Was the GameStop and AMC fiasco a beckoning of a new age for financial market infrastructure

STACS: Was the GameStop and AMC fiasco a beckoning of a new age for financial market infrastructure?

Financial Market Infrastructures have time and again impacted all parties involved. In such unprecedented times and in the midst of disruptive transformation currently shaping the entire financial service industry, financial market infrastructure will not stay immune for much longer. In light of the GameStop and AMC fiasco, legacy infrastructure was shoved into the limelight once again. To understand the impact of such infrastructures and also discuss alternatives, we interviewed Benjamin Soh, Co-founder & Managing Director of STACS.

The last few weeks have catapulted GameStop and AMC into the spotlight. It also shed light on the legacy infrastructure and systems that financial markets operate in. What according to you is the most significant take-away from this event?

Benjamin Soh, Co-founder & Managing Director of STACS

Benjamin Soh, Co-founder & Managing Director of STACS

Benjamin Soh: The latest retail trader outrage on the back of the GameStop and Robinhood fiasco shows that now is the perfect moment to champion technology-driven alternatives. The reality we are living with is that trade settlement infrastructure in 2021 still requires financial institutions to post billions of dollars each in capital requirements, while settlement times can take up to multiple days and involve multiple parties. The result is an inefficient, costly, and cumbersome hidden back-end to capital markets that the popular retail broker was on the sharp end of two weeks ago. Further, as many inside the industry are already aware the technology to solve this problem for clearing houses, regulators, and financial institutions (banks, brokers, and exchanges) is already here.

Speaking of legacy systems, what are some of the current alternatives that financial markets can adopt to address these problems?

Benjamin Soh: Blockchain or distributed ledger technology (DLT) shows the most promise in delivering instant clearing times and dramatically reducing capital requirements as well as parties involved. Let me share more with you on exactly how it works, and some of the implementations we have done with institutional partners, below…

Could you please elaborate on how STACS fits into this picture? What are some of the problems that STACS could address with regard to financial markets?

Benjamin Soh: Unfortunately, the financial markets have operated in the same way for the last 50 years. Since the 1970s, the capital markets have been fragmented, where institutions operate on different systems and ledgers and go through a linearly dependent process where settlement takes between 2 to 14 days depending on the asset class. This leads to US$800 bn of capital being locked up every single day in the clearing system. With multiple layers of processing, US$300 billion is being spent every year on transaction costs, and this model isn’t even effective. Further, delay in settlements leads to fines being paid in millions of dollars. As we saw in the Robinhood/Gamestop, such failures can potentially affect every participant.

This is where we really come in…STACS works by offering multiple options of connectivity for financial institutions via our front-end applications built specifically for finance use cases (trade lifecycle management of bonds, structured products and derivatives), API integration between existing platforms (i.e. Aladdin, Murex, Omgeo), and the STACS Settlity infrastructure as well as node-to-node integration. Our proprietary platforms mirror financial processes on the blockchain (distributed ledger) so that things like trade settlements and clearing are captured in a decentralised environment.

Could you take us through of any case studies that STACS has developed in recent times?

Benjamin Soh: We’re really excited to have had the opportunity to work with some great institutional partners in the past few months. In December, we completed a blockchain proof-of-concept with Malaysia’s national stock exchange, Bursa Malaysia, to facilitate the growth of the bond marketplace at the Labuan Financial Exchange. Together with CCB Labuan, CIMB and Maybank, we simulated several bond issuances which were all issued and managed on the STACS Blockchain. Using our Trident Blockchain-based platform developed, bond templates were mirrored onto smart contracts for rapid deployment, while operational workflows were streamlined to increase efficiency and flexibility in settlement cycles. The creation of a blockchain powered infrastructure will provide a single source of information that is kept in a shared distributed database between Bursa Malaysia and participating banks. Further, this provides a registry of ownership and reducing counterparty risks and reconciliation costs.

In January, we partnered with Deutsche Bank to jointly explore a project related to the technological and practical feasibility of digital assets interoperability, liquidity, cross-border connectivity, and smart contract templates, including the support of sustainability-themed digital bonds.

Earlier this month (February) we partnered with Eastspring Investments and BNP Paribas on a successful implementation of a first-in-market blockchain-driven solution to enhance trade lifecycle management capabilities for exchange traded derivatives (ETDs). The trading fee calculation platform, named Mercury, addresses current inefficiencies in the trade lifecycle management of ETDs. ETD contracts are complex and require multiple inputs to calculate broker fees, which can lead to trade breaks and many hours of investigation and reconciliation work. Within the first month of the implementation, 84 percent reduction in trade breaks was observed and a significant four-hour per day reduction in non-value-added reconciliation work, with reduced risk of errors in client reporting was also noted.

Finally, we are proud to become a portfolio company of PwC Singapore’s Venture Hub programme. The partnership will bring about synergies between our two firms, while helping to elevate trust placed in distributed ledger technology by the financial services industry and driving adoption.

Finally, as technology and digital transformation shapes other segments of FSI, what are the key areas ripe for disruption in the financial markets?

Benjamin Soh: Apart from fixing this issue of instant trade settlements, we see a really big opportunity in the area of ESG and Green Fintech. We are working towards building efficient techniques of launching of green bonds and green loans to mobilise capital, improving impact monitoring for transparency, and instilling stronger investor confidence in general.

To take this initiative further, we launched GreenSTACS – a platform that is developed on our blockchain core and allows physical Green financing use cases to now be integrated seamlessly to the financial institutions and their infrastructure. For example, Green Bonds and Green Loans can now be digitally issued in a more flexible, cost-effective and rapid manner, while the management and disbursement of proceeds can be enforced more effectively via the use of smart contracts.

LexisNexis How risk management providers are set to play a significant role in combating Financial Crime

LexisNexis Risk Solutions: How risk management providers are set to play a significant role in combating Financial Crime?

With the evolution of technology, the constant assessment of risk factors have become integral to every organisation. Strictly speaking of the ever expanding FSI landscape, the need to understand, predict and mitigate risks has significantly grown in the midst of the pandemic. As the pandemic forced most businesses to operate in a new fashion, it also exposed the whole industry to unethical  activity and disruption. To better understand how to manage risk effectively and become cognizant of the role risk management solutions can play in the FSI landscape, we interviewed Douglas Wolfson, Director of Financial Crime Compliance at LexisNexis Risk Solutions.

