Customers’ expectations of always-on, real-time services and convenience are in stark contrast with the reality of the core systems that serve them, and established institutions are seeing an exodus of customers to providers able to make good on those demands.

The irony is that older banks possess an incredible amount of data accrued over decades, yet are unable to capitalise on that rich seam of information at their disposal. Systems architected 30 or 40 years ago may be proven, reliable and relatively secure, but were never designed to leverage data in the ways now required to guide service design and refinement at the kinds of speeds needed to remain competitive.

Financial institutions have a dual challenge, therefore. Core banking systems need to be replaced or phased out, and the data archives locked into mainframes and legacy storage released to improve customer experience, offer innovation, and take the fight to the new and neobanks that threaten to out-compete longer-established businesses.

Trusted market intelligence organisation IDC recently published papers in conjunction with Thought Machine, a next-generation core banking provider, on the options available to banks reliant on outdated infrastructure. It describes how fourth-generation cloud technologies now offer a choice of migration strategies to replace and/or update core functions.

Source: Shutterstock

Non-exclusive options of progressive, greenfield and ‘big bang’ methods are considered in detail, and the papers assert that an amalgam of these strategies is the most likely to succeed in the majority of cases. All, however, are predicated on the embracing of technologies like interoperability via APIs, microservice-based architecture, low-code compatibility, platform agnosticism and scalability/elasticity.

Using methodologies like architecture-as-code, self-healing and baked-in scalability, banks can develop real-time services and downstream data for analysis, all based on modular architecture that’s secure and resilient. These methods enable fast, iterative development, lowering costs and time-to-market, as well as widening product portfolios (of both customer-facing and business intelligence applications).

Once banks engage in revising their core systems, they can begin to develop an ‘enterprise intelligence’ approach that unlocks their data assets that will inform, with empirical information, long-term strategies unencumbered by the limitations that are imposed at a deep level by aging code. Running on core technology that is based on interoperability and modularity ensures an open future, allowing emerging technologies (machine learning is often quoted in this context) to be implemented – creating the possibility to develop unique and differentiating products.

The emergence of an enterprise-wide data strategy unlocks a strategic treasure-trove of information that helps banks identify, via advanced analytics, key information used to drive innovation, enhance customer experiences, and improve operational efficiencies. The myriad advantages of EI (enterprise intelligence) are explored further and possible roadmaps are outlined in ‘Unlocking Enterprise Intelligence in Banking Systems’ which is available here.

There are clearly challenges on the route to modernisation, not least of which is the maintenance of reliable, steadfast services as work proceeds. The two papers describe the pros and cons of common migration strategies and how institutions might best pick their own course.

It’s important to stress, however, that although there are myriad options, there are a number of ‘givens’, paramount among them being the use of cloud-native methodologies and techniques, even when considering a waterfall, ‘big bang’ strategy. It’s also worth noting that cloud-native methods are not solely implemented on cloud providers’ resources. Like many industries subject to high levels of governance around data security and compliance, many financial organisations adopt a hybrid topology, often to maintain a separation between critically sensitive data (airgapping) or to prevent vendor lock-in, among other reasons. Cloud-native technologies allow for this, and ensure that during and after migration, data governance is strictly observed.

Source: Shutterstock

The agility and scalability of cloud-native confers on platform architects the ability to structure core and ancillary systems however they’re required to be distributed, regardless of hosting platform, remote or on-premise. With the right approach, a bank’s options remain open and it can react quickly to changes in governance, as well as to market conditions, altering topology at will.

Finally, it’s worth circling back to the reasons for overhauling core infrastructure. Replacing old technology with new should not be an empty gesture because of a perceived need to progress. The end goals should remain clear in the minds of decision makers: to enable practical use of existing and future data resources and to create a basis of technology that is adaptable, secure, compliant and agile. On that basis, banks can innovate, lower the cost and time required for innovation, and compete with new-generation financial organisations that operate with little technical debt.

Startup banks and neobanks may come to the table with fewer encumbrances, but they lack the powerful body of historic data spanning multiple products that older institutions have. And it’s data, at the end of the day, that is the one resource that truly empowers.

Read the reports, ‘Driving Innovation Through Cloud-native Core Banking Platforms’ and ‘Unlocking Enterprise Intelligence in Banking Systems’ for fuller discussion of the issues covered here. Discover the cloud-native core banking and data services portfolio from Thought Machine by heading here.

The post Data Strategies That Dictate Legacy Overhaul Methods for Established Banks appeared first on Tech Wire Asia.

To this day, CFOs continue to be at the forefront of technological innovation in the workplace, yet their role has grown considerably in scope. CFOs are now key strategic players in the business, with important roles in regulatory compliance and talent management.

More broadly, the finance team is expected to keep abreast of the economic situation at the macro level – international market conditions, for example – as well as oversee the organisation’s long-term prospects and daily administration. It is no wonder that the finance office continues to embrace the latest technology to keep so many plates spinning.

Source: Shutterstock

Financial Close Process

One of the most critical aspects of a CFO’s role is ensuring a smooth and accurate financial close process. The financial close involves consolidating all financial data at the end of a reporting period, a process that includes reconciling accounts, adjusting entries and preparing financial statements. The financial close process is crucial for accurate financial reporting and strategic decision-making, providing the basis of empirical fact for both internal and external use.

Trintech stands out as a leader in automating financial processes, particularly in streamlining the financial close process. By leveraging cutting-edge technologies, Trintech replaces error-prone manual tasks with automated routines that revolutionise workflows. This transformation frees up resources so staff can address their wider remit in many different areas.

There are several benefits from Trintech’s financial close solutions, specifically:

– Enhanced accuracy and compliance: Automated reconciliation and transaction matching ensure that financial data is accurate and compliant with pertinent regulatory standards. This reduces the risk of errors and non-compliance, which can lead to fines and reputational damage.

– Time and resource savings: By automating routine tasks, finance teams complete the financial close process faster, freeing time for more strategic activities.

– Realtime insight: With realtime access to financial data, CFOs make informed decisions quickly. This is essential for agile financial management in today’s fast-paced business environment.

– Scalability: As businesses grow, the Trintech platform scales to handle an increased volume of transactions and more complex financial structures yet ensures the financial close process remains efficient and accurate.

