No matter who wins UK election today, homeowners get a small break thanks to Neos Insurtech with AI + IOT

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UK Insurtech Neos was in the news last week for raising a £5M Series A round, led by Aviva Ventures with strategic partner Munich Re.

In this post we dig below the news headlines to understand the trends illustrated by what they are doing.

More than a random buzzword generator

At one level, one could view Neos as combining all the hottest buzzwords to unlock VC funding:

  • Insurtech
  • IOT and connected home.
  • AI via Chatbot.

Our belief is that the hype cycle and the reality cycle are disconnected. Yes, all the above are hot, hot, hot. Yes, all will fall into the slough of despond, because that is what happens to all overhyped trends. Yet all three have huge value – if applied properly to solve a real pain point. That is what we now turn our attention to.

A win/win/win proposition

Neos is creating a win/win/win proposition for:

  • Homeowners. Brits love the expression “a stitch in time saves nine” meaning that paying attention to something small now – like a plumbing leak – will prevent an expensive disaster later.

 

  • Service contractors. They will benefit from a flow of work to fix those things – like the plumber coming in to fix a leak.

 

  • Insurance companies. They save on preventable expensive disaster claims and re-establish themselves as being central to their customer’s lives (not just a premium bill to be paid each month).

 

Look at this chatbot conversation to see something that will resonate with almost every homewner:

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That makes IOT and connected home useful in a way that the oft-hyped milk buying fridge does not do. It also shows the use of AI Chatbots to deliver something useful; we believe that AI Chatbots will become as ubiquitous as websites and mobile apps, no longer a source of advantage, simply a must have item.

Now if only somebody could apply that same thinking to something even more precious than a home – the human body. Prevention is the back to the future of healthcare and health insurance and IOT sensors and AI Chatbot will be the key to this market as well.

UK innovation is alive and well

My home country has been down in the dumps since Brexit and goes to the polls today to decide who will lead the future of the country.  Whatever direction the country goes in, innovation will be the key to jobs and prosperity. Neos shows that UK innovation is alive and well.

Join the debate;

On this election day, do you think UK can reclaim tbe fintech capital of the world title?

Bernard Lunn is a Fintech thought-leader and deal-maker. 

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ChatBots in Consumer Banking

GhostInMachine

Image courtesy of SuitPossum

This is Day 5 of ChatBot Week on Daily Fintech. You can see the intro and index here.

How Much?

ChatBots are great when customers want answers to various “how much” type questions, such as how much….

  • Have I got left?
  • Will this cost me in interest/fees?
  • Will I earn/save by doing this?

Sure I could go online or check an App, but just texting those questions is easier.

Finding this innovation in the wild

MyKai from Kasisto launched on June 28. They must have had the back end ready and had the aha moment when they saw the launch of the Facebook Messenger App Store.

Bits don’t stop at borders but money has to show its passport. I wanted to try out Kasisto, but stopped at this Stop Sign (I am based in Switzerland):

“Right now, I am available in the U.S. If you live in another country, you can sign up and I’ll let you know when I’ve arrived.”

Do I have enough to…
“Eyeballing” physical cash in your leather wallet is how millions budget. We need an equivalent for the digital age.  MyKai shows shows how this can work by integrating with Venmo (check your balance before paying). Imagine that linked to your budgeting rules (Budget Nanny says no to that Latte).
Cousin of Siri

Kasisto which created MyKai originated from SRI International, the company that came out of Stanford University and created Siri.

Privacy

MyKai anonymizes the data and does not have full access to your banking passwords. My take is “be careful” and this will be a big hurdle with most consumers, which brings us to the next point.

Public Proof Of Concept
MyKai is like a Public Proof Of Concept for a service that Kasisto sells to Banks. That is how they aim to make money. They claim Royal Bank of Canada and DBS Bank as early customers and Wells Fargo Startup Accelerator is an investor.
The future is already here….in Denmark

LunarWay, a Danish full stack startup bank (now tagged “neobank”, aka “challenger bank” in UK) offers LunarWay Bot today (in Beta with a few thousand users). It was developed in-house

…And in Africa

ABSA (Barclays Africa) offers ChatBots via both Twitter and Facebook.

