This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.
Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
What are the biggest obstacles to digital transformation in banking and financial services? For Leda Glyptis, self-described “recovering banker” and author of the new book, Bankers Like Us: Dispatches from an Industry in Transition, the fault lies not in the stars, but in bankers themselves.
Fortunately, Glyptis sees bankers as the solution, as well.
“For years I have been blogging and speaking about how the biggest obstacle to progress inside banks is people. And that the only hope for change are also people,” Glyptis told Fintech Futures as the date of the world premier of her book was announced earlier this month. “What is so often approached as a technology journey often falls down or triumphs around the humans that keep on keeping on, the dreamers, the builders, the plumbers, and the storytellers of banking transformation.”
Leda Glyptis will discuss her experiences and insights as a veteran of the banking business in an afternoon keynote address on Day One of FinovateEurope, March 14 through 15 in London. Titled “The Problem With Digital Transformation is You,” Glyptis will discuss the human and structural obstacles to digital transformation with a focus on the kind of mentality and leadership bankers need to embrace in order to bring about the changes in banking and financial services that consumers increasingly demand.
For Glyptis, there is no reason – and no time – to wait for the rise of a younger, more digitally-native generation to do the work of transforming financial services. The time to act is now, and the ones to act are bankers — with “grit, determination and energy to drive change,” Glyptis insists. “Like us.”
Bankers Like Us will be available for pre-order on Friday, January 20th, and is expected to ship after February 10th. This provides plenty of time to get your copy of the book ahead of Glyptis’ keynote at FinovateEurope in March. At the event, after Glyptis’ afternoon keynote address, we will also host a special Networking Break & Book Signing with the author.
In addition to her work as an author, Glyptis is the Chief Client Officer at 10x Banking, a cloud-native core banking platform provider based in London. She is also a Non-Executive Director at leading U.K. cash deposit platform, Flagstone. Glyptis has a PhD in Politics from the London School of Economics and Political Science (LSE), and shares her thoughts on banking and financial services as a columnist – and “resident thought provocateur” – with Fintech Futures. Her latest columns have tackled topics such as the importance of preparation, the role of pain in learning, and the challenge of maintaining the courage of convictions.
Be sure to visit our FinovateEurope 2023 hub to save your spot at our upcoming fintech conference, March 14 through 15 – featuring author Leda Glyptis’ keynote address on the afternoon of Day One.
The Consumer Electronics Show (CES), a tech event that showcases the latest advancements in consumer electronics and technology, is a must-attend conference for those working in the field of tech. But what if you work at a bank?
This year, U.S. Bank sent five representatives to walk the floors of CES to scout out what’s new and what’s possible when it comes to banking technology. Among the group attending last week’s technology showcase were U.S. Bank Chief Innovation Officer Don Relyea and Senior Vice President and Head of Applied Foresights Todder Moning.
We caught up with Relyea and Moning to get their thoughts on the show.
You’ve just returned from CES. Tell us about what U.S. Bank was looking for at the show.
Don Relyea: We are looking for several things. We go to get an understanding of how ready for primetime various technology verticals are for mass consumer applications. We also go to detect new disruptive technology trends well in advance of their readiness for consumers, so we can prepare to take advantage of opportunities – as well as avoid (or leverage) a disruption. A good example is how, a decade ago, we detected the early rise of natural language processing and started testing and learning with it, eventually leading to us being ahead of the curve in releasing an industry-leading voice assistant a decade later.
Todder Moning: We think about it like a “tech safari” or a “future safari” – allowing us to see a lot of the new products or emerging R&D work across multiple tech spaces and across multiple industries. It helps us to see what consumers, business owners, and our employees are going to be experiencing in their lives and helps us better understand what financial solutions are going to become most important to them. We look for how the spaces and tech we follow are progressing and for the weird or unexpected. That gives us new ideas that we take back to start work in our innovation labs and business lines.
Was there any tech on display that had the potential to help improve the user experience?
Relyea: More than I could ever tell you about. A big trend we saw in this space was the leveraging of AI for hyper-personalization across every industry. Companies in so many different verticals were converging AI, digital twins, the cloud, and the sensors in your consumer devices to create highly personalized and useful consumer experiences.
A great example is Incheon Airport (Seoul, South Korea) using a digital twin combined with AI, IoT sensors and consumer phones to give travelers a navigational guide like none other: an augmented reality robot avatar that will lead them around the airport wherever they need to go. Another one I loved was an AI scanner that analyzes your face and detects your skin condition in order to recommend skin care products. When the point of sale becomes your bathroom instead of the mall, that will be a gamechanger.
Moning: Yes, a lot of it.
Sustainability and waste tracking
New experiences in the automotive and transportation industries
The broad use of sensors, AI, displays, and wearables that are bringing services, health, and wellness directly to the consumer
Easier interconnectivity in smart homes and smart devices across product brands to finally start making those contexts easier
Continuous advancement in VR/AR glasses for digital and virtual experiences
Automation and autonomy in vehicles, robots, and other appliances/devices that will help assist or do things for people
How about tech for back office operations?
