Small business mobile banking adoption higher than retail

While U.S. consumers may be hesitant to adopt mobile payments, small businesses are more open to it. A recent J.D. Power study reports that mobile banking adoption for small business owners has surpassed adoption for retail banking customers. The findings from the research firm’s 2019 U.S. Small Business Banking Satisfaction Study indicate that mobile banking …Read More

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Centana Growth Partners closes $375m fintech fund

Centana Growth Partners, a New York and Palo Alto, Calif.-based growth equity firm, closed its second fintech fund valued at $375 million this week.

Eric Byunn, partner, Centana Growth Partners

The firm, which closed a $250 million fund in 2015, primarily invests in business-to-business technology companies. Its portfolio includes nine firms, including digital identity companies Jumio and SheerID, workplace benefits platform Ease and alternative investment solution Alaia Capital.

Partner Eric Byunn told Bank Innovation the focus areas of the second fund will remain the same as the first, which amounts to a validation of Centana’s long-held investment strategy.

“We continue to look at how payments are evolving and the next layer of [customer] paths, how we’re making paths more efficient and improving the customer experience,” he explained. “In asset management, we continue to look at the next level of democratization of tools to [reach] broader audiences and broader sets of customers, and for identity and security, we look at how technologies and customer behaviors evolve.”

Centana invests between $5 million and $30 million in  portfolio companies within its core sectors, including asset management, insurance, banking, digital identity, wealth management, payments, capital markets and enterprise technologies that sell into these verticals. The company seeks out companies that have a proven business model and customer base, noted Byunn.

Portag3 Ventures closes $320m fund for consumer and infrastructure plays

“We invest in growth-stage companies, which are companies that have established their initial customer traction have shown that initial product market fit, and the next chapters are really about scaling the growth of the business,” he said.

Fintech startups raised $24.6 billion in funding the third quarter of 2019, surpassing 2017’s total of $18.8 billion, according to CB Insights.

“Financial services continue to be a very exciting place for innovation, for entrepreneurship, for growth — we’re delighted to see all the activity going on in the sector and we’re super excited to invest in leading companies in this category,” said Byunn.

Bank Innovation Ignite, which will take place on March 2-3 in Seattle, is a must-attend industry event for professionals overseeing financial technologies, product experiences and services. This is an exclusive, invitation-only event for executives eager to learn about the latest innovations. Request your invitation.

ndgit Powers Inventx Open Finance Platform

Swiss IT and digitization specialist Inventx is the latest company to leverage technology from ndgit to enable it to maximize the opportunities of open banking. The company will use an open API integration layer from ndgit to power its new Open Finance Platform, ix.OpenFinancePlatform, which makes it easier for banks and insurance companies to connect with fintechs and other third party providers.

“The partnership with Inventx gives us clear strategic advantages, allowing us to expand our range of fintech solutions for Swiss clients and further boost local market growth,” ndgit Business Manager for Switzerland Roger Wisler said. “Inventx’s innovative Open Finance Platform is the next logical step for the evolution, adoption, and promotion of Open Banking in Switzerland. Together, our optimized interfaces will help to facilitate smooth and seamless integration of fintechs and financial service providers.”

Inventx’s ix.OpenFinancePlatform will use ndgit’s technology and open APIs to facilitate the connections between FIs, fintechs, and software partners. Inventx Head of Consulting and Software Solutions Pascal Wild said the two companies complemented each other insofar as ndgit’s APIs provide the standardized APIs for front-end applications while Inventx offers backend system connectivity. The combination makes it easier for FIs to take advantage of open banking for themselves and their customers “without having to worry about the technical challenges of system communication and orchestration,” Wild explained.

Founded in 2016 and headquartered in Munich, Germany, ndgit demonstrated its PSD2-enabled Digital Loan Application at FinovateEurope earlier this year. The company, which implemented Switzerland’s first Open Banking Platform in 2017, notes that its technology has been deployed by 20+ banks over the past year. Ndgit’s API platform won the CEE Fintech Challenge in 2018, the biggest fintech conference in the Central and Eastern European region.

In October, ngdit forged a partnership with Swiss fintech incubator and accelerator F10. The following month, the company collaborated with Synpulse to launch Switzerland’s first fintech app marketplace. Ndgit was awarded the Finance IT Innovation Award in June, along with partners Finstar, Sonect, and neo.

2020’s Fintech Micro Trends

‘Tis the season for every fintech news outlet to cite industry predictions for 2020. And while it’s helpful to know that AI is still the biggest trend since PFM, and that the bank of the future will get ahead by focusing on the customer, sometimes the best way to gauge new trends is to think on a smaller scale.

Examining these micro trends helps keep a finger on the pulse of what’s about to take off in fintech and cuts the noise of the glaringly obvious ideas that dominate headlines. Here’s a look at a few of those trends.

Workplace training and compliance

These types of solutions have two main drivers, new technology and new regulation. Both of these factors continue to move at a fast pace throughout financial services.

Solutions such as Horizn help employers train their employees to use new consumer-facing technology so that they are ready to answer questions from end clients. By using gamification and leaderboards, Horizn encourages employees to increase their knowledge about new tools and offerings. Similarly, Launchfire’s Lemonade is an interactive, game-based simulation approach to workplace learning and helps employees not only learn skills they need to share with their customers but also familiarize themselves with compliance regulations.

