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Playbook FIntech - English Version

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PLAYBOOK
E D I T I O N 0 2 - 2 0 1 7
FINTECHS
INSIDE THE MOBILE REVOLUTION
OF THE FINANCE SECTOR
EXPEDIENTE
MMA LATAM TEAM
Managing Director LATAM
Fabiano Destri Lobo
fabiano@mmaglobal.com
Director Business Development
...
3FINTECHS
TABLE OF CONTENTS
04
05
14
18
23
27
2 - Inside the revolution
3 - Finances in the palm of your hand
4 - Innovati...
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Playbook FIntech - English Version

  1. 1. PLAYBOOK E D I T I O N 0 2 - 2 0 1 7 FINTECHS INSIDE THE MOBILE REVOLUTION OF THE FINANCE SECTOR
  2. 2. EXPEDIENTE MMA LATAM TEAM Managing Director LATAM Fabiano Destri Lobo fabiano@mmaglobal.com Director Business Development & Operations LATAM Thais Schauff thais.schauff@mmaglobal.com Argentina Soledad Moll soledad.moll@mmaglobal.com Brasil Graziela Mazzer graziela.mazzer@mmaglobal.com Colômbia e México Thais Schauff thais.schauff@mmaglobal.com Produção Playbook Head of Content: José Saad Neto Art Director: JB Junior Editor: Juliana Veronese Research and Writing: Débora Yuri e Fernanda Bottoni Reviewer: Roberta Soares www.goadmedia.com.br Images Flaticon e iStock ― MMA is the main leading non-profit trading association of the mobile industry in the world, having over 800 associated companies in approximately 50 countries. Our associates come from every corner of the Mobile Marketing ecosystem including: brand marketers, advertising agencies, mobile technology platforms, media companies and operators among others. MMA’s mission is to accelerate the transformation and innovation of marketing through mobile devices, promoting business growth with a stronger and closer consumer engagement.​ ―
  3. 3. 3FINTECHS TABLE OF CONTENTS 04 05 14 18 23 27 2 - Inside the revolution 3 - Finances in the palm of your hand 4 - Innovation and open banking 5 - The fintech industry from a to z 7 - Interview: guga stocco advisor of strategy and innovation 2.1 What it is 05 1 - Introduction - Why Fintechs? 143.1 Mobile disruption 153.2 A new relationship with the money 163.3 Fintechs and mobile marketing 184.1 Technologies 204.2 New services 214.3 Data and security 224.4 Challenges and future 062.2 How it appeared 072.3 Open banking:
the data democratization 092.4 Why it is important - and revolutionary 112.5 The golden age and the potential growth 122.6 The impact in the financial sector: the bank as a platform
  4. 4. 4FINTECHS 1. INTRODUCTION WHY FINTECHS? Our mission as the main global association that represents the mobile industry is to spread knowledge and provide a wealth of resources to the content market to promote its business and professionals. For this, the Fintech topic is more than necessary. It is essential to understand where the mobile industry is heading in order to create an effective platform to connect people and companies. In this Playbook, the second of 2017, we dive into the revolution of the companies that simplified the finance services and focused on solutions that fit into the palm of your hand. It discusses companies that are changing the relationship with money and causing changes in one of the most powerful markets in the world. This material explains what it is and how the Fintechs movement started. It approaches the Open Banking concept under the innovation perspective. It walks through Fintechs’ relationship with the Mobile Marketing and explains the main technologies that shaped this ecosystem, among them, the revolutionary Blockchain. There is more: we approached this theme in terms of transparency, usage and data privacy and we wrapped this material up with our stimulating interview with Guga Stocco, one of the best innovation specialist in the Brazilian market. This Fintech Playbook is an educational, analytic and instructive material for your understanding of the size of this ongoing revolution. Enjoy your reading! Fabiano Destri Lobo Managing Director Mobile Marketing Association, Latam
  5. 5. 5FINTECHS 2.1. WHAT IT IS This expression resulted from the agglutination of finance and technology and brings us to 2017 as the focus of discussions. Fintechs are made up of companies, mostly startups that develop innovative technology within the financial sector, creating seamless services for smooth processing, as well as for the final consumer. In an industry strongly connected to systems, processes, paradigms and traditional brands, the multiplying and rising of these new players means that an unprecedented revolution in happening. Meanwhile, far beyond these young companies, whose actions are based on technology and innovation, the Fintech ecosystem is rapidly gaining a reputable stable of established representatives. Big banks and financial institutions started seeing Fintech as an ally rather than a threat. Many of them have made way for businesses connected to the new market and are creating accelerators to encourage the research and development of these technologies. 2. INSIDE THE REVOLUTION ——————— “Ultraconnected; The Fintechs promise to change the way the omnichannel consumer handles his money”. ———————
