Issue 1 Summer 2016

Fintech
in Focus
Frontier banking
Exploring Mongolia
Big data
daddies
UniCredit
fights back
Rise of the
challengers
Preparing for takeoff
with Starling's
Anne Boden

Frank Abagnale
On cyber theft and the
fight against fraud
Jordan Belfort
Following the money with
the Wolf of Wall Street

Plus INsIGHTs FRom RBS ● The Just Group ● Barclays ● Envestnet ● DBS ● Saxo Payments
Metro Bank ● UBS ● Santander ● NBAD ● LV ● Innovate Finance ● Moven ● ACI ● Smart Engine
intellectdesign.com

THE WORLD’S FIRST COMPLETE

GLOBAL TRANSACTION BANKING PLATFORM

PAYMENTS & SUPPLY CHAIN

DIGITAL CASH MANAGEMENT LIQUIDITY & TRADE COMMERCIAL RISK

140% increase in transaction volumes from

Australia to Asia for a leading bank using iGTB
The digital financial technology you’ve always needed to leverage your expertise and on-field innovation
is here.

iGTB is your platform to seize the tremendous global transaction banking opportunity, estimated at $2.1
Realize your GTB ambitions with trillion by 2023. Seamlessly integrate all transaction needs of your corporate customers, delighting them
iGTB today. with superb experience through a consolidated next generation front-end portal with Corporate Banking
Exchange and powerful back-end product processors designed for operational efficiency across
Contact Payments & Cash Management, Liquidity, Supply Chain & Trade and Commercial Risk.
Phil Cantor, CMO, iGTB
to know more. With leading global transaction banks running on Intellect designed solutions, we are the authority
e: phil.cantor@intellectdesign.com progressive banks rely on to realize their GTB ambitions. Realize your GTB ambitions today.

RUN THE BANK. CHANGE THE BANK. DESIGN THE BANK. iGTB helps banks maximize corporate wealth with the world's first
integrated transaction banking platform serving 100+ live installations across 85 countries. Leveraging its out-of-the-box digital
360 approach, banks help businesses optimize surplus liquidity, digitize the financial supply chain and trade, enable anytime
universal payments and remove concerns from risk.

Sydney • Tokyo • Hong Kong • Singapore • Mumbai • Dubai • London • New York • Toronto

Special report
6 The rise of modern
banking in Mongolia
A country where everyone has a bank
account and branches are open 24/7
paYMeNtS & iNNoVatioN
10 Safety in numbers
The rapid rise of crowdfunding has
changed the face of equity funding
12 Chain reaction
How blockchain technology could
facilitate a revolution in trade finance
14 An interconnected
world of payments
Fixing an outdated ‘many-to-many’
model by introducing a ‘hub-and-spoke’
16 The battle for fintech
Banks versus fintechs overlooks
the real challenger… China
18 A global digital market
A sharp rise in cross-border electronic
payments has opened up the market
for transaction providers
20 A collaborative approach
Global giant UBS is finding
innovative ways of becoming a
leader in the digital space
22 The future of payments
The challenge of an evolving
payment ecosystem
25 The emperor with no clothes
What we can learn from the
spectacular collapse of paytech
startup POWA?
26 Planet of the apps
Android-based card payment
terminal Albert is bringing
merchants closer to customers
28 The voice of banking
Santander is determined to talk to
customers across every channel – not
least with its voice-led mobile service
30 Flexible friends
Contis Group is making its name as
an agile player in alternative banking
32 Rising to the challengers
The disruptive influence of low-cost,
digital banks could actually be good
news for institutional dinosaurs
cuStoMer experieNce
34 Bridging the Gulf in banking
The National Bank of Abu Dhabi aims
to being the World’s Best Arab Bank
Summer 2016
TheFintechView
iSSUe #1
Welcome to the first issue of
Fintech Finance Magazine, a
companion to our popular
Fintech Finance channel, in
which we give a platform to
some of the sharpest players
shaping the industry today.
From disruptive start-ups to
established operators sharing a
sometimes surprisingly new perspective,
we hope you find it a stimulating mix
of opinions and information on the
technology that’s transforming not just
finance, but the way we live our lives.
Find out why Neal Cross of DBS
Bank is looking forward to a Chinese
revolution and Anne Boden is having her
cake and eating it at Starling. What does
the FBI’s favourite fraudster, poacher-
turned-gamekeeper, Frank Abagnale,
have to teach us about identity theft
and are there any lessons Wall Street
can learn from its famous wolf?
It would be wrong to think that
traditional areas of banking, including
the branch, are not evolving. But where
does face-to-face banking fit in? We
discover how big data is improving the
36 Evolution not revolution
The internet of Value is forcing
rapid change on the way
corporate banks do business
38 Digitally dressed to impress
rBS is leading the way in
wearable technologies
40 The price of digital loyalty?
intelligent technology is creating
great relationships between
banks, merchants and customers
42 Push me, pull me
UniCredit is nudging customers
towards starting a conversation on line
44 Lost for words
Teaching banks how to talk to
customers using a new digital lexicon
46 The bank that keeps on giving
Nationwide has a lot of happy
customers…it plans to keep them
CONTENTS
SUmmer 2016
customer experience – be it through
the creation of the new RTM by KAL, or
the development of real-time financial
transactions assisted by ACI – and
empowering staff at the front desk.
The breadth of the content in this
issue illustrates how digital technology
is impacting on every transaction – in
branch, online and via next-generation
hand-held devices. Who knows what the
future will bring, but speaking to both
mainstream bankers and the newest
entrepreneurs, I’m convinced that
fintech will have a big hand in shaping it.
I hope you enjoy this edition – and let
us know what YOU think!
Ali Paterson | ali@fintech.finance
48 Fintastic fun
Australia’s Sandstone Technology was
a fintech before fintech was invented
50 The fortune hunters
investor search platform Fundbird
is poised to make the most of
changes to UK banking laws
53 Listen up!
Analytics specialist Nexidia his its ear
to the ground and a view on how
banks should be talking to customers
Data
54 Malaysia’s digital powerhouse
malaysia Digital economy Corporation
is positioning the country as one of
the world’s biggest data centre hubs
56 Humanising digital
iT shouldn’t be about taking people
out of the process; it’s about enabling
them to play a greater part in it
www.fintech.finance | 3
intellectdesign.com

PAYMENTS & SUPPLY CHAIN

DIGITAL CASH MANAGEMENT LIQUIDITY & TRADE COMMERCIAL RISK

Doubled transaction banking corporate

customer base in just 9 months for a
middle-eastern bank
Pioneer innovation with Corporate Banking Exchange (CBX) giving your corporate clients a seamless
experience across account services, payments, receivables, liqudity and trade. The true omni-channel
apps-based customer engagement platform is revolutionizing digital access to banking, with an
e-banking portal that actually understands what the business needs.

Spearhead your digital innovation Be the über-banker by tailoring experience for your customers at no extra cost to you, any country, any
with iGTB today. currency, any sector, any segment.

Contact Allow clients to connect with you how they choose – and with self service, with omnichannel features
Phil Cantor, CMO, iGTB across web, laptops, Android, iPhone, iPad, tablets and even wearable technologies.
to know more.
e: phil.cantor@intellectdesign.com CBX is now on Apple Watch too. Experience it today.

RUN THE BANK. CHANGE THE BANK. DESIGN THE BANK. iGTB helps banks maximize corporate wealth with the world's first
integrated transaction banking platform serving 100+ live installations across 85 countries. Leveraging its out-of-the-box digital
360 approach, banks help businesses optimize surplus liquidity, digitize the financial supply chain and trade, enable anytime
universal payments and remove concerns from risk.

Sydney • Tokyo • Hong Kong • Singapore • Mumbai • Dubai • London • New York • Toronto
 CONTENTS

59 App-iness is the truth 80 Challenging behaviour 98 The branch is dead…

retail banks won’t fully realise the FeatureSpace’s AriC engine is long live the branch!
transformative power of fintech revolutionising the way that Branch banking as we know it has
without widespread adoption of APis banking businesses combat fraud been transformed at Nationwide

61 20/20 vision 82 Applied thinking FiNtecH

Four key takeaways from this year’s The latest solutions in
money20/20 europe conference payment validation 101 Identity crisis
intelligent personal technology
62 The big daddies of big data 84 Staying ahead could drive traditional banking
Global banks aren’t late to the of the hackers towards a precipice
digital party, they’re just figuring Data breach is fuelling organised
out what next to do with it crime and undermining 103 Fintech vs fintech
consumer confidence The big daddies of finance aren’t quite
64 Less pain, more gains as slow as the challengers make out
How to find the gain in BFSi 87 10 commandments of
customer service customer ID authentication 104 Why the apple cart
The essential questions every needs upsetting
Grc & traDiNG New online lenders have made
financial service should be asking of
their authentication system provider significant inroads into the territory
66 Running with the pack once held by the banking giants
The Wolf of Wall Street has turned
from predator to penitent cuStoMer experieNce 107 The mighty Atom
– braNcH mark mullen, CeO of the UK’s first
68 Up in the Cloud app-based bank talks digital
The Alcatraz data depository is 88 Keeping an eye to the future transformation… and life in Durham
propelling Actiance to the forefront New kid on the block metro Bank
of next-gen archive technology has an ambition to be a truly 109 Taking a slice of the cake
omnichannel service Starling joins the flock of new banks
70 Wall Street to mainstreet getting airborne this year
How would Brexit affect your 90 Branch transformation:
investments? One of the coolest a strategic perspective 111 Follow the money
fintechs might just have the answer The branch is not dead, but it does is corporate venture capital the new
need resuscitating smart money in fintech?
72 Finessing fintech
Fast-growing system integration 92 In search of the 113 The view from the bridge
company Finesse’s bright ideas golden nuggets Bridging the gap between
are helping banks work smarter Santander’s Portuguese bank has technology and business in banking
FrauD had to fight hard for the hearts 115 CCC comes of age
and minds of its customers Competence Call Center is
75 Access denied
Passwords are a necessary evil, 94 Who wants a celebrating in 2016

but they won’t be around forever cashless economy? 116 Helping the little
in an age of digital financial guys think big
76 Catch them before they can enlightenment we appear to have A small loans company for Smes
The former identity thief-turned-FBi overlooked one crucial truth… the in the UK is now giving big banks
consultant Frank Abagnale Jr is going public prefers cold, hard cash across europe a run for their money
beyond the 41st Parameter
97 KAL of the wild iNSiGHt & GlobaliSatioN
79 Advice from above The company behind many of
Supporting independent the world’s ATms is on a mission to 120 A question of leadership
financial advisors through a make banking and cash accessible Banks cannot delegate their
Cloud-based platform to the remotest communities digital future – they must install
technological expertise at the top

FintechFiNANCe issue #1 summer 2016 122 Carpe fintech!

ExECUTIVE EDIToR CoMMERICAL DIRECToR Fintech Finance is published by DESIGn & PRoDUCTIon Susanne Chishti of Fintech Circle
Ali Paterson Jason Williams ADVERTAInMEnT MEDIA LTD. Yorkshire Creative media and The Fintech Book reflects
EDIToR SECURITy DIRECToR Advertainment media Ltd. www.yorkshirecreativemedia.co.uk
Sue Scott Nikheel Solanki riverside Business Centre, IMAGES By
on the industry’s transformation
riverside Lawn, Tonbridge www.thinkstockphotos.co.uk
ART DIRECToR
Chris Swales
FEATURE WRITERS
Dylan Jones, richard Crombie,
Kent, TN9 1eP
PRInTED WITH 125 Kickstarting fintechs
PAyMEnTS DIRECToR Graysen Hall
ConTACT US
YellowBall Creative Connecting entrepreneurs with
Doug macKenzie PHoToGRAPHER www.Fintech.Finance
Jordan “Dusty” Drew Tel: +44 208 626 3619
investors, mentors and partners
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any at Startupbootcamp
means, electronic, photocopying or otherwise, without prior permission of the publisher and copyright owner. While every effort has
been made to ensure the accuracy of the information in this publication, the publisher accepts no responsibility for errors or omissions.
The products and services advertised are those of individual authors and are not necessarily endorsed by or connected with the publisher. 126 Virtualised expertise
The opinions expressed in the articles within this publication are those of individual authors and not necessarily those of the publisher.
introducing the virtual advisor

Summer 2016 www.fintech.finance | 5

 Onon Orkhon, CEO of TDB Bank, is also
the president of the Mongolian Banking
Association, whose goal is to spearhead
sustainable growth across all sectors.
“Mongolia is a cyclical economy – it
depends on the mining and commodity
price cycles. We all know that," he says. "So
this is the challenge, not only for banking
but all the sectors in Mongolia. The economy
needs to be diversified (which) will help
the banks diversify their risk profiles.”
Cardless ATMs
During my time in Mongolia I found a
number of financial practises surprising.
One was the ability to get cash from an
ATM without a card, something that hasn’t
yet taken Europe by storm. Using a mobile
phone and the menu on an ATM, a
customer only has to follow a few simple
instructions on screen and enter a security
number sent via SMS to collect cash.
The other surprise was 24-hour branches,
which, ironically, were originally introduced
to save on the cost of installing ATMs.
Mirroring experience in the West,
Mongolian banks have seen reduced
footfall in their branches as a result of
offering customers alternative channels.
But they've also recognised the importance
of maintaining a branch network to carry
out more complex transactions with
customers. In a country of three million
people there are now more branches and
ATMs per person then anywhere else in
the world. But that may not last, according
to Bataa Ganbold of State Bank, which
operates the biggest branch network.
"We observe that very gradually
customers are changing from the branch
to mobile application, internet bank
or ATM, but it takes some time," he says.
The number of branches, paired with the
implementation of mobile banking and the
Banking for everyone:
Branches open 24/7
in Ulaanbaatar
8 | www.fintech.finance
Forward-looking:
Bolormaa Luvsandorj,
CEO of Golomt Bank
introduction of a core banking system in
both Golomt and State banks, has led to
rapid innovation and exceptional access to
banking services, even in rural areas.
“Almost every citizen of Mongolia
has a bank account,” says Orkhon.
“It’s a phenomenon of Mongolia because
during the last several elections, money
was promised to every citizen by major
political parties. For example, every child,
almost from the day of his birth, receives
money from the government and the elderly
receive handouts every month. It was
policy for some time when the mining sector
was booming. Now it’s changing, but it
created a basis for banks.”
Orkhon would like to see a more
integrated banking industry, specifically an
agreed system for mobile and electronic
payments – an idea he says most of the
banks support.
“The payment systems, the marketing
and other operations could be done
together – unfortunately, the banks spent
so much money developing those systems
alone and competing with each other.
Now they have certain market shares in
their segments, we could integrate some
of the operations which we don’t need
to compete on anymore. Doing that will
be beneficial for our customers; it will
save costs, save time for them, and boost
their confidence in the sector.”
The common goal for many of the banks
is to become more client-centric.
Simple changes, such as the introduction
of uniforms in Golomt Bank branches
have transformed the perception
Mongolians had of their banks, almost
overnight, says Luvsandorj.
“All of a sudden, people started to see the
bank as a service industry and feel that they
can demand better services, approaches
and products,” she says. “That in itself
helped tremendously the growth of the
banking sector. People stopped seeing the
banks as a bureaucratic entity and rather as
a service, which can be changed through
customer input.”
Outward looking
For an emerging market such as Mongolia,
international networks are crucial to its
development. Many of the banks have signed
Summer 2016

We need to work with international banks to create
a favourable environment for investing in Mongolia
correspondent relationship agreements with
others across Europe, which is likely to
facilitate access to technologies from both
Europe and Asia. The first foreign bank moved
into Mongolia in 2008 and Goldman Sachs
took a 4.8 per cent stake in TDB in 2012.
With these new relationships, come
new deals.
“The largest undeveloped projects
– mining projects, the supply of energy
and infrastructure logistics to those
gigantic projects – need a lot of funding,”
says Orkhan. “Basically, Mongolian banks
alone cannot provide sufficient financing,
so we need to partner, we need to
work with international banks to create
a favourable environment for investing
in Mongolia and to earn the trust of
international investors.
Contrasts: Mongolia
is a wild frontier
Summer 2016
"Obviously, they will come through
banks and financial institutions, so we
need to really expand our relationship
with those international banks and
start large project financing in Mongolia,
the syndicated lending market, and to
develop the local capital market so that
not only banks but other institutional
investors and players could have an
access to the market.
"So we can develop this country and
its huge natural resources by cooperating
with foreign banks and investors. That’s the
next area of development of the financial
sector in Mongolia.”
The government has been working
towards creating a more diversified
economy since 2008.
“Being dependent on only commodity
prices makes our economy quite volatile,
so I think that policy is starting to pay off, "
says Luvsandorj. "This year, for example,
the agriculture sector is becoming very
interesting. Golomt Bank is the sole
implementer of many projects in
agriculture; we see increasing operations
and export of cashmere wool products and
dairy products, finally taking off. We believe
meat production is going to be quite
important in the coming few years, too.”
Some of Mongolia’s banks have started
attending international events, such as
Diversity is key:Onon
Orkhon, CEO of TDB
Payments & InnovatIon
those organised by the European Bank
for Reconstruction and Development,
not only to enhance their own reputation
on the world stage, but also to help
promote Mongolia as a brand.
TDB in particular plans to expand into
Hong Kong, Singapore and other Asian
financial centres before moving its ventures
to London or New York.
All three banks have very similar goals,
which are predominantly to focus on
customer care while delivering profits to
shareholders and developing networks
with foreign investors.
One of the interesting developments to
look forward to as Mongolia’s banking
infrastructure continues to catch up with the
West, will be what edge their core banking
system gives them and whether the same or
different app-driven technology will benefit
them to the same degree. Either way, the
country's banks are keen to learn, says
Luvsandorj. Her bank is already using social
media to connect to customers.
“Social media is already becoming
incorporated in many activities," she says.
"All these new technological advances that
we could bring or learn from other countries
are very important.
"The operating environment of the
banking sector is improving year over year,"
she adds. "The supervisory duties of the
central bank are significantly strengthened.
Compared to what we were 20 years ago, I
think the Mongolian banking sector is
really now on par with international
standards and with international practices
of supervision as well.”
I'm sure the rulers in Khan Square would
have been impressed.
■ Ali Paterson had the opportunity
to visit Mongolia while reporting at
Future Banking Magazine
Branch loyalty:
State Bank CEO
Bataa Ganbold
www.fintech.finance | 9
Payments & InnovatIon
Safety in numbers
The rapid rise of crowdfunding has changed the face of equity finance, but it’s
not without risk. Matthew Gammond, of corporate finance house Racefields,
believes the company's come up with a solution to load the dice in investors’ favour
“We should be in no doubt that there
will be failures like Rebus (but)…
the question is whether people
understand the risks they are taking,”
is how Julia Groves, founding
chair of the UK Crowdfunding
Association, reacted to the collapse
of claims management group
Rebus earlier this year.
The company appointed administrators
in February after hitting trouble. It had
raised £816,790 via crowdfunding platform
Crowdcube and more than 100 individuals,
some of whom made £135,000
contributions, stand to lose their investment.
Nesta, which monitors the crowdfunding
and peer-to-peer lending sectors, described
the collapse as the largest equity
crowdfunding failure in UK history.
The industry is still in its infancy, but the
question remains: are the risks understood?
Put simply, crowdfunding is a way for
businesses and individuals to raise capital
from a large group of people via internet
portals. First-generation platforms, like
rewards-based Kickstarter, gave the industry
a reputation for helping quirky start-ups, but
now companies of all sizes and intentions
can participate and it’s not uncommon for
multi-million pound deals to pass through
a platform alongside much smaller raisings.
All of which helps to build and maintain
the ‘community’ feel of crowdfunding
– one of the industry’s
goals from the outset.
Wisdom of
the crowd
There are more than 1,000
active platforms in the
world and more appear
with each passing week.
Larger names, such as
Seedrs, Indiegogo and
GoFundMe, get a lot of
press, but there are many
more that specialise in
niche markets and cater
v to specific audiences.
10 | www.fintech.finance
There are even some, such as
SyndicateRoom (who recently partnered
with the London Stock Exchange),
that pioneer new ideas and open up
fresh avenues for investors and businesses
to connect.
Crowdfunding is changing the finance
world: some commentators now see it as
the way for small businesses to fund their
ideas and growth. Some even claim that
it could easily rival traditional funding in
the near future.
There’s no doubt that this is an immensely
successful industry that’s on a rapid rise. Last
year, the UK’s alternative finance market was
worth £3.2billion, an 84 per cent increase on
2014’s figure, and a study commissioned by
the World Bank predicted that it could have a
global value in excess of $93billion by 2025.
Capital should always be considered to
be at risk, though. The Rebus collapse
highlights the inherent dangers of equity
investment and, while the peer-to-peer
side of the industry is considered to be
far less hazardous, it doesn’t mean we
don’t need to address the issue.
Information is key
Racefields is an FCA-authorised corporate
finance house based in Manchester’s
vibrant Northern
Quarter. It’s a family
business run by
David Gammond, who has worked for more
than 20 years in corporate and property
finance. It mixes seasoned experience
with young creatives and go-getters and it
lives and breathes crowdfunding, offering
numerous services to both businesses
and investors. Its latest offering tackles
the question of risk head on.
“We want to provide individuals with
the kind of information they need to help
them make a more informed investment
decision,” says David Gammond. “We want
them to completely understand the risks
they are taking before they commit any
capital. This passion to provide
transparency and to nurture trust led us to
create our independent research service.”
That research goes beyond what
you’d normally expect to see on a
crowdfunding platform.
“We’ll check bank statements to ensure
they are operating within their limits. We’ll
examine any contracts and intellectual
property rights as well as look at what
HMRC is told when the company obtains
EIS/SEIS status to see if it matches what
they’re actually doing,” explains Gammond.
Summer 2016
 “On top of this, we’ll report on the
company’s premises to make sure that they
are fit for purpose and that no clauses in
any leases are being broken, and we’ll also
look into the experience of the directors,
including their time at previous businesses,
and ask questions if we find any bad history.”
All of these details are compiled into a
document and automatically emailed to
subscribers as and when they become
available. To ensure impartiality, neither the
platform nor the business that’s
being reviewed is charged for
this service. “We believe that
is very important from an
investor’s point of view,”
says Gammond.
Investor insight
Subscribers should have a
clearer view on exactly what
an investment opportunity Ceo: David Gammond
can offer and whether or not
they are financially sound. But it doesn’t
stop there.
We don’t just pick and choose companies reliance on banks while enabling private
that are live on a platform; we will be giving
subscribers a say in who we research in
the near future. "Our database of reports
will soon be supplemented by requests
from our subscriber base," says
Gammon. " If there’s a business that
Summer 2016
The investment world is inherently
risky and some investments will
always turn sour... we want to protect
as much investor capital as possible
hasn’t been reviewed, subscribers will be
able to notify us by hitting the request
button and filling in a short form. If we
produce the report, we’ll email
them when it’s available to
download from our website.
Using this request button
means we can provide our
subscribers with exactly what
they want and that’s very
important to us. We intend to
launch this part of the service
in the coming months."
Peer-to-peer and
crowdfunding platforms are
revolutionising the finance industry by
enabling businesses to overcome their
investors to increase their
returns but, without the right
insight, investors cannot be
certain what they're getting themselves
into. “By providing comprehensive research
on businesses looking to raise funds,
Racefields will provide a much-needed
layer of transparency to the peer-to-peer
and crowdfunding market, enabling
investors to be more confident of their
decisions," says Gammond.
He believes recent moves by the
Financial Conduct Authority to regulate
the peer-to-peer market are a positive sign
that the industry is beginning to mature.
“It’s great news for both the investors
and businesses involved. Racefields will
enhance this further by providing a level
of information that the platforms
themselves don’t always achieve alone."
The investing world is inherently risky
and some investments will
always turn sour. That’s the
industry’s biggest problem.
Whilst it may be impossible
to accurately predict which
businesses will fail and
which will prosper, we
believe our research
service goes some way
towards giving investors
greater peace of mind.
Situations like the
Rebus collapse are
almost guaranteed
to be repeated. At
Racefields we want
to protect as much
investor capital as
possible by making
sure they have the
ability to pick and
choose where they
make their investment
with a greater level of
background knowledge
than they would
have had if they
weren’t a subscriber.
■ To find out more,
visit www.racefields.
com and follow us
across social media
www.fintech.finance | 11
Payments & InnovatIon
Chain reaction
Simon Taylor (right), VP of a Research and Development at Barclays,
and named one of the Top 10 most influential people in fintech, explains
how blockchain technology could facilitate a revolution in trade finance
Without question, the biggest
challenges at an industry level right
now are cost and compliance.
Compliance describes the need
for ever-increasing transparency
and ever-increasing fairness for
customers. On the flip side, there’s a
commercial need to deliver back to
the shareholders. The key way to do
that is to take cost out of the business.
Without question, cost is the
battleground. Can you reduce it and
once you’ve done that, how do you
still maintain or improve the service
that the customer is receiving?
Having set a goal to be the world’s
most automated bank, Barclays has been
looking into new technologies and
automation with the aim of reducing cost
while enhancing the customer experience.
And one of the best ways we think we
can do that is through digital technology,
including in trade finance with a genuinely
different, potentially transformational
technology called blockchain.
Banking on the move
Trade finance is centuries old and yet
essentially the process on which it is
based hasn’t changed in all that time. It
starts with a piece of paper, called the
bill of lading, a document that describes
everything that’s been loaded onto a
shipment. In 2015, that piece of paper
might be sent by, say DHL, to five different
people, although there’s still only one
original copy. This allows the opportunity
not only for fraud, but also error and a
host of operational risks in which the
customer, ultimately, loses out. What
blockchain allows Barclays to do is to
12 | www.fintech.finance
digitise that piece of paper in a way
that hasn’t been possible before.
Historically, the bank had two choices.
It could either use a centralised system
for issuing a bill of lading, with everyone
using the same service, or it could
standardise – a good example of that
being Swift – with everybody using the
same messaging format. In trade finance
you might have agriculture and shipping,
road transport and banking, and all
these different industries need to be
able to talk to each other.
That’s what blockchain offers: a
universal fabric for parties in a transaction
to communicate with each other, but with
Barclays
has been
looking into new
technologies
and automation
with the aim of
reducing cost while
enhancing the
customer experience
enhanced assurance and enhanced
security. What’s really special about
blockchain is the ability it offers for as
many parties as are needed to validate
a transaction.
For example, suppose you are asked to
declare that inside a container in a ship
there are 100 blue Lego bricks. You no
longer need to sign that declaration on a
piece of paper, you sign it with your
computer. Then you want the bank to sign
it, the customer, and a fourth party involved
in the shipment. But now you don't need
four copies; the one they all sign is the
original and they can all see it instantly.
Now, while it is absolutely possible
to do this with a centralised service
today, the problem comes with getting
everyone to agree to it. With blockchain,
somebody simply creates the paperless
transaction, and if you choose to adopt
it and enough of your counter-parties,
enough banks, adopt it for it to be
worthwhile, then you get viral adoption,
which is very compelling.
In effect, we’re using a computer
algorithm to create a consensus around
the truth rather than everyone in the
transaction chain having their own paper
version of it. If we could rely on maths to
“sync” the truth between us all, we could
cut out a lot of wasted paper going back
and forth – and we’d have taken a step
closer to the holy grail of removing paper
from the economy.
Barclays recently announced that it was
going to pilot blockchain next year with
a company called Wave. It’s time to move
from small experiments to pilot stage and
seeing if the business case stacks up. We’re
moving from ‘What if?’ to making it real.
Immediate solutions
Some people say blockchain is a
technology to solve a problem that hasn’t
been created yet. We think in trade finance
there's a problem it can solve right now.
Barclays is fortunate to have a team of
innovative minds, who collectively have
Summer 2016
 the power of technology:
Barclays is ready to roll
out a blockchain pilot

hundreds of years of experience in trade

finance. They were initially cynical about
blockchain, as attempts to centralise and
standardise the lading process have failed
before. They are now in constructive
dialogue with Barclays’ partners at other
banks and when the most cynical people in
the room start to ‘get it’, you know there’s
something there. Blockchain isn’t the only
innovation on Barclays’ digital agenda.
Last year, it launched its first Barclays It’s also recently announced that,
Accelerator, a 13-week open innovation following huge demand from customers, it
programme for technology-focussed is now possible to set up a payee through
start-ups whom it matches with some its mobile banking app and it is likely that
of the finest fintech minds in the world. we will see continuing richness of those
There are now three programmes features and continuing collaborations
running in the UK and the US with more with the industry on a wider level.
planned for Cape Town and Tel Aviv. Blockchain is just the start.

Summer 2016 www.fintech.finance | 13

No borders: Current
payment systems
struggle to cope

14 | www.fintech.finance Summer 2016


An interconnected
world of payments
Earthport CEO Hank Uberoi, and Peter Klein, the global
head of FX, explain the particular challenges in cross-border
payments and how the company is fixing an outdated
'many-to-many' model by introducing a 'hub-and-spoke'
As expected, payments was a hot
topic at this year’s Money20/20
in Copenhagen. Fintech is driving
change across the entire payments
space and traditional players,
looking to keep pace, are
collaborating with innovative
companies to deliver transparent
and cost-effective solutions.
Among these innovators is Earthport,
which provides a global payment network
through partnerships in more than 70
countries and has a customer base made
up of eight of the top 20 global banks,
including Bank of America and HSBC.
With offices in major financial centres,
Earthport’s model is determinately global,
reflecting the needs of the global economy.
In CEO Hank Uberoi’s words: “The whole
correspondent banking infrastructure was
designed on a many-to-many model, where
banks have relationships and connections
with each other to satisfy a low-volume,
high-value payment demand. Now, with
the interconnected global economy, you
need a hub and spoke model.
A sharing economy
“E-commerce, the sharing economy, app
stores et al are driving a massive and
massively growing flood of low-value,
cross-border payments. It is new, happening
fast and the 40-year-old correspondent
Summer 2016
system cannot cope cost effectively…
Nobody imagined AirBnb in 1978!”
Uberoi says Earthport is creating “a
completely new paradigm where payments
are faster, cheaper and more transparent”,
a shift from the model which was built
when high-volume, low-value payments
were relatively rare.
Earthport’s clients are given a single
API connection through which they can
deposit money into any bank account
in 70-plus countries, with no principal
deduction, typically in a T+1 time frame
or even same day.
The model is structured on key strategic
partnerships with banks and businesses
around the globe. Relationships are central
to this business model and Earthport has
to comply with the regulations of each
country in which it operates.
Technology is obviously at the core of
what the company offers but deep
understanding of the heterogeneous global
regulations environment is also critical.
Earthport’s latest technology is the
distributed ledger hub, which uses
Ripple technology and allows for
real-time transactions.
“If you apply distributed ledger
technology to international transfers
it’s really challenging, because of the
complexity of regulatory and compliance
infrastructure of 200 regulators around
PaymeNts & INNovatIoN
the world,” says Uberoi. “With our
partnership with Ripple we are able to act
as the hub, providing the infrastructure
and compliance, allowing banks to set live
with minimal cost and internal build.”
Peter Klein, Earthport’s global head
of FX, says the company also offers
"a strong FX utility where people
cannot only leverage our cross-border
payment rails, but also use us for FX risk
management and revenue optimisation.
“This allows our customers to attain the
best possible pricing in terms of optimising
liquidity management and cash flow.”
Earthport has built a new, fast
payments infrastructure for our new,
global interconnected world.
E-commerce,
the sharing
economy, app
stores et al are
driving a massive
and growing
flood of low-value,
cross-border
payments
www.fintech.finance | 15
Payments & InnovatIon
The battle for
fiN T eCh
The concept of banks vs fintechs is outdated, says Neal Cross, Chief Innovation Officer
for Singapore’s DBS Bank and it risks Europe overlooking the real challenger…
The media likes to portray the
fintech revolution as a bunch of
upstart challenger banks seeking
to bring down the entire banking
edifice. The more cynical view it as
an internecine spat between two
siblings fighting over the financial
market like a toy.
“It’s a lot more complex than that. I think
there is a fundamental misunderstanding
of what’s happening in this very volatile
industry,” says Neal Cross, Chief Innovation
Officer of the Singapore-based DBS Bank.
According to Cross, there are five
types of fintech player, the largest and
most successful of which are the banks
themselves. “They’ve done financial
technology for a very long time. What
they’re doing now is putting in place
innovation heads, running fintech
accelerators and trying to bring in the
tools of fintechs, like lean start-up,
experimentation, design thinking, to react
and to improve customer experience.”
Then there are the ones nobody ever talks
about – the traditional suppliers of financial
technology; The Misys, Sungards and
Fisevs of the world, who have accumulated
16 | www.fintech.finance
billions of dollars embedding themselves
with the five trillion dollar financial
services industry globally.
Next comes two types of neo fintech
– one more benign than the other.
“The first ones want to partner with
banks. They sell technology or services or
potential business to financial services.
"The others are the ones who
fundamentally want to kill banks. They go
out with a model and marketing that is
very anti-bank; they don’t really want to
partner, they want to take back share.
These are the ones which will affect our
industry the most,” says Cross.
Finally, we have the dark horse GAFA,
a powerful segment yet to realise its full
potential made up of Google, Amazon/
Alibaba, Facebook and Apple.
“Apple, for example, has 850 million cards
on file, and so already they’re the biggest
bank on the planet, technically," says Cross.
"Google’s moved into financial services
payments, it’s doing recommendation tools
around property. Obviously, Amazon’s
building out off its e-commerce structure,
but there’s an interesting split here. The
tech companies are going (for the)
consumer, so Google and Apple are too.
The big e-commerce giants, like Alibaba
and Amazon, they’re focussing on
small businesses. Because so many
businesses utilise them as
their platform for sales
and distribution anyway,
they’re building banking
around that.”
And if you think
New York, London
and Silicon Valley are
where the fintech
battle is at, then wake
up and smell the kopi.
“There is a misconception that
(these) places are fintech capitals of
the world. They’re not by some way.
They are so far behind what’s happening
in China, just by the numbers alone," says
Cross. "There are more than 3,000, and this
is a conservative estimate, of peer-to-peer
lending platforms in China. The
government-investment fund for start-ups
Summer 2016
is $337billion US. Even if 10 per cent of
that was for fintech, it’s double what the
rest of the world invests.
“One bank has been open a little over
a year, it’s got 30 million customers. They’ll
have 300 million in another two years. The
success of the fintech, the scale, the amount
of people in the fintech, the investment
Summer 2016
means that China is way ahead on every
single measure I can think of.”
A disruptive dragon
The Chinese banking revolution is a lesson
in customer ownership and the speed
and scale of change is eyewatering. Banks
there realise customers are on a journey,
says Cross, and they’re determined to make
it with them. In some cases, literally.
“They have partnerships or direct
ownership of holiday websites, of
transport, of airlines. The same
with medical, and they do the
same with commerce, and they
do the same with house moving.
They even have moving companies
and places where you can buy
furniture. The Chinese banks
Can these
Chinese
fintechs scale
outside of China?
Will they wholesale
jump into Europe and
the US? I hope so
are doing some amazing work. That’s the
epicentre of digital disruption in financial
services,” he says.
The country’s leading third-party online
payment platform, Alipay, launched by
Alibaba in 2004 and operated by its affiliate
Ant Financial Services, recently announced
it has in excess than 450 million users,
more than double US-owned PayPal’s.
And it’s likely to benefit
from further investment
following a $4.5billion
private finance deal struck
in April by Ant, which is now
the world’s most valuable
privately owned internet
company, valued at $60billion.
The question is, can the rest of
the Chinese fintechs follow suit?
“That’s the big thing that everyone’s
thinking,” says Cross. “Can these Chinese
fintechs scale outside of China? Obviously,
they’re moving out through places like
Hong Kong, Taiwan, Singapore, but will
they wholesale jump into Europe
and the US? I hope so. I like
competition, it’s good for
everyone, so my guidance
is watch this space.”
eastern promise:
China's the epicentre of digital
disruption in financial services
www.fintech.finance | 17
Payments & InnovatIon

A global
digital market
A sharp rise in cross-border electronic payments has opened up the
market for transaction providers – but most have been found wanting.
Anders la Cour, CEO of Saxo Payments, is busy finding solutions

Saxo Payments is what you might
call a digital utility on purpose.
And if you are a utility, you really
need to have scale.
Fortunately for the global transactions
services provider, the trade winds are
blowing in its favour. According to a recent
McKinsey report, cross-border electronic
payments are expected to account for 81
per cent of the value of all global payments
flows in 2016 – up 16 per cent in a decade.
“The world is getting connected to a
higher level every day and that era of
connectivity has increased the tendency
to bring a global, single, digital market
to the world,” says Anders la Cour, Saxo
Payments co-founder and CEO.
“The consumer does not care whether he
is based in Denmark and buys something
on ASOS in the UK. He just wants the ability
to purchase and receive goods. Then you
have a financial tech industry that’s trying
to help the ecommerce industry meet
these demands and all these players are
merging together into one market.
“We have increased our service to make
sure we can support players on that global
single digital market with cross-border
transfers all over the world. That’s what we are
underpinning and that’s what our strategy
over the last couple of years has been part of.”
out pretty much where it is heading – and
it knows there are some big hills to climb.
The report revealed 63 per cent of
payments-related businesses were
dissatisfied with the speed of cross border
payments and only 38 per cent believed
they got a competitive FX rate. It also
showed they would be willing to switch
provider if they could see the benefits,
three-quarters saying they’d change if it
cost less, while two-thirds would make
the move if it provided faster transactions.
The results of the survey provide a
compelling business case for change
– one that Saxo is driving.
“We’re basically trying to rebuild
transactional banking as we think it should
be done,” says La Cour. “That’s why we’ve
set up a brand new platform from Oracle,
but customised it to meet the demand and
the needs of businesses in 2016. We’re
trying to work with the banks and with the
financial tech industry because I
believe there’s a lot of good stuff
with the banks, and there’s a lot of
good stuff within fintech.
We have chosen a path where we
think a cross-border payment should
be a utility over a couple of years.”
A one-pay world
Saxo’s Oracle platform is bespoked to cope
with multiple layers of regulation; its legal
and compliance team stay on top of changes
to the legislative framework in the regions
in which it operates; and its customer service
team is manned 24/7 to respond to demand,
wherever it arises in the world.
“In general, the cost savings by using our
platform are significant compared to what

Reshaping the market

A conduit for money transfers, Saxo Payments,
part of the Denmark-headquartered Saxo
Banking Group, enables fintech businesses
with international client bases to plug in
directly to the global banking infrastructure
via the Oracle Flexcube banking system.
But Saxo isn’t just in the global financial
transaction market; it’s reshaping it. a world of choice:
Cross-border e-transactions
The company’s recent white paper on
are expected to count for
cross-border B2B payments, Today’s 81 per cent of all global
Landscape; Tomorrow’s Opportunity, spelled payments in 2016

18 | www.fintech.finance Summer 2016

 you would usually see,” says la Cour.
But it's not all about cost.
“From an alternative perspective, you
have an entire fintech industry that is doing
a very good job trying both to lower the
prices but also to increase convenience.
Of course, price is important, but a lot of
very good fintech businesses come with
a brilliant user interface."
The introduction of the Single Euro
Payments Area (SEPA) in 2014, allowing
more than 500 million consumers and
more than 20 million businesses and
organisations to make and receive seamless
payments in euros under equal terms,
demonstrated what a single global digital
market could look like. The real battle
in the next few years will be over who
owns the customer relationship in those
transactions, believes la Cour.
Fintech has already staked its claim, but
banks haven't thrown in the towel yet.
“We’ve seen BBVA, in Spain acquire a
stake in Atom Bank, we’ve seen Santander
move into that market. Goldman is trying to.
And I think you will see on the other part
of the value chain, utilities like us providing
the cross-border pipe to all these
businesses. Someone could be providing a
lending pipe, someone could be providing
the FX pipe. I think that’s the trend you
will see. A huge battle to win that digital
relationship towards the clients, and then
the pipes coming in from the other side,
trying to deliver cross-border payments, FX,
lending, wealth management, whatever it is.
"I think they will enter this area as well
and try - as the tech giants are - to own
the relationship with the client. It would be
exciting to see because they are already
controlling another part of the value chain
- like Amazon and Alibaba control the
distribution level as well as the products.

