path for mid- and back-office end-to-end standardized workflow. Is there a better modernization as APIs and RPA/IPA (robotic and account type the bank could recommend? intelligent process automation) are used to integrate Can the consumer be pre- qualified for other products? Can a preliminary financial plan be prepared to then discuss with a financial advisor? Can you shift away from a reactive service model to proactive service model leveraging voice interaction? Three billion reasons voice can transform banking 4 Strategy&

Voice interaction should extend far beyond next best offer, or deliver tailored financial advice transactional activities to also deliver convenience in rather than relying on the customer to visit a branch the account opening process, proactively find the or call a personal banker. Figure 1: Potential efficiency opportunities across all channels Channels Wealth management Online Call center Branch Mobile Voice banking advisors Client Prospecting and Campaign Client proposal Client Client Inquiry and Account facing lead management generation experience/ Client analytics onboarding/ instruction termination management management channel account opening management Banking Wealth and trust Loans origination Credit and risk Account Cash services Advisory Investment Portfolio Trade support/ analytics servicing services research construct/ execution management Application Customer Wire transfer Trust admin Tax services Advisory processing Account analytics communication processing distributions management Non-client Product strategy Third party Account Client due Client reporting Fee and contract Money facing and partner maintenance diligence (tax, statements) management movement management management Banking Wealth and trust Middle Underwriting BSA/AML Treasury Marketing Accounting and Performance Asset movement Inv compliance office credit compliance management database valuations report/analysis management management management Back Loan and Loan processing Loans Collateral/ dep Custody/ Clearing/ Cash and Asset office deposit servicing disbursement management safekeeping reconciliations collateral administration management Small opportunity Medium opportunity Large opportunity (less than 10% efficiency gain and small savings) (10-30% efficiency gain and medium savings) (30%+ efficiency gain and large savings) Source: PwC A voice assistant coupled with other emerging These customized responses play directly into the technologies may be a powerful enabler to unlock these downstream opportunities. Artificial one-click mindset that many consumers are intelligence (AI) is approaching basic human accustomed to — they can deliver faster, more capabilities in areas of speech recognition and convenient service than call centers or branches. In language translation by converting human input into data that computers can act upon. By applying taking an analytics approach to ask the customer if machine or deep learning techniques to the data set, personalized recommendations can be made and they would like to transfer funds to a higher yielding fine-tuned over time, refined by the real world data account with the awareness of upcoming payments, set derived from the voice input. institutions can bring an automated yet personalized approach to the bank-consumer relationship. In many cases — especially for basic customer assistance requests — this type of personalized response can directly influence loyalty and lifetime customer value. Three billion reasons voice can transform banking 5 Strategy&

Customer assistance Operational excellence Frequently asked questions tend to have well- Any area where human input is converted into a defined inputs and outputs that can be addressed standardized data structure should be evaluated for with automated, customized responses that have a process automation and AI-based recommendations high likelihood of success. By enabling consumers for faster decision making. While this can include and customer-facing employees to get the right customer-facing recommendations, more significant content at the right time, questions and transactions opportunities exist in redefining downstream can be properly addressed at a lower cost and in a operational processes. satisfying manner. Customer experience Voice interaction is a gateway to help improve personalization and the digital experience. The larger the training data set, the more accurate and satisfying ancillary technologies (e.g., AI) will be in making recommendations. No longer will customers be put on hold, and more proactive recommendations can often directly influence customer satisfaction. Three billion reasons voice can transform banking 6 Strategy&

5 Fintech Trends That Will Revolutionise Banking and Financial Services for 2022      David Thompson, Tech Times 07 January 2022, 02:01 pm (Photo : Blake Wisz via Unsplash) Fintech trends that may further disrupt the way traditional banking services are delivered, or be used by regulated financial institutions to compete with unregulated providers of decentralised financial services Technology has supported operations for financial service companies for a long time. Specifically, banks have been at the forefront of implementing many new technologies for the past 40 years, if not longer.

When Paul Mifsud became CEO of Sparkasse Bank Malta in 2007, one of his main objectives was \"to transform the Bank into a semi-investment services bank where we would have the banking arm, but also have a very strong investment services arm.\" Fourteen years later, Fintech has made such transitions easier. Fintech is a relatively old concept. The term was first used in 1993 as a shortened way to indicate financial technology. Fintech is now widely used to indicate a state- of-the-art financial application of technology. The internet, improved connectivity between applications through application program interfaces (APIs), Blockchain, and artificial intelligence have considerably increased the pace of change in financial technology.  In recent years, fintech has driven the pace of growth in the financial services sector. Significant technological advancements and the widespread use of smartphones have introduced several new themes in the banking ecosystem. Those themes will play an essential role in the evolution of conventional financial services and in developing new ones. Open Banking Open banking may be described as a collaborative approach in which different applications exchange financial data via an API. APIs become intermediaries that enable various apps to interact with each other. For instance, every time you transfer money from a PayPal account to your bank account, the transfer is facilitated by APIs. APIs are also used to link different systems within the same organisation and this has helped and contributed to the successful integration between banking and investment services.   Paul Mifsud, Sparkasse Bank Malta plc CEO, commented, \"Customers can access banking and investment services from one account with the Bank.  This can be achieved via the online banking solution of the Bank which allows a customer to transact and this is seamlessly connected to the Bank's core banking software via APIs,''. IT development and the evolution of APIs will make transition and communication between  systems all the more accessible and integrated

Blockchain Blockchain is perhaps the most disruptive technology available to fintech innovators. It is changing everything from financial transactions to regulatory reporting. It challenges legacy systems by making them redundant. A Blockchain network is built on trust and transparency via Digital Ledger Technologies (DLT). Trust has the potential to eliminate intermediaries and disrupt existing operating models. Blockchain technology might have become popular in the cryptocurrency world, but the majority of new implementations are not from that world. The intermediaries that are being eliminated are often applications rather than roles. The level of transparency and trust associated with the technology allows the elimination of specific \"distribution hubs.\" The security and transparency features of Blockchain technology make it particularly suitable for implementation where those elements are essential requirements. ''These technologies are of interest to us especially for settlement and custody'' says Mifsud - the Bank is committed in making the necessary investment in gaining more knowledge and expertise to allow it if support such processes in a safe and sustainable manner in an effort to be a front runner locally. Decentralised Finance (DeFi) Blockchain technology has enabled applications that do not rely on central financial intermediaries such as brokerages, exchanges, or banks to offer financial products, instead utilising smart contracts on blockchains. So far, DeFi ecosystems have created a high-risk parallel system that is often not regulated. The technology, however, is ripe for disrupting processes in the regulated worlds of banking and financial services. DeFi logic might enable authorised institutions to streamline business processes, offering clients the protection of a regulated environment and simplified procedures. Banking as a Service (BaaS)

