Financial wellness in the workplace

Workplace wellness is a booming business, especially at the corporate end of town. In Australia, property groups like Dexus and CBRE are embracing wellness initiatives to differentiate themselves in the office leasing space. Not only are they incorporating wellness principles into their building standards (WELL by Delos being one example), a friend of mine in asset management now tells me property companies are developing wellness platforms and portals for tenants, allowing building users to tap into a network of on-site yoga instructors, nutrition experts and chiropractors, as they seek to help their tenants create healthier and more productive workforces.

Of course, many of us know that wellness in the workplace extends beyond the purely physical. Along with mental health, financial wellness is an area that is now increasingly gaining the attention of employers. According to a study published by AMP last year, 1 in 4 Australian workers experiences financial stress, with a lack of confidence in their ability to make ends meet. Business owners and managers are under no illusion that this type of stress has an impact on workplace productivity.

50 percent of stressed workers site bad debt as the trigger for their sleepless nights while 35 percent are worried about saving for their retirement. The study also found 30 percent of females are more likely to experience financial stress, compared to 19 percent of males. In the US the numbers are similar, with a Bank of America report finding 75 percent of employees suffer from some degree of financial pain.

Last year I wrote a post for Daily Fintech detailing a number of companies operating at the edges of the financial wellness spectrum. Companies profiled at the time – PayActiv, SalaryFinance, Ziero Financial, Zebit and Kashable – mainly focused on salary advances.

More true wellness players are now emerging, such as TRUSTIVO, an online hub that allows employees to access a national network of financial professionals, educational tools, as well as other financial wellness support resources. But strong examples of technology led innovation are thin on the ground. It is clear that this is a wide-open space for innovation, supported by a business community that is increasingly receptive to ways to enhance their workplace offering. Sounds like a no-brainer, doesn’t it?

Ask yourself this – when was the last time your employer offered you a product or service that could have a meaningful, positive impact on your finances? If you work for a large corporate, you’re probably more likely to have had some exposure to something over the past year. But if you work for a small business, a retirement fund option when you signed on is probably where your employer’s involvement in your financial wellness started and stopped.

With cloud services now embedded in many emerging small businesses, delivering wellness options and platforms for employees on top of this is now viable. The idea of employers being active participants in reducing employee financial stress is where PFM needs to head. At the end of the day, salary is the primary source of cash flow for the vast majority of workers. So managing this monthly flow of funds in a responsible way benefits both the employee and the employer. There is no question it is a fine line to tread – not everyone will see value in being told how to spend their money. But for those that are lost at sea, it could be exactly what they need to truly start getting ahead.

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.

Time for the SEC to adopt an Open Research approach

As Bernard Lunn reiterated in yesterday’s post Blockchain needs to become technically boring, much like TCP/IP in depth knowledge has become for internet users.

In wealth management, ETF structures have become technically boring long time ago.

Nobody cares and often most users don’t understand the magic redemption/creation process. Most users don’t even know the instrumental role of Authorized Participants (APs) in the smooth functioning of ETF markets. For those wanting to know more around this topic, we outlined the main risks in Are ETFs Trackers that Fintech can turn into Trucks with No Brakes?

Naturally, the media highlights malfunctions in the ETF market during flash crashes. As robo-advisors have accelerated the growth of low-cost passive investing, mainly through ETFs, we have been following such events which showcase incidents of illiquidity and mispricing. Check last summer’s mis-communication debacle in The Betterment/Brexit incident – What the Fintech Genome community spotted.

At the same time, we don’t get excited anymore by the fact that we can invest in the Japanese stock market (and many other country trackers) while they are even asleep and from almost any location.

ETFs are boring!

Except for the recent disapproval by the SEC of the Bitcoin ETF filed by the Winklevoss Bitcoin ETF, $COIN. We covered the “boring” part of it (i.e. the amendments) last week Wedding announcements pending between Old & New Finance Tribes: Bitcoin in an ETF gown!

We need to revisit the topic after the rejection this weekend, to cover two areas:

1.    What did we learn about Bitcoin trading, during this event

2.    What did we learn about the state of capital markets, following this event.

Mid March Bitcoin trading

Lots of worthwhile observations from the market reaction to this event.

