AI Frontiers and innovation in Wealth Management

Savethedate: June 27th 2018 GFT and Virtual B are hosting a workshop on Artificial Intelligence frontiers and how financial data management can innovate wealth management.

Agenda

  • 10:30 – 11:00 Guests Registration and Welcome Coffee
  • 11:00 – 11:10 Welcome and Introduction – Dante Laudisa, Marketing e Communication Director GFT Italia
  • 11:10 – 11:40 Keynote speech “Dati: l’oro delle istituzioni finanziarie” – Roberto Ferrari, Key influencer e Advisor digital banking & FinTech
  • 11:40 – 12:00 “2018, l’anno della tempesta regolamentare: trasformare i vincoli in opportunità grazie alla Financial Data Science” – Serena Torielli, CEO Virtual B
  • 12:00 – 12:40 “Know Your Client” – SideKYC live – Raffaele Zenti, partner Virtual B and  Maximiliano Barberi, Delivery Manager CU Insurance GFT Italia
  • 12:40 – 13:00 “Tecnologie smart per soluzioni a basso impatto organizzativo: si può fare” – Umberto Zanchi, Executive Director CU Insurance GFT Italia
  • 13:00 – 13:15 Q&A
  • 13:15 Chiusura lavori e Light Lunch

For further info:

Virtual B Contact

GFT Italy Contact

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GLG – Gerson Lehrman Group – Council Member

SUCCESSFULLY CLOSED THE IPO OF ARCHIMEDE

On May 17th Archimede SpA (“Archimede”) obtained from Borsa Italiana the decree of admission to negotiation on AIM Italia – Alternative Capital Market, with first trading day on the 21st may 2018.
The IPO process for Archimede’s ordinary shares – with linked warrants – has been successfully closed with an amount of Euro 47 million.
Such a result has been reached with a demand, coming both from Italian and international investors, overcoming Euro 60 million, more than the maximum collection target that was set at Euro 47 million.

At the first trading date, Archimede’s promoters will own special shares amounting Euro 1.000.000 (100.000 special shares without voting rights, convertible into ordinary shares upon conditions and following ways set in the corporate bylaws).

With reference to the specific position of Andrea Battista, for his ordinary shares a 36 months lock-up period is foreseen after each conversion tranche.

Archimede is the new Special Purpose Acquisition Company cofounded by Andrea Battista, Matteo Carbone and Gianpiero Rosmarini.

The objective of the project is – also through the business combination and upon the obtaining of the required regulatory approvals – the set-up of an Insurance Company insurtech-based which, leveraging on the specific successful managerial and entrepreneurial track-record of the proponent-team and of the management team, generates:

  • the strengthening and profitable growth in the reference segment of the insurance company deriving from the business combination;
  • an independent non-life bancassurance platform;
  • distinctive service capacity for innovative insurance distribution networks;
  • a full employment of insurtech innovation in all insurance processes.

The Board of Directors of Archimede is composed by Andrea Battista (Executive Chairman), Gianpiero Rosmarini, Dario Trevisan, Mayer Nahum (Independent Board Member) e Carlotta De Franceschi (Independent Board Member).

UniCredit Corporate & Investment Banking acted as Global Coordinator and Bookrunner. Banca Finnat Euramerica S.p.A. acted as Nomad for the admission and Co-Lead Manager and acts, also, as Nomad for trading and Specialist.

Archimede and its Promoters have been assisted by the Law Firm Trevisan & Partners while the banks by Gianni, Origoni, Grippo, Cappelli & Partners.

KPMG S.p.A. has been appointed as independent auditor.

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GLG – Gerson Lehrman Group – Council Member

B-hive Roadshow 2018 – Milan

Thursday, May 17, 2018 –   

Fintech District and B-Hive are joining forces to bring you a one-day event of pitching, networking and collaboration between the Belgian and Italian fintech ecosystems.

Why Milan?

  • Milan has an excellent business environment: starting a new business takes 6 working days (faster than in the UK or Germany).
  • It’s is the third largest exhibition center in the world after Hanover and Frankfurt.
  • Finally, it’s the European city with the highest density of multinational companies: home to 3,000 multinational companies with over 289,000 employees and € 169 billion in turnover.

