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Business

Avaloq has added regtech capabilities to its B2B wealthtech platform

  •  Avaloq has added regtech capabilities to its B2B wealthtech platform, slashing wealth managers' compliance costs.
  • And it can leverage the feature to expose new clients to other Avaloq products.
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry with the Fintech Briefing. You can learn more about subscribing here.

The Swiss-based fintech software provider is partnering with regtech Investment Navigator to simplify compliance for wealth managers, per Finextra. The white-label solution will be integrated into the Avaloq Wealth platform via an API. Avaloq offers core banking and centralized data platform solutions to its 150+ institutional clients, representing approximately $4.5 trillion in client assets. It was recently acquired by tech giant NEC.

The new partnership will drive wealth managers' operational efficiencies, enhancing Avaloq platform's value proposition and driving acquisition. Wealth managers operate in an increasingly complex regulatory environment, with associated compliance costs rising in recent years. Avaloq's new feature expedites their compliance efforts by providing suitability checks when distributing investment products as well as regulatory guidance on cross-border business activities.

Adding the regtech feature will complement the Avaloq Wealth platform's existing digital tools that automate investment analysis for wealth managers, and likely accelerate its uptake, as we've seen with Fenergo: Its cloud-powered platform that digitizes financial institutions' account management and compliance processes is reporting rapid adoption.

The added regtech features free up wealth managers' resources to boost their users' experience—another area where Avaloq can help.

  • Wealth management customers are demanding a stronger digital experience. Stay-at-home mandates have forced financial advisors to interact with investors via digital channels, which is laying bare their tech shortcomings. By streamlining and cutting compliance costs with Avaloq's solution, wealth managers can redirect their budgets to other areas ripe for digitization. For example, they could look to digitize the onboarding process and remote transactions authorization to provide a more seamless user journey.
  • Avaloq can use the regtech offering to direct new clients to its customer-focused products, increasing sales across the board. Wealth managers first drawn by the new compliance solution can then be exposed to Avaloq's other products beyond the Wealth platform. Its recently launched Engage app, for example, allows wealth managers to talk to clients through social media messaging channels like WhatsApp and WeChat, making online communication more convenient. And Avaloq Insight leverages AI to enhance wealth managers' analytics capabilities and personalize their services. Together with the added regtech service, wealth managers can provide a more holistic and well-rounded service to their customers, all through Avaloq's platform.

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Business

HYBRID ROBO-ADVISORS: Here's how incumbent wealth managers are successfully implementing the hybrid robo-advisor model

  • Insider Intelligence publishes thousands of research reports, charts, and forecasts on the Fintech industry. You can learn more about becoming a client here.
  • The following is a preview of one Fintech report, the Hybrid Robo-Advisors report. You can purchase this report here.

Digital wealth managers, also called robo-advisors, emerged after the 2008 crisis as fintechs aimed to simplify and democratize wealth management services with technology-first solutions. And while these robo-advisors changed the wealth management game by offering such services for a lower fee, many players have chosen to maintain a human aspect within their offerings. Known as the hybrid robo-advisor model, this approach intertwines technology and human touch.

The hybrid robo-advisor business model complements conventional wealth management services and can help attract more users, which will push more incumbent financial services firms toward this approach. Hybrid robo-advisors link the cost and maintenance efficiency of a purely digital robo-advisor with the human advice of conventional wealth management services. These offerings therefore often have a lower fee than legacy services, while still providing personalized guidance and advice from humans to support customers and reassure them amid market volatility.

The coronavirus pandemic has further highlighted the need for wealth management solutions that offer a human touch. The market has been particularly volatile and unpredictable during the pandemic, including some of the worst weeks for stocks since the financial crisis in 2008 as well as some quick, unexpected recoveries. This has likely caused unease among investors, but hybrid robo-advisors can mitigate unrest by leveraging their human advisors to explain market volatility and investment strategies.

