Reflections of Nacha Payments 2017

Reflections of Nacha Payments 2017

Analysts have definite fixed points in our year. For me, one is the spring conference season, and which nearly always includes Nacha Payments, the big US payments conference. I was unable to attend last year, so I was particularly looking forward to returning this year. Indeed, there are groups of people I often only see at the event.

After being away, the first thing was that struck the exhibition floor was now much, much smaller. Not just that the stands were smaller, but there were fewer of them as well. Indeed, no banks had stands (though several had meeting “pods”). I also noticed that, at some point (or perhaps I had never noticed it), Nacha had snuck onto the Payments logo the word Faster. And the floor and conference sessions were abuzz with talk of real-time payments.

This had some interesting side effects.

First, the belle of the ball was The Clearing House, with virtually every conversation I had referencing their real-time solution directly or indirectly. Same Day ACH, by comparison, didn’t come up in a single conversation at all. Even in the few sessions I managed to attend, it was only briefly mentioned.

Second, the number of attendees (by our estimates) was up, though still down on a few years ago (my trip report blog for 2012 reported 2,500 vs. the 1800 this year). The result was a definite buzz, particularly on the exhibition floor, where most vendors reported good activity and good levels of conversation.

Third, the topic of conversation was real-time. If name checks in discussions are a valid, albeit unscientific, measure of which real-time solution will succeed, then The Clearing House is significantly ahead of Zelle, but with no other real-time solution even mentioned. Indeed, there seemed to be surprise that so many solutions were going through the Fed process. Whilst the Fed obviously is respecting confidentiality of those going through the process, the vendors themselves need to be very vocal and visible, or they could find themselves being seen as late to the party. I’m party to a number of the names, but I’ve not seen anything from those organisations at all.

Finally, and most interesting, was the sudden appearance of APIs. In Europe, because of PSD2, for the last couple of years, APIs have been something that banks have to discuss because they will become mandated. Their appearance in the US has quite probably been triggered by some of the international banks, but the types of banks discussing them was much broader. In Europe, APIs and real-time will most likely go hand-in-hand – it’ll be interesting whether that will be the case in the US too.

Next year Nacha Payments is back in San Diego. Given where the real-time adoption will be, it’s likely to be a pivotal moment in the industry. I think that sets up the event to be a must attend event. See you in San Diego!

Finovate Spring: A Focus on the Practical

Finovate Spring: A Focus on the Practical

Finovate Spring 2017 has just finished up in San Jose; go to the Finovate blog at http://finovate.com/blog/ for an official list of the best in show winners. My focus isn’t on individual companies, but rather the broad themes that I picked up from 59 presenters over the course of two days.

Themes

1. Practicality
There were few gee-whiz, wildly futuristic presentations. Practicality ruled: companies focused on improving processes and delivering better outcomes. Solutions weren’t necessarily sexy or mind-blowing, but potentially more useful in terms of delivering reliable if unspectacular results.

2. Employee Efficiency
What’s more practical than making employees more efficient? Very little. Presenters automated processes, improved learning, and took the drudgery and time out of many manual tasks.

3. Artificial Intelligence / Machine Learning
One way to make employees more efficient, and increase that efficiency over time, is through AI technologies like Natural Language Understanding and Natural Language Generation. To improve those, apply machine learning over time.

4. APIs / AsAService
Another way to bring new ideas to market quickly is to tap into others who’ve already built the solutions. APIs are a key way of accessing many of these pre-built products, some of which were offered as a service (think Family Office As a Service, etc.)

5. Customer Experience
In line with what banks have recently been telling us, improving the Customer Experience was top of mind for many customers. Whether making an interface more aesthetically pleasing, eliminating friction, or speeding feedback, a keen focus on enriching interactions was evident throughout the event. I’d point out that the vast majority of solutions focused on the mobile experience, so much so that it almost doesn’t merit its own mention (but, since this didn’t used to be the case, it’s worth being explicit).

Observations

1. The presenting roster was down to 59 companies from 72 last year in San Jose. While more digestible, frankly, it made many observers wonder whether this was an early sign that the fintech frenzy is moderating.

2. Other technologies that didn’t make the headlines but were present include Analytics, Biometrics, and Lending / Mortgages.

3. I’m always interested in the dogs that didn't bark. Two technologies completely absent from the roster: Apple Watch and Blockchain. Others that were surprisingly underrepresented included Voice, Payments, Branch, and Financial Inclusion. As is my practice, I jotted down a few words associated with each presentation; the results are below.

If you’d like to discuss what we say at Finovate, please be in touch and we’ll arrange some time.

Congratulations to All Celent Model Bank 2017 Award Winners!

Congratulations to All Celent Model Bank 2017 Award Winners!

Many of us at Celent just came back from a busy and exciting week in Boston. Undoubtedly, the highlight was attending Celent's Innovation and Insight Day on April 4th, where we celebrated achievements of the Model Bank and Model Insurer award winners.

The rain and clouds couldn't obscure spectacular views from the State Room overlooking the Boston harbour. And they certainly didn't dampen the mood of nearly 300 attendees representing banks, insurers and technology vendors from at least 15 countries around the world.

Craig Weber, Celent CEO, opened the day by presenting compelling evidence that financial services are more important than many celebrities. He was followed by an insightful presentation from Andy Rear, chief executive of Munich Re Digital Partners. The programme then split into parallel Banking, Insurance and Wealth and Asset Management tracks before reconvening again to close with a series of debates between Celent analysts on three topics: Internet of Things, artificial intelligence and blockchain.

During the Banking track we presented Model Bank awards, and discussed the winning initiatives and why they stood out from all others. As regular readers of this blog know, this year we introduced specific named awards with only a single winner for each award. I would like to offer my personal congratulations to all of our Model Bank 2017 winners:

Winner

Award

Alior Bank S.A., Poland

Emerging Technology for Consumers

Banco Original, Brazil

Consumer Digital Platform

Bank of America, USA

Risk Management

BMO Bank of Montreal, Canada

Process Automation

Capital One, USA

Emerging Technology for Businesses

CBW Bank, USA

Banking as a Platform

Citi, USA

Open Banking

Credit Suisse AG, Switzerland

Payments Replatforming

DenizBank, Turkey

Lending Product

Emirates NBD and ICICI Bank, India and UAE

Most Promising Proof-of-Concept

FGB, UAE

Corporate Banking Digital Platform

Idea Bank S.A., Poland

Small Business Digital Platform

India Post, India

Financial Inclusion

IndusInd Bank, India

Fraud Management and Cybersecurity

Millennium BCP, Portugal

Branch Transformation

Mizuho Financial Group, Japan

Consumer Banking Channel Innovation

National Australia Bank, Australia

Core Banking Transformation

OakNorth Bank, UK

Banking in the Cloud

Radius Bank, USA

Product Innovation

The Royal Bank of Scotland, UK

Employee Productivity

YES BANK, India

Payments Product

And of course, congratulations to Caixa Bank, our Model Bank of the Year 2017! The keynote presentation by Àngels Valls on how Caixa Bank has embraced digital was the highlight of the I&I Day for many of us in Banking – thank you! Finally, congratulations to Celent Model Insurer award recipients.

Each of the award winning initiatives is published as a case study and available to Celent research clients by following the links above. In addition, we also published an overall Model Bank 2017 report, which discusses how the Model Bank programme has changed over 10 years and reviews the content themes across all nominations in 2017.

We intend to run the Model Bank programme again later this year, so keep an eye on the announcements when the new submissions window opens. We have no doubt that you are all working on exciting things and hope that you will consider submitting your initiatives for 2018 awards. In the meantime, enjoy the case studies and let's celebrate the Model Bank winners of 2017!

Model Bank 2017: Small Business and Corporate Digital Innovation Themes

Model Bank 2017: Small Business and Corporate Digital Innovation Themes

This is the fifth article in a weekly series highlighting trends and themes from Celent’s Model Bank submission process. For more information on how the Model Bank Awards have evolved, see the first two pieces from Dan Latimore and Zil Bareisis. This particular article is focused on innovations in small business and corporate banking:  two critical market segments for financial institutions as they seek revenue growth and relevance in the evolving digital B2B marketplace. 

