保险科技没有用,为什么呢?

What follows is a Chinese translation of today’s InsurTech post on Daily Fintech by Stephen Goldstein, with translation by Zarc from InsurView. This article will also appear in Chinese on the InsurView site. To read more Fintech content in Chinese, you can scan the following QR code by Wechat and subscribe to InsurView’s Wechat account.

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以下是今日DailyFintech发布的由Stephen Goldstein撰写的InsurTech文章的中文翻译,由InsurView的Zarc进行翻译。 本文也将在InsurView网站上以中文显示。 要阅读更多Fintech的中文内容,您可以扫描以下二维码,并订阅InsurView的微信公众号。

 

好吧,好吧,其实我并不相信这一论断。毕竟,这是我所在的行业,我每周还要为它写一篇文章呢。

我之所以取这个题目,原因有二:

1、我希望让题目更吸引眼球;

2、我希望从我上周提到的话题“保险的基础和原则”开始展开本文。

上周的文章有一点长,我总结了我们在保险业中要做的事,即:

“保险是一门为客户提供安全感的生意,我们要让他们知道,当他们遭受到不幸时,他们可以获得一定的经济补偿。这类不幸可以是身体健康、生命方面的,也可以是财产方面的。这是保险的核心所在。”

同时,这些事又与我前几周提到的保险业三大基石有关:

1、定价

定价是否合理,关系到保险公司的收入是否能够覆盖其日常运营的开支以及是否有着足够的资金储备以保证其偿付能力。

2、资金储备

关系到保险公司的偿付能力。

3、理赔

和大家一样,我也在实时跟踪保险业和保险科技领域的热点新闻。每天,我的Linkedin主页和邮箱都会收到新的保险科技新闻推送,其中包括创业公司获得投资、新的保险科技合作、创业公司拓展业务以及贯穿保险价值链的新型解决方案等。

这些内容我都很喜欢,因为它们展现出了技术解决方案可以如何提升客户体验,以及如何帮助保险公司提升运营效率。我是保险科技未来光景的粉丝。

但是,我对于当今保险世界中可能存在的风险,也保持着谨慎的态度。

我不想太过激进。作为专栏作者,我认为同时谈论保险科技的好与坏是非常重要的。

目前,保险科技解决方案的变化程度和业界对其的接受速度都达到了历史最高水平。而且没有任何慢下来的迹象。但是,任何优秀的计划,都必须要有一个风险缓冲和备用计划。

这也带来了我取这一题目的第三个原因。其实并非保险科技没有用……而是,如果风险未能得到合理地控制,或者应急计划没有到位,那么许多保险科技项目的进程就会受到阻碍,在某些情况下,就会没有用了。

那保险业和保险科技面临的风险有哪些呢?我主要关注三点,这三点在过去几个月内也经常出现在新闻报道里。事实上,不管有没有保险科技,这些风险都存在于保险行业。即:

1、宏观经济环境;

2、天气风险/自然灾害;

3、监管。

宏观经济环境

2008年后,全球股市一路走高。这也难怪现在有大量热钱涌入保险科技领域进行投资。

如果再次出现市场回调,甚至再次世界经济危机的话,会出现怎样的情形?保险科技领域内的投资还会有那么多吗?

我说的还只是股票市场的影响。如果固定收益市场也产生冲击呢?

在这篇8月份的金融时报文章中,丘博的CEO,Evan Greenberg就对人们发出了关于低息环境的警告,以及其可能对保险公司造成的影响。他说道:“很多保险公司没能赚回足够的钱,有些甚至还在亏钱,或者即将在未来亏钱。”这是一个很严重的问题,因为这会在未来影响保险公司的偿付能力。当然,他们首先得满足监管层制定的偿付能力要求,但是如果这一情况持续下去,保险公司势必会大幅提升保费,以及撤销部分险种业务。

除了宏观经济环境,自然灾害对于保险的影响也不容忽视。

天气/自然灾害

过去几个月,厄玛飓风、玛利亚飓风和哈维飓风先后袭击了美国东南部及沿岸小岛。美国加州也在过去几周身陷火海。世界各地的其他国家也经历了大量灾难,相关的文章非常多。文章题目从“遭受灾难后,如何向你的保险公司索赔?”到“天气灾害会对保险公司造成多少经济损失?”都有。随着气候变化的程度加深,未知的天气灾害也越来越多。我必须承认,我不是灾害风险定价方面的专家,但我猜想,气候变化将会使得天气灾害相关保险产品的定价越来越困难。

所以,股票可能会跌,利息可能也涨不上去,天气灾害也可能越来越严重。这些风险很大,但是最后一个风险可能会分到最大的蛋糕,那就是:监管。

监管

上周,美国总统特朗普颁布了两条有关医保的行政命令。一条是允许消费者跨境购买保险,另一条则是限制了奥巴马医保的资金来源。这些安排会对美国的医保市场和保险市场造成怎样的影响,目前我们还无法判断。这个话题足以写一篇独立的文章,我打算未来再写。

监管如果不能客观地看待问题,真的能把事情搞砸。我在前几周写过关于如何与政府合作的文章。有一些政府就更加开放,也更懂得金融科技和保险科技。但是,就我接触过的监管层来说,监管层的态度和观念可能会在朝夕之间改变,迫使从业者被动地改变计划。

不同的险种有着不同的机会和风险

对于有些险种来说,比如财险,保险科技可以发挥重大的作用,可以带来大量颠覆和改变现有保险价值链的机会。如果自动驾驶汽车成为主流,整个车险领域将会彻底改头换面。对于非车财险,用智能家居和智能设备来监控房屋财产,将会更好的为客户改善产品定价和体验。

对于旅游险,保险可以用来保护游客财产(比如手机、电子设备等),以及提供基于时间的保险(比如共享经济下的保险)。颠覆行业,增强客户价值的机会非常多。

对于寿险、健康险以及灾害险,那就是另一番光景了。我们看到了很多在线销售的定期寿险。但是终身寿险、全能险和年金险呢?当我们需要处理更复杂的个人/商业险时,该怎么办?

我最大的担心来源于这些类型的产品。我的保险业经历主要就是寿险和健康险领域的。这些类型产品的定价结构更注重长期,因为是终身产品,而非产险这类按年收费的。健康险可以按年收费,但是随着保健支出的增长,人们看医频率的上升,健康险的定价也将越来越困难。

那我们可以做什么呢?

