Why changing is so difficult? | FinTech Summary 84

FinTech Change

It’s very difficult for banks to change. There are many external factors to overcome – regulation, customer expectations, competition, internal complexity. However, the biggest factor is the mindset. Lack of leadership belief is the biggest break in the process. The reason it’s difficult to learn something new is that it will change you into someone who disagrees with the person you used to be. Changing direction requires admitting that you were going in off course in the first place.

Thanks for reading; YOU are awesome!

Have a wonderful week,
Alex

 

The power of banking with purpose
By Jim Marous

The importance of a well-defined, articulated and acted upon purpose has never been more important for a financial services organization. Unfortunately, most financial institutions lack an underlying purpose or lack the commitment from top management that motivates both employees and customers. Some organisations do little more than express their purpose as if it was an ad slogan that is changed with the seasons. Some purpose statements lack differentiation and could easily be used by other financial organisations or firms in other industries. Some purpose statements are more similar to a ‘wish list’, with no real connection to where a firm is or where it can effectively go in the future. Finally, there are those banks or credit unions that create an effective purpose statement, only to do nothing to support the purpose on a daily basis to employees or customers.

 

Open APIs – leveraging banking as a service to compete and collaborate
By David Donovan

In an API world where data is currency and a customer-centric experience is king, banks are lagging behind the tech titans. However, the advent of open banking legislation may just force the hand of banks to innovate around the customer before tech firms enter the financial services market. Banks should look at APIs as a way to enhance service offerings, improve customer engagement, increase digital revenues and build partnership models with fintech while ensuring regulatory and data guardrails are in place. There is an unprecedented opportunity for banks to make every customer interaction more seamless and strengthen their partnership ecosystems by building a core API strategy.

 

Customer experience as a competitive advantage in banking
By Artashes Vardanyan

The evolution of the customer service in traditional banking was very slow during the past few decades. One of the milestones in that matter was probably the invention of the ATM in 1967 for the automation of bank-teller operations. Then the customer support in branches started to migrate to telephone banking, followed by the smartphone era that changed the approach of banks in dealing with customers. Mobile technologies have significantly affected the financial services industry, forcing institutional players to tailor their businesses to survive in the mobile-first environment. Innovation in customer service is becoming a huge priority for banks; the world today is changing rapidly and everything we know is getting digitised.

 

A holistic approach to cybersecurity
By Joe McKendrick

Today’s waves of cyberattacks may be coming on too fast for the best computer scientists to unravel fast enough to stop their spread across connected networks. If anything, the recent ransomware attacks that shook up many of the world’s IT systems highlights the need for insurers to work even harder — and smarter — to batten down their hatches. More money is part of the solution, and there doesn’t seem to be a shortage of that going into security efforts. But throwing more money at the problem will only be feeding a black hole which will keep demanding more dollars, euros, pounds or rupees. Insurers need to get smarter about their cybersecurity as well. Looking at their own protective requirements, connected insurers face increasing threats that need to be addressed aggressively.

Asking the right questions; AI-first banking; open banking and frictionless banking; Blockchain regulation done right – FinTech Summary 83

FinTech - asking the right questions

Ever increasing quantity of data provides us with more and more options to drive new insights. Companies are jumping on the big data bandwagon and, rightly so, trying to find new ways to improve their services and offerings. However, at a time when information is so abundant that we can get the answer to any question, the real responsibility becomes asking the right question.

Thanks for reading; YOU are awesome! Just hit reply if you want to get in touch 🙂

Have a wonderful week,
Alex

 

Banking must move from mobile-first to AI-first
By Jim Marous

Technology continues to impact the banking industry, as more and more transactions move from physical to digital channels. The application of big data insights and advanced analytics (machine learning) has changed the internal operations, external experiences and competitive battlefield in financial services. With so much change, banks and credit unions are rethinking their business models for the future. While there are many important technological trends impacting the banking industry, none may be more important than artificial intelligence (AI) and the ability to use data, advanced analytics and digital technology to deliver a better customer experience. The number one trend around artificial intelligence is underscored by the fact that bankers believe artificial intelligence (AI) will ‘revolutionize the way banks gather information and interact with customers.’ This is in line with the findings from other industries, where the application of big data and machine learning is expected to provide a better understanding of customer beliefs and intentions, enabling enhanced customer experiences and better competitive positioning.

 

Open banking – is data the new currency?
By Alessandro Hatami

Banks across the globe are anxiously looking at the slow but seemingly inexorable progress of banking APIs. Regulation and market demands will require banks and other financial services firms to make it easy for another firm to gain access to their customers’ data, and to engage with their platforms to transact. Most realise that the world of financial services is going to be shaken to its foundations by their arrival. Banking APIs will usher a completely new era for banking. Financial services firms will have to accept a reality where their most valuable asset – their customers’ data – is now controlled by customers themselves. This may not be the end for the big banks and financial institutions, but it’s definitely a very different world from what they’re used to.