  6. 6. 6FINTECHS ——————— “The origin of the expression is attributed to the Fintech Innovation Lab, founded in 2010 by the Accenture and Partnership Fund for New York City”. ——————— In saying this, none of this would be possible without the consumer’s change of habit. The consumer got used to obtaining products and services with the simple touch of their smartphones while using their social network or their own apps to make complaints if their requests were not responded to in a practical, fast and digital way. Obviously, the demands of the Omnichannel consumer would also affect the financial services - one of the most problematic segments when it comes to measuring the client’s satisfaction. Ultra-connected, the Fintechs’ promise is to enhance your experience and change the way your money is handled. They bring more efficient processes to the market, more transparent business models, more agility to the services provided, less bureaucracy and a higher level of personalization regarding interactions with each user. 2.2. HOW IT APPEARED Big Data, IoT (Internet of Things), cloud computing, Artificial Intelligence, Machine Learning, the evolution of the smartphones: the combination of several technologies allowed the explosion of the Fintech movement. But the idea of breaking status quo gained enough strength in 2008, the year of collapse for the Lehman Brothers, who held the fourth biggest investment bank in the USA at the time, resulting in its consequent global economic crisis. The origin of the expression is attributed to the Fintech Innovation Lab, founded in 2010 by the Accenture and Partnership Fund for New York City. The acceleration and orientation program to finance technology startups is supported by over 30 leaders of global financial institutions, having new labs opened in London, Hong Kong and Dublin, aside from its flagship in New York. Currently, London is considered the world’s largest Fintechs hub, regarded so by the massive presence of multinational financial institutions and also by the more adapted regulation to disruptive companies. Its ecosystem is living in the “Golden Age”, as per the view of Accenture’s strategists, with the convergence of data analytics and cloud storing and robotics being presented among other evolutions.
  7. 7. 7FINTECHS At the same time, the most successful exponents in the market are establishing partnerships or being bought by traditional organizations. The tendency right now is collaboration; the competition has been left behind. Today, Fintechs work in dozens of areas, while releasing new solutions and business models to: checking accounts, credit and debit cards, investments, loans, debts negotiation, finance management, payments, foreign currency, financial inclusion, solutions for small and mid-sized companies, insurances, crowdfunding and cryptocurrency. The majority of products and services are available 24/7 and on mobile apps. 2.3. OPEN BANKING: THE DATA DEMOCRATIZATION Another key element to the Fintech explosion, is the beginning of the open banking regulation - a collaboration model among financial institutions that make available owned data accessible from both their clients, as well as third party solution developers. With this collaboration, it allows the creation of more assertive products as there is access to a huge databank. The movement has happened in large scale in the European Union and in the United Kingdom. In the USA, the regulation is anticipated to be released very soon, and in markets such as Australia, Singapore and Malaysia consideration is also being given to oblige banks to offer open access to their data. Open banking is considered the democratization of financial data, once restricted only to big corporations. Making information available to anyone with permission to access it, in a safe system that preserves the user’s privacy, it enlarges the competition in the industry and promises the offer of efficient and innovative services to the final consumers. The connection between these two parts - banks and developers - happens via APIs (Application Programming Interfaces). They allow the communication between two different pieces of software and consequently, enable open banking communications. It is the same model that integrates accounts on websites, apps and social networks of an individual. Thus, the user does not need to repeat their personal data on every platform. ——————— “Considered the democratization of financial data, open banking allows a larger offering of innovative services”. ———————
