What is hyperautomation?

In 2019, Gartner begat the expression “Hyperautomation” (Gartner). Hyperautomation alludes to the utilization of cutting-edge innovations, for example, AI and mechanical technology process automation (RPA) to robotize manual assignments. It is basic to comprehend that hyper automation isn’t intended to replace human specialists, yet rather to coordinate them into the cycle.

Benefits of Hyperautomation

Regardless of a few early mishaps in the utilization of mechanical technology and artificial intelligence (AI) in banking processes (McKinsey), the future shows up splendid. Banks are likewise learning significant work process illustrations in this new world, for example, how to oversee handoffs among man and machine more successfully, and where conventional interaction update/reengineering can be postponed or even skipped for automation.

1.IT expenses have been decreased

With regards to assets and customer maintenance, banks ordinarily burn through huge load of cash. They can set aside cash through automation since it permits them to use cloud-based services like iPaaS (which permits them to convey developments, new items, and scale foundation).

2. Streamlined market time

The desire of great importance is for new items and services to be brought to advertise as fast as could be expected. This additionally applies to banks. Automation will support formalizing the interaction and utilizing cutting edge innovations and devices to help with the execution of new items over more limited and more effective item life cycles.

3. Information and customer experience

Across businesses, a noticeable shift from is being item driven to being customer-driven and information centered. These will turn into a pivotal mark of separation. With the expansion of computerized channels and stages, the volume of information has developed dramatically, requiring constant information handling and updates. At long last, it comes down to utilizing progressed investigation to settle on better choices and giving customized encounters.

4. Transfer speed

Scalability is the essential objective of any business, and it very well may be accomplished through associations and nonstop development. With the presentation of new stages, hyperautomation gives the valuable chance to scale quickly while spending less, to assemble a biological system, and to make incorporation simpler.

Conclusion: The pandemic has increased the requirement for financial services to mechanize their business and data technology cycles to stay coordinated and answer a continually evolving market. To avoid complication in customer administration conveyance with more automation, hyperautomation consolidates abilities with shrewd work process coordination. It is expected to develop close by a business, bringing about a functioning biological system that is continually instructed and ready to involve information and experiences for fast and exact navigation. As financial institutions strive to keep up with their capability in a post-COVID world, there has never been a superior opportunity to acknowledge the eventual future of intelligent automation.

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Over the last few years, the banking sector has gone through an inevitable transformation as more and more fintech businesses come into the market. Financial services are evolving to the point where new products, channels, partnerships, and opportunities are being created. At the heart of this digital storm, lies the concept of Banking as a Service (BaaS).

So, what is Banking as a Service (BaaS)?

In simple words, Banking as a Service (BaaS) is the provision of banking products and services through third-party distributors. It is an end-to-end approach that uses APIs to connect fintech companies and other third-party organizations to a bank’s system. This helps such third-party Fintech organizations build innovative financial services upon the provider bank’s regulated infrastructure while enabling open banking services.

Banking as a Service (BaaS), disaggregating the traditional banking value chain.

The typical structural functions of a bank as we all know are accepting deposits, lending deposits to businesses, remittance, and payment processing. To facilitate these, banks require huge investments and other physical assets like property, infrastructure, etc. All these processes create  gridlocks.

BaaS is bringing revolutionary changes in the finance industry by reconfiguring the value chain and promoting new sources of growth. FinTech companies & Non-banking Financial Services providers are working with traditional banks to create BaaS that enables innovative, specialized offers to get to market faster by combining the strengths of both institutions. With increasing problems of customers with existing banking barriers of regulation, security, and technology, Baas is delivering fast, agile and seamless offerings. The winning factor of BaaS is the ability to capitalize on technology investments and create value.

According to Finextra, the top companies that are actively pioneering BaaS strategies and have already experienced all the advantages first-hand are solarisBank, Bankable, Starling Bank, Pi1, Green Dot, and BBVA.

The future of banking is driven by next-generation technologies, enabling customers to make seamless, safe, and rapid payments in order to meet their changing needs. Let’s look into some of the key trends that are disrupting the banking industry in 2022 and opening new doors of growth for banking.

