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.

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

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?

Execution: the Achilles Heel of cool new stuff

I’m heading into Finovate in a couple of hours. The UN general assembly is in town, and the only reasonable Starwood hotel I could find was the Aloft in Harlem. It’s amazing that this hotel has exactly the same feel as its counterpart at the Denver Airport…but I digress. I’m writing because Aloft has a cool feature called Keyless Entry. Very simply, I checked in on my SPG app, was given my room (which puzzled the clerk as I tried to check in again – apparently I didn’t even need to stop at the front desk), and my phone was to serve as my key. Brilliant in theory, but in practice I overshot my floor on the elevator because I couldn’t activate the security pad quickly enough, and getting into my room and the health club took several swipes (5-10 seconds) each time. So while I like ditching the plastic key, that convenience is more than outweighed by the hassle of having to call up the app (which takes 5-10 seconds itself to load) and then match it to the pad. I’m using a plastic key next time. Another great idea is using a phone’s camera to capture data, most notably a U.S. driver’s license. I love the demos I’ve seen at prior Finovate events, but when I’ve tried it to open new accounts, it simply didn’t work. Just to show I’m not wholly negative, I also activated my BofA TouchID login today. It worked beautifully, and now I can stop typing in a truly secure password with my thumbs! BofA waited until they got it right (at least for me!). What’s the moral? When rolling something new out, you’d better be sure that it works. Few consumers will give you a second chance, at least not anytime soon, particularly when the alternative is almost as good and the experience is tried and true.

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.

Finovate Europe 2014: Some Key Takeaways

Finovate just ended yesterday, and it was great to see all the new and interesting ideas floating around the financial services space.  For those who may not know, Finovate is a two-day event that showcases some of the best new and innovative things happening in financial services technology.  Over 60 companies coming from all over the world  presented this year, taking part in the rapid format that gives each presenter 7 minutes to show why their product is worth the viewers’ attention.  The event can also be a great networking opportunity, as many of the attendees are from large institutions or influential VCs.

