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  • user 11:32 am on October 8, 2016 Permalink | Reply
    Tags: financial services, , ,   

    How to deploy funds for Innovation 

    This is the second post on financials and for in large corporations (in the industry).

    In the previous post we talked about how one can think about the amount to be invested in Innovation by comparing the investment to the premium of a call option.

    This post is about how to deploy capital, possibly in a cleverer way.

    Let’s start with describing the status quo in most Financial Services companiesbriefly:

    1. There is an annual budgeting process (and still multi year initiatives)
    2. The budgeting process sometimes is so slow that projects cannot even spend enough in the time given which in turn results in management pulling the funds and stopping potentially good projects (bizarre but I have seen it).
    3. Projects get approved by (central) committees of different seniority levels depending on size. Therefore the approval process can take a while… months sometimes.
    4. Scope definition and the project’s financial estimates require a lot of investigation. In the end the full amount of the project’s worth gets approved before starting analysis work. As a result projects often ask for high dollar amounts at very early stage…that’s quite risky.

    In the context of Corporate Innovation these four points make fast progress of initiatives almost impossible.

    To address these issues we propose a capital deployment model for Innovation efforts in Financial Services firms that follows the StartUP / Venture Capital model with multiple funding rounds:

    The key to keep in mind here is the iterative deployment of capital. Similar to a startup that gets funding in smaller and growing chunks as risk decreases we believe this to be the right model to be applied inside financial services firms as well.

    1. Small amounts to ideate using methodologies like Design Thinking may start the journey
    2. As concepts are developed prototypes may be required to show internal stakeholders the value proposition
    3. The third stage may involve getting feedback from the external customer for which further funding is required
    4. Once an idea has some customer validation a real product build can commence and a larger organization and possibly spent is required.

    In order to facilitate a quick decision making process and avoid long waiting periods we recommend to have a VC partner like group that can deploy capital at each stage. Ideally they are empowered to take decisions within 48 hours for their portfolio. The Project Owner (like a Startup CEO) in turn gets the freedom to spend the funding he has “raised” until the next milestones is (or is not) hit. Alignment of interest andempowerment are therewith given.

    It is important to realize that as with startup funding there is always an option to abandon. For more information with regards to (real) optionality please refer to this good MIT deck.

    Of course the devil is in the detail and all of the above is easier said than done; especially Financial Services companies with existing and often stiff processes. But there is hope. If you want to talk more about this please get in touch – at Lightbulb Capital we’d be happy to work with you on this tricky challenge.


    is Founder of Innovation Research & Advisory firm – Lightbulb Capital

     
  • user 7:55 am on July 20, 2016 Permalink | Reply
    Tags: bmw, financial services, innovation lab   

    [PR] – BMW Group Financial Services launches innovation lab in the UK 

    Group of people discussing some issues

    Group of people discussing some issues

    Group , the retail and commercial finance provider, has today launched the in the UK, an opportunity for early-stage start-up companies to partner with the company. Designed specifically to discover new technologies that can help deliver new and improved services to its customers, the company’s initiative is the first of its kind in the automotive financial services sector.

    Run in partnership with L Marks, a corporate innovation specialist and investment fund, the Innovation Lab has been developed to attract young companies with disruptive technologies that can be used to speed up development of new financial services products and bring them to market faster. Applications are now being invited and start-up companies have until 31 July to submit their application on the Innovation Lab website http://www.bmwinnovationlab.co.uk.

    Mike Dennett, CEO, BMW Group Financial Services, UK said: “The Innovation Lab provides a great opportunity for us to get a different perspective on our business and generate new ideas more quickly. It is a very different approach and one which will allow us to explore customer-focused initiatives from young, energetic and talented small companies while at the same time offering them the chance to gain exposure to a range of experienced mentors and potential investors.”

    Stuart Marks, entrepreneur and Chairman of L Marks, said: “Innovation Lab is an unprecedented opportunity for promising start-ups to get access to a leading provider of automotive finance and insurance products and solutions, BMW Group Financial Services in the UK. I believe that this kind of intense engagement with the company over a 10-week period will enable start-ups to build a deep and meaningful relationship with the brand and develop their products and services in a unique environment. By opening their doors to start-ups, BMW Group Financial Services will be getting access to new ideas and ways of working that will have a real impact on their business. I am very excited that L Marks will be part of the journey the chosen companies take as they work on this programme and to see what they will have achieved by the end of the process and beyond.”

