Several hundred fintech founders, investors, bankers, and analysts convened at FinvoateSpring in San Francisco this week, where we witnessed demos of innovative products and solutions and discussed emerging trends in a fast-paced atmosphere. The mood was lively and optimistic with a focus on forward-thinking areas of opportunity and growth despite the headwinds facing our industry.
The keynote by Greg Palmer recognized that it will no longer be good enough for providers to simply outrun their direct competitors. The industry is now at an inflection point with many external pressures and customers expect more; the next 5-10 years will be transformational as providers adapt and compete within this broader context.
Here are some themes I observed at the conference:
- AI and data should be harnessed to truly understand your customer and deliver personalized customer experiences. Gone are the days of product-focused cross-selling efforts – a requirement is customer engagement along a customer journey, all supported by data and analytics. Data is not valuable until it is processed to uncover insight and action. Providers need to start with customer needs as they develop products and include strong feedback loops. Apiture lead a fantastic discussion showing examples of how a bank can leverage data to build a symbiotic relationship with customers over time and over life stages, creating a relationship where the customer feels like the institution understands their challenges and objectives over the years. [Square, Apiture]
- Gen Z will have an enormous impact on the industry. The generation is influenced by social media, TikTok, and video and trusts PayPal more than banks. Providers will need to adjust to attract this generation as employees, customers, and suppliers in the coming years. Climate and sustainability are of great interest to this generation and there has been a call to action for providers to substantiate climate in their products and services with integrity. [Insider Intelligence, Carbon Zero Financial]
- Non-banks and Big Tech have achieved share of mind as there is a higher ability and lower barrier of entry to offer financial services. Javelyn reported that 52% of consumers indicate that their financial relationship is with a non-bank, and this figure rises to 69% for Gen Z. In the current and future landscape, traditional FIs will be competing against players that exist on someone’s phone. Big Tech (Apple, Amazon, Meta) influence on financial services is massive as they continue to diversify their revenues, capture more data, and drive customer engagement. Cornerstone Advisors estimate that embedded finance will be a $26B market in 2026. Banks and fintechs need to integrate more, but existing infrastructure limits delivering the products and experiences that customers require. 70% of attendees think overcoming legacy thinking and legacy systems is the roadblock to achieving digital transformation. [Javelyn, Cornerstone Advisors]
- The industry will need to incorporate new technologies that will fundamentally change the landscape. Generative AI is the most promising of those, and banks will need to start small and begin experimenting internally and with non-sensitive data. While the Metaverse was discussed, attendees do not view it as being truly transformational. RTP in the US needs to happen, but it will take time. [Celent, Cambrian Ventures, Lightspeed Venture Partners, Moov Financial]
- Many expect BNPL will continue to surge and place some pressure on existing consumer credit products such as credit cards. Adoption will continue with consumers and merchants given the strong value proposition for the product. Regulation is developing but this is perceived as good for the industry. Credit bureau reporting is still being implemented, and will enable more data and insight on usage and performance. [Insider Intelligence, LendingClub, Tavant, FTV Capital]
- We have made progress with financial inclusion but there is more work to be done. More underrepresented people have accounts and there are more digital payments since the pandemic. However, the wealth gap needs to close through home ownership and savings, and consumers need to have a better ability to manage cash flow and gain access to cheaper and more efficient payments. AI models are being used that leverage data beyond traditional FICO scores that enable more “yes” credit decisions and better prices across the board. Cash flow transaction data is powerful to understand financial health and the ability to pay. [CommonWealth, Accion Venture Lab, Interledger Foundation, LendingPoint, Pave.dev]
Over 32 fintech demos were presented, and organized around:
- Cash flow insight and analytics: Pave.dev showcased their solution for consumer credit underwriting; upSWOT featured their solution for small business (for businesses and FIs that serve them)
- Lending solutions: QuickFi showcased a compelling product that brings automated PoS lending to the manufacturing sector
- Investor dashboards. A compelling product was demonstrated by Babbl
- Market analysis (vendor evaluation, competitor product evaluation). Fintech Insights illustrated customer journey steps by providers and the ability of an FI to design and implement an optimized customer experience.
- Operational and/or processing efficiencies
- Features to enable FIs to differentiate products/services
- Tools to enable digital journeys
- Access to datasets (tax data, government funding programs)
- Assistance for FIs as they modernize and implement AI and/or cloud
- Customer verification (voice, biometrics)
- Document assessments, validation, and sharing
- Counterparty risk assessments
- Personalization and marketing
Overall, FinovateSpring gathered forward-looking industry participants with curiosity and energy to uncover future opportunities. I’m looking forward to continuing this conversation this Fall in New York City!