The definitive source of news and analysis of the global fintech sector | October 2018 www.bankingtech.com
THE TREE OF FINTECH LIFE Growth, gains and generations CASE STUDY: HOME CREDIT Life’s good at Europe’s heart FOOD FOR THOUGHT Authority in a disrupted economy FINTECH FUTURES IN THIS ISSUE
Contents
NEWS 04 The latest fintech news from around the globe: the good, the bad and the ugly.
17 Spotlight: APIs The rise of the API economy.
18 Comment: $2 bill fintech Do you like weird money? Then read on...
20 Case study: core banking Live Oak Bank pioneers Finxact’s core banking tech.
24 Analysis: bank of the future When banktech gets personal.
27 Interview: Peter Hainz, SmartStream Taking away the bank’s intraday liquidity risk pain.
28 Case study: Home Credit Life is good at the heart of Europe.
31 Spotlight: enterprise blockchain The rubber has met the road.
32 Fintech tour Frankfurt What can the city offer in the post-Brexit world?
34 Food for thought Titles, corner offices and authority in a disrupted economy.
38 Fintech funding round-up Good ideas can bring good money.
41 Spotlight: fintech How to succeed and influence people.
REGULARS 43 Appointments – the movers and the shakers. 43 Industry events – mark your calendars! 44 Out of office – a slice of satire.
October 2018 | www.bankingtech.com | 01 Managing Director & Editor-in-Chief Tanya Andreasyan +44 207 551 9010 13 December 2018 | London Marriott Hotel Grosvenor Square [email protected]
Deputy Editor Antony Peyton +44 207 551 9010 [email protected]
Reporter Henry Vilar +44 207 017 5709 [email protected]
Design & Production Manager Kosh Naran [email protected]
Head of Sales Jon Robson +44 203 377 3327 [email protected] Business Development Manager Editor’s note David Wurie +44 207 017 5593 [email protected]
Marketing Manager Irena Andrisevic Thinking of changing your core banking and insurance firms. The majority of +44 207 017 5379 system? Prepared to cast your net wider its customers are in its home country [email protected] than the “usual suspects” such as Temenos (Aegon, Robeco, SNS Bank and LeasePlan Subscriptions and Renewals and Infosys Finacle? Here is our pick of Bank among them), but it has also made JOIN US FOR THE INDUSTRY’S MOST Tel: +44 207 017 5533 fresh faces that are worth putting on inroads into the UK with an FCA-approved Email: [email protected] your radar: subsidiary, Ohpen Operations UK. GLAMOROUS EVENT OF THE YEAR Subscription for one year: Finxact in the US. Built by Frank Five Degrees, also in the Netherlands ■ £495 Sanchez, developer of the Profile core and also founded in 2009. Its flagship ■ €625 ■ $795 banking platform, which today resides with solution, Matrix, has recently been Now in their 19th year, Banking Technology Awards recognise excellence in the use FIS and is well-known worldwide, Finxact supplemented by the acquisition of Libra, of IT in banking and financial services, strive for innovation, and Subscription for two years: is riding “the second wave” of digital a core banking software developer in ■ £800 banking. The solution is cloud-native and Iceland, and its Libra Securities and Libra professional contribution to the industry’s betterment. ■ €880 ■ $1,000 its design in API-first. It already has a taker Loan solutions. Libra employs 40+ staff, in the US, Live Oak Bank, and is in talks who specialise in the same technology Book a table for you, your colleagues, partners and clients, and join us for a with distributors in Asia to take the system stack as Five Degrees. fabulous black-tie event at London Marriott Hotel Grosvenor Square, international (for a detailed case study Íslandsbanki (Bank of Iceland) is see p20). among Libra’s clients. Five Degrees’ user a top-star venue in the heart of the UK capital. Mambu in Germany. This nine-year old base includes Munnypot in the UK and company has progressed from providing ABN Amro’s new wealth management Be a part of the celebrations! a back office engine for small credit and proposition in Germany, Prospery. bt © Banking Technology 2018 All rights reserved; Banking Technology material microfinance firms to a more fleshed out may not be reproduced in any form without core banking product suitable for bigger the written permission of the publisher. players across the globe. The solution, Banking Technology is published ten times a year delivered on a hosted/cloud basis, has www.bankingtech.com/awards OakNorth and Santander in the UK as Address customers, N26 in Germany (and Europe), Maple House 149 Tottenham Court Road Folkefinans in the Nordics, and Mynt in Get in touch to find out more and book your seat: London W1T 7AD the Philippines. UK The vendor has recently launched Jon Robson Printer Mambu Process Orchestrator (MPO) – an Hobbs the Printers Ltd integration Platform-as-a-Service. e: [email protected], t: +44 (0)203 377 3327 Hampshire, UK Ohpen in the Netherlands. Same age Tanya Andreasyan ISSN 0266-0865 as Mambu, and also cloud-based, Ohpen Editor-in-Chief www.bankingtech.com targets banks, asset/investment managers Banking Technology For general queries, please contact: [email protected] @FinTech_Futures October 2018 | www.bankingtech.com | 03 #BankingTechAwards NEWS NEWS
NatWest starts KGI Bank pioneers Taiwan’s first Bank of Khyber in new core Judo selects quantum regulatory sandbox banking system search Temenos T24 computing testing Taiwan’s first test of its “regulatory sandbox” According to Koo, the participants’ Bank of Khyber (BOK), a regional assign 80% weighting to the technical core system will begin on 5 December, according to the future payment records are to be used in government-owned bank in Pakistan, proposal, and 20% to the financial one. NatWest has begun testing with quantum financial supervisory commission chairman the scoring model. “A person who pays has embarked on a core banking system BOK’s incumbent system is Bank Melbourne-based challenger bank Judo computing power to solve the efficiency Wellington Koo at the opening ceremony telecom fees on time will have a higher modernisation programme. Essentials, provided by local vendor Capital has selected Temenos’ T24 core demand of some of the issues the bank faces. of FinTechSpace in Taipei last month. credit performance,” he says. The bank issued a request for proposal Sidat Hyder. Its implementation process system, channels, analytics and financial The bank says it is using “quantum- The Taipei Times reports that the To make the scoring more accurate, the (RFP) in June, looking to “procure the was a lengthy one, starting in 2011 and crime mitigation, as it hunts for action inspired” computing power, to execute sandbox will have KGI Bank and Chunghwa experiment would verify the identity of services of experienced software houses, concluding in 2016. in the SME business sector. tasks at 300 times the speed of a traditional Telecom as participants, offering loan and the user by checking the IP address of the IT companies for the supply, installation, For treasury ops, the bank uses Adams The bank, which launched in March, computer – this meaning that quantum credit lines which will be limited to TWD borrower’s mobile phone. implementation and maintenance of a core from another local vendor Autosoft has created a cloud-based, API-centric algorithms are used, but not qubits. 200 million ($6.49 million) in total. Once the loaned amount reached TWD banking system”. Dynamics, as well as AutoRTGS for settlement. tech ecosystem and the Temenos Cloud The quantum-inspired computing power The commission, who initiated the 160 million ($5.2 million), a panel will The new solution should “provide all the It is likely BOK will be evaluating was a “perfect fit”. can be used to help portfolio managers experiment, expects 4,000 people to take determine if it should pursue the TWD 200 necessary facilities to run the business of Autosoft’s core banking solution, Temenos says it was the first banking decide on the right composition for the part throughout its one-year duration. million maximum. the bank as per best standard practice”, the Autobanker, as well as the offerings software provider to launch a cloud bank’s £120 billion “high quality” liquid KGI hopes the sandbox test gives it The experiment would need to stop if bank says in the RFP document, and cover of international vendors that are well- offering running on Microsoft Azure assets (HQLAs) portfolio. access to new customers, including the there are four cases of imposter fraud, but its network of 166 domestic branches established in Pakistan: Temenos with T24 and since 2011, T24 has been available HQLAs are assets such as cash and bonds financially excluded, according to the the bank is required to give a preliminary (including 84 Islamic banking branches). and Oracle FSS with Flexcube. as a managed service on the Temenos that every UK bank must hold as a buffer in bank’s department of planning director- report halfway through. In the scoring process, the bank will Tanya Andreasyan Cloud. case it runs into financial trouble. general Lin Chih-chi. If the sandbox experiment presents By using the API layer, T24 will The hardware used in testing has been April saw the promulgation of the Act good results, the commission would integrate with Judo’s existing systems Fujitsu’s quantum-inspired Digital Annealer, on Financial Technology Innovations, consider adjusting the related regulations. 250 ATMs close monthly in UK via its zero trust network and identity whilst the quantum software is provided by which was originally passed by the Personal information would be protected, management system “thereby opening 1QBit – of which NatWest is an investor and Legislative Yuan on December 2017. as Chunghwa Telecom isn’t required to Link, the largest UK ATM network operator, the door to easily connect with board observer. KGI and Chunghwa Telecom applied in provide customers’ payment records to says free-to-use cash machines are being additional third-parties and creating an “For the first time, we have the hardware August for the sandbox experiment, the KGI without their permission, while KGI is removed at a record rate of over than 250 open banking environment”. and software necessary to apply our only application out of three by a financial to follow several criteria when selecting per month – over 1,300 ATMs shut down in Alex Twigg, co-founder and CIO, work to industry scale problems, and we institution, aimed at combining big data customers, such as having their mobile phone the five months until the end of July. Judo Capital, has the usual dig at the look forward to seeing the far-reaching analysis with telecom mobile identity number for more than six months. Link says it represents the first decline established players: “With the big implications of the advancements enabled authentication technology. Henry Vilar in more than 20 years, most notably taking banks’ shift to industrialisation and by these early collaborations,” says Andrew place in town and city centres where card centralisation, SMEs have lost the Fursman, CEO of 1Qbit. payment options abound. human interaction and tailored service The bank hopes to make some processes Tangerine sweetens up Link’s statistics shows 76 out of 2,365 that they so deserve and crave.” more efficient, like allowing portfolio with Meniga’s PFM tech protected free-to-use ATMs will disappear Anyway, according to Temenos, managers to adjust the allocation of assets – those more than a kilometre from any Australia’s SMEs employ roughly 70% of following a surprise movement in the market Tangerine, a direct bank in Canada, has client experience in 2016. It hopes other cash machine or place where cash the country’s workforce, and yet there in a much shorter space of time than normal. partnered with Meniga, a personal finance that Meniga’s technology will offer its can be accessed without charge. 21 of the is AU$70 billion ($50.1 billion) of unmet Quantum technology could also be management (PFM) solutions provider. This customers a clearer view of their finances 76 closures do not meet the criteria and credit demand coming from the SME applied to optimise the bank’s other is Meniga’s first known client in Canada. through more accurate categorisation of are under investigation by the Payment Link chief executive, John Howells, sector. Judo naturally wants a generous portfolios and areas, like anomaly detection, Georg Ludviksson, CEO and co- their transactions and a more customised Systems Regulator (PSR). says: “Consumers are continuing to slice of all that. artificial intelligence (AI), and software founder of Meniga describes the deal as banking experience – consistent across the The statistics were released following a switch from cash to alternative payment Judo is currently in the process of verification. “a key milestone” for the vendor’s global bank’s internet and mobile channels. funding row in which Link cut the amount methods, and ATM volumes are falling obtaining its full banking licence with There are other quantum leaps. expansion ambition and “a strategic The first phase of the roll-out includes it receives from banks for withdrawals past 6% year-on-year. Given this backdrop, the Australian Prudential Regulation Last year, Commonwealth Bank of foothold” in North America. Meniga’s transaction enrichment tools, July, leaving campaigners warning there it’s critical we protect cash access for Authority (APRA). In August Judo got Australia joined telco Telstra, the Federal Tangerine has over two million clients, data-driven personalised insights and was no incentive for banks to maintain those who rely on it and maintain a itself a handy $140 million in funding. Government, the New South Wales close to CA$38 billion ($29.4 billion) in reports. services. A second reduction is planned for comprehensive network of ATMs that’s For Temenos this deal is another Government and the University of New assets and over 1,000 employees. Its Tangerine and Meniga are working January 2019. spread right across the UK. boost to its Australian ambitions South Wales (UNSW) in an $83 million presence extends beyond digital to its café on a number of PFM-related innovations Some firms are calling for regulators to “The report today is part of our In May challenger Volt Bank powered venture to found Australia’s first quantum and pop-up locations, kiosks and 24×7 based on the latter’s solutions, including intervene. commitment to monitor the situation on up and selected the T24 core system. computing company. contact centres. The bank was launched in programmable banking interface to The PSR says it has been seeking the ground and do whatever it takes to Last year Temenos acquired its local Atos is already ahead with a working 1997 as ING Direct; in 2012 it was acquired combine third-party data with the savings renewed commitments, but Nicky Morgan, ensure people continue to have the free partner and Software-as-a-Service computer to simulate 40 Qubits. by Scotiabank and rebranded as Tangerine. experience. who chairs the treasury committee of MPs, access to cash they want,” he adds. (SaaS) specialist Rubik Financial. Henry Vilar The bank set out to revamp its digital Henry Vilar says this move may be too late. Henry Vilar Antony Peyton
04 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 05 NEWS NEWS
Novo business Nationwide Building Society targets Barclays opens up mobile banking app to rival accounts Barclays has become the “first” UK bank to example, in August London-based Customers who have a personal or banking launches £4.1bn tech investment allow customers to bring their other current personal finance app Bippit launched with business current account with Lloyds, in US The UK’s largest building society, investment in branches – such as video. accounts into its mobile banking app. the offer of an account connecting and Halifax, Bank of Scotland, RBS, NatWest, Nationwide, will invest a further £1.3 billion In addition, it mentions vague “service With competition in UK banking savings service. Nationwide or Santander can now choose New York to bring its total revamp plan to £4.1 billion experience”; reducing current data stores tougher than an East End gangster, banks Catherine McGrath, managing director to view their balances and transactions over the next five years. from 20 to two, and investment in artificial are trying to stand out and play a game of of retail banking at Barclays, says: “Today, when they log into the Barclays app. More The investments will be used for the intelligence (AI) and machine learning; and constant one-upmanship. lots of people have current accounts with banks will be added over the coming usual “growth” plans but also “explore entry the hub as mentioned above. Barclays says this new feature gives more than one bank, so keeping track of months. into new markets such as SME”. For the Nationwide turns to history to remind customers a way to get a clearer picture of your finances can be tricky as well as time- The free feature will be rolled out latter it has already launched a new £50 us of previous tech changes. their day-to-day finances within its app. It consuming. Our new feature is designed to over the coming weeks to all Barclays UK million fintech fund in June. Last year it built digital distribution uses API technology – all powered by open solve this problem.” personal current account holders including According to Nationwide, the investment channels and says over half of all its new banking. According to Barclays, customers can add premier, wealth management and private will see between 750 and 1,000 jobs created members and other product sales were It’s also a riposte to the many fintech current accounts without ever giving out their clients. and the opening of a new technology hub. completed through these channels. start-ups offering a similar service. For other banks’ usernames or passwords. Antony Peyton Tony Prestedge, Nationwide’s deputy In 2014 it integrated three separate chief executive, says: “As a mutual we can acquired businesses (Derbyshire, Cheshire afford to take a longer-term view rather and Dunfermline building societies) and Nasdaq offers $190m for trading tech firm Cinnober than focus on short term gains. The pace completed the account and systems of technological change means that we migrations. Nasdaq has made a $190 million all of SEK 75 ($8.4) per share and SEK 85 ($9.5) Cinnober