This second piece of Launchfire’s offering– the compliance training– is key because it is increasingly evolving. This is due in part to employees expecting a more interactive training experience and partially because new technology is driving regulation to change at an increasingly fast pace. Christina Luttrell, COO of IDology highlighted this in a discussion about Europe’s General Data Protection Regulation (GDPR), which took effect in 2018; and the California Consumer Privacy Act (CCPA), which will begin enforcement on the first of next year.

“According to IDology’s Annual Fraud Report, 28% believe CCPA compliance will be more burdensome than GDPR,” Luttrell said. “If GDPR is an indicator of how CCPA will unfold, then businesses need to consider how criminals can and will exploit subject access requests.” With regard to CCPA specifically, there is a lot at stake for non-compliance. “With consumers being able to sue, the compliance risk is enormous,” Luttrell added.

Debt management

Debt management, specifically student loan assistance platforms, have already started to take off. Players such as, Student Loan Genius, and CommonBond offer workplace benefits that enable employers to contribute to their employees’ student loan debt repayment efforts.

Direct-to-consumer debt repayment apps such as Qoins, which allows users to contribute their spare change from everyday purchases toward their debt, and Changed, which uses the same “spare change” concept but is focused on student loan repayment, are less common.

The coming year will bring even more of these types of solutions, especially as third party applications become more commonplace in financial services.

While there won’t be a huge wave of new players in the debt management space (again, we’re thinking micro trends!), it’s likely that existing players will launch new solutions to help consumers manage not only their student loan debt, but also mortgages and personal loans.

Philanthropic tech

We first saw an emergence of philanthropic fintech around 2012 when Billhighway launched fundraising technology and CafeGive, which has since shuttered, powered multiple financial institutions’ community-focused giving promotions.

Newer examples of philanthropic technology include Betterment’s donation feature and Meniga’s collaboration with the UN that allows users to donate their cash-back rewards to fight climate change. Additionally, Radius (recently acquired by Kabbage) launched its Data for Good campaign to help the company’s employees and customers give back to their communities, and Revolut launched a charitable giving feature. And there are even fintechs devoted entirely to charitable giving, including Place2Give, Sustainably, and Pinkaloo.

Could charitable donations via “feel good fintech” begin to take the place of tax deductible donations – especially in the U.S. – in 2020? Philanthropic fintech is also partially driven by the convenience economy. For example, instead of sitting down to make a yearly donation to their favorite charity, consumers can support the organization on a regular basis through the deduction of their “spare change” on everyday purchases or investments.

FintechOS Locks in $14 Million in Growth Funding

Growth, growth, and more growth is the goal of FintechOS as the company announces receiving a new investment of $14 million (€12.7 million). The open source, digital banking solution provider, which made its Finovate debut last year at FinovateEurope, will use the funding to fuel its expansion to both the U.S. and South East Asia, as well as continue its growth in Europe. The capital will also help the company invest further in the development of more pre-built apps and solutions to enable FIs to offer better experiences for their customers.

“Our disruptive approach is customer, not technology driven,” company co-founder and CEO Teodor Blidarus said. “We created FintechOS to transform the financial industry, empowering banks and insurance companies to act and react faster and to create a smarter, slicker customer experience. As a result, hyper-personalized services and elevated customer experiences are now available almost plug and play.”

The Series A round was led by Earlybird’s Digital East Fund and OTB Ventures. Also participating were existing investors Gapminder Ventures and Launchub. The new funding takes FintechOS’s total capital to $16 million.

FintechOS enables banks and insurance companies to offer personalized, data-driven digital solutions to their customers in weeks rather than months or years. Via cloud SaaS or on-premise deployment, FintechOS offers 150+ integrated data sources out of the box and more than 20 automated financial processes to support AI-enabled functions like KYC, Customer 360, pricing, and risk analytics. Firms can also use FintechOS to access a marketplace of 50+ open source, prebuilt apps for key processes ranging from client onboarding and lending to pensions and wealth management.

“FintechOS’s technology is transformational in its ability to provide true end-to-end digital automation for all services and products that banks and insurance companies offer,” OTB Ventures General Partner Adam Niewinski said. “This new technology is inexpensive and versatile, ultimately enabling massive cost savings and growth stimulators for financial institutions.”

With clients in more than 20 countries and three continents, FinechOS was founded in 2017 and has offices in London, Amsterdam, Vienna, Copenhagen, and Bucharest. The company reported annual recurring revenue growth of 4.5x this year.

Branches still pay off for Canada’s banks even in the app era

In a world reliant on smartphone apps, bank branches may no longer be Main Street mainstays, with red velvet ropes between brass stanchions herding customers to tellers behind wickets.

But they’re still an important part of banking and, in Canada, the two largest lenders are beating their smaller rivals at drawing more and more revenue from physical locations. Royal Bank of Canada and Toronto-Dominion Bank earn C$14 million ($10.6 million) a year from each of their domestic branches, distancing themselves from smaller competitors in the process.

Bank branches are evolving as customers increasingly rely on mobile phones, websites and automated teller machines for routine transactions, with the drudgery of standing in line to cash a paycheck or shift money between accounts largely left to a bygone era.

Canada’s banks have reacted accordingly, shrinking branch sizes, adopting the newest technology and turning once counter-bound tellers into roaming advisers armed with tablets to sell high-margin products and mortgages. That’s paying off: All of the big Canadian banks have posted increases in annual revenue per branch in each of the past three years, and sales have soared substantially from a decade ago.