Bitcoin is trading as we speak, with a twelve hundred handle (in USD) which is not that far from where it was hovering before the decision. That shows that the bitcoin market continues to shrug off events (from 2 recent PBOC decisions, to the ETF rejection). Market capitalization is also more or less in line, having recovered from dips, to the $20bil area.

This reflects, in my opinion, the steady growth in customer adoption which is outpacing merchant adoption for the first time. Although we don’t have aggregated comparison data to justify this, we can at least point to the most recent Coinbase results that are impressive in terms of the numbers of users and digital wallets; and to the “color” we crowdsource from our network.

Screen Shot 2017-03-13 at 09.46.42

Bitcoin, behaved very much like conventional assets traded in centralized exchanges, this weekend.

Bitcoin, the P2P digital asset which is settled in a decentralized way, experienced a flash crash following the announcement of the rejection. More importantly, the bid/ask spread widened substantially ($35-$60); the volume dropped and then surged ($17bil-$20bil); the price discrepancies between exchanges were large ($50-$100); and the intraday high-low was very wide ($50-$170).

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Source: CoinDesk BPI exchange

Disclosure: I had sold my Bitcoins before this weekend (with an 80% profit) and managed to re-open a small position at $1,100 (moved into cold storage, to be forgotten).

If you prefer a professional fund manager, making the decisions on your behalf, for your digital currency allocation, there are two alternatives that I can suggest for your review.

Hedgeable, the next gen robo, has incorporated Bitcoin in its asset allocation via a partnership with Coinbase (who provides the digital wallets and cold storage needed). Hedgeable views Bitcoin as an alternative asset, like a currency, in determining the optimal allocation for each client.

ArkInvest, the US based fintech creating thematic fully transparent ETFs, is the first fund manager to invest in bitcoin in its ETF, ARK Web x.0 ETF (NYSEARCA: ARKW). ARK has made its investment through the purchase of OTC publicly traded shares of Grayscale’s Bitcoin Investment Trust (OTCQX: GBTC).

Capital Markets processes are dysfunctional

In a nutshell, the SEC after 4yrs and 6 amendments, rejected the Bitcoin ETF on the basis that they can’t allow an unregulated asset (that is not physical), to be wrapped in an ETF wrapper. As if soybeans, and pork bellies that trade through futures are regulated and cant be “hacked” by weather conditions or viruses.

I cannot but reiterate Ian Goldin’s mantra

“Today is the slowest day of the rest of your (our life)”

Over the next year, there be more digital currencies issued than in the last 4yrs (even if there are no more than half a dozen that gain significant traction). Isn’t this actually how the ETF market has emerged, i.e. a few really large ETFs?

Screen Shot 2017-03-13 at 10.11.43.png

There will be more ICOs listed (albeit small size), than in the last 4yrs. There will probably be an OTC trust publically trading, linked to a basket of digital currencies (e.g. Bitcoin, Ether, Dash, Ripple, ect) out of Europe (not the US).

Looking at the SEC’s archaic process of inviting commentary from the people, a kind of hearing process, around the Bitcoin ETF; I italicized the SEC questions below:

  1. The proposed fund, if approved, would be the first exchange-traded product available on U.S. markets to hold a digital asset such as bitcoins, which have neither a physical form (unlike commodities) nor an issuer that is currently registered with any regulatory body (unlike securities, futures, or derivatives), and whose fundamental properties and ownership can, by coordination among a majority of its network processing power, be changed (unlike any of the above). Moreover, as the Exchange acknowledges in its proposal, less than three years ago, the bitcoin exchange then responsible for nearly three-quarters of worldwide bitcoin trading lost a substantial amount of its bitcoin holdings through computer hacking or fraud and failed.57 What are commenters’ views about the current stability, resilience, fairness, and efficiency of the markets on which bitcoina are traded? What are commenters’ views on whether an asset with the novel and unique properties of a bitcoin is an appropriate underlying asset for a product that will be traded on a national securities exchange? What are commenters’ views on the risk of loss via 56 57 See supra note 3. See Notice, supra note 3, at 25 n.19. 12 computer hacking posed by such an asset? What are commenters’ views on whether an ETP based on such an asset would be susceptible to manipulation?
  2. According to the Exchange, the Gemini Exchange Spot Price is representative of the accurate price of a bitcoin because of the positive price-discovery attributes of the Gemini Exchange marketplace. What are commenters’ views on the manner in which the Trust proposes to value its holdings?
  3. According to the Exchange, the Gemini Exchange is a Digital Asset exchange owned and operated by the Custodian and is an affiliate of the Sponsor. What are commenters’ views regarding whether any potential conflict of interest or other issue might arise due to the relationship between entities such as the Sponsor, the Custodian, and the Gemini Exchange?
  4. According to several commenters, there is a need for the Exchange to provide additional information regarding “proof of control” auditing, multisig protocols, and insurance with respect to the bitcoins held in custody on behalf of the Trust, in the interest of adequate security and investor confidence in bitcoin control. What are commenters’ views on these recommendations regarding additional security, control, and insurance measures?
  5. A commenter notes that the Gemini Exchange has relatively low liquidity and trading volume in bitcoins and that there is a significant risk that the nominal ETP share price “will be manipulated, by relatively small trades that manipulate the bitcoin price at that exchange.”58 What are commenters’ views on the concerns expressed by this commenter? What are commenters’ views regarding the susceptibility of the price of the Shares to manipulation, considering that the NAV would be based on the spot price of a single bitcoin exchange? What 58 See Stolfi Letter, supra note 4. 13 are commenters’ views generally with respect to the liquidity and transparency of the bitcoin market, and thus the suitability of bitcoins as an underlying asset for an ETP?
  6. The Exchange asserts that the widespread availability of information regarding Bitcoin, the Trust, and the Shares, combined with the ability of Authorized Participants to create and redeem Baskets each Business Day, thereby utilizing the arbitrage mechanism, will be sufficient for market participants to value and trade the Shares in a manner that will not lead to significant deviations between intraday Best Bid/Best Ask and the Intraday Indicative Value or between the Best Bid/Best Ask and the NAV. In addition, the Exchange asserts that the numerous options for buying and selling bitcoins will both provide Authorized Participants with many options for hedging their positions and provide market participants generally with potential arbitrage opportunities, further strengthening the arbitrage mechanism as it relates to the Shares. What are commenters’ views regarding these statements? Do commenters’ agree or disagree with the assertion that Authorized Participants and other market makers will be able to make efficient and liquid markets in the Shares at prices generally in line with the NAV? What are commenters’ views on whether the relationship between the Gemini Exchange and the Trust’s Sponsor and Custodian might affect the arbitrage mechanism?Use the Commission’s Internet comment form (; or · Send an e-mail Please include File Number SR-BatsBZX- 2016-30 on the subject line. 14 Paper comments: · Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090.

Who actually sent commentary to the very important and well posed issues raised by the SEC? The SEC publicizes this data with names and responses (click here). The list shows very few business affiliations and is really short given the issue at stake. It does include the Bitcoin critic, Jorge Stolfi, Full Professor/Professor Titular, Instituto de Computação/Institute of Computing, UNICAMP, university professor; the Bitcoin proponent –fund manager Chris Burniske, Blockchain Products Lead, ARK Investment Management LLC; Kyle Murray, Assistant General Counsel, Bats Global Markets (the exchange to be listed); and a few more.

Crowdsourcing information, filtering the relevant data, ranking and weighing it by “reputation”, is what should be done by the SEC.

Such Capital markets processes cannot be left anymore to forums that include ranking algorithms of their communities members, to select the “best conversations” (for example, thread on Reddit). Fintech innovation is still very scattered. Sentiment analysis fintechs (e.g. Sentifi), crowdsourced scientific research (e.g. Stanford Daemo), and applying machine learning; are floating out there and need to be incorporated in the decision making processes in capital markets.

This is the kind of micro-services that the SEC can implement in their digitization process. ArkInvest is already using an innovative process in their own research Open Research Ecosystem. The Innovation Ecosystem brings cross-industry innovation leaders together to design and invent their innovation journeys.

Screen Shot 2017-03-13 at 10.38.58.png

Source: ArkInvest

The SEC needs to replace its old-fashioned invitation for comments process, to one that uses technology to make the research process meaningful (not simply procedural, a tick in the to-do-list), efficient, and value added.


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.


Blockchain needs to become technically boring



Clay Shirky, in Here Comes Everybody, writes:

“Communications tools don’t get socially interesting until they get technologically boring.”

