FINTECH FUTURES

The definitive source of news and analysis of the global fintech sector | September 2019 www.fintechfutures.com

THRIVING IN A HYPER-CONNECTED WORLD Challenger banks: The intersection of science and art redefining the financial services experience IS YOUR BRAND AN AWKWARD TEENAGER? Find out if your fintech displays these traits WILD WEST TO CRYPTO BEST How compliance separates cowboys from champions Read more on page 25 Full page advert - inside front cover- Banking Tech.pdf 1 2019-08-07 3:13 PM

IN THIS ISSUE Your customers want a better digital user experience. Contents helps you: WS NE Instantly verify customers online 04 The latest fintech news from around the globe. Automate AML/KYC compliance processes FEATURES 07 Through a Gen Z lens We don’t forgive easily. Reduce abandonment with swift customer onboarding 08 Focus A launchpad platform for savings providers. Expand into 195+ markets through a single integration 10 Thought leadership Distributed compliance is the key to banks increasing CDD and KYC challenges. 13 Spotlight

C Behind the music: tuning the noisiness of your KYC.

M 14 Analysis The battle for European challengers success in the US. Y

CM 17 Focus The importance of specialised standard software for MY MAD/MAR compliance.

CY 18 Editor’s choice CMY Is your fintech brand an awkward teenager? K 21 Thought leadership Taking open banking global. 25 Industry insight Challenger success points the way for incumbents. 26 Comment Big banks are driving fintech to the mainstream. 28 I’m just saying… Carlsberg Bank – probably the best digital bank in the world. 30 Paytech Awards 2019 roundup 34 Thought leadership How compliance separates cowboys from champions. 38 Food for thought Bad bosses and hardy flowers. 40 Fintech funding round-up Lucky recipients of funds in the tech world. 42 Ask the expert Practical, free advice on how to grow your business. REGULARS 44 Appointments – the movers and the shakers. 44 Industry events – mark your calendars!

September 2019 | www.fintechfutures.com | 01 Managing Director & Editor-in-Chief Designed to help you drive truly digital Tanya Andreasyan +44 207 551 9010 [email protected] transformation at scale Editor Sharon Kimathi +44 207 551 9010 Conclave 2019 - Infosys Finacle’s annual banking leadership conference [email protected]

Reporter Ruby Hinchliffe CXO 400+ 100+ 50+ 20+ +44 207 017 5709 Conference Attendees Global Banks Speakers FinTechs [email protected] Editor’s note Contributing Reporters Jane Connolly Martin Whybrow

Head of Sales Jon Robson +44 203 377 3327 The end of summer is often met with European countries doesn’t reflect that of [email protected] melancholy. The sun sets earlier. The winds any East African country. Marketing Manager get chillier. And we get back to work. Not Speakers will also be focusing on the David Taylor just business-as-usual work, but the rush of changing competitive landscape, increasing +44 207 017 5379 catching up on piled up holiday emails and regulation and technological change. [email protected] prepping for various conferences. Entrepreneur Maxim Bederov explores Marketing Executive Which brings me to the main topic of this the dichotomy between competition and Kiran Sandhu month’s edition – Sibos. This year, Swift, the regulation in the cryptocurrency space, +44 207 017 7377 [email protected] global provider of interbank messaging, has and whether it will force major players into decided to host the highly anticipated event closer collaboration with regulators. Business Development Executive in London. Ruby Hinchliffe, FinTech Future’s fresh Sam Hutton +44 207 017 7017 Hordes of businesswomen and men reporter, tackles Sibos’ human element and [email protected] will be heading down to the ExCel cybersecurity threat themes at this digital centre, wearing our Sunday-best for four age, arguing that businesses need to do Design & Production Simon Turner @ West Hill Media consecutive days, not only to swap cards more than just adopting the latest tech. [email protected] and handshakes but also discuss the success Financials need to build up trust in the stories and challenges that lie ahead for relationship once a data or security breach banking technology. has taken place, and not rest on the laurels This year’s theme – thriving in a of their legacy names. hyper-connected world – recognises the So, as you stroll past each stall searching challenges and opportunities that mass for interesting goody bags at Sibos and any digitisation and data-driven relationships other conference this month, I hope the present for the finserv community. features in this edition distil you with the © Banking Technology 2019 All rights reserved; Banking Technology material Matt Elsom, VP of risk at Artesian wisdom to network with the person behind may not be reproduced in any form without Solutions, highlights how the greatest the stall before you grab your fanciful the written permission of the publisher. successes are often achieved at the branded merch-bag and dash. bt Banking Technology is published ten times a year. intersection of science and art – not only to drive efficiency, but augment and Join us Address enhance human skills to improve customer Maple House 149 Tottenham Court Road experience. London W1T 7AD Enhancing digital ecosystems and UK adapting to shifting geopolitical and Printer regulatory are sub-themes at this year’s Hobbs the Printers Ltd Sibos. Rolands Mesters, co-founder and CEO Hampshire, UK of Nordigen, dissects how it’s not possible to Sharon Kimathi ISSN 0266-0865 apply a ‘one-size-fits-all’ approach to open Editor www.fintechfutures.com banking, since the financial infrastructure of Banking Technology

[email protected] September 2019 | www.fintechfutures.com | 03 NEWS NEWS

Fintech start-up Challenger investment firm founder EWPN and EPA collaborate on boosting Australian share Byhiras chosen launches legal action against UK PM equality in the finserv industry trading start-up for UK pension Gina Miller, founding partner of SCM Direct, earlier this month. It has now lost around The European Women Payments working with the EPA, with its reach and to launch in UK a challenger investment firm based in the 7% of its value since March, when Britain’s Network (EWPN) and the Emerging influence in the financial services sector. It solution UK, has filed an urgent application for a Brexit extension was agreed. Before the Payments Association (EPA) are working is vital that we all understand the barriers Australian share trading start-up, Stake, legal challenge to stop Prime Minister, Boris 2016 referendum, one pound was worth together to bolster understanding of the that exist, not just from an anecdotal has been granted a licence by the Financial Johnson’s plan to prorogue parliament. €1.30, and about $1.48. diversity issues that exist in the financial point of view, but from informed insight Conduct Authority (FCA) to launch in the Under the Prime Minister’s plan, Several City economists and investors services sector. from across the sector.” UK. Instead of just developing a mobile parliament would be shut down for five voiced concerns over the move. Derek The first output of this partnership is a The direct cost is evidently high app like Revolut or Freetrade, Stake has weeks, which would effectively thwart Halpenny of MUFG told The Guardian that new white paper published by the EPA – and borne by the individual – but the created a web offering too. Its aim is to MPs trying to block a no-deal Brexit on Britain faces a “constitutional crisis”, while “Women in Changing Times” – which sets indirect cost is also problematic. Those serve more “professional” investors. 31 October. The prime minister asked the Seema Shah of Principal Global Investors out a baseline in gender equality issues who feel they have been discriminated Earlier this month, US free share trading Queen to prorogue parliament between the warned that Britain could be dragged that will allow for the measurement of against have a significantly more giant, Robinhood, was also granted a second week of September and October 14 into recession. Adam Cole of Royal Bank change over time. negative attitude about both the current licence by the FCA, setting a trail for close – the longest suspension since 1945. of Canada warned that no-deal Brexit The trade association investigated the situation and the prospects for improving competition with its Australian rival. “Whilst prorogation is an acceptable UK looks more likely than before, at about current state of equity in the payments conditions in the future. “Our FCA approval marks our first London-based fintech start-up, Byhiras, constitutional practice, no prime minister 44% probability (based on market data). sector, focusing on successful examples of “It’s not bad… but it’s not good,” says licence outside of Australia, but the was chosen by the Scheme Advisory in modern history has attempted to use it Deutsche Bank put the chance at 50%. progressions in the movement, in order to Tony Craddock, the EPA’s director general. continuation of our mission to bring Board (SAB) for the UK Local Government in such a brazen manner,” Miller wrote on Oliver Blackbourn of Janus Henderson detail plans for workforces to balance the “I take the results of this study personally the US market to the rest of the world,” Pension Scheme (LGPS) to develop a her fundraising website set up fund the Investors told clients to expect more drama playing field between genders. – as should everyone in the payments says Stake CEO and founder, Matthew platform that will enable asset managers urgent application to the high court for a in Westminster, with Johnson facing a new Surveying hundreds of industry industry. It’s time for a step change. We Leibowitz. “When it comes to trading, Wall to comply with its cost transparency code. judicial review. battle in the Commons after his first vote executives, the EPA found that roughly all have a duty to use this research to Street is mecca – the size and scale of the The platform will be implemented Miller rose to prominence when she as PM saw him lose to rebel Tories and three quarters of the female participants understand where we really are with opportunity there just dwarfs other stock throughout all UK LGPS pension funds won a legal case forcing parliament to opposition MPs who object to a no-deal (77.5%) and 38% of the men feel that diversity and then to help implement the markets.” and pools by Q1 2020. The solution is legislate before Article 50 could be invoked. Brexit. “Summer holidays are definitely gender discrimination is still unacceptably recommendations as individuals.” Currently in Australia, Stake’s only designed to validate and store data She states that the decision to suspend over for MPs; now comes the shouting,” high. More concerning is that 57% of those Along with launching the results of its charge to its clients is 0.7% to convert their about fees and expenses that asset parliament a few weeks before the Brexit Blackbourn says. surveyed reported having personally recent study, the EPA has announced that funds into dollars. While Stake is yet to managers disclose to pension funds, as deadline was a “dark day for democracy”. Business groups voiced alarm. The experienced gender discrimination, it will be creating a ‘Diversity Charter’ as a confirm its UK model, the new UK website well as facilitating reporting and data Sterling tumbled by more than a cent British Chambers of Commerce warned and that discrimination has had serious way to encourage its members to commit indicates a similar conversion fee. comparisons between managers. at one stage, hitting $1.2155, after the that the UK was already suffering from negative effects on their duties, pay and/ to creating diverse senior leadership The company serves 50,000 users in The LGPS Code of Transparency, announcement. The pound also weakened Brexit uncertainty, and urged MPs to resist or advancement in the workplace. teams. By signing up, members will be Australia, who have an average age of 32 launched in 2017, has been signed up to against the euro, dropping below €1.1 and a no-deal shock. Martha Mghendi-Fisher, founder of able to publish key metrics and inform and hold an average deposit of £7,000. by more than 100 asset managers, who heading back to the 10-year low struck Sharon Kimathi EWPN, believes this partnership is crucial external and internal stakeholders of their Stake partners with US digital broker, are asked to comply with the code if they to understand the social and structural commitment towards equality. DriveWealth, to offer access to US stocks hold mandates from LGPS funds. barriers that inhibit change so that The EWPN and EPA will be working and shares, but has no UK or European Byhiras’ CEO and founder, Sam Lusty, EQT will raise at least €500m in IPO initiatives and action can be taken to together on other research projects over coverage as of yet. says: “For the first time, the LGPS funds One of Europe’s biggest private equity to competing as a major global player,” says more effectively level the playing field. the coming months. Ruby Hinchliffe and pools will have access to detailed firms, EQT Partners, has confirmed plans to EQT chief executive, Christian Sinding. She says: “It is very exciting to be Sharon Kimathi information on costs and performance list in Stockholm on Monday to rival larger EQT’s planned listing will be one of the from different investment managers global competitors, according to Reuters. largest Nordic IPOs so far this year, as it through a single service, helping them Sweden-based EQT, which is targeting a looks to list about 20% of the total number Baton raises $12m for blockchain-inspired b2b solution to deliver cost savings and improve €4 billion valuation, is set to release at least of shares, which implies a deal size of California-based bank-to-bank paytech, platform for “a daunting global regulatory Baton’s distributed ledger technology investment outcomes.” €500 million of new shares, while existing about €800 million. Baton Systems, has secured $12 million environment”. (DLT) solution means banks don’t have Byhiras’ offering was chosen in large shareholders will sell parts of their stakes in JP Morgan and Nordic corporate bank, in its latest Series A funding round, led by Trinity Ventures general partner to overhaul their existing systems, and its part for its “high level of assurance on the initial public offering (IPO). SEB, will act as global coordinators for Trinity Ventures with participation from and member of Baton’s board, Schwark redundant architecture can autoscale to security necessary to protect the identity Boasting to be the world’s seventh the IPO, while Morgan Stanley, Goldman Alsop Louie and Commerce Ventures. Satyavolu, says: “Bank-to-bank settlement handle bursts in transaction traffic. and data of users”, according to SAB. largest private equity fund, EQT also Sachs, Nordea and UBS will all act as the The three-year-old company, which is today is slow and manual, trapping billions The blockchain developer has run The cost of the contract, which will last intends to “future-proof” itself by creating main underwriters on the deal. Co-lead modelled on blockchain technology, acts of dollars that could instead be used to a pilot with the Bank of England and for at least five years, is being met from EQT’s own balance sheet. managers include ABG, BAML and BNP as a gateway between bank ledgers for grow businesses. Baton is completely currently processes more than $12 billion within the SAB levy, making the service “The majority of our global competitors Paribas. EQT will pay out a total 2019 real-time reconciliation. transforming the global bank payments each business day in payments between free for all UK LGPS pension funds. have strengthened their balance sheet dividend of €200 million to shareholders The company hopes the capital will infrastructure, leveraging the best of market participants and clearinghouse Ruby Hinchliffe either by listing or through private in 2020. strengthen Baton’s distributed ledger- blockchain’s potential while mitigating its counterparties. transactions, and we see it as a prerequisite Ruby Hinchliffe based system, preparing the technology key concerns.” Ruby Hinchliffe

