Market Gravity

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Finspiration Our Favorite Financial Services Precedents for 2015 15th December 2014 Market Gravity

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Market Gravity is a specialist growth and innovation consultancy. We help the world’s leading companies to design new propositions and services. We work with some of the world’s leading Financial Services firms and over the past few weeks have picked out some of our favorite market trends and precedents for 2015.

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Some of our recent clients:

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4 Neo Banks 53% of millennials don’t think their bank is any different from other banks and 33% don’t think they will need a bank at all in the future leading to new challengers looking to take market share from traditional incumbents. There has been initial enthusiasm for such propositions as 88.5 million Americans have attempted to open an account online or with a mobile device in the past 12 months.

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Banking for Canada’s Gen Y Koho focus on 18 to 34 year olds seeking an alternative digital banking experience with fewer and more transparent fees Koho provide a mobile app and what they call a ‘pre-paid credit card’ for making transactions Like Moven Bank, Koho plan to use data to improve the insights made available to customers Britain’s 1st Pure Digital Player Atom Bank, due to launch in 2015, will be the UK’s first digital only bank Founded by Anthony Thomson, co-founder of Metro Bank, Atom will look to take advantage of the current churn in UK current accounts Atom will sit on top of Fiserv’s Agiliti cloud based banking platform Walmart and GreenDot Team Up GoBank is a Simple-esque digital bank formed by GreenDot Corporation, a pre-paid debit card provider Access to a GoBank account is made available through the purchase of a $2.95 starter kit at any Walmart store in the US enabling distribution to middle America

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Digital Investment Platforms Digital Investment Platforms have emerged due to changing customer needs and evolving market regulation. Most people struggle to understand or meet their investment goals, particularly for retirement. Many new offerings focus on removing the confusion of traditional advisor based models.

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Dip your toe into investments Loyal3 allows customers to buy shares in a range of organizations from just $10, with no transactions charges online or with their iOS app Customers are able to invest small amounts to test their investment strategies and have no transactions charges which can act as a barrier to smaller investments Get the UK Ready for Retirement Retiready is a simple, direct to consumer investment platform by Aegon The majority of people in the UK are not saving enough to meet their retirement expectations With Retiready, customers get a score out of 100 and guidance on how to meet their goal through 5 easy to understand funds Follow the Expert Investors iBillionnaire taps into the investment strategies of Wall Street billionaires, providing key insights into the financial data and investment decisions of leading U.S investors Customers are able to follow the trades made by the world’s highest profile investors to give them confidence in their trading strategy through the iBillionnaire ETF

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Enhanced Customer Experiences Customer experiences associated with Financial Services have ranked poorly for many years, lagging behind benchmarks set by other industries. Many financial technology firms are offering solutions to improve particular customer pain points, e.g. loyalty, digital interactions, customer support and pre-paid cards.

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Consolidate Customer Loyalty Loyalty programme aggregator to help consumers keep on top of an average 18 different loyalty programs – their offering can be white labelled for inclusion with a bank’s mobile app Location based notifications inform customers of available offers vs. them searching manually Maintaining Customer Interactions Video banking allows customers to have a face-to-face conversation with an adviser via their device from anywhere at any time While millions of people do most, if not all, of their banking online or via mobile, there are times when only a face-to-face chat will suffice Barclays began rolling out video banking in late 2014 Seamless Customer Support Fiserv’s Mobiliti is a mobile banking platform facilitating better interactions with customer support staff Through the app customers are able to have more direct conversations with customer support – e.g. instant messaging, by phone and secure direct message

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Security & Authentication Alternatives Security has become a key issue for digital services, especially in the aftermath of the recent Target POS and iCloud hacks. Entering complex security credentials however is often detrimental to the user experience. A number of alternatives have been demonstrated this year, offering both high levels of security and a better user experience.

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Secure Password Consolidator Anchor ID is a password alternative, providing users with a universal username to log in to any account Customers set up their username using an < sign and never enter a password, authenticating themselves with their mobile device using PIN, TouchID or Geolocation Keeping Accounts Secure BioCatch is a cognitive behavioral biometrics technology tracking users interacting with applications Past behaviour is logged to ensure actual transactions carried out are within the normal parameters Banks using Biocatch place less strain on the customer experience through unwarranted blocks on legitimate transactions The Most Personal Login Making the tedious ‘forgot password’ routine a thing of the past PixelPin allows customers to choose four allocated points on a photograph to log in, creating a personalised and user-friendly way to authenticate online, reducing fraud

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Youthful Banking Banks are looking to the next generation of customers to win their custom early in the hope of building a long lasting relationship with them. Generation Z expect financial services to be digital, helping them build their financial awareness and access money from their family. Parents also benefit from such services as they can monitor and motivate their children’s financial behavior.

