The global financial sector is witnessing an ever-growing change shaping Europe’s banking infrastructure into an increasingly competitive market. Open banking proved to people how it can alter financial services to accommodate their needs; all while fostering a continuing digitalization of modern life as Fintech companies set the stage for simplified yet optimized solutions to deliver reliable economic efficiency.
These changes have brought companies such as UK-based Salt Edge into the limelight as it supports customizable services for customers, by synchronizing banking services with users’ needs. Since customer loyalty and satisfaction sets the main pillars for the financial sector, the merger between technology and finance delivers Salt Edge with the needed tools to comply with consumers’ expectations with the immense rise of digitalization on all fronts.
Inside Telecom dives deeper with Salt Edge’s CEO, Dimitri Barbasura, to highlight the Fintech’s conduct of meeting customer demands in compliance with the regulatory authority. As well as delivering elaborated insights regarding open banking and its role in addressing the needed support for the UK as it embraces a modernized approach in its banking sector.
As one of the big names in the industry, piloting the ever-changing effect of the rise of Fintech on the European Union’s financial sector, the CEO elaborated on how the company is assisting in enhancing consumers’ financial status in the UK and on a global level. In addition to the Central Bank Digital Currencies (CBDC) duty in delivering high-quality services in coherence with governmental regulatory footprint.
INSIDE TELECOM: As the financial sector takes a bigger leap into a digital ecosystem, how do you think open banking will affect the European Union’s take on its current financial sectors?
Barbasura: From our position of open banking and open finance, PSD2, which is already two years old, is changing the world for the better. There are new products and solutions occurring, targeted towards the wellbeing of society – in general, individuals and business – in particular. Take, for example, on-the-go carbon emissions calculators based on personal expenses or the fairer credit assessment occurring from unified aggregated data, translated into financial insights. Especially in COVID-19 times, this has proven to be very helpful, allowing creditors to approach their activity more responsibly. Open banking increases security and decreases overall expenses by changing the instruments we use for paying. As these new payment instruments and solutions are being created, economic efficiency rises and makes what was previously accessible to bigger corporate clients – now available for SMEs. What used to be available for SMEs is now accessible for retailers, and so on. Budget planning, financial advising – all these solutions lead to open finance, which we hope will soon be consolidated by payment service directive (PSD3). Thus, data access will involve more than current payment accounts, including investment, lending, mortgage, and unveiling the full potential of the financial sector.
INSIDE TELECOM: The company’s API has been seen as one of the leading banking solutions for over 5 years, can you elaborate on some cases where the company’s API helped in consumers’ financial health and sustainability?
Barbasura: There are plenty of use cases among our clients showing how open banking works for the general well-being. Businesses like Credit Hero and Lendex have turned to Salt Edge for open banking solutions to ensure a wider financial inclusion for their customers. This is probably the domain where open banking has the most noticeable impact, allowing individuals and businesses access to funds otherwise unreachable to them. Using open banking data enables lenders to give a second chance for credit approval to potentially great loan applicants who have initially been rejected simply due to lack of credit history (first-time borrowers, migrants). Besides, open banking cancels potential manipulations in physical bank statements while helping financial institutions save on fraud detection, underwriting, or credit risk-related issues. Lenders see the authentic financial picture of potential borrowers and tailor their offering to the real-time status quo.
Another interesting use case is how open banking-based public financial management (PFMs) contribute to more responsible financial behavior. We live in a consumerist era. And, while most of us don’t even realize it, PFMs like Spendee, Toshl, MoneyWiz, and Planner Bee, manage to comprise all bank data based on open banking capabilities and transform it into a picture detailing the users’ financial behavior and the areas that need adjustments. Thus, end-users can shift from reckless expenses to a more rational, sustainable lifestyle.
What we’ve carefully observed throughout our clients is that, by leveraging open banking possibilities, their companies become more viable. This is obvious since open banking contributes to preserving ecological balance by:
● Stimulating behavioral changes.
● Cutting down on unjustifiable consumerism.
● Enhancing green finances (green lending & investing).
● Improving financial inclusion for underserved categories by simplifying bank data sharing even across continents, for ex-pats, and introducing alternative reliable data sources for credit analysis for people with thin credit file.
● Reducing plastic cards and cash use.