Two examples of boring technologies having a big impact on Fintech are QR Codes and Prepaid Cards.

Blockchain is definitely not boring. It will probably have a bigger impact than QR Codes and Prepaid Cards, but it may still fade into the sunset of overhyped technologies. It is exciting because that is a huge delta – change the world or dustbin of history.

I incline to the former – that Blockchain will change the world.

However, that promise won’t be fulfilled until Blockchain becomes technologically boring. This post looks at why that is true and at efforts to make it technologically boring.

War is exciting too, but not productive

The internecine wars among Blockchain technologists are really exciting for those on the front lines. For the rest of us, who cannot say anything technically profound about SegWit and Lightning Network and Proof Of Stake, it is alienating. Could we just get a product we can use?

The answer is no, not really, not yet. In this post we looked at the scaling challenges. TL:DR: there is still technical risk here. Or to put this another way, build a proof of concept, attend hacktahons and conferences, issue Press Releases, but don’t bet your company’s future on this – just yet.

The technical debates are pretty ugly. It is like watching Blue and Red states in America. There is no middle ground and a lot of dialogue of the deaf – if I shout louder maybe you will hear me and agree with me. The Bitcoin scaling debate has rightly been compared to a Civil War within the Bitcoin community.

The reason that there is so much heated debate is that this is no longer just a cool computer science open source project. Real money is at stake. That makes people cautious. Yet it is broken today – as it stands, Bitcoin cannot scale.  So there is technical debt and legacy code and innovators dilemma. Welcome to the real world.

Boring is good for employer, not employee

Java, the Cobol of the modern era is a good example. It is boring and for an employer that is a good thing. Java coders are abundant and inexpensive. As an employee, the words abundant and inexpensive signal bad news. It is much more profitable to be an expert in an obscure but hot language. Even better to be an expert in Blockchain. So few people really understand it technically and yet because the upside & downside for huge enterprises is massive and existential they have been spending multi-million $$$$ on Proof Of Concept projects.

The Multi-Million $ Proof Of Concept

Blockchain will make tea for you in the morning. Blockchain will also make you a better lover. Back in the real world, most of the systems that Blockchain is being proposed for could use standard database technology (aka boring technology).

The reality is that in 2016, just the word “Blockchain” unlocked enterprise budgets.

It is a good time to be a Blockchain guru. For companies looking to avoid the Blockbuster fate a pitch that “this could be how we become the next Netflix” is beguiling enough to unlock multi-million $$$$ budgets for Proof Of Concept projects. These projects cannot grow beyond POC, because there is still technical risk around scaling, but the prize is big enough so the budgets get unlocked. The POC is simply an option on the future.

You can take two views on this:

A. It is all nuts, all the money going into POCs is wasted because Bitcoin/Blockchain will never scale.

B. The scale of the opportunity/risk is so great that some wastage is normal and the cost of doing nothing is worse.

I incline to B but also think it could be done more efficiently.

Three Months and Six Figure POCs

Three months and budget in 6 figures is the normal rule for a POC if you cannot use the magic B word to unlock multi-million $$$$ budgets for projects lasting 12 months or more. Coding a prototype to show stakeholders is easy – it can be done in days or weeks. Before that some work to determine business strategy and the level of technical risk is needed. The key job is EAU (Education Awareness Understanding) for senior stakeholders. The ones making the big decisions need to understand Blockchain beyond the simplistic “it’s a distributed ledger” mantra. There is too much at stake to simply leave these decisions to technical people without any understanding of how it really works.

Two things to make Blockchain technologically boring

One should be able to:

A. Create smart contracts aka Blockchain apps as easily as building a mobile app with lots of free components and standard tools that millions know how to use.

B. Deploy to any Blockchain with any cyber currency with any validation scheme (Proof Of Work, Proof Of Stake etc) as easily as deploying to AWS or Azure or any other cloud service.

I can see enough progress both within Bitcoin (Segwit, Sidechains and Lightning Network) and Ethereum to feel confident that this will happen and while I cannot see exactly when this will happen, I do believe it will mostly happen in 2017. If not, then Bitcoin and Blockchain will disappear into the dustbin of history. Yes, there is a lot at stake in those technical debates!

It’s OK, we are Blockchain not Bitcoin

Then there is the enterprise wing of the Bitcoin party. Their line is:

“We don’t need Bitcoin.  That can be a failed experiment and it won’t matter to us because we just need to scale to enterprise level and that is easy”.

