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RPA in Banking Industry: The Future Roadmap into Digital Transformation

banking
Banking, Global Trade Daily

RPA in Banking Industry: The Future Roadmap into Digital Transformation

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The banking sector has become increasingly saturated, and in this competitive market, it is difficult to stay a leader in the banking market. This demands the banking sector stay focused on the challenges, improve productivity, and have 24×7 availability to stay ahead in the competitive market. Such financial services are witnessed and transformable only through RPA(robotic process automation) in banking; this will allow the bankers to rapidly improve their operations and stay ahead in the competitive market.

RPA in Banking sector uses software bots, streamlines banking operations, and allows the employees to focus on other tasks by automation process. These bots can mimic human actions and even interact with users and provide them the solutions for the same. 

The key area where RPA can significantly impact and change the banking sector is manual data entering; as every banking sector deals with huge data daily, RPA bots can extract this data faster and in less amount of time. To implement this automation service, leveraging an RPA developer in the firm can free up human tasks and allow them to focus on other responsibilities.

* Key Areas Where RPA Can be Implemented in Banking Sector

There are various areas where implementation can be done successfully by using RPA in the banking sector. Here we will see key areas where the banking sector can implement.

Customer Onboarding

There are many errors faced while onboarding customers, RPA can quickly streamline the processes by OCR( optical character recognition) automation, such as KYC documents. This will improve the banking process and provide customer satisfaction.

Accounts Maintenance

Maintaining an account is quite difficult for humans; errors often take place. RPA has the ability to maintain the accounts, the activity that follows accounts closures, data updation, and address updation. This information will be processed promptly.

Fraud Detection

Fraud activities in the banking sector are very sensitive. Over the past years, there have been billions of cases filed. RPA can stop such fraudulent activities; it can even track these activities and help the cyber departments in the investigation.

Loan Processing

Processing of the loan services take months to close the deal. By leveraging the RPA, the overall time process is saved, the efforts of booths the parts are improved, and less chances of errors to take palace.

Customer Service and Support

Customers expect better service from any firm or organization, and providing better services can make them loyal customers. RPA can improve customer services with automated bots providing quality services related to balance inquiries, transitions failer, and account status.

*Benefits of Implementing RPA in Banking Sector

Here are the top four benefits of RPA. Moreover, you will find numerous other benefits that you can avail for your sector. For good, connect to the best RPA Consultant and activate the services by implementing RPA in banking sector.

Improved Accuracy and Compliance

RPA enables accurate and reliable process execution by doing away with human error. It follows established guidelines, regulations, and legal requirements, lowering compliance risks. RPA also keeps track of all automated activities, which helps with transparency and regulatory reporting.

Cost Savings

Implementing Robotic process automation in the banking sector can save maximum cost, even track unwanted transactions spent, reduces errors, and allows employees to focus on a higher task.

Enhance Efficiency

With RPA, 24×7 work process is accessible and provides quality work, and improves multiple processes in the sector. This makes the chances of error become less and allows the employees to work on other tasks.

Data Accuracy and Analytics

Humans may sometimes fail to provide accuracy for data. RPA ensures to provide data accuracy by reducing errors. Also, providing quality data will help the bank’s management make actionable decisions and identify opportunities for future improvements.

Also Read:

RPA in healthcare Industry

RPA in Pharma Industry

*Future Roadmap of Banking Sector Using RPA

The RPA is expected to have a disruptive impact on the banking industry in the future, which will bring the banking sector numerous advantages. RPA is the process of automating and helping in rule-based tasks and procedures within an organization using software robots or virtual assistants. The following are some significant ways that RPA will change the banking industry:

1.Customer service

2.Fraud detection

3.Compliance and regulatory reporting

4.Risk management

5.Intelligent process automation

6.Seamless integration with digital channels

These are the core areas, where RPA in banking sector can support and help them to stay ahead in the competitive market.

According to Statista, the size of the pharmaceutical industry is anticipated to be USD 745.4 million in 2021 and to increase to USD 7.1 billion by 2031, rising at a CAGR of 25.7% between 2021 and 2031.

Overall, implementing RPA in banking sector has numerous benefits where the sectors can streamline the maximum work process with fewer errors and walk towards successful Digital Transformation.

 

cryptocurrency
Banking, Global Trade Daily

Cryptocurrency vs. Traditional Banking: Understanding the Differences and Benefits

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The way we do business is changing as technology develops. The realm of finance is one such sector where technology is having a huge impact. The rise of cryptocurrencies has put the conventional banking system under pressure and is presenting an alternate method of conducting financial transactions. In this article, we will examine the distinctions between regular banking and cryptocurrencies and emphasize the advantages of each.

