The Best (and Worst) From Finovate Spring 2018

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Before I went out to San Jose to attend (and present at) Finovate Spring 2018, my wife asked me the following question.

“Wait, let me get this straight. You’re going to travel 3,000 miles so you can be on stage for seven minutes?”

“Hell yeah!”

Now if you haven’t attended a Finovate conference before, here’s the background. It used to be just a two-day event, where the only content was seven-minute presentations from fintech startups (and, over time, from legacy vendors) all vying for the coveted “Best-in-Show” awards which are determined by a vote among conference attendees. After the founder, Jim Bruene, sold the conference to Informa, they added two days of more traditional conference content — i.e, presentations and panel discussions.

Bottom line? It’s widely regarded as the place to launch new fintech products, debut new features and rollout new tools/solutions in banking.

Here is my take on this spring’s conference. (Disclaimer: Any comments shared about vendors do NOT represent Cornerstone’s opinions or viewpoints, nor those of The Financial Brand, nor should you incorporate any opinions shared here in your vendor selection processes.)

Highlights From the Startup & Vendor Demos

Kasasa. Kasasa cited my Reinventing Consumer Loans research in their presentation, so how could I not love that? Seriously, though, the firm’s new Kasasa Loans product is just what banking needs right now: product (and not just user experience) innovation. The loan product lets borrowers “take back” excess funds they’ve paid on a loan. If you think today’s Millennials are struggling to pay back loans and can’t pay down their loans, you’re half right/half wrong (see the data in the report).

AlphaRank. When I first met Brian Ley, AlphaRank’s CEO and founder, two years ago, he told me that the firm used epidemiological data analysis approaches to analyze card transaction data to identify “influencers” which would help issuers improve their marketing efforts. The firm won a best-in-show award at last year’s Finovate as well, and got a $50,000 investment (with the potential to earn an additional funding of up to $300,000) from FIS’s VC accelerator. It’s gained traction over the past year doing analytics work on a contract basis for credit unions.

Conversation One. This firm offers a build-once-deploy-anywhere platform for conversational applications that enables financial institutions to build and deploy Alexa and Facebook Messenger bots. Very slick demo.

Digital Onboarding. Given the huge interest in digital account opening and onboarding, and the relative success this firm has had recently, it was disappointing that their demo didn’t impress the rest of the audience as much as it impressed me.

Horizn. This Canadian-based firm helps banks train their staff on what their digital channel offerings do (and can do. Doesn’t sound real exciting, but it’s good stuff (there’s actually a business case behind it), and they’re the technology behind RBC’s recent Model Bank award from Celent.

PFM: A Big Demo Lowlight

A couple of presenters showed their “groundbreaking” PFM tools which prompted this:

Two things particularly frustrating about the PFM demos. First, the lack of recognition that what they were presenting wasn’t new. Second, the lack of ideas, suggestions, or advice for how banks and credit unions could avoid the shortcomings of the oh-so-many PFM efforts and initiatives they’ve deployed.

One of the PFM presenters showed off their peer comparison capabilities. This is something I wrote about in a PFM report I published in 2003 (that’s 15 years ago for the mathematically-challenged). I believed then that peer comparisons would drive PFM usage. Add that to the list of things I’ve been wrong about.

There is one good thing to say about the PFM presentations, though: no bubble charts.

Analyst Sessions

I got to participate in the Analyst All-Star panel (presenting the deposit displacement concept), along with four of the analyst firms including:

Javelin. Javelin’s Jacob Jegher told me he thought he was taking a chance doing an “anti-innovation” presentation which would focus on “getting back to the basics.” I didn’t think it was anti-innovation at all. It contained a lot of solid advice and research for improving the mobile experience, and a model to help banks and credit unions assess their digital banking maturity.

Aite Group. Tiffani Montez delivered a strong presentation on the need to infuse AI into financial health-related offerings. No offense to Tiffani, but I’m skeptical. PFM has failed to be a differentiator for banks for the past 15 years, and now AI is now going to be PFM’s savior? There are a host of reasons why financial health efforts have failed to gain traction (I’ll write more about that in another post)–adding AI is not the fix to those challenges and problems.

IDC. Hats off to IDC’s Jerry Silva for doing a 7-minute presentation with no slides (it’s not as easy as it looks). And kudos to Jerry for taking a different tack than the rest of us and orienting his presentation to fintech and legacy vendors, helping them understand how to better sell to banks. Excellent stuff here.

