Money20/20 Europe – a new addition to the circuit

Money20/20 Europe – a new addition to the circuit
One of the key parts of being an analyst is attending conferences. At first it may seem like an ideal job, swanning around the world attending them (and to be frank, we’re not complaining!). In reality, they’re a very busy and critical part of our job, and choosing the right one is key. Firstly, we get to meet people. With global coverage, we spend much of our time talking to people on the phone. Yet nothing beats meeting people face to face still. Conferences then are as much about who you meet as anything. Secondly, the content. Our job is making sure we have the finger on the pulse of what is happening, and what matters. To be truthful, we often don’t get chance to attend many sessions as we’d like, but the conversations, whether formal or the casual catch-up in the corridors are just as vital to us. With so many conferences to choose from, it’s vital that we pick the right ones to attend. It could be a full time job just visiting them all, and every year at least one conference clashes with another. One recent conference that seems to have almost instantly established itself on the circuit is Money20/20. Celent analysts have attended the first three in Las Vegas, and seen it grow rapidly. It’s therefore no surprise that we’re watching the inaugural European version with interest. Cunningly titled Money20/20 Europe, it takes place in Copenhagen April 4-7. As with any event, it’ll take a little while to settle into its on rhythm but already the agenda is attracting some well known names from the banking industry. We suspect that this will become one of the mainstays of the European banking calendar. If you plan to attend but haven’t registered yet, feel free to use our Celent discount code CEL200, worth €200 off of your ticket. We hope to see you there!

Alexander Hamilton’s approach to innovation has lessons for us today

Alexander Hamilton’s approach to innovation has lessons for us today
CBS’s 60 Minutes ran a story recently about the hottest new Broadway musical – Hamilton (go to the 14 minute mark). It turns out that some of the research for the show was conducted at the site our Innovation and Insight Day – The Museum of American Finance. This biography underscores why we chose the Museum for our next Insight and Innovation Day (to be held April 13, 2016). The segment talks about Hamilton’s numerous accomplishments:
“…a penniless, immigrant, orphaned kid who came out of nowhere and his achievements were monumental…he creates the first fiscal system, the first monetary system, first customs service, first central bank…”
Without these innovations, the modern economy as we know it now would look very different. Anyone working in financial services today is aware of the challenges we face responding to changing customer expectations and new technology opportunities. Vast sums of money and time are being spent on innovation, looking for answers. However, Celent’s research shows a widely held view that the financial services industry cannot innovate very effectively. Hamilton graphic nov 2015 So how do we improve? The theme of our Insight and Innovation Day event this year will take inspiration from Hamilton’s work and use it as a guide for our future efforts. By the way, if you want to go to Hamilton while at the Celent I&I Day, I suggest you get your tickets now. It’s the hottest ticket in town! This is a republished post by Mike Fitzgerald from the Celent Insurance Blog. Click here to read the original post.

As conference season rolls on, here’s what I’ll be looking for at Money20/20

As conference season rolls on, here’s what I’ll be looking for at Money20/20
We’re smack in the middle of conference season and the team has been traveling all over the world. We’ve been busy with Sibos and BAI (unfortunately held at exactly the same time), AFP, and next week, Money20/20.  In only its fourth year this new conference had to move to a new venue so that it could avoid running afoul of the fire marshal. Given the excitement around the payments ecosystem, we think it will be an exhausting whirlwind of a week. What will Zil Bareisis and I be looking for? Three main topics top the list:
  • What’s the view on blockchain? There was a lot of discussion at Sibos on the corporate side (we don’t think retail will be leading), but we’d like to find out if there’s heat behind the light.
  • What sort of value added services around the payment are in production or on the drawing board?
  • Is the apparent stall in mobile payments adoption temporary, and what can be done by ecosystem participants to jump-start it?
There will, of course, be many other payments topics covered, and we’re looking forward to plunging in to soak up the zeitgeist. What will you be looking for? If you’ll be in Vegas next week, we look forward to seeing you. If you still haven’t registered, you can get $250 off your ticket by using the code celen250.

