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CHALLENGES

The current state of the fi ntech sector

Last year Innovate fi-nance visited the US with the Mayor of Lon-don, to foster greater trade and investment connections between New York and London -

the world’s biggest and most impor-tant fi nancial epicentres. Innovate Finance helped to select a delegation of leading fi ntech fi rms, which were ideally placed to expand into US markets, to connect with American investors and large banking organ-isations, and to foster an introduc-tion to an ecosystem of infl uencers, within the US. This was also an im-portant opportunity for Innovate Fi-nance to connect with a similar eco-system of key stakeholders, within the global fi ntech marketplace.

Branching outThere are many reasons why the global fintech movement has emerged from the UK - our geo-graphical location provides unri-valled international connectivity; our leading academic talent pool is world-class; we have prime inves-tors and impressive business facil-ities; we promote global thought-leadership on emerging digital so-lutions; and we can provide a simple regulatory system that balances risk and innovation. But our job is not do-ne. Fintech fi rms both big and small, face major innovation and growth challenges. We need to increase our

exposure to great fi ntech opportu-nities and encourage smart, active investors to enter the fi ntech sec-tor within the UK. It’s imperative that we continue to foster leader-ship skills and talent, and we need to ensure that those skills are retained. We need to continue examining the conditions necessary to create greater competition, to open up the fi ntech sector to new players, and ensure our SMEs have good access to the capital needed to grow their business. It is vital that we continue to develop and connect the fi ntech sector in the UK, including acceler-ators, investors, academic institu-tions, code clubs, policy makers, big tech and beautiful design. The power of international corporations, need to be exploited.

Global investmentLast year alone over £500 million was poured into fi ntech fi rms by way of investment. So being open to for-eign infl uencers is essential. Indeed, American investors drove signifi -cant growth in the UK fi ntech sec-tor - recent heroic funding rounds include TransferWise (£58million); Nutmeg (£32million); Funding Cir-cle (£40 million). More recently how-ever, Digital Shadows our local suc-cess, grew from two people on Lev-el39, to over 30, and is now launching in the US via Passion Capital after having raised £5.2million in their latest funding round.

This raises an interesting question about the US v UK fi nancial services sector. The recent ‘Bootstrap to IPO’ event, hosted by Innovate Finance, ex-plored the diff erent sources of fi nanc-ing, from angel investors, to venture capitalists and alternative investment. It also highlighted the cultural diff er-ence – the attitude towards risk and the confi dence to dominate in a global marketplace. It was said that that there is no lack of entrepreneurial talent or technological innovation when we compare the two marketplaces. But the industry -- entrepreneurs, investors and consumers alike -- has some way to go. We need to champion the huge so-cial and economic impact of the sector. We need to get behind these new high growth fi ntech companies, who are bringing greater choice, diversity and resilience to the fi nancial services sec-tor. This isn’t just the responsibility of the entrepreneur, or the investor. This is the responsibility of all us, as con-sumers, to ask for and make sure this change happens.

These are some of the concerns we hope to address at our Global Sum-mit on March 9th at the Guildhall. This historic gathering will explore the impact of fi ntech on society and the economy, and together with over 700 delegates we will discuss how we can overcome challenges to make UK fi ntech bigger and better - and, crucially, help build a global sus-tainable banking sector that means something for everyone.

As the UK’s independent voice of the fi ntech sector, Innovate Finance is bearing witness to the transformative innovations that are reforming the fi nancial services sector.

P4-5: The alternative finance expert panel

EDITOR’S PICK

FINTECH2ND EDITION, FEBRUARY 2015

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Claire Cockerton CEO/ FOUNDING DIRECTOR INNOVATE FINANCE

“Last year alone over £500 million was poured into fi ntech fi rms by way of investment”

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PANEL OF EXPERTS

Investing in businesses can be enjoyable, and backing “the next big thing” has the potential to produce life-changing returns. How-ever, it’s important to create a diverse portfolio when looking at eq-uity crowdfunding. Investing in small and early-stage businesses is high risk, and the majority will likely fail. Those that do succeed will potentially deliver spectacular returns—which can far more than make up for the losses—but that only helps if you’ve invested in the winners. This is why diversifi cation is crucial. Invest across a large number of businesses to ensure that your portfolio as a whole has the best prospects for producing market-beating returns.

