Coming down from a 4-day conference with 8,000 attendees and wrapping it all up in a blog post is hard, because one has to focus on the signal despite all the noise being so interesting. Last year in Singapore, I had 6 #takeaways, having not been to #SIBOS for aRead More
Bank Innovation
In my previous post https://www.linkedin.com/pulse/fintech-era-9-mid-term-trends-bet-roberto-ferrari?trk=mp-author-card I noted down the 9 #FinTech future trends, taken from my recent book “L’era del FinTech”.
Here i focus a bit more on the first one that i called : Silicon Valley is coming (and actually they are not alone..).
#Banks have been shielded for centuries from competition. We couldn’t imagine until months ago a world without banks. Now things are changing, fast. Global digitization is creating a double effect: a) entry barriers to any market are brought down to new competition, and financial sector makes no difference; b) the new economy is creatingnew omnivorous global internet and #technology players, that are turning their heads (and their investments) also to banking and FinTech.
A very recent chart from the WEM (World Economic Forum) shows the latter with no need of additional explanation.
The world economy is increasingly becoming dominated by big global tech and internet giants across many sectors. Banking could be one of the next ones? So, what are the key moves the Apples and Googles are making?
Number 1 – Investments in FinTech startups : Did you know that Google Ventures is the third most active VC investor in North America Fintech companies since 2011, according to KPMG/CB Insights, and holds investments in key FinTech players such as Robinhood, OnDeck or Ripple and many more? Google is not the only one. Intel, Salesforce, Microsoft, Apple, Amazon they have all made investments and acquisition of FinTech startups.
Tech companies and internet giants have interest in FinTech as the last one has the potential to efficiently reach large masses on a global scale (see the payments story afterwards), take a significant slice of globally banking revenues and redesign significantly cheaper operations.
Number 2: Playing with payments. Apple, Facebook, Google, they are all playing with digital payments (proximity and/or remote) with several branded initiatives. Amazon was the first one to do so twenty years ago, in order to build its ecommerce platform and has months ago announced that will move forward, beyond its own platform. Why that? Because payments are one of the the biggest commodities in the world, are the entry point to billion of customers and their own spending and life style data, and both technology and regulation are making easier and easier for an over the top to build a digital proposition on top of global banking and payments rails (old and new). Tencent and Alibaba are also showing the way from China. It is very likely that in very few years we will see a totally different competitive scenario. Will banks be ready to react or they will end up like MNOs in the Telco industry?
Number 3: Increasing competition among omnivorous: Globally, competition among big tech companies will increase. There has been so much room for growth so far that there was not so much need to compete. But now, Chinese and Asian competitors are getting very strong, and at least in the Western World there’s is far less room for growth. Apple Pay is already competing with Android Pay for proximity payments and with PayPal and Amazon for remote payments, Facebook Messenger payments could become a strong competitor too. Stronger competition among big tech/web players will lead to greater investments and new competitive services, also in the financial sector if they decide to do so.
To conclude, it is not just from Silicon Valley, it is from the increasingly global and dominant internet and tech players that the threat is coming to banks and traditional financial institutions. This is serious and big as no one in the retail banking industry has the global scale to compete with them. How banks will behave and react? They have started to cooperate with Apple, for instance, but not everywhere. Is that correct or it is instead a forced, inevitable compromise that will ultimately de-touch customers from banks? And what will happen if digital giants will move to lending (as some is already doing?) or, even worse, if they will start to aggregate fintech platforms and startups to great a totally new competition on a global scale?. Piece by piece…….
[linkedinbadge URL=”https://www.linkedin.com/in/robertoferrari” connections=”off” mode=”icon” liname=”Roberto Ferrari”] is General Manager CheBanca!
#Design plays a vital role in shaping the world we live in; from the objects around us to the services we consume daily.
With increasing competition for mindshare, design is often the only differentiator for elevating a product or service from an otherwise crowded market. Small wonder, then, that a growing number of companies are turning to design in their continuous fight for relevance and growth.
However, design and creativity don’t always sit comfortably with conventional business doctrine. The discovery process that precedes great design requires that rules be broken – which usually means mistakes, and these can be perceived as wasteful failures rather than the byproduct of healthy innovation. Businesses of this mindset tend to treat design as an afterthought; often just dressing up products with a last minute costume and therefore foregoing its full potential, which is often immeasurably greater.
Design is a potent catalyst for sparking innovation and maintaining growth, yet it must be ingrained in the core of the business and given time to produce results. The perpetual journey of discovery and learning requires empathy for users, patience, and commitment – so that the end product is efficient, effective, and desirable.