04 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 05 NEWS THROUGH A GEN Z LENS

Singapore opens PNC launches internal fintech start-up Gen Z: We don’t forgive easily digital bank PNC has created a start-up program, numo, service for companies which run portfolios that functions as an internal start-up, of retail properties. “Our team saw an applications complete with a pre-negotiated equity opportunity to create an analytics platform split between PNC and numo employees, to help them,” adds Passavant. The Monetary Authority of Singapore according to its CEO, David Passavant. Although a lot has been written about By Ruby Hinchliffe, reporter, FinTech Futures (MAS) is inviting applications for new The first development has been indi, the death of bricks and mortar retail, PNC digital bank licences. a mobile phone-based bank account for knows, as the fourth largest commercial Up to two digital full bank licences and gig workers. Indi offers tax calculations, tax lender in the country, that physical retail As a newcomer to the fintech industry, my long-established bank to serve my for students and young adults. Yes, they three digital wholesale bank licences will savings goals and dynamic adjustments is very much alive. Passavant hastened to it strikes me how little I know about the needs, because too many times the still have a HSBC account or a Barclays be issued, with a view to ensuring that when users save ahead or fall behind. It also add that the analytical platform doesn’t use potential of my money. mobile banking app has crashed with no account, but for how long? “Singapore’s banking sector continues to reminds them when quarterly taxes are due. any PNC data but purchases anonymised I can get real-time savings advice on explanation. Transferring money instantly In the context of industry priorities such be resilient, competitive and vibrant”. The account has no minimum balance financial and social data for its analytics. it, I can convert it into crypto and pay my is table stakes now – if you can’t even do as simplicity and ease-of-use, surely one Applications close on 31 December and no monthly service fee. It is in testing “With this, a real estate firm would be Netflix bill, or talk to my Google smart that, then we’re really in trouble. will have to win if consumers are being told 2019 and are open to non-bank players, as with numo staff and has a waiting list. The able to tell companies that own property speaker about it, or take out a loan on it they should be able to get everything they long as they meet certain eligibility criteria. indi account will be insured by the Federal portfolios that here is a brand you might with a few clicks, just like I would with an NO-ONE’S SAFE need from one place. MAS will only consider companies that are Deposit Insurance Corporation (FDIC) held want to target because they are expanding, overdraft – the list of fintech pilots and But neobanks aren’t perfect either. They’re Walmart’s application for its own anchored and headquartered in Singapore at PNC Bank with a Visa prepaid debit card and their customers shop at places like this,” products is lengthy and growing every day. susceptible to data breaches just like their crypto ‘Walmart Coin’ points to this and controlled by Singaporeans. They and is available for both iOS and Android. he says. But now is a time of drastic change as predecessors. Monzo’s recent PIN debacle monopolisation, as it tries to lure in must also meet certain standards No major US bank had built an account A third area of focus is regulatory people are beginning to see the true worth prompted many of my friends to change the proportion of society that still feels concerning business track record, capital for gig workers, Passavant says, although technology. “As we were building indi we of their money and neobanks are leading their passwords and question whether the alienated and intimidated by banking commitment, a clear value proposition Mastercard recently introduced real-time had to take it through PNC’s entire policy the way in financial transparency, lighting bank was still safe to be with. environments. and a sustainable business model, along payments for gig workers. “How do you management and approval framework,” up all the hidden opportunities stashed When Credit Karma denied the phrase A call once in a blue moon to encourage with ‘fit and proper’ shareholders, directors estimate your tax liability when you don’t adds Passavant. “We saw opportunities for away in that cash of yours, sitting there “data breach” despite overwhelming a customer to look at investing their and management. have an employer doing it for you?,” he great software to fix inefficiencies through a gathering dust. evidence on Reddit, I shook my head savings isn’t enough. Despite the blow up Eligible applicants will be further says. “We built a system with intelligence to platform that lets multiple people work on The customer service horror stories I’ve in dismay. If you’re called out, own up, of mobile, banking apps from big players, assessed for the value they bring to under- estimate what you should set aside for taxes.” something simultaneously.” heard and experienced personally with big be transparent. Just as easily as Gen Zs they still offer very little. Challengers served segments of the Singapore market, While this sounds pretty basic and begs Passavant says numo is using its player banks who, more often than not, distrust, we do forgive – if you handle us should use this moment – especially with their ability to implement and run the the question of why banks have been so perspective within the bank to focus seem to rest on the laurels of their legacy the right way. new customers – to enlighten them. bank, and their growth potential. slow to innovate in areas as obvious as early on significant tech solutions. “Inside the names, are alarming. Challengers such as Monzo and Starling Looking at these developments through Successful applicants will be access to paychecks and financial health machine you get a phenomenally good My generation don’t forgive easily. If we are becoming the popular second choice a Gen Z lens, I’d say it’s more important announced in mid-2020 and expected to coaching, Passavant says banks are cautious view of problems,” he says. “What we care feel betrayed, we rarely go back or give you than ever to educate your customers on be ready for business by mid-2021. because the stakes are so high. about is does this create positive economic a second chance. If your mobile banking what they can do with their money. bt Digital full banks will be permitted to Operating on new technology numo value for the bank. Part of our strategy has app is down for days at a time, or if it still take deposits from and provide financial uses Visa DPS for its debit card transactions been that we don’t take huge bets. We try to just offers bare minimal functionality, services to retail and non-retail customer and built the front end within the group. make really smart small bets and scale them then we’ll open another account segments, while digital wholesale banks Now it is looking to partner with employers up as they become successful.” with Starling or N26 and will be able to serve SMEs and other non- who use a lot of gig workers to help PNC recently became the first US bank eventually phase you out retail segments. distribute the platform. to go live on RippleNet, almost a year after completely. If the grass is Jane Connolly A second app under development is joining Ripple’s technology. greener, then that’s where a world away from the gig economy – a Sharon Kimathi we’ll be. Trust in banks is changing. I no Danske reported to police over investment mis-selling longer trust The Danish Financial Supervisory a time when Denmark is experiencing a that Danske went on to sell the product Authority (DSA) has brought in police protracted period with negative interest for “a continued period” and didn’t inform over Danske Bank’s alleged violation of rates – first broke in June and led to the customers that they were likely to have a investor protection rules. Financial Times firing of interim CEO, Jesper Nielsen. negative net return. reports that Denmark’s largest lender The bank had already admitted that The complaint comes on the heels is suspected of breaking two rules on it had set aside DKK 400 million ($58.9 of a €200 billion money-laundering providing misleading information, related million) to compensate the 87,000 scandal that resulted in multiple criminal to the selling of its Flexinvest Fri product. customers who had been overcharged investigations and the removal of the News of the mis-selling of the product fees compared with the expected return bank’s chief executive and chairman. – which was designed to attract savers at from Flexinvest Fri. The regulator claims Jane Connolly

06 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 07 FOCUS: RETAIL SAVINGS Sponsored by

To meet the changing demands and needs of providers wishing to compete and A launchpad remain agile in the savings sector, banking technology provider, DPR, has launched an enhanced savings platform solution. platform for At the heart of the DPR savings platform is a fully digital technology core that provides a range of critical application savings providers services. These production-proven components are common across all clients Despite continued political and economic uncertainty, interest rates on savings and solutions, maximising flexibility and simplifying support and maintenance. products are starting to rise as competition intensifies between established This fully branded solution embraces the banks, building societies and challenger banks, writes Dave Patel. rise of open banking and APIs, and the emergence of always-on, cloud-connected smart applications working alongside the next generation of banking technology. Offering deposit takers an opportunity to work with a trusted systems provider de- risks future business operating models. The result is a complete and coherent solution that can be implemented quickly and with minimal effort. Historically, deposit takers have employed bespoke savings origination and servicing solutions. These systems invariably include a separate front end and core, which eradicates many of the advantages gained by employing DPR’s straight-through processing solution. Multiple systems can often lead to project delays and subsequently, expanding costs. This is also true of bespoke systems when poorly defined or changing requirements occurring during the build stage often lead to functionality issues and implementation delays. Due to the nature of this model, there are ongoing costs associated with any system updates as multiple changes This saves both time and money when improve levels of productivity, efficiency need to be made across separate systems. regulatory or product-led distribution “DPR is using the and accuracy as well as speeding up Together, these factors mean that the cost updates are necessary. experience and drawn-out processes, at the same time of originating a customer climbs and any DPR's modular solution can be reducing overheads, increasing profits eventual profit is hit. deployed in the cloud or on-premise in expertise gained with and enhancing their overall appeal to just three months and the company firmly customers. The time saved on consumer ALL-ENCOMPASSING PROPOSITIONS believes it has the most comprehensive approximately 40 bank account origination and servicing can be Instead of this bespoke design, DPR offering available in the market, enabling and building society better spent on improving relationship is using the experience and expertise its clients to open up access to a vast banking levels and greatly reduce the cost gained with approximately 40 bank and number of mainstream and specialist clients to offer more to acquire new customers. bt building society clients to offer more customer segments. It is perfectly placed all-encompassing digital propositions. as a vendor to remain at the forefront of all-encompassing Dave Patel is co-founder and CEO of DPR, Offering providers cost-effective practical building society banking development digital propositions.” a company he founded in 1996 following a solutions that can be quickly enabled and and integration. successful career at NatWest. deployed in branches, call centres and By taking this form of digital approach, for postal accounts these fully integrated DPR’s award-winning savings platform For more information, please visit systems offer fuller flexibility alongside will bring benefits for financial institutions www.dpr.co.uk, email [email protected] ongoing support and maintenance. at all levels. Savings providers can or call 020 7050 2000.