In The Hybrid Robo-Advisor Report, Insider Intelligence examines hybrid robo-advisors' operational benefits for incumbents looking to diversify their offerings, and highlights how the pandemic has affected such companies. We define a maturity model for hybrid robo-advisors to showcase important features and capabilities that incumbents should take note of to find success, especially when it comes to adding human financial advice to digital products. The report also spotlights four key incumbent players in the US hybrid robo-advisor space—Charles Schwab, TD Ameritrade, Vanguard, and BlackRock—and evaluates their onboarding processes, technology and human advice, and pricing. Additionally, we discuss key considerations regarding their offerings.

Our outreach process involved interviews across three providers—Charles Schwab, TD Ameritrade, and BlackRock—in September 2020, while Vanguard's profile is based on desk research due to interviewee unavailability. Interview quotes have been lightly edited for clarity.

The companies mentioned in the report include: ABN AMRO, Betterment, BlackRock, Charles Schwab, Fidelity, Moneyfarm, Nutmeg, Personal Capital, TD Ameritrade, Vanguard, Wealthsimple

Here are some key takeaways from the report:

  • Hybrid robo-advisor products have been met with exponential growth over the years, and we believe that the pandemic and millennial wealth transfer will further accelerate growth.
  • Hybrid offerings are likely attractive to consumers amid the pandemic because human advisors can provide additional support and reassurance, yet the crisis also presents specific challenges for the business model.
  • Hybrid robo-advisors can cut costs along the value chain using technology, which means they can be offered at a lower price and potentially lure in younger users who can be upsold later.
  • Advanced hybrid wealth managers are able to fully support their users with humans, while also enabling self-service if that's a customer's preferred method, to provide a convenient and flexible offering.
  • Charles Schwab, TD Ameritrade, Vanguard, and BlackRock all launched hybrid robo-advisors, and they're successfully combining human input with advanced technology to offer their clients tailored services. 

In full, the report:

  • Outlines the benefits of offering a hybrid robo-advisor.
  • Explains how the coronavirus pandemic has impacted the sector, and provides recommendations what companies can do to navigate the crisis.
  • Details what kind of features a hybrid robo-advisors should have to be competitive, and provides insight about where a service falls on our maturity scale.
  • Spotlights four players within the hybrid robo-advisor space and offers insights into their respective services.
  • Discusses how these four players onboard new clients, manage portfolios, price offerings, and notes key considerations for each of their services.

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World News

ENTERPRISE SECURITY IN THE CORONAVIRUS PANDEMIC ERA: How to support remote work while securing the distributed enterprise through the Zero Trust security model

  • Insider Intelligence publishes thousands of research reports, charts, and forecasts on the Connectivity & Tech industry. You can learn more about becoming a client here.
  • The following is a preview of one Connectivity & Tech report, the Enterprise Security in the Coronavirus Pandemic Era Report. You can purchase this report here.

A staggering number of employees have moved to a new mode of remote work in 2020, kicking off a significant andlasting transformation of the workplace—one that will require a different approach to enterprise security. 

Starting in February, the first outbreaks of the coronavirus pandemic resulted in China shutting down, followed by other countries from March onward. Companies had to quickly pivot to enabling remote work where possible and crafting new work-from-home (WFH) policies, many of which will remain in effect into 2021 and beyond.  

Hackers have rapidly moved to target remote workers and adjusted their tactics to take advantage of the move to WFH. IT departments are reacting to the rapid move to WFH by adding network, virtual private networks (VPNs), and firewall capacity to keep up with user demand—but the road has been bumpy.  These technologies have been around for years, and will still be in use for years to come, but they have many shortcomings in terms of cost and performance that will require the use of newer, cloud-based technologies.   

Ultimately, securing the workplace amid its ongoing digital transformation will require enterprises to shift toward a Zero Trust model of security.  The Zero Trust model is different from traditional security models because it requires verifying a user's identity and role in the organization before giving them access to only the applications they need for their function. Security vendors have responded to market needs by offering Zero Trust Network Access (ZTNA) services, which are a combination of technologies that an enterprise uses to implement the Zero Trust architecture. 

