Dubai And Abu Dhabi: Fintech Capitals Of The Future Show Us How It’s Done

Sergio Barbosa, CEO, FutureBank


Co-founder and CIO of enterprise software development house, Global Kinetic, Sergio directly heads its open banking platform, FutureBank. A skilled software engineer, innovative product developer, and keen business strategist, he has participated in several notable fintech milestones, including building the southern hemisphere’s first digital-only bank all the way back in 2002.

I’ve wanted to blog about Dubai for a while now, and not only because the Cape winter has me thinking of those +40°C temperatures almost longingly. I was recently in the United Arab Emirates (UAE) for Seamless Middle East 2022.

We have experience in the region. We’ve been working with a Saudi Arabian bank for a while and are actively exploring opportunities with several other financial institutions, as well as potential fintech partners in the wider GCC. Banks there are highly competitive, deeply engaged with the latest technology, and faced with several of the same challenges that their peers struggle with in other regions. Our conversations with them are always animated, with legacy core systems a frequent topic.

Global Kinetic’s banking platform, FutureBank, has resonated faster there than in some of our other markets, where the promise of open banking was perhaps not grasped so fast. As CEO of FutureBank, I’m bullish about doing business in Dubai and its environs.

Different boom, same town

But, really, who wouldn’t be? The UAE’s economy continues to mature at pace, with tech innovation and business increasingly superseding tourism and real estate, much less oil, as the country's primary focus for future development. Sheik Hamdan bin Mohammed, the Crown Prince of Dubai, recently referred to the emirate as “the city of entrepreneurs”, giving some insight into the sources of wealth he and others envisage will be drivers of future success. (The UAE’s nearest fintech rival, Israel, is often called “the start-up nation”.)

The UAE’s fintech takeoff wasn’t an organic phenomenon. The sovereign wealth funds of Dubai and its brother emirate Abu Dhabi have each invested hundreds of millions of dollars in fintech over the last few years, vying – at least, according to some people I’ve spoken to – to expand their already dominant positions in the Middle East, Africa, and South Asia and, perhaps, eventually take the Asian crown from Singapore.

Both emirates established hugely successful finance-focused special economic zones back in 2017, the Dubai International Finance Centre (DIFC) and the Abu Dhabi Global Market (ADGM), which are in part tasked with accelerating growth of the regional fintech sector. A couple of months ago, Dubai launched a +R1729.81-million fund – the Venture Capital Fund for Start-ups – to support new projects and “promote the economic growth of the emirate and consolidate its position as a global center for [fintech] and innovation in investment capital”.

Abu Dhabi recently set up a similar fund in partnership with Jordan and its global investment-focused tech ecosystem, Hub71, has welcomed over a hundred startups from 25 countries, active in 18 industries including fintech, so far. Its sovereign wealth fund, the Abu Dhabi Investment Authority, announced on 1 June that it had made an investment in the fintech Acrisure, boosting its value to a whopping R397.86 billion.

Catalysts for growth and healthy competition

Most important elements in generating a competitive fintech environment

Twice a year, Long Finance and Financial Centre Futures survey stakeholders on the most important ingredients for fintech hub success. Access to finance, ICT infrastructure, and an ecosystem of innovation came up tops in their most recent report.

Source: The Global Financial Centres Index 31; March 2022

Venture capital is pouring in following the heavy government investment in the ecosystem, but funding is only part of the reason why Dubai and Abu Dhabi are doing so well in fintech. The UAE’s free economic zones provide the benefit of business-friendly regulatory regimes, as well as highly attractive tax and foreign exchange rules. Does zero tax on business income or profits sound good to you? What about full foreign ownership and free repatriation of all capital and profits? You might also enjoy the complete waiver on personal income tax and low capital gains taxes.

There’s also excellent digital infrastructure and a strong focus on emerging technologies (Dubai wants to be the first “blockchain-powered city”); awesome tech community collaboration and innovation programs (the DIFC Innovation Hub has nearly 600 innovation and tech companies, ranging from start-ups to unicorns); valuable support from traditional financial institutions like the Abu Dhabi Islamic Bank and Mashreq; large pools of international talent, owing to the quality of life, which beats many of the emirates’ rivals. The Dubai Chamber of Digital Economy, founded a year ago, proposes policies aimed at nurturing the digital economy and helps to plan and direct efforts to attract businesses, investment, and talent.

Going somewhere very, very fast

The Central Bank of the UAE also has a FinTech Office, established in 2020. Its “strategic ambition journey” gives December 2023 as the point by which it hopes Dubai is a top-five global fintech hub. That doesn’t seem to me like ambition out of touch with reality. Not when you’ve lined things up the way Dubai and Abu Dhabi have. You can feel the excitement in Dubai when it comes to fintech, and there is no doubt a similar vibe in Abu Dhabi.

If you’re considering the next phase of your own strategic ambition journey, choosing between these two cities for regional headquarters could be hard. But perhaps not as hard as you’d think. They’re just 140 km removed, less than an hour-and-a-half’s drive apart – a taxi ride will cost you about 280 dirhams (roughly R1314.66 or 1200 rand). And soon, they could be linked by hyperloop, which would cut travel time to just 12 minutes, sucking you through an overland tube at around 1,000 km/h. It’s the perfect mode of transport for cities with more gold taps than stop signs (totally made that up), sharing a mindset so determinedly focused on the future that you’d be stupid not to go along for the ride.