With significant advances in technology, please talk to us about some of the emerging risks related with it?

Douglas Wolfson: There is always anticipation that criminals will adapt to new technologies quicker, this can oftentimes lead to better risk management solutions in the long run. Take cryptocurrencies as an example; at first, there was real concern around money laundering due to anonymity in the cryptocurrency landscape. However, once Financial Action Task Force (FATF) released the interpretive notes for recommendations 15 (New Technologies) and 16 (Wire Transfers), which required KYC and AML screening for virtual asset service providers and transaction tracking, the mechanisms of cryptocurrency made it possible to track transactions and potentially know end users. Further, as all transactions are public and the blockchain is immutable, specific coins can be tracked forever. This is a significantly better situation than with cash, which is extremely difficult to monitor and track. Hence while significant advances in technology do court various risks, these are often addressed through effective risk management solutions.

Talk to us about the evolving role of risk solution providers in such a dynamic regulatory environment?

Douglas Wolfson: Risk solution providers are essential to regulated entities in terms of helping them understand evolving regulations both in terms of consulting on how the regulatory environment is evolving and what it means for these entities in terms of solutions provided to their clients. For instance, in a situation where individuals and entities are increasingly being added to sanctions lists, end users must have rapid updates to the lists that they require for screening regular and potential new customers to ensure that they are capturing all of the risk in their client base. Here is where reliance on solution providers comes into the picture. Additionally, the need to have tools to match evolving or dynamic use cases forces solution providers to be nimble in how their products can help solve compliance issues, while constantly improving efficiency in customer workflows.

With increased monitoring of transactions, AML and fraud checks and extensive regulatory requirements, how can risks in the financial services industry be effectively managed?

Douglas Wolfson: The increasing use of data analytics, machine learning and artificial intelligence is essential to effectively manage and assess risk. End users require highly efficient processes to ensure that they can onboard and monitor as many customers as possible as businesses continue to evolve and expand. Therefore, compliance departments must be able to monitor risk without slowing down the business. This results in a reduction in false positives without a corresponding increase in false negatives. The best way to achieve this is through data analytics and algorithms that can find and automatically flag false positives, so that these transactions can pass, while ensuring that risky transactions are reviewed further.

What are some of the impact of Covid-19 on Financial Crime Compliance and how is it set to evolve in light of the pandemic?

Douglas Wolfson: COVID-19 has seen a very swift move to digital across all industry types, which further implies that those companies with digital platforms have seen a sharp uptick in onboardings and transactions. This emphasizes the ability to be able to quickly onboard new customers and monitor transactions at significantly increased rates than previously expected. However, this can essentially strain companies that haven’t been using compliance technology to its fullest potential as increase in onboarding customers means increased workloads for employees, slower onboarding and potentially slower transaction processing times. This is just one of the many impacts of Covid-19 that is currently plaguing the industry. Hence, we see that companies that are now quickly adapting to new trends, are focused more on technology and have also realized more success.

Considering APAC, significant strides have been made in the banking sector by extending licenses to allow new business models to compete with incumbents. What are some of the immediate opportunities for LexisNexis Risk Solutions with regard to this?

Douglas Wolfson: LexisNexis Risk Solutions supports the APAC-wide extension of licenses to new banking business models. Competition will help the banking business flourish and bring in new technologies and advances that will change the way that we all bank. With this comes a need for end-to-end e-KYC solution, which we provide. We are excited to discuss with this sector of the market how we can help support digital and device KYC, identity verification and authentication, KYC/AML and sanctions screening and ongoing monitoring of the business, all using exception-only processing. Further, we also believe that this is key to the future of digital banking.

Looking at the next 5 years, what are some of the changes in risk management and compliance that could shape the workings of the financial services industry?

Douglas Wolfson: Over the past five to ten years, we have seen the development of risk based approaches in major APAC markets and we expect this is to continue to expand throughout the region. Regulators overwhelmingly agree that check box compliance management does not work and thus there is a need to continue expanding the RBA approach throughout the region. This, along with the implementation of more and better technological solutions, will help to improve the efficiency and effectiveness of compliance departments, which will help to grow overall businesses.

Image: TY Lim / Shutterstock.com

Best Retail Bank in Singapore: OCBC puts customers at the heart of business

Over the past couple of years, the banking experience has been redefined by the rapid advancement of digital innovations. Similarly, OCBC Bank continues to evolve to meet the changing needs of its customers. With customer-centricity at the heart of OCBC’s consumer banking business, it has stayed true to its mission to improve both customer experience and product offerings that deliver maximum value than ever before. At the same time, the Bank continues to invest in physical touchpoints, recognizing that many of its customers still prefer an offline banking experience.

For continuously raising the bar in service excellence, OCBC has received numerous industry accolades – and this year is no exception. At the recent Global Retail Banking Innovation Awards 2020 (GRB Awards) by The Digital Banker, this exceptional mettle has once again been proven when OCBC bagged the following awards:

  • Winner, Best Retail Bank Singapore
  • Winner, Excellence in Digital Innovation
  • Winner, Excellence in Digital Wealth Management
  • Winner, Automobile Lending Product of the Year
  • Winner, Digital Lending Product of the Year

Having built a trusted consumer franchise in Southeast Asia over the past 87 years, OCBC continues to deliver service excellence and reliability. With its digital capabilities, OCBC’s banking services are accessible 24/7. This enables the Bank to better support its customers especially in the current environment where various restrictions are being strictly implemented. OCBC’s cutting-edge mobile banking app continues to serve as a bank in the customer’s pocket, supporting them with their banking needs every step of the way.

“Customer centricity is at the heart of OCBC’s consumer business. The Bank “Stays True” to its customers and is continuously improving its product offering. OCBC’s digital platform enables a bank-in-the-pocket experience for its customers and allows them to enjoy a seamless omnichannel experience. The bank’s profitability is also beyond question. The investments made by the bank to redefine its banking experience have significantly improved customer satisfaction and made banking fuss-free,” said Nirav Patel, Managing Director at The Digital Banker during the awards ceremony.