Conforming to APIs’ and Legislative Rules

Trintech integrates with common software platforms like Workiva, Oracle, and Microsoft Business Dynamics. Integration means relevant information can be collated in formats ready for analysis, improving the efficiency and accuracy of the financial close process.

Changes in legal regulations and their increasing complexity, especially internationally, leave companies open to missteps. Using up-to-date software to identify the shifting legislative requirements means that companies can pre-empt statutory changes and fulfil their obligations in registering and filing all necessary paperwork.

Most businesses face arduous data collation and filing because most necessary compliance work involves evidencing procedures and data. However, automated systems capable of comprehensive data aggregation help finance personnel quickly produce the required information and present it in formats demanded by overseeing bodies.

Adaptable agile software allows the inevitable compliance changes to be adopted without having to dedicate resources to address the needs of multiple regulators. With software from Trintech, CFOs don’t have to sideline resources engaged in more strategically focused tasks, so risking hard-won competitive advantage.

Cost and Spend Management

Controlling spending, lowering rates of incorrect expense submissions, and matching incoming invoices with a company’s records mean that keeping tight reins on monies in and out is more straightforward and less prone to fraud and human error. Digitisation reduces the need for manual paperwork processing. It ensures all staff know the required processes and approvals to access funds, and are aware of expense spend limits & request filing procedures.

In growing businesses, especially those with an international presence, automated systems handle the complexities of managing all aspects of cost control, freeing up finance staff to concentrate on activities that will bring the company more value.

Source: Shutterstock

Considering the Future

In an increasingly complex financial world with more responsibility resting on CFOs, the digital transformation of finance systems is the only way financial professionals can stay ahead of the game and retain a proactive stance.

With the right software platform, the finance function can become more strategic, allowing a new generation of CFOs to lead company strategy using data processing that informs and guides other stakeholders and improves internal workflows. Trintech helps CFOs shape the financial future of their organisation, keep on the right side of regulators, and handle everything the business throws their way!For further insights, explore Trintech’s on-demand webinars and read how Queensland Airports and the Dallas Cowboys improved their financial reconciliation processes, improving visibility & control over operations. There are more case studies over at the Trintech site.

To learn about the wide portfolio of capabilities that Trintech offers, reach out to a local representative to book a demo and discuss how a data-driven approach can transform your finance function.

The post Transformed Finance and Automated Excellence with Trintech appeared first on Tech Wire Asia.

Pavel has extensive experience in both finance and advanced machine learning technologies, with a background in data science, analysis, and research. We asked Pavel first to describe what we mean by the phrase ‘fraud network’ and, broadly, how their activities can be counteracted.

“Fraud networks are organized groups or individuals that collaborate to carry out fraudulent activities. [They] exploit gaps where [an organization’s] infrastructure is not connected to transaction or event monitoring. Fraud networks, or fraud rings, are groups of individuals – operating globally or within the same location – who jointly participate in fraudulent activities, such as multi-accounting, money laundering, money muling, and personal data breaches. They collaborate to take advantage of a digital platform like a cryptocurrency exchange, fintech app, dating service, or online casino. By connecting who the person is (with IP addresses, payment details, and so on) to what they actually do on the platform, we can detect and act on fraudulent patterns.”

Although such groups operate globally, there is a greater instance of this type of crime in the APAC region, plus the problem is growing faster there too. Pavel told us that attack numbers are growing about eight times faster than in Europe and the Americas. The issue is not necessarily linked to national economic status: Singapore and Hong Kong are among those countries where fraud networks operate commonly. Singapore, with the highest GDP (PPP) per capita in the world, saw 4,800 people investigated for ‘money muling’ (the transfer of illegally-gained funds on behalf of others) in 2020 alone, according to Singapore Police data. There were 4,700 similar cases in Singapore in the first three months of 2023 alone.

Source: Sumsub

“In Asia, fraud rings are affecting both developed and developing markets alike. For example, Bangladesh has an average fraud network incident rate of a worrying 10.2%, with alarming rates in other growing economies such as Thailand (6.6%), Vietnam (3.7%) and Indonesia (2.2%),” Pavel said.

Of course, the problem isn’t limited to the APAC. In Estonia – arguably one of the most digitized countries in Europe –  a group of several dozen cryptocurrency exchange applicants uploaded identical Proof of Address documents from an unlicensed foreign bank in an attempt to get multiple cryptocurrency-based payment cards issued to the same address.  , Sumsub, discovered the attempt. “This is just one case of how serial fraud operates; other instances include money muling schemes, tech support scams, ransomware, and phishing attacks, and account takeovers.”

Legacy methods of combating the types of fraud we see today depended on only initial KYC (know your customer) checks. Once a new user had passed those, their activity was not monitored. Fraudsters can, in those circumstances, persuade legitimate citizens to ‘lend’ (or sell) their credentials, to then go on to use the account to perpetrate crimes. “Continuous monitoring and analysis ensure that even those applicants who’ve passed initial verification are consistently under observation,” Pavel told us. But there are significant challenges in deploying full-lifespan countermeasures. These include:

• High volumes of data mean manual identity of suspicious activity is resource-intensive,
• False positives can impact genuine users and sour relationships between customers and provider,
• Evolution of methods used by fraudsters means training and adaptation are required constantly by enforcement organizations,
• Regulatory compliance means there are boundaries that simply cannot be crossed during investigation,
• Customer experiences are easily compromised by heavy-handed anti-fraud measures,
• Costs rise and profits take a hit because of the need for fraud prevention.

Pavel Goldman-Kalaydin, Head of Artificial Intelligence & Machine Learning. Source: Sumsub

Pavel told us that today’s machine learning algorithms are a huge boon in fraud detection. “AI is a powerful tool for detecting fraud networks. Should users show signs of fraud after being onboarded, they won’t go unnoticed. Through leveraging AI, companies can implement behavioral analysis and risk scoring algorithms, which were previously challenging to implement effectively. Such advanced capabilities enable continuous monitoring of users’ activities, meaning early detection of suspicious behavior and enhancing fraud prevention measures.”

Sumsub holds an ever-evolving database that has identified and reported over 2 million fraudsters and operates a KYC platform built on over a billion identities. It analyzes more than 5,000 fraud attacks daily, building a comprehensive picture of the digital landscape that examines historical connections and relationships among entities, using ML-powered algorithms.

