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  • user 12:18 pm on February 22, 2017 Permalink | Reply
    Tags: financial, , , , , ,   

    Kakao Investment Points Offline Push for Ant Financial 

    In yet another installment of Ant #Financial’s global expansion master plan, the company today announced a $ 200 million #investment in #Kakao Pay — a soon-to-launch #fintech subsidiary of South Korea’s Kakao Corp. Through the deal, Ant will offer its digital financial services to Kakao Pay’s 14 million members, for starters:Read More
    Bank Innovation

     

  • user 12:19 am on February 14, 2017 Permalink | Reply
    Tags: financial, , , , ,   

    Stash To Launch New Financial Products This Year 

    The strategy for the investment app #Stash is simple: onboard customers, teach them the basics, encourage them to invest. Once that’s covered, introduce them to more complicated #financial #products and big-ticket investing. Which is exactly what Stash is going to do at the end of #this #year. “Getting people toRead More
    Bank Innovation

     

  • user 12:18 am on January 26, 2017 Permalink | Reply
    Tags: $700K, , Cleo, financial, , , ,   

    Financial Chatbot Cleo Raises $700K in Seed Money 

    Siri who? #Cleo, a London-based #fintech startup that has developed a virtual assistant for personal finance, just raised $ 700,000 in a round of #seed funding from intrigued angels. According to Crunchbase, one of those angels is Niklas Zennström, whom some might remember as the mind (and founder) of video-chat service Skype.Read More
    Bank Innovation

     

  • user 11:35 pm on December 30, 2016 Permalink | Reply
    Tags: , , , financial, , ,   

    The Blockchain explained to my VP (and my President-CTO) 

    Last week I was contracted by my last employer before I retired, a world-class satellite operator in Luxembourg, to do a training on satellite business and #technology — it’s always a pleasure to meet old friends again. I had the opportunity to discuss with 2 VPs who asked me about the #blockchain and how it can be useful for the satellite and space industry. It was a nice opportunity to discuss about what the blockchain is useful for, instead of the usual speech on what the blockchain is.

    I made a 1-minute elevator pitch, which proved itself interesting enough that we chained on a 15-minute coffee explanation immediately after that. Note: This has also been checked by my former President 🙂

    Executive Summary – 1-minute elevator pitch

    • Today’s #financial services bookkeeping and reporting rely heavily on the double-entry ledger.
    • This method of bookkeeping is a kind of manual checksum that has been invented in 13th century to support the lucrative wool trade across Europe. Doing this, each of the parties maintain their view of the ledger and the counterpart’s view, and both views must balance (“reconciliation”)
    • Mathematically speaking, the number of links among n parties grows as n-square in a peer-to-peer organisation, while it grows much more slowly (only logarithmically) in an hierarchical organisation.
    • So the double-entry ledger favoured a centralised model of trade, with layers of intermediairies, but also generated a need for regulations and auditing. Today’s entire financial world actors, regulators and auditors are organised from this double-entry ledger of the 13th century.
    • The blockchain brings back the simplicity of the single-entry ledger (journal) and peer-to-peer transactions protected by cryptographic primitives from glitches, from errors in operations sequencing or from deliberate frauds. We take full advantage of the speed of communication and of the calculation accuracy of computers.
    • But despite its great promises of simplification and cost reduction, its adoption may be hindered by the threat of disruption of the existing organization (actors, regulators, auditors).
    • Outside the finance world, every day-to-day activity that would be essentially peer-to-peer may benefit from the blockchain. The #Bitcoin has the most success currently, but its blockchain is dedicated to crypto-currency transactions, while Ethereum and other blockchain platforms, being Turing-complete, have more potential.
    • Some examples of peer-to-peer activity: housing swaps, hotel rooms or airplane seats booking, spare parts tracking in airliners maintenance, tracking freight containers load, individual healthcare history, real estate transactions, proficiency certification of non-commercial pilots, mutuel pension funds, mutuel health funds, micro-insurance, micro-finance etc.

    What are the problems that the blockchain solves?

    The blockchain is best known through its impact on financial services, so we’ll start with this application before moving to other fields.

    The #problem of keeping accurate records of commercial transactions existed since the Egyptians, but was not solved satisfactorily until back in the Middle Age. At that time, Flanders was the center of the wool textile industry. Merchants all over Europe bought the finest wool clothes there and retailed them to the richest families in the rest of Europe. Payment was done partly with various currencies, partly in kind. Some were done cash, some were paid at term.

    Let’s take the example of a wool merchant located in Munich, with subsidiaries in Paris, in Frankfurt, in Warsaw, and local representatives and warehouses in Bruges, in Brussels, in London. At that time, communication was done at the speed of a walking man, at best of a galloping horse.

    The problems were:

    • how to keep track of the amounts owed by customers, as well as owed to suppliers, in different locations?
    • how to keep accurately inventory of goods at different warehouses with their delivery status and synchronise the information among locations?
    • how to make sure that the same piece of cloth in Bruges warehouse is not sold simultaneously by both the Paris agent and the headquarters in Munich? accessorily how to make sure that the same piece of cloth has not been smuggled out and falsely booked as sold to someone?

    One could use a single-entry ledger per location, a journal, to record each operation. But it was very difficult to detect when and where an error would occur, until it would create an inconsistency with the rest. During the 13th century the double-entry ledger started to be used (the Farolfi ledger of 1299 in Nîmes, France). In such a ledger, each transaction would appear twice, once in the column of credit (where the article came from) and once in the column of debit (where it went). With this method, each transaction could be double-checked, making sure that any flow of goods or money has a starting point and an ending point, and that the total of both parties were equal (balanced). We can see it as the ancestor of a checksum :-).

    In practice, the journal would still be used to record the transactions and, at the end of the day, the accountant would copy and dispatch the transactions in the double-entry ledgers, identifying the origin and destination of each movement, making sure that all accounts were balanced after each operation and matched the journal (reconciliation).

    In 1495, an Italian named Luca Pacioli formalised in a printed book the details of the method and made it popular (Gutenberg’s first book was 1439). So popular that this double-entry ledger is still the basis of today’s accounting practices, of today’s official regulations, and of today’s financial processes. It is so deeply embedded in the commercial practices that the most recent payment settlement automation efforts of the Bank of England, of the Monetary Authority of Singapore and of the Australian New Payment Platform faithfully reproduced this process.

    I met concretely the reality of this kind of issues when I accepted to be treasurer of the Luxembourg Air Museum in Mondorf. This non-lucrative association has one bank account, one petty cash box for operations, one petty cash box for the Museum (selling tickets and souvenirs). It has also an inventory of postcards, DVDs, catalogs and wine bottles bearing the logo of the Museum. I use the bank account to receive subsidies and to pay suppliers. I use the cash boxes to feed the bank account, and I track the inventories. Considering the limited activity of the Museum, we do the bookkeeping ourselves instead of hiring an accountant. I discovered thus the mysteries of manipulating double-entry ledgers, inventories and journals.

    What are the steps involved in a financial transaction?

    To follow the steps of a transaction, let’s imagine I received an SMS from the president of the association “let’s take 100 € from our account to the petty cash box of the Museum“.

    • Step1 – submission: the president sent me a transaction request. In this case it is a SMS. For a bank transaction it could be submitted either with a check (in France or in UK), or a money transfer in the other countries. Generated from paper or directly by web banking, a formatted electronic message is sent to the bank’s payment system. For large amounts between #banks, the interbank SWIFT messaging network would be used (Society for Worldwide Interbank Financial Telecommunication).
    • Step2 – validation: I checked that the SMS came indeed from the president. A bank would check that the accounts of the payer and beneficiary indeed exist. It would check the syntax, verify that the amount is within some threshold, control an authorised signature etc.
    • Step3 – confirmation: I checked that Museum’s bank account had enough balance for me to withdraw 100 €. In real life, the bank would check the account balance, the regulatory status of the transfer (reporting threshold, exchange control etc.)
    • Step4 – settlement: I withdrew the amount and fed the Museum petty cash box. For a bank transaction, one account would be credited and the counterpart would be debited.

    Now that the payment is settled, comes the serious job: I have to record the operation in my journal, update the double-entry ledgers of the Museum’s account and of the petty cash box (in my case they are simply 3 worksheets of the same Excel file) and make sure that both have their double-entry balanced. At the end of the month, I’d verify that the bank statement carries the same amount as in my journal.

    On the bank’s side, in addition to keeping the equivalent books for the Museum’s account (journal, general ledger) it has also to keep an archive of the transaction, add it to the monthly reporting to the authorities for Anti-Money Laundering purposes etc.

    • Now what if I, the Museum M, have to pay a supplier S; and if M has an account in Bank A and S has an account in Bank B? In its simplest form, in cascade, Bank A would debit M and credit Bank B, and Bank B would debit Bank A and credit S. The double avalanche of updates and archives and reporting as above would also be unrolled.
    • What if between Bank A and Bank B there is no commercial relationship? The #solution would be to involve a Bank C who would have relationship with both Bank A and Bank B. There comes another avalanche of updates and archives and reporting.
    • What if Bank B goes bankrupt before S is credited but after having received the credit from Bank A or Bank C? The answer is to involve a Central Bank that would never go bankrupt. We have another avalanche of updates and archives and reporting.
    • What if at the end of the day, there has been 200 billions Euros worth of transactions between the nation-wide set of 200 banks? Would all the 20’100 possible pairs of banks proceed to the mutual transfers knowing that the total compensated amounts will be much smaller? The solution is a common Chamber of Compensation (for example Clearstream) that would simply debit each bank of the difference. We have another avalanche of updates and archives and reporting.

