When your house starts to fade…

FinTech House Fade

It’s hard for big companies to innovate incrementally because the process often feels slow and, nearly, meaningless. There are no ‘big wins’, at least not done quickly. Repainting your house the same color it already was feels like a waste. It’s a lot of effort merely to keep things as they are. Minor updates feel like repainting your house but they matter because once you need a big update it may prove a mountain too high to climb. But if you don’t do it, time and entropy kick in and the house starts to fade.

Thanks for reading; YOU are awesome! Just hit reply if you want to get in touch 🙂

Have a wonderful week,


Rebuilding “Truth”
By Pascal Bouvier

As an investor, the more meaningful fintech opportunities I see on the horizon center around enabling a new truth equilibrium. This is why core banking systems or policy management systems for insurers are so exciting. This is why digital sovereignty – digital identity schemes, privacy schemes applying equally as direct to consumer solutions and b2b solutions – are so exciting. This is why distributed ledger or blockchain tech is so exciting, when appropriate. This is why solutions that allow us to make sense (truth) of data such as new generation data marketplaces are so exciting. Any and all of these hold the promise of anchoring us with new truths we can trust. Therein lies the real signal. The efficiency part is only noise.


What should be priority for banks
By Chris Skinner

Embrace technology and change the boardroom. Banks are led by bankers, but banks are fintech firms too. Banks should, therefore, have a good balance of technologists and bankers in the boardroom. If a bank’s leadership team cannot understand the difference between machine learning and deep learning, or between blockchain and a distributed ledger, how can they possibly lead the bank into this digital future?


Cards vs non-cards, or cards and non-cards?
By Dave Birch

The traditional merchant acquirer will transmute into a Merchant Service Provider (MSP), fits within this narrative. I can see that merchants want value-added services, a great many of which depend on collecting and analysing large quantities of data rather than just “cost plus” payment processing. What’s more, as the cost of payments heads toward zero, nodes in the value chain will have to provide those value-added services or be bypassed. So, will Visa and MasterCard be bypassed by open banking? If they do nothing, then yes. Facebook, Google, Amazon, Alipay and others will simply go directly to consumer payment accounts via APIs, and payments will begin to drift away from the 8,583 rails put in place over many years. But they won’t do anything.


Why insurance might finally be getting interesting

InsurTech is finally catching-on. The industry has only recently woken up to the many opportunities that new technology offers and now we’re seeing more firms investigating what phones and apps can do for them. But the insurance industry is just catching up with its customers. Consumers, used to seamless experiences from many of their interactions, are expecting to see it from their insurance companies too. The big, established players, in particular, have recognised the need to embrace new technologies to remain relevant and engage with customers. This is more crucial than ever as new players have entered the field, all with an eye on the prize. Jumping on the digital bandwagon is no longer an option – but a necessity for all insurance companies – no matter their size. 

Why changing is so difficult? | FinTech Summary 84

FinTech Change

It’s very difficult for banks to change. There are many external factors to overcome – regulation, customer expectations, competition, internal complexity. However, the biggest factor is the mindset. Lack of leadership belief is the biggest break in the process. The reason it’s difficult to learn something new is that it will change you into someone who disagrees with the person you used to be. Changing direction requires admitting that you were going in off course in the first place.

Thanks for reading; YOU are awesome!

Have a wonderful week,


The power of banking with purpose
By Jim Marous

The importance of a well-defined, articulated and acted upon purpose has never been more important for a financial services organization. Unfortunately, most financial institutions lack an underlying purpose or lack the commitment from top management that motivates both employees and customers. Some organisations do little more than express their purpose as if it was an ad slogan that is changed with the seasons. Some purpose statements lack differentiation and could easily be used by other financial organisations or firms in other industries. Some purpose statements are more similar to a ‘wish list’, with no real connection to where a firm is or where it can effectively go in the future. Finally, there are those banks or credit unions that create an effective purpose statement, only to do nothing to support the purpose on a daily basis to employees or customers.


