Fintech

Top executives and investors sound off on the trends and technologies that will transform financial services in the next 3–5 years.

1 We asked 20 leaders in financial services a single question: What technology or business model innovation will have the greatest impact on ? financial services in the next 3 to 5 years?? ? 2 Who did we talk to? “ ”3 Areas Of Expertise

Payments

Banking Asset Management

4 Henry Agusti Bart Brouwer Jan Hammer Patricia Kemp Kathy Nalywajko Digital Platforms Executive Senior Corporate Strategist General Partner Co-Founder & General Partner Senior Vice President & Investment Counselor

Jim Breyer Keith Crawford Karim Hirji Will Kohler Anju Patwardhan Founder & CEO Global Head of Mergers Senior Vice President, Partner Managing Director, CreditEase & Acquisitions International & Ventures Fintech VC Fund

5 Steve Pretre Tim Rozar Ruben Salazar Genovez John Stecher Harrie Vollaard Venture Partner Chief of Staff to the CEO SVP, Head of Products, Group Managing Director, Head of Rabo Fintech Innovation & Solutions Investment Ventures

Dan Rosen Bipin Sahni Harshul Sanghi Serge Taborin Rafal Walkiewicz Partner EVP, Head of Innovation R&D Managing Partner Group Innovation Director CEO, Willis Towers Watson Securities

6 Key Findings

AI is the biggest Blockchain is Customer acquisition Platform business trend to watch. noticeably absent. costs are too high. models are a focus.

7 of 20 respondents cited Surprisingly, blockchain was Respondents believe new Platform businesses will artificial intelligence as only mentioned once as the business models and radically shift how financial having the greatest impact biggest trend to watch in partnerships that lower services are distributed. in the next 3–5 years. financial services. customer acquisition costs will have the greatest impact.

7 Themes That Stood Out

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10 Here’s what they said... “ ”11 Henry Agusti Digital Platforms Executive

RECENT ACCOMPLISHMENTS

Responsible for Bank of America’s mobile and online banking platforms currently being used by over 25 million and 35 million customers, respectively. “Everywhere you look customers are getting more comfortable with electronic payments over cash or checks.”

12 “Everywhere you look customers are getting more comfortable with electronic payments over cash or checks.

Whether it’s the increased adoption of person-to-person payments via Zelle and other platforms, or the adoption of digital wallets like Apple Pay for digital commerce and point of sale, the dramatic changes in behavior are evident.

Even the under-banked are adopting more paycheck disbursements Henry Agusti with prepaid cards. It’s driving digital innovation from a variety of Digital Platforms Executive industry players to create increasingly intuitive and convenient payment tools.

It’s also driven the major shift towards financial centers being places where customers seek advice and guidance instead of processing routine transactions.”

13 Founder & CEO @jimihendrixlive

RECENT ACCOMPLISHMENTS

Lead/co-lead investor/board member of over 40 highly successful technology companies, including , , , , , and . “Today I remain confident that Currently an investor and serves on the Board of blockchain, and Circle, will radically Blackstone (BX) and (FOXA). change financial services for the better.” Previously ranked No. 1 on Forbes’ Midas List of Tech's Top Investors.

14 “Blockchain. In 2013, I led Circle’s Series A round. I invested because I believed then, as I believe now, that blockchain technology will be a transformative force.

We built the company around the following question: what if money could across borders, between currencies, and among friends without friction?

Jim Breyer We knew that moving, sharing, trading, and investing money had to Founder & CEO be easier and realized that blockchain technology could provide novel and effective answers.

Today I remain confident that blockchain, and Circle, will radically change financial services for the better.”

15 Bart Brouwer Senior Corp Strategist

RECENT ACCOMPLISHMENTS

Responsible for supporting the executive board in setting the strategic vision of the bank with regard to activities beyond traditional banking. “The main challenge for is to Focus areas are platform business models, trends, innovation, fintech, new competition, and emerging stay relevant for their customers business areas. in…digital ecosystems”

16 “Platform business models will radically change the way banks provide financial services to their customers.

In the near future, customers will be served via digital ‘ecosystems’ where people network, shop, bank and do many other things in one place. Go-to-platforms — like WeChat — provide the personal and relevant experience customers expect, open to third-party providers of financial and other relevant offerings.

The main challenge for banks is to stay relevant for their customers Bart Brouwer Senior Corp Strategist in these digital ecosystems. Are they able to create and grow a go-to platform on their own, or will they end up on successful platforms of others?

At ING, we want to be where our customers are: on digital platforms. We are developing our own go-to platform, but we will be part of platforms of others as well.”