In this report, Insider Intelligence will explain the Zero Trust concept, how it leverages user identity along with policy enforcement mechanisms, and why it is gaining traction with enterprises in the post-pandemic era.  First, we will explore pandemic-driven trends in remote work and cybercrime, and highlight enterprises' challenges in responding, with a particular focus on VPN technology.

Then, we will explain Zero Trust and how ZTNA services can help solve these challenges. We will provide an overview of the rapidly evolving ZTNA market landscape to help buyers understand who some of the key incumbent and startup vendors are. Finally, we will provide recommendations for starting to implement ZTNA services.  

The companies mentioned in this report are: Akamai Technologies, Ananda Networks, Axis Security, Broadcom, Cato Networks, Checkpoint Software, CrowdStrike, Cisco (Duo), Citrix, Cloudflare, Elisity, Fortinet, Okta, NetFoundry, Netskope, Perimeter 81, Palo Alto Networks, VMware, Zero Networks, and Zscaler. 

Here are some of the key takeaways from the report: 

  • The coronavirus pandemic has forced companies to quickly pivot to enable remote work where possible and craft new WFH policies. But this has also provided hackers with more targets to attack. 
  • The Zero Trust model can help chief information security officers (CISOs) and IT security professionals face the security challenges of this new era.  The model requires verifying a user's identity and role in the organization before giving them access to only the applications they need for their function.   
  • ZTNA services offer significant benefits in terms of security and performance compared with traditional security measures such as VPNs. ZTNA services—a combination of technologies that enable an enterprise to implement the Zero Trust architecture—can be put in place via an easy-to-deploy cloud-based model and allow more fine-grained control of user access policies than do VPNs.   
  • Understanding how the market for cloud-based Zero Trust solutions is evolving will help CISOs and other IT buyers identify the vendors best suited for their enterprise's particular needs.  The report covers how vendors are acquiring technology for their product portfolios while others are more tightly integrating their existing networking and security services for easier deployment.  
  • Adopting the Zero Trust model and implementing ZTNA services requires planning and preparation among human employees, fine-tuning technology systems, and carefully vetting potential vendors.  

In full, the report: 

  • Explores the pandemic-driven trends in remote work and cybercrime, and highlights enterprises' challenges in responding, with a particular focus on VPN technology. 
  • Explains the Zero Trust concept, how it leverages user identity along with policy enforcement mechanisms, and why it's gaining traction with enterprises in the post-pandemic era.  
  • Explains how cloud-based ZTNA services can help solve challenges with security technologies such as VPNs. 
  • Provides an overview of the rapidly evolving ZTNA market landscape to help buyers understand who some of the key incumbent and startup vendors are.  
  • Offers recommendations for starting to implement ZTNA services. 

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World News

Key takeaways from eMarketer's forecast for the use of communication and collaboration tools by US enterprises

  • eMarketer released its forecast for the use of communications and collaborations tools by US medium and large enterprises.
  • The forecast suggests that there will likely be a period of consolidation as Microsoft and Google continue to deepen integrations and expand platform functionality. 
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Connectivity & Tech industry with the Connectivity & Tech Briefing. You can learn more about subscribing here.

Last week, eMarketer released its forecast for the use of communications and collaborations tools by US medium and large enterprises (100+ employees). The "communications & collaborations" category encompasses both "audiovisual conferencing tools" (e.g., Zoom) and "messaging & chat tools" (e.g., Slack). It also includes project management tools made to foster employee productivity, increase transparency, and streamline processes (e.g., Trello).

Overall, the use of communications and collaboration tools by US companies increased from 54% of all companies in 2019 to 69% of all companies in 2020. The significant increase isn't particularly surprising given the coronavirus lockdowns that forced thousands of US businesses to adopt remote work policies. Audiovisual conferencing tools experienced a higher year-over-year adoption increase than messaging & chat tools, jumping from a 39.4% adoption rate in 2019 to 60.7% in 2020. 

