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OHIO’S FINTECH71 ACCELERATOR PICKS TEN STARTUPS FOR ITS INAUGURAL COHORT

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OHIO’S FINTECH71 ACCELERATOR PICKS TEN STARTUPS FOR ITS INAUGURAL COHORT

UK-based blockchain payments platform Billion secures $100,000 grant 

Valentina Isakina

Valentina Isakina

After a rigorous global process and rounds of technical and qualitative reviews,Fintech71 has officially chosen its inaugural cohort of financial technology startups. The ten startups were formally announced today at Finovate in New York City. Three European companies, from the U.K., Ireland and Portugal, are among the ten winners.

London-based Billion Group has been named one of the fintechs in the first cohort, in recognition of its groundbreaking platform for financial transactions using distributed ledger to exchange regulated currencies.

The announcement coincides with more corporate partners declaring support for the effort. In the last few weeks, Accenture, Klarna Inc., Westfield Insurance and Corporate One Federal Credit Union Inc. have also joined the extensive ranks of the private sector partners which already include companies, banks and insurers such as KeyBank, Huntington Bank, JPMorgan Chase Bank, Grange Insurance, Progressive Insurance and Kroger, the largest food chain in the USA.

Fintech71, a first-of-its-kind nonprofit accelerator, is run by Ohio-based industry leaders to spur innovation and growth and is supported by JobsOhio, the state’s private economic development corporation with the mission to grow the economy and bring jobs and investment to the state. The intensive ten-week programme is designed to accelerate access to top financial services companies and expand the innovation pipeline for private-sector stakeholders.

 “We are thrilled about the quality and diversity of this inaugural cohort,”said Matt Armstead, executive director for Fintech71. “In fact, half of the teams are international and represent specialties ranging from blockchain to personal finance. We believe our ten-week programme will provide an ideal springboard for these companies to graduate from emerging startups to scalable businesses, especially with access to many Fortune 500 and Fortune 1000 partners across Ohio.”

Valentina Isakina, chair of the Fintech71 Board of Directors and managing director for financial services at JobsOhio, said Fintech71 received a phenomenal response with applicants from across the globe and is excited to welcome the startups to Ohio.

“We are fortunate to have the business landscape and collaborative culture to support a unique venture, such as Fintech71 and be attractive for global fintechs,” Isakina said. “Ohio is home to a multitude of global financial and retail leaders, many of whom are backing Fintech71, eager to both mentor and do business with smart, innovative fintech companies.”

Each startup was required to have at least one fintech product or solution prototype in the market and a minimum of two team members attend the full programme in person.

The 10 winners, selected to the inaugural cohort are:

  • Billon (UK) – Blockchain-based payments platform
  • Elafris (US/San Francisco) – AI/virtual insurance agent
  • Hexanika (India/NYC) – End-to-end Regtech and Big Data automation for banks
  • ID-Pal (Ireland) – KYC authentication and onboarding solution
  • James  (Portugal/NYC) – Machine learning credit risk solution for banks
  • LateShift (US/Atlanta) – Income optimisation tool for independent workforce
  • PayKey (Israel) – White-label money transfer to anyone on any social platform
  • SafeChain (US/Ohio) – Title insurance optimisation via blockchain
  • SKOOKii (US/Phoenix) – All-in-one payment platform for K-12 schools
  • “Stealth” stage (US/Ohio) – Commercial insurance technology for agents

Over the 10 weeks the startups will receive:

  • Stipend of $100,000 in exchange for a flexible, stage-appropriate equity stake.
  • Access to all of the participating companies’ C-level decision-makers.
  • Access to over 100 of world-class mentors across a wide range of industries with daily one-on-one mentor support.
  • Technical advisory support by Accenture for each team.
  • Introductions to potential clients and stakeholders across the state, including site visits to Cleveland and Cincinnati.
  • Six months of free office space from start of programme in downtown Columbus.

The cohort will officially start the week of September 18 and finish by Thanksgiving.

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Don’t ignore “lockdown fatigue”, UK watchdog tells finance bosses

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Don't ignore "lockdown fatigue", UK watchdog tells finance bosses 1

By Huw Jones

LONDON (Reuters) – Staff at financial firms in Britain are suffering from “lockdown fatigue” and their bosses are not always making sure all employees can speak up freely about their problems, the Financial Conduct Authority said on Monday.

