Financial Services - The Bank Is Dead. Long Live Banking.

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How banks can survive and thrive in the digital world


Founded in 2008, AnalogFolk is an independent digital creative agency. We use digital to make the analog world better. With offices in London, Sydney, New York, Portland, Shanghai and Hong Kong, we create connected brand experiences that help people achieve their ambitions.

AnalogFolk 20 Rosebery Avenue London EC1R 4SX +44 (0)20 7684 8444


Welcome The financial services sector is going through a dramatic transformation. This is creating massive disruption, but also opportunities for those who dare to challenge long-held conventions and move quickly to embrace change.


At AnalogFolk, we believe digital devices, tools, content and experiences should bring positive change to the analog world. Our teams around the globe are working with some of the world’s biggest financial services brands and, as such, have developed a unique perspective on how new technologies are impacting the sector.

In this journal, we unpack some of the key themes and what they could mean for your industry - and your customers - in the future. And we present solid pathways to making tangible innovation happen in your business. We actually do that stuff every day, though. It’s what makes us tick. Drop me a line if you’d like to hear more. Best, Bill

Bill Brock, founder and CEO, AnalogFolk






Our at-a-glance guide to the history of fintech and its impact on financial services

Why it’s essential financial technology feels as natural and easy to use as possible


P.14 THE FINTECH STRATEGIES TO STEAL What banks can learn from China, the world’s biggest fintech market




How banks can ensure they’re part of the rapidly changing landscape

How Plum’s digital assistant is transforming the reluctant saver’s fortunes




WINNING OVER GENERATION Y What banks need to do to woo keen-to-save but bank-shy millennials


7 FINTECHS WE DIG Some of the most exciting companies breaking the banking mould


CONCEPT TO CONCRETE: THIS IS HOW TO MAKE INNOVATION HAPPEN IN YOUR BUSINESS. ACTUALLY HAPPEN Simple tools and techniques to help get innovative ideas off the ground



Insight and insider tips from Moven CEO and futurist Brett King

Financial near-futures imagined by the experts at AnalogFolk


Viva la fintech revolution 67 years and stronger than ever

1971 National Association of Securities Dealers Automated Quotations (NASDAQ) is established as the first electronic stock exchange.

1998 Majority of US banks introduce first transactional capabilities on the Internet

1950 Diners Club (US) introduces the first credit card

1983 Nottingham Building Society introduces first online banking



PayPal launched (initially as Confinity)

Barclays (UK) introduces the first ATM

1982 eTrade introduces first online brokerage.


2016 2004

China overtakes US as leading nation for advanced fintech


The first peer-to-peer lending company Zopa founded

2010 First mobile banking apps launched



Users of mobile banking exceed users of physical branches

Bitcoin v0.1 launched



The first robo -advisor services launched


Apple Pay launched


Number of fintech companies estimated to exceed 1,000 globally


Payment companies Venmo and Square established

Android and Samsung Pay launched

2017 2009


Digital-only banking pioneers Simple and Fidor established

Global investment in fintech hits new high of $47bn

2017 2004 Alipay launched

2011 Chinese peer-to -peer lender Lufax launched

ClearBank launched in UK — the first new clearing bank in 250 years



Do you know the new rules of banking? When the landscape of your business changes, be the one changing it Chris Joannou, Business Partner, AnalogFolk London

We live in a world where the biggest holiday bookings company doesn’t own a single room and the largest taxi firm doesn’t own a single cab, so why should you have to be a bank to take deposits, lend money or manage payments? Welcome to the new rules of banking. The world has certainly woken up to this paradigm shift, with an explosion of investment in fintech reported to have exceeded $130bn globally between 2010 and 20161. While fintech isn’t a new phenomenon, this recent scale of transformation is unprecedented.


Cynics could look at this scale of change and fear a similar bubble to the one we saw in the early 2000s. Before Metro Bank launched seven years ago, there hadn’t been a new high-street entrant granted a banking licence for more than 150 years; at the last count, in the UK alone there were around 50 new banking entrants, many led by digital. Not all of the new players will survive; likewise, the thousands of start-ups in the broader fintech arena. However, some have already made their mark and changed the landscape forever.

KPMG, The Pulse of Fintech — Q4 2016


Banking is becoming more social Peer-to-peer lenders, such as Zopa in the UK, Lending Club in the US, and Lufax in China, are now taking sizable chunks out of the market. Lending Club alone has now funded more than $24bn worth of loans since 2009 and nearly $2bn in just the last quarter. Humans are playing a smaller role Robo-advisors — a class of digital advisor that uses algorithms to provide financial advice or investment management online with little or no human intervention — are on the rise. For instance, automated wealth management firms Betterment and Wealthfront between them now have more than $10bn in assets under management — not bad given they’re both less than 10 years old. Mobile is opening up finance to people who have no access to a bank If you want real insight into the nature of a future banking system, look to Asia and the developing markets of Africa. In many places, they’re building banking systems from scratch, without having to deal with the legacy constraints the West’s more developed markets are wrestling with. And it’s being led by mobile. One example is M-Pesa, which launched in Kenya in 2007. M-Pesa has radically

if you want real insight into the nature of a future banking system, look to asia and the developing markets of subsaharan africa. transformed a whole country, with 75% adoption and more than 60% of Kenyan GDP now being transacted through this feature-phone-based mobile payments solution. In China, Tencent’s WeChat started life as a simple messaging platform in 2011. It’s now rapidly built out a huge ecosystem of ‘apps within an app’, allowing users not only to message friends, but to shop, hail a cab, check their balance, make payments or apply for new financial products, among many other everyday activities — all without leaving the WeChat platform. So for over 800 million Chinese users, WeChat features as part of their daily lives.



