Among bankers, there is anxiety. Anxiety from outsiders promoting newfangled technologies that must be adapted in order for their bank to be relevant. Anxiety from insiders chiding them to innovate because this customer or that customer asked about some piece of technology their other bank has. Anxiety from conferences that feature young speakers touting shiny objects.
There is little benefit to anxiety if it doesn't result in action. And knowing where and when to act is critical in a changing industry like ours. The more we create and later hone the formula for making strategic decisions that result in positive action, the less anxious we will be.
1) Must we do it (as in CECL)? 2) Is it consistent with strategy (as in demanded by high lifetime value (LTV) customers)? 3) Will it make us more efficient in how we run the bank (lower expense and/ or efficiency ratio)? 4) Will it improve the customer experience (and extend customer longevity, shorten sales cycles, improve pricing power)? 5) What is the cost? And, as you will note from the rest of this article, 6) Longevity of solution(s) provider.
Only then would you move to the solutions to solve the problem or innovate. But what solutions? Does it depend on the last conference attended by an employee? How much longevity does the solutions provider have?
This is increasingly on the minds of bankers. Many solutions providers in the fintech space are very young, don't have many installations, and have yet to turn a profit. Does it mean they are not viable alternatives to your bank? Not necessarily. But bankers want to ensure if they partner with a solutions provider, they will be viable into the future. And ideally would not have sold to a big three core processor that increases core dependency.
That is why I occasionally look at Finovate best of show companies. To see where they are now because they were much ballyhooed by a top trade show in the country for fintech solutions. It should be instructive to bankers that evaluate solutions and implement a disciplined innovation culture, without creating such roadblocks that slow bankers down into becoming the bank they need to be for long-term relevance.
Finovate Best of Show: Fall 2017
Five years ago, these were rated the best. I include the description from Finovate five years ago, and where they are today.
2017 Finovate Description: Envestnet was recognized for its Financial Health Check that leverages account and transaction-level data to measure and score overall financial health across multiple dimensions including spending, savings, borrowing, and planning.
Today: Envestnet continues to transform the way financial advice and insight are delivered by powering financial advisors and service providers with technology solutions that work toward expanding a holistic financial wellness ecosystem. It has over 108,000 advisors working for more than 6,000 companies including 18 of the 20 largest banks. Although reporting positive EBITDA in the four years and year-to-date (9/30/22) since being named best of show, it has reported net losses in two of the four full years and year to date.
2017 Finovate Description: Finn.ai was chosen for its Virtual Banking Assistant, powered by artificial intelligence and available via channels ranging from Facebook Messenger to Amazon Alexa. It makes everyday banking simple and easy for customers.
Today: Finn AI was purchased by Glia in June 2022 where it remains a leading AI-powered virtual assistant platform for banks and credit unions, partnering with major FIs including ATB Financial, BECU, United Federal Credit Union, EQ Bank, Civista Bank and Truist Momentum.
2017 Finovate Description: Jiffee won best of show for its tap & pay mobile technology that turns any device into a payment terminal, enabling for consumers to pay anywhere and everywhere without relying on plastic credit and debit cards.
Today: Jiffee is a white-label mobile payment and authorization platform that securely confirms the identities of both parties on either side of a transaction. Jiffee is owned by Neontri, formerly Braintri, a private fintech based in Warsaw, Poland that entered the U.S. market in 2019. There were no financials available and no list of U.S. users on their website.
2017 Finovate Description: Sensibill was selected for its +Pulse solution that helps spot revenue opportunities from on- and off-card purchase data, providing targeted prospect list for personalized, in-app campaigns.
Today: Canada-based Sensibill is a customer data platform designed specifically for the financial services industry with an AI-powered, ethically sourced first party data with real-time actionable insights that help FIs drive personalization at scale. They claim over 60 million users across over 150 FIs in North America and the U.K. In October 2022, Sensibill was acquired by fintech aggregator Q2.
2017 Finovate Description: SpyCloud was selected for its monitoring and alert service that helps organizations better understand their employee and customer digital footprints by giving them visibility into their exposed credentials actively being traded in the underground.
Today: Spycloud's products leverage a proprietary engine that collects, curates, enriches and analyzes data from the criminal underground, driving action so enterprises can proactively prevent account takeover and ransomware. Its customers include half of the ten largest global enterprises, mid-size companies, and government agencies around the world from its Austin, Texas headquarters. It has been funded with four rounds for over $58 million, the latest raise occurring in 2020.
2017 Finovate Description: Chosen for its social good platform for consumers and businesses that turns the spare change from shopping into micro-donations to philanthropic causes.
Today: As best I can tell, Sustainably, a U.K. based 2016 startup that helped businesses and consumers earmark spare change from purchases to their charity of choice, shut down this year. Although this fintech did not make it, the idea could advance an FIs higher purpose by helping their customers fulfill their higher purpose.
2017 Finovate Description: Voleo was selected for its social trading app that makes it easy for people to invest together, saving time and money, while simultaneously leveraging the collective wisdom of networked investors to pursue market-beating returns.
Today: According to its website FAQ, effective June 2020, Voleo USA, Inc. closed its US brokerage. Although they claimed their user base swelled dramatically, Covid-19 had cut off traditional funding sources and since they were not yet profitable, their parent company indicated it was unable to continue to support the operating losses.
Of the seven Finovate Fall 2017 Best of Show, three continue to operate independently. Two were acquired, and two shuttered. This exemplifies the anxiety bankers experience when selecting partners. There is vendor risk that the solution might not make it, as is usual when partnering with relatively new firms/ solutions. Take solace that your partner selling to a larger technology firm is usually a good thing, perpetuating the solution and its evolution.
However, there is risk. And bankers must assess the risk when selecting a solution partner. But only after going through the disciplined process outlined at the beginning of this article so you have a better chance of avoiding shiny objects.