November 2018

Tracking innovation in financial services

FinTrack

Introducing FinTrack, GlobalData’s financial innovations tracker. Every month, FinTrack will showcase the latest innovations from financial providers around the world. Each innovation is assessed and rated on key criteria, providing you with valuable insight. FinTrack will help you to: • Keep up-to-date with the latest innovations from your competitors. • Develop cutting-edge product and channel strategies. • Identify the latest trends in the delivery of financial services.

FinTrack: the inside track on the latest financial innovations.

November 2018

About This Product

Consumer Payments Costa and Barclaycard launch contactless cups ECB launches cross-border real-time payments service

General Insurance Photocert aims to streamline claims and reduce fraud MakuSafe helps manufacturers prevent workplace incidents yulife utilizes gamification to reward customers

Retail Banking Lloyds Bank’s new PFM tool maps out customer spending

Wealth Management tickr lets users invest in socially responsible companies Nutmeg expands into human-led financial advice Wahed Invest launches stock screener app

November 2018

Table of Contents

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Consumer Payments

November 2018

TOTAL SCORE 4/5

Barclaycard has joined with coffee chain Costa to launch a reusable coffee cup with integrated contactless payments technology. Named the Clever Cup, the silicone-based reusable cup has an integrated contactless chip powered by Barclay’s bPay technology. Created to encourage the use of reusable cups, the contactless chip is detachable to allow consumers to wash the cup without damaging the chip. Customers can use the cup to pay at Costa branches or other stores accepting contactless payments. Users are also able to track their spending and top up their balance using a paired app. The cup costs £14.99, with a £1 donation from every sale going to the Costa Foundation.

Is it original? There are a number of contactless payment methods in the UK, such as contactless wearables, cards, and mobile phones. However, reusable contactless payment cups is a completely new concept for the UK market. Is it long-lasting? Mitigating the environmental impact of disposable plastics has never been more in the spotlight. People who buy their coffee as part of their morning routine are likely to use the Clever Cup long term, especially given how widespread contactless terminals are in the UK. The cup could be used at a wide variety of coffee shops. Is it operationally game-changing for the provider? The contactless cup will not drastically change Costa’s or Barclaycard’s operations, although it will benefit Costa in terms of cost savings from not having to issue as many disposable cups.

Will it significantly improve the user experience? The contactless cup will significantly improve the user experience for those who regularly purchase coffee, as they will not have to find their phone or contactless card to pay. Yet while the contactless cup will be more convenient for purchasing coffee compared with other options, it has no application outside of this (despite the chip’s ability to pay at other shops). There are also other issues with the product, such as having to remove the chip to wash it, which may be considered inconvenient compared to normal reusable cups.

Is it market-changing? This launch is inherently niche, catering specifically to environmentally-conscious regular coffee drinkers (offering them a tangible, if small, benefit). But it also represents one of the first integrations of contactless technology into a common item for a specific payments use case, which may lead to more tailor-made smart payment objects in the future.

Costa and Barclaycard launch contactless cups

ECB launches cross-border real-time payments service

The European Central Bank (ECB) has announced the launch of a real-time cross-border payments service called TARGET Instant Payments Settlement (TIPS). The service enables instant transfers between bank accounts in the 19 countries within the eurozone, and can be used on smartphones, computers, and at in-store payment points. The service therefore offers a bank transfer-based method of not only making P2P payments, but also in-store and online purchases.

Is it original? The concept of a real-time bank transfer-based P2P service is not new, but TIPS is the first instant cross-border payment service in the region. Is it long-lasting? The ECB’s backing means this service may attain significant scale very quickly, if enough banks in the eurozone countries sign up. Currently only eight banking brands are involved in the scheme. The service will undoubtedly fail without a sufficiently large network of banks behind it – although as it represents a way for banks to hold their position against the challenges of Apple and Google, it is likely to gain the partners it needs.

Is it operationally game-changing for the provider? For the ECB, this service does open up a new revenue stream in the form of a (very minor) transaction fee on each TIPS transfer. However, the main impact will be on TIPS’s bank partners, which stand to benefit from the launch of a mobile proximity and P2P payments service that does not require them to build, launch, and market their own mobile wallets or P2P apps.

Will it significantly improve the user experience? The ability to make instant cross-border P2P payments is a clear benefit for consumers using TIPS . While similar services exist in various countries, TIPS offers a much wider network of senders and recipients. Merchants also stand to benefit from accepting TIPS payments, since the system cuts out the card schemes and thus the interchange fees that eat into profit margins. Is it market-changing? Should TIPS successfully build up a network of banks, merchants, and consumers across its 19 markets, it stands to eventually supplant card payments in the eurozone by offering cheaper, faster payment settlement. But its initial growth will be slow, as consumers will likely adopt the P2P functionality (which alone stands to revolutionize remittance payments within the eurozone) much faster than the in-store functionality.