Business banking isn’t immune to this revolution, either. Research undertaken by BCG estimates that just over 50% of all fintech investment has been directed to solutions intended for the business and corporate space. App-only challenger banks, such as Tide in the UK, are trying to reinvent the business banking experience for small firms, and what they’ve created so far looks impressive.

Hunting the fintech unicorn THE TOP FIVE BIGGEST FINTECHS Worldwide, there are reported to be just 27 fintech unicorns2 — start-ups valued at over $1bn — which have originated from just six locations: China, India, the Netherlands, Sweden, the US and the UK. The majority started life in the US, with 14 to date, but, unsurprisingly, the current four largest come from China. The top five are:

Specialist business-lending platform Kabbage in the US is providing innovative working capital solutions, while Swedish company Klarna’s e-commerce payment solutions are now being used by more than 70,000 merchants: just two examples in an ever-expanding list.

1 Ant Financial China

Alibaba’s financial services arm and operator of Alipay is valued at $60bn.

Partnerships are the way forwards While the fintechs continue to reimagine what a future banking system might look like, the legacy banks are spending billions on ‘digital transformation’ programmes, as they try to reinvent their businesses to both compete with and defend themselves against the new threats they’re facing.

2 Lufax China

China’s largest peer-to-peer lender is valued at $18.5bn.

3 JD Finance

However, the general market sentiment has changed from one of competition to collaboration, as both traditional banks and fintechs begin to realise they have complementary skills that collectively bring a greater chance of success. While agile fintechs can launch new products quickly, banks can offer large customer bases and established infrastructure.


Backed by online shopping giant and Tencent, this credit provider is valued at $7bn.

4 Qufenqi China

The online electronics retailer that allows consumers to purchase in instalments is valued at $5.9bn.

The new collaboration models are still emerging and will undoubtedly evolve for some time, as these unlikely marriages still need to work through their cultural and mindset differences.

5 Stripe United States

This San Francisco-based online payments processor is valued at $5bn.

To explore this topic further, email


Business Insider, 2016


9 reasons Banks need to take

Natural language interfaces seriously

The most successful tech slots seamlessly into people’s lives, so if banks want to hold onto customers, it’s essential they make services personal, quick and natural to use Miguel Alvarez, Director of Research and Development, AnalogFolk London


2. Voice search is huge Natural language interfaces (NLIs) allow users to interact with a computer by typing or speaking in their everyday language. Chatbots can reply to a person’s written questions, for example, while voice-recognition software will convert spoken words. The customer needs no special systems training — they just speak naturally. Here’s why it’s crucial that banks invest in NLIs.

What could be easier and faster than speaking your request into a phone? When you think that humans generally talk at around 150 words per minute, as opposed to typing on average 40 words per minute, it’s no wonder voice is the fastest-growing type of search. The stats are compelling: according to analytics company comScore, 40% of adults now talk to their phones every day, and 50% of all searches will be voice by 2020.



It’s a chance to be human

It’s a new way to test and learn

When people hear the word ‘bank’, they tend to think cold, hard numbers, but proper banking interfaces that use NLIs can make everyone feel as though they have a personal assistant. Sending a payment, for example, can be as easy as texting ‘send 15 pounds to my mother tomorrow morning’. There’s a lot of information in that message, from a software that knows who your mother is to understanding the context of ‘tomorrow morning’. For the user, though, it’s very simple — and far easier than going through the five to 10 clicks needed to achieve the same result through other interfaces.

Those who enter a new realm first have the luxury of testing and learning. Users are forgiving when someone is leading, innovating and defining the future. Guidelines don’t exist for NLIs yet, so there’s a big opportunity to be the driver.





It’s not just about chatbots

You can own your voice

Chatbots represent a powerful means of engaging with customers in different ways, but they need to play a part in delivering a broader strategy. There’s a misconception that if a company creates a chatbot or software for a voice assistant, that’s enough to drive it forwards. Chatbots are targeted solutions to a problem. Banks need to understand the role they can play alongside other technologies, products and channels. Then there needs to be investment into NLIs that’s proportionate to the opportunity they present.

It’s common to invest heavily in visual style guides when developing a website, campaign site or mobile application, but that effort is lost if banks don’t also control how they sound and feel through NLIs. There’s a lot to consider. Who is your chatbot persona? How does it respond and react? How should it sound in different languages? How should various regions on a customer support chatbot be managed? Should it adapt based on geolocation? And when should the persona vary its response, depending on sentiment analysis?



Traditional SEO isn’t enough

It’s not about being innovative

A lot of money is invested in SEO, assuming searches are carried out in a particular way, but that’s all changing thanks to voice commands. The way people write versus the way they talk is very different. Written Google searches tend to follow a pattern and be very simple; voice searches rely heavily on context, localisation, and long tail patterns. Companies continue to invest in obsolete SEO methodologies that aren’t taking into consideration whether or not a search comes from a voice command.

Having bank interfaces that can be controlled purely through text messages or via voice is not innovative. It’s the equivalent of when banks started to support mobile. A bank wasn’t innovative just because it could support mobile — that was simply a must to survive and prosper. This translates to voice. When people realise the convenience of managing everything via the spoken word, with no need to install an app or wait for a website to load, tempting them back to a mobile app will be extremely difficult.

8. Sentiment analysis is key to building trust The governor of the Bank of England, Mark Carney, recently warned that only 20% of Brits think banks are well run. Similarly, a study by McCann Truth Central revealed: ‘42% of US consumers believe brands are “less truthful” than 20 years ago.’ As public trust declines, empathy with customers is more important than ever. So it makes sense to invest in sentiment analysis. A bank that acts according to a customer’s mood might sound futuristic, but that technology is already here. Rather than channelling money into mobile apps, banks need to invest in and test proper methodologies to personalise their services.

