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Weekly Analysis And Opinion Highlights – 17 October 2022

And we’re kicking off the week with new analysis and opinions on investing, open banking, metaverse and more. Dive into the latest fintech insights and have a great start of the week!

Who will survive the fintech bloodbath? (The Economics)
The annual Sibos conference is the Davos of the payments industry. The latest opus in Amsterdam, attended by 10,000 delegates from October 10th to 13th, seemed stuck between the future and the past. Sessions on the metaverse and the digital euro drew crowds. But so did a barber stall and arcade games lit by 1980s-style neon lights. Next to an exhibitor displaying a “net-zero” countdown to 2050, measured in milliseconds, financial plumbers mulled decade-old issues, from clunky trade finance to costly cross-border payments. Virtual-reality headsets and, later, vodka cocktails made heads a little heavier, even as they lightened the mood. Read more

Collaboration Between Banks and Fintechs Crucial to Combat Risk of Disintermediation (The Fintech News)
The report – The Forces Disrupting Payments – showed that banks, community banks and credit unions continue to be at risk of disintermediation – when businesses circumvent their banks by engaging directly with fintechs – with only a third of businesses surveyed believing their FIs fully understand their payment needs. In fact, 62 per cent of the business respondents said they are already working with a fintech provider. Overall, however, businesses said that they would rather partner with another bank than have to seek third-party fintech providers. Smaller banks, in particular, are finding it beneficial to partner with larger FIs that have already vetted and validated the numerous fintech payment options available. “Banks need to solve for points of friction as their business customers show a greater expectation for robust, real-time capabilities,” says Isabel Schmidt, co-head of global payments at BNY Mellon. “Our experience is that clients who partner with financial institutions that are connected to fintechs and their capabilities stand a greater chance of success.” Read more

How machine learning can be applied to actuarial and pricing workflows (Fintech Global)
Advances in technology is making applying machine learning to pricing processes in insurance easier. According to Akur8, actuaries can benefit greatly from its adoption. Machine learning is quickly entering the insurance space, and this opens up exciting new opportunities for the industry. In a recent paper, Akur8 championed the use of such technologies and provided guidelines for how companies can incorporate machine learning techniques into pricing applications. One common hurdle to employing modelling or machine learning, according to Akur8, is the lack of data. The company said this viewpoint is often based on antiquated assumptions about machine learning algorithms and the intended purpose of their output. However, by applying machine learning techniques such as penalised regression, which behaves consistently with standard credibility models, machine learning can limit the noise from thin data and be used on datasets that were previously too small to be considered. Read more

How the economic downturn will impact alternative finance (The Fintech Magazine)
Prakash Pattni is the MD for Financial Services Digital Transformation, IBM. He is an expert in cloud technology, organisational transformation, agile methods, and more. He has almost 20 years of experience in the technology industry, and has worked within investment banking and commodities for the majority of his career. We caught up with him to find out his thoughts on how the global economic situation will affect the alternative finance space. “Economic turmoil is causing an increase in interest rates across the board, making sources of alternative finance less competitive against traditional lenders. While companies are looking for new sources of funding, the criteria will become more stringent for both traditional and alternative finance lenders.“ Read more

How investment firms can compete with social media for attention (Fintech Global)
Social media has become a core part of the lives of many. As people look to invest to curb impacts of the economic climate, will social media become their financial advisor? With the rising cost of living, people are becoming more worried about their financial situation. A recent report from the British Post Office claimed that people have even been switching back to cash to better monitor their spending. It claimed that personal cash withdrawals have been up 8% month-on-month. Another coping method people seem to have looked to is investing. A recent report from Investing Reviews claimed that Google searches for ‘how to invest’ has surged by 186% in the UK. An even bigger jump was seen from novice investors, with the search ‘investing for beginners’ exploding by 522%. As more people look to get involved with investing, many might look towards social media for their advice. Read more

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