When evaluating this year’s Model Bank submissions that are targeted at small business and corporate clients, we identified a number of excellent initiatives in each of the five overall categories:

    Customer Experience

    Products

    Operations and Risk

    Legacy Transformation / IT Platform Innovations

    Emerging Innovation

For these two segments, the Model Bank award candidates come from Europe, North America, the Caribbean, Asia Pacific and the Middle East. Despite the wide geographic spread of the submissions we received, certain common themes became evident that are important to highlight, 

Enhancing client experience is paramount: Banks are intensely focused on how to deliver solutions to clients in ways that are convenient and easy to use in order to meet the emerging expectations of business users based on their consumer experiences with technology. Creating a consolidated point of access for all corporate banking services using portal technology that eliminates the need for multiple logins and security procedures was just one of the types of initiatives that were submitted.  Mobile and tablet access are becoming mainstream channels for employees of business and corporate clients to effectively manage their daily workload no matter where they might be located.

Improving digital channels is not enough to succeed: The initiatives that demonstrate significant quantifiable benefits to banks and clients are those that address the inefficiencies in the way that bank employees interact with their clients but also involve the elimination of paper-intense, manual workflows both for the client and the bank. From the use of videoconferencing technology to access experts in trade finance for advisory services to the replacement of faxed instructions with digitally signed transactions initiated on mobile phones, banks are finding innovative ways to contribute to their own efficiency while also improving client productivity. Another critical element of the digitization of these processes is speed. Automation enables faster decisions (for example for credit approval) and this provides business with a superior service and the ability to manage their businesses rather than managing their banking relationships. These initiatives drive revenue growth and loyalty because the bank’s services provide quantifiable benefits to clients that are seeking to leverage technology advances in order to more effective manage their working capital.

Reinvention in Small Business Banking: I was struck by several of the initiatives that represent an entirely new way of thinking about how to enable entrepreneurs and small business owners to succeed. Rather than tweaking traditional banking solutions that are designed for consumers or larger businesses, several of the banks submitted initiatives that reflect an entirely different way of meeting the needs of small business clients. Recognizing that the needs of entrepreneurs and start-ups fall well beyond the services that a bank traditionally offers (i.e. credit, payments, cash management), a few innovative banks have attempted to reinvent business banking by offering a complete, integrated package that combines traditional banking activities with non-banking services that extend beyond even the adjacent types of solutions that banks typically make available through partnerships (e.g. payroll services). The goal of these packages is to offer a business owner every piece of business functionality and technology they would need to grow their business. What makes these solutions especially impactful is that they are designed from a business owner’s perspective and don’t reflect a bank-centric view of how the client should manage their business. 

I hope this brief description whets your appetite for more discussion on our award winners in small business and corporate banking at the 10th annual Innovation and Insight Day on April 4th in Boston. I look forward to seeing you there.

Get off the bench: free lunch is over for banks?

Get off the bench: free lunch is over for banks?

This is a copy from my guest post for Finnovista that I wanted to share with you here as well.

A few years ago when we started collaborating in creating the Latin American Fintech community there were no Fintech associations, no Fintech conferences and for sure there was no mapping of Fintech start-ups at all. It has been quite a journey for all of us involved. Kuddos to the Finnovista team for being a key element and catalyser for these achievements!

What exciting moment to be in financial services! Many things going on. Banks are being unbundled; and its happening everywhere. Want to take a look? Check what’s going on in the US, Europe and in more near places across Latin America like Mexico, Brazil, Colombia, Argentina and Chile.

It’s making no distinctions, affecting personal and business banking equally. Consequently, the nature of competition is changing; and pressure is not expected to come from other financial institutions. In a recent Celent survey, to SME banking representatives from Latin American banks, most believe that fundamental changes that are expected to occur in the banking industry won’t come from other financial institutions; instead they are looking mainly to new entrants and adjacent industries.

In last year’s survey to retail banks in Latin America, Stanford University found that 47% of the banks see Fintechs as a threat. The same survey indicates that only 28% of the banks meet the needs of their digital customers. Not a position where you want to be.

Customer expectations, pressure on revenue and cost, and increased regulation don’t make the life easier for banks either. Fintech start-ups may advantage banks on responding to customer expectations and being leaner has Fintechs better positioned to pressure on costs; but they have to play under the same regulation and at some point earn revenues in excess of cost (a.k.a. be profitable).

