How banking as a service is transforming the industry
Keeping up with banking can be like trying to watch a Star Wars spin-off with too many characters. The latest cohort of fintech innovators includes Ordo, Kasko, Mantl, Kani, and Tuum (payment processor, product distributor, client integrator, reconciliation specialist, and core banking provider, respectively).
The ecosystem is full of startups with colorful names but a similar premise: offering a service hosted in the cloud, connected through an API, to offer something the bank can’t build in-house.
BioCatch is a great example. Monitor behavior patterns to distinguish between users and criminals. In the first half of 2021 in the UK, criminals stole £754m through fraud, an increase of more than a quarter, so banks are keen to explore whatever technology they can find. BioCatch is therefore booming, signing up 62 clients, including Barclays, Citi Ventures and HSBC. BioCatch is cloud-hosted, so banks have nothing to run or maintain. They simply connect through an application programming interface (API).
If banks need it, they can outsource all aspects of operations. Options include Thought Machine for the core OS, Jumio for AI verification, FintechOS for the onboarding interface, Feedzai for fraud detection, etc. A system integrator like Synpulse or GFT will build everything if needed.
It has led to an analogy with LEGO. The parts fit together. If a block isn’t working right, remove it and replace it.
Overcoming the bureaucracy
The challenge for the industry is to assess how well this works in practice. Fintech investments average $170bn (£135bn) a year. If banks are offered services but are reluctant to experiment with plug-and-play providers, much of that venture capital cash will be wasted.
The speed of adoption can be exaggerated. “Actual connectivity is easy,” says Michael Mueller, CEO of Form3, one of the highest-profile cloud-native payment processors for banks like Lloyds, Barclays and N26. “We’ve had customers who received access to our API in the morning and were able to connect in the afternoon.” However, the timeline is considerably longer.
“Banks are probably more conservative than ever,” says Mueller. “But that conservatism is not necessarily rooted in the bank itself, but in the environment in which they operate. All of our banking clients must meet strict security, certification and auditing criteria. There is no time for risk when it comes to payments that drive the global economy.”
Delays can be frustrating for fintech providers, who want to connect with banks as quickly as possible. Ivan Maryasin, co-founder and CEO of Monite, a Berlin-based provider of integrated financial systems for banks, confirms that there are serious delays: “The typical experience for most fintechs is that a deal with a bank takes 12 to 18 months. something that the decision maker has already approved to materialize. There are all sorts of extra steps, like due diligence, legal compliance, the list goes on.”
Often, it’s just pointless bureaucracy, says Maryasin. “Currently, it feels like there are thousands of unnecessary steps in that process and people from all sorts of departments are getting involved, even if later they won’t have anything to do with the service at all. At worst, it prevents them from improving service. At best, it slows down integration tremendously.”
Neobanks are quicker to connect to third-party services, showing how much traditional banks could improve their performance. “Neobanks are the ones that are very close to this LEGO concept, built from composable blocks and using much of their infrastructure as a service. And this gives the opportunity to grow very quickly and outperform traditional banks”, observes Maryasin.
How to speed up the adoption rate
Three things can accelerate the rate of adoption of new cloud-hosted services. First is competition from fast-moving neobanks. Second, there is the attitude of regulators, who are becoming increasingly comfortable with innovation hosted in the cloud. And the third is the maturity of banks in dealing with services connected to APIs: this model is the new normal.
“Banking is becoming more experimental, but we’re still in the early stages,” says Iana Dimitrova, CEO of OpenPayd, which offers banking and payments through an API. “The real experimentation and innovation will come in the next few years.”
She says there is potential for really fast iteration. “Banking-as-a-service providers can really get their customers connected in a matter of days,” she says. “I would compare banking technology to electricity. A hundred years ago, if you wanted a light bulb in your home, it took a team of workers to install all the wiring, plugs, connections, and light bulbs you needed. Today an electrician can do the same job in less than an hour; Every component and process has been standardized. This is the change that banking has experienced in the last decade”.
Ultimately, the rise of plug and play for banking will reshape what it means to be a bank. We are on the cusp of true composability, where an entire organization is made up of third-party services, with all the parts changeable. When Banca Mediolanum Group launched Flowe, a new digital-only bank for younger customers, it did so using a composable banking structure. It went live in just five months and attracted 600,000 customers in its first half.
Varo Bank, another tech-first digital bank in the US, claims to operate at 25% of the cost of a traditional bank. It attracted four million customers in its first 13 months.
Banking is bursting with shiny new services, from core banking and payments to AI fraud detection and automated identification. The challenge for banks is to accelerate the adoption cycle to take full advantage of these opportunities. There is a galaxy of innovation waiting to be explored.
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5G as a transforming axis for industry and mobility
5G represents the definitive leap towards the era of digitization and milliseconds, being the technological enabler that will change the future of our lives, implying new ways of working and listening to our daily lives. In this article you explain everything needed to bring down 5G and how to transform industries, especially mobility. Keep reading!
It may interest you: Master in Industry 4.0
What is 5G?
Imagine a network with immediate response times and maximum bandwidth that also has hundreds of specific applications for all sectors and dynamically adapts to the needs of the service. This network is already a reality and both companies and society in general can use it to grow and transform.
The defined capabilities of 5G networks are useful for the evolution and availability of a combination of technologies such as virtualization and edge computingintelligence in red, cybersecurity or network cut (technologies that we intend throughout the article) in which the factor innovation plays a key role in defining, implementing and adapting them to society.
Hey, Spain will lead the number of pilot tests being carried out in Europewith a clear leadership in promoting the ecosystem that orbits around these new technologies.