    All this complexity was progressively built because initially the double-entry ledger was invented to do somehow a manual and medieval version of a checksum.

    Side note: all payment services Fintechs actually handle steps 1, 2 and 3, the easiest and most lucrative ones. Step 4 and the actual burden of complexity are still left to banks. This is why the European Payment Directive (PSD2) calls these services “Payment Initiator Services”, not “Payment Services”.

    Today the computing power is such that an iPhone 6 has 115 GFLOPs while a Cray-2 (a super computer of 1989) had only 2 GFLOPs. A GFLOP is one billion floating-point operations per second. And with the Internet, information travels at the speed of light, not at the speed of a galloping horse. In the same time we are still doing banking operations as if calculations were done manually, and indeed hundreds of thousands of accountants are still employed to verify manually on the double-entry ledgers the tricky cases generated by manual entry. Let’s go back to the initial questions and see how the blockchain solves them.

    How does the blockchain solve these problems?

    To start with, by definition the blockchain is a set of data that is shared by all computers (“nodes”) that participate as peers to a blockchain network and use the same blockchain protocol executed by a “client” software.

    How to keep track of the amounts owed by customers and owed to suppliers in different locations?

    Each participating node receives a copy of all transactions. It executes steps 1, 2, 3 and 4 above and share the result with peers.

    • Step1 – submission: this is solved with the blockchain by purely data network transmission.
    • Step2 – validation: cryptographic primitives are used to validate signatures; they involve heavy computing. It is part of the blockchain protocol and done by all nodes.
    • Step3 – confirmation: checking that there are sufficient funds to pay the transaction is part of the blockchain protocol and done by all nodes.
    • Step4 – settlement: the updated balances (or outputs of the transaction) are broadcast over the network to all other participating nodes and a consensus is build to record the settlement.

    How to keep accurately inventory of goods at different warehouses and their delivery status and synchronise the information between locations?

    Because the computation is now done electronically by the same “client” software, any discrepancy between nodes may come from a computing glitch, or from a difference in the sequence of execution of transactions: some nodes may receive transaction B before transaction A and other nodes in the reverse sequence.

    Addressing a computing glitch is easy: the faulty node is isolated and the corresponding result is rejected by peers. Handling a discrepancy in sequence is more subtle because there may be a minority subset of nodes that agree on a diverging sequence.

    The blockchain protocol states that if nodes achieve different results, they would all agree to chose randomly one of them to be right. This is called the “consensus”: the others discard their calculations and use the result of the chosen one. There are many ways to achieve consensus, the most widely used is the “proof of work”: the competing nodes try randomly to find a number that satisfies a given property. It may takes billions of billions of trials before finding it. The first node who finds a solution wins the consensus.

    How to make sure that the same piece of cloth in Bruges warehouse is not sold simultaneously by both the Paris agent and the headquarters in Munich?

    This can happen by coincidence in time, or by deliberate fraud. It is called “double-spending”. The blockchain protocol solves this problem by using a cryptography primitive called a “hash”. A hash of a document proves that it has not been modified. It is very difficult to forge but very easy to verify. We talked above about the “proof of work”: it consists of collecting a number of transactions together in a “block” and calculating a hash of it, as part of the work of finding a random number. If a block is modified, a verification of the hash will reveal it immediately. The blocks are “chained”, i.e. each block contains the hash of the previous block. If this previous one is modified, its hash changes and therefore the content of the next block also is, as well as the hash of this next etc. As a result, the whole (block)chain would reveal this single change.

    If the double-spending incident happened by coincidence, the problem is similar to the above: it is a matter of sequencing, so the transaction that gets first its block approved by the general consensus is the only one valid.

    If the double-spending was done on purpose for fraud, subsequently to the first spending being approved, the cheater will issue a second spending of the same good and this must also be approved, and at the same time somehow the block containing the first spending needs to be invalidated.

    However, because this previous block has already been approved by consensus and chained to other blocks, the cheating node that wants to invalidate that block must build a variant chain faster than the rest of the community. This means it needs more computing power than the rest of the community. It is not impossible, but economically very unrealistic because of the cost versus benefit of such cheating.

    As a result, there is a minimal need for auditing and verification from a higher authority because of the consensus is always achieved among all actors.

    So is the blockchain only good for financial transactions?

    If we take a step back and look at the big picture, the general problems that the blockchain solves are:

    • how can we track the inflows and outflows of something (money or token), among a large number of peer actors?
    • how can we protect against a quasi-simultaneous commitment (spending) of this “something” by 2 or several actors or by a same fraudulent one?

    Does it sound familiar to you?

