The following is a guest post by Jack Warner, a cybersecurity expert with Techwarn.

According to a recent ImmuniWeb study, 98 percent of the world’s top 100 fintech startups are vulnerable to cyberattacks. And it’s not surprising that fintech is an attractive target for threat actors.

The rapid growth of financial technology combined with lagging regulations means there’s much more data to analyze and too few rules to govern how data is protected. These same factors make the sector susceptible to breaches and vulnerabilities, particularly in the wave of COVID-19 inspired cybercrime.

Financial institutions are increasingly adopting fintech solutions to handle the digital wave that’s happening all over the world. This swift tech transformation comes hand in hand with emerging cybersecurity risks, alongside a few old “favorites.”

With that in mind, it’s imperative that fintech enterprises take appropriate measures to secure data and systems as well as possible. Here, we take a look at the most pressing cyber risks facing fintech and why cyber resilience and not just cybersecurity is critical.

The cyber risks fintech companies face

While not comprehensive, the below attack types and recognized vulnerabilities are among the most concerning in the financial technology sector. Let’s begin with one of the most common attacks, malware.

Malware

Malware is a portmanteau term that combines malicious and software, and it designates any program that is explicitly designed to cause harm, be it to devices, data, or individual users. Within fintech, hackers may design malware to breach a company’s system and collect sensitive or critical information.

The Gustuff banking trojan, for example, emerged in the first half of 2019 and has since targeted numerous traditional institutions but also newer players, such as PayPal and Revolut.

Data breaches

Because many fintech platforms allow customers to store payment data such as card details and password credentials for convenience’s sake, these platforms are inherently vulnerable, and an attractive target. Even a small breach could lead to sensitive financial user details being compromised.

If third-party providers are involved, the risks are heightened, which is exactly how the 2020 Dave breach occurred.

Cloud environment vulnerabilities

Fintech providers often lead the pack when it comes to incorporating cloud-based computing into their information management systems. It’s something the industry can pride itself on and something other sectors lack. However, strong cloud security measures matter. If the cloud environment is vulnerable, so too is the company’s data.

Why cyber resilience is important for fintech companies

Firstly, it’s helpful to consider the differences and similarities between cybersecurity and cyber resilience, and how these two are intimately linked.

Cybersecurity versus cyber resilience

Cybersecurity refers to a set of defensive tools, strategies, standards, and protocols, all of which are designed to keep threats out of a fintech enterprise’s systems. In this sense, cybersecurity is purely a defense strategy.

Cyber resilience, on the other hand, encompasses cybersecurity’s aim to defend against threats, but takes things a few steps further. Cyber resilience can be defined as an entity’s ability to prepare for, respond to, and recover from a cyber attack.

It merges cybersecurity in the preparedness phase but also integrates solid business strategies to ensure an organization stays afloat after an attack occurs. After all, an attack doesn’t end after the fact, rather, the effects are long-lasting, expensive, and highly damaging to a company’s reputation.

In fintech, losing customer confidence is much more damaging than in other industries as we are dealing with financial information. To that end, having a solid cyber resilience plan in place is essential. That plan should cover all the bases, from getting prepared to financially recovering and mitigating reputational losses — the more detailed and in-depth, the better.

Creating cyber resilience

A fintech company’s cyber resilience plan may be more or less detailed depending on the size of the organization, any third-party links, the number of platforms available to clients, and other such factors. However, some basics should be standard across all companies:

• Create a culture of cybersecurity — All staff should be aware that cybersecurity is everyone’s job, not just the IT department’s domain. Good digital hygiene and exacting standards make a lot of difference. Starting from the ground up means the company’s culture accepts cybersecurity as integral. Staff training and regular updates to standards and procedures help here.
• Use a full suite of cybersecurity tools — Of course, logging out of accounts and avoiding suspicious links can only get an entity so far. Proper cyber resilience covers preparedness, and that’s where security software like VPNs and email scanners comes in. One of the functions of VPNs is encrypting data transmissions, while email scanners detect threats and can make a big difference to a company’s defenses.
• Ask what happens when an attack occurs — Understand that an attack is more likely a matter of when and not if. How will the company deal with the immediate fallout, who does it need to inform and when, and how can the threat be removed as swiftly as possible?
• Staying afloat — Fintech companies should have plans in place for retaining clients, getting back on their feet after an attack, and continuing to be financially viable. This part of a resilience plan can include all sorts of factors, such as post-attack PR and ways to pay off any regulatory fines.

