FinTech Summary #49 – #Bots #Crowdfunding #Blockchain #Startups

FinTech Summary #49 - All The FinTech News You Need

Seth Godin, a famous marketing guru, said: “it’s far easier to sell someone on a new kind of fruit than it is to get them to eat crickets, regardless of the data you bring to the table.” FinTech is facing a similar issue – new challengers need to find a way to break the pattern. For that, they need to create new beliefs. For example, a belief that wiring your money with TransferWise is better than with your bank. It is easier to form these beliefs for companies that can directly prove the benefit to the customer (lower fees, more transparent). It is much harder to achieve for companies that are unique or provide indirect benefit – like blockchain startups where you need to do the ‘leap of faith’ integration first and hope the benefit is worth it. We, as a customer, play a crucial part in the disruptive innovation cycle by either forming these beliefs or rejecting the product. And this product could be the next Google Search.

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Have a wonderful week,


This week’s summary


Equity Crowdfunding 3.0 – The ‘Killer’ Feature
By Alex Nech

What will Equity Crowdfunding 3.0 look like? A real ‘killer’ feature will be added – a secondary market that will enable investors to ‘cash out’ early. This feature will be particularly powerful with the equity crowdfunding model, where there is not fixed time frame for an exit and investors are unable to cash out if their circumstances change. Such mechanism has the potential to open up markets that were out of reach for most platforms. People will be more willing to ‘give it a try’ and potentially become big investors in the future. There are a number of challenges that both platforms and the companies will have to address around liquidity, valuations, funding and future of the employees.


On Tokens and Crowdsales: How Startups Are Using Blockchain to Raise Capital
By Demian Brener

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.


Can A Bot Help Your Bank Speak Millennial?
By Eran Livneh

Millennials communicate differently than previous generations. They prefer texting over talking, emojis over words, and talking to Siri or Alexa over talking to a real human. Strange? Depending on who you are. These new communication etiquettes are second nature to those that have grown up with instant online chatting and texting. This is where a bot comes handy. Something about removing the human element, yet being able to communicate on a human-like level, makes certain processes and tasks more attractive and effective for millennials. Integrating guidance and service into chat and personal assistant bots provide a two-way advantage for millennials and banks.


Code is Law? Not Quite Yet
By Lukas Abegg

After The DAO experiment failed, a heated policy debate ensued about how to go forward with the development of ethereum’s blockchain. The positions ranged from holding on to the immutability paradigm with “code is law” as the most important rule to follow, to a more human approach of asking ethereum’s miners and developers what measures should be taken. Only little time, however, was spent on the question what a smart contract is actually capable of performing. But this very question, I believe, should be at the core of the debate and the respective answer is the only sensible foundation on which a sound policy for blockchain and smart contract development can be built.


5 things that made me smarter this week

The hidden economics behind deceptive on-demand pricing. Seems like Uber for anything business model may just not work for anyone but Uber.
The 2020 Tokyo Olympic medals could be made of discarded electronics. Gold and silver recovered from small consumer electronics in Japan has been estimated as equivalent to 16% and 22% of the world’s total reserves, respectively.
Eleven Reasons To Be Excited About The Future of Technology. There are many exciting new technologies that will continue to transform the world and improve human welfare. Here are eleven of them.
Do You Really, Truly Hate Your Office Printer? (Paywall) There’s a Bat for That. Workers destroy balky machines in a ritual act of catharsis; ‘glass fireworks’. A new form of team-building exercise.
Top 10 Happiest Countries in the World. Strong correlation with GDP per person… And they say money can’t buy you happiness.

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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 22 – 30

FinTech is certainly trending right now. All major banks and consultancies are rapidly building up their FinTech arms, VCs are investing eagerly and ads of fintech startups are everywhere (some very expensive). FinTech is very visible right now but can they transform their visibility into credibility? Can FinTech become credible trustworthy names that customers automatically associate with trust. FinTechs need to find a way to achieve this to make a lasting impact.

Have a wonderful week,


Ethereum, Explained: Why Bitcoin’s Stranger Cousin Is Now Worth $1 Billion
By Timothy B. Lee

For the first time since its creation, Bitcoin is in danger of losing its status as the world’s leading cryptocurrency. The new challenger is a Bitcoin-like technology called Ethereum that has seen a surge of interest from users, developers, and the corporate world. The network’s currency, called ether, is now worth more than $1 billion — that compares to Bitcoin’s total market value of nearly $7 billion. Last week, a leading Bitcoin startup called Coinbase announced it was adding support for Ethereum to its popular currency trading platform.


Venture Capital Funding Is Flowing Back To FinTech Startups
By Ian Kar

In March, funding for fintech startups fell dramatically. In retrospect, it looks like that quarter was more akin to a speed bump than a car crash. The report speculates that this could be a great year for fintech investments. The $4.9 billion invested in the first quarter is 96% higher than the $2.5 billion in the same quarter last year. With Alipay’s parent company Ant Financial recently closing a $4.5 billion financing round in April 2016, the report says to expect next quarter to “bring more of the same.”


The DAO Of Accrue
By The Economist

It sounds like a cult, but it wants to be a venture-capital fund of sorts. As The Economist went to press, the DAO (short for decentralised autonomous organisation) had already raised the equivalent of nearly $150m to invest in startups. This, say its fans, makes it the biggest crowdfunding effort ever. To understand the DAO it helps to keep in mind the concept of “smart contracts”. These are business rules encoded in programs that execute themselves automatically under certain conditions: for example, funds are only transferred if the majority of owners have digitally signed off on a transaction. Such contracts can also be combined to form wholly digital firms that are not based anywhere in the real world, but on a “blockchain”, the sort of globally distributed ledger that underpins crypto-currencies such as bitcoin.


The Internet of Blockchains, Or Something
By Dave Birch

I’ve said a few times that I think the Internet of Things is where mobile was a couple of decades back. Some of us had mobile phones, and we loved them, but we really didn’t see what they were going to turn in to. We’re in the same position now: some of us have rudimentary Internet of Things bits and bobs, but the Internet of Things itself will be utterly beyond current comprehension. The idea of shared ledgers as a mechanism to manage the data associated with the thingternet, provide a security infrastructure for the the thingternet and to provide “translucent” access for auditing, regulation, control and inspection of the thingternet strikes me as an idea worth exploring. That’s not to say that I know which shared ledger technology might be best for this job, nor that I have any brilliant insight into the attendant business models. It’s just to say that shared ledgers might prove to be a solution a class of problems a long way away from uncensorable value transfer.


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