digest | Today’s modern money + the digital way forward for finance

A primer on fin-tech: banking, finance, insurance.
January 20, 2019


— contents —

~ story
~ featurette
~ reading + videos
~ chart
~ special section
~ background


group: BCG
story title: Insure-Tech enters the 20s with sustained success

read | story

https://www.bcg.com/industries/insurance/insurtech-enters-20s-with-sustained-success.aspx

— summary —

A look at the record-breaking year in insure-tech — emerging trends, innovative business models, and the most disruptive tech — using a data-driven view of insure-tech globally through products, investments, and geographies.


— story —

This primer supplies essential background on the growing development of revolutionary new digital products in the world of financial services. Traditional consumer opportunities for banking, lending, and investing are dashing toward an entirely new range of products — all built upon modular technology-powered platforms.

Designed for the modern generation of people looking for ease, affordability, inclusivity, mobility, and independence — these products + services are known collectively as fin-tech: an abbreviation for financial technology. A key foundation for these products is web access to the customer’s account from mobile phones, laptops, and tablets — plus automated support from virtual assistants and robotic analysts.

Software sees trends.

The financial services sector has become truly digital. In addition to the fresh new line-up of opportunities for the public, fin-tech is also breaking ground behind-the-scenes. The companies + organizations making-up the framework of banking + investing are using computer software programs to: sort, characterize, organize, and understand trends in vast arrays of financial data. Software techniques from the computing field of artificial intelligence are used by analysts to: assess the market, speed transaction times, rapidly perform complex math, and process data in massively parallel ways.

This is an unprecedented use of computing to help financial experts: decide on the best investment opportunities, manage customer portfolios, improve the functionality + efficiency of mobile financial apps, target best-fit customers, plan for the economic climate, and route enormous volumes of data into packets so they can visualize patterns. Business solutions fin-tech products can manage extensive payment systems for merchant networks. Insurance products are also touched by fin-tech — this range of updated offerings is called insure-tech.

Innovation at the helm.

So both the front-end + back-end of financial services is experiencing innovation. Professionals in the field say many markets are affected by fin-tech: retail, enterprise computing, mobile. This is accompanied by accelerating investment from traditional banks + service companies into start-ups. Incumbent businesses are rushing to keep-up with the times — by partnering with fin-tech projects or launching new products of their own that appeal to fin-tech customers.


watch | featurette

featurette title: artificial intelligence: An Open World
brand: Jersey Finance org.
year: 2018

A featurette on high-tech for finance — with insights from: firms, partners, businesses. Global finance thrives with deep data. Groups must adopt the state-of-the-art in computer analysis for asset management + fund opportunities to succeed in the 21st century.

AI is transforming business at a level we haven’t seen since the Industrial Revolution — such as: sophisticated fraud detection, hyper-customization of services, identifying un-tapped business opportunities.

To ride the emerging wave of AI, financial services companies must navigate evolving standards + regulations — and harness risk.

  • artificial intelligence is rapidly evolving internationally
  • but the term itself is relatively mis-understood
  • what makes good fin-tech?
  • what does this mean for the work-force?
  • what is the future of artificial intelligence in the financial services?

about | Jersey Finance

Jersey Finance is a not-for-profit international financial center. We’re focused on developing a better, more certain future for businesses, for the general public at home + abroad — and for the finance industry as a whole.

By working with the right people, and creating a safe + secure environment for investors, we grow both local + international economies.

description: by Jersey Finance org.



— fin-tech for banking + finance —

Among the many services they offer, banks are first + foremost money depositories — convenient places to hold and withdraw cash. These days, with all sorts of ways to navigate the digital space: banks and financial institutions are making wealth access easier than ever.

From entirely mobile banks and payments between friends — to artificial intelligence enhanced chat-bots and  anti-money laundering software. These fin-tech companies and services are bringing banking into the digital age.

So venture capitalists are pouring money into start-ups that are offering basic banking services — known as neo-banks or challenger banks. In year 2018, US neo-banks got 4 times the funding they received in year 2017. And 10 times as much funding as they did in year 2015 — according to data from CB Insights co.

The consulting firm CG42 co. said in a report that it expected the 10 largest banks would lose $159 billion in deposits to smaller competitors over the next year.


on the web | reading

CB Insights | research: fin-tech
CG42 | study: retail banking vulnerability

Built-In | fin-tech is having a big impact on banking — and it’s getting bigger
Built-In | fin-tech lending companies — up-ending the credit card, loan, mortgage industries



— fin-tech for insurance —

New financial technology is revolutionizing the insurance industry with innovations collectively called “insure-tech.” Traditional insurance products are transforming to: improve customer experience, simplify policy management, and increase competition — making insurance more vibrant, sustainable, and agile.

