First we unbundled. Now, we’re rebundling. The latest evolution of banking is here and fintechs are ensuring it’s a better solution for businesses and consumers.

When fintech unbundled the banking industry in the 2010’s it signaled the start of change the likes of which the industry had arguably never seen. Rather than rely on the entrenched relationships they had with traditional incumbents, customers suddenly had a choice. A choice of products and ultimately, better value.

Like any major change in an industry, however, it became apparent that there were shortfalls in what this new way of banking could deliver. Unbundling meant customer service was disjointed and opportunities for brand loyalty for almost non-existent. 

It was time for the next phase of fintech. A new phase that built on lessons learned from unbundling that delivered its benefits, overcame the downsides and more. 

Enter: rebundling. 

The Problem With Unbundling

In the past, success as a fintech meant being a master of a single solution. A solution to a financial challenge that was better and cheaper than the solutions offered by a bank.

“Unbundling: the shift from department stores to boutiques.”

International Banker

By unbundling traditional bank services, fintechs could specialize in singular areas: savings or mobile payments, for instance. It was the very opposite of the jack-of-all-trades approach that banks had been operating under. Retail analogies abounded:

“For decades, the bank has been a ‘supermarket’ for our financial needs. The bank pays once to acquire you as a customer but can cross-sell multiple products over the course of your relationship. The hub of it all was the ‘free’ current account – one of the great customer acquisition tools of all time. Of the above services, the bank can give you one to three for ‘free’ and seek to make revenue from doing the other jobs. Because you spend a lot of time engaging with your bank, when you need something else related, they are the natural starting point.”

Deloitte

Unbundling allowed users to rethink this natural starting point. A proliferation of ‘compare’ websites helped, offering an easy way to look outside the traditional bank box and at fintech-driven options. While this had benefits for customers – and the fintechs taking advantage of the changes – it also had significant downsides. 

Huge competition meant the market was dispersed. The result was poor value proposition and an often disjointed customer experience. The convenience of a one-stop-shop was lost as was the opportunity for brands to develop a deep understanding of their customers and offer products and services accordingly. 

Banks and fintechs were at war. Collaboration was a dirty word. 

Now, thanks to an evolved and highly competitive market, fintechs are rebundling it all back up again and cooperation is back on the menu. This isn’t a movement back towards the original banking model, though. It’s a complete rethinking. 

The Next Phase: Rebundling

Unbundling may have had some downsides but overall it meant a realisation that change was possible. That better banking was possible, and that fintechs were the most likely vehicle for driving this change. 

“[Fintechs] have grown from a sideshow to the elephant in the room for banks. By engaging customers in their daily lives to solve specific financial needs with a distinctive experience while delivering back useful customer insights with advanced analytics, these digital companies have gained customers by the millions and a rapt audience of investors attracted to their compelling growth story.” 

S&P Global Research

And true to their entrepreneurial roots, fintechs are now leading the rebundling of the industry.

Instead of challenging singular verticals, fintechs have rebundled and are focussed on offering products and services that offer value as well as a seamless user experience and the benefits of brand loyalty. 

Shopping for a whole product suite (and more – we’ll delve into that later) in supermarket-style was originally popular for a reason. Convenience and one source of trust are powerful aspects of the decision-making process. There’s a strong case for this style of banking – but we now know that this doesn’t have to be in the form of a traditional bank. Evolved fintechs can offer all of this while still offering the type of innovation and value that drove the unbundling phase in the first place.

The benefits don’t just lie with customers though. 

Being a single source for multiple points of products and services means new, evolved fintechs can build a wealth of customer data. Data that they and the brands they partner with can use to gain insight into the financial behavior of their customers and make decisions accordingly. 

A rebundled future

The most competitive fintechs in the future will be those that offer the elements of a bank – loans, savings accounts etc. – as well as additional and complementary products and services. We’re entering a time in which users might sign up for a credit card through the same brand that might shop for energy deals, secure insurance or receive bespoke offers. 

Traditional banking is still on the rebundling journey, thanks to cooperation with startups as they optimize internal processes and customer journeys, launch joint products, and create an ecosystem of financial services around the bank. 

A study by Cornerstone Advisors found that nearly two-thirds of banks and credit unions had partnered with at least one fintech in the past three years. Of those who hadn’t, 37% planned to partner with a fintech in the next year.

Many agree though that the horse already has bolted. That the incumbents have been too slow to change and that the gap is now too wide for them to close. That naturally agile fintechs will outpace banking in this new phase of rebundling, a position that will be emphasized as digital-native generations like Gen Z reach decision-making age.  