At FastFin, we believe in the power of great design in everything we do. We’ve observed that successful products result from a deliberate, well-rehearsed process that places users at the center of design thinking – drawing on domain knowledge, cutting-edge #technology, and agile delivery methods.
We’ve been fortunate to work with visionaries at global #financial firms who share our passion for great design, and look forward to working with others who seek differentiation – and disruption – through design.
[linkedinbadge URL=”https://www.linkedin.com/in/emintatosian” connections=”off” mode=”icon” liname=”Emin Tatosian”] is Co-founder, FastFin and this post was originally published here: http://fastfin.co/differentiation-and-disruption-through-design/
New York-based money transfer service #Payoneer has signed with e-commerce player #Rakuten.com, formerly known as Buy.com. Payoneer doesn’t enable purchases on the platform, but rather enables Rakuten to compensate its suppliers, who may be located anywhere in the globe, particularity East Asia. “We&8217;re a bridge between marketplaces and sellers,” saidRead More
Bank Innovation
Despite the promise that #blockchain holds for banking, the sector will likely not be #first to put the burgeoning #technology into real-world action.
Simon Dixon, CEO of BnktotheFuture, lays out his vision for #blockchain startups and makes the case for #bitcoin.
Image source The Daily #Fintech founders are at SIBOS in Geneva; reporting every day, snippets of insights on the Fintech #Genome. Stay tuned on all SIBOS Insights conversations. We held our breath for nearly 9 months after the $ 13m Sequoia Capital Seed round for #Lemonade was announced at the end of 2015. ReleaseRead More
Bank Innovation
I am completely fascinated by the concept of money. What makes a picture of our first president on a piece of paper worth a dollar? I used to believe that our money was backed by gold. Turned out this hasn’t been the case for almost a half century. The only thing that makes a dollar worth a dollar is because of faith. People have faith that a dollar today is worth a dollar tomorrow. If I exchange that piece of paper with a picture on it for goods, the person that received it believes they can exchange it for the same amount of goods tomorrow. Faith.
Currency is nothing more than a token of value and that value is based purely on supply and demand. As the supply of currency increases, the value decreases. If demand should decrease, so will the value. However, if supply decreases or demand increases, the value increases. Sheep were used as currency. As sheep became more plentiful, you needed more sheep to purchase land. If there was famine and you had sheep, your wealth, the value of your holdings, skyrocketed. Moving sheep around was very difficult and sometimes messy. So, tokens of value were used instead. If I have 8 sheep, and exchange them for a token that says I own 8 sheep and everyone is on board with that token being worth 8 sheep, then I could use that token for exchange of goods. For currency to work, it doesn’t need to be backed by anything but the faith of those who use it as an exchange medium.
The problems with currency are well known. Counterfeiting currency occurs. This causes the value of the currency to go down as it actually increases supply. A decision to just print more money by the issuing agency will decrease value. If we decide to print twice as many bills as we have in circulation currently, the value is cut in half. What would happen if the decision was made to never print another bill?
8 years ago next month, a computer programmer or group of them using the alias Satoshi Nakamoto released #Bitcoin. They released a very technical white paper that can be found at https://bitcoin.org/bitcoin.pdf
The gist is Satoshi set up tokens of value on the internet. To address the problems of inflation, he first set a limit of 21,000,000. There will never be more than 21,000,000 created or in circulation. Denominations of Bitcoin can be divided down to a millionth of a bitcoin, known as a Satoshi. If the wealth of the whole world is stored in Bitcoin, a satoshi would be worth about $0.04. With a finite supply, the only way value is decided is by demand.
To get these in circulation, computers must have special software to confirm transactions. Anyone can own these computers and software. The transactions are broken up in blocks that go to different computers to be confirmed. This allows no one full access to a bitcoin and the network of many confirms the transaction. The incentive of confirming these transactions is gaining bitcoin through fees or through confirming enough transactions to release a bitcoin which is then in this “miner’s” wallet. Almost 16,000,000 are currently in circulation using this method. Once all 21,000,000 are in circulation, the miners will be paid by fees alone.
By not having the flow controlled by an issuing agency and the ledgers and balances not being kept by a bank means there is no risk of inflation, no mistakes by one central authority, and a conglomerate of network miners verifying transactions based on simple supply and demand. A miner in New Zealand may confirm the first part of a transaction while a second part may be confirmed in Argentina and a third in Kenya.
