Voice of the Industry

MoneyLIVE: banks and fintechs set to dazzle the customer in a tech-driven world

Wednesday 21 March 2018 09:31 CET | Editor: Melisande Mual | Voice of the industry

Although the banking industry is not entirely known for radical innovation, the banks attending MoneyLIVE: Retail Banking Europe have come to show the opposite.

Banking executives, financial investors, fintech enthusiasts and entrepreneurs have met for three days in Amsterdam to share their experience in the banking/financial industry, to showcase their success stories and to enjoy viewing the historic city centre and the river IJ from Mövenpick Hotel, the event’s location.

The rapid pace of change in banking, driven by technologies such as AI, machine learning, blockchain, as well as regulation - PSD2, Open Banking and GDPR - have powered some of the most insightful presentations we have had the pleasure to attend.

Fintech lightning pitches

The event debuted with an evening dedicated to fintechs. The first company to showcase their product was Combine, a personal mobile banking app that aggregates a user’s bank accounts from anywhere in the world together in one place. Next in line was KlippaCast, a fintech that tries to simplify receipts and make them paperless, followed by Riskifier, a startup that leverages AI to make investment risk profiling simple, meaningful and insightful. The last pitch was a spontaneous one, coming from Cashoff, a white-label service that gathers financial data of final consumers from different sources (banks, merchants, e-wallets, telecom providers, loyalty programmes) to foresee consumer buying behaviour, using AI.

The fintechs are active not only in the AI space. We also had the pleasure to meet with Alastair Johnson, CEO at Nuggets, a company focusing on ecommerce and payments ID. The startup leverages technologies such as blockchain, biometrics and cryptography to secure users data. Recently, Nuggets has been selected by Chinese online retailer JD.com’s AI Catapult Accelerator (AICA).

During some of the debates, the general conclusion was that the way innovation is being spurred within fintechs could also be a consequence of the agile way in which they work. To questions such as what makes small fintechs stand out from the crowd, or what makes banks take decision so hard, the Pizza test used by Amazon popped up. The idea of a decentralized company was initiated by Jeff Bezos, CEO of Amazon, where small groups can innovate and test their visions independently of everyone else. He came up with the notion of the “two-pizza team”: if you can’t feed a team with two pizzas, then the team is too large. That limits a task force to five to seven people, depending on their appetites.

Banks - a view from the top across Europe

Francois Miqueu, Consumer Finance CEO at CaixaBank started his presentation by asking himself whether the “traditional banking business model has arrived to its end...? Well, no - if banks rethink their approach and redesign the bank around the clients, and for the clients.” The new approach for Caixa is translated into three main pillars: customer segmentation, differentiated value proposition and of course offering great customer experience – empathizing with customers.

In terms of segmentation, the Spanish bank has offers for youngsters and millennials through imaginBank (which so far has enrolled over 75 000 Millennials, with products focusing on payment, transfer, loans, insurance). For families, Family (launched in 2017) is here. For people over 60 there is ClubAhora, which covers 21.5% of the market share for Spanish pensions (and besides financial solutions, the program also offers leisure activities). For entrepreneurs & SMEs there is MicroBank and for international customers living partially in Spain HolaBank. Lastly, but not least, for premium consumers CaixaBank Banca Privada provides everything needed.

In the Netherlands, according to Jessica Niewierra, Director of Mobile, Internet & Design at ABN AMRO, the Dutch spend a lot of time online, as 92% of the population is online every week. Moreover, the Netherlands has one of the highest online banking penetration and percentage of self-directed customers globally.

Now context is more important than content. The customer context is defined by last minute decisions, use of smartphone, interacting a lot with friends and family, use of social media; the user does daily banking on its own, transacts on the go to work, wants personal advice on demand, has no plan how to achieve financial goals, and has bigger lifestyle wishes. “It is dominated by know me. Empower me. Wow me.”

Some stirring facts have been shared by Kai Friedrich, CEO at BNP Paribas Consorsbank & DAB, regarding the way Germans view cash and savings. Only 54% of Germans use online banking and they have an average of 2.2 bank relations per year. Moreover, every second payment in the retail sector is done by using cash as consumers have an average amount of EUR 150 in their wallet. Germans have low savings rates - 6.9% (they save an average of EUR 105 per month) and are risk-averse with only 12% investing in stocks and just 38% preferring cash deposits.

The fact that the way we pay is influenced by geographies and cultures is not a new thing. As a result, the required time for digital adaptation is different in each geographical region and for countries such as Hungary, Poland, Czech Republic, Italy it might take a bit until the online transactions dominate the use of cash.

Blockchain: an accelerator for operational efficiency

As suspected, blockchain was a topic on the event’s agenda, with Abhijit Singh, the Deputy CIO at ICICI Bank, presenting a real use case of blockchain tech implemented in trade finance. The solution, from Infosys, is dubbed Finacle Trade Connect and it enables the digitization of the trade finance business process, including validation of ownership, certifying documents and making payments.

Realizing the potential of machine learning and AI

Rami Thabet, the VP of Mobile & Digital Money Management at Royal Bank of Canada (RBC), brought a new concept for the banks to explore - conversational commerce: engaging with customers on their terms. To make his presentation more convincing, Rami actually presented how his institution engaged with its customers via the Nomi app. The app offers actual insights about the clients’ financials and savings, and uses predictive technology to identify money in a client’s cash flow that can be automatically saved.

AI can also fight the bad guys, however it needs to stand a case. By using the iceberg metaphor, Daniel Greiller, the Sales Director of Feedzai, revealed what it takes to implement an AI solution that is profitable for business: modelling, profiling, exploring, and real-time deployment (the faster the new models are tested and deployed, the sooner multiple scenarios of rules and models can be tested, leading to high detection rates).

The banking industry is not well-known for its huge leaps in innovation or significant shifts in the dynamic of the players involved. However, banks with tradition, like CaixaBank in Europe or the Royal Bank of Canada, have survived as they directed their substantial resources to evolving the big ship, which is their bank brand. On the other hand, fintechs - such as Combine - redefine the rules that created the base for the classical bank account: low friction, engaged customer base, differentiated distribution (no branches) and strong digital (mobile & web) support. Nevertheless, at the core, there is a new approach to the basic day-to-day bank account.

However, when talking about securing transactions and customer information, or regulations such as GDPR, more effort is really needed to apply controls and get the assurance that innovation is there within a proper security environment, that also maintains it, according to Mohammed Saeed, Audit Supervisor at National Bank of Egypt.

As the customer experience focuses more on context, and not the content, these financial institutions, sometimes together with fintechs, can put a new layer of innovative customer experiences and technology over the old core, creating something new. And, with the help of artificial intelligence and predictive analytics, FI are learning to use their ever-growing data hoards to help customers make better financial decisions.

We want to take this opportunity to thank MoneyLIVE organizers for inviting us for the Retail Banking Europe event and warmly recommend their next event called MoneyLIVE: Digital Banking that takes place between 25 – 26 June 2018 in London.

About Mirela Ciobanu

Mirela Ciobanu is Senior Editor at The Paypers and has been actively involved in covering digital payments - related topics, especially in the cryptocurrency, online security and fraud prevention space. She is passionate about finding the latest news on data breaches, machine learning, digital identity, blockchain, and she is an active advocate of the need to keep our online data/presence protected. Mirela has a bachelor degree in English language and holds a Master in Marketing.

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Keywords: MoneyLIVE, Retail Banking Europe, fintech, banking, AI, machine learning, PSD2, GDPR, Open Banking, combine, Riskifier, Feedzai, Nuggets, blockchain, trade finance
Countries: World

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