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When we talk about FinTech trends at the European level, we quickly realise that each country has its own attributes, which are largely influenced by the country’s culture, as well as the banking environments specific to each country. While Germans are very attached to cash, for example, it has almost disappeared from the daily lives of Swedes.
Regarding FinTechs, we often encounter the same approach, which consists of focusing on a specific usage that they are trying to improve, or even disrupt, by focusing on the user experience of the end-consumer.
In general, these FinTech’s seek to offer services that the customer is required to use on a frequent basis to make them more relevant in everyday life. Scenarios known as “toothbrush tests”, i.e. for daily use, are what these new players are trying to conquer first. It is clear that payments, in the form of bank transfers or card payments, represent the most common uses.
Therefore, in Luxembourg, private clients will mainly find the solutions of the neobanks Revolut and N26, which offer different account packages, ranging from a very basic account to an account for +/-16 euros per month.
While other banks look critically at these newcomers, at Spuerkeess we decided to play the role of transparency, and we are proud to offer instant transfers from and to these new players, free of charge.
Similarly, since the end of 2021, our customers can aggregate their Revolut and N26 accounts into our S-Net e-banking solution and our S-Net Mobile app.
The growing importance of Open Banking
FinTech players will gradually try to expand their offerings in all financial areas, whether in the area of loans and credit or investments. One of the major levers will be Open Banking, which allows customers to connect their bank accounts to third-party applications such as credit platforms. In this context, we note that Luxembourg has a fairly unique position in this area, because unlike its neighbouring countries such as France or Germany, there is no “credit file” in Luxembourg, listing the “bad debtors”.
Therefore, it is all the more important for FinTech players to be able to connect to their customers’ bank accounts in a seamless manner. It is true that, from one bank to the next, the user experience will vary greatly, with some incumbent players seemingly ignoring more or less voluntarily their customers’ desire to be able to connect their account to the third-party service of their choice. The various national regulators have once again reiterated their determination to no longer tolerate these superfluous obstacles.
Here again, Spuerkeess is participating fully, as we are convinced that a bank account that can be easily connected to third-party offers will in the future be an increasingly decisive sales argument for the end-consumer. Spuerkeess offers an interface on its S-net, called “Spuerkeess Connect”, which allows customers to view the different connections they have authorised on their account and can block access via a simple click. The same applies to the connection via smartphone, while other banks redirect their customers to a mini-webscreen, on which the customer must authenticate via their LuxTrust certificate, Spuerkeess offers its S-net Mobile customers a 3-click connection via an “app-to-app” process, which is very simple and does not need to use LuxTrust certificate, while offering an optimal level of security.
The trend towards embedded finance
Another major trend we observe is that of “embedded finance”. This concept aims to take financial services (lending, payments, etc.) out of their “silos” in order to offer them to the customer when and in the context of their need.
We often read that data is the oil of the 21st century. At Spuerkeess, we make every effort to enhance the data and then make it available to our customers. For example, in the different contexts, by simply categorising inflows and expenses via our personal assistant MIA, or via the S-Tax “digital safe”, which automatically detects significant bank transactions for tax returns, such as donations to NGOs, tax advances paid, etc. In this way, the raw data is refined up to the stage of being able to feed an automated process that will help the end-customer file a tax return in a shortened fraction of time.
Crypto and challenges
Cryptocurrencies are attracting both new FinTech players and customers from all sides, who are hoping to see the value of their “coins” multiply. The promise to democratise and simplify access to and use of cryptocurrencies is the challenge incorporated into the leitmotiv of many FinTechs.
Spuerkeess, for its part, showed interest in Blockchain technology very early on, and has just completed a first concrete project to allow students to request the instant payment of their CEDIES student loan, subject to the scanning of a QR code with the S-Net app.
On the path to “super apps”
Inspired by Chinese and American apps, such as Tencent, Alipay, Amazon, major international companies are being forced to follow this new trend. The roadmap for many of these players with regard to “super apps” is often limited to offering the purchase and sale of a few cryptocurrencies. Thus, the Klarna, Paypal, Bloc (formerly known as “Square”) are trying to reinvent (some would even say monopolise), the e-commerce shopping experience by offering their own shopping apps, into which an entire set of features are grouped together, such as a price comparison tool, the famous “one click shopping”, automatic pre-filling of the delivery address, split payment, etc.
These are the very first FinTechs, which, after going through many adventures, have now found themselves with stock market valuations exceeding billions or even tens of billions of euros.
Spuerkeess favours collaborations, for example by integrating the “Payconiq” payment solution into its S-Net Mobile app.
The “official” players that are regulated and legitimate
The benefits offered by new players are multiple, but like any economic player, they must make money at some point. We are increasingly seeing that the players that had started with free offers are gradually seeking to monetise their relationships with customers by encouraging them to subscribe to premium packages.
In terms of investing on the stock market, some players showcase very attractive prices at first glance, but when we know that they are paid by the broker on the basis of a “payment for order flow” arrangement, we recommend that customers compare the stock market price for a given security and do their calculations to see which platform ultimately offers the best terms.
Like banks, FinTech players must be authorised or licensed in order to be able to offer services that, in the broad sense, fall under banking regulations. As such, FinTechs that depend on their concrete activity are often forced to formally identify their future customer and to do so are obliged to put them through the “Know Your Customer” process, during which the future customer will have to enter their contact details, address, and download a copy of their identity card. In the end, each customer must choose to complete x onboarding procedures, read x general terms and conditions, install and maintain x applications, define x passwords, receive x changes in terms and conditions, etc. or to work solely with a single “generalist” supplier.
The real scams we encounter in Luxembourg today are primarily in the area of “crypto investing”. By unscrupulous means such as telephone calls, false advertising, using the logo of a well-known brand, or even a political person, the con artists will attract customers to a website, where they will find a wonderful false story about how to increase their money by investing it in an “investment strategy” that is supposedly “risk-free”. After they have taken the bait, the fraudsters will make them believe that the strategy is profitable and will encourage them to invest more, on the premise that this will multiply their gains. Needless to say, in the end, these customers will find all their money taken, that the supposed profits have disappeared, together with the alleged experts.
1. Read the privacy policies carefully. These should be written in plain language.
2. Critically assess requests for personal data.
3. Remove unnecessary access rights from the FinTech application software.
4. Use complex passwords for FinTech accounts and do not share these passwords with other accounts.
5. Monitor your accounts on a regular basis to detect unauthorised transactions.
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