10 Takeaways From Finovate

Finovate Fall, one of my low-key favorite fintech events, was this week, and in keeping with the established tradition here at Fintech Takes, I would like to share 10 takeaways that I had from the conference.

Ready? Here we go.

1.) Fintech Is Boring!

I had the pleasure of presenting at Finovate this year on the top fintech trends impacting financial services in 2023 and beyond. The five trends I chose to highlight were:

1. Legacy Bank Technology Gets an Upgrade
2. There is No Problem Too Boring for Fintech
3. Embedded Finance Uncovers New Opportunities
4. New Platforms to Build On
5. Open Banking + Generative AI

At some point in the newsletter, I’ll share my full thoughts on all of these trends, but for now, I’ll just say that I was surprised (but pleased) to see that the trend that resonated the most with the audience was the second one – There is No Problem Too Boring for Fintech.

The bankers in the room seemed genuinely excited when I started talking about all the “boring” fintech innovations that I’ve been seeing in pitch decks lately. Everything from balance sheet augmentation to fraud data consortiums to escheatment management (I sounded very smart when I correctly defined escheatment for all the non-lawyers in the audience!)

Hypothesis – the more boring fintech becomes, the more that traditional financial institutions will gravitate to it (via procurement, partnerships, and M&A). 

2.) Metaverse Thought Leadership, Alive and Well

On the opposite end of the spectrum, I was dismayed to see that the metaverse discourse (which I feel like everyone in tech moved on from a while ago) is still alive and well in banking circles.

And that discourse is as unclear as ever.

One speaker at the event started his presentation on the metaverse by stating all of the things that the metaverse isn’t (NFTs, video games, etc.), which was fine, except he never really defined what the metaverse actually is!

The most tangible example of the metaverse that I heard about at Finovate was Coastal World, which is this cheesy-looking video game/financial education platform created by Coastal Community Bank. It’s basically a 3D beach town populated by colorful, blob-like avatars that you can interact with. Some of the interactions are finance-related (mostly cross-sell for Costal’s fintech partners), and some are just goofy (one headphone-wearing blob told me that it, quote, “loves music. And Sushi. But music, more so, you know?”)

There’s a whole little economy within financial services that is built on educating bankers about scary-sounding-but-actually-meaningless technology trends. The metaverse is still big business in this economy, apparently.      

3.) Generative AI … Popular, But Not a Winner

Speaking of trends that everyone can’t wait to get on board with … generative AI was a very popular topic at Finovate this year, unsurprisingly.

The wonderful Tiffani Montez, analyst at Insider Intelligence, spoke about generative AI in a presentation on the main stage, and multiple fintech companies made generative AI a central part of their demos.

And yet … none of the Gen AI demos that I saw did a particularly good job of explaining how the unique benefits of large language models (LLMs) could benefit specific use cases in financial services. It was mostly just the “Gen AI is cool, therefore, it must be valuable” transitive property argument.

I didn’t see all the demos, so maybe there were some that did a better job on this front. Or maybe 7 minutes just isn’t enough time to adequately explain the nuances of LLMs. But I do find it telling that the vast majority of the Best of Show winners made little-to-no reference to generative AI (eSelf AI’s uncanny valley-ass virtual agent was the exception).     

4.) Debt Repayment Was Surprisingly Well Represented

I was intrigued to find that debt repayment was a very well-represented category on stage this year.

Debbie (Best of Show winner, focused on rewarding consumers for paying down their debts), Peach (a debt repayment planning app for consumers), and Payitoff (embedded debt repayment) all made appearances.

Why was I surprised by this? Well, my sense (which could certainly be off base) is that this category of fintech hasn’t been doing all that well (I recently wrote about how some other players in the embedded debt repayment space are pivoting).

Perhaps Finovate is becoming the venue for fintech companies that have realized that their product is actually a feature that needs to be pitched to banks and credit unions?

5.) Fintech Innovation, Growing Out of Banks

Two of the demos that I was particularly impressed by – Panacea Financial and CD Valet – were ones that grew out of individual community banks. 

Panacea, which I have written about previously, is a neobank that serves doctors, dentists, and veterinarians. It is an independent company, but all of its funding (to date) has come from Primis Bank, which is also Panacea’s bank partner for its lending and deposit products.