    • have you ever been victim of an airline seat overbooking?
    • how can a tour operator makes sure that a hotel room has not been booked twice?
    • how can a peer-to-peer Uber reservation avoid that the same taxi be booked to 2 clients?
    • how can an air traffic controller be sure that another flight sector has not assigned the same flight level and same route than his, to another plane?
    • how to track over the lifetime of an liner aircraft the spare parts replaced gradually and independently by different airlines and repair shops? Airbus has 7000 subcontractors.
    • how to simplify registration and declaration of all customised add-ons equipments to homebuilt and kit aircrafts made by passionate “homebuilders“, instead of today’s heavy process of paper work and local inspection made by Civil Aviation delegates or private Quality Control agencies.
    • how about letting each private pilot log their hours in a blockchain and letting the doctors log the medical certificates of these pilots, both of which naturally confirms their proficiency for flying, instead of spending time and effort of all national aviation agencies to certify them, controlling an activity that is non-commercial.
    • how to track individually the placement of identified satellite parts in subsystems by subcontractors?
    • how to make sure that the same KWh from a solar array has not been sold to 2 different clients?
    • how to guarantee that a house has not been sold simultaneously by 2 remote real estate agents?
    • how to keep track of the loading of a fleet of container ships by peer forwarder stations?
    • etc, etc.

    All these problems have already been solved today by introducing some central coordination and distributed databases, which may be suited below a certain number of stakeholders and become polynomially complex when this number grows. But such centralisation is a source of failure, is of error-prone complexity and is a target for attacks. Above a certain volume and number of more or less independent actors, these problems would benefit from a peer-to-peer solution, and the resulting system would gain in flexibility, efficiency and resilience.

    Why did the financial services become the first application of the blockchain?

    • Since beginning of mankind, everybody uses some sort of financial service, every day. It’s an ideal peer-to-peer candidate application.
    • The lack of a satisfactory technology to detect and correct distributed mistakes fostered the creation of a multi-layered centralised system.
    • Then the centralisation and aggregation of transactions lead to huge movements of funds…
    • … and huge financial flows created a need for strict regulations, to detect and punish frauds.
    • A transformation into a peer-to-peer model needs significant changes in regulations and may deeply transform the financial industry.

    Which one of the above use cases are better candidates than the finance industry for blockchain transformation? Probably none. That’s why the first applications of blockchain were in this field. But all the other examples can at some stage take profit of the blockchain technology.

    The Bitcoin, the first well known blockchain platform, has been designed specifically for monetary transactions with a remarkable incentivizing scheme to support its use. This is why it is so successful. The Ripple blockchain platform has also been designed for monetary transactions. The Ethereum blockchain platform is more ambitious and targets to be universal. The task is huge and the product takes time to mature, but ultimately, it would not be limited to financial transactions and support the other use cases cited above.

    What else?

    If Ethereum succeeds, the question is “would it make sense to store in the same public blockchain the information of all the above use cases, and more (for example trading Pokemon-Go characters)“? Probably not. This is why there would be most certainly in the future

    • one public (Bitcoin or Ethereum or other) blockchain that supports public peer-to-peer trading Pokemon tokens, DVD cassettes, antique stamps, collector vynils, house swaps (AirBnB), car transportation services etc.,
    • and a number of private and restricted Ethereum-based (or not based) blockchains to manage more confidential matters.

    To cite only the current contributions to the open source Hyperledger project, that pave the road for different types of blockchains, we have today:

    But talking about them will be another discussion, that I’ll have with the same ex-colleagues VPs of the space industry, or with others.

    [linkedinbadge URL=”https://www.linkedin.com/in/kvutien” connections=”off” mode=”icon” liname=”Khang Vu Tien”] is Blockchain & Ethereum practitioner and this article was originally published here.

     

  • user 3:35 am on December 23, 2016 Permalink | Reply
    Tags: , , financial, , , , ,   

    The Role Of The New Advisor In The Digital Financial World 

    #Robo-advisors, wealth management algorithms typically offered at low costs and with little human interaction, are gaining stream. Globally, wealth managers were responsible for US$ 74 trillion in assets under management (AUM) in 2014. BI Intelligence predicts that robo-advisors will manage around 10% of total global AUM by 2020. This equates to around US$ 8 trillion in robo-advisors AUM.

    robo advisors growth

    Opportunities

    Robo-advisors are a class of #financial adviser that provides financial advice or portfolio management online with minimal human interaction. Much of the focus has been on portfolio management and most of these platform use algorithms such as Modern portfolio theory.

    Today, popular platforms include US-based Wealthfront and Betterment, UK-based Nutmeg, Australian Stockspot, German Vaamo, among others. In Switzerland we have Truewealth, Glarner KB, Swissquote and some new platforms which are going live soon.

    A research conducted by BI Intelligence found that consumers across all classes are receptive to robo-advisors, including the wealthy. 49% of this group would consider investing some of their assets using a robo-#advisor.

    With robo-advisory on the rise, the wealth management industry is undergoing significant disruption.

    According to Deloitte, robo-advisors hold some distinct advantages and are disrupting the industry in the following ways:

    – The lower fees have broadened the market for advice to include the majority chunk of untapped wealth. More mass-market consumers can now afford advice.

    &8211; Robo-advisory is more appealing to the new generation of wealth, which seeks more control, who is digitally savvy, and demands greater availability.

    &8211; With large wealth management firms investing heavily in big data and advanced analytics, robo-advisory can become even more personalized and specific over time.

    &8211; Many wealth management firms have already begun incorporating robo-advice capabilities within their existing advisory offerings to create hybrid models.

    &8211; #Technology has lowered barriers to entry for new firms to break into wealth management. This has brought new levels of competition and innovation to the industry.

     

    Hybrid human-robo advisors

    After the strong growth of the robo-advisory approach in recent years, promoted by numerous startups worldwide as well as a sizeable number of early adopting wealth managers, a new “sub-species” has emerged: the hybrid human-robo advisor.

    According to MyPrivateBanking’s report &8220;Hybrid Robos: how combining human and automated wealth advice delivers superior results and gains market share,&8221; these platforms combine computerized recommendations with on-demand advice from a human being.

    They use technology to standardize and cut costs on the information-gathering side of the job.

    The report found that pure robo-advisors (completely automated without personal service added on) have seen their growth slowing down as the market matures. Notably, Betterment&8217;s growth rate for AUM has remained at the same place it was a year ago.

    This is due to clients “starting to realize that what they’re getting from many providers is little more than a passive portfolio that they can easily build on their own without the robo middleman,” the report says.

    MyPrivateBanking estimates that hybrid robo-advisors will grow to a size of US$ 3,700 billion assets worldwide by 2020. By 2025, the total market size will further increase to US$ 16,300 billion. This number constitutes just over 10% of the total investable wealth in 2025. By comparison, pure robo-advisors will have a market share of 1.6% of the total global wealth at that stage.

    &8220;Hybrid robo solutions are a dynamic and also unstable new phase in the wealth management industry&8217;s transformation,&8221; the report says. &8220;We expect 2016 to be a year of significant developments.&8221;

    So far, notable hybrid robo-advisors include Vanguard, Personal Capital, Rebalance IRA and AssetBuilder.

     

    Featured image: Robot and human touching forefingers by Pixelbliss, via Shutterstock.com.

    The post The Role Of The New Advisor In The Digital Financial World appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.

    Fintech Schweiz Digital Finance News – FintechNewsCH

     

  • user 12:18 pm on December 12, 2016 Permalink | Reply
    Tags: , , , Entering, financial, , , , ,   

    Smart Contracts Have to Grow Up Before Entering Mainstream Financial Services 

    During this week’s #Smart #Contracts Symposium in NYC, 250 attendees—including members of the #blockchain-trading group the Chamber of Digital Commerce—listened as the potential benefits of the #technology were laid out, from securing property titles, to gold ownership. Symposium speakers, presenters, and panelists demonstrated and debated all of the possible useRead More
    Bank Innovation

     

  • user 12:18 am on December 6, 2016 Permalink | Reply
    Tags: financial, Franchise, , ,   

    The Franchise Opportunity in Financial Services [SPONSORED] 

    If you take a survey of people on the street to name a #franchise, not only will you probably get a 100% response, but you will also probably get the same response from the vast majority of individuals. That response being a certain fast food outlet that has golden archesRead More
    Bank Innovation

     

  • user 3:35 am on November 23, 2016 Permalink | Reply
    Tags: “meaningless”, Demographic, financial, , , , , ,   

    Research reveals Millennial Demographic “meaningless” for Financial Institutions and FinTechs 

    New #research has found that the millennials classification is not a meaningful way for #financial #institutions and #FinTechs to understand those aged between 18 and 34.

    The findings suggest that younger and older millennials have divergent financial priorities, exhibit disparate financial behaviours, especially around digital finance, and have different tolerance levels for customer experience issues. Financial services providers need to re-evaluate how they market to and serve this #demographic.

    Misunderstood MillennialsThe research ‘Misunderstood Millennials: Have financial institutions got it wrong?’ commissioned by Mitek, surveyed 1001 UK millennials and found that younger millennials – aged 18-22 – are not yet financially independent, with 47.6% most concerned about paying for education. Younger millennials’ financial mindset is also dominated by a reactive, short- term focus demonstrated by their other main concerns, paying rent (43%) and entertainment (33%). Long-term financial planning is not on their agendas, contrary to received wisdom evidenced by the plethora of educational #FinTech start-ups.

    It’s only when millennials reach 29-34 that financial services become a necessity. 43.1% of 29-34 year old are most concerned with saving to buy a house but only 30% of young people are. Surprisingly, 40% of 29-34 year-old are also looking to save money for travel and 33% with saving for their retirement, compared to 26% and 17% respectively for those aged 18-22. Between 23 and 28, millennials are not yet financially independent and around a third are still concerned about paying for education. At this age, only 23% are concerned about saving for their retirement.

