Wrap of Week #40: Drivezy, SEC, Wealthfront and Fundrise, BeeSolar, ICT2017, Data privacy

  • The BBC Monday briefing offered insights the SEC stance towards Crypto-ETFs, Drivezy adopting Bitcoin before Uber. Bitcoin exchange guidance towards Segwit2X, and rising fees for processing Bitcoin transactions.
  • For me, this argument is more about public versus private real estate rather than passive versus active: Read more in: What a wonderful customer-centric investment world! The Wealthfront – Fundrise dispute.
  • InsureTech Connect 2017 (ITC2017) was held in Las Vegas, USA, in early October, with more than 3,500 attendees, including insurers and reinsurers, as well as entrepreneurs, investors, technology employees, and consultants.  48 countries around the world, gathered in Vegas. DailyFintech Review of ITC2017

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Battle for customer data heats up – Banks and Tech Giants lobby against each other

Data is the new Oil. The European regulators brought PSD2 into force with a mandate for all banks to get compliant with the regulation by next year. I also discussed in one of my previous articles that GDPR could be an excuse that banks would use to not stick to the spirit of PSD2 and open banking standards.

data-wars-new

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The UK has gone one step further to create the Open banking framework that helps create data sharing capabilities within banking and an engaged developer community. However, in the US, banks have been notoriously lobbying against data sharing since Consumer Financial Protection Bureau (CFPB) released a set of questions on this topic for the public to answer.

Based on the responses to this public survey, it is pretty clear that customers wanted to own their data, and also would like to decide who the banks can share their data with. And they want the data to be shared safely and securely. It is widely believed that most banks (not all of them) in the US, would create enough bureaucratic barriers for small innovative companies to get access to their customer data.

The other technique they might follow is opening up data access to Fintechs just a few times a day. This might hurt the business models of many Fintechs that depend on real time availability of customer’s banking data.

On the other coast of the country, tech giants (Amazon, Facebook, Google and Apple) are gearing up to fight the banks to get access to their customers’ data. In the recent past a group called Financial Innovation Now has been setup by the tech giants, with a view to lobby for customers’ data.

These tech firms realise the opportunity they have in consumer finance, especially lending and loan intermediation. With a wealth of data around customers’ spending pattern, and on ecommerce peaks and troughs, Amazon for instance, should be able to recommend a financial product to the customer, and make an easy introducer fees.

Amazon and Paypal lobbyists have met with the  Office of the Comptroller of the Currency (OCC) to discuss “issues related to mobile payments and payment processing, financial innovation, and technology”.


Large technology firms are really interested in the intermediation piece, where you have access to all that data.

– – Paul Nash, the former senior deputy comptroller 


If firms like Amazon could get their hands on customers’ financial data through an API, they could be a serious threat in the consumer finance space. They just need to follow the path that Alibaba and Tencent took in China.

With the initial years of Fintech we saw many banks embracing (or pretending to do so) innovative technologies. However, with open banking, we may see reverse osmosis where the tech giants move closer to banking.

So banks now not only have to worry about Fintechs squeezing their top line, and regulators hitting their bottom line, but also have to worry about Tech Giants eating up their market share pretty quickly. Long Live Data.


Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

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.


 

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。

#ITC2017 – The Daily Fintech Review

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The networkers networked.  The start-ups hustled.  The investors swarmed.  The consultants consulted.  The incumbents searched.  And the rest, listened and learned. #ITC2017 was a great event, that brought over 3,500 Insurers, Reinsurers, Start-Ups, Investors, tech firms, consultants and more, from 48 countries together, to discuss Insurtech – anything and everything that has to do with it.  

I had three goals from ITC:

  1. Prospect for my business
  2. Learn about new trends
  3. Find good sound bites/themes to write a good story about the event

About 3 weeks prior to ITC, Bernard Lunn, CEO of Daily Fintech sent me an e-mail with some advice on preparing for an event:

Reporting from a conference/event

Here is what I have learned from doing a lot of them.

Sipping from a firehose is the hardest issue. It is hard to know what to focus on. I have found two techniques to help with this.