“A lot of money is invested in SEO, assuming searches are carried out in a particular way, but that’s all changing thanks to voice commands.”

9. you’ll be left behind Consider this — of WeChat’s 700m+ users, nearly 300m have added their bank details to WeChat Pay. That’s contributed to the world’s most bustling mobile payments economy. In 2015, China’s mobile transactions surged to $235bn, surpassing the US for the first time. According to iResearch, China’s mobile payments market was estimated to be worth 15.7 trillion yuan in 2016 — 28 times the $62.5bn forecast by eMarketer for the US in 2017. In Q3 of 2016, WeChat owner Tencent reported $6bn in revenue, up 52% year-on-year, driven largely by the success of WeChat. Something else to consider — what if, ahead of this growth, banks had invested in divisions dedicated to messaging applications? Imagine where they’d be now. To explore this topic further, email



the fintech strategies to steal What every business can learn from China, the world’s biggest fintech market Summer Yang, Senior Strategy Manager, and Wallace Wong, Senior UX Designer, AnalogFolk Asia

Imagine paying for your Starbucks, settling your electricity bill and moving your spare change into a high-interest personal fund, all from within a single app. In China, banking has slipped into the everyday habits of millions. How? China’s domestic internet finance industry has been growing at an exponential rate because it listens and learns from its market. It has just

overtaken the US as the biggest fintech market in the world. There’s no legacy; it’s creating banking from the ground up. Rather than leading to exclusivity, technology has actually been the enabler that’s brought the next generation of banking services to the masses. Here are six key strategies you can adopt to help your business do the same…


FOCUS ON A NEGLECTED DEMOGRAPHIC A large proportion of China’s population falls into the low-income class, unable to meet the threshold for wealth management products offered by traditional banks. And, according to a survey by China’s Southwestern University of Finance & Economics, more than two-thirds of new investors are not high school graduates. So there was a gap for a more inclusive finance system and Chinese tech giants were able to massively disrupt the existing industry. This phenomenon is not exclusive to China; there are demographics everywhere with banking needs not currently being met. Technology could be the catalyst that makes it possible to serve the largely under-served.

MAKE IT SIMPLE When you make investing simple, more people can invest. When Yu’e Bao (‘leftover treasure’) launched in 2013, it was hailed as the ‘fund for the masses’, because it lowered the barriers of entry. Yu’e Bao allowed Taobao (eBay equivalent) shoppers to invest the spare change in their Alipay (PayPal equivalent) wallets into an investment fund. This process takes no more than five clicks. Yu’e Bao now accounts for more than a third of China’s investment funds.

MAKE IT FAMILIAR Look at the existing behaviour of your users and shape your offerings into familiar experiences. Free instant messaging app WeChat, or ‘micro messaging’ in Chinese, taps into its users’ cultural behaviours and offers a digital equivalent. The giving of money-filled red envelopes is a Chinese New Year tradition. In 2014, WeChat launched its Red Envelope feature during the New Year period, allowing users to send virtual red envelopes with money and a greeting attached. As its users flocked to use the feature, WeChat was able to kick-start its mobile payment service.


MAKE IT SOCIAL Popular activities usually have lively communities; investing needn’t be any different. A market is inherently social. Futu Niuniu, or ‘wealthy path of the bull’, is an app developed by Futu Securities, with investment from Tencent. It was launched to satisfy the younger generation who wanted to invest abroad, but who don’t have the capital to open an investment account with a private bank. Futu created a hybrid platform to make stock trading a fun and social experience. Users can buy and sell stocks, discuss their stock picks in message groups, and express daily profits through emojis and stickers. This leads to better user engagement and longer platform usage times.

“Look at the existing behaviour of your users and shape your offerings into experiences that are familiar to them” DON’T MAKE IT TRIVIAL


Clumsy implementation of gamification can cause products to lose value and gain criticism. An example of this is the integration of a FarmVille-style game in the Futu Niuniu mobile trading platform.

Bear in mind that gamifying finance has its perils, as the combination of gaming and money can result in gambling. Futu’s achievement badges, daily missions and lucky draws encourage users to trade for the sake it. Instead, services should empower users to make informed decisions.

In a virtual farm, you nurture a seed by watering it daily. You can invite stock trading friends to help with watering and fertilisation to speed up growth. When the plant matures, you can harvest it for a period of commission-free trading. This gamification experience feels odd and disconnected. Businesses should only apply it in a way that feels right for the context — and make it genuinely useful.

Many of China’s fintech strategies can be reapplied in other markets, because, ultimately, financial services should enrich users. Only if companies do that successfully will users return. To explore this topic further, email


This start-up knows how to get spenders saving. It’s just a matter of trust. Plum’s digital personal savings assistant makes putting away money for a rainy day effortless. The company’s growth hacker, Robert Powell, talks about how the model works and where it goes from here Fame Razak, CTO, AnalogFolk London

Plum is a personal savings assistant that monitors your spending and automatically sets aside money you won’t need. Launched in September 2016, it was the first AI-powered Facebook chatbot. We asked its growth hacker, Robert Powell, to share the story of Plum’s development, the company’s future ambitions — and what the team would have done differently. ROBERT, WHAT FIRST INSPIRED PLUM? Most people know they should be saving money and understand the concept of compound interest, but few actually save. Plum’s co-founders, Alex [Michael] and Victor [Trokoudes], both Cypriots working in London’s tech scene, were no different. In addition, Victor was employee number five at TransferWise, so he witnessed firsthand the huge transformational effect a start-up can have. HOW DOES IT WORK? Users grant Plum read-only access to their transaction data by linking their bank account (we’ve partnered with Yodlee). Plum then analyses thousands of transactions to identify their regular income, rent, bills and daily spend. With this data and other factors including available balance, our algorithm will run every few days and calculate the right amount for them to save. This is then automatically transferred into their Plum savings account via Direct Debit. We message users to keep them updated with their progress, and their Plum savings are accessible 24/7. WHY FOCUS ON SAVINGS? As we were determining what Plum would be, we kept seeing stories pop up from around the world. Did you know that 16 million people in the UK currently