There is much discussion on Bank's becoming large money utilities in the future with business models geared towards a wholesale approach or to the B2B model rather than the traditional B2C model that prevails in branch networks etc --   There are entities out there that can be better suited in promoting a services or product says Mifsud - while Banks in general have shifted their focus more toward compliance, prudential measures, risk and AML issues rather than the procurement of new business, we have begun to see modern technology begin to support this idea by the  recent integration of different systems into  non-banking businesses. With the correct regulatory authorisation, non-banking websites could possibly seek to  offer a  banking product or service to its customer base, services that needless to say would be  provided by the regulated entity that offers them to the public through the third party. Those services may be specifically tailored to meet the needs of the customer base of that third party. For instance, a builder can \"provide\" mortgages on its website. The mortgage company might have created specific products for the type of buyer the builder wants to attract. These products may not be available to other customers approaching the mortgage company directly.   As the example shows, BaaS can link online platforms and financial services, reshaping the financial value chain. Digital banking services will become more widely available. Customers accessing a nonfinancial platform can benefit from additional services like digital loans or embedded payment systems (see also embedded banking, above). Equally, banks may also provide other services to their clients, transforming themselves into \"assemblers of services,\" expanding their offerings beyond their primary banking activities. BaaS can be very useful for traditional banks as it can help provide more services to clients in a very cost-effective way. If customers request a service from a  bank that it may not  currently offer, it can  choose to partner with one that can in a seamless manner and offering the necessary disclosures while retaining a high degree of positive customer experience.. The \"bank as assembler\" logic means there is no need to invest money in developing or buying the technology needed if the bank did it itself. A made-to-measure service suite becomes feasible.

Sparkasse Bank Malta plc was established in Malta in 2000.  Sparkasse Bank Malta plc provides banking, investment, depositary, and fund custody services. The bank is authorised by the Maltese Financial Services Authority as a credit institution and investment services provider. The Dublin Branch, established in 2018, has been authorised by the Central Bank of Ireland to act as a depositary to Irish-authorised investment funds since 2018. The Bank provides investment services, including advisory and non-advised services, including execution, settlement services, and custody. Sparkasse's Custody Department offers high-quality custodian and securities services to foreign institutional investors, professional investor funds, fund of funds (FoF) managers, financial institutions, domestic and overseas collective investment schemes, corporate investors, high net worth investors, and brokers. Sparkasse Bank Malta's vision is to grow its enterprise into a recognised European financial institution providing banking, investment, depositary, and fund custody services, excelling in service and expertise. Sparkasse Bank Malta's banking and investment services are geared toward corporate entities, private customers, funds, asset managers, and other regulated investment entities.

5 key FinTech trends to watch in 2022 Share By Edlyn Cardoza November 23, 2021 The end of 2021 is here! With the ongoing pandemic, 2020 and 2021 have been primarily dominated by the challenges of digital transformation. Drastic bumps in firms of swapping systems to digital platforms, working remotely, and devising user-friendly products and services that retained customers during the lockdowns seem to now calm down. FinTech companies specifically have seen a boom. Several transformations continue to occur, while many more still require rationalising. But parity has been reached, which means innovation will continue to transform and build for its own sake rather than develop due to crisis.  Abdul Naushad, President and CEO, Buckzy, stated: “The on-going uptake by consumers of new ways to access and use financial services requires a complete rethink from traditional financial providers. Consumers are driving change on an unprecedented scale because of new technology and broader societal trends. It goes without saying that the pandemic has changed the way we live, work and buy. This in turn is impacting traditional banks and fintechs alike, who need to identify new solutions to deliver competitive advantage. We see five core trends driving that change as we move into 2022 and beyond.” Rise of Digital/Neo banks: Banking has traditionally been a monopoly with high barriers to market entry. But the relaxation of regulations in countries around the world has paved the way for neobanks to take the initiative and attract customers with the promise of lower fees, convenient mobile banking and improved customer experience that removes in-store banking. That’s why, according to Statista, the neobank sector was valued at $30+ billion in 2020 and is projected to grow at a Compound Annual Growth Rate of 47.7% over the next eight years. Neobanks are also attracting the unbanked customers with a combined purchasing power of $1.2 trillion. As more of the world’s population gets online, expect digital banking to move ahead of in-store services. Real-time cross border payments: Approx. 40% of large enterprises in the US have already adopted real-time payments, and this percentage is set to rise, according to Levvel Research. Elsewhere in other countries and regions, approximately 50 real-time payment schemes are now up and running. Demand is high for the immediacy of payment settlement, which delivers a competitive advantage for businesses, reduces the risk for payment failure, and improves cash flow efficiency. As domestic schemes become more established and popular, expect real-time capabilities to extend to cross-border payments. Open Banking: During the pandemic, our reliance on digital payments and self-service banking confirmed the need for banks to become more digital. Open banking is an API enabled, a technology-driven approach that allows banks and other providers to seamlessly deliver financial services using aggregated and authenticated customer data. FinTech companies everywhere are incorporating open banking standards into their products and services. Banks that don’t embrace open banking will limit their capabilities to better service their clients and limit their growth opportunities. Artificial Intelligence (AI) and Machine Learning (ML): Machine learning applications enable the processing of large amounts of data sets and reaching valuable conclusions which, by using its algorithms, can drive effectiveness and provide efficiencies, including time-saving opportunities. It analyzes patterns in real-time, enabling quick decisioning. Many financial services applications already use AI/ML today for everything from fraud detection, lending approvals, and AML screening to risk monitoring and investment predictions. Machine Learning is constantly evolving, and FinTech will continue to be one of the leading industries to benefit from the power of AI/ML. Emergence of Banking-as-a-Services: In recent years, Banking-as-a-Service (BaaS) platforms and services have emerged as a cost-effective and efficient way for delivering financial services using open banking concepts. Banks must adopt a service-oriented and composable/modular architectural approach in delivering new and innovative digital services. BaaS is a critical component for traditional banks and financial institutions on their digital transformation roadmap. Expect many more legacy financial institutions to collaborate with FinTech companies by using BaaS services to bring innovative tech in-house and enhance their offerings.

These trends will accelerate the growth and development of the financial industry and will cater to consumers new expectations. “As technologies and markets mature over the next 12 months, these core trends will create an environment for further innovation and the emergence of new business models in financial services. They create global opportunities for banks and fintechs to cooperate and extend their offerings globally in payments, lending, digital banking, instant credit and more,” concluded Naushad.