It’s in proactive, constant monitoring that the company’s platform excels. Its platform pre-screens service applicants using ID verification and behavioral intelligence that adds an invisible layer of fraud prevention. Verification processes detect deepfakes, suspicious device fingerprints, create risk scores, and detect the activities of today’s fraud networks. On an ongoing basis, Sumsub oversees login behavior and looks deeply into account activity using AI that ensures near-zero instances of false positives, guaranteeing a highly accurate and reliable detection of fraudulent activities in real-time.

“We adopt a multi-layered approach, offering a solution with ‘Detect & Act’ capabilities in one platform. This goes beyond traditional anti-fraud or KYC methods to ensure a fortified defense against a wide array of fraud, including account theft, romance scams, payment fraud, and many more. We provide the ability to set action alerts to automatically trigger additional checks, to simplify the decision-making process and reduce false positives.”

Given the sums of money that change hands daily over the internet, it’s perhaps no surprise that fraud networks are constantly developing new methods to launder and steal money from legitimate sources. Sumsub is the only platform that uses technologies that are in advance of those employed by these cyber criminals, preventing fraud and illegal activity in the APAC and across the world.

To find out more about Sumsub, head over to the company’s website and join over 2,000 companies that protect themselves and their customers with preventative measures that don’t impact customer experience or statutory compliance. Sign up for the free demo today.

The post The threat of fraud networks in the APAC: KYC and beyond appeared first on Tech Wire Asia.

The top performers who are able, consistently, to verify and track spending right across a large business are those that set the standard, and these organisations are the ones appearing in the top quartile of the Coupa Business Spend Management Benchmark Report [pdf]. Unlike many business-focused survey papers, the report is based on real-world data and metrics from companies and organisations undergoing a process of transformation involving continuous monitoring and iterative improvement.

Source: Shutterstock

We spoke to Michael Odom, Value Consultant, at Coupa Software, about the report and its implications. The published findings give organisations that need to overhaul their spend processes useful guidance on “what a spend management program should be delivering, regardless of the technology you’re using,” Michael explained. “We see the Coupa Community achieving the amazing results in the benchmark report, and we feel it really sets the bar for finance and procurement teams to see what the right combination of people, process, and platform can bring to their company.”

“When you look at a transformation, you need to make sure that you have the right people in place with the right mindsets to action, and a process that fits in and is right for the business. And the technology ultimately supports both of those areas, it really is a three part equation that you need to get right,” he said.

When a business seeks to change, the technology part of the potential solution is often wrongly thought to provide both the catalyst for and the means to change a company, a misconception that’s common across business functions and not one specifically confined to finance and accounting. Just deploying technology often produces a faster version of the existing undesirable results.

The Coupa report presents 20 KPIs against which CFOs can measure performance in groupings such as ESG, source-to-contract, procurement, supplier management, invoicing, expenses, and payments. By analysing each area and ensuring the resilience of the three P’s (process, people, platform), companies can improve their spend performance. The best performers constantly strive to improve each metric, and thanks to data-based spend management systems, they have empirical information against which they can track progress.

At their most basic, spend management platforms can help prevent mistakes and flag potentially fraudulent spending thanks to rules baked into the software. But traditional algorithms’ yes/no basis for rules may not be appropriate.

“One set of patterns we see as potentially suspicious may be fraudulent activity for one [business] and for another, maybe it’s okay for them. Another great example would be split purchase orders. If I have approval up to $10,000, and I need to go and spend $30,000, it would probably be wrong if I went and raised three requisitions for $9999. Technically, I’m below my limit, […] maybe following the letter of the rules and the policies in place within the system, but I’m definitely violating the spirit of it,” Michael said.

The way to solve for particular use cases is to use cognitive software that learns from and adapts to each company’s patterns of spend, a dedicated AI that trains on day-to-day practice. That’s the premise of Spend Guard, a feature of the Coupa platform that’s helping the best-performing businesses who feature in the Benchmark Report.

“It basically acts as several FTEs (full time employees), when it comes to actually doing audit processes. It’s very difficult for a human to go through and look at all of the activity and all the data that’s flowing through a system – some organisations’ spend could be billions of dollars on an annual basis. It’s just impossible to go through and look at tens of thousands of orders unless you hire a lot of people. And even then, it’s a manual and imperfect solution to a problem that can instead be addressed with AI-based pattern recognition and automation. Spend Guard provides that type of audit capability.”

Source: Shutterstock

Spending doesn’t have to be fraudulent for it to cost an organization. An issue as simple as clerical errors requires staff to manually check records and occasionally chase around the company asking colleagues for clarification. Michael recounted a story of a company in Australia interested in the Coupa platform to reduce costs of that nature. “They identified $800,000 of duplicate invoices. No one was doing anything wrong, per se. It’s just that invoices had been unknowingly raised multiple times. Staff went to enter the invoice and the platform said ‘these invoices are in the system already.’ So they added characters at the end of the invoice filename. Those invoices went through and were paid, and so [the company] had to claw that back. No one was actively trying to commit fraud, but a mistake happened and wasn’t caught until Spend Guard was turned on and detected it. And that’s just one example of where it had been going wrong.”

By resolving inefficiencies in processes and directly saving wasted spend, companies not only see immediate benefits, but the business at large can also improve its performance at a deeper level. “CFOs see activities that are taking place across operations and supply chain, even into areas like HR and IT. Being able to provide information back to those lines of business is important. There’s so much data available through procurement and finance […] for other parts of the business, it’s critical information whether you’re looking at sustainability, or operational efficiency.”

In our next article on spend management, we’ll look at aspects of spending like procurement and ESG and how tying together all the threads of spending can help organisations of any size achieve the type of efficiency metrics exhibited by the best performers listed in the Coupa Business Spend Management Benchmark Report. In the meantime, you can access the (non-gated) report here and learn more about the Coupa spend management platform here. Watch this space.

The post How to perform like the best in spend management appeared first on Tech Wire Asia.

In an age where traditional wire transfers and steep fees once hindered international money transfers, the landscape of financial transactions has undergone a remarkable transformation. With the emergence of borderless banking platforms such as Wise, sending money across borders has been redefined. As this fintech trailblazer continues to disrupt the industry, it’s imperative to unravel the narrative behind Wise and understand its profound impact on travel and financial experiences in Malaysia and across the globe.