Conclusion from innovation in the wild

ChatBot looks like a natural UI for a mobile first Bank. It will become an increasingly standard feature of both  startup and incumbent banks. Oh…and make tons of money for Facebook (showing us again how valuable being an ID provider is).

Messaging channels

Facebook is certainly the big one in America where Kasisto plays. When Kasisto hit a tech glitch they used SMS and Slack as fallback channels. Messaging itself is clearly a commodity. The money is at the intersection of ecommerce and payments and that is where Account Linking is the key innovation from Facebook (which we identified in the intro to ChatBot Week).

PSD2 and other utility regulation

Account Linking can be used a) by Banks to offer a better service or b) by startups who innovate on top of bank account data and aim to commoditise  banks into being low margin utilities. Actually that is not the objective of startups. They just want to offer a better service to consumers and to do that they need access to account data; turning banks into commoditised utilities is simply a by-product consequence.

PSD2 and other regulation is key to this. When banks have to open up their data, then they will.

It is a level playing field. Banks could win. Methinks we will see a lot of ChatBots from Banks soon.

level playing field

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Bernard Lunn is a Fintech thought-leader.

ChatBots in InsurTech From Offshoring to Automation to New Experience

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This is Day 4 of ChatBot Week on Daily Fintech. You can see the intro and index here.

Unusually we are seeing more adoption from Incumbents than upstarts . This is the reverse of the cycle of innovation in banking (startups show the way and then banks “fast follow” via mix of copy and acquire). This post explains why it is being done differently when it comes to ChatBots in Insurance and then looks at a few early stage startups that may point to the future.

The action is from Incumbents

Look at this list of ChatBots in Insurance compiled by @rickhuckstep who tracks InsurTech very well. You can see a long list of incumbents and one startup.

You can also see what Halifax is doing on ChatBots.org

SalesForce.com which does Service as well as Sales (Service is the key to retention) and is big in Insurance is clearly looking at this.

First, turn humans into robotic workers

Cutting payroll cost has been a favourite enterprise project since the dawn of computing. Insurance has a ton of routine customer support work. The product is complex and critical to the customer. Good customer support is a) essential b) expensive. This is the kind of work that was first offshored and is now being automated. Once a job has been made totally process driven, eliminating individual judgement, it is quite a simple step to automate that job. An offshoring project works by breaking tasks down into repeatable, fungible “units of work” that are given to humans to do as if they are robots. If those humans leave, they are easy to replace. It is a short step from robotic workers to actual robots and that is what AI enables.

This is of course not good news for the $28 billion BPO business because about 5-6% of those jobs are low end as per this report (ie low hanging fruit for automation)

From Hal to Her

When we search for images of AI, the robot appears. The disembodied voice of Hal in Stanley Kubrick’s brilliant 2001 a Space Odyssey (released in 1968) was a bleak  view of our robot infused world.  In another brilliant science fiction film, Her by Spike Jonze (released in 2013), the robot has the gorgeous voice of Scarlett Johansson and so the protagonist naturally falls in love with the robot.

The point is we don’t see the robots who are serving our admin jobs. We see their texts or hear their voice. Maybe holograms will be the next attempt to humanise them.

Humanising robots is just marketing

Robots in factories making stuff for us are invisible to us, so they don’t need to be humanised. Robots taking care of our every day admin needs have to be humanised to be acceptable. It is Marketing 101.

This started in offshoring where the rule was that call center workers working in the Rest imitated the accents, names and behaviour of their customers in the West. Krishna, Pranav and Deepika become Bob, Ted and Alice.

