Fintech

The financial sector should act as “Married but available” to innovation

MBA

This is my second year at the Swiss International Finance Forum whose theme was “Excellence in times of Change”. Last year, it was “Back to growth” and you can find my takeaways in Back to growth despite the triple-witching in banking & with a AAA regulatory recipe.

I leave all the political and strictly macro themes for others to reflect on, even though there is a strong connection to capital markets and investments. I will share with you the different thinking and positioning that has occurred since last year. The stage was a runaway for financial services Executives, Academics, Central Bankers, Board members, Regulators (check the program here).

The perspectives and questions being asked, confirmed that the Swiss Finance community is awake and alert.

Cultural shifts

The old guard is paying attention and knows that the Finance sector is sitting on a Burning platform (to use the change management jargon). Ulf Berg of BLR Partners, urged the financial sector to move fast. Speed is essential. Optimizing costs is necessary but not enough. Swift change for large scale impact, is needed. He bluntly, said “forget about strategic plans” and referred to an innovation analogy of being aggressive and relentless in

as if engaging on a single dating platform with the motto

“Married but Available”.

Susanne Chishti from Fintech Circle, prompted the Swiss to start “Admiring Entrepreneurs” because “Worshipping Entrepreneurs” is one of the main factors that has contributed to London’s top ranking as a Fintech hub. Only 1% of Switzerland’s financial sector is currently, working in Fintech. London is already at 10%.

Essential Reflection questions

It was the during the first panel discussion that top executives from large incumbent players (UBS, Blackrock, Credit Suisse, SIX, Swiss Re) and the Swiss Banking association; shared with us how their mindset is changing.

Even though traditionally banks haven’t been investing heavily in the personal development of their staff, they are now challenging their own thinking on topics like:

  • What is a Bank?
  • Where do we add services and how can we serve the client better?
  • Who is our supplier?
  • Are Bankers the new horses?

If AWS is the new supplier of financial services, then is our data or software that is on the cloud in the Swiss jurisdiction? What is the regulatory interpretation on these issues

What is the new legal framework for robots and what will be the next innovation replacing the “limited liability” concept.

Are middlemen needed? Can we move fully to P2P, whether in payments or other credit services? Is there is a need for a trusted third party, even in a blockchain world?

Concerns

If the tendency is “to follow the customer” and if business will travel where the business people want to live; then, are we becoming more local-national or more international? Is Switzerland suffering from regulatory arbitrage? Switzerland maintains its stamp duty tax on transactions and its withholding tax, while the UK is offering huge tax relief (first £500k) for Fintech Investments.

Market access is needed for Switzerland. In Europe this is a big issue because of the European rules and the lack of equivalence.

Switzerland has been leading in asset management but only with regards to private money. Institutional asset management is serviced predominantly, in the Anglo-Saxon world.

Europe itself, is becoming increasingly dependent to the US in terms of data, rating agencies, settlement, security etc. At the same time, Europe is moving away from India as the main back office outsourcing center, the dependency to the US is increasing.

Europe doesn’t seem to able to finance its growth. Over 40% of European startups will be bought by US entities and this figure doesn’t include those that simply move to the US and stay independent.

These concerns are amplified by the reality that large tech firms are on a buying spree. They are buying the innovators and as Markus Brunnermeier, the Princeton scholar, pointed out the Corporate Savings rate is rising which means that this trend won’t come to a halt anytime soon.

And I will close with some of the insights that Henri Arslanian, Pwc director based in Hong Kong, shared during his opening keynote.

  • It is the large tech firms leading innovation, so think TechFin.
  • China is 2yrs ahead of Silicon Valley.
  • India is the biggest global experiment in financial inclusion.
  • Voice tech is happening faster than we anticipated.
  • Facts and Figures that can’t be ignored:
    • Facebook has 50 regulatory licenses in the US alone
    • More than $14billion transactions are processed on a daily basis in China; this is more than double what Paypal processes in one year!
    • Ant Financial has 340million users!
    • Tencent has 17million users, outside China!

Keep active, be agile and nimble on the global dating platform. “Married but available” for the financial sector is the way to go in times of change.

Source of image

Efi Pylarinou is a Fintech thought-leader, consultant and investor. 

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Can video restore trust for both insurer and insured when making an insurance claim?