Traditionally, banks don’t lend to young businesses with little col-lateral, venture capital requires traction, and angel investment is scattered and ineffi cient. Without wealthy friends or family able to invest large amounts of high-risk capital, entrepreneurs have had few options. Equity crowdfunding changes that. By making it simple for anyone to invest online, ambitious businesses can access capital from a wider range of investors than ever before. And they can receive more than just investment, like: mentorship and advice from a broad investor base; long-term engagement with existing and potential customers; and international exposure and product validation.

1

Jeff LynnCEO AND CO-FOUNDER,SEEDRS

Investing as an individual in alternative fi nance (P2P) is a bit like ISA investments in shares. Firstly, you need a provider that gives you access to the stock market. Secondly, you need to de-cide on the companies you wish to invest in. The UK has now circa 50 alternative fi nance providers, mostly platforms, that are very transparent about the way they operate and how they help you manage the risk of investing in loans directly. So, there is no short-age of options, but I’d recommend to diversify your investments across P2P, cash and shares.

Alternative finance providers are fi lling a gap created by tradi-tional banks who (had to) reduced lending to “high risk business-es”. They address an underserved market, and at the same time uti-lise better technology to assess credit risk based on the often min-imal track record and security on off er from SMEs (such as build-ings, machinery or equipment). With approx. £2bn lend last year, alternative fi nance will continue to improve the UK funding land-scape so businesses have a more healthy range of funding choices, as is the case in the US for example.

Rainer PlentlCEO, FINPOINT

From my experience, both from working in compliance and being an investor in alternatives, I believe there are two rules you should always follow when looking to invest, especially in alter-native investments. Number 1, do your due diligence on the fi rm and on the investment. Never feel unsure about asking questions, it is your money and your risk. Number 2 is don’t invest in what you don’t understand. The people that don’t understand what they are investing in or how it works are the people that run the risk of losing their investment by making the wrong decisions. If you can invest feeling safe in your understanding then go for it, if you can’t then don’t.

Alternative investments allow companies to raise capital in a climate where banks aren’t lending, meaning businesses with no track record and little funds can get going more easily (just look at crowdfunding). But it should be noted the degree of riskiness these new investments represent compared to other asset classes. Firms that are arranging fi nance for new businesses in this way should always be open about the inherent risks and only target those in-vestors who have the ability to understand it.

James DingwallDIRECTOR, THISTLE INITIATIVES GROUP

1 What would be the first advice you would offer to individuals looking to become alternative finance investors?

2 How do you see alternative finance changing the funding landscape for new businesses?

Consider the security provided. Alternative fi nance covers a wide range of investment opportunities and, as with any invest-ment, balancing the security and the reward to suit your portfo-lio is essential. Equity crowdfunding provides the least security and the highest potential returns, though arguably some losses are inevitable with funding focused on start-ups and early stage businesses. Conversely marketplace lending has low default rates but returns start from a more modest 4 per cent.

The big change has already taken place with disintermediation having opened up multiple sources of funding. As the sector grows it will be interesting to see if the ‘hidden experts’ within the crowd are motivated to support young business in other ways; perhaps providing sector expertise, business acumen or even introducing business opportunities. Platforms will need to encourage and fos-ter communication.

Angus DentCEO, ARCHOVER

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ThistleInitiativesFinancial compliance experts

As the market matures and investors start to anticipate successful exits, investors are assigning greater importance to investor protection. We believe that all investors, however small their investment, should be able to realise maximum returns on their investments. We’ve always prided ourselves on leading the way on this, which is why we operate a nomi-nee structure for each deal, include professional protections and rights in all investment agreements, and ensure that each investee company keeps their investors up-to-date. It’s no longer about making introductions but sharing in success.