Embedded Finance or embedded banking: According to Juniper Research, the value of the embedded finance market will exceed $138 billion in 2026, from just $43 billion in 2021. Embedded finance is the seamless integration of financial services into a typically non-financial platform, enabling customers to use apps to avail banking services. Apart from the easy-to-use user experience, embedded finance is having a great deal of success because of its already existing broad customer base.  In addition to embedded payments, there are also emerging trends for embedded credit which allows customers to take credit within the non-financial platforms. For example, Amazon offers EMI options which purchasing any product. Moreover, embedded investments and insurance are integrated within the non-financial apps for a smooth customer experience. In fact, embedded insurance has the potential to increase the purchase of insurance for high-value products among eCommerce customers. Research reveals embedded insurance premiums to grow to over $10 billion in 2026, from just $3.8 billion in 2021.  

Emerging technologies in financial services: Advanced technologies like AI (Artificial Intelligence), Machine Learning, Blockchain, Internet of things (IoT) are rapidly transforming customer experiences by increased responsiveness, security, transparency, and time efficiency. Today, customers are exploring the benefits of open banking where they are thoroughly aware of their financial condition, they can plan investments, compare the alternatives and make better financial decisions.

Increase in Mobile Banking: According to 2020 mobile banking survey, approximately 58% of respondents indicated that they were visiting branches less frequently due to the pandemic; among them, over 61% indicated they were also using mobile apps more frequently. This trend is likely to continue as users are more comfortable than ever in availing mobile banking. Mobile banking enables users to have account information access, transaction access, investments, support services, and news and offers alerts. One of the biggest reasons for the rapid growth of this trend is because users can conduct almost all sorts of banking activities anywhere, anytime. This has further helped the bank to cut down on its operational costs by maintaining customer satisfaction.

To conclude, both banks and fintechs are imbibed in a symbiotic relationship. The difference between the structure and functions of the two is even making the relationship more valuable. Along with the provisions of banking infrastructure, regulatory legitimacy, and the existing customers who still rely on banks; fintech brings the freedom to create, design, and experiment, offering user-friendly and tailor-made solutions for the customers. Finally, it would not be wrong to say that banks, fintechs, and BaaS firms are most effective when they collaborate to reduce risk, maintain compliance, and provide the modern financial solutions that customers demand.

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Traditionally, the business of wealth management is based on personal relationships and trust as client engagement involves several individuals and manual processes. The clients deal with an investment advisor who is supported by the middle and back-office staff – the opening of accounts, transfer of money and transactions are all performed by various individuals and thus prone to human error. While it appears to be a smooth functioning place to an outside observer, in reality, it’s hardly ever the case.

The current business model has poor scalability and efficiency – according to McKinsey, the need of the hour is a next-generation operating model that is supported by Data, Analytics, and Technology. The pandemic has catalyzed this inevitable change since it caused a shift towards digital modes for sales and delivery of advisory services. The clients seem to have accepted the change too and expect the best of the changes to continue post-pandemic.

We are currently at a juncture when the industry’s business models are getting disrupted, with digitization accelerating the change. Here are a few of the several drivers bringing changes to the world of wealth management.

Data & Analytics

The wealth management industry seems to be behind the curve in terms of the adoption of Data & Analytics. However, leveraging D&A for different business processes such as client advisory, portfolio building &management, risk evaluation, etc. could significantly enhance the value delivered by wealth management firms.

Data analytics benefits advisors and clients alike – better analytics and visualization tools can add value to the vast amounts of data that advisors deal with. Leveraging advanced data analytics tools and techniques, wealth management organizations can generate meaningful and actionable insights for their clients to make informed investment and business decisions.

Cloud Adoption

Most wealth management firms struggle with the complexities and inconveniences of legacy software systems – cloud computing allows for modernization without changing the IT landscape completely in one go, as it can be implemented in a modular manner.

The pay-per-user function also transforms the way in which wealth management firms create and offer customized applications and services.

Future-forward firms have begun planning their cloud transformation strategies, as they are well aware of the challenges involved in implementing one, while simultaneously being convinced of the many positives it brings, including the ability to help Wealth Managers use their resources more efficiently, plan their budget management and allocation, and help the organization to obtain flexibility by building an enabling IT infrastructure.

Robo-Advisory

Robo-advisors are defined as digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision – they collect information from clients about their financial situation and future goals through an online survey and then use the data to offer advice and automatically invest client assets – thus, they are also called Automated Wealth Managers.

