By distilling decades of research in the fields of quantitative analysis, behavioural economics and portfolio management into easily accessible B2B APIs, Kidbrooke enables fintechs and financial institutions to build next-generation digital customer experiences. Their cloud-native APIs allow banks, insurers and Fintechs to create engaging and reliable customer and advisor journeys alike in a fraction of the time and cost that it would take to develop them from scratch. Currently, their API – OutRank, is running the digital pension planning service for Skandia, one of the largest life insurers in Sweden.
After nearly 20 years of an international career within insurance and capital markets, Fredrik Davéus and his co-founders set off on a journey to equip the industry with faster, more affordable and transparent offerings, powered by cutting-edge technology.
Passionate about innovation and driven by the expert operational knowledge of large incumbents’, Fredrik and the team has been able to leverage their experience in design and implementation of large scale distributed systems to build high performing solutions addressing some of the key challenges within the digitalisation of modern banking and insurance businesses. Today, Fredrik and his team carry on creating technology improving financial decision-making processes for millions of consumers through Kidbrooke’s banking and insurance clients, driven by the corporate vision of a world where everyone can make educated financial decisions.
What has been the traditional response of the financial industry to technological innovation?
It is fair to say that the financial sector is conservative in its nature. Banks and insurers manage peoples’ and firms’ hard-earned financial resources, and therefore it has traditionally been an area that requires an extra layer of security and resilience. At the same time, the conservatism of the industry tends to deprive financial institutions of flexibility, which is a necessary element of any innovation process. Therefore, banks and insurers tend not to be the first adopters of emerging technology, drawing their motivation from regulatory scrutiny or customer demands.
How has this changed over the past few years?
The past couple of years have been characterised by an increased regulatory scrutiny – MiFID II and IDD directives have been an impactful force to change for the European banks, insurers and wealth managers. These regulations required the financial institutions to increase the transparency of their decision-making and encouraged them to put their customers’ interest first while advising them on their financial situation. Another large trend is the shift in customer’s expectations towards more comprehensive digital experiences, which has of course been even further amplified by the COVID-19 pandemic.
Is there anything that has created a culture of change inside the institutions?
The digitalisation trend, which had already been unfolding in the industry, has been significantly accelerated by the Covid19 pandemic. In this rapidly changing, uncertain environment, insurers and wealth managers have had to find new ways to interact with their customers, and many incumbents have made digitalising of their operations a priority.
What Fintech ideas have been implemented?
There is a growing consensus among the institutions that the hybrid approach to financial services is the most flexible way of interacting with consumers. Therefore, some players have started looking into digitalising their value chains. In particular, we see many financial institutions looking into complementing their offerings with reliable and intuitive digital wealth and insurance experiences: digital pension planning, mortgages, savings and investments as well as insurance. Many such firms choose to own, personalise and manage the user experiences of these services, while leveraging Kidbrooke’s analytics through our versatile APIs. This has been the case for Skandia, one of the largest insurers in Sweden, who recently went live with their hybrid pension planning offering. Among the main themes discussed at the recent Singapore FinTech Festival, an API approach has become the growing consensus for the most popular way to add desired functionalities and design truly bespoke services for the rapidly evolving financial sector.
What benefits have these brought?
Primarily, the development of digital and hybrid wealth and insurance journeys has helped to greatly improve the ROI of these businesses, which has suffered greatly as a result of the new regulations. The intelligent automation of some of the processes within the value chain has helped to improve the cost-to-income ratio, which in turn has opened the opportunity to reach and serve more customers, making the traditionally exclusive industry more available to everyone. Secondly, consistent, high-quality digital channels have enabled these firms to better reach and address the issues of their customers even before they know they need help. For instance, our financial calculation engine allows our customers to constantly monitor the financial situations of all their customers, equipping the advisors with up-to-date lists of clients who need their attention, and suggestions of the next best actions for each of them. Finally, the cutting edge technology at the heart of the offering allows our customers to easily build more financial journeys to extend their offering over time.
Do you see any other industry challenges on the horizon?
The introduction of Open Banking in Europe has prompted banks to concentrate on the myriads of data and infrastructural challenges to make the change technologically possible. We believe the next step could be based on deriving value from all this data, and that is an area where we believe traditional banking and insurance firms would face another challenge. Most traditional banks and insurers provide siloed services, keeping functional divisions separate from one another, leaving it up to the customer to consider a holistic picture of their financial health. The era of open finance is likely to play an important part in destroying these siloes, requiring the banks and insurers to consider their customers comprehensively and individually.
Can these challenges be aided by Fintech?
These challenges can of course be aided by a number of emerging technology companies within the financial industry. For instance, Kidbrooke has always been very mindful of how the customer needs would be perceived in the era of open finance. Therefore, we placed the simulation of the holistic balance sheet of the end-customer at the heart of our API, OutRank. This way OutRank can simulate, optimise and advise on any financial decision that has a modellable pattern of cash flows, meaning it’s well-equipped to drive the financial institutions’ digital decision-making into the “open” future.
We believe that technology driving core business processes within the financial sector needs to be aligned with the long-term vision of how the industry would develop. And we are convinced that in the next period, the ability to easily extend your offerings to support a holistic picture of the customers’ finances will be a deciding factor for being competitive in an open finance world.