Finovate 2016: Automation And Personalization Take Centre Stage

Finovate came to London again this week and I was lucky enough to attend. Here are my thoughts from the two days:

  • This year’s big theme was robo-advice. Every Finovate seems to have an unofficial, accidental theme with a large group of start-ups clustered around the same disruption, like PFM, mobile payments, small business banking or digital wallets. This year it was robo-advice.
  • Robo advice is starting to look crowded. Each of the new digital investment managers has a distinct story. Scalable Capital offers a sophisticated quantitative, value-at-risk strategy. MeetInvest helps investors mimic the strategies of famous investors like Benjamin Graham or Peter Lynch.* Investify lets investors choose themes that feel right. DriveWealth offers fractional share investing to allow low-cost access to the US markets. SwipeStox makes it easy to follow other investors through an app. Capitali.se converts ideas into trading rules. Europe has many countries and investors are diverse. Even so, the market is starting to seem crowded. Clearly the cost of managing investment portfolios is falling, which should enable firms to break even with fewer assets under management, but the costs of regulatory compliance and marketing to achieve growth have not diminished. Investment performance will sort the unicorns from the donkeys.
  • Personalization is coming; it’s just not here yet. If robo-advice was the most popular theme, personalization struck me as the most important one. In one way or another, at least a dozen of the exhibitors including Innofis, InvestGlass, Livian Technologies, Meniga, North Side, Persado, Personetics, SBDA Group and Strands are using technologies like predictive analytics and machine learning to help financial firms engage customers with relevant and helpful messages based on an individual customer’s context. Financial firms have a few years to demonstrate relevance before other firms start showing how to deliver more relevant advice and recommendations using their customers’ financial data.
  • Collaborative advice is becoming a reality. It was good to see firms like Additiv, Backbase, Envestnet and SaleMove building capabilities to deliver human advice through digital touchpoints, and help advisors, agents and bankers help customers more effectively. Despite the growing use of digital self service, most people still want human help for complex or emotional interactions.
  • Insurance finally appeared at Finovate. Despite the disruption promised by driverless cars and the obvious potential of telematics, wearables and the Internet of Things, not a single insurance start-up has decided to demo at Finovate Europe in the past five years. So I was delighted to see OutShared, a digital insurance platform spun out of the Dutch direct insurer InShared, showing how digital technologies can improve customer experiences and make processes more efficient in insurance. SaleMove also showed how its collaboration technologies apply to insurance. I hope many other insurance innovators will follow.
  • Use the API, obviously. It’s fascinating how quickly APIs have become accepted by both strategy and technology executives as obviously the right approach (though I realize it’s not quite that simple). A couple of years ago hardly anyone mentioned APIs. This year perhaps half the companies did. It’s hard to think of another technology, standard or approach that has become so widely accepted so quickly that it passes without comment or explanation. Well, perhaps biometrics.
  • Biometrics continue to impress. I’ve said this before, but it’s remarkable how quickly fingerprint, facial and voice recognition technologies have developed, with impressive capabilities on show from firms like EyeVerify, IDscan and VoicePIN. As my colleagues Andras Cser and Merritt Maxim have written, it’s time to kill passwords.
  • Nobody demonstrated QR codes. Phew.
  • The Bitcoin bubble has burst. Bitcoin and blockchain companies were notably absent, except for Ledger’s hardware wallet . The potential of blockchain technology is still too far out and too unproven for more than experimentation.

I continue to admire all the presenters at Finovate. Summarizing what you do and what problem that solves, and then demonstrating that it works, and being memorable and engaging all in seven minutes is no easy feat. Congratulations to Capitali.se, DriveWealth, EyeVerify, IDscan, SwipeStox and Valuto for winning Best of Show.

Thank you to Jim Bruene, Greg Palmer and the rest of the Finovate crew for an entertaining and thought-provoking two days.

Benjamin

* OK, not truly famous. Famous within investment management.