Of course, price is important, but a

lot of very good fintech businesses
come with a brilliant user interface
It would be exciting to see if they can
use that to their advantage when they
enter the market.“Over the next couple of
years the Internet of Things will see that
connectivity moving into other products.
So one could imagine your fridge ordering
milk directly from Ocado and this could
basically be done by Amazon. Amazon
would act like your payment engine.”

Summer 2016 www.fintech.finance | 19

Payments & InnovatIon
A collaborative approach
In pursuit of becoming a leader in the digital space, global giant UBS
is working with smaller collaborators and taking on board suggestions
from customers and staff. Dirk Klee, COO at UBS Wealth Management,
and Andreas Kubli, UBS Head of Multichannel, explain
Among the core challenges
within today’s financial services
market are regulation and building
trust – or rather rebuilding trust –
with clients. Both are linked
to the financial crisis.
But there is a third element, which is, if
anything, even more disruptive. Technology
has raised clients’ expectations of their
relationship with banks; instead of the bank
deciding what to take to the client, it’s now
about what the client is asking of us.
UBS is using social media channels to
engage with its clients on investment
content. Using what it calls the CIO
(chief investment officer) House View,
it’s presenting its best new ideas on social
media platforms, including LinkedIn,
and actively seeking client feedback.
UBS also uses social media to connect
with the fintech community, to exchange
ideas, to learn from others and find
potential partners among the start-ups.
Historically, within private banking,
transaction channels were the first to
be digitised; UBS is now starting to
digitise more of the content that would
traditionally have been communicated
to an advisor and communicating that
content direct with clients. Digitising
the so-called last mile, giving the client an
additional channel to the product, backed
by direct communication from the CIO,
has led to more engaged customers,
which in turn has seen UBS’s retention
rate increasing.
Digitalisation is not about substituting
robots for client advisors; rather it’s about
engaging with better data and making
smarter investment decisions for clients by
using the full range of technology at our
disposal. And we have to be a multichannel,
24/7 service, reachable from wherever the
client is and always ready to respond.
As a result, we’ve seen a significant
uptake on UBS’s digital channels and the
key performance indicators are
encouraging. UBS is the only bank in
20 | www.fintech.finance
Switzerland to receive a five-star rating
for its apps on the App Store. It has a 700
per cent higher growth rate among clients
that use e-banking and mobile banking.
Retention rates among those clients are
25 per cent higher than among those who
don’t use digital services. And our
experience has been that return on
investment in these clients is also higher.
UBS led the field in rolling out these
digital channels to clients; now it’s going
further by embracing technology as a
business enabler, working with innovation
labs to create a whole environment around
the technology. As part of this, UBS has
built an intranet site called Innovation
Central where employees can contribute
ideas and have them validated internally
before being challenged by external
experts. If an idea passes that hurdle, UBS
takes it to the market for testing.
It is part of our aim to be a leader among
banks in the digital space. That said, we
realise not all services are appropriate to all
channels and we distinguish clearly
between simple transactions and more
sophisticated products. Clients can choose
to engage in some transactions on a fully
digital basis. When it comes to more
sophisticated services, UBS adopts a
multichannel approach.
Improved client services
UBS has always been a high-touch
business, with client advisors relentlessly
focussed on bringing the best services
to the customer. A consequence of the
move to more digital services has been
to allow our advisors, relieved of routine
transactions, to focus on investment
ideas and quality interaction with clients.
An example of this is UBS Advice.
Under the UBS Advice contract, the
bank undertook to conduct daily,
overnight health checks on client accounts
and arrange for a client advisor to call
them the following morning to report any
event that needed their attention. This
generated significant workload for client
advisors but was, infact, a service that the
bank could easily have provided, at least
in part, digitally. Now we send an SMS or
email to the client, inviting them to log
into e-banking to check the account
where they will find a summary of the
situation and options to fix it. We are not
removing the choice to contact a client
advisor but they can now address the
issue entirely online if that is what they
choose to do and it has been very
successful. Digitisation of UBS Advice
recently won UBS the Banking Innovation
Award of the University of St Gallen.
High-touch plus high-tech
A consequence of this move was to free
up client advisors to focus time on other
areas where, being in the investment
advisory business, UBS has concentrated
on developing the client relationship.
Technology allows us to elevate this
relationship to high-touch plus,high-tech,
giving clients access to better data, better
information and better advice. The digital
channel is not replacing, but rather,
supplementing the client advisor role and
it follows the trends clients are used to
seeing in other areas, such as e-commerce.
As an experience, dealing with your
bank shouldn’t be seen ranked alongside
a visit to the dentist. It needs to be one
that enhances the way you look at your
finance and your life. We want to partner
our clients through the lifecycle of his or
her investments.
This partnership approach extends to
other spheres of the bank’s operation, too.
Where there was a tendency in the past to
build everything by ourselves, in future we
will be partnering more with others as part
of a dynamic ecosystem where banks and
external providers collaborate to deliver
perfect services to clients. UBS has already
demonstrated the value of that approach;
it recently won the Best of Swiss App
Award in a joint venture with a start-up.
Summer 2016
 Hand in hand:
UBS has a partnership
approach to both clients
and developers

We use social media to

connect with the fintech
community, to exchange
ideas and learn from others
Summer 2016 www.fintech.finance | 21

Exposed: The emperor
with no clothes
Tony Craddock, Director General of the Emerging Payments Association, looks
at what we can learn from the spectacular collapse of paytech startup POWA
You may have heard about Dan
Wagner, the CEO of POWA
Technologies, and the recent
liquidation of his company. He
raised and spent more than
$200million of investors’ money in a
company once valued at $1.9billion
and endorsed by David Cameron
for its ability to create 250 jobs.
The investors in POWA were not stupid.
They evaluated the opportunity and
concluded that it was worth a punt (as all
investments in early-stage technology
companies should be viewed). The staff
were not stupid. They decided to join a
company with good pay and conditions
and nice offices and flash parties to follow
a dream, a vision created by one man.
And in the end, people out in the markets
were not stupid. They decided that the
product was not attractive enough to buy.
So the company folded.
What is amazing is that the first two
groups – the investors and the staff – firstly
followed a dream created by Dan Wagner,
a PM-endorsed and VC-supported
businessman with a track record of
founding Dialog, which was dubbed
“dial-a-dog” by City wags after its share
price crashed 95 per cent on Nasdaq, New
York’s technology-heavy market. And,
secondly, they did not challenge someone
who, in the end, delivered so little of
commercial value with his investors' money.
I believe it is a perfect example of ‘the
Emperor has no clothes’ – you remember,
the fairy tale where nobody dare accuse
the Emperor of parading in front of his
subjects naked, until an innocent little boy
shouted: “But that man has no clothes!”
And then everyone realised that their
hero was, indeed, parading in the nude.
What I want to understand, however,
is why, when more than $200million of
shareholders’ money was being ‘spent’ in
around two years on a company that never
Summer 2016
actually made ANY money (that is, revenue,
let alone profit), that there were not more
little boys out there, calling time on a
flamboyant, smart-suited David Brent
figure. They should have spotted it coming.
And why, now that evidence is emerging
of some clearly inaccurate claims having
been made about ‘contracts’ that were
actually LOIs and deals with China Union
Pay(that clearly were not deal, let alone
actual engagements with CUP), that people
as well-intentioned and connected as Julie
Meyers at Ariadne Capital are supporting
Mr Wagner for being a courageous, brave
entrepreneur, to be applauded for his
bravery, creativity and genius.
Irresponsible behaviour
Their positive support and now their
silence is endorsing what I believe is
irresponsible entrepreneurialism –
jingoistic salesmanship in the name of
capitalism – when they should accept
that, as difficult is it seems, this emperor
really had no clothes.
I fear it is because they are scared of
looking stupid. But now is the time when
Payments & InnovatIon
they should come clean, accept that they
were duped, and endorse a principle of
responsible entrepreneurship, where
investors' money is not spent on flash
offices in Heron Tower and videos that
patronise staff and make inaccurate
claims, but is spent on generating real
revenue from real customers.
We should not be proud of the POWA
story. As a passionate advocate of business
as a means to improving the world around
us, as the main means of creating value and
improving lives everywhere, I have watched
the POWA story unfold. I am embarrassed
to see such value destruction in the name
of the UK technology industry. I fear for
what all investors in my industry, paytech,
might now wonder: “How do we know this
is not just another POWA?”
I believe we should be rallying around to
see what we can learn from this and to do
what we can to make sure other ‘POWAs’ do
not happen again.
They should
come clean,
accept that they
were duped, and
endorse a principle
of responsible
entrepreneurship
Come on, you responsible entrepreneurs
out there. Stake your claim on what is right.
Accept that we were, indeed, stupid, but
that we have learned how not to do it
again. And that we can go out to invest
in responsible technology entrepreneurs,
who are not raising money to spend
money, but raising money to make money.
It’s about time we learned to spot
the emperors that are wearing no clothes.
www.fintech.finance | 25
Payments & InnovatIon

Planet of the apps

AEVI set out with a vision to revolutionise commerce by bringing banks and
acquirers closer to their merchants, and merchants closer to their consumers…
now, with its new Android-based card payment terminal Albert, it’s living the dream

a world of ideas:
Albert is redefining
payment systems

26 | www.fintech.finance Summer 2016

Apps were a fantasy that have been
exploited by visionaries to become
one of the most frequently used
systems in the technologically
connected world. At fintech
company AEVI, the fantasy was
even more full-blown.
It set out to be the “open platform that
helps everyone to be successful” by
acquiring hundreds and eventually
thousands of apps in the payment
channel marketplace and linking banks,
acquirers and solution providers to figure
out ways of adding value and generating
new revenue streams.
Now, two years since forming an enabling
partnership with the secure payment
solutions specialist EVO Payments
International, the dream is close to
becoming a reality. With everyone from
multiple retailers to independent SMEs in
its sights, AEVI is set to fundamentally
change the payment service industry by
giving clients the ability to work on a white
label basis via what it describes as “the
coolest B2B app store in the world". Through
this groundbreaking ambition, a completely
new payment service has emerged.
Albert is an unspectacular name for a
piece of technology that promises to
rapidly transform not only the payments
industry but bricks-and-mortar retailers
and the customers’ experience of them.
Gamechanging POS
The reason for all the excitement around
Albert is because it is the world’s first
Android-based, PCI-certified touch-screen
payment terminal, meaning it works in a
similar way to tablets and smart phones.
Thanks to AEVI’s open platform, Albert
will be fully customisable through the app
marketplace, which will allow businesses
that use it to do everything, from
promoting themselves over social media, to
managing stock and ordering supplies. With
further programming from companies that
are excited about using Albert, it’s hard to
imagine a direction the device can’t go in.
“You will see a lot of kickass in the market,
and we’ll see a lot of customers going,
‘Wow, what I experience on the internet, I
now experience in the face-to-face world,
as well? That’s so cool. I don’t have to queue
anymore in a stupid row and say when can I
pay?’ "says AEVI Chief Commercial Officer,
Left-right: Mike Camerling, Gerd
Laufens and Hans Langenhuizen
Summer 2016
Hans Langenhuizen. He reaches for an
illustration and comes up with… a Martian.
“Just pretend you’re coming from Mars,
you’re wearing your jeans and you want
new ones. I’m Dutch, when you’re in a
Dutch store, they shout at you. ‘Oh, sorry, I
was just here to buy something…’ You find
your jeans and finally you have to queue up
to pay. Paying is the worst thing; you have
to wait for 10 minutes. If somebody comes
to you with a service device that said, ‘Hey,
which jeans do you want? This is how they
look on you. You want to pay? Don’t worry,
pay here and you’re done’. I like that.”
Acting as the Swiss army knife of the
payment channel marketplace, Albert’s
core physical features include a smart
card reader, magnetic stripe reader,
NFC reader and a printer module.
But due to AEVI’s associated marketplace,
Albert’s potential as a payment device is
more than the sum of its parts. Fast and
effective innovation from acquirers of the
technology will deliver apps that promise
enhanced control and flexibility, which in
turn will reduce the total cost of ownership.
Customers, too, can influence development
through queries, suggestions and even
pro-active polls, while features such as a
Pan-European on an e-commerce
space is quite easy to achieve,
but on a POS and card-present
basis, that’s a totally different game
split-pay app, for example, to work out how
to divvy up a restaurant bill, will endear it
both to them and to business.
“We provide our merchant acquirers and
banks with new ways to provide models
and services to their customers via our
smart apps and services, but in order to do
that, you need a developer community
that creates content,” says Mike Camerling,
Director of Business Line Marketplace for
AEVI. “Those developers exist, they’re
already in the market, and domain experts
in the merchant space. These are small
companies that already have software and
apps or mobile devices, or they could go
all the way up to big companies that have
been in the market for years.”
Added-value services
From EVO’s perspective, it’s the powerful
combination of Albert and the supporting
eco-system developed by AEVI to
deliver value-added apps and services
to merchants and acquirers that takes
it into a new dimension.
“Pan-European on an e-commerce space
is quite easy to achieve, but on a POS and
card-present basis, that’s a totally different
game,” says Gerd Laufens, Head of Global
Products Europe at EVO Payments
International. “AEVI could enable us to go in
that direction, which brings a lot of benefits
to our clients, which are financial institutions,
big retailers to small SMEs. The retailer
can really benefit from this offering in terms
of cash flow optimisation and having
centralised partners rather than having
multiple suppliers in multiple countries.”
And in the merchant acquiring
business, its effects could be profound.
“We will see multiple additional payment
methods – not the standard acquiring
services that you had in the past – evolve
massively,” says Laufens. “From a standard
merchant acquiring business, where you
have a supplier/client relationship and the
client pays for a service, we turn this
business around into a relationship where
the client also gains from the service that
the acquirer is providing, because of the
additional value-added services that we
can offer through the marketplace. This is
turning this business from a cost centre
into a profit centre for the client.”
And you don’t have to be a Martian
to appreciate that.
n AEVI’s Mike Camerling, Hans
Langenhuizen and EVO’s Gerd
Laufens were talking to Fintech
Finance Magazine’s
Dylan Jones
www.fintech.finance | 27
Payments & InnovatIon
The voice of banking
Santander is determined to talk to customers across every channel – not least
with its voice-led mobile service, says Head of Innovation Sigridur Sigurdardottir
In the race to embrace a digital
future, Santander’s Head of
Innovation is determined not to
see a hierarchy of services that
privileges any single channel or
customer above the rest.
Rather, says Sigridur Sigurdardottir,
it’s about developing a “seamless and
frictionless” experience for everyone, from
those using the bank's 850 branches to
the latest Apple Watch wearer – and it's
partnering with whoever has the hottest
ideas to deliver it.
“We’re really focussed on providing
simple, personal and fair services to our
customers in their channel of choice,” says
Sigurdardottir. “We design for mobile but
we then make sure it flows through into all
the other channels.
“In terms of our overall innovation agenda,
we think about the holistic experience, then
partner with fintechs and start-ups to bring
the external view into the bank, get pilots
out quickly and integrate those that are
successful into that experience.
“We see this as a core part of our strategy.
The start-ups really bring a disruptive mindset
to the table. They bring speed and agility and
an incredible focus on the customer. It helps
us think through problems in a different way.
What we bring to the table is scale, resilience
and robust infrastructure – and that fantastic
Santander brand that’s so widely recognised.”
Among its most recent innovations has
been Spendlytics, which coincided with
Santander being among the first wave
of banks to adopt Apple Pay last year.
A mobile app, Spendlytics is an example of
smart use of the existing data on customers
held by the bank, made available to them
in a dynamic way. Spendlytics allows users
to track spending on their credit cards
and analyse their own financial behaviour,
rather than have the bank do it for them.
“We have close to 200,000 active
28 | www.fintech.finance
customers on Apple Pay already. Our
customers love it – they’re using it across
merchants and across industry,” says
Sigurdardottir. “We launched Spendlytics to
allow people to track their card spending
and be able to see that on the go. I think
providing a solution on the go and
providing the ability to pay on the go is
exactly where the industry is heading.”
Coming along behind and still in the
pilot stage is what Sigurdardottir describes
as the “Siri of banking” – a pioneering
voice-activated service linked to Santander’s
existing SmartBank app on iPhone.
It doesn’t go as far as using voice
biometrics, relying instead on existing
security logins, but it does allow customers to
interrogate information about transactions
made on their accounts over the previous
12 months simply by talking to their phone.
“They can ask how much they’ve spent in
the last month on a specific category or even
‘How much have I spent in Café Nero in the
last 30 days?’” says Sigurdardottir. “In phase
two later this year, people can give payment
recommendations or payment instructions.
We’re seeking to understand how customers
can adapt to this and we can enhance the
service as we go. We are engaged in a lot
of education around using it, but from a
security perspective it’s absolutely safe.”
A new demographic
The more customers use such services,
the more they provide the bank with the
data it needs to drive more innovation.
It's a virtuous circle.
“It’s understanding the behavioural
versus the classic age/income
demographic," says Sigurdardottir. "The
key is really analysing the data. It’s about
making sure that we know what their
needs are, having a really single-minded
view of the customer and then being able
offer them great products, services and
experience. It’s leveraging what their
interests are, how they’re transacting with
us, how do we make sure that we’re making
the right recommendations based on who
the customer is? We are experimenting
with other things, like geolocation, to offer
people different services based on what
we are seeing in terms of behaviour.”
In the commercial banking division,
too, big data is playing its part in speeding
up approval processes by giving a more
comprehensive picture of the customer
and their risk profile.
“We’re looking at data from Experian and
exploring how we leverage social media
data to provide insights and information,
aggregating data that is available to us
to help make better decisions for our
customers,” says Sigurdardottir.
Don't forget the branch
Those 850 branches are an integral part
of the strategy, too.
“While we absolutely want to make
sure that we are providing great service
in our mobile channel, we see customers
really like the personal touch. So while the
services that people seek in the branches
might change in terms of advice, we
certainly see branch as a key part of our
distribution channel.
"We are digitising our branches, so staff
now have iPads to be able to demonstrate
to customers how they can access (the
bank) through the app or mobile. We are
continually talking to customers and
making sure we take in what customers
like in terms of how we evolve our service.
“We need to be led by our customers. We
need to be led by where our customers want
to be, able to access the financial services,
whether it’s on the go in the mobile phone,
through the watch, or coming into a branch
to get the service. It’s all about providing
that seamless and frictionless experience.”
Summer 2016
 multi-channel: Santander
is the first to trial voice
banking to the UK

The start-ups really

bring a disruptive
mindset to the table. They
bring speed and agility and an
incredible focus on the customer

Summer 2016 www.fintech.finance | 29

Payments & InnovatIon
Flexible friends
Contis Group is making its name as an
agile player in the alternative banking
market, as Group CEO Thomas Gregory
and MD Mike Fromant explain
“There’s a whole group of people
today who have been on the
internet before they could walk,”
says Thomas Gregory, the newly
installed CEO of Contis Group,
which has carved out a niche in
end-to-end payment solutions in a
market hungry for fresh ideas.
With a fistful of awards for its prepaid
cards, it really is the industry’s flexible friend.
Acting as a fully-integrated, alternative
banking and payment solution, Contis
Group offers a complete one-stop service
for businesses looking to develop Visa
prepaid/debit card solutions – from
issuing, licensing and payment processing
through to programme management and
consultancy. A true ‘total control’ offering
for business needs, it is aiming at driving
the alternative banking and payment
market in the UK and Europe, helping to
democratise and transform financial services.
Its core targets are financial inclusion, travel
and FX, payroll and gift and loyalty, and,
having built the technology stack over the
past four years, it’s now growing services fast
and winning recognition.
“We don’t provide direct banking services
to consumers, we do it via clients or partners
who want to play in this space but don’t have
the technology themselves,” explains Gregory.
“We believe we’re bringing something
that’s unique to the market. There are not
many people with our agility, with our
technology stack, who do the whole range
of end-to-end alternative banking, current
account or debit card issuing services. We
are our own processor, our own BIN sponsor,
a principal member of Visa and bring
those things together in a very agile way.”
Bespoke solutions
Alternative banking is what the Contis
Group is all about. “For so long, we’ve had a
30 | www.fintech.finance
number of large banks, which are
predominantly very similar,” says Gregory.
“Alternative banks, such as Starling Bank
and Atom Bank, are trying to provide a new
style of banking, fit for purpose for today’s
environment, so that’s mobile, it’s digital,
it’s for millennials, it’s for people who don’t
want to walk into branches.
“I can’t remember the last time I either
wrote a cheque or received a cheque.
There’s a whole group of people today who
were brought up in that environment. They
were bought their first smartphone aged
five or seven, and that segment of people
don’t see the appeal of a branch-based
network. That’s the opportunity for us here
at Contis Group.”
The company’s plug-in-and-play
technology stack is easy to use and
integrate through simple APIs, avoiding the
legacy infrastructure of traditional providers. Trust
will come
“We can move very quickly and
dynamically, we can bespoke our solutions
to what our client needs are and we can
make sure that we can move in a very agile
through using the
way, which is fit for purpose for today’s
fintech environment,” says Gregory.
technology and
“All our technology is in house; we have brand will become
less important
our own development centre, so we can
build and develop the solutions and the
services that we need to keep one step
ahead of the market. If we see the market
shifting in one direction, we have our
own technology stack and we can build
modules, or develop it, in whichever way
we want to go. That gives us flexibility.”
A good example of that is its
market-leading Credecard, widely adopted
by smaller players promoting financial
inclusion. The card is used as the basis
for an online current account with
front-loaded card payment facilities,
bundled in with savings and a loyalty
programme. It helped Contis pick up the
Summer 2016

Payment options: Contis
offers a white label card
Summer 2016
award for Annual Card and Payments
Best Prepaid Product of the Year award with
its client Ffrees, whose Credecard-based
account is aimed at the millions of people
in the UK unable to access high street
banking facilities.
Contis also offers Engage, a dedicated
card for European credit unions, Travel
Seasons, billed as the travel industry card of
the future, and a white label prepaid option
allowing Contis to tap into a market of new
players busily building their own brands as
they reinvent consumer financial services.
Meanwhile, it’s gift and loyalty programme
portfolio includes blue-chip clients, such as
Virgin, Pizza Express and Goodwood.
“It’s about being slick to the mark, it’s
about being able to innovate and provide
the services that the clients are looking for
through mobile payment, through internet
banking, and providing a better and different
level of service,” says MD Mike Fromant.
Demise of the brand
As more of these alternative providers of
financial services enter the market, the key
question is whether consumers will switch.
Fromant believes consumers of the future
will put their faith less in brand and more
in technology, leaving a big question
mark for traditional high street banks
and creating a huge opportunity for
next-gen companies, like Contis.
“Trust comes with brand and it also comes
with using a product and seeing that it
works,” says Fromant.“The mobile phone is
something the younger generation are used
to using – my grandchildren of four and five
years of age are using mobile phones to play
games on. They just pick them up as a natural
form of communication. As we get that
generational change, I think trust will come
through just using the technology and brand
will become less important.”
www.fintech.finance | 31
Payments & InnovatIon

Rising to the
challengers
The disruptive influence of low-cost, digital banks could actually be good news
for institutional dinosaurs, which is why an accord with the challengers
is better for the big four than outright war, says Daryl Wilkinson founder
of DW Consulting and officially one of the most powerful Top 50 in fintech

Challenger banks have been a
black cloud looming over the
“big four” for the past few years.
The traditional high street banks have
been braced for these challengers to shake
things up and create an entirely new
environment, just as budget airlines did to
the aviation industry in the Nineties. And
with the FCA keen to see consumers benefit
from “effective competition” for regulated
financial services, the time seems right.
However, while those working in the
industry are tracking every move of the
challengers and what they offer, this
awareness has yet to filter down to
customers. With the big four still holding
more than 90 per cent of the UK market, and
consumer awareness of challenger brands
failing to gain momentum, is the impending
shake-up going to happen, and if so, when?
The big four are portrayed as clunky
behemoths, held back from innovating by
complicated legacy infrastructure that is
creaking at the seams. In just the first few
months of 2016, customers of some of the
major banks have experienced cashpoint
outages, data breaches and system failures.
What is interesting, and at odds with
consumer behaviour in other industries, is
that customers are not reacting by switching
brands in their droves to new suppliers –
despite the seven-day switch service
introduced by the Government in 2013,
which makes switching current accounts
easier than ever. So why the complacency?
The path of least resistance?
New challengers are offering faster, cheaper
transactions with greater flexibility than
ever – yet customers are still hesitant to
switch. Banking is seen by customers as a
chore and many customers lack confidence
in financial planning matters. Consequently,
spending time researching and
understanding different banking products,
switching to a new bank or account, and
then getting used to a different way of
doing things, is something that many
customers avoid. This is why UK customers
are collectively losing out on £3billion
through money sitting in low-interest
savings accounts. And it’s why the
challengers may well continue to
struggle to gain traction against the
tried-and-tested big banks.
Step forward the challengers
The challengers to traditional retail banking
take several forms. Supermarket retailers,
such as Tesco, M&S and Sainsbury’s, were
quick to head into the banking space
with uncomplicated current and savings
accounts. It made sense; these are heavily
data-rich organisations, putting them in
prime position to offer customer-centric
services. They have the on-street presence
through stores across the UK and can
interact directly with their customers
without huge start-up costs.
The next wave of challengers
concentrated on putting the customer
at the centre of their communications.
Virgin crashed into the market in 1995 with
Virgin Money, branding their high street
outlets as stores, rather than branches,
with a new focus on customers’
individual needs. Metro Bank
arrived in 2010, introducing a

The new breed is tapping into cultural

trends, such as social networking and
online communities… Fidor even links its
number of social followers to its interest rates
32 | www.fintech.finance Summer 2016
softer side to the retail banking market
with their mission to create “fans not
customers”. Growth for these new players
has not proven easy, however – Virgin
Money only has 75 stores nationally,
compared to Lloyds’ network of nearly
1,300 branches. There has also been a string
of banking start-ups that have failed during
the same period, the most well-known of
which is Prudential Banking’s internet bank,
Egg, established in 1998.
The costs of creating a high street
presence to rival that of the big four make
the direct high street challenge almost
impossible and, without a high street
presence to back them up online, banks
have historically struggled to gain traction
and retain customers for the long term.
Summer 2016
Don’t talk, tap
A new breed of mobile-only and
mobile-first banks is hoping to reverse these
trends and succeed where others have
struggled. And in an age where laptops are
being replaced by mobile devices, where
people trust new brands like never before
(think Uber, Netflix and Airbnb) and where
we are moving to mobile for more and more
of our daily tasks and activities, these new
banks may just have their timing right.
Atom bank intends to build relationships
with customers by never being more than
one atom away from them, using mobile
technology to enable seamless integration
into everyday life. Atom, along with Starling,
Fidor and Open Bank, all recognise that
the new age of customers demands to use
services on the go. These customers
live on their mobile phones
and expect to be able to
complete all of their
transactions that way.
These new players hope that customers
will value the fast and convenient features
and services, from biometric authentication
to digital wallets, above a traditional high
street presence.
This low cost-base proposition allows
the mobile banks to lead with low-interest
loans and high-interest savings. And the
new breed is also tapping into cultural
trends, such as social networking and
online communities, to appeal further
to today’s customers and to help them
self-serve. Fidor even links its number of
social followers to its interest rates and is
using a community-centric model to help
enable it to serve its 300,000 customers
with just 32 employees.
Unify to achieve scale
Whether the challengers succeed or not,
customers will benefit from this period of
market disruption, as it is forcing traditional
banks to reassess their services and ensure
they remain competitive.
My view on the future of retail banking
is ultimately one of unity. I expect there
will be further challenges to the incumbent
banks, but there will be two long-term
survival strategies for the newcomers: stick
to a niche market, serve that market well
and own the space; or work together with
the traditional banks to gain scale. The
incumbents will need to innovate faster
and faster, but tied down by legacy systems
and processes, they cannot do it alone. The
challengers offer technological innovation
and slick customer experience in spades,
but may struggle to gain traction against
customer inertia and to navigate the
regulatory banking landscape. Joining
forces would be mutually beneficial to
both the incumbent and the start-up
– and ultimately to the customer.
www.fintech.finance | 33
CUSTOMER EXPERIENCE
Bridging the
Gulf in banking
The National Bank of Abu Dhabi aspires to being the World’s Best Arab Bank
by putting customers at the centre of everything it does, as Dylan Jones reports
‘The customer is always right’,
the words all retail industries
hold as gospel, is a mantra banks
are finally beginning to adopt
in Euro-American markets. But
what of the rest of the world?
The National Bank of Abu Dhabi (NBAD)
is known in the Middle East for offering
exceptional customer experience, validated
by several awards.
Its mission is to become the “World’s
Best Arab Bank” and right now its main
focus is on achieving total transparency
in cross-channel customer engagement.
34 | www.fintech.finance
Additional investment this year has
gone into enhancing its digital platform,
increasing distribution capacity and
capability with significant upgrades
planned for its online banking system
as well as ATM and CDM platforms.
Personalising customer interactions and
managing end-to-end customer experience
is crucial for a bank that offers multiple
ways to use its services, from phone and
online banking to a mobile banking app,
and which operates one of the UAE’s largest
branch and ATM networks.
Its work in branch is as important as that
of any channel. In 2012 it created a Service
Ambassador Programme to distinguish it
from the customer services provided by
competing banks, training a team of staff
ambassadors dedicated to looking after
NBAD clients in branch.
Service ambassadors greet the customer
in the welcome zone and direct them to
the appropriate part of the branch for
their needs. The ambassador is the human
face of the bank, creating a space that
ensures privacy and comfort and giving
the customer confidence that they can
have an intimate dialogue with the bank.
A year later NBAD teamed up with
NCR Corporation, a global leader in
consumer transaction technologies, to
introduce a sleek, in-branch ATM in
order to migrate low-value transactions
from the teller line to self-service,
freeing branch staff to focus on sales
and customer support. 
Summer 2016
 “At NBAD we believe that to be
recognised as the 'World’s Best Arab Bank',
we need to put our customers at the
forefront and do the right things, the
right way,” the bank said at the time.
“Consumer experience at the bank branch
is about to change more dramatically
than it has in more than a generation.
Additional software will unlock even
greater capabilities as financial institutions
move their associates into the open to
directly interact with consumers and
provide in person assistance, similar to
what we experience while shopping or
checking in to the airport.”
Multilingual call centres
On the road to continuously improving
its customer experience, NBAD has also
implemented 24-hour internet banking
services and call centre support, with
multilingual advisors speaking Arabic,
English and Urdu, competent in handling
financial and non-financial queries. The 24/7
call centre was made possible through
NBAD’s partnership with Fujitsu in 2013.
The project included modernising the
Personalising customer interactions and managing
end-to-end customer experience is crucial
Summer 2016
UNIX operating system, which runs under
Solaris, in anticipation of future growth.
One of the achievements of which NBAD
is most proud is maintaining its presence in
Global Finance’s list of the ‘World’s 50 Safest
Banks’ – the only bank from the UAE to
have achieved the status – since 2009.
The bank has adopted multi-factor
authentication for online access using
password, image ID and an RSA secure ID
token (a physical device that generates a
random six digit code) for several years. In
2012 it became the first bank in the region
to launch a security service that sent all
cardholders – not just those operating
nbadOnline accounts – a dynamic code via
SMS for each online purchase to protect
against possible fraud. More recently the
bank introduced stronger risk controls in
its commercial division.
With one of the most extensive networks
of ATMs in the region, NBAD was one of
several UAE banks which was reported
to be investigating the introduction of
biometric iris scanning in 2008 following
a spate of cash machine fraud that was
thought to have affected nearly half of all
users. So far, only Abu Dhabi Commercial
Bank has gone so far as to introduce voice
authentication for customer transactions
in Arabic, English and Hindi, saying that it
could offer more convenience and security
than knowledge-based answers.
Gulf's fintech future
But with aspirations for Abu Dhabi to
become the fintech capital of the Gulf
it’s likely to be only a matter of time
before NBAD adds biometrics to a suite
of services being introduced as part
of a five-year transformation plan for
a bank that's putting customers at the
centre of everything it does.
“NBAD recognises that it has a
responsibility to deliver value for not only
our customers and shareholders but also
the UAE as a whole,” says Chairman Nasser
Alsowaidi told investors in the bank’s
upbeat Q1 2016 report.
“I am pleased to see the bank continuing
to support the people that have made
the UAE what it is today by providing
them with effective and responsible
banking services.”
www.fintech.finance | 35
CUSTOMER EXPERIENCE

