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During a season that is often quiet for news from the world of finance, one story has turned up the heat on the future direction of banking and payments. Facebook’s announcement of its plans to launch a digital currency, Libra, in the early months of 2020 has sent shockwaves through governments, central banks and financial companies worldwide. Our cover feature considers the potential global impact of Libra and explores the possibility that central banks could launch their own digital currencies in the future. Also addressing the challenges to the traditional banking model, 11:FS Group CEO David M Brear warns banks against apathy in taking on the startups and suggests they ask the right questions about the culture and purpose of their organisations. We also hear from Dominic Maffei, SC Ventures Lead for Financial Markets and UK/ EU at Standard Chartered, who describes how the bank is investing in and promoting innovation. Other highlights this issue include an interview with PayKey CEO and co-founder Daniel Peled, who outlines how his company is enabling mobile payments from within existing apps, while our regular Fintech Nation feature explores the developments that have seen Ukraine become a key Eastern European destination for fintech development.
ANDREW SAMU EDITOR-IN-CHIEF
July/August 2019 // Volume 2 // Issue 1
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CONTENTS 06 Facebook and the future of money Facebook’s plans to launch Libra, its own digital currency, have rocked the financial world. With other big names poised to enter the same space, could the future also see central banks create their own digital currencies?
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Asking questions that matter As new fintech companies take an everincreasing share of the market, David M Brear, Group CEO, 11:FS, suggest the questions that incumbents should be asking themselves as they develop new services in response
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Finding the key to seamless mobile payments PayKey CMO Guy Talmi explains how his company is making it easier for mobile phone users to engage with banks without the need to leave their favourite apps, improving the integration of banking with social media, shopping and other services
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Rewiring the DNA of banking Dominic Maffei, SC Ventures Lead for Financial Markets and UK/EU at Standard Chartered, on how the bank is promoting innovation, investing in disruptive financial technology and exploring alternative business models by nurturing an intrapreneurial culture
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28 Seeking solutions to cybercrime
Yaron Hazan, financial crimes expert at ThetaRay, explains the key cyber threats to global banking systems and considers how blockchain and artificial intelligence could provide a solution
34 Building a better experience Dr András Rung, CEO and founder of Ergomania, describes how his company has become a leading partner for banks and fintechs that are seeking expertise to design their websites and apps to enhance the user experience
40 Fintech Nation: Ukraine How Ukraine is overcoming conflict and political turmoil to reap the economic rewards of becoming one of Eastern Europe’s fastest-growing centres of fintech innovation
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and the future of money The recent announcement of Facebook’s plans to launch its own digital currency, Libra, in the early part of next year has sent shockwaves through the financial world and raised questions about the future of currency in the digital age
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ryptocurrencies and alternative payment platforms are regularly being touted as threats so far to the traditional banking landscape, but the announcement of Facebook’s Libra digital currency has immediately been regarded as one of the most disruptive so far. Backed by a global brand name, albeit one tarnished by recent data and privacy scandals, it would appear that Libra has better chances of commercial success than already established cryptocurrencies, particularly
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with numerous big names in its governing consortium (see panel on opposite page).
Cautious response Given the recent high-profile concerns surrounding Facebook and how it stores and shares user data, as well as widespread scepticism about the emergence of cryptocurrencies in general, perhaps it is unsurprising that the reaction of governments and central banks to the announcement of Libra has been one of trepidation.