首先,最重要的是,每一家创业公司和传统保险公司都需要根据自己的保险科技计划准备好一个降低风险计划和一个应急方案。沉浸在行业狂欢之中是简单愉悦的,但是谈论风险的时候大家就没那么开心了。上文提到的一些风险仅仅是最主要最宏观的几个。每一家公司和每一个项目都有着自己特定的风险集合,都需要依据实际情况进行风险评估。

精算师也需要跟上。他们需要用自己的专业技能进行精算建模以及和数据工程师们协同合作,深入理解能获得到的所有数据,并将其用于改善定价模型。

精算定价体系和数据科学的结合,将是推动保险发展的最重要力量。传统保险公司已经花了几百年的时间来管控风险。但风险控制的本质,随着数据大爆炸的出现已经彻底改变了。它已经不再仅仅是研究过去的历史和预测未来的可能了。

我们需要理解整个行业中,哪些环节在发挥作用,哪些环节没有,然后据此进行规划。我们所有人都紧密相连,我们也需要共同建设保险行业。毕竟归根结底,我们对所有客户都有着共同的责任。

The financial inclusion on ramp for the next billion 

GAME - SNAKES AND LADDERS

GAME – SNAKES AND LADDERS

The emergence of billions from subsistence farming into a global middle class is both a) the biggest investment opportunity of the 21st century b) the cause of so much of the trauma (political, social, geopolitical) roiling the world today.

In short, there is a lot at stake in those two words – financial inclusion – and in the technology that is driving financial inclusion today.

Financial inclusion used to mean a) philanthropy b) governments telling banks to serve more poor people. That was analog financial inclusion and it was and still is very helpful. What we are focussed on is digital financial inclusion, which is more to do with mobile and blockchain. Digital financial inclusion is accelerating the way billions move up the ladder of opportunity.

7 billion in 6 tiers playing snakes and ladders

There are about 7 billion people in the world today. We can look at this with a glass half full point of view as a ladder of opportunity. Or we can look at this as a glass half full point of view as snakes that the unfortunate slither down into poverty.

Being an entrepreneur, I tend to have a glass half full point of view. If you are in one of those middle tiers and see how your earning ability is being hurt by billions around the world competing for labor, you can rail against foreigners taking your old job or find a way of trading with those foreigners or working for a firm that trades with those foreigners (or find work that is immune from automation and has to be done locally).

The economy needs growth. That growth will come from billions entering the global middle class as long as global trade remains open. The problem is that the climate needs us to stop driving that growth with C02 emitting fossil fuels. Again we can have a glass half full or empty point of view. Glass half empty = we must stop those billions entering the global middle class because that growth will kill the planet for all of us.  Glass half full = we must find profitable ways for billions entering the global middle class to use clean, renewable energy and that is a huge business opportunity.

Note: many of the examples that follow come from India, mainly because I happen to have lived and worked there so I can speak from experience, but the challenges and opportunities apply to all the Velocity 12 countries (more on them later).

The 6 tiers, starting from the bottom are

Tier 1 = Subsistence. This is the world of philanthropy, such as the amazing Bill & Melinda Gates Foundation. It is ensuring that people are healthier and better fed, with a focus on things like malaria and sanitation. The success of these initiatives puts more people onto the next ladder.

Tier 2 = Unbanked. Bill Gates famously said that “banking is necessary banks are not”. In this tier, banks as they exist today are irrelevant. The classic customer is a day labourer working in a metropolitan area and remitting money back to their home village and buying mobile pre paid services and other low cost services. Those remittances are not always the cross border remittances that Fintech fans like to talk about. These cross border remittances have regulatory hurdles.  In big markets such as India, the domestic remittances market is also big and being within a national border the regulations are easier.  The unbanked use “feature phones” (aka “dumbphones”) and transaction unit sizes are typically too low for bank payments rails (you need to make money on a $1 transaction or less). Visiting a bank branch or ATM is not something this customer tier considers and if they did banks would find them to be unprofitable customers. These customers want basic payment services at very, very low cost. This is the world of services such as M-Pesa and, in India, MoneyOnMobile (Disclosure MoneyOnMobile is a client of Daily Fintech Advisers, our earlier coverage here). The people in this tier who work hard and save diligently may move up to the next tier.

Tier 3 = Underbanked. They need the same ultra low cost basic payment transactions as the Unbanked. They do more volume and slightly higher per unit transactional value, but their needs are fundamentally the same. They are formally in a different tier because they are classified as having a bank account. Although now formally in the tier marked as “banked”, they almost never use an ATM or credit card or other bank service and as far as banks are concerned they are unprofitable customers. In countries such as India that have an active government policy of encouraging financial inclusion, many will be paid via pre-paid debit cards or mobile wallets. They need to use this digital cash to a) pay for for basic goods and services via pre-paid mobile wallets and b) remit money home and c) get physical cash back from retailers (so they can buy the goods that you can only pay for with physical cash (more than 90% of the economy in a country like India). This is the tier where world of services such as M-Pesa and MoneyOnMobile intersects with services based on smartphones and credit cards that come from the West. This tier also applies to the West. There are people in countries such as UK and USA that might have a bank account but almost never use it because they mostly live “hand to mouth” and banks don’t want their business. This is the world of pre-paid services such as Ffrees in UK and GreenDot in USA.

Tier 4 = Banked Middle Class. This is the world of traditional Retail Banking and the more recent Neobank entrants. The supply is obvious. The demand is less obvious. Who woke up this morning in the West and put “change my banking provider” into their top Must Do priority list? In comparison millions of people in tiers 2 and 3 wake up each morning and things like “top up my mobile phone minutes” or “send cash home to my family” are on their top Must Do priority list. Look at the data in India. Tiers 2 and 3 are about 850 million vs about 300 million in tier 4. As people climb the ladder of opportunity, that 300 million Middle Class will grow. However it is unlikely that, having used the services designed for Tiers 2 & 3, they will desert them for traditional banking services.

Tier 5 = Overbanked Wealthy. Not relevant to this analysis,  other than as Impact Investors.

Tier 6 =The Super Rich. Not relevant to this analysis, other than as Impact Investors.

