tag:blogger.com,1999:blog-12635760238656317362024-03-29T10:12:02.325+01:00BanklochA weekly blog with articles on the future of financial services sector and more particular specifically Fintech, but also on topics, like IT and digitalization and its impact on the world (like e.g. mobility).
#fintech #bankingsector #innovation #bankingtechnologyJoris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.comBlogger141125tag:blogger.com,1999:blog-1263576023865631736.post-26231296426230290282024-03-18T08:54:00.003+01:002024-03-18T08:54:50.516+01:00Safeguarding Finance: The Crucial Role of Sanction Screening<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFHm61_gWis5zZvDQYFrvCGtJmhc1jYKRlQ_AIY7xW4G14WcCV2skfnxRP37f9iiqd0s2Z9-R_NCKZkGnKeQ8OoQ2BkKdn9cXrThlFHP4gx77GCnCHx_aA4ZOZOSEOcL7UutxWxnPOQV5x0XxQ8DfC-VMvpKMVyEsqZu7bm7Ve7AtY2Y9ii906PWnnzfsV/s1024/DALL%C2%B7E%202024-03-16%2022.14.10%20-%20A%20serene%20and%20inviting%20image%20of%20a%20lighthouse%20standing%20tall%20on%20a%20coastline,%20symbolizing%20guidance%20and%20vigilance.%20The%20lighthouse%20beams%20a%20powerful%20light%20ac.webp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFHm61_gWis5zZvDQYFrvCGtJmhc1jYKRlQ_AIY7xW4G14WcCV2skfnxRP37f9iiqd0s2Z9-R_NCKZkGnKeQ8OoQ2BkKdn9cXrThlFHP4gx77GCnCHx_aA4ZOZOSEOcL7UutxWxnPOQV5x0XxQ8DfC-VMvpKMVyEsqZu7bm7Ve7AtY2Y9ii906PWnnzfsV/w400-h400/DALL%C2%B7E%202024-03-16%2022.14.10%20-%20A%20serene%20and%20inviting%20image%20of%20a%20lighthouse%20standing%20tall%20on%20a%20coastline,%20symbolizing%20guidance%20and%20vigilance.%20The%20lighthouse%20beams%20a%20powerful%20light%20ac.webp" width="400" /></a></div><br /><p><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">Financial crime</strong><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">continues to be a major issue, undermining the trust and safety of global financial systems. The United Nations estimates that a staggering 2 to 5% of global GDP, or between EUR 715 billion and 1.87 trillion, is laundered each year. Moreover, about 50% of companies worldwide have experienced fraud in the last two years, underscoring the urgent need for effective measures against financial wrongdoing.</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Financial crimes fall into three main categories:<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">money laundering, financial fraud, and sanctions evasion</strong>, each with its own implications. However, sanctions evasion stands out for its direct threat to global economic stability and security.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Sanctions</strong><span class="Apple-converted-space"> </span>are punitive measures imposed on entities or individuals to restrict their trade or financial transactions. Sanction evasion aims to bypass these restrictions, often through methods like using shell companies or exploiting legal loopholes, making detection and prevention challenging for financial institutions.</p></div><div class="paragraph data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Sanction screening is crucial in fighting these crimes, designed to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">identify, prevent, and disrupt</strong><span class="Apple-converted-space"> </span>illegal financial flows. However, this task is fraught with challenges:</p></div><div class="ulist data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Decoding Sanction Lists</strong>: The initial step involves navigating through various sanction lists, each with its own focus and territorial applicability. These publicly available documents, issued by national or international bodies, include entities or individuals subject to financial or trade restrictions. Examples include the OFAC, UN, and EU Consolidated lists, among others. These ever-evolving watchlists contain unique and sometimes conflicting restrictions, making compliance complex.</p></li><li class="data-line-19" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Maintaining Accurate Customer Data</strong>: The foundation of effective sanction screening is reliable and up-to-date customer data, necessitating systems for regular updates and checks to identify evasion attempts. Data collection ranges from basic personal details for individuals (such as full and alternate names, birthdates, nationality, addresses and national register numbers) to quite complex information for businesses, including connections to directors, UBOs (Ultimate Beneficiary Owners), and trading partners. This is crucial for adhering to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">implicit</strong><span class="Apple-converted-space"> </span>sanctions, which are based on associations with sanctioned entities or sectors rather than specific names. E.g. any entity doing business with Iran, Cuba or Sudan is implicitly covered by the sanction lists. As implicit sanctions are less clearly defined, they are much more complex to cover and more open to interpretation.<br style="box-sizing: border-box;" />Apart from collecting the data, the accuracy also has to be validated. This is accomplished by cross-checking the collected data against other sources, such as public registers, official documents and/or third-party data providers.</p></li><li class="data-line-22" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Sophisticated Matching Techniques</strong>: The heart of sanction screening lies in accurately matching customer data with entries on sanction lists, a task complicated by variations in names and aliases. Sophisticated algorithms and fuzzy matching are critical for ensuring precision while minimizing false positives.</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Investigation and Reporting</strong>: When a potential match is found, it triggers a detailed investigation to verify the findings, distinguishing false alerts from genuine matches. Confirmed matches necessitate the submission of a Suspicious Activity Report (SAR) to authorities, as neglecting to report can result in severe penalties. These reports allow law enforcement agencies to take necessary actions. In 2022 more than 3.6 million SARs were filed, which shows the scale of the challenge.</p></li></ul></div><div class="paragraph data-line-26" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Sanction screening is<span class="Apple-converted-space"> </span><span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">not a one-time activity but a continuous commitment</strong>, necessitating regular re-screening to account for updates in sanction lists and customer profiles. This includes screening at customer onboarding and at regular intervals or triggered events, such as new transactions or account openings, to ensure ongoing compliance. Additionally regulators impose as well that counterparties in financial transactions (Know Your Transaction - KYT) are also screened, even if those are not customers of the financial institution.</p></div><div class="paragraph data-line-28" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Meeting this challenge efficiently calls for the adoption of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">sophisticated technologies</strong><span class="Apple-converted-space"> </span>to automate processes as much as possible. Many RegTech solutions provide comprehensive services that distribute common efforts across banks. Integrating sanction screening into a broad financial crime prevention strategy, combining AML, KYC, and fraud detection, can lead to more effective outcomes, as these crimes often overlap. Continuous monitoring (via a so-called risk-based approach) of all the activity of customers and the use of AI and rule engines can significantly improve results, reducing both false positives and negatives.</p></div><div class="paragraph data-line-30" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">With<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">regulators intensifying scrutiny</strong><span class="Apple-converted-space"> </span>and imposing heavier fines and legal actions for non-compliance, the pressure on financial institutions to enhance their sanction screening practices is mounting. High-profile cases of fines for breaches, such as those involving Standard Chartered, BNP Paribas or Société Générale, underscore the stakes involved. This drives institutions to heavily invest in automation to decrease compliance costs while improving adherence to regulations.</p></div><div class="paragraph data-line-32" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">For more insights, visit my blog at<span class="Apple-converted-space"> </span><a class="bare" href="https://bankloch.blogspot.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bankloch.blogspot.com/</a></em></p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-89432402013235366912024-03-04T22:43:00.001+01:002024-03-04T22:43:32.962+01:00The Fraud Puzzle: Assembling the Pieces of Payment Security<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWANpCO5VOQ2TJP-3jrJnM4h0bQkYjkduRGZJ5ED942jFPjn3ISinCjX5G93opdW0OobikxSPpW4DvqxXkDhhLe-eXGIn7nviyDW55djPF43iXx34y_hpoCDsv7Tx3hbE6_vD1jYyHb0VUwsv6lctWIJvGliopWRGAUotoxNf9gIwklCragyVK6yddc24w/s1024/DALL%C2%B7E%202024-03-04%2022.28.59%20-%20A%20digital%20collage%20representing%20the%20concept%20of%20fraud%20detection%20in%20the%20financial%20sector.%20The%20image%20should%20include%20visual%20elements%20such%20as%20a%20magnifying%20g.webp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWANpCO5VOQ2TJP-3jrJnM4h0bQkYjkduRGZJ5ED942jFPjn3ISinCjX5G93opdW0OobikxSPpW4DvqxXkDhhLe-eXGIn7nviyDW55djPF43iXx34y_hpoCDsv7Tx3hbE6_vD1jYyHb0VUwsv6lctWIJvGliopWRGAUotoxNf9gIwklCragyVK6yddc24w/w400-h400/DALL%C2%B7E%202024-03-04%2022.28.59%20-%20A%20digital%20collage%20representing%20the%20concept%20of%20fraud%20detection%20in%20the%20financial%20sector.%20The%20image%20should%20include%20visual%20elements%20such%20as%20a%20magnifying%20g.webp" width="400" /></a></div><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><br /></span></p>Following our previous blog '</span><em style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: inherit;">Rethinking AML: A Call for Innovation and Efficiency</em><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">' ("https://bankloch.blogspot.com/2024/02/rethinking-aml-call-for-innovation-and.html"), where we navigated the complex world of AML and pinpointed three primary</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">categories of malicious financial activities</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">:</span><p></p><div class="ulist data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-11" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Money laundering</strong>: Transforming proceeds from illicit activities into seemingly legitimate funds.</p></li><li class="data-line-12" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Sanction bypassing</strong>: Circumventing governmental sanctions.</p></li><li class="data-line-13" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Payment Fraud</strong>: Exploiting stolen or fake payment details to illicitly acquire goods or funds.</p></li></ul></div><div class="paragraph data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Focusing on Payment Fraud, we discern two principal categories:<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">insider (internal) fraud</strong>, conducted from inside an organization by its own staff, and<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">external fraud</strong>, perpetrated by outsiders like customers or suppliers. This blog delves into<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">external fraud within the financial sector</strong>, particularly the unauthorized extraction of customer funds. This subset of "Payment Fraud" can be further split-up in several types, depending on the tactic used for the fraud:</p></div><div class="ulist data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Phishing</strong>: A social-engineering strategy that deceives individuals into revealing sensitive information. This category encompasses a broad spectrum, from widespread email phishing to more personalized attacks like Spear Phishing and Whaling, extending to SMS (Smishing), voice (Vishing), and QR codes (Quishing).</p></li><li class="data-line-18" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Skimming</strong>: The use of skimmers by fraudsters to capture credit or debit card data at ATMs or sales terminals.</p></li><li class="data-line-19" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Identity theft</strong>: Unauthorized use of someone’s personal information for fraudulent transactions or account openings.</p></li><li class="data-line-20" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Chargeback fraud</strong>: Customers falsely disputing a legitimate charge, claiming non-receipt of goods or services, or denying the transaction altogether. This type is also known as "friendly fraud".</p></li><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Business email compromise</strong>: Unauthorized access to business emails to initiate fraudulent transfers.</p></li><li class="data-line-22" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Card-not-present fraud</strong>: Fraudulent transactions conducted online or over the phone using stolen card details.</p></li><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Credential Stuffing</strong>: Utilizing stolen credentials, typically collected from data breaches and sold on the Dark Web, to access accounts under the assumption of reused passwords.</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">SIM Card Swapping</strong>: Persuading a mobile carrier to reassign a victim’s phone number to a new SIM card, undermining two-factor authentication (2FA) measures.</p></li><li class="data-line-25" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Malware</strong>: Installing malicious software to hijack bank accounts.</p></li><li class="data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Man-in-the-Middle Attacks</strong>: Intercepting communications between a financial institution and its clients.</p></li></ul></div><div class="paragraph data-line-28" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Many of these fraud types fall under "<strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Account Takeover Fraud</strong>" (ATO), where cybercriminals gain control of a victim’s account. However, fraud can also occur without direct account access, as seen in "<strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Spoofing</strong>" scams, where fraudsters impersonate legitimate entities to deceive victims into making transfers to their accounts. E.g. a cybercriminal could counterfeit an invoice of a customer’s supplier. If done well, almost no difference can be identified with a legitimate invoice, except of course that the IBAN does not belong to the supplier but to the cybercriminal. This type of fraud is becoming increasingly common, a reason why the new European directives on PSD3 and Instant Payments will force banks to execute IBAN-Name checks.</p></div><div class="paragraph data-line-30" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The extensive list of techniques described above shows that cybercriminals use<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">a variety of techniques to gain access to the money of their victims</strong>. As such, addressing Payment Fraud necessitates a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">multi-faceted approach</strong>, combining technological solutions with vigilant practices.</p></div><div class="paragraph data-line-32" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">A foundation element to better identify the customer is MFA or<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Multi-Factor Authentication</strong>, which significantly reduces unauthorized access by requiring multiple verification factors (something you know, something you have and/or something you are). For further insights on this, check out my blog "<em style="box-sizing: border-box; line-height: inherit;">Multi-Factor Authentication and Identity Fraud Detection in the Financial Services Industry</em>" - "https://bankloch.blogspot.com/2020/02/multi-factor-authentication-and.html")</p></div><div class="paragraph data-line-34" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Beyond MFA,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Risk-Based Authentication</strong><span class="Apple-converted-space"> </span>(RBA) offers a dynamic layer of security by adapting authentication requirements based on the user’s behavior and context, enhancing both security and usability. This approach may involve:</p></div><div class="ulist data-line-36" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-36" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Behavioral Biometrics & Analytics</strong>: Analyzing user behavior patterns, such as typing speed, the way the user moves his mouse over the screen, the way the user holds his mobile phone in his hand, the typical flow the user follows in the banking app…</p></li><li class="data-line-37" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Device & Network settings</strong>: Monitoring IP addresses (e.g. known or new IP address, geo-location of the IP), device types (incl. browser type), and network characteristics (e.g. VPN used or not) for anomalies.</p></li><li class="data-line-38" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">User activity</strong>: Evaluating the nature and history of user actions to assess risk.</p></li><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Transaction data</strong>: Scrutinizing transaction details (e.g. transaction amount, existing or new counterpart, sector of counterparty…) for irregularities.</p></li><li class="data-line-40" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Timing</strong>: Considering the usual timing of user interactions for any anomalies.</p></li></ul></div><div class="paragraph data-line-42" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">By adopting a holistic view of user activity, banks can impose additional controls as needed, striking a balance between security and convenience.</p></div><div class="paragraph data-line-44" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Improving the identification and evaluation of counterparties involves various controls and alerts, including:</p></div><div class="ulist data-line-46" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-46" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">IBAN - Name Checks</strong>: Verifying the match between IBAN and counterparty names.</p></li><li class="data-line-47" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Customer Profile Alignment</strong>: Assessing whether transactions align with the user’s typical behavior.</p></li><li class="data-line-48" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Sanction and Blacklist Screening</strong>: Comparing counterparties against official and internal lists (i.e. allow customers to report themselves also malicious IBANs and counterparties).</p></li><li class="data-line-49" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Risk and Financial Scoring</strong>: Evaluating the counterparty’s credibility and trustworthiness using public (e.g. published annual reports) and private records.</p></li><li class="data-line-50" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Improved<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">KYC and AML screening</strong><span class="Apple-converted-space"> </span>for customer onboarding, i.e. if malicious customers cannot open a bank account, it adds an additional burden to do payment fraud.</p></li></ul></div><div class="paragraph data-line-52" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The rise of cybercrime emphasizes the need for robust fraud prevention strategies within the banking sector. The advent of innovative technologies, particularly from RegTech firms, is crucial. Yet, their effectiveness depends on the availability of comprehensive, real-time, and historical data.</p></div><div class="paragraph data-line-54" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">As financial institutions grapple with<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">data silos, dismantling these barriers</strong><span class="Apple-converted-space"> </span>is essential for improving fraud detection and securing the financial ecosystem. By creating an environment where data from various sources can be seamlessly integrated, banks are better positioned to address the growing challenge of cybercrime.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-61312070344602002972024-02-13T22:30:00.005+01:002024-02-13T22:31:04.375+01:00Rethinking AML: A Call for Innovation and Efficiency<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizr9-obgCjfQsacXUOYPmKuuLE6Kn4qnS9wGPKae4Wo1l_aIIRS6R5UNWGZ8OZFL268NX1khLVOA30nxMnVFjarX6ncRfHNz5f_A5E0cG3oX5NXtl_pxQ-Yjr2DOHg3Eq0jmQEQWOJ6MfjLNRU2nh8yYOkBYtHW5tAn82-Po4fRJj6sF3Zd2x7BlLrKkks/s1024/DALL%C2%B7E%202024-02-13%2022.21.52%20-%20A%20dramatic%20scene%20inside%20a%20financial%20institution%20where%20a%20team%20of%20professionals%20is%20gathered%20around%20a%20high-tech%20digital%20workstation,%20analyzing%20data%20and%20I.webp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizr9-obgCjfQsacXUOYPmKuuLE6Kn4qnS9wGPKae4Wo1l_aIIRS6R5UNWGZ8OZFL268NX1khLVOA30nxMnVFjarX6ncRfHNz5f_A5E0cG3oX5NXtl_pxQ-Yjr2DOHg3Eq0jmQEQWOJ6MfjLNRU2nh8yYOkBYtHW5tAn82-Po4fRJj6sF3Zd2x7BlLrKkks/w400-h400/DALL%C2%B7E%202024-02-13%2022.21.52%20-%20A%20dramatic%20scene%20inside%20a%20financial%20institution%20where%20a%20team%20of%20professionals%20is%20gathered%20around%20a%20high-tech%20digital%20workstation,%20analyzing%20data%20and%20I.webp" width="400" /></a></div><br /><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">In the financial services sector,</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">Anti-Money Laundering (AML) </strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">continues to be a topic of intense debate. Discussions oscillate between advocating for stricter regulations and questioning the extent of banks' responsibilities in overseeing (policing) financial transactions.</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">AML regulations are pivotal in preventing the use of financial institutions for facilitating crimes such as money laundering and terrorist financing. However, the effectiveness of these measures is often under scrutiny, especially considering their impact on legitimate customers and banks' financial models. Despite rigorous AML frameworks, a significant gap persists between their intended outcomes and actual results, i.e.</p></div><div class="ulist data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-13" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The United Nations estimates that around $2 trillion, equivalent to the GDP of a major economy like France, circulates annually through money laundering channels. Alarmingly<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">the detection and interception rates are disconcertingly low</strong>, with only about 2% of this amount being detected, , and merely a fraction of that effectively halted. This highlights the shortcomings of current KYC and AML processes in addressing major financial crimes.</p></li><li class="data-line-15" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Legitimate customers face substantial repercussions</strong><span class="Apple-converted-space"> </span>due to the billions invested in compliance each year, which escalates costs for consumers and potentially excludes them from essential banking services. For instance, SMEs may face serious business disruptions due to blocked payments, migrants might struggle to provide the necessary identity proofs for KYC, and low-income consumers might be unfairly flagged as high-risk.</p></li><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Dozens of financial institutions have already<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">been fined for enormous amounts</strong><span class="Apple-converted-space"> </span>for non-compliance with KYC and AML procedures. In 2023 alone, several financial institutions, including Binance ($4 billion), Crown Resorts ($450 million), Deutsche Bank ($186 million) and Bank of Queensland ($50 million), were fined significant amounts for non-compliance with KYC and AML procedures, contributing to over $403 billion in penalties since 2008.</p></li></ul></div><div class="paragraph data-line-19" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Enhancing AML processes requires a shift away from prescriptive governmental measures towards fostering innovation and efficiency. This entails moving beyond a "check-the-box" mentality to solutions that effectively identify and mitigate money laundering risks, a challenge compounded by the complexity of measuring AML effectiveness. E.g. a bank identifying a lot of AML cases, does not necessarily have good practices in place. They might also have been lucky or might have a business model which attracts a lot of money-laundering (making it easier to detect the tip of the iceberg).</p></div><div class="paragraph data-line-21" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Financial institutions can navigate the AML landscape more effectively by implementing best practices that minimize disruption and enhance compliance, such as:</p></div><div class="ulist data-line-23" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Adopting a Risk-Based Approach</strong>: Instead of applying the same level of scrutiny to every transaction, financial institutions should adopt a risk-based approach that focuses on transactions that are most likely to be high risk. This will allow the bank to prioritize its efforts and reduce the number of false positives.</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Leveraging Technology</strong>: Many financial institutions still use simple rule-based AML systems implemented on outdated and siloed systems, which logically result in bad results. The adoption of advanced, often AI-based systems offered by various RegTech companies (like ComplyAdvantage, Chainalysis, Unit21, Discai, Alessa, Fraudio) can improve however detection accuracy, reducing both false positives and false negatives without significantly impacting user experience. RegTech can offer a beacon of hope for overburdened compliance departments.</p></li><li class="data-line-25" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Fostering a Culture of Compliance</strong>: Continuous education and training ensure that all bank employees are well-versed in AML regulations and understand their role in the compliance process, maximizing the benefits of RegTech innovations.</p></li><li class="data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Continuous Policy and Procedure Review:</strong>: Ensuring AML policies and procedures remain effective and aligned with current regulatory standards through regular updates.</p></li><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Monitoring and Reporting</strong>: Ongoing monitoring and reporting on AML compliance efforts help identify areas for improvement, ensuring ongoing effectiveness.</p></li></ul></div><div class="paragraph data-line-29" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">AML is about more than preventing money laundering; it also encompasses combating corruption (i.e. individuals or corporations taking bribes), sanction evasion (i.e. individuals or corporations moving money that should not be allowed to), and fraud (i.e. attempting to steal or scam money from someone else). Criminals use sophisticated techniques to launder illicit funds, complicating detection and intervention efforts by financial institutions, i.e.</p></div><div class="ulist data-line-31" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Placement</strong><span class="Apple-converted-space"> </span>: depositing illegal money in the financial system. This is done via different techniques, e.g. via cash businesses with little or no variable costs (e.g. car washes, casinos, tanning studios…), via false invoicing, via smurfing (splitting up in small amounts, which stay below certain AML thresholds), via trusts and offshore companies or foreign bank accounts, via aborted transactions…</p></li><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Extraction</strong>: this consists of getting the money out, so it can be used. Often this is done by techniques, on which the criminals will pay taxes, as this increases the legitimacy. Typical techniques consist of paying salaries to fake employees, loans to directors or shareholders which are not repaid or pay out of dividends.</p></li></ul></div><div class="paragraph data-line-34" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Due to the variety of types of financial crime and the techniques used for placement and extraction, it becomes very complex for financial institutions to properly detect and stop these activities. The main reasons for that being:</p></div><div class="ulist data-line-37" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-37" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Lack of comprehensive data available to banks</strong>, often due to privacy regulations like GDPR. This limitation makes effective AML akin to finding a needle in a haystack. Enhanced, more fine-grained data collection and sharing, subject to stringent security measures, could significantly improve AML efforts.</p></li><li class="data-line-38" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Every bank implements AML on its own and tries to ensure compliance within its organization</strong>. This isolated approach of banks to AML compliance, coupled with the exploitation of this by criminals, underscores the need for a legal framework facilitating data sharing and collaboration among financial institutions. RegTechs can play a crucial role in this ecosystem by offering resources like sanction screening lists and regulatory compliance tools, which are shared in a SaaS model across its customers.</p></li><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Given the international nature of financial crime, the development of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">global AML standards and increased international cooperation </strong>are imperative. Money laundering is a global issue that demands a unified response.</p></li><li class="data-line-40" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Regulators do very little to support financial institutions</strong><span class="Apple-converted-space"> </span>in their mission. Instead of just defining strict (often outdated) rules and imposing sanctions, they could also offer tooling to support financial institutions in having better AML. E.g. up-to-date and easily accessible sanction screening APIs, good (API-based) access to company and UBO registers or the setup of regulatory sandbox, in which (anonymized) examples of recently detected fraud and common false positives are included, would all help players to be more effective in AML compliance. Additionally regulators can organize trainings and knowledge sharing forums to facilitate the exchange of crucial expertise.</p></li></ul></div><div class="paragraph data-line-42" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Ultimately, the journey toward more efficient and effective AML practices demands collective action. Financial institutions, regulators, and RegTech providers must collaborate closely, sharing insights and data to enhance AML efforts.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-39165365281146562852024-02-07T23:17:00.006+01:002024-02-07T23:18:06.787+01:00Rethinking Refunds: Leveraging Technology for Enhanced Efficiency<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLc984RCTc3CsTyOn00t7l1msUy-49clvLl3J2xehQU38Z3EhcMkW2636BEN1r4Hsnfft7fiiJuPVKtPviJIztzfXy-wUS881AsWe6YJf1qiV99LbuNnIvq9gLmOLnINmkWnniuW20qysIYuzqGocskFNMLLdnzdUA_fcjHveYVIDs5xzvTxJHMdtu6Aog/s1024/2f307951-af04-457a-82c6-0f384a1d885c.webp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLc984RCTc3CsTyOn00t7l1msUy-49clvLl3J2xehQU38Z3EhcMkW2636BEN1r4Hsnfft7fiiJuPVKtPviJIztzfXy-wUS881AsWe6YJf1qiV99LbuNnIvq9gLmOLnINmkWnniuW20qysIYuzqGocskFNMLLdnzdUA_fcjHveYVIDs5xzvTxJHMdtu6Aog/w400-h400/2f307951-af04-457a-82c6-0f384a1d885c.webp" width="400" /></a></div><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><br /></span><p></p><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">Just over a year ago, I wrote a blog describing how merchants struggle with an efficient refund process (cfr. "</span><em style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: inherit;">Refunds - A bigger problem than you would imagine</em><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">" -</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><a class="bare" href="https://bankloch.blogspot.com/2022/07/refunds-bigger-problem-than-you-would.html" style="background-image: none; box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: #2156a5; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: inherit;">https://bankloch.blogspot.com/2022/07/refunds-bigger-problem-than-you-would.html</a><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">). The traditional method of refunding is by sending funds back to the original payment method, but this method is not just costly and complex; at times, it is downright impossible.</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">This issue was also identified by Jeremy Balkin, a former executive of JP Morgan and now founder and CEO of TodayPay, which offers “<em style="box-sizing: border-box; line-height: inherit;">Refunds as a Service</em>”, enabling merchants to offer customers instant refunds via multiple payment methods. Examples of their services are "<em style="box-sizing: border-box; line-height: inherit;">Refund Now, Pay Later</em>", in which TodayPay issues the refund and the merchant has up to 90 days to refund the funds or "<em style="box-sizing: border-box; line-height: inherit;">Better Refund</em>", offering consumers a cash back in exchange for a refund. This unique service underscores a significant gap in the evolution of payment systems for efficient handling of refunds.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The problem of refunds extends however far beyond the retail and eCommerce world. There are many niche use cases, where consumers are entitled to a refund, but where the link with the original payments is not existing or very hard to find, making the current approach of sending money back through the original payment method impossible.</p></div><div class="paragraph data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Some examples are:</p></div><div class="ulist data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Recycling Initiatives</strong>, e.g. getting your deposit back (a refund) at festivals for returning glasses or reusable cups or supermarkets and dispensing machines that incentivize recycling by refunding deposits for returned plastic or glass bottles.</p></li><li class="data-line-18" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Library Late Fees Refund</strong>: Some libraries offer refunds for late fees if books are returned in good condition within a grace period.</p></li><li class="data-line-19" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Rental Equipment</strong>: When you rent equipment, like tools, vehicles (e.g. car rental) or supplies (e.g. clothing), you often pay a deposit to cover potential damages. This deposit is refunded when the items are returned on time and in their original condition.</p></li><li class="data-line-20" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Hotel Incidentals</strong>: Hotels often place a hold on your credit card for incidentals when you check in. This is not an actual charge but a temporary hold to cover potential expenses like room service or minibar usage. The hold is released, effectively refunding you, if these services are not utilized.</p></li><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Parking</strong>: parking costs can be reimbursed, if you leave within a certain time frame or can prove a certain consumption (e.g. at a local merchant).</p></li><li class="data-line-22" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Public Transportation Cards</strong>: In many cities, public transportation systems require a deposit for a reusable transit card. When the card is returned, the deposit is refunded.</p></li></ul></div><div class="paragraph data-line-25" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">To navigate the complexities of refunds, especially where direct purchase links are absent, businesses are turning to diverse solutions:</p></div><div class="ulist data-line-27" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Cash Transactions</strong>: Simple and immediate, cash refunds are ideal for straightforward transactions like bottle deposits or event parking.</p></li><li class="data-line-28" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Card Holds</strong>: Hotels, car rental agencies, and similar businesses often hold an amount on a credit or debit card to secure deposits. This involves blocking a certain amount on the customer’s card, which is released (effectively refunding the customer) upon fulfilling service terms.</p></li><li class="data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Digital and Mobile Payments</strong>: Digital wallets like PayPal and Apple Pay offer convenient refund options, especially for online transactions.</p></li><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Prepaid Solutions</strong>: Public transport and rental services often use prepaid cards or tokens, with deposits refunded upon service completion.</p></li><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">RFID Technology</strong>: Events and festivals use RFID bands for payments and access control, with deposits refunded upon return of the device.</p></li><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Online Gateways</strong>: E-commerce platforms process refunds directly to the original payment method, simplifying online shopping returns.</p></li><li class="data-line-33" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Direct Bank Transfers</strong>: Ideal for larger deposits or when other methods are impractical, ensuring direct and secure refunds.</p></li><li class="data-line-34" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Vouchers and Credits</strong>: Some businesses offer future service credits instead of cash refunds, promoting customer retention.</p></li></ul></div><div class="paragraph data-line-36" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Looking ahead, the rise of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">smart contracts</strong><span class="Apple-converted-space"> </span>promises to redefine refunds, automating them under predefined conditions and further simplifying the process. Another evolution which might simplify the process is SEPA Request-to-Pay (cfr. my blog "<em style="box-sizing: border-box; line-height: inherit;">SEPA Request-to-pay: a door opener to innovation</em>" -<span class="Apple-converted-space"> </span><a class="bare" href="https://bankloch.blogspot.com/2022/06/sepa-request-to-pay-door-opener-to.html" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bankloch.blogspot.com/2022/06/sepa-request-to-pay-door-opener-to.html</a>)</p></div><div class="paragraph data-line-38" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">As refunds are often viewed as a loss activity, very few businesses effectively invest in this, resulting in an inadequate service. However investing in efficient refund processes can significantly reduce costs (by reducing manual actions and the number of customer support calls and enhance customer satisfaction. A smooth refund experience not only minimizes operational hassles but also builds consumer confidence, encouraging repeat business.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-25466393807568601302024-01-29T23:16:00.009+01:002024-01-29T23:17:21.010+01:00Meeting Overload: Balancing Quantity with Quality<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIj-BDIwQJY0jGiLtOSxLe6kZ0wXbl68xUXluUb0GofrlSjXMdytfvUejk6GSz9ZT9dF7Pr9qb834envQHOm4hS-6j_8UwIo1jvtAYW-3Lfy_jNhpsWqGwGGc0c7bDbBxRnZASPnqoaoyHf4EIx68Nx5XB8_DooUYO1s4MejoJydhDrXulsGEkjvFGc6Kz/s1024/DALL%C2%B7E%202024-01-29%2023.12.52%20-%20A%20modern,%20sleek%20office%20environment%20with%20a%20diverse%20group%20of%20professionals%20gathered%20around%20a%20transparent,%20high-tech%20meeting%20table.%20The%20table%20is%20equipped.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIj-BDIwQJY0jGiLtOSxLe6kZ0wXbl68xUXluUb0GofrlSjXMdytfvUejk6GSz9ZT9dF7Pr9qb834envQHOm4hS-6j_8UwIo1jvtAYW-3Lfy_jNhpsWqGwGGc0c7bDbBxRnZASPnqoaoyHf4EIx68Nx5XB8_DooUYO1s4MejoJydhDrXulsGEkjvFGc6Kz/w400-h400/DALL%C2%B7E%202024-01-29%2023.12.52%20-%20A%20modern,%20sleek%20office%20environment%20with%20a%20diverse%20group%20of%20professionals%20gathered%20around%20a%20transparent,%20high-tech%20meeting%20table.