In the United States, Federal Reserve chair Jerome Powell told Congress of his “serious concerns” about how Libra would deal with money laundering, consumer protection and financial stability, while President Donald Trump also weighed in on Twitter, saying: “If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations”. In Europe, French finance minister Bruno Le Maire warned against
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What is Facebook Libra? Facebook Libra is a new digital currency created by the social media giant and expected to launch in early 2020. The company states the aims of Libra as reducing the cost and increasing the speed of sending money online, as well as helping to boost inclusion for those with limited access to financial services. In common with cryptocurrencies such as Bitcoin and Etherium, Libra will be built upon a blockchain platform. However, an important difference is that the Libra Network is a “permissioned blockchain”, meaning that only particular servers will be able to connect, unlike other cryptocurrency networks where any server may join the chain. Facebook claims that the advantage of this approach will be that the network will be able to handle more transactions than other cryptocurrencies. Although Facebook has developed the network for Libra, the launch and governance of the currency will be overseen by an independent and non-profit organisation, the Libra Association. Based in Geneva, this consortium of companies and non-profit organisations comprises representatives from payments, communications, technology and venture capital fields. Among its 28 founding members are Paypal, Coinbase, Visa and Mastercard, and Facebook expects the Association to have 100 members by launch day. Unlike other cryptocurrencies, Facebook Libra will be pegged to a basket of assets, which the Libra Association says will include “bank deposits and government securities in currencies from stable and reputable central banks”. This is likely to mean global currencies such as the US dollar and the euro. Facebook has also created a subsidiary to develop new products and services that will utilise Libra, The first of these is the Calibra Wallet, which will enable users to store Libra and transfer it to other users in a similar way to sending a text message, at little or no cost. Other developers will also be able to create wallets and other utilities that use Libra.
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Libra being allowed to become a sovereign currency, while Bank of England governor Mark Carney said that it would need “to be subject to the highest standards of regulation”. Japan has gone a step further and launched an investigation into Libra and its potential effect on the country’s monetary policy, which it intends to submit to the G7 leaders’ meeting in France in late August. One of the biggest areas of concern among analysts is global financial stability. One financial regulator in South Korea recently highlighted the consequences for banks’ solvency “if 2.4 billion Facebook users worldwide transfer one-tenth of their bank deposits to Libra”. Bad memories still loom large in a global system that is still recovering from the effects of
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the 2008 financial crisis and the bailing out of the private banking sector by national governments.
Allaying fears Since Facebook announced the launch of Libra in June, it has sought to allay the fears of analysts, regulators and lawmakers, pledging to tick all the necessary regulatory boxes before the currency goes live. “The time between now and launch is designed to be an open process and subject to regulatory oversight and review,” said Facebook executive David Marcus in testimony to US Senate Banking Committee on 16 July 2019. “We know we need to take the time to get this right. And I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed
regulatory concerns and received appropriate approvals.” The stir created by Facebook’s entry into cryptocurrency has reignited the debate over the future of money, payments and banking in an increasingly digital financial landscape. This includes the possibility that central banks themselves may move towards creating their own digital currencies. The idea is already receiving the attention of governments around the world, bringing with it the potential for users’ accounts being held directly at the central bank. One of the advantages of such a move would be to increase financial inclusion, particularly in areas where populations are poorly served by banks and
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“The time between now and launch is designed to be an open process and subject to regulatory oversight and review� Facebook executive David Marcus are unable to access physical cash easily and conveniently. Although current digital currency providers highlight that their technology and security measures can be trusted, a fully regulated, central bank-backed digital currency is likely to earn the trust of users in much the same way that coins and paper money issued by central banks have been considered safe for centuries. Such a development may also prevent the transfer of digital currency from coming under the power of a small number of payment behemoths, but carries the associated risk of stifling innovation in the sector. The advent of Facebook Libra is set to be a major challenge to the traditional banking system and the authority of central banks. It is a story that is only going to become more interesting and complex if and when its rival online giants launch their own digital currencies.
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Asking questions that matter
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As new fintech companies take an increasing market share, David M Brear, Group CEO, 11:FS, considers the questions that incumbents should ask themselves as they develop new services in response
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here has been plenty of talk about challenger banks, fintech and the tech titans entering banking, as either collaborative partners or in direct competition to incumbents. Naturally, the question arises of who, ultimately, wins. But in attempting to answer that, we uncover more fundamental questions around ‘how’ and ‘why’. While just a few years ago it was easier to dismiss new market entrants, those firms are now taking major chunks of traditional business lines – from international payments, transfers and FX, through to savings, investments and retail accounts. Meanwhile, incumbents have to deal with ever-increasing operating costs through legacy technology, resources and real estate. Their innovation spend is just layering more and more cost into operational spend without decommissioning the spaghetti that keeps the show on the road. I think of this as the Red Queen’s Race from Lewis Carroll’s Through the Looking-Glass, where the Red Queen and Alice are constantly running, but remain in the same spot. Billions spent to keep the lights on. To stand still. This was an acceptable outcome when
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winning was purely about size of customer base and everyone in financial services was treading water at the same pace. Threats were slow to appear; new entrants, such as supermarket brands, offered no real advantages other than some brand affiliation. But the world has changed, and banks are now busy trying to readjust to the new realities of a new axis based around the level of intelligent digital services.
