Interesting International Initiatives in Financial Services

Butterfly Effect Intelligence™

August in Review 2018

The following report captures international innovations in the

Financial Services industry, including financial products, advertising,

sponsorships, promotions and distribution, with a focus on

technological innovation.

This month saw the following trends emerge:

Reinventing the Old: Banks, investment firms and insurance

companies have seen their businesses undergo accelerating change in

recent decades, driven in part by technological innovation and rapid

digitalisation. The old way of conducting business is out the window,

and if your company has no unique proposition to offer consumers, it

will get left behind. From bank cards crafted with a diamond drill bit

to bringing automation to insurance regulatory reporting via

blockchain, the reality is that the financial service industry needs

more than just new products – it needs a new paradigm.

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The Digital Revolution: Everywhere we look, digital transformation

is at the top of the agenda. Publications and consulting firms all have

views on how digital transformation will rewrite the future of

industries, especially the future of the financial services industry. One

powerful way to meet today’s challenges is to move toward digital

transformation, a strategy that many financial services providers are

undertaking.

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KEY FINDINGS

Healthcare On-Demand: Today’s health sector is going digital.

This is a fact! The global healthcare industry has undergone a sharp

and drastic period of change led by digital innovations. Advances in

technology has infiltrated the health sector and it is now beginning

to have a growing influence on both doctors and patients.The age

of the ‘On-demand’ consumer (also known as the “we want it now

generation”) has inspired a lot of discussion in recent years. The

future of healthcare, in combination with the “we want it now

generation”, will only be a few clicks away.

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The Era of Open Banking: Disruptive EU and UK regulatory

changes are forcing the banking industry to allow access to their

customer data, creating significant opportunities and challenges for

all players. The digital economy is changing the banking industry.

Banks are no longer only competing against banks, but other

financial services providers alike. The “Urbanisation” of banking is

coming and with it, platform-based business models that will see

banks increasingly provide services beyond banking. Through

partnerships, collaboration and embracing new technology such as

AI, machine learning or blockchain, banks are reimagining their

business processes to better serve their customers.

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Banking on the Young: Increasing competition in the banking

industry has made it more and more important for banks to

address customers’ needs better so they can increase customer

satisfaction and loyalty. An important market segment for banks is

the youth market. This market has become very desirable because

of the increasing number of young people and their relatively

increasing assets. The youth of today, is the future of tomorrow, so

why not make them your customers?

See pages ,

Rise of the “Smart” Insurance: The insurance industry has

traditionally been a very conservative industry, and this has been

reflected in the way it has used information technology. However,

this conservatism is about to change as the market is increasingly

offering a “smart” solutions that offers greater convenience, instant

payouts, fewer delays and value, tailored to suit individual needs.

See pages ,

Moving with the Times: Imagine a world where selling and

growing cannabis for medicinal purposes is not only encouraged

but insured… A world where profits are not only measured in a

quantifiable monetary measure, but in more sustainable terms such

as employment, social cohesion or the preservation of nature and

the environment… Brace yourself – that vision is currently making

its way to reality.

See pages

1

HSBC Life launches new campaign (Hong Kong)23 August 2018

HSBC Life, HSBC’s wholly-owned life insurance business, has launched a new comprehensive marketing campaign that emphasises the company’s determination to be a life-long partner of customers. Called Because a promise is a promise, the campaign consists of a 30-second ad, a 60-second ad and a social media and massive out-of-home marketing plan. Through the campaign, the life insurer aims to demonstrate that it is not just about making promises, but the effort and perseverance needed to realise that promise over time. The ad follows an endearing story of a grade-school boy, who makes a promise to protect an egg for two weeks and then brings that promise to fruition through perseverance and dedication – much like what HSBC Life aims to do for its customers.

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Revolut launches Metal debit card that gives cashback in cryptocurrency (UK)22 August 2018

Europe’s billion-dollar FinTech “unicorn” Revolut, announced the launch its most exclusive card yet and its crafted with a diamond drill bit. Called Revolut Metal, the card is designed from a single sheet of reinforced steel and weighs three times as much as a plastic card. Revolut Metal costs £12.99 a month, or £120 a year and offers a host of benefits, including cashback in Bitcoin, Ethereum, Litecoin, Ripple and Bitcoin Cash. The launch of Revolut Metal is also an important step towards the company generating additional revenue, especially as it prepares to launch a commission-free trading platform and expand the business into North America and Asia later in 2018.

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Reinventing the Old

2

IBM brings blockchain to

“antiquated” insurance

compliance processes (U.S.)

