Cloud Banking Data Storage In The Spotlight - pymnts.com

Cloud Banking Data Storage In The Spotlight - pymnts.com


Cloud Banking Data Storage In The Spotlight - pymnts.com

Posted: 25 Sep 2020 06:34 AM PDT

Here's an eye-opener: Up to 1 in 5 customers in Italy, Spain and the United States are now likely to increase their online banking tool usage after the pandemic abates. Let that sink in.

Call it digital transformation or a financial services sea change, but cloud banking could not be better positioned for a touchless post-pandemic world of altered customer perceptions.

Digital Banks And The Power Of The Cloud Tracker® done in collaboration with NuoDB, looks at the rise of cloud banking, accelerated by the pandemic like many other trends, but with implications for the future of banking that will see entire swaths of the industry redesigned.

It's also an opportunity to address long-standing data issues that shadow digital banking.

The bizarre events of 2020 "… are prompting banks to examine how they store and manage their data to secure it from fraudsters as well as which technologies can help." Many financial institutions (FIs) "have considered moving sensitive information to the cloud, but this migration can create stumbling blocks for those that still utilize legacy core banking infrastructure," per the new Tracker.

"One recent study found that 71 percent of the information stored on public cloud servers can be categorized as sensitive data, even though these services' security measures are not as robust as those of private cloud solutions," the Tracker states. "FIs' struggles and rising fraud are also leading financial regulators worldwide to closely examine their data storage and transfer standards as well as what must be done to ensure that customers' information and the cloud solutions hosting it are secure."

Data Handling Pandemic-Style

Observing that "… the very foundation of all businesses is access to capital and the banks that lend it," NuoDB Chief Technology Officer Ariff Kassam told PYMNTS, "When the world shut down to keep its citizens safe … banks were forced to quickly adjust their services by maximizing their digital capacity and leveraging cloud-based technologies."

From remote onboarding experiences that actually worked to government aid disbursements, banks tapped cloud-based technology throughout the pandemic, Kassam said, "Using Kubernetes and containers to allow development teams to rapidly build and deploy solutions in the cloud," and leveraging software-as-a-service to handle back-end functions, refined digital experience to service customers "on their mobile devices as effectively as if they were standing in a branch, working with a teller."

Cloud benefits go beyond a great CX. "Many … FIs appeared to have adopted cloud solutions to beef up their protection measures" last year, with one survey finding that "94 percent of banks and businesses were utilizing more than one cloud provider. Eighty-six percent of survey respondents also said they expected their organizations' cloud strategies and environments to evolve to address novel threats."

Mobile Adds New Facet To Cloud Banking Data

Data compliance is as serious as it gets. Ask Google or any of the tech firms and FIs fined by the European Union (EU) and other agencies over policies at odds with new attitudes — and laws — concerning data privacy.

Perhaps it's for the best. "FIs have long been favorite targets of fraudsters. One 2019 report found that 62 percent of the data stolen in online breaches that year came from FIs, even though many banks and businesses were tapping some form of cloud technology at the time."

"The pandemic appears to be giving cybercriminals even more opportunities to launch their schemes, with 89 percent of U.S. consumers now using mobile banking applications to access their bank accounts," the Tracker states.

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers' growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

AICPA, Biz2Credit Launch PPP Portal For CPAs To Help SMBs - pymnts.com

Posted: 24 Sep 2020 02:12 PM PDT

To help certified public accountant (CPA) firms advising small- to medium-sized businesses (SMBs) on Paycheck Protection Program (PPP) forgiveness and additional financing choices, the American Institute of Certified Public Accountants (AICPA) along with its CPA.com division and Biz2Credit said in an announcement that they are rolling out the CPALoanPortal.com platform.

CPA.com President and CEO Erik Asgeirsson said in the announcement that CPA firms have "played a defining role" with their customers when it comes to business relief initiatives, particularly the PPP during the last six months.

"We have been helping the 44,000 firms provide advice and direction to their clients through our weekly AICPA Town Halls and resource tools," he said. "We're now taking the next step in launching a cloud-based business relief platform for firms to use in providing these services."