Plum founders, Alex Michael (left) and Victor Trokoudes (right)

have less than £100 in savings? And real interest rates with banks are now at 0%? People still only want to work till they’re 65 so, with life expectancy growing, that means they’ll need 30 years’ worth of savings to support them in retirement. With all this in mind, we knew what Plum’s direction had to be. HOW WILL YOU DIFFER FROM THE OTHER FINTECH START-UPS OUT THERE? Our algorithm is the differentiator. People already know they should be saving their money, they just don’t take any action. We’re doing that for them. We’re putting away just the right amount – money people can actually afford. Saving is just the first step to financial freedom. As Plum matures, we’ll offer investments and then tips and offers to help people reduce their spending.


THERE’S VERY LITTLE YOU CAN DO WITHIN PLUM ITSELF AND IT’S MOSTLY INSIDE FACEBOOK MESSENGER. HOW DID YOU DECIDE ON THE FEATURES AND THE CHANNEL? There were three key actions we needed to build for – putting money in, taking money out, and seeing your balance; anything else and we’d go against our mission of keeping it simple. Our biggest challenge was deciding whether we were going to build an app or not. We’re all aware of the app download barrier and usage fatigue, so we initially decided to take an SMS approach, since it’s universally accessible without blockers. However, at the time, Facebook began heavily promoting Messenger bots and it made sense for us to be there instead. HOW DID YOU FIND THE BEST TALENT IN YOUR EARLY DAYS TO DEVELOP AN ALGORITHM AND A PLATFORM ON A START-UP’S BUDGET? The early development was built by Alex, the CTO, who created the algorithm over

a six-month period. Once we were happy the algorithm would work for everyone, we brought in some freelancers to help build the prototype. Now we have three software engineers who we found through our investors and personal contacts. We’re lucky we get a lot of interest; I think it’s down to fintech’s popularity and Plum being something that’s cool to work on. Who doesn’t want to work with and explore machine learning? WHAT HAS BEEN PLUM’S BIGGEST CHALLENGE SO FAR? Trust. We have to use data aggregator Yodlee to connect Plum to people’s bank accounts and, for that to work, we need their internet banking login details. People could think, ‘Why would I give my bank details to a start-up?’ We know we’ll lose a lot of people at this point, so it’s a big concern for us. We put extra work into security, and being recognised at the National Tech Awards 2017, where we won Startup Tech Company of the Year, has helped with

Plum’s playful brand illustrations by Simple as Milk


awareness. The press have been really great and receptive to us — we’ve been in The Independent and on the BBC — but our focus is on getting recognised on a national scale outside of the tech bubble. OTHER THAN THE ALGORITHM AND YODLEE, WHAT ELSE DO YOU USE TO CREATE PLUM? We also use MangoPay to create an e-wallet for each customer to hold their money. Our tech is all hosted on the Amazon cloud. HOW DIFFICULT IS IT TO BECOME FSA-REGULATED AND HANDLE OTHER PEOPLE’S MONEY? We are regulated via our e-money partner, MangoPay, and we have to comply with its rules. We’re a registered data controller, so we have the Data Protection Act in place. Security is our highest priority, because we know it’s also our customers’ biggest concern. We do regular penetration tests on our IT infrastructure and we have strict rules in place. All data is encrypted on our laptops, we don’t store files on the hard drives, everything has to be in our private cloud storage, and USB drives are not allowed. All the policies are in place to keep Plum safe. All our staff understand and follow the rules. WHAT ARE THE PARTICULAR CHALLENGES IN BEING DIGITAL-ONLY? We love face-to-face interaction with customers — we think it’s important, because we’re talking about people’s finances. We have a messenger platform we can do it through, but when you talk to someone in person, you get so much more insight, so we’re trying to put on events every fortnight where users can come in and tell us what they think of the

product so far. We push them for good and bad feedback. You could lose that connection in digital-only, but by keeping your community engaged, you can make it work. Traditional banks going digital don’t necessarily appreciate what they’re losing. It could just create yet another problem for them to solve. HOW ARE YOU GENERATING AND PRIORITISING IDEAS TO KEEP AHEAD OF THE COMPETITION? We’re asking our customers what’s most beneficial to them. Changes we make must help everyone, not just a few, and be so profound we couldn’t not do them. We’ve heard investment is what our customers want next, so we’ll be going there. FINALLY, IF YOU HAD TO DO IT ALL AGAIN, WHAT WOULD YOU DO DIFFERENTLY? From what I know now, I’d focus on the community. As a start-up, once you have the general idea of what you want to solve, find the community and learn — from them — everything that would solve their problem. Then you end up with a focused solution you have a market for and it becomes easier to open it up to a wider audience. To explore this topic further, email


Winning over Generation Y Believe the financially irresponsible, narcissistic, carefree stereotype at your peril: millennials have unprecedented consumer power and might be the savviest group of all. What does it take to become #theirfavouritebank? Roger Houghton, Strategy Director, AnalogFolk London

Everyone knows millennials spend all their savings on holidays, festival tickets and nights out, right?

have the lowest amount of outstanding debt compared to other age groups.

Well, not exactly. Despite the media portrayal of them as free spirits, or ‘snowflakes’, Gen Y are actually on track to build better money habits than Gen X.

Yet despite a desire to save, in the US, for instance, 60% of millennials say they’ll transact money differently from the services currently offered by banks, and only 33% believe they need a bank at all.