They are an attractive option for young investors who don’t have a large sum to begin investing with, who don’t necessarily need the face-to-face human interaction and relationships that the older generations prize, and who would rather not spend a lot of money on wealth manager fees.

RegTech

Complying with industry regulations is a high-risk area for wealth management firms since any failure on their part can result in financial losses in addition to costing them their reputation as well as punitive measures by Governments. Firms have begun to employ technology to perform functions such as due diligence, transaction monitoring, regulatory reporting, data management, and so on to reduce regulatory risks as well as costs.

RegTech, or Regulatory Technology, not only eases the burden of compliance for wealth management companies but utilizes AI, data mining algorithms based on machine learning, offers services on the cloud and integrates with existing systems in organizations through APIs to make it easier for firms to adopt new technologies.

In conclusion, digital transformation services are already underway in the wealth management industry. However, the successful transformation and adoption would require the organization to adopt it with an open mind. Technology adoption may be risky, but those firms that can adapt and embrace the change would fare better in the long term.

Black Rock IT Solutions is a digital transformation service provider with over 14 years of experience working with clients from the Financial Services industry. We have been instrumental in the digital transformation journeys of several firms, equipping them with the advantages of D&A, AI&ML, and Cloud Adoption to build a more future-proof business. For instance, blackrock proposed a data analytics-powered investment advisory services platform as a solution to the challenges a leading wealth management firm in the US faced. Designed with an intuitive interface on Web, Desktop, Android, and iOS devices, the investment advisory services platform helped its users to manage different kinds of investment portfolios seamlessly. Read the whole success story here.

If you are looking for a reliable IT-partner who understands your domain, drop a mail to sales@blackrockdxb.com.

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From Industry 1.0 to Industry 4.0, intending to reduce cost and to improve efficiency, organizations have always tried to automate business processes with whatever technology or machinery is available to them. With the widespread adoption of digital technologies, automation has evolved quickly during the last few years. Though traditional automation has been around for quite some time, the introduction & adoption of Robotic process automation (RPA) has taken the automation industry by storm. RPA streamlines & automates business processes that are repetitive and manual-labor intensive – it has transformed human lives, the business ecosystem, and the global economy in an unprecedented way. 

What is Intelligent Automation? 

With advancements in digital technologies such as Artificial Intelligence and Machine Learning, a smarter version of RPA that analyzes the vast amount of data generated, then decodes and learns the business process itself with context, rather than perform a series of rule-based tasks, has paved the way for Intelligent Automation. 

IA combines artificial intelligence and automation to create smart business solutions that can analyze, learn, and adapt to improve the efficiency and productivity of any organization. It leverages natural language processing, computer vision, machine learning, and machine vision to understand and solve complex business challenges.  Intelligent Automation automates any business processes that leads to reduced operational costs, improved efficiency, and enhanced customer experience. 

Let’s explore how Intelligent Automation Solutions are disrupting different industries. 

Healthcare   

 With the implementation of Intelligent Automation solutions, healthcare providers can devote more human resources towards patient care as the mundane & time-consuming tasks are taken care of by IA. The Healthcare industry struggled with the processing of unstructured data involving text, videos, and images – intelligent solutions took over the unstructured data processing and automated tasks such as collecting and interpreting diagnostic results, pharmacy & laboratory operations, etc., in a short time frame with increased efficiency.  Digitization of health records, inventory management, automating unstructured data processing, automating contact center operations, patient journey management, etc., are some of the ways automation has made an impact in healthcare. 

With virtual caregivers, patient management robots powered with speech & facial recognition, and AR/VR technologies, the healthcare industry can offer personalized patient care, ensuring superior patient and employee satisfaction. 

Retail 

Artificial intelligence infused into Robotic Process Automation (RPA) has enabled retailers to offer personalized offers to each customer. Intelligent Automation solutions analyze the massive amount of data generated via various customer touchpoints to create a seamless and error-free shopping experience for their customers. Assistive body measurement solutions by leveraging cutting-edge Artificial Intelligence & computer vision technologies to automate and fast-track body measurement and apparel-size recommendations for their customers accurately and efficiently is one of the applications of IA in retail industry.  

