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Digital Transformation: The clash between the new and the old world

Rafael Luco

By Rafael Luco

Account Executive at ClearSale

Digital Transformation: The clash between the new and the old world

By Rafael Luco, ClearSale

Technology is transforming the relationship of society with the money and, especially, with the financial system, which results in a reduction of the costs involved, transparency in relations with the end customer, increase of the quality of services offered and agility in financial transactions.

The relationship of the consumer with money is unique, varying from person to person and from one culture to another. If you have the intention to undertake and innovate in a country, it is not enough just placing on the market something that already exists abroad, in this case it is necessary to observe the laws and specific regulations, beyond understanding  the local socioeconomic policy.

Recipe for the Success: Overview of the Fintech Universe in Brazil

I start the topic with the following question: What is your current perception of the business model of banks? Certainly most people will cite the drawbacks of lengthy phone calls to solve problems, numerous attempts to offer insurance and investments, so that goal achievement is achieved, unnecessary commutes, long queues, among other points.

Currently, in the Brazilian market, more than half of the population is using the internet; we also surpass 100 million active smart phones, which can give a proportion of speed for the growth of interactions via digital channel. In the banks, data of Febraban 2017 show that the number of financial transactions by traditional channels has reduced abruptly and currently represents only 40% of the total volume, on the other hand, operations undertaken by electronic remote channels (Internet Banking and Mobile Banking) already represent about 60% over the same period.

In the light of the above scenario, the Fintechs' call for a new market-oriented approach, with an initial focus on the digitization of financial companies, is to simplify the resolution of these problems by delivering, with agility and transparency, services such as loan approval, account transactions or insurance quote.

Viewing this change in customer behavior caused mainly by new digital trends, with the popularization of smart phones and digitization of the services industry, traditional banks follow with attention the development of these startups, which on the basis of technological innovations are able to bring profit to the customer while maintaining the reliability of services assisting in the expansion and enhancement of the quality of banking services.

“Unbanked”: The excluded from the traditional banking system

Data from the Central Bank in 2017 indicate that Brazil has a rate of "banking" (part of society that uses banking processes) next to 85% and the main factors for this are the lack of information and creditworthiness of individuals, in addition to the inadequacy of products of banks for this profile of the population, however, the Fintechs are examining these people as potential markets.

The technological advance allows a reduction of the structures and consequently of the costs involved, allowing a greater number of people to access the banking services, since in a period of approximately three years, the Smartphone will be the client's main means of communication with the bank.

Not everything is perfect...

Turning our analysis to the weaknesses of this niche, Fintechs face problems such as raising money, an element of paramount importance for the financial system and difficult to overcome for small companies, and these companies must legally bind themselves to financial institution to provide their services.

Because of the lean structure, a large part of these companies do not have important areas for the fulfillment of contracts with customers, as legal counsel, Ombudsman, and customer service. In very rare exceptions, they are also prepared to answer questions such as the security of information, which will soon be required by regulatory bodies.

Is the end of the banks decreed?

In fact, the tendency of the bank we know that will disappear in a short period is very strong, financial institutions need to understand that they are present in people's lives and, failing this interpretation, the result will be failure.

The banks understand the need of digital transformation for the conquest of consumers and the realization of this transition is not seen as an option, but as a matter of survival. Only introducing new technologies will not be enough, the change must be in cultural matters within the banks.

In the digital age, the area of information technology has substantial importance in banking transformation and the path to innovation, but other elements are equally vital as people and processes, knowledge and especially customer understanding are as relevant as technology in this process transition. The transition to the digital universe is endless, especially in relation to a world in constant transformation and essentially composed of digital platforms.

Fraud in the digital age

When we analyze the digital transition from a fraud point of view, the financial services segment is one of the most targeted, as it represents high liquidity for fraudsters, when issuing an online card for example, we can observe fraud three times higher than in the e-commerce.

However, who loses out with fraud, consumers or businesses? The answer would be: both. The market in general is suffering with this event, but in comparison with the companies, the cost of online fraud is worse for banks, retailers and online operators.

And in this scenario, are there technologies that meet the challenge of combating fraud in the banking system?

In a digital scenario, preventing fraud tends to evolve at the same speed as the fraudster creates new forms of attack; no technology alone can prevent fraud as a whole, but the combination of technologies can be a powerful weapon. According to the website (https://goo.gl/kMRbKN) I quote some of the current technologies for prevention followed by vulnerabilities mapped that are being frequently used by fraudsters

Captcha Image

OCR software can read the requested information and play it;

OTP Card

A malware collects all the passwords or can request the user to report them;

Virtual Keyboard:

Screen loggers or mouse loggers allow the capture of information;

Phrase Password

Screen loggers or mouse loggers allow the capture of information;

Positive Information

The information provided by the user is used in social networks, search services on the Internet and social engineering;


The fraudster changes the user's registration data and informs another mobile number;


Because it is a statistical technique of correlation of default, is always subject to "false" positive and negative, leading banks to implement a programmed diversion which allows the transaction without confirming biometrics.

Mapping risk quickly, together with the improvement of the user experience, is highlighted in fraud prevention in the following aspects:

  1. Customer Overview - Behavior

    A general profile of consumer behavior requires that we have access to an environment of related data, such as information on the identity, behavior of buying online, history of transactions, among others. Mapping this behavior to the identification of this consumer can collaborate in the validation, establishing a relationship of trust between the company and who is carrying out the acquisition.
  2. User Experience

    The solutions of preventing fraud must seek a balance between the percentages of approval and disapproval according to the actual rates of exposure to risk. In this way, the applications must be designed with the intention of achieving greater accuracy in the level of assertiveness for each transaction, respecting commercial strategies.
  3. Fraud is contextual and migrates between the segments

    Currently, fraudsters have access to a large amount of identity data of consumers, in this way, they can create profiles. In this scenario, possessing a comprehensive view on a database that includes multiple segments, contributes to the view and prevention of fraud in the market.

People factor in evidence

The customers are the focal point of current business relationships, they are the protagonists of this universe and based on their personal experiences, new expectations about services offered are created.

Innovating does not mean just figuring out a new technology, it is producing something that proves to be relevant and helpful. The market, in constant transformation, requires that the companies reinvent themselves and accompany with protagonism the new tendencies.

In view of the scenario, meeting the wishes of increasingly demanding customers, the focus is on the user experience. Anyone who can better interpret the client's need and translate that into a good experience will be well on their way to success.

Rafael Luco

Rafael Luco

Account Executive at ClearSale

All from this author

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