3 What has been the biggest development in the alternative finance space in the last year?

For me the single biggest difference is the fact that the UK Government is proactive about bringing alternative fi nance (P2P) into the ISA fold. Research by RateSetter found nearly a third of people (31 per cent) would put their own sav-ings into a P2P platform, if they could do so through a new ISA. The outcome of the ISA consultation may translate into making P2P investments ISA-eligible as early as April. Irre-spectively, this will be benefi cial for the sector and for inves-tors, providing lower associated risk than stocks but higher returns than cash.

The world of alternative investment, a vast market al-ready, has seen great growth in the areas of Crowdfunding and Peer to Peer Lending. Our fi rm has helped numerous clients in these two spaces and with them being disruptive industries the accompanying regulations are also developing and chang-ing. The past year has seen an explosion within the market, with these two new products leading the way. It has been a very inter-esting year with ‘older’ regulations being shaken up through the foundation of Crowdfunding. The greatest change is not these two platforms but rather the way we interact with investing, reg-ulation and the implementation of the one into the other.

Our vision is to build a platform that allows businesses with international aspirations to raise capital from investors any-where; to be a global platform. Business fi nance has been rather slow to adapt to globalisation, and outdated regulations in cer-tain jurisdictions have hampered the rate of globalisation, to an extent. However, we have a bright team, and we have been very successful at developing a model that is increasingly global. After launching in the UK in 2012, we opened across Europe in 2013. In 2014 we acquired a US business and will be opening to accredited US investors in 2015.

4 Is alternative finance a truly global phenomenon and to what degree are alternative finance providers bound to their national/ local areas?

5 In the coming years, do you see forms of alternative finance and investment becoming more diverse?

The industry has matured, some of our recent innova-tions include:● Funds, which make it possible for investors to spread a sin-gle investment across multiple businesses chosen by an ac-celerator or through a competition.● Convertible equity, which off ers a way to raise and invest money now, while deferring the need to place a value on the company until the future.● Funding publicly-traded companies through equity crowd-funding, which we believe will become increasingly popular.

Absolutely! Alternative fi nance is a truly global phenomenon that has caught the attention of many stakeholders: business borrowers who were let down by traditional banks, individual investors wanting a better return for their cash, venture capi-tal fi rms, fi nancial services regulators, etc.The UK is probably the best place right now to be running a FinTech business, thanks to the tremendous support from or-ganisations such as Innovate Finance and the attention we have from UK authorities, wishing to support this thriving sector internationally.

I’d say that the UK already has a very diverse alternative fi nance sector, which enables P2P-lending to individuals as well as to businesses. From working with the alternative lenders on the Finpoint-panel, we can see some are thinking of adding new, complementary fi nance options to their ex-isting product range. On the other hand, we have tradition-al banks on our panel, interested to wanting to get involved with alternative fi nance, either by investing in a business, by co-lending or through referral partnerships. So, watch this space!

The new question is how we take our investments global. Global access will provide a greater platform of clients and op-portunities, but with this has come age old regulatory ques-tions of who is responsible, how to assess the risk and how much infl uence they can have in the global circuit. We have re-viewed the international market place and how we can make off erings to those based overseas, and have found a range of diff erent requirements. Certain countries will allow these pro-viders access to potential investors, with limited requirements and oversight from the home regulatory bodies but certain streams are proving more diffi cult.

This has already started, with the diversifi cation of what is being off ered and the range of platforms that are be-ing built in which we explore these opportunities. The market and its providers is developing every day. In the UK we are see-ing the development, with platforms such as Crowdfunding merging with P2P platforms. The diversity is only limited by our ability to implement the changes into the structures and how we implement the required oversight. All new entrants to the fi nancial markets need to prove that they understand the regulations. Although this too can also add to growth as pro-viders and investors look for ways to develop within the rules.

