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OUT WITH THE OLD: WHY BANKS MUST ADOPT FINANCE TECHNOLOGY TO REMAIN RELEVANT

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OUT WITH THE OLD: WHY BANKS MUST ADOPT FINANCE TECHNOLOGY TO REMAIN RELEVANT

The term “FinTech” continues to saturate the news and financial institution reporting in recent years. It’s not surprising that streamlining financial services in the age of automation is something traditional banks struggle with adopting as global markets capitalize on technology. The trade sector on a high level is already purging antiquated, traditional processes involving paper, phone calls, Excel spreadsheets and tedious, unreliable methods of tracking and invoicing.

Now that FinTech is part of the bigger financial picture, it only makes sense that more companies in the global trade market are adopting FinTech as the norm rather than an option. This presents its own set of challenges for banks to overcome as much as it presents opportunities in optimization and risk mitigation. FinTech has its own challenges to overcome as well before it can successfully replace the traditional financial processes currently in place.

To understand exactly how FinTech fits into the bigger picture, we must break it down and evaluate all angles. To start, trends in emerging finance technology include variables from governments and dominating players to emerging acquisitions positioning big tech as a disruptor and solution to trade finance. So, what are some of the top emerging trends currently found in the financial technology space? According to experts at Azlo, a no-fee digital banking platform, government regulation will weed out fly-by-night FinTech while ownership of a self-sovereign identity will become more prevalent for risk modeling. Additionally, FAANG companies are currently positioned to become major players in the FinTech space as they continue to raise the bar for consumers and businesses alike.

Azlo also maintains that banks must adopt FinTech and emerging tech to remain a relevant part of the financial industry, warning that if they don’t, European, African and Asian markets, which possess less regulation and oversight, will own the space very soon. Additionally, optics, trust and inevitable obsolescence will ultimately serve as supporting reasons behind the adoption of emerging tech in the banking space in the near future.

From a safety and risk mitigation point of view, cybersecurity requires a sophisticated and advanced system to combat various strategies hackers utilize to disrupt the financial industry. Cybersecurity goes hand-in-hand with the recent surge in FinTech and will present itself as a challenge for financial companies to mitigate. How will this risk impact banks from a cost perspective? Think of it in terms of compliance and regulation. Circling back to Azlo’s expert point that once the government starts implementing harsher regulations, the days of FinTech will take a different stance in the financial industry. An example of this is found in Mexico’s FinTech law that took full effect this year and in the Latin America markets. As noted in a November Nasdaq article: “The goal of the FinTech law was to help bring more people into the formal economy. Additionally, it would help to reduce the amount of cash in circulation, which would cut down on money laundering and corruption as well.”

Nasdaq experts also point out the significant progress FinTech has made within the Mexico and Latin America markets. “In January 2019, Albo raised $7.4 million, sparking a surge in investor interest in Mexican neobanks,” states the article. “In March 2019, Mexican neobank, Fondeadora, announced a $1.5 million round of investment, and in May 2019, Nubank, Brazil’s largest neobank with over 15 million users, announced its plans to expand into Mexico.”

Considering the reputation for cash dependency in Mexico paired with the more than 273 FinTech ventures operating in the country, it’s no surprise that FinTech is disrupting and recreating opportunities for global markets while changing the way cash flow is approached.

FinTech will not necessarily hurt the traditional banking model, as it does offer an automated and sustainable approach for customers while keeping up with what is expected of companies on a cultural scale. To remain relevant, banks should consider what customer generations are emerging while maintaining the changing ecosystem supporting efficiency, sustainability and cost-savings.

Furthermore, FinTech is changing the way investments and lending are assessed. FinTech allows for much larger sets of data, providing a new level of visibility. Possessing the ability to manage multiple information streams that reflect the health of a company is found as an unmatched solution provided by FinTech, according to Azlo. With this information, companies can further evaluate next-step approaches and what actions in place need to be revisited, revamped or completely eliminated. The name of the game is data visibility, folks, and that is exactly what FinTech is doing to redefine how finances are approached.

“FinTechs are relying on different information when underwriting consumers, looking at things traditional banks have never considered and providing more people with access to personal and business capital,” explains Donna Fuscaldo in her blog, “The Rise of Fintech: What You Need to Know & Financial Services Now Offered.”