Pricing analytics, a sub-discipline of Intelligent Automation, helps retailers adjust prices based on customer’s intent and real-time market conditions. It can also gather customer sentiments from various social media platforms and allows retailers to make informed decisions. IA significantly improves the retailer’s operational efficiency, reduces costs, and ensures superior customer experience. 

FinTech 

FinTech organizations embraced Intelligent Automation solutions to automate almost every aspect of their business process. Combining technologies such as Artificial Intelligence, Machine Learning, Natural Language Processing, Computer Vision, etc., Intelligent Automation enables FinTech providers to offer cognitive agents such as virtual assistants and chatbots. These cognitive agents are capable of learning complex structured and unstructured data to make logical decisions and have disrupted the way customers engage with financial institutions. 

Intelligent Automation solutions help wealth management organizations analyze the vast amount of available data to understand stocks’ historical performance, make more accurate predictions in the future, and help gauge market movements in near real-time. These solutions can also help FinTech providers to meet regulatory compliances and standards as they reduce the risk of human errors significantly.  

Transportation & Logistics 

In recent times, automation in transportation industry has made significant advancements. Intelligent Automation solutions enabled the highly fragmented and complex Transportation & Logistics industry to become more efficient and transparent with fewer resources – autonomous trucks, driverless cars, and drone taxis are some of the most exciting intelligent automation applications within the transportation & logistics industry. 

With the widespread adoption of digitization, the customer’s logistics & transportation expectations have changed enormously. Intelligent Automation solution providers help organizations streamline & optimize their business processes such as transportation planning, route planning, warehouse network management, and inventory management to meet the rising and fluctuating market demands. Driven by insights and predictions, IA solutions help organizations be more efficient, meet customer demands, and make better faster decisions.  

In Conclusion 

Intelligent Automation solutions are designed to address complex business problems, simplify business processes, reduce costs and improve efficiency. With increased market demand and dynamic customer expectations, if businesses don’t automate everything they can, they may not survive.

At Black Rock IT Solutions, we understand the intelligent automation ecosystem and can help build customized solutions for organizations across industries. To know more about Experion’s automation capabilities and how we can support your journey towards automation, contact us at sales@blackrockdxb.com   

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In the first six months, the global revenues for payment systems declined by an estimated 22% when compared to the same period in 2019. According to BCG, from 2019 to 2024, the global payments revenue is likely to increase by around 1% to 4%, depending on the speed of recovery from the pandemic. However, even in a best-case scenario where the rebound is quick, the expected growth rate would be half the rate of the prior 5 years. 

However, in the past six months, e-commerce, digital payments, and other online services have all registered excellent growth. The pandemic has reshaped how consumers and businesses interact with each other and this will shape the future of the payments industry. 

Here are a few of the trends that were observed during this time.

Cash to Non-cash conversion

Even countries that have been traditionally cash loyal have experienced a drop in the use of cash for transactions and have seen a rise in digital payments. For instance, the UK has seen a 50% drop in cash usage in March 2020. Payments made in-person are reducing every day, as people are being encouraged to stop handling cash to curb the transmission of the virus. In fact, most businesses encourage contactless payments, with some going so far as to not accept them at all. 

Electronic peer-to-peer and consumer-to-business payments have experienced growth during this time. Debit cards, normally associated with lower value transactions, have also exhibited growth. On the other hand, ATM transactions and cash use had experienced a decline during the same period – In India, ATM usage fell to almost 50% and a steep decline was observed in the UK as well. It was estimated that transactions executed via cash will decline by 4 to 5% during this year, which is around 4 to 5 times the annual decrease experienced during the last couple of years. 

Boost for e-commerce 

The pandemic forced a significant percent of the population to shift towards digital channels for their retail purchasing activity. Industries that depend on travel such as hospitality and tourism as well those that depend on density such as entertainment are likely to be unfortunate casualties in the short term, based on how the crisis has been progressing. However, niche segments such as fresh food, pet supplies, in-home entertainment, and so on are expected to grow at better rates. In the retail sector especially, a shift in buyer behavior was observed with customers moving from brick-and-mortar to online retail shopping. This was evident from Amazon’s second-quarter numbers that recorded a 40 % Y-O-Y boosted by the growth in grocery sales. 