Reaching new customers through fintech partnerships

Sergio Barbosa, CEO, FutureBank


Co-founder and CIO of enterprise software development house, Global Kinetic, Sergio directly heads its open banking platform, FutureBank. A skilled software engineer, innovative product developer, and keen business strategist, he has participated in several notable fintech milestones, including building the southern hemisphere’s first digital-only bank all the way back in 2002.

Back in October, I made an argument for open banking’s relevance to regional American banks and credit unions. I listed several ways that open banking platforms could benefit institutions like these – specifically those with under a billion dollars in assets.

My focus in this post is on the enormous potential banking-as-a-service (BaaS) and banking-as-a-platform (BaaP) have for helping traditional banks reach new customers, including those that were uneconomical, unreachable, or unheard of in a physically restrictive and data deficient banking paradigm.

Platforms that leverage APIs and facilitate integration can enable banks to benefit from fintechs’ data-driven and customer-centric approach to innovation by offering them the embedded finance foundation that fintechs need in return for greater customer acquisition on the bank side.

They can also enable banks to develop highly engaging new offerings faster, more efficiently, and with far less risk than before. Both fintechs and banks could leverage a combined customer data set in various ways – with their approval, of course.

Let’s look at three broad opportunities banks and credit unions have to gain new customers or members through open banking partnerships.

Meeting the needs of niche markets

What bank is the best fit for serial house restorers? And for TikTok entrepreneurs? Convenience store franchisees? Everything counts in large amounts, as the song goes, and the economies of scale that digital technologies can provide could bring millions of potential customers within reach of the smallest bank. Sifting through them, you’re bound to find a market, even a very niche, geographically distributed one.

Going “niche”, as they say, means targeting market segments and communities united by emotional or cultural bonds, personal concerns, and unmet financial needs that have little to do with geography. 

US banks and credit unions have long focused on the needs of narrowly-defined communities, but their geographical footprint has almost always been limited by cost considerations related to their physical branch and ATM networks, if not by their charters too.

No more. Digital channels have freed them – and their competitors – to market to prospects and serve customers far beyond their home county, state, or region without much additional outlay. To get a good return on investment, however, they have to hone their value proposition carefully – and that may require further specialization.

Going “niche”, as they say, means targeting market segments and communities united by emotional or cultural bonds, personal concerns, and unmet financial needs that have little to do with geography. These groups may always have been there – ethnic, racial, or sexual minorities, for example – or could be entirely new – think of crypto-asset traders and gig economy workers.

It’s an approach that many smaller financial institutions see as a way to differentiate themselves from competitors large and small, gain customers, and profit from value-added services delivered through low-cost channels – even as banking infrastructure and traditional banking products are commoditized.

Some examples:

All of these businesses reflect something profoundly different about the open banking paradigm: banking is increasingly conceived of as something rooted in everyday life, occasioning a far wider range of interactions at many more moments in the day.

High-context recommendations – product and service cross- or up-sell, meaningful communication and useful advice, shortcuts to the next step on any given journey – these all depend on knowing your customer intimately and understanding the motivation behind their transactions.

Fintech partnerships help these financial institutions:

Meeting the needs of the unbanked

The US federal Community Reinvestment Act obliges financial institutions to serve neighbourhoods across a range of incomes in their catchment, but industry consolidation, commercial imperatives, as well as patchy enforcement have seen low-income communities – urban as well as rural – hit disproportionately hard by branch closures spanning decades. It’s a leading cause of financial exclusion, together with lack of government ID, insufficient credit history, and unaffordable or unpredictable service fees.

Open banking platforms can go a some way to addressing financial exclusion while helping mid-sized banks and credit unions reach new customers at reduced risk. 

According to the US Federal Reserve, 6 percent of adults in the United States are unbanked, while 16 percent are under-banked (the FDIC has similar figures). These millions of Americans represent frustrated human potential and an untapped market. Digital service provision is not a cure-all, as the Fed pointed out just before the onset of the pandemic, but open banking platforms can go a some way to addressing the problem while helping mid-sized banks and credit unions reach new customers at reduced risk.

Partner-provided data concerning devices, payments, online and social media interactions, etc., combined with third-party AI systems help manage risk and improve efficiency, so that the market can be served more cheaply and effectively.

Fintech partnerships help these institutions:

Meeting the needs of other businesses’ customers

Open banking – BaaS in particular – has opened many senior executives’ eyes to the exciting potential in distributing financial services over third-party channels, essentially reaching and making money from people and businesses with which their institution does not have a direct relationship.

With embedded finance, the bank brand may take a back seat to another – a racing car maker, a global charity, even a Kardashian or two – but the opportunities to extend your reach are immense. 

These third parties are often fintechs, but they could be any enterprise looking to leverage banks’ money-moving infrastructure, rich troves of data, and competencies in areas like fraud detection and prevention, identity and access management, and regulatory compliance. Banks, in turn, either gain revenue directly from the fees they charge or benefit from their products’ relatively cost-effective exposure to a wider, captive audience.