Velocity 12 – the countries formerly known as emerging

The names have changed from third world to developing world to emerging markets to BRICs to high growth markets to The Rest (of the World). The latest is the Velocity 12 designation by Ogilvy.  I like it because a) “the countries formerly known as emerging” is too long and b) it denotes rapid growth opportunity as the most fundamental characteristic. If I had to choose one simple word it would be the Rest (of the World).

These markets are now the driver of change. This is the mega trend that we call “First the Rest then the West”. One simple but powerful innovation that has gone from Rest to West is the dual SIM phone, which started in India.

Quoting from the Ogilvy report:

“The 12 velocity markets identified herald a shift to South Asia as the epicenter of future middle-class growth.  Centered principally in India, but inclusive of Pakistan, Bangladesh, Myanmar, Indonesia, and the Philippines – and extending up to China, and to Egypt, Nigeria, Mexico, and Brazil in the other direction, the Velocity 12 markets represent a vast arc of future growth.   Over the next decade, these 12 markets will be the source of the next billion middle-class consumers, which will create a critical tipping point as the middle-class move from a minority to the majority of the local population in many of these markets.

Miles Young, Ogilvy & Mather Worldwide Chairman said, “The Velocity 12 research shows the world as it will be in the not too distant future. A billion new middle class members will literally change its shape. It will become, for instance, much more orientated to South Asia, especially India. Most Western businesses simply are not used to thinking this way.  This means finding a new lexicon of growth, as the phrase ‘emerging market’ doesn’t now describe the new realities. ‘Velocity’ better describes the real transformation in these markets.”

Tipping point theory

When economies move up this ladder of opportunity it happens very fast and there are behavioural economics feedback loops. For example in Tier 1, all the incentive is to have lots of children who will look after you in old age. Somewhere between Tiers 2 and 4, the motivation changes to having a smaller number of children who are well educated and cost a lot of money to raise. As these well educated grown up with high expectations start producing and spending, it lifts those economies and all who trade with or invest in those economies.

Image Source.

Bernard Lunn is a Fintech deal-maker, author, adviser and thought-leader.

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DailyFintech的ITC2017回顾

 

What follows is a Chinese translation of today’s InsurTech post on Daily Fintech by Stephen Goldstein, with translation by Zarc from InsurView. This article will also appear in Chinese on the InsurView site. To read more Fintech content in Chinese, you can scan the following QR code by Wechat and subscribe to InsurView’s Wechat account.

InsurView QR code

以下是今日DailyFintech发布的由Stephen Goldstein撰写的InsurTech文章的中文翻译,由InsurView的Zarc进行翻译。 本文也将在InsurView网站上以中文显示。 要阅读更多Fintech的中文内容,您可以扫描以下二维码,并订阅InsurView的微信公众号。

InsureTech Connect 2017(ITC2017)会议在10月初于美国拉斯维加斯举办,出席会议的嘉宾超过3500人,其中有保险公司和再保险公司从业人员,也有创业者、投资者、科技公司员工以及咨询顾问,这些人从全球48个国家赶来,共聚维加斯,来讨论保险科技,以及任何与保险科技相关的话题。

参会前,我给自己定了三个目标:

1、推进业务;

2、了解趋势;

3、寻找一个有趣的角度来报导这次会议。

在会议开始的三周前,Daily Fintech的CEO,Bernard Lunn发来邮件给我提了一些建议:

如何报导一次行业会议?以下是我参加多次会议总结的经验。

会议中信息量很大,如何取舍,如何确定重点是很难的。对此我有两个技巧。

1、关注大型主题和重点事件。比如说当下关注度较高的话题有,再保险即服务(Reinsurance As A Service)和大灾风险定价等。和这些话题有关的专题讨论都要参加,并和这方面的专家进行沟通。

2、记录一切有意义的信息,并进行深度消化。这是第一个技巧的反面。在会议期间保持一个开放的心态,准备迎接任何惊喜。

此外,记住一点,在互联网时代,“不管维加斯发生了什么,你都可以在Youtube上找到”。

在两天的时间内,总共会有22场专题会议,我计划参加其中的12场,并且还想去展览厅拜访一下所有的创业公司。这次行程势必万分紧凑。

关于本次会议的回顾,作为会议主办者之一的Oliver Wyman已经发表过两篇文章

Insurance Journal也有一篇。

CB Insights提供了很多数据。

此外还有很多回顾文章,具体链接大家可以在本文的英文原版中找到。

仅从回顾会议文章的数量来看,我们就能感受到这次会议的热度有多高。因为本次会议的很多内容都被报道过了,我在本文提出的观点或许会和其他报告有所重复。我会对一些较为重要的观点进行再次剖析,也会对一些没有被关注过的内容进行报导。

以下是我对本次InsureTech Connect 2017会议的观点:

会议热度很高,保险热度高,但这种情况会持续多久呢?

在热度VS实际情况的讨论中,现在保险科技的实际应用已经超过了我的预想。但是我认为过热的现象依然存在,特别大家的心态。

如果你在10年前(正好是上次经济危机时期)参加一起保险行业会议,几乎所有参会者都会穿着西装领带出席,会议的议题以及形式都会偏严肃向。如今的会议则不是这样。在这里,几乎没有人打领带,大家穿得都是标准的硅谷着装——印有公司LOGO的彩色T恤。会议的气氛也更加轻快活跃,参会者们都很激动,我从来没有见过这么多人对于保险业的发展感到激动。

我在汉诺威再保险和Sureify共同搭建的会前展台上看到了一个他们提出的问题——“这股热情什么时候会耗完?”这是我在本次会议上听到的最为激进的一个问题。

现阶段,我们有机会能在保险供应链的各个环节上布局各类有意思的新型解决方案。这类解决方案大部分都是有技术驱动的。这也真是“保险科技”一词的由来。我认为,就像“金融科技”一样,因为“保险”和“科技”进行了组合,保险这一行业也越来越酷了。

不过,总有一天,当这些技术将成为保险供应链中的正常组成部分,那个时候,我觉得这股热情就会消失了。那个时候,为了追赶风口来到保险业的人将会去追逐下一个风口了。一切顺利的话,那个时候,行业将会经历一次洗牌,劣质圈钱的项目和公司将会消失,让优质的项目和公司得以有更大的空间施展拳脚。