By Rick Huckstep

The real test of value for insurance is at the point of claim. It is also a point of conflict. Claimants want to maximise payouts; insurers want to minimize them. And this undermines trust in the relationship. But it doesn’t have to be this way. So I’ve looked at how video can change the trust dynamic in the relationship between insurer and insured.

Imagine the scene. You drop a tin of paint on your living room carpet. After cursing your misfortune, you contact your insurer, who calls you back at an agreed time. They invoke a video call and you have a virtual face-to-face discussion about the incident with a claims assessor.

The assessor asks you to show them the damage through the video camera. You move the camera around the whole room to show the assessor evidence that redecoration is happening (and that it’s not a scam to get a new carpet!).

In a matter of minutes, the assessor confirms that they have all the necessary information and the claim is in order. They process a faster payment for you against your policy and the money hits your bank account  straight away.

Sounds cool! It’s a conceirge approach to supporting the customer at a time when they need it (and the reason they bought insurance in the first place!).

Without question, it’s a much better experience for the customer.

And it’s also a lower cost process for the insurer.

And it (should) remove the point of conflict from the insurance claim process (see blog post from Ethics and Insurance).

So why isn’t it like this today?

Well it is for a few insurers who are in trials with VideoTech (but they haven’t gone public about this yet!).

And they are already seeing positive results, as they should.

  • Taking control of the claims process and all expenses as early as possible after the event is critical to an insurer.
  • Getting support and settlement as early as possible is important to the customer!

When you look at it like that, both insurer and insured share the same goal. Making a claim does not have to be a point of conflict!

To find out more about VideoTech and if it really could make a difference, I sought out Thomas Rigaudeau, the founder of VisioGroup.

Vis.io logoOriginally founded in Paris, Thomas is relocating the business to the UK as he launches his insurance company Vis.io. Thomas is very much a startup entrepreneur of his generation and when I asked him what made him want to start a business, he answered, “to make a social impact”.

Thomas started Vis.io around 2 years. His ambition was to create a platform that would bring customers and businesses together. What he calls, “proximity”!

Shortcomings of Video in the market

Tom explained, “Consumer 2 Consumer video streaming is commonplace with platforms like Skype, Face Time and Google Hangouts. And we see established B2B solutions such as GoToMeeting and WebEx that meet corporate needs for various complex functionalities.

“However, there was nothing in the market suited to B2C. Human interaction between business and consumers is either face to face in the branch, shop or office. Or, it is an audio engagement over the phone, usually with a call centre.”

(Ed Note, check your user agreements, you’ll find that some platforms own your conversations!).

And whilst commerce has largely shifted to an online, self-service model that minimizes human interaction as much as possible, there will always be activities that require proximity.

So Tom decided to create Vis.io and build a platform that both business and consumers would be ok to use together. And it would be secure, private and mobile.

Vis.io for Insurance

The platform is SaaS based and built to be highly “integratable”. Using APIs, Vis.io is designed so that it can connect to any of the insurer’s existing ecosystem and making it very easy to integrate the platform into the existing IT infrastructure.

And the business case for using Vis.io is a simple one for insurers.

First, it allows a face-to-face and direct communication with their customers.

Next, it lowers the threshold for automatic payouts. Vis.io makes it cost effective to assess smaller claims that would usually be paid out automatically.

Last, it raises the threshold for deploying a loss adjustor to assess the claim. By using Video Tech, any claims assessor based anywhere in the world can perform a virtual site visit without the cost and time impact of a physical trip to assess the claim.

The promise of improved customer satisfaction, reduced fraud losses and a much lower cost of operations is compelling!

The key is bandwidth speed

Vis.io has worked hard on building a solution that is low on bandwidth. It does not require 4G or a super fast broadband connection to be effective. Partly this is because the insurer does not need high HD definition images. A clear image is good enough.

But even so, Vis.io have developed a management layer that optimizes picture quality for the bandwidth that is available at the time. And this is where they optimize cache memory to get the best image for the lowest bandwidth.

How do insurers use Vis.io?

It starts at FNOL (first notification of loss- the industry acronym for when the claimant first reports a claim to their insurer). The insurer logs the event on their CRM system and schedules a call back with the claimant.

At an agreed date and time, the call is initiated by the insurer calling the claimant’s mobile. Using the Vis.io platform, a secure and recordable video call is established between insurer and insured. The claims assessor engages in a virtual face to face with the claimant and uses the camera on the smartphone to capture video, pictures and the conversation.

The end result is a video record of the claim with supporting evidence included. Which sure beats the traditional methods of either collecting information over the phone (and relying on voice technology and clever questioning to detect fraud)…or sending an adjuster out with a clip-board in a company car (expensive!).

Once the video record has been made, it is moved into the claims management workflow for the claims handlers to process.

Vis.io is more than just a claim’s solution

Vis.io is a cross industry platform and has already established itself in the moving industry with visioquote.com. As they enter the world of insurance, they are not limiting the applicability of the platform to claims.

Their platform can also be used in the underwriting process.

Imagine a consumer using Vis.io to make a video viewing of their home, with the insurer on the call to acknowledge the record has been made fairly and accurately. And with particular attention paid to a valuable painting, piece of furniture or expensive jewelry.

Or to confirm mandatory policy requirements, such as confirming that window locks are in place.

Or to meet regulatory requirements, such as in France where it is a requirement of every home to be installed with a smoke alarm.

The future of insurance is Engagement

Whereas I talk about engagement insurance, Tom talks about proximity.

Two different words to describe the same concept, which is the redefining of personal lines insurance by the way the insurer connects with the insured.

VideoTech enables a return to the “across the table” interaction with an insurer, whether that be for assessing a claim, confirming an identity, collecting needs or explaining a policy.

Vis.io have made their platform easy to use and low cost for insurers who want to embrace engagement insurance. 

And, as well as an improved relationship with their customers, there are massive cost efficiency gains for insurers.

Having already progressed through two accelerators; 01Ventures in London and Prosais in Paris, Vis.io is currently raising a seed round from a combination of angels and French government grants. After they close this round in February, Tom plans to move the business to London and prepare for Series A.

Other Insurance Tech firms operating in the Video Tech space include;

LiveMed, who have developed a a video tech solution to verify identities, sign documents, explain policies and make claims. I have just interviewed Yair David, co-founder of LiveMed and they will be subject to a research note in a couple of weeks time.

360Globalnet, with their “disrupt without disruption” tagline, they offer a video tech platform and a crowdsourced UK network of assessors for quick response to a site visit.

Roundcube, a wholly owned subsidiary of Dutch based insurance tech vendor CCS. Their insurance claim solution uses a mobile app to make it easy and immediate to collect data and evidence for the claims handler.

Previous research notes relevant to this week’s article;

Fluttrbox Drones making it easy to go were loss adjusters fear to tread

Recordsure – artificial intelligence to restore trust in pensions and annuities

 

By Rick Huckstep, Founding Partner, Daily Fintech Advisers.

Daily Fintech Advisers provide strategic consulting to organizations with business and investment interests in Fintech.

 

 

Why I created this blog

I sold a lot of software to banks, but that Traditional Fintech game got old. Emergent Fintech makes it fun again.

Media likes to talk about “disruptive fintech”, but I prefer to think of this more simply as “Fintech for the rest of us”:

  • Customers don’t care about disruption. Customers care about good service at the right price.
  • Banks will be partners with born-digital ventures. This is different from Banks as our only source of financial services. For all the talk of disruption and battles (good for page views and conferences) the more usual change is evolutionary and driven by partnerships.

I started this blog because I could not find anything that covered this patch/space/beat/territory the way that I wanted. Most blogs monetize through advertising, so there are lots posts that riff off a hot news story. I want more background analysis, which you cannot monetize through advertising. I am an entrepreneur. I blog in order to get my thoughts straight and to connect with people who are fishing in the same waters.

Many blogs that do cover Fintech miss the big disruption coming from people outside the current financial system. This is because most blogs are written by people who are over-banked. For example, few blogs cover the huge opportunity among the 70% of the global population that have no bank account at all (the “unbanked”). I won the genetic lottery, I was born in the developed world, but I have lived and worked for enough time in the developing world to have some appreciation of the needs of the unbanked.

It is not just the unbanked in the developing world. There are plenty of people in the West who have been left in the cold by the current financial system. Consider the 25% of Americans who have no FICO score and so find it hard to borrow. Or ask a small business owner how much they like using Factoring or pledging their home as collateral in order to get working capital. Or ask any consumer or small business how much they love paying a lot of money to change currency.

Daily Fintech is about making money by empowering people, not just papering over the cracks of the existing system.

All I want to do is learn more and connect with others who also want to learn more. The monetisation opportunities will flow from those conversations; the Emergent Fintech opportunity is so massive that there will be plenty of monetization opportunities.