Yes, it is easy to scale a Blockchain system to enterprise level, but why bother? This handy decision chart helps you figure out whether you need a Blockchain.

Blockchain Decision

In the vast majority of cases, the answer is no. In those cases, enterprise tech companies like Oracle will happily sell you the technology that gives you what you need without any Blockchain. For a skeptical take on Blockchain by Oracle, read this. Moving from POC to enterprise deployment puts $ billions at risk. That won’t happen while there is technical risk.

That is why the “we don’t need Bitcoin because we are enterprise” line is baloney. If Bitcoin fails, it will drag Blockchain along with it. Technically we can insert a “better cyber currency” but if Bitcoin fails, the sentiment crash will kill Blockchain projects and Altcoins as well. The naysayers on the project approval committee will have a field day.

Google Deep Mind AI and Immutable trust without Blockchain

Boy is that a tough headline guaranteed to lose clicks! The headline where I saw this was in the Guardian and it did draw me in with “Bitcoin-like” in the headline. The use case is healthcare, but it applies also to banking as we will see later.

“Google’s DeepMind plans bitcoin-style health record tracking for hospitals”

Hat tip to famed Femtech leader Efi Pylarinou for sharing this in her Twitter feed.

However when you dig below the surface of the headline, as is our habit at Daily Fintech, you get a more nerdy conclusion that reflects back to our core thesis that enterprise Blockchain is a passing phase that will lead to maybe 1% of the current enterprise Blockchain POCs turning into large-scale deployments.

This was great tech reporting by the Guardian. They related some deep tech to a concern shared by millions – privacy of medical records.

“Google’s AI-powered health tech subsidiary, DeepMind Health, is planning to use a new technology loosely based on bitcoin to let hospitals, the NHS and eventually even patients track what happens to personal data in real-time.

Dubbed “Verifiable Data Audit”, the plan is to create a special digital ledger that automatically records every interaction with patient data in a cryptographically verifiable manner. This means any changes to, or access of, the data would be visible.

DeepMind has been working in partnership with London’s Royal Free Hospital to develop kidney monitoring software called Streams and has faced criticism from patient groups for what they claim are overly broad data sharing agreements. Critics fear that the data sharing has the potential to give DeepMind, and thus Google, too much power over the NHS.”

To understand the tech, dive into the blog post by the Google Deep Mind team to understand how verifiable data audit sounds like Blockchain but does not use a decentralized trust-less consensus mechanism to verify transactions.

What you will see sounds like Blockchain:

– immutable, append only: check

– Verifiable aka transparent in real time: check

– Merkle like tree structure: check

But it does not use a decentralized trust-less consensus mechanism to verify transactions. This makes it more efficient. There are no proof of work miners. Nor are there any as yet unproven consensus mechanisms such as Proof Of Stake.

The cost is some level of trust in institutions.

That pitch will resonate with the CXO suite at these institutions.

This is why I was writing as far back as November 2015 that the permission enterprise blockchain was a mirage beguiling both banks and IT vendors. This is like the Intranet phase of the Content Internet.

Commercial break: get these kind of insights ahead of the pack by subscribing to Daily Fintech – its free.

The big debate about PSD2, which we cover a lot on Daily Fintech, is who owns your banking data – you or the bank. Translate that to healthcare – where consumers care more about personal data and you have what Google is offering. Google is smart to launch first in Europe where consumers (and regulators) are more concerned with data privacy.

It’s binary. Bitcoin (and Blockchain) will either change the world or fade into the dustbin of history. When it does change the world (I think it will), then being a Blockchain guru will be about as exciting as being an HTML or TCP/IP guru today.

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Wrap of Week #10: Women in Finance, Bitcoin ETF, SmallBiz fintech, Insurtech, Metro Bank



We started the week naturally with The woman in the global Fintech arena which highlighted what is importnant in the financial services businesses as they transform.

We zoomed into the ETF bitcoin approval-disapproval Wedding announcements pending between Old & New Finance Tribes: Bitcoin in an ETF gown!, as the decision was looming (now disapproved).

In our small business post on Wednesday, we shared our insights on Symbiotic channel strategies key to making B2B fintech scale.