Some examples:

Embedded finance is an especially promising development. It allows financial services providers and an almost limitless number of non-bank brands to integrate financial services seamlessly in websites, apps, games, and the point of sale for greater convenience and deeper engagement. The bank brand may take a back seat to another – a racing car maker, a global charity, even a Kardashian or two – but the opportunities to extend your reach are immense.

BaaS partnerships help these institutions:

You don’t have to be a fintech startup to be excited by the future these partnerships will help build. Regional banks and credit unions have as much to gain as any other stakeholder, and with the right partners and a few good ideas, they will.

FutureBank is a fintech marketplace and technology platform enabling banks and credit unions of all sizes to test a wide range of third-party products at scale. There is minimal upfront cost and significantly less risk involved in making an investment. Compatible with over 6000 financial institution back-end systems, we offer a single integration point for fintech technologies for rapid time-to-market.

Looking to explore new opportunities in open banking?

Contact FutureBank for a presentation.

Solving the software integration challenge, FinTech's last mile

Sergio Barbosa, CEO, FutureBank

Co-founder and CIO of enterprise software development house, Global Kinetic, Sergio directly heads its open banking platform, FutureBank. A skilled software engineer, innovative product developer, and keen business strategist, he has participated in several notable fintech milestones, including building the southern hemisphere’s first digital-only bank all the way back in 2002.

Eyes on fintech's last mile

Many of the banks and credit unions that we speak to are no less “progressive” than their tier-one peers when it comes to recognizing the potential of platform banking or banking-as-a-service. They just don’t have the same budgets to spend on new talent, in-house innovation hubs, and large-scale partner programs.

You’ve got to spend money to make money though, right? That’s where fintechs can help by providing banks with reasonably priced know-how and out-of-the-box financial services developed with an entirely new focus on the digital end customer.

There are new sources of revenue to be gained in both directions, of course. My focus in this blog post is, however, not on the opportunities for value creation and exchange in bank–fintech partnerships – as central as that topic is to everything we do at FutureBank. Today, I want to look at a common hurdle for fintechs getting to that point: software integration. It’s fintech’s last mile.

Software integration: Here be monsters

The promise of a stress-free go-live – “fast go-to-market”, “rapid ROI”! – typically features in every piece of fintech marketing material, with assurances based on the modern, lightweight deployment model and excellent APIs. Things tend to run differently in reality, however, and fintechs often find themselves spread thin when integrating their technology at the bank.

Implementation teams are usually ignorant of what they will find at the client. Even smaller banks have many moving parts, constituencies, and the various systems they use are technologically complex and interface in unpredictable ways. The scale of banks’ regulatory burden, especially as it pertains to digital security and risk management, is also something few fintechs really understand, despite it being a factor in nearly every answer banks give to questions fintechs ask.

When the inevitable complications arise during integration, time is lost and costs – all the fintech’s own – pile up. Progress updates may remain cordial, but the project draws senior staff away from other important aspects of their business, including landing the next sale and building the next killer feature of their product.

Sound familiar?

Solving the software integration problem for fintechs and their customers

As enterprise software integration experts of long-standing, my colleagues and I at Global Kinetic have seen this dynamic – or something like it – in play many times. Knowing the nature of the beast ahead of time would help providers plan and act with speed and precision, freeing them sooner to return to what they enjoy doing most.

That’s why we built FutureBank, a banking-as-a-service platform that integrates into the world’s most widely deployed core banking systems. It provides fintechs with a fully kitted-out digital banking sandbox for testing their software integrations against these and helps determine the level of custom work required for non-standard or customized versions out there.

Flipped 180 degrees, FutureBank becomes a fintech marketplace where banks and credit unions are able to discover, test, and deploy pre-integrated third-party products and services at low cost, with considerably less risk than they would before. We have many products on the platform, and we onboard new providers every month.

What is the experience like for our fintech customers? I’ll describe a couple of case studies in future blog posts.

Partnerships are the lifeblood of open banking. Contact FutureBank to discover how we can help you work better together.

Read our previous post here: Regional banks have a big opportunity in open banking

Regional banks have a big opportunity in open banking

Sergio Barbosa, CEO, FutureBank

Co-founder and CIO of enterprise software development house, Global Kinetic, Sergio directly heads its open banking platform, FutureBank. A skilled software engineer, innovative product developer, and keen business strategist, he has participated in several notable fintech milestones, including building the southern hemisphere’s first digital-only bank all the way back in 2002.

Pandemic spurs digital transformation drive

Even as this pandemic pushed digitalization to the top of banks’ agendas, associated business stresses cut into their capacity to respond. Forced to prioritize measures to survive now over thriving the year after next, they re-allocated resources overnight. IT budgets were hit hard. Big digital transformation projects – including open banking initiatives – were cut or scaled back at HSBC, ING, RBS, and other boldface behemoths.

At smaller financial institutions, the situation was often critical. Regional banks and credit unions that were further along in their transformation journeys were in a significantly better situation than those that were not, but everyone was stretched by the new imperative to serve their customers and members remotely in challenging times.