November 2018

TOTAL SCORE 5/5

General Insurance

Photocert aims to streamline claims and reduce fraud

Photocert uses artificial intelligence and blockchain solutions to streamline the claims process in motor and property insurance. Claimants can start a claim through their insurance provider’s app by providing photos and video evidence, which then becomes automatically available to the claims handler. Images are also certified – with the date, time, and GPS all logged.

Is it original? Technology is becoming increasingly prevalent in the claims process, with more providers leveraging the power of images and video footage. But the certification element of the images and video gathered through Photocert’s service is a unique element, and has the potential to reduce fraud Is it long-lasting? The claims process is becoming increasingly reliant upon technology in order to reduce the time from first notification of loss to settlement. Insurers that implement Photocert will be able to reduce the claims lifecycle from 15 days to five, which should ensure the longevity of the offering. Is it operationally game-changing for the provider? Photocert’s technology will allow insurers to provide policyholders with the means to begin the clams process through their app, the use of certified authentic images will help reduce the level of fraudulent claims, and the claims lifecycle will be reduced significantly. These benefits should drive significant uptake of Photocert among insurers. Will it significantly improve the user experience? Providing policyholders with the ability to begin the claims process immediately after an incident occurs will greatly benefit users, helping cut down on stress and the possibility of consumers being left out of pocket in the aftermath of an incident. Is it market-changing? The insurance industry is increasingly adopting technology that helps streamline customer-facing processes. Photocert not only streamlines the claims process but also assists in the fight against fraudulent claims. The fact that it has clear benefits for both consumers and insurers means it could have a significant impact on the market.

November 2018

TOTAL SCORE 5/5

TOTAL SCORE

MakuSafe develops devices that allow manufacturers to monitor factory floor safety conditions in real-time. The devices identify, predict, and look to prevent risk in workplace environments through the use of Internet of Things sensors. Insights are used to highlight what equipment and areas are frequently causing problems.

Is it original? Companies have been exploring the use of smart devices to improve safety records for a number of years now, but the specific device MakuSafe has developed is original. It is an armband that every worker on a factory floor wears. It collects live data, which is processed immediately via the MakuSmart cloud platform and presented on dashboards to be monitored by managers. This allows them to identify trends and locate frequent problem areas. Is it long-lasting? Yes. It is targeting a huge market, with hundreds of millions of dollars paid out every year in the US for accidents that could have been avoided. The vast costs associated with compensating a member of staff injured at work mean preventative measures are a very justifiable cost. This situation has seen MakuSafe raise a total of $2.3m over four rounds of funding. Is it operationally game-changing for the provider? Yes, as it represents a much more proactive form of insurance. It collects vast amounts of data and looks to first identify problem areas; once it has sufficient data it then looks to forecast where and when potential incidents could happen. Will it significantly improve the user experience? Yes, it offers clear benefits to employers. Firstly, it covers them financially and reduces the chances of them being liable for significant payouts. Secondly, it will promote a safer working environment, which should lead to a more satisfied and less stressed workforce. Is it market-changing? No. The market has been moving towards prevention through smart devices in recent years, and MakuSafe is simply part of that trend. Its device and its ability to analyze data appears to put it at the forefront of this shift, but it is not changing the direction of the market.

November 2018

MakuSafe helps manufacturers prevent workplace incidents

4/5

TOTAL SCORE

yulife is an all-in-one wellbeing health insurer aimed at businesses. It has one product option, which rewards customers for completing certain goals (such as reaching a step count). This is monitored via a smartphone app, which includes games to improve mindfulness. Achievements are rewarded with yucoin, which can be redeemed at certain retailers.

Is it original? No. yulife does have some original features, particularly its use of gamification to create friendly competition for staff within companies (leaderboards can be found in each customer’s app). The proposition also includes mindfulness targets, with digital games aimed at monitoring mental health. yulife is one of the first companies to include mental health in its proposition, but other companies such as dacadoo offer a similar feature, and its overall proposition is too similar to Vitality to be truly original. Is it long-lasting? Yes. Healthy living has been a key trend in recent years, and rewarding customers for it has already proven successful. Indeed, yulife’s founder has previously enjoyed success in the industry as the CEO of Vitality, and is therefore well placed to replicate that. It has received a total of £3m in funding to date. Is it operationally game-changing for the provider? No. It is still offering payouts for premiums, it is just a more interactive model that looks to actively prevent health issues by promoting fitness. Providers in the life and health space have been increasingly moving towards this model in recent years. Will it significantly improve the user experience? Yes. It aims to improve consumers’ lifestyle while rewarding them for achieving their targets. Customers earn yucoin when certain goals are reached. These can be credited in a range of ways, including Avios air miles or ASOS and Amazon vouchers, which will keep customers interested and satisfied. Is it market-changing? No. It is a slightly different proposition to Vitality and other incentivized health schemes, but it is not unique enough to change the market. However, creating its own currency appears to be a good branding move, and it is easy to see that catching on, especially if non-insurance players such as Amazon continue to partner with insurers.

