April 2017

Tracking innovation in financial services

FinTrack

Introducing FinTrack, GlobalData’s financial innovations tracker. Every month, FinTrack will showcase the latest innovations from financial providers around the world. Each innovation is assessed and rated on key criteria, providing you with valuable insight. FinTrack will help you to: • Keep up-to-date with the latest innovations from your competitors. • Develop cutting-edge product and channel strategies. • Identify the latest trends in the delivery of financial services.

FinTrack: the inside track on the latest financial innovations.

April 2017

About This Product

Consumer Payments Facebook Messenger launches group payments Paytm to launch Paytm Payments Bank Amazon targets the underbanked with Amazon Cash

General Insurance HDFC Life launches new chatbot solution Hood Group in connected home insurance pilot InsureScan – the new smartphone-ready tool

Retail Banking Oval Money aims to improve users’ savings habits Clarity Money creates time and space to make decisions Humaniq: a blockchain-based financial platform for the unbanked

Wealth Management Niu Jiao Suo connects Chinese investors with overseas mutual funds Smartfolios offers B2B advisory and investment platform MostShorted provides investors with information regarding short positions in equity markets

April 2017

Table of Contents

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Consumer Payments

TOTAL SCORE

Building on its existing Messenger P2P payments service, Facebook recently added functionality to support group payments on its instant messaging service. The payments feature, which is currently available on Android devices and desktops, allows users to pay either everyone in a group or individual members through a click of the payments icon.

Is it original? The ability to support group payments through messaging apps is not original, since the PayPal-owned Venmo successfully launched this feature in the US market in 2015. Is it long-lasting? Given Facebook’s sizable user base, it is expected that its Messenger group payments feature has long-term potential as it offers customers a convenient channel for a range of payments use cases – such as a group gift or splitting a restaurant bill. These use cases have proven themselves already, having helped Venmo rise to prominence in the market. Is it operationally game-changing for the provider? Adding group payments positions Facebook as a challenger for Venmo. Facebook Messenger is well placed to overcome its competitor, provided it can capitalize on its more than 1.2 billon active users (as of February 2017) to increase its popularity. As part of its global efforts to build a payments business, Facebook is also reportedly preparing to launch digital payments in India through WhatsApp. Will it significantly improve the user experience? The service opens up new payments functionalities to Messenger users, enabling them to conveniently pay other Messenger group members or request payments from the group within the chat. The service is free of charge and does not require a password. Is it market-changing? Facebook Messenger is a reflection of the industry trend towards including payments as a critical feature for messaging apps, and is more of an enhancement of the services already available in the market rather than a market disruption.

3/5

April 2017

Facebook Messenger launches group payments

Emtek Group, the parent of BlackBerry Messenger (BBM) – the most popular mobile messenger platform in Indonesia – has teamed up with Ant Financial to develop a mobile payment platform for the BBM service.

Is it original? An instant messaging-based payment solution is nothing new. Applications such as Tenpay, a payment platform integrated into the WeChat messaging app, have been around since 2011. But this is the first launch of P2P payments on the BBM service in Indonesia. Is it long-lasting? Indonesia has a very large unbanked demographic, with around 80% of consumers lacking access to financial services. With a population of about 250 million there is clearly a large addressable market for this payments service, giving it long-term potential. Is it operationally game-changing for the provider? For BBM, mobile payments and financial services is a completely new area of business. Yet with the experience and expertise of Alipay on its side, along with the strong adoption of BBM within Indonesia, the initiative should prove lucrative for Emtek Group. Will it significantly improve the user experience? This will greatly improve the payment and banking consumer environment in Indonesia; with a large proportion of the local population already using BBM, adoption of this new service should happen quickly. Is it market-changing? This service looks set to change both the banking and payments environment in Indonesia going forward since the majority of the market is financially underserved. BBM and its significant user base will help shape the future direction of the market and improve the financial inclusion situation in Indonesia.

April 2017

TOTAL SCORE 4/5

Ant Financial and BBM develop mobile payment platform

TOTAL SCORE

Amazon has launched a new service that allows financially underserved consumers in America to shop on its website by adding money into their Amazon account through a barcode and a visit to one of its partner retailers.

