How Does Banking Taxonomy Works (Or Doesn’t Work)

How does banking taxonomy works in fintech

How does banking taxonomy works in fintech

The FinTech hype is starting to slowly wear off. The next sexy thing is InsurTech. That’s a good thing. We can stop focusing on the next ‘sexy’ application and start solving real problems. Raising money will become harder than using 4 buzzwords in one sentence. Investors are more educated now, more demanding. The money is still there but it will take a founder with a personal mission to tackle big problems like financial inclusiveness and not ’this cool app that is facebook for banking’. Mark Suster said it really well, and I completely agree with him – ‘When a founder is “mission driven” you get the sense that he or she will do whatever it takes to make an impact in the market they serve and will keep persevering whatever the startup trends of the month.’ I welcome that change.

Thanks for reading; YOU are awesome!

Have a wonderful week,


Platform Banking Taxonomy
By Pascal Bouvier

Like drunken sailors swinging fists at one another, we have been hurling around various terms to describe new ways of banking, new ways to deliver banking services. This post attempts to sort out a taxonomy and clarify the meaning behind the most salient terms, such as API Banking, Platform Strategy, Marketplace Banking, Banking as a Service (Baas) and Banking as a Platform (BaaP). I am using these terms within the context of the banking world in this post. Do note they apply equally to the insurance, asset management or payments worlds, indeed to the entire financial services industry.


If You Want to Convince The Bank To Change, Read This Blog
By Chris Skinner

The statement is clear: monolith firms are industrial age; platform firms are digital age. It also clearly shows the difference in focus. Monolith firms are heavy lifting physical assets; platform firms are providing open markets. This is why the industrial age firms have 100’s of thousands of employees to generate their market capitalisation whilst platform firms have just a few thousand. After all, an open marketplace has 1000’s of other people doing the work to buy and sell on your platform; a monolith firms does it all themselves. This is almost like an aha moment as, when I look at banks, they are monolith firms. Built for the industrial age, they like to control everything internally. They do everything themselves. Banks are A-Grade Control Freaks. The idea of opening up to all and sundry in a marketplace is like an enema to them, but they will have to do this to survive in the digital age.


Why It’s Critical To Get FinTech Regulation Right
By Daniel Nadler

Some argue that regulations stifle growth; others say they are critical to it. To me, regulation — specifically, sensible, nonobstructive regulation — is crucial to the success of the free market system; nonetheless, the key to maintaining the free market system is not a question of more or less regulation but a matter of getting the regulations right. That means government rules that provide a level playing field. Regulations specifically targeting fintech should seek to reduce the asymmetry of financial information between those on Wall Street and those on Main. They should also strive to make human interactions with the technologies safe. Fintech is too important to the future of the American and global economies to get wrong.


Insurance Sector Worried as Insurtech Startups Cosy Up to Customers
By Oliver Ralph

Losing control of distribution is one of the big challenges that established insurers face from new technology. Metromile, for example, is offering pay-by-the-mile car insurance in the US. Simplesurance, a German start-up, is selling product-by-product insurance via online retailers. What unites these companies — and many other insurtech challengers — is that they are not regulated insurers in their own right. Instead, they sell the policies and then have them underwritten by established insurers. One of the responses to this problem is for the insurers to find other ways to get close to the customers. Here, the big hope is the so-called internet of things, in which anything from your car to your TV to your fridge would be connected to the internet. Insurers see several opportunities here. The first is the chance to learn more about how customers behave. They have been using this principle in cars for years, installing telematics boxes that provide data about how well (or badly) the customer is driving.


5 things that made me smarter this week

We aren’t meant to be happy all the time—and that’s a good thing. Recognizing that no one “has it all” can cut down on the one thing psychologists know impedes happiness: envy.

The world has its first “space nation.” Scientists have proposed the formation of Asgardia, which would, among other things, develop a shield to protect Earth from space threats.

Your favorite TV characters could be reborn as AIs. The digital recreations might appear in new episodes or take over for Siri on your smartphone.

There are 10 times more galaxies than previously thought. The new estimate is at least 2 trillion.

Italy is running out of exorcists. Young priests find the job too scary, leaving 79-year-old Fr Vincenzo Taraborelli to expel up to 30 demons a day.

Is Banking A Commodity Or An Experience?

FinTech Summary - Is Banking A Commodity Or An Experience

A commodity is a product or a service that no one cared enough about to market. Marketing creates value, by combining stories, design and care. The product or service is produced in a way that makes engaging with the item better. Commodities are in the eye of the producer. If you don’t want to sell something that’s judged merely on price, then don’t. International transfers were seen as a commodity service until TransferWise came in, so are deposit accounts (Fidor, N26, Atom), opening a bank account (Pockit), direct debits (GoCardless). There is no such thing as a commodity in banking anymore. Banking is an experience, not a service or a commodity.

