This document analyzes trends and innovations in financial services, particularly focusing on digital banking, insurance, and payment technologies, highlighting the impact of technology and changing consumer behaviors. Key points include the rise of mobile banking, the emergence of fintech startups, and the integration of the Internet of Things into financial solutions. It discusses strategies for financial institutions to build trust, provide convenience, and enhance personalization to attract and retain customers.

1. Financial Services: Digital Trends &
Innovations
Ruth Lewin-Chen, Hamutal Schieber, Meital Yachin
April, 2017

2. Introduction
• This presentationexamines trends and innovations in financial services (focusing on
banking, insurance, credit cards). It is the 3rd report in the series, with the 1st published in
2014.
• The presentation is built on the Schieber Research model, which examines:
unmet / new needs
created by macro
trends
Enablers
Adoption of
innovation
Market
Trends
new & promising
start up companies
affecting the industry
Trend-
setters
competitors ahead
of the curve
Best in
class

3. Enablers: Technology Penetration
• The high rate of technology penetration is affecting the state of financial services:
– Collaboration economy – driven by social media
– On the go behavior – driven by intensive lifestyles and the rise of mobile technology
– Convenience seeking – driven by connectivity (“the internet of things” and wearable technology)
Global Mobile penetration continues to rise, giving birth to more
on the go/ mobile financialsolutions. Rising penetration of
Wearable Technology offers opportunities forcompanies
Source: Ericsson, 2016
Time spenton social networking by internet users worldwide is on
the rise, causing more sharing and peer to peer behaviors
resulting in the “collaborationeconomy”
Statista, 2016 Source: Worldwide; GlobalWebIndex; 2012 to
2016; 16-64 years; social media and messaging

4. Online and Mobile Banking
• As a result of the digital consumer behavior, the market is undergoing a
shift towards digital financial services.
• Online banking adoption rates are 49% in the EU, but in some countries,
as well as in the USA, penetration surpassed 50%. In Scandinavia
penetration rates of online banking surpassed 80%.
• We expect Mobile financial services to grow at a faster rate, due to
the increase in solutions offered through mobile devices as well as
younger demographics demand for ultra-convenient solutions.
• According to the Federal Reserve, in the USA, use of mobile banking
continues to rise but is yet to reach the rates of online banking:
• 43% of all mobile phone owners, and 53% of all smartphone owners with
a bank account, had used mobile banking in the 12 months prior to the
survey, compared to 71% who used online banking on a desktop, laptop
or tablet computer in the same period.
• Source: Consumers and Mobile Financial Services, Board of Governors of the Federal Reserve
System, March 2016
• Founded in 2014, Atom Bank is the UK's first
mobile-only bank, offering all of its services
through a smartphone app.
• The company raised another £83 million ($102
million) in funding led by BBVA, the Spanish
bank (and owner of Simple in the US). BBVA
also led Atom’s previous $128 million round in
November 2015 (source: Techcrunch, March
2017).

5. • Established competitors, as well as
emerging competitors, use a mix of
strategies to maintain competitive
advantage in the financial services field,
including adoption of new technologies
(using enabling start ups), innovation labs
(to provide access to trend setting
technologies) and M&As (of disruptive
start ups).
• The main challenge in mobile financial
services is keeping them simple and
intuitive, as financial services can be
complex.
In 2017,Mastercard announced a massive expansion of its Qkr Platform to six
additional markets - Brazil, Canada, Ireland, Singapore,South Africa and the
United States, in addition to Australia, Colombia,Mexico and the United
Kingdom.
Qkr Is a mobile order-ahead and payment platform developed byMastercard
Labs.
Qkr enables consumers to seamlesslyorderand pay for goods and services via
their smartphone without having to wait in line or for a restaurant server. The app
uses Masterpass. (B2B Innovation – aimed at retailers)
Competitor Strategies

6. Disruptors
• Fintech companies are offering new ways of responding to consumer needs.
• While existing competitors need to adopt more slowly, developing channel after channel, start ups are concentrating
on entirely digital solutions, thus designing cutting-edge solutions which in turn, create new consumer expectations.
• Schieber Research separates between “tech based financial services” (those relying specifically on digital channels
and would not have existed without use of technology), and “digitally adapted financial services” (those which utilize
channels / capabilities which are not digital in addition to adapting to the digital age).
• According to research by
Citi, investment in
financial technology has
grown exponentially in the
past 6 years, rising from
$2 billion in 2010 to $20.9
billion in 2016. China’s
share of the investments
has more than doubled in
2016 (from 19% in 2015
to 46% in 2016). In the
US, venture capital
investments are moving
away from lending
towards new areas such
as insurance – which is
gaining lost lending dollars
- and wealth
management.
BI Intelligence– major companies in the Fintech
sector by segment