  • Mega themes and big issues. Have a few that you are looking out for eg Reinsurance As A Service, pricing Catastrophe Risk. Talk to anybody or attend any sessions that connect to those themes and issues.
  • Let it emerge. Soak it in. This is the opposite of the first. Be open to surprises and feeling the mood of an event.

Enjoy and remember one big lesson of the digital age – what happens in “Vegas lives on YouTube forever”.

With 22 meetings scheduled over two days, my desire to attend 12 of the talks/panel sessions and wanting to view all the start-ups in the expo hall, it looked like I was planning for this, let alone a firehouse.  

There have been a lot of good and interesting reviews of the event and I encourage you to read them to get differing perspectives from the event.  I have included links to some of the ones I have found at the end of this article.  Just by the sheer number of reviews, one can see the amount of buzz there is surrounding this event.

I am going to be critical in some areas and also offer some potential ideas for next year’s event. This in no way takes away from my overall feeling over the event – that it was absolutely amazing one.  A big shout out goes out to Jay, Caribou and their teams. The event was grand and had the feeling and buzz of something big.  There was a lot of substance (I thought there would be more hype to be honest).  It was just great to see so many people excited to talk about Insurance.

Here are my key takeaways from #ITC2017:

The excitement of the event was second to none.  In fact, Insurance almost seems cool now…but how long will this feeling last?

In the hype vs. substance debate, I would agree that there was a lot more substance on display than I thought there would be.  However, the hype was still there, just more so in people’s minds (i.e. the attitude towards Insurance/Insurtech).  If you went to an Insurance conference a 10 years ago (this would have been in the midst of the last financial crisis), almost everyone would be wearing ties and/or a full suit and the theme would be rather somber.  Not here.  I hardly saw a tie during my few days there. Not only that, but we also got to see the standard Silicon Valley start-up solid color shirts with company logo on display.  And the mood was vibrant.  People were excited.  I’ve never in my life seen so many people excited about Insurance and for them to actually feel genuinely cool being in the industry too (I feel that way too, so it’s OK).  

An interesting question (that I have not seen in any other written reviews) was posed in the pre-conference workshop hosted by Hannover Re and Sureify – ‘when will the burnout happen?’.  I found this to be one of the more provocative questions that I heard asked throughout the conference.  

There is an opportunity right now to implement tons of really interesting new solutions to the Insurance value chain.  Many of these solutions happen to be technology, which has helped to dub the term ‘Insurtech’.  I feel that, a bit, just like Fintech, because Insurance has now added a ‘tech’ to it, it feels cool to be in the Insurance business.

However, one day, these solutions will be considered ‘normal’ as it relates to the value chain, and that’s when I think the burn out will happen.  That’s when people who were here for the hype will move on to the next big hype/opportunity, and hopefully there will be some washout of the solutions (and people) that are not so good – allowing for the really good ones to really shine.  

Why such a focus on this?  Because the conference helped to remind everyone what we are here for…

We are here to find solutions, not build technology

I’m just going to come out and say that James Siminoff, CEO of Ring, was the WWE equivalent of a babyface at ITC2017.  His emotionally charged interview with Telisa Yancy from American Family, reminded me of why we are here.  His quote “Humans don’t love technology. They love solutions that make life better. Sometimes technology becomes that” has been mentioned many times so far.  And I couldn’t agree more.

Insurance is a business where we provide people with peace of mind, allowing them to know that there will be a monetary solution provided when they suffer a major loss/accident (or minor, depending on coverage purchased).  This loss/accident can either in the form of health, death or to some sort of property, and the solution is at a time when a person typically needs it most.  That is the core of our business.  

And because that is the core of our business, Insurance is REALLY important to the people who purchase/use it.  That’s why, there was such a focus on customer experience during the event (well, at least it was mentioned a bunch of times throughout the conference…)  

People that have been around the business for a while, or really understand this business, know this.  They know that technology is simply an enabler to improve the Insurance value chain, and that the fundamentals and principles of Insurance still need to be considered, in addition to, the new sources of information (i.e. data), available to them.  