%20The%20table%20is%20equipped.png" width="400" /></a></div><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; word-spacing: -0.05em;"><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; word-spacing: -0.05em;"><br /></span></p>The phrase "</span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit; word-spacing: -0.05em;">too many meetings</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; word-spacing: -0.05em;">" resonates widely among employees in the corporate sphere. This pervasive sentiment clashes with the pressing need for executives to boost productivity, prompting a reevaluation of the meeting culture in many organizations.</span><p></p><div class="paragraph data-line-9" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Consider these startling statistics:</p></div><div class="ulist data-line-12" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-12" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Organizations devote an estimated 15% of their time to meetings.</p></li><li class="data-line-13" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">A staggering 71% of these meetings are deemed unproductive by participants.</p></li><li class="data-line-14" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The average employee spends around 4.5 hours in meetings weekly, with 30% of employees reporting over 5 hours.</p></li><li class="data-line-15" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The higher one climbs the corporate ladder, the more meetings one participates in : CEOs can spend up to 72% of their time in meetings, upper management about half, and middle management around 35%.</p></li></ul></div><div class="paragraph data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Yet, the irony lies in the simultaneous complaints of employees about insufficient alignment and communication among colleagues, a perceived disconnect with management, and a lack of bottom-up involvement. These issues are often addressed by convening more meetings. This paradox seems to be an unwinnable battle in many companies.</p></div><div class="paragraph data-line-19" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The key to unraveling this paradox lies not in the quantity but in the quality of these meetings. An<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">effective meeting</strong><span class="Apple-converted-space"> </span>can serve as a powerful catalyst for organizational success and employee motivation. Yet, the reality is that many meetings miss the mark of being productive. Initiatives to foster more effective meetings often result in temporary measures and actions, which quickly slip back into old habits. This suggests that a long-term transformation, sponsored by top management (and with top management leading by example), may be necessary to effect lasting change.</p></div><div class="paragraph data-line-21" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Several prominent tech leaders have already taken innovative steps to address this issue, advocating for a shift in meeting culture:</p></div><div class="ulist data-line-23" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Jeff Bezos</strong><span class="Apple-converted-space"> </span>of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Amazon</strong><span class="Apple-converted-space"> </span>has banned PowerPoint from meetings in favor of six-page memos (with real sentences), insisting on a collective reading at the start of meetings to ensure alignment and comprehension. This ensures that participants do not just claim to have read the memo without actually doing so.</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Jack Dorsey</strong>, the famous leader of both<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Twitter</strong><span class="Apple-converted-space"> </span>(in the past) and<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Square</strong>, adopts a similar approach, dedicating the initial minutes of meetings to silent reading from a shared (Google) document.</p></li><li class="data-line-25" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Elon Musk</strong><span class="Apple-converted-space"> </span>came up with his famous 6 rules for productivity. These include</p><div class="ulist data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">the need to avoid large and frequent (recurring) meetings (unless for temporary urgent matters)</p></li><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">the mandate (even obligation) for everyone to leave a meeting if it is obvious they are not adding value</p></li><li class="data-line-28" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">avoiding acronyms or jargon, as anything that requires an explanation inhibits communication</p></li><li class="data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">the mandate to ignore the chain of command. This to ensure that communication travels via the shortest path necessary to get the job done.</p></li><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">using common sense at any moment</p></li></ul></div></li><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Shopify</strong><span class="Apple-converted-space"> </span>CEO Tobi Lutke announced that employees are encouraged to decline non-essential meetings. Additionally the company cancelled all recurring meetings with more than two people and put a strict ban on meetings being held on Wednesdays.</p></li><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Google</strong><span class="Apple-converted-space"> </span>and<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Asana</strong><span class="Apple-converted-space"> </span>have experimented with meeting-free periods to encourage autonomous work. E.g. Asana imposed a company-wide ban on meetings on Wednesdays.</p></li><li class="data-line-33" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Zapier</strong><span class="Apple-converted-space"> </span>explores the concept of designated no-meeting time slots to foster productivity and focus.</p></li><li class="data-line-34" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Jurgen Ingels</strong>, co-founder of Belgian Fintech<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Clear2Pay</strong>, describes in his book '50 Lessons for Entrepreneurs' how he installed a clock in meeting rooms that showed the total cost of the meeting, based on the time spent and the number of participants involved. The idea was to make people more conscious of the enormous cost of meetings, especially when a large number of participants are involved.</p></li></ul></div><div class="paragraph data-line-36" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">All these approaches underline a universal truth:<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">meetings are costly, both in terms of time and resources</strong>. If you consider a weighted cost of an employee at 500 euros per day, a one-hour meeting with 6 people has a total cost of 375 euros, which shows the need for every meeting to be productive.</p></div><div class="paragraph data-line-38" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Effective meetings</strong><span class="Apple-converted-space"> </span>are therefore key to a successful organization. A practical<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">framework</strong><span class="Apple-converted-space"> </span>for holding effective meetings is the implementation of the "<strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">5Ps</strong>":</p></div><div class="ulist data-line-40" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-40" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Purpose</strong>: Define a clear and compelling reason for the meeting. In other words, evaluate the necessity of the meeting (is it really needed?) and check if alternative communication methods cannot achieve the same objectives more efficiently (e.g. use of asynchronous tools like Google Docs, Teams or Slack to facilitate ongoing collaboration without the need for synchronous meetings or simply sending out a general communication via email). Critical here is to weigh up the meeting cost against the anticipated value it will add.</p></li><li class="data-line-41" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Participants</strong>: Carefully select attendees who can create added-value. This means inviting only essential participants to maintain focus and efficiency. Foster also an environment where free thought and speech are encouraged, thus establishing a context in which every participant can contribute.</p></li><li class="data-line-42" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Process</strong>: Define a clear process for the meeting and plan the meeting with precision. This means clearly defining the meeting’s purpose and structure, agenda, time allocations and expected outcomes. Also designate a meeting leader or moderator to guide the discussions, ensure inclusivity, and maintain adherence to the agenda.<br style="box-sizing: border-box;" />At the start of the meeting reiterate the meeting objectives and define again who’s leading the meeting and who’s taking the notes.<br style="box-sizing: border-box;" />The meeting leader should also not lose sight of what the meeting is there to achieve. This means that topics not linked to the agenda and/or meeting objectives, should be written down and parked for when time allows (or for another meeting).</p></li><li class="data-line-45" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Payoff</strong>: Set specific objectives to achieve by the meeting’s conclusion and conclude the meeting with a clear summary of main meeting conclusions and an action plan, assigning tasks and deadlines to translate the discussion into tangible outcomes.</p></li><li class="data-line-46" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Preparation</strong>: Ensure all participants are adequately prepared to contribute. This means sending out (or publishing) the agenda and any supporting material early so it can be reviewed by the attendees ahead of the meeting.</p></li></ul></div><div class="paragraph data-line-48" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Apart from this framework, some<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">practical tips</strong><span class="Apple-converted-space"> </span>which can also improve the effectiveness of meetings:</p></div><div class="ulist data-line-50" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-50" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Explore varied meeting formats</strong>, such as stand-up meetings or other formats that can reduce duration and enhance focus. E.g. research shows that stand-up meetings can cut meeting time by a third.</p></li><li class="data-line-51" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Avoid meetings with more than 2 hierarchical levels</strong>. It can be good to have direct communication between a person and a manager of 2 or more levels higher, but at that moment avoid that all intermediary hierarchical levels are present, as this creates automatic inefficiency and typically bad meetings.<br style="box-sizing: border-box;" />As a general rule, organize only meetings with 2 different hierarchical levels, which doesn’t imply that these two levels are directly adjacent in the organizational hierarchy.</p></li><li class="data-line-53" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Establish individual and departmental<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">caps on meeting time</strong><span class="Apple-converted-space"> </span>to safeguard productivity. A good practice can be 20% of worktime for non-managers, 30% for middle management and 40% for senior leadership.</p></li><li class="data-line-54" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Opt for shorter meetings</strong><span class="Apple-converted-space"> </span>- 30 or even 15 minutes - to encourage conciseness and discipline. Typically, meetings will fill the time allocated for them, meaning the more time foreseen for a meeting the longer it will take.</p></li><li class="data-line-55" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Adhere strictly to start and end times</strong><span class="Apple-converted-space"> </span>to respect participants' schedules and other commitments. The published meeting start time is when the talking starts and not when you expect people to turn up. Late-running meetings should be avoided, as they impact all kinds of other scheduled activities. If the meeting has not produced the desired results at the end of the allocated meeting time, schedule another.</p></li></ul></div><div class="paragraph data-line-57" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">While meetings are an indispensable facet of corporate life, their current execution often leaves much to be desired. By embracing innovative practices and fostering a culture of efficiency, organizations can transform meetings from time-consuming obligations into<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">valuable opportunities for collaboration and decision-making</strong>.</p></div><div class="paragraph data-line-59" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-41396131843184891702024-01-10T23:36:00.006+01:002024-01-10T23:37:25.930+01:00The Art of Checkout: Digital and Physical Shopping Experiences<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjohKv1v__rABUweGshs97BBL1KU1FX3rrPF1qT3CaMeqQPnP-CZcR2K8tLgwa5BPBsIqISU8TIL337p65JpklBMTU9PzmauTVv8s8h0T0-wOEacJ7cjrOHSkq9RjM7_XjCFB73XNRFkXtSzuXiXWG_etMMblw0f6Ky0LxAxHv3Ox86U9uFA4vNCgaLkjKC/s1024/DALL%C2%B7E%202024-01-02%2017.57.14%20-%20An%20illustration%20depicting%20the%20modern%20retail%20checkout%20experience.%20The%20image%20should%20show%20a%20seamless%20blend%20of%20digital%20and%20physical%20elements%20in%20a%20shopping.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjohKv1v__rABUweGshs97BBL1KU1FX3rrPF1qT3CaMeqQPnP-CZcR2K8tLgwa5BPBsIqISU8TIL337p65JpklBMTU9PzmauTVv8s8h0T0-wOEacJ7cjrOHSkq9RjM7_XjCFB73XNRFkXtSzuXiXWG_etMMblw0f6Ky0LxAxHv3Ox86U9uFA4vNCgaLkjKC/w400-h400/DALL%C2%B7E%202024-01-02%2017.57.14%20-%20An%20illustration%20depicting%20the%20modern%20retail%20checkout%20experience.%20The%20image%20should%20show%20a%20seamless%20blend%20of%20digital%20and%20physical%20elements%20in%20a%20shopping.png" width="400" /></a></div><br /><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">Every business inevitably engages in a</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">checkout journey</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">. In B2B contexts with low-volume but high-value transactions, this can be a lengthy, manual process. Nevertheless, the same three key steps can always be identified:</span></p><div class="ulist data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-11" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Finding and Selecting a Product or Service</p></li><li class="data-line-12" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Collecting and Delivering the Product or Service</p></li><li class="data-line-13" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Paying for the Product or Service</p></li></ul></div><div class="paragraph data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These 3 steps can always be identified, but they may vary in sequence depending on the specific use case.<br style="box-sizing: border-box;" />Optimizing each step to be as frictionless as possible for the customer is a crucial aspect of conducting business.</p></div><div class="paragraph data-line-18" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Let’s delve into these three steps in more detail.</p></div><div class="paragraph data-line-20" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Step 1: Finding and Selecting a Product or Service</strong></p></div><div class="paragraph data-line-22" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">This step focuses on creating awareness for your business and guiding customers to the right choice from your catalog. It corresponds with the 'SEE' (creating visibility for initial contact) and 'THINK' (where the customer considers a purchase and identifies their needs) stages of the Google model.</p></div><div class="paragraph data-line-24" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In physical stores, this includes store advertising, clear road directions, attractive window displays, strategic product placement, and knowledgeable staff assistance. In online shops, it encompasses effective SEO, user-friendly web design, efficient search and filter tools, and smart product recommendations based on trends like 'People Like You Bought' or 'People Buying This Product Also Bought', as well as reminders for abandoned shopping carts.</p></div><div class="paragraph data-line-26" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Step 2: Collecting and Delivering the Product or Service</strong></p></div><div class="paragraph data-line-28" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The collection and delivery methods vary significantly between physical and online worlds. In physical stores, customers usually collect products themselves, ensuring instant delivery. Online, collection involves adding digital representations of products to a shopping cart, followed by a webshop employee preparing the product for shipment (post-payment). Delivery options include in-store pickup, home delivery, or collection at designated points.</p></div><div class="paragraph data-line-31" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Step 3: Paying for the Product or Service</strong></p></div><div class="paragraph data-line-33" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The payment process first requires determining the total amount due. Products are scanned at a cashier, or customers scan the products themselves (during shopping or at a self-service cash register). The payment can then be made using cash, card (online or via a POS-terminal), or mobile payment methods like Apple Pay, Google Pay, or QR-based systems. Additionally, options like traditional consumer credit or Buy Now, Pay Later (BNPL) schemes may be available.</p></div><div class="paragraph data-line-36" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Minimizing friction in these steps is crucial for revenue generation. Online retailers like Amazon have significantly streamlined these processes. They utilize sophisticated AI models to anticipate customer needs, offer easy user registration, maintain long-lasting login sessions, record customer delivery and payment preferences (e.g. preferred delivery dates, methods, and contingency plans for absence at home), and facilitate one-click payments with security measures like risk-based authentication and behavioral analysis (refer to my blog "Multi-Factor Authentication and Identity Fraud Detection in the Financial Services Industry" -<span class="Apple-converted-space"> </span><a class="bare" href="https://bankloch.blogspot.com/2020/02/multi-factor-authentication-and.html" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bankloch.blogspot.com/2020/02/multi-factor-authentication-and.html</a>).</p></div><div class="paragraph data-line-38" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Physical stores are also evolving. Hybrid multi-channel experiences combine the immediacy and personal touch of in-store shopping with the convenience of digital tools, thus eliminating unnecessary friction (e.g. waiting lines at cashiers, out-of-stock items, carrying shopping bags). Examples include online reservation of in-store goods, personalized assistance based on customer profiles (such as shoe stores that measure your feet and store characteristics to personalize advice on your next visit), self-scan and cashierless checkout technologies (like Amazon’s Just Walk Out technology), and apps to manage payments and loyalty points. These apps can be directly integrated with the shop’s cash register system, allowing to receive directly the payment amount and ticket information. The app then automatically applies coupons and discounts, manages loyalty points, and handles payments (allocating gift cards and vouchers correctly, if desired by the customer). They can also store invoices for business customers and manage guarantees, warranties, and optional insurances for certain products. A universal super-app covering all chains would be even more convenient, but there’s still a long road ahead, although BNPL players like Klarna and large tech giants are well-positioned to deliver this experience.</p></div><div class="paragraph data-line-40" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These innovations hinge on<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">3 crucial building blocks</strong>:</p></div><div class="ulist data-line-42" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-42" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Frictionless and secure customer identification</strong>: Rapidly identifying customers when they visit a webshop or physical store.</p></li><li class="data-line-43" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Personalization</strong>: Adapting the shopping experience to each customer’s needs and preferences. This encompasses personalization of product guidance, delivery and payment methods, advertisement strategies, and dynamic pricing based on an estimation of the customer’s willingness to pay.</p></li><li class="data-line-44" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Hybrid Experience</strong>: Merging the best of digital and physical worlds. This includes strategies like composing a shopping bag online but picking it up in-store with the option to add additional products, or selecting items in-store and having them delivered to your home. Items out of stock in physical stores can be automatically added to a webshop bag by a store employee, with delivery details known due to the linking of webshop accounts and physical store loyalty cards.</p></li></ul></div><div class="paragraph data-line-46" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Optimizing each step of the checkout experience is key to significantly enhancing customer value.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com1tag:blogger.com,1999:blog-1263576023865631736.post-74094832391734243362023-12-18T19:17:00.006+01:002023-12-18T19:18:09.126+01:00The Shift to Trust-Based Partnerships in Financial Services: Aligning the objectives<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeNONXHJxHNLIPpav9f1rHeI5ngboikWkcqvkupRulHkpCUyM78x1tQS0-Bcs7nNeiW2bTwGae9VsH_-yO1lhuLy0IgRtXtfGkDdqxRoOww4i5zQr92WZ7Ar6cOPLuDeGwfv6xEeaDjMK2YGXVo92yBP6_QyiVIK7jr8S2aEBuWU3QHTKCkuPFouUkWj8a/s1024/DALL%C2%B7E%202023-12-14%2021.46.49%20-%20A%20creative%20and%20abstract%20illustration%20symbolizing%20trust-based%20partnerships%20in%20financial%20services.%20The%20image%20should%20depict%20a%20bridge%20made%20of%20puzzle%20piece.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeNONXHJxHNLIPpav9f1rHeI5ngboikWkcqvkupRulHkpCUyM78x1tQS0-Bcs7nNeiW2bTwGae9VsH_-yO1lhuLy0IgRtXtfGkDdqxRoOww4i5zQr92WZ7Ar6cOPLuDeGwfv6xEeaDjMK2YGXVo92yBP6_QyiVIK7jr8S2aEBuWU3QHTKCkuPFouUkWj8a/w400-h400/DALL%C2%B7E%202023-12-14%2021.46.49%20-%20A%20creative%20and%20abstract%20illustration%20symbolizing%20trust-based%20partnerships%20in%20financial%20services.%20The%20image%20should%20depict%20a%20bridge%20made%20of%20puzzle%20piece.png" width="400" /></a></div><br /><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">In the dynamic world of financial services, rapid innovation, rising customer expectations, and increasing complexity are the norm. This reality necessitates a shift from traditional in-house operations to more</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">specialized, external partnerships</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">.</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Historically, these relationships have predominantly followed a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">customer-supplier model</strong>, focusing mainly on financial negotiations. However, there’s a growing trend towards* long-term strategic partnerships*. Financial considerations remain crucial, but there’s an increasing awareness that squeezing partners for short-term gains is unsustainable and leads to higher long-term costs. The emerging model emphasizes long-term trust, striving for a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">win-win-win situation for both partners and their customers</strong>. Successful partnerships are marked by<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">shared risks and rewards</strong>, fostering mutual investment in each other’s success.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">A vital component of these partnerships is aligning commercial agreements with shared objectives. For example, consider Company A, which profits from customer transactions based on a percentage of the transaction amount, and partners with Company B, to whom it pays a fixed amount per transaction. Company A benefits from fewer, high-value transactions, which is not in Company B’s best interest. Despite seeming balanced, this model reveals a clear misalignment in mutual interests and goals.</p></div><div class="paragraph data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The consequences of such misalignments may not be immediately apparent, as they can even lead to short-term gains. However, in the long run, they result in<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">instability, poor cooperation, and ineffective communication</strong>, potentially ending the partnership.</p></div><div class="paragraph data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Examples of misalignment</strong><span class="Apple-converted-space"> </span>are all too common in business:</p></div><div class="ulist data-line-20" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-20" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Consultancy firms</strong>, for instance, often have objectives misaligned with the financial service companies they serve. A consultancy’s primary goal is to maximize billable hours and revenue by staffing numerous consultants for extended periods. In contrast, a bank or insurance company aims to complete projects quickly with minimal staffing to reduce costs and speed up platform launches. Moreover, consultancies may inflate the importance of trends like AI, cloud, and blockchain to create future business opportunities.</p></li><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Rating agencies and auditors</strong><span class="Apple-converted-space"> </span>are another example. They are paid by the companies they rate or audit, but their work is meant for shareholders to validate the company’s financial reporting. High-profile cases of such misalignment illustrate this issue, e.g. the role of rating agencies in the subprime financial crisis or financial scandals overlooked by auditors like Enron and Wirecard.</p></li><li class="data-line-22" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Certification agencies</strong><span class="Apple-converted-space"> </span>face a similar dilemma. They aim to deliver certifications with minimal effort, while customers seek quick certification with little change to existing systems. This often results in certifications based more on documentation and interviews rather than actual practice, diminishing their value.</p></li><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Law firms</strong>, too, have a tendency to draft complex contracts and highlight legal risks that rarely materialize, inflating perceived risk to generate more business.</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">A common scenario in financial services involves<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">IT support desk outsourcing</strong>. Payments are typically made per closed ticket, with set SLAs for ticket response and resolution times. However, the quality of resolution is hard to quantify and often overlooked, leading to hastily closed tickets without proper resolution. This results in lost time, frustration, increased costs, and reduced revenue.</p></li></ul></div><div class="paragraph data-line-26" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These external misalignments are mirrored internally within organizations, as seen between different departments of the same firm. For example, IT departments may focus on system stability and bug reduction, which can conflict with the company’s overarching goal of continuous improvement and innovation. Similarly, sales teams may push for quick sales with custom, tailor-made solutions that negatively impact operational costs, ultimately making some customer relationships unprofitable.</p></div><div class="paragraph data-line-28" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These examples highlight how<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">misaligned objectives can lead to inefficient outcomes, increased costs, lost revenues, delayed deliverables, and strained relationships</strong>. Performance-based remuneration and shared revenue models are generally effective in aligning objectives, but perfect alignment is an ongoing challenge that requires continuous revision and strategic foresight.</p></div><div class="paragraph data-line-30" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Maintaining this alignment calls for<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">open communication channels, regular joint strategic planning sessions, and transparent measurement of shared objectives</strong>.<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Value-stream mapping exercises</strong>are particularly useful in identifying and quantifying each party’s contribution, ensuring mutual benefits are clear and balanced.</p></div><div class="paragraph data-line-32" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">While perfect alignment in partnerships is an elusive goal, striving for it is crucial. It ensures that both parties work towards shared financial outcomes, strengthening the partnership. However, this requires a long-term strategy, careful consideration of how to maintain alignment, and planning for transitions in response to strategic shifts by either party.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-79788680515825206372023-12-01T11:35:00.001+01:002023-12-01T11:35:25.166+01:00The Unseen Backbone of Banking: A Deep Dive into Matching and Reconciliation<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBzDhhaFy0QwKQbPYnv3I-4Rg_yJZIkdLhEpS5138TfKE0BtGs0n6TKRi73wOsEwGmsc8Ea-0Eu2B4BUFq3DyHV3oB4APcY-Qwm5mePykWh3JRJgEVsHkH37S9IzNMrBo8V0hToSDJhspDsyKTq_cwf_ARviUeu2n6rwHR-aZE4zDGqFmiKtJnzArTaa0U/s1024/DALL%C2%B7E%202023-11-28%2022.37.06%20-%20An%20abstract%20representation%20of%20financial%20reconciliation%20and%20matching%20in%20the%20banking%20sector.%20The%20image%20should%20depict%20a%20fusion%20of%20traditional%20banking%20ele.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBzDhhaFy0QwKQbPYnv3I-4Rg_yJZIkdLhEpS5138TfKE0BtGs0n6TKRi73wOsEwGmsc8Ea-0Eu2B4BUFq3DyHV3oB4APcY-Qwm5mePykWh3JRJgEVsHkH37S9IzNMrBo8V0hToSDJhspDsyKTq_cwf_ARviUeu2n6rwHR-aZE4zDGqFmiKtJnzArTaa0U/w400-h400/DALL%C2%B7E%202023-11-28%2022.37.06%20-%20An%20abstract%20representation%20of%20financial%20reconciliation%20and%20matching%20in%20the%20banking%20sector.%20The%20image%20should%20depict%20a%20fusion%20of%20traditional%20banking%20ele.png" width="400" /></a></div><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; word-spacing: -0.05em;"><br /></span><p></p><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; word-spacing: -0.05em;">Last year I celebrated two decades of immersion in IT, specifically within the Financial Services sector. During this period I have been a witness to remarkable transformations in banking and technology. The emergence of Fintech companies and their customer-centric approach, along with significant advancements in software engineering like Agile methodologies, microservices, and cloud computing, have reshaped the landscape. Yet, intriguingly, the back-office operations of many financial service companies have remained relatively static over these years, still grappling with</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; word-spacing: -0.05em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit; word-spacing: -0.05em;">manual encoding, repetitive tasks, and heavy reliance on Excel</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; word-spacing: -0.05em;">.</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">A particularly manual and yet automatable process in the Financial Services sector is<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">matching and reconciliation</strong>. This process arises in various forms, i.e. from identifying and addressing discrepancies (typically occurring due to issues or gaps with the integrations) in master-slave integrations to correcting or removing duplicates and semi-automated updates of operational systems with data from external sources.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Despite the availability of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">sophisticated software</strong><span class="Apple-converted-space"> </span>(e.g. FIS IntelliMatch, Calypso Confirmation Matching, Misys CMS, Temenos T24 Confirmation Matching…) for specific reconciliation tasks, such as payment and trade confirmation matching (often based on SWIFT messages), the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">majority of matching tasks often rely on custom or manual solutions</strong>, including Excel or even paper-based methods. Very often automation is also not pertinent, as matching is often involved in one-time actions like marketing campaigns, data clean-ups, alignment with partners…</p></div><div class="paragraph data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Understanding better reconciliation requires<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">dissecting its components</strong>, i.e.</p></div><div class="ulist data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">It starts with<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">collecting and transforming the disparate data sets for comparability</strong>. This consists of recuperating 2 data sets, which can be delivered in different formats, different structures, different scopes and with different names or enumerations. The data needs to be transformed to make them comparable and loaded into the same tool (e.g. a database or Excel), so that they can be easily compared.</p></li><li class="data-line-18" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The next step is defining a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">precise matching algorithm</strong>. This can be a simple unique key, but it can also a combination of multiple attributes (composite key), a hierarchical rule (i.e. match first on key 1, if no match try on key 2…) or a fuzzy rule (if key of data set 1 resembles key of data set 2 it is a match). Defining this matching algorithm can be very complex, but it is crucial in the ability to automate the matching and reach a good output quality.</p></li><li class="data-line-19" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Once the matching algorithm is defined, we enter the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">comparison phase</strong>. For small data sets, this can be done quite simple, but for very large data sets, it can necessitate all kinds of performance optimizations (like indices, segmentation, parallelism…) in order to execute the comparison in a reasonable time.</p></li><li class="data-line-20" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Finally,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">identified discrepancies must be translated into actionable outputs</strong>, such as reports, communications to colleagues or third parties or corrective actions (e.g. generation of files, messages or SQL statements to fix the differences).</p></li></ul></div><div class="paragraph data-line-22" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The intricacies of matching in financial services are diverse. Let us explore<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">some typical use cases</strong><span class="Apple-converted-space"> </span>in the financial services landscape:</p></div><div class="ulist data-line-24" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Most banks have a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Securities Master File</strong>, describing all securities which are in position or can be traded at the bank. This file needs to be integrated with a lot of applications, but also needs to be fed by multiple data sources, like Telekurs, Reuters, Bloomberg, Moody’s… This means a security needs to be uniquely matched. Unfortunately, there is not 1 unique identifier describing all securities. Publicly traded instruments have a commonly agreed ISIN code, but private and OTC products like e.g. most derivatives usually do not. Banks have therefore invented internal identifiers, use fake ISIN codes (typically starting with an "X") or use composite keys to uniquely identify the instrument (e.g. for a derivative this can be combination of ticker of underlying security, strike price, option type and expiration date).</p></li><li class="data-line-25" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">In Retail banking it is obviously essential to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">uniquely identify and match a specific physical person</strong>. However even in a developed country like Belgium, this is easier said than done. Every individual in Belgium has a National Register Number, so this seems the obvious choice for a matching key. Unfortunately, Belgian laws restrict the usage of this number to specific use cases. Additionally this identifier is not existing for foreigners and can change over time (e.g. foreign residents receive first a temporary National Register number which can change to a definitive, other one later or in case of gender change the National Register Number will change as well). Another option is to use the identity card number, but this is also different for foreigners and will change every 10 years. Many banks therefore use more complex rules, like a matching based on first name, last name and birth date, but obviously this comes also with all kinds of issues, like duplicates, spelling differences and errors in the names, use of special characters in the names…</p></li><li class="data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">A very similar problem is<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">matching a company or more specifically a store</strong>. In Belgium, each company has a company number, which is similar to the VAT number (without the "BE" prefix), but this is again very national and 1 VAT number can have multiple locations (e.g. multiple stores). There exists a concept of a "branch number" ("vestigingsnummer" in Dutch), but this concept is not very well known and rarely used. Similar there exists the LEI code (Legal Entity Identifier) which is a code of a combination of 20 letters and codes, which uniquely identifies a company worldwide. Unfortunately, only large companies have requested a LEI code, so for smaller companies this is not really an option.<br style="box-sizing: border-box;" />Again more complex matchings are often done, like a combination of VAT number, postal code and house number, but obviously this is far from being ideal. In search for a unique and commonly known identifier, the Google ID becomes also more and more in use, but the dependency with a commercial company might also poses a big operational risk.</p></li><li class="data-line-28" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Another interesting case is the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">matching of an authorization and the clearing message in a VISA card payment</strong>. Normally a unique identifier should match both messages, but due to all kinds of exception cases (e.g. offline authorizations or incremental authorizations), this will not always be correct. Therefore a more complex rule is required, looking at several identifiers, but also to other matching criteria like acquirer ID, merchant ID, terminal ID, PAN (card number), timestamp and/or amount.<br style="box-sizing: border-box;" />This kind of matching applies also to other payment use cases, like e.g. matching a pre-authorization completion with its preceding pre-authorization or a refund with a prior purchase.</p></li><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">A financial use case which concerns almost any business is<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">invoice and payment matching</strong>. When a company issues an invoice, it needs to be able to see when the invoice can be considered as paid. This is important for the accounting, but also to see if reminders for unpaid invoices should be sent out.<br style="box-sizing: border-box;" />To uniquely match the payment with the invoice, in Belgium typically a structured comment is used in the payment instruction. This unique code with check digit provides a unique matching reference. Unfortunately, customers often forget to put the structured comment or use the wrong one (e.g. copy/paste of a previous invoice). This means a company needs to have a fallback matching rule in case the unstructured comment is missing or wrong. Typically a combination of payment amount, payment date, IBAN of counterparty and/or name of counterparty can give an alternative way to match those invoices.</p></li></ul></div><div class="paragraph data-line-33" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">As you can see matching is far from easy, but understanding the basic steps can help in better matchings. In the meantime, despite its limitations, Excel remains a powerful tool for (manual) matching. Therefore a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">quick reminder for everyone who wants to do matching in Excel</strong>:</p></div><div class="ulist data-line-35" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-35" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Use<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">VLOOKUP to perform matching</strong>. VLOOKUP has however certain limitations, like the fact it gives an error if there is no match and that you can only search on the first column. A powerful alternative is to use<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">XLOOKUP</strong>, which does not have these limitations.</p></li><li class="data-line-36" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">If you need a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">composite search key</strong>, add a column in your search data set, with the composite search key (i.e. concatenate the different attributes, with e.g. "#" as a separator) and then use VLOOKUP/XLOOKUP to search on this new column.</p></li><li class="data-line-37" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Some<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">attention points</strong><span class="Apple-converted-space"> </span>when using VLOOKUP:</p><div class="ulist data-line-38" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-38" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Do not forget to add "false" as the last argument of the function VLOOKUP to ensure an exact match.</p></li><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Ensure that data formats are the same. E.g. a number "123" and the text "123" will not match, so it is important to convert them to the same format first. Idem for identifiers starting with leading 0’s. Often Excel will convert those to numbers, thus removing the leading 0’s and not resulting in a match.</p></li><li class="data-line-40" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Do not use data sets of more than 100.000 rows in Excel. Larger data sets are problematic for the performance and stability of Excel.<br style="box-sizing: border-box;" />It can also be interesting to put calculation mode to "Manual" if you are working with VLOOKUP on large data sets, otherwise Excel will recalculate all VLOOKUPs each time you make a minor change to the data.</p></li><li class="data-line-42" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">VLOOKUP has the column number to return as third argument. This number is not dynamically adapted when adding or removing columns, so remember to adapt when adding or removing columns.</p></li><li class="data-line-43" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">If you just want a match, you can use formula "=IF(ISERROR(VLOOKUP(<SearchValue>,<DataSet>,1,false),"NO MATCH","MATCH")"</p></li></ul></div></li></ul></div><div class="paragraph data-line-45" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These tricks can help to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">speed up your manual matchings</strong>, but obviously real automation is always better.</p></div><div class="paragraph data-line-47" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Matching in financial services is a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">multifaceted challenge</strong>, but understanding its fundamental steps is key to improving outcomes. While tools like Excel offer temporary solutions, the future lies in intelligent automation, which can significantly streamline these processes. For those seeking to delve deeper into matching complexities or automation, leveraging advanced tools and platforms, including AI-driven solutions like ChatGPT, can provide both insights and practical solutions.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-44969834000608561852023-11-26T22:11:00.002+01:002023-11-26T22:11:35.308+01:00Beyond Imagination: The Rise and Evolution of Generative AI Tools<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbzmpP6iM_PiIf-bV4UWYRafiZ489V73zefoOfnu7chtnoLSbVFpF-86aDq9CCaDLLB24OUwFJTEp4Fdl3Mc9jvrBUu0vpwb-Tv9jQWxdL0RJLeE1muFlEf_tMJt6yhTBYWp4PDngJfQsj5kHV4-3ylcj0Th_k16FEG1JN0kSr3U8hVJB707guwhtlNpt0/s1792/DALL%C2%B7E%202023-11-21%2022.54.08%20-%20A%20futuristic,%20vibrant%20digital%20collage%20representing%20the%20evolution%20of%20generative%20AI,%20featuring%20various%20elements%20like%20a%20humanoid%20robot%20typing%20on%20a%20laptop.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1792" height="229" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbzmpP6iM_PiIf-bV4UWYRafiZ489V73zefoOfnu7chtnoLSbVFpF-86aDq9CCaDLLB24OUwFJTEp4Fdl3Mc9jvrBUu0vpwb-Tv9jQWxdL0RJLeE1muFlEf_tMJt6yhTBYWp4PDngJfQsj5kHV4-3ylcj0Th_k16FEG1JN0kSr3U8hVJB707guwhtlNpt0/w400-h229/DALL%C2%B7E%202023-11-21%2022.54.08%20-%20A%20futuristic,%20vibrant%20digital%20collage%20representing%20the%20evolution%20of%20generative%20AI,%20featuring%20various%20elements%20like%20a%20humanoid%20robot%20typing%20on%20a%20laptop.png" width="400" /></a></div><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;"><p><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;"><br /></strong></p>Generative AI</strong><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">has revolutionized the way we create and interact with digital content. Since the launch of Dall-E in July 2022 and ChatGPT in November 2022, the field has seen unprecedented growth. This technology, initially popularized by OpenAI’s ChatGPT, has now been embraced by major tech players like Microsoft and Google, as well as a plethora of innovative startups. These advancements offer solutions for generating a diverse range of outputs including text, images, video, audio, and other media from simple prompts.</span><p></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The consumer now has a vast array of options based on their specific<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">output needs and use cases</strong>. From generic, large-scale, multi-modal models like OpenAI’s ChatGPT and Google’s Bard to specialized solutions tailored for specific use cases and sectors like finance and legal advice, the choices are vast and varied. For instance, in the financial sector, tools like BloombergGPT (<a class="bare" href="https://www.bloomberg.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.bloomberg.com/</a>), FinGPT (<a class="bare" href="https://fin-gpt.org/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://fin-gpt.org/</a>), StockGPT (<a class="bare" href="https://www.askstockgpt.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.askstockgpt.com/</a>) or BeeBee.AI (<a class="bare" href="https://www.beebee.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.beebee.ai/</a>) or in the domain of legal advise, tools like Law Chat GPT (<a class="bare" href="https://lawchatgpt.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://lawchatgpt.com/</a>) or LegalFly (<a class="bare" href="https://www.legalfly.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.legalfly.ai/</a>), offer niche solutions with heightened accuracy.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">To give an idea of what is available on the market, here is a short overview of some notable solutions available:</p></div><div class="ulist data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-15" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">General Chatting and Writing Assistance:</strong>:</p><div class="ulist data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Bard (Google):<span class="Apple-converted-space"> </span><a class="bare" href="https://bardai.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bardai.io/</a></p></li><li class="data-line-18" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">ChatFlash (Neuroflash AI):<span class="Apple-converted-space"> </span><a class="bare" href="https://neuroflash.com/chatflash/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://neuroflash.com/chatflash/</a></p></li><li class="data-line-19" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">ChatGPT (OpenAI):<span class="Apple-converted-space"> </span><a class="bare" href="https://chat.openai.com/chat" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://chat.openai.com/chat</a></p></li><li class="data-line-20" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Claude (Anthropic):<span class="Apple-converted-space"> </span><a class="bare" href="https://claude.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://claude.ai/</a></p></li><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Copy AI:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.copy.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.copy.ai</a></p></li><li class="data-line-22" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Easy Peasy AI Chat:<span class="Apple-converted-space"> </span><a class="bare" href="https://easy-peasy.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://easy-peasy.ai</a></p></li><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Fireflies (<a class="bare" href="https://www.unite.ai/goto/fireflies" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.unite.ai/goto/fireflies</a>)</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">GrowthBar:<span class="Apple-converted-space"> </span><a class="bare" href="https://growthbarseo.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://growthbarseo.com</a></p></li><li class="data-line-25" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Jasper AI:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.jasper.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.jasper.ai</a></p></li><li class="data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Llama 2 (Meta):<span class="Apple-converted-space"> </span><a class="bare" href="https://ai.meta.com/llama/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://ai.meta.com/llama/</a></p></li><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Notion AI:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.notion.so/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.notion.so/</a></p></li><li class="data-line-28" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Perplexity:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.perplexity.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.perplexity.ai</a></p></li><li class="data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Quillbot:<span class="Apple-converted-space"> </span><a class="bare" href="https://quillbot.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://quillbot.com</a></p></li><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Rytr Chat:<span class="Apple-converted-space"> </span><a class="bare" href="https://rytr.me/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://rytr.me</a></p></li><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Rytr:<span class="Apple-converted-space"> </span><a class="bare" href="https://rytr.me/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://rytr.me/</a></p></li><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Wordtune:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.wordtune.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.wordtune.com/</a></p></li><li class="data-line-33" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Writesonic:<span class="Apple-converted-space"> </span><a class="bare" href="https://writesonic.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://writesonic.com</a></p></li></ul></div></li><li class="data-line-35" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Art and Picture generation</strong>: this can be generating new pictures from a prompt, but also adapting existing pictures (like enhancing, removing parts of a picture, inserting object into a picture…):</p><div class="ulist data-line-37" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-37" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Adobe Firefly:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.adobe.com/sensei/generative-ai/firefly.htm" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.adobe.com/sensei/generative-ai/firefly.htm</a></p></li><li class="data-line-38" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Artbreeder:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.artbreeder.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.artbreeder.com/</a></p></li><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Auto Draw:<span class="Apple-converted-space"> </span><a class="bare" href="https://autodraw.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://autodraw.com</a></p></li><li class="data-line-40" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">BRIA:<span class="Apple-converted-space"> </span><a class="bare" href="https://bria.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bria.ai/</a></p></li><li class="data-line-41" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Canva:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.canva.com/ai-image-generator/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.canva.com/ai-image-generator/</a></p></li><li class="data-line-42" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Craiyon:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.craiyon.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.craiyon.com/</a></p></li><li class="data-line-43" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Dall-E 2 (OpenAI):<span class="Apple-converted-space"> </span><a class="bare" href="https://openai.com/product/dall-e-2" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://openai.com/product/dall-e-2</a></p></li><li class="data-line-44" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Deep Dream Generator:<span class="Apple-converted-space"> </span><a class="bare" href="https://deepdreamgenerator.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://deepdreamgenerator.com/</a></p></li><li class="data-line-45" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">DeepAI:<span class="Apple-converted-space"> </span><a class="bare" href="https://deepai.org/machine-learning-model/text2img" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://deepai.org/machine-learning-model/text2img</a></p></li><li class="data-line-46" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Deepswap:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.deepswap.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.deepswap.ai</a></p></li><li class="data-line-47" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Flair AI:<span class="Apple-converted-space"> </span><a class="bare" href="https://flairai.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://flairai.io</a></p></li><li class="data-line-48" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Fotor:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.fotor.com/features/ai-image-generator/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.fotor.com/features/ai-image-generator/</a></p></li><li class="data-line-49" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Images.ai (unite.ai):<span class="Apple-converted-space"> </span><a class="bare" href="https://images.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://images.ai/</a></p></li><li class="data-line-50" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Jasper Art:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.jasper.ai/art" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.jasper.ai/art</a></p></li><li class="data-line-51" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Leap AI:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.tryleap.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.tryleap.ai/</a></p></li><li class="data-line-52" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Lensa AI:<span class="Apple-converted-space"> </span><a class="bare" href="https://prisma-ai.com/lensa" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://prisma-ai.com/lensa</a></p></li><li class="data-line-53" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">MidJourney:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.midjourney.com/home/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.midjourney.com/home/</a></p></li><li class="data-line-54" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Neural Doodle:<span class="Apple-converted-space"> </span><a class="bare" href="https://neuraldoodle.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://neuraldoodle.com/</a></p></li><li class="data-line-55" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">NightCafe:<span class="Apple-converted-space"> </span><a class="bare" href="https://creator.nightcafe.studio/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://creator.nightcafe.studio</a></p></li><li class="data-line-56" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">PhotoSonic (Writesonic):<span class="Apple-converted-space"> </span><a class="bare" href="https://writesonic.com/photosonic-ai-art-generator" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://writesonic.com/photosonic-ai-art-generator</a></p></li><li class="data-line-57" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Pictory:<span class="Apple-converted-space"> </span><a class="bare" href="https://pictory.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://pictory.io</a></p></li><li class="data-line-58" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Pikazo:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.pikazoapp.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.pikazoapp.com/</a></p></li><li class="data-line-59" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Pixray:<span class="Apple-converted-space"> </span><a class="bare" href="https://replicate.com/pixray/text2image" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://replicate.com/pixray/text2image</a></p></li><li class="data-line-60" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Prodia:<span class="Apple-converted-space"> </span><a class="bare" href="https://app.prodia.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://app.prodia.com/</a></p></li><li class="data-line-61" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Remini:<span class="Apple-converted-space"> </span><a class="bare" href="https://remini.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://remini.ai/</a></p></li><li class="data-line-62" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">RocketAI:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.rocketai.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.rocketai.io/</a></p></li><li class="data-line-63" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Simplified:<span class="Apple-converted-space"> </span><a class="bare" href="https://simplified.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://simplified.com/</a></p></li><li class="data-line-64" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Stable Diffusion (DreamStudio):<span class="Apple-converted-space"> </span><a class="bare" href="https://stablediffusionweb.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://stablediffusionweb.com/</a></p></li><li class="data-line-65" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Stablecog:<span class="Apple-converted-space"> </span><a class="bare" href="https://stablecog.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://stablecog.com/</a></p></li></ul></div></li><li class="data-line-67" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Video generation</strong>: this can be based on "prompts" resulting in video, taking a picture and identifying which part should be moving or providing a set of pictures asking the solution to interpolate the movement between 2 consecutive pictures (thus transforming a set of pictures into a movie).</p><div class="ulist data-line-68" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-68" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Colossyan:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.colossyan.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.colossyan.com/</a></p></li><li class="data-line-69" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">D-ID:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.d-id.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.d-id.com/</a></p></li><li class="data-line-70" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">DeepBrain:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.deepbrain.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.deepbrain.io</a></p></li><li class="data-line-71" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Elai:<span class="Apple-converted-space"> </span><a class="bare" href="https://elai.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://elai.io/</a></p></li><li class="data-line-72" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Fliki:<span class="Apple-converted-space"> </span><a class="bare" href="https://fliki.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://fliki.ai/</a></p></li><li class="data-line-73" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Gen-2 Runway:<span class="Apple-converted-space"> </span><a class="bare" href="https://research.runwayml.com/gen1" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://research.runwayml.com/gen1</a></p></li><li class="data-line-74" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Genmo AI:<span class="Apple-converted-space"> </span><a class="bare" href="http://genmo.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">http://genmo.ai/</a></p></li><li class="data-line-75" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">HeyGen:<span class="Apple-converted-space"> </span><a class="bare" href="https://app.heygen.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://app.heygen.com/</a></p></li><li class="data-line-76" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Hour One:<span class="Apple-converted-space"> </span><a class="bare" href="https://hourone.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://hourone.ai/</a></p></li><li class="data-line-77" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Invideo:<span class="Apple-converted-space"> </span><a class="bare" href="https://invideo.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://invideo.io/</a></p></li><li class="data-line-78" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Kaiber AI:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.kaiber.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.kaiber.ai/</a></p></li><li class="data-line-79" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Lumen5:<span class="Apple-converted-space"> </span><a class="bare" href="https://lumen5.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://lumen5.com/</a></p></li><li class="data-line-80" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Make-A-Video (Meta):<span class="Apple-converted-space"> </span><a class="bare" href="https://makeavideo.studio/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://makeavideo.studio/</a></p></li><li class="data-line-81" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Pictory:<span class="Apple-converted-space"> </span><a class="bare" href="https://pictory.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://pictory.ai/</a></p></li><li class="data-line-82" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">SuperCreator:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.supercreator.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.supercreator.ai/</a></p></li><li class="data-line-83" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Synthesia:<span class="Apple-converted-space"> </span><a class="bare" href="https://synthesia.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://synthesia.io/</a></p></li></ul></div></li><li class="data-line-85" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Audio, Music and Sound production</strong>: this category generates everything to do with sound. This includes use cases, like the generation of sound, regenerating the voice of someone, reading a text aloud…</p><div class="ulist data-line-87" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-87" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">AIVA:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.aiva.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.aiva.ai/</a></p></li><li class="data-line-88" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Amadeus Code:<span class="Apple-converted-space"> </span><a class="bare" href="https://amadeuscode.com/app/en" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://amadeuscode.com/app/en</a></p></li><li class="data-line-89" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Amper Music:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.ampermusic.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.ampermusic.com/</a></p></li><li class="data-line-90" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Boomy:<span class="Apple-converted-space"> </span><a class="bare" href="https://boomy.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://boomy.com/</a></p></li><li class="data-line-91" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Brain FM:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.brain.fm/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.brain.fm</a></p></li><li class="data-line-92" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Ecrett Music:<span class="Apple-converted-space"> </span><a class="bare" href="https://ecrettmusic.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://ecrettmusic.com/</a></p></li><li class="data-line-93" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Ecrette Music:<span class="Apple-converted-space"> </span><a class="bare" href="https://ecrettmusic.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://ecrettmusic.com/</a></p></li><li class="data-line-94" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Loudly:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.loudly.com/ai-music-generator" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.loudly.com/ai-music-generator</a></p></li><li class="data-line-95" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Melobytes:<span class="Apple-converted-space"> </span><a class="bare" href="https://melobytes.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://melobytes.com</a></p></li><li class="data-line-96" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Murf.ai:<span class="Apple-converted-space"> </span><a class="bare" href="https://murf.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://murf.ai/</a></p></li><li class="data-line-97" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Musenet (OpenAI):<span class="Apple-converted-space"> </span><a class="bare" href="https://openai.com/blog/musenet/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://openai.com/blog/musenet/</a></p></li><li class="data-line-98" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Soundful:<span class="Apple-converted-space"> </span><a class="bare" href="https://soundful.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://soundful.com/</a></p></li><li class="data-line-99" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Soundraw:<span class="Apple-converted-space"> </span><a class="bare" href="https://soundraw.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://soundraw.io/</a></p></li><li class="data-line-100" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">WavTool:<span class="Apple-converted-space"> </span><a class="bare" href="https://wavtool.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://wavtool.com/</a></p></li></ul></div></li><li class="data-line-102" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Presentations and Web Content Generation</strong>:</p><div class="ulist data-line-104" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-104" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">10Web:<span class="Apple-converted-space"> </span><a class="bare" href="https://10web.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://10web.io/</a></p></li><li class="data-line-105" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Bertha AI:<span class="Apple-converted-space"> </span><a class="bare" href="https://bertha.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bertha.ai/</a></p></li><li class="data-line-106" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Gamma:<span class="Apple-converted-space"> </span><a class="bare" href="https://gamma.app/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://gamma.app/</a></p></li><li class="data-line-107" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Plus AI:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.plusdocs.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.plusdocs.com/</a></p></li><li class="data-line-108" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">SlidesAI:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.slidesai.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.slidesai.io/</a></p></li><li class="data-line-109" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Tome:<span class="Apple-converted-space"> </span><a class="bare" href="https://tome.app/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://tome.app/</a></p></li></ul></div></li><li class="data-line-111" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Code Generation and Assistance</strong>: generation of programming code or auto-assistant when writing code.</p><div class="ulist data-line-113" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-113" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">AutoRegex:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.autoregex.xyz/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.autoregex.xyz/</a></p></li><li class="data-line-114" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">CodeT5:<span class="Apple-converted-space"> </span><a class="bare" href="https://github.com/salesforce/CodeT5" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://github.com/salesforce/CodeT5</a></p></li><li class="data-line-115" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Codiga:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.codiga.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.codiga.io/</a></p></li><li class="data-line-116" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Durable AI:<span class="Apple-converted-space"> </span><a class="bare" href="https://durable.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://durable.ai/</a></p></li><li class="data-line-117" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">GitHub Copilot:<span class="Apple-converted-space"> </span><a class="bare" href="https://github.com/features/copilot/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://github.com/features/copilot/</a></p></li><li class="data-line-118" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">OpenAI Codex (OpenAI):<span class="Apple-converted-space"> </span><a class="bare" href="https://openai.com/blog/openai-codex" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://openai.com/blog/openai-codex</a></p></li><li class="data-line-119" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">PolyCoder:<span class="Apple-converted-space"> </span><a class="bare" href="https://github.com/VHellendoorn/Code-LMs" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://github.com/VHellendoorn/Code-LMs</a></p></li><li class="data-line-120" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Replit Ghostwriter:<span class="Apple-converted-space"> </span><a class="bare" href="https://replit.com/site/ghostwriter" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://replit.com/site/ghostwriter</a></p></li><li class="data-line-121" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Snyk IO (based on DeepCode AI):<span class="Apple-converted-space"> </span><a class="bare" href="https://snyk.io/product/snyk-code/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://snyk.io/product/snyk-code/</a></p></li><li class="data-line-122" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Tabnine:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.tabnine.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.tabnine.com/</a></p></li></ul></div></li><li class="data-line-124" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Research and Explanations</strong>:</p><div class="ulist data-line-126" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-126" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Consensus:<span class="Apple-converted-space"> </span><a class="bare" href="https://consensus.app/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://consensus.app</a></p></li><li class="data-line-127" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">DocGPT:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.thedocgpt.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.thedocgpt.com/</a></p></li><li class="data-line-128" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Elicit:<span class="Apple-converted-space"> </span><a class="bare" href="https://elicit.org/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://elicit.org/</a></p></li><li class="data-line-129" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Paperpal:<span class="Apple-converted-space"> </span><a class="bare" href="https://paperpal.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://paperpal.com</a></p></li><li class="data-line-130" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Raxter:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.raxter.io/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.raxter.io/</a></p></li><li class="data-line-131" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Scholarcy:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.scholarcy.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.scholarcy.com/</a></p></li><li class="data-line-132" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Scite AI:<span class="Apple-converted-space"> </span><a class="bare" href="https://scite.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://scite.ai/</a></p></li><li class="data-line-133" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Trinka:<span class="Apple-converted-space"> </span><a class="bare" href="https://www.trinka.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.trinka.ai</a></p></li></ul></div></li></ul></div><div class="paragraph data-line-135" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">As you can see this list is already enormous, but this is just a small subset of all available solutions. Additionally the offer grows almost on a daily basis, making it hard to keep track of what is available on the market. This shows on one hand the enormous interest of high-potential startup founders and VCs in the topic of generative AI, but at the same time also shows the immaturity of the market.</p></div><div class="paragraph data-line-137" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The enormous choice in AI tooling to support digital content creation makes it hard for organizations to select the right tooling, as the needs and preferences of every worker are quite different. Additionally for organizations it can be hard to remain cost effective. With most tools offering professional access at around 15-20€ / month / user, the bill starts increasingly rapidly when you start using multiple tools by multiple employees. Obviously productivity gain (and thus cost reductions) can be enormous when used well, but often gimmick usage today remains the primary usage. Some consolidation in the sector is therefore likely to happen in the coming years.</p></div><div class="paragraph data-line-139" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">As we witness the rapid expansion of this domain,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">three key trends</strong><span class="Apple-converted-space"> </span>are becoming increasingly evident:</p></div><div class="ulist data-line-141" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-141" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Rise of multi-modal, generic, multi-purpose models</strong>: Models like OpenAI’s GPT-4 and Google’s Bard are evolving to understand and generate diverse types of content. This versatility might soon enable a single model to match the capabilities of various specialized tools.</p></li><li class="data-line-143" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Integration and Embedding</strong>: More and more, AI tools are being integrated into existing productivity and business software, instead of stand-alone tools (or websites). Notable examples include</p><div class="ulist data-line-145" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-145" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Integration of ChatGPT in Bing (<a class="bare" href="https://www.bing.com/search" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.bing.com/search</a>).</p></li><li class="data-line-146" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Microsoft 365 Copilot (check out<span class="Apple-converted-space"> </span><a class="bare" href="https://www.youtube.com/watch?v=S7xTBa93TX8" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.youtube.com/watch?v=S7xTBa93TX8</a>) embedding AI in all Microsoft Office applications.</p></li><li class="data-line-147" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Google Duet AI embedding AI in all Google Workspace applications.</p></li><li class="data-line-148" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">OpenAI is already offering APIs to integrate ChatGPT in any business platform (cfr.<span class="Apple-converted-space"> </span><a class="bare" href="https://platform.openai.com/docs/overview" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://platform.openai.com/docs/overview</a>).</p></li><li class="data-line-149" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Atlassian Intelligence (<a class="bare" href="https://www.atlassian.com/software/artificial-intelligence" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.atlassian.com/software/artificial-intelligence</a>) offering a virtual teammate for all Atlassian applications, like JIRA, Confluence or Bitbucket.</p></li><li class="data-line-150" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Salesforce Einstein GPT offering generative AI for CRM.</p></li><li class="data-line-151" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">…</p></li></ul></div></li><li class="data-line-153" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Creation of Custom AI Subsets</strong>: New developments are allowing users to tailor large, multi-purpose models to their specific needs, combining the best of both worlds, i.e. the broad capabilities of an LLM model with specialized focus on one specific topic. OpenAI’s recent announcements of GPTs allowing to anyone to create a tailored version of ChatGPT and Assistants API (<a class="bare" href="https://platform.openai.com/docs/assistants/overview" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://platform.openai.com/docs/assistants/overview</a>) are very clear and powerful steps in this direction.</p></li></ul></div><div class="paragraph data-line-155" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These three trends favorize the big tech players, as they have the means to support these complex trends, i.e.</p></div><div class="ulist data-line-157" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-157" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Google</strong><span class="Apple-converted-space"> </span>with solutions like Bard, PaLM API, Vertex AI and Duet AI, but also with Google Assistant.</p></li><li class="data-line-158" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Microsoft</strong><span class="Apple-converted-space"> </span>via its partnership with OpenAI and the integration of chatGPT in Bing, but also with Microsoft Copilot and Azure OpenAI</p></li><li class="data-line-159" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Amazon</strong><span class="Apple-converted-space"> </span>with several solutions, like Amazon Ads, which contains a new AI feature for making advertisements and Amazon Marketplace, which offers an AI feature for sellers to write more effective product listings, but also on AWS with solutions like Amazon Bedrock, Amazon SageMaker, Amazon CodeWhisperer, Amazon Kendra, Amazon Lex, Amazon Polly… And obviously there is also Amazon Alexa, as a virtual assistant.</p></li><li class="data-line-160" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Apple</strong>: apart from Apple’s assistant Siri, Apple is currently lagging a bit behind in the battle of generative AI solutions. Nonetheless in October of this year, Apple announced it will be investing $1 billion a year in generative AI products. Obviously Apple has already some generative AI features, like Photos (use of generative AI to enhance quality of photos), Visual Lookup or Autocorrect. Rumors say that Apple will be coming up with an "Apple GPT" solution towards the end of 2024.</p></li><li class="data-line-161" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">IBM</strong>: IBM has been investing for quite some time already in AI, with solutions like IBM Watson (Assistant) and Watsonx platform.</p></li><li class="data-line-162" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Meta</strong>: Meta has also missed a bit the game, as it was investing heavily in the Metaverse, but in March of this year the company announced that its "single largest investment" is now in advancing its AI strategy. For this Meta is focusing on building out its open-source large language model Llama 2. Interesting to mention is that Microsoft is also investing heavily in this model. Additionally Meta introduced in September of this year Meta AI, which is an AI chatbot assistant integrated in Instagram, WhatsApp and Messenger.</p></li><li class="data-line-163" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">NVIDIA</strong>: one name which is often overlooked, but which has the potential to overthrow the other big names is NVIDIA. NVIDIA is currently mostly known as the dominant GPU chip provider, which boomed as its chips are ideal for the heavy calculations for AI training. In the meantime Nvidia is becoming more and more an end-to-end company, offering also software solutions. Their AI Platform software, called NVIDIA AI Enterprise with its large language model NVIDIA NeMo and image and video AI generative solution NVIDIA Picasso, are already best in class and their strong link with the underlying hardware might give them a competitive advantage compared to other tech players.</p></li></ul></div><div class="paragraph data-line-165" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The ultimate goal obviously of all companies is to come to a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Virtual AI assistant</strong>, which pro-actively helps you will all your tasks, both personal and professional.<br style="box-sizing: border-box;" />Obviously the above big tech companies are all working towards this, but there are also some specialized start-ups investing in this. E.g. Otter (<a class="bare" href="https://www.unite.ai/goto/otter" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.unite.ai/goto/otter</a>), Lindy (<a class="bare" href="https://www.lindy.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.lindy.ai/</a>), Leon (<a class="bare" href="https://getleon.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://getleon.ai/</a>), Kore.AI (<a class="bare" href="https://kore.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://kore.ai/</a>), Leena AI (<a class="bare" href="https://leena.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://leena.ai/</a>), Moveworks (<a class="bare" href="https://www.moveworks.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.moveworks.com/</a>), Hyro (<a class="bare" href="https://www.hyro.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.hyro.ai/</a>) or Yellow.ai (<a class="bare" href="https://yellow.ai/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://yellow.ai/</a>) offer very creative solutions in this field as well.</p></div><div class="paragraph data-line-168" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The pace at which generative AI is evolving is breathtaking. The potential applications and advancements in just a few years are staggering to contemplate. While this presents an exciting frontier, it also poses challenges in selecting the right tools and ensuring cost-effective implementation. Nonetheless, the journey into the realm of generative AI is one filled with immense possibilities and is undoubtedly shaping the future of digital content creation.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-67478680903104879242023-11-17T16:38:00.005+01:002023-11-17T16:38:55.501+01:00Unlocking the Power of AI: Reshaping Financial Services<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhroHVDhVdzWZcLQ-lPF83PvyrNJ7v_JvK_lQwJTo059EwOQ-g7UOkR4RWfuVGg7EpccqPlV7eDEFFio8CC0Pbc-ls-3ftxwwt-DBsvUmPYhozo4-t0wjLIwj8Wt0R5HGHNowBVxxZZ-7VsimNYoetVAYOiAO7dp0p3iFjSmohg_jW6ksPjDuNl6pr2hIRD/s1024/AI-Financial-Services.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhroHVDhVdzWZcLQ-lPF83PvyrNJ7v_JvK_lQwJTo059EwOQ-g7UOkR4RWfuVGg7EpccqPlV7eDEFFio8CC0Pbc-ls-3ftxwwt-DBsvUmPYhozo4-t0wjLIwj8Wt0R5HGHNowBVxxZZ-7VsimNYoetVAYOiAO7dp0p3iFjSmohg_jW6ksPjDuNl6pr2hIRD/w400-h400/AI-Financial-Services.jpeg" width="400" /></a></div><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><br /></span></p>AI is a</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">hot topic</strong><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">and numerous articles are published stating that financial service companies not adopting AI today risk becoming obsolete tomorrow. However, as with many hypes, the industry’s adoption of AI may not proceed as rapidly as commonly predicted. Just as an example, for the past two decades, experts have been forecasting the obsolescence of banks using old legacy mainframe systems. Yet, even after 20 years, many banks still rely on critical core banking applications built on legacy mainframe technologies, and these banks remain as strong (if not stronger) as they were two decades ago.</span><p></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">That being said, AI is here to stay, and a gradual adoption is essential. As discussed in my blog, "<em style="box-sizing: border-box; line-height: inherit;">The Right Fit: Assessing Business Value before Adopting AI/ML</em>" (<a class="bare" href="https://bankloch.blogspot.com/2023/10/the-right-fit-assessing-business-value.html" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bankloch.blogspot.com/2023/10/the-right-fit-assessing-business-value.html</a>), it is crucial for banks to choose their AI battles wisely, rather than implementing AI for the sake of it.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Creating a comprehensive list of AI use cases in the financial services industry is therefore imperative. In my opinion, we can categorize all AI use cases in the financial services industry into<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">two main groups</strong>:</p></div><div class="paragraph data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><span class="underline" style="box-sizing: border-box; text-decoration-line: underline;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Group 1: More efficient handling of unstructured data</strong></span></p></div><div class="paragraph data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">This category focuses on collecting, analyzing, and processing data that cannot be neatly structured in an SQL database. It typically includes data from documents, speech, or images, often stemming from third parties like the government or from non-digital customer services that need transformation into a digital format. These use cases primarily aim at cost reduction, as processing unstructured data can be very resource-intensive. The rise of AI is making it increasingly feasible to automate these processes.</p></div><div class="paragraph data-line-19" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Examples include:</p></div><div class="ulist data-line-21" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">KYC and KYB document handling</strong>: Processing identity card images, government publications, or company statutes to gain a better understanding of customers and company structures.</p></li><li class="data-line-22" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Identity management</strong>: Similar to KYC/KYB but focused on continuous authentication and transaction signing, using unstructured data like ID card images, biometric identification (like face and fingerprint) and behavioral identification.</p></li><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Brand & Reputation management</strong>: Monitoring customer and media sentiment about the company to react to marketing campaigns and address negative publicity. This is done by monitoring traditional media and social media (like feedback comments, likes, shares, opinions..) and other information sources (e.g. call center records) to identify the customer sentiment and trends.</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Claim Management</strong>: Automating the processing of claims with unstructured data, such as pictures of damaged insured objects and insurance expert reports.</p></li><li class="data-line-25" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Chatbots and automated call centers</strong>: Utilizing AI to categorize and tag customer interactions, dispatch interactions efficiently, propose standard response templates, and even fully automate responses across various communication channels (mail, phone call and chat box).</p></li><li class="data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Sentiment analysis</strong><span class="Apple-converted-space"> </span>on emails, chat sessions, voice and video recordings, and unstructured summaries of communication to understand customer feedback and employee-customer interactions.</p></li><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Expense and Invoice Management</strong>: Converting financial documents into structured data for automatic processing (e.g. correctly booking it in the right accounting category).</p></li></ul></div><div class="paragraph data-line-29" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><span class="underline" style="box-sizing: border-box; text-decoration-line: underline;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Group 2: Better prediction and resource allocation</strong></span></p></div><div class="paragraph data-line-31" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In the financial services industry (just like in any other industry), resources like people and money are scarce and should be allocated as efficient as possible. AI can play a crucial role in predicting where these resources are most needed and where they can yield the highest added value.+</p></div><div class="admonitionblock note data-line-33" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><table style="background-image: none; border-spacing: 0px; border: 0px; margin-bottom: 1.25em; width: 587px;"><tbody style="box-sizing: border-box;"><tr style="box-sizing: border-box;"><td class="icon" style="box-sizing: border-box; color: rgba(0, 0, 0, 0.8); direction: ltr; font-size: inherit; line-height: 1.6; margin: 0px; padding: 0.5625em 0.625em; text-align: center; width: 80px;"><span class="fa icon-note" style="-webkit-font-smoothing: antialiased; box-sizing: border-box; cursor: default; display: inline-block; font-family: FontAwesome; font-size: 2.5em; line-height: 1; text-shadow: rgba(0, 0, 0, 0.5) 1px 1px 2px;" title="Note"></span></td><td class="content" style="border-left: 1px solid rgb(221, 221, 223); box-sizing: border-box; color: rgba(0, 0, 0, 0.6); direction: ltr; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px; padding: 0.5625em 1.25em 0.5625em 1.125em; text-rendering: optimizelegibility;">The attention of a customer can also be considered as a scarce resource, meaning any communication or offer should be highly personalized to ensure that the limited attention span of the customer is optimally used.</td></tr></tbody></table></div><div class="paragraph data-line-35" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These use cases can be categorized into two sub-categories:</p></div><div class="paragraph data-line-37" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><span class="underline" style="box-sizing: border-box; text-decoration-line: underline;"><em style="box-sizing: border-box; line-height: inherit;">Sector-agnostic use cases</em></span></p></div><div class="ulist data-line-39" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Segmentation of customers</strong><span class="Apple-converted-space"> </span>based on available data (e.g. customer profiling, analyzing transaction patterns, past and immediate customer behavior…) for determining the best possible means (best channel mix) and style of communication (contact optimization) and allocating resources to the customers with the highest potential future revenue.</p></li><li class="data-line-40" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Churn detection</strong><span class="Apple-converted-space"> </span>to identify and retain customers at risk of leaving. By allocating extra resources to those customers, such as employees contacting the customer or offering certain incentives (e.g. discounts or better interest rates) to prevent the customer from churning.</p></li><li class="data-line-41" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Identify best prospects and sales opportunities</strong>: out of a list of leads identify those who are most likely to become a customer, but also identify which existing customers can best be targeted for cross-selling and up-selling actions.</p></li><li class="data-line-42" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Predict evolutions in demand and supply</strong>, e.g. identify where ATM machines or branches should best be located, predict how many customer support interactions can be expected to ensure optimal staffing of the customer support team or predict the load on the IT infrastructure to optimize cloud infrastructure costs.</p></li><li class="data-line-43" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Next best action, Next best offer or Recommendation engine</strong><span class="Apple-converted-space"> </span>for personalized customer interactions, i.e. predict which action, product or service is most likely to interest a user at any given moment in time. Allowing easy access to this process can help the customer or any other user (like internal employees) to achieve their goal faster, thus resulting in increased revenues and reduced costs.</p></li><li class="data-line-44" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Pricing engine</strong><span class="Apple-converted-space"> </span>for determining the optimal product or service pricing.</p></li></ul></div><div class="paragraph data-line-47" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><span class="underline" style="box-sizing: border-box; text-decoration-line: underline;"><em style="box-sizing: border-box; line-height: inherit;">Financial service industry specific use cases</em></span></p></div><div class="ulist data-line-49" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-49" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Credit Scoring Engine</strong><span class="Apple-converted-space"> </span>to assess creditworthiness and make efficient lending decisions. This engine aims to predict the probability of default and the estimated loss value in case of default, to determine whether a credit should be accepted or not. This is also a prediction problem, which ensures that the money of the bank is spent in the most efficient way possible.</p></li><li class="data-line-50" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Fraud Detection Engine</strong><span class="Apple-converted-space"> </span>to identify and prevent fraudulent financial transactions, including online fraud (cyber threats) and payment fraud. The engine predicts if the actual behavior of a user matches with the expected (predicted) behavior. If not, it is likely a case of fraud. These engines help to reduce revenue losses, avoid brand damage, and provide a frictionless customer online experience.</p></li><li class="data-line-51" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Robo-Advisory</strong><span class="Apple-converted-space"> </span>services to create optimal investment portfolios based on market trends, the current investment portfolio and customer constraints (like risk profile, sustainability constraints, investment horizon…).</p><div class="ulist data-line-52" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-52" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">AML Detection Engine</strong><span class="Apple-converted-space"> </span>to detect (and stop) money laundering and criminal activity in financial transactions.</p></li><li class="data-line-53" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Liquidity Risk Management Engine</strong><span class="Apple-converted-space"> </span>for optimizing cash flows. This is a service that can be offered to customers, but which is also required internally for the bank. The bank needs to ensure sufficient liquidity on its balance sheet to cover all withdrawals, but also to predict the physical cash needs to supply ATM machines and branches.</p></li></ul></div></li></ul></div><div class="paragraph data-line-55" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In addition to these business-oriented AI use cases, do not overlook the internal use of AI to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">enhance employee productivity</strong>. Generative AI tools like ChatGPT can assist various departments, such as sales, marketing, and IT, in boosting their productivity.</p></div><div class="paragraph data-line-57" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">As indicated in my blog "<em style="box-sizing: border-box; line-height: inherit;">The Right Fit: Assessing Business Value before Adopting AI/ML</em>" (<a class="bare" href="https://bankloch.blogspot.com/2023/10/the-right-fit-assessing-business-value.html" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bankloch.blogspot.com/2023/10/the-right-fit-assessing-business-value.html</a>), the first category (i.e. "<em style="box-sizing: border-box; line-height: inherit;">More efficient handling of unstructured data</em>") holds in my opinion the biggest potential, though it requires very specific AI skills and complex AI models. Therefore, many financial services companies are likely to use pre-trained models for this category of use cases.</p></div><div class="paragraph data-line-59" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The use cases in the second category (i.e. "<em style="box-sizing: border-box; line-height: inherit;">Better prediction and better allocation of scarce resources</em>") are also promising and can yield more quickly results than the use cases of category 1. However, their added value compared to traditional rule-based algorithms is not always guaranteed, they often lack transparency and are difficult to fine-tune. As a result, AI those use cases often look more promising than they actually are.</p></div><div class="paragraph data-line-61" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In many cases, banks will not need to invest directly in AI, as numerous software solutions already exist, offering not only AI models but also encompassing the workflow and business logic around them.<br style="box-sizing: border-box;" />For each use case, financial service companies can actually choose between<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">three options</strong>:</p></div><div class="ulist data-line-64" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-64" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Option 1</strong>: Building a model<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">from scratch</strong><span class="Apple-converted-space"> </span>using platforms like AWS SageMaker or GCP AI Platform. This means the company needs to identify a good data training set, set up a model and train the model itself. E.g. KBC has built a big part of its virtual assistant (called Kate) fully in-house using GCP AI technologies.</p></li><li class="data-line-65" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Option 2</strong>: Using<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">pre-trained</strong><span class="Apple-converted-space"> </span>cloud-based models that are easily deployable and adaptable, such as AWS Fraud Detector, AWS Personalize, or custom versions of ChatGPT (cfr. announcement of OpenAI to introduce new concept of GPTs) for specific use cases.</p></li><li class="data-line-66" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Option 3</strong>: Acquiring<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">full software solutions</strong><span class="Apple-converted-space"> </span>that include internal AI models, screens, workflows, and processes. Numerous solutions exist in the Financial Services industry, such as Discai (which commercializes the AI models built internally by KBC bank), ComplyAdvantage, Zest AI, Scienaptic AI, DataRobot, Kensho Technologies, Tegus, Canoe, Abe.ai…</p></li></ul></div><div class="paragraph data-line-68" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The decision on which option to choose depends on the financial service company’s specific needs. Understanding the capabilities and limitations of AI models, having a solid data strategy, and knowing how to make data available for external models and tools are crucial steps for a financial services company looking to adopt AI. These steps are usually more important than having deep internal AI knowledge.</p></div><div class="paragraph data-line-70" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Adopting AI in the financial services industry is clearly a necessity for staying competitive and meeting customer demands. The right approach (of build versus buy), combined with well-considered use cases, can pave the way for a successful AI journey.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-90093890506147985762023-11-09T20:35:00.005+01:002023-12-01T11:35:45.384+01:00The Mafia Effect: How Successful Ventures Spawn Entire Ecosystems<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivXJZnJJotFoUjfYOqhFsdc1bTTq1pbLyjTuII0TSFAH8dgkIpTdV2RVhLVWo_6cuB5HKvZN3ODXwwM_17BjA2FfzQScuAdSb0rVGm93Sawjb_gCX9-Cu8aWcrkEFWv4M3Sj5JQQPhJ2xpNlZawD9s0oB8WDB_QifYF3DX6emDcBhvU9QzCcLbzB8Nxcsp/s1024/DALL%C2%B7E%202023-09-19%2020.27.30%20-%20An%20painting%20of%20the%20PayPal%20Mafia%20in%20Hopper%20style.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivXJZnJJotFoUjfYOqhFsdc1bTTq1pbLyjTuII0TSFAH8dgkIpTdV2RVhLVWo_6cuB5HKvZN3ODXwwM_17BjA2FfzQScuAdSb0rVGm93Sawjb_gCX9-Cu8aWcrkEFWv4M3Sj5JQQPhJ2xpNlZawD9s0oB8WDB_QifYF3DX6emDcBhvU9QzCcLbzB8Nxcsp/w400-h400/DALL%C2%B7E%202023-09-19%2020.27.30%20-%20An%20painting%20of%20the%20PayPal%20Mafia%20in%20Hopper%20style.png" width="400" /></a></div><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><br /></span><p></p><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">A few weeks ago, I came across a LinkedIn post by Marcel Van Oost (whose content is truly remarkable, so if you’re not already following him, make sure to subscribe to his updates). Marcel’s post shed light on the "</span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">Revolut mafia</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">". In just five years, 102 Revolut alumni-led startups (such as Payday, Kiko, Belvo, Fuse, Pledge, Flux, Sync, Sardine, and more) have collectively secured an impressive $2.2 billion in funding. This surpasses Revolut’s own funding of $1.7 billion, highlighting the profound ripple effect that a successful startup can have.</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">We are all familiar with the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">iconic story of the "PayPal mafia"</strong>, a group of former PayPal employees and founders who, after the sale of PayPal to eBay in 2002, catalyzed the growth of numerous successful tech companies:</p></div><div class="ulist data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-13" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Peter Thiel</strong>, PayPal co-founder and former CEO, is often referred to as the "don" of the PayPal Mafia. He became one of the earliest investors in Facebook and founded the hedge fund Clarium Capital Management and the software company Palantir Technologies.</p></li><li class="data-line-14" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Max Levchin</strong>, another PayPal co-founder and former CTO, later co-founded Affirm, a Buy Now Pay Later player. He was also an early investor in the crowd-sourced business review platform Yelp (co-founded by Russel Simmons, who was also a PayPal engineer).</p></li><li class="data-line-15" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Elon Musk</strong>, a PayPal co-founder and arguably the most recognizable member of the PayPal mafia, has an extensive list of accomplishments, including founding Tesla, SpaceX, Neuralink, and The Boring Company. His recent acquisition of Twitter (now X) further solidifies his tech guru status.</p></li><li class="data-line-16" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Reid Hoffman</strong>, a former PayPal executive, went on to found LinkedIn.</p></li><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">David O. Sacks</strong>, former PayPal COO, later founded Geni.com and Yammer.</p></li><li class="data-line-18" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Steve Chen</strong>,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Jawed Karim</strong><span class="Apple-converted-space"> </span>and<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Chad Hurley</strong>, 3 former PayPal employees, co-founded YouTube.</p></li></ul></div><div class="paragraph data-line-20" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Other examples, besides Revolut as mentioned earlier, also exist:</p></div><div class="ulist data-line-22" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-22" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Square Mafia</strong><span class="Apple-converted-space"> </span>in the US: Alumni from Square have been instrumental in launching companies like Opendoor (real estate), Faire (wholesale marketplace), DoorDash (food delivery service), Hummingbird (AML), Indie (banking app), and more.</p></li><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Monzo Mafia</strong><span class="Apple-converted-space"> </span>in the UK: Monzo alumni have played crucial roles in Plend (lending), Fronted (rental deposit), Lollipop (grocery shopping assistant), 11:FS (Fintech consultancy), Fintrail (financial crime consultancy), and others.</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Transferwise (Wise) Mafia</strong><span class="Apple-converted-space"> </span>in the UK: Former Transferwise employees have been at the forefront of startups like Plum (personal saving assistant), Candu Labs (user onboarding), Qatalog (virtual workspace), Taxscouts (tax declarations), Salv (AML), Finanzfluss (PFM), and more.</p></li><li class="data-line-25" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Klarna Mafia</strong><span class="Apple-converted-space"> </span>in Sweden: Klarna alumni have ventured into companies like Anyfin (app to refinance debt), PFC (neobank), MODIFI (trade financing for SMEs), Brite (A2A payment tool), Zimpler (payment solution), stoEr (mortgage solution), TrueAccord (debt collection), and beyond.</p></li></ul></div><div class="paragraph data-line-27" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These examples underscore<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">the potential of a highly successful startup to serve as a catalyst for a thriving ecosystem</strong><span class="Apple-converted-space"> </span>of new startups. Such ecosystems, often characterized by a concentration of startups within a specific industry or region, owe their existence and momentum to the pioneering success of the initial startup. The impact of these ecosystems reaches far beyond the original venture.</p></div><div class="paragraph data-line-29" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">reasons behind this snowball effect</strong><span class="Apple-converted-space"> </span>are evident:</p></div><div class="ulist data-line-31" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Knowledge and Experience</strong>: Employees at successful startups gain valuable insights into innovative technologies and the intricacies of scaling a business from a small startup to a corporate giant. These startups serve as excellent learning grounds for future founders. Additionally, working at such startups provides a front-row seat to market dynamics, making it easier to identify gaps and opportunities.</p></li><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Funding Source</strong>: Founders and early employees of successful startups often cash out their shares, which, in many cases, become a substantial source of funding for future ventures.</p></li><li class="data-line-33" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Networking</strong>: Successful startups tend to attract highly talented individuals. Years of collaboration with such individuals create valuable networks, a prerequisite for launching successful startups in the future.</p></li><li class="data-line-34" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Inspiration</strong>: One success story has a cascading effect, inspiring others. The tales of young tech entrepreneurs becoming millionaires, or even billionaires, in just a few years can motivate numerous young individuals to pursue science and technology and embark on entrepreneurial journeys. The absence of such examples nearby can, conversely, serve as a deterrent.</p></li></ul></div><div class="paragraph data-line-36" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Unfortunately, Belgium lacks a prominent international example of a catalyst startup. Belgian success stories are often acquired by international players before they can grow into large international unicorns. Examples include Silverfin and Yuki (accounting software, both acquired by the Norwegian company Visma), LMS International (acquired by Siemens), Ubizen (acquired by Cybertrust), ICOS Vision (acquired by US company KLA-Tencor), Ogone (acquired by French company Ingenico), and Callataÿ & Wouters (acquired by French Sopra group). As these exits often occurred too early to be inspirational, none of them has ignited a substantial ecosystem.</p></div><div class="paragraph data-line-38" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">However, the tech landscape in Belgium isn’t entirely bleak. Some companies in Belgium, both founders and employees, exhibit signs of creating an ecosystem. The most notable ones include:</p></div><div class="ulist data-line-40" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-40" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Clear2Pay</strong>: This international fintech payment company was acquired by FIS for 375 million EUR in 2014. Its founders, Michel Akkermans and Jurgens Ingels, are now among the most influential tech venture capitalists in Belgium. Michel Akkermans has invested in Belgian tech companies such as Awingu (homework software), Intix (payment specialist), Cashforce (cashflow management), B.Fine (regulatory financial reporting), NGData (Customer Intelligence), Yield.io (Model Risk Management), Monitr (cashflow management), and more.<br style="box-sizing: border-box;" /></p><div class="paragraph data-line-42" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Jurgens Ingels is also deeply involved in tech startups in Belgium and the rest of Europe through SmartFin Capital. Some examples of his investments include CrazyGames (games), Payflip (HR Tech), Timefold.ai (AI scheduling optimizer), Hex-Rays (IT security), Timeseer.ai (time-series analytics), Willow (social media publishing), Deliverect (online food ordering), Itineris (ERP solution for utilities companies), Bright Analytics (management reporting), NGData (Customer Intelligence), and more.</p></div></li><li class="data-line-43" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Skynet</strong>: Founded in 1995 as a Belgian internet provider, Skynet quickly became the largest internet provider in Belgium. In 1998, it was acquired by the largest telecom operator in Belgium, Belgacom (now Proximus). The three founders of Skynet later created an online broker, Keytrade bank (sold in 2007 to Crédit Agricole), a payment startup Tunz (sold in 2012 to Ogone, which was subsequently acquired by Ingenico), and PingPing, a mobile micro-payment platform. They also became early investors in Monizze, a social voucher issuer in Belgium, successfully challenging the historical Sodexo-Edenred duopoly.</p></li><li class="data-line-44" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Netlog</strong>: Netlog was an early Belgian social network site, mainly active in Europe. At its peak in 2013, it had over 100 million accounts. The company can proudly claim to have a "Netlog mafia," with its executives, including Toon Coppens, Lorenz Bogaert, Nicolas Van Eenaeme, and Vincent Verlee, being the driving force behind dozens of later tech startups. These include Xpenditure (now Rydoo, digitalization of company expenses), Twoo (dating platform), In The Pocket (digital product studio), Realo (real estate data marketplace), Engagor (customer communication via social media), Qollabi (business relationship management), Introw (B2B lead management), Delta (crypto portfolio), and more. Some of these companies have themselves created new success stories, like Showpad (sales and marketing platform), which emerged from In The Pocket.</p></li><li class="data-line-45" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">CapCo</strong>: Founded in 1998 by Rob Heyvaert, CapCo was a consultancy company specialized in capital markets. It was sold to FIS in 2010. Given its employment of numerous young Belgian talents in the financial services sector during the Dot-com bubble era, its employees later assumed key roles in many financial companies in Belgium. Although not widely recognized, CapCo quietly nurtured a pool of talent. E.g. Stefan Dierckx founded in 2006 Projective, which is now a major financial services consulting group, employing more than 1000 consulting experts.</p></li></ul></div><div class="paragraph data-line-47" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In addition, there are several promising tech startups in Belgium that have the potential to serve as the foundation for new ecosystems, including:</p></div><div class="ulist data-line-49" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-49" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Odoo</strong>: An open-source ERP solution for SMEs.</p></li><li class="data-line-50" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Deliverect</strong>: A platform for managing online meal deliveries for restaurants.</p></li><li class="data-line-51" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Collibra</strong>: Specializing in data governance and intelligence.</p></li><li class="data-line-52" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Showpad</strong>: A sales management platform.</p></li><li class="data-line-53" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Dstny</strong>: cloud-based telecom solutions</p></li></ul></div><div class="paragraph data-line-55" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">For example, Collibra is already displaying early signs of creating an ecosystem centered around data engineering and data science in Brussels.<br style="box-sizing: border-box;" />Unlike other large tech players that often take many years and multiple acquisitions to reach their current size (e.g. Unified Post or team.blue), these tech startups have experienced rapid growth trajectories, and their founders are actively involved in the company. They are also frequently featured in the media and invest in the tech ecosystem. Examples include Fabien Pinckaers for Odoo, Zhong Xu for Deliverect, Felix Van de Maele for Collibra, and Louis Jonckheere for Showpad. These factors create the perfect recipe for a new ecosystem. Let’s hope that the Belgian government will support and nurture these startup ecosystems, paving the way for Belgium to become the European Silicon Valley.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-54284475343395475562023-11-02T22:55:00.002+01:002023-11-02T22:55:43.902+01:00The Fintech Regulatory Puzzle: From AISP to Bank<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnSpDToaizFDeSPqPiKH0RY5u7ki0LQoBeTwakUH903LbXCKyNju29nloJFmwxR5qnx6SATG-McUzArYOXSXt7l6e-5RNllnCyMCTi2oA3d_kEc8EFZMvGzmPNeVpXDZN3wXSNRNWkY0ERDx_XoNJHrIyw57pGg7dilO40wc3cbuA-8urt53B6qs04qDGb/s1024/DALL%C2%B7E%202023-10-26%2017.27.33%20-%20An%20expressive%20oil%20painting%20showing%20a%20regulator%20that%20grants%20a%20license%20for%20money.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnSpDToaizFDeSPqPiKH0RY5u7ki0LQoBeTwakUH903LbXCKyNju29nloJFmwxR5qnx6SATG-McUzArYOXSXt7l6e-5RNllnCyMCTi2oA3d_kEc8EFZMvGzmPNeVpXDZN3wXSNRNWkY0ERDx_XoNJHrIyw57pGg7dilO40wc3cbuA-8urt53B6qs04qDGb/w400-h400/DALL%C2%B7E%202023-10-26%2017.27.33%20-%20An%20expressive%20oil%20painting%20showing%20a%20regulator%20that%20grants%20a%20license%20for%20money.png" width="400" /></a></div><br /><p></p><div class="paragraph data-line-9" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">When discussing the dynamic world of Fintech, particularly in the context of neo-banks and payment Fintechs,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">licenses play a crucial role</strong>. This regulatory aspect, while less glamorous than cutting-edge user experiences, is a fundamental component of the Fintech ecosystem. Unfortunately, it often does not receive the attention it deserves in Fintech media.</p></div><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Yet, with Fintech funding drying out, the changed interest rate climate, and increased regulatory scrutiny, the discussion around licenses has once again risen to prominence among Fintech executives.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Regulation, especially in terms of licenses, is an intricate domain typically navigated with the assistance of specialized law firms. These firms guide Fintech companies through a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">labyrinth of complex regulations, compliance requirements, and the intricate nuances of each country’s unique interpretation of supra-national regulations</strong>. Furthermore, securing a license remains a somewhat informal process, wherein Fintech executives must convince regulators that their operations pose no threat to the existing financial system. Building strong relationships with regulators can significantly ease this complex journey.</p></div><div class="paragraph data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Now, let us explore some fundamental concepts related to licenses, particularly within European countries. It is essential to note that licenses in the European Union (EU) are, in principle, EU licenses. This means that a license obtained in one EU country can, with minimal effort, be passported to another EU country. Consequently, many Fintechs<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">search for the EU country with the most accommodating regulatory environment</strong>. Lithuania, for example, has attracted numerous Fintechs seeking an EU license due to its favorable regulatory climate.</p></div><div class="paragraph data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In addition to selecting the right country, Fintechs can<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">choose from a range of licenses</strong>, such as:</p></div><div class="ulist data-line-19" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-19" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">AISP</strong><span class="Apple-converted-space"> </span>(Account Information Service Provider): Offers account aggregation services, providing customers with a single view of all their accounts in one place.</p></li><li class="data-line-20" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">PISP</strong><span class="Apple-converted-space"> </span>(Payment Initiation Service Provider): Facilitates direct bank transfers from a customer’s account.</p></li><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">PI</strong><span class="Apple-converted-space"> </span>(Payment Institution): Supports various payment and money transfer services. A payment institution must specify which payment services it wishes to offer, including:</p><div class="ulist data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Service 1</em>: Cash depositing (e.g. ATM).</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Service 2</em>: Cash withdrawal (e.g. ATM).</p></li><li class="data-line-25" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Service 3</em>: Execution of payment transactions (credit transfers, direct debits and other money transfers).</p></li><li class="data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Service 4</em>: Similar to service 3 but involving credit lines.</p></li><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Service 5</em>: Issuing and acquiring services (merchant acquiring and payment card issuing).</p></li><li class="data-line-28" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Service 6</em>: Money remittance (cross-border international payments).</p></li></ul></div></li><li class="data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">EMI</strong><span class="Apple-converted-space"> </span>(Electronic Money Institution): Licensed to manage electronic money, allowing the issuance, distribution and redemption of eMoney, the execution of transactions (e.g. payments and remittances) and the issuing of payment cards.</p></li><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Bank</strong>: Offers all the services of an EMI institution but with additional capabilities, such as using client deposits for internal investments or financing credits. Lending is where a bank distinguishes itself from an EMI institution.</p></li></ul></div><div class="paragraph data-line-32" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These licenses are ranked in order of complexity to obtain and maintain. As you move down the list, the capital requirements, reporting demands, compliance checks, and regulatory oversight become more rigorous. For instance, a bank typically needs a capital base of at least 5 million EUR, while an EMI can operate with a capital base as low as 350,000 EUR, and a PI with a base of less than 125,000 EUR. As licenses become more comprehensive, entities lower on the list are often automatically licensed for services higher on the list, or they can easily obtain them. For example, a "Bank" automatically holds licenses as an AISP, PISP, PI, and EMI.</p></div><div class="paragraph data-line-34" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Consequently, choosing the right license is a critical decision for Fintech companies. Some Fintechs may opt to operate without a license by partnering with third parties that possess the necessary licenses. For instance, for a Fintech wanting to offer</p></div><div class="ulist data-line-36" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-36" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">AISP / PISP services</strong><span class="Apple-converted-space"> </span>: Companies like Tink, Digiteal, or Ibanity/Ponto offer an abstraction layer, eliminating the need for a license while simplifying PSD2 integration with various banks.</p></li><li class="data-line-37" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Payment services (requiring a PI license)</strong>: Payment Service Providers (PSPs) like Mollie, Adyen, or Stripe facilitate these services. More complex services are sometimes required, e.g. for marketplaces that handle funds collected from one party to pay another. Some PSPs like MangoPay or Thunes are specialized in offering these kinds of services.</p></li><li class="data-line-38" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Holding money (requiring an EMI license)</strong>: Companies such as Stripe, Adyen, Swan, or Tresor offer these services, making them valuable partners for Fintechs. Cfr. my blog "<em style="box-sizing: border-box; line-height: inherit;">Fintech Fusion: How Integration is Driving Change</em>" (<a class="bare" href="https://www.finextra.com/blogposting/24977/fintech-fusion-how-integration-is-driving-change" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.finextra.com/blogposting/24977/fintech-fusion-how-integration-is-driving-change</a>).</p></li><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Banking services</strong>: Banking as a Service (BaaS) providers like Solarisgroup, Treezor, Contis, Railsr, Bankable, ClearBank, 11:FS Foundry, or traditional incumbent banks acting as partners (e.g. BBVA, Starling Bank, J.P. Morgan, or Goldman Sachs) provide these services.</p></li></ul></div><div class="paragraph data-line-41" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Besides working with third parties, it is possible to circumvent specific licensing requirements by avoiding certain financial flows or securing particular exemptions. For example:</p></div><div class="ulist data-line-43" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-43" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">A<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">marketplace</strong><span class="Apple-converted-space"> </span>that intermediates between a buyer and a seller should have a PI license if the buyer pays to the marketplace and the marketplace then pays out the seller. This can be avoided by working with an intermediary PSP (see above) but can also be avoided by just mediating between the buyer and seller, meaning the buyer directly pays to the seller and the marketplace just gets a commission for the mediation.</p></li><li class="data-line-44" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">"<strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Commercial Agent</strong>" principle, i.e. institution acts as an intermediary on behalf of the principal. For instance, a city wants to issue a small city voucher to its citizens. This could be managed entirely by a voucher issuer (including all money flows), but this would require the voucher issuer to have an EMI license. The voucher issuer could however also function as a commercial agent on behalf of the city. In this case all money linked to the vouchers stays in the city’s bank account, but the voucher issuer offers the commercial platform for the city voucher on behalf of the city.</p></li><li class="data-line-45" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Limited network exemption</strong>: the PSD2 regulation exempts also certain financial instruments from the definition of eMoney. As a result, the issuing company does not need a license. Typically these are financial instruments which only allow to pay in a limited network (e.g. a gift card for 1 store or 1 chain), for a specific product (e.g. a fuel card, phone card or meal voucher) or for instruments for which there is a specific social or fiscal law in place in the local country (e.g. meal vouchers, service vouchers…).<br style="box-sizing: border-box;" />Under this last category, we could also categorize specific regulated money flows, like e.g. social secretariats paying out salaries to employees or notaries paying out the seller of a house.</p></li><li class="data-line-47" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Cash collection and delivery</strong><span class="Apple-converted-space"> </span>within the framework of a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">nonprofit or charitable activity</strong></p></li><li class="data-line-48" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Small institutions</strong>: institutions which manage eMoney but stay under certain limit in the amount of payment transaction and/or money issued, can avoid also a license (until they excecoed the threshold), as long as they execute a certain self-declaration.</p></li></ul></div><div class="paragraph data-line-50" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Ultimately, licenses and regulations aim to safeguard the financial system and ensure that customer funds remain secure, and financial commitments made by financial institutions are met. This complexity is ensured through several mechanisms:</p></div><div class="ulist data-line-52" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-52" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Operational Controls</strong>: These encompass security measures, IT processes, documented procedures, and independent audits, all designed to minimize the risk of mishandling money or illegal activities.</p></li><li class="data-line-53" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Restrictions on Fund usage</strong>: These define how institutions can use customer deposits for investments and credits. They also require mechanisms to manage risk (including hedging techniques and insurances) and ensure liquidity. E.g. payment institutions and EMI should put in place necessary safeguards to protect those funds, while banks can use the funds to generate revenues.</p></li><li class="data-line-54" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Capital Requirements</strong>: These serve as buffers that institutions can tap into in case of (temporary) issues.</p></li><li class="data-line-55" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Deposit Guarantee Schemes</strong>: These schemes, organized at the country level, act as insurance in the event that other mechanisms fail.</p></li></ul></div><div class="paragraph data-line-57" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Understanding these risk management mechanisms provides insight into why different licenses exist and why regulators enforce varying levels of control. Notably:</p></div><div class="ulist data-line-59" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-59" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Money deposited with an<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">EMI institution is not protected by the "Deposit Guarantee Scheme"</strong><span class="Apple-converted-space"> </span>but with proper safeguards, this may not be a concern, as all EMI deposits are typically ring-fenced.<br style="box-sizing: border-box;" />As a result one could say that money at an EMI is less safe (as there is no deposit guarantee scheme), but on the other hand they are more safe, as an EMI should (if all processes are correctly in place) protect all funds, while a bank’s deposit are only protected up to 100.000 EUR.</p></li><li class="data-line-61" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">EMIs cannot typically offer interest on accounts</strong><span class="Apple-converted-space"> </span>(although some do) since they ring-fence deposits, preventing them from generating revenue.</p></li><li class="data-line-62" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">EMIs can lend using their own capital</strong><span class="Apple-converted-space"> </span>but cannot use client deposits for lending, which distinguishes them from banks with more extensive lending capabilities.</p></li><li class="data-line-63" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">An EMI is allowed to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">store clients' funds for a longer period</strong>, in contrast to a PI, which can only keep clients' funds for a short period (enough to manage the transfer).</p></li><li class="data-line-64" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">An EMI institution should<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">protect customers’ rights to the same high standards as banks</strong><span class="Apple-converted-space"> </span>- for example, the right to information before and after a payment and fair treatment when something goes wrong.</p></li><li class="data-line-65" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">EMI institutions must adhere to similar<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Know Your Customer (KYC) and Anti-Money Laundering (AML) standards</strong><span class="Apple-converted-space"> </span>as banks.</p></li></ul></div><div class="paragraph data-line-67" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">As you can see, there’s considerable nuance in these licenses. Given their high cost in terms of acquisition and maintenance, it is vital for Fintech companies to assess whether a license is necessary for their business and explore potential exemptions or partnerships with third parties. If a license is indeed required, selecting the right one is of paramount importance, including the possibility of obtaining a more favorable license in a different country.</p></div><div class="paragraph data-line-69" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Check out all my blogs on<span class="Apple-converted-space"> </span><a class="bare" href="https://bankloch.blogspot.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bankloch.blogspot.com/</a></em></p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-86479558716169872092023-10-25T22:33:00.005+02:002023-10-25T22:34:00.962+02:00Scaling Smart: How to Grow Without Succumbing to Bureaucracy<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNP4bJzruKyAnFcc-SUm4db37sOjBBwAmEyXqTeCIFPSh_lcIjB3xRL6EZLPYRdcHqO32PZdTpHRLBW1fRS66C3FiBdzt3H03vfI1901c5xRPoaDVrR2CdppK-vUJPXOgIkNa81ywAnWpjy4lNNEmlXzYZlTTpUPFcL2t50_mXsyBlG2yEPazkxGfUvnQ7/s1024/DALL%C2%B7E%202023-10-02%2022.26.06%20-%20Design%20an%20image%20depicting%20the%20challenges%20of%20bureaucracy%20and%20its%20impact%20on%20innovation,%20juxtaposed%20against%20efficient%20growth..png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNP4bJzruKyAnFcc-SUm4db37sOjBBwAmEyXqTeCIFPSh_lcIjB3xRL6EZLPYRdcHqO32PZdTpHRLBW1fRS66C3FiBdzt3H03vfI1901c5xRPoaDVrR2CdppK-vUJPXOgIkNa81ywAnWpjy4lNNEmlXzYZlTTpUPFcL2t50_mXsyBlG2yEPazkxGfUvnQ7/w400-h400/DALL%C2%B7E%202023-10-02%2022.26.06%20-%20Design%20an%20image%20depicting%20the%20challenges%20of%20bureaucracy%20and%20its%20impact%20on%20innovation,%20juxtaposed%20against%20efficient%20growth..png" width="400" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">As companies expand, it is almost inevitable that bureaucracy grows alongside them. The term "</span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">bureaucracy</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">" typically carries a negative connotation, often associated with demotivated personnel, complex and excessive procedures, slow decision-making, silo-thinking, a disconnect between management and employees, and a lack of digitalization and innovation. One might assume that avoiding or at least reducing bureaucracy is a fundamental objective for any organization. However, achieving this is easier said than done and is often not even desired, as bureaucracy also serves to maintain order and consistency, reduce operational risk, and enhance predictability.</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">When a start-up embarks on the journey to becoming a corporate giant, a transformation in organizational structure and processes is inevitable. While this evolution is necessary for growth and stability, it tends to introduce bureaucracy - often seen as a necessary evil.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In a start-up with a small team (let us say up to 20 people), collaboration is seamless due to the limited number of employees, enabling almost all information to be easily shared in an informal manner. Consequently, there is no immediate need for clear role definitions, as everyone possesses a comprehensive understanding of tasks and goals. Roles are organically defined and adapted daily, reflecting a pragmatic approach to getting the work done.</p></div><div class="paragraph data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">However, as the company grows, the following becomes necessary:</p></div><div class="ulist data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Define Roles and Specializations</strong>: This leads to the creation of departments with their respective department leads (managers).</p></li><li class="data-line-18" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Document Procedures</strong>: Especially for cross-department tasks, documented procedures are essential.</p></li></ul></div><div class="paragraph data-line-20" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Typically, these initial growth pains manifest as a company evolves from 20 to 100 employees. Between 20 and 50 employees, the first pain points are identified but can still be swiftly addressed due to hands-on management. However, this approach can inadvertently result in the senior management becoming single points of failure and bottlenecks in the decision-making process. Senior management becomes increasingly involved in minor company decisions, acting as fire-fighters rather than strategic leaders.</p></div><div class="paragraph data-line-22" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">As a company progresses from 50 to 100 employees, a critical turning point occurs. Informal procedures become more difficult to maintain, internal politics between newly created departments begin to emerge, and delegation becomes essential. Consequently, formal procedures and checks are introduced to maintain strategic control, marking the initial steps of bureaucracy.</p></div><div class="paragraph data-line-24" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">As the company surpasses 100 employees,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">structures become increasingly complex and formal</strong>. This inevitably impacts the dynamic nature of the company:</p></div><div class="ulist data-line-26" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">More departments and complex organizational charts lead to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">rigid structures and greater separation</strong><span class="Apple-converted-space"> </span>between senior management and day-to-day employees.</p></li><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The increase in employees makes<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">managing everything via informal channels</strong><span class="Apple-converted-space"> </span>nearly<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">impossible</strong>.</p></li><li class="data-line-28" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Formalized procedures</strong><span class="Apple-converted-space"> </span>(rules and processes) become a necessity, as complexity of operations increases.</p></li></ul></div><div class="paragraph data-line-30" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">This means bureaucracy will automatically kick-in:</p></div><div class="ulist data-line-32" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Due to the increasing number of employees, there is an<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">exponential growth in the number of communication lines</strong><span class="Apple-converted-space"> </span>(i.e. a team of 4 has 6 lines of communication, a team of 12 has 66, while a team of 50 has 1225 lines of communication).</p></li><li class="data-line-33" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">As no one can be responsible anymore for end-to-end processes and the work of other people/departments becomes more and more vague, it creates a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">lack of ownership</strong>.</p></li><li class="data-line-34" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Managers are more and more forced to generate fast results</strong>(identify quick wins) in the optimization of the work. This means managers will typically react to every day-to-day incident, by adding a layer of control as a remedy to avoid the incident in the future, rather than taking strategic long-term actions to take away the root cause of the incident. These small, well-intended extra controls will in the long-term create a bureaucratic nightmare.</p></li><li class="data-line-35" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Larger companies often become<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">risk-averse</strong><span class="Apple-converted-space"> </span>(which is logical as there are more assets at stake, e.g. in the form of brand value), resulting in a plethora of checks and approvals before any action is taken.</p></li></ul></div><div class="paragraph data-line-37" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">To mitigate bureaucracy during organizational growth, consider the following tips:</p></div><div class="ulist data-line-39" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Hire and Train Effectively</strong>: Invest in skilled and motivated employees by offering training and development opportunities to enhance their capabilities. Well-trained and motivated employees require less oversight, allowing to reduce bureaucracy.</p></li><li class="data-line-40" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Empower Decision-making</strong>: Encourage employees to make decisions within their roles and trust their judgment. Allow them to take responsibility and learn from their mistakes, fostering a culture of initiative and ownership.</p></li><li class="data-line-41" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Decentralize Decision-making</strong>: Clearly define decision rights and ensure decisions are made at the appropriate level, avoiding unnecessary layers of approval.</p></li><li class="data-line-42" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Streamline Processes</strong>: Regularly review and streamline processes to eliminate redundant steps, focusing on efficiency without compromising creativity and flexibility.</p></li><li class="data-line-43" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Define Clear Company Goals</strong>: Establish clear company goals and Key Objectives and Results (OKRs), with ideally 1 North Star goal. From these, derive departmental goals to ensure alignment with the overall company objectives. This prevents individual department goals from overshadowing the broader company mission.<br style="box-sizing: border-box;" />A short anecdote to demonstrate this risk. A few years ago, I worked for a bank, where the IT department had as its main goal to have maximum availability of the systems (furthermore this goal had been aligned and agreed with all business stakeholders). The result was that changes to the IT systems were pushed back and controlled, as obviously they negatively impacted on the overall IT department goal. The result, however, was that the business department were no longer able to reach their goals, as they were no longer able to innovate and change their existing way of working. It shows that although each department had very noble and good goals, they did not enforce each other, on the contrary.</p></li><li class="data-line-45" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Foster Open Communication</strong>: Create open communication channels for employees to voice their concerns, ideas, and feedback. Leadership should actively listen and engage with employees at all levels.</p></li></ul></div><div class="paragraph data-line-47" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Bureaucracy is an inevitable outcome of growth, but with conscious effort and the right strategies, companies can strike a balance between structure and efficiency.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-66310024204655479972023-10-17T22:07:00.004+02:002023-10-17T22:07:48.827+02:00Saving 2.0: Breaking Free from Tradition<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFc88gbc_eEbMM5RAU7ofmW5L0WvkuJrTEmMLe6QF1BNUOqiHJSjOk5b-3vqNopl4uuASXqMzfv_dQpK_XfAU7e6M6-RMMix4wCEbshYla6uOtjF-n8Sc8Zb3CyPBRmXDZ1pVVTLSG-3LCiiFzRJdkN99a3bX85yHBimZecZ0MEC1DmHkfqku1ngQn-rUt/s1024/DALL%C2%B7E%202023-09-26%2010.13.46%20-%20A%20piggy%20bank%20being%20filled%20with%20coins%20next%20to%20a%20computer%20in%20style%20of%20Hopper.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFc88gbc_eEbMM5RAU7ofmW5L0WvkuJrTEmMLe6QF1BNUOqiHJSjOk5b-3vqNopl4uuASXqMzfv_dQpK_XfAU7e6M6-RMMix4wCEbshYla6uOtjF-n8Sc8Zb3CyPBRmXDZ1pVVTLSG-3LCiiFzRJdkN99a3bX85yHBimZecZ0MEC1DmHkfqku1ngQn-rUt/w400-h400/DALL%C2%B7E%202023-09-26%2010.13.46%20-%20A%20piggy%20bank%20being%20filled%20with%20coins%20next%20to%20a%20computer%20in%20style%20of%20Hopper.png" width="400" /></a></div><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><br /></span></p>In Belgium, the</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">traditional savings account remains highly popular</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">, boasting a total deposit of over 300 billion EUR. With approximately 11.5 million inhabitants, this averages to about 25,000 EUR per Belgian on their savings account. However, this is an average value; most Belgians do not have this amount on their saving account, which means some hold substantially larger amounts.</span><p></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Nevertheless, the savings account has come<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">under scrutiny</strong><span class="Apple-converted-space"> </span>in recent years due to several reasons:</p></div><div class="ulist data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-13" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">For years, the interest accrued from savings accounts<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">fails to keep up with inflation rates</strong>. Consequently, money on a savings account gradually loses its value.</p></li><li class="data-line-14" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Following the banking crisis, a lot of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">people could not access their funds for very long times</strong>, due to placing them at banks that came into financial troubles (e.g. people who deposited their savings at Kaupthing bank or Optima Bank). Although deposits are protected by a 100.000 EUR guarantee, this may prove insufficient for those with substantial savings.</p></li><li class="data-line-15" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">emergence of crypto-investment platforms</strong><span class="Apple-converted-space"> </span>(e.g. CoinBase or Binance)<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">and online Fintech brokers</strong><span class="Apple-converted-space"> </span>(e.g. Robinhood, eToro or EasyBroker) has significantly lowered the barriers and costs associated with investing, presenting viable alternatives to traditional savings accounts.</p></li><li class="data-line-16" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The Belgian government recently introduced a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">short-term government bond</strong><span class="Apple-converted-space"> </span>to compete with banks' savings accounts, aiming to pressure banks to raise their interest rates, as they deemed a lack of competition resulted in unacceptably low interest rates.</p></li></ul></div><div class="paragraph data-line-18" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Despite these drawbacks, the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">savings account remains a familiar, straightforward, and user-friendly banking product</strong><span class="Apple-converted-space"> </span>for stashing away money for future acquisitions or as a rainy-day reserve. Other alternatives, though potentially more beneficial, often prove too complex for the average individual, particularly those outside the finance sector.</p></div><div class="paragraph data-line-20" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">However, to encourage a shift towards better financial products and services, banks should consider further innovations, facilitating easier and low-risk investments, as well as simplifying day-to-day personal liquidity management.</p></div><div class="paragraph data-line-22" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Following products could help with this:</p></div><div class="ulist data-line-24" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Provide an<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">easy, intuitive trading platform</strong>, not focusing on the more informed and aggressive trader (which most trading platforms target today), but rather on the occasional, low-risk investor. Check out Capilever’s blog "<em style="box-sizing: border-box; line-height: inherit;">Tips and tricks for making investment tools more transparent in these high inflation times</em>" (<a class="bare" href="https://www.finextra.com/blogposting/24262/tips-and-tricks-for-making-investment-tools-more-transparent-in-these-high-inflation-times" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.finextra.com/blogposting/24262/tips-and-tricks-for-making-investment-tools-more-transparent-in-these-high-inflation-times</a>) for more info on what such a tool should and could do.</p></li><li class="data-line-25" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Provide a solution to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">balance short- and long-term liquidity imbalances</strong>. Check out blog "<em style="box-sizing: border-box; line-height: inherit;">Liquidity management as a (banking) service</em>" (<a class="bare" href="https://www.finextra.com/blogposting/22102/liquidity-management-as-a-banking-service" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.finextra.com/blogposting/22102/liquidity-management-as-a-banking-service</a>) for more info on this topic.</p></li><li class="data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Enable easy access to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">short-term financing against your investment portfolio</strong><span class="Apple-converted-space"> </span>(i.e. Lombard loan) during liquidity shortages, reducing the need to maintain substantial funds in a savings account. Learn more about liquid asset-based lending’s potential benefits in retail banking via blogs "<em style="box-sizing: border-box; line-height: inherit;">Liquid asset based lending - a clear retail banking market opportunity</em>" (<a class="bare" href="https://www.finextra.com/blogposting/17210/liquid-asset-based-lending---a-clear-retail-banking-market-opportunity" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.finextra.com/blogposting/17210/liquid-asset-based-lending---a-clear-retail-banking-market-opportunity</a>) and "<em style="box-sizing: border-box; line-height: inherit;">How liquid asset based lending brings benefits to both banks and their customers</em>" (<a class="bare" href="https://www.finextra.com/blogposting/17401/how-liquid-asset-based-lending-brings-benefits-to-both-banks-and-their-customers" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.finextra.com/blogposting/17401/how-liquid-asset-based-lending-brings-benefits-to-both-banks-and-their-customers</a>).</p></li></ul></div><div class="paragraph data-line-28" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Those ideas build further on existing banking products and services, but we could think even more out of the box, like eliminating completely the notion of a saving account. Cfr. my blog "<em style="box-sizing: border-box; line-height: inherit;">A bank account - A concept of the past</em>" (<a class="bare" href="https://www.finextra.com/blogposting/18567/a-bank-account---a-concept-of-the-past" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.finextra.com/blogposting/18567/a-bank-account---a-concept-of-the-past</a>).</p></div><div class="paragraph data-line-30" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">However, there are numerous innovative ideas that can enhance the existing savings account experience and help people manage their finances more effectively. Examples are:</p></div><div class="ulist data-line-33" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-33" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Gamification</strong>: When it comes to modernizing savings accounts and making them more engaging, gamification is a powerful tool. By incorporating elements like badges and pleasant animations, savings accounts can transform into a more enjoyable and interactive experience for users. For a deeper understanding of how gamification can revolutionize financial services, I delved into this topic in my blog "<em style="box-sizing: border-box; line-height: inherit;">Gamification - A good idea for a serious topic like financial services?</em>" (<a class="bare" href="https://www.finextra.com/blogposting/19896/gamification---a-good-idea-for-a-serious-topic-like-financial-services" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.finextra.com/blogposting/19896/gamification---a-good-idea-for-a-serious-topic-like-financial-services</a>)</p></li><li class="data-line-34" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Saving goals</strong>: One of the key aspects of a satisfying savings experience is setting clear goals. Linking specific objectives to a savings account can transform the act of saving into a fulfilling customer journey. Understanding the motivations behind why people open savings accounts and aligning them with their goals is crucial. To explore how this can be achieved effectively, take a look at my blog "<em style="box-sizing: border-box; line-height: inherit;">PFM, BFM, Financial Butler, Financial Cockpit, Account Aggregator… - Will the cumbersome administrative tasks on your financials finally be taken over by your financial institution?</em>" (<a class="bare" href="https://bankloch.blogspot.com/2020/02/pfm-bfm-financial-butler-financial.html" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bankloch.blogspot.com/2020/02/pfm-bfm-financial-butler-financial.html</a>).</p></li><li class="data-line-35" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Automating saving actions</strong>: Automation is key to simplifying the savings process. Automated saving actions, such as setting aside a fixed amount per month, automatically transferring excess funds from your current account to your savings, automatic rounding of expenses (and saving the rounding difference) or algorithm-based savings predictions (e.g. Plum and Chip), make saving hassle-free. These actions ensure that saving becomes a seamless part of one’s financial routine.</p></li><li class="data-line-36" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Saving simulators</strong>: Understanding the potential future outcomes of your savings can be empowering. Saving simulators are valuable tools that help individuals visualize their financial future based on the amount they save per month. These simulators, designed to be fun and graphical, can also incorporate various scenarios, including inflation and a growing savings amount over time. They provide a tangible representation of financial goals and motivate continued savings efforts.</p></li><li class="data-line-37" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Save Now, Buy Later (SNBL)</strong>: SNBL programs offer an exciting twist to traditional savings. By enabling individuals to save for a specific item they intend to purchase, in collaboration with the SNBL provider and the merchant, this approach can offer certain incentives for achieving savings milestones. To delve more into SNBL explore my blog "<em style="box-sizing: border-box; line-height: inherit;">Is SNBL more sustainable than BNPL?</em>" (<a class="bare" href="https://www.finextra.com/blogposting/22453/is-snbl-more-sustainable-than-bnpl" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.finextra.com/blogposting/22453/is-snbl-more-sustainable-than-bnpl</a>)</p></li><li class="data-line-38" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Marketplaces</strong>: To provide users with a broader range of savings options, the concept of marketplaces can be introduced. These platforms give customers access to savings accounts from various third-party providers, enhancing choice and encouraging competition in the savings account landscape. For example, Raisin offers a platform that facilitates access to a variety of savings options.</p></li><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Price-linked Saving Accounts (PLSA)</strong>: Price-linked Saving Accounts (PLSA) introduce an element of chance and excitement into saving. In these accounts, interest payments are distributed as prizes based on luck, encouraging individuals to save regularly for the chance to win rewards. Several providers, like Save to Win, Walmart’s Prize Savings, Yotta Savings, or Big Prize Savings, offer PLSA options. Taking this concept further, Layup incorporates sports outcomes, allowing customers to win cash prizes and products from brands based on the results of sports games.</p></li></ul></div><div class="paragraph data-line-41" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These innovative features and approaches aim to improve the traditional savings account, making it more engaging, goal-oriented, and rewarding for individuals. By infusing creativity and technology into the saving experience, we can motivate people to manage their finances more effectively and better achieve their financial goals.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-32687244520623624352023-10-11T22:43:00.003+02:002023-10-11T22:43:51.866+02:00The Right Fit: Assessing Business Value before Adopting AI/ML<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1HWSut3XLoxU97WYKhn7AycfYAfdqg-8Gd-GosBXiQ5MnnGrDlGbCNF_QpLJfmJEuBTCIwKO9Yzcco7ZTzXA4UEVpZ71zjOBfI29C4Lc6puNR5ikiwka9zqZi8PEFgHXazwQnRdWtkyMk62IaYGqpzq7Fv8o9QZEb5iWnSH4DTYJjOgHgat7IQ7k-v-7R/s1024/DALL%C2%B7E%202023-09-21%2017.51.45%20-%20An%20artificial%20machine%20conquering%20the%20world%20while%203%20managers%20are%20looking%20at%20it%20in%20modern%20urban%20style.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1HWSut3XLoxU97WYKhn7AycfYAfdqg-8Gd-GosBXiQ5MnnGrDlGbCNF_QpLJfmJEuBTCIwKO9Yzcco7ZTzXA4UEVpZ71zjOBfI29C4Lc6puNR5ikiwka9zqZi8PEFgHXazwQnRdWtkyMk62IaYGqpzq7Fv8o9QZEb5iWnSH4DTYJjOgHgat7IQ7k-v-7R/w400-h400/DALL%C2%B7E%202023-09-21%2017.51.45%20-%20An%20artificial%20machine%20conquering%20the%20world%20while%203%20managers%20are%20looking%20at%20it%20in%20modern%20urban%20style.png" width="400" /></a></div><br /><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><br /></span><p></p><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">The</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">potential of AI/ML is immense</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">, yet it is often misused by managers who are driven by trends and a fear of missing out. Like any technology, AI/ML should be seen as a means to an end and should be evaluated for its business value within the appropriate context.</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">To make<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">informed decisions</strong>, managers should begin by assessing the use case they want to address and evaluating the associated business value. This evaluation should be conducted independently of considering the use of AI/ML. Unfortunately, the decision to use AI/ML is often the first one made.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">When<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">determining the suitability of AI/ML</strong>, it is essential to have a clear understanding of its definition. AI/ML relies on complex models with thousands or even millions of parameters, fine-tuned through training. It excels in situations where:</p></div><div class="ulist data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-15" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">There are<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">large datasets available for training the model</strong><span class="Apple-converted-space"> </span>(or your use case fits an already trained model offered by a third-party company).</p></li><li class="data-line-16" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">It is<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">challenging to define rules that can convert input parameters to desired results</strong>. For instance, converting spoken language to text cannot be easily achieved through a small set of rules.</p></li></ul></div><div class="paragraph data-line-18" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These critical conditions are often overlooked:</p></div><div class="ulist data-line-20" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-20" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Models trained on<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">insufficient or unrepresentative datasets</strong><span class="Apple-converted-space"> </span>will yield poor results.</p></li><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">If a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">limited set of rules (forming an algorithm) can achieve the desired outcome</strong>, it is often more effective to code those rules instead of using AI/ML. Rule-based systems are easier to interpret, maintain (fixing an issue can be done by adapting a rule, while an AI/ML model will need to be retrained, potentially leading to unexpected regressions on other cases), and are less computationally intensive. There is a tipping point where the number of rules becomes too extensive, making it more practical to employ an AI/ML model. Additionally, AI/ML models may identify correlations and rules that were not initially considered, leading to better results. However, comparing the cost, maintenance, and outcome quality between AI/ML models and traditional rule-based systems is challenging. Conducting extensive and expensive A/B tests with both models over a significant period is usually not feasible for organizations.</p></li></ul></div><div class="paragraph data-line-23" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">For instance, in the case of a bank wanting to establish a new credit-scoring model, a rule-based scoring algorithm can be implemented based on predefined factors such as Loan to Value (LTV), Debt to Income (DTI), and risk and stability factors like customer loyalty, customer age, and residential history. Alternatively, an AI/ML model could incorporate a broader range of input factors, e.g. full account transaction history and social media details. The AI/ML model may provide better results, especially for individuals with unconventional profiles. However, it also introduces challenges such as complex data pipelines, data cleaning, and difficulties in explaining or defending specific credit decisions (with high risk of discrimination bias).</p></div><div class="paragraph data-line-25" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Measuring the performance of this credit-scoring AI/ML model versus the traditional rule-based model is very challenging:</p></div><div class="ulist data-line-27" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">impact of credit decisions takes years to unfold</strong>, as the "credit default rate" will be impacted by credit decisions of several years before.</p></li><li class="data-line-28" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Only the approved credits can be compared</strong>; if a model refuses a credit, you can never know if this credit would not have been reimbursed without any issues.</p></li></ul></div><div class="paragraph data-line-30" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Another good example is the use of AI/ML for Recommendation engines. In many cases, a simple database query based on user similarities (e.g. people buying similar product or people with same age, family situation, profession, hobbies/interests….) or product associations (products bought together) can yield comparable results to complex AI/ML models.</p></div><div class="paragraph data-line-32" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In general, AI/ML excels in handling unstructured data, like speech records, documents, unstructured text, images, where traditional software development struggles. However, these AI/ML use cases also pose higher complexity due to extensive data preparation, complex models, and challenges in interpretation and verification. Consequently, many companies focus on AI/ML models that utilize structured data. These models rely on statistical correlations and may not always provide obvious or substantial added value compared to traditional rule-based systems. The hype around AI/ML can sometimes lead to these use cases being promoted, although the benefits may be non-existent or very poor.</p></div><div class="paragraph data-line-34" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">To<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">maximize the value of AI/ML, organizations should carefully assess where to deploy AI/ML and where not</strong>. Organisations should avoid going for quick AI/ML implementations, which can just as well be implemented by traditional software development. Instead they should assess more complex use cases, where the true potential of AI/ML can make a significant difference. Often those more interesting use cases can however be handled quite well by third-party pre-trained models (often offered as easy to integrate APIs), meaning for many companies there is no immediate need to hire AI/ML specialists. Instead it might be more interesting to train everyone within the organisation in the possibilities and constraints of AI/ML and have a good knowledge of which third-party AI/ML services are available on the market.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-80816656022383265092023-10-02T21:52:00.002+02:002023-10-02T21:52:51.182+02:00Fintech Fusion: How Integration is Driving Change<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh68MeiPfggjO1Dbkp6VO_-xAQWLzQ1dHEltFFeVD8-3uw50leZ4x6WOYsd16B7WcuAi75DYgPXm3EBeRXgYGpWhVsBd2ZxIjljqzqXCo7N2L4VPtPyA3jpLcuVxWOeC2DKWh_x896Mn-5PbOuq4G8IEI4S21yvcUdhG5zC5bYTNIDRqoG0cFCQM5M6Tcvc/s640/image_T3zAaA8M_1695287849333_raw.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="640" data-original-width="640" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh68MeiPfggjO1Dbkp6VO_-xAQWLzQ1dHEltFFeVD8-3uw50leZ4x6WOYsd16B7WcuAi75DYgPXm3EBeRXgYGpWhVsBd2ZxIjljqzqXCo7N2L4VPtPyA3jpLcuVxWOeC2DKWh_x896Mn-5PbOuq4G8IEI4S21yvcUdhG5zC5bYTNIDRqoG0cFCQM5M6Tcvc/w400-h400/image_T3zAaA8M_1695287849333_raw.jpg" width="400" /></a></div><br /><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><br /></span><p></p><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">In the landscape of financial services, a multitude of '</span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">as a service</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">' models have emerged, revolutionizing how both financial and non-financial institutions (such as retail and HR Tech) offer financial services to their customers. Gone are the days of complex, lengthy implementation and regulatory projects. Financial services can now be readily accessed through a diverse array of '</span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">Embedded Banking</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">' and '</span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">Banking as a Service</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">' (BaaS) solutions.</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Within this expansive "finance as a service" ecosystem, companies offer<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">varying layers of abstraction</strong>:</p></div><div class="ulist data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-13" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Card Issuing Processors</strong>, such as Marqeta, Enfuce, or ByQwest, remove the complexity of issuing cards and connecting to international payment schemes like VISA or MasterCard, or to card issue/personalization providers like Idemia or Tag Systems UK.</p></li><li class="data-line-14" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">BIN Sponsors</strong>, including Stripe, Adyen, Swan, or Tresor (along with Marqeta and Enfuce), extend beyond card issuing processors by providing a card BIN range (a specific range of card numbers) at major card schemes and the ability to manage funds on the card.</p></li><li class="data-line-15" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Embedded Banking/Finance Players</strong><span class="Apple-converted-space"> </span>enable the seamless integration of various financial services (payments, credits, insurances, etc.) into non-financial journeys, effectively transforming any company into a fintech entity. This integration is facilitated through modern API integrations or plugins. The "customer" of these services only needs to focus on front-end integration, while the provider manages the rest. This category can be further categorized based on the type of service offered, e.g., embedded payments via PSPs like Adyen, Mollie, MultiSafePay, Buckaroo, MangoPay, or Stripe, accounts via embedded account providers like Shopify Balance, Gemba, or Treasury Prime, credits via embedded lending providers such as Banxware, Zopa, YouLend, Lendflow, or Capify, or via BNPL providers like Klarna, Affirm, or Afterpay. Insurances are offered by embedded insurance (InsurTech) companies like Qover, Trov, Cover Genius, Bsurance, or Wrisk.</p></li><li class="data-line-16" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">BaaS Players</strong><span class="Apple-converted-space"> </span>not only provide payment, account, and card services but typically extend to other banking services and often come with their own banking license. This group can be divided into three sub-categories:</p><div class="ulist data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The<span class="Apple-converted-space"> </span><em style="box-sizing: border-box; line-height: inherit;">pure BaaS players</em>, which launched their business specifically to offer BaaS services. Examples include Solarisgroup, Treezor, Contis, Railsr, Bankable, ClearBank, 11:FS Foundry, or Cambr.</p></li><li class="data-line-18" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Traditional<span class="Apple-converted-space"> </span><em style="box-sizing: border-box; line-height: inherit;">core banking software providers</em>, who are now offering their solutions also in a SaaS and BaaS offering, e.g. Finastra, Temenos, Sopra Banking, Avaloq, Finacle (Infosys), FIS or BPC.</p></li><li class="data-line-19" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Incumbent and neo-banks</em>, which have white-labelled their own banking systems and operations to offer them to third parties, e.g., Fidor, BBVA, Starling Bank, J.P. Morgan, and Goldman Sachs.</p></li></ul></div></li></ul></div><div class="paragraph data-line-21" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">However, all these companies are converging towards similar offerings:</p></div><div class="ulist data-line-23" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">BaaS players</strong><span class="Apple-converted-space"> </span>are making their rich offerings more<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">componentized</strong>, allowing customers to choose and customize the products and services they require.</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">other players</strong><span class="Apple-converted-space"> </span>are broadening their services from pure payment and card services to regulated accounts and value-added services like lending and investments, offering a more complete suite of services to avoid the need for customers to contract and integrate with multiple providers.</p></li></ul></div><div class="paragraph data-line-26" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The customer (banks, fintechs, and non-financial companies wanting to offer financial services) aims to avoid the burden (i.e. the heavy lifting) of setting up the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">underlying infrastructure</strong>, which consists of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">three main components</strong>:</p></div><div class="ulist data-line-29" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Banking Software</strong><span class="Apple-converted-space"> </span>encompassing both the initial implementation and ongoing software maintenance. For example, a gateway connected to the VISA or MasterCard scheme must regularly update its software to comply with mandatory releases imposed by the payment scheme.</p></li><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Regulatory, Licensing and Membership Requirements</strong>: the financial services industry is heavily regulated, necessitating compliance with various rules, procedures, and requirements from governments, payment schemes, partners, suppliers, and customers. This includes</p><div class="ulist data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Licenses</strong>: almost any type of financial service is regulated by the government, meaning that the institution needs to obtain a license from the regulator (e.g. National Bank) to execute the type of financial activity. As not every financial activity has the same risk level, several types of licenses exist, like an AISP/PISP license, a payment license, an EMI license, a credit institution license, an investment broker license or a banking license. These licenses are expensive to obtain and can take years of negotiation with the regulators. Additionally a license comes with a lot of regulatory overhead, like extra audits, regulatory reporting, capital requirements… Therefore building your service on top of an entity, which has already the necessary licenses, can be a huge cost-saver and reduce time-to-market enormously.</p></li><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Standards and certifications</strong>: banks need to be certified for several activities, e.g. ISO 27001 for managing information security risks and ensuring regulatory compliance, ISO 22301 for Business continuity Management or ISO 31000 for IT Risk Management. Additionally compliance with standards like PCI-DSS is mandatory for connecting to payment schemes.<br style="box-sizing: border-box;" />These standards and certifications are also costly, as every process needs to be carefully documented, improvements need to be made to all systems and the audit needs to be executed by an external auditing/certification agency. Additionally these certifications need to be renewed every X years.</p></li><li class="data-line-34" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Memberships</strong>: financial institutions need to become members or partners of several entities in order to successfully do their business. These memberships can be very time-consuming and costly (both to become member, but also for the yearly membership fees). E.g. becoming member of VISA or MasterCard, becoming member of protocol-standards like CTAP or EP2, Swift membership…</p></li></ul></div></li><li class="data-line-35" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Operational part</strong>: although automation plays a significant role, financial services still require substantial human involvement for validations, supervision, third-party interactions, and exception management. Moreover, certain operational services, such as AML and KYC/KYB, demand expertise due to their intricate nature and potential for significant financial penalties for errors.</p></li></ul></div><div class="paragraph data-line-37" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Customers must<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">strategically decide</strong><span class="Apple-converted-space"> </span>which services to keep in-house and which to outsource to external providers. This strategic decision involves trade-offs between speed to market, control, flexibility, cost, and focus on core business. Startups often begin by partnering with service providers for quick, cost-effective solutions. As businesses scale, they may consider insourcing certain services, ensuring a well-planned decoupling strategy from the outset to prevent excessive lock-in and loss of control over critical business aspects.</p></div><div class="paragraph data-line-39" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">This trend is not unique to finance. In the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">realm of eCommerce</strong>, businesses can also choose from a spectrum of options, e.g.</p></div><div class="ulist data-line-41" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-41" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">You can<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">build your website yourself</strong><span class="Apple-converted-space"> </span>and even integrate all payment methods yourself.</p></li><li class="data-line-42" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">You can<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">build a website using a website builder</strong><span class="Apple-converted-space"> </span>(e.g. Wordpress, Drupal or Wix) and use a PSP to easily integrate payment methods (e.g. Mollie, MultiSafePay or Buckaroo)</p></li><li class="data-line-43" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">You can<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">use a full eCommerce platform</strong><span class="Apple-converted-space"> </span>(e.g. Shopify, Magento, PrestaShop or WooCommerce), with also various levels of integration and value-added services. For example Shopify allows to setup easy an eCommerce webshop and even offers logistic services like stock management and fulfillment services and financial services like Shopify Balance (a bank account), Shopify Bill Pay (to pay your bills as a merchant) or Shopify Capital (to get financing).</p></li><li class="data-line-44" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">You can finally even go one step further and not build a platform yourself at all, but<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">leverage an established marketplace</strong><span class="Apple-converted-space"> </span>like Bol.com, Amazon, eBay to offer your products.</p></li></ul></div><div class="paragraph data-line-46" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Similarly, financial service companies or non-financial entities looking to offer financial services now have a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">range of abstraction levels to choose from</strong><span class="Apple-converted-space"> </span>when engaging external providers to establish their financial services.</p></div><div class="paragraph data-line-48" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Check out all my blogs on<span class="Apple-converted-space"> </span><a class="bare" href="https://bankloch.blogspot.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bankloch.blogspot.com/</a></em></p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-82648245329008019722023-09-25T17:38:00.000+02:002023-09-25T17:39:00.297+02:00Connecting the Dots: Navigating Tomorrow’s Services through Ecosystems<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVcJIJNsKEYtojVKhxnxObvGq1JJ3m3o82jK37czpMXblFeOMRg_sZy_hJ_LJruXxniJp3Ti5T-Ax3u6VbiAd6gSV7Akg91I5_Suek0mCkPFGZQNApCTaujKP6bKm9HQxuMcrasfJzbIi5RTvh-jNW3dKK-58lk9RMe0ceKK7ezetOdpUry-CZRK8TG2Fr/s1024/Ecosystems.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVcJIJNsKEYtojVKhxnxObvGq1JJ3m3o82jK37czpMXblFeOMRg_sZy_hJ_LJruXxniJp3Ti5T-Ax3u6VbiAd6gSV7Akg91I5_Suek0mCkPFGZQNApCTaujKP6bKm9HQxuMcrasfJzbIi5RTvh-jNW3dKK-58lk9RMe0ceKK7ezetOdpUry-CZRK8TG2Fr/w400-h400/Ecosystems.png" width="400" /></a></div><p><br /></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><span style="background-color: white;">In recent years, there has been a growing trend among companies across different sectors to build ecosystems or even super-apps. These ecosystems typically include a range of services and products designed to meet the diverse needs of consumers in their daily lives. While each company may approach this from a different angle, their ultimate goal is the same: to<span class="Apple-converted-space"> </span></span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">create a one-stop-shop for all their customers' needs</strong><span style="background-color: white;">.</span></p><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">One of the most notable examples of this trend is observed in the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">tech industry</strong>, where companies such as Amazon, Apple, and Google have created vast ecosystems that encompass everything from e-commerce, cloud computing, and financial services to entertainment. These companies have leveraged their existing strengths to expand their offerings and provide a seamless experience for their users. For instance, Amazon Prime offers not only fast and free shipping but also access to streaming music and video content, as well as discounts on groceries and other products.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">However, it’s not just tech companies that are building ecosystems. Traditional<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">retailers</strong><span class="Apple-converted-space"> </span>are also getting in on the action, with companies like Walmart and Target creating their own platforms that offer everything from groceries to clothing to home goods. These retailers are leveraging their existing brick-and-mortar presence to establish an online footprint, enabling them to reach a broader audience and offer a more comprehensive shopping experience.</p></div><div class="paragraph data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Similarly,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">financial institutions</strong><span class="Apple-converted-space"> </span>are also entering the game. Many banks now offer a range of financial services, such as daily banking, loans, insurance, and investment management, all within a single platform. This allows customers to manage their finances more efficiently and easily, without having to navigate multiple different apps or websites. Some banks, like KBC in Belgium, go even further by offering various third-party services, such as mobility, shopping deals, entertainment and accounting and legal services. In this category, we can also include BNPL (Buy Now, Pay Later) players like Klarna, who aim to provide an all-inclusive "Shopping app" offering features such as a marketplace of shops accepting Klarna as a payment method, exclusive deals, delivery tracking, and hassle-free returns.</p></div><div class="paragraph data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Telecommunication companies</strong><span class="Apple-converted-space"> </span>are also increasingly partnering up, offering entertainment deals, packages with streaming services, financial services (e.g. Orange Bank or the Beats cooperation of Proximus and Belfius in Belgium), phones and other electronics linked to their telecommunication services.</p></div><div class="paragraph data-line-19" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">And then there are the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">mobility companies</strong><span class="Apple-converted-space"> </span>like Uber and Lyft, who are looking to create ecosystems that extend beyond ride-sharing to areas such as food delivery, bike rentals, and even healthcare services.</p></div><div class="paragraph data-line-21" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">While each company may operate in a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">different sector</strong>, they are<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">all converging towards the same goal</strong>: creating a comprehensive ecosystem that offers a wide range of services to their customers. This convergence is driven by the desire to provide a more seamless and efficient experience for users, as well as the potential for increased revenue and customer loyalty.</p></div><div class="paragraph data-line-23" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In Asia, this trend has led to the creation of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">super-apps</strong>, such as Tencent’s WeChat in China, AliPay in China, Grab in Singapore, Go-Jek in Indonesia, Zalo in Vietnam, Paytm in India, Kakao in South Korea, and Line in Japan. In Africa, M-Pesa is also evolving into a super-app and of course Elon Musk is also working on a similar concept with X, targeted at the US and Europe, where super-apps have not yet gained significant traction.<br style="box-sizing: border-box;" />A super-app is a closed ecosystem offering a seamless, integrated, contextual, and efficient user experience. It is a multifunctional platform that consolidates diverse services within a single application, enabling users to perform numerous tasks without the need to switch between apps.</p></div><div class="paragraph data-line-26" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In the future, we are likely to see even more companies from various sectors embracing the ecosystem trend as they strive to remain competitive and meet the evolving needs of their customers.</p></div><div class="paragraph data-line-28" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">When executed effectively, an ecosystem can be a win-win-win for all parties involved: the central party managing the ecosystem, the third-party offering the specific service, and the customer.</p></div><div class="paragraph data-line-30" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Ultimately, it all boils down to where the user is active and where they initiate their journey. Large players with substantial customer bases and high user activity can position themselves at the center of the ecosystem, while other players are more likely to offer their services in an embedded manner.</p></div><div class="paragraph data-line-32" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Choosing the right strategy is crucial</strong><span class="Apple-converted-space"> </span>for every party involved. Several large companies, such as social secretariats managing payroll for businesses (e.g. SD Worx, Acerta or Liantis), insurers (e.g. AXA, Nationale Nederlanden or AG Insurance), payment apps (like Payconiq, Venmo or Paypal) and telcos (like Proximus or Telenet), are striving to be at the center, investing significantly in feature-rich apps with a wide array of added-value services. However, this strategy is inherently risky and uncertain, as these companies, despite having a large customer base, typically experience low customer engagement. For example, insurers usually interact with their customers only at the inception of an insurance contract and during claims. Insurers might regret this lack of user engagement as it results in missed cross- and up-selling opportunities and less customer loyalty. However, changing this dynamic might entail too much effort compared to the potential reward. Therefore, for these companies, opting for an embedded approach might be more rewarding.</p></div><div class="paragraph data-line-34" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Nevertheless, this embedded approach also carries the risk of even less direct customer contact and a growing dominant position of the ecosystem provider, who could decide in a matter of days to replace your service with a competitor, potentially breaking your business.</p></div><div class="paragraph data-line-36" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Many companies will need to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">find the right balance between targeting a direct digital customer relationship versus an indirect, embedded one</strong>. Most likely, a hybrid approach will yield the best results, providing a direct digital experience for core functionalities in which the company can genuinely make a difference and add value, while embedding all non-differentiating functionality.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-77125157189294869912023-09-17T15:53:00.001+02:002023-09-17T15:53:26.407+02:00The Price Is Right: A Quest for Fairness and Simplicity<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkHzS_R4c1sHbI9kjTXB8_8t0hUM6PiyAWEmKU1GROWFoMhKkAL-rZIAlH7r9jP2fgX3k6PD9XhY_gerEiC-2hkM2dl4OHY16HHeObD1SoJv06M971a2-rnTYzg5O9hUFzEfSTmZbz7KKlRV5IEOEjAwBzETrcAnU0gDhvs7wTxX5lQycUNMNjGQQKmw76/s1024/DALL%C2%B7E%202023-09-17%2015.46.04.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkHzS_R4c1sHbI9kjTXB8_8t0hUM6PiyAWEmKU1GROWFoMhKkAL-rZIAlH7r9jP2fgX3k6PD9XhY_gerEiC-2hkM2dl4OHY16HHeObD1SoJv06M971a2-rnTYzg5O9hUFzEfSTmZbz7KKlRV5IEOEjAwBzETrcAnU0gDhvs7wTxX5lQycUNMNjGQQKmw76/w400-h400/DALL%C2%B7E%202023-09-17%2015.46.04.png" width="400" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="paragraph data-line-9" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In a world marked by high inflation rates, governments are engaged in a race to find ways to compensate citizens for their diminishing purchasing power. Simultaneously, businesses are navigating a complex landscape, searching for strategies to sustain their revenue streams by increasing prices without alienating their customer base.</p></div><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">This conundrum has sparked a wave of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">innovation in different (pricing) models</strong>. Pricing models influence not only the cost of products and services, but also the tax rates imposed by governments and the support premiums and reductions granted by governments to both companies and citizens.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Striking the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">right balance</strong><span class="Apple-converted-space"> </span>within these models is imperative, requiring a delicate compromise between several crucial factors:</p></div><div class="ulist data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-15" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Fairness</strong>: Both customers and citizens must perceive the pricing model as just and equitable. There should be a sense that the price aligns with market norms and does not unfairly treat individuals compared to their peers. Unfair pricing practices can erode trust and brand loyalty, ultimately harming businesses in the long run.</p></li><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Complexity and Transparency</strong>: The pricing model should be easily comprehensible for everyone. When customers can effortlessly grasp pricing, it reduces frustration and facilitates their purchasing decisions. Subscription-based services, for instance, offer a straightforward monthly fee that covers all expenses. However, achieving simplicity is not always straightforward. Certain industries, like airlines and healthcare providers have implemented pricing structures driven by numerous variables.</p></li><li class="data-line-19" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Ease of Implementation</strong>: The IT systems should be capable of supporting and setting up the pricing model in a cost-efficient manner.</p></li><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Long-Term Sustainability</strong>: Ideally, the pricing model should remain relevant without the need for frequent adjustments, especially due to inflation. Automatic indexation can be integrated into the model as long as it is transparent to end-users.</p></li><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Commercial Viability</strong>: The pricing model should generate sufficient revenue or, in the case of subsidies, not impose excessive costs.</p></li></ul></div><div class="paragraph data-line-25" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">There exist<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">various pricing models</strong>, each with their own advantages and drawbacks, i.e.</p></div><div class="ulist data-line-27" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Upfront Price</strong>: This model defines the price at the point of acquisition or contract signing. It can take several forms, i.e.</p><div class="ulist data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Fixed Price</em>, i.e. the price of a product or service is fixed and independent of any conditions (like the customer, the acquisition moment and place…). A typical example are the products in a supermarket at a given moment in time (although they do vary also strongly over time).<br style="box-sizing: border-box;" />Obviously a product or service can be modularized, allowing to define a complex pricing catalogue, in which the user can compose the product or service of different modules and calculate as such the total price. A typical example of this is a car, where the consumer can compose the car with different packs and options.</p></li><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Dynamic Price</em>, i.e. in this scenario prices fluctuate based on various criteria such as customer segmentation, cross-selling, timing, location, user search history… The most known example of this type of pricing is obviously the hotel and airline sector, where prices for the same room or seat can be very different depending on all those conditions.</p></li></ul></div></li><li class="data-line-33" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Volume-based pricing</strong>: in this type of pricing, the amount paid for a service or product will depend on the volume being acquired. The volume can be very diverse, i.e. the weight of the product, the number of (total, active or concurrent) users, the amount (e.g. transaction amount, salary amount…), the number of CPU cycles or Gigabytes transferred/stored… Obviously the exact definition of the "volume" is critical and can spark a lot of discussion if not carefully defined. For example, a PSP processing payments for a webshop might ask X EUR per transaction. In this case the volume is the "number of transactions", but this is clearly too vague: Is a transaction only a successful transaction or also a failed transaction? Are test transactions included or not? If 1 payment is completed via 2 payment methods, does this count as 1 or 2? Is a retry counted or not? What about refunds? …<br style="box-sizing: border-box;" />Once the volume definition is clear, there are a number of options to define the pricing:</p><div class="ulist data-line-36" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-36" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Fixed price per volume unit</strong>. A typical example is a SaaS platform charging X EUR / user / month.</p></li><li class="data-line-37" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Dynamic price per volume unit</strong>. A good example are Cloud providers, which can have very variable prices per customer segment, per availability zone, sometimes even based on timing (i.e. less expensive during non-peak hours).</p></li><li class="data-line-38" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Percentage based</strong><span class="Apple-converted-space"> </span>(if the volume unit is an amount). Example are PSPs charging a percentage of the payment amount as cost or government taxes.</p></li><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Staffel pricing</strong>, i.e. a number of staffels are defined with a different price per staffel or percentage for each staffel. The Belgian income taxes are typically defined via a staffel pricing based on the taxable income, with different tax percentages per staffel.<br style="box-sizing: border-box;" />When working with staffels, it is important to define the calculation method. E.g. is the entire volume charged with current staffel or is the volume split between the different staffels? Is the real volume used for calculation or is the staffel threshold used for the calculation? …</p></li><li class="data-line-41" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Any combination of the above</strong><span class="Apple-converted-space"> </span>is of course also possible.</p></li><li class="data-line-42" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Additionally all those volume-based pricing models can be accompanied with a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">minimum (floor) or maximum (cap)</strong><span class="Apple-converted-space"> </span>to compensate for too small or too big resulting prices.</p></li></ul></div></li></ul></div><div class="paragraph data-line-44" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Effective pricing strategies often incorporate<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">psychological techniques </strong>drawn from years of research, e.g.</p></div><div class="ulist data-line-46" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-46" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Charm Pricing</strong>: Prices ending in 9.99 EUR are perceived as less costly than rounded figures like 10 EUR.</p></li><li class="data-line-47" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Odd-Even pricing</strong>: Items ending in odd numbers are purchased more frequently than those ending in even numbers.</p></li><li class="data-line-48" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Discounts and Freebies</strong><span class="Apple-converted-space"> </span>(e.g. Buy One, Get One Free). Companies often adjust their initial prices to offer discounts or free add-ons. This means companies already adjust their starting price to offer the discount or to offer certain additional product/modules/services for free. Usually discounts are granted on immediate costs (e.g. set-up costs and implementation costs), as they give an immediate benefit to the customer, while these discounts cost considerably less than giving discounts on recurring revenues.</p></li><li class="data-line-49" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Companies will often issue products in<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">3 models with 3 different prices</strong><span class="Apple-converted-space"> </span>(cfr. most SaaS offerings). Usually the cheapest and most expensive one exist for boosting the sales of the middle-priced product.<br style="box-sizing: border-box;" />Or in some cases also decoy pricing is used, were again 3 models are showed, with the most expensive one only a little more expensive than the middle one. In this case, people tend to buy the most expensive one, much more than the cheapest one. The middle one is almost never sold, as it acts as a decoy for selling the most expensive one.</p></li><li class="data-line-51" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Price Appearance</strong>: The visual presentation of a price can also have an impact, e.g. EUR 12.00 is considered more expensive than EUR 12 and just "12" is considered even less expensive. In general the "lighter" the number, the less expensive the customer perceives the price.<br style="box-sizing: border-box;" />Similarly it is better not to put a decimal separator in a price or show the discounted price in a slightly smaller font size than the original price, as this enforces the feeling it is a smaller price.<br style="box-sizing: border-box;" />Some studies indicate even that the length of the words of the price (when said out lout) has an impact. The shorter the number sounds, the lower the price is perceived.</p></li></ul></div><div class="paragraph data-line-55" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">For<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">businesses</strong><span class="Apple-converted-space"> </span>other considerations come into play when determining the right price:</p></div><div class="ulist data-line-57" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-57" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Access to Capital</strong>: some companies have a lot of cash or have access to cheap cash. Those companies will be open to pay more upfront, if they can reduce recurring costs later. Other companies, with limited cash, will want to spread the costs as much as possible over time. This is often exploited in SaaS businesses offering an additional discount when the subscription is paid annually.</p></li><li class="data-line-58" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Growth cycle</strong>: High-growth companies seek long-term pricing stability to ensure their growth trajectory remains predictable.</p></li><li class="data-line-59" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Fiscal year budget and results</strong>: as companies work with fiscal years and budgets, it can sometimes be important to have maximum of the cost still in the current fiscal year or the opposite move all costs to the next fiscal year.</p></li></ul></div><div class="paragraph data-line-61" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">To grasp the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">complexities and trade-offs inherent in pricing models</strong>, let us examine a few real-life examples:</p></div><div class="ulist data-line-63" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-63" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Notary Costs in Belgium</strong>: These are calculated using a staffel pricing system imposed by the government and based on the house’s purchasing price. However, the low staffel thresholds mean that many houses fall into the highest cost bracket, sparking questions about fairness.<br style="box-sizing: border-box;" />E.g. a house of 150.000 EUR has a notary cost of 1.655 EUR, a house of 250.000 EUR a cost of 2.140 EUR and a house of 500.000 EUR a cost of 2.890 EUR. The question now is if it is fair that someone buying a house of 500.000 EUR is only paying a bit more in notary costs than someone buying a house for half the price. On the one hand, clearly not, but you could also argue that the effort for the notary is almost identical for the 2 houses.</p></li><li class="data-line-65" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Payment Transaction Costs</strong>: Payment providers employ various pricing models, such as fixed commissions, pure percentage-based fees, or percentage-based fees with minimum and maximum thresholds. Each model has its trade-offs in terms of simplicity and fairness.<br style="box-sizing: border-box;" />A fixed commission of e.g. 6 cents per transaction, is very transparent and easy, but gives of course an advantage to stores with high average transaction amounts. A percentage-based approach seems fairer for the merchant, as 2 merchants collecting the same amount of money will pay the same commission, but as the payment provider has a fixed internal cost per transaction, the payment provider will have a considerably higher cost on merchants with a lot of small transactions. The combination of a percentage-based with floor and cap gives a good compromise but increases the complexity (e.g. for the merchant to check if the total monthly commission is correct).