    Misunderstood Millennials 1

    Financial services companies are increasingly serving their customers through mobile channels and 29-34 year-olds are certainly receptive to this. Older millennials are, on average, 5% more likely to use mobile financial services than their younger counterparts with one in five making a mobile purchase at least once a day. However, security concerns are preventing 29-34 year olds from taking full advantage of mobile with 88.5% saying that worries about ID fraud or data security prevent them from making transactions on their mobile, compared to 72.8% of younger millennials.

    Misunderstood Millennials 1The research also found that, counterintuitively, those in the older age bracket are much more comfortable using the camera on their mobile, with 72.7% seeing it as one of the most important functions. This is compared to 54% of 18-22 year olds. This is also manifested in the fact that older millennials are 25% more likely to allay their security fears by using their camera to fill in personal information or verify their identity with a selfie or a photo of their ID.

    Getting the mobile experience right, however, is key. Millennials are highly intolerant of poor mobile experiences with 56.3% stating that if they were unable to sign up for a financial product on their mobile, they would go to a different, more mobile-friendly competitor. Indeed 42.4% of all millennials have already switched providers because of a poor mobile experience.

    Key Findings

    Financial Independence
    · 47.6% of millennials aged 18-22 are concerned about paying for education, whereas only 19.4% of 29-34 year-olds were.
    · 43.1% of older millennials are concerned about saving to buy a house but only 30% of younger people are.
    · Around 40% of 29-34 year-olds are also looking to save money for travel and 33% with saving for their retirement, compared to 26% and 17% respectively

    Mobile usage
    · Older millennials are 5% more likely to use their phones to apply for services or purchase goods than younger millennials
    · One in five millennials aged 29-34 make at least one purchase on their mobile per day, compared to 12.4% of millennials aged 18-22

    Misunderstood Millennials 3Security and Fraud
    · 88.5% of older millennials say that worries about ID fraud or data security prevent them from making transactions on their mobile, compared to 72.8% of younger millennials
    · 87.4% of younger millennials cite convenience factors as a barrier to usage compared to 79.9% of older millennials
    · Older millennials are around 25% more likely to use their camera to fill in personal information or verify their identity using a selfie or a photo of their ID document

     

    Mobile User Experience
    · 56.3% of all millennials would abandon an application for a financial services product if they could not complete it on their mobile and would join a more mobile-friendly competitor
    · 42.4% of millennials have left a financial services provider due to a poor mobile experience

    “Millennials have been the target of financial services providers for as long as they have been recognised as a category. However to date, efforts to attract them have largely been unsuccessful” said Sarah Clark, General Manager, Identity, Mitek. “The reasons for this are now clear. By trying to appeal to this group as one single demographic, financial institutions’ marketing has been misdirected. They now have the opportunity to focus their efforts more sharply and cater for millennials’ diverse needs at different stages in their lives. It can’t be a one-size-fits-all approach anymore. Financial institutions need to tailor their offering to appeal to the lucrative 29-34 year-old market, which is mobile-first, concerned about the security of their identity and willing to disengage due to poor service. ”

    Misunderstood Millennials 4

    With impending regulations such as Anti-Money Laundering Directive 4.1, Payments Service Directive Two and the EU’s Funds Transfer Regulation, there is pressure on financial institutions to improve KYC practices. Electronic identity verification and on-boarding reduces the risk of financial fraud and improves operational efficiencies. Institutions not only need to cater to the demands of this generation and ensure they are best positioned to meet the regulatory requirements of today and tomorrow.

    The research was conducted by Osterman Research and covered 1001 UK millennials. Download it here.

     

    Featured Image Credit: By Optician Training via Flickr

    The post Research reveals Millennial Demographic “meaningless” for Financial Institutions and FinTechs appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.

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  • user 4:54 am on November 21, 2016 Permalink | Reply
    Tags: , , , financial, , , ,   

    Digital Waves & Financial Services 

    Even though the #digital age finds its root in the 1950s with the rise of computers, we had to wait until the mid 1990s and the rise of the internet to witness a first wave of tectonic shifts and the creation of what many defined as the New Economy. Innovation, characterized by the application of #technology to productive means and resulting in driving down costs relentlessly over time, was hard at work. This first wave did not escape the rule and we saw the cost of “discovery” plummeting. By discovery I mean the ability to find any type of data. Google benefitted from this trend and built an empire based on hyper efficient search. We also benefitted from another wave that saw the cost of &8220;communication&8221; dropping and the rise of various forms of connecting between humans. Facebook can be viewed at the intersection of discovery and human connections. Apple benefited from the connection/communication wave. Finally, Amazon mined the decreasing cost of discovery in the e-commerce field.

    shutterstock_265303661

    More recently, we have benefitted from the wave of &8220;personalization&8221; where a myriad of applications have unbundled past needs, uncovered needs we did not know we had, or disintermediated needs that were poorly serviced. Again, this wave resulted in the cost of personalization plummeting.

