FinovateEurope 2022: Where to Next on the Financial Services Digital Journey?

April 11, 2022
  • Investor Services
With new technologies accelerating financial services’ digital transformation, BBH’s Cameron Jack and Janet Du Chenne attended FinovateEurope and report on the fundamental changes since the pandemic and evaluate the roles of incumbents and fintechs in setting the future direction of travel.

For the first time since the pandemic, FinovateEurope convened in London’s Greenwich Peninsula from 22-23 March 2022 amid a deluge of change. Since the last in-person conference in 2019, new technologies have accelerated the transformation of financial services as remote working and lockdowns forced firms to digitize many manual, paper-based services and customer interactions. While they have upended traditional financial services and changed the rules of the game for incumbents and fintechs, conference attendees heard that “the fun part” of the journey lies ahead.

With a swathe of regulatory and technological change expected in 2022, it appears that the financial services journey is only at the nadir of innovation. Using the momentum of change seen in the last two years, this year’s FinovateEurope highlighted the biggest technology trends driving transformation and why things are different now.

The event, which brought together banks, asset managers, wealth managers and fintechs, highlighted that there is still a long way to go to the incumbents’ digital evolution. Following their analogue beginnings, banks then digitized by taking paper out of certain processes. Digital banking is where the next opportunity can be found. The music industry has led the way, first by digitizing music and bundling it onto platforms such as Spotify and then introducing digital models that put the entire entertainment experience in the hands (or ears) of the listener. In banking, we’ve moved from paper to statements on a website or a mobile phone, but full digital adoption is still nascent.

Thankfully, said Finovate’s Greg Palmer in his opening address, there’s an opportunity given that the pre-pandemic problems⁠—individuals and populations without access to common financial services and inefficient processes for customers—haven’t disappeared. Conferences such as Sibos 2019 highlighted these problems and how the industry was addressing them through digitalisation. “It wasn’t perfect, but we have an opportunity now customers and banks are willing to embrace new digital solutions. We can now look back and put solutions in place on a scale and on a level that we could never have dreamed of before”.

Today it’s about more than just digitizing, said one fintech representative. “It’s about the shift from analogue to commoditized digitized to purely digital which is a personalized one-to-one experience. For example, the ability to instantly move money from a savings to a current account when running into overdraft, without human intervention.”

Toward a Digital Horizon

Another example of digital solutions are algorithms that empower customers with a “private-banker-in-your-pocket, where they can act instantly and invest. That’s where we see the landscape fundamentally shifting”. The fintech representative added that to achieve this customer-centric innovation, fintechs and incumbents should move in the same direction of travel as their digital native customers. “The threats to financial services are greater than ever but the opportunity to add value through collaboration is also great.”

So digital is no longer just a channel it’s just a way of doing business, delegates heard. Fundamentally, that requires new rules and expectations because customers have very different expectations of what their providers will be able to deliver. For traditional incumbents it requires collaboration because as one speaker said: “If there’s a problem there’s a chance that a fintech is trying to solve it, so if you’re an incumbent, are you ready to work with them.”

Cases for Collaboration

The event showcased several demos highlighting how new technologies are bringing financial services participants together, co-creating to solve single problems for end clients.

Solving client problems - FinovateEurope Demos

Seamless end-to-end query handlingTeamViewer Engage’s chatbot (or query agent) deals with simple queries from financial institutions’ customers and forwards more advanced queries to Subject Matter Experts (SMEs). They automatically equip those SMEs with the context of the query, instead of just taking a note and subsequently informing the sales team. If those SMEs are unavailable to answer immediately, customers have a direct view of their calendars to book a time to speak with them.

Generating savings on receivables management New technology from white-labelled e-invoicing solution provider enables banks to generate a request-to-pay instruction simultaneously with an invoice. It connects enterprises with their banks via an API on the customer side and is agnostic to whether the customer uses a tailor-made solution or an online invoicing product. E-invoicing together with request-to-pay creates savings on receivables management for the banking customer, presenting an opportunity to change the face of transaction banking.