 

Frictionless finance with fintech
By Chris Skinner

Larry Summers, former director of the National Economic Council for President Barack Obama, writes a regular column in The Financial Times. His latest piece is his take on fintech, which has the main headline that fintech is taking away frictions in finance. FinTech to banking is like Skype to telecoms – drastically reducing margins; or like Netflix to Blockbuster – yes, some banks will go bust. 10 years from now, he predicts that one or two firms will have valuations of $250bn, the value of America’s biggest bank JP Morgan Chase, and maybe hadn’t noticed that Ant Financial is heading that way already. A further prediction is that the American internet giants won’t get into banking: I am “sceptical of the idea that one of the big tech players like Apple, Google, Facebook and Amazon would also become a big player in financial services (due to) the traditional American aversion to combinations of banking and commerce and also that I thought privacy rules would preclude their using their massive data troves to drive lending activity”. This illustrates the difference between the Chinese internet giants – Baidu, Alibaba (Ant) and Tencent (WeChat) [BAT] – and the American ones: Google, Apple, Facebook and Amazon [GAFA]. BATs are integrated versions of a Facebook, Amazon and PayPal in that they offer social, commercial and financial all-in-one apps.

 

Blockchain regulation: is Europe getting it right?
By Noelle Acheson

Despite increased investment, the banking industry in the U.S. continues to lag other regions of the world in the development of meaningful digital innovation. This impacts customer experience, cost structures, as well as revenue opportunities. Historically, the banking industry in the U.S. has been slow to innovate compared to other industries. When asked why this may be, most industry studies found legacy back office infrastructures, the lack of leadership commitment (culture), regulations and compliance, organizational silos and the lack of budget to be inhibitors. Despite these limitations, the U.S. banking industry has tried to increase their focus on innovation through upper management commitment and support of innovation initiatives, development of innovation labs, increases in dedicated financing, and even an openness to invest in, or partner with, fintech firms. Some may question if the increased level of attention has had any measurable impact. 

Barclays the blockbuster of finance, insurtech innovation, how to compete with fintech, the real number of unicorns – FinTech Summary 82

Barclays is the blockbuster of fintech

Fintech won’t challenge us. Jess Staley, CEO of Barclays, sees technology as driving globalisation and changing banking, but says there’ll always be a Barclays.

It’s also worth understanding that there is no upside to saying stuff like this. Because more often than not, you’ll find yourself on the wrong side of history like so many of these CEOs. And then we’ll make slides to immortalise your cluelessness – “neither Redbox nor Netflix are even on the radar screen in terms of competition” once said Blockbuster CEO…

Thanks for reading; YOU are awesome!

 

What’s happening in the Insurtech innovation scene in London
By Bernard Lunn

Insurtech is moving beyond the early buzz created around P2P, drones, Blockchain and AI as concepts. The focus now is on solving actual pain points that the incumbent insurance industry fully recognises, the most pressing of which is how to better engage with customers. There is less hostile talk of disruption and more about the power of partnerships. The backdrop to all of this is the collapsing value chain in Insurance.

 

How banks can compete against an army of fintech startups
By Karen Mills and Brayden McCarthy

It’s been more than 25 years since Bill Gates dismissed retail banks as “dinosaurs,” but the statement may be as true today as it was then. Banking for small and medium-sized enterprises (SMEs) has been astonishingly unaffected by the rise of the Internet.  Gates’ original quote contended that the dinosaurs can be ”bypassed.” If U.S. banks are going to survive the coming wave in financial technology (fintech), they’ll need to finally take digital transformation seriously. There are strategies that they can use to compete successfully online. The familiar David vs. Goliath script of the scrappy, internet-fueled startup vanquishing the clunky, brick-and-mortar-laden incumbent is repeated so often in startup circles that it is sometimes treated as inevitable. But in the real world, sometimes David wins, other times Goliath wins, and sometimes the right solution involves a combination of both. SME lending can remain a big business for banks, but only with deliberate choices about where to play and how to win. Banks must focus on areas where they can build a distinct competitive advantage, and find ways to partner with or learn from the new innovators.

 

Disruption is already here
By JP Nicols

Disruption is already here. It just isn’t widely distributed yet, as William Gibson famously said about the future.The open banking movement may eventually turn banks into app stores, where customers can consume products and services from a wide range of providers, all connected to a central banking utility. This platformification of banking, as Ron Shevlin calls it, is still very much a work in progress, but leading banks, such as BBVA, Capital One, Silicon Valley Bank, and others are actively developing APIs and working with fintech partners to connect and build new applications for customers. The result will be a massive reduction in operating expenses, and the ability to mass-customise products, features, and benefits to personalise the experience for banking customers. Exactly what most banks need, but you have to play to be able to win.