The ChatBots found by Rick Huckstep are called Magda, Allie, Mia, Arbie, Nienke, Marc and Hanna. Pick a name that fits the culture of the market you are serving, it costs nothing.

From makeup to makeover

Mobile Apps followed the usual trajectory of disruptive innovation from talking heads on TV (Radio to TV) to something that is native to the new media. Early Mobile Apps were simply bad web sites on a small screen. ChatBots will follow that new trajectory.

And now for something different

Spixii is not a cute name. OK maybe it is – cuteness is in the eye of the beholder. Apparently it means Blue Parrot. I guess BlueParrot.com was not available.

This is bleeding edge.  Spixii got €15k funding at the end of 2015 as per Crunchbase.

SPIXII looks like AI with a ChatBot UI – a RoboBroker if you like. As they put it:

“The first development of SPIXII consists in selling insurance using a chatbot.”

Their TLD is .ai They clearly aim to be AI with a ChatBot UI.

You can watch their Demo Day pitch here.

This feels like SimpleBank – changing the User Experience but not as a full stack regulated Bank/Insurance company. SimpleBank was a success – founded in 2009, acquired by BBVA in 2014. SPIXII may follow the same trajectory.

Insurgram from Germany is “Insurance by Chat” and they look a bit more mature than Spixii and have a partnership with Ergo Direct (think Geico if in America).

HeyBrolly is also aiming to change the whole Insurance experience and describe themselves as a concierge rather than a broker (so chat is just a natural UI layer to a reengineered experience).

Early days

Think of the app store in 2008  – that was 8 years ago. Current examples of ChatBots are fairly crude and occasionally embarrassing and funny but this is the usual story with new tech and the economics of admin service job automation using AI + Chat is compelling, so I am sure they will get better.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Bernard Lunn is a Fintech thought-leader.

Goodbye admin, hello Pegg – Sage introduces its first small business chatbot

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This is Day 3 of ChatBot Week on Daily Fintech. You can see the intro and index here.

The writing is on the wall for banks and their customers. Soon banking and all its associated tasks will be completely embedded in our everyday lives. Banking will live in the platforms we love to engage with, allowing us to access our financial life exactly when we need to. We won’t have to plan our lives around banking – banking will plan its life around us.

Chatbots are shaping up as the critical ingredient that will propel this future state into being. Why? Because chatbots have the ability to create a dialogue with a customer that’s personalised, real-time and, more importantly, actually effective. No more worrying if that real-life customer support agent actually processed your form or actioned your request, or if that payment you sent through actually made it to your supplier. That’s the magic of automation – it just happens.

It’s easy to visualise how texting your personalised bank chatbot will make handling your personal finances easier. The emerging opportunity now is to build on these simple early use cases and build some killer chatbot powered applications for use in small business. For example:

  • How could a business owner chat with their bank to check their pending settlements?
  • How could a business owner chat with their accounting system to confirm bills it wants to pay?

This week accounting giant Sage announced the beta launch of its new bot Pegg, built in partnership with bot platform Gupshup.

Pegg is ‘a smart assistant who lives where you work and lets you manage your business admin through your favourite messaging apps’. Just spent money on a business lunch? Message Pegg with the amount and take a photo of the receipt. You can then generate a one-time access link to a webpage where you can download a csv file of your transactions. Just been paid for your freelance design services? Let Pegg know and it will lodge this as income earned.

Let’s be clear, Sage isn’t intending Pegg to replace existing accounting software and cloud add-ons. Sage is instead using Pegg to go after the 65 percent of small businesses it claims still rely on spreadsheets and manual recording practices. Its going after the under-served portion of the market that aren’t commercially attractive for the bigger players up the food-chain. Pegg is almost like the Square of accounting.

I gave Pegg a go. It’s easy to use, and when I did run into trouble conversing with the chatbot, it prompted me to type ‘help’ so I could access a list of instructions it did understand.