</p></li><li class="data-line-67" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Government Support</strong>: several government support systems provide a fixed amount or percentage-based amount as of a specific wage threshold. This means above this threshold you do not get anything, while below the threshold you are eligible to receive support. This type of model is very easy, but has the counterproductive effect, as staying just below the threshold gives a better outcome than being just above the threshold, which is the opposite of what the government wants to accomplish.</p></li><li class="data-line-68" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Commission of a real estate agent</strong>. Typically real estate agents in Belgium charge a commission of 3 to 4%. This seems a good pricing strategy, as at first sight it aligns the objectives of the seller and the real estate agent, i.e. sell at the highest price.<br style="box-sizing: border-box;" />In practice however, this is not always the case. Suppose a commission of 3% and a house of 300.000 EUR. Let’s say this house can be sold in 1 month at this price, which means real estate agent has a commission of 9.000 EUR. Imagine now that if you take 3 months, you could sell it at 330.000 EUR. Probably as a seller, you would like to go for that second option, but as a real estate agent, the second scenario only delivers 900 EUR extra for 2 additional months of work. In order to align the 2 parties, it would be better to work for example with a staffel pricing of 2% for first 200.000 EUR, 4% for next 100.000 EUR and 10% on all the above. In the first scenario, the real estate agent would gain 8.000 EUR, but in the second scenario the agent would gain 11.000 EUR, making it worthwhile for the real estate agent to go for the second option. But you can also imagine, that this much more complex pricing strategy is much harder to sell to a customer, even though it would be in the seller’s best interest.</p></li><li class="data-line-70" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Pricing Models of Belgian SaaS Companies</strong>: Various SaaS companies adopt different pricing models, including fixed monthly/user pricing, and volume-based pricing, often with discounts for annual payments, e.g.</p><div class="ulist data-line-71" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-71" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Odoo</strong><span class="Apple-converted-space"> </span>has a simple standard pricing of EUR 24.90 per user when paid monthly. When paid annually, you pay EUR 19.90 per user per month, meaning a discount of about 25%.</p></li><li class="data-line-72" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Cumul.io</strong>: they have chosen foramodelof3 fixed-prices, i.e. a basic package at 950 EUR/month, a professional at 1.950 EUR/month and an elite package at 2.950 EUR/month, with all of them paid on an annual basis.</p></li><li class="data-line-73" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Deliverect</strong>: they also work with a model of 3 fixed-prices, i.e. small at 79 EUR/month, medium at 119 EUR/month and large at 199 EUR/month. Additionally to the monthly cost, they also have a setup cost.</p></li><li class="data-line-74" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Yuki</strong>: they work with a combination of fixed-monthly price per user, with a volume-based price based on number of administered company numbers, i.e. a fixed-price of 375 EUR per month for the access to the portal and 9 EUR per month for each administered company number.</p></li><li class="data-line-75" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Teamleader</strong>: for companies with up to 20 employees, Teamleader proposes also 3 fixed-prices, i.e. Go at 60 EUR/month, Move at 78 EUR/month and Boost at 99 EUR/month with quarterly invoicing. When paid annually, a discount of about 20% is given. Interesting here is that these models include 2 users, but the pricing model is then volume-based per user, when adding more users (respectively 25, 33 and 45 EUR/month/extra user).</p></li></ul></div></li></ul></div><div class="paragraph data-line-77" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The above examples show that finding a fair, transparent, and straightforward pricing strategy remains an ongoing challenge. Businesses strive to maintain profitability while customers seek to maximize value. Balancing these interests requires a careful blend of innovation, psychological insights, and a deep understanding of market dynamics.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-8497449806408690432023-09-11T21:50:00.001+02:002023-09-11T21:50:34.948+02:00The UPI Phenomenon: From Zero to 10 Billion<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjgucpEcjYhdINd6dX3n_B3NTkJZO4hPNFxho8tm0Ld4plll3PUG4v97sL_aL4IqGyFbUxxp1zz6FlXHi2jVBZdXehQN9Jq6PhaWlRieDhUQATcwd1BjNwXlQtUYCNjrZoVMmqoiZvCZnh7znfgArpA4yBpM4tVnlOHktbhLampeTXeHeE5wiTu1gS0oIe/s1024/DALL%C2%B7E%202023-09-11%2013.29.58%20-%20An%20abstract%20painting%20of%20someone%20in%20India%20paying%20at%20a%20shop%20with%20mobile%20phone%20by%20scanning%20a%20QR%20code.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjgucpEcjYhdINd6dX3n_B3NTkJZO4hPNFxho8tm0Ld4plll3PUG4v97sL_aL4IqGyFbUxxp1zz6FlXHi2jVBZdXehQN9Jq6PhaWlRieDhUQATcwd1BjNwXlQtUYCNjrZoVMmqoiZvCZnh7znfgArpA4yBpM4tVnlOHktbhLampeTXeHeE5wiTu1gS0oIe/w400-h400/DALL%C2%B7E%202023-09-11%2013.29.58%20-%20An%20abstract%20painting%20of%20someone%20in%20India%20paying%20at%20a%20shop%20with%20mobile%20phone%20by%20scanning%20a%20QR%20code.png" width="400" /></a><br /><br /></div><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">If there is one Indian innovation that has grabbed</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">global headlines</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">, it is undoubtedly the instant payment system</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">UPI (Unified Payments Interface)</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">. In August 2023, monthly UPI transactions exceeded an astounding 10 billion, marking a remarkable milestone for India’s payments ecosystem. No wonder that UPI has not only revolutionized transactions in India but has also gained international recognition for its remarkable growth.</span><p></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Launched in 2016 by the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">National Payments Corporation of India (NPCI)</strong><span class="Apple-converted-space"> </span>in collaboration with 21 member banks, UPI quickly became popular among consumers and businesses. In just a few years, it achieved<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">remarkable milestones</strong>:</p></div><div class="ulist data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-13" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">By August 2023, UPI recorded an unprecedented<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">10.58 billion transactions</strong>, with an impressive 50% year-on-year growth.</p></li><li class="data-line-14" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">This volume represented approximately<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">190 billion euros</strong>.</p></li><li class="data-line-15" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">In July 2023, the UPI network connected<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">473 different banks</strong>.</p></li><li class="data-line-16" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">UPI is projected to achieve a staggering<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">1 billion daily transactions by 2026-27</strong>.</p></li><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The platform boasts over<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">300 million monthly active users</strong>.</p></li><li class="data-line-18" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">India now leads the global real-time payment market</strong>, surpassing China and South Korea.</p></li></ul></div><div class="paragraph data-line-20" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Those figures are more than impressive and unprecedented in the payment space. To understand its success it is important to understand its origin and operation.</p></div><div class="paragraph data-line-22" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">UPI<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions via mobile devices</strong>. End 2022 P2P transactions accounted for 49% in volume and 67% in value while P2M accounted for 34% in volume and 17% in value, but the growth of P2M is significantly higher in recent years than P2P transactions.</p></div><div class="paragraph data-line-24" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Notably, it is a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">free system</strong>, even for merchants. Unlike card payments with high interchange fees, the Indian government subsidizes banks to offer UPI services for free.<br style="box-sizing: border-box;" />In April 2023, NPCI introduced a 1.1% interchange fee, applicable only when using Prepaid Payment Instruments (e.g. wallets) for payments above a certain minimum amount. As 99% of UPI transactions originate from bank accounts, this fee won’t affect the majority of users.</p></div><div class="paragraph data-line-27" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">UPI enables<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">instant fund transfers</strong><span class="Apple-converted-space"> </span>through a user-friendly mobile interface, leveraging virtual payment addresses (VPAs) to link multiple bank accounts from different banks. Robust security measures, including mobile number verification, PIN authentication, and QR code validation, ensure safe transactions.</p></div><div class="paragraph data-line-29" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In UPI transactions,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">four key players</strong><span class="Apple-converted-space"> </span>are involved:</p></div><div class="ulist data-line-31" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Payer PSP</strong>: the UPI app used by the sender, responsible for onboarding customers, creating UPI IDs, and ensuring device security.</p></li><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Payee PSP</strong>: the UPI app of the receiver, which may differ from the payer’s app. This entity handles customer and merchant onboarding and facilitates money transfers.</p></li><li class="data-line-33" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Remitter Bank</strong>: the sender’s bank, responsible for managing and debiting bank accounts, as well as verifying UPI PINs.</p></li><li class="data-line-34" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Beneficiary Bank</strong>: the receiver’s bank, processing incoming credits and funds.</p></li></ul></div><div class="paragraph data-line-36" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Several UPI apps are available, but the top three, PhonePe (46%), Google Pay (35%), and PayTM (15%), hold over 95% of the market share.</p></div><div class="paragraph data-line-38" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Recent innovations include<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">UPI-enabled ATMs</strong><span class="Apple-converted-space"> </span>(see<span class="Apple-converted-space"> </span><a class="bare" href="https://www.linkedin.com/feed/update/urn:li:activity:7105113203340173313" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://www.linkedin.com/feed/update/urn:li:activity:7105113203340173313</a>for small demo), allowing cash withdrawals by scanning a QR code showed on the ATM machine with an UPI app.</p></div><div class="paragraph data-line-41" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">success of UPI</strong><span class="Apple-converted-space"> </span>can be attributed to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">several factors</strong>:</p></div><div class="ulist data-line-43" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-43" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Prior to UPI, digital payments, especially card payments, had<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">limited penetration in India</strong>, creating a ripe opportunity for innovation.</p></li><li class="data-line-44" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">India’s vast population</strong>, with over 1 billion inhabitants, presented enormous potential.</p></li><li class="data-line-45" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Strong government backing</strong><span class="Apple-converted-space"> </span>through promotion, incentives, and investments ensured rapid adoption. The advantages for the government are more than obvious, i.e. more transparency on money flows (resulting in less black money and less fraud), increased security (people don’t need to carry paper money anymore), faster money circulation which can significantly help to grow the economy and positioning India as a high-tech country.</p></li><li class="data-line-46" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">UPI’s<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">free model</strong>, supported by government subsidies to banks, encouraged widespread usage.</p></li></ul></div><div class="paragraph data-line-48" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In contrast to many government initiatives worldwide, UPI’s success can also be attributed to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">its speedy execution and the chosen model</strong>. The government provides substantial support, regulated by the Reserve Bank of India, while maintaining an open ecosystem with open-source APIs built on the Immediate Payment Service. This openness allows various vendors and initiatives to enhance user experiences. Additionally, the system operates in real-time, is<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">user-friendly, available 24/7, and highly reliable</strong>.</p></div><div class="paragraph data-line-50" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">UPI’s influence transcends India’s borders, leading to a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">global rollout in recent years</strong>. Bhutan, in July 2021, became the first country to embrace UPI through BHIM UPI. Other countries, including Oman, the United Arab Emirates, Malaysia, the United Kingdom, Singapore, Europe, Bahrain, and France, have also adopted UPI. Notably, Worldline SA’s signed MoU in October 2022 will enable European merchants' POS terminals to accept UPI payments via Worldline QR codes, starting with Belgium, the Netherlands, Luxembourg, and Switzerland.</p></div><div class="paragraph data-line-53" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">But UPI is<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">not the only success story of India in the financial space</strong>. India also developed a large-scale government backed<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">bio-metric digital identity system</strong>, called<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Aadhaar</strong><span class="Apple-converted-space"> </span>(also called UIDAI ID or UIDAI Number). It is a 12-digit unique identity number (based on biometric and demographic data) given by the Unique Identification Authority of India (UIDAI) that can be obtained voluntarily by the citizens of India and resident foreign nationals. It is the world’s largest biometric ID system. Certain UPI apps, like e.g. Google Pay, have also enabled Aadhaar-based identification, allowing to register for UPI using Aadhaar instead of via a debit card.<br style="box-sizing: border-box;" />At the same time, India has developed the concept of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Jan Dhan bank accounts</strong>, which are free bank accounts with no minimum deposit, aimed to improve financial inclusiveness within India. All those evolutions have given impressive results. It took India only six years to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">reach its financial inclusion target of 80%</strong><span class="Apple-converted-space"> </span>(41 years earlier than originally anticipated).</p></div><div class="paragraph data-line-57" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Comparing UPI’s success to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">European payment solutions</strong>, such as Payconiq (also a success, but nothing in comparison with UPI), highlights<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">key differences</strong>:</p></div><div class="ulist data-line-59" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-59" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">High card penetration</strong><span class="Apple-converted-space"> </span>in Europe has hindered digital payment adoption.</p></li><li class="data-line-60" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">European systems continue to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">rely on card networks</strong>, resulting in higher costs and delays.</p></li><li class="data-line-61" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Unlike UPI, European initiatives, including Payconiq, are private initiatives,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">lacking substantial government backing and incentives</strong>.</p></li></ul></div><div class="paragraph data-line-63" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Europe acknowledges the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">immense influence of Visa and MasterCard</strong>(both American companies) in the European payment landscape, while UPI in India, along with AliPay, WeChat in China, PIX in Brazil (another impressive success story, launched only in 2020 and already linked to 700 Brazilian financial institutions, processing 3.5 billion transactions per month and 150 million active users), and M-Pesa in Africa, offer formidable alternatives. Europe has local initiatives, but it lacks a robust native European platform. The<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">European Payment Initiative</strong><span class="Apple-converted-space"> </span>aimed to address this gap, but political issues and lobbying hampered progress. A relaunch occurred, involving the acquisition of iDEAL and Payconiq, but its success remains to be seen as it will depend on strong support from all European countries for adoption.<br style="box-sizing: border-box;" />Meanwhile, some countries, such as France, are exploring UPI as a potential payment system, underscoring the incredible accomplishment of UPI. However, it remains a missed opportunity for Europe not to develop its own digital payment system for such a vital economic instrument as digital payments.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-24590828085804143252023-08-28T21:44:00.003+02:002023-08-28T21:44:44.222+02:00Beyond the Surface: The concept of Underbanked in Developed countries<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEja9QEuyE1NJEIrVGDZ8q3VIE0HgB4h8i0faaI1DmnDhSV5_GNw_HVr4AJKinrcBtGC0d4RGXQvKLOPYDA5MNS0bKC2Qhv6lJ2uBjOmAwotEpk_FfMSBEdWNOrgTCL0lNy2T_SJoBLzbL4hIR6uuRBnDPGlghk9b38kMoY7DRQFWx4iGlJ5kwtKD5vIVIpu/s1024/DALL%C2%B7E%202023-08-28%2021.21.45.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEja9QEuyE1NJEIrVGDZ8q3VIE0HgB4h8i0faaI1DmnDhSV5_GNw_HVr4AJKinrcBtGC0d4RGXQvKLOPYDA5MNS0bKC2Qhv6lJ2uBjOmAwotEpk_FfMSBEdWNOrgTCL0lNy2T_SJoBLzbL4hIR6uuRBnDPGlghk9b38kMoY7DRQFWx4iGlJ5kwtKD5vIVIpu/w400-h400/DALL%C2%B7E%202023-08-28%2021.21.45.png" width="400" /></a></div><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><br /></span><p></p><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">When we think about the concept of</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">financial inclusion</strong><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">and more particularly about</span><span class="Apple-converted-space" style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">underbanked and unbanked populations</strong><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">, we often picture developing countries where access to banking services is limited. However, it might surprise you to learn that even in developed European countries, where banking services are abundant, a sizable portion of the population remains excluded, falling into the category of the "underbanked".</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The term "underbanked" refers to individuals or businesses that lack access to the financial services they require to help them manage their money and improve their economic well-being and this at a reasonable (acceptable) cost.<br style="box-sizing: border-box;" />This issue is more prevalent than commonly acknowledged and extends beyond financially disadvantaged individuals.</p></div><div class="paragraph data-line-14" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">There are<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">four primary causes</strong><span class="Apple-converted-space"> </span>of being underbanked:</p></div><div class="ulist data-line-16" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-16" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Niche Needs</strong>: Some customers have highly specific requirements, rendering the market too small to support dedicated services or products tailored to their needs.</p></li><li class="data-line-17" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Risk Considerations</strong>: Certain customers carry a level of financial risk that surpasses what financial institutions are willing to bear at an economically viable cost.</p></li><li class="data-line-18" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Compliance Complexity</strong>: The enormous burden of regulatory compliance, such as Anti-Money Laundering (AML) or Know Your Customer (KYC) requirements, can make it impractical for financial institutions to serve certain customers in a cost-effective manner. The enormous penalties associated with non-compliance only amplify this challenge.</p></li></ul></div><div class="paragraph data-line-20" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These exclusions have become more pronounced, driven by<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">increasingly stringent regulations</strong><span class="Apple-converted-space"> </span>and the fact that financial institutions are increasingly<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">monitoring the individual profitability of each customer</strong>. If a customer’s profitability is negative or falls below a certain threshold, institutions are more inclined to deny service. Moreover, when one financial institution makes the math, others will follow their example.</p></div><div class="paragraph data-line-22" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Let us have a look at<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">some illustrative examples</strong>:</p></div><div class="ulist data-line-24" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">People with a history of cancer or advanced age seeking life or medical insurance.</p></li><li class="data-line-25" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Individuals with a history of accidents or traffic fines pursuing car insurance.</p></li><li class="data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Residents of high-risk regions facing difficulties obtaining a car or bike insurance.</p></li><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Elderly who do not have sufficient digital skills to use all digital tools offered by the financial institution.</p></li><li class="data-line-28" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">People not having proper access to the internet or a smartphone, e.g. those who live in rural or remote areas.</p></li><li class="data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Politicians encountering regulatory or ethical barriers due to their status. This can be for regulatory reasons, as PEP (Politically Exposed Persons) individuals have severe additional KYC and AML requirements, but also for ethical/sustainability reasons, when it concerns politicians of more extreme parties. Cfr. the recent stories of Coutts (private bank owned by NatWest) closing the banking account of Nigel Farage or Jeremy Hunt being refused to open a banking account at Monzo.</p></li><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Freelancers and gig-workers grappling with income instability impacting their creditworthiness.</p></li><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Immigrants, regardless of education and income, facing credit history gaps.</p></li><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Individuals who defaulted on past credit struggling to access credit in the future.</p></li><li class="data-line-33" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Residents of high-risk countries or nations with additional regulatory demands, e.g. US citizens, facing additional regulatory efforts under the FATCA regulation, even when residing in another country.</p></li><li class="data-line-34" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Workers in certain industries such as sex work, pornography, tobacco, or soft drugs.</p></li><li class="data-line-35" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Individuals with criminal records</p></li><li class="data-line-36" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Companies with owners who faced a bankruptcy in the past</p></li><li class="data-line-37" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Businesses with intricate structures, making owner identification complex.</p></li><li class="data-line-38" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Companies with subsidiaries in precarious countries.</p></li><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Companies dealing in phone and gift cards.</p></li><li class="data-line-40" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">High-risk sectors like Horeca and construction prone to financial instability and money laundering.</p></li></ul></div><div class="paragraph data-line-42" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">These rejected customers could potentially form<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">a niche market for specialized financial institutions</strong>, yet turning a profit with this demographic is more difficult than with clients accepted by the mainstream institutions.</p></div><div class="paragraph data-line-44" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">If there is not a well-regulated alternative for those individuals and companies, they will be<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">compelled to operate outside the financial system</strong>, resorting to cryptocurrency, payday loans, or cash transactions. Such practices can trap them in cycles of debt and financial insecurity. Moreover, this circumvention hampers economic growth, social mobility, and inadvertently fosters money laundering and unreported labor – outcomes that contradict the intent of stricter regulations set by governments.</p></div><div class="paragraph data-line-46" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">This means financial exclusion can have<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">profound consequences for individuals and companies and society as a whole</strong>. Governments must therefore undertake necessary corrective measures, which could involve streamlining counterproductive and resource-intensive regulations, mandating financial institutions to serve a minimum percentage of "underserved" customers, or providing subsidies to institutions that effectively cater to the underbanked. Simultaneously, governments and financial entities should improve financial literacy by offering education and awareness programs.</p></div><div class="paragraph data-line-48" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Addressing this issue is paramount</strong><span class="Apple-converted-space"> </span>for fostering economic growth, minimizing disparities, and elevating the financial well-being of individuals and society as a whole.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-42538628335426590862023-08-10T12:20:00.003+02:002023-08-10T12:20:59.282+02:00Cracking the Code of IT Project Delivery: Lessons from 20 Years in the Field<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibgQekYyL7mSythKwrzDTVOdgKRcZN3hOzdemBSFv2TcG0xqF2QC01b3wB3efX7FvxZN5BxcUAquDQsIEsTkey8ByfqnlmyuXj5P1PZGDmlv_lnbbY9nhipCo31wyOdxOt1GGWAcZJ-0hLRrFE21ix-8i3uF01xedERS7nCBYBtcCPvHJj-0m8GlWs9AvC/s1024/CrackingTheCode.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1024" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibgQekYyL7mSythKwrzDTVOdgKRcZN3hOzdemBSFv2TcG0xqF2QC01b3wB3efX7FvxZN5BxcUAquDQsIEsTkey8ByfqnlmyuXj5P1PZGDmlv_lnbbY9nhipCo31wyOdxOt1GGWAcZJ-0hLRrFE21ix-8i3uF01xedERS7nCBYBtcCPvHJj-0m8GlWs9AvC/w400-h400/CrackingTheCode.png" width="400" /></a></div><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><br /></span><p></p><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">In August 2003, I started my professional career as an IT consultant at Accenture. This month marks my 20th work anniversary, a milestone that I celebrate with pride :-). Over these two decades, I have traversed the spectrum of IT project delivery, wearing various hats—developer, tester, business analyst, functional and technical analyst, all the way up to project management, test management, and solution architecture.</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Yet, despite this experience, I remain consistently amazed at the challenges inherent in delivering IT projects on time, within budget, and meeting the expected quality. While software development is very rational, IT projects are very human and often irrational endeavors. While many managers stare blindly at objective metrics like development mandays or number of lines of code produced, it is essential to recognize that the development effort forms only a fraction of the entire project endeavor. Typically, the stumbling blocks in IT projects do not stem from development but rather from other facets.</p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">How often have we not encountered projects for which the preparation phase takes months if not years, only to have the IT team being asked to implement the solution within a few months?</p></div><div class="paragraph data-line-15" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Once we realize and accept that IT projects cannot be nicely planned in a perfect Microsoft Project planning, because of their complexity, but even more because of all the human-factors involved in a project, we can better cope with it. Enter the philosophy of the Agile movement, i.e. advocating the continuous embracing of changes in vision, requirements and scope. Unfortunately, Agile consultants have taken over the movement by introducing all kinds of ceremonies and methodologies, which all aim to increase predictability. These slightly contradict the initial philosophy of the Agile movement. While some level of planning and forecasting remains necessary for budgeting resources, these should serve as guiding principles and not rigid as constraints.</p></div><div class="paragraph data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Drawing from the successful IT project I have witnessed, several key practices stand out for effective IT project delivery:</p></div><div class="ulist data-line-19" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-19" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Optimal Project Size</strong>: Strive for projects that are neither too small nor too large. Projects in the range of 300 to 600 man-days are in my opinion optimal, allowing for a dedicated team without overwhelming overhead.</p></li><li class="data-line-20" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Dedicated Team</strong>: A focused, dedicated team of a few individuals outperforms a larger team with fragmented commitments. This arrangement fosters accountability (everyone is accountable for the full delivery), teamwork, and focus (concentration).</p></li><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Hands-On Pragmatism</strong>: Team members should embrace well-defined roles while remaining open to assisting with other tasks when needed. Clear alignment points (like e.g. daily stand-ups) and communication channels are important, but excessive ceremonies can be counterproductive (instead favor asynchronous alignment where possible).</p></li><li class="data-line-22" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Iterative Approach</strong>: Begin with a high-level vision, blueprint, and architecture and take sufficient time to define this well, then progressively refine the details through iterative cycles.</p></li><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Short Feedback Loops</strong>: Maintain frequent communication between the product owner and developers throughout ticket design and testing phases. Too often, a ticket is put to "Blocked" and moved to the next sprint, because something is missing for a developer. Obviously, this should be avoided, as a good product owner should be able to rapidly complete anything missing in the ticket. Additionally it is highly productive if a developer asks an immediate quick validation from the product owner when he finished the story. This way most issues can immediately be identified and resolved, while everything is still fresh in the developer’s mind. Too often testing is only done at the end of the sprint, which means there is a delay of multiple days between the development and the validation of stories.</p></li></ul></div><div class="paragraph data-line-25" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">By adhering to these principles, you automatically end up with</p></div><div class="ulist data-line-27" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Small, dedicated teams of 4-6 individuals</strong><span class="Apple-converted-space"> </span>encompassing roles such as a product owner, a lead developer, and additional developers.</p></li><li class="data-line-28" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Projects that are well-contained and independent (autonomous)</strong>, lasting 4-6 months from initiation to delivery. This timeline includes 1-2 months for preparation and alignment on blueprints, followed by 3-5 months of execution. This means they should not be part of complex transformation programs, which bring too much overhead. Note that the fact that projects should not be part of larger programs does not mean the senior management should not have a clear medium to long term roadmap with several projects to execute in order to achieve a well-defined goal. The point I am making is that once a project is launched, it should work as autonomously as possible and only report on a 6-8 week basis to the Project Sponsor (e.g. in a Sponsor meeting or Steering Group).</p></li><li class="data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">A focus on<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">tangible deliverables deployed in production</strong>. Once delivered the team should support during maximum 1-2 months (after-care). If they continue on a next iteration of the same product, they can continue the support. If not, there should be a clear hand-over to a support organization, so that the product team is liberated to focus on the next project.</p></li><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">A<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">less strict application of Scrum methodology</strong>, as all the Scrum ceremonies create much overhead and reduce initiative, pragmatism and accountability. I am therefore a huge fan of working in Kanban style, with a prioritized back-log where everyone takes the story on top of the backlog. This approach does not mean you should not do a demo every 2 weeks, but it avoids this artificial pressure of fixing a number of stories in a sprint (while in reality there are always stories added or removed for particularly good reasons).</p></li></ul></div><div class="paragraph data-line-32" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Balance these best practices with awareness of potential pitfalls, like</p></div><div class="ulist data-line-34" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-34" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Foresee sufficient contingency</strong>: work is always underestimated and certain tasks are always missed. It is important to be aware of it and foresee sufficient contingency budget at any phase of the project. This budget should however only be used for unknown, missed and underestimated work and not for changes or for extra refactoring. In other words, stick to the scope, even if you still have contingency budget left. Most likely you will still use it later in the project. Usually (and unfortunately) the biggest surprises come near the end of the project when all the bits and pieces need to fit together.</p></li><li class="data-line-35" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Strive for simplicity over complexity and be aware of over-engineering</strong>, i.e.</p><div class="ulist data-line-36" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-36" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Product managers love to create a lot of features and complex business rules to manage all the exceptions. Continuous challenging is therefore needed to ensure that all logic and all features are really needed and create sufficient value;</p></li><li class="data-line-37" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Developers like to<span class="Apple-converted-space"> </span><em style="box-sizing: border-box; line-height: inherit;">re-engineer code</em><span class="Apple-converted-space"> </span>(the code of another developer is almost always poorly written) and build technical frameworks from scratch (often reinventing the wheel). It is important the technical lead or solution architect challenges continuously the team to see if existing internal assets cannot be reused or open-source tooling or libraries are not available. It is also important to make code as modular as possible, so that re-engineering can be done gradually (i.e. when adapting a module as part of a change, do a refactoring of just that module). This gives as additional advantage, that code does not need to be perfect. If the underlying assumption is that the module will likely be rewritten in the foreseeable future, you can focus on the actual functionality of the module and on non-functional requirements, like performance, stability and security.</p></li></ul></div></li><li class="data-line-38" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Remember the 80-20 rule</strong>: often the happy flow can be implemented quite quickly giving the feeling to the whole team that the finish is near. However implementing all the unhappy and exception scenarios is typically more work and always underestimated.</p></li><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Automate as much as possible</strong><span class="Apple-converted-space"> </span>and never underestimate maintenance. A task that is supposed to be done only once, will likely have to be redone a few weeks later, so try to automate it as much as possible from the first time you do the task.<br style="box-sizing: border-box;" />This also applies to testing. I am a major fan of testing automation, as it can save an enormous amount of time, not having to redo the same tests manually each time and avoiding time-consuming fixes in production due to regressions. However, it is important to be pragmatic. I have seen many projects where enormous efforts are spent on writing unit tests for all code, while the code can be much easier tested (and easier automated), when testing on a higher functional level. These types of higher level automated functional tests are also easier to understand for the product owner and are less prone to continuous maintenance (when minor changes to the code are made).</p></li></ul></div><div class="paragraph data-line-42" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Obviously as<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">software projects are irrational</strong>, almost every member of a project team will have a different vision of what should be done or not done to deliver the project in the best conceivable way. The above guidelines are therefore just my personal vision. In a project, each team member will have unique insights into achieving optimal project delivery. It is therefore crucial to find a way of working in which everyone feels well in the project team and improve continuously. This will give the biggest buy-in and the highest motivation to work on the project. Ultimately,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">motivated and skilled teams will always find a way to get the job done</strong>.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-85242301921373650282023-07-31T08:10:00.006+02:002023-08-10T12:20:39.957+02:00Is centralization inevitable when making DeFi available to the masses?