OCBC leads in Singapore and beyond

One of OCBC’s core strengths is its ability to harness the latest technological advancements to enhance its omnichannel proposition. With a strong offline network in place, the Bank’s focus has been to deliver a seamless digital experience that goes beyond the usual norms, making them a confident leader in Singapore and other markets it serves. Some of OCBC’s most notable initiatives include:

Simplified car loan, home loan and renovation loan application process: With a streamlined process, car, home, and renovation loan applicants can complete the entire process digitally. OCBC recognises that the loan application process can be a stressful experience for customers, especially during these uncertain times. To that end, OCBC has launched the first-in-the-region digital car loan application process which features instant approval and online acceptance within 60 seconds.

“Even as OCBC strengthens its digital infrastructure, the Bank has remained committed to boost its offline offering.”

Alternate mobile login option: OCBC is the first bank in Singapore to enable the use of SingPass Mobile, a secured application used widely by residents for government-related matters, as an alternative login for its mobile banking application. By doing this, customers have one less password to remember.

HealthPass by OCBC app: OCBC launched its health and wellness app to help customers with safe and affordable access to doctors in the pandemic. The app is the first in the market which provides access to both general practitioners and specialist doctors, and has over 100 wellness offerings, offering customers a holistic approach to health. With HealthPass, OCBC helps customers protect their fundamental wealth – their health.

STACK platform: The multi-partner loyalty platform allows customers to consolidate their points from multiple rewards programmes in one place. It boasts two key features – points exchange and marketplace. The point exchanges enable real-time conversion of points from one rewards programme to another. The STACK marketplace allows customers to use their reward points from the participating partners to redeem for deals across F&B, shopping, travel and entertainment.

Enhanced in-person banking experience

Even as OCBC strengthens its digital infrastructure, the Bank has remained committed to boosting its   offline offering, recognizing that a large segment of its market continues to prefer an in-person banking experience.

One of the important initiatives is the launch of the next-generation ATMs, which allows customers to self-serve for most of their frequently performed transactions. One new feature activity is the cheque encashment service that allows customers to instantly encash cheques, for up to a maximum of $30,000 in a single cheque, simply by depositing them in the ATM machine.

In addition, OCBC is the first in Singapore to avail the QR code cash withdrawal function, which reduced the time taken for cash withdrawal at ATMs from 80 seconds to under 45 seconds. It also has the added benefit of enhanced security via biometric authentication.

“OCBC’s digital platform enables a bank-in-the-pocket experience for its customers and allows them to enjoy a seamless omnichannel experience.”

Also, earlier this year, OCBC launched an industry-first SORA-based mortgage. To date, $350 million worth of SORA-based mortgages has been disbursed, which represents approximately 40% of the average monthly mortgage sales.

With all its digital and in-person initiatives, OCBC continues to be well ahead of the curve. Even during difficult times such as the COVID-19 pandemic, it has remained steadfast in its commitment to stay true to its customers.

 

>> To read more about this story and other exclusive features about the digital banking landscape, download the latest issue of The Digital Banker Magazine HERE.

 

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Image: TY Lim / Shutterstock.com

Qatar Islamic Bank Accelerating Digitisation to Attract New Customers

Qatar Islamic Bank: Accelerating Digitisation to Attract New Customers

For several years now, Qatar Islamic Bank (QIB) has been steadily scaling up its digital banking services, ensuring that its customers adopt the new digital banking methods and significantly reduce reliance on traditional banking services. This extraordinary foresight to strengthen its digital capabilities has served QIB well not only in normal times but more importantly, in times of crisis. In the midst of the COVID-19 pandemic, QIB has managed to significantly reduce customers’ reliance on face-to-face services made through physically visiting its branches. With an Accelerated Digitization of Banking Services, the Bank has contributed to ensuring the safety of its customers and has allowed them to bank safely from home, while having all their banking needs fulfilled remotely.

Just recently, in recognition of its outstanding digital innovation, Qatar Islamic Bank was awarded Winner, Best Digital Bank of the Year – Qatar, Best Retail Bank of the Year – Qatar and Outstanding Client On-boarding & Account Opening – Middle East at the recent Global Retail Banking Innovation Awards 2020 (GRB Awards) by The Digital Banker.

Globally acclaimed as the most authoritative and transparently judged Retail Banking awards program, the GRB Awards recognises trailblazing banks that are leading with digital innovation, product development, service delivery, customer centricity and customer experience. Making it through is a feat in and of itself, with adjudication panel that includes industry experts from companies such as such as KPMG Digital Village, Imaginarium Advisors, EY and Forrester.

“QIB embarked on a bank-wide transformation program with the primary objective of improving and simplifying the customer experience, modernize the bank’s offerings and introduce an agile methodology to continuously deliver innovative features to attract new customers. Robust profitability and a stable financial performance were underpinned by large scale transformation, which significantly increased digital sales and reduced the cost to the bank,” said Nirav Patel, Managing Director at The Digital Banker during the awards virtual gala. For its part, QIB Group CEO Bassel Gamal said: “We are pleased to be recognized for our innovation and outstanding performance in servicing all our customers. QIB has developed its own repertoire and know-how in offering the best products and services to existing and potential customers, and we are proud that our customer-centric approach is now a reference not only in Qatar but in the region as well.

“QIB will continue implementing its long-term strategy where the customer comes first, and we are always dedicated to offering the best, fastest, and most trusted banking products in Qatar.”

“QIB was the first bank in the region to introduce Instant Finance (One Click Financing), the fastest and fully digital way to obtain personal financing in Qatar in 5 mins.”

5-Minute Digital Onboarding Process

Over the past 2 years, QIB has excelled in welcoming new segments of the community to its extended network of customers in Qatar. Its new digital onboarding process allows customers to open accounts in a fast, simple, and convenient way from anywhere in the world in only 5 minutes.

The new solution makes it easier for prospective customers to scan and submit identification documents, such as passports and ID cards, without any need to type the required personal information. This is made possible by OCR technology that allows the platform to read the necessary information from scanned documents. All the customer has to do is to confirm the information displayed on the app.

