Latest technologies and the rapid rejection of cash: The current state of the transactional business in Ukraine
Kyiv, Ukraine, 23 Sep 2021, ZEXPRWIRE, Shareholder of IBOX BANK Alona Shevtsova is sharing her ideas on the future of the transactional business, the main challenges in this business field, and the ability to pay by simply moving your hand above the terminal.
IBOX BANK is a classic and truly versatile bank with more than 30 years of experience. The bank provides all types of banking services. In 2020, IBOX Bank changed its strategy and focused on becoming a full-cycle transactional bank. According to Ukrainian Forbes, the total amount of assets of the bank is equal to UAH 281 million. By the end of the year, they are planned to increase by € 15 million (UAH 469 million
So, what is a transactional bank?
A transactional bank is a classic private or state bank. The main difference is the way of functioning of its internal processing center and direct cooperation with the main international payment systems (IPS). Such an approach the status of an important participant in the transactional business, as well as expands the possibilities of working with transactions, and gives access to new functions of payment systems, primarily Internet acquiring. The key difference in the process of cooperation of transactional banks with international payment systems is also hidden in the rules and conditions that the bank is obliged to observe. The security of all processes within the bank is of immense importance.
Today, the transactional business industry is just beginning its development in Ukraine, thus requiring huge expenses. First of all, it requires high salaries, because it is almost impossible to find employees in Ukraine or attract expats with more than three years of experience in the field of e-commerce. At the same time, this business field is growing very quickly. According to the statistics of the National Bank, the number of transactions and payments made by Ukrainian citizens on the Internet increases every quarter. All these became possible due to the investments of international payment systems and banks in the construction of infrastructure for non-cash payments in the country.
Statistics from the NBU:
* 24.6% of contactless payments are made using NFC gadgets at payment terminals.
Development of transactional business in Ukraine
PrivatBank has become a pioneer in the transactional field in Ukraine. It was the first bank the pace, the quality, and the level of service. Many years ago, PrivatBank was able to offer up to 500 new products to the market per month. This bank was an example setting goals and developing their business. Starting from 2016, the number of players who launched their processing centers and expanded their range of activities increased. Such banks as Ukrgazbank and Alfa-Bank were among the leaders.
In 2019, the management of IBOX BANK decided that they wanted to adjust our development strategy to become a transactional bank. It is worth noting that one of the key drivers for development was the COVID-19 pandemic, which accelerated all processes five-fold. The restriction of movements has forced a larger percentage of the population to pay online. At the same time, Apple Pay reported huge growth of profitability, and all businesses decided to move to the digital rails. All these are also confirmed by the cost of renting commercial real estate, the price of which has fallen drastically, as well as the development of retail. Today, every company is simply obliged to have an online store and sell goods without spending a lot on the traditional offline business.
It is also worth noting that the amount of cash in all transactions is rapidly decreasing. Last year, the National Bank introduced additional fees for accepting cash money. Such an approach makes us work even faster to completely move away from cash, and also confirms that we have chosen the only right strategy, i.e. to invest in the domestic and international e-commerce field.
The results of the MasterIndex study by MasterCard:
* The ability to use non-cash payment is a crucial factor in choosing a retail outlet for 52% of Ukrainians. 8% of respondents avoid stores where it is impossible to pay for a purchase with a card.
* 60% claim that they began to buy online more often in comparison with the beginning of the pandemic, and almost half (45%) make an order online regularly (several times a month).
Challenges of transactional business
The most important challenge today is cyber fraud. It is worth noting that this problem is faced not only by banks but also by almost all business sectors and even entire states. For example, in 2012, the largest oil-producing company in the UAE was attacked by hackers, who were able to delete the entire database in a day. After that, many countries began to invest massive amounts of money in cybersecurity. This example showed the world that the Internet can be dangerous for business, as well as for the GDP of the entire country.
For a bank, the vulnerability of the system is unacceptable, because even one nanosecond can be enough to destroy the entire structure. Even the simplest security flaws are a potential threat that needs to be prevented as quickly as possible.
Interestingly, banks of post-Soviet countries often hold a hackathon, where they attract "white" hackers, providing them with an opportunity and a platform to test the system for vulnerability. The best of them are invited to work, thus strengthening their security.
It is also worth noting that the majority of Ukrainian banks work together with insurance companies to prevent fraud and offer their clients a lot of services to protect information and funds. For example, by using such a service, the user is insured against social engineering, illegal payments with a lost or stolen card, withdrawal of funds without a card at an ATM, illegal payment transactions by third parties without a card by using SMS confirmation, and so on.
The future of the transactional business
New types of payments are becoming increasingly popular. For example, many people are interested in installing a chip into the body. Even in Ukraine, many people are able to pay for their goods and services by moving their hands over the terminal. We use their experience to study the effect of chip implantation on the body. We are gradually moving away from the era of Fintech to the era of MedTech, where medicine, human health, and technology are combined.
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