  8. 8. 8FINTECHS 1 Fintech developers connect their app to a specific bank API. The APIs are built following the standard rules of design which facilitate the connection with the majority of systems, allowing storage in the cloud (24/7 access). When it comes to the open APIs, any startup can connect to them without any previous agreement with the institutions that own the data. Source: Business Insider. 2 A user of an API developed by Fintech must make a request for some services. For instance, to check the financial balance or to make a payment, the request is sent to the bank via the API. 3 The bank receives the request, and the system automatically sends the requested balance or the payment confirmation to the app, also via the API. ——————— How an open API works: ———————
  9. 9. 9FINTECHS 2.4. WHY IT IS IMPORTANT - AND REVOLUTIONARY Fintech is transforming a whole industry renowned for its bureaucratic complexity and inconvenient process towards its consumers. New ways of using the financial services are emerging and different opportunities to establish a long-lasting relationship with the brands are being built. To request a credit card, you simply need to open your smartphone, take a selfie, take a picture of your ID and sign it with your finger using the touch screen. No longer you are required to be in person at a bank agency, present a series of documents in paper, fill in forms and wait for days until your request is processed and delivered. Another downfall of traditional banks is that they have not progressed the products and services available to adapt to the modern world. In a world where people are always connected and solving a great part of their problems with their mobile phones at any moment, there is a serious gap. For this reason, some established institutions, such as J.P. Morgan and Wells Fargo, have opened their APIs to specific Finetech startups, allowing clients to access partner apps in real time. This strategy benefits the traditional corporations that don't need to come up with a solution of their own. The idea is to become allies with companies that have been born digital and have technology and innovation in their DNA. Different open APIs allow third party companies the ability to incorporate different services on their apps or websites. The functionalities, however, are varied. Some example include: opening a checking account, accessing information from different accounts, making payments and investments, getting loans, requesting a debit card as well as having the ability to block it. HSBC, BBVA, Citi and Barclays have also announced projects linked to open banking. In this way, other sectors are also making developments. Allianz, the world’s largest insurance company, has announced a strategic investment at Lemonade, a New York startup that bases its business in Artificial Intelligence and guarantees to offer its consumers contracted insurance within 90 seconds, and refunds in as little as three minutes. In a 2017 report, Business Insider showed the stance of Global Banks in regards to the idea of open banking. ——————— “Is no longer necessary to be in person at a bank agency to fill forms and wait for days to request a credit card”. ———————
  10. 10. 10FINTECHS 69% 52% 54% 60% 51% 30% 48% 35% 42% 44% 38% 29% 53% 29% It is an opportunity, more than a threat. It is absolutely necessary to fight against the disruptive competition of companies that are not banks. Building an open banking platform is a high priority to us. We are ready to invest in an API. We would like to offer services from companies that are not banks to our clients. We are happy to offer products from third parties through our platform. We cannot explore this strategy due to the technological/costs limitations. 2016 2015 Source: Business Insider. ——————— Statements from Global Banks regarding open banking: ———————
  11. 11. 11FINTECHS 2.5. THE GOLDEN AGE AND THE POTENTIAL GROWTH The potential of Fintech within the industry is huge. Goldman Sachs estimates that in the upcoming years, revenue of up to 4,7 trillion USD will migrate from banks to new companies in this sector. According to the same study, 33% of millennials believe they will not need a bank. In Brazil, the overview is warming up. As per a survey released in February 2017 by FintechLab, created by the innovation consulting company Clay to monitor the sector and encourage the market, over 200 initiatives emerged in the country last year. The number of mapped Brazilian Fintech backers increased, from 54 in 2015 to 244, according to the last published report. It is estimated that, by the end of 2016, these companies will have received over 1 billion BRL in investments. The birth of associations, accelerators and investors, followed by the attention towards regular origins, is helping the ecosystem become more structured. The sector of payments remains a major part of the initiative: 32% of the total. There are three main niche sectors now: payment management, pre/post-paid payments and customers. In the Latin American Fintech scene, Brazil takes the leading position. It is the country with the highest number of initiatives, way ahead of Mexico, who have gathered 158 companies taking second place. In all big Latin American markets, the payment sector is dominant due to the expansion of e-commerce and the growth in the number of internet and smartphones users. FintechLab also performs as representative sectors in the following regions: loans in Mexico and Colombia, financial management in Argentina and crowdfunding in Chile. ——————— “In Brazil, the number of mapped Fintech backers increased, from 54 in 2015, to 244 in 2017. Last year alone, there were 200 new initiatives”. ———————