Born out of a desire to challenge the status quo of traditional banking and tackle the opaque and often exorbitant fees associated with cross-border transactions, Wise has emerged as a disruptive force in the digital finance arena. Its innovative platform has empowered millions of individuals and businesses worldwide to navigate the complexities of international finance with unparalleled transparency and ease.

100,000 NEW PERSONAL AND BUSINESS CUSTOMERS JOIN WISE WEEKLY

Aaron Raj | 1 March, 2023

Through an insightful interview with Lim Paik Wan, Country Manager of Wise Malaysia, we delve into how the company harnesses the power of technology to reshape the travel and savings landscape in Malaysia and beyond.

The digital renaissance has brought transformative shifts in travel. How do you see technology shaping every aspect of travel beyond being a mere tool to smoothen the process?

Technology has now made travel more accessible and has allowed consumers to personalize their holidays, as people now take to blogs and social media platforms for inspiration. Additionally, consumers are now accustomed to instant and seamless experiences, with everything readily available through a few taps on their smartphones. This seamless digital connectivity has also changed how people make transactions for their travels. 

Lim Paik Wan, Country Manager, Malaysia at Wise

In years past, travelers needed to exchange cash physically and were usually required to pay for most meals and excursions in cash. Today, contactless payment options are offered almost everywhere, making it easier and safer for consumers to make international transactions. 

Even how consumers plan their travels has changed, with hotel bookings and flights done through travel apps. However, consumers still face challenges as the world transitions to a largely cashless society. A common one is a general unfamiliarity with international transaction fees, causing them to spend more than anticipated or budgeted for. Issues like these have led fintech providers to create solutions to make these processes smoother and more manageable. 

How do Wise’s digital cards and contactless payment solutions like Apple Pay and Google Pay enhance travel safety?

Today, contactless payment methods are widely accepted in many countries, lessening the burden of carrying large sums of cash. However, when used internationally, most traditional credit or debit cards tend to come with additional fees and hidden costs. Providers like Wise offer users the ability to hold money in over 40 currencies and make transactions at the mid-market exchange rate with no markups, helping travelers save money on international transactions. 

This relieves users of having multiple traditional cards, where they would have to bear the cost of foreign transaction fees and interest fees. Wise’s smart technology automatically converts the currencies you hold in your account for you, which have the lowest conversion fee; the card even allows users to withdraw money from ATMs with low fees while traveling.

Another great thing is that Wise users can start spending immediately with its digital cards, available instantly upon request in the app. Users can get up to 3 digital cards with different card details for an extra layer of protection. These digital cards can be deleted anytime, so customers can generate new card details when they need them. 

The cards can also be added to Apple Pay and Google Pay — these contactless payment methods are powered by NFC technology, which is generally more secure. Additional features on the account allow users to track their spending in real-time, ensuring smoother user and travel experiences. 

How has the pandemic impacted Wise’s services, particularly regarding international travel and cross-border transactions?

Digital adoption during the pandemic created the expectation for instant and real-time processes and a trend of contactless payment options. This has dramatically impacted the Malaysian market, as e-wallets and mobile payments are now expected payment options that businesses should offer. Additionally, we found that Malaysians are spending more time online, adopting more

Wise app shows that users can manage all their currencies all over the world. Source: Wise

international lifestyles, and traveling more frequently, leading to an increase in cross-border spending and shopping. 

These trends suggest a need for efficient cross-border payment solutions that offer faster, cheaper, and transparent international payments. Wise addresses these needs with its multi-currency account, empowering Malaysian consumers to seamlessly navigate global payments and lifestyles with no hidden fees and complete transparency. 

The recent launch of Wise on Apple Pay and Google Pay in Malaysia is part of our commitment to making international transactions more convenient and accessible for customers. A few other ways Wise is providing more convenience is by offering our users the ability to send money to popular e-wallets in the region, including Touch’nGo in Malaysia, GrabPay in the Philippines, and ShopeePay in Indonesia — being able to offer multiple money movement options makes moving money across borders even more convenient.

How does Wise promote financial literacy and awareness among users regarding currency exchange and international transactions?

A crucial part of our mission has been advocating for transparency in foreign exchange fees, empowering people with knowledge and insight into their transactions. This is reflected in our services and is why we support transparent and fair cross-border transactions. With Wise, all fees are transparently displayed to customers when they set up a transaction. 

Customers pay a single upfront fee, and the exchange rate they get is the one you see on Google with no markups or hidden charges. People also gain visibility into what’s happening to their money from start to finish when making cross-border payments, which includes the actual total cost to make the payment.

Wise also offers price comparison tools in the app, which allows our customers to compare the exchange rates and fees across a range of currency routes to make better decisions when choosing their preferred provider.

What upcoming advancements can users anticipate from Wise, and how will they improve travel and financial experiences?

Not to give too much away, but we are always looking to bring globally available features to Malaysia, such as Wise Business and Wise Platform. Wise Business accounts are for businesses that want to grow and operate internationally, making it easier to manage their finances across borders, such as paying overseas vendors and employees or receiving funds from clients.

Wise Platform is our infrastructure offering, which enables financial institutions and businesses to incorporate our global payment network into their platforms. As Wise operates globally, we’re always looking to see what would benefit Malaysian customers and work to solve their pain points. 

Lastly, in the rapidly changing landscape of digital finance and travel, how does Wise stay adaptive and responsive to its diverse user base’s dynamic needs and preferences?

At Wise, we constantly listen to our customers, and our goal continues to be making Wise as convenient, low-cost, fast, and transparent as possible. As more Malaysians look for cross-border opportunities, it’s vital that our users can use Wise to broaden their lifestyles globally.

Looking ahead to 2024 and beyond, we’ve got a number of exciting things coming up in our product roadmap to improve the speed, convenience, and cost of cross-border payments for our customers around the world.

The post Wise: Revolutionizing travel and finance in Malaysia appeared first on Tech Wire Asia.

Core banking systems serve as the backbone of financial operations and customer interactions for banks worldwide. They deliver loan management, withdrawals, deposits and other critical transactions in real-time, but a system with this number of capabilities comes at a hefty cost. Financial institutions (FIs) are spending up to US$100 billion a year on technology, and for good reason, as the best-in-class solutions can provide a significant competitive edge. Modern all-in-one platforms offer efficiency improvements, scalability and flexibility, comprehensive data analytics capabilities, robust security measures and, ultimately, cost savings.