In Insurtech we used the funding lenses in our review of The Top InsurTech Ventures by Capital Raised (don’t miss the comments).

In our consumer banking coverage, we looked closer at Metro Bank, publicly traded Challenger bank with a unique business model. Can you ride the Metro to the Challenger Bank future?

We made an announcement as we are extending an invitation for an author on the Daily Fintech platform focused on Insurtech or consumer banking. If you are interested in joining us, read here.

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Can you ride the Metro to the Challenger Bank future?


Metro Bank does not fit any obvious category. It is not a stodgy old bank. Nor is it a mobile only disrupter created by and for Millennials. It is based in the UK but founded and led by an American.

We aim for actionable insights on Daily Fintech. If you believe that challenger banks can beat the incumbents and you don’t want to start a challenger bank (it is very hard work) or invest in a startup challenger bank (you may be a bit late to that party), you might take a look at Metro Bank. It is a publicly traded business, so you can get detailed financials and buy and sell without anybody’s permission.

The public stock market is the original permissionless innovation and tool for the democratization of capital markets. The public stock market may have lost its way recently with all the focus on High Frequency Trading (HFT), but the fundamentals are still sound. Choosing a stock to buy or short only needs smarts. You don’t need permission from anybody.

That is why Daily Fintech likes looking at public companies and the Daily Fintech Index.

The question is, if you believe that challenger banks will own the future, can you ride the Metro Bank to that future? In simple terms, should you buy Metro Bank stock? Or do you think that a challenger bank with physical branches does not make sense in the digital age and that means that Metro Bank is over-valued and that you should short it.

That is the question we shine a light on in this post. Our focus is the strategic tailwinds and headwinds more than current financials. I Am Not A Financial Adviser (IANAFA). Do your own research. If it does not work out, don’t blame me. If my research helps your research I am happy. I have not yet bought Metro Bank stock but I might.

Metro Bank Background

Metro Bank was founded in 2010. This was the Cambrian Explosion era of Fintech when other great ventures such as Lending Club were born. Metro Bank was celebrated as Britain’s first new high street bank in over 150 years.

The founder is an American entrepreneur called Vernon Hill, who had earlier created Commerce Bancorp in America (which was acquired by TD Bank in 2007). This gained the nickname of “McBank”, because Hill used his knowledge of the fast-food chain business to the bank.

Metro Bank looks like Vernon Hill’s second act.

Metro Bank is a contrarian play in the digital age. They invest in physical branches – or “stores”. These branches are open seven days a week, and have longer working hours and work hard for better customer service (often through simple human touches such as being dog friendly). Speed is a key selling point. Customers applying for a current account in store can start using it the same day and get their bank card and cheque-book printed while they wait.

They are better branches, but they are still physical branches.

In the digital age is it too late for a strategy that emphasises physical branches?

The tipping point for UK Challenger Banks

A few weeks ago we did a landscape review of UK Challenger Banks, where we posed the question Can Challenger Banks break the massive bank concentration in the UK?

In short, I believe the answer is yes. This is about the tipping point when it becomes normal to switch from the Big 4. After that tipping point, word of mouth marketing will take over and the Customer Acquisition Cost will come tumbling down.

Tipping point is the Malcom Gladwell term and there is empirical observation behind it. Before the tipping point, the idea of change seems ridiculous. After the tipping point, everybody agrees that change was inevitable.

In that landscape report we said that “Metro Bank is the one to watch”. In this post we dig deeper into that thesis.

Before digging deeper into Metro Bank, we need to look at a different tipping point.

When do people stop using branches?

Back in October 2015 we wrote that Branch closures will soon pass the Wile E Coyote moment. This is a different tipping point, when people see so many branches closing (or semi-closing by reducing branch staff to such a minimum that their only job is to teach customers how to use the automated tools) that the customer’s takeaway is “it is pointless to go into a branch”.

At the time I was focused on incumbents. It did not occur to me that a new bank would actually aggressively open new branches. I had seen Metro Bank branches, but assumed this experiment would soon end. As we enter 2017, it is clear that the experiment is still going strong. That is why we are re-evaluating and digging deeper into Metro Bank. It is about behavioural economics. If all you see is branches closing, your behaviour changes one way. If you see new branches opening, your behaviour changes the other way.

Does their technology stack make them agile?

