evolving financial services: a fintech future ire (dublin...president’s conference insurtech &...

Alastair Lukies CBE

Founding Partner, Motive Partners

UK Prime Minister’s Business Ambassador for FinTech

November 2017

President’s ConferenceInsurTech & Innovation

MOTIVE PARTNERS HIGHLY CONFIDENTIAL

The history of money

2

Infographic compiled by bartercard

9000BC

Early man would barter

goods they had in surplus for

ones they lacked.

Grain and cattle were popular goods to barter.

Bartering was first recorded in

Egypt.

1100BC

In China, people started using

small replicas of goods cast

from bronze.

Largely for practical reasons these

developed into rounded ‘coins’.

Coastal regions around the Indian Ocean

saw the use of cowrie shells in trade as

early as 1200BC.600BC

As first ‘official’ currency

was minted by King

Alyattes of Lydia in

modern day Turkey.A standardised coinage allowed trade to

flourish across the mediterranean world.

1250AD

The Florin, a gold coin minted in Florence, was widely

accepted across Europe, encouraging international

commerce.

1290AD

The travels of

Marco Polo to

China introduced

the idea of paper money

to Europeans…

1661AD

… however paper money

didn’t catch on for quite

some time with the first

bank notes being printed in

Sweden.

Paper money was great for business because

it could be mass produced without relying on

raw metals like gold and silver.

1860AD

Industry giants, Western Union,

spearheaded e-money

with electronic fund

transfer via telegram.

1946AD

John Biggins

invented the ‘Charg-It’ card,

the first credit card.

1999AD

European banks began offering mobile

banking with

primitive smart phones.

The Euro began to circulate in 2002.

2008AD

Contactless

payment cards

were issued in

the UK for the

first time.

2014AD

With a constant demand

for ways

to ensure businesses can

trade easily new

innovations are

constantly being

introduced and refined…

History comes full circle with Bartercard

offering a platform for business to barter

surplus goods and services worldwide.

Barclaycard trialled ‘wearable’

contactless wristbands.

ApplePay was announced for iPhone users to

enable them to pay for things with their handsets.

Bitcoins entered the

mainstream, the first

fully implemented

decentralized

cryptocurrency.

2015AD

2016AD

2017AD

Buyers of a London mansion on sale for £17 million

have to pay in Bitcoin.


The last 10 years of technology

3

USERS SEARCHES IPHONE VIEWS

2006 10m 0.35tr per year 0 8m views per day

2017 2bn 2tr per year 1.2bn 5bn per day


The largest companies by market capThe tech whizz kids of silicon valley have replaced the oil barons

4

1 2 3 4 5

2001

2006

2011

2016 $582B $556B $452B $364B $359B

$406B $365B $272B $261B $260B

$446B $383B $327B $293B $273B

$406B $376B $277B $237B $228B

Top 5 publicly traded companies

(by market cap)

Tech

Other


FinTech across the global economy

5

$294trGlobal financial

stock [equity

markets,

bonds & loans] in

2015

$75trPayments

processed in the

UK in 2015

$450bnCost of cyber

crime globally

2016

$3.5trWorldwide IT

spending

expectation for

YE 2017

$4.5trGlobal insurance

premiums in 2015

FINANCIAL

SERVICES

CYBER

SECURITY

INSURANCE

SECTOR

$26trGlobal retail sales

(in-store & online)

in 2017

INFORMATION

TECHNOLOGY COMMERCE

GLOBAL

INDUSTRIES

$1trGlobal spending on

cybersecurity

products

over the next

5yrs

$480bnTotal global FS

IT spending

2016

$1.7bnInsurtech

investment

in 2016

$17.8bnAlibaba one-day

record revenues

in 2016

EXAMPLE

MARKET

SEGMENTS

Perfect Storm

in Financial

Technology


A perfect stormEmergent trends are catalysing transformational change in Financial Services

7

REGULATORY DIRECTIVES

Regulatory initiatives promoting customer rights and

financial stability will redefine the role of financial

institutions and reshape the competitive landscape

ECONOMIC UNDERPERFORMANCE

Financial Institutions no longer earn their cost of

capital and the financial sector is dramatically lagging

in performance, necessitating fundamental change

CUSTOMER EMPOWERMENT

Individual and business customers are taking control

of their digital and financial lives, shifting power away

from financial institutions

TECHNOLOGICAL INNOVATION

New technology is transforming financial institutions –

often through external providers – while empowering

startups and technology giants to gain market share


The FinTech attackers

8


FinTech innovation & the challenges of financial institutions

9

DISRUPTIVE

INNOVATION

OPERATIONAL

OPTIMIZATION

Global regulatory

pressure(EU Data Protection Act,

PSD2,

Open Banking Standards)

+

Shareholder pressure

BANK

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiuveTCkMrJAhUBVhQKHbfGDf0QjRwIBw&url=http://benjaminmerrick.com/&psig=AFQjCNF_lAdNAYY9VfDjlONhC9OCwdiAkw&ust=1449590731839448


Case study: M-PesaThe introduction of M-Pesa to Kenya has made it an iconic example of financial inclusion via mobile technology

10

• M-Pesa is a mobile phone-based money transfer, financing and

microfinancing service.

• M-Pesa is a branchless banking service allowing users to deposit

money into an account stored on their cell phones, send balances

using PIN-secured SMS text messages, and to redeem deposits for

regular money.

• M-Pesa has become the most successful mobile-phone-based

financial service in the developing world.

• IN 2013, 43% of Kenya’s GDP flowed through M-Pesa with over

237 million P2P transactions.