What’s great, is that with some of these technology solutions, not only can we help our customers when they need it most, but we can also engage with them to help them prepare for the events when they need it most.

When we marry the two – fundamentals/principles of Insurance and technology together, then we can find solutions to improve what keeps being mentioned – customer experience.  

As mentioned in some of the other review articles, more incumbents were present than last year.  In my mind, this is important, as they can help teach some of the start-ups the fundamental and principles of Insurance, as well as the operational aspects of their business.  Start-ups, especially tech start-ups, are good at being nimble and offering solutions for incumbents, but they need to understand them first.  In this regard, I personally found that…

The industry ‘vets’ are not the traditional ‘vets’ you would expect

If you take a look at the speakers list for the conference, the majority are from start-ups. Yes, some of the more active Insurers/Reinsurers in the Insurtech space like AIG, AXA, Munich Re, XL Catlin, Chubb, Hanover Re and Allstate featured in some talks, but the list was dominated by start-ups.

‘The Insurance Company of the Future’, session, which featured Nick Martin, Fund Manager at Polar Capital, Steven Mendel, CEO of Bought by Many, Assaf Wand, CEO and Co-Founder of Hippo and Kyle Nakatsuji, founder and CEO of Clearcover was standing room only.

This is quite telling.  People attending the event wanted to hear from some of the new Insurance CEO’s on their take of how Insurance companies will look in the future…looking to them as the vets of the industry.

I was able to spend some time with Kyle and Assaf both individually.  If you take a look at their LinkedIn profiles, they only have a few years of pure ‘Insurance’ experience.  They have been able to, however, learn the principles of Insurance (Assaf through being around it with his father being a senior executive in the Insurance industry and Kyle helping start the Venture fund at American Family), and apply these principles along with technology, to build a proposition that is unique for customers for a variety of reasons.   

Talking to them, I felt as if I was talking to people that had been working in this business their whole life.  They really get Insurance.  It’s not about applying technology to the Insurance value chain, it’s about looking at the fundamentals of Insurance, seeing what customers need and what they don’t need, and then offering it to them, in a way that they would prefer to get it.  Technology is a primary helper in this, but it is not the main driver.

It’s actually quite simple if you start to look at it this way.

This is not to say that the incumbent C-suite that were there didn’t have something valuable to say.  They did.  The session by Benoît Claveranne, Group Chief Transformation Officer of AXA was one of the more informative ones that I attended.  I also heard and have read really good things about the session with Rob Schimek Executive Vice President and CEO, Commercial @ AIG, but unfortunately, I could not attend.  Benoît made a few very key points during his talk:

  1. When a start-up approaches an incumbent, they should make clear what they are looking for – to be invested in, bought out, or partnered with.  A lot of time is wasted on this during early engagement, and will help move the conversation along if it’s clear early on
  2. For start-ups – make a call after 1-2 meetings to see if the incumbent is serious about doing business.  Do they have a budget and a team to develop it?  If not, it may be time to move on to the next client.  

The point I am making here, is that there is a wealth of information from both start-ups and incumbents, and people on both sides of the fence that are looking at the fundamentals/principles first, and tech as an enabler.  The more that incumbents can understand what part of the value chain they are trying to solve for, and what sort of tech solutions are available to them, and start-ups can understand the fundamentals and principles of Insurance, as well as the value chain, then there will ultimately be better opportunities to improve the customer experience.  In my opinion, it’s not really about us vs. them, and…

Partnering is key

Last week, I wrote about the announcement between Snapsheet and Keybank to launch Snapsheet Transactions.  There was another partnership announcement this week between Everplans and RGAx.  RGAx will become the primary distributor of the Everplans platform to all U.S. life insurance carriers.  In my conversation with Co-CEO and Co-Founder of Everplans, Abby Schneiderman, we discussed how the Everplans platform is a complementary service to traditional insurance offerings and how it can benefit a customer to have all of their important documents and wishes in one place.  In the event of something happening to them, their beneficiary can use this tool as a roadmap to their loved one’s life and wishes ,minimizing the burden of searching everywhere for documents.  Referring to my second review point above, a good and practical solution for the customer.