17 Keith Crawford Global Head of Mergers & Acquisitions

RECENT ACCOMPLISHMENTS

Responsible for leading the evaluation and execution of strategic transactions and investment opportunities.

“We are on the verge of redefining Led the negotiation and execution of the $485 million acquisition of GE Asset Management with over $100 value creation across the foundations billion in assets under management. of finance with the advent of digital Works with State Street’s businesses to invest in new money and assets.” technologies which recently included NextCaptial and PensionBee, among other early / mid-stage investments.

18 “The financial services industry is moving from Digitization to Digitalization. In other words, from process optimization and efficiencies to new business models and value creation.

Digitization involves creating better user experience and flexibility along with enhancing processing and scalability of capabilities. Whereas Digitalization is about redefining the user experience by creating new business models along with user experience.

This shift will result in new investment vehicles and forms of liquidity, in addition to new types of capital such as digital currencies. The growing need Keith Crawford for advanced analytics and real-time data transparency will also require access Global Head of Mergers & Acquisitions to new markets such as peer-to-peer and crowd-driven solutions.

We are on the verge of redefining value creation across the foundations of finance with the advent of digital money and assets. With this will come innovative and transformational technologies that will enable us to realize these efficiencies, such as artificial intelligence (AI), machine learning, distributed ledger, and enhanced cloud capabilities.”

19 Jan Hammer General Partner

RECENT ACCOMPLISHMENTS

Adyen went public on June 12th, in Europe’s largest VC-backed fintech exit ever. Index Ventures backed the company in 2011 and is its largest shareholder. “The evolution of financial services over the coming decade will be driven by new Recent exits: OANDA, Adyen beautifully designed products with new Recent deals: Capitolis, Alan revenue models, offering more for less, Recent financings: Robinhood, backed by Index since its Seed and ultimately for free, to the end user.” round, raised $363 million, valuing the company at $5.6 billion

20 “Traditional financial services have been characterized by large customer acquisition costs, high fees, and poor user experience.

The evolution of financial services over the coming decade will be driven by new beautifully designed products with new revenue models, offering more for less, and ultimately for free, to the end user. Jan Hammer General Partner The push towards free will dramatically improve transparency in the market and ultimately open up existing and previously inaccessible financial products to a much wider pool of customers.”

21 Karim Hirji Senior Vice President, International & Ventures

RECENT ACCOMPLISHMENTS

Recent investments include Algolux and Humatics.

“Technology alone will not have the Intact Ventures has made nine investments and deployed greatest impact on financial services in the $120 million in capital, including investments in Metromile, Turo, and Snapsheet, and partnered to develop medium-term, rather, we need to start by a tailored insurance program for Uber across Canada. looking at the changing needs of the customer to understand what will have the greatest business model impact.” 22 “Technology alone will not have the greatest impact on financial services in the medium-term, rather, we need to start by looking at the changing needs of the customer to understand what will have the greatest business model impact.

Fintechs have been successful in recent years in driving innovation and better meeting customer needs by providing simple solutions that are transparent, easy to understand, and that put the customer in control of their experience. However, most fintechs have had difficulty scaling due Karim Hirji to high customer acquisition costs and regulatory complexity. SVP, International & Ventures This is why I believe you will see more incumbents and fintechs partnering to develop and establish financial service ecosystems to offer streamlined and digital customer-facing platforms including the addition of peripheral value-added services. Partnerships are effective to utilize the strengths of both parties to offer innovative solutions to better meet changing customer needs.”

23 Patricia Kemp Co-Founder & General Partner

@_PatriciaKemp

RECENT ACCOMPLISHMENTS

15 years of experience investing in transformative companies and entrepreneurs.

Active investments include: CLARA, Duedil, FastPay, Feedzai, FreshBooks, Insureon, Kasisto, NextCapital, Poynt, Trov, Urjanet, Digital “As digitization increases, there is an Currency Group enormous need for different processes Prior investments include: Argus Information & Advisory Services (acquired by Verisk Analytics), NetSpend Corporation (NASDAQ: NTSP; and standards.” acquired TSYS), Point Carbon (acquired by Thomson ), TxVia (acquired by Google), Vesta Corporation

24 “B2B payments continue to be ripe for innovation, as this space and what we call the CFO suite remain antiquated.

Requests for payment between customers, suppliers, buyers, and vendors come in many different formats, and go out in many formats. As digitization increases, there is an enormous need for different processes and standards.

A prime example for corporations is what is called cyber wire fraud. This is when a criminal sends an email that looks like it has come from a corporate Patricia Kemp executive to someone else in his/her organization, requesting a wire transfer. Co-Founder & General 1 out of 4 times the money is sent. The FBI estimates over $5B attempted to be Partner taken in the last 2 years. That equates to 40,000 different transactions. This is incredibly preventable and is just one example.