Adapt or die:
Corporate banks
need survival
strategies

Evolution not revolution

The Internet of Value is forcing rapid change on the way corporate banks
do business. You can fight it or embrace it. But to benefit from it, you must
follow the first rule of survival and adapt, says Phil Cantor of Intellect
In 1957 a longshoreman at a described the challenge for banks: “Banks operations in 10 countries. Deutsche, RBS
Hawaiian port could be part of a have buildings and humans and tend to and even Citi – some of the biggest banks
370-man team, loading 125lb sacks think of digitization as working out how to in the world – are eschewing geographical
of sugar onto a ship, a job that layer software and services on top. The right expansion in a flight for quality and focus.
would take seven days. thinking is to design the bank based on Challenger banks are small, nimble and
One year later, the team would be down software and services and only add buildings maintain mostly an online-only presence.
to just 35 men, hoisting new steel shipping and humans on top where necessary.” They aim to win profitable market share
containers onto the ship with steam-driven In his book, ValueWeb , Skinner expands from their larger counterparts with
machinery – a job that took just 11 hours on this, showing how the development of promises of better products and better
and cost 97 per cent less. mobile technologies and cryptocurrencies service and, on the most part, are able to
Nearly 60 years later, it’s well understood have established potential for a cheaper deliver. Challengers aren’t sacrificing
that standardization of shipping containers value exchange system, an “Internet of Value”. customer service to tend to their aging and
revolutionized industry, opened the doors It means non-bank fintech challengers overly complex legacy systems because
for China’s exports and paved the way to are now able to participate in value and they don’t have them. Even bricks-and-
today’s global trade economy. payment exchange networks, compelling mortar new players, such as Metro Bank,
That was the power of ‘The Box.1’ Now we banks to re-invent themselves to compete. are able to slaughter some sacred cows, as
have a new, digital ‘box’ that’s impacting not evidenced by their “no stupid rules” policy.
just on banking, but on all industries. More Own the customer experience Your competitors are banks and non-banks
than that, it’s redefining the value exchange. Deutsche Bank has already taken drastic alike, evolving as rapidly as a software
Speaking at MEFTECH 2016, leading steps, declaring that it will eliminate start-up, which is, arguably, what many of
fintech commentator Chris Skinner acutely 35,000 positions by 2020 and shut down them are. Many target a niche piece of the

36 | www.fintech.finance Summer 2016

value chain, leaving the (less profitable) rest
of the chain to others.
Some corporate customers are
accustomed to the inefficiencies and
inadequacies of your current offerings.
With a simple search online they can find a
specilalised, non-bank offering to execute
a specific function more quickly and
cost-effectively. Many of your competitors
integrate directly with corporate clients,
sometimes removing the bank entirely
from the process.
“In two decades, we will go from 20,000
‘analogue’ banks today worldwide to no
more than several dozen ‘digital’ banks,”
wrote Francisco Gonzalez of the Spanish
banking group BBVA in late 2013 in The
Financial Times. He has since mapped out
BBVA’s future identity as a software company.
Frank Bria, an authority on the digitization
of banking, predicts the future will hold not
several dozen, but seven billion banks – one
for everyone on the planet. Contradictory?
No. At the heart of both assertions is an
assumption that banking of the future must
be agile, lean, designed around optimal
user experience, and, most of all, personal.
The digital vortex
Goldman Sachs reported in March 2015
that banks stand to lose at least $4.7trillion
in financial services revenue, which will
migrate to new fintech firms.
The increased complexity of supply
chain management and optimization of
working capital suggest the specialised
requirements of the corporate treasurer
have outgrown the bank.
Doom and gloom then? Actually, no. I
see a rosy future for the fast-acting,
self-cannibalising bank. The reality is that the
variety of niche technology firms presents
both additional complexity and additional
value creation that can be exploited. Financial
services specialists solve very specific pain
points, but at the expense of losing sight of
the big picture. Corporations that opt out
of the bank’s services have to live with a lot
more vendor management, oversight,
compliance, risk, fraud liabilities, and
management of fragmented financial data
spread across multiple vendors, all on top
of financial accounts still held at the bank.
As a corporate banker, you have immense
power and opportunity to define not only
how your institution participates in this
new value model, but where, when, and with
whom. With trading taking place on the
Summer 2016
value web, how will your institution
participate? What value can your institution
offer that few others can? Because, despite all
the bad press following the global financial
crisis, you’re still trusted. Customers may not
like you, but their money stays with you.
Your blueprint for survival
Just as intermodal containers transformed
the shipping industry, the Internet of
Value will transform financial services. So,
here are four key strategies for corporate
banks to survive the upheaval:
1 Modernize (or else). If your institution
is mired in the muck of legacy systems
and processes, it’s time for an overhaul.
Only by adopting an agile design can the
corporate bank be modern enough to
participate in the value web. Update and
design the corporate bank’s functions from
scratch and in such a way that any product
or service component can be ripped out,
upgraded or replaced quickly without
disruption to service and, importantly,
without the involvement of the corporate’s
IT team or provider. Several banks are
daunted by evolution and, scarily, now
talking revolution, nurturing new, in-house
digital banking models and grooming them
for matricide on maturity. Don’t lose control
of your e-banking; it’s your proposition.
Banks stand
to lose at
least $4.7trillion in
financial services
revenue, which
will migrate to
new fintech firms
2 Partner with fintech to compete
with fintech. Vietnam-based fintech
company Momo has integrated with more
than 100 providers to supply its payment
apps. Venmo, a service of US-based PayPal,
links a user’s credit, debit, and checking
accounts into one digital wallet. Dubai-based
Beehive provides a service to match
finance-seeking SMEs with crowdsourced
investors. Banks can similarly partner with
competitive, white-label financial services to
integrate their capabilities via application
programming interfaces (APIs) while still
presenting a singular bank brand. Offer
solutions as components in a way
that allows any corporate client to fit
the bank’s offerings with its needs, thus
turning the threat of niche competition
into your upstream supply chain.
3 Prioritize the customer journey.
Work out what your customers are
actually trying to achieve and draw upon
Web 3.0 to help them. Simplify your
corporate client’s experience to solidify the
bank’s role, not only as a fintech partner, but
also as a trusted advisor. Digitisation affords
banks opportunities to leverage predictive
technologies, artificial intelligence, standard
data, sexy data visualisation, exploratory
data analysis and analytical insights to
understand a client’s risk profile, anticipate
a client’s banking needs and offer highly
contextual and relevant solutions. You have
the data, leverage it.
4 Think like a startup. If your institution
is not prepared to flexibly assimilate
the newest technology or innovation, you
will not survive. There will be regulatory
changes. There will be complications.
Prepare for unforeseeable adaptations by
taking a page from lean startups: iterate
quickly, allow for error, measure your
results, and pivot as needed. If there aren’t
innovators within your organization, now’s
the time to bring them onboard as partners
or employees. Corporate banks with an
industry focus should investigate deeper
integration with trade software. Always
remember the transaction bank is a
parasite on global trade; it only exists and
survives as a consequence of movement
of value. That action is now taking place
in direct API-to-API, real-time, millisecond
proposition fulfillment, and the bank’s
challenge is how to participate in a billion
such fleeting digital deal handshakes.
The longshoreman of 1957 could not
have predicted how dramatically his work
would change. He had not experienced
as much technology disruption in his
lifetime as you, today’s corporate banker.
Although the pathway to participate
in the future of transaction banking will
never be fully clear, we know where to start.
1 The Box: How The Shipping Container Made The
World Smaller And The World Economy Bigger.
Levinson, M. (2008). Princeton University Press.
www.fintech.finance | 37
CUSTOMER EXPERIENCE

Wearable technology:
Customers don't want a
bank on their wrist, but
RBS believes there is a
role for Apple Watch

RBS... digitally
dressed to impress
RBS aims to become the easiest bank to work with’, which is why it’s leading the
way in wearable technologies, as Chris Popple, MD of Digital Services, explains

In the last few years, the financial
services industry has implemented
some of the biggest changes in its
history with the introduction of
digital services and mobile banking.
The evolution of mobile technology
has changed the way customers manage
their finances and the way they interact
with their bank. But with the acceleration
of contactless payment and now the
advancement of wearables, the need for
security has become a focal point for both
the customer and the industry.
RBS was one of the first banks to adopt
fingerprint readers and it's led the way in
experimenting with wearable technology.
It acknowledges that the need to simplify
product sets is paramount while it is also
setting itself the goal of becoming the
number one bank for customer trust
and advocacy. Its continued investment
in mobile technology has yielded some
impressive results.
Just two years ago the bank was in the
early stages of mobile banking adoption,
with around two million customers using
its mobile services. Every year since, it has

38 | www.fintech.finance Summer 2016

added around a million new customers to the
system: now four million of them log into RBS
mobile banking almost 40 times a month.
Its most recent innovation, the Natwest
app, Touch ID, which uses a fingerprint to
securely access personal accounts, saw
more than a million customers embrace
it within six months. Now, 90 per cent of
those who could use it, do through an
iPhone with an enabled fingerprint scanner.
“It’s because it’s so incredibly easy,” says
RBS MD of digital services, Chris Popple.“The
thing that has changed, not just in banking,
but in all digital services, is the number of
things that customers need to remember
to access their energy company, their bank,
their credit card, etc. On average, customers
have to remember 20 different usernames
and passwords, so anything we can do to
help keep them safe and secure but makes it
very easy for customers to access takes off.
“People do definitely ask the question
‘Is it safe? Is it secure?’ and the answer is
‘Yes’. Mobile banking actually gives us more
information about customer usage than we
have if they’re using a website. We can tell
the particular device that’s accessing the
service and if it’s the device they usually use
to do that with. It gives us confidence that it
is the right person accessing the account.”
He’s personally a big fan of Apple Pay,
predicting it will be adopted quicker
than contactless.
“I use it to pay for coffee, on the Tube. It’s
just easier to tap it with my thumb print.
We’re definitely through the early adopters
now. I think it’ll be a bit more slow to get
into the next wave of customers. A good
sign though is that we’re moving through
contactless so fast; Apple Pay or the like
will grow faster than contactless did.
Known unknowns
According to Popple, the bank has two main
reasons for joining the digital revolution.
“We do things first because we think it’s
going to make a difference to customers,
The fingerprint Touch ID was definitely that.
"We also do things because we’re not
quite sure what benefit they will have for
customers. Wearables and Apple Watch in
particular fits into that.
“The Apple Watch is a new device at
the beginning of a journey. We wanted
to put something on the market where
we can learn and what we’ve learned is
that looking up your balances isn’t what
wearables or watches are for.”
Summer 2016
What they are good at is helping the
bank communicate with customers.
“An Apple Watch is good at telling the
time in new, interesting ways, but it’s
also a really good vehicle to proactively
notify you. Wearables will definitely be
useful in that regard,” says Popple.
All these new data points has allowed
RBS, not only to enhance security through
its relationships with mobile providers, but
also to accelerate improvements in the
entire customer experience across the full
range of bank services - not just in mobile.
“What we’ve started to do over the last
year is use our own data about how
customers use branches and telephones and
webchat and mobile and online to establish
patterns, to figure out where we might be
able to do things better,” says Popple.
People do
definitely
ask the question
‘Is it safe? Is it
secure?’ and the
answer is ‘Yes’
Mobile banking
actually gives us
more information
about customer
usage than we
have if they’re
using a website
“A really interesting insight we’ve been
working on lately is that when customers call
us, at least half them have been using online
banking a couple hours previously. Why
would they do that? They’re obviously not
calling because they want to transact over
the phone, they’re calling us because they’ve
seen something online that they’re confused
by. So, rather than focus necessarily on the
phone call, we’re really using the data we
have and usage across channels to figure out
what we’re not doing so well, to do it better,
so that customers don’t have to do more.
“We’re really trying to be best in
customer experience, which means we are
probably more focussed on where the pain
points are. Using the behaviour of what
customers do across channels really helps.”
Customer behaviour
Part of that requires a much more nuanced
approach to information gathering.Take
its call centres. It now builds a story around
customer interaction with its advisors
and feeds those events into the number
crunching team that analyzes data for
patterns of behaviour.
“In call centres now we do two things.
We measure, compared to events in other
channels, and we also ask our agents to
record the context around a call, so we
can marry up the story behind the events.
Those two things together allow us to say,
so we can do something about it, right?”
Sometimes the answers are relatively
simple. One tangible result was to make
changes to the website, making it much
clearer to customers what information
they needed ready before making an
international payment.
Other fixes aren’t so simple – particularly
when it comes to educating customers
about security.
“We need to find ways to get it into
customers’ minds that they need to be
careful about what they do with their own
data,” says Popple.
“No amount of barriers that we can put
in front of technology can get around the
fact that sometimes it’s really easy to fool
a customer. We’re talking about traditional
con artists who can either, by calling or
sending you an email, convince you that
person is from the bank and you then
volunteer a piece of your information.
“There’s some really important pieces
of software and technology that we use,
but what we’re finding is that customer
education is by far the most effective
vehicle to making sure that customers
keep their own data safe.
“Ultimately, we want to be the easiest
bank to bank with, therefore the one that
is the most trusted and the most focussed
on what customers really need. That is
our honest ambition. We think in the next
two, three, four years we can get there. We
hope we're demonstrating that through
simplifying our products, making them
more valuable, through reward, and being
the first with innovation that really matters.”
Chris Popple was talking to Fintech
Finance Magazine’s Richard Crombie
www.fintech.finance | 39
CUSTOMER EXPERIENCE
What is the price
of digital loyalty?
Christian Bacher, CEO and managing partner of Smart Engine, on how intelligent
technology is creating great relationships between banks, merchants and customers
Banks have been slow to tap into
customer loyalty schemes, perhaps
largely because customers have,
until recently, steadfastly refused
to be unfaithful.
But with more bed-hopping between
accounts an unsettling possibility, banks
are increasingly seeing the value of wooing
them with rewards.
They rely on proxy lotharios, of course,
like innovator Smart Engine, to do their
courting for them.
A European Fintech 100 company, Smart
Engine provides digital loyalty marketing
solutions for banks and financial services.
It aims to address the biggest challenge in
today’s environment – gaining customers
and keeping them – by helping clients
deepen their alliances with merchants and
build new ones in order to present customers
with meaningful offers.
The system is based on a mobile strategy
that securely analyses and matches data
from the sources provided by the owner of
the loyalty programme.
As far as the bank customer is concerned,
of course, these overtures come from the
financial institution under which the apps,
portals and internet banking integration
facilities are all branded for the outside world.
Smart Engine merely acts as a background
enabler, but by using its platform, expertise
and strategy, banks form coalitions with
businesses where points can be redeemed as
well as extending rewards to customers who
take advantage of the bank’s other services.
The aim is to surprise and delight customers,
like an attentive lover in the hope that the
relationship will last.
Smart Engine’s state-of-the-art software
platform is provided to banks and the
payment industry investment-free, giving
40 | www.fintech.finance
them from both commercial and technical
flexibility. And, being a service provider
to banks in the European and North
American markets means it supports a
multi-language system and operates within
European data privacy laws.
The Smart Engine platform is a long
way from the early days of loyalty schemes
when, in order to claim their rewards,
customers were required to trawl through
pages of coupons or navigate company
websites in search of offers and coupons
most relevant to them. The marketplace
has also moved away from expecting
merchants to give discounts on all of
their products, all of the time. By integrating
with their cashier systems to load product-
related data, Smart Engine gives them
the opportunity to run campaigns for
specific products or product groups with
linked rewards automatically redeemed
by the customer.
The new Smart Ads
Now Smart Engine is going one step
further by creating a digital advertising
platform for mobile payments,
called Smart Ads.
In this new digital
marketplace publishers
can not only upload offers
and advertisements onto
the platform but the most
relevant ads and offers to
the customer can also be
triggered by a payment.
Picture yourself buying a coffee
at Starbucks and paying for it with
your mobile wallet. The bookstore
across the street has a linked offer to
Starbucks customers and as soon as
you pay, you receive an alert, telling
you there’s an exclusive offer waiting
for you across the road to come in and
redeem right now. It’s instant, relevant
and exciting – and it provides a great
basis for relationship building.
Customer reactions to the digital
advertising platform and the loyalty
benefits it provides have been very positive,
especially the ability it gives them to
choose where they spend rewards. Whereas
before, customers could only benefit from
loyalty schemes in the physical form in
store, Smart Engine allows customers to
collect loyalty points across all channels
and use them across all channels.
It’s now busy integrating with payment
providers, wallet providers and POS
providers, specifically those devices on
which apps can be deployed, and it’s
currently rolling out its marketplace for
instant digital advertising for mobile
payments across different markets in the
UK, Germany and France. It’s also looking
to introduce the system to the United
States where it could be the start of
more beautiful friendships.
Summer 2016
 The aim
is to surprise
and delight
customers like
an attentive lover
in the hope that the
relationship will last

Instant gratification:
Payments across
Smart Engine trigger
immediate rewards

Summer 2016 www.fintech.finance | 41

CUSTOMER EXPERIENCE
Push me, pull me
UniCredit’s Head of Digital for Central Eastern Europe, Paolo Barbesino,
is nudging customers towards starting a conversation on line
How do you move from macro to
micro? That’s the pressing question
at the top of every institutional
bank’s agenda and it’s occupying the
mind of UniCredit’s Paolo Barbesino.
The man responsible for UniCredit Group’s
digital transformation project, CEE 2020, has
the challenge of entirely redefining the
bank’s online customer services in Central
Eastern Europe. Or, as he puts it, creating
more ‘push’ than ‘pull’ in the compulsively
connected world of mobile personal finance
where the shift is from macro interactions
with very high volume to many daily micro
interactions of limited value.
“Customers are increasingly 24/7. We
see they bank at night, they bank during
the weekend, they leverage every micro
moment to check their balance or do small
transactions,” says Barbesino. “The shift to
micro moments is also a shift in getting
more time out of our customers.
“Originally, digital banking services were
mostly pull services – the customer has to
go to a website, log in to internet banking,
or switch the mobile banking application
on. The way we understand the shift is that
we move from a pull to a push model,
where we will see a growing number of
interactions with our customers that are
triggered by a message that is originated
by the bank – or by a behaviour from the
customer – a message coming from the
bank saying, ‘Hey, what’s happening?’
‘Hey, you just made a transaction… is this
transaction the best transaction you could
have made?’”
Starting the conversation
The territory in which Barbesino works is
both scary and stimulating.
“In Central Eastern Europe, customers are
by definition unloyal and I really love it,”
says Barbesino. “Why? Because it’s a good
We can significantly improve by
designing services that mimic
the logic of big internet players
42 | www.fintech.finance
opportunity for us to learn a different setting out to create an “innovation
way of doing banking. Our customers ecosystem, sustained by the development
are on average much younger, much more of new digital platforms where all countries
digitised than the average customers in can contribute with innovations and ideas
Western Europe. They started banking from the bottom up”.
pretty much the same time they started “These ideas and innovation get
surfing the internet.” systematised at central level and deployed
These millennials are used to searching at local level. It’s the aim of CEE 2020 to
for products online, being savvy about achieve business agility, reduce time to
finding better offers from different financial market, and get ready to compete in a
institutions through aggregators or social digital age,” he says.
media and they are driving reinvention in UniCredit is already working with
the banking sector. third-party companies, including intelligent
Barbesino describes the challenge for technology experts Smart Engine, to
all banks as moving from an “inside-out facilitate the selling of financial products
approach, where the bank is basically and it’s using all the micro moments created
projecting the complexity onto the front by the digital loyalty specialists to create a
end” , to what he characterises as an dynamic new relationship with customers.
‘inside-in’ model where services and It’s all part of understanding what will
products are designed and deployed come next, says Barbesino, “in terms of new
around customers, who are much more features, new products, new services, new
informed and potentially smarter than service models, a new way of interacting".
they ever used to be. And it is a journey, he believes, every bank
Even in Western Europe and the US, needs to make. What lies at the end of it
these customers are interacting with their remains to be seen.
bank not just several times a week, but up
to five times a day. And while there may
advantages to being in bed with them,
on the train, at work and in the pub with
them, such an intimate relationship creates
its own problems.
“Let’s assume that you have five
opportunities to talk to your customers on
a daily basis,” says Barbesino. “What on
earth are you going to tell this guy? How
can you start a relevant conversation? Do
you really think that the way banks have
been presenting their content so far can be
relevant when you shift from, say, a micro
interaction once every six months, to
something that happens on a daily
basis? I bet not.”
His way round the problem is to share
it with others. Through CEE 2020, he is
Summer 2016
 “There is quite a big discussion as to
whether banking is facing what gurus call
an unbundling.
"You have a bunch of players coming
in with a digital value proposition that
resonates with digital consumers better
than banks, so a discussion now is whether
this unbundling will go on in the future
or whether at some point – after a big
tsunami that was originated by the
financial crisis, by the increasing
pace of change in technology
and by demographics –
some banks can start
re-bundling again.”
The push factor:
Banks can nudge
the conversation
with customers online
Summer 2016
The Amazon factor
Barbesino is looking to non-banking
models for inspiration in the constant
battle to retain and acquire customers.
“I do not think that serving our customers
24/7 and achieving a very high quality in
the service necessarily means that we
have to serve in a manned way. I believe
there is quite a lot of room for self-service
interaction, provided the services we design
online are putting the customer at the very
centre of their proposition,” he says.
“How many times have you been talking
to someone sitting at Amazon or Expedia
or Google? You give them a lot of money
every month, but you never feel the urge
to talk to a sales representative of these
companies. Why? Because the services
they offer are so well-designed to work in a
pure self-service mode on a digital screen.
There’s a lot we can do to significantly
improve the quality of our services by
designing services that mimic the
logic of big internet players.”
Paolo Barbesino was
talking to Fintech
Finance Magazine’s
Dylan Jones
www.fintech.finance | 43
CUSTOMER EXPERIENCE
Lost for
words?
Communication software specialist Persado
teaches banks how to talk to customers.
Chief Revenue Officer Lawrence Whittle
throws light on the new lexicon
Fintech pioneers, such as E*Trade
and Apple Pay, are significantly
altering customer expectations
around banking, transactions and
investing – but fundamentally they
are changing the language of
customer communication.
“The over arching theme of today
is this massive rush towards a digitised
customer experience. This is especially
true for the financial services arena, in
which brands will have to compete on
experience going forward,” says Lawrence
Whittle, Chief Revenue Office for Persado.
“Any digital experience is all about
understanding exactly how to address
the customer in every situation, whether
I’m trying to move money around on my
mobile banking app, or when I receive
an email from someone saying, ‘Would
you like to do paperless?’, or an ad on
Facebook saying, ‘Would you like to hear
about our new credit card?’”
Persado, which works with some of the
top financial institutions in the world
(including customers-turned-investors
Citi and American Express), created a
science around communication in the
digital world. With digital marketing real
estate steadily shrinking to accommodate
mobile screens and the din of competition
44 | www.fintech.finance
overwhelming, it’s more important than
ever to make a great first impression, fast.
Using a “smart system” powered by
natural language processing (NLP) and
machine learning algorithms, Persado
draws from its proprietary database of
marketing language – the largest of its
kind – to generate the optimal phrases
that will inspire anyone, in any situation,
to act. The result is greater consumer
engagement because the communication
is more emotionally resonant and
personally relevant to the customer.
This ability to effectively communicate
offers, rates and transparency are the
ammunition of tomorrow’s world.
“We use this term ‘cognitive content',"
says Whittle. "If you think about the
average display ad, or the average email,
or even something as simple as an SMS,
when you break it down to its elements
of product features, how many ways can
you describe a credit card? When you want
to appeal to the heart, as well as mind of
the consumer, what type of emotional
language would resonate? There are
literally thousands and often millions of
permutations, so in very simple terms,
what we’ve developed is a data model
around language."
Emotion, by its subjective nature, is one
of the most difficult things to
communicate, especially when you have
a range of them to choose from. When
coupled with the number of synonyms
for every emotion, the lexis increases
substantially. Persado fuses these words
and phrases within a digital impression
to give emotional language context that
its smart machine can read.
“We’ve got this massive data set
of five elements that go into a digital
communication – emotional language,
product features, formatting, positioning
and the call to action. These main elements
are scored against billions of real-world
digital impressions,” explains Whittle.
Persado allows the platform to test
every possible variable of a message and
identifies the words and phrases that
are proven to move an audience to act,
opening up the potential to redesign the
way financial marketing programs work.
Summer 2016
 Smart talk: Persado
combines the science
of language and data
Success right from the start
It’s a pick-up-and-go model. With
the ability to leverage existing
knowledge from its database
and applying it
to new campaigns,
customers
generate uplifts
from the start. The
Persado engine feeds
off the results of every
subsequent campaign, building
up a continuous learning experience,
based on how audiences react to the
wording of specific offers as well as what
is generally trending in the marketplace.
With an overwhelming amount of
information being transmitted at any
given time, the engine self-selects and
scales it down to give relevant and
practical insight.
Whittle gives a Persado-generated
banner ad on a financial services website
as an example. “As that ad is served to
a visitor to the site, all we need to know
are the content of that ad and audience
response data that the financial services
company will have to supply. Did
customers click? Did they then apply
and, ultimately, did they buy?”
Persado is then able to match the
impressions to the various elements of an
Any digital experience is all about
understanding exactly how to
address the customer in every situation
Summer 2016
ad and show the client company what
aspects of the creative, from headline
to image to colours to phrasing, moved
customers to act.
Nothing artificial about AI
We have seen the flip side of this
technology – artificial intelligence that
went awry, as with Microsoft’s Tay bot that,
left to learn on its own, interacted with
Twitter users with dire results. But sentient
robots are not Persado’s end goal; rather it
uses “cognitive computing,” an assisted
type of machine learning that uses science
and data to amplify the effectiveness of
human creativity. It still relies on human
guidance regarding the financial brand’s
individual personality and voice, which
Persado’s platform then accounts for.
“The difference between artificial
intelligence and our type of machine
learning is that, ultimately, it’s the
audience that tells our machine what is
working, as opposed to what an artificial
intelligence-type bot is doing, which is
basically trying to guess at scale,” says
Whittle. “Persado acts with the confidence
of data, freeing human creatives from
bias and subjectivity that have hampered
their decisions in the past.”
The engine doesn’t feature the
entire spectrum of human emotion, such
as disgust or vengeance, only ones
that are proven to inspire action because
in financial services, those types of
emotions have no validity based on
data. The good news is this means
customers won’t be interacting with
a sarcastic version of Siri or be
served by a version of Skynet from
the Terminator films.
According to Whittle, the end game for
Persado is to turbocharge what financial
institutions are doing on a manual basis,
which is brainstorming, testing, coming
up with hypotheses, and generate
comparatively huge volumes of content.
Innovative times call
for innovative practices
Whittle believes that the future needs
to be optimised to the digital age and
those who are innovative and early
adopters of transformative technologies,
much like the consumers they seek to
engage, will be the eventual winners in
the financial market.
“I think there will be a number of
start-up financial services organisations
coming into play, but they need very
deep pockets and they need very long
time frames to really build the customer
base of a traditional bank," he says.
"Most of the more established banks
will ultimately remain successful if
they can figure out how to adopt and
reliably generate success through the
use of these new technologies.”
Lawrence Whittle was talking to
Fintech Finance Magazine’s Dylan Jones
www.fintech.finance | 45
CUSTOMER EXPERIENCE
The bank that
keeps on giving
If you’re with Nationwide Building Society chances are you are a
happy customer. Ian Thompson, Head of Customer Operations
explains how he plans to maintain the bank’s award-winning service
Are you having issues with your
current branch? Do you constantly
feel confused and like a statistic?
Then maybe a switch to the bank
that consistently polls top of the
respected Financial Research
Survey is in order.
For two years now the customer
feedback survey has put Nationwide
Building Society in prime position and
Ian Thompson, Head of Customer
Operations, plans to keep it there.
Visualise in the heart of Nationwide’s
offices, Thompson pulling on all the strings.
This is the beating heart of the branch
network: it handles the savings, mortgages,
banking and current accounts. The front
desks act as its eyes.
Nationwide has managed to fight its way
to the top for customer service through a
successful collaboration of people and IT;
excellent technology systems partnered
with employees that share similar values.
This unity has created an easy-to-access
platform being micromanaged by
colleagues who are available to help
customers in real-time.
Such service can only be attained through
testing.“Within our organisation, any change
we make, we absolutely, robustly test,” says
Thompson. “'What’s going to be the impact
on the customer of that change?’ If it’s
negative, we really think about why we
should be doing it. That inculcates all of our
management processes.”
People-facing
With roughly half a billion pound profit this
half year, Nationwide has been able to invest
in long-term decisions for the benefit of
customers, including just over a year ago,
implementing real-time online banking.
That said, the current campaign for the
branch is ‘People make the world go round’.
“The way people deliver frontline, and
46 | www.fintech.finance
actually backline service, is absolutely A social bank
incredibly important to remain number The bank has purposefully moved
one for customer service, but they have away from silo-ing the teams who deal
to be supported by fantastic IT systems, with different customer interfaces.
and those systems fall into two categories, “Our Twitter services, our Facebook
for me,” says Thompson. services, our telephony services, our
He describes the first as being the big, back-office services, are now all in one
heavy lifting, batch machines that churn function. It’s the product operations
through Nationwide’s 16 million accounts function that I run, so there is interaction
and calculate the interest while making all between our front-of-house facing
the payments and running core services for employees and our back office people.
a large financial services organisation. “Our vision of the future is that the
“If you’re in a back office IT environment, systems that our employees use are exactly
to use my phrase, you’re playing not to lose the same as the systems that our customers
there," says Thompson. "You must make use, so that if you’re having a conversation
sure changes go in, that they work, and the through a web chat, or through a phone,
system must stay absolutely reliable. Our or through a Twitter feed, actually you’re
change framework that covers that, the looking at the same thing. In that way,
types of people who work on it have that you’re breaking down the barriers both
as their headset and there will be all sorts within our organisation, because we’re all
of different checkpoints and compliance
sign-offs and so on, before anything could
ever get implemented on the systems."
The other customer-facing function is
more nimble, more adaptable.
“There is an ability for somebody in our
branches, or somebody on our telephones,
to be able to raise a request using an
intelligent form, rather than filling in a piece
of paper; the ability for our customers to
be able to find out where their mortgage
application is through our online track and
trace services.
"In the front office systems, you clearly don’t
want to introduce errors, but I think your
mind-set is much more about play to win.
So there’s a different change framework we
use. It still has control points and authority
proceed gates, but a different team will work
on that. They can very quickly put and test
changes. Sometimes we’ll put them in one
branch or area, then roll them out. If they're
not right, we’ll correct them quickly. It’s much
more of a dynamic test-and-learn approach
in those front-office systems.”
Summer 2016
using the same systems, but also between
the front office, the customer themselves
and the back office systems. That’s part of
our investment in the digital society.”
Nationwide’s work with MatsSoft is
already moving it in that direction.
“MatsSoft provides a number of services
for us. It originally started off as our track
and trace system for mortgages and we’ve
extended that service to savings products
and banking products, so the customers
can see the status of their application.
That’s really important to them; it lets them
know where things are and actually stops
them phoning us up or going to branches.
"We’ve also used MatsSoft as an internal
workflow system, so in terms of joining up
the front and the back office, it’s provided
real advantage to us. We use it to create
intelligent forms at the front end, so people
in the branches or on telephony can fill in
a form and ask for something to be done
and it will be in the next two, three, four
hours, and they can see where it’s gone.”
Customer-facing IT, including social
media, has a critical role in two-way
communication, which can be both a
blessing and a curse, says Thompson.
“Only five or 10 years ago, if you had an
outage in your payment systems, for
example, it was probably a day or two before
the customer would notice. Now it’s literally
Our vision of
the future is that
the systems that our
employees use are
exactly the same as
the systems that our
customers use
Summer 2016
minutes. If our ATMs stop working, then
the Twitter feeds start to hit immediately,
it’s in the open. But it also gives us a
fantastic opportunity to communicate with
customers, because we can take control of
those tweets, explain to customers where
we’re at, what the prognosis is, what their
alternatives might be. We can give them
phone numbers, access to emergency cash,
if it’s one of our payment systems. But
having those things does mean you have to
be on your toes and the world very quickly
finds out if you’ve got any problems.”
Track and trace
There are other advantages that come with
an integrated system. The popular track
and trace facility that operates around ISA
transfer season, for example.
“It can take two or three weeks to collect
all the money, match up references and
so on, and our customers, a few years ago,
were saying, ‘I’ve sent in my application
and I’ve heard nothing, what’s going on?
I’m trying to capture a really good rate,
interest rates tend not to be there for
very long’. They were phoning us up,
ringing the branches,” explains Thompson.
So the bank implemented a customer
monitoring system with alerts sent via SMS
and an online facility for them to check
where the application was in the system.
“It didn’t take us very much to do, created
a very good customer experience and
actually saved us money, because people
didn’t phone up, go to branches and so
on,” he says.
“Customers will not understand the
complexities of Nationwide, that there’s a
savings department, or a change of address
department, or indeed that the branch
staff are different to the telephony staff,
are different to the back office staff, and I
wouldn’t expect a customer to,.
“A customer would think,‘Well, you know
me. Join all that up, please’. It makes it easier
for us, but much more importantly, it gives a
better service for the customer. The last thing
a customer wants is to go into a branch and
then phone us the next day and the person
on the phone doesn’t know they’ve been in.
That creates a view of a very disaggregated
organisation and not one that’s linked to
service. Linking those systems together is
absolutely critical.”
Communication:
It's all about
removing barriers
www.fintech.finance | 47
CUSTOMER EXPERIENCE

Fintastic fun
Australia’s Sandstone Technology was a fintech before fintech was
invented. It’s been around longer than some of the banks seeking its
software solutions, which gives CEO Sam Plowman a unique perspective

Banks aren’t the only ones who’ve
had to reinvent themselves to keep
pace with consumers over the past
decade. Software development
companies also felt their pain.
According to Sam Plowman, CEO of
Australia’s Sandstone Technology, founded
two years after a bookseller called Amazon
went on line and just as dotcoms began
inflating that famous bubble, suppliers
had to look at their legacy systems, too.
“The response that leading software
companies had to make, especially
ourselves, was to become a lot more
consumer-centric. A lot of the old
90s-style software development programs
that were spat out were very focussed
on rich functionality, but didn’t really
spend a lot of time and invest enough
in consumer experience,” he says.
Sandstone, which specialises in the finance
industry and describes itself as having a
niche relationship with banks, works on
two levels: digital banking solutions, which
includes internet and mobile banking,
personal financial management tools and
digital origination; and an omnichannel
service, which features customer
on-boarding and product origination.
A digital journey
Its latest, Travel Kaddy, a mobile banking
app that adapts as customers travel across
countries and currencies, allows banks to
enhance security and carry on a real-time
conversation with customers as they
manage their money abroad. It’s an
example of how banks are extending their
reach into every aspect of a customer’s life
and it’s made possible by mobile devices.
“The shift of transaction banking to
mobile has been prolific,” says Plowman.
“The key that we’re seeing right now is
that instead of thinking of digital as a
standalone property, more and more
banks are looking at it as a strategy. How
it becomes an extension of their valuable,
face-to-face or contact centre channels, how
it complements their third-party or broker
channels, how it helps originate or cross-sell
products to new or existing customers.
Rather than having to set up a standalone
technology to perform standalone processes
that don’t interface with anything else,
the terms multichannel or omnichannel
are becoming prevalent everywhere and
we’re playing strongly into that space.”
The exceptional impact of the internet
on banking has made it “more viable,
accessible, simpler, faster, and actually a

