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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
When it comes to foreseeing the future, nobody gets things 100% right. However, Strategic Futurist at TEDx Curator Nancy Giordano is poised to come pretty close with her predictions.
Giordano is a keynote speaker at FinovateWest Digital, a online event hosted November 23 through 25. At her presentation, Just One Percent In – Learning to Navigate the Next Economy, Giordano will discuss how we are only 1% into this new technological era and what that may mean for your five-year, 10-year, and 50-year outlook. She will detail four massive shifts in human awareness and behavior that are reshaping the understanding of business, society, technology, and ourselves, and will offer hope for the days ahead.
Giordano is a 10-year TEDx curator in Austin. Described as endlessly optimistic, she is a strategic futurist with a drive to help enterprise organizations and visionary leaders transform to meet the escalating expectations ahead. With growing conviction of what will (and needs to) shift, executives value Giordano’s unique abilities to sense and synthesize the terrain ahead, and guide those ready to build more relevant and sustainable solutions.
Don’t miss Nancy Giordano’s presentation at FinovateWest Digital on Monday, November 23, 2020 at 1:20 pm. If you still haven’t registered for FinovateWest Digital, book now to get the best discounts.
SoFi has spent the past few years broadening its focus. What launched as an alternative lending company has emerged as a platform that provides a deeper breadth of banking services including insurance, checking accounts, credit score monitoring, investing, estate planning, and small business financing.
After building all of these tools, SoFi began focusing on building something different– community. The fintech offers a membership program with a range of perks including career coaching and financial planning.
Today, the company is leveraging its community in the launch of social trading and investing features. The new capabilities allow users to share their investment portfolios and discover and follow the holdings, watchlists, and activity of fellow members who opt in to the feature.
“According to SoFi’s research, about 70% of SoFi Invest member respondents indicated that they regularly (at least weekly) discuss their investments with family members, peers, or colleagues,” said SoFi CEO Anthony Noto. “Our new social investing features not only help us live up to our name of Social Finance, but provide ways for investors to see specifically what members on the platform are doing with their investment decisions, discover new investment ideas, and see how they stack up in their investing performance. Given the importance of investing early and consistently, we are thrilled to be able to provide a more informative, engaging, interactive mobile investing experience rooted in building better investing habits.”
To encourage social interaction, SoFi’s new tools allows users to comment on and react to the others’ trades and compare their performance on dynamic leaderboard.
For privacy purposes, participation is optional and members are not automatically enrolled. Additionally, the amounts of investment portfolios are hidden from other users.
If you’ve studied fintech for any length of time this should sound familiar. U.K.-based eToro launched its CopyTrading platform in 2011. This social investing platform is different from SoFi’s in that it pays top investors when others copy their trades.
The following is a guest post by Lisa Bigelow who writes for Bold.org.
Robo advisors. Touchless payments. Zelle. These are just a few ways that digitalization has transformed how people manage their money. Although consumers have experienced a few hiccups along the way — lame chatbots, we’re looking at you — fintech is making an enormous impact on how banks will serve their customers now and in the future.
Here are five futuristic fintech trends that reveal where banking is headed.
In five years, AI will dominate customer service
You’ve probably used your bank’s chatbot to accomplish a simple task like disputing a transaction, but have you considered asking it how much you spent at the grocery store last month? Some digital transformation experts estimate that 95% of customer service interactions will be powered by artificial intelligence by 2025.
Consumers expect AI-driven interactions to satisfy bigger customer service expectations, according to a Drift survey. Businesses that delay improvements in natural language processing or that rely on human responders will be at a disadvantage, with one IBM study showing a 99% improvement in response times when using AI. With 38% of baby boomers expecting a 24-hour response, that’s significant.
Yet chatbots are more than basic analytics delivered quickly. They can also offer suggestions on the best mortgage or investments for your finances. Even high net worth investors may be surprised to learn their financial managers rely on roboadvisors for complex algorithms that recommend investment strategies.
In China, digital payments — not cash — is king
Digital payments went mainstream in Asia long before COVID-weary consumers turned away from cash for health reasons. In China — where a mobile payments market worth $17 trillion flourishes — vendors often prefer cashless transactions, even for small purchases. And with 91% of Chinese tourists saying they would shop more overseas if mobile payments were an option, all economies — and their banking systems — will benefit by adopting fintech.