There’s no doubt about it, cybersecurity risks and threats are increasing both in number and sophistication. Attacks can and will occur, so having a proper cyber resilience strategy in place is critical, especially in an industry where clients entrust us with their most sensitive information.

Jack Warner is an accomplished cybersecurity expert with years of experience under his belt at TechWarn, a trusted digital agency to world-class cybersecurity companies. A passionate digital safety advocate himself, Warner frequently contributes to tech blogs and digital media sharing expert insights on cybersecurity and privacy tools.

Photo by Miguel Á. Padriñán from Pexels

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

Financial tech and nonprofits have an opportunity to build partnerships and make the world a better place. If fintech companies want to work with nonprofits, they must establish trust and clearly outline the benefits of collaborating for the greater good.

Households in the United States are generous. According to National Philanthropic Trust, Americans gave $449.64 billion to various charities in 2019. However, people are increasingly demanding that the giving be easy and intuitive, which brings fintech into play. Even the way nonprofits manage the funds donated to them is changing.

Examples of fintech companies include Lending Club, Kabbage and Stripe. Meshing fintech and charity isn’t always an obvious choice. However, nonprofit technology is on the rise, and organizations benefit greatly from some of the advantages these brands bring to the table. Here are some of the benefits of fintech charity partnerships.

How Fintech and Charity Work Together

There is a growing move toward non-cash payments in charitable giving. Forbes reports in countries such as Sweden, cash-based payments make up 13% of transactions. This can impact traditional fundraising efforts, such as in-person collection baskets.

Fintech advances in the last decade have made it much easier for people to participate in charitable giving. There are numerous ways nonprofit technology helps organizations raise money. Rather than an in-person fundraising push, organizations raise money via social media and email campaigns. Not to mention philanthropies saw an increase in virtual fundraising campaigns in 2020, boosting the need for online financial services and resources at an unprecedented rate.

Nonprofits can only thrive because of the generosity of patrons and local businesses. A fintech business can team up with a charity, and both can develop stronger community relationships as a result. Individuals who support the organization will look to partner companies for their own fintech solutions. The charity benefits from gaining access to the business’s software for easier donations and tracking funds.

Nonprofit Technology Advances

The M + R Online Giving Benchmark Study found that online revenue grew about 10% in 2019. Facebook alone made up around 3.5% of online giving, with much of it occurring on Giving Tuesday.

In addition to ramping up the ways people give to nonprofits, financial management has gone into the cloud. Rather than keeping a paper book, nearly every organization uses some type of accounting software and big data to track giving and donors and figure out ways to increase revenue from year to year.

Benefits of Teaming Up

There are numerous benefits to fintech and charity partnerships. While some are quite obvious, others are more subtle.

More Exposure

When two companies team up, they both gain access to one another’s customer lists. For example, if a business offers an online payment gateway and it teams up with a local charity, it might send out a press release. Simply gaining exposure may bring in more donations for the nonprofit.

They also will let their members know they are using a partner’s payment system. If the software is donated, the nonprofit will offer a thank you. Some of its patrons are likely business owners who may need services. By working together, the charity and company both expand their reach.

In a study by Omnicom Group’s Cone Communications, researchers found 83% of millennials felt loyal to companies helping them contribute to causes. A partnership helps both the fintech firm and the non-profit organization.

Financial Help

Some fintech companies throw their financial support behind an organization. They offer technology advantages and also come alongside them to raise money for the cause. Businesses should care about the purpose of the charity it supports. It should tie into the company’s philosophy and help advance its own goals. Any donations can likely be written off on taxes while helping a local group.