Relyea: Again, I’ll go to the Incheon Airport example. Not only did a friendly little robot provide guided navigation, but also the airport used the digital twin for operational efficiencies as well, helping to manage air traffic, vehicle traffic, foot traffic, and physical plant operations.
Moning: To be candid, the fintech part of the show was pretty sparse. It’s been that way in years past too. CES is typically far less interesting when it comes to technology we might directly implement to our systems, and much more interesting in seeing how we can integrate into the experiences where consumers would want to use their money. Which, we’re seeing more and more – particularly with embedded finance – is kind of everywhere.
When it comes to implementing ideas like these at a bank, is it better to be on the leading edge to gain a first-mover advantage? Or is it better to wait for other firms to jump in first?
Relyea: It really depends on the use case. In some cases, with fintechs and reg tech, it may be better to be an early mover. In others, where the maturity of the technology is not clear, it is better to wait until the technology achieves a good level of maturity.
Moning: It depends. We like building prototypes to try ideas first. We also like collaborating with or investing in startups when it makes sense. We will go first when it makes sense and we’re ready, like when we were first in ApplePay, first in Zelle, first in real time payments networks, and first to have smart chat services with all three major smart-speaker brands. Other times, we’ve seen the first-in-market attempts by others at really new technology fall flat or miss the mark. So first-mover vs. fast-follower really depends on each opportunity.
If U.S. Bank was exhibiting at CES, what would be the newest tech you would showcase?
Relyea: We get so much out of exploring the show floor, and so we find other ways to launch and showcase our own innovations, but we’re rather proud of our Smart Assistant, including the launch of our Spanish language version this year – the nation’s first voice assistant for banking in Spanish. Other candidates would be some of our work within the real time payments space, perhaps some of our blockchain initiatives or the recent launch of our financial education program for college athletes, which we are doing in collaboration with Opendorse. There are a lot of digital innovations happening across U.S. Bank that combine the best of digital with our amazing team members.
Moning: Some of our voice tech stuff is pretty cool, at the leading edge. We’ve done some really good things with real time payments in auto and some other areas. Our approach tends to be more of one where we work quietly behind the scenes until just the right time to launch it to the public, rather than showcasing our work in prototype or in pilot. I’d love to share more, but we’ll hold some of those cards close to the vest.
Outside of fintech applications, what was the coolest thing you saw at the show?
Relyea: I liked the MPC micro power chip that pulls low amounts of power from dirt and moisture. I haven’t seen anything quite like it before – that can charge a battery array and light an off-grid structure. I’m looking forward to when their tech is commercially available.
Moning: It would have to be the BMW Dee, a concept car that had “e-Ink” panels all over the outside of it, including the windows, and changed color in real-time based on music or your mood. As a sustainability concept, the Under-Ocean Farming that Siemens was showing was amazing. And from Caterpillar, the giant equipment company, they were showing remote autonomy, where you could control a real excavator that was in Peoria, Illinois from a seat at CES in Las Vegas. Pretty incredible.
It may be a fintech cliche that “every year is the Year of the Customer.” But the obsession over customer experience that is sweeping through financial services is showing no signs of slowing down.
Steven Van Belleghem, author of The Internet of Customer Value, How Web3 and the Metaverse Are Changing the Game in Customer Experience, will deliver a keynote address on Day One of FinovateEurope this year that tackles this topic head-on. An expert in the future of customer centricity, Van Belleghem emphasizes the relationship between enabling technologies, customer-centric thinking, and the human touch in his work. This work includes four international best-selling books, as well as co-founding inspiration agency Nexxworks and social media agency Snackbytes.
Find out more about how to attend FinovateEurope at the O2 in London and catch Steven Van Belleghem’s keynote address live on Tuesday, March 14, at our FinovateEurope hub.
An engaging speaker and colorful writer, Van Belleghem has impressed audiences and readers with his insights into what it truly means to put the customer first – and why it is imperative for companies to do so in order to succeed. In a recent blog post, Van Belleghem explained how “customer culture” has “replaced technology as the holy grail” as a growing number of businesses recognize the value of “really try(ing) to understand what people want and then help them.” He wrote:
“Over the years, software has even become quite good at being creative, but empathy remains that last beacon, something that is typically human. And so a positive culture of being kind, of being human, of saying ‘yes’ to your customers will become a true differentiator. That’s what will bridge the most of that last 10% to get great CX.”
Read his full discussion, which includes Van Belleghem’s explanation of why this last 10% is always the most difficult to achieve, as well as a helpful strategy for keeping even the most promising of enabling technologies in the proper perspective.
Then stop by our FinovateEurope 2023 hub to save your spot at our upcoming fintech conference, March 14 through 15, featuring author Steven Van Belleghem’s keynote address on Day One.
