At Finovate Europe in London, a leading event on innovation in financial services, I met a strange banker. He claimed to be from the year 1993 and had been sent in a time machine to London to check out Finovate’s 2013 latest innovations. He would then return to 1993 to implement them at his firm. Curious, I asked him about his key findings:
- Inefficiencies in the value chain will be punished. A good example: Money-wiring services are faster and cheaper via peer-to-peer platforms, like those shown by TransferWise and Azimo, than via Western Union or MoneyGram.
- The user experience on banking platforms is becoming more engaging. This starts with smooth and speedy onboarding solutions such as the one from Five Degrees, and moves on to the personalized and engaging dashboards with widgets from Backbase and award-winning Banktron solution form Etronika.
- Banks are branching out to loyalty and other reward systems. It’s no longer enough to simply show customer balance. As well as the many digital money management solutions from players such as Meniga and IND Group, we’re also seeing cash back and discounts offered via the banking platform. Cardlytics is a frontrunner here, but Polish mBank’s platform has also nicely incorporated this. As an mBank official said: “Offering clients other tangible benefits like discounts or loyalty points takes the heat off some of the interest-based discussion of banking products.”
- Voice biometrics are surfacing with the aim of making banking tasks easier for customers. Companies such as VoiceTrust and Finantix showed the audience how customers can be verified by voice, and how easy certain banking tasks can be when using voice commands.
- Peer-to-peer lending is maturing. Assessing the risk of potential borrowers is a major hurdle, but companies such as Kabbage and ezbob are making use of data from eBay and PayPal to provide almost instant offering of credit to online web shops.
- Self-service concepts continue to spread. Dutch firm eyeOpen presented digital self-service mortgage advice underpinned by extensive algorithms. The trading and asset management solutions that companies such as Ayondo, BörseGo, and Financial Simplicity presented show us that rebalancing portfolios and making trades can be done with a click of a mouse.
One thing that almost all the presenters had in common was that they were benefiting from the opportunities provided by digital disruption. For starters, almost all the presentations or demonstrations were made via smartphones and/or tablets. In the book Digital Disruption, my colleague James L McQuivey will talk about how barriers to entry in every market are dropping in an era of free and cheap digital tools. People can compete at a lower cost, which means far more competitors and far more ideas to compete with. This undermines traditional businesses at an incredible pace. The only way to compete is to evolve; to become a digital disrupter yourself. As an example, at Finovate, vendor ITSector presented its ‘Smartbank’ concept based on the Google TV platform.
For more observation about this exciting event, please read my colleague Benjamin Ensor’s extensive coverage, which contains more details.
Walking back to my hotel through the City of London, I noticed that not much has changed since 1993. I realized that my friend the banker hadn’t made it home safely in his time machine. Another missed opportunity! See you all next year!