Touchless UI in Insurance

This is a guest post written by KV Dipu, President & Head of Operations, Communities & Customer Service at Bajaj Allianz General Insurance Company.


COVID-19 has forced organizations to embark on new journeys in various customer facing domains and the fintech/financial services sector is no exception. Since it has become imperative for organizations to consider the health and safety of customers and employees, touchless technologies are gaining traction across the spectrum to avoid physical contact. While touchless technologies are not new – smart homes, smart health, augmented and virtual reality games, smart cars, etc. are all part of our lives – they have gained a new lease of life and are now being adopted at scale.

There are numerous ways in which human communication occurs; we connect with gestures, speech, and touch along with the choice to switch amongst them seamlessly. However, the human-computer interaction is different and complicated. Touchless UI is a classic approach to control and speak with your gadget without typing or touching the screen to carry out a task. In the “Home insurance” segment, where IoT devices are used for safety along with insurance to cover during theft or burglary, the gestures control becomes an essential tool to protect from intruders. The gesture recognition system can differentiate between people and can avoid unauthorized access. However, it relies on various lighting conditions as the cameras require a desirable ambience.

Gesture vs. voice commands

Gesture recognition uses computer vision; voice recognition uses natural language processing and does not depend on lights or cameras, which add to the cost. On the contrary, gesture recognition beats voice recognition because of its natural character. This is a key factor for the implementation of voice recognition technologies into several fintech products, making the process more efficient and inexpensive. Since users do not need to go through a steep learning curve, the need of change management is eliminated to a great extent.

Typically, the development of such innovations is not without challenges. Incorporation of such gestures requires deep study of human gestures and feature engineering them while developing deep learning algorithms. Error rates, false positives, and false negatives must be eliminated to attain six sigma status. Advanced Driver Assistance Systems (ADAS) in insurance plays a major role in the third-party claims of commercial vehicles. The gestures are not restricted to hand or finger movements; eye gestures help in understanding driver behavior while driving. It helps in deriving a driver score based on the eye movements that helps data scientists analyze whether the driver is drowsy, drunk, or distracted. Consequently, the driver score is used by underwriters to arrive at a premium based on the driver score.

UI design principles

The standard design principles for touchless UI are classified into three categories: action, navigation, and transform gestures.

  • Action gestures: Action gestures involve those related to tapping, long press and swiping that help interact with elements of GUI and access additional functionality.
  • Navigation gestures: Navigation gestures involve actions related to scrolling, dragging, swiping, and pinching that enable users to flip through a product with ease.
  • Transform gestures: Transform gestures involve actions related to compound gestures, pick up and move, and double tap that enable users to zoom into and out of content, reorder content, rotate graphics et al.

Interaction principles are changing by the day as human gestures keep evolving to keep pace with the new behavior brought in by millennials. Data scientists need to consider these changes while doing feature engineering. They also need to curate data sets accordingly as these data sets will eventually lead to the training for ML/DL algorithms.

Whilst the technology evolves, two aspects of customer experience need to be taken into consideration:

  • Ease of understanding: Gestures must be in line with the ones widely known and address gaps in existing ones. Cultural nuances (for instance, a gesture in country A can mean something radically different from the same gesture in country B) need to be taken into account.
  • Realistic responses: Latency is annoying and people switch products/services if the responses are not real time. Traditional authentication with user IDs and passwords/OTPs is not something users expect in the new era of banking and insurance. Gestures and voice commands enhance the customer experience by quick logins and payments. However, for certain aspects of banking, an extra layer of security is applied and the value of transactions is restricted to avoid risk.

    By 2025, 72% of the people across the globe are expected to have smartphones. As touchless UI/UX gains traction, we are in for the new normal – M2M (man to machine) interactions, human communication morphing from voice into gestures, design at the core of customer experience, amongst others, and, most importantly, healthy and happy human beings!

KV Dipu is President & Head of Operations, Communities & Customer Service, spearheading digital transformation, leveraging start-ups from fintech/insuretech globally, at Bajaj Allianz General Insurance Company (a joint venture of Allianz, the world’s leading insurer, and Bajaj Finserv & ranked #8 amongst the global top 100 digital insurers).


Photo by Laura Barbato on Unsplash

The People’s Champion: How Wealth Management Firms Can Win Client Trust

Ahead of FinovateFall Digital next week, we hear from Chad Hamblin, Global Industry Director of Financial Services at Microsoft, one of Finovate’s Gold Sponsors. Hamblin explores why success will come down to understanding and empathizing with your client. Dig a little deeper into this topic with Microsoft’s eBook on the topic: Reimagine the client experience in wealth management.

COVID-19 has put a strain on everyone. We’ve all navigated social isolation, uncertain investment projections, and remote work environments. Regardless of the experience, this time away has left a haze over individuals and organizations alike. We’re not just unsure what comes next, we’re questioning the very processes we’ve accepted to this point.

Investors are feeling a new tension that makes small pain points all the more obvious. Voice automation, fixed fees, commissions — what clients once accepted as the cost of doing business are suddenly under intense scrutiny. Clients aren’t obligated to trust a major firm with their financial future, and now they’re acting on the opportunity to move their money elsewhere.

So how can wealth management firms adapt their strategies (and identities) to regain that trust? It all starts with understanding the client.

A holistic experience

Over the years, many wealth firms operated under a one-size-fits-most model — if the client fell into a specific demographic, then the firm provided a specific portfolio. Empowered by the Digital Age and amplified by this pandemic, a growing number of modern clients are looking for a wealth management partner—someone willing to listen to their ambitions, dreams, and goals and recommend actions catered to their unique circumstances. These clients want to feel identified, seen, and valued; they want to feel like more than an account number. Organizations can deliver on that expectation by creating a holistic client experience — a strategic client approach that uses technology and relationship-building to create a more inclusive perspective on the client’s needs, interests, and ambitions.

Delivering a holistic client experience comes to life in three ways: portfolios, services, and communications.