16 August 2018

IBM is collaborating with the

American Association of Insurance

Services (AAIS) to streamline

regulatory requirements and

reporting, as well as bringing

automation to insurance regulatory

reporting via blockchain. Together

they have launched openIDL, an open

insurance data link that is built on

the IBM Blockchain and based on

Hyperledger Fabric. With openIDL,

AAIS is updating an antiquated

compliance process and pioneering

an advanced method where insurers

can contribute data directly onto a

secure blockchain platform, to

satisfy state regulatory

requirements. Simplifying the

process for insurance reporting

using blockchain will create greater

efficiency and provide the industry

with new insights that will benefit

consumers.

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Gig economy start-up launches pay-as-you-go public liability cover (UK)24 August 2018

Zego, the London-based provider of pay-as-you-go insurance, has launched public liability insurance, the company’s first insurance product outside of the motor space. This move into public liability will provide cover for Britain’s 5 million freelancers and self-employed workers, in over 80 professions on a pay-as-you-go basis. Customers can top up their insurance payments through an app, which calculates the amount to be paid by a customer for working a certain amount of time in a particular job. The company has partnered with insurance group RSA to offer consumers personalised insurance tailored to fit their working needs.

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Reinventing the Old

3

Healthcare On-Demand

Ping An Good Doctor and Grab form joint venture to deliver transformative O2O healthcare solutions (Asia)16 August 2018

China’s leading one-stop healthcare services platform, Ping An Good Doctor and Grab, the leading O2O platform in Southeast Asia, announced that they will be establishing a joint venture company to deliver transformative online healthcare services in Southeast Asia. The joint venture, the first of its kind to operate regionally, will provide an array of integrated medical services such as AI-assisted online medical consultations, medicine delivery and appointment bookings through an online platform. The tie-up will utilise GrabPay, a leading digital wallet serving Southeast Asia, to complete the transaction. Through the joint venture, the two companies aim to open up access to high-quality and affordable healthcare in Southeast Asia, as it will be the world’s fourth-largest economy by 2030, facing rapidly growing healthcare needs.

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Reinventing the Old

Goldman Sachs launches UK retail bank “Marcus” 24 August 2018

Wall Street titan Goldman Sachs has moved into retail finance in the UK as it launches a new savings bank. The new bank, named “Marcus” after Marcus Goldman – the company’s founder, will go live in September 2018 after Goldman’s 6 500 London staff were offered the chance to open accounts on 23 August 2018. The bank is opening its doors to less affluent consumers with an online access account that can be opened with a minimum deposit of £1. The launch of “Marcus”, which currently has 150 employees in the UK, comes as Goldman Sachs seeks new sources of income to offset the squeeze of tighter regulation on profits. It is a major change of direction for Goldman Sachs, which has long focused on its investment bank. Goldman has already launched its “Marcus” account in the US, bolstering its retail deposits, diversifying its revenue streams and taking pressure off regulatory stress tests.

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4

UK regulators are aiming to increase banking competition15 August 2018

The UK's banking revolution is set to continue at pace with two of the country's regulators, the Financial Conduct Authority (FCA) and the Competition and Markets Authority (CMA) introducing a new financial comparison rule to improve competition for consumers. This new rule will require UK banks to provide better information on the quality of their services to customers. For instance, lenders will be required to reveal operational and security incidents, as well as information on the willingness of existing customers to recommend their services to others. From 15 February 2019, the FCA will also require financial providers to publish quarterly information on how long it takes them to open a current account and how long it takes them to replace a debit card. The introduction of the new rule by the FCA and CMA is further evidence that the UK government is intent on providing a supportive regulatory environment for new entrants.

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The Era of Open BankingHealthcare On-Demand

Yolo introduces on-demand Pet Insurance (Italy)02 August 2018

Those who own pets can relate: they are much more than just pets, they are family, and just like family, we would do anything to ensure they live a long and healthy life. But at what cost? Enter Yolo, an Italian-based insurance startup that distributes products of major international insurance groups on digital channels. The company recently launched Yolo MiFido, a new on-demand pet insurance product designed for the 14.5 million cats and dogs in Italy. The new product allows pet owners to pay monthly, with the option to turn coverage on or off via the Yolo website or app. The cover reimburses pet owners for surgeries, funeral expenses, search costs in case of a lost pet and medical treatment related and non-related to an accident or illness.

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5

Starling to help RBS develop a digital bank (UK)28 August 2018

Royal Bank of Scotland (RBS) has enlisted the online-only challenger Starling, to assist in its secret project to build a standalone digital bank. According to a shareholder letter from Starling chief executive Anne Boden, published as part of Starling's annual results, Starling has signed a contract to provide payment services to support new initiatives at RBS/NatWest. The deal with RBS is an example of its new platform-as-a-service offering, an API-driven product whereby it provides its underlying payments infrastructure to other institutions looking to establish a digital banking service.