Sibos 2015: banks reacting to the threat of blockchain and other FinTech

Sibos 2015: banks reacting to the threat of blockchain and other FinTech
Singapore hosted Sibos this year, and judging by the reported 8,000 attendees, transaction banking is alive and well. That also means there were 8,000 different experiences, impressions and takeaways. Here are mine: Banks are fully aware of the threat of posed by technology and are beginning to act on it. Two technology vendors I spoke to said that every single bank they met with asked about blockchain, an extraordinary change from six months ago when it was only beginning to be seriously discussed. It’s encouraging that banks have evolved their positions so quickly. While no one know yet what the killer blockchain uses will be, banks are ramping up experiments along all facets of the value chain. Celent will have more to say about that shortly. Another facet of technology change is the need for banks to partner with FinTech innovators. Based on my conversations with many of these vendors, banks were a lot more willing to discuss new ways of working together. There may even me some movement toward value pricing (that is, mutual sharing in beneficial outcomes), but it’s still very early days; banks seem loathe to give away upside and are unsure how to structure enforceable deals. Sibos’ ambivalence about innovation manifested itself physically with Innotribe. The space was relatively small, and every time I went by I was unable to get in because it was filled to overflowing. Innovation clearly needs to be given even more attention despite the threats it presents to the existing structure. Was this perhaps a physical metaphor of Banking’s relationship with and attitude towards FinTech? Having had four straight nights of canapés for standing dinners, getting home to digest the whirlwind that is Sibos was very welcome. On to Geneva next year!

Dispatch from Vegas: Capital One places big bet on AWS

Dispatch from Vegas:  Capital One places big bet on AWS
If it’s October, it must be conference season.  Old DominionThe month started innocently enough: a visit to Nashville for the Computer Services, Inc. annual client conference.  By virtue of endless industry consolidation over the past 30 years, CSI has been initiated as a full member of the Big-5 fraternity of core banking systems providers, and Celent will be adding their flagship NuPoint banking solution to our pending updated coverage of core banking systems solutions.  I was pleased to be invited to speak to CSI’s clients about innovation in banking (more about that in a future blog post).   Entertainment was provided by an up and coming country group Old Dominion — I’d never heard of them, so was surprised at their excellent performance of songs that they had written for established acts like Blake Shelton (“Sangria”) and Tyler Farr (“Guy Walks Into A Bar”). After Nashville, it’s been back-to-back trips to Las Vegas for the Amazon Web Services re:Invent developers conference followed by the Bankers Administration Institute’s Retail Delivery Conference (BAI-RDS). BBKingFor a long time, BAI-RDC has been the premiere conference for retail banking.  When I was busy digging up acquisition opportunities for Metavante in the 2000s, BAI-RDS was a “can’t miss” opportunity to take the temperature of fintech, to see what competitors were up to, and especially to keep tabs on the many startups that had emerged from the shadows to lead the way in internet-enabled banking services.

Those were very heady days for BAI-RDS.  I have vivid memories of packing into the House of Blues in New Orleans as Chip Mahan, founder of online banking pioneer S1, invited a few hundred of his industry friends to a private performance by BB King.  It was November 29th, 2000, a Wednesday evening and yet the party went on well after BB finished up his performance at 11 PM.

Back to Vegas.  Since I also cover cloud services for Celent, I decided to check in on what AWS was up to these days.  Their annual developer’s conference is called re:Invent and since AWS has only been doing this for the past four years, I didn’t quite know what to expect.  BAI-RDS regularly draws 3,000 attendees, and while I knew re:Invent 2012 drew about twice that number, I was still not prepared for the crowd of nearly 20,000 developers and AWS partners that converged on the Venetian Hotel and Sands Expo.  The many specific education sessions were scattered over the five floors of ballrooms in the Venetian while the Expo Hall and Key Note presentations were held at the adjacent Sands Expo. While I didn’t see many bankers wandering the halls of AWS re:Invent, the one banker I did see grabbed my attention:  Capital One appthat was Rob Alexander, CIO of Capital One, who shared the stage with AWS SVP Andy Jassy during the Day One Keynote address.  Rob was there to announce that Capital One is deploying its new flagship mobile banking app on the AWS Cloud — I found that nothing less than startling in that Capital One only started experimenting with AWS last year, running a few mobile app development projects and bank-sponsored hack-a-thons in the AWS Cloud. Based on its initial success, Capital One began migrating development and testing work to AWS at the beginning of the year, and nine months later it was sufficiently happy with their experience that the bank made the bold decision to shift part of its production environment to AWS, beginning with its new mobile banking app. The new app essentially melds Capital One’s existing online and mobile banking applications, with a uniform look and feel, and changes to user preferences made on an iPhone or iPad automatically flow to the user’s online banking experience.  Capital One’s API gateway and 80 individual banking services are in the process of moving to the AWS Cloud as part of the mobile banking services launch, initially on the iPhone and later this fall expanding to the iPad and Android platforms. What’s The Hurry?   Surely Capital One is no start-up — with more than 70 million cards and $80 billion in card balances, Capital One is a top-four credit card issuer.  When combined with its direct banking operations, Capital One is in fact the sixth largest bank in the United States, with $350 Billion in assets.  Even as a proponent of the long-term impact that cloud services will have on the banking business, I was nothing less than astonished that Capital One has progressed from cloud newbie in 2014 to going “all in” on AWS in 2015. It didn’t take long to see what Capital One was up to.  By leveraging AWS for DevOps and (over time) production, Capital One is on track to reduce the number of data centers it owns and operates from 8 in 2014 to 5 by 2016, to only 3 by 2018.  Capital One intends to redeploy the capital it will recoup from data center consolidation into its core businesses while increasing the scope and pace of innovation at the bank. Capital One is betting that an AWS-based mobile banking platform will allow the bank to support the level of real-time scalability needed to cope with demand spikes such as occurs on Black Friday and Cyber Monday. But what about security?  Security is the most commonly cited reason why most banks are not embracing cloud services, so I was interested to hear Capital One’s take on security.  According to Rob, “Of course, security is critical for us.  The financial services industry attracts some of the worst cybercriminals.  So, we work closely with the Amazon team to develop a security model which we believe enables us to operate more securely in the public cloud than we can even in our own data centers.” More securely in the cloud?  Either Capital One has gone rogue (very doubtful) or it knows something that most banks have yet to reconcile:  when it comes to security, it’s much less about where your sensitive data sits and much more about how you secure your data from pranksters and thieves. AWS Party AWS’s re:Play evening entertainment was provided by Zedd, a Russian-German musician and DJ who I also had never heard of (although my 18-year old college student did).  Chip Mahan was nowhere in sight, but I might have missed him in the crowd of 19,000 AWS converts in the audience.  Zedd was no BB King for sure, and unlike Old Dominion I didn’t know any of his songs, but nevertheless his techno-pop performance was hypnotically entertaining. I could have gone back to Las Vegas for a third consecutive week, where the ever-growing Money 20-20 conference beckons, but alas I’ll be in Denver for the Association of Financial Professionals annual conference.  Dan Latimore and Zil Bareisis will be at Money 20-20 and I’m eager to hear about their experience.  

Helping build the fintech ecosystem in Latin America

Helping build the fintech ecosystem in Latin America
A few weeks ago, Dan Latimore and I had the chance to attend Finnosummit in Mexico City. IMG_1341 While Dan was the one really working (he presented on “How Big Data can change Financial Services”) I mingled around the participants of this vibrant ecosystem encompassing entrepreneurs, financial institutions, investors, and regulators among other stakeholders. It is amazing how the ecosystem continues to grow and how fintech start-ups are booming.IMG_1349         Celent has been collaborating to help create the fintech ecosystem in the Latin American region since its inception and I had the honor, for 2nd time, to judge the fintech start-ups participating in the BBVA Open Talent, which brought the Latin American finalists into town as part of Finnosummit. They had their 5 minutes of glory (or suffering) by pitching their venture to the audience and two winners were selected at the end of the day. Discover the finalists of all regions here. In Latin America two chilean start-ups were the winners: Destacame.cl, aiming to financial inclusion by creating a credit scoring based on utility payments; and Bitnexo which enables fast, easy and low cost transfers between Asia and Latin America, using Bitcoin. In the US & RoW the two winners were: ModernLend enables users with no credit profile to create one in just 6 months by using alternate metrics; and LendingFront which facilitates short term commercial lending through a simple platform. In Europa the winners were Everledger, specialized in anti-fraud technology for financial services and insurance; and Origin an electronic platform that facilitates bond issuing in the capital markets. Many fintech startups that made it to the finals focus on Blockchain technology and payments. These seem to be the areas of major investment for the last two years. If you are interested in these themes I suggest that you follow my colleagues John Dwyer, Zilvinas Bareisis and Gareth Lodge. Coming back to Dan’s presentation, he made a very interesting observation around the need to move from the old paradigm (Customer response optimization) to a new paradigm (Anticipate and shape customer intent) based on the use of big data and analytics, but also warning that disruptors are out there applying the new paradigm today. If you want to get deeper into any of the subjects covered here, please let me know. By the way, is there any fintech start-up you believe has great potential? Share with us please!