These are just two examples of non Insurtech companies, partnering with ‘Insurtech or Incumbents’ to provide better, holistic solutions for customers.  In addition to this, we saw drones at the event, Google Maps, Card Tapp and someone told me that they could now do underwriting based on a swab of the cheek.  For a more traditional type of announcements that you would expect from this type of conference, Qover, made an announcement with Munich Re, one of the more active Reinsurers in the space.  (See an exclusive interview I had with them here)

Bottom line is, in addition to the point I make on industry veterans above, is that collaboration is key.  It doesn’t matter whether you are a Fintech, Insurtech, Insurance/Reinsurance incumbent or some other technology based solution – we need to continue to look at things from a customer Insurance value chain perspective – and ask ourselves, is this really beneficial for them or not?  Because ultimately…

It’s not all rosy, and there a few things we need to look out for…

While there were a lot of good things from the event, as highlighted above, there were a few things that I took note of that need to be addressed.  It’s easy, when surrounded by such a buzz of an event, to have blinders on to potentially negative/risky things out there.  Here is the list:

  • There is a lot of data available now, and it can be scary.   With telematics, wearables and IoT, Insurance companies, just like Google, Facebook and your smartphone, will now basically be able to know every thing about you.  If Insurance companies were just going to use this for targeted marketing, that is one thing.  However, and rightfully so, there is a lot of talk about how data can be used in the underwriting process and pricing products.  This really needs to be handled with care.  Insurance and Reinsurance is a business of risk management.  If carriers have more data and get an idea of the customers that are really hurting their overall book, there is more of a chance that they won’t want to underwrite that risk at all.  Regulation can help with this, however, will regulators be able to pick this up and understand it quick enough?  Right now, it is still early days, so there are still opportunities to understand this before it gets out of hand.  
  • Risk Management and Customer Data Protection are not being discussed enough. Sure, they got touched on, but I didn’t see this as the focal point of many discussions.  All solutions that are being implemented, need to have a proper assessment of risk attached to it (this relates to my point on fundamentals and principles of Insurance).  What are the different risks associated with implementing these solutions – from a customer, company and market risk standpoint?  How is customer data being protected with the increased use of wearables?  How are we ensuring data is not being used improperly?  The amount of regulators present at the event shows the openness to working together with incumbents and start-ups to understand solutions and how they ultimately impact customers.  They will need to continue to be proactive in collaborating and start-ups and incumbents will need to be proactive in engaging too.  I touched on this a few weeks ago.
  • Global sharing is just starting.  48 countries were in attendance, which meant that many cross-border conversations and potential opportunities for collaboration were happening.  This has so much value, and needs to continue happening.
  • What about the other 5 billion? During the session Redefining the Insurance Value Proposition, Peter Gross, Director of MicroEnsure Labs mentioned that ‘there are 5 billion low-income people in the world, who wake up every day exposed to massive risk’. Some of the solutions featured during the event may be costly to a customer – especially one that falls into this low-income category. This infographic shows the percentage of people with Microinsurance from parts of the world that have higher concentration of low-income earners.  For these people, Microinsurance may be all they can afford.  While some of these numbers are a bit outdated and they would have increased over the past few years, they would still not be as high as some of the Insurance penetration levels we see in some of the more developed markets like the US and UK.  How do we as an industry help these people to get access to Insurance/protection?  
  • It is apparent that some are just trying to cash in on the Insurtech gold rush.  I get it.  There is a lot of hype around Insurtech right now and a lot of money flowing into it.  So, you want to take an opportunity to get into it.  That’s fine, but at least be honest about it. The amount of people I spoke to that couldn’t explain to me in 30 seconds or less whether their solution was for a customer or carrier was not encouraging.  And from the other side, the amount of people who told me they were now an Insurtech innovation lab or incubator, just because had years of experience in Insurance was also not good.  Unfortunately, I only found this article after the event, but I think it is a really good future guide for events when speaking with start-ups.  And for those trying to advise or consult start-ups/incumbents – please articulate what you do, have done and what makes you different.   If you don’t know exactly what you can offer, just admit this, and say ‘we’ve been in the industry for a while and can better help start-ups to understand it’ or ‘we have a pretty cool technology that we think can be applied to Insurance, but are not sure yet how’. Being sincere and honest will take you a long way.