Testing Systems

Offering software at no cost allows businesses to try out new features and work through bugs. Part of the agreement can be that it provides the nonprofit with updates first, and they’ll report issues so the company can fix them. They get the program for free, and the business receives instant feedback on what works and what needs tweaking.

Better Tracking

Most fintech companies offer better tracking features for all types of businesses. Charities will be on top of where donor funds go and if they’re being used wisely. When people give to an organization, they expect them to be good stewards of that generosity. With the right programs, the nonprofit can run reports and know in an instant how money gets spent and if they are actually making the difference they promised.

Fintech Charity Partnerships Can Improve Performance

When it comes to making a difference in the world, improved performance enhances productivity and allows volunteers to do more than they ever thought possible. Technology allows people to stay on top of tasks and ensure cash flow is never an issue. By working together, fintech and nonprofits can make a huge difference in the lives of those they serve.

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

The following is a guest post by Lily Tran, content writer for MoneyTap.

Southeast Asia is one of the fastest-growing fintech markets in the world. The expected market growth is estimated to be between $70 billion and $100 billion by 2020, outpacing the likes of the U.S., U.K. and China.

One of the contributing factors to this growth in this region is its insufficient financial inclusion. The World Bank data points to a lack of access to financial tools in southeast Asia. As per the data, in Indonesia, only 49% of adults have formal bank accounts; in Cambodia, the number is 22%, and in the Philippines and Vietnam, it’s 34% and 31%, respectively. The penetration of insurance and wealth management is also low.

This makes it difficult for people to save, borrow, and manage money easily. This has given a tremendous opportunity to fintech companies to offer innovative opportunities for unbanked consumers to take fintech services and improve their financial situation.

Investors are channelling funding into the region, with financial technologies as their primary investment. According to new data from CB Insights, fintech fundraising activity in southeast Asia grew by 143% year on year in 2018. Fintech investments in Southeast Asia increased by more than 30% through 2018 to reach approximately $6 billion.

An international finance company, Robocash Group, in its recent report released the names of the top five countries experiencing the fintech boom in southeast Asia. So let’s take a closer look:

1. Singapore

Singapore is at the forefront of the fintech boom, dominating the region’s fintech market for several years now. In 2017, 400 local fintechs raised a combined total of $229 million.

With an appetite to consume a range of fintech offerings, Singapore fetched more than 50% of all fintech deals made in the region between 2013 and 2016. The diversified fintech market includes fund transfers, cryptocurrency trading, peer-to-peer payments, investment apps, insurance services, money lending services, and crowdfunding platforms.

2. Indonesia

Indonesia is largely populated, but only over 50% of its population are active internet users. This means roughly 150 million people have the means to use fintech. 61% of Indonesia’s internet users have registered for mobile banking apps. And 11% of its population transact online to purchase items or pay bills. However, online payments increased to $313.6 million in 2018.

By the end of 2019, only 49% of Indonesia’s population had a bank account. Now, alternative payment platforms are rising in popularity. Peer-to-peer payment platforms make up over 30% of the all fintechs. Along with payment platforms, e-commerce is expected to push the market further forward.

3. The Philippines

2018 saw the Philippines’ central bank roll out plans to make at least a fifth of its transactions go digital within two years. The digital payment adoption was projected to increase by 20% by 2020.

The country has 71% active internet users and 65.5% unbanked. And fintech companies have emerged to bridge the gap. In 2017, $78 million in funds were raised, an increase of 13% from the year before. As mobile banking has diversified, 54% of the country’s internet users have at least one mobile banking app.

According to Singapore Fintech News, one-third of all fintech companies registered in 2018 were payment platforms, followed by alternative finance at 30%, and blockchain companies at 16%.

4. Vietnam

In Vietnam, the total transaction value in the personal finance sector has crossed the $1 billion mark. Further, this value is projected to show an annual growth rate of 38.4% resulting in a projected total amount of $4.5 billion by 2024.

