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IN AN AGE where all industries have become a subsection oftechnology, financial technology, commonly known as fintech, hasbeen molded by a handful of milestone technological inventions.The financial services industry has always been at the forefront toexploit what technology has had to offer. After the advent of theinternet that shaped the modern world, we are again at a pivotpoint where several new technologies are creating new paradigmsthat will change the shape and face of all industries along withopening up new vistas for the financial world.

It is speculated that there will be more changes in the indus-try over the next decade than there have been in the past 100years. Akin to the mechanisation and transformation of the autoand garment industry by technology, the financial industry is atthe cusp of being modernised. The next couple of years will seethe industry embrace fintech as it can help streamline infrastruc-ture, deepen customer engagement and improve delivery capabil-ities.

Global surge of investment in fintech. In the last three years,there have been exciting developments in the fintech sector,matched by equal enthusiasm from consumers and serviceproviders alike. The numbers are certainly reflective of the indus-try sentiment where in 2014 saw a Bitcoin investment worthUS$400m alone, while future forecasts also seem to be in linewith the various predictions. In 2014 investments soar in financialtechnologies and reached a record high of US$12bn, indicatingindustry wide interest and hinting that the digital revolution inthe sector is well underway.

China is moving forward with integrating the internet intothe financial services industry and 2015 could be a “breakthroughyear” said Amy Choi, Vice President of Ping An Bank CompanyLtd, China. China is amongst the leading nations of the worldalong with the US and most European countries in appreciatingthe impact of financial technology.

These pioneering nations and their prevalent demand forinnovations in the financial sector to match their already complexfinancial processes are carrying the development of fintech worldforward.

Key emerging financial technologies. Wireless ATMs. As aresult of the expansion of wireless technology to even the mostremote corners of the world, customers have been mobilised and

are always on the move. To cater to this new dynamic, ATMs areevolving too. Wireless ATMs functioning on 3G/4G can bedeployed at practically any high-volume usage location, frommarkets, trade shows, railway stations, special events and concertsto conventions. ATMs can now be placed at strategic positions toinfluence customers purchase decisions such as shopping centresand high-value goods stores.

These high-speed internet based ATMs are not mere cashdispensation machines, in fact they offer a whole lot more. Theyhave become revenue streams in themselves as they support richdata applications such as on-screen advertising and personalisedmessaging to target audiences, therefore making them attractivepromotion channel for advertisers.

The value addition comes from the advantages of Machine-to-Machine (M2M) communications and remote operation andmonitoring. These ATMs can communicate with contactlesspayment devices and are remotely monitored from a controlcentre.

Wireless ATMs are much more efficient as the status of eachunit and customer transaction can be monitored in actual timefrom any location, notifying operators of faults, irregularities, cashlevels and security breaches. Additionally, there is no ATM down-time costs and therefore are much cheaper to run than conven-tional fixed line ATMs.

Cryptocurrency and block chain revolution. Cryptocurrencyis the first self-restrictive, electronically stored, currency systembased on the block chain encryption technique which makes ittamper proof. Unlike the fiat currency which is a legal tender, thevalue of which is governed by the relationship between its supplyand demand or the commodity/representative money which isbacked by a commodity such as gold or silver, cryptocurrency iscreated when and where there is demand for it and can’t bemanipulated by government-controlled banks.

Cryptocurrency creates basic monetary units and verifies thetransfer of funds instantaneously. The cryptography process usedin cryptocurrencies is the renowned system widely adopted byonline payment companies such as Paypal, Google Wallet andWePay which is secure from all third parties.

The block chain is a decentralised public ledger system thatuses a peer-network to record transactions. All transactions are

Technologies poised todisrupt the financial servicesindustryBy Andrew Godsmark, NetSol Technologies

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recorded under a given title thereforethey are not anonymous. Users con-tribute in the verification process oftransactions, called mining – in realtime – for a prescribed compensation.

The block chain system is beingdubbed as fraud proof because therehas not been a single incident, of eventhe slightest discrepancy, in any of theblock chain systems in use to date.Once an immutable block ofencrypted transaction has been cre-ated, it is added to the end of a chainand a copy of that chain is held by allparticipating users of the network.