FCA, the U.K. financial regulator, has opened its sandbox for applications from financial firms and tech companies that support financial services. Successful applicants can test new ideas for three to six months with real consumers under loosened regulations. This is something we haven’t see yet in Latin America, though regulators are increasingly open to the benefits of Fintech and innovation, particularly if it is related to financial inclusion: we have seen the support of regulators to mobile wallets across the region in the last couple of years. Mexico appointed this year an officer for Fintech development in what I see as the leading case in the region to facilitate the adoption of services provided by Fintechs under the umbrella – and supervision – of the regulator. Most lately, the Argentinean regulator has introduced changes enabling digital onboarding, and in payments facilitating competition and adoption; though no sandbox yet, but maybe a digital/branchless bank in the way? Will it be a disrupting incumbent or a new player? By themselves or in cooperation with Fintechs?

Indeed, there has been a lot of debate regarding the nature of the (best) relationship between banks and Fintechs; be it competition, cooperation or coopetition, banks need to play a different game. The ecosystem has changed incorporating a myriad of players and increased complexity. Banks must reconstruct their business models around three areas, recognizing that they are part of a broader and new financial ecosystem:

  • Channels: How the bank serves customers
  • Architecture: How the bank organizes to deliver value
  • Innovation: How the bank delivers new ideas, products and services around both channels and architecture

Banks can innovate on their own, or partner with Fintechs or other 3rd parties; at the end of the day banks need to select and execute on the best innovation models. There is no single answer that fits all; each institution will have to discover the best combination of innovation models aligned with risk appetite, organizational culture and the target customers you want to reach.

ORACLE: Swinging the Bat in Cloud Services

ORACLE:  Swinging the Bat in Cloud Services

It's hard to believe that an entire month has gone by since Oracle OpenWorld in San Francisco — but baseball fans will have noticed that things have been a bit hectic here in Chicago of late.  Ironically, the Chicago Cubs clinched a playoffs berth on September 18th, the very day that Larry Ellison officially opened OPEN World with his first of several Keynote presentations.



My primary motivation for attending OpenWorld was to get an update on Oracle's two banking platforms — the new flagship Oracle Banking Platform (OBP) aimed at large retail banks and its stable mate FlexCube, the universal banking platform deployed by nearly 600 banks globally.  After three days at OpenWorld, I realized that the real story of interest to banks is Oracle's emerging cloud story, which coupled with its existing core banking applications business puts them in a really interesting position to transform the core banking systems market.

Now a robust 72-year-old, Larry joked with the audience about being prohibited from climbing the stairs to the Keynote stage, but he still exhibits the intense competitive burn that served his company well during the ERP battles of the 1980s and 1990s.  The difference is that these days, he's less focused on IBM or SAP as he is two new challengers:  Amazon Web Services (AWS) on the IT infrastructure side and WorkDay on the applications side.

Of course, what AWS and WorkDay have in common are that they are both businesses with long-term prospects predicated on the continued growth and development of cloud services.  Larry's first Keynote noted that we are witnessing generational change as companies move from "lots of individual data centers" to a smaller number of "super-data centers called Clouds".  In a separate presentation, Oracle CEO Mark Hurd shared Oracle's view that within the next ten years, 80% of corporate-owned data centers will have been closed, with the remaining data centers running at 20% of today's capacity, running legacy workloads that are not easily ported to a cloud services environment (hey COBOL — I think they're talking about you!).

mark-hurd-data-center-stats

According to Larry, Oracle's "overnight success" in cloud services began ten years ago when it started reengineering its original ERP products — licensed software designed primarily for the on-premise market — into a new multi-client, multi-tenant architecture, as befitting a company that was pivoting to the emerging SaaS model.  At OpenWorld, Larry shared how Oracle was extending its original SaaS business to embrace both the Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) models — putting AWS, Google, and Microsoft all squarely in Oracle's competitive sights.

Of the three, AWS appears to be the primary target of Oracle's competitive ambitions:  Oracle's new "Gen2" IaaS platform offers a virtual machine (VM) that offers twice as many cores, twice as much memory, four times as much storage, and more than ten times the I/O capacity of a comparable AWS VM.  But there is a catch, according to Larry:  "you have to be willing to pay less" than what AWS charges for a comparable VM.  (While AWS might take issue with Larry's claims about performance and value, what is clear is that Oracle is planning a serious competitive challenge to AWS's supremacy in the IaaS race.)