The rise of cryptocurrency

In order to safeguard transactions and regulate the generation of new units, cryptocurrency employs encryption methods. With the development of Bitcoin, the first and most well-known cryptocurrency, it was presented to the public in 2009. Other digital currencies have since emerged, including Litecoin, Ethereum, and Ripple. Cryptocurrencies are not centralized, unlike traditional money, and are not managed by a bank or government. Transparency, security, and near-impossibility of manipulation are all a result of transactions being recorded on a blockchain, a public ledger.

The traditional banking structure

On the other hand, the conventional banking system has existed for many years and has served as the main method of managing financial transactions. In this centralized system, banks serve as a middleman between the parties to a transaction. You are effectively lending the bank your money when you deposit money in a bank, and in exchange, the bank pays you interest. Banks lend money to people and companies, charging interest in exchange, using the funds they receive from deposits.

Cryptocurrency and traditional banking: Differences

The key distinctions between cryptocurrencies and conventional banking come from the way they are built.

Centralization vs. Decentralization- Cryptocurrencies and

conventional banking vary most noticeably in their decentralized vs. centralized organizational structures. Decentralized means there is no single entity in charge of cryptocurrency. Traditional banking, in contrast, is centralized, with banks serving as go-betweens for the parties to a transaction.

Transparency- Transparency is another significant distinction. Transactions involving cryptocurrencies are transparent and nearly difficult to tamper with since they are kept on a public database known as a blockchain. While banks are not required to make their transactions publically available, traditional banking transactions are opaque.

Security- Another significant distinction is security. Cryptocurrencies are protected by encryption methods, making hacking them nearly hard. Contrarily, traditional banking institutions are open to fraud and online threats.

Advantages of cryptocurrencies

Let’s examine the advantages of each now that we have examined the distinctions between cryptocurrencies and conventional banking.

Transparency- Transparency is among the most important advantages of cryptocurrencies. Transparency and security are provided via the recording of transactions on a blockchain, a type of open ledger. This openness lowers the possibility of fraud and guarantees that business dealings are handled fairly.

Decentralization- Due to the decentralized nature of cryptocurrencies, users can verify and record transactions, providing greater transparency, increased security, and lower transaction costs. You have complete control over your assets when you buy bitcoin or other cryptocurrencies since there is no need for a centralized organization or middleman.

Security- Additionally, cryptocurrency is incredibly secure. Transactions are protected using encryption methods, rendering them essentially unhackable. As a result, consumers may transact with assurance knowing that their valuables are secure.

Advantages of conventional banking

Several advantages are also provided by conventional banking systems.

Regulation- Regulation is a key advantage of conventional banking. Banks are subject to a lot of regulation and have to follow tight guidelines. This guarantees that business dealings are performed honestly and that client assets are safeguarded.

Familiarity- Additionally, most people are more accustomed to traditional banking systems. Banks have been processing financial transactions for many years and are a reliable option.

Customer service- Last but not least, conventional banking systems provide customer service. If you require assistance or have a problem with your account, you may contact customer support, who can assist you in resolving the situation.

Which is better, traditional banking or cryptocurrency

This question’s answer will depend on your unique needs and preferences. Both cryptocurrencies and conventional banking systems have advantages and disadvantages, so the choice ultimately depends on which is more appropriate for your requirements. Cryptocurrency could be a better option for you if you value transparency, security, and decentralization. However, traditional banking may be a better choice if you value regulation and customer service and prefer the familiarity of those systems.

It is also important to remember that while cryptocurrencies provide a number of advantages, there are also hazards involved. Because they are so volatile, cryptocurrencies’ values can change drastically very quickly. Additionally, there is a chance of fraud and computer attacks, and because cryptocurrencies are unregulated, investors have no protection. Traditional banking systems, on the other hand, provide consistency, security, and regulation. Your valuables are safeguarded, and if you want assistance, you may contact customer service. Traditional banking systems can be sluggish and expensive to use, and they can also be vulnerable to fraud and cyberattacks.

Final reflections

With an alternate method of handling financial transactions, cryptocurrencies have challenged the conventional banking system. Traditional banking institutions are controlled, regulated, and provide customer service; cryptocurrency is decentralized, transparent, and secure. A person’s preference ultimately determines whether to utilize cryptocurrencies or conventional banking systems. When choosing between the two systems, it’s crucial to take your needs and preferences into account even though each has advantages and disadvantages of its own. Understanding the dangers and advantages of the system you select as well as taking action to safeguard your assets are crucial.