The encryption is such that anyalteration in a single block of a chainby any user will alter the entire chainheld by that user and therefore will notmatch with the corresponding copiesof that particular chain held by all inthe network. It is akin to a DNA in every cell.

Athough the way people make payments is only one of thefew types of transactions being affected by the block chain tech-nology at present PwC claims that the technology has thepotential to disrupt several other kinds of transactions such as:• Smart contracts: Set rules that automatically enforce a con-

tract terms.• Smart property: Using block chain you can automatically

trade properties.• Notary services: Block chain systems can keep records of

documents and their details, such as the time and date of cre-ation of a particular document.

• Bonded identity services: Secure identity verificationthrough block chain. The most promising of these for the financial services

industry is the prospect of smart contracts which is garneringinterest from financial institutions. These contracts, once config-ured to the specifications of a lease agreement, can enforcethemselves. For example, under a usage based contract, a pay-ment can be triggered automatically on the usage of an asset, ora settlement automatically initiated against a default on a con-tract term. Thus there is no need for a big central database orenforcement operatives.

This system can also be used to track and record attributes ofany high-value asset. Leeane Kemp, CEO of Everledger, in con-junction with Barclays Bank, is using the block chain technologyto record unique attributes of diamonds on a global ledger. Thisgives transparency over the entire supply chain/chain of custodyof any diamond. This is just one-use case already being imple-mented. Also, it has the capacity/potential to track complete fleetsof leased cars through their entire contract life cycles.

Cryptocurrencies inimitability. The quintessential differencebetween traditional monetary exchange systems or secure onlinepayments and cryptocurrency lies in the encryption process beingcoupled with the public ledger system.

This protocol eliminates the need for verification by atrusted central third party to validate the transaction and movefunds and assets from one entity to the other. This enables thebuyers and sellers to interact directly, sharing encrypted datawithout the need to give out personal information.

PwC has tasked a cross-functional team – for more than twoyears now – to observe the development of the cryptocurrencymarket and have put out several papers on the subject. In theirlatest paper “Money is no Object,” PwC acknowledges cryp-tocurrency’s potential to disrupt various markets, while dispellingsome common misconceptions.

They make the case that cryptocurrency has gained accept-ance as an alternative “unit of value” and coinage by a criticalmass of five key market participants: investors, technologists, reg-ulators, merchants, entrepreneurs and consumers.

It was also noted that the recent use of Bitcoin in some ille-gal activity has been a cause for concern. However, it is not rep-resentative of the industry as a whole and only identifies the needfor increased monitoring and governance.

It will serve financial institutions well to offer or adopt vir-tual currency strategy to remain the ultimate clearers and settlersof a transaction.

High frequency trading. High frequency trading is an exam-ple of how fast and powerful computers connected with high-speed internet are changing the dynamics of the financial world.It gives traders the ability to fully automate the transaction oflarge number of orders at extremely high speeds. These orders areautomatically triggered and carried out when certain criteria aremet, using conditional protocols.

High frequency trading platforms are being widely adoptedby large investment banks and institutional investors and areknown to give an advantage of more than 500 microseconds forgetting Nasdaq (NDAQ) price quotes, using a direct feed fromthe exchanges.

Contactless payment technology. Presently, out of the esti-

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mated 650 million NFC capable phones only 5% are used at leastonce a month to make non-contact in-store payments. However,with most smart phone manufacturers incorporating contactlesspayment capability in their handsets and more and more retailstores incorporating the technology this number is expected torise drastically. It is estimated that by the end of 2016 there willbe nearly two billion smartphones users globally, more than halfof which will have phones capable of contactless payment technology.

IoT. The internet of things (IoT) is not a novel idea by anymeans and has been around for a long time, a simple point of sale(POS) machine being just one example. However, the buzzaround the much predicted imminent storm of connected andinterconnected devices does hold merit.

In its most advanced and holistic manifestation IoT is a smartnetwork of devices, from everyday personal electronics to indus-trial machines, that now have computing power, can sense andtransmit information and can be operated remotely over theinternet, thus giving the user the ability to operate and manipu-late these devices remotely.

This subtle shift in how we now integrate and operate ordi-nary devices into an integrated framework is rapidly changingconsumer expectations and has awakened technology providers tothe boundless possibilities brought about by the prospects of aworld submersed in the internet of things.