我们的目标是找到解决方案,并非构建技术

Ring的CEO,James Siminoff在这次会议里扮演了白脸角色。他在对美国家庭保险公司的Telisa Yancy进行采访时,提醒了在座的所有人,我们来到这里的目的是什么。他说道:“人们并不喜欢技术,人们喜欢的是那些改善生活质量的解决方案,有些时候,技术正好提供了这些解决方案。”对此我深有同感。

保险是一门为客户提供安全感的生意,我们要让他们知道,当他们遭受到不幸时,他们可以获得一定的经济补偿。这类不幸可以是身体健康、生命方面的,也可以是财产方面的。这是保险的核心所在。

正因如此,保险对于投保人来说是至关重要的。这也是为什么客户体验成为了本次会议中最热门的话题之一。沉浸保险业多年的从业者,以及真正理解保险业内核的人,都已经深刻理解了这一点。他们知道技术仅仅是一项使能工具(Enabler),保险的基本原则并没有随着技术的提升而改变。

行业主力改头换面

如果仔细研究一下会议的演讲嘉宾名单,你将会发现大部分都是创业公司成员。虽然像AIG、AXA、慕再等传统保险公司依然在列,但是很明显,主角已经改头换面了。

人们来参加会议的目的也变了。曾经,大家是来听传统保险公司分享行业进展的,如今,人们更希望参与到创业公司CEO们的分享讲座中去,去聆听他们眼中保险未来的样子。

我有幸获得了和Hippo的CEO,Assaf以及Clearcover的CEO,Kyle进行面对面交流的机会。在他们的linkedin简历上,他俩的保险经验其实很短,只有几年。但是他们认识到了保险的核心,并将保险核心与技术进行高效结合,为客户带来了独特的体验。

在谈话过程中,他们给我的感觉就像是一生都在从事保险业的老保险人。他们对保险的深刻理解,并非体现在如何将技术和保险相结合,而是体现在东西保险的核心,看清客户需要的是什么,知道哪些是他们不需要的,然后用客户喜欢的方式为他们精确地输送产品和服务。

当然,这并不意味着传统保险公司的高层的分享过时了,他们同样为保险科技的发展在添砖加瓦。安盛集团的首席转型官(Chief Transformation Officer)Benoit Claveranne在其主持的研讨会上分享了大量重要的信息。其中最关键的两点是:

1、当一家创业公司在接触传统保险公司时,他们要明确自己的目的——是寻求投资、收购还是合作?有太多实际案例显示,双方在早期的接触过程中,浪费了大量的精力在没有意义的交流上。

2、对于创业公司来说,在和传统保险公司进行过1-2次面谈后,可以电话再和他们接触一次,确认对方的意向是否足够强烈。如果不够强烈,就应该及时寻找下一个合作对象。

合作是关键

上周的文章中我提到了Snapsheet和Keybank合作启动Snapsheet Transactions的消息。本周,又有两家公司宣布合作了,他们是Everplans和RGAx。RGAx将成为Everplans平台的主要分销伙伴,向全美国的寿险公司提供Everplans的文件存档服务。

我和Everplans的CEO兼联合创始人Abby Schneiderman进行了交流。他认为Everplans的平台对于保险价值链来说是一个很有价值的补充,该平台能够让投保人将所有投保信息归结到一处,这些信息将会有平台保密保存,在投保人或受益人需要进行理赔时,他们可以轻松的将需要的信息提取出来。

保险科技和传统保险通过合作,往往能为消费者提供更优秀更全面的解决方案,以上这些例子就是很好的佐证。除此之外,还有一些较为传统的合作项目,比如Qover宣布和慕再合作。

美中不足

虽然本次会议的亮点很多,但我认为,有一些应该被重点讨论的事情并没有获得大家足够的重视。比如:

1、如今的数据太多了,这很可怕。随着可携带式设备、车联网和物联网的兴起,保险公司将和谷歌等科技公司一样,知道关于你的一切数据。保险公司如果只利用这些数据去开发特定市场,那倒也还好,但如果他们未来将全面用数据来定价、评估风险,以及对用户进行核保,这一步必须要走得谨小慎微。保险是一门风险管理的生意,如果保险公司仅依据数据就拒绝向潜在的高风险客户提供保险服务,这样并不公平。

2、大家对风控管理和客户数据保护的讨论太少。每一项新的解决方案在实施前,都应该从客户、保险公司以及市场的角度分别进行风险评测。客户通过可携带式设备产生的数据该如何被保密?如何确保数据用于正当用途?

3、全球共享才刚刚开始。本次会议有来自48个国家的嘉宾参与,这意味着将会有很多跨国讨论,以及潜在的跨国合作正在发生。这对于全球市场的共同发展大有裨益。

4、剩下的50亿人口怎么办?MicroEnsure Labs的主任,Peter Gross在其专题讲座“重新定义保险价值主张”中提到,“目前全世界还有50亿人生存在贫困线以下,每天都暴露在巨大的风险之中。”保险科技在为发达国家的消费者提供服务的同时,也应该努力去实现普惠保险。

5、很多人只是想乘机捞一把。因为保险科技的概念变得火热,很多投机者带着大量资金进入了这个行业,希望能乘势获取高额收益。这是资本市场的常态,但是我希望投机者们能够坦诚面对。我和有些人聊天后发现,他们甚至无法向我解释清楚他们的产品到底是to B的还是to C的,这就很可怕了。

总结

我一位来自英国的朋友在去年参加了InsureTech Connect会议,当时他觉得他是参会者中唯一的外国人。今年他没来,我想告诉他,今年有48个国家的人参与了会议,相信大家并不会再觉得这是个只有美国人的会议。这也是保险科技全球化的趋势,在全球范围内大家分享和实践,是促进这一行业快速发展的良方。而消费者们也将最终从这些发展中受益。

The winner of Daily Fintech Venture Pitch Rating System at #swissfintechpitch is…Bee Solar 

Pitch.jpg

Today I attended the Swiss Fintech Pitch 3 event in Zurich (with 4 ventures and 4 investors pitching).  I used the Daily Fintech Venture Pitch Rating System, which we have used with some success in past Pitchathon events; this is now V3.

