A few weeks ago, the FINOVATE EUROPE 2018 was held in London, a major event for everyone who wants to stay abreast of the main challenges, new business models and innovative technologies in the financial sector.
Our colleagues Patrick Van den Broeck and Frederick Beernaert traveled to London to scout out the latest trends and new technologies for us, and love to share their findings.
Why did you go to London for Finnovate?
AE’s footprint in the Belgian financial sector (currently active in various projects at 10 Belgian financial service providers) is primarily due to the highly trained AE consultants who distinguish themselves through their knowledge and very good understanding of the business of our customers. With more than 1400 interested professionals, 70+ demos and more than 100 fintech experts, Finnovate is the place to expand our knowledge and network. An event AE Financial Services just could not miss out on.
What are the major trends that you spotted? What are banks and insurance companies looking out for and what will they be focusing on in the coming months and years?
It is no longer the play to compete with the next online banking app pimped with new features that often strongly resemble those of your competitors. This is particularly true for Open Banking. The term refers to preparing the architecture and technology to unlock third-party services for your customers’ benefit by using open APIs. And of course conversely, to link and integrate your banking and insurance services to the product offerings of third parties.
Banks currently dispose of a number of valuable assets. An important - if not the most important - of these assets is the relationship of trust with their customers. This has so far assured them of a loyal customer base and stable incomes, particularly in Belgium. The customers’ expectations are however changing rapidly and many believe that convenience and customer experience will put customer loyalty under pressure. Innovative, smart banking apps that merge banking services with other services such as e-commerce or loyalty programmes allow for differentiation and contribute to a unique customer experience and higher loyalty.
Financial institutions have a wealth of information about their customers, their purchasing behaviour and preferences. The challenge will be to use this data and in particular, the insights gained from the combination of different data sources, in an intelligent manner but most importantly, in a manner that delivers added value to the customer. The main competitors here are not other banks or insureres, as one would expect, but the bigtechs and fintechs. They read and understandthe digital consumer and know better than anyone else which new services to offer and which new customer segments to reach. They use both personal and contextual data to meet the real needs of their customers and to provide them with a unique and optimal customer experience. That is why service providers who genuinely wish to think customer centric, pay a lot of attention to personalisation and data.
It’s no surprise that we spotted a multitude of payment innovations. Indeed, it’s logic that this domain - rather than focusing on offering a comprehensive range of services via core banking platforms - pulls the attention of “disrupters” from outside the financial sector, fintechs, bigtechs, non-financial service providers, etc.
Furthermore, Artificial Intelligence and Machine Learning were the talk of the town. A large part of today’s scenario-based chatbots contains little or no artificial intelligence. The challenge is to go beyond addressing routine questions and quickly evolve towards meaningful transition-based, and even real virtual assistant, use cases. The latter requires a more complex integration with data and applications.
In the private banking and wealth management space, a new generation of customers is demanding that their bankers not only truly understand them, but also to offer them a multiplicity of channels and advise rather than command them. Artificial Intelligence is also widely used here, not only in KYC processes and robo-advice, but also for example for stock price forecasting based on predictive algorithms. We clearly see a trend towards offering less complex products and increase interest in targeting millennials. In this context fit trends like “Goal-based wealth management'’, and tools to follow-up their portfolio and performance independent of time and location via dedicated apps.
Finally, major regulatory changesand their impact on the existing business models and infrastructure is what keep bankers and insurers awake. Currently particularly GDPR and PSD2 are on the radar, where the challenge will be to turn regulatory changes from a threats into an opportunity.
Which of these trends have you already spotted in the Belgian landscape?
Conversations with our clients show that these trends are also on the strategic agenda at the majority of our customers. Often, we are very actively involved in strategic thinking, choosing direction, and executingtheir digital transformation. Two of the regularly appearing themes are digital onboarding and customer-centricity.
However, there are significant differences amongst countries as regards the speed and intensity with which new technologies and fintech challengers are launched and gain a foothold. Regulation and a more favourable climate for enterpreneurship are important makers or breakers. Belgium is not a precursor, certainly not in comparison to the numerous initiatives that we are witnessing from the UK and the Netherlands. Here, bigtechs seem to suffer less in this regard and are able to grow more quickly.
The focus on personalisation of services, the pursuit of a unique, seamless digital customer experience: there is always a direct link with “identity”. Locally Belgian Mobile ID, with its ‘itsme’ service, accommodates exactly this. Their service can noticeably improve the customer experience through authentication and digital signatures across various service providers. We expect a lot from this and as a strategic partner we are elaborating concrete cases with our customers.
Which trends we in Belgium can’t afford to miss?
There’s a need for Belgian financial service providers to speed up the adoption in the Open Banking space. The infrastructure of most financial institutions is not yet ready, but the clock is ticking. There is increasing pressure from non-traditional players. Legacy systems can no longer support the current digital transformation. Core IT systems and processes will have to be adapted to ensure these to remain stable and predictable, while simultaneously making them faster and more agile.
Facebook was promoted as being best positioned to challenge incumbent players in payments. Amongst fintechs, we saw a high level of adoption of facebook messenger. But looking at Asia’s WeChat, it is not inconceivable that the world conquest may come from a totally different angle.
And what about technologies like blockchain?
Our feeling is that a lot of experimentation has already been done with blockchain, but everyone is watching out for sufficiently mature cases with adequate inherent business value, before effectively bringing it into production. But this was equally the case for many technologies that are now part of our daily lives. It is therefore important to reflect, with appropriate guidance and knowledge, on the areas in which blockchain can create tangible value.
Will you go back next year?
AE is already signing up for the next year. The varied programme provides a valuable and highly interesting picture of what is happening in the financial sector!
In a subsequent blog, we would be happy to discuss the fintechs that most caught our attention and are the ones to monitor closely.