- Gyana Ranjan Samal
This year's theme for NFW was AI and it was amazing to see how fintech organizations are coming up with some innovative ideas and solutions to address problems that is not only making a strong business case for them but also creating a positive impact on the society.
One common factor across all fintech organization's goals was to address customers’ needs. It's not only addressing what customer wants but also to understand what customer doesn't want and develop solutions accordingly. There are lot of technology stacks, platforms, and solutions in the market but as an organization we need to focus only on what customers wants. Sometimes we get carried away with technological evolution and forget about our customer’s needs. This fits very well with DNB's mission of 'Customer First'.
What makes fintech organizations thrive so well is the fact that they pick one area of a complex problem and delve into a customer's pain points and go deep into the solutioning using various tech stacks that they have at their disposal.
Invest tech was one of the key highlights in this year's fintech week as various organizations presented their innovative solutions around helping asset managers in finding the right investment option for their client keeping in mind ESG parameters. Most of the fintechs are targeting the SME segment to help them get the necessary funding by partnering with different banks or other lenders. Some of the solutions provided by the fintechs in the SME segment are invoice processing, cash flow analysis, real time accounting, and expense management, to name few.
In the retail part they are targeting the younger generation to build customer relationships with various financial institutions. One classic example is the product 'Young Money' from & money which helps young people aged between 7 to 17 understand how money works and develop a good habit for the future. In this way banks can build relationships with their future core customers.
Mifundo's borderless loan solution helps young expats find their dream home by providing the banks necessary credit risk data as a centralized solution across Europe.
Lunar is building a hyper-personalized solution that helps their customers in financial planning. It’s not a chatbot but a personalized financial assistant that gives customers clarity and control on their finances which helps them in making more informed choices.
Legacy to Agility
As we in DNB are in the middle of transformation journey, it was worth attending the session on Legacy to Agility. MAMBU's team provided insight into their core theme of 'Composable Banking'. As one-size doesn't fit all, composable banking is an approach to design and deliver based on flexible assembly of independent systems. As a bank you need to have one system integrator with whom you can have one contract and sub-contract with other vendors. In this way you can choose vendors/solutions that best suits your need and avoid any lock-ins. There are many pros and cons to this approach which can be a separate topic of discussion.
Another approach that was discussed by Tuum (Estonia based fintech company that provides modular core banking platform) was multi-core approach where you build a parallel core system and migrate from the old system in a phased manner. There are many different approaches for a modernization journey which big banks can explore.
Central Bank Digital Currency (CBDC)
In the space of CBDC, as more and more banks are collaborating in various projects, it is becoming clearer that wCBDC is gaining more traction than rCBDCs. Bahamas and Nigeria have implemented rCBDC but the adoption is low. Also, the lack of awareness among the people is not helping. Tokenized deposit is often mixed with cryptocurrency which is not the case. But for wCBDC there are good business cases where banks are collaborating to explore further. Project Agora got a mention where 40 private sector financial institutions, convened by Institute of Internation Finance (IIF) and BIS to explore how tokenization can enhance wCBDC. This space will be watched by lot of banks globally.
To summarize, a lot is happening in the space of financial services, which we as a bank need to keep our eyes on and prioritize our strategies accordingly.