According to a report, between 2017 and 2020 the number of fintech startups grew more than 179%, with payment apps leading the sector, consisting 31% of the total startups.

Along with payments, peer-to-peer lending was another field which grew rapidly during this phase. The government is planning to get more than 70% of its people over 15 years of age to own a bank account within a year’s time. In 2017 and 2018, only 31% of adults owned a bank account, and only 4.1% of its people owned a credit card. In the phase between 2010 and 2020, a vast number of personal loan apps emerged, some of which have become huge.

Like the other countries in the region, Vietnam’s unbanked population are turning to fintech for its sheer ease of financial transactions. Around 50% of the country’s internet users use mobile banking platforms, 39% make mobile payments, and 9.3% own some form of cryptocurrency.

5. Thailand

82% of Thailand’s population is on the internet, and 74% of them bank online. 47% of all internet users make mobile payments, and 71% of them use their phones to purchase goods online each month.

Even though such a massive number of people are active online, Thailand is not a very friendly market for fintech compared to other countries in the region. The country attracts fewer investments for fintech, but that said, it’s still experiencing the fintech boom as 10% of its internet users own some form of cryptocurrency. This makes Thailand the second country after South Africa in the world for crypto ownership.

Key Takeaways from Southeast Asia’s Fintech Boom

• The most disruptive fintech sectors are payments and lending.
• Fintech has changed the way people and businesses make payments, save their money, borrow, invest, and buy insurance products.
• Fintech has given access to finance for poor people and people in remote areas, boosting the economy and stimulating demand. Fintech has made it easier for SMEs to get small loans and credits anytime to keep their business running.
• Many economies have implemented regulatory sandboxes to motivate innovation in the fintech sector.

Lily Tran is a content writer, working for MoneyTap, who writes about all things finance. Her passion for credit, debt, loan and investment drives her to help readers get an insight about everyday finance.

Photo by Tony Pham on Unsplash

The following is a guest post by Lisa Bigelow who writes for Bold.org.

Robo advisors. Touchless payments. Zelle. These are just a few ways that digitalization has transformed how people manage their money. Although consumers have experienced a few hiccups along the way — lame chatbots, we’re looking at you — fintech is making an enormous impact on how banks will serve their customers now and in the future.

Here are five futuristic fintech trends that reveal where banking is headed.

In five years, AI will dominate customer service

You’ve probably used your bank’s chatbot to accomplish a simple task like disputing a transaction, but have you considered asking it how much you spent at the grocery store last month? Some digital transformation experts estimate that 95% of customer service interactions will be powered by artificial intelligence by 2025.

Consumers expect AI-driven interactions to satisfy bigger customer service expectations, according to a Drift survey. Businesses that delay improvements in natural language processing or that rely on human responders will be at a disadvantage, with one IBM study showing a 99% improvement in response times when using AI. With 38% of baby boomers expecting a 24-hour response, that’s significant.

Yet chatbots are more than basic analytics delivered quickly. They can also offer suggestions on the best mortgage or investments for your finances. Even high net worth investors may be surprised to learn their financial managers rely on roboadvisors for complex algorithms that recommend investment strategies.

In China, digital payments — not cash — is king

Digital payments went mainstream in Asia long before COVID-weary consumers turned away from cash for health reasons. In China — where a mobile payments market worth $17 trillion flourishes — vendors often prefer cashless transactions, even for small purchases. And with 91% of Chinese tourists saying they would shop more overseas if mobile payments were an option, all economies — and their banking systems — will benefit by adopting fintech.

In addition, cash payments don’t always offer consumers more convenience or better pricing, especially with browser add-ons making finding deals easier. Peer-to-peer shopping platforms like eBay and Alibaba have given consumers more choices than ever before. And with players like Venmo and Zelle allowing instant cash transfers, it’s never been more convenient to shop.

Fintech is changing cross-border education

American colleges prize international students for reasons related to finances and diversity. International students value American college educations for their quality and name recognition. Before fintech, financing an international education and recording international tuition payments was time-consuming and difficult.