The necessity for digital transformation

The COVID-19 pandemic and increased competition have accelerated the pace of digital transformation in Asia-Pacific FIs. Customers increasingly use digital channels and services, so banks allocate more resources to their technology budgets. However, merely maintaining legacy systems is no longer sufficient. Older IT stacks represent significant technical debt creating challenges in maintaining uptime, innovating at pace and meeting evolving market needs.

Investments in technology drive digital maturity, product agility, data-driven personalisation and, overall, enhance the end-to-end financial experience.

Despite the majority having clear digital strategies, over 80 per cent of APAC banks have yet to achieve their digitalisation goals. Furthermore, the emergence of digital-native banks and fintech firms poses a significant threat to traditional incumbent banks. Over 40 digital-native banks had been launched in APAC as of 2023, with a further 100 expected by 2025. Increased competition directly challenges incumbent banks’ market share. To future-proof their operations and mitigate the risks associated with technical debt, existing APAC banks must prioritise core modernisation.

Source: Mambu

The problems of a ‘big bang’ approach

A ‘big bang’ legacy replacement can seem tempting, as it promises a swift and comprehensive solution to outdated core banking systems’ problems. However, this approach often brings about problems that can outweigh benefits. Firstly, the sheer scale and complexity of replacing an entire legacy system can overwhelm resources, leading to prolonged implementation timelines that span years and risk substantial cost overruns. The necessary tech expertise can be hard to source and the risk of operational disruptions during the transition period is significantly higher. This approach also tends to overlook the intricacies of individual banking functions, resulting in weaknesses emerging in critical areas like Customer Relationship Management (CRM), channels and payments. This demands separate transformation efforts and can lead to functional silos and unprecedented costs.

Consider incremental changes

Incremental change using dual and parallel core platforms is suggested as a strategy with less risk and lower cost compared to a ‘big bang’ approach. Dual core platforms involve progressively migrating customers based on key lifecycle events like product rollouts using existing digital capabilities.

Parallel core platforms entail launching new customer propositions and experiences and then aggressively migrating existing customers through re-enrollment or by recreating accounts. Both approaches facilitate incremental transformation for APAC banks by either gradually updating existing systems or introducing new solutions alongside legacy infrastructure. Incremental yet otal transformations then take a matter of months to complete as opposed to years, and without disruption to critical systems.

Other advantages of incremental transformation include a reduction in time-to-market of new products by up to 80 per cent, enabling banks to compete more effectively. It also offers a reduced cost of change by extending the existing digital capabilities with APIs to meet evolving demands. Finally, it facilitates the easy setup and integration of new ecosystems that can future-proof the tech stack.

Source; Mambu

How Mambu can help

Whether choosing to go down a dual or parallel core route, the Mambu cloud banking platform helps banks complete their transformations quickly and with operational stability, at a fraction of the cost of a ‘rip and replace’ approach.

It enables a test-and-learn methodology, allowing organisations to evolve gradually while minimising disruption to services without heavy back end reconfiguration. The single software-as-a-service (SaaS) solution suits to all banking functions, ensuring commercial alignment, and Mambu’s network of third-party partners can further tailor the platform to specific business requirements. This presents a 30 per cent saving on typical integrations and upgrades and 35 per cent saving on product customisations and changes (CRs).

Mambu allocates up to 20 per cent of product innovation budgets to resolving technical debt issues, enabling more forward-thinking initiatives. With up to 50 per cent lower resource requirements for maintenance due to the absence of tech debt-created issuest, the digital core offering optimises engineer focus. This ultimately drives faster project execution and time to market, resulting in an up to 60 per cent improvement in deployment timelines.

Fernando Zandona, the Mambu CEO, said: “Asia Pacific financial institutions that partner with Mambu are able to remain agile while operating on a lean budget, and can find better and faster ways to meet their customers’ expectations.

By enlisting Mambu for their incremental digital transformation journey, APAC banks can unlock new opportunities for competitiveness, agility and customer-centricity in the digital age. To discover how Mambu can take your core banking systems to the next level for less, visit the website or contact one of the expert team today.

The post Transforming core banking systems: Incremental change vs ‘big bang’ approach appeared first on Tech Wire Asia.

Paytm, short for “Pay Through Mobile,” began its journey with a revolutionary idea – letting users make cashless transactions through their mobile phones. But it wasn’t until the whirlwind of India’s 2017 demonetization that Paytm soared to new heights. That year, Prime Minister Narendra Modi’s bold move shook up the cash-dependent economy, compelling many individuals and countless small merchants to seek alternatives. Amid the chaos, Paytm’s wallet emerged as the straightforward solution, drawing a massive influx of users. 

Paytm emerged as a prime beneficiary of demonetization, witnessing a meteoric rise from 140 million users in October 2016 to a staggering 270 million by November 2017 following the demonetization program. The winds of change propelled Paytm to the forefront of India’s digital financial revolution. It has become a pioneering force, transforming how millions transact and engage with digital finance. 

WHY WHATSAPP SHOULD START WORRYING ABOUT PAYTM

Soumik Roy | 10 August, 2018

The platform provided a versatile and convenient solution for individuals and businesses, from small grocery purchases to utility bill payments. In short, Paytm’s success during demonetization contributed to the broader acceptance of mobile wallets in India. The platform’s simplicity and strategic marketing campaigns played a significant role in shaping the narrative around digital wallets as a reliable alternative to traditional currency.

A QR code for Paytm is pictured at a shop in New Delhi on November 8, 2021. (Photo by Sajjad HUSSAIN/AFP).

What is happening with Paytm in India now?

Founded in 2010 by Vijay Shekhar Sharma, Paytm initially gained prominence as a mobile wallet but swiftly evolved into a comprehensive financial ecosystem. Over the years, Paytm has diversified its services, expanding beyond mobile wallets to offer various financial products. The platform now provides services ranging from digital payments, mobile recharges, and bill payments to insurance, wealth management, and even digital gold investments. 

This diversification has positioned Paytm as a one-stop shop for various financial needs. By 2017, Paytm received approval from the Reserve Bank of India (RBI) to launch Paytm Payments Bank, a significant milestone in its journey. The Payments Bank allowed users to open savings accounts with zero balance requirements, seamlessly integrating banking services within the Paytm app. The bank is restricted from lending and can accept deposits of up to 200,000 Indian rupees. 