Thanks for reading; YOU are awesome! 

Have a fantastic week,


Wouldn’t It Be Simpler Just To Launch A New Bank?
By Chris Skinner

Should a bank just launch another bank, rather than trying to be digital and convert the existing bank. The expectation is that the new bank will eat the old bank, over time, until at some point in the future the old bank can be shut down. This is a strategy, but it is a flawed one. First, does the new bank have the commitment to eat the old bank, or is it just being launched to show that the bank can create a digital first proposition. Second, what is the commitment to the new banks’ success? Does it have the full support of the old bank’s executive team, in terms of budget, capital, resources and talent pool? Will the SVPs be happy to see their bonus destroyed and given to the newbie upstart?


When A Payment Is More Than A Transaction
By Sofia At Lets Talk Payments

The role of electronic payments in 2016 goes far beyond basic transactions performed in vast networks to move funds from one person or entity to another. Just like banking is no longer somewhere you go but something you do, payments have turned into an experience rather than an action. Agile financial technology companies nowadays are able to turn bill payments (and other services) into a smooth and seamless, almost one-click process. As the UK government fairly noted, “good services are verbs, bad services are nouns.” As the British authority further elaborated, “To a user, a service is something that helps them to do something – like learn to drive, buy a house, or become a childminder. Notice these are all verbs.” Thinking of payments beyond transactions means understanding the value of transparent, seamless payments services.


Real-time Connections Between Regulators And Banks Is A Game-changer
By Chris Skinner

Real-time reporting will soon be norm. But this is not even reporting; this is analysis by the regulator directly of the data of the banks. This is where the conversation got really interesting as we discussed the idea that, in the near future, banks won’t even have to think about what they have to tell the regulator; the regulator will just be taking it. At that point, regulatory reporting becomes just a hygiene factor underlying the markets. There is no conscious focus on reporting, as the regulator is keeping their hand on the pulse of the markets in real-time. At this point, we then move beyond reporting to regulatory intelligence. The idea of having machine learning data analytics applied to market data by banks and the regulator should start to show systemic exposures and weaknesses pre-emptively. Before any market structural issues occur, the markets will know it.


Wearables Could Help To Heal Health & Life Insurance
By Daily FinTech

Buying Health & Life Insurance today is like filling in a form to tell Netflix what movies we say we like at that moment in time – versus what movies we actually watched recently. You fill in a snapshot report of your health, with blood samples and other tests run by a doctor and the premium is set. The fact that you later put on 40lbs and developed diabetes – or gave up smoking and alcohol and ran a marathon and reduced your blood pressure – impacts Insurance risk but is ignored by Insurance companies. Wearables could change all of that and revolutionize health and life insurance by a) personalizing insurance and risk and b) changing the delivery of healthcare. But first, there are three big hurdles to overcome.


5 things that made me smarter this week

Nike actually made those Back to the Future sneakers. Advances in batteries and motors made it possible for Nike to produce 89 pairs of the self-tying shoes.

African elephants walk on their tiptoes. The massive mammals put pressure on the outside toes of their front feet, and as little as possible on their heels.

Drunken birds dive-bombed a highway in Austria. The starlings had consumed too many fermented berries and ended up crashing into cars.

When you die, will you become an app? When a car ran her best friend down, a Russian AI specialist collected his digital traces and used them to build a bot that could talk to her, by text message, uncannily like he would have done.

Half of the mass of Eurasia and India has disappeared. Scientists thought continental crust couldn’t be swallowed by the Earth’s mantle, until it apparently happened.

Hey Bank, Are You Brave?

FinTech Summary - Innovation Requires Courage

It takes courage to make bold decisions; many may not understand it. Apple removed headphone jack from a product that is generating 69% of its revenue. That’s bold. It may be transformative with the rapidly growing Internet of Things (IoT) ecosystem. Or this may prove to be unnecessary friction right now, one way or another most headphones will become wireless in the next five years, who really wants to have a cable? It may be just too soon. One thing for certain, Apple will not be the company who just waited, and waited, and waited until it was too late. Blackberry was that firm. Kodak was that firm. Twitter, arguably is that firm, it started changing now, but it may be too late. How many of financial service firms are just waiting now? It may be too late soon. The best time to innovate is today, just like yesterday was. The more room and scope you have for iterations, the more successful product you can develop. Just do it. (Sorry Nike)

Thanks for reading; YOU are awesome!