provides solutions and New York-based business banking need to reassess continually how we serve Also in that year, it completed a SAP cash offer for Swedish trading tech firm per warrant, representing an offer value of services to trading and clearing venues provider Novo has powered up with the our members in order to remain relevant, core banking implementation, migrating Cinnober. SEK 1.7 billion ($190 million). worldwide, including exchanges, offer of a checking (current) account and valued and competitive.” around five million accounts. The proposed acquisition, Nasdaq The acceptance period of the public clearinghouses, banks and brokers. debit card solutions that use artificial The investment will address six areas. Nationwide offers current accounts, credit says, “advances and accelerates Nasdaq’s tender offer is expected to close in Q4 Largely based on the firm’s proprietary intelligence (AI) technology. These comprise revamping its underlying cards, ISAs and personal loans. It has around strategic direction as a technology and 2018, subject to certain conditions. TRADExpress Platform, they cover price The bank, which is aiming at the application and infrastructure; developing 15 million customers and 18,000 employees. analytics provider to the global capital “Since co-founding Cinnober in 1998, discovery and matching, real-time risk start-up market, doesn’t have a licence a greenfield digital platform; and Antony Peyton markets and beyond”. It is also expected Cinnober has been on an exciting journey,” management, clearing and settlement, but white labels its services. Its products to deliver “attractive shareholder returns” – comments Nils-Robert Persson, co-founder index calculation, data distribution and can be connected with other financial 10% ROIC within three to five years. and chairman of the board of directors of market surveillance. accounts, and Novo steps in to provide Quelle surprise! Europe’s banks Adena Friedman, president and CEO Cinnober. “I see the offer as the next step in Amongst Cinnober’s customers recommendations based on a user’s continue branch cull of Nasdaq, explains: “The combined its development.” are Asia Pacific Exchange, Australian financial picture. intellectual capital, technology He continues: “I really believe in the Securities Exchange, B3, Dubai Gold and Novo’s deposit account services and It’s probably not a shock but European EU last year declined to approximately competence and capabilities of Cinnober strategic logic of combining Cinnober Commodities Exchange, Euronext, Japan card are provided by Middlesex Federal banks are continuing to scale back their 183,000, showing that about 5,900 and our Market Technology business will and Nasdaq’s Market Technology business Exchange Group, Johannesburg Stock Savings. The card is pursuant to a licence physical presence across the continent as branches were closed last year, down 3.1%. expand the breadth and depth of our also as it reinforces the strong technology Exchange, London Metal Exchange, LME by Mastercard. the digital drive pushes on. Compared to 2007 the total number of fastest growing division at Nasdaq.” foundation in Sweden. As the largest Clear, NYSE and the Stock Exchange of Novo is currently being offered to The European Banking Federation (EBF) branches has declined 21%, or by almost Nasdaq looks to acquire all outstanding shareholder of Cinnober, I am supportive Thailand. small businesses for free. Its banking published “Banking in Europe: the 2018 50,000, reflecting the “rapid uptake of shares and warrants in Cinnober at a price of the offer and intend to accept the offer.” Tanya Andreasyan tools are from within the app, and users Facts & Figures”, its annual update on the online and mobile banking services in can link accounts, pay bills, process ACH sector. recent years”. In 2017 more than half of transfers, cancel recurring subscriptions, The publication shows that the all people in the EU, 51%, used internet Dwolla shuts last branded product Transfer and transfer money between accounts. It contraction in the European banking banking, compared to 29% in 2008. has plans to launch this service on a web sector, both as measured in terms of staff The number of people working for Dwolla is discontinuing the service of its final “Sometimes becoming who you are we are focusing exclusively on products that platform in the coming months. numbers and branches, continued in 2017. credit institutions in the EU fell to the branded money product Transfer. means leaving behind some things you bring us closer to our mission of building It doesn’t offer lending services or The Banking in Europe overview shows lowest level since the European Central Transfer was launched in spring 2017, and were,” he adds. the ideal platform to move money”, finalises interest-bearing accounts. that the total number of credit institutions Bank (ECB) started measuring this in 1997 “although it became popular, we realised The firm will now be focusing on its Ensley. Michael Rangel is the bank’s co- in the European Union (EU) fell by 5% in and stood at approximately 2.74 million that it was not, in fact, the ideal way to move Dwolla Platform, says founder and CEO Only last May, Dwolla introduced a new founder and CEO. His experience includes 2017 to 6,250 institutions, down by 2,275 people at the end of 2017, compared to money, and that we weren’t done,” explains Ben Milne. product plan. It’s called Start, and it offers working as a lead trade administrator at since the contraction began in 2009. 2.78 million a year earlier. the company’s VP of product, Travis Ensley. Dwolla Platform, launched last year, a white-labelled, out-of-the box way for Fairholme Capital Management. Last year’s decline was led by Germany, This compares to 3.13 million in 2009. “Starting October 2018, we will no longer is a white-label API that integrates with businesses to send and receive money The other co-founder is Tyler McIntyre. Italy, Hungary and Austria. The number of About two-thirds of all bank staff in the EU accept new Transfer accounts. In December businesses to connect them to the ACH without a large time or money commitment. He recently attended the University of credit institutions increased in the UK and is employed by a bank headquartered in 2018, the ability to send or receive payments Network, which allows them to send and The firm also raised $12 million in funding Pennsylvania – The Wharton School. Sweden last year. one of the five largest EU member states. will be removed entirely and Transfer will be receive funds. in February this year. Antony Peyton The number of bank branches in the Antony Peyton permanently retired. “We are discontinuing Transfer because Henry Vilar
06 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 07 NEWS
Denmark’s central bank turns to SIA for new RTGS system Danmarks Nationalbank, the nation’s in use by the central bank since 2001. live in Iceland too. central bank, has selected SIA for its new In this development, SIA used its Later this year, Denmark will be the real-time gross settlement system (RTGS) wholly-owned subsidiary Perago, based first non-euro country to participate in that connects banks, mortgage banks in Pretoria (South Africa) and which Target2-Securities (T2S), the centralised and settlement systems. specialises in central bank solutions. European platform for the settlement The technology infrastructure This RTGS platform is already in of domestic and cross-border securities developed by SIA has replaced the operation with the central banks of transactions. previous in-house system that had been Norway and Sweden and it will soon go Antony Peyton
The world’s first cross-border, open-architecture platform unveiled
The ASEAN Financial Innovation Network – will develop and operate APIX. Middle East and North Africa (MENA) (AFIN) has unveiled its API Exchange (APIX), Paul Gwee Choon Guan, secretary region. an online fintech marketplace and sandbox general of the ASEAN Bankers Association AFIN was established last year by the platform for financial institutions. (ABA), says: “The ABA is pleased to be part International Finance Corporation (IFC) According to AFIN, this is the “world’s of this financial innovation journey for all and the Monetary Authority of Singapore first cross-border, open-architecture our members, which is vital to deepening (MAS). platform” and it will help financial inclusion financial inclusion in ASEAN markets.” Through AFIN, the duo said they would across the Asia-Pacific region. AFIN also announced a partnership with plan to establish a regional network to A consortium led by IT firm Virtusa Abu Dhabi Global Market as the first regulator help financial institutions, fintech firms and – which also includes German digital member of the APIX platform outside ASEAN. regulators address issues of connectivity, local bank Fidor and data integration and This partnership will see the compliance and cross-border compatibility. virtualisation platform provider Percipient marketplace and sandbox expand to the Antony Peyton
ING Bank in Romania closes physical cash desks ING Bank Romania plans to have all its and other banking transactions will be in February this year. physical cash desks closed from 29 October done through the bank’s ATMs. For other As one of the top ten banks in Romania, this year, as it intends to turn its local activities, like transfers, the mobile banking ING has 1.2 million customers, with a net profit branches into self-service units, according app will be the place to go. of €74 million in the first half of this year, up to Romanian news site Profit.ro. The bank had announced its plan to 35% compared to the same period of 2017. This means that withdrawals, deposits, move towards a self-service model earlier Henry Vilar Singapore unveils world’s first unified payment QR code The Singapore Quick Response Code (SGQR) will be adopted by 27 payment schemes quicker payments processing”. has been launched offering multiple payment including PayNow, NETS, GrabPay, Liquid MAS says SGQR does not require a QR codes into a single SGQR label. Pay and Singtel DASH, and will be deployed terminal, so it is a “cheaper” way to accept As reported last year, the Monetary progressively over the next six months. various e-payment options. Authority of Singapore (MAS) and Info- MAS says with SGQR consumers will The first phase of SGQR label replacement, communications Media Development be able to “quickly and easily see if their starting with merchants in the Central Authority (IMDA) unveiled a taskforce preferred QR payment option appears on the Business District, will start later this month. to develop this common QR code for merchant’s SGQR label”. Plenty of big names are involved in SGQR. the city-state. Members of the task force With the consolidation of QR codes, These include Alipay, American Express, Bank include both Singapore and international merchants will need to display a single SGQR of China, DBS, Mastercard, United Overseas payments providers. label showing the e-payments it accepts. This Bank, UnionPay, Visa and Tencent. With SGQR now up and running it means “less clutter on the store front and Antony Peyton
October 2018 | www.bankingtech.com | 09 NEWS
Cashforce powers BNP Paribas corporate banking Santander to build £150m Valley National BNP Paribas has partnered with Cashforce, and automated cash flow forecasting and because of the integration with various tech hub in UK Bank in major a cash management and trade finance treasury reporting. ERP systems and financial data sources. The company, as the bank pursues the “Forming agile partnerships with solution also allows AI-based simulations Santander has unveiled its plans for a new new MK:U university on the horizon, which tech overhaul digitalisation of its corporate clients’ user innovative fintechs like Cashforce, who of cash flow scenarios, forecasts and £150 million tech hub in Milton Keynes in is set to become an “even greater magnet for experience. leverage new technologies such as artificial impact analyses. the UK. technology talent”. Oklahoma-based Valley National Bank The banking group has also invested in intelligence (AI), helps us to significantly The platform will be available to clients According to the bank, this will be its Features of the planned campus include (VNB) has selected SAP and Axxiome for Cashforce. accelerate the digitalisation of our through Centric, BNP Paribas’ digital “flagship” UK technology hub and provides an environmentally sustainable building; its tech overhaul. The bank will use SAP The solution connects its treasury customer journey in the area of transaction banking platform that gives corporate a “boost” to the UK government’s vision of a event space for colleague training; fitness for Banking core banking software and department with other business banking,” says Jacques Levet, head of and institutional firms access to the bank’s Cambridge-Milton Keynes-Oxford “growth centre, cycle storage, rooftop walking and SAP S/4HANA. and finance departments, and offers transaction banking EMEA, BNP Paribas. online financial services. corridor”, which is located just north of running track; and “flexible collaboration Axxiome, an SAP partner specialising “transparency” into the cash flow drivers, The firms say that the platform is unique Henry Vilar London. space” that will be offered to local businesses in core banking, will implement the SAP The proposed office is expected to be and community organisations. solutions covering deposits, loans and home to over 5,000 staff and replace the Santander says it is expected that a customer account management. CBD keen to go digital, foster innovation and retain talent bank’s existing local office buildings. planning application for the new campus The SAP HANA software will help Nathan Bostock, chief executive, will be submitted early in 2019 following with real-time analytics and there will be Commercial Bank of Dubai (CBD) has opportunity areas across all areas of relationships and make an impact in a Santander UK, says: “We want a workplace consultation with the local authority and a revamp of the bank’s channels using recruited consultancy firm PwC to assist it business, the consultancy firm explains. place where people, quality and value which truly reflects our culture and our community groups. Subject to planning Axxiome Digital hosted by DXC. with its digital transformation. The project team will evaluate start- mean everything”. vision for the future, which is based on permission, it is anticipated that the building VNB’s president and CEO Brad Scrivner The agreement focuses on an ups in specific business areas on the basis The bank’s strategy “is centred around innovation and harnessing new technology will be ready to open in 2022. says SAP and Axxiome’s “collective “innovation programme that will help the of demos and develop proof of concepts attracting, retaining and developing the to make banking simpler and more personal Santander UK has 24,200 employees and expertise will allow us to dramatically bank in its objective to become default (POCs) for implementation. best talent in the region”, he states. for our customers.” around 15 million customers. improve the way we currently engage digital and in providing an exceptional PwC emphasises that CBD “will ensure As part of the project, PwC will help Bostock adds that Milton Keynes has its Antony Peyton with customers, automate everyday job customer experience by collaborating with that an all-inclusive culture of innovation CBD build, design and operate CBD Labs, functions and create new processes to fintech start-ups, and effectively leveraging and disruption is fostered throughout the which the two parties describe as “a position ourselves as a leader in the US emerging technology as a tool”, according bank”. corporate workspace focused on building Norway’s Kraft Bank financial market”. to PwC Middle East. Dr Bernd van Linder, chief executive of a culture of innovation, collaboration and The bank also plans to concurrently During the yearlong initiative, CBD CBD, says the bank is proud to offer young disruption”. The CBD Labs are set to launch craftily powers up move all its systems into a single-tenant will look to solve key business problems, people in the Middle East “the opportunity in late October. managed cloud improve efficiency, and identify new to grow as individuals, to build lasting Tanya Andreasyan Norway-based Kraft Bank is up and running for core banking to offer automated loan This is the second core banking as it has received all necessary permits and processing. tech client for SAP in the US, following licences to run as a fully-fledged consumer Tieto’s solution includes processing for a project with BB&T – which was Stripe lives up to hype with $20bn valuation bank. home loans, unsecured loans, debit cards unsuccessful and was canned. Kraft, which is based in Sandnes in and savings accounts, including Vipps and In a separate development, California- US-based mobile payments provider Stripe Thiel and Tesla founder Elon Musk. San Francisco. the southwest of the country, received a direct withdrawal. The engine for credit rating based Meed teamed up with VNB to has raised $245 million in funding, taking Patrick Collison, Stripe’s chief executive According to the firm, more than 200 banking licence in December 2017, and it analysis has built-in machine learning. Kraft launch its mobile banking programme in its valuation to $20 billion. and co-founder, says the firm will use the million Southeast Asians will come online was fully subscribed for an issue of NOK was Tieto’s first lending customer in Norway. December. Meed says says its customers The latest investment was led by new funds for international expansion, in the next two years, and the region’s 300 million ($35.6 million) in January 2018. Kraft Finance is the power behind can be “paid to bank” through its “income- Tiger Global and includes DST Global particularly in Asia. internet economy – growing to more than It officially started operations in May. Kraft Bank and has about 40 employees building” SocialBoost programme. and Sequoia. Stripe has got the backing Stripe has already launched a new $200 billion by 2025 – comprises more Kraft uses loan agents as a sales channel, distributed in six cities; Stavanger, Sandnes, According to the firm, customers of some big names, such as American engineering hub in Singapore. This is its than 7,000 high-growth start-ups. but also receives customers directly. Ålesund, Trondheim, Oslo and Tromsø. can earn an income stream in return for Express, Visa, PayPal’s co-founder Peter fourth lab, following Seattle, Dublin, and Antony Peyton Svein Ivar Førland, Kraft’s CEO, says it Kraft Finance was established in 2001 growing the Meed community among has established “good contact with several and is a securities company with a licence their family and friends. The result is an key lenders”. from the Danish Financial Supervisory acquisition and loyalty engine for VNB India’s central bank shortlists five vendors for data project The product offer will initially consist Authority. Førland is also chairman of the “driven by customers’ social sharing”. of loans and credit; and will eventually board at Kraft Finance. “The vast majority of banks worldwide The Reserve Bank of India (RBI), the country’s The companies were shortlisted based entities, data validation and review. It will expand to customer deposits. The bank is new but has already have all handled the mobile era in exactly central bank, has shortlisted five banking on the results of an expression of interest also provide a scalable data repository Its team consists of four management released some financial results. the same way, and we think it’s a flawed tech and services providers for its planned (EOI) issued earlier this year by the bank. and a data dissemination platform. The personnel – for a total of 11 employees. Its Lending to customers stood at NOK 32.3 approach,” says Les Riedl, CEO for Meed. overhaul of a centralised information and The selected hopefuls will now receive a analytics component will facilitate the first three customer advisors are in place million ($3.8 million) as of 30 June 2018. There “Simply shrinking down traditional management system (CIMS). request for proposal (RFP). creation of RBI’s Data Sciences Lab – a new and Kraft explains it is considering hiring is no profit yet (which is understandable) – bank accounts and putting them on a These are: Capgemini, IBM, Infosys, The new CIMS platform, comprising initiative to explore and harness big data more as it receives “increased number of and the bank reported a loss before tax of smartphone screen doesn’t offer real Larsen & Toubro Infotech (LTI) and Tata a data warehouse and a data lake, will opportunities. customer requests”. NOK 3.63 million ($432,000). innovation, nor is it customer-centric.” Consultancy Services (TCS). enable data collection from regulated Tanya Andreasyan In March, Kraft chose Tieto’s AI solution Antony Peyton Antony Peyton