Fintech helps lower the barrier to entry to the U.S. education market. Take the University of Virginia, which adopted Flywire as a means of helping foreign students establish payment plans and transfer funds. And in China, Superyou and myMoney allow students to complete cross-border transactions with the touch of a mobile button.

What about those who can’t afford the sometimes $70-thousand-and-up annual price tag of American education? Enter Prodigy Finance, a U.K. lender that finances students based on their future earning potential. Think that can’t possibly work? Think again — Prodigy says its repayment rate is 99%.

Students, for their part, are eager to learn about fintech. At Georgetown, MIT, NYU and other top-tier institutions, courses related to financial innovation are filled, with fewer expressing career aspirations in once-hot areas like trading.

Tech startups are also playing a role in increasing accessibility to education with platforms like Bold.org creating and hosting exclusive scholarship opportunities for students.

India is adopting fintech quickly

You already know that China, the U.S., and the U.K. are fintech hotspots. But what about emerging markets with large, tech-savvy populations and unmet banking needs?

Enter India, widely regarded as the “next frontier” in fintech. According to a 2019 report on emerging technologies in banking, PWC ranked India second worldwide in fintech adoption, with a rate of 57.9%, driven by favorable government policies and funding from foreign venture capitalists.

If you can’t beat ‘em, join ‘em

Traditional banks are eager to jump aboard the innovation train. Collaboration is at an all-time high, with staid players such as Lloyds, American Express and PNC partnering with hot innovators like Swave, GreenSky and OnDeck, respectively.

A 2017 PWC study found that 82% of banks, insurers and wealth managers surveyed plan to invest or collaborate with fintech firms over the next three-to-five years, with 88% fearing lost revenue should they not make the move to fintech. PWC says, “Businesses need to understand how this new world affects all of their touchpoints with the customer if they are to actively reinvent their own future and not be at the mercy of external events.”

In addition to improving operational efficiency and lowering costs, traditional banks believe that fintech will ultimately improve the customer experience for less money. And that means fintech will drive your financial decisions sooner than you ever thought possible.

Lisa Bigelow writes for Bold.org and is an award-winning freelance content creator who helps people learn more about personal finance, real estate and information security. Bigelow has contributed to Finance Buzz, Life and Money by Citi, MagnifyMoney, Well + Good, Smarter With Gartner, Popular Science and Cadre Insights.

Photo by Karsten Würth on Unsplash

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

Voice recognition technology is experiencing something of a golden age right now. You can control virtually anything with your voice now, from your lights to your TV to your phone. As these technologies keep improving, their applications in banking grow more promising.

Voice tech encompasses a range of technologies that involve recognizing and responding to users’ voices. The potential for these services in the financial industry is immense. You could use your voice to log into your bank, make withdrawals or ask for financial advice.

The advantages of voice tech for banks are impressive, but there are still some roadblocks ahead. Here’s a closer look at three benefits and three drawbacks of the technology.

Benefits

Roughly 111.8 million Americans use voice assistants at least monthly. That’s more than a third of all internet users in the country. The American public is already comfortable with these technologies, so bringing them to banking is a natural next step.

Banks shouldn’t adopt voice tech just because people would use it. Thankfully, the technology has benefits beyond high adoption rates. Here are three of the most significant.

1. Streamlined Banking

Think of how easy voice assistants like Alexa and Google Assistant make routine tasks. You can check the weather, read your messages and hear the news without lifting a finger. Banks can bring those same benefits to their user experience by integrating voice technology into their apps.

Users could make a deposit or withdrawal by merely asking their phones to do so. Mobile banking allows people to perform routine actions in less than three minutes on average. Voice tech could shorten that to a few seconds since users wouldn’t have to press any buttons.

2. Increased Accessibility

Mobile apps made banking more accessible than ever, but the industry can still improve. You still need to have full function of your fingers to work these apps, which can be a barrier to some users. Voice controls can allow more people to experience the convenience of banking apps.