This shift in consumption could also lead to a shift in the payment method used. For instance, in place of using credit/ debit cards, consumers could shift to contactless payment modes such as digital wallets or cryptocurrencies.

Move from “physical” to “virtual banking”

Banks in various parts of the world are closing branches either temporarily or permanently due to the current scenario. This has been aided by the adoption of technologies for real-time payment facilities.

In the words of Deepak Sharma, Chief Digital Officer at Kotak Banks, India – “Ninety-five percent of transactions moved out of branches post-COVID. Unless there is a great need for customers to visit branches, we don’t see it happening (again anytime soon). “

“We have also seen fast adoption of WhatsApp banking and conversational banking bots. Very soon, we will see (these changes apparent) while doing small business transactions and loan origination as well. Even after we come out of COVID, this shift in habits that we (have seen) will continue,” he added.

Cross-border payment flows severely affected

Because of lockdowns introduced by Governments, international travel came to a grinding halt causing a massive decline in international transactions. This was further worsened by waivers offered on the transaction to boost demand. Inter-regional trade had a deeper impact than intra-regional which further hurt cross-border payments, while at the same time the prices of commodities such as oil dropped since demand declined. This had a 2-fold effect on the transaction values since both the volume as well as the unit price dropped. 

To conclude, crises often create an opportunity for firms to take a good look at how they conduct business. COVID-19 is no different except for the speed at which it has managed to affect change. Payment systems have been forced to accelerate and meet the challenges raised against them. The most talented firms that adapt to the situation, leap ahead of the competition, and deliver exceptional value to customers will survive and shape the industry.

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From governments closing the borders and enforcing lockdowns to businesses struggling to meet the supply and demand, the novel coronavirus is changing the way businesses operate, collaborate and compete. Traditional business models are on the verge of being wiped out by their digital counterparts. Digital Transformation is something that has been predicted by leading analyst firms as the way forward for years now, and certain organizations have already implemented it, with a fast-tracked future now becoming a reality.  In this current scenario, the first movers will have the upper hand in the long journey ahead, and unfortunately, the laggards will struggle to tackle the situation. 

This article takes a predictive look at how various industries will flourish post COVID-19.

Healthcare

Unlike any other industry, COVID-19 has affected the healthcare industry the most. The current situation is an opportunity for healthcare stakeholders to utilize the available tools, software, and technologies such as AI, ML, IoT, Data Analytics, etc to offer better solutions.

Mobile healthcare, IoT, Virtual Assistants, and Robotics are some of the leading areas that healthcare providers can look into. Mobile apps to get in touch with doctors at your convenience, sensors/IoT devices to monitor real-time patient data, virtual assistants to guide healthcare professionals with complex procedures remotely, machine-learned robots to assist doctors in patient examination, etc. are some of the areas where digital transformation is going to make its mark.

Ultimately, new business models will emerge, as all healthcare providers need to rethink their current business strategies and pave the way for the vast opportunities that will come along with this pandemic. 

Retail 

With people staying inside their homes and practicing social distancing, the impact of COVID-19 on retailers will be severe. Leading retailers have started adopting omnichannel digital transformation strategies rapidly to win the customer pie. Most traditional retail customers, who once swore by the in-store experience, have now been forced to experience the convenience of digital purchasing, and are likely to continue with the trend even once this phase of being locked in is over.  

Brick and mortar stores have noted reduced footfall during this situation.  In order to stay afloat, they must now look into newer and more innovative ways to do business – be it through online platforms or even just becoming available on social media platforms to take orders. We are yet to see how the retail industry will evolve post-pandemic but surely, COVID-19 has dramatically accelerated the digital transformation in the retail industry too. 

InsurTech

The insurance industry thrives on predictability and the uncertainty that COVID-19 has caused is unprecedented. Most of their customers will be devastated with the fear of losing their jobs, their businesses and even their lives and they will rely on the insurance industry to be a ray of hope. 

Collaboration with various governments and other industry players to collect data from all possible sources should be the priority. Be it in the form of sensors, IoT devices, weather reports, and drones, they must generate meaningful insights in real-time to offer pro-active and personalized solutions. Coupled with advanced data analysis, they can come up with data models that predict possible future outcomes like this. 

