Retail Banker International lists the top five terms tweeted on fintech in February 2022, based on data from GlobalData’s Banking and Payments Influencer Platform.
The top trends are the most mentioned terms or concepts among Twitter discussions of more than 150 fintech experts tracked by GlobalData’s Banking and Payments platform in February 2022.
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1. Artificial intelligence (AI) – 3,712 mentions
Making fintech more inclusive by tackling AI bias, the ways in which AI is expected to transform the financial sector, and humans still outperforming AI in the financial markets, were some of the popular discussions on AI in February 2022.
Mike de Waal, CEO of Global IQX, a software development company dealing in insurance procurement, shared an article on making fintech more inclusive by removing the biases in new financial technology. Identifying patterns in unstructured data using AI or machine learning (ML) is impairing access to certain demographics due to the way the technology is encoded and structured, according to Sergio Suarez Jr., CEO and founder of TackleAI, a company dealing in next-generation AI. The marginalisation of certain sections of the society or unbanked and unbanked segments of the population is effectively becoming the data, which AI is learning and reinforcing, he further added.
Suarez also stated that fintech aims at improving and democratising economic access to all, while ML speeds up lending, thereby reducing the time to calculate mortgages or interest rates. However, some people have been paying historically higher interest rates even if they met the same criteria of another group of people. Biases will, therefore, continue to exist as long as AI repeats its decisions based on the historical data, the article stated.
Tamara McCleary, CEO of a digital social media marketing agency Thulium, tweeted on how firms in the financial sector are using AI to analyse and handle data from different sources to offer valuable insights. AI is helping banks in day-to-day services such as loan management and payment processing, the article detailed. It is also helping fintech in enhancing security, through facial or fingerprint recognition, and other kinds of biometric data, while enhancing customer service through the use of AI-powered chatbots and AI-driven personalised banking apps. AI application programming interfaces (APIs) also help in predicting user behaviour, while enabling lending decision making, fraud detection, wealth management, insurance, and credit risk assessment, the article highlighted.
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By GlobalDataIn another tweet, Theodora Lau, founder of Unconventional Ventures, a financial services firm, shared an article on how humans are outperforming AI in making money in financial markets. An analysis of 27 peer-reviewed studies published between 2000 and 2018 aimed at understanding whether stock market forecasting techniques using ML algorithms could imitate the real world. The analysis found that the models had a high level of accuracy of approximately 95% in many of life’s areas. However, when an algorithm is wrong in 5% of the cases in market forecasting, then it had the potential of becoming a big problem. The studies also found that funds powered by AI underperformed in the market data available. Humans and analysts were still ahead of AI in making money and should be embedded in decision-making and analytical tools ensuring that the ultimate investment decisions are made by them.
2. Innovation – 1,524 mentions
Klarna’s ‘Pay Now’ option, fintech empowering smaller players to compete with traditional banks and financial institutions, and fintech innovations leading digital transformation in the financial sector, were some of the popular discussions on innovation in February.
Alex Jiménez, a fintech expert and strategist, shared an article on financial services firm Klarna launching the new ‘Pay Now’ option to complement its ‘Pay in 4’ option. The new service was launched in Australia and allows customers to make full payment for their purchases immediately. The service comes in the wake of growing concerns surrounding buy-now-pay-later (BNPL) options. Two-thirds of financial counsellors in Australia are estimated to be struggling with growing BNPL debt, according to a report from Financial Counselling Australia (FCA), a non-profit organisation, the article highlighted.
Minh Q. Tran, managing partner at venture capital firm Mandalore Partners, shared an article on how fintech is helping smaller players to compete with older players, while rewarding those that are serving customers’ needs. The article detailed that the move from internet banking to application programming interface (API)-led banking in fintech was driven by the need to improve customer experience and liquidity decision making for the customer. API-led banking fosters innovation and lowers costs for the underserved and unbanked, thereby making banking more personalised and simpler for customers. APIs are allowing fintechs to recover account balances in real-time, process transactions at high speeds and provide expanded information for real-time reconciliations, which is leading to a quicker churn in the financial ecosystem, the article noted.
In another tweet, Alberto Garuccio, a fintech expert, shared an article on fintech trends for 2022, including regulation, innovation, and collaboration. The article highlighted how the Covid-19 pandemic has accelerated the move to digital transformation, and the need for banks and financial institutions to become more adaptive, innovative, and revolutionary. Fintech innovations have provided significant support in this journey by expanding access to affordable financial services particularly in emerging markets and creating a competitive space for the sector for the benefit of consumers, the article detailed.
3. Digital currency + Cryptocurrency – 608 mentions
Digital currencies and fintech shaping the future of the financial system, and the fintech industry advocating financial inclusion through digital and digitalised finance, were some of the popular discussions during the month.
Dr. Robin Kiera, founder and CEO of consulting firm Digitalscouting, tweeted on how digital currencies and fintech are shaping the future of the financial system. The combined value of Bitcoin and Ethereum was almost half of the $2.2tn of outstanding US Federal Reserve notes despite recent losses, the article detailed. Experts believe that the rising inflation and the likelihood of interest rates hike is significantly responsible for the losses in crypto. In addition, private stablecoins were recently declared a threat to the financial system by the US president’s working group, a team of the Financial Stability Oversight Council (FSOC) member regulatory agencies. The working group concluded that private stablecoins should be considered as bank deposits, and stablecoin issuers are required to follow all banking regulations, the article noted.
