Financial Verification Software in 2023

One of the biggest challenges facing the growth of financial technology is a lack of control when verifying user information. This is a serious issue, especially considering the role these services play in our day-to-day lives.

With FinTech having transformed the way people manage their money, the need for data safety cannot be overstated. In this article, we will look at why this issue is so significant for companies of all sizes and what can be done to mitigate the risk. 

The Importance of FinTech Security

Fintech security can be compared to a secure home. Just like you wouldn't leave the windows and doors of your house unlocked, fintech companies cannot put their platforms at risk of being broken into. The security systems FinTechs use in this case becomes the home security system except for a millionfold the number of members.

What The Research is Telling Us

Last year, research found that more than 50% of financial institutions were impacted by cybersecurity breaches, which is a 21% increase from the previous year. Additionally, more than 40% of these attacks were aimed at small to mid-sized businesses of which only 14% have the resources to defend themselves.

And lastly, a survey last year found that over 20% of US companies who did face an attack lost between $100,000 to nearly $500,000, with 4% losing over one million dollars.

Options Moving Forward

As we consider the best options for financial firms to maintain the security of their platforms in 2023, one of the most relevant and pressing topics in the sector is KYC (Know Your Customer) software. Before delving into other facets, let's take a closer look at this aspect of fintech security:

Defining KYC: In simple terms, KYC is the process of confirming the identity of your clients and checking that they aren’t involved in any illegal activities. KYC software is an automation tool that supports financial institutions, which includes fintech businesses, in meeting regulations and mitigating any possibility of misconduct.

The software simplifies the customer onboarding process by collecting and verifying their personal information. It then cross-references the information with various databases. 

The process is mandatory when opening/maintaining bank accounts in the United States and Canada, as well as in several other countries. This is certainly for good reason as taking on new customers poses plenty of risk without proper verification processes.

This is why every startup needs to strategize and prepare for these contingencies. Yep, it starts that early, and as we said earlier, it’s the small to mid-size institutions that are targeted the most and impacted the hardest.

Now, although KYC is important, it is not the only component needed to ensure your platform is secure. Other aspects include:

• Customer Due Diligence (CDD): This is half the process of KYC as this is what collects and cross-references the information financial institutions use to determine the risk customers pose to the institution.

• Anti Money Laundering (AML): AML goes hand in hand with KYC since KYC is merely a component of AML technology. It’s designed to prevent any illicit activity such as money laundering or other offences alike. 

• Fraud Detection Software: This technology analyzes transactions and flags anything that comes across as unusual or suspicious based on pre-determined criteria. This helps to quickly identify potential fraud and minimize the risk of revenue loss.

Again, we’ve emphasized that the financial institutions that prioritize meeting regulatory requirements using these processes will be better equipped to handle cyberattacks and reduce the risk of data breaches, financial losses, and damage to the company’s reputation. 

Investing in the right financial verification software not only meets regulatory requirements but also gives clients peace of mind knowing their information is protected. Aside from the direct risks facing firms in terms of security, it’s said that the vast majority of customers won’t stay with platforms that poorly integrate KYC guidelines.

The Takeaway

Financial firms need to consider how KYC fits into their platform. Is it already a high priority? Do your customers find it annoying? The performance of your platform is meaningless if the experience is not enjoyable for your users. This means that consistently evaluating your platform and getting the necessary help will set up any firm for success in the long run. 

Written By Ben Brown

—

ISU Corp is an award-winning software development company, with over 17 years of experience in multiple industries, providing cost-effective custom software development, technology management, and IT outsourcing.

Our unique owners’ mindset reduces development costs and fast-tracks timelines. We help craft the specifications of your project based on your company's needs, to produce the best ROI. Find out why startups, all the way to fortune 500 companies like General Electric, Heinz, and many others have trusted us with their projects. Contact us here.

