Secure and fast money transfer (otherwise transactions) has always been and will be trendy. Every new year provides new opportunities, such as the QR tool or a fast transfer system by phone number. IPS (International Payment Systems, editor's note) compete with each other not for seconds, but for nanoseconds. By leveraging their correspondent account matrix, they build SWIFT transfer analogues. Cryptocurrency, based on blockchain technology, is actively developing because the absence of compliance (conformity to norms, editor's note) and currency control by the regulator allows for fast and technologically efficient transfer of funds from one market to another. All stories with money movements are relevant and will remain so, and process simplification and loyal tariffs will allow cash turnover to become cashless. In Kazakhstan, about 80% of payment operations are transfers. Fintechs that can compete for seconds and nanoseconds will continue to be in demand.
The popularity of fintech is understandable – the entry threshold to the industry has been lowered. Open banking APIs are used, non-banking companies can quickly partner with vendors and launch a working solution. The increase in the number of fintech operators allows businesses to choose integration independently: it is possible to add the ability to pay via Apple Pay on the website, or it is possible to launch your own microfinance system.
The main fintech trends for business in 2023 are acquiring, quiring, FPS (Fast Payment Systems), overnight, payroll project, accounting, cybersecurity, lending. Each deserves individual attention.
Today, to connect acquiring, it is not necessary to open a current account in a specific bank. Modern banking technologies allow having an account in one bank and connecting acquiring in another. This allows payments to be accepted from Visa and MasterCard, without opening accounts in other banks and without connecting additional services. How does this work in reality? Suppose, if one bank raises the acquiring rate, instead of changing the bank completely, this service can be connected in another bank - with a lower interest rate. This saves from unnecessary hassle: signing additional agreements and sending new details to counterparties.
In this case, the business does not have to buy and set up an additional terminal for accepting payments. The function of the terminal is performed by a smartphone or QR code. Accepting payments in this way from customers is easier and faster, and the company saves the budget every month on technical service and bank commissions (usually the commission in quiring is twice as low as in acquiring).
Fast Payment System
This is a service that allows money to be transferred almost instantly. And if before it was available only to individuals, now this function is actively being implemented by legal entities for settlements between themselves. This frees companies from spending 3-4-7 working days on processing a payment, also allows not to worry about time zones and availability of interbank settlements.
Overnight is a short-term deposit that lasts a few days or nights. This product helps the business to make income even when money is not working. Free money can be sent to overnight so that it does not lie idle until the moment when it is needed for investment in business development.
Payroll Project and BaaS
This includes the issuance of free cards for company employees and their easier receipt - without signing additional papers.
Thanks to the open banking system BaaS, companies have the opportunity to become a kind of bank for their employees and independently issue cards without agreeing with the bank. At the same time, the business remains protected from fines for, for example, errors in documents - the service remains on the side of the bank.
How does BaaS work? The company rents financial infrastructure from the bank and integrates banking functions into its own processes, and the bank provides access to API interfaces.
Thus, companies can connect any acquiring, offer customers different forms of payment, issue branded debit cards, create individual bonuses for customers, create their own payroll projects, and pay salaries in five minutes.
Several accounting programs are located on a remote secure server. The service also provides the opportunity to set up a personal tax calendar with reminders, calculate taxes, form reports. All this - without paper hassle and with easy access from anywhere in the world.
Another plus - such a simplified approach allows the head of a small company to keep the accounts himself, there is no need for a huge staff of accountants.
SMEs are especially vulnerable to cyberattacks because they hold large volumes of confidential customer data, but lack the investments to create quality security infrastructure.
Fintech products provide SMEs with advanced authentication features - biometrics, two-factor and multi-factor authentication. There are also fraud detection algorithms based on AI. By analyzing large volumes of data, they detect fraudulent transactions in real time.
Fintech as a Service (FaaS) is an important player in the market. Fintech companies can enrich a financial organization or build a business in a few months, going the path that large organizations take years. If a fintech service allows to set a new standard and create a service or product for the customer at the intersection of technology and democratization of conditions, then the probability of success in the market share is high.