One of the more compelling presentations at FinovateFall this year was the keynote address from BOND.AI CEO Uday Akkaraju. Titled “Why the Future of Finance is Beyond Finance, And How to Get There,” Akkaraju’s discussion looked at the wave of digital transformation in financial services and asked “is there a radically smarter path to profitability while staying relevant to customer expectations?”
We pick up on this conversation in today’s extended interview with the BOND.AI CEO. Akkaraju has leveraged his background in interaction design and cognitive science to help make machine intelligence more empathetic and human-oriented. The result is the world’s first Empathy Engine for finance – a technology that helps bridge the gap between consumers struggling to meet their financial needs and banks that are eager to engage these consumers with new technologies that offer greater personalization and effectiveness.
Founded in 2016 and headquartered in Little Rock, Arkansas, BOND.AI won Best of Show in its Finovate debut at FinovateFall 2018. We talked with the company’s CEO about the how the company is helping financial institutions better serve their customers, as well as what to expect from BOND.AI in 2023.
You recently spoke at FinovateFall on Why the Future of Finance is Beyond Finance. Can you tell us a little bit about what you shared with our audience in that keynote?
Uday Akkaraju: It was my pleasure to be asked to speak again at FinovateFall this year. A lot has changed since I spoke last time in 2018! And a lot has changed for the better in terms of banking.
The pandemic spurred investments in technology and digital channels to reach customers—a benefit for the banking and fintech industry. However, we must now utilize opportunities accelerated by the pandemic to create a future of better financial health for everyone.
I wanted to use my keynote speech to highlight the “Empathy Gap” between what customers need and what banks can offer today, especially given the fast-changing economic environment. For me, it’s essential we discuss how fintech can help bridge the communication gap between banks and customers. Banks need to strategically implement discourse analysis tools with measurable KPIs to ensure they don’t return to past mistakes.
That’s where human-centered AI comes in. In this case, AI is our chatbot-powered Empathy Engine that can converse with customers via an app to get a deeper understanding of their needs. Through conversation, banks can grow their revenue using customers’ contextual information. With more customer data, individual banks can meet and even predict an individual’s needs, improving financial health as they tailor their products and services as a result. Of course, conversational data is only a part of it. You still need the bank data – otherwise, you only get half the truth.
BOND.AI won Best of Show at FinovateFall 2018 with a live demo of its Empathy Engine. You’ve also talked about something you call the “Empathy Gap.” For the uninitiated, what does the “empathy gap” mean?
Akkaraju: The Empathy Engine is our main vehicle for closing the gap between customer needs and a bank’s inability to meet those needs, which we’ve labeled the “Empathy Gap.” We quantify this gap between what banks offer and what individuals need to be worth roughly $34.2 trillion. I like to say the only thing that changes faster than technology is consumer expectations. Unfortunately, banks’ inability to keep up with those expectations leaves them with a lot of money left on the table for them and a lot of lost opportunities for consumers.
The Empathy Engine helps banks to better communicate with and service consumers to close this “Empathy Gap.” We use its ability to talk directly to customers and deliver personalized service at scale. This aids banks in seeing a holistic picture of each individual and better meeting their financial needs.
The main point of my presentation, though, was to make it clear it’s not going to be possible for one fintech or financial institution to close that gap alone. That’s why we created The BOND Network, to connect banks, employers, and fintechs and make it a true network—not just a marketplace—to balance the needs of all three stakeholders.
How does BOND.AI’s Empathy Engine flow from this?
Akkaraju: We launched the world’s first Empathy Engine for finance in 2018. It’s designed to bridge what the consumer needs against what the bank can offer to give a holistic view of customers, including their needs, strengths, weaknesses, and potential.
Right now, for customer segmentation, banks only consider financial data, and that information remains too broad. It fails to keep up with fast-changing consumer expectations or recognize an individual’s circumstantial information. Segmentation should consider both financial and non-financial data to be effective and offer a hyper-personalized approach that talks directly to the customer.
The BOND.AI Empathy Engine was developed in response to this insight. Instead of considering massive amounts of data with lots of noise, the engine moves to a small-data approach, where segmentation happens based on actual and observed behavior rather than traditional correlations and predictors.
Who is BOND.AI’s primary market and how do those customers use your technology?
Akkaraju: Our primary market is currently made up of financial institutions to whom we provide a white-label solution for insights, analytics, and customer communication. These are our core customers, and they are also members and contributors to The BOND Network.
We also have employers on the network who provide our mobile app to their employees as a financial benefit. At this point, we have 28 employers bringing about 300,000 employees into the network, which is set to grow next year.
What makes BOND.AI’s technology unique in the way it solves problems for your customers?
Akkaraju: Our Empathy Engine is the first-of-our-kind, human-centered technology focused on increasing the financial health of institutions and individual consumers. It also powers The BOND Network, which nurtures an ecosystem of financial institutions, fintechs, employers, and employees that all benefit. The engine identifies stakeholder needs and connects the dots to fulfill those needs, thus making this a network rather than a marketplace.