48 | www.fintech.finance Summer 2016


Partnership working: Solutions
will come from sharing IPs
little bit more fun”, says Plowman. It’s
handed power from banks to consumers;
but it’s also reshaped the old hierarchies
within the banks.
“We’re certainly seeing the CIOs, CTOs
and chief architects are very much in hand
with the business in setting the agenda,
the strategy and the roadmaps for their
products," says Plowman.“Technology
used to be very much a back-of-house
operations 20 years ago and now it’s
leading the innovation.
"The technology has caught up the
strategy and is providing opportunities
for businesses. All these fintechs are now
leveraging the fact that technology
enablers are giving them a way of
presenting things better... the boys
and girls from the back of house, the
technologists, are starting to dance
more at the front and set the tone.
I think that is very significant.”
New social engagement
Plowman himself has been working in
and around dotcoms, including banks
and non-banks, since the early 90s.
Back then banks were the only place you
could manage your finances and from such
Summer 2016
a privileged position they could arguably
ignore customer complaints and negativity.
Social media changed that for good and,
according to Plowman, that’s no bad thing.
“Banks are becoming socially engaged
and good banks are becoming socially
aware by listening, not by telling. If they’re
a smart bank, they will be receptive to
what’s being said socially about them, their
competitors and about their industry. And
if they’re able to come in, in a relevant way
and offer a solution to an issue that’s been
presented through any new channel, such
as social media, wow, what a turnaround.”
What this new enthusiasm for
engagement means for companies such as
Sandstone is that closed IPs are opening up,
allowing for more flexibility for the banks.
Not only this, but open API is becoming
more commonplace, enabling the banks
and their technologists even more
flexibility and agility, allowing them to
leverage the core functionality from some
of the main providers, but also to build out
from it. It gets around the problem of many
general ledger (GL) systems, which are
weighing down banks with complexity and
risk. Open APIs limit risk and bring banks
closer to the consumer, argues Plowman.
“Where a lot of the API and opening
up is happening is probably at a layer
closer to the customer. We’ve found with all
of our origination and digital platforms, for
all of those products, the more we can open
those up now you can incorporate fantastic
mobile apps – new technology products
and services that can be offered by either
The internal teams know the
bank better than we know the
bank, but we know the industry better
than the bank knows the industry
the banks themselves building
it, or smaller vendors, smaller start-ups
that can access the data or access part
of the functionality.
“The good thing about doing it at this layer
where you’ve got internet banking, whilst
it’s integrated down into your core systems,
it provides the security, the structured
functionality. In principle, it also provides a
portal window whereby other modules can
just come and sit there, so you can extend
your services and your offerings to your
customers, be they retail or business.”
The creation of mobile banking and
other financial apps has meant banks
have had to look for new ways to protect
clients. This can come in a variety of forms,
such as encryption and authorisation
techniques, which they are continuously
advised to research. Businesses such as
Sandstone are constantly having to
monitor industry bulletins and looking
at newly identified vulnerabilities.
“We’ve got continuously running
automated software analysis tools to scan
those vulnerabilities,” says Plowman. The
company also outsources to third parties
to “conduct all forms of testing, penetration”
and its chief security officer is an in-house
expert with a finger on the pulse of
what’s happening externally.
“The CSO is able to not only keep us
informed, internally, but also keep our
clients engaged. This is a critical role for
us; it’s a critical role for the banks.”
Smart working
Plowman is leading the company’s
expansion into Asia, the UK and mainland
Europe on the back of a suite of innovative
products that will increasingly be
developed not just for the banks but
alongside them.
“One of our greatest competitors in the
marketplace, ironically, is the banks' internal
technology teams,” says Plowman.
“We think that a solution moving forward
is working much more in association with
them and leveraging the strengths of both.
You know, the internal teams know the
bank better than we know the bank, but
we know the industry better than the
bank knows the industry in terms of some
of the technology points and the trends.
“When you bring the two together,
you can provide world-class solutions that
are a combination of Sandstone’s IP and
the bank’s IP.
"I think it’s the hybrid outcomes that will
be a winning solution in the future. So we’re
going to be a lot more flexible, adaptive,
and sort of, in technology terms, extensible,
in the next 12-plus months.”
www.fintech.finance | 49
CUSTOMER EXPERIENCE
The fortune hunters
Investor search platform Fundbird is poised to make the most of UK legislation
that insists banks offer to pass failed SME loan applications to alternative
lenders. CEO Sharon Argov is confident it can rise to the challenge
If there was one thing being in
the gaming industry taught
Sharon Argov it’s that you don’t
leave anything to chance.
As a former director of 888.com, the
online poker, casino and bingo platform
that floated for $1.5million in 2005,
she learned the value of measuring
performance in a competitive environment.
She’s adopted a similar approach to
Fundbird, the investment platform
established with co-founder Noa Wolfson,
which sets out to match SMEs
to alternative lenders –
although in this case the
odds of coming out a
winner are more favourable.
The conversion rate for
small businesses who are
50 | www.fintech.finance
paired with a lender via Fundbird and go
on to secure a loan is running at 40-60 per
cent. There is no charge to the business
and every acquirer pays the same flat fee.
“We are a mediator in the alternative
lending world, improving the quality
process from both sides,” says Argov.
“For the small businesses, rather than
filling in three to five applications and
negotiating his deal, he comes with one
application and gets access to the most
relevant lenders for him. From the lenders’
side, we are dramatically improving the
conversion rate, which, of course, improves
their user acquisition costs and their access
to market."
Almost half of the six million businesses
in the UK, the vast majority of which are
SMEs, look for a loan every year, says Argov.
“When we started, we realised two things:
one is that alternative lending groups are
Attracting investors:
Fundbird's conversion rate
for loans is 40-60 per cent
solving a critical problem of access to capital
that commercial companies are struggling
with. The other thing we understood was
that a lot of businesses are not aware of this
alternative, so we’re opening the funnel,
marketing it through distribution partners
and bringing this revolution of funding to
the awareness of SMEs.”
Financial matchmaker
The London-based start-up uses smart
algorithms to matchmake between lenders
and cash-hungry entrepreneurs who are
typically looking for a short-term fix of around
£15,000 to £20,000, although Fundbird’s
biggest sign-off to date has been £130,000
and it handles bids of up to £1million.
So far, 20 of the UK’s lenders have joined
Fundbird, including MarketInvoice and iwoca.
“I’ve talked to a lot of investors and
with most of them I realized that their
Summer 2016
biggest problem is acquisition and
awareness. It’s how to take these
products and services and market them
– because when it comes to financials,
small businesses are very conservative.
She’s convinced that SMEs stand to
gain the most from fintech, if they could
just raise their heads from the desk
to find out more about it. Fundbird’s
model lays it out for them on a stall.
“Most businesses during their lifetime,
or during the year, would work with two
lenders, probably with a long-term
solution, like invoice factoring or working
capital or security, and then, parallel to
that, a short-term loan. A lot of them will
come to us to compare the options,
browse around and then they will come
back in two or three weeks’ time after they
have made a decision.”
She believes there is gap in the market
for providing sub-£200,000 loans to small
business that the banks would prefer
Summer 2016
not to service. “It’s too heavy on their
risk management,” says Argov.
“I’ll give you an example. We had a
cleaning company that won a five-year
government contract and they needed a
loan for equipment and rebranding. It
was a guaranteed agreement with the UK
Government – they were definitely going
to pay and fulfill. They went to their bank,
a bank they’d worked with for 20 years,
and got declined. It took them two months
(to make the decision).
“Then they went to iwoca through us
and it took them less than a week to get
the money in the bank. No phone calls,
everything was purely online. This is exactly
what I’m talking about. It’s a real revolution
that helps a business grow.
“Money is one of those areas where we
are super-intimidated. Most people are
afraid to take risks, so they will stay in their
comfort area, rather than changing to
something that they might be better for
them or cheaper for them or more efficient
for them.”
Responsible lending
The Fundbird algorithm includes a
responsible loan mechanism to come up
with a deal that’s “not only the easiest but
the healthiest” for a business. It’s already
integrated with QuickBooks and is in the
process of adding Sage and Xero, the
biggest accounting platforms in the UK.
We are a mediator in the alternative
lending world, improving the
quality process from both sides
By partnering with fintech third parties,
it taps into KYC data that’s been largely
ignored so far by the banks, including
information gathering over social networks,
as well as sophisticated anti-fraud
assessments provided by, among others,
the Israel start-up Biofeedback.
"If it’s fraud with intention, then they
(the lenders) manage to prevent it. If a
company went bankrupt or haven’t
managed to fulfill their commitment,
most of them will be able to help through
a secondary market for loans to cover
their debt through a personal guarantees
mechanism, for instance.
“Part of the lenders’ IP is how they’re
doing their underwriting process and their
risk management. There is a lot of data
information available that the banks are
not using to validate the loans or do the
KYC process, from Facebook to Companies
House, through Experian to the VAT
reports," says Argov.
By the end of the year Fundbird hopes
to have launched a follow-up product based
on an API that will transform the service into
a true comparison site.
“We will send lenders the information
about a specific business in real time and
they will return a real quote with a specific
condition of the loans,” says Argov. “We’ll
have for the first time ever real comparison
between different products.
“It will compare on the most important
things. Hidden fees, for instance. Also the
monthly pay out, which is sometimes more
important than the level of interest
because you really need to know what are
your limits. We took the five important
things that the business needs to know and
these are the criteria that we will compare.
It’s not simple, but I think this will be the
revolutionary product for businesses.”
With the big four banks still accounting
for 80 per cent of SME lending in the UK,
Fundbird is well placed to make the most
of forthcoming changes under the Small
Business, Enterprise and Employment Act
(2015). The new rules will require banks
who reject SMEs for finance to ask them
whether they want their details to be
shared with websites, who will then refer
companies to challenger banks and
alternative lenders. The regulations, which
Argov expects to be enacted within the
next year, follow several failed attempts
by Government to improve bank lending
to the SME sector.
“It’s a major gap that needs to be
solved and it’s in our own interest
that those businesses will grow and
succeed and manage to be active and
successful,” says Argov. “I think there
will be more niche solutions; loans
against property; loans for verticals
in industry; you are already seeing
companies that only give loans for working
in specific areas, or specific verticals,
or willing to give specific guarantees.
So I think this industry is here to stay.”
www.fintech.finance | 51
 Navigating the future of innovative banking
15-16 June 2016, Singapore
Profitable customer engagement
www.arena-international.com/abf

For further details please contact:

Nadine Placzek at nadineplaczek@arena-international.com
Tel +44 (0)20 7936 6945

Listen up!
Jonathan Wax, head of EMEA operations at Nexidia, the US-based
advanced speech and interaction analytics company, is a man with his ear
to the ground and a view on how banks should be talking to customers
Jonathan Wax is good at listening.
It’s his job.
As head of EMEA operations for Nexidia,
the US-based advanced speech and
interaction analytics company, he
eavesdrops on organisations’ conversations
with customers every day – through
call centres, on social media and over a
myriad of other digital channels.
He helps them gather, understand and
use those conversations to predict what
customers will do or want next. And what
he’s learned is that customers want choice.
“I think one of the challenges with any
form of self-service is that there is normally a
view from an organisation saying, ‘Oh, those
are really classic transactions, they’re very
simple things, they’ll be far more effective
or efficient, having them as self-service.’
There may be a percentage of customers
who are delighted to do that, there may be
a percentage of customers who never
want to – they always want to ring up for a
balance, that’s just one of the things they do.
“So while I think there is huge ability to
improve the cost models through moving
a lot of these things to intelligent channels,
the danger is if you say the only way to do
X is through that channel, then you can
start to alienate your customers.”
And with just over two million people
moving accounts in the UK since seven-day
switching was introduced in 2013, banks
can’t afford to do that.
Communicating value
Deciding what is appropriate for whom
starts with segmenting the customer base,
says Wax, and then implementing a good
communications strategy to make sure
customers are aware of the options – be it
phone, webchat, app or social media.
And as any fan of TV detective shows
will tell you, every contact leaves a trace.
For banks, the records of these contacts for
clues to business performance, regulatory
compliance and customer behaviour.
“One of the strong sectors for us has
been contact centres because we can show
Summer 2016
people what’s happening in their calls to
do things like process improvement or to
understand the voice of the customer or
use it as a performance tool,” says Wax.
“Where it becomes particularly relevant to
the financial services industry is regulatory
oversight. Whilst we’ve always been able to
improve the contact centre performance
now we can take all your interactions and
analyse them and present data so that you
can go back to the regulator (with them).”
90 per cent
of call centres
had some form of
performance and
quality monitoring.
Social channels was
under 20 per cent
Wax is an advocate of banks integrating
social and digital channels into their
mainstream operations rather than leave
them where they usually sit, out on a limb
in the marketing department.
“The challenge for the banks is to
integrate them into their operations and
not have to re-learn all the lessons from the
contact centres,” he says. “Contact centres
have been going 30, 40 years, and people
have slowly worked out you’ve got to
check the quality of the service you deliver;
CUSTOMER EXPERIENCE
you’ve got to check the consistency; the
regulatory compliance. So there’s been a
whole ecosystem supporting the way the
contact centres work. The digital, social
media channels are normally being run
separately and the danger is all of the
lessons learned from the development of
contact centres are forgotten. Then people
will make the same mistakes.
“We did some research about two years
ago and (around) 90 per cent of call centres
had some form of performance and quality
monitoring going on. Social channels was
under 20 per cent.”
Integration is key
Wax argues that without fully integrating all
the many ways customers can talk to them
and subjecting those channels to the same
scrutiny, banks will only ever have half a
picture of who their customers really are.
Seeing the full portrait is much more powerful.
“The integration of channels means
I actually get a complete view of the
customer. It will mean that there will be far
more data that’s available at the point of
contact, so the people who are in contact
centres will be more than just processing
transactions. I think it’s been a nirvana
for a long time that we want to have the
really important conversations with
customers, and I think that’s what we’ll
see happening. We’ll see the contacts
that are still happening on a one-to-one
relationship, and it doesn’t necessarily
have to be voice, it could still be chat or
whatever technology, but when you’ve got
a one-to-one transaction, people have far
more ability to deal with a customer, take
responsibility and to deliver a better service
“I think you’re going to have to empower
people to do far more at the point of
contact. One of the primary changes we
are going to see is people moving away
from the old command and control type
of environment in call centres. They're
going to be able to do that because of
the wealth of information that’s available
is being tapped for the first time.”
www.fintech.finance | 53
DATA
Humanising digital
Information technology shouldn’t be about taking people out of the process; it’s
about enabling them to play a greater part in it – that's where true innovation
begins, argues Saul Judah, Research Director of IT advisory consultants Gartner
“Banks can’t differentiate on
whether their current account is
better than the next bank anymore.
They have to look at something
quite different; they have to look at
how they can innovate with their
information and create some value
that the customers and the market
truly need,” says Saul Judah.
Welcome to digital humanism – harnessing
the power of information technology, not to
depersonalise the customer experience but
put people back at the centre of it. To make
every interaction hyper human.
As Research Director at consultants
Gartner, it's Judah’s job not only to work
out what the information clients receive
from billions of smart devices and other
channels says about their customers
and whether or not it’s to be trusted;
he also shows them how to build their
organisations around it. Because if there
is one asset that banks are not short of,
it’s data. Their problem is not knowing
too little, it’s knowing too much and
that creates a challenge for “digital
leadership”, says Judah.
“Chief information officers, chief data
officers and information leaders widely
need to re-establish and look at the people
they have in the organisation, retrain them,
redesign them and make them future
facing,” he adds.
And if that sounds a bit Ex Machina to
you, Judah believes it’s justified.
“I’m seeing new ways of differentiation
through things like personalised products,
making products that are very specific
to the individuals and that requires vast
amounts of information. It requires new
processes and frameworks to think about
information, therefore driving the need to
have better information management.
“We used to look at structured systems –
databases, data warehousing and so on –
Technology allows a human being to flourish, to do
their best, to innovate, to be creative in the organisation
56 | www.fintech.finance
but now there’s also the very urgent need to
look at unstructured data, semi-structured
data, inside and outside the organisation.
Having large volumes of structured and
unstructured data by itself can only address
some types of business scenarios. Where
organisations want to achieve true digital
transformation and where they want to
differentiate (they need) to be able to link
those things up with their master data.
“Linking the Internet of Things to master
data is going to be crucial. That’s a
technological aspect. There is also the need to
have digital leadership, that is to understand
what it is to differentiate, what the identity
of the organisation is going to be, and
create and harness all the information and
technologies to deliver that objective.”
People-centric focus
Judah’s boss Betsy Burton, Garton’s
vice-president, has described “digital
humanism as “the notion that people are
the central focus in the manifestation of
digital businesses and digital workplaces”.
“In the past we’ve seen the purpose of
technology as being to automate things,
remove people from processes,” says
Judah. “Digital humanism (is) where the
purpose of technology allows a human
being to flourish, to do their best, to
innovate, to be creative in the organisation.
That’s where invention and differentiation
is going to come from.”
The sheer volume of data is one
challenge; its variety and veracity are others.
“Knowing how and where data is going to
emerge is incredibly hard, which requires
different responses than assuming that the
data is going to be uniform and consistent.
“The evolution of information, the
complexity, means they have to re-establish
and re-evaluate how they think about
information trust, especially when much of
this information is coming from outside;
they have to consider its origin and lineage
and what it means to their data insight.”
Which brings us to strategy and risk.
Judah believes digital business strategy
needs to be far more options-based than
it is now.
“We still find that many organisations
look at strategy as being something that
they do as an activity and then move on to
real work. This can’t be the case anymore.
It has to be an options-based, always-on
strategy that is revisited frequently and
also considerate to the changing business
needs and the evolving circumstances
of the market. Where organisations are
able to do that, they are far more able to
understand and predict challenges.”
The framework for assessing risk similarly
needs to change. “We’re seeing the rise of a
focus on information related to people and
processes more than we were," says Judah.
"In the old days it was very much a case
of, ‘We’re facing risk, let’s establish greater
controls’ but the complexity of organisations
is such that it can’t just be controls now, it has
to be other responses, and people-centric
information risk, people-centric information
security, is far more important,” says Judah.
He is in favour of a metrics-based approach
to measuring data quality, but not in isolation.
“Beyond that, they also need very good
policies, very good standards, a very
effective compliance framework, a risk
management framework, and a way of
measuring with respect to business
outcomes, that enable that data quality
not only to get clean but also to be kept
clean. Without those, it’s ineffective spend.
“So, organisations will need to ask what
data means in terms of consistency,
conformity, effectiveness, all those good
things, but also subjective measures, like 'Is
it timely? Is it useable?' These are the things
that business users, who are the consumers
of information, need to define.”
Summer 2016
In control:
There's a greater need
for digital leadership

Summer 2016 www.fintech.finance | 57

Marketforce’s 4th Annual Conference

The Future of Digital Banking

29th & 30th June 2016
Marriott Grosvenor Square, London

The age of digital innovation: defining banking for the next generation
This event brings together 200+ leading experts from “ This event brings together
across the globe to discuss the key issues shaping the
banking industry in this era of digital innovation. Hear some of the brightest minds
from key decision makers at global incumbents, as well
as challenger banks and start-ups.
and talents from across
Europe to understand and
Last year’s attendee breakdown explore the emerging digital
landscape and possible
future trends impacting the
45% 30% 17%
region and industry.”
8%
Head of Touchpoint Transformation,
Banks IT Solutions Management Other Personal Banking, Barclays
Consultants

Book before 20th May to save up to £150

www.marketforce.eu.com/digitalbanking345 @MF_Banking
#banking16

13+ HOURS OF
CONTENT 6+ HOURS OF
NETWORKING 6 INTERACTIVE
SESSIONS

API-ness is the truth
Retail banks won't fully realise the transformative power of fintech
without the widespread adoption of APIs, argues Konstantin Rabin,
CMO of financial data aggregation specialist Kontomatik
Financial services and banking
have traditionally been among
the most conservative industries.
Then fintech happened.
Companies composed of just a few
talented and motivated developers started
taking slices of the financial pie and
“disruption” became a media buzzword
applied to what used to be an ultra-cautious
sector. And yet, while a number of banks
have joined in the innovation, one key
issue remains – banks do not provide
APIs, or, to give them their full name,
application programming interfaces.
What is a banking API?
A banking API is a tool that lets applications
access the financial data of users with their
consent. The process is similar to using
Facebook or LinkedIn to log in to a
third-party app, but in the realm of financial
services. Instead of filling out a bulky
registration form on a website, users just
click a button and the browser grabs data
from the current Facebook or LinkedIn
session. With banking APIs the process is
different, due to the security measures
involved, but not that different.
An application that wants to access
banking data will ask users to authenticate
it with their bank, using their login
credentials. This is the case even if they
are already logged in to internet banking
in another tab. Once authenticated, an
application gets access to that user’s
registration, account and transactional data.
3main benefits
of a banking API
1. Know-your-customer
Most companies that offer financial
services are required to perform
know-your-customer (KYC) procedures.
Typically, this is a time-consuming, labour-
intensive process. When done offline, it
might require customers to visit a bank
branch, wait in line and, potentially, not
have all the required documents with
Summer 2016
them. To perform KYC online, users have
to supply scanned copies of documents,
such as a utility bill.
Whether online or offline, having to
authenticate yourself is an inconvenient
process that delays the use of an actual
product or a service. But why do you
need to be identified every time you
register at a new company? Wouldn’t it be
better if these companies could somehow
communicate and perform KYC based
on the data obtained from the source of
your registration? This is where banking
APIs come in handy.
In the last two years, for example, German
online microlender Kreditech doubled its
conversion rate using such technology.
Instead of requesting a client to upload
the documents and proofs of residence,
Kreditech was able to verify the identity of
a client with just a few clicks.
Banking APIs
will be the
fuel of financial
innovation over
the next few years
2. Understand your customer
Identifying your customers does not
necessarily mean you understand them.
Google asks you for hardly any
information and sometimes only requests
a phone verification. Nevertheless, this
company tracks your searches, behaviour,
interests and so on. Based on the data
obtained through the usage of its services,
Google can display ads that are more
likely to be compelling to the user.
The same can happen in the financial
industry. If a company can access
a customer’s transactional data
and analyse their spending habits,
it can present them with truly
tailor-made offers that are more
DATA
likely to be useful and therefore adopted
more often by customers.
3. Provide more convenience
Do you remember when upgrading
your phone took forever? Unless you
had all your contacts backed up to a SIM
card, you’d need to spend hours copying
contacts, re-sending important messages
and so on. The process is still much the
same today when it comes to finances.
Your bank has all of the predefined
payments, address book and other features
that you have spent years setting up. With
a banking API, a user can import all of his
settings with a single authentication.
When Alior bank launched AliorSync, for
example, it managed to attract new clients
by ensuring that all of their current banking
settings would not be lost when importing
data via Kontomatik banking API.
The verdict
Banking APIs will be the fuel of financial
innovation over the next few years. This
technology will power-up new services
that will transform the way we treat our
financials as well as assist in developing
banking systems and enabling merchants
to gain access to the customers and data
they need more easily.
KNOW-YOUR-CUSTOMER
Performing identity
checks is simpler
with APIs
www.fintech.finance | 59
In 21st century banking,
whether new or established...

...make your Customer

Experience your legacy.

Flawless customer experience management

email: matt.sims@teleperformance.com
@TPmarketingUK
TeleperformanceUK
TeleperformanceUK

www.teleperformance.com

20/20 vision
Brian Costello, VP and Chief Information Security Officer
at software company Yodlee gives four key takeaways from
this year’s Money20/20 Europe conference in Copenhagen
Recently, I attended Money20/20
Europe – the world’s largest fintech
conference held in Copenhagen,
Denmark. As I talked with several
attendees from financial institutions
and fintech innovators, I noticed
some common themes emerging.
They’re the same conversations we’re
having across Europe with banks and
technology companies and it shows that
everyone is focussed on similar topics.
1. Responsible fintech innovation
Everyone in the industry recognizes that
responsible fintech innovation is a force
for good. According to the Office of the
Comptroller of Currency, responsible
innovation is defined as: “The use of new or
improved financial products, services, and
processes to meet the evolving needs of
consumers, businesses, and communities
in a manner that is consistent with sound
risk management and is aligned with the
bank’s overall business strategy.”
Consumers and small to medium
enterprises (SMEs) benefit by getting
data-driven services that are personalised
just for them. Banks benefit because they
get reliable and timely data that helps
them improve their product and service
offerings. And the market benefits from
the improved financial health and wellness
of its members.
2. Fintech Innovation is evolutionary, not
revolutionary Yes, certain technologies,
such as blockchain, are revolutionary. But the
financial ecosystem, balanced by responsible
innovators, banks and regulators, helps to
influence it in a more evolutionary direction
and ensure that fintech initiatives don’t cause
systemic risk. All stakeholders benefit from
this, especially consumers.
3. Increasing consumer protection
and regulation Consumer enablement
and protection is another common
theme, driven by fintech innovators and
financial institutions with increasing
input from regulators.
Summer 2016
DATA
PSD2‚ the European Parliament’s Directive consumers have a role to play in
on Payment Services, was a big part of protecting them. We will see PSD2 and
conversations at Money20/20 and it’s the new General Data Protection
having a major impact on our interactions Regulation (GDPR) continue to inform
with EU banks and innovators. these issues and drive standards
The recognition that account information for a balanced financial ecosystem.
service providers are different from payment Also, service providers and app
providers allows Envestnet/Yodlee and developers that leverage financial data
other platforms to better understand their to power their solutions have the critical
legal requirements and craft appropriate responsibility to protect consumers.
solutions that serve our customers.
It also supports a key principle of
consumer protection, namely that a
consumer owns their financial data. This
principle allows consumers to choose
how they use their data to improve their
financial wellness by engaging with service
providers they choose.
4. Financial services most impacted by
fintech Lastly, fintech is still having a
dramatic impact on financial services across
Europe. There are four primary use cases
getting the most attention:
■ Personal finance management apps,
including those that use
Fintech is
behaviour-based triggers that are
targeted to key segments, like students,
still having a
women and those nearing retirement dramatic impact on
financial services
■ Payment providers using aggregation
for account verification and risk
management
■ Lenders using bank statement data
across Europe
for personalized underwriting and As such, financial institutions and
affordability checks in a streamlined data aggregators must do everything
application experience possible to fortify their defences against
■ Financial advisors using account data possible threats to enable secure,
to provide better advice and to comply aggregation-powered applications.
with industry requirements like retail
distribution review (RDR), a new set of UK ■ See the Fintech Magazine interview
regulations that provide transparency and with Brian Costello at Money20/20 by
fairness to clients of financial advisors going to www.fintech.finance/fintech-tv/
brian-costello-envestnet-yodlee.
Events like Money20/20 play an important Download the white paper on Account
role by connecting innovators and service Aggregation and Security: What You
providers to support the continued evolution Need to Know at www.yodlee.com/
of fintech and discuss some of these issues. resource/account-aggregation-and-
Responsible innovation means that all security/ or visit www.yodlee.com for
stakeholders working in the service of more information.
www.fintech.finance | 61
DATA

The big daddies of

big daTa
Global banks aren’t late to the digital party, according to george Stein, UniCredit’s
head of global transaction banking for the UK. They were managing big data when
fintech was still in nappies. They’re just figuring out what next to do with it

“Thirty years ago the then
chairman of a major international
bank said: ‘Money is information
on the move.’ He got it right. But no
one back then could have imagined
the bandwidth and processing
capability that market participants
have these days,” says George
Stein, the recently appointed head
of global transaction banking for
UniCredit in the UK.
With UniCredit having pledged to spend
1.2 billion euros on digital innovation by
2018, Stein is looking for ways to make the
most of the information at the bank’s
disposal in order to serve clients with the
most modern cash management and
trade finance services available.
Far from playing catch-up with the new
challenger banks and financial service
providers, Stein’s of the view that banks

Information:
The challenge for banks
and customers is working
out how best to use it

62 | www.fintech.finance Summer 2016

were the true innovators in this field – the
big big daddies of big data and information
exchange. Their challenge is not so much
mastering big data as figuring out how best
to use it to create value for their clients.
“Big data is a new name for something
we’ve always dealt with. We’re banks. How
many transactions do we process a day?
We already do big data,” he says.
“I would argue that since we started
using computers, banks have been in the
digital business. We’ve digitised the money
transfer industry. If you think about the
preponderance of cashless payments right
now, and in my area, wholesale banking,
we have become highly automated.
“It’s a bit of a cliché, but straight through
processing (STP), is still, in my view, entirely
appropriate to use as a goal, both on the
bank side and on the client side. On the
bank side, by making our processes more
efficient, we save cost and we can pass that
efficiency on to our customers. On the
customer side, well, what do the customers
want? They want information and reporting,
which is digitalisation in my mind. They
want information reporting from us that
enables them to process transactions on
their side as straight through as possible,
therefore achieving efficiencies. Every single
business in the world wants to be more
efficient and, through digitalisation, banks
have been helping customers do that and
we will continue to do that.”
A new landscape
The question, now that the financial
ecosystem has changed, is how.
Blockchain, the payment system
underlying bitcoin exchange, which is
based on a decentralised ledger that in
theory could encroach on part of banks’
role as a trusted third party intermediary,
is one area of intense scrutiny. The
technology’s potential to reduce risk and
transaction costs and to improve speed
and transparency in capital markets has
persuaded some of the biggest banks to
collaborate to harness this particular
digital beast.
“Blockchain is an interesting new
technology, and it’s one where I think the
banking market, in particular, is trying to
work out exactly where it’s applicable,”
Summer 2016
says Stein. “UniCredit has teams working
on the concept, as do other banks. Trade
finance is a very important business for
UniCredit. Our strategy is to do a lot more
with our customers and a lot more with
other banks, including in London, so we
are building up our capability and our
capacity. Whether Blockchain becomes a
part of that… I definitely think we’ll find
out in the next few years.”
Meanwhile, he sees a more immediate
challenge in sifting and interrogating big
data for the bank’s own and ultimately
the customers’ benefit.
“We have an amazing wealth of
knowledge about our customers that
we use to do things like we’re doing in
London to develop new products and new
capabilities to serve our clients better. On
the customer side, to turn that equation
Big data is a new name for
something we’ve always dealt
with. We’re banks. How many
transactions do we process a day?
around is a huge challenge. Customers are
traditionally used to receiving data from
their banks about their activities, but
sitting down with customers and working
out exactly how to use all the additional
data that they’re maybe not used to
looking at – things that go beyond daily
reporting and balance and transaction
reporting– that’s a challenge for our
customers as well as for us. How do you
use all this data? What is there that is
relevant for me? What’s relevant for one
client may not be relevant for another
client. The challenge is for customers to
understand what’s available and how they
think they can use it, and our challenge is
to follow our customers in that endeavour.”
That’s why UniCredit met clients at last
year’s SIBOS conference in Singapore with a
joint delegation, including both bankers
and IT specialists, to discuss the possibilities.
Customer-first banking
"Getting our technology colleagues
together directly with customers is an
important way for everyone to get a
better understanding of what the other’s
needs are and what the other’s
capabilities are, and in the end, we think
we can deliver a better service to our
customers that way.
“It’s easy to believe that transaction
banking is purely a technology business.
Fundamentally, I believe it’s a people
business, like every other business. In
bringing our technology colleagues
together with our clients, we think it makes
it that much easier for us to get a better
understanding across all areas of the bank of
what our customers want to do,” says Stein.
“At UniCredit in London right now
we’re investing to build our capability and
our capacity to serve customers in this
market, so the continuous process of
understanding what your customers want
from you and then putting the investment
behind it, is absolutely vital to us remaining
competitive and succeeding in the market. "
The pace of change in banking is only
going to accelerate, says Stein.
“We have a huge network of customers
and we have a very large geographic
footprint in some of the strongest
economies in the world and the UK, as
an important financial market, is vital
for us, because our customers want us
to follow them here.
"So, we’re investing to meet our
customers’ needs here as part of keeping
up with the change and the efficiency
pressures that we see in the business. A
good example of that is on the trade
finance side where UniCredit has been
actively working with customers to make
use of the bank payment obligation (BPO)
instrument in trade finance, which
combines the safety of a letter of credit
with the efficiency of open account trading.
“Going forward, there will be continued
pressure to manage costs, but deliver
more capability with advances in
technology. I think we can do that.”
www.fintech.finance | 63
DATA

Less pain, more gains

Anand Subramaniam, Senior Vice President Marketing at eGain Corporation,
addresses the pain, the cure and how to find the gain in BFSI customer service
What are the biggest pain points different answers” (each mentioned by 40 customers said they switched or were likely
in customer service in the banking, per cent of respondents), and “Agents didn’t to switch banks due to poor customer service,
financial services and insurance know the answer” (27 per cent) were the according to Accenture’s recent Global
sectors, aka BFSI? culprits, followed remotely by “other” issues Consumer Pulse Survey. The same survey
According to a recent survey of 5,000 (the respondents were only allowed to pick reported that 39 per cent of insurance
consumers conducted by Forrester Research up to two pain points in their responses). consumers had either fully or partially switched
on behalf of eGain, “Can’t find answers on The result is increased customer effort and their provider, which meant $470billion worth
company websites", “Different agents give resultant defections. In fact, 34 per cent of of premiums were up for grabs just last year.

64 | www.fintech.finance Summer 2016


Next-gen KM: It can
transform your business
The Cure
So what is the cure for customer service
pain in BFSI? If you look closely at the
consumer responses, you’ll find a common
thread across them – all the issues can be
addressed by infusing smarter knowledge
across customer touchpoints. So what is
driving the need for smarter knowledge?
It is the increasing breadth and depth of
customer queries, preference of next-gen
customers for self-service, and the
increasing ability of self-service systems
to handle routine questions, which leaves
the hard questions for the agents.
Here are four steps to pain relief:
Summer 2016
1 Improve findability It is one thing
to have content and another thing to
be able to find the proverbial needle in the
haystack, i.e. the answer when a customer
is waiting on the line. While content
management (CM) systems are good at
content creation and maintenance, they
are not good at findability. It’s important
to have a knowledge management (KM)
system that offers multiple ways for agents
(and end customers) to find answers
– dynamic FAQs, keyword and natural
language search with or without chatbot
front-end, topic tree browse, guided
search, etc. If you already have a CM system
in place, you are well-advised to add a
findability layer to it with KM.
2 Leverage artificial intelligence (AI)
You can’t address today’s business
challenges with yesterday’s technologies.
The need for smarter knowledge calls
for the use of AI and here is the good
news. Purpose-built AI, applied in
conjunction with best practices, is
guaranteed to deliver transformational
business value. An example is eGain’s
patented Case-Based Reasoning (CBR)
technology, which has simultaneously
improved multiple customer service
metrics for blue-chip companies
across industries.
3 Unify across touchpoints
Inconsistency of answers and process
across touchpoints not only frustrates
customers but also creates compliance
risk for the BFSI sector, one of the most
regulated among industries. The problem
can be addressed by enforcing regulatory
and best-practice compliance across
content, interactions, and service fulfillment
processes with robust omnichannel
KM, infused with AI for guidance.
4 Optimise for performance It is
important to expand and maintain
your KM system on an ongoing basis
to ensure its relevance and expand its
business value. Make sure you leverage
knowledge analytics to continuously
improve the accuracy and scope of your
knowledge base content. At the same time,
measure the performance of your agents
and customer self-service systems before
and after deploying KM to quantify the
business value of knowledge. Sample
metrics include First-Contact Resolution
(FCR), Average Speed to Answer (ASA),
customer satisfaction (e.g. NPS),
reduction in training time, speed to
competency, and call deflection rate
(in the case of digital self-service).
The Gain
Done with the right technology and
best practices, knowledge, infused with
AI, can transform any business while
alleviating customer pain. Here are some
examples from our blue-chip clients:
Global BFSI giant: Scales to meet
100 per cent increase in demand for
customer service without adding any
advisors, improves FCR by 36 per cent,
slashes training time by 60 per cent, and
enforces regulatory compliance
Premier US financial services firms:
One improves FCR by 72 per cent, and
another speeds up response time by
47 per cent and improves compliance
attainment by 30 per cent, while reducing
classroom training time by 30 per cent
You can’t
address today’s
business challenges
with yesterday’s
technologies
Pan-African BFSI firm: Ascends from
#3 to #1 in customer service NPS, cuts
agent training time by 50 per cent, reduces
agent churn to less than one per cent, and
enables any agent to handle any customer
query, even as it expands to 11 countries
Transformational? Yes, that is exactly
what next-gen KM can do for any BFSI
company, and, in fact, for any business.
The Path
What is the safest and best path to
customer service transformation with
next-gen KM? A proven approach our
clients have taken is to start with eGain
Try+Buy, a cloud pilot in a production
environment, guided by best-practice
experts for success, all free of charge with
no obligation to buy. Once business value
is established, these clients engaged with
our experts to expand the value in rapid
sprints. Agile transformation of BFSI
customer service is, after all, no oxymoron.
www.fintech.finance | 65
GRC & TRADING
Running with
the pack
Jordan Belfort, the Wall Street broker whose
spectacular rise was mirrored by a spectacular fall
from grace, has turned from predator to penitent…
“Don’t hang up until the customer
buys or dies” was the mantra
Jordan Belfort and his wolves of
Wall Street lived by. The bender
of rules, the once seeker of the
grey area, the alpha wolf, is now
on a straight and narrow path
to redemption.
Since Martin Scorsese turned his
memoir The Wolf of Wall Street into a film,
Belfort has mined another niche – as
a public speaker, reliving his morally
questionable past and commenting
on regulations designed to prevent
another wolf emerging.
The ascension to the throne for Belfort
was made possible by “pump and dump”
schemes, “ratholes” and his manufactured
Straight Line System of selling.
Pump and dump (P&D) is a form of
microcap stock fraud, which seeks
to boost the price of a stock through
recommendations based on misleading
and greatly exaggerated statements.
Those who commit this fraud already own
investments in the company’s stock and
sell their share once the upselling of it leads
to a higher share price. The consequence
of that, of course, is capital flight, the share
price in freefall and big losses.
Rathole was a code word coined among
traders at Belfort’s Stratton Oakmont
brokerage house for a nominee, a person
who owned shares of stock on paper
but was nothing more than a front man.
There was nothing inherently illegal
about being a nominee, as long as the
appropriate taxes were being paid
and the nominee arrangement didn’t
violate any securities laws.
According to Belfort’s memoir: “As long
as you didn’t acquire more than five per
cent of any one company – at which point
66 | www.fintech.finance
you’d be required to file a 13D disclosing
your ownership and intentions – it was all
perfectly legal”.
One of the many issues that the US
Security and Exchange Commission (SEC)
had was the engineering of its lawsuit
against Stratton Oakmont for being a
penny-stock firm because Belfort’s firm
bore no resemblance to one. Traditionally,
these firms are decentralised and have
many offices, whereas Stratton Oakmont
only had one.
The genius behind the firm was its
targeting of wealthy individuals.
Penny-stock firms would normally target
people with little or no net worth and
encourage them to spend a few thousand
dollars; Stratton Oakmont would convince
the wealthy to invest millions ,which
meant that the “SEC couldn’t make the
usual claim that Stratton’s clients weren’t
suitable to risk their money in speculative
stock”, according to Belfort.
At the peak of his reign on Wall Street,
Belfort employed more than 1,000
stockbrokers and raised an outstanding
$1.5billion while starting more than 30
million-dollar companies from scratch
and consulting for more than 50 public
companies. Belfort’s personal salary
during this time was $50million a year,
which he used for instant gratification,
as famously depicted by Leonardo
DiCaprio in Scorsese's film.
Much has been made of Belfort’s
drug abuse and addiction; it doesn’t
however define him. The fact of the
matter is that what Belfort managed
to accomplish was incredible.
Although it all came to an end with
a jail sentence and his broker’s licence Excess: Acadamy Award
winner Leonardo DiCaprio
revoked, he continues to achieve. During portrayed Belfort in Martin
his time in prison, he was cell mates with Scorsese's The Wolf of Wall Street
Summer 2016
 Tommy Chong, most famous for his role
in the ‘Cheech and Chong’ movies about
cannabis smokers. Chong is the person
who convinced Belfort to write the two
memoirs that for him became an act of
atonement. He is regularly quoted as
saying the books are a “cautionary tale”
rather than a glorification of his actions.
Since his incarceration, Belfort has been
on the road to paying back the $110million
he owes to the victims of his fraud. During
an interview with Bloomberg, Belfort was
asked how he was corrupted. He’s quoted
as saying that “it started with one gigantic
rationalisation that it was OK to take a bag
of cash for someone to hide it, trade it and
have it make sense on paper... everyone on
Wall Street does it”.
Through desensitisation, Belfort
became the man he was portrayed in the
movie. With the philosophy of hindsight,
he says there is an “emptiness” to the
money traders on Wall Street accumulate
and they try to fill that void in whatever
way they can.
For decades, the media has demonised
Wall Street and the people who work
there. And, to be fair, up until 2008 there
wasn’t much evidence that the excess
had been reigned in. When interviewed
by The Sacramento Bee Belfort was asked
whether it is better or worse today than
when he was running Stratton Oakmont.
“It was going on and got much worse
leading up to the GFC (global financial
crisis). The whole industry was running
amok,” he said.
The association between greed, excess
and Wall Street may never go away but
time in jail made Belfort at least “realign”
his values. Losing everything – his money,
his wife, his children – forced him to focus
on a more legitimate line of work.
These days, Belfort has directed his
attention to speaking at seminars and
corporate events about his Straight Line
System, employed so successfully to
persuade people to part with millions of
dollars, now turned into a self-development
Much has tool, earning him considerably less. Most

been made of of the profit goes towards compensating

those he wronged. He now insists Straight
Belfort’s drug abuse Line is a technique that should be used
‘ethically’ to convince someone to take any
and addiction; it doesn’t action, thereby increasing your income,
sales, closing rate and confidence.
however define him A wolf in sheep’s clothing? Maybe.