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The Digital Revolution The Era of Open Banking

Investing app Moneybox announces Open Banking integration with Santander (UK)02 August 2018

Micro-investing app Moneybox has announced its integration with Santander, which will now allow Santander customers to invest their spare change using the Moneybox app. The integration will allow Santander customers to connect their accounts to the round-ups feature, which lets users save through a combination of card transaction round-ups, weekly deposits, payday boosts and one-offs. Customers can choose from three simple starting options: cautious, balanced and adventurous, which invest in tracker funds run by Vanguard, Henderson and BlackRock.

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6

The Digital Revolution

MetLife pilots blockchain-based health insurance solution (Asia )22 August 2018

Metlife Asia has begun testing the world’s first automated insurance solution using blockchain technology, to offer pregnant women financial protection in case of gestational diabetes, without them ever needing to make a claim. The experimental product, known as Vitana, is Singapore’s first dedicated insurance product for gestational diabetes and was developed by LumenLab, the innovation centre of MetLife Asia. Vitana securely connects to customers’ electronic medical records via their mobile device to issue a policy within minutes, and triggers an automatic payout upon diagnosis. In addition to an enhanced experience, Vitana offers customers improved data security as it performs parametric underwriting on the customer’s mobile device, meaning the insurance company doesn’t require access to the underlying medical data to confirm insurability.

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OKO launches next generation crop insurance (Tel-Aviv)10 August 2018

OKO, a newcomer in the world of crop insurance, is aiming to disrupt the market with the launch of its weather-based index insurance that uses satellite technologies for risk-assessment, claim verification and mobile payments. OKO uses the latest technology in satellite imagery and weather forecasting to simplify and automatise claim management, thus creating low-cost crop insurance for smallhold farmers who have no bank accounts and depend on rain for their agriculture.

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7

Albaraka Türk launches mobile-only banking service for Europe's Muslim community (Germany) 02 August 2018

Albaraka Türk, a leading organisation of interest-free banking in Turkey, has unveiled its insha app in Germany for a branchless and digital banking experience. Available in the Apple App Store and on Google Play, inshafeatures a document-free account opening process and comes complete with a debit card. In addition to financial products, the app offers a range of Islamic-friendly services including a Zakat Calculator and a “Nearest Mosque” locator. Account holders will be able to withdraw money from ATMs up to three times per month without paying a withdrawal fee, make up to ten free money transfers in SEPA (Single Euro Payments Area) and use the insha debit card free of charge. The launch forms part of the bank’s strategy to enter the European market.

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Ping An unveils smart city project called 1+N (China)18 August 2018

Ping An Insurance introduced a range of new initiatives to help create smart cities across the country at the fourth China Smart City International Expo, which took place in Shenzhen from 21-23 August 2018. The insurance and personal financial services company was one of the expo’s key organisers and launched its new 1+N platform as part of the smart city initiative, which aims to cement Ping An’s status as a global technology and financial services powerhouse. The 1+N smart city integrated platform is based on four core technologies: intelligent cognition, AI, blockchain and cloud technology. It strongly supports 10 core smart city industries including smart administration, insurance, security, transportation, port, financial trade, finance, education, healthcare, real estate, environmental protection, and elderly care. Ping An has already begun providing cloud-hosted medical insurance, finance, education and real estate services in over 200 cities in China.

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The Digital Revolution

8

Amazon looking to launch UK insurance price comparison website16 August 2018

Amazon.com is considering a venture into the UK’s financial services sector by setting up an insurance price comparison website and is in talks with top insurance firms to see if they would contribute products to the comparison website. A UK insurance site would also build on Amazon’s existing products in Europe offering extensions to manufacturers’ warranties, a service known as Amazon Protect. A comparison site would let Amazon give its customers access to insurance from a variety of providers and place the company in a unique position to make a move into the insurance market.

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The Digital Revolution Rise of the “Smart” Insurance

Allianz Global Assistance Launches SmartBenefits for travellers (U.S.)27 August 2018

Allianz Global Assistance has debuted its new SmartBenefitsaimed at adding value and convenience. To stay ahead of consumers' evolving needs, Allianz Global Assistance has re-engineered its travel protection benefits and added coverages to give customers even better financial protection and emergency medical coverage, in the event of travel disruptions, while making it faster and easier to get their claims paid. Thanks to proprietary technology and new automated claims capabilities, Allianz Travel Insurance customers can now receive proactive claim payments within minutes of a qualifying flight delay. Additionally, on certain plans, the company’s new fixed-amount payment option allows travellers to file other travel delay and baggage delay claims with no receipts.

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9

Rise of the “Smart” Insurance

AXA and Vodafone Ukraine launch SMART TRAVEL03 August 2018

AXA and Vodafone Ukraine have partnered to launch SMART TRAVEL, a travel insurance policy that can be instantly activated via mobile. Travellers can insure themselves and up to four others, to receive medical coverage up to €30 000. Payment is made from the user’s mobile account and consumers only pay for days outside of Ukraine. The policy includes cover for emergency first aid, hospital care, provision of emergency ambulatory care, emergency dental care, medical evacuation repatriation and the transfer of urgent messages related to the insured event.

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Banking on the Young

OCBC Bank launches robo-investment service aimed at millennials (Singapore)28 August 2018

Oversea-Chinese Bank Corporation (OCBC) has joined the growing trend of financial services companies launching robo-advisors, with the launch of OCBC RoboInvest. The product, developed together with Singapore FinTech, WeInvest is meant to be as seamless as picking a digital music playlist. For OCBC, the tie-up is a bid to democratise wealth management, by offering products to a wider group of potential clients in a more efficient, convenient and more personal way. Targeting young and tech-savvy investors, OCBC RoboInvestrequires an initial investment amount of just S$3500 and uses algorithms to monitor each of the 28 available portfolios automatically and periodically re-balances assets, if there are economic and market movements that may impact a selected portfolio.

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10

Banking on the Young

JPMorgan to launch low-cost digital trading platform for young investors (U.S.)27 August 2018

As pressure mounts on Wall Street to lower trading fees, JPMorgan Chase is launching a new retail investing service that will offer free trades to customers. Called You Invest, the new digital investment service will be available to everyone using JPMorgan's mobile banking app or website, and users will get 100 free trades in their first year. The service is targeting both millennials who have never invested before, as well as customers who don't currently invest with the bank. Hooking millennials has been a big focus of JPMorgan as it deploy its large technology budgets to compete with the array of low-cost providers available in the market. Users can open a You Invest account in minutes and the service will tutor them with the bank's equity research, learning how to invest in about 1 200 stocks, among other resource.

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Monzo launches account for 16-18 year olds (UK)06 August 2018

UK-based challenger bank, Monzo, announced it is making its digital current account offering available to 16-18 year olds. The decision will open up the bank to more than 1.5 million new young people. The bank said that 16- and 17-year-old customers can sign up for a Monzo bank account by downloading the app, after which they will receive a contactless debit card in the post the next working day. With more than 860 000 account holders registered and set to cross 1 million accounts before the end of 2018, Monzo has employed several strategies to grow customers, one of which is making friend-to-friend payments more convenient. Certain banking features, such as overdrafts and spending on gambling, will be blocked until customers turn 18. Once customers turn 18, Monzo will review their limits and the extent of access they wish to have.

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11

ABN AMRO launches Finance the Future campaign (Nederlands)13 August 2018

ABN AMRO, one of the biggest Dutch banks headquartered in Amsterdam, launched a new advertising campaign that aims to better familiarise commercial markets with sustainable business models. The campaign carries the message that earnings can be expressed in money but also in more sustainable terms such as employment, social cohesion or the preservation of nature and the environment. Deborah Wietzes, Marketing Manager at ABN AMRO Corporate Banking, indicated that the bank wants to highlight the opportunities it sees for combining business profit with social gains and that sustainable business models create opportunities for entrepreneurs. Advertising directs consumers to ABN AMRO’s Sustainable Investment Tool, which offers clients free advice on the sustainability of their properties and identifies opportunities to make these more sustainable.

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Moving with the Times

Hub International introduces new cannabis insurance and risk services (U.S.)15 August 2018

Hub International, an insurance brokerage providing an array of financial services across North America, has launched cannabis insurance and risk services that offer coverage for cannabis organisations to help them cut down on the risks and liabilities associated with their operations. The new offering, which will cater to medical and recreational cannabis producers, distributors and retailers, will come under the Agribusiness & Farm Specialty Practice of the US-based insurance broker. Through the new insurance product, Hub International will be offering customisable insurance solutions and risk services, which includes among others product liability insurance, crop insurance, workers’ compensation cost and safety management, and liability, directors and officers’ insurance,

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• Do you understand how your competitors are positioning their products and services to your clients?

• What are your competitors’ value propositions?

• Do you know what the key global and local financial services marketing trends and themes are?

• What unique proposition does your company offer consumers? How has it adapted to the changing digital business environment to leverage the latest technology and attract more consumers?

• Have you included the current Generation Z as part of your long-term marketing plan for the next 20 years?

• What emphasis has your company put on growing a sustainable tomorrow, where resolving social and economic issues is used as a measure of success?

SO WHAT?

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