Is it original? Amazon Cash is not unique in the market. PayPal My Cash offers a similar service and targets the same audience of underbanked or unbanked consumers in America. Users of both services have to download a barcode and present it at one of the retailers together with the amount of money they want to add into their account. Is it long-lasting? In 2015, a quarter of the total number of point of sale transactions were made in cash, and cash will remain an important payment method over the next five years (18% by 2020). As Amazon Cash targets a significant proportion of US consumers, it is expected that the service will remain relevant in the long term. Is it operationally game-changing for the provider? Amazon Cash extends the retailer’s reach to the approximately 27% of US consumers who are financially underserved and rely on cash extensively. By making it easier for these consumers to shop with Amazon, the group’s revenue will likely increase. Will it significantly improve the user experience? Amazon Cash is convenient to use because consumers do not need to have any type of payment card or account to shop online. Funds are added to the user’s account immediately and can be used for any transactions on the Amazon website. Compared to other options for the underbanked, Amazon Cash has a clear edge in that it charges no fees. Is it market-changing? Amazon Cash is an alternative payment method specific for Amazon, and while it will likely increase the group’s market share by targeting new customers, ultimately its closed-loop nature means it will not change the payments industry.

3/5

April 2017

Amazon targets the underbanked with Amazon Cash

General Insurance

HDFC Life launches new chatbot solution

India-based life insurer HDFC Life has launched the country’s first life insurance chatbot in collaboration with Haptik, India’s largest chatbot platform. The new product is designed to act as a financial guide to help users choose the most suitable life insurance plans and solutions, by providing insurance advice based on their answers to a short and simple set of questions.

Is it original? Chatbots within insurance are still relatively new, and there is yet to be a fully established proposition within the industry. HDFC Life’s product is somewhat unique in the way it works to provide an insurance quotient based on the user’s answers to a 60-second quiz. Is it long-lasting? Chatbots are intended to increase efficiency within the insurance markets, with the aim of consumers being able to access and purchase the products and services they require in a timely fashion, with minimal effort. New propositions that promote this trait will undoubtedly have some longevity. Is it operationally game-changing for the provider? HDFC Life’s product sees the group utilize technology to encourage users to engage with the brand and submit information. Being app-based, it also targets a generation that is likely to be otherwise unfamiliar with life insurance. Will it significantly improve the user experience? The chatbot not only works as a personal financial advisor but it also brings to the forefront the universal need for life insurance, which often involves a prolonged application process before a quote is generated. Here users are provided with a quick, indicative view of their cover requirements. Is it market-changing? Chatbots would not be suitable for users in need of more complex cover due to their additional guidance requirements, meaning this proposition is somewhat limited unless the advice it provides is advanced and expansive, covering a vast range of insurance needs.

April 2017

TOTAL SCORE 4/5

Hood Group in connected home insurance pilot

Hood Group has begun testing a new connected home pilot program designed to evaluate escape of water sensor technology and inform the development of new home insurance propositions. The broker is working in partnership with smart home provider Lightwave in a bid to deliver the project by mid-2017.

Is it original? The Hood Group is not only developing a proposition that reinforces the connected home concept, but its product is intended to actively shut down a system if it is malfunctioning, instead of merely “monitoring” the situation or giving users remote access. Is it long-lasting? For insurers, especially those prominent in the home and home emergency spaces, the concept of the Internet of Things represents an opportunity to incorporate the use of technology into their services and also target a generation familiar with the use of these devices. Is it operationally game-changing for the provider? It is unlikely provider operations will change dramatically; however, Hood Group’s proposition can have a hugely positive impact in the household market, and as water damage is a huge area of claims for home insurers it seems appropriate to start with a proposition that pilots water flow sensing technology. Will it significantly improve the user experience? Users with the technology installed could benefit from premium reductions or discounts due to having improved the mitigation of any potential risks to their water systems. Is it market-changing? Yes. The home emergency space remains somewhat untapped by insurers in terms of innovation, with the energy groups being the main providers facilitating innovation in this market. Here, insurers have the opportunity to get behind a product that would serve the industry well.

April 2017

TOTAL SCORE 4/5

InsureScan – the new smartphone-ready tool

InsureScan, developed by Israel-based Scanovate, presents the next generation of integrated and patented solutions – a complete smartphone system solution that integrates insurers’ existing quoting, policy management, and document processing all into one simple, easy-to-use service.

Is it original? Insurers have already begun to explore the concept of mobile device integration via mobile wallets and online policy management services. However, a proposition strictly for smartphones, which offers more benefit to the provider and its operations instead of the end user, does hold some appeal. Is it long-lasting? As insurers are increasingly embracing the use of digital technology, services and propositions that can be integrated into these very devices can only be a good thing going forward. Is it operationally game-changing for the provider? Potentially. Digital and mobile channels change the way people select and purchase insurance, and this has required insurance providers to implement new ways to engage and serve their client base. Therefore, insurance providers must find a way to overcome the industry’s dependence on physical documentation, which could involve a complete overhaul of back-office processes. Will it significantly improve the user experience? InsureScan takes the user and service experience to a new dimension. It enables providers to reduce the time spent on lengthy procedures such as entering customer data or processing claims, meaning the service customers receive in return is quicker and more efficient. Is it market-changing? The proposition is ultimately designed to take insurance companies mobile and turn their digital presence into a fully fledged, streamlined, and less labor-intensive service.

April 2017

TOTAL SCORE 5/5

Retail Banking

Oval Money is a UK-based savings app that aims to help consumers track their spending and boost their savings. Users can link their accounts and payment cards, and save via three rules: rounding up transactions to the nearest £1 and saving the difference; saving a fixed percentage of selected transactions; or saving a fixed amount with each transaction. Oval Money was part of the FCA’s regulatory sandbox and completed testing in April 2017.

Is it original? Other savings apps that allow users to set up savings-related rules already exist , but Oval Money has refined the concept by adding personalized prompts that inform users exactly how much they could save by following certain rules. It also aggregates users’ data to learn about their spending and saving patterns, and uses this insight to offer recommendations via in-app notifications. Is it long-lasting? Younger consumers in particular have to deal with high livings costs and irregular working patterns, which makes it difficult to commit to saving fixed amounts each month. Our 2016 Retail Banking Insight Survey found that 57% of 18–34 year olds seek help with decisions, which means that Oval Money should find a receptive audience. Is it operationally game-changing for the provider? The operational principles underlying Oval Money are similar to those of other providers in this sector, and as such do not represent a fundamentally new approach. Will it significantly improve the user experience? Oval Money proactively suggests rules that can raise savings rates based on a user’s actual spending patterns, thus increasing the likelihood of influencing beneficial behavior. Users in the beta program saved an average of £135 per month through the app. Is it market-changing? Oval Money is not designed to challenge existing savings providers, but instead to integrate with consumers’ existing banks. As such, it acts as a supplementary enhancement rather than a standalone product.

April 2017

TOTAL SCORE 3/5

Oval Money aims to improve users’ savings habits

Clarity Money creates time and space to make decisions

Clarity Money is a personal financial management app that provides customers with actionable and objective insight. Clarity Money uses AI, data science, and machine learning to make sense of customers’ finances and provide opportunities to save money, make more informed decisions about their financial objectives, and negotiate better deals with service providers such as energy and internet providers.

Is it original? Clarity Money is a simplified and effective personal financial management toolkit, but the tools are not new. Is it long-lasting? Clarity Money will appeal to consumers because it addresses the problem of information overload. Consumers are bombarded with deals and different product options through multiple channels on a daily basis. Clarity Money can help consumers make better decisions about their finances without them having to conduct extensive analysis. Is it operationally game-changing for the provider? The key impact on providers will be the diminution of customer acquisition marketing. Consumers are likely to use the AI and machine learning capabilities of Clarity Money as a filter, perusing only the options already analyzed. Not only will providers be forced to improve their pricing, they may have to adjust their propositions to take into account the analytic process performed by Clarity Money in order to remain competitive. Will it significantly improve the user experience? Yes. Firstly, it will save customers money through its partnership with Billshark by negotiating better deals with service providers. Secondly, it will provide a degree of clarity and assurance for consumers managing their day-to-day finances. Is it market-changing? The additional analytical capacity that Clarity Money provides could encourage previously complacent consumers to become more discerning. Furthermore, as AI and machine learning is increasingly used to the benefit of consumers, providers will have to devise new customer retention and acquisition strategies.

April 2017

TOTAL SCORE 4/5

Humaniq is a blockchain-based app that allows users to work, borrow, lend, save, and pay using a protected biometric ID, which eliminates the need for traditional methods of ID and security. In addition to being a mobile app, the platform also acts as the infrastructure backbone for third-party services to plug into, such as insurance providers, P2P lenders, and data security companies. It aims to make banking easier and accessible to the poorest and least educated people of the world and enhance global financial inclusion.

Is it original? Blockchain banking for the bankless is a new concept, and Humaniq’s unique features such as biometric ID and security not just for unlocking the app or verifying transactions but to replace the entire sign-up process make it original. Is it long-lasting? Humaniq is the next generation model for financial services. It will bring mobile finance to a potential client base of 2 billion people who currently do not have access to banking services, meaning this service is likely to gain traction and longevity. Is it operationally game-changing for the provider? Humaniq issues its own tokens, known as HMQ, but the app will support a variety of cryptocurrencies, including bitcoin. A network of local cashiers will exchange HMQ and other cryptocurrencies for local currency. Humaniq's open source stack and API will be available for start-ups and other businesses to build services on its core technology, making it easy to plug it into Humaniq's network to reach a huge, untapped audience. Will it significantly improve the user experience? It is a safe, strong financial tool, specifically designed to be used by people who are undereducated or who do not possess identification without making them change their existing behavior. Is it market-changing? By dissolving the barriers of archaic banks – such as the need to visit a branch, do paperwork, deal with hard-to-use mobile apps, and protect information with complex passwords – Humaniq offers a completely new banking experience.

April 2017

Humaniq: a blockchain-based financial platform for the unbanked

TOTAL SCORE 5/5

Wealth Management

Is it original? No. Other providers such as Acorns have introduced micro-investing in other markets. But this start-up is targeted at a developing market, China, where mutual funds are not a prominent asset class. Is it long-lasting? Yes, as the capital controls and restrictions on foreign funds will continue to require intermediaries such as Niu Jiao Suo to facilitate investments abroad. Is it operationally game-changing for the provider? As a start-up that only went live in July 2016 it has “thousands” of users. A recent funding round for the company secured $5m to speed its expansion. Will it significantly improve the user experience? The automated KYC using information provided from public APIs significantly improves access for small-scale Chinese investors to foreign capital markets, which typically have been the preserve of more affluent customers. Its slick mobile interface also ensures access for poorer clients who primarily access the internet via mobile. Is it market-changing? Foreign mutual funds are difficult to directly invest into on the mainland. Tools such as Niu Jiao Suo – which bypass the banks and wealth managers that have traditionally provided exposure to investments in the rest of the world – represent a marked change in market dynamics.

Beijing-based start-up Niu Jiao Suo was founded in 2016 to conveniently connect Chinese retail investors with overseas mutual funds. Its mobile app allows users to invest in a range of 30 foreign mutual funds – a difficult activity in China. Minimum investments are as low as $400 up to a maximum of $50,000 as per current capital controls. Know Your Customer (KYC) compliance is carried out via an API from China’s Ministry of Public Security, while DBS acts as custodian. The firm attracts small investments, which it packages together and transfers to asset managers in one daily transaction, charging a 1% subscription or redemption fee on the assets as well as receiving commissions from certain funds.

April 2017

TOTAL SCORE

Niu Jiao Suo connects Chinese investors with overseas mutual funds

4/5

Singapore-based Smartfolios is an online advisory and thematic investment platform aimed at banks, brokerage companies, private wealth managers, IFAs, and multi-family offices. It combines personalized advice with customizable portfolios and a modular offering that provides a white-label platform that helps with client onboarding, straight-through processing, portfolio tracking and rebalancing, and risk management. It offers pre-built portfolios (which can be customized) designed to find wealth managers a range of cheap, transparent investments.

Is it original? While essentially a modular white-label automated investment platform for the UHNW market, it is the first to be launched in Asia targeting the advisors of family offices, private banks, and other private wealth managers. Is it long-lasting? The fintech has already signed a deal with Marvelstone Capital, a wealth manager focused on Asian UHNW families; other financial institutions looking to add an element of automated investment to their offering will likely follow. Is it operationally game-changing for the provider? Smartfolios will allow smaller private wealth managers to offer a slicker digital investment service with key elements of robo-advice built in. The service will likely increase advisor efficiency, but will not fundamentally alter business models or operations. Will it significantly improve the user experience? Smartfolios improves the user’s digital investment experience, automating certain functions and allowing for more flexible access. Advisors will find it improves their workflow and ability to serve clients, particularly as it can connect to existing software via back-end APIs. Is it market-changing? There are already robo-advisory services aimed at the higher-end investor segment, and platforms geared to the advisor market. As it is designed to assist incumbents in the market better compete with these services, Smartfolios will not markedly change market dynamics in the UHNW wealth management segment.