Changing expectations Under the influence of Amazon, Spotify and Netflix, consumers have come to expect services that are available on demand and increasingly tailored around the individual. For that to truly happen in banking, the conversation needs to move away from digital transformation or innovation and get down to the job of actually delivering meaningful change. Banks should be wary of the fintechs, challenger banks and the tech titans who won’t just copy the traditional banking model, they’ll be doing something brand new that they would not expect, which will cause tension in the market. But real fear should be saved for the real business-killers:
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“Consumers have come to expect services that are available on demand and increasingly tailored around the individual�
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“With new possibilities being opened up, what is the purpose of banking? What can the bank meaningfully do?”
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apathy and a lack of respect for the challenge ahead. That’s the real opponent. That’s where the danger lies and that’s what banks have been getting wrong for too long.
meaningfully do? What can you achieve with credibility, reliability and capability that customers would want? Do you even have the brand permission to make any of this possible?
The important questions are not which technology wave to catch, or how to implement a voice strategy. It’s not a question of which startup to partner with, or emergent technology to back. They’re more fundamental. With new possibilities being opened up, what is the purpose of banking? What can the bank
Culture and desire As financial services transform into a more open and collaborative landscape, attitudes and cultures must shift. For banks, these are not things that you can just train in to your people – it begins with the skill sets you hire for, nurture and build around, and the leadership that inspires it.
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Multiple new entrants have shown the big banks that, if you come to market with expertise and the right culture with a real desire and hunger to deliver what customers need, then you can achieve amazing things. Startups don’t need to write a five-year business case, they have no “digital” strategy and don’t need to get 14 committees to approve. They need to build something that customers want, so they can secure more investment and fast. We’re already seeing some promising signs from the incumbents. Goldman Sachs
released Marcus to huge success, and RBS launched Mettle, to service small businesses through a truly digital experience. These are the organisations that are trying to rekindle the desire to deliver better customer experiences and what that means for both their customers and themselves. To achieve this, they needed to be agile. True agility is not a methodology, it is in product development and engineering, where firms can move from idea to it being safely and securely executed to their customers in a fraction of the time it currently takes.
“Give the right remit to a small team of highly skilled talent... and they can achieve great things”
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New challengers can move at pace because they have a tech stack and mentality that allows them to. Data is accessible, clean, and available in real time. Their core banking engines are designed around integrated customer identity systems, not ones that are siloed around product lines. They’re easily configurable, allowing the flexibility to create new financial products and, more importantly, services, quickly and easily. But true agility also means having small, autonomous, multi-disciplinary teams that can take an idea to execution, not pass it from one team to another. Endless committees and sign-off at every level hamstring the process. Give the right remit to a small team of highly skilled talent, laser-focused on solving real customer problems, and they can achieve great things. So, who wins? The exciting thing is this is really all up for grabs. But it requires a new way of hiring, thinking and delivering that some incumbents may never achieve. And some that do will find it’s already too late.
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Finding the key to seamless mobile payments Mobile payment apps have played a major part in the fintech revolution so far, but the integration of banking with social media, shopping and other services has been limited. PayKey CMO Guy Talmi explains how his company is making it easier for mobile users to engage with banks without the need to leave their favourite apps
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“PayKey is there whenever you look at your phone, and people look at their phones between 100 and 500 times a day” What is PayKey? In a nutshell, PayKey enables its users to access key banking services from any app. Whether you’re in Facebook, WhatsApp, Twitter, Instagram or on the Amazon app, you’ll be able to make a payment request, check your balance, split a bill, find the nearest ATM and more without needing to leave the app you’re in. The problem today isn’t trust – it’s that digital access to money is increasing, but conversations about money are not happening inside banking applications. They’re happening on social apps, where life is happening, so it made sense to enable customers to access financial services from within any app. Social apps and tech firms know they have engagement with their customers in a way that
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banks haven’t, and they’re now trying to become the new banks. Facebook got their e-money banking licence in Ireland in 2017, WhatsApp is now beta-testing payments in India, and Google already have their banking licence for Europe, thanks to Lithuania. My favourite example is Kakao Talk, the most-used social application in South Korea. Kakao Bank launched two years ago and needed only five days to reach one million customers, and now 33% of the population in South Korea has a Kakao Bank account. It’s becoming increasingly difficult for traditional banks to maintain engagement with their customers, and this is exactly where we come in. Then there is also Facebook’s recent announcement on launching Libra, which can even create a greater shakeup in the personal finance ecosystem.