Daily Fintech Venture Pitch Rating System

We first tested this out at the inaugural Barclays Techstars Demo Day in October 2014 and my top picks from then seem to have done quite well two years later, so I was emboldened to try it again and refine that MVP at the Nexus Squared Pitchathon in July 2016.

This is Version 3 (at Swiss Fintech Pitch 3, yes 3 is a magic number).

The objective of the Daily Fintech Venture Pitch Rating System is to add some slow thinking methodology and metrics to what is traditionally a fast thinking gut decision.

There are two main attributes – Quality of Presentation & Fundamentals.

For each attribute we use a simple 1,2,3 score (3 is best).

Quality of Presentation. This might sound superficial, but it is a proxy for quality of team & focus. We look for:

  • Strong opening attention grabber
  • Strong middle with the details, real data, hold my attention
  • Strong close, make me want to talk to them.

This is clearly subjective. The quality of fundamentals impacts this (it is much easier to present a great business) but I have seen great businesses that lost investors because of presentation and vice versa. This is also a proxy for quality of founder (see below). So, Quality of Presentation gets a maximum total score of 9.

Fundamentals. This is still pretty subjective as it is based on a quick pitch. We scored Fundamentals on 5 dimensions (so a maximum total score of 15, weighting it more than Presentation):

  •  Pain. Amount of Pain felt by immediate customers/users in market entry niche. Is this a pain that is acute (customers must have to now) or just annoying (may get around it after untangling the headset cord).
  •  Innovation. Amount of Innovation involved in solving that pain. In short, any secret sauce creating a barrier to competitors?
  •  Monetization strategy. Starting with free is good; Freemium works. But the team must have a plan to make money. If the answer is advertising I switch off (because of adblockers, ad-fatigue and because you cannot beat Google and Facebook in what is now a scale game).
  •  Timing. Why now? Brilliant ideas ahead of their time are money losers. Just another follower in an established market needs lots of capital. Timing is the most critical factor in venture success;  see this amazing talk by Bill Gross, the founder of IdeaLab.
  • Go To Market Strategy. Is this clearly articulated and credible? This leads to Product Market Fit, where the “rubber meets the road”. Relates to the Pain question.

Then we add Quality Of Presentation to Fundamentals to get total score (out of a max of 24).

Notes:

  • Filters. Investors use Pitchathons as a first filter – actually second filter, because Incubators, Accelerators and Pitchathons provide the first filter. After a Pitchathon, investors look at those fundamentals in more detail but what they are really doing is rating the founder (based on how well they handle questions about the details). The old VC mantra is back the jockey not the horse.
  • Founder Rating. Do you see a founder who can go the distance in a hard game? If I added Founder rating I would make it as much as the two other attributes put together (so if the max score of Presentation + Fundamentals is 24 I would add another 24 just for Founder). However, you can only evaluate a Founder in a one on one meeting and the objective of the Daily Fintech Venture Pitch Rating System is a quick rating score based on a pitch.
  • CoFounders. “Founder” can mean 2 or more people and that is critical in the early days when founders have to do everything but cannot afford to hire top talent to do those jobs; but the reality is one person tends to emerge as a leader and you have to evaluate that person (think of Bill Gates vs Paul Allen or Steve Jobs vs Steve Wozniak).
  • Fast and slow thinking. The theory behind the Daily Fintech Venture Pitch Rating System is combining fast and slow thinking (from this amazing book). VCs work on “gut” – thinking fast based on a lot of experience. Quality of presentation is a gut call but with some metrics based on dividing the pitch into open, middle and close. The advantage of doing this at a live event is that you can also gauge how the people around you are receiving the pitch – crowdsourced gut if you like.
  • Confirmation bias. This operates at two levels. One level is highly destructive. Some investors base their gut evaluation of a founder on seeing somebody they are comfortable with. This can simply be disguised racism and/or sexism and/or ageism. This is a well recognised problem in Silicon Valley. Although the top VCs may not have diversity among their GPs they sometimes work hard to get diversity in their entrepreneurs because they know how much this matters, but understanding the problem and doing something about it is a different thing. Another level of confirmation bias is based on seeing other ventures  in that “space” succeed or fail. That is why we have Timing as a critical parameter. An idea that failed x years ago might be brilliant now (or vice versa).

The 4 ventures in their own words

Bee Solar Sàrl

(BeeSolar offers a new type of impact investment by installing solar panels on residential buildings in Switzerland)

IMburse 

(A payments marketplace to access any payment type to collect and pay out monies.)

Lend 

(Lend matches investors with borrowers. Both benefit from a fair and transparent business model.)

Protos Cryptocurrency Asset Management 

(Protos Cryptocurrency Asset Management invests in pre-ICO tokens and trades established tokens like bitcoin using advanced quantitative strategies.)

Werthstein 

(A Revolutionary Private Wealth Management.)

And the winners is – drum roll please

With a total score of 19, Bee Solar is the winner.

From the snapshot description I had not expected this one to win. It appears to serve a real need and the way they have set this up was elegantly simple. If the IRR (net over 15%) bears up under scrutiny, they are onto a winner.

We don’t do negative reviews on Daily Fintech because we respect how hard the entrepreneurial journey is. So we don’t say why we gave low marks to others.

And we can of course get it totally wrong. The best ventures often surprise everybody and are roundly rejected/dismissed at the time of launch.

Now we have to wait a few years to see if that was a good call. That is why we waited a few years from the V1 MVP at Techstars in 2014 as we can then see how these ventures performed in the years after the pitchathon applause has faded away.

Investor Rating System

Sitting on the entrepreneur side of the table, you look for two things to qualify if an investor is worth talking to:

  • Stage. Do they like to invest Early? Look for clarity below the words e.g. in actual deals and in ticket size and is it pre or post PMF? Investors may say Early but really prefer late stage. Late stage maybe sensible for investors, but I focus on early stage because that is what most attendees at pitchathons are looking for.
  • Value Add. Do they have a clear point of view on where they can add value beyond cash and is that relevant to early stage investors.

It was hard rating the investors in this event because there were three different types:

  • Angel representing an angel network.
  • Corporate VC (Swisscom and AXA in this event).
  • VC Funds (RedAlpine and DI Ventures in this event).