Have a fantastic week,


Can This 22-year-old Coder Out-Bitcoin Bitcoin?
By Robert Hackett

Vitalik Buterin, creator of the fast-growing new cryptocurrency network Ethereum, wants to use his technology to disrupt, well, everything. Since its launch last year, the total value of Ether has rocketed from nothing to nearly $1 billion. Ethereum’s boosters believe the network could someday power a host of decentralized applications—censorship-free social networks, public utility ride-hailing apps, crowd-sourced prediction markets and investment firms, even governments. If it sounds as if Ethereum is destined to be Silicon Valley’s latest billion-dollar startup, however, think again. Because Buterin isn’t your typical entrepreneur. He isn’t backed by VC money and he isn’t even based in the Valley—in fact, he’s a vagabond who more or less lives out of a backpack and crashes on couches wherever he happens to be coding. In that sense, Buterin represents a challenging archetype for the banks and investors lining up to invest in the potentially world-altering technology underlying cryptocurrencies: the unprogrammable programmer.


As Traders Leave, The Developers Arrive
By Chris Skinner

I find it a little amusing to see the noise being made by banks about FinTech.  Lots of noise, not so much action.  And where there is action, it’s not necessarily real.  There are a few exceptions, but the majority seem to be tackling FinTech as more of a marketing requirement than an active cultural change program.  That’s the mistake: are you a financial institution using technology or a technology firm offering finance?


Connected Insurance Is Here to Stay: Are You Ready for This New Insurance Paradigm?
By LTP Team

InsurTech and connected insurance are transforming insurance business lines. It is essential to create the conditions needed for insurers and other specialised players to fulfill their role as providers from e-health to antifraud and from driverless cars to electronic payments and product design. A new and more connected insurance model has to be defined in order to achieve this so that the full potential of the technology can be exploited. There are many opportunities and areas to be explored within connected insurance that would allow for a more client-centric offering to be created. The demand would be easier to aggregate, and thus, more client categories that are not insurable today would become insurable. Lastly, it reduces claims through the use of sensors with advantages for both the insurer and the insured.


Banking’s One-to-One Future is Finally Possible
By Jim Marous

Almost a quarter century ago, a book was written about how organisations would focus on share of customer as opposed to share of market, building a personalised collaboration driven by big data. The central concept of the book was that mass manufacturing, mass marketing, and mass communications would give way to one-to-one relationships. It was known 23 years ago that data, analytics and new technologies would change the balance of power for marketing. It was believed that those firms that succeeded in harnessing insight on behalf of the consumer would establish a close, lifelong relationship that would be virtually impossible to subvert. With advanced analytics, banking may finally be getting close to realising this vision.


5 things that made me smarter this week

Every British swear word has been officially ranked in order of offensiveness. The UK’s communications regulator, Ofcom, interviewed more than 200 people across the UK on how offensive they find a vast array of rude and offensive words and insults.
An overwhelming majority of internet users agree to Terms and Conditions without reading them. In one experiment 98% of users failed to notice a clause requiring them to give up their first-born as payment.
Street talk can help your brain in the same way as being bilingual. Children who speak more than one dialect score almost as well on executive function tests as bilingual kids—and much better than monolinguals.
Here’s how Snapchat’s new Spectacles will work. The company formerly known as Snapchat surprised the world last night by unveiling Spectacles, its first hardware product. The biggest  question is whether teens will think they look cool.

The galactic tick.
 A group of science fans thinks it’s a shame that we celebrate Earth orbiting the sun annually on New Year’s Day but never give the sun proper kudos for its voyage around the Milky Way. Unfortunately, it only loops round once every 220 million years or so, so they’ve created “Galactic Tick Day” to celebrate little chunks of the rotation every 1.77 years.

FinTech Weekly Summary | Aug 15 – 22

Banks have been forced to open their APIs to third-party organisations. The regulator claims that this will benefit the customers since they will receive tailored services, and will have the opportunity to switch banking products easier. I buy that. Data is power, and now customer will own it, not the bank. However, as the old cliche goes – with great power comes great responsibility. There are number (valid and not so much) concerns about the security of the data and opportunistic behaviour that some third parties could engage in. Again I totally agree. But there is a bigger opportunity here for us as a society. Whether we like it or not our lives are becoming more and more digital and in turn, data driven. All the data points that are collected by the plethora of apps that we use, health trackers that we were, banking products that we use. We shouldn’t debate IF it is secure to give customers access to their data (and/or third-parties with customer’s permission) but we should debate HOW to make it secure to store and manage the ever-growing personal database.