InsurTech players must lead the digital transformation journey in terms of leveraging the latest technologies, optimizing the processes, personalizing the solutions, and bringing in automation to reduce costs and improve efficiency and effectiveness. All the players in the ecosystem must embrace digital transformation at the heart of their strategy to be the front-runners in the new insurance era. 

FinTech

With people being asked to remain indoors and governments and central banks announcing economic relief packages, everyone is looking at FinTech to help implement their ideas.  The current situation brings a new sense of urgency to the need to examine ‘going digital’ by accelerating the rush to digitization. Digital payments have become an integral part of everyday life across the globe, opening up new avenues of innovation and business opportunities in the coming future. 

Digital onboarding, omnichannel retailing and eWallets will likely grow to new heights. Financial institutions must utilize these opportunities and go digital in their offerings. Technologies such as Artificial Intelligence, Blockchain and big-data analytics will play a crucial role in formulating FinTech strategies in the digital-only era. 

EduTech

The global learning population has been keenly impacted by the spread of the C0VID-19 virus. Though the infrastructure in terms of internet access, data costs, etc are yet to catch up with the rising requirements, the time is ripe for EduTech companies to make their mark. This will be the point of transition in the adoption of the online medium against the traditional educational model. 

Instead of focusing on replacing mundane administrative and managerial roles, which unfortunately most providers are doing right now, they must embrace and accelerate the digital transformation of education itself. EduTech companies need to collaborate with traditional universities and schools and offer an online-offline system. They must leverage the latest technologies such as online video-based learning, artificial intelligence, machine learning, advanced analytics to personalize the learning experience and ensure a more engaging and valuable offering to the user.

The change here must come from the educational institutes as well, as they need to take the step towards embracing this change – but the current pandemic has only proven that it is high time they understand that this is the future of education. 

Transportation & Logistics

Transportation and logistics players globally are trying to fix things with whatever resources they have because they are the lifelines that make sure the logistics of essentials stay in place. With limited manpower and severe restrictions, they must leverage technologies to overcome this hurdle. 

This is an opportunity for them to rethink their business practices. Instead of working and relying on outdated legacy software systems, they should embrace digitization and automation to stay competitive within the industry. They must accelerate their digital transformation process and partner with technology companies to develop tech-driven solutions to offer streamlined and personalized end-to-end services. They must harness the power of “digital” to handle any unforeseen events in the future. 

The challenges that COVID-19 poses cannot be generalized as it varies from industry to industry. Post epidemic, organizations should revisit and reinvent their business strategies with more focus and weightage on innovation, research and development. Inevitably across industries, digitization shall be embraced with an urgency more than ever before. 

Survival and recovery of core operations should be what organizations focus on post COVID-19. Collaborating with digital technology consultants like Black Rock IT Solutions can help you get the kick-start you need to successfully restart your businesses.

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But the recent pandemic, COVID-19,  which has the whole world reeling from the repercussions of being locked down,  has made steady paychecks with health insurance benefits look a lot more promising. And while there are advantages to being in the gig economy, there are also disadvantages that cause incredible anxiety to the workers in the ecosystem, the biggest among them, undoubtedly,  being the payment question.

According to a Global Marketplace and Gig Economy Payment Satisfaction report, a survey of gig economy freelancers from various industries around the world found that 73% of gig workers are likely to leave the marketplace due to payment issues. Many gig workers and freelancers face delayed or even denied payments, and many spend weeks tracking down payments every year. And this is where companies who rely on gig-workers can make a difference and digital transformation can be a lifesaver. One could argue that adopting a digital transformation platform to meet employees’ requirements in real-time –  an instantaneous payment platform for instance – will help the gig economy thrive going forward. 

In a move that seemed understanding of this predicament, the US Federal Reserve officially announced in August 2019 that it plans to build a real-time payment service by 2023-2024 called ‘FedNow’. Hopefully, the changes that COVID-19 has brought upon the world economy spurs them on to develop and implement this sooner rather than later. 

In the announcement, the Fed Reserve invited extensive feedback from members of the banking and payment community and in a much-publicized response, Google wrote to the US Federal Reserve Board detailing the successful example of the UPI (Unified Payment Interface) based digital payment platform in India to build FedNow. 