Open APIs – leveraging banking as a service to compete and collaborate
By David Donovan

In an API world where data is currency and a customer-centric experience is king, banks are lagging behind the tech titans. However, the advent of open banking legislation may just force the hand of banks to innovate around the customer before tech firms enter the financial services market. Banks should look at APIs as a way to enhance service offerings, improve customer engagement, increase digital revenues and build partnership models with fintech while ensuring regulatory and data guardrails are in place. There is an unprecedented opportunity for banks to make every customer interaction more seamless and strengthen their partnership ecosystems by building a core API strategy.


Customer experience as a competitive advantage in banking
By Artashes Vardanyan

The evolution of the customer service in traditional banking was very slow during the past few decades. One of the milestones in that matter was probably the invention of the ATM in 1967 for the automation of bank-teller operations. Then the customer support in branches started to migrate to telephone banking, followed by the smartphone era that changed the approach of banks in dealing with customers. Mobile technologies have significantly affected the financial services industry, forcing institutional players to tailor their businesses to survive in the mobile-first environment. Innovation in customer service is becoming a huge priority for banks; the world today is changing rapidly and everything we know is getting digitised.


A holistic approach to cybersecurity
By Joe McKendrick

Today’s waves of cyberattacks may be coming on too fast for the best computer scientists to unravel fast enough to stop their spread across connected networks. If anything, the recent ransomware attacks that shook up many of the world’s IT systems highlights the need for insurers to work even harder — and smarter — to batten down their hatches. More money is part of the solution, and there doesn’t seem to be a shortage of that going into security efforts. But throwing more money at the problem will only be feeding a black hole which will keep demanding more dollars, euros, pounds or rupees. Insurers need to get smarter about their cybersecurity as well. Looking at their own protective requirements, connected insurers face increasing threats that need to be addressed aggressively.

Asking the right questions; AI-first banking; open banking and frictionless banking; Blockchain regulation done right – FinTech Summary 83

FinTech - asking the right questions

Ever increasing quantity of data provides us with more and more options to drive new insights. Companies are jumping on the big data bandwagon and, rightly so, trying to find new ways to improve their services and offerings. However, at a time when information is so abundant that we can get the answer to any question, the real responsibility becomes asking the right question.

Thanks for reading; YOU are awesome! Just hit reply if you want to get in touch 🙂

Have a wonderful week,


Banking must move from mobile-first to AI-first
By Jim Marous

Technology continues to impact the banking industry, as more and more transactions move from physical to digital channels. The application of big data insights and advanced analytics (machine learning) has changed the internal operations, external experiences and competitive battlefield in financial services. With so much change, banks and credit unions are rethinking their business models for the future. While there are many important technological trends impacting the banking industry, none may be more important than artificial intelligence (AI) and the ability to use data, advanced analytics and digital technology to deliver a better customer experience. The number one trend around artificial intelligence is underscored by the fact that bankers believe artificial intelligence (AI) will ‘revolutionize the way banks gather information and interact with customers.’ This is in line with the findings from other industries, where the application of big data and machine learning is expected to provide a better understanding of customer beliefs and intentions, enabling enhanced customer experiences and better competitive positioning.


Open banking – is data the new currency?
By Alessandro Hatami

Banks across the globe are anxiously looking at the slow but seemingly inexorable progress of banking APIs. Regulation and market demands will require banks and other financial services firms to make it easy for another firm to gain access to their customers’ data, and to engage with their platforms to transact. Most realise that the world of financial services is going to be shaken to its foundations by their arrival. Banking APIs will usher a completely new era for banking. Financial services firms will have to accept a reality where their most valuable asset – their customers’ data – is now controlled by customers themselves. This may not be the end for the big banks and financial institutions, but it’s definitely a very different world from what they’re used to.


Frictionless finance with fintech
By Chris Skinner

Larry Summers, former director of the National Economic Council for President Barack Obama, writes a regular column in The Financial Times. His latest piece is his take on fintech, which has the main headline that fintech is taking away frictions in finance. FinTech to banking is like Skype to telecoms – drastically reducing margins; or like Netflix to Blockbuster – yes, some banks will go bust. 10 years from now, he predicts that one or two firms will have valuations of $250bn, the value of America’s biggest bank JP Morgan Chase, and maybe hadn’t noticed that Ant Financial is heading that way already. A further prediction is that the American internet giants won’t get into banking: I am “sceptical of the idea that one of the big tech players like Apple, Google, Facebook and Amazon would also become a big player in financial services (due to) the traditional American aversion to combinations of banking and commerce and also that I thought privacy rules would preclude their using their massive data troves to drive lending activity”. This illustrates the difference between the Chinese internet giants – Baidu, Alibaba (Ant) and Tencent (WeChat) [BAT] – and the American ones: Google, Apple, Facebook and Amazon [GAFA]. BATs are integrated versions of a Facebook, Amazon and PayPal in that they offer social, commercial and financial all-in-one apps.


Blockchain regulation: is Europe getting it right?
By Noelle Acheson

Despite increased investment, the banking industry in the U.S. continues to lag other regions of the world in the development of meaningful digital innovation. This impacts customer experience, cost structures, as well as revenue opportunities. Historically, the banking industry in the U.S. has been slow to innovate compared to other industries. When asked why this may be, most industry studies found legacy back office infrastructures, the lack of leadership commitment (culture), regulations and compliance, organizational silos and the lack of budget to be inhibitors. Despite these limitations, the U.S. banking industry has tried to increase their focus on innovation through upper management commitment and support of innovation initiatives, development of innovation labs, increases in dedicated financing, and even an openness to invest in, or partner with, fintech firms. Some may question if the increased level of attention has had any measurable impact. 

Barclays the blockbuster of finance, insurtech innovation, how to compete with fintech, the real number of unicorns – FinTech Summary 82

Barclays is the blockbuster of fintech

Fintech won’t challenge us. Jess Staley, CEO of Barclays, sees technology as driving globalisation and changing banking, but says there’ll always be a Barclays.

It’s also worth understanding that there is no upside to saying stuff like this. Because more often than not, you’ll find yourself on the wrong side of history like so many of these CEOs. And then we’ll make slides to immortalise your cluelessness – “neither Redbox nor Netflix are even on the radar screen in terms of competition” once said Blockbuster CEO…

Thanks for reading; YOU are awesome!


What’s happening in the Insurtech innovation scene in London
By Bernard Lunn

Insurtech is moving beyond the early buzz created around P2P, drones, Blockchain and AI as concepts. The focus now is on solving actual pain points that the incumbent insurance industry fully recognises, the most pressing of which is how to better engage with customers. There is less hostile talk of disruption and more about the power of partnerships. The backdrop to all of this is the collapsing value chain in Insurance.


How banks can compete against an army of fintech startups
By Karen Mills and Brayden McCarthy

It’s been more than 25 years since Bill Gates dismissed retail banks as “dinosaurs,” but the statement may be as true today as it was then. Banking for small and medium-sized enterprises (SMEs) has been astonishingly unaffected by the rise of the Internet.  Gates’ original quote contended that the dinosaurs can be ”bypassed.” If U.S. banks are going to survive the coming wave in financial technology (fintech), they’ll need to finally take digital transformation seriously. There are strategies that they can use to compete successfully online. The familiar David vs. Goliath script of the scrappy, internet-fueled startup vanquishing the clunky, brick-and-mortar-laden incumbent is repeated so often in startup circles that it is sometimes treated as inevitable. But in the real world, sometimes David wins, other times Goliath wins, and sometimes the right solution involves a combination of both. SME lending can remain a big business for banks, but only with deliberate choices about where to play and how to win. Banks must focus on areas where they can build a distinct competitive advantage, and find ways to partner with or learn from the new innovators.


Disruption is already here
By JP Nicols

Disruption is already here. It just isn’t widely distributed yet, as William Gibson famously said about the future.The open banking movement may eventually turn banks into app stores, where customers can consume products and services from a wide range of providers, all connected to a central banking utility. This platformification of banking, as Ron Shevlin calls it, is still very much a work in progress, but leading banks, such as BBVA, Capital One, Silicon Valley Bank, and others are actively developing APIs and working with fintech partners to connect and build new applications for customers. The result will be a massive reduction in operating expenses, and the ability to mass-customise products, features, and benefits to personalise the experience for banking customers. Exactly what most banks need, but you have to play to be able to win.