And yet. Over 18 months since the drama of that first lockdown, thousands of US financial institutions can proudly say that they got there faster than they thought they would. Many of their customers took a leap into the digital void with them, and a large percentage of those will continue using self-service channels after the masks come off for the last time.

No time to wait on open banking

We aren’t out of the woods yet, mind you, not by any measure. Margins are thin, fintechs continue targeting the most profitable lines of bank business, and unprecedented self-service banking rates, otherwise a reason to celebrate, are negatively impacting customer satisfaction rates across all ages.

There are strong indications that traditional banks and credit unions, including the very largest, are losing primary account status to digital-only banks at a faster rate than before. As reported by Ron Shevlin of Cornerstone Advisors, “Roughly one in four Gen Zers and Millennials now call a checking account from a digital bank their primary account. That’s about double the percentage it was at just nine months ago” (my emphasis).

Financial institutions of all sizes – but small- to mid-sized ones especially – face some level of threat from categories of companies no-one would have heard of 20 or even 10 years ago. The point is that banking is being reshaped by forces outside of the industry’s traditional spheres of influence and ignoring it won’t make it go away. In a July 2021 report with a focus on the United Kingdom, McKinsey says, “If open finance continues to accelerate it could reshape the global financial services ecosystem, change the very idea of banking, and increase pressure on incumbent banks.”

Bank consolidation declined somewhat during the pandemic but is predicted to lurch upwards in the coming years, driven in part by digitalization. Change is no longer negotiable for incumbents hoping to be around in twenty years, and it has to encompass pretty much everything about the business. McKinsey again: “It will be imperative to understand and respond to these changes, reimagine offerings, adjust business models, and forge successful partnerships with fintechs or tech companies, to ensure continued success and relevance.”

Regional banks and credit unions face a dilemma like few anyone in the industry remembers. With barely any time to catch their collective breath, they must set about the next stage of their digital transformation. Covid-19’s systemic side effects did nothing if not make the case for open banking stronger, more urgently central to American financial institutions’ future prospects than it was before.

Open banking is also a significant opportunity

Research by the Digital Banking Report shows that over half of banks with assets of $100 billion or more already have an open banking strategy in place or say they will have within a year. Overall, 24 percent of financial institutions (all tiers) have a strategy, and another 21 percent plan to implement one in the next two years.

In the United States, regulators are not setting the open banking agenda, as they are in Europe, Australia, India, or Brazil. It’s commercial self-interest, good old-fashioned competition in an ever widening ecosystem owing its lush good health to technical innovation and the mutual benefit of value exchange. The APIs on which much of this ecosystem rests have contributed immeasurably to Big Tech’s successes and are driving the so-called “platformication” of nearly every business model out there, including banking.

Open banking can benefit banks and credit unions in several important ways, including:

I will go into some of these in greater detail in my next couple of blog posts. Today, I’d like to underscore how vital third-party partnerships and cross-organizational collaboration is in achieving each of these benefits, especially for institutions where the digital mindset is not yet pervasive and relevant expertise thin on the ground, which is to say, most banks and credit unions.

With open banking, small isn’t the big deal it used to be

I recently read that JPMorgan Chase’s annual tech spend is around $8 billion more than the combined amount at all 94 US banks with assets between $10 billion and $100 billion. Still, no institution – not even JPMorgan Chase – can do it all, well, and at the speed of change we are seeing. The days of going it alone are over.

There is a growing ecosystem that combines the best resources, niche products and services, a ton of data, and existing and potential customers. Using APIs, smaller banks can access the ecosystem and contribute to it through banking-as-a-service or -platform models. They can do pretty much everything their giant competitors do, faster than they could have before, with less risk and fewer development and operational costs, relatively speaking.

Partnering for the best value in open banking

Developing an open banking strategy and navigating the highly dynamic fintech ecosystem isn’t easy. Banks without dedicated DevOps teams and sandboxes usually need a partner to guide them through the process of testing and integrating complementary third-party products and services or facilitating the same for their prospective fintech partners.

Futurebank FinTech Marketplace

FutureBank is a fintech marketplace and technology platform enabling banks and credit unions of all sizes to test a wide range of third-party products at scale. There is minimal upfront cost and significantly less risk involved in making an investment. Compatible with over 6000 financial institution back-end systems, we offer a single integration point for fintech technologies for rapid time-to-market.

I would like to invite any bank or fintech planning on or considering a banking-as-a-service or -platform play to view our offering, which I believe is unique in the market for its focus on both ends of the open banking spectrum, if not also the breadth of pre-integrated technologies on offer.

Looking to protect your institution’s future and explore new opportunities in open banking? Contact FutureBank for a presentation.

It is over for Bitcoin

Bitcoin will never make it.  It has no practical application.  I mean, how can you rely on a currency whose value in real terms changes every second?  You cannot expect the lay person to accept that the price of the BigMac on the menu behind the checkout counter is going to change many times before they get to the front of the queue to place their order.  And then they must wait for 10 minutes while their payment is confirmed in China (because that is where 65% of all Bitcoin is mined) and a ton of coal is burned?

I am sure you hear comments like this all the time when you are not in your Crypto echo chamber.  And they are very valid with one caveat.  The reference point for comparison is the current status quo of what money is and how we pay for things.  The problem with this is that Bitcoin lives in a parallel financial dimension.  To compare it to Fiat money like the US dollar, or to compare the payment mechanism to what we have available from the card schemes of VISA and Mastercard, would be like comparing a car to an aeroplane.  They both can get you from A to B, but in very different ways.  Cars and planes live in the parallel transport dimensions of land and air, respectively.  If you had to use the plane to get from A to B, but it had to stay on the ground all the time, it would be impractical and frustrating.  And trying to get a car to fly… well good luck with that.

The parallel financial dimension that Bitcoin lives in is the decentralized financial dimension.  Fiat money like the US dollar and the card schemes of VISA and Mastercard live in the centralized financial dimension.  The decentralized financial dimension is in its infancy though.  Bitcoin is just the very first building block of that dimension and is much more like gold than it is like the US dollar in today’s terms (because the US dollar and Fiat money in general are not backed by their underlying assets anymore and there is no limit to the supply).  In the early days, gold was also cumbersome for frequent transactions, and reserved for less frequent, larger, settlement type transactions.  Over the centuries, services were built on top the underlying asset of gold to make it more convenient and secure to use, like bank notes/cheques, credit, loans, exchanges, insurance, etc.

The recent surge in the value of Bitcoin (relative to the US dollar for example) can largely be attributed to the rise of the next set of building blocks in the Bitcoin timeline. Aptly name DeFi, for Decentralized Finance, these next set of building blocks make use of Smart Contracts (mostly Ethereum based) to build brand new financial services that are decentralized.  Ethereum and Smart Contracts are not new, it is just that the penny has dropped for using them to build financial services for this decentralized financial dimension (rather than all the other silly app ideas Ethereum has been used for in the past).  Ethereum combined with the use of overcollateralized stable coins (specifically DAI) to remove price volatility, makes it possible to build a fully fledged financial system that is decentralized - one that lives in parallel to the centralized financial system we have today.  Additionally, stable coins provide the bridge or connection point between the centralized and decentralized financial dimensions.

Take for example an Exchange like Binance or the NYSE.  These are centralized.  Ultimately, the small group of people or single person in charge of these organizations will make the final decision on how they work and who they will work with.  A Smart Contract can do exactly these same things, with the added benefit that it is immune to censorship.  This means that an entire Exchange can be completely deployed within the boundaries of a Smart Contract in this decentralized financial dimension and provide all the features of an Exchange in a completely autonomous and incorruptible manner.  Once the Smart Contract is deployed, that is how it will work forever (unless the consensus decides to hard fork of course, which is a much more democratic turn of events).

The first of these DeFi Exchanges, or DEXs, have seen immense adoption across the Crypto community and have given rise to the development and adoption of other decentralized services collectively referred to by the ghastly name of “Money Legos” (I mean, Lego is just way too sacred to allow the term to be claimed like that!). These “Money Legos” when combined are designed to provide complex services like lending and liquidity management for the decentralized financial dimension to name a few.  All the core building blocks that you need in a fully-fledged financial system.  It will not be long before you see the first completely decentralized bank using a combination of these “Money Legos” to offer its services to the market, except, it does not have a banking license issued by a central bank.  The bank itself will probably be funded by its own ICO, and it can be used as the foundation to build the user experiences that consumers and businesses in today’s centralized financial dimension have learnt to expect, and then outclass them completely.

Like the analogy with the car and the plane, in some cases it makes sense to use both at the appropriate time to get from A to B.  You might take the car to the airport, fly somewhere, and then take a car to your destination after you land.  I see a future where both the centralized and decentralized financial dimensions work together to provide a more stable financial system for the world.  We cannot deny how successful Bitcoin has been with the “gold use case” of the less frequent, larger, settlement type transactions with the likes of TransferWise for example.  They are a great early example of the centralized and decentralized financial dimensions working together with only the very first building block of the decentralized dimension. 

When I say, “It’s over for Bitcoin”, I mean the fight for proving the use case for Bitcoin is finally over, and we know undoubtedly that it is useful and here to stay.  We are on to the next thing now of building a decentralized financial system on top of it.  In the past 20 years we have seen the erosion of personal privacy, the near collapse of the financial system and an increase in censorship and control, all by centralized authorities.  Over the coming decade, the willingness for the world to fight back against that trend will tell how far down this decentralized rabbit hole we go.

Austin Digital Banking Conference 2019

The Digital Banking Conference is quickly becoming the premier FinTech and Banking event in the US, with this year’s event boasting some great content around Open Banking and high profile speakers.  We also got the opportunity to meet and chat with Pepper the Robot who was stationed across the way from out booth.

Our booth at the Digital Banking Conference in Austin, Texas.

We were lucky enough to meet some fantastic new emerging FinTech companies, a total of 21 companies doing amazing things in Banking and who will be working with over the coming months to integrated into our FutureBank Marketplace and make it easier for banks to plug and play this technology into their core banking environments.  As for Austin, the live music capital of the world, there could be no better place to host an event.  Oh, and of course, we can’t forget the bats

Open Banking vs Community Banks

The ICBA (The Independent Community Bankers of America®) generally attracts a large following from smaller banks around america as there are multiple banks for each state. These banks are called community banks and are generally quite s bit smaller. These community banks have various digital needs. The ICBA is the ultimate gathering for community bankers who are serious about dialing into high-tempo networking and learning. It is also the ideal space for us to exhibit our Futurebank product as community banks can benefit greatly from Open Banking.

Community banks can meet digital banking needs with Open Banking APIs

To compete with large national banks and maintain a competitive advantage, community banks need to collaborate with fintech partners who can help integrate new technologies that result in more efficiency, more profitability, and secure transactions. All this while making the banking institution attractive to younger generations of customers who expect flawless, easy-to-use, convenient access to banking and payment services.

The way that banking customers are choosing to bank is changing faster than any other component of financial services. This is due to digital transformation and growing customer demands. The increasing consumer demands is influenced by the customers’ experiences in other industries too - putting pressure on smaller banks to change for the better. What is clear is what has worked in the past will not work in the future.

The Digital Opportunity. What is Your Strategy?

Digital is the new norm in banking – it’s not just about digital payments, it’s digital everything. Today, banks of all sizes need a proactive, cohesive digital strategy that provides the right products, services, and best possible customer experience. Why is a digital strategy so important? For one, Boomers are aging and as a group their numbers are on the decline although they will continue to be the wealthiest generation in the country until at least 2030, according to Deloitte.

They are also set in their ways with whom they bank and how they bank. Next, the massive growth opportunity for community banks is with Millennials and Gen Z. Accenture projects Millennials to make up as much as 40% of U.S. consumers by 2020 and today are the largest generational demographic group in the history of the United States.

Open Access Banking is Key for community bank

According to the FIS 2018 PACE survey, It has been shown that people who make use of community banks also utilize mobile applications more than any other type of banker. A large 53% of them claim to use mobile apps more now than 2017. The growth of mobile app usage is continuously increasing.

Consumers are doing more “core” business on financial mobile apps, such as making investments, applying for loans and even opening new accounts. This will only continue as open access banking makes its way into the mainstream and Open Banking is embraced.

Open Banking is an opportunity for community banks to engage the right tech partners and create a win-win situation that expands usage of and loyalty to their services. The 2018 PACE findings say,” this might be one of the best and most agile approaches for banks to add the ancillary products and services their customers want.”

Community Banks in Great Shape to Capitalize on New Technology

Community banks continue to grow and prosper every year. The 2018 PACE Study says that 8 in 10 customers are satisfied or very satisfied with their community bank provider. This means that the customer base is loyal and is not eager to opt out of using their bank anytime soon. However, this also assumes that the bank is keeping pace with technology and offering the digital products and services customers have come to expect.

Customers will move to another banking provider if their digital needs are not being satisfactorily met. Mobile is viewed as the main branch by many consumers. All generations except baby boomers (and older) bank on their phones and tablets more than via desktop PCs, ATMs or physical branches. In addition, PACE says that “feature parity is here. Community banks that introduce features like P2P payments see rapid adoption, and it has never been cheaper or easier to add national bank digital capabilities.”

How FutureBank can benefit community banking?

An Open Banking environment can improve the overall customer experience and third-party partnerships can also become a source of competitive advantage. It can also make the banking process easier for those who have multiple accounts in different banks. Aggregating all those banking operations into one simple application is the best solution for community bankers.

FutureBank is a secure and customizable Mobile and Internet Banking solution with an Open Microservices API that integrates with the most popular Core Banking systems in the world. It will allow each community bank greater flexibility and scalability. We also provide an architectural blueprint and code framework which makes FutureBank the perfect solution for any new FinTech product.

Come visit our booth at the ICBA in Nashville from the 18th of March till the 22nd. We will be exhibiting our FutureBank product. For more on FutureBank, visit getfuturebank.com

References:

Getfuturebank.com. (2019). FutureBank Platform – Secure. Compliant. Simple. Flexible.. [online] Available at: https://getfuturebank.com/ [Accessed 8 Mar. 2019].

Icba.org. (2019). 2019 ICBA Convention. [online] Available at: https://www.icba.org/events/2019-icba-live-convention [Accessed 8 Mar. 2019].

Johnson, J. (2018). Community banks can meet digital banking needs with open banking APIs. [online] RISE with FIS. Available at: https://www.risewithfis.com/Community-banks-can-meet-digital-banking [Accessed 8 Mar. 2019].

Oradian and FutureBank Partnership

Oradian and FutureBank Partnership

Oradian integrate their Instafin Core Banking solution with the FutureBank Platform product suite into a seamless banking experience aimed at the unbanked in Nigeria, Ghana, the Philippines and more.

In total; 2.5 billion of the world’s adults don’t use formal banks or semi formal micro-finance institutions to save or borrow money (1) . Of that number nearly 2.2 billion of these unserved adults live in Africa, Asia, Latin America, and the Middle East.

This is problematic as it restricts these populations from having significant benefits and increases in financial assets for families and individuals that have the ability to gain account ownership.(2)

Micro Financing Institutions (MFIs) in frontier markets have unusually made lending decisions without access to the sort of customer data and documentation commercial banks take for granted: credit scores, identification documents such as passports or government ID cards, bank statements, lending history and collateral.  These unbanked individuals do not have the necessary documentation needed for traditional lending methods from banks. This is why Oradian made an effort to physically visit these communities and find groups of people who want to lend money. Lending activities are then tracked on Oradian’s cloud-based core banking system Instafin via tablet interfaces and the lender can come back periodically to collect the returns from one of the unbanked individuals in each of these communities.

It is evident from this case that there is a growing need for a digital banking system that may assist and connect these unbanked populations to relevant banks and providing them with access to the financial services they need.  While Oradian’s Instafin core banking solution is able to manage financial products and the record of accounts for this market, the FutureBank Platform can provide regional, demographic specific and targeted digital user journeys for the unbanked user in this market.

What is Oradian?

Oradian is a company founded in 2012 that provides MFIs in countries with underdeveloped banking infrastructure with a finance management platform for personal banking.

The Croatian fintech company was originally focused on Nigeria , where it grew its customer base to 24 MFIs with roughly 490,000 end users. Philippine Central Bank supported the project and since the young company has had a rollout in the Philippines, where it already works with 18 MFIs. Oradian today is also present in Ghana, Liberia, and Malawi.

What is our collective vision with this project

The long term vision of Oradian’s Instafin and the FutureBank Platform is to connect 100 million previously unbanked families to the financial system globally, especially in areas where technology is underdeveloped, through an end-to-end digital banking experience.  Our combined software helps MFI’s grow their businesses and lower the cost of finance to end users. In order for this project to be implemented, our FutureBank Platform will be used in conjunction with Instafin to provide a seamless banking experience. Collectively, we can make an accessible user interface paired with connection to the relevant lending accounts for the unbanked target market.  We can also provide services to the unbanked that will make their lives a whole lot easier, like being able to provide prepaid services directly from their mobile devices so that they can eliminate costly travel to urban areas in order to purchase electricity and other basic services. Instafin is the operational platform on which microfinance institutions, cooperatives and credit unions manage their day-to-day operations, and FutureBank Platform is the digital experience that the unbanked user interacts with.

The number of people who own smartphones is increasing in Nigeria, Ghana and the Philippines as the retail price drops. This means there is a growing opportunity to extend Oradian reach by making use of digital banking with the help of FutureBank.

Instafin and FutureBank     

To create the tools for financial inclusion and make them accessible to all financial institutions The FutureBank Platform is an ideal product to integrate with Instafin in order to reach this goal to give the system a useful and customizable front end banking interface.  Each region and demographic group has its own nuances and requirements, and the FutuerBank Platform is specifically designed to accommodate rapid, agile customization to user journeys that can be quickly deployed and easily scaled.  The technology also supports offline capabilities and zero rated services through integrations with regional Mobile Network Operators (MNOs) in Nigeria, Ghana and the Philippines.

Instafin can reduce high operational costs through automatic reporting that dramatically speeds up time-consuming month-end reporting processes, thus minimising inefficiencies that exist in across these rural banks servicing the unbanked population.  Instafin has other features such as messaging, automatic updates, maximum data security and pricing engines. It also provides training and implementation services on the ground in the areas they service — including data migration from their previous CBS or from spreadsheets.

The FutureBank Platform provides the unbanked users with access to their basic financial information, such as their current balance, transactional history, loan account status and other repayment information.  It can also provide direct access for the user to purchase pre-paid services available to them based on their area. These kinds of features add immediate value to the quality of life for the unbanked individual and puts them on a path to financial security and wealth for their families into the future.

At its core, the FutureBank Platform is a MicroServices API platform that integrates into the most popular Core Banking systems in the world.  The Banking API exposes a common interface to digital channels and FinTech partners whilst abstracting the complexities of the underlying legacy Core Banking systems.  The Banking API can provide a single end point into multiple disparate Core Banking systems which is useful in the case of the project with Instafin.

FutureBank uses unique asymmetrically encrypted HSM tokens to secure each transaction through the platform – adding an additional layer of security.  The platform exposes an event driven SDK architecture for easy integration into 3rd Parties, Merchants and Individuals.

SOURCES:

  1. Source: McKinsey research conducted in partnership with the Financial Access Initiative (a consortium of researchers at New York University, Harvard, Yale, and Innovations for Poverty Action); we relied on financial usage data from Patrick Honohan, “Cross-country variation in household access to financial services,” Journal of Banking & Finance, 2008, Volume 32, Number 11, pp. 2493–500.

  2. FITZPATRICK, K. (2014). Does “Banking the Unbanked” Help Families to Save? Evidence from the United Kingdom. Journal of Consumer Affairs, 49(1), pp.223-249. doi:10.1111/joca.12055

2017 Finovate Trends, Highlights and Lowlights

I’ve watched a lot of Finovate clips and videos on YouTube and I’ve heard Martin tell many a story on what Finovate is all about and how to approach it.  However, this year I attended Finovate for the first time in San Jose, and like most global spectacles, an in person perspective is priceless.

