Meeting the start-ups that bring new solutions to the industry
This year’s Money 20/20 held at Las Vegas, USA showcased a number of start-ups that offer new technologies and solutions as well as brought together professionals who discussed the future of the banking and finance industry.
- Money 20/20 served as an open platform for both start-ups that offer new technologies and solutions and professionals from the banking and finance industry
- The event allowed stakeholders to see and touch the future, showcasing actual products and use-cases of new technologies
- The Asian Banker spoke to challenger banks and financial technologies to discuss the developments in key areas such as payments, blockchain, artificial intelligence and security
Two of the biggest events in the financial services industry were recently held back-to-back last October – SIBOS 2017 in Toronto and Money 20/20 in Las Vegas – both of which attempted to define the future of banking and finance. However, having attended SIBOS, the banking industry’s largest annual international gathering, and Money 20/20, the world's largest payments and financial services innovation event, revealed a decided difference in perspective between the two. The former obviously tried to put banks and the banking industry in the centre of the future, not at all surprising since it was organised by bank-owned cooperative SWIFT; while the latter created a more open platform for all comers to have their say in that future.
The question is which of the two “future” would come closer to becoming a reality? An acquaintance from an Indian bank described that “at SIBOS, we have been talking about the future of banking for the last couple of years. But this year, it seems that we are talking about actually making the change, implementing the change.” Yet, Money 20/20 allowed its participants to literally see and touch the future. For example, cryptocurrency in Money 20/20 was not a proof-of-concept but instead an actual product that people can use. No wonder that Carlos Torres Vila, chief executive officer of Spanish bank BBVA, was one of the more than 1,700 chief executives who reportedly attended the event.
BBVA is closely watched for how it is working with financial technology companies to transform itself towards the future. It acquired strategic stakes in a number of digital challenger and neo banks such as Simple in the US, Atom in UK, and, most recently, Holvi in Finland. According to Vila, Money 20/20 “was a chance to meet a number of start-ups that bring new solutions to the industry and who are hoping to change the way customers and clients bank in the future.”
The challenger banks from UK and marketplace players
The City of London, a leading global fintech hub, brought 13 of its hottest financial technology (fintech) companies to the event through a trade mission run by its mayor office – a key part of the work it does to promote London’s fintech sector following Brexit as it aims to export or expand into the US market.
The Asian Banker spoke to a number of challenger banks and fintechs who came to get their insights about the event.
Revolut is a digital challenger bank, which recently applied for a banking licence in the European region. The company offers various financial services including a pre-paid debit card, currency exchange, and peer-to-peer payments. It currently charges no fees for the majority of its services, and uses interbank rates for its currency exchange. It recently raised $66 million in Series B funding and is exploring further expansion into the Asian and North American market. They currently have over 700,000 users worldwide. “Revolut is effectively a branchless banking which means every time I do transactions in any country, in any shop, we'll give you the best possible foreign exchange (FX) rates. You are not going to experience friction in any of the transactions. If you want, you can send money globally for free, you can spend money for free as well.” Given the success of Revolut, Stornsku shared that it is planning to share and provide its technology to banks. “We are actually looking into issue fintech as a service product so when everyone can effectively connect into the Revolut platform or through application programming interfaces (API), and build exciting things on top of it,” Nikolay Storonsky, co-founder and CEO of Revolut, explained.
Starling Bank is another UK challenger bank that looks to redefine customers’ banking experience. It launched an app-only current account last April 2017 that has gained thousands of users. It is reported to be raising $40 million in funding, which it would used to expand into business banking and in international markets in Europe and North America. Ben Chisell, its product director, said: “We are building a bank that works for the people and helps them live a healthier financial life. Customer obsession is what we are really focused on in Starling. We spend a lot of time to optimise the experience and making the “banking basics” easier and more efficient for customers. On the business side, I think we want to be the Amazon of banking in the UK. From the business model perspective, we want to allow other financial services partners to offer their products inside our app. In the spirit of trying to provide the best selection for the customers, we are fostering competition among partners to offer the best products. In addition, we have a business-to-business offering – this is our equivalent of Amazon Web Services (AWS). We have started by launching a payments services business for other organisations.”