 

Fintech unicorns – what’s the real number?
By Chris Skinner

Investors are accustomed to the modern tech growth curve. Most funds have a three to five-year investment horizon. This means that investors inject capital into a business with the expectation of realising a return on that capital within that investment horizon. The problem is that finance is a very slow-moving sector. Whether you’re selling bank technology, small-business solutions, or acting as a lender, it takes time to break into the market. The tech idea that you must get big fast and dominate a sector is at odds with the slow-moving nature of finance, and lending in particular. Unfortunately, fintech companies often receive pressure from both existing and potential investors to demonstrate so-called “hockey stick” growth. This, in turn, leads to short-term thinking on behalf of the fintech company, which brings us to the second reason for the industry’s woes.

Core banking system – the ‘Death Star’ of banking | FinTech Summary 79

FinTech Death Star Banking

A true disruption of banking will only happen when startups find a way to blow up banking pricing models that used to sustain their business model. This is likely to come in a form of unbundling from the very core, such as deposit accounts. The reason it hasn’t happened yet is because banks are doing it better. There is an Achilles weakness, however, the lack of real-time transaction processing capability. Cracking that could provide a very real and serious edge over banking incumbents. Copying model app design is easy. Offering P2P loans is easy. Changing your core banking system is not. This would, indeed, prove that banking is necessary but banks are not.

Thanks for reading; YOU are awesome! Just hit reply if you want to get in touch 🙂

Have a wonderful week,
Alex

 

Road to (perdition) unbundling
By Pascal Bouvier

We know of two evident truths since the internet graced us with its presence. First, intermediators in any given industry will be disrupted as new business models emerge and effectively unbundle old paradigms. Second, this unbundling has not happened yet in the financial services. The question we are all working toward answering and in the process elevate to a third truth or disprove altogether is: will a great unbundling/rebundling occur in financial services? Suffice it to say, that, at a high level, new business models will disrupt old ones by unbundling their offering, rebundling new features/functionality and leverage at scale by aggregate attention as a result of said unbundling/rebundling. It is inevitable that credit intermediation will be upended as a result of this shift. How money is created as well as how capital requirements are engineered in the aggregate will have to be revisited should this model take hold at scale.

 

Arguing with a banker
By Chris Skinner

We are on the cusp of radical change. Some banks are leading this change, while some banks have no idea what change is coming. Bank is there as a trusted store of value. The lending part is now no longer important, as that can be done through alternative media such as peer-to-peer lenders. The bank’s risk management function is being eaten by software. This means that credit analytics, transparency and management of risk, and the democratisation of finance, is becoming a key change factor as people connect directly through marketplaces and platforms. Banking isn’t the end, but the means to the end. The end is what we’re buying and selling. A bank provides a method to enable that to happen, but software, platforms and marketplaces can just as easily provide that method in a far cheaper, faster and lower risk form.

 

What the father of venture capital can teach us about blockchain
By William Mougayar

Today, the industry is begging for a rewrite and a reengineering of the financial regulatory structures of yesteryear, giving hope to the current array of activities that have developed around cryptocurrencies. If that sounds far-fetched, remember that stocks were once considered a new asset class. The current asset classes include stocks, bonds and cash as ‘traditional assets’. Alternative assets include commodities, REITs, collectibles, insurance products, derivatives, foreign currency, venture capital, private equity and distressed securities. It is also worthy to note that the alternative asset classes have varying degrees of compliance requirements: from being regulated to non-regulated. Should regulators stop scratching their heads and treat cryptocurrencies simply as a new alternative asset class, we’ll be done with the debate. Hopefully, crypto will not take 20 years before the investment community buys into that concept wholeheartedly. These groups should note, it has already seen big successes. Bitcoin, ethereum and many other crypto projects have generated financial returns for their early investors, while creating a new economy – the blockchain economy. Just as Georges Doriot was credited for seeing that capital needed to get ‘creative’ to birth venture capital, we need to be creative today, in order to birth ‘crypto capital’. The difference now is we have a roadmap to replicate.