Why Financial Firms Use System Automation

In today's fast-paced business environment, teams who prioritize productivity and efficiency have a much better chance of success. Savvy leaders know this, and it’s why they treat their time and that of their teams as a currency, because it quite literally is. 

Investing in efficient systems is a must for businesses targeting long-term success. It starts by maximizing the short-term time-saving potential. Now when we say “succeed long term,” we’re not talking about the businesses trying to dominate the market for the next 3-5 years; we’re talking about the enterprises looking to make their mark for the next 10, 20, 30 years and beyond. 

But what industries do businesses aim to compete for such a long time? The financial industry is an example of a sector where businesses aim to compete for a long time, and firms need to evaluate their capabilities for the long haul. For this reason, technology providers cater to these needs by introducing tools and solutions that help businesses streamline their workflows, automate repetitive tasks, and overall manage their teams more effectively. 

So, what are these magic systems? Here are just 5 software solutions that a financial firm trying to compete long-term would use:

1. Workflow Management Systems: Financial firms use these systems to organize and track different tasks and approvals, making sure everything gets done on time.

2. Business Intelligence and Data Analytics Systems: Systems used by institutions to understand how the business is performing and make more informed decisions through data analysis.

3. Artificial Intelligence and Machine Learning Systems: Smart computers that can learn and make predictions on their own, helping firms easily make better decisions. 

4. Electronic Document Management Systems: This is where organizations store and share important papers like contracts and invoices electronically. As a result, they don't have to rely on hard copies.

5. Robotic Process Automation Software: This software will take over repetitive tasks such as data entry and free up time for the complex and value-adding tasks we’ve been mentioning. 

While each one of these systems sounds cool, there is still a gray area behind integrating them into daily practice within the organization. With that said, It's important to note that while these systems can indeed bring great benefits, they also require a significant investment in terms of time and resources. Consider for a moment that 70% of digital transformation projects fail typically because of a lack of planning for system integration and an understanding of why the team needs the system. That is why a game plan before implementation is so critical to ensure maximum ROI upon execution.

What Does This Execution Plan Look Like?

For a financial institution, the execution model might look something like this: 

1. Identify the goals that can be met with the new system.

2. Assess the current workflows and processes within the organization and find the areas that the new system can optimize.

3. What features/capabilities of the new technology align with the objectives of the business and/or team?

4. Outline ideals (milestones, timelines, and deliverables upon implementation).

5. Resources needed to support the project (staff, budget, equipment, etc).

6. Monitor progress and ensure the necessary adjustments are being made.

This outline is kind of the static layout behind every software project and for good reason. This guide is going to force you to evaluate the “why” behind your project, which will then make every step beyond a lot more simple to understand. 

The Takeaway

The point here is to emphasize how important it is to constantly evaluate your organization's processes and to find the margins where innovation can benefit performance. As always, this comes down to understanding your business goals and the impact of new technologies.

Written By Ben Brown

—

ISU Corp is an award-winning software development company, with over 17 years of experience in multiple industries, providing cost-effective custom software development, technology management, and IT outsourcing.

Our unique owners’ mindset reduces development costs and fast-tracks timelines. We help craft the specifications of your project based on your company's needs, to produce the best ROI. Find out why startups, all the way to fortune 500 companies like General Electric, Heinz, and many others have trusted us with their projects. Contact us here.

FinTech and ESG Tech: The Financial Tool Investors Need

Change is an inevitable aspect of running a business. Changes will be good and bad, but the long-term results of change depend on how it’s managed. When it comes to finance, this is something industry professionals have ingrained in their mindset which is what allows them to keep up with the world and market of today.

With the world and culture being interconnected in the way they are presently, there’s been plenty of changes in technology needed for businesses to keep up. Notably, this has brought forth ESG attention which stands for environmental, social, and governance. 

ESG is not reserved for those associated with fossil fuels; companies from a wide variety of industries are finding ways to implement these strategies. Among them is FinTech.