Given recent changes made to platforms such as Microsoft Teams, G Suite, and Slack, the distinction between audiovisual conferencing tools and messaging & chat tools will become increasingly meaningless. eMarketer senior forecasting analyst Oscar Orozco told us: "One of the major trends is Big Tech firms increasingly blurring the lines distinguishing their services.

We believe the siloed, standalone tools will slowly give way to multiple use-case tools." One significant driver of this trend that we've covered previously is Microsoft and Google embedding their communications tools throughout their market-dominant productivity suites. With the latest G Suite update, for instance, users have the ability to enter Meet video conferencing rooms directly from a Google Doc or Sheet. 

Because of these blurred lines between different communication and collaboration services, we expect enterprises will begin to consolidate services. A fall 2019 survey of senior executives from Forbes Insights and Zoom found that only 4% of companies are operating just one video communications platform, while 61% are operating three or more video communications platforms, with 16% indicating the figure is five or more.

The use of multiple platforms has been a continuing trend into 2020, as a Vyopta survey conducted in July 2020 found that about two-thirds of US enterprises use two or more video collaboration products. But using multiple platforms can add unnecessary complexity to remote work collaboration.

Third-party platforms will also struggle as Microsoft and Google give their services prime real estate within their enterprise productivity software. We therefore expect companies will look to cut costs by reducing the number of subscriptions they maintain, which will spark a period of consolidation in this market. 

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Business

One in four personal finance managers in the UK and the Netherlands don't use open banking

  • One in four PFMs in the UK and the Netherlands don't use open banking.
  • And forthcoming regulations against screen scraping should push them to transition. 
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry with the Fintech Briefing. You can learn more about subscribing here.

One in four from the UK and the Netherlands still use manual entry from users to access their accounts or spending data, such as screen scraping, a recent Yolt Technology Services (YTS) reveals. In screen scraping, a third party creates a mirrored login page and asks the customer to input their login details. The third party does not have to identify itself to access the bank's system.

PFMs use customer data to analyze their finances and offer money management tools, such as automated savings. The data is surprising considering PFMs have the most to gain from open banking: Over 90% of PFMs that use open banking said that it is worth between £1 million–£5 million ($1.3 million–$6.4 million) to their business each year, compared with 70% of respondents across all sectors.

Upcoming regulatory changes will phase out screen scraping, disrupting PFMs that still rely on this less secure and cumbersome process.

  • The PSD2's Strong Customer Authentication (SCA) standards are about to remove screen scraping. Thirty-five percent of those PFMs that do not use open banking say it is too early to invest in the technology. Yet, the clock is ticking, as SCA requirements become law on December 31, 2020, for the EU and September 14, 2021, for the UK. The SCA will enforce an extra layer of security to login processes, making screen scraping no longer compliant and strengthening the security of open banking communication. PFMs that do not start exploring open banking capabilities imminently and continue to rely on screen scraping will face major service disruptions.
  • Screen scraping limits PFMs' effectiveness in servicing customers. Twenty-eight percent of respondents said that data privacy is a key concern in adopting open banking. However, screen scraping is much less safe as customers have to share their login details with third parties, which increases chances of data breaches. On the other hand, open banking uses secure APIs to connect to bank accounts and does not require the customer's password. Screen scraping is also inefficient, taking 5–10 minutes to retrieve data compared to mere seconds using open banking channels.

We therefore expect the remainder of PFMs to transition to open banking APIs, which will help them deliver better personalization and meet consumer demand. PFMs that already use open banking believe improving efficiency and the customer experience are the tech's top benefits, per YTS. They can automatically aggregate data from customers' multiple accounts—as opposed to having to ask customers for their login for each account—getting a complete and accurate view of their finances in real time, which in turn can be used to offer more personalized services.