Estimates of the size of the IoT market varies, with Gartnerevaluating it around 26–30 billion devices, with a “global eco-nomic value-add” of US$1.9 trillion by 2020 and InternationalData Corporation (IDC) estimating that the universe of thingsconnected to the Internet will generate nearly US$9 trillion inannual sales by 2020.

Whatever the actual figures, the market and its growth islarge enough to require extensive financing operations and subse-quently powerful enough to alter the face of the financial servicesindustry itself.

Currently, IoT is being driven by sensor and node imple-mentations made possible by innovations in wireless technologieslike Bluetooth, ZigBee and RFID – while advances in cellulartechnology (3G/4G) and Wi-Fi serve as communication high-ways, conveying collated data to the cloud to be processed andtransmitted.

IoT is expected to impact financial institutions and retailbanking in a big way. These institution are always looking toattract more savings, increase business volumes and give out morecredit. The installation of low-cost sensors can tell you when amachine is likely to break down allowing banks incredible insight,thus reducing their risk factor and thereby allowing them toextend loans to small businesses.

Companies like Ford are using RFID’s to monitor vehiclesso as to offer their customers maintenance and financing optionswell after the sale of a car. These companies give promotionalincentives such as a car model upgrade or family plan extensionto offer an additional vehicle on an existing plan at a lowerfinancing rate to increase business volume.

Additionally, under IoT data availability and consumptionbecomes instantaneous. A simple voice command or swipe on a

watch or mobile screen will bring up the data people want to seebefore making smart financial decisions.

These devices keep track of expenditures and give assess-ments and quotations on the go, helping users curb excessiveexpenditures and aiding in making the right decisions and invest-ments in the moment. Glasses can already provide instant infor-mation on items in a user’s view, including costs, plans andassessments on whether a user can afford the item or not.

Big data. The emergence of big data and associated analyticsis gaining momentum with the support of IoT as the growingnumber of wirelessly enabled devices feed into the data pool andin turn take advantages of the same data set to operate applica-tions and provide services.

More granular and in-depth data sets hold value and offerreal-world insights from assets and actions that were traditionallymuch more ambiguous. Financial advice and consultancy is mostcontextual when delivered in real time, therefore communicationwith customers is ideal through banking by countless forms,mailed statements and timely updates.

Linking insurance data to investment opportunities boastsinteresting prospects. If insurance companies anonymise andaggregate data then investment banks would benefit enor-mously. For example transatlantic shipping delays can affect salesand will impact stock markets or knowing how many trucks lefta car manufacturer’s plant will give you an excellent indicator ofstock levels and future revenues. If lots of employees of a partic-ular company need travel insurance for some new countries, it is easy to see which region the company is increasing its investment in.

However, some cases will require customers to agree withtheir insurance data being shared. This can be done by incentivis-ing them by offering discounts or launching other such promo-tional programmes.

What Fintech means for the financial services industry. Theprimary change in the word of finance is the ongoing digitisationof banks. In the new all-digital environment conventional bankswill have a hard time surviving if they resist to evolve as it is notconducive to their strengths or interests.

Megabanks have the cushion and flexibility to adapt anddigitise, however for this to work these financial institutions needto recognise the implications of an all-digital environment, andthen draw up a strategy for becoming ready for the changed envi-ronment.

The most overwhelming impact that the advent of any newtechnology has on an industry is that it creates redundancies andfintech is no different. Dealers, brokers, traders, money managersand various indirect customer touch points such as call centresthat are between the service providers and the end customers asmere “middlemen” are at risk of being cut out and replaced bytechnology.

The rise in internet banking, increased usage of alternativepayment systems like Apple Pay and Amazon gift cards and fastadoption of mobile contactless payment technology has broughtabout the disintermediation of the financial and banking sector.

Money management is an area that stands to gain consider-ably from new financial technologies. Real time data collection

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coupled with the ability to act upon that data provides the uniqueability to initiate and execute deals and financial contracts fromthe field on the go.

Financial services platforms can stream data from live feeds,process, acquire consent from customers, digitally verify and makedecisions in the moment, essentially capitalising on advantages intime sensitive matters that were conventionally lost. This dynamicand live money management can give customers calculations onthe go in order to make smart decisions.

