Over 1000 fintech professionals joined us in London for FinovateEurope 2019. We saw the best of the Europe’s fintech through unique, short-form demos and learned from expert speakers on banking, regtech, payments, customer experience, investech, open banking and AI.
The digital lending market is rapidly expanding, growing at an impressive 47% CAGR, spurred by venture capital (VC) investment, according to the new whitepaper, European Digital Lenders: How operating efficiency is helping digital lenders attack a $150 billion annual origination market across the Eurozone in 2018, from analysts at the Fintech research practice, Autonomous Next. The UK alone has an origination market of $6.6B, while across Europe, the addressable market is $150B and revenues are estimated at $400m. This represents a sizable opportunity for a competitive market that includes new entrants and incumbents alike.
Lenders who want to remain competitive need to drive efficiency through digitisation
But while the market is growing quickly, the whitepaper reports that digital lending’s share of the total addressable origination market is still relatively low – especially given the size of the opportunity.
This discrepancy is attributed to the competitive nature of this new, but rapidly expanding, market. To remain competitive and profitable, lenders need to drive efficiency through digitisation. Efficient onboarding and servicing using digitised workflows, such as digital identity verification technology, are being used by both new entrants and incumbents to boost competitiveness by ensuring regulatory compliance, improving speed, and reducing the cost of customer acquisition. In fact, the report finds that digital identity verification can reduce KYC/AML costs by up to 70%, and improve speed by 80%.
Aplazame, an instant consumer financing company based in Spain, illustrates an ideal example of increase in customer acquisition by way of digitisation in their case study. Spain sees massive online shopping cart abandonment, with over 69% of carts abandoned, representing a missed total of approximately 46 billion euros. In order to capture these lost opportunities, Aplazame needed to correctly, securely and quickly verify the identity of customers who applied for credit. After adopting a secure, easy-to-use identity verification solution, they were able to verify a customer’s identity in less than 20 seconds, allowing them to offer instant, secure and streamlined financing – and ultimately achieving a 20% increase in conversions.
Improving customer acquisition and reducing KYC/AML costs
The report also highlights the speed of onboarding as another competitive factor as processing times have been drastically reduced in the digital world – from a traditional six weeks to a matter of minutes. However, while digital lenders have increased the speed of onboarding, their costs of acquiring customers hasn’t budged. On average, acquisition costs remain at $300 per customer, which includes as much as $150 to run KYC and AML checks. Another stumbling block many digital lenders face is the high cost of their capital is preventing digital lenders from competing with incumbent banks on price – and this cost isn’t likely to drop anytime soon, so a savvy digital lender has to figure out how to be as efficient as possible.
However, it’s not all doom and gloom. Smart digital lenders are starting to harness their lower operating costs to their advantage. For digital lenders, reducing costs is paramount to offering a real alternative to traditional banking providers. Where digital lenders must also play catch up is with security – and digital identity verification has the potential to be the tool to make this happen.
For digital lenders, mandatory KYC and AML checks are still largely manual, building delays and inefficiencies into the onboarding and vetting process. Combine these delays with high costs per customer, and the clunky process can prevent digital lenders from competing with incumbent banks on price. To gain an edge on their competition, digital lenders are investing in identity verification solutions, which provide an opportunity to massively enhance the efficiency of the onboarding process in terms of both speed and cost reduction. Diminishing inefficiencies and offering better prices can help drive a more ideal customer experience and help to garner some market share away from traditional lenders.
Digitisation can benefit industries beyond lending
Businesses from other industries, from online marketplaces and sharing economy platforms, to innovative financial institutions like challenger banks and money transfer services, are following suit as they realize that the right identity verification solutions can help them achieve compliance, reduce fraud, onboard more customers quickly, create trust and safety, and promote brand integrity.
For example, global money transfer company MoneyGram deployed Mitek’s Mobile Verify® to aid their organization in reducing friction, speeding up the verification process to service more customers faster, and to fulfill regulatory requirements. As a result, MoneyGram saw a 20% reduction in fraud loss and, more specifically, an 80% reduction in account takeover fraud – as well as a more than 70% increase in ID acceptance rates.
In addition to reducing fraud and creating a safer platform, proper identity verification tools can help many types of businesses more quickly build their customer base. When blockchain payment pioneer Nocks began using digital identity verification, they achieved an onboarding speed of 5 minutes and drastically reduce its abandonment rate, enabling them to grow their customer base by 214% in just six months.
In this new economy, businesses need to prioritize their digital processes to respond to consumers and regulations. Digital identity and onboarding, in particular presents lenders and savvy financial institutions the chance to improve customer acquisition funnels, improve margins, mitigate fraud risk, and meet regulatory requirements while delivering a fast and secure digital user experience. In the end, those businesses that seize on the opportunity that digitization offers will be the ones who hold the key to success in the age of digital only lending and finance.
Download the Autonomous Report and find out more about how to drive success with digital identity.
Ahead of FinovateEurope in London next week, we talked with Tobias Christen, CEO of Zurich, Switzerland-based DSwiss, about his company and its flagship digital safe technology that supports the long-term secure, safe-keeping of personal files and passwords.
DSwiss was founded in 2008 and most recently demonstrated its technology at FinovateEurope 2018.
Finovate: Banks offer an adapted version of your digital safe directly from their online banking portals. But why would people want to save passwords and files with their bank?
Tobias Christen: A recent PwC-survey concluded that banks are amongst the most trusted organizations when it comes to privacy and cybersecurity, outranking healthcare providers, nonprofits, and online retailers. This only confirms our own experience: Increasingly, people are looking for a trusted partner that can help them keep important data safe. Banks are really well-positioned to act as that partner because of their long history as custodians of wealth.
The study also revealed that only 10% of consumers feel they have complete control over their personal information. In my opinion, that’s because they started out making the mistake of saving everything with companies whose business model was to sell data. There’s nothing wrong with using social media, iCloud or Google Docs but we’re seeing a growing understanding that not all data is made equal. Some documents are worthy of a superior protection – copies of ID papers, financial documents and passwords for example – and people are really looking for a safe alternative to store such data.
This is where a digital version of the bank safe seems like a very logical place to go. People feel safer storing essential data here because the business model of banks is not based on selling customer data but rather on their ability to keep such assets safe.
Finovate: How do you keep up with consumer demands and ensure that the digital safe stays relevant to them?
Christen: We’ve had a two string approach to that. On the one hand, we develop and market our own B2C solution called SecureSafe, which has more than 1 million users. Being behind our own B2C solution gives us direct access to highly valuable user feedback. Due to the popularity of such services as Dropbox, SecureSafe users started asking for more advanced file sharing and sync capabilities. We responded with secure sharing and encrypted sync functionality.
On the other hand, we’ve established a highly collaborative approach to the digital safe. Since our first private and cantonal bank clients joined us in 2009, DSwiss experts have joined forces with banks to develop strategic features that fit their particular needs. In 2011, we started to work on a patented single sign-on technology to allow for smooth integration of digital safes in online bank portals. eDelivery for the safe transfer of bank documents directly to clients’ safes followed soon after. After entering our first collaboration with a major bank in 2015, we’ve been able to speed up the collaborative product innovation.
Our latest innovation combines original meta-data that is passed along with documents (or requests) and data that is extracted with rule-based and machine-learning-based algorithms. This might sound very technical, but at Finovate London 2019 we’ll show you how it makes onboarding for a mortgage a lot faster and easier for bank clients. Ultimately, this feature makes any interaction between bank advisor and end-client user-centric. This fosters customer loyalty and helps a bank stand out to prospect clients.
Finovate: How do you keep up with security demands from your bank clients?
Christen: Banks have always been focused on a particularly high level of security and are understandably cautious when it comes to collaborating with fintechs. However, DSwiss was built on the principles of privacy by design from the get-go. We’ve employed zero knowledge architecture, double encryption and triple data redundancy since the very beginning. In particular, our zero knowledge architecture takes the confidentiality protection, which banks generally implement, to the next level. Throughout the years, we’ve been so fortunate as to work with banks of all sizes, both private and retail. That has enabled us to build up a lot of experience with the specific regulations that concern banks, such as GDPR.
Finovate: According to you, what are the biggest challenges to online security and privacy protection today?
Christen: In the old days, cyber criminals were quite often isolated individuals with limited financial resources. They were principally motivated by curiosity, pride or revenge. Today, the offenders are mostly motivated by economical perspectives and they are often engaged by governments. This means that we increasingly see well-organized and well-founded groups at work.
Watch DSwiss and dozens of other innovative fintech companies demonstrate their latest technologies live at FinovateEurope 2019, 12-14 February at the Tobacco Dock in London, U.K. For more information, including how to buy your ticket and save your spot, visit our registration page today.
Data is a valuable asset to your business – driving competitive advantage and transforming the customer experience. However, most organizations are unable to leverage it.
