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As those who read my blog will know by now I chair a very active group called Nordic Finance Innovation (NFI), based out of Oslo. Our last meetings were a great success and NFI rapporteur Danielle Pamela Neben did a great write-up afterwards. I'm guessing most of you will have missed it, so here it is for posterity:

A United Europe enabled by technologies

By Danielle Pamela Neben, Editor of NFI and Marketing Director at ePassi in Iceland

Nordic Finance Innovation hosted its second meeting of the year in sunny Madrid on 3 April 2019. Iren Tranvåg, CEO of NFI welcomed all to the meeting. NFI´s objectives are to help the Nordics improve competitiveness and recognition. The financial market is moving so quickly as seen in Asia. NFI helps share knowledge, work with data, encourage partnerships and collaboration – such as the mobile payment interoperability project.

She then welcomed Chris Skinner, Founder and Chairman of NFI to moderate the meeting. In 1999, Francisco Gonzalez spoke about the financial sector being the most impacted by digital but having the most to gain. Knowing how to give customers advice anytime, anywhere is key to transformation. Defining strategies and execution in digital is not a simple task. It is only the banks that understand this change that will be successful. Francisco said this before the iPhone. The pace of change is dramatic.

Take a look at Stripe. It was started in 2010 by two brothers who were 19 and 21. In 2018, the value of the company was $20bn with 1,000 employees ($20m per employee). Compare this with JP Morgan Chase. In 2016, it was valued at $245 bn with 235.000 employees ($1m per employee). In 2018, they reduced the number of employees by 1/3 to 165.000 through automation and the valuation increased to $365bn.

“Tackle the ‘frozen middle’ of your organization or face irrelevance”

There is difficulty in making digital transformation happen if it is not internalized from the ground up. ANZ hired Google executive Maile Carnegie as Group Executive for Digital Banking. A major cultural barrier is what she calls the “frozen middle” resisting change like death. It is flattened organizations taking on hierarchy, taking out the middle management that can make progress.

Technology is the game changer in financial services. Banks that are doing well have gone out to see to learn from tech companies – Google, Facebook, Alibaba, Spotify and Netflix. They are integrating micros services architecture into their businesses with teams of less than 10 people. There is no separation of IT and business. They have brought digital teams into unified organizations. United businesses.

Connecting suits with hoodies through hackathons

The major challenge”, as per Mikael Ericson CEO Intrum, “is it is a 100-year-old company in 23 countries that comes with lots of pride and responsibilities, but also a lot of legacy.

It was built by clever people over these 100 years in these different geographies and doing different things for clients. But in 2019, it is a patchwork of things and presents a major challenge compared to fintechs who start their operations with a blank sheet.”

“To go forward, we need partners. We need dialogue. We need transparency.”

The core focus is daily communication with 200.00 customers who make late payments or are unable to pay. The work is not just about communication, but about respect. Intrum needs an efficient way to communicate to be transparent, open, work with partners, clients and communities to bring this dialogue forward.

“We want to open the door to innovation such as the hackathon we are doing today in Madrid”, Catharine Kloumin, COO Intrum. Conducting hackathons helps companies take a pause for employees to come forward with their ideas, combined with external parties for their outside view.

As highlighted by Danny Heally, Regional Executive at Mulesoft which is supporting the Intrum hackathon, “Some of the best ideas come from hackathons such as the ‘like’ feature in Facebook, the most used feature today.”

Delighting the Customer through Data Driven Innovation

How much should I Swish?

“We are often using ‘inside-out perspectives’, but it is a case of using ‘outside-in’ and listening to our customers”, Anne-Lena Wretman, CEO Getswish. Today more than 7 million Swedish people are using Swish, from the youngest being 1 month old to the oldest at 104 years of age. 90% of under 25s are using the app and for 75% of over 75s.

Swish conducted an analysis of customer navigation of their app. They noticed that many people jumped out of the app for a minute and then came back to conclude the transaction. But why? After data analysis, it showed that clients needed to calculate for their transfers, such as splitting the bill between friends.

To answer this, Swish added a calculator function in the app. And people were delighted! It was a small development but had a huge positive consumer experience.

Alibaba 3/1/0 microloan: 3 minutes to fill the form, 1 second to process and 0 human intervention

Yancchao Wang, Solution Architecture at Alibaba Cloud, spoke of the recently launched micro-loan based based on real-time transaction credit scoring with Zhima Credit.

These micros loans help businesses avoid cashflow crisis where they immediately can borrow small amounts of money starting from 1 CNY (~0.13 Euro) and up to 1.000 Euros. The average cost of the loan is 2.3 CNY (~0.3 Euro) with a bad debt rate of under 1%.

Zhima Credit scoring is available to everyone with an Alipay account. Benefits of having good credit scores also helps people when they want to book a hotel room or rent a car, where they do not need to make a credit card deposit. This gives business confidence to sell their services. And since 80% of Chinese do not have credit cards, this provides them with much more financial accessibility than ever before.

On Singles Day, 90% of the 1 billion transactions were delivered within four days. To achieve this, Alibaba Cloud used Artificial Intelligence to map out the demand beforehand and stock inventory in its regional distribution centres via its logistics company Cainao. Alibaba Cloud is now available globally, which also helps foreign companies overcome firewall restrictions to access the Chinese market.

“Proximity services, marketing and pushing content at the right moment”

Worldline is an aggregation of payment services, transactions and merchant acquiring. “In this business, we are in the age of data processing and taking value from the data. People expect cognitive services and to make recommendations. They do not want to create a shopping list, they want you to create it for them. We need to put this into place”, Jose Lopez Granados, Head of Business Development Mobile Competence Centre at Worldline.