Along with an added Live Chat feature, the new solution also offers customers a smart authentication process and an integrated identification system to analyse biometric information and help eliminate fraud as it is linked to Qatar Central Bank and Qatar’s Ministry of Interior databases. In addition, the documents are checked against global compliance databases for blacklisted customers. Using this technology, QIB is now able to validate the documents provided by the customers and cross verify them with their selfie image taken through the journey.

“The new solution makes it easier for prospective customers to scan and submit identification documents, such as passports and ID cards, without any need to type the required personal information.”

Digital Innovations to Bank Safely

At the onset of the COVID-19 pandemic, QIB introduced a number of new features as part of its Bank Safely from Home campaign. As a result, it has seen accelerated digitization of banking services since March 2020, which enabled both retail and corporate customers to use the Mobile and Internet Banking channels to remotely complete their daily banking needs.

QIB has introduced major digital services on its Mobile App, updated its Internet Banking Portal, and launched a new Corporate Mobile App for its corporate customers. Consequently, the Bank has not only seen unprecedented demand of its digital services, but it has also helped anchor the culture of adopting digital banking services across customer channels, a practice that has carried on even after the recent lifting of the government restrictions.

QIB was also the first bank in Qatar to introduce a digital Instant Credit Card solution via its Mobile App late in 2019, giving customers the opportunity to get a full-digital approval on a credit card that will be ready for use within just a few hours. Moreover, QIB was the first bank in the region to introduce Instant Finance (One Click Financing), the fastest and fully digital way to obtain personal financing in Qatar in 5 mins.

For SME’s, QIB has accelerated the Digitization of SME Financing, and QIB’s SME/WBG Financing was introduced as a parametrized financing and automation of standard credit applications that significantly reduced the “time to yes” to 80% and “time to money” to 50% for SME’s. In addition to being one the first banks in Qatar to introduce corporate mobile app (QIB’s Corporate App), the Bank has also implemented a total revamping of its corporate internet banking platform to offer automated features for corporate customers on the levels of payments, transfers, bulk upload of salary files, liquidity management, and positive pay, post-dated cheques, in addition to FD and CD account opening and other services.

With initiatives such as Instant Finance (One Click Financing), a complete digital onboarding solution, digital Instant Credit Card and SME financing, the bank has utilized digital channels to reach its customers effectively.

 

>> To read more about this story and other exclusive features about the digital banking landscape, download the latest issue of The Digital Banker Magazine HERE.

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Digital with a Human Touch: How Standard Chartered excels in end-to-end digital banking

Bagging the greatest number of awards and numerous accolades at the Global Retail Banking Innovation Awards 2020 (GRB Awards) by The Digital Banker, Standard Chartered proved once again that it is a leader in its field. Employing a data-driven approach into product development and research, matched with a 360-degree understanding of client needs, Standard Chartered continuously delivers enriching experiences to its customers all year round. Among the coveted awards bagged by Standard Chartered this year include:

  • Retail Banker of the Year, Asia – Vicky Kong
  • Winner, Best AI Initiative
  • Winner, Best Digital Banking initiative
  • Winner, Best Digital Financial Inclusion Initiative
  • Winner, Outstanding Client Onboarding & Account Opening
  • Winner, Best Self-Service Banking
  • Winner, Best Digital Bank Singapore
  • Winner, Best Digital Bank Taiwan
  • Winner, Best Digital Bank Pakistan
  • Winner, Best Digital Bank Africa
  • Winner, Best Digital Bank Hong Kong
  • Winner, Best Islamic Retail Bank – Global
  • Winner, Best Islamic Retail Bank – Malaysia
  • Winner, Best Islamic Retail Bank – Pakistan
  • Winner, Best Islamic Retail Bank – Bangladesh
  • Highly Acclaimed, Best Mobile Banking

“Standard Chartered is one of the largest and fastest-growing banks in the world. It offers best in class services to its customers across all lines of banking, allowing it to expand significantly in the major markets it serves. For Standard Chartered, the key has always been “digital with a human touch.” The team’s passion for implementing new digital capabilities while simplifying its customers’ digital banking activities is a true game-changer,” said Nirav Patel, Managing Director at The Digital Banker during the awards ceremony.

“For Standard Chartered, the key has always been “digital with a human touch.” The team’s passion for implementing new digital capabilities while simplifying its customers’ digital banking activities is a true game-changer.”

Outstanding digital initiatives across Asia and beyond 

Standard Chartered employs a proactive approach to using technology to deliver a seamless client experience. In Hong Kong, they launched MyRM, a new chat function within the SC Mobile banking app that allows clients to connect with its relationship managers through messaging, co-browsing and conferencing within a secured environment to discuss wealth management solutions.  Its user-friendly wealth management platform enables clients to make investments and buy insurance round-the-clock. Within its Mobile Unit Trust platform, the Bank has a shortlist of the best performing, most popular and high-dividend funds so clients can easily assess products best suited for them.

Meanwhile, in Taiwan, an initiative called ‘SC Keyboard Banking’ was launched. Utilising the keyboard of a client’s mobile phone to make payments, the Keyboard Banking function has since become the first-ever keyboard-based social media payment gateway in Taiwan, enabling users to send money and view their account balances without having to logout from messaging apps.

In addition, with customers’ high stickiness to social media, Standard Chartered has been able to use LINE as new client acquisition and communication channel. In Taiwan, LINE has an existing 21 million monthly active users with 91.3% market penetration. Standard Chartered’s official LINE account has provided a new avenue to approach customers. Any person who is interested in a product or service can be directed to the application page within a click. LINE’s account binding function enables personalised services for clients including inquiries on credit card statement and reward points without having to log in to mobile banking separately.

Similarly, in Pakistan, going heavy on digital also helps streamline internal processes. Using its ‘eOPS’ facility (otherwise known as electronic operations facility), it allows the Bank to store all client applications and documents electronically, removing the dependency on physical documents and eliminating scenarios of misplaced or damaged documents. Moreover, as the systems are well integrated, the entire exercise of moving physical documents to back-office operations team has now been made redundant, saving precious time and effort of company employees. This capability has greatly improved staff efficiency resulting in quicker turn-around-time of service delivery to clients.