  1. Holistic portfolios understand the client’s dreams, goals, and life events and work to build the right mix of investments to meet that individual’s financial plan, risk preference, and goals. By moving away from cookie-cutter portfolios and embracing a consultative approach, advisors create a partnership built on trust.
  2. Holistic services encourage firms to expand their capabilities to adapt to a changing world. In the last decade, clients have become jaded by fixed-fee models. At the same time, online resources have made wealth management more accessible. By shifting to a holistic client model, organizations expand their services beyond portfolio management and provide added-value services like financial advice and planning, risk mitigation, goal tracking, wealth building strategies, and even bring in experts for specialized areas like real estate, education planning, tax mitigation, and estate planning. By expanding into capabilities that they may not have focused on before, wealth management firms further align with the individual goals of their clients and can offer one-stop solutions.
  3. Likewise, holistic communication leverages the client’s communication preference. Every company has multiple engagement channels—voice, text, email, chat, video, social media, etc.—but most organizations assume that every client wants to be contacted via every channel. Yet, modern tools can equip firms to democratize their client data to share information and insights. By consolidating data and communication streams into a single hub of truth and by providing that information via client-friendly channels, wealth management firms can ensure that clients are engaged in the mediums they prefer.

Adapting in real time

It won’t be enough to lag behind your clients, real time adaptations and analysis will count.

While holistic client experiences serve as the star of wealth management’s future, next-generation technologies will be the foundation of these efforts. Trending tools like AI, life event and goal tracking, market risk analysis, smart portfolio allocation, and project automation equip organizations with the tools they need to build more responsive, reliable offerings for clients.

Imagine how predictive analytic tools will help determine the stability of future investments or the time employees could save on data entry through automation. Today’s technologies grant employees the tools they need to deliver a holistic customer experience by making their day-to-day tasks more efficient and effective.

Investing in trust

By creating a holistic client experience, wealth management firms become a reliable asset during hardship and a celebrated ally in victories. Right now, clients around the world are reassessing their investments for fear of a future crisis. In many cases, COVID-19 has fundamentally upset the way many clients view wealth management and building. It’s up to firms to empathize with those concerns and shape their efforts to bring peace of mind.

With a multitude of wealth firms fighting for their dollars, today’s clients are increasingly taking their funds to firms that demonstrate a conscious effort to understand their ambitions beyond executing trades. Wealth management firms that position themselves as true advisors and champion the hopes and dreams of their clients can foster trusting and long-lasting relationships.

The alternative is a slow descent into transactional business, commoditization, and ultimately irrelevance. The holistic wealth management firm is prepared to advocate for the best interests of their clients.


For more insights into how today’s firms can steel themselves for tomorrow’s challenges, read Microsoft’s latest eBook.

A Look at the Top 50 Fintech Companies in Europe

The following is a guest post from Scott Raspa, Head of Marketing, Hydrogen.


The European fintech scene has experienced tremendous growth over the last few years. One of the key drivers of this growth is open banking. This is causing financial institutions and fintechs to partner together to provide more innovative, user-friendly solutions for consumers throughout Europe.

European consumers are receptive to the idea of non-financial players offering financial products, according to EY’s Global FinTech Adoption Index 2019. The survey finds that fintech adoption throughout Europe, especially in countries such as the Netherlands, U.K., Germany, Sweden, and Switzerland, are well above the global average of 64%, and aren’t showing signs of slowing down any time soon.

Below is a list of the top 50 fintech companies in Europe, based on their valuations.

RankingCompanyFundingValuationCountry
1Adyen$266M$22BNetherlands
2NexiPublic$8.2BItaly
3Klarna$1.4B$5.5BSweden
4Checkout$380M$5.5BU.K.
5Revolut$917M$5.5BU.K.
6Transferwise$1.1B$5BU.K.
7Greensill$1.7B$3.5BU.K.
8N26$782.8M$3.5BGermany
9Oaknorth$1B$2.8BU.K.
10IZettle€273.2M$2.2BSweden
11MetroBankPublic$1.92BU.K.
12Wefox$268.5M$1.65BGermany
13Funding Circle$746.4M$1.5BU.K.
14Monzo£384.7M$1.24BU.K.
15Rapyd$170M$1.2BU.K.
16Ledger$88M$1.2BFrance
17AvaloqCHF350M$1.1BSwitzerland
18Deposit Solutions$198.9M$1.1BGermany
19Ivalua$134.4M<$1.0BFrance
20Sumup$425.6M$1.0BU.K.
21Radius Payment£150M$1.0BU.K.
22Numbrs$78.8M$1.0BSwitzerland
23Monese$80.4M$1.0BU.K.
24Worldremit$407.7M<$900MU.K.
25Ebury$123.5M>$900MU.K.
26Oodle Car Finance£160M>$850MU.K.
27Qonto$151.5M>$770MFrance
28Starling Bank£363M>$600MU.K.
29Atom Bank£429M$590MU.K.
30Raisin$206M<$550MGermany
31Tradeplus24$103.5M>$550MSwitzerland
32Kreditech$347.5M<$500MGermany
33Pleo$78.8M$500MDenmark
34Smava$188.7M$500MGermany
35Tink$205.5M>$500MSweden
36Pagantis€76.2M>$400MSpain
37Gocardless$122.3M>$400MU.K.
38Wynd$123.5M>$400MFrance
39Moneyfarm$127.3M>$400MU.K.
40Soldo$83.2M>$400MU.K.
41Ratesetter£43M$360MU.K.
42solarisBank€155.1M$360MGermany
43Bitstamp$12.4M$350MU.K.
44Tinubu Square€79.3M>$350MFrance
45Nutmeg$153.6M$318MU.K.
46Banking CircleN/A$300MDenmark
47BIMA$170.6M$300MSweden
48LendInvest$1.3B>$300MU.K.
49PayFit$101.1M>$280MFrance
50Curve$74.2M$250MU.K.

These companies have raised over $16.8B (€14.3B) in venture capital funding and are valued, collectively, at over $92B (€78B).

The U.K. fintechs are valued at nearly $40B (€34B). The Netherlands are second, all thanks to Ayden, the most valuable fintech in Europe.

The U.K. has also invested the most money, nearly $11B (€9.4B), almost 65% of the funding of these top 50 fintech companies. After the U.K., Germany and Sweden have invested the most with 12.9% ($2.1B / €1.78B) and 12.4% ($2.0B / €1.7B) of the overall funding, respectively.