Fintech unicorns – what’s the real number?
By Chris Skinner

Investors are accustomed to the modern tech growth curve. Most funds have a three to five-year investment horizon. This means that investors inject capital into a business with the expectation of realising a return on that capital within that investment horizon. The problem is that finance is a very slow-moving sector. Whether you’re selling bank technology, small-business solutions, or acting as a lender, it takes time to break into the market. The tech idea that you must get big fast and dominate a sector is at odds with the slow-moving nature of finance, and lending in particular. Unfortunately, fintech companies often receive pressure from both existing and potential investors to demonstrate so-called “hockey stick” growth. This, in turn, leads to short-term thinking on behalf of the fintech company, which brings us to the second reason for the industry’s woes.

Incentivising purpose in banking, gig economy and insurtech, banking revolution, American banking – FinTech Summary 81

FinTech Second Order of Consequence

The revolution that fintech has started has a significant impact on the way we will live our lives. From how we pay for our coffee to what kind of retirement we will get. However, these are only the first-order consequences of fintech revolution. There will, surely, be the second and third order of consequences. For example, the way we transact will eventually impact the way we hire sales staff, which in turn will impact how we structure our companies and how we allocate capital. These changes are still hard to predict but something we need to start thinking about.

Thanks for reading; YOU are awesome!

Have a wonderful week,


Mo’ Money Mo’ Problems: it’s time to incentivise purpose in banking

By Anne Leslie-Bini

“I want to create a lender that people don’t hate” said Denise Kingsmill, the chair of the board at U.K. challenger bank Monzo. Now there’s a pithy declaration that speaks volumes about the state of the banking industry and the times we live in. But how should we read this: are her comments simply savvy market positioning, tapping into the desiderata of a disillusioned digital generation? Or could this be something of greater substance: a refreshingly wholesome approach to rehabilitate an industry that historically ran on trust and bankrupted itself of its own currency during the global financial crisis? But here is the rub: even if challenger banks turn out to be ‘better’ banks from a customer experience perspective, is this enough? Can’t we, and shouldn’t we, expect more from the ‘banks of the future’?


Next up in insurtech: the gig economy
By Diana Asatryan

The Ubers and TaskRabbits of the world fueled the creation of a whole new layer of the labor market, which now spans across (arguably) every imaginable industry. Just like with every new industry, the gig economy is now in need of products and services, designed specifically for its unique market. Finance and insurance products, are, of course, on top of that list. Already, many FIs have jumped on the gig bandwagon; GreenDot, for example, partnered with Uber and Mastercard last year to offer instant pay for on demand workers. Both insurtech and the freelance market have been on an upward curve lately. The CNBC estimated recently that over the past 20 years, the number of gig economy workers has increased by 27% more than regular payroll employees. In the meanwhile, reports suggest that between 2011 and 2017, VC funding for insurtech companies grew 31% annually. The two industries seem to be a match, made in fintech heaven.


The banking revolution: sink or swim
By Chris Skinner

Wave after wave of technology hits the bank, and the bank absorbs each wave and internalises the change. The issue is that, just like the fish, each wave is getting stronger. As digital transformation sweeps through the industry, the bank can resist each wave or swim to deeper waters. The banks that resist the digital waves are those who have millions of customers, billions of capital and centuries of history. The bank does not need to change so fast. The bank is robust, secure and resilient. The question today has to be: is it? As the digital waves hit, they are transforming the bank. Now, with open sourcing structures, billions of dollars are being invested in companies to transform the whole nature of finance. FinTech firms are reinventing the markets whilst cloud, AI and distributed ledgers are reinventing the back office. Through apps, APIs and analytics the bank is being open sourced. Without fundamental technology change and technology leadership, the bank is behaving like the fish by the shore. Wave after wave after wave of demand for technology change and digital transformation is hitting the bank, and the bank is just continuing to feed on past customer revenues, products and services.


America is Falling Behind in Banking Innovation
By Jim Marous

Despite increased investment, the banking industry in the U.S. continues to lag other regions of the world in the development of meaningful digital innovation. This impacts customer experience, cost structures, as well as revenue opportunities. Historically, the banking industry in the U.S. has been slow to innovate compared to other industries. When asked why this may be, most industry studies found legacy back office infrastructures, the lack of leadership commitment (culture), regulations and compliance, organizational silos and the lack of budget to be inhibitors. Despite these limitations, the U.S. banking industry has tried to increase their focus on innovation through upper management commitment and support of innovation initiatives, development of innovation labs, increases in dedicated financing, and even an openness to invest in, or partner with, fintech firms. Some may question if the increased level of attention has had any measurable impact. 