7 Tech Trends that will Change the Fintech Industry in 2022 The world of finance drastically changed when the pandemic finally unlocked the true value of fintech. December 07, 2021 Daria Dubinina CEO, Crassula Credit: Andriy Popov via Alamy Stock AI adoption in the financial industry was quite slow before the pandemic. When the world locked down, it finally pushed financial institutions and their partners around the globe to automate the rest of their banking services and make them more customer centric. What does the future hold in store for 2022? Here are seven fintech trends to keep an eye on: 1. Digital banking Due to the changing consumer habits caused by the pandemic, bank closures are on the rise. Digital banking offers improved customer experience and delivers faster and more efficient services. Statista estimations show that 64.6% of US citizens use online banking in 2021, and this means that online banking has finally become a transformational tool in finance. The good news is that digital banking is not just about going paperless and cashless -- the underlying technologies have substantially contributed to the shift from a centralized traditional banking model to a more distributed, technology-driven one. 2. White label fintech The next prevalent fintech trend that you should not miss out on is white labelling. In a nutshell, white label products are manufactured by a provider to be rebranded before they are sold. Finance management has a lot of complexities. White label fintech solutions allow businesses of all size to easily create a global payment gateway. It is an actual win-win since it provides the distributor with a larger customer base and minimizes initial launch costs for the reseller. 3. Data aggregation Data aggregators will increasingly be responsible for facilitating the way data is exchanged between financial institutions and their customers. For instance, Envestnet Yodlee retrieves data from multiple sources, including investments and credit cards outside the originating financial institution. Expect fintech companies to use this transparency to provide their own customers with additional services.  ADVERTISING

4. Blockchain technology According to a Cision PR Newswire report, the size of the global blockchain market is forecasted to increase from $3 billion in 2020 to $39.7 billion by 2025. Blockchain is undoubtedly the most significant financial innovation for digital transactions because its management is distributed, which means it cannot be controlled by a specific individual, company, government, or bank. Although companies worry about the security issues of this cutting-edge FinTech, Blockchain’s growing acceptance as a way to create a secure digital ledger cannot be ignored.  5. Robotic process automation (RPA) Robotic process automation enables businesses to obtain better work efficiency with a relatively small investment. RPA uses software robots (bots) to free up human resources and improve the way routine, repetitive business activities are carried out. Right now this technological innovation is valued at $1.40 billion -- look for it to reach $11 billion by 2027 (Grand View Research). 6. Voice-enabled payments When online banking started, no one could even imagine how quickly it could evolve. Expect voice to become a trusted way for individuals and businesses to conduct routine banking operations just as quickly. The convenience of talking vs. typing is going to help customers quickly get the information they need. Improvements in natural language processing, natural language understanding and natural language generation will allow customers to use voice for banking transactions in so powerful a way that will feel as if they are interacting with a human teller. 7. Big data You will be shocked but in 2020, people created 1.7 MB of data every second. Fintech providers and their customers generate vast amounts of data that can be aggregated to provide a more comprehensive view of a customer’s financial status. Expect financial institutions to partner with data aggregators (see #3 above) so they can use big data to improve customer retention and improve services. The Bottom Line FinTech trends will surely never be the same after 2020. The events of last year broadened our understanding of what a digital economy is going to look like moving forward. Make sure you keep these latest fintech trends on your radar screen so you can maintain a competitive advantage by transforming the future of your business finance.

Bank tech trends to watch in 2022 January 4, 2022 11:42 AM By Miriam Cross, Penny Crosman, David Heun Adobe Stock Bank technology initiatives this year will be driven by the need to make finance ultraconvenient for consumers and businesses. One manifestation of this is embedded banking, a version of the open banking movement started in Europe, where banks offer their services through all manner of companies that aren’t banks. Another is the effort banks are making at personalization, trying to deliver just-in-time advice to consumers to help them avert financial problems and take advantage of opportunities. And letting customers authorize themselves with a selfie and facial recognition is the ultimate way to provide security for couch potatoes. Banks and fintechs also will continue to try to become a trusted place for consumers and businesses to go for cryptocurrency services as the popularity of digital assets keeps growing. Other trends in bank technology, such as the explosion of bank-fintech partnerships, are part of an evolution of financial services brought on by the fintech movement. Read on to learn about seven technology trends for banks and fintechs in 2022.

Adobe Stock  Embedded banking will become more widespread Embedded banking — in which banking is done somewhere other than a bank branch, website or mobile app — started to gain steam in 2021 and will likely continue to do so in the year ahead. The buy now/pay later loans offered on shopping websites have been the most visible example of this trend recently, but it goes beyond that. Shopify’s e-commerce software for merchants, which has payments services baked in, is embedded banking that otherwise might have been merchant-acquiring business for companies like JPMorgan Chase or Bank of America. Banks and other financial services providers will try to present products to consumers at the point at which they are most useful. This could include offering mortgages as someone is shopping for a new home online and offering personal loans through home contractors, doctors, veterinarians and lawyers. It could be businesses getting banking accounts through their accounting software. “Do consumers actually want to have to proactively go out to search for financial products or are financial service products themselves tools that are best delivered at the moment of need to solve a problem?” said Phill Rosen, CEO of Even Financial, which provides embedded finance and recently agreed to be sold to the New York challenger bank MoneyLion. “That's the mode change that's happening as a result of embedded finance.” TRENDING CONSUMER BANKING Navient to pay $1.85 billion to settle deceptive lending charges Under an agreement with 40 state attorneys general, the student lender and servicer agreed to cancel debt for over 66,000 borrowers and pay restitution to another 350,000 borrowers placed in certain types of forbearance. By Laura Alix 7h ago POLITICS AND POLICY Brainard stops short of endorsing climate stress tests for banks Fed Gov. Lael Brainard, President Biden's nominee for Federal Reserve vice chair, sought to assure GOP members of the Senate Banking Committee she favors a more limited supervisory approach that would help larger banks identify pockets of risk in their loan portfolios. By Brendan Pedersen 8h ago REGULATION AND COMPLIANCE FTC settles with Dun & Bradstreet over business credit reporting errors The company sold small businesses a credit-building product that fell short of its promises, and also failed to help them fix inaccuracies in their credit reports, according to the Federal Trade Commission. D&B has agreed to give refunds to many customers. By Polo Rocha 8h ago

Adobe Stock  Banks will get better at delivering personalized insights Banks are intensifying efforts to tailor their messaging and sharpen their recommendations to suit individual customers. A study in May from the technology consultancy Capco found that 72% of its 1,008 respondents rated personalization as “highly important” to them. Ather Williams, head of strategy, digital and innovation at Wells Fargo, predicted that banks will use personal information that customers share, artificial intelligence and machine learning to create hyperpersonalized experiences, such as alerts about potential shortfalls in their accounts based on historical transaction activity. Wells Fargo is incorporating such features into its consumer products. The Credit Close-up tool, due out in 2022, will offer personalized tips to help customers better understand their credit score and improve it. The bank will also debut a new virtual assistant in its mobile app, Fargo, which over time will use artificial intelligence to deliver tailored insights to help customers better manage their finances. The trend is gathering momentum among banks of all sizes. People’s United Financial in Bridgeport, Connecticut, doubled down on its personalization efforts in 2021 with Virtusa, a digital business strategy firm. Virtusa conceptualized and packaged a personalization engine called vEngage using Adobe Experience Manager to handle digital content and the Customer Decision Hub from the software company Pega to predict customer needs. The $63.7 billion- asset People’s launched the tool in March to encourage customers to activate and use People’s digital offerings. First Foundation, a $7.7 billion-asset institution in Dallas, recently launched an app with the financial data platform MX. FFB Mobile will aggregate all of a user’s accounts across all financial institutions and offer personalized insights, such as predicting overdrafts before they happen.