VOIP will also gain some next-gen improvements in the next few years due to 5G. For instance, more banks may achieve faster, unified communication with the help of voice-to-text functionality and faster networks. With the VoIP market gaining $35 billion by 2025, we will most likely see additional innovation for these communication systems.

Voice tech gives users more options, which makes banking services more appealing to consumers and businesses alike.

3. Biometric Security

Voice commands aren’t the only application of voice tech in banking. Banks could also use this technology to as another layer of biometric security. Since voice assistants can differentiate between voices, they can use your voice to verify your identity.

Unlike with passwords and PINs, you can’t steal biometrics. This security advantage is why fingerprints and facial recognition have surpassed passwords, and voice recognition adds another layer of security. With all of these options, banks could offer biometric multi-factor authentication.  

Drawbacks

Despite these advantages, there are still some downsides to voice tech in banking. As much as these technologies have improved, they’re still relatively new and far from perfect. As such, there are a few risks that come with their adoption.

These disadvantages will likely fade as voice technologies improve. At the moment, though, they may dissuade some users from using voice services, making them less profitable for banks. Here are three of the most prominent of these drawbacks.

1. Privacy Concerns

Voice technology may increase security, but it also raises questions about privacy among some users. According to a Microsoft report, 41% of voice users are concerned about issues like passive listening. People may not use banks’ voice tech out of fear that someone may be listening.

Even if users don’t interact with voice recognition features, they may turn away because of them. People may worry that banking apps always listen to them, even while they’re not using voice features. If banks can’t assure people that their privacy is safe, these features could repel users.

2. Faulty Voice Recognition

There are still some lingering concerns about how accurate voice recognition technologies are. A 2017 study found it takes just two years for your voice to change enough that these systems won’t recognize it. Recognition errors could lock people out of their bank accounts, causing unneeded complications.

In fact, foreign language barriers don’t just exist between humans. When you’re dealing with finances, any translations errors could be costly. If your system misunderstands your voice commands, it could make unwanted transfers or deposits. Voice recognition has to be almost perfect for banks to use it extensively.

3. Regulatory Complications

Any financial institution has to comply with strict regulations, and voice tech could be an issue here. Right now, there aren’t any standards for how banks can or should use this technology. The legal ambiguity could cause banks to run into some complications while using these services.

Finding out how voice tech fits into existing regulations could be a headache. Working through these gray areas could be more trouble than it’s worth to many institutions.

Voice Tech Is Promising but Imperfect

The efficiency and security of voice technology is enticing for financial institutions. Still, many banks may avoid the technology right now due to its current drawbacks. More firms will embrace it as the technology improves, but that could take a few years.

Voice tech today is far from perfect, but it does have potential. With further advancement, it could revolutionize digital banking.

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

Photo by Mason Kimbarovsky on Unsplash

The following is a blog post by mortgagetech veteran Caleb Skinner.

This year’s historically low interest rates are creating rare opportunities for homebuyers and mortgage refinance applicants — and, by extension, for the mortgage industry.

Unprecedented as the present economic situation is, though, it’s not unexpected. Indeed, it’s already old news.

What’s more interesting to real estate professionals, financial professionals, and fintech executives whose livelihoods depend on a vibrant real estate lending industry is how that industry looks two, three, or four business cycles out from the present.

Like It or Not, Big Changes Are Coming

Comforting as it is to imagine that business will continue as usual through the coming decade, all available evidence suggests that won’t happen. We need to gear up now for years of potentially wrenching change and prepare for a mortgage industry that, come 2030, bears little resemblance to today.

Here are five ways that lending will dramatically change in the next 10 years.

1. (Virtually) touch-free origination

“Disruptive” originators like Quicken Loans’ Rocket Mortgage combine slick marketing with legitimate process improvements to insinuate that the mortgage application process of today is radically different than 15 years ago. Today’s buyers and refinancers shuffle less paper and enjoy a far better digital user experience. Still, the basic, labor-intensive workflow is about the same.