INSIDE TELECOM: In August, the company collaborated with software company Finastra. What was the incentive that led to this collaboration?
Barbasura: For most banks, especially those which are not tier 1, the legal and technical requirements concerning opening API’s access to their infrastructure are far from being crystal clear. They need to invest a lot of effort in understanding what vendor suits them best, what legal provisions they must respect in accordance with to become compliant, what assessments they must conduct, and the mechanisms they need to have in place. All this is very costly for businesses to accomplish. Add that to the expenses involved with opening APIs, making them usable, safe, sustainable, and integrable, with high availability and security requirements.
Finastra is a core banking vendor supporting multiple banks in the EU and beyond. They chose our solution as it includes a variety of options banks can choose from when building their digital banking puzzle for becoming PSD2 compliant. Prior to pre-integrating our solution into Finastra’s platform, Salt Edge has successfully passed all due diligence audits, safety systems, and data services checks, so that banks can choose our solution with peace of mind.
Our collaboration with Finastra is that happy situation where there was a market request, we had the perfect solution to answer it, and Finastra is the right partner to scale up the solution’s availability.
INSIDE TELECOM: Currently, the banking sector is enduring immense pressure to heighten its competitiveness to stay in the league. What approach does Salt Edge support to help banks optimize their profitability while reducing businesses’ time to market for new products?
Barbasura: First of all, Salt Edge helps banks become PSD2 compliant, which enables them to save time and effort resources and invest them in creating open banking-based products. In this perspective, our company acts as a technical service provider (TSP) for regulated institutions. Therefore, we cover all the above-mentioned for banks, due to our expertise, knowledge, and experience. Here are some of the ways we help banks and diminish their go-to-market:
● We know and advise which use cases are viable for payment initiation, how to adjust the merchant proposition to it, what complications may occur on the way and how banks can overcome them and bring their project to realization.
● We automatize a lot of processes. Out of 6,000 banks across Europe, some of them still require manual onboarding. In these cases, we either automate the process, where dynamic onboarding is supported, or we perform the entire manual onboarding process for the bank thus decreasing the timeframe required for the solution to go live.
● We cover all the necessary components – technical implementation, connection to thousands of banks, highest security standards, consultancy for PSD2 strategies, and others. This way, we help banks to do everything correctly from the beginning.
Another advantage is that our clients work with one single vendor covering all the EU, which is very critical for payments. Imagine that a merchant works with a bank and sells its products all over the EU. In this case, the bank needs a vendor who will support payments across the EU for a seamless process. In other words, Salt Edge exceeds the notion of “go-to-market”. We literally help clients reach different markets from the EU, thus diminishing their expenses.
I’d also like to mention the value-added services provided by Salt Edge. Being one unique vendor, with one standard security model, one high-quality standard, helps us aggregate and provide all data, from various countries where our client is present, in a unified form to credit bureaus, for example. We use AI, machine learning algorithms, which again, saves lots of money for the client, and we are always adjusting and improving the algorithms upon our clients’ requests and feedback.
INSIDE TELECOM: Where do these approaches stand from a regulatory standpoint?
Barbasura: First, it all revolves around compliance with the open banking regulations from regions around the world: where data is kept, how it is encrypted and transmitted, who has access to this data, or how it gets anonymized. Take for example one of the value-added services provided by Salt Edge – financial insights. One of its components is data categorization. You cannot categorize something if you don’t know what you are categorizing. As a Technical Service Provider, Salt Edge works purely with information. Therefore, our activity is focused on safety. We perform regular penetration testing, vulnerability scannings, cyber security – and data privacy-related audits and certifications. We are always open to showing our clients and regulators our offices, our data centers, and demonstrating the operations and safety systems we have implemented. Maximum transparency and delivering exactly what we promise – this is what governs our relationships with the clients.
INSIDE TELECOM: What additional plans does the company have to enforce the role of small banks in accommodating the market’s needs, as Central Banks are working globally to issue their CBDCs?
Barbasura: We at Salt Edge are agnostic to underlying payment schemes and currencies since we work with any data set that can be presented as an account and set of transactions. As for CBDCs, we see lots of potential in it related to instant payments. It would be way cheaper (or even zero cost), which is directly benefiting small banks, end customers, retailers, and other businesses.
