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Key trends in Fintech to shape up the future

New solutions in banking and how data is enabling new practices

In March we’ve hosted another FinTech roundtable (see summary of first FinTech roundtable here). This time, over dinner and in Stockholm. Both AWS and Stripe sponsored the event. See below some of the topics covered and insights gathered:

1. How to use data in financial services

2. Regulations & compliance and how RegTech opportunities will arise

3. Shifting value chains in banking thanks to OpenBanking + PSD2 and the big question is where most of the value will be captured in the future + what will the role of incumbent institutions become

4. Landmark FinTech events and developments from the previous 10 years and what excites people the most looking forward 5 years (Neobanks and Netflix-like financial services mentioned, InsurTech, Data opportunities in price+product, BigTech, just to mention a few).

Landmark FinTech events/developments from the past 10–15 years:

  • The iPhone (2007) and the App Store (2008). First Payment Apps emerged and gradually we got mobile banking.
  • Satoshi Nakamoto’s 2009 whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System”. In other words, Blockchain and digital currencies/assets.
  • Apple Pay launched in 2014 and Google Pay (originally named Android Pay) launched in 2015.
  • GDPR — regulation on data protection and privacy in the EU. PSD2 and Open Banking forcing the banks to open up their precious data, which could mean big changes for the way we use money. Increasing regulation in general + compliance requirements for financial institutions.
  • The explosion of FinTech Unicorns. Last time we checked, about 60 globally. Stripe with €35b valuation on top. Increasingly also B2B FinTech Unicorns, not just consumer-facing payments and lendings B2C companies.

What excites people (and what could be potential landmark events) when looking forward 5 years, in terms of A) how businesses handle their finances and B) how private individuals and families handle their finances:

  • Neobanks exciting, but a very broad topic in general. Gimi and P.C.F. (both Swedish neobanks) were present. Also, Deutsche Bank and Danske were present at the roundtable. How to navigate as an incumbent bank in this landscape and stay competitive and relevant also in the future?
  • Netflix-like “on-demand” financial services (mainly on the private consumer side). Also, WealthTech was mentioned in this context (in the style of Wealthfront and Betterment).
  • Alternative lending in the digital space, not just for private consumers, but also for businesses and SMEs in particular. Stripe is launching an SME loan facility, which is based on payment forecasts (via Stripe) and can also adjust to seasonal variation. UK based startup Uncapped is also doing revenue-based financing with flexible payback to SMEs.
  • Data Explosion thanks to sensors everywhere and social media. Data is fuelling machine learning and thanks to GPUs, we can do ML on a massive scale.
  • InsurTech and possibilities for disruption in pricing and product innovation, but still also on the distribution side.
  • BigTech enters the scene big time: Google to offer checking accounts. Apple Pay and Apple Card. Amazon merchant loans. Facebook Libra and WhatsApp Payments. Uber Money. What will this mean for the future of financial services and especially for the FinTech startup ecosystem?
  • “The Data Explosion” and how this is transforming all businesses on the planet.
  • Highly relevant for Financial Services, be they banks or insurers, or new FinTech startups.
  • The idea is that the ones who can collect, aggregate, process, and analyze data can make superior predictions and recommendations compared to competitors and thus deliver superior customer experiences. Banks and Insurers of the future are building 360-degree views of their customers.
  • Pricing of risk is a clear domain where data will have an impact.
  • As consumers become more data-aware and discerning in what data they share, with who, how and for what purpose — trust will emerge as the key differentiator between providers. How do you build this trust between banks/insurers/fintechs and customers?

Shifting value chains in banking, i.e. value chains moving from being vertical to horizontal”

  • Key enablers being OpenBanking and PSD2, forcing financial institutions to open up their systems and data through APIs.
  • And new infrastructure technology companies, such as Tink, Plaid, and Trulayer, essentially “taking care of the plumbing” and also increasingly providing data aggregation and analytics.
  • What kind of pressure do you think this will put on the incumbents in the industry? And what kind of opportunities (or risks) do you think there will emerge?
  • Where will most of the value be captured? On top of the data stack (where analytics and predictions/recommendations are made)? Is volume the only way to create value on the “bottom” i.e. in the infrastructure layer?

InsurTech topics of interest (not all were covered in the roundtable though):

  • Instant underwriting and coverage: Emerging providers are using technology to enable customers to obtain insurance for any product instantly.
  • Pay-as-you-go auto insurance (btw auto is still one of the largest LoB:s in P&C insurance, typically representing about 50% of GWP in any Northern European Insurer).
  • Automating manual processes, mainly thinking about the insurance claims process.
  • Blockchain-based risk management systems: Example Maersk with blockchain-based marine insurance platform to connect commercial vessels that will use smart contracts to manage risk and establish an immutable audit trail.





That’s all folks, till next month’s edition 👋




Imagine the future of data

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