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Innovations in the Financial Services Market – Trends at the Finovate Asia 2013 in Singapore

Key Facts

  • How new market players can reach a critical mass of customers more quickly by using technological innovations

  • The innovations presented in the payment transactions segment are minimally disruptive

  • Focus on digital currencies – developments in this field could eventually become popular options for payment transactions

  • Offering optimized digital processes and services for customers was another hot topic at Finovate Asia

  • Initial opportunities for cross-sectoral commercial use of customer data analysis

Report

Finovate has firmly established itself as an important event for all those interested in innovations in the finance world. The last Finovate conference of the year took place in Singapore in mid-November. Thirty-six businesses presented their innovative products to over 350 participants from more than 30 countries in the typical 7 minute rhythm.

 

Figure: Finovate Asia 2013 in Singapore

Innovations in the field of payment transactions have usually played a significant role at Finovate over the last few years. The same was true at this year’s event in Singapore, where a majority of the businesses stemmed from this field. The innovations presented at the conference showed that the market is continuing to mature. New players are employing different strategies in order to establish themselves in the hotly contested field of payment transactions. Many businesses attempt to separate themselves from the competition based on price (such as Mobino – only 1% margin per transactions, no minimum turnover), or by offering additional services (advertising placement, mobile wallet, PFM – such as Mobexo or Arkalogic Transaksi). Other innovators, on the other hand, concentrate on specific market segments, such as international and cross-currency transactions; this group includes players such as Pangea Payments and BlueKite.

Achieving a critical mass of customers is essential for start-ups to secure their existence. Some new players are trying to circumvent this hurdle by including potential users who do not own smartphones. Pixeliris, for example, is a company that has developed a payment solution that functions purely via acoustic communication, while Tootpay processes and encrypts payments via a chip that can be attached to a SIM card. Both of these solutions are compatible with all types of mobile phones.

Rather than brand new solutions, the products introduced at the Finovate within the field of payment transactions tended to be modifications of already established concepts or business models, such as Mobino, Mobexo, Pangea Payments or Tootpay.

One innovation that could potentially change the payment landscape comes from the field of “virtual currencies”. The so-called P2P crypto-currencies (including, among others, Bitcoin) have so far been unable to gain widespread use. One reason for this is the great value swings these virtual currencies experience in relation to established currencies. The New Zealand company KlickEx aims to introduce a digital currency that is linked to different assets. This would allow KlickEx to stabilize its digital money and thereby increase the willingness of users to employ it in payment transactions. The company envisions a payment system built on stable digital currencies, through which international liquidity will be increased due to particularly low FX transaction fees. Services in other areas, such as micro credits in the lending segment, could also be implemented cost effectively through this digital money. It remains to be seen whether the providers of digital currencies will be able to gain the necessary trust of users and how market regulators will react to such developments.

Aside from the payment transactions sector, another key topic at the Finovate was the supply of digital processes and services. A growing number of customers expects entirely digitalized processes and products; banks are increasingly aware that a majority of business in the future will be decided by their ability to adapt processes to the changing needs of customers. In light of these developments, the Finovate in Singapore played host to many businesses that presented solutions within this field. Luminous – the new product from DataVault – for example, is a secure, electronic locker that enables banking customers to upload, organize, and store personal documents in order to reduce the amount of slow and costly printed correspondence. GMC Software Technology, on the other hand, presents itself as the provider of an application for carrying out paperless, streamlined onboarding processes for customers at retail banks.

Ever more innovators are looking for ways to utilize banks’ customer data across different sectors. Businesses such as Intuition Intelligence and Red Zebra Analytics enable banks to work together with specific merchants to provide targeted advertising to their customers. Due to existing regulations, it is questionable whether such solutions can be implemented worldwide. Regardless of the regulatory situation, banks still need to conduct research on customers’ willingness to accept such coordinated advertising, else they risk incurring negative consequences. Innovators are called on to develop solutions for customer data analysis that conform to data protection laws and provide added value.

The focus on optimizing digital services and products as well as the use of smart data reflects new topics and trends within the field of financial services. It remains to be seen whether these trends will have firmly established themselves by next year’s conference in London.

Sources