Summer 2016 www.fintech.finance | 67

GRC & TRADING
Secure: Alcatraz offers
limitless storage of
communication across
multiple channels
Up in
the Cloud
Brian Perfect (right), looks at how the Alcatraz data depository – a context aware object
store – is propelling Actiance to the forefront of next-generation archive technology
In recent years, the financial services
industry has faced some of its
biggest challenges, from the 2008
financial crash through to the LIBOR
and foreign exchange scandals.
In the wake of ever-increasing regulation,
the market has been forced to evolve. The
announcement of revisions to the European
Markets in Financial Instruments Directive, in
the form of MiFID II, is such a large change in
regulation for most in the financial services
industry, people have begun to look
differently at their business processes, their
operations, and the markets they operate
and position themselves within.
MiFID II removes some of the systemic
risk, preventing investors from being
abused by any potential market malpractice.
In terms of customers, this means the
market should be a safer place for investors,
68 | www.fintech.finance
promoting a growth in confidence, with
investors investing more due to the market
being, essentially, safer than it was prior to
the introduction of MiFID II.
With more stringent rules for record keeping,
financial services firms have felt an increasing
need for supervision and trade reconstruction,
causing the industry to move towards a
greater balance between transparency and
security. This is where Actiance has been
leading the way, helping businesses
communicate and cooperate across an array
of highly regulated industries, by creating
the first system that allows complete capture
of all business communications, and the data
it generates, on a single platform.
Unique proposition
The unique selling point of the Alcatraz
system is that, being Cloud-based, it’s unlike
any of the current archives available today.
The majority of archiving technology
presently in use is based on email archiving,
which is becoming increasingly swamped
with the additions of instant and other
types of electronic messaging.
Designed and built from the ground up a
few years ago by Actiance, Alcatraz is not,
strictly speaking, a traditional archive, but a
context aware object store, this allows for
faster ingesting and exporting of data. With
the ability to build applications for eDiscovery
and supervision, it offers a much faster case
management than other alternatives and,
because of context awareness, a richer
experience of supervision functionality,
allowing its users to benefit from analytics.
Most financial services firms like to keep
their core information systems onsite, the
premise for this primarily being reasons
Summer 2016
relating to data security and performance.
But with increasing costs of data storage
and advancements in Cloud-based
technology, there has been a shift away
from the tradition of archiving in this way.
An example of this is the email system; as
people have moved their email into the
Cloud, they have begun to move the
archiving and compliance for those Cloud
functions into the Cloud as well.
Although some argue that there may be
technical advantages to being onsite in
terms of storing data safely, these appear to
be psychological and the advantages of a
Cloud-based system, like Alcatraz, is
becoming increasingly recognised as the
more practical and more efficient alternative.
The data dilemma
One of the biggest complications that a lot
of banks face is the problem of siloing and
legacy. Through archiving and compliance,
the Cloud is being used to break down
the barriers between these departments.
In the past, there just used to be email,
then various different types of electronic
messaging arrived on the scene, including
instant messaging, unified communications,
financial networks like Bloomberg and
Reuters, and then there’s also collaboration
platforms, enterprise social and public
social. When the compliance and archiving
of all of these individual channels is done
using different systems the costs can be
expensive. With Alcatraz, all of that data can
be brought together in the Cloud, allowing
easier access and the ability to perform
One of the biggest complications that banks face is
the problem of siloing and legacy. The Cloud is being
used to break down the barriers between these departments
eDiscovery and supervision, with a single
pane of glass across all of the channels. This
has tremendous business benefits in terms
of efficiency, not to mention the lower total
cost of ownership that comes with having a
single system. Being able to access all the
channels on one system means it’s easier to
access all of the data, making it simpler to
gain a unified view of all of the information.
The rise of social media has brought with it
compliance issues. Counted as another form
of electronic communication, as far as the
regulator is concerned, if anything that
occurs on social media leads to, or is relevant
to a business transaction, then it has to be
Summer 2016
captured, monitored and archived in the
same way that email and other forms of
instant messaging have to be controlled. Due
to the expanding growth of social media,
both smaller and larger financial services
firms are beginning to take into account the
importance of using it to correspond with
their customers. If they want to make use of
more modern, unified communications
techniques, such as Skype, then they have to
be particularly careful. The communications
analytics offered by Alcatraz allows the user
insight across all of their social networks and
communications channels.
Built using the same distributed elastic
technologies as Netflix and Google, Alcatraz
is Actiance’s next-generation archiving
technology. It is, at heart, a highly performant
context-aware, object-based store, which is
able to stay ahead of compliance and
uncover patterns and relationships hidden
within the user’s data. The advantage of this
is noticed when it comes to the time taken to
do complete searches of records, which had
been cut from weeks and days, to just hours
and minutes.
Everything in context
Compared to the old email-based archiving
that is widely in use today, Alcatraz holds
a number of advantages. Apart from the
increased speed and performance, the
context awareness means that the
conversation is captured within the context
of the different channels that it might have
taken place across and the events preceding
and succeeding it. This is something that is
quite difficult to achieve, if converting every
message into an email. The way the Alcatraz
technology centralises the data, enables
Actiance to build applications for eDiscovery
and supervision, which have a range of
features and performance that is completely
different from the technologies that have
been in use for the last few years.
Actiance itself is well-established in
the active compliance market, and its
Vantage product performs email archives
for many of the top banks in the world.
The genesis of Alcatraz was to offer the
same functionality as Vantage, but using
state-of-the-art, web-scale technology to
develop a very powerful long-term archive.
In terms of limits, the performance offered
by the Cloud doesn’t degrade with scale.
With no impact on performance caused
by the amount of data in its archive, the
Cloud has a potentially limitless capacity
when it comes to data storage.
In terms of actually storing data, most,
if not all, US and European banks require
their data to stay within their jurisdictions,
often requesting that only European
citizens work on European data. Actiance
operates a datacentre in Frankfurt that
employs European citizens to manage
the data within it.
Future conversations
So what do the next few years have in store
for the financial services market? Whether
the industry agrees or disagrees, it will be
increasingly regulated. With increasing
pressures from governments and regulators
to ensure the safety of the world economy,
the banking industry is likely to be shaped
around greater customer expectations.
Social mobile and Cloud technologies are
enabling global organisations to energize
their businesses. By placing people back at
the centre of business, this new technology
is driving higher performance and
increasing engagement, which is ultimately
leading to greater business results.
Over the last 10 years, bank branches
have become less important and the costs
inherent within them, increasingly harder
to justify. Customers are becoming used to
the idea of dealing with their bank in
different ways. The surprising growth
of smartphone and internet banking is
changing the way the industry operates
and with the adoption of different ways
of communicating, such as Skype and
Facetime, looking more and more likely, the
need for compliance within these channels
is absolutely vital.
The financial service industry has had to
become better at something that it hasn’t
always done well with in the past, putting the
customer first. The market is looking geared
towards the need for a single archive, such
as Alcatraz, that has the ability to capture
conversation across multiple channels.
www.fintech.finance | 69

From Wall Street
to main street
How would Brexit or a Trump victory affect your investments? One
of the coolest self-financed fintechs to emerge from Wall Street, might
just have the answers, says HiddenLevers co-founder Raj Udeshi
With big data comes big
responsibility. The catalyst for all
future personalisation within the
finance sector, big data is being
used across business to personalise
customer experiences and improve
efficiency for both customer and
provider. But how could it be used
to prevent you falling victim to
another financial disaster?
That’s the question the portfolio stress
tester HiddenLevers set out to answer.
Understanding psychology is critical to
an understanding of the stock market and
one of the ways HiddenLevers wanted to
improve financial services was to allow
people to view their options if a stock
started to fall in a safe, hypothetical
setting. The idea was that this would guard
against ‘panic selling,’ which was a huge
contributor to the 2008 market crash.
HiddenLever attempts to removes the
financially unreliable and sometimes
dangerously unpredictable element of
human emotion by utilizing big data to
measure millions of relationships between
the economy and investments and using
it as the basis for a 'stress test' - both
psychological and economic.
Areas such as interest rates affecting
home sales, which affects stock held in real
estate companies, is just one example from
more than 35,000 investment links built
into the company’s algorithms.
The genius of this software is its clever use
of scenarios. Take the hypothetical financial
impact of an economic slowdown in China
– not so hard to imagine now – or the rise of
a dictator in some far-flung part of the world.
By modelling future what-ifs on known
The whole second season of House
of Cards was about economics,
currency trading and currency manipulation
Summer 2016
historical events, HiddenLevers stress tests
an investment by using regression analysis.
It gives advisers and their clients an idea
of not only how the market is likely to react
and which investment products are the
most vulnerable and the most safe, but also
whether an investor is likely to be panicked
by big swings, giving advisors a chance to
rehearse talking them down off the ledge.
With visual aids and funky tools to help
guide client portfolio decisions, users can
customize their own ‘what ifs’.
It adopts what co-founder Raj Udeshi
describes as a “ Sesame Street, really-easy-to-
understand, nobody’s talking over my
head” approach.“Nothing that’s fear
mongering, but actually reassuring," he
says. HiddenLevers is not a robo advisor,
Udeshi stresses, it just wants to “make
sure the macro conversation is part of
every conversation” with an investor.
Coming from Wall Street, Udeshi knew
there must be a way to make financials as
addictively exciting for everyone as they
were for him. Or, as he puts it, he wanted
to make macro economics “super sexy”.
The way he did it was by building a tool
backed up by clever big data analytics that
showed how stocks performed visually and
in the context of world headlines
‘”We have had help, you know," he
laughs. "The whole second season of House
of Cards was about economics, currency
trading and currency manipulation. All
those things have become really interesting
topics now. They’re in the zeitgeist.”
HiddenLevers is built on economic
assumptions, which are subjected to big
variables. "So, first we start with, ‘OK, let’s
separate this into a good, bad and ugly
GRC & TRADING
future and have those be real names that
make sense to people, as opposed to just
some index that we’re measuring," says
Udeshi. “So, number one (is) risk parity.
Number two, we find a historical analogy…
where do major economic indicators move
and how far? Number three (is) the
short-term correlation between the levers.
Number four (is) technical analysis. And
then analyst opinion. So we synthesise
analyst opinions, throw out ones that don’t
make sense and then, of course, in the
research component, we talk about those.
Now I can take this conversation and make
it portfolio-specific.”
It's exactly the same model used day-in,
day-out on Wall Street. "At the private client
level they have a team of 10 doing, serving
maybe one customer with a $400million
portfolio, now I’m doing this for somebody
who is much less than that," says Udeshi. "I
don’t have to have an economist, because let’s
face it, the economic research is a commodity,
so I’ve put that all in here. I can see my palette
of scenarios, just like an Instagram palette.”
And even the Cookie Monster would
understand that.
www.fintech.finance | 71
 Customer Acquisition & Retention
11-12 May 2016, Vienna
Digitisation and disruption:
enhancing distribution channels to
support customer loyalty
www.arena-international.com/ebf-car
Banking Technology & Strategy - Security & Risk
12-13 October 2016, Vienna
Navigating the future of
innovative banking
www.arena-international.com/ebf-security-risk

For further details please contact:

Nadine Placzek at nadineplaczek@arena-international.com
Tel +44 (0)20 7936 6945
 FRAUD

Access denied
Passwords are a necessary evil, but they won’t be around forever, says
Yaniv Oz, CEO and Co-Founder of the ‘passwordless pioneer’ Hermetic

The average internet user has 90 security. The design goal was to ensure take advantage of the core technology for
online accounts and research credentials remain secure against protecting the account credentials. Using
suggests he or she regularly forgets brute-force attacks, as well as attacks on a cryptographic service, which itself is
the passwords for 37 of them. lost or stolen devices and server hacking. 'zero-knowledge' which means that it is never
They might be a headache to remember, And it doesn’t matter what make, model exposed to information about the end user
but in combination with a secure login, or operating system the customer is or other sensitive data like the access code
they’ve worked well enough for years, using because the app is the interface or credentials. This is what makes the service
not least because no one’s been able to and it can be integrated with a bank’s resistant to hacking attempts.
come up with an alternative method of system with a few lines of code. “Breaking the policy that the service
protecting a customer’s details that works “We achieve that by locking the existing provider, the bank, has set will block the
across any and all the mobile devices credentials, that is the username and the user’s device. You then have to go through
they’re likely to use. Until now. password, and binding them to the user’s the regular bank procedure,” says Oz.
“Hermetic realized that the main own device, so you can log in only from the Building these ‘Hermetically sealed’ walls
barrier to mass adoption of passwordless device the user authorised, and they stay between the device, the user and the data
authentication and transaction signing locked and encrypted on it,” says Oz. takes security “to a whole different level”,
has been device fragmentation, namely The purpose for this turnkey model is to says Oz, and one that will become
the huge variety of device models in increasingly important as more services
the market,” says Yaniv Oz, CEO and There is move from bank branches and the web
Co-founder of Hermetic.
“Whereas only a small minority of
always this towards mobile. As agreements and
instructions that currently require the
devices are equipped with fingerprint
scanners, even fewer devices allow apps to
balance that you customer’s manual signature, are confirmed
and signed via user devices, and mobile
securely store sensitive credentials, like have to strike payments and peer-to-peer fund transfers
passwords and signature keys. The latter replace credit cards, paper money and coins,
ability is essential for using devices as between usability Hermetic stands ready for the revolution.
trustworthy means of authentication.”
The technology created by Hermetic
and security Yaniv Oz was talking to Fintech
Finance Magazine’s
is designed to overcome the problem Dylan Jones
by enabling apps to securely store
sensitive credentials on any given device.
Signature keys or passwords are kept on
the device but only accessible via a PIN,
pattern or fingerprint, making it more
secure against someone with the phone.
It might solve the problem but don’t
all sigh with relief. The password is going
to be around for a while yet.
“I don’t think it’s going to become
obsolete very soon,” says Oz. “There is
always this balance that you have to
strike between usability and security. We
are certain this is going to happen, but
you know, it will be gradual. You’re
going to see a lot more of it in five
years, maybe 10 years from now.”
Hermetic’s Turnkey Mobile Login,
underpinned by its ØK-Vault
technology, will enable service
providers to move beyond
passwords without compromising

Summer 2016 www.fintech.finance | 75

FRAUD

Catch them
before they can
The former identity thief-turned-FBI consultant and white hat hacker
Frank Abagnale Jr is going beyond the 41st Parameter to improve
security in the financial world and beat the conmen at their own game

You feel distinctly uncomfortable
talking to Frank Abagnale Jr, the
world’s most infamous white hat
hacker. He’s the man who knows
who you really are, where you
are… if you’re to be trusted.
And when he describes data breaches
as being deadly, he means it.
Forget Talk-Talk and Target, he sees
hackers shutting off your pacemaker,
taking over your car’s computer with you
on board, terrorists seizing power grids.
“Absolutely, five years from now,
they will have the ability to stop your
pacemaker from thousands of miles away.
So, if I want to kill you I’m going to get
into your pacemaker, or any embedded
device you may have in your body that’s
controlled by a computer, and speed it
up or shut it down. If you’re driving down
the highway and I want to turn on your
airbags, shut off your power steering,
cancel your brakes – everything in the car
is controlled by computer. Everything I’m
telling you, we literally can do now, but we
have to be within 35 feet of the victim;
five years from now, you’ll be able to do it
from thousands of miles away. Those kind
of things bother me.”
The former confidence trickster, who
inspired the Hollywood film Catch Me If
You Can, is now a full-time digital security
consultant and one of the FBI’s most
trusted associates. He teaches the US
government how to beat the hackers and
he’s let some of the biggest data holding
companies in the world into that same
secret – which, as it turns out, isn’t such a
big secret after all. It all comes down to
making sure no one in the organisation
does anything stupid.
“I have been involved in just
about every major breach that
has occurred within the
United States, from Anthem,
which was 80 million
people just a few weeks
ago, to Chase, to Sony,
to Target, to you name
it. Every breach I’ve
ever incurred, occurred because someone
inside that company did something they
weren’t supposed to do,” he says.
“Look, if I’m a hacker, I can’t get into
Chase Bank’s infrastructure. They spend
$250million every year just on software to
keep me out. However, they also employ
200,000 people around the world and
somebody, somewhere, is going to do
something they’re not supposed to do –
read email they shouldn’t have read, go
on line when they shouldn’t have gone
on line. That’s how these breaches occur.”
The car parks of companies where he’s
been invited to lecture on the subject of

To catch a thief: Staff are

the first line of defence

76 | www.fintech.finance Summer 2016

digital security are littered with Abagnale
data sticks. It’s a little party trick he
plays to test an organisation’s first line
of defence. “They all say, ‘Confidential.’
Then at lunchtime in the cafeteria I open my
laptop to see how many employees picked
up that stick, put it in the computer in their
office to see what it said, which is ‘This is a
test and you’ve failed’," says Abagnale.
"In the afternoon, I talk about what if that
had been malware? What if I was going to
take over your system? You have to bring
home the point to your employees that they
have the most important job on the face
of the earth. If you work at a bank, I don’t
care if you’re the receptionist or the
telephone operator, your job is very
important – people have entrusted their
personal information with you. You have
to protect that information and you have
to protect it as best as you can.”
He travels all over the world, giving the
same advice. Abagnale has being working
on the right side of the law for the last
40 years, helping companies safe-proof
themselves from fraud. Ten of those years
have been devoted to developing a
technology called the 41st Parameter,
with Ori Eisen, former Head of Corporate
Security for American Express. The 41st
Parameter detects with 99.9 per cent
accuracy, claims Abagnale, whether the
person behind a digital device the other
side of the globe is who they claim to be.
“When we started the company, we
knew there were 40 parameters
used around the world to
Summer 2016
identify an individual. Name, social
security number, date of birth, address,
etc. We knew you had to go beyond those
40 parameters and come up with the 41st,”
explains Abagnale. “What that technology
did when you signed in at the bank was
tell it within just a millionth of a second
everything above that 41st parameter
– the resolution of your screen, the power
source, the time of day where your
computer is, the location of your computer,
the language your computer was in.
“So, if Amazon got 80 orders, and each
order had a different credit card number,
a different address to ship to a different
name, Amazon would know instantly that
all 80 orders came off a Russian computer.
Five years
from now
they'll be able
to stop your
pacemaker from
thousands of
miles away
www.fintech.finance | 77
FRAUD
Security: Who really is the
other side of the screen?
“It also works in the opposite way. Every
year Visa and MasterCard turn down more
than $40billion payments because you were
probably somewhere they didn’t know you
were, or you looked suspicious to them, and
when they turn down a charge, two people
are out. The customer is out, and the retailer
is out. The 41st Parameter says to Visa and
MasterCard, ‘I can tell you with 99.9 per cent
accuracy this is, in fact, your customer online
purchasing this item’.”
In 2013, having persuaded eight of the top
10 US banks, all the major airlines and a
significant number of retailers to adopt the
software, Abagnale and Eisen sold 41st
Parameter to the British-based credit
checking and information services company
Experian in a reported $324million deal.
Experian said at the time that 41st
Parameter’s device detection capabilities
added “another layer” to its fraud prevention.
Earlier this year, the same company
reported that Britain was now ready for
biometric banking with almost one in
three people believing biometric ID
was just as secure or more secure than
passwords; 40 per cent were happy to
use fingerprint scanning to access online
accounts. Abagnale isn’t one of them.
“I’m not big on fingerprint technology,” he
says.“A number of years ago, IBM was
demonstrating for me a laptop that allowed
you to do away with a password. I’d taken
some Play-Doh with me and put it over my
fingerprint, which left an impression. Then I
put the Play-Doh on top of the laptop, it read
the impression and opened the computer.
Think of all the places you leave your
78 | www.fintech.finance
fingerprint. On the glass we had lunch today,
everything you’ve touched in this room. If I
pick up your fingerprint it would be like
taking your identity, but a lot simpler. We’re a
little more protective about our personal
information, but we’re not protective about
our fingerprints. We leave them everywhere.
“Obviously, technologies are getting
better. For example, there are certain parts
of government buildings in Washington I
go where you have to put all 10 fingerprints
down and they read your eye retina, etc. But
then you get into privacy issues. Am I going
to trust my DNA with Visa? I don’t think so.
So there are limits to what information
people are going to be willing to give up
for their personal security,” says Abagnale.
You have
to stay one
step ahead of
the criminal when
you develop
a technology
Which is why, in his view, data security
comes back to education.
During a recent speech in Spain to 60
top European bank security officers, he
asked how many of them had a degree in
computer science.
“I have to admit I was impressed,” he says.
“About 50 per cent of them raised their
hands – they had four-year degrees,
five-year degrees in computer science. Then
I asked the second question: ‘How many of
you had any training in malware, breaches,
intrusions?’ Nobody raised a hand. So, I
think we have to do a much better job
when we teach computer science. Beyond
writing code, we have to teach people how
to detect malwares, understand malware
intrusions and things of that nature.”
Abagnale began his career forging
cheques – reputedly, $2.6million of them.
He’s moved on. Earlier this year he re-joined
his 41st Parameter partner Ori Eisen in
Eisen’s fledgling stealth cybersecurity
start-up Trusona, which has the ambitious
aim of solving the problem of online
identity and authentication by “shedding
light on the darkest corners of the internet”.
But there are plenty more young Abagnales
coming up behind to worry about.
“In the US, cheque forgery is still about
$20billion a year, because technology has
made it easier," he says. "People always ask
me when we’re going to see the paperless
society, I always tell them, ‘When you see
the paperless toilet.’ No time soon. But
technology is getting better and we are
constantly developing things to make it
more difficult for people.
"You have to stay one step ahead of the
criminal when you develop a technology.
You can’t just say, ‘Oh I developed it,’ and
walk away. You have to always constantly go
back and make it better, because someone’s
always going to be trying to attack it, find a
weakness in it.
"It’s like a chess game, you just constantly
play back and forth and try to make sure
you protect your side.”
Summer 2016

Advice
from above
A Fintech Finance Magazine Q&A with Jay Hummel, MD, Strategic
Initiatives and Thought Leadership for Envestnet Inc, which supports
independent financial advisors through a Cloud-based solutions platform
FF: Envestnet has been growing
quite rapidly over the last year.
What have been the changes in the
financial industry that have facilitated
that growth?
JH: When we were founded in 1999, we
were one of the first Cloud-based financial
services companies. With the general
acceptance of Cloud-based technology,
firms are realising that they don’t have
to do it themselves. Actually, in a lot of
ways, doing it themselves may put them
at a competitive disadvantage. They’re
looking to us as a partner that can stay
ahead of trends, that can be nimble, that
can innovate and use our experience
across the globe.
FF: How have the financial
organisations you work with reacted
to Cloud technologies? Has there
been any apprehension?
JH: Not really. Obviously, cyber security
is a hot topic, but I think there’s much
more of a general acceptance of what
the Cloud is. I mean, in 1999 when the
company was founded nobody even
knew what that meant. They thought
clouds brought rain, they didn’t think
clouds brought technology, so I think
there’s been a global shift and that’s
been a benefit for us as a company.
FF: How does the Envestnet Advisor
Suite enable your clients to run a
better portfolio?
JH: Not only do we help them run a better
portfolio that brings better outcomes to
their consumers, but we also help them
run their firms and their practices more
effectively. Our system can go all the way
from proposal to portfolio design. It has
the ability to research and actually put
Summer 2016
that in the portfolio. Not only that, but
it can also do very sophisticated data
analytics. It can even analyse what the
portfolio attributes would be. So we can
go from the proposal all the way to billing
the end consumer, which allows our
advisors and financial institutions to
really scale their business, because doing
these manually or over multiple systems
is ineffective. We believe the productivity
gain that we provide to financial
institutions allows their advisors to grow
their business, spend more time with
clients, and build deeper relationships.
We believe that the relationship with the
end consumer is going to be even more
important in a digital world and we
believe our technology allows the
advisor to spend time on that.
Many of our advisors and financial
institutions we serve have been
surprised by the change of pace
FF: How do you ensure that your
clients not only have state-of-the-art
technology and support from you but
are also flexible and future-proofed
enough for unforeseen circumstances?
JH: The first thing we do is we listen a lot.
We’re day in and day out listening to our
clients and listening to the challenges of
what’s coming to their desk. We have a
market research group that is constantly
focussed on what is going on in the
industry, what is going on in the
behaviour of advisors, what’s going on in
the behaviour of the consumers, what’s
going on with our competition, so that
we’re constantly assuring our group and
our management team that we’re ahead
of the macro trends that exist. I think the
FRAUD
financial services industry is far behind
in many ways, as financial institutions
were, in being able to deliver what the
consumer expects. Many of our advisors
and financial institutions we serve I think
have been surprised by the change of
pace. That’s why they look to us to be
their strategic partner, to make sure that
we’re sitting there, helping them stay
ahead of what the consumer ultimately
is going to want.
FF: What are you planning in
the next 12 months?
JH: There’s going to be a lot more
transparency around fees. But what I’m
excited about in the future is that we’re
going to have better educated clients. I
think people are talking about big data
and all the cool things you can do with
analytics, but if you can’t get it into a
process that actually changes the life
of an end consumer, you’ve spent a
lot of money on something that doesn’t
really matter. Then I think it’ll be
interesting to see it play out. I hope the
digital movement and all the things that
we’re doing in Envestnet as a company
are going to widen the number of people
that can access advice, because we
believe very strongly that advice, good
financial advice, is essential for people to
be able to reach their goals. If the use of
technology allows advisors and financial
institutions to be more efficient, the
number of people that can access
affordable advice is going to increase.
www.fintech.finance | 79
FRAUD
Challenging
behaviour
FeatureSpace’s ARIC Engine is revolutionising
the way that banking businesses combat fraud and
security threats. Luke Reynolds, the company's
Fraud Director, talks through its capabilities
FeatureSpace is the world’s leading
producer of adaptive behaviour
analytics, with ARIC, its
fraud-fighting engine, helping to
keep organisations safe in 180
countries across the globe.
By profiling customers using the mass
of unstructured data that banks receive
daily, ARIC identifies anomalies more
efficiently than previous technology,
while the engine’s self-learning capability,
means new fraud attacks are combatted
by a constant upload of new information
surrounding the threats.
FeatureSpace’s main focus when
engineering ARIC was the vital importance
of understanding the consumer and
identifying unusual behaviour patterns
upstream before a transaction takes place.
From how they log in, to what they do
on their screen, ARIC uses these many
pathways of information to build up a
profile – and with customer-not-present
fraud forecast to cost retailers and financial
institutions $7billion by 2020 in the US
alone, knowing who your customer is has
never been more important.
Data overload
Due to the vast technological advances
that the western world has acquired for
convenience, large banking businesses
find it difficult to develop an individual
profile of the thousands of consumers that
utilise their many products.
Having multiple devices and using
them all in different ways to process
transactions, means that organisations end
up with a huge wealth of data, but much
it is not well-defined or well-structured.
80 | www.fintech.finance
The questions that are being thwarted by
this influx of unstructured data are vital ones:
How do you know your customer? How do
you build a profile? How do you understand
what’s normal behaviour for a customer
when potentially you never see them?
FeatureSpace’s response to these
questions is to use data collected prior to
any monetary transaction to build up a
detailed picture of the customer, so when
he or she logs into their mobile app, for
instance, the way that they type in their
passcode, followed by the way that they
navigate through their screens, creates a
footprint that allows ARIC to determine if
the person accessing the account is genuine.
Technology that preceded ARIC used
expensive means of understanding normal
behaviour for the consumer, based on
multiple layers of defender technology
to build a rich behavioural profile score.
ARIC gathers information from many
channels but flows it directly into one
engine in order to produce a non-monetary
consumer file long before a transaction
has even taken place.
Social engineering
The most challenging fraud to detect and
combat is customers under duress being
forced to use their banking technology to
transfer funds to their attacker. Otherwise
known as social engineering it’s a difficult
case to solve, because how do you know
it’s fraud if the person has logged in, using
the details as they would normally do?
Thanks to ARIC’s profiling system,
FeatureSpace is able to identify nuanced
screen behaviour, such as logging in slower
or navigating the screen with a different
Summer 2016
 pattern. And its ability to navigate through
data prior to a monetary transaction gives
it a head start on the competition. No data
goes to waste, allowing the engine to
produce a more accurate real-time score for
the consumer based on their device use.
ARIC takes take all of the raw, unstructured
data to profile a customer’s spend, pattern
and behaviour, and uses it to provide a score.
It then compares the session score against
the customer’s personal profile and against
their peer group.
By comparing one individuals’ monetary
or transaction data to their peer group,
ARIC is able to ensure that even though a
particular transaction may appear to be
anomalous in comparison with previous
Behaviour patterns: Aric transactions the individual has made, the
can detect imposters based
on the slightest change
data can in fact be explained. This makes
ARIC extremely efficient at detecting fraud,
as it is these anomalies that would usually
be suspected as fraudulent behaviour by
its strict rule-based predecessors.
In addition to its ability to profile
consumers via non-monetary data, ARIC is a
self-learning engine. Every new transaction,
whether it be monetary or non-monetary,
lays down more statistical data, which is
used to update the profile.

Technology
that preceded
ARIC used
expensive means
of understanding
normal behaviour
for the consumer
The benefit of ARIC learning from
new data input is that it rules out the
need for manual handling of potential
fraudulent behaviour. Where there are
humans handling data there is potential
for human error, or for the issue even
to be forgotten if the paper trail gets lost.
ARIC’s ability to pinpoint data immediately,
due to its profiling system places it head
and shoulders above previous manual
handling methods.
As mobile app devices grow, functionality
will become more and more vital for
companies to utilise the data that flows
from them to undermine fraudsters.