Adobe Stock  More banks will support facial recognition The continued popularity of selfie photos makes it easy to predict that the selfie concept — or facial recognition — is going to make significant inroads in banking authorization technology in 2022. Already, 15% to 20% of the 11,000 financial institutions in the U.S. use selfie photo imaging in combination with document verification to authorize use of mobile or online banking or online application processes, the research firm Aite-Novarica Group has reported. The research estimates between 600 to 700 more financial institutions adopted facial recognition technology in the past year. The banking industry can expect some significant advancement in this field in the coming year as digital ID providers like Jumio, TransUnion, Thales, Socure, Equifax, LexisNexis, Facepoint, iProov and Blockpass turn to some form of facial authentication. Bank technology vendors providing cloud services are addressing security issues such as \"deep fake\" fraud attempts. An example of a deep fake would be when a fraudster creates the image of a company exec and fool other workers into providing personal credentials.  The use of facial recognition authorization still faces opposition from consumer protection groups that fear use of digital images allow potential bias to trickle into decisions based on the color of skin or sex of an applicant for loans or new products. Banks likely won't rush to facial recognition as an authentication process for transferring money or making payments. Rather, they will start with low-risk transactions like balance inquiries and other information requests. Money movement would be a future step as technology improves and users and financial institutions get more comfortable with it.

Adobe Stock  Virtual branches will combine the best of in-person, digital interactions Virtual branches — digital platforms that simulate the conversation that occurs in a regular branch and rely on diverse communication tools, including web or mobile chat, video, co-browsing and document sharing — started popping up at U.S. banks over the past two years. As in-person branch visits dwindle and customers rely more heavily on digital, virtual branches could become even more common in 2022. Arvest Bank in Fayetteville, Arkansas, is one example. Its stand-alone mobile app Arvest Banker Connect was built by the customer engagement company Agent IQ. Customers who download the app can read banker profiles, select one that appeals to them and message back and forth with their chosen banker, who sees a running history of the communications. A future version may incorporate video and co-browsing. Agent IQ counts Park National Bank in Ohio, Rockland Trust in Massachusetts, Extraco Banks in Temple, Texas, and First National Bank of Omaha among its customers. FNBO’s Twig app is marketed as “the branch that can go with you.”

Adobe Stock  More banks will offer cryptocurrency services Investors have taken to cryptocurrencies, and there’s no reason to think they’ll turn back. The global value of cryptocurrencies nearly tripled last year to $2.25 trillion. Most observers expect digital currency prices and market capitalizationsto continue to rise in 2022, albeit at a slower rate. Banks will move forward into cryptocurrency offerings as they started doing in 2021, especially with partners like NYDIG, Anchorage, Figure and Tassat. They are also likely to proceed with caution — for instance, by having partners handle crypto custody — until policymakers provide specific guidance on what banks are permitted to do. Several community banks have been working with NYDIG and their core banking software providers to let customers buy and sell cryptocurrencies through their mobile banking app. Vast Bank in Tulsa, Oklahoma, was the first community bank to support cryptocurrency purchases. It now supports 12 cryptocurrencies with its Vast Crypto Banking app, using a new core system from SAP and the services of the cryptocurrency exchange Coinbase. After the bank added this capability, its customer base grew fivefold in 80 days, according to Brad Scrivner, the bank's CEO. “I was expecting a result, but five times is a lot,” Scrivner said at American Banker’s Digital Banking Conference in November. “Most customers want something that they understand and trust. Crypto feels very, very scary, and it doesn't need to be, and building that last mile out and putting the trust of a long-established bank with a reputation … it doesn't surprise me that we’ve had real success.” Scrivner considers Vast Bank’s current offering a minimum viable product that will continue to get better. Silvergate Capital in La Jolla, California; Signature Bank in New York; BankProv in Providence, Rhode Island; Customers Bank in West Reading, Pennsylvania; New York Community Bank in Hicksville, New York; and Western Alliance Bank in Phoenix are among the banks that are stepping up their cryptocurrency services for businesses.

Adobe Stock  Bank-fintech partnerships will multiply thanks to ‘matchmakers’ Matchmakers are emerging in many forms to foster relationships between banks and fintechs. Venture capital funds, core-software providers and other entities are curating fintech partners for banks, especially for smaller ones that find vendor selection to be an arduous process. As these efforts increase, banks may experience a boost in their technological capabilities and fintechs can adopt more banklike services. A number of venture capital funds with financial institutions as limited partners have sprung up in recent years, including three in 2021. The goal is not only to earn a return on investment. Fund managers are also in search of promising technologies for their partners, especially regional and community banks and credit unions that lack the resources to find such products on their own. “We’re starting to see banks growing faster through fintech partnerships and breaking out into more significant valuations in the public market,” Matt Kelly, director of the JAM Fintop bank network, said in an interview in October. Core providers are giving their financial institution clients a leg up with fintech integration. For example, Fiserv announced a head of fintech and started integrating capabilities from fintechs such as FutureFuel.io and NYDIG into its technology stack in 2021. This means it can efficiently distribute these capabilities to its network of thousands of financial institutions and let them go live with these products in a matter of days. FIS launched its Fintech Referral Network several months ago to match fintechs with sponsor banks. In December, the Mass Fintech Hub, an initiative to encourage innovation, retain talent and strengthen fintech-bank partnerships in Massachusetts, announced that in less than six months it had more than doubled its membership. Its bank members include Citizens Financial Group, Eastern Bankshares and Reading Cooperative Bank.

Adobe Stock  Banks will embrace new hybrid-work technologies As the omicron variant spreads like wildfire in the U.S., some banks are predicting permanent changes to the way they do business. Suffice it to say that hybrid work, where employees must collaborate effectively when some are in the office and others are remote, will be around for a long time. But while everyone was in the same boat during all-remote work, hybrid models are more complicated. Employees participating in a meeting by videoconference can be at a disadvantage to those attending in person. Products to facilitate hybrid work abound. In the United States, venture capital investors in 2020 poured nearly $22 billion into tools that help workers collaborate remotely or asynchronously, according to PitchBook. Similar investments totaled $14.2 billion through May 7 of last year, the latest available figure. Ally Financial in Detroit is one of the banks experimenting with creative workarounds. When the company was building an office in Charlotte, North Carolina, which it finished in May, it created Zoom Rooms, or conference rooms outfitted with video collaboration and other tools from Zoom. Employees in the rooms sign into a meeting on a touch panel; participants appear on one screen and shared content, such as drawings on Zoom’s whiteboard app, is shown on another screen. Remote meeting participants can see the same displays. At the same time, Ally is testing a beta feature with Zoom called Smart Gallery, where artificial intelligence will create multiple video feeds of people in one conference room, meaning it can draw focus on individual participants for remote attendees. Currently, Ally’s offices are open to vaccinated individuals only.