Actually, I believe that not having a stable digital coin in the 21st century, when all the premises for its existence and functionality exist, is rather strange. This is the future. It is safe, controllable, the source of money and the expenses are easily traceable, which is especially important for Anti Money Laundering (AML)/ Counter-terrorist financing (CTF) practices and terrorism-sponsoring prevention. CBDC is something that should have happened yesterday.
INSIDE TELECOM: To what extent will the company go to help these small banks defend themselves from any potential fraudulent scenarios?
Barbasura: We do work with data, but we are not specialized in fighting fraud, however, Salt Edge provides rich information for fighting fraud. We have very limited access to the interaction between the user and the bank. Nevertheless, we always promote strong customer authentication and dynamic linking as critical components of the aforementioned interaction. Besides these two elements, using a combination of security measures like possession, inheritance, and knowledge combined in a user-friendly way enhances security utmost, decreasing risk.
When I say “user-friendly”, I mean that every integrated safety measure must be maximally client-oriented and thoroughly explained, in terms of why it is important, how it protects the end-user and how to use it.
We believe the most effective defense is when the bank and only the bank control authorization of the payment and end-customer pays using the WYSIWYP principle (What You See Is What You Pay).
INSIDE TELECOM: The UK’s historical role in the financial sector could potentially shape the Fintech industry’s future outline in the country. What solutions could the company implement to help heighten the UK’s role in Fintech on a global scale?
Barbasura: In this manner, Salt Edge can promote two things that are already going well in the UK. The first one is the Open Banking standard, which is very well compiled and, with the right support, would diminish the market’s fragmentation. We have developed the payment service directives (PSD2) Compliance Solution at Salt Edge and already tailored it to the particularities of existing open banking standards around the world, like Berlin Group, Open Banking in the UK, or CDR in Australia. We see the financial institutions from different regions struggling with these differences and believe that unifying these standards will simplify a lot of things. Second, we can promote strong customer authentication and dynamic linking – elements that are significantly increasing safety. We’re already doing that through Salt Edge’s mobile Strong Customer Authentication, which considerably enhances the security of the payment experience, minimizes fraud risk, and guarantees customer protection.
Next, the UK has CMA9, the country’s 9 largest banking group. It is constantly introducing progressive initiatives, such as VRPs and we think that, from the UK’s point of view, it would be very useful to have it supported not only by these nine banks but also by all banks that can ensure it technically. This would be an example to the EU and other countries looking at the effectiveness of open banking.
Using fintech solutions for paying, investing, saving, and other operations must become a norm, just like we’re using apps for any other needs. It should be a norm, not a privilege.
Another way that Salt Edge is contributing to the UK consolidating its role in open banking is by opening up markets outside the country for local businesses – offering access to 5000+ banks across the globe. Many companies need various geographies to grow bigger in spite of the UK being one of the most innovative markets.
Therefore, I really hope that regulators from all countries, including the UK, the EU, and others can unify all legal approaches in one unique regulation so that once a business gets licensed in one region, it gets the occasion to passport it in other regions as well. Besides other advantages, it would decrease expenses, and this is the direction all should strive to.
INSIDE TELECOM: Under which regulatory umbrella could Salt Edge implement these solutions to augment the UK’s presence in the industry?
Barbasura: To answer this question narrowly, Salt Edge Limited is regulated in the UK, with an EU entity in the process of becoming regulated in the EU at the moment.
In a broader manner, PSD2 has been transposed into each country’s legal framework with local adjustments which need to be taken into consideration when entering the market. And we always do it. As mentioned above, one of the ways Salt Edge contributes to the UK consolidating its leadership position is by helping UK businesses upscale within the country and further across the globe based on our solutions: Open Banking Gateway and Open Banking Compliance Solution.
From our point of view, we often act as technical service providers for regulated entities. In terms of general data protection regulation (GDPR), these entities act as data controllers, while Salt Edge acts as a data processor – processing data according to their instructions. Now, considering this, Salt Edge solutions are implemented in many regions, including the Middle East, Australia, LatAm. We are agnostic to regulation since we act by generically approved principles of security, data privacy, compliance, and governance of the data. Yes, there are details deferring from one regulation to another related to data storage, for example, but we always find satisfactory compromises with our clients.