Fintech Enablement in Europe

Here at Hydrogen we work with companies all over the world. Our award-winning fintech enablement platform enables organizations to quickly and easily build fintech products and components. Whether you want to offer a PFM app in France, a challenger bank in the U.K., or issue cards in Germany, Hydrogen is here to help. Hydrogen has pre-built integrations, workflows, business logic, and UI already built in and available in white labeled/no-code modules or through our robust API.

It’s free to get started, so start building with Hydrogen today!


*Note: Funding information was provided by Crunchbase.com and the Euro, Pound, and US Dollar conversions were based off of today’s conversion rate. Also, total funding amounts didn’t include public companies or companies where we couldn’t identify the funding received.


Photo by H. Emre from Pexels

Open Banking: What Australia’s Banks Can Learn from the U.K.

The following is a guest post from John Mason, Senior Director at Zafin.


Open Banking in Australia kicked-off in earnest in July when it became mandatory for the country’s big four banks to share product reference data (including interest rates, fees and charges, and product eligibility criteria) with accredited data recipients, typically fintech companies who provide alternative products and comparison shopping services to consumers. Also, in July, the same big four started sharing their consumer customers’ data—specifically data associated with deposit, credit, debit and transaction accounts—with alternative providers as requested by the customer.

In an effort to anticipate what lies ahead for Australian banks and consumers as the country joins the worldwide movement to give consumers greater access to products and services that can improve their financial lives via Open Banking, we decided to take a look at an island nation more than 9,000 miles away, boasting 2.5x Australia’s population but just 3% of its land mass—the U.K.

The United Kingdom embarked on its own Open Banking journey almost exactly four years back. In August 2016, the United Kingdom Competition and Markets Authority (CMA) directed its nine largest banks to provide accredited fintechs with access to previously proprietary customer data (pending customer approval, of course) down to the transaction level for current accounts.

Here is what’s happened in the U.K. that may be instructive for Australia:

  • Consumer up-take for Open Banking capabilities is sizable. As of January 2020, according to the Open Banking Implementation Entity (OBIE), there are one million users of Open Banking services in the U.K., representing a two-fold increase in just six months’ time. Further, the ecosystem of regulated open banking service providers is expanding rapidly. As of May 2020, it stands at 249, up from 100 at year end 2018.
  • Open Banking’s impact on the payments arena is particularly notable, with 50,000 consumers turning to third party applications to make payments from their current accounts in the month of December 2019 alone.
  • Investment is strong and widespread. Tink, the open banking platform, surveyed almost 300 senior financial services executives about their Open Banking investments. Almost ¾ indicated that spend had risen year-over-year, while a third stated that their financial institution was spending €100 million or more on Open Banking initiatives, and half projected positive payback on capital invested in Open Banking in four years or less. 
  • Despite strong adoption and investment, consumer awareness of Open Banking is low—perhaps pitifully so. In a 2019 study by Crealogix, two thirds of respondents had no idea what Open Banking was, much less its potential benefits.
  • Some banks see opportunity in the transition to Open Banking, whereas others view Open Banking as just another compliance obligation. One example of a visionary is Barclays, who empowered its U.K. customers to better manage their finances with the ability to attach non-Barclays accounts to its mobile app—taking a big and bold step forward to participate in the industry’s emerging platform economy.
  • Interest in the capabilities Open Banking enables varies substantially by different generational cohorts. For example, according to Crealogix research in the U.K., GenZs and millennials are twice as likely to adopt new open-banking capabilities and applications relative to baby boomers. 
  • Many positives and much innovation notwithstanding, for the most part, Open Banking’s promise to drive positive changes for financial inclusion have not yet been realized.

Based on what we’ve observed in the U.K., here are three predictions for how we expect Open Banking to play out in Australia. 

  1. Some banks will respond with vision and vigor, delivering new experiences that resonate with their customers and create advantage in the marketplace.
  2. Other banks will view a more open financial ecosystem as a threat and put their heads in the sand, leading to short term investment savings and long-term competitive disadvantages.
  3. Investors—inside banks and outside in the broader fintech ecosystem—will bet on advancing technologies and evolving customer expectations by placing smart bets on future possibilities in the Open Banking arena.

While consumers may never know what Open Banking is, their desire to benefit from new and compelling digital banking services will ultimately lead the overall banking industry to a brighter future—in Australia and the rest of the world. As in the U.K., the advent of Open Banking in Australia will hasten progress, create opportunity and change an industry.


Photo by Catarina Sousa from Pexels

Will Digital Behavior Affect Credit Scores in the Future?

This is a guest post by Sandeep Sood, CEO of Kunai.

Will Digital Behavior Affect Credit Scores in the Future?

Credit scores are about to take another leap forward—or backward, depending on how you see the future. People’s digital lives leave a trail of data “exhaust” that some countries are beginning to leverage to understand and better predict their behavior.

Assessing someone’s credit risk without traditional financial information is tricky business. Inevitably, concerns about privacy and credit-based blacklists arise.

For as long as there is debt, there will be debate about the subjective measures that determine who can be trusted to repay it. To understand how we got here and where we’re going, we’ll need to review the history of credit scoring as we know it.

Where Did the FICO Score Come From?

Formal credit reporting began in the U.S. in 1841. Ledgers in New York recorded borrowers’ creditworthiness, however these reports were extremely biased. Entries included advice such as “prudence in large transactions with all Jews should be used.” A more fact-based, alphanumeric system was developed in 1857 and used well into the 1900s.

Starting in the 1950s, computerized credit ratings used algorithms to automate scoring. FICO was born, and made rapid lending approvals possible.

In a world with Facebook and Google, it’s hard to think of an algorithm that has a greater effect on our day-to-day lives. It dictates the jobs we get and the places we can live. Yet, the algorithm is cryptic and occasionally biased, even if it works most of the time. FICO is far from perfect, but it’s the best system we’ve got—for now.

Alternative Scoring Methods Help Bankless Borrowers, at a Cost

Around the world, many people don’t engage in the banking and credit card transactions that feed the FICO algorithm. This has led to explorations of other credit scoring methods.

Fast-growing startup Tala, for example, is using the ubiquity of cell phones to bring credit scoring to unbanked borrowers. Applicants surrender their mobile data, and Tala monitors bill payment history, text messages, and behavioral data gleaned from their device to provide a unique “mobile credit score”.