Core banking system – the ‘Death Star’ of banking | FinTech Summary 79

FinTech Death Star Banking

A true disruption of banking will only happen when startups find a way to blow up banking pricing models that used to sustain their business model. This is likely to come in a form of unbundling from the very core, such as deposit accounts. The reason it hasn’t happened yet is because banks are doing it better. There is an Achilles weakness, however, the lack of real-time transaction processing capability. Cracking that could provide a very real and serious edge over banking incumbents. Copying model app design is easy. Offering P2P loans is easy. Changing your core banking system is not. This would, indeed, prove that banking is necessary but banks are not.

Thanks for reading; YOU are awesome! Just hit reply if you want to get in touch 🙂

Have a wonderful week,


Road to (perdition) unbundling
By Pascal Bouvier

We know of two evident truths since the internet graced us with its presence. First, intermediators in any given industry will be disrupted as new business models emerge and effectively unbundle old paradigms. Second, this unbundling has not happened yet in the financial services. The question we are all working toward answering and in the process elevate to a third truth or disprove altogether is: will a great unbundling/rebundling occur in financial services? Suffice it to say, that, at a high level, new business models will disrupt old ones by unbundling their offering, rebundling new features/functionality and leverage at scale by aggregate attention as a result of said unbundling/rebundling. It is inevitable that credit intermediation will be upended as a result of this shift. How money is created as well as how capital requirements are engineered in the aggregate will have to be revisited should this model take hold at scale.


Arguing with a banker
By Chris Skinner

We are on the cusp of radical change. Some banks are leading this change, while some banks have no idea what change is coming. Bank is there as a trusted store of value. The lending part is now no longer important, as that can be done through alternative media such as peer-to-peer lenders. The bank’s risk management function is being eaten by software. This means that credit analytics, transparency and management of risk, and the democratisation of finance, is becoming a key change factor as people connect directly through marketplaces and platforms. Banking isn’t the end, but the means to the end. The end is what we’re buying and selling. A bank provides a method to enable that to happen, but software, platforms and marketplaces can just as easily provide that method in a far cheaper, faster and lower risk form.


What the father of venture capital can teach us about blockchain
By William Mougayar

Today, the industry is begging for a rewrite and a reengineering of the financial regulatory structures of yesteryear, giving hope to the current array of activities that have developed around cryptocurrencies. If that sounds far-fetched, remember that stocks were once considered a new asset class. The current asset classes include stocks, bonds and cash as ‘traditional assets’. Alternative assets include commodities, REITs, collectibles, insurance products, derivatives, foreign currency, venture capital, private equity and distressed securities. It is also worthy to note that the alternative asset classes have varying degrees of compliance requirements: from being regulated to non-regulated. Should regulators stop scratching their heads and treat cryptocurrencies simply as a new alternative asset class, we’ll be done with the debate. Hopefully, crypto will not take 20 years before the investment community buys into that concept wholeheartedly. These groups should note, it has already seen big successes. Bitcoin, ethereum and many other crypto projects have generated financial returns for their early investors, while creating a new economy – the blockchain economy. Just as Georges Doriot was credited for seeing that capital needed to get ‘creative’ to birth venture capital, we need to be creative today, in order to birth ‘crypto capital’. The difference now is we have a roadmap to replicate.


Bullion on the blockchain: a new gold standard?
By Noelle Acheson

It’s hard to believe that the price of gold was fixed twice a day via conference call as recently as two years ago. In 2015, the London gold market (the largest in the world) switched to an electronic pricing system, broadening participation and, in theory, ending decades of opacity, inefficiency and occasional manipulation. However, the price is still fixed only twice a day and most trading of physical bullion still occurs on OTC markets, perpetuating the lack of transparency and cumbersome reconciliation. This partially explains the recent flurry of activity in gold trading technology. This past week alone, both Euroclear and the Royal Mint announced progress in testing blockchain-based gold trading. IEX also has trials under way, and the Canadian Royal Mint already allows the public to buy and sell bullion on a blockchain platform. A more liquid and verifiable market for physical gold could create greater trust in ‘digitized gold’ by lowering skepticism about price fixing and removing doubts about the authenticity of the underlying asset. Increased demand and a greater choice of vehicle is likely to further boost liquidity, which in turn would increase circulation. This would enhance gold’s functionality as collateral or even as a means of exchange. The greater the ‘usefulness’, the greater the value.

