future of fintech - ipsos · march 30, 2020. future of fintech . what to expect in 2020. sanjay...
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March 30, 2020
FUTURE OF FINTECH WHAT TO EXPECT IN 2020Sanjay Ponnaiya
Chris Palmer
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Agenda01.
02.
03.
Introductions
Trends we’ve been watchingWhat to expect in 2020
What’s next
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Who we are
Global Leader in Market Research
Consumer Testing Proof of Concept
Financial Services and Fintech Specialty
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2019 was another banner year in Fintech
$60B Fintech Funding (US)
Not Just Global Anymore
Consumer Adoption Steadily Increasing
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Source: KPMG
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What to Expect in 2020
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01.
Changing what a bank really is
02.
Expecting the unexpected
04.
Going beyond the underserved
05.
Tech, but not for its own sake
03.
Broadening definition of trust
Partnering with merchants
06.
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Changing what a bank really is:The explosion of Banking as a Service (BaaS)
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At the start of the century regional players held a significant share of consumer deposits
Currently large banks (JPMC, BAC, Wells Fargo) now hold a significant majority of markets.
BaaS was developed based on two key factors.
Consolidation of deposits The Opportunity
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Prior to the financial crisis• Hundreds of new FDIC reporters a year
2010-2018• 25 new reportersSource: FDIC
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Back office now offered through Banking as a Service (BaaS)
Banking-as-a-service allows challengers to sit atop regulation with the backing of a traditional institution
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Regional banks and similar players are placing their bets here
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Growing specific underserved customer bases and balances
$5.8 billion valuation
5 million users
Focused ONLY on middle incomes: $35K-$70K
• No fees• Overdraft loan• Paycheck early• Automatic savings• Capitalizes on poor experiences
with big banks
‘If you make $150,000, you may not love your bank, but you probably don’t hate it,’ Britt said. ‘I’m not going after that consumer, the credit card rewards seeking person who wants to travel to Europe for free on points.’ – Chris Britt CEO
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Chime: Niche/Targeted… and Sticky
Concept Tested
Archetype Niche/Targeted
Seek informationCommitmentBroad appealLikingValueUniquenessBelievabilityNeed fulfillment
Best Worst
• No monthly fees• No minimum balance
requirements• No overdraft fees• No hidden fees• No transfer fees
• No overdraft fees• No monthly fees• Set up direct deposit and get paid
2 days before your coworkers
• No overdraft fees• No monthly fees• Set up direct deposit and get paid 2
days before your coworkers• No minimum balance requirements • No foreign transaction fees
• No foreign transaction fees• Set up direct deposit and get paid 2
days before your coworkers• Mobile banking app
Messaging Elements
Most Relevant Least Relevant
Most Unique Hard to Believe
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Strong emotional resonance
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Some Fintechsare trying to build a full stack
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Prior to the financial crisis• Hundreds of new FDIC reporters
a year
2010-2018• 25 new reporters
Source: FDIC
The Opportunity
2019• 13 new reports
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Expecting the Unexpected
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Any organization with a large user base can technically now offer banking services
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Uber Money provides basic banking services to its 4MM partners and enables unbanked to participate in financial system
• Immediate access to earnings
• Free $100 overdraft provides credit and capital
• Cash back on gas purchases on Uber Debit
• Top 20% riders will get credit if unable to pay
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Big Tech is close behind, looking to build on its advantages to deliver frictionless experiences
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“Start up with 150 years of experience”
Even investment banks are moving into the consumer deposit space to take share
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Apple’s foray into financial services
Putting the voice of consumer at the heart of innovation is important, even for big tech brands.
Apple launches Apple Pay, facing mixed reviews and executional hurdles
S E P T E M B E R
2014
Apple launches titanium card, receiving positive consumer feedback
S E P T E M B E R
2019
Despite Apple Pay’s push, a majority of consumers continue swiping or inserting traditional cards
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September 2019 | Apple Card Launch
Need Fulfillment
Believability
Uniqueness
Value
Liking
Usage Intent
Apple card, has very strong performance in our test. People like the dailycash that the card offers along with no fee, simplicity & transparency.
Vertically integrated value chain – everything within the Apple ecosystem.Apply within app, approval within minutes. Virtually no friction in the entireprocess.
“When you buy things with the Apple-designed titanium card, you get Daily Cash on everything you buy.”
Worst Best
Key Measure Scorecard
We tested the Apple Card with consumers...