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How does PayKey work? PayKey is bringing the banking experience to the most viewed app on your mobile device – the smartphone keyboard. We place banks directly onto the keyboard, with the bank’s logo on its own button. In any app, the user can press a button on their keyboard and the bank-related options just pop down, ready to use. It also works the other way around, too, when banks want to send a message to their customers, such as letting them know when they are low on credit or when a bank card is due to be delivered. We allow banks to place a red button right on their logo, so the customer knows immediately when something needs their attention. Our studies show that the response rate goes up immediately, because it’s harder to ignore something
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flashing directly on your keyboard. PayKey is there whenever you look at your phone, and people look at their phones between 100 and 500 times a day.
Which bank customers can currently access PayKey? PayKey is working with various banks, not just in Europe but around the world. The experience has been amazing. We’re working with HSBC in the UK, with ING in Poland and Standard Chartered in Hong Kong – to name but a few. We now cover 13 countries in total. Every new bank that joins the family is an exciting starting point, and almost every month we have a new client that’s going live with our solution. We walk them through their digital transformation, really helping them increasing engagement with their customers and seeing the results and feedback.
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Rewiring the DNA of banking
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Dominic Maffei, SC Ventures Lead for Financial Markets and UK/EU at Standard Chartered, describes how this specially created business unit is designed to promote innovation, invest in disruptive financial technology and explore alternative business models, by nurturing an intrapreneurial culture that empowers people to take the initiative
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run Standard Chartered’s UK/ EU eXellerator and, in addition, I cover our financial markets fintech activities. I’ve worked at Standard Chartered for almost 10 years, in financial markets and then the COO’s office, until my time in London with SC Ventures. I joined the bank in Hong Kong right after the financial crisis, when the bank was growing, somewhat counter-cyclically to our peers. Then I moved to Singapore, and now London. The overarching mantra for SC Ventures is to rewire the DNA in banking. The team was formed in early 2018, but looking at innovation and working with clients is not something new for us – we’ve been doing that in pockets for years. In order to do that more efficiently and exponentially, we needed to bring it together.
“To date, we have 20,000 employees on our ideation platform, with around 1,800 ideas submitted”
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Supporting that vision there are three underlying pillars. The first is all about client co-creation and fostering internal innovation through intrapreneurship. We have our Intrapreneurship Programme at Standard Chartered, in which we invite ideas from the bank’s entire staff. We employ around 85,000 people across some 60 markets, so we have a vast pool of subject-matter experts. If you have this huge body of talent that you can utilise, why have seven people in a room trying to come up with a solution in an isolated way, when you can open it up to your network? To date, we have 20,000 employees on our ideation platform, with around 1,800 ideas submitted, 11 regional/business challenges, 49 Pitch Days and 25 boot camps. Some of these ideas are already being introduced as new product offerings or being launched as business ventures. Also within this first vertical is client cocreation, where we work with clients to develop new solutions or even new business models. This has been a focus for some time and we have done it well with a few select clients, now the trick is to broaden that to a larger segment of our client base. For us, we’re not trying to pull innovation away from business, or saying that business doesn’t need to worry about any of this stuff because someone else is doing it. What we’re doing is facilitating and enabling the business
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to push forward innovative areas that help the business model and help our clients. The second vertical is the fintech engagement piece. Obviously, people at the bank have been talking to fintechs for years, even back when they were just called technology companies! However, this was also very fragmented, so we wanted a better understanding of who is in the various spaces that we’re interested in being in and who we could potentially partner with. Such collaboration with fintechs can range from arm’slength vendor relationships, or it could be an investment, which we would make through our fund. In order to institutionalise this engagement across the group, we have recently launched an SC Ventures Fintech Bridge platform where fintechs can register and be matched with problem statements that the bank is looking to solve. The third vertical is one of the most exciting in my view – our venture vertical. This is about launching new, innovative disruptive business models outside the bank. We have a number at an early stage, with a good handful that are more advanced. One that is public is our virtual bank in Hong Kong, which is being built completely separately, with a different tech stack, different brand proposition and a completely different model. We’ve had an eXellerator lab in Singapore for a few years, and last year we launched the Hong Kong