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Youth Current Account FlexOne is a checking account aimed at customers aged between 11 and 17, though it can be held up to the age of 23 The account comes with a contactless Visa debit card, mobile banking, pays 1% credit interest on balances up to ?1,000 and provides discounted cinemas tickets It even has its own dedicated Twitter feed Pre-Paid Card for Kids & Families Osper is a UK based payment service that aims to teach and empower young people to manage their money responsibly Osper provides young people with a mobile app and pre-paid debit card that can be credited and monitored by their parents Kids are able to get track their spending and get help to meet their goals Digital Allowances for Children Famdoo is a point based rewards tool for families. Parents reward their children for tasks they carry out – e.g. chores, learning or good behaviour using native iOS or Android apps Customers and their families can spend loyalty points through FamDoo with companies like Amazon, BestBuy, Target or put their points into a savings program

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Alternative Scoring Mechanisms Traditional credit scoring mechanisms such as FICO have remained consistent for decades. Established by a variety of factors including payment history, age of credit, recent credit inquiries and current debt. Some companies are recognizing there is more to customers than just their financial records, especially as more personal information – e.g. promotions, having children and day to day activity – is shared on social media.

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More Than a Credit Score Consumer analytics supplement for FICO scores using a “scoring as a service” Financial institutions can use online profile, phone and psychometric data to improve accuracy By more accurately assessing risk, the business can offer more competitive pricing Social Media Credit Score Traditional credit scoring does not accurately portray the financial risk of people under the age of 30 due to their lifestyle (moving frequently, limited credit history etc.) Friendly Score analyzes social media profiles to access more personal data and provide a more accurate credit worthiness score Transparent Credit Score Discover provide customers with a free FICO credit score as part of their monthly statement Although a traditional credit scoring system, by highlighting a customer’s credit score, Discover are making the process transparent to them Otherwise, customers would need to pay to access their rating

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16 Improving the Back End Most enterprise level financial institutions are reliant on legacy back end systems to provide their services to customers. The cost of maintaining these systems is vast, while they often limit the customer experience. Many FinTech startups are developing new products to help the financial institutions make back end improvements, at low cost with minimal risk. The knock on impact being huge leaps in the end customer experience.

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Connecting the World via API Standard Treasury is building middleware that allows a bank’s customers to programmatically interface with their bank. Their first product is a RESTful API processing checks, book transfers, account opening/closing and foreign currency quoting/execution Powering International Payments Currency Cloud’s vision is for a transparent, fast, easy-to-use and secure payments engine to transform the way businesses move money around the world Customers can automate end-to-end international payment processes and deliver sophisticated solutions One Platform, Multiple Solutions Yodlee offers a single API and customized developer portal, built for each customer and exposable to developers With the data, the API, and the tools to build and create, financial institutions are free to innovate with speed and agility. For example, enabling consumers to “invest their change” in stocks

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18 Banking with Wearables No trends briefing would be complete at the moment without reference to wearable technology. What started out as a frenzy for Google Glass has matured as companies start to think about real use cases for wearables. Large financial services firms are considering applications for wearables to build new interactions with customers, primarily starting in the payments space.

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Tap & Pay at Southampton FC bPay by Barclaycard is a new way to pay with a pre-paid account linking to a bPay wristband. Customers add money from a debit or credit card and use the band to make contactless payments, up to ?20 Southampton FC fans can get a club themed bank for making payments at their St Mary’s stadium Balance on Your Wrist Customers of Canada's Scotiabank can now check their account balances with a quick glance at their wrists with a new app for the Samsung Gear range of smartwatches Customers swipe the screen to see the balance of their preferred account Banking with Google Glass Ukrainian Bank PrivatBank has provided a glimpse of what banking with Google Glass could look like for customers Examples include using voice commands to authorise payments, using the camera to pay bills or a QR code reader to redeem offers PrivatBank say this could be achieved by re-using existing architecture

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