“Traditional financial institutions may be late to the FinTech party, but they haven’t missed it altogether,” Fuscaldo writes. “Many of them are creating their own services or partnering with established FinTechs to bring services to their clients. It’s happening in every aspect of FinTech from robo advisors with Charles Schwab’s Schwab Intelligent Portfolios to digital payments with Visa’s Visa Pay digital payment service. Even heavy hitters like JPMorgan are turning to FinTech’s data to evaluate applications for loans, and Quicken Loans, the online mortgage lender, launched its Rocket Mortgage app that can churn out mortgage approvals and rejections in minutes. All of this action on the part of the traditional financial services industry make for more choices beyond just the startups.”

With cybersecurity and automation consistently creating new ways for companies to optimize their payments while maximizing data and integration, only time will tell how much regulation global governments will impose and whether that reshapes the FinTech marketplace. One thing is certain: Traditional banking will continue to be challenged to redefine how customers are served, transactions are protected and how the investment and lending sectors approach opportunities throughout the international and domestic markets.

marco polo

Marco Polo Network Welcomes BNY Mellon

The Marco Polo Network, a trade and working capital finance network powered by blockchain technology, welcomed The Bank of New York Mellon (“BNY Mellon”) onboard to conduct an evaluation program. BNY Mellon’s collaboration is aimed at developing a more open and connected trade finance environment that powers global trade and economic growth.

Marco Polo is a consortium working to make international trade more efficient. The network includes financial institutions, their corporate clients, service providers and the blockchain technology firms TradeIX and R3, leveraging R3’s Corda blockchain.

By engaging with Marco Polo, BNY Mellon is positioning itself to explore trade financing powered by blockchain, in an industry where many participants still rely on costly and inefficient paper-based systems to conduct trade. 

“We recognize tremendous potential to harness digital, data and advanced technology capabilities to transform essential trade finance processes to make them more efficient and secure. Collaborating with Marco Polo members is one more measure of our commitment to provide innovative opportunities to improve the client experience throughout the transaction lifecycle,” said Joon Kim, Global Head of Trade Finance at BNY Mellon. “To achieve our goals, we seek to work with forward-looking organizations, like the Marco Polo Network, that are harnessing digital to truly transform industries,” he added.

The move reflects BNY Mellon’s focus on fully digitizing the business to deliver new capabilities faster, unlock the power of data and put clients at the center of their ecosystem. BNY Mellon remains dedicated to broadening the scope of its digital ecosystem both by actively advancing its own products and services as well as seeking opportunities to collaborate with best-in-class external companies. 

Already strong in Europe, Asia and the Middle East, the Marco Polo Network now bolsters its U.S. presence with the addition of BNY Mellon. “We are accelerating the network’s growth and reach while our members are preparing and running programs with their corporate clients,” said Daniel Cotti, Managing Director, Centre of Excellence, Banking & Trade at TradeIX. 

 BNY Mellon joins Bank of America, BNP Paribas, Commerzbank, ING, LBBW, Anglo-Gulf Trade Bank, Standard Chartered Bank, Credit Agricole, Natixis, Bangkok Bank, SMBC, Danske Bank, NatWest, DNB, OP Financial Group, Alfa Bank, Bayern LB, Helaba, S-Servicepartner, Raiffeisen Bank International, Standard Bank, Intesa Sanpaolo, MUFG, National Bank of Fujairah PJSC, National Australia Bank, and Bradesco as a member of the largest network of financial institutions leveraging blockchain for trade finance.

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About BNY Mellon

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries. As of Sept. 30, 2019, BNY Mellon had $35.8 trillion in assets under custody and/or administration, and $1.9 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.

About TradeIX 

TradeIX, is an award-winning technology platform provider driving innovation and driving change in facilitating the flow of goods, money, and credit in the $8 trillion trade finance market. Its TradeIX Platform is delivered to banks and their corporate clients via ERP-embedded applications. The TradeIX Platform is integrated with the Marco Polo Network, the world’s fastest growing trade finance network.

Some of the smartest financial institutions and companies in the world work with TradeIX, including ING, BNP Paribas, DHL, AIG, Oracle, and many other Fortune 500 companies from various industries. TradeIX is headquartered in Dublin with offices in London, Kettering and Singapore. For more information visit: www.tradeix.com

About R3

R3 is an enterprise blockchain software firm working with a broad ecosystem of more than 300 members and partners across multiple industries from both the private and public sectors to develop on Corda, its open-source blockchain platform, and Corda Enterprise, a commercial version of Corda for enterprise usage.

 R3’s global team of over 180 professionals in 13 countries is supported by over 2,000 technology, financial, and legal experts drawn from its global member base. 

Learn more at r3.com.