    Successful start-ups taking part in the Innovation Lab will be amongst the first to have access to the following opportunities as a result of the company’s initiative:

    • Financial product validation and testing opportunities with UK experts and customers
    • Mentorship from the UK leadership team
    • Access to investors at L Marks
    • Access to network of industry experts
    • Free office space located at the company’s head office in Farnborough, Hampshire
    • A first class education programme based on the Disciplined Entrepreneurship method from the Massachusetts Institute of Technology

    In addition, access to fundraising support from the L Marks investment team will be made available as well as the opportunity to pitch for investment from this fund at any point during the programme. BMW Group Financial Services in the UK will not take a minimum equity stake for participation.

    Further information on the Innovation Lab can be found on the website: http://www.bmwinnovationlab.co.uk

     
  • user 9:30 pm on July 17, 2016 Permalink | Reply
    Tags: , , financial services, ,   

    Biometric Tokenization Delivers Financial Services the Best in Security, UX 

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    A question that providers are prodded to answer is how to safeguard identity while not burdening the end user too heavily with new tasks when they access their accounts online, whether on desktop and mobile. This question, however, is a flawed one since within our reach is a solution that markedly enhances user experience (UX) while providing the best security available.

    The marriage of biometrics and cryptography along with advances in mobile has made biometrics a viable, immediately-deployable, and scalable replacement for yesterday’s flawed username and password authentication scheme. The solution is called  tokenization, and our partners are already implementing it to eliminate passwords, lower enterprise risk, introduce IT efficiencies, and preserve user privacy.

    What remains when passwords are left behind is a new UX where the user registers his or her biometric signature on-device, and when their banking app prompts them to log in, transact, or otherwise assert their identity he or she simply authenticates using the device’s embedded fingerprint sensors, camera, microphone, or combination thereof. When accessed, a cryptographic challenge-response validates the identity, login, transaction, or communication in under a second.

    The biometric data is decentralized across millions of user devices, meaning the financial services institution no longer holds customer data as it currently does with passwords and PIN codes. It also means that the user is in possession of his or her biometrics, and that these encrypted templates are stored offline in trusted zones found on the devices.

    Biometric tokenization such as the FIDO UAF standard HYPR supports is integrable with existing security architectures, requiring no overhaul, and HYPR is interoperable with the diverse biometric sensing modalities, biometric sensing vendors, operating systems, devices, and enterprise applications in use and in place. Bank employees using internal applications on desktop are treated to the same UX that their customers using a consumer-facing mobile app are, and a user’s mobile device can communicate over Bluetooth low-energy (BLE) to navigate desktop applications.

    The underlying security that decentralizes and encrypts biometrics also delivers the best UX Internet users have ever known. Biometric tokenization eliminates passwords—it doesn’t corral passwords into a single sign-on, and it doesn’t cause the actioning of an on-device biometric to unlock the phone or paste in passwords. This is true password elimination for the best UX plus top security—no workarounds or corner-cutting.

    Enterprises like and their customers can finally “forget about forgetting” when it comes to the credentials they once used to access accounts, and when a device is lost the biometric template, lacking its owner, is rendered useless. Public keys on the enterprise side are also revocable, adding another layer of confidence to the enterprise and user.

    Biometrics has brought us such a long way in security innovation because of the security in its own right. What’s not widely known is that there is a usability revolution in the making as a byproduct of the hard work companies like HYPR are doing to finally make online banking safe.


    is CEO is Co-Founder & CEO at HYPR

    is Partner at HYPR Asia Pacific.

     
  • user 8:20 pm on July 16, 2016 Permalink | Reply
    Tags: , , financial services,   

    The role of APIs in the unbundling (and rebundling?) of financial services 

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    Constantly reinventing the wheel is a barrier to innovation

    We’ve added “aas” to so many functions and products, from Software to Platforms to Backend (there’s some joke to be made here, but I’ll refrain…). If you started building products or services in the last few years (like me), you might take for granted that you don’t have to reinvent the wheel every time you want to access basic infrastructure and functionality; you probably rely on AWS for hosting, and use a CRM in the cloud to keep track of your customers.