The challenge of maintaining a separate business persona for business conversationsLeapXpert’s federated messaging orchestration platform for enterprises makes data from instant messaging apps visible. The solution provides businesses with a comprehensive view and full visibility of employee-customer communication without capturing employees’ private and personal messages. They’re now able to manage business communication – messages, documents, images, or videos sent to customers – keeping everyone safe, professional, and compliant.
Providing investment signals to investorsFintech company SESAMm applies big data and artificial intelligence (AI) to provide investment signals to investors.  
Freeing enterprises from the constraints of legacy technologies Unqork’s no-code enterprise-wide application development platform enables innovation and increased business agility, freeing enterprises from the constraints of legacy technologies.
Collecting and detecting anomalies and business incidents in real-timeAnodot’s business monitoring tool uses AI analytics that can analyze 100% of the data a business collects, detect anomalies and business incidents in real-time and identify their root cause, enabling them to remedy problems faster and capture opportunities sooner.
Identity verificationIdentity verification technology from Trulioo compares identity data against independent data sources. It runs document checks, deploys dynamic routing to increase pass rates and user authentication with selfies. It also verifies business details and owners, and obtains official company documents.
Combining siloed data in enterprises for real-time analysis and decision-makingAI enables enterprises to integrate transactional, operational, and historical data into a single platform. Hazelcast has a real-time streaming and memory-first application platform for fast, stateful, data-intensive workloads on-premises, at the edge or as a fully managed cloud service. It connects all the relevant data sources needed for these compute-intensive jobs, enabling optimal real-time decisions thanks to a low-latency, distributed memory architecture allowing users to analyze a comprehensive set of information to take the best action, without simply adding more of the same components to their infrastructure.
Managing exceptions as data management and reporting become a regulatory imperativeFinancial transaction lifecycle management solutions provider SmartStream’s cloud-native AI data reconciliations solution provides increased automation of exceptions management in the cloud. It validates the integrity across a huge number of fields, particularly for reference data, regulatory and intersystem reconciliations. It also simplifies the reporting process with higher levels of automation for attribute-by-attribute matching. It supports limitless data types as data management and regulatory reporting become ever more relevant for a number of provisions under the Markets in Financial Instruments Directive II and the Markets in Financial Instruments Regulation.

Five Lessons from Wealth Management

Just as in banking, the pandemic moved technology in wealth management along quickly too. Today leading wealth managers offer customers end-to-end services on a mobile app where they can receive instant investment advice and buy shares at that point.

A panel of wealth management experts noted five key trends in the wealth tech space:

  1. Using technology to build better portfolios, instead of just manually picking the best funds, putting them into a portfolio and expecting them to perform
  2. Reaching more clients through robo advice and digitalization of investing
  3. Scaling advice for advisors so that they can cover 1,000 clients versus 100 clients
  4. Targeting efficiencies in custody, administration and trading
  5. Using data and AI to produce better user interfaces and apps that enable clients to connect every aspect of their financial affairs with a bank or investment company’s offerings

Managers can heed lessons from the banks in learning to deal with disruptions in the innovation space. One asset manager remarked that “it’s about looking at what is coming down the pipe that makes people's relationship with your organization seamless, and almost without thinking makes them want to engage with you. Industries such as travel, music and shopping have evolved in a way that they’re now apps on our phones just sitting in our pockets—we’re always thinking about them. The same has happened in banking and many banks now integrate the same features such as cancelling your card if you’ve lost your wallet.”

The panel explored what initiatives managers should explore to make customers’ interaction with their technology more seamless. A fintech representative said this needs a hybrid approach of people and technology: letting the technology do the things it’s good at and the people do the things they’re good at, which is the relationship management. Digital can be used to acquire those relationships too, for example a U.K. bank uses Zoom for new investors who like the personal touch, while more digital savvy customers can use the apps.

Getting to that level of innovation for customers requires an end-to-end digital experience, said one panellist. “You achieve that by collaborating with fintechs and the different players for a best of breed scenario where people look to create an ecosystem first and then innovate through open API's, etc. In one sense, incumbent players compete with fintechs and in another they co-operate with them.” He provided the example of Moonfare, the technology platform that connects with the best opportunities available among the large private markets managers and enables individuals and their advisors to invest in top-tier private equity funds (the platform has more than 25000 active users).

Managers should understand that customers are putting their entire financial services lives into one place, rather than having 16 apps or a spreadsheet. “It’s about having that financial services hub, and wealth managers will get disintermediated quite aggressively from the client if they do not allow for more holistic services,” said the asset manager. “This includes a platform that allows a direct-to-consumer platform for users to manage their families’ investments. They want to do this themselves and wealth managers have to understand and embrace open finance.”

Financial Services in Five Years’ Time

The panel concluded that these examples of open finance, using APIs that enable third-party developers to build applications and services around the financial institution, will be the game changer that will enable the private sector to solve for many client problems such as those highlighted in this article. One panellist remarked that “we’re not going to have to wait for public-driven initiatives such as the Pensions Dashboard1 – I think that’s going to be solved for privately. The pandemic is tragic and has been difficult for so many people, but one of the few silver linings is that it moved the technology within Wealth Management forward by probably seven or eight years. And I think open finance and the idea of personal financial hardware, software and data is fast becoming a reality.”

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