CD Valet is a digital marketplace for researching and opening CD accounts. Interestingly, by making it free for any bank to list their CDs in the marketplace (you have to pay to enable users to directly open a CD through the marketplace), deposits gathered via CD Valet can apparently be classified as core deposits. CD Valet was created by and is fully owned and operated by Seattle Bank, although it may at some point be spun off as an independent company.

I might be misremembering, but I don’t recall a lot of demoing companies at prior Finovates that grew out of individual community banks. Pretty cool to see.  

6.) Neurodiverse Banking

Possibly my favorite demo – Mahalo Banking, a digital banking provider for credit unions, which showed off improvements to its platform specifically designed to cater to the needs of neurodiverse users, such as those with dyslexia, autism, ADD, ADHD, epilepsy, visual sensitivity, and ASD. Among the platform’s new features are left- and right-hand use modes, font/color options for those with dyslexia or visual impairments, and the ability to disable animations for individuals affected by epilepsy.

I don’t really have any analysis here. I just think this is really freaking cool. Very well-deserved Best of Show winner!  

7.) Bringing Home Ownership Insights Into Banking

Another favorite and Best of Show winner – Chimney.

Chimney enables banks and credit unions to give homeowners actionable advice about their home value, equity, borrowing power, and pre-qualified offers, directly within their digital banking channels.

Hell yes.

I’ve been begging for this for years. Homes are the most valuable financial assets most people will ever own. It makes zero sense that none of the data or insights associated with that asset (home value, available equity, cash flow projections, etc.) have historically been available within modern digital banking interfaces.

GIVE ME A HOME OWNERSHIP DASHBOARD!

8.) Broadening the Value Prop for Entrepreneurs 

One more favorite (this one didn’t win Best of Show, but it’s still really cool) – Fundica.

Fundica is basically a search engine that allows entrepreneurs to find government-sponsored grants, tax credits, loans, and equity. It is designed to be white-labeled and embedded by banks, credit unions, and other organizations that work with small businesses.

The company is based in Canada, where it has built extensive coverage of government funding sources and already has several high-profile financial services customers (Intuit & Desjardins) However, it expanded into the U.S. in 2021.

I love this. This is exactly the kind of value-added service that banks, credit unions, and fintech companies that serve SMBs should be thinking about.   

9.) Climate x Fintech 

The best-represented trend on stage at Finovate – helping banks and credit unions measure, track, and improve actions to fight climate change.

Demoing companies included ClimateTrade (calculating carbon footprints and facilitating access to carbon offsets), Cloverly (ditto … a marketplace for carbon credits), Connect Earth (calculating the carbon impact of financial services customers’ spending decisions), GreenPortfolio (helping customers calculate the climate impact of their financial investment and allocation decisions), and SESAMm (ESG risk monitoring).

As I discussed with my Workweek colleague Nick Van Osdol, not all climate x fintech solutions are created equal. I’m not a huge fan of the ‘measure the carbon footprint of all your actions and buy offsets’ solutions. The solutions that focus more narrowly on helping consumers make more climate-friendly financial decisions (especially GreenPortfolio’s ability to recommend specific banks for different financial products) are the ones I’d like to see get more traction.         

10.) Protection as a Benefit

And last but certainly not least, a trend that I’d like to see financial services providers double down on – embedding more ‘protection’ products into their offerings.

Two examples from the conference, both Best of Show winners – Trust & Will and Wysh.

I wrote about Trust & Will in the newsletter a long time ago, and they’ve continued to be a favorite of mine since then. The company provides digital estate planning services, which are intended to close the estate plan gap in the U.S. (150 million U.S. adults don’t have any estate plan, and another 100 million have out-of-date plans). It offers this service directly, as well as through partnerships with financial institutions like Fifth Third.

Wysh is one I hadn’t heard of until this week, but I’m glad I know about it now. Wysh provides micro-life insurance that financial institutions can embed directly within their deposit accounts. The insurance coverage can be as high as 10% of the account holder’s balance, up to $10,000.

Banks and credit unions are great at risk management and business continuity planning … for themselves. They haven’t, historically, been great at extending these competencies to their customers. It’s nice to see that start to change.