    But when it comes to , building products & services is still largely on-premise, and most product managers and developers are reinventing the wheel.

    Development and product teams can focus on what they’re good at

    Let’s say you have a great idea for a new savings app based on behavioral economics. To build an MVP and get your first 100 users on it, you’ll have to have a mechanism to move money and you’ll have to be compliant with KYC and AML regulations. Neither are easy tasks, and neither one is core to your product or competitive advantage. They’re simply table stakes for getting off the ground.

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    APIs are the way to make viable financial ecosystems and the key to making Financial-Services-as-a-Service possible. A variety of well-designed, easy-to-integrate APIs will let you launch faster while staying focused on your product and customers. You may integrate Plaid, Dwolla, Twilio, or some combination of the three. Think of the developer hours you’re saving by not building those functions yourself.

    Big financial institutions can become platforms (the American dream!)

    On the other side, big financial services companies are also getting into APIs, and for good reason. They don’t just want to use the services, they want to be the platforms upon which those services are built and distributed. They want to be ecosystems. Be Apple, not Tidal.

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    Without APIs, , and financial institutions are siloed. Few users want to process a payment through their bank or make a trade through an archaic brokerage online when they can use Venmo or Robinhood. But banks have trouble building this themselves — for one thing, as one of my favorite VCs put it recently, “banks think they’ve hired developers, when in fact, they’ve just built IT departments”. By embracing APIs, they can take advantage of innovation without doing it all themselves, by opening themselves up.

    Open platforms and initiatives are allowing bigger financial services institutions (e.g. BBVA, Capital One, Barclays) to have innovative products and services built off of their platforms, bring exciting experiences to customers, and get talented developers connected to their banks without completely renovating their core banking systems.


     is the cofounder and CRO at Alloy, which offers an identity and onboarding API for financial services companies. To send feedback, questions, or simply connect with Laura: Twitter, LinkedIn, or email [email protected].

     
  • user 7:12 pm on June 17, 2016 Permalink | Reply
    Tags: , financial services,   

    Hybrid Mobile Financial Commerce & Services 

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    The evolution of financial payment systems has been a long but interesting journey characterised by sudden changes in underlying . Financial payments and banking started in a very inefficient and traditional way which was slow but still acceptable to the customers due to the stage in the information age. Initially, almost all the fun and joy in terms one double zero percent in shape of activities in the (Except Non-Banking Services) space was attributable to with all the revenue being collected by the same entities. With advancement in technology, organisations outside the banking industry diversified into financial services targeting margins in the space. These were organisations servicing millions of customers through broad distribution channels, be they operators, retailers or on-line merchants.

    The phrase mobile was originally coined in 1997 to mean “the delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via wireless technology Singapore’s e-commerce market will hit US$2.99 billion while m-commerce will reach US$1.18 billion by end-2014, clocking an annual growth of 38 percent and 65 percent, respectively, between 2011 and 2014, according to the latest stats released by PayPal with the average consumer forking out US$1,861 a year on purchases. By 2018.

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    In the early days, banking services were basic; covering deposits, withdrawals, loan processing and interest capitalisation. These transactions were conducted in-branch and one had to physically visit a marble banking hall to conduct the banking transactions also same branch hall all the time. Access to banking services was restricted to the banks operating hours. Slowly, transactions evolved from being intra-bank to interbank with settlements being conducted through a settlement partner..

    The introduction of magnetic stripe technology upped the tempo by allowing transactions on ATMs and POS machines through debit and credit cards. ATMs brought about 24×7 access to banking services and the underlying technology evolved from simple cash dispensers to deposit handlers which allow customers to perform a multitude of transaction sets which were previously confined to a brick and mortar banking hall.