“We’re growing our investment in innovative formats: university campuses, hospitals, newcomer centers, which is helping us grow our client base,” Royal Bank Chief Financial Officer Rod Bolger said in a phone interview. “As we have ramped up our leading digital and mobile applications, customers and clients still like to come to branches for advice.”

Royal Bank is Canada’s leader, with 1,201 branches across the country — four more than a decade ago, even with the addition of digital-banking options during that period. Annual revenue per branch has soared 70% since 2009. Technology has allowed branch employees to focus on dispensing advice to customers rather than merely handling routine transactions, according to Bolger.

“We continue to free up time for our banking advisers,” he said. “That is helping us to continue to expand our market share, which will then in turn result in higher productivity per branch.”

Rival Toronto-Dominion, meanwhile, has 1,091 branches nationwide, slightly fewer than a decade ago. Like Royal Bank, it has seen a surge in per-branch revenue, with a 66% increase since 2009. The ratio for each of bank was calculated by dividing annual revenue from Canadian personal-and-commercial banking by the number of domestic branches at the end of each fiscal year.

“People have been speculating about the future of branches, but we’ve been very clear in our strategy that branches are important to us — they’re an important contact point for customers who need human advice and human touch,” Toronto-Dominion CFO Riaz Ahmed said. “We continue to see them as a very important part of our strategy.”

Canadian Imperial Bank of Commerce brings in an average of C$10 million in yearly sales, up about 53% from a decade ago, for each of its 1,024 branches.

Customer Conversations
“We continue to improve our advisory capabilities and focus on having conversations with clients to understand their needs and to provide them with products and services that they need,” said CIBC CFO Hratch Panossian. “That has had some positive momentum.”

Canada’s six largest banks operate 5,578 branches domestically, 2.9% fewer than a decade ago. While the decline isn’t as dramatic as was once predicted by those who thought ATMs and mobile banking would spell an end to bricks-and-mortar locations, branches also aren’t keeping pace with population growth.

Canada had 20 branches for every 100,000 adults as of 2018, down from about 25 before the 2008 financial crisis, according to the World Bank. The U.S., in comparison, had about 31 branches per 100,000 adults, down from 35.

Bank of Nova Scotia reduced its domestic network the most, trimming 6.9% of its branches from a decade ago, to 949 today. Those branches generate an average of C$11 million in annual revenue, an amount that has climbed steadily in the past six years.

“Scotiabank has been adding adviser roles to branches,” spokesman Clancy Zeifman said in an email. “We have also been investing in technologies and tools to help our employees be more productive, including removing manual processes so they can spend more time focusing on our customers.”

While branches remain important for Bank of Montreal, CFO Tom Flynn said he expects a gradual decline in both the number of branches and average size amid a push toward digital banking. Canada’s fourth-largest lender has 891 domestic locations, which generate about C$9 million in annual sales on average, a 55% jump from 2009.

Smaller Branches
“We want to be close to people when they’re doing transactions that are bigger and really important to them,” Flynn said. “At the same time, total branch traffic is down, given the digital migration, and in response to that we have been and will continue to take the average square footage of our branch network down.”

National Bank of Canada has the lowest annual revenue per branch, at C$8.2 million for each of its 422 locations, though that’s still 60% higher than a decade ago. The Montreal-based lender, the smallest among Canada’s Big Six banks, may lag behind its larger rivals partly because of its regional focus.

“We are located in the province of Quebec, where people are less in debt — they borrow less,” Jean Dagenais, senior vice president of finance, said in an interview. With property values lower than in other parts of Canada and mortgages smaller as a result, “the volume of loans per branch is lower than a big bank in the Toronto area.”

— Doug Alexander (Bloomberg)

FintechOS raises $14M to fund expansion into Europe, US, Southeast Asia

FintechOS raises $14M to fund expansion into Europe, US, Southeast Asia

FintechOS co-founders CFO Sergiu Negut and CEO Teo Blidarus.

FintechOS said it raised $14 million (GBP 10.7) in Series A funding led by Earlybird’s Digital East Fund and OTB Ventures to expand its digital banking technology into new markets, including continental Europe, Southeast Asia and the U.S. 

Existing investors Gapminder and Launchup are also participating in the funding round. 

The company provides banks and insurance companies the ability to provide digital products, like risk analytics, know-your-customer authentication and other products that can be implemented within a few months rather than years. The firm also offers open source apps for lending, saving, insurance, customer onboarding and other functions. 

“FintechOS is a pioneer in a booming market, with a vision to transform the way financial institutions react to market and regulatory changes,” Dan Lupu, partner at Earlybird, said in a company release from FintechOS. 

Cover image: FintechOS.

Topics: Mobile Banking, Region: APAC, Region: EMEA, Technology Providers, Venture Capital

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Mastercard buys stake in Doconomy, extends collaboration on carbon footprint tracking

Mastercard buys stake in Doconomy, extends collaboration on carbon footprint tracking

Mastercard said it has taken an equity investment in startup fintech Doconomy AB, and the companies are extending a joint effort to combat climate change by allowing Mastercard issuers to offer cardholders the ability to track their carbon footprint based on purchases they make with the card. 

Mastercard said the first bank in the U.S. and Nordea in the Nordics will join the Bank of Aland in allowing clients to track their carbon footprint through the Aland Index, which is a cloud-based software service that tracks CO2 emissions created by individual transactions. 