Thank you for reading. You’re awesome!

Have a fantastic week,


China Is Disrupting Global FinTech
By Joshua Bateman

Going forward, declining technology costs and China’s inexpensive labor market will ensure it remains a fintech axis. Regulations are also supporting the industry. Appropriately regulating financial services is challenging. If policies are too lax, investor risk increases. Too stringent, innovation is stifled. Unlike developed markets where regulations were instituted prior to technologies being invented, Chinese regulators are relatively young and are evolving with fintech. They do not need to re-write existing regulations, an arduous task. Although more stringent regulations could temper growth, the trend is toward greater fintech adoption in China, driven by technology companies.


The Subtle Tyranny of Blockchain
By Stefan Thomas

Project Xanadu (started in the 60’s) was a competitor to the World Wide Web (WWW). Xanadu has been around for longer and had more ambitious feature set such as two-way links. Both Xanadu and the web are decentralized, but the web was much simpler. All it required was a minimal protocol and simple data format. No interaction was needed between websites, which meant that they could evolve independently from each other, and rather than waiting for the Xanadu creators to add a feature. There are parallels to the blockchain, lets look at payments as an example. Bitcoin is a replacement for existing centralized ledgers like the credit card networks. But Bitcoin still has a lot of shared rules that participants must agree to such as the proof-of-work mechanism, currency distribution function, block size limit, lack of anonymity. By contrast, in adding one more layer of abstraction, the Interledger Protocol allows me to choose options that I like and still seamlessly transact with someone who has made different choices in each of these categories.


Ethereum Scaling Advances With ‘First’ Off-Blockchain Payments
By Alyssa Hertig

Ethereum and bitcoin currently each support only a fraction of the transactions seen daily on centralized payment networks like Visa or MasterCard. As developers seek to take on this challenge, scaling is widely seen as a fundamental issue yet to be solved. Raiden draws inspiration from the Lightning Network, an in-development off-chain transaction network that’s often trumpeted as a fix for scalability on the bitcoin blockchain. If success this could open up the floodgate to much wider adoption and incredibly more efficient use of blockchain. These include making micropayments for seconds spent watching online videos or facilitating trade in Internet of Things-enabled markets, where machines pay other machines for chunks of bandwidth or temperature sensor data.


UK Banks Ordered to Digitalise or Else
By Chris Skinner

On Tuesday the Competition and Markets Authority (CMA), a UK Government Agency, told British banks that they must digitalise or suffer penalties. In a report entitled Making banks to work harder for you, they have ordered the UK banks to digitalise within two years or face regulatory fines. The key headlines include, under what the CMA calls its “Open Banking programme”, that banks must share their customer data with third-party app providers. The second headline is that all banks will be required to introduce a Maximum Monthly Charge (MMC) to limit the costs of an unarranged overdraft. Third, the CMA has ordered new measures to encourage more people to switch their accounts to other providers.


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FinTech Weekly Summary | Aug 08 – 15

Protocols are very important. However, they are not a sexy topic and often misunderstood. We rarely think of email as SMTP protocol, but it is. The application that we see is just a ‘nice-wrapper.’ The reason we can send email from @gmail account to @yahoo account is because of the underlying protocols. They ensure that applications use the same language and can communicate. The recent appearance of blockchain (a  protocol) has enabled a completely new business model to create a whole deal of other protocols (nothing related to blockchain itself). This is a tremendous opportunity for innovation, and it will change many things – the first two summaries go into more detail about this. Protocols are a technical (potentially dry) topic to understand but understand it we must. It is a tremendous step in tech evolution. It is like taking medicine – not pleasant to do but will make us better later 🙂

Have a wonderful week,


Fat Protocols
By Joel Monegro

The previous generation of shared protocols (TCP/IP, HTTP, SMTP, etc.) produced immeasurable amounts of value, but most of it got captured and re-aggregated on top at the applications layer, largely in the form of data (think Google, Facebook and so on). This relationship between protocols and applications is reversed in the blockchain application stack. Value concentrates at the shared protocol layer and only a fraction of that value is distributed along at the applications layer. There are two things about most blockchain-based protocols that cause this to happen: the first is the shared data layer, and the second is the introduction cryptographic “access” token with some speculative value. Increasing value at the protocol layer attracts and incentivises competition at the application layer. Together with a shared data layer, which dramatically lowers the barriers to entry, the end result is a vibrant and competitive ecosystem of applications and the bulk value distributed to a widespread pool of shareholders. This is a big shift. It will prevent “winner-takes-all” situations and creates an entirely new category of companies with fundamentally different business models at the protocol layer.


