Watch Season II of the Swiss Bitcoin Reality, with EY leading.

EY ATM.png

In the first season of the Swiss Bitcoin Reality show, we saw SBB announcing the introduction of Bitcoin ATMs by using its existing extensive network of ticket dispensing machines. We covered this in The radical change coming to Financial Services & Fintech in Switzerland and Matthias Muller, group innovation manager at SIX, used the witty analogy of The Monkey Business illusion in “Did you notice the Gorilla on stage?” as he (along with all of us) was surprised by this move.

EY 2017: from talk to walk

In the second season of the Swiss Bitcoin Reality show, which starts early 2017, we will be watching another bold move by EY in Switzerland! The plan cannot be seen as an under-the-radar screen move or lets get our feet wet, or lets be trendy.

EY Switzerland is already bold in the first phase already, of the strategic move.

  • A new Bitcoin ATM machine installed in their public office building in Zurich
  • A digital wallet app for all Swiss branch employees
  • EY clients in Switzerland, can pay for consulting services with Bitcoin

The Bitcoin ATM machines can of course, be used by all EY employees but also from any individual passing by.

Any EY employee in Switzerland will receive an “EY secure digital wallet app” that can be used to pay with Bitcoins. This is much like, receiving a corporate email address once joining a company that is secure within the corporate environment. EY is providing all its employees in Switzerland with a specially developed EY digital wallet app (I suspect in collaboration with Bitfury who is their partner on the innovation lab, but have not been able to confirm this) to load on company smartphones.

EY is leading the movement of “Bitcoin goes mainstream” in the both the advisory sector and as a large publicly traded entity that accepts crypto currency payments for its services. It is surpassing Deloitte, who has also installed a Bitcoin ATM machine in the Toronto office of the building housing the Rubix team (Rubix is the team and platform focused on blockchain solutions). Not only because EY’s ATM is in the main office building, and the welcoming – standard employee kit includes EY’s digital wallet app and EY corporate email; but also because EY is accepting compensation for advisory services from its clients in Bitcoin.

EY advisory services in the most recently reported financial year (July 1, 2015-June 30, 2016) have grown 21.7% and reached 210.8 million CHF with total gross revenues were 661.2 million CHF. By inviting clients to pay for EY consulting services in Bitcoin, EY signals its commitment to the digitization underway, its strategic decision to make crypto-currencies integral part of the business offering.

This latter part makes the EY Garage-Lab, not just another safe playground for clients to experiment with blockchain but a safe platform to experiment within a company who is putting its money where its mouth is.

On cryptocurrencies, EY is putting its money where its mouth is!

On cryptocurrencies, EY is boldly moving from Talk to Walk!

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Efi Pylarinou is a Digital Wealth Management thought leader.

Insurance helps Bitcoin become safer for mainstream consumers

Bank depositors get tax-payer funded insurance in many jurisdictions (such as FDIC in America) in case a bank goes bankrupt. Your Bitcoin in Mt.Gox or BitFinex….buyer beware.
People paying by Credit Card can fight back against a fraudulent charge. Once you send those Bitcoin it is like handing over cash…buyer beware.
Bitcoin early adopters and true believers are technically savvy enough to protect themselves in these kind of situations. For 99.99% of the world, a bit more reassurance is needed.
That sounds like a job for Insurance – pay some money for peace of mind. This post looks at how Insurance companies are stepping up to the plate.
The most high profile Bitcoin exchange failure was Mt.Gox, based in Japan. So it is no surprise that the first major rollout of Insurance for Bitcoin exchanges comes from Japan
Mitsui Sumitomo Insurance offers insurance to bitcoin exchanges globally. This is not exactly new, but in the past each deal was very custom negotiated. Mitsui Sumitomo Insurance seems to want to make this a more routine line of business.
Brave New Coin has the details, which is useful as the Mitsui Sumitomo Insurance offering to bitcoin exchanges is still only in Japanese.
The plan’s total theft cover ranges from ten million yen (US$88,500) up to one billion yen (US$8.85 million). It also covers loss from internal and external threats, including employee theft, mistakes, cyberattacks, and other unauthorized access.
The first customer is Japan’s largest exchange, Bitflyer. By working with a highly professional exchange, Mitsui Sumitomo Insurance can offer best practice advice. After a number of bitcoin exchange blow ups, the best practices are now well established. If a bitcoin exchange follows these, the risk of loss goes down (which is good for the Insurer) and being insured will help bitcoin exchanges to gain consumer confidence.
This is a critical plank in Bitcoin growing up and becoming mainstream.
The Bank like Bitcoin platforms
For a while we had very distinct companies in each Bitcoin segment – wallet, exchange, payment processing. However, as Bitcoin grows up we are seeing more Bank like Bitcoin platforms in the sense that they offer a full suite of services. These full service Bitcoin platforms such as Coinbase, Xapo and Circle already have insurance. Mainstream insurance offerings will let new players get consumer confidence – just like a small bank being able to offer deposit insurance.
Xapo pioneered the use of insurance because secure storage is their core proposition, using A.M. Best rated insurance providers.