“Addressing climate change is bigger than any one company,” Mark Barnett, divisional president for U.K., Ireland, Nordic and Baltics at Mastercard, said in a company release. “This is an important next step to continue progress and move from promise to action.”

Barnett said that Mastercard has made a commitment to manage its own impacts using science-based targets and renewable energy and now is working to help accelerate actions that cardholders can take. 

Mastercard and Doconomy originally announced a collaboration in February to launch a mobile banking service that lets users track their carbon footprint. 

Cover image: Mastercard.

Topics: Card Brands, Mergers & Acquisitions, Mobile Apps, Mobile Banking, Venture Capital

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Brex launches marketing portal for ecommerce clients

Brex launches marketing portal for ecommerce clients

Brex, a fintech that helps e-commerce firms scale, announced the launch of a partner agency portal that will allow client firms access to extensive marketing services. 

Client firms will have access to a range of services, including paid advertising, social media, branding, SEO and other services from partner agencies, including Agency Within, Absolute Web Services, Ikonifi, MuteSix, Hawke Media and Metacake. 

“Our directory is designed to help our customers find the best agency partners to build our brands and scale their businesses,” Max Segall, partnerships and rewards at Brex, told Mobile Payments Today via email. “Brex’s directory connects our customers with the most relevant partners based on their specific needs and then provides them with access to exclusive partner offers and a curated list of agencies that have experience working with Brex.”

Brex has attracted major e-commerce companies since launching in February, including The Black Tux, Perfect Keto, Outdoor Voices and Untuckit. 

Brex previously launched a portal to provide companies with third-party accounting services. 

Cover image: Brex.

Topics: Mobile Apps, Mobile Marketing, Mobile Payments

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Bitcoin transactions at 'Lightning' speed

Stuck with a lot of change in your pocket? You can use it to buy bitcoin — not a lot, just tiny fractions of it. 

A bitcoin aficionado who goes by the moniker “21isenough” has created a prototype for a Lightning ATM. The rudimentary contraption allows you to send tiny amounts of bitcoin over the Internet via the Lightning Network, a second-layer protocol that works on top of the bitcoin blockchain. The Lighting Network was designed specifically for instant, micro transactions of bitcoin 

Speaking to ATM Marketplace on the phone from Lisbon, 21isenough said his machine will allow you to buy a unit of bitcoin as small as a single satoshi — worth one hundred millionth of a single bitcoin — for a few pennies. His invention, which initially caused a stir at the Baltic Honeybadger conference in September in Latvia, accepts six different types of coins. 

21isenough said he came up with the idea for a crypto ATM that takes coins when he was at the Breaking Bitcoin conference in Amsterdam over the summer. It would be neat to buy bitcoin with spare change, he thought, and the Lightning Network fit the bill. 

“I thought it would be kind of an interesting and also quite a tangible way of introducing people to bitcoin,” he said. 

Lightning ATMs are rare, almost nonexistent, he said. The first Lightning ATM was introduced by bitcoin developer Felix Weiss in March in Hong Kong. Weiss used a modified bitcoin kiosk developed by General Bytes.  

How it works

21isenough described how his machine works. He also posted a video on Twitter.

You insert as many coins as you like into the coin receptor. When you are done, you push a button to initiate the exchange process. You then open a Lightning wallet on your mobile phone, generate a QR code and place it near the device’s camera for scanning. The Lighting ATM then converts your coins into satoshis (the smallest unit of bitcoin) and sends them to your wallet. The entire process takes less than a minute, he said. 

21isenough said he wasn’t quite sure what to do with his invention yet, whether to mass produce it or simply create a kit and sell that to other tinkerers like himself. 

In the meantime, he has uploaded a parts list and code to his GitHub page for those who would like to recreate his Lightning ATM, with the caveat that it is still under development. He is also working on a tutorial that shows how to assemble the machine but wants to perfect the product a little more before publishing it. 

“From the hardware perspective, it’s pretty finished, but there is quite a bit of things that need to be implemented into the software,” he said.

For those who want to build their own Lightning ATM, parts cost $50-$70 and include a Raspberry Pi Zero WH, a 16 GB SD card, a PaPiRus Zero ePaper/eInk screen and a Raspberry Pi Zero Camera. It also includes a coin acceptor (616), a push button, a bunch of cables and a power supply. Behind the scenes, the setup makes use of the open-source crypto payment processor Btcpay Server and Lightning Network Daemon to pay invoices via an API.

Why Lightning?

One of the problems with bitcoin is that you can’t actually use it to buy anything. There is virtually no merchant adoption, which makes it difficult to use the popular crypto as an actual form of money. You can’t easily do things like buy a cup of coffee, for instance, because it can take up to 10 minutes for a transaction to go through and the cost of sending fractions of a bitcoin can also be prohibitively expensive. 

Lightning Network was created as a way to solve all of that. In theory, it allows you to send tiny amounts of bitcoin instantaneously, at low cost. However, critics claim the off-chain solution is riddled with problems.

21isenough agrees that the Lightning Network has a ways to go before it fulfills its promise. “The network has to grow; there is a lot of quirks,” he said.

Still, he hopes his contraption will help people learn more about crypto. “I would love to see them built all around the world for people who want to introduce others to bitcoin,” he said. 

Update: An earlier version of this story said that one satoshi is worth 1 millionth of a bitcoin. It actually represents a one hundred millionth of a single bitcoin.

Images proved by 21isenough.