The platform provides new functions centered around CPAs to the automated PPP loan forgiveness technology at PPPForgivenessTool.com that the firms rolled out over the summer.

CPALoanPortal.com has the basic loan forgiveness technology with bolstered features for CPA firms to more effectively help their customers, according to the announcement. Those functionalities include connection with further lending options for clients; bolstered customer service for CPA firms; and features that let companies simply aggregate customers, tailor engagements and monitor financing/loan application status.

Biz2Credit CEO Rohit Arora said in the announcement that the PPP loan forgiveness process is just the beginning of the path to recovery for a number of SMBs. Arora said many of them will require further support and solid financing as the economy has its gradual rebound.

"That's why the additional lending options we're providing in CPALoanPortal.com are critical," Arora said.

In July, the AICPA and CPA launched the PPPForgivenessTool.com website. The Biz2Credit-powered technology harnesses the AICPA-created PPP forgiveness calculator and can be used by firms that have received approval for a PPP loan.

"This online platform will produce a finalized forgiveness application that a borrower can take right to their lender for submission without any extra work," Arora said at the time.

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers' growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

Bank of America Study Finds Employers' Sense of Responsibility for Employees' Financial Wellness Increased Significantly Over the Last Decade - StreetInsider.com

Posted: 24 Sep 2020 06:14 PM PDT

Ant Group IPO: Five things to know about the Alibaba affiliate aiming for the largest offering in history - MarketWatch

Posted: 24 Sep 2020 08:54 PM PDT

Jack Ma "has ultimate control over our Company," Ant Group said in a filing as it plans to go public.

AFP via Getty Images

Ant Group could be headed for the largest initial public offering in history, as the Chinese financial-technology juggernaut chases a valuation that would rival the biggest payments companies in the world. 

The Alibaba Group Holding Ltd.–affiliated company controlled by Jack Ma has filed paperwork to list its shares concurrently on the Hong Kong and Shanghai exchanges. Ant, which runs China's immensely popular Alipay mobile wallet, is reportedly looking to rake in at least $35 billion through an offering that could value the company at $250 billion, according to Bloomberg. 

See: These are the Chinese fintech firms you should be aware of

That would make Ant's offering larger than that of Saudi Aramco, which brought in more than $25 billion in the biggest IPO to date. A valuation of $250 billion would mean Ant is worth more than Bank of America Corp. BAC ($207 billion) and PayPal Holdings Inc. PYPL ($213 billion) but less than JPMorgan Chase & Co. JPM ($287 billion), Mastercard Inc. MA ($336 billion) and Visa Inc. V ($427 billion).

The company is best known for its mobile-payments offering, but it aims to be a one-stop financial hub that also provides access to wealth management, investing and insurance services. Analysts view the payments portion of the business as a gateway that brings users in to Ant's more complex offerings. 

The Ratings Game: Square stock gets an upgrade as Cash App enthusiasm keeps growing

Here are five things to know about Ant as it prepares for a public debut.

A sprawling financial empire

Unlike Western mobile wallets, Ant's platform touches on nearly all aspects of one's financial life. Ant goes beyond what PayPal and Apple Inc.'s AAPL Apple Pay do, offering services for everything from payments to credit to insurance to investments within Alipay, which the company calls a "ubiquitous super app." Ant counts more than a billion annual active users for the Alipay app and 711 million monthly active users. 

The Alipay app is "synonymous with digital payments in China," Ant said in its filing. Bernstein analyst Kevin Kwek sees the payments component as a "hook product" for the company that may have limited profit potential but helps the company bring in new users who can then try out more lucrative services. 

App-based payments are commonplace in China, even for in-person transactions, and this is perhaps the most well-known aspect of Ant's business. But other areas of the business are more interesting, Bernstein's Kwek argued in a note to clients, particularly the company's credit business, in which Ant originates loans that are almost entirely underwritten by financial partners, giving the company useful loan insights without requiring it to take much balance-sheet risk. 