Join us on Thursday, March 14th for a case study on Using Smart Technologies to Modernize and Transform the Customer Experience in Banking. Norman Wren, former Director of Technology and Operations at Santander, and Dave Jones, Vice President of Product & Industry Marketing at Nuxeo, will show how to defuse data issues by using smart technologies like AI, micro-services, and modern content services.
In our latest Finovate webinar, Wren and Jones will discuss real world examples of practical business applications and solutions that can help you:
• Leverage existing data systems
• Drive value from unstructured data
• Have flexible, yet secure, and auditable data
• Remove obsolescence, reduce costs, and maintain compliance
Register today to learn how to modernize the customer experience in banking with smart technology and turn your data into a valuable asset.
Norman Wren, Financial Services Consultant; Former Director of Technology and Operations, Santander
Wren is a senior financial services executive with over 20 years’ experience operating at the board level, in complex and challenging regulated organizations. He has a wealth of experience in leading transformational change and delivering digital transformation projects for global companies including Santander, AXA, and Barclays and consulting with Anderson Consulting.
Dave Jones, Vice President of Product & Industry Marketing, Nuxeo
Jones is VP of Product Marketing for Content Services at Nuxeo. He is responsible for developing the global go-to-market strategy and execution plan for Nuxeo’s modern enterprise Content Services Platform.
Welcome to FinovateLive! Tune in between 19 – 21 March to delve deeper into the biggest issues impacting the finance sector.
FinovateLive! will feature expert discussions via a series of interactive webinars, live Q&As, whitepapers and articles to shed light on the areas most ripe for innovation. The program will also highlight the technologies that have the potential to transform the entire banking, payments, insurance and investment industries.
Catch the future of fintech in real-time from the comfort of your desk with our exciting agenda built around business challenges and innovative solutions. Register here >>
Tuesday 19 March
Hear from Jeremy Balkin, as he showcases how doing things differently adds value and truly transforms business. We also put forward the question: “Is innovation essential in banking?” and look to get Jeremy’s take on how to create touch points and deepen long term personalized human relationships in a highly technology driven environment.
Featuring: Jeremy Balkin, Head of Innovation, HSBC
Wednesday 20 March
In this webinar, Clara takes a practical approach to developing an AI strategy. She discusses why designing a long term AI strategy is essential, and why patchwork innovation with AI is not going to pay off. The discussion will draw from Clara’s direct experience working with decision makers, as well research lifted from her upcoming book on how AI is transforming financial services.
Featuring: Clara Durodié, Executive Chair, Cognitive Finance Group
Banks are in trouble. Every modern bank dependent on branch revenue is in virtual survival mode, hoping for a miraculous reversal of emerging customer behavior. Brett King, discusses the future of banking and fintech, finally deciding which banks will make it, and which won’t.
Featuring: Brett King, CEO & Co-Founder, Moven
Thursday 21 March
In this webinar we’ll focus on the findings of the just released 2019 Retail Banking Trends and Predictions research, published by the Digital Banking Report. The report is now in it’s 8th year and combines insights from a crowdsourced panel of more than 80 industry leaders and a quantitative survey of more than 300 financial services organisations worldwide.
Featuring: Jim Marous, Co-publisher, The Financial Brand
In the last webinar of #FinovateLive, we speak with JP Nicols, Managing Director at FinTech Forge about the fintech revolution, why banking hasn’t yet been ousted by apps and wearables, and what has been seperating the winners and the losers in fintech.
Featuring: JP Nicols, Managing Director, FinTech Forge
More interviews, thought-leadership and digital content to be announced…
Editorially curated by: Adela Knox, Editor in Chief, Finovate Digital Week
As if disruption in the global banking sector was not already confusing enough, traditional institutions must now deal with the rise of neo-banks banks. This new breed of competition are organizations that are purely digital. They don’t require the licensing, nor do they incur the regulatory burden of traditional banks. They exist without brick and mortar and provide fast, simple, easy to use, highly personalized services that are entirely done via mobile device.
Their rapid growth and success is a result of both a lower cost structure and a regulatory environment aimed at increasing competition and consumer choice. Additionally, they don’t try to be everything to everybody. They excel by offering a limited range of digital products like checking, savings, and a subset of consumer lending products, while deferring things like credit card and mortgage services to more traditional institutions. This results in a lower regulatory burden and reduced overhead which is passed on to the consumer via lower fees.
