More fintech solutions are reaching the market
This week, ING started using AI-powered tooling to price bonds and Nordea Bank initiates a pilot of an open banking platform, while Vanguard has announced to run its indexing business on the blockchain. As more established corporates start embracing fintech solutions, we observe a clear shift where momentum is driving faster modernization of our financial services industry.
As a large chunk of the fintech startups focus on improving small parts of the value chain within finance, an important consideration will always have been whether the reaction of the incumbents currently operating in the market. Large banks and insurers have a trusted brand and a sizable customer base, making barriers to entry in the financial services industry particularly high for new solutions providers. The pace of incorporating these new solutions has however picked up, although we still observe a preference at banks to prioritize their own inhouse-build solutions.
Included in yesterdays Fintech AM, Dutch bank ING has started working with a new AI-tool called Katana, which helps traders visualize the historic prices and price movement of the relevant products, helping traders make a decision for the near future. So far, the solutions has been tested with ING’s Emerging Markets trading desk in London, resulting in a 25% reduction in trading costs.
Norwegian bank Nordea is moving ahead with an Open Banking API, preparing itself for the PSD2 environment it will have to operate after the 3rd of January, 2018. The Open Banking API will open up the banks’ customer data to trusted third parties, opening up a new range of products to its banking customers. During the trial face, Nordea will allow a select group of third parties in Finland to operate and test the platform, before moving on to other markets.
Mutual fund firm Vanguard will start running index data for its funds on the blockchain, as the technology continues to expand its role in financial services. The company will begin using smart contracts, a feature that can better automate data, developed by blockchain startup Symbiont
Although ING’s solution is still build inhouse, the trend of increased enthusiasm from incumbents to embrace new to upgrade current processes to either achieve cost benefits, or improve the customer experience of its services is promising for startups working on the value chain.
By Lars van den Enk, Research Analyst for Holland FinTech