According to a recent study by Accenture, investments in #fintech hit $ 5.3 billion in the first quarter of this year (having grown 75 percent in 2015, exceeding $ 22 billion). These are staggering figures for a still nascent industry, which can have a monumental impact on all sectors, from lending and investments to savings and payments. Read More
The use of #alternative #data for #asset management has grown in popularity, but the industry is far from a complete #adoption, Bina Kalola head of global strategic direct investments for global banking and markets at Bank of America, said during the Future of #Fintech Conference this morning. “Data is beingRead More
Bank Innovation
E-Trade recently rolled out its new Adaptive Portfolio aimed at young professionals just beginning to face the financial struggles of adulthood. Adaptive Portfolio combines previously offered active and passive management with risk classifications that automatically rebalance to accommodate market changes. Users will also have the option to connect with financial consultants. Read More
The first #Fintech wave has passed its peak. OK, I know I’m not inventing sliced bread here, but if you are one of those people fervently expecting the buzz to translate into the full rebirth of traditional #banking anytime soon, well, you’d better hold your horses. Don’t get me wrong, the disruption of #banks’ business models is happening (and not only because of Fintech competition but also due to their high-friction distribution model based on branches, plus the negative interest rate environment and the post-crisis regulatory framework). But I guess such an industry disruption (whose outcome has still to be defined) won’t be an overnight process.
Managing expectations
In the last 18 months, Fintech has become way too hot, and we’ll probably be surrounded by this hype as long as the “banks”, “digital” and “disruption” combo keeps hitting the headlines. But those won’t be gaining momentum forever, especially once digitalisation becomes the new normal in the industry. Unsurprisingly, people tend to have over-expectations in the short run, especially those who are chomping at the bit to see banks under stress after years of turning their back on their customers and bailouts to the tune of trillions. But unfortunately, this is not the taxi industry and banks cannot be “uberised” as easily as other businesses. The disruption process in banking is not just about opening the business up to competition, but a matter of adapting and transforming the complex and very demanding banking regulatory framework along with banking infrastructures and payment networks. That’s one of the main reasons why the industry cannot be disrupted in a matter of 4-5 years.
The banking licence
So I guess the traditional landscape dynamics have not really changed. In the end, banks own banking licences that allow them to issue banks accounts, manage the payment infrastructures, take risk-free retail deposits (covered by the deposit guarantee scheme) and gain access to central banks’ liquidity facilities, without mentioning their too-big-to-fail unfair advantage. With retail depositors their main source of funding, their balance sheets are huge. Besides, as providers of bank accounts, banks de facto own the infrastructure, which means that Fintech firms still need to rely on them one way or another (at least until new regulatory frameworks show up).
Although the requirements for getting a licence are very high (which becomes an important entry barrier for Fintech. In the UK, it is considered that opening a new bank with a full banking licence requires 20M GBP up front), the obligations derived from it in terms of prudential regulatory compliance (e.g. capital and liquidity requirements) are also remarkable. That said, having a banking licence gives the company a reputational advantage relative to other financial institutions.
Living up to the standards
However, it’s amazing how the industry as a whole has been able to overcome all sorts of difficulties, creating a solid narrative appealing to consumers and investors. The Fintech business is not only about offering marketable products and services, but a commitment to values and good practices too. You just need to check out some Fintech webpages and customer feedback to notice that words such as “trust”, “transparency” and “simplicity” are constantly showing up. Apart from the reputational concerns, this reflects firms’ eagerness to differentiate themselves from traditional players in the banking ecosystem and to really put the customer at the centre of their work.
But this could be a double-edged sword. The fact that the whole industry lies under the same brand constitutes a great advantage for firms (especially start-ups) in need of reaching clients and raising funds. However, it also means that potential malpractices by specific firms are liable to ultimately harm confidence in other Fintech companies. For instance, we have seen how the stress episodes involving platforms such as Lending Club and OnDeck or the bankruptcy of Powa, have been used by some media to extrapolate these firm-specific problems to the whole industry. We’ve also recently experienced how some old-school brokerage firms are trying to position themselves as Fintech while their business model is based on screwing clients through opaque spreads and sales methods based on dumping.
Focusing on what really matters
Nonetheless, living up to these standards may be not enough. Some Fintech companies have been focused on gaining market share based on huge marketing spending without really creating new #technology and/or a defensible competitive advantage. This kind of “low-cost” positioning may work but for a very limited number of players. Generating value through new tech-oriented solutions should be the main target in the medium and long term for any firm seeking to consolidate in the market. We are now experiencing a reality check which will make the Fintech industry healthier, pushing companies to build unique and sticky technology and to collaborate with existing players.
