Are you really sure I am not a dog? Maybe I am a really smart dog with an AI implant pretending to be a human. Disclosure, #Daily #Fintech is written by a stealth mode AI venture as a proof of concept. Seriously folks, you cannot know my #Identity. To readRead More
Bank Innovation
U.S. #Bank’s #transactions are now 60% #digital, Chief Operating Officer Andrew Cecere said at the Goldman Sachs U.S. Financial Services Conference this week. But that doesn&8217;t mean the Minneapolis-based bank is giving up on branches. It has around 3,000 branches and 80% of its sales activity still takes place thereRead More
Bank Innovation
A new report by Swisscom’s think tank e-foresight and the Institut fĂŒr Finanzdienstleistungen Zug (IFZ) found that the vast majority of #banks are #falling to #meet consumers&8217; #digital #needs, notably when it comes to small and medium-sized enterprises (SMEs).
The report points out how banks can fill the gap between their digital offerings and the real needs of their #corporate #clients.
The research program compares the digital offerings of 50 retail banks and the needs of 473 SMEs. Most particularly, it focused on five specific areas: e-banking, communication channels, payments, financing and banking-related products.
The study found that 66% of the surveyed banks are late followers, 29% are followers and only 5% are considered as being first movers.
Late followers are those that haven&8217;t launched any digital initiative or that has only launched isolated initiatives in terms of offerings to SMEs.
Followers have proposed their first products and are serving customers.
First movers have advanced rapidly toward digitalization and are at the forefront in term of their digital offering to SMEs.
For e-banking, although a number of banks are already offering solutions, the level of innovation remains low and corporate clients are demanding more digital solutions and functionalities.
80% of banks are offering push notifications via email or text message and 26% are offering personalized homepage. Only 8% are offering accounting software solutions, although 62% of clients said they considered these solutions as being important or very important.
Another area where banks are falling behind is the communication channels. Despite clients claiming that web chat, the ability to book meeting appointments online and video format advisory are important or very important, only a few banks are offering these services.
SMEs are also demanding various digital payments solutions including online and mobile payments solutions, which a number of banks are already providing.
Alternative financing solutions is expected to grow in popularity, and SMEs are requesting online onboarding processes notably to open business accounts (54%), but also for online mortgage applications (29%) and renewal/extension (43%). Less than 10% of banks surveyed are currently offering any of these solutions.
Finally, as for banking-related products and services, SMEs said that are interested in online factoring (17%) while only 2% of the surveyed banks are actually offering this service. 21% of SME clients said they are interested in the possibilities to bundle through business networks, but only 4% of banks are proposing this. Finally, 10% of the banks said they offer insurance products online, while only 5% of SMEs believe this is actually important or very important.
The report advises banks to start considering SMEs as an entirely separate segment in their strategy. Banks should focus on building and delivering solutions that SMEs are actually demanding and offerings that effectively help them, notably in areas that include e-banking and online assistance and advisory. Banks should also develop “an intelligent combination of banking and non-banking services” to build customer loyalty.
&8220;Globally, banks are only at the beginning of their digitalization efforts in products for SMEs,&8221; the report says. &8220;Most of them have been primarily focusing on the retail banking segment.&8221;
&8220;Digitalization is not an end in itself, it must be put in place to better and/or more easily serve clients&8217; needs. (…đ Corporate clients consider the most relevant areas as being solutions and functionalities related to transactions and auto-administration in e-banking, which simplify their daily activities or improve their processes. These aspects demanded by corporate clients are currently not provided by any of the banks.&8221;
Featured image by IFZ
The post Swiss Banks Are Falling To Meet Corporate Clients and SME Digital Needs appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
In September, TD Bank launched TD for Me, which the bank describes on an FAQ page as “a #digital concierge that allows customers to opt into a service that sends real time notifications about special offers and nearby events.” TD for Me lives in the TD Bank app but requires #usersRead More
Bank Innovation
The personal lending space in the United States, conservatively estimated to be around $ 3 trillion in 2016, is seeing continued disruption. One of the latest innovative offerings in the lending space comes #from a traditional investment bank: #Goldman #Sachs has looked to expand its presence in the retail banking spaceRead More
Bank Innovation
#Starbucks is about to get even more #digital. The coffee giant announced a major executive shift yesterday: longtime CEO Howard Schultz has stepped down, and will turn his focus to âinnovation, design and development of Starbucks Reserve Roasteries,â the companyâs new upscale brand, as an executive chairman, the company saidRead More
Bank Innovation
“Wachstum können Finanzdienstleister beinahe nur noch im #Markt #fĂŒr Bezahlsysteme erwarten, wo die Digitalisierung stetig voranschreitet. Hier aber konkurrieren die Banken mit reinen #Digital-Dienstleistern und Angeboten groĂer OnlinehĂ€ndler, die oft noch nĂ€her am Kunden sind”, kommentiert Andreas Pratz, Partner bei A.T. Kearney und Leiter des Digital #Payments Teams die Ergebnisse der #Studie &8220;Cashing in on Cashless Commerce&8220;.