Many staff at financial companies have been working from home since Britain went into its first lockdown in March last year to fight the COVID-19 pandemic.

One year on, the challenges have evolved from adapting to working remotely to dealing with mental health issues, said David Blunt, the FCA’s head of conduct specialists.

“During this third lockdown, there has been a greater impact on mental well-being, with many people struggling with job security, caring responsibilities, home schooling, bereavements and lockdown fatigue.”

Bosses should continually revisit how they lead remote teams, he said.

“The impact of COVID-19 is creating a huge workload for those considered to be high performers, while the remote environment potentially makes it much more challenging for those who were previously considered low performers to change that perception,” Blunt told a City & Financial online event.

Companies should consider “psychological safety” or ensuring that all employees feel confident about speaking out and challenging opinions.

“We’ve heard varying reports of how successful this has been,” Blunt said.

Pressures in the financial sector were highlighted this month when accountants KPMG said its UK chairman Bill Michael had stepped aside during a probe into comments he made to staff.

The Financial Times said Michael, who later apologised for his comments, had told staff to “stop moaning” about the impact of the pandemic on their work lives.

Blunt was speaking as the FCA next month completes the full rollout of rules that force senior managers at financial firms to be personally accountable for their decisions to improve conduct standards.

There have only been a “modest” number of breaches reported to regulators so far as firms worry about being “tainted” but more cases will become public as sanctions are revealed, Blunt said.

“Regulators won’t be impressed by lowballing the figures.”

(Reporting by Huw Jones; Editing by Mark Heinrich)

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UK regulators need global ‘competitiveness’ remit, says UK Finance body

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UK regulators need global 'competitiveness' remit, says UK Finance body 2

By Huw Jones

LONDON (Reuters) – Keeping the City of London competitive should be an “across the board” objective for Britain’s financial regulators after Brexit, a UK banking industry body said in a paper published on Monday.

Britain’s finance ministry is consulting on future financial regulation after the UK’s departure from the European Union cut the City off from the bloc’s financial markets but left it free to set its own rules as it competes with New York, Singapore and, indeed, the EU.

UK Finance, which represents high street banks, said the international competitiveness of UK banking would be enhanced by more proportionate regulation.

Mindful that the Bank of England is opposed to a formal competitiveness objective which would require it to consider the ability of UK banks to compete globally, the finance ministry has suggested some activities could be subject to less red tape like burdensome reporting requirements.

“The sector is of major importance to the UK economy, and this calls for international competitiveness to be a principle to which the regulators must have regard across the board and not just in respect of specific activities,” UK Finance said.

Consumers have faced a string of financial scandals, from pensions to the mis-selling of payment protection insurance, piling pressure on regulators to better protect them.

However, UK Finance took a more qualified stance, saying regulators should also remind consumers that they bear responsibility for their decisions.

Britain’s regulators are funded by levies on financial firms and UK Finance said annual requirements have risen by 11.5% over the past four years to nearly 900 million pounds.

“We therefore believe there is merit in reviewing the overall cost of regulation, in particular compared to that in other major financial centres, to ensure it does not act as a disincentive for firms to do business in and from the UK,” it said.

Any significant divergence from EU regulations could scupper attempts to secure an ‘equivalence’ ruling which would allow some UK banks and financial institutions to directly serve clients in the bloc again.

(Reporting by Huw Jones; Editing by Kirsten Donovan)

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How do you adapt your insurance pricing strategy in the face of increased price competition?

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How do you adapt your insurance pricing strategy in the face of increased price competition? 3

By Ketil Kristensen, Senior Advisor, Insurance, SAS

Many countries in Europe have in previous years experienced increased price competition for general insurance products. Especially in Southern Europe, the competition has been very fierce, fuelled by online price comparison websites. In Spain, Portugal and Greece, there has been a substantial drop in average premiums for products like motor, home and health insurance. This poses a real threat to the profitability of property and casualty insurers.

While some insurance products are highly specialised and almost impossible to compare, most common products have increasingly become commodities. Consumers can now easily compare them online.