The Theory of a Blockchain Circular Economy
By William Mougayar

We are in the early stages of a new chapter in the nature of work. The blockchain will enable us to do our jobs and be compensated inside new circular economies that have their own currency units and their own work units. Most work today is compensated via bilateral agreements between a worker and an employer according to a simple contract: you work in X job, and we will compensate you in Y currency. With more control, we would then be able to perform new types of tasks that may or may not resemble what is traditionally considered labor, and earn cryptocurrency instead of fiat currency. Already, a number of blockchain based businesses are compensating users for their ‘work’ via digital tokens. At the heart of making this possible, is the relationship between actual work done, the value created, and value received. These type of mechanics and operations will benefit and enable their users also to partake in their success via the sharing of network equity. What is happening here is the creation of mini circular economies that are self-contained.


Disruptive Mentality in Banking
By Vicente Quesada

The disruptive mentality for the digital transformation requires innovating, ideally without ‘muscle and money.’ What would disruptive mentally look like in banking? Charge at a 90% discount rate credit card services; link advertising performance with product demand; use voice robot financial advising; issue personalised financial products with 50 times less face value; be at least 10 times smarter with big data usage for product development and promotion, that will enable Amazon-like recommendations to increase product consumption; use machine-learning models for consumer credit risk management, etc. Disruptive mentality innovation can create a true competitive advantage for banks that embrace it.


Risks in the Crowdfunding Industry
By Vaishali Naroola

The UK’s financial watchdog is probing the crowdfunding sector for the second time in two years. The rationale behind this is that this sector is displaying signs similar to those that were displayed by market players in the lead-up to the financial crisis. Putting this in perspective, the global crowdfunding market is expected to reach between $90-96bn by 2025, which is approximately 1.8 times the size of the global venture capital industry today. Crowdfunding and its offshoot, peer-to-peer lending, come with inherent risks as any other financial product. These risks have to be uniformly communicated and understood by market participants before a market floor can be established. If the goal is to become better investors, let’s start by understanding these risks for what they are: pooling of credit risk, asymmetric information and limited liability and the role of the platform provider.


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FinTech Weekly Summary | July 24 – 31

As Umberto Eco once said “You can not make a spoon that’s better than a spoon”. We are so clung onto an idea of FinTechs replacing banks. They won’t. We need banks and you can’t make a better bank than a bank. In my eyes bank’s main responsibility is to protect our documents and money, everything else is an add-on. These add-on services are what we can disrupt and improve, or encourage banks themselves to improve them. Money-transfer is a great example, you can do it outside bank; cheaper and better. Banks won’t disappear but they may change their face drastically over the next decade by losing some services, drastically altering others and, possibly, creating new ones.

Have a fantastic week,


Counting Down to the Bank of Facebook
By Lionel Laurent and Leila Abboud

The biggest risk comes when technology heavyweights like Google, Apple or Amazon really start to zero in on their business. These tech giants are relentlessly innovative, and their reach — Facebook alone boasts 1.65 billion monthly users — and grip on customers’ personal data is virtually unparalleled. For now, the tech giants have barely scratched the surface. Apple and Google have mobile payment tools, Facebook users can send money to friends through Messenger and Amazon is pitching student loans in partnership with Wells Fargo, but they’re not exactly setting the financial world on fire. Their Asian cousins are more advanced: WeChat and Tencent can now be used to pay for everything from rent to a taxi, and Alibaba runs mutual funds.


A Seven Year Old Idea Comes of Age: Bank-as-a-Service
By Chris Skinner

Bank-as-a-Service is an idea came from and point to banks opportunities to grow business by releasing more of their capabilities as APIs, as software, as apps, as widgets … as anything that can plug-and-play into anything else. Part of this is that it’s not just banks’ products, processes and designs that should plug-and-play, but we should be able to plug-and-play any other services into the BaaS model, such as Stripe, PayPal, Fidor, Moven or any other APIs, apps and analytics we want.


Ethereum’s Two Ethereums Explained
By Alyssa Hertig

What started as an attempt to rescue investor funds in a high-profile project has resulted in a schism that has effectively split the community on the second-largest public blockchain. There are now two slightly different versions of this platform available to users – ethereum, the ‘official’ version of the blockchain maintained by its original developers, and ethereum classic, an ‘alternative’ blockchain maintained by a wholly new team. Now that it’s happened though, and ethereum classic exists, the community has tons of questions. These include whether hard forking the blockchain, or rewriting the code to reverse transactions without near-unanimous consensus, is worth the risk, and if ethereum developers forked again to solve a similar problem, would it split again? Either way, it’s not clear if the rise of ethereum classic is a bad thing for the technology. The protest blockchain gave the minority a chance to build their own system, and some people think it’s an exciting development.


