Modern fintech tools that change the payment business

I get the first cycle of articles, and here is why.

In my previous text I talked about the opportunities for fintech products, offered by digital economy. This is: a solution to small user’s problems, the use of «new demand», formed by smartphonization and saving time on typical tasks in an era of general “temporary starvation.”

Thus, fintech companies can realize the potential new technologies imply in themselves — the desire to constant increasing the convenience and simplifying of interaction for the customer in all areas: e-commerce, banking services, payment acceptance, consumer lending, retail. The first thesis from the previous entry was formed as follows: «not to sell the service, but to help user to solve the problem with the help of this service”. Thus, if my ultimate goal (like any other payment company) is profit growth, then our means of achieving it (besides the obvious ones) is a constant UI/UX upgrade, transaction security and simplicity.

Following the development vectors, those “doing points” I mentioned earlier and which can change the world of finance, I decided to put together a few main tools / events that will affect the overall picture.

Banking simplicity — digital, of course

Ukraine’s largest banks are slowly, but surely accepting and implementing the idea of ​​mobile banking. The idea of ​​providing services to customers not only from banking centers, but with one click in a smartphone / laptop, was first implemented in one bank, making it a leader (I don’t use names and brands, I suppose they are understandable without it). For several years, the remaining fairly strong financial institutions conducted their work in the style of “catch up and overtake.” Or, at least “catch up”at least. After the release of the first Ukrainian mobile bank, this “catch-up” turned into an active race for survival. It has long been known to everyone that providing an opportunity to make transactions with accounts at any time of the day is not only the increasing cost of 24/7 support, but also more and more constant interaction with the customer — which, in the very end, is more earnings.

From the consumer point of view, at the end of 2018 payments from mobile applications are what is needed here and now, and if there is no such option, customer just takes his money and goes to a competitor.

And if with the task of creating mobile banking, we’re already more or less good, but the simplification is just begun. What is interesting, it goes again from the pioneer bank created by the same person. Opening an account and issuing cards without having to visit a branch — the National Bank of Ukraine is already preparing for full, not partial availability of this options, having issued Resolution №105, providing relaunch of Bank ID. As I said in a comment for tsn.ua, after November 5, other banks will join the system — the process will be officially launched.

Creating blockchain storages

And now about the more sublime and complex. Bitcoin and Ethereum are the blockchain systems (I knowingly call them that way in this context) became popular because of their ability to process secure transactions and preserve the accuracy of stored information. They don’t have a single unified repository, but the information can be easily stored and accessible. Blockchain algorithm works in such a way — it creates a secure repository for various types of information.

Using this technology, banks can safely store and process such confidential user data, like KYC (Know-Your-Customer). Using blockchain repositories, institutions can easily verify information. It will be available to banks and financial institutions, and this will greatly simplify the chain of conditional «deals», because now customers must reproduce KYC data for loans or large purchases (for example, real estate or cars), etc.

At the same time, the information remains secure, so the froders can’t hack it or change the KYC information. The impact of this on the further simplification of banking is must be described in separate material, but specific examples have already given a good introduction.

Machine learning

It is used everywhere — even in the cameras of your new smartphones, when the image quality improves due to the experience of repeat interactions. Speaking of fintech business, with the help of machine learning, customer information (activity history, categorical preferences, monthly turnover on a personal account, etc.) will be used to refine algorithms that take into account lifestyle, needs and financial capabilities. These algorithms, in turn, will make (and sometimes already making) specialized offers, select services according to interests and capabilities.

And this doesn’t always mean total surveillance and control, we are not in the “Black Mirror” after all. A good example is individual fundraising. Customer decided to save on the car and sets himself such a goal through a special application functionality. Application can analyze data on savings and expenses in order to offer the customer an individual strategy for accomplishing such financial goal — with terms, based on income, lower percents of the loan, recommendations for reducing household expenses, and so on.

Here we come to what I will write about in the third article — that the financial infrastructure is developing at a pace that in 5–10 years will transfer all of our banking and financial transactions to a smartphone. You will have (and partially have right now) an ability to open an account, deposit, transfer money and even create a new financial strategy without ever communicating with a bank representative (not counting correspondence with support). One thing — to fantasize about the future, and another is to implement it in daily work.

CEO of the international payment system LEO, the shareholder of IBOX Bank