    The internet age brought about an era which took banking to the comfort of one’s home or office. However, internet banking was quickly coupled with mobile banking which was SMS based in the initial days. Mobile banking paved the unity and collaboration between mainstream banks and telecommunication companies. This fusion brought about the rise of mobile financial services. The most common form of mobile financial services is mobile money – Empowers a service provider with a set of distinct features that provides an intuitive and convenient way for managing service channels with various interfaces under single roof and covers airtime purchase, peer to peer transfers, bill payment and merchant payment. With these advancements, the mobile handset has become a critical channel to accessing financial services. Due to the heavy involvement of regulators in this space, most mobile money services focused on the banked customers. Mobile money services in Kenya, Zimbabwe, Tanzania and many other African countries took a radical move and focused on the under banked segment of the market. Most of these operations were successful due to the extremely low banking penetration rate, flexible regulation, market need and low trust in banks. Today, mobile penetration has reached levels equal to or surpassing population levels of multiple countries across the globe. Financial services is a key need of any human being and it makes sense to enable multiple sets of financial tools and features on mobile phones.

    Mobile Money Solution has got the edge over existing solutions in this domain because of it’s economical and ubiquitous, Flexible & Scalable nature. Singapore’s e-commerce sector will further increase by 13 percent annually while m-commerce will grow 15 percent. To continue its growth and begin to fulfil the promise of an e-money economy, industry stakeholders must work together to unleash convergence, drive customer acquisition, and refine enable technology. Mobile money must have a clear appeal to consumers, the public sector, and the private sector. The Mobile Money system identified a number of key lessons for all of the industry’s stakeholders. Primary among these was that mobile money’s development value rests in its ability to facilitate financial sector inclusion. To do so will require financial institutions and Mobile Network Operators (MNOs) to work together with regulators on a country-by-country basis. Smartphones, tablets, and, in the near future, watches, eyewear and other wearables, will emerge as new points of sale. Online retailers with a well planned, flawlessly executed, and tightly integrated mobile presence stand to gain the most. More impulse buys come from mobile, with clothes, books, and music noted as leading impulse buys. In 2014, mobile commerce was expected rise to $57 billion (Google as source). By 2017, mobile is poised to represent nearly a third of all digital sales at $115 billion (Google as source). In 2013, physical and digital retailer, Target raked in 43 percent of its digital sales from mobile-only users(www.internetretailer.com)

    Savvy mobile shoppers use their devices for more than just clicking the “Buy Now” button. According to a 2013 survey from Deloitte, smartphone owners used their devices to find store locations (56 percent), check and compare prices (54 percent) and get product information (47 percent). Mobile is disrupting the way we browse a store’s showroom. Over a third of users report consulting mobile devices in-store to compare retailers and one out of five go mobile in the store to view products on the store’s website. More importantly for retailers, mobile shoppers were prepared to spend 27 percent more on holiday gifts than non-smartphone owners.

    The mobile movement isn’t just for traditional retailers. By integrating mobile into insurance claims processing, the process has become 30 percent more efficient. Looking ahead to 2015, over 80 percent of insurers plan to be using mobile technologies in claims, customer service and field sales.(http://www.baselinemag.com)

    On a lighter side Recession & Depression are not synonyms as use of them are way apart like if you don’t make money in business thats recession and if your neighbour makes money from same business thats depression

    Banks lost out on revenue from mobile transactions as MMS became increasingly popular. Major success factors of MMS being the flexibility to transact at anytime, anywhere and with access to make payments to utility bill companies, airtime sellers and merchants. To maintain relevance, banks started working on technology based payment solutions in collaboration with card companies and opened their doors to all customers and services. This brought about the merger of mobile money services, mobile financial services and mobile banking services. With this fusion, cross border remittances, peer to peer transfers, payment for water, DTH, electricity, internet subscriptions, income tax transactions can be completed within seconds.

    Of late, we have seen companies like Apple bringing NFC functionality on mobile handsets in a bid to claim a share of the mobile payment industry. Whenever an entity outside the telecommunications industry offers a joint payment service with an MNO, the resultant is a hybrid mobile financial and banking service.

    Technology is moving beyond 24×7 access so the MFIs (Cross Border & Oceans Remittances, micro loans, micro savings, micro insurance, share trading and ecommerce) should consider occupying this scape. If we evaluate payment channels we see that mobile handsets (via SMS, USSD, NFC, QR Codes, WAP, APP), ATMs, POS, internet, debit/credit card companies and money transfer agencies are widely accepted and available for payments along with Money Transfer for Inter/Intra banks/cities/currencies/countries/continents.