We see great technology-based opportunities in treasury, cash management, inventory management, or supply chain looking at B2B payments specifically.”

25 Will Kohler Partner

@wakohler

RECENT ACCOMPLISHMENTS

Partner at Lightspeed since 2014 focusing on enterprise and SaaS

Significant / notable investments and rounds: “Unlocking money supply in centralized Ladder, Seed, Series A, Series B Roofstock, Series B, Series C systems will continue to have a profound Mynd, Seed, Series A, Series B impact on financial services.” Track record: first institutional investor in C2FO

26 “Unlocking money supply in centralized systems will continue to have a profound impact on financial services.

Incumbents have immense leverage through their deposit accounts in the form of cost of capital advantages, customer lock in, and the flow of cash into the system, while corporations Will Kohler have working capital tied up on balance sheets due to antiquated Partner cash flow management systems.

Technologies and business models that decentralize these money supply choke points will have a great impact.”

27 Kathy Nalywajko Senior Vice President & Investment Counselor

RECENT ACCOMPLISHMENTS

Works directly with high net worth individuals and business owners and their families to create customized plans for protecting and growing their wealth. “The real power to shift paradigms, revolutionize the industry, and enhance Has expertise in investment planning and implementation, intergenerational wealth transfer, philanthropy, risk the client experience, however, will rely management, and business succession planning. upon the combination of technology Previously held positions at 1919 Investment Counsel, Citibank, and human input.” , US Trust Company, and City National Bank.

28 “Artificial Intelligence, with its far-reaching possibilities, has already profoundly influenced the financial services industry. Given the boundless implications for innovation, this trend will definitely continue.

For example, the success of Open Banking — driven by progress in AI, big data, cloud computing, and smart mobile combined — will be a key business model innovation to watch.

Kathy Nalywajko The real power to shift paradigms, revolutionize the industry, and enhance SVP & Investment Counselor the client experience, however, will rely upon the combination of technology and human input.

AI plus human intelligence will yield exponentially superior outcomes than either on its own. Great human advice will always be necessary.”

29 Anju Patwardhan Managing Director, CreditEase, Fintech VC Fund

@Anjupatwardhan

RECENT ACCOMPLISHMENTS

Recent deals: Upgrade, Figure, Fair, NAV, Marqeta, Addepar, Branch, Ellevest, Active.ai, H2O.ai, BioCatch

“The increasing use of AI will also require Key notes on other portfolio companies: Circle Financial attention to risks related to data privacy, became a unicorn, Funding Circle has filed for an IPO cybersecurity, ethical issues, and impact on jobs. But on balance, the benefits will significantly outweigh the risks.” 30 “Artificial intelligence will have the biggest impact over the next few years.

We have seen extensive applications of machine learning for credit scoring and fraud detection over the last decade. We are now seeing growth in use of chatbots and conversational AI for account opening and customer service. Other AI applications such as the use of biometrics (facial recognition, retinal scans, etc.) for identity verification and video banking are becoming common.

Anju Patwardhan Digital identity will become a key driver to support financial inclusion, as Managing Director, already seen in India through use of Aadhar. But I think we are still far CreditEase, Fintech VC Fund away from seeing humanoid robots (such as Pepper and Sophia) for real fintech applications.

The increasing use of AI will also require attention to risks related to data privacy, cybersecurity, ethical issues, and impact on jobs. But on balance, the benefits will significantly outweigh the risks.”

31 Steve Pretre Venture Partner

RECENT ACCOMPLISHMENTS

Leads fintech and insurtech investments for World Innovation Labs.

Most recently led the $30 million Series B for PeerStreet and is a member of the Board of Directors. “The greatest changes in financial services will occur in emerging markets.” Co-founder and early CEO at Metromile.

32 “The greatest changes in financial services will occur in emerging markets.

New financial products for microlending, banking, and payments will meld with new insurance products across health, life, accident, and property to create a symbiotic ecosystem of financial empowerment and financial safety net that hasn’t existed in these markets before.

Steve Pretre The proliferation of mobile device adoption, AI, and cloud computing Venture Partner will enable underwriting, servicing, claims, and fraud management while driving the marginal cost of distribution and operations for these products to near zero.

This will spur a new level of economic vitalization, particularly across Africa and Southeast Asia.”