Miriam Cross Tech Reporter, Arizent Penny Crosman Executive Editor, Technology At American Banker And Arizent, American Banker David Heun Associate Editor, American Banke

Financial and Banking Predictions for 2022: Top 3 Tech Trends 12 January 2022 876 It is no surprise that the pandemic has pushed business owners to accelerate their digital transformation journeys. Digitalization seemed obvious and inevitable with all the lockdowns, restrictions, and hybrid work models enforced globally. And overall, the banking, financial services, and insurance industry (BFSI) did a pretty good job, swiftly adjusting to the new normal and embracing the latest digital banking trends. So, where do banks invest their money? And what should those seeking stability and business continuity expect next? To go fintech or not is no longer the question Statistics don't lie and financial technology is thriving in the next-generation banking ecosystems: Fintech providers receive an impressive $50bn in funds and 500+ new fintech companies are launched annually The global fintech investments for 2020 alone hit $44 bn amid the pandemic The American fintech sector raised $12.8 bn in 2021 Q1 The fintech market is projected to reach almost $310 bn in 2022 We should admit that fintech works and there's no reason to think that it will slow down any time soon. Our future is Gen Z who are willing to spend more only when they get higher convenience. So, fintech solutions have it all sewn up because they make our lives so much easier. But what else is out there? Top 3 corporate and retail banking trends and predictions to watch in 2022 We can agree that things like AI, ML, and RPA are no longer the future—they are the present. We’ve seen the BFSI sector dominating the RPA market with a 29 percent revenue share in 2020. Meanwhile, 40 percent of financial organizations plan to invest more in intelligent process automation in the next few years. So, if these technologies are the present, then which ones will drive the future? Forrester suggests that leading banks will shift their digital transformation focus to hiring top engineering talents and building more secure financial systems. But is that all? Not even close. So, let’s see what initiatives are worth your attention in 2022. 1. Sustainable finance products What is sustainable finance? It refers to investment decisions that take into account environmental, social, and governance (ESG) considerations. Currently, the EU even has a set of Sustainable Finance Disclosure Regulation (SFDR) rules. And banks, to their credit, have fully embraced their social responsibility. Finance and sustainability are expected to go hand in hand in the short run. So, it is no surprise that sustainable finance is among the top trends for the BFSI sector. Together with fintech, banks will have the perfect chance to adapt to these new SFDR requirements by creating future-oriented, sustainable finance products. We should expect more social impact initiatives, better access to environment- related investment opportunities, new transition finance guidelines aligned with net-zero goals, and other sustainability-linked bonds. 2. Open banking This trend was supposed to take off in early 2020, though it didn't. Why? One reason was that 41 percent of European banks missed the March 2019 deadline for the PSD2 open banking pilot phase. Also, banks that later met the June deadline for open banking API testing didn't deliver high-quality interfaces. But here comes 2022, and the trend is more promising than ever in terms of the collaborative approach and connectivity between banks, fintech vendors, and regulators. What is open banking in simple words? It is a concept that obligates financial institutions and banks to give regulated third-parties access to customers’ financial data. Of course, such access is provided only with customers' permission and will be used for the development of new apps and service platforms. Open banking means better transparency for consumers and more opportunities for market players ready to revive the BFSI sector. Financial organizations will be able to deliver full-spectrum, client-centric banking capabilities as a service and remain competitive. Finally, the global open banking market share is projected to reach over $43 bn by 2026. Meanwhile, 90 percent of financial leaders expect the open data economy to boost organic growth by 10 percent. 3. Buy now, pay later (BNPL) Initially, the BNPL boom started in e-commerce, but it's now rapidly conquering the BFSI industry as well. Investors poured around $4 bn in BNPL companies in 2021. Talking about the most popular buy now, pay later apps, there are trailblazers like Afterpay and Klarna that partner with Stripe. Affirm has agreements with Shopify and Amazon. Apple Pay promotes the trend in cooperation with Goldman Sachs. Meanwhile, Splitit leverages Mastercard and Visa to provide buy now pay, later with no credit check. This market tendency offers customers financial transparency, no added fees, installment plans, and a great alternative to traditional crediting. So, it'll only keep growing as online shopping is thriving. Moreover, the list of providers expands monthly with buy now, pay later catalogs now having 10 plus companies. So, this is a perfect opportunity for traditional banking institutions to discover new value sources and keep up with consumers' demands. Trends in financial services that went mainstream in 2020-2021 It's worth mentioning that some of the technological advances we've only anticipated before are now everywhere in finance processing routines. Those advances would be: 1. Hyperautomation and RPA 2. Wealthtech

3. Increased cybersecurity 4. SupTech and RegTech 5. Cloud computing 6. Neo banks 7. Embedded financial services 8. Decentralized finances 9. Big data, AI, ML 10. Digital banking (going cashless) We also continue witnessing the rise of banking as a service, video and voice-enabled banking, and faster cross-border payments. We all realize that banking enterprises face significant digitalization challenges amid the ongoing pandemic, recurring lockdowns, and economic volatility. All this requires reconsidering the overall operational strategy, establishing mutually beneficial partnerships with fintech vendors, and enhancing engineering capabilities across organizations. But what we know for sure is that we are going through unique transformations and the technological future can still have a few tricks up its sleeve.

Fintech and automation among 2022’s hottest tech trends By Dr. Tim Sandle Published December 31, 2021 Photo by Philipp Katzenberger The second year of the pandemic, 2021 was an eventful one as new security threats emerged and technological breakthroughs were made. Yet more changes are afoot. Looking to 2022, IT and security professionals must be prepared for whatever comes next – from advancements in embedded finance to mounting consumer data

privacy concerns to data breaches due to leaky APIs.  This is the stark message from Nathanael Coffing, CSO and co- founder of Cloudentity, to Digital Journal readers. Coffing pinpoints four important trends that are due to take place across 2022. He defines these below. Embedded Finance Will Revolutionize the Technology Industry in 2022  For 2021’s main development in the sector, Coffing says: “Embedded finance has rapidly become the hottest topic in financial services and the tech industry. Embedded finance provides the “why” building off of the “how” capabilities of Open Banking. Companies that aren’t financial service providers use embedded finance application programming interfaces (APIs) to offer financial tools or services, such as lending or payment processing. It’s designed to streamline financial processes for consumers, making it easier for them to access the services they need when they need them. For example, embedded lending lets someone apply for and get a loan right at the point of purchase, as we’ve seen with Klarna and AfterPay. Both companies partner with retailers to let consumers split an online purchase into several smaller monthly payments.”

