Category: Banking

Open Banking
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How Payment Providers Will Use Open Banking to Win the Payments Race

Open Banking

By Michael Lane, Vice President – Sales, Token

The past few years have been a real slog for business owners, who are understandably keen to future-proof their operations amidst economic uncertainty. Payments are a perfect place to start.

During the pandemic, countless businesses shifted from bricks to clicks to stay afloat, realising the need to introduce cost savings and evolve to survive. The emphasis on resilience intensified as the UK and Europe lurched from the pandemic into the war in Ukraine and a spiralling cost of living crisis, fuelled by rising energy prices and inflation.

Amidst this gruelling marathon, retailers are being squeezed between higher costs and weaker demand. “As inflation reaches new heights, retailers are doing all they can to absorb as much of these rising costs as possible and to look for efficiencies in their businesses and supply chain,” said Helen Dickinson OBE, Chief Executive of the British Retail Consortium (BRC).

As running a business becomes more expensive, many companies have begun ‘war gaming’ for a recession in recent months, facing up to this damaging double hit of slowing consumer demand and rapidly rising costs.

 

The growing cost of traditional payment methods

One way to future-proof a business is to reduce the overall cost of the proposition. Payments are an obvious starting point because, simply put, they can be very expensive. According to the BRC, for example, UK retailers spent £1.3 billion to accept payments from customers in 2020.

Payment methods have continued to increase their costs, putting merchants under pressure. In October 2021, Visa and Mastercard both raised their cross-border interchange fees on purchases made by UK consumers to European businesses. The fees increased from 0.2% to 1.15% for debit cards and 0.3% to 1.5% for credit card transactions.

In June 2022, following these five fold increases, the UK’s Payment Systems Regulator (PSR) reported it will initiate a detailed review of these fees “to understand the rationale behind these increases and whether they are an indication that the market is not working well.”

It’s not just card costs that are on the rise. Look at digital wallets, like PayPal, which increased its fees for payments between businesses in the UK and Europe from 0.5% to 1.29% in November 2021.

 

Bringing a much-needed new option to life

Luckily, a cost-effective alternative to cards and wallets is now available to merchants. One that can offer the same, or better, reach and conversion rates, as well as significantly lower costs. And that’s Open Banking-enabled account-to-account (A2A) payments. 

As merchants race to cut payment costs, I see them looking around and asking: how can I accept A2A payments? Through my payment gateway? Do I speak to my bank, or search for an Open Banking payments provider online?

As a result, we’re now seeing payment gateways asking how they can bring Open Banking payment propositions to life quickly and efficiently. And there are various ways to do it – but not all are equal.

The first option is to build it yourself. That may be feasible if you want to serve a single country and connect to the top three banks in that country, but you would be building a somewhat limited and very restrictive alternative payment method (APM).

The second option is to go to a company that can do it all for you, but then you (the gateway) have to put that company’s logo on your checkout. Once you start putting four or five Open Banking logos on your checkout (and you would likely need to, to offer sufficient reach across markets), you’ve suddenly gone from a checkout with five or six payment methods to upwards of 10. Every gateway knows a crowded checkout is never good for conversion.

If I think back 15 years, the talk was of how important APMs were. Today, gateways can offer hundreds of APMs, depending on what you’re selling, where, and who you’re selling it to.  But I don’t think Open Banking should work like that. It must be both visible and invisible.

So this brings me to the third option. Work with a company that can offer a white-labelled proposition. The gateway adds their own single button for Open Banking payments to their checkout. This can either be quite generic and unbranded – for example, ‘pay by bank’ – or the gateway can give it their own brand. This allows end customers to go through a user experience they know and trust, delivering a conversion rate of upwards of 99.7% in some geographies at a significantly lower cost than traditional cards or well-known wallets.

This third option is the simplest route and by far the best way for gateways to generate the greatest revenues and highest margins with Open Banking payments.

Payment service providers (PSPs) are traditionally payment method aggregators. This started with aggregating card acquirers and then a plethora of APMs. Now, with Open Banking payments entering the market, you can easily aggregate five or six other ‘pay by bank’ options – but what’s the point? You’d need to juggle different pay structures, customers, and target demographics. The complications become exponential.

A white-labelled proposition is open and inclusive to everybody, earns more for PSPs than APMs (which pay notoriously little back to the gateway), and delivers the benefits that merchants are increasingly demanding in our current economic climate: lower costs, instant settlement to improve cash flow, and exceptional reach and conversions.

Whilst there are different tracks to help merchants cross the finish line, this one is the shortest and has the fewest hurdles. 

ArticlesCash Management

Marketing Expense Management for Start-ups: a How to Guide

One of the most essential aspects of any company start-up, is your business marketing. How you manage your marketing can be pivotal to the overall success of your company, and how well it develops and grows.

One key part of this vital process is knowing how to effectively manage start-up’s marketing budget.

In this article, you’ll receive a how to guide on marketing expense management for star-tups, including what the process is, and how expert software can help optimize how you conduct it.

What is marketing expense management?

Marketing expense management is the process in which you handle all of the marketing expenses throughout your business.

Marketing is crucial for any business – particularly a start-up – so there can likely be many different transactions and payments being made across the company to support your marketing efforts.

For instance, you might be paying for a software which aids your marketing process, paying companies to advertise your business, or purchasing resources to develop your marketing team.

Regardless of what they are, all these different marketing expenses need to be effectively managed by your company, to ensure you maintain a firm grip on how much corporate spend is being funnelled into this area of the business.

This can include tracking every transaction made across the company, uploading any receipts, monitoring the regular spending on certain services, and various other aspects of marketing expenses.

One of the best ways to help you conduct marketing expense management, is to implement spend management software.

This expert tool helps boost the process with a more effective and efficient way of handling your marketing expenses, as well as offering a range of features to enhance how you control your spending, all from one central platform.

How to use spend management software to enhance your process

There are many different ways spend management software can help you better manage your start-up’s marketing expenses. Here’s how to execute a few of them:

Implement spend controls

One of the best things to do when using your spend management software is to implement spend controls on your marketing expenses.

These are useful features which give you a firmer grip on how your money is being spent on marketing.

For example, you can use the software to set spend limits across all of your marketing efforts. This means that any transactions which overstep your set limit will be automatically prevented, and you’ll be notified promptly.

This will ensure that no transactions within your marketing efforts are out of your control, and every expense can be tailored to suit your start-up’s needs.

Gain full visibility on budgets

Another highly important aspect of marketing expense management is having full visibility on budgets across your company.

In order to effectively manage your expenses, you need to be fully aware of each and every budget you’ve set for your marketing efforts, and how well they’re being followed.

Your software can achieve this for you, with real-time data on every marketing expense, including what was paid for, how much was spent, who completed the transaction, and how much of a particular budget has been spent.

This is vital for showing you how closely your start-up is sticking to budgets, so you can make any necessary adjustments as you see fit, and stay on top of your corporate spend.

Adhere to meaningful spend insights

Spend management software not only helps control your marketing expenses, but goes one step further in showing you how you can make them much more cost-efficient.

The software will offer detailed insights for each of your expenses, providing useful information on where you could be optimizing the way you spend on your marketing.

For instance, you may be paying for a particular software subscription that assists your marketing efforts. The spend management software can reveal any cheaper alternatives to your current software, so you can gain a similar service for a cheaper price.

This is great for helping you maintain a consistent eye on how effectively you’re spending on your marketing, and you’ll always have new avenues for more cost-efficient expenses.

Marketing expense management can be complex, but with the right spend management software in place, the way you manage your spending can evolve alongside your business start-up.

ArticlesCash Management

The Financial Challenges of Running a Hotel

Hospitality is one of the most lucrative and competitive sectors in business, but successfully running a hotel can be difficult to say the least. Many different factors from marketing (which is increasingly digital) to organisation contribute to a hotel’s success and having a general understanding of how they affect your business can help minimise any challenges.

Prospective hoteliers would be smart to keep ahead of any potential hurdles, but don’t worry if you’re not sure what to keep an eye out for. Take a look at our tips that can help your hotel stand out and run smoothly.

Responsibilities

The list of responsibilities when running a hotel is never-ending, but some stick out more than others. Keeping your customers and employees safe comes to mind immediately. Despite your best efforts, things can go wrong and that’s why it’s important that you have the right insurance for your hotel in place.

Customers are unlikely to return if they feel unsafe in your establishment. It will also have a negative impact if the property is seen to not be properly maintained. This could lead to avoidable accidents occurring and people suffering injuries on your premises.

The importance of advertisement

With COVID lockdown and restrictions being lifted, the hotel sector is busier than ever. One way to stand out from your competitors and generate interest in your brand is by investing in sophisticated advertising campaigns and developing a strong storefront.

Let potential customers know what you’re offering and how it sets you apart from competing hotels by developing an optimised website and using techniques such as marketing automation. Social media is a great tool you can take advantage of to build your reputation and encourage customer loyalty by providing personalised offers.

There are so many different ways to market your hotel that can help drive up your website traffic and create a boost in revenue from bookings. The more eyes on your hotel/brand the more bookings you can expect.

Ask what your customers think

The best way to stay on top of what needs improving and what is running well in your hotel is by asking customers about their stay. Building on any constructive criticism will only lead to higher standards of service and increased bookings.

Positive reviews are the lifeblood of the hospitality industry. The more confident customers feel in their decision to stay with you, the more likely they are to book with you again or recommend your establishment to friends and family. In fact, it was revealed in a study that 76% of hotel-goers were willing to pay more for a hotel with higher reviews.

Make sure to pass over a card with the hotel’s information for multiple review platforms and encourage customers to provide feedback when they check out.

Having said that, feedback is only half of the whole point of getting it in the first place. You will need to take action to the best of your capability in order to turn any criticism into more positive reviews.

ArticlesCash Management

Pros and Cons of VoIP – A Comprehensive Cost Comparison

The financial side of VoIP telephony is one of the major selling points. But if you’re primarily concerned with the cost implications of moving away from old-school calling solutions, you need to know the full story to make the right decision.

To that end, let’s talk about the upsides and issues with VoIP packages and products, focusing on the expense involved in adopting and perpetuating such a system.

Why VoIP is a good investment

There’s no denying that, as the uptake of VoIP increases worldwide, it makes more and more sense to take the leap and do away with traditional phone infrastructures. The positive aspects include:

Significant savings on voice calls

Whether you’re making calls to local, national or international numbers, the cost of your conversation will be significantly lower if you’re using a VoIP service.

Lower hardware costs

Knowing your startup costs is necessary if you want your business to thrive, and the prospect of having to install and maintain a complex on-site telephone system might unbalance your budget and derail your plans altogether.

VoIP is far more frugal, since all you need is an internet connection and a modern computer or mobile device. Software can handle the rest, and the entire infrastructure which would normally make up an in-house exchange can be hosted remotely on the cloud.

Impressive scalability

The thing that makes VoIP the best phone solution for your small business is that it won’t just serve you well today, but will represent good value as your company grows and prospers.

Because everything is hosted remotely and overseen by a provider with far more resources than you could muster for the purpose of keeping your phone system up and running, when you need to add support for more agents and devices, this can be done at the drop of a hat.

And of course with scalability comes financial viability; you won’t need to calculate future needs and over-provision today in the expectation that this will serve you better in the future. Instead your costs will correlate with your needs, and your budget can be kept lean and mean as a result.

Innate flexibility

As with any cloud-powered product, VoIP isn’t affixed to just one location, but can be accessed from anywhere.

If you need to take voice calls on the move, or you want to support a workforce for whom remote working is now the norm, a good VoIP package will have you covered.

Where VoIP isn’t perfect

If you’re creating a budget and you don’t know if VoIP will fit into this, you need to know about the downsides as well, such as:

The potential for outages

Because VoIP services are all based on having always-on internet access, network downtime becomes a single point of failure that you might not be able to tolerate.

Since the costs of downtime quickly spiral upwards, you need to be confident that your particular connection is robust and resilient enough to minimize these risks. You may also benefit from having a backup plan for if the main connection is taken out of action unexpectedly, so that your operations don’t grind to a halt.

The relevance of security

Another concern relates to how secure any calls you make over a VoIP service will be, and this is down to the reputation of individual providers.

The cost of recovering from a breach is steep, so it’s better to only put your trust in brands that have proven themselves in the face of cyber threats.

Wrapping up

On balance, VoIP is definitely a good investment for businesses, and will justify itself through cost savings and scalability, regardless of any perceived flaws it might have.

ArticlesCash Management

Will Self-Driving Vehicles Eliminate The Need For Auto Insurance?

Auto insurance is a large industry, with millions of policyholders, and new people buying car insurance policies every day. The traditional market for auto insurance policies has remained the same for decades. But a change is coming, and it is being brought by machines.

There has been a rise in the number of cars that can drive themselves with little or no human input. “Driving itself” is very liberal use of the words, as these cars are not completely self-driving. But what they can do is very impressive and promising.

For example, cars from Tesla are capable of driving at a constant speed, detecting incoming cars, cars in front, and any things that come in between. It can stop, slow down and even change lanes depending on the challenge ahead.

While the company says that a human needs to be active while the auto-driving feature is on, the day is not that far ahead when cars with complete autonomous driving will be available. It will make driving more productive, but what about auto insurance?

What would happen to the auto insurance market when self-driving cars are as common as a Honda or a Toyota? Will self-driving vehicles eliminate the need for auto insurance? Let’s find out.

The State of Self-Driving Vehicles

Not many cars today come with self-driving capabilities. One can only think of a Tesla when thinking about self-driving cars. But some other features are very basic, yet come under the self-driving category. ADAS, for example, is one such feature that offers some self-driving capabilities, albeit very basic.

When it comes to a car being completely driven by itself, the most advanced mass-produced car is from Tesla. But it is very far behind from becoming truly autonomous. Tesla is considered to make level 2 autonomous cars.

Five levels define the capabilities of self-driving cars. Level 0 is not autonomous at all level 5 is completely autonomous. A level 5 car will not require any human interaction and will drive itself just like humans drive. Tesla is at level 2, so there’s a long way to go.

Risks of Accidents

The safest way of transportation is air travel. With millions of flights around the globe every year, only a handful of accidents are reported. The most unsafe way to travel is by road. Now if we try to correlate something, we get to know that when machines drive, travel becomes much safer.

Since planes are almost always self-drivers with a high level of autonomy, they are quite safe. This is not the only reason why planes are safe, but a big contributing factor.

There is no doubt that cars with better artificial intelligence and self-driving capabilities will reduce the number of accidents and make the roads safer. With the reduced risk of accidents, the number of cars would also increase. But would you still need to buy auto insurance?

Need for Auto Insurance

The entire auto insurance industry works because of the high risk of road accidents. You buy liability insurance to ensure that you do not have to pay for the other driver’s medical treatments and repairs.

Similarly, collision and comprehensive policies are bought just because cars are very likely to get damaged in a road accident and the cost of repairs is always very high. But what happens if the rate of accidents plummets? Since there are hardly any accidents, the price of repairs will also go down.

In this case, would anyone buy car insurance policies? Today, the most advanced autonomous car regularly seen on the roads is Tesla. But Tesla does not eliminate the need for auto insurance. You still need to get all the important auto insurance policies like liability insurance, personal injury protection plan, etc to legally drive a car.

Tesla cars also get in accidents, even in autonomous modes. But a level 5 self-driving car will be smart enough to drive itself while avoiding any car accidents. And if all the other cars come with the same capabilities, with better roads and intelligent monitoring systems, road accidents will truly become rare.

But auto insurance would still be around, but not as expensive as it is today. Perhaps you would be able to pay all the different policies (liability insurance, collision, comprehensive coverage, personal injury protection plan, etc) at just $200-$300 per year. How do we extrapolate this data?

Take a look at comprehensive coverage. While it covers theft and other human-induced damages, many people buy comprehensive coverage to cover the cost of damages due to earthquakes, fires, floods, hurricanes, etc.

The chances of your car getting damaged in a natural disaster are very low, yet people get this policy to be on the safe side. Comprehensive coverage is also quite cheap, so it doesn’t hurt the wallet too much. This will be the condition of all car insurance policies when self-driving cars are everywhere.

But that utopia is far ahead, at least 10-15 years from now. Today, you need to get multiple policies and pay a hefty price for them. Avoid paying too much for car insurance policies by comparing multiple vehicle insurance companies and getting quotes from them.

Be specific about the search as well. For example, if you live in Wisconsin, look for cheap car insurance companies in Wisconsin and select the company that offers the best coverage at the most affordable price. Remember to not put too much weight on just the affordability. The insurance policy must also provide great coverage.


ArticlesSecurities

Why Financial Businesses Are Migrating to IP-based Security

IP-based security is an excellent way for any business to leverage its security in a cost-effective and reliable manner. IP (internet protocol) security systems operate as digital security cameras and store footage via a network video storage system. IP security is becoming increasingly popular with financial businesses as IP systems work digitally and can house data more efficiently than CCTV or other physical security systems.

Here we will walk through why IP-based security may be a preferred option, covering the main advantages that work teams and managers can use when choosing this system.

Provides More Robust Security Through More Verification Methods

IP-based security uses verification methods to operate effectively, which can be seen as a much more robust and secure system. The system works by quickly authorizing users based on data on which visitors are allowed network access at specific dates and times.

A further element to this point is that administrators and managers can receive real-time notifications about their network, allowing them to efficiently see who is trying to access their network or if any issues have arisen in their team. This increases network visibility, further securing the company as a whole, which is particularly important for businesses in finance as extensive data will be viewed and created daily.

A Reliable Security Platform That can Transmit High Volumes of Data Quickly

The trouble with many traditional CCTV setups is that you need to find a separate way to download, store and view the data regarding access. With IP-based security, you can transmit high volumes of data quickly between connected systems, making access control management a much easier task to keep track of.

And, you won’t be waiting around for data to be manually checked, or entry requests to be granted won’t be necessary, as this data will be accessible immediately. You could also opt for a non-physical system that doesn’t require any infrastructure in its setup, meaning you can focus solely on your IP-based security.

It can Be a Lower-cost Security Measure

In addition to the overall efficiency and effectiveness of IP security, there are also significant benefits regarding cost. This is due to the fact you wouldn’t have to maintain wired connections or install any physical factors.

Another factor is that you can integrate your new IP security with older measures such as CCTV and physical security practices. This means that you won’t need to splurge on entirely new equipment to feel the benefits of IP-based security.

Provides Additional Security Management Flexibility

As mentioned above, IP-based security allows administrators and managers to oversee activity from their devices. This means security management will become increasingly more flexible, with managers able to grant or deny access no matter where they are located.

This is particularly apparent in the world of commercial door security, as your IP access control system can merge with your cloud system, which allows you to monitor visitor access and keep track of who is on-site at any given time. Usually, your team will have access credentials such as a key card or fob, which they will know how to use regarding company protocol. Still, if any technical problems were to arise, managers would be able to grant access to authorized visitors through the digital platform.

Final Thoughts IP-based security is an excellent alternative to installing physical systems that may cost more money and time for financial businesses. One of the biggest positives to financial firms that choose to use IP-based security is that their data can be transmitted quickly with minimal setup or interference involved, meaning the system is efficient, even for big companies.

IP-based security also allows managers to oversee access in real-time through notifications, which could further be supported through physical or cloud-based access control, making the business more manageable and easier to see who has been accessing specific data.

ArticlesTransactional and Investment Banking

4 Ways to Invest Your Inheritance

An inheritance is always going to feel like a mixed blessing. On one hand, you’ve lost somebody close to you and are going to spend an indefinite time grieving their passing, while on the other, what they’ve left you is a great opportunity to improve your own life with their legacy. One thing it would be a shame to do is to waste your inheritance by making poor investment choices.

So, if you’ve come into an inheritance recently and are looking for smart ways to spend it, look no further.

Pay your debts

Particularly given recent global events, there are more of us in debt than ever before and paying off debts while also enjoying your life can be an almost impossible task in some situations. Using your inheritance to clear your debts and wipe the slate clean, so to speak, can be an ideal way to honour the memory of your loved ones.

If you are looking to pay off your debts now with an inheritance payment that’s taking time to clear, however, there is a way to ensure you can pay off your debts sooner rather than later. With the average waiting time for inheritance money in the UK at 12 months, you might consider a probate loan, which will allow you to clear your debts as soon as you can by awarding you an advance on your inheritance.

Holidays

So many of us have been struggling with our mental health over the past few years and while paying off your debts is certainly one way to ensure you can breathe a little easier at night, taking some well-deserved time off with the family is another way. Consider investing part of your inheritance in a holiday to allow you to process your grief and repair your fractured mental health.

Home improvements

Anyone that’s ever bought a home will tell you that “the work is never truly done.” Home improvements don’t come cheap though, particularly if you are not the handiest person in the world and would rather get somebody in to do it. That’s why using inheritance money to finance home improvement projects is far from uncommon.

Whether you want to add an extension to the house (a conservatory, perhaps) or finally tear out that awful 80s bathroom, it’s always going to be money well-spent investing in the most valuable thing you own.

Education

What better way to honour the memory of your loved one than by investing in the future of another loved one? Education costs have never been higher, especially University fees. Using a portion of the inheritance to cover education costs for your children is a wonderful way of ensuring something good and lasting can come out of your experience.

ArticlesTransactional and Investment Banking

What to Know About Investing in Telehealth Right Now

Telehealth or telemedicine wasn’t new at the time the pandemic started, but that situation accelerated its implementation and development in significant ways. People can now, connect with health care providers from home or anywhere.

Telehealth or telemedicine lets providers deliver care without the need for in-person office visits. There are several key formats for this approach to health care.

Telehealth can be delivered through a video chat or phone call. Remote monitoring is also integrated into telehealth in some cases so providers can monitor patients when they’re at home. For remote monitoring, a device might gather vital signs to help providers stay up-to-date with a patient’s progress. Telehealth is especially well-suited to the management of ongoing health issues, such as chronic conditions.

The world of telehealth and digital medicine seems on track to continue to grow and be impactful in the healthcare industry. The U.S. is expected to have a shortage of over 120,000 doctors by 2030. With dwindling numbers of physicians and increased demand for health services, telemedicine could be one way to deal with challenges.

For investors, there could be continuing opportunities because of the growth of telemedicine as well. The following are some things to know, particularly from the perspective of investors.

Investing in Telehealth Stocks

Even before the pandemic, there were signals that digital health companies were something investors should keep an eye on. These signals included population growth, disparities in care among demographic groups, and increasing numbers of older people.

The investment case before the pandemic was built on the idea that companies were making health care simpler and more convenient for consumers since a lot of medical interventions don’t actually require in-person doctor visits.

The pandemic led more doctors and patients to try it out, and that shows broader adoption is likely on the horizon. Some experts and analysts feel that telemedicine is actually in its earliest days of adoption.

One of the primary public companies in this space currently is Teladoc. Teladoc offers virtual care services to consumers and employers. Teladoc also offers care services to hospitals, health plans, health systems, and insurance companies.

While the shares gained enormously in the height of the pandemic, analysts say there’s still room for growth in the next decade, especially with regard to the expansion of chronic illnesses and mental health services.

The Global X Telemedicine & Digital Health ETF invests in companies that could benefit from advances in digital health, such as connected devices, administrative digitization, and health care analytics.

ROBO Global Healthcare Technology and Innovation ETF offer telehealth exposure, but it also offers exposure to companies involved in robotics, genomics, and diagnostics.

Insurance companies like Anthem and Humana could benefit from the growth of telehealth because it will help generate savings compared to the costs of traditional care.

Telemedicine vs. Telehealth

One thing investors should be mindful of is that while we often use telemedicine and telehealth interchangeably, there are some subtle differences that can become relevant from an investor’s perspective. Telemedicine is usually a referral to delivering health services through communication networks. Telehealth can actually include connecting patients with doctors but also doctors to doctors and medical devices to both doctors and patients.

There’s more of an element of data and analytics that comes with telehealth compared to telemedicine.

Telehealth can also include nonclinical services, such as administrative meetings, continuing medical education, and provider training.

The Longevity of Virtual Care

Before the pandemic, most people probably didn’t even understand exactly what telehealth is. Now, it’s become the norm for many people. However, even though the pandemic is significantly less severe now, it doesn’t mean the service will be obsolete or unnecessary.

Telehealth could be a high-growth area that could generate strong returns well into the future.

One of the telehealth challenges was from people in rural areas with limited internet connectivity. The Biden Administration announced a $19 million investment to expand telehealth and improve access for rural communities. That’s likely just the beginning of such legislative moves, with Congress having dozens of bills it’s looking at that could expand virtual care.

Telehealth is also growing in popularity for employers, with a recent survey showing that 76% of employers increased their offerings during the pandemic. They also reported they planned to keep these options available for employees.

There’s a big incentive for the government and businesses to continue to push for more access to telehealth—it saves money. It can reduce hospital load, and it’s cheaper.

While it could be a good option looking forward, that’s not to say telehealth investments haven’t faced serious headwinds recently. Teladoc’s shares were nearly halved in value as the economy started to reopen. Some of that was also due to the announcement of Amazon entering the space, though. Amazon announced it was expanding the roll-out of Amazon Care telemedicine to all employees, and the company plans to eventually offer it to other employers.

Analysts feel that any short-term slumps are knee-jerk reactions and don’t reflect the long-term value propositions of companies in the space. Even as the world returns to normal, people will want to find a way to automate or virtually deal with things they see as errands, including basic medical appointments.

Grand View Research estimates the market will grow to a nearly $300 billion industry by 2028, from around $56 billion in 2020.

While there are promising opportunities, choosing the right ones is tough as more and more companies are entering the market. It’s unlikely that more than a few of the current companies will still be viable publicly-traded companies with any notable market capitalization.

If you want to invest in telehealth and telemedicine, as with anything else, do your research. You have to find those options for long-term value with an appreciation for the fact that many of the names you might be looking at currently are undoubtedly going to be gone from the marketplace in a few years.

Transactional and Investment Banking

How to Find and Purchase Land for Development in the UK

Whether you’re looking to expand your property portfolio or purchase land for the first time, this comprehensive guide will provide a clear step-by-step overview of how to buy land in the UK, how much it costs and how it can be financed. 

How to find land to buy

The first step to starting your search is by looking in the correct location. Several channels can be used when looking to purchase land. You can typically find land for sale advertised in a number of ways, including online, through land auctions, in local newspapers and magazines, or through estate agents. 

Stephen Clark from Finbri bridging finance comments, “There are many routes for sourcing land but in my experience, the most fruitful options tend to be direct contact with the owner or through building deeper relationships with local estate agents. You’re able to obtain the ownership details of a plot of land from the Land Registry or many online land search portals. A simple enquiry letter to the owner could be a good first step of opening up communication.” 

Online research: The easiest way to find land for sale in the UK is via an online search. Numerous websites cater to this market, such as Rightmove, OnTheMarket, Zoopla, and Plotfinder. When searching for land to purchase, these sites can allow you to look in a specific area or search by postcode. However, if there is some flexibility in the desired location, it may be worth doing a generic search to determine the average prices and how much the location affects the price.

Estate agents: Another way to find land available for purchase is via an estate agent. This may be considered a more traditional method but can also provide in-depth knowledge of the property market; estate agents will have local knowledge of the area and will usually have a number of properties, including land, readily available to purchase. When using an estate agent, it is essential to get multiple quotes to compare the prices, as they may try to charge a higher commission on the property. 

Land auction: Auctions can be an effective way to secure land at a lower market value, often because the land for sale is in foreclosure, or it is government-owned, and they’re selling it to cover tax repayments. However, it is essential to remember that the buyer’s premium (the fee charged by the auctioneer) and survey costs will need to be factored into any offer made. Auctions are typically a quicker process than purchasing through an estate agent, which would be an acceptable alternative for those looking to buy a property quickly. 

Newspapers and local magazines: A more traditional method of finding land for sale in the UK is by looking through local newspapers and magazines. However, this can be a more time-consuming method, but it may be worth considering if you have a specific location or type of land in mind. 

Combining all these channels can provide a greater understanding of the market to find the best value for money. 

What to look for when buying land

Be certain of your purpose: Defining the purpose, and understanding the possibilities, of your site is the first step in ensuring your purchase fits your requirements. Aim to be super clear with your intent. If your intent is to develop the land for profit then price will also factor into your decision-making and whether the land has planning already granted, and to what extent will affect the price greatly. For example, if you are planning on building a house, you will need to make sure there is planning permission for one or more residential dwellings appropriate to the intended development. 

Brownfield or Greenfield: There are several attributes to consider when purchasing land – there are two main types of land offered, Greenfield and Brownfield. Greenfield sites are undeveloped land; Brownfield sites typically have a structure already built or elements of services laid on where the site once had a property. Usually, it is easier to get planning permission on Brownfield land as there are benefits to the local communities for repurposing such a site. However, Brownfield sites may well require various remediation to the site due to contamination from its previous use. 

Location: Location plays a significant role in determining the land price. Desirable locations with good amenities, such as schools or transport links are highly sought after and this influences the value of land intended for development.

Size: Depending on the land’s purpose, size would be a significant attribute when buying land. Whether this be any potential property development or for agricultural purposes, the size of the land is an essential factor. Therefore, you need to consider if the land size is appropriate for your chosen purpose and large enough for any potential property development. 

Type: The type of land purchased will be dependent on current use, known as its class, whether this is for agricultural use, commercial, residential or industrial. The class type will be a deciding factor when buying land. Natural hazards should be included in this decision process; for example, property developers should not deem a floodplain appropriate for housing development. Whilst the existing class can be changed to another, there are strict planning requirements for this, so advice should be sought when the land being purchased is not currently in the class required.

Planning permission:  In most local authorities, planning applications are decided within 8 weeks, however large or complex applications might take up to 13 weeks. This timeline significantly extends if the decision is against you and you wish to appeal. In some instances land can be sold with permission already granted with the local authority which is clearly of benefit to a developer, however it’s essential to identify if any planning restrictions or covenants are also associated with the land. 

Clear boundaries:   Ensure that the boundaries of the land are clear and there are no disputes with neighbouring properties; this could ultimately lead to further ongoing issues and expenses.

These are the main aspects a buyer should prioritise when looking to purchase land. Awareness of all the potential implications and restrictions of owning land is essential. In addition, it is necessary to conduct adequate research to find the most suitable option. Buying land offers several development opportunities; however, it is essential to consider all attributes before finalising any purchase.

How much does this cost?

The price of land will typically depend on the size, location, and intended purpose. Depending on the region, the average price per acre typically ranges upwards of £7,000. However, this is a general estimation as numerous external factors could impact the price, such as the current market, any potential planning permission needed, and location.

Site Surveyor: A site surveyor is a professional that produces a report detailing the condition of the land being purchased. This report will highlight any potential risks or problems with the land. It is crucial to utilise a site surveyor as they can offer valuable insights that may not have been considered. Using a site surveyor will typically be around £300 – £1,000 per day, depending on the surveyor. However, it must also be noted that contaminated land surveys tend to cost more as they require further investigation. Property developers might also be interested to know that if they’re seeking finance for the development of the land then they will be required by the lender to pay for a valuation survey of the lender’s choosing in addition to any previous one they have had completed, regardless of how recent it was. In some cases it might save costs to seek advice from a lender at the earliest opportunity.

Legal fees: It is essential to utilise a solicitor when purchasing land as they can offer guidance and support throughout the process. They will also help to draw up any relevant contracts. Utilising a solicitor, although incurring additional fees, utilising a solicitor will assist in guiding you through the process and drawing up any applicable agreements. The average cost of using a solicitor varies significantly, but typically it is cheaper to use a fixed rate service; however, this rate will also depend on the purchase’s value and complexity.

Stamp Duty Land Tax (SDLT): SDLT will also be applicable when purchasing land in the UK. This tax is payable to HMRC and is based on the value of the property transaction. For example, up to £250,000 has a 0% tax rate, with SDLT rates rising to 12% depending on the value. These rates are for non-residential properties and are subject to change, so they must be checked at the time of the purchase.

Land purchasing can be costly and time-consuming, with many associated fees and taxes. Therefore, it is essential to be aware of all potential costs before making any purchase. Purchasing land offers many opportunities; however, it is necessary to consider all fees and restrictions before finalising any purchase.

Once you have found the plot of land that suits your requirements, you will need to find a method of financing this purchase. The process of paying for land is similar to buying a house. First, you will need to instruct a solicitor who will carry out all the legal checks and draw up the contract of sale. Once both parties sign the contract, a deposit must be paid by the purchaser to the seller, typically around 10% of the purchase price when the contracts exchange. The final payment will be made once the contract is completed. However, numerous methods can be used to fund this process, this includes: 

Land bridging finance:  Land bridging finance is a short-term loan used to purchase land, develop it, and then sell it for a profit. This type of finance is typically only available to experienced developers as these projects often have a high-risk profile. The typical loan amount offered is around 50% to 70% LTV, depending on the planning, security, and lender with terms ranging from 1 to 24 months. This is one of the most popular forms of financing, as property developers can borrow large amounts; typically, high-street banks tend to avoid it due to the high-risk level. Therefore, alternative lenders may be more appropriate in certain circumstances.  BridgingLoan.Org.Uk is a directory that lists all major UK alternative brokers and lenders.

Development finance: Development finance is a loan used to fund the costs associated with developing land. This could include the cost of planning permission, surveys, and the building process. Development finance is typically only available to experienced developers due to the level of risk for the lender. The typical loan amount sought is between 65% to 100% loan to gross development value (LTGDV).

Personal savings: Another method that can be used to fund the purchase of land is using personal savings, this can be used for any purpose and no interest needs to be repaid. This is often the most common method as it doesn’t incur additional costs. 

Final thoughts

Buying land for property development has a significant time resource and financial cost associated with it. The potential for high returns are equally significant and it’s for this reason why property values have increased on a yearly basis for the last decade, with greenfield site values having increased by 7.1%, and urban site values by 5.7% in the last year. Whether any specific plot of land is a good investment relies on multiple factors, some of which may not be truly understood until the development is completed and sold. If in doubt, always seek professional advice before making any significant decisions.

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7 Things to Look For Before Buying Life Insurance for Your Family

Purchasing a life insurance policy is one of the most important decisions you can make for your family, as it will provide them with financial security in the event of your death or other unforeseen circumstances. However, with so many different life insurance providers and policies available, selecting the right one for your needs can be challenging. Factors you should consider include coverage, rates, and the company’s financial stability, just to name a few.
When it comes to life insurance for your family, you want to make sure that the policy you select will provide them with enough funds to cover any final expenses, as well as any debts or other obligations they may have. To help you make an informed choice, below, you will find a list of things to look for when choosing the best life insurance company to support your family.

Know Your Coverage Needs

The first thing you need to do when selecting a life insurance policy for your family is to determine how much coverage you really need. To do this, you will want to consider your current income and debts, as well as any future expenses that may arise. Additionally, it is crucial to consider any dependents you have, as they will also need to be taken care of financially in the event of your death.

Having a clear understanding of your coverage needs will help you narrow down the list of potential life insurance policies and ultimately select the one that is best for your family’s needs.

Compare Life Insurance Quotes

Once you know how much coverage you need, you can start shopping around for life insurance quotes. There are several ways to do this, such as using an online life insurance calculator or contacting various life insurance companies directly.

When comparing quotes, it is crucial to pay attention to more than just the premium amount. You will also want to take the time to read over the policy details to fully understand what is and is not covered. This will ensure that you are getting the most bang for your buck when buying life insurance for your family.

Consider the Financial Stability of the Insurer

It is also essential to consider the financial stability of any life insurance company you are considering doing business with. After all, you want to ensure that they will be able to fulfill their obligations in the event of your death or other unforeseen circumstances.

It may be tempting to go with a less-known or cheaper life insurance company, but this could end up costing your family dearly if the company is not financially stable. To avoid this, be sure to research the financial stability of any life insurance companies you are considering before making a final decision.

Get Professional Help

If you are still feeling overwhelmed by all the different life insurance options available, it may be beneficial to seek out professional help. There are many independent life insurance agents and brokers who can provide you with unbiased advice and assistance in choosing the right policy for your needs.

Working with a professional can help take some of the guesswork out of choosing the right policy for your needs and ultimately give you peace of mind knowing that your loved ones are taken care of financially.

Understand Pricing Factors

When looking for life insurance, it is vital to understand the factors that go into pricing a policy. Things like your age, health, and lifestyle can all have an impact on the cost of coverage. This, however, goes far beyond just the physical factors.

For example, your occupation can play a role in how much you pay for life insurance. If you have a high-risk job, such as one that involves working with hazardous materials, you can expect to pay more for coverage than someone with a desk job. This is because there is a greater chance that you will die while working, and the insurance company needs to account for this risk when setting rates.

Evaluate the Future

It is important to remember that life insurance needs can change over time. As your family grows and changes, so do your coverage needs. For this reason, it is essential to periodically review your life insurance policy and ensure that it still meets your family’s needs.

If you find that your current policy no longer provides adequate coverage for your loved ones, don’t hesitate to update it or shop around for a new one. By evaluating the future and adjusting your coverage as needed, you can ensure that your family always has the financial security they need in case of an unexpected death or other unforeseen circumstances.

Compare Insurance Rates

The final thing to look for when purchasing life insurance for your family is the insurance rates. Like any other type of insurance, life insurance rates can vary significantly from one company to another. For this reason, it is important to compare rates before making a final decision on a particular policy.

There are several ways to compare life insurance rates, such as using an online comparison tool or contacting various companies directly.

To Conclude

Choosing the right life insurance policy for your family is a big decision, but it doesn’t have to be overwhelming. By taking the time to understand your coverage needs and compare quotes from different companies, you can be sure to find a policy that meets the unique needs of your loved ones.

Additionally, don’t forget to consider things like the insurer’s financial stability and any future changes that may occur to ensure that your policy continues to provide adequate coverage for years to come. Once you have found the right life insurance policy, you can rest assured that your family will be taken care of financially after your demise.

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Retirement: 3 Essential Things to Consider

The prospect of retirement always brings about feelings of excitement and anticipation. You look forward to being free from work and the rigid schedules, travelling and seeing the world, embarking on a new project you have never tried before, and finally resting after years of work. For some retirees, moving abroad is an ideal option. Just being home and around familiar surroundings and people is a dream come true for others. Whatever the choice, when you think about retirement, you think of a comfortable and peaceful life.

While eagerly anticipating your retirement, there are a few essential factors to consider before adapting to the life of a retiree. You have worked hard all your life and want to ensure you can have the lifestyle you have always hoped for. If you have a family, your children are all grown-up and can tend to themselves. Now, you can focus on yourself and your spouse and how you can enjoy life together now that you are retired.

If you are ready to retire and have been conscientious about handling your finances, you can foresee a future where you are comfortable and financially secure. Financial planning is essential to keep you worry-free when you stop working. Fortunately, you can get expert assistance from professional financial advisers like Fingerprint Financial Planning. They can help you make sound financial decisions
beneficial for your retirement.

Here are some essential factors to consider for your retirement.

1.         Your plans after you retire

During the early part of your retirement, it is normal to want to have your much-needed rest finally. After all, you have spent most of your life working hard to earn a living and provide for your family. You may also be thinking of what you can do to occupy your free time and maintain productivity, even if you are retired. It would help to list down what you are interested in and the activities you never had the time to pursue. It can be anything from starting a business to travelling to a dream destination. Study your list and find out which is the most suitable for your life as a retiree.

2.         Your finances

One of the most important things to consider as your retirement approaches are your finances. You need to know whether you have set aside enough money that can allow you to maintain the lifestyle you want. Of course, your retirement expectations differ from those with other plans and ideas about the life they
want to live. When considering your financial state, you should also consider where you intend to spend your retirement and how much it will cost you to live there. Other expenses need to be considered, such as food, utilities, medications, insurance, and others.

3.         Your lifestyle

Most retirees would hope to maintain their lifestyle before retiring. Others have higher expectations, wanting to enhance their standard of living, learn new skills, or live abroad. Whatever you plan to do when you retire dramatically depends on your finances and what you have saved throughout the years to keep your future secure.

Considering these factors, you can make better decisions when you retire.

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Breaking Down & Overcoming The Stock Market Anxiety Syndrome

The stock market is a major source of anxiety for many new investors. That’s primarily because of how easy it is to lose money while trading stocks.

That being said, while stock market losses are pretty common, the vast majority of losses traders suffer are actually caused by having anxiety in the first place.

That’s because, when you’re anxious, you tend to second guess yourself and make irrational decisions which can lead to devastating losses in the stock market.

So if you’re looking to start investing in the market, you need to understand that you’re entering uncharted territory – and the only way to succeed is to curb your anxiety and fear of the market.

With that said, here are some tips on how to get rid of your fear of the stock market.

Learn And Educate Yourself

Having a wealth of knowledge about various aspects of stock market trading can help you avoid the anxiety that comes with putting your money on the line.

Learning more about the market’s impacts on the economy, shareholders, companies, and the government might also help you feel less anxious during your forays into the market.

Set Financial Objectives

A great way to overcome stock market anxiety is by establishing financial objectives and designing safe investment strategies that can help you reach those goals within a reasonable enough time frame.

Setting these objectives doesn’t have to be difficult – a great example of a financial goal is planning to have an estate worth $1 million by the time you are 65 – which is not particularly hard to do with the right strategy.

By establishing these objectives, you can face your fear head-on and overcome your investment anxiety with a precise plan designed to grow your wealth. 

Never Invest More Than You’re Willing To Lose

A major reason why many investors are fearful is because they invest more than they’re willing to lose.

Many investors go as far as putting their entire life’s savings into the market hoping to secure a huge profit.

It’s important to note that while betting the farm can yield incredible gains in the market, it comes at the cost of your peace of mind, as you’re likely to find yourself constantly worrying about how your investment is going.

If you invest money that you can afford to lose, odds are you won’t constantly stress about your investment positions. 

You’ll be able to remain stoic regardless of how your trades pan out, allowing you to approach the stock market with an anxiety-free mind. 

After overcoming your anxiety, you can start trading with a trusted platform like SoFi invest

Have A Plan For Your Investment And Trades

The process of investing is much simpler with a strategy. 

While some strategies can be perplexing and ineffective, others can help you succeed. Once you feel at ease, you should gradually change your approach until you perfect it and are satisfied with it. 

It’s worth noting that if you’re not a seasoned investor, you should only opt for simple strategies.

Complex investing methods can involve much more effort and stress than simpler ones – often without producing any additional reward. 

A straightforward strategy for investing maintains your focus and protects you from being stressed or making errors. Using a straightforward technique, you can be versatile with your funds and possessions. Simple plans make it simpler to identify problems. 

You can implement alterations if you discover an issue with any of your investments. 

You may need to make modifications such as altering the shares of the firms you trade, paying a new value per share, modifying your holding approach, as well as altering your investment selection process.

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Choose Your Online Payment Solution According to Your Products or Services

If you have a business providing a product or service that might interest a lot of people, and you’re tired of having these shoppers abandon your store because they can’t find one convenient way to pay for their purchase, then you should choose online payment options according to your products or services. Use this information to help guide you when researching an online payment solution for your business!

What is an online payment solution?

An online payment solution is simply a platform that accepts payments for your business. With a paying gateway, customers can choose to pay for their purchase using one of the many available options in their location. A merchant account is what allows your business’s online store or shopping cart to accept credit cards, debit cards, PayPal, and check payments from shoppers.

Types of online payment solutions

There are two types of online payment solutions: hosted and merchant-hosted options

  • Hosted means that your online solution is stored on someone else’s server (usually PayPal’s). 
  • Merchant-hosted means that your online option of paying is stored on the server that you have control over.

Hosted solutions are usually better for businesses that are just starting and don’t have a strong online presence. Merchant-hosted solutions are more appropriate for businesses who want to control more of their data, especially if they’re handling sensitive customer information.

Reasons for using online payment options for your business

Online payment solutions are used by businesses that sell products and services online. The following sections explain some of the reasons why businesses choose to use them:

  1. Security  

Most businesses want to minimize the risk of fraud, so they choose a trusted bank or credit card company to process their transactions, in the form of hosted online payment solutions. Choosing an online payment solution that’s provided by a trusted bank or credit card company is one way of reducing the risk associated with accepting payments. 

  1. Simplicity 

Many businesses look at the ease of use when selecting an online payment solution. This includes selecting a hosted or merchant-hosted option that makes it easy for customers to complete their purchases. This could mean making sure that any software you choose is easy to install and update. Or it might simply mean choosing a well-designed shopping cart system.

  1. Processing power 

Businesses that sell products or services online need the processing power to process their transactions. The bigger your business gets, the more transactions you’ll need to process, which means you’ll need a payment gateway that has enough processing power for your business. Most credit card companies offer very reliable card-processing services that are available immediately at no cost for small businesses.

  1. Support

Many payment gateways offer excellent customer support, which is one great reason to choose an online payment solution that’s provided by your bank or credit card company. They’ll be available to you 24/7, should you ever have a problem with your registrar (the website where payments are processed).

  1. Cost 

Each payment gateway has a different cost structure. Depending on how many transactions you need to process, and how much processing power your business needs, the cost can vary significantly. The cheaper fees associated with a merchant-hosted option might not be as reliable as credit card companies’ hosted services.

Thus, it is best to run a test to compare the various online payment solutions, and then choose one that meets your business needs.

Paypal

Paypal is a widely used online payment solution. It’s an online, hosted payment gateway with a clean interface and excellent processing power. PayPal is currently owned by eBay, which makes it an ideal choice for eCommerce businesses, since most people are familiar with the company, and know that they can trust them.

WePay

WePay is a nice alternative to PayPal. It’s online, hosted payment solution that’s easy to use. WePay also has a competitive price structure, with fees starting at 2.7% + $0.30 per transaction and going up to 6% + $0.75 per transaction, depending on your volume of transactions and the options you choose for processing your transactions.

Checkout.com

Checkout.com is another popular online, hosted payment gateway. It’s an excellent choice for eCommerce businesses since it’s an online service that offers excellent customer support and the option to accept payments from a variety of sources, including PayPal, major credit cards, and wire payments.

The following are reasons why you might choose to use Checkout.com:

  • Easy to set up – It only takes a few minutes to set up the Checkout.com service on your website.
  • Secure – They offer 256-bit encryption for payments and sensitive data, which means that your orders are processed safely without being intercepted by hackers.
  • Reporting – They provide easy-to-use reporting options, so you can track how many customers you’re reaching with your online store or shopping cart.
  • Customer Support – The quality of their customer support is excellent since they have multiple support options, including email, phone, and live chat. 

This payment gateway works best for eCommerce businesses that sell products and services.

BlueSnap

BlueSnap is another great payment gateway option for eCommerce businesses. They offer two hosted payment solutions, one for eCommerce stores and the other for online retailers. BlueSnap’s online retail solution doesn’t offer a shopping cart that’s compatible with most shopping carts and websites, so it might not be best for all businesses. But since it’s provided by BlueSnap, you can be sure that every order you process through them will be tracked, so you’ll know exactly how your customers are buying from your store or website.

Braintree

Braintree is an online, merchant-hosted payment solution that’s part of PayPal’s Affiliates program. Braintree offers a hosted service that works well with shopping carts and offers one of the lowest fees of any credit card company’s hosted services.

Braintree claims to offer up to 10X the processing power of PayPal’s normal processor. So if you have a big enough business where you need fast payment processing, then Braintree is probably your best choice for an online payment solution for your business.

Conclusion

An online payment solution is something that you can easily implement on your website to help the owners of your business increase their sales and increase the number of customers that they’re able to serve. Choosing the best solution for your business will depend on how you want to make your payments, how many transactions you need to process per day, and how much processing power can be provided by merchant-hosted payment solutions. We hope that this article helps you choose between the various online payment solutions available for your business.

Please comment below if you have any questions about online payment solutions or if we left out any important information.

ArticlesTransactional and Investment Banking

A Short Guide to Buying a Second Property for Letting Purposes

Becoming a landlord in the UK is often regarded as a shrewd way to expand your investments and organically grow your earnings, whether long-term letting to tenants or operating short-term holiday lets in a growing market. But getting into the rental market is a process that should be undertaken carefully. Here are some essential things to understand about buying a property for letting purposes.

What is Buy-to-Let?

‘Buy-to-let’ is the principle of purchasing a property with the express intention of letting it out to another person or business. Many landlords begin their landlord careers by purchasing a new family home, and the renting-out out their first family home. But some landlords choose instead to start their portfolio with the purchase of a property for rental.

The Buy-to-Let Mortgage

If you are looking to purchase a property to begin a rental portfolio, or even simply as a rental property to subsidise income, you will need to do so with a buy-to-let mortgage. A buy-to-let mortgage is a specific kind of mortgage, used when someone is buying for investment as opposed to for personal residential purposes.

A buy-to-let mortgage requires the buyer to provide a larger minimum deposit than with residential properties, with most lenders expecting between 20% and 25% of the total property value up-front. However, many buy-to-let mortgages are also interest-only, allowing the buyer to pay just the interest until the end of the mortgage – at which point the balance can be settled outright.

The Practicality of Letting

Many would-be landlords get into the rental industry as a result of the theoretical benefits. When distilled to the basics, becoming a landlord can seem a simple way to generate additional, passive income and bolster your overall yearly earnings. In practicality, though, renting a property can be much more hands-on – with some key practical considerations to reckon with along the way.

For one, property rental is not the assured income it is often assumed to be. Problem tenants can cause critical cashflow issues, and are legally protected from imminent eviction; meanwhile, maintenance costs can often cut into your overall income. Together, these difficulties make a strong case for the importance of landlord insurance.

Speaking of maintenance, it is your legal obligation as a landlord to provide a bare minimum of comfort and convenience for your tenants and to maintain the property to a certain standard. You can do this yourself or via a property maintenance company, but both have their disadvantages; co-ordinating maintenance yourself can be time-consuming, while third-party property management can be costly.

Lastly, it is important to understand your tax standing as the owner of rental property. Setting up a limited company to conduct your rentals through can be helpful when it comes to tax savings, as corporation tax tends to be cheaper than income tax on property.

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Best Ways to Fund Your Retirement

After a long career, you deserve the chance to enjoy a relaxing and peaceful retirement. A retirement where you get to pursue the passions you never had time for during your career. However, funding your dream retirement can be difficult. Especially if not well planned ahead of time. But there are ways of doing this aside from using your pension. Below, we will explore the various ways in which you can fund your retirement.

Plan Your Pension

For a start, you should try and calculate how much money you’d need a year to live comfortably during your retirement. This differs from person to person depending on their financial status, home ownership and family responsibilities. Either way, you should plan your pension around it. You might increase your pension contributions or consolidate your pensions with the goal of setting yourself up with the money you need for retirement.

Investments

Investments are one way you can try and grow your savings quickly for retirement. They’re volatile – and you could easily lose money – but with some careful investments, you’ll be able to better fund your retirement. If you’re unsure about what investments to make, you could seek wealth management advice from a professional. If you are young then you have the advantage of compound interest on your side, which could drastically change the course of your financial future.

Budget

Funding your retirement is a long-term process and setting up a budget can help you begin to save for it. By working out your incomings and outgoings each month, before setting aside some surplus for a savings account, you can begin to grow your retirement fund and gain peace of mind from having organised yourself so that you don’t lose track of your spending.

Equity release

Another option for your retirement fund is an equity release mortgage to increase your cash pot. This is where you sell a portion of your property’s value in return for instant capital while retaining the right to live in your home. This can be an excellent way of funding your retirement without jeopardising your future.

Work longer

For many people, funding retirement will mean working longer. The thought of having to continue your career for another few years can seem daunting, but it can provide you with the money you need to live a comfortable retirement. Deciding to work longer should be part of a wider financial plan though if it’s to be used correctly.

The importance of financial planning

Ultimately, funding your retirement is underpinned by careful financial planning, regardless of the strategy you select. Any of the strategies above should be part of a wider plan to save for the retirement you want, rather than making a sudden decision to receive a cash injection.

Saving for retirement should be something you work on over many years. And by starting your financial planning now – with some of the strategies above – you’ll be all set to work towards securing yourself a comfortable retirement.


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How To Transform Your Business In 2022

Business transformation means making changes within your company in line with current trends. A lot has changed in the way we work over the last 2 years, and with the economy taking a hit in 2022, adapting to the current economic climate is essential – from implementing a marketing strategy to drive sales or updating the way you work to increase productivity – it can all have a positive impact. Read on to find out more about how you can transform your business this year.

If you’re struggling with your finances, business or personal, and you are faced with an unprecedented expense, a payday loan can help you in an emergency.

Reflect on strengths and weaknesses

Before you can transform your business for the better, you’re going to need some idea of where you need to improve. Take the time to reflect on what you think would be advantageous for your company, and what you are doing well. Make a list that is easy to refer to, and you can use this to make various changes that could be beneficial to your business. For example, if you had a business plan pre-pandemic, the plan you had in place then, may not be able to get you where you want to be now. Various aspects of the business have changed, like what customers are expecting, as well as how they prefer business to operate, e.g., contactless payments, click and collect. If you think your business has a weakness, make time to rectify this.

Update your software

If you’re operating with out-of-date, old software, updating to a new system may be advantageous to your company. Not only does this mean you can run your business smoothly, with less downtime for IT issues, but it can also enhance your company, making it easier for you to operate and store customers’ data. Modern software can open doors for your company and make your workplace more efficient. You could decide to work with a cloud computing programme, which allows for improved collaboration and gives your workforce the option to work from anywhere if they can – this can improve employee flexibility and satisfaction.

Marketing

Every business needs some type of marketing or online presence in 2022 – if you’re not promoting what you have to offer online, you could be missing out on new customers and sales. After the pandemic, a lot of businesses have had to move their sales online to ensure they’re not missing out on profit. But marketing is also important to spread the word about your business – if your company is not online, a huge chunk of your target audience won’t be able to find you. Invest in marketing and social media this year to spread the word about your company, and your products and attract new customers.

Improve communication

Whether it’s with customers or your staff, improving communication is vital. Lack of communication is one of the main reasons customers stop using a certain product or service – and it’s one of the easiest things you can do! Communicating clearly means you can be more transparent, solve issues easily and work together to come up with solutions. You can implement improved communication throughout your company by training your staff to have a productive dialogue with customers and co-workers. As communication becomes clearer, you will see a big difference in the way your company works.

Create a positive workplace

Company culture can make or break a company and the way that it runs. You should create a set of beliefs amongst your employees at all levels, in a way that increases productivity and improves positivity. You could do this by creating a reward system for your employees to show that you value their work, keep an upbeat attitude when interacting with your colleagues, as well as try your best to resolve conflicts as soon as you can. Showing your employees that they are appreciated and that you are doing all you can to make the company a better place, will improve company culture. It will also help you to retain valuable members of your team and increase efficiency.

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4 Benefits Of Adding Commercial Lending Software To Your Arsenal

The world is witnessing massive changes in all the major industries where AI and machine learning are replacing mundane and repetitive workflow processes with automation. After initial inertia in changing to a new norm, now financial institutions are embracing digital banking solutions.

The primary benefit of adding commercial lending is increased working hours without increasing the workforce or related costs. Studies have suggested that out of an eight-hour workday a human being is productive approximately for three hours. And in a year they work for close to 240 days.

In comparison to a human being, digital solutions that are unmanned and robotic assistants can serve customers 24/7 and 365 days. Thus digital assistants or chatbot services can aid customers eight times more than a human employee. This feature alone is enough for any financial institution to adopt a commercial lending software that can integrate their databases and automate their loan origination process. On the other hand, round-the-clock service is just one of the benefits a lending business gets from transitioning to digital lending software.

To understand the relevance of digital transformation in the banking and lending business, check these benefits that are required to scale a business:-

Unified source of data

In legacy and CRM, banking data integration with different verticals for the same task is time-consuming and is constantly at risk of data theft. The compliance cost of maintaining the data integrity increases as the information is spread out. It is also difficult to understand the reports without contacting another employee to understand reports or insights on business metrics.

The digital lending solutions for consumer software have a single genesis of truth that is accessible to every authorized personnel. With neural networks and API integration, the applicability of data is enhanced in analytics. This in turn reduces the time and increases the accuracy of strategic decisions that are business-centric.

Accurate results

Loans are complex products concerning due diligence, lengthy calculations, and spreadsheets to arrive at the decisions that will boost growth. These calculations are also highly regulated and have to meet stringent risk metrics. The likelihood of human errors when making long calculations are high.

In the digital loan origination process, the calculations are done through algorithms that have been backtested. The calculations are free from errors, computed in a few minutes, and display the results on dashboards with easy infographics.

Efficient loan portfolio management

A loan cycle does not end till it is completely paid off. Each loan has to be reviewed regularly for red flags. They have to be checked for taking adequate measures to cover the additional risk that may arise during a loan. An automated loan portfolio reviews the loan constantly and sends automatic reminders to pay in time. Any change in cash flows of the borrower is reflected on a real-time basis through neural networking and API integration. Any flag will create an alert for the banker to check and address the issue immediately. Thus a banker plays an adjunct role of a consultant who can engage the borrower to focus on paying in time.

Boosts team’s productivity

A business agile approach is achieved through digital loan solutions that deter from repetitive tasks. Automation takes care of speed, flexibility, access to information, and seamless communication between different verticals and departments. Tasks, like checking and responding to emails and importing data from spreadsheets for compilation, are discontinued or minimized. They are replaced with real-time alerts that appear on the interface.

Conclusion:

With changing times and increased awareness in short periods through constant updates from parallel media, consumers are aware of the wonders and scope of AI and machine learning. The attention span and patience levels to perform a banking task by physically walking in is no longer a preferred mode. With rising consumer demands and the ability of automation tools at disposal, if banks don’t change to adapt to a digital route, then they will not only be left out of new business growth but may lose existing customer share to the pioneers of this change.

The multiple benefits like efficiency, time and cost-saving, improved customer experience and employee productivity have a sine qua non-effect on the growth and numbers of lending and other banking business. However, for a lending business to be operational, the deal breaker or maker is the ability to be risk-agile. Any process that can increase productivity but also stresses the bank’s assets are not the right proposition.

ArticlesTransactional and Investment Banking

Most Successful Forex Traders in 2022

Forex traders around the world have achieved different levels of success. Keep reading to learn about the 5 most successful forex traders in 2022.

In forex trading, there is no one-size-fits-all answer to the question of who the most successful traders are. However, by examining the traits and habits of some of the most successful traders in history, we can begin to understand what it takes to be a successful trader. In this article, we will take a look at five of the most successful forex traders in history and explore what made them so successful.

5 Traits of Successful Forex Traders

1. They Have a Plan

All successful traders have a well-defined trading plan that they stick to no matter what. This plan will outline their entry and exit criteria, risk management rules, and any other important parameters. Having a plan helps traders stay disciplined and prevents them from making impulsive decisions that can lead to losses.

2. They Take Responsibility for Their Actions

Advanced traders know that they are solely responsible for their results. They do not blame the market or outside factors for their losses. Instead, they take responsibility for their actions and learn from their mistakes. This allows them to move on quickly and focus on making profitable trades in the future.

3. They Manage Their Risk

All successful traders know how to manage risk. They never trade with more money than they are comfortable with and always use stop-loss orders to protect themselves. By managing their risk, they ensure that they can stay in the game even if they have a few losing trades.

4. They Stay Patient

Successful traders know that patience is key to success in the forex market. They are not looking for quick wins but instead focus on making long-term profits. This requires them to be patient and wait for the right opportunities to enter the market.

5. They Keep Learning

The most profitable traders never stop learning. They are always looking for ways to improve their trading strategies and increase their knowledge of the markets.

By continuing to learn, they are able to adapt to changing market conditions and find new ways to make profits.

5 Most Successful Traders in Forex

1. George Soros

He is a world-renowned currency trader and is known for his large positions while trading the British Pound in 1992, which earned him the title “The Man Who Broke the Bank of England.” He is also the founder of Soros Fund Management, LLC. He has an estimated net worth of $8 billion and his renowned trade shorting the British pound happened on a day known as ‘black Wednesday’. This event was characterized by the withdrawal of the pound sterling from the European Exchange Rate Mechanism. It earned George Soros over a billion dollars, making him one of the most successful forex traders even in 2022.

2. Bill Lipschutz

He is known as the ‘sultan of currency’ and is the current head of Hathersage Capital Management. Lipschutz began trading currencies while studying at Cornell University in the 1980s. He is said to have made $250 million for his firm in one year. In an interview, he once said that “The forex market is always moving. Most people lose because they try to pick tops and bottoms; I sell weakness and buy strength.” This quote just goes to show how important it is to focus on the trend rather than trying to pick reversals.

3. George Van der Riet

Currently works as a full-time trader and is also a popular public speaker on financial markets. He focuses mainly on technical analysis and has developed his own unique trading approach which he has successfully used to trade forex, stocks, and commodities. He is a South African hedge fund manager and currency trader. He is currently the head trader and director of the Global Forex Institute.

4. Andrew Krieger

He is a former currency trader at Bankers Trust. In 1987, he made large bets against the New Zealand dollar, which earned him the nickname “The Kiwi Killer”. He has an aggressive trading style and his strategic trades involving the New Zealand dollar make him well known to date. After identifying that the NZD was overvalued, he opened short positions in 1987 which earned him millions of dollars.

5. Paul Tudor

This American hedge fund manager and currency trader founded Tudor Investment Corporation in 1980. He is also a philanthropist and supports many causes through his foundation. Just like Andrew Krieger, Paul was able to effectively predict and take advantage of the market crash in 1987. This trade earned him up to a million dollars.

These five traders are some of the most successful in Forex history. They have all made fortunes by correctly predicting market trends and taking advantage of them. While their trading styles may vary, they all share one common trait: they are patient and never stop learning. By following their example, you can improve your chances of success in Forex trading.

 

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BankingCorporate Finance and M&A/Deals

8 Mistakes To Avoid When Raising Non-Dilutive Funding For Your Start up

Desktop

Non-dilutive funding refers to any kind of funding that doesn’t require you to give away any form of business equity to your investors. This means you receive monetary funding without giving out even a single share of your company. Examples of non-dilutive funding include loans, grants, tax credits, vouchers, subsidies, and the like.

It’s said that non dilutive funding is the most popular option for start-up founders because it offers monetary support all the while allowing for the non-surrender of business ownership to creditors.

Non-dilutive funding can help to accelerate your business growth to the point where you’re comfortable raising funds from venture capitalists interested in getting a piece of your company.

Despite being a popular financing option, non-dilutive funds such as banking institution loans are usually challenging to obtain and grants are available for those that can meet specific requirements only. Further, non-dilutive funds can become a costly financing option for your business if not used right.

To avoid situations where borrowed funds become costly and an unbearable liability to your business, below are some of the common mistakes made by entrepreneurs when raising non-dilutive funding. Read through them one by one to avoid committing them when you decide to pursue non-dilutive funding for your budding business.

1.Not Being Prepared Enough

Raising any form of funding, disruptive or non-disruptive, requires you to be adequately prepared with information about your market, your own business, and the viability of your products. You must provide your prospective lenders with a good understanding of the industry you’ll be playing in. To do so, you’ll need to spend ample time in advance analysing different resources.

You’ll also need to prepare visual presentations that’ll aid in making your case. You might need to hire someone to do this for you because potential lenders will use this information to determine how far your company is likely to go with the funds they’ll let you borrow.

In addition, you should also take the time to understand your lender’s requirements for non-disruptive financing. This could be in the form of security requirements or even the kinds of businesses they don’t finance. It’d be a waste of your time to approach an institution where your firm stands no chance of obtaining financial support.

2.Not Seeking Expert Opinion

Sadly, many entrepreneurs tend to overestimate their abilities which often leads them into trouble. Applying for any funding needs the input of experienced professionals like attorneys and accountants.

Experienced attorneys help you to identify and understand different clauses in the contract documents that can lead you to losses. An example is redemption clauses.

Meanwhile, financial experts like an accountant look at your books and projections to provide you with a realistic amount to apply for as funding. This avoids a situation where you apply for either less or more than your business needs.

3.Not Considering Different Options

While there are regulations for players in the financial sector, they’re still allowed some leeway to operate. For instance, although the interest that lenders charge on their various financing options is capped, they all don’t extend a similar interest rate. It’s good for you to scout the market to identify what different financial institutions offer. This can help you to avoid the common mistake of receiving high-interest non-dilutive funding, whereas there was an option of lower interest charges.

4.Over-Valuing Your Business

It’s common for entrepreneurs to over-value their businesses, especially when seeking funds or partnerships. Unfortunately, this often sets you up for failure.

When you over-value your business, you raise your lender’s expectations, which can work against you when applying for additional funds in the future. Since you’ll always need to prove some growth to your lender when applying for future funds, this could end up hurting your relationship with your lender when they realize you were dishonest. You could end up missing necessary additional funding to scale up your business if you resort to this course of action.

5.Over-Forecasting Your Financial Returns

When in desperate need of finances, it’s easy to overrate your business growth rate. This could result in you overestimating the money you’ll make to impress your potential financiers. The downside is that your lenders might be convinced that you can repay your non-dilutive funding over a shorter period than is realistically possible. And even if you could make high revenues, it’s always advisable to err on caution.

For instance, unforeseen changes in your business environment could make it impossible for you to earn the forecasted revenues causing you to default on repayments, potentially leading to poor relations between you and your lenders.

6.Applying For Funding Too Early Or Too Late

Timing is critical when applying for funds because the processes can be long and winding. Doing it too early or too late can be disastrous. Poor timing can cost your business a great opportunity that would have elevated it to the next level.

According to a couple of entrepreneurs, it’s advisable to give yourself an average duration of six months to raise business funds. For instance, when you apply for funds too early, you expose your business to a lot of analysis that could cause your application to be rejected.

On the other hand, applying too late could see you miss a scheduled trade exhibition where you’d have demonstrated your products to prospective clients.

7.Trying To Raise Money To Fix The Entire Business

The common saying that ‘Rome wasn’t built in a day’ comes into mind. It’s advisable to stick to your business strategy and plan even when raising funds for growth. Your business plan helps you to remain focused as it shows the most urgent business areas that need funding.

Whenever you’re applying for funds, deviating from the business plan can cause you to raise money that may not benefit the enterprise. This is especially critical in the in-between incidences where a lender proposes to give more than is asked. Entrepreneurs have been known to overspend when they get more money than they need. For example, this has resulted in business people incurring unnecessary expenses on office/warehouse space, salaries and wages, or new products that weren’t needed by the market.

8.Pitching About Your Product Instead Of The Business

It’s normal to keep talking about some unique products your company is introducing and how they’ll solve many customer problems. When you use such details to pitch for non-dilutive funding, this becomes a problem. In as much as lenders aren’t after partnering with you in your business, they still want to understand your business model and how that’ll help you to make money.

Further, you must make your business presentation in a simple method that’s easy to understand. Your lender is keen to know how they’ll recover their money, so you must explain how your business as a whole (not specific products) will generate and rake in revenues.

Conclusion

Although non-dilutive funding is always a good option for start-ups, some options like bank loans are difficult to get. Plus, even where they’re readily available, young companies without the necessary collateral to secure their loans are always left out. Nonetheless, newer private lending and fintech companies have come onto the scene to address some of these challenges. You can reach out to any of them for non-disruptive funding for your company.

Paperwork

Open Banking Payments
ArticlesBanking

The People Power Behind Open Banking Payments

Open Banking Payments

By Jess Gerrow, VP Marketing, Token

Driven by two complementary, powerful forces – innovation and regulation – open banking is proving to be a seismic shift for payments across Europe.

Reach, cost, conversion, security and user experience – open banking-enabled account-to-account (A2A) payments outperform traditional payment methods in every respect.

It’s, therefore, no surprise that players across the payments value chain are now eagerly embracing them. According to Juniper Research, open banking payments will account for $87 billion of Europe’s transaction volume by 2026. Traditional payment methods, such as cards and cash, continue to lose share and are now projected to account for less than a third of global e-commerce transaction value within the same period.

 

A deep dive into the human element

But a third powerful force behind this explosive growth in open banking payments is often overlooked – and indeed is spoken and written about much less – and that’s people.

At the end of every A2A payment is a person. And in the world of payments, success ultimately depends on human factors, such as how consumers perceive and respond to risk, reward, cost and effort.

This is why we partnered with Open Banking Expo to deliver a data-driven look at the human element that will fuel open banking payments’ march to the mainstream. Earlier this year, we spoke to over 1,100 consumers in the UK, France, Germany, Italy, the Netherlands and Poland to tackle a question rarely addressed: who will pay by bank?

The resulting report presents the findings of our deep dive into current and potential users of open banking payments. It’s intended to debunk myths, bust misconceptions and highlight consumers’ appetite for A2A payments. It highlights the attitudes, preferences and behaviours shaping people’s financial and digital lives, and we hope it will help payment service providers and other ecosystem participants adapt to Europe’s changing payment landscape.

 

Here’s what we found

Nearly half (46%) of those surveyed had made an instant bank transfer in the three months preceding May 2022, with the figure as high as 67% in Germany.

And it appears the experience has generally been well received, with 81% of consumers likely to make another A2A payment in the future. Perhaps unsurprisingly, given the UK’s status as an open banking pioneer, 85% of British consumers we spoke to will be embracing A2A payments moving forward.

In another clear sign of growing popularity, instant bank transfers now sit amongst the top five payment methods in each of the six countries we covered.

Our research revealed a wide, and growing, range of use cases. For example, in Germany and France, 55% of consumers use A2A payments to pay off loans or credit card debt, whilst 57% in the Netherlands prefer an instant bank transfer when covering subscriptions.

When it comes to buying a car, we found that instant bank payments are now preferred by over a quarter of consumers in all markets, and nearly half in Germany and Italy (47% and 45% respectively). A2A payments are also increasingly seen as a trusted method of sending money to friends and family, with 59% of people in the UK using them for this purpose and 51% in France.

While A2A payments are still associated more with online payments, with almost a third (31%) of Polish consumers using the payment method for e-commerce, we also see signs of adoption in physical stores as merchants integrate them with QR codes and other technology. Nearly a quarter (23%) of respondents in the Netherlands said they are using A2A payments for in-store purchases.

 

So what’s next?

In nearly every purchase scenario we presented to European consumers — whether a one-off, high-value purchase like a car or paying off debt, friends or family — they preferred to pay with instant bank transfers over cards. This is huge news for the industry and suggests that the pendulum has swung towards open banking payments.

Who is paying by bank today, and who will be doing so tomorrow? We found the strongest A2A payment adoption rates were amongst consumers in Germany and the UK, particularly those aged 35 to 44. But the footprint is widening, with the greatest appetite for future A2A payments observed in Poland, France and the Netherlands.

People across Europe are becoming more familiar with the benefits of A2A payments, with 58% who have used them saying they were fast, 56% highlighting their ease of use, and 51% calling out their strong security element.

In terms of what would make consumers more likely to make a payment directly from their bank account instead of by card, 59% of those surveyed said an instant discount would attract them to an A2A payment, with 37% saying they would choose A2A payments over cards if they were offered the option to split payments.

As we roll towards the fifth year of open banking in Europe, these are the types of insights that participants in the payments value chain should be aware of as they seek to match their payment offerings to the evolving behaviour and appetites of consumers in Europe.

Virtual Debit Card
ArticlesBanking

8 Reasons to Use a Virtual Debit Card

Virtual Debit Card

Using debit cards for payment and purchases across the globe has gained popularity since their launch in the 1980s. Today, people appreciate the benefits of paying online transactions with ease.

Like other businesses, technology has allowed the finance industry to advance the use of debit cards, hence, the emergence of virtual debit cards. They differ from the traditional plastic rectangular cards because they only exist in digital form on online portals or mobile phones.

The following highlights some of the benefits of virtual payment cards:

 

1. Safe and Secure Payments

Virtual debit cards are typically hard to copy or steal. Unlike the traditional ones that criminals can clone or steal, virtual debit cards are impossible to tamper with. Account theft is among the top e-commerce frauds criminals use to steal debit cards and then use them in making purchases without the account owner’s knowledge. However, it’s impossible to steal information from virtual debit cards as they don’t have physical copies, ensuring the security and safety of your payments.

 

2. Fast and Easy Acquisition

The traditional debit cards can take days to arrive at your residence. Apart from the card creation process, the issuing company might need more days to verify your identity. Placing an order for the physical debit card from abroad or before a long weekend can also prolong the waiting period before you can start spending.

Meanwhile, virtual cards arrive immediately after completing the application process as it doesn’t require on-site production. You only have to check and confirm the card details, allowing you to start using it without waiting for days on end. They’re also accepted by almost all vendors and utilities, ensuring their reliability as a payment option.

 

3. Convenience

Virtual cards are also convenient as they eliminate the hassle of using a company card. It allows you to make quick purchases through your mobile phone without looking for a card you might have misplaced somewhere in your house or under your purse. This mobile element makes for a seamless shopping process while protecting your information.

 

4. Ease of Cancellation

You might want to make only one or two purchases from a card. This includes purchasing something from websites you don’t fully trust or performing one-off purchases that you don’t want to reflect on your bank statement. This is where virtual debit cards come in handy because they let you create an account and perform your purchase, then immediately cancel the card with no strings attached.

 

5. Controlled Spending

Virtual debit cards are an excellent choice for specific spending activities because they can allow you to control how much you spend on your card. They are ideal for businesses that offer their staff personal spending limits or parents who limit the online purchases of their children.

 

6. Staff Empowerment

Virtual debit cards are also ideal for businesses with employees who make purchases on behalf of the establishment. However, tracking the spending habits of each employee using one physical card can be a tiring task. In addition, there would be too much paperwork if you need to issue a card to every employee.

With virtual cards, you can issue multiple cards to your employees in one go. Thus, you can easily track the spending of each team member. With this, your business can progress as the virtual company card eliminates the need to wait for a physical debit card before you can start making purchases. Implementing limitations like spending limits also guarantees that employees would only buy necessities.

 

7. Cash Flow Tracking

Some businesses often deal with a messy cash flow when making payments to suppliers and vendors before a specific period. Virtual cards allow you to track the flow of payments made and know the available funds through the data in the system, thereby improving the efficiency and transparency of your payment processes. Indeed, virtual debit cards are gradually taking over payments for many businesses.

 

8. Eco-friendly

The use of virtual debit cards can reduce your carbon footprint because it eliminates the manufacture of a physical card. It might not seem much, but this makes sense when considering the number of expired physical cards thrown away daily. Therefore, you promote a positive impact on the environment by using them because they only exist digitally on phones or online.

 

Conclusion

The introduction of virtual cards, an improvement of the traditional physical cards, is due to the continuous advancements in technology. Most shoppers and businesses welcome their use in making purchases due to their many benefits. Thus, virtual debit cards can guarantee a fast, safe, secure, and seamless shopping experience.

Investment Account
ArticlesBanking

Saving Through Investment Accounts: 4 Options You Should Know About

Investment Account

Big moments in life require a purposeful plan toward saving money. This is true whether you’re hoping to purchase a home, plan a big wedding, send your kids to college, or retire early. 

However, it’s not as easy as simply putting money aside. If your savings aren’t earning any interest, you’re not only missing out on an opportunity to make more money but you are, in fact, also losing it due to inflation.

The trick is to find the right balance between risk and interest-earning potential. In particular, you want to choose a low-risk option that will yield a substantial return over time. Fortunately, there are many options that offer exactly that. Here are the pros and cons of the four major low-risk options:

 

1. Education Accounts

The most popular payment option for post-secondary education expenses is a 529 savings plan. These tax-advantaged savings plans can be opened on behalf of the beneficiary (college-bound teens) — and anyone can contribute to it. However, the account owner — not the beneficiary — ultimately retains control over the funds.

  • Pros: The 529 savings plan involves fairly low maintenance and is easy to set up. There are no contribution or high aggregate limits, and contributions are considered gifts to the named beneficiary. The income grows tax-deferred, and distributions are tax-free — as long as they’re used to cover qualified education expenses.
  • Cons: If the distributions aren’t qualified, they will incur an income tax, as well as a 10% penalty (there are a few exceptions, though). Investment options included in the 529 plan are limited to a static portfolio that should reduce the risk. Account fees can vary significantly, so make sure to choose a low-cost 529 plan that will cover your family’s specific needs. 

 

2. Standard Brokerage Accounts

This type of account offers a wide portfolio of investment opportunities, such as stocks, bonds, mutual funds, and more. Brokerage accounts are subject to taxes, and you must be age 18 or older and have a Social Security number or tax ID to own one. This is a good choice if you plan to save for more than five years.

  • Pros: You can open a brokerage account as an individual or share it with a spouse or a relative. There’s no limit on contributions, and you’re free to withdraw your money at any time.
  • Cons: Ultimately, you’ll need to pay taxes on the interest or dividends your portfolio earns, as well as any gains made by selling your assets.

 

3. Retirement Accounts

Similar to standard brokerage accounts in terms of investment opportunities, retirement accounts differ in taxation and withdrawal conditions. The most popular retirement accounts are traditional IRAs and Roth IRAs. Some companies offer 401(k) investment opportunities, in which your employer matches any contributions you make up to a certain amount; it’s usually 5%. To qualify for an IRA, you have to have earned an income.

  • Pros: The greatest benefit of IRAs is that your funds grow tax-free. Plus, traditional IRA contributions are tax-deductible. Of course, there are some limitations to this rule, so make sure to research them.
  • Cons: Contributions to an IRA are limited, and your money will be tied down until you reach retirement age — unless you’re willing to pay a penalty to access these funds early. There are some exceptions to early withdrawals. After age 72, you’ll have mandatory withdrawals with high penalty fees if you don’t utilize them (50% + taxes).

 

4. Children’s Investment Accounts

Each of the previous options requires that the owner is age 18 or older. However, there are also a few options for custodial accounts that can be owned by minors. 

The two main types of children-owned accounts are custodial brokerage accounts and custodial IRAs. Assets in custodial brokerage accounts can be typical investments (i.e., stocks, bonds, cash, etc.) or even tied to real estate. Once placed into the account, the funds cannot be transferred to another beneficiary, but they can be used for any purpose. 

Conversely, children are eligible to open a Roth or traditional IRA if they’ve earned an income through a custodial IRA. The funds are not taxable, and there are no withdrawal penalties.

  • Pros: These types of accounts are easy to set up, and there are no income or contribution limits. There are also no penalties for early withdrawals and no restrictions on how the funds should be used. The income is taxed at child rates and the contributions are tax-deductible. 
  • Cons: Custodial accounts count as a child’s asset, so they might not be eligible for financial aid such as student loans or grants. And once the child owning the account becomes an adult, they will be liable for taxes on income gained at the regular tax rates.

 

Choose the Right Investment Savings Account for Your Needs

Finding the best savings options that fit your circumstances may not be limited to one type of investment account. In fact, you may decide to split your savings into short-term and long-term options, giving you more flexibility to save for goals you’re anticipating in the next few years. Once you’ve assessed all your available options, you’ll gain greater clarity on the best route to guide you and your family toward financial freedom.

Traditional Banks vs. Online
ArticlesBanking

Traditional Banks Must Innovate to Survive

Traditional Banks vs. Online

Philippe De Backer & Juan Gonzalez

Arthur D. Little

The traditional banking sector is in serious trouble. In an age where the digital economy is kicking over the traces of the old world, customers are falling out of love with conventional high street banks and are starting to embrace new, more agile financial service providers.

If traditional banks are to survive and remain relevant, urgent action is needed to transform their business into one that is more suited to the demands of the 21st century consumer. They have to move on from just exploiting their pre-existing markets, and instead embrace innovation and develop an ‘ambidextrous’ mindset and culture.

 

Banks challenged by new entrants

The magnitude of the challenge facing traditional banks is immense, with the signs of a financial revolution everywhere. For instance, Europe’s three largest ‘neobanks’ – Revolut, N26 and Monzo – have 23 million registered users between them and that number is continuing to grow. The scalable business models of the neobanks give them an easy advantage. Their lower cost structure, lower capital requirement and greater flexibility in introducing products make them nimbler and more adaptable to changing consumer demands.

There are also incursions into the market from businesses that look very different from traditional financial institutions. For example, Amazon Cash enables customers to load money from their Amazon account on to a card and use it to buy products at physical retailers. Google has launched a physical debit card linked to a Google Wallet account. And the Apple Pay app further removes consumers’ mental association between day-to-day financial transactions and traditional banks. Meanwhile, supermarkets and high street brands have become post offices, banks, and bureaux de change.

 

Adopting an explorer mindset

To survive and potentially thrive, traditional banks need to adopt an ‘ambidextrous’ approach. That means balancing short- and long-term priorities and exploiting existing markets while experimenting with new ones – capitalizing on historical strengths while also embracing radical change.

The problem is that banks have remained in ‘exploit’ mode for too long, the consequences of which are now catching up with them. Now, they have to learn from businesses with an ‘explorer’ mindset if they are to continue to remain viable. These are firms focused on experimentation, risk-taking, discovery and innovation. They are more flexible and comfortable in the presence of uncertainty than their exploiter counterparts, creating an environment from where interesting innovations can emerge.

Neither exploration nor exploitation is inherently good or bad. The key is to achieve a working equilibrium between the two. The ambidextrous bank must balance short-term value drivers with the need for innovation to drive growth and transformation.

 

Becoming ambidextrous

To become truly ambidextrous, traditional banks will need to do much more than just reduce costs or add more features to existing products and services. It will necessitate a total rethink of its business model to enable the bank to differentiate itself in a marketplace that, on the one hand, is becoming increasingly commoditized, and on the other, is transforming beyond recognition.

Against this challenging backdrop, the most important thing that banks can do is find the right person to lead them to an ambidextrous future. This appointment needs to be an inspirational and entrepreneurial leader who understands the need for transformation and is willing to take risks and think differently – rather than merely maintain the status quo.

He or she must be a mix of innovator and optimizer: someone who can resolve the exploration-exploitation dilemma by replicating the drive and technology innovation of a digital start-up, through risk-taking and experimentation – while simultaneously squeezing the most from the organization in the short-term.

It’s also vital that new blood is brought in at the executive level to nurture and stimulate the ambidextrous mindset. There should be a widespread mix not just of age and gender, but of technology skillsets and digital acumen too, all of which are critically important in challenging a board’s traditional assumptions that hold it back from change.

Timid board members who hide behind the excuse that transformation initiatives will disturb business-as-usual miss the point. In a world of neobanks and digital fintech, disrupting business as usual is precisely what needs to be done. And if they feel they cannot, or prefer not to, participate in this, then they should make room for someone who’s willing to do what’s necessary.

In the wider economy, it’s easy to spot ambidextrous businesses: Amazon and Alphabet are clearly two companies that have blended left- and right-brain capabilities to spectacular effect. Yet there are also companies in the financial services sector that have also combined the efficient exploitation of traditional markets with digital risk-taking and service innovation.

A great example of this is DBS, Singapore’s largest bank, where radical change has been driven by Piyush Gupta, a CEO with an explorer mindset. With Gupta at the helm, DBS has taken a leap into the digital future. By adopting the cultural vision of a ‘27,000-person start-up,’ DBS has successfully repositioned itself, developing new products and services and delivering the type of growth and financial performance that has seen it go from a traditional regional player to being recognized as one of the world’s most forwarding-thinking and innovative banks.

To remain competitive in this new world of digital finance, the traditional banking model has to change. But banks will only succeed if they see this transformation for what it is: a fundamental reconfiguration. It is not a gradual, incremental set of improvements – instead, it’s a total shift in both mindset and operations.

As such, creating an appropriate culture must be a top priority for the CEO of any truly ambidextrous organization. He or she must also ensure that innovation permeates every cell of the business as part of the transformation process.

For while there’s still money to be made in traditional financial services, it soon won’t be sufficient to support the huge and unwieldy corporations that conventional banks have become. Banks must innovate and diversify now, or face obsolescence.

 

Philippe De Backer is managing partner and global practice leader of financial services at Arthur D. Little. Juan Gonzalez is a Partner at Arthur D. Little. They are co-authors of Disruption: The Future Of Banking And Financial Services.

Online Banking
ArticlesBanking

Growth of Digital-only Banking Customers Stalls for the First Time

Online Banking

The number of people saying they have an account with a digital-only bank has stalled for the first time in 4 years, new research from personal finance comparison site finder.com shows.

Around a quarter of the population (27%), equivalent to 13.9 million people, say they currently have an account with a digital-only bank, which is the same figure as last year. This is the first time during 4 years of tracking digital banking adoption in the UK that Finder’s poll has shown the figure flatlining.

But growth appears to have been slowing for a while, with the number of digital-only banking users rising from 9% in 2019 to 23% in 2020 before a more modest rise last year, when it rose to 27%.

 

The reasons behind traditional banks’ fightback

3 in 10 (31%) respondents said they have absolutely no intention of opening a digital-only bank account in the future and gave reasons why.

The top factor was that over half (55%) of these people feel like they have always been treated well by their current bank. Similarly, around 1 in 6 (16%) also said their traditional bank had been helpful during the COVID pandemic.

As the world begins to return to normal, the second most common reason was that customers prefer having the option of face-to-face communication with their bank (35%).

A worrying finding for the digital-only banks is that a quarter (25%) of those not intending to switch cited a lack of trust in new banks as the reason.

 

Growth still on the horizon for digital-only banks though

Despite the slowdown in new recruits, digital-only banks can still look forward to welcoming 18% of the population over the next 5 years, according to the research. This includes 1 in 10 (10%) UK citizens who plan to open an account within the next 12 months.

If everyone followed through with their intentions, 44% of the population would have a digital-only bank account by 2027, equalling a whopping 23.2 million people.

For the fourth year running, the top reason for those who have gone, or intend to go digital-only with their banking is convenience (27%). Linked to this, 1 in 4 (24%) wanted a new account and thought doing so with a digital bank was the easiest option.

1 in 5 (21%) said they want to transfer money more easily, and 18% thought the apps of digital-only banks are better.

A lack of trust isn’t just a factor for those who prefer traditional banks – 1 in 10 ( 11%) customers, or potential customers, of digital-only banking say they don’t trust traditional banks.

 

Young generations continue to be the biggest market for digital-only banks

Digital banks are still most popular with younger generations, with 41% of Gen Z saying they have a digital bank account and a further third (34%) intending to get one within the next 5 years. This would mean that by 2027, three-quarters of gen Z (75%) could have a digital bank account. The silent generation (born between 1928 and 1948) remains the generation that is least keen on digital-only banks. Just 7% said they have an account currently.