08 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 09 THOUGHT LEADERSHIP: COMPLIANCE THOUGHT LEADERSHIP: COMPLIANCE

detect nefarious transactions, all combine consistency and control to the areas it Distributed compliance is to place a bright spotlight on risk and transforms. But more than that, it places compliance functions. These pressures compliance at the heart of the business also conflict with an over-arching desire – front of mind for every member of staff, to improve customer experiences. informing every decision, instructing the key to banks increasing A transformative change is needed. every interaction, and shaping every A strong dose of digitalisation has relationship from conducting pre-screens the potential to both smoothen the for new customer prospecting through to CDD and KYC challenges onboarding process and facilitate a long-standing client development. new era of efficiency in CDD and KYC The benefits are numerous. Reduction By Matt Elsom, VP Risk at Artesian Solutions management within banking. in analyst spend, faster and more efficient The term for such change? customer onboarding and superior customer experiences, improved due DISTRIBUTED COMPLIANCE – diligence, transparency and auditing, THE FUTURE OF CDD AND KYC and improved efficiency and productivity Banks have invested heavily in data from compliance teams with more time to solutions and teams of compliance focus on work that requires their skill and analysts to interpret data. This has been experience. This brings me nicely to my necessary to enable them to cope with next point: human and machine working the workload created by adherence in unison. to KYC. However, the two don’t always work together, resulting in relationship THE (HAPPY) MARRIAGE OF ART managers investing effort in winning AND SCIENCE business only to be delayed, or even The greatest successes are often achieved blocked, by compliance teams under at the intersection of science and art. strict regulation. The focus of Sibos this year is exactly Many banks have responded by that – the opportunity for digitisation and building solutions ensuring that automation to not only drive efficiency regulatory and compliance requirements but to augment and enhance human skills can be adhered to by finding better ways in order to improve customer experience. to extract and scrutinise data, but few Just as a masterpiece by any great have looked at how to distribute the artist requires talent, it also requires a workloads these tech solutions create, in commitment to innovation. Artworks order to create a more efficient process are built using perspective, symmetry, for customers. structure, light and shade. Creating Distributed compliance recognises next-generation commercial banking that the proliferation of KYC tasks has had experiences requires insight, context, a negative impact on a bank’s ability to objectivity and perspective, design and onboard customers in a timely, orderly framework, and it also requires innovation. fashion, and furthermore that many of the Distributed compliance perfectly tasks not requiring specialist knowledge illustrates the concept of man and can be best performed by other teams. machine working in union. Distributed compliance involves More than simply a fintech solution The banking sector is well-versed in technology driven thanks to automated Much has been written about the THE CHALLENGES FACED giving the compliance team control of a designed to address a clearly defined digital disruption. The ability to harness decisions, the adoption of mobile channels, challenges faced by financial institutions A lack of consistency in the methods used sophisticated decision engine to enable need or problem within banking, or intelligence and insight to augment the internet of things and artificial intelligence. in meeting client due diligence (CDD) to collect information about new clients, data coming in to have rules applied an opportunity to automate thankless, customer relationship and drive faster However, on the corporate side, efforts to and KYC compliance in a continuously disparity in the number of contact points and tasks created. Further, it enables the laborious or repetitive tasks, distributed decision making. It also has many years create a smooth onboarding process have evolving regulatory landscape. But there required to reach out to a customer (an distribution of these tasks to appropriate compliance suggests that we reimagine of experience in utilising the potential for been rendered futile by the enormous isn’t too much focus on how to maximise average of eight according to Thomson staff (according to the rules), monitoring risk management and compliance, automation to deliver new efficiencies and bottleneck of work that is required to meet the potential of human and machine Reuters), increased data security the completion of the tasks and enhancing and future-proofing human banks and financial service institutions have the strict regulations and know your client working together to address the incredibly requirements, challenges in uncovering evidencing the whole process. skillsets while intelligently tackling a become active adopters of digitisation. (KYC) requirements for transacting with disjointed process corporate clients are material changes within corporate The automation aspect of this is complex banking issue. Retail banking is now incredibly commercial entities. currently subjected to. entities, and pressure to crack down and fundamental as it brings efficiency, Art and science working together. bt

10 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 11 Sponsored by Empowering the SPOTLIGHT: KNOW YOUR CUSTOMER payments r-evolution Behind the LIQUIDITY music: FRAUD MANAGEMENT MANAGEMENT tuning the noisiness

ISO20022 of your KYC By Guy Stiebel, CIO of Scanovate and Danit Ianovici, Scanovate content creator

When conceiving an orchestral connecting all relevant data points and without harming conversion rates or masterpiece, a composer considers the efficiently using them to propel service accuracy. After years of middle/back office intricacies of musical whimsy along with upsale and so on, which leaves much room insights, we put together the perfect the harmonies the instruments create. It for information to fall through the cracks. orchestra of risk and compliance tools, is a composer’s pedantic ear that knows We knew automation would better which optimise broken mechanisms which instrument to highlight at the the processes, better equip compliance capable of perpetuating errors. precise moment to maximise the music’s managers with the necessary information We understood how to highlight PEP impact on its listeners. for audit and better the infrastructure to (strings), OFAC (percussion), Adverse Similarly, Scanovate has created the allow for intuitive and simple flow creation. Media (brass) and Sanctions (woodwinds) KYC Orchestra consisting of intricate flows according to the desired transaction, and seamlessly harmonising with each KYC MAKING SWEET MUSIC created a tool that simplifies, automates and AML audit. Our expertise and insights Scanovate quickly realised the potential and allows these instruments to produce guide us to know which data to reference for compliance to be a dynamic, profit simple, translatable results. at which moment to maximise the user’s generating department and built a We were finally playing music that was data efficiency. system that orchestrates and streamlines tugging at the strings of our clients’ major At first, we were playing to the wrong compliance processes to minimise costs pain points, alleviating the financial toll tune. Initially, as an image processing it was taking and bridging knowledge 24/7 OPEN and biometrics company, we understood gaps to ensure continued success. Our the importance of accurately identifying innovation immediately began reaching BANKING end users and their government issued “We were finally our clients’ KPIs and surpassed all credentials. playing music that was expectations of the middle/back office INSTANT We researched and developed and set employees whose complex struggles had out to conquer the financial technologies tugging at the strings left them in dire need. PAYMENTS industry with what we were told was Scanovate’s KYC Orchestra has been strong and effective technology. of our clients’ major doing full tours in the EU, Latin America, However, upon expanding, we Israel and the US, and audiences around identified the bottleneck costing our pain points, bridging the world rave about the efficiency potential clients billions of dollars in knowledge gaps to and moving simplicity behind the fines and manual employment expenses: orchestration. Scanovate says this is just compliance. ensure continued the beginning and that the future of KYC A large percentage of compliance work will boast newer melodies and harmonic is the preparation: getting users to update success.” aggregation to provide clients with the Visit us at stand I120 their information, onboarding new users, best way to go from A to Z. bt [email protected] | www.tasgroup.eu September 2019 | www.fintechfutures.com | 13 ANALYSIS: THE AMERICAN DREAM ANALYSIS: THE AMERICAN DREAM

The uphill battle for European challengers success in the US years old. Chime targets them with every “The assumption is available advertising weapon, from TV to By Tom Groendfeldt, contributor, FinTech Futures social media to billboards. that [the US] is a very Chime can offer free checking to everybody because its proprietary similar market, but the technology takes out most of the usual reality is that it is very costs of holding an account. “Our business model is interchange,” different [to Europe].” King adds. A customer who uses a Chime Visa debit card and spends $100 Yann Ranchere, Anthemis generates $1.50 for Chime. The trick is getting them to use the card frequently – 50 transactions a month is the average. Simple has customers who aren’t using their debit cards enough, he says, because a lot of people opened accounts and As several experts on the challenger didn’t use them. banks noted, they have appeared in an King expects the Europeans to be economic boom; none has lived through surprised at how good American banks a downturn. are, relatively speaking, he hastens to add. Varo CEO, Colin Walsh, says: “Varo “While as terrible as I like to talk about is building a business that is safe banks here, I think they are more terrible in and sustainable across cycles – it is a the UK and parts of Europe,” he says. “The regulatory requirement to do so.” incumbent banks have no technology; it takes weeks to open an account.” FUND-RAISING AND VALUATIONS Several of the neo banks have done well A EUROPEAN ENIGMA at fundraising. Chime ranks as a unicorn Will the popular Euro challenger banks – Bank of America’s mobile app “Best in because users haven’t made them their will be losing money. The more accounts The closest to Chime among the with a valuation of $1.5 billion. N26, Monzo and Revolut – crash and burn Class” overall. main bank, and/or the banking partner it gets, the more it loses. The venture challengers is probably N26, he says, but Meanwhile, Varo raised $100 million in on their attempted US entry? Banks coming into the US have two gets most of those fees. capitalist adds that Temenos will be a they want to offer a metal debit card for July, bringing its total to $178.4 million, Probably. choices – get a US banking licence, which Both firms appear to be coasting with tenth of that cost and Chime’s CIO figured $10 a month. and has 750,000 users. “The past experience of European will take years, or use an American bank little new information on their web sites its costs would be similar. Lower FX fees and travel insurance On the European front, N26 is valued players going to the US doesn’t have the insured by the Federal Deposit Insurance and neither would respond to questions. Chime has quadrupled to four million don’t mean much to Chime customers. at $3.5 billion after a $470 million funding strongest traction,” says Yann Ranchere, a Corporation (FDIC) to hold the deposits The hot new challenger banks in the customers in the last year and is on track If you live in London and take weekend round in July. partner at Anthemis. “Klarna tried a few – N26 is using Axos Bank and Monzo will US – Varo, Chime and Green Dot, which to quadruple again, says Ryan King, chief jaunts to Paris and are paying terrible fees Green Dot reports six million active times. The assumption is that it is a very use Sutton Bank. has a background in reloadable cards in technology officer at Chime. to Barclays, the European challengers accounts and, as a publicly listed similar market, but the reality is that it is That has costs. The partner bank is addition to operating GoBank – have built Chime has features common to many have definite appeal. company, has a market cap of $2.5 billion. very different.” using legacy technology that has a price on new technology. A venture capitalist challenger banks – no hidden fees, no “Our customers rarely travel out of the Revolut, based in the UK, has a valuation Banking challengers in the UK are for the challenger banks, and it reaps most partner says the cost of legacy core minimum balances, access to payroll two state in a year,” notes King. of $1.7 billion. competing against high street banks of the interchange fees from debit cards. technology like that from FIS, Fiserv and days early, no overdraft fees, and free “Monzo is targeting the emerging Meanwhile, Chase shut down its high- with old technology, while the biggest That hasn’t worked out so well for Jack Henry runs about $4 to $6 per month access to 38,000 ATMs across the country. mass affluent in London,” says Anthemis’s profile entrant into millennial money American banks are spending billions the first domestic challengers – Moven per account, meaning that if Simple gets An automatic savings feature can transfer Ranchere. “A population very much manager, the short-lived Finn, launched each year on technology. Admittedly, a lot and Simple. They have paid a price for 1,000 inactive accounts it is out of pocket 10% of any paycheck over $500 into a targeted by credit cards in the US. It is in October 2017. “They start these of that spend is to keep legacy spaghetti the underlying technology used by their by $4,000 to $6,000 per month for tech savings account. going to be quite interesting seeing how experimental lines of business with the code running, but they are also investing partner bank while not getting great licensing, and if the accounts are inactive It targets people living paycheck to the European players will do in the US aim to be relevant and cutting edge,” says heavily in mobile. Javelin’s report rated income from debit card interchange fees and not generating interchange fees, it paycheck, middle class people – 20 to 50 versus a growing US competition.” Lane Martin, a partner at Capco. bt