 

Bullion on the blockchain: a new gold standard?
By Noelle Acheson

It’s hard to believe that the price of gold was fixed twice a day via conference call as recently as two years ago. In 2015, the London gold market (the largest in the world) switched to an electronic pricing system, broadening participation and, in theory, ending decades of opacity, inefficiency and occasional manipulation. However, the price is still fixed only twice a day and most trading of physical bullion still occurs on OTC markets, perpetuating the lack of transparency and cumbersome reconciliation. This partially explains the recent flurry of activity in gold trading technology. This past week alone, both Euroclear and the Royal Mint announced progress in testing blockchain-based gold trading. IEX also has trials under way, and the Canadian Royal Mint already allows the public to buy and sell bullion on a blockchain platform. A more liquid and verifiable market for physical gold could create greater trust in ‘digitized gold’ by lowering skepticism about price fixing and removing doubts about the authenticity of the underlying asset. Increased demand and a greater choice of vehicle is likely to further boost liquidity, which in turn would increase circulation. This would enhance gold’s functionality as collateral or even as a means of exchange. The greater the ‘usefulness’, the greater the value.

AI, UX, Innovation and Uncertainty in Banking

Chess FinTech Banking Experience

Banking services have been commoditised since moving from one-to-one to one-to-all relationship infused by digital revolution but it can’t stay that way anymore. Banks face extreme regulatory pressures and thinning margins are making it difficult to stand out from the crowd. But what’s more worrying is that banks also don’t seem to be in any hurry to offer additional service to the everyday customers. You can open a bank account, get a debit card, possibly an overdraft and a credit card too, if you were a ‘good’ financial citizen. The difference will be very small (if any) whether you go to HSBC, Barclays or Lloyds. Everyday banking is starting to feel like using a gas station – you need to use it but you really don’t care which one you’re going to use – it is a commodity.

You can read my full article here – Boring, beraucratic, commoditised: why banks need to shift towards experience

Thanks for reading; YOU are awesome! Just hit reply if you want to get in touch 🙂

Have a wonderful week,
Alex

How AI Will Become the Most Defining Technology for the Banking Industry
By Elena Mesropyan

Artificial intelligence is here to stay, and 2017 will be about the adoption of ML/AI by the FinTech community and beyond. Experts agree that FinTech companies will harness this technology to make better decisions and offer improved solutions – they will make use of predictive analytics to break down big data and analyse large volumes of consumer information. AI will be the most defining technology for banking industry. The two-three most promising areas where digital advances could revolutionise the customer experience are artificial intelligence, chatbots and personalisation. Financial institutions have found a variety of use cases that bring undebatable benefits for organisations and customers.

Unrealistic Expectations About Innovation – There’s No Silver Bullet
By JP Nichols

Managers have this bad habit of looking for a silver bullet – that magical holy grail that will make all of their problems go away quickly, and preferably painlessly. Those expensive consultants. That fancy new CRM system. This flashy acquisition. That confusing and demoralising internal reorganisation. Many have this same unrealistic expectation about innovation. Your competitors that are sticking to their programme are starting to create their own competitive advantages. Partly through the accumulation of a lot of small wins, and partly by getting better at successive experiments because they’re learning more quickly what works and what doesn’t. Tighter iteration loops.

Embrace Uncertainty To Give Your FinTech Start-up The Edge
By Bernard Lunn

If there is one thing I’ve learned during my time working for a growth company, it’s that you have to get comfortable with uncertainty. In start-up and growth-stage land, uncertainty is a place you should actively want to inhabit. And while there is some truth to the ripple effect of the downside of uncertainty in particular domains, the negative press the word has received has possibly blinded many in business to its hidden, positive traits. Especially when it comes to creatively outwitting your competition.

Building a Better Experience in Banking
By Brian Solis

Design and tech can only go so far as the products, services, processes, systems, operations, et al. are designed to support. This is why customer experience, design, innovation and leadership must work in lock-step to fuse the connection between usefulness, user experience, value and enchantment. Customer-centricity or obsession or whatever you want to call it, is just one step. Change gains momentum with a new mindset that sees customers, markets and opportunities through a lens of possibility and invention not legacy perspectives. As a regulated risk-averse industry, financial institutions can find every reason to make safe bets. But at best, that leads to what I refer to as iteration, doing the same things better. That might work for your traditional customers, but Generation-C demands innovation, products and services that unlock new value. Disruption either happens to you or because of you, and that’s measured by how many innovative and iterative experiences make the old ones obsolete.

Boring, beraucratic, commoditised: why banks need to shift towards experience

Bank Shift Towards Experience FinTech

Banking services have been commoditised since moving from one-to-one to one-to-all relationship infused by digital revolution but it can’t stay that way anymore. Banks face extreme regulatory pressures and thinning margins are making it difficult to stand out from the crowd. But what’s more worrying is that banks also don’t seem to be in any hurry to offer additional service to the everyday customers. You can open a bank account, get a debit card, possibly an overdraft and a credit card too, if you were a ‘good’ financial citizen. The difference will be very small (if any) whether you go to HSBC, Barclays or Lloyds. Everyday banking is starting to feel like using a gas station – you need to use it but you really don’t care which one you’re going to use – it is a commodity.