This is how our efforts move ‘beyond finance’. We believe to bridge the Empathy Gap it will take collaborative action to understand people as more than just transactional data and talk to them instead to establish their needs and situational context. With AI tools, we can speak directly to customers from the comfort of their own home or on the go with our mobile app. This intimacy builds trust and strengthens the customer’s relationship with their bank, so people feel able to share their problems.
The best part? Insights are there for everyone across the network to see how they can further close the Empathy Gap.
I think some would be surprised to learn that BOND.AI has headquarters in Little Rock, Arkansas. What does Little Rock offer a company like BOND.AI?
Akkaraju: There’s a lot we feel Little Rock can offer us, which is why we moved here! We were previously based in New York but chose Little Rock strategically for both the company and our employees. The work-life balance is good here. There’s also barely any commute considering most places can be reached in 20 minutes. That’s ideal for a fast-growing start-up where time is money.
There has been a move away from the coast, but tier-two cities are also getting a little cramped. People are happy to explore other options at this point, and Little Rock is an interesting place where both company and employee dollars stretch further.
There are also a lot of possibilities here for us as a start-up looking to connect with employers and their workers. Walmart’s headquarters is here, and many of its vendors are nearby. You don’t need to move to the city to find talent and opportunity. The next thing we’d like to do is start consciously investing in the local talent we think is out there to really prove that to people.
What can we expect from BOND.AI in 2023?
Akkaraju: In 2023 we’re excited for our app to be going direct-to-consumer via employers and expanding our partnerships for The BOND Network. We’ll be using these acquisitions to grow the company organically. These developments will also aid us in our mission to give the power of data back to the consumer and show banks what types of data they can leverage more effectively.
We want to focus on alternative wealth building, giving more people the tools they need to take control of their finances confidently. Budgeting is good, but it doesn’t fix the bottom line and, in many cases, more support is needed. We want to extend the possibilities of financial inclusion by giving everyone access to the tools used by high-net-worth individuals and sharing guidance on how to use them.
What innovations are making their way to the payments space in the U.S.? How will the new FedNow Service impact the current payments infrastructure when it goes online in 2023? What can fintechs do to prepare themselves and get involved with a post-FedNow payments landscape?
This year at FinovateFall, we talked with Bernadette Ksepka, Assistant Vice President and Deputy Head of Product Development with the FedNow Service at the Federal Reserve System. With the launch of the FedNow Service drawing nearer, Ksepka helped put the challenges and opportunities in perspective.
On the promise of the FedNow Service
The Federal Reserve banks are developing an instant payment service for financial institutions of all sizes, across every community in the United States, to be able to offer safe and efficient instant payments to their customers, 24×7, 365 … Recipients of those funds are going to be able to have full access to that funding to be able to better manage their cash flow, to be able to make time-sensitive payments … In the back end, banks are going to be able to settle those transactions instantly instead of (in) hours or days. It will eliminate a lot of the liquidity and credit risk that exists today.
On the impact of FedNow on the payments landscape
The FedNow Service is going to modernize the U.S. payments infrastructure. It is really going to pave the way for a big change in the future of payments. It has been over 40 years since the Federal Reserve introduced a new payments rail, so we are super-excited that the FedNow Service is going to go live in the middle of next year.
On the innovation that FedNow may help unleash
The FedNow platform is use-case agnostic, so the possibilities are really endless. And as we’ve seen demand for instant payments grow, we’ve seen use cases expand and I think there are use cases out there that we are not even thinking about. For example, there’s a lot of energy around early wage access. Imagine an employer that can pay their employees at the end of the shift or at the end of the day instead of every two weeks. That makes that employer that much more competitive, especially in a really tight job market like we have today.
Check out the full interview with the Federal Reserve Systems’ Bernadette Ksepka on FinovateTV.
One of the areas of fintech that has benefitted significantly from the rise of enabling technologies like AI and machine learning is compliance. From reducing the role of manual labor via automation to streamlining complex processes to make rules easier for companies to follow, both regtech firms and compliance teams alike play a major role in ensuring the fintech innovations we enjoy are safe, do what they say they’ll do, and are as available to as many eligible consumers as possible.
We caught up with Sarah Murray, who leads the Deposit Product Team at Compliance Systems. She talked about the impact technology is having on the field of compliance, and discussed the key challenges that Compliance Systems is helping its 1,800 financial institution clients overcome.
How did you get started in fintech? What has led you to where you are today in your career?
Sarah Murray: Before fintech, I was practicing law in private practice, and I just knew I was ready to be out of the courtroom and do something different with my legal career. I started at Compliance Systems eight years ago as a product specialist and counsel; now I am happy to have led the product team for the last five years. I love my job because no two days are the same. I never thought I would spend some days researching legal topics and reviewing regulations, and other days reviewing code and testing software, but I love the challenge each day brings.
Tell us about the work you do for Compliance Systems.