Moving to over to Africa, Standard Chartered launched its first pure digital bank in Côte d’Ivoire in 2018 and completed a multi-market roll out this year across 8 additional markets in Africa including Uganda, Tanzania, Ghana, Kenya, Botswana, Zambia, Zimbabwe and  Nigeria. The Bank has invested heavily in the research and development of products that align with its customers’ fast-paced and digitally connected lives. For example, the end-to-end technology that the team deployed in its digital banks in Africa was developed in-house. The goal was to design state-of-the-art products that provide its users with the right balance of functionality and capability to meet their banking needs. That goal has been successfully achieved.

Making headway in Islamic banking

Standard Chartered Saadiq offers the complete range of Shariah-Compliant financial solutions to clients in Asia, Africa, and the Middle East. The Bank offers unmatched digital solutions resulting in greater client convenience and satisfaction. By offering a complete range of Shariah-Compliant products – from credit cards to financing and wealth management solutions – the Bank has been able to expand its Islamic banking footprint on a global scale.

Recently, in Malaysia, Standard Chartered Saadiq Berhad (SCB) launched a Shariah-compliant proposition called ‘Halal360’ to support local businesses to thrive within the global eco-system. The most attractive feature of this proposition is the financial incentives offered by SCSB for halal businesses in Malaysia. All initiatives are focused on growing Islamic banking businesses and provide exceptional customer experience.

“Employing data driven approach into product development and research, StanChart continuously delivers enriching experiences to its customers all year round.”

Retail Banker of the Year, Asia – Vicky Kong

On a bigger scale, Standard Chartered truly excels as a team. But individually, some people show consistently exemplary performance that moves the needle when it comes to retail banking. One of them is Ms Vicky Kong. Awarded  Retail Banker of the Year for Asia, Vicky Kong is the Regional Head of Wealth Management, GCNA and Global Head of Wealth.

In one of the most turbulent years for Hong Kong, first with the protests and later with Covid-19, Vicky Kong, helmed the retail banking operations at Standard Chartered Hong Kong. During this period, SC Hong Kong’s retail operations and digital usage grew significantly as a result of various initiatives meant to enhance customer experience. In the first nine months of 2020, the Bank’s unit trust transactions via digital channels increased more than two-fold and transaction volumes for foreign exchange were up almost 50% year-on-year.

 

>> To read more about this story and other exclusive features about the digital banking landscape, download the latest issue of The Digital Banker Magazine HERE.

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Africa’s Best Retail Bank Absa’s digitally led initiatives bring possibilities to life

Africa’s Best Retail Bank: Absa’s digitally led initiatives bring possibilities to life

One of the largest and most complex separations in the banking sector began in March 2016 when Absa Group Limited began its separation journey from Barclays PLC. What then ensued is a massive transformation that birthed a new purpose, a new brand, and a new strategy for the company. Absa Group Limited is listed on the Johannesburg Stock Exchange (JSE) and is one of Africa’s largest diversified financial services groups, with a presence in major markets across the continent and around 40,000 employees. Clearly, the move that had transpired just three years ago has allowed Absa to become a self-sufficient bank of the future, enabling it to own and control its systems, processes and infrastructure across the continent to best serve the needs of its customers.

For these reasons and scores of others, it comes as no surprise that Absa Regional Operations, Absa Group Limited was adjudged Winner, Best Retail Bank – Africa at the recent Global Retail Banking Innovation Awards 2020 (GRB Awards) by The Digital Banker. Known as the world’s leading and most definitive Retail Banking awards program, it recognises cutting-edge banks that blend the best technology with a service-oriented mindset to raise the bar in consumer banking. Judging this year’s best of the best in retail banking are trusted experts from companies such as KPMG Digital Village, Imaginarium Advisors, EY and Forrester.

“Digital has been an impetus to a wave of innovations, both in front-end and back-end, which has allowed Absa and its regional operations to flourish as a leading and digital-first African financial services group. Inspired by the continent and the people it serves, they deliver customer experiences that are seamless, convenient and safe to use – and for that, they truly deserve to win this award,” said Nirav Patel, Managing Director at The Digital Banker during the awards ceremony.

Vimal Kumar
Chief Executive – Retail & Business Banking, Digital and CX Absa Regional Operations, Absa Group Limited

‘Africanacity’: The distinctly African ability to always find a way to get things done

The Absa Regional Operations (ARO) is known to overcome every challenge with authenticity, ingenuity, positivity and creativity. They call it ‘Africanacity’, and they embrace it fully well.

One of the most notable examples of this happened during the COVID-19 pandemic when ARO reached out across all its territories in Africa to assist customers and communities with solutions to best navigate the economic impact of the health crisis. In addition, the bank also contributes extensively to local social relief efforts.

Just recently, the Bank’s Kenyan subsidiary also committed to plant 10 million trees in various parts of Kenya to boost the forest cover to 10 per cent. Currently, the country’s tree cover is believed to be at 7.2 per cent. This program aims to assist the Kenyan government in combating the effects of climate change and unemployment.

For Absa, creating opportunities for its customers to make their possibilities come alive is a mission always supported by action. By creating seamless experiences that engage and delight, the team has proven its steadfast commitment to living up to its ideals.

“Absa Regional Operations (ARO) is known to overcome every challenge with authenticity, ingenuity, positivity and creativity. They call it ‘Africanacity’, and they embrace it fully well.”

ARO: Digital to the core

In 2019, the Retail and Business Banking teams set out a new strategy to pursue further growth. ‘Digital’ was at its core and this has extended not only to new products and services but in areas such as back-office operations and banking administration.

Perhaps unknown to many, a huge number of people across Africa cannot be reached or serviced by traditional brick and mortar banking channels. Seeing the pressing need of the market and the value it can offer, ARO collaborated with innovative partners such as technology platform provider, JUMO, and a mobile network operator, MTN, to provide loans via mobile in Zambia and Ghana, to the largely unserved and underserved customers. Through these products, many customers who would have had no access to finance because of thin credit files and were unable to save due to onerous onboarding requirements, can now formally borrow money. This has greatly contributed to driving financial inclusion across Africa.

To this day, ARO’s commitment to delivering seamless and innovative solutions to all its customers across Africa never stops. Across its African markets, ARO has about two million customers with varying needs and preferences. Given the size of its customer base, the challenge is to aggregate and analyse data to facilitate swift and accurate decision-making. To this, ARO has turned to its C360 data analytics platform, which helps Absa anticipate the changing needs of its customers through predictive modelling and multifaceted data science approaches.