&8220;Nur wenn es den Banken gelingt, ihre Bezahlangebote zu digitalisieren, werden sie dem Wettbewerb mit spezialisierten Dienstleistern standhalten&8221;, meint Pratz.
FĂŒr die aktuelle Studie zu sogenannten Digital Payments hat A.T. Kearney knapp 60 europĂ€ische FĂŒhrungskrĂ€fte von Banken, Payment-Anbietern und -HĂ€ndlern befragt. Ein zentrales Ergebnis der Studie: &8220;Bargeldloses #Zahlen wird immer beliebter: Seit 2010 beobachten wir ein jĂ€hrliches Wachstum von sechs Prozent&8221;, so Pratz. Die Experten erwarten daher, dass die Einnahmen im Bereich der digitalen Bezahlsystemen in den nĂ€chsten zehn Jahren von 80 auf 111 Mrd. Euro ansteigen werden.
Die Schweiz ist immer noch ein starker Bargeld-Markt â in Sachen bargeldloser Zahlung kann man noch nicht zur Spitze aufholen. Immerhin liegt die Schweiz aber mit 24 Bezahlterminals pro 1â000 Einwohnern weit ĂŒber dem europĂ€ischen Durchschnitt von 17. Mit 101 Transaktionen pro Jahr bezahlen die #Schweizer weit hĂ€ufiger mit der Karte als beispielsweise die Deutschen (55-mal) â genug Spielraum nach oben bleibt jedoch. So wird in Norwegen 400-mal jĂ€hrlich bargeldlos bezahlt.
âEuropaweit erwarten wir, dass sich die Anzahl der Transaktionen ohne Bargeld bis #2025 auf knapp 238 Mrd. verdoppeln werdenâ, berichtet Finanzexperte Pratz. âIn der Schweiz rechnen wir mit einem ĂŒberdurchschnittlichen Wachstum der Kartenzahlung um sechs Prozentâ, ergĂ€nzt Frederick Michna, Berater bei A.T. Kearney und Co-Autor der Studie.
Verschiedene Entwicklungen unterstĂŒtzen diesen Trend: Neben der seit diesem Jahr deutlich reduzierten Interchange Fee (Interbankenentgelt) fĂŒr Debit- und Kreditkarten vereinfachen vor allem Innovationen wie kontaktloses oder mobiles Bezahlen die Nutzererfahrung. FĂŒr Kunden werden solche Systeme immer wichtiger, verlagert sich der Bezahlvorgang – beispielsweise durch Online-Shopping &8211; doch zunehmend ins Internet.
FĂŒr E- und M-Commerce können Wachstumsraten von 10 Prozent verzeichnet werden (klassischer Einzelhandel in Europa nur 2 bis 3 Prozent). Diesen Befund teilt auch ein Drittel der befragten FĂŒhrungskrĂ€fte, die dem Einkauf im Internet eine SchlĂŒsselrolle fĂŒr die digitale Transformation der Payments-Funktion zusprechen.
Klassische Einnahmequellen der Banken, wie das GeschĂ€ft mit traditionellen Zahlverfahren (Ăberweisung, Lastschriften) oder der Ausgabe von Karten, wachsen dagegen nur langsam (um 6 Mrd. auf 59 Mrd. Euro). Das gröĂte Wachstumspotenzial spezialisierter Zahlungsdienstleister liegt im HĂ€ndlergeschĂ€ft und im GeschĂ€ft mit alternativen Zahlungsmethoden &8211; einem Bereich, den groĂe internationale Anbieter beherrschen.