Figure 1: Number of Presenter Products with Aspects of Each Category

 Untitled Here are some key takeaways after watching most of the presentations:
  • PFM is still going strong:  Banks have been declaring the end of PFM for years now, yet the topic is still one of the most talked about at every Finovate.  At Finovate Europe, PFM was the most prevalent.  What does this mean for the institutions?  Well, first off, it’s obvious that entrepreneurs still see the value in PFM tools.  Banks, many of which adopted PFM solutions long ago, have shrugged at the lackluster adoption, subsequently declaring PFM a failed experiment.  Financial institutions themselves are partly to blame, hiding these platforms in menus, barely showing any desire to market the products. Yet the biggest problem with PFM is shared by all, vendors and banks alike.  PFM doesn’t add value!  Let’s just assume most people want to know how much they spend on coffee each month (I don’t!). What comes next?  Where’s the action?  The fundamental problem with PFM is that the way the data has been leveraged to truly provide value has been disappointing at best.  Until the quality of the data is there, PFM won’t be in the mainstream.  A secondary concern—the misconception that most vendors buy into—is that PFM can be fun, succeeding through cleverly designed games and well-designed UIs.  I hate to say it, but PFM will never be fun! Nevertheless, there were some interesting takes on PFM this year that could offer some new ways to think about it going forward. A company called Tink takes financial data and creates insights for the user like where you spent the most money in the last year, largest one-time purchase, most frequent spending location, and others.  The difference is that these are non-intrusive ‘stats’ that show up only if a user scrolls down from the landing page on the mobile app.  Three takeaways from Tink’s product: everything is done on the bank side, it’s is more interesting than visualizations of spending categories, and the analysis requires nothing from user.  Meniga, a PFM success story in Europe, uses demographic data to help small businesses find market opportunities. It provides competitors’ sales data, locations, profitability, among other things.  It’s not PFM is the strictest sense, but that’s probably a good thing.  PFM needs a little shaking up
  • Moving Mobile Banking Beyond Transactions:  While not a new topic, this was a common theme across a variety of presentations.  The most common involved using the camera to assist in account opening or paying bills (see Kofax, Top Image Systems, and Axa Banque).  Mitek and US Bank have been at this for some time, but the rush of new start-ups looking to fill the gap in the market is telling.  As mobile banking becomes more common, and adoption increases, consumers’ appetite for mobile-based interactions will broaden.  Banks are not only beginning to offer consumers the ability to do more complex transactions via the mobile device, but they’re opening up ways for financial institutions to monetize the channel.  This will effectively make ROI much more tangible, doing away with the misconception that the value of digital channels is ambiguous
  • Replace the Password: Is the password dead? That was the question asked by Wired Magazine in November of 2012, and something that has been on the mind of Celent for quite some time. Finovate produced no shortage of companies looking to innovate on financial security.  Finovate veterans, Behaviosec, continue pushing their gesture-based biometric product that learns how the user moves and interacts with the device to create a confidence score for use behind the scenes.  Encap uses the mobile phone as an authentication device for approving transactions or logging into digital banking.  This was the second most discussed topic at Finovate.  While biometrics is already used in some places globally, the practicality of such solutions is dubious at best.  Security needs to start becoming a little more practical.  One of my favourite presentations was from Feedzai, where they use social media data scraping to assess fraud risk.  For example, if I just checked in at a restaurant in San Francisco, then it’s likely that a transaction from somewhere else is fraudulent.  A few took to twitter to question whether customers would be ok granting banks access to their social media lives.  If Citibank starts poking people, then maybe I could see the point, otherwise, it’s a practical application for enhancing security.  Besides, most social media information is already public anyway
  • Lots of Front-end, Little Back-end:  One thing Finovate teaches us all is that there is no shortage of great UI designers.  One thing Finovate doesn’t teach us is that banking is messy once you start connecting that nice-looking front-end to the messy back-end.  Are most of these front-end products from Finovate really bank-ready? I’m not convinced.  Large vendors like Misys, Fiserv, and Temenos may not have won best in show, but with integrated backend products, they’re in a much better position to succeed. One of my favorites was Five Degrees, a Dutch back/mid-office solution that runs in the cloud and offers a truly innovative BPM product.  Other than that, good examples of back-end innovation were scant
  • Social Collaboration:  It was interesting to see different idea behind leveraging crowd-sourcing and social collaboration.  Nous presented a product for investments that incentivizes users to play a game that aggregates data based on the players’ outcomes.  A company called MyWishBoard uses collaboration, similar to SmartyPig, for goals and wishlists list that can be shared via social media with friends.  Leveraging the power of crowds has been difficult to accomplish in financial services, and most social strategies have revolved around marketing and customer support. While some of these ideas may not be the best business ideas, it’s nice to see different takes on leveraging the power of social
  • No Branch Channel Innovation: Absent from the Finovate line-up were any innovative ideas around branch technology.  Celent has written a number of reports looking at branch technology, and there is undoubtedly still much to talk about in this space.  The closest the show came was with JHA’s Luminous, a Dropbox-like secure storage cloud application for bank documents.  Branches are changing, but they aren’t going away, at least not anytime soon.  Banks have been doing some interesting things in the branch channel, but there are still plenty of innovative ways to maximize the brick-and-mortar experience. Celent did a recent consumer survey showing that branch channel adoption is still very high among consumers, and the first choice for important decisions. Considering the adoption gap between PFM and the branch, the low activity is surprising
 