UPI, according to the NCPI website “is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments under one hood.”  It also caters to the ‘peer to peer’ collect request, which can be scheduled and paid according to your convenience. 

Google listed three major qualities of the UPI worth emulating: 

• Interoperability – account to account transfer and not just an online wallet
• Real-time money transfers
• An ‘open’ system – standards are open-source so technology companies can build their implementation of the solution

Let’s look at these qualities a bit closer and understand how they can become game-changers for the gig-economy.

Interoperability

The diverse requirements of the US FinTech industry necessitated multiple channels for enabling payments. The payment systems currently in place don’t interoperate seamlessly. Private solutions are closed-loop systems too –  real-time transfers are possible only between those users who use their specific solution. This is arguably the biggest drawback of the multitude of perfectly functional payments systems that have organically sprung up over the years.

Now imagine a new platform that can now provide you with access to the funds lying in your bank account and can transfer money from your PSP (Payment Service Provider) to another party’s bank account without worrying about the PSP the other party uses. This would essentially convert all PSPs into portals to your financial world. This is what the UPI platform accomplishes.  

Real-Time Money Transfer

As smartphones are replacing physical cards and POS systems, any new system being developed should be able to authorize a payment using a pin or two-factor authentication to transfer cash instantaneously regardless of the platform the merchant uses. Without Visa or Mastercard needing to act as intermediaries. A system that combines all the existing payment rails and can transfer money to any of the nodes seamlessly, just like UPI does.

‘Open’ System

In the current payment ecosystem, different payment rails need different types of authentication information. The new system should simplify and standardize these operations – the different types of authentication for each payment rail should be handled under the hood by the new system.  The result would be an open and interoperable payment infrastructure, compatible with all the existing technologies and has the potential to integrate newer ones. 

This is what will enable any PSP to facilitate transactions to any other PSP instantaneously, leveling the playing field for banking and non-banking PSPs (Fintech firms) when it comes to managing payments. 

The Entrepreneur’s Advantage 

The biggest beneficiaries of such an instantaneous payment platform,  other than gig workers, will be small business owners and the low fixed-income individual who has to wait for a couple of days after a paycheck is deposited for the amount to reflect in their account.

If FedNow works with this kind of an open system, it will create opportunities for small and medium-sized banks, credit unions, FinTech companies, and large retailers to develop their version of PSP applications. And while developing such a system, firms must ensure that they create a simple, intuitive platform for P2P transfers and digital POS systems for their customers. 

It will also create an opportunity for payment and ‘payment adjacent’ solutions providers to develop their own version of PSP apps. For instance, even small FinTech firms can utilize their existing infrastructure and leverage digital transformation solutions to meet customer requirements, offering innovative, secure and user-friendly solutions that can compete with the likes of larger banks.  In this way, they can reposition themselves for continued success, even post COVID-19.

Having developed FinTech solutions for their partners, companies like Black Rock IT Solutions have a distinct advantage in developing PSP apps for their client partners, that companies around the globe can rely on to be top-notch.

To know more about Experion’s Fintech offerings, drop a mail to sales@blackrockdxb.com

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Blockchain as a technology (BCT)/software protocol has a lot to offer to the financial services realm. A major attraction for BCT within financial services is its ability for disintermediation, a cost-saving mechanism for most sector players. Blockchain trims down a need for costly infrastructure requirements that aid in transaction processing.

Before we begin, let us look at what is meant by Blockchain technology.

As per industry definitions, Blockchain is a distributed digital ledger (DLT) that allows transactions of value to be recorded and verified electronically over a network of computers (called nodes/blocks) without being managed by a central ledger. Data is encrypted inside each block to protect it from fraud /hackers. All data/transactions within the blocks are cryptographically encrypted.

Blockchains are more trustworthy than conventional centralized systems because each transaction on the chain is verified/validated by the participating nodes/blocks and also encrypted cryptographically. Any change/duplication of data in one of the nodes is synced with the other nodes and this leads to transparency. As per a recent article published in the Medium, Blockchain’s decentralized, open & cryptographic nature allow people to trust each other and transact peer to peer, making the need for intermediaries obsolete. (*Source:Medium)

So how will Blockchain prove to be a transformational force for the financial services domain? Let us check out a few scenarios:

1. International Payments: Global payment volumes have been rising with the passing years. Along with this rise is the increase in infrastructure and processing requirements along with the need for quick settlements. Security, of course, is important as it always has been. Transaction costs are another challenge. Competition from non-banking players is seen as a forceful change in the payments scenario.