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eXellerator, with the UK following later in the year. Most recently, we launched a lab in Kenya, to cover the African market, which is a key region for our bank. Due to our scope and scale in Asia, I think we know pretty much everyone in the fintech community or, at least, know of them. We have also had a scouting effort in the US for going on a decade, so we have good insights there, but here in the UK we have work to do to better understand the ecosystem and raise our profile, so that fintechs understand our value proposition as a partner and we understand the relevant companies for that partnership. I think it’s important to realise that, for us, this is still business-driven innovation and, again, because it goes back to our clients, it is still going to be driven by business. London is the fintech capital of Europe and we knew we needed to step up our engagement there. Over the past six months, we have put good foundations in place and have a much more developed sense of the UK ecosystem, but now we need to start thinking more about the other EU fintech hubs. That said, I would say we are still in the ramp-up stage, as there is a lot to do, explore and expand. Day-to-day is very much meeting with fintech companies, talking to clients, nurturing those intrapreneurs. In terms of opportunities, we are looking for the companies that will be the future best-in-class
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“London is the fintech capital of Europe and we knew we needed to step up our engagement there” for their respective areas – the best of the new, or something to that effect. As for the areas, that includes everything from pre- and post-trade infrastructure to data analytics, alternative data and regtech, all the way to automation and practical applications of DLT. The whole capital market space is really interesting right now, as we are seeing a real move from a view of disruption to partnership, especially in the bond space, as it is going through big changes. The advantage of working with a bank like Standard Chartered is how we are able to help fintechs scale up – we have a presence in more than 60 of the most dynamic and fastest-growing economies around the world. We have the ability to test proof of concepts and once successful, roll out very rapidly across our footprint.
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Seeking solutions TO CYBERCRIME
Why does it seem so easy for cybercrime to occur? Yaron Hazan, financial crimes expert at ThetaRay, explains the key cyber threats to global banking systems and considers how blockchain and artificial intelligence could provide a solution
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“With the global financial system today, all that is needed to launder billions of dollars is to find the weakest link in the chain of a network of banks”
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hetaRay provides artificial intelligence (AI) solutions to financial institutions. Our algorithms replicate the decisionmaking power of human intuition, to identify unknown events that indicate terrorist financing, human trafficking, sex slavery, money laundering or other malicious acts. I started my career in the Israeli police, with responsibility for investigations into terrorist financing and serious international organised crime. Later, I was part of the global leadership team for the forensics and anti-moneylaundering practice for PwC in Israel. After this, I was the head of compliance for HSBC in Israel. My team implemented new programmes, global standards, policies, procedures and controls.
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It’s fair to say that I’ve always been involved in fighting financial crime!
and illegal activity, such as drug dealing or human trafficking.
In the past two years at ThetaRay, I’ve been focused on providing the market with technology solutions that will make the fight against financial cybercrime more efficient and more effective, with a view to the future and tackling the new types of risks and requirements.
In both cases, criminals seek ways to enter these funds into the traditional financial systems. Some may argue with me, but it really isn’t difficult to do. We’ve seen numerous large schemes that were identified and publicised in the past three or four years, including those in Russia and the Philippines.
Cyber risks for banks mainly fall into two categories. The first comes from direct attacks by what might be called cyber experts or sophisticated fraudsters that can get access to and transport system data. The second type is money laundering, involving organised crime groups or sophisticated white-collar criminals with money from corruption
With the global financial system today, all that is needed to launder billions of dollars is to find the weakest link in the chain of a network of banks – find a way to enter funds into specific banks that either don’t know how to detect such crimes or unusual behaviours, or don’t care enough to do so. Once money has entered
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“The arrival of blockchain made the financial industry wake up to the fact that things are going to be very different in the future”
the banking system, international banking, the SWIFT system and the global payment systems make it very easy to transfer the funds anywhere in the world. Rules-based or scenario-based detection is not effective in detecting and stopping financial cybercrime. It was designed for the traditional banking system, but today very few of us set foot in a branch. We connect online with our financial services providers. Often, you’re even onboarded online, without anyone even meeting you. Everyday, in short order, we use numerous online services and products from multiple providers. It’s easy to do in the online world. We use totally different types of financial services and products, so the old systems can’t do what they were originally meant to do – find bad actors. They can’t handle the large datasets, volume of transactions and data, nor the types of services.
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The arrival of blockchain made the financial industry wake up to the fact that things are going to be very different in the future. Most people associate blockchain with Bitcoin and other cryptocurrencies, as a platform used by criminals that can be used through the dark web and which no regulator sees. With no one monitoring this platform, it’s regarded as an ideal tool for criminals.
weird, you don’t have to be an expert in the field to work out that something probably isn’t right. For example, if you’re driving your car and you hear some unusual noise from the engine, you don’t have to be a mechanic to know that there is a problem that needs attention. AI learns what is normal in the data and identifies what is potentially suspicious, regardless of the type of data.
However, I see a lot of opportunities in blockchain to improve business and financial services for all of us. But, at the same time, when we increase our use of blockchain and cryptocurrencies we must have new controls in place. We need a totally different way of thinking, which is where AI comes in. The beauty of Thetaray’s AI that it replicates human intuition – one of the most powerful decision-making tools we have.
People tend to forget that, as much as we move forward with technology and fintech, the opportunities also bring risks. This makes it easy for the bad guys to get information quickly, to make any use of this information as they want. Humanity needs to develop the technology to ensure secure accessibility to financial services, online products and online social activities. We need this level of sophistication, if not even more, in detecting potential threats, whether from individuals, organised crime or other countries.
Think of it this way: if you see or hear something that is totally
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Building a better
EXPERIENCE Dr Andrรกs Rung, CEO and founder of Budapest-based UX designers Ergomania, describes how his company has become a leading partner for banks and fintechs, seeking expertise to design their websites and apps to enhance the user experience
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Ergomania’s team has become a sought-after partner for enterprises looking to create new fintech UX experiences. How did this come about? The whole story started when I was working as a freelance UX consultant, for almost 10 years from the early 2000s. I started to take on more and more projects, which were becoming increasingly complex, but I couldn’t manage alone. I founded Ergomania in 2012, as the first UX company in Hungary, with two employees. Previously, there had been digital agencies with UX departments, but no company that specialised in UX. Step by step, we started to receive more projects, but the big change happened in 2013-14, when we started to take on larger multinational clients, such as BNP Paribas, Telenor and OTP Banking Group. To serve these bigger companies, we needed to increase the size of our team to five people, as well as manage projects with the help of freelancers and agencies. However, in Hungary there is a shortage of top-quality freelancers whose work you can trust, so we started to hire
more full-time staff to create a solid base for the business.
banking or fintech experience if you apply these processes effectively.
What is Ergomania’s experience of engineering UX for banks?
Where there can be problems is when there isn’t enough emphasis on user research. Banks know what their customers want, but fintechs are usually more tech driven – they have very good tech solutions, but sometimes don’t have sufficient understanding of user needs.
Our first banking project was for the Hungarian branch of Italy’s UniCredit bank. We were focusing on helping customers to access information about loans – from simple cash loans to mortgages. It was a small but successful project, and afterwards we moved onto bigger projects. We have since worked on around 30 fintech projects, ranging from mobile projects to redesigning internet banks. We also work on making frontoffice systems more effective and we are creating a white-label application for sales automation. In general, the processes for creating a fintech site are similar to those for an e-commerce site. With fintech, at times you have to put more attention into discovering the business needs. What is really important in banking UX is to put a lot of emphasis on stakeholder interviews, discovering what they really want or their expectations. I think you can create a very good
“We have worked on around 30 fintech projects, ranging from mobile projects to redesigning internet banks” disruptionbanking.com
Another typical blind spot is where fintechs don’t pay enough attention to the return on investment, which is a hard thing to measure. Usually, the return on investment in UX in service design comes several years after implementation.
How competitive is the UX design market for banks and fintech? I think it depends on the region, as each has its own challenges. For example, in Central Europe – with more developed countries in UX, such as the Czech Republic, Slovakia and Hungary – the field is very competitive. There is a lot of competition on price in this region. If you go to the Balkans, there is lower demand and far fewer providers. In Western Europe, the demand is much stronger.
In your opinion, what are the key things that bank executives should know about UX design or the market? What is essential is good communication – setting strong foundations by talking to and understanding each other very well. If this happens then we can progress much faster and, in general, projects will be shorter, cheaper and more effective. It’s a big temptation to rush, and start to do something.
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“What is essential is good communication – setting strong foundations by talking to and understanding each other”
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Banks can sometimes hesitate to invest because they are afraid that UX service design is going to add complexity to their world. Of course, it probably feels that way the first time they need it, but like if they start to use it more frequently then it gets easier and makes things cheaper. Good planning saves time and money – the earlier that the design process is started the better. Bank staff should be educated in working with UX and with product design people. They have to build a solid knowledge of ways of cooperation and multi-step feedback. That’s why we like to help with training to generate ideas together and in providing structured feedback.
What will the next generation of UX look like? It’s very hard to predict the future, but I think one of the biggest changes will be standardisation, both in the tools that we use and in the ways that UX is constructed. Automation and artificial intelligence, and how they can help to create better experiences, will also become factors. Things are constantly changing and reshaping. When I was at Lloyds Bank recently I was surprised at the big teams they have. We’ve come a long way in just a few years, when BNP Paribas had just one member of staff working on UX, in an organisation of 40,000 people!
In your opinion, what are the key things that bank executives should know about UX design or the market? What is essential is good communication – setting strong
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foundations by talking to and understanding each other very well. If this happens then we can progress much faster and, in general, projects will be shorter, cheaper and more effective. It’s a big temptation to rush, and start to do something. Banks can sometimes hesitate to invest because they are afraid that UX service design is going to add complexity to their world. Of course, it probably feels that way the first time they need it, but if they start to use it more frequently then it gets easier and makes things cheaper. Good planning saves time and money – the earlier that the design process is started the better. Bank staff should be educated in working with UX and with product design people. They have to build a solid knowledge of ways of cooperation and multi-step feedback. That’s why we like to help with training to generate ideas together and in providing structured feedback.
What will the next generation of UX look like? It’s very hard to predict the future, but I think one of the biggest changes will be standardisation, both in the tools that we use and in the ways that UX is constructed. Automation, voice and artificial intelligence, and how they can help to create better experiences, will also become factors. Things are constantly changing and reshaping. When I was at Lloyds Bank recently I was surprised at the big teams they have. We’ve come a long way in just a few years, when BNP Paribas Fortis had just one member of staff working on UX, in an organisation of 40,000 people!
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Fintech Nation
UKRAINE
From a country dominated by conflict and political turmoil to the location of one of Eastern Europe’s fastest-developing IT industries, Ukraine is enjoying increasing rewards from local fintech innovation
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cross Eastern Europe in recent years, the IT industry has proved to be a vital area of economic development, and Ukraine is no exception to its neighbours in reaping the benefits of this boom. The country’s IT industry has been increasing by 16% annually, with exports valued at $3.6 billion. It is no surprise that the country’s prime minister, Volodymyr Groysman, has described the IT sector as a “locomotive for growth”. As well as raising living standards for large numbers of the population, the boost to the IT sector has also offered hope in a country damaged by conflict that is estimated to have cost Ukraine as much as one-fifth of its GDP. Ukraine is somewhat unheralded for being the starting point for a number of globally known IT products, services and brands. Perhaps the biggest achiever from these is video doorbell innovator Ring, which was acquired by Amazon for a mammoth $1 billion in 2018. Other success stories include online writing and spellchecking assistant Grammarly, blockchain technology giant Bitfury, augmented reality app creator Looksery and connected technology provider Petcube. Ukraine has also become a popular location for IT outsourcers – such as SoftServe and EPAM – which contribute to supporting 100,000 jobs in the sector. Hundreds of Ukrainian firms service this market, mostly situated in and around Kiev and several of the country’s university cities, such as Lviv, Dnipro, Odessa and Kharkiv. Freelance coders and software developers can expect to earn up to $3,000 per month – 10 times the average wage across the Ukrainian economy as a whole.
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Fintech starts to flourish Ukraine’s fintech scene started to take off in 2017 after a series of conferences and events in the country, and the sector now boasts more than 60 companies at various stages of their development, according to a report last year by UNIT.City, an innovation park in Kiev. The majority of Ukraine’s fintech companies have launched in the past four years, with the initial activity being in the fields of payments and money transfers. These areas continue to account for around onethird of the country’s fintech activity, followed by fintech infrastructure services and lending platforms. Blockchain and cryptocurrency, regtech, insurtech and digital banks also provide a lesser, but still significant, contribution. Realising the potential for Ukraine to become a leading fintech hub, the country’s central bank has supported the sector under the banner of the Comprehensive Programme of Ukrainian Financial Sector Development. Among the series of initiatives launched by the programme are the Cashless 2020 strategy, introduction of remote identification and electronic signatures, and initiatives to improve financial literacy. The rise of fintech, and the IT sector as a whole, has also been attributable to Ukraine’s increased internet penetration rate – fewer than a quarter of the country’s adult population had access to the internet in 2008, but this figure rose to two-thirds during the subsequent 10 years, in large part due to the rapid take-up of smartphones.
Start-up success Arguably the country’s biggest homegrown start-up success is Monobank, which was created by
entrepreneurs Dima Dubilet, Misha Rogalskiy and Oleg Gorokhovskiy – a trio of former employees of PrivatBank, Ukraine’s largest bank, which serves half the population. Monobank, which enables payments, lending and deposits via a mobile app, was launched in November 2017 and attracted around half-a-million customers within its first year. The new digital bank’s rapid rise is instrumental in improving financial inclusion and indicates the appetite of
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It is no surprise that the country’s prime minister has described the IT sector as a “locomotive for growth” disruptionbanking.com
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the Ukrainian population for fintech products and services.
creator Coinypay and software development company Attic Lab.
Examples of success emanating from Ukraine in the payments sphere include Easypay – which enables its users to make payments online (via a website or apps) and offline with branded terminals – and Electrum, which allows its customers to open e-wallets anonymously to pay for goods and services. Among those leading the way in the burgeoning blockchain and cryptocurrency sector are Eastern Europe-focused crypto exchange Kuna, payments chatbot
Expanding hub
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Kyiv’s fast-expanding UNIT.City is the hub for much of Ukraine’s growing IT and fintech activity. Described as the country’s first “innovation park”, its campus plays host to more than 90 companies working at more than 1,000 desks, with 900 students at the UNIT Factory IT school, with plans for expansion in 2020. As well as providing an ecosystem and infrastructure to assist fintech innovation, businesses can also benefit from
mentoring programmes, expert consultations, events and exclusive discounts on services from the likes of Microsoft and Amazon. Soon to advance Ukraine’s IT development infrastructure even further is Lviv’s Innovation District IT Park. Currently under construction, this major $160 million development will provide 14,000 workplaces, a technology lab, hotel, childcare facilities and leisure outlets.
Forums and events Ukraine’s fintech credentials are also attracting visitors to a
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growing number of related forums and events held in the country. Among the most prominent of these is the Ukrainian Banking Forum, which reaches its eighth edition in October. This annual event sees C-suite bankers and financiers mingle with regulators and market influencers to discuss the challenges and opportunities in the Ukrainian banking sector and the country’s role in the global financial system. Each April brings the Ukrainian Fintech Forum, which gathers the country’s community of financial ecosystem stakeholders.
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Welcoming 1,500 visitors, the oneday event features presentations, panel discussions and networking opportunities, with previous representation among the speakers from the likes of the National Bank of Ukraine and First Ukrainian International Bank. Last December’s debut of UAFIN. TECH was described as the first international event to cover the Ukrainian fintech market. The Kiev-hosted day-long conference – which included keynotes speakers from Revolut, Transferwise and Viber – returns for a second edition on 4 December this year.
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