Metro Bank’s co-founder Anthony Thomson left in 2012 to set up rival Atom Bank.

There can be two stories behind this:

  • Either – Metro Bank’s technology is a boat anchor constraining innovation
  • Or – Metro Bank is a talent incubator and great companies are defined by their alumni

Challenger Banks either buy/license from established vendors or build their own from scratch. Metro Bank opted for the former strategy and has licensed technology from the following vendors:

  • Temenos’ T24 core banking
  • Backbase Omnichannel Banking Platform for front-end.
  • FIS/SunGard’s Ambit for Asset Liability Management
  • BancTec for mortgage processing
  • Glory Global Solutions’ Vertera 6G teller cash recyclers (TCRs)

The question is, in the mobile age, how good is their mobile app? How do they compare to the big incumbents and the pure digital upstarts? For this we turn to the Great British Mobile Banking Review 2016 which as of April 2016 did not even give Metro Bank a mention.

You can see their app here.

The tech stack matters. User Experience is more than putting fresh paint on an old car. There is no reason why Metro Bank cannot compete with their mobile app, as they have a reasonably modern tech stack. However, they are clearly late to this party. Metro Bank is due to launch a new mobile app soon. It does not have to blow away the competition, because the physical branch is the differentiator, but it does have to be good enough. It also has to show 1+1= more than 2. It has to show how the combo of branches + mobile is a winner. We await that eagerly.

Apple store comparison

Another contrarian play was Steve Jobs opening Apple stores when most consumer electronics stores were hurting. Good visual design and customer service does wonders. But the comparison soon breaks down. Consumer electronics are physical. You want to touch them, look at them before buying. That is not true for financial services. Both are complex but you can learn about financial services online, by phone or by somebody visiting your office (what Civilised Bank do).

We have to look elsewhere for a potentially winning reason for opening physical branches in the digital age.

The first bank built for Market Place Lending?

Banks bundle two functions – they borrow from you (and call it a Deposit Account) and lend to you (and call it a Loan Account). The latter is hard to do well. That is where Market Place Lending is the first fundamental innovation in banking for hundreds of years (by creating the Lending Account). If you get lots of Deposits, you don’t need to lend the hard way, you can outsource that to Market Place Lending platforms. Metro Bank is going down this route as evidenced by their deal with Zopa.

Metro Bank is happy to lend direct if the collateral is a house aka mortgage lending and are aggressive on the rate they offer for residential mortgages.

If Metro Bank can get a low cost of capital via Deposit growth by using physical branches they will be onto a winner. As an investor that is the one metric worth tracking.

UK Economy Post Brexit?

Two features offered by Metro Bank indicate an entrepreneur who understands that the UK works in a global economy:

  • You can withdraw cash or pay by card anywhere in Europe without being charged a fee.
  • Metro Bank is the only bank that uses MasterCard’s market conversion rate. This is the rate that banks themselves trade at, so there is no need to use a broker.

The FTSE 100 goal

Vernon Hill does not lack for ambition. He has declared a target of getting into the FTSE 100 as per this report.  This is not just about bragging rights. FTSE 100 status brings in new investors. He states the bull case clearly:

“We are very close to one million accounts in a country where people say no one switches bank accounts. If we only get 5 per cent of the British deposits market, that is £100 billion. If you value the bank at about 20 per cent of that, you are looking at a £20 billion company.”

You have to take a man seriously who built Commerce Bancorp from scratch and sold it for $8.5 billion – netting him $400 million.

Neither Growth nor Value play

Many investors position as either a Growth investor or a Value investor. Metro Bank is neither fish nor fowl. That may make Metro Bank a good long term bet – they could be growth at a reasonable price. That may make it a good long term bet, but will constrain short term price momentum as it lacks an obvious story.

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The Top InsurTech Ventures by Capital Raised


InsurTech is in it’s Cambrian explosion phase with lots of funding action. So we thought it was time for a snapshot.

The amount of capital raised is only one predictor of success. The startup world is full of klunkers that raised a huge amount and bootstrappers who created $ billions in value. In this list alone, Zenefits is clearly having a lot of trouble having raised half a big one.

Nevertheless, the amount of capital raised is a reasonable proxy of value based on the wisdom of a savvy crowd (VCs).

Thanks to all who contributed to this research, here is an updated list:

Venture Region $ Segment 1
Zhong An Asia 900 Full Stack
Oscar America 727.5 Health
Zenefits America 583 Lead Engine
Metromile America 205 Auto
Accolade America 163.34 Health
Collective Health America 125 Health
Bright Health America 80 Health
Lemonade America 60 P2P
Trov America 46.27 Product Insurance
Cyence America 40
FinanceFox Europe 33.5 Misc
Justworks America 33 Lead Engine
Simplesurance Europe 33 Product Insurance
Huize Insurance Asia 31 Lead Engine
namely America 30 lead Engine
CXA Asia 25 Health
PolicyGenius america 21 consumer
Knip Europe 18.3 Robo Agent
Finanzchef24 europe 17 SME
Friendsurance Europe 15.3 P2P
Praedicat Europe 12 Catastrophe
QuanTemplate Europe 10.25 Tech
Bought By Many Europe 9.14 P2P


  • America still leads by number of ventures and total $ raised.
  • Asia leads by the most raised by a single venture.
  • Health Insurance is the big driver in America

If I have missed any that should be on that list ie have raised more than the $9.14m, please tell us in comments and we will correct.

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Symbiotic channel strategies key to making B2B fintech scale

Small business owners tend to be incredibly difficult to get hold of, and, even when you do manage to pin them down, they probably have a grand total of 5 minutes available in their busy day to devote to hearing your meticulously rehearsed product pitch.

That’s why, as those of you who’ve done it will know, selling to small business can be a real slog. You need serious patience, plus a willingness to really get to know their business and the problems they face. After all, that’s what they’re doing for their customers. They expect the same in return. You have to care.

So given this state of affairs, rather than go direct, some of the most effective B2B sales strategies leverage channel models instead. The idea is that if you can get in the ear of a small business advisor or existing technology vendor who is already ‘wining and dining’ your prospective customer, then the ripple effect through to their customers will be a highly cost effective route to market.

It’s a sound model – but also a well-worn one. It also doesn’t help that more and more B2B fintech and banking startups are vying for the same advisors ears. At some point, something will probably have to give.

Pushing business banking products to small business through third parties is notoriously difficult. Primarily because banking products are complex and, given they physically ‘touch’ the finances of a business owner, tend to invoke a far higher degree of caution than a loyalty or rostering app recommendation would. This is mostly because the latter can be easily deleted should it turn out to be less than satisfactory. But changing banks or finance providers? Everyone knows that’s painful. So as an advisor, you need to have a particularly compelling reason to put someone through that sort of open heart surgery.

Business advisors are often also uncomfortable about receiving commissions for recommending banking products. One advisor has mentioned to me in passing that they would far rather use their relationship with a fintech provider to offer preferential pricing to their customers, rather than pocket commissions. Unlike traditional technology vendor channel partners, not all advisors see a commission stream as a ‘valuable enough’ source of revenue compared to preserving the aura of independence a commissions free stance provides in support of their broader client advisory work.

So if channel models aren’t the most elegant distribution channel for small business banking products, what is?

Well, it’s probably less a case of chucking the baby out with the bathwater and more a case of rethinking what banking channel models are. Channel models where no money changes hands, but where a business advisor’s life and a business owner’s life both get better as the product becomes more embedded is probably key.

Taking this from a philosophy to a reality is a huge challenge. As a result there is plenty of smoke and mirrors around the concept of ‘mutual gain’ in B2B partnership pitches today.

But if you can build a product with both sides of the channel equation in mind – customer and advisor – then you are likely to build a highly defensible channel strategy that can make itself heard above the noise of all the rats and mice B2B fintech players pitching into the advisory space.

We often talk about understanding the problems of small business owners. You actually need to go deeper than this – you need to understand the problems of the people that advise to them. There will be commonalities, and your goal should be to uncover these and build your product accordingly. While not really fintech directly, companies like Receipt Bank do this very well today.

In my opinion creating a truly symbiotic product that helps improve a relationship between an advisor and their client is better than tapping an advisor on a per transaction basis. It’s also something a traditional bank would never do.

In all fairness I don’t really know of any B2B fintech startup that has mastered this at scale. Some are certainly trying in the cash flow advisory, bench marking and forecasting space, and could very well crack it. But if you do, I’d love to know about them to further my research!

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.