That’s not likely to be the case in 2030. We already see the contours of a (virtually) touch-free origination process that requires little if any person-to-person interaction. For example, platforms like Mortgage Cadence offer consolidated digital lending platforms for lending professionals. Meanwhile, “hybrid close” suites like SimpleNexus and automated borrower support tools like Capacity facilitate borrower self-service and reduce lender workloads.

For lenders, this makes for leaner, more productive origination; for applicants, a dramatic reduction in time, effort, and awkward phone calls.

2. Appraisal as afterthought

For most lenders in most markets and submarkets, in-person appraisal is already strictly optional. Experts can easily compare comps and take the market’s temperature from afar.

If the early success of AI-powered valuation tools like Clear Capital holds, those experts won’t have much to do by 2030. That might be a good thing. Human appraisers bring their blind spots and built-in biases to their work, potentially putting their employers on the wrong side of borrower protection laws like the Fair Housing Act.

3. In-person close: strictly optional

This is the year remote closings went mainstream. In the short term, the in-person close is likely to make a comeback as pandemic-era habits fade. But the fact that deals got done this year, and the market held up better than anyone expected in March, is a warning sign for anyone betting on in-person closings over the long term.

4. Responsive, humane delinquency management

Presently, lenders’ and servicers’ risk management departments accept that a certain proportion of their loans will lapse into delinquency and that foreclosure is inevitable in many of these cases.

The first condition won’t change much by 2030, but the second can and probably will. AI-powered servicing solutions like Brace, which spots troubled loans early and keeps borrowers current, will help servicers identify looming delinquencies, jumpstart the workout process, and stop costly foreclosures before they happen. With widespread implementation, lender foreclosures could become less common by decade’s end.

5. Remote work

Many of the office-based jobs that evaporated in the pandemic-induced shift to remote work earlier this year aren’t coming back — to the office, at least.

They still exist, just in dispersed form. In time, they’ll disperse further, as newly location-independent workers seek out lower-cost, higher-quality-of-life alternatives to expensive coastal hub cities threatened by climate change and income inequality. A 2020 study of the best places to work remotely identified clear competitive advantages for small and midsize cities in the Midwest and interior South, mainly due to low living costs and excellent Internet infrastructure. As the knowledge economy gains ground in places like Grand Rapids, Michigan, and Des Moines, Iowa, fintechs clustered in major U.S. metros will need to broaden their horizons and cast a wider net for talent.

Final Thoughts

This year taught us that trying to predict too far into the future is risky. We can’t say for certain how the world will look 10 months from now, let alone 10 years.

That said, no one disputes that an ambitious cohort of fintechs are revolutionizing the mortgage industry in real time. By 2030, homebuyers and homeowners will take for granted a host of new capabilities now in their infancy.

In-person appraisals and closings will be strictly optional. The entire origination process will involve few person-to-person conversations and take a matter of days, not weeks, for well-qualified borrowers. And the lender foreclosure process, at least in its current form, could be all but obsolete.

You read it here first.

Caleb Skinner worked in a mortgage lending company for 15 years. He is now a finance consultant.

Photo by Tomasz Frankowski on Unsplash

Below is a guest post from Shubhradeep Nandi, co-founder and CEO of PiChain.

The current pandemic has brought the whole world to a standstill and created grave economic issues. The finance and banking sectors have slowly started to experience the tremors, too. With almost all sectors struggling to keep up in these economic conditions, all eyes are on financial sectors who are the drivers of the economy; it is only them who can prevent an economical holocaust. According to research from Wakefield Research and Concur, almost 84% of small businesses rely on manual processes for most of their work. Being one of the sectors that still needs a lot of manual work, the financial institutions need to bring significant changes in their operations to keep up with the new rules of social distancing. 

How is COVID affecting the financial industry? 