Gas Station Banking Experience

 

What is a commodity?

It is a product or a service that no one cared enough about to market. Marketing creates value, by combining stories, design and care. The product or service is produced in a way that makes engaging with the item better. Commodities are in the eye of the producer. If you don’t want to sell something that’s judged merely on price (or interest rate), then don’t.

There is no such thing as a commodity in banking or finance anymore. There is no such thing as a commodity in an online world. Banking is becoming increasingly online-based and can’t afford to be a commodity.

Commodity Banking Experience FinTech

 

Banking is an experience and it should be treated as such.

How do companies create an experience that appeals to the customer, like buying an apple device or using Airbnb? Banks need to take bold steps to create an experience for their customers. Banks need to move from transactional to experiential relationship. First step is to prioritise innovation and research. JP Morgan R&D budget is 0% of their revenue, yes, 0% while Apples R&D budget is 4.6% of their revenue. Banks have adopted a latecomer approach, it works when the rest of the market is equally slow or reluctant to change. It’s game theory – “I don’t need to do this because my competitors won’t”. It’s a dangerous game to play.

Once companies take a conscious steps to innovate they will allocate a budget towards that. However spending money on technology is very easy and temptation is to get quick fixes in but we need to prioritise strategic, not tactical solutions. I know it feels safer to do a short term fix (of another short-term fix of another short term fix.. you get the point) than a large strategic overhaul but a large strategic overhaul is what’s going to make the difference. A difference that will become a competitive advantage.

Chess FinTech Banking Experience

 

To create truly better experience banks need to prioritise innovation

This doesn’t mean to have robots instead of bank tellers, innovation doesn’t need to be futuristic, it can simply mean reusing concepts from other industries that work. For everyday banking, retail is a good place to look for inspiration, many stores are looking to shift from towards experiential centre. To do that you need to hire people who understand technology, innovation and its priorities (hint: this doesn’t mean poaching head of digital from Deutsche Bank or BAML, but rather the head of innovation from Amazon or Nike).

The innovation that will make the difference needs to come from an outsider, who doesn’t think like a banker. You can’t project manage your innovation pipeline by sorting your deliverables in a spreadsheet by decreasing Internal Rate of Return (IRR) column. Some of the projects that will deliver the biggest IRR won’t be obvious until implemented, even at a visionary company. Sergey Brin said he nearly discarded Google X project, a bedrock for most of the AI and other critical projects in Google, as unnecessary. You need to take a bet.

 

Bold decisions will have to be taken

I know, I know there is a lot of money involved. It takes courage to make bold decisions. Let’s take a look at an example with a lot of money involved. Apple removed headphone jack from a product that is generating 69% of its revenue. That’s bold. They have taken a commodity (headphones) and morphed it into an experience. It may be transformative for the company in the light of rapidly growing Internet of Things (IoT) ecosystem.

Or this may prove to be unnecessary friction right now, one way or another most headphones will become wireless in the next five years, who really wants to have a cable? It may be just too soon. One thing for certain, Apple will not be the company who just waited, and waited, and waited until it was too late.

Path Less Travelled FinTech

 

You can be the future or you can be the past – the choice is yours

There are many once-mighty companies that believed their history of success would inevitably protect them from technological change, only to be done in by their complacency. Blackberry was that firm. Kodak was that firm. Twitter, arguably, is that firm. It started changing now but it may be too late.

How many of financial service firms are just waiting now? Soon, it may be too late. The best time to innovate is today, just like yesterday was. Just like tomorrow will be. The sooner you start the more room and scope you have for iterations, the more successful product you can develop.

Can Banks Innovate Like Startups? Should They?

Can banks innovate like startups

Can banks innovate like startups

This week I have been asked to contribute to a crowdsourced book on fintech (insurtech, regtech and wealthtech to be more precise).

I have submitted my 3 abstracts and now if they get enough votes I will get to write full 2,000 pieces and get them published.

I have a big ask – could you please cast your vote for my pieces if you like them, and even if you don’t, be honest 🙂

To do that you need to register on http://thefintechbook.com/ and click voting, you can find me if you filter for authors in top right corner of the screen under name Alex Nechoroskovas. I have submitted abstracts for all 3 books. I am incredibly grateful for your support!

Thanks for reading; YOU are awesome! Just hit reply if you want to get in touch 🙂

Have a wonderful week,
Alex

 

Are You Sure You Want To Innovate Like A Startup?
By Pascal Bouvier

As corporations reinvent their innovation processes, they have lots to learn from startups, but must realise that lean startup wasn’t designed for their context. They have different goals (serve a mass market, rather than a niche), different risks (a reputable brand, rather than the flexibility to start over), different constraints (legal regulatory, ownership) and of course, an ‘unfair advantage’ of resources to put to use – none of which is suited to lean startup. This institutional nature, which makes decision making slow and risk aversion high, busts the idea of lean. In all the enthusiasm for the startup ecosystem, we need to re-address how corporations are using this for their own innovation. Now’s the time to create an optimal new approach.