Technology brings major benefits to banking such as lowercosts, greater transparency and more efficient, convenient andconsistent customer experiences.

Technology has altered the way we now approach problemsolving and set ways of doing things. This change in humanbehaviour has increased the minimum level of performance wehave come to expect as standard. Consumers now have access tofinancial data around the clock and now expect service deliveryon the go.

These changes have evoked an archetype shift in traditionalbrick-and-mortar financial institutions and forced them to deliverpersonalised service and user interactions through a host of newcommunication channels (mobile apps, digital banking, contact-less payment systems, machine learning and smart wallets to namea few). This has been made possible by the collection of big data,data mining and advanced analytics tools.

Barriers to adoption. There still are a few years to go beforeall these new technologies become completely assimilated intoour daily lives and we accept all digital financial institutions as thenorm. Resistance by conventional banks, customer’s affinity tobrick-and-mortar institutions and their mistrust of online onlyentities (vulnerable to hacks) are slowing down adoption.

Virtual banks lack the authenticity that brick-and-mortarbanks enjoy, therefore traditional banks will have to transition into

a brick-and-click setup, in which they maintain the minimumphysical presence required to ensure efficiency that can only beafforded by a physical network of branches and ease discerningcustomers. The current decade will be essential in the growth anddevelopment of fintech as a solid concept for the consumer tograsp.

Future of the industry. As these disparate yet complementingtechnologies take hold and develop into an ecosystem for thefinance world, financial institutions and financial technologycompanies will be inundated with opportunities and possibilities,some of which this paper has attempted to allude to.

The focus of financial services will be all about real timeservice delivery, convenience, personalised interactions andremote operations.

An overwhelming number of millennials feel that the bank-ing and finance industry is outdated and are not satisfied with theexchange system and the way money is managed. They also feelthat the disruption in this industry will be bottom up and willactually come from outside the industry, with some tech start-upcoming up with a product/system that will set the ball rolling onthe revolution.

While industry giants are slow to realise and adapt, differentfinancial technologies are already incrementally changing theindustry for the better and putting this unique and gradual indus-try revolution in motion.

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LEASING SOFTWARE REPORT

If your company is not included in this software report but you wish to be listed in the next edition please contact:

Leasing Software ReportWorld Leasing Yearbook59 North HillColchesterEssex CO1 1PXUKTel: 44 (01206) 579591

within the market place. Clients can also have a secure remote

access so that they can view their data.

Recent enhancements: Have launched a front end proposal

system with workflow management that feeds its back office

system so that clients can book deals directly to LPMs sys-

tems. Hardware compatibility: Not applicable to clients as this is an

outsourcing service although we can generate data feeds for

GL purposes.

Availability: Immediate on a pay as you use basis.

Price range: On applications.

Country applications: United Kingdom.

LINEDATA SERVICES

Program name: Ekip

Program type: Ekip is the pan European software solution for

leasing and credit finance and offers full life-cycle administra-

tion and accounting support for all types of business and con-

sumer finance; Revolving Credit, Finance Lease, Operating

Lease, Loans, Full Service Leasing, Fleet Management, Service

Only, Hire Purchase, Real Estate Leasing and Dealer Funding.

All finance types are managed in a single, open architecture

system providing both control and flexibility. Already

installed in 16 countries, Ekip has full multi-company, multi

language, multi-currency facilities with country specific fiscal

and legal compliance.

Transaction capabilities: Ekip is fully Oracle certified and is

designed for large volume processing within an international,

multi-country business environment. The product architecture

supports a comprehensive range of finance types and is easily

interfaced with external or internal systems to deliver a fully

integrated end to end solution. Payment structures can be at

asset or contract level and unlimited services (insurance, main-

tenance, fees etc) may be included. Workflow strategies can be

used to automate and control procedural tasks to improve

efficiency and reduce costs.

Recent enhancements: R&D in Ekip is continuous (over 6500

man days in 2004). Our package approach means continued

compliance with legislative rules/regulations and regular func-

tionality improvements so ensuring the system is a cost effec-

tive, long term investment.