In a previous post I argued that in the short run we are moving towards a co-petition (co-operative competition) model in which Fintech “stays at the mercy of banks, they [Fintech firms] disrupt banks on one side but they bring them business on the other side. In the end, banks still win.” But such a statement does not have to be valid for the long term – in fact, people tend to underestimate the impact of Fintech on the industry for the coming 10 to 20 years. It seems obvious that the complete digitalisation of financial services is unstoppable since customers are turning digital at an amazing pace (I have recently been told that 90+% of contacts with customers are now through digital channels even at savings banks) but the way this ecosystem will work and interact in the future is still to be defined.
In conclusion (and coming back to the title of the article), sooner rather than later the Fintech buzz will die, taking with it all the firms that have based their business on empty words. In contrast, those who create real and new technological solutions and products will stay alive, driving the long-term disruption that the industry needs. Besides, relying on this timeframe is not only a more realistic approach for evaluating the real impact of Fintech, but also a medicine against the potential frustration that could otherwise be caused when the short-term hype passes.
[linkedinbadge URL=”https://www.linkedin.com/in/philippegelis” connections=”off” mode=”icon” liname=”Philippe Gelis”] is CEO at KANTOX, disrupting the financial industry
#BAFT‘s newly launched Innovation Council makes serving its members #blockchain needs a top priority, and that won’t likely change anytime soon.
fintech techcrunch
Ralf Keuper
Die Frage steht schon seit längerer Zeit im Raum: #Benötigt ein #Fintech-Startup, um auf Dauer erfolgreich zu sein, unbedingt #eine #Vollbanklizenz?
Sagen wir mal so: Wenn ein Fintech-Startup mit dem Anspruch auftritt, eine Bank zu ersetzen, dann wird es um eine Vollbanklizenz nicht herum kommen.
Dies gilt um so mehr, je abhängiger die neuen Banken von den existierenden Bankinfrastrukturen und je ähnlicher ihre Kosten- und Erlösstrukturen (und damit ihre Geschäftsmodelle) denen der klassischen Banken sind. Sollte es jedoch Absicht des Fintech-Startups sein, nur bestimmte Bereiche des Bankgeschäfts anzubieten, die lediglich einer eingeschränkten Regulierung bedürfen, dann ist eine Vollbanklizenz zumindest nicht zwingend.
Ob eine Banklizenz Light, wie sie in der Schweiz diskutiert wird, die Lösung ist, bleibt abzuwarten. #Oder aber das Fintech-Startup verfügt über so viel Kapital und technologisches Know How, dass es in der Lage ist, eine eigene Infrastruktur zu betreiben, wie Ant Financials/Alibaba bei den Internet Payments. Ein weiteres Beispiel ist PayPal, wenn man jetzt PayPal und Ant Financials als Fintech-Startups betrachtet.
Schaut man sich die Zahl der Banken an, die in den letzten Jahrzehnten neu auf der Bühne erschienen sind und es geschafft haben, sich zu etablieren, fällt der Befund recht mager aus, wie auf diesem Blog vor einiger Zeit in Bankgründung als Mittel der Wahl?thematisiert wurde. Wirklich etabliert haben sich Direktbanken, Autobanken, Umweltbanken, Teilzahlungsbanken und neuerdings Whitelabel Banken; also eigentlich Spezialbanken oder Limited Purpose Banken. Reine Online-Banken haben es dagegen schwer, wie Chiwon Yom bereits im Jahr 2005 in Limited Purpose Banks: Their Specialties, Peformance, and Prospects feststellte:
Die Internet-Banken konnten zum damaligen Zeitpunkt die in sie gesetzten Erwartungen nicht erfüllen. Zwar verfügten sie auf den ersten Blick gegenüber den etablierten (Filial-)Banken über den Vorteil geringerer Alt-Lasten, jedoch konnten sie ihren technologischen Vorsprung nicht in einen ausreichenden Gewinn ummünzen. Zu groß war auch hier bereits der Kostenapparat, bestehend aus IT-Infrastruktur und Personal.
Die Erlöse aus Zinseinnahmen waren im Vergleich zu den anderen untersuchten Limited-Purpose-Banken gering, was ja auch so gewollt war, da die Internet-Banken mit hohen (Guthaben-) Zinsen, geringen Kredit-Zinsen und günstigen Konditionen warben. Auch die Einnahmen aus Provisionen, Gebühren und Service-Leistungen konnten hier für keinen Ausgleich sorgen. Erschwerend kamen die hohen Kosten der Internet-Banken für die eigene Finanzierung hinzu. Weiterhin schlugen die im Vergleich zu anderen Banken deutlich höheren Kosten für Werbung und Marketing zu Buche (Eigenzitat).