What Is FinTech And Where Does It Live?
By Vinod Sharma

Fintech can manage your money automatically for betterment or wealthfront and not pay for investment advice that may or may not outperform the market. Fintech companies whose line of business combines software and technology to deliver financial services – will reshape and improve finance by cutting costs and expanding access to financial services. FinTech companies can create a more diverse and stable credit landscape by gathering data from social-media and other sources to assess the needs of young businesses and borrowers on the fringes of the banking system. To model the Fintech enterprise, its better use a method rather than make things up on the go. A method guarantees results and increases the productivity, predictability, repeatability and reliability of the business modelling and transformation. Most of the FinTech companies wins on the principal of “The ability to relate to people, to inspire and motivate them is what you must ever work on as a leader”.


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FinTech Weekly Summary | July 17 – 24

Last week Ethereum community voted to create a hard fork (a piece of code that will overwrite immutable records on the Ethereum blockchain) to recover stolen the DAO funds. This is a historic moment in the cryptocurrency community. For example, Bitcoin community has been debating for over a year to increase the size of bitcoin. Ethereum has voted and implemented the change in under a month. While the community is smaller and they were under time pressure to make the decision to recover DAO funds, it shows that Ethereum developers and community are willing to be adaptable and solve problems as and when they appear – and they will. This is a major advantage for Ethereum in the Ethereum vs. Bitcoin debate.

Have a wonderful week,


Will Deposit Accounts Be The Next Wave of Fintech Innovation?
By Jessica Ellerm

There’s one sector of finance that really doesn’t get a lot of airtime when it comes to fintech – deposits. Checking accounts, savings accounts, transaction accounts – while they’re the bread and butter of banking, they’ve been relatively untouched since they were first invented. You put money in, and, if you’re lucky, earn a little interest before you take the money out. In today’s world, the humble bank account hardly feels revolutionary, yet the brilliance of it is we all need one. Is there an opportunity here for a fintech startup to slice away this part of a bank’s core business, by adding a little flavour to the whole deposit experience?


4 Scenarios for Lending Club – the proxy for Fintech disruption or hype $LC
By Bernard Lunn

When Lending Club did it’s IPO in December 2014 I declared it as the Netscape moment for Fintech. Meanwhile, the $LC stock price tanked to such a level that by late May 2016, after the Lending Club CEO ouster, the conventional wisdom became that yes this was the Netscape moment for Fintech and we all know how the Netscape story ended – they were crushed by Microsoft. That is one of the 4 scenarios that we analyze in this post – that incumbency wins, that big banks crush Lending Club and that Marketplace Lending becomes a footnote in banking history.


Why It’s Not So Easy To Bring Down The Cost Of Banking

Every year, Bank of America spends about $1 billion to move money around in armored trucks and shuffle various other bits of paper about.  It is a cost they might like to cut – along with the costs of fixing broken ATMs and replacing lost cards – but these are costs that just aren’t going anywhere anytime soon. The digital banking revolution gets lots of airtime – and has surely led to many branches being closed in favor of the frictionless smartphone or ATM tech that does the same job better.  Or theoretically better anyway – when it came to cases, consumers complained they weren’t getting personalized enough services and JPMC found itself rehiring tellers. Which, in a nutshell, is the new tight spot banks find themselves in when trying to boost near-term earnings. Interest rates remain at historically low levels and sunk costs are – well, sunk – and also growing.


The Case For Bitcoin (Or Something Like It)
By Chris Skinner

So what does this mean? Well, many of us look at dollars, euros, pounds, yen, yuan as being of great value, but they’re not. These currencies are all useless. They’re just fictions. They are made up by governments to be of value, and because we believe in governments, they work. As long as the government works, the currency works. The Zimbabwe Dollar and the Venezuelan Bolivar are only imploding because their governments stopped working effectively. What happens when money stops working? For me, the bancor is bitcoin 4.0: a design upon a design that gradually makes the faults of bitcoin 1.0 to be wrinkled away until we do have a trusted digital currency. Bearing in mind what’s happening in Venezuela and Britain right now, maybe that wouldn’t be such a bad thing.