  12. 12. 12FINTECHS 2.6. THE IMPACT IN THE FINANCIAL SECTOR: THE BANK AS A PLATFORM One of Bill Gate’s statements has become a classic of the Fintech entrepreneurship while perfectly summing the needs for the future: “We need financial services, not banks”. The list of priorities includes improvements to the usability and the consumer experience, speeding up operations and simplifying processes. All of them are connected to the 4th strike in the evolution of banks; the one we now live in. 1st Strike 2st Strike 3st Strike 4st Strike 1960 1990 2010 2017 ——————— The bank evolution in four strikes: ——————— Traditional banks Internet banking Mobile banking Seamless banking 300 years later 20 years later 7 years later High Friction Selection of Services 100% Services Exclusive services by interface
  13. 13. 13FINTECHS We are currently living the moment of integrated, continuous and non- stop banks, or rather, banks simply as platforms. Aware of this shifting, giants of the Brazilian financial market have started to change their paradigms and diversify their investments. Banco do Brasil has opened an innovation lab in Silicon Valley, California. Itaú has founded Cubo in São Paulo, a co-working space that gathers startups focused on technology. MasterCard has adhered to the initiative as a partner. Bradesco has launched the InovaBRA, an acceleration program for startups with focus on relevant business models and services that consumers are currently exploring. Not far behind, Caixa Econômica Federal has structured an internal department of innovation and has established partnership with the NGO Artemisia to develop an acceleration program focused on companies that promote financial inclusion of the classes targeted as C and D. A great turnaround in Brazil, and in Latin America by extension, happened in April 2016, when the Central Bank started to allow the opening of checking and savings account through the internet, saving the people of Brazil from going to a bank agency in order to achieve this. At the occasion, the Central Bank announced that the standard changing was aimed at optimizing processes in the banking system. Coming into play were 100% digital banks, with no physical agencies and an infrastructure placed in the cloud. • ——————— “A big change happened in Brazil in 2016, when the Central Bank allowed the opening of bank accounts through the internet”. ———————
  14. 14. 14FINTECHS 3.1. MOBILE DISRUPTION “It was a simple fact, but it changed all the financial sector. It was when the Central Bank allowed people to open checking accounts though their mobiles. Everything changed”, said Guga Stocco, Strategy and Innovation advisor and one of the most renowned specialists regarding the Fintech project in the Brazilian market. On Fintech, every service can be accessed via mobile devices. The company’s stake on open banking with APIs has opened to the market. According to Stocco, the convergence of these two disruptive forces explains the revolution in banking: Fintech + Mobility. “Besides this combination, agility is needed. In the current industry, one year is equivalent of 30 years in the past.” The bank was made for the mobile phone, he states. “A smartphone contains a camera, geolocation, biometry and it is always with the client. The mobile takes the transformation of the financial sector to another level. We’ll connect the mobile phone to our cars and speak with the bank, we’ll plug it into a TV set and access a dashboard of investments.” 3. FINANCES IN THE PALM OF YOUR HAND ——————— “Fintech concentrates financial services on mobile devices and bets on the open banking concept”. ———————
  15. 15. 15FINTECHS ——————— “According to Febraban’s research, in 2015 internet banking and mobile banking represented 54% of bank transactions in the country”. ——————— 3.2. A NEW RELATIONSHIP WITH THE MONEY The adoption of technology in the financial world is constantly growing in Brazil. According to research in 2015, conducted by Febraban, (Brazilian Banks Federation) internet banking and mobile banking represented over half of the bank transactions in the country. With the mobile boom and the advancement of technologies adopted by the financial sector, it is possible to observe a new relationship between people and banks. More than that, this kind of “marriage” also starts to create a new relationship: the one between the consumer and their money. One of the biggest cases of Fintech’s Revolution is the M-Pesa, launched in Kenya by Vodafone. It is now widespread in other countries such as South Africa and Afghanistan. The service allows transferring resources, making payments and withdrawals by te mobile phone, providing banking services to millions of people while decreasing the “bankless” rate. In Brazil, according to McKinsey Global Institute research, 32% of the adult population does not have a bank account and 53% of the small and mid-range companies have no access to credit, an example of success is the Maré Bank. Created to encourage the local economy and to offer better financial services to the residents of the Complex of Maré, one of the largest favelas in Rio de Janeiro, the platform allows making payments and money transfers by use of the smartphone. In 2017, we are expecting the first public opening of Amazon Go, a supermarket that is currently in its testing stage in Seattle, USA, serving the Amazon employees. Jeff Bezos’ company, that has previously revolutionized different industries, built an intelligent system of physical