PFMs that use open banking will also likely see accelerated growth: Driven by financial concerns during the coronavirus pandemic, over 2 million UK bank customers now connect their accounts to trusted third parties, up from 1 million in January, as they seek better money management options. Money-saving app Plum's CEO points to open banking as a key enabler for developing PFM features, and its deposits have increased fivefold between January and June 2020.

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Business

U.S. Bank will close 400 branches by early next year, as it continues to report robust digital engagement

  • U.S. Bank will close 400 branches by early next year.
  • The move comes after announcing that the percentage of its customers who are digitally active was above the three-quarters mark, standing at 76% as of August 31, 2020.
  • Insider Intelligence publishes hundreds of research reports, charts, and forecasts on the Banking industry with the Banking Briefing. You can learn more about subscribing here.

Last week's announcement coincided with the bank's Q3 2020 earnings report, which revealed its net income plunged 17.2% year over year (YoY) to $1.58 billion.

U.S. Bank also noted that it set aside $635 million in provisions for credit losses, marking a 63% decrease from the $1.74 billion it set aside in Q2 2020 during the height of the coronavirus pandemic. The bank also reported that the percentage of customers who are digitally active was above the three-quarters mark, standing at 76% as of August 31, 2020—ticking down just one percentage point from 77% as of May 31.

The bank's plans to reduce its branch footprint will mean the closure of 400 branches by early next year. "While physical branches and personal interactions will always be important, [the bank needs] fewer branches today than [it] did even a few years ago," said CEO Terry Dolan on U.S. Bank's Q3 earnings call.

In the past 18 months, the bank has closed about 10% of its branches, and the closure of an additional 15% of branches will be locations that were temporarily shuttered by the coronavirus pandemic—a fact that could help blunt potential adverse effects on customer experience. The cuts will leave U.S. Bank with a branch footprint of around 2,300 and generate $150 million in cost savings, some of which will go toward strengthening digital initiatives and remodeling remaining branches, according to the Star Tribune.

And a deeper look at U.S. Bank's digital engagement metrics supports the idea that the bank's branches could come out of the coronavirus pandemic as a different kind of customer touchpoint. On top of the bank's strong digital penetration, the percentage of transactions carried out in digital channels is also above the three-quarters mark, at 76%, and the share of loan sales through digital channels reached 56%—the first time that the majority of the bank's loan sales came via digital.

Together, these metrics reflect the pandemic-induced shift to digital banking, which raises the question of what the branch's role will be if these newly acquired habits become permanent. U.S. Bank seems to envision them as customer service hubs, and has begun remodeling branches for that transition, placing emphasis on financial advice and making transactions secondary—for example, by doing away with teller lines.

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Business

98point6 scored $118 million to expand its online medical practice as the demand for remote care rises

  • 98point6 scored $118 million to grow its platform, which could include more services beyond primary care.
  • And the virtual primary care provider could catch the eye of Walmart's primary care arm.
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Digital Health industry with the Digital Health Briefing. For a limited time, you can try the Briefing for a full week for just $1!

 The virtual primary care provider scored $118 million in a Series E funding round, which it plans to put toward research and development and to expand its online medical practice as the demand for remote care rises. For context, 98point6 is a text-focused primary care startup that provides on-demand digital care via text messaging to users in all 50 states of the US.

After witnessing a surge in users fueled by the pandemic, 98point6 could use the cash infusion to broaden its scope of telemental health options and keep riding the telehealth boom. The coronavirus pandemic catalyzed a large-scale shift to virtual care, and 98point6 reaped the fruits of patients' sudden interest: From the end of 2019 to the first few months of 2020, the telehealth company saw a 238% upsurge in membership, and it now touts over 240 commercial partnerships.

Earlier this year, 77% of employers expressed their intention to expand their offerings to include digital mental health services. Despite spikes in telemental health usage amid the pandemic, as of July 2020, behavioral health visits made up just 10% of 98point6's total visits. Considering 98point6's major consumer segment is employers, it makes sense for it to further develop its platform in this area and to target those intending to build out their benefits packages to include telemental health. 

