BY POST REPORTER

Next year is going to be pivotal for a number of reasons. Not only do most c o m p a n i e s

have to get in line with the upcoming general data pro-tection regulation (GDPR), but financial institutions will see a shake-up in the form of PSD2.

Oliver Lynch, who is the business development di-rector at Comtrade Digital Services, says that it’s going to “really shake up the bank-ing industry . . . as it will drive

competition in the payments market and foster innovation within the fintech space”.

“Banks will have to give third-party payment pro-viders access to their clients’ current accounts, with the client’s permission, and that fundamentally changes how banks operate,” he said.

“Complying just merely isn’t an option, you have a strategy and compete in this new API economy.”

Part of the challenge for banks is having to take on the new wave of fintech companies that will emerge. Unlike banks, these compa-

nies will be small, nimble and able to release new updates and features quickly, while banks may take a while to do it. However, it’s not all doom and gloom for banks.

“Banks can view it as a threat, but they should be viewing the potential oppor-tunities so . . . they should also be looking to cooperate with them,” he said. “These guys may be able to bring products that the banks don’t have to market a lot quicker or more efficiently than banks can, so the bank [could] do an iTunes approach, share revenue with the product they don’t cur-rently have and it can deliver it much more efficiently.”

Alongside PSD2, Comtrade has been working on its own innovations in the banking industry. The biggest one is chatbot technology, mim-icking human conversation so that the customer service

process is smoother and more efficient.

Lynch believes this technol-ogy can help with payment transfer, customer interaction and customer service, an-swering the standard ques-tions you would visit a local branch about.

“The 80 per cent of ques-tions that can be answered in real-time through a chatbot, essentially it’s a large data-base of questions and a large database of answers where you get the answer back in real time rather than having to go to a contact centre, get in a queue and wait for an agent to answer that question,” said Lynch.

Comtrade’s latest innova-tion was launching its own chatbot for Viber, doing it with two Austrian banks, Raiffeisen Bank and Addiko Bank, over the last month. Through it, you can transfer money from one

Viber account to another or if they don’t have a bank ac-count with that bank, send a QR code so they can take out money quickly.

The biggest thing that PSD2 allows is for non-banking brands to become payment companies in new and dif-ferent ways. Lynch gives an example of Ryanair or Aer Lingus becoming a payment service provider, taking pay-ments directly without service charges.

“It’s going to create some new market opportunities that currently don’t exist,” he said. “Banks can’t afford to be complacent; if they only comply, they’re not going to thrive. They really have to embrace it.”

The focus of fintech may be transactions and payments first, but customer service is also ripe for change

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Shaking up the fintech sectorDue to come in next year, PSD2 will bring significant changes to the financial market.

It will allow consumers and businesses to use third-party services to help manage their finances and will see banks compete against anyone offer-ing financial services. The reg-ulations will also help improve

customer protection and data security.

It will introduce two new types of providers. One is AISP (Account Information Service Provider), which provides access to bank customers’ account information, while the other is a PISP (Payment Initiation Service Provider)

who carries out the payment on behalf of the user.

Instead of using tradition-al banks, the next few years could see you using a specific app or service to pay for goods or services or send money to other contacts while still using your bank account. For banks, it means they will be obliged to

offer these third parties access to their customer accounts through open APIs (Applica-tion Program Interface).

Among the organisations we spoke to, the attitude is very positive, although there is a healthy degree of caution. For Paul Prior, chief innova-tion officer of FTI Consulting, the risk isn’t just understand-ing the regulations, but the customer as well.

“There is a willingness, par-ticularly in the banking sector, to work with fintech indus-tries, but there is a level of risk adversity in terms of ‘Will they understand the customer in five or ten years?’

“The emotional journey point is a really interesting one . . . you think about someone’s journey with car insurance, a lot of insurers think it starts when they type in ‘car insur-ance’ into Google. It’s not. It’s the point where they’re 16 and getting their driver’s licence.

“What we find with the cli-ents we work with is they’re starting earlier when identi-fying the customer experience and [looking more at] how they follow up.”