As to what will happen next, Coffing notes: “Given its potential to create new lines of business and efficiencies for customers and businesses alike, many leading financial services and tech companies are implementing major embedded finance initiatives. Google Pay, for instance, has already made large investments to drive its embedded finance capabilities. For these reasons, there will be massive growth in embedded finance in the coming year.” Strict Regulations Will be Essential to Drive Consumer Privacy Protection Privacy is set to grow as an issue, says Coffing, noting: “Consumers today are calling for more control over their online data and how it’s being used by companies. While government regulators enforcing privacy laws such as GDPR, CCPA and CPRA are a step in the right direction, more needs to be done to protect consumers’ privacy and this needs to start at registration and continue through API-based data sharing. Every website or app should display an icon (similar to SSL) as soon as a user opens the page that rates the certifications the company is meeting to protect their customers’ data.” “These must be written in a way that is easy for consumers to understand as well – no hiding behind confusing legal

jargon. Then, organizations will have no choice but to be transparent with how they are harvesting, using and sharing their users’ data. The icon must provide consumers the ability to control their privacy settings on an attribute level, control their sharing of that attribute and delete their data after they are done with the website/app, so the user remains in control of their personal information at all times.” Tokenized Identity Will Become a Prominent Method to Mitigate API Data Leakage and Compromised Tokens   Coffing looks at the rise of digital ledgers: “Tokenization has become a key method for businesses to bolster the security of credit card and e- commerce transactions while minimizing the cost and complexity of compliance with industry standards and government regulations. Moving this same per transaction security capability to personal identifiable information (PII) can drastically reduce an organization’s attack surface. Today, most organizations continue the perimeter- based security for their distributed applications passing enriched over- privileged JSON Web Tokens (JWT) to any service that requests them.” “However, with the rise of third-party developers and B2B2C business models, cyber attackers only have to

find the weakest link to start compromising millions of PII records. A notable example of this occurred last year when cybercriminals registered a malicious app with an OAuth 2.0 provider, which generated tokens for authorization. If the user accepted and used the token, the attacker could gain access to their mail, forwarding rules, files, contacts, notes, profile and other sensitive data and resources. In 2022, we will start to see tokenization and very short expiration times for tokens to prevent these types of attacks.” Automation is Key to Mitigate the Rising Number of API Attacks Due to the Growing Attack Surface   For 2022, automation will matter more. Coffing finds: “The number of API attacks will continue to rise as APIs usage continues to increase exponentially. This is because each API and developer is another potential point of entry for cyberattacks. The State of 2021 API Security, Privacy and Governance Report revealed that in the last year, at least 44 percent of enterprises have experienced substantial issues concerning privacy, data leakage and object property exposure with internal or external- facing APIs. As a result of these issues, 97 percent of enterprises experienced delays in releasing new applications and service enhancements due to

identity and authorization issues with APIs and services.” Coffing adds: “To mitigate this looming threat, IT and security teams must do a better job of protecting the enterprise by ensuring APIs are discovered and the right security guardrails are in place for every API. Given the rapid propagation of APIs, automation becomes the defining requirement for building the principle of least privilege and zero trust into your APIs. This starts by adding machine identity, workload identity and correlating them with the requestor user identities to allow mutual authentication. Once every entity in a transaction is authenticated, declarative authorization becomes the next logical step in providing developers the tools they need to adhere to security requirements. It’s impossible to implement proper security measures for every single identity with manual coding, especially when machine and API transactions are so rapid and temporal.”

Fintech trends that ruled 2021 and outlook for 2022 By CNBCTV18.com Contributor |  Dec 27, 2021, 05:55 PM IST (Updated) Mini As per Reserve Bank of India (RBI) latest bulletin, the fintech sector received investments worth $4.6 billion, which is nearly triple than the total investments received in 2020 ($1.6 billion in 2020). The year 2021 has been quite interesting for the financial technology sector or commonly called fintech sector. Not only the sector receive good amount of investments, but the sector outperformed as compared to other sectors, despite the pandemic and bearish market.

As per Reserve Bank of India (RBI) latest bulletin, the fintech sector received investments worth $4.6 billion, which is nearly triple than the total investments received in 2020 ($1.6 billion in 2020). Indeed, the sector, which was born almost a decade back, grew and grew exponentially during a global crisis, thus facilitating millions to smartly manage their financial transactions. The sector was already undergoing exponential growth, thanks to rapid acceptance of digital payments. The recent robust investments in 2021 clubbed with RBI noticing the sector has put the spotlight on the fintech industry. Globally as well as in India, the acceptance for digital payments has increased with the changing consumer behavior. Majority of the shoppers in India, especially in tier 1 and 2 cities prefer digital mode of payments or computerized channels. Also, with smartphone being one of the common gadgets for all today, digital banking have become quite common for many users. Interestingly, the sector has come a long way and is gaining momentum with lot of players entering the market, envisioning change in digital transactions landscape and gaining enormous success. With this, human communication for banking services have also drastically reduced, which is crucial with the new variants mushrooming in different parts of the world. With these factors, the fintech industry has seen an interesting metamorphosis. Here are some of the top trends that shaped up the sector in 2021. Also, the year 2022 will see more of these trends and growth of these models.

Emergence of BNPL model: Buy Now, Pay Later model is one of the offering where an individual can opt for buying without any interest rate and can repay through small ticket size amounts. The model is quite booming and is considered one of the most preferred transaction models for 2022. These models also facilitate credit options for those who do not have access to credit or do not have credit score. The model is prospering as the pandemic and job losses gave the model the required push. With the convenience that the model provides on payments, it enabled and empowered consumers to buy without any interest rates and pay at their convenience. Technology companies entering banking and payments services: A pure example of Product Innovation is improvised and hyper-personalized banking services and offerings by technology companies. This offering has led to increased penetration of banking services in tier 2 and remote parts of the country and is all set to receive a great boost in 2022. Interestingly, the new lenders (fintech companies/ NBFCs) are smaller than national or co-operative banks, but they provide convenience and range of services to customers for repayment of loan. One of the most preferred aspect is the technology based solutions, Artificial Intelligence based systems that can process huge files and documents on requests. Increased Collaborations where fintech, tech, NBFCs for offerings: With the recent announcements by corporates on acquisitions, collaborations and partnership models to expand service offerings. In continuation to these trends, the year has also seen increased measures being opted by fintech companies to prevent cyberattacks. With increasing acceptance of such platforms, it is highly crucial for the sector to adopt security measures, so as to maintain and build the trust level of consumers at large. While the year 2021 saw partnerships, it is high time that the sector witnesses more such collaborations and policy level support through favourable policies and regulations to enable the sector to thrive and succeed. The author, Rohit Gajbhiye, is founder and CEO at Financepeer. The views expressed are personal