Cisco VP highlights need for inclusivity when entering the 4IR
As the global health crisis slowly subsides, one cannot ignore the fact that the pandemic forced a brave new world onto all of us. Pandemic-infused conundrums have evolved from mere debates between both people and companies, are now being actionably championed by those looking to thrive within the fourth industrial revolution.
The future of work, digital transformation, cybersecurity, smart cities, privacy, and everything in between have been thrown into the limelight, as the decisions and regulations taken today will affect our relationship with tech for generations to come.
To everyone, it’s considered a whole new world of opportunity where organizations of all walks of life have been forced to convert to digital, not only to remain adaptable to the winds of change of technology, but to merely survive the data explosion to come.
A 2018 McKinsey survey showed that well before the pandemic, 92 percent of company leaders believed “their business model would not remain economically viable through digitization.”
While companies across the globe have invested their resources into future-proofing their organizations, not many have championed the 4IR as notable as California-based tech giant, Cisco, who has been pushing for a more digital future from the get-go.
Inside Telecom sat down with Reem Asaad, Cisco’s Vice President for Middle East Africa, to better understand the company’s focus and efforts for what’s ahead.
INSIDE TELECOM: Cisco has been a driving force in a number of technological avenues, most notably by championing both remote and hybrid working models; accordingly, how does the company view the future of work? And how will Cisco look to double down on this view?
Asaad: At Cisco we believe work is not where you go, it’s what you do. That’s why we’re flexible on the numbers of days in — or out — of the office. In fact, pre-pandemic only a third of our employees were in the office full time, so we’ve long been a hybrid-first company.
This puts Cisco, and our technologies, in a unique position to help other organizations advance their hybrid work strategies. We view powering hybrid work in two distinct ways: enabling a Hybrid Workforce and transforming Hybrid Workspaces.
Enabling a Hybrid Workforce means providing secure access and collaboration from anywhere, anytime. Transforming your Hybrid Workspace only happens when networking, security, and collaboration tools come together to enhance health and well-being, safety, and efficiencies.
INSIDE TELECOM: Remote working is considered as an important aspect of digital transformation with some calling it “a main pillar of the fourth industrial revolution,” with that in mind, how is Cisco looking to bolster digitization on enterprise-level with its offering?
Asaad: We’ve been taking significant steps forward in helping the industries unlock the potential of their hybrid workforces – providing with unique insights and studies, while enabling them to collaborate in new ways and drive inclusive experience.
Since the pandemic started, Cisco has launched more than 1,000 Webex innovations. At WebexOne 2021 that was held recently, we announced significant new innovations across Webex ecosystem, the industry’s first and most comprehensive end-to-end hybrid work solution.
Webex Suite’s new meetings and messaging capabilities help our customers empower equal participation, from everywhere. Similarly, our new collaboration devices enhance effective collaboration, and the new Webex Events portfolio powers hybrid events at scale. Additionally, Webex interoperability with Zoom, Microsoft and Google video communications platforms ensures seamless collaboration with customers’ preferred platforms and devices.
INSIDE TELECOM: As all aspects of life are quickly and fully transitioning into digital, the importance of cybersecurity grows along with it, how is Cisco applying a security-by-design approach to its products within its core industries of focus?
Asaad: We believe that security has to be at the heart of everything. Cisco is major player in the cybersecurity market, and we’ve been building security into all of our technology, including user and email access, device and endpoint protection, network security, and locking down apps and data.
We also made several product announcements recently, including SecureX enhancements that address integrating IT and security inventory and visibility, endpoint detection and response (EDR) to XDR transition functions, new cloud security features via its SASE offering, updates to its Umbrella cloud-based firewall, and a new cloud-native firewall for Kubernetes development environments.
INSIDE TELECOM: Companies, as well as people, are bombarded every day with a plea to become more secure online, yet cyber-attacks and breaches are dominating the news cycle week-in and week-out, giving the impression that these tips and pleas are not sticking. Since cybersecurity is considered one of Cisco’s fortes, what advice can the company give both groups to bolster their cybersecurity efforts?
Asaad: Whether we like it or not, cybersecurity is a topic that affects society as a whole. Security is the most important investment that a company can ever make. While it may be true that an investment in security is unlikely to generate new business, it cannot be denied that investing in security will prevent a company from experiencing serious resources losses and seeing its reputation compromised, perhaps irremediably. The damage can be so significant that even established companies have gone out of business after a cybersecurity attack.
