As the name suggests, Finovate prides itself on showcasing the most significant innovations that are set to the take the world of fintech by storm.
Finovate Europe 2017 was therefore crammed with new ideas, companies and products, hoping to catch the eye of a packed-in audience of buyers from many of Europe’s premier financial institutions.
But what were the biggest takeaways from the show? Bobsguide was in attendance for both days, and here were ours:
The mass market want (and will be able) to take investing into their own hands
With interest rates having been stuck on the floor for an eternity, it is easy to predict that consumers are fed up with getting no significant growth on their savings. But the crash is still pretty fresh in the minds of consumers too, and trust in traditional financial services certainly hasn’t fully returned to pre-2008 levels, which all adds up to there being a gap in the market for fintech companies to create products that allow consumers to both take their financial future into their own hands, and make their money work harder for them.
It wasn’t a surprise, therefore, to see a prominence of mass market investing tools at this year’s Finovate Europe. Two companies that stood out in this regard were Wealthify and Wealth Wizards.
Aiming to transform the way investors save money, Wealthify is an affordable investing service for consumers looking to grow savings from as little as £250. Backed by a robo-investing strategy that uses a proprietary algorithm to optimise asset allocation decisions, Wealthify’s aims are to make investing available and easy to understand on a simple, transparent platform.
Wealth Wizards focuses its products on financial advice services, trying to fill gap between consumers who are all too often completely unaware of their investing options, and current financial advice services that are expensive or clogged by jargon. At Finovate Europe 2017 Wealth Wizards presented its Pension Wizard product, which employers can provide to their employees to give them a better perspective on how they should be preparing for later life and managing their pensions.
Other mass market investing technology at Finovate included aixigo’s high performance portfolio management API for digital wealth management, which included voice recognition technology that can be utilised via Amazon Alexa.
Social media is everywhere
Social media has been a staple element of modern living for the best part of a decade, but still seems to find new and innovative ways of infiltrating every part of our personal and professional lives. 2017 feels like the year that we will really see social media make a telling impact on financial services, in a number of created, unexpected, and varied ways.
One company that has had success in the market for a number of years, but who was at Finovate Europe to present on the reason for that success, was eToro. The intraday trading and FX platform, which has over five million registered traders, separates itself from traditional trading platforms through it social elements; traders have their own profile, can communicate openly with other traders, and can even copy the trades of successful traders.
Another fintech that, rather than creating its own social community, is instead looking to harness the power of a global social media platform, is Market Earlybird. The company’s theory is that the immediacy and direct content delivery available via Twitter is a critical tool for traders who rely on keeping their fingers on the pulse of the markets, but that Twitter is not currently specialised for that use case. EarlyBird technology strives to do the hard work for banks in both modification of the standard Twitter platform to create a product that is read-only and fully recorded for compliance, and in filtering a huge volume of tweets to produce information and reports relevant to the needs of individual traders.
A third company developing its application through social principles is payments provider Memento. Memento drives engagement with bank account holders by monitoring spending behaviour, showing them how they are currently spending their money, and showing users how other members of their network compare. Members can also set goals and challenges for themselves and their friends.
The thinking behind this is that millennials whose lives are completely entwined with their social persona are already sharing this financial information on Facebook and Whatsapp, and that banks should focus on creating their own app fulfilling this same purpose to add value to customers who own a mobile wallet. Mememto has secured its first partner, Icelandic bank Islandbanki, so it will be interesting to see if this market develops further in 2017.
The age of API may be dead before PSD2 has even had a chance to take effect, thanks to blockchain
PSD2 has been billed as one of the principle guiding lights for the fintech industry ever since it was put on the table in 2015. The adoption of a directive compelling banks to give access to third party technology through APIs signalled the opening of the floodgates the fintech industry had been developing behind, lowering the barriers to entry to the market.
Of course you couldn’t find a single tech innovator at Finovate cursing the introduction of PSD2 and the new age of open banking, but there was a discussion on whether the API systems that developers have been working on feverishly to capitalise on PSD2 are in fact already out of date.
That is because advocates of blockchain were keen to wax lyrical on the emerging tech’s advantages over API, declaring that blockchain makes transactions faster, cheaper, and more secure, the three key metrics on which digital payments are measured.
Leading the charge for this argument was cross-border payments specialist Caxton, which demonstrated its Firebord Payments engine. The engine is powered by API-less connectivity technology, utilising a blockchain ledger. The product offers FX pricing, client take-on, and account management as well and peer-to-peer, bank-to-bank, and card-based payments.
Naturally there were dozens of API-focused payments companies at Finovate 2017 fighting their own corner, but there is certainly a significant amount of industry buzz surrounding blockchain, how this rivalry progresses in the eyes of banks, financial institutions and consumers will be one of the key narratives of the fintech industry in 2017.
Remote verification is at the forefront of banks’ minds
As banking services and customers become more and more comfortable with the concept of mobile banking, it is inevitable that we will see less brick-and-mortar banks on the high street. HSBC has already begun the process of winding down its physical presence in the UK due to the success of mobile and online banking, and this trend is only going to continue in one direction.
Of course this means that the banks and digital financial services of the future will have to provide all of the facilities offered by branches, not simply transactions. And for many of these facilities, for example opening an account or applying for a loan, one the internet’s biggest issues raises its ugly head: How do you prove conclusively that someone is who they say they are?
Replicating the process that would previously have taken place in the bank is essentially a duel authentication system; 1.) confirming that the documentation proving identification is a genuine document, and 2.) confirming that the person presenting the document is the person said document purports them to be. This is going to be a huge issue for the financial services industry to tackle, but one the fintech industry appears determined to get to grips with in 2017.
There were at least half a dozen providers presenting verification software that allows for digital onboarding of customers in a safer, smarter way, using a combination of state-of-the-art mobile capture, improved document verification, and assessment of applicants via other platforms such as social media.
Jumio and Mitek are two companies promoting document verification technology; Vasco, iProov and Signicat are three other fintech providers aiming to make the onboarding process for financial services frictionless and secure.
HooYu is another fintech looking at the verification issues created by the digital age, but is focused on peer-to-peer ID verification that protects consumers buying and selling online from other individuals.
The age of biometrics has arrived
Speaking of the new security and verification issues that a modern digital age has created, it seems almost inevitable that 2017 will be the year that biometric technology become an even more visible element of digital finance.
We’ve already spoken about companies such as Vasco, whose Sign & Smile onboarding system is using biometrics technology to authenticate payments using ‘selfie’ technology, and aixigo’s voice recognition technology for managing an investment portfolio. But there were a whole host of other biometrics-centric fintechs offering different security procedures in relation to log ins and payment authentication.
These included Eyeprint ID, created by EyeVerify, which logs customers into their mobile banking accounts and secures payments using iris recognition selfie technology, and Veridium, whose end-to-end platform includes an SDK to embed biometrics into an enterprise’s mobile app, and includes reporting tools. Veridium claims its 4 Fingers TouchlessID software is the most reliable biometric that can be measured on the market.