  16. 16. 16FINTECHS shopping that dismisses payment counters, cash or credit/debit cards (besides the waste of time). Even the mobile phone itself is only necessary until the arrival at the store: the client should access the app to login and select the products he/ she wants to acquire. It is possible to return the items to the shelves, in case of giving up or walk out of the store with them. At that moment, the purchase is finalized and the billing is made on the user’s account. The involved technologies are the same used on autonomous cars: Artificial Intelligence, Machine Learning, proximity sensors and computer vision. The invisible payment is one of the main current tendencies and has had an impact on a series of different industries. One example is Uber: when the ride is over, the individual is billed on the registered credit card, a digital invoice is received and that is it. Associated to the behavioral changing of the consumers, the expectation is that as the increase of the inclusion of smartphones pushes, in a decisive way, so will the solution of frictionless payments. By 2021, it is expected that the number of transactions without any contact between machine and card double in the whole world. 3.3. FINTECHS AND MOBILE MARKETING “Mobile is the backbone of Fintech and for this reason, they have the obligation to use it for marketing in a very daring way", says Paulo Martinez, Founder and COO (Chief Operating Officer) at Agência Ginga. Advertising is the ignition that Fintech needs to generate credibility and strength to other brands. "The mobile's unique character allows them to work with geolocation and behavioral context generating empathy, affinity and an infinite number of occasions to reach consumers in a completely personal way.” ——————— “The invisible payment is one of the current tendencies that causes an impact on different industries”. ———————
  17. 17. 17FINTECHS Its implement require the necessity to act on the spot, in both the right context and place. TV campaigns must be in consonance with digital platforms, because in this new retail market, you need simply to download an app and register - the conversion is 100% digital. Everything needs to be monitored and measured in real time. “It’s not about traditional measuring, you can’t measure the brand awareness separately from the performance. It’s important to implement attribution, to have KPIs in real-time. It’s to bring the startup model to the digital.” At Ginga, the teams know, for example, how much TV ads increase searches and how these searches relate to the increased amount of accounts being opened. Martinez says that, during a TV campaign, the mobile access ranges between 85% to 90%. “It is the confirmation of the behavior of watching TV, holding a mobile phone and reacting to it in real time”, he highlights. Fintech has strong brand competitors, a few hundred with millions of clients. In terms of image, the biggest challenge is to promote knowledge and empathy, besides transmitting security and credibility. “The consumers complain about banks and telecom companies, but in these sectors, it’s difficult to shift. And, when they shift, they shift to another established player. As the product is innovative, it’s fundamental to work on the whole path, from brand awareness to conversion”. • ——————— “In terms of image, the biggest challenge of Fintech is to promote knowledge and empathy, besides transmitting security and credibility”. ———————
  18. 18. 18FINTECHS 4.1. TECNOLOGIAS In this sub-chapter, we will introduce the main technologies related to the Fintech universe. API Application Programming Interface defines an interface model that allows interaction with different systems or applications. Through them, third parties can access information in a safe way and develop their own solutions. Apps that connect to Google Maps to offer their services, are an example. In the financial market, APIs sustain the open banking model, connecting financial institutions to companies or to Fintech startups. To make information available through APIs, the corporations need to redesign their technological architecture or create new layers of complementary interface. Blockchain It is the name given to each register of funds transference made on a 4. INNOVATION AND OPEN BANKING ——————— “The APIs sustain the open banking model, connecting financial institutions to companies or to Fintech startups”. ———————