Their agility and speed is due to the absence of the burden of legacy technology. They are true digital natives — whereas most traditional banks offer a digital front end built on top of outdated and monolithic legacy system-based banking applications.
“These banks don’t carry the weight of legacy technology, so they can leapfrog over traditional infrastructure and disrupt the status quo.”
– Judd Caplain, Head of Global Banking & Capital Markets, KPMG International
Neo-banks target millennials who are more receptive to change. With each passing year the influence of Gen Y changes the shape of the delivery of banking products and services – and that is the long-term bet Neo-banks are making today.
The disruption being driven by this demographic shift has not gone unnoticed by traditional banks. Not only is it forcing banks to accelerate plans to modernize their legacy IT systems and infrastructure, but also to discover new ways of delivering customer value.
The good news is that traditional banks have several advantages over the neo-banks including:
- Well established and recognizable brands
- Long histories and well-established customer relationships
- Massive amounts of content and data on their customers
- Deep insights into customer saving and spending habits
And although traditional banks are starting from a position of competitive advantage, in order to retain and extend that advantage in the digital age, they need to quickly learn how to
- modernize and extend the same customer value that digital-based neo-banks deliver;
- shift the mindset and the culture from business transactions to providing experiences; and
- focus on helping people with their financial lives, not simply selling products.
No one wakes up in the morning and wonders what the next product offering from their bank is going to be. To that end, traditional banks need to extend and grow the value of the customer relationship beyond increasing products per household and focus on increasing value through improving digitized customer experiences.
To learn how one of the top 15 banks in the world partnered with Nuxeo to extend customer value, join us at Finovate Europe on February 14th at 11:15am for “The ticking time bomb of data: Making sense of legacy data in different systems.” presented by Norman Wren, former Director of Technology and Operations for Santander.
FinovateEurope is just 18 days away. Get ready for the cutting-edge demos and networking opportunities by taking a glimpse into the fintech products and solutions that will be showcased live on stage. With topics ranging from AI to SMB solutions, there’s lots to see for all fintech enthusiasts.
Ahead of FinovateEurope, we spoke to Valentina Kristensen, Director, Growth & Communications at OakNorth, about her experience in fintech, why sometimes it pays to take a chance and write an elevator pitch for your ideal role, and where the future of fintech is set to go. Valentina will be discussing the current state of play amongst challenger banks during her presentation at FinovateEurope next month.
Finovate: How did you start your career?
Valentina Kristensen: My career in communications started at Lansons. I was introduced to the agency by someone I met at a CIPR (Chartered Institute of Public Relations) “drinks and links” event who told me they were looking for recent grads to join their trainee programme. I had sat my final exam at university two months earlier and was a week away from finishing a PR internship, so I was looking for a job in the industry. I really liked the look of Lansons and their clients, so applied, went for various interviews and a test, and was fortunate to get the job. It was 2011, so the midst of the financial crisis when a lot of companies were still undergoing hiring freezes, so I was very lucky to get it when I did!
Finovate: Tell us a little about the work you did when you started at Lansons and how that led you to fintech.
Kristensen: My first client at Lansons was Metro Bank which gave me my first foray into challenger/disruptor brands and from there, I was hooked. “Fintech” as a concept wouldn’t become mainstream for a few more years, but my time at Lansons gave me exposure to a number of challenger brands across different financial services areas – wealth management, alternative lending, pensions, banking, etc. – so I was well-versed in the “fin” of “fintech” by the time I decided to specialise in fintech.
OakNorth was a client of mine – I joined the account in June 2015, so before OakNorth had launched, done their series A, got their first client, etc. A few months after the launch in September 2015, I was seconded as things were getting busier, and from my first day, I absolutely loved it. I loved the work, I loved the challenge, I loved the team and leadership, culturally it was a great fit, and I believed in OakNorth’s mission and what it’s trying to achieve. So I emailed Rishi and Joel (our co-founders) asking to meet with them to discuss an idea I had, and then two days later, I gave them the elevator pitch as to why I felt they should hire me full-time.
Kristensen: Granted, it was a ballsy move, but I’d have always regretted if I didn’t go for it and fortunately, both Rishi and Joel were very receptive, so it was a risk that paid off! I joined full time in July 2016 and it’s been quite a journey ever since – going from a start-up to where we are today with a £2.6bn loan book, c.300 people across the group, offices in multiple markets, over $570m raised and a $2.3bn valuation.
Finovate: What was your lightbulb moment?