For those that don’t know, Finovate is a demo only format event where presenters get 7 minutes to demo something innovative in the FinTech space.  No slides or videos are allowed.  You need to demo working software and you have 7 minutes to convey the innovation behind your product before a loud bell sounds and you get physically ushered off the stage.  The rules are strict and the host is spectacularly good and coordinating, inspiring and enforcing these rules where appropriate.

For me Finovate is the perfect opportunity to see the actual trends of where people in the FinTech space are focusing their energies.  Last year was mostly about AI, BlockChain and “Banking for the Unbanked”, so I was curious to see where the trends had moved this year.  I decided to get a little scientific and plotted some data about the presentations.

* Even though there is some overlap, as an example a lot of the presentations incorporate AI at some level, the AI category is just for solutions focused on AI specifically.

To my surprise there was an overwhelming large number of Loan Origination Optimization solutions.  Is this an indication of a housing boom in the US?  Or is it that there is an influx of Millennials buying their first homes and there is a new level of customer experience that FIs are expected to attain?  Either way, it was certainly not what I was expecting.  If you add the pure KYC based solutions to the tally, which are typically used to optimize the loan origination process, and combine this with two of the presentations I’ve classified in the "Everything Else" category that were property related, something is brewing.

* About the Everything Else category above, this is where I’ve grouped everyone that I felt stood on their own and cannot really be put into a group.

One thing that stood out is the eerie absence of new Blockchain based solutions.  Perhaps that’s not surprising considering $1bn has been invested so far into Blockchain in the US banking sector and there is exactly $0 in revenue so far reported and nothing actually in production in the banking sector.  It’s as if the successes of Bitcoin and Ether as crypto currencies immediately implies that Blockchain has to be successful in the banking sector for smart contracts or recon processes or whatever people think up next.  It’s like a solution waiting for a problem.  It’s slow, has a limited security time window and not even that innovative anymore – take AI and Quantum computers and put them together into some malware and the Blockchain ledgers will get corrupted across the globe within milliseconds.  Don’t get me wrong, it’s that I’m not a BlockChain fan, and I believe there are opportunities for it outside of banking, possibly government, legal and pharmaceutical sectors.  It’s just that I’m waiting for it to go past the peak of inflated expectations so we can get to the trough of disillusionment.  Maybe that just happened.

In the above I also plotted how many of the presentations spoke about having available APIs that could be exposed to developers and FIs.  With all the pressure with PSD2 in Europe for FIs to open their APIs to the world I was expecting there to be a much higher focus on API availability, but the data seemed to prove otherwise.  Of all the presenters, only ~28% of them offered APIs and more than 70% either hadn’t gotten around to it yet or weren’t ever going to expose an API because of the nature of their product (which is understandable in some cases).

To me this is symptomatic of two possible things.  The first is that the pressure for open APIs from Financial Institutions is not as prevalent yet in the US like it is in Europe and other parts of the world.  What is possibly a more alarming conjecture being that perhaps, because these new innovators are startups, they’ve rushed their development and engineering pieces to get their product to market and haven’t architected them properly with a solid foundation of APIs and/or SDKs followed by the User Experience and engagement channels.  This presents a fantastic opportunity for a product like FutureBank, because, if these innovations get traction they will need to build out their products at scale and facilitate integration with the Financial Institutions, and FutureBank does just that.

We are hoping to get a 7-minute window at Finovate New York in September this year to showcase how quickly we can spin up a brand new FutureBank instance that integrates with most core banking systems and exposes APIs for FinTechs to integrate into.  I believe our product will be invaluable to all the new innovative FinTech’s coming out of the woodwork every year who at some point in their success stories will need to integrate with FIs quickly and seamlessly and have their solutions scale to meet demand, and I hope FutureBank is their secret weapon.

Finally, some highlights and lowlights.

The highlights were:

There was only one lowlight.  Turn Key Lender was so embarrassingly unprepared that it was kind of an insult to the attendees who’ve spent good money getting to the event.  They may have a great product, but I just couldn't get past the lack of preparation in the presentation.  If you are going to be presenting at Finovate in the future, remember to take some of Martin’s advice.

FutureBank choose Entersekt Security

Earlier this year we concluded agreements with Entersekt that enable us to embed the Entersekt technology within our FutureBank Platform.  The FutureBank Platform now supports out-of-band unique device registration and step up authorizations on our mobile channels as well as soft token generation for securing Internet channels.

Our choice of security partner in Entersekt was an obvious one.  Entersekt are far ahead of any of their competitors in the field of authentication and mobile security.  The reason for this is their focus.  Whilst many of their competitors cover a very wide security spectrum in terms of solutions, Entersekt focus specifically on the areas of authentication and mobile security.  As a solution provider we can in turn offer mobile and Internet banking solutions to Entersekt customers with our FutureBank Platform, allowing them to keep this focus on authentication and mobile security.

By embedding best of breed security technology into FutureBank in the form of Entersekt, we ensure that our FutureBank Platform is the most secure mobile and internet banking solution in the market today.  The FutureBank Platform now also includes biometric authentication for securing sensitive transactions as well as tamper detection for compromised mobile devices.

For release in September this year we will be introducing some new advanced features arising out of this partnership that we will be able to showcase in the FutureBank Platform.  More on this to follow.