Virtual Skinny FinTech: Stick the Landing

Posted by The Virtual Skinny on August 14, 2016 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.

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. 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.

8.3.2016 – Virtual Skinny FinTech: Move It or Lose It

Posted by The Virtual Skinny on August 3, 2016 in FinTech Edition, Newsletter 0 Comment

8.3.2016

Good to Know: We want to get your thoughts. Take our poll below!

THE SKINNY

When You Can’t Beat ‘Em …

Join ‘em. Wells Fargo, JP Morgan, Bank of America, and US Bank are all jumping on the instant cash bandwagon.

When You Don’t Really Have A Choice …

Their hands have been forced. In the U.S., moving money between bank accounts is slow AF. Mobile services like PayPal’s Venmo and Square Cash handled the issue…Customers love it … Now U.S. banks don’t want to get left behind.

When Your Age is Showing …

Banks have tried to pull an Instagram by offering their very own money transfer apps. Think Chase QuickPay. But, it isn’t quite the same ‘copy and paste’ job Instagram just pulled on Snapchat (read more on that later this week in our Internet & Tech edition). They want customers to believe that their apps are just as ‘hip and cool’ as the Venmos of the world with the help of star-power ads. But, some people aren’t buying it.

When You’re Not Leading From Behind…

The U.S. is playing ‘follow the leader’ with the rest of the world when it comes to faster payments. Note to self: The U.S. is doing the following. So, the Federal Reserve Board’s ‘Faster Payments Committee’ is telling banks to ‘pick up the pace’ on money transfers.

When You Need to Make A Move …

Meanwhile everyone and their moms in the financial ecosystem (including financial OGs like Mastercard and Visa) are in an arms race to build the “payments network of the future.” Mastercard snatched up a huge chunk of Vocalink, a UK biz with a mobile and internet payment network, and Visa’s strategically linked up with Paypal.

When You’re Just Happy to be Here …

Since people are still using the cash money and writing checks, there’s lots of opportunity to get in on the instant payments action. It won’t be easy for banks to catch up with Venmo and other peer-to-peer apps that are hybrid payment and social platforms. But, at least U.S. banks are making moves.

PENNY FOR YOUR THOUGHTS?

Now that banks are stepping up their instant payments game, are you willing to give up your current money transfer app (i.e., Venmo, Square Cash, etc) and give your bank’s app a go?

WHAT ELSE IS GOING ON?

Ain’t Nobody Got Time for That …

The U.S. is still trying to get consumers to dip their credit cards rather than swipe them. Turns out chip and pin cards aka EMV cards aka cards that keep us waiting at checkout for life are way more secure and help cut back on fraud. That’s great and all, but we hear that making just two purchases daily for a year with an EMV card adds up. It’s literally 85 minutes of our lives that we’ll never get back just waiting to check out. No bueno! Even retailers want to avoid installing EMV card readers because long lines aren’t good for biz. Only 28% of all U.S. merchants require dips v. swipes. Shopping at places that take Apple, Android, or Samsung Pay may be a better, faster option. Meanwhile, some of us will continue to struggle with the process.

And The Winner Is…

We hope China’s been practicing it’s surprise face and pageant wave. The U.S. Department of Commerce just crowned Asia’s largest economy as the 2017 Fintech Leader. Expect China to lead the world in payment exports.

Sorry Seems To Be The Hardest Word …

Banks in Africa are are like that ex who took you for granted but now wants to make things right. Sure, they did the basics like setting up infrastructure but didn’t go the extra mile to take care of everyone’s needs. Banks on the continent dropped the ball on figuring out mobile money services and left potential bankers out of the loop. Now that fintech startups have stepped in to offer way better services that can help way more people, the banks are seeing the error of their ways. To right their wrongs, banks are teaming up with startups like MFS Africa and Nomanini to reach untraditional young consumers.

THE STREETS ARE TALKIN’

Hong-Kong based Bitcoin exchange Bitfinex told us its system had been compromised. Like thieves in the night, hackers allegedly made off with a cool US $65 million in real money. The exchange is looking into the breach. In the meantime, Bitcoin’s value dropped by 7.8 percent earlier this week.

China’s got a trust problem with its charity organizations. Alibaba’s CEO Jack Ma wants to use blockchain technology to make sure charities are using donations for the right purposes. Alibaba’s Ant Financial is leading the effort on this. Transparency FTW …

The charity world is pretty old school when it comes to donations. It’s all about those cash money donations. But, you can only give what you have. So, if people are short on dolla bills, charities are SOL. DipJar wants to change that up by allowing people to donate with credit or debit cards for “impulsive, on-the-spot giving.”

While Alibaba’s trying to figure out this blockchain situation, IBM seems to be way ahead of them. The tech company is all set to kick off the first major implementation of the technology for its business. IBM’s figured out how to use the technology to settle financial disputes between partners and customers. #NBD

One last thing on the checkout process, Venmo’s no longer for just easily reimbursing your friends. It’s branching out into checkout services for retail apps. Buying things you probably don’t need just got easier…

Virtual Skinny: Anything Is Possible

Posted by The Virtual Skinny on May 25, 2016 in Internet & Tech, Newsletter 0 Comment

5.25.2016

Good to Know: Anything is possible on the Internet! Stay-at-home mom Candace Payne just wanted to have a little fun and prove that she was the proud owner of an electronic Chewbacca mask. She posted a Facebook Live video wearing the mask, and the rest is history. In no time, her video racked up over 141 million views making it the most watched video via the feature. She’s landed guest spots on late night talk shows and paid a visit to the Zuck at FB HQ.

THE SKINNY

When Something Is No Longer A Thing …

Car ownership may likely become a thing of the past. Thanks to tech companies, it’s becoming easier and cheaper to get from Point A to Point B without owning a car. Automakers can’t beat tech companies so they’re joining them.

When You Need to Get On Board …

Toyota and Volkswagen are the latest automakers to say “we want in” when it comes to how tech is disrupting the auto industry. While Toyota is teaming up with U.S. ride hailing service Uber, Volkswagen is partnering with European app Gett. Both automakers have invested heavily in each service and are trying to figure out how they’ll continue to grow in this new world of ride-hailing and self-driving cars.

When You Have A Bit More Time …

The future of auto is all about “mobility services” aka car-sharing and ride-sharing. Industry analysts say we’re not quite there yet. But in the meantime, Toyota wants to be all in on mobility (e.g., Toyota’s planning to create in-cars for Uber drivers). Volkswagen is trailing behind Toyota as it deals with its emission-cheating scandal, but the German automaker plans to release what it’s calling “Strategy 2025,” a plan for its mobility efforts, this summer.

QUICK POLL – BY THE NUMBERS

WHAT ELSE IS GOING ON?

Keeping It As Local as possible…

Ever tried to access content online only to get hit with the “this video is not available in your country” message? The formal term for that message is called “geo-blocking.” And, the European Union (EU) has had enough of it and other barriers to online shopping across its 28 Member States. So, it’s come up with a new proposal for the Netflix, Amazon, and iTunes of the world: Get more European content up on your services. At least 20 percent of each catalog to be exact. This is all according to a proposal put out by the EU this week. Only problem is Netflix and a European tech industry group DigitalEurope say that setting a quota for European content production won’t help protect local content. But instead, could hurt biz models. Meanwhile, European screenwriters and authors want even higher quotas. In a nutshell, no one is happy with the idea.

ICYMI: Peer-To-Peer (Money) Petty

Is peer-to peer money transfer app making its users petty? Check out our post on this from earlier this week, and share your Venmo petty story in the comments!

THE STREETS ARE TALKIN’

Is investor Peter Thiel for free press or not? Word on the street is that Thiel (on the low) bankrolled Hulk Hogan’s lawsuit against media company Gawker. Hogan beat Gawker and was awarded US $140 million in damages. Thiel has history with Gawker. The company publicly outed Thiel in a piece called “Peter Thiel is Totally Gay, People.” We’ll let you draw your own conclusions.

Twitter is planning to ditch its 140-character word limit. Also, tagging people in replies, adding pics, GIFS, or video won’t count towards the tweet limit. Times are ah-changing …

French investigators paid a visit to Google’s Paris office over tax payments. France is claiming the Google machine owes it 1.6 billion euros (US $1.79 billion) in back taxes.

The level of FitBit’s accuracy depends on who you ask. Studies have shown mixed results in whether the wearable devices are accurate in tracking users’ activity.

Peer-To-Peer (Money) Petty

Posted by The Virtual Skinny on May 23, 2016 in Culture, Money, Relationships 0 Comment

PayPal-owned peer-to-peer money transfer app Venmo is a hit among millennials because of its social feed. While Venmo users are launching the app to complete transactions a couple of times a week, they’re spending most of their time checking out what their friends are doing. Who charged who and for what? It’s a good way to get all up in people’s business. Although the app is a quick and efficient way to reimburse your friends, it turns out that the app may be turning your peers into petty people.

A recent QZ article documented how ‘p2p petty’ may be the trend. The article suggests that “invoicing” friends after sharing an experience (i.e., a night in with Netflix and wine, sharing cab rides, meeting up for drinks, etc.) is fast becoming commonplace. To avoid any awkward situations with friends, a select few are avoiding downloading the app and opting to deal in traditional cash money instead.

Which camp do you fall in? Tell us your petty story with Venmo or other peer-to-peer money transfer services!

Virtual Skinny FinTech Ed: Trending …

Posted by The Virtual Skinny on May 4, 2016 in FinTech Edition, Newsletter 0 Comment

5.4.2016

Good to Know: Dr. Craig Wright was trending on social media earlier this week. The Australian entrepreneur claims that his alias is Satoshi Nakamoto, creator of virtual currency bitcoin. Some people are giving him major side eye, but he allegedly has “extraordinary proof.” Apparently, he’s got receipts.

THE SKINNY

When You’ve Moved Onto Something Else …

Dr. Craig Wright had the Interwebs abuzz. But at this week’s Consensus 2016 conference in New York City, execs said yawn. Newsflash: They don’t care about bitcoin.

When You’re TRENDING…

Bitcoin is out. But, the blockchain (bitcoin’s underlying technology aka a huge public ledger that records all bitcoin transactions) is in.

When You’re Not Sure What To Do …

For now, bitcoin as a virtual currency is the only application that works across the globe via the blockchain. But, we could see other applications popