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Gianluca Corradi Explains How Open Banking is Already Benefitting Customers and Driving Innovation

Written by Gianluca Corradi (Head of UK Banking at Simon-Kucher) (Head of UK Banking at Simon-Kucher, Gianluca Corradi January 14, 2019 marked the first anniversary of Open Banking, allowing banks, fintechs and ‘big techs’ to compete in a more fluid space. Despite a “below the radar” start, Open Banking is truly shaping the future of finance. It is generating huge threats as well as tremendous opportunities to incumbent financial services players and new competitors, particularly through allowing more businesses to specialise in parts of the value chain where they can create a strong competitive advantage. Initial impact Gianluca Corradi, Head of UK Banking at pricing strategists Simon-Kucher (which works with numerous banks and fintechs in the UK and worldwide), says “The first year of Open Banking has already brought a significant change for the financial sector and indicated countless opportunities for future growth.  I see this unfolding seismic shift started by the creation of Open Banking as largely benefiting customers through better services and better access to finance. “So far it is early days and customers have not seen the true potential of Open Banking, but they are already starting to experience the benefits.  For instance, being able to see all your financial wealth, investments and pensions seemed out of reach only a couple of years ago, but now it is happening. “Fintechs are now taking it to the next level, allowing customers to monitor their financial wealth across all asset classes, from jewellery to real estate, and this is subsequently triggering new innovation by the high street banks.  A good example of this is the app Asset Vault. “After an initial period of panic, even large institutions are now taking a positive view on Open Banking, thinking about new ways to boost the current business. Open Banking has the potential to become a primary channel for distributing financial services – equal to branches and online.” Arrival of tech giants Gianluca adds: “Sooner or later, the financial services sector will lose most of its customer-facing roles to Big Tech technology giants, the way Amazon shook up the retail sector, Apple reshaped the music industry and Uber transportation, especially at nighttime, in cities. “The reason for this is, essentially, customers don’t desire a financial product, their need instead is to fulfil other primary desires such as having income in retirement, owning a house or simply having a night out.  For instance, when people ride an Uber car they are seeking transportation and may don’t even have to think of physically paying for the journey … it simply happens in the background without the need for cash or a credit card. “Loss of brand recognition for many large and established financial sector firms is highly likely in the not-too-distant future, but this will not necessarily translate into less revenue for banks as being in the background allows players to focus on economies of scale and higher revenues from a higher volume.  “Banks with a relatively lower cost of funding and global reach might opt for this strategy.  After all, no bank in the world that has as many customers as Amazon, and partnering with such a giant represents a huge opportunity for reaching clients and increasing market share. Fintechs “Fintechs are also adopting different strategies to win in this market. Some have been successful in gathering an extensive customer base and are now leveraging this position to cross-sell other financial products through a ‘marketplace approach’. “Others have preferred to focus their effort on continuous innovation by white-labelling their solution to more established players with large customer bases. “Finally, a third group of fintechs has opted for a radical change in the business model – the BaaS (Banking as a Service), essentially outsourcing the entire banking capabilities to third-party players.”  The post Gianluca Corradi Explains How Open Banking is Already Benefitting Customers and Driving Innovation appeared first on The Fintech Times.
The Fintech Times

Two-Thirds of Financial Decision-Makers Believe Tech Giants Will Offer Retail Banking in Five Years

New research released today reveals the significant concerns of C-suite and director level decision-makers at retail banks about the Open Banking regulations, potential competition from tech giants, and the performance of fintech companies.  The research, commissioned by Pepper, the 100% mobile bank created by Bank Leumi, Israel’s leading bank, found that two-thirds (66%) of financial decision-makers feel that technology giants such as Google and Amazon will offer retail banking services in five years in the UK. In addition, according to a third of respondents (34%), traditional banks as we know them will effectively cease to exist by 2023. Instead they expect banking to be split into specific services (i.e. payments, money transfers, loans etc.), which tech giants or specialist financial companies will handle exclusively, yet some of these companies already offer financial services, like Apple Pay and Google Pay.  The Impact of Open Banking The introduction of the Payment Services Directive II (PSD 2), also referred to broadly as Open Banking, in January 2018, is cited as the one of the biggest reasons why respondents believe that tech giants will jump into this space. Six in 10 (64%) decision-makers said they believe that the new regulations have already given large tech companies a distinct advantage over traditional banks, opening the door for their entry into the retail banking market within five years. More immediately, however, the majority of respondents (58%) think that PSD2-led Open Banking regulation has had a “negative” impact on their organisation in less than a year. Nearly half (48%) feel that the new regulations have added more red tape and around a third of respondents also believe that Open Banking has caused confusion amongst not only their customers (30%) but also their own employees (28%).  Despite this though, 56% of respondents still think that Open Banking is an opportunity for traditional banks to change and become more customer-centric. Retail Banks Behind Fintech Rivals Regarding their current performance in the UK, decision-makers believe traditional retail banks are struggling to compete in the digital era. The vast majority (82%) say banks aren’t innovating fast enough to meet changing consumer demands for digital services, with almost half (48%) thinking that these banks are at least three years behind fintech rivals. The number one reason cited for feeling that they are behind newer rivals is that there is a reluctance to adopt external technology (65%), followed by a culture that is not innovation focused (57%) and that it takes longer to innovate due to clunky legacy IT systems (53%). A third (34%) admit that innovation is being stunted because retail banks are too focused on product development and streamlining. Despite this, over half of decision-makers (54%) believe that retail banks “must collaborate” with fintech firms to speed up their own innovation. Michal Kissos Hertzog, CEO of Pepper said of the research: “Clearly financial decision-makers feel that Open Banking has opened the door to tech giants to jump into the retail banking space, but this must not be feared.” “Open Banking can create a real revolution that benefits traditional banks, not only the huge tech companies. In my view, it won’t end in a ‘winner takes all’ scenario, like in other industries.  The two main challenges for banks today are utilising the huge amount of data they have gained for the benefit of customers; and collaborating with fintechs and third parties – which are made possible in light of Open Banking – in order to offer the best value proposition”.  “Having said that, another big challenge for traditional banks today is changing their outdated legacy IT systems, some of which were built decades go. Despite this very challenging situation, it actually – in a positive way – forces banks to put innovation at the heart of what they do from now on and will help them to put up a fight with the tech giants”. “At Leumi we not only ‘disrupted ourselves’ by spinning off a mobile-only challenger bank of our own – ‘Pepper’, we also made sure it was built from scratch, on a new core IT system, and with an Open Banking ready architecture and data capabilities, allowing it to play a significant role in this upcoming ecosystem.”  In 2017, Bank Leumi launched Pepper, a first of its kind digital platform, to allow customers to manage all of their banking activities entirely via mobile and with no current account fees. Pepper, built on a new and separate core IT system, is based on a unique artificial intelligence technology that offers a personalised banking experience that differs from person to person and helps customers better manage their finances. The post Two-Thirds of Financial Decision-Makers Believe Tech Giants Will Offer Retail Banking in Five Years appeared first on The Fintech Times.
The Fintech Times

Dan Hedl: Satoshi’s Bitcoin Vision was a Viable Banking Alternative, not a New Visa for Payments

The former Blockchain executive and a cryptocurrency veteran, Dan Hedl, has said that Satoshi Nakamoto, the creator of bitcoin, wanted bitcoin to be an “alternative to banks”, and not a “new visa.” In a series of tweets on January 14, Hedl took up an argument with other cryptocurrency enthusiasts who believe that the idea of Bitcoin was to be a currency for payments. 1/ Satoshi’s Vision is a silly endeavor, as it doesn’t matter what it was, we are where we are now. However, those pushing the “Bitcoin was first made for payments” narrative insist on cherry-picking sentences from the white paper and forum posts to champion their perspective. — Dan Hedl (@danheld) January 14, 2019 He argued that those who have this mere belief haven’t quite understood bitcoin’s full implications from Satoshi’s vision, which is clearly shown in Bitcoin Whitepaper. In his main tweet, he said that: “Satoshi’s Vision is a silly endeavor, as it doesn’t matter what it was, we are where we are now. However, those pushing the “Bitcoin was first made for payments” narrative insist on cherry-picking sentences from the white paper and forum posts to champion their perspective.” World Needed An Alternative Bank, Not Another Visa In 2008 when bitcoin whitepaper was published, it happened that there was a financial crisis the same year. During that time, many had lost their trust in Banks, so it was perfect timing for bitcoin to be popularized. According to Hedl, Nakamoto has cleverly planted a seed at the right timing. Hedl also noted that: “How do we determine Satoshi’s intention? We need to look at his ideology, description of functionality/architecture, timing, and audience. Let's start with how Satoshi describes the problem Bitcoin solves. In his first public comms after the whitepaper, in the first paragraph: ‘The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.’” Hedl believes that bitcoin is largely a store of value and not an alternative to payment networks such as MasterCard and Visa. In a tweet, Hedl noted that: “The world didn’t need a new VISA; they needed an alternative to banks.” When it comes to capacity, though, bitcoin will outdo payment processing networks like MasterCard and Visa, especially through the Lightning Network, which allow transactions to be processed off-chain.
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Canada Digital ID System Could Use Blockchain to Secure Data, Says Banking Executive

Canada Digital ID System Could Use Blockchain to Secure Data, Says Banking Executive A Canadian banking group supports the idea of using blockchain technology as part of a digital ID system for residents, national news agency The Canadian Press reported via various local media outlets on Jan. 15. Speaking during a presentation at the Economic […] Cet article Canada Digital ID System Could Use Blockchain to Secure Data, Says Banking Executive est apparu en premier sur Bitcoin Central.
Bitcoin Central
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Ripple’s RippleNet XRP Showcases Real-World Effectiveness: Mercury FX

After partnering up with the firm behind the second largest coin XRP [XRP] Ripple as one of the +200 costumers, Mercury FX announced via their official twitter handle that they transacted their largest payment across RippleNet with a positive conclusion. 1/1 We've made our largest payments across RippleNet using #XRP – 86,633.00 pesos (£3,521.67) from the U.K. to Mexico in seconds. pic.twitter.com/WsHJuZTiOy — Mercury-fx Ltd (@mercury_fx_ltd) January 17, 2019 Using XRP, the firm transferred £3,521.67 or $4,552.41 while they cited that UK based Mustard Foods was able to save £79.17 and 31 hours on the transaction. Mustard Foods could be one of the best examples of the impact of using RippleNet could have as it opened doors to cheaper expenses, quicker orders and faster payments. As covered by John P. Njui on EWN a few days ago, The Ripple company has announced via its website that 13 new financial institutions have joined RippleNet thus propelling the number of total global customers to over 200. RippleNet currently operates in 40 countries across 6 continents. Out of the 13 aforementioned financial institutions, 5 are confirmed as using XRP to source instant liquidity for their cross border payments. The are JNFX, SendFriend, Transpaygo, FTCS and Euro Exim Bank. By the end of this year [2018], major banks will use xRapid as a liquidity tool. By the end of next year [2019], I would certainly hope that we will see…in the order of magnitude…of dozens. But we also need to continue to grow that ecosystem…grow the liquidity. – Brad Garlinghouse The success behind the team from Ripple could be standing by their marketing strategy and future plans of making the financial industry a better place to be. While not displacing traditional banking systems but helping them make payments cheaper and faster, it is finding its way to take spotlight in the crypto-verse. The post Ripple’s RippleNet XRP Showcases Real-World Effectiveness: Mercury FX appeared first on Ethereum World News.
Ethereum World News

BRD Wallet Expands Crypto User Access Across Europe With Coinify Partnership

Coinify, a European-based financial platform that provides a wallet, trading and payment processing solution, has announced that they are integrating BRD Wallet into their platform to deliver BRD wallet access to users across the European region.Specifically, the partnership provides access to virtual currencies, like bitcoin, to 34 countries across the Single Euro Payments Area (SEPA). The SEPA region is a collection of member states in Europe who are part of a payment system that simplifies bank transfers denominated in EUR. The launch is also enabled largely in part by Coinify’s newly rebranded trading solution for wallet partners.Customers will now be able to use BRD Wallet to “purchase bitcoin at cost-efficient rates with SEPA bank transfers” within Coinify’s trading platform. With BRD integration, customers will also retain control over their private keys while using Coinify.Essentially, this provides a large number of users with an efficient and secure way to buy bitcoin and other cryptocurrencies, and then allows them to immediately store it in a manner where they control what happens to their money. Typically, a user will entrust the custody of their private keys to a centralized exchange while they are waiting for trades to be executed and sometimes for much longer than that.Aaron Lasher, co-founder and chief strategy officer at BRD, highlighted the advantages of the integration for security-focused users of the Coinify platform.“We like exchanges and think security will get better in the future, but by using our integrated purchase and trading solutions, you get to keep your funds under your control 99 percent of the time, and only put them at a slightly higher risk for a short period when you make the exchange,” Lasher told Bitcoin Magazine.“Using a non-custodial wallet means that you and you alone control your funds. It’s similar to having physical cash in a (highly secure) safe at home. Only in this case, we provide our customers a digital safe (the BRD wallet) that they can keep in their pocket and carry along. Nobody else in the world has access to your funds but you, and nobody can stop you from sending or receiving funds.”Integrating a wallet that allows users to own their funds and seamlessly make trades on a platform like Coinify could help to push bitcoin adoption forward."The financial industry is ripe for disruption and we see bitcoin and the other virtual currencies as the future of payments,” said Rikke Stær, chief commercial officer at Coinify, told Bitcoin Magazine. “At Coinify, we have experienced first-hand the rising adoption of bitcoin and working with BRD as a user-friendly, decentralized wallet will only encourage the global reach of the currency."“Since launching as the first iOS bitcoin wallet in the App Store over 4 years ago, we’ve grown tremendously in North America,“ Adam Traidman, CEO and co-founder of BRD, said in a statement. “Europe will be strategic in the next phase of BRD’s global growth, and the partnership with Coinify will ensure our success in this crucial endeavour.”In August 2018, Canadian-based Coinberry exchange launched a similar BRD integration, allowing users to quickly and seamlessly buy, deposit and withdraw bitcoin on the Coinberry platform, while keeping control of their keys at all times. This article originally appeared on Bitcoin Magazine.
Bitcoin Magazine

Crypto Payments Service BitPay Reports It Saw Over $1 Billion in Transactions in 2018

Crypto Payments Service BitPay Reports It Saw Over $1 Billion in Transactions in 2018 Major cryptocurrency payment service provider BitPay has reported $1 billion in transactions this past year, according to a press release Jan. 16. According to the report, the company also set a new record for itself in terms of transaction fee revenue. […] Cet article Crypto Payments Service BitPay Reports It Saw Over $1 Billion in Transactions in 2018 est apparu en premier sur Bitcoin Central.
Bitcoin Central
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