  19. 19. 19FINTECHS ——————— “Around 80% of the global banks are already working on blockchain projects, the digital tool behind the Bitcoin”. ——————— decentralized system, regardless of a central regulator entity. The system is based on sophisticated algorithms of encryption, which assure the authenticity of the confirmations. In 2016, blockchain was presented as one of the most innovative and progressive technologies of the financial industry during the World Economic Forum. Around 80% of the global banks were already working on blockchain projects, the digital tool behind the Bitcoin and its promises to execute functions such as register, compliance and financial transaction verification. Robo Advisors The robo advisors are financial consultants that work with very little human interaction, basing their analysis on algorithms. According to the client’s risk profile, they make investment recommendations. The technology is democratizing the access to this service, because the fees charged are more accessible to the consumers. Besides that, it starts to change the way people make investments. Artificial Intelligence Products that hold AI replace human decisions for advanced technology. They are based off of complex algorithms and Machine Learning systems. They learn and grow the more they are used. Thus, they can recognize patterns and offer predictions. A simple example of AI is the virtual keyboard of a smartphone that suggests the next word to be typed by a specific user. Internet of Things This includes cars, fridges, TV sets and wearables, such as watches, bracelets, jackets and glasses. Everyday life objects, connected and capable of processing complex information, start being used to offer new products and services. In terms of evolution, the IoT is connected to innovation in areas of AI, nanotechnology, wireless sensors, and others.
  20. 20. 20FINTECHS Input of the “bankless” in the financial system through platforms and apps that facilitates the opening of checking and savings accounts. Make investments based on the recommendation of a robo advisor. NFC is embedded in bracelets, watches and rings and is used to make payments.Integrate Chatbot with popular platforms to communicate with the consumer, such as Facebook Messenger and the Amazon assistant. Inlay in car apps that make payments, point out the necessity of filling the tank and indicates the nearest gas station, using technologies such as bluetooth and QR codes. Collect information about clients and track secured items via wearables, connected devices and installed adhesives. Once the access and payment move through the mobile phone, technologies such as facial and voice recognition and GPS for authentication are used towards prevention against frauds. Use of the mobile wallet to pay bills via Near Field Communication (NFC) technology, available on mobile phones and other mobile devices. Go shopping at a physical store while using check-out in an app on the mobile phone. Integration with other platforms to make payments and financial transferences. A few examples: Facebook Messenger, WhatsApp, WeChat (the biggest mobile social network in China). Besides these apps, Fintech is focused on transactions between consumers and commercial institutions. Offer assistance to the clients using Chatbots technologies and automatized service interface. With the introduction of Artificial Intelligence, the interactions become more sophisticated. 4.2. NEW SERVICES Meet the movements and services that the Fintech Revolution made available.
  21. 21. 21FINTECHS 4.3. DATA AND SECURITY The advance in the innovation market also enlarges the security in the financial system, as per specialists’ analysis. Now, banks can adopt different procedures to fight fraud and money laundering: the use of GPS to get the client’s location, the analysis of the time using the e-mail account, facial and voice recognition, digital certificate or the demanding of specific movements to process the transaction. Insurance is another sector that will benefit from the adoption of technologies. In June 2016, BTG Pactual, the biggest investment bank in Latin America, launched an online investment platform, the Digital BTG Pactual, focusing on the high income retail market. The idea is to make the investment accessible to more people and reach 200,000 clients within three years. “We offer the same products with competitive fees because we don't have the huge costs of big retail banks. We showed that it is possible to invest, starting with three thousand Reais, not five million”, says Marcelo Flora, associate responsible for the project. “I used to say that we are a startup inside the institution”. Without physical agencies, the platform uses Machine Learning, robo advisor and Big Data to offer innovative services and to optimize processes. The opening of an account is 100% digital. “The mobile phone holds the geolocation