Wyoming passed the HB-74 legislation that establishes crypto-friendly special purpose banking institutions that will be regulated by the Wyoming Banking Commission and not federal banking regulators in the US, in order to serve as the home for cryptocurrencies in the US. Wyoming’s special purpose depository institutions are authorised to hold digital currencies for customers and also required to follow custodian rules under the Investment Advisors Act of 1940. The Wyoming law also authorised the building of digital assets or security tokens that represent stocks that can be transferred to anyone through blockchain technology. Kraken and Avanti are the two banks that have been chartered under the Wyoming law, and they have access to the traditional bank payments system, the article noted.
The term also trended in a discussion on how the fintech industry is promoting the digital currency in an article shared by Koen Vanderhoydonk, the founder and CEO of financial services firm The Connector. Peya Mushelenga, Namibia’s Minister of Information and Technology, urged African countries to digitise and liberalise their economies, noting that digital and democratised banking promotes financial inclusion, thereby benefiting the countries that adopt the technology. The World Bank reported that 1.7 billion adults are still unbanked worldwide despite two-thirds of them owning a smartphone that can provide access to financial services, while less than 15% of the adults are banked in Sub-Saharan Africa. Mushelenga believes that digital finance is a way towards financial independence and away from the rules and regulations of the financial institutions.
4. Neobanks – 500 mentions
Revolut found to be Switzerland’s fastest growing neobank, neobanks becoming the new target for cybercriminals, and the importance of diversification through unique selling proposition (USP) for all digital banks, were some of the popular discussions in February.
Urs Bolt, product manager digital banking at information technology services company ti&m, shared an article on Revolut being Switzerland’s fastest growing neobank among the eight active in the country, according to a survey by Money Today, an online magazine. The survey highlighted that Revolut had the highest number of clients despite having no operations in the country. Revolut offers digital online services without a bank licence by partnering and working along with investment banking company Credit Suisse. The company ranked fourth after Yuh, Neon and FlowBank in the survey, the article noted.
Theodora Lau further shared an article on neobanks becoming a target for fraud by cybercriminals and hackers. Neobanks are attractive to customers because of their frictionless onboarding process, but also become a target for financial criminals. Experts believe that a digital account opening process should be robust to prevent frauds and comply with anti-money laundering rules. A number of neobanks have been investigated, penalised, or faced regulatory issues, in recent times for failing to comply with such rules. The financial regulatory authority for Germany BaFin, for example, charged digital bank N26 a fine of $4.74m for weak anti-money laundering controls. BaFin stated that the fine was due to 50 suspicious activity reports filed last year. Experts believe that neobanks need to quickly build solutions to tackle fraud and balance customer experience goals with regulatory obligations.
In another tweet, David Jimenez Maireles, CEO of digital only bank TNEX, shared an article on a comparative analysis report of market strategies adopted by 80 digital banks that highlighted the success and failures of independent and incumbent-led challenger banks. The report highlighted that diversification was important for all digital banks, but independent digital banks can often fall into the trap of over-attractiveness, thereby building their models on free services and leaving them exposed to market shocks. Furthermore, the report highlighted that the number of global digital banks increased by 200% since 2015.
5. Cloud – 411 mentions
SWIFT veterans introducing a worldwide payment service based on Microsoft Azure, and US banks migrating to the cloud to stay agile and competitive, were some of the popular discussions in February.
Neira Jones, an independent advisor and international speaker, tweeted on a new global payment service launched by a group of former employees with the Society for Worldwide Interbank Financial Telecommunications (SWIFT). The employees founded the company iPiD (International Payments Identification), which aims at simplifying global payments. The service uses only a proxy such as phone number, for the payee’s identity to make international, cross-border payments. It provides request-to-pay and payment-to-wallet services for fintechs, banks, wallets and other payment service providers, along with its partner Palo IT, a software development company.
The service runs on Microsoft Azure cloud computing platform and uses APIs, thereby making it easy to be leveraged by banks and fintechs, while also complying with the existing regulatory norms. It was tested last year and will be headed by iPiD as it looks to partner with other firms. The new service makes global money transfers easier and drastically reduces the costs incurred in failed payments, which was estimated at $118.5bn in 2020, the article highlighted.
In another tweet, Nicolas Pinto, marketing manager at core banking fintech platform Skaleet, shared an article on how bank CEOs are migrating to the cloud to stay relevant, secure and competitive in the US. Jamie Dimon, JPMorgan Chase’s CEO opined that he would take decision to move to the cloud even if it required an investment of more than $2bn. Goldman Sachs’ CEO David Solomon believes that cloud will play a critical role in transforming legacy banks by enabling them to become more responsive and digital-first in meeting the ever-changing demands of the consumer. A survey conducted by software company Red Hat found that only 4% of banks and financial services firms did not focus on a cloud strategy. Financial institutions see numerous advantages for moving to the cloud, such as fraud mitigation, speed, cost savings, and enhanced customer experience. Banks were initially slow to adopt the technology, but the pandemic has accelerated the movement due to speed and performance across a range of activities.
Banks and fintechs are also focusing on big data, core banking, and compliance with respect to cloud services, the article noted. Furthermore, leading cloud providers such as like AWS, IBM, Google, and Mirosoft, are witnessing more traction from their financial services patrons. Technology company Google, for example, has witnessed an increased adoption of cloud technology from customers such as Deutsche Bank, Wells Fargo, Goldman Sachs, Scotiabank, and HSBC, the article highlighted.
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