Murray: I lead our deposit product team at Compliance Systems, which consists of attorneys, business analysts, software developers, and quality control specialists who all work toward the common goal of delivering compliant and innovative products to our 1,800 financial institution clients. I love the mixture of technology with the law and getting to keep my legal hat that I went to school for by delivering compliance solutions through technology to our clients.
What are your thoughts on the way technology is helping companies keep up with the changing regulatory environment?
Murray: Overall, I think it’s the job of technology to streamline and simplify, regardless of which industry we’re talking about. In the case of fintech and regulatory compliance, that means automating repetitive and high-risk compliance processes. It also means demystifying regulations where we can for the benefit of the consumers that those regulations are intended to protect.
Our proprietary research engine tool enables us to provide proactive and update-to-date compliance, and our team is constantly monitoring and tracking what is happening in the legal and regulatory spaces in real-time to ensure we can deliver timely compliance solutions to our clients. Our software provides updates through our cloud-hosted solutions, and our compliance safety net tool also provides interactive features that help our clients complete compliant transactions and provide a better level of customer service.
How has this evolved and how do you see it continuing to evolve leading into 2023?
Murray: The market has evolved through financial institutions rethinking compliance and needing to deliver a solution that meets their customers [and] members where they are: on their phones. We deliver compliance in a way that makes sense in a mobile-first environment and develop content with that in mind. This model isn’t necessarily what financial institutions are used to, but it is what customers [and] members strongly prefer: easily navigable, mobile-friendly content.
Financial institutions are telling us they want a single, streamlined approach for a customer, regardless of the channel (e.g. whether it be in branch or online). So, we’ve created a solution that satisfies the requests of both parties. You can open accounts through the same process as you would in a branch location, but on a mobile device with ease.
What challenges are you hearing in conversations with clients? What technologies are resonating most?
Murray: Our Simplicity Mobile, a mobile-first account opening solution, has been highly successful because it has helped address some of the main pain points for our clients. They communicated that they are looking to have a more streamlined, efficient, and consumer-friendly workflow to open accounts and to reduce friction in that process to avoid abandonment. This solution completed that challenge by offering native HTML content that a financial institution can include within their account opening workflow, and by supporting “click to sign” functionality.
Another challenge we are hearing from clients involves their treasury management solutions. Treasury management operations are a vital component of a bank or credit union’s commercial services, but the content needed to properly document this business can require costly outside counsel or consume internal resources that put a strain on operations. Also, financial institutions are looking for a better, more streamlined way to sign up their customers for their treasury services. They don’t want to have to create and maintain separate contracts for each treasury service and are looking to avoid inundating customers with multiple contracts and documents.
Our delivery model ensures that our clients will always be in compliance and our technology delivers the configurability needed for a treasury management solution, as many aren’t looking for a “one size fits all” fix. Our solution helps minimize operational and compliance risks for our clients while also providing a central hub for all compliance-related updates and content within our solution. Furthermore, our solution offers one master services agreement for treasury services to help improve a customer’s enrollment experience.
Are there any tips you would like to share on providing strong leadership in a male-dominated industry?
Murray: A few tips I have are to be passionate about what you do and work with integrity; work hard to deliver what you say you will do when you say you will do it; don’t be afraid to challenge the status quo and be an advocate for yourself and others. A big thing at Compliance Systems is that we believe in reinvesting in our products based on what we have learned from our clients and the industry. I would say it is important to have that mentality yourself as you grow. Learn from mistakes. Learn from what works. Learn from your colleagues and clients. Together as an industry, we can elevate the banking experience for all.
Financial inclusion has been a rising hot topic in the past few years. Providing underserved populations with the tools they need to manage their finances and build their wealth has been a top goal across many banks and fintechs, especially those focused on credit and underwriting.
I recently had the opportunity to speak with Gregory Wright, Executive Vice President and Chief Product Officer at Experian. Wright was a keynote speaker at this year’s FinovateFall event in New York. He offered key takeaways from his keynote, discussed opportunities for banks when it comes to financial inclusion, and talked about how they can prepare and plan to scale their operations.
Key takeaways from his keynote
I talked about innovation in three parts. The first part was about innovation with purpose. I think being mission-driven and wanting to have an impact in the world helps drive not only what you want to do as a business, it helps drive growth and [has an] impact on consumers and who you serve in the communities you live in. And that also can drive employee engagement; they love to work on something that actually has meaning beyond just making money.
The second part is innovation through scale. So, think about platforms. Think about global scale, how we leverage platforms and data, and cloud computing, and modern APIs so that you can innovate faster, get products to the market faster, and really have an impact not only for your business, but for your clients.
And in the third part, we talked about innovation with analytics. We live in this new world where cloud computing, advanced APIs, and modern APIs pull data from multiple data sources. [They are] able to do that in real time with advanced analytics and automating model deployment. We can bring together things that we’ve never been able to bring together before. That enables us to do analytics and credit scoring in ways we’ve never been able to do before.