33 Dan Rosen Partner

@venturedan

RECENT ACCOMPLISHMENTS

Socure announced new CEO Tom Thimot joining the company and, in a similar timeframe, that they had won two of the top five banks in the country as customers. “Machine intelligence speeds up legacy Bumped announced the creation of its pioneering stock rewards processes, reduces costs, and ultimately program, which automatically rewards consumers for their merchant loyalty by giving them fractional shares of stock in the merchants where enables better outcomes wherever they spend money. supported by large amounts of data — Marqeta announced an additional $45 million of investment from Iconiq perfect for financial services.” and .

34 “Artificial intelligence will have an enormous impact on financial services in the next three years.

Today, financial institutions must both capture and process vast quantities of data, and AI is critical to doing so — whether it be input capture (machine vision, speech recognition, natural language processing, etc.) or processing vast datasets with machine learning.

Already, conversational AI is reshaping customer support, automating 80% of customer inquiries in some retail banks. Deep learning is Dan Rosen helping financial institutions digitally identify 80–85% of new account Partner applicants automatically, completely eliminating transaction fraud for e-commerce payments and even developing new, profitable trading strategies autonomously.

Machine intelligence speeds up legacy processes, reduces costs, and ultimately enables better outcomes wherever supported by large amounts of data — perfect for financial services.”

35 Tim Rozar Chief of Staff to the CEO

RECENT ACCOMPLISHMENTS

“I foresee AI/ML/RPA applications Acquisitions of Logiq3 and Tindal Associates, Inc. radically improving upon traditional Investments/partnerships with Everplans, Bitspark, approaches by optimizing products for Getsurance customer needs, streamlining the medical underwriting process, detecting fraud, and engaging with consumers to dynamically respond as their needs evolve.” 36 “Anything that will move the needle over a 3–5 year horizon will already need to be in advanced development today.

Given that, I will exclude innovations such as peer-to-peer models, CRISPR/Cas9, and blockchain technology that I expect may ultimately facilitate long-term transformational change to the life insurance industry.

Conversely, artificial intelligence really could deliver meaningful advances to the entire life insurance value chain in the near future. Tim Rozar Chief of Staff to the CEO I foresee artificial intelligence, machine learning, and robotic process automation (AI, ML, RPA) applications radically improving upon traditional approaches by optimizing products for customer needs, streamlining the medical underwriting process, detecting fraud, and engaging with consumers to dynamically respond as their needs evolve.”

37 Bipin Sahni EVP, Head of Innovation R&D

@BipinSahni

RECENT ACCOMPLISHMENTS

Added Alpharank and Amicus.io to Startup Accelerator portfolio, bringing the total number of portfolio companies to 19. “Data is the next gold rush. Technologies Increased potential funding to up to $1 million for each that allow us to use data to its fullest incoming Wells Fargo Startup Accelerator potential will have a huge impact in portfolio company. the near-term.”

38 “Data is the next gold rush. Technologies that allow us to use data to its fullest potential will have a huge impact in the near-term.

Financial services companies have so much unique data, and as the world becomes more connected, the amount of data is growing exponentially. Bipin Sahni EVP, Head of Innovation R&D Smarter data has the power to transform customer and team member experiences, and there are still significant breakthroughs to be made in using data to add meaningful value in financial services.”

39 Ruben Salazar Genovez SVP, Head of Products, Innovation & Solutions

@rubengenovez

RECENT ACCOMPLISHMENTS

Commercial partnership with Novopayments.

Relaunched the Visa Innovation Centers for Latin America.

“The combination of AI and biometrics will Secured a strategic equity investment in YellowPepper to develop push payments, Tokenization, and other key Visa have a profound impact in commerce, platforms to support banks and merchants. banking, and payments.” Launched Visa Everywhere Initiative with close to 300 participating startups with less than $6 million in capital

40 “The combination of AI and biometrics will have a profound impact in commerce, banking, and payments.

Today’s digital commerce is highly dependent on human intervention, with browsing, searching, and paying requiring too many steps.

In the next few years the preferred way to interact with personal computing will be by voice commands, and consumers will leverage Ruben Salazar Genovez robo-like platforms to interact with financial institutions and stores. SVP, Head of Products, Innovation & Solutions These two technologies will trigger a reduction in the cost to serve, will enhance consumer authentication, will empower consumers with better data to maximize financial returns, and will create frictionless purchase experiences.”

41 Harshul Sanghi Managing Partner

@hsanghi

RECENT ACCOMPLISHMENTS

Series D round of Turo

Series A round of Albert “The continued integration of artificial $30 million raise by BioCatch intelligence into customer-facing applications and behind-the-scenes Recent fundraising rounds by EverCompliant processes will drive significant Amex Ventures is an investor in iZettle, which PayPal transformation in financial services.” announced a deal to acquire for $2.2 billion

42 “The continued integration of artificial intelligence into customer-facing applications and behind-the-scenes processes will drive significant transformation in financial services.

The technology is already helping financial institutions deliver more personalized and intuitive service to customers. That’s critical as consumers have come to not only expect but demand that their financial services providers deliver an experience that is on par with Harshul Sanghi what they receive in other industries in terms of flexibility and speed. Managing Partner As the technology advances, institutions will be further able to reduce friction in internal processes, better leverage partnerships with fintechs, and ultimately drive greater customer engagement and satisfaction.”

43 John Stecher Group Managing Director, Barclays Investment Bank

RECENT ACCOMPLISHMENTS

Breadth of experience in financial services across “Disruption to the financial services technology and product design for capital markets, collaboration systems, and most recently development industry will happen via not only emerging of a next-generation loan platform for Goldman Sachs. technologies that will reshape our Previous to his role at Goldman, Stecher led application experiences and engagement with financial development, architecture, and strategy for Software products, but also via regulator-driven Group at IBM and filed 45 patents as a master inventor and customers’ views changing related for the firm. to data privacy.” 44 “Disruption to the financial services industry will happen via not only emerging technologies that will reshape our experiences and engagement with financial products, but also via regulator-driven and customers’ views changing related to data privacy, with GDPR being a catalyst in Europe.

This change will rapidly drive forward R&D in machine learning applied to sparse or tokenized datasets. In turn, this will lead to more John Stecher powerful consumer-personalized financial assistants that will Group Managing Director, Barclays Investment Bank optimize your wallet specifically for your lifestyle.

For banks, these enhancements will lead to greater accuracy in their internal risk systems, resulting in better pricing for customers and better returns for shareholders.”

45 Serge Taborin Group Innovation Director

@SergeTaborin

RECENT ACCOMPLISHMENTS

Develops partnerships with the world’s leading startups, VCs, and accelerators.

“I am a big believer in interoperability as Built Aviva’s open innovation framework and drives execution across the Group’s markets in Europe, Asia, and North America. the key ingredient of successful products of the future, with customer propositions Established highly effective partnerships with Founders Factory and Plug&Play, jointly accelerating and incubating over 200 effectively becoming marketplaces of digital businesses over 5 years. best-in-class, fully integrated services.”

46 “I am a big believer in interoperability as the key ingredient of successful products of the future, with customer propositions effectively becoming marketplaces of best-in-class, fully integrated services.

This will have a particularly strong impact on financial services, where most of the existing products suffer from poor user experience, lack of transparency, and poorly understood fee Serge Taborin structure. Group Innovation Director We are already seeing the process of service re-bundling taking shape amongst the European challenger banks, and the PSD2/Open Banking legislation will help to further accelerate that process. Ultimately, the successful products will be solution-led rather than industry-led.”

47 Harrie Vollaard Head of Rabo Fintech Ventures

@harrievo

RECENT ACCOMPLISHMENTS

Sold MyOrder (fuel and parking App)

Invested in GoCredible (smart contract payment solution) and Peaks (investment App for millennials) “The party who owns the conversation controls how the financial services will be delivered and the future development of financial services.”

48 “As where blockchain impacts the fundamentals in the financial industry, artificial intelligence will finish the digitalization journey started with internet banking in the ‘90s.

What started as a distribution channel of financial products AI will finally fully automate, becoming the advisory function Harrie Vollaard of the bank and your PA software agent. Head of Rabo Fintech Ventures The party who owns the conversation controls how financial services will be delivered and the future development of financial services.”

49 Rafal Walkiewicz CEO, Willis Towers Watson Securities

RECENT ACCOMPLISHMENTS

Over twenty years of international experience working with financial institutions and in particular insurance companies. “Insurers of the future are likely to be Advised on over $50 billion of &A and financing platforms that leverage outsourced transactions globally. processes and technologies from best-in-class specialists.”

50 “Modularization will have a profound impact on financials business models.

Using insurance as an example, the value chain is built upon numerous processes serving three functions: (1) distribution, (2) underwriting, and (3) capital aggregation.

In the past, the efficiency of a full-stack insurer outweighed the benefits of seeking innovation through specialization of individual nodes along the value chain. Rafal Walkiewicz CEO, Willis Towers Watson Today, frictions in connectivity are fading rapidly, and technology Securities allows insurtech startups to focus on distinct areas of the value chain.

Insurers of the future are likely to be platforms that leverage outsourced processes and technologies from best-in-class specialists.”

51 The Disruption of Financial Services

The Future of Fintech is an exclusive gathering of the world's largest financial institutions, best fintech startups, and most active venture investors.

New York, NY | June 19-21, 2018

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