Top 5 Phrases
1 You get daily cash
3 Like simplicity, transparency
2 No fees
4 Apple Card lives on your iPhone
5The first credit card that actually encourages you to pay less interest
\ Archetype: Winner
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Is an Apple bank account next?
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Cash
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Broadening the definition of trust
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Trust has eroded in all sectors
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Trust and security as a positioning
• Data security is a key positioner: Won’t sell, share, or trade your data• Always free to consumer• Free credit score = best product for which you are eligible• Minimizing rejection preserves one’s dignity and confidence, which in turn engenders loyalty• Becomes a simple place to understand one’s finances and removes angst• More than just lead generation, financial assistant and tax preparation
$7.1 billion sale to Intuit 100+ million members
A view into $6 trillion debt
10+ year old “start up”
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Tech, but not for its own sake
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Upending The Insurance Business Model Using AI
$2 billion valuation
$57 million in premium revenue
425,000 customers 75% under 3590% first time insurance buyers
• Licensed carrier (unlike Hippo, Jetty)• Applying behavioral economics• ‘Peer-to-peer insurance’• Discourage dishonest claims by
donating a portion of revenue to charity
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Consumers Want Lemonade… but Don’t Need the AI
WantLemonade’s Key Measure pattern indicates a Want archetype. This is often the observed pattern fortrend setters. With strong marketing support, Lemonadecan succeed in transforming the home insurance category.
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Market Success Score
Lemonade demonstrates a strong probability of success.
HighLow
• Simple and transparent
• Pay claims super fast• It’s your money• Flat fee
• Simple and transparent• Insurance in 90 seconds• Get paid in no time• No forms to fill out
• Give back to a cause• Insurance in 90 seconds• No forms, just speak to the camera
• Maya, our charming AI bot
• Jim, our claim AI• Just speak to the camera• Go party
Most Relevant Least Relevant
Most Unique Hard to Believe
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Strong emotional resonance
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Going Beyond the Underserved
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Digitization of financial advice democratizes investing and wealth management
5 million accountsUp from 3.5 million year ago
$860 million valuation
Traction: lead with Education
Continuing Innovation:Acorns InvestAcorns LaterAcorns SpendDifferent fee structure“We’ll be in anything that helps Americans save and invest”
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Concept Tested
Archetype Good Concept
Seek informationCommitmentBroad appealLikingValueUniquenessBelievabilityNeed fulfillment
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Acorns: Good Concept… and Super Sticky
Best Worst
• No surprise fees• Get your own portfolio for just $1,
$2, or $3 per • No minimums• No trade fees• That allows you to invest spare
change
• Until you have $1 million invested• No trade fees• No minimums• Get your own portfolio for just $1,
$2, or $3 per
• Get your own portfolio for just $1, $2, or $3 per
• No minimums• No trade fees• That allows you to invest spare
change• No surprise fees
• N/a
Messaging Elements
Most Relevant Least Relevant
Most Unique Hard to Believe
Very strong emotional resonance
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Payment fintechs providing buy now, pay later options
$3 billion valuation
3,000 merchants
2.5 million customers
Removes pain of payment for consumer
Introduced Resolve with a ‘buy now, pay later’ model aimed at businesses
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Pay over time in fixed monthly payments – no late fees, service fees, prepayment or any other hidden fees
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Partnering with Merchants
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Payment fintechs are enabling merchants to deliver exceptional experiences
$5.5 billion valuation
85 million customers
205,000 merchants
17 countries
6 million new American users/year
3,000 merchants in the USBuy now pay later removes pain of payment for consumer
Assumption of risk and smooth checkout process reducing cart abandonment benefits merchants
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Klarna expanding broadly in US
Klarna and Abercrombie & Fitch Co. Announce Expanded PartnershipYahoo Finance, July 1, 2019
H&M Is Now Letting Customers Pay for Clothes a Month LaterInStyle, July 8, 2019
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Amazon Go has completely removed payments from the shopping experience
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Payment decisions will increasingly be pre-determined
Marketing touchpoints to consumers will decrease and
shift upstream
Partnerships with merchants may become the most effective
channel
Potential partnerships with tech companies?Device manufacturers?
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What’s Next
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Recap and What’s Next
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Strong business and revenue model
Undeserved use cases
Frictionless experiences
But what makes a fintech truly resilient?
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Contributors
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Christopher Palmer Account Manager Ipsos Innovation, US
Kevin HungClient PartnerIpsos, US
Sanjay PonnaiyaSenior Vice PresidentIpsos Innovation, US
QUESTIONS