Research shows 45% of 18- to 34-yearolds save a quarter of their salary each month, compared to just 34% of 35- to 54-year-olds. And 18- to 24-year-olds

Banks need to engage with the new set of values and beliefs behind this attitude shift if they’re to attract the next generation of customers. How?


Banks can’t rely on historical behaviour While banks could previously rely on passive loyalty (only 1 million people switched their primary financial institution in the UK last year), millennials seem set on doing things differently, with only 46% seeing themselves staying with their current financial services provider over the next few years. The recent trend that’s seen rising rates of consumer borrowing is also set to be challenged, with 25% of millennials describing credit cards as something that ‘worsens their financial standing’ and another 30% stating they’re ‘not sure how credit cards could be helpful’ to them. British consumers currently spend


more than £50 billion a year on interest repayments on personal debt (or around £139 million per day), which is a significant slice of a provider’s balance sheet. Millennials’ goals and priorities are clearly different. These themes emerged during recent focus groups and interviews AnalogFolk ran as part of an audience study for PepsiCo, where young people discussed their ambitions and attitudes to money. Their desire to be ‘free of things’ (a preference for access over ownership) can also be seen as a desire to be ‘free from debt’, which is their primary financial goal, replacing home ownership or early retirement cited by previous generations.

While millennials clearly have a strong digital preference, they aren’t defined by it. When it comes to finance, 45% say it plays an important role, but another 46% say it doesn’t, so providers may fail to engage with them if they recreate existing services in other channels without also taking into account millennials’ goals, needs and priorities. Engagement is critical This was the lesson we learned when working with Nike on developing its digital training products. AnalogFolk recently launched the Nike Trainers Hub, an innovative digital service that uses an intelligence-matching engine to connect consumers directly with one of Nike’s elite trainers. While this service proved successful in engaging users, we soon learned that giving people digital access to expert advice and information wasn’t enough if we wanted to help Nike members improve their performance. To go that step further, we needed to make engagement both personal and purposeful. This led to a new

engagement strategy, encouraging people to ‘Stop exercising. Start training’, with a redesigned Nike Training Club app that could deliver adaptive training plans based on a user’s goals and needs.

engage millennials, “To we need to focus on

their emotional needs, not just their rational, transactional ones.

New tech isn’t the whole answer, either The development of new digital offerings is often cited as the industry’s response to this situation, with one former CEO describing the rise of fintech as ‘a fundamental shift’ to meet the needs of millennials. With research from Fiserv showing that 80% of consumers would trust a new bank if it had ‘good technology’, you’d expect to see younger, tech-savvy consumers turning to start-ups for their financial needs. But, according to EY’s fintech tracker, it’s actually income, not age, that’s driving adoption of fintech.

Fewer features, more feeling Millennials admit to struggling to understand and manage their finances. In one study, over half said they’d trust their bank more if it offered useful content. Financial services, though, often seem designed for rational people who make sensible choices, when in fact we’re driven as much by emotion and intuition. Millennials have different goals and priorities and an underlying need for better emotional support, with a third saying they worry about how much debt they have and over half saying they don’t feel savvy when it comes to financial decisions. To engage with millennials, banks need to focus on meeting their emotional needs, not just their rational, transactional ones. That’s why fintech innovation needs to stop asking, ‘What can this technology do for us?’ and start asking, ‘How can we use this technology to improve people’s lives?’

To explore this topic further, email


1. Metromile fairer car insurance

2. AFFIRM credit card alternative

Why should every consumer pay a flat fee for car insurance? What if they rarely drive? With Metromile, they can pay per mile used. An easy-to-fit tracking device in their vehicle records actual mileage and calculates charges based on data captured. This data also allows users to generate a customised risk profile over time. (

Affirm lets shoppers pay for goods in instalments at checkout. It’s partnered with several retailers to provide its customers with easyto-access, transparently priced finance, granting three-, six- or 12-month loans on the spot. By doing so, it’s playing in a space typically owned by the credit card providers to offer an alternative, often cost-effective, means of consumer finance. (


disruptive-thinking behaviour-mirroring sector-shaking


3. Clinc ai for financial services Clinc claims to have created ‘the most advanced AI platform’ for financial services. Its first product, ‘Finie’, is a mobile voice-based AI platform for banking, broadly equivalent to a ‘Siri for your bank account’. Based on deep neural networks and created by professors at the University of Michigan, Clinc looks to be leading innovation in this space and promises more to follow. (


4. stash inclusive investing

6. TIDE mobile banking for SMES

Only have $5 to spare? That’s no barrier to becoming an investor. US-based Stash is seeking to simplify the investment process to make it more accessible. Through its mobile platform, investors can choose from a range of ETFs with a minimum investment of $5, while simplified language and tips help point investors in the right direction for their lifestyle. (

UK challenger Tide says high-street banks don’t care about SMEs. It claims to be one of the first mobile banking providers specifically designed for small businesses. It offers a slick and speedy account-opening process and integrated book-keeping capability to help manage expenses and invoices. (

chs we dig 5. clearbank 21st century clearing

7. Lemonade Faster insurance

ClearBank is the first new UK clearing bank for more than 250 years. It’s independent and powered by a 21st century, purpose- built infrastructure, utilising cloud-based tech plus core banking capabilities ready for API integration from the outset. It says it processes payments faster and more efficiently and cost-effectively than the big four. (

How long should an insurance claim settlement take in a world with zero patience? Three seconds? That’s the world record claimed by insurance disrupter Lemonade. It has shaken up the US market with its AI- and bot-powered service. It charges a flat fee for each policy and promises to distribute any post-claim surplus to good causes. (