Summer 2016 www.fintech.finance | 81

FRAUD
Applied
thinking
A Fintech Finance Magazine Q&A with Mark Bradbury,
MD of global payments provider Apply Financial
Fintech Finance: What’s shaping
the landscape around global
payments and how is that likely to
change over the next 12 months?
Mark Bradbury: The problem, particularly
with overseas payments, is that banks are
engaged in a race to the bottom with
fintechs because they’re cutting margins to
the bone to win business. Some of their
margins are paper thin, so they’re looking
to get volume. They want to get the best
deal they can at the lowest cost. They’re
basically offering near-zero spread with a
small fee-type model, which the banks
haven’t offered in the past.
The banks we deal with are trimming
their costs so that they can be competitive
in this new landscape and deliver better
services. That’s why they use us, because
Apply Financial automates what essentially
used to be a manual process of fixing
payments. We already do faster payments
in the UK, but I think that real-time, instant
payments, will become more of a global
phenomenon over the coming years.
82 | www.fintech.finance
FF: Why have the banks not
achieved optimum efficiency in
global payments yet?
MB: Because it’s not easy. The banks, the
big foreign exchange brokers, built an
infrastructure that supported a certain
business model. The fintechs have come
along and disrupted that. In the past you
could get away with a fee and a spread, so
even if the infrastructure they had was
quite costly, they were still making bigger
margins. Now they’re having to cut back.
I’m not saying that using things like
blockchain is the route, I’m just saying
automate where there used to be
manual intervention, streamline, but
still remain compliant.
FF: Why is payment validation required
and how does your system differ to
what’s happened previously?
MB: Payment validation has been with us
for a long time. If you go back many years,
people used to check a payment by
opening up a book and referring to a bank
and a branch and getting all the details –
the SWIFT, BIC and account forma, etc. That
went from book to a CD to a flat file. The
problem is you’re still dealing with human
error or erroneous data. The user that’s
putting in that information – whether it be
a customer or a bank employee – doesn’t
know if they’ve got erroneous information.
What you do when you validate it is check
to see if the account number is in the right
structure. Does it work with the bank code,
the BIC code and is that BIC code the
correct code for payment, because certain
institutions ask for different types of BICs?
There’s a head office BIC, there’s a branch
BIC, there’s an IBAN BIC.
So what we’ve done is taken everything
that would have been a manual process
to either fix a payment before it goes out
or fix a payment when it fails, using a
combination of all the global reference
data that’s changing daily and added
algorithmic functions that use that data
intelligently. It allows us to get all our
clients as near to a 100 per cent straight
Summer 2016
through process. That’s a big cost saving.
We estimate that a payment that fails
costs between £50 and £100, depending
on the procedure they have.
FF: What about scalability? Can it
work for very large organisations?
MB: We’re dealing with a range of clients,
from those that do 1,000 payments a year
to those that do millions and we provide a
‘five nines’ environment – 99.999 per cent,
highly robust, highly secure and scalable.
We can scale 100 per cent at the flick of a
switch at peak times, if needed. We could
easily double our transaction levels in a
day without it touching the sides. But it’s
also about customer experience.
The new major players in the foreign
exchange payments world are using our
technology, because their goal in life
is to provide a much better customer
experience, more efficient and at lower
cost. Using the Apply Validate API gives
them the opportunity to do that.
FF: What’s the advantage of operating
a Cloud-based system such as yours?
MB: The systems clients have built in the
past are all very clunky; they’re having to
provide their own hardware, they’ve got
their own operating systems, maintenance
issues, patches, updates, upgrades. It’s a
little department in itself with its own
infrastructure. We just replace all of that
completely. You plug in the API and it does
it all for you. All you’ve got to do is manage
the implementation of the API and support
that internally. Whenever somebody’s
making a payment, filling in a payment
instruction or sending a payment file, it
sends out a sub-second web call to our
client system and we validate it. If it’s
correct, we send it through; if it’s a caution
or a fail, it’s up to the client how they
handle that. We let them know the details
and either the client can fix it on the portal
themselves if they’re making a payment, or
the bank can alert them and fix it for them.
We give them lots of flexibility.
FF: What’s the advantage of
using open APIs?
MB: I’ve been sitting on the Open Bank
workgroup, the government initiative
looking at the management and
governance of open APIs and I think having
an open API environment is a real winner
for businesses or private individuals. Ours is
Summer 2016
highly standard; we use a RESTful
environment and give people access to a
test sandbox that’s secure. They can test our
API working within their systems and that’s
the route that open APIs will go. It will allow
vendors to test their application working
in line with the bank’s systems. It’s a great
initiative and one that I fully support.
FF: How should banks make sure the
validation systems they use are
sufficiently future-proofed?
MB: People choose us because we take
that out of their hands so they don’t have
to worry about it. We make sure that we are
in line with all the regulations, that we’re
compliant with SEPA regulations and the
non-SEPA related area, IBANs and non-IBAN
countries. Apply Financial enables a
payment company to be compliant in
nearly 200 countries and with a number
of those countries we can also take care
of domestic validation.
Blockchain is
the technology
that stimulated
better ideas and
more efficient
infrastructures. It
might not be the
infrastructure itself
FF: Being based in the Cloud,
do you work out of multiple
datacentres all over the world?
MB: Currently our datacentre provider is
in the UK and all our clients are happy with
that. However, if a client says the datacentre
needs to be in the US or in Germany or
Singapore, because of the global nature of
our infrastructure provider, we can literally,
at the flick of a switch, enable a distributed
data topology. So we can localise
connectivity. There are certain parts of
the world as well, where it helps to have
a local centre, because the internet
connections are not brilliant.
FF: What can we expect from Apply
Financial in the next 12 months?
MB: We have just released a new version
with automated tools to enable our clients
to work out how much time and money
we’ve saved them, look at the velocity of
payments, how they’ve grown and in which
countries; where they’re getting the most
errors country by country, or by user. Then
we are expanding our data management
side to enable our clients not just to use
our data, but to manage their own. They’ve
got their own data sets for payments, so
correspondence banks, for instance, is a big
area. They call them standard settlement
instructions, SSIs. Our banking clients could
use our data hub and store their own SSIs
in there and use them integrated with our
solution. That’s quite important.
So we’re talking not just about
validating payments now, we’re talking
about managing data sources for
clients, so that they have more accuracy
in payment validation.
We’re also looking at adding the ability
to manage sanctioned payments, so
anti-money laundering, at a very front-end
stage, when you’re capturing the
beneficiary, giving an early warning for
sanctions, rather than the typical way that
people do anti-money laundering at the
moment, when you get the payment
ready to go, that’s when you check for
AML. It would be a lower cost, early
warning on a sanctioned payment.
That’s going to be in the next 12 months.
FF: Finally, what are some of
your predictions for the industry
on a macro level?
MB: More moves to more efficient
payment models, better customer
experience, and real-time payments,
even cross-border payments with more
experiments with blockchain, although
I have a healthy scepticism about
blockchain and Bitcoin. I do think that
people will build far more efficient
infrastructures over the coming years,
but whether blockchain will be part
of that, I don’t know.
There may be something that’s
post-blockchain. Blockchain is basically the
technology that stimulated better ideas
and more efficient infrastructures. It might
not be the actual infrastructure itself.
A lot of money’s been invested in it, but
I’ve been 30-odd years in the business and
I’ve seen all these changes in infrastructure
to centralised, then distributed, then back
to centralised, so who knows?
www.fintech.finance | 83
FRAUD
Staying ahead
of the hackers
Data breach is fuelling organised crime and undermining consumer
confidence, says Martin Milliner, Claims Director at LV
“I think some companies, not all,
have put making money ahead
of doing what’s right for the
consumer and also for their own
people. So I think the challenge
over the next two or three years
for the industry is to do the right
thing by that consumer and make
sure they understand that we’re
not putting making money over
and above their interests.”
Martin Milliner, Claims Director at LV, one
of Britain’s largest mutual societies, doesn’t
mince words. But then trust takes high
priority with an insurer and in his view it’s
“gradually been eroded over the last few
years, since the recession in particular”.
It doesn’t help that high-profile data
breaches have contributed to the flight
of consumer confidence.
“One of the areas of concern is that many
people in the industry are probably using
legacy systems and legacy technology,
which at the time were fit for purpose but
today are probably more vulnerable to
cybercrime and hacking and various other
external pressures that maybe require
additional investment,” says Milliner.
“In times where choices for the industry
are pretty stark – in a sense of, do you
invest in defending your data, defending
your security, or invest in your products
and your portfolio to grow the business
– from a regulatory perspective, you’ve
got to put your customer first and that’s
security above all else.”
National taskforce
More needs to be done, he believes, to
protect corporations and their customers
against cybercrime, both at a national
policy and company process level.
“People have to take a risk-based
approach (but) you’ve got to look at what
the country is doing.
84 | www.fintech.finance
"There’s recently been a publication
by the Metropolitan Police around
tightening the net. There are some good
insights, which probably lead us to
conclude that at a national level we’re not
prepared for the next five to 10 years and
the potential threats on the horizon. If
you look across the Atlantic, back in 2013,
I think it was, President Obama gave a
speech where he was pulling together the
public and the private sectors to create
a joint approach to solving this issue.
"I think the industry needs to get
together with government and work
more closely to tackle this across the
public and private sectors.”
For its part, LV is already co-operating
with industry and government on a
number of fronts. It worked with others in
the insurance sector to create the Insurance
Fraud Bureau, which acts as a hub for data
to be shared, matched and reported to
individual insurers, who can then use it to
track criminal activity, and it has funded the
Insurance Fraud Enforcement Department
(IFED) within the Economic Crime
Directorate of the City of London Police.
You’ve got
to put your
customer first and
that’s security
above all else
“It became very clear that there was a
real appetite to do something to crack
down and disrupt organised crime, not
just in the sense of solving a problem as an
insurance industry, but because of the links
with other criminal activities, such as drug
trafficking and also terrorism,” says Milliner.
“Since we formed in 2012, 262 people have
been arrested and more than 1,000 people
have been either interviewed or disrupted
in the context of organised car crash fraud.”
Cash for crash
A scam known to insurers for years,
crash for cash, or contrived collisions,
has risen to “epidemic” proportions over
the past few years in the UK.
“It’s an organised criminal activity
where professionals are coming into the
marketplace and either causing crashes
with innocent motorists, or creating paper
accidents that never happened between
themselves and reporting them to insurers
or via solicitors,” says Milliner. “We work
hard with the police to stop it, not just in
the interests of honest motorists, but in a
sense of preventing crime in wider society.”
There are serious concerns in the
insurance industry about data leakage, too.
The announcement in last year’s Autumn
Statement, which abolished the right to
cash compensation for minor whiplash
injuries, masks a much deeper issue. 
LV’s own research showed the average
driver received five calls or texts following
a crash, promising compensation with
some claims management companies
pressurising motorists into making an
application. Eight per cent told LV they had
been contacted even before they reported
the incident to their insurer with 57 per cent
of people receiving calls saying they had no
idea how their details had been sourced.
Last year, Milliner was quoted as saying
that the insurance industry had played
cat and mouse with fraudsters for years
“when what we need is a multi-pronged
solution that will benefit the consumer
once and for all”.
But he concedes the criminals will
always be one step ahead.
“You can have the most secure vehicle
in the world, but they’ll come up with
Summer 2016
some way of disrupting the key fob when
it tries to lock your car, or they’ll be
scanning the vehicle for signs of an iPad
being stuck in the boot.”
Responsible hacking
White hat hack hackers have a limited
role, he believes, when used as a defence
force. “They’re great at putting a mirror to
your face and reflecting back on you in a
more direct way the risks that potentially
are there. But it probably only tells you
what you may already know,” he says.
Where bringing in white hackers can
be useful is looking along your process
or supply chain or highlighting the
weakness in your hiring policy.
“There’s a kind of a cause and effect
to some of these things. Looking at your
processes from end to end when you
engage with your supply chain, you may
have the right processes up front, but
how do you know that they’re following
Summer 2016
the same sort of thread as you are? Are
they recruiting to the same standards,
doing the same checks as you are
when you hire your own people? When
they’re out with customers in the field,
for example, what are they actually
doing? How can they access data that
perhaps they shouldn’t be?
“For me, a white hat hacker will
almost be a fortune teller for you as a
business, creating an opportunity for
you to be more proactive in defending
your data instead of being reactive
when somebody gets caught out and
then gets fined by the Financial Conduct
Authority as a consequence."
He believes the industry is starting
to take its responsibilities to educate
the public more seriously.
“Financial services are starting to
be more educational around how they
interact with their customers; there’s
more information about cold calling,
or people that may be fishing, or trying
to get information out of you that you
shouldn’t be giving. There are more
warnings, literature and more advice out
there for consumers.
“That said, I don’t think that’s gone far
enough and we should be doing more in
that space, telling consumers they should
report instances to the Information
Commissioners Office, or to their bank or
insurer; they should be warned that if
they’re not registered with the Telephone
Preference Service, they probably should
be," says Milliner.
"All of these things are very short, sharp
clear messages that we can educate
consumers about, which, if they were
taken advantage of, could improve the
overall security, not just for them as
individuals, but for the industry overall.”
Security:
Education is key to
protecting data
www.fintech.finance | 85
Marketforce’s 3rd Annual Conference

Customer Experience

SUMMIT

A CROSS-SECTOR PERSPECTIVE ON WHAT MATTERS FOR CX RIGHT NOW:

Engagement / Loyalty / Customer-centric operations / Return on investment /
Personalisation / Channel innovations / Disruption and differentiation

WWW.MARKETFORCE.EU.COM/2020

LEARN FROM OUR EXPERTS:

• Barclays
• Nissan @2020_CX
• Zurich Insurance #2020CX
• eBay John Humpish
• Vodafone Chief Customer Officer
Starling Bank
• Heathrow Airport
• citizenM hotels
• Argos
• Google
• BT

250+ 30+ 14 6
Senior Hand-picked Focused Interactive
Attendees Speakers Sessions Roundtables

10
commandments
of customer ID
authentication
Ofer Friedman, VP Marketing at AU10TIX, lists the essential questions
every financial service should be asking of its authentication system provider
So you are a financial service provider
and you realize that KYC/AML
regulations are leaving you no choice.
You already know that if you don’t
respond quickly enough, you are bound
to see 50 to 70 per cent of your prospects
abandoning. You definitely want to survive,
which means you must automate customer
ID authentication and onboarding. So here
are the 10 commandments that will help
you make the right choice between the
different solutions out there:
1 Choose the right technology
generation There are first-generation
solutions and second-generation solutions
out there. Second generation is 100 per cent
automated, forgery checks go beyond
data checking and algorithms are better
at handling off-template ID images. If
OCR and basics checks are good, while
response time may not be critical for you,
then go for simple first generation. If strong
authentication, fast-response and higher
tolerance to image quality variability are
important than second-generation solutions
are the ones for you.
2 Make sure you know what the
common forgeries are Check with
your risk/compliance people which are the
common forgeries out there. These are not
necessarily the most complex ones, but it
may be that some solutions are actually not
designed to detect them. Ask your people
how many fraudsters make typos, how many
change face picture, how many miss the
checksum, etc. Then look at the different
solutions and ask for a tested proof to see
how well they cover all the options.
3 Data-based authentication is not
enough Any solution will probably be
able to read the data off the ID image. Just
Summer 2016
check how well data cropping is done with
documents that do not have MRZ lines
or barcodes. There are many of them out
there, but since many fraudsters do use
legitimate data, check also that you have
forensic image tampering checks in your
solution. The data might make sense, but
may also be planted by the fraudster.
5 Check how good they are with
borderline quality images Online
and mobile are a whole different ball game.
You are bound to receive ID images at
any conceivable quality, including such
off-template ones that regular technologies
will not be able to handle them. You may
want to look at machine-learning enhanced
solutions and to test with genuine traffic.
How many
fraudsters
make typos, change
the face picture,
miss the checksum?
6 Remember the world doesn't speak
only English You are promised
extensive coverage. Hundreds, perhaps
thousands of documents. Really? Have
a good look at the list. Does it cover
Cyrillic document texts, Chinese, other?
7 Know your image quality before
you rely on the results Who doesn’t
want a simple go-no-go answer? But
obviously, the ability to process and
authenticate an online submitted picture of
an ID is as good as the quality of the image.
One way to handle the challenge is to tell you
what percentage of certainty there is behind
the system’s ruling. But what can you make
FRAUD
out of 85 per cent certainty? Isn’t it better to
have a built-in threshold of image quality and
differential weighing of each factor checked?
8 Make sure that exception reporting
is workable OK. So the system put up
some quality or suspicion flags on a certain
ID image. Is that flag specific enough to be
able to investigate the case quickly and
effectively? Test-drive your solution with
extra care on how specific your exceptions
are. Make sure that either your back office
can handle it effectively or that you system
can even ping back a re-do request to the
client without bothering your back office.
9 You want technology to screen noise,
not pass it through Customer-Not-
Present (CNP) ID authentication and
onboarding is a whole different ball game.
Depending on the type of service and
geography, you may well be facing a
sizeable amount of “garbage”. This means
images of documents that are not an ID
document (say, cash register slip), a non
regulatory acceptable ID (say, a library card),
and even pictures of cats and dogs. Without
the right solution, your back-office team will
need to review each and every one of those
pictures. But what if your ID authentication
solution is smart enough to sort out most
of that “noise”? Well, this capability does
exist in second-generation solutions.
10 Prefer a technology that can
handle all channels How many
channels can a customer be onboarded
with? Branch, online, mobile, kiosk... If you
need to have all those covered then you’d
obviously be asking about an ability to
have one core brain, capable of handling
different image sources. There are not
many of those around but this capability
does exist. Better ask the right questions.
www.fintech.finance | 87
CUSTOMER EXPERIENCE – BRaNCh
Keeping an eye
to the future
New kid on the block Metro Bank has an ambition
to be a truly omnichannel service… and that starts
with the branch, says CEO Craig Donaldson
Four billion in deposits, three
billion in lending and more than
600,000 customers strong, Metro
Bank is now a serious competitor
in the financial services market.
What once was a purely London-based
business has now expanded into ‘commuter
land’, its reach extending from Brighton to
Milton Keynes and west as far as Reading.
Its real estate requirements are exacting.
It specifically targets buildings of between
3,000 and 5,000 square feet with around
16-foot high ceilings and on a corner. The
preference for the latter is obvious – corners
increase visibility and drive footfall; the
spacious operating environment has two
purposes. The open-plan interior is more
welcoming to customers, but it also allows
for the high-resolution security cameras to
see more. Pinprick cameras are embedded
into the walls, the ceilings and into the
counters in every branch, or 'stores' as
Metro CEO Craig Donaldson prefers them
to be called.
Aesthetics are important for Metro Bank.
But so is technology.
“We’ve an agreement with Microsoft
who have provided a full Microsoft stack
on the desktops,” says Donaldson. “We’ve
got a surface device where our colleagues
and our customers can do things together,
touch-screen. From this, around 77 per cent
of our customers, from first keystroke to
last keystroke, get their account opened
in 15 minutes.”
Fast and secure
This entirely paperless process – the
customer signs on a tablet and is emailed
account information and Ts & Cs – not only
speeds up acquisition rates, but keeps
everything secure. It also saves on a few
acres of trees.
“In the past, we’d have to print out 20
pages of application forms and this and that,
but now it really is just us talking to you,” says
88 | www.fintech.finance
Donaldson.“The key thing about moving
away from the big screen on the desk to
a surface device is it’s breaking down the
barriers. We’ve removed the barriers so we
can engage with our customers in a much
more detailed way. You turn the screen
around and the customer can move it
themselves. It’s giving power and choice
to the customer.”
Making more self-service options available
is all part of the plan to extend that choice.
“Do you want to talk to somebody?
Do you want to use self-service? Do you
want to do more on the mobile app? I want
to be able to fulfill through every channel,
but the customer decides how they want to
do it,” says Donaldson. “I worry automation
has become about forcing customers to do
things rather than letting them own how
they interact with you.”
That, however, inevitably increases the
burden of security on the bank – another
area of branch technology where Metro is
leading the field.
“We’ve been looking at things like
iBeacons, which you could use by pulling
through from the card, to identify the
customer as they walk into a store.
Therefore, you know who’s there and you’ll
be able to service them because CRM
should pull straight through to the surface
device. And because we take photos of our
customers, I can see whether it’s you or not.”
Donaldson is keen to accelerate other
customer services processes, so it's "as fast
as humanly possible" by exploring new,
frictionless security – replacing a lost card,
for instance.
“I could go on my mobile app and order
it to be delivered to my house, order it so
I can pick it up at the store straight away.
Or why not in the future, wouldn’t I be able Focus on
to send you a temporary card online so you the customer:
iBeacons could
could purchase things straight away while
identify you as
you waited to get your plastic?" you walk into
Metro Bank is already faster than a lot of a Metro store
Summer 2016
 the competition, claims Donaldson.
“A lot of the large incumbents have big
batch processing systems, that mean to
move from phase one to phase two, you’ve
got to wait overnight, and then from phase
two to phase three, overnight. We do it
straight through, which allows us, on
average, less than an hour for a business
account to be opened.”

Truly omnichannel
His objective is for Metro Bank to be truly
omnichannel within the next two years.
Part of the way the bank will achieve that is
by integrating the CRM software Microsoft
Dynamics and Marketing Dynamics into
its social media and telephony platforms.
“Say you tweet that you’ve lost your card
and then you walk into a store. I should be
able to see that you’ve put on social media
you’ve lost your card, I should be able to
identify you because I can pull the data to
the screen, and the person should be able to
say, ‘Hello, can I help you? Do you want me to
get you a…,’ so it’s joining up all the different

I worry
automation
has become about
forcing customers
to do things rather
than letting them
own how they
interact with you
interaction points so that the person
who’s dealing with you can have a proper
conversation from an informed position.”
This dream extends in future to a
customer being able to choose whether
to freeze or unfreeze their card. These
are the ambitions of a truly omnichannel
provider, says Donaldson.
“It’s about putting power in the customer’s
hands, giving them the choice of what
channels they want to use to interact with
you, then making sure you move the data and
the information to where the customer needs
to be, so they feel whatever channel they
come to you through you’re joined up and
that the customer gets amazing service.”
Craig Donaldson was talking to Fintech
Finance Magazine’s Dylan Jones

Summer 2016 www.fintech.finance | 89

CUSTOMER EXPERIENCE – BRaNCh
Branch transformation:
a strategic imperative
It’s true to say that how people
bank has changed in recent
years, but although customers
are increasingly becoming
multi-channel users, a 2014
Novartis study confirmed that
“for things that matter most,
people still prefer the branch”.
The relationship with the customer is
key. People talk about teller-less branches,
but it is not the same as no-staff branches.
The branch remains at the core of retail
banking and provides opportunities for
interactions that are highly valued by
customers. Recent research carried out by
YouGov for Glory Global Solutions in five
countries (Great Britain, United States,
Australia, France and the Netherlands)
found that in each instance what customers
valued most was face-to-face interaction,
followed by convenience and simplicity.
What they didn’t value was long queues
or a lack of specialist staff or personalised
service. For many, the message is clear – the
branch is important but it needs to change.
The branch is central to customer service
and this is something banks ignore at their
peril. A recent report from Accenture shows
that 34 per cent of customers who switched
financial providers in the last year did so
because of poor customer service experience.
A challenging environment
The recent financial crisis has brought
both challenges and opportunities for
technology-focussed companies. In the area
of banking, for example, some countries
have seen an increasing number of mergers
and a reduction in branch numbers as bank
margins come under pressure, but that’s
only part of the story.
As customers expect more choice and
higher levels of service delivery, the
challenge that banks face is how they
position the branch as part of their retail
offer. Innovative solutions have a key role in
enabling institutions facing cost pressures
in a rapidly changing market environment
to meet the needs of increasingly
demanding consumers. The retail banking
90 | www.fintech.finance
The bank branch is not dead, but it does need
resuscitating, says Paul Race, Director of Global
Marketing Operations at Glory Global Solutions
industry needs to provide the type of
service customers require, where they need
it. Old-style branches were based in high
streets and were focussed on transactions.
Today’s branches need to be located where
the customers are and this is one area
where they can learn from the retail sector.
Long live the branch
Location is one part of the branch network
solution; the other is service delivery.
“The branch will not die,”
says Javed Anjum, Branch
Transformation Specialist
at Glory Global Solutions.
“It is evolving to better meet
consumers’ needs. The focus
is no longer on enabling
transactions but rather
on human interaction. Optimistic: "The branch will self-service, some will
not die," says Javed Anjum
The modern branch is about
providing advice and income generation
and the key to all this is customer
experience. Glory’s technology and global
experience are key to revitalising the
branch channel. We see our role as an
adviser and a facilitator of change.”
Today’s customers want easy transactions the need for security screens also enables
and a personal, customised service. They
are at ease with self-service technology,
whether that’s ATMs, online or mobile
banking, and are able to do more for
themselves. That said, the role of the bank
branch remains clear; it is the only channel
where every type of transaction can be
completed successfully, whether it is a more right, to achieve the cost savings associated
The branch
focus is no
longer on enabling
transactions, but on
human interaction
complicated multi-step transaction or
financial advice about a new banking
product. What the bank wants from its
branch is cost-effective high footfall and
the highest levels of customer experience.
Using innovative technologies is essential
to this process.
Automation enables transformation.
It opens up opportunities for a more
sales-centric experience and ensures the
bank can achieve this cost-effectively,
potentially in a smaller space
with fewer people, or the
same number of people
focussed on higher value
activities. Of course, the bank
has to take into account the
fact that not all customers
will be comfortable using
continue to want or need the
assistance of a teller. In this instance the
use of TCRs (Teller Cash Recyclers) in the
branch will speed up transactions, reduce
queues, lower overall transaction costs,
improve security and enable more
effective customer interaction. Removing
the adoption of a more welcoming,
open-plan environment at the branch
As Javed Anjum explains:“While there can
be ‘no transformation without automation’,
automation of transactions should not lead
to the elimination of human interaction.
The challenge then is to get the balance
with self-service, to ensure customers
have the re-assurance necessary to carry
out more complex transactions and also
to preserve the opportunity for customer
interaction with a member of staff, free
from minor administrative duties.”
New branches that provide a positive
customer experience have the potential
to drive increased revenue and this is the
Summer 2016

market model adopted by innovative
institutions, like Metro Bank in the UK.
In the past, the customer perception of
bank branches has been fairly negative, with
a focus on slower manual transactions and
resultant queues. The focus now, with the
help of innovative technology, is to make the
branch somewhere the customer will want
to visit, with a more open-plan design and
for it to become an effective advice centre.
Technology for the future?
Despite various claims that we are about
to embark on a cashless future, for the
foreseeable at least, cash is here to stay. In
the UK, cash still accounts for 48 per cent of
all transactions by volume and the number
of bank notes in circulation continues to
increase. According to the Payments
Council, there will still be 14 billion cash
payments in the UK in 2022.
Automated cash handling at the
branch will continue to provide an essential
means of improving security, releasing
resources, enabling speedier transactions
and lowering costs.
Some things have changed and will
Summer 2016
impact on future developments. Most bank
customers are now multi-channel users
and it is important that there is a consistent
look and feel between the branch and
other channels. There is also increasing
pressure for what has been termed
‘infotainment’, whereby consumers expect
to be entertained while being informed.
Expect future products to be designed in a
way that does both.
In this and other areas, Glory is already
ahead of the game.
Javed Anjum says: “In everything Glory
does we are looking forward. As our tagline
states, ‘We secure the future’. By enabling
positive customer experiences we help our
clients increase customer loyalty while
lowering costs, maximising sales and
improving the bottom line. It’s no accident
– we are in a unique position to do so.”
A unique perspective
Glory has long experience of working in the
branch channel rather than on one specific
solution type.
This unique background means Glory has
a deep understanding of cash – back office,
middle and front office. Unrivalled
knowledge of the requirements of
interacting with cash across the
organisation enables Glory to tailor the
right solution for each client, delivering the
maximum benefits by optimising the
processing and management of cash, not
just in silos, but across the whole branch.
Glory Global Solutions is a global leader
in secure cash technology solutions in
more than 100 countries, operating
across the financial, retail, cash centre
and gaming industries. Solutions are
about choice and ensuring that banking
customers are served in ways that will
enhance the overall branch experience.
The company’s research demonstrated
that significant numbers of customers
remain uncomfortable about using
self-service, particularly for more
complicated transactions at the branch.
This is where assisted self-service,
whereby staff stand ready to help
customers to use the machines, is
important. One thing you do not want
to do is lose those customers more wary
of using technology. Staff intervention,
when required, is cost-effective in that it
involves a ‘one to many’ ratio.
Moreover, Glory’s TellerInfinity product
enables customers to carry out a wide
range of transactions themselves, including
transactions that were not previously
available through traditional ATMs – those
that typically would require some level of
staff intervention.
Another important feature of Glory’s
solutions is that its software connects to
the branch platform. This integration with
the core banking system enables a wider
range of automated services at the branch,
avoiding limitations associated with the
ATM switch.
For customers wishing to open an account
or acquire a new product the process
couldn’t be easier or more convenient. As
the software is linked to a staff member’s
tablet PC, they are able to intervene and
validate the customer’s identity.
There is no doubt the branch is changing
in terms of location, appearance and
functionality. But what is also evident is that
these new branches have a continued
essential role to play in terms of the banks'
service delivery.
Working with Glory, banks worldwide
have rejuvenated the channel – and there’s
more to come.
www.fintech.finance | 91
CUSTOMER EXPERIENCE – BRaNCh
In search of the
golden nuggets
Santander’s Portuguese bank has had to fight hard for the hearts and minds of
customers following the financial crash. Miguel Paixão, former Director of Innovation
and Commercial for Santader Totta, explains how he set about the challenge
One of the worst affected economies
following the financial crash of 2008,
Portugal has struggled to rebuild
faith in its banking system through a
series of aftershocks – most notably,
the collapse of its largest listed lender
as recently as 2014.
So, the bar was set dauntingly high for
Santander Totta – the Spanish bank’s
regional arm – when it began introducing
a series of innovations designed to win
back customer confidence.
It decided to take things personally
– not hard in a country of just 10 million
people – and started by focussing on
the face-to-face branch relationship.
“The branches are still fundamental,”
says Miguel Paixão, until recently Director
of Innovation and Commercial, responsible
for branch redesign and rethinking the
bank’s distribution models. “We abolished
the desk concept – it sounded cold, merely
transactional and that’s not what we
wanted. The aim was for ‘clients’ space’, a
more emotional approach.”
Paixão’s shopping list was long and
detailed and set against a complex backdrop
that sounds familiar to banks in the UK, but
all the while the chairs on the deck were
being reorganized as the country took
several steps forward and many more back.
“Portugal is a small country that got
out of a major economic crisis and the lack
of confidence in its banking is extremely
high,” says Paixão. “Portuguese customers
were used to having a highly evolved
banking system, one that offered good
products and good services.”
In the years since the crash, they had not
only become more sceptical of financial
institutions, but more demanding of them,
too. “The new digital era had a clear influence
on our clients’ behaviour,” says Paixão.“Firstly,
it introduces us to the notion of “I want what I
92 | www.fintech.finance
want when I want it’. Clients can also search
for the answers to whatever they want and
have become more knowledgeable.”
At the same time, the environment
in which the bank operated had and
continues to change.
“We have three big challenges. The first is
to incorporate the clients’ say into the bank’s
processes. The second relates to the new
players that are starting to appear in the
markets, plus the excessive regulations we are
suffering. And finally we need to know what
are our channels’ capacities so that we can
reach our clients faster and better,” says Paixão.
Fundamental to all that, driving
behaviour and potentially offering a
solution, was digitisation.
“Digital allows us to know the clients;
to identify every client so that he or she
feels unique to the bank. What the digital
era is pointing us to is ‘know every client’
as opposed to ‘know every client group’.
“Nowadays we have many players in our
market that are not bankers but offering
banking services. They make our relationship
with our clients more difficult. On the other
hand, we know that if we don’t listen to our
customers, get to the root of what they want
and if we don’t incorporate the client in our
process, we create distance between us. That
is why we wanted to create a bank that is
closer, more simple and fair to clients.”
At the back end of the organisation
that meant working closely with the IT
department and forming partnerships
with the distribution network, not least
because they were responsible for the
mechanisms that would tell the bank
what clients wanted to see developed.
In branch, the new philosophy meant
not only doing away with desks but also
giving staff tablets that are enabled with
biometric software.
“The tablets allowed us to change the
paradigm of being with clients,” says Paixão.
“We no longer sit on opposite sides of the
table; we sit side by side with a tablet infront
of us. It also facilitates mobility – we can
open an account at the branch, at our client’s
office, wherever and whenever they want.”
Biometric signature identification
provides the necessary security.
“Biometric translates as having the
rhythm, velocity, pressure, acceleration and
movement for any signature we collect. This
detail distinguishes any signature from any
other. We can both sign exactly the same
name, but the system will always know
when you signed it and when I signed it.
It’s really easy to use but extremely safe,”
says Paixão. “The tablet introduces a new
way of being with the client – we create
golden moments with our client, allowing
us to know them more and better.”
The ‘clients’ space’ is both a physical and
a virtual concept based on a number of
key principals.
“Firstly, it’s important for the physical and
the digital space to be one space,” Paixão.
“As a client, if I am at the branch or at my
digital desk I’ll have the same experience.”
Secondly, the bank is sensitive to regional
contexts.“Attention to the physical space
is important; In Lisbon I will have to
communicate differently than I would in
Oporto,” says Paixão.“Thirdly, it is extremely
important that the client is able to live the
experiences but at the same time that he
remembers and accumulates them. The forth
is that communication must be possible at
any time; and last, you (the bank) need to
know who you're communicating with.
“We need to understand that clients,
nowadays buy less based on the product
itself and more for the experience,” says
Paixão. “Today we are doing much better.
We’re successfully managing to win the
clients’ confidence back.”
Summer 2016
 a rich seam: Technology has
allowed the bank to mine the
customer experience

We create golden
moments with
the client, allowing us
to know them better
Summer 2016 www.fintech.finance | 93
CUSTOMER EXPERIENCE – BRaNCh
Who wants a
cashless economy?
In an age of digital financial enlightenment we appear to have overlooked
one crucial truth… the public prefers cold, hard cash. Always have and,
if Ron Delnevo, chairman of Cash & Card World, has his way, they always
will. Denying them that choice, he warns, could be an industry own goal
Let’s be honest, most of us opt
for the easy life when we can.
Part of that option is not to think
about the future – or, at least,
not beyond our next birthday,
or holiday or Christmas.
Living for the moment has become the
norm. No one wants to worry about the
long run because in it we are all dead.
This rampant short-termism infects
every aspect of our society, from
interest-only mortgages, through delayed
development of airports, right up to not
knowing where our next nuclear power
station is coming from.
What do we care? Today is OK – or
better – so tomorrow can take care of itself.
Only it won’t.
Who can we really trust to look after
the future, if we don’t care about it much
ourselves? Why should anyone be mindful
of our interests if our own minds are
otherwise engaged?
Can we rely on politicians (expenses
scandal)? Bankers (Libor-fixing-plus)?
The media (phone tappers united)? I
cannot hear a chorus of “ayes” in the
dusty trail of this recent history.
So, it is time for all of us to take the
hankies off our heads, struggle out of our
deckchairs and start doing a bit of thinking
– and doing. And that brings me to
payment choice.
In the 1950s – and for the preceding
2,500 years or so – choice in day-to-day
payments wasn’t really an issue. There was
cash and there were cheques. Full stop.
Were we happier then, with no choices to
make? Possibly.
94 | www.fintech.finance
What happened to change the situation?
Three things, primarily.
Firstly, people started to get their wages
paid into their bank accounts, rather than in
cash. Employees did not ask for this change, it
was forced on them by employers and meant
that access to cash was not so convenient.
That presented an opening for cards, which
had barely been seen before.
Secondly, in the swinging Sixties, many
of us wanted to live a little. Love may have
been free but not much else was, so living
a little often meant spending a LOT more
than you could earn, at least in the short
term. Enter the credit card, with the luxury
of delayed payment.
Thirdly, the first ATM did not come along
until 1967 and the machines were really not
that user-friendly until well into the 1970s.
This, coupled with wages increasingly not
being paid in cash, meant there was a
convenience gap. Once again, an alternative
was on the cards.
So credit cards arrived, followed by ATM
cards and, then, fully-fledged debit cards.
This meant people had a choice.
However, cash still accounted for 80 per
cent of all day-to-day payments.
The next major change was the
world-wide web during the 1990s and,
as the third millennium dawned, this
brought with it the first flush of online
banking and, of course, internet shopping.
Internet shopping was a real boost for
card issuers in the UK. Consumers wanting
to shop on the internet had no choice: it
was cards or nothing.
So much competition for cash now.
Yet, as recently as 2005, more than
70 per cent of all day-to-day payments
were still made using it.
Internet shopping has continued its
growth, to a point where it now accounts
for 15 per cent-plus of all UK retail sales.
Much of the decline in the last decade in
cash use is accounted for by internet
shopping, not through consumers in the
high street switching to cards from cash.
In short, where consumers have a choice,
they still mostly opt to use cash.
The rise of contactless
So, the card issuers had to come up with
something else. That something else was a
little surprising, because for years those
issuers had been drumming into the public
that PIN numbers were vital to validate card
use in shops. However, the card marketeers
decided that good security got in the way of
increasing card use, so out went PIN numbers
(largely) and in rushed contactless.
Contactless is very simple in principle.
The customer waves the card at a reader
adjacent to the shopkeeper’s till and, hey
presto, the transaction is approved. Once
in a while, the customer will be asked to
use a PIN number, but not very often.
Sounds good, doesn’t it? Yes. Though the
UK public didn’t buy the goodness for a
long time. Contactless was introduced into
the UK in 2008, but didn’t really make any
inroads for years. People were happy
enough with traditional card use and, of
course, cash.
The card marketeers were scratching
their heads by this time. What could they
do? How could they get the UK public
to change their ways? Enter London
Summer 2016

When the public have been
allowed an unmanipulated
choice, we have most often chosen to
use cash. And we continue to do so
Transport – or Transport for London (TfL),
as they prefer to call themselves.
TfL had introduced its own contactless
card, the Oyster card, in 2003. This had
proved very popular, in particular for
pay-as-you-go travel (although this only
accounts for around 15 per cent of all
TfL journeys).
By 2012, more than 43 million Oyster
cards had been issued. A winner, then.
Why would you change the formula?
In a word: money. Along came the card
Issuers, deal in hand. They easily had the
financial clout to persuade TfL to gradually
Summer 2016
phase out Oyster, in favour of travellers
being able to use contactless debit and
credit cards on all TfL transport.
There are, of course, a number of
disadvantages for the long-suffering
London public in moving away from Oyster.
Control of expenditure, ease of use and
card clash, to name but three. But money
talks and the phasing out of Oyster is in
train (or is it going down the Tube?).
Why is this so important to those card
marketeers? Because by September 2015,
650,000 journeys a day on the TfL network
were being made using contactless debit
Liberty: The paying public's freedom
of choice shouldn't be denied
and credit cards. This not only improved
the statistics for contactless use, which
had been pretty dismal up until then,
but it also made the new users more likely
to resort to their contactless cards when
making other purchases.
Contactless use on TfL was further
enhanced by its ban on using cash on
London buses. In backwaters such as Los
Angeles, the public can use both cash and
cards, but it is all too much trouble for
TfL to offer that choice to its customers.
Tender is our right
What does all this tell us? Firstly, when
the public have been allowed an
unmanipulated choice, we have most
often chosen to use cash. And we
continue to do so.
Secondly, organisations such as
Transport for London will arrogantly
remove the public’s right to choose,
if we allow them to do so. Not just in
payments, of course, but in every way.
Thirdly, card schemes, in rightly focussing
on increasing profits for shareholders, will
pursue strategies that are not necessarily
in the interests of society as a whole.
What’s happening in transportation in
London is simply one small example of
choice being removed.
So, remain in that deckchair at your
peril. It may seem easy to accept the diktats
of big businesses, especially when those
businesses can afford to spend hundreds
of millions of dollars to persuade you to
alter your judgement.
We long ago lost the right to be paid in
cash. We have lost the right to use cash to
pay our bus fares. Soon, if vested interests
have their way, we will lose the right to use
cash at all. Don’t think other businesses
haven’t seen what TfL has got away with;
some of them will want to follow that lead.
Choice is one small word. Not worried?
Then think independence; freedom; privacy.
Bigger words, containing massively
important principles.
Time now to tell the TfLs of this world that
we – the public – will decide how we pay. It
could be using card, or ApplePay, or cash.
The message will be clear: if you take away
our choice, we will take away our business.
Time is short. Act now. Whilst you still
have that choice.
www.fintech.finance | 95
 “T H E F U T U R E O F
Global RETAIL BANKING
Digital Banking INNOVATION,DISRUPTION
Conference 2016 A N D C O - O P E T I T I O N“

THURSDAY 16 JUNE
THE BANKING HALL, LONDON
Global business intelligence and media provider RFi Group is
launching its Global Digital Banking Conference Series which
includes London on 16 June 2016. This event series will also
be running in Toronto, Dubai, Singapore and Sydney and
has been designed to optimise RFi Group’s global research
expertise and provide an opportunity to share insightful
global best practice and thought leadership.