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Archives, Banking, Global Trade Daily

What Should Crypto Traders Be Ready for in 2021?

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There is still much to explore in the staying power of cryptocurrency. While its previous peak in 2017 made waves, it slightly went off the radar for a few years since then; until 2020. The shift towards the further digital transformation of business processes due to the global pandemic has renewed interest in it, peeking up to 63% gains in November according to InvestorPlace.

Decreases and Increases in Bitcoin Price

Experts point out that the volatility of cryptocurrency is comparable to the gold rush back in the 1850s. There’s really no telling what’s going to happen next. The main difference, however, is there was a lack of data sharing and analysis back then. Today, we have various platforms and tools to monitor and examine the current activity in real-time.

For instance, we know through CNBC updates that Bitcoin hit a record high of above $23,000 this December and that most of the investors are not solely made up of retail investors anymore but billionaires and other investing experts and pioneers like Stanley Druckenmiller and Paul Tudor Jones.

Viral Cryptocurrencies in 2020

Here is a quick look at the cryptos that ran viral this year:

Bitcoin (BTC). Bitcoin remains to be at the top of the game and is still rising. Investing analysts expect that it will still continue to dominate the market in the years to come.

Ethereum blockchain network’s native cryptocurrency probably still has a long way to go before it reaches Bitcoin’s level of recognition and reputation. However, we certainly believe that this standing won’t be for long given its current high demand. Its secret lies behind its flexible and widely customizable applications.

Ripple (XRP). Finally, there’s XRP, another leading cryptocurrency tied in second place with ETH. Again, it is currently in high demand thanks to its popularity amongst leading financial institutions.

Why Some Cryptos Succeed and Others Don’t

There are undoubtedly other cryptocurrencies that are on the rise much like the ones aforementioned. However, there is still a considerable number that fails. In fact, there are currently almost 2000 entries listed as “dead coins” at Coinopsy.

They have also listed some of the possible reasons behind their demise. Among the leading reasons are:

The lack of reputation. While there are benefits to having the support of “big finance”, this transition also has a major downside.

They can potentially cripple cryptocurrencies from humble beginnings, especially those lacking renowned developers to back them up.

The lack of resources. We’re not entirely surprised why bigger financial institutions are thriving. Sometimes, they simply have the resources to invest in the needed infrastructure to make a cryptocurrency operational.

Even basic services or financial products like a cryptocurrency loan will already need a lot of financial capital to launch. This is also the reason why a lot of cryptos are simply left abandoned or neglected.

The abundance of schemes. Finally, the lack of resources probably won’t be an issue if there are more investors to start with.

Unfortunately, there is still a (rather well-founded) stigma against cryptocurrencies. In fact, just last year there were executives running a Nevada-based firm who was charged for running an $11 million Ponzi scheme.

What We Can Expect in 2021

We are expecting a very good outlook next year, though.

The added interest and the support of big finance can pave the way for stricter regulations that will benefit both investors and developers (regardless of the scale).

It will also encourage more clients that can hopefully sustain even smaller institutions.

Classic Cryptos vs Prospect Tokens

Another factor that we also expect to change next year is people’s lack of understanding of these new forms of currency. For instance, cryptos, altcoins, and tokens are often used interchangeably despite their differences (that further adds to the confusion between these terms).

In a nutshell, cryptocurrency is digital currency while altcoins are independent cryptocurrencies that are recognized as an alternative to the classic currency, Bitcoin (hence the name). Lastly, tokens are an entirely different form of currency altogether. Think of a token as a unit of value within a certain organization that is also supported by a blockchain.

Considering tokens as an investment is a good idea if you want to maximize your earning potential. Think of them as similar to reward points that have various functions. For instance, they can be made to offer security, a form of ownership, or provide extra services.

Conclusion

Cryptocurrency is still in its infancy. Tokenization is even more so. We can still expect a lot of improvement in the system.

However, understanding how digital currencies work certainly holds a lot of insight into how the landscape of the global economy and investing will inevitably shift in the future. And who knows? Maybe this future might not be too far off. Maybe this significant shift happens in 2021.