Therefore, companies must secure every single component of the system: hardware, software, and network.
INSIDE TELECOM: As we’ve previously touched up, remote working, digital transformation, and cybersecurity are all intertwined in the development and transition into smart cities and communities; accordingly, could you briefly walk us through Cisco’s role within this transition?
Asaad: Digital technologies are the key driver to achieving social and economic good and powering an inclusive future for all. We at Cisco work closely with all public and private sector partners to develop an integrated vision, which reflects the leadership’s efforts to create community and aspiration-driven cities of the future, with flexible infrastructure that is capable to manage and deliver connected urban services.
From inclusive access to smart water systems, Cisco is a trusted partner in enabling cities to operate sustainably and meet the needs of their citizens.
INSIDE TELECOM: In your opinion, what have been the main obstacles within this transition?
Asaad: Many cities today have ambitions of becoming the smart cities of tomorrow. But to achieve this, they need to overcome the challenges associated with mapping out a complex strategy that involves public and private participants, direct and indirect stakeholders, integrators, network and managed service providers, product vendors and IT infrastructure providers.
Smart city planning is a balancing act that involves citizens, public organizations, state and local government and private enterprises. Once this balance is achieved, it creates huge opportunities for business, sustainability, disaster prevention, public safety, and quality of life improvements.
Investment must come not only in terms of infrastructure, but also in upskilling and developing digital competencies in the people who will operate and oversee various aspects of the smart city. With little margin for error, a smart city can only be enabled if the people bringing it to life are forward-thinking and fully knowledgeable of the tasks at hand. At Cisco, our Networking Academy (NetAcad) program is designed to do exactly that – build digital skills to futureproof careers and help nations advance their digital agendas. Since the program was introduced to the MEA region, we have trained in excess of 1.6 million students. Today, we have well over 1,600 active academies, in countries ranging from the UAE and Saudi Arabia, to Egypt, South Africa and Kenya to name but a few.
INSIDE TELECOM: How can Cisco, and other major tech companies offer assistance to governments to hasten the progression into smart cities in an efficient and secure way for all?
Asaad: At Cisco, we believe that technology is the ultimate enabler and unifying link which makes people’s ambitions a reality. However, in the context of a smart city, a city can only be classed as ‘smart’ if it truly works for its people. Top-down approaches to smart city planning often do not consider the idiosyncrasies which may occur on a more granular, grassroots level. This is a mistake. A smart city requires constant iteration between its leadership, technology providers, end users and the wider public to create improved outcomes which can benefit the masses.
To address this, at Cisco, we are proud to be running an initiative known as our Country Digital Acceleration (CDA program). The program is a long-term partnership through which we work alongside national leadership, industry, and academia to achieve a country’s vision for a smarter and more sustainable future.
The UAE and Saudi Arabia are local examples of nations we work closely with in the region, via our CDA program. Sectors which we continue to work alongside local stakeholders to transform range from education and healthcare, to trade, tourism and energy. In each case, it is digitization which is key to developing a particular industry, and we think not only about how the city can be reimagined to for the benefit of the economy, but also to improve quality of life for all.
INSIDE TELECOM: Smart city development comes hand-in-hand with greener initiatives that are meant to foster a fiercer fight against climate; earlier in September, Cisco committed itself to reach net-zero greenhouse gas emissions by 2040, could you briefly walk us through the company’s roadmap?
Asaad: For more than 15 years, Cisco has worked toward a sustainable future by reducing emissions, reducing waste, building more efficient products, and setting and achieving ambitious goals.
We recently announced our commitment to reaching net zero for greenhouse gas (GHG) emissions across all scopes by 2040, 10 years ahead of when climate scientists say the planet must reach net zero to avoid the worst impacts of climate change. Cisco’s net zero goal will be supported by ambitious near-term targets, including to reach net zero for all global Scope 1 and Scope 2 emissions by 2025.
To reach net zero include:
- Continuing to increase the energy efficiency of our products through innovative product design
- Accelerating use of renewable energy
- Embracing hybrid work
- Investing in carbon removal solutions
Ian Terblanche, Global Strategic Sales & Channel Director at Sigfox
As the world moves heavily towards digital inclusion, all aspects of life will become connected, paving the way to a more IoT-fueled tomorrow. A major player within this ring is Sigfox, the world’s leading service provider for IoT services, Inside Telecom sat down with the company’s Global Strategic Sales & Channel Director Ian Terblanche to discuss their solutions regarding this field, and its impact on connectivity.
Could you briefly tell us about Sigfox’s 0G network?
Our global network allows billions of devices to connect to the Internet, in a straightforward way, while consuming as little energy as possible. Our game-changing approach makes it possible to send and receive data without the need for complex connections or SIM cards. Base stations simply listen in and capture specifically formatted radio messages from around the globe. Devices need something as simple, and as small, as the silicon chip that you find in a remote control.
How do your 0G IoT sensors and connectivity aid in the digital transformation efforts by incorporating real-time alerts about delays and transport conditions?
Sigfox has built a dedicated IoT network across 76 countries to serve 3 market segments:
1. Security – we provide Securitas with an anti-jammable network for their home alarm service. Despite more people investing in alarm and remote surveillance systems to discourage burglars and enable them to react quickly to any intrusion, those same systems can be faulty, suffer from breakdowns or even jam at the worst possible moment because of a droppage in the GSM network linking them to the security company protecting your home. We also work with Verisure, a Swiss company that specialises in alarms with remote monitoring, to mitigate that potential risk in its own devices and system – by using our 0G network as a backup connectivity which, unlike the GSM network, is less likely to jam. Through 0G network connectivity, communications between Verisure and each individuals’ home virtually anywhere in the world is assured 24/7/365.
2. Asset tracking – we provide DHL with a global asset tracking service with seamless roaming globally. DHL has outfitted around 250,000 DHL roll cages with smart trackers using a 0G network. The result is improved visibility of the essential and valuable roll cages, which are used to transport large volumes of parcels – about five million shipments in Germany alone each working day.
3. Monitoring – we provide the world’s largest food retailers with full end-to-end cold chain monitoring. This ensures that frozen food, for example, does not at any point in its journey go above the required temperature to keep it viable for purchase once in a supermarket.
In summary, no other network providers offer a single, global, open roaming IoT network that is exclusively designed and built for low cost, environmentally friendly data capture and transfer.
What are the benefits of using IoT to improve goods exchange between the EU and the UK?
IoT allows both loaders and shippers to identify, track and isolate individual assets whilst digitally linking the required paperwork to the goods being transported. For example, in a mixed pallet shipment, where one consignment has an issue, the entire shipment is delayed. But, with IoT, the individual consignment can quickly be located, isolated and removed. IoT also provides near real time insight which allows decisions to be made quickly and at an individual shipment/consignment level.
What role does IoT play to reintegrate the UK into the European Union?
IoT, if implemented correctly, provides the missing data to provide a clear consistent picture of cross boarder movement. In most applications, IoT bridges the gap between central data sources and the physical world, and in particular asset tracking and product movement. By strengthening supply chain visibility, IoT can dramatically reduce friction and minimize delays for smoother trade.
What is Sigfox doing to assist a post-Brexit UK to track transit paperwork towards shipment?
We have several engagements across the supply chain within Europe and beyond. At their core, all of the engagements have the same requirement, to digitally link the physical asset/product to the required paperwork. This allows end-to-end visibility and facilitates near real time correction within the transportation process.
How does IoT implementation across supply chains aid businesses with Big Data?
We believe that IoT fills a critical gap in the data required to give true end-to-end visibility. Most companies have good data sources within their enterprise estate and often their key suppliers can also provide data inputs. What is often missing is data from the physical world, outside of those companies and their supplier systems. IoT provides that data source to fill in the missing gaps, but the real question is how do companies gather IoT data from many different sources? This requires careful consideration.
Will you be rolling out the fifth-generation technology to assist your IoT sensors?
Our strategy is very clear, we work with the world’s largest silicon /semiconductor providers to reach ultra-low cost components that are sustainable and are the platform to facilitate IoT to enable everything. We have a combined roadmap with these suppliers and our eco-system provides the physical device manufacturing capacity to scale as the market adoption grows.
Can you tell us more about any future plans to expand your services?
We have many future plans, but not all that I can share right now. One I can talk about though is the strategic initiatives in our vision of open OSS. In response to growing market demand we are re-engineering our OSS to be a ubiquities data capture platform for multiple IoT devices. We see this as a key step to accelerate the entire IoT marketplace and to simplify data orchestration.
Could you please elaborate more on your recent partnerships with telecom operators to improve the quality of your services?
We work with a number of telecom operators globally to provide a wireless portfolio with 0G connectivity for over 1.3 billion people and 17 million registered devices, and growing. Our most recent partnership was with Citymesh in June, where Sigfox’s 0G network was selected thanks to our ultra-low consumption combined with low hardware and network costs. We will continue working with telecom operators to further develop offerings based on our 0G network.
As the pandemic slowly subsides, what have been some emerging challenges that you’re currently facing?
CV19 has been devastating for so many reasons, however many positives have come from it: The environment has become a lot more central to many countries/companies thinking. Having faster visibility of issues and being smarter at making decisions has become even more important and finally the pandemic has totally transformed the historic view of supply chains. IoT adoption has increased, which in turn accelerates supply chains, and minimizes inefficiencies and costly delays.
What steps are you taking to resolve them?
We have seen a big difference in the impact on different sectors: The logistics firms we work with have seen a massive increase in demand which has placed real stress on their infrastructure and asset management. Whereas in the brewery and retail (physical) sectors we have seen the opposite. What is common across all business sectors is that the pandemic has highlight real deficiencies in current business models which in turn has accelerated digitisation in all aspects of business re-architecting.
Steve Lacoff, General Manager of Avalara Communications
Nothing in the world is certain except death and taxes. While we may be far from solving the former, Inside Telecom sat down with Steve Lacoff, General Manager of Avalara for Communications to discuss how their solutions can make tax management easier for all involved amid a world changing pandemic, when going digital is the new normal.
What are the patterns that have changed in communications and technologies with the spread of COVID-19?
Covid-19 has certainly impacted a lot of businesses in a negative way, but broadly speaking it’s actually been a little bit of a tailwind for communications. Everybody has been at home, with millions of people having to transition into remote work. In order to do that, connectivity is crucial.
Accordingly, an uptake in virtual collaboration occurred with people using platforms like Microsoft Teams and Zoom, as well as VoIP for enterprise voice being extended into employees’ home offices.
Also, on the consumer side, people had more at-home time, and budget, for living room entertainment, creating a significant uptake in streaming services. Streaming giants like Disney+ doubled their subscription base during the pandemic. This scenario occurred across the board with streaming platforms. What’s interesting about it is that when those platforms begin with a free trial, then customers transition to a month to month contract, it’s a very sticky service. Consumers were exposed to more streaming services during COVID-19,which in turn has driven more adoption.
What can you tell us about data, VoIP, and video streaming, with businesses turning digital?
Those services are foundational, as businesses have gone digital and increasingly embraced remote work.
Companies have for many reasons been intrigued with remote working, including the reduced necessity for big offices, and the elimination or reduction of commuting, giving employees more flexibility. Suddenly, hundreds of thousands of companies were thrown into this forced experiment to give it a test run. We collectively found that, with platforms like VoIP, Zoom and Slack, remote work did not impact productivity.
While COVID may have forced them to redefine the work culture, companies discovered that remote working worked. We’re beginning to see that every company has licenses to Zoom, and they are increasing their investment in messaging platforms.That leads companies to adopt a new strategy, where you can’t just be a pure play messaging company or voice provider or collaboration company. All those capabilities have to come together in a single unified platform where all these services work together. We have been a big shift in terms of companies expanding their capabilities, either building their own platform or through acquisition.
Supply chains have been experiencing heavy pressure due to the global health crisis; how has Avalara been able to absorb this amount of pressure trickling down? What are the tax solutions you provide for the ever-evolving telecom, streaming, and technology industries?
We provide tax calculation and compliance products and services for telecom and tech companies; therefore we’ve been able to help companies navigate these challenges in a number of ways.
With merger and acquisition activity, multiple businesses are coming together and typically have multiple tax platforms that require unification. When they do that, they start evaluating whether or not it is a capability the company can run in the cloud. One of the key advantages we have is that we are a native cloud technology service. As such, we’ve been able to help many companies consolidate these different systems into one tax service where we can handle all their tax calculations, and all their registrations and compliance filings. Basically, we take all that corporate tax complexity and provide outsourced cloud tax compliance solutions.