Will the next financial crisis be caused by finance or cyber? | FinTech Summary Issue 78

The Crypto Sector FinTech

Cyber security is one of the biggest ‘new’ global problems that have arisen lately. During financial crisis everyone wanted to buy as much property, sell as many financial products; make as much money. The currency has shifted from dollars, pounds, and yen to ‘innovation’. The financial sector is trying to score as many innovation points as possible. FinTech is trying to get as high on the ‘new and cool’ scale as they can. Are we taking the necessary precautions building these new features and products? Are we cutting corners to ship as soon as possible? These corners tend to be things that are not identifiable right now, such as security holes, until they are the only thing that matters. Global reliance on data and the internet is growing exponentially. Is it likely that next major crisis will be caused by cyber security failures, not finance? (Hint: watch Mr. Robot on Amazon Prime Video for some clues – great show!)

Thanks for reading; YOU are awesome! Just hit reply if you want to get in touch 🙂

Have a wonderful week,


How hackers hijacked a bank’s entire online operation
By Andy Greenberg

The traditional model of hacking a bank isn’t so different from the old-fashioned method of robbing one. Thieves get in, get the goods, and get out. But one enterprising group of hackers targeting a Brazilian bank seems to have taken a more comprehensive and devious approach: One weekend afternoon, they rerouted all of the bank’s online customers to perfectly reconstructed fakes of the bank’s properties, where the marks obediently handed over their account information. Kaspersky researchers believe the hackers may have even simultaneously redirected all transactions at ATMs or point-of-sale systems to their own servers, collecting the credit card details of anyone who used their card that Saturday afternoon.


Why insurers need insurtechs to improve digital experience
By Danni Santana

Large insurance incumbents are not agile enough to build out top-notch user experiences without the help of insurtech startups. There are two answers to insurtech disruption: build capabilities in-house or partner with industry newcomers with an option to buy at a later date. The latter submits all user experience control to insurtech startups. However, it is a risk Munich Re feels it has to take. Most consumer-facing websites do not ask customers for basic information they can easily scrape of Facebook profiles. They are also mobile-first and include some sort of chat function. In return, Munich Re offers startups capital, product design capabilities, and global multiline capacity—the ability to expand businesses across state and country borders. At some point startups will want an exit and we will think about whether we will be their exit.


Sweden going cashless
By Chris Skinner

For as long as I can remember, I’ve been hearing about a War on Cash. The war, as illustrated by India’s recent demonetization, is not on cash itself but on the illegal use of cash and, by association, the fraudulent creation of cash. Both fraudulent notes and coins along with large cash denominated amounts transferring between criminals, spurs the governments of the world to try to get rid of cash. Things have changed in the last seven years though, thanks to mobile and contactless payments. And astonishingly, about 900 of Sweden’s 1,600 bank branches no longer keep cash on hand or take cash deposits – and many, especially in rural areas, no longer have ATMs. Circulation of Swedish krona has fallen from around 106 billion in 2009 to 80 billion last year. This is why the world’s oldest central bank, has now announced that it’s exploring the concept of a digital currency (the eKrona) to accompany its Swedish kroner notes, which could ultimately save tourists a trip to the currency exchange desk.


Finding common ground between legacy systems and insurtechs
By Joe McKendrick

“Worlds colliding” seems like an apt way to describe the meeting of the minds between insurers and Silicon Valley’s free-wheeling digiterati. But it’s been happening lately, big time. The verdict? Insurers have ‘no choice’ but to get on board. True to the spirit of disruption, many of these new technology ventures have made their moves fulfilling needs the large established insurers have been overlooking. Large insurers are sitting up and taking notes. Of course, it should be noted that Silicon Valley is just as much a state of mind as it is a physical location in California. All across the world, companies are seeking to deploy technology to address business opportunities and problems in new ways. By all recent indications, insurance is becoming part of this movement. The spirit of Silicon Valley lives in Chicago, Boston, Berlin and Bangalore as much as it does in San Jose.