I spent Tuesday and Wednesday of this week at Finovate Europe. As always, it is a great way to spend two days thinking about digital financial innovation and how firms can deliver better experiences for their customers. Here are a few of my impressions from the two days:
- Biometrics is becoming mainstream.We barely raise an eyebrow when shown authentication processes by firms like eBankIT, ID Mission, Jumio, Nice Systems and Wipro that use facial recognition, fingerprints or voice recognition because these technologies now seem almost commonplace. Yet the technologies are hugely impressive and far advanced on what was available or even possible a decade ago.
- Future generations will pay differently. The credit card is one of the greatest financial innovations of all time. Yet, despite the various card innovations on show, I cannot rid myself of the belief that plastic cards will one day soon start to seem as quaint and outdated as cheques (and, indeed, business cards). There are many big obstacles on the path to mainstream mobile payment adoption, and payment habits take decades to change, but I don’t think the future is bright for plastic cards.
- Relevant, location-based offers will become common. Firms like Bendigo and Adelaide Bank, Fiserv, mBank, Meniga and Strands have developed impressive capabilities to deliver relevant offers to customers based on their location or other context. Executing this well at scale is really hard, because you need enough scale to make it work for merchants.
- Scepticism about digital wallets is overdone. Wallets were overhyped; now they are being underestimated. Much of what we carry in our purses and wallets today will be digitized. It will just take time. Forrester’s view is that most people won’t deliberately seek a mobile digital wallet; instead they will gradually start using a series of related features like offers, payments and receipts that are embedded in apps and services that they already use.
- The Elephant wasn’t in the room. No innovation has changed the conversation about digital financial services more in the past year than Apple Pay. The combination of Passbook with Touch ID biometric authentication and the tokenization of payment credentials has shifted thinking about what mobile payments and digital wallets will look like. Yet Apple Pay was barely mentioned throughout the two days. Odd. I don’t think that’s only because Apple Pay has yet to launch in Europe.
- Account opening should get a lot easier. Thanks to the cameras embedded in ubiquitous devices, financial firms have a great opportunity to streamline the customer experience throughout the life cycle, from product discovery through the application process to customer onboarding. Firms like Avoka, Jumio and PhotoPay are speeding up processes and greatly improving the customer experience (and conversion rates) by using optical character recognition to extract relevant data from paper documents.
- Advisor planning tools are steadily improving. Crealogix, MyDesq, Novabase and CPB Software all demonstrated better software platforms intended to help financial advisors be more efficient, smarter and more relevant to their customers. MoneyHub’s platform is more focused on self-directed customers, but enables them to share with advisors. It is good to see more attention being focused on delivering smarter tools to advisors. Providing relevant, actionable financial advice at an affordable cost to mainstream consumers remains one of the last big unsolved challenges in retail financial services.
- Venture capitalists should shift funding to business banking, wealth management and insurance start-ups. Retail banking is a fairly simply business and it seems to me that much of the technology needed to address the most common customer problems and improve customer experiences already exists, though integrating new technologies into existing systems is very far from easy. Most firms have years of work to do to build better customer experiences, but leaders are already delivering. By contrast, business banking still appears to be fertile ground and I continue to be surprised by how few start-ups or established firms are trying to develop innovations in insurance.
- Disruption comes from integrating multiple innovations, not any single innovation. I heard a number of people say they hadn’t seen much that was truly new. True enough. Many of the innovations on show echo or build upon previous innovations. But I think that misses the point. Few single inventions or innovations are truly disruptive. Instead it is the combination and integration of multiple innovations that uncovers new sources of value for customers. That’s why I’m so impressed by the work of firms like Backbase, eBankIT, Five Degrees, Fiserv, mBank, Meniga, Misys, and Strands in combining multiple innovations to create new sources of value. The vast majority of European financial firms have yet to implement more than a handful of these innovations.
- The biggest challenge is transforming the wider organization. The biggest challenge facing Europe’s financial firms is not a lack of technology, a lack of ideas or a lack of bright people. Instead the challenges are to integrate new technologies with outdated legacy systems and to lead the change from siloed product-centric organizations to agile customer-centric organizations that use digital technologies to create better experiences and serve customers more efficiently than before. I draw inspiration from the pioneers who are trying to drive change.
Thank you to Jim Bruene, Greg Palmer, Eric Mattson and the whole team at Finovate for another great show.
PS Here’s my simplistic group of the 72 exhibitors, based on what they exhibited (which is often not the only thing the company does):
Security & Authentication
- Fraud detection: Akamai, Intelligent Environments
- Identity and authentication: Encap Security, ID Mission, iSignThis, Mistral Mobile, Nice Systems, Pirean, Sedicii, Trunomi
- Data capture and verification: Avoka, Jumio, KPAX, PhotoPay, VATBox, WSI
Business and SME banking
- Financing and lending: Invoice Sharing, Taulia, Topicus, TradeRiver Finance
- Credit risk management: QCR
- Business valuation: Biz Equity
- Merchant point of sale: LifePay
- Currency exchange: AlphaPoint
- Card payments: Dynamics, iXaris, Smart eMoney (LockByMobile), Vipera
- Digital payments and mobile wallets: C24, Cash Payment Solutions, CashSentinel, CoinJar, Delta Bank (Pay2You), Mobino, OnlinePay.com, Quisk, Revolut, Sofort, TransferTo, Xsolla, YoYo
- Offers and rewards: Bendigo and Adelaide Bank, Meniga, Strands
- Money management: MoneyHub
- Digital bank: Telenor Banka
- Digital branch: mBank & i3D
- Banking and lending platforms: Backbase, eBankIT, Evry, Five Degrees, FiServ, Misys, Nostrum Group, Temenos, Wipro
- Cash management: Fobiss
- Consumer credit scoring: Aire
- Savings accounts: TiVitz
- Social lending: Bitbond, Street Shares
Investing & Wealth Management
- Personalized video: Financial Media Solutions (MAPPS)
- Financial advice: Advice Games
- Advisor platforms: CBP Software, Crealogix, MyDesq, Novabase
- Financial data: Xignite
- Social investing: eToro, Next Markets
- Crowdfunding: InvestUp
- Peer networking: eRipple