    Crucially whenever costs plummet, demand grows in both expected and unexpected ways. The New Economy and our demand have certainly exploded.

    It is interesting to observe that the #financial #services industry did not immediately espouse these #waves, nor did it find itself materially impacted by them, or at least it appears so to the naked eye. For example, #banks were not particularly diligent in their internet banking efforts at that time. Even though new technology companies won the early stages of the New Economy and even though the financial services industry did not register any &8220;win&8221;, we also can categorically state that banks or insurance companies did not lose. They still command, to this date, market share and dominance in all five sectors  – lending, capital markets, insurance, asset management, payments &8211; in every geography.

    The #fintech movement, in its first two phases, the &8220;direct to consumer&8221; phase and, once that first phase failed, the &8220;partnership pivot&8221; phase were essentially driven by the necessity to play catch and for the financial services industry to capture the lower costs of &8220;discovery&8221; and of &8220;connecting&8221; with users. Much needs to be done as most participants have not completed their digital journey. Even though startups and incumbents alike are still mostly focused on digitizing front end processes &8211; on-boarding, distribution, sales, underwriting amongst others &8211; we have now seen a broadening of the digitization movement towards middle and back office processes.

    Still this has not resulted yet in a dramatic lowering of costs in financial services and an increase in demand. To be clear, the cost of lending will never &8220;decrease&8221; below an incompressible cost of capital. The cost of delivering a loan should decrease, and in other sectors, the cost of of a payment (be it domestic, p2p, mobile, cross border, b2b) has yet to decrease across the board.

    Meanwhile, the technology world is busy reinventing itself and as the waves of discovery, communication, connection and personalization are flattening, new waves are engulfing us. I will focus on two technologies which I believe are the leading candidates to usher the next wave &8211; again characterized by reduced costs and demand explosion: Artificial Intelligence and AR/VR

    Artificial Intelligence holds the promise of bringing our decision making to the next level. Any of the AI vectors &8211; machine learning, deep learning, nlp/nlg/nlu to name a few &8211; will drive down the cost of &8220;decisioning&8221;. By decisioning I mean the ability to arrive at optimal decisions via superior analysis of mountains of disparate data and in the absence of clarity. Most technology companies are locked in an epic arms race hiring the right talent, developing their own AI tech stacks and applying their technology breakthroughs to their fast evolving business models. The next wave may indeed see the rise of cognitive enterprises and cognitively enhanced individuals.

    AR/VR holds the promise bringing our interaction with the world to the next level. I understand there are differences between AR and VR and for the purpose of this post will assume them away. AR/VR will drive down the cost of &8220;immersive discovery&8221;. By immersive discovery I mean discovery in action, using the full capabilities of our bodies in movement, in our three dimensional world;  as opposed to the discovery we have done to date from behind a laptop or a smartphone. Given the explosion of supply and demand ushered by the plummeting cost of &8220;discovery&8221;, I leave you to imagine what this wave may be able to bring about.

    Although it seems AI holds a slight edge over AR/VR currently based on maturity and traction, I do not definitively know which wave will be dominant first at scale, either in the enterprise or retail world. Suffice it to say that either wave will pose unique challenges to the financial services industry. Challenges inherent to customizing, designing, implementing and integrating each new technology paradigm. Challenges inherent in making use of and making sense of these new technologies with the right human skills. Finally, competitive challenges in the face of what we can only assume will be renewed pressure from non financial services enterprises ever more willing to capture poorly defended margins in lending or payments.

    Although  threats from fintech startups or tech companies have not been successful in eroding meaningful market share yet, many industry analysts believe that up to half and sometimes more of incumbents’ revenues are under threat. I believe this analysis does not fully include the implications of the lower cost of &8220;decisioning&8221; or &8220;immersive discovery&8221;. As such financial institutions may be under even more threat than we realize.

    Be that as it may, a reasonable and well educated practitioner will healthily push back and raise two objections to the demise of financial institutions at the hand of the potential dislocating effects of the above digital waves. One is articulated around regulation, the other around core systems.