In beiden Segmenten wird eine Verdopplung des Marktvolumens von 27 auf 52 Mrd. Euro erwartet. Der Anteil der Banken am Payments-Umsatz dĂŒrfte dagegen sinken: von zwei Dritteln Marktanteil heute auf voraussichtlich nur noch die HĂ€lfte im Jahr 2025.
Ein Blick in die Zukunft zeigt: Die wichtigsten UmbrĂŒche #liegen #beim sogenannten &8220;Kontozugang fĂŒr Dritte&8221;. Ab 2018 sind Drittanbieter berechtigt, Zugang zu Kontoinformationen zu bekommen und Ăberweisungen im Namen des Kontoinhabers zu veranlassen. 32 Prozent der befragten Payments-Experten in Banken sehen darin die entscheidende VerĂ€nderung fĂŒr ihr GeschĂ€ft.
Mobile Wallets (26%) und Instant Payment (21%), also eine elektronische Bezahlung in weniger als fĂŒnf Sekunden, bewerten die Studienteilnehmer als die gröĂten externen UmbrĂŒche, die den Markt von auĂen verĂ€ndern werden.
Andreas Pratz
&8220;Vernetzte GerĂ€te werden unsere Art zu bezahlen schneller verĂ€ndern, als die Meisten erwarten &8211; schon 2020 wird jeder BĂŒrger weltweit mindestens dreieinhalb vernetzte GerĂ€te nutzen, die EinkĂ€ufe aufgrund herausgebildeter PrĂ€ferenzen tĂ€tigen und Zahlungen auslösen können&8221;, warnt Pratz. Solch ein automatisierter Handel erfordere daher auch einen ebenso reibungslosen Zahlungsverkehr.
&8220;Banken können letztendlich nur profitieren, wenn sie es schaffen, fĂŒr ihre Kunden alle Zahlungsströme zu integrieren und Transparenz und Ăberblick ĂŒber ihre Ausgaben zu ermöglichen. Voraussetzung bleibt allerdings, dass sich alle Akteure auf eine neue Innovationswelle einlassen&8221;, schlieĂt Pratz.
Die Studie &8220;Cashing in on Cashless Commerce&8221; finden Sie hier
The post EuropĂ€ischer Markt fĂŒr Digital Payments wĂ€chst bis 2025 um 40% â Laut Studie liegen Schweizer beim bargeldlosen Zahlen zurĂŒck appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
The #identity management startup Civic launched this summer to kill the social security number as a means of authentication — a worthy goal, but its ambitions are much grander. At Money20/20 in October, CEO Vinny Lingham revealed a bit more on how the company plans to solve the enormous andRead More
Bank Innovation
Even though the #digital age finds its root in the 1950s with the rise of computers, we had to wait until the mid 1990s and the rise of the internet to witness a first wave of tectonic shifts and the creation of what many defined as the New Economy. Innovation, characterized by the application of #technology to productive means and resulting in driving down costs relentlessly over time, was hard at work. This first wave did not escape the rule and we saw the cost of “discovery” plummeting. By discovery I mean the ability to find any type of data. Google benefitted from this trend and built an empire based on hyper efficient search. We also benefitted from another wave that saw the cost of &8220;communication&8221; dropping and the rise of various forms of connecting between humans. Facebook can be viewed at the intersection of discovery and human connections. Apple benefited from the connection/communication wave. Finally, Amazon mined the decreasing cost of discovery in the e-commerce field.
More recently, we have benefitted from the wave of &8220;personalization&8221; where a myriad of applications have unbundled past needs, uncovered needs we did not know we had, or disintermediated needs that were poorly serviced. Again, this wave resulted in the cost of personalization plummeting.
Crucially whenever costs plummet, demand grows in both expected and unexpected ways. The New Economy and our demand have certainly exploded.
It is interesting to observe that the #financial #services industry did not immediately espouse these #waves, nor did it find itself materially impacted by them, or at least it appears so to the naked eye. For example, #banks were not particularly diligent in their internet banking efforts at that time. Even though new technology companies won the early stages of the New Economy and even though the financial services industry did not register any &8220;win&8221;, we also can categorically state that banks or insurance companies did not lose. They still command, to this date, market share and dominance in all five sectors  – lending, capital markets, insurance, asset management, payments &8211; in every geography.