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Lidia D. Staron is the Head of Content at OpenLoans.com. As a financial advisor and former financial planner at an insurance company, she knows that life is full of major events and challenges. She enjoys helping people navigate through important financial decisions while avoiding common mistakes.

mobile wallet
Archives, Banking, Global Trade Daily

Mobile Wallet Market: Top Emerging Trends Fostering the Industry Growth through 2026

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The mobile wallet market is set to register significant growth during the forecast period. Mobile wallets and mobile banking have gained a lot of importance in the past few years due to the increased internet penetration in various industries across the world. There are many benefits associated with using mobile wallets like convenience in making payments, higher safety while keeping all card-related information at one place. The youth population across the world prefers to use these wallets instead of carrying physical ones as they can have easier and safer access to their money.

The banking industry in developed regions like North America and Europe has undergone tremendous transformation with the introduction of mobile banking transactions. Banks and other financial institutions today are introducing their own mobile wallets to enhance customer experience and increase their customer base as well. They are targeting the millennial generation as they are the largest users of digital banking services.

Online shopping and other e-commerce activities have witnessed robust growth, especially during the COVID-19 pandemic. The lockdown restrictions imposed by various governments across the globe has led to increased dependence on these online platforms to make their daily purchases and carry out other transactions. This has led to a sharp spike in the demand for mobile wallets to help customers conduct their transactions with ease.

The trends that will foster global mobile wallet market size are listed below:

Open mobile wallets will witness hike in demand in Europe:

Europe mobile wallet market is reported to be worth a whopping $60 billion by the end of 2026. Open mobile wallets will see robust demand among the regional population. In fact, this segment is expected to grow at a CAGR of 15% during this time period. Open mobile wallet is a type of virtual wallet with the help of which one can make payments, withdraw money and conduct several other transactions.

Europe is known to have one of the most advanced digital banking infrastructures in the world. Banks in the region use state-of-the-art technologies to make everyday banking convenient for customers. The traditional banking system is facing some serious competition from fresh fintech start-ups, resulting in the introduction of open mobile wallets and other modern banking technologies to retain customers and expand their business.

European device manufacturers adopt mobile wallets:

Banks, tech companies, telecom operators and device manufacturers constitute the users of mobile wallets in Europe. Out of these, the device manufacturers will increasingly adopt mobile wallets in the region. This segment is reported to grow at 20% CAGR through 2026. One of the main reasons cited for this is the rapid increase in demand for smartphones among the young population.

This demand has skyrocketed to such an extent that countries like France, Italy and Germany had almost 150 million smartphone users in 2019 alone. It is even being reported that 80% of the transactions will be done via internet-backed devices by the year 2025. There are several smartphone manufacturers that are introducing mobile wallet technologies by creating in-built apps to cash in on the growing demand.

Scope of the U.K. mobile wallet market:

Among the several countries in Europe engaged in providing digital banking services, the U.K. is reported to showcase promising growth by 2026. The country even held a market share of more than 20% in 2019 and this figure is projected to go even higher in the future. One of the main reasons for this is the rising awareness among customers about the concept and benefits of mobile banking.

These include higher convenience and transparency in operations, a wide variety of channels to make payments from, and many others. Key factors have prompted several traditional banks to revamp their offerings and introduce user-friendly mobile wallets to increase their customer base.

The use of closed mobile wallets will increase in North America:

Mobile wallet market size in North America is reported to exceed a staggering $80 billion by 2026. The closed mobile wallet segment is projected to show robust growth trends in the coming years in the region and will grow at a CAGR of 20% between 2020-2026.

One of the major reasons for this is the security issues arising from conducting online cash transactions. The risk of cyber-attacks is always present, and a major chunk of the creators of mobile wallets are not well equipped to handle these attacks, leading to heavy financial losses for the company and loss of customer confidence as well. This is why more customers prefer to use closed mobile wallets to keep their money safe.

Banks will be the largest owners of mobile wallets in North America:

Banks are reported to be the largest owners of mobile wallets in North America. In fact, this segment will capture a growth rate of 15% by 2026. One of the major reasons for this is attributed to the rising focus of banks to enhance customer experience by introducing them to convenient and transparent banking procedures.

There are several banking and financial institutions that are replacing their traditional ways of doing business with digital processes. Banks and customers enjoy several benefits like improved customer relations, increase in customer base, exponential market growth and increased customer confidence. All these advantages have made several banks to offer mobile wallet services in North America.

Mobile wallet use in emerging economies of Asia Pacific:

Asia Pacific mobile wallet market size will be more than $200 billion by 2026. Economies like India, Singapore, South Korea and China are going through a period of economic transition. This has caused increased demand for digitization in these countries, leading to creation of advanced technologies in the banking sector to foster economic growth. Since the regional population has become quite aware about the benefits of using mobile wallets, there is a substantial growth being seen in their demand.