How to survive (and thrive in) the fintech revolution Futurist and Moven CEO Brett King reveals who the winners and losers will be in the race to be the world’s most innovative and customer-friendly bank. Spoiler alert: it probably won’t be a bank By Harry Llufrio, Executive Creative Director & Partner, and Chris Ryan, Managing Director & Partner, AnalogFolk Asia


We asked futurist and CEO of digital banking service Moven Brett King what the coming years hold for the incumbents – and how they can get on board. BRETT, WHAT ARE THE YOUNGER GENERATION LOOKING FOR IN BANKING? Millennials have very different expectations of banking: they think of it in terms of utility and experiences, not relationships. In emerging markets, where there’s no legacy behaviour, millennials are finding new ways to work with each other financially, using services such as WePay and Alipay. They’ve found a workaround to the banking system. They don’t need a full bank account, a cheque book, an overdraft or a credit card; they just want the ability to pay. In China, the younger generation have been splitting bills using WeChat for a while now. The emphasis is on how they live their lives, and how finance fits into their lifestyle. IF RELATIONSHIPS ARE NOW LESS IMPORTANT THAN UTILITY, WILL THIS MAKE LOYALTY HARDER TO ACHIEVE? For the big banks, it’s going to get much harder to keep customers. The emergence of smart assistants, voice UI, mixed reality and AR-embedded experiences will help fintechs raise their game and compete with banks and their


human-to-human touch points. As these experiences mature, that utility becomes very behavioural rather than product or brand in nature. Banks aren’t employing this kind of technology fast enough, however. They’re still pushing traditional products hard. Technologies like Amazon Echo, through which products can be ordered by voice command, illustrate the experiential problem traditional banks have. If you look at how a bank sells a credit card to a customer, it differentiates it by offering air miles, cashback and other rewards for usage, hoping customers will pull its card out of their wallet above any others. In [the case of Amazon Echo], the product disappears and the utility surfaces. Who has the advantage in that space? The owner of the smart assistant or layer of technology. They can dictate which apps will be utilised and what gets configured into the machine learning, and they will influence what service is from a commerce perspective. People who don’t own that technology layer are going to have to fight hard for involvement.

have to “Banks be able to deliver

every product in their wheelhouse in real time, with a mobile phone and without a signature

The fintech revolution has caught some well-established banks off-guard. They’ve been held back by legacy systems and the urge to press on with traditional models, despite changes in customer needs and behaviour.

Ant Financial-operated Alipay is China’s dominant mobile payment service and has 450 million users worldwide.

SO BANKS WILL BECOME BACK-END, PROVIDING THE PRODUCT FOUNDATION, BUT BEING LESS VISIBLE TO THE CUSTOMER? The only banks that can survive this transition and maintain a direct relationship with customers will be the biggest banks with a major commitment to providing digital experiences. Banks that don’t will end up with three core products: the ability to make payments or move money, the ability to store value and appreciate that value, and the ability to access credit. BECAUSE OF THE TOUGH REGULATORY BARRIERS, WILL FINTECHS HAVE TO WORK IN PARTNERSHIP WITH BANKS? With Moven, we started off with a direct-to-consumer model in the US, but then had lots of banks asking to license our technology because it’s differentiated. We’ve signed a US$20m commercial deal with Canada’s TD Bank and we’re now extending into the US for them.

There’s a number of banks we’re now licensing our tech to. We realised it was far easier to be paid by banks per user for deploying our app than to go through the cost of acquiring customers in a direct-to-consumer model. And since we aim to expand internationally and reach 100m customers, trying to get a bank charter and our brand established in each foreign market would be really hard and very expensive. So the way forward is in partnership with banks. When you look at other technologies, such as AI and Bitcoin, those, too, will only work well in partnerships. THE GROWTH OF FINTECH IS SET TO CONTINUE. WHAT DO YOU THINK THE PACE AND DRIVERS FOR CHANGE WILL BE? Let’s start by asking what the financial services sector will look like in 30 years’ time. The application of a ‘first principles’ design philosophy focusing


on goals will make things look very different. Consider the way the iPhone was designed. Apple didn’t iterate on the design of the Motorola flip phone; it took three groups of functions — the iPod, the browser and phone apps — and thought about a completely new approach. If you were building the banking system from scratch today, would you end up with branches and a business that requires you to visit in person and sign a piece of paper? No way. So based on the fact that technology is redefining how we think about banking, who’s redefining the way banking works in people’s lives? Ant Financial, for example, is 15 years ahead of the banks. It’s in 77 countries and investing and acquiring, and is on track to have 2, maybe 3 billion people on its platform by the end of the next decade. That would easily make it the largest financial services company in the world.

WHAT ABOUT THE CORPORATE AND B2B SIDE OF THE BUSINESS? I get asked one question all the time: ‘If you were a bank, what would you do today?’ I give a simple answer: You have to be able to deliver every product in your wheelhouse in real time, with a mobile phone and without a signature, whether you are corporate or retail. That’s the design problem you have to solve. If you have friction in the system, somewhere in the world there’s a fintech already working on it. DO YOU THINK TECH WILL GRADUALLY MAKE HUMAN INTERACTION LESS NECESSARY? Companies such as Quicken in the US look at cash-flow analysis. Moven can, for instance, plug in its cash-flow analysis and that data will inform Quicken what credit it can offer Moven. Here, the data is all that matters. Ultimately, if the data leads to tactical

Mobile-based money transfer and microfinancing service M-Pesa has transformed access to banking in Kenya.


advice that helps you manage your business more effectively, with advice given through AI or predictive algorithms, a human relationship only slows down decision-making.

will be among them; they are trying different things. But if you’re looking at a bank to model on, you’re starting with the wrong assumption. You need to look at M-Pesa and Ant Financial.

Larger organisations could augment humans with data – a combined AI approach – but the banks that will win will be those that invest in the platforms.