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FinTech Weekly Summary | May 15 – 22

The other day my friend asked me to explain why Blockchain was so important, in a non-technical or financial terms and I thought I share it with you. I had to think to bare basic benefits of Blockchain. It is trust. It will enable us to cut out intermediaries in many industries. It feels like a much-needed addition to the technology internet. After all, what internet enabled us to do was to become much more efficient – we can open a store for under £100 online and sell our goods without needing to own physical premise, we can sell our services overseas without needing to travel there and work from a local coffee shop. Internet made it possible. However, the bad side of this were the scams, dishonesty and lack of trust. Here is where blockchain comes in – its technology is built in such a way that it will enable me to trust someone I have never seen and just met on the internet to carry out an honest transaction with me. This is groundbreaking. This is why blockchain is so important.

Have a wonderful week,


Here’s Why the Blockchain Powers Prosperity
By Don Tapscott, Alex Tapscott

Prosperity first and foremost is about one’s standard of living. To achieve it, people must have the means, tools, and opportunities to create material wealth and thrive economically. But for us it includes more—security of the person, safety, health, education, environmental sustainability, opportunities to shape and control one’s destiny and to participate in an economy and society. In order to achieve prosperity, an individual must possess, at minimum, access to some form of basic financial services to reliably store and move value, communication, and transactional tools to connect to the global economy, and security, protection, and enforcement of the title to land and other assets they possess legally. This and more is the promise of the blockchain.


Dear Bankers – Feelings Make Bank
By Duena Blomstrom

Tapping into emotions and driving positive ones through addictively delightful interactions pays. That’s why you need to be a brand. There are three areas where the connection between customer’s feelings and their shopping behaviour becomes most evident. Areas where the Rational Consumer is but Myth. No matter how much denial they invest in it and how many times they roll their eyes at the urgency to understand and act on Emotional Banking, retail banking will have to soon stop avoiding the issue, rip off stifling culture to inject experience design into the DNA as a sine qua non technology enabler, and become a loved brand, as opposed to just paying customer centricity lip service sometime very soon.


Leaderless, Blockchain-Based Venture Capital Fund Raises $100 Million, And Counting
By David Z. Morris

A new entity called The DAO, created using the Bitcoin-inspired financial platform Ethereum, has collected more than $100 million worth of cryptocurrency since late April, and will use the funds to support projects in the sharing economy. The DAO is being touted as a model for a new kind of organization, created and run using blockchain software rather than conventional corporate structures. The DAO is basically one big, complex smart contract comparable to a venture capital fund. It’s offering its own voting shares—called DAO tokens—in exchange for a cryptocurrency called Ether, though for regulatory reasons, The DAO states its tokens are not a form of equity. Ether is the financial component of the Ethereum blockchain.


For All The Talk About Blockchain, What Is Really Happening?
By Chris Skinner

There is lack of any real consortia to create a shared system and without sharing, blockchain developments will come to nought. After all, blockchain protocol is focused on building shared ledgers on the internet, and shared ledgers require the banks to come together to create shared structures. Unfortunately, from where I stand, the banks are not doing that. The Blockchain has now entered the trough of disillusionment. This is made clear when you realise that blockchain is like Big Data and Cloud. A lot of talk, but little action at first.


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FinTech Weekly Summary | Apr 24 – 01

FinTech has started the disruption of traditional finance. It started using tools and practices from the tech world such as beautiful user interface (UI) and better user experience (UX) or mobile first development. However, one big shift that will have in the next technology evolution will be artificial intelligence (AI). A move to AI first design. This is particularly powerful in fintech or any financial matters because an algorithm can make better decisions than we can. People are emotional about money. When you are in an emotional state you tend to act irrationally. We see that with direct debits – automatically pay my bills so I don’t forget it, monthly savings deductions – take my money before I spent it, roboadvisors – invest longterm and ignore news headlines. AI to make more day to day decisions about what we do with our money and where we spend it is the way forward. We will all be better of because of it.

Have a lovely week,


The Unique Value of Crowdfunding Is Not Money — It’s Community
By Ethan Mollick

Crowdfunding has been growing explosively, with over $2 billion raised via equity and reward crowdfunding in the United States in 2015 alone. However, crowdfunding is more than another way of raising funds. In connecting creators and entrepreneurs directly with customers and funders, it transforms the opaque and oligarchical market for early-stage fundraising into a more democratic, open one. Rather than relying on venture capitalists and marketers to try to project nascent demand for new innovations, creators can directly reach out to customers and communities to refine ideas and gauge interest. Crowdfunding acts as a platform, matching innovators with those who need innovation, and thus is reshaping which ideas come to market.