For context, Paytm Payments Bank is primarily owned by Paytm (One 97 Communications), with a 49% stake, while the remaining 51% is held by Paytm’s chief executive and founder, Vijay Shekhar Sharma. The bank serves as a crucial banking partner for Paytm, holding funds from popular digital wallets within its operations. 

All 330 million wallet accounts under the parent company are housed within Paytm Payments Bank, making it the repository for the money held in these wallets. However, It is noteworthy to know that on top of its immense success, Paytm was not short of challenges. Most recently, in a significant setback for one of India’s largest payment firms, the RBI has directed Paytm’s payments bank subsidiary to cease accepting new deposits in its accounts or popular wallets starting in March. 

So what exactly won’t be working on PayTM after 29th Feb then? 🤔 pic.twitter.com/rNJvRPAJhc

— Sunderdeep – Volklub (@volklub) February 4, 2024

According to a report by Reuters, India’s central bank said it took action because of “persistent non-compliance and continued material supervisory concerns in the bank,” which it did not specify. The restriction, effective from March 1, 2024, follows a previous limitation imposed two years ago, preventing Paytm Payments Bank from onboarding new customers.

Paytm Payments Bank was restricted from adding customers in March 2022 due to similar concerns but continued doing business with existing customers. It has been told to wind down most of its businesses this month. Moreover, local reports indicated that the banking regulator consistently raised concerns over various issues. 

Sources reveal that apprehensions regarding money laundering and substantial financial transactions, amounting to hundreds of crores of rupees, between the well-known Paytm wallet and its less prominent banking arm prompted the RBI to take action against entities overseen by Vijay Shekhar Sharma. 

It has also been disclosed that Paytm Payments Bank had numerous non-KYC (Know Your Customer) compliant accounts, with thousands of cases using a single PAN to open multiple accounts. Instances of transactions exceeding regulatory limits in minimum KYC pre-paid instruments, reaching crores of rupees, raised red flags for potential money laundering, as per sources.

What is Paytm doing about the scrutiny by the Reserve Bank of India?

Paytm’s CEO on X.com

Paytm has committed to adhere to the RBI’s directives promptly. As part of compliance, it will discontinue its association with Paytm Payments Bank and exclusively collaborate with other banks. The company anticipates a potential adverse impact on its annual earnings before interest, tax, depreciation, and amortization (EBITDA), ranging from 3 billion rupees (US$36 million) to 5 billion rupees under the worst-case scenario.

One 97 Communications (OCL), the parent of Paytm, said in an exchange filing that it would partner with other banks, not with Paytm Payments Bank (PPBL). “OCL has been working with other banks for the last two years. We will now accelerate the plans and move to other bank partners,” the company said.

“Regarding the direction on termination of the nodal account of OCL and Paytm Payments Services Limited (PPSL) by February 29, 2024, OCL and PPSL are moving the nodal account to other large commercial banks,” it added.

In a report, Bloomberg claims that India’s banking regulator is considering canceling Paytm Payments Bank’s license as early as next month, potentially impacting the growth plans of Paytm, a troubled local fintech giant. The RBI is prioritizing the protection of depositors and may take action after the February 29 deadline, sources told Bloomberg.

The post India’s Paytm is in a crisis. What do we know about the fintech giant’s turmoil? appeared first on Tech Wire Asia.

Smaller businesses must find some way to sustain their profitability or face market exclusion and eventual closure. One such lifeline is the presence of Chinese suppliers which offer access to a wide array of products at competitive prices. In February, the country reported that its manufacturing activity had expanded at the fastest pace in more than a decade.

Source: Shutterstock

The allure of these suppliers lies primarily in their ability to offer cost-effective manufacturing solutions without compromising quality. Small businesses can expand their product ranges, maintain margins, and acquire unique items that set them apart from mainstream marketplaces. Business owners can access these suppliers through online B2B marketplaces, like 1688, or may choose to travel in person to trade fairs in China, like the Canton Trade Fair. At the fair, an array of China-produced products are showcased by their manufacturers, many of which could spur business growth. Approximately 200,000 foreigners attended the November 2023 event in person, and the online platform was attended by 6.6 million overseas visitors.

1688, an Alibaba Group business, serves as a B2B platform connecting international manufacturers and wholesalers with wholesale buyers in China. Specialising in diverse industries like apparel, electronics, and home furnishings, it facilitates sourcing and online transactions, providing businesses with access to a broad range of products for bulk purchasing.

“We decided to start sourcing from 1688 as we found there was a huge range of factories from China on this platform that can really enable savings from their competitive costs, without making any compromises on quality,” said Mark Brookfield from Sunrise Accessories. “We could select products that are in the range of goods that we usually buy to wholesale in Australia.”

The challenges of switching suppliers

Travelling to China to source new suppliers can be expensive for Australian and New Zealand businesses, especially when it comes to attending trade fairs of global interest that last weeks. It involves the costs of travel, accommodation, and time spent away from managing the day-to-day operations of their business. The language barrier can hinder face-to-face negotiations, while cultural differences and differing business practices might complicate agreements and contracts. Even conducting business purely online can be subject to the same problems.

After a deal is struck, things may not necessarily be smooth sailing. Vetting suppliers for quality, reliability, and ethical standards to ensure compliance with bodies like the Australian Competition and Consumer Commission (ACCC) is crucial but also challenging from a distance. Coordinating logistics, ensuring quality control, and managing shipping and customs processes add layers of difficulty, too.

Reliance on foreign suppliers, particularly those in China, introduces risks related to geopolitical tensions, trade regulations, and unexpected disruptions such as those seen during global crises or natural disasters. For example, in August 2022, a heatwave in the country led global manufacturers like Volkswagen and Foxconn to suspend their operations to save power after a spike in demand for air conditioning put pressure on the local grid. Issues like intellectual property protection and maintaining ethical manufacturing practices also pose challenges when dealing with suppliers from different countries.

Despite the risks, Australia and China continue to have a strong relationship, with a study by the University of Melbourne finding that 58 per cent of Australian companies still identify China as a top three priority for global investment. Indeed, in November 2023, Prime Minister Anthony Albanese visited China and said that “significant progress” was made in relations after talks with President Xi Jinping. China is also planning to remove tariffs on a number of Australian products to help improve the relationship between the countries.