Various companies across different sectors are trying to avoid a situation of bankruptcy, there is very little that the banking and financial industry can do to help. Several companies have opted for employee layoffs and change in investment strategies with the aim to survive this crisis. In spite of all the crisis, digitization is the only way the whole of the finance industry can get back on its feet and start controlling the economy again. But the banks cannot opt for these options as they have to deal with a fall in demand, lower income, and production shutdowns. 

Given the current pandemic situation, a transition to the digital world was very inevitable for the finance and banking sector. The pandemic gave a boost to digitization which led to more and more people engaging in digital and online banking. The finance industry has undergone a digital revolution. Banks and financial institutions who are head-on entering the financial market with digital platforms are experiencing an increase in profitability and market share. 

Customers have already adopted digital means for performing various transactions. Fintech is becoming increasingly common as a majority of financial institutions find themselves using technology to advance their services. New technologies are extensively being implemented in the finance sector. Cloud computing, Big Data analysis, machine learning, artificial intelligence, blockchain etc., which were exposed to a fraction of players in this particular sector, are slowly starting to spread their reach bringing a large number of institutions under their umbrella. The increased security practices in the digital payment sector are also making the digital finance industry more and more appealing. 

Increase in risk exposure due to the pandemic 

According to FinScan’s May 2020 report, those professionals dealing with anti-financial crimes like auditors, regulators, compliance professionals etc. are finding it hard to keep the financial crimes under control. This has led to an increase in the overall risks of money laundering, compliance and other financial frauds. Among the main reasons to fuel the sudden increase in compliance risks is the “remote working” policy. This has resulted in a lack of monitoring systems and proper digital connectivity leading to minor disruptions in working schedules. Moreover, most employees have an inadequate IT structure to carry on full-fledged work. There were a lot of security risks involved as the systems were moved out from state-of-the-art firewall securities in the office to the basic securities of personal networks. 

Another commonly heard reason is that, like all other industries, the financial industry was also not ready to roll out online in such short notice. In an industry where even today most work happens manually, there was a huge gap created when, all of a sudden, they were forced to get all their operations to perform digitally. This created a lot of opportunities for criminal masterminds to install backdoors and capitalize on this opportunity. Thus with an increase in cybercrimes, the risk of non-compliance increased as well. The drastic shift of a majority of the customers to digital transactions provided a safe haven for hackers to monitor transactions and perform data breaches. It has also become very difficult for the compliance and regulations department to monitor activities because of scattered data and disruptions in the overall working network of the organization. 

Dealing with the growth in compliance risks 

With all fields of technology advancing to help other industries, many fintech and regtech firms have come up with automated compliance and risk management solutions. Even though these solutions are state-of-the-art, tech companies mainly focus on the technical and security aspect of it. This is indeed necessary because of the ginormous amount of data on the web; most tech companies can’t deliver on the level of regulations and compliance that needs to be followed by the financial institutions. However, regulations and compliance being the two most important aspects of any financial organization, these finance companies have to look towards those handfuls of fintech companies who deliver both on the technical and finance regulations aspect. These firms leverage regulatory technology to monitor and regulate compliance laws and lead the company to a steady rise in the market. 

Looking toward a post-COVID world 

The world getting back to normal may be difficult and changes made during COVID-19 will slowly become the new normal. The finance industries will continue to face major challenges unless companies have deployed thought- through and well-defined resilient strategies. Regulators will need to be able to track every transaction being made. Customers will want every transaction quicker and safer. Thus, an effective sustainable digital governance, due diligence and compliance management with risk assessment strategy would be of great value to the BFSI sector. 

The sector, with the help of its employees, would need to redo their relationship with customers and provide assurance in terms of service. Evolution to meet changing socio-economic conditions is the prime need of the sector which can only be bolstered with strategic digital transformation.

Shub, co-founder & CEO of PiChain, is a serial entrepreneur who is passionate about business growth. On a quest to achieve sustainable compliance for 500 Entities by 2025, he has 10+ years of experience in building and selling software for finance and regulatory compliance management.  At PiChain, Shub provides organizational leadership with his unique combination of business understanding and technical acumen.

Photo by Sharon Snider from Pexels

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