BigTechs moving into e-money regulated spaces

“There are 3xDs in disruption that are driving new payment solutions: Demonetized, Dematerialized and Democratized.”, Alfonso Ayuso, Chief Innovation Officer of Banco Sabadell. He highlighted the major challenges that banks are facing, especially under PSD2. And with that, comes the challenge of BigTechs moving into e-money regulated spaces.

  • December 2016 > Facebook secured an e-money license in Ireland, paving the way for Messenger payments

  • December 2018 > Google was granted an electronic money license by the Lithuanian central bank

  • March 2019 > Facebook talks to cryptocurrency exchanges about selling its new digital coin

Under the PSD2 regulation, e-Money institutions could build a basic offering of banking services including the appearance of managing current accounts when they are really managing payment accounts.

In Spain, the banks have launched a payment scheme with a common solution called Bizum. This is a payment processer for all banks in Spain. And it demonstrates an excellent way of cooperation through united technology.

APIs – Unsung heroes of how things connect together

“The ability to partner with other organisations to explore new and emerging digital technology and APIs is critical in understanding how we can evolve new products and services for our customers and clients”, Peter Josse, CIO Barclays UK 2016

“Mulesoft is a leader in API management and our mission is connectivity”, Danny Healy, Regional Executive and MuleSoft. “You can drive value through these buildings blocks. You can expose APIs to third parties, and they become brand ambassadors for their product. And you can look at innovation of exposing externally and bringing back in house. It goes far beyond technology.”

The modern API is the core enabler of a new operating model. Expectations of today’s APIs are to:

  • Open up innovation

  • Improve connection with the customer

  • Improve and adapt processes

People historically used only one bank. Now they have one bank for their mortgage, one bank for day-to-day banking, one bank for investments. But they need to view this as a whole.

Tink is a tech provider in PFM and aggregation as a service to a whole scale of customers and major banks, as well as self-service to startups to access services for data aggregation. “Tink has been in this space since 2012 to help banks open with APIs and give users their data that is more user-friendly and proactive in terms of managing personal finance. We are now giving personalized advice and predictions based on that data”, Richard Simko, Product Expert at Tink.

“Do what you do best, and link to the rest”, Marco co-founder of Solaris

In 2017, Chris Skinner published a blog about the Lego Bank. The Lego Bank owns no pieces but assembles the pieces into different form factors. One can take a range of APIs and build a Universal Bank, a Commercial Bank or a Retail Bank. This is what typifies in the new world of BaaS: Banking as a Service.

Better together with innovation in collaboration

True innovations will not come from new technologies, but from new ways of collaboration – Thomas Malone, MIT

Marisol Menendez is now Chief Open Innovation at Startup Spain South having previously been Head of Open Innovation at BBVA. With her depth of experience in working at a large bank and with startups, she conducted a mini-workshop with the participants to help identify where their organisations stand in terms of innovation – whether they seem themselves as closed or open. And whether they are looking inside-out or outside-in. Below is the OI Strategy Map that she used for reflection with all participants.

But banks are control freaks – can they really drive innovation with external partners?

This was the central discussion in one of the key panels led by Chris. Banks are control freaks. They have ‘build versus buy’ discussions and always go towards build. To change this culture is challenging, but how can banks be collaborative?

Johann Lundberg, Founding Partner at NFT Ventures, spoke of the mismatch between the banks and fintech startups. Big banks’ propositions have little variation - same price, same services, more of a utility service. Revolut and challenger banks have unique propositions. Bankers are paid to manage risks. Working with financial startups, banks needs to take risks and challenge themselves. However this is against the banking environment. NFT did three investments with Nordea which took a minimum of 9 months. Whereas Facebook can take just 3 days from meeting to disbursement. They key is to match in-house with outside innovation to combine the strengths.

Alfonso from Sabadell spoke that banks have legacy systems. It is not easy to transform, change and at the same time comply with regulatory requirements. But keeping innovation internal is tricky without bringing an external perspective.

With Marisol’s previous experience as Head of Innovation at BBVA, a major issue is to speed up the process. Startups want to gain access to the distribution with their solutions. But in the bank, there is a list of priorities and timing. The challenge is aligning the timing between the startups and the bank’s roadmap.

Johann compared the proposition approach between the large banks and fintechs/startups. A lot of banks are trying to change, but they are working through very simplified solutions to scale. On the other hand, startups can see a very profitable proposition with a niche of 10.000 customers.

Aha moment!

Danny from MuleSoft recently did a hackathon with a legal team in a bank, using a framework to help them build a webpage by taking an external company’s API. The lawyers had an ‘aha’ moment when they could link an API to their website that day. But in their legal department, third party contracts can take up to 9 months to get signed, dramatically slowing down the process of innovation.

Delighting the millennial employees – Space as a Service

This event was hosted at WeWork in Spain. Julia Abarca Muro, Community Manager at WeWork, addressed how workspace needs are changing around the world by moving from long term to flexible arrangements. They are opening up 30 new spaces every month around the world with 1.000 members – 30.000 new members each month. In NYC, they already have 50 workspaces.

Small to major companies are using these facilities today, such as Intrum for the hackathon. Other major companies include Nasdaq, Bank of America, Deloitte, Microsoft, Oracle, Airbnb, Diageo, Starbucks to name a few.

By 2020, 50% of the population will be millennials. 75% are moving to cities, 69% would trade other benefits for better workspaces. They want flexibility, mobility, value, productivity and a place with talent attraction.


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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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