Growth and diversification; the phenomenal growth of the sector and the increase in institutional investment has led to alternative fi nance lending appearing in the UK Gov-ernment quarterly fi gures for the fi rst time. What really ex-cites us is the diversifi cation of off erings from innovative platforms challenging pre-existing fi nance models.

From Moscow to Brazil and a thousand platforms in-be-tween crowdfunding is already truly global. However, it is not yet globalized, as legislation is still playing catch-up in many markets which means that platforms are often contained within their jurisdiction. As legislation develops it is inevita-ble that platforms will expand their operations and become more multinational.

Yes. Both investor demand and the desire to be noticed by fundraisers will see many new ‘splinter’ platforms develop-ing away from behemoth catch all crowd sites that were fi rst to market. Already specialist investment sites in technolo-gy, pharma and education appealing to specialist crowds are upon us and new lending models suited to specifi c business-es are cropping up constantly.


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LISA MOYLE

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The fi ntech story in recent years has concentrated on consumer facing ser-vices, but the same dy-namics that have been driving this change - le-veraging new technolo-

gies and disruptive business models to lower costs and barriers to entry - are enabling development of new products and services for previously underser-ved insurance markets.

According to Swiss Re, the UK popu-lation is signifi cantly underinsured, with a total protection gap of £2.3 tril-lion. Only 1 in 3 households with inco-mes below £20,000 have life insuran-ce, one third of households have no contents insurance, rendering vulne-rable households exposed.

The insurance sector shares chal-lenges with banking in the provision of aff ordable, appropriate products.

Incumbents are hindered by outdated, infl exible legacy systems and pricing mechanisms too complex to adapt to the underinsured. The typical product off ering is too expensive for low-inco-me groups. The pricing of risk, using standard models, cannot assess these market segments.

Technology is creating the poten-tial for insurance companies to ser-ve low income consumers. Advances in a range of technologies; data ana-lytics, biometric identifi cation, psy-chometric testing and the rise of mo-bile are now being applied to the insu-rance sector, broadening the range of consumers to whom it is profi table to supply insurance products and enab-ling the creation of new, personalised insurance products.

At the heart of insurance is pricing risk. A number of online platforms that use big data analysis to calculate

risk are broadening the pool of people who can be assessed and provided with suitable products. Using both av-ailable and unorthodox sources of da-ta, platforms can analyse pools of data that allow for more accurate, targeted pricing of risk.

Driving change in financeThe data generated by telematics al-lows for a finer assessment of risk and reduces insurance premiums. Discounts in life or health insuran-ce can be offered to those who are ab-le to demonstrate healthy lifestyles using wearables, rewarding and in-centivising low risk behaviour.

The growth of fi ntech will continue to drive change across fi nancial servi-ces, and the insurance sector will not be immune from disruption. The need to meet changing customer demand will force the challenges of legacy

systems to be addressed. Potenti-al competitors, spurred by the evo-lution of technology, may emerge. A Forrester Research report Trends 2014: European Digital Insurance, noted that European companies are falling behind and startups and com-panies in the manufacturing, utility and telecoms markets could take bu-siness from traditional insurers.

With that disruption comes the opportunity to meet the additional challenges of incorporating millions of would be clients into the fi nancial system and provide them with insu-rance products that have the potenti-al to protect them from the impact of life changing shocks.

The need to meet changing customer demand will force the challenges of legacy systems to be addressed

Lisa Moyle,HEAD OF FINANCIAL SERVICES & PAYMENTS PROGRAMMES AT TECHUK

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INNOVATION IN FINANCEThe innovators in fintech have made drastic changes to finance services.PHOTO: THINKSTOCK Written by Julie Lake and Nicky Cotter,

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NEWS

How is fi ntech innovation benefi ting payment services?

Payments is a hot space in European FinTech. And it’s getting hotter.

