This month at The Fintech Times our focus switches to reflection as we look back at developments over the last 12 months. 2022 has certainly been a challenging year for everyone with global economic activity experiencing a severe slowdown, with inflation higher than seen in several decades.
Throughout this week, our community of fintech CEOs and leaders have shared their thoughts on this year’s major fintech trends. Today our selection of industry leaders touch on evolving technologies, including Tax Systems, GBG Americas, Plan A Technologies, TeamApt, Gresham Technologies, MagiClick UK and Icon Solutions.
Throughout this year, we have increasingly seen large financial institutions turn to technology and automation, says Bruce Martin, CEO of Tax Systems, the tax software supplier to accountancy firms and corporates.
“This was a huge leap forward for the sector, which has typically been reluctant and cautious to adopt new technology due to the large amounts of sensitive data that they hold,” Martin says.
“In 2022, these companies have embraced big data analytics and artificial intelligence and machine learning to identify trends, remain compliant, and ensure that they are adhering to the necessary regulations.
“This has enabled these companies to have more informed conversations about where improvements need to be made. Data science, therefore, has become an important role in the tax and finance sector, and I expect to see it grow in importance even more over the next 12 months.”
For Christina Luttrell, CEO for GBG Americas (Acuant and IDology), the identity verification, regulatory compliance and fraud prevention provider, the importance of adaptable and inclusive tech is a top lesson learned in 2022.
She says: “Fraud remained frustratingly pervasive in 2022. In this time of sharply increasing fraud and rapidly changing regulations, fintechs will have to be more agile. This means that they need technology that makes it easy to manage fraud, compliance, and that allows them to do business with all demographics.
“Companies who adopt multi-layered identity verification technology are going to be able to identify and thwart new and persistent fraud threats. Relying on more than one data point of verification and having the seamless ability to escalate and add friction only when needed- to suspicious transactions – will keep business growing with trusted customers.
“Multi-layered identity verification technology will also aid in financial inclusion which has become increasingly important. Including diverse data sources for lnow your customer (KYC) will allow fintech companies to do business with the vast majority of the world’s population- including the un- and underbanked, thin files (those with short or no credit history), and those who are new to a country.
“And as anti-money laundering (AML) regulations continue to evolve and take into account more fintech applications and even move into cryptocurrencies- all fintechs must ensure that they have workflows in place that are able to quickly adapt and comply across their business.
Plan A Technologies
Slav Kulik is the CEO/co-founder of software engineering and digital transformation company Plan A Technologies. He provides insight into how technology has evolved in 2022.
“One of the most fun parts about doing so much software development work for the financial services world is we get a front row seat to the latest trends and concerns across the industry. Things we’ve been working on for clients include:
- More sophisticated digital wallets that work more seamlessly across devices
- Integrating powerful loyalty functionality with transactions to incentivise certain behaviours
- Adding predictive analytics into platforms to help both customers and companies get a better sense of not only what is currently happening, but what is likely to happen
- A lot of companies ask us for help making international cross-border transactions easier – the internationalisation of moving funds has been a supertrend for a long time, but there is still a lot of friction, so companies are working on some great solutions
- Adding AI/machine learning to just about everything seems another trend that won’t slow any time soon
- Functionality to allow easier peer to peer transactions continues
- The buy-now-pay-later trend continues to attract companies
- Cryptocurrencies are still being investigated and integrated into platforms but we saw a lot of crypto projects get postponed or sidelined this year.”
Fintech TeamApt provides business and banking solutions to SMEs. Its CEO and co-founder Tosin Eniolorunda talks about the increasing reliance on digitisation tools.
“This year, we have seen many founders and investors across emerging markets jump on the SMB digitisation trend. This is because SMBs make up a huge portion of economic activity in these markets, and the highly manual and informal nature of these businesses presents significant digitisation opportunities, from payments to business management tools. This realisation has led to the emergence of many players across the SMB digitisation value chain, with significant VC investment pouring into this space.