14 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 15 FOCUS: MAD/MAR COMPLIANCE Sponsored by

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is leaking and there’s not enough duct • Scale: How big is the actual problem in tape in the world” reality of a start-up. its subject/nature? “We’ve all heard Is your fintech brand But they’re not so far out of the woods • Scope: How far does the effect of the that immortal line that the wheels don’t come off in some problem continue? A team, the whole areas, some of the time. Losing a bunch business, your whole customer base? from older kids and an awkward teenager? of key people, having a competitor steal • Duration: How long is it likely to be an teens: ‘You just don’t a march on a new tech development, issue for if we respond appropriately? legal challenges from larger rivals – there understand!’ And are a tonne of things that can upset your COMMUNICATION By Emma Humphrey, managing director of creative agency, Genius equilibrium. Often, we see mid-sized fintech brands teenager fintech We like to call these breakouts because that haven’t shaken off their start-up much like teenage spots, they can make mentality and it usually hampers their brands can feel a bit your mid-sized fintech brand look a little growth. They’re still in that bootstrap like that too.” Fintech businesses typically go through a when the next one will come, based on to back off. This information will be a less perfect for a while but, effectively mindset where cheapest is best; whole range of ages and stages on their analysis of past data to identify where reporting marker that triggers your scale- treated, they’re unlikely to cause any long- marketing is conducted as a reactive Emma Humphrey, Genius path to success. One of the most interesting demand spikes have occurred. What were up plan in just enough time to avoid this term damage. and often improperly measured shoot of those is the one that could be referred to the characteristics that triggered each peak going forward. Create a method of triaging your from the hip-type activity. It’s worth as the ‘awkward teenager’ phase. one? Are there any trends? breakouts. Something simple that will noting that this is rarely the fault of the This is the stage where you’re no longer You can also use this data to pinpoint BREAKOUTS enable you to quickly assess the potential marketer in post; they are usually fighting pre-revenue, no longer a start-up chasing when on the uptick you ran out of A teenager fintech brand has generally damage to your brand. Some of the things for autonomy against a founding senior those early funding rounds, but not yet marketing or delivery resources and had outgrown the crazy “oh wow, everything you might want to look at include: leadership figure or group. at a level where you could feasibly claim Check that your marketing budget just not ready for, only to crash and burn to be one of the bigger brands in your is appropriate to your size and market on the delivery. space. When you reach this stage depends situation. Then check that you have a upon what sector you are in, but typically marketer of sufficient skill and seniority to SLEEPING IN your business would have a turnover of be entrusted with this budget. Finally, get We’re frequently speak about how mid- between £1 million and £49 million. out of their way and reduce your input to sized fintech brands should use their More important than your revenue holding them accountable for delivering relative agility to pivot round their bigger is whether you can identify with any measurable results that help the brand to rivals. And it’s true that they both can and of the traits common in teenagers: prosper and grow market share. should. But they need to guard against unpredictable growth spurts; the inroads that scaling up tends to make occasional breakouts; sometimes not UNDERSTANDING in this dynamism. The bigger your brand very communicative; thinks no one We’ve all heard that immortal line from gets and the more like a big company understands them; and they have started older kids and teens: “You just don’t you become, you’ll necessarily add more to ‘sleep in’. understand!” And teenager fintech layers of people, processes and systems Here we look at each trait and how to brands can feel a bit like that too. They’re to help you run effectively as you scale. deal with it, so it works for you and not not tiny, excited nippers bouncing atop The danger is that when not properly against you. brightly coloured beanbags bought with implemented and managed, these things their latest round of funding cash, nor can slow you down and lead to your UNPREDICTABLE GROWTH SPURTS are they yet big enough not to feel a business ‘sleeping in’ while your smaller We’d all love to surf the gentle wave of a little intimidated going toe-to-toe with start-up rivals are already up and cracking. predictable growth curve, but the reality the large corporate grown-ups. It’s an is that most mid-sized fintech brands awkward phase and one best managed by MAKE IT WORK FOR YOU don’t always have that luxury. That said, spending time with people who really get Most fintech brands put a huge amount teenage fintech businesses are ideally your brand. of time and effort into evaluating and positioned to manage and capitalise Find partners and customers who planning a change before they implement on this. They have more resources and really understand the stage you’re at right it, whether that’s a process, tech or structure to them than smaller start-ups now. Other businesses that work with people change. What far fewer do is but are still agile enough to respond to businesses like yours will have better evaluate whether the expected benefits dramatic shifts effectively, unlike their responses. They are well placed to support of the change are fully realised and even larger corporate siblings. you through the inevitable growing pains fewer than that actually go on to reverse Don’t wait for the wave. Create a typical of your journey towards the big changes that don’t live up to expectations. simple, easy to execute scale-up plan leagues. And you’re more likely to retain Those that do all three stay far nimbler for ahead of time that will allow you to customers whose expectations match far longer than their similarly sized rivals. quickly respond to and make use of what you’re currently able to offer rather How many of those traits did you demand spikes. Then try and anticipate than chasing the dream business you’re recognise in your own brand? bt

18 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 19 THOUGHT LEADERSHIP: INNOVATION

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Simplify authentication Open banking, so far, has been a roaring widely, including countries in East Africa. the globe, as long as the implementation success. We’ll have to reassess this In reality, it’s going to take longer for is defined by the local financial ecosystem Deter and detect fraud evaluation on 14 September 2019 with the countries such as Kenya to be in a position from the offset. final Revised Payment Services Directive where the right financial and technology The secure transparency of data Meet AML/KYC requirements (PSD2) compliance deadline but since the infrastructure is in place to implement in Europe has allowed for increased inception of open banking in the UK and open banking technology. accessibility and freedom of innovation, Europe last January, fintech innovation has However, the fundamental principles fostering a culture of healthy competition. exploded with 100 regulated providers that form the backbone of open banking Put simply, mutual trust creates mutual now using open banking in the UK with a can and should be implemented for benefit and a plethora of consumer choice. predicted £7.2 billion revenue opportunity region-specific fintech solutions. It is this fundamental principle that can by 2022. help bring much needed financial access to It’s fair to say that Europe’s fintech THE UNDERLYING PRINCIPLE regions with large unbanked populations. ecosystem is in rude health. And with Open banking may be a piece of European For many regions, the most important such positive proof points, it’s no wonder regulation, but its core principles can be action is to build upon, or create anew, Visit Jumio in the there are talks around rolling it out more replicated in numerous countries across an ecosystem that holds these principles >> When Identity Matters jumio.com UK Pavilion at Sibos 2019 September 2019 | www.fintechfutures.com | 21 THOUGHT LEADERSHIP: INNOVATION Shape the Future

inherently in its infrastructure. With a transparent, sustainable financial of Financial infrastructure, innovation, progression and success will follow naturally. Whether this infrastructure is based upon traditional banking interactions, mobile payments or even blockchain payments, is irrelevant – it Services should be specific to the country. For example, over the past two decades, the Latvian financial sector has seen extensive transformation. In the 1990s, citizens did not trust the banks enough to keep their money in accounts. Now that ties Whether your goal is have been cut between the government and the banking sector and banks have improving customer become much more self-sustainable, consumer trust has dramatically improved experience, increasing and the Latvian fintech startup sector is “With countries like Kenya beginning to prove market share, or meeting valued at $878 million. their worth as tech centres, the scope for MAKING INTERNATIONAL home-grown solutions is huge.” compliance requirements - REGULATION LOCAL While open banking is working for Europe, Rolands Mesters, Nordigen modernizing your information it is not possible to apply a ‘one-size-fits- management systems is all’ approach. Not every region operates in the same way as Europe – certainly crucial for success. the financial infrastructure of European digital or blockchain; we shouldn’t assume worldwide and that when combining countries doesn’t reflect that of any East a one-size-fits-all approach. the adult population of Kenya, Uganda, African countries. Take mobile payment technology in Sub- Rwanda and Tanzania, 66% are regular Open banking is probably the best Saharan Africa’s 46 markets, for example users of mobile money services. thing to arrive in Europe since the – it is driving financial inclusion for people Utilising open banking principles introduction of cashless payments. But with limited access to financial services, in the mobile money space should be this does not mean it can or should be particularly those living in rural locations. investigated, rather than looking to rolled out in its current form to economies In Kenya, the majority of the population implement regulation that focuses on bank such as Kenya, that have wholly different does not hold a bank account – those account data. financial sectors, and digital infrastructures that do, do not trust banks enough to From data centric to Realize your full Deliver repeatable at varying stages of development. For keep their money there anyway. Large, TAILORING TECH example, 31% of Kenya’s unbanked inaccessible institutions bear down Implementing open banking in East Africa customer centric potential business outcomes population use M-PESA, the mobile based with commission fees and identification as it functions in Europe just doesn’t make Financial services organizations We work at enterprise scale - With automated workflows and money transfer service, for money transfers processes that just don’t make sense sense. By tapping into the unique and can deliver superior customer that means billions of objects, case management capabilities, and 21% use it for paying bills. Tapping into (recording an address for example – blossoming mobile payment ecosystem, the mobile payment technology sector some don’t have a tangible house name on-the-ground fintech players can develop experiences by deriving TBs of storage, and thousands organizations can encapsulate may be the best route forward. or number). It’s no wonder that instant bespoke solutions that are as successful actionable insights from the of users. Publicly benchmarked decades of business Instead of trying to fit a square peg into transferring alternatives such as M-PESA as Europe’s open banking standard yet information they already at 1 billion assets, Nuxeo can knowledge and experience, a round hole, why not ditch the specific have gained such traction – it’s convenient completely tailored to the landscape. have about their customers, demonstrate true performance while ensuring all processes legislation and keep the best aspects – the to the local modus vivendi and receptive to With countries like Kenya beginning products, services, and more. at scale. are performed in accordance open banking principles. inexpensive mobile handsets. to prove their worth as tech centres, the The sector is growing at pace: scope for home-grown solutions is huge. with established policies and MOBILE PAYMENTS AND OPEN according to the GSMA Intelligence And the key is home-grown: devising procedures. BANKING PRINCIPLES Report in 2018, the continent’s mobile bespoke solutions which are informed and In any country, innovators, business economy is expected to generate over defined locally is the best way to enable leaders, regulators and governments $150 billion (7.9% of GDP) of economic effective and accessible innovations. This have a responsibility to build public trust value along with an expected 300 million can only happen if we stop myopically of banks, cut service charges and create people to be online by 2025. The GSMA focusing on eurocentric regulation and the best solutions to suit local payment revealed that Sub-Saharan Africa is home assuming what works well for us will work Copyright ©2017 Nuxeo. All rights reserved. infrastructure, whether mobile, traditional, to 282 mobile money services operating for others. bt Visit nuxeo.com/finserv September 2019 | www.fintechfutures.com | 23 Sponsored by INDUSTRY INSIGHT: DIGITAL BANKING

Adding a modern UX to their long- standing reputation and robust security practices enables them to capitalise on their strengths.