Payment innovators account for just under 25 per cent of this year’s Fin-Tech50 and VC investment in Euro-pean payments and transaction pro-cessing companies reached an all-time high in 2014.

In fact, such is the abundance of innovation, it’s becoming something of a challenge to fi nd a space that is not being disrupted by the ingenuity of FinTech pioneers.

Fintech revolutionising paymentsAccording to Index Ventures’ Jan Hammer, “Payments is moving from the domain of the banks to next gen-eration platforms that can combine acquiring, processing and payment gateway services under one roof, across all channels globally.”

Indeed. Not only are fi ntechs revo-lutionising cross-border payments, stripping out costs, time and com-plexity, they are also giving consum-ers unwilling or unable to secure credit card services access to elec-tronic payments. They are assuming credit and fraud risk for e-stores and they are transforming the multi bil-lion dollar global remittance market.

They are also being viewed as the solution to fi nancial inclusion. In a world where millions of people do not have access to traditional fi nan-cial services, mobile solutions and, increasingly, digital currencies, are transforming not just the way in which money is transferred, but the nature of money itself.

A recent feature in CityAM ex-plored the impact FinTech can have (is having) on the distribution of international aid, with its potential to reach thousands, without the need for bank accounts, internet or even power.

Payments have always been about trust, convenience and simplicity - how to reliably transfer value be-tween two unknown parties,” says payments expert Roy Vella. “Tech-nology is now deeply embedded in our daily lives and it is allowing that transfer to happen more seamless-ly than ever and granting entry to many new and interesting compa-nies. As such, FintTech has become the space to watch where the speed, agility and innovation of startups are challenging and transforming the status quo.”


NEWS

Asset Management: The next frontier for fintech?

In regards to asset management, the UK is the largest fund manage-ment centre in Europe and the second largest globally, accounting for over £6.2trillionn of assets under manage-ment. Furthermore, of the total assets under management, some £2.2 tril-lion are now managed on behalf of for-eign clients, making the UK the lead-ing global centre by this measure.

Globally, the UK is fast becom-ing recognised as the fintech capi-tal of the world. According to Accen-ture, the UK and Ireland is now the fastest growing region for Fintech

investment with deal volumes here having been growing at 74 per cent a year since 2008, compared with 27 per cent globally and 13 per cent in Silicon Valley.

The Cloud Cloud-based service providers have helped lower barriers to entry across

many industries by reducing opera-tional costs and seed capital needed to start a business.

Investment management is no different and even in this highly regulated environment there are many opportunities to improve op-erational efficiencies by moving ac-tivities to the cloud.

Advances in various academ-ic fields like behavioural sciences have created an opportunity to in-troduce performance enhancing techniques into the investment de-cision making process. In much the same way as athletes training pro-grammes are now supported by data

analysis, ground-breaking data driv-en tools developed by companies al-low managers to track, measure and improve on their performance taking into account input across multiple dimensions.

Big Data Big data and powerful analyt-ics tools have also helped a new breed of real time investment strategies appear.

The age-old-art of sector research and analysis is complemented by tools that can analyse anything from the number of specific job ad-verts on global online job boards, to the price movement of hotel rooms in New York as a proxy for the health of a sector.

Investment opportunities and strat-egies which not long ago were only available to high-net-worth individu-als with access to private banking ser-vices can now be reached on one’s own smartphone device.

Developments in fintechAs the second largest global market for assets under management, situ-ated alongside what is probably the hottest hub for the development of fintech businesses, UK Trade & In-vestment — the economic devel-opment arm of the British Govern-ment — anticipate further growth in this segment.

Developments in financial tech-nology, and the innovation pio-neered by the companies compris-ing the sector, have the potential to make a big difference to investors and long-term savers. Increased competition will bring lower costs across the investment process. Cou-pled with better distribution and greater efficiency, one could argua-bly expect that to be translated into higher net returns.

The UK is a leading global financial services centre, and the most internationally focused financial marketplace in the world, with more overseas financial institutions and investors choosing to do business in, and with, the UK than any other country.