Commenting on the findings, Michelle Stevens, banking specialist at the personal finance comparison site finder.com, said: 

This is the first year that our research hasn’t seen growth in the number of people using digital-only banks and it’s clear that traditional banks are adapting to an increasingly digital landscape. This seems to have played a significant role in the dropoff of new customers for digital-only banks as their first-mover advantage in the app space gets diminished. 

Traditional banks such as Halifax have also seen net gains after improving their digital products and offering switching incentives – including to existing customers – something that digital-only banks haven’t done yet. Halifax has just won Finder’s Banking Customer Satisfaction Awards for 2022, with some customers in our survey praising its app.

It isn’t all about digital though as there’s also a significant number of Brits who value having a physical branch to visit and trust traditional banks more. While the digital-only banks may not be able to compete with having a presence on the ground, they will be concerned at the lack of trust some customers appear to have in them.

World Banking
ArticlesBanking

Brand Value of World’s Largest Banks Grows for First Time in Three Years

World Banking
  • HSBC remains UK’s and Europe’s most valuable banking brand at US$18.0 billion.
  • World’s top 500 banking brands turn tide on brand value contraction for first time in three years, going up by 9% to all-time high of US$1.38 trillion
  • Worth over US$450 billion, Chinese banks make up one third of total brand value in Brand Finance Banking 500 2022 ranking; ICBC retains title of world’s most valuable brand
  • US banks account for 5 of top 10, with Bank of America nation’s most valuable
  • 30 new entrants this year, with Cadence Bank fastest-growing, up 181%
  • Ambitious climbers in smaller markets including Vietnam’s MBBank and Poland’s mBank both doubling in brand value
  • Indonesia’s BCA reclaims title of world’s strongest banking brand, scoring 94/100 and elite AAA+ rating, followed closely by South Africa’s Capitec and Russia’s Sber

The world’s top 500 banking brands have turned the tide on brand value contraction for the first time in three years, observing a 9% year-on-year brand value growth to reach an all-time high of US$1.38 trillion, according to the latest report by Brand Finance published in The Banker magazine today.

Every year, leading brand valuation consultancy Brand Finance puts 5,000 of the biggest brands to the test, and publishes nearly 100 reports, ranking brands across all sectors and countries. The world’s top 500 most valuable and strongest banking brands are included in the annual Brand Finance Banking 500 ranking.

The brand value of the world’s largest banks shrunk by 2% by the beginning of 2020 (US$1.33 trillion) and a further 4% by 2021 (US$1.27 trillion). Initially caused by economic uncertainty and interest rate movements, the situation was exacerbated by the pandemic, which saw profit and interest rates take a hit.

However, as nations continued to adapt to COVID-19 and economies rebounded over the last year, loan loss provisions were much less significant than initially forecasted by industry experts. Furthermore, improved digitalisation by banking brands, coupled with a strong government intervention and economic recovery around the world resulted in a higher than expected industry profitability in 2021.

While this year’s overall brand value growth is undoubtedly a positive sign for the industry, it signifies a meagre 2% increase from US$1.36 trillion, which was the combined pre-pandemic brand value of the world’s top 500 banking brands in 2019. Particularly in Europe, banks are still feeling the effects of COVID-19, where weak profits are not helped by cost inefficiency and insufficient investments in digital technology.

David Haigh, Chairman & CEO of Brand Finance, commented:

“As banks continue to battle the fallout from the COVID-19 pandemic, the importance of a solid brand is more significant than ever. Banking products are becoming more commoditised, and banks will need to continue differentiating themselves from other competitors in the market, through the use of their brand, particularly in the face of an emerging threat from challenger brands and decentralised finance in the future.”

“Many of the world’s largest banking brands have come through the worst of the pandemic stronger – a testament to the role they have played in supporting the real economy through the past 12 months,” said Joy Macknight, editor of The Banker. “Banks’ digital transformation efforts over recent years meant they were able to respond faster to client needs, as well as deliver new products and services, which has boosted banks’ reputations in the eyes of their retail and corporate customers.” 

 

Chinese banks dominate ranking 

Chinese banks maintain the lead in the Brand Finance Banking 500 2022 ranking, accounting for one third of total brand value and worth a cumulative US$454.4 billion. While their global counterparts saw drops in brand value over the past two years, Chinese banks remained largely impervious to these issues. A significant factor to this success was not only the nation’s timely response to the virus, but also the early and continued investment into digital development, allowing Chinese banks to continue engaging with their customers with relatively little disruption. Over the past year, China’s economy has continued to recover steadily despite a complex and ever-changing domestic and international environment. In the first half of 2021 alone, the nation’s  GDP increased by 13% year-on-year.

The world’s largest bank by total assets, ICBC’s brand value has increased by 3% to US$75.1 billion, making it the world’s most valuable banking brand again as well as the 8th most valuable brand across all industries in the Brand Finance Global 500 2022 ranking. Over the past year, ICBC has continued to fare well with consumers and expand its portfolio, opening branches in foreign markets such as Mexico, Argentina, and most recently Panama. ICBC continues to outshine its competitors, holding a healthy brand value lead ahead of China Construction Bank (up 10% to US$65.5 billion) and Agricultural Bank of China (up 17% to US$62.0 billion), which rank 2nd and 3rd, respectively.

Declan Ahern, Valuation Director at Brand Finance, commented:

“Chinese banks have performed extraordinarily well this year, with no signs of growth slowing down for years to come. This was undoubtedly aided by the country’s timely response to the pandemic, which reduced the level of economic disruption observed by its counterparts in Europe and the United States.”

 

US banks account for 5 spots in top 10

US banks account for almost a quarter of the total brand value in the Brand Finance Banking 500 2022 ranking, worth a cumulative brand value of US$313.7 billion. Of these 76 brands, Bank of America (up 12% to US$36.7 billion), Citi (up 7% to US$34.4 billion), Chase (up 5% to US$30.1 billion), Wells Fargo (down 6% to US$30.1 billion), and JP Morgan (up 23% to US$28.9 billion) have held on to their spots in the top 10 of the world’s most valuable. 

Dropping 1 spot in the ranking to 8th position, Wells Fargo is the only bank in the top 10 with a contracting brand value. Wells Fargo continues to be undermined by the account fraud scandal, where it emerged that the bank had forged millions of savings and checking accounts on behalf of its clients without their consent. The scandal continued to bring about financial and legal consequences in 2021.

 

Regional leaders

Looking beyond East Asia and North America, HSBC (12th, up 6% to US$18.0 billion) is the most valuable banking brand in Europe, Singapore’s DBS (39th, up 11% to US$8.7 billion) leads the way in Southeast Asia, State Bank of India is number #1 in South Asia (43rd, up 29% to US$7.5 billion), and Itaú (51st, up 30% to US$6.6 billion) dominates in Latin America.

The largest financial institution in the Middle East and Africa, QNB has consolidated its position as the most valuable banking brand in the region, observing a healthy brand value growth of 16% to reach US$7.1 billion. QNB also rose three spots to 45th place overall, now firmly situated amongst the 50 most valuable banking brands in the world.

 

New entrants

30 newcomers have joined the Brand Finance Banking 500 2022 ranking this year, with new entrants such as Greece’s Piraeus Bank (brand value US$176 million), Israel’s Mercantile Discount Bank (brand value US$188 million), and Kenyan Equity Group (brand value US$388 million) hailing from smaller and emerging markets.

Of these new entrants, Saudi Arabia’s SNB (brand value US$3.2 billion) is situated firmly in the top 100, in 94th position, making it the highest-ranked new entrant. A significant rise in profits as well as emphasis on its sustainability initiatives have helped nudge SNB onto the world stage, with the brand recently announcing its plans to create a platform focusing on long-term investments in sustainable economic activities.

With an eyewatering brand value increase of 181%, Cadence Bank has re-entered the ranking as the fastest-growing brand of 2022, reaching a brand value of US$403 million. The US-based bank has recently entered into a merger agreement with BancorpSouth Bank, which held a brand value of US$266 million in the 2021 iteration of the Brand Finance Banking 500 ranking. As part of the agreement BancorpSouth has rebranded to Cadence Bank. The merger aims to provide more customer and relationship-focused financial services to Cadence Bank’s extensive customer base across the southern US.

 

Ambitious climbers in smaller markets

Looking at country level, with an overall brand value growth of 49%, Vietnam’s banking sector is one of the fastest growing in the world. All Vietnamese brands in the Brand Finance Banking 500 2022 ranking have experienced growth or add to the country’s total as new entrants. It has been a very fruitful year for Vietnamese banks, which have observed continuous growth in their balance sheets and income statements, with both deposits and loans issued growing. This has been bolstered by the nation’s recovery from the pandemic, which was well-managed by the government, resulting in strong economic growth.

Among these brands, MBBank is also one of the fastest-growing in the Brand Finance Banking 500 2022 ranking, up by a staggering 113% to US$642 million. The brand has continued to innovate, particularly in the digital space by partnering with leading tech company, Software AG, to provide high speed online services for its customers. Similarly, Techcombank (up 80% to US$945 million) has invested heavily in cloud infrastructure as part of its strategy to nurture long-term relationships with clients. In addition, the strong growth in the Vietnamese banking sector has brought two new entrants to the top 500 this year, namely HD Bank (up 53% to US$248 million) and Saigon Hanoi Bank (up 63% to US$211 million).

The story is similar for the Polish banks in the Brand Finance Banking 500 2022 ranking, which have seen an overall brand value gain of 40% year on year. PKO Bank Polski (up 22% to US$2.2 billion) remains most valuable, followed by Bank Pekao (up 31% to US$1.2 billion), mBank (up 105% to US$999 million), Millennium (up 55% to US$487 million), and Alior Bank (up 53% to US$351 million).

Of these banks, mBank has recorded the best performance – doubling in brand value over the past year and placing among the top 5 fastest-growing banking brands in the world. The rapid gain is a result of the brand’s fantastic scores in Brand Finance’s original market research conducted among customers of Polish banks. As the nation’s first internet bank, mBank has paved the way for Poland’s banking industry through investments in the digital space, allowing it to serve customers in a more accessible and efficient way.

 

BCA as sector’s strongest

Apart from calculating brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Certified by ISO 20671, Brand Finance’s assessment of stakeholder equity incorporates original market research data from over 100,000 respondents in more than 35 countries and across nearly 30 sectors.

According to these criteria, Indonesia’s BCA is the strongest bank in the Brand Finance Banking 500 2022 ranking, following a +2.5 point increase to reach a Brand Strength Index (BSI) score of 94.0 out of 100 and an elite AAA+ brand strength rating.

As one of the biggest banks in the ASEAN region and Indonesia’s largest lender by market value, BCA has performed strongly across key metrics, particularly those pertaining to customer satisfaction. In Brand Finance’s original market research, BCA outperformed its peers for reputation and quality, and scored highly for value for money.

Over the last year, the brand has undoubtedly been bolstered by significant investments in its digital banking arm, as the quality of digital platforms remains an important factor in customer perceptions of banking brands. BCA shows no signs of slowing down in the coming year, recently outlining its plans to list BCA Digital on the Indonesia Stock Exchange.

Declan Ahern, Valuation Director at Brand Finance, commented:

“BCA’s performance is an excellent example of the importance of customer relationships in building brand loyalty and reputation. The brand has consistently scored favourably across brand strength metrics for the last few years, now reclaiming its spot as the strongest banking brand in the world.”

South Africa’s Capitec Bank has claimed the spot of the second strongest brand in the Brand Finance Banking 500 2022 ranking, boasting a BSI score of 92.4 out of 100 and a corresponding AAA+ brand strength rating. Despite having only been around for 22 years, Capitec Bank has already overtaken many of South Africa’s traditional banks, becoming the second largest bank by market cap. The brand continues to position itself as the nation’s leading retail franchise, delivering a low-cost alternative to traditional banks, and has already built a strong, loyal customer base. This helped boost Capitec Bank’s rank as 6th in the world for familiarity, 3rd for its quality of services, and it was noted as the 5th easiest bank to deal with. As the brand continues to uphold a customer-centric business model focused on providing low costs and high interest rates on deposits, it remains poised for further success.   

Russia’s Sber rounds of the top 3 strongest banking brands with a BSI score of 92.3 out of 100 and a corresponding AAA+ brand strength rating. In addition, Sber has been named the strongest brand in Europe across all industries, having overtaken Ferrari in the brand strength classification of the Brand Finance Global 500 2022 ranking.

The Russian banking and technology giant has recently launched new digital investor services such as portfolio selection and investment consulting on its mobile application. At the same time, Sber is continuing to develop a digital ecosystem for its variety of services that go beyond banking, now ranging from e-commerce and logistics, to telehealth and streaming. While relying on an impressive consumer base of more than 100 million, Sber is aiming to diversify further into a new demographic of Gen Z users with a new digital services offering.

Bank Fraud
ArticlesBanking

Confirmation of Payee for Bacs Is a Welcome Upgrade, But It Could Go Further

Bank Fraud


More than 4.5 billion Bacs payments are made in the UK every year, representing
roughly 90% of all regular monthly payments via direct debit transactions. But until now, this vital payment system was not secured by Confirmation of Payee (CoP), a payment verification service that Pay.UK first rolled out in 2020. 

 

By the end of 2021, all the SD10 banks will offer CoP, which already protects CHAPS and Faster Payments. The addition of CoP to Bacs represents an important step in the industry’s battle against fraud and will provide more confidence during payment transactions.

 

However, in its current form, CoP is not yet the silver bullet that will defeat fraud. To realise the full potential of CoP, it requires further development to improve user experience and offer improved protection against crime.

 

Ozone API already offers a CoP solution that provides more information about a payee before a transaction than the standard CoP check. Ozone’s founders developed the Open Banking standards that are now used around the world and delivered the sandbox and reference implementation for the UK Open Banking Implementation Entity (OBIE).

 

It has now issued a call for the industry to expand CoP by incorporating different forms of identifying data and improving user experience.

 

“The addition of CoP to Bacs payment is a welcome move that will make life more difficult for criminals,” said Huw Davies, Chief Commercial Officer of Ozone. “However, the framework is rudimentary at this stage, meaning that the developing CoP is a long way from complete.

 

“CoP is supposed to add friction when risk is high and reduce friction during ‘safe’ transactions. Yet the way that CoP has been implemented by some banks is confusing and cumbersome, sometimes showing dramatic fraud warnings even after the payee’s details have been verified, causing the payer to worry that their payment will be misdirected, or worse, lead to apathy about the messages.

 

“The continued evolution of CoP and extension of its use cases is good to see. But we’re still at the beginning of this journey and must continue to think about how to move forward with its development.”

 

 

 

 

The evolution of fraud

 

Fraud prevention is one of the areas in which CoP plays an important role. Criminals are changing their tactics, sparking a huge rise in authorised push payment (APP) scams in which fraudsters trick victims into transferring money directly into their accounts.

 

During the first half of 2021, the losses caused by APP fraud soared by 71% to £355.3 million – overtaking the amount of money stolen in card fraud. In 2020 alone, losses totalled £479m, with the actual figure likely to be much higher due to underreporting.

 

Earlier in 2021, the Payment Systems Regulator (PSR) reported that SD10 banks and other PSPs had confirmed that CoP has “improved security and strengthened customer confidence when making a payment to a new payee”. Its data also showed a reduction in the number of APP scams experienced by CoP-enabled PSPs.

 

“With regards to APP fraud, it is likely that CoP has prevented what would otherwise have been a larger increase in scams,” the PSR wrote.

 

There is cause for optimism in the PSR’s statistics, but the fact that APP is still growing shows that further action is needed.

 

Chris Michael, Ozone’s Chief Executive Officer, said: “CoP has the potential to combat APP fraud and offer businesses and consumers the reassurance they need when making payments. Unfortunately, the current framework is not complete yet. We need CoP to be much more than just a simple algorithm. The extension of CoP to Bacs is a good move that points to a better, more secure future of payments. But there is still a long road ahead.”

 

 

The state of COP

 

CoP was initially mandated for six banks but optional for others when introduced in 2020. However, earlier this year, the SD10 firms (a group of major banks made up of Lloyds Banking Group, Bank of Scotland, Barclays, HSBC, NatWest, Nationwide and Santander) wrote to the PSR to offer a commitment to deliver a new Confirmation of Payee role profile by the end of 2021.

 

There is another important date coming in 2022. Phase 1 of CoP will be retired in 2022, with PSPs expected to complete migration to Phase 2 by March 30.

 

Phase 2 is “aimed at broadening participation in CoP to all account-holding PSPs, not just those that operate accounts with a unique sort code and account number”, according to the PSR. In the first phase, a PSP offering COP was required to be enrolled on the Open Banking Directory, which then allowed them to identify each other and send CoP messages.

 

The second phase will allow PSPs that do not have full Open Banking membership to access the Open Banking Directory, allowing a wider range of organisations to offer COP as well as offering reduced set-up and running costs.

Phase 2 also includes technical enhancements that will allow PSPs to send and receive Secondary Reference Data (SRD), which is more information than a sort code and account number that allows for account identification.

Ozone believes the expansion of the data available to CoP is a welcome addition to the framework.

Freddi Gyara, Ozone’s Chief Technology Officer, said: “CoP can be improved by adding further capabilities to the Open Banking frameworks which provide additional information when a payment request is made. Ozone’s API solution already allows banks and businesses to draw on a wider range of data, offering greater certainty during a payment transaction.

The evolution of CoP is only beginning. In the future, it will use much more than just a payee’s name, sort code and account number. External validation data from other data sources (such as Companies House or social media profiles) could more accurately help to verify the identity of a payee. Other methods of verification could include biometrics or phone number matching.

