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Matchi Trend Report - Digital Account Origination

Fintech innovators have developed innovations in payment systems ranging from mobile payments, low cost remittances to real time payment settlements. A specific focus is the emergence of cryptocurrencies which rely on a decentralised ledger (the “blockchain”), of which bitcoin is best known.

The fintech intrusion into the payments space has been to improve the customer experience whether it is in speed, convenience or accessibility through a myriad of channels.

It is not just in the transactional aspect of payments that there is innovation but at more fundamental level, notably the influence of blockchain technology as well as the use of data analytics to enhance security of transactions.

The use of data analytics extends further into the domain of fraud prevention and corrective action such as early warning of potential credit card breaches through to modelling each client’s payments history to detect outliers.

Personal identification for the receipt of payments has also been significantly enhanced with the usage of various biometric identifiers that have been integrated within the new payments technologies

The proliferation of smartphones has lent itself to multiple solutions centred on convenience, e.g. mobile wallets, as well as a plethora of other smartphone based apps, e.g. using the phone camera as an identification tool

Person-to-person (P2P) mobile payments generally allows the transfer of value between individuals via mobile devices which previously was the exclusive domain of banks, particularly through the EFT process

Remittance and forex exchange are large turnover segments for which banks are being disintermediated by non banking providers and using technology to do so at lower cost

Fintech innovators have also begun to address the issues in real time settlements of payments, which traditionally used to be done in batch processing

The emergence of cryptocurrencies and the associated blockchain technology that underpins these, are a largely unknown factor but one that cannot be discounted, considering its potential to disintermediate banks as a gatekeeper of transaction data and processing

Payments are arguably the most transactive aspect in any banking relationship hence there are multiple fintechs active in this space – however many of them address only a part of the payment process, i.e. a fintech innovation itself may not look to be payment related but may enhance the payments process in terms of speed, efficiency or customer experience

To this end, it is left to financial institutions to imaginatively combine multiple innovations to create a solution, an example of this is the use of a geolocating data analytics provider to confirm a customer’s location via their mobile and triangulate this with the location of the card transaction, thus increasing the validation of the transaction and preventing fraud.

Some solutions

Mobile payment solutions

These extend from fully mobile P2P payment mechanisms to micropayment systems that allow bill splitting at restaurants

Smartphone enabled transactions

The increasing penetration of feature rich smartphones have led to innovative use of such features, particularly the camera when allied with Optical Character Recognition (OCR) technologies

Point of Sale (POS) payment systems

These are usually smartphone enabled payment solutions that are allied with a POS device

Specific payment systems

Several fintech innovators have combined multiple technologies and created a bespoke solution for specific issues. As an example, smaller amounts depending on their risk appetites. In some cases, funding is theme based where investors have higher risk tolerances for companies in particular sectors or serving specific segments.

More on Matchi: Matchi is a global fintech innovation match-making firm, since 2013. Matchi has worked with over 100 leading banks and insurance companies (FIs) around the world, and has a database of over 2,500 fintech firms. Matchi provides both a highly curated portal of fintech solutions, as well as bespoke projects for FI clients to source targeted fintech solutions aimed at the FIs focus areas / pain points. The global Matchi team has run Innovation Challenges and Market Scans for multiple FIs around the world, in markets as diverse as Canada, Japan and India, as well as searches in other geographies.

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