The 9 Mistakes I Made When Bringing Blockchain to My Startup
By John Rampton

As a relatively new concept, blockchain is still evolving, so it’s easy to understand how mistakes can be made in terms of how it can actually be used. Many processes are still being tested to see if private blockchain applications will work for various business functions. By sharing the mistakes I’ve made, hopefully others can learn and avoid the same pitfalls. At the time, I recognized the potential that blockchain technology had to help us quickly advance our technology and the solution we offered customers, thereby creating a competitive advantage.


Banks and Fintech in 2025: An Unlikely Alliance
By Eyal Lifshitz

The fintech industry has orchestrated in just a few short years a sweeping change in customer preferences and expectations for the modern “bank” experience. The next decade will demonstrate the impact of this disruption as customers choose financial services based on the product experience, not on the breadth of offerings. In 10 years, most banks will still be public-facing brands. Their role as a safe deposit box for our cash will continue, but consumers’ rising standards will force them to rise to the occasion, ensuring a best-in-class experience is a core component of their offering. This unlikely alliance is just over the horizon. Both the old and new worlds will have no choice but to find a way to join forces, looking like startups while working like banks.


Open Sourcing Finance: You Cannot Delegate This Project
By Chris Skinner

Leading incumbent banks from their traditional command and control structures to open sourced operations that are shared, cooperative and inclusive. Open sourcing finance is the shared economy business model of partnering, white labelling and integrating components to create a new business model of aggregated components of product and service. Any bank resisting such change will not survive and, to understand such change, truly requires a leadership with technological prowess, not just banking knowledge. Many banks will fail to meet this challenge, not because their bank is weak or unable to adapt, but more because their leadership is weak and unable to adapt.

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FinTech Weekly Summary | Apr 17 – 24

I have recently returned from my trip to Spain and Portugal. The food and sun were great, but what I really enjoyed was the fact that I can use euros in both countries. There was no hassle of exchanging currencies, finding the best rates or exchange points. The seamless monetary system made it easier for me to spend money (no need to find exchange), obtain the better value (no translation cost/fees) and budget better as I didn’t need to convert every price back to currency I understand to make a purchasing decision. This has a significant economic benefit. If Bitcoin, or any other digital cryptocurrency, could replicate the similar model on a global level this would have a sizeable positive impact on the global economy. For the consumers, it would be much better experience travelling abroad.

Have a fantastic week,


Why Blockchain Could Enable a True P2P Insurance Model
By Olivier Rikken

In the new business model, the focus of the insurers would shift away from asset management and instead would focus on matching supply and demand and to risk calculation research. The insurer would provide a marketplace-like platform where customers can post their insurance demand, which could be either a standardized product or even a specific demand. This business model could be very interesting, and it could bring multiple benefits, creating a true P2P, crowdfunded insurer. One can even argue that, should this model develop fully, we might no longer have a traditional insurer, but instead, an intelligent capital trading house that fulfills this essential market role.


What’s Next For Personal Financial Services?
By Erin Shipley

Technology companies are increasingly vocal about their role in the finance ecosystem. It is telling that we are seeing organizations spring up like Financial Innovation Now, a policy group composed of companies including Amazon, Apple and Google — a hint that big banks are likely to be facing increasing pressure not just from upstart companies, but large, well-recognized brands with the reach and funding to offer a comprehensive suite of financial services if (but more likely when) they choose. This is likely to be the next wave of innovation shaping the future of personal financial services.


Cash, Fear and Uncertainty: The Holy Trinity of Bitcoin and Blockchain
By Matt Reynolds

The hype around blockchain comes from the fact that it looks to disintermediate banks. Fundamentally, a non-fiat currency that behaves like cash – whether that’s Bitcoin or something else – is terrifying to a bank. If we centralise trust, it’s possible for certain types of actors to try and exploit the centralised nature of this system. Think CIA in Snowden-type examples, think the FBI in “please-give-us-a-specific-version-of-iOS-so-that-we-can-brute-force-this-iPhone”-type examples. The blockchain is our first real example of a technology that allows us to build systems with disintermediated trust. That aspect itself is beyond hype – from a societal perspective we’ll likely gravitate towards systems where trust cannot be exploited, and the blockchain is a great way of building those types of systems.


India’s Audacious Plan to Bring Digital Banking to 1.2 Billion People
By Saritha Rai

Decades ago, most people couldn’t afford to buy an entire bottle of shampoo, so Unilever, Procter & Gamble, and other companies sold them in small sachets that people could afford to buy, paving the way for marketing everything from detergent to toothpaste in rural areas. Nadhamuni is betting that the new digital payments system will be low-cost, high-volume, like a “shampoo-sachet revolution in the financial sector.”

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