On how banks and fintechs can leverage data and technology to drive financial inclusion
So, let’s just talk for a minute about conventional credit scoring. Today, the conventional credit scores can score about 81% of the U.S. population. That’s one-fifth that are not being scored or that are credit invisible. With ExperianLift, we can score between 93% to 96% of the U.S. population. That is a step change in performance. And that’s because we use more data, better analytics, bringing it all together in a big data platform and making it live instantly for consumers. So lenders, banks, fintechs– they need to be doing that every day to score more people, drive financial inclusion, and have better business outcomes.
How do we represent consumers in their time of need? There are one-to-two million credit reports pulled every day. These are the most important financial moments in consumers’ lives. We can help represent that. And I know fintechs want to create a consumer experience that is delightful, seamless, digital, easy. And with analytics and big data platforms, they can make that happen. We can help partner with fintechs to use things like Experian Lift, or, even better, Experian Boost, where we’re allowing consumers to come in, connect their bank account, add data to their credit report in real time based on the bills they pay, and improve their credit score before they even apply for something. We’ve worked with a lot of fintechs to figure out how we not only allow consumers to contribute to their credit report and get a better outcome, but also we can help them with better analytics and scores to score more consumers and get to a better outcome. This is not only good for consumers, because they get to a better financial outcome, it’s good for them. They’re scoring more people, getting to “yes” more often, and helping build their business.
What should companies implement now to prepare for future growth?
It comes down to what they’re trying to do and how they want to grow. I really advocate for innovating with purpose. [They should think] about how they want that consumer experience to feel and what that consumer journey is. How do they make it more digital, more seamless? How do they get to “yes” more often?
And again, we’ve talked about the platform capabilities from Experian that can help them. We’ve talked about how we can go from analytics and model development all the way to production through the Ascend platform. Things that normally take nine-to-twelve months to get a new score into market, into production, through compliance, and through their IT queue suddenly, we can do that in one platform from the analytics to deployment in real time. That’s something that any lender, any bank should be doing because it’s going to help get to “yes” faster, deploy better models in real time, pull data sources from not just the credit bureau but from anywhere. That means you can drive better customer outcomes, get to “yes” more often, not add more risk, and eventually build great businesses.
The role of state-based organizations in helping foster fintech innovation in their communities is often overlooked. For years, one such organization, JobsOhio, has helped bring attention to the opportunities available to fintech entrepreneurs throughout the state of Ohio. The private development corporation also works to encourage investment in the state’s most innovative businesses – from advanced manufacturing to insurtech. As remote work has expanded in recent years, more and more founders and professionals have turned from Silicon Valley and New York to cities in states like Ohio to launch new businesses and begin new careers.
This year at FinovateFall we sat down with Ron Rock, Senior Director of Insurance/Insurtech with JobsOhio to talk about the organization’s role in driving fintech innovation in Ohio, and what the Buckeye State has to offer both fintech entrepreneurs and fintech investors.
On the impact of remote work on fintech and financial services
In financial services, it seems like we have the ability to be remote. We’re not a “build a building, fill it full of people” kind of industry. So being able to work remotely is very easy in the financial services space – especially when you’re stretching into some of the tech strategies that we have … On the other side, there are some banks and insurance companies that are quick to get people back into the office. They love the camaraderie. They love the collaboration.
On the rise of Ohio as an fintech innovation hub
We fund three different innovation centers in the state. We have one in Cincinnati, one in Columbus, and one in Cleveland that are being developed right now. There’s a lot of collaboration in the healthcare space, in the true IT space. So, in the financial services space, we think that being close to that innovation is very key. What I’m trying to do is recruit some of those (financial services) companies to utilize those innovation centers, get close to that innovation because, I know it’s kind of corny, but innovation breeds innovation.
On the advantages of launching new fintechs in Ohio
What you have is that you’re close to about two-thirds of the financial services sector in Ohio. So, within a day’s travel you can be anywhere you want to be within the financial services ecosystem in the midwest. What we’re also trying to do is highlight with our venture capitalists that fintech and insurtech is a space that is going to provide some really good ROI. We’ve got a lot of venture capital in the state. When you think of venture capital, you tend to think of Silicon Valley or New York. But we’re trying to get really strong in the state of Ohio, as well.
We are all familiar with the challenge businesses have when it comes to new customers. On the one hand, there is an urge to onboard as many new customers as possible. On the other hand, great care must be taken to block bad actors or, in the case of the lending business, to avoid borrowers who are unlikely to repay their loans.
To help companies manage this tug-of-war, innovators in the credit scoring space have developed new strategies for determining credit-worthiness. These new approaches have moved beyond traditional credit scoring to help lenders reach reliable borrowers who may have thin credit histories – or even no significant, traditional credit history at all.
VantageScore is one such innovator. This year at FinovateFall, we caught up with Rikard Bandebo, VantageScore Executive Vice President and Chief Product Officer to talk about the company’s approach to credit scoring, how it differs from traditional credit scoring methods, and how fintechs can leverage VantageScore’s technology discover more “newly lendable” customers.
