We’re three months into the new decade and Crayon Data has already unlocked something very special. For awhile now, we’ve wanted to showcase the powerful AI-led personalization capabilities of our product, maya.ai in Europe. And this year, we were selected to demo maya.ai at Finovate Europe.
In between some fantastic meetings, my colleague Vijay Anand and I had a chance to sit in for interesting sessions and talks at Finovate Europe.
Here’s what we learnt from the sessions on the hottest FinTech trends in Europe.
Platform size and API matters
In his Keynote Session on Platform Services, Dr. Nicolai Schattgen of Match-Maker Ventures, talked about how in a fragmented market like Europe, achieving scale is a concern for most FinTech platforms. Therefore, optimizing costs can be a challenge. What’s more, nearly 70% of the global digital platform business today is owned by just 7 big tech companies.
The number of Open Banking API calls have increased ten-fold in the past 12 months. In fact, the number of customers making monthly API calls to open banking systems has reached millions with customers linking multiple accounts online. On the other hand, despite the surge in customers seeking open banking services, financial institutions currently only offer account aggregation and PFM capabilities.
Which makes the ability to create a platform that’s robust enough while operating at scale, even more important for banks. The key to success is dynamic and powerful infrastructure that ensures more than 99% success rate on API calls. And if banks don’t adopt early, there will be too much ground to catch up on later.
AI to play a role in ethical data management
Even though it’s been a little more than a year since the EU’s data regulation act, the GDPR was passed, companies and financial institutions around the globe are still reeling from its implications. Banks around Europe have been beefing up their data security policies and infrastructure. As Kristoff Zammit Ciantar of FiNOPZ explains, the regulations and changes thereof, are affecting the assessment of risk levels.
Banks need to understand how to correctly and ethically use their customer data, instead of merely protecting it. This is where AI can help. Currently, only 24% of bank boards fully understand AI and its implications.
Right now, the answer to the question of where to ethically draw the line is still a grey area. And the lack of knowledge at the board level is not helping the situation. In fact, most European banks are still grappling with managing data that implementing AI-led solutions seems like a big challenge for them.
A call for humanized technology
The 2010s saw the mobile revolution. Through the course of the decade, the entire consumer lifestyle has moved to mobile platforms, with almost all banking conversations taking place on smartphones. Even social media plays a part in this. (take for example, the introduction of WhatsApp Money in select areas). With the world at their fingertips, consumer expectation is sky-high. Quick services, personalized communications and seamless experiences are considered the norm. This sets an interesting tone for the coming decade – what will customer behaviour look like once AI, quantum computing and 5G networks become mainstream?
Right now, banks are at a stage that’s similar to the world when Nicolaus Copernicus proved that Earth was not the center of the universe. According to Benoit Legrand, (CIO of ING Ventures)banks have become arrogant. They need to soften their stance and empower people to stay a step ahead in life and in business.
Author Steven Van Belleghem calls it the “bubble of superiority” for European financial institutions. In order to pop this bubble, banks need to put the consumer squarely at the center of their innovation strategy – focus on customer experience, and not on cool tech. Identify points of friction in their customer engagement and work towards removing these points of friction.
The future is not digital, it’s human and cultural. Financial enterprises who understand and leverage this will thrive.
Diversifying banks and artificial intelligence
In an age when every industry is facing digital disruption by innovative technology, nearly 92% business leaders do not believe their business will survive these disruptions. Andrew Vorster of Innovation Catalyst suggests that the more diverse an organisation, the better it’s placed to drive disruption, since innovation thrives when there are differing ideas and opinions.
It’s the same with AI. At this point in time AI is like a 3-year old child. And in order for this system to be truly successful, it needs to be built on a diverse data-set, unfettered by human biases.
Catching up with the Asian payments industry
In the past few years, the payments economy has boomed across Asia. Especially in India and Japan. In the former, digital wallets and UPIs (Unified Payment Interface) are popular. In the latter, the government is promoting a cashless economy by reducing taxes on cashless payments.
This boom can be linked to the advancement of IoTs. There are nearly 20Bn devices globally that are connected to each other. Once major industry players start trusting IoT and AI systems, with data being collected ethically, then payments can be automated with digital contracts.
Unlike in Asia, the adoption of online payment alternatives hasn’t been as quick and wide spread as in Asia. Due to heavy data regulations, which vary from country to country in the EU, the disruptions are mainly localised.
Digital disruption in European FinTech
It’s pretty clear that the European FinTech ecosystem has quite a bit of ground to cover before they can catch up with banks in Asia and the Middle East. European banks are just waking up to the possibility of personalized consumer experiences and services. And like with payments, the stringent data privacy regulations will prove to be a speed bump for FinTech companies. But on the bright side, it’ll help create a safer and more secure financial ecosystem for consumers and financial institutions alike.