Blockchain technology has great hopes pinned to it in the form of savings in transaction costs involving intermediaries as well as the time lags associated with the transactions. Real time payments with reduced settlement risks are another possible outcome of Blockchain implementation. This is in addition to lessening the threats to data safety, privacy and similar limitations.

2. Asset Management: Global asset management is cumbersome when it comes to clearance and settlement practices. Blockchain promises to simplify processes, bring down costs and delays. Blockchain implementation can speed up decision making, protect data sensitivity and provide much-needed transparency to transactions. This is in addition to simplification in the KYC, client onboarding, trading processes.

3. Trade Finance: Trade is an area that is largely prone to theft and fraud dangers. Documents involved in a trade process such as invoices, Letter of Credit, Bank Guarantees and Bills of Lading are not free from the dangers of forging. This is what Blockchain adoption can eliminate. Since it is a peer to peer network, middlemen are cut off, bringing down instances of cost and time savings. Asset tracking can be made simple as each asset is linked to a generated serial number within the chain. Another instance of the technology making trade finance simpler is in the execution and maintenance of Smart Contracts.

4. Investment Banking: It is said that Blockchain technology could save millions of dollars for investment banks. This includes a huge savings in office infrastructure in addition to savings involved in reconciliation processes, enhancement of data accuracy, transparency in dealings and auditability (Source: Accenture Report on Investment Banking 2017)

5. Capital Markets: Capital markets include a global network of financial institutions that act as trusted intermediaries. Such intermediaries possess volumes of isolated data, leading to challenges in the form of data inaccuracies, processing delays and resultant errors. What the Blockchain can do is to bring down the number of intermediaries and in the process, eliminate many of the earlier roadblocks. Capital markets also gain a number of benefits such as faster clearance and settlements, easier compliance requirements, and the operational efficiencies resulting from a mix of all these benefits.

6. Financial Inclusion: For the many nameless people on the planet, Blockchain can be a way to financial inclusion and creation of own identity. This way they could make more money by selling their wares directly to people who matter, without ever having to go through meddlesome intermediaries. An example is the Blockchain connecting several mobile wallet providers for quick services to people who are in need for money transfers and payments, yet not in a financial network.

7. Insurance Claims: A trusted technology such as Blockchain is the most suited for transformation of the insurance industry. The onus would be on increasing transparency to the entire process. The end-to-end process of insurance starting from customer evaluation down to claims processing is now covered by a haze of mistrust and formidable costs, which prevents even the most eligible parties from reaching out for cover. This is true globally, and is what Blockchain technology can correct. Smart contracts linked to Blockchain can enable a dynamic pricing policy for premiums.

8. KYC Process: Blockchain creates an internal identity process that is aided by storing data in the form of blocks and making this data tamper-proof using a hash format. This ensures greater data security, identity management and fraud prevention in transactions. Banks can be a beneficiary of such automation of KYC, leading to customer experience and loyalty.

9. Banking in general: Though banking as a whole cannot be overthrown by disruptive technologies including Blockchain, there is a greater chance for the industry to undergo a sea change as a result. More transparency, faster processing, cost reduction, bringing down cyber risks plus mediation and central controls will change banking scenarios for the better. Since Blockchain operates with blocks/nodes that are tamper-proof, all transactions that take place in the peer-to-peer network are relayed throughout the blocks and verified. A way forward for banks is to start testing the waters internally by automating back office functions, and gradually extend it to outside operations.

Challenges to Implementation
Blockchain technology needs agreement between the different parties/functionaries as well as regulatory approvals before it can be fully adopted into the various financial service realms. Infrastructural expenses can be another hurdle to adoption as legacy systems can be costly or even suicidal to interrupt, even for a few minutes or hours. Process and people changes are also an essential part of implementation, and this is not often an easy thing to accomplish.

Conclusion
Blockchain will definitely bring about a big wave of transformation into the financial services sector, with focus falling on Payments, Trade Finance and Banking. It may not eliminate intermediaries and banking altogether, but is poised to make the scenario much more customer-friendly and trustworthy.

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