On making credit scoring more accurate and more inclusive
We went back to the drawing board in a way to look at what we could do to make these models much more accurate and inclusive. In doing so we started looking at ways we could look at the data on the credit file. We began using what’s called trended data and found, in doing so, we were able to improve the accuracy of the model significantly. It’s probably one of the most accurate, if not the most accurate, generic model that’s been widely adopted.
Secondly, we also found that by using this type of data we got much more consistent scores for consumers over time. There’s nothing quite as frustrating for consumers and lenders (than) when their scores go up and down a lot over time. So this provides a much smoother transition throughout a consumer’s history.
And the third piece is that we were able to massively improve our inclusion with this latest model. We score about 37 million more consumers than traditional generic models that are out there – out of which more than 10 million are above 620.
On transitioning to VantageScore from other credit scoring providers.
First and foremost, we are a very transparent credit scoring company. We provide a lot of transparency into how our models work (and) what impacts different activities have on our models. We also have built out great support services around migration and also around governance. We do a lot to make it as easy as possible for both fintechs and lenders to make a transition.
On VantageScore’s reputation in the capital markets and among ratings agencies.
We recently had FTI Consulting conduct a study where they went out and interviewed and tried to understand what the appetite was like in the broader market, what they were looking for. One of the common feedbacks they found was that, like other markets, they’re looking for more competition, and they’re looking for the best models that they can use to understand the impact of different types of consumers on risk.
We’ve actually seen a big uptake in VantageScore being used in general, and we’re seeing now a growing appetite in the securitization markets. We’ve seen some very large lenders transition to now offering their securities based on VantageScore.
If you had 6 minutes to talk with Alexa Von Tobel about all things fintech, what questions would you ask?
For those new to the fintech industry, let me fill you in. Alexa is the Founder and Managing Partner of Inspired Capital and was the Founder and CEO of LearnVest, a wealth management platform she sold to Northwestern Mutual for $250 million in 2018. She is also the author of Financially Fearless and Financially Forward. All this is to say, Von Tobel is a long-standing expert in the fintech industry.
I was fortunate enough to have the opportunity to chat with Von Tobel at FinovateFall last month. Here are some of the highlights of our conversation.
Dealflow in fintech has changed a lot this year. When I asked Von Tobel what we can expect moving forward, she said that the fintech industry is full of dry powder. She said to ignore the spike in funding that has occurred in the past couple of years, and instead look forward to the future. “This is when the best builders come out,” she said. “When times get tough is when you see resilient, committed founders saying that they want to build a business. I want to meet those founders.” In fact, Von Tobel is excited about the downturn because it will bring out the mission-oriented builders and founders that are seeking to fix the big gaps in the industry.
In our interview, we also looked at retirement. According to Von Tobel, retirement looks different today, thanks in part to the gig economy. Many people are looking to leave their full time job to work in a more flexible environment that allows them to choose how frequently to work. On the flip side, young people are also seeking more flexibility in their working environment, and because they are not working the traditional nine to five career, they need solutions to save for their retirement that fit this unique need.
Von Tobel also shared the top trends she expects to see rise in the next few years and offered up advice for founders of mid-to-late stage companies who are having difficulty finding VC funding in today’s environment.
From Open Banking to Embedded Finance, there are more ways than ever for financial institutions and financial services providers to embrace digital technology and bring better, more personalized, and easier to use financial products to market.
One company that is playing a role in helping businesses make the most of the latest innovations in financial technology is ASA. The company, headquartered in Utah and making its Finovate debut last year at FinovateFall, facilitates collaborations between financial institutions and fintechs. An embedded solution, ASA’s technology helps community banks and credit unions offer their customers the same quality of innovative digital services offered by their larger rivals.
We caught up with Lisa Gold Schier, Chief Strategy Officer with ASA, to talk about the opportunity of collaborative banking, how to make bank/fintech partnerships work, and what financial institutions are focused on right now.
Tell me about your time in the industry and your new role at ASA. Why did you make the switch from banking to fintech?
Lisa Gold Schier: I started my financial services career with a bank, then worked with banks and fintechs. However, I had never worked directly for a fintech. Prior to joining ASA, I served as a leader at the American Bankers Association (ABA), where I led product evaluation and served as a strategic advisor to bankers, technology providers, and consultants across areas such as technology trends, digital transformation, and the customer experience. I helped establish and spearhead the only industry committee focused on guiding strategic direction for industry innovation with an emphasis on bank/technology partnerships and core processor engagement.
I evaluated hundreds of fintech solutions during my years at ABA. When I discovered ASA, I knew it was something unique. I realized ASA’s technology and framework changes and improves how financial institutions, fintechs, and customers access technology and work together. By joining the team, I help financial institutions and fintechs meet the needs of their account holders. I am now Chief Strategy Officer at ASA, driving the strategy of collaborative banking and creating a clear path to innovation, scale, and customer financial empowerment through embedded fintech.
Who is ASA and what is collaborative banking? What makes it different than Open Banking or Banking as a Service?
Schier: While OpenBanking and Banking as a Service each have their place in the market, challenges exist with each. Banking as a Service requires fintechs to jump through regulatory hoops and open banking puts banks and fintechs against each other in competition for customers’ finances. Collaborative banking, on the other hand, is a model that allows financial institutions and fintechs to work together, sharing revenue and business opportunities. Collaborative banking takes the spirit of open banking and mitigates the pitfalls, allowing institutions and fintechs to partner in a mutually beneficial way by removing the regulatory risk traditionally associated with partnerships.
ASA, the pioneer of collaborative banking, is an embedded fintech solution that connects financial institutions with customer-facing fintechs in a secure, compliant, and easy to implement marketplace, powering growth and opportunity for all. Account holders select and instantly download the apps that meet their individual needs, and link their accounts without giving the fintech access to any personal information. With ASA and collaborative banking, financial institutions are the hub of financial choice, maintaining the account holder relationship and providing financial empowerment through individualized choice.
Lisa Gold Schier introducing ASA’s demo at FinovateFall 2022 in New York.
What challenges have traditionally made bank/fintech partnerships difficult, and how is the ASA model helping to overcome them?
Schier: There are many challenges, some of the largest include developing an innovation strategy and the team to implement and follow through, researching and vetting all the fintechs and determining which ones will solve the majority of customers’ needs, contracts, core integrations, and balancing innovation with liability and risk. These roadblocks can be especially challenging for community institutions, who lack the large tech budgets of regional and national players.
ASA addresses these issues by acting as a single integration point between financial institutions and fintechs, either through the institution’s core, online provider, or data aggregator. Fintechs never interface with institution’s core, and ASA normalizes, tokenizes, and anonymizes customer PII data, ensuring fintechs can’t access personal accountholder data.
By solving the one-to-one integration pain point, ASA is enabling personalization at scale by allowing customers to choose and download the niche apps they crave without diluting the relationship with the bank or credit union. ASA creates a trusted closed network between financial institutions and fintechs, making partnerships easier, more affordable, and more secure than ever before.
How do you mentor and support women in the industry?
Schier: I strongly believe in having diverse views around the table, and part of doing so means proactively seeking out those different perspectives. This often looks like creating networks, whether within my organization or within the industry, and then supporting each other. It’s important to foster relationships with junior and senior women and share advice and insights.
I also support women through social media and speaking opportunities, looking at and creating diversity in promotional and advertising materials. It’s disappointing to see panels and conference sessions that lack diversity. So, when I am working with conference coordinators, I make it a priority to seek diverse representation, which includes recommending industry leaders and women that may not be tied in with the conference circuit. This also includes working with and supporting diverse communities. Since so many have supported me, I want to continue to give back to the industry.
What is top of mind for financial institutions and fintechs now and over the next 12 months?
Schier: To quote Ron Shevlin, our industry is at a hard fork in the road, and it’s critical for banks and credit unions to move toward the collaborative future of banking. Doing so will enable them to keep up with all of the new technology apps, grow business, and remain relevant. Financial institutions and fintechs that embrace embedded fintech and lean into secure consumer choice, providing consumers with more authority over who has access to their data and under what circumstances, will gain a strong competitive advantage. Moving forward, financial institutions and fintechs should prepare to embrace self-sovereign identities more fully, enabling consumer ownership of their data in new, innovative ways.
Customers increasingly need easier, quicker access to a range of financial education and wellness resources, especially given current market volatility. Those financial institutions that proactively offer more choice, providing customers with simpler, more secure, wider access to the tools needed to develop their financial health and education, will be well positioned to promote financial empowerment and equity.
At FinovateFall earlier this month, I sat down with author Vivek Bedi who delivered a keynote presentation later that week, to gain some insights on the customer experience. Specifically, Bedi discussed how organizations can shift from a product focus to a customer focus.
See his answer below and watch the video in its entirety for more on how business leaders can make smart decisions and how the financial services industry can keep up with a continuously changing world.
We always talk about it, right? How do we actually do it? Being in product for 20 years, I’ve realized, “geez, the customer is so important.” And there are a few things I’m going to talk about tomorrow.
The first is how do we become customer obsessed? I know we say that term a lot, but how do we actually make that happen in practicality…. Nine out of ten times, we’re not even using our own product day in and day out. Somebody else is. So how do we become in their shoes? So it’s really important– when I say customer obsession– is how do we really become the customer; feel their challenges, feel their pains, and feel their struggle.
The second area [I’m going to focus on] is that all customers’ feedback matters. It is so easy for us to gravitate towards “the good.” The customers that are our cheerleaders saying that we’re doing a great job. What about the naysayers? I actually found myself obsessing over time on folks that don’t like my product. Why don’t they like it? Are they just grumpy, or is there something there that I’m missing? The point is really obsessing about all different parts of the product lifecycle.
To watch more video interviews from FinovateFall, check out FinovateTV on YouTube. And whether you were at the event in person or not, check out the highlights below:
