Collibra: safe and secure digital disruption of finance giants
In 2008, nobody was really talking about Big Data – but the financial crash led to more stringent regulatory requirements for banks to manage the sensitive information they possessed. Meanwhile, data governance firm Collibra was formed out of the University of Belgium’s research into semantic technology. CEO and co-founder Felix Van de Maele explains: “We were researching how to bring domain experts together and help figure out what data really means, because semantic technology is about how you define data in a way that it can be understood not just by people, but also by computers.”
Now, financial institutions had to be even more in control of their data, knowing where it was coming from, who was responsible for it, and that processes were in place to fix any problems that cropped up. Since this initial approach to compliance, which was defensive and reactive, data has been brought to the fore of the finance industry. Fast forward to 2019 and Chief Data Officer is a key role for companies as data management is recognised as a core strategic function. “Today, data drives the whole digital transformation,” says Van de Maele. “AI, machine learning, IoT: it’s all about data.”
A competitive landscape
Nowadays, financial institutions are not just in competition with each other, but with all kinds of client-facing organisations which serve an increasingly demanding consumer with their efficiency and ease of use. “Today, it’s not just about compliance. It’s about how we can compete with those data first companies like Google, Amazon or Facebook,” Van de Maele explains. “How can we extract more value? How can we serve our customers better? How can we build better products?”
Extracting value from the reams of data available nowadays and using this to disrupt the financial landscape is where Collibra comes in. “We believe data is becoming so valuable we need to treat it as a real asset and a key part of the business process. Just like you have SAP to automate and formalise your financial processes and Salesforce for your customer processes, you need a system to run and support your data processes.” Collibra’s data governance products and solutions are instrumental in helping organisations unlock the value of data, whilst remaining secure and compliant with regulations such as GDPR. “We are, so to speak, the system of record for the data team.”
It’s certainly a service with high demand – last year, the company celebrated a growth rate of 80% and today it serves around 300 customers including some of the largest companies in the world. In January, Collibra raised $100mn in its Series E funding round, led by Google’s investment arm Capital G. This brought the company’s value to over $1bn, affording it unicorn status. “We were very happy that CapitalG and Google reached out to us because the Google engineers said: ‘This is a really important problem and Collibra is the company that’s solving it in the best way.’ I think Google is probably the most mature data company in the world – even around artificial intelligence (AI) and machine learning.”
Tech giants are rightly taking an active interest in what Van de Maele dubs the ‘fintech revolution’. “It’s all about the customer, and I think within the financial services industry it’s hard because you still have that need for compliance,” he comments. “Some of the large established banks have legacy infrastructure which makes it harder for them to move faster.” This is where data comes in, helping to improve customer service, build new products and drive automation.
Secure, compliant transformation
As part of any digital transformation, security is often a concern for clients and end users, and this is only heightened when dealing with finance. “Data is going to become the differentiator, but what is going to be really important is that the consumer trusts the company that handles their data,” Van de Maele explains. “I think that’s a unique opportunity for larger financial institutions because they often have that trust – but it comes with a lot of responsibility. I think the key challenge is how we leverage data to extract the most value, while still making sure we comply with regulations and keep the trust of our customers.”
Building on its impressive growth, Collibra will look to remain sustainable and maintain the quality of its product as it expands and innovates. “Our product is enterprise grade because we’re working with the largest companies in the world,” Van de Maele comments. “We have real strategic partnerships with our customers. From a support, services and sales perspective it’s really important to keep investing to meet customer expectations.”
In addition, Collibra’s partnership with – and investment from – CapitalG will allow the startup to leverage AI and machine learning further than ever before. “There are two ways we will leverage that: one is embedding even more AI and machine learning into our own products, and driving automation. Through AI and machine learning, we can automatically route data to the right approval to show it’s GDPR compliant.
“The other way is within data science teams themselves. We’re now seeing AI and machine learning become more mature. As a bank, you need to make sure you are compliant: you need transparency, predictability and traceability… and you can enable that with AI and machine learning. That’s where there’s a big opportunity to extend the platform, and to provide transparency and control of data.”
As the finance space begins to grow and change – with fintechs and challenger banks providing increasing competition which will always breed innovation – it’s likely that yet more banks will look to tech startups like Collibra to transform safely and securely. “The largest institutions are going to feel the pressure of those fintech startups,” says Van de Maele, who feels this is the time for banks to ask themselves serious questions. “How do we make the most of the unique data assets we have to really drive innovation and serve our customers better? I think they’ll feel the pressure to do that.”