10 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 11 NEWS
News sites can be confusing. There is too much going on in the world. Sometimes it’s difficult to spot the most important topics. Articles drag on and on before Bank of England preps UK fintech for next decade The Bank of England (BoE) is getting ready for Mark Carney, the bank’s governor, has explore these and other themes in they get to the point. the power of fintech, an ageing population appointed Huw van Steenis as a senior roundtables, workshops and forums with and big data sets over the next decade. advisor to lead the project. Van Steenis has businesses and consumer advocates from We don’t do that (intentionally). In its “Vision 2030: the future of finance”, worked at Morgan Stanley and Schroders. around the UK. the bank is exploring what the financial The bank’s research will cover a range These events will bring together banks, Every day we’ll send you a digest of the industry’s system of tomorrow might look like, and of issues, including the implications of an insurers, technology firms, exchanges, what it means for its priorities now and in ageing population and suitable financial financial market infrastructure firms, top news and subjects so you don’t have to search for the future. options; the emergence of big data sets businesses and consumer groups to talk updates anywhere else. BoE states: “The bank recognises that and the sharing economy. about problems, trends and potential a new economy, a new world and new In addition, it will examine the solutions. demographics demand a new financial integration of emerging markets into the BoE aims to complete the project Sign up to the FinTech Futures system … The new finance will develop for global financial system; and new fintech. “around the turn of the year”. free daily newsletter – the new economy, not in isolation from it.” Over the course of this year, it will Antony Peyton your go-to resource on all things tech. Danske Bank’s CEO resigns over money laundering crisis
Thomas F. Borgen, CEO of Danske Bank, Estonian branch from 2007 until 2015. to live up to its responsibility in the case has stepped down in relation to the The figures went up as Danske of possible money laundering in Estonia. issue of €200 billion in possible money explained that around €200 billion I deeply regret this. Even though the laundering in Estonia. of payments had flowed through its investigation conducted by the external As reported last year, Denmark’s two Estonian branch from non-resident law firm concludes that I have lived up to largest banks, Danske Bank and Nordea, customers – from countries such as my legal obligations, I believe that it is best were involved in alleged anti-money Russia, the UK and the British Virgin for all parties that I resign. laundering (AML) violations. (There are no Islands. “As the CEO, I have the management comments yet on Nordea’s website about According to the FT, an analysis of responsibility for the things that take its case.) 6,200 of the riskiest customers – out of place in the bank, and, of course, I take At that time, more than DKK 7 billion 15,000 non-resident clients in total – on this responsibility. It has been clear to ($1.1 billion) was transferred to accounts in showed that the “vast majority have been me for some time that resigning would the Danish banks. Accounts that belonged found to be suspicious”. be the right thing to do, but I have held to “shady” drawer companies with Borgen was in charge of international off the decision, because I have felt a addresses in tax havens like Seychelles banking including Estonia from 2009 responsibility for seeing the bank through and Panama. The transactions took place to 2012 and became chief executive this difficult period towards presentation of between 2011 and 2014. in 2013. He faced allegations that he the investigations.” After more recent investigations, it was ignored warning signs of trouble. Borgen will continue in his position until found there were issues with Danske’s In his resignation letter, Borgen says: a new CEO has been appointed. control and governance system at the ”It is clear that Danske Bank has failed Antony Peyton
Gibraltar International Bank rocks core system revamp Government-owned Gibraltar International uses two-factor authentication: after the by Crédit Agricole. We have contacted GIB Bank (GIB) will be upgrading its core user enters their password, a code will be for more details about the upgrade and banking platform next month as it preps sent to their phone via text. core system – and are waiting for a reply. for a major overhaul. The bank’s online and mobile banking In terms of history, the bank was In a TV interview with the Gibraltar services will be upgraded, taking place officially launched in May 2014 and went www.bankingtech.com Broadcasting Corporation (GBC), GIB’s from 12 October to 15 October 2018. live in October that year. In 2015 it got its online banking platform has come in According to GIB its core products will full banking licence and 3,500 clients were @FinTech_Futures for criticism from customers and CEO not be impacted by the system upgrade signed up. Lawrence Podesta accepts it’s been a weak and ATMs and cash and cheque deposit The bank now has 21,000 accounts, Interested in advertising and marketing opportunities? Get in touch: point for the bank. machines (CCDMs) will be available. £800 million has been deposited and £230 On GIB’s site, the bank explains it is Banking Technology understands GIB million has been loaned. Contact Jon Robson replacing the digital key with a system that uses an outsourced S2i platform provided Antony Peyton Tel: +44 203 377 3327 | Email: [email protected] October 2018 | www.bankingtech.com | 13 NEWS NEWS
VPBank launches lively new digital bank Yolo Hackers steal $60m from Japanese US paytech Elan Vietnam Prosperity Bank (VPBank), has a movie and booking flights. crypto exchange Zaif sold to Fiserv for unveiled its digital brand Yolo. Mushakov adds: “Yolo means you only It has been launched as a separate live once, we are going to make your life Japanese start-up Tech Bureau has released a statement on 20 September. $690m business product letting “youngsters and most convenient.” revealed its cryptocurrency exchange Zaif Of the total stolen, JPY 2.2 billion other active people experience a new VPBank will also sign a co-operation has been hacked to the tune of JPY 6.7 ($19.6 million) was the company’s US banking tech heavyweight Fiserv has digital lifestyle”. agreement with Vinaphone – owner of the billion ($59.6 million). assets, while JPY 4.5 billion ($40 million) agreed to acquire the debit card processing, As we exclusively reported in May Vpoint, a point accumulation system with Three digital currencies were affected, belonged to customers. ATM managed services and MoneyPass 2016, VPBank was in the process of setting more than 3,000 stores and “millions of Bitcoin (BTC), Bitcoin Cash (BCH) and As a result of this hack, Tech Bureau surcharge-free network of Elan Financial up a standalone digital bank, and it also X5 Retail Group. members”. MonaCoin (MONA). has asked for JPY 5 billion ($44.5 million) Services, a unit of US Bancorp, for $690 implemented a new digital solution, SAP’s Mushakov says Yolo will offer lending, According to the agreement, Yolo users Tech Bureau says since 14 September, in financial assistance from Fisco Digital million. Omnichannel Digital Platform. savings, payments and Mastercard. only need one Vpoint account to get some services such as deposit and Asset Group. As exclusively reported by Banking Earlier in 2016, VPBank appointed a new Yolo will offer “unlimited connectivity” benefits at all partners’ stores. In exchange, withdrawal of virtual currencies were not in Hacks on crypto exchanges are Technology in August, Elan was up for sale CIO, Igor Mushakov. He moved from Russia, to lifestyle service providers, so the idea is Vpoint users can also get Yolo digital bank’s operation. After investigation, it turned out nothing new in Japan. with Fiserv, Finastra and FIS vying for the where he held senior technology roles at to get users all excitable by calling a taxi, modern features. that some of the deposits and withdrawals In January, $534 million was stolen paytech firm. Uralsib Bank, Sberbank and most recently ordering food, listening to music, watching Antony Peyton of hot wallets had been hacked. from Coincheck cryptocurrency exchange The acquired business has revenues of Tech Bureau detected server in Tokyo. more than $170 million. abnormality on 17 September and Those with good memories will recall Fiserv says the acquisition will help it hacking damage was confirmed on MtGox, a Tokyo-based exchange that was “build on the growth of its card services BBVA’s app shows account activity from other banks 18 September. This was reported to forced to file for bankruptcy in early 2014 business by expanding its suite of solutions Japan’s Treasury Department. The firm after hackers stole around $650 million in key areas such as ATM managed services”. BBVA’s mobile banking app will start and cards from other financial service operating between different products within is currently checking and strengthening worth of customers’ Bitcoins. Also, MoneyPass, the second largest showing products the bank’s customers providers earlier this year. Starting in the BBVA app itself”. security and rebuilding the server. It Antony Peyton surcharge-free network in the US with have selected from different financial September 2018, they can also add The regulation establishes that banks access to 33,000+ ATMs nationwide, will service providers, becoming the first investment funds, pension plans, deposits, must give access to payment account “further enhance its market position”. banking app in Spain to do so. securities and mortgage and consumer information to payment service providers Equifax fined £500,000 for Fiserv will offer Elan clients additional (In the UK, Barclays has recently become finance products. registered with the Bank of Spain, UK security breach services, including risk management the first bank to allow customers to bring Customers need only to click on the tab including banks, if so authorised by solutions, Accel debit payments network their other current accounts into its mobile “your other banks” to verify and download customers. The Information Commissioner’s Office Elizabeth Denham, the ICO’s Information and enhanced debit platform capabilities. banking app – see p7.) products, which are then included in The bank plans to allow customers to (ICO) has given Equifax a £500,000 fine for Commissioner, says: “The loss of personal This deal, however, does not include The information will be included in Bconomy. select and configure only the products failing to protect the personal information information, particularly where there is the Elan credit card issuing and corporate Bconomy, BBVA’s tool that examines the The new feature currently allows to check they want to see, access the planned of up to 15 million UK citizens during a the potential for financial fraud, is not only payments businesses, which are also US income and spending of users to provide balance and movements of all products movements of the products contracted cyberattack in 2017. upsetting to customers, it undermines Bancorp units. an analysis of their finances, which was grouped together in the app. However, the with others and have sociodemographic The incident, which happened between consumer trust in digital commerce.” The transaction is expected to close in launched last year. bank says that in 2019, “regulation will create comparisons within the Bconomy tool. 13 May and 30 July 2017 in the US, affected The ICO’s probe, carried out in parallel Q4 this year. BBVA first opened its app to accounts the right framework to add the possibility of Henry Vilar 146 million customers globally. with the Financial Conduct Authority (FCA), “We continue to see opportunities The ICO is the UK’s independent revealed multiple failures at the credit for financial institutions to enhance the regulator for data protection and reference agency which led to personal card-based payments they provide to their Westpac welcomes Siri for managing payments information rights law. Its investigation, information being retained for longer than customers in an always-on, anytime access published on 20 September, found that necessary and vulnerable to unauthorised world,” comments Jeffery Yabuki, president Westpac is enabling Siri for its users to response: “Here is your Westpac payment of for Amazon’s Alexa and Westpac for Google although the information systems in access. and CEO of Fiserv. manage their accounts and transactions $20 to John Citizen. Do you want to send it?” Assistant earlier this year. the US were compromised, Equifax was The investigation was carried out under He adds his company “looks forward to from iPhone devices, claiming to be the The bank says almost half of Australians According to the bank, it will soon be responsible for the personal information of the Data Protection Act 1998, rather than the welcoming the Elan team to Fiserv”. first in the country. (48%) use a voice assistant on their launching its Travel Companion for iPhone its UK customers. current GDPR, as the failings occurred before Meanwhile, Tim Welsh, vice-chairman, To authenticate payments, customers smartphone, with a third of this group users, and iMessage capabilities for payments. The UK arm of the company failed stricter laws came into force in May of this year. consumer banking sales and support, US will be prompted to input their fingerprint using it at least once a day. Travel Companion displays the most to take appropriate steps to ensure its The ICO says the fine is the maximum Bank, says the decision to sell Elan was or face ID before the money is transferred Westpac chief George Frazis says: “We popular travel features on the home screen American parent Equifax, which was allowed under the previous legislation. “strategic”, following an evaluation of the to the payee. know a growing number of Australians are of the mobile banking app when travelling processing the data on its behalf, was The company contravened five out of business unit. Through Siri’s voice command, using Siri to help make their lives easier overseas. protecting the information. eight data protection principles of the “We believe this sale is the right thing to customers will also be able to check up to and faster, from checking the weather Westpac for iMessage – a new “You With interesting timing, Equifax Data Protection Act 1998 including, failure do for the bank and our customers,” he says. three Westpac account balances. through to setting an alarm, all with a Owe Me” feature allows customers to get posted its responses on 19 September to secure personal data, poor retention Fiserv, he emphasises, has “the long term Westpac says this will be a potential simple voice request.” a specific amount owed to them when to the ICO investigation. The firm says it practices, and lack of legal basis for commitment” for the business and thus common interaction with the phone: “Hey Siri for Westpac follows the sharing their account details via iMessage. is “disappointed in the findings and the international transfers of UK citizens’ data. everyone will benefit from this deal. Siri, pay John Citizen $20 for dinner”. Siri’s implementation of Westpac Banking Skill Henry Vilar penalty”. Antony Peyton Tanya Andreasyan
14 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 15 NEWS SPOTLIGHT: API
Revolut records annual loss but revenue grows fivefold Digital engagement in banks Challenger banking service Revolut and pressing ahead with innovative new “In addition to offering the best has reported its annual results for the products, such as commission-free stock spending analytics and cheapest foreign year 2017, with some stark figures: the trading,” it states. exchange on the market, our customers and the rise of the API economy revenue has increased fivefold to £12.8 Revolut cites other impressive stats have come to trust that we will always million ($16.8 million) from £2.4 million and developments, such as doubling its innovate and disrupt the financial We wanted to know more about APIs, and who better than Red Hat’s Benjamin Henshall, country manager, India, ($3.2 million) and the customer base has workforce to 400+ people, a European industry for their benefit, launching new and head of financial services APAC; and Manfred Bortenschlager, Agile Integration business development EMEA. trebled to 1.3 million (from 450,000). banking licence application, plans to add and exciting products that’ll save them Monthly transactions volumes in 2017 ten international markets, and embarking time and money,” he claims. It is assumed that the financial services grew from $200 million to $1.5 billion. on a project to build “a highly anticipated, But there is more. 2018 looks to be industry understands the value of APIs However, the company made an one of a kind in Europe, commission-free “even more impressive”, he continues. and their role in digital transformation. But “The most effective way to open data overall loss of £14.8 million ($19.4 million) trading platform”. Revolut now has close to three million Henshall feels there is a misunderstanding last year. Founder and CEO Nik Storonsky says users, opening 7,000 new accounts in the way APIs are presented. He says that or services in a transparent but still “While increasing revenue and he is “really pleased” with the company’s per day, and processing $3 billion APIs as a software engineering principle reducing costs is an important factor for progress and the results. in monthly volumes. The number of are as old as software itself, but that the controlled way is via APIs with a solid the company, the key focus is currently on “Our growth is driven by putting the employees is also in the rise – over 500 difference is with the introduction of new strategy and governance concept taking Revolut into international markets, customer at the core of everything we do,” people globally. standards and tech – APIs are becoming expanding its customer support team he emphasises. Tanya Andreasyan the business model enabler. around it.” Bortenschlager says there are more and more ways of leveraging APIs to directly Manfred Bortenschlager, Red Hat create business value. This gave rise to NPSO releases first details on New Payments Architecture the notion of the “API economy”, which is already disrupting several industries, and The New Payment System Operator (NPSO) which can process trillions of pounds payments being processed using the financial services are lagging behind in has released initial details of the new worth of payments every year. We look Image Clearing System (ICS) for cheques. meeting this disruption. The role of APIs has enabled fintechs versatile. “In the world of fintech, where procurement process for the clearing and forward to engaging widely to find the The new procurement exercise “APIs have ushered in the destruction to integrate with a rich set of banking the focus is on usability and customer settlement layer part of the New Payments right one.” follows the consolidation of Faster and reassembling of value chains and have functions and wrap them into an engaging engagement, APIs are the key component Architecture (NPA). The NPSO is looking for a partner Payments and Bacs into the NPSO, which done so faster and more pervasively than the and productive user experiences. If the of making customer experience work The NPA is a new conceptual model “capable of implementing a scalable has enabled the procurement for the average CEO or board knows how to handle,” APIs at the back end were not already well,” says Henshall. Banks are beginning for payments in the UK, aiming to cover infrastructure for the NPA”. The capability successor to each of these schemes to be Henshall tells us. He explains that because available, the bank can’t effectively use to pick up that open banking is a the processing of £6.7 trillion of Bacs, for clearing Faster Payments will be integrated within the NPA programme. APIs are largely a software engineering and IT them. competitive advantage and opens up Faster Payments and potentially cheque migrated onto the NPA platform first, as This has widened to include clearing and operational construct, there can be problems There is also the misperception that access to new markets and new partners payments every year, from 2021. described in the Payment Strategy Forum settlement of potentially all of the UK’s if an organisation is not in synch with how its APIs are for external public consumption. they might not have had before. It aims to simplify the rules, standards (PSF) Blueprint. non-card retail payments, rather than just APIs are built and run. Most APIs are internally or partner- Aside from the reasons mentioned and processes that banks and others need The NPSO will conduct a further the real-time aspect. The “fintech fever” has gained oriented. Within banks, open banking as a above, APIs are now becoming to follow to use the systems. consultation in 2019 on plans for the Specific details regarding the momentum for good reason – banks strategy is usually either regulation-driven, particularly relevant for the industry Paul Horlock, chief executive of the migration of payment volumes currently approach and timelines for the new deprioritised the “digital customer like PSD2, or focused on new business due to regulatory pressure to enhance NPSO, says: “We need a long-term strategic cleared through Bacs and potentially, procurement process will be published in experience”, which fintechs jumped on opportunities. Both reasons are helping to competition. Since 2011, the number partner that is capable of working with us subject to a suitable business case being a prospectus on 18 October 2018. by relentlessly focusing on usability and change the role of APIs. of regulations has increased, with some to safely deliver a scalable infrastructure identified, the migration in future of Henry Vilar value-mapping, creating a refreshing Banks have been delivering APIs for regulations designed to enforce more new digital customer experience that a long time, but historically they have open strategies. “The most effective way consumers felt banks were lacking. been private, point-to-point, and not very to open data or services in a transparent but still controlled way is via APIs with a Goldman Sachs to spin off Simon finance app solid strategy and governance concept around it,” Bortenschlager says. Goldman Sachs is in advanced talks with channel among independent and regional an interest in a stake in the business “In the world of fintech, where the focus is Red Hat’s business model is based several companies to sell “Simon”, its three- firms. It added that it would also provide include JP Morgan Chase, Barclays, HSBC, on usability and customer engagement, on open source. The firm works with a year-old app that sells financial products to access to advisors who represent client Credit Suisse, Wells Fargo and Prudential huge community of developers globally retail investors. assets of roughly $2 trillion. Financial. APIs are the key component of making and contribute to that code base, and Simon stands for Structured Investment In the latest development, and The WSJ says the deal, which would its benefits from a large and active Marketplace and Online Network. Soon according to the Wall Street Journal (WSJ), value the app at about $100 million, is customer experience work well.” community are transparency, security and after its initial launch, Goldman Sachs which cited people familiar with the likely to be finalised in the coming weeks. Benjamin Henshall, Red Hat speed, which then can be leveraged by said in a presentation that Simon allowed matter, there is plenty of interest. Goldman Sachs declined to comment. customers and clients. bt access to a new third-party distribution Some of the names that have expressed Antony Peyton Henry Vilar
16 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 17 COMMENT COMMENT
is to underestimate the ingenuity of “If your solution complete fools”. That’s probably too harsh isn’t so easy to (the overworked cashiers I’m pulling quotes from are more likely improperly use that a tired/ trained than “complete fools”), but it illustrates a valuable point for any bored/overworked/ innovators: if your solution isn’t so easy undertrained cashier to use that a tired/bored/overworked/ undertrained cashier at [insert retailer] can at [insert retailer] can use it, then it’s not going to catch on. For years, at Finovate, we’ve seen use it, then it’s not people pushing the boundaries of what going to catch on.” was possible in fintech, and that includes a lot of what I like to think of as “$2 bill” Greg Palmer, Finovate solutions. These are solutions that are functional, legal, but slightly too unwieldy to really catch on. Let me be clear, I don’t mean to disparage these innovations or technologies at all. Valuable innovations don’t always have to be customer-ready “Oh, you’ve got one of those phone right now, they can be a step on a journey payments? I don’t think we take those.” (The that will lead somewhere that could Apple Pay logo was proudly displayed on change things. “$2 bill” innovations are vital the PoS terminal.) to the long-term success of the industry, “It says the card reader is disconnected, and I can’t think of a single innovation can you try again?” that’s popular today that you can’t trace “Apple Pay won’t work here because cards back to a “$2 bill” version. need to have the chip now.” (Yes, for real.) I love “$2 bill” fintech, and I’m sure Obviously all of these examples we’re going to see a huge amount of it demonstrate user-error on the part of on stage at all six Finovates over the next the cashiers, but guess what – in real life, 12 months. The question we should all user-error abounds. This isn’t limited to be asking ourselves, though, is who is retail payments, either, you can experience ready to go past the “$2 bill” stage? Which something similar when send money innovations have a chance of becoming so $2 bill fintech electronically to your friends, contact widely adopted that we no longer bat an customer support for an online-banking eye when we use them? Which innovations issue, apply for a mortgage etc etc. are already there? To quote Douglas Adams, “a common The companies that can get past that By Greg Palmer, VP Have you ever paid for something with why I like fintech. After all, using most Greg Palmer, Finovate mistake that people make when trying to hurdle are the ones who will become of Finovate a $2 bill? Or a Sacajawea dollar? Both are fintech solutions to complete basic design something completely foolproof household names. bt legal tender, and theoretically, nobody in financial transactions isn’t too dissimilar the US should have any problem accepting to paying with a $2 bill. In theory, as long either. as the proper hardware is in place, there The reality, though, is frequently more shouldn’t be a problem accepting an NFC “’$2 bill’ innovations are vital to the complicated. If you’re at a major grocery payment, but once you get away from chain, you probably won’t get much more the sterile (yet admittedly high-stakes) long-term success of the industry, and than a questioning glance, but if you get conditions of the Finovate demo stage, any I can’t think of a single innovation that’s the wrong cashier when you’re buying number of real-world hassles can pop up. lunch, you could end up with a much more Chief among those hassles are the popular today that you can’t trace back convoluted transaction than you were people on both sides of the transaction expecting. You could even be accused of who need to be educated. Here are real to a ‘$2 bill’ version.” forgery and sent to have a talk with local quotes that I heard from retailers when I Greg Palmer, Finovate police (no joke, Google “$2 bill forgery”). paid (or attempted to pay) with various I like $2 bills (and Sacajawea dollars) NFC solutions in the early days of the because I like weird money. That’s probably technology:
18 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 19 CASE STUDY: CORE BANKING CASE STUDY: CORE BANKING
Riding the second wave Chip Mahan, Live Oak chairman and SANCHEZ #2 – FINXACT CEO, has a long relationship with Frank Sanchez’s company, Finxact, is based in Sanchez, developer of one of the old core Jacksonville and was set up with initial systems, Profile, which today resides with capital of $12 million. Sanchez describes FIS. Profile became one of the stalwarts of what is happening today as the second the US market but was unusual in that it wave of digital banking, following the also succeeded on the international stage. investment in channels and new banks Out of the discussions between Mahan from 2000. Today’s wave is focused and Sanchez came a plan for the latter to on mobile and much more seamless build a next generation core system, with integration between payment beneficiaries an initial $12 million raised to support the and recipients. venture and with Live Oak Bank lined up as The demand is for systems that are truly the first taker. real-time and can support a potentially That system has, naturally, taken longer massive increase in volumes, he says. to build than planned – there has arguably The individual values of transactions will not been a new offering in the history of decrease as digital banking matures, so the core banking system market that has volumes will increase, he predicts. Data arrived on time. However, Live Oak Bank analysis and business intelligence are also expects to go live, after a phased ‘friends key areas of focus. and family’ pilot, by the end of this year However, “banks are responding by to cover, among other things, its DDA and saying, I can’t put this on top of my current savings business, with loan accounting to infrastructure”, says Sanchez. There are also follow next year. major frustrations about costs, he adds. The bank expects to start using the And he no longer sees a resistance to cloud system for all new accounts and, once deployments, with widespread recognition The US, in particular, is in urgent need of new core offerings to support next generation everything is stable, will migrate existing of their flexible and lower cost benefits. digital banking. Can an offering being built by one of the early core system pioneers, accounts, which Underwood predicts will The Finxact system is being built Frank Sanchez, fit the bill? Live Oak Bank, an investor and first client, clearly hopes so. be mid-2019. “This will be at the right time, for AWS although could support other Martin Whybrow spoke to the tech-savvy bank and the start-up supplier. when we feel confident.” options. It is meant to be real-time and Live Oak Bank HQ, Wilminton, North Carolina, US In terms of the delays, “Frank had very event-driven. The design is centred on aggressive plans to start out with”, says inventory, meaning any attribute whether Underwood. However, “internally, for our a traditional currency, electronic currency, shareholders, we set expectations as some security, physical asset and so on, rather time this year”. The development teams of than the customer account. This eases Live Oak Bank views technology as one origination; Apiture for online banking, online banking and bill payment products, the bank and supplier have worked closely the ability to support new financial of its differentiators. Which is a challenge with a next generation version of the latter these will be made available via First together, he adds. instruments, says Sanchez. In terms of >> when considering the core. The US market on the way for Amazon’s AWS cloud). Data’s online banking tools, derived from Neil Underwood, Live Oak Bancshares is dominated by ageing commercial core The bank also uses a bill payment FundsXpress, an acquisition around a systems that mostly now reside in the system, Payrailz, a big data cybersecurity decade ago. hands of just a few large suppliers, as a solution called DefenseStorm, and is result of vendor consolidation. Customer implementing a debit card system, ADDRESSING THE CORE satisfaction is low and there is little to Greenlight. These are third-party offerings However, for all of this innovation, there be gained, aside from stress and cost, (in contrast to nCino and Apiture) that was still the question of how to overhaul “When we looked to build out our next from replacing one with another. Over are backed by the bank’s venture capital Live Oak Bank’s core operations. The idea the last decade or so, the main driver arm, Live Oak Ventures. “We are searching of building a new core was deemed a generation digital bank, there were no when talking to US banks that have gone every day on the venture side,” says non-starter, says Underwood. The scale suitable core systems.” through replacements seems to have been Neil Underwood, president at Live Oak and complexity of the task were the main complete exasperation with their existing Bancshares, and cloud-based design is a prohibitors. “We would have failed,” he Neil Underwood, Live Oak Bancshares supplier, rather than a sound business case. common thread running through each. concludes. Wilmington, North Carolina-based Live In addition, Live Oak Bank recently Having rejected the in-house route, Oak Bank has developed its own systems announced a joint venture with payments a search of the market proved fruitless. for other areas of its operation and, in a services provider, First Data. The bank “When we looked to build out our next couple of instances, it has successfully has been working on new solutions for generation digital bank, there were no spun off these (nCino for CRM and loan merchant services and, alongside the suitable core systems,” says Underwood.