My take is that VC in Switzerland is still pretty immature. It does not have even close to the depth of other markets. It was notable that the Swiss VCs had invested in more ventures in Germany (mainly Berlin) than Switzerland. It appears that more VCs VCs fly to Switzerland to pitch to LPs than to invest in ventures.

I was also looking for mention of the elephant in the room – ICOs. Privately everybody was talking about this. On stage it was not mentioned.

Serial Entrepreneurs and Capital Formation

The Keynote was by a Serial Entrepreneur (Stefan Heitmann of MoneyFarm, who is now onto his next venture after a good exit). This is how it works in Silicon Valley and other Swiss Serial Entrepreneurs include Richard Olsen and Dorian Selz. So it is now happening in Switzerland and I expect this will soon have a positive impact on investor appetite for early stage ventures.

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Bernard Lunn is a Fintech deal-maker, author, adviser and thought-leader.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

What does the wisdom of the market tell us about the Fintech bubble question?

antifragile_things_that_gain_from_disorder-taleb_nassim_nicholas-18363273-frnt

Markets going through disruption tend to be a bit manic depressive, with headlines alternating between:

“Its a bubble, the big crash is coming, sell sell sell

“Its going to the moon, load up today, buy your Lamborghini tomorrow, buy buy buy”

The Fintech bubble question has become a staple as the media chases page views with sensationalist clickbait headlines.

I want to bring some data, rather than add to the landfill of opinions. That data is lurking in the markets (both stock and cybercurrency). Investors have skin in the game. They back their opinion with cash. Investors can be wrong for a while, but in aggregate their actions usually signal something more interesting than an opinion.

In this post we seek data from the markets to answer the question whether Fintech is a disruptive force or a bubble waiting to pop.

What does the KBW Index tell us?

For example, if Fintech disruption is real, it might be reflected in Bank stocks declining in price. You can see the logic from past disruptions such as e-commerce disruption hitting retailers or social media disruption hitting publishers. In that scenario, bank stocks would be declining.

KBW created a leading index of Bank stocks with symbols BKX. There is another one with a more regional bank focus called KRX. A quick glance tells us that investors still like bank stocks.

BKX KRX

The price action to date has nothing to do with Fintech. It is more likely simply that monetary policy in America is on a path to rising rates which benefits banks and there is an expectation that the regulatory load will be lightened under the Trump Administration. The big moves can be easily tracked to the Trump election and statements by Janet Yellen.

So, the takeaway is “Fintech is a bubble, it is having no impact on bank stocks”. Not so quick, read on.

Lets look at publicly traded Fintech stocks.

Fintech ETFs – FINX and FINQ

Daily Fintech created the first Fintech Index back in March 2015. More recently a couple of companies created tradable ETFs from the simple idea of an index – FINX and FINQ. Zacks offers a comparison

These are not as cheap as buying a Vanguard S&P fund. Both charge 68 bps.

There are some differences between weighting by big, medium and small cap and by geographic region, but they share one thing in common. The holdings are almost all “traditional Fintech”; this is Wave 1. Some are Wave 2 which is Emergent Fintech based on SMAC (Social Mobile Analytics Cloud). This is natural. To get to scale big enough to be a public stock you need to play within the current system.

(See this post for a description of the three waves of Fintech). TL:DR: Traditional Fintech Wave 1 is “we bring you lunch” (aka vendor), Emergent Fintech Wave 2 is “lets split the bill and partner” (aka B2B2C revenue share partnership) and Disruptive Fintech Wave 3 is “we eat your lunch”.

So it is natural to see these Fintech ETFs going up in tandem with KBW and the overall bank market. When the banks prosper, the vendors and partners to those banks prosper. Many of these companies are moving from a pure vendor model (here is my technology and here is the price) to a revenue sharing model (either white label or co-branding). In short, Traditional Fintech is morphing into Emergent Fintech as quick as they can; but in both models Fintech and Bank interests are aligned.

There are some great companies in these ETFs, however don’t trade it as a hedge against bank stocks. The correlation is surprisingly strong.

First we show the two Fintech ETFs together (taking a 1 year view):

FINX FINQ

They track pretty closely. FINQ seems to stop this summer and as they track closely enough I only use FINX for further analysis.

So, lets look at Bank stocks and Fintech stocks together. In a 3 month view we see some outperformance by Fintech, but on a longer term horizon we see mostly correlation:

BKX FINX

Stop yelling, its Yellen that matters

Looking at all these ETFs, there is high correlation. Its The Macro Stupid.

So lets look at some individual stocks on opposite sides of the Fintech Bank divide and how they reacted to similar crises.

Comparing Lending Club and Wells Fargo crises

When the Lending Club CEO did something stupid, the board fired him immediately and the stock tanked. In my view, the market overreacted and LC was a bargain and I was fortunate to buy in at the all time low of 3.51 (see this post for my analysis at the time) and sold a few months later.

When Wells Fargo did something stupid my analysis was a) that this was worse than what  Lending Club had done and b) the underlying cause was probably related to Fintech disruption (a thesis I outlined in this post).

So you would think that Wells Fargo stock would have crashed like Lending Club did. A quick look at the two charts (on a two year view to get the LC crash) shows this is not true:

WFC LC

The takeaway, scandals are rougher on Fintech upstarts than Banks. How long this will remain true is a matter of opinion. Wells Fargo and Equifax will be stocks to watch, but also assume we will see many more blow-ups like this in the months ahead – it is Act 3: Denial in the 7 Act Creative Destruction Play.

Searching for negative correlation via Disruptive Fintech

Smart money is waiting for the OmniBubble to burst. This is bigger than all previous bubbles, whether Housing or DotCom, driven by money printing all over the world. If you see this OmniBubble, none of the normal strategies work. All the sensible assets are also over valued. You want to buy something that is anti fragile that will benefit from a crash.

There are not many tradable stocks in Disruptive Fintech category of Crypto Finance. There are lots of private companies but then you buy into the public/private valuation inversion which was the subject of no 7 of our Top 10 Fintech Predictions for 2017:

“7. Uber will not do an IPO and may do a private down round.This will signal the dramatic end of the public private valuation inversion (private higher than public valuations). This started in 2016 and will have its dramatic end in 2017.”

Uber is still making brave noises about an IPO, but it is likely that an IPO will be a massive down round. Some other overvalued private companies are “taking their lumps” now and getting the pain over. One example is the 70% valuation drop for Prosper. Their problem was that Lending Club was such an obvious comparable.

