Wrap of Week #3 of 2017: Fintech trends, Australian Fintech, T-zero, UK Challengers, healthcare insurtech

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We started the week echoing loud that in 2017 everything will change. Read carefully, Fintech is entering the third wave and this will be a wild ride.

From this thought provoking piece, we switched to the second significant and symbolic move from T-zero platform in capital markets: T-Zero sings “Love me do” to the SEC with its Blockchain Series A Preferred Shares.

A look at the Australian fintech ecosystem as it heads to Hong Kong for the Next Money event: Gazing into the crystal ball of Australian fintech.

Up to the northern hemisphere to other significant island, the UK, to inquire whether Challenger Banks break the massive bank concentration in the UK?

In Insurtech we looked at 4 of the companies positioned to do well from uptrend in the healthcare consumer and pay per outcome. Check out

Prevention & pay per outcome could be the key to Healthcare InsurTech post Trumpcare

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Happy New Year with some music about money

This blog is about the business of money, so for some light relief on New Year’s Day here are my top 11 songs about money:

The Romantic view:Money can’t buy me love

The lazy view of money:

The practical view: Take the K.A.S.H

Anticipating derivatives: You never give me your money

What we all want: Money for nothing

Jaded realism: You can’t always get what you want

The yuppie anthem: Opportunities (Let’s Make Lots Of Money)’ by Pet Shop Boys

Sadly real: Private Dancer

Paycheck blues: Working for the Clampdown

Celebrating the practical:

Ask and ye shall receive Oh Lord won’t you buy me a Mercedes Benz

Wrap of Week #43: Marketplace Lending, Simplesurance, Market Data feeds, Tink, ICOs

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IPO or ICO or IEO (briefing on Colored Coins):

The last day of the week focused on Innovations in capital funding and particularly on the Initial Currency Offerings (ICOs) and demystifying the Fintech jargon around. Lots of commentary to indulge in, too.

Why did Allianz invest in Berlin InsurTech startup Simplesurance?

A post around the questions of Why did Allianz, Germany’s largest insurance group, buy a minority stake in Berlin based startup Simplesurance? And will this be a good experience for the founders of Simplesurance and the shareholders of Allianz?

Creating the virtual bank – Tink makes the Fintech 100

Picking from the Fintech 100 KPMG report, one possible candidate for becoming a virtual bank, Tink.

Stock exchanges are aggregators of market data feeds, not playing to the Fintech rhythm

When and why did stock exchanges become profits centers? And did you know that they have been increasing the price on real-time market data feeds?

Market Place Lending is simply automated Asset Liability Management and that is a big deal.

MPLs are not like banks that have an asset liability mismatch when lending out out deposits. Asset Liability Management 101 and the value in MPLs.

The Fintech Genome

Check out the recent conversations on the P2P Fintech knowledge platform. Engaging can earn media for you personally, your company, or your clients.

Simply register, view and share your insights and points of view.

If you enjoy reading the Daily Fintech insights by our experts è Subscribe to this newsletter.

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Stock exchanges are aggregators of market data feeds, not playing to the Fintech rhythm

A check on stock exchanges before Halloween makes sense. We covered stock exchanges in a two part series in May, with a focus more on Fintech innovation and naturally, we found Blockchain parties and concerts all over the planet. These activities continue to spread but today I want to highlight the major source of the extended revenue growth over the past 5yrs of Stock exchanges. Lets not fool ourselves by believing that the revenue growth is due to some innovation. It is heavily due to a government created oligopoly that exploits customer transactions data!

When and why did exchanges transform into profit centers?

Exchanges before the turn of the century were serving a global service and were operating very much like utility companies or social servicers. They were scaled versions of Jonathan’s Coffee house in London (original site of LSE) and the Button wood tree in New York (agreement that started the NYSE).

It all changed in the very first few years of the 21st century, not because they were waiting to make sure that computers could overcome the Y2K problem. It was mainly due to the wide adaptation of electronic trading for stocks at least, which led to setting up clearing and settlement businesses like DTCC. These for profit businesses post trade companies led the way to raising capital by accessing the public markets. In the US, it was NYSE In 2005; and in Europe, Deutsche Börse and LSE, in 2001.

The next pivot in their business model of these publicly traded ex-social servicers happened 100% because of regulation. SIP (Securities Information Processor) resulted in an unintended consequence that many believe as a government-led oligopoly of stock exchanges. SIP was conceived to protect end-investors from being taken advantage from those operating the electronic trading circuits. It created a filter, operated by the exchanges, in order to ensure that the best quotes get fed to the broker dealers. Simply said, exchanges which act as aggregators were also crowned with another role, the filtering SIP role.

In addition, the subprime crisis resulted in reduced trading activity and shrunk the market-maker activities. The revenues from trading volume shrank and the business shifted its focus to increasing charges on Market Data feeds. This was and is a captive market – Real-time access to Market Data feeds – is absolutely necessary for brokers, and market makers etc.

Stock exchanges are the aggregators and are continuing to charge an arm and a leg for real-time access to these feeds. In fact, they are the only aggregators that have increasing these charges.

Tabb group reports that the revenues from US stock exchanges have climbed 16% over the past 5yrs, largely due to data revenue. Of course, the acquisition spree that has been happening is very much contributing to these figures too.

 

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From “Costly data battle heats up between traders and equity exchanges

 Lawsuits on Market data feeds are dragging

 There have been multiple lawsuits around this issue. However, the rulings take very long and in the meantime, the exchange sector continues to consolidate, leading to further strengthen of the oligopoly and resulting in fewer and fewer players. The most recent announcement of the BATS exchange acquisition from CBOE takes an innovator out of independent action. ICE is a huge conglomerate with a global web that makes the space very tough to disrupt.

The most significant lawsuit saga continues for more than 10yrs. SIFMA (Securities Industry and Financial Markets Association) and a coalition of Internet companies filed a lawsuit against the exchanges in 2006. In 2013, the U.S. Court of Appeals for the District of Columbia instructed the SEC to reexamine its approval of data fee increases and require the exchanges to justify the price hikes. Since then, the case was  awaiting review by the SEC’s own administrative court. This summer, the SEC judge threw out the case and SIFMA has stated that they will appeal the ruling.

The double disruption from IEX: speed bumps and free real-time data

IEX, the sole disruptive force left in the stock exchange space, got approval to operate just 3months ago.

Remember this is the only such business that isn’t heavily influenced and tied to the Sell-side; contrary to all others who came out of a Sell-side membership type of organization before becoming public. IEX is a membership held organization but from the Buy-side! It’s first positioning was-is to use a speed-bump in the way it operates the electronic circuits of the IEX exchange. The purpose is to protect the market from HFT rigging and serve the interests of the Buy side.

The second move, which is upcoming will be-is to offer free access to real-time data to its customers (Kurt Dew, an industry veteran has been covering these issues in Seeking Alpha as they unfold). This is a direct and major disruption to the other players that count on such data feeds constituting a major source of their revenues.

How soon will the data source of revenue disappear for exchanges? Will technology solutions and private markets become the areas of revenues for the exchanges?

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.

 

Wrap of Week #42: China Marketplace Lending, Fintech book, Health Insurance, the Australian payments platform

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On the aftermath of Lendit Europe, we looked at the Chinese Marketplace Lending scene with the following inquires in mind:

Part I: The Big and Scary prize

Will China MPL follow the Uber Didi trajectory?

How will global lenders get in on the action?

How is the progress from Wild West to Settler phase?

In Part 2: Which Chinese players will emerge from Consolidation

What role will BAT (Baidu Alibaba TenCent) play?

We reviewed the new  book Fintech Innovation: from Robo-Advisors to Goal Based Investing and Gamification in our analysis “Fashionista Sironi speaks about Fintech Innovation in Investing”.

In the insurance space, Health Insurance InsurTech innovation may start with dentists and a P2P network of providers as we looked at the old-fashioned organizations of Cooperatives that we call today P2P networks.

From the Southern hemisphere, we looked at the New Payments Platform (NPP), the Australian equivalent of the UK’s Faster Payments Service.

The Fintech Genome

Check out the recent conversations on the P2P Fintech knowledge platform. Engaging can earn media for you personally, your company, or your clients.

Simply register, view and share your insights and points of view. Sample conversations:

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This week we celebrate the 2 year anniversary of Daily Fintech by launching a peer to peer knowledge network, the Fintech Genome (ala genetics).

 

Join, engage, interact by clicking here.

 

We extended an invitation to the growing Fintech community and explained the concept in “Help us decode the Fintech Genome”.