The Global Digital Banking Conference - UK edition, will

examine and investigate the latest insights, best practice and
success stories for digital engagement and innovation across
retail banking. This will include: acquisition, the importance
of main bank relationship, share of wallet, targeting
consumer segments, marketplace lending and new forms of
payments.

Speakers include: For more information on the event programme and

sponsorship opportunities or to register please contact:
Jason Bates, Co-founder, Mondo (Co-founder &
former CCO, Starling Bank) - UK

Anne Boden, Chief Executive Officer, Starling Natasha Dochniak
Commercial Director - Media &
Bank - UK
Events
Lee Jay Burningham, Head of Financial Services Direct: +44 203 862 2143
Mobile: +44 755 206 0507
UK & EMEA, Facebook and Instagram
Matthew Walsh
Financial Reports and Events
Executive
Direct: +44 203 862 2142
Mobile: +44 742 928 8938

Steven Cooper, CEO - Personal Banking,

Barclays
Lead sponsor:
Sophie Guibaud, Vice President, Fidor -
Germany

Rhydian Lewis, CEO, Ratesetter

Media partners:
David Millington, Head of Current Accounts,
Tesco Bank
Global
Mark Mullen, Chief Executive Officer, Atom Retail
Bank - UK Banker

Jay Sidhu, Chairman and CEO, BankMobile and Supporting partners:

Customers Bank (USA)
UK
Valentin Stalf, CEO, Number26 - Germany Retail Banking
Council
www.globaldigitalbanking.com

KAL of the wild
The company behind many of the world’s ATMs is on a mission to make banking
and cash accessible to the remotest communities. Aravinda Korala, founder
and CEO of KAL explains how he plans to broaden banking’s horizons
Imagine you’re in a bar in Beijing
late at night. The metro closed at
10pm and you need to pay for a
cab back to the hotel but you don’t
have any local currency – or indeed
any currency. If you offer the driver
plastic, you know he’ll tell you to
take a walk. Even if you could find
an ATM in downtown Beijing, half
of them don’t accept foreign cards.
Now suppose there’s a KAL Remote
Teller Machine in the lobby. It will scan
your card and issue you a note of
creditworthiness, which is good to
exchange for 100 yuan at the bar. The
beauty of it is, by the time you walk back
from the lobby, the money is already in the
vendor’s account. It’s instant fulfillment.
These RTMs are a revolution in
branchless banking. A cashless ATM that
gives you instant access to cash but are a
tenth of the cost to run, so banking RTMs
can have them everywhere.
KAL has been promoting RTMs for the
past four years as a way of reducing costs
for branches and customers, and reducing
the time for people waiting to carry out
transactions. It eliminates the need to find
an ATM when traveling abroad and
reduces the fees for currency exchange
and withdrawal in a foreign country.
CEO Aravinda Korala sees bars,
restaurants and hotels as prime locations.
“Hotels are ideal because they are already
carrying a certain amount of cash in order
that their customers can convert US dollars
or whatever to the local currency.
“The difference between an ATM and
the RTM is that at the point at which an
ATM would dispense cash, the RTM
Summer 2016
dispenses a secure ticket. This secure
ticket is telling the person at reception in
the hotel, or behind the till in a store, that
you’re good for $20, £20 or whatever it is.
So you hand over this ticket and they give
you back the cash.”
Cost savings
With roughly 3 million ATMs around the
world, each costing 20,000 euros to
maintain per year, the cost saving to
banks is significant.
The RTMs run on the same KAL
software as its ATM machines, so they
interface with the bank’s network in
Banks have
a big, big
challenge about
how to do financial
services in rural
areas because the
cost is very high
exactly the same way. And because they
are cheaper to install and maintain, banks
can roll out a lot more of them, allowing
people to carry out more complex
transactions without holding up others,
who will only take 30 seconds.
But the possibilities don’t end there.
An RTM’s 17-inch LCD or an attached
video topper can also be used to offer
video conferencing with a real teller.
“Should I repay my mortgage or should I
CUSTOMER EXPERIENCE – BRaNCh
put it in a savings account, and what’s the
interest rate?’ that kind of conversation
has to be done by a real expert and the
kind of person that the bank might not
always have in the branch,” says Korala.
“But with the remote teller-assisted
transaction, because you can route the
call to somebody across the country,
anywhere nationwide, or even in another
country, it means that you can always
have the expert to answer that question.”
The idea is the technology will free up
time for both banks and consumers
and create a more fluid banking process
around the world.
Rural challenge
It would be self-defeating if the RTMs
were permanently busy, so several would
have to be placed in close proximity,
so the customer doesn’t have a negative
experience, points out Korala. But for a
tenth of the price, banks could afford to.
The initial assumption was that the RTM
would be more popular in poorer
countries, such as China and India, where
governments are encouraging the use of
personal banking. But KAL found a
surprisingly high level of interest from
banks in the West, too.
“They have a big, big challenge about
how to do financial services in rural areas,
because the cost is very high in rich
countries to do that and, of course, you
can’t justify ATMs in all of those locations,”
says Korala.
In those areas the RTM can act as a
mini branch, to those unable to visit a
physical one – in effect, bringing banking
to everyone’s doorstep.
www.fintech.finance | 97
CUSTOMER EXPERIENCE – BRaNCh
The branch
is dead... long
live the branch
Branch banking as we know it has been transformed at Nationwide
– and it’s all thanks to fintech, according to Barnaby Davis,
Group Retail Strategy Director at Nationwide Building Society
“Nothing excites me more in
banking than a customer who’s
been empowered by technology,
because it tends to take customers
back to high street banks to say,
‘Now I’m in control, I would like to
talk to somebody on my own terms
about information that I have now
got access to,” says Barnaby Davis.
Talking to the Retail Strategy Director at
Nationwide Building Society in the week that
Microsoft opened a store on Fifth Avenue
and Amazon started selling books from a
real shop makes you think he’s got a point.
“That tells me there is a real need for
physical locations and those locations need
to be comfortable places for customers to
go and feel they can have the right level
of knowledgeable discussion,” says Davis.
After 14 months of creating just such
an environment, he is no longer using the
phrase ‘branch of the future’, conscious
perhaps that the future in banking is not
yet ready to be defined. Instead, he prefers
to describe the radical path he's chosen as
‘branch design transition’.
“I think with age and experience probably
comes a greater degree of wanting to take a
bit of a risk because if you play it safe, you’re
going to design the same branch that
everyone else has done,” says Davis. So the
brief he gave the bank’s designers was to
turn Nationwide’s 600-plus branches into
an extension of the customer’s own home
– somewhere where they primarily felt
If you can find the sweet
spot between machines and
people, that’s the winning experience
98 | www.fintech.finance
comfortable but which also offered a opened 150,000 in a very short space of time
degree of privacy. and the vast majority of 11- to 18-year-olds
“We call the self-service area the tool opening that account are doing it in branch
shed and the central hub is the living area. because their perception is that isn’t the sort
The seating down the left hand side is of thing you do on your own at home via
very much based around living room technology – you go and talk to someone,
seating. We wanted to make the offices because you don’t really know anything
look more like the study where you’d go about opening a bank account.”
and have a sensible discussion with a That's led him to build the bank’s offline
business advisor,” says Davis. and online retail strategy around a segment
The investment in the bank’s high street of one. “You’ve got a person, they’re of
network wasn’t about turning the clock back; a certain sex, they’re of a certain age,
it was part of a carefully structured plan to they’ll have a certain experience of both
move Nationwide forward. Because if reports banking and technology, and you find
of the death of the branch have been much out where they are and what
exaggerated, so are reports of who uses they want to do,” says Davis.
them and how. Contrary to popular belief,
says Davis, there is no divide between
digitally savvy but remote millennials and
their digitally illiterate grandparents.
“Anyone over a certain age gets classified
as ‘They won’t want to do digital’, and
then you’ll be in a branch
and a 95-year-old man will
be telling you how excited
they are that they can use
Facetime to speak to their
great grandson in Australia.
They don’t have an issue with
technology because it’s
become useful to them at
a certain time in their life.
"Likewise, Nationwide
has launched a new youth
account, FlexOne. We’ve
Summer 2016
 That might be choosing to visit a branch
where staff and customers have access
to a full range of digital devices and data,
or interacting with the bank from home
over their smart phone or wearable device.
The strategy for the future of the branch
in Davis’ eyes comes in a three-tier plan:
n A floor layout that both “customers
and colleagues find helps what they’re
trying to do on a daily basis”
n Improving the branches' “digital
assets, which is fundamentally
supportive of what colleagues and
customers are trying to do"
n A “real harnessing and usage of
customer data and consumer insight
to create a proper relationship with
a customer”, which can now be
achieved through mobile banking
The branch design transition Davis is
currently engaged in is part of a much wider
evolution in banking services, which can
be summed up as 'the easier you make
something for a customer, the more they will
do it'. One way Nationwide has been making
it easier for customers is through mobile
banking app features, such as Quick Balance
and Impulse Saver, which allows them to
view their balance and transfer cash into a
deposit account without logging in. Well
over half of Nationwide’s one billion digital
transactions a year are now made using a
mobile device and later this year it plans to
boost that with the introduction of Android
Pay. It was the first bank to embrace Android
Wear and introduced Quick Balance on
Apple Watch, too.“Wearables, for me, are an
extension of the smartphone,” says Davis.
”The smartphone is an incredible empowerer
of people, financially. Whether it’s a watch or
a phone, it’s one more thing they’ve got on
them when they come into a branch to have
a discussion about something. If you begin to
add alerts and notifications onto wearables
in particular, that’s when you’re truly creating
a digital relationship with your customer,
helpfully bringing their attention to things,
which in many cases is going to lead them
straight back to us.”
Davis sees wearables as part of a
technological democratisaton of banking
that started with the introduction of
modern accounting systems in the Sixties
and Seventies. But in his view, people
remain at the heart of it.
“Machines are really good at doing
repetitive tasks that need absolute accuracy.
I think people are really good at serving
people, creating rapport, finding things out
and making sure something really is sorted.
If you can find the sweet spot between
getting the machines to do what they’re
good at and getting the people to do what
they’re good at, then that’s the winning
experience. It’s not just digital and it’s not
just people, it’s a bit of both.”

home from home:

Nationwide has
transformed its branches

Summer 2016 www.fintech.finance | 99

 When you have to be right

Make clear-
sighted decisions
in today’s rapidly
evolving
environment
The traditional boundaries that exist between the
governance, finance, risk and compliance departments, in
conjunction with technological constraints from the past,
mean that siloed architectures are still very common
within financial institutions. However, demand from
management and regulators for more, faster and better
quality information, together with technological
advancements and ‘big data’ capabilities, these obstacles
can now be overcome.

OneSumX provides an ecosystem of complementary and

comprehensive
ç ù solutions and services to manage the
intersection of governance, finance, risk and
compliance—increasing organizational profitability,
efficiency and growth.

For more information, visit www.wolterskluwerfs.com/onesumx

 FINTECH

Identity crisis
Intelligent personal technology could drive traditional banking towards
a precipice, says Brett King, CEO of Moven and all-round digital
banking guru. Because in the new crowdsourced economy, it's
not just a matter of knowing 'who' but 'what' your customer is...

Traditional banking has had its day,
according to Brett King, CEO of
Moven and host of Breaking Banks.
In the mid-Nineties, consumers would
visit their local branch a couple of times a
month. Today, in almost all markets, it’s
closer to once per year, with the average
customer calling an agent maybe five times
a year and logging onto their web-based
channels an average of once per day.
This is where Moven comes in. Founded
in 2011, Moven’s system relies heavily on
digital technologies.
“We’ve used the term ‘digital bank’ in
the press when we talk about those banks
who are ready to do that, but there’s really
only a handful of really digital banks,” says
King. “I think you’ve got to ask ‘What is
the baseline of a digital bank?’ and, if
you’re a bank today, looking at all of this
technology, then it’s pretty simple.”
The mobile revolution
Moven is finding that customers are
accessing upward of three transactions
per day using their phones and King
believes that customer service will
evolve to focus on the provision of an
unparalleled banking experience. “That’s
going to be a significant requirement
for human interfacing – when I talk to a
human it’s going to be because I really
need a problem solved and I really need
great service,“ he says.
King is focussed on future generations,
generations that are never going to write
a cheque, never going to have a plastic
card, never going to own a car.
“They may have two or three jobs, they
may have 10 different jobs by the time
they have been in a career for a decade.
It’s going to be a very dynamic world, a
very crowdsourced world.”
Rethinking KYC
Ten years out, King invites us to think
of a self-driving car that’s owned by a
community of friends, who are sharing a
home. This self-driving car picks them
up and drops them at their place of work
for the day. It’s got a few hours before it
needs to collect them again, so it clocks
on to an Uber-like service and acts as a
network vehicle.
“It gets paid for that, then it has to go
and recharge because it’s an electric
vehicle. So it goes to a parking lot and
hooks up to a supercharger, pays for that
electricity, maybe generated through
solar, and then gets back on the road and
picks up its owners and drops them at
home,” says King.
“If you think about that from a Bitcoin, or
a blockchain, or a technology perspective,
that self-driving car has its own wallet, it’s
earning an income, it’s transacting, and it’s
doing all of that independent of the
identities of the owners.
“You’re not going to get 10 people
down to a bank branch to KYC them for a
wallet in a car. You’re not going to link 10
debit cards to a wallet in a self-driving car.
We have to handle this in a different way
and the current financial system, the big
banks, are not well-equipped to imagine
this world of payments and innovative
things and different transacting and
account and identity paradigms that are
coming down the stream.”
The future is here
For a long time bankers have thought that
people need banks to help them
understand complex banking products
and interest rates. In reality, most people’s
banking requirements are quite simple
“But that still means you need to be
able to provide every core retail banking
product, whatever field you’re in,” says
King. “You need to be able to provide that
product or service in real time, over a
device, without requiring a signature
on a piece of paper, or a physical identify
verification moment, right? Now, if you
can’t do that, you’re screwed in five years’
time. That is the baseline. A digital bank
has to be able to execute revenue and
relationship in real time across a device.
“You know, fintech is here,” King adds.
“This is fintech’s moment and it’s about
time that banks actually recognised that
technology, not fin, is where the future of
banking is.”
Brett King was talking to Fintech
Finance Magazine’s Ali Paterson

It’s about time that banks actually recognised that

technology, not fin, is where the future of banking is
Summer 2016 www.fintech.finance | 101
DIFFERENT COUNTRIES.

DIFFERENT CULTURES.

DIFFERENT PAYMENT PREFERENCES.

Payment preferences differ significantly from country to country – Chinese consumers prefer
Alipay, Germans tend to use direct bank transfer, online banking is highly popular with Finnish
consumers and the majority of Dutch online shoppers chose to pay via iDEAL. PPRO serves PSPs
and financial institutions with acquiring, processing and collection services. By offering access to
a vast range of alternative payment methods with only one contract and one integration PPRO
takes out the complexity of e-payment.

www.ppro.com

Fintech vs fintech
Don’t write off the dinosaurs just yet. The big daddies of finance aren’t quite as
slow as the challengers make out. They’re catching up with new kids on the block
and fast, says Praful Krishna, CEO of cognitive technology company Coseer
In the battle for relevance between
traditional financial institutions
and fintech disruptors, the best ally
for the old-guard is turning out to
be, unsurprisingly, fintech.
Cognitive technology companies, such as
IBM and Coseer, are helping banks, wealth
managers, insurance companies and other
financial enterprises win against new-age
technology-driven fintech startups.
Detractors point out, rightly so, to the
difference in experiences for a common
task, like sending a friend $100. With
PayPal or Square pay, you just take a snap
of your card, type out your friend’s phone
number and you are done. With a Bank,
you may have to fill in forms, pay $35 and
wait three to five days. There are similar
stories in each aspect of finance – lending,
investing, plan administration, etc.
It’s not that the banks hate consumers.
On the contrary. If they could afford it, they
would rather have a personal teller who
would speak to you in natural language,
clarify what you mean, leverage on your
personal history and complete the task right
away. If they could afford it, they would have
a team to anticipate your every need and
advise you at every step with sound options.
Winners: Forward
thinking financial
enterprises are
in pole position
Summer 2016
It turns out, for the first time in the history
of banking, now they can finally afford it.
Thanks to technologies like Watson and
Coseer, the traditional financial institutions
are redefining both their consumer product
and the consumer experience. They are
being more intelligent, more personalized
and more human by being more
automated. Combined with their millions
of long-standing trust-based relationships,
this puts the traditional financial enterprises
in an enviable position.
I live in San Francisco, so here’s an
example from my backyard: when Charles
Schwab launched its Robo-Advisor, within
months the assets under management
overtook the Silicon Valley favourites, like
Wealth Front and Betterment, that have
been around for years.
Thinking ahead
As always, in truth the story unfolds
not by a magician’s sweep and pixie dust,
but through a series of blocking and
tackling steps. Cognitive technology
is being applied to multiple facets of
a financial enterprise. For example,
cognitive computers are beginning to
interact with customers, giving them
Traditional institutions
are being more
intelligent, more personalized,
and more human by
being more automated
FINTECH
better, quicker answers. Or, in the back
office, qualitative information, especially
social, is being folded in with quantitative
information for far superior risk analytics.
Or, finance professionals are becoming
disruptively productive using the idea
of artificial interns.
Two distinct models are emerging in the
nascent market of cognitive computing.
IBM’s Watson takes an investment of time
and money worthy of a super computer,
but then combines text, speech, visual
signals and others to solve foundational
challenges. Other companies may have a
light footprint, but go after specific
problems to achieve high accuracy within
weeks. For example, Coseer focusses on
language only and scales language-driven
workflows; Sentient focuses on images.
Either model is beating fintech at its
own game. The general-purpose nature
and adaptability of these technologies
allow financial giants emulate a startup
very quickly, with or without big budgets.
Then they have all the data, the life blood
of any modern technology, and the
relationships, the soul of any business.
In this battle of Fintech vs Fintech, it is
too soon to write off the old guard.
www.fintech.finance | 103
FINTECH
Why the apple cart
needs upsetting
New online lenders have made significant inroads into the territory once
held by the banking giants – but they can’t all claim to have been a success.
Here, John Davies, CEO of one firmly established disruptor The Just Loans
Group Plc, gives his thoughts on servicing the financial needs of SMEs
Picture the scene – a small business
owner is enjoying breakfast and
announces to the family: “I think
today is the day when I am going to
introduce fintech into my business.”
This amusing and totally unrealistic
picture popped into my mind after reading
a recent report calling for more SMEs to
adopt fintech. I could see where the author
was coming from but this simply isn’t the
way the world works. Fintech shouldn’t be
evident to customers but what they should
notice is how much easier it makes running
their businesses.
This, in a nutshell, is what has driven
The Just Loans Group Plc strategy since
we opened for business in 2012 and the
multi-million pound investment we have
made in integrating fintech into our back
office and customer journey.
We’ve already achieved two notable
European successes, being the first
European alternative lender to provide
card access to business finance at the
point of sale and the first to provide
customers with a mobile app, enabling
on-the-move transactions.
New customer relationship
There is a lot of talk about how new fintech
companies are either going to replace
services provided by traditional banks or
find smart ways of working together.
However, what seems to have slipped from
people’s minds and from today’s business
agenda are: lifetime value, one-stop
solutions and long-term relationships.
Let’s get back to fundamentals – we
know our customers demand a fast but
high-quality service and value for money.
But today they need more than this – they
104 | www.fintech.finance
want the seamless, invisible financial tools
to make running their businesses easier in
a time-starved environment, such as easy
access to short-term funding, control of
their business finances from their smart
phone, a corporate card with a business
account that has free transactions. They
want faster payments and everything else
they would expect from a leading finance
provider – including the ability to take
payments from their customers either at
point of sale or whilst mobile – raise an
invoice while on the move and, if necessary,
raise additional funding on that invoice.
And they want all this from one app.
One provider, one contact, one
relationship – a customer for life.
A bold aim but one that we have total
confidence in achieving. We have built and
extensively tested our multi-currency,
multi-language lending platform that
allows us to lend confidently using our
proprietary PropensityPlus® technology
underwriting module. PropensityPlus®
technology is invisible but enabling to the
customer, whilst we derive the benefits of
being able to make faster, more informed
lending decisions.
Our immediate focus is on lending in
the UK but our modelling strategy is
designed to support full-service business
banking and to be the springboard for
European expansion.
Today, The Just Loans Group lends to
growing UK businesses through three
wholly owned subsidiaries.
■ Just Cash Flow Plc (Just Cashflow)
provides a secured, flexible
revolving credit facility, similar
to a traditional bank overdraft
■ Just Bridging Loans Plc (Just Bridging)
provides specialist second-charge lending
in the commercial property sector
■ Just Finance Loans and Investments Plc
(Just Finance) takes equity investment in
companies in conjunction with longer
term loan repayments. Increasingly, the
focus is on fintech companies that can
enhance the Group’s core business model
On the Plus side
I am often asked to give more details on
our PropensityPlus® underwriting module
that, to date, has allowed us to record zero
capital losses. We have invested millions in
designing and building this platform that
provides us with a unique and unparalleled
level of predictive business analysis,
personal behavioural characteristics
and credit intelligence. This is a major
competitive advantage as it drives a
comprehensive underwriting module,
boosted by latest technology, providing
a wide variety of current and historical
data points, many of which are not used
by traditional banks or other lenders.
This provides extensive insight into the
propensity for both the directors and
businesses to be successful in the future.
The ‘Plus’ comes from highly experienced
underwriters’ insightful questioning, designed
to give them a good understanding of the
business, the directors and their objectives.
PropensityPlus® has allowed Just Cashflow to
significantly speed up the finance application
process and record zero capital losses to date.
So how does all of this fintech investment
help the end customer?
It is well documented that UK SMEs have
problems with accessing the finance they
need to grow and develop their businesses.
Summer 2016
It can take weeks to get a bank appointment
and often several more weeks to get an
answer. PropensityPlus® allows us to make
an initial loan decision within 6.5 minutes.
Businesses that are turned down know
exactly where they stand and can spend the
time saved looking for alternative sources
of finance or taking steps to improve their
credit worthiness for future applications.
We are proud to be the first European
alternative lender to provide card access to
business finance at the point of sale through
The BusinessPlus Prepaid MasterCard®
from Just Cashflow and to support this
with a mobile app that allows customers
to manage their finances on the go.
Our new card facility has already received
external endorsement by being highly
commended in the Business Product
Innovation of the Year category at the
Business Moneyfacts 2016 Awards.
Many of our customers will be using the
new app to move money on to their card
for use at point of sale. It’s not enough to
simply provide SMEs with much-needed
funding – they also need quick, convenient
and time-saving access.
Fintech solutions for SMEs
We are anticipating strong demand for The
BusinessPlus Prepaid MasterCard® as even
when SMEs are provided with bank finance
it’s difficult for them to get a business card
as a traditional bank will want to see at least
It’s not enough to simply provide
SMEs with much-needed funding
– they also need quick, convenient
and time-saving access
Summer 2016
two years trading history. Even
then, they are more likely to be
provided with a charge card that
has to be repaid in full at the end
of every month – not ideally suited
to managing cash flow challenges.
I am convinced that alternative lenders
that build full-service solutions like this will
do well. Fintech underpins and is rapidly
changing how we do business and I believe
the ability to quickly adopt and adapt is
what is going to enable disrupters like
ourselves to be in the winning category.
To ensure we can keep pace
with this rapidly evolving world,
Susanne Chishti, one of Europe’s
leading fintech experts, has
joined The Just Loans Group
board as a non-executive
director. She is CEO at
Fintech Circle, chairperson
of Fintech Circle Innovate
and has been recognised
in the European Digital
Services ‘Power 50’ 2015.
She will make a great
contribution to accelerating our
involvement in the most promising and
customer-focussed fintech technologies
and companies that will see us take a lead
in the European digital lending space.
Fintech has helped drive our success to
date and will be key to ensuring we are
a successful and innovative disruptor.
www.fintech.finance | 105
 Digital space.
Conquered.

Record Analyse Act

Digital transformation is easier said than done. If you feel frustrated

that you know WHAT is going on within your website and mobile
app but not WHY, you’re certainly not in the minority.
Glassbox helps you to record-replay and analyse all your digital sessions.

We help you increase conversion rates by identifying

why customers abandon online transactions.
We improve your customer service efficiency by reducing
both call volumes and calls duration.
We help to reduce the risks associated with your digital business.

You can create bespoke reports and funnels, or even free-text

search across all the data.

It’s quick, it’s easy and it’s safe because

Glassbox can sit in your premises,
while minimising your TCO.

Want to hear more? Let’s get in touch.

@glassboxdigital
+44 (0) 20 3170 6273 info@glassboxdigital.com

glassboxdigital.com

the mighty
Atom
Fresh from the buzz of launching the UK’s
first app-based bank, Atom CEO mark
mullen talks to Fintech Finance about
digital transformation… and life in Durham
The future is here. That’s how,
Mark Mullen CEO of the UK’s first
bank designed for digital from
the ground up, saw the arrival of
Atom in the UK last month (April).
The newly licensed, branchless bank
has been given permission to start rolling
out products, starting with a fixed saver
account, although its offer will eventually
include current accounts, overdraft,
demand deposits, mortgages, business
lending and term deposits.
Initially, exclusively available via iOS,
its pre-registered customers are now
being invited to join Atom on the journey
into banking’s unknown.
What promises to be a tech-based,
primarily app-distributed model, does
in fact feature a contact centre at the
company’s HQ in Durham, England, which
will provide round-the-clock support in
acknowledgement that customers might,
at some point, want human interaction
over a medium that isn’t a screen.
Location, location
The decision to base the UK’s most
innovative challenger bank to date about as
far away as it could get from the City seems
to have been more a case of personal
preference than an act of tactical warfare.
“A direct bank doesn’t need to be based
in a country’s most expensive hub, so
choosing the north of England really wasn’t
a difficult decision,” says Mullen. “We’ve
got a whole bunch of people who want
Summer 2016
to build careers where they live, without
having to move to the big cities. There’s
a great culture, it’s a wonderful part of
the world and it doesn’t take me forever
to get to and from work.”
Until Atom matures, the only account
individuals are able to open are fixed savers.
A customer may harbour as many of these
accounts as they like and deposits can be
made by electronic transfer from another
bank or building society – although there
has been talk of plans to allow cash and
cheque deposits via a high street partner.
There are currently four rates, varying
between a one- or two-year fixed saver
and a choice between monthly or annually
accrued interest. Each option has a different
gross rate and AER.
Because the majority of the service
revolves around the mobile app, it is easy
for Atom to create a VoiceID, FaceID and a
passcode for a user when they set up the
account. One of these methods will be
required for a user to access their account
and, depending on the transaction, they
may be required to enter more biometric
information as further authentication.
The app itself is secured by cryptographic
technology, so information moving from
I think news
of the demise
of the big banks is
a little premature
FINTECH
the phone to the end user is protected,
making security more advanced,
compared to physical branch standards.
Personalised banking
Despite the bank’s name, Mullen doesn’t
see himself as the Oppenheimer of the
banking industry – in its early sales pitch
the atom was in fact used to describe the
proximity of this highly personalised bank
to its customers (“We never want to be
more than one atom away from you").
Nevertheless, the former CEO of HSBC’s
online and telephone bank First Direct does
describe packing an entire bank into an
app whose design was based on gaming
technology and relies on voice recognition
and selfies for biometric security as a
“transformation of the banking landscape”.
Although that will be gradual.
“I think news of the demise of the big
banks is a little premature,” he says.
“Fintech’s not a fad. I think there are
a number of ideas that will enter the
mainstream. There are a number of the big
banks that are already investing hugely
in trying to transform themselves from
their traditional distribution models to
something that looks a little bit more
modern and is more aligned to how
customers are banking on the move.
I think all of the players are going to
get on this train in one way or the other
or they’re going to get left behind.”
Mark Mullen was talking to Fintech
Finance Magazine’s Dylan Jones
www.fintech.finance | 107
 Life without
stress testing...
.com

Innovative risk technology

vers

● loss tolerance
enle

● macro stress tests

● risk monitor
hidd

Ahoy!

Layers: Starling works on a
full-stack banking model
Taking
a slice of
the cake
Anne Boden often describes the
model for her new Starling bank
as being like the layers of a cake;
the icing is the mobile app that
sits at the top. She even promises
some ‘cherries’ to sweeten the
customer experience.
It’s built on what’s known as a ‘full-stack
banking’ model, which takes its name
from the “technology stack” – imagine
a set of products sitting on top of each
other, each dealing with a different set
of functions for the bank. A ‘full-stack
engineer’ is someone who has the ability
to work on the development of all those
levels, ranging from engineering the app
to developing the back-end systems.
“In banking, above any other industry,
the full-stack business model is more
critical to the overall customer experience,”
says Boden, who set up Starling on leaving
Allied Irish Banks where she was chief
operating officer.
“The regulatory framework enforces a
discipline of customer ownership and
rigid responsibilities for ensuring that
processes are in place to prevent money
laundering, fraud and (most importantly)
to protect the customer from being
mis-sold financial products.”
But she acknowledges that this “strict
division of responsibilities is at odds with
the objective of a seamless customer
experience”, which is, after all the holy grail,
not just for Starling but every other
challenger. The difference is, many of them
I believe that the industry could disaggregate.We’ll have
lots of players all getting together to serve customer needs
Summer 2016
Among the flock of new banks getting airborne
this year is Starling. Chief Executive Anne Boden
is busy sweetening this challenger's offer
are not full-stack banks. Starling will
receive its full banking licence this year
and plans to launch with the “best current
account in the world” in late 2016. So has
Boden managed to square the full stack
with her ambition to deliver “something
really differentiating that would be a
step-change in banking experience”?
We’ll have to wait and see.
“We’re definitely in the banking camp,
but we’re also a fintech. We’re also a
start-up and we also create something
very different and very new for our
customers,” says Boden.
“It’s all about managing your everyday
financial affairs and when we manage our
everyday financial affairs we get a better
financial life. Money really matters and its
fairness is fundamental.
"We believe that offering a fantastic
service to our customers in a very fair
and transparent way is so important.”
Starling dedicates an entire day a week
to listening to customers and discussing
their financial matters. The rest of the week
is spent analysing what they’ve said and
working on ways to incorporate it into a
service model that hasn’t been seen before.
“The days of lots of big banks all
offering exactly the same to a customer
base are really long gone. It’s all about
FINTECH
listening to customers and giving the
customer what they really need and really
want,” says Boden.
The three main unique selling points
for Starling are ‘real-time intelligence’,
which gives the customer the ability to
understand their money in the present
while allowing them to view such things
as spending for the previous week or
forecasting if they can afford a holiday;
‘complete personalisation’, meaning
the customer can shape their finances
around the type of life they lead; and
finally ‘smart simplicity’ with an easy-to-
use platform that allows a customer to
micromanage their money.
A brave new world
Boden believes it will put Starling at
the heart of the new banking era.
“I believe that the industry could
disaggregate. We’ll have lots of players in an
ecosystem of financial products, all getting
together to serve customer needs,” she says.
“Starling will be the heart of that
process, the heart of people’s financial
lives, and we’re looking forward to
working with customers for the rest
of the year until we launch. “
Anne Boden was talking to Fintech
Finance Magazine’s Dylan Jones
www.fintech.finance | 109
FINTECH
Follow the money
Lawrence Wintermeyer, CEO of Innovate Finance, asks if corporate venture
capital is the new smart money in fintech as deals rise to an estimated $1billion
According to data crunchers
PitchBook, UK venture capital (VC)
investment rose by 35 per cent to
$901million in 2015, led by large
funding rounds from Innovate
Finance members Funding Circle,
Transferwise, WorldRemit, eToro,
RateSetter, Azimo, The Currency
Cloud, MoneyFarm and Seedrs,
There were a total of 72 VC deals done
in the UK, second only to the US, with a
total of 860 deals completed globally,
representing an investment of $12.5billion.
This was up only slightly on the 2014 VC
investment of $12.3billion.
Two of the top 20 global VC deals in
fintech involved UK companies Funding
Circle ($150million) and Atom Bank
($125million). Top funding rounds were
also financed by Seedcamp, Index Ventures,
Techstars, Augmentum, Balderton,
Anthemis and GLI, demonstrating an
increasing depth of bench in UK and
European venture capital firms.
More than 60 per cent of the UK VC
investment in fintech has been in the
peer-to-peer, alternative finance and
payment and remittance segments, with
challenger banks pushing investment
volume above 74 per cent. The balance
of investment is spread across wealth
management (Robo-Advice), capital
markets, data analytics, crowd funding,
and a number of emerging categories.
Much of the investment in fintech to
date has been in segments with no, or
light regulatory friction. The P2P segment
voluntarily submitted to the FCA to be
regulated and the new round of challenger
banks have been part of a more ‘expedient’
regulatory process, led by Treasury thinking.
With the ‘future of advice’ and ‘blockchain’
flirting on the periphery of regulated
products, it is likely that regulation will
consume greater capital investment in
future fintech.
Fintech IPOs of note include Lending
Club ($8.9billion) and OnDeck ($1.3billion),
both issued in December of 2014. These
110 | www.fintech.finance
stock prices have more than halved in 2015,
in line with the banking sector as a whole
where a number of European bank stocks
have more than halved in the past year.
WorldPay’s stock price has defended its
ground. Its $7.7billion listing on the London
Stock Exchange in October 2015 is an
important signal to UK fintechs on their
IPO journey from Level 39 to the LSE, and
was the biggest tech IPO of 2015.
Institutional investment
One of the big trends in 2015 is
investment in fintech by financial
institutions in incubators, accelerators,
labs, talent, partnerships, digital M&A, and
corporate venture funds. A couple of years
ago, entrepreneurs in the community
were looking for introductions to VCs.
Last year, they were interested in
introductions to institutions. Investment
sums in fintech and innovation in financial
institutions are difficult to find in the public
domain, though estimates of $1billion
in investments over three-to five-year
programmes have been mooted by
industry insiders.
The continuing rise of the Corporate
Venture Capital (CVC) fund has seen a
number of funds earmark sums starting at
$100million using the institution’s balance
sheet. Santander InnoVentures, a
$100million fund headed by Mariano
Belinky, is leading the charge in Europe
with investments in Ripple, MyCheck,
Digital Asset Holdings, iZettle, Cyanogen &
Kabbage. CommerzVentures, which makes
individual investments of €2million to
€10million, has made investments in iwoca,
eToro, GetSafe, Mambu, Marqeta. HSBC
allocated up to $200million for early-stage
fintech. AXA Strategic Ventures has set up
a fund of €200million and Aviva Ventures
has earmarked £100million.
In the US, Citi Ventures makes individual
investments of $500,000 to $5million and
has investments across big data, payments,
behavioural finance and security, including
Jumio, Linkable, Square, Betterment,
TradeIT and LiveNinja. CME Ventures
has made investments to date in Ripple,
Digital Asset Holdings, IQBit, Digital
Currency Group, Dwolla, Fortscale,
Nervana, Powerlytics and Wickr.
A number of investment targets across
CVCs are in the payments, data and analytics,
identity, and infrastructure segments, likely
reflecting a deeper understanding of the
requirement and/or urgency for institutional
legacy systems replacement. This is best
evidenced in investments in distributed
ledger technologies, commonly referred
to as the blockchain, unheard of by most
bankers in February of last year and which
was the talk of the town at Sibos last year.
A global leader
The rise of these investment funds raises
the question of whether corporate venture
capital is the new smart money in fintech.
A report from Ernst & Young (EY) ranked
the UK first among the world’s seven
leading fintech hubs this year. It compared
the country’s availability of talent,
investment, government and regulatory
policy, and the demand for fintech services.
Commenting on the EY report,
Chancellor George Osborne said: “In 2014,
I said I wanted Britain to be the global
capital of fintech. This report says that we
have delivered exactly that: we have the
most supportive tax and regulatory regimes
in the world for fintech and we have the
world’s leading fintech ecosystem.
“But we’re not going to rest on our
laurels. I know that we need to do more if
we want to maintain this position and so I
welcome the report’s recommendations.”
At Innovate Finance, we are doing all
we can to ensure that the UK remains the
leader in fintech and to help tackle some
of the areas where the UK can improve,
including diversity in the workforce and
greater investment. We do this by bringing
together the fintech community and
supporting and championing the
innovators that are helping to shape a
better financial services future for everyone.
Summer 2016
 Investment: UK cash in
fintech is growing

A report from
Ernst & Young
ranked the UK first
among the world’s
seven leading fintech
hubs this year

Summer 2016 www.fintech.finance | 111

DIGITAL TRANSFORMATION
DIGITAL TRANSFORMATION
IN INSURANCE
IN INSURANCE
25-26 MAY 2016, LONDON, UK
25-26 MAY 2016, LONDON, UK

Your toolkit for end-to-end operational adaptation

Your toolkit
to reach the for end-to-end
digital-savvy operational
future adaptation
consumer.
to reach the digital-savvy future consumer.