In addition, cash payments don’t always offer consumers more convenience or better pricing, especially with browser add-ons making finding deals easier. Peer-to-peer shopping platforms like eBay and Alibaba have given consumers more choices than ever before. And with players like Venmo and Zelle allowing instant cash transfers, it’s never been more convenient to shop.
Fintech is changing cross-border education
American colleges prize international students for reasons related to finances and diversity. International students value American college educations for their quality and name recognition. Before fintech, financing an international education and recording international tuition payments was time-consuming and difficult.
Fintech helps lower the barrier to entry to the U.S. education market. Take the University of Virginia, which adopted Flywire as a means of helping foreign students establish payment plans and transfer funds. And in China, Superyou and myMoney allow students to complete cross-border transactions with the touch of a mobile button.
What about those who can’t afford the sometimes $70-thousand-and-up annual price tag of American education? Enter Prodigy Finance, a U.K. lender that finances students based on their future earning potential. Think that can’t possibly work? Think again — Prodigy says its repayment rate is 99%.
Students, for their part, are eager to learn about fintech. At Georgetown, MIT, NYU and other top-tier institutions, courses related to financial innovation are filled, with fewer expressing career aspirations in once-hot areas like trading.
Tech startups are also playing a role in increasing accessibility to education with platforms like Bold.org creating and hosting exclusive scholarship opportunities for students.
India is adopting fintech quickly
You already know that China, the U.S., and the U.K. are fintech hotspots. But what about emerging markets with large, tech-savvy populations and unmet banking needs?
Enter India, widely regarded as the “next frontier” in fintech. According to a 2019 report on emerging technologies in banking, PWC ranked India second worldwide in fintech adoption, with a rate of 57.9%, driven by favorable government policies and funding from foreign venture capitalists.
If you can’t beat ‘em, join ‘em
Traditional banks are eager to jump aboard the innovation train. Collaboration is at an all-time high, with staid players such as Lloyds, American Express and PNC partnering with hot innovators like Swave, GreenSky and OnDeck, respectively.
A 2017 PWC study found that 82% of banks, insurers and wealth managers surveyed plan to invest or collaborate with fintech firms over the next three-to-five years, with 88% fearing lost revenue should they not make the move to fintech. PWC says, “Businesses need to understand how this new world affects all of their touchpoints with the customer if they are to actively reinvent their own future and not be at the mercy of external events.”
In addition to improving operational efficiency and lowering costs, traditional banks believe that fintech will ultimately improve the customer experience for less money. And that means fintech will drive your financial decisions sooner than you ever thought possible.
Lisa Bigelow writes for Bold.org and is an award-winning freelance content creator who helps people learn more about personal finance, real estate and information security. Bigelow has contributed to Finance Buzz, Life and Money by Citi, MagnifyMoney, Well + Good, Smarter With Gartner, Popular Science and Cadre Insights.
In today’s era of embedded finance, everything is available as a service. Digital banking services company Q2 is at the leading edge of this trend, offering a range of solutions for banks’ retail clients, their commercial customers, and fintechs.
Many fintechs sell an “as-a-service” offering that focuses on a single aspect of banking. Q2, however, takes a more holistic approach. Here’s a look at some of the company’s embeddable offerings.
Q2’s consumer solutions include remote onboarding, PFM tools, remote deposit check capture, lending tools, marketing offers, behavioral biometrics, and authentication. The company helps banks leverage client data using machine learning technology that brings the necessary intelligence to effectively market new products to customers.
On the commercial side of things, Q2 can aid with account opening, loan origination, ERP integration, and scalable tools to suit a range of business sizes.
Q2 offers fintechs both lending-as-a-service and banking-as-a-service tools to integrate into their existing offerings. The former focuses on the application, approval process, and loan funding, while the latter offers bank accounts, debit cards and payment solutions without the need to partner directly with a traditional bank.
In addition to these embedded finance offerings, Q2 is venturing into the bank-fintech collaboration space. In a Best of Show winning demo at FinovateFall last month, Q2 launched its Partner Marketplace, an app store integrated within the company’s digital banking platform. Fintechs can upload their tools on the platform’s app store and banks can browse the offerings they’d like to integrate.
By relying on fintechs to bring the tech, the Partner Marketplace broadens Q2’s reach as a provider of embedded finance. The company offers banks access to a variety of fintech solutions that range beyond what Q2 itself is able to create or provide.
For fintechs, the marketplace lowers customer acquisition costs by making the startups’ solutions visible to Q2’s network of bank partners on the platform. It also helps with integration and deployment– after integrating with Q2’s digital banking platform, fintechs can offer their product to 400+ banks and credit unions, one million businesses, and 16+ million end users.
When it comes to payment and savings account services designed for minors, most large banks have stayed on the sidelines. In fact, much of the development has come from fintechs that layer kid-friendly tech on top of existing bank accounts.
This bank-fintech partnership is exactly what Chase is relying on for its new bank account for kids that it is launching this week in collaboration with Greenlight, a company that provides financial tools for children. The new offering, Chase First Banking, aims to help parents manage allowances, complete and check off chores, monitor spending, and help kids save towards a goal.
“Families are juggling so many more responsibilities today than ever before,” said JPMorgan Chase Head of Digital for Consumer and Community Banking Allison Beer. “To help, we’ve made it easy for parents to manage kids’ allowances, keep track of chores and teach important financial skills from within the Chase Mobile app.”
The accounts have three features that encourage kids to earn, spend, and save. The Earn function allows parents to set allowances and assign chores and allows the child to check off when each chore has been completed. The Spend tool provides kids with their own prepaid debit card that they can use to shop at stores that their parents have approved. Parents have ultimate control of the card and can lock or freeze it at any time. The Save function helps the child set aside money toward a goal and allows parents to move funds, as well.
Chase First Banking accounts, which are aimed at grade school children, are available for free to Chase retail deposit account customers. The bank already offers checking and savings accounts tailored to high school and college-aged users.
Founded in 2014, Greenlight competes with startups such as Oink and FamZoo. In addition to the Earn, Spend, and Save features offered with Chase, Greenlight’s B2C offering, which costs $5 per month, also offers a Give tool and will soon launch an Invest feature. The company rebranded earlier this year which helped it double its growth and set it on track to double again by the end of the year. Late last year Greenlight raised $215 million. The company is valued at $1.2 billion.
Oh say, can you see… new digital banking technology landing on U.S. shores? Meniga can.
The U.K.-based company with Icelandic roots is expanding operations into the U.S. with a New York City headquarters location. The U.S. team, led by North America Heads of Sales, Wim Van Lerberghe and Paul Renken, will work remotely until the offices open next year.
Meniga is making the expansion to meet new, pandemic-induced demand for digital banking solutions. “In the current economic climate, it is crucial that Americans are getting the support they need from their banks, and help with the management of their personal finances. But if the bank fails to respond with anything but an efficient and enjoyable user experience, those customers will go elsewhere,” said Meniga CEO and Cofounder Georg Ludviksson. “We know that the unrivalled expertise and local market insight brought by Wim and Paul will allow us to fully export our technology to the U.S., granting American banking partners access to cutting-edge digital products and apps that their customers will love to use every day.”
While many know Meniga as a PFM solutions provider, the company has broadened its approach. The company now has leveraged data to offer a more personalized customer experience via predictive analytics and personalized engagement technologies including spending reports, automated budgeting, personalized nudges, savings challenges, and personalized cashback rewards.
Unique to Meniga is the company’s transaction-based carbon insights tool. Launched earlier this year, the carbon insights tool allows end users to track the carbon emissions that result from their spending.
Meniga has brought this technology to 165+ banks across 30+ countries, reaching more than 90 million end-users across the globe. The company has offices in London, Reykjavik, Stockholm, Warsaw, and, as of last year, Barcelona and Singapore.
“Since expanding into the Southeast Asian market just last year, we’ve also been instrumental in getting some of the area’s most popular banking apps to market. By opening up to the U.S., we’re going to be leading the charge here too,” said Renken. “We see banks as the bastions of the customer, designed to protect and manage assets, particularly during such a financially unstable climate. However, in order to remain competitive, this means they also need to move, and digitalize, with the times. With Meniga’s technology and expertise, banks all across The States will be able to achieve this; creating a customer experience that is intuitive and seamless as well as secure and reliable.”
Among Meniga’s clients are UniCredit, Santander, and UOB. Founded in 2009, the company has raised $43.9 million.
By many accounts, 2020 has been a difficult year full of events nobody could have anticipated or planned for.
As an industry, however, fintech has faired rather well. The shift to digital combined with an enhanced focus on the customer experience have benefitted banks, end users, and even fintechs themselves.
Fintech’s wealthtech subsector is no different. In fact, roboadvisory tools have evolved over the past decade with near-futuristic new features and offerings that are helping today’s consumers battle the challenges of 2020.
Here we’re taking a look at six ways roboadvisors have improved to (unknowingly) prepare for the toughest year yet.
AI has gotten smarter
Thanks to machine learning capabilities, the AI technology that powers investment strategies, forecasting, and reporting has improved significantly since roboadvisors hit their peak in 2015. Additionally, the amount of data has increased and computing power has been significantly upgraded, meaning that AI has never been smarter.
Recession forecasting
One of my favorite tools that launched this year is Personal Capital’sRecession Simulator. While many investment portfolio models offer a range of what-if scenarios, the Recession Simulator helps users illustrate the effects that historical recessions may have on their portfolio. Currently the Recession Simulator allows users to mimic returns of the DotCom crash of 2000 and the Financial Crisis of 2008.
Challenging the challengers
Last year ushered in the era of challenger banks, and roboadvisors were quick to jump on the opportunity. Three of the top roboadvisors by assets under management– Wealthfront, Betterment, and Personal Capital– all launched checking tools last year. These accounts help consumers keep all of their cash in a single, unified place and some offer tandem, high-yield savings accounts.
Automation
While many fintechs have promised to automate savings, investing, and billpay, many have been slow to deliver. Recently, however Wealthfront has made strides toward its Self-Driving Money concept. Last month the company unveiledAutopilot, the first product in its self-driving money suite. Autopilot takes clients’ savings and automatically monitors their balances and moves money around on their behalf to maximize their savings and returns.
Looking beyond retirement
While everyone hopes to save for retirement, there are plenty of other events to save for, too. Many roboadvisors have set up their platforms to enable users to save up for relatively smaller savings goals, such as a kitchen renovation, a child’s education, or a wedding.
Built for everyone
While many investment platforms cater to a variety of risk appetites, some have started to cater to new client bases, such as gig workers. Betterment, for example, launched a promotion with Steady, a gig economy workforce platform, to offer its users free financial advisory services for one year.
Digital banking solutions provider Alkamiacquired payments fraud prevention technology company ACH Alert this week.
Terms of the deal are undisclosed but the announcement comes just a few days after Alkami closed a $140 million round of funding.
Founded in 2008, ACH Alert offers two flagship solutions, PRO-TECH and PRO-CHEX, which provide a real time ACH approval process and a check positive pay service, respectively. Alkami will leverage ACH Alert’s solutions to provide a platform to enable banks to increase revenue, reduce complexity, and improve fraud prevention.
“ACH Alert provides FIs with a seamless solution that eliminates the flaws and inefficiencies in existing processes. These inefficient, paper-based processes not only undermine customer adoption and profitability, but also lead to a higher incidence of fraud,” said Alkami CEO Mike Hansen.
Among ACH Alert’s latest clients are Mountain America Credit Union and Citizens Union Bank. Last November, the Tennessee-based company signed a distribution agreement with Apiture, which will offer ACH Alert’s fraud detection services to its 450+ financial institution customers.
Headquartered in Dallas, Texas and founded in 2009, Alkami seeks to provide an end-to-end digital banking experience by offering tools for onboarding, user engagement, and account servicing.
“Together with ACH Alert, we expect to continue to create and deliver winning digital solutions to our clients and their consumer and business digital users,” Hansen added.
This is a guest post written by Shannon Flynn, managing editor at ReHack.com.
Voice recognition technology is experiencing something of a golden age right now. You can control virtually anything with your voice now, from your lights to your TV to your phone. As these technologies keep improving, their applications in banking grow more promising.