In Larry's words, "Amazon's lead is over.  Amazon's gonna' have some serious competition going forward."

larry-aws

This represents great news for the growing number of banks that have gotten past the question "Why cloud?" and have moved onto the more interesting question "How cloud?".  For the largest banks like Capital One that have significant IT development capabilities in-house and with the willingness to experiment with new technologies, AWS makes a lot of sense.  Banks can roll their own code, spool up a VM, and off they go.  Capital One's cloud journey has been so compelling in fact, that the bank is in the process of closing down 5 of its 8 data centers while swinging many workloads to AWS.  Most banks, however, are not Capital One. 

For the mere mortals among us — banks coping with practical limitations on their ability to develop and host banking apps — having an IT partner with demonstrable experience on the application side and the infrastructure side can represent a real game changer in terms of the bank's appetite to make a leap into cloud-based banking services.  While some banks have in the past been a bit overwhelmed by Oracle's ambitious sales pitch featuring its all singing, all dancing suite of integrated applications ("that's very impressive, but I only want a G/L!"), with Oracle's new IaaS offering a bank could mix and match Oracle applications (offered via SaaS) with third-party and in-house developed systems.  That potentially a game changer for banks interested in cloud services, but overwhelmed by the complexity of going it alone with a public cloud provider.

That brings us back to OBP and FlexCube.  OBP is a recently built Java-based core banking solution built for the needs of large scale retail banks.  As such, OBP is aimed squarely at mainframe-based core platforms like Hogan, Celeriti and Systematics.  FlexCube is a universal banking platform and has also seen some renewed investment from Oracle in the last few years.  While today its primary market appears to be international banks, as a modular solution FlexCube can address specialized needs in the US market like cash management and trade finance. OBP and FlexCube continue to compete in the global core banking systems market on their own terms — with OBP having some recent success as a foundation for a new digital banking platform for Key Bank (Cleveland) and as the foundation of a complete core replacement project at National Australian Bank (Melbourne).

For larger banks intrigued by the promise of cloud services, but daunted by the complexity of building and operating their own environment, the opportunity to pull down an OBP license that is hosted in the Oracle Cloud while dragging other applications from their private data center to Oracle's IaaS platform could help achieve in one move the twin goals of core banking system and data center transformation.  That's a rare 2-for-1 in a world where a widely-held truism is that every IT decision involves trade-offs among alternatives.

According to Larry, Oracle's annual revenue run rate for cloud is currently about $4 billion.  Amazon recently announced that its revenue run rate for cloud services was north of $10 billion while just yesterday Microsoft announced its own revenue run rate for cloud has approached $13 billion.  These are undoubtedly different businesses (AWS is more or less pure-play IaaS while Microsoft skews towards SaaS by virtue of the strength of its Office 365 business), so I won't pretend to make any apples-to-apples comparisons.  The point remains that while it's still early in the cloud ballgame for Oracle — with deep financial resources, an impressive portfolio of banking applications, and Larry's intense "Will To Win" against the current market incumbents — bank CIOs need to pay close attention to what is going on in Redwood Shores.

“Transforming the Landscape” – My learnings from SIBOS 2016

“Transforming the Landscape” – My learnings from SIBOS 2016

The fall conference season is a business time for us in the industry research business. I’ve finally recovered from a hectic week in Geneva, where I met with over 40 banks, technology companies, and consulting firms to discuss what’s happening in global transaction banking. This year’s Sibos theme was “Transforming the Landscape”, organized around four themes: Banking, Compliance, Culture, and Securities. A selection of Sibos session recordings is available on the Sibos website.

With my research focus of Corporate Banking, my discussions focused on three key topics.