For people who need loans, giving up personal information is worth the sacrifice. Tala arose out of the need for better information in countries without established credit systems, making credit available to people who otherwise would not have access to it.

China’s Social Credit and the Big Brother Debate

In parts of China, credit is returning to a reputation-based model. Various local programs measure social credit based on behavior. Some of this is tracked online, similar to Tala’s methods, but facial recognition and CCTV networks are also leveraged to ding people’s scores. Littering, failing to cede right of way to pedestrians while driving, and other actions deemed socially harmful can affect someone’s score.

While these pilot programs feel Orwellian, the Chinese system remains in a nascent stage of development. Perhaps one day soon, the West’s fears of Chinese social control will be justified. And then the question is, how will the rest of the world respond?

The Future of Credit Scoring

The credit score is a fundamental pillar of our modern financial system. But it’s difficult to define a universal set of attributes to determine every American’s credit risk.

Cryptocurrency may offer a viable solution. Finance startup Bloom is already leveraging the recorded financial history available on the blockchain. Since all transactions are permanently stored in a public record, cryptocurrency provides an immutable source of truth. While there is no history on the blockchain yet, it could be a game-changer once developed.

But data and its surrender aren’t going to suddenly change a system that’s been, more or less, working since the 1950s. In fact, too much data can lead to bad models that over-index for characteristics that work well in one population but do just the opposite for another.

As these experiments continue, they’ll likely bring a more stable, accessible credit system to countries in the wild west of credit scoring. In five to ten years, their successes and failures may very well lead to breakthroughs that influence how FICO evolves. But for now, FICO is proving it works well enough without the glut of invasive personal data.


Sandeep Sood is the CEO of Kunai, a product development company that has been building digital products for 20 years. See more of his articles at Kunaico.com along with Kunai’s work. Follow him on Twitter @sandeep_k_sood.


illustrations by Jorge Godoy

Why a Lack of Diversity in Fintech Poses an Existential Threat

This is a guest post written by Philippa Ushio and Hal Bienstock of Prosek Partners.


In an extremely uncertain business environment, there are two things that almost every expert agrees to be true:

  1. The most innovative companies are likely to come out ahead when the COVID-19 crisis comes to an end
  2. Diverse leadership teams are more innovative and generate better business results 

So, why is it that venture capitalists – the very people tasked with funding innovation – are so monolithic? According to a report from Richard Kerby of Equal Ventures, just three percent of VC employees in 2018 were Black and only one percent were Hispanic. Eighteen percent are women.

The numbers for fintechs tell a similar story. According to research from Oliver Wyman, women represent just 14% of fintech boards, compared with 23% in the banking sector. The consulting firm found that 39% of fintechs it studied had no women on their board at all. 

Now consider that McKinsey’s Delivering Through Diversity Report found that companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability. And research from Boston Consulting Group found that companies with more diverse management teams have 19% higher revenues due to innovation. Clearly, there’s a disconnect.

That said,  we can agree that not all talk about diversity and serving underserved populations is just lip service; many fintechs are in fact delivering on their missions. Facilitating access to PPP is a good example, with loan marketplaces like Lendio, Fundera and Nav having all been credited with reacting quickly to help small businesses during the first round of government support. And many neo-banks and earned wage access providers are helping low-income workers achieve financial wellness during a period of great economic uncertainty. Pandemic aside, there is no doubt that it is easier today than it was 10 years ago for businesses and individuals to get reasonably priced short-term credit, specialized financial advice, and avoid high percentage loans, among other things. Yet, for all the good fintechs are doing, it’s impossible not to think about the problems that founders haven’t begun to even consider – let alone solve – because they don’t have people on their teams who are actually living with these issues.

In addition to the disturbing lack of ethnic and gender diversity at VC firms, Richard Kerby found that 40% of VC employees went to one of just two schools – Stanford or Harvard. How many of them grew up unable to afford an unexpected $400 expense, like 40% of Americans? Or with parents running small businesses that lived or died based on what was in the cash register at the end of the day?

Over the past decade, fintechs have done a lot to help small and medium businesses. But there’s an opportunity to do so much more and there has never been a more important time than now as so many face the reality of shutting their doors in the wake of the pandemic. 

If founders and VC firms continue to ignore the benefits that diversity in leadership bring, it won’t be long before the disruptors find themselves disrupted by those who are more innovative, more thoughtful about the problems they are trying to solve, and more able to reach a customer base that consists of far more than just Harvard and Stanford grads. 

The good news is that things are changing. Many fintechs and VC firms put out strong statements of support following recent racial justice protests and committed themselves to taking measurable action to diversify. Only by living up to these ideals can the current fintech wave continue to build. Let’s watch this space.


Philippa Ushio is SVP at Prosek Partners where she leads teams in developing communications strategies and mounting multi-disciplinary campaigns to protect and enhance business value. Throughout her career, she has provided strategic counsel to clients facing a wide variety of complex issues, focusing particularly on their communications challenges. 

Hal Bienstock is a Managing Director at Prosek Partners. A fintech specialist, he has spent more than 20 years working as a brand strategist and corporate communications executive. He has extensive experience counseling C-suite leaders and developing integrated campaigns that change perceptions internally and externally. 


Photo by Sharon McCutcheon from Pexels

How Empowering the Underbanked Will Create the Next Big Investment Opportunity

The following is a guest post by Borys Pikalov Head of Analytics and Cofounder at Stobox.

One of the greatest challenges in fintech is reaching the unbanked. Accessing poor communities is operationally complicated and their use of financial services is very limited.

Microfinancing institutions are only a partial solution and traditional loans do not work as an investment vehicle because they are risky for both parties: banks don’t want to give, and poor don’t want to take. To solve this puzzle we may use two creative concepts from financial engineering.

Individual investment contract

Instead of taking a loan, people promise part of their future income in exchange for money. This reduces the risk for farmers in case they cannot pay off the debt. This is already being practiced when corporations provide education grants to poor students in exchange for future employment.