The only public stock I can see where any Josephine Q Public (aka unaccredited investor) can buy without permission into the Crypto Finance Third Wave is Overstock ($OSTK) where TZero and other Crypto Finance ventures are lurking within an e-commerce company. That is not a pure play.

That explains the hunger for ICOs. Those ICO issues are all you can buy if you think Blockchain, Bitcoin and Crypto will change the world and you don’t have access to private deals. However there is a much, much simpler investing strategy hiding in plain sight:

You could not buy The Internet in the 1990s, but you can buy Bitcoin today.

There are obvious parallels between the Dot Com bubble and today’s ICO craziness.

In the 1990s, you could not buy “The Internet” if you saw The Internet changing the world. All you could buy was lousy stocks like Pets.com. Today’s equivalent is a lousy ICO. If you see Crypto Finance changing the world and you are an unaccredited investor, all you can do is buy an ICO. Not quite true. Today you can also buy Bitcoin. If you see Crypto Finance changing the world, your actionable trade can be as simple as buying some Bitcoin. Any “dumb” retail unnaccredited investor can do that without anybody’s permission. Meanwhile the smart money buys into overvalued private deals. Err, who is the sucker at this table?

Getting back to the bubble question, one way to look at this is that we are witnessing the end of the Financialization Bubble. This has been going on for so long that it is harder to see it as a bubble. For years, the smart money has seen this and while pumping the securities bubble as much as possible, they buy gold and land as better stores of value than paper assets. More of them are now also buying Bitcoin as an alternative store of value, which explains the rise in price. Some on Wall Street trash talk Bitcoin and some buy it and some do both. All understand that Bitcoin, weird as it may sound, is the anti fragile portfolio response to decades of loose money policy.

Image Source.

Bernard Lunn is a Fintech deal-maker, author, adviser and thought-leader.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Swiss Fintech is moving into prime time #swissfintechpitch

zurich

The third Swiss Fintech Pitch event is in Zurich next week.

Daily Fintech is global. We have subscribers from 130 countries, mostly tracking GDP but skewing English speaking (until we get our act together in other languages) and our 6 Authors are from 5 nations of origin and 5 nations of residence (which are different as we have two Greeks in two countries and two people who moved to Switzerland).

So we don’t take sides in the Fintech capital of the world debate. But as I love living in Switzerland, I may have some cognitive bias.

Which is a long way of saying that I am looking forward to the third annual Swiss FinTech Pitch on October 11th at Landesmuseum in Zurich. Daily Fintech readers can get a 25% discount by quoting sfpmedia discount code.

I want to mark this occasion by noting how far Swiss Fintech has come in a few years and to give a shout out to the pioneering work of John Hucker in bringing this community together. If you wanted to connect with the Swiss Fintech community in the early days, you went to the MeetUps organised by John. Today the meetings have morphed into more professional events as the community became bigger, but it is still a gathering of the tribes.

The Swiss Fintech world has changed a lot in a few short years. In December 2014 I reported back from one of those early MeetUps with Zurich Fintech Fans Look Jealously To London. in those days it felt like Switzerland was playing a catch up game at best and the game itself (Fintech) was not in prime time. Nearly 3 years later, the whole Fintech market is moving into prime time and Switzerland is taking a leadership role.

7 reasons why Swiss Fintech is moving into prime time:

  1. Bitcoin is a legal currency in Switzerland. This is a little known fact (obscure history around WIR). Nor do many people understand the significance, but it is quite simple. For Bitcoin to go mainstream it must be legal. The companies that want to profit from this move to the mainstream want a country that welcomes them rather than fights them legally.
  2. Switzerland led the way with the first wave of innovation around ICOs. Yes, that wave went too far in one direction (free and easy wild west era) and is now moving into the next phase which is more regulated and professional. If Switzerland can get the balance right between enabling innovation and regulating away the bad actors, the country can lead the change that is coming to the Innovation Capital business (from Seed to IPO)
  3. London scored an own goal with Brexit. As a Brit by birth, it is sad for me to note this. London will always be a great Fintech center, but Brexit has sure made it easier for other centres to grab more share.
  4. Switzerland is a great place to live and work. This is true whether you want the beauties of nature, a thriving arts scene or business friendly environment or a well educated workforce or great trains and other infrastructure.
  5. Switzerland as a Financial Centre is right-sized. It is big enough to have capability but not so big that they have to play defence. Fintech is better for upstarts than incumbents. If the market and the regulations are dominated by incumbents with more to lose than to gain, innovation will be stifled.
  6. Switzerland has a very innovative Fintech License. Nobody would have forecast this three years ago, when FINMA was at best playing catchup with FCA and MAS. (See this post for more).
  7. The Crypto Finance specialisation. This is where Switzerland moved from playing catchup in the 1st and 2nd wave of Fintech to taking a leadership position in the third wave of Fintech by playing to strengths rather than overcoming weaknesses. The combination of regulation, technical bench strength and financial capital in Crypto Finance is hard to beat.

3 hurdles for Swiss Fintech:

  1. Cost. It is expensive here, which is a killer if you are trying to get traction based on a skimpy seed round. What we are now seeing is startups from all over the world coming here for expertise in crypto finance, to raise money the modern digital way. So we can see ventures where most of the workforce is outside Switzerland, making the high Swiss costs less of an issue.Nor are ICOs usually skimpy rounds, so there is less problem being undercapitalised.
  2. Angel investor tax incentives. The SEIS tax scheme in UK has been a major boost to angel investing. Switzerland has a perverse/strange issue where individual investors pay zero capital gains tax on occasional investments but pay at income tax rates if they are classified as a “professional” investor. What determines professionalism – total amount invested, number of deals, IRR? That maybe why one sees a lot of Funds in Zug which is a low tax Canton.
  3. Risk aversion. This will take time. It happens when founders become serial entrepreneurs. This is happening today with Lykke and Squirro for example – but in Silicon Valley there are hundreds of examples like that.

The issue of risk aversion brings us back to the Swiss Fintech Pitch event. In addition to the usual mode of entrepreneurs pitching investors they have a reverse form of this where investors pitch entrepreneurs. This makes sense as investors need high quality deal flow and if they tell entrepreneurs what they are looking then they are more likely to get deal flow that is a good fit. This “reverse pitch” also illustrates the changing balance of power between founders and investors. This has been well understood in Silicon Valley, where there is great competition by investors to get in the good deals. Seeing this happen in Switzerland is another sign of Swiss Fintech hitting prime time.

In short, if you live near Zurich and are into Fintech be there or be square. I will be there. Details are at Swiss FinTech Pitch.

Bernard Lunn is a Fintech deal-maker, author, adviser and thought-leader.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

MoneyOnMobile is a mobile operator agnostic alternative to M-Pesa for the Unbanked and Underbanked

single shampoo

MoneyOnMobile is very low profile given how much traction they have. With a retail outlet distribution channel in India of 335,000 shops, 200 million unique phone numbers and more than 1 million domestic money transfer transactions processed in August 2017 alone, MoneyOnMobil should be top of mind for anybody tracking mobile money innovation.

Yet, although I keep a close eye on this space, I only heard about them a couple of weeks ago. Maybe we all instinctively gravitate towards something that resonates with our Western lifestyle. We can personally relate to the emerging middle class of India and so we can relate to ventures such as Paytm or the recently launched Tez from Google that serve that market.

It is harder to relate to the needs of the Unbanked and Underbanked and that is the market served by MoneyOnMobile and M-Pesa

As soon as I came across MoneyOnMobile,  I wrote about them here.

MoneyOnMobile has got the tag “Square of India”, partly because Jim McKelvey, a cofounder at Square is on the board of MoneyOnMobile. That positioning works well because of the connection through Jim and because Jim tells the story so well in this short video:

However this is a Western centric view and the analogy makes one think of credit card processing for small retailers. The analogy for MoneyOnMobile is closer to M-Pesa than Square and that is the analogy described in this post.

Disclosure: MoneyOnMobile is a client of Daily Fintech Advisers. I am not a financial adviser, please do your own diligence before investing.

The journey of discovery about MoneyOnMobile

When I tell people who know about mobile money in India about MoneyOnMobile, the journey of discovery goes like this:

“That sounds like Paytm.”

“Not really, Paytm and Mobikwik and Tez and many other ventures go after the emerging middle class of India. It is a great market of about 300 million people and Western models and bank/credit card rails translate reasonably well to that market. MoneyOnMobile in contrast is serving the Unbanked and Underbanked of India, a market closer to 850 million people. What is remarkable is that MoneyOnMobile have found a way to profitably serve that population which you could never do with Western bank/credit card payment rails”.

“OK, so it is more like M-Pesa”.

“Exactly. With one crucial difference. MoneyOnMobile is an open platform that is mobile operator agnostic”.

In this post I will elaborate on that thesis for those who need some more background explanation.

Although I did not know about MoneyOnMobile, I did write a post nearly 3 years ago in November 2014 basically saying that the world needs something like an open alternative to M-Pesa. When I wrote that I did not know about MoneyOnMobile, I just thought that something like that should exist. So when I came across MoneyOnMobile a few weeks ago I immediately saw how game-changing it was.

Why M-Pesa is so game-changing 

M-Pesa started in Kenya because people were trading their mobile phone minutes; in a world without bank accounts or landlines, these mobile minutes were vital to life and were a form of currency. The roadside stands (a kind of decentralized Walmart) became the bank where you could convert mobile minutes into Kenyan fiat currency and/or pay bills. Bankers lobbied the Kenyan government to kill it, but a study found it to be secure. Anecdotally, the Kenyan President wanted to pay his gardener and when he saw how easy it was to do this with M-Pesa he was sold.

The traction data from M-Pesa in Kenya is stunning. Read this article from SC College of Business at Cornell with this data:

“Today, Kenya is a leading actor in the mobile money sector: approximately more than 26 million subscribe to the network with over 127.000 agents. Between 31% and 50% of Kenya’s GDP is estimated to flow through this network, as over 50% of the population continue to be without a bank account and to rely on platforms such as M-Pesa.”

But there is one big problem with M-Pesa

M-Pesa is controlled by Vodafone. There is nothing wrong with Vodafone. They are a good mobile phone operator. However an open, mobile phone operator agnostic version of M-Pesa would be better. This is particularly true in India where there is tough competition from many mobile phone operators driving down prices (which is critical to the Digital India agenda of the Indian Government).

The other analogy that people reach for when they first come across MoneyOnMobile is Bitcoin. This is where it is useful to compare M-Pesa and Bitcoin. They are like mirror images of each other:

M-pesa bitcoin

If you replace M-Pesa with MoneyOnMobile in that comparison, the power of their model emerges because it is like M-Pesa, except that it is mobile phone operator agnostic.

Why fight over the Overbanked when the Underbanked are so hungry for service?

Disruption happens through outsiders who are not being served by the current financial system. Bankers, fighting over the overbanked in the West, are eying the 70% of the world that is unbanked. One of the simplest trends to ride in the 21st century is the rise of billions from subsistence farming into the consumer society. Each of those billions spends very little but in aggregate the market is big and when a country reaches the tipping point when a real middle class emerges, it becomes a very big market – witness China and more recently India and many countries in Africa today.

The reason why – price

Going after the blue ocean Underbanked market is so obvious. Why is not everybody laser focussed on this? The reason is simple. It is hard to serve the Underbanked profitably.

It is hard, but not impossible.

CK Prahalad popularised the idea of this demographic as a profitable consumer base in his 2004 book The Fortune at the Bottom of the Pyramid.

The iconic Bottom Of Pyramid success story was the single serving of shampoo sold by Hindustan Unilever Limited (HUL) in India, described well in this HBR article:

“Years ago, HUL pioneered the use of low-cost, single-use packets to make its products affordable for lower-income consumers who often shop daily for necessities (think of a ketchup packet, but filled with soap). Now these packets are ubiquitous in developing countries around the world. HUL itself sells 27 billion sachets a year.”

It should be easy to do this digitally where the marginal cost is zero; but it is impossible using bank/credit card payment rails. MoneyOnMobile has figured out how to make payments profitable even if the transaction is 1 Rupee (about US$0.015) – just like M-Pesa. Unlike M-Pesa, they are mobile phone operator agnostic.

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Bernard Lunn is a Fintech deal-maker, author, investor and thought-leader.

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