The most visible examples of insure-tech come from the personal insurance world:

  • in-car monitoring devices
  • wearable activity trackers
  • high quality customer-facing apps
  • virtual chat-bots to support customer questions + needs
  • smart sensors monitoring connected homes
  • web / mobile customer account dashboards
  • software-as-a-service that manages insurance coverage + payment

In these examples, we see insurance companies use better data + create better customer experience to improve their insurance coverage and make more accurate predictions about risk. But a lot of insure-tech isn’t visible. For example: in the small business insurance world, insure-tech works behind-the-scenes to:

  • increase options for business owners
  • keep costs low
  • speed delivery of insurance coverage

20 years ago, it was hard for a new business to find insurance. After meeting with an insurance agent, they might find out the agent’s carrier didn’t have any coverage options to fit their business. Now with insure-tech: anyone can start a consulting business, go on the web, and find out discover in 20 minutes how much their policy will cost.

In year 2016 insurers spent nearly $187.3 billion on information technology (enterprise computing + business software) — accounting for approx. 26 % of the whole of financial services spending. Old, out-dated, legacy computer systems slowing innovation.

So investors are taking notice of these popular updated insurance options:

  • in year 2011: there were 28 funding deals involving insure-tech companies
  • in year 2016: there were 173 — jumping 600 %
  • in year 2016: 50 % of insure-tech funding was for US start-ups

Each year insurance agents spend 1000s of hours supporting customers in the decision making process, providing standard on-demand info or reports. Tech can automate those processes with: virtual chat-bots, reporting tools, mobile technologies, and voice recognition software. A large customer care center can be replaced by chat-bots to reduce costs in customer support + sales.

According to Accenture co. in year 2016: artificial intelligence and the internet-of-things (IoT) accounted for half of total investments in insure-tech start-ups globally. The internet-of-things is: the network of devices such as vehicles, smart home appliances that contain electronics, software, actuators, and wired + wireless connectivity — enabling these things to connect, interact, and exchange data. Sensors networked into smart houses + smart facilities give owners + insurers real-time data on the home’s safety — damage prevention saves money for the consumer + insurance provider.

Becoming popular with customers is “telematics insurance” — a group of innovative car insurance offerings based on a safe driving record. A telematics box is installed into a car. The device includes: a global positioning system (GPS), motion sensors, a subscriber identity module (SIM) card, plus analytics software. A telematics box tracks vehicle: speed, location, time, crash accidents, driving distances, breaks, and more driving data.

First, the telematic system processes the info it gathers — and transmits it via the mobile internet to the insurance company for further analysis. Then the driving analytics are added to a customer personal account.

By tracking the drivers’ behavior insurers can create tailored insurance plans and improve risk management. For instance, a company can increase charges from irresponsible drivers, reward customers for safe driving, and notify police in the event of a car accident. So telematics adoption fosters these business models:

  • usage-based insurance
  • pay-as-you-drive
  • pay-how-you-drive

watch | video: the future of telematics • by GeoTab co.
watch | video: understanding telematics • by OakHurst co.


on the web | reading

AltexSoft | insurance technology: 11 disruptive ideas to transform traditional insurance
ClearBridge | how insure-tech is transforming the insurance industry
Insureon | what is insure-tech?
Medici | 80 insure-tech firms shaking up the $ 80 trillion insurance industry

Financial Times | video: is telematics the future of car insurance?

the Digital Insurer | story: connected homes, smart insurance, and the internet-of-things enabled insurer
Forbes | story: this is how the internet-of-things will impact the insurance claims process


chart | How insurance is going digital

chart title: Insurance processes can + will become more automated by smart software.
with data from: McKinsey co.


special section: helpful lists
topic: popular fin-tech products


a. | fin-tech — BANKING
With virtual assistants.


b. | fin-tech — BANKING
For fraud detection + security.


c. | fin-tech — BANKING
With neo-banks + challenger banks.


d. | fin-tech — BANKING
With mobile payments.


e. | fin-tech — FINANCE
For lending.


f. | fin-tech — FINANCE
With crowd-funding + freelance markets.


g. | fin-tech — SERVICES
Solutions for business.


h. | insure-tech — SERVICES
Insurance for consumers + business.


— background —

featurette title: 5 things you need to know about fin-tech
brand: World Economic Forum org.
watch: video


— background —

points | the serious issue of financially under-served people
from: Braviant co.

