Three Trends from #MoneyConf2016 that the Finance Technology Sector Should Watch

#MoneyConf2016 recently took place in Madrid. This landmark international event hosted main players from the financial technology sector, including banking institutions and FinTech companies, as well as financial services companies.

Several interesting ideas for the sector were proposed during the various meetings, and several of the main trends for 2016 and beyond were discussed in detail.

The main conclusion was that the decisive factor for being competitive is not technology itself, but rather knowledge of new consumer habits and behavior, as well as the ability to utilize technology to leverage this knowledge as much as possible.

Banking is Much Closer to the User

Current financial services go far beyond simple money deposits or investment advice. They have taken on the much more active role of helping the client to manage their money. For this reason, traditional processes and existing technology are not sufficient. Banking needs to understand people, namely what people want and how and when they want it, in order to offer services of added value.

In this sense, FinTech companies have a clear advantage over traditional business models, as they were created with an approach more closely related to marketing than to finance, and their services and solutions approach is completely centered on the user. However, many traditional banking institutions are still adapting offline processes to new channels and redefining value contribution in online processes.

What is the key to learning about the consumer? The answer is Big Data. Big Data systems provide increasingly more precise information and more enhanced predictions, which allow for more strategic decision-making.

The Race for Consumer Confidence

Traditional institutions do, however, have an advantage over FinTech: user confidence. Current consumers have made it very clear: They want a good user experience, and they want security, which means confidence.

FinTech companies have made great advancements with respect to user experiences, but traditional financial institutions have had much more time to build user confidence and often have a powerful brand image, which works in their favor. However, FinTech companies first have to convince the user to try their product or service. Only then can they begin to build user confidence.

From here there are two options: compete to find the ideal formula of User Experience and confidence, or create alliances between traditional banking and FinTech in order to offer the consumer the best of both models, an option that has already been applied by many financial companies.

Digital Security Using Biometrics

As was expected, the growth in the volume of business has also meant increased attacks on security, especially in mobile channels. Evidence of this channel’s growth is apparent, as online fraud via mobile devices has grown by 65%.

Fortunately, digital security systems and identity verification systems are also evolving. Even though the traditional password will not die anytime soon, trends points to biometrics playing an increasingly relevant role in the identification of the user, since it is the only system that recognizes that the user is who they say they are using their own device, whether it is a cell phone, tablet, or desktop.

But recognizing users by biometrics is not sufficient on its own for reliable verification; verification needs to be linked to an identification document. In this way, the future of digital identification points towards a system that connects biometrics with identification document validation.