RETROFITTING LEGACY TECH The good news is that today, traditional banks often have access to the same innovative solutions that challenger banks do. Many fintech, regtech and UX tools are cloud-based and modular, meaning they can be integrated into existing infrastructure. Flexible API technology serves as a catalyst for retrofitting legacy systems. For example, identity verification systems like GlobalGateway help with The success customer due diligence (CDD) and interact with core banking platforms. This dovetailing of solutions reduces the of challengers chance of disruption that comes with major tech overhauls, while maintaining points the way the trust that’s so important to customers. Verifying customers through a digital, for incumbents automated workflow has immediate UX benefits: it simplifies and speeds up the Challenger banks are redefining the digital banking experience, and traditional banks stand to benefit from their trailblazing efforts. onboarding process, which is crucial for landing younger customers who live on their mobile phones. On many fronts, challenger banks appear they offer. Digital onboarding is quick Because they are building their tech to be thriving. These digital-first upstarts and easy. New features include real-time stack from scratch, challenger banks have are securing venture capital investment notifications of transactions, categorised their pick of new tools – it’s less digital and expanding into new countries at rapid spending reports to help with budgeting transformation, more digital formation. So rates. And more are coming: FinTech Futures and the ability to split bills among friends. incumbents should pay close attention to lists 21 UK and US challenger banks slated A rich omni-channel experience has their choices. to launch in 2019. strong appeal for new banking consumers. Canadian challenger banks Koho They’re also winning over today’s Generation Z, the first cohort to grow up and Stack are currently leveraging banking customers. In a 2019 FIS survey of with widespread internet access, expects GlobalGateway to help meet AML/KYC UK banking customers, challenger banks the speed and convenience that big tech compliance requirements during customer pulled ahead of their competition with an leaders pioneered. Challenger banks onboarding. The identity verification 88% overall customer satisfaction rating. understand how critical it is to attract these API satisfies these banks’ high standards Global banks remained steady, while customers when they’re young and keep for UX and also meets the security and regional and cooperative banks saw their them for a lifetime. compliance requirements needed to earn ratings fall from 2018. The newcomers are customer trust. clearly doing something right. THE ROLE OF TRUST Although the FIS survey found that a LEARNING FROM ONE ANOTHER MEETING TODAY’S CUSTOMER “smooth, easy customer experience” was Challenger banks and traditional banks can EXPERIENCE EXPECTATIONS an important bank attribute for 64% of take a page from each other’s book. The As one would expect in an industry named respondents, trustworthiness and secure keen UX focus mastered by challengers for its opposition to the establishment, transactions topped the list at 81% and is not out of reach for their bigger challengers or “neobanks” have multiple 82%, respectively. In a climate of headline- counterparts, and trust can be attainable differentiators from their incumbent grabbing security and privacy breaches, for challengers who lack an established counterparts, including lower fees and customers have signaled that trust is reputation. Through modern tech solutions, innovative products like debit cards for something they take seriously. each can learn from one another and have children linked to their parents’ accounts. Due to their decades of experience, their cake and eat it too. Trust and strong UX But much of their advantage comes traditional banks have the jump on need not be mutually exclusive; customers down to the superior user experience (UX) challengers when it comes to trust. today demand both. bt

September 2019 | www.fintechfutures.com | 25 COMMENT COMMENT

commercials were impossible to avoid, though, and by the 10th or 20th time I’d “These commercials are showing everyday, Big banks are driving fintech seen those dancing silhouettes, I started normal people using fintech to make their questioning my music delivery system. Maybe it would be cool to dance around lives better in ways that have nothing to do with headphones on and not worry that to the mainstream my song would skip. Maybe it would be with being technophiles.” cool to have a smaller device. And maybe Greg Palmer, Finovate it would be really cool to be able to queue By Greg Palmer, VP, Finovate up more than 15 songs at once. I didn’t end up getting an iPod, but that massive advertising effort by Apple created a desire in me that I didn’t have even one The first time I saw an iPod commercial, I year previously. these commercials are showing everyday, specific PR firms, marketing firms and didn’t think much of it. At that time I was Here’s why this trip down memory lane normal people using fintech to make their so on started to pop up. While targeting still happily downloading every song I is relevant: right now large, multinational lives better in ways that have nothing the general population with a national could get my hands on (for free! Thanks financial institutions are marketing fintech to do with being technophiles. We see a marketing campaign was still out of reach Napster!). Even though I was amassing capabilities to the general populace with couple raising their credit score and then for most companies, it became a lot easier an impressive collection of music, I was compelling, benefit-oriented messages. moving out of a tiny, old apartment into a to engage the relatively small community still burning them onto recordable CDs Whether the average consumer ends nice new house, or we see a convenience of financial institution professionals. At so that I could play them on my Discman up switching FIs or not, the way these store cashier monitoring (and eventually Finovate, we saw this change firsthand. (which I would connect to my car through firms are presenting their fintech offerings reaching) her savings goal so she can fly A lot fewer demo-ers had messages that a converter that went into the tape deck – will dramatically change how the average home to visit her family. We see people essentially boil down to “We can do X!” remember that?). consumer thinks about what they want using fintech to do something cool and A lot more of them took it a step further I used to spend hours creating the out of their bank. Or, coming back to the worthwhile instead of seeing people saying, “We can do X, and here’s exactly “perfect” mix for every situation, and I was story above: a lot of consumers who think using fintech because it inherently is cool why you need us to do it”. buying burnable CDs in stacks of 50. For they’re happy with CDs are about to start and worthwhile. It sounds simple, but as any marketer all the time and energy I spent thinking asking about mp3 players. This is a subtle shift, but it’s a vital one. will tell you, doing it well isn’t easy. As the about music, I never, ever considered And it’s one that echoes a similar shift that industry got better at it, banks and bankers moving away from a CD-based system. MOVING BEYOND TECH occurred several years ago when fintechs no longer had to think of themselves as Music belonged on CDs, no matter how I’ve spent the last few months keeping changed the way they presented their “tech forward” to be interested in fintech. you acquired it. track of the bank commercials that I’ve offerings to financial institutions. Instead, fintech became a path to growing So yeah, the first time I saw an iPod seen and how they speak about tech. For When I first started paying attention customer bases, increasing operational commercial, I wasn’t that interested. I anyone who’s keeping track, I tend to see to the industry, fintech companies were efficiency, reducing risk, staying compliant would have told you then that I was quite these primarily while watching live sports much better at building cool technology and more. You can still find banks and happy with what I already had. Those (especially major sporting events) or as than they were at explaining why people bankers who are suspicious of fintech or ads on Hulu. I’ve seen ads from US Bank or banks needed that technology. A lot feel like they don’t need to worry much (showing a mobile savings goal system), of cool innovations died on the vine, so about it, of course, but that group is Bank of America (showing branch- to speak, because their teams couldn’t shrinking every day. Today, fintech is a “Major international to-mobile functionality), Synchrony convince banks or end users that they part of the banking industry’s general banks with (showing an analytical insights platform needed to buy them. This kind of missed consciousness in a way that would have for businesses), Experian (showing how opportunity has long been one of the been unthinkable as recently as 2013. robust marketing they help raise your credit score), and most painful aspects of fintech for me – I Will we see a similar change among Wells Fargo (who have too many different can’t count how many times I’ve seen a the general population? It won’t departments are tech commercials out right now to count). company that I know has a good product happen overnight, but right now, major using their substantial My apologies to all those bank marketers with a strong value proposition fail to international banks with robust marketing whose work I didn’t highlight here; there make that value proposition clear when it departments are using their substantial resources to create are many more I could have listed. really counted. resources to create a set of desires among What’s really interesting to me about the general population. When that a set of desires these commercials is that they move the IMPROVED SKILLS happens, you can bet it won’t be long among the general conversation beyond the technology As the industry matured, and more before people who used to be satisfied itself and instead focus on the benefits investment capital started flowing in, with what they’ve always had will start to population.” that technology can offer. Instead of fintechs were able to improve their get curious about what else is out there. presenting the latest tech as something messaging skills dramatically. The The clock is ticking. Don’t be the last Greg Palmer, Finovate that’s cool, hip and necessary for those growing support industry around fintech guy out there trying to sell CDs in an who think of themselves as tech-forward, played a big role too, as more fintech- mp3 world. bt

26 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 27 I’M JUST SAYING… I’M JUST SAYING…

maintenance tasks/costs and produces time to cover outgoings, and that you’d tax returns? I could go on, but you get the “Creating a rich only need the loan for six weeks. Again, Carlsberg Bank – probably the point – transactional banking is no longer ecosystem of third- it could package that offer up from its the differentiator. Banks need to identify ecosystem and have it ready to go at the new segments and go beyond banking to party offerings click of a button. best digital bank in the world meet an unfulfilled need. Both Coconut and Moneycado seamlessly integrated were started by a vision and a team of ONE STEP BEYOND into your journeys is developers, less than four people! End-to-end journeys and going beyond Cloud-based services meant that no By Dharmesh Mistry banking are two features that will help another key feature internal IT was required, and that costs of meet that unfulfilled need. As I highlighted technology was based on usage rather Having discussed what banks could learn previously, both Coconut and Moneycado of our imaginary best than outright purchase and redundancy from Amazon, Uber and Tesla in previous go beyond banking and look at end-to- bank in the world.” for future demand. Super-efficient and posts, I was tempted to write next about end journeys. By doing so, they are not able to work from anywhere, they are great Apple. However, instead I’m going to focus only removing friction and building some Dharmesh Mistry examples of the new levels of efficiency on Carlsberg. loyalty/affinity with their customers, challengers can create with open banking. The Danish beer company ran an they’re also gathering valuable data they This efficiency would reduce costs and interesting advert over a decade ago. The would not have otherwise have. accelerate agility, which our new bank key punch line was: “Carlsberg don’t run a For example, by allowing customers would mandate via utilising both cloud bank, but if they did it would probably be to fully plan a trip, Moneycado will and open banking. the best bank in the world.” understand more about their customers’ financial solutions, but an ecosystem If you watch the video, then you’ll lifestyle preferences and overall budget. is broader than financial solutions. For MAKING A DIFFERENCE notice that it’s very tongue in cheek – a With data from a few trips, they can example, it could include third-party Last but not least, our bank would have a young man goes into a bank, gets served get a better picture and move towards services like accounting, legal advice, strong ethical reason that would resonate beer, asks for £50,000 to start a business recommending destinations, predict other HR advice, stationary products – all of with our customers. Something simple and gets told he can have £75,000 and pay costs to reduce the planning effort and these and more could enhance Coconut’s yet meaningful like “making life easier and it back when he can! This led me to think, start to provide third-party offers relevant offering to add greater value to their better for everyone”. Like Ant Financial’s what would the best digital bank in the to the customer. platform for contractors. An ecosystem also forest app, which commits to planting world look like? While this may seem to be a niche, provides more data to better understand trees based on transaction volumes. Our First and foremost, it must be that it research highlights that millennials are customers and therefore make better bank would provide a measure for how meets an unfulfilled customer need and choosing life experiences over home recommendations for future needs. well the bank was doing, not based on provides something that they are not ownership, which provides a healthy So the value of data, beyond profits, but on tangible differences it had getting from banks today – and before you target segment. But why stop there? transactional banking, is what drives greater made to improving life, like minutes saved, think it, “providing great customer service They could use the same platform to help value and a more personalised service for paper saved, wealth increased, unbanked at great value” is not a valid answer! corporate customers plan business trips by customers. A data-driven approach has got customers onboarded and so on. There are very few examples of this organising cabs or parking, flights, hotels to be a key feature of our bank. To summarise, the key features of “the currently, since we have most challengers and interesting places to see or eat at in With greater volume of data, our bank best digital bank in the world” would be: offering “better banking”. Hence banking, the evenings. would use AI to predict customer needs/ • Designed to meet an unfulfilled better or not, is not really an unfilled need. We are all becoming increasingly preferences before customers themselves customer need A better example would be a service time-starved, so having to juggle multiple realise it – a bit like Netflix predicting what • End-to-end integrated and seamless that helps you to manage the finances for suppliers to fulfil a single goal is time lost. programmes or movies you’d like to watch. customer journeys a contractor. Their needs are: pay suppliers, Providing support for end-to-end journeys With this in place, Moneycado could tell • A vast ecosystem beyond banking issue invoices, track expenses, file tax saves customers time and simplifies their you your next destination and will have • Data driven and with AI to predict returns and so on… voila! Coconut does life – who doesn’t want that? already costed and planned the trip for customer needs exactly this. How about people wanting you. Or Coconut could tell you that you’ll • Cloud and open banking based a dream holiday? Their needs are to help JOINING THE ECO PARTY need a short-term loan in two months’ • A strong ethical raison d’être bt them plan the trip, find great deals, and However, it’s going to be very difficult to help save for it… voila! Moneycado – a do everything yourself, and impossible to fintech that does exactly that. provide every option a customer might Dharmesh Mistry has been in banking for What other examples could there be? A want. Therefore, creating a rich ecosystem 30 years and has been at the forefront of “bank” that helps you run a club – collect of third-party offerings seamlessly banking technology and innovation. From subscriptions, chase late payers, track integrated into your journeys is another the very first internet and mobile banking expenses, produce an end-of-year set of key feature of our imaginary best bank in apps to AI and Virtual Reality. He has been accounts, issue newsletters. Or how about the world. on both sides of the fence and he’s not one for landlords that tracks income, Some banks, like Starling, have already afraid to share his opinions. alerts on late payers, reminds you of key created marketplaces of third-party