20 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 21 CASE STUDY: CORE BANKING
THEM US from US competitors, he says. As the need arises to support the first customer, so the staff numbers will increase and he also anticipates a second round of funding.
THE POTENTIAL BENEFITS What will be the benefits for Live Oak Bank? The “API-first design methodology implies massive flexibility”, says Underwood. This should allow much better interaction with other systems. “Exposing the entire core, securely of course, will allow us to build out solutions for our customers.” Ease of integration is intended to be a key gain. Linking, for instance, Apiture to the bank’s current core, Fiserv’s Premier, for Live Oak Bank HQ account opening involves 62 calls to and from the core, says Underwood. This took 18 months to build and still has problems, openness, Finxact was the first banking he says. With Finxact, he expects this to be system supplier to sign up for the Linux “Exposing the entire replaced by a single call and response. Open API Initiative which seeks to define a core, securely of Another benefit for Live Oak Bank cited vendor-neutral description format for APIs. by Underwood stems from the native AWS Finxact is using the Google-derived course, will allow us to design, bringing reduced costs and much open source Golang high-performance greater scalability as the bank expands. language and SQL alternative databases, build out solutions for “Our goal is better customer experience with non-SQL options to follow. Sanchez our customers.” but to do it for far less.” He estimates that describes the architecture as “container- the cost per account on Finxact compared based” so the system can be implemented Neil Underwood, Live Oak Bancshares with Premier could be one-tenth. on the cloud but also on any machine, so It is easy to predict that some or all of will be deployable in-house. the Live Oak Ventures systems might be Sanchez admits that the development offered with Finxact. A “bank-in-a-box” has taken longer than he would have turnkey platform has been touted for liked. He points out that this is very new decades but this has been “laughable”, says technology with a currently relatively small Underwood. He believes that it could now developer community. The development be a reality, in a pre-integrated cloud- is being done in the US and Thailand. He based form. also blames the delays on a broader scope as well to gain the full benefits. Thus, the There is interest from the market in the than initially planned. When Finxact started more functionality within the single stack, development, says Underwood, including talking to banks towards the end of 2017, the better. discussions with CEOs of some large They struggle with Fintech complexity. We see straight to your goal. the feedback on the APIs and design was As well as providing the system, Finxact financial institutions and with a number of We leverage proprietary knowledge and technology to solve complex regulatory challenges, create new products very positive, he says, “but they asked, intends to market the underlying banking banks starting to carry out due diligence. and build businesses. Our unique “one fi rm” approach brings to bear best-in-class talent from our 32 offi ces where’s the branch system, the reports, model and schema to users, partners and Of course, the hoped-for benefits are worldwide—creating teams that blend global reach and local knowledge. Looking for a fi rm that can help keep the screens, really we need to run a bank, consultants, to use to build other financial unproven and promising-looking new core please fill out the picture for us. We have, products and to extend the standard systems have sometimes failed to live up to your business moving in the right direction? Visit BCLPlaw.com to learn more. but this has taken time.” functionality. The developments could be the hype or have failed altogether. Whether In part, he believes this demand for made more widely available through an Sanchez can deliver this time around an end-to-end solution, along the US’s app store-type model, he adds. remains to be seen, for all of his previous traditional service bureau lines, stems Although the initial focus is the US, it experience. However, whether from here or in part from the fact that often the is Sanchez’s plan to also offer the system from other sources, no one – apart perhaps platform will be restricted by the slowest internationally, with one investor in from the few incumbent heavyweight component. “It could easily be a sub- Thailand (a former distributor of Profile) a suppliers – would argue that the US market optimal mixed bag.” While Finxact’s system likely initial partner. In the US it currently isn’t crying out for new options. And much will have open APIs, third-party systems has 16 staff, having “cherry-picked” the the same goes for the rest of the world as would need to be API and cloud-enabled best service and engineering resources well. bt
LAWYERS OFFICES YEARS BCLPLAW COM September 2018 | www.bankingtech.com | 23 ANALYSIS: BANK OF THE FUTURE ANALYSIS: BANK OF THE FUTURE
When banktech gets personal TURNING THE SHIP – HOW BANKS lot of these traditional banks face is that ARE REACTING TO THESE FORCES because they are so complex with so much The impact to traditional banks is that legacy, the best they can really do on each one of these traditional product providing “banking as an experience” is to Brett King, co-founder and CEO of Moven, explores how artificial intelligence (AI), departments will be under threat because just ensure that they are doing what the embedded tech and experience design are reframing banking. these products will largely cease to exist challenger banks have already done. – replaced by a technology experience If you look at the range of leading delivering the same or better core banking innovations in banking over the last As technology has dominated our utility. decade, evidence suggests that fintechs lives over the last decade, banking has This changes distribution dynamics and technology players like Ant Financial, transformed what customers expect in considerably. For example, the selection remain three to seven years ahead of an everyday banking experience. Today, criteria many customers used historically mainstream banks on the innovation a digital presence is simply table stakes of who they banked with, tended to be stakes. Banks seem to be spending most – it has become imperative in how banks focused on the location and convenience of their time catching up and arguing engage and more importantly, retain their of the local branches. Now the focus is why they can be fast followers of the customers. Despite this progress, less than how you will differentiate your bank in challengers. This lack of core digital 5% of banks in markets like the US and real-time, and how quickly and smartly strategy across the board will make it UK allow a customer to open an account that bank can respond to an individual almost impossible for these traditional through a mobile phone. A shockingly low customer’s needs. banks to transform at the same pace that statistic. As a result, many leading banks have challenger banks have been able to do So where are banks today, and what taken to building apps to compete with consistently. Thus, many banks are also do they need to do to compete with the the up and coming challenger banks; like partnering with fintech firms that can get challenger banks whose offerings are 100% HSBC working on its own digital bank them into market faster or cheaper than digital? under the codename “Project Iceberg”, they can on their own. JP Morgan Chase’s Finn, Wells Fargo’s CHANGING ECONOMICS Greenhouse and more. The issue that a THE EMBEDDED There is a paradigm shift especially in TECHNOLOGY EXPERIENCE retail banking (increasingly across wealth The idea of the embedded technology management and wholesale banking), where experiences, with the use of new age many products and services that have been technology like AI, is a current reality that built on the premise of the signature, paper- is only getting more sophisticated. In our based process and just physical presence, are homes, we have the likes of Siri and Alexa no longer valid or viable for the way people that have infiltrated our day-to-day from live their lives today. “The important finding the right restaurants with your Banking, like all other industries, is preferences or how you book your next subject to rapidly changing consumer point here is that flight – in essence, acting as intelligent behaviour and technological capability. agents on your behalf. Brett King, Moven In the field of music, movies and TV, retail the technology The important point here is that the consumer goods, clothing, groceries and infrastructure is the technology infrastructure is the primary even restaurants, digital distribution is financial services. The future expectation that your customer’s mobile device will interface by which people are benefitting, increasingly a fact of life. But technology will be that banks should be able to have this capability embedded. always on, primary interface by and as a result, technology owners and has not just attacked distribution, it’s anticipate their customer’s daily experience anticipating their needs. first-movers have a distinct advantage. also attacked friction – driven by shorter and proactively meet their needs – in It is with this mindset that the which people are As social media networks have attention spans, technology adoption real-time. To effectively do this, the bank challenger banks and the banks of benefitting, and as the advantage of the network effect, diffusion and improvements in experience will need to intuitively understand and the future are aiming to circumvent and companies like Amazon have the design. In a world where you can order link all of its customer’s financial activity the traditional banking product and a result, technology advantage of voice; banks ultimately need groceries from Amazon and have them and relevant behavioural data to ensure departments by taking its core utility (i.e. to partner with innovative technology delivered within hours, having to physically that the customer will have access to the the ability to store money safely, move owners and first- providers to be integrated into their sign a piece of paper to access banking right banking payments or credit capability money quickly or to access credit) and movers have a distinct customers daily lives in the same way that services seems an anachronism. when and where it is needed. The future embedding into the technology layer. Next Amazon and social networks are today. What is yet not recognised by banking experience doesn’t necessitate a will come consumer awareness of the fact advantage.” If they don’t, banks will quickly lose their most financial institutions is that this credit card or signature to make a payment that they don’t need to apply for a plastic customers and market share to those directionality will inevitably, completely or the need to ensure that a checking credit card in advance, that credit will be Brett King, Moven banks who are on the forefront of this transform acquisition economics for (current) account has cash – the idea is available on demand, as required. paradigm shift. bt
24 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 25 INTERVIEW: PETER HAINZ, SMARTSTREAM
The definitive source of news & analysis of the global fintech sector Wave goodbye to the risks In an exclusive interview with Peter Hainz, global presales programme manager – cash and liquidity at SmartStream, he explains Monthly page views: how it helps banks deal with intraday liquidity risk challenges and how machine learning is making a major difference.
You could see Hainz’s role as a doctor of Peter Hainz, SmartStream of work for ten years with “many tier 1 570,000+ fintech as he, and SmartStream of course, customers across all regions”. Clients take all the pain away for banks when include JP Morgan, Morgan Stanley, it comes to intraday liquidity risk. With Goldman Sachs and Deutsche Bank. 1,500 clients the firm has provided a lot of Newsletter subscribers: comfort. RISE OF THE MACHINE Hainz’s background displays a In the artificial intelligence (AI) and 42,000+ strong understanding of Basel III as he machine learning (ML) space SmartStream is professionally certified. Hainz shares is up to some smart stuff. his expertise as he has lectured at three “We have an innovation lab in Vienna, universities in Vienna on treasury and led by Andreas Burner. It is a highly liquidity management. He is also often functioning team working on AI, with Customer database: ADVERTISE asked by regulatory bodies to provide a focus on ML. ML fits nicely into this opinions about this subject matter. because we are in the reconciliation space, 50,000+ With these kinds of skills, he can explain so you have incoming and outgoing data WITH US how SmartStream helps banks deal with which needs to be reconciled and ML is a intraday liquidity risk challenges. perfect scenario for this. Magazine distribution: “I have visited many banks in Europe, “And then you have unsupervised and US, Middle East and Africa. Banks are supervised ML, which is especially useful coming to us as we provide thought ”We aim to help for regulators who receive tonnes of data 55,000+ leadership in intraday liquidity monitoring and they have to evaluate this, especially in and management. The feedback I receive regulators, which the liquidity space. is that they often need guidance on how have limited “Regulators have to assess anomalies. to apply intraday liquidity regulation along ML especially detects anomalies and learns stress-testing. resources, with AI to from them, where for example the user print and online “Currently many banks only have end then receives alerts. of day (EOD) visibility in cash and liquidity. detect anomalies.” “Given a set of data as input sample, One bank contacted me and said, ‘if I have Peter Hainz, SmartStream ML can learn and detect anomalies and only EOD data available, I have issues with report them accordingly. This is certainly Twitter @FinTech_ Futures: LinkedIn group: big payments in the afternoon – as I do not applicable for banks in the area of stress exactly know what my actual position is.’ So testing. in order to avoid too large liquidity buffers “We aim to help regulators, which or not enough liquidity, accurate real-time “As a global company we have local have limited resources, with AI to detect cash and liquidity data is necessary. management centres with regional anomalies which human resources, for “A big challenge for our clients is knowledge. Our people know the example, cannot solve in a timely manner.” highest data quality, which is required local regulations. Basel gives their When it comes to future ambitions, 36,000+ followers 2,100+ members for excellent real-time intraday cash and recommendations and we have local Hainz is happy to explain. liquidity monitoring. We have a very authorities that implement these solutions. “We are engaging with different experienced team supporting our clients Our aim is to talk with local authorities, like markets which haven’t fully integrated the with these needs.” the UK’s Prudential Regulation Authority reporting regime. We can help customers SmartStream also provides regulatory (PRA) or the European Banking Authority produce reports. Request a media pack for more information insight. For example, in specific regions (EBA) and provide solutions.” “We are also building out richer and in the Middle East Smartstream was This is not limited to Europe of course. more functional stress testing capabilities. working closely with the regulator and SmartStream does the same across the rest We will offer more proactive monitoring, so they discussed the best intraday liquidity of the world, such as in Singapore, Hong banks can control what goes on.” www.bankingtech.com risk solutions for the banks. There are also Kong, India and the US. It seems SmartStream’s desire to remove different flavours to consider – such as Along with this global savoir-faire, pain in this part of the fintech world is Contact Jon Robson local regulatory specifics. SmartStream has been doing this kind looking healthy, wealthy and wise. bt Tel: +44 203 377 3327 | Email: [email protected] October 2018 | www.bankingtech.com | 27 CASE STUDY: HOME CREDIT CASE STUDY: HOME CREDIT
walk in, like what they see and decide to open an account. Jakub Petrina, CMO of Air Bank, also came over to the branch to have a
Air Bank, Prague chat. Air Bank is only in the Czech Republic for now – with 650,000 customers – but Germany could be next and within 12 months.
