Like the bridges, pipelines and power stations that prop up modern civilisation, financial systems are a crucial piece of infrastructure upon which we all depend. In recent years, as cellular networks have grown in scale, sophistication and security, mobile has become an increasingly common – and indispensable – enabler in the financial sector.
As always, MWC provided an important opportunity to review some exciting case studies in mobile fintech and examine how they may be able to exploit market opportunities and combat cybercrime, which, last year cost $56 billion in the United States alone (of which identity theft accounted for the bulk at $43 billion). Despite the inevitable restrictions, this year’s MWC hosted several workshops on the latest trends in identity authentication. In addition launching new fintech services, sponsored by Citi, was a key focus.
Tom Wesselman, CTO and Head of Product at TeleSign, focused on the importance of transitioning to secure, next-generation authentication: “we can connect the offline world with the online world with a single common denominator – the mobile phone number.” Mobile operators, he said, could further support the payments industry through the evolution of their networks and tools like voice RCS, which can support different levels of authentication to secure specialised use cases such as high-value transactions.
By using mobile to verify customers, Yabx has been able to facilitate several commercial propositions anchored in creating insights from telecom & wallet data that could enhance lending decisions that can outperform the credit bureau performance for emerging markets with a high percentage thin-file population. Yabx showcased their credit risk scoring models, which are providing financial services with a platform to onboard, underwrite, and service new-to-credit segments using proprietary AI algorithms built on alternate data and helps them build a profitable customer portfolio.
Adam Elboim pointed to Boku’s success in using mobile networks to verify payments, which in his view is a technology which is still evolving and can be scaled over time. He explained that the SIM should play a vital role in authentication strategy and has shown itself to be adaptable to a variety of use cases – thus it is no surprise that it’s a common tool in helping to build trust in FinTech. Trust was a common theme in discussions between experts throughout the week’s events, with all agreeing on the critical importance of security. This was underscored by Tim Zhou, Chief Security Architect, Risk & Compliance, ANT Group, who argued that trust was at the cornerstone of digital life. One of the principal challenges FinTech faced, he explained, was the presence of ever-evolving cyber security threats, “the financial security model needs to change from being reactive to proactive. With this approach, we can use machine learning to adaptively respond to attacks, which make it possible to respond to the billions of transactions on our platform.”
According to Jason Engelbrecht, Head of Citi Innovation Labs, trust, in part is achieved by constant innovation and investment: “Citi are spending $9 billion on tech a year. Innovation comes from different areas – technological innovation, internal growth and external scouting, accelerating and investments.” Of this spend, the banking giant was keen to underscore the importance of helping to cultivate new partnerships and collaborations: “we are looking for the real challenges or big problems facing our customers. Therefore, it makes sense for us to see these as new opportunities and build new business lines such as those in cybersecurity or infrastructure. The technology we use and deploy should be mature and ready for scaling, built with flexibility and trust in mind.” This was supported by Citi’s Kunal Bist, Managing Director of Global Payments & Receivable for Treasury and Trade Solutions, who stated that “we are extremely excited, committed and keen to continue in our partnership journey with FinTech and that hopefully, our intent to partner is loud and clear.”
Yet, in this new landscape, it’s not just conventional fintech that is innovating and claiming the crown of ‘unicorns’. Mobile operators too are adapting their business models and playing a far greater role in the financial services market than ever before. Among the most illustrative examples of this is STC Pay, which has arisen directly as the financial and banking arm of Saudi Arabian network operator STC. “We wanted to provide a different experience for our customers,” said Ahmed Alenazi, Co-founder and CEO of STC Pay. “70% of the Saudi population is below the age of 35 and we have a high penetration of smartphones – these elements formed the basis for the demand. We then studied our customers’ usage and spending and decided that our financial products and services, and the use cases they serve, should be developed around these findings.” Like STC Pay, M-Pesa, Africa’s largest fintech platform, found success by adopting similar methods. Chris Williamson, Managing Director of Vodacom Group M-Pesa, explained that mobile networks, in their ubiquity, had given them “phenomenal reach”, and the ability to offer financial services to vast numbers of people who were otherwise unconnected. Like STC Pay, they found success in adapting their services to consumer needs: “although the initial idea was microfinance, we discovered that a much bigger pain-point for customers was sending money across the country, and in our pilot that was the use case most people wanted”, Williamson said. As explained by Benjami Puigdevall, CEO of Imagin (Spain’s first digital banking app as part of Ciaxabank), modern, mobile financial services need to be based around services and culture which people have come to expect in everyday digital life. Here, he said, Imagin had had success by offering multiple services within a single interface: “we originally were a mobile banking app, but last year we launched an evolution, which is a combination of traditional financial services, digital content, social solidarity and lifestyle choices, thereby creating a kind of super app.”
As we have seen throughout the last few years, operators such as STC and Vodafone are using their networks and existing user-base to launch new financial services in a variety of markets and achieving compelling results- a trend which we can expect to see more of in the coming years. Additionally, as digital growth is increasingly powered by mobile FinTech we are seeing a huge interest in this sector reinforcing the role of mobile as a key enabler.
If you are interested in the discussions from MWC21 Barcelona and learning more about GSMA’s work in the financial services vertical and related events at MWC22, please visit: https://www.gsma.com/identity/financial-services.