November 2018

yulife utilizes gamification to reward customers

2/5

Retail Banking

Lloyds Bank has a new personal financial management (PFM) feature within its mobile app that helps customers identify where they have spent their money. Google Maps has been integrated into the app so that customers can pinpoint the exact location and details of their transactions. Not only will this provide customers with a better sense of where their money is going, it will also improve fraud detection as users will know sooner whether or not a fraudulent transaction has occurred, allowing the bank to prevent further transactions. The Google Maps integration joins a suite of PFM tools such as in-app card controls and payday insights.

Is it original? No. Other banks have launched the same solution or similar alternatives. Is it long-lasting? Yes. Consumers are seeking a range of PFM tools that help them make sense of their finances. The most popular tools are ones that keep consumers informed and help them understand their outgoings. Visually presenting transaction history via Google Maps is much easier than sifting through a chronological monthly bank statement. Is it operationally game-changing for the provider? Yes. This could improve fraud detection rates for banks as customers are more likely to identify fraudulent activity if it is tied to a specific location. Consumers will notice an irregular transaction immediately, particularly if its location is one they have never frequented. Will it significantly improve the user experience? Yes. The chronologically ordered monthly statements or daily transaction history viewed on digital devices often includes details or names of merchants that are not easily identifiable. Visually displaying transaction history on a map provides customers with additional markers that will help them remember purchases. Is it market-changing? The innovation on its own is not market changing. However, consumers are now increasingly switching their financial services provider because they are looking for innovative solutions. As per our 2018 Retail Banking Insight Survey this was the second most common reason cited by switchers. Consequently, the tie-up with Google Maps will bolster Lloyds’ innovation credentials.

November 2018

TOTAL SCORE

Lloyds Bank’s new PFM tool maps out customer spending

3/5

Wealth Management

Is it original?

Impact investment-only apps are not a new concept. In the US, platforms such as Swell Investing and Open Invest focus on companies that are socially responsible. tickr is simply replicating this idea in the UK.

Is it long-lasting?

Our HNW Product and Service Demand Analytics dashboard shows that the majority of wealth managers in the UK and globally believe demand for socially responsible investments will increase in the future. This app is thus aiming to provide a service that will be embraced by the next generation of investors.

Is it operationally game-changing for the provider?

tickr has newly entered the robo-advisory market, and is the company’s only product.

Will it significantly improve the user experience?

Customers in the UK who solely want to invest in socially responsible companies will welcome a robo-advisor that offers this. However, socially responsible investments are available in the UK through robo-advisor Wealthsimple, as well as through wealth managers. In addition, the tickr app does not represent a particularly unique platform in comparison to currently available options, and so adds little extra value to the investment experience.

Is it market-changing?

tickr does have features that are new to the market, such as the disruptive technology focus. But there are already investment apps that focus on socially responsible companies, including examples that allow investments in all types of companies. tickr is unlikely to be the catalyst that shifts the market.

In November 2018, a new investment app targeting socially responsible investors launched in the UK market. tickr allows users to invest in businesses that focus on three main areas: climate change, social impact, and disruptive technology. Users also have the option to invest in a combination of all three. The on-boarding process follows the approach used by other robo-advisors, with investors filling in a risk appetite questionnaire before being matched with an investment strategy. The minimum investment is £5, and the app charges a management fee of 0.7% per annum.