The world of accounting software plugins and apps should be very nervous about chatbots. I hardly need a budgeting app and a receipt scanning plugin for my accounting software if I have a chatbot that does it all – especially if it then posts the information back to my software. And if the stats telling us nearly half of us will be freelancers by 2020, simple, lightweight accounting tools will be all the rage.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.

Chatbots for investing: research and trading

This is Day 2 of ChatBot Week on Daily Fintech. You can see the intro and index here.

If you haven’t seen the first trade execution on a chatbot, then watch this video. The first implementation of a basic stock trade execution via a chatbot comes out of a UK brokerage house and uses the Facebook Messenger platform.

AJ Bell youInvest is the behind this; an online platform launched in 2000 as the first online SIPP provider. Since then it has grown to include ISA, Junior ISA and Dealing accounts. AJ Bell, the parent company, is one of the UK’s largest providers of online investment platforms and stockbroker services. With more than 131,100 customers and assets under administration exceeding £28 billion.

This symbolic trade demoes a buy order for Facebook stock!

  • You are asked your username on your broker account
  • Chatbot sends you a temp password on your mobile (valid for 5min)
  • You can see and choose your account
  • You can ask for a stock (e.g. Facebook stock)
  • You can choose Buy or Sell
  • The chatbot shows you updated quote (max 15sec delay)
  • You place the order
  • You get confirm

Over to New York, to look at Polly Portfolio, whose focus is on financial education and research for DIY investors or asset managers, who are seeking low cost active investments and predominantly, designing a low cost portfolio that reflects their macro views. They launched a Chatbot, PollyChat, again using the FB Messenger that can chit-chat about recent financial news headlines and prepares a financial profile based on your responses, along with customized portfolios and trade ideas; as explained on their website.

I checked it out personally and I am impressed. At first one gets a couple of macro questions with a choice of Agree, Disagree, No opinion.

That creates a profile and an asset allocation.

Screen Shot 2016-07-22 at 10.21.24

This profile can be updated with further macro views. The asset allocation, then can be refined into investment ideas. The chatbot then proposes to send financial news (curated based on views) and by accepting them or not, one personalizes the curation. There is humor. For example, at some point the chatbot responded VPL 10%; I asked “what is VPL?”, the Chat bot responded “Could you type that more slowly and loudly please? Just kidding, please type ‘Help’.

Another New York computer software company that has been focused on chatbots for banks, is Kasisto. Many of their products are focused on various consumer banking processes. Just last week however, they announced that their chatbot MyKAI designed for banks can also monitor investment portfolios and has linked with Etrade and Nasdaq. Users will be able to ask questions regarding their positions (e.g. size) and ask the chatbot to alert them when prices reach certain levels. Responses can be delivered via SMS, on Slack or FB Messenger.

Chatbots in wealth management: possible use cases

In wealth management much like basic consumer banking, customers may want chatbot functions to ask for basic portfolio information and updates. From positions, cash, risk units, industry exposures, correlations to existing holdings etc. Anything that relates to accessing existing data and answering questions. Nothing predictive for now.

Chatbots could also play a major role in discovery of investment ideas and curating financial information. A Siri in a chatbot form. A personalized chatbot for financial investments, much like what PollyChat is trying.

Will Chatbots be a way that robo-advisors effectively and cheaply stay in touch with clients and personalize their profiles and asset allocation? Will brokers adapt chatbots as the best customer engagement portal with a combination of Machine learning and artificial intelligence?

We are at an early stage of this trend and we will be monitoring. If you don’t have a Facebook account, consider getting one, to stay directly in touch with the broader chatbot boom. WeChat in Asia is heavily used for transactions and professional groups.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network.  Efi Pylarinou is a Digital Wealth Management thought leader.

 

Announcing ChatBots Week on Daily Fintech

admirable_design_chatbot

Image courtesy Admirable Design

This week is ChatBot all week on Daily Fintech. Today is the Tech in FinTech day when I attempt to summarize why so many people are excited by ChatBots and describe who is active at the platform level. Then we look at the use cases in WealthTech, Small Business Finance, InsurTech and Consumer Banking.

