Weekly Research Highlights – 12 March 2024

The fintech industry is rapidly evolving and disrupting traditional financial systems. In this article, we bring you the latest research insights to help you stay ahead of the curve and understand the future of financial technology. Enjoy researching!

Fintech Benchmarks 2024 report – the promise and threat of AI (Central Banking)

The Fintech Benchmarks 2024 report reveals that over half of central banks (56.8%) are utilizing artificial intelligence (AI) and machine learning (ML) tools, indicating a slight increase from the previous year. The adoption of AI is particularly notable in the significant area of monetary policy. This underscores the dual role of central banks as both adopters and overseers of technological advancements in the financial sector. The report highlights a broader industry trend of central banks, irrespective of income level, embracing AI tools and cloud services to enhance operational efficiency and decision-making processes. Overall, the findings emphasize the growing significance of AI in central banking and the financial industry’s commitment to staying technologically advanced. Read more

CommerzVentures 2024 Climate Report is Out  (CommerzVentures)

The 2024 Climate FinTech Report highlights the emergence of a new ecosystem of financial technology startups focused on facilitating climate action and driving decarbonization. These Climate FinTechs are receiving record amounts in venture capital funding, indicating strong investor interest in the sector. The report explores the sector’s growth on both sides of the Atlantic and provides a quantitative overview by analyzing funding dynamics across geographies, sub-sectors, and company stages. It suggests that the most successful players in this space will be those actively engaged in combatting carbon emissions, implying that businesses prioritizing environmental sustainability will likely yield the most value in the long term. Read more

Women in the Workplace 2023 (McKinsey & Company)

The 2024 Women in the Workplace report by McKinsey and LeanIn.Org highlights significant progress in women’s representation in the C-suite but points out ongoing challenges, particularly for women of color in middle management. The report debunks myths about women’s ambition, career barriers, microaggressions, and flexible work. It emphasizes the persistent “broken rung” issue at the first step up to manager as the primary obstacle to women’s career advancement. Companies are recommended to track outcomes, empower managers, address microaggressions, optimize flexible work models, and fix the persistent broken rung, with insights from top-performing companies provided. Overall, the report aims to guide organizations in fostering gender equality and inclusion. Read more

Working Paper Series: Tell me something I don’t already know: learning in low and high inflation settings (European Central Bank)

This study employs randomized control trials (RCTs) across various countries and time periods to investigate how the economic environment influences how individuals absorb and react to new information. The research reveals that in advanced economies experiencing rising inflation, both households and firms exhibit increased attention and awareness of publicly available news related to inflation. Consequently, these entities become less responsive to externally provided information about inflation and monetary policy. The study extends its analysis to countries with consistently high (Uruguay) and low (New Zealand) inflation rates, as well as observing the behavior of the same agents exposed to information in both low and high-inflation environments (Italy). Overall, the findings align with models suggesting that inattention is an endogenous outcome influenced by the prevailing economic conditions. Read more

Report: Payments from a merchant’s perspective (Payments Cards and Mobile)

Merchant Payments Ecosystem (MPE) and Arkwright Consulting collaborated on a research project titled “Payments from a merchant’s perspective.” The report, based on Q4 2023 data, highlights various challenges faced by the European merchant industry. Key findings include a perception among merchants that certain payment services, particularly mobile wallets, are unfairly priced due to a lack of competition. Online payment methods, such as e-payment solutions and buy now, pay later (BNPL), are experiencing changes in market shares across different European countries. Fraud remains a significant concern, with a focus on customer authentication for online transactions and challenges related to in-store fraud. Merchants express a desire for standardized and low-friction Open Banking payments, along with increased demand for data and analytics solutions. The report suggests that the payment industry’s success is tied to the success of the retail community it serves, emphasizing the need for value propositions and services beyond price competition.
Read more

ID fraud dominates UK financial sector with a 45% surge (Fintech Global)

ID fraud is expected to become the predominant form of bank-reported fraud, reaching 50% of all cases by 2025, according to projections. A comprehensive analysis of the UK’s largest database of syndicated risk intelligence managed by Synectics Solutions revealed that ID fraud already represents 45% of all adverse contributions as of 2023, with ‘ID fraud originating online’ identified as the most significant threat in the financial sector. The report emphasizes the importance of striking a balance between combating fraud and ensuring inclusivity, as mishandling the response to ID fraud could risk financial exclusion for ‘ID Poor’ customers. Synectics Solutions advises on adopting inclusive verification measures and robust online ID verification processes, particularly in light of the UK government’s Digital Identity and Attributes Trust Framework (DIATF). Read more

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