Source: http://bankstil.blogspot.com/2016/06/benotigt-ein-fintech-startup-uber-kurz.html
The post Benötigt ein Fintech-Startup über kurz oder lang eine Vollbanklizenz? appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
Taking a leaf out of leading US consumer #finance player Affirm’s book, listed Australian digital retail finance company #zipMoney (ASX:ZIP) has notified the market it plans to #acquire #personal finance app #Pocketbook. The acquisition will see the app ‘pocket’ AU$ 7.5 million, with $ 6.0 paid upfront and $ 1.5 million deferred, subjectRead More
Bank Innovation
#Network #virtualization specialist #Midokura today announced it has raised a $ 20 million #Series B #round with participation from Japanese #fintech company Simplex and existing investors like Allen Miner and the Innovation Network Corporation of Japan. With this round, Midokura’s total funding has now hit $ 44 million. As enterprises move away from expensive proprietary networking hardware… Read More
We hear a lot about “smart contracts”[1] these days. What about “smart lawsuits”?
Lawsuits are a dispute resolution tool. Over-simplying (a lot): a plaintiff puts their problems into a complaint (sometimes called a petition) and files it with a court. The defendant answers (or doesn’t, and maybe gets defaulted). No dispute? No need for a lawsuit.
How were disputes resolved before lawsuits? Using current lingo, we’d probably call it “peer-to-peer.” You stole my cows? I’m stealing them back. The reader can imagine their own, more colorful, self-help remedies.
Formalized court systems made most modern commerce possible. Whether or not you like them (or think they should last) is a matter of personal preference. Whatever you think, they are also likely to remain in place for some time, process automation brought to you by software notwithstanding.
Lawsuits may have been an improvement but they aren’t always fast or efficient, a common complaint. Proving that one thing is or isn’t true takes time and, often, testimony or documentary evidence. They are also static, not dynamic documents, and changes must be incorporated by written amendment. Nor are they aware or able to respond to or interact with external data. Lawyers are catching up, but we still use tools and #technology with 19th century (and earlier) antecedents.
Take a basic function of a lawsuit, deciding what’s true and what’s not. Who decides that in our current system? First you have to distinguish between law and facts, at least in the U.S. We use a jury system, in which a number of citizens are selected to decide which facts are true and which aren’t. In a non-jury case, the judge will make factual decisions. In all cases, the judge makes legal decisions.
Some lawsuits are dismissed early for a variety of reasons. They may fail to state a claim under any recognized theory of law. It may be true that you can sue someone because you don’t like what they had for breakfast. If that’s all you got, though, your lawsuit will probably be dismissed if the request is made.
If you make it past motions to dismiss you may end up in what’s called discovery (again, I’m referring to the U.S.)[2] Discovery is the phase of a case where the parties get to learn about the other sides’ facts — what do they have that will prove their case? The proof may be in the form of witness testimony or exist in documentary form. Document can be ink and paper or electronic.
Some cases make it to trial. Some don’t. They may settle, they may be dismissed. Some cases are resolved in motion practice. Summary Judgment is an example. It’s a way to resolve a case without a trial where (1) there are no “genuine issues of material fact” and (2) the moving party is entitled to a decision in their favor as a matter of law. (See Rule 56 of the Federal Rules of Civil Procedure for the Federal Court formulation. Many states follow this, though not all. https://www.law.cornell.edu/rules/frcp/rule_56).
How do you get summary judgment in your favor or defend against it and live to make it to trial? You have to be able to get your facts in front of the judge, who will decide the motion. Traditionally, this involved citing deposition testimony and getting witnesses to provide affidavits or declarations, under oath, attesting to facts (either to show a dispute the lack of one), and including documentary evidence (the authenticity of which may need to be established by a person with knowledge). Disputes often turn on things like whether a document was signed, whether or when products were delivered — things that can be proved or disproved with documentary evidence, which may or not be readily available or for which authenticity may be disputed.
The Federal Rules don’t use the word #blockchain in Rule 56, but they do refer to “electronically stored information”, right between “documents” and “affidavits of declarations”.
(1) Supporting Factual Positions. A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:
(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials;
At the risk of stating the obvious, blockchain data = “electronically stored information”. Explaining to a Court what a blockchain or #smart contract are may for educational (if not foundational) purposes still require an explanatory declaration of affidavit. But it’s not hard to foresee a time in the not too distant future where moving papers might point to an address, no affidavit needed.