  • 1 in 3 — US citizens can’t afford $2,000 for an unexpected expense
  • 43 % — of the population have sub-prime credit scores
  • 50+ million — US adults are under-banked

— background —

featurette title: what is fin-tech?
brand: cNBC
watch: video

  • the multi-billion $ industry called fin-tech is: a wide range of products, tech, business models
  • fin-tech is digitally revolutionizing financial services
  • examples: cashless payments, crowd-funding platforms, robo financial advisors, virtual currencies
  • do you: pay for goods or services with your mobile, transfer money with your smart-phone app?
  • do you: check your bank statement online, donate to projects on the web? ( such as: IndieGoGo • KickStarter )
  • do you: engage the advice of an artificial assistant to manage your money?
  • then you’re already using some examples of fin-tech
  • 100s of start-ups are disrupting banking + finance by changing the way customers pay + borrow money
  • global investment in fin-tech has added up to $100 billion since 2010
  • for example: in 2017 fin-tech investment surged 18
  • start-ups focused on payment + lending got most of that investment
  • the world’s biggest companies such as Apple co. ( Apple Pay ) + Alibaba co. (AliPay ) are getting involved
  • consumers are adopting fin-tech fast
  • 1 in 3 people across 20 major economies report using 2 fin-tech services in year 2017
  • that’s according to the Ernst + Young firm’s Fin-Tech Adoption Index
  • in China: 1/2 of all consumers using services such as money transfers, financial planning, borrowing, insurance
  • in India: 1/2 of all consumers using services such as money transfers, financial planning, borrowing, insurance

on the web | pages

cNBC | section: money 20/20
cNBC | section: business
cNBC | section: technology


key points | fin-tech field expert

from: Mike Segal
bio: head of partnerships • for the fin-tech program | 500 Start-Ups co.

  • when a new technology is invented, start-ups are first to adopt them
  • digitally native companies: are the ones that set the standard for what customers expect
  • digitally native companies: show customers how services can be: easier, faster, convenient, with you wherever you are
  • digitally native companies: control customer expectations
  • so many new companies come to market so quickly, that it’s impossible for any company to keep up with expectations
  • for example: Skype by Microsoft co. ate  40% of the international telecommunications market in 10 years
  • thinking about the financial services industry, one of the biggest in the world: $13 trillion | 17% of global GDP
  • basically un-touched by digital today: less than 1% of loans in the United States originate online
  • because of: regulation, inter-connectedness, the scale of businesses — financial services are hugely inefficient
  • 30% of the staff of the financial services industry: is on operations + compliance
  • they’re unable to serve the 3 billion new under-served customers entering the market
  • there will be 3 billion new smart-phone users by 2020
  • so fin-tech enters: to make financial services more efficient — for new or existing customers
  • tech solutions: make financial services more efficient — either by enabling or disrupting
  • there are approx. 12,000 fin-tech companies operating today globally
  • fin-tech companies have taken approx. $50 billion in investment — up 10x over 5 years
  • so that growth is astonishing
  • companies at the center of customers’ digital lives discovered they can do better if they take the lead
  • they can create profit: if they design + embed financial services — instead of waiting for the incumbent industry to do it
  • so where we are today: incumbent companies are realizing they have to change + innovate faster to keep up
  • but there’s a problem that exists in financial services that doesn’t exist in other industries
  • think about: those giant companies, regulations + legacy framework
  • think about: the fact that those companies exist “to stamp out risk”
  • incumbent businesses have a difficult time transforming their culture
  • but the millennial generation: that could help them transform — they don’t want to work in a bank
  • in a survey: 71% of millennials would rather go to the dentist — than listen to what banks are saying
  • so this is the issue that keeps bank CEOs + boards of directors — up at night
  • how are they going to get the talent to transform?
  • on the flip side: fin-techs found they can be agile — but there’s no such thing as a lean start-up in financial services
  • so what’s happened, that hasn’t in other industries, is banks are blowing in to partner with + learn from start-ups
  • 2016 headline reads: “Bank of America has $3 billion to pour into innovation + banks swarm around fin-tech start-ups”
  • banks want to depend on start-ups: to outsource key parts of their innovation
  • some of the giant companies are creating disciplined programs to invest in + partner with start-ups
  • they hope to increase something I call “innovation through-put”


on the web | pages

Jersey Finance | home
Jersey Finance | YouTube channel

Jersey Finance | blog: meet the female leaders + influencers in artificial intelligence
Jersey Finance | blog: artificial expectations -or- intelligence opportunities



— notes —

* fin-tech = financial technology
* AI = artificial intelligence

* EY = Ernst + Young
* cNBC = cable National Broadcasting co.

* CB Insights = historic name ChubbyBrain
* JP Morgan Chase = historic name John Pierpont Morgan Sr. + Chase

* US: is the country the United States