There are many banks in Asia Pacific that are increasing their funding on research and development processes to introduce their own mobile wallets to provide convenience to customers in their transactions. All these factors will accelerate demand for mobile wallets in Asia Pacific.

Increase in NFC technology use in Asia Pacific:

Among several technologies being incorporated while creating mobile wallets, the Near Field Communication (NFC) technology will attract a high demand among consumers in Asia Pacific. In fact, this technology is set to witness more than 20% growth rate by 2026. One of the main reasons for this is that mobile wallets that are equipped with NFC technology have additional security and prevent unauthorized data transfer from one device to the other.

It even creates an encrypted and secure channel of communication between a POS system and the device and has message authentication system in place. The security features of this technology can be customized according to end-user requirements as well, leading to increased demand for mobile wallets with NFC.

Some of the reputed companies engaged in providing mobile wallet services across the world are American Express Company, Amazon.com Inc., Mastercard Incorporated, PayPal Holdings Inc., Wells Fargo & Company, Tencent Holdings Ltd., Google LLC and some others.

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Archives, Global Trade Daily, News

Demand for Contactless Smart Card Materials to Remarkably Expand

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The market for smart card materials is expected to see tremendous potential in the coming years with the influx of various chip-based technologies given the increasing requirement to curb security risks across the financial and banking sectors.

The expansion of the retail, BFSI, and hospitality industries has also stirred the need for easy and quick operations along with cashless payments; which stands to be an ideal factor supporting the demand spurt for contactless smart cards.

Smart cards are witnessing higher demand in current times in the form of payment cards such as debit and credit cards, as well as electronic benefits transfer (EBT) cards which are used in the allotment of government benefits. They are configured for access control across government & educational institutions and are employed for patient identification and detailing in hospitals.

Smart card materials, like polyvinyl chloride, acrylonitrile butadiene styrene, and polycarbonate, among various others are mainly incorporated in the manufacturing of these cards, as they possess application-specific performance attributes. They are extensively used to resist impact, UV rays, and chemical substances for the longer shelf life of the cards.

Looking at these factors, it would be safe to declare that the global smart card materials market size could be worth a substantial remuneration by 2027.

PVC and ABS as major materials

The demand for polyvinyl chloride (PVC) smart card materials is anticipated to rise substantially as they can be regarded as the commonly used components in the card bodies. On account of lower prices, they are preferred in both contact and contactless cards. However, these materials offer depleting resistance to heat, UV, and bending stress, which results in the lost quality finish over time. They are also believed to exhibit a shorter life expectancy in comparison to other materials with the gradual peeling of the lamination and finishing layers.

Meanwhile, the acrylonitrile butadiene styrene (ABS) smart card materials will also see significant penetration on account of their higher resistance to heat and chemicals. As these materials possess optimum print quality-making attributes, they are suitable for graphics-heavy card applications like branded access cards and ID cards used in universities and high-end organizations.

The smart card materials market is currently being fueled by the prominence of the latest trends and developments made by the industry conglomerates. Given below is a gist of the trends that would potentially augment the smart card materials market strata in the years to come:

Growing preference for contactless cards

Contactless smart card materials are pegged to see a higher preference in the coming years. This is due to the extensive usage of these cards in securely managing, storing, and providing access to data while performing other on-card functions. Various international standards have been introduced to comply to contactless smart card technology and applications. Furthermore, contactless smart card materials are largely used in plastic cards, key fobs, watches, documents, and handheld devices.

Strong uses in retail and telecommunication

The application of smart card materials in the retail sector will gain prominence with the increasing need to store customer information, such as account data. This is because the transaction details fit in as a credit card while online good purchases are made. More to this, several retailers are also leveraging the advantages of smart cards to store points for specific customers as well as render necessary incentives to recurring clients.

Likewise, what makes smart card materials popular in telecommunication applications is their extensive role in the development of SIM or Subscriber Identity Module cards.

Developments by the ‘who’s who of the industry

Numerous innovations by leading industry participants as well as inorganic strategies, such as acquisitions, mergers, and partnerships are playing an important role in the development of smart card materials.

Apart from this, the firms are focused on extending their global presence across the world while catering to the increasing product demand, even in this stretching COVID-19 pandemic. For instance, in March 2021, IDEMIA, partnered with BBVA to roll out its first-ever payment card made of recycled PVC in Spain.