WHERE ARE THE BIGGEST INNOVATIONS AND GAME-CHANGERS COMING FROM? Emerging markets are where you see both the biggest changes and the fastest adoption. They have new systems, less regulation, and no legacy systems or behaviours that favour incumbents. Take mobile payments. In the US last year, about $9bn in mobile payments were carried out. That includes Apple Pay, Samsung Pay, Android Pay, PayPal and others. In 2017, China’s mobile payments will amount to about $3 trillion; around 70% of which will be through Tencent and Ant Financial’s networks.

have friction “Ifinyou the system, somewhere in the world there’s a fintech already working on it.

WILL WE SEE A COMMUNITY OF BUSINESSES WORKING TOGETHER FOR CUSTOMERS MORE OFTEN? Yes. Banks can learn from the likes of Amazon and Uber. But think about the change that would require for an organisation to go from being a bank that’s heavily regulated, with a credit card department, mortgage department and risk departments, to becoming a tech company that can deploy AI across a voice-user interface. These are completely different skill sets. SO THE CULTURAL SHIFT IS A BIG FACTOR, BUT IS IT MISSION IMPOSSIBLE? If a bank’s leadership team is talking about technology all the time and is enabling experimentation and allowing teams to fail, they’re the ones that have some promise. I believe Capital One in the US, BBVA, DBS Bank and Emirates NBD

In Kenya, before M-Pesa’s mobile payment came along, financial inclusion was 27%; today it’s effectively 100%. That hasn’t happened because of branches; it’s happened because of M-Pesa and the mobile phone. In sub-Saharan Africa, China and India, people won’t think of a bank account as something they got from a branch; they’ll think of their phone as the way to access utility and money. That’s the psychological, behavioural shift we’re seeing in emerging markets. The rest of the world will see it eventually. Brett King’s latest book, on the development of the digital world and beyond, is Augmented: Life in the Smart Lane (Marshall Cavendish International). To explore this topic further, email


concept to concrete:

This is how to make innovation happen in your business. Actually happen. The fintech revolution is posing big questions for business. The sheer volume of ideas makes it challenging to take your first step on the right road Matt Robinson, Managing Director, AnalogFolk Australia


Fintech is disrupting the financial services industry on a scale not seen before. It’s growing by the minute and evolving constantly. Businesses must do or die. So, what exactly are you going to do? Simple, you’re going to innovate. All you need to do is select the perfect innovation from myriad options; track down the ground-breaking but solid and lasting idea that will transform both your business and your relationship with your

customers, and see significant long-term growth as a result. No pressure, then. Feeling overwhelmed? That’s natural. The challenge doesn’t end with identifying a route; you then have to cut through the bureaucracy to realise your vision. Making innovation happen is core to our approach at AnalogFolk. Here are some frequent barriers our clients meet and some of the ways we’ve helped them.


‘WE WANT TO INNOVATE, BUT WE HAVE NO IDEA WHERE TO START’ This is common. Really common. And who could blame you? If the sheer volume of innovation means you can’t hear what’s right for you, here are four ways we help businesses cut through it and get going. Reframe the problem If you’re going round in circles, trying to solve a challenge, you can reset your collective minds by reframing the problem. Pose it from another perspective; try your customer’s experience or needs. This action can take you from the seemingly unreachable to a surprisingly simple solution. In its quest to be a leader in customer service, CommBank in Australia reframed ‘How does digital impact our customer service?’ as: ‘How could digital create new service experiences?’ Sainsbury’s, meanwhile, had the challenge of how to fill a revenue gap. It needed every customer to spend £1.14 every time they visited. It switched its thinking to focus on the customer and the resulting campaign, which suggested simple meal ideas to encourage them to try new things, generated £550 million in sales over two years.1 Hold a problem pitch When it comes to fintech, your business is likely to be facing several challenges and many possible solutions. So it helps to get a range of minds on the job. We’re all familiar with the ideas pitch, but one of the most effective ways of identifying and prioritising difficulties is via the ‘problem pitch’. Invite team members from as many relevant areas

as possible, sending them a challenge ahead of the session. It could be around specific tech tools you’d like to explore using, or a question about the role tech should play in improving customer experience. Ask them to individually prepare a 60-second pitch that should include the problem, who’s suffering because of it, and why it’s important. Don’t talk about the solution yet, just focus on painting a picture of the problem. When everyone has presented, you can all vote on the most important problem to solve. As well as discovering ways of helping your business take another step forwards, the result of sessions like this will be more energy behind the concept of innovation. You might also gain important insights into how your colleagues really feel about the subject. 1


IPA Effectiveness Awards Case Study

Get journey mapping How can you decide which fintech innovation will best mesh with your customer’s lifestyle? There’s a simple way to find out. You need to put on their shoes and walk through the sales/service process, recording every touchpoint, decision you make and emotion you feel throughout the process. Once you’ve documented this, you’ll easily be able to identify some of the major barriers and opportunities at which to aim your innovation.

Use the Looking Glass At AnalogFolk, we have a tool we call the Looking Glass. This is a simple framework that helps us explore a client’s problem from different angles by looking at it through six lenses: Consumer (attitudes; interests) Competitor (strengths; weaknesses) Company (values; history; messages) Culture (trends; politics) Catalyst (technology; geography) Category (the client’s industry) Typically, clients look at their problems through only one or two lenses at a time (usually the company’s challenges and goals, then maybe what their competition are up to). By viewing challenge through what’s relevant in cultural trends, technological trends or customer insights, too, we can help them open up to new ways of solving their problems. This is our starting point when first tackling a client’s problem. The research we get out of it is then fed into collaborative workshops, strategies and creative briefs.