Yoyo Wallet is the largest multi-retailer mobile wallet in Europe. It provides fast and simple mobile payment solutions combined with an instant personalised loyalty and rewards programme for high street retailers, universities and corporate locations - backed by an easy-to-use analytics and campaign measurement platform. It recently announced a series B fund raising of $15 million. “Our customers are retailers. Yoyo is effectively mobile, and how do you get people to use your mobile app in store? It is not by offering payments only but giving the retailers the opportunity to create loyalty through enabling points and rewards through the app. The payment aspect of our proposition is really not the main product, the main product is a mobile-first marketing platform for retailers. We use the payment transaction through the mobile to create a very different experience particularly in brick-and-mortar retail. We want to automate loyalty and personalise marketing,” Alain Falys, co-founder and CEO of the company, shared.
German online bank and financial solutions provider Fidor Bank that operates as a challenger bank in the UK used the event to launch Fidor FinanceBay – an online marketplace, which connects curated fintech, insurtech and tradetech offerings from its ecosystem to consumers. With Fidor FinanceBay, customers can browse financial and insurance products and use its financial tools in one place. It was initially launched as a beta test to customers in Germany. Fidor is working with design house Eight Inc, in designing the customer experience for the digital financial services marketplace. Matthias Kröner, founder and CEO of Fidor Bank, said: “At the end of the day, the objective is to create maximum value and a holistic experience for our consumers. The sky is the limit. Suppliers can be then fintech companies or incumbent banks who have niche offerings. It is not only restricted to financial products but it can be money-related solutions. What we look closely to is Amazon being a marketplace in different areas. There is nothing now you cannot buy from Amazon.”
Lendio operates an online marketplace that allows business owners to find small business loans. Its platform provides various small business loan options, ranging from short-term specialty financing to long-term low-interest traditional loans, including small business loans, term business loans, short term loans, business line of credit, start-up loans, equipment financing, merchant cash advances, commercial real estate loans, accounts receivable financing, peer to peer lending, and small business loans for women. “It is an interesting time in the market right now as the industry is really maturing. We are starting to identify who are going to be the winners and who are those who are not going to make it. We have had quite a few players in this space – both lenders and platforms – that have gone out of business because they did not have a sustainable business model and could not raise money. I think it is an important time in the industry wherein we are recognising who really has solid unit economics, who can acquire customers, and who can build for the long term,” Brock Blake, Lendio’s CEO, discussed.
The payment disruptors
INTL FCStone serves selected international and domestic financial markets. Its global payments service specialises in transferring funds to the developing world. It provides customised foreign exchange and treasury services to more than 500 customers, including international aid and development organisations, UN agencies, government and non-government organisations, religious entities, multinational corporations, and financial institutions. It offers indicative exchange rates for corporate clients, viewable in real-time for more than 140 currencies through its proprietary Global Payments Network. Carsten Hills, global head of payments of the company, explained that “there are a number of providers in this space, and every provider has a certain niche they are focusing on. We see ourselves more as a provider who does the foreign exchange part and the payments itself so there are two components. We like to do the foreign exchange as well because we can pool the smaller payments together and become an aggregator of payments. And hopefully as an aggregator of these smaller and larger payments together, we can provide a better service level and exchange rate for our clients – make it cheaper for them.”
Xpress Money is one of the fastest growing money transfer brands in the world with a thriving presence across five continents. Established in 1999 in the UK, the brand has spread its geographical presence across 180 countries in over a decade. Working with some of the largest banks and non-banking financial companies, Xpress Money has established one of the largest remittance networks in the industry across 200,000 locations. Sudhesh Giriyan, chief operating officer (COO) of Xpress Money, shared that, “as compared to new age start-ups, I think we have gone a long way in bringing to the table an omnichannel capability that we have built for more than 17 years. We have a peer-to-peer business model, and we move money from one country to another. We look at open banking and API as an opportunity to collaborate. Increasingly we are looking at potential partnerships – be it banks, telcos, online players and fintechs. We are not restricting collaborations.”
MoneyOnMobile is headquartered in Dallas, Texas in the US with primary business operations in Mumbai, India. It is one of the largest mobile payment platforms in India and is authorised by the Reserve Bank of India (RBI) to set up a payment system that enables registered users to buy products and services from registered merchants.”We enable retailers to take digital payments. Consumers come in to those retail touch-points with their cash and convert that into digital transactions. We facilitate that ‘last mile’ infrastructure between the consumers and the banks. And because of the demonetisation that happened last year, we are starting to do more cash-out transactions: consumers who want to get access to their bank accounts and access that in a digital cash format,” Will Dawson, MoneyOnMobile’s COO, discussed.