We think we could see Walmart—a brand 98point6 already has a relationship with—become more interested in bringing the virtual care startup's telehealth offerings into its retail care clinics given its recent success. 98point6 is no stranger to the Walmart brand: Last month, the virtual care startup struck a deal with Walmart subsidiary Sam's Club to offer $1 telehealth visits to Sam's Club members. Meanwhile, Walmart has been expanding its primary care footprint across the US: Last month, Walmart announced its plans to roll out 22 clinics in its supercenters across the US.

And although Walmart has signaled its commitment to broadening its primary care play, it has not yet integrated any virtual care options within its network of retail clinics. Seeing as the pandemic has reeled in hordes of telehealth users, the retail giant might want to tap an affordable telehealth service like 98point6's to hook in consumers who want to keep using virtual care: More than 50% of consumers plan on using telehealth once outbreaks subside, per a June 2020 Amwell survey of 2,000+ US adults.

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Healthcare Explained:

Telehealth Industry
Value-Based Care
Senior Care & Assisted Living Market
Medical Devices & Wearable Tech
AI in Healthcare
Remote Patient Monitoring

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Business

These are the top 5 UK financial institutions ranked by the mobile banking features consumers value most

  • This is a preview of Insider Intelligence's second annual  UK Mobile Banking Competitive Edge Study, available exclusively to enterprise subscribers.
  • In addition to mobile banking coverage, Insider Intelligence publishes thousands of research reports, charts, and forecasts on the Banking industry. You can learn more about becoming a client here.

The UK's top banks are in a fierce battle to offer the most innovative mobile banking features to current and prospective clients, as the coronavirus pandemic has shifted more customers online.

In Insider Intelligence's second annual UK Mobile Banking Competitive Edge Study, exclusive data shows that 68% of all UK respondents surveyed use mobile banking. Of those that use mobile banking, 86% said mobile was their primary banking channel and 62% said they would even change banks if the mobile banking experience fell short.

UK banks are cognizant of this large base of mobile-oriented customers and are expected to spend a staggering £14 billion ($17.5 billion) on technology in 2020. For example, in its latest annual report, NatWest Group spoke of its continued investment on mobile and online channels as part of its digital-first strategy, and said this includes "releasing new mobile app features to help customers create savings goals, lock and unlock their debit card, and take control of their spending."

In the UK Mobile Banking Competitive Edge Report 2020, we take a deep dive into this trend by benchmarking the 10 largest digitally focused financial institutions (FIs) offering zero-fee current accounts in the UK on whether they offer the mobile features customers say they care most about.

This 74-page report draws on two exclusive data sources: a benchmark of the 10 largest UK FIs by 41 mobile banking features and a UK consumer study on the desirability of each of those features. This research gives digital teams a data-driven look into which highly in-demand features, like ordering a replacement card, they should focus their attention on. On the other hand, it also spotlights which features should be deprioritized, by showing that conversing with a conversational assistant has minimal consumer demand, for instance.

Here are a few key takeaways from the report:

  • NatWest has the most desirable mobile banking feature set in the UK. The bank offers industry-leading digital money management and alerts capabilities. Barclays came second with competitive security and transfers features, while Lloyds followed closely behind, rounding out the top three.
  • Security features were the No. 1 priority for consumers. For example, our study's top two most in-demand features out of a list of 41 — the ability to order a replacement card in-app and put a temporary hold on a credit or debit card — fell under this category.
  • Mobile account management features are also highly sought after by the UK mobile banking users in our study. This section includes capabilities that allow customers to conveniently set their preferences and handle important housekeeping tasks. Banks could stand apart from competitors by meeting strong customer demand for traditional account management features, such as the ability to activate a new debit or credit card and select paperless statements — something only half of banks studied currently do.
  • Customers also crave digital money management features. This section includes features that empower users to improve their financial health, including the ability to view recurring charges and set spending limits for their debit or credit card. The ability to cancel subscriptions, such as for Netflix, was called "extremely valuable" by 38% of respondents and was the section's most in-demand feature.

