This Week in Fintech ending 3rd July 2020

this week in Fintech V3 with HT.001

This weekly summary from our 8 experts, brings you insights based on their experience as investors, entrepreneurs & executives.

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Your Editor is Bernard Lunn. He is also the CEO of Daily Fintech and author of The Blockchain Economy and occasional opinion columnist.

Monday Ilias Hatzis our Greece-based crypto entrepreneur (Founder & CEO at Mercato Blockchain Corporation AG and Weekly Columnist at Daily Fintech) @iliashatzis wrote Wirecard’s $2 billion disappearing act

On January 7th, 1918 Harry Houdini performed his “Vanishing Elephant” illusion where he was able to make a 5 ton elephant disappear before the eyes of a packed theatre in New York. But what Wirecard to pull off, even Houdini couldn’t have managed. Wirecard is a payment processor. Their mantra was simple, to build a cashless society that did not use notes or coins any more. When you go online to buy something you would give them your credit card details. They process the information, collect the money for the purchase and make sure merchant gets paid. To be honest, this is a pretty simple business and lots of companies are trying to do it. Wirecard’s promise to its investors was that they developed some of the best technology that allowed them to grow faster and make more money than their competitors. Wirecard offered their payment processing services around the world, in the countries where it didn’t have its own licenses, it would use these third parties. The money from these third parties, instead flowing into Wirecard’s account, it would sit in special escrow accounts in the Philippines. At least that’s what it told its auditors. At the end of last year Wirecard claimed it had 1.9 billion euros in cash sitting in these accounts. When EY checked with two banks in the Philippines asking about Wirecard’s account balance, the banks had no clue what they were talking about. 

Editor note: Ilias examines the implications of the Wirecard bankruptcy on the crypto debit card industry. 

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Tuesday Efi Pylarinou @efipm our Swiss-based Fintech Adviser,  founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019 wrote The missing WHY of Robinhood

I had not planned to write two posts on two high growth, high valuation Fintechs in an atmosphere that has turned sour because of the demise of Wirecard and its potential domino effect. And of course, I am unhappy that such business practices have been adopted from Fintechs and especially publicly traded ones. Wirecard was part of the DAX index and was also included in several large ESG ETFs because of this[1].

Last week I wrote about my disappointment with certain business practices of the digital bank Revolut. Today I will focus on Robinhood and will make every effort not to discuss the very emotional suicide incident triggered from a very common issue with forward and option trading (i.e. position netting is delayed).

Editor note: Efi looks at another Fintech that does NOT have a positive impact on our troubled world. An addictive casino game is hardly the way to improve financial health for those with few investable assets. 

Alan Scott Managing Director EMEA at 24 Exchange @Alan_SmartMoney wrote Stablecoin News for the week ending Tuesday 30th June

This weekly snapshot is the news that matters in the Stablecoin market. Alan looks at Central Bankers turning positive on CBDCs, as a way to combat Libra.

Wednesday Jessica Ellerm @jessicaellerm, our Australia-based Fintech entrepreneur and thought leader specializing in Small Business and the Gig Economy & CEO/Co-Founder of Zuper, a new superannuation startup in Australia wrote New Business Banking Startup Zeller Set For Australian Launch

Business banking hasn’t had a lot of competition in Australia.

That is set to change, with news a former Square, Visa and NAB executive is set to launch a new offering for Australian SMEs, Zeller.

The business will reportedly help SMEs streamline business bank account opening, payments and cash flow management, however it will not pursue its own banking licence in the foreseeable future, taking a leaf out of local consumer neobanking startup Up.

Editor note: The Chinese word for “crisis” is frequently invoked in Western motivational speaking as being “danger-plus-opportunity”. That describes business banking today. We wish Zeller a lot of success.

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Thursday Patrick Kelahan @insuranceeleph1, our US based Insurtech expert (a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners who also serves the insurance and Fintech world as the ‘Insurance Elephant’) wrote AI- hot water for insurance incumbents, or a relaxing spa?

The parable of the frog in the boiling water is well known- you know, if you put a frog into boiling water it will immediately jump out, but if you put the frog into tepid water and gradually increase the temperature of the water it will slowly boil to death.  It’s not true but it is a clever lede into the artificial intelligence evolution within insurance.  Are there insurance ‘frogs’ in danger of tepid water turning hot, and are there frogs suffering from FOHW (fear of hot water?) 

Editor note: Pat analyses an oft unspoken worry by incumbents – that AI will disrupt them more than enable them.

Thursday Christian Dreyer @x3er, our Swiss based CFA who focusses on how XBRL changes our world wrote XBRL: scrapping quarterlies, explaining AI and low latency reporting

Editor note: This weekly snapshot is the news that matters in the XBRL market. This week we note two news stories showing how XBRL could lead to the old print hangover of quarterly reporting going the way of the dinosaur

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Friday Howard Tolman, a well-known banker, technologist and entrepreneur in London, wrote: Alt Lending: Asset Values Heading South

Editor note: This weekly snapshot is the news that matters in the Alt Lending market. This is Howard’s second post as News Curator, in which he focusses on how Alt Lending Fintech is being tested by the economic cycle.

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