Banking on Blockchain - 2020 Industry Trends in the Banking Sector
Fintech is not a binary operation. We help you to understand all of its dimensions.
Hi,
We were gone for a bit more than a week, as we’ve been setting up something special for Nextrope Insights #2 🤩. I’m Maciej Wróblewski and today I’ve prepared for you some more detailed facts and trivia about the use of Blockchain and AI in the banking sector.
Today we’ll discuss: :
🔥 Most recent trends in banking
🤖 Neobanks to watch on the market
📈 Financial data on challenger banks
🤠 Banking on Blockchain
Before we start, I’d really like to thank you for your continuous interest in our platform. At Nextrope, we’re pleased that representatives of almost all the largest VCs in Poland joined the community, and we’re happy to create the first of its kind group for fintech enthusiasts.
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Not financial advice
The information contained in this Newsletter and the resources available for download are not intended as, and shall not be understood or construed as, financial advice. We have done our best to ensure that the information provided in the Newsletter and the resources available for download are accurate and provide valuable information. However, nothing available in the Newsletter should be understood as a financial recommendation.
The hottest trends in banking - what are gonna be my bank’s new features?
To fully understand the ongoing changes in the banking sector, it’s crucial to take a closer look at current trends on the market. Based on my research, I present some of the most inspiring trends in the industry to look at in the next months:
Tech giants are willing to provide their own (or cofounded with a bank) financial services. So did Apple, working closely with Goldman Sachs on launching an Apple Card. Another example is Facebook announcing the Facebook Pay mechanism.
Banks and financial institutions provide their customers with personalized informative advice. In 2019, Huntington Bank launched its AI-based service called Heads Up, which gives the bank’s clients useful advice on managing their finances. Similar solutions are available in many other banks like Wells Fargo, Bank of America, Citigroup, and more.
Banks liaise with fintech to provide more technologically-advanced services. HSBC created a digital lending platform, which is mainly based on Amount’s solutions. American fintech - Amount, now provides many banks with its technology and is becoming a popular source of new technological know-how. HSBC will lend up to 30K USD to clients that successfully go through an online procedure. The platform created by Amount and HSBC enables their clients to receive funds as soon as the next day.
Challenger banks - fresh, small, meeting needs of those, who weren’t satisfied with longer-established banks. There are many examples of those challenger banks: N26, Chime, MoneyLion, or HMBradley. They differ a bit from the traditional ones by offering innovative and automatized services. Their main goal is clear - meeting the needs of young people used to the digitalization of most of the services that they need in everyday life.
Banks are investing in alternative core providers (providers of software solutions for banks). Banks prefer to invest in new fintechs that offer alternatives as per users’ needs to manage deposits and loan services.
Ones to be watched on the market
The market size of fintech and challenger banks is growing constantly over the years. I’ve picked some of the most interesting hot financial (🔥) services providers that we all should watch this year.
Monese is a perfect alternative for Revolut or N26. It also offers some good exchange rates, free ATM withdrawals worldwide, no fees for transfers between Monese’s users, or connection to Avios (and more!) in the app. In 2016, Monese won a prize for Best Challenger Bank by European Fintech Awards. Now, over 3000 people are signing up for Monese every day and it’s one of the most trusted banking services across Europe.
Curve is another challenger bank, aiming mainly for young people. Curve offers One Card that gives you access to rule all of your bankcards. Via Curve App, it’s easy to choose, which account will be debited upon payment. Similarly to most of the other challenger banks, “Curve gives you killer FX rates”. An interesting feature of Curve is the possibility of time-travelling - you can change a bank card you paid with for completed payments.
HMBradley was mentioned before as a challenger bank. Whereas most of the challenger banks focus mainly on free international transfers or great exchange rates, HMBradley put forward saving. It offers saving up to 3% of APY via good saving habits. It’s an innovative idea and a 3% rate is the best offer on the market.
From a financial point of view
Curve and Monese raised a similar amount of money via investing rounds - respectively 74.2M and 80.4M USD. They are well known in the industry and have been noticed by the biggest investors like Santander (Curve) or PayPal (Monese). The situation is slightly different with HMBradley. It has raised only 3.5M USD in one seed funding round in November 2019.
Monese is one of the newest UK fintech unicorns - its valuation exceeded 1.2bn USD in January this year. Curve’s value is said to be over 250M USD, but considering the fact that the last funding round valuation was 55M USD, it might be much higher soon. HMBradley’s value is much lower, but according to the industry experts, this may change due to the popularization of neobanks and extraordinary features, such as a return of a part of APY.
Banking on the Blockchain technology?
As Blockchain has recently become a real buzzword, many experts are widely speaking about the implementation of Blockchain in many types of industries. But how does this relate to reality? We’ll see. As for now, it’s already possible to notice some changes coming to the banking sector. Banks, in general, are eager to experiment with various new technologies. One of them is JP Morgan. According to the claims, it has many initiatives applying AI and Machine Learning such as Anomaly Identification or the use of Smart Contracts. Another case is implementing AI, for instance as AI-backed chatbots. This solution is getting more and more popular and is provided by Bank of America or Capital One. A perfect example of an innovative bank is Alior Bank, one of the biggest Polish banks. It’s one of the first banks in the world to be replacing records with Blockchain-stored data as a durable medium. As Nextrope, we’re happy to help Alior with servicing the Blockchain-backed transactions on public blockchain Ethereum. If you’d like to take a closer look at the story of Alior and the use of blockchain Ethereum, read this article in Forbes.
Last but not least - Are neobanks going to overtake the market?
I realize that the trends mentioned above are only a tiny part of what is happening in the industry. So we’ll definitely return to banking, as one of the most inspiring and fast-changing industries. I would love to know what your feedback is. If you have any questions, feel free to message me at m.wroblewski@nextrope.com.