banking

Virtual Skinny FinTech: Stick the Landing

Posted by The Virtual Skinny on in FinTech Edition, Newsletter 0 Comment

8.14.2016

THE SKINNY

When You Stick to the Plan …

Even though Britain said yes to Brexit, it’s still got lofty goals to be the center of all things fintech. (BTW, Brexit means that time Britain voted to leave the European Union then immediately regretted it).

When You Keep On Keeping on…

Two years. That’s how long it’ll take for Britain to exit stage left (if it actually happens). It’s also the deadline that Britain’s Competition Market Authority (CMA) is giving British banks to stop being stingy with their customers’ data.

When You Know What’s Up…

CMA is very aware that bank fees can be…excessive. Customers are paying up but aren’t getting what they deserve. Enter fintech companies. CMA is drinking the ‘fintech koolaid’ and wants banks to share customer data with fintech startups and third party apps. Bank customers must approve first of course.

When ‘Many People Are Saying It…’

CMA thinks by 2018, fintech will not only help save British bank customers money and get them better services but also earn the economy the top spot in “fintech” around the world.

When You Need to Watch Your Back…

About that Brexit thing. No one knows exactly how Britain saying ‘bye’ to the EU will play out. But, Germany’s taking full advantage. It’s on a full on recruitment mode to get fintech companies based in London to hop on over to Deutschland. Do you blame them?

WHAT ELSE IS GOING ON?

Lies, Fairytales, and Fallacies…

Chip and pin cards (we’ve covered this; those cards you dip instead of swipe) were supposed to protect us from thieves. But, it’s not as safe as you think. Payment technology company NCR just unveiled a way for fraudsters to still get at your money. Apparently, they’ve used their genius for evil to figure out how to make chip cards seem cardless. Then, it’s off to the races. Retailers are thinking, ‘more reason not to buy those EMV card reader machines.’ But, it’s not all a lost cause, even with this security flaw, chip and pin cards are still slightly safer than regular ole swipe cards. 

promises

THE STREETS ARE TALKIN’ 

Thanks to Square Capital aka Square’s lending business, the company’s stock is wayyy up. It should feel blessed. Square Capital doles out loans to the company’s existing merchants in exchange for a piece of merchants’ sales. It’s all love all around (for now). Merchants love that they can get loans fast (within a few days) and low default rates. Investors love it too. But, to keep growing, Square Capital will have to do something else (e.g., handing over $$$ to non-Square merchants). 

The war on cash in Boston is on its way. Boston area eateries like Sweet Green, Amsterdam Falafelshop, and Clover Food trucks want to go cash-less. They’ve picked up on the trend that young people are choosing plastic over paper when it comes to payment.cashless But, a little known law in Massachusetts makes it illegal to turn down cash. The law and how it’s enforced is all very wishy-washy. But, seems like shops are willing to take the risk. 

Been Around the World, Uh Huh 

India’s mobile phone game is strong (smartphones are up 220 million making it the second largest market in the world). Should be good news for financial inclusion but not so much. Not many rural and underbanked folks are using their phones for banking or payment. And, taxes for use aren’t helping. But, the Indian government won’t be giving up on this. 

The Nigerian Central Bank likes to walk the road less traveled when it comes to remittances (transferring money across borders from one country to another). The rest of the world wants to cut down costs on remittances. But, no. Not Nigeria. It’s going the opposite way. No secret that Nigeria’s economy is struggling. So to ‘maintain the exchange rate’ it’s up-ing the price on remittances. 

In other news dealing with the continent, the Brookings Institute (U.S. think tank) says more regulations protecting consumers will help grow financial inclusion and innovation in countries like Kenya, South Africa, Uganda, Rwanda and Nigeria. Interesting since, a lack of banking regulations is a major reason money transfer service M-PESA is a success in Kenya … 

Australia’s postal service is looking to the future. It’s looking into applying blockchain technology to the mail – mainly for identity reasons. 

The Virtual Skinny FinTech Ed: Checking In …

Posted by The Virtual Skinny on in FinTech Edition, Newsletter

1.20.2016

Good to Know: Global political and business leaders are in Davos, Switzerland this week. In between ski runs, they’ll be at the 16th World Economic Forum Meeting talking things like robots, inequality, Europe, etc. Where do we sign up? 

THE SKINNY

Is That A Threat?

People in their 20s and early 30s (aka Millennials) would rather handle their finances via digital services and smartphones than deal with old school banks.  FinTech startups and services offered by Internet and tech companies like Apple, Amazon, Google, Facebook, etc. are giving banks a run for their money.