Kristensen: It was during my secondment – it was a Thursday after I’d left the OakNorth offices and I was on my way to meet some friends for dinner. I was on the tube and it just hit me – “I want to work for OakNorth. That is where I should be.” And that was it. By the time I arrived at the restaurant to meet my friends, I was so excited and had drafted a pitch to Rishi and Joel in the notes section of my phone! If I’d been too afraid to take the chance, it’s very likely that I would have missed the opportunity and wouldn’t be here today.
Finovate: Do you think we see too few women in fintech? Why do you think this?
Kristensen: Unfortunately, yes, but with every year that passes, I feel like I’m seeing more and more women pursuing careers in these industries, more and more women speaking at and attending industry events, and more and more women in leadership roles at finance and fintech companies.
I think the reason that historically (and still today) numbers are low is because there’s still not a strong pipeline for encouraging women to enter these fields and move up the ranks into senior roles in these fields.
Finovate: How can businesses improve this?
Kristensen: I’ve seen loads of great initiatives – blind CVs, the Women in Finance Charter, the Fintech Parity Pledge, gender pay gap reporting as it helps to highlight gender disparities at different levels of organisations – and institutions – FinTECHTalents which I’m on the steering committee for, Code First: Girls (I’m actually starting their 8-week coding course this month which I’m really excited for!), Raspberry Pi which is training 40,000 teachers on computing and coding so that every child (boys and girls) in the UK can learn computer science…These are just a few examples, but businesses could partner with these institutions or commit to some of these initiatives and I’m sure we’d see numbers improve.
At OakNorth, we work with schools and universities to do anything from a guest lecture or Q&A session on getting into fintech, all the way through to larger initiatives whereby we sponsor a series of talks and events specifically aimed at encouraging girls and young women to consider STEM industries for their future careers.
Finovate: What advice do you have for women starting their career in FinTech?
Kristensen: My advice isn’t really women specific, as I think it’s relevant for anyone starting their career in the industry – take every opportunity to learn and meet new people. There are loads of free industry events that are great for doing this such as: the Monzo open office days or Fintech Insider After Dark Live. Also, make sure you subscribe to relevant podcasts as they’re a great way to get to grips with all the different parts of the industry and discover which one excites you most – some I listen to are: Fintech Insider from 11:FS, Rebank: Banking the Future, and Breaking Banks.
Finovate: What tech innovations are you most excited about this year?
Kristensen: Well what we’re doing at OakNorth – applying big data and machine learning to SME lending – clearly excites me! But beyond that, I think anything in regtech is also super-interesting as it affects pretty much everyone working in the industry, and could have a 10X impact on their ability to securely service customers without jeopardising on the speed or quality of the user experience.
Finovate: So, what will the future of fintech look like?
Kristensen: It depends on how far into the future we look! In the next five years, I think we’ll see more consolidation amongst small-to-medium sized fintechs, IPOs from some of the larger ones, more unicorns being born (and some dying), and (hopefully) more fintechs proving that pursuing growth and pursuing profits are not mutually exclusive!
Now more than ever, leading financial institutions depend on technology to mine valuable data from a multitude of complex sources to enrich and connect it across topical lines so key stakeholders can obtain relevant information.
This can provide tremendous opportunities to increase revenue and reduce risk. Yet, at the same time, organizations are required to comply with even more stringent regulations.
These regulations, such as Dodd Frank (US), MiFID II (EU), the GDPR (EU) and the proposed California Consumer Privacy Act, are examples of major regulatory changes that heighten the pressure on your organization to organize and secure data, as well as make it readily accessible no matter where it is stored and in what applications.
Becoming information-driven can help your organization enhance the performance of key stakeholders in significant ways, such as:
- Leveraging technology to surface actionable information across all business functions.
- Finding patterns and relationships among disparate data from different silos to deliver an advanced Know Your Customer (KYC) approach with contextual insights from a timeline of important events including M&A activity, fundraising, credits, litigation, etc.
- Surfacing topically relevant information from disparate sources in a unified view – for example, a 360° view of a bond fund that brings together information from different business applications, previous analysis, broker commentary, email, new sites, etc.
Find out more by downloading this Sinequa white paper >>
As 2019 gets into full swing, we wanted to take one last look back at the highlights of the last few months of 2018. Download the latest eMagazine now!
Our multimedia eMagazine visits with industry analysts at FinovateFall, studies the value of bank-fintech partnerships, reviews important trends to consider before the year comes to an end, and more.
We’ve packaged all of this in a slick, new format focused on the user experience. Enjoy!