" class="no-js "lang="en-US"> EXCLUSIVE: "Easing the Squeeze" - Rowan Brewer, Paymentology in 'The Paytech Magazine'
Monday, February 06, 2023
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EXCLUSIVE: “Easing the Squeeze” – Rowan Brewer, Paymentology in ‘The Paytech Magazine’

Rowan Brewer, CEO of card issuing and processing platform Paymentology, believes that data-driven, real-time financial services can help alleviate the current cost-of-living crisis for consumers

With inflation shooting ever upwards and many global economies on the brink of recession, financial institutions (FIs) are once again in the headlines. Central banks are doing what they can to tackle inflation through interest rate rises, but it’s retail banks and fintech service providers that are on the front line of this cost-of-living crisis. After all, it’s their customers who are struggling to pay bills, heat homes and even put food on the table. Fortunately, banks and fintechs have an important new tool at their disposal to help their customers better manage their finances and support them through these challenging times. Unlike in any previous large-scale financial crisis, data is now available in huge volumes and, thanks to Cloud-native platforms, FIs have the ability to mine it for insights that can underpin valuable new services.

PERSONALISING FINANCIAL MANAGEMENT

Personalisation is a good example. Over time, banks can analyse spending data to build 360-degree profiles of their customers. These customers can then be served with relevant products and offers that reflect their previous spending behaviours. This approach not only enables FIs to market relevant opportunities to the right audiences, but it also means that they can channel financial advice and support to those most in need. A more advanced approach is to use real-time payment data in combination with a powerful analytics rules engine. Doing so enables FIs to identify sophisticated behavioural patterns as they happen and respond with appropriate support.

For instance, if a customer with a good credit rating makes an expensive one-off purchase that puts them into their overdraft, the rules engine would alert the FI, enabling it to offer the customer a buy now, pay later (BNPL) or instalment plan immediately following authentication. Such services will prove hugely valuable to customers who may otherwise struggle with unexpected but necessary expenses.

“Unlike in any previous large-scale financial crisis, data is now available in huge volumes and, thanks to Cloud-native platforms, FIs have the ability to mine it for insights that can underpin valuable new services “

The ways in which FIs support customers will need to vary from region to region. Saudi Arabia is a case in point. The country is currently looking to digitise its payments infrastructure as part of its Vision 2030 roadmap, which includes a drive to create a cashless, digitally enabled and financially literate population. Key enablers such as contactless cards and digital wallets, will, of course, be important in achieving this goal, but so, too, will be the data-centric approaches described above. However, these approaches will need to have a local flavour. For example, in Saudi Arabia, FIs need to be able to offer products that are compliant with Shariah law and Islamic banking practices. In this instance, standard BNPL schemes or loans to hard-up customers may not be appropriate. That said, data-driven, customer-centric services still have a role to play, but will here underpin financial management products that are specifically tailored to local market needs. In this region, these services would include things like murabaha credit solutions, for example, a Shariah-compliant form of financing.

How data is handled is another important consideration. Many countries (again, including Saudi Arabia) have stringent rules about data sovereignty. FIs therefore need to ensure that they use a Cloud-native platform that is compliant and keeps data processing on-soil with fully private Cloud instances.

PUT CUSTOMERS IN CONTROL

In many ways, the use of data for financial services is about empowering people. By breaking down spending data, banks can report to customers on where their greatest expenses are and, potentially, how these can be reduced. Data can also be used to create new approaches that enable customers to take greater control of their finances. Multi-account mapping is a good example. Usually, bank cards are attached to specific accounts. A customer wishing to use their card therefore needs to ensure there is enough money in the associated account, and that can at times mean moving money from other pots, requesting overdrafts, or depositing cheques or cash. All of this takes time and effort, and can even mean visits to bank branches for support. Now, banks and fintechs have the option of empowering their customers through single cards that map to multiple accounts. This helps improve liquidity for the customer and enables them to make payments quickly, and at the moment they’re needed. For countries like Saudi Arabia that are making the move to a cashless society, such approaches will smooth the transition and ensure that people retain the advantages of cash in terms of ready access, even once payments have been completely digitised.

FROM CUSTOMER SUPPORT, TO CUSTOMER EMPOWERMENT

Banks and fintechs are often the first line of support for cash-strapped consumers and rightly pride themselves on the help they extend to their customers. Armed with data-driven services, FIs are now better placed than ever to provide this support and, more importantly, give customers the tools and insights they need to help themselves. During this cost-of-living crisis, fraud is, unfortunately, becoming rife. Access to valuable data enables banks and fintechs to improve their fraud modelling and reduce false negatives, false positives, declined and fraudulent transactions. Importantly, this provides customers with peace of mind that their funds are safe, while giving them complete control over their finances


 

This article was published in The Paytech Magazine Issue 13, Page 34-35

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