When comparing insurance policy prices and details becomes as effortless as getting quotes for airline tickets or hotel accommodation on price comparison sites, more insurance companies will eventually enter the market. And thus price competition will increase.

Preparing for a price war

Once the price war starts, there is no way to avoid it. And insurers need to meet their competitors head-on.

To win a price war, insurers need to be meticulous when they set the premium levels. They might also need to rethink the definition of “profit” when they are making pricing strategies for the future. In a market where premium levels are volatile and the competitive situation may change rapidly, insurers also need the capability to evaluate potential future scenarios in a short period of time.

Setting the premiums right

In the fast-paced digital era, customers expect insurance prices to be easily available online. They will make inquiries for insurance covers for their cars or homes on price comparison websites and expect the prices to be available immediately. From an insurer’s point of view, the premium customers will see on their screens when comparing insurance policy prices is the sum of the insurer’s technical premium and the commercial loading.

The technical premium represents the break-even price that the insurance company would charge for the policy if it had no costs and no desire to make a profit. Commercial loading represents the sum of the insurance company’s costs and the profit it expects to make on the policy. Technical pricing is the subject of many actuarial textbooks. But as machine learning algorithms make their way into actuarial departments, we will need to rewrite those books. Modern pricing techniques that include machine learning algorithms are a notable improvement compared to traditional models. If applied properly, ML models will result in more accurate technical pricing given the same data.

But what about commercial loading? How much profit should the insurer aim for?

Every one of us has a different tolerance for how much we would pay for, e.g., a car insurance policy. Some customers don’t consider price to that important. Others will try to search for a better deal elsewhere, regardless of how much time the process would take. Most customers are somewhere in between.

Being able to price the insurance products analytically based on the “willingness to pay” is, for many actuaries, seen as the holy grail of insurance pricing.

Personalised premiums

Most insurers already do personal pricing to some extent today. For example, they give different discounts to policyholders with equal risk. However, there is often a great potential to do segmentation and price calculations in a more analytical manner. Ideally, insurers would like to set the premiums as high as possible, but not so high that customers move their policies to another insurer.

On the other side, insurers would like to move customers away from their competitors by offering low premiums – but not too low. The insurer must first determine the price sensitivity of insurance customers and then price each insurance policy so that it maximises the profit for the insurer. At SAS, we refer to this as portfolio optimisation.

Insurers that can quickly reoptimise changing prices in the online market will also quickly identify customers that are at risk for churn. They can then perform the appropriate actions to prevent this from happening.

Rethinking ‘profitability’

When insurers think “profit,” they usually mean the income statement for next year. This is about to change. The concept of Customer Lifetime Value (CLV) is becoming more and more common in the insurance industry. And many insurers are now refining their pricing strategy based on a maximisation of the CLV of all its customers, thus not focusing solely on the profit definition in the income statement. The CLV of an insurance customer is the net present value of this customer for the insurer, where behavioural effects like renewal, cancellation and cross-selling of other insurance products are considered for the entire lifetime of the customer.

To accurately compute CLV for a customer, the insurer will need data that describes the behavioural patterns of the customer. Most insurance companies have quite a lot of such data available – the problem is usually that it is not adequately structured. In practice, to quantitively identify the customer lifetime value, insurers need to integrate both actuarial and customer behaviour models. Once a system for this is in place, insurance companies will have a strong quantitative foundation to compute the customer lifetime value of their policyholders.

SAS and insurance pricing

Price competition is changing the insurance market right now. When a customer determines where to buy insurance, the price is the most important factor. Thus, to stay competitive and still run a profitable business, insurers need to set their premium levels just right. The evolution of price comparison websites – which provide real-time quotes on competitor prices and increased access to data that contains information about the customer’s insurance risk – has made the actuary’s job of calculating the premium more complicated.

Over the years, SAS has worked together with insurers to ensure that strong system support is in place to compute premium levels down to an individual policy level. These pricing systems have been put through the test in some of the most competitive insurance markets in Europe. They have turned out to be a valuable strategic tool for insurers to balance the desire for profit against the desire for market share. And maybe most important of all, they have enabled these insurance companies to effectively join the price war, fight it and still make a profit.

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