If a record’s substance and existence can’t be contested, that would do away with a lot of disputes and make summary judgment practice simpler for many. As for broader applications, here’s a nice formulation by Nina Kilbride of Eris Industries:
It may not happen overnight, but this may be how blockchain based smart contracts may start to pave a way to smart lawsuits. The first lawsuit or summary judgment motion that refers to a contract address may have the distinction of being the first (sorta) smart lawsuit.
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* Photo credit: https://pixabay.com/en/bird-cage-hanging-birdcage-vintage-783185/. CC0 public domain.
** Disclaimer: These are my personal opinions only. They may not be shared by and are not sanctioned by clients, past, present or future, or any law firm with which I’m affiliated. And none of this is legal advice. A blog post isn’t a substitute for a lawyer.
[1]. Neither smart, not contracts. You’ll find a recent and very thoughtful discussion of “smart legal contracts” here: http://www.coindesk.com/making-sense-smart-contracts/.
[2]. The world is a big place. The fact that I’m referring to U.S. practice is because I am U.S. trained lawyer.
[linkedinbadge URL=”https://www.linkedin.com/in/stephendpalley” connections=”off” mode=”icon” liname=”Stephen Palley”], the author of this post, is a lawyer focused on Construction, Insurance, and Compliance Driven Software Development. @palleylaw
The 4 #fintech #events in #Europe below that you should not miss will celebrate the innovation and disruption in finance. All areas of financial innovation are showcased and the hottest and most innovative & disruptive startups and companies in the area will present. International and national experts share insights and experiences. Find your next great experience in fintech #this #June & #July
#Blockchain Amsterdam 2016
June 9th, Amsterdam
We’re in the early stages of a mass transformation in industry, the third phase of the information age. The first phase saw the introduction of computers, in the second phase they became interconnected and gave rise to the digital economy. The third phase is now among us. Computers and digital #technology are now ubiquitous, we have more data than we know what to do with and we’re redefining sectors that seemed untouchable for decades.
We are in the age of realignment and that’s where we find Blockchain technology. A distributed ledger, born from clever mathematics and a desire to transact anonymously while maintaining trust on both sides of the exchange. The world is starting to wake up to the vast number applications for such technology. The internet changed the world in 20 years. Blockchain will do it in 10. Welcome to year one. Welcome to Blockchain Amsterdam.
>> Sign up now with code FTSW to get 20% discount!
FinCoder 2016
June 20th, London, UK
The organisers of London Fintech Week bring you the 2nd Annual Fincoder, a conference tailored especially for Fintech technologist, developers and coders. Fintech developers are changing the face of the financial services industry. Hear from some of the brightest developers and technical leads from large financial services firms and fast-growing start-ups. Learn what it takes to work with large financial services firms and what investors look for in emerging financial technology. Discover new opportunities, ways to tackle challenges and the latest trends in financial services technology. From enterprise to start-up and everything in between, 140 attendee will join together at Aviva’s Digital Garage in Hoxton on June 20th 2016. This event is part of London Tech Week.
June 28th, Zurich, Switzerland
Money-Tech features 20 international digital payment and finance technology company pitches and offers 1on1 meetings.
Innovations presented will include digital currencies, mobile banking, peer-to-peer financing (crowdlending, crowdfunding), crypto finance, new trends insurance tech, #robo advisors, among many others.
Speakers will include academics and executives from fintech startups and financial services firm including Roland Berger, Ascribe, the Ethereum Foundation, Nexussquared, Wikifolio, Crowdhouse and more.
>> Sign up now with code fintech16 to get 15% discount!
London Fintech Week 2016
July 15th-22nd, London, UK
Fintech Week is a series of conferences, workshops, hackathons, meetups and parties. Each day we focus on a different topic. We always ensure that there is plenty of time for networking and meeting other innovators. In 2014, we successfully organised London’s first Fintech Week. In 2015 we scaled up and attracted delegates from across the globe, got some of the brightest minds in financial services on our stage and ran a Blockchain Hackathon in Canary Wharf.
The main conference/exhibition takes place at the Grange Tower Bridge Hotel, but other events take place across the City of London, Canary Wharf and “Tech City.” In 2016 we’re going bigger.
Fintech Week 2016 aims to unite the world of Fintech in the world’s financial capital – London of UK. Series of events will help to enhance the dialog between established multi-nationals, innovation firms, disruptive start-ups, governments, media and investors. You will be inspired, learn something, meet new clients, partners, developers, investors and find value for your business.
>> Sign up now with code FTSW to get 15% discount! Limited offer.
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