Jimmy John's debuts Freaky Fast Rewards program

Jimmy John’s is launching its first-ever customer loyalty program, called Freaky Fast Rewards, offering members a free 8-inch sandwich after the first order.

The nationwide program, which went into testing in March, is being rolled out across the country with 1.8 million members already signed on, according to a press release.

“At Jimmy John’s, we have amazing customers, and we’re committed to rewarding them for their loyalty,” CMO John Shea said in the release. “Freaky Fast Rewards is a best-in-class program that makes earning rewards fast and easy.”

The program is designed to ensure a frictionless customer experience from sign-up through earning, redemption, and payment and features one-tap technology integrated into the store experience, so members can use Apple Pay or Google Pay to earn and pay. Freaky Fast Reward is fully integrated into and the Jimmy John’s mobile app, according to the release.

Statistics, since the pilot launch, include:
•    1,724,623 total rewards redeemed.
•    50,000 free Little John sandwiches to support October’s national product launch.
•    268,893 birthdays celebrated with a free sandwich.
•    24,881 sandwiches given away on 11/3, National Sandwich Day.
•    18,512 pickles given away on 11/14, National Pickle Day.
•    100,925 free sides earned on 12/2, Cyber Monday.

Topics: Loyalty Programs, Mobile Apps, Mobile Payments, Restaurants

Companies: Jimmy John’s Franchisor SPV, LLC

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Fifth Third Bank recovers from system outage Friday

Fifth Third Bank recovers from system outage Friday

Photo: iStock

Fifth Third Bank spent the weekend recovering from a network outage that caused banking issues on Friday.

The network was back up and running Friday night, but for several hours during the day, thousands of customers were unable to access their accounts online or pay for gas, food and other items using their debit cards due to problems with the bank’s computer systems. 

The issues also caused disruptions for customers trying to use ATMs, according to a report in USA Today. 

At 1:35 p.m. eastern time on Friday, the bank tweeted: “We are experiencing an issue with our network. We are working as quickly as possible to restore service for our affected customers, and we apologize for the inconvenience.” 

In a later tweet, the bank said that the issues were being gradually restored.  

Customers voiced their complaints on Twitter. 

“Car in shop. Need to get to work. Try to get an Uber only to have my card declined. Try to call customer service. Number doesn’t work. Try to call fifth third branch and that doesn’t work either. I can’t afford to miss work,” one customer tweeted Friday.  

“It’s literally my only day off to get things done and I have no gas. I can’t do anything and I work 16 hours tomorrow,” another said in a tweet

Fifth Third Bank is based in Cincinnati, Ohio.

Topics: ATMs, Mobile Banking, Mobile Payments, Security

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Operational resilience: a new approach to managing cyber, tech and sourcing risk

The financial services sector has often led the way in shaping thinking about how to manage risk. In the UK its latest focus, thanks to the Financial Conduct Authority, Prudential Regulation Authority and Bank of England, is operational resilience. This concept is one that anyone in, or interacting with anyone in, the financial services sector needs to know about.

What is Operational Resilience?

Part and parcel of crisis planning

In days that are long gone, the focus was mainly on trying to prevent cyber attacks, data breaches, and system, process and third party service failures. Nowadays, most people accept that these types of events are bound to happen. Crisis plans and teams are now in place across many organisations, primed and ready to respond to all kinds of risk scenarios.

However, in many cases, approaches still focus on the risk relating to individual systems, processes or events. Stakeholders are incentivised to look after only what is within “their” areas, and the potential impact of events on customers, suppliers, the wider market and other third parties is too often left to be determined at the point of crisis, rather than beforehand.

Shaking things up

Operational resilience shakes things up. It requires financial services firms to take a more holistic, clearly-evidenced, outcomes-focused approach to making themselves ready to “resist and respond” to disruption to their operations. The way in which they judge disruption needs to be set by reference to clear impact tolerances i.e. the point at which the disruption to each of the firms’ services to their customers and the wider market becomes intolerable.

Protecting continuity of services – a cultural change

The focus is on protecting the continuity of the services that firms deliver to customers and others (known as “business services”), i.e. thinking about “business service outage”, not just “system outage”; thinking about the “end-to-end business service”, not just the “end-to-end system or process or outsourced service”.

For many organisations, this will require significant cultural change and the bringing together of previously siloed parts of the business to speak a common new language.

Consultation papers on Operational Resilience

Regulatory proposals
A few days ago, in their long-awaited package of papers proposing new rules and guidance on operational resilience, the UK financial services regulators proposed key activities to improve operational resilience. For regulated firms, these may become rules; for others, they may become a new benchmark of good practice.

  1. Governance. Clearly articulate governance and responsibility for operational resilience (for many regulated firms, this will be done as part of their Senior Managers and Certification Regime framework).
  2. Business services. Identify your important business services at a sufficiently granular level.
  3. Mapping. Identify and document the people, processes, technology, facilities and information necessary to deliver each important business service.The purpose of this mapping is to identify and remedy vulnerabilities and enable effective scenario testing. This is much easier said than done.
  4. Impact tolerances. Assume disruption will happen and set a disruption tolerance level for each important business service. Impact tolerances should generally be set at the first point at which a disruption would cause an intolerable level of harm to, for example, customers or market integrity. It will be crucial to be SMART about how impact tolerances are set and monitored. 
  5. Scenario testing. Carry out regular tests of your ability to remain within impact tolerances. Scenarios should be severe but plausible, and lessons should be learned. Any existing crisis plans will need to be reviewed and tested regularly to ensure that they remain adequate.
  6. Communications. Implement “fast and effective” communications strategies for internal and external communications.
  7. Document, document, document. Among other things, prepare and regularly update self-assessments to evidence compliance with operational resilience rules. These self-assessments must be reviewed and approved at board level regularly and could be requested by the regulators at any time.
What happens next?

The regulators are inviting feedback on their proposals until 3 April 2020. They aim to finalise their rules by the end of next year and for most of them to take effect in late 2021 although full compliance is not expected until 2024.

In order to properly understand the impact of the proposed rules, firms will need to have a proper handle on what operational resilience means for them. As well as requiring input from internal stakeholders across a very broad spectrum, they may also need to seek feedback from third parties, including those within their supply chain or on whom they will rely to assist with the implementation of operational resilience programmes or in the event of a crisis.

Even in the short term, regulators’ keen focus on the proper management of third-party services is likely to increase. This makes it crucial for teams to be seen to be undertaking proper vendor assessment, selection and management, as well as ensuring that any in-house functions responsible for procurement, assessment, strategic integration and management of third-party services are adequately resourced, experienced and performing. As always, it will be important to ensure that appropriate diligence has been carried out – and continues to be carried out throughout the procurement lifecycle – on vendors, and that appropriate contractual protections are not just in place, but also tested and used in practice. This will be particularly challenging against a background of increased cloud-usage and the drive for innovation and automation.

What Happens in Vegas… An Exclusive Finastra Interview at Money 20/20 USA

Christophe Langlois interviews Eli Rosner, Chief Product and Technology Officer of Finastra at Money 20/20 USA in Las Vegas

A throwback to the much-anticipated MONEY 20/20 USA in October this year – with a focus on the fundamental changes in the way the world uses, spends, borrows and moves money. This year’s Money20/20 USA held at The Venetian Hotel, entertained more than 450 speakers attend and more than 4,000 meetings took place – a record in the event’s eight-year history.

Major fintech player Finastra, formed in 2017 by the combination of Misys and D+H, was a sponsor and exhibitor at the event. And, during the conference, we caught up with Eli Rosner – its Chief Product and Technology Officer.

Finastra builds and deploys innovative, next-generation technology on open Fusion software architecture and cloud ecosystem. In May, it launched, which brings together banks, Fintechs and SMEs onto a single open platform, allowing advanced technologies, such as facial recognition, AI, machine learning and voice interaction apps to be created, deployed and monetised in the same ecosystem.

During our interview, Rosner discussed the strength of the company’s open development platform, machine learning, lending data, as well as the company’s plans to launch products into Europe within the next six months.

Rosner said: “We decided to go to market first and penetrate the market in North America. But the platform is going to go global. I can tell you that within the next few months – under six months – we will have deployed in Europe, specifically in the UK.”

“We do have two challenger banks that have signed up with us that are going to be leveraging the platform and they are both based in the UK. Then, three or four months after that, we will have an instance of the platform deployed in Asia Pacific and MENA so all global customers will have access to the platform.”

Make sure you check out our videos featuring Christian Ruppe, CEO, and Co-Founder of Monotto and Ralph Marcuccilli, CEO of Allied Payment Networks. They are working with #Finastra as an #APP partner.

Watch our full video interview, produced and hosted by our CMO Christophe Langlois.

Finastra video interview here

We also managed to catch up with two of Finastra’s partners:

Video interview with Monotto

Video Interview Allied Payment Network

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2020 Predictions From SunTec

By Madhur Kumar Jain, Senior Vice President and Global Head of Solution Consulting, SunTec Business Solutions

Customers today expect the same experience and convenience that they are able to get online from any marketplace to be delivered from a bank too.

They want to plan, compare, assess and then only purchase what is a hyper-personalized offering for them, rather than take up any standardized product or service from the bank. With Open Banking and an API driven ecosystem, this is slowly becoming feasible and the banks are increasingly collaborating with fintechs, independent developers and non-financial lifestyle institutions like restaurants, retail outlets, etc. to make the move towards making BaaS a reality, sooner than later. 

The risk/opportunity with the entry of BigTechs: The strategic focus on customer experience has largely been driven by the pressure banks have experienced this year from the BigTech companies such as Google, Amazon, Facebook and Apple muscling their way into financial services and muddling the boundaries between industries. In order to truly compete with BigTech companies, banks need to transition from being a service provider to truly owning the customer value chain experience; offering empathetic banking by humanizing the banking experience. 

On the other side, there is also an opportunity to work together and collaborate to take advantage of each other’s strengths rather than just compete. The fact that consumers’ trust the banks to handle their financial data, their ubiquitous presence and industry expertise provides a good opportunity to collaborate with BigTechs which have expertise in handling big data, AI, analytics and building customer centricity.

Regulations set to become more prominent: Open Banking, as well as entry of Fintechs and BigTechs has paved the way for the industry to own customer journeys by providing best in class customer experience rather than simply selling some random products or services. But what we have seen is that the advent of these technology transformations has increasingly put highly confidential customer data and privacy at risk.  In fact, with news about many high-profile data breaches the role that regulators have to play has become so significant and interestingly, they are quite involved too.