28 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 29 5 JULY 2019 | HONOURABLE ARTILLERY COMPANY

The second annual PayTech Awards took place on 5 July 2019 at the Honourable Artillery Company (HAC). What better way to celebrate summer and tech innovation than on a unique historic venue in the heart of London, enjoying gourmet food, celebrity host entertainment, the company of outstanding industry figureheads, and of course, the Awards ceremony itself! It was hosted by the witty Jo Caulfield and was a wonderful celebration of excellence and innovation in the payments industry and people who make it happen. We would like to thank our staff, attendees, awards judges and our sponsors: Wirecard, Webshield EG and Jumhouria Bank. bt

30 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 31 OVUM PAYMENTS INNOVATION AWARDS

5 JULY 2019 | HONOURABLE ARTILLERY COMPANY BEST REAL-TIME BEST OPEN BEST SOLUTION PAYMENTS BANKING PROVIDER JUDGED AWARDS SOLUTION SOLUTION FOR PAYMENT PROVIDER PROVIDER SYSTEMS IN THE Winner Winner CLOUD ACI Worldwide Worldline Winner Highly commended Highly commended OpenWay Fiserv Volante Highly commended Form3 LEADERSHIP AWARDS BEST MOBILE PAYMENTS BEST E-COMMERCE INITIATIVE INITIATIVE Sponsored by Jumhouria Bank Sponsored by Wirecard Winner Winner Pannovate Emailage Highly commended Highly commended HPS, Batelco, AFS & Comviva, Israel Discount Bank Fundbox WOMAN IN RISING PAYTECH PAYTECH TEAM PAYTECH STAR OF THE YEAR Winner Winner Winner Melissa McKendry Alex Barseghian BPI Highly commended Highly commended Highly commended Tracy Cray Maxime de Nanclas Vocalink

OTHER AWARD WINNERS See you EDITOR’S CHOICE AWARD TOP PAYTECH INNOVATION PAYTECH FOR BEST USE OF BEST CORPORATE Winner HooYu Sponsored by Webshield next year! GOOD BIOMETRICS IN PAYMENTS Winner McLEAR PAYTECH LEADERSHIP Highly commended Green Dot, Sberbank Winner PAYMENTS INITIATIVE Winner Christian Chmiel for SMEs Streeva Winner Winner Highly commended Monica Eaton-Cardone Sberbank ANNA Highly commended BEST CONSUMER www.bankingtech.com/ Fiserv, Pennies BEST PAYTECH PAYMENTS INITIATIVE paytechawards Highly commended Highly commended Winner Token PARTNERSHIP @FinTech_Futures Bank Hapoalim, Soldo, Swift Winner Christian Chmiel Highly commended Bank Hapoalim, #PayTechAwards OP Financial Group Highly commended Monica Eaton-Cardone OP Financial Group

32 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 33 THOUGHT LEADERSHIP: CRYPTOCURRENCY THOUGHT LEADERSHIP: CRYPTOCURRENCY

At the heart of early cryptocurrency was with the system, not against it, will be the ideal that cross-border transactions allowed to reap the rewards. Wild west to crypto best: could exist outside the system, As proof, the world’s largest digital untraceable and pseudonymous. That’s asset exchanges sat down with global about to change. policymakers in Japan in June for a crucial How compliance separates The Financial Action Task Force meeting to determine how the FATF (FATF) is one of the most powerful proposal will affect the industry. standards-setting bodies on the planet, The meeting, which coincided with the cowboys from champions and as reported by Bloomberg, is due G20 summit in Osaka, counted exchanges to recommend the most important such as Coinbase, Kraken, Huobi and the regulatory change ever to hit the Goldman Sachs-backed Circle among its cryptocurrency industry. numbers. By Maxim Bederov, entrepreneur The FATF wants regulators to instil As digital asset professionals we need recognisable user data at the heart of all to be in close contact with regulators, new rules on cryptocurrency trading and putting forward our case and making sure transactions. the benefits of what we bring to the table The imposition of this so-called ‘travel are heard. rule’ represents a trying time for the industry. Blockchains are not, on the FACEBOOK CREATES CRYPTO BUZZ whole, designed to register this kind of Facebook’s Libra cryptocurrency has on-chain identifying information. ignited mainstream interest in the space Some would argue that forcing old- once again. Technical details of the project tech rules onto crypto will decrease have now been shared in a 29-page transparency, not improve it. whitepaper, borrowing from Bitcoin and But whether the rule comes to fruition Ethereum to power a new global currency. or not in its current form is a moot point. And regulation was there from the The outcome is the same: major players beginning. will be forced into closer collaboration It’s no accident that Mark Zuckerberg with regulators and with one another. And went to the Commodity Futures Trading as we know, fully-regulated businesses can Commission (CFTC) to talk about how his attract better, more secure funding from in-house crypto would work, long before more sophisticated investors. it ever came to market. The cynicism and suspicion that once KAY WHY SEE characterised regulatory approaches to From Malaysia to San Marino, Switzerland crypto assets is on the way out, too. to Wyoming, forward-thinking states and In fact, the CFTC, which oversees the nations are writing laws to pull digital asset US derivatives and futures market, has exchanges into their day-to-day oversight. grown much fonder of blockchain. Reputable and regulated exchanges Officials even suggested in a June 2019 – just as in the mainstream equity world – speech to the Italian securities regulator, require investors to identify themselves if CONSOB, that blockchain-based records they want to buy crypto-assets. could have helped to prevent the 2008 This is because modern money financial crisis. transfer laws all require some level of Outgoing chairman J. Christopher Know Your Customer (KYC) process to Giancarlo said: “Imagine if regulators identify where money has come from, and could have viewed a real-time distributed where is it going. ledger… to recognise anomalies in Even Shapeshift, once the darling of the market-wide trade activity and diverging anonymity crowd, has had to fall in line. counter-party exposures indicating CEO Erik Vorhees, announcing the layoff heightened risk of bank failure? of a third of its workforce, admitted that “What a difference it would have made failing to prepare to share user data for KYC a decade ago if blockchain technology had devastated the company financially. on a private distributed ledger accessible Those that can prove they will work to regulators had been the informational >>

34 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 35 THOUGHT LEADERSHIP: CRYPTOCURRENCY

foundation of Wall Street’s derivatives exposures. At a minimum, it would certainly have allowed for far faster, better- informed, and more calibrated regulatory intervention instead of the disorganised response that unfortunately ensued.” Fintech firms should not be afraid of regulators. Quite the opposite: close collaboration is key. The right conversations at the right time can transform your prospects and bring funding to the table.

INSIDE, NOT OUTSIDE At one time, cryptocurrency was content to exist outside the financial mainstream. Its anonymity made it a pariah, its volatility a joke, a bogeyman to scare financial advisers and bring them out in a “Switzerland’s SIX huge potential but aspects of regulation sweat late at night. like cryptocurrency taxation still exist in a But this scrappy outsider is changing exchange is the legal grey area. its ways. The market is maturing. It was Others, like India, are moving to follow unthinkable 10 years ago that bitcoin first in the world to a shadow banking ban for cryptocurrency could become a stalwart of the financial debut an exchange firms with an incredible 10-year jail system. But here we are. sentence for trading in digital assets. Perhaps related is the fact that the traded product for Large Indian crypto-exchanges such as US Security and Exchange Commission’s Zebpay and Coinome have been forced Office of Compliance Inspections cryptocurrency.” to shut their doors in such a harsh and and Examinations has ramped up uncertain regulatory environment. investigations by 10% year-on year and At the same time, one of India’s largest marked out digital asset broker-dealers, and most powerful tech lobbies is trying exchanges and traders for special joint head of digital asset markets Duncan to make the case to the central bank attention in its 2019 priorities list. Trenholme admitted: “Every institution for legalisation and regulation. These Where once large investors saw is on an educational journey. Many are conversations are vital. only risk in digital assets, they now see exploring how tokens can legitimately One example we should all watch opportunity. These are pension funds be traded or stored and I’d expect more closely is that of Switzerland’s SIX and hedge funds, those whose job it is projects to hit the market over the next exchange. It became the first in the world to allocate assets for millionaires and year or two.” to debut an exchange traded product for billionaires, and who control the future Note that key word: legitimately. cryptocurrency. Now, the Amun Crypto purchasing power of entire populations. Within the rules. Basket, tracking the prices of bitcoin Dow’s Marketwatch explains how The question we face is not whether and ethereum, sits happily alongside institutional investors are now bullish regulation is necessary for digital assets, exchange-traded products (ETPs) for on crypto, backed by record highs in the but how digital asset businesses can best gold, oil, silver and other traditional bitcoin futures market. work with regulators. commodities. When the owner of the New York Amun had a keen eye for regulatory Stock Exchange launched digital asset LOOKING FORWARD standards and is reaping the rewards. exchange Bakkt in 2018, the veil was lifted Securing the correct licence can transform It should come as no surprise that the and the idea that cryptocurrency would the value of fintech assets. Working within most recent ETPs listed on SIX are all by be relegated to a mere sideshow ended. the system and fulfilling compliance Amun. Single-asset funds for ripple and Bakkt will begin testing its bitcoin futures obligations is costly, sure. In fact, ethereum arrived in 2019, for example. and custody in July 2019. regulatory costs for financial institutions By contrast, the last new traditional Interdealer broker, ICAP, is entering could double in the next decade. commodity ETPs debuted back in 2013. bitcoin derivatives, too. This $568 million- But financial regulators can open This is fintech working at its best, a-year revenue business looks after trades massive markets for the best fintech disrupting the market with the regulator’s for investment banks and large asset products. Some economies, like South backing, attracting institutions and setting managers. Speaking to Bloomberg, the Korea, have recognised the industry’s the new standard for investment. bt