FinovateEurope 2012: More Payments and Mobile, Less PFM

Sometimes our blog entries are like London busses – you wait for a while and then two turn up in a row… This is my second entry this week, but I am back from travels and wanted to reflect on FinovateEurope, which happened earlier this week in London. For those who are not familiar with Finovate, it’s an event where companies are given 7 minutes on stage to demonstrate their products and solutions. Many companies are start-ups, although sometimes large and established players are also there promoting their innovations. This was the second Finovate event in Europe and I was privileged to attend both. 2011 was good, but as expected, the 2012 event was even better. Many things stayed the same, such as the format, the number of presenters (35), etc., but it had a much bigger audience (and hence venue) and was even better organised. Without getting into too much detail and specific companies, what were the key take-aways? To help identify key themes, Celent defined the solution categories and assigned individual companies to the specific categories – the assignments, of course, are subjective and based on Celent’s best understanding of the solution demonstrated and what the company does more broadly. Based on this categorisation, last year’s event was dominated by Personal Financial Management (PFM) with 6 companies presenting their solutions in this area, whereas this year, only one firm was firmly in the PFM category. Also, there was only one company that was focused on Financial Advice this year vs three companies last year. This year saw the introduction of a new category – Mobile Platforms, which included five companies focused predominantly on developing mobile platforms which enable banks and other players to develop apps and other mobile services. Payments category grew from six to 10 companies this year, but the definition also broadened to include companies that provide card technologies or services to card companies – as a result, some companies, such as Cardlytics moved from Miscellaneous into Payments category this year. The Payments category also includes PayPal, which is obviously a payments company, although this time it did not demonstrate a payments innovation; instead, it showed a creative way to acquire customers and open new accounts. Overall, 12 of the 35 companies presented in both years, although often with new or enhanced solutions. finovate-chart-11 Celent clients may remember my report Innovative Payment Startups: Bank Friends or Foes? in which I reviewed payments companies that presented at FinovateEurope 2011. I intend to do the same again this year, so look out for another report in the near future.

Finovate Roundup

I had the opportunity to attend Finovate Startup in San Francisco earlier this week. It was a great event with a slew of fintech companies showcasing their wares to the captive audience. Each company was given 7 minutes to live demo their product – not an easy task. I’m very much a hands-on person so I appreciated this format. The demos were great and I got a pretty good feel for each firm’s product. The audience was a mix of vendors, press, analysts, financial institutions and VCs. I was surprised and disappointed to see how few banks were in attendance. Only 17% of the attendees were from financial institutions, and 40% of the FI attendees were from a single institution. Banks need to do more with regards to innovation and this event is a perfect place to learn more, and formulate thoughts and ideas. It’s also a great opportunity to look for vendor solutions that will improve feature/function, customer experience and overall competitiveness. While many of the startups offer their solutions directly to consumers on the web, there are a good number of firms that would be quite happy to sell their product to a bank. Some takeaways and trends from the show: PFM is where it’s at. I was amazed at the number of PFM solutions that were showcased at Finovate. Vendors include, moneyStrands, Wesabe, Mint, Jwaala, and greensherpa. I am a big proponent of PFM (see the following blog entries ) and was happy to see the emphasis. However, the market cannot sustain this many vendors and some will have trouble staying alive. PFM is expanding beyond budgeting and tracking. A number of vendors (Mint, greensherpa, Rudder, and Simplifi) demonstrated solutions that provide a picture of a consumer’s financial health/viability and financial planning. Grades/rankings are provided and customers can see where they need help and can plan for the future. BillShrink demonstrated an impressive solution that can help consumers save money on their wireless bills, gaz, and credit cards. Lending related solutions are gaining popularity. Tight fisted banks are driving consumers to a variety of places and P2P lending companies are capitalizing on this. Vendors here include, Prosper (now reopened), Lending Club, People Capital, and Pertuity Direct. Other vendors showed off lending and credit related offerings. These include Know Before You Apply, Credit Karma, Home-Account, ZimpleMoney, and SmartHippo. Payments offerings. A number of companies had payments solutions – SmartPay, HomeATM, Moneta , and Tempo Payments. Mobile Solutions. iPhone apps were the talk of the town (some live, some in development). Mobank demonstrated a neat e-commerce iPhone app. Not enough emphasis on security. Only 2 security vendors were part of the mix. Aradiom with a soft token for mobile phones and mobile banking, and Silver Tail Systems with their forensics solution. I was worried about the security of some of the solutions that I saw at Finovate. One vendor, Tempo Payments actually showed a form that contained a full SSN – not something you ever want to request or display online! The audience was given the opportunity to vote for best of show. BillShrink, Prosper, Silver Tail Systems and Simplifi were selected (in no particular order). Look for an upcoming Celent report authored by yours truly that examines the fintech space and what it means for banks.