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Archives, Banking, Global Trade Daily

How are Digital Banking Facilities Helping During COVID-19 Pandemic?

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Digital banking reduces a person’s bank visits and manual work, along with saving time. The COVID-19 pandemic has accelerated the process of digital banking due to its numerous benefits. Smartphone usage has resulted in an additional surge in digital banking during the COVID-19 pandemic. Moreover, swift transactions, 24/7 banking facilities, and smooth mobile banking have flourished the digital banking industry.

If you ask your grandparents or any person old enough to have witnessed changes in technology, they will tell you about the endless hours spent in a bank just to get one task done. The story doesn’t end here though; efforts to keep track of all transaction receipts, cheques, passbook records, and pending payments seemed to be tiring in those days. Don’t you feel lucky now to be born in an era that has tremendous technological facilities and scope?

According to a report published by Research Dive, the global digital banking market is projected to cross the $1,702.4 billion mark by 2026, from a significant market share of $803.8 billion in 2018, and exhibit CAGR of 10.0% in the 2018-2026 forecast timeframe. The exponential rise of technological development is suggested to be the driving force of the digital banking market growth.

What is Digital Banking?

Ideally, banks are boring yet important part of our lives. Boring because one has to wait for long hours in queue just to get cash or transfer money. If you hit your rewind button, then, about 30 years ago, banking systems dealt with a lot of paperwork. Computers and the internet were not advanced enough to run quickly. A lot has changed to date but a huge push to go digital came from the COVID-19 pandemic. This outbreak changed the shape of the entire banking industry by making it go digital.

In simple terms, digital banking means converting all traditional banking services to online or digital mode. These services could be deposits, transfers, withdrawals, applying for various financial services, account handling, loan management, and bill payments. Digital banking eliminates the need for paperwork such as demand drafts, cashing cheques, or pay-in slips. One has the complete liberty to perform all banking activities 24/7 without literally going to the bank. Digital banking facilities are accessible with a stable internet connection and any electronic gadget like mobiles, laptops, or tabs.

Customers’ preference for banks with digital banking options forced several small and large banks to go digital. Banks didn’t expect that consumers would opt for online banking services at a faster pace, and hence creating digital banking provisions at an accelerated rate in all financial institutions for clients became a necessity. Deloitte’s 2019 banking and capital market outlook suggests that banks are trying to match consumers’ expectations regarding banking by turning towards digital banking services. Moreover, ‘create digital capability’ was cited by 28% of banks as their foremost initiative. Almost 50% of the banks are making digital banking their top priority.

What are the Benefits of Digital Banking during the COVID-19 Pandemic?

There is a significant advantage of fund or money transfer as digital banking skips the hassle of issuing demand drafts or cheques. One can simply transfer money from one account to the other without visiting a bank from the safety of their homes. This ensures a low risk of COVID-19 infection and the liberty of transactions anytime and anywhere. A few notable options for online money transfers are IMPS (Immediate Payment Service), RTGS (Real-Time Gross Settlement), and NEFT (National Electronic Fund Transfer).

Apart from this, one has the luxury of downloading e-bank statements at any point in time. These bank statements can be saved on mobile phones or laptops and can be accessed easily. This prevents the need to visit banks and take printed copies of statements, thus preventing unwanted contact during the COVID-19 pandemic. Moreover, the installation of ATM machines in every nook and corner is aiding people in withdrawing cash, be it day or night.

Bill payments can be smoothly managed with digital banking by simply logging in to your bank account. All kinds of bills such as electricity, phone, gas, and television can be completed via digital banking. Mostly, several banks have auto-debit facility to pay bills automatically whenever issued. For instance, HDFC bank has started a pre-paid mobile recharge facility as part of the digital banking initiative. In addition to this, one can open a fixed deposit account in seconds, invest in mutual funds, and apply for loans and various insurance policies as well.

The rise in smartphone usage and the availability of strong network connectivity has paved way for mobile banking systems. Since everyone nowadays possesses a smartphone, one can download apps for transaction purposes. Google Pay, Apple Pay, BHIM, SBI’s Yono, Payzapp and many more are gaining popularity amidst the COVID-19 outbreak. For transactions, one just has to scan a QR code or know the phone number of the beneficiary. Mobile banking apps are like mini-digital banks that include all banking services on the go.

If at all you have to stop a cheque process, then simply log in to your account and click on update cheque process. Furthermore, one can track credits and debits of the account as banks send SMS or e-mails of transactions. These notifications aid in preventing frauds and one must report them as quickly as possible to the bank authorities. Beyond this, digital banking displays transaction history and any pending payments as well.