Easing the transition with WorldFirst

While the source of some challenges may be out of a business’s hands, steps can be taken to ease the transition to Chinese suppliers. Choosing to do business remotely and hiring local sourcing agents can reduce travel costs and marginalise unreliable suppliers. Human translators are also vastly more valuable than online tools for communication, and the risk of unexpected supply chain disruptions can be mitigated by diversifying product lines, conducting thorough risk assessments, and keeping abreast of geopolitical developments.

Source: Shutterstock

But an integral part of success is the smoothing over of international payment processes to ensure that business owners deal with invoices efficiently and suppliers are paid quickly. Paying manufacturers in their local currency eases the financial burden of currency conversion fees and FX fluctuations, improves supplier relations and trust, and enhances operational efficiency – ultimately giving businesses more scope to tackle other challenges they cannot prepare for.

Leading global fintech company WorldFirst connects businesses around the world with fast and affordable payments, and offers an easy way to achieve smoother commerce with its World Account, explicitly designed for cross-border businesses trading in multiple currencies. With their World Account you have access to local sort codes, account numbers, and IBANs, working to reassure partners, minimise conversion charges, and reduce fees associated with cross-border trade. They also aid businesses in currency risk management by offering tailored hedging solutions, enabling e-commerce businesses to protect themselves from currency volatility and maintain stable pricing during economic uncertainty.

WorldFirst is currently the only provider in the market to connect to the cross-border payment solution for 1688. This purpose-built link to 1688’s network of ten million suppliers in 1,700 categories provides businesses with direct access to a wide array of products at competitive wholesale prices.

The integration also supports global selling on major marketplaces like Amazon, Wish, AliExpress, Lazada, and Shopee and facilitates direct deliveries to warehouses in China or international shipments managed by logistics partners. Online sellers can pay suppliers and collect from various marketplaces all within a single account, making reconciliation and preparation of tax returns much simpler. Furthermore, once the World Account is synched to Xero or NetSuite, businesses benefit from streamlined financial management, saving on time and accountancy fees.

Source: Shutterstock

With WorldFirst’s competitive exchange rates and transparent fees at lower rates than local banks, businesses can optimise costs while ensuring swift and reliable payments. There are no transaction size limits or hidden charges, and payments are transferred on the same day and fully comply with international trade regulations.

“WorldFirst has been a great help with this transition as we found most of the smaller factories in China did not have US accounts to pay their invoices,” said Mr Brookfield. “This way we could transfer CNH straight to their Chinese account, which is much easier for us.”

WorldFirst is a global fintech that connects businesses around the world with fast and affordable payments, access to international marketplaces, flexible currency risk management tools, working capital, and a deeper understanding of cross-border payments and global markets. The latter enables its relationship managers to provide insights into payment trends and preferred trading methods in different regions, helping businesses adapt their strategies. The Australia-based team is ready to help with any inquiries or visit the WorldFirst website, or for more information. Discover how you can take advantage of overseas suppliers with WorldFirst today.

The post The rise of Chinese sellers in sustaining small business profitability appeared first on Tech Wire Asia.

Another two digital banks have been given the green light to start operating by the central bank of Malaysia, Bank Negara. The two banks are Boost Bank – a joint venture between fintech company Boost and RHB Banking Group – and AEON Bank, which is a subsidiary of AEON Financial Service.

While there were a total of five applicants granted digital banking licenses by Bank Negara in 2022, only Grab’s GXBank actually began operations in the final quarter of 2023. The other two successful applicants that have yet to launch their digital banks are a consortium led by Sea Limited and YTL Digital Capital Sdn Bhd, and a consortium led by KAF Investment Bank Sdn. Bhd.

GXbank has reportedly already had over 100,000 customers since its launch. The digital bank plans to introduce a debit card for its customers sometime in January 2024, too.

Bank Negara approved licenses for five digital banks in Malaysia.

The first Islamic digital bank in Malaysia

AEON Bank is notably the first Islamic digital bank in Malaysia. Compared to other digital banks, an Islamic digital bank will have to be Sharia-compliant. This means the bank will offer its customers financial services that are compliant with the principles of Islamic finance.

According to Raja Teh Maimunah, chief executive officer of AEON Bank, the digital Islamic bank aims to advance the promotion of financial inclusion and Islamic banking.

DIGITAL BANKS: WHAT’S DRIVING SUCCESS IN SOUTHEAST ASIA?

Aaron Raj | 3 October, 2023

“As part of one of Malaysia’s most recognized retail household brands, we aim to provide accessible, inclusive, and Shariah-compliant digital banking solutions to our AEON Group of customers, as well as to all Malaysians. It is our intent to empower our communities with access to digital financial services which are simplified, safe and secure,” said Maimunah.

The AEON brand is already a highly recognized household name that has served Malaysians nationwide for over four decades. The AEON Group aims to further expand and enhance the provision of its services to its retail and wholesale customers as well as ecosystem partners such as its auto dealers, merchants, suppliers, and tenants, among others.

In addition, the AEON Bank’s advocacy of digital technology will facilitate the introduction of new and innovative products for the AEON Group, enhancing the overall value proposition for its customer base and its ecosystem partners.

AEON Bank aims to unveil its phased rollout in the first half of 2024. The rollout plan is expected to begin with an exclusive beta testing phase with AEON employees. Maimunah explained that this will allow the bank to gather insights and feedback from users to refine and optimize the app.

“By initially offering access to a select group of beta testers, we aim to collaboratively fine-tune the app to ensure it meets the expectations of our wider user base on full release,” she said.

The Boost-RHB Digital Bank Consortium received regulatory approval ahead of the scheduled timeline. (Source – Boost).

Boost for digital banks in Malaysia

Compared to the other digital banks, Boost Bank is taking a more traditional-finance approach to digital banking. While none of the other digital banks are affiliated with traditional banks, Boost Bank is part of the Boost fintech company, which is a subsidiary of Axiata as well as RHB Bank.

As such, the Boost-RHB Digital Bank Consortium is the first primarily Malaysian-owned digital bank to begin operations with a pioneering embedded digital bank app in the local market. Boost holds 60% equity, and RHB owns the remaining 40%.

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“Our aim is to broaden the digital banking options available to those with limited access to conventional banking facilities, and fostering an inclusive digital society for all Malaysians,” said Vivek Sood, group CEO of Axiata Group Berhad.