SHAUL DAVID

[email protected]

ABOUT

UK Trade & Investment is the Government Department that helps UK-based companies succeed in the global economy and helps overseas companies bring their

high-quality investment to the UK’s dynamic economy, acknowledged as Europe’s best place from which to succeed in global business.

Shaul DavidFintech Specialist, UKTI Financial Services Organisation

PHOTO: THINKSTOCK

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NEWS

Data centres at the heartT

he UK, mainly in and around the M25, is home to more than 50 per cent of Eu-rope’s data cen-tre estate. Much of which is operat-

ing systems and applications for the Financial Sector. Businesses are no different from the popula-tion at large when it comes to ‘al-ways available, instant service’ and so data centres are designed

and built with high levels of re-dundancy so that even very bad events cannot easily disrupt the IT service in question. Things such as grid blackouts are shrugged off even by the lowliest facility with batteries and diesel generation standing by to supply all the ener-gy that the user needs.

Data centre energy effectivenessOf course data centres consume

ever increasing amounts of power that has attracted the critical attention of gov-ernments, both national and European – although the main driver is the popu-lations’ demand for social networking, gaming, gambling and photo/video ser-vices. Mind you, the governments of the world haven’t yet woken up to the fact that rolling out ever-faster broadband only serves to accelerate power demand, but that is another matter.

So data centre energy effective-ness has been getting better over the

last few years with the likes of Google publishing their PUE (an energy metric describing the ratio of ICT energy to facility input energy) as if it is some kind of marketing cam-paign. They now run at 1.12 – so the electrical and mechanical systems that power and cool the ICT load rep-resent 12 per cent of the ICT energy itself. Clearly ‘1.0’ would be perfect but levels of security, availability and maintainability without shutting off the service make that impossible.

The financial sector has some very special needs that make a Google-like PUE target of 1.12 almost impossible – however, this should not be an excuse for either energy or fi-nancial inefficiency. In London a PUE of 1.25 is a perfectly reasonable target, even for a bank and growing cost efficiency pressures are slowly curing the habit of running even development servers as if they are critical trading platforms.

Data Centres are at the heart of the UK economy – to a large extent being our factories for the digital age — and most, if not all, large businesses cannot operate without ICT and, as a direct

consequence, a data centre ‘somewhere’.

DATA CENTRES: CRUCIAL TO LARGE BUSINESSESPHOTO: THINK STOCK


New entrants to the market, new business models, changing custom-er expectations and fragmentation of traditional services are all contrib-uting to put traditional banks under pressure. Metro, mBank and others are all demonstrating that focusing on the new experiences and needs of their customers is driving increased loyalty and revenue. Meanwhile ser-vices like Barclays, PingIt and Paypal demonstrate that disruptive servic-es can significantly move customers away from traditional banking offer-ings. The appetite for such services is clearly there, and the maturity and takeup of them can only move on an upward trajectory.

Indeed, changes are afoot and the physical manifestation of these changes is apparent. At a macro lev-el, the branch appears to be in de-cline with most established brands reducing their footprint. Cash is no longer king, mobile payments are in-creasing in popularity and no longer is the current account the only thing one uses to manage money. Bank-ing is becoming more democratised by technology and new services are changing the way we think about banking, our money and the applica-tion and capability of technology.

So is the branch dead? Well who knows for sure, but the received wis-dom and the empirical evidence cer-tainly indicates that the purpose of the branch is changing. With tra-ditional branch banking services

moving online, the high streets are seeing branches of the most estab-lished banks disappear. In fact, 2,000 branches have been wiped off the map over the last decade and many more closures will follow.

The good news is that this is not the death knell of the industry, more an evolution that sees the focus shift from the noun to the adjective, from banks to banking. One where cus-tomer satisfaction, convenience and new services will feature more prominently. Where the commit-ment to digital banking and the sup-port for new channels and services make it easier for financial institu-tions to build relationships with the customer.