 

This was done without any interruption of the regular schedule of our insights. This week too, it was another trip globally.

 

A first look at the most hard hit public valuations in the Daily Fintech Index, after the Brexit.

 

A first look at the Fintech recruitment scene with the input from Nicole Curtin and Fintech Recruiters; and some disruptors.

 

Over to Australia, where there are three fintech IPOs in the pipeline and we look at the real time KYCexpert serving financial institutions, which is a re-branding of the Global Business Register.

 

A two day coverage of innovation in the Life Insurance space. First part more focused on categorizing innovation players within life insurance. Second part, more focused on the pain points of the industry and the opportunities.

 

 

We mentioned

Nicole Curtin, Fintech Recruiters, Angel list, efinancialcareers, The Banking practice, Ashmore Stark, New Finance

Global Business Register Limited (GBR), @KYCexpert, @ChimpChangeMe @CoAssets, @OnMktBookBuilds, @ASX, Kyckr, KYC.com, AvoxClarient and SmartStream

Hearsay Social, Smart Asset, Policy Genius, Slice Labs, InforcePro, Haven Life, VitalityNew York LifePacific LifeFarmers and AXA.

 

 

 

 

 

,

 

 

, a UK based a 2yr old practice which positions itself as a online talent platform for financial services.

New Finance, the financial network operating out of London via Meetup, is also stepping into the jobs space.

Ashmore Stark, i

 

 

 

 

 

Robo-advisors, Blockchain; Insurtech and Small Business; in-store mobile payments; Marketplace lending

 

The UK is in the spotlight for many reasons (some good, some bad). We gave it first position this week but we also traveled from Australia to the US.

 

21 #roboinvesting ventures in the UK & the Blackrock tale. Sizing the UK robo-advisory market, which seems on the way to triple its size.

 

An in depth look at the important B2B niche in Small Business Finance: How to tackle the Approved Payables Finance. Could this be an example of a permissioned network that makes sense, Blockchain

 

The 4 US based Small Business Friendly InsurTech Ventures that are filling in the gap that Zenefits left.

 

Growing conversion rates via a superior customer experience; focus is on in store mobile payments. A growth opportunity; a problem to be solved.

 

An insightful look at the value chain in marketplace lending. Where is the value in the ecosystem?

 

We mentioned:

ETFmatic, Nutmeg, FiverAdat, Money On toast, Money farm, EValue, Wealth Objects, Wealth Wizards, Wealth Horizon, Wealthify, Wealth Kernel, Net Wealth, Swanest, Scalable Capital, Alpima, Quantstore, Zen Assets

ApplePay, Clover, Paypal, OneTouch

CoverWallet, Embroker, Insureon, FounderShield, Zenefits

OnDeck, Kabbage, Flexport, Fluent, Credit IQ, Provenir, EOriginal, Meridian Link, Cunexus Solutions, Web Bank, Cross River Bank, CBW Bank, NSR Invest, Lending Robot, Orchard Platform, DV01, Monja, Orca Money, Kreditech, Prosper, Lending Club, Funding Circle

 

 

 

 

 

 

 

 

 

 

 

 

,

 

 

 

 

 

 

Kansas: A global alternative exchange that IPO’d; BATS exchange.

Austin TX: An alternative credit history builder running in a bank; SelfLender.

Global: Western Union an incumbent innovating in payments and more; Podcast.

Global: Distribution strategy alternatives for Online business lending;

Global: 21 Insurtech Ventures changing the Auto Industry (continuation of coverage)

Global: One way that marketplace lending could thrive; watch Warren Buffet’s lips.

 

 

https://dailyfintech.com/2016/05/31/credit-history-is-a-digital-asset-in-an-underserved-market/

@selflender

@nerdwallet

https://dailyfintech.com/2016/05/30/fintech-opens-ipo-window-with-bats-and-says-sorry-about-earlier-ipo-fluffs/

@Batsglobal

https://dailyfintech.com/2016/05/29/pirates-with-ties-interview-with-david-thompson-of-western-union/

WU Edge

@WesternUnion

@WesternUnionCIO

 

https://dailyfintech.com/2016/06/01/whats-the-trojan-horse-distribution-strategy-for-online-business-lending/

PayPal Working Capital, Square Capital and Shopify Capital.

@PayPal

@Square

@Shopify

@Fundera @OnDeck

 

https://dailyfintech.com/2016/06/02/21-insurtech-ventures-changing-auto-insurance/

https://dailyfintech.com/2016/05/05/insurtech-comparison-sites-transform-to-robo-brokers-as-insurance-value-chain-shifts/

 

AccuScore Telematics

DriveWay Telematics

Metromile Telematics

Octo Telematics Telematics

RootInsurance Telematics

TheFloow Telematics

TrueMotion Telematics

Wunelli Telematics

OkChexian Telematics

Acculitx Telematics

DriveSpotter Telematics

Telematic Telematics

Citymile Telematics

Goji Robo Broker

Cuvva Just In Time

CoverHound Comparison

Insurify Comparison

RenewBuy Comparison

TheZebra Comparison

ClaimDi Claims Process

SnapSheet Claims Process

 

https://dailyfintech.com/2016/06/03/marketplace-lending-depends-on-savers-moving-on-from-bank-deposits/

 

 

The IPO window is open but only the best can get through. The headwinds are still there for Fintech but skilled sailors are needed to ride the wind through turbulent weather. One of the first ventures to go through is the BATS (Better Alternative Trading System). We covered BATS in an earlier research note on Fintech in action on Western Stock Exchanges. The key point is that BATS is number 1 in ETFs. This is important because ETFs are powering Robo Advisers.

 

One of the largest underserved segments in the US, are individuals that don’t own this Digital Asset – Credit history. SelfLender is the first all-online credit builder loan; ideal for students, young adults especially those in no-mans land 18-21yrs old, foreign students, immigrants, H1-B visa holders, and others with zero credit history who need to establish credit.

 

What options do small business lenders have to maintain healthy margins, as the popular channels are failing?

 

 

 

 

 

Wrap of Week #41: Barclays Techstars, Technopark meetup, Lendit Europe, Metromile, SmallBiz Fintech

 

cropped-dailyfintech_logo_blue_2016-04-14-03.pngInsights and takeaways from three venues: an accelerator, a meetup, a conference! The first was a check on the startups that made it 2yrs ago; the second a unique Reverse Pitch meetup and the third the European Lendit Conference.

First the reflection on the 11 startups that graduated from Barclays Techstars accelerator 2 years ago. We are old in Fintech land and we aren’t shy to show it. Enjoy our self-check: Whatever happened to…11 startups graduating from Barclays Techstars 2 years ago.

Second our insights from a Technopark Zurich meetup that combined Investors pitching first and then the Fintechs. Transparency missing from the suppliers of Capital to Fintechs. Check out also the new topic “Which crowdfunding platforms have a model that empowers the entrepreneur?

And last but not least, our takeaways from Lendit Europe in London. Check out on the Fintech Genome in the Lending category where the conversations continue.

In Insurtech, the latest hot new space, we covered Metromile and the promise of personalized Auto Insurance.

As banks continue to allocate to safe sectors, we all need to realize that Fintech is fueling economic growth especially in the small business. Don’t miss reading Why fintech companies should measure performance differently to banks.

The Fintech Genome platform

In the more recent Category for “Lending”; there is lots to discuss especially following the Lendit conference.

You can simply use the Search area (top right) to find topics that interest you.

If you enjoy reading the Daily Fintech insights by our experts Subscribe to this newsletter.

If you want to engage and converse with the Fintech community Register on Fintech Genome. 

Transparency missing from the suppliers of Capital to Fintechs

reversepitch

 The #ReversePitch event organized by SwissFintech at Technopark, was a wonderful fusion across the ecosystem and it captured much of the emerging interactivity.

For those that didn’t hear about it, it was a mix of the typical pitching from Fintechs (5 homegrown Swiss companies – Biowatch, NetGuardians, Fractal-Labs, CarbonDelta, VirtualBroker) and an unusual pitching from those investing, the suppliers of Capital, funding innovation. In addition, it was the Investor side that pitched first; and everybody watched their public speaking anxiety.

A room in Technopark with a fusion of buyers and sellers of innovation, in a market that is active, growing, and changing.

Thank you SwissFintech for highlighting the changing nature of capital raising in Fintech. Offline and online match-making is everywhere, with Corporate VCs and Financial VCs (broad ones or Fintech specific), and then the Accelerators, and the Angel networks (traditional ones and digitized, syndicate-led). These are all contributing to the growth of capital into Fintech innovation; while also disrupting the business models that have been traditionally employed (especially by VCs).