When can fintech as a service be useful? Firstly, when it helps to maintain the integrity of the customer journey. At some stages of the sales funnel, some customers are lost. For example, at the moment of the test drive. It is quite difficult and inconvenient for many customers to come to the office to arrange a test period. However, fintech allows to do this online - without paper hassle and with automatic debits. Thus, FaaS services allow to connect different sales channels, launch payouts, loyalty programs, customer identification, or your own customized acquiring.
Secondly, when fintech allows the business to comfortably engage in scaling. Usually, if the business audience grows, it becomes difficult to maintain the quality of all processes, especially when it comes to payment processing. Fintech allows, without losing speed and quality, to make scaling budget-friendly.
Also, fintech helps to reduce the time-to-market - the time from the start of development of an idea to the release of the finished product on the market. About 20% of "late" products never reach their goals, so speed in business is important.
There are quite a few benefits of FaaS, and they are all based on simplifying accounting and the life of the entire business, as a living organism, as well as its interaction with customers. And it is important to note that fintech is able to adapt to any business.
Small businesses need funding to grow. However, obtaining a business loan is not the easiest task. The bank's decision depends on: credit line, company existence period, cash flow and credit rating. The underwriting process can take from 30 to 90 days.
Credit products for SMEs are not standing still, and fintech solutions help companies improve cash flow, invest in new opportunities and grow.
Different markets have their own specific players, depending on the regulator, the market itself, operators, and the economy. Mostly, these are microfinance companies, in whose business development institutions such as ADB (Asian Development Bank), EBRD (European Bank for Reconstruction and Development), and others participate. By providing their tranches to flexible, technological MFOs (microfinance organizations) and MCOs (microcredit organizations), institutions achieve SME market penetration. There are many programs and conditions. Speed is one of the important components. Due to it, rationality among clients takes a back seat, they choose an irrational, but fast path.
For example, Freedom Bank has launched online working capital financing for SMEs. 100% online, without going to the bank and collecting documents. To fill out an application on the website, you only need your Individual Identification Number (IIN) and phone number. How did this happen?
The team that worked on the launch of this project was able to build digital processes that assess the reliability of an individual entrepreneur, perform identification, open an account, sign a contract, register a pledge if necessary, and make a scoring decision in seconds.
Some statistics for this product. In 2 months, the share of organic queries amounted to 98%, only 2% – lead generation.
The main question at this moment is: what is the basis - irrational or rational choice of the client? Usually, when creating a product, one type of thinking is laid down, as it is difficult to combine both. Conscious, logical, but also emotional choice is possible only at the intersection of technology and democratization of conditions.
Emotionally, it is important for a person that it is easy to use the product and quickly solve their problems, that everything works correctly and "does not irritate".
How emotions intertwine with the Digital Credit from Freedom Bank:
1. The application form only requires two fields to be filled - the individual identification number (IIN) and the phone number.
2. The client is identified through video biometrics.
3. Online scoring is available, with decisions given within seconds.
4. Zero paperwork and document hassle.
5. Account opening happens online.
6. Collateral registration is done online.
7. Credit up to 10 million tenge is given without collateral.
8. Signing of the loan agreement and payment schedule is done online.
9. The loan is issued online.
No need to gather documents and stand in lines, no need to come to the bank and depend on a loan manager. The emotional process created time savings, the ability to quickly purchase at the best price, and a host of other advantages, all of which flowed into the rational part of the thinking.
The rational calculation of the interest rate has become part of the emotion - the payment is much less (often by tens of percent). This is important, considering that every tenge counts for the entrepreneur. This calculated approach leads to positive emotions and recommendations. Personal client recommendations make up these 98% organic inquiries.
Who are these clients? They are mature, established representatives of small and medium-sized businesses (SMBs).
In doing so, they are offered one of the lowest interest rates. As a result, the Digital Individual Entrepreneur product has seen up to a thousand applications per day, amounting to approximately 20-30 thousand unique inquiries per month, just a few months since its launch. And all this is not due to advertising, but well-constructed processes.
Payment companies will become aggregators of banks' Open API services. They are technologically advanced, capable of transferring funds from point A to point B, integrated with banks' processing systems and can identify the customer. Thus, by integrating the services of banks, payment companies can build a B2B business for the bank and the market, as well as implement the regulator's program to develop an open platform for financial organizations.
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