Why banks should pay attention to “Assistant as an App”

Why banks should pay attention to “Assistant as an App”
Last week I had the pleasure of going to Finovate, a biannual event (at least in NA) where startups and established vendors show off their newest creations. My colleague Dan Latimore wrote an in-depth piece about it last week. It’s usually a good temperature read of where the market is and what banks are thinking about. PFM used to be hot, now it barely makes an appearance. Mobile account opening and on-boarding was massive. Each year you can count on a few presentations tackling customer communication, whether it´s customer service applications or advisory tools. While this year was no different, I didn´t see any presentations representing an emerging trend in mobile: assistant as an app. What is assistant as an app? Basically, it puts a thin UI between two humans: the customer and the service provider (e.g. retailer or bank). The UI layer enhances the interaction by allowing each party to push information back and forth, whether its text, pictures, data visualization, etc. There are a wide range of possibilities. Apps are already starting to incorporate this idea. For a monthly fee, Pana offerings a human personal travel assistant who will take care of any travel related need. The concierge books restaurants, hotels, rental cars, and flights, all via in-app communication. Pana Vida Health allows users to push dietary information to a health coach that can then send back health plans, ideas to diagnose health issues, or create a weight loss regimen. The dating app Grouper uses a concierge to coordinate group dates. EasilyDo is a personal assistant that can manage your contacts, check traffic, schedule flights, etc. The app Fetch uses SMS to let users ask the concierge to buy just about anything. For a small fee (sometimes free, subsidized by business or premium services) these companies provide value-added premium services to customers through a mobile device. The applicability for banks is obvious. Finances can be complicated; most people aren´t good at managing money, and according to Celent research, consumers still prefer to speak to a human for important money matters. Assistant as an app would offer institutions a clear path towards monetising the mobile channel, moving interactions away from the branch, and capturing a growing base of digitally-directed consumers. I predict this will be a major trend in financial services in the future. What do you think? Feel free to comment below.

Mobile, onboarding among dominant themes at FinovateFall 2015

Mobile, onboarding among dominant themes at FinovateFall 2015
When I’m feeling a bit flip, I tell clients that Celent goes to a lot of conferences so that they don’t have to. Don’t get me wrong: conferences are worthwhile, and you have a lot of serendipitous conversations. But they’re also time away from the office, and, to be honest, not every minute is completely productive. With that in mind, I’ll describe my very-high level takeaways of Finovate Fall 2015, held earlier this week at the New York Hilton. As I listened to each of the 70 7-minute pitches (2 presenters scratched), I tagged them in an unscientific way. Each company received two to eight words describing the space the problem they were solving and how they did it. Here’s the resulting word cloud: Finovate Word Cloud Mobile, unsurprisingly, dominated. I was astonished, however, at the prominence of “onboarding,” a term I used to cover a wide variety of solutions pertaining to account opening, from ID verification to assisted form filling. Many talked about eliminating friction, and creating a platform to support a particular service. Security and Fraud were prominent, as was the concept of components, often enabled by APIs. The biggest surprise: only two companies addressed Blockchain technology – perhaps that will change at FinovateSpring. Somewhere around the 60th presentation, I was struck by the variability in presentation skills and solution excellence. Being a consultant, I had to create a 2×2, below. What did we miss because the product or service was presented sub-optimally? Finally, a big thanks to the folks at Finovate – Celent values our partnership with this great event. If you’d like more detail, check out their blog, which describes the best in show winners. What did you like at Finovate?

London calling: “payments are missing”

