3 Critical Fintech Innovation Trends in Banking

Each year, the most exciting innovations in banking are presented at Finovate conferences. While some of the new ideas may never be seen by the general public, the trends of the demos provide insights into the future of financial services.

Once home to the likes of The Who, The Rolling Stones, and Frank Sinatra, The City National Civic theater had a brief moment to relive its glory days. This time, the rising stars of fintech owned the stage, with over 70 companies presenting at Finovate Spring in San Jose, CA vying for the coveted ‘Best of Show’ designation.

In a two-day marathon of rapid-fire presentations, each company had just seven minutes to discuss their latest innovations. While we heard from an array of startups, established players also made it clear that they are in the innovation game.

Financial services companies of all shapes and sizes appear to be taking risks. While not all of those bets will pay off, the level of investment bodes well for the future of the industry. One of the most interesting things about Finovate is that it serves as something of a leading indicator of emerging trends.

Here are some of the highlights of this year’s show.

Coming to a Bank Near You … Smart Wearables

While relatively few Apple Watches are gracing the wrists of consumers yet, retail bankers should get prepared. As a product category, technology tracking firm IDC forecasts that vendors will ship 45.7 million wearables worldwide in 2015. Smart wearables, the devices that can run apps created by third-party developers (including banks), will account for 25.7 million units in 2015 (up by 511% from 2014).

According to Ramon Llamas, Research Manager of IDC’s Wearables team, “The Apple Watch raises the profile of wearables in general and there are many vendors and devices that are eager to share the spotlight.“

Finovate did not disappoint retail bankers when it comes to the Apple Watch. Malauzai Software showed their Smartwear App and Chief Product Officer Robb Gaynor announced that 8 community banks and credit unions are already live with the product. Malauzai leveraged their existing mobile banking platform which enabled them to develop their wearable technology in record time.

callout_watch_031Malauzai Software’s demonstration at Finovate shows that the Apple Watch is on its way to changing retail banking. To start using the Smartwear App (individually branded for each bank), all a customer has to do is download the latest version of the bank’s mobile app from the Apple app store. The Apple Watch tethers to a customer’s iPhone (requiring an iPhone 5 or later).

The functionality in version 1.0 of Malazuai’s Smartwear App is relatively basic and limited to checking balances, viewing transaction history, and accessing a branch locator. But that’s reflective of the vast majority of today’s mobile banking transactions. You’re not going to apply for a personal line of credit on your watch … at least not yet.

On its website, the company notes that, “the Apple Watch simply provides an additional screen to view parts of the mobile banking SmartApp.” And they conclude that, “overall, the Apple Watch does not introduce additional security concerns.”

Innovation is no longer the sole territory of the big banks – Malauzai hopes to level the playing field. You can view their full Finovate demo.

Financial innovator Moven also presented impressive ways to leverage wearables and the Apple Watch. As The Financial Brand reported last month, CEO Brett King, and President Alex Sion introduced Moven’s new Impulse Savings feature. Their app addresses the dirty little secret of most personal financial management solutions, namely that people hate budgeting and they’re lousy savers.

Moven uses the Apple Watch to deliver real-time alerts to customers, and makes a game out of turning an impulse spend into and impulse opportunity to save. While wearable technology is the enabler, Moven shows what is possible when you unleash big data and analytics to understand consumer behavior – and attempt to change it. Moven plans to make their app available on the Android platform for an array of devices such as the Moto360 and Samsung Gear.

Rediscovering Small Business

Judging from the range of products and services presented at Finovate, innovators in financial services see huge untapped potential in the small business segment. However, meeting these needs may require banks to think beyond what they provide today.

Shoeboxed helps small businesses to manage and process receipts, no matter how they are received or stored. At Finovate, they demonstrated their technology to pull receipt information from your email, and use it to populate a more detail-rich view of online banking.

For example, instead of seeing an accounting expense for Amazon.com, Shoeboxed would process that receipt so that the details of each item you purchased are properly categorized. This is a feature that the company would like to provide via financial institutions. The complete demo that earned them Best of Show is available here.

Karmic Labs recognizes that small businesses still struggle with payment solutions and are frequently forced to make use of petty cash. Karmic Labs is trying to make it easier for employees of small businesses to make payments, particularly for employees that don’t otherwise qualify for a corporate credit card.


The product is actually an API-based technology integration, and it enables a range of features from payment, to expense management, to value-added services for card issuance. For a retail bank looking to address the unmet needs of small businesses, the Dash technology would provide an alternative to extensive in-house product development. Their demo at Finovate is available here.

SizeUp bills themselves as ‘business intelligence for all.’ The company provides an online portal that is essentially a market and competitive research tool for small businesses. With simple to use web forms, they can provide tailored information about the health of a business (in comparison to local competitors) and where advertising might be more valuable (based on demographics and other factors).

The small business owner can benefit from a number of interesting benchmarks and points of comparison. In their Finovate demo, the company showed their live implementation with Wells Fargo as part of the bank’s Wells Fargo Works initiative. I’ll wager a guess that many banks haven’t thought about how they can provide data and insights to their small business customers as a no-cost value added service.

Before you think that all of the small business innovations represented niche opportunities, veteran presenter Kabbage featured a new twist on its business lending program. The company has already made a name for itself, and raised over $465 million in funding to date, based on its data-driven decisioning that takes a deep, deep, dive into an applicant’s financial and operating metrics.


Kabbage now offers a card that enables small business customers to draw down their loan, without having to transfer the money into a business checking account. This is part of their “Kabbage Everywhere” push to expand products and channels. For retail banks, partnering with a company like Kabbage could help to increase loan volumes in a highly scalable way as demonstrated here.

Everyone Loves a Crowd

Spring Finovate 2015 also featured several different takes on crowdfunding. If you’re not familiar with the term, crowdfunding is the procedure for raising money, sometimes lots of money, through a slew of small donors.

Pioneers like IndieGoGo and Kickstarter helped launch innumerable film, book, and music projects. Crowdfunding for personal causes still hits the news and sites like GoFundMe have helped raise cash for everything from “Plea to Save Grandpa’s Home” ($137k) to “Boston Homeless Man Reward” ($160k).

At this Spring’s Finovate, FundAmerica highlighted their crowdfunding platform that enables large transactions. They offer payment processing, anti-money laundering compliance, escrow accounts, and more. The big difference is that they are targeting crowd funded equity and debt issuance.

On their website they state, they are “here to minimize your risks and costs associated with equity and debt crowdfunding.” They have an SEC registered, FINRA member, SIPC insured broker-dealer. With their “Invest Now” button, you can add compliant fundraising to any website or mobile app.

Someone With Group has a very interesting product that enables crowdfunding for medical/HIPAA needs. The platform is licensed to medical providers. Consumers have to opt-out of HIPAA to set-up a funding page.

The offering helps to reduce fraud for this type of crowd-funded campaign (by ensuring that the fundraising causes are legitimate). Contributions raised through a campaign are loaded onto a MasterCard debit card restricted to medical bills and medical supplies. CEO Paula Jagemann-Bane was a strong presenter and the company’s demo was very compelling.

It’s About the Customer, Not the Technology

The landscape of retail banking is changing, because the needs of consumers are changing. In a recent report, Forrester Research notes that only 2% of organizations “walk the talk” when it comes to delivering on their brand promises. Banks can stay relevant by not only re-examining what they offer, but by also assessing the role they play in their customers’ lives.

New technologies, like all of the ones showcased at Finovate Spring 2015, can play a critical role in that evolution.

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