To prevent counterfeiting, the code of bitcoin is based on all the transactions being recorded along with when it was transacted. The code is considered unhackable because it is constantly changing, complex, and decentralized. You would need to get the right codes off of many different miners to recreate the chain of transactions, then put them in the right order, and then get it confirmed before another transaction occurs. A virtual impossibility.
So, the question becomes demand. Why would anyone want Bitcoin? The average amount of currency is “taxed” by #banks at 3% through fees. If you take $50 out of an ATM, you could pay anywhere between 6-10% in fees. When you use a debit card at a store, that store is paying 1.5% in fees. A credit card average fee is 3% for the store plus any interest accrued by the consumer. If a store is netting 8% of its revenue, then these fees are taking 20% of its profit. Those costs are passed onto the consumer in 2-3% price increases.
With Bitcoin, the fees can vary between 0-0.2%. I sent $18.00 worth of Bitcoin to a bookseller in Austria for $18.01. This transaction was confirmed in 8 seconds. International transfer fees from banks can be as high as 21%. If I travel from the US to Jamaica, I will now have more to spend through Bitcoin as I will not have exchange rates and bank fees to pay for. Wiring money can have fees of over 10%. With bitcoin, it is a transfer of data from one virtual wallet to another with fees less than .2%. $582 billion dollars were sent in remittances to home countries last year. This means the fees for that were at least $58 billion. With bitcoin, $1 billion in fees MIGHT be paid. If your family will receive 10% more value, you are more likely to use bitcoin.
So, yes, demand is rising. As is speculation. People are buying bitcoin to sell later at a profit. Unfortunately, this also is causing fluctuations in value. In 2010, a Bitcoin was worth $0.08. In 2011, it went from $1 to $31 and then back to $2. It has gone as high as $1000 and has hit a low of $200 since then. As I write this, the value has varied between $570 and $630 just in the last month. How much faith would you have in a dollar if it could be worth $0.95 or $1.05 in a month? With wild fluctuations like that, merchants will fear accepting bitcoin. It does not have the faith needed yet to make it a viable currency, but its demand and acceptance is growing.
The Yap in the Eastern Pacific used large limestone as currency. Instead of moving handheld currency, the stone was a public ledger that was used to show who owned what value. A riveting story to read up on if you ever get the chance. It had me doing a ton of research as to what makes money have any value. We use the dollar today instead of gold because of fluidity and a common value. We can go almost anywhere and get something in exchange for a dollar. The value of that dollar is generally accepted as fact only because IT IS GENERALLY ACCEPTED. If we were dealing with a culture that does not know of a dollar, they would laugh at you for attempting to exchange those pieces of paper for work or goods. Just as you would laugh at the Yap for offering a piece of their stone for your computer.
Bitcoin’s value is solely based on demand as supply is finite. Miners are inflating the amount of bitcoin in circulation by 4% per year currently. This will be cut to 2% in 2020 as the amount of bitcoin released is cut in half every 4 years. This is programmed in and cannot be changed. Once that 21,000,000th bitcoin is released, then no more bitcoin can be mined.
Demand far outweighs supply currently and continues to grow. The factors that can stop this are still plenty. Banks and financial institutions drastically dropping fees. Another #cryptocurrency being created that makes Bitcoin look like Atari or MySpace. A buyer hoarding bitcoins suddenly sells all theirs (It is estimated that Satoshi holds 1,000,000 bitcoins).
Use and acceptance has been doubling almost every year since bitcoin crossed parity with the dollar. If I believe bitcoin will double in value every year, that makes a bitcoin worth 5 figures in 5 years. I believe this will occur and invested in bitcoin. However, I also know that something better may come along and make bitcoin valueless. I can’t put all my eggs in one basket.
Cryptocurrency is the future of money. The evolution is upon us and occurring as we speak. The internet of the early 90s is the cryptocurrency of today. Whether we like it or not, this is happening. I believe the market share bitcoin owns ($9.6 billion of $12.1 billion) and 8.5x larger than the next cryptocurrency forces bitcoin to be more readily accepted than the others. Putting speculating on the future aside, I see cryptocurrency becoming the world standard of value and that will occur sooner than we ever expected. Le Roi Est Morte, Vive Le Roi.
What is the #state of #banking #innovation today? Each year, we poll the industry to find out. #Fintech funding has grown tougher to raise though total volume, because of a few monster deals, may exceed the previous year. Finovate this year pursued many themes that would have been familiar inRead More
Bank Innovation
#Thomson Reuters will soon launch a platform for #ethereum smart contract developers.
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