Voice tech encompasses a range of technologies that involve recognizing and responding to users’ voices. The potential for these services in the financial industry is immense. You could use your voice to log into your bank, make withdrawals or ask for financial advice.
The advantages of voice tech for banks are impressive, but there are still some roadblocks ahead. Here’s a closer look at three benefits and three drawbacks of the technology.
Benefits
Roughly 111.8 million Americans use voice assistants at least monthly. That’s more than a third of all internet users in the country. The American public is already comfortable with these technologies, so bringing them to banking is a natural next step.
Banks shouldn’t adopt voice tech just because people would use it. Thankfully, the technology has benefits beyond high adoption rates. Here are three of the most significant.
1. Streamlined Banking
Think of how easy voice assistants like Alexa and Google Assistant make routine tasks. You can check the weather, read your messages and hear the news without lifting a finger. Banks can bring those same benefits to their user experience by integrating voice technology into their apps.
Users could make a deposit or withdrawal by merely asking their phones to do so. Mobile banking allows people to perform routine actions in less than three minutes on average. Voice tech could shorten that to a few seconds since users wouldn’t have to press any buttons.
2. Increased Accessibility
Mobile apps made banking more accessible than ever, but the industry can still improve. You still need to have full function of your fingers to work these apps, which can be a barrier to some users. Voice controls can allow more people to experience the convenience of banking apps.
VOIP will also gain some next-gen improvements in the next few years due to 5G. For instance, more banks may achieve faster, unified communication with the help of voice-to-text functionality and faster networks. With the VoIP market gaining $35 billion by 2025, we will most likely see additional innovation for these communication systems.
Voice tech gives users more options, which makes banking services more appealing to consumers and businesses alike.
3. Biometric Security
Voice commands aren’t the only application of voice tech in banking. Banks could also use this technology to as another layer of biometric security. Since voice assistants can differentiate between voices, they can use your voice to verify your identity.
Unlike with passwords and PINs, you can’t steal biometrics. This security advantage is why fingerprints and facial recognition have surpassed passwords, and voice recognition adds another layer of security. With all of these options, banks could offer biometric multi-factor authentication.
Drawbacks
Despite these advantages, there are still some downsides to voice tech in banking. As much as these technologies have improved, they’re still relatively new and far from perfect. As such, there are a few risks that come with their adoption.
These disadvantages will likely fade as voice technologies improve. At the moment, though, they may dissuade some users from using voice services, making them less profitable for banks. Here are three of the most prominent of these drawbacks.
1. Privacy Concerns
Voice technology may increase security, but it also raises questions about privacy among some users. According to a Microsoft report, 41% of voice users are concerned about issues like passive listening. People may not use banks’ voice tech out of fear that someone may be listening.
Even if users don’t interact with voice recognition features, they may turn away because of them. People may worry that banking apps always listen to them, even while they’re not using voice features. If banks can’t assure people that their privacy is safe, these features could repel users.
2. Faulty Voice Recognition
There are still some lingering concerns about how accurate voice recognition technologies are. A 2017 study found it takes just two years for your voice to change enough that these systems won’t recognize it. Recognition errors could lock people out of their bank accounts, causing unneeded complications.
In fact, foreign language barriers don’t just exist between humans. When you’re dealing with finances, any translations errors could be costly. If your system misunderstands your voice commands, it could make unwanted transfers or deposits. Voice recognition has to be almost perfect for banks to use it extensively.
3. Regulatory Complications
Any financial institution has to comply with strict regulations, and voice tech could be an issue here. Right now, there aren’t any standards for how banks can or should use this technology. The legal ambiguity could cause banks to run into some complications while using these services.
Finding out how voice tech fits into existing regulations could be a headache. Working through these gray areas could be more trouble than it’s worth to many institutions.
Voice Tech Is Promising but Imperfect
The efficiency and security of voice technology is enticing for financial institutions. Still, many banks may avoid the technology right now due to its current drawbacks. More firms will embrace it as the technology improves, but that could take a few years.
Voice tech today is far from perfect, but it does have potential. With further advancement, it could revolutionize digital banking.
ShannonFlynn is a technology and culture writer with two plus years of experience writing about consumer trends and tech news.
