Your Friday fix for global fintech and payments news
With so many decisions to make at the end of year – gifts, food, decorations, what on earth to prepare for 2021 – we just couldn’t get our heads around settling on only three pieces of industry news to round up the week. So enjoy four. We are looking at how the cost of cybercrime may overtake previous records, how open banking can become beyond banking with successful partnerships, the increase of the contactless payment limit in India for 2021, and how Brits cannot see neobanks lasting 12 months into the future.
Our weekly round-up brings you a dose of some of the biggest news announcements from the past seven days so you can keep an eye on all that’s shaping our world this week.
- Cost of cybercrime to exceed $1trn in 2020
- Open Banking can turn into Beyond Banking
- Indian central bank raises limit for contactless card payments
- Brits still wary of trusting neobanks
Many of us around the globe are now working from home where possible. A new report from McAfee cited that this has led to a huge increase in cyberattacks, due to the decline of security that comes hand in hand with remote working. The research stated that the amount of crime conducted by the end of 2020 will increase 50% from the 2018 figure.
Although generally the financial sector sees stricter cybersecurity requirements put in place, it does still remain a concern, especially in emerging economies. A report from the International Monetary Fund stated that help is needed to develop cybersecurity capacity in low income countries and that the risk of cybercrime is a “new threat to financial stability".
Steve Grobman, Chief Technical Officer at McAfee said: "While industry and government are aware of the financial and national security implications of cyberattacks, unplanned downtime, the cost of investigating breaches and disruption to productivity represent less appreciated high impact costs."
Open Banking can turn into Beyond Banking
Like many things, open banking depends highly on mutual cooperation between old and new. Both traditional institutions and new-to-the-market fintechs must partner to create cohesive success, as exemplified in Commerzbank’s latest paper - The Future of Cooperation in Corporate Banking.
The study suggests that the larger customer base can be provided by the more traditional institution, with the fintech companies providing a focus on technology which delivers original services that help to unlock the potentials of open banking.
The paper states that: “Specialised fintechs may complement the [banks’] services with their capabilities to form a whole ecosystem of independent actors that collaborate to offer rich services that address highly individualised needs with innovative solutions.”
With the aim of increasing the volume of contactless transactions in India, The Reserve Bank of India has plans to more than double the contactless card payment limit, from INR2,000 (£20 GBP) to INR5,000 (£50 GBP). This change will come into play from January 2021.
Many players in the Indian payments industry are praising the decision to increase the limit, with the CEO and Managing Director of National Payments Corporation of India saying: “The increased limit will also help to boost the average value of transaction and push the adoption of digital payments. This step reaffirms the commitment of the country to become a less-cash economy.”
This is in line with comments from the Mastercard Merchant Acceptance South Asia Vice-President Vikas Saraogi: “Mastercard welcomes the RBI’s decision to increase the limit from Rs 2,000 to Rs 5,000 without entering a PIN on contactless transactions through NFC cards. The company has worked extensively on building awareness about contactless digital payments among merchants and consumers to help people shop quickly, conveniently and safely.”
Most of the UK will have at least heard of the challenger banks on the market. Interestingly though, research conducted by Plum, found that only 9% of their 450,000 respondents use the neobanks as their primary accounts. The remaining 91% have a traditional high street bank as their main bank account.
Separate data from Accenture finds further information about the uptake in the use of neobanks, revealing that only 10% of their respondents place ‘a lot’ of trust in the fintechs, in comparison to 41% for the traditional banks. To add to these surprising statistics, a fifth of respondents said ‘not at all’ when asked whether they trusted neobanks to look after their financial wellbeing.
UK Customer Insight and Growth Practice Lead at Accenture, Peter Kirk, said: "The pressure on banks - both traditional and digital - to meet consumers’ needs for convenience and safety is higher than ever. The challenge is on to create propositions that effectively reconcile the rapid and inevitable shift to digital in ways that feel more personal and relevant.”