When companies come together, it’s intended to expand their product capabilities. Therefore, when you have a broader set of products, you get a more complex set of tax requirements because the taxability and the rules, particularly in the United States, vary dramatically from service to service. We have a robust library of content where we can provide customers a future-proof solution no matter what product or technology.
What are some of the complex compliance challenges you’ve faced during the pandemic?
Some of the challenges are simply inherent, as the taxation regime in the U.S. is incredibly complex, with taxes at multiple levels: federal, state, county, and city level.
As companies go digital and make their services and capabilities available in the cloud, they are now serving customers not in just one state or region, but across the U.S. and globally.
And as these communication services move away from being infrastructure based and transition to the cloud, they take on a much broader taxation footprint, with increased complexity.
A second challenge has to do with cord cutting and the rise of streaming. With traditional pay TV services, we’re subject to a whole string of taxes, not only in traditional sales and use taxes, but also telecommunications taxes. During the pandemic, streaming was introduced broadly, and not subject to any tax. Over the last two years, on a state-by-state basis, jurisdictions began introducing not only sales and use taxes, but also traditional telecommunications taxes for streaming that were based on the taxation of TV services.
The reasoning is simple – with cord cutting, you had consumers moving away from a heavily taxed service to a service that had little to no tax, shrinking that tax base. In an effort to reclaim some of those taxes, states have aggressively looked at taxing streaming in the same way they did pay TV or cable service.
What differentiates Avalara from its competitors?
It’s several things: one is that we are a true cloud-based service. Traditionally, tax software systems were run on-premises, having a lot of associated costs and maintenance. It is very simple for customers to implement our cloud-based products and services, which scale fluidly.
The second thing is ease of migration. Since Avalara’s founding, the area of focus has been to provide out-of-the-box integration to ERP and accounting systems, ecommerce and billing systems, and subscription management systems, via connectors. Avalara is integrated with over a thousand different technology solutions that companies use to run their business.
Our breadth of content is another important benefit, which includes all the various tax rates, and the rules associated with those rates. We have a very large content team that researches all of our content to ensure the accuracy of taxes – this capability allows us to be agile and ahead of the curve in terms of ongoing rate changes, and, for example, additional states that are adding taxes on streaming services.
Could you briefly tell us about the benefits emerging from Avalara for startups and partnering with Female Founders Alliance?
There is a big benefit of what we do for startups in terms of ease of integration with a cloud based system. Avalara offers a very flexible set of tax compliance solutions for early-stage companies to adopt, and we support these companies as they continue to grow.
How has the pandemic affected your ability in facing tax fraud? Could you give us a brief example?
Avalara began to see significant anti-fraud measures with the e-invoicing requirements that are now taking shape in the EU from a VAT perspective. This trend toward “real-time” tax collection will have many advantages for governments to be able to secure their tax due on a more immediate basis. However, it introduces significant complexities for businesses. Avalara has been working diligently to stay ahead of the introduction of this new tax regime change. To that end, we recently acquired a company, INPOSIA that handles many e-invoicing requirements.
How has the rise of cryptocurrency affected your business? And what are you doing to adapt to this new technology?
Avalara is more focused on the longer view of the development of stable digital currencies. The accelerating shift to government-sanctioned digital currency is an inevitable global trend, following closely behind an increasingly digital economy. In the U.S., we’re seeing a rapidly evolving effort with the CBDC Digital Dollar Project, buoyed by the growing adoption of cryptocurrencies such as Bitcoin, the speed, ease and traceability of digital currency, and competitive positioning toward other world governments. CBDC efforts across countries are frequently collaborative, with governments, private industry, think tanks and educational institutions providing resources for research, development and testing. Avalara is a pioneer in developing advanced technology to drive innovation in compliance, and this includes our ability to handle taxability and compliance around digital currency. Avalara will continue to closely monitor CBDC developments around the Digital Dollar Project, and we stand ready to assist as efforts move forward and private sector resources are required to develop a country-leading digital currency.
How has the ever-growing pressure from worldwide governments on Big Tech companies affected your business?
This is something we’re watching closely – the ramped-up pressure on Big Tech is certainly increasing the complexity of tax overall. We’ve already seen action taken in Maryland with a gross receipts tax. It could ultimately have effects for both communications tax and sales tax.
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