Geoswift is a payment technology company that connects China to the rest of the world, providing customised one-stop cross-border payment solutions to and from the country. Its customers include some of the world’s leading e-commerce corporations, global universities and travel specialists. It is an acquirer of UnionPay in North America and a long-term partner of many other leading financial institutions. Raymond Qu, founder and CEO, shared, “We all know that China is one of the biggest markets in the world, and there is a huge need for clients to move money to and from China. However, the RMB is still restricted as a currency so that costs a lot of challenges for the international players. Geoswift specialises on cross-border payments especially in the China market. The bank system is designed for one-to-one transaction. However, there are so many transactions of big volumes and small volumes – so we work around this space.”
Blockchains and cryptocurrencies
DASH is an open source peer-to-peer cryptocurrency that aims to be an “on-chain” and scalable cryptocurrency. On top of a bitcoin's feature set, the company currently offers instant and private transactions and operates a self-governing and self-funding model that enables its network to pay individuals and businesses to perform work that adds value to it. Its decentralised governance and budgeting system makes it an autonomous self-governing organisation. It aims to facilitate transactions between consumers and merchants, so transaction times are similar to a credit card authorisation.“There are a lot of challenges in cross-border payments. There are so many different payment channels and corridors, and many different ways of facilitating payments that have advantages and disadvantages. DASH is a digital currency similar to bitcoin but we offer a number of improvements on bitcoin both in terms of how we function as an organisation; as well as the attributes of our currency to address the issues in cross-border payments. We have introduced an explicit governance model. DASH is really borderless. It allows users to facilitate transactions instantly around the globe,” Ryan Taylor, DASH’s CEO, explained
Swarm Fund claims to be a fully decentralised capital market place that democratises investing by using the power of blockchain to open up high-return, alternative investment classes to smaller investors through asset-backed funds using cryptocurrency tokens. It makes traditionally exclusive investment opportunities, such as private equity and hedge funds, inclusive by pooling together smaller investments into larger, institutional-sized blocks. Philipp Pieper, partner and co-founder, said: “We are a blockchain-based platform for doing alternative investments, and at the same time, we are redefining co-ownerships. We are solving core issues for two distinct people. The first group is the crypto-investors themselves. We are reducing the risk profile for them and allowing them to invest in something that is more stable. The second group of people is family offices and retail investors that live outside the US and Europe but want to invest in dollar or euro denominated asset classes. They usually have high degree of hurdles such as money and legal logistics. We can break that down, make it more fragmented, and standardise that using blockchain both on the investor processes and ownership processes.”
The sentinels who keep systems, data and transactions safe
SecuredTouch specialises in behavioural biometrics for mobile-based transactions that delivers continuous authentication to strengthen security and reduce fraud while improving customer digital experience. It collects and analyses a dynamic set of over 100 different behavioural parameters like keyboard-typing, scroll-velocity, touch pressure and finger size to automatically create a unique user behavioural profile. “Behavioural biometrics is a new way to authenticate users in a mobile environment. The idea is to have it with two main benefits that other authentication or fraud solutions are lacking today. The first and most important part is to do everything behind the scenes, in which authentication of users are without any friction. The second part is called continuous authentication, which means that rather than just authenticating the user at log-in or at the transaction-level, we keep monitoring the user throughout the entire session – making sure that this is the right user during the entire session,” Ran Shulkind, co-founder and chief product officer of SecuredTouch, shared.
VoiceVault provides voice biometrics solutions for mobile, on-device and telephony applications. The solutions focus on ease of use and convenience for customers and end-users. Solutions are developed and delivered through partners or direct-to-client organisations, deployed through a range of hosting models including cloud, on-premise or via managed service providers. Julia Webb, head of sales and marketing, explained that “VoiceVault provides a simple way to authenticate customers in the context of mobile banking or within the call centre. What we specialise in is active authentication with a very small amount of speech. The accuracy of voice biometrics is just as strong as other leading biometric technologies. For banking, the probability of an imposter to get in is at 0.01%.”
Zighra offers an AI-powered continuous authentication and threat detection platform. Providing a suite of intelligent analytics to create personalised models to authenticate the user in a transaction, Zighra's solution is accessible across web, mobile and sensor-based devices. Deepak Dutt, founder and CEO, said: “At the heart of everything we do is a sophisticated AI engine that brings in information from different layers – be it from the sensor layer, device networks, behavioural biometric and location – to create a highly personalised user model. What is very different about us is we can do this entire thing on a device, keeping costumer data secure while providing a high level of accuracy.”
Keywords: Money 20/20, Retail Banking, Transaction Banking, Fintech, Technology, Blockchain, Payments, Security, Cybercrime, API, AI, Mobile Banking
Guest: Alicia Garcia Herrero, Eugene Tarzimanov