I walked away thinking that no doubt innovation continues, with more attempts to solve Fin problems, more entrepreneurs taking the dive, more potential for better Fin services for customers.

But watching the two sides that are both eagerly looking for the perfect match, it confirmed the conventional wisdom that this remains a Buyer’s market. Those that have the Capital, are the ones setting the rules in the flirting game. This segment of capital markets, isn’t nowhere close to a natural process, like bees finding pollen in flowers (a frictionless market that Richard Olsen referred to during his keynote).

#ReversePitch commences

Nicolas Brand from Lakestar, won the majority of votes from the audience for the best Investor pitch. His message was around the way “sellers” (the Fintechs) should approach the suppliers of capital. He suggested avoiding monologues and recommended coming to have a conversation. He repeatedly alluded to a metaphor of bringing to the innovation proposition the same attitude as “when being in love”.

Radboud Vlaar from Orange Growth Capital, emphasized their selection process which weighs heavily towards ventures that aren’t about incremental change but that have large scale effect.

In contrast to the Fintech pitching, which was 100% Swiss; the capital suppliers, the reverse-pitchers, were global. Based in Switzerland, France, Holland, or the US but with a global presence in most cases.

AXA Ventures is a Financial VC focused on Insurtech, functioning separately from the insurance company. No more than 10% of deal flow comes from AXA.  Florian Graillot, a Twitter influencer, claimed that Insurtech can soon become a standalone vertical; he even went as far as, maybe Fintech becoming a sub-vertical of Insurtech.

The two Swiss reverse-pitchers, Swisscom and SICTIC, are the newcomers to the Fintech space. Both with experience in broader tech innovation and with a recent dedicated focus in Fintech. Andreas Page heading the Digital business unit at Swisscom, explained the co-creation approach for Fintech between Fintech enterpreneurs and Swisscom Fin customers. Swisscom has invested a lot in the Fintech sector. To hear more about their multifaceted involvement, listen to the Daily Fintech Pirates with Ties interview with Andreas Page.

Ralph Mogicato from SICTIC, described their angel network offering and experience in the other sectors, along with their decision to dedicate a special focus to Fintech. Their first dedicated Fintech event is coming up soon on Nov. 14th, see details here.

My heart goes to the sellers of innovation – the Fintechs

Sellers (Fintechs) are trapped in a buyer’s market. Who will then push the buyers to show more metrics? Which are the metrics that suppliers of capital should be showing up on the screens in ReversePitch events?

VCs have to come up with ways to quantify their value-add through their strategic relationships. None of them do. They anecdotally refer to isolated unicorn type of cases. Graphic databases could be one technology, to help them showcase the impact of their relationship value-add.

Angel networks need to find ways to standardize their performance. They are currently operating much like asset managers that manage multiple discretionary accounts that are customized based on each investor’s profile. A performance benchmark is needed. The quantitative algorithms exist and a cost-effective technology solution.

Richard Olsen, founder of Lykke and keynote speaker, jump started the Meetup with his vision of a global marketplace that will be feasible and necessary, once all assets are digitized. In such a world, fundraising will be:

  • Global – you wont have to move to the Londons or Palo Altos of the world.
  • Each stockholder will be an ambassador of your innovation proposition – as the roles of Customer and Capital suppliers, are fused.
  • The process – fundraising and business progress – will be monitored real time. As if you are watching how the fuel (capital) is consumed by the vehicle (the business) towards the business goal (arriving to the destination).

The chasm between current practices in the “Capital seeks innovation to invest” match-making business and the global marketplace that Richard Olsen is pushing for is huge. In that world, there will be no gatekeepers and there will be no costs for transactions. The value-add (for which profits will be made) will be in the investment strategy.

Thanks again to the Swiss Finance + Technology Association, for organizing the gathering. There are many conversations that were started at this Meetup (more than a dozen around understanding Lykke only). We invite you to continue publicly these conversations on the Fintech Genome, so that the community can benefit.

We have opened a first topic around capital funding innovation “Which Fintechs have a model that assumes that the power really lies with the entrepreneur?”

http://genome.dailyfintech.com/t/which-crowdfunding-platforms-have-a-model-that-assumes-that-the-power-really-lies-with-the-entrepreneur/603

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.