Where would we be without technology? It has become a fundamental part of many of our daily lives.
It’s remarkable to think that the first generation of iPad was only released 6 years ago; tablet devices are now a common household item. Technology is changing the way we live, and the way we are interacting with each other and businesses, including financial services.
It is no surprise that financial services are also developing through the use of technology. I have recently worked on updating the ICA Specialist Certificate in New Payment Products and Services, the rate of change since the last edition of the manual has been remarkable.
In 2013 when the certificate was first launched, one Bitcoin was valued at around $100, in 2016 it is around $600. The first edition of the manual discussed the use of Near Field Communication (NFC) to pay for items without having to enter your PIN. Today a payment card isn’t needed; the NFC technology in mobile phones and ‘smart watches’ can be used to make purchases.
Whilst NFC may be making it easier for those with bank accounts to pay for their morning cup of coffee, the benefits of technology can be even greater.
One of the key aspects of the increased use of mobile phones is their role in supporting the key global strategy of financial inclusion. Mobile payments (m-payments) have been instrumental in providing access to financial services to communities who are not served by ‘traditional’ financial services. GSMA remarked that “mobile money has made it possible for over 100 million unbanked and underserved people around the world to access convenient and affordable low-value transfer and payment services”.
But as we explore within the NPPS specialist certificate, the benefits of financial inclusion have to be balanced with the requirement to maintain financial integrity. The communities served by mobile money providers often do not have the standard identity documentation to meet basic account opening requirements, further cementing the requirement and importance of a risk-based approach.
Managing the risks associated with NPPS will no doubt continue. Financial Action Task Force are clear on their stance, financial inclusion is a prerequisite of being able to detect and disrupt money laundering and terrorist financing.
It’s clear that technology innovations in financial services will play a key part in all of our futures, by providing more convenient and quicker access to customers who already have bank accounts, and opening up opportunities to the 2 billion adults who are still ‘unbanked’.
The financial services industry is seeing an unprecedented level of innovation, with the UK actively looking to develop the FinTech sector. The UK’s Financial Conduct Authority has introduced an Innovation Hub to help established, regulated businesses and unregulated start-ups to introduce innovate financial products and services to the market.
Terms such as FinTech and RegTech will become even more common and hold more significance in the near future. It’s an exciting time to be a part of the industry, and something we are monitoring quite closely at ICT.
Find out more about the ICA Specialist Certificate in New Payment Products and Services, which looks more closely at mobile money, prepaid cards, internet based payment systems and virtual currencies. This course will be available for enrolment soon.
By following us on LinkedIn, Facebook and Twitter you’ll stay up to date with the latest developments in governance, risk, anti-money laundering and financial crime prevention, and the professional qualifications we offer.