‘With innovation, we can picture success, but not how to get there’ It’s incredibly hard to take big, bold steps into the future if you’re attempting it one project at a time. If you try to iterate your way by improving slowly, you don’t make enough big leaps; if you make the leap straight to the future, you’ll come unstuck. So you need a plan, a roadmap to innovation, to help you. Imagined Futures This is one of the most effective tools we use. It helps you identify a revolutionary and successful future for your company,


then works through creating a highlevel roadmap to get there. We start by framing what a successful future could look like by writing audacious statements as a stimulus for the group. For example, instead of: ‘Grow mobile banking app penetration by 5% each year over five years,’ we might say: ‘By 2022, 95% of all credit card transactions will happen without physical cards.’ We then work backwards to identify the key things we’ll need to achieve to get there. We also identify the enablers (assets, people or processes that will help us), blockers (assets, people or processes that will hinder us) and key behaviours (mindsets, attitudes and habits that will help keep us on track). The statements are then organised and prioritised against overall business objectives, and form the core pillars of an innovation plan.

‘We have our ideas. Now we need to validate them. But how?’ Congratulations, you’ve whittled hundreds of hopeful innovations down to just a few options. But which is the one? Which are you going to make and when? The guesswork is over, though — you need to know as far as possible, for sure, which will work for you.

The trick, as ever, is being canny with investment. Ask yourself: What’s the smallest possible version of these ideas? (See illustration, below.) Get there in four steps:

1. HYPE IT Video is a good way to showcase an idea, because time constraints force you to edit down to the most compelling story. Aim for 60 seconds, and structure it in a simple way — the background; the problem; why the problem is important; the solution, and the impact of solving it. Pull in footage from corporate videos or stock libraries, and you’ll have something powerful that can easily be shared. CommBank in Australia chose to develop something more sophisticated when they created ‘Gamechangers: Commonwealth Bank Case Study’, a video showcasing a futuristic vision of the apps and services they believed would come to life and be available to consumers in the years ahead.

2. MAKE IT The word ‘prototype’ sounds timeconsuming and expensive, but making the idea tangible could be as simple as a Keynote or PowerPoint presentation, or a basic Squarespace website. The goal is to build something that mimics the functionality, user experience or features of the end product.

Make the smallest workable version of a product


3. FAKE IT If we said ‘consumer testing’, what would you imagine? Usability labs, focus groups or other research methods that take significant time and large investment? Often, we’re able to utilise much simpler methods to validate ideas. Some early-stage start-ups pretend sophisticated functionality exists behind a website (such as e-commerce), when in effect the test phase is handled completely manually. They take an order online, fulfil it over the phone, package it up, send it, and manually send a confirmation email. You could also create a simple landing page. Design a logo, a value proposition, and potentially include your video. Then buy some search terms, create a lead form for those interested in finding out about the launch, and see what happens. Work out a success metric by equating a value to every customer. If someone wants to know when you launch, they’re pretty likely to at least trial your product or service.

4. TRY TO BREAK IT You don’t want to be late to the innovation party. You want to be there first, already owning the room by the time your competitors arrive. So you have to move fast. You have to get your ideas out into beta testing as quickly as possible. In Australia, Macquarie bank has recently pushed into consumer banking, with a vision to be an entirely digital bank at the forefront of customer experience and digital innovation. Its model is based on getting a minimum viable product live and tested with the public as quickly as possible. They’ve done

this through technical innovations, such as embracing open source technology, while changing the structure of the team, creating smaller groups — which can make decisions more easily — that then work collaboratively with the other groups rather than in silos.

‘Look, we really don’t have time for any of this’ Ah, the biggest barrier of all. We understand how challenging it can be to pull teams together, dedicate time, develop ideas, and get them validated. That’s why we’ve created a simple tool called Rapid Invention. We’ve used it to help countless clients, tapping into our global network to develop ideas from across the world in 24 hours. All you need is an hour and groups of two people to get started. If you’re interested visit: Or, of course, get in touch and we can take you through the process in more detail. To explore this topic further, email


Watch this space Financial near-futures proposed by the global strategy, research & development and business minds at AnalogFolk ‘Discrete banking is over’ Government directives have loosened banks’ grips on customer data. This means APIs and Blockchain provide systems for non-traditional players to help people save, spend and invest seamlessly through their devices and channels. The most vicious battles rage over providing the AI to manage it all. Doug Baker, Head of Strategy, Analogfolk London ‘Banks are emotional’ Psychological and health-related services have merged with financial services, making the topic of money more approachable and understandable to more people. Tina Cordes, Director of Strategy, AnalogFolk US ‘We lease our lifestyles through our banks’ Your bank is your lifestyle provider. You pay a monthly fee that gives you access to all the services you use to lead your life, whether that be for entertainment, holidays, clothing, food, schooling for your kids or the roof over your head. Miguel Alvarez, Director of R&D, Analogfolk London

‘Financial companies don’t compete’ With infinite choice, consumers are the most important stakeholders. Consequently, successful financial services companies are those that show a willingness to collaborate for the consumer’s benefit. As a result, products are less siloed; solutions are more lifestyle-oriented and heavily personalised. Chris Ryan, MD & Partner, Analogfolk Asia ‘No bank would dream of owning its own channels’ Many traditional banks have disappeared into the background and now play the role of a utility provider. There are no bank-owned channels. Bank-owned branches, websites and apps no longer exist. Successful banks work closely with consumer tech platform providers to deliver their services. Chris Joannou, Business Partner, Analogfolk London

To explore these topics further, email

Editor-in-chief Morag Bruce Chief sub-editor Sarah Alcroft Design and illustration Yvonne Michaelides Marketing manager Nicola Cheese Business partner Chris Joannou


banks “Traditional and fintechs aren’t

the same. And that’s ok. Brilliant results don’t always come from working with people like you.


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