The Future of Digital Banking

This title wouldn’t have existed 50 years ago due to a lack of technical knowledge, but today this heading seems relevant. The digital banking sector will continue to grow in the upcoming years with a few changes in technology. Several banks are already utilizing artificial intelligence for meeting the financial demands and expectations of customers. Today it is artificial intelligence; tomorrow, it will be something else that’ll augment digital banking to a greater height.

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Chaitali Avadhani is currently working in the content writing industry and has a Master’s degree in journalism and mass communications from Savitribai Phule Pune University. She is naturally attracted towards writing and is harboring experiences in the same field. Apart from this, she is a certified mountaineer and has passed out from Himalayan Mountaineering Institute, Darjeeling. Outside the office she is actively engaged in fitness activities such as running, cycling, and trekking.

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Archives, Banking, Global Trade Daily

The Advantages of Blockchain over Traditional Payments

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E-commerce is expected to surpass $4.6 trillion globally by 2022, with the seamless experience of e-wallets boosting its popularity. The simplicity of services like PayPal and Stripe has helped to improve customer experience while giving merchants easy access to new markets.

Blockchain-based solutions represent the next logical evolution of this trend. By eliminating middlemen, cross-border blockchain payments can result in even faster transfers while significantly reducing costs for both merchants and customers.

The cost in trust in traditional payments

In a traditional payment flow, three to five parties facilitate a single transaction. Together, they make up what is called the “payments stack.” These different parties work together to create trust. They check that transactions can be carried out and manage the transfer of funds. At the same time, this trust has a cost, which is ultimately borne by merchants. Each party within the payments stack takes a small cut of a transaction.

A typical transaction involves a payment processor checking with the issuing bank if a customer’s card can be charged. Once a transaction is validated, which occurs within a few milliseconds, a merchant has a guarantee that they will be paid at a later date. Over subsequent days, funds are transferred from the issuing bank to the acquiring bank.

The traditional stack involves numerous charges. Card networks and other parties can also raise their fees. As recently as September 2019, Visa added a fixed charge of 0.02 EUR for merchants using 3D-Secure, which is increasingly required under new PSD2 legislation.

Cash flow, holdbacks and fraud

Cost isn’t the only issue merchants face with the traditional stack. The speed of transactions can also be a problem. While validation takes place in milliseconds, it can be days before money finally arrives in a merchant’s bank. This is not ideal for small-to-medium-sized businesses that depend heavily on cash flow to pay suppliers and employers.

When we look beyond card payments, the picture is even worse for merchants. In the US, the average B2B payment cycle takes 34 days to complete, with 47% of invoices being paid late!

So-called “holdbacks” are another issue that has come to prominence recently. Here, acquirers keep a percentage of a merchant’s revenue as collateral in case a service is not provided, and refunds must be issued. Holdbacks have particularly affected the travel industry as a result of the COVID-19 pandemic. Most travel is booked long in advance, and given the uncertainty introduced by COVID-19, holdbacks have increased significantly. This has led to reduced cash flow for merchants – and ultimately to the insolvency of Thomas Cook and Flybe.

While traditional payments are geared towards creating trust, 78% of businesses reported attempted or actual B2B payments fraud during 2018, with international fraud rising 136% from 2017–2019. Although nearly half of payment fraud is related to pen-and-paper processes, digital methods and credit cards are not immune.

Faced with this situation, it is not surprising that more and more companies are turning to fintech to reduce payment costs, particularly when it comes to B2B payments, where 1.8% interchange fees for cards introduce excessive overhead.

The promise of blockchain

When we view the payments stack as a means of generating trust, the promise of blockchain becomes clear: eliminating the stack entirely. Customers send funds directly to merchants, with transactions being verified by a decentralized network.

Blockchain promises great improvements for merchants in terms of speed and cost. No middlemen are required to check whether funds can or cannot be sent – the network will reject a transaction if a wallet has an insufficient balance. Once a transaction is confirmed, funds arrive within minutes. The only cost is a network fee, paid by the customer themselves. 

What’s more, blockchain is ideal for protecting against fraud and encouraging transparency. The fundamental problem blockchain solves – the “double spending” problem – is directly related to preventing fraudulent transactions. Blockchain is designed to make it impossible to spend coins you do not have. Moreover, since blockchains are public ledgers, regulators can easily perform automated audits.

Blockchain is also a universal solution. While the US has ACH for bank transfers and the EU has SEPA, Bitcoin works the same everywhere. No bureaucracy is required to send funds overseas. Not only does this make designing integration protocols relatively simple, but it gives merchants easy access to new overseas markets.

A 2019 report from the European Payments Council indicated an increase of cryptocurrency use alongside the growth of e-commerce.

Blockchain has too many advantages over traditional payment solutions for merchants to ignore. By accepting cryptocurrency, merchants can tap into a growing multibillion-dollar market and get a taste of a cashless, borderless future.

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Kellogg Fairbank is Executive Sales Leader for Nash Link, a solution for merchants designed to make it as easy as possible to accept cryptocurrency from customers.

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LATEST: 2020 is Shifting the B2B Payments Scene

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B2B payments have historically been slow to adapt to automated payments but COVID may be the vehicle to forever change how business payments are processed. Josh Cyphers, President of Nvoicepay, a FLEETCOR company that transforms the way firms pay their suppliers, provides insights into the changes and trends businesses are experiencing in B2B and mobile payments and how it’s impacting businesses moving forward.

What are some of the big trends driving B2B payments?

Paper checks still reign supreme in B2B payments, but COVID has created a compelling event that is really pushing companies toward fully automating payments. This is a big shift. Over the course of the last 10 to 15 years, check use has been ticking down ever so slowly. According to the 2019 AFP Electronic Payments Survey Report, organizations made 42 percent of their supplier payments by check in 2019, down from 81 percent in 2004.

Now that accounts payable departments are working remotely, companies are trying to minimize the amount of manual work that requires trips to the office, or to employee’s homes to get them to sign checks. Suppliers are asking to be paid electronically because they get the money faster and they don’t have to go to the bank. It will be interesting to see the 2020 AFP report and see if the pandemic pushes organizations to finally give up checks.

The other thing that’s happening is an extreme focus on managing cash. Given the economic environment we’re in, a lot of companies are looking for ways to conserve cash. They’re looking at the timing of payments; extending payment terms to suppliers or delaying payments. With an automated solution, all of the payment approvals and workflow are online, and you have visibility into every payment as it moves through the system, and that gives you precision control over cash flow.

What are some innovations you’ve noticed in contactless payments lately?

In B2B payments, I would define contactless as not having to do manual work. Cloud-based software is enabling accounts payable departments to automate work they’ve previously had to do manually. That includes the handling of paper checks but also a lot of the work that goes into electronic payments as they’ve historically been done through banks. For example, if you want to do ACH payments, you have to pick up the phone or send out emails and collect suppliers’ banking information and probably manually key that into a system. For card payments, you have to phone or email to find out who will take a card payment, and then you might have to phone the supplier with the card number, and then they enter it into a terminal. There’s a surprising amount of manual work that has to be done to get the funds to move electronically through the banking system.

The cloud is what is enabling payment automation providers to transform that disjointed process, with all its manual touchpoints, into a single automated workflow.

 

The cloud also makes implementation very fast and easy, so automating payments is something that an organization can now accomplish in a matter of weeks.

How has COVID impacted mobile payments?

Having a cloud-based solution allows accounts payable professionals to make payments anytime, anywhere. But up until COVID, that kind of mobile capability was a nice to have, not a must-have for business payments. I’ve never in my finance career seen an AP team that was completely remote. With everyone in the office, mobile just wasn’t a consideration. The construction industry is one exception; in that industry, many of the people who approve payments are out in the field, so mobile capabilities are a real selling point for a payment solution. Now that AP teams have been out of the office, every industry is looking for payment solutions that allow them to work remotely as much as possible.

What do you see as the biggest future trend for mobile payments?

B2B payments are about ten times as big as consumer payments, yet the adoption of cloud-based solutions is still in the single digits. Given the size of the market, the adoption of mobile payments by businesses is a big trend in and of itself.

Mobile payments have changed consumer life by making payment so easy and convenient that you hardly have to think about it. That has had a huge impact on how we live our lives and has really sped up commerce and increased our options. When you think about that same kind of frictionless, mobile payment experience becoming widespread in the business world, which it inevitably will, I think it will fuel all kinds of innovation and change.

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Josh Cyphers is the President of Nvoicepay, a FLEETCOR Company. For the past 20 years, Josh has managed successful growth for a variety of companies, from start-ups to Fortune 100 companies. Prior to Nvoicepay, Josh held leadership roles at Microsoft, Nike, Fiserv, and several growth-stage technology companies. Josh is a lapsed CPA, and has a BS in Economics from Eastern Oregon University.