September 2019 | www.fintechfutures.com | 37 FOOD FOR THOUGHT FOOD FOR THOUGHT

I learned my lesson through this. But the It was a hypersensitivity to a You are more than what you do. And learning didn’t come that day. change in tone coming from seniors or you are here most of each day, most days Bad bosses and hardy flowers It came slowly. In waves. With distance. customers, an alertness to triggers or a week. You are robbing yourself by not signs of bad behaviour “from above”. An bringing your whole self to work. You are I AM THAT GUY overdeveloped sense of self-censorship. also robbing us. The first few days of being out of that job, An instinct I had never had before, now on Man. No, I said. My whole self is By Leda Glyptis I was walking on air. Like stepping into the permanent high alert. intense. It says “no”, and “are you nuts?” sun after a long stint in a dark room. It was not needed. But it was there. and “WTF” a lot. It tolerates no stupidity, Many, many years ago, I ended up having up and giving in, but even the thought Not walking on eggshells. Not bracing A survival trait forging a bad habit, a no lack of integrity, no compromise to a conversation about how unhappy I was of going to work made me unhappy and yourself for whatever madness may come habit formed under harsh conditions that core values. And has no time for people in my job with a friend’s New Age new stressed and nervous. your way. Not second-guessing every word was hard to shed. I shed it. In the end. looking for excuses. My whole self is a boyfriend. The boyfriend is now a husband And was it worth it? It affected my days you say for fear of trigerring a reaction. But it took time and effort and a string of pain in the proverbial. and still a hippy. He still comes out with at work and beyond. It was eating away at But the relief was short-lived. Because great bosses to get there. Good, he said. Bring her to work, I words of great wisdom and although many me. But I am not a “throwing in the towel” it dawned on me before long that I had One of whom once answered my look forward to meeting her. years have passed and we have had many kind of girl and the urge to fight on was been bullied. question of “how do you deal with a bad But I had been burnt before. conversations, this one I remember like it keeping me fighting on. And that me being strong and resilient boss” with the last thing I expected to So I didn’t take him at face value was yesterday. And he said, “a flower can push through and tough didn’t mean squat. It didn’t hear: “you get away from them”. immediately. I was saying I did not know how to concrete. But it doesn’t have to. What will make me impervious. It didn’t shield me. Their inadequacies as humans are not So he asked again. And again. And handle my boss’ mood swings, cruel ways you really get out of this if you persevere I had been bullied. It had happened to yours to fix or carry. again. Until tentatively I started trying. and confrontational style. I was saying I that is worth persevering for?” me and while it was happening I was They will not teach you, they will not Then a little more. And when the sky was ready to walk and that it felt like giving Nothing. reflecting on and controlling my own help you, they will not support you. So didn’t fall, a little more still. It was behaviour, trying to not waken the why stay? amazing. It was liberating. It was restful. beast and whatnot. I wasn’t aware I was Because I had never until that moment And it accelerated my career. being bullied as it happened. But when I thought about the workplace as a locus More than the education, the delivery stepped out of the situation, it was clear of equal exchange: where I give my time, record, the experience. It turned out my as day. It had happened and my resilience labour, ideas and creativity and take home prickly, explosive, intense and difficult had helped me survive it but had not more than my salary. Her statement was personality of high octane honesty and protected me from it. a shock and a sudden illumination of unbridled enthusiasm, silliness and And in fact, had it helped me at all? blinding proportions. pessimism in a weird blend that says Did my resilience help me survive or The workplace needs to give you “shoot for the moon, prepare for the did it keep me there in absurd heroics, more than your salary. A bad boss doesn’t. fall, rinse, repeat” was more useful to dealing with unacceptable, unfair and You owe it to yourself to move away. the bank, to my team and to my career undeserved behaviour in an entirely What an incredibly, deliciously than anything I had learned or done misplaced attempt to not give up on revolutionary thought. along the way. something I should not have considered It turned out being happy at work worth fighting for in the first place? BRING YOUR WHOLE SELF TO WORK also made me better at my job. A sobering lesson. And a hard one to Those were the words of my boss a few It turned out that moving away from stick to. But possibly the greatest thing that years later. And the final lesson. bad bosses was not good advice, it was mad woman taught me, inadvertently. What do you mean? I asked, slightly essential advice. defensive, hearing a criticism and not an It turned out a flower can push through PAVLOV’S DOG’S RESIDUAL ANXIETY invitation. Thinking “here we go again”, concrete. But it doesn’t have to. And it The second thing I learned wasn’t a happy reliving experiences I thought I had left probably shouldn’t even try. It should realisation either. It came in dribs and behind. But he smiled and persisted. consider its options and go somewhere drabs in the months after I left that job Bring your whole self to work. The crazy. more giving. Somewhere where it can and settled into another one. The insecure. The intense. The angry. bring its whole self to work. bt

Leda Glyptis is FinTech Futures’ resident thought provocateur – she leads, writes on, lives and breathes transformation and digital disruption as chief of staff at 11:FS and CEO of 11:FS Foundry. She is a recovering banker, lapsed academic and long-term resident of the banking ecosystem. All opinions are her own. You can’t have them – but you are welcome to debate and comment! Follow Leda on Twitter @LedaGlyptis and visit our website for more of her articles.

38 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 39 FINTECH FUNDING ROUND-UP FINTECH FUNDING ROUND-UP

Australian challenger, Judo Bank, has Monitor, which raised $266 million in 2014. Fintech funding round-up completed the biggest single funding Launched in 2018 as Judo Capital, Judo started out as a round in the country’s history by small business lender. It began offering full banking services raising $400 million. StartupSmart after gaining its authorised deposit-taking institution (ADI) reports that the finance – which licence in April this year. This month, Robinhood targets further expansion, N26 enters the top 10 most valuable is double Judo’s original target The bank focuses on small businesses rather than consumer global fintechs, and Judo sees investors return with more funding for the round – came from banking and is on course to lend more than $1 billion by the new institutional investors, end of this year. including Bain Capital Credit According to StartupSmart, co-founder, David Hornery, and Tikehau Capital, along with believes Judo is more of a relationship-based bank than a neo- existing investors. bank or fintech. He says that the bank understands a business’s Klarna has raised $460 million in an equity funding round, making it the largest The company says that cashflow, capital and character of management, rather than private fintech in Europe. about 90% of investors who just assessing its collateral. The Swedish bank now stands at a post-money valuation of $5.5 billion. It will participated in the first $140 “Those are the things that really matter,” he adds. “We have use the new funding round, led by Dragoneer Investment Group, to pay for its million equity funding round in cutting-edge technology, but we see that as an enabler.” expansion into the US, which is seeing a growing customer base of six million August 2018 have returned, such as OPTrust, the Abu Dhabi Judo Bank now employs 135 people and has a presence in year on year. Capital Group, Ironbridge and SPF Investment Management. Melbourne, Sydney and Brisbane. The funding will be used to Global brands H&M, Abercrombie & Fitch and Boohoo Group will soon go live US-based stock trading start-up, The previous funding record was held by Campaign further support the bank’s high-growth trajectory. with Klarna, joining more than 1,000 other merchants integrating with the bank Robinhood, has raised $323 million who have a combined volume of $10 billion alongside Klarna. in a new round of funding that “This is a decisive time in the history of retail banking,” says Klarna co- values the company at $7.6 billion. founder and CEO, Sebastian Siemiatkowski. “There will be no more room for The round was led by DST The Board of Banking Competition Remedies (BCR) has unimaginative products, non-transparent terms of use or lack of genuine care of Global, with participation from announced it will be issuing four £10 million grants to lending ones customers.” investors including Ribbit Capital, MoneyLion, a US-based mobile bank, has raised $160 million in and payments organisations that have pledged public The challenger bank has also announced Commonwealth Bank of Australia’s Sequoia, Thrive Capital and NEA. funding. The firm raised $60 million in previously unannounced commitments. As part of the Capability and Innovation Fund involvement in the equity round, giving Klarna the opportunity to establish an The company said it will financing and a $100 million Series C funding round. (CIF) Pool C grant process, Atom Bank, iwoca, Modulr and exclusive partnership for the Australian and New Zealand markets. use the funding to expand the The round was co-led by Edison Partners and Greenspring Currencycloud will all benefit from the cash injection. Funding leader Dragoneer said its strategy is to partner with a small number business. It applied for a national Associates and included strategic investment from Capital One, Public commitments include creating new UK jobs, of disruptive, growth companies such as Klarna who are highly differentiated in banking charter to launch a a diversified bank that offers a broad array of financial products providing greater company transparency and fighting UK their markets. consumer-focused bank in the US and services to more than 45 million consumers. The round also SMEs’ corner. The grant will help with expanding iwoca’s in April this year, with various tech included investment from MetaBank and FinTech Collective. customer base and making £5 billion available to support heavyweights vying for its core Upon completion of the Series C round, the company will Britain’s SMEs. Its also commits £13 million on top of its £10 banking software. have raised more than $200 million in equity financing. million grant, promising the launch of OpenLending by 2020 N26 has announced a $170 million extension of its Series D funding round to $470 Robinhood, which has gained “We created MoneyLion with a focused goal of providing – a customisable self-serve “plug and play” platform for SME million. The extension drives N26’s valuation to $3.5 billion, making it the highest popularity among young consumers people with the most valued banking experience in the world,” fintech partners. valued German start-up to date. The company now also ranks among the most valuable for its commission-free stock trading says Dee Choubey, CEO and founder of MoneyLion. Modulr, Atom Bank and iwoca all committed to creating European start-ups and the top 10 of the most valuable fintechs worldwide. To date, app, has been looking to expand the “The strategic investment from these leading financial new jobs across the UK. Modulr promised 53 in Edinburgh N26 has raised more than $670 million. types of financial services it offers. institutions validates our mission and approach and and 11 more in other UK regions, Atom Bank pledged 70 new All previous investors from the Series D funding round in January 2019 extended The company is currently working demonstrates their acknowledgment of a dynamic shift in jobs and apprentice roles in Durham and iwoca stated they their investment in the company. Among the participants are many of the world’s most on a new cash management feature, consumer banking. It also reinforces consumer demand for will open a new office in either Glasgow, Edinburgh, Leeds or established investors, including Insight Venture Partners, GIC (Singapore’s sovereign according to Reuters. fintech solutions that provide Americans with unprecedented Bristol with “at least” 50 staff. wealth fund), Tencent, Allianz X, Peter Thiel’s Valar Ventures, Earlybird Venture Capital access to the most powerful financial products and services in a Currencycloud has sworn to “help 10% of UK SMEs” who and Greyhound Capital. single, integrated platform.” are trading internationally to access better cross-border “Once again, our investors have placed their trust in us. This will allow us to accelerate Hunter Somerville, general partner at Greenspring experiences, while also investing £30 million more of its own our global expansion outside Europe. The further increase in valuation is a great testament to the company’s development over Associates, says: “We believe that MoneyLion, with its financial funds into helping SMEs more generally. the last months,” says N26 co-founder Maximilian Tayenthal. membership model and holistic approach to providing an all-in- BCR received 76 applications for the Pool C round this year. The firm serves more than 3.5 million customers in 25 European markets, with 16 million transactions per month. It one financial solution for millions of Americans, has created the recently launched its mobile banking app in the US, its first market outside of Europe. The company plans to launch next in most complete mobile banking destination in the market.” Brazil and aims to reach over 50 million customers worldwide in the coming years. MoneyLion will use the funding to continue rapidly accelerating its customer growth within the US and drive further N26 will use the additional funds to drive expansion in Europe, the US and Brazil, and invest in innovative new features. adoption of its powerful bank membership, which includes fee-free checking, 55,000+ free ATMs and zero-fee managed The challenger bank recently started relaunching its premium membership offering, N26 You, and will soon launch Shared investment accounts that offer diversified portfolios, low-cost ETFs and hassle-free contributions. The company also plans to Spaces. It also plans to continue its heavy investment in organisational and structural growth. Within the last 12 months, N26 expand its product offering by introducing a series of new and innovative financial tools, including 0% APR daily cash advances has tripled its global workforce to more than 1,300 employees and will continue hiring for its locations in Berlin, New York, available to members any day of the week to help with short-term cash flow issues, a high-yield cash account, and a stock Barcelona, Vienna and São Paulo. trading platform that allows members to invest in individual companies about which they’re passionate.