The recent scrutiny of Facebook’s plan for launching Libra is a good example of how regulators across the world has a huge influence on the financial markets. It is remarkable to see how law makers have come together to ensure that as long as the digital currencies are not able to address key risks around data protection, financial security, money-laundering , investor protection etc., there is no way it will see the light of the day.

Regulations could vary depending on the maturity of the financial services industry in the region, but in general, the role that regulators play can never be ignored and could turn out to be the Joker in the pack, that can alter the way financial services will look in the future.

Increasing use of AI and Data Analytics: Although it will be take time for AI to be seamless enough to totally replace human customer service, today AI is increasingly used in customer facing areas like Chatbots, as well as back and middle office processes like underwriting, data processing and anti-money laundering. One key area that we feel will definitely will grow is Natural Language Processing, that can help utilize deep learning algorithms to understand language and generate responses in a more natural way.

With the Increasing use of RPA, AI & ML in financial institutions, another fascinating thing to note is the huge amount of customer interaction data that is being made available to these banks. But how do they make sense out of them and respond in real time?  This requires putting their existing data in order with big data analytics and an insights engine that could even identify and incorporate new sources of third-party information that could help, such as geographic and socioeconomic data as well. The result is an extremely personalized one to one relationship with the customer.

Increased focus on cost management: With Challenger banks, fintechs and BigTechs leading the disruption drive, there is no looking back for the industry or the consumer. They are innovating continuously, putting pressure on the large banks to see how they can meet the agility, create new offerings and reduce time to market to stay relevant as well as adopt AI/ML and other data/technology driven initiatives.  This pressure has actually made them look inward, especially where they are struggling to meet profitability targets, keep margins as well as not being boggled down by the legacy IT systems.

Across the board, we are finding that the banks we are working with are focusing on increasing margins by plugging revenue leakages, building partnerships and adopting a phase-wise, low risk digital transformation approach, which is seen to be more preferred over an abrupt rip and replace of the core systems to meet the market pressure and stay profitable at the same time. 

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How innovative can Goldman Sachs be with its planned robo-advisor?

Maybe Goldman Sachs leads the way so that Digital Advice reaches the $1.26 trillion projected by 2023.

The large players are moving down-market, slowly and steadily. Goldman Sachs moved Marcus into their asset management division last year and has just announced that they will launch a robo-advisor with a $5k minimum next year. They acquired early on, Honest Dollar for digital retirement savings and Clarity Money, a PFM app. Both are mobile offerings.

Goldman at a high-level glance


Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.

The details of their planned robo-offering are not known yet and Goldman`s offering with the masses is a work in progress.

 Will Goldman develop a first-class Mobile digital advice app?

 Now that would be a great First in the US market. My intuition tells me that Goldman Sachs will integrate its existing partnerships, like the one with Motif, into this offering and use its existing brand name to build a pipeline of new customers. The partnership with Motif (established earlier this year) aims to launch innovative ETF products and indices based on machine learning and artificial intelligence.

  • Goldman Sachs Motif Data Driven World ETF (GDAT)
  • Goldman Sachs Motif Finance Reimagined ETF (GFIN)
  • Goldman Sachs Motif Human Evolution ETF (GDNA)
  • Goldman Sachs Motif Manufacturing Revolution ETF (GMAN)
  • Goldman Sachs Motif New Age Consumer ETF (GBUY)

Goldman and the newly acquired network of United Capital, are a great launchpad for the upcoming GS down market offering. Imagine it is Christmas next year and your mass affluent dad, aunt, or older friend already banking with GS and or UC, offer you a new investment account at GS which you can be fund with only $5k. Goldman remains a very sticky brand name that is envied by many in the market, and it will become accessible to the masses. The second trick up GS`s sleeve is that their product offering is not only the basic, mass-produced ETFs only but the innovative, in-house branded forward-looking ETFs too.

Smart products via a low-cost offering, by a top brand name provider. And if GS`s offering is mobile-first, then it has a great chance to leapfrog the existing pack.


Tinkoff Launches Super App, Integrating Finance, Leisure, and Lifestyle

Neither a bird, nor a plane … the latest offering from Russian digital bank Tinkoff is its new “super app” – launched his week – which offers functionality to support and enhance the users’ personal financial, leisure, and lifestyle needs.

“The Tinkoff app has evolved into more than a traditional mobile bank, and the latest changes are the culmination of this transformation,” said Tinkoff SVP Arten Yakanov. “The super-app is both our own version of the App Store, with its own mini-app, and the first WeChat-like app in the Russian or any other European financial market, featuring products and services from our partners.”

The app is currently in beta, and will be available “shortly” in version 5.0 for iOS, with an Android version to follow. The technology currently features Tinkoff digital banking and lifestyle services (movies, concerts, restaurants, travel, commerce, sporting events, etc.), and integration with the complete Tinkoff ecosystem of investment, business banking, and insurance services. Users of the app will also benefit from end-to-end integration with Oleg, Tinkoff’s voice assistant.

In a statement, Tinkoff signaled a number of features to be added to the super app, including more retail experiences, food and flower delivery, car sharing, as well as fitness and wellness services. The bank said it has agreements with a number of industry partners to offer customers discounts and cashback via the app.

“Unlike other Russian ecosystems, we decided to blaze a trail of our own,” Yamanov added. “Instead of scooping up businesses, we opted for a win-win solution, attracting the market’s best partners who share Tinkoff’s qualities and values.” Yamanov said one goal would be to expand these partnerships, working with businesses “from Instagram bloggers to Russia’s largest B2C companies.”

