Weekly Research Highlights – 26 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!

New Research From Brite Payments Shines a Light on the Rise of Pay by Bank – And Highlights Consumer Willingness to Embrace New Payment Methods
(Brite Payments)

A new report by Brite Payments and YouGov reveals the increasing popularity of Pay by Bank (or A2A payments) in Europe, with 73% of respondents familiar with it. Speed and security are cited as primary reasons for its adoption. Pay by Bank ranks among the top three payment methods in several European countries, including the UK, Netherlands, Finland, Spain, and Germany. The report highlights a growing demand for secure, convenient, and instant payment methods. Notably, 36% of respondents aged 18-29 use Pay by Bank daily or weekly. Security is considered the most important factor in choosing a payment method by 73% of respondents, followed by fees and ease of use. Brite Payments, a fintech company based in Stockholm, is a key player in facilitating instant A2A payments across Europe. Their technology allows for real-time transactions between consumers and online merchants without the need for signup or credit card details. The report emphasizes the need for an ecosystem of digital payment technologies to meet evolving consumer needs in the instant economy. Read more

Trust as an Online Currency (OPP)

Earning and maintaining consumer trust as a platform involves understanding and addressing key factors such as convenience, shipping options, payment security, data protection, and customer service. These elements are critical in influencing consumers’ purchasing behaviors, particularly in online shopping environments. Platforms, namely payment providers like OPP, play a central role in building trust with consumers, which requires a deep understanding of consumer perceptions and preferences, as highlighted by CEO Maurice Jongmans. Read more

Scaling gen AI in banking: Choosing the best operating model (McKinsey)

The article discusses the transformative potential of Generative AI (gen AI) in banking and emphasizes the critical role of implementing the right operating model to harness its benefits. McKinsey estimates significant value addition from gen AI in banking, primarily through enhanced productivity. Centralization emerges as a favorable approach in the early stages of gen AI adoption due to its efficiency in talent allocation, risk management, and decision-making. However, flexibility is crucial, considering organizational differences and evolving technology landscapes. Key decisions include strategy alignment, domain identification, funding, talent management, risk mitigation, and change management. Overall, the article advises financial institutions to strategically align gen AI initiatives with their goals and adopt suitable operating models for effective scaling and impact. Read more

Four archetypes have emerged for using gen AI in financial services, and the highly centralized approach is showing the best results.

Report: Consumers seek flexible, transparent cross-border payments
(The Paypers)

The inaugural global ecommerce report by Airwallex and Edgar, Dunn & Company reveals consumer preferences for flexibility and transparency in digital cross-border payments. With the global cross-border ecommerce market projected to reach USD 7.9 trillion by 2030, addressing consumer pain points becomes crucial for international merchants to thrive. The report highlights that trust and security are key drivers of increased cross-border spending, with digital payments facilitating a customized payment experience. Regional consumer preferences vary, with factors such as product availability, quality, and pricing influencing shopping behavior. Social commerce is also on the rise, particularly in regions like China, Hong Kong, and Singapore, where consumers show a strong interest in buying from international merchants through social media platforms. The research, conducted through a global survey and interviews with leading merchants, underscores the importance of understanding diverse consumer considerations for success in the global marketplace. Read more

Private climate funds lead in net zero transition opportunities, MSCI study shows (Fintech Global)

The MSCI study, “In the Name of Climate: Private vs. Public Funds,” sheds light on the burgeoning landscape of climate-related investment funds, revealing significant differences in strategies between private and public markets. Private funds, accounting for over 70% of cumulative capital dedicated to private markets climate initiatives, focus on high-emission sectors crucial for the net-zero transition. In contrast, public funds lean towards companies with reduced carbon footprints. Private funds show a substantial exposure to carbon-intensive sectors like utilities, while public funds exhibit a more conservative approach. Asset class preferences also differ, with private markets favoring infrastructure and public funds predominantly investing in equity. Zaid and Mahmood emphasize the importance of transparency in fund holdings for investors evaluating climate strategies. The study signifies a pivotal moment in the financial sector’s approach to addressing climate change, with private funds leading the charge in critical sectors for the net-zero transition. Listen more

Quo vadis, inflation? (ECB)

In their discussion, host Stefania Secola and Chief Economist Philip R. Lane provide a comprehensive overview of current economic trends and considerations. They evaluate inflation trends since late 2022, discussing the impact of rising wages and potential implications for the labor market amidst low unemployment rates. The conversation also delves into recent changes in the ECB’s operational framework for monetary policy implementation, emphasizing its role in maintaining price stability. Additionally, Lane recommends a paper on ECB’s macroeconometric models for further understanding. Overall, the dialogue offers valuable insights into inflation dynamics, labor market conditions, and ECB policy initiatives, providing listeners with a nuanced understanding of key economic developments. Read more

Top scams impacting consumers and businesses globally (Payments Cards & Mobile)

Visa’s Spring 2024 Biannual Threats Report highlights a surge in sophisticated scams targeting both consumers and businesses, with threat actors increasingly exploiting human vulnerabilities in the payments ecosystem. Consumer scams like “pig butchering,” inheritance schemes, and humanitarian relief fraud have led to substantial losses, fueled by emotional manipulation and advanced technologies like Generative AI. Meanwhile, organizational fraud trends reveal heightened targeting of supply chains and third-party services, with a notable rise in AI-driven attacks and Purchase Return Authorization fraud. Ransomware cases have also spiked, posing significant risks to critical infrastructure, including financial institutions. Visa underscores its proactive approach to combatting fraud through rapid response measures and close collaboration with industry stakeholders to safeguard the payments ecosystem. Read more

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