7. Disruptors: “Unicorns”
• Selected Fintech “Unicorns” (worth over $ 1 billion, according to CBInsights)
Avant: personal loans. $1.7B in funding. Kabbage: small business loans. $1.5B in funding.
Stripe: payments online and in mobile apps. $690M in funding

8. The Internet of Things & Wearables
• On May 2016,Intelligent Environments
launched Interact, an IoT banking platform.
• Through the platform, smart devices such as
Nest Thermostatand the Pavlok wearable
device can be connected to the user’s bank
account and maximum spending for bills can
be set, monitored and notified.
• On March 2017,Visa unveiled a
new payment-enabled sunglasses
prototype.
• Consumers need to tap the Visa
payment-enabled sunglasses on
enabled payment terminal in orderto
make a payment.
• Visa is currently testing to see if
there is a demand for the
sunglasses and if brands or banks
want to sponsorthe product.• Alibaba is launching VR Pay
– goggle-basedvirtual reality
payments.

9. Digital Wallet
• Apple Pay, Samsung Pay, and Android Pay are the
largest competitors in the digital wallet market, with 150
million users together.
• According to a recent report by Juniper Research, Apple
leads the digital wallet market and is expected to nearly
double Apple Pay userbase in 2017. The study
estimates that Apple Pay will hit 86 million users in 2017
globally, up from 45 million in 2016.
0
20
40
60
80
100
120
140
160
2015 2016 2017
Leading Digital Wallet Competitors (source:
Juniper Research)
Apple Pay Samsung Pay Android Pay
Walmart Pay, the retailer’s alternative to Android Pay and Apple Pay,
allows shoppers so pay using their mobile app instead of a credit card or
cash

10. Payment Apps
• Owned by PayPal, US Millennials’ popular payment app Venmo processed$17.6 billion in 2016 in mobile payments,
up 135% from the prior year.

11. On the Go Payment
Mobile apps such as “FirstBus” and "NJ Transit“
offerbuying bus passes or tickets securelyand
getting transit options on mobile devices.
• Consumers can buy Uber gift cards online (e-giftcard) or in-store (plastic).
The gift cards can be added to Uber account in the mobile app. Uber gift
cards can be only used for rides or UberEATS orders.

12. Voice Activation
In the UK, Santander bank launched a feature for its student account holders to ask
questions directly to their bank accounts, using the Santander SmartBank App.

13. Cardless Transactions
• “Cash” customers – those who don’t have a bank account or a debit card – account for 27%
of American consumers, according to a 2015 FDIC report. Companies are responding.
PayPal My Cash Card lets you add funds to your online
PayPal account, using cash from your wallet. It also has
a barcode-onlyservice,powered by Green Dot.
In April 2017,Amazon announced the launch of Amazon Cash, a new
service that allows consumers to add cash to their Amazon.com balance by
showing a barcode at a participating retailer, then having the cash applied
immediatelyto their online Amazon account. The service will support
adding any amount between $15 and $500 in a single transaction.
Amazon Cash will be available at brick-and-mortar retailers across the
U.S., including CVS Pharmacy, Speedway,Sheetz, Kum & Go, D&W Fresh
Market, Family Fare Supermarkets, and VG’s Grocery.Other stores will be
added in the future.

14. Social Media
• Facebook enables people to send and receive
money on its Messengerchat app.
PayKeyis an enablerfor industry
competitors,connecting banksto social
media for secure everydayactivities.
NIC Bank Group has announcedthatit will be the first bank in
Kenya to launch aninnovativesocialmediabankingplatform,
dubbed"NIC KONNECT

15. Chatbots
• Chatbots has became a common tool in the financial field, allowing
consumers handle routine transactions and receive a financial
advice in the form of human interaction.
• Users can check their balance, transfer money, ask questions and
more.
Erica,Bank ofAmerica
chatbot
Mastercard KAI is a
messaging platforms
that allows customers to
receive financial
information and make
decisions in the form of
a virtual assistants.

16. Chatbots
• Transferwise is a Facebook
Messenger based bot, claiming to
transfer money with real exchange
rate.
• Sway is a Slack based financial
services bot, aimed at small
businesses. Slack also invested in
the start-up.

17. Rewards and Cash Back
• Rewards, points and cash back are added value strategies that help to differentiate competitors in the
financial sector. Increasingly, they are also used by non-financial competitors.
Yelp offers a Cash Back program
which rewards consumers with up
to 10% cash back. In order to join
the program,Yelpers need to sign
up once,and then every time they
pay with one of the linked cards at a
participating business,cash back is
automatically earned.

18. Peer-To-Peer Lending
• The term “peer–to–peer lending” has its origins in the facilitation of unsecured personal lending between individuals
(rather than a company) via digital tools.
• P2P lending are a major industry, and traditional competitors have been responding via partnering / acquiring /
investing in competitors. The leading competitors are Lending Club (with over $20 billion in loan issuance, offering
both consumer and small- and medium-sized enterprise loans), and Prosper (over $6 billion in loans, offers only
unsecured consumer loans and does not make SME loans).
• Some companies have identified the problem of low/ lacking credit score, offering “potential based” loans.
• Competitorssuch as Prosperand Klear are offering unique
services,further contributing to the overall market growth. For
example, Klear claims to offernon-profitfinancial education.
• Peerform offers p2p lending services to borrowers
with a creditscore as low as 600.

19. P2P Payments
Bank of America launched Zelle, a
mobile platform that allows real time
peer-to-peertransactions through the
mobile app.
According to the bank, users sent $8
billion in P2P payments. throughout
the first quarter of 2017.
MasterCard also offersp2p solutions that allows customers send and
receive payments easily and quickly
“With Mastercard Send, you can offera P2P solution that provides
your consumers with a seamless experiencewhen sending or
receiving funds and solve the unique challenges your business faces”

20. Comparison Sites and Aggregators
• Complex insurance products and services are being disentangled by 3rd party websites. Therefore,
navigating between different companies’ solutions will become easier, and we expect that companies
will build specialties for specific market segments rather than a “one size fits all” attitude.
Mintoffers personal
financesmanagement Websitessuch as LearnVest.com and CountAbout.com help
consumers monitorand manage theirfinances online.

21. Digital ATMs – and Branches
• A number of banks launched cardless ATMs, to enable customers cash withdrawals from an ATM by tapping their
device when they’re in front of the ATM.
Wells Fargo offers cardlessATMaccessin USA.
Customers can use their Wells Fergo app and receive a
one time token to conducta transaction.
Bank of America ATMs:make withdrawals using your eligible smartphone.
The company has opened three completelyautomated branches in Feb.
2017,where customers can use ATMs and have video conferenceswith
employeesat other branches.

22. Small Business Services
• Fintech competitors have entered the field of small business financial management, replacing services
outsourced to HR and CPAs personnel.
Workday offers Financial and HR management
applications, including expenses management and
payroll solutions
Paycor focuses on HR solutions starting with
recruiting and over with time and attendance
tracking and payrolls
Zoho Invoice is web-based invoicing software that helps
users create invoices, automatically send payment
reminders and get paid faster online.

23. How to Utilize Digital for Growth?
• Financial Services brands must provide the following advantages in order to
attract new clients and cross-sell new services to new clients:
– Building Trust through: Personal connection (utilizing social platforms),
content ownership / expertise (utilizing blogs, micro sites etc.) and targeting
niches, through transparency.
– Offering Convenience. On time / on place (utilizing mobile devices). Self
service (utilizing mobile, online and tablet).
– Providing Personalization. Online / mobile customizable tools, device-
specific presentation (such as tablets).
– Offering Simplicity. The industry is perceived as complicated and
confusing. Digital channels are enabling new strategies such as
gamification and simple analysis tools.
Source: Schieber Research & Carmelon Digital Marketing, Digital-Inspired
Trends & Innovations in Financial Services, 2014

24. Time for AI
• Our 2014 report found that convenience, as well as simplicity, were the key growth drivers for the
industry, in terms of customer benefit: time saving, schlepping-free transactions, etc.; next in line were
money saving and personalization. And indeed, key competitors focused on delivering more
convenience through omni-channel tools, with a specific focus on mobile devices.
• The 2015-2016 reports identified personalization as the key driver for companies, as a result of the use
of Big Data, the rise of Internet of Things (including wearable devices, smart homes and smart cars);
and the growing competition from new industry disruptors, forcing companies to a deeper
understanding of micro-clusters needs, or a “mix and match” between products and services.
• In 2017, the advance in IoT, including smart home (e.g. Amazon’s Echo/ Alexa), as well as artificial
intelligence (AI) will create opportunities for seamless omni-channel transactions, and we also expect
rewards to make a “come back” with better value offers, as a point of differentiation.

25. Thank You
The research was conducted by: Ruth Lewin-Chen, Hamutal Schieber, Meital Yachin
Schieber Research | Market Research & Competitive Intelligence
www.researchci.com | hamutal@researchci.com
More articles and researches on Carmelon Digital Marketing website:
http://www.carmelon-digital.com