THE RIGHT MIX Zonky sounds fresh and different. And that’s the plan. It was founded three years ago and its office is located away from HC. The idea is to create a separate culture where its approximately 150 staff can work. The vibe is certainly less corporate. To its Credit The firm lets people lend to people – and those seeking loans can tell their stories to try and get the investors on Home Credit HQ, Prague board. Investors can get a 3.5% to 5% yield. Zonky is proud of its net promoter score of 82 and that loans get approved within two days. In an exclusive tour of Home Credit’s (HC) operations in Prague, Banking Technology It has a community of 50,000 Czech users. met seven staff members and learned about its retail challenger Air Bank, P2P Here people can share experiences and advice. For example, a person may well be lender Zonky and Home Credit Venture Capital (HCVC). Air Bank interior looking for money so he/she can set up a coffee shop. They ask people who did it; and the success is passed onto the next wave. Picture in your mind a map of Europe. Sitting interest in China and India shows not only It makes thing less formal and removes doesn’t make money from banks fees – it Currently Zonky does 2,000 loans per at the heart of the continent is the Czech a great understanding of those nations but petty rules. If you want to bring your dog or eat profits from consumer loans and mortgages. month. It is targeting 400,000 users by 2028. Republic – the birthplace of HC in 1997. where it sees the firm’s future. your ice cream in the branch, feel free. In fact, Its price list is kept simple at 250 words. In a video call with the CEO, Pavel Novak, Now expand outwards from Europe the bank had some amusing photos showing Karasová cited one traditional bank which who was in San Francisco for an event, he to show the entire world and see that MAKE IT LIKEABLE people taking advantage of these rules – such has a contract of 11,972 words. That’s almost says while there are P2P firms like Zopa and HC is active in ten countries, including Air Bank was created in November 2011 as as one guy with a gigantic potbellied pig a novella. Lending Club, “we have a community and we Russia, Kazakhstan, China, India, Indonesia, HC saw a gap in the market for consumers. happily sat on the floor in a branch. Air Bank is a challenger – and its customers don’t see them doing it”. Philippines and the US. The consumer Its approach was to ask “what do people Jana Karasová, the bank’s PR can also be a challenger. He adds: “We are using cloud finance provider has grown to occupy large dislike in a bank?”. For example a typical spokesperson, says its research found that the This means a user can dispute any bank technologies and no one else on the Czech swathes of the globe with a diverse range of contract is 12 pages long, it’s trimmed that traditional players were “mysterious, arrogant charge three times a year. Within the app is a market is doing that.” operations and activities. down to one page. and monotonous”. It’s the opposite. Air Bank trash symbol – which is used to bin a charge Looking ahead, IT is its biggest HC sees itself as the “world’s biggest if perceived as unfair. Think of a broken ATM, department and tech investment is going to fintech” and its goal is to lend to people which means the individual has to find and be a €5 million spend next year. He envisages with little or no credit history. A major use another one which charges a fee. The seeing €20 million spent over the next few shareholder is PPF, a privately held financial person challenges that and gets a refund. years. The Zonky office already has space and investment group owned by billionaire While it’s a digital bank, Air Bank does have ready for new IT recruits – as I saw first-hand. Petr Kellner. 35 branches across the country. Next year, he wants to double business Things are going well. HC has €21.8 I visited one of these branches, and as Radek Pluhar, Home Credit again and look for 10% of the market share. >> billion in total assets, a net loan portfolio of the name suggests, it had a light and breezy €16.4 billion and a healthy net profit in H1 of look. It was spacious, with an energetic green €40 million. décor, and the assistants don’t sit opposite Around the world it has 130,800 “HC has mastered the the clients. The desks mean the customers sit employees. On my visit to Prague I met seven next to them – they see what the assistant of them. These aren’t people who’ve spent offline world.” sees to break down any barriers. “HC is nicely expanding and life is good.” their whole lives at HC. Some are former Pavel Krbec, Home Credit Air Bank feels the branch has plenty of Radek Pluhar, Home Credit bankers, while others were entrepreneurs. It is life yet. Karasová states that 79% of its new a fascinating mix – and their knowledge and Pavel Krbec, Home Credit customers come through the branch. They
28 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 29 CASE STUDY: HOME CREDIT SPOTLIGHT: BLOCKCHAIN
programmes to help young managers realise their potential. At the heart of this thinking Enterprise blockchain: is that in less predictable emerging markets, the need for buffers and adaptive capacity increases. the rubber has met the road My final interview was with Miroslav Boublik, managing partner of HCVC and head The adoption of blockchain technology to delivered the vision we’ve shared with our With the choice between Corda of special projects at HC. rewire the way the world does business is ecosystem from the beginning: to build and Corda Enterprise, a wider range of HCVC has three projects. Nymbus, a now an inevitability. a robust, new blockchain-based system institutions can now realise the full potential cloud core banking provider; Barion – a This year will be remembered as the that enhances the way global business is of blockchain regardless of their industry, payments gateway in Hungary; and Eureka. year enterprise blockchain technology conducted. size, budget and stage of development. ai, a Singapore-based firm that uses telco came of age. While the timing for adoption We are now seeing widespread R3’s Marketplace is a directory of over data for monetisation. These are all minority will depend on the market and sector, the community adoption of Corda, our 200 organisations focused on harnessing investments. trajectory is clear. open source blockchain platform, and the power of Corda, and helps firms to HCVC invests anything from between Businesses of all sizes across the world, its enterprise version for commercial discover, build and deploy solutions on
Charles Bridge, Prague $1 million to $20 million in each firm. He’s in sectors as diverse as financial services, distribution. our platform. At launch, Marketplace looking for Asian expansion – “particularly in healthcare and logistics, are now actively had over 50 applications solving specific David E. Rutter, R3 India”. Boublik says “India as vibrant for its VC using blockchain in live deployment as you problems across several industries, Freedom is part of Zonky’s ethos. Novak loan is simple – there are five fields to fill out and start-up culture.” read these words. including trading precious metals, says its innovation and IT department are online – and the decision to authorise the In his other role, HC wants to push on with The speed and scale of blockchain streamlining property valuation, trading independent: “We can decide what we want loan is instant. open APIs. This was “inspired by open banking adoption has been remarkable. The level high quality liquid assets more efficiently, to do. If we want online cash loans – then we During the tour, quite a few people in the UK” and he wants HC to participate in of interest, airtime and pace of growth it self-sovereign identity and much more. can do it.” mentioned Kaggle – a Google-run platform the ecosystem. This will make it easier to work has experienced is usually reserved for When we started this journey three and community of data scientists and with larger and smaller partners and bring primetime consumer-facing technologies years ago to take the potential of LIFE IS GOOD machine learners. HC’s know-how into this arena. and platforms such as the iPhone or blockchain technology and apply its Because HC is the business of lending, risk Krbec says HC had a record 7,200 teams At the moment, this project is in five Instagram. benefits to real business, we knew there management plays a huge part. compete to work on a computational countries – Czech Republic, Vietnam, India, The history of enterprise technology would be challenges ahead. Then, and Radek Pluhar, group chief risk officer, feels challenge via this platform. The idea was Indonesia and the Philippines. The goal is to has shown it can be as game-changing as to a lesser extent now, the industry’s “HC is nicely expanding and life is good” for these teams to use anonymised data to teach the standards to HC’s local staff. Later, consumer technology in the long run, but imagination was captured by public because it’s found its niche. It would be hard predict who will default on paying back a those people can work with companies. more often than not it remains behind the blockchains like Bitcoin and Ethereum. to argue with this based on its geographical loan. This was HC’s clever way of outsourcing The tour was a lively two-day affair. The scenes and adoption rates are far more We chose a different path, and the tough reach, 29 million customers and the stats an innovation lab. chance to meet so many different people, visit conservative. choices we made around critical issues mentioned above. two offices, and see a bank branch in action, This is not the case for blockchain. such as privacy, security, scalability, HC can make customer decision loans in THINKING AHEAD offered a great insight into how HC works. Deloitte’s survey of 1,000 companies across integration and others led us to design one minute – and six million such decisions For Home Credit to be successful in the fast- The company has proved that it can be seven countries found that 34% already Corda by taking the best of early are made a month across the globe. And growing markets it operates in, it needs to be versatile and successful. It’s also proved that had a blockchain system in production blockchain technology and improving that’s not counting holidays – such as Diwali driven by innovative thinking. it has every chance to stay as the “world’s today, with another 41% expected to The open source version of Corda is a upon it to suit the needs of global or Christmas. Mel Carvill, group board member biggest fintech”.b t deploy a blockchain application within unique, inclusive platform designed for business. As the company has expanded, Pluhar and chief officer for public affairs, runs Antony Peyton the next 12 months. Nearly 40% of the production from the very start. Companies And the dividends are paying off. explains it can now cross sell to a “safer group surveyed companies reported they would with a relatively simple IT structure and Corda is now seen as the blockchain of people” – and 20% of its customers do take invest $5 million or more in blockchain in network can go live on it today. Each week platform that gets the job done. The right loans that way. Miroslav Boublik, Home Credit the coming year, according to the Deloitte we’re seeing new and innovative CorDapps model and the right technology, built We met in person but Pavel Krbec is 2018 Global Blockchain Survey. being released into different industries. collaboratively by the right people. This is the group head of online. He feels “HC has The potential for this technology to Corda Enterprise offers a range of blockchain machine-tooled for business. mastered the offline world” but recognises improve the efficiency, transparency, additional features that make it the most As more institutions put their how things have changed. For instance, speed and security of the way money and resilient, secure and efficient enterprise resources behind blockchain technology, it partners with Russian e-commerce firm goods flow around the globe is vast and blockchain platform available, including the network effect will continue to Eldorado. “India is vibrant for virtually unparalleled, but it was clear from the Blockchain Application Firewall, so it grow and businesses across the globe They have created a marketplace “so you its VC and start-up the outset to R3 and the thousands of can be deployed inside corporate data will become connected in a more can browse a catalogue like Amazon”. During coders, business leaders and cross-industry centres, while retaining the ability to streamlined, secure and efficient manner our meeting I saw it on a mobile phone. It was culture.” professionals that make up our ecosystem. communicate securely with other nodes than ever before. Corda is now firmly an easy-to-use UI. Krbec says it was created We are immensely proud to have Miroslav Boublik, Home Credit anywhere else in the world. This is a critical rooted at the heart of this revolution, and one year ago and at present “thousands of played a role in the enterprise blockchain feature requested directly by institutions our work has only just begun. bt contracts” are closed every week. To get a revolution since Day One, and to have with complex IT infrastructures. David E. Rutter, CEO and founder, R3
30 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 31 CITY SPOTLIGHT: FRANKFURT CITY SPOTLIGHT: FRANKFURT
“I’d be inclined to say that when it comes to banking, Germany is not really that far ahead. I mean, we have got N26, but it is really unique.” Hugo Paquin, TechQuartier
cultural reason why Germans have been hub in lieu of London is far down the list of attention from firms which want to ramp quite reluctant to start their own firms things around Brexit occupying their mind. up their development. With access to While we were at the hub, we managed Regardless of London’s fintech exodus, tier 1 banks and a range of fintechs to to talk to some people that are fully it was clear that Frankfurt needed a boost collaborate, TechQuartier is preparing immersed in the banking and fintech world to accommodate start-ups and fintechs in the foundations for a thriving fintech in Germany. For example, we managed to particular. TechQuartier represents exactly ecosystem in Frankfurt. see the Plug And Play team getting settled that, alongside the 11 other innovation “All these start-ups work in the same in their newly launched fintech platform, hubs (D-hubs) throughout the country, space, which means it is very easy for aimed to make the most out of the fintech aimed at promoting digital and tech them to collaborate with each other – appetite taking flight in Frankfurt. innovation. we shouldn’t dismiss the geographical One of these is Pascal Di Prima, CEO at The hub was founded nearly two years proximity,” adds Paquin. bt Fintech tour Frankfurt: regtech Lexema. Its product, which has ago and has already attracted international Henry Vilar recently completed its pilot with German banks, is looking to expand into other ready for a post-Brexit world? markets to educate banks’ executives on EU regulation. “I believe that while it is not now, “All these start-ups work in the same Frankfurt definitely has the potential to host a large amount of fintech companies space, which means it is very easy and become a fintech hub,” he says. “This for them to collaborate with each Many deem Frankfurt to be Germany Trade & Invest (GTAI) hosted in Germany, those working in the industry may look like a good thing, but only in the the city that will host most Banking Technology over at Frankfurt’s know that the reality is different. short term. The damage that Brexit can other – we shouldn’t dismiss the TechQuartier, an innovation and Hugo Paquin, who helps run do to Europe and globally outweighs the of the banks and fintech collaboration hub with a specific focus on TechQuartier, when asked about Germany short-term potential of fintech companies geographical proximity.” companies emigrating away fintech firms. being at the forefront of digital banking, to thrive locally.” Hugo Paquin, TechQuartier from London as a result of It is definitely a candidate to be kept an says: “Not at all! I’d be inclined to say that He’s not the only one who feels this way. Brexit’s new status quo. eye on, but it is just overly hyped to what it when it comes to banking, Germany is not Throughout the hub’s fintechs firms, the amounts in reality. really that far ahead. I mean, we have got possibility of Frankfurt to become a fintech In 2010, Frankfurt hosted nearly 250 N26, but it is really unique. Other banks, national international banks. This number like ING and DB Group, are definitely has increased since, and with many UK investing and looking into innovation, but banks starting to set up offices there, the implementation hasn’t gone that far”. current estimations are much higher. He adds: “In terms of banking, Frankfurt However, on the fintech side, the is definitely up there, but fintech is a picture doesn’t look as prolific. Fintech different story.” Paquin tells us that there’s companies are in short supply, and the only 350 start-ups in Frankfurt – only a start-up ecosystem is not comparable to fraction of them are fintechs. London’s. The hope is that fintechs start realising Earlier this summer, Banking Technology the potential of the city due to the density ran a series of polls which crowned of banks and start-ups migrating there. England as the best fintech country in the Ute Richter runs TechQuartier’s sister world, beating Germany in a final that was hub in Darmstadt, Hub 31, which is solely a bit more toe-to-toe than it should have. focused on cybersecurity. She believes This clearly points towards a certain that Germany is now starting to see a more sentiment – that Germany leads the way in risk-prone attitude towards innovation fintech investment and applications, but and start-ups, but she believes there is a TechQuartier’s offices, Frankfurt