Currently, the Bank has over 20 systems in 10 African markets with no integration between them, while disparate reporting mechanisms and intensive manual reporting processes further complicate any measurement or evaluation. As a result, relationship managers, who are key to serving customer journey and experiences, are unable to execute real-time delivery of products or service offerings as they were reliant on retrospective customer insights.

The design and subsequent deployment of the web-based C360 data analytics platform have enabled the Absa to convert data into customer insight as part of its customer-centric approach. The deployment of the KAI Conversational AI Platform enabled Absa customers to engage with the bank, with human-like conversations over digital channels including such public web and WhatsApp.

This impressive feat of achievement has yielded a 30% year-on-year growth for digitally active customers while total digital volumes including mobile banking, internet banking and Hello Money increased to 41%.

In a post-COVID-19 world, Absa is well-positioned to reach greater heights. Through its digital products that are designed to meet the needs of its existing customer base, and its ability to provide an access point for a large number of unbanked customers in Africa, there is no limit to what Absa can accomplish in years to come.

 

>> To read more about this story and other exclusive features about the digital banking landscape, download the latest issue of The Digital Banker Magazine HERE.

The Growing Dangers of Money Mule Accounts in Asia Pacific

The Growing Dangers of Money Mule Accounts in Asia Pacific

By Christopher Yap, Regional Head of ASEAN and Hong Kong, BioCatch

Today, banks are witnessing a drop in on-premise account applications as more customers choose to move to the digital space. However, this shift opens up new avenues for cybercriminals. While the threat landscape continues to escalate, fuelled by the easy availability of stolen and synthetic identities, financial institutions (FIs) are under pressure to remove these friction points to safeguard their customers.

Money mule accounts, which are either set up with false paperwork using a stolen identity or belonging to a legitimate customer who has allowed criminals to use their account, are the most critical link in the fraud supply chain infrastructure. After all, cybercriminals are unable to steal money if they have nowhere to send it.

The financial services industry clearly recognises that mule accounts are a significant problem. At the same time, not all banks are tracking money mule accounts due to a lack of resources to support continuous monitoring. Combine this with a lack of industry standards or best practices for detection and the increase in peer-to-peer platforms for faster payments, FIs are faced with an ideal environment for money mule accounts to flourish.

Money Mule Accounts a Region-Wide Issue

Christopher Yap, Regional Head of ASEAN and Hong Kong at BioCatch

Across the Asia Pacific region, this issue is becoming much more significant. We are seeing targeted groups of people becoming increasingly at risk of opening a mule account, knowingly or not, with the majority being teenagers or young adults in their early 20s. This group is focused on what they can gain, rather than the risks involved in doing so. In Malaysia, a recent survey showed that one out of four students share their bank accounts, debit and credit card details and personal identification numbers because they “trust” their friends[1]. This has contributed to the rise in mule account cases that are slowly spreading to schools, colleges and university students.

Another at risk group is the unemployed. An increase in unemployment across the region has led to those who are willing to open up mule accounts to earn quick money. In Australia, The Australian Federal Police (AFP) has warned citizens to be vigilant online after a spike in December 2020 in criminal syndicates using job advertisements to recruit money mules[2].

Lastly, victims of romance scams are also widely recognised as a targeted group, although they have decreased in number over recent years. In these cases, the person opening the accounts wants to be helpful to the person they believe they are in relationship with. In Singapore specifically, more than 250 people are being investigated for alleged money mule crimes, comprising mainly Internet love scams[3].

Deep Diving into the How

To educate the wider public, it is important to firstly understand how cybercriminals operate. There are two main ways cybercriminals can go about establishing mule accounts – recruiting mules or opening a new account. For mule recruitment, cybercriminals will dupe real victims into scams in an attempt to get them to use their established bank account to transfer stolen funds. Two of the most common types of mule recruitment tactics are work-at-home opportunities and romance scams, which have both seen a dangerous uptick during lockdowns when restrictions were implemented across the region.

Cybercriminals can also use stolen or synthetic identities to establish new accounts that cannot be traced back to them. Once opened, cybercriminals will often let the account remain dormant for some time to avoid raising red flags with the bank. Before long, the new accounts are being used to cash out and launder stolen funds from other compromised accounts. It is not unusual to see cybercriminals take advantage of marketing programs or other promotions designed to increase customer acquisition to open new accounts. FIs open themselves up to increased risk during these promotions as it is harder for them to spot the fraudulent accounts during the period of increased enrolment.

A Greater Role Placed on Behavioural Biometrics

There are some common factors that can be used to detect mules such as transaction velocity and number of transfers – but how would an FI prevent a fraudulent account from being opened in the first place? This is where the power of behavioural biometrics comes in. Behavioural biometrics is an AI-driven fraud detection and authentication technology that does not focus on data itself, but on how a user interacts during the entire account opening process. The technology works behind the scenes to analyse positive and negative behaviours that are indicative of a fraudster versus a legitimate user.

Application fluency and low data familiarity are just a few examples of how digital behavioural data can be used to identify new account fraud. Application fluency refers to how familiar the user is with the account application process. A cybercriminal repeatedly using compromised or synthetic identities will demonstrate a high level of familiarity with the new account opening process, compared to a legitimate user. Low data familiarity, on the other hand, refers to how familiar the user is with his or her own personal data. A cybercriminal, who is not familiar with the personal data, may display excessive deleting or rely on cut-and-paste techniques or automated tools to enter information that would be intuitive to the legitimate user.

Over the past year, the role that behavioural biometrics plays in customer trust and safety has increased significantly and forms a crucial development in fraud technology. Many traditional solutions are still reliant on knowledge-based authentication, device ID, and mobile network operator solutions such as SIM cards. However, this approach is simply not enough to detect cybercriminals in today’s day and age. Similar to social engineering attacks, behavioural biometrics looks at thousands of risk indicators that signal latency, hesitation, distraction and other user behaviours that indicate a person may be acting under the direction of a criminal. Suncorp, an Australian based bank began using behavioural biometrics in 2020. After installing the solution, they successfully shut down 90% of mule accounts before any fraud occurred.

As we consider the lack of industry standards and best practices for detection and how they are contributing to an ideal environment for money mule accounts, FIs should make building a trusted environment a top priority with behavioural biometrics in 2021 and beyond.

 

# # #

[1] https://www.thestar.com.my/news/nation/2018/12/29/police-beware-of-mule-account-scam/

[2] https://www.afp.gov.au/news-media/media-releases/afp-implores-dontbeamule-new-campaign-against-money-laundering

[3] https://www.channelnewsasia.com/news/singapore/police-investigating-230-scammers-money-mules-operation-13870658

 

About BioCatch

BioCatch pioneered the category of digital behaviour analysis, which analyses an online user’s physical and cognitive digital behaviour to protect users and their data. With nearly a decade of analysed data, over 56 registered U.S. patents, BioCatch is the leader in driving behavioural insights.

About Christopher Yap

Christopher is the Regional Head of ASEAN and Hong Kong at BioCatch. As a Certified Fraud Examiner (CFE) and Certified Anti-Money Laundering Specialist (CAMS), Christopher has over 15 years of experience working with financial institutions to improve their fraud detection processes.

These Ideas Will Help the FSI Industry Bounce Back

These Ideas Will Help the FSI Industry Bounce Back

The banking and finance sector today is dynamically changing at a fantastic speed never seen before. It begs the question – how would the next generation of financial services look like? It’s true. Transformation does not occur overnight, but in small, incremental phases.

It will be fueled by an explosive combination of rigorous regulations, investor capital, globalisation and futuristic financial technologies.

Nevertheless, it is equally evident that technological innovation is at the centre of this lightning-fast changes we’ve been seeing of late. Still, what fascinating developments will the next decade bring?

Here are some ideas that will help stimulate growth in banking and financial services:

Reach Out to the Unbanked

The World Bank Report states that over 1.7 billion adult individuals across the globe have no account with any financial or mobile money provider. About half of these unbanked individuals live in developing nations such as Indonesia, India, Nigeria, China, Mexico, Bangladesh, and Pakistan. High-income economies, on the other hand, do not have significant numbers of unbanked individuals as nearly everyone owns an account.

However, statistics also show that about 1.1 billion unbanked adults globally have a mobile phone. Therefore, these mobile phones can be used to access mobile money accounts and other financial platforms. This presents an enormous opportunity waiting to be tapped.  Paired with internet access, there is a huge opportunity for banking institutions to drive financial inclusion.

Statistics reveal that about 1.1 billion unbanked adults globally have a mobile phone. These mobile phones can be used to access mobile money accounts and other financial platforms. This presents an enormous opportunity waiting to be tapped.

Still, these financial services should be designed for unbanked users, many of which are poor, disadvantaged or lack adequate literacy and numeracy skills. The technologies created for these groups will help eliminate the obstacles limiting unbanked individuals from using financial services. Furthermore, providing services to the unbanked will no longer require travelling great distances to meet a need. As such, digital technology will help lower the cost of transaction. Most banks and financial institutions have one core objective – to reach the greatest number of customers possible. Given these facts, it is clear that the unbanked market will be actively pursued in the years ahead.

Get Serious About Blockchain Technology

Blockchain is another trend that will grow in the next few years. About 48% of banking executives in a survey by Business Insider Intelligence stated that AI (artificial intelligence) and blockchain will have the most decisive influence in the growth in the financial sector. No doubt, blockchain will shake the industry globally. As Blockchain drives the new ideology of substituting centralised processes for decentralised finance, it will inevitably drive change in financial systems worldwide. Already, it has led to the creation of a diverse online peer-to-peer (P2P) financial system for monetary dialogues in a decentralised manner. This distributed ledger technology, which gave rise to cryptocurrencies, can help transform existing processes and systems remarkably.

Many cryptocurrencies have been created, and many more will be “mined” soon. Already, several countries are creating their own cryptocurrency. Such a move could significantly push the shift from fiat to cryptocurrencies.  The shift will, in turn, boost coin stability, drive the creation of regulatory frameworks, and make people gravitate more towards decentralised transactions. In fact, some financial institutions are already exploring blockchain technology to uncover how it can help cut costs, improve internal processes and increase efficiency.

Speed up Development of RegTech

Technological innovations present tremendous opportunities. However, the finance industry is heavily regulated. It is essential to realise that technological innovation has also given rise to diverse challenges, including data breaches, cyber hacks, and other fraudulent activities. RegTech was created for this purpose. It involves using innovative technologies to manage regulatory processes in the finance sector. Some examples of regtech include real-time tracking of airliners’ locations and automated monitoring of a company’s compliance with sustainability regulations.

However, even as technology companies, legislators and other stakeholders in the finance industry, work closely together to spring regulatory innovations, it will still take some time before everything comes into fruition. One such example is the implementation of biometric authentication for financial transactions, which has met strong opposition after a high profile data theft case that happened in the US. Notwithstanding this incident, recent studies show that the size of biometric authentication market is fast expanding. By 2023, biometric authentication is expected to have over 2.6 billion users.

 

Can Technology Spur Growth in Finance

Can Technology Spur Growth in Finance?

The finance and banking industry is under an increasing pressure to create new strategies and cutting-edge solutions using data, analytics and artificial intelligence. To improve customer experience, it is necessary to implement programs that will contribute to faster and smoother transactions.

There used to be a time when customers were impressed by the prospect of being able to resolve disputes and financial queries in the comfort of their own homes. Today, customers demand lightning-fast response and resolution. They no longer have the patience to wait a minute longer than necessary, which presents a considerable challenge and opportunity. Customer service is mostly driving chatbot development within the financial sector. Backed by AI and Machine Learning technologies, chatbots can help financial institutions reduce costs and meet the ever-changing needs of their customers.

Gartner’s report states that in 2020, chatbots will handle about 85% of customer service-related affairs. This is because it reduces the cost of two-way communication systems,

such as phone and email. Chatbots inspire conversational interactions and can aid financial companies to offer an outstanding experience to their customers. Chatbots can personalise these interactions and present solutions as though they are happening in-person, which help meet and exceed the customer’s expectations.