Hardware compatibility: Any hardware that supports UNIX,

Linux or Windows operating systems.

Availability: Purchase, rental or ASP.

Price range: On application

Country applications: Austria, Belgium, Cyprus, Czech

Republic, France, Germany, Italy, Lebanon, Morocco,

Netherlands, Poland, Portugal, Spain, Switzerland, Tunisia

and UK (plus continuous R&D is extending the geographic

reach all the time.)

MONIS SUNGARD TRADING AND RISK SYSTEMS

Program name: Analyzer, Structure

Program type: Lease evaluation, pricing and structuring.

Intended for Windows environment, these stand-alone prod-

ucts are designed for complex evaluations in the medium/big

ticket markets.

Transaction capabilities: Analyzer’s powerful non-linear opti-

miser targets and maximises any given measure while solving

for multiple variables, subject to such constraints as negative

depreciation taxation. Add flows, fees and loans and create

complex relationships between all elements of the case.

Unsurpassed flexibility and solving power for highly sophisti-

cated calculations including strip-risk and a-, b- and c-line

SLV schedules. These widely used evaluation programs in the

UK, used by over 80 lessors, lessees advisors and arrangers,

including Macquarie Securities, Lloyds Leasing, Bank of

Ireland and PriceWaterhouseCoopers.

Recent enhancements: Grids with Excel-like functionality for

hands-on number handling. Scenarios facility for automated

sensitivity runs. Advanced Tools support calculation and

accounts for multiple parties and includes an export engine to

Excel. New template for Japanese Operating Lease

Evaluation.

Hardware compatibility: PC running Windows 95, 98 or NT.

Availability: Immediate.

Price range: On request.

Country applications: All.

NETSOL TECHNOLOGIES LIMITED

Program name: LeaseSoft: The constituent software applica-

tions are: ePOS (electronic Point of Sale), CAP (Credit

Application Processing System), CMS (Contract Management

System) and WFS (Wholesale Finance System).

Program type: LeaseSoft, a suite of four integrated applica-

tions, is an end-to-end core leasing solution which fully auto-

mates the operation of a leasing / finance company. The four

applications under LeaseSoft have been designed and devel-

oped for a highly flexible setting and are capable of supporting

multi-company, multi-asset, multi-language, multi-distributor,

multi-manufacturer and multi-currency operations.

Transaction capabilities: The LeaseSoft applications integrate

as a total leasing solution, interfacing to required external

environments; or can be implemented individually to address

the areas indicated below, interfacing to an organisation’s

existing applications. Where required, the applications are

supported by robust and flexible workflow engines.

LeaseSoft.ePOS: highly configurable and parameterized web-

based point of sale system for booking credit applications.

LeaseSoft.CAP: robust automation of the credit approval

cycle. CAP is point-scoring based, interfacing with credit

rating agencies, Red Book, etc. CAP handles any number of

scoring models and rules within a particular model; with use

of a particular model being selected by defined criteria.

LeaseSoft.CMS: supports the complete lifecycle and all

aspects of a retail contract. CMS also maintains a comprehen-

sive database of business partners and assets. LeaseSoft.WFS:

automates and manages all aspects of the floor plan / bailment

activities of a finance company. Dealer Access System (DAS),

an additional web-based sub-system of WFS, links dealers to

the finance company through the internet.

Recent enhancements: An Accounting Engine has been added,

enabling easy configuration of accounting entries.

Hardware compatibility: Scalable Intel Architecture servers.

Availability: LeaseSoft is a highly configurable suite of para-

meterized and fully integrated applications with short imple-

mentation cycle. LeaseSoft can also be customized to meet

specific business requirements.

Price range: Please contact NetSol Technologies for informa-

tion. Country applications: Australia, Japan, Mauritius, New

Zealand, Peoples Republic of China, South Korea, Singapore,

Taiwan and Thailand. All four LeaseSoft applications can be

implemented in Europe and North America with equivalent

ease.

LEASING SOFTWARE

Author:Andrew Godsmark, European Product Head for Ascent NetSol Technologies, Planet House, North Heath Lane, HorshamRH12 5QE, UKTel: +44 1403 282300Email: andrew.godsmark@netsoltech.com; Website: www.netsoltech.com

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