Taxpayers and regulators  should breathe a sigh of relief

There is no possibility of bailout in Bitcoin-land. Private sector Insurance becomes the alternative. This will raise the professional bar for all Bitcoin players. To get Insurance they will have to meet basic standards and without Insurance they won’t get consumer confidence. Regulators and their political masters may then relax a bit more because the risk is left to the private sector to manage. Taxpayers will never be on the hook again in a bailout.

Image source

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge platform.

Banking on a virtual and augmented future

This week I attended a talk by Robert Scoble and Shel Israel, the authors of The Fourth Transformation. Their latest book charts the rise of virtual and augmented reality (VR & AR), haptic technology, and the devices that will transform our experience of the world we know, not to mention those worlds we are yet to discover…

Of course, it’s hard not to put your banking and fintech hat on (or should we say techfin now, thanks to Jack Ma) and consider what viable applications of the technology would be in this space. Especially use cases that move beyond pure gimmick and add real value to everyday people like you and me.

Investment banks are dipping their toes into VR and AR as we speak. Fidelity Labs have developed StockCity, possibly the first investment app for Oculus Rift.  The app allows investors to visualise their investment portfolio as a collection of buildings. Red or green roofs indicate if stocks are down or up for the day’s trade. This video is a handy demo.

In other news, The Wall Street Journal has released a VR app on Google Daydream that allows users to visualise live market trends. While First Gulf Bank in the UAE has launched what it is claiming to be the first virtual bank branch in the world.

But where could we really go with VR and AR applications if you were trying to help consumers and business owners make better financial decisions?

Make wealth tangible for savers

One of the things that makes saving difficult is how intangible a number on a statement is. Wouldn’t it be great if you could walk into your own personal money vault and see your investments in the coin or paper denomination of your choice? With haptic technology, you could even touch and feel them!

Help people visualise the effects of wealth (or lack thereof)

While some of us have vivid and rich imaginations, for many it’s hard to understand what a future state looks and feels like. This can leave people trapped in the hamster wheel of today’s financial behaviour. Immersive experiences that help an individual experience what life would be like in various future financial positions could help someone to take action now rather than later. In the spirit of Christmas, I’m naming this the ‘Scrooge Effect’.

Getting more personal

Chatbots are great, but what about a personal banker who can visit you in your living room? Someone who remembers the last conversation you had and is on hand for a chat whenever you need it?

Benchmarking your financial health

Today it’s hard to know how you stand compared to your peers when it comes to wealth. Tangible assets like owning a house tend to be the easiest but possibly most misleading physical sign of wealth. Visualising how you stack up against your peers could help you either feel more comfortable about your progress, or could give you the insights you need to see how you are falling behind.

Banking is prime ground for VR and AR. Why? Because it’s complex, intangible, messy and difficult to navigate. So the more tools we have like these, the sooner we’ll be able to help everyday people make sense of it all. So my question is this – will the bank of the future lure new customers away from the incumbents with Oculus Rift headsets? Very possibly, and it may not be a bad acquisition strategy at all. Follow the conversation here on the Fintech Genome.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.

Regtech thrives on change: welcoming Trump, Brexit and China


Heraclitus, a Greek philosopher of the 5th century BC, is quoted as saying

“Change is the only constant in life.”

His doctrine was around change being central in the universe. This has also been translated to “the only constant is change.” And this exactly why Regtech, the cross-sector Fintech category, thrives and will continue to do so.

Whether one regulatory body is becoming lighter or stricter, change is what Regtech needs to be able to serve. A modular Fintech design of Regtech services, is key in both of these cases. For example, if the US changes its strict and complex multi-layer regulatory structure as a result of the Trump administration, the Regtech sector will not be affected; neither the size of the sector, nor its significance in the multi-carriage train of financial innovation. The train has left the station and there is no turning back. In every compartment, there is a place (albeit a moving target) for Regtech and this will not change.

Regtech companies will continue to serve the huge market need of integrating legacy systems of the incumbents and at the same time offering these services in a dynamic (quick and cheap time to market) way as regulations change. Regtech will always have new clients and areas to serve, as a result of regulatory changes. The recent announcement of the Office of the Comptroller of the Currency (OCC) in the US to offer an opening to the US federal banking system to Fintechs; is an example, of how new clientele will be flocking to Regtechs can serve the new business needs of Charter Fintech Banks.

“A top regulator said Friday that his agency would for the first time start granting banking licenses to “fintech” firms, giving them greater freedom to operate across the country without seeking state-by-state permission or joining with brick-and-mortar banks.” By  WSJ Regulator Will Start Issuing Bank Charters for Fintech Firms.

The US Regtech Fintechs have been different than the European in two main ways. First, the number of European fintechs is much larger basically because of there are more regulations (e.g. MIFID, EMIR, MAR, CRDIV, PSD2, REMIT etc) that apply to all EU countries and second because in Europe bootstrapping and growing businesses without strong VC support, is more common than in the US. On the other hand, in the US the complexity of regulations is mainly due to cross-state differences and incumbents have tried to find other ways to circumvent these frictions; plus, entrepreneurs prefer naturally to pick naturally businesses that have a higher probability of being funded by VCs. Regtech overall hasn’t been the favorite baby of VCs.

The US Regtech sector will not be hurt, in case of lighter regulations by the new US administration, simply because any type of change will create new opportunities and clientele. Regtech Fintechs have an advantage compared to the Regtech offerings by incumbents (and there are many) like Thomson Reuters, Bloomberg, IBM, Oracle etc. only because they can adapt faster. Whether they will able to execute on this advantage is yet to be seen. We will be monitoring how the acquisition of Promontory by IBM plays out, what market share Accenture and Bloomberg gain as they all have no procurement issues, which is an important friction for Fintechs. FundApps, the UK based Regtech focused on serving the investment management sector, just announced that they will be opening a NY office in the Flatiron district. This is the first international Regtech move from Europe over to the US. Regtech is less local than it looks at first site. I foresee, more moves from Europe towards the US in 2017, rather than in the other direction.

“The only constant is change, in regional and cross-border Regulations”.

The increased fragmentation and complexity, resulting from Brexit, will also open up more opportunities for Regtech services. The pain points are simply changing.

Similarly, in Switzerland and the East, we are seeing new regulations that will also need to be served. All these changes, are great opportunities for Regtech companies to show incumbents especially, that Regtech should be seen as an enabler rather than an expenditure.

Regulations lighter or stricter, new regulations, more or less complex, fragmenting or integrating; are great market opportunities for Regtech Fintechs and for incumbents with Regtech services. The biggest threat to Regtech Fintechs is rather the incumbent Regtech offerings.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Efi Pylarinou is a Digital Wealth Management thought leader.

How Traditional and Emergent Fintech could converge and change Finance



Traditional Fintech is so boring – and so profitable. The question is whether these vendors will use some of those profits to transform themselves or let nimble startups with modern technology and new business models eat their lunch. 

Two years ago, in December 2014, we took a look at the Traditional Fintech market. TL:DR Traditional Fintech was 82% of the market, much bigger than Emergent Fintech.  

Eons ago I worked in Traditional Fintech. Now I work in Emergent Fintech. So I can see that they are two sides of the same coin.

My simple definition of the difference as seen by Banks – Traditional Fintech cook your lunch (and bring you the bill) while Emergent Fintech aims to eat your lunch. A converged world will be more nuanced cooptition and revenue sharing deals around platforms and Open APIs, with shared risk & reward (i.e real partnerships).  

This post focuses on how these two worlds will converge in the future.

Many Emergent Fintech ventures went through turmoil in 2016, in a difficult funding environment, so a lot of those firms are open to partnering (or being acquired). As a few Emergent Fintech ventures achieved real success and started to challenge the banks, the banks are also more open to partnering.

This willingness of both Emergent Fintech and Banks to partner puts Traditional Fintech in a great position – unless they emulate Blockbuster and snatch defeat from the jaws of victory.

Blockbuster’s demise was not inevitable

Market share can evaporate very fast during times of disruption – ask Blockbuster, Kodak, Barnes & Nobel and many media and tech firms.

With 2020 hindsight, it was inevitable that Netflix would replace Blockbuster. The real story (as revealed in this great article in Variety) is much more interesting.

Blockbuster could have bought Netflix for $50 million (current market is over $50 billion). Reed Hastings (Netflix founder) was ready to sell, but as Variety put it:

“Blockbuster chiefs lacked the vision to see how the industry was shifting under the video rental chain’s feet”

Big bang disruption as explained by HBR

We might not pay attention when Variety writes about strategy. So listen to Harvard Business Review (HBR) describe why:

“the strategic model of disruptive innovation we’ve all become comfortable with has a blind spot. It assumes that disrupters start with a lower-priced, inferior alternative that chips away at the least profitable segments, giving an incumbent business time to start a skunkworks and develop its own next-generation products.

That advice hasn’t been much help to navigation-product makers like TomTom, Garmin, and Magellan. Free navigation apps, now preloaded on every smartphone, are not only cheaper but better than the stand-alone devices those companies sell. And thanks to the robust platform provided by the iOS and Android operating systems, navigation apps are constantly improving, with new versions distributed automatically through the cloud.

The disruption here hasn’t come from competitors in the same industry or even from companies with a remotely similar business model. Nor did the new technology enter at the bottom of a mature market and then follow a carefully planned march through larger customer segments. Users made the switch in a matter of weeks. And it wasn’t just the least profitable or “underserved” customers who were lured away. Consumers in every segment defected simultaneously—and in droves.”

What HBR describes as the first step in countering Big Bang disruption is:

“see it coming”.

That is why senior leaders in banks and insurance (along with startups and their investors) subscribe to Daily Fintech and consult with us. We help you to “see it coming”.

The “it” in the case of Traditional Fintech is how Business Process Optimization and Outsourcing is being replaced by Business Process Elimination thanks to Blockchain.

Business Process Elimination

This post explains how Blockchain will lead to Business Process Elimination thanks to the elimination of Settlement Latency. This is Big Bang Disruption. It starts with the top tier banks, not creeping up slowly from the bottom tier.

The new stack that is emerging

  • User Experience is the visible part of the offering and will be the source of real innovation and value creation. The reason they will be able to innovate so fast is that the rest of the stack gives them so much value.
  • Business As A Service is a new type of entity that is being created as we speak. They could come from a bank or an emergent Fintech or a Traditional Fintech. The key is that they do not just offer technology. Of course they do that. They also offer service delivered by humans and may also offer a regulated layer. It is a complete business service delivered to the User Experience layer via an Open API.
  • Blockchain Middleware is a nascent space where cross-cutting services dealing with concerns such as Identity or Security or Data Integrity play. This is also the realm of interoperable data standards (which are totally essential for Blockchain systems to work)
  • Blockchain Platforms really means a consensus mechanism and transactional currency that enables entities that do not trust each other to transact. The main options today are Sidechains (using Bitcoin), Etherum (Ether) and Ripple.

Cloud and open source is traditional disruption

Traditional Fintech has learned how to handle disruption from cloud and open source using what HBR calls “the strategic model of disruptive innovation we’ve all become comfortable with”. 

Cloud and open source falls into what HBR calls “lower-priced, inferior alternative that chips away at the least profitable segments”.

Cloud and open source is not the problem. Indeed, they are part of the solution.

Emergent Fintech Startups do Core Banking byepass surgery

Emergent Fintech Startups are not waiting patiently for Traditional Fintech to open their doors. They understand that Core Banking is like the heart – an essential pump. Not being confident that the pump is available to them, they are choosing byepass surgery using modern technology such as Microservices and Open APIs.

The Business As A Service opportunity

Emergent Fintech Startups would prefer to work with a well functioning heart. Traditional Fintech could serve that role.

Traditional Fintech can leverage cloud and open source to move up the value chain to Business As A Service, letting startups innovate on their platform at the User Experience. That means they can bring the massive benefits of Business Process Elimination (enabled by Blockchain) to their customers.

Image Source

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge platform.

Wrap of Week #48: R3CEV, Ayondo, DBS Digital Bank, CoverWallet, Fintechs with no customers


We started the week sharing our insights on Why the R3CEV Blockchain consortium is splintering & what that signals (three departures in one week).

We moved over to Singapore were Ayondo, a European social trading platform will IPO. Our insights on Ayondo’s pre-IPO moves (a Fintech acquisition and an RTO).

We highlighted Why having no customers could be the best thing for your fintech startup in banking. If you follow our thinking then listening to the Pirates with Ties interview with Olivier Crespin of DBS Digital Bank, will make more sense. The Singaporean Digital bank who launched first in India and Indonesia.

In Insurtech we used CoverWallet as an example of a Low touch and Customized service. Read more in CoverWallet could define the Insurance Robo Agent space

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Pirates with Ties interview with Olivier Crespin of DBS Digital Bank

In the Pirates with Ties interview series, we are interviewing people who are leading digital transformation and innovation in major Financial Institutions, tech and telco companies.

Olivier Crespin, is the Head of the DBS Digital Bank in Singapore. In this interview, he explains their strategic positioning which is built on an open architecture. We discuss their Digital customer-centric apporach, in India and Indonesia.  DBS Digital Bank is receiving recognition of their transformation as we speak, through mutliple awards.

 Pirates with ties


Fintechs mentioned: Kasisto, Moneythor, V-key.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Efi Pylarinou is a Digital Wealth Management thought leader.