Ethereum’s Two Ethereums Explained
What is ethereum classic? And how does it differ from ethereum? CoinDesk profiles the ongoing split on the #blockchain network.
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Paolo Sironi: “Albert Einstein and My Robo-Advisor”
Paolo Sironi, IBM Thought Leader – Wealth Management #FinTech Analytics
According to Albert #Einstein, gravity is a property of the universe that regulates the interaction between energy, mass and spacetime. What would happen if gravity would not be there? … most likely an unregulated system!
Today’s financial markets seem just that, a universe without gravity, where Market Authorities and Central Bankers attempt to revise the risk/return forces and their time interactions within a workable model: by increasing costs of capital and strengthening fiduciary standards.
What is gravity in Wealth Management? Good Advice indeed, hence Goal Based Investing.
The Global Financial Crisis has shown that financial institutions were “defying gravity”, by interpreting the asymmetry of information inherent in the Wealth Management relationship like a marketing process centred on financial products only loosely related to actual client needs, instead of advice centred on customers&8217; goals. This transformation will differentiate successful Digital Advisors from traditional firms.
The Wealth Management universe contains three major &8220;sources of energy&8221; which must relate the one to the other: risks, returns and fees.
– The value of a financial investment (whose projection is always uncertain) should be aligned to its potential return over time;
&8211; The price of risk of a financial investment (which is derived from the estimate of the potential loss) would be what is put at stake over time;
&8211; The cost of a financial investment (made of transaction costs and fees) should be the price to pay to enter an informed financial transaction.
Way before the Global Financial Crisis, the system started to deviate from a viable equilibrium among the forces: the value of financial assets got disconnected from underlying economic conditions, exacerbated by a deluge of global liquidity (think of the consequences of Quantitative Easing); costs have been soaring for taxable investors, without being reflected in effective added value (think of active versus passive management); risks have been mis-priced leading investors to buy risky assets without understanding the underlying risks (think of sub-prime backed securities &8230; but also FinTech-like Peer to Peer lending).
Why a need to change the Wealth Management relationship and centre it on clients first? Because clients are the major mass in the Wealth Management universe and should not be neglected in modeling financial relationships!
&8211; In a product centric industry, the potential value of financial securities tend to be oversold (ever higher expected returns) to induce transactions (hence revenues).
&8211; In a client centric industry, personal ambitions tend to be cautioned to facilitate more reasonable risk management of portfolios and more realistic financial planning for the long term (hence less AUM volatility).
Nowadays, the only way to reinstate gravity is to transform Wealth Managers from product-centric marketing channels to client-centric advisory mechanisms. That is, Goal Based Investing or placing the client at centre stage.
#Robo-Advisors have sincerely made a first attempt to realign the gravitational system for they:
&8211; reduced the costs of investments;
&8211; simplified the value proposition of financial products;
&8211; exploited goals/thematics to engage clients on seemingly more personal investment decisions.
Yet, Robo-Advisors are far from being good enough mechanisms to truly personalise personal finance. Financial institutions, willing or needing to follow their path, should learn very fast to do more when digitalising their businesses, if they truly want to achieve more sustainable cost/incomes.
This is not easy, because the change is not about #technology but business models.
Albert Einstein will pardon me for the analogies.
If you want to read more about the topic, you can pre-order on Amazon my new book &8220;FinTech Innovation: from Robo-Advisors to Goal Based Investing and Gamification&8220;.
Interested in Robo Advisors? Attend Robo Advisors Congress in London this September 14. SPECIAL OFFER: Sign up now with code &8220;FTN10&8221; to get 10% discount!
This article first appeared on Linkedin Pulse
The post Paolo Sironi: &8220;Albert Einstein and My Robo-Advisor&8221; appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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10 Fintech Startups You Probably Haven’t Heard Of (Until Now)
When you’re in financial services, it sometimes seems like #fintech #startups are everywhere. They&8217;re on Twitter, LinkedIn, they&8217;re at conferences, they&8217;re in your inbox, they may be waiting outside your office this very minute. But for each one you&8217;ve #heard of, there are ten you #probably haven&8217;t come across yet, andRead More
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SMS No Longer Secure for 2-Factor Authorization
It might be time to say goodbye to those text messages containing PINs to help you log into your favorite banking site. The U.S. National Institute of Standards and #Technology (NIST) released a draft of its latest guidelines on digital authentication this week, and it contains a disturbing bit ofRead More
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ItBit Hit With String of Departures in Bitcoin-to-Blockchain Transition
A slew of recent #departures from #itBit suggest a changing future for a startup originally founded as a #bitcoin exchange service.
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P2P Lending Platforms Revamp The Consumer Lending Industry
Peer-to-peer (P2P) #lending, one of the hottest #fintech industries, has experienced tremendous growth in the past five years and is expected to be worth US$ 150 billion by 2025, according to PwC.
After the financial crisis in 2008, P2P lending emerged as a new method for consumers to get loans easily and quickly, bypassing traditional #banks that had tightening their #consumer lending policies.
The model quickly grew in popularity, attracting borrowers with the new platforms’ perceived low interest rates, simplified application process, and quick leading decisions.
In 2014, an estimated US$ 5.5 billion worth of loans have been issued in the US alone with an average growth of 84% per quarter since 2007.
Growth has been largely influenced by technological breakthroughs and demographical shifts. Most particularly, the Millennial generation – those born between the early 1980s and the early 2000s &8211; has set new standards in the financial services #industry.
P2P lending and Millennials
Image credit: Rawpixel.com via Shutterstock
This demographic is demanding greater convenience, mobility, real-time update, and are using entirely different channels.
Tech-savvy and socially-minded, Millennials are changing the face of finance and have embraced fintech solutions. A recent report by Oracle and Wharton Fintech suggests a notable increase in the use of non-bank options by this demographic in solutions such as mobile wallets, mobile money and overall alternative payment solutions.
In the P2P lending area, Millennials are ten times more likely to use P2P lenders than those 50 and older, according to the Fair Isaac Corporation. The demographic is becoming a larger portion of the consumer loan market as they seek credit to finance major purchases or refinance their student debt.
“The Millennials are prime targets for P2P lending as they value the convenience of transacting online and are less loyal to banks,” according to PwC.
P2P lenders vs. banks
While the industry is experiencing strong growth, lending from large banks, on the other hand, has decreased dramatically. In the US, the ten largest banks lent US$ 44.7 billion in 2014, a drop of 38% from its peak of US$ 72.5 billion in 2006, according to Techcrunch.
That said, banks shouldn&8217;t be afraid of these new players as P2P lenders &8220;are unlikely to pose a threat to banks in the mass market,&8221; according to Neil Tomlinson, Deloitte&8217;s head of UK banking.
Image credit: Stokkete via Shutterstock
In a report released earlier this year, the consulting firm argued that these new platforms &8220;will not be significant players in terms of overall volume or share.&8221; It said that P2P lenders cannot compete with banks in mainstream markets and should in fact focus on profitable niche segment markets where their knowledge can be a competitive advantage.
The report encourages banks to start collaborating with P2P lenders to deliver superior UX capability, maintain customer relationship, gain access to data to improve the bank&8217;s risk scoring, as well as provide an option to under-served segments.
For these platforms, collaborating with banks would allow them to increase awareness among borrowers and investors, gain scale and lower their customer acquisition costs.
A number of banks have already teamed up with P2P lending startups: JP Morgan Chase provides loans to its SME customers using OnDesk&8217;s platform; Metro Bank deploys customer deposits through Zopa; and RBS and Santander UK are both regering SME customers rejected for a loan to Funding Circle.
Featured image by Anton Gvozdikov, via Shutterstock.com.
The post P2P Lending Platforms Revamp The Consumer Lending Industry appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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Silicon Valley Bank Building Out Payments Services
Watch out #payments industry, #Silicon #Valley #Bank is coming. The bank for startups — officially named SVB Financial Group &8212; said last Friday that it was boning up its payments infrastructure and #services by “leveraging strategic partnerships to offer scalable and sustainable payment solutions to our clients, at every stage ofRead More
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Blockchain Researchers Debate Future of Consensus Tech at IBM Event
Forty #blockchain #researchers met in Chicago this week to hash out #consensus mechanisms that might be employed by distributed ledgers.
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N26 Adds Investing Just Days After Becoming a Bank
N26, the German banking startup that has been called the Simple of Europe, announced that it had been granted a banking charter last week. Wasting no time, the company announced today it has added investment services to the account through a partnership with the roboadvisor vaamo. This pairing of servicesRead More
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Ethereum Creator Vitalik Buterin Addresses ‘Classic’ Blockchain
#Ethereum #creator #Vitalik #Buterin issued new statements today addressing the increasing support for Ethereum #Classic.
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