 

“When the framework is complete, it will be a powerful weapon against fraud and remove unnecessary fear or friction from payments.”

ArticlesSecurities

Top Cyber Threats Facing Financial Services Firms

With the advancement of technology, different types of cyberattacks have emerged that invade computer systems and can cripple the operations of an entire organization within minutes. Among all the industries, financial services firms are among the top targets of cyber attackers due to the sensitive data firms deal with, leading to possible financial gains attackers can receive. The cost of cybercrime in the financial services sector is $18.3 million, the highest among other industries. Thus, it is imperative to know which cyber threats financial firms are highly vulnerable to. The article discusses the top five cyber threats facing financial services firms and how you can prevent them.

 

Ransomware

Ransomware is a form of malware that invades a computer system through various means. Often disguised as messages from legitimate users, ransomware mainly invades a system through phishing emails, spear phishing, drive-by downloads, and social media messages. Once ransomware infiltrates a computer system, it will encrypt the files making them inaccessible.

Ransomware attacks have become a very common and costly cyber threat worldwide. In 2021, the cost of damages due to ransomware was $20 billion, which was 57 times higher than it was in 2015. Therefore, every financial firm needs to be on high alert establishing robust security mechanisms to prevent ransomware attacks.

For ransomware attack prevention, financial firms can take the following measures:

  • Provide the necessary employee training on how to avoid ransomware attacks.

  • Ensure that employees always check with the sender when they receive a suspicious email, text, or social media message and avoid clicking on suspicious links.

  • Keep a regular backup and recovery plan

  • Keep their system software up to date to mitigate ransomware attacks through software vulnerabilities.

  • Maintain systems for endpoint protection and email protection for added security.

 

Data Breaches

A data breach occurs when an individual’s or an organization’s sensitive, private and confidential data get exposed to unauthorized parties. For financial firms, the data can be from users’ personally identifiable information to critical data such as bank account numbers and passwords that could lead to severe financial losses for individuals connected with the firm.  Data breaches can happen either due to human error, stolen devices, weaknesses of the security technologies or bad actors inside and outside the organization. The cost of a data breach is increasing every year. In fact, in 2021, the average cost of a data breach was $4.24 million, up from $3.86 million in 2020.

There are many actions financial firms can take to ensure the security of sensitive data. The best approach for data breach prevention will be encrypting data with a robust encryption algorithm so that unauthorized parties cannot see the content of the data. Keeping your software and servers up-to-date also ensures your data are not vulnerable to data breaches from outsiders. Establishing strong security and access policies that meet regulatory compliances, including multi-factor authentication and introducing tight security policies for BYOD, also provides strong protection against possible data breaches.

 

Phishing and Social Engineering

Social engineering is a common cyber-attack method where attackers use human interactions to invade a computer system. In a social engineering attack, attackers are often disguised as legitimate persons who can even be employees. The attackers can get information from various sources required to infiltrate a system.

Phishing is also a type of social engineering where attackers use malicious emails or websites to invade a computer system disguising themselves as a legitimate and trustworthy person or an organization. For example, the email sender can act as your organization’s help desk, asking you to reset the password by providing a seemingly unharmful link.

To prevent phishing and social engineering, advise your employees not to open any emails if they do not know the person who has sent the email, even if it appears legitimate. Always enforce multi-factor authentication of logins to prevent account compromises if an attack occurs. Also, keep your software up-to-date and use strong antivirus software on your computers, keeping them up to date with automatic updates.

 

DDOS attacks

A distributed denial-of-service (DDoS) attack happens when attackers exhaust a server or a network by sending many requests at once. It means the network or the server suddenly gets an unexpected network traffic spike which is more than what it has been configured to handle. The sources of attacks can be multiple systems that attackers exploit. The exploited computer systems can have multiple servers and include IoT devices. Research suggests that by 2022, the DDOS attacks can rise up to 14.5 million.

There are several ways financial firms can prevent DDOS attacks. One is rate-limiting or limiting the number of requests the servers can handle. Using a web application firewall is another way to mitigate the effects of DDOS attacks, which can filter requests based on defined traffic rules denying entry to unwanted traffic. Another way is using a black hole to route traffic that can prevent routing traffic directly to the network or the system by routing into a different path.

 

Insider threats

Insider threat is another popular form of cyberattacks in which a malicious person inside the organization deliberately or unknowingly steals sensitive and critical information. Typically, an insider is an internal employee of the organization who can access critical information. Some insiders become pawns of other bad actors who unknowingly expose critical information. Also, the insider can be a mole, who is an outsider of the organization but somehow manages to gain access to the organization’s network.

The best way to protect your organization from insider threats is by enforcing strong security and access policies with strict access control mechanisms. Also, always protect your critical information through encryptions and data backups. Monitoring and keeping records of the critical data access by the users is also a good practice that can identify potential malicious insiders within an organization.

 

Conclusion

Cyber-attacks are an ever-increasing phenomenon worldwide that financial firms are highly vulnerable to. This article discussed the top 5 cyber-attacks that can harm financial organizations leading to loss of revenue and reputation. As prevention is always better than cure, financial firms need to establish prevention mechanisms described throughout the article.

Debt Provision
ArticlesBanking

New Solution to Taking the Guesswork Out of Bad Debt Provision

Debt Provision

Almost a third (30%) of credit managers ‘guess’ their bad debt reserve requirement 

Less than one in ten (9%) are given any steer/model by their auditors 

Businesses seeking to take the guesswork out of bad debt provision at Financial Year End could benefit from a new free service being provided by Debt Register, a global payment accelerator. 

Loading a company’s five largest outstanding debts onto the automated Debt Register collections platform, with a very high chance of collecting those debts, could significantly improve the accuracy of bad debt provision. This will in turn improve the visibility and accuracy of a company’s true financial position and its bottom line, with all the inherent advantages this brings in terms of access to future lending and credit. 

The proposal follows research that suggests that almost a third (30%) of credit management professionals guess at a figure when assessing the level of bad debt reserve they require at Year End, while less than one in ten (9%) are able to look to any financial model provided by their auditors. More than a third (35%) opt for generic, age-based percentages to arrive at a figure while a quarter (26%) look to their experience of similar debt. 

Gary Brown, Founder of Debt Register, believes the survey proves what he has long thought: that the current process of providing for bad debts is invariably guesswork: “Speaking to firms and accountants, many companies have no clear picture of how collectable or otherwise certain debts are, and make provision simply by taking a best guess,” he says.  

“By passing the five oldest or longest-standing debts through our platform, however, there is a very real chance that those debts will be settled. This means the actual bad debt figure being provided for will be more accurate. because there would be no need to reserve for those invoices at all. 

“Indeed, even if the money is not collected, then that also helps takes the guesswork out of the process and gives the company and the auditor something more tangible to refer to than a vague model. Either way, Debt Register gives companies a tool that supports a more accurate financial position.” 

Real case scenarios with current Debt Register clients have already proven the point and the age of the debt appears not to be a barrier to its collectability. One customer uploaded a debt that was 888 days overdue, and the debt was settled in 27 hours. In a more remarkable example, an uploaded debt that was 1499 days overdue was paid within 45 minutes.  

Debt Register is, first and foremost, a global payment accelerator that enables a business to identify late invoices on their ledger and allow the platform to do the rest. This includes validating the customer contact’s email against a database of some 90 billion addresses to a 93% degree of accuracy. The platform contacts the debtor automatically and in the appropriate language, requesting that the payment is settled, and ensuring the invoice is correct and not in dispute.  

By leveraging its relationships with leading credit reference agencies (CRAs) to report unpaid and overdue debts, debtors are encouraged to settle any overdues promptly to avoid their credit scores being negatively impacted. In short – there is now a tangible and direct consequence for those companies should they continue not to pay an undisputed, overdue invoice. 

Along with shortening the timeframe of remittance, Debt Register provides a series of tools to credit managers including auto-translation for use within multiple territories. The system is intelligent, recognising different time zones, working days and cultural nuances including national holidays or religious festivals, and schedules the dispatch of any communications accordingly. 

To date it has successfully recovered debts in 71 different countries and six out of the seven continents  

“Using the free service means a business has nothing to lose and everything to gain,” Gary concludes, “and converts a guess into something closer to the truth.” 

Women in Business
ArticlesBanking

Metro Bank Reveals How the Pandemic Has Made the Loan Process More Accessible for Women

Women in Business
  • Lack of funding, mentoring & child care key issues for women in business

  • Metro Bank reveals how the pandemic has made the loan process more accessible for women

  • Metro Bank’s Investing in Women Code helping to transform women’s businesses

 

The Government wants to increase the number of female entrepreneurs in the UK by 50 percent by 2030 – the equivalent to nearly 600,000 businesses led by women. This target followed the 2019 Review of Female Entrepreneurship which reported on the barriers faced by women starting and growing businesses in the UK.

The three key barriers to growth were identified as women being unaware of funding available; a need for more local mentoring and networking and greater family care support.

The UK’s community bank, Metro Bank, has a dedicated team tackling funding, mentoring and networking for female business leaders.  The team is reviewing all aspects of the Bank’s products and services to make them more accessible to women across a range of backgrounds.  Drawn from colleagues across the business, the team has also worked with external bodies to ensure they are maximising the opportunities for women in business and encouraging start-ups to get off the ground.

“We know from industry research that not only are fewer businesses led by women​, but also female-led businesses receive less funding at every stage of their entrepreneurial journey and are less likely to scale up in size and turnover,” explains Kerry Reynolds, head of Metro Bank’s investing in women committee.  “We are specifically trying to address these issues by targeting female-led industries and providing more opportunities for women to build businesses skills and increasing our business networking events to help women meet advisors and find mentors.

Metro Bank is working to ensure colleagues have a greater awareness of the issues that women running businesses face including running education events led by female business owners and presentations from external bodies like UK Finance.  Ironically the pandemic also helped.

As Kerry Reynolds explains; “We quickly realised that by being forced to short circuit the loan process when we supported the Government’s pandemic Bounce Back Loan scheme – women found using our 24/7 portal more convenient, less formal and scary. We are now looking to offer this short circuited process going forward, cutting our reliance on the more formal face to face meetings and presentations of old.”

Each Metro Bank store has a dedicated local business manager to support all local businesses and start-ups in its community.  The business managers give practical support for business customers – be that the complementary use of an office in the store to conduct business meetings or advice on the business. Lisa started Daisy’s Dog Empawrium selling accessories for dogs. When the pandemic hit, her Metro Bank local business manager, Kelly helped Lisa get funding to switch her business model to online and she hasn’t looked back since.

Raising money for growth is a key issue facing lots of business owners.  Metro Bank offers an invoice finance lending facility – literally as a company raises an invoice they can borrow against it, before the invoice has been paid.  This proved to be the perfect solution for Debi Scott based near Exeter.  Debi was experienced as a logistics recruiter and in 2012 bought part of a franchise from Driver Hire which helps businesses find the help they need.  Debi soon realised she would be infinitely more profitable if she owned the whole franchise, but as a single person with sole responsibility for her mortgage, was not keen to take on any more traditional debt.  Debi approached a number of banks, but found Metro Bank the most innovative and responsive.  “By borrowing against the invoices I raise, my business presents a more diverse, less risky portfolio and invoice finance lending also circumvents gaps in cash flow helping me to keep the business on a more even keel.”

An established publican based in Liverpool, Fiona Hornsby decided to launch a new pub right in the middle of a pandemic at the end of 2020.  “Not an ideal time to launch a pub I grant you, but the site came up and it was too good an opportunity to miss.  Metro Bank has always been very supportive and whilst I managed to fund the purchase without taking on any more debt with the bank, I knew their continued support would make growing the business easier as I have an excellent working relationship with their local business manager.”

Metro Bank business customers also receive free membership to Enterprise Nation. Enterprise Nation provides access to its 100,000 members with networking advice and support through blogs, webinars, business news and services. Blogs include advice on everything from how to impress a lender, how to successfully speak in public to the five tax mistakes to avoid as a company director. A full calendar of webinars includes everything from how to start up a business with no start-up funds to pricing your products and services.

Banking Customers
ArticlesBanking

How to Ensure Safe Onboarding Procedures of Clients’ Customers?

Banking Customers

Non-banks have been choosing BaaS (Banking-as-a-Service) due to the difficulty of getting and maintaining a banking license, which calls for meeting all the necessary requirements, like KYC (Know-Your-Customer). Chief Compliance & Risk Officer at ConnectPay, Thibaud Catry, says that it takes mutual cooperation and a strong in-house compliance team to ensure the safety of clients’ customers’ onboarding procedure.

Banking-as-a-Service (BaaS) platforms have been gaining more traction in the market as they streamline non-banking businesses’ entry into the financial services sector. Alongside the fully developed banking infrastructure, a BaaS provider takes on the responsibility to adhere to any regulatory requirements, including Know Your Customer (KYC), aimed at preventing money laundering activities and helping to better understand the customers, as well as manage risks more prudently.

Since BaaS uses KYC to onboard their client’s customers, Thibaud Catry, Chief Compliance & Risk Officer at ConnectPay, has outlined key aspects necessary to ensure that this process runs smoothly: a strong in-house compliance team and mutual collaboration.

To provide banking services companies must obtain a banking license, which is both hard to get and difficult to maintain. The necessary infrastructure to carry out transactions and handle funds can cost millions, while using BaaS is usually a fraction of the price — making these platforms a more cost-effective solution.

Infrastructure aside, businesses find it hard to enter the financial market due to strict and ever-changing regulations, which also differ depending on where in the world companies are trying to provide banking services. When choosing BaaS, non-bank entities acquire both the necessary framework as well as the assurance that they are running an operation in compliance with mandatory AML requirements and KYC, which becomes the responsibility of a BaaS provider.

The reason for constant adjustments in regulations is to combat constantly emerging new threats — in the case of KYC, their intent is to minimize illegal activities like money laundering and fraud. According to Catry, these developments are part of the various challenges that BaaS face when trying to safely carry out their clients’ customers’ onboarding process.

“Each industry has its own challenges, from geo-risk to new modern payment methods providing an additional level of anonymity and fast-changing regulatory landscape. Compliance professionals need to adapt to these nuances, learn about market changes and the potential risks linked with these transformations. When it comes to KYC, some of the main obstacles while onboarding clients’ customers emerge from poor data and record management, which both result in potential risks going undetected.”

To avoid these mishaps, Catry emphasizes the need to focus on compliance specialists. ConnectPay followed this strategy when creating their own new BaaS product, making sure that these experts made up a substantial part of the team.

“For example, a third of ConnectPay’s staff is just the KYC department. It takes quite a number of qualified professionals to keep up with all of the changing requirements and sort through all of the client’s provided data to make sure that their customers are identified and assessed correctly,” Catry emphasized. “It’s not enough to check and verify a customer just once — a BaaS provider needs to conduct ongoing monitoring to detect any possible risks and react accordingly. This is a detailed procedure which requires a number of specialists at work and, considering the current regulatory environment, financial institutions in Europe cannot afford to work with a weak compliance team.”

Although regulatory procedures are the BaaS’s responsibility, it cannot effectively meet all the necessary requirements alone. In order to make sure that everything is running smoothly, Catry says that mutual cooperation is a must.

“Using an intermediary is always a challenge for any FI. At ConnectPay, the team focuses on working with their partner to ensure that the standards they are applying regarding KYC procedures are at a minimum at the same level as ConnectPay’s standards. When it comes to ensuring the safety of onboarding client’s customers, strong cooperation, direct line of communication, and sharing best market practices is key.”

ConnectPay is constantly investing in its compliance department, making sure that all activities of the company are adhering to regulatory requirements. Additionally, any unethical business practices are eliminated during the thorough screening process, ensuring that all of the company’s customers are working inside the legal framework.

Woman in a cafe paying contactless through mobile on a card machine
ArticlesBanking

The Evolution of Frictionless Payments

Woman in a cafe paying contactless through mobile on a card machine

 

Frictionless payments are essential for e-commerce platforms to reduce the barriers between online shopping and completed checkouts. The buying process needs to be easier for both the customer and the seller, as an enjoyable user experience causes higher conversion rates and fewer abandoned shopping carts.

Effective frictionless payments are essential for both large and growing businesses, where the checkout process eliminates waiting times, creates a faster checkout experience, and reduces the barriers and steps towards a completed sale. Ultimately, frictionless payments should feel like a natural part of the customer experience.

Understanding how frictionless payments have developed and reviewing the history of buying processes allows us to recognize how businesses will be able to continue their growth in the digital age. Here, we explore the evolution of frictionless payments and predict how businesses will drive higher conversion rates and create better customer experiences in the future.

 

1950: Debit and credit cards

While the credit card was developed in the mid-twentieth century, it was only in 1973 when the system for using card payments was computerized. This frictionless payment reduced transaction times to just one minute and gave rise to the era of electronic consumer payments. Computerized payments would eventually allow for future online transactions to take shape, where e-commerce businesses could contact banks to finalize payments with ease. In 1994, Stanford Federal Credit Union was the first financial institution to offer online internet banking, leading the way for online transactions to begin in 1995.

 

1999: 1-Click

Bookseller turned global conglomerate Amazon patented an online transaction process called ‘1-Click’ in 1999. This allowed customers to buy products with just a click of a button. No items are added to a shopping cart, meaning that customers can buy a product in a flash. Voila: no shopping cart abandonment. Personal details and your bank account details are stored online, safely assuming that users are content with the same delivery address and bank account being used for every transaction.

The patent has since expired, meaning a flurry of businesses can now utilize this frictionless payment method. Given the global average rate for shopping cart abandonment is 69.8 per cent, skipping over the shopping cart means that e-commerce businesses can maximize their conversion rates and generate more sales through this simple process.

 

2003: Chip, pin, and tap

Going back to credit and debit cards, a more recent development contributed to the evolution of frictionless payments. In 2003, the introduction of Chip and PIN in the UK allowed cards to store data in a small chip on the face of a card. This data could then be accessed using a four-digit PIN, authorizing the payment. The American conversion to chip and PIN was announced in 2012 and completed in 2015.

Not only did this process increase efficiencies for both customers and businesses by automatically authorizing payments rather than signing a receipt, but it also curated a secure form of payment. Only those with access to the card and the secret PIN could access the account. This demonstrates how frictionless transactions can be made easier, but importantly, more secure at the checkout.

Contactless payments were introduced in 2007, further making the checkout process even easier. Today, one in five card payments is now contactless.

 

2011: The mobile revolution

As mobile phones became smaller, they became as much an essential accessory like a wallet or purse. They’re with us all the time. It’s unsurprising, therefore, that these handheld devices have become ingrained in the checkout culture. Leading mobile manufacturers, Google, Apple, Android, and Samsung all launched digital wallets between 2011 and 2015, allowing users to complete transactions in place of their debit or credit cards.

These transactions had the added security benefit of authorizing payments through a fingerprint or facial scan. Furthermore, these digital wallets could be used in-store or online, storing your personal data to automatically fill in those arduous forms with personal details, delivery addresses, and billing addresses. This helps to further speed up online sales and transactions.

 

Now and the future…

As online transactions become easier and quicker on the customer side, some obstacles for businesses to achieve a completely frictionless payment remain. Businesses must ensure that every transaction is genuine, blocking attempts of fraud and abuse.

As the popularity of digital wallets and one-click buying continues to develop, innovative ways to maximize sales without being affected by fraud have been developed. Commerce protection platforms, such as Signifyd, drive automated decisions on the best transactions, approving more good orders and recovering lost revenue from chargebacks. This streamlines the customer experience, limiting the need for authentication forms and processes. Overall, commerce protection platforms feel like a natural part of the checkout process, going unnoticed by customers, and they can increase conversion rates by four to six per cent on average.

 

Frictionless payments will continue to improve, creating better customer experiences and improving business performance. As more sales move online, and while transaction speeds and efficiencies increase, it’s important to tackle attempts of fraud and abuse. At every stage of the evolution of frictionless payment, new processes are helping to make every transaction safer and more worthwhile for customers and businesses.

A pink piggy bank wirth coins around it, sitting on a wooden surface
ArticlesBanking

Pros and Cons of Bank Loans

A pink piggy bank wirth coins around it, sitting on a wooden surface

 

Almost everybody finds themselves borrowing money at some point in their lives. For some, it’s to afford an education. For others, it’s to buy a home or cover business expenses. Regardless of the reason, the most common way for individuals to get the financing they seek is through bank loans and lines of credit.

Loans and lines of credit require approval from the lenders based on your credit score and financial standing. Your financial health determines the loan amount, monthly repayment instalments, and interest rates. Bank loan interest is similar to credit card interest but usually lower. In this article, we’ll go into further detail about the pros and cons of bank loans.

 

Advantages of Bank Loans

 

Control Your Business

You may lack the funds to increase your stock and keep the business going. However, you can qualify for a business loan if your company can meet full payment obligations on time. The lender evaluates your financial status to determine your payment capability through the credit score.

Additionally, banks don’t need shares in your business to provide the loan amount. This way, you can maintain control and run operations without any interference. By allocating the loan, it doesn’t mean the bank will have any role in managing your business, and you can stay in control.

 

Temporary Agreement

A bank loan is a temporary agreement between your business and the bank. This means you don’t have to maintain any relationship with the lender. Your credit rating and payment history are the main determinants for qualifying the loan amount when you wish to reapply in the future. Once you complete your loan repayment, there are no more obligations to the bank.

 

Flexibility

There are different types of loans that you can choose to apply from the bank. The loans have different terms and conditions with varying interest rates. You can acquire funds to handle your business operations if you prove a low defaulting risk and cover your instalments. You can obtain a loan when needed if you don’t have any outstanding debts with the bank.

 

Bank Loan Cons

 

Strict Qualification Terms

A bank will heavily evaluate your risk level before you can qualify for a loan. You are required to provide various documentation and financial history to show your ability to meet the payment obligations. Your business may not meet a few terms on the qualification criteria, thus making it hard to acquire the loan.

Bank loans may also require a personal guarantor to secure the loan. Hence, they may seize your personal assets should your business default on a loan. Thus, you’re required to have a significant record or provide valued collateral.

 

Bank Loans are Secured

Your business may be in debt, and you may opt for a consolidation loan to cover your dues. Thus, the bank may require your assets as security. This way, you risk losing your assets that are integral to your business.

Other lenders may provide a loan with bad credit and may not require collateral. Your home may be collateral for a bank loan, and you lose more than just your business.

 

Cash Problems

You may take out a business loan to cover your debts and pay your suppliers or employees. It may be a low season, or customers may fail to make timely payments. The bank requires you to make monthly repayments which may strain your finances.

Most of your revenue may cover the loan leaving you in further debt or with cash flow problems. Instead of being reinvested in your business, cash will go to the bank, causing you a financial headache.

Online Payments
ArticlesBanking

Limited Access to Baltics’ E-commerce Market Addressed with New Tailored Payment Option—banklinq

Online Payments

The continuing global e-commerce boom highlights old issues of Local Payment Methods (LPMs) some regions, like the Baltics, still face. Offering a region-tailored solution, Nikulipe, a Fintech company, is launching a new LPM to tackle the problem.

E-commerce in 2020 has seen an impressive surge as worldwide retail online sales saw a 27.6% growth rate with sales reaching over $4 trillion. This upward trajectory is expected to continue—by 2023 global e-commerce is predicted to be worth a sound $6.5 trillion, up by 22% from 2022 estimates. The Baltics are no exception in this—Lithuania’s e-commerce revenue is projected to reach $889 million in 2021, while Latvia and Estonia are expected to reach $345 million and $405 million respectively.

The continuing e-commerce boom, however, brings back one of the key problems some regions still face—current LPM (local payment method) options do not reflect the needs of global merchants, this way limiting the access for them and potential consumers.

The Baltics region is experiencing this issue as well. More than 65% of Baltic shoppers have a preference of paying through online banking, which has become the dominant payment method in the region. However, only around 20% of them have a credit card—roughly 17% of Lithuanians and Latvians, and 29% of Estonians—bringing limitations to consumers in terms of shopping on international e-commerce platforms, as well as restricting market access for international merchants; well over 60% of Europeans tend to abandon their shopping cart, if they cannot pay with their favourite payment method. In addition, global payment providers which service the Baltic states, are often unaware of the market needs, offering access only to a small traditional and challenger bank network.

One way to address this issue is by offering an innovative payment method, specifically tailored for the region, that would be able to connect global merchants to the Baltics market in an easy and hassle-free way. Nikulipe, a Fintech company creating and connecting Local Payment Methods to access Emerging and Fast-Growing Markets, is the first one to undertake the issue that the Baltics are facing, by launching a new product for the region—banklinq.

Banklinq will be the first Local Payment Method to address regional complexities by combining the local know-how and global experience, helping international merchants become more familiar with and trusted by local shoppers, paving the way to access new user markets.

“By connecting the largest number of leading local financial institutions in Lithuania, Latvia and Estonia, including major traditional and challenger banks, we are easing the access for international merchants that are looking to expand their businesses and reach new customers, but are limited by regional intricacies, like regulatory processes,” explains Frank Breuss, CEO and co-founder of Nikulipe. “Incorporating region-specific payment solutions puts businesses one step ahead in the game as the local knowledge goes a long way with customers, who are used to certain ways of paying for goods and services.”

Built upon open banking and adhering to EU regulations, banklinq will offer a payment option that covers all relevant banks in the region, bringing the Baltic consumers to global merchants. One convenient API ensures an efficient market entry without being caught up in technicalities, as the local regulatory landscape, processing, collection, reconciliation, settlement, remittance and other processes will be navigated by banklinq experts.

“The Baltics is one of the fastest-growing e-commerce markets in Europe, contributing to the worldwide e-commerce growth rate of 26% last year,” observes Breuss. “This growth is attracting a number of new businesses to the region, but the current Local Payment Methods are, unfortunately, not fit for international merchants and make it more difficult for them to access the market. We want to change that.”

The growth that the global e-commerce continues to experience is, in turn, bringing back some of the rooted issues in Local Payment Methods which have not been addressed yet. The Baltics being one of the regions facing these problems as well, the region-specific solution like banklinq could be the answer to the limited access international merchants and consumers experience in Lithuania, Latvia and Estonia.

Close up of a person's hand as they use an ATM
ArticlesBankingDue DiligenceRisk ManagementSecurities

Financial Institutions Prime Targets for Cybercriminals: Future Attacks are ‘Inevitable’

Close up of a person's hand as they use an ATM

The sector looks to reduce the attack surface area after a 238% surge in cyberattacks

According to IBM, 23% of all cyber-attacks are directed at financial institutions, while the total cost of a single data breach is the second largest among all industries, costing financial organisations $5.72 million on average.

Another study indicated that 53% of data breaches are financially motivated, so the industry is constantly on the cybercrime radar. In other sectors, malicious users get a foothold through social engineering, credential stuffing, and application vulnerabilities. However, the Finance sector is different as these users primarily compromise internal corporate networks.

The pandemic has accelerated the digital shift, with enterprises focusing on securing cloud environments. Cybercriminals also leverage this change, especially when businesses move to cloud-based platforms. Financial institutions also opt for SaaS (Software-as-a-Service), PaaS (Platform-as-a-Service), and IaaS (Infrastructure-as-a-Service), leaving additional vulnerabilities in a multi-layered environment.

Studies indicate that since the pandemic, banks faced a 238% surge in attacks. They can be devastating to the economy, given their interdependence and daily transactions. The United States Federal Reserve Bank of New York said, “compromising any of the five most active United States banks will result in significant impacts to other banks,” resulting in $130 billion of forgone payment activity. Unsurprisingly, the average cost of a data breach in Finance is 52% greater than average — around $5.85 million.

The finance sector is strictly regulated and has to comply with complex cybersecurity rules. It makes data breaches even more problematic, as organisations must pay fines and remediation costs, in addition to compensating the lost funds. These requirements call for a holistic approach.

“Organisations have to strictly authenticate both external and internal users to protect their corporate systems. Financial institutions suffer from internal actors who know the banking system’s inner workings, and state-backed hackers often target them. While cybersecurity automation today cannot guarantee holding off attackers, a reduced surface area can greatly lower the risk”, says Juta Gurinaviciute, the Chief Technology Officer at NordVPN Teams.

 

Zero Trust and IP whitelisting – a bottleneck for attackers

To minimise the cyberattack surface area, financial companies establish secure connections for employees and contractors to reach essential assets. However, unconditional trust can be harmful if malicious users compromise the connection.

“Today’s authentication is based on a Zero Trust model, meaning that employees and contractors can only access limited resources for a defined period. Even if their connection is compromised in a supply chain attack, hackers won’t do much harm as they won’t reach the rest of the internal network”, says Gurinaviciute.

The organisation can also implement an additional security layer that filters the end-point devices and apps based on their IP address. With IP whitelisting (also known as the allow list), admins can create a set of trusted employee and third-party devices, granting them access to the corporate network. This policy complicates the onset of the cyberattack, limiting its surface area.

However, manually whitelisting particular IPs can be arduous, especially for smaller organisations like FinTech startups. Companies can stay resilient by implementing third-party solutions with a centralised control panel for an efficient addition of new devices and applications.

Accenture estimates that banks will lose $347 billion to cybercrime in the coming years. Organisations with strict and robust external authentication shouldn’t overlook the resilience of their internal networks. Cooperation with technology service providers (TSPs), managed service providers (MSPs), and cloud service providers (CSPs) is inevitable. It brings efficiency and scalability but comes with a cost. To neutralise new possible attack vectors, Finance should review their contractors’ and employees’ access privileges — IP whitelisting is an appropriate first step.

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ArticlesBankingPrivate FundsTransactional and Investment BankingWealth Management

Minted Launches Market-First Precious Metals Savings App

Three young work colleagues stood together, looking at their phones and smiling

Minted, an FCA licensed UK-based fintech company, has launched a new savings app, aimed at making precious metals accessible to all. The platform’s easy-to-use app allows customers to invest as much or as little as they want each month, and to withdraw their physical gold if they wish.

 

The brainchild of founders Hamzah Almasyabi and Haroon Siddiq, Minted is tapping into a national savings mindset and breaking down traditional barriers to investing in gold. Through the platform, savings plans start from as little as £30 per month, with users buying gold of the highest purity from an LBMA approved delivery partner. Minted also provides customers with free insurance and the option to store their gold for free in a high-security London vault.

 

Gold is well-known globally as a ‘safe haven’ asset, which holds its intrinsic value and performs well compared to equity investments on a short and long-term basis. At a time of significant stock market volatility and low interest rates, gold offers investors stability and growth potential.

 

Minted’s app has been designed with user experience in mind, making it easy to open an account and start saving. The app allows users to control regular savings plans and see detailed insights into account balances. Once they have saved enough for a gold bar, customers can then withdraw or sell their physical gold, if they choose. Users can pay by credit or debit card, as well as PayWithMyBank and other e-wallet options.

 

Becky Hutchinson, MD at Minted, said: “Right from the start, we wanted to make investing in gold a possibility for absolutely everyone. There is no reason why it should still be thought of as the preserve of the extremely wealthy or experienced investors. These are uncertain times and investing in precious metals can provide stability and the prospect of strong growth.

 

“We’ve worked hard to ensure that our app is easy to use, intuitive and gives customers just the right amount of information to guide their investment decisions. The fintech sector is evolving rapidly and the boundaries are constantly being pushed in terms of the investment products and services coming to market. It is extremely important to us that our platform stands out from the crowd.”

 

Unlike other investment options, which simply offer investors exposure to gold prices, Minted’s customers actually own physical gold and can withdraw or sell at any point they choose. By investing incrementally, even customers with relatively little disposable income can build their own precious metals portfolio over time. Currently, Minted offers gold bars ranging in size from 10g to 1kg and is set to add other precious metals to its platform.

 

Hutchinson continues: “People may have various reasons for choosing gold: diversifying their investments, building an emergency fund, putting away money for their families in a safe place or simply saving enough to splash out on a big purchase. We believe Minted offers options for everyone, and we are extremely proud to be bringing this new product to market.”

 

Minted’s platform is live in the UK. Visit www.theminted.com for more info or search for ‘Minted’ on the App Store and Google Marketplace.

Open Banking
ArticlesBanking

Finastra and Salt Edge Collaborate to Provide a More Personalized Banking Experience

Open Banking


Combined offering provides instant PSD2 and global Open Banking compliance for an open, secure and personalized banking experience

Finastra today announced its collaboration with Salt Edge to improve the speed of compliance with the Payments Service Directive 2 (PSD2) and other global Open Banking standards, for banks and Electronic Money Institutions (EMIs) worldwide. The integration of the Salt Edge Software-as-a-Service (SaaS) solution, Open Banking Compliance, with Finastra’s core banking solutions, Fusion Essence and Fusion Equation, enables institutions to build the necessary architecture to support end-to-end banking requirements and compliance through one Application Programming Interface (API). The integration is carried out via Finastra’s open development platform, FusionFabric.cloud.

In an increasingly competitive global marketplace, banks and EMIs are under pressure to optimize their core processes, increase profitability, reduce the time to market for new products, and continue to innovate and personalize their offerings. The opening up of data has provided a good foundation for achieving this. In fact, Finastra’s State of the Nation research found that, globally, 94% of professionals at financial institutions agree that Open Banking is important to their organization, with 63% reporting that it has enabled them to improve customer experience and 59% stating that it has helped attract new types of customers. However, complying with PSD2 and regional Open Banking standards can be a time-consuming, expensive and complicated task.

Dmitrii Barbasura, Co-Founder & CEO at Salt Edge said, “Finastra’s commitment to unlocking the power of finance for everyone supports our goal to simplify all components of Open Banking and PSD2 compliance for both financial providers and end customers. The partnership extends our network coverage from our existing      customers to Finastra’s wide customer base, while the pre-integration of our combined best-in-class solutions allows end customers to benefit from more inclusive financial services thanks to Open Banking.”

Open Banking Compliance provides full coverage of regulated markets with cross-bank and pan-European API standards, such as Open Banking UK and The Berlin Group in the EU, as well as newly regulated markets such as AustraliaBrazil and the GCC. The comprehensive set of APIs gives Third-Party Providers (TPPs) access to instant and secure account information, payment initiation and a full-stack developer portal. Additionally, the integration provides added security, with a TPP verification system and mobile-first application to comply with strong customer authentication (SCA) and dynamic linking requirements.

Anand Subbaraman, General Manager, Banking at Finastra said, “Salt Edge has a proven track record of success with more than 100 API implementations for financial institutions globally. Bringing Open Banking Compliance into our suite of core banking solutions makes compliance quick and seamless for both Finastra and Salt Edge customers, while giving them the tools to create better and more personalized products and services. For the end user, the benefit is a much quicker, more secure and relevant banking experience that truly accommodates their needs. We are excited to partner with Salt Edge and welcome them into our ecosystem.”