My two recommendations for next year’s event

It’s easy for me to write about how great the event was and also give some critical feedback of the event, but I also want to offer two ideas to the organizers for next year’s event:

     1) Let’s crowdsource the best ideas/learnings from the event

It is impossible to attend all the sessions, visit all the booths and still have time for networking.  There were so many good things to learn from the event, and everyone should have the chance to hear it all.  As review based scoring is how a lot of us shop nowadays, a crowdsourced review platform from all the attendees would help people to see content and/or share ideas that they may not have been able to get exposed to at the event.  This may also help to find the solutions that may be ‘real’ vs some of the ones that are ‘hype’.

     2) Workshops for start-ups/incumbents

This one may be a longer shot.  Lot’s of people at the event were looking for something – partners, funding, a story, etc.  For some, they had problems they were hoping to get solutions from.  For incumbents – maybe it is how to go about their digital strategy.  Or, how to best identify a start-up to work with.  For start-ups, maybe they needed that final piece to work through to make their solution a great one.  

Right now, the options for these folks is to go to a consulting company or an accelerator/incubator/innovation lab (both of which are OK options).  Since there are so many people here with such a wealth of knowledge, it would be great to see some opportunities for them to work through these problems during the conference itself.

Summary

I spoke with one of my friends in the UK who attended the event last year.  He explained that he felt like the only non-American at the event.  He did not attend this year, but we spoke a few days after the event.  I explained to him that the intro slide from Caribou showed that there were participants from 48 countries in attendance, and it certainly did not feel like an American only event.  There are things happening all around the world, and at much different paces than others (primarily due to regulation).  Sharing these ideas and best practices globally, will be the next evolution of Insurtech, allowing the customer to ultimately benefit from the innovative solutions happening around the world.  

Stephen Goldstein is an experienced Insurance executive and Insurtech dealmaker with a core focus on growing revenue, launching go to market initiatives and advising industry leaders.

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Links to other reviews of ITC

Oliver Wyman, the presenting sponsors of the event, had a nice summary here and here one too

Insurance Journal had one of my more favorite ones

CB Insights has if you like more data than words

Some really good ones here and here and here and here and here and here and other nice ones here and here and here and here

A good contrast from last year

And some top quotes from the conference

 

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.

Image Source.

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

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Why side-hustlers should be the new target market for SME digital banks

There really is no shortage of people in fintech espousing ideas and concepts like ’emotional banking’, ‘human banking’, ‘simple banking’ and ‘easy banking’.

And I get it, I really do. Banking in 2017 still remains, for the most part, the complete opposite of all of these things. So it is intellectually romantic to indulge the idea that we can start a bank fresh today that can truly translate these adjectives into actual products.

But here’s the problem I’m noticing. Everyone’s adjectives seem to be ending up as the same feature sets – mobile apps that help you categorise your spending habits, help you track where your money is spent. And while it’s a solid foundation, I can’t help but wonder whether this is enough anymore. Sure, this concept felt novel 3 or 4 years ago, but perhaps product developers and designers should be pushing the envelope just a tad more with their MVPs. It doesn’t get me excited when I hear about it, and I’m convinced we can collectively do better.

It also worries me that as a competitive advantage, this is pretty much dead. When everyones talking about, chances are, the ship has well and truly sailed.

The big connection that I think everyone is missing in digital banking, is the emergence of the “employee come side entrepreneur’. How often do you bump into millennials that are doing a side gig? Whether its driving Ubers, running workshops for General Assembly or freelancing in their weekends. In my case – all the time.