 In full, the report:

  • Shows how 41 features, selected to be rare and attractive to customers, stack up according to how valuable respondents in our survey actually say they are.
  • Ranks the top 10 digitally focused UK FIs that offer zero-fee current accounts on whether they offer each of those features.
  • Analyzes how demographics skew demand for different mobile features.
  • Provides data-driven strategies for banks to best attract and retain customers with mobile features.

The full report is available exclusively to Insider Intelligence enterprise clients. In addition to our UK Mobile Banking Competitive Edge Study, Insider Intelligence publishes a wealth of research reports, charts, forecasts, and analysis of the Banking industry. You can learn more about accessing all of this content here. 

Insider Intelligence's Mobile Banking Competitive Edge study includes: Barclays, Co-operative Bank, HSBC, Lloyds Banking Group (Lloyds, Halifax, and Bank of Scotland), Metro Bank, Nationwide, NatWest Group (NatWest, RBS), Santander, TSB, and Virgin Money.

The survey data for this report comes from Insider Intelligence's UK Mobile Banking Competitive Edge Survey 2020, which was fielded between May 16, 2020 and May 26, 2020 — 1,100 UK respondents were asked to rank the value of 41 innovative mobile banking features. Respondents to the survey were mobile banking users selected to align with the UK population on the criteria of gender, income, and age.

 

Want to hear from the leaders of digital transformation in finance? Insider Intelligence is hosting two free webinars called “The Bank Insider Panel – Acting on Consumers’ Accelerating Digital Adoption.” Click here to reserve your spot.Learn more about the financial services industry

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Business

Bold Penguin is acquiring RiskGenius to enhance its Software as a Service platform for insurers

  • Bold Penguin continued its acquisition spree with RiskGenius to further enhance its Software as a Service platform.
  • And this purchase will help the insurtech further enhance its platform.
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry with the Fintech Briefing. You can learn more about subscribing here.

The US-based B2B insurtech has entered a definitive agreement to acquire RiskGenius, per a press release; details around the acquisition haven't been disclosed.

RiskGenius has developed document intelligence software along with other data and analytics products, which will become part of Bold Penguin's existing Software as a Service (SaaS) platform under the acquisition. This marks Bold Penguin's second acquisition this year, following the purchase of multiquote platform for standard and surplus lines business insurance market xagent.

Bold Penguin provides technology solutions for the $300 billion commercial insurance space—and the latest purchase will help it enhance its platform. Bold Penguin partners with brokers and insurers to make underwriting small commercial policies a viable business.

Its products include a commercial insurance exchange that connects businesses, agents, and carriers to the right quote, as well as an agent terminal that lets agencies quote and bind commercial insurance. Its clients include Nationwide, which teamed up with Bold Penguin to enhance the underwriting of its commercial insurance line. RiskGenius will enhance the fintech's existing product suite, as it focuses on the renewal stage of the policy lifecycle and leverages AI and machine learning to understand terms of coverage, including policy review, compliance, and emerging risk assessments.

Underwriting policies is becoming increasingly difficult for insurers, as the process is becoming more complex due to emerging risks, like cybercrime. Emerging risks, including cyber threats and disruptive environmental patterns, make it harder for insurers to assess the actual risk related to customers' coverage.

The number of phishing websites, for example, has increased 350% during the crisis. That said, risk assessments can be significantly enhanced via new technologies like machine learning, AI, and advanced analytics, while insurtech partnerships can help with implementation of such solutions. Bold Penguin and RiskGenius can help mitigate these risks; one of the latter's clients already includes Guy Carpenter, which partnered with the fintech earlier this year to enhance detection and qualitative analysis of silent cyber exposure—cyber-related losses from insurance policies not designed to cover cyber risk.

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