of the individual and identifies where he/ she spends their nights. It’s harder to fraud this technology than to falsify a proof of residence document. With Big Data, data from third party companies, the client types the Individual Taxpayer’s Registry and I can check, with a higher degree of reliability, in which address this individual lives”, mentions the executive. BTG’s digital area is expanding to Colombia and Chile. Flora states that the goal is not to innovate by innovation, but to improve the client’s experience. “We’re living in real shifting times. It’s more than just Fintech Revolution, because it involves all the industries”. ——————— “Thanks to the advent of innovation, banks can adopt different procedures to fight fraud and money laundering”. ———————
  22. 22. 22FINTECHS 4.4. CHALLENGES AND FUTURE We cannot lower the Fintech movement to the fight of “established banks versus disruptive startups”, says Marcelo Bradaschia, FintechLab founder. “Not all Finetech initiatives compete with banks; most of them want to gather new solutions to offer them. And a series of companies are positioning themselves: at Starbucks, the second most profitable product is the company’s pre-paid card. WeChat moves more money in the Asian market than the PayPal does”. For him, the biggest challenge of Fintech industry is the fact that the financial market is extremely concentrated, with the dominance of few large scale corporations. “There is a barrier to the new players. It’s not a coincidence that the first area that evolved was the payment sector, the one that permeates all the industries”. But important agents are contributing to its growth. The regulations change is one of them. “It’s about a regulated market, but that is what brings security. Why doesn’t USA reference the adoption of Fintech? Because each state has its own laws”, he explains. Another thing is demand. “People are becoming digital”, sums up the specialist. According to a study made by FGV-SP (Fundação Getúlio Vargas de São Paulo), Brazil will have one smartphone per person by the end of 2017. • ——————— “The biggest challenge of the Fintech industry is a financial market extremely concentrated, with the dominance of few corporations”. ———————
  23. 23. 23FINTECHS ― API (Application Programming Interface) Application Programming Interface is the expression that names a set of programming methods and patterns to access an app or platform. An API allows the connection of the app to be used with other systems. When making an API available, the company allows third party companies to develop solutions for them. ― Big Data A set of data so huge and complex that it cannot be treated with traditional data processors. Associated to technologies such as Machine Learning and sensors available on mobile phones, it is capable of identifying, for instance, behavioral traits and adaptive profiles. ― Biometrics A process that detects and registers, through a device or electronic system, unique characteristics of a person to identify his/her identity. ― Bitcoin The first virtual currency of distributed management in history, created in 2009, when its source code was made available as open-source to the market. ― Blockchain A digital tool that allows the execution of functions such as registering and financing transaction verifications in decentralized systems. 5. THE FINTECH INDUSTRY FROM A TO Z
  24. 24. 24FINTECHS ― Chatbot When a chat uses a “bot” (short for “robot”), a system equipped with Artificial Intelligence allows interaction with the client and consumers through messages. ― Cryptocurrencies Encrypted digital currency. The Bitcoin is an example. ― DLT (Distributed Ledger Technology) A set of initiatives connected to decentralized systems, that can be private or public. ― Insurtech Insurance + technology. The expression names companies and startups that develop services and products focused on the insurance sector, based on technology. Currently, it is one of the most promising areas of the Fintech movement. ― Internet of Things The Internet of Things (IoT) is the technology that connects everyday electronic devices to the internet, such as household appliances, electroportables and means of transportation. ― Machine Learning Technology that allows machines to learn new behaviors while they are being used.
  25. 25. 25FINTECHS ― Agile Methodology A set of methodologies used to develop software that allows fast adaptations and modifications. ― Mobile Money Expression used for financial services made through mobile phones. ― Mobile Wallets Mobile wallets are systems that keep and encrypt data from credit cards and other means of payment on mobile devices. ― NFC (Near Field Communication) Technology that makes payment available when you bring two devices close to each other. ― Cloud The cloud platforms, in the cloud and storage of your information in remote servers and can be accessed through internet. ― One-click-buy One-click-buy dismisses the filling out of forms and the repetitive sending of information for online shopping.