Differentiation through added value services

So how will the banks compete in this new world of banking? The an-swer is in how they deliver servic-es and products. No longer will it be competitive to just show account balances on a page or to provide on-line facsimiles of paper applications. Customers want a more holistic and engaging experience that can span channels and be supported in by them all.

Customers will expect everything that can be done in the bank to be available online or through mo-bile — they will see no reasons to be forced down any particular route. Customers will increasingly look for personalised products that have a simple application and acceptance mechanism such as ‘one click’ to buy.

Additionally, customers will in-creasingly look for value added ser-vices, to help them manage their fi-nances and to help them to under-stand their spend. There will be a need to deliver tools that offer ad-ditional budgeting services and run alongside the capabilities they al-ready have at their disposal to man-

age their finances. For example the establishment of the new children’s banking service from Halifax is just one indicator of the direction in which banks are heading. They are gearing their services towards a more expectant, tech savvy cus-tomer base with growing numbers of digital natives.

For the high street banks that will continue to operate in traditional bricks and mortar settings, the need

for a free flow of services between channels is hugely important. Om-ni-channel retail banking will see customers interacting with services in branch but will be given access to information and services they can research and interact with further while they’re on the go. Tablets and mobiles will be the delivery system but the services they will use will need to be user friendly, genuine-ly useful and provide full fidelity of service.

The right strategy, people and innovation will drive successThe majority of established banks already have the platforms to de-liver new services — the challenge is in the exploitation. The ability to join the product centric thinking into a more customer centric and focused set of offerings will chal-lenge traditional operating mod-els. It requires the skills of an IT department that takes a holistic approach to change.

The first consideration should be the needs of the business to better serve its customers, which is includ-ed in the brand strategy and digital strategy. The last thing a bank needs in this new age of banking is a glut of tech-led solutions that leave cus-tomers puzzled and frustrated. It’s the reason why the technology im-plementations driven by Avanade begin with the vision of the compa-ny. The exploitation of banking plat-forms to do more should be a posi-tive experience that provides value.

From our experience, we see that the most successful banks are deliv-ering a range of channels offering a full spectrum of services. In addi-tion, they’re starting to expose new services to drive innovation and dif-ferentiation. Examples include Bar-clays, which recently enabled some of the Barclays PingIt application

programmable interfaces (APIs) to be used by third party developers in the provision of banking services. As a result, customers were given much more functionality and the base of potential users was expanded.

To deliver in this new era, success-ful banks are looking outside of the traditional banking fraternity. They are hiring designers, customer ex-perience professionals, retailers and innovators who have an under-standing of customers’ needs and expectations from non-banking sec-tors. This strategy coupled with flex-ible product innovation is providing a formula for success in traditional banking environments which if fol-lowed will enable banks to compete with the new entrants and disrupt-ers in the market.

In a customer-led era of banking, Avanade works with its clients to de-velop the strategy that helps banks reach their desired end goal of im-proving interactions they have with their end customers. We work with firms to help define the customer experiences, the journeys and tech-nology to deliver the new experienc-es needed to succeed.

Today’s digital customers have higher expectations than ever. To be fruitful, companies need to harness new innovative approaches to at-tract and retain customers through highly relevant and personalised experiences across multiple chan-nels. Although customers now have the freedom to switch banks more quickly than ever, it’s the job of the banks themselves to unlock added services and ultimately put the cus-tomers firmly at the centre of what they do. Working with the suppliers that can get them there is a positive step towards this goal.

From banks to banking — a new era of customer focused innovation in financial services

Nic [email protected]

Bill Gates once said that banking will always be needed but banks as we know them could easily disappear. How profound this statement proves to be will become clearer over the coming years, however the current landscape certainly appears to support the sentiment.

COMMERCIAL FEATURE

Nic Merriman UK CTO OF FINANCIAL SERVICES, AVANADE UK

“The majority of established banks already have the platforms to deliver new services — the challenge is in the exploitation”

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