  • SWIFT’s global payments innovation (gpi) initiative:  SWIFT announced that it had successfully completed the first phase of the gpi pilot, surprising some bankers with SWIFT’s ability to meet the first milestone so quickly. The initial objective of gpi is to improve the speed of cross-border payments (starting with same-day) and improve transparency with new end-to-end payment tracking. SWIFT staffers roamed the exhibition hall with iPads demonstrating the gpi’s new payment tracker. It remains for banks to integrate the new payment type into their corporate digital channels and to determine product pricing.​

SWIFT GPI

  • PSD2 and UK Open Banking:  Technology providers, especially those that offer core banking systems along with payments technology, are working closely with regulators and industry groups to enhance their product offerings to accommodate the third-party account information access and payment initiation provisions of PSD2, along with the UK’s Open Banking API Framework. Looking beyond mere compliance, both providers and banks are developing value-added services to capitalize on the significant disruption arising from opening traditional banking capabilities to third-parties.
  • Blockchain in Corporate Banking:  After publishing a Celent report on use cases for blockchain in corporate banking earlier this year, I was heartened to hear “real world” blockchain announcements from the big tech companies, touting their banking collaborations. Swiss bank UBS is working with IBM on a project to replicate the entire lifecycle of an international trade transaction. The FX settlement service, CLS, is building a payments netting service that will enable cash trades on IBM’s Fabric blockchain. Bank of America and Microsoft announced their intent to build and test blockchain applications for trade finance.   Although much progress is being made by blockchain consortia, banks, and technology providers, most people I talked to believe that significant adoption of blockchain for corporate banking use cases is still a few years in the future.

I’m off next week to attend the Annual Association for Financial Professionals (AFP) conference, hoping to bring back developments in the world of corporate treasury and treasury management.

Key Takeaways from Sibos 2016

Key Takeaways from Sibos 2016

Having just returned from the whirlwind that is Sibos, I (along with many other industry observers) feel compelled to contribute my two cents on the top takeaways from the event, along with one observation on the mood. Nothing about Sibos can be exhaustive, but three key areas stood out: Cyber, PSD2, and Open Banking / APIs.

Cyber was the first topic mentioned in the opening plenary address. Its seriousness brought into stark relief by the $81mm Bangladeshi incident (something my cab driver in Boston asked about on the way to the airport!), Cyber was a focus throughout the conference. While it has long been an important issue, it has catapulted to the top of the agenda of every member of SWIFT’s ecosystem given the recognition that the system is only as secure as its weakest node.

PSD 2 is often thought of in a retail banking context, but its implications will carry over to the corporate side as well. There are two critical points: 1) Banks must make their customers’ data accessible to any qualified third party, and 2) Third parties can initiate payments. These changes will have profound second-, third-, and even fourth-order effects that can scarcely be imagined today. Banks are thinking through what they need to do to comply, as well as what their strategies should be once they’ve implemented the necessary (and not inconsequential) technology changes. For a primer on the current state of PSD2, see Gareth Lodge’s recent report on the subject.

Open Banking is enabled by APIs. While PSD2 is certainly accelerating the concept, it would have been gaining momentum even without the external pressure. There are simply too many activities that can be done better by third parties than by banks, and the banks have realized that they need frictionless ways to tap into these providers. APIs are a critical mechanism to enable this interaction. Technology, of course, is a necessary but not sufficient condition for success; banks must be culturally able to integrate with new partners quickly and flexibly.

On a final note, the mood was pragmatic. The atmosphere wasn’t one of consternation, panic, or confusion. Instead, the buzz was focused, purposeful, and businesslike. Bankers and their service providers are ready to roll up their sleeves and get the job done instead of wringing their hands about all of the possible ill-fated futures that could arise. We at Celent look forward to the progress to come in 2017. What are your thoughts?

Impressions from Finovate Fall 2016

Impressions from Finovate Fall 2016

A few weeks ago I attended Finovate Fall 2016 with a few different colleagues of mine in New York.  For those who’ve never been, Finovate hosts three main events (New York, San Francisco, and London) where more than 70 fintech companies are able to present new concepts, services, or products in a rapid 7-minute format.  Traditionally, the San Francisco event has catered to more of the pure start-ups, while the New York event gives larger, more established vendors the opportunity to show off their newest ideas, although typically there’s a bit of a mix between each.