    Regulation is tedious, complicated and costly and serves as a defensive moat. In some instances it can be a drag as financial incumbents cannot act as flexibly or nimbly as non-regulated entities. Still, regulation acts as an effective digital fire retardant. Regtech not only holds the promise of lowering the cost of compliance, it also holds the promise of lowering the cost of developing and disseminating regulation to the market. Should regtech lower the cost of compliance to such an extent that fintech startups become more competitive or non-regulated tech companies become less averse to regulation, then regulated financial institutions will come out weakened, all else being constant. I am not predicting this will happen, yet the likelihood should not be discounted altogether

    Core systems in the market today are cumbersome, expensive to build, expensive to maintain. Even though financial institutions &8211; banks or insurers alike &8211; dislike their vendors with the intensity of a thousand suns due to the woeful inability current core systems exhibit operating in a digital world, the fact is not everyone can afford core systems. Imagine a world where the cost of building, provisioning or deploying a core system would plummet and you are one step closer to another incumbent competitive advantage vanishing.

    Although the future of regtech and core systems is more difficult to predict than a presidential election, the trends clearly point towards cost and complexity reduction and even though the full effects of either the lower cost of &8220;immersed discovery&8221; or &8220;decisioning&8221; are still be be felt, they cannot be avoided. These new digital waves hold the potential to drastically lower the cost and complexity of &8220;building a bank&8221; or &8220;building an insurance company&8221;. Obviously, regulatory capital, liquidity and solvency issues will still hold, but picture a world where building a core stack will be as easy as building a web site and where the cost will be a fraction of what it is now &8211; to the dismay of the entire value chain of third parties currently feasting on any implementation, from consultants to systems integrators &8211; and you can start grasp the monumental changes afoot. Digital waves keep coming and most financial institutions are still standing. How will they respond to the coming waves is an important question to ask. How will incumbent service providers cope is equally intriguing. How fintech startups exploit gaps will be fascinating to witness.

    ps: no #blockchain was harmed while writing this post.

    FiniCulture

     

  • user 3:35 pm on November 18, 2016 Permalink | Reply
    Tags: , , financial, , , , ,   

    87% of Financial Market Participants Say Blockchain Will Disrupt The Industry 

    A survey conducted by Deutsche Bank and FT Remark, the research arm of the #Financial Times, found that a staggering majority (87%) of financial #market #participants are confident that #blockchain #technology will #disrupt the settlement model for securities.

    62% believe that the introduction of distributed ledger technology will produce substantial savings ranging from 11% to 25%. Almost half say that it will help the #industry cope with the risk of system failure and market disruption.

    Benefits of blockchain tech in capital markets Deutsche Bank report

    “Blockchain may completely change the settlement model for securities processing, creating a utility around securities processing and cash management,” commented David Rhydderch, Deutsche Bank’s head of alternative fund services.

    &8220;The entire back end would become a far more efficient, far less costly, more accurate and less risk-prone function. This has an obvious knock-on effect on the cost of service provision. In the administration space, blockchain may not be quite the disruptor. It’s more in the functional utility elements within the securities processing settlement chain. In that context, it may be totally revolutionary.&8221;

    Respondents believe that blockchain technology will be widely used within the next three to six years (75%).

    Blockchain adoption Deutsche Bank capital markets report

    The industry is still struggling to figure out how to implement the technology in the current web of legacy infrastructure, the report says, noting that market participants are trying to determine how it can be deployed in a way that works, given ongoing data protection and security concerns.

    The document a previous report released earlier this year by Euroclear and Oliver Wyman which praised the merits of blockchain technology in capital markets and highlighted the potential of the technology to provide a new approach to data management and be a solution to many of the efficiencies afflicting capital markets.

    Deutsche Bank report capital marketsThe Deutsche Bank report, titled &8220;Powering the flow of global capital: Capital markets investor insights,&8221; highlights the key findings of a survey of 200 market participants to examine what is driving today&8217;s capital market.

    The research found that regulation, new technologies and emerging markets are key issues impacting strategic thinking. These three areas have caused the vast majority of respondents to partially or completely reshape their operating models, buying behavior and capital/fund allocations over the past two years.

    &8220;These three themes are fundamentally redefining the securities services landscape and the knock-on effects will impact the business models of many capital markets participants,&8221; according to Satvinder Singh, head of global securities services and head of GTB EMEA ex Germany.

    Notably, a majority of market participants are convinced of a revival of emerging markets. 54% believe emerging markets will deliver growth rates close to those seen during the 2001-2011 boom, noting that India and South Asia will likely be the most attractive region (88%).

    Emerging markets Capital Markets Deutsche Bank survey

    China, Indonesia, Russia and Turkey in particular are ranked highest for their capital market infrastructure. Respondents said that China and India have made the greatest infrastructure improvements during the last five years.

    That being said, investing in emerging markets remains risky and some investors are hesitant.

    Respondents ranked regulatory hurdles as their greatest or second greatest challenge (62%) when carrying out securities transactions in emerging markets, followed by political interference (53%) and instability as a challenge, and unreliable capital markets infrastructure (40%).

     

    Featured image: Stock market chart by bluebay via Shutterstock.com.

    The post 87% of Financial Market Participants Say Blockchain Will Disrupt The Industry appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.

    Fintech Schweiz Digital Finance News – FintechNewsCH

     

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