Innovation in fintech has moved in a new direction in 2016 and with new players coming to the surface, the traditional sector has started to become digitally savvy after understanding that the consumer is looking for simplicity and cost effective solutions. Since the financial crisis, billions of dollars have been spent on startups in order to fund their products as trust in banks has depleted. This is a trend that is being seen in many financial industries, but this year is set to be a game changer for the insurance world as was evidenced at Finovate 2016.
11 leading robo-advisors grew by 65% and retained around $19 billion in assets under management last year, according to a Deloitte report, which indicates that this area is expected to boom. At Finovate 2016 this year, many products that were showcased were targeting insurance and explored the necessity of the digital, as Irene van den Brink, Director at fintech company OutShared highlighted that insurance and complexity had become synonyms. “Digitisation is key and with insurance, we want to do what Uber did for the taxi industry and Google did for the Internet,” van den Brink said.
OutShared’s product Cynosure epitomises what the insurance industry needs to be, as Director Ronald Willemsen, is full automation, alongside low cost operations, speed and flexibility. While this solution provides digital insurance, Envestnet aims to provide advice to those traditional advisors that are currently competing with the robo advisors. Jay Hummel, SVP, Advisory Service at Envestnet spoke about how reports about robots have “got out of hand.” “What is not discussed is the infrastructure that is needed as the future is for institutions to blend with the digital to serve 20 year old millennials as well as 70 year old retirees who want interaction with a human personal advisor,” Hummel said.
Unlike many of the other systems that were demonstrated at Finovate, additiv provides a customisable solution for financial services providers so that they can implement digital innovation and business models. This is something that Michael Stemmle, CEO and Founder of additv, believed that asset managers and brokers were looking to invest in as the system enables full integration with partners. additv describe themselves as the “iTunes of wealth management.”
Advisory fintech has also developed and grown in the investment industry with products such as what Investify provides, which guides someone through the process of becoming an established investment customer. CTO of Investify, Tobias Haustein, believes that “everyone should feel right about investment,” and this is an attitude that DriveWealth shares and implements in its cloud based mobile solution. With the launch of its real time fractional trading product, head of corporate strategy, Michael Fitzgerald, spoke about how stock prices no longer matter as investments made on their product Passport 2.0 are made according to how many dollars the investor wants to spend.
Another way that the Passport 2.0 has shown innovative techniques is by using the emoji function on the iPhone to ensure quick and easy investments, for example, when the package emoji is entered, companies such as Amazon show up. An add to basket capability is also enabled which allows the customer to budget how much money they want to spend and the percentage of cash they want to allocate to each security.
Capitali.se uses a similar format to make sure that investment is made easy with the use of common words so that anyone can enter the complex world of automated trading. This fintech company forms strategic decisions for businesses with the creation of rules that invest in companies only when they reach a certain stage and suggest a better strategy if relevant. With this, companies can gain the two things they want the most: customer engagement and increased revenue.
With the adoption of Apple Pay last year and other services where biometric technology is needed, Finovate 2016 saw many companies using voice authentication and touch ID within their new products that were being demonstrated. Biometric technology has become popular recently as more and more people begin to distance themselves from using passwords, pins and security questions because they are simply difficult to remember.
VoicePIN.com CEO, Lukasz Dylag, put across this view: “People don’t like passwords, security questions and PINs. Human voice contains biometric features and is the most natural and convenient way of communication.” Alongside this, security is always a key feature of these new solutions and Qumram showcased their product that records user sessions on the web across all platforms which is beneficial when it comes to compliance with regulation and prevention against fraud.
What to Expect on Day 2 of Finovate
Day 2 of Finovate will welcome many more fintech startups that are developing and innovating. Here are some comments from the speakers that will be on stage demoing their products tomorrow.
Marc Torrens, Chief Innovation Officer, STRANDS
“At the moment, banks are trying to sell products without thinking about what the customer truly wants. Banks should be proactive and offer customers a solution to their problem, personalise the product and understand the needs of the customer at the start of their journey, rather than at the end.”
Roberto Valerio, CEO, Risk Ident
“Banks are more defensive about their risk management strategies as we live in a world now where fraud prevention doesn’t just mean anti money laundering, it’s also the prevention of terrorism financing. Because of this, the risk industry is becoming a crowded space but with the use of machine learning algorithms and working with players in different industries, we have created a fraud prevention platform.”
David Sosna, Co-Founder and CEO, Personetics
“Banks and fintech are working together to produce some good stuff, but with the abundance of challenger banks coming to the surface, it questions how many mobile only banks are really mobile only. Banks should be the first point of contact for customers but they have too many products themselves and those that they have to compete with.”