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AGENDA

13h – Registrations
14h – Welcome to Italy by Ministry of International Affairs
14h35 – Intro to Belgium by Belgium Ambassador Frank Carruet and B-Hive
15h – Intro to Italian Fintech Landscape by Fintech District
15h20 – Pitching Session #1
16h20 – Coffee Break
16h40 – Pitching Session #2
17h30 – Closing
17h35 – MoU Signing + Speeches from B-Hive/Fintech District
17h50 – Fin & Tonic Networking and Drinks
19h00 – End

Apply

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GLG – Gerson Lehrman Group – Council Member

Archimede the new Insurtech SPAC

Go-Live for Archimede, the new spac – founded by Andrea Battista, Matteo Carbone, Giampiero Rosmarini – aimed at the development of an innovative Italian Insurtech carrier independent, multichannel and focused on protection business.

Archimede S.p.A. deliberated the next formal start-up of the listing process on the AIM Market of the Italian Stock Exchange targeting 30-47 million euros funding.

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Archimede is the new Special Purpose Acquisition Company promoted by Andrea Battista, well known insurance manager Giampiero Rosmarini (known professional and banking expert) and Matteo Carbone (international thought leader on insurtech topics).

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The objective of the project is – also through the business combination – the set-up of the first Insurtech Insurance Company of the Italian market which, leveraging on the specific successful managerial and entrepreneurial track-record of the proponent-team and of the management team, generates:

  • a strengthening and profitable growth in the reference segment of the insurance company deriving from the business combination;
  • an independent non-life bancassurance platform;
  • a distinctive service capacity for innovative insurance distribution networks;
  • a full employment of insurtech innovation in all insurance processes.

The industrial project foresees the implementation of 4 main strategic/ operative streams, characterized by specific lines of action:

  1. Further profitable development of the business of the TargetCo: optimizing the existing business (program of careful portfolio selection, investment optimisation, general expenses rationalization) and implementing a program of new development initiatives (relaunching existing insurance agreements thanks to the stronger capital position and starting-up new distribution relationships leveraging the track-record of the new shareholders/ managers; valorizing human resources and the service industrial competences).
  2. Development of non-life non-motor bancassurance: building-up new distribution capacity in Italy (definition and implementation of new distribution agreements; leverage on existing distribution agreements also for the distribution of the new non-life products) and setting-up an efficient operating machine serving the new business (design and implementation of an innovative product offering in retail/ family protection with some extensions to the SME segment; implementation of a dedicated “service machine” evolved starting from the current operating and technological assets).
  3. Development of non-life non-motor retail-broker channel: building-up new distribution capacity in Italy (set-up of agreements with selected brokers characterized by innovative distribution structures, focused on retail business and with specific vertical competences) and putting in place an efficient operating machine to serve the new business (taylorization of product offering, use of the “service machine” that will be developed on a multichannel basis).
  4. Digital Innovation & Insurtech: following an approach of “pervasive insurtech”, technological innovation will be embedded inside the whole insurance value-chain of risks underwriting and management of the business combination by assuming a business accelerator role. That – in line with the “make-buy-ally” flexible model – through the progressive integration of digital innovations (insurtech) in order to support the activity of the intermediated distribution channels, to develop a distinctive “insurtech-enabled” product offering and to characterize the Business Combination as the reference “Bancassurance Platform” for the new fintech entrants and for the development of the “incidental channels” on the Italian markets.

The integration and development plan will be directed to a relevant capital management discipline and to a consistent resiliency over time in order to set a S2 ratio target well above the minimum regulatory requirements.

The Board of Directors of Archimede also deliberated to adhere to a non binding Letter of Intent with Net Insurance Group with which, as possible TargetCo, will implement the above described business combination  subject to the signing with Net Insurance Group of a following binding agreement and to the obtaining of the required regulatory approvals.

Cattura

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GLG – Gerson Lehrman Group – Council Member

WealthTech and Roboadvisory: A quick Chat with Paolo Sironi

Wealth management is definitely changing and is one of the most sensitive areas of Fintech Revolution. We asked a couple of question on this topic to Paolo Sironi (website: http://www.thepsironi.com) IBM Industry Academy member and International keynote speaker.

Question: What’s your take on roboadvisory? Is it a fancy way to sell the same old stuff or can it be, as claimed by its supporters, a new paradigm to bring high quality asset management services to a broader customer base especially young people with limited amount to save?