Named one of the world’s leading digital banks, Tinkoff demonstrated Stories for Mobile Banking at FinovateEurope 2018. Headquartered in Moscow, Russia, and founded in 2008, the digital bank has more than seven million customers and has been listed on the London Stock Exchange since 2013.

Bank Innovation Ignite to focus on digital customer journey

The business of banking is reaching a critical inflection point as ‘challengers’ take market share and incumbents implement strategies to accelerate their digital transformation efforts to enhance customer journeys.

Bank Innovation Ignite, which will take place on March 2-3 at the Grand Hyatt in Seattle, is an invitation-only practitioners’ retreat that will explore the evolution of the industry over the next five to ten years. While Bank Innovation Build, our most recent event, focused on internal best practices financial services organizations should adopt to drive innovation, Ignite will look at how external technologies and emerging tools from outside of the traditional ecosystem will help institutions evolve.

The industry’s transition from physical stores of value to data-driven digital vaults is adding pressure on incumbents to reinvent their business models. Indeed, ‘innovate or die’ is a harsh reality many institutions face, while a growing constituency sees partnerships as the path forward.

The imperative to develop new ways of working, aided by technology with the right balance of human intervention, is top of mind when considering paths forward. A recent McKinsey study positioned banks in four stages of development: market leaders; resilients; followers and challenged institutions. For the challenged, it advises they can increase their share of wallet by extending their offerings beyond traditional banking products, a classic “ecosystem play” taking a page from startup playbooks.

Participants at Bank Innovation Ignite will have exclusive opportunities to talk to industry experts and brainstorm on how to leverage emerging technologies. We will review case studies and learn about what the future customer experience will look like. Participants will delve into the roles data and AI play on the march towards automation and embedded financial services. Meanwhile, the evolution of the business banking segment, a burgeoning area of interest among startups and big banks and the role of technology in moving innovation forward, will be a prominent topic of discussion throughout.

A selection of carefully curated startup demos will give participants direct exposure to forward-looking companies that seek to partner with incumbents to address evolving problems in the fintech space and enable financial institutions to further their innovation capabilities.

Ignite is not a large event with surface-level panels and pre-cooked speeches. It will be an intimate opportunity designed to stimulate discussion among a select group of senior industry leaders, from both startup and incumbent perspectives. Speakers on the agenda include Anupam Sinha, managing director and global head of domestic payments and receivables at Citibank; Eyal Lifshitz, CEO of BlueVine; Rick Winslow, chief experience officer at Kabbage; Stephanie Reiley, director of product at BBVA-owned Simple Finance; Anu Shultes, CEO of LendUp and Matt Oppenheimer, CEO of Remitly.

At Ignite, we will identify and share best practices and ideas as the industry charts the next chapter of its development. Join us to explore the next set of opportunities new technologies will bring to the future of banking.

Request your invitation here.

Capture-as-a-Service Specialist Ephesoft Partners with Malaysia’s Alliance Bank

Small and medium-sized businesses in Malaysia are the focus of a new partnership between enterprise content capture and data discovery solution provider Ephesoft and Alliance Bank Malaysia Berhad. The pact, announced today, heralds the integration of Ephesoft’s intelligent capture automation technology, Transact, into Alliance Bank’s middle office operations.

Alliance Bank Group CEO Joel Kornreich praised the way Ephesoft’s technology helps it manage the high volume of high-value documents it deals with every day. “Ephesoft is able to meet our requirements and is versatile to scale with us as we continue to transform our business processes to deliver faster, simpler, and more responsive customer experience to our clients,” he said.

Kornreich added that the technology will also enable Alliance Bank to better defend itself and its customers against fraudulent activity. “We also use the information (from customer transactions) to perform financial casting to understand our customers better, and due diligence in assessing customers,” he explained.

Ephesoft Transact enables businesses to accurately and quickly convert unstructured data in documents into actionable information. The technology leverages human-supervised machine learning to examine documents ranging from mortgage applications to insurance claims and to extract required data from them.

Transact improves in efficiency over time, becoming more “intelligent” with every correction, new layout, or new document type. The solution is available as both an on-premise option, running on Windows, Ubuntu, CentOS, and Red Hat servers, as well as via the cloud courtesy of Ephesoft’s Cloud HyperExtender add-in.

“Ephesoft’s machine learning-powered software enables Alliance Bank employees to accelerate tedious processes and use their time to bring value to the organization in strategic ways that provide a competitive advantage,” company founder and CEO Ike Kavas said.

The company’s partnership news comes one month after it announced a collaboration with Thailand-based insurance company, Tokio Marine Asia. The month before, Ephesoft unveiled a pact with automation-driven, IT, BPO, and consulting service provider Hexaware. The company will combine Ephesoft’s intelligent data capture technology with Hexaware’s own robotic process automation-based solutions to enhance a wide variety of business processes.

“Many organizations suffer from having a tremendous amount of untouched, unstructured data that they either don’t use or must manually process,” Kavas said when the Hexaware partnership was announced. “We solve those challenges so that companies can be nimble, efficient, and accurate using modern tactics.”

Founded in 2010 and headquartered in Irvine, California, Ephesoft demonstrated its Capture-as-a-Service platform for smart document capture at FinovateSpring 2018. With customers in more than 50 countries, and partnerships with 250+ fintechs, integrators, solution partners, and resellers, the company has raised $15 million in funding from investors including Mercato Partners.