We are delighted to announce the launch of our first Verdict Financial event:
We are delighted toDigital
announce the launch ofin
Transformation our first Verdict Financial event:
Insurance
Digital Transformation in Insurance
This two-day event will leave insurers and brokers with the knowledge of how
This two-day event
to successfully will leave
engage insurers
all key customerand target
brokersgroups
with the
to knowledge how
thrive aboveofthe
to successfully
impending engage all key
non-traditional, customer
digital savvytarget groups to
competition. Thisthrive above the
is a unique event,
impending non-traditional, digital savvy competition.
offering actionable content to adapt your aged strategies to complement event,
This is a unique and take
offering actionable content to adapt your aged strategies
advantage of new technology, rather than compete with it. to complement and take
advantage of new technology, rather than compete with it.

Key topics:
Key topics:
• Customer engagement and experience
• Customer engagement and experience
• Operating costs
• Operating costs
• Future proofing
• Future proofing
• Addressing traditional and non-traditional competition
• Addressing traditional and non-traditional competition

Join us in May to transform your business and set yourself apart from competition!
JoinLimited
us in May toplaces
FREE transform your business
for senior and setfrom
representatives yourself apart
insurers andfrom competition!
aggregators
Limited FREE places for senior
Register representatives
with from insurers and aggregators
the code: MKAD
Register with the code: MKAD

O K
For more information about this event, please visit:
For more information about this event, please visit:
www.arena-international.com/verdictinsurance/
www.arena-international.com/verdictinsurance/
To find our more contact events@arena-international.com B O
BOOW K
N O
To find our more contact events@arena-international.com

Organised by Arena International Events Group · www.arena-international.com

Organised by Arena International Events Group · www.arena-international.com NOW

The view from the bridge
Stéphane Eyraud & Patrick Bucquet of the global financial
services advisor Chappuis Halder & Co share their views on
bridging the gap between technology and business in banking
One of the two key trends in
banking since the financial crisis
has been the change from a
product and trading model to a
client advisor model. The other
has been the increasing burden
of regulatory reform.
Fundamentally changing the way
they did business was a difficult transition
for banks and so what we saw was a
fixation on regulatory issues, rather than
innovation in client services. This lack of
effort in developing the client-focussed
side of their business allowed newcomers
a huge opportunity.
Apple Pay and Moven did not disrupt the
industry by changing the product or the
back office where the banks were busy; they
started reinventing banking by changing
the front office – at the customer interface.
By focussing purely on the user
experience, giving people a banking service
that reflected what customers were doing
in other areas of their day-to-day lives,
these newcomers didn’t need to concern
themselves with the regulatory problems
thrown up by the financial crisis. Instead,
they could concentrate on where the value
is – in the relationship with the client.
Regulation and innovation
Fintech claimed this territory because it
was good at innovating, making
distinctions in the market and better
Summer 2016
understanding what would make the
customer’s life easier. Banks, meanwhile, are
increasingly having their role redefined as
being service providers to other financial
institutions, a trend that’s likely to continue.
Chappuis Hadler & Co is involved in
advising banks in both spheres – ensuring
compliance while minimizing impact on
profitability and increasing revenue
through digital service innovation. While
the imperative to reform was driven by
regulation, it’s fintech that’s helping banks
recover from the impact on the bottom
line, bridging the gap between the legacy
of the past and the promise of the future.
By better understanding and introducing
structure to the innovation process and
exploring and adopting elements of fintech
and other start-up technologies, banks can
add value to what they already do. This is
especially important in investment banking,
which took the brunt of post-crash
regulation and experienced uniformly
dampened profitability. As margins are
reduced, so investment banks strive to
increase volume, which in turn means they
have to work on their distribution channels.
That requires first an insight into the new
needs of the customer and then adopting a
FINTECH
specific digital strategy to meet those needs.
It’s a culture change as much as a technical
one and its global footprint means Chappuis
Hadler & Co can leverage relationships with
associates around the world to identify and
share not only trends and bright ideas, but
best practice with management to find the
right organizational fit.
Defining a new role
At the same time, the company has
focussed resource on monitoring rapid
changes in the global financial industry,
dedicating a large team to keeping
regulatory watch on authorities, such as
EBA, FED and FCA. And it co-ordinates
conferences around fintech and its specific
application to the banking industry.
Positioning itself between the regulators,
financial institutions and fintech gives
Chappuis Hadler & Co a unique view from
the bridge. What does it think the future
holds for the financial industry?
In terms of investment banking, with
prices of assets and margins severely
squeezed, if not collapsed, there is an
urgent need to increase volume, so we are
likely to see more mergers and less players.
In the near future, banks look set to become
more of a service provider, with fintech and
start-ups taking on more front-end services,
increasing the need for firms like Chappuis
Hadler & Co to continue building bridges
between technology and business.
www.fintech.finance | 113
FROM SLUGGISH TO SUPERCHARGED.
Start profiting from real-time payments in no time
with a partner who’s been there before.

aciworldwide.com/immediate-payments

CCC comes of age
Competence Call Center is inviting exclusive international guests to its Executive
Day and 18th Anniversary at the end of June in Vienna. Here’s what to expect…
On 23 June Competence Call
Center (CCC) will hold the CCC
Executive Day with Dr Stephan
Sigrist in the Austria Trend Hotel
Park Royal Palace in Vienna.
The strategy expert will talk to the
international audience on the topic of
“Rebooting business – innovation in the
age of the digital economy”.
Dr Sigrist, the founder and head of the
W.I.R.E. thinktank, has spent many years
analysing interdisciplinary developments
in business and society, focussing on
trends in the healthcare system and life
sciences, among others.
He is the publisher of the ABSTRAKT book
series, author of a number of publications
and a keynote speaker at international
conferences. With W.I.R.E. he advises
companies and institutions
in the political and scientific
Summer 2016
FINTECH
spheres on the development of long-term in the exclusive atmosphere of the
strategies and innovation projects.  impressive Viennesse Gloriette in the park
He works in cooperation with Julius Bär of Castle Schönbrunn.
– the leading international private bank CCC stands for high-quality BPO solutions
with strong Swiss roots as – well as with in customer care. It has more than 5,000
the Collegium Helveticum (laboratory for employees and operates from locations in
transdisciplinary research), based in Zurich. eight countries. A winner of 51 international
After studying biochemistry at the ETH awards, it has business partnerships with
Zurich, Dr Sigrist initially joined Hoffman-La global brands and enjoys continuous
Roche’s medical research team. He growth. It operates from six locations in
subsequently went on to work at Roland Germany where it has
Berger Strategy Consultants as a management been for 15 years.
consultant and at the Gottlieb Duttweiler CCC recently
Institute. He is a member of the Governing announced the
Board of the aha! Swiss Allergy Centre and opening of its16th
the Foundation Board of Science et Cité. international location
Following the CCC Executive Day, CCC in Biel, Switzerland,
will celebrate the 18th CCC Anniversary in May 2016.
The CCC
Executive Day:
Dr Stephan
Sigrist (above) is
guest speaker at
the Park Royal
Palace in Vienna
www.fintech.finance | 115
Ambitious: Iwoca aims
to offer flexible funding
to all of Europe's
20 million SMEs

Helping
the little
guys think

big
116 | www.fintech.finance Summer 2016

What started as a small loans company for SMEs in the UK, is
now giving big banks across Europe a run for their money.
iwoca CEO and Co-founder Christoph Rieche is leading the race
Every small businesses has big
dreams. Unfortunately, in
Christoph Rieche’s experience,
raising the funds to realise
them often proves something
of a nightmare.
It takes weeks – sometimes months
– to be approved for a start-up loan
through a mainstream lender, which is
frustrating for any keen entrepreneur
and potentially devastating if you’ve
a time-sensitive business model.
It’s here that Rieche, CEO and
Co-founder of lender Iwoca, saw an
opportunity to intervene – to help
small companies turn some of their
dreams into reality… and fast.
The company focusses entirely on
extending short-term credit facilities of
between £1,000 and £100,000 to small
business within a 24-hour timeframe and
it has already lent more than £70million
since its birth in 2012. It thrives on
customer feedback, good and bad, even
sharing its Trustpilot page and providing
links to articles and websites that host
open reviews about the company.
The result? Overall positive rating
for Iwoca is a triumphant 9.6/10.
It suggests it’s serious about getting
things right.
“We want to become a material player
and create real economic growth,” says
Rieche, formerly of Goldman Sachs, who
with co-founder James Dear recently
topped up the £20million raised through
two previous funding rounds with a
private deal for an undisclosed amount.
One of a new crop of B2B fintechs,
including Funding Circle, Funding Bird,
MarketInvoice and Ebury, that are
rewriting the business loans ledger,
Iwoca's USP is its method of automated
data collection to drive a model that takes
customer intelligence to a new level.
“We started in the e-commerce sector
where there are half a million professional
merchants earning their living by trading
on platforms like eBay and Amazon,” says
Summer 2016
Rieche. “They can share this information
with us in an electronic way when they
are applying for funding. Using this
granular trading information is incredibly
valuable to understand exactly what they
do and how they do it.”
Beyond credit checking
The process also allows Iwoca to gather
information from linked accounts, such
as PayPal and VAT returns, building a
comprehensive picture of the business
and how it compares to similar in its field,
taking their risk research way beyond
credit checking.
Data capture on this scale significantly
increases efficiency and provides Iwoca
with more information in a few minutes
than traditional lenders would have after
weeks of manual processing.
Having collected it, Iwoca is then in a
unique position to use it.
“ This is simply data that hasn’t been used
at all in the past,” says Rieche. “Collecting it
digitally enables us to process it in a very
different way and by just understanding
your customers better, asking more relevant
questions, you also provide at the same
time a much better user experience. The
user feels that you really know what you are
talking about, rather than just generically
providing information or asking generic
information from them.
“Small businesses find it really hard to
go through the traditional process that
might take many, many weeks. They’re
very happy if things are processed quickly
and swiftly and have the certitude of a
decision,” says Rieche.
Low-cost model
Having a 360-degree view of the business
and the landscape in which it operates
significantly helps reduce the cost,
which underpins Iwoca’s interest-only
pricing policy – there are no underwriting
or retaining fees.
Iwoca’s generalised loan rate varies
from 2 per cent to 6 per cent per month as
FINTECH
standard. Clients can contact Iwoca to
receive a more tailored quote or use
the loan calculator on the website.
An easy-to-read table highlights the
initial loan, the interest to be paid and
the total amount of the loan to be repaid,
broken down into monthly amounts.
Interest accrues daily and repayment
periods are determined by the type of
business, the maximum being 12 months.
Businesses are allowed to make early
repayments and there is an opportunity to
top up. Repeat borrowers may be given a
higher credit limit or benefit from reduced
interest rates.
Now operating in the UK, Spain, Poland
and Germany, the lending platform also
has Ireland and France in its sights with
the eventual aim of offering flexible
funding to all of Europe’s 20 million small
businesses. In December it signed a deal
with the European Investment Fund to
facilitate £40million of loans just to those
SMEs in the UK. But it clearly sees an
We want to
become a
material player
and create real
economic growth
opportunity to accelerate its reach by
building alliances.
“Scaling the business is a priority,” says
Rieche. “We have more funds available
and we’ll continue to raise more funding
that we can deploy to our customers.
“I think [banks] are really warming to
the idea that there are new players like
Iwoca to help them provide, eventually, a
better service to their customers. I think
there will be a lot more cooperation in
the future. We are looking at engaging
with a number of strategic partners and
I think we will have very exciting news
on that front over the next few months."
www.fintech.finance | 117
 EXPAND YOUR FINTECH BUSINESS ABROAD AT
GLOBAL EXPANSION SUMMIT
17-18 October @ Intercontinental O2, London, UK

Panni Morshedi Nikolay Storonsky Eugene Danilkis Sanjin Beloberk Cristina De Villeneuve
Global Head of International Founder & CEO, Co-Founder & CEO, Chief Infrastructure Chief Digital Officer
Expansion Revolut Mambu Officer & Advisor, BNP Paribas
Funding Circle Ebury

150+ speakers will discuss the latest growth opportunities

with fintech and highlight stories of success in international expansion.

With a mix of keynotes, fireside chats and lively panel discussions,

#gxpsummit will explore digital transformation in financial services,
the evolution of payments, the emergence of blockchain,
alternative finance and security.

SECURE YOUR SEAT TODAY

www.gxpsummit.com

Bankers engage
your brains!
Thinking in siloes is bad for business. Rivi Varghese, CEO of CustomerXP
Software, urges an intelligent approach to cross-channel fraud management
Banking is the only industry in the
world where the entire life of the
customer flows through it – you
know how much they earn, where
they live, where they visit, how much
they spend, who’s part of the family,
whether or not they own their own
home, even how much gas they
put in the car. No other industry
has the privilege of seeing such a
360-degree view of a customer’s life.
This could make banking the smartest
industry on the planet, but bankers the
world over don’t realise this potential –
they still believe they are in the transactions
business and so every decision is siloed.
These siloed decisions are proving to be
costly and impacts both the top line and
bottom line of banks
The time has come for bankers to use the
collective insight they have gained about
every individual customer and bring it to
bear in the split second when the transaction
occurs – to influence, modify or stop the
transaction across channels in real time. We
need to use this brain-like central nervous
system approach to make a segment of one
decision every time in real time.
For example, if a customer card
present transaction is detected in a
far-off location, a siloed card-only
The time
has come
for bankers to
use the collective
insight they have
gained about every
individual customer
Summer 2016
solution will make the decision based
on data gleaned just from cards. However,
a brain-like, real-time, cross-channel
approach will know that the customer
logged in to internet banking in London,
logged into mobile banking via Vodafone
in London and hence will question
the possibility of how he/she can
simultaneously be thousands of miles
away. It will then figure out what to do,
thus making every such interaction
contextual and real time.
One can see that this brain now has a
segment of one intelligence, every time
for every customer interaction, and this
is very hard to replicate for anyone –
especially for hackers, who typically carry
FINTECH
out large segment attacks, which leverages
the siloed nature of the underlying
system. In this brain-like approach, the
hacker will now need to understand every
customer individually across channels
to perpetrate serious fraud, as not only
the fraudulent transaction should be
channel-wise correct but it should also
be correct from the collective intelligence
perspective of the customer.
One of the reasons why banks still
think in siloes is because vendors who
provide such systems also continue to
think in siloes. Vendors need to think about
integrating the wealth of intelligence
available in core banking calls and invest
in re-architecting their products to go from
a legacy approach to a Google-like system;
from thinking in terms of monolithic
machines that work by running
and optimizing complex
queries to a system that
is doing distributed
in-memory computing
using commodity
processors that
scale horizontally.
From a bank’s
perspective, this
impact is externalized,
as such a smart system
will be able to leverage
the existing investments
made by the bank and will
minimize the overall impact
by ensuring business-as-usual
processes are not changed.
Bankers, please think like Google
and use this brain-like intelligence
that you have about every customer
in-line, real-time for every
transaction. Only you have this
ability, so make it your sustainable
competitive advantage.
www.fintech.finance | 119
Digital challenge:
Banks lack technology
leadership

120 | www.fintech.finance Summer 2016

 insight & gLobaLisation

A question of
leadership
Banks cannot delegate their digital future; they have to install technological
expertise at the top, argues Chris Skinner, Chairman of the Financial
Services Club and best-selling author of Digital Bank and ValueWeb

Talking about transformation at
conferences every day gets you
into a mantra. My mantra is
leadership and how banks lack
technological leadership.
The pushback is that we have too many
technologists without banking
knowledge; we need banks run by people
who understand money and they can tell
the technologists what to do.
I’m not so sure. A bank cannot delegate its
future and that, to me, is the fundamental
flaw in the argument over banks being led
by bankers. If banks are digitalising and
have to be fit for the internet age by
unbundling their vertically integrated
structures to open-source finance, can a
control freak really understand this
fundamental change in operations?
I say control freak purposefully, as there
are few big banks that delegate their IT
externally. They may use solutions from
external providers, but do they truly put
their IT out to the markets or are they
adapting such systems to their internal
needs and making them proprietary
again? I suspect the latter. In fact, it amuses
me when we talk about legacy structures, as
are able to narrow-target every piece of
banking, componentise and open-source it.
This is why we have narrow peer-to-peer
structures for payments, credit and advice
emerging which seem innocuous on the
surface, but may be truly transformational
within. It is the true innovator’s dilemma.
Banks believe that they must control the
value chain and process of finance but
fintech is breaking that vertically
integrated value chain apart.
Functional friendships
Now what the truly visionary and innovative
banks are doing is recognising that fintech
firms are just widgets of capability. They are
taking their capabilities, evaluating their
functionalities and, where necessary,
copying or partnering to bring that
functionality to their clients. White labelling
and partnering with fintech firms is not an
embarrassment. It’s not an admittance of
weakness. It is more a recognition that
someone can do a narrow-line function
better than you and, as a company with
centuries of brand recognition and millions
of customers, bringing that capability to
your client base is visionary.
and most of what they do can be provided
by an alternative far cheaper and easier,
because the alternative players are
replacing buildings and humans with
software and servers.
The open source challenge
So this is where the leadership has to be
created. Leading incumbent banks from
their traditional command and control
structures to open-sourced operations that
are shared, cooperative and inclusive. This
is the core of conversion to digitalisation
and, as most bank leadership is immersed
in risk management and control structures,
open-sourcing the bank is a really tough
ask. Many banks will fail to meet this
challenge, not because their bank is weak
or unable to adapt, but more because their
leadership is weak and unable to adapt.
Open-sourcing finance is the shared
economy business model of partnering,
white labelling and integrating components
to create a new business model of
aggregated components of product and
service. Any bank resisting such change will
not survive and, to understand such change,
truly requires a leadership with technological

Banks are hugely reluctant to open-source their operations

and that’s where the fintech community is scoring points
banks have legacy IT; their providers have
even greater legacies in many instances.
Add a bank bespoke implementation of a
legacy solution and you have a legacy upon
a legacy. Or is it a heritage? Whatever.
Anyway, back to the main point: banks
are hugely reluctant to open-source their
operations and that’s where the fintech
community is scoring points. By taking the
vertically integrated, proprietary and
legacy structures of finance, fintech firms
These banks will be the ones that survive
the transition from last-century distributors
of paper through a physical network to
this-century distributors of data through a
digital network. The challenged banks,
rather than the challengers, will be those
that try to keep their vertically integrated
control of operations. Banks no longer
control any part of their value chain. They
do not own the customer; they have zero
digital relationship, unless they earn it;
prowess, not just banking knowledge.
Hence, when I come back to this thought
of banks not needing technological
leadership, just good leadership, who
can delegate the change to the right
advisors, whether internal or externally,
I fundamentally disagree. You cannot
delegate the future of the bank. You
cannot ignore your obligations to lead the
change. Should your bank leadership think
that’s the way to go, I’d leave the bank.

Summer 2016 www.fintech.finance | 121

insight & gLobaLisation
Carpe fintech!
Susanne Chishti, CEO & Founder of Fintech Circle and Co-founder
of The Fintech Book, reflects on the industry's transformation
What an unforgettable moment
when our global fintech
entrepreneurs, investors and
visionaries arrived in London in
March to meet for the first time
at the global signing of 200
copies of The Fintech Book.
The group arrived at The Shard to
celebrate a dream that had turned into
reality. By end of April 2016, The Fintech
Book had become an Amazon bestseller
and was selected as the “hottest new
release” among finance books in the USA.
One of the first things I did when I left
banking in 2014 and wanted to learn more
about the fintech sector was to go to
Amazon to buy such a book. I was surprised
to find nothing; not a single one was
available describing this new industry,
which has seen an inflow of $22billion of
investments in 2015. So, Janos Barberis,
founder of Fintech Hong Kong, and I decided
to create our own, using the fintech principle
of crowdsourcing. Our idea was to invite the
best fintech thinkers globally, no matter if
they came from a small fintech start-up or
a multi-billion pound bank or tech giant.
Each contributor was invited to propose
an abstract in the form of a teaser for a full
article that would then be written if the
fintech community voted for their content.
We did not know if we would attract 10
or 20 authors. A few months later we had
almost 170 from 27 countries, contributing
almost 190 articles on the most cutting-edge
fintech topics and disruptive technologies.
Our fintech community helped us select the
best abstracts from a diverse group.
Contributors ranged from established banks,
such as Citi and Lloyds, to challenger banks,
such as Fidor and CheBanca; from top
consulting companies, such as KPMG and
PwC, to specialist fintech research firms, such
as Banking Reports and Fintech Daily.
We had global tech giants, including
Microsoft, global fintech firms, such as
Strands, Avoka, eToro and Kantox participate,
and European fintech firms, such as Econob
(Austria), Scaled Risk (France), BIW Bank and
foresee.biz (Germany) and Kontomatik
122 | www.fintech.finance
(Poland) to name just a few. We had
fintech leaders from the USA and Canada
(Digitalfutures and Koreconx) and from
South America (Bankaool.com) contribute
great articles. Equally fintech entrepreneurs
and thought leaders participated from
Asia, for example, from HK & Singapore
(Extractalpha), to India (Centre for Innovation
Incubation and Entrepreneurship)
to Australia (DragonBill).
Thus The Fintech Book, is the first
crowd-sourced book on the global fintech
sector. Published by Wiley in April 2016, it
contains the most holistic, cutting-edge
thinking globally to not only truly understand
how the global fintech sector works
today but to learn how it will revolutionise
financial services in the next 10 years.
The fintech
future belongs
to all of us, both
in developed
countries and
emerging markets
And it’s what people
wanted to hear; The
Fintech Book had received
pre-orders of more
than 2,500 copies even
before its official launch.
My personal fintech journey
started 20 years ago when I studied in
Berkeley, California, and later worked
for a tech company in the Silicon Valley.
I recognized the special atmosphere in
London in 2014 because it was the same
excitement that we all felt when the
internet boom was being born in California.
I was there, saw what happened and how
the internet changed our world for the
better. What the internet did for us in the
last 20 years, fintech will do to our lives in
the next 20.
Now again we are at the beginning of a
new, gigantic wave of innovation: the digital
revolution in financial services, often
referred to as the fintech revolution. It will
change the financial services sector forever,
the same way the music, video and travel
industries were disrupted. It will impact all
financial services businesses, from banking
to insurance, globally, and will include
business to consumer (B2C), business to
business (B2B) and business to business
to consumer (B2B2C). The impact will often
be painful for established large players and
it cannot be stopped.
I founded Fintech Circle in the second
half of 2014 in London after a long career
in banking. I decided to leave because I felt
so passionate about this new, emerging
financial world order, which we are all
creating together. Banking colleagues often
approached me who wanted to invest in
these new fintech start-ups and fintech
founders asked me for advice in how to
attract smart money, i.e. angel investors
who truly understand their fintech
businesses and who can not only fund them
but help them grow. I experienced how
difficult it was for fintech firms to raise
seed funding when angel investors did not
understand their sector well enough. Most
of fintech is complex, thus deep domain
expertise is very valuable and often
hard to find among both private and
institutional investors.
What is Fintech Circle?
Fintech Circle is Europe’s first Angel
Network focussed on fintech
investments. Our goal is to connect the
best fintech startups with the best fintech
angels (private investors) and bring them
together in person during regular Angel
Network Evenings in London as the fintech
capital of the world. During these evenings,
the top six fintech firms (which have passed
our multi-stage selection process) are
invited to present to our angel investors.
Normally, they will be asking to raise up to
£500,000 in equity capital.
As part of our selection process, the top
10 applicants are invited to Fintech Circle
Selection Days where the fintech founders
Summer 2016
present to our selection panel, followed by
a Q&A. The six winners are then invited to a
Coaching Day to help the entrepreneurs to
finetune their presentation. When you pitch
for investment, you normally have only one
chance to get it right, so preparation is key.
In order to help create a fintech
community for our entrepreneurs and
investors, we also set up the Fintech Circle
LinkedIn group and Twitter account
(@fintechcircle). Our goal was to create a
platform of sharing the many successes of
fintech leaders, including their exciting
disruptive business models and products/
services, creating a collaborative atmosphere
of working together. Our group is growing
rapidly since we launched in October 2014
and now has 12,000 members, including
many C-level executives across financial
services, technology, telecoms and
consulting firms, who want to engage
with and learn from fintech entrepreneurs
globally. In addition to this online group,
we have also set up a Fintech Circle Alumni
Group consisting of the best fintech firms
who have passed our selection process.
Here we meet face to face with the goal
to identify and encourage synergies
between our portfolio companies.
On a regular basis, we organize
educational fintech events for our fintech
members, ranging from industry specific
events, such as providing “fintech deep
dives”, to angel investor seminars on
tax incentives or specific disruptive
technologies, such as blockchain.
London Fintech Tours
In 2015 we launched London Fintech Tours
to invite international fintech firms to
London’s fintech ecosystem, introduce
them to investors, business development
opportunities and empower them with
the knowledge and contacts to set up a
business here in order to tap into the UK
capital market when raising funds and to
create an important network of contacts to
grow their fintech business in the UK. The
next two-day fintech tours are on 16 and
17 May and 15 and 16 September 2016.
The programme includes pitch training
and a business plan workshop, meetings
with investors and potential partners and an
opportunity to present their fintech business,
everything start-ups need to know about
fundraising options in the UK, overview of
the best fintech accelerators, presentations
by and extensive Q&A with companies
Summer 2016
helping fintech firms set up their business in
London and lots of networking with other
fintech entrepreneurs. Signup is simply by
completing an application form online.
Fintech Circle Innovate
To close our own “circle” we realised that we
would like to work closer with established
financial services players who often are just
realising the opportunities and challenges
that fintech trends pose. The focus of
Fintech Circle Innovate is to accelerate
innovation, connect ecosystems and shape
the new generation of financial services.
We also advise established players and
support their internal educational needs to
enable their C-level executives, specialists
and teams to truly understand fintech
innovation, new business models and
technologies and decide on the best
strategies for effective engagement. Our
training portfolio for retail, corporate and
investment bankers can be customised to
the requirements of our corporate clients
and can be viewed online.
In April 2016 we launched a dedicated
Wealth Tech Platform to help select the
best fintech firms across asset and wealth
management and combine them with the
best fintech experts in this space for the
benefit of our institutional clients.
Across financial services,
collaboration with fintech
an eye on the future:
Everyone is part of the
fintech revolution
firms is of paramount importance and we
are able to source fintech firms to address
specific external and internal challenges and
to shape and meet the requirements of
investment mandates as part of corporate
venturing activities.
In summary, the fintech future belongs to
all of us, both in developed countries and
emerging markets. You might be deeply
involved in the fintech sector already or
you simply consume financial products and
services. You might already save or borrow
on a peer-to-peer (P2P) platform and invest
or raise capital on a crowdfunding platform.
Some of you might get asset allocation
advice via robo-advisory services, or make
payments via your mobile phone or simply
transfer your holiday money internationally
with the help of fintech FX and remittance
payment providers, such as Azimo or
Transferwise, to save on fees.
We are all part of the fintech ecosystem
as consumers, investors, entrepreneurs,
service providers or established players. We
have all left the shore behind us in order to
moving to a bright future of finance. Let’s
together seize this enormous fintech
opportunity – carpe
diem, carpe fintech!
www.fintech.finance | 123
2,000+ attendees | 100+ speakers | 60+ exhibitors

Save
20% with
promo code
‘FinteChFin’

EUROPE 2016
7-8 JUNE 2016 // EXCEL, LONDON

brinGinG the entire eUropean paYMents eCosYsteM toGether to

disrUpt the statUs QUo and eVoLVe the paYMents MarketspaCe

Bringing together over 2000 senior payments professionals from across

Europe, PayExpo is the essential event for anyone interested in making
payments faster, easier and more secure.

keY FeatUres For 2016 inCLUde:

Free passes payments punch Up
Retailers, transport operators, retail banks, investors, Grab a ringside seat for the Payments Punch Up, a live
MNOs, gaming operators and NGOs all attend for free. debate in a boxing ring on the show floor
Register for your pass and start planning your visit today!

payments accelerator agenda

Meet new Fintech companies showcasing the latest Five agenda themes will cut out all the noise and go straight
technologies and solutions to the heart of the most pressing industry topics

Register your place today at www.payexpo.com/europe - use promo code ‘FinteChFin’ to save 20%

Kickstarting fintechs
A Fintech Finance Magazine Q&A with Francisco Lorca, MD of Startupbootcamp,
which connects startups with investors, mentors and partners in more than 30 countries
FF: What are some of the biggest
challenges facing the finance industry?
Francisco Lorca: One of the them
is understanding what millennials demand
from their bank. They don’t know whether
they will exist in the same way they do
now or just be a utility platform.
Another challenge is banks being able to
offer a personalised service while operating
with legacy business processes, technology,
infrastructure and compliance systems.
As new features are added to improve
their service in the digital age, none of
the existing systems are retired. This means
banks need to have the capacity to support
branches, call centres, online and mobile
customer channels all at once. This increases
the cost and complexity of banking and
to offset this, the banks need to find ways
to interact with customers that make
routine processes as automatic and
defect-free as possible.
In addition, there has been an increase
in regulatory requirements and banks need
to spend more on building compliance
systems. Banks are definitely under threat
from disruptive fintech startups. This creates
a challenge for incumbents because they
are not able to adjust quickly to changes
in the sector, not just in technology and
services but also in operations and culture.
Banks are failing to deliver the seamless
level of service consumers have come to
Summer 2016
expect from other Internet companies
and other easy-to-use technology.
FF: Are the startups you see in the
disruptive category or are they keen
to work with incumbent banks?
FL: At Startupbootcamp Fintech we have
seen both types. However, most both want
and need to collaborate with incumbent
banks and other financial institutions.
During our accelerator, we help startups
perform their proof of concept with one
or more of our corporate partners. The
startups selected for the programme will
have the chance to work with our partners,
such as Mastercard, Rabobank, Lloyds
Banking Group, Intesa Sanpaolo, PwC, and
Banks don’t
know if they
will exist in the
same way they do
now or just be a
utility platform
insight & gLobaLisation
many more in addition to our extensive
mentor network from around the globe.
FF: Tell us a little about the accelerator
programme and what you have
planned over the next 12 months.
FL: Startupbootcamp was founded in
2010 and each programme invites
20 start-ups to its Selection Days from
where the top 10 will progress to the
three-month accelerator programme.
During these three months the start-ups
undergo mentoring. The first month is all
about intense, mentor-driven development
of the team, idea, solution, business model
and development plan. The second
focusses on forming actionable plans to
create a product that solves customer’s
problems. And the third drives traction to
gain initial revenue and viral growth.
We have recently opened applications
for our 2016 Startupbootcamp Fintech
accelerator. We are now on the look out for
a variety of fintech startups to attend one
of our FastTrack events that we are holding
in Europe, Asia, Israel and the US. Attending
one of these events means startups are on
the Startupbootcamp Fintech watch list for
life, giving them a greater chance of being
selected for a global programme. We choose
10 to 12 successful startups by the end of
July for our accelerator programme, which
will run from September to December.
www.fintech.finance | 125
insight & gLobaLisation
Virtualised expertise:
a true win/win
Simon Blissett, Head of Financial Services Solutions & Innovation EMEAR
at the multi-technology company Cisco, introduces the virtual advisor
How many times have you gone into
your local branch to see someone
about a mortgage or a pension
or a current account and no one is
available to see you right away?
It happens more often than you think
and the bank often doesn’t know how
much business it is losing as these initial
requests are often not tracked or recorded.
Of course, you can make an appointment
but why should you have to wait?
In reality, it is difficult for the bank
to match the supply of expertise with
fluctuating levels of demand from
customers. And it is increasingly expensive
for them to provide expertise on a local
basis due to increased demand for quality
advisors and the growing cost burden
of regulation and supervision.
That is why many banks are looking to
virtualise their sales forces. How? By using
fully immersive video-based capability
to project their centralised expertise into
local branches, homes and places of work.
At Cisco we are seeing an increased
demand from banks asking how digital
face-to-face capability can enhance their
customer experience, lower their cost to
126 | www.fintech.finance
sell/serve and reduce revenue leakage.
It has another strategic impact, too.
None of us can predict how channel
usage will change in the future. Sure, there
is a clear trend to move from branches
to self-service channels for everyday
transactional banking but not so much yet
for complex advisory services. We don’t
know how quickly people will want to
conduct their mortgage discussion from
home over their smart TV, for example.
Changing models
Banks need to build agility into their
operating model and that is what
centralising their sales (and service) expertise
achieves when it can be projected digitally
into branches, places of work and homes
alike. The biggest challenge in this is not the
technology but the change in operating
model and sales culture that is required.
Customers also win as they are better
protected as virtual interactions can be
recorded and referenced if sales conduct
or product suitability is challenged in
the future. They are also more likely to
be ‘seen’ by an advisor at a time and place
that is more suited to them.
The banks win by reducing costs,
driving improved revenue and reducing
distribution risk.
It is not often that everyone wins but this
is one of those times and analysts at Forrester
appear to agree. Its recent Implement Video
Banking To Drive Digital Sales report by
Alyson Clarke urges banks to consider
weaving human advisors and digital
technologies together with video banking.
Clarke says: “Success will require more
than just a simple video call. eBusiness
and channel strategy executives need to
ensure that video banking capabilities let
prospects collaborate effectively with an
expert when and where they choose and
that experts are supported by the right
processes, tools, and training.”
Banks win
by reducing
costs, driving
improved revenue
and reducing
distribution risk
Summer 2016
 THE BIGGEST STAGE
THE BEST AUDIENCE
TH E B O L D E S T E V E N T
EXHIBIT SPONSOR ATTEND
With the biggest stage in front of the best
ATTENDEES audience, Money20/20 optimizes your
financial and non-financial resources. We
provide off-the-shelf and tailored exhibiting,
meeting space and sponsorship opportunities
CEOs to meet your company’s specific marketing
needs and budget. Whether you’re a startup,
large global company or somewhere in
between, our offerings can be designed to
SPEAKERS achieve your goals.

PARTICIPATE TO:
COMPANIES • Engage with the industry’s largest audience
• Meet with senior decision makers
• Generate qualified targeted leads
• Build brand awareness
COUNTRIES • Launch new products

W E L C O M E

www.money2020.com
2016 5-STAR SPONSORS INCLUDE:
Smart Ads
Digital Advertising for Payments

Grow your payment platform

Deliver real-time customer relevance
Boost income through ad sales

Quick and easy integration with Mobile wallets,

PoS, digital banking and eCommerce

Smart Engine Europe office@smartengine.at

Tel. +43 1 919 504 11 00 www.smartengine.solutions