     
  • user 7:36 am on June 9, 2016 Permalink | Reply
    Tags: , , financial services, , ,   

    The Rebundling of UK Financial Services 

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    If you enjoyed this please like it and then share it 🙂

    This post appeared first in The Times and Raconteur in the .

    Until the financial crisis had enjoyed decades of growth unencumbered by the disruption seen in the newspaper, telecommunications and music industries.

    During the good years banks’ profits soared and, while they embraced customer-facing internet and mobile apps, the foundations, processes and on which banks are built, despite billions spent on technology, would look familiar to those who worked there in the 1970s.

    UK banks now face the perfect storm of significant technological advancements plus a regulator and government that want to foster innovation, and an ever-growing disillusionment of banking customers to banks’ offerings.

    Disrupting

    In recent times the UK has been hailed as a global leader for a new type of company called a “” which combines financial services, technology, and innovative processes and customer experiences to compete with traditional banking products.

    Companies such as Nutmeg, TransferWise, MarketInvoice, Mondo Bank and their kind, offer a genuine alternative to the major banks for financial services. These fintech companies have the advantage of starting with a blank canvas and standing on the shoulders of advances in technology brought in the internet and smartphone age.

    Fintech companies are now breaking from the pack, and highlighting the depth and seriousness of the technological and cultural deficiencies that most banks suffer.

    It’s important though not to see fintech as some sort of banking panacea which will right all the banking wrongs. As recent revelations around Lending Club have shown, there are downsides to fintechs, although it’s worth noting banks have not been immune from controversy in recent years. However, generally speaking, fintech is leading the charge for disrupting how financial services are created and delivered to customers.

    Key to the success of fintech has been the use of APIs (application programming interfaces). Think of APIs as a set of rules that computer programs can follow to communicate with one another. Imagine a plug and plug socket; APIs offer a standard way for two bits of software to interact with each other across the world.

    Whole companies have been created off the back of integration of great ideas and APIs that others have exposed. For example, if you’ve ever used Rightmove to look for a property, Rightmove didn’t build the map that you use to find your property. Google did. Rightmove then added their own properties over the top of Google’s maps via API integration.

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    The use by banks of internal APIs – those for internal development – is increasingly becoming common as they try to drive speed and cost effectiveness into traditional legacy systems. But open APIs – those exposed to allow third parties access and development – have been reserved for banks that have reached the right level of maturity for new ways of working.

    This reluctance to adopt open APIs has been a major driver for the slow evolution of banking across Europe and has led to the European Commission stepping in with the revision of the Payment Services Directive (PSD). While the aim of the original PSD, adopted in 2007, was aligned with the bigger economic vision for the EU, namely to create a single market for payments, PSD2 has a very different agenda.

    “Banks now have the opportunity to become platforms, connecting, curating and controlling new services offered by fintech”

    In short, PSD2 mandates into law in December 2017: third-party access to accounts whereby e-commerce providers can take online or mobile payment directly from a consumer’s bank account without going via intermediaries; use of APIs to enable payment by directly connecting the merchant and the bank; and the ability to consolidate account information in a single portal. In the latter, an API enables a new type of financial services company – an account information service provider or AISP – to aggregate account information to let consumers with multiple banks view all bank details in one portal.

    For banks that currently sit in a position of significant power, PSD2 is likely to cause a major change with the departure from a hub-and-spoke model, which has traditionally governed the relationship between centralised data and the internal distribution channels. Within Europe, PSD2 and the rise of fintech offer a true vanguard moment for traditional banks.

    Smart banks getting ahead

    Banks now have the opportunity to become platforms, connecting, curating and controlling these new services offered by fintech. This would in turn allow them to drive real growth in their business. Or, if they lose control, the banks face the real risk of becoming separated from their customers by the new breed of fintechs that are creating their own intelligent platforms which could relegate banks to utilities.

    Bad decision-making at this critical point could see banks facing the real prospect of becoming like mobile phone networks or interchangeable, commodity infrastructures, and by shying away from this new world, they may inadvertently make their worst fears become…

    For the full article and views on what some awesome banks are doing to get this right go and read the rest here on Raconteur 🙂


    is Co-Founder and CEO at 11FS and this article was originally published on linkedin.

     
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