The credit business is "maybe the gem" of Ant's business, Kwek wrote. By his math, with a "conservative" assumption that the company only made one loan to each of its 500 million loan customers over the past 12 months, Ant would have originated 16 loans per second.

"Everyone has heard of the 'fintech model,' where data insights from online activities will be used for underwriting and everything will happen digitally (and quickly, even instantaneously)," he wrote. "But to witness the growth at this scale was indeed a surprise."

Ant also offers investment services through the distribution of money-market funds, as well as wealth-management and insurance options.

Tightly linked

Alibaba BABA BABAF HK:9988 previously had a profit-sharing arrangement with Ant in which Alibaba received 37.5% of the company's pretax profits, but Alibaba announced in early 2018 that it would be switching to an equity structure. Now, Alibaba has a 33% stake in Ant through its subsidiaries, a move that analysts thought would help the Chinese e-commerce giant benefit from a potential Ant IPO down the line. 

"Equity ownership allows us to participate in the long-term value creation of Ant Financial as opposed to the quarter-to-quarter fluctuations of a profit share," Executive Vice Chairman Joseph Tsai said on the company's earnings call at the time. 

Beyond the equity interest, Ant and Alibaba collaborate on business-related issues. "We, together with Alibaba, are building the infrastructure for commerce and services," Ant said in its filing. The companies work together by "sharing insights" derived from their platforms, expanding cross-border efforts, and "jointly serving" both consumers and merchants. Ant lists synergies with Alibaba among its business strengths in its filing. 

Money machine

Ant generated RMB 120.6 billion ($17.7 billion) in revenue over the course of 2019, up from RMB 85.7 billion a year earlier. The company's latest annual total consisted of RMB 51.9 billion in digital-payments revenue and RMB 41.9 billion in credit-technology revenue. Ant added RMB 8.9 billion in revenue from insurance technology and RMB 17 billion from investment technology. 

The company posted a non-IFRS profit of RMB 24.2 billion for 2019, after recording a loss of RMB 18.3 billion in the prior year. The non-IFRS profit represents profit before accounting for equity-based compensation, royalty and service payments, gains on the disposal of subsidiaries, and some other items. 

Competition

Ant's main competitive pressures come from Tencent Holdings Ltd. HK:700 TCEHY, which operates the WePay platform, but, while the companies are close in terms of the amount of consumption spending they help facilitate, Ant, Bernstein's Kwek said, is "well ahead" in the other areas of its business. 

"Ant is [about five times] bigger on loans under management, [about four times] bigger on assets under management on the wealth-management side, and [about three times] more on insurance partners," he wrote in a note to clients. "The Tencent competitive threat exists, but isn't that large today." 

The real question for Kwek is what Alibaba will need to do to maintain its edge. This could mean "limited increase in take rates," or the amount of money that Ant retains for helping to facilitate various financial interactions, as the company fends off competition.

The biggest pain point for Alibaba might come from the Chinese government, which has put up roadblocks to Ant's growth in the past. Ant mentions in its filing that China's "laws, rules and regulations are highly complex, and continuously evolving" as it relates to obtaining and maintaining the proper approvals for doing business.

"They could change or be reinterpreted to be burdensome or difficult for us, businesses on our platform or our partners to comply with," the company cautioned.

How to invest

While Alibaba shares are listed in the U.S. and Hong Kong, Ant is aiming for a dual listing of its shares in Hong Kong and Shanghai amid tensions between the U.S. and China. The U.S. government is looking to impose stricter restrictions on Chinese companies listed on U.S. exchanges.

Because Ant's shares are expected to list in Hong Kong and Shanghai, the process of buying these stocks isn't as straightforward for U.S. investors as it would be for stocks listed on U.S. exchanges. Investors should check with their brokerages for specific rules. 

A spokeswoman for Interactive Brokers Group Inc. IBKR, for example, told MarketWatch that its international investors could access stocks on both exchanges. A spokeswoman for Charles Schwab Corp. SCHW said that clients could access stocks listed in Hong Kong but not those listed in Shanghai. A spokesman for Robinhood said the company doesn't currently support stocks trading on foreign exchanges. 

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