The #fintech movement, in its first two phases, the &8220;direct to consumer&8221; phase and, once that first phase failed, the &8220;partnership pivot&8221; phase were essentially driven by the necessity to play catch and for the financial services industry to capture the lower costs of &8220;discovery&8221; and of &8220;connecting&8221; with users. Much needs to be done as most participants have not completed their digital journey. Even though startups and incumbents alike are still mostly focused on digitizing front end processes &8211; on-boarding, distribution, sales, underwriting amongst others &8211; we have now seen a broadening of the digitization movement towards middle and back office processes.
Still this has not resulted yet in a dramatic lowering of costs in financial services and an increase in demand. To be clear, the cost of lending will never &8220;decrease&8221; below an incompressible cost of capital. The cost of delivering a loan should decrease, and in other sectors, the cost of of a payment (be it domestic, p2p, mobile, cross border, b2b) has yet to decrease across the board.
Meanwhile, the technology world is busy reinventing itself and as the waves of discovery, communication, connection and personalization are flattening, new waves are engulfing us. I will focus on two technologies which I believe are the leading candidates to usher the next wave &8211; again characterized by reduced costs and demand explosion: Artificial Intelligence and AR/VR
Artificial Intelligence holds the promise of bringing our decision making to the next level. Any of the AI vectors &8211; machine learning, deep learning, nlp/nlg/nlu to name a few &8211; will drive down the cost of &8220;decisioning&8221;. By decisioning I mean the ability to arrive at optimal decisions via superior analysis of mountains of disparate data and in the absence of clarity. Most technology companies are locked in an epic arms race hiring the right talent, developing their own AI tech stacks and applying their technology breakthroughs to their fast evolving business models. The next wave may indeed see the rise of cognitive enterprises and cognitively enhanced individuals.
AR/VR holds the promise bringing our interaction with the world to the next level. I understand there are differences between AR and VR and for the purpose of this post will assume them away. AR/VR will drive down the cost of &8220;immersive discovery&8221;. By immersive discovery I mean discovery in action, using the full capabilities of our bodies in movement, in our three dimensional world; Â as opposed to the discovery we have done to date from behind a laptop or a smartphone. Given the explosion of supply and demand ushered by the plummeting cost of &8220;discovery&8221;, I leave you to imagine what this wave may be able to bring about.
Although it seems AI holds a slight edge over AR/VR currently based on maturity and traction, I do not definitively know which wave will be dominant first at scale, either in the enterprise or retail world. Suffice it to say that either wave will pose unique challenges to the financial services industry. Challenges inherent to customizing, designing, implementing and integrating each new technology paradigm. Challenges inherent in making use of and making sense of these new technologies with the right human skills. Finally, competitive challenges in the face of what we can only assume will be renewed pressure from non financial services enterprises ever more willing to capture poorly defended margins in lending or payments.
Although  threats from fintech startups or tech companies have not been successful in eroding meaningful market share yet, many industry analysts believe that up to half and sometimes more of incumbents’ revenues are under threat. I believe this analysis does not fully include the implications of the lower cost of &8220;decisioning&8221; or &8220;immersive discovery&8221;. As such financial institutions may be under even more threat than we realize.
Be that as it may, a reasonable and well educated practitioner will healthily push back and raise two objections to the demise of financial institutions at the hand of the potential dislocating effects of the above digital waves. One is articulated around regulation, the other around core systems.
Regulation is tedious, complicated and costly and serves as a defensive moat. In some instances it can be a drag as financial incumbents cannot act as flexibly or nimbly as non-regulated entities. Still, regulation acts as an effective digital fire retardant. Regtech not only holds the promise of lowering the cost of compliance, it also holds the promise of lowering the cost of developing and disseminating regulation to the market. Should regtech lower the cost of compliance to such an extent that fintech startups become more competitive or non-regulated tech companies become less averse to regulation, then regulated financial institutions will come out weakened, all else being constant. I am not predicting this will happen, yet the likelihood should not be discounted altogether
Core systems in the market today are cumbersome, expensive to build, expensive to maintain. Even though financial institutions &8211; banks or insurers alike &8211; dislike their vendors with the intensity of a thousand suns due to the woeful inability current core systems exhibit operating in a digital world, the fact is not everyone can afford core systems. Imagine a world where the cost of building, provisioning or deploying a core system would plummet and you are one step closer to another incumbent competitive advantage vanishing.