The reality is, these people need business banking apps that feel like consumer apps. It seems very few digital banks have isolated this market and considered it as a marketing and acquisition strategy. It is the perfect uncrowded, underserved entry point for a longer term consumer banking play.

The irony is, it’s all about inverting the traditional banking model. Once you have them on a great ‘side-hustler’ banking platform, chances are, you might actually earn the right to their personal banking. Generally banks do the reverse, starting with personal and moving to banking. As an attack tangent, a side-hustler angle has serious merit.

Wannabe digital banks need to stop looking at the Monzo’s of this world and trying to imitate. They need to think bigger and harder about the problems that really exist in the marketplace. And if they watch what is happening outside of the fintech and finance bubble, they will realise the nature of work is fundamentally changing, and therefore, so to must the financial system that underpins it.

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.

What a wonderful customer-centric investment world! The Wealthfront – Fundrise dispute.

customer is king.jpg

It wouldn’t be the first time that Wealthfront defends publicly their view which is opposing another Fintech positioning. We can all understand the motivation of going public against Betterment in the earlier years while aiming for the leading position in the space of standalone Robos 1.0.

What caught my eye last week was the public argument between Wealthfront and Fundrise, a leading real estate crowdfunding platform. The issue at stake was the “optimal” or “customer-centric” way that small investors should gain exposure to the real estate market.

Real estate investing is by no means new and is Not low hanging fruit. It is complex even in a relatively mature market like the US. Public and private investment vehicles to gain exposure to various real estate sectors have been around for a while. What is new is taking advantage of low-cost technology and new business models to improve the UX, increase accessibility and improve the risk/returns.

We have innovations focused on the Data aspect of Real Estate which is an information business.

Others focused on the Speed, the consistency of underwriting and analysis.

Others democratizing the deal flow with more transparency.

More than 200 companies in the US are startups in the digital investment part of the stack. Staring with crowdfunding platforms (Fundrise being one of them) that have taken off after the JOBs act, marketplace lending platforms specializing in real estate (like Sharestates) and eREITs giving exposure to a diversified portfolio of commercial real estate with a very low denomination and cost.

And just recently, companies like StackSource who have created a digital marketplace for commercial real estate lending that connects both “online” and “traditional” lenders.

Circling back to the dispute between Wealthfront, who naturally uses publicly traded REITs in their portfolios, and Fundrise who has launched the eREITs innovation.

eREITs are public but Not-traded structures that offer to small investors (as low as $1000 denominations) exposure to small-cap commercial diversified property portfolios. RealtyMogul has also launched similar structures as Fundrise.

Wealthfront claims that REITs and real estate ETFs offer not only more liquidity and greater diversification but also better returns. The argument is valid and is supported by the usual passive average outperformance versus active real estate portfolio performance.

Screen Shot 2017-10-09 at 10.17.15 AM.png

Fundrise claims that their business approach is more like a Blackstone and should be evaluated on the basis of opening a market segment that was not accessible before to retail investors and that actually presents low-cost investment opportunities. Fundrise claims that the entry point of the assets they are packaging in eREITs is much lower because of their lower liquidity and their private status. Fundrise believes that there are better opportunities in the less liquid Private commercial sectors and that eventually, they will offer better returns to retail. The example of the recent IPO of Invitation Homes (INVH) shows how expensive the public markets can be. INVH was priced 215% higher in the public markets than in the private markets, according to data from Google Finance (source).

For me, this argument is more about public versus private real estate rather than passive versus active. I see analogies with the other relative illiquid asset space (i.e. loans) which is also creating all sorts of investment vehicles for retail.

The fact is that yield-starved investors of all sizes are “begging” for something juicy and are moving down the liquidity curve. In these conditions, I wouldn’t be surprised if a someone launched a Robo platform for retail with an exclusive focus in private markets (not listed on central exchanges). A contemporary “alternatives” platform (hedge funds or private equity are not alternative any more) that you can create a portfolio with investments with tokens like the YC Combinator idea, eREITs like Fundrise, and marketplace loans like Mintos.

Efi Pylarinou is a Fintech thought-leader, consultant and investor. 

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