If you are new to ChatBots, here is a good intro (yes, there is now a ChatBot Magazine).

First we look at ChatBots through three different prisms:

Prism # 1. ChatBots = User Interface (UI) 4.0

Prism # 2. ChatBots = native UI for AI

Prism # 3. FB Messenger BotStore is like the Apple AppStore in 2008.

Then we look at what the Internet Platforms in America (GAFAM) and China (BAT) are doing with ChatBots.

Finally, to bring it home to Fintech leaders, we explain the relevance of one specific feature called Account Linking.

There will soon be a Fintech version of the Turing test. For example, is that my friendly private banker recommending an asset allocation change? Or is it a robot programmed to act like a friendly private banker?

Prism # 1. ChatBots = User Interface 4.0 

1.0 = Text command line eg DOS & “green screen” mainframe terminals.

2.0 = Windows Icon Menu Pointer (WIMP) in PCs and Macs.

3.0 = Smartphone touch

Yes, just when we all agreed on mobile first and mastered those skills….the game changes again. Apps have a problem because people are reluctant to install apps (it is the app tax friction).

The reason why ChatBots are UI 4.0 becomes clearer when we look at the next Prism.

Prism # 2. ChatBots = native UI for AI

How do we interact with those machines who appear human like in intelligence? One way is the same way that we spend a lot of time interacting with flesh and blood humans – via text messages. It is the perfect UI to hide all that complexity.

For our AI Week please click here.

Prism # 3. FB Messenger BotStore is like the Apple AppStore in 2008.

When the Apple AppStore launched in 2008, I caught a tweet by a friend that said in effect “this changes everything”. I did not get it at once so I called him and he explained and he was right. Thanks @alexiskold

The launch of Facebook Messenger platform with ChatBots on 12 April 2016 had the same inflection point significance.

6 weeks later VentureBeat was reporting 11,000 chatbots that you could try. Talk about Cambrian Explosion!

What are GAFAM doing with ChatBots?

  • Facebook (already covered above)
  • Amazon does it their own way as usual. Jeff Bezos always surprises. Their Alexa device is an AI machine in a home device. You don’t talk to Alexa with text messages. You talk with your voice – how cute and retro! It’s more VoiceBot than ChatBot, but conceptually both are UI for AI. Amazon has opened this up to developers.

Apart from the giants, all major messaging services from SnapChat to Telegram (which has a good intro for developers) have initiatives.

What are BAT doing with ChatBots?

  • Baidu has Duer, a digital concierge service.
  • Alibaba has not made a move yet as far as we can see, but given their big ambitions in FinTech, we can expect it to be highly relevant when they do.
  • TenCent has WeChat, currently the world’s biggest messaging platform with 700 million users, so they were early with ChatBots and have a digital concierge service called WeSecretary that helps users buy products, book restaurants, pay bills and other internet-based admin activities. It sounds more practical than SIRI.

ChatBot Account Linking

Facebook has an opt-in feature called account linking that allows you to, for example, link your Facebook account with a retailer. The ChatBot can then suggest new products based on a recommendation system. Watch out Amazon.

We expect this intersection of payments and e-commerce to be very active.

An example from Telecoms shows how this could work. You can chat to your Telecoms assistant to find out how much bandwith you have left or how much an international call will cost. That clearly has to link to your Telecoms account. Now imagine opening up to your banking accounts using PSD2.

Calendar for the rest of the week

Tuesday          ChatBots in WealthTech

Wednesday    ChatBots in Small Business Finance

Thursday        ChatBots in InsurTech

Friday               ChatBots in Consumer Banking

Please tell us about any use cases in those areas that you know about. We may already be researching them, but a heads up is always appreciated.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Bernard Lunn is a Fintech thought-leader.