November 2018

TOTAL SCORE

tickr lets users invest in socially responsible companies

2/5

In October 2018, UK robo-advisor Nutmeg piloted a new human-led advice service that is conducted over the phone. Once human advice is requested, Nutmeg will send a questionnaire on the user’s finances and the robo-advisor will then decide if they would benefit from financial advice. There will then be a free phone consultation before the tailored advice occurs, which costs £350. The service is available for both new and existing customers,

Is it original? Robo-advisors turning to human-led services are not a new idea. Both Scalable Capital and Moneyfarm incorporate human-driven advice within their proposition. Is it long-lasting? By providing both digital and human advice, Nutmeg is aiming for a prolonged existence. It is adding another channel of advice to retain the loyalty of current clients, attract more customers, and keep the business alive. Is it operationally game-changing for the provider? Launching a phone-based advice service does change the core digital product in an attempt to attract new clients. However, it comes at an additional cost for Nutmeg, as it will need to hire advisors to operate this new channel. If it does not get the returns it is looking for, turning a profit will only become more difficult. Will it significantly improve the user experience? Even though this additional service can be considered expensive compared to Scalable Capital’s £200 human-led advice service, it does have benefits. Customers that need or want an advisor to converse with about their digital investment portfolio will welcome the addition of human advice. Value is added to their investment experience that they did not initially have. Is it market-changing? Nutmeg is the largest UK robo-advisor by assets under management, and so any move it makes is likely to have an impact on the space. If the new service proves to be financially beneficial, others will follow suit. However, Nutmeg is simply following in Scalable Capital’s footsteps, and so cannot be viewed as the market changer.

November 2018

TOTAL SCORE 3/5

Nutmeg expands into human-led financial advice

In October 2018, Wahed Invest, the online Halal investment platform, launched a Sharia-compliant stock screener app. This app allows investors to search over 50,000 global stocks and request analysis to see if they are compliant. The analysis will provide company overviews, stock pricing, financial ratios, and other information. If users require official Sharia certification it will come at a cost of $9.99 per stock.

Is it original? There are several stock screener apps that exist in the market. However, Wahed Invest has introduced the first Halal-specific stock screener. Is it long-lasting? Wahed Invest’s stock screener app is designed to aid current and future Muslim investors by providing them with a list of Sharia-compliant companies. As it aims to be the go-to platform before these individuals invest it is designed for longevity. Is it operationally game-changing for the provider? The main product provided by Wahed Invest is a robo-advisor platform allocating client assets to Sharia-compliant investments. With the app, Wahed Invest has essentially given access to the info it already has on Sharia-compliant companies to the public. The launch does not change the core product, but the app could prove to be a good client sourcing tool and act as a gateway to the investment platform. Will it significantly improve the user experience? With Wahed Invest’s robo-advisor, Muslim investors were able to have Sharia-compliant portfolios built and managed for them. Now the app will allow them to conduct stock screening themselves, at no cost, which removes another barrier to direct and faith-compliant investing for Muslims. Is it market-changing? Thanks to the app, stock picking for Muslims is now easier. It effectively opens up the investing market to a large new pool of investors who to date may have been reluctant to buy equities because of the effort required to screen them. This development could lead to a boom in the market.

November 2018

TOTAL SCORE 4/5

Wahed Invest launches stock screener app

Definition of parameters Is it original? Is the innovation significantly different to other products or services already on the market? Is it long-lasting? How much longevity will the innovation have? Is the innovation more than a novelty that will only be of transient appeal to consumers? Is it sustainable for providers in the long run, with respect to the cost and complexity of provision? Is it operationally game-changing for the provider? How much impact will the innovation have on providers with respect to cost, speed, and efficiency of provision? Will it reduce barriers to entry or open up new revenue streams? Will it significantly improve the user experience? How much impact will the innovation have on consumers with respect to speed, ease of use, and cost or price? Will it enhance or add value to their experience, or will it lead to improved outcomes for consumers? Is it market-changing? How much overall impact will this innovation have across all market participants, both providers and end users?

November 2018

Appendix

Sources Citywire (2018) Ex Barclays wealth pair launch app for impact investing [accessed November 2018] Computer Weekly (2018) Lloyds Banking Group in Google maps mash up [accessed November 2018] Crunchbase (2018) Yulife [accessed November 2018] Finextra (2018) Costa Coffee launches contactless reusable cups [accessed November 2018] Finextra (2018) ECB launches real-time payments system [accessed November 2018] Finextra (2018) Lloyds' customers can now keep track of spending with Google Maps [accessed November 2018] Finextra (2018) Wahed Invest launches halal stock screener app [accessed November 2018] Forbes (2018) This company makes Halal investing easy [accessed November 2018] International Investment (2018) Former Barclays Wealth duo launch social impact investment app [accessed November 2018] MakuSafe (2018) MakuSafe profiled in Insurance Business! [accessed November 2018] MakuSafe (2018) Company website [accessed November 2018] Nutmeg (2018) Introducing our personal financial advice service [accessed November 2018] Photocert (2018) Company website [accessed November 2018] This is Money (2018) The robo-advisor goes old school [accessed November 2018] yulife (2018) Company website [accessed November 2018] Ask the analyst For further information, the Financial Services team can be contacted at clientservices.fs@globaldata.com.

November 2018

Appendix