“At TeamApt, we believe there is a significant business opportunity in this space, as Africa rides the wave of digitisation, and consumers and businesses on the continent both come ‘online’. We are constantly positioning the business to take advantage of this trend, specifically through Moniepoint, our one-stop digital financial services platform for SMBs. With Moniepoint, SMBs in Africa have access to digital payment solutions, credit, and business management tools, all on a single, easy-to-use platform.”
Industry changes and evolving regulation have forced a review of existing technology and processes that are now deemed legacy, suggests Ian Manocha, CEO of Gresham Technologies, which provides software and automation solutions for financial services.
“2022 has seen greater emphasis on the post trade lifecycle with the middle and office. Typically, investment has always had a front office bias to increase trading opportunities but new and proposed industry changes affecting settlements, payments and regulation have forced a review of existing technology and processes that are now deemed legacy. From real time trade capture through to reporting and reconciliation, all of these verticals with firms are in scope for an automation overhaul.
“The inevitable decision to move towards cloud computing and managed services in a key trend that has been accelerated to meet these challenges with improved operational efficiency and cost as the main drivers.
“Amidst turbulent financial market conditions this year, fintechs have stepped up to the plate to support stretched teams at financial institutions globally. There has been a definite shift towards more and more firms adopting managed service models in order to free up staff for higher value work.
“Standardisation has also been a key trend in both payments and regulatory reporting. In payments SWIFT and the Eurosystem’s TARGET2 both migrating to ISO 20022 are significant projects for firms and cross border payments with the coexistence period delayed but due to start in March 2023.”
Tom Kelleher is commercial director at Icon Solutions, a provider of services and technology solutions that are simplifying banking transformation.
“Icon Solutions is a technology provider and consulting firm serving Tier 1 banks, so my observations refer mainly to the banking sector and in particular payments.
“2022 has certainly been a unique year. Covid slowed the momentum banks had generated in digital transformation, but this has afforded time to pause and really think about the changes needed. Consequently, piecemeal transformation has been replaced with ambitious programmes offering more to not only retain existing customers but also increase market share.
“Tier 1 banks are competing for market share, digital banks are attracting a younger demographic and the ever-increasing number of (maturing) fintechs is putting pressure on margins. That’s why banks have been innovating at a rate I certainly haven’t seen before to keep their competitive edge, and technology is at the heart of that process.
“In addition to these pressures, Tier 1 banks continue to face regulatory changes. In the UK the New Payments Architecture will really start to gather pace during 2023, with up to 42 Faster Payments Service participants to start testing in Q4. If you don’t want to be left with technical debt, unnecessary complexity and increased cost, this is not a quick fix or patch to the existing estate of large, established banks.”
Mark Lusted, CEO of MagiClick UK, also founded Dock9 in 2008 and grew it into one of the most respected digital agencies serving the financial services sector. Dock9 was acquired by MagiClick in 2020, and he moved to the role of CEO.
He says: “Over the past 12 months, the much talked about entrance of big tech companies into the fintech space has become more of a reality. In the summer, Apple announced that it was moving into the Buy Now, Pay Later (BNPL) market in the US with Apple Pay Later. The next question is of course whether this is just the opening move of a much larger play into financial services.
“Speaking of BNPL, we witnessed some regulatory pushback during 2022 – the market had become too significant to ignore by regulators. In addition, Klarna started feeding customer information to credit reference agencies, a sign that the largest player in the UK just couldn’t continue to exist outside of the realities of the credit market.
“On a more pessimistic front, we saw the onset of the ‘fintech winter’, with downsizing and limited access to funding the new names of the game. A shake-out of many companies not making profit is upon us, although some will say not a moment too soon.
“Finally, within the mortgage space, improved connectivity through the use of APIs and other tech meant it started to finally catch up with other sectors, which has to be welcomed.”