Banking has always been one of the largest technology plays, although it is currently challenged by a new way of innovation which threatens existing infrastructures based on outdated legacy systems. Yet, Wealth Management is one the banking businesses which has been less affected by technology transformation until now, and always relied upon personal relationships. On one side, this technological delay spells for great opportunities to provide startup innovation on the digital wealth management space, of which Robo-Advisors are one example. On the other side, this is also the consequence of the asymmetry of information which is rooted in investors’ psychology (apart the self-directed few) which has allowed to build a wealth management industry that is largely dominated by the offer side.

Investors’ cognitive biases, when it comes to investing, cannot be easily overcome by digital technology. Digital is a PULL technology, which means it is well suited for people who access digital services with a purpose: more or less they know what they want. Investing instead largely operates in a PUSH economy, which means that investment products are sold to final investors. The history of Trading on Line platforms is also revealing, since on average no more than 20% of ToL customers’ transactions fund the remaining 80% which are typically dormant on the platform. This is the reason why Robo-Advisors grew very differently from their initial ambitions: more among mid 40s clients instead of millennials, more among affluent than retailers. In my bestseller “Fintech Innovation: from Robo-Advisors to Goal Based Investing and Gamification”

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I make no secret about these mechanisms, and I see that the WealthTech landscape is effectively landing where I indicated: more on business to business to consumers (B2B2C) or business to business (B2B) offers than business to consumers (B2C), which I branded Robo-4-Advisors. I believe that the hybrid model “human advisors” plus “machine automation” will be the dominant model for a while, although something is starting to shift. Artificial intelligence is becoming more conversational, which can ultimately turn digital from being PULL to being PUSH technology. Only than the game will truly change.

Question: The patron of Easyjet has recently launched a saving account that should exploit the tax benefits of UK IFISA regulatory framework,  regulation is often seen as a shield that protects incumbent financial intermediaries from competition of innovative players is something changing?

I always advise to see the positive side of regulation, especially in the aftermath of the global financial crisis. In a very asymmetrical world, such as banking, regulation is mandatory to foster investors protection although regulatory requirements can be an overkill, inconsistent or subject to damaging arbitrage. Honestly, shoot the industry not the regulator if regulation is not consistent: should the industry be able to self regulate, regulation would not be needed. However, what truly matters today is that Europe is facing a regulatory storm made of PSD2, MIFID2, PRIIPS and GPDR. If we read regulation carefully ,we can devise there is a consistent spirit of regulation across Europe, which is the attempt to make the banking industry more open (PSD2), transparent (MIFID2), understandable (PRIIPS) and protective of people data (GDPR).

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This will force many financial firms to transform their business model from transactions (commissions on products, which are progressively squeezed) to services (fees for added value services and advice). Without technology and fintech innovation this change will not be feasible, reason why regulation is an essential engine for sustaining innovation.

Question: The fintech wave that is hitting payments industry and retail banking seem less disruptive for wealth management, where good relationship with clients seem to matter more than cost saving and efficiency gains allowed by technology, is this just a temporary illusion or this segment may actually prove more resilient to change in future?

I believe many commentators and entrepreneurs of the Fintech ecosystem have been making an innocent but substantial mistake: they have debated payments, wealth management, credit and insurance as separate pillars called PayTech, WealthTech, CreditTech or InsurTech. Fact is that, if we want to be truly digital we have to conceive a client-centric digital platform as the sustainable outcome of innovation, because only platforms win on digital. What is such a platform? Clearly not an agile deployment mechanism of banking products, such as many challengers banks seem to imply. Banking as a Service should mean to create a client-centric platform which has the personal financial equation at core, either for individuals or SMEs, in which the operators are logical symbols. “Earning – Paying = Saving + Investing + Lending + Borrowing +Insuring + Retiring + Donating”. Big data is generated on the left side of the equation, because of digital payments which are the gateway of the banking relationships. But most added value products are still laying on the right side of the equation, like investment and insurance products. Which means that the only way to stay profitable on digital, without overcommoditizing, is the learn how to move from the left side to the right side of the equation in a continuum called “engagement”. Therefore, only the bundling of digital payments and digital wealth management into an AI powered engagement mechanism will allow to generate a resilient transformation of the banking industry.

How do you see Italy from your global perspective? Is fintech more a threaten or an opportunity for our country?