Among the many sectors in which 5G will bring about a disruptive transformation, there are two with special relevance, due to their transversality in society: mobility and industry 4.0.
Industry 4.0: What technologies does the fourth industrial revolution include?
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The new mobility hand in hand with 5G and Industry 4.0
When we talk about the new mobility, we talk about the communication and interaction of the vehicle with its environment (other vehicles, road infrastructure, vulnerable users, etc.) in a safe, sustainable, autonomous and, of course, connected.
A mobility made up of a set of state-of-the-art technologies with a common goal: to reduce the number of deaths and injuries in traffic accidents to zero thanks to a 5G network capable of providing the fundamental and transversal elements that enable the new mobility paradigm. Sound levels:
- Sufficient capillarity so that thousands of elements per square kilometer can be connected simultaneously (vehicles, pedestrians, and all kinds of sensors: smoke, humidity, wind, thermal cameras or the traffic lights themselves).
- Very high bandwidths for video transmission or data transfer of high value for the ecosystem (for example, a vehicle equipped with a LiDAR capable of mapping its environment in real time).
- Ability to dedicate specific resources to different needs within the mobility ecosystem, differentiating, for example, the content dedicated to infotainment (gaming inside the vehicle) from the one focused on safety (brake warning). This is what is known as network cut.
- End-to-end encryption of communications, as well as a high reliability of these. Being able to also provide digital cybersecurity certificates to the ecosystem, creating a trusted mobility ecosystem.
5G applications and sales in the mobility industry
The use of computing nodes at the edge of the network (edge computing) at the national level will consolidate the capacity to:
- Offer immediate response time in an ecosystem of a few milliseconds of delay when making a decision, the difference between enduring an accident or avoiding it can be assumed.
- Process large amounts of local information in real time to be able to extract high-value data segmented by geographic area.
- Allow segmented management of the different applications in the field of mobility, being able to report to a centralized national platform.
The 3 great ecosystems that drive the 5G reds
Specifically, there is 3 large mobility ecosystems that relies on the capabilities of 5G networks to unlock its full potential:
one# Smart cities
Hyperconnected and smart cities (Smart cities) since mobility is a differential factor based on multimodality. It is about the use of various forms of transport in an optimal, safe and sustainable way. This will be achieved by connecting traffic lights, signals and zebra crossings, among others. This will make it possible to implement services capable of giving priority to emergency vehicles or intelligently managing traffic at intersections, at the entrance/exit of cities, or the optimal speed to pass green lights.
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two # smart roads
Digitization of roads or, what is the same, provision of infrastructure and connected roads. This encompasses 5G on roads and highways, including tunnels, information panels, black spots and smart roads. that is, cstop your ability to communicate with vehicles. Which, in turn, communicate with each other in order to carry out safe and coordinated maneuvers (coordinated overtaking) or act as sensors. For example, reporting an obstacle on the road in real time both to vehicles ahead and to road maintenance services.
3# smart industry
Let’s transfer the concept of connected mobility to the industrial environment. The object is to reduce the accident rate and increase efficiency in these environments. A good example of this would be remote driving services (avoiding the displacement of operators to dangerous areas), platoon (truck convoys that optimize fuel consumption and increase the efficiency of operational logistics) or the coordination of AMRs (Autonomous Mobile Robots) inside an industrial warehouse.
The neighborhood of the industrial revolution hand led 5G
The digitization of the industrial fabric key result to secure new business opportunities. Also to enhance competitiveness, process efficiency and guarantee the sustainability of the industry. Once again, 5G networks are the cornerstone to promote the definitive form of the industrial revolution, a revolution that orbits in rotation has 3 axes:
Hyperconnected digital industry
A transformation of the factory model or hub logistics as we know it, based on the digitization of elements and processes. The use of 5G networks in industrial environments (where private 5G networks take on special relevance) enables the concept of a modular factory by eliminating wiring, thanks to the use of wireless networks that guarantee quality of service at all times (and, therefore, , business continuity) within a hyperconnected environment capable of waiting for peaks in demand or variations in the production model.
Increased operational efficiency
Having a hyperconnected industrial environment unlocks, for example, the ability to create digital models identical to reality (digital twin concept, which runs at the edge of the network edge computing-) on which they will check how a change in the production chain would affect.
The fact of having information in real time about an intelligent network (mechanisms of deep learning) allows decision-making in the production chain in a reactive or even preventive way. This leads to operational efficiencies of:
- Between 10% and 20% in logistics environments. This could mean an increase of around 13% of the gross margin and the shipment of millions of additional packages per year
- From up to 20% in production costs. It could increase, for example, the gross margin of a car factory by 7%
- From up to 50% on inventory costs
sustainability
5G is 90% more efficient in terms of power consumption for unit traffic compared to previous generations. If we add this evidence to the previously mentioned (efficiencies in the use of resources and optimization of industrial processes in real time) we can obtain figures as promising as 15% reduction in greenhouse gas emissions in sectors such as energy, transport, construction or agriculture. In addition, to optimize the use of resources based on technologies such as predictive maintenance, it extends the useful life and favors the reuse of assets within a circular economy.
As we can see, right now we are in a phase of exponential development. The rapid evolution and availability of technology as disruptive applications arise daily in turn to 5G technology, both in the industrial sector and in society in general (education, commerce, health, sports, maintenance, mobility…), promising improvements in everything imaginable in aspects such as sustainability, efficiency, productivity, safety, quality of life, accessibility and many other factors.
By last, 5G is not just another evolution of mobile networks. It is a technological and social revolution with a very defined objective: to improve the lives of people and society as a whole.
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