  26. 26. 26FINTECHS ― Open Banking A model of bank that opens its digital platform to other companies or startups so they can develop new solutions and functionalities. The connection between these two components happens through APIs. ― Invisible Payments Also known as frictionless or contactless payments. When you make a payment with your mobile phone, you use an electronic device or an adhesive with no need for a card or cash. Uber and SunPass are examples of invisible payments. ― RFID Radio Frequency Identification is the technology that identifies objects using radio waves. ― Robo Advisors The robot investors are consultants or automatized managers that use algorithms to advise and place financial investments. ― Seamless Bank A route that connects its services to products and apps, allowing the client to have access to them at any time and place. ― Wearables Wearable products, such as clothing, glasses, watches and bracelets that pair with devices capable of generating data and connecting to the internet. •
  27. 27. 27FINTECHS 6. INTERVIEW: GUGA STOCCO, ADVISOR OF STRATEGY AND INNOVATION THE NEW FINANCIAL REVOLUTION Is it already possible to evaluate the impact of Fintech and the open banking movement in the financial sector of the developing markets? In Brazil, the Central Bank authorized the consumer to open and close online bank accounts, it facilitated several processes and also the portability of accounts. The portability has already caused an impact in the telecom sector, for instance. What we see now is that the banks are apps - and they have to play by the apps rules. They need to be faster, they need to be constantly updated with technology, they need to please the client in order to not be deleted. ——————— “The banks are apps now - and they have to play by the apps rules”. ———————
  28. 28. 28FINTECHS In a few years, we will see banks becoming extremely responsive companies, because the level of demand of the consumer has changed. If the iPhone doesn’t make innovations, they lose market share. If an app is not updated, the audience leaves it behind. What motivated the decision of investing in this industry? We are in the middle of a transition period, from “bank centric” to “user centric”. New technologies already exist in banking, but not at the banks. This is the “Uberisation of banks”: innovation and technology causing disruptor, making processes easier, enlarging the competition in the market, improving the consumer’s experience and showing that it is necessary to treat them well. In this new industry, feelings are still divided: I am a credit card, I am a bank, I am Taco Bell. But the links are starting to connect and, when they connect, the movement gets powerful. It started as a “black swan”, people thought it would be just a buzz… But the financial institutions opened their eyes. Anyway, it is about a difficult change because it involves culture, the way of working and the professionals’ skills. Yet, at the end of the day, what remains is the BlackBerry effect. Why hasn’t the Blackberry made the iPhone? The Fintech revolution happens especially on mobile platforms: it was the mobile progress that allowed the focus on financial services in the palm of our hands. How did the combination of these two forces change the relationship between people and the bank and people and their money? The mobile will be the remote control of people’s financial life. And cash will die. It can be stolen, it is not interesting to the economy. With your finger, today, you can make a bank transference of money. With the adoption of smartphones as a first screen, within five years, many countries in the world will no longer have cash. People will have digital credit and money. Another clear tendency is the shared economy, ——————— “In the upcoming years, banks will offer services on smart TVs, cars and smart fridges”. ———————
  29. 29. 29FINTECHS exemplified by companies like Uber and Airbnb. We are reaching a moment that people won’t need to buy things; in the near future, experience will prevail over assets. Think about the difference between the millennials and the baby-boomers. Do you think a millennial would prefer to buy a house or to travel the world via Airbnb? How do you project the future of the financial sector? The bank is on its 4th evolution phase. We had the bank agency, the internet, then the mobile - where people started to live, literally, with their bank 24 hours a day. Now, the bank is everywhere. The 5th strike will be the blockchain which will decentralize everything: you can issue your own currency, for example. In 2020, it’s expected that 20% of the internet access won’t happen through a physical device. We’ll have virtual reality, augmented reality, robotics, holographic technology, artificial presence. We’re starting to build this future. ●
  30. 30. 30FINTECHS Do you want to be part of MMA? Get in touch with us! C L I C K H E R E MMA LATAM TEAM Managing Director LATAM Fabiano Destri Lobo fabiano@mmaglobal.com Director Business Development & Operations LATAM Thais Schauff thais.schauff@mmaglobal.com Argentina Soledad Moll soledad.moll@mmaglobal.com Brasil Graziela Mazzer graziela.mazzer@mmaglobal.com Colômbia e México Thais Schauff thais.schauff@mmaglobal.com ― MMA Is the main leading non-profit trading association of the mobile industry in the world, having over 800 associated companies in approximately 50 countries. Our associates come from every corner of the Mobile Marketing ecosystem including, brand marketers, advertising agencies, mobile technology platforms, media companies, operators and others. MMA’s mission is to accelerate the transformation and innovation of the marketing through mobile devices, promoting business growth with a stronger and closer consumer engagement. ―

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