The Future of Payments with New Financial Technologies (with Spanish Translation)

Over the past few years, new financial technologies (FinTech) have evolved rapidly around the world. Digital innovation has brought major improvements in connectivity and reduced transaction costs. It is transforming financial services as a whole. Innovations such as mobile money, peer-to-peer (P2P) or marketplace lending, Robo-advice, insurance technology, and crypto-assets have emerged. In the last decade, fintech has already driven greater access to, and convenience of, financial services for retail users. Meanwhile, artificial intelligence (AI), cloud services, and distributed ledger technology (DLT) are transforming wholesale markets in areas as diverse as financial market trading and regulatory and supervisory technology (RegTech and SupTech). The diversification of the financial sector has increased in both developed and emerging markets. Nowadays there are many different types and sizes of fintech and big tech, offering a wide range of financial services. Some remain focused on a single product or service, while others have leveraged their initial successes to broaden their service offerings such as PayPal. Some FinTech are converting to banks, while others have become service providers to, or value chain partners with banks. Depending on licensing approaches in different jurisdictions, a range of digital-only or digital-mainly neo-banks have emerged. Payments, loans, and deposit-taking services may be provided by specialized payment service providers (fintech), e-commerce platforms (big techs), and other non-banks. In this context, it is important that regulators develop approaches to ensure a level playing field and provide clear requirements for licensing. While FinTech can add efficiency to the delivery of banking services, if banking is to become entirely virtual, there will be significant impacts on underprivileged sectors of society. Moreover, FinTech can enable better management of financial risks but it cannot essentially change the nature or extent of financial risks. And while FinTech can improve the delivery of financial products, they cannot be left to create the regulatory and risk management frameworks to match. Fintech has the potential to facilitate lower-cost, faster, convenient, secure, and multi-channel accessibility to payments. It can also extend financial services to unbanked populations; to lower SME funding gaps; to reduce costs and delays in cross-border remittance markets, and to improve efficiencies and transparency in government operations that help reduce corruption. The technologies can help improve collateral management, fraud detection, credit risk management, and regulatory compliance. Through these channels, fintech has the potential to reduce income disparities and enhance financial inclusion as well as promote inclusive growth and financial stability. For digital transformation to benefit everyone and help tackle financial exclusion, stakeholders need to come together. Governments need to keep expanding internet access and help support initiatives in financial and digital education. Close attention must be paid – and funding made available – to overcome barriers to digital financial inclusion, including not only access to resources such as smartphones and the internet, but also digital and financial literacy, and potential biases amplified by new data sources and analytics. Financial institutions, new and established, need to seize this chance to innovate while national and international organisations need to coordinate to

The Conventional Marriage between Tech and Finance

The financial sector has always been one of the quickest to adopt new technologies. From using phones to provide banking services to the new FinTech sector, the relationship between the two sectors has always been positive.

Relationship between Going Cashless and Social Marginalisation

As we are becoming more reliant on technology, particularly following the COVID19 pandemic, our societies have moved ever closer to becoming cashless. Those who are struck by poverty, without disposable funds, or who live in rural areas are often affected, having limited access to credit, smart devices and secure internet connections.

Can Digital Payments Replace Cash Payments?

Technology has revolutionized the way people shop, sell, and save, and people are increasingly moving away from using cash. Even though, the rise of these digital payment systems and electronic banking has led to debates among economists, business experts, and the public about the future of cash. Recent studies states show cashless transaction volumes will increase by over 80% to 1.9 trillion by 2025 and that digital payments per person will triple by 2030.

The Move to Cashless Societies

The evolution of money as a payment method goes back to 5th century B.C. where what we know as coins today were first used. This transition from the old form of payment through bartering to the use of a universal payment method was industrialised in the ancient European continent in a region called Lydia where coinage manufacturing (minting) first took place.

Corporate Governance Digitization Strategy

Good governance encompasses the processes, practices, and policies that form the cornerstone of companies enabling leaders to responsibly manage their companies. Consequently, technology is mission-critical and crucial to the survival of a business.

20 years on: 9/11, Lone Wolves, and the threat of “New Threat-ism”

The attacks of 9/11 ‘changed everything’ for terrorism research – or, so at least the story goes. Brian Jenkins of the RAND corporation famously captured the field’s zeitgeist with a rephrase of an earlier version of his work, stating the ‘new type of terrorists’ “want a lot of people watching, and a lot of people dead” (own emphasis).

Can technology play a bigger role in enhancing CSR?

Information technology (IT) is an effective enabler for all sorts of business strategies, so it comes as no surprise that IT is useful for implementing a firm’s CSR initiative. There are many technological practices available that are targeted at improving the impact of CSR. Technology remains the basic driver of societal development, but growing social expectations place new demands on technology developers of responsible and sustainable technologies that could adequately support the solution of social issues in modern society.   Technology can help businesses to adopt a more coherent and integrated reporting framework. Through technology, companies are better placed to include detailed data on their supply chains and regional operations, providing a more comprehensive picture of their corporate sustainability and compliance. Consequently, technology allows businesses to explore and benefit from the interconnections between organizational strategy, governance, and economic performance. For example, Google is using its technology to tackle education inequality worldwide. The company has supported the creation of an open-source platform that translates books into local languages spoken in smaller communities around the world (Rico). Therefore, investors want to be associated with companies that have a long-term strategy to sustainably operate and maintain harmonious relationships with their stakeholders.   There is a huge potential for technology in strategizing, planning, managing, and reporting CSR programs. It has the potential to impose great impact. For companies looking to break away from the traditional way of doing and managing CSR, technology is regarded as a game-changer in the long run. These plans and strategies have the rationale for choosing the causes to support, beneficiaries, and locations to focus on and modalities of monitoring and reporting based on their previous learning and data analytics.   Technology could play a bigger role in enhancing CSR since tech platforms can bring greater transparency by bringing all the relevant stakeholders on one plane. Technology can help in prioritizing CSR expenditure by aligning them with the needs on the ground and helping choose the right partners at the planning stage. Additionally, CSR strong planning is a very important step that can be done by introducing various tech platforms. Tech based monitoring of CSR programs provides eyes on the ground and direct access to beneficiaries which paper-based monitoring cannot. CSR and Innovation are the foundation of business competencies. These two elements help companies to create value and new ways of operations that may be more efficient in resource utilization and will benefit the company in the long term.   References: John Riccio, How big tech is giving back to society, https://www.pwc.com.au/digitalpulse/tech-philanthropy-industry-giving-back-society.html. María I. González-Ramos* , Mario J. Donate , Fátima Guadamillas, “Technological Posture And Corporate Social Responsibility: Effects On Innovation Performance”, http://www.eemj.icpm.tuiasi.ro/pdfs/vol13/no10/Full/9_665_Gonzalez-Ramos_14.pdf. Goodera, “Technology as a game-changer for CSR”, https://goodera.com/blog/csr/technology-as-a-game-changer-for-csr/.