One thing is for sure: it’s good news for customers. 

“The overriding driver in all of this innovation is how the experience can be improved (securely) for the customer.”

The Payments Association

Want to find out how rebundling allows Qorbis to deliver better banking? Contact us today.

We pride ourselves on cutting out the jargon and communicating in simple, easy-to-understand language. But fintech is a jargon-heavy sector - even the word fintech (that’s shorthand for financial technology) is jargon.

Get to grips with what everyone else is really saying with our insider’s glossary - updated regularly.

Application Programming Interface (API). A set of protocols that facilitates communication between two applications. APIs allow the creation of applications that access data from and the features of third parties.

API economy. The ecosystem of APIs. In an API economy, businesses leverage and monetize APIs to create new services, integrate with partners, and enhance their offerings.

Banking as a Service (BaaS). A model that allows a licensed provider to integrate financial products and services into a non-financial service brand’s own environment. This is done using APIs and a white-labeled front end.

Bank Identification Number (BIN). Also referred to as an Issuer Identification Number (IIN). This is the initial four to six numbers on a payment card that identifies the institution that issues the card. BINs are vital to the process of matching transactions to the issuer of the charge card.

Blockchain. A shared database or ledger that collects information into digital blocks. This decentralized approach means the sharing of these blocks of information is easier and cheaper.

Buy Now, Pay Later (BNPL). A short-term financing product that allows consumers to make purchases and pay for them later. BNPL is one of the fastest-growing digital financial products. This is in part due to the speed of approval, term flexibility, low-to-no-interest, and no credit impact if paid on time.

Cross-border payments. Transactions involving individuals, banks, companies, and other entities in which the payee and the recipient operate from different countries. These could be wholesale, retail, or recurring transactions.

CX. Shorthand for customer experience. CX refers to a customer’s entire experience of a brand. It includes the journey from marketing to post-sales service and everything in between.

Cybersecurity. The practice of protecting computer systems, networks, and data from unauthorized access, attacks, or damage.

Digital identity. The electronic representation of an individual's personal information. This is used for authentication, verification, and access to online services.

Digital wallet. An electronic device or software that allows individuals to store, manage, and make electronic transactions. Examples include Apple Pay, Google Pay, and PayPal.

Electronic Funds Transfer (eFt). Any transfer of funds initiated electronically. This includes card payments, cash machine/ATM withdrawals, point-of-sale (Pos), and debit transfers without requiring the intervention of bank staff.

Financial inclusion. The effort to provide access to affordable and quality financial services to all. Some individuals and businesses who are traditionally underserved or excluded from the mainstream financial system benefit most from financial inclusion.

Fintech as a Service (FaaS). When any company uses fintech APIs to embed financial capabilities into their existing applications, products and services. Sound familiar? FaaS is pretty much interchangeable with BaaS, but is fast becoming the preferable term in this fast-growing industry.

Know Your Customer (KYC). Standards used within the financial services industry to protect all parties from risk. This is done through the mandatory verification and authentication of a customer’s identity. All legal and financial institutions must validate their customers’ Proof of Identity (POI) and Proof of Address (POA) to prevent illegal or fraudulent activities.

Metaverse. The next iteration of the Internet. The metaverse is a digital, immersive 3D world that mimics aspects of the physical world using technologies like virtual reality (VR). Research suggests that 25% of people will spend at least one hour a day in a metaverse for work, shopping, education, social media and/or entertainment by 2026.

Open banking. The practice of sharing customer financial information securely. This information is shared with third-party financial service providers through the use of application programming interfaces (APIs).

Payment gateway. An interface between a merchant and the acquirer that allows the acceptance of credit/debit transactions. The technology behind a payment gateway validates card details, ensures sufficient funds, and then enables merchants to get paid.

Payment Card Industry Data Security Standard (PCI DSS). A set of standards that protect consumers’ sensitive data. It is applicable to organizations that store/process/transmit cardholder data either as clear or in an encrypted manner.

Point-to-Point Encryption (P2P). Payment encryption. Specifically, customer account data is encrypted at the swipe and decrypted at either a retailer’s switch, a payment gateway, or by the processor depending on the scheme. 

OS financing. Also referred to as point-of-sale financing. This is an increasingly popular style of financial product that offers customers flexible, pay-over-time installment options when completing a sale via e-commerce. BNPL is an example of POS financing. 

PSD2. A European regulation for electronic payment services that aims to make payments more secure, boost innovation, and help banking services adapt to new technologies. 

Regulated sandbox/Regulatory sandbox. A controlled environment provided by regulatory authorities. This environment allows fintech startups to test and experiment with innovative products and services under relaxed regulatory conditions.