Although the future of regtech and core systems is more difficult to predict than a presidential election, the trends clearly point towards cost and complexity reduction and even though the full effects of either the lower cost of &8220;immersed discovery&8221; or &8220;decisioning&8221; are still be be felt, they cannot be avoided. These new digital waves hold the potential to drastically lower the cost and complexity of &8220;building a bank&8221; or &8220;building an insurance company&8221;. Obviously, regulatory capital, liquidity and solvency issues will still hold, but picture a world where building a core stack will be as easy as building a web site and where the cost will be a fraction of what it is now &8211; to the dismay of the entire value chain of third parties currently feasting on any implementation, from consultants to systems integrators &8211; and you can start grasp the monumental changes afoot. Digital waves keep coming and most financial institutions are still standing. How will they respond to the coming waves is an important question to ask. How will incumbent service providers cope is equally intriguing. How fintech startups exploit gaps will be fascinating to witness.
ps: no #blockchain was harmed while writing this post.
The #mutual #insurance sector has undergone a modest recovery in recent years, says #Swiss Re’s latest #sigma #report “Mutual insurance in the 21st century: back to the future?” Mutual insurers&8217; share of the overall insurance market increased from 24% of direct premiums written in 2007 to just over 26% in 2014, reversing some of the declines of previous decades. However, the segment faces challenges, including adapting to new risk-based capital requirements and more stringent corporate governance arrangements, which could put some mutuals at a competitive disadvantage.
Further, mutual insurers must embrace technological disruption. Exploiting #digital #technology such as smart analytics and social media should allow mutuals to better serve the interests of their member-owners, while their ownership structure should enable mutuals to keep insurance affordable for some individuals and risks.
The primary purpose of mutual insurers is to provide risk protection coverage for its owner-members, rather than to make profits or provide returns to external shareholders as in the case for stock-based insurers. Over the past few years, cumulative premiums written by mutual insurers have outpaced those of the wider insurance market, with much of the outperformance concentrated during the height of the financial crisis in 2008-09.
&8220;That mutuals&8217; relative premium performance did not reverse once economic growth resumed after the financial crisis, suggests a degree of permanence to the segment&8217;s recovery,&8221; says Kurt Karl, Chief Economist at Swiss Re. &8220;Some mutual groups have expanded internationally in recent years, and new mutuals have been established in a number of markets, another indication of the segment&8217;s renewed popularity.&8221;
However, while mutuals&8217; share of the global insurance market has increased modestly since 2007, it remains well below previous highs. For example, in the life sector, the share of global premiums of life mutuals was 23% in 2014, well below levels of around 66% in the late 1980s and early 1990s before a wave of demutualisations in a number of countries.
New challenges
Mutual insurers face a number of challenges. The most obvious comes from new risk-based capital requirements and tougher corporate governance arrangements introduced by governments and regulators, designed to boost the resilience of individual insurers and curb excessive risk taking. These requirements could put some mutuals, especially smaller ones with a narrow regional or business line focus, at a competitive disadvantage. Larger and better-diversified insurers are in a stronger position to manage the additional operational and funding costs associated with compliance.
Regulators appear alert to the possible unintended consequences of their new rules, and emphasise proportionality in implementing the new prudential (i.e. capital) and governance regimes. There has also been a renewed focus on the range of capital solutions available to mutuals, including legislation in some countries to allow equity-like capital instruments to be issued, such as certificats mutualistes in France. Together with customised reinsurance solutions and alternative risk transfer mechanisms such as insurance-linked securities, this will give mutuals increased financial flexibility to grow their business and compete with other types of insurers.
Embracing digital technology
Digital technology is changing the way that insurance is designed, priced and sold, and is fundamentally re-configuring the competitive landscape in which all insurers operate. Mutual insurers must adapt and upgrade their underwriting and distribution practices if they are to remain relevant in the digital age. There are signs that many are actively embracing such change, but some mutual insurers are lagging behind.
For example, smaller mutual insurers have not yet adopted full online functionality in their business practices, perhaps reflecting their greater attachment to traditional agent/broker distribution. The laggards run the risk of losing out to market participants better placed to harness the new technologies. This is especially true given the growing development of peer-to-peer (P2P) insurance platforms, which enable individuals to share risks among themselves in much the same way that affinity-based mutual insurers do.
The post A Comeback For Mutual Insurance? Swiss Re Report Investigates Six Sigma and Digital Technology appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
Reply