Some traditional institutions have been using bots for quite some time to deal with simple issues. However, today’s chatbots provide a lot more. They can help detect and mitigate fraudulent actions, offer financial tips to customers and help customers make informed decisions.

Some traditional institutions have been using bots for quite some time to deal with simple issues. However, today’s chatbots provide a lot more. They can help detect and mitigate fraudulent actions, offer financial tips to customers and help customers make informed decisions. For the best part, these bots help financial companies have smart and effective conversations with millions of customers within seconds. Therefore, it drastically reduces the cost of customer service while creating great interactions with their customers.

Another important aspect to look at is the integration of Big Data into core processes. Big Data presents a huge opportunity to harness actionable and relevant insights from increasing piles of data (credit/debit card transactions, money transfers, ATM withdrawals) created daily by the financial sector. These insights can be transformed into strategic opportunities, which can help any financial institution stay competitive and meet future demands.

Big Data helps financial institutions harness deeper insights about, for instance, their customers’ purchasing habits. This, in turn, enables real-time business decisions about better ways to serve their customers. It can also help financial institutions make smarter decisions about their marketing strategies, sales management and fraud detection.

Overall, big data can help banks and other economic sectors keep up with emerging trends, streamline internal processes and mitigate risks more efficiently.

 

>> To read more about this story and other exclusive features about the digital banking landscape, download the latest issue of The Digital Banker Magazine HERE.

What to Expect in Retail Banking Technology in 2021

What to Expect in Retail Banking Technology in 2021

Many people envisioned that the 2020s will be a decade of ground-breaking digital banking transformation, seamless innovations and technological advancements that greatly improve user experience.

These advancements are geared towards helping banks decrease cost-income ratios, increase return-on-equity ratios and improve their efficiency through and through. For example, Open Banking, which allows third-party applications to access bank accounts, is adding tremendous value to all parties concerned. Such systems have created an opportunity for companies like Apple, Facebook, Google and Amazon to compete favourably by splitting the value chain into manufacturing and distribution.

Due to the effects of COVID-19, consumer demand for more flexibility and control are driving the need for new tools and technologies.

Banks are now tasked to create new strategies and innovative solutions using available data, digital technologies, novel delivery platforms, and transactional and behavioural analytics.

Future retail banking trends are expected to improve customer experience by facilitating faster and smoother transactions. Here are a few trends expected to disrupt and shape the retail banking industry in the year 2021:

Banks will need to be proactive in recognising the changing needs of customers at the exact time they need them, as having the right products and services will no longer be enough.

1. Artificial Intelligence will drive a shift in the business model

Stakeholders in the banking industry believe that Artificial Intelligence (AI) will be the most consequential technology in the sector.

They expect that AI will play a huge role in creating an improved and personalised user experience, supporting new businesses and in strengthening portfolio management through the use of advanced investment algorithms.

Furthermore, banking executives are optimistic about using AI in fraud detection and improving back-office functions to trace anomalies in future business plans.

Business executives all over the world have invested heavily in the development of artificial intelligence. This massive investment was done to strengthen cybersecurity, curb cybercrime and prevent a breach of data.

The viability of AI depends on its expandability. Regulators require that banks must only use explainable AI. EU’s GDPR, for instance, has introduced a “right to explanation” mandate to guide AI algorithms and other new technologies.

If AI denies a customer loan, for instance, it is necessary to explain to the customer what the reason for this decision is, guide them on alternative ways of sourcing for what they need, or help them solve this problem.

2. Banks will overhaul business models to create digital ecosystems

As new banking technologies come into existence, banks have been changing their business models to be in tune with current trends. They have had to extend their most vital services from strictly branch operations to the internet and mobile banking, thereby providing more access and control to customers from any location. Basically, only the mode of access to banking services has changed. The banking services, on the other hand, did not change.

The digital ecosystem model adds more push to these changes. Ecosystem banking model is based on intuitive self-leading software which studies customer needs and integrates them into banking to create offerings that provide solutions to these needs. Just as mobile banking brought banking to customers’ fingertips, ecosystem brings human needs into banking. It is built on cloud, open APIs, explainable AI and other critical elements of modern banking technology.

3. There will be an increased expansion in Open Banking

Open banking is a banking initiative that allows third parties access to a bank’s APIs. While many people think that open banking is a European issue, the reality is that it is a derivation from traditional business practices that allow third parties to access banking data and functionality. Open banking is also called banking-as-a-service, banking-as-a-platform, open APIs, and API banking.

Open banking seeks to help financial institutions ease the burden of providing customers with seamless financial services without the usual hassles. Fintech companies and other retail banking institutions are already taking advantage of the API banking ecosystem to ease financial hassles involved in making and receiving payments, buying homes, and general financial management. This trend is expected to advance in 2021 and beyond.

4. Wider Acceptance of Real-Time Financial Products

As digital banking accelerates, there will be an increased need for real-time financial products. In 2021, real-time payment is expected to be the norm. Creating real-time experience will no longer be a challenge to the banks. The new challenge would be in creating ways to better compete with other banks in real-time payments.

Real-time payments will rely significantly on APIs. As such, the retail banking community can play a central role in putting up robust and innovative real-time transaction services that will attract individual customers as well as fintech companies.

As digital banking accelerates, there will be an increased need for real-time financial products. In 2021, real-time payments is expected to be the norm.

5. Always-on Invisible Banking will become the Norm

Invisible banking refers to the new trend where financial institutions can integrate their financial services into their customer’s everyday life. Direct deposit is an example of invisible banking.

Today’s technology-driven, always-on world is one where business opportunities appear and disappear in just a snap. Experts believe that in the nearest future, banks will need to be proactive in recognising the changing needs of customers at the exact time they need them, as having the right products and services will no longer be enough.

A Unique Opportunity

Banks are struggling to keep up with the effects of the pandemic, the dynamism of the tech world, and the increased operational pressure from customers.

In all of these, however, banks still have their resources and customers’ trust. Hence, if they implement the right strategies, and adapt adequately to the advanced technologies in banking and the digital ecosystems, they will still succeed in the long term. These changes, when implemented, will also help banks cut cost, become more efficient and achieve the required flexibility to weather future storms.

 

>> To read more about this story and other exclusive features about the digital banking landscape, download the latest issue of The Digital Banker Magazine HERE.