“This is a culmination of the symbiotic and strategic partnership between a leading fintech and successful financial institution with substantial ecosystems, united by a shared vision to drive greater financial inclusion,” added Sheyantha Abeykoon, group CEO of Boost.

Just like AEON Bank and GXBank, Boost Bank will advance into the alpha testing phase, involving internal employees, family, friends, and a selected group of customers. In the lead-up to the public launch, the digital bank will progressively enhance its product propositions and refine the user experience.

Fozia Amanulla, CEO of Boost Bank, added, “Rooted in the fundamental belief that everyone deserves a bright financial future, we are determined to propel Malaysia into an age of true financial inclusivity, by harnessing the untapped potential of embedded finance with our digital bank.”

The digital banks are expected to announce capabilities that will promote financial inclusion. (Image generated by AI).

Pursuing financial inclusion for all

Bank Negara awarded the digital bank licenses to these consortia based on a lengthy assessment. The assessment criteria covered the character and integrity of applicants, the nature and sufficiency of their financial resources, the soundness and feasibility of their business and technology plans, and their ability to meaningfully address financial inclusion gaps.

As such, the digital banks are expected to announce how they will promote financial inclusion as part of their venture. While GXBank has yet to make any announcements about its plans to reach the currently unbanked, both AEON Bank and Boost Bank have said they hope to provide financing and banking opportunities to individuals who have traditionally not been able to access funding.

AEON Bank aims to further that commitment by extending financial services to both individuals and small businesses who would not have access to funding and other financial services. It will also prioritize financial literacy and education initiatives to empower individuals and small businesses with the knowledge and tools to make informed financial decisions.

Meanwhile, Boost Bank believes that as it begins its operations in phases following the completion of the operational readiness audit, Malaysia is poised to unlock the benefits of greater financial inclusion.

The post Boost Bank and AEON Bank: two new digital banks start operations in Malaysia appeared first on Tech Wire Asia.

As the world looks to strengthen AI regulations, using AI in risk and compliance could be one way of ensuring the technology is not abused. AI adoption in risk and compliance may still be in its nascent stages, but the technology is improving, with more companies feeling the best way to ensure they meet regulations on technology is by using technology itself.

The financial services industry, which prioritizes risk and compliance most, is already using technology to do so. With AI, measuring risk and compliance is a lot faster. Fintech companies in particular can easily adopt this, given the amount of technology already involved in the industry.

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In fact, in a recent study by Moody, fintech is the leading sector for AI adoption and readiness in risk and compliance, with 18% of fintech respondents currently actively using AI – double the percentage of respondents across all surveyed sectors (9%).

Sectors like insurance, asset management, and wealth management have been slower on AI uptake and adoption. Only 3% of respondents in those areas reported actively using AI currently, though another 11% are piloting it. Banking sits just behind fintech, with 12% of respondents actively employing AI.

“Compliance professionals are convinced that AI will be transformative for their industry, but obstacles remain that could hinder risk management and compliance functions from capitalizing on its potential. The benefits of AI are currently viewed in easy-to-measure quantitative terms.

“Process efficiencies are a good start to AI adoption, but they are only scratching the surface of the technology’s capabilities. Advanced data analytics, accurate predictions, and the scalability of data are all features compliance teams will not want to miss out on,” said Keith Berry, general manager for KYC Solutions at Moody’s Analytics.

Looking specifically at the use of AI for risk and compliance, compliance professionals are most likely to identify improved efficiency in processes (72%), increased speed of data processing and analysis (72%), and cost savings due to automation or improved decision-making (66%). Fewer currently recognize the potential for more advanced, transformative benefits, such as improved accuracy of results and predictions (51%) and the reduction of false positives (49%).

“With many of the professionals we spoke to expecting the widespread adoption of AI in the next one to five years, steps need to be taken for it to meet its transformative potential across risk management and compliance. For example, when based on high-quality data, AI is able to drastically reduce the number of false positives in a KYC screening process at scale and can result in up to 80% of level-one investigation and triage happening instantly and accurately. The overall outlook for AI is strong if compliance teams acquire the right expertise and data to fully capitalize on the opportunity,” explained Berry.

Can AI make a difference to ensuring risk and compliance?

AI adoption in risk and compliance in APAC

Moody Analytics’ study, Navigating the AI landscape: insights from compliance and risk management leaders, included a survey of more than 550 senior compliance and risk management professionals from 67 countries to assess their perspectives on and uses of AI.

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Most of the respondents from Asia Pacific (APAC) think they will adopt AI faster in risk and compliance compared to other departments (30% compared to 18% in Europe and 16% in the Americas). That’s actually not that surprising given how countries like Singapore are promoting the use of AI by organizations.

The APAC region is also most keen for vendors to integrate AI tools, at 90% vs 77% in Europe and 68% in the Americas. 90% of APAC respondents also consider it fairly or very important to have new regulations on AI. However, at least 30% of APAC is most concerned about the displacement of jobs, compared to 13% in Europe and 14% in the Americas.

The study found that while 79% of professionals feel new legislation to regulate the use of AI in compliance is
important, the majority lack awareness of existing AI-related regulations. (Source – Moody Analytics).

Beyond the early adopters of AI

Another highlight from the study is that outside of the early adopters of AI, most firms have yet to embrace the use of large language models (LLMs). However, there is broad agreement that AI technologies, including GenAI, will deliver advantages for risk and compliance.

Despite the rapid growth of LLMs, caution remains in risk and compliance. Only 28% take a positive stance on these models, while 25% are actively discouraging or prohibiting their use and 46% have yet to adopt an LLM policy. Just 41% associate LLM terminology with risk and compliance.

One of the reasons for this could be the challenges of their internal data quality. Only 14% of those surveyed rated their own data as high quality. Resolving data issues is critical to reducing LLM hallucinations and improving the accuracy of AI outputs. More than half of the respondents stated their data quality was either inconsistent (44%) or fragmented (22%).

Inconsistent data quality means the data is structured but contains inconsistencies. This requires manual cleansing and has limited breadth and depth. Fragmented data quality meant the data was unstructured and required significant cleansing for meaningful use. Only 2% of respondents actually have superior quality data infrastructure with real-time refinement. This allowed them to seamlessly integrate the data into decision-making.

The post Fintechs leading the change for AI adoption in risk and compliance  appeared first on Tech Wire Asia.