40 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 41 ASK THE EXPERT ASK THE EXPERT

Ask the expert 3. Being the company’s Number One that scale, and that means that he or she months, and then map out your existing If you have a question for Greg and cheerleader. cannot be involved in every decision. expertise and where you have gaps. would like a practical, no-nonsense However, the reality is founders may This is particularly true for fintechs, which answer/advice, please get in touch! We’ll not possess the skills, experience or desire often experience hyper growth early on – 3. Clarify your role in the next phase of be answering your questions in this to undertake other business activities going from a few customers to thousands growth – and stick to it column – free and open to everyone. Greg Watts is our resident expert. He is the founder such as running the operation, creating or millions in a short space of time. You have now created a plan to bring in You can post your questions in the a high-performing culture, creating and Most founders are initially focused on more specialist resources to support the comments section below, email Greg of Demand Creation Partners, a London-based growth closing commercial deals, or launching building compelling products. However, business in its next phase of growth, but Watts and/or FinTech Futures’ editor, consultancy that helps fintechs and paytechs to scale. into new markets. very quickly those products require what does that mean for you as a founder? Sharon Kimathi, or get in touch with A visiting lecturer at the American University in Paris As a fintech grows, a founder or selling and marketing, after-sales support Unsurprisingly, many founders struggle to Greg on LinkedIn. and regular industry speaker, he was previously head of founding team often requires specialist and account management, finance and step back from their baby – the business and perhaps more experienced legal expertise, and investor relations. they have created from scratch. market acceleration at Visa Europe. individuals to support them. Then there’s the culture of the business, Stepping back can take many forms. Here are some questions founders which usually determines overall success. It might mean being less involved in day- should ask themselves as their companies Driving a business forward requires to-day decision making in order to take embark on the next phase of growth: skills that successful founders aren’t a more strategic view of the company’s • When is the right time to make always equipped with – or enjoy using. future. Or it might mean stepping back changes to the leadership team and/or entirely and bringing in someone else operating model? 2. Identify your skills gaps and create to run the business. Sometimes this is a • What skills and behaviours are required a plan voluntary change, as a founder realises from the new team? Once you’ve recognised the skills gaps that the best thing for the business is • What will my role as a founder be going you have, you should develop a plan to for a professional CEO to take charge. forward? address them. Other times, investors may insist on a • How do I communicate these changes For example, now that you have new CEO as a condition for investment. internally and externally? more customers, it’s likely you’ll need an Therefore, it’s important to pre-empt In this column, we’ll provide account management or client success these conditions and have a proactive between being supportive versus suggestions to help founders make the function. If you’re signing up new plan in place. being over-bearing or even obstructive. right decisions as they position their partners and clients, you might need Natural roles for a founder who is Perhaps start by organising handover companies for long-term success. to enhance your commercial function. stepping back might be to spearhead meetings for the first few weeks, then And as you move into new markets, investment, champion the business to have a weekly check-in session. Your goal 1. Admit you need help you’ll need people who can lead and run overseas markets or develop the brand is to move back from the day-to-day. Being a company founder means you have those operations. or product. Try and avoid the trap of stepping back a unique connection to it. You might have Meanwhile, investors looking for into the detail if you spot mistakes or devised the idea, built it from scratch and promised returns will be expecting you 4. Set up the new team for success missed opportunities. That will not be invested significant, personal resource to prioritise sales. Some fintechs have from Day One appreciated, nor will it set the new team in ensuring its success. Not surprisingly, appointed a chief revenue officer (CRO) No one likes having someone continually up for success. deciding when to take a step back is one or chief growth officer (CGO) who is looking over their shoulder. Overcoming of the most difficult decisions any founder responsible for the entire sales cycle from the mindset of “I can do it better” can BRINGING IT ALL TOGETHER can make. initial market assessment and scoping be tricky for founders as they bring new Founders must put their egos aside, Often, ego comes into play. After all, to after-sales and support. Such roles leadership into the fold. recognise their limitations and see you came up with the idea, built the MVP, often incorporate marketing to support New leaders or leadership teams the bigger picture of what’s best signed the first partnerships and secured demand generation efforts and to ensure require time to get up to speed. For for their company in the long term. One important, but not often discussed investment. Who better to take the all resources and activities are focussed fintechs going through hyper growth, Remember that only a few founders QUESTION topic is, when is the right time for a fintech business forward? on generating and closing sales leads. it can sometimes be frustrating for a of leading fintechs – or indeed any founder to take a step back and bring in At the beginning of a company’s Then there’s the day-to-day business. founder to allow sufficient onboarding major technology companies – have WHEN IS THE RIGHT experienced managers who can take the journey, required leadership skills typically Who is best suited to run it? A smart move time as they “want to get on.” However, successfully stayed the course. business to the next level? include creativity, passion, inspiring for a founder is to hire an experienced to do so is a mistake that will lead to Stepping back, in whatever form is TIME FOR A FOUNDER Before we answer that, let’s examine others and micromanaging the business – chief operating officer who sits failure down the line. It typically takes required, can be tough – but it can also TO TAKE A STEP BACK three traditional strengths of founders: because that’s easy to do in the early days. alongside the CRO or CGO and assumes three to six months for a new team to be rewarding. It allows the company FROM THE BUSINESS? 1. Coming up with great ideas and However, once a business starts responsibility for all support functions. come together, and before any significant to achieve the greatness the founder developing a compelling minimum experiencing success, a different set of To identify where you need support, results can be seen. envisioned while allowing a founder to viable product (MVP). challenges come into play. start by reviewing your commercial In the early days of a new team, discover his or her strengths and focus on 2. Raising investment. Founders need to create companies objectives for the next 12, 24 and 36 founders need to strike a balance where their genius lies.

42 | www.fintechfutures.com | September 2019 September 2019 | www.fintechfutures.com | 43 FINTECH FUTURES Movers and shakers EVENTS CALENDAR

September 16-19: Platform Economy Summit N26 has appointed Thomas Grosse Blockchain Business Council has accepted Europe 2019, Frankfurt as its new chief banking officer – a an appointment to the Board of Directors finance.knect365.com/platform-economy- newly introduced role for the German of GDF as a non-executive director, summit challenger bank. Grosse, a former senior commencing 1 September 2019. 17-19: InvestOps Europe, London executive at Google, will oversee the bit.ly/investops-europe set-up of regulated N26 banks and bank Alex Ng, market group head for China, is 18-19: International SAP Conference partnerships within the N26 Group. leaving Credit Suisse. Ng joined the bank on Central Finance, Berlin in 2008 from UBS as China market head of bit.ly/SAPCentralFinance2019 HSBC boss, John Flint, has abruptly private banking. Previously, he had been stepped down from his role, saying UBS’ China country team head from 2005 23-25: Finovate Fall, New York the bank needed a change at the top until 2008. finance.knect365.com/finovatefall to address the challenging global environment. Flint took the helm at HSBC Yintech, a provider of investment and only 18 months ago, and resigned on 5 trading services for individual customers in October August, when the bank also published China, has appointed Raphael Qian as vice 2: MoneyLIVE: Lending, London results for the second quarter. president and CFO of the company. With bit.ly/moneylive-lending Noel Quinn, head of its global this appointment, Wenbin Chen, CEO and commercial banking unit, will hold the interim CFO of the company will focus on 7-9: InsurTech Rising International, Paris role of interim CEO until HSBC makes a strategies and business operations. Prior to bit.ly/insurtech-rising-international permanent appointment. this appointment, Qian was vice president 8-9: ATM & Cyber Security, London and financial controller of Shanghai rbrlondon.com/conferences/acs Xinja Bank, an independent Australian Dasheng Agricultural Finance, since August 14-15: Finovate Asia, Singapore challenger bank, has hired John Pountain 2014, and worked as an audit manager bit.ly/finovate-asia as its new CTO. Pountain worked at New in KPMG Shanghai from August 2006 to York-based neo-bank, Moven, and BT August 2014. 14-16: CX Exchange BFSI, Miami Financial and Macquarie Group before bit.ly/cx-exchange-bfsi entering the fintech sector. Aviva’s strategy director, Shaun Meadows 21-23: MoneyLIVE: Nordic Banking, has joined 11:FS as its first Chairman. In Copenhagen Mobile banking company, Varo, has the newly created role, Meadows will work bit.ly/moneylive-nordic-banking selected a former Xbox designer, August with the 11:FS Board to review company de los Reyes, as its new chief design objectives, examine performance and help 21-23: RiskMinds Asia, Hong Kong officer. Between 2013 and 2016, de los shape future business activity and strategy. bit.ly/riskminds-asia Reyes led design for Microsoft Xbox, where 22-23: Finnovex West Africa, Lagos he’s credited with helping to make the Jackson Hull will be joining OakNorth as finnovex.com/wa Xbox gaming platform more accessible for the new Chief Technology Officer and Chief all types of people. Operating Officer. Hull has over 15 year’s C-suite experience in London and San Banking Technology is a prominent TransUnion has snapped up Experian’s Francisco, most recently at GoCompare. media partner of many financial services, director of strategy and planning, Sam insurance and payments technology Welch, to join its UK executive team. Grasshopper Bank has hired Jeremy events worldwide. If you are interested in a Taking up his role as strategy and planning Shure as its global head of its early- media partnership with us and marketing director for TransUnion in the UK, Welch stage practice. Shure joins from Silicon opportunities, please contact: will be responsible for driving its growth Valley Bank, where he worked as a agenda. managing director. Shure’s hire follows David Taylor, Marketing Manager the appointment of Barbara Fleming as Tel: +44 (0) 207 017 5379 Industry body, Global Digital Finance, head of private equity and venture capital Email: [email protected] has appointed Sandra Ro, CEO of Global relationships.

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