<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaa5-cTOuEIKYD_HpTUHgkhr2X9ykwZBAG5vNNm2T48lVtkhfpieokpNZ7rs7Jqe3Ba63UdNYffSKpGMsaxr3fLkQy10TJq8pkvzuG4x_o-0J7y26sL_cBT3kYVPWqBxtbednK1e3YKEhHB04wjHaxSs5DW65axSuDWqStmQPkWvv8D2qVSNqIq0ojEySS/s512/DeFi.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="512" data-original-width="512" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaa5-cTOuEIKYD_HpTUHgkhr2X9ykwZBAG5vNNm2T48lVtkhfpieokpNZ7rs7Jqe3Ba63UdNYffSKpGMsaxr3fLkQy10TJq8pkvzuG4x_o-0J7y26sL_cBT3kYVPWqBxtbednK1e3YKEhHB04wjHaxSs5DW65axSuDWqStmQPkWvv8D2qVSNqIq0ojEySS/w400-h400/DeFi.jpeg" width="400" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><span style="background-color: white; letter-spacing: -0.17px;">In recent years, I have delved into the domains of<span class="Apple-converted-space"> </span></span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">DeFi (decentralized finance), Web3, blockchain, and cryptocurrencies</strong><span style="background-color: white; letter-spacing: -0.17px;">, building a solid understanding (although far from being an expert) of their underlying concepts and technologies. Nonetheless, I continue to grapple with the business and economic aspects surrounding these innovations. Surprisingly, there are very few articles focusing on the economics of DeFi and blockchain businesses and this in sheer contrast to the enormous amount of content focusing on the technology and the innovative and disruptive nature of this technology.</span></p><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">As an engineer, I find the technology behind permissionless decentralized blockchains and smart contracts immensely captivating. However, as a business and functional analyst, I struggle to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">discern the business dynamics</strong>: the viability of the business case, the definition of customer support models and the customer journeys both in happy and unhappy flows. Unfortunately, these critical aspects seem to receive inadequate attention within the Blockchain and DeFi community.</p><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><span style="font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">In the end these questions do not come from the underlying blockchain technology, but rather from the</span><span class="Apple-converted-space" style="font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"> </span><strong style="box-sizing: border-box; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.005em; line-height: inherit;">discussion between decentralized and centralized finance</strong><span style="font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">. The core distinctive feature of Web3 is also the decentralization of business models.</span></p></div><div class="paragraph data-line-13" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">The central question, persistently unanswered in discussions on DeFi and Blockchain, revolves around the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">viability of decentralized models within our current capitalist framework</strong>, which heavily relies on centralized entities that generate profit by offering services while assuming responsibility, risk, and accountability.</p></div><div class="paragraph data-line-16" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Several instances exemplify this<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">tension between decentralization and centralization</strong><span class="Apple-converted-space"> </span>within the crypto space:</p></div><div class="ulist data-line-18" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-18" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Bitcoin</strong>: originally intended as a fully decentralized creation governed by the masses, Bitcoin has succumbed to the dominance of a few centralized players (crypto-miners and exchanges), which are so dominant that they can also influence the future of Bitcoin.</p></li><li class="data-line-19" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Ethereum</strong>: the shift from "Proof of Work" to "Proof of Stake" reduces costs and ecological impact but raises concerns of increased centralization.</p></li><li class="data-line-20" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">NFTs</strong>: initially a purely virtual concept, NFTs have evolved to include extra services and perks outside the blockchain. Organizing these physical world benefits necessitates involvement from centralized companies, eroding the decentralization aspect.</p></li><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Stable Coins</strong>: while offering a lot of potential for mainstream adoption and direct payments, stable coins introduce a level of centralization, as they require an underlying issuer to maintain reserves in fiat currency, ensuring the stability of the coin.</p></li><li class="data-line-22" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Crypto-Exchanges</strong>: these platforms create significant centralization by providing centralized management, facilitating fiat-to-crypto conversions (via off- and on-ramping), and offering virtual wallets for private key storage.</p></li><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Open-Source Projects</strong>: even projects with open-source code often rely on a single company or a handful of entities for development. These companies are often rewarded through Initial Coin Offerings (ICOs), but those introduce clearly also a strong conflict of interest (and centralization).</p></li></ul></div><div class="paragraph data-line-25" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Currently, the crypto community remains relatively closed and niche, comprising individuals with technical expertise and an anti-establishment mindset. However, as<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">crypto becomes more mainstream</strong>, attracting larger financial institutions and less tech-savvy users, the gravitational pull toward centralization intensifies. This shift is driven by various factors, including</p></div><div class="ulist data-line-27" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-27" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Regulators</strong><span class="Apple-converted-space"> </span>need to have a party to talk to and regulators will impose more and more restrictions (e.g. on KYC or AML) when crypto become more mainstream (cfr. MiCA directive in EU)</p></li><li class="data-line-28" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Lobbying</strong><span class="Apple-converted-space"> </span>requires a central authority</p></li><li class="data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Users (especially companies) want to have a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">juridical agreement</strong>with a party, so they can take legal action in case of issues</p></li><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Users want to be able to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">call someone in case of questions/support</strong></p></li><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Users need much<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">better and more user-friendly interfaces</strong>, which require much more design and coding (which needs again to be organized, most likely by a central entity)</p></li><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Marketing</strong><span class="Apple-converted-space"> </span>is needed to convince users to use the new platform (e.g. take away fear about security & fraud issues)</p></li></ul></div><div class="paragraph data-line-34" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In the end<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">centralization allows more simplicity</strong>, especially for users with little technical knowledge.<br style="box-sizing: border-box;" />And if<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">centralization is ultimately inevitable</strong>, for reasons which are non technical, the question can be raised if blockchain is then still the best technological choice (and not a centralized database with certain encryption and non-permutation capabilities on top of it).<br style="box-sizing: border-box;" />Some people argue that blockchain can form an alternative ecosystem alongside traditional systems, as innovating within the existing payment ecosystem is too challenging due to dependencies and technical constraints. While a valid argument, it seems somewhat contrived, as a more efficient and modern alternative ecosystem could also be built using centralized technologies with added encryption and non-permutation capabilities.</p></div><div class="paragraph data-line-38" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Blockchain technology is<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">still searching for widespread product market fit</strong>. In developed countries, cryptocurrencies serving as investment assets, represent the only use case with substantial market adoption. Other use cases, often leveraging blockchain in traditional platforms, tend to be less user-friendly and fail to provide significant added value for the average user. Blockchain enthusiasts argue that security, privacy, and decentralization provide sufficient value in themselves, but these qualities are challenging to grasp and quantify for most users.<br style="box-sizing: border-box;" />In emerging countries, the situation may be more promising due to the lack of banking infrastructure, a substantial unbanked population, untrustworthy governments, high inflation rates and high transaction costs.</p></div><div class="paragraph data-line-41" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">As the crypto world evolves and attracts substantial investment from business experts, it is essential to acknowledge potential blind spots and engage in discussions that move beyond the ideological (almost religious)<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">debate of centralized vs. decentralized</strong>. Instead, the focus should be on how mainstream users can derive value from DeFi and Web3 and how these models can be organized to address unhappy scenarios (e.g. a user having a question or something goes wrong). By addressing these concerns and striking a balance between decentralization and centralization, the crypto community can pave the way for broader adoption and integration within the traditional financial system.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-29377475088972754582023-07-14T10:26:00.007+02:002023-07-14T10:27:25.686+02:00Agile Realities: Adapting Organizational Models to reality<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3iS4QT4uCcatGk_d0MLUh7EOFVxAz3SQ5q6xmYNx5l0_cZ8686E_BS9YCPY8gQMRCwtxmyx34n0bHEJ9Q4msOwWT_mSsH0NeHmheG0olrd0oZXCw1P6adGh-HpnQjLG7OoeFX8b8y9c9zBfLKZfnyWtj3IiXipbdfmhQE39cnDhg2gpZSzS1jCE1jIUHz/s3702/ProductManagement.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2128" data-original-width="3702" height="230" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3iS4QT4uCcatGk_d0MLUh7EOFVxAz3SQ5q6xmYNx5l0_cZ8686E_BS9YCPY8gQMRCwtxmyx34n0bHEJ9Q4msOwWT_mSsH0NeHmheG0olrd0oZXCw1P6adGh-HpnQjLG7OoeFX8b8y9c9zBfLKZfnyWtj3IiXipbdfmhQE39cnDhg2gpZSzS1jCE1jIUHz/w400-h230/ProductManagement.png" width="400" /></a></div><p></p><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">In my work, I have been confronted a lot with the crucial question of how to establish an effective connection between business and IT. In the pre-Agile era, this responsibility typically fell on the Business Analyst, who would hand over business requirements (needs) to the Functional Analyst for conversion into a functional design (solution). However, even then, discussions revolved around:</span></p><div class="ulist data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-11" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Should a business analyst be<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">part of the business or IT team</strong>?</p></li><li class="data-line-12" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Where are the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">boundaries</strong><span class="Apple-converted-space"> </span>of a Business Analyst versus a Functional Analyst, considering cost and technical restrictions that may challenge certain business needs.</p></li><li class="data-line-13" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Who takes care of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">small enhancements</strong><span class="Apple-converted-space"> </span>for which there is no need of a detailed and complex analysis and process?</p></li><li class="data-line-14" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Who makes the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">bridge with the end-users</strong><span class="Apple-converted-space"> </span>and all non-IT activities (like marketing roll-out, process adaptations…)? To fulfill these requirements, organizations often introduced additional roles such as Process Analysts, Business Owners, or Business Application Owners.</p></li><li class="data-line-15" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">…</p></li></ul></div><div class="paragraph data-line-17" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">With the rise of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Agile methodology</strong>, the traditional roles of Business Analyst and Functional Analyst have given way to new positions like<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Product Managers and Product Owners</strong>. Although the way of working has evolved and these new roles come with different responsibilities, the pain points and discussions remain the same as before.</p></div><div class="paragraph data-line-19" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In these discussions everyone seems to have a proposal for the perfect organizational model. However, in reality, organizational models are always a compromise, depending on the skills of individuals and the nature of the work. Considerations include:</p></div><div class="ulist data-line-21" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Project Size</strong>: the organization for a 1000 manday project differs from a small 2 manday evolution.</p></li><li class="data-line-22" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Project Type</strong>: a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">technical project</strong><span class="Apple-converted-space"> </span>(e.g. refactoring or setup of new monitoring system) requires a different organization than a business project. And even<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">2 business projects can be very different</strong>. E.g. a project which is very UI oriented requires a different approach than a project, where a back-end workflow is modified, despite both having significant business impacts.</p></li><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Existing Logic vs. Building from Scratch</strong>: projects that adapt existing logic/code are organized differently from those that involve creating new applications or features. Similarly, implementing a custom-built application varies significantly from implementing a packaged solution.</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Programming Approaches</strong>: Low-code/No-code applications enable developers to work closely with the business and iterate more rapidly, unlike traditional programming languages. AI/ML projects also follow a distinct approach, even though they ultimately result in algorithms.</p></li><li class="data-line-25" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Perspective and experience of individuals¨</strong>: the background and experience of the persons involved in the project will also impact the approach. Technical experts with deep application knowledge approach the work differently from junior product managers or owners with a stronger business orientation.</p></li></ul></div><div class="paragraph data-line-28" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In essence, context is paramount, and<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">there is no one-size-fits-all rule</strong>. Nevertheless, I often encounter posts making absolute statements such as:</p></div><div class="ulist data-line-30" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The Scrum Master and Product Owner must be different individuals.</p></li><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Product Manager and Product Owner roles cannot be separate.</p></li><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Product Owners should not impose solutions while defining stories.</p></li><li class="data-line-33" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Product Owners should not be part of the Scrum team.</p></li><li class="data-line-34" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Development tickets should be written in the form of user stories in the format "As a [persona], I [want to], [so that]".</p></li></ul></div><div class="paragraph data-line-36" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">While these statements hold merit, they excel in ideal and theoretical scenarios where</p></div><div class="ulist data-line-38" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-38" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The scrum team is<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">only occupied with 1 project</strong></p></li><li class="data-line-39" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The project is<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">rather large, but not too big either</strong><span class="Apple-converted-space"> </span>(around 100-200 mandays)</p></li><li class="data-line-40" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The project will result in a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">new custom-built</strong><span class="Apple-converted-space"> </span>application</p></li><li class="data-line-41" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The application is<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">strongly end-user facing</strong></p></li></ul></div><div class="paragraph data-line-43" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">This situation rarely exists in reality, i.e. in reality IT teams have to deal with a mix of</p></div><div class="ulist data-line-45" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-45" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Small and large projects</p></li><li class="data-line-46" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Back-end and user-facing work</p></li><li class="data-line-47" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Changing priorities and budgets</p></li><li class="data-line-48" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Evolving teams (people joining/leaving the company)</p></li><li class="data-line-49" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Different profiles (full-stack engineers versus front-end/back-end engineers, junior versus senior profiles, people who already know well the application stack versus people who are discovering the application stack…)</p></li><li class="data-line-50" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">…</p></li></ul></div><div class="paragraph data-line-52" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">To address these complexities, each Scrum team must find the best organizational approach for their specific context and continuously adapt and improve based on lessons learned.</p></div><div class="paragraph data-line-54" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Some key considerations include:</p></div><div class="ulist data-line-56" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-56" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Keeping Scrum teams<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">relatively small</strong><span class="Apple-converted-space"> </span>(following the "two-pizza team rule").</p></li><li class="data-line-57" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Granting teams a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">high degree of autonomy</strong>.</p></li><li class="data-line-58" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Making teams<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">accountable</strong><span class="Apple-converted-space"> </span>for end-to-end outcomes, embracing both the challenges and rewards.</p></li><li class="data-line-59" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Establishing<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">a set of guiding principles</strong><span class="Apple-converted-space"> </span>(5-10 golden rules) that cannot be compromised.</p></li></ul></div><div class="paragraph data-line-61" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">This combined with a good dose of<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">pragmatism and a hands-on approach</strong>, will propel your team a lot further than any rigid theoretical framework imposed in many organizations.</p></div><div class="paragraph data-line-63" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Check out all my blogs on<span class="Apple-converted-space"> </span><a class="bare" href="https://bankloch.blogspot.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bankloch.blogspot.com/</a></em></p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-44713681569666301132023-07-06T21:46:00.000+02:002023-07-06T21:46:48.002+02:00The Rise of Embedded Finance: How SaaS Companies Are Transforming into Niche Neo-Banks<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmpj66g6ZnD0nDDRxSk81LfziX3-8ncBDT2Y5cnzlSpAfa4AtF4kwzJQPUu65B9sfTyXrTbvVPGMQx6csrf5Up6lTBaWXBZtI8R5byECcHg04-qeLnV14kuXAVj6kC5hQQVnbi88Wa4ajILjZu1Eo5YrxKLicG-7ZL8Lp3_45hHAGfpw5b7qB1wEov2PnB/s2000/1608656251-GettyImages-1168365118.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1333" data-original-width="2000" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmpj66g6ZnD0nDDRxSk81LfziX3-8ncBDT2Y5cnzlSpAfa4AtF4kwzJQPUu65B9sfTyXrTbvVPGMQx6csrf5Up6lTBaWXBZtI8R5byECcHg04-qeLnV14kuXAVj6kC5hQQVnbi88Wa4ajILjZu1Eo5YrxKLicG-7ZL8Lp3_45hHAGfpw5b7qB1wEov2PnB/w400-h266/1608656251-GettyImages-1168365118.jpg" width="400" /></a></div><br /><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">In my blog post "</span><em style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: inherit;">The financial sector boundaries are blurring</em><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">" (</span><a class="bare" href="https://bankloch.blogspot.com/2022/11/the-financial-sector-boundaries-are.html" style="background-image: none; box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: #1d4b8f; cursor: pointer; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: inherit; outline: 0px;">https://bankloch.blogspot.com/2022/11/the-financial-sector-boundaries-are.html</a><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">) I explored the evolution where traditional financial companies are expanding their offerings with adjacent services, while companies from other sectors are also offering more and more financial services. As a result, the boundaries of the financial sector are blurring.</span></p><div class="paragraph data-line-9" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Although this blog focused primarily on large players striving to become super-apps (or semi super-apps) and providing end-to-end journeys, there is an equally fascinating narrative to explore about<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">SaaS vendors offering solutions for a niche market</strong>.</p></div><div class="paragraph data-line-12" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">In my other blog "<em style="box-sizing: border-box; line-height: inherit;">Every neobank its own niche</em>" (<a class="bare" href="https://bankloch.blogspot.com/2022/10/every-neobank-its-own-niche.html" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bankloch.blogspot.com/2022/10/every-neobank-its-own-niche.html</a>), I discussed how certain<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">neo-banks</strong><span class="Apple-converted-space"> </span>concentrate their efforts on specific customer segments. This deliberate focus enables them to provide highly targeted value-added services to their target audience. As a result, these niche neo-banks naturally extend their offerings to include adjacent services that deliver additional value to their customer base, giving them a competitive advantage on universal banks.</p></div><div class="paragraph data-line-14" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">On the other end of the spectrum, we have<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">SaaS (software technology) companies</strong>, that offer specialized platforms for specific professions or activities, such as platforms for online courses, eCommerce, 2nd hand goods, catering services, charity services, accounting information exchange… Typically, these SaaS companies begin with a specific feature and gradually evolve into comprehensive Enterprise Resource Planning (ERP) systems tailored for that specific profession or activity, primarily serving small businesses.</p></div><div class="paragraph data-line-16" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Once these SaaS companies achieve a certain level of market penetration and establish a comprehensive service offering,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">a logical next step is to initiate and accept payments</strong>, as the system is ideally positioned for this, i.e.</p></div><div class="ulist data-line-18" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-18" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Having the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">incoming invoices</strong><span class="Apple-converted-space"> </span>in the system allows to have a good view of all costs. Once those invoices are in, it is only logical, customers will ask to be able to pay them (e.g. via PSD2 PISP integration).</p></li><li class="data-line-19" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">As the system will manage all professional activities, it is very logical, it also<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">generates the invoices</strong>, but then a logical next step is that those invoices can be immediately paid and that the payment status is tracked.</p></li></ul></div><div class="paragraph data-line-21" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">This means<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">payments get integrated in the platform</strong>.</p></div><div class="paragraph data-line-23" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Following this integration, the natural progression involves<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">keeping funds</strong><span class="Apple-converted-space"> </span>directly within the system instead of relying on traditional bank accounts. By having their own bank accounts, these SaaS companies can streamline customer onboarding processes and analyze incoming and outgoing payments more efficiently. This pivotal moment marks the SaaS company’s<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">transition into a banking role</strong>. However, since most SaaS companies are not inclined to obtain banking licenses, they typically achieve this through<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Banking as a Service (BaaS)</strong><span class="Apple-converted-space"> </span>offerings. In simple terms, the BaaS model empowers SaaS companies to provide banking services without the need to become licensed banks themselves.</p></div><div class="paragraph data-line-25" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Finally, once funds are stored in these accounts, users naturally seek<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">ways to consume them</strong>. This necessitates the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">issuance of payment cards</strong>. Moreover, leveraging the detailed business information available, the SaaS company can offer highly competitive and tailored<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">financing products</strong><span class="Apple-converted-space"> </span>that other entities cannot match. With these pieces in place, the SaaS company effectively transforms into a comprehensive<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">niche neo-bank</strong>.</p></div><div class="paragraph data-line-27" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Let us explore a few examples of such SaaS companies:</p></div><div class="ulist data-line-29" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">One prominent example is<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Shopify</strong>, which is offering more and more financial services for their eCommerce customers, which have their webshop built on top of Shopify. Example services are Shopify Balance (a platform that gives merchants an account in which they can manage their cash flow, pay bills and track expenses) or Shop Pay Installments (a buy-now, pay-later option).</p></li><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Uber</strong>, originally a ride-hailing platform, now offers financial services not only for taxi payments but also for the benefit of taxi drivers. Offerings such as Uber Cash and Uber Pro Card exemplify this.</p></li><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Accounting platforms</strong><span class="Apple-converted-space"> </span>play a crucial role in facilitating communication between accountants and their customers. Initially, their focus was on enabling the exchange of invoices and expense notes with accountants and providing various financial reports and insights generated by the accountant. A natural evolution for these platforms is to facilitate invoice payments (e.g., via PSD2), automate the retrieval of bank account information for matching cash movements with invoices and expense notes, and exchange real-time financial data with banks to expedite credit origination.</p></li></ul></div><div class="paragraph data-line-33" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Clearly the financial frontiers are blurring, as financial services become deeply<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">embedded into the customer journey</strong>. Moreover, banking services are increasingly accessible to companies of all types, thanks to partnerships with BaaS providers.</p></div><p><em style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: inherit;">Check out all my blogs on<span class="Apple-converted-space"> </span><a class="bare" href="https://bankloch.blogspot.com/" style="background-image: none; box-sizing: border-box; color: #2156a5; line-height: inherit;">https://bankloch.blogspot.com/</a></em> </p>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0tag:blogger.com,1999:blog-1263576023865631736.post-18464610109702171742023-06-26T11:03:00.006+02:002023-06-26T11:04:01.987+02:00Safeguarding Your Savings: Embracing Term Deposits for Stability<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQ_IrD8cU_tSiyM3RFUE6HNfE74Qo8xXPsqSSMkVauOE2-zNocbIbDMpa3OUMmPpP_zyYt0dpUL6uTMfamBe7I8jUpLG9OZv0ASBm1MhpJ5Imx26JglgxKNaXtLs_Aaw5qdWwzatqNmrMDq89onCpnpRiJo9QCJCs4qbB7LqTH2gje1Bv_O-lqakCxNctl/s1200/TermDeposits.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="667" data-original-width="1200" height="223" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQ_IrD8cU_tSiyM3RFUE6HNfE74Qo8xXPsqSSMkVauOE2-zNocbIbDMpa3OUMmPpP_zyYt0dpUL6uTMfamBe7I8jUpLG9OZv0ASBm1MhpJ5Imx26JglgxKNaXtLs_Aaw5qdWwzatqNmrMDq89onCpnpRiJo9QCJCs4qbB7LqTH2gje1Bv_O-lqakCxNctl/w400-h223/TermDeposits.jpg" width="400" /></a></div><br /><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;"><br /></span><p></p><p><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">In my previous blog, "</span><em style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: inherit;">In the Blink of an Eye: How the Digital Age Intensifies the Risk of Bank Runs</em><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">" (</span><a class="bare" href="https://bankloch.blogspot.com/2023/06/in-blink-of-eye-how-digital-age.html" style="background-image: none; box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: #2156a5; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: inherit;">https://bankloch.blogspot.com/2023/06/in-blink-of-eye-how-digital-age.html</a><span style="caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em;">) I discussed the increased risk of rapid bank runs in today’s digital age, particularly when customers hold substantial deposits in current and saving accounts, as they can be withdrawn almost instantly.</span></p><div class="paragraph data-line-11" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Obviously<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">reject deposits is not a commercially viable option for banks</strong>. Therefore banks have to find a convenient way to convert excess (saving) deposits into alternative financial products, reducing the ease of immediate withdrawal and mitigating the risk of bank runs.<br style="box-sizing: border-box;" />This strategy is not only beneficial for the bank (as it reduces the speed of withdrawals), but also for the customer, who can profit from higher interest rates.</p></div><div class="paragraph data-line-14" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Due to the<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">convenience of saving accounts</strong>, many customers are hesitant to move their savings into other financial products. While investing in securities is of course still the best approach to put aside assets (for the long-term), this is still a big step for many customers.<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">Term deposits can be the perfect intermediary solution</strong><span class="Apple-converted-space"> </span>(positioned between a saving account and investments), as it remains a product which is offered directly by the bank, is very flexible (both in terms of invested amount and duration) and has also a low-risk profile.</p></div><div class="paragraph data-line-16" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Unfortunately, term deposits are not as easily accessible as saving accounts in most banks. One potential solution is to relocate those products from "Investments" domain (where typically securities reside) to the "Daily Banking" domain (alongside the current and saving accounts).</p></div><div class="paragraph data-line-18" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Consider the following setup:</p></div><div class="ulist data-line-20" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 1.25em 1.5em; padding: 0px;"><li class="data-line-20" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">On your saving account or the aggregation of your different saving accounts (with possibility to select which saving accounts to include or not in the aggregation), you can set a<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">limit above which funds are automatically moved to a term deposit</strong>. Customers can define this limit manually or the bank can offer some standard settings such as six times your monthly expenses (a guideline for maintaining liquid assets) or the government-backed depository insurance amount (e.g. 100.000 EUR in most European countries).</p></li><li class="data-line-21" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">Once this limit is depassed,<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">automatically a proposal</strong><span class="Apple-converted-space"> </span>to transfer the excess funds in a term deposit is generated. To avoid excessive order generations, certain minimum thresholds (e.g., waiting until a minimum excess amount of 500 EUR is reached) can be established.</p></li><li class="data-line-22" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The term deposit<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">orders are pre-filled</strong><span class="Apple-converted-space"> </span>with the following information:</p><div class="ulist data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-23" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Amount</em>: the excess amount</p></li><li class="data-line-24" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Feeding account</em><span class="Apple-converted-space"> </span>(and also account to return money to): the saving account. Note that if the limit is set on the aggregation of multiple saving accounts, it is advisable to create multiple term deposit orders, ensuring that each amount is taken (and returned upon maturity) from the right saving account. This linkage with the source saving account is crucial.<br style="box-sizing: border-box;" />Currently, most banks do not offer this functionality, making proper term deposit management challenging. For instance, if I am saving for a car, I would create a dedicated saving account for that purpose. When part of these savings is placed in a term deposit, it is important to track how much has already been saved for the car.</p></li><li class="data-line-26" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;"><em style="box-sizing: border-box; line-height: inherit;">Term deposit selection</em>: term deposit orders should be generated to achieve an equal yearly liquidity flow. For example invest in a 1, 2, 3, 4…, 10-year long term deposit initially. Once this 1 to 10-year structure is established, any new excess funds from year X can be invested in a new 10-year term deposit, generating cash flow for year 10+X. By consistently adding a 10-year deposit, you can benefit from a higher interest rate (assuming a normal yield curve with higher rates for longer-term investments), while still having an annual cash-out for necessary liquidity.<br style="box-sizing: border-box;" />Obviously users should have the option to define the target amount to be freed each year and set the maximum duration of a term deposit. These parameters could also be dynamically adjusted based on past excess amounts and the current yield curve.</p></li></ul></div></li><li class="data-line-29" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">When<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">visualizing a saving account</strong>, it should be possible to<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">display all associated term deposits</strong>, including</p><div class="ulist data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px 0px 0.625em; padding: 0px;"><ul style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1em; line-height: 1.6; list-style-position: outside; margin: 0px 0px 0px 1.25em; padding: 0px;"><li class="data-line-30" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">The<span class="Apple-converted-space"> </span><em style="box-sizing: border-box; line-height: inherit;">total amount</em></p></li><li class="data-line-31" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">An indication<span class="Apple-converted-space"> </span><em style="box-sizing: border-box; line-height: inherit;">how much money can be liberated immediately at no cost</em><span class="Apple-converted-space"> </span>and what would be the penalty to liberate everything immediately.</p></li><li class="data-line-32" style="box-sizing: border-box; direction: ltr; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 0.625em; padding: 0px; text-rendering: optimizelegibility;">This<span class="Apple-converted-space"> </span><em style="box-sizing: border-box; line-height: inherit;">indication</em><span class="Apple-converted-space"> </span>can also be provided for different time periods, such as a<span class="Apple-converted-space"> </span><em style="box-sizing: border-box; line-height: inherit;">1, 2, 3… year period</em>.</p></li></ul></div></li></ul></div><div class="paragraph data-line-34" style="box-sizing: border-box; caret-color: rgba(0, 0, 0, 0.8); color: rgba(0, 0, 0, 0.8); direction: ltr; font-family: "Noto Serif", "DejaVu Serif", serif; font-size: 16px; margin: 0px; padding: 0px;"><p style="box-sizing: border-box; direction: ltr; font-family: inherit; font-size: 1.0625rem; letter-spacing: -0.01em; line-height: 1.6; margin: 0px 0px 1.25rem; padding: 0px; text-rendering: optimizelegibility;">Implementing such a setup would<span class="Apple-converted-space"> </span><strong style="box-sizing: border-box; letter-spacing: -0.005em; line-height: inherit;">give term deposits a level of convenience comparable to savings accounts</strong><span class="Apple-converted-space"> </span>and would make this product more accessible to individuals who currently keep all their funds in savings accounts. Moreover, it serves as a proactive response to the increased risk of bank runs, as discussed in my previous blog.</p></div>Joris Lochyhttp://www.blogger.com/profile/10864430397486967313noreply@blogger.com0