Venmo is one step closer to being a full-service bank competitor with today’s news. The PayPal-owned company is rolling out a credit card offering that is available to select customers starting this week.
The Visa-branded card, which is issued by Synchrony Bank, offers many features one would expect to pair with a mobile-first account, such as an app-based virtual card for online shopping, tools to track spending and rewards, and the ability to pay off the card balance from within the app. The cards, which pander to a mostly millennial user base, also offer five unique color designs.
One feature specific to Venmo’s new credit card is the use of a QR code printed on the card. Similar to Venmo accounts, users can scan their friends’ unique QR code to send or request money. This QR code technology, along with an embedded RFID chip that enables users to tap to pay, provides an (almost) contactless payments.
Another unique feature is the way the Venmo card handles rewards. Instead of offering a pre-determined rewards category or even allowing users to choose which category they’d like to receive rewards for, Venmo rewards consumers based on the categories in which they actually spend.
To do this, the company separates customers’ spending into categories such as dining, travel, bills, health and beauty, grocery, gas, transportation, and entertainment. Venmo rewards users 3% cash back for purchases made in the category in which they spend the most, 2% cash back for purchases in the second-highest spending category, and 1% cash back on everything else. The rewards cash is automatically transferred to the user’s Venmo account at the end of each period.
The card adds to Venmo’s existing offerings, including a robust P2P payments ecosystem and its Mastercard-branded debit card launched in 2018. Venmo plans to market the new credit card to its 60 million active users, a built-in audience comprised of its target market.
This year has brought on a lot of changes for U.S. businesses and individuals alike– some for the worse, and others for the better.
One change that fits into the latter category– open banking– has heated up in 2020. There are four indications that the U.S. may be at a tipping point when it comes to open banking:
More consumers than ever are using digital financial services. Not only has the coronavirus has halted in-person activities, it has also prompted users to focus on their finances.
We’ve finally agreed that screen scraping is a bad way to aggregate accounts. Last week, even Wells Fargo announced it has stopped using screen scraping as a data aggregation technique.
Consumers have become aware of their data usage. Big tech companies like Facebook were put on trial in the U.S. in 2018 for questionable usage of consumer data. Now, in an election year, and with films like Netflix’s The Social Dilemma, users are more aware than ever of how tech platforms use their data to sway their opinions.
There’s more competition than ever in the B2C fintech space. New competitors are laser-focused on perfecting the user experience, and have started making data management as easy as possible for consumers. Many, for example, provide users a dashboard that allows them to manage third party data sharing, toggling certain platforms on and off.
All of these elements have aligned to bring the U.S. to a tipping point in open banking. There is still one thing missing, however, and that is a unified approach for data sharing.
Whereas Europe enjoys standardization through common API specifications thanks to PSD2, the U.S. is lacking direction. Instead of a government-mandated approach, the market is currently being driven by private players such as Plaid, MX, Envestnet|Yodlee, and others.
Despite challenges, 2021 may the year for open banking in the U.S. As the global pandemic continues next year, so will consumers’ online presence, and ultimately their awareness of their digital rights. Earlier this week, the U.K. surpassed 2 million consumers using open banking, more than double the number recorded in January of this year. And even though the U.S. still has a long road ahead to fully realize open banking, take hope– we’re closer than we’ve ever been.
Square announced this week it has released a new ordering tool for restaurants this week.
The new self-serve ordering tool, which boasts a contactless experience, allows diners to place their order on their mobile device. The service doesn’t use complicated technology, but leverages a QR code that links the customer to the restaurant’s mobile-optimized ordering page.
Once the customer inputs their order, it is received by the restaurant’s point of sale platform and is sent to their kitchen. When the meal is ready, the staff brings out the food. The self-ordering technology minimizes human contact, limits error, and improves efficiency by removing wait times.
QR code technology has re-emerged as a promising tool for payments and ordering. The technology had fallen out of favor around 2012 with the advent of NFC and BLE communication technologies. With recent concerns around the coronavirus, however, we’ve seen an uptick in QR code usage. Just yesterday InCommannounced partnerships with five QR and barcode payments processors that will facilitate point-of-sale payments acceptance at retailers across Japan.
Square’s self-serve ordering is available now for Square Online sellers in the U.S., U.K., Canada, and Australia.