Loan securitization

Instead of taking a single loan from banks, real estate developers issue debt securities and sell them to many institutions. Thus, the loan is divided into many small parts that may be traded on a secondary market, which spreads the risk for parties giving the credit. For conventional real estate loans, the maximum debt-to-value ratio is ~60%, while for securitized loans it is ~90%, which means that 50% higher risk is acceptable.

Personal securities

Combining these two concepts we arrive at personal securities – individual investment contracts issued in the form of securities that can be divided into small parts and traded on a secondary market. There is already an example of a personal securities offering in use: a software developer offered a part of his future income in order to move to Silicon Valley. 

The use of personal securities can solve the risk puzzle of investing in poor communities. However, there are a number of practical problems to be solved in order for personal securities to be an efficient solution. 

First of all, personal securities should be powered by proper technology. Offering many securities to many investors in dozens of different countries requires robust and scalable infrastructure. Blockchain technology is widely considered suitable for these purposes. In the last few years, providers of securities tokenization made serious progress and now enable convenient mass operations with securities. For example, the blockchain was used to reduce the entry threshold in a $22 million venture fund by 2,0000 times– from $1,000,000 to $500.

Another problem is the operational complexity. Using personal securities would require reaching poor communities, doing the legal groundwork of signing investment contracts, choosing investment opportunities, and gathering and distributing income. This requires wide collaboration between existing banking providers, governments, nonprofits, and startups. 

A solution may be to organize everything as an investment fund that would issue securities to investors worldwide and use the proceeds to organize the investment process and do the investment itself. Pooling investment into funds can further reduce the risk for investors. It is better to do pilot projects to test the best structures.

The next big investment opportunity

Giving money to poor communities is the next big investment opportunity. It would not only directly benefit investors but also all businesses that can sell to poor communities. It can vastly improve the financial outcomes of developing countries. Most importantly, it can assist in finally ending extreme poverty and providing people with a dignified life.


Borys Pikalov is Cofounder and Head of Business Analytics at Stobox, an award-winning advisory and technology company in the field of securities tokenization. Pikalov has done 2500+ hours of research in the digital securities industry. Co-author of the book “How to Attract Investments with STO: A Practical Guide”. He is currently advising the government of Ukraine about developing an ecosystem for virtual assets.


Photo by Katrine Bengtsson on Unsplash

The Potentials and Vulnerabilities of Adopting Smart Contracts

This is a guest post written by Shannon Flynn, managing editor at ReHack.com.

People in the fintech industry have inevitably heard about smart contracts. Here’s how they’re shaping the sector and why some parties may ultimately decide not to adopt them yet.

How do smart contracts tie into the rise of decentralized finance?

Anyone who asks a search engine “What is a smart contract?” will quickly discover it’s a computer code on the decentralized digital ledger system called the blockchain. 

Entities ranging from utility to health insurance companies are investigating how smart contracts could help them do business while keeping information safe. Their increasing popularity helped spark the creation of the decentralized finance sector — DeFi for short. 

A person located anywhere in the world could access a DeFi account with an internet connection. They can then carry out transactions typically associated with banks without going through those entities or intermediary influences. 

Estimates say there are about a billion dollars connected to the DeFi industry now. That’s a relatively small amount compared to centralized finance, but DeFi is worth people’s attention. It offers new opportunities to invest, borrow, and lend, appealing to parties unhappy with traditional investment options. Some DeFi companies using smart contracts let individuals earn cryptocurrency tokens redeemable for platform governance rights. 

What’s happening with smart contracts so far?

You can think of smart contracts as business rules translated into software since they work on an if-then basis. One required action triggers a related event. The parties involved set the parameters, and the smart contract automatically upholds them. 

In one trial, Spanish banks investigated using smart contracts to administer instant credit transfers. The company that assisted with the rollout clarified the system could work for sending money for any reason. 

Similarly,  in Singapore, financial authorities recently completed the fifth phase of an initiative called Project Ubin by examining blockchain-based options across a multicurrency payments network. Real-world tests validated smart contracts for various arrangements, including conditional payments and escrow for trade.

IBM announced an upgrade to its smart contracts offering, too. It allows multiple parties to propose and amend alterations to existing smart contracts instead of only accepting or denying others’ proposals. 

How do smart contracts work when used with property purchases or loans?

People in the fintech industry often encounter individuals who need business loans or want to take out mortgages for their dream homes. Research indicates about 83% of people are slightly or not at all familiar with cryptocurrencies. Education could show them that smart contracts and related technologies ease the stress of milestone transactions.

Increased speed is one smart contract benefit. However, advantages span beyond the initial signing of paperwork. Once a person’s loan gets approved, they could use an encrypted key to sign the offer, and their signature becomes a unique blockchain entry. Funding and property title transfers also become entries on the ledger. Mortgage approvals and loan term agreements take days, not months.

Smart contracts and the blockchain can help mortgage servicers track borrowers’ payments, too. Plus, if a homeowner wants to refinance a mortgage or sell their property, the blockchain records for the duration of the smart contract to confirm ownership. 

What other benefits exist?

Ironing out financial agreements with smart contracts could also make good cost sense. One company offering smart contract-based mortgages in California and New York plans to offer lower rates than banks, and customers may get loans packaged together and sold as securities. 

Some analysts think smart contracts could help the economy stave off a recession, preventing prolonged challenges in the housing market. Each intermediary that finalizes a home-buying process adds 1% to 2% of the total property value to the transaction costs, statistics show. Smart contract automation can reduce third-party involvement, cutting costs and delays. 

Efforts to use smart contracts could close the gap between investors and investment managers as well. An investment manager might initiate a smart contract that carries out a client’s wishes and avoids missed opportunities. 

Several companies are investigating smart contracts to facilitate vacation rentals at lower-than-average rates. They believe the smart contracts would settle disputes faster and facilitate speedier cross-border payments. 

What are the downsides of smart contracts?

Smart contracts aren’t without potential faults. One investigation showed that 25% of smart contracts studied contained critical bugs, with 60% having at least one security flaw.  

Moreover, these contracts are only as “smart” as the programmers creating them. The code cannot recognize and bypass mistakes. Although errors could be less frequent than traditional contracts — especially with experienced, meticulous developers — the possibility remains.