The new regulations offer interesting possibilities, ac-cording to Oliver Lynch, busi-ness development director of Comtrade Digital Services.

“What we think is interest-ing is you could have other brands that are non-bank-ing brands, say Aer Lingus or Ryanair, they decide ‘Okay, listen let’s cut out credit card processing fees’ and reduce them greatly,” he said.

“Companies who have massive brand trust and eq-uity already will be able to be active in the payment process-ing area and greatly reduce the costs of payment processing for their clients.”

Dominic Conlon, the head of corporate at Leman Solic-itors, Ireland, believes that all parties – banks, financial in-stitutions, fintech companies and customers – will benefit going forward.

“Most companies in the B2C fintech space welcome sensible regulation because it gives a sense of comfort for consumers who can say ‘My money is safe’,” he said.

The Sunday Business PostMarch 26, 2017 Focus On: Fintech 2017 43

ClaimVantage chief executive Leo Corcoran knows the in-surance busi-ness inside out, having

provided software to it for two decades. With ClaimVantage, though, he is seeking to bring about a disruptive improve-ment to business practices – one driven by software.

“We moved from on-prem-ise to the cloud about six years ago, linking in to Salesforce, which was a risky thing to do back then, but by 2012 it start-ed to pay off,” he said.

It seems that the insurance industry likes what it is see-ing: ClaimVantage doubled its business last year. Claim-Vantage works to help process life, health and absence claims for insurance companies, third-party administrators and very large employers in the US.

“It’s a niche within a niche, but it’s a global business,” said Corcoran. “We have custom-ers in North America, Austra-lia and Europe.”

One such customer is Irish Life, which ClaimVantage is moving into the digital age. Like all insurance companies, it has robust legacy systems, but today’s customers want mobile access and insurance companies themselves are keen to make sense of the data they have.

“There has been some dis-ruption in our business [sec-tor] around digital transfor-mation,” he said.

“Globally in insurance, life insurance is the laggard

[and] claims is seen as a backwater, despite it being where they make their money and spend money. Claims is now moving to the front and centre of the business, but there are 20 to 30-year-old legacy systems, and many are still using lots of paper and legacy green-screen systems. They want to move to a customer-centric view of the world [and] they’re trying to bring mobile in.”

ClaimVantage, which has operations in Ireland and the US, is now expanding.

“We employ around 16 or 17 people in Ireland now, out of a total of about 35, and we hope to hire more this year,” said Corcoran.

Corcoran said ClaimVan-tage’s cloud-based system means that once a migration is complete, systems need not become legacy ever again.

“Our mission in life is that we want to build a global soft-ware company and AsiaPac is our next big market. We update the software for all our customers, so it never becomes a legacy system. The final thing we want to do is provide world-class customer service. Software companies are notorious for not provid-ing good customer service, [but] the fact is if you look after customers, they look after you,” he said.

As to the future, Corcoran said the next area ClaimVan-tage is working on is big data and artificial intelligence (AI).

“That’s where we see it go-ing. So you have databases, but it’s still dumb data. What do you do with it? We’re look-ing at analytics and artificial intelligence. What can do you do to make your system work smarter?”

Some applications sound quixotic, but the point is that the industry is undergoing a quiet revolution.

“In the Japanese market, they’re putting AI bots into call centres to deal with the initial calls. They’re doing it today, but in other markets they’re not even asking about it.”

Corcoran said the transfor-mation of the financial sector is continuing, with different industries and sub-sectors moving at different paces. Nonetheless, fintech is the future for all of them.

“We’re still a few years off the end of the old days, but we’re getting there. We’re right in the middle of that space,” he said.

Claiming first place in digital raceFintech is changing the financial industries, but not as rapidly as outsiders may think. One company, ClaimVantage, is working to move insurance claims processing into the digital age

Leo Corcoran, chief executive officer of ClaimVantageThe future of customer

service through chatbots

Oliver Lynch, business

development director,

Comtrade Digital Services