Banking on technology: Tech trends that have carved a niche this year Year 2021 has seen increased dependence on digital technologies for banking needs. Here are some tech trends that have defined India’s banking system  BY BHAVIN TURAKHIA   4 min read UPDATED: Nov 24, 2021 06:40:47 PM UTC Full Bio      With increased consumer demand for digital banking services, artificial intelligence is also at the core of digital banking transformation. Image: Dhiraj Singh/Bloomberg via Getty Images

Technology has been a major disruptor in the way banking was done just a few years ago. While the pandemic accelerated the adoption of technology across industries and sectors, our dependence on these advancements has been magnified to a great extent. For example, the recent Annual Report 2020-21 of Reserve Bank of India shows, the total digital transaction volume in 2020-21 stood at 4,371 crores, as against 3,412 crores in 2019-20, attesting to the resilience of the digital payment system in the face of the pandemic. As these technological advancements continue to disrupt the traditional ways of banking, we see a whole new spectrum of newer and faster banking solutions. Online deposits, mobile wallets, e-bill payments, and so on have fundamentally become a norm for how financial transactions are carried out nowadays. With increased consumer demand for digital banking services, artificial intelligence is also at the core of digital banking transformation. These advancements are predominantly followed by the growth of fintech and neo-banks that are making the entire banking process more convenient and hassle-free for customers. Following are some tech trends that have defined India’s banking system this year: Open Banking  Open banking is an important strategy for financial institutions to compete and grow. Banks embed their financial solutions into third-party software and create a single interface for customers to access the services of their bank. By partnering with fintech, banks make their services available to their customers across apps for easy payments. Online payments while ordering food from Zomato or digital payments in Uber are possible due to open banking services. Blockchain To undertake risk management practices, banks are increasingly using blockchain technology that makes it difficult for hackers to extract confidential information such as customer bank details. The industry is already experimenting with the technology by replicating current asset transactions on the blockchain. It helps in improving efficiency, enhancing security, and making quicker transactions with decreased costs.

Biometrics As consumer reliance on cash is decreasing, companies such as WhatsApp, Google, Amazon are coming up with their payment systems. Biometric payments are shaping the way consumers make payments through their mobile devices. Payments are made within seconds of scanning their finger or facial recognition technology. Cloud banking Most banks have started to move towards cloud-based banking. The cloud allows banks to synchronise the enterprise; break down operational and data silos across customer support, finance, risk, and more. This transforms their cost-efficiency and enables them to provide digital experiences to customers by keeping their legacy model intact. Artificial Intelligence and Machine Learning Banks are extensively implementing AI and ML to offer just-in-time, personalised services to their customers. AI and ML automate the banking processes and facilitate better customer services, credit and loan services. They also combat fraud. Chatbots As voice-based interactions are becoming more popular with consumers, banks will start offering an increasingly large number of services on a voice interface. Financial chatbots are saving over four minutes per transaction. It will also allow banks to receive customer feedback easily and economically. ‘Zero Trust’ Security Model Conventional IT models are getting outdated, making banks prone to cyber fraud. A new approach to combat this threat is the Zero Trust Security model. It is a security framework that secures the enterprise by removing implicit trust and enforcing strict user and device authentication throughout the network. Wearables

As more technologies come into play, existing technologies adapt to create more interactive consumer experiences. Wearable devices such as smartwatches are expected to transform the digital payments experience for customers. Gaining popularity among millennials and GenZ for wearable payment devices is going to revolutionise the payments space. Conclusion The year has seen increased dependence on digital technologies for banking needs. There still lies a massive potential for banks to fill the gaps to meet their customer expectations. More businesses are digitising their processes and finding more agile ways of working and modernising functions by investing in the latest technologies. Modern banking technologies are helping banks collaborate and integrate their services with fintech and neo-banks to offer consumers newer and efficient technologies. Consumers are also actively adopting these new technologies for better and convenient banking experiences. As a result, more and more consumers are transacting with their banks, building an opportunity for newer technologies to be created in the space, providing the customers with an ultimate banking experience. The writer is CEO and Co-founder of Zeta.

Global Banking & Finance: Financial Foursight for 2022 Fintech Banking finserve DigitalTransformation GARIENT EVANS, SVP, IDENTITY S... 5 MIN Garient Evans, SVP, Identity Solutions at Trulioo explores the new trends and challenges for fintech companies in 2022 The current fraud climate should be a major signal to brands in every industry that identity verification is imperative. As more activities were carried out online in the pandemic, a flurry of fraud was committed. For example, the Federal Trade Commission’s (FTC) Consumer Sentinel Network received approximately 1.4 million reports of identity theft alone last year, more than double the amount of incidents reported in 2019. The reality is that poor or nonexistent identity checks in online retail or financial services can wreak havoc on people’s lives.  While it may seem counterintuitive to introduce friction in the form of identity checks, consumers have high expectations when it comes to their online safety. Findings from a FICO report exploring COVID-induced digital transformation in financial services reveal that 62 percent of U.S. respondents expect to have to prove their identity when opening an account digitally, and 42 percent said they would expect the need to set up biometric identification The combination of which is going to see four major trends emerge in 2022. Cryptocurrency sophistication Many banks still view crypto exchanges like the “wild west”, a stark difference from the financial institutions and banks that are using identity verification technology that employs artificial intelligence, machine learning, and large data sets to manage increasingly strict regulations. Cryptocurrency will continue to grow and we’ll begin to see more sophistication across the crypto space in terms of how these companies can interact with legacy financial institutions-interoperability will be key as crypto organisations need to increasingly operate in these highly regulated industries seamlessly. Effective digital identity verification will be paramount as these new companies continue to carve their own path.  As the Treasury Department and OFAC enforce sanctions designed to curb illicit use, proper digital identity verification ensures cryptocurrency organizations have a method to protect against bad actors and comply with the regulations that govern all financial institutions today. The tightening ring of regulation An unexpected consequence of the pandemic has been its impact on physical cash transactions and traditional banking. There has been a global trend towards electronic forms of payment, spurred by public health concerns over cash handling. Consequently, traditional money-laundering supply chains have been disrupted. This has caused money launderers to innovate and exploit electronic payment methods. Peer-to-peer platforms are a viable target for bad actors to transfer money that has been acquired through ill-gotten means.  We continue to witness the fallout from bad actors perpetrating financial crimes, as evidenced by the Pandora Papers leak several months ago. The compliance measures currently in place are not able to staunch the flow of laundered money and bad actors are still able to exploit loopholes to commit fraud and avoid taxation. Regulations around Know Your Customer (KYC) and Anti-Money