 

The Power Of One Sigma
By JP Nichols

Lean and Six Sigma programmes work well when there are identical operations and repeatable processes in large volumes, particularly when those operations can generate a lot of accurately measured data. When administered properly, they also focus on creating real value by improving quality, cost and customer satisfaction. But what happens when you perfectly execute the wrong priorities? Kodak was arguably the best manufacturer of celluloid film in the world (although Fujifilm might argue that one). Nokia was the world’s leading maker of mobile phones, with 48.7% market share in 2007. The quality of their operations was admirable, and not what turned out to be the Achilles heel for those companies. New technologies and new business models regularly disrupt the status quo. Blockbuster beat all comers in the business of operating video rental stores. It executed the standard business model of its industry better than anyone else until Netflix showed up. Netflix didn’t beat Blockbuster at its own game – it changed the game.

 

Banks – Big, Binary And Beyond Redemption
By Gary Schwartz

The bank’s service ladder is losing its rungs and is being pulled (kicking and screaming) into a marketplace where the consumer is in control. A customer walks into a bank and asks for money. She will either hit the magic 700 FICO score and walk out of the branch with a cheque, or she will not. There is little fuzzy, human logic below this presumptive line. Banks are binary, very linear and often lack the necessary 360-degree view of their consumers because they have never been challenged to develop these tools. With customers looking for alternative solutions to the yes-or-no culture, can banks adapt? Can we learn from other industries such as retail, that have been rudely disrupted over the past decade? Can banks learn to adapt and move towards a customer-centric business that allows for just-in-time services, information and access in a frictionless and seamless way? The answer is no.

 

The Great Distribution in Finance
By Markus Lampinen

We’ve grown up with the belief that we need a bank account to store our capital. At the same time, modern technology and FinTech innovation have made it possible to create complex products and services at very little cost. Do we need a bank account or do we only need some place to store our money? And even further, with the proliferation of technology tools, specialist services, open interfaces, and a rising global computer literacy, is there any stopping the global emergence of new types of services that offer that exact service in a new way?  We’re going to see a distribution in financial services due to changes in technology. So why would you want to have your money with a bank? Because the bank’s name still carries weight and makes you sleep better at night, whatever complaints you might have during the week but this might change.

Future vs Past

Future vs Past - FinTech

One of the landmark political changes has happened on Friday. I don’t want to go into details of that event but I just want to share a short write up by Albert Wenger, a VC from Union Square Ventures. This is something I deeply agree with:

 

The Fight of Our Lifetime: Past against Future

Many of the people in power or currently grabbing for it are trying to maintain the recent past or even go back further. This is the fight of our lifetime. The Past against the Future. It is NOT: left against right, rich against poor, black against white, Islam against Christianity, men against women.

Do not let yourself get dragged into these fights, that for now just serve to keep us in the past. Yes, there are vast injustices in the world that need to be addressed, but if we get stuck in the past we will have no chance of ever doing so.

The past wants: less innovation, less automation, less science, less tolerance, less diversity, less democracy, less transparency, more nationalism, more fear, more greed

The future needs: more innovation, more automation, more science, more tolerance, more diversity, more democracy, less nationalism, less fear, less greed

The past scarcities were: food, land, capital.

The future scarcity is: attention.

Do not live in the past. Do not enable people who want to take us back further into the past.

Fight for the future!”

 

We can’t afford to stop progressing towards a better future.

Thanks for reading; YOU are awesome! Just hit reply if you want to get in touch 🙂

Have a wonderful week,
Alex

 

The Use of AI in Banking is Set to Explode
By Jim Marous

With an origin rooted in risk and fraud detection and cost reduction, AI is increasingly important for financial services firms to be competitive. The digital consumer is being trained by firms that are becoming masters of AI (Amazon, Google, Facebook and Apple) and expect the companies they use to know them, understand them and reward them through personalized communication. This is just the tip of the iceberg. Soon, all financial services firms will leverage the power of AI to deliver better experiences, lower costs, reduce risks and increase revenues.

 

Fintech Is Entering The Third Wave And This Will Be A Wild Ride
By Bernard Lunn

Financial Services is a big % of GDP, of employment and of corporate profits. Many big companies, that are not labelled as Financial Services, make a lot of their profit from Financial Services. Almost all of this can be digitized and is therefore susceptible to disruption. In short, there is a lot of money at stake. That also means that a lot of money is spent to persuade people that nothing will change and the status quo will remain. Perception does impact reality (aka mindshare leads to marketshare). However, this is PR. The reality is that incumbents can no longer dictate the pace of change. They can benefit from change or be hurt by change, but what they cannot do any longer is dictate the pace of change.

 

The Catch 22 of Banking
By Chris Skinner

We live in a Catch 22. In every developed economy, there is a core group of banks who control everything. The result is that in some countries we are seeing a whole new raft of digital and physical banks launching. People call these challenger banks. They’re not. I call them neobanks, and here’s the Catch 22. A neobanks will grow in a niche. If it ever breaks out of that niche into the mainstream and challenges the large incumbents, what will happen? The big banks will just let them do it? I don’t think so. When banks see a true threat they either buy it, copy it or kill it.

 

Trust, Not Tech, Is Fintech’s Advantage Vs. the Banks
By Grace Noto

As the world grows more comfortable with digital, the key to retaining customers is not going to be the technology, but through customer trust. That means the biggest advantage fintechs have over banks isn’t technological innovation, but a lack of that legacy of distrust. Technology is easier to grow than consumer trust—building an omnichannel digital banking service is not quite as difficult as it was just a couple of years ago, even if a bank has to strip a legacy system to do so. Coming up with a stellar integration of both—in other words, growing trust through technology—is what’s going to keep fintechs top of mind for consumers.

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FinTech 2017 Preview in 12 Headlines

fintech predictions 2017

fintech predictions 2017

Happy New Year! I wish you lots of bitcoin, low remittance fees, secure mobile wallets and cheap P2P insurance. Today, I have prepared a special edition of FinTech Summary for you. We will review of various predictions for 2017, as well as big and important topics that need to be address. After all, we’ve entered the most profound era of change for financial services companies since the 1970s brought us index mutual funds, discount brokers and ATMs. So exciting.

Have a wonderful week,
Alex

FinTech 2017 Preview in 12 Headlines

 

Pascal Bouvier shares his fintech wishlish for 2017. There are many nitty gritty problems that need solving in the financial services industry. Technology, common sense, thoughtful regulation and new business models will address these over time. There are also complex problems, bigly ones, that will require either deceptively simple solutions and/or intricate collaboration among many stakeholders.

10 Predictions for 2017 by Chris Skinner. A FinTech unicorn stumbles (this market is still nascent). Or perhaps SWIFT gets hacked again (how many times can this happen?).

For fintech, 2016 was a year of reckoning. Scandals and layoffs killed industry buzz, and deal activity took a mid-year nosedive. Regulatory uncertainty in the U.S. loomed large, as did Brexit. After a glum 2016, look for startups tackling massive opportunities like insurance and real estate to reenergize the fintech sector.

 

Cryptocurrency

Bitcoin Blockchain Predictions

2017 Will Prove ‘Blockchain’ Was a Bad Idea. Yet, all in all, 2017 might be the final year in the pump-and-dump scheme of blockchain-without-bitcoin , the last-ditch effort to prove the marginal utility of databases on crypto-steroids. Probably some smart contract hype will clutter the debate, thanks to the smartest ones among the fools trying to outsmart even the smart contract inventor. But most of this fuss will finally leave center stage, allowing for the 2018 return of (a hopefully more fungible) bitcoin.

Another bitcoin ecosystem health check as we slide into 2017. Bitcoin is at its 3 year high. Is justifiable? Daily FinTech carries out a deep dive into bitcoin prices.

2017’s Big Question: Who Pays for the Blockchain? Not since the heady dotcom days have we seen so many experts hyping a new technology. But, amid the hype, little attention has been paid to an important question. Who pays for the blockchain?

 

InsurTech/RegTech

Insurtech Regtech Predictions

What’s in Store for RegTech in 2017? RegTech has been a famous buzzword in 2016 and the industry – banking and FinTech alike – is looking eagerly at 2017.

InsurTech’s Predicted Impact on Agents in 2017. This upcoming New Year’s Day, agents and brokers should make a resolution to adopt technology that will more easily support customer requirements.

10 insurtech trends to set the stage for the digital insurance agenda in 2017. These 10 insurtech trends set the stage for the digital insurance agenda. They reinforce the need to connect insurance executives with insurtech leaders, which is basically our mission. It helps us to create an agenda for DIA 2017 Amsterdam that’s in sync with what insurers need and what the latest technologies can provide.

Banking and Payments

Banking and Payments Predictions

The top 10 trends in banking innovation. Littered with global examples, Efma has been running an awards program with Accenture for a few years now, to recognize global banking innovation showed 10 key trends emerging in the past year, of how banks are absorbing innovation.

Top 5 payments predictions for 2017. Brian Roemmele and Faisal Khan look ahead to what might change in payments in 2017.