Celent. Dan Latimore presented on improving the branch experience. Dan started his presentation by saying: “I want to start off with a joke. Two millennials walk into a bank branch. I don’t actually have a punch line for the joke, so if you can come up with one, let me know.” Haven’t heard if he got any responses.

There was a sixth analyst who was supposed to present, but who bailed for some reason. Probably saw the competition he was up against. Not that it was a competition.

Keynotes and Panel Discussions

Innovation. Top-notch presentation from Fintech Forge’s JP Nicols on the state of innovation in banking. Refreshing to hear a practitioner (not preacher) perspective on the topic. And the picture accompanying the “fintech petting zoo” concept — i.e, how so many banks and credit unions interact with fintech startups, and credited to Fintech Forge partner Jason Henrichs — was priceless.

Digital identity. This session included Al Pascual from Javelin as the moderator, a guy from Wells Fargo, the exec from Capital One (who’s running their new digital ID service), and the CEO of Trusona. I’m probably not going to get much consulting work from Wells Fargo in the near future. Here’s why:

In an awkward moment, while talking with the Cap One guy, Pascual turned to the audience of bankers and asked them if they would sign up for a digital ID service from their bank, which prompted this:

P.S. – I recently published a report on digital identity that argues against the logic that banks will become “identity providers.”

Open banking. Why in the world would they put a guy from the CFPB (hey, that’s where *HE* said he worked — maybe nobody told him about the name change) on a panel about APIs and open banking? The only banker on the panel was a guy from the commercial side of a European bank. For a panel that was supposed to be about APIs, there was practically no mention of APIs.

Platformification. Sadly, I don’t think everyone on the panel (including the moderator) was on the same page about what platformification is (or could be). As I’ve discussed it, it’s about a shift in the predominant business model of banking — and not a technology construct. Zion’s Alex Jimenez took my view as his definition. The moderator had a different perspective. The panelist from Goldman Sachs’ Marcus (a former Facebook employee who annoyed me to no end by repeatedly name-dropping “Mark”) had no clue what platformification was.

Role of humans in the future of digital customer service. This session chaired by the ABA’s Lisa Gold Schier with Brad Leimer of Explorer Advisory and Capital and Greg Boudreaux of First Republic was top-notch for its practical perspectives on the realities of providing customer service in banking. Reality, folks: For as sophisticated as AI chatbots and tools have become at speech recognition and cognition, providing AI-driven service requires the use of data that isn’t being captured today (namely, to what extent are service issues and opportunities resolved).

Branches. In this panel on “the role of branches in a digital world,” one of the panelists was the Chief Strategy Officer of a $300m credit union who talked about implementing ITMs in his branches. Kasasa’s John Waupsh asked “why in the world would you make your members get out of their homes to go to a branch to talk to a machine when there’s technology available that would enable them to do that from their homes?” To which the CSO replied, “we like to give our members choices.”

The Bigger Picture and Overarching Conclusions

Still no business cases. One thing I’ve learned about the Finovate crowd: It likes shiny new things. The Conversation One win is a great example, and helps to highlight an interesting evolution in Finovate demos. For the past few years, a number of vendors (i.e., Personetics, Clinc) have demoed their chatbots. Cool stuff to be sure, but they never talked about the business case for their solutions (instead focusing on the customer experience improvement). The Conversation One solution takes this to another level—instead of one-off chatbots, C-One is a front-end chatbot development tool. But if there’s no business case for the underlying chatbot, how can there be a business case for the front-end? The lack of a business rationale for some of the technologies demoed drives me nuts — but apparently is OK with much of the rest of the crowd.

Emerging technologies are becoming invisible. A few years ago, presenters fell all over themselves to highlight the types of technologies they were using — “hey look, we have AI!” or “we use blockchain!” This time around the focus of many presentations was on the solution, not the underlying technology. This is a good sign of the maturity of these emerging technologies.

Security demos poorly. Here’s a conundrum Finovate must deal with: Security solutions are hot (as well they should be) but demo poorly. You can’t see how the technology does it. But that also makes it nearly impossible for the Finovate audience to determine how effective the technology really is, and how easy or expensive it would be to integrate it with what they’ve got. Finovate should really carve out a Security track and let these vendors demo/explain what they’re doing in far more greater detail.

See You in New York?

Despite my somewhat critical tone, I’m still a big fan of Finovate. Attendance at the spring event suffered a bit from overlapping with the Financial Brand Forum, but attending Finovate is hugely valuable despite some content shortcomings, and it’s priceless for the networking opportunities. I’ll be at Finvoate Fall in New York in September — hope to see you there.

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