I think FinTech is a great opportunity for Italy. The banking system is still facing difficult years, which will be dominated by banking aggregations and cost cutting, while interest rate margins and intermediation margins are due to shrink further. I believe that only technology and open innovation will help banks to land onto a new landscape made of agile operations, lean business models, value for clients, new professional opportunities for banking employees and small entrepreneurs. Innovation generates growth, and growth we are compelled to seek for.

Paolo Sironi short bio

Paolo is C-level advisor for banking innovation, mentoring financial institutions and entrepreneurs globally on digital business models and investment analytics. He is visiting professor on Fintech innovation for post-graduate courses and formerly held senior roles in quantitative risk management and investment banking. He owns a track record as startup entrepreneur, and is author of bestselling literature on finance, technology and regulation to guide financial services towards sustaining innovation out of today’s disrupted landscape. Author’s page thepsironi.com

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GLG – Gerson Lehrman Group – Council Member

Understanding Insurtech – few questions to Matteo Carbone

Insurtech is one of the most interesting and relevant branches of Fintech universe but is still less known and to understand it better we asked few basic questions to Matteo Carbone, Founder and Director of IoT Insurance Observatory and one of the best known thought leader on this field.

Question: We can find a lot in the news about innovation in financial services with focus on payment system, mobile banking and even robot advisory, but insurtech is quite a less common argument: can you please tell us in brief what is it about?

Answer: You have right; it is less common. But it is not less interesting.
I would like to share with you a concrete example of that. I have written – together with Andrea Silvello the founder of the insurtech startup Neosurance – the book “All the insurance players will be insurtech”. I have been the first – and at the end of March still, the only – book dedicated to the insurtech trend. But It has been steadily in the top 1000 bestseller management book on Amazon since the publication.
Back to your question, Insurtech is the usage of technology in the insurance sector. How can a player in the insurance sector not to pose the question of which modules within its own value chain should be transformed or reinvented through technology and the use of data. We live in an era where you can only innovate or die. This is the reason because I believe any insurance players – from the reinsurers to the insurance carriers to the intermediaries – will be insurtech, meaning organizations where technology will prevail as the key enabler for achieving their strategic goal.
Insurance is about to assess, manage an transfer risk. Insurtech is “superpower” have enhanced the ability to perform those activities.

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Question: How will insurtech affect employment in insurance industry? Will all administrative staff be replaced by AI ?

Answer: Yes as the adoption of personal computer and mail had done in the past. The employment in the insurance industry has changed compared to 30 years ago and will change faster in the future.
But let me say that this will be not the most immediate impact and for sure not the most relevant.
Let’s consider to the key unique characteristic of the insurance sector. On one side, talking about the top line, the sustainable growth in the insurance sector require underwriting discipline. On the other side, when we talk about costs, the claim payment is the elephant in the room. Well, AI has the potential to tremendously improve the effectiveness of the underwriting decision and the claims settlement decision. I’m not talking about the wishes of some ambitious and brave founders screaming daily the superiority of their AI and the readiness to eliminate the humans from those processes, but sadly their startups have paid more than $1 as claims for each $1 earned from policyholders in the last 12 months. Instead, I’m talking about decision support systems which have been trained on millions of insurance policies and claims. Tools capable of supporting the activities of the people enhancing the effectiveness of their decisions.

There is a lot of talk regarding Internet of Things (IOT), how it will affect insurance industry?
Answer: Yes, a lot of talks but unfortunately 90% of the discussion are scraping the surface or focusing some myths crystallized there for years. The average understanding of this opportunity in the different markets is low, and there are a lot of superficiality from the analysts in the various markets. But I have been lucky to have the opportunity to see with my eyes some players obtain amazing results and create the foundation for a brilliant future in insuring the hyperconnected world: Unipolsai, Groupama, Discovery, American Family, Allstate, Swiss Re and Munich Re only to name a few.
I can talk for days about my view on how IoT will affect the insurance industry, the current best practices, and the typical pitfalls I have seen. Trying to make a long story short, IoT insurance is a paradigm based on the value sharing between the Insurance company, the intermediaries, the clients and the entire society. Insurance IoT is the bundle between an insurance contract and services based on IoT data. It is common to hear Insurance CEO affirm their strategic goal to sell services to their customers, when these services are based on IoT there is a terrific opportunity. The same data necessary to deliver these services can be used to improve the technical profitability of the insurance portfolio through a better risk selection, an enhanced loss control including all the claims management activities, the mechanisms to influence behaviors promoting the less risky ones, and more accurate pricing. The sharing of this value with intermediaries and clients have already allowed some insurance carriers to effectively deliver a valuable bundle between insurance coverages and IoT solutions

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Amazon is recently talking with JP Morgan and Capital One to enter retail banking industry (after deploying some 3Bn in corporate lending) how about insurance? Are there any Big Bad Tech Giants looking at this sector?