April 2017

TOTAL SCORE 3/5

Smartfolios offers B2B advisory and investment platform

Is it original? Credit Suisse claims to have launched the first fully front-to-back automated digital client onboarding application, and we are not aware of any other providers that allow clients to complete the process 100% paperless. However, the concept itself is not original, given that a combination of paper-based and digital has already been widely adopted. Is it long-lasting? Credit Suisse’s new onboarding application is here to stay. The wealth industry is becoming more and more digital, and while a front-to-back automated onboarding process still acts as a differentiator for the private bank, we expect this process to become the norm over the next few years. Is it operationally game-changing for the provider? Digitizing the client onboarding process will result in a number of efficiencies for Credit Suisse. It will free up advisor time and reduce onboarding costs, as well as minimizing the risk of a potential new client jumping ship during the onboarding process by eliminating friction points, as there is no need for someone to be re-routed to different channels. Will it significantly improve the user experience? Credit Suisse’s paperless application process will appeal to increasingly digitally savvy consumers. Streamlining the onboarding experience will improve the client experience by reducing the time the process takes and minimizing room for human error. Is it market-changing? While 100% digital onboarding has the potential to create goodwill, it is a one-off event at the very beginning of the relationship, and thus is unlikely to have a lasting impact. We also expect competitors to launch similar services in the near future.

In March 2017, Credit Suisse launched its automated Digital Client Onboarding application, which allows the bank’s relationship managers to onboard new clients domiciled in Singapore wishing to open an account in the city state. The entire onboarding process is conducted digitally on a specially configured iPad, with Optical Character Recognition for client identification. A client’s signature is captured electronically.

April 2017

TOTAL SCORE

Credit Suisse launches 100% digital onboarding solution

3/5

MostShorted’s platform aims to improve investor efficiency by collecting and aggregating information about short positions in equity markets, currently focusing on hedge fund and activist shorts. The start-up provides investors with live data and sends out real-time alerts on changes in significant shorts in the EU equity markets. MostShorted also updates users with market intelligence in the activist short sector on current and historic activist campaigns and their performance.

Is it original? MostShorted specializes on a niche segment in the investment market. However, there are plenty of research and information apps and platforms, and the concept itself is not new or original. Is it long-lasting? Data from our Global Wealth Managers Survey shows that dissatisfaction with traditional asset classes is on the rise among European investors, particularly in the UK. MostShorted provides a welcome alternative to traditional long equity investments amid increasingly volatile market conditions. Is it operationally game-changing for the provider? MostShorted only provides one service offering. As such the launch is game-changing for the provider, and its success will depend on its ability to build a customer base. Will it significantly improve the user experience? MostShorted supports investors who want to take a short position in the equity market. Details about significant shorts in European stock are not widely available and information is spread across many different platforms. By providing aggregated and condensed information the start-up will improve the user experience. Is it market-changing? MostShorted will drive uptake of short investing (which is considered more niche in the wider retail investor community) through increased transparency and information provision.

April 2017

TOTAL SCORE 4/5

MostShorted provides investors with information regarding short positions in equity markets

Definition of parameters Is it original? Is the innovation significantly different to other products or services already on the market? Is it long-lasting? How much longevity will the innovation have? Is the innovation more than a novelty that will only be of transient appeal to consumers? Is it sustainable for providers in the long run, with respect to the cost and complexity of provision? Is it operationally game-changing for the provider? How much impact will the innovation have on providers with respect to cost, speed, and efficiency of provision? Will it reduce barriers to entry or open up new revenue streams? Will it significantly improve the user experience? How much impact will the innovation have on consumers with respect to speed, ease of use, and cost or price? Will it enhance or add value to their experience, or will it lead to improved outcomes for consumers? Is it market-changing? How much overall impact will this innovation have across all market participants, both providers and end users?

Appendix

April 2017

Sources Bitcoin.com (2017) Humaniq Releases 2nd Iteration of Financial Services App Business Wire (2016) Adam Dell Launches Clarity Money, Revolutionary New Personal Finance App Clarity Money (2017) Company Website Credit Suisse (2017) Press release The Economic Times (2017) The millennial way to find the right insurance Finextra (2017) Former Uber Italy CEO launches social savings app Forbes (2017) Facebook Messenger Passes 1.2 Billion Users Humaniq (2017) Company website Insurance Age (2017) InsurTech Futures: Hood Group launches connected home insurance pilot MostShorted (2017) Company website Niu Jiao Suo (2017) Company website Oval Money (2017) Company website PYMNTS.com (2017) Facebook Messenger Launches Group Payment Service Scanovate (2017) InsureScan Smartfolios (2017) Company website TechCrunch (2017) Alibaba’s Ant Financial to develop services in Indonesia as global expansion continues TechCrunch (2017) Amazon launches Amazon Cash, a way to shop its site without a bank card TechCrunch (2017) Facebook Messenger now supports group payments Tech in Asia (2017) This fintech startup is helping Chinese people move their money abroad Yahoo Finance (2017) Top Fintech and InsurTech Influencer Spiros Margaris Joins InsureScan Team Ask the analyst For further information, the Financial Services team can be contacted at clientservices.fs@globaldata.com.

Appendix

April 2017