FinTech Summary 75 – Apple Bank, Expensive Bitcoin, Bots, PSD2 Effects

FinTech Summary 75

Every so often a new hype cycle comes around, it was bitcoin, then it was blockchain now it’s bots. We are early into development circle and expectations currently set out by the public are unlikely to be met. It won’t feel like talking to a human any time soon, not you can’t just chat to your banking bot when you’re bored at 3am about the game you saw yesterday. It will feel more like an advanced Q&A box where you don’t need to use keywords but the bot implies them from your sentence. There are challenges that we need to overcome, particularly the data ownership. If you’re using a bot a banking bot on Facebook, everything you say about your banking life will now be with Facebook. That’s a problem for me, and for many others. It is still a huge technological advancement and it will be huge, someday, just not tomorrow.

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Have a wonderful week,


How PSD2 Will Change Europe’s Banks For The Better
By Artem Tymoshenko

Open APIs will change this by forcing banks to give the same access to your banking information that their website has. Banks will still be required to authenticate users and provide the same level of security that they do now, but they will not be allowed to restrict account owners to accessing it only through their services. This will allow third-party financial service providers to build services directly on top of banks’ data and infrastructure. This means that banks will no longer be competing just against other banks, but against everyone who wants to offer financial services.


Hello, May I Speak to My Personal Bot?
By Eran Livneh

By and large, customers want to better manage their finances, but they don’t have time to stay on top of it all. That’s where the chatbot can lend a helping hand, by automatically executing money management tasks on behalf of customers, dutifully working to improve their financial well-being behind the scenes. Because of its ability to always be available, predictive, understand compliance, and work autonomously, a chatbot can become a critical – even if not an exclusive – channel for customers interacting with their banks. At the end of the day, if a customer receives excellent customer service, he/she won’t care if it comes from a human employee or a chatbot.


Will Apple Bank be the first new American #Fintech Bank?
By Chris Skinner

On Wednesday the American Office of the Comptroller of the Currency (OCC)* followed up on its promise last December to introduce a national bank charter for Fintech bank startups by issuing a white paper on how to apply for a licence, the evaluation process and what will be involved. It’s a massive move towards allowing Fintech firms like Square, Stripe and Simple to become full banks in the USA, if they want to be, plus any other firm who fancies a shot like Apple, Wal*Mart and even Ant Financial. It doesn’t mean they’ll get a license, but it does mean they can apply for one through one agency rather than having to deal with 200. This is a significant step towards encouraging Fintech banking competition in the USA and reflects similar moves made in other geographies.


But, but… I thought Bitcoin was supposed to be cheap?
By Izabella Kaminska

Total transaction fees in bitcoin are on the ascent, challenging a key claim put forth by bitcoin acolytes in the early days: that the bitcoin payments network could compete with the mainstream banking system on cost. Reality, however, is finally catching up with bitcoin. Fees are escalating due to capacity constraints being imposed on the network on account of blocksize limitation as well as the reduction in bitcoin mining awards. If unresolved such constraints will impede further scaling of the network and make bitcoin prohibitively expensive for day-to-day transaction use. Thus far, however, a have-your-cake-and-eat-it solution has escaped the developer community with all options on the table introducing some sort of compromise, whether that’s to bitcoin’s security or its decentralised and trustless nature. And, naturally, because this is the anarchic utopia bitcoin, nobody can agree on how to proceed anyway


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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