Strong Customer Authentication (SCA). The use of two authentication factors for bank operations that were not previously required. This includes payments and access to accounts online or via apps. It also includes a stricter definition of what counts as an authentication factor.

Tokenization. The process of replacing cardholder data with a random string of characters called Tokens to move sensitive data. This minimizes the threat of fraud or identity theft.

Virtual card. A payment card that exists digitally, rather than as a plastic, physical card. Virtual versions still offers users the same capabilities, though. This includes contactless payments via a smartphone.

White-Label platform. Also referred to as a cleanskin platform. A software platform that can be rebranded by a third party, allowing a bank or lender to put their stamp on a platform. These platforms are generally developed by a third party (often a fintech).

Remember, this glossary provides a brief overview of common terms. There may be more detailed definitions and variations within each term.

Regulatory and compliance measures in digital banking have become increasingly important as technology continues to transform the finance and banking industry. With the rise of online banking, mobile payments, and financial technology (fintech) innovations, regulatory bodies are faced with a crucial task: to adapt and develop frameworks to address the unique challenges and risks associated with digital financial services.

This framework serves as the foundation for maintaining a secure and transparent financial system, protecting businesses and consumers, and preventing illicit activities.  

Regulations such as the Sarbanes-Oxley Act, Dodd-Frank Act, and Bank Secrecy Act are in place to prevent fraud, money laundering, and illegal activities. Governments and regulatory bodies put these in place to ensure fair and ethical practices, protect the interests of consumers, and maintain the stability and integrity of the financial system.  

This article explores the main pillars of regulatory and compliance measures in American banking and finance, with a focus on the evolving fintech and digital banking sectors. 

Cybersecurity and Data Protection 

Digital banking brings with it a heightened need for robust cybersecurity measures and data protection. Regulatory agencies, such as the Federal Financial Institutions Examination Council (FFIEC) and the Office of the Comptroller of the Currency (OCC), have established guidelines and requirements for financial institutions. First and foremost this is to safeguard customer data and protect against cyber threats. Compliance measures, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), provide additional frameworks for ensuring the privacy and security of customer information. 

Digital Identity Verification and Authentication 

As digital banking expands, the challenge of verifying the identity of customers and ensuring secure authentication becomes crucial. Regulatory bodies are working on establishing standards and guidelines for digital identity verification processes, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. These measures aim to prevent identity theft, fraud, and money laundering by implementing robust identity verification procedures and multi-factor authentication protocols. 

Regulatory Sandboxes and Innovation 

To foster innovation in the digital banking space while maintaining regulatory oversight, some jurisdictions have introduced regulatory sandboxes. These sandboxes allow fintech companies and startups to test new products and services in a controlled environment, while regulatory authorities monitor their operations. This approach encourages innovation, facilitates collaboration between regulators and industry players, and helps strike a balance between innovation and compliance. 

Consumer Protection and Dispute Resolution 

In the digital banking realm, consumer protection is of paramount importance. Regulatory bodies, such as the Consumer Financial Protection Bureau (CFPB), enforce regulations that ensure fair practices, transparency, and effective dispute-resolution mechanisms. These measures help protect consumers from fraudulent activities, unauthorized transactions, and unfair practices in digital financial services. 

Cross-Border Regulations 

With the global nature of digital banking services, cross-border regulatory cooperation is vital. Regulatory bodies across different jurisdictions collaborate to establish frameworks that facilitate international transactions, mitigate risks associated with money laundering and terrorist financing, and promote regulatory harmonization. Initiatives such as the Financial Action Task Force (FATF) and the Basel Committee on Banking Supervision work towards aligning international standards and promoting consistency in regulatory approaches. 

The financial industry is extremely highly regulated in the USA and globally. As digital banking continues to reshape the finance and banking industry, regulatory and compliance measures must keep pace with technological advancements. By addressing cybersecurity risks, enhancing data protection, establishing identity verification protocols, fostering innovation through regulatory sandboxes, ensuring consumer protection, and facilitating cross-border cooperation, regulators play a crucial role in creating a secure and trustworthy digital banking environment. Striking the right balance between innovation and compliance is key to unlocking the full potential of digital banking while safeguarding the interests of consumers and maintaining the stability of the financial system. 

Qorbis and its partners adhere to the highest standards of regulatory and compliance measures so you can be confident your money is in safe hands. Talk to us about how the FDIC protects your Qorbis account, today. 

A wealth of actionable insights into customer behavior are increasingly the common factor among the most successful brands

The transition to digital has meant that the amount of customer data available to brands has increased exponentially in a short time.