FIVE things fintechs must do to keep investors onboard
New investors flocked to the stock market during the COVID-19 pandemic. Thirty-eight percent of investors said they had never had a brokerage or similar account before opening one in 2020.
Low or no-fee trading options have helped accelerate the trend – nearly half of new investors said they accessed their account primarily through a mobile app. As FinTechs, how do we create the trust needed to keep new investors in the market and create a fruitful customer experience for them?
The financial industry does a disservice to individual investors if we merely offer tools that focus on making money quickly, an approach that usually backfires. Instead, the surge of interest presents an enormous opportunity for those who want to help more consumers use financial technology to educate them on responsible spending, saving, and investing in order to achieve financial wellness current fintech tools have welcomed individual investors in the door.
Now, it’s time to focus on education and improving their experience going forward. There are several ways those of us in fintech can step up to shape the future of retail investing so that it works better for everyone, starting with the following areas.
Equal access to financial wellness education
Financial health should be available to everyone — but today, not everyone has the educational resources to achieve it. One study shows that only 3.9% of students from low-income schools were required to take a personal finance class. What they aren’t learning in school or from family members, fintech companies can provide on their platforms.
The companies should move from solely offering financial services to a more responsible model of education, advice, and prescriptive choices to help consumers develop better habits and make wiser financial decisions. Not only can they empower consumers and bridge historical wealth divides, but they can also stimulate growth by opening up new consumer segments.
Just as we’ve come to expect that our fitness routines are tailored to our individual bodies, we’re also ready for finance tools that go beyond one-size-fits-all solutions. But only six percent of financial institutions say they’re using the kind of technology that allows them to deliver a deeply personalized experience. Fintech tools need to reflect that financial success looks different for each of us.
For one consumer, it may mean providing guidance on how to pay off student loans early; for another, it may mean prescriptive actions that enable them to stick to a budget for the first time; for a third, it could look like prioritizing environmental, social and governance (ESG) investments, so that her portfolio aligns with her political beliefs.
Now, we are seeing financial technology beginning to meet the demands of personalized finance in a substantial and meaningful way.
The rise of AI-Powered Advice
Big-picture advice and predictive guidance used to be a feature of high-end financial advisory firms — a perk only available to those who could afford it. But thanks to rapid advancements in data analytics and artificial intelligence (AI), that kind of holistic advice is now more accessible than ever. AI-driven robo-advisors can parse many different streams of financial information, delivering customized answers to key questions: Is it time to buy a home, or is it smarter to keep renting? Can I afford to take out another student loan?
Intelligent connectivity powered by AI can anticipate consumers’ needs and next steps, making proactive suggestions that guide them along the path to financial wellbeing. Fintech companies can also help consumers identify when their financial picture becomes too complex for a robo-advisor, and help them find a human financial advisor to meet their needs.
Focus on financial mental health
New investors are quickly finding that the market can be overwhelming. That’s not surprising, financial anxiety is common and studies show that financial stress can have an impact on mental health for some.
It’s not enough for fintech companies to give retail investors access; they also must provide the guidance and support that help consumers manage their financial well-being. Educational tools can ensure that consumers are well informed about their options.
Predictive analytics can anticipate consumers’ questions, serving them key information and insights before they ask. Features that emphasize a comprehensive notion of financial well-being, rather than short-term wins and losses, can also help ensure that consumers are keeping their eyes on the bigger picture.
Gamification for good
The surge of gamification apps has done an impressive job making investing as engaging as playing a video game or joining a social media platform.
Much of the current use of gamification emphasizes short-term thinking, but there’s also an opportunity to help consumers think more broadly about their overall financial picture. One example is peer benchmarking, a feature that enables help consumers to see how their financial habits compare to those of friends and fellow consumers.
Gamification can also be used to incentivize making smaller, smarter choices — for example, rewarding saving over making an impulse buy.
The future of fintech is about more than just broadening access to the markets. It’s about making sure more individuals have access to the tools that can help improve their financial well-being—in the ways that suit their own circumstances and needs. The potential to act within their own set of individual priorities, with their long-term financial wellness in mind is much more empowering to a consumer than simply relying on short-term, high-risk investments.