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.
Games of buzzword bingo and comparisons of on-stage role-play to 1980s’ pornography acting…today’s comments on Twitter prove that it takes guts to face the sometimes cruel Finovate crowd. But if you want to measure the current beat of banking, wealth management, insurance, and startup hearts, there’s no better place than Finovate. Here are a few reflections on Finovate Europe 2016:
Robo-advice is all the rage. Just when blockchain made it into a Dilbert cartoon, it disappeared from the Finovate stage. The only mention of cryptocurrencies was during Ledger’s presentation of its “hardware wallets for decentralised applications” (bitcoins, basically). This is not a bad thing; Forrester advice is to maintain a healthy level of scepticism. Finovate isn’t the place to prove blockchain’s purported capabilities. We’ve also moved away from personal finance management (fondly called PFM), mobile payments, digital wallets. If you want to be in vogue, you now need to pay attention to digitising investment strategies, biometric authentication and contextual engagement. Apart from the international-payments startup Valuto, this year’s Best of Show winners (Capitali.se, DriveWealth, SwipeStox, EyeVerify, IDscan) all fall under the first two themes.
In the race to keep up with skyrocketing consumer expectations around omnichannel commerce experiences, many retailers moved quickly to roll out omnichannel fulfillment capabilities without fully understanding the incremental expense of operating these programs. Today, retail executives are beginning to shift their focus towards profitability: moving from implementing to optimizing their omnichannel fulfillment initiatives.
In our new report Build A Profitable Omnichannel Fulfillment Program, we asked a number of eBusiness leaders and industry experts to share the processes, tools, and best practices they used to assemble profitable omnichannel fulfillment programs. Our research indicates that retailers can optimize their omnichannel fulfillment capabilities by:
Enabling product visibility and order orchestration. Omnichannel fulfillment initiatives—think endless aisle, ship-from-store, click and collect—are completely dependent on the ability for customers, associates, and retail selling systems to be able to accurately pinpoint the location of every product across the enterprise. Further, having a robust distributed order management system (OMS) can help retailers reduce the cost of fulfilling orders by orchestrating across all stores and distribution centers.
Understanding agent attitudes toward their insurance carrier partners is crucial in earning independent agent loyalty—and driving sales. Why? Because despite predictions that direct-to-consumer insurance sales would doom the insurance agent, nearly 20 years after the advent of online insurance selling, millions of consumers and small businesses continue to rely on their local insurance agencies. Consider that when it comes to their agents, US consumers:
Buy from. Even after all that money direct insurers spend on TV ads, consumers are still buying from insurance agencies. In a survey of 10,000 online Americans, we found that 84% of home insurance buyers stated that they bought from an agent; 82% did the same for their car insurance, while 57% of life insurance buyers said that they did.
Trust in. When we asked in the same survey about attitudes toward financial services providers, more than 70% of life insurance buyers and about two-thirds of non-life insurance buyers we surveyed agreed with the statement “I completely trust my agent”. And that trust runs deep for some customers, especially for 25-34 year olds we surveyed.
Stick with. And after buying from an agent, consumers tend to stick with their them We asked US online adults how long they had been buying certain coverage from their agents. The average relationships with their auto, home, and life agencies were 12.9, 12.5, and 16.3 years Consumer steadfastness with an agent is often longer than that loyalty to a spouse: the average American marriage that ends in divorce lasts eight years. And no surprise, the tenure with direct insurers is much shorter than that with agent-centric insurers.
Today we announce the launch of our brand new Omnichannel Commerce Playbook! In its many forms, omnichannel is quickly resetting customer expectations, and redefining what it means to deliver seamless, fully-integrated commerce across the enterprise. This playbook provides a structured framework to help eBusiness leaders strategically plan, launch, and maintain omnichannel capabilities and services.
Customers today forge paths to purchase that seamlessly cross channels, screens and stores. For example, U.S. consumers in 2015 spent a whopping $1.5 trillion in-store that originally started or were influenced along the way by digital touchpoints. Retailers who offer omnichannel fulfillment are directly responding to customer expectations for this seamless experience. As such, services like ‘buy online, pick up in store’ and ‘ship-to-store’ drive store traffic and provide significant, measurable benefits to retailers and customers alike.
However, omnichannel commerce goes far beyond fulfillment; the full spectrum of omnichannel capabilities encompasses marketing, merchandising, and even customer service. This playbook helps eBusiness professionals analyze and deliver the omnichannel services that are right for their customers, including how to measure their impact and then optimize over time.
The Omnichannel Commerce Playbook will help you:
1. Analyze the business impact of omnichannel integration. Understanding how to identify and quantify the projected net value of omnichannel capabilities and services translates into a strong business case that drives an organization's overall omnichannel strategy and road map.