As a temperature gauge for the industry, I don't think there’s a better event. The ideas generally reflect where the industry is at in its thinking, and what the major trends are for fintech.  For example, 2-3 years ago the hot topic was PFM, big data, and mobile wallets.  Last year, mobile onboarding, customer acquisition schemes, and AI were the most prevalent.  Parsing through the hype and the reality is typically one of the more fun aspects of attending.  This year I noticed a few things that caught my attention:

  • Chatbots, Natural Language Processing (NLP), and general communication solutions were common: Companies like TokBox, Personetics, Kore, and Clinc were some of the more compelling examples here. These solutions were prominent in 2015, but the biggest change was the maturity of their capabilities.  Last year, what stood out to most attendees were the many demos that fell flat.  A handful of presentations completely bombed on-stage, and even those that made it through the process were often shaky and the inputs looked too rigid.  These technologies have advanced quite a bit in the last year, and the proposition for banks is becoming much more attractive. 
  • PFM was hidden behind data analytics:  PFM hasn't been a discussion topic in the industry for quite some time. The initial round of PFM deployments were troubled by poor execution and unmet expectations by financial institutions that piloted them.  Many financial institutions we’ve spoken to become immediately sceptical of a vendor solution that even uses the term.  Celent has been talking for some time about PFM merging with online banking and essentially becoming the landing page.  What was traditional PFM (spending breakdowns, budgeting, savings goals, etc.) is now just digital banking.  New methods of financial management demoed at Finovate, however, show PFM under disguise as platforms that leverage data analytics.  MapD was one that stood out. Clean data has always been the holy grail for PFM, and it’s always been one of the biggest issues.  More solutions focused on getting the data analytics right, creating financial value for the consumer, and cleverly disguising what should have been PFM from the beginning: insights unpinned by advanced analytics.
  • Not many payments products or solutions leveraging blockchain: Surprising to me were the lack of payments startups as well as any startup leveraging blockchain. My thinking is that many of the solutions around blockchain are still in their early days, and probably not ready for prime time.  Also, while I know of a number of startups leveraging the technology, they are more bleeding edge, and may have been attracted to the spring Finovate, which focuses much more on early-stage fintech companies.  The lack of payments schemes was also a surprise, but it could be that Apple Pay has taken some of the wind out of the sails of fintech companies trying to solve very similar issues.  Mobile wallets and payment products typically require a lot of industry leverage to make work.  You have to satisfy the merchants, the banks, and the consumers, and most have failed to reach sufficient scale.  Many in the industry said it would have had to be a larger more established firm, and indeed the launch of Apple Pay confirmed that prediction.

 

Finovate continues to offer great insight into where the industry is at and where it’s heading.  We’ll continue to attend these events and provide some more analysis. Feel free to comment on your perceptions, if any, from the event.

Where Will We See You Again?

Where Will We See You Again?

When the leaves start falling, it usually means one thing for Celent analysts – the conference season is getting into full swing and it’s time for us to hit the road big time.

The team is already busy at SIBOS this week, with BAI and AFP coming in a few weeks. Personally, I am looking forward to speaking on customer authentication at Mobey Day in Barcelona on October 5-6, as well as attending Money20/20 in Las Vegas on October 23-27.

Such high profile events are always great places for catching up with our clients and other industry experts. They are also perfect for getting up to speed with the latest developments in the industry, or, as my colleague Dan Latimore says, “soaking up the zeitgeist”. Dan will also be joining me at Money 20/20.

This year, we will be keeping an eye on (amongst many other things):

  • Which of the latest initiatives look most promising to (re-)invigorate mobile payments? Will it be Apple Pay and Android Pay on a browser, the networks’ partnerships with PayPal, 'Merchant' Pay, or something new that will get announced at the events?
  • Adoption of and developments in payments security technologies, from EMV to biometrics, and from 3DS to tokenization.
  • Innovations that drive commerce and help merchants, from bots to APIs that enable deep integration of payments into the merchant’s proposition. Also, creative application of analytics, whether to help merchants increase conversation rates, extend a loan, or deliver the most relevant and timely offer to the customer.
  • Where will blockchain fit into payments world? Ripple continues to gather momentum with cross-border payments, the UK is exploring the use of distributed ledger technologies as backbone for a domestic payments system, while IBM is partnering with China's Union Pay around loyalty. What other payments-related innovations can we expect from the blockchain community?

What will you be looking for? If you’ll be in Barcelona, Orlando, Chicago or Vegas, we look forward to seeing you. If you haven't registered, now's the time. And because of your relationship with Celent, you are entitled to an additional $250 discount off the Money20/20 registration fee. Combined with the Fall Final special you save a total of $725. Simply enter promocode Celen250 when you register here.