Just Look At the Signs … 

Well for one, in 2015 alone, retail banking saw about $6.8 billion in investments (up 4x from 2014). If that’s not enough, young people’s behavior is pretty telling. Some are ditching credit cards all together for alternatives offered by startups like Affirm. The appeal? A ridiculously easy sign-up/approval process and minimal confusion regarding its terms.

When You’re So good, You Can’t Be Ignored… 

You know what they say, imitation is the best form of flattery … Or, if you can’t beat ’em, join ’em.  Seems like a couple of cliché phrases, but that’s pretty much how banks are approaching competition in a FinTech world.  For instance, Citigroup is partnering with online lender Lending Club.  And just a few months ago, it created its very own group focused on becoming more innovative, appropriately named Citi FinTech.

It’s Not All Sunshine and Rainbows … 

FinTech startups and services are popping up pretty quickly. But, it’s not without any issues. Legal and regulatory challenges are at the top of the list. But, companies are working on that. Last November, Amazon, Apple, Google, PayPal, and Intuit got together to form a D.C.-based group called Financial Innovation Now. Its goal? “To promote policies to “foster greater innovation in financial services.”

WHAT ELSE IS GOING ON?

It Ain’t No Thing … 

Regulatory barriers are tough to break through, especially when it comes to moving money across borders. But, few Fintech startups (25 to be exact) have navigated the muddied, regulatory waters like champs to achieve global expansion and growth. Square, Payoneer, Stripe, Braintree, and Transferwise are just a few that made the cut. Congrats on figuring out how to strike the right balance on things like regulations, market opportunity, local ecosystem, competition, flexibility of business mode, etc.

When You’ve got a #@%$! problem … 

Bitcoin is going through it – again. Lately, there’s been not so positive chatter about the fate of the virtual currency and its network after one of its core developers Mike Hearn penned a pretty controversial blog post. In a nutshell, Hearn basically said Bitcoin is a major fail and announced that he was bowing out of the whole thing. Now, Bitcoin insiders and those on the outside can’t help but add in their two cents about the state of the Bitcoin network. See here and here.  Other developments? Russia plans to ban Bitcoin before it becomes a thing in the country. And, Bitcoin wallet and exchange company CoinBase’s main guy tasked with helping educate U.S. lawmakers is about to dip out for another gig with the bankers. No word yet on what this means for the company.

WHEN SOMEONE’S Not A Fan … 

Unlike Bitcoin, crowdfunding typically doesn’t get a bad rap. In fact, you’d think that everyone loves it, but no so much. Ian Russell, CEO of the Investment Industry Association of Canada, is not feeling crowdfunding – not even a little bit – particularly when small businesses use it to raise capital. Russell thinks TSX Venture Exchange (TSX), Canada’s stock exchange, is a way better option for early stage ventures looking for money. Russell isn’t just talking about it. The man is on a mission.  He is calling on Canadian regulators to forget about equity crowdfunding and focus on TSX instead. Naturally, the National Crowdfunding Association of Canada thinks that’s a terrible idea. Side bar: If you’ll remember the U.S. Securities and Exchange Commission signed off on rules allowing non-accredited investors to participate in equity crowdfunding.  Just something to think about …

THE STREETS ARE TALKIN’

The UK Government Office for Science wants other parts of the UK government to look into blockchain technology and figure out how it can work for them on things like government aid payment systems, tax monitoring, etc.

Commerce technology company First Data is going after mobile payments company Square with CloverGo, its new EMV card-reader.

 

The Virtual Skinny: Hello, It’s Me

Posted by The Virtual Skinny on in Internet & Tech, Newsletter

11.4.2015

Good to Know:  Former Daily Show Host Jon Stewart is coming back to TV but only via the Interwebs. He has a four-year deal to do shows for HBO’s online platforms.  

THE SKINNY

 When You Give No Types of “Effs…”

San Francisco (SF) residents gave the city’s Proposition F, otherwise known as the AirBnB Initiative, a big thumbs down.  Prop F would’ve limited short-term rentals in the city to only 75 nights/year.  Also, it would’ve encouraged people to dime out their neighbors and companies violating the law.

This Is NOT A Fire Drill …

To defeat the proposal, AirBnB launched an $8 million full court press called the Anti-F campaign.  The rental platform unleashed seasoned organizers and volunteers (including 138,000 members of the AirBnB community) to pound the SF pavement to turn voters against Prop F. Unofficially, about 55% of voters checked no on their ballots.

When You Pull Off The “W…” 

AirBnB is happy because the proposition would’ve caused issues for the $25.5 billion company both in the U.S. and abroad. And, residents are happy because they can continue to freely rent out their homes to supplement their incomes.  After all, prices for SF housing are no joke, partly thanks to the technology boom in the city. This year’s average rent for a studio apartment in the city is $2,828.month, and the median home price is $1,097,000 (up 17% from last year). Yikes!

Taking A Victory Lap …

AirBnB plans to brief reporters on the results today.  But, the company can’t celebrate for too long. It’s hit roadblocks in Santa Monica and Berlin, and the company has attempted to compromise with authorities by saying yes to paying taxes in cities like Paris. If the company wants to go public, it’ll need to sort out all of the legal and policy stuff first.

WHAT ELSE IS GOING ON? 

It’s Better To Give Than To Receive … 

For Internet companies these days, that’s the motto.  Marc Benioff, CEO of cloud computing company Salesforce, says including corporate giving into your business strategy is a must.  Salesforce takes the 1-1-1 approach, meaning the company annually donates 1% of its equity, 1% of employee time, and  1% products to communities where Salesforce employees live. Benioff had a lot to tell the New York Times, but the key takeaways for businesses and its leaders? Do good in your community, have a heart, stand up for equality, and try not to stress too much.  Other companies that are taking this to heart? Google.org is gifting San Francisco organizations fighting for racial justice in the U.S. criminal, prison, and educational systems with $2.35 million in grants to help the cause. And, Kickstarter’s CEO Yancey Strickler is still sounding off on staying true to the crowdfunding sites’s core and “not selling out” on its values by going public.

A FEW OF Your FAVORITE THINGS… 

Yesterday, Twitter changed things up on us and decided it preferred hearts over stars. The social platform replaced the star intended for users to “favorite” tweets with a heart. Turns out this change happened because the star was confusing for folks new to Twitter. Apparently you can’t have more than one favorite thing (tell that to Oprah and Maria von Trapp). We’ll see if the heart brings in the new blood Twitter hopes to see.

Not All Hearts Aflutter… 

In other news, former Twitter Engineer Manager Leslie Miley left the company and then wrote about his less than diverse experience.  He says he’s happy to have been part of a platform that gives a voice to underrepresented groups but takes many … and we mean many issues with how the company handled increasing its low diversity numbers (3% of engineering and product personnel at Twitter are African-American/Hispanic and less than 15% are women). From a lack of communication with the company’s black employee resource group to a questionable suggestion for a name analysis tool to track job candidates, Miley uses examples to show how Twitter leadership just doesn’t get it. But, Miley thinks CEO Jack Dorsey is the man to fix the problem.

who’s the boss? 

Ride-hailing app Uber has a lot on its plate. Ready? First, the company’s still in the midst of the employee v. contractor battle.  Uber drivers say they should be considered employees, but CEO Travis Kalanick insists that Uber isn’t their direct boss. Kalanick is giving the “boss” title to its algorithmic software that matches drivers and riders. New York University Data and Society research team begs to differ.  The team says the algorithm manages drivers the same way a human would.

Second, Uber wants regulators and policymakers to ease off on the company because it gives people jobs (1.1 million around the world) and puts money in their pockets ($3.5 billion this year for U.S. drivers alone).

Third, competition is getting tough in the ride-hailing app game so Uber is reportedly exploring the idea of luring new drivers with promises of bank accounts and same day payments.

Fourth, Chinese regulators have a proposal that would be hugely problematic for Uber, but the company’s still full steam ahead on its plan to be in 100 Chinese cities in 2016. Speaking of expansion, Uber’s putting up $250 million to get into North Africa and the Middle East.

THE STREETS ARE TALKIN’

Who has time to reply to e-mails anymore?  No worries, Gmail’s got it handled. Through machine learning, Gmail will generate responses on your behalf via “Smart Reply.”

Pinterest Shop is coming to your phone soon.

Don’t be scurred. Netflix CEO Reed Hastings is letting media execs know that they shouldn’t worry about what his company’s doing but should instead focus on themselves. Industry’s ‘TV Anywhere,’ which lets users watch network TV shows online, isn’t catching on with folks.

OfferUp, an online classifieds apps aka the potential ‘Craigslist Killer,’ just put $90 million in its bank. The currently free app has seen consistent user growth over the past three years and processed $2.9 billion worth of transactions this year alone.

Facebook’s really getting into artificial intelligence and is trying to build software that works like our brains.  If its software can beat the strategy game Go, then FB is headed in the right direction.

Eric Lefkofsky, co-founder of daily deals site Groupon, is no longer the company’s top guy effective immediately. Lefkofsky is now chairman. He’s been replaced by its Chief Operating Officer Rich Williams.

Social video game provider Zynga keeps losing users, and its Chief Financial Officer David Lee just dipped out.