Answer: Let’s start with the personal lines, where the Big Tech Giants look to have more chances; I think they will not disrupt the insurance sector. I believe they will do something – especially around insurance coverages on the products they sell – but they will not be able to touch the core of the insurance profit poll of personal lines (auto, property, life, health). My view is based on two reasons. The first is the need of underwriting discipline to survive in the insurance sector. It looks to me that underwriting discipline conflict with the culture of any tech giant. The second aspect is the local characteristics of each insurance market what the customers want (need) to buy in the different markets and how they want to buy it. I’m skeptical about the tech giants’ ability to deal with those local insurance characteristics. Let’s image tech giants deal with that from their offices in Silicon Valley or the European hubs in Dublin. I believe this weakness will emerge as soon as they dirty their boots on the insurance distribution (or more steps of the value chain). About the commercial lines – the small and medium market – I see more threats for the incumbents…but not from the tech giants, from small players have a deep knowledge of the single business and a customer base already in place. Those players can cross-sell insurance to their clients, some of them have already become an MGA to do it.

How do you see Italy from your global perspective? Is fintech and insurtech more a threaten or an opportunity for our country?

Answer: Let me skip the fintech part, I’m an insurance guy, and because I’m disappointed about the superficiality of how to speak about insurtech without any cognition of the insurance fundamentals, I don’t want to do the same saying some superficial stuff about fintech.
About the insurtech, the Italian market is the international best practice in the usage of telematics. There are currently more than 7 million policies telematics-based in Italy, the last data from IVASS shows a penetration higher than 20% on the auto personal lines. The lessons learned by the insures on the Italian auto insurance market will be precious in their transformation to Insurtech, because all the insurance players will be insurtech.

 

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Amazon may partner with JP Morgan to offer bank accounts

As reported by Financial Times Amazon is considering to launch a product similar to a bank account that will be offered to its customers. The project is said to be in an early stage and some discussion are in progres with JPMorgan Chase

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Since payment management is a highly regulated sector some discussions are said to be in progress with Federal Deposit Insurance Corporation (FDIC) and even more complex issues are to be addressed with other specific laws like the Dodd-Frank that sets a cap to interchange fees paid to retailers for debit-card purchases.

The tech giant has already entered the market of lending to small businesses operating on its Marketplace platform (for a total value o 3 Bn$ since 2011) and should not find too difficult to comply with the specific regulation of payments industry in order to set this additional step in its growing strategy.

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Can Fintech disrupt real estate market?

Will real estate agents, property and facility managers share the dramatic fate of dinosaurs?

This kind of comparison may look a little bit extreme, but the idea should be taken in serious consideration as recently pointed out by the Forbes Real Estate Council.

While brick and mortar banks and traditional  payment agents are trying to keep the pace of Fintech innovative startups and to figure out how to cope with the moves of Tech Giants towards financial services, a new wave of Proptech players is coming to disrupt what was so far considered a traditional sector.

Crowdfunding platforms may let individuals to access large real estate development projects, allowing small investments that could limit risk through divesification.

Virtual real estate broker like purplebricks  or settled  may help private individuals to sale or rent properties charging flat fees rather than usual market rates with savings that may reach 5,000 pounds per deal.

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Techword has raked 12 most disruptive proptech companies that may change the shape o real estate markets in upcoming months.

To sum up the most relevant drivers of disruption are expected to be

  1. Easier link to capital markets for both equity and lending resuorcers
  2. Reduced frictions and Information Asymmetry between demand end offer of property
  3. Advanced Technology solutions to handle contracts, payments, and communication between all individuals and corporate involved in the market

It is not possible to foresee precisely what upcoming real estate market will look like and if current incumbents are going to transform or disappear, what we could take for granted and  is valid for all the Fintech revolution space is the famous principle (wrongly attributed to Charles Darwin):

It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change

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