A World Bank examination of smart contracts concluded they’re not always the best choice for every scenario. One example was that they could lower the cost of providing insurance and perhaps automate payouts. However, if used with short-term unsecured loans, smart contracts would not significantly improve a borrower’s creditworthiness. 

Not all analysts agree that the benefits of smart contracts surpass those associated with conventional ones. They see them as an interesting idea that works best in the experimental realm instead of the real world. Smart contracts are still relatively rare, too. People in fintech and other industries may balk at using them since they’re newer and could introduce unforeseen issues. That could change if overall adoption rates rise, however. 

Food for thought in fintech

This overview introduces how smart contracts work and proposes appealing ways to use them in the financial sector. Given the associated limitations, you may still have some unanswered questions, and that’s okay. The ideal approach is to view smart contracts as options that could positively change the industry but are not problem-free.

Shannon Flynn is a technology and culture writer with two plus years of experience writing about consumer trends and tech news.


Photo by Roman Mager on Unsplash

Why an AI Center of Excellence is the Key to Success

The following is a guest post by Wilson Pang, Chief Technology Officer of Appen.

Becoming an AI-first Organization in Finance

Many global organizations are recognizing artificial intelligence (AI) as a core component of their business. In fact, three out of every four companies surveyed in The 2020 State of AI and Machine Learning Report consider AI critical to their success. This is no surprise: there has never been a more opportunistic time to invest in AI given the breadth of people, budget, and other resources available to devote to these efforts.

Financial services firms are likewise integrating AI into their businesses to enhance operational efficiencies, bolster customer experience, and obtain competitive advantages. With several AI projects already under their belt, many financial services providers have started asking, now what?

Invest in an AI Center of Excellence

Becoming an AI-first organization will be crucial to long-term success. Organizations with this goal should invest in an AI Center of Excellence (CoE)– and in truth, more than a third of large firms already have. A CoE is a team of experts in a given discipline that manage resources and provide counsel within that field. With an AI CoE, firms benefit from a growing body of knowledge and set of best practices that enable scalable AI initiatives to launch with proven success.

Think of an AI CoE as a core machine in your organization. This machine contains the accumulative learnings from past AI initiatives and a clear vision for use of AI in your business strategy. It enables teams to continuously deliver solutions consistent with your business needs. It can drive revenue, create cost efficiencies, enhance customer experience, and give you a competitive edge.

In financial services, an AI CoE can help establish data infrastructure to ensure projects launch successfully at scale and are leveraging high-quality training data to do so. An AI CoE will support the structuring of the right engineering team to deliver on the increasing volume, quality, and speed requirements for training data. Few financial services firms have developed an AI CoE, and as a result aren’t fully leveraging the latest best practices, putting at risk the success of their AI ventures.

How to Build an AI Center of Excellence

Building an AI CoE involves several key steps:

  1. Make the case for AI

Identify the business use cases for AI and how your organization will benefit from an AI initiative. Determine what kind of data you have, and what kind of data you’ll need. Establish the scope of your CoE.

  1. Obtain stakeholder buy-in

Building a CoE requires a team effort. Share your case for AI with relevant stakeholders across your organization, particularly your executive team. Survey results indicated that 80% of AI projects are being managed by VP level or higher.

Many organizations struggle with alignment between business leaders and technologists, particularly on data challenges, core problems, and budget allocation. Keep in mind that an alignment is instrumental in creating strong AI infrastructure.

  1. Build your CoE team and architecture

Consider which teams are critical to success and have domain expertise. You’ll likely require teams across product, product management, machine learning, data analytics, and DevOps (or its next evolution, AIOps).

DevOps deserves particular mention—these teams ensure everything runs smoothly within the company infrastructure and their support is required to launch a model and manage post-production delivery pipelines. Like DevOps, AIOps monitors whether the model is working as intended, but with the added leveraging of AI through machine learning and advanced analytics technologies.

  1. Build a flywheel to launch your AI initiatives

A flywheel is a self-reinforcing loop made up of best practices. Your CoE should act as a flywheel, a core machine that drives revenue. To build scalable practices and create initial momentum, start small with quick wins.

Identify success metrics for each initiative, which could include saving money and time, generating revenue, or improving efficiencies. These metrics will guide your launch process and determine the data you need.

Gather high-quality data—data that is clean, complete, and reliable—and have the ability to collect, store, and annotate it before developing your algorithm(s) that address a use case. Don’t overlook the importance of this step; training data is the foundation of AI, and a key indicator of a model’s success or failure.

Depending on your in-house resources, you’ll choose to build your AI model using one of the following options:

  • Pay for a vendor-produced model – cheap and fast, but limited use cases
  • Build a model in-house – more control and alignment with use cases, but most expensive and resource-intensive
  • Outsource model build – customizable and requires few in-house resources, but expensive

An AI CoE will serve as a well-oiled machine for repeatedly launching scalable AI initiatives that support your core business strategies. Most importantly, building an AI CoE will take you further down the path of becoming an AI-first company, a critical next step in developing a competitive edge in financial services.

Wilson Pang has been with Appen since November of 2018 and has more than nineteen years’ experience in software engineering and data science. Prior to joining Appen, Wilson held positions at CTrip, eBay, and IBM.


Photo by George Becker from Pexels

A Strategy to Accelerate Adaptability Through Infrastructure Automation

Today we feature a sponsored post on best practices in automation from leading open source solution provider Red Hat.

While many things have changed over the past six months, the need remains for financial services companies to increase speed and efficiency, and deliver a differentiated customer experience, all whilst complying with complex regulations and requirements.

To overcome current and future challenges, IT organizations are working to increase the flexibility of their infrastructure and operations. With security at the forefront, regulatory and compliance controls adherence requirements, digital products, and services must be efficiently developed, deployed, and managed. Often this means that infrastructure and processes require updates to support digital offerings and protect against costly security breaches and cybercrime-related risks. 

An automation framework can help organizations achieve this transformation, improving agility, flexibility, and speed to adapt to changing requirements. Optimization of resources and increased efficiency to control costs allows not only innovation but also the delivery of digital customer experiences with less risk. Organizations seeking to automate infrastructure to should consider the following best practices.

Deliver Results with People, Tools, and Processes

An effective approach to automation includes people, processes, and tools.