Here’s why 2017 will be a turning point for the UK marketplace lending industry. The UK’s marketplace lending sector is one of the world’s oldest and largest, but it may be reaching a tipping point whereby growth starts to slow and market dynamics start to change.

 

What do you think? Leave the comment below!

What’s the Endgame for FinTech?

FinTech Summary - Banking Startup

FinTech Summary - Banking Startup

Startups are the heroes of the modern day. They see a big bully taking advantage of poor customers and they set it right. If it wasn’t for FinTech revolution, we would still be paying ridiculous amounts for international transfers, invest in stock markets via funds charging 5% for below market performance and only the privileged ones would have access to financial system. TransferWise, Property Partner, mPeza, Pockit and many others are changing it, very rapidly. We witnessed the power technology has in making our lives better. We can now demand technology to make a real improvement to our lives and not just another ‘find a place to drink app’.

Thanks for reading; YOU are awesome!

Have a wonderful week,
Alex

 

Designing a Better Banking Experience
By JP Nicols

Design is about a lot more than making things look pretty. It’s about making things work better. Technology has been a democratizing force across so many industries, and banking is no exception. Customers have more choices than ever, and those choices now include products, services and experiences that are often far superior than the you’ll-take-what-we-make era that prevailed for so long. I have heard a lot of bankers proclaim their desire to make their branches more like Apple stores, but for too many of them that desire begins and ends with the clean visual aesthetic. The effectiveness of the design of the Apple store that makes it so successful goes far deeper than that. A good design process involves a ‘test and learn’ approach that is well known to any fintech entrepreneurs following lean startup principles. It’s an approach that banks should be using in more of their business decisions.

 

What’s the Endgame for FinTech?
By Elena Mesropyan

Amidst all the excitement and sometimes overinflation of financial technology startups’ disruptive potential, entrepreneurs often can’t zoom out a bit out and see a bigger picture. While it is understandable when your startup rapidly gains traction and there are no visible barriers, yet the market is not infinitely stretchable. At some point, a strategic decision will be required and every entrepreneur will have to find an answer to the important question: what’s the endgame? The answer highly depends on the niche and the type of startup.

 

How Banks Are Failing to Uphold Their End of the Bargain
By Andrew Sharpe

Banks are failing to enter into a social, unwritten contract with their customers. Millennials want a return on the asset they’ve entrusted with the bank. They ultimately want better financial health in return. This might come in the form of real-time information on their accounts and finances and help at the point of sale to make the right payment decisions, through to budgeting tools and alerts when they’ve spent beyond their means. In real terms, millennials are expecting a bank to tell them when they shouldn’t make that additional non-discretionary purchase. They want tools to help make good financial decisions, and the bank to forgo the payment revenue and opportunity to charge more interest. Until banks enter into social contracts with their customers, trust in their services will continue to erode and they will remain ripe for disruption.

 

Why Did Allianz Invest in Berlin InsurTech Startup Simplesurance?
By Bernard Lunn

There are two kinds of corporate investments in startups; passive corporate VC arms and active strategic investments. Which prompts the question, why did Allianz, Germany’s largest insurance group, buy a minority stake in Berlin based startup Simplesurance? In other words, will this be a good experience for the founders of Simplesurance and the shareholders of Allianz? Lets read between the PR lines to find out. How Allianz figure out the cannibalization challenge with their existing agents remains to be seen. No amount of digital tech can make that problem go away. The other game play for Allianz can be to use Simplesurance as a digital only entry to new high growth markets. The PR mentions India as a country and that makes sense as it is mostly a blue ocean market for Insurance.

 

5 things that made me smarter this week

Venezuela’s cash is easier to weigh than count. Hyperinflation has devalued the bolivar to the point of absurdity.

The more we hear a lie, the more likely we are to believe it. An “illusion of truth” results from hearing a lie repeatedly.

War is really boring. The battle for Mosul is underway in plain, live streamed sight. The unedited continuum of war images accessible online does nothing to help an understanding of what’s happening, argues Sam Kriss, but it perfectly represents our war against ISIS: always, everywhere, yet mostly uneventful.

Tim Fernholz on the crucial role that Google’s chairman played in Hillary Clinton’s campaign. “‘I met with Eric Schmidt tonight,’ John Podesta, the longtime Hillary Clinton adviser, told campaign manager-in-waiting Robby Mook in April 2014, more than a year before Clinton announced her candidacy for president. The email, stolen by Russian hackers and published by Wikileaks, details the billionaire Alphabet chairman’s interest in backing Hillary Clinton’s nascent presidential run.”

Uber is exploring the use of flying cars. It predicts that “vertical take-off and landing” vehicles “will be an affordable form of daily transportation for the masses.”

 

Thanks for reading – you are awesome!

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