News of the shutdown of the P2P lending platform, Ezubao, following investigations by Chinese authorities have shocked the world. Small investors in China were allegedly scammed out of more than $7 billion in what is now called "a giant Ponzi scheme".
But I wasn't very surprised by the news. As I mentioned in my report, P2P lending in China has reached a tipping point and there is a dark side to the industry as it continues to be fraught with fraud and embezzlement. Widespread fraud tarnishes the entire industry, damaging well-run marketplaces as well as immediate victims of fraud. Many P2P lending platforms with unsound business models have operated for years without any backlash, violating regulations with impunity. Some of these platforms used money from new investors to pay off existing investors—like what Ezubao did—or invested lenders' money in the volatile Chinese stock market. These unstable platforms were simply ticking time bombs.
However, the fall of one P2P lending platform does not signify the fall of the entire P2P lending industry in China. Instead, the shutdown of Ezubao:
Signals the Chinese government's resolve to enforce regulations. In late December 2015, the China Banking Regulatory Commission (CBRC) drafted new rules calling for closer supervision of the P2P lending sector. However, "law without enforcement is just good advice". Thus, there was a level of skepticism surrounding what impact these new rules would have on unlawful P2P lending companies. Therefore, the shutdown of Ezubao is significant in that it signals the regulator's resolve to enforce these rules, sending a strong message that violation of these regulations is a criminal activity and there will be consequences, which is positive for the industry.
For the past eight years, business leaders have used Forrester's eBusiness and digital marketing assessments to mature their firms toward excellence. In 2013, we introduced a comprehensive digital maturity model that consolidated our interactive marketing and eBusiness maturity models.Two years applying the model with clients have helped hone and focus it even further. Our latest report, the Digital Maturity Model 4.0 updates our 2014 digital maturity model into a single set of scoring criteria that today's cross-functional digital leaders can use to benchmark how well they use digital to drive competitive strategy, enable superior customer experiences, and create operational agility.
Digital maturity demands cross-functional collaboration. Digitally mature firms do so much more than deliver great technology. They understand that digital execution demands the rightculture, organization, technology and insights. That’s why we define digital maturity across those four key dimensions. Our assessment outlines key best practices for how firms drive a digital culture, how they organize and resource digital teams, how they invest in technology and how they steer their strategy and execution with customer-driven insight.
Robust mobile commerce platforms are no longer a “nice to have” for retail organizations. A recent Shop.org and Forrester Research survey indicates that smartphone sales accounted for 17% of total retail sales in 2015, and that sales from smartphone devices grew 53% year-over-year.
With mobile’s stake now planted so firmly in the ground, it is critical that the technology solutions used to support transactional mobile sites and apps provide the scalability and flexibility required today to stay ahead of the innovation curve tomorrow. With this in mind, we are pleased to announce that the Forrester Wave evaluation of mobile commerce and engagement platforms is now live.
Among mobile commerce and engagement platforms, which Forrester defines as commercial solution partners for the technology, development, and/or ongoing support of their mobile websites and/or mobile apps, we have identified four core competency traits. These include:
An obsession for mobile commerce trends and metrics. The best of these vendors do not just build and support mobile technology; they live and breathe mobile commerce — it's in their DNA. This means they are at the forefront of what works and what doesn't when it comes to how mobile experiences support conversion metrics.
A continually evolving, common platform on which they support all of their clients. Unlike traditional agencies, these vendors are not building tailored capabilities for each client. Instead they onboard all of their clients onto a common (often software-as-a-service [SaaS] based) platform.
The mass adoption of consumer broadband in the late nineties and early 2000’s helped firms like Amazon, Expedia and Intuit establish new business models and new ways of scaling to millions of customers. Selling products online and empowering customers to find the best deals on travel or financial services products changed market dynamics in a range of industries. But things aren’t slowing down. Quite the opposite, in fact.
Digital continues to change how your firm makes money. Perhaps not fundamentally yet for your firm, but don’t kid yourself, there are changes afoot. There’s obvious examples:
At least two dozen accelerators and incubators have been launched by financial services firms in the last two years. I believe that in five years’ time, most of these corporate accelerators will have disappeared. Why? A fully-fledged, multi-startup accelerator is expensive to run. The cost of searching, selecting, and providing seed investment and support for startups could easily reach $1 million a year. Many accelerators aren’t focused enough on customer problems or business objectives to deliver return on that investment.
So why are so many banks, insurance, and wealth management firms eager to loosen their purse-strings? Some want to identify and co-opt future disruptors, others are looking to startups for innovation. There’s been a palpable change of tone in discussions of digital disruptors in retail financial services. The ubiquitous stories about voracious startups that want to eat incumbents’ lunch have been replaced by tales of successful collaboration. Financial technology startups deliver innovation, established firms bring customers, and together they live happily ever after.