32 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 33 COMMENT COMMENT
Titles, corner offices “You can never and authority in a assume what you know today is enough disrupted economy for tomorrow.” Leda Glyptis By Leda Glyptis
In September 2002 I had a sleepless night justification. It was a quantity and mileage unlike all others. defence. assumed you don’t have one and therefore Although I am no stranger to insomnia, I So I got a bit of sleep. what do you know? Because even if you do am not usually susceptible to stress, so that And walked into the class. And died a know, what can you do? night is memorable. Sleep was elusive and little. And although there is practical wisdom the short spells I managed to snatch were Because here was a mature student, a in this (because you may know, but in a filled with angst-ridden dreams. breezy 60 to my 24. Retired naval officer hierarchical world, without authority, you I was starting the second year of with NATO credentials. Ready and willing cannot do), there is also madness. Because my PhD and had just won a teaching to learn what I had to teach him and you can never assume what you know scholarship. The following morning I was teaching me in turn that things need not to today is enough for tomorrow. going to teach my very first seminar for a come from grey beards to be useful. So when I walked into that class ready course on democracy and democratisation, But also teaching me with gentility and to teach, I was the only person in the room a comparative politics module for third grace that your credentials can’t be relative (but most definitely not the building) who year undergraduates. I was 24 and a lot was to how you got them or you won’t last had spent any time understanding the riding on this. My funding. My future. Not the day. You can’t stand at the head of the theories of democratisation, the trends in letting the London School of Economics class because you have a few years on your statistical associations between GDP and down. Not falling short. students. It has to be about what you did the stability of the democratic process and Not letting the students down who with those years, however many of them the average number of power hand-overs (in my head) were demanding and there were. at the end of fully served terms of office sophisticated. it took before you could breathe free and And realising I would be absolutely no AUTHORITY BEYOND assume a new-born democracy was stable use to anyone unless I got some sleep, I TITLES AND HATS (three, in case you care). comforted myself with the thought that I In banking, you always get introduced And I had a mature student who had was older than them. Not by much. But by with your title and grade. Expertise and been there for the Suez crisis, actually enough to have completed my own degree seniority. physically there, in the room. and a masters, having done a research Your chair makes you, as it hooks you He was in the listening chair, in that job for a year and completed a year of my to a solid box in a hierarchy that shuffles classroom, not the talking chair. But only PhD. I was older and the learning in those faces but not degrees of significance. a fool would silence him for the sake years would be my shield and authority If you don’t lead with your title, it is of situational authority. And I am a lot of things in life, many of them deeply irritating. But I am no fool and neither was “If you don’t lead with your title, it is he. He knew when he had invaluable assumed you don’t have one and experience to share. He also knew when the youngsters in the therefore what do you know? Because room had things to teach. He was there to learn, he even if you do know, what can you do?” was generous with the Leda Glyptis knowledge he had and the lectern was just furniture. >>
34 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 35 COMMENT
THREE LESSONS IN HUMILITY FOR BANKING EXECUTIVES ■ Lesson one. My one time COO and the best mentor I have ever had (his name is Jim and sadly for banking but luckily for him he retired to a sandy beach) used to insist on reverse mentoring, getting kids out of the back offices and basements and having them teach him stuff they knew. New programmes just installed in his PC, a new policy fresh off the press, how to navigate social media. It didn’t matter. It had to be someone shaking at the size of his office and level of authority having to learn that there is always something you know that’s worth sharing, and the top guy doesn’t know everything. Be like Jim. Stay teachable. And in doing so stay humble. And in doing so, teach your organisation it is a value to be cherished, because, enter left, lesson two… ■ Lesson two. We love to talk about ■ Lesson three. Your title is bound to your disruption but we hate what it does to the organisation, your experience isn’t. The wallpaper. Technologies and ideas that digital natives’ age is bound to biology, are two or three years old laugh at your their usefulness isn’t. Knowing everything 30 years experience. Not because it is not is an impossibility, learning is a choice. If valuable but because it is not relevant. you want to navigate disruption, accept Technologies or practices borrowed by “If you want to that the first thing that will really transform other industries don’t care about the dress is how you relate to your work and the code or front-loaded audit reviews your navigate disruption, world around you. industry considers normal. Not because accept that the first It’s heady, it’s scary. It is occasionally they are not meaningful, but because they overwhelming. It is definitely much more are your issue, not theirs. thing that will really terrifying than a bunch of undergraduates As you try to learn from digital natives in an overheated London classroom. But I of all ages and from other industries, it transform is how have no sleepless nights any more because pays to enter the conversation with the you relate to your back when I was 24, a retired officer sat humility of the learner, despite your title, pen poised ready to learn from me and great big office and tastefully greying work and the world everyone around him and he taught me temples. It’s hard to stay humble but you everything I needed to know about staying can’t learn without it. So try. And use all around you.” relevant. Shut up a little, listen and learn that hard-earned experience to accelerate, Leda Glyptis from everybody. Experience may be how filter, select and weigh. It is still valuable. you got the title and corner office. Learning It’s just not everything. is how you keep them. bt
Leda Glyptis is FinTech Futures’ resident thought provocateur – she leads, writes on, lives and breathes transformation and digital disruption. Leda is a lapsed academic and long-term resident of the banking ecosystem, inhabiting both start-ups and banks over the years. She is a roaming banker and all- weather geek. 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.
October 2018 | www.bankingtech.com | 37 FINTECH FUNDING ROUND-UP FINTECH FUNDING ROUND-UP
Payments start-up Wagestream has UK mobile-only bank Monese has secured $60 million in capital giving it some raised £4.5 million funding. Investors handy oomph to fuel its international banking ambitions. Fintech funding round-up include Village, a VC backed by The Series B round is led by Kinnevik, with participation from PayPal, European entrepreneurs, such as Bill Gates and investor Augmentum Fintech and International Airlines Group for its loyalty and Jeff Bezos, as well as QED Investors, data business Avios Group. Existing investors including Investec’s INVC Fund also the London Mayor’s Co-Investment participated. Who’s got the dosh and who parted with it over the last month. Fund and Fair by Design fund, whose According to Monese, it now has nearly 600,000 users who are moving over $2.5 social impact charities include Big billion a year, and the number of new monthly customers has been tripling since Society Capital, Nominet Trust and the end of 2017. the Joseph Rowntree Foundation. The funding will be used for the usual stuff – increase the size of its operations, SimpleFinance, a Russian online platform providing SME lending, has completed a Wagestream, which offers a international expansion, and recruit more staff in its London and Tallinn (Estonia) $15 million funding round with an investment from the SBI Group. This is SBI’s largest “get-paid-as-you-go” service to let offices. It will also open a new office in Lisbon, Portugal. Monese adds that at the minority investment to date in a Russian company. workers access their monthly wages beginning of 2017 it was a team of 36. Since then, that team has quadrupled. SBI Group made its first investment in SimpleFinance during its first-round equity in real-time, has launched it in the raise a year ago, including debt financing. With the latest round, SBI Group’s total capital UK. The service can be implemented commitment now stands at nearly $50 million. by companies without impacting Alexey Basenko, SimpleFinance CEO, says: “We have already put to work our unique cash-flow, payroll or timekeeping lending platform backed by proprietary technology – our lending portfolio more than processes. ABN Amro’s Digital Impact doubled in 2017 and is forecast to double again in 2018 thanks to SBI support.” The company says it aims to end Fund (DIF) has teamed up with the “payday poverty cycle, and last- venture capital firm Earlybird and resort measures like payday loans solarisBank to invest €14 million Investment firm Ribbit Capital is on along with it”. Most UK employees are in Germany’s CrossLend. the hunt for $420 million in funds. paid monthly (around 85%), “meaning The fund has also agreed a Ribbit is a big player on the investment that employee financial stress is partnership with this digital cross- scene and this is its fifth fund – it raised uniquely higher in Europe because of border lending marketplace. $100 million in 2013, $125 million fund the monthly pay cycle”, it notes. ABN Amro says the partnership in 2014 and $226 million fund in 2015. Over 20 employers are now should help improve access to UK fintech firm Acorn OakNorth has To give you an idea of its diverse KPMG has acquired a minority stake in alternative credit scoring start-up AdviceRobo. piloting the Wagestream platform international capital for Dutch closed a $100 million funding round range of investments over the past The amount of the investment was not disclosed. including Key Security, CitySprint and companies. aimed at driving growth to make its years these include trading app AdviceRobo’s approach to credit risk management focuses on the insights available Fourth. Berlin-based Crosslend was platform reach $5 billion in assets under Robinhood, Coinbase, digital lending from the non-financial and behavioural data of would-be borrowers. Its psychographic founded in 2014 and has 40+ service across the US, Europe and Asia. start-up ZestMoney, US lender risk scoring can be used to access the creditworthiness of applicants for products employees. In the UK, challenger bank OakNorth Upgrade, UK-based challenger Revolut, including loans, mortgages, and credit cards. aims to have a loan book of around $2.8 paytech Gusto, Next Insurance, Founded in 2013, AdviceRobo has clients in ten countries across Europe and Latin South African-based point of sale billion, having already lent over $1 billion Brazilian challenger Nubank, and America, including Hungary’s OTP Group, Argenta in the Netherlands, and Banco Macro (POS) payments provider Yoco has of new capital year to date. The funding Wealthfront. in Argentina. raised a Series B round of $16 million will also be used to push its fintech led by Partech, a venture capital platform, Acorn machine. firm based in Silicon Valley, Europe EDBI of Singapore and NIBC Bank and Africa. This brings Yoco’s total have come on as new backers, with investment to $23 million. participation of existing investors Digital lending start-up Kissht, whose parent company is OnEMI Technology Other participants included Orange Clermont Group, GIC and Coltrane Asset Solutions, has completed a $30 million Series C funding round led by Vertex Digital Ventures, FMO (The Dutch Management. Ventures and Sistema Asia Fund. Development Bank) and existing Series According to Acorn OakNorth, the Existing investors Fosun RZ Capital, Ventureast and Endiya Partners also A investors Quona Capital and Velocity $100 million represented 4.3% of the participated in the round. Capital. company valuation, so the estimated The aim of this funding is to expand its network of offline and online merchants, Since launching its first product in total valuation is around $2.3 billion. deepen its presence across categories, and enhance its data and analytics capabilities. late 2015 – a card reader that connects Acorn machine’s team now consists of The company also has plans to launch its own credit card. with a merchant’s smartphone or almost 100 people and in the short term The firm provides collateral-free loans to consumers, who can repay through tablet – the company has grown its expects to add another 50 people across equated monthly instalments (EMIs) with the Kissht EMI card. Kissht says it disburses base to over 27,000 South African growth and operations, engineering, over $8 million of loans every month. small businesses, 75% of which had machine learning and data science. Kissht is based in Mumbai and has 160 employees. It reaches customers through never accepted cards previously. The Since its inception, Acorn OakNorth about 50 portals and 3,500 offline points of sale and offers loans across categories company says it is adding more than has secured $576 million from several such as consumer durables, electronics, health, alternative energy and education. 1,500 new merchants every month. investors.
38 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 39 FINTECH FUNDING ROUND-UP SPOTLIGHT: FINTECH
Paytm has got $300 million in funding Small-business lending platform Funding Circle has officially announced its plan to How to succeed in fintech from Warren Buffett’s investment firm raise £300 million as part of its £1.65 billion IPO on the London Stock Exchange. Berkshire Hathaway. Berkshire joins Heartland, the private holding company of Anders Holch Povlsen (an investor Ant Financial, SoftBank, Alibaba and in companies such as ASOS and Zalando), has confirmed that it will participate as and influence people SAIF Partners as key shareholders in the a “cornerstone” investor in any such listing and has agreed to purchase 10% of the Indian company. issued ordinary share capital. Todd Combs, the investment Funding Circle offers SME loans in the UK, US, Germany and the Netherlands. It Once upon a time, I was sitting in Barclays brilliant start-ups such as Previse, which Nick Murray-Leslie, Chatsworth Communications manager at Berkshire Hathaway, has launched in 2010. According to the company, it has facilitated more than £5 billion in head office on Lombard Street, writing a tackles late payments for businesses, and joined Paytm’s board of directors, that loans to over 50,000 SMEs from 80,000 investors – including over £1 billion in the first crystal ball briefing on the growth and threat Mosaic Smart Data, which applies smart data also includes Pallavi Shroff and Mark half of 2018. posed by financial technology for the CEO. and analytics to wholesale financial markets. Schwartz as independent directors. The firm uses proprietary credit models and data analytics, and borrowers can The briefing was printed out and faxed to Then there is R3, the breakout story in the Paytm founder and CEO Vijay Shekhar complete an initial application in minutes and typically receive a decision within 24 him, because I didn’t have an email account enterprise blockchain space and the fulcrum Sharma says the firm is “humbled by this hours in the UK and US. from which to send it. They hadn’t sorted for those looking to apply this technology endorsement”. them out for the lower tiers yet. Oh the sweet to professional markets. Their model of Sharma also notes that the Berkshire irony. engaging and working with the financial investment is going to be a “huge Crypto platform Dfinity has raised Fast forward a *few* years and fintech is services industry right from the start has advantage in Paytm’s journey of CHF 102 million ($105 million) for its now white hot and getting hotter. The sector paid dividends, with over 200 organisations bringing 500 million Indians to the blockchain supercomputer scheme. has sky-rocketed this year, with worldwide contributing towards the development of the mainstream economy through financial Returning investors Polychain Capital global investment in the sector for the first Corda platform. inclusion”. and Andreessen Horowitz (deploying half of 2018 exceeding the whole sum value This is ground-breaking innovation capital from its new a16z crypto fund) of 2017. – delivered by smart people who know were joined by names such as SV Angel, It has been the breakout success story for markets and understand technology. They are Aspect Ventures, Village Global, Multicoin London. established technology and payments working with banks and their customers to Capital, Scalar Capital, Wanxiang Where the Silicon Roundabout has failed infrastructure, but offers a safe space for tackle real-world problems. Artificial intelligence (AI) and robot process automation (RPA) firm UiPath has raised $225 Blockchain, and Amino Capital. to deliver on its hype and deliver us with a challenger start-ups to engage, network and million in Series C funding round, led by CapitalG and Sequoia Capital. In less than two years, Dfinity has got home-grown tech giant, the city has busily meet potential bank customers. TRAITS OF A SUCCESSFUL FINTECH The firm has gone from $1 million to $100 million in annual recurring revenue in less $190 million in private funding. It is now output dozens of outstanding, world class, With start-ups to the left and shareholders So, what is the shared DNA of successful than 21 months, reaching a valuation of $3 billion. valued at $1.9 billion. fintech firms. to the right, banks may feel like they are in fintechs? Firstly, the combination of financial Accel, which led both UiPath Series A and B rounds, also participated. UiPath’s total The firm sees itself as “The Internet Not wishing to crow, but London has the squeezed middle. But in truth, finance markets experience, and technical and funding has now surpassed $400 million. Other investors include Credo Ventures, Computer” and is designed to host the received more investment in its fintech sector and technology have become inseparable engineering excellence within their teams. Earlybird’s Digital East Fund, Kleiner Perkins Caufield Byers, and Seedcamp. “next generation” of software and services than any other country in the world, with over over the past decade or two. Crucially, the Second, an absolute focus on engagement The company projects to end 2018 with more than 1,700 employees, a three-fold – i.e. “Cloud 3.0”. $16.1bn of inbound investment during the banks still hold the cards, the liquidity and the with existing market infrastructures to increase in 12 months, with operations in 30 offices across 16 countries. The start-up says it is building a first half of the year. That puts it firmly ahead capital. work and define the use cases before “We are enabling a future where employees at every organisation are empowered new kind of public decentralised cloud of China ($15.1bn) and the US ($14.2bn). That Fintechs need the banks. They have development. to automate tedious and time-consuming work, enabling them to focus on creative, computing resource. “This rests upon a is a success story, right there. the markets, connectivity and ultimately And last, a seemingly inexhaustible supply challenging problems,” says Daniel Dines, co-founder and CEO of UiPath. new blockchain computer that is similar But the UK’s position as the leading fintech the influence over any change to existing of energy, drive, curiosity and intelligence. in concept to Ethereum but has vastly hub is by no means guaranteed. The history systems. The banks, for their part, have Of course everyone says they are improved performance and, ultimately, of financial markets teaches us that liquidity is been excellent investors and partners. They specialists in fintech, and blockchain in unlimited capacity.” bt hard to shift – but when it moves, it moves fast. continue to engage and partner with fintechs particular, nowadays – witness the sheer JUMO, which claims to be “the largest and fastest growing technology platform for So to Sydney, Australia’s magnificent – investing, encouraging and collaborating. It volume of self-appointed advisors and PR operating inclusive mobile financial services marketplaces”, has closed an equity funding capital – with a AU$60 billion financial was always going to be this way. “specialists” on LinkedIn. round of $52 million, led by Goldman Sachs. Other investors include Proparco, the services industry. Think tank, Australian The bulldozer approach of some self-titled In truth, this gold rush of the private sector financing arm of the French Development Agency (AFD), Finnfund, Vostok Fintech, estimates the sector has the potential “disruptive” start-ups, where you build an inexperienced is partly to blame for an over- Emerging Finance, Gemcorp Capital, and LeapFrog Investments. to take up to 30% of revenue from traditional alternative system and then try to slam it into cooked news and hype cycle which inevitably Since its launch in 2014, more than nine million people have saved or borrowed on the banking in Australia over the next few years, a an existing market, simply does not work. sets unrealistic expectations for speed of JUMO platform. It has originated over $700 million in loans on its platform to date and prize worth a cool AU$25 billion. adoption. manages over 25 million customer interactions per month. And so the banks, acutely aware that their FIRST ON FINTECH So choose your advisors wisely and trust The company has over 350 employees across Africa and Asia, approximately two-thirds lunch is under threat, are converging in Sydney Chatsworth knows a fair bit about fintech. your reputation to the best hands. They will of which are specialise in software engineering, data science, prediction, analytics and for Sibos, the annual conference, networking We were the first marcomms agency to focus articulate and tell your story with confidence, finance. event and shopfront for Swift’s services. on this sector, working on electronic broking, creativity and commitment. The new funds will be used for the expansion to new markets, the company says. With its frequently brilliant Innotribe online banking and market data with systems Wishing everyone a fantastic and sessions and a solid line-up of speakers like EBS, CLS, ICAP and Barclays. productive Sibos 2018. bt and panellists, the event has become a We have launched and supported larger Nick Murray-Leslie, CEO, curious arena. It is hosted by an older, more infrastructure providers as well as some Chatsworth Communications
40 | www.bankingtech.com | October 2018 October 2018 | www.bankingtech.com | 41 Position yourself as a thought leader through webinars
Webinars are an excellent way of raising your company’s profile, delivering Movers and shakers EVENTS CALENDAR thought leadership and generating high quality sales leads. With Fintech Futures, your company will receive the complete webinar Nationwide Building Society has and will focus on new opportunities as an November package, including full project management, a moderator and appointed Patrick Eltridge as COO. investor and entrepreneur. a full-scale multi-channel marketing campaign to drive registrations. Eltridge, who will start his new tenure Graubner-Müller co-founded Kreditech 13-15: AfricaCom, Cape Town in February 2019, is currently CIO of Royal with Sebastian Diemer in 2012. Since the tmt.knect365.com/africacom Bank of Scotland (RBS), a role he has held inception, the company has grown to since March 2015. 850,000 customers, 400 employees and 14-16: Money20/20 China, Hangzhou Prior to RBS, he was CIO for Telstra, €70 million in annual revenue, and has www.money2020-china.com Australia’s largest telco, and before that he secured funding of €250 million. was Standard Chartered’s group IT strategy Earlier this year, Kreditech appointed 26-27: MoneyLIVE Summit, London and architecture director. new leadership, including CEO David Chan. new.marketforce.eu.com/money-live/ Nationwide has recently announced event/summit a further investment of £1.3 billion into W.UP, a Hungary-based digital sales technology and operations to bring its company for banks and financial 27-28: Branch Transformation, London total revamp plan to £4.1 billion over the institutions, has appointed a new www.rbrlondon.com/conferences/bt next five years (see p6). president, Balázs Vinnai, who is also the company’s investor. 27-28: FinovateAfrica, Cape Town BNY Mellon has appointed Roman Vinnai, who comes with over 20 years of finance.knect365.com/finovateafrica Regelman to a new role as senior EVP and experience in the banking tech space, was head of digital. most recently chief digital officer at Finastra. 27-29: TRUSTECH, Cannes Regelman brings over 25 years of He also was co-founder and CEO of digital www.trustech-event.com experience in digital, operations and channels solutions firm IND, which was management consulting and launched purchased by Finastra (Misys at the time) in 28-29: AI & Big Data Expo North America, several fintechs. Most recently, he was early 2014. Santa Clara a partner and MD at Boston Consulting www.ai-expo.net/northamerica Group (BCG), where he co-led BCG’s Standard Chartered has hired former financial institutions digital business. Commonwealth Bank of Australia (CBA) Prior to that, he drove Booz and CIO David Whiteing as COO. December Company’s transformation business in Whiteing left CBA earlier this year financial services. following a management reshuffle by new 4-5: IMPACT>CITIES, Las Vegas CEO Matt Comyn. He spent nearly five events.impactconf.com/cities US-based provider of digital banking years at the Australian bank. solutions Kony Inc has appointed Jeffery Meanwhile, Standard Chartered’s 5-7: Alternative Investing Summit, Kendall to the newly created position of incumbent CIO Michael Gorritz will retain Dana Point SVP and GM of Kony DBX, the vendor’s control of the bank’s innovation and www.opalgroup.net financial services arm. transformation programme. The key benefits of Fintech Futures webinars include: Kendall brings more than 20 years 13: Banking Technology Awards, London of experience in enterprise-scale digital João Dias has left McKinsey after 17 years www.bankingtech.com/awards ■ Increased brand awareness transformation, seven of which has been with (where he was a partner for the last six and a ■ Direct lead generation Kony. Previously, he was director of business half years) to join Novo Banco as chief digital ■ Reaching key decision-makers across the fintech sector development at NCR for five years. officer as the Portuguese bank embarks on an Meanwhile, Miljan Stamenkovic has enterprise-wide digital transformation. ■ Direct engagement with the webinar audience via live Q&A Banking Technology is a prominent media joined Kony from rival Backbase as regional partner of many financial services and ■ Extended value with an on-demand recording, hosted on the Fintech Futures website VP of Europe. Stamenkovic has 11+ years’ Canada’s Central 1 Credit Union has banking technology industry events and accessible via registration for further lead capture experience in the fintech space, having worked recruited Arvind Sharma as chief digital worldwide. If you are interested in a for companies such as SAP and MSG Global. and payments officer. media partnership with us and marketing Sharma most recently was with opportunities, please contact: www.bankingtech.com Alexander Graubner-Müller, co- Manulife Financial as VP, IT Industrial founder and MD of German online lender Insurance and Manulife Bank & Trust. Irena Andrisevic, Marketing Manager Kreditech has stepped down from his He also held senior roles at D+H (now part Tel: +44 (0) 207 017 5379 operational role. He remains a shareholder of Finastra) and Marlborough Stirlin. bt Email: [email protected] Contact Jon Robson Tel: +44 203 377 3327 | Email: [email protected] October 2018 | www.bankingtech.com | 43 smartstream-stp.com Out of office
More fintech words enter the dictionary
With the word “fintech” finally included in that have decided to have their oh-so- the Oxford English Dictionary, it’s time for Alcotoll important discussion right in front of the a new wave of industry terms to enter that entrance/exit at a conference. This means hallowed hall of linguistic fame. Confcornerer the movement of all other delegates is Grab a cold one (that’s a beer, not the slowed down to a painful crawl – and it’s ex) and read on. Enterpainer painful enough to even be at a conference. Alcotoll (n.) An occasional sight on Is it OK to give a confcornerer an almighty the speaking circuit, alcotoll is a variant of Pratechnician boot up the backside? Asking for a friend. a hangover that discreetly affects panel Enterpainer (n.) Found at large members who enjoyed too much drink the Quizdain conferences, these poor unfortunate souls night before. Under the glare of the lights, are forced to perform magic tricks or dance the “alcotollee” is having regrets as his face for the amusement of the delegates. The slowly starts to resemble a melting candle. enterpainer is immediately noticeable The individual suffering from alcotoll will by the look of boredom on his/her face. be reduced to near silence and brief nods Their dreams of working at the Cirque du as they spend the rest of the discussion Soleil or travelling with a bohemian band staring out into space like a wild-eyed of absinthe-fuelled acrobats across South madman. America have been crushed. Instead, they Confcornerer (n.) Usually found in the eke out an inane existence upon a dreary plural form, confcornerers are a group blue carpet in a lifeless hall to people who of businessmen (it’s always men isn’t it?) simply don’t care. Pratechnician (n.) A person unable to describe anything in simple terms. Were People are important to us you looking for a definition of “blockchain” that a six-year-old could understand? Then get ready for a complex two-minute Since 2000, our business has been steadily growing. Our approach to technology description that includes “immutable” and has succeeded because we understand the financial industry. We always listen ridiculous gobbledygook. Even Carl Sagan to it. Listening is part of our DNA. at the height of his powers would not Technology is the life force of our business. But we also know that while AI and have had a clue what the individual was robots are pretty exciting – well, we find them pretty exciting – human beings blathering on about. are even more important. When it comes to understanding the challenges Quizdain (n.) The disdainful look on financial institutions face, and to deciding how technology can best serve a person’s face when they have been those organisations, we realise that people are paramount. asked a question from a journalist that dares to ask something without the use of We want to know where you need to get to and how we can help you get there. flowery language or excessive flattery. The That is why talking to you face-to-face is important to us, and why getting to “quizdainer” appears confused – where was know you at Sibos is our top priority. the easy question I deserve? Where is the love and adoration that a mere reporter (aka serf) should ask to a senior exec (aka Come along and join us on Stand I31, feudal lord)? bt Antony Peyton it will be the best coffee you taste at Sibos. smartstream-stp.com/sibos
44 | www.bankingtech.com | October 2018 13 December 2018 London Marriott Hotel Grosvenor Square Imagine your brand positioned next to the biggest names in the industry…
Explore sponsorship opportunities with Banking Technology Awards, the premier event recognising excellence in the use of IT in financial services:
n Access an engaged audience of senior fintech executives
n Benefit from our extensive marketing programme
n Network with the most influential names in fintech
n Align your brand with excellence and innovation
A range of sponsorship packages is available. Enquire today! Contact Jon Robson Tel: +44 203 377 3327 | Email: [email protected]
Visit our website for more information: www.bankingtech.com/awards
@FinTech_Futures #BankingTechAwards