Laundering (AML) will continue to evolve to meet technological advances. For the first time the 6th Anti-Money Laundering Directive (6AMLD) tackles cyber-crime and names it as a predicate offense. Fighting fraudsters online Online shoppers should be mindful that bad actors are employing a variety of methods to steal personally identifiable information (PII) -- including but not limited to setting up fake domains that look like real brands and posting scams on social media that in turn request sensitive data and payment info that is exploited to create synthetic identities or make fraudulent purchases, respectively. Additionally, there are fraudsters posing as courier services or border control agents demanding money in exchange for clearing packages for delivery. On average there has been double the number of new shoppers online during the pandemic than there was before. These less savvy consumers use weaker passwords, follow fewer security steps, and are vulnerable to Account Takeover attacks. For online brands, the past 20 months or so have presented myriad opportunities for customer acquisition and growth, unfortunately, juxtaposed against new and increased threats of fraud and identity theft. The surge in online activity has certainly emboldened and inspired creativity among bad actors online. The eCommerce industry must deploy strong identity verification measures to establish the root of trust that’s critical for our digital transactions. What’s more, 80% of people state that online sites have a responsibility to help reduce cyber-crime through effective identity verification methods. Doing this will not only help keep the fraudsters at bay, but it will be the basis for trusted customer relationships in the future.  Securing the customer journey We know from our own research that people expect their online experience to be both secure and convenient, and they recognize how advancements in technology have a big part to play in this. Indeed, 84% of consumers believe businesses need to use AI and automation to protect against sophisticated fraudsters, 72% feel secure when behavioural analytics, such as AI-enabled analysis of their voice and typing speed, is used and over half (52%) of people are more likely to trust a brand that delivers high-quality fraud protection. Put simply, if a consumer doubts the integrity of an identity verification process, they may abandon the account creation and not choose to transact with the brand.  Onboarding users or transacting requires a layered approach to compliance and AML requirements. Essentially, a layered approach combines a multitude of verification services that increases acceptance rates for legitimate customers and susses out bad actors or perpetrators of fraud. Using a layered and risk-based approach and tapping into diverse data sources enables organizations to have complete flexibility in their AML and KYC checks dependent on the type of business or service and at each stage of the customer journey.

The great divergence McKinsey Global Banking Annual Review 2021 December 2021

Contents 03 Executive summary 06 Banking in the pandemic: An industry crisis averted 28 The great divergence in financial services 43 Is your bank ready to diverge? 47 Appendix McKinsey Global Banking Annual Review 2021: The great divergence 2

Executive summary “Tipping point” may be the most overused metaphor in business; viral. For years, investors had been gravitating toward a it gets broadly applied to all kinds of ho-hum changes. But new generation of financial-services firms with new ways of once in a great while, it’s more than appropriate. The COVID- applying technology to serve customers better. In 2020, on 19 pandemic is truly a tipping point: Everything has changed. the back of a broad rally in share prices, the trend took off. Malcolm Gladwell’s 2000 book popularized the idea that Payments specialists, exchanges, and some securities firms the best way to understand trends in business and society captured more than 50 percent of the $1.9 trillion in market cap is to think of them as epidemics. Little did he know that 20 that the industry added. Most retail banks—those in the less years later, the world would grapple with a true epidemic that exalted business of taking deposits and making loans—were would not just devastate lives, but move markets, bring global left on the outside, looking in. industries to their knees, and transform others forever. That’s only the most outward manifestation of what we call The effects on society are still startling, no matter how many the “great divergence” between the industry’s top performers times we see the statistics: nearly 256 million cases, more and its utility-like laggards. Welcome to the 11th edition of this than five million deaths, and 7.3 billion doses of vaccine report, in which we document the ways the industry is splitting administered.1 The ways that buying and selling have changed into haves and have-nots, explain how to tell them apart, and are no less incredible: every business, from the corner grocery show how banks with ambition and determination can join the to any of the world’s largest companies, has been profoundly leaders. We will discuss the following key findings from our altered. research this year: For banks, COVID-19 marks the end of an era. After the 2008 — Banks have thus far endured the pandemic with losses global financial crisis, a conflagration that started in banks and averted but profitability depressed. In North America, ROE ended many of them in spectacular fashion, the survivors went fell from 12 percent in 2019 to 8 percent in 2020. European to work. They rebuilt capital, mended fences with regulators, banks’ ROE was halved, from 6 percent to 3 percent. ROEs and invested in digitization to build relationships with in Asia fell by a percentage point. customers and wrest more efficiencies from their back-office processes. The gambit worked. Banks withstood the pressures — The global financial-services industry still trades lower of 2020, and capital reserves rose last year. But it came at a than other industries. Banks trade at book value, versus cost: the global industry’s return on equity (ROE) fell from 8 companies in all other sectors at three times book value. percent in 2011 to 6 percent in 2020. The industry became Half of banking institutions trade for less than the equity safer, more predictable, more commoditized. value on their balance sheets and generate profits below shareholders’ cost of equity. At the same time, a slow-motion investment trend went 1 WHO Coronavirus (COVID-19) Dashboard, as of 4:27 p.m. CET, November 18, 2021; covid19.who.int. 3 McKinsey Global Banking Annual Review 2021: The great divergence

— Creating value for shareholders is not for the fainthearted. • They are faster and more flexible, and they invest—both Most banks’ economics are modest at best, with ROEs organically and through acquisitions or partnerships, under 10 percent and income growing 3 to 7 percent and by attracting the best talent—in delivering multiple annually. The traditional bank’s balance sheet is overly releases that delight customers. liquid, too capital-intense, and less relevant for revenue monetization, even as a digital disruption accelerated by the — Traditional banks that wish to join this elite group have only pandemic tilts the action away from the balance sheet and a limited window. About two-thirds of the value generated toward fee-based services. during an entire economic recovery cycle is created during the first two years after a crisis. — The banking industry now faces a great divergence. The gap in market-to-book ratio between top and bottom McKinsey’s Global Banking Annual Review is based on insights performers has widened. Today the spectrum runs from and expertise from McKinsey’s Global Banking Practice. This seven to well below 0.5 times. edition is structured in three chapters. In the first, we review how banks fared in the whirlwind of 2020 and what forces will — The divergence is based in part on the geographies in which likely influence their economic fate in the next few years. In the financial institutions operate, their relative scale, and their second, we look in detail at the great divergence—the factors segment focus. such as geography, customer base, scale, and business model that are lifting one set of banks above the rest. We conclude — But the biggest factor is a bank’s ability to deploy a future- with some business-model questions for CEOs and strategists proof business model that displays three characteristics to consider, along with examples of what is possible for banks that make them attractive to investors (and customers): seeking the on-ramp to growth and prosperity. • They are embedded in customers’ lives (with more touchpoints and greater ownership and engagement), using digital channels and ecosystems to solve specific customer needs with distinctive and personalized experience—and they use the insights they gain to develop even better ways to keep customers engaged. • They have a sustainable economic model that is less capital-intensive and more focused on growth and customer monetization through services/commissions rather than just financial intermediation. McKinsey Global Banking Annual Review 2021: The great divergence 4

Capital markets are already factoring in a growing diver- gence in valuations between top- and average-performing banks. 5 McKinsey Global Banking Annual Review 2021: The great divergence