London calling: “payments are missing”
From a brief scan of the morning headlines comes news of an IT glitch at the Royal Bank of Scotland. RBS Help announced via its Twitter account at 5:45 AM London time yesterday that “some customer payment are missing this morning — we are investigating this issue as a matter of urgency,” and further advised that affected clients could call or visit their branch if they “have been affected and need to access funds today.” Six hours later, RBS reported that the underlying issue had been fixed and that all missing payments – reportedly 600,000 payments directed to client accounts at RBS, NatWest, Ulster Bank, and Coutts – would be restored no later than Saturday. While certain questions remain (like what sort of a payments glitch would take a three full days to resolve?), to RBS’s credit, it attempted to get ahead of the issue quickly in order to allow customers to mitigate any problems that might arise from the bank’s glitch. Somewhat predictably, some industry observers are already pointing to RBS’s mainframe-based “legacy” payment processing systems as the root cause of the problem. Huh?  The logic appears to be that systems that are old can’t operate reliably, simply because they’re old.  One observer went so far to claim that the lack of courage was the key reason why banks delayed needed modernization projects (OK, courage was not exactly the word used, but you get the point). To put this in perspective, RBS is said to have roughly 20 million retail clients in the UK.  RBS has yet to make an official statement on the matter, and so we’re left guessing whether the 600,000 payments impacted by the glitch represented a small part, large part, or all of the bank’s payment flow on Tuesday.  (I’m guessing it’s a small part, but that’s no consolation to those who were impacted). The last time a similar outage in RBS’s payments system occurred (in June of 2012), the culprit was found to be a problem with a systems upgrade, specifically a piece of software that handled the processing of payment batches. RBS has not yet officially commented on the cause or scope of the glitch this time, so much of what has been written in the last 24 hours is little more than speculation. What is clear is that most mainframe systems do work reliably on a daily basis – RBS is said to process on average more than 20 million payments a day – and systems rarely fail spontaneously of their own accord. So when RBS does comment on the situation, I will be looking to read the tea leaves for signs of the human element at work here – inadequately tested system upgrades or simple human error that was not immediately detected by the bank’s internal controls. That’s not to say that banks should ignore the opportunity to continually update and improve their legacy processing environment (they ought to!), but it does seem a bit cartoonish to treat every processing glitch as another call to action for wholesale systems modernization. The banks that do embark on systems modernization projects are not Cowardly Lions returning from the Land of Oz.  Rather, they are forward-looking institutions that seek market leadership through the delivery of better products and a more satisfying banking experience for the customer. For these banks, innovation is the goal and IT agility is the route to their destination. Where front-office innovation leads, back-office legacy will follow, and so it will be in time with the mainframe.  In the meantime, let’s show some respect to our long-serving and trustworthy friends. Let’s stay tuned…

Finovate and SAP SAPPHIRE: more in common than you might think

Finovate and SAP SAPPHIRE: more in common than you might think
Over the last ten days I’ve spent time at two different conferences, Finovate and SAP’s SAPPHIRE NOW. Two very different conference models generated serendipity where I wouldn’t necessarily have expected it. Both shows were rife with partnership possibilities. SAP spoke continually of the partnership ecosystem, realizing that one of its values is bringing partners together, while at Finovate, the notion of small companies going direct to consumer by themselves was basically dead – they realize they need partners. So if providers are demonstrating that they’re willing partners, all they need is someone on the other side – and that’s where banks come in. As banks strive to compete with upstarts, they’re going to need help, which means they’re going to need to work with others. And today, they just don’t do a very good job – ask anyone who’s ever been stuck in procurement hell. Banks must get better at working with outside parties, from streamlining the vendor approval process, to designing compensation models, to navigating the shoals of procurement. Speed is of the essence, and banks are woefully slow. But I digress… At SAPPHIRE NOW I participated in a panel: “Disrupt or Be Disrupted to Survive in Financial Services.” Partnership was one of my key themes. SAP earlier gave center stage to its recent acquisition, Concur, its T&E management solution. The presentation’s available here (go to 41:30 where Bill McDermott introduces Concur). Along the very same lines, one of the Finovate Best in Show winners was Shoeboxed, for its Receipt Capture for Banks solution, which boosts the functionality of online and mobile banking apps while providing fraud protection. While they have different perspectives on the expense problem (SAP goes for an integrated enterprise travel solution, including the T&E, while Shoeboxed focuses on letting banks provide its white-labeled expense solution to smaller business customers), both have focused on a particular pain point for employees and developed solutions to address it. Simplifying expense reporting may not seem like a big deal, but it’s some pretty low hanging fruit for digitization and disruption. And disruption, of course, is one of the main themes of Finovate. A who’s who of Fintech, the conference this year was outstanding. Best of show winners were the aforementioned Shoebox, together with Alpha Payments Cloud, Avoka, Money Amigo, Moven, Namu Systems and Stratos. More can be found here. What were my impressions? After having had a couple of days to assimilate all that was thrown at us, a couple of thoughts coalesced:
  1. There was only one bitcoin demo.
  2. The Apple Watch made it’s first set of demonstrations, with three demos featuring it on day 2. Two out of three had glitches, not because of the programs (it seemed), but because of the watch itself. While mobility is going to be a very powerful force, I’m still going to wait for the Apple Watch 2.
  3. Personal Financial Management (PFM) was rarely mentioned, even when the demos concerned. This TLA (three letter acronym) has acquired a questionable connotation, and presenters avoided it (with some, like Moven, even declaring it dead).
  4. There were a lot of different concepts discussed. Here’s the wordcloud I created on Day 2, based on my impressions of the concepts that presenters were trying to get across.
Finovate World Cloud As always, please let me know of your feedback or questions.