But huge volumes of raw data aren’t helpful to anyone. Instead, brands are turning to data analytics to break down vast amounts of information into bite-size pieces for analysis. This more-manageable data then becomes actionable.

The result? In-depth insights into consumer behavior, the ability to predict future outcomes of campaigns, and more accurate business decision-making.

Successfully leveraging data analytics for competitive advantage is a long-term game. Rather than focussing on short-term conversions, the most successful companies use data analytics to establish a connection with customers that has the ability to stand the test of time.

The importance of customer connection

A customer’s experience with a brand throughout their buying journey is one of the biggest determining factors in their repeat business.

80%

Of customers say that the experience a company provides is as essential to them as a brand’s products or services.

The good news is that assessing key customer service metrics to understand a customer base and then using these insights to improve customer retention, deliver on or exceed expectations and proactively identify opportunities for improvement are all possible with data analytics.

Forrester previously predicted that organizations either need to learn to leverage customer insights and quantify the business impact of customer experience (CX) initiatives or find themselves in a vulnerable position. Another report from Adobe revealed that companies considered “CX leaders” were three times as likely to have exceeded their business goals. While many forecasts are little more than an alternate reality, Forrester, Adobe, and others are spot on about CX. Customer experience is a competitive advantage in every industry, from finance and insurance to healthcare, logistics, and retail.

35%

Of ‘high performing’ organizations worldwide rate themselves as effective users of analytics.

McKinsey

How Data Drives CX

Data analytics are key to ensuring the type of personalized and seamless experience customers expect - at scale, without friction, and with the human element intact.

“With analytics, organizations can develop detailed intelligence about their customer needs. With analytics, organizations can process feedback from multiple sources at scale. With analytics, organizations can tailor offerings specific to customer needs. With analytics, organizations can improve customer satisfaction.”

According to MIT.

Investing in smart CX tools powered by AI and machine learning is booming as brands look to understand customers - through how they shop and what they buy - to improve the customer experience.

Data analytics like those powered by BaaS models allow brands to review multiple sets of data points in real-time that help them understand their customers in context. For example, AI-enabled analytics tools can reveal why some products are more popular with millennials vs. baby boomers, or to identify leaks in the sales funnel.

Data’s role in creating a smooth customer journey might include:

• Tracking why visitors don’t go on to make a purchase
• Identifying gaps in user experience.
• Understanding why people connect with a brand the way they do.
• Identifying similarities between repeat and high-value customers.
• Identifying similarities new visitors have.
• Highlighting what messaging resonates most.
• Pinpointing the best ways to communicate with your customers.
• Highlighting speedbumps in a customer’s journey, including specific pain points and challenges.

Big Data = Big Benefits

Data that is insightful enough to inform you and your team of practical strategies to boost your business is invaluable. Arguably the biggest benefit to your bottom line comes from the ability to personalize a customer’s experience.

According to McKinsey, personalization can increase revenue by 5 to 15% and marketing efficiency by 10 to 30%. Data analytics allows brands to use online behavior insights to create customized landing pages, email campaigns, and offers, and to serve up personalized recommendations to drive more purchases. For instance, checkout abandonment emails or messages highlighting an offer or event specific to the recipient's geographic area are going to feel much more relevant and engaging.

6x

Studies have found that personalized marketing emails result in six times as many transactions as non-personalized messages.

A recent Forbes Magazine article reports that market leaders share a common approach to using data to improve customer experience: they focus on “personalization at scale starting from customer touchpoints back.” Great customer-centric brands recognize that when employees and systems know everything about every customer interaction over time, they can provide better service and support.

Striking the right CX balance

Such is the quest for the most optimal customer experience that the relationship between CX and financial gains can hit a point of diminishing returns.

For example, companies often overspend on efforts to attract or delight customers, which typically costs more than improving retention rates or taking advantage of upselling and cross-selling opportunities.

Data analytics helps to find a balance by assisting brands in making sure they allocate their resources where they will have the most significant impact. McKinsey reports that effective use of data analytics can improve customer satisfaction (with an increase of 10 to 20 percent) while unlocking a lower cost to serve (cost savings of 20 to 30 percent in some cases). For these reasons, companies are seeking to step up their customer service offerings to meet the heightened expectations of customers.

Take Amazon, for example. Those constant price changes on their website are not random, nor are they merely an algorithm set to try different prices at different times with no informational underpinning. Instead, those price changes are heavily data-driven and personalized, enticing customers to purchase items they have looked at in the past but not bought, or to consider new items that match their previous purchases on the site. By leveraging big data to analyze customer interest, competitor prices, and inventory, Amazon can price its products in ways that attract and retain customers.