FY1

2

FY1

3

FY1

4

FY1

5

9.08

10.5

4

12.1

6

13.8

6

14.0

%

5.00

10.0

0

15.0

0

30-day active M-Pesa

customers

Million

M-Pesa revenue

Kshs. billion

FY1

2

FY1

3

FY1

4

FY1

5

16.8

7

21.8

4

26.5

6

32.6

3

22.8

%

10.0

0

15.0

0

35.0

0

20.0

0

25.0

0

30.0

0


Case study: Ant Financial (China)

11

• ANT Financial Service Group, founded in December 2004 and formerly

known as Alipay, operates the payments platform affiliated with Alibaba

Group.

• Credit Suisse estimates that 58% of China’s online payment

transactions go through Alipay.

• State-backed: the $740 billion sovereign-wealth fund China Investment

Corp. and the country’s national social security fund are now among its

biggest shareholders.

• Investments plans – financial services expansion in China’s rural areas,

investments in IT and oversea acquisitions e.g. Paytm (India’s largest

mobile wallet).

• January 2017 – Ant Financial buy MoneyGram for $880M

Big Leagues

Alibaba’s financial affiliate Ant Financial’s latest funding round would value it among the

largest listed financial companies in China. Market capitalization in dollars.

Source: S&P Global Market intelligence. The Wall Street Journal

ICBC

China Construction Bank

Agricultural Bank

Bank of China

China Life Insurance

Ping An Insurance

China Merchants Bank

Bank of Communications

Ant Financial

China Minsheng Bank

Industrial Bank

$224

$155

$155

$143

$90

$87

$60

$55

$50

$49

$45


Case study: Apple Pay, Facebook,…From stable foundations, comes significant opportunity – the power of a brand

12

… as well as daily usages

Be healthy

Be entertained

Consume Pay CommunicateLive betterMove faster

Google Calico

Google YouTube

Google Play

Google Wallet

Google Hangout

Google Car

Apple Healthkit

Apple Beats Streaming

Apple iTunes

Apple Pay

Apple iMessage

Apple Homekit

Facebook Moves

Facebook Oculus rift

Facebook Gifts

Facebook Credits

Facebook Messenger

Internet.orgfacebook

Amazon Marketplace

Amazon Twitch Amazon.com

Amazon Payments

Amazon Cloud Drive

AmazonFulfillment

Creating the right

environment for FinTech


Providing the best possible environment for the sector’s evolution

14

REGULATION FINANCIAL SERVICES

TECHNOLOGY

The

Consumer


Providing the best possible environment for innovation opportunities

15

OPEN BANKING STANDARDA set of specifications and rules addressing the data, technical and security aspects to data sharing in

an open API environment; supported by a Governance Model.

DATA

STANDARD

Rules by which data are

described and recorded.

API

STANDARD

Specifications that inform the

design, development and

maintenance of an open API.

SECURITY

STANDARD

Security aspects of the

API specification.

GOVERNANCE MODEL

Governance required to operationalise the Open Banking Standard

Open banking frameworkTo facilitate data sharing in UK banking

“Increased innovation and competition will further establish the UK as leader in FinTech, deliver proposition

enhancements – both in value and service – to consumers and businesses and prepare the UK for the

implementation of emerging regulation from Europe (PSD II).”

The Open Data Institute


Unlike most FinTech hubs around the world, London combines all the necessary

attributes for successful innovation in FS.

• Critical Mass - over 40,000 financial services companies are based in London.

• World-Class Talent - 60,000 employees working in London’s FinTech sector and over

150,000 digital tech professionals.

• Digital Connectivity - super-fast broadband and transport networks guarantee connectivity

and access to customers.

• Investment – more than half of all FinTech investment in Europe is channeled into the UK.

United Kingdom – the FinTech all-rounder

16

UK

The evolving Insurance

landscape


Millennials

18


The Insurance exodus

19


LEASE

VEHICLE

PURCHASE

HOME

PROTECT

LIFESTYLE

What Insurance looked like for past generations

20


2

1

FRAGMENTED

BANKING

MILLENNIAL

LIFESTYLE

RENT VS. OWN

What Insurance looks like for millennials


13%89%

of homeowners have contents insurance

(GenX and older)

of renters have contents insurance

(GenY and younger)

The changing trends


2

3

2007

2017

The amount of renters over the past decade has doubled.

The changing trends


TRŌV PARTNERS WITH UNDERWRITERS

N O R T H A M E R I C A E U R O P E A S I A - P A C I F I C

• UW partner takes balance sheet

risk

• Trōv is Appointed Representative

in AU and UK

• Trōv is MGA in USA

• Trōv and Insurance Partner design

Insurance product

• Fronting via UW partner

(or an affiliate)

PAN-EU 2017

PAN-ASIA 2018

LATAM 2018

CANADA 2018 2016

2016

20182017

2018

U/W

TBD

U/W

TBD

New insurance models built on new consumer behaviour trends and collaboration


Key InsurTech trends

25

Insurers are investing in key

technologies, such as data

analytics and mobile, that will

support this transformation

Emerging technologies,

such as RPA, AI and IoT

are coming to the fore

InsurTech no longer seen

as disruption, but more as

a transformative force

The need for better risk

insights and customer

engagement is driving the

transformation

Insurers and InsurTech are

collaborating to overcome

industry challenges

Blockchain is more familiar and

a majority of insurers expect to

have use cases in production by

2018


The InsurTech ecosystem

26


InsurTech Funding on the Rise

27


“If past history was all

there was to the game,

the richest people

would be librarians”

Warren Buffett

evolving financial services: a fintech future ire (dublin...president’s conference insurtech &...

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