Start with your people

All initiatives, including automation, start with people. Begin with the following actions:

  • Build consensus to gain cultural buy-in. Ensure a successful start to your project by building consensus among all stakeholders. Failure to do so can result in well-intentioned, but isolated activities, or the continuation of time-consuming manual activities which would reduce the benefits possible with a standardized automation approach. 
  • Define the scope. Determine the extent of your automation and explain the strategy, IT benefits, and business benefits at both the organizational and individual job levels. 
  • Encourage participation. Solicit technical advice from staff who will implement, administer, and use the automation technology from the start. People will avoid using a solution if they believe it to be inadequate, regardless of its actual capabilities. 
  • Inspire collaboration. Create a culture of automation by unifying teams and technical domains for tooling that can be used by the entire organization.

Select appropriate processes

Not all processes are candidates for automation. When planning automation projects:

  • Be instinctive. Prioritize automation use cases that involve repeatable, time-intensive processes with predictable outcomes. If automating a process requires significant customization or is a single delivery to an external team, automation may not be at the top of this list, or even appropriate. 
  • Focus on benefits. Automate processes that provide benefits that scale as your adoption and scope increases. 
  • Plan for maintenance. Plan for quick and efficient ongoing maintenance of your automation activity to keep up with the business, process, and technical changes.

Choose the right tools

The right – or wrong – tools can greatly impact the success of your automation project. Look for the following capabilities:

  • Adaptability. Needs and services will not remain static. Choose tools that can adapt to change and prepare you for the future. 
  • Flexibility. Use tools that can automate infrastructure and IT processes without complex configuration or customization. Find tools that easily integrate and operate with other automation and management solutions. 
  • Simplicity. Look for tools that are easy to install, configure, manage, and maintain at scale. Analyzing and understanding the results of an automated process should be simple and straightforward. 
  • Usability. Select tools that are easy to learn. Hard-to-use tools will not be adopted by most of your team and can result in a small, segmented group of subject matter experts. 
  • Accessibility. Adopt tools that feature simple, human-readable syntax and graphical user interfaces (GUIs) to help users without advanced coding skills contribute to automation projects.

Automate for success with Red Hat

Red Hat helps financial services organizations move forward with higher performance and advanced automation. In a recent study*, Red Hat Ansible Automation Platform was shown to increase the efficiency of application environment management teams by 41%, and IT security teams by 21%.

  • Gain business and IT agility and speed through cross-organizational automation and collaboration. 
  • Boost efficiency and focus on new initiatives by eliminating manual, repetitive tasks. 
  • Innovate and deliver digital customer experiences with less risk and at a lower cost by using modern platforms that meet today’s needs and easily adapt to tomorrow’s requirements.

* Red Hat Ansible Automation Platform Improves IT Agility and Time to Market – An IDC White Paper, Sponsored by Red Hat, June 2019.

Banking with Crypto: Where Will It Go Next?

This is a guest post written by Shannon Flynn, managing editor at ReHack.com.

Amid the market instability caused by COVID-19, a major shift seems to be taking place in the crypto industry.

After years of false starts and criticism from the banking sector and traditional financial institutions, new partnerships and legislation seem to suggest the industry may be on the verge of a large-scale crypto service adoption.

Here’s the current state of the crypto market, and how financial institutions are beginning to offer it in earnest.

The Current Health of the Crypto Market

Like other asset classes, crypto wasn’t immune to the crash caused by the coronavirus. In mid-March, as assets of all categories fell — even those typically more secure against market shocks, like gold — so too did major cryptocurrencies like Bitcoin and Ethereum. Prices for both dropped sharply, with Bitcoin’s market value nearly halved.

Crypto, however, was remarkably quick to bounce back, with prices recovering to near pre-coronavirus levels over the next two months. So far, crypto seems to have come out as one of the better-performing asset classes, recovering much faster than others.The disruption caused by COVID-19 seems to have been small enough that banks and major financial institutions are continuing with plans to offer crypto services.

JPMorgan Announces Partnership With Crypto Exchanges

One of the biggest announcements of the past few months has been the partnership between JPMorgan Chase and crypto exchanges Gemini and Coinbase. In May, the bank announced it would accept the exchanges as banking customers — making them their first clients from the cryptocurrency industry.

Coinbase is the largest U.S.-based cryptocurrency exchange. Gemini is less prominent but is notable in its moves to secure support from major institutions outside of crypto.

The partnership is big news for American cryptocurrency traders and firms, especially in light of JPMorgan CEO Jamie Dimon’s previous comments on bitcoin. In 2017, Dimon famously bashed the currency as a “fraud” and said he expected that global governments would take action against crypto.The partnership isn’t JPMorgan’s first foray into digital currency, though. In 2019, the bank introduced its own version, JPM Coin. Each coin represented one dollar stored in the bank and could be used to more quickly settle transactions between members.

While the move isn’t JPMorgan’s first experiment with digital currency, it is a sign that traditional financial institutions may be getting more comfortable with the idea of trading in crypto. Large banks have traditionally been fierce critics of cryptocurrency.

Concerns about the inefficiency of blockchain and the potential environmental impact of bitcoin may be enough to dissuade broader adoption. After all, bitcoin miners use up the same amount of energy as 6.8 million average U.S. households.

However, investors seem like they are becoming more interested in crypto. According to the Wall Street Journal, “average daily trading volume this year of CME’s bitcoin futures contract has risen 43%” compared to last year. Other crypto vehicles, like Grayscale Bitcoin Trust, have also seen similar upticks in trading volume.

Even if traditional financial institutions shy away from full crypto adoption, cryptocurrency banks in the U.S. may still become a possibility over the next few years. In June, Former Wall Street trader Caitlin Long secured $5 million in funding for a cryptocurrency bank, Avanti. That gave the institution enough cash to follow through on filing for a charter with the Wyoming Division of Banking. The bank currently plans to open for business in 2021.

Banks Around the World Consider Crypto Service

The trend toward cryptocurrency banking isn’t limited to the U.S. In Germany, more than 40 financial institutions declared their intent to offer crypto services under new legislation. Two of Switzerland’s largest banks have also launched digital asset-based transaction services.