There’s no doubt - knowledge is power. Data analytics provides valuable insight into customers that brands can use to boost a wide range of metrics - including their bottom line.

Customer success drives business success. Talk to us today about how we can help you know more and deliver more.

Better payments benefit everyone in the value chain. Meeting customer expectations for a seamless experience is important now - but will be a non-negotiable for successful brands in the near future…

In the past brands, were constrained by what they could practically offer customers. Now the internet, mobile, cloud, and financial technology have combined to open up a new wave of possibilities for companies to serve customers better.

First and foremost in the delivery of the ultimate in CX (customer experience) is embedded finance - and it’s not just end-users who benefit.

The freedom of friction-free payments

The convenience of embedded finance - in particular, embedded payments - is invaluable to customers. Instead of having to find their wallet or credit card, a customer can just tap a few buttons and the purchase is complete.

A 2022 study published by the Federal Reserve Bank of San Francisco noted that in-app embedded payments increased as a percentage of total consumer purchases from 11% in 2019 to 15% in 2020, to 29% in 2021. Conversely, 7% of abandoned online carts are due to not having a credit card handy or the same credit card accepted by the merchant.

A smoother buying journey means less shopping cart abandonment and customer dissatisfaction, resulting in a win for businesses via increased revenue and customer loyalty.

The ultimate goal of embedded finance is to make it easier for consumers to access financial services in a seamless and convenient way. For example, a brand might offer its customers the option to pay for their purchases using a digital wallet or a mobile payment app, or a technology platform might offer its users access to financial tools such as budgeting and investment tracking.

“Embedded finance is the new ‘norm’ in banking.”

Finance Digest

Changing demographics and behavior, increasing internet penetration, technological advances, and growing trust in the digital ecosystem are helping make embedded finance the norm among consumers.

New research reveals the size of the embedded finance market was $43 billion in 2021, with growth set to skyrocket to $138 billion by 2026.

215%

The CAGR of the embedded finance market from 2021 to 2026.

It’s not just the B2C market seeing this transformation, though. KPMG flags the B2B embedded finance sector as being on the move, in order to “facilitate trade flows and supply chain efficiency”.

Long after B2C moved online, B2C transactions are finally digitizing at speed. Over half of business buyers already rely on web stores for frequent purchases, so it’s safe to say that there is set to be a high increase in merchants and marketplaces offering these seamless options alongside more traditional payment methods like credit cards and Direct Debit.

Benefits for businesses

When a brand embeds financial services into its own products, the key benefits are threefold:

• An additional source of revenue: Via a share of the income from the financial products sold to customers within their brand.
• Competitive advantage and customer trustworthiness: Delivering on customer demand (and indeed, expectation) for easy, secure, and efficient online payment options is more attractive to customers than a business that doesn’t provide these options.
• Higher order value: Flexible payment options like BNPL (Buy Now Pay Later) reduce barriers to purchase, resulting in customers buying more high-value products than they usually would.

88% of companies that offered some type of embedded finance reported increased engagement, and 85% said it helped them acquire new customers.

These figures are of particular importance because happy customers are engaged customers. The more emotionally invested a customer is, the stronger their connection with a brand will be and so brand loyalty and an engaged community are established.

"Online retailers can leverage embedded finance to tap into contextual financial services that offer customised, real-time insights about how each customer interacts with their brand. By creating more personalised touchpoints, online retailers can connect with customers through specific micro-moments during different points of their payment journey.”

David Feuer, chief product officer at Galileo Financial Technologies

The Fintech Times

Innovation amidst challenging economic times

2022 saw embedded finance move into the mainstream. While 2023 is predicted by many to be the year it moves into the spotlight to power consumer-facing applications, it has already revolutionized core payments operations.

How? In short: more revenue, less churn. By embedding payments, businesses of all sizes can provide seamless cash flow that’s hard to replicate by a third party. And as a potential recession looms, this type of ‘bread and butter’ embedded finance use case is expected to see huge uptake. After all, dramatically improving the efficiency of back-end processes will deliver significant savings and productivity benefits for fintechs and brands - which is more important than ever right now.

Unlocking the next wave of growth

Businesses ranging from retailers and travel to software companies are working to tailor their payment services for increased accessibility. As a result, embedded finance will become firmly interwoven into more industries, acknowledging e-commerce as the driving force in business growth and revenue streams.

The next step in payment innovation also lends itself to the metaverse, and how the digital world can help shape how financial services offer their products.

The more immediate future is likely to see the rise of embedded finance within the world of social media. Many platforms have shown an interest in plugging in their own payment services to embed a seamless end-to-end experience, something which Instagram has trialed with its ‘Shop’ function.

Elon Musk has also recently filed papers to the US Treasury for Twitter to become a financial service.

Embedded finance is not just for the Twitters of the world, however - businesses of any size can benefit from seamless payment functionality.

Qorbis delivers an embedded finance experience that's fast, flexible, compliant and future-proofed - for big and small businesses. Ask us how.

Digital transformation is in full swing and yet - people still want people. Meeting the challenge of delivering an online experience that matches an in-person one might rely on the very opposite of the problem it's solving: technology.

As bank branches across the country - and indeed, across the globe - close their doors, it would be fair to assume that we’ve evolved beyond the days of banking requiring a personal element.

In the place of brick-and-mortar branches, digital banking platforms have evolved to reach customers in entirely remote environments and ensure that customers could receive the same level of service as when they were able to visit a bank branch.

The convenience and ease of digital banking cannot be underestimated, and yet, people still want people.

But that doesn’t mean it’s one without the other.

“It's actually not a case of human vs digital. It's about human and digital. Humans need digital enablement to deliver successful, personalized experiences, meanwhile, digital tools and techniques augment the human-delivered customer service.”

UK Finance

The key is to meet somewhere in the middle, with all the perks of digitization and a personal touch. To succeed, banking providers must be able to offer the same high level of service digitally to a customer as they would receive in person. So how best to navigate this tightrope?

A Balancing Act

“A strong digital strategy requires a human element.”

Customer experience experts Majorel. 

The appetite for a human touch amidst the plethora of data, apps, and APIs is still strong. Without this personal element, the traditionally commoditized banking and financial service industries risk losing out on the benefits of customer trust and loyalty.

A digital banking experience that drives conversion, creates loyalty, and improves brand reputation needs to embrace the best practices in technology and humanization.

It’s this position that’s driving the development of the metaverse, a reality designed to combine the best of digital-physical worlds. In the future, this could pose a real solution to the challenge of giving banking a human touch - but it’s one that’s still years away from actuality. In the meantime, the most successful players are embracing personalization.

70%+

Of consumers from all age demographics said personalization was “highly important” to their banking experience.

Another study found similarly.

72%

Of respondents said they expect the businesses they buy from to recognize them as individuals and know their interests.

Analytics-powered digital solutions enable intelligent personalization based on context. For example location data that offers a “Good Morning!” or “Good Afternoon!” prompt depending on the time zone where the customer is located.

“Find ways to be proactive and show them that you care about their financial well-being. Celebrate with your customers (e.g., birthdays, anniversaries, financial accomplishments) – think of it as digital confetti.”

Analytic decision-making platform FICO

Data derived from the technology that powers digital banking can bring back the human element that used to be part of local banking relationships. Collecting, analyzing, and generating actionable insights with machine learning and artificial intelligence (AI) from that data can give rise to alerts and notifications that help consumers on their self-serviced financial journeys.

“Using personalization data is central to building humanized digital banking CX that extends across an entire experience from app to chat to phone.”

The Financial Brand

But as with most business practices, there are potential downsides to personalization. Even a single irrelevant message can torpedo consumers’ faith in how well you know them, leading to decreased conversions and tanking loyalty.

Leveraging Data to Delight - Not (Necessarily) Sell

Customers want brands to meet them where they are, know their tastes, give them targeted offers and check in to make sure they’ve been fully taken care of.

76%

Of customers are more likely to purchase if their experience is personalized.

Use the data used to personalize with caution, though, experts warn. Personalization is about making intelligent and meaningful offers and isn't necessarily about selling products. It’s a long game - and making customers feel comfortable and valued during every interaction is the key to a competitive advantage.

When asked to define personalization, consumers associate it with positive experiences of being made to feel special.

“They respond positively when brands demonstrate their investment in the relationship, not just the transaction. Thoughtful touch points such as checking in post-purchase, sending a how-to video or asking consumers to write a review generate positive brand perceptions.”

McKinsey

The Quest for the Best Support

Advisory firm Genpact recently released an analysis indicating that consumers’ continuing preference for traditional channels continues in the Age of the App because this is still where they receive the best customer support and personalized advice.

“If the same quality of service were available through digital channels,” the report states, “consumers wouldn’t choose to travel to a branch or phone a customer service center.”

Far from suggesting that digital alternatives will never entirely replace traditional banking incumbents though, the firm maintains that it’s not a matter of forgoing digital but instead, supercharging its abilities.

“It’s not going to be digital only and it’s not going to be human only.”

Raja Bose, consulting and transformation services leader, Genpact.

Bose thinks digital channels can begin to mix in some of the advantages of human interaction by blending human-machine collaboration through artificial intelligence.

The human becomes augmented by the technology, but not wholly replaced, he explains, drawing a parallel with GPS service. This technology tells a human how to get from point A to point B - but the human still does the driving (for now).

Want to meet the people behind the platform? Our team is available when you are to answer any of your questions - chat to us.

Traditional cross-border payment methods are rife with pain points, with B2B solutions lagging behind innovations in the B2C space. Not for long, though - new entrants are challenging incumbents with innovative business models that offer fast, secure, more efficient, and cost-effective cross-border payments.

Money is zipping across the world like never before. Borderless e-commerce, cross-border B2C payments, and web-centered businesses are all contributing to a boom in cross-border payments.

This type of digital jet-setting is far trickier than standard domestic payments, though. Cross-border payments lag domestic ones in terms of cost, speed, access, and transparency. Some cross-border payments can take several days and can cost up to 10 times more than a domestic payment.

It’s no surprise then that the demand for fast, secure, cost-effective, and efficient cross-border payments is an opportunity that fintechs have seized. While there are plenty of choices when it comes to solutions within the B2B sector, there are distinctly fewer within a B2C environment.

The value of cross-border payments is estimated to increase from almost $150 trillion in 2017 to over $250 trillion by 2027, equating to a rise of over $100 trillion in just 10 years. B2C represents a significant chunk of this. The global cross-border B2C e-commerce market was valued at $794 million in 2021, with that figure forecast to grow at a compound annual growth rate of 25.1% to $3,042 million by 2028.

$3,042 million

The forecasted value of the global cross-border B2C e-commerce market by 2028.

For businesses looking to expand into global markets, cross-border payments matter. Friction in the form of time delays or currency confusion put serious dampeners on business success and customer loyalty. Easing these common pain points with B2B payment solutions that include features like competitive, real-time rates and corporate and virtual payment cards is essential.

How do cross-border payments work?

“International banks provide accounts for foreign counterparts and have their own accounts with their foreign counterparts, which enable banks to make payments in foreign currency. The funds are not sent across borders; instead, accounts are credited in one jurisdiction and debited the corresponding amount in the other.”

Bank of England

Cross-border payments are financial transactions in which the sender and recipient are in different countries. Fintechs and money transfer agents use the interbank network detailed above to process these payments for businesses and individuals.

They’re not simple, though, because of a variety of reasons.

Cross-border payments: the downsides

The traditional payment process leaves incumbent banks that are on the receiving end of a transaction with little predictability of when payment will arrive or what the amount will be after currency exchange calculations and fees. Compliance and anti-money laundering regulations can result in transaction delays, which only grows uncertainty in an already uncertain process.

It’s not all doom and gloom though…

New solutions driving global growth

Increasing demand is driving innovation. Innovation within fintech that’s seeing a new wave of cross-border payment providers emerge, including within a B2B space.

By harnessing advancements in AI, APIs, blockchain, cloud, and robotic process automation, new payment providers are helping businesses send and receive cross-border payments rapidly, cheaply, transparently, seamlessly, and securely.

This transformation is set to have a major impact on not only corporates but small- to medium-sized businesses (SMEs), too. Traditionally, SMEs have comprised a lower share of cross-border payments than their share of GDP would indicate. But this is expected to change as their access to affordable international payments improves.

APIs: providing access to better rates

The key to new cross-border solutions is APIs (Application Programming Interfaces). Fintech platforms that use cross-border payment APIs help businesses scale their capabilities quicker, by streamlining their payment processes and ultimately, growing revenue.

Under this model, users can securely send, receive, manage, and spend dozens of currencies, with better exchange rates, more transparent fees, and faster delivery times than traditional high street banks.

Instead of using the traditional SWIFT network, cross-border APIs allow access and visibility to competitive FX rates in real time. This means payments with better exchange rates than banks, as well as access to multi-currency account solutions to send, spend, and get paid as if in-country, from all over the world.

Improved transparency

New cross-border payment solutions also offer an increased amount of data related to transactions, allowing faster, more seamless settlement.

In traditional cross-border payments, much of the associated data does not ultimately make it through to the beneficiary. Without this information, bank clients struggle to reconcile payments efficiently.

The wealth of data that accompanies payments throughout their lifecycle within a digital platform means being one step closer to the ultimate goal of frictionless, straight-through reconciliation.

This is in part due to the growing adoption of ISO 20022, which is an international standard for relaying electronic messages between financial institutions that enables up to 10 times more data to be sent than previously.

International payments fuel the cross-border trade and investment that’s key to the emergence of today’s global economy. Friction-free cross-border transactions are crucial for businesses to enjoy the commercial benefits associated with connection to the global economy - whether they’re large corporates or SMEs.

Qorbis gives you access to major payment schemes for easy, secure cross-border payments. Join us today and enjoy borderless banking.

Digitally native Generation Z makes up 20% of the American population. Adapting to their preferences will be a priority for brands looking to capture this lucrative market.

A new generation is officially here. The oldest of Generation Z is now coming of age and will soon surpass Millennials as the most populous generation on earth.

With sheer numbers comes sheer buying power. Already strong, this buying power will only grow as Gen Z ages into their highest-earning years. Ready to capture this market are businesses that not only understand this unique cohort but are making changes to best meet their preferences. So who is Gen Z?

Members of Gen Z—loosely, people born from 1995 to 2010—are true digital natives: from earliest youth, they have been exposed to the internet, to social networks, and to mobile systems. That context has produced a hypercognitive generation very comfortable with collecting and cross-referencing many sources of information and with integrating virtual and offline experiences.”

McKinsey

This is a group whose experience of the Internet has shaped them more thoroughly than anyone else before them. They are shunning Google, and instead searching via TikTok. The average Gen Z got their first smartphone just before their 12th birthday. They communicate primarily through social media and texts and spend as much time on their phones as older generations do watching television.

It’s clear this is a group of people for who e-commerce - and even more so, m-commerce (mobile-commerce) - is second nature. They have grown up in an environment where almost everything can be accomplished with a finger swipe on a smartphone. And this includes payments.

Gen Z: digitally-savvy and debt-aware

Gen Z expects payments to be embedded, immediate - and almost entirely via smartphone. Whether it’s buying a t-shirt, paying for transport, ordering and paying for food, booking and paying for holidays and making investments - Gen Z wants to do it with a couple of taps on their phones.

This propensity for digital finance is also reflected in their choice of banks. Both Gen Z and Millenials are more likely to use digital banks than older generations.

While just 3% of those aged 55-64 use digital banking according to recent research from Oliver Wyman, more than 20% of those aged 18-24 did - with that percentage expected to grow significantly.

Why? Because digital banks not only offered the type of embedded finance experience Gen Z expects but also offer “creative payment solutions that are attractive to younger customers”.

These ‘creative’ solutions don't necessarily extend to credit cards, though, with this generation having a much lower tendency to use them than every other generation before them.

Less than half of Gen Z consumers have a credit card — compared to 61% of Millennials, 65% of Gen X, and 81% of Baby Boomers. Even among Gen Z consumers that do use a credit card, 53% pay off the total balance every month.

MX

Merchants must think mobile-first

With retail sales from m-commerce in the United States expected to surpass the 710 billion dollar mark by 2025, mobile wallets are no longer optional for institutions looking to appeal to Gen Z money habits.

• 95% of mobile phones owned by Gen Z and Gen Y in the US are smartphones.
•  78% of Gen Z consumers say they have connected money-related apps to their financial accounts.

Businesses most successful in catering to this cohort will not only have efficiently designed mobile websites and social commerce channels but also embedded payment options. This doesn’t necessarily mean businesses will be required to go it alone though, with Gen Z highly responsive to third-party partnerships when it comes to payment transactions. In fact, more than 75% of Gen Z say they’re comfortable using a tech company to facilitate online payments.

Alternative payment options

Seamless access to embedded mobile payments may not be enough to win over Gen Z, however. They also show strong preferences for a choice of alternate payment options such as BNPL solutions and cryptocurrency.

A growing contingent of networks, big tech, and e-commerce merchants is encouraging cryptocurrency as a form of payment in response to studies that have found that almost half of Gen Zers and Millenials have owned or currently own cryptocurrency.

Buy now, pay later (BNPL) finance is also expected to grow in response to Gen Z preferences. New research shows that nearly 60% of consumers across the board say they prefer buy now, pay later over credit cards, with this preference especially pronounced among younger consumers.

The takeaway for businesses

Crucial to capturing the highly lucrative Gen Z market is offering the most relevant forms of payment to attract this next generation of buyers. A 2022 study showed that almost half of the customers overall — 51% of Millennials and 48% of Gen Zers — will abandon a purchase if their favourite payment method isn’t available.

For Gen Z, that means the ease of a few clicks via mobile - possible with the type of solutions offered by digital encumbents like Qorbis.

We're committed to future-proofing your banking and finance. Find out how your business can stay ahead of the curve with Qorbis' scalable solutions that grow with you and your customers.