Defining ESG

You can think of ESG as a method of regulating a company's operations in the best interest of the environment. The guidelines associated with ESG are essentially a screening process for how a business is operating, what investments they’re looking to make, the kind of materials being used, etc. Deforestation, carbon emissions, and air pollution, for example, all contribute to a company's performance. Why is that?

Public relation is a factor in financial institutions adopting ESG, but it is not the only motivator. The market is hot and highly competitive for these institutions, which means that the operation and performance of companies are not dictated solely by their brand image. How does the company function internally? How do they plan to be in business for the next 30 years? It comes down to these three guidelines:

Environmental: Green initiatives are a major draw today. Companies need to evaluate how their actions are impacting the planet.

Social: How does the organization impact people? This applies to everyone from employees, to the community, and clients. 

Governance: Who runs the organization? How do they run it? Transparency is an extremely important factor in operating an organization and it extends beyond the needs of your staff.

How ESG Tech works

As we saw earlier this month, green FinTech is big. It is only continuing to grow and though it’s great to see, this kind of consciousness is branching to other areas for companies. Your business isn’t going to attract growth by simply stating your environmental initiatives. This is about running your organization like a well-oiled machine whose operations are balanced. Here is how software can enhance this for FinTechs:

• Creating modules that track the organization's impact on the environment.

• Releasing ESG reports based on the institutions' economic activity (this demonstrates transparency).

• Offering feedback utilizing IoT technology.

• Building platforms that oversee how a business is meeting the ESG criteria.

• Evaluating investment risks based on depletion of resources, hazards to the environment, social issues, etc.

FinTech opens businesses to endless opportunities when it comes to ways they can focus on the client side. However, the point we’ve been getting at here is that organizations need to practice what they preach. The front end can be enticing but it isn’t sustainable if the back end isn’t just as well organized. This is why ESG criteria are so beneficial to financial organizations from both ends. 

Commonly, this topic is referred to as a business's “corporate social responsibility” (CSR). The simplest way to understand this term is that businesses adjust to the market, not the other way around. At the moment, the market is demanding initiatives aligned with all three pillars, which is why the technology is in such high demand.

Benefits for FinTechs

The most notable benefit when it comes to ESG tech is how it positions businesses in the eyes of investors which is especially helpful for ​​startups. The start of this year alone saw almost $380 billion worth of ESG assets worldwide. In the tagged article, you’ll see that investors called 2022 “the year of ESG investing”. 

Customers are the real focal point for FinTechs incorporating ESG tech. Again, it’s all about the internal and external governance of the organization. Research is finding that over 75% of consumers are ready to boycott businesses that fail to treat employees or the environment in the right way.

Where are we now?

ESG tech is by no means without faults for organizations at this point. There is still plenty of work to be done for international markets to have efficient identification methods and avoid disinformation regarding the environment (greenwashing) and PR. 

ESG reporting is meant to provide investors and other participants in the market with the necessary information to guide their investment decisions. Ultimately, it is the standardization of these ESG reports that needs work, or they will lose all value.

Methods for measuring performance such as key performance indicators (KPIs) are needed to make these accurate evaluations. It's going to be the organizations that dominate this facet that succeed in using ESG.

What’s next?

ESG guidelines present opportunities for growth in both investors' portfolios and companies' consumer base. ESG technology has still not fully been tapped into in terms of the potential value it can deliver. Like any new technology, it's all about how businesses can integrate it into their platforms. As always, you’ll need a software development team with the skills and experience to bring this to life. 

Written By Ben Brown

—

ISU Corp is an award-winning software development company, with over 17 years of experience in multiple industries, providing cost-effective custom software development, technology management, and IT outsourcing.

Our unique owners’ mindset reduces development costs and fast-tracks timelines. We help craft the specifications of your project based on your company's needs, to produce the best ROI. Find out why startups, all the way to fortune 500 companies like General Electric, Heinz, and many others have trusted us with their projects. Contact us here.