Earlier this year, India’s Supreme Court overturned a Central Bank ruling that prohibited banks from providing services to traders and firms dealing in cryptocurrencies. While it had signaled it would challenge the decision, it instead issued formal guidance giving commercial banks in India the green light on providing banking services.

Following the court’s decision, CoinDCX — India’s largest crypto exchange, which received a major investment from Coinbase in early June — integrated bank account transfers. This allows customers to purchase and trade cryptocurrency using their bank accounts.

However, as in America, trust remains a significant barrier. Even with the prohibition on services for crypto traders lifted, few Indian banks have moved to seriously integrate crypto offerings.

The Future of Cryptocurrency Banks

Despite the major instability caused by the COVID-19 crisis, the cryptocurrency market has managed an impressive rebound and emerged as one of the best-performing asset classes so far.

At the same time, major institutions — including JPMorgan and several European banks — are moving ahead with new plans to offer crypto- and digital asset-based transactions. There’s reason to believe that banks may soon provide financial vehicles that make it easier for investors to purchase and trade bitcoin. It’s hard to know what the future of crypto banking will look like right now. For the moment, it’s all good news in spite of current market disruptions.

Shannon Flynn is a technology and culture writer with two+ years of experience writing about consumer trends and tech news.

What is Next for Digital Transformation in Financial Services?

The following is a guest post by Natalie Myshkina, Strategic Business Development, FSI at Adobe.

Like many industries and businesses right now, financial organizations in banking are finalizing and implementing business continuity/contingency plans as well as enabling all employees to work from home. At the same time, they are diligently working to meet changing client needs and building new ways to serve clients. Beyond the operational actions underway, banks and capital markets need to start developing medium- and longer-term plans to address each element of financial, risk, and regulatory compliance, and create new environments to support the business in fully digital settings.

In late 2019, an Arizent survey commissioned by the Credit Union Journal and American Banker reported that only 30 percent of organizations have a digital first, enterprise-wide strategy and readiness. Other organizations are still in the middle or beginning of the digital transformation of their businesses.

While most organizations have business continuity plans, they have been heavily tested over the last few weeks. I’d like to highlight a few operational steps that are essential to consider now for banks:

  • Transparency and trust
    Continue to adjust a communication plan to quickly liaise with employees, customers, business partners, regulators, investors, and vendors. Keeping close communications with customers and other stakeholders creates the opportunity to strengthen the relationship.
  • Operating model
    Implement a dynamic, scalable, and flexible operating model to ensure business continuity in any scenario. For example, in the case of temporary closures, branches need to quickly train branch employees to provide online help or assist the call center in serving clients.
  • Remote services and capabilities
    Many enterprise organizations have an extensive set of workflow tools, document management tools, document collaboration, and electronic signature solutions in place, but they are not fully utilized. For example, one department in the organization may fully embrace digital documents and electronic signatures, while another department keeps receiving and sending snail mail. The solution here would be to review best practices and tools across the organization, understand the full capabilities of available solutions, and offer them to unit managers to utilize as immediate solutions.
  • Digital project prioritization
    Conduct project prioritization exercises, and speed up projects related to offering digital products and services (client onboarding, product enrollment, etc.) or operational inefficiencies. If possible, speed up time-to-market or release solutions with limited/partial functionality or limited integration points.
  • Organizational culture
    Communicating and fostering the culture that maintains employee morale is becoming extremely important, and it can be done in different forms: through top-down communication and leaders acting as role models, by encouraging grassroots initiatives, by providing platforms for team collaboration, creating virtual watercoolers, etc.
  • Peer communications
    Be in close contact with industry groups for information to get best practices and requests to obtain waivers from regulators if required.

The coronavirus pandemic is already leading to major changes in how customers manage their finances and how financial organizations support their customers. Next we would be seeing activities related to meeting changing client needs due to financial stress, supporting client activities in digital channels, rapid digitalization in commercial and corporate banking, and more.

Here are a few notable areas financial organizations should address:

  • Proactively address new customer needs
    To operate in the new environment, banks would need to rapidly meet different client needs and serve them in ways outside the norm. Scalable solutions to process and approve requests for forbearance, mortgage holidays, deferred loan repayments, etc. would need to be implemented quickly as well as quickly scale up the Paycheck Protection Program (PPP) via the SBA program.
  • Branchless banking and self-service options in digital channel
    Due to the temporary closing of branches and reduced ATM availability and usage, the branchless banking or virtual branches idea is becoming more popular. As many interactions move online, expect to see more and more consumers want to use self-service tools on the web and in their mobile devices.
  • Rapid digitalization and digital service accessibility across all customer lifecycles stages
    For many organizations, their digital transformations began with onboarding new clients. But often we see that many other client touchpoints in the customer lifecycle are not fully digitized, and some require manual/paper steps. In the new environment, most of the client-initiated activities would be done on digital platforms. Automation is essential to provide clients with fast service and a consistent experience while keeping cost-effective operating model in place.
  • Expending successful digitalization of customer touchpoints beyond retail banking
    Over the last few years, we have seen substantial efforts and budgets spent on elevating customer experiences and moving clients to digital platforms. This has been done for many reasons, one of them was a demand from a digitally native consumer to have a better experience and the competition coming from neobanks (aka digital-only banks).

    Commercial and corporate banks were behind this trend partially because the lack of these drivers and the complexity of the processes. In the new reality, we would be seeing a lot of rapid digitalization of customer-facing and internal activities in commercial/corporate banking and capital markets.
  • Data use, extraction and manipulation
    Going forward, the ability to extract and process data from multiple documents will be essential to manage risks and to create cost-conscious processes. Immediately, we could see requests for solutions to process documents to feed systems assessing portfolio health in stressed markets, or complete search thought legal documents.
  • Adaption of cloud solutions
    As financial services organizations have been behind the curve in the cloud solution adaption, this situation will trigger a revisit of internal policies and expedite further cloud adoption for both client-facing and internal solutions to improve efficiencies, eliminating the need for a larger security and maintenance staff, and creating cost-effective, scalable environments.

During these trying times, banks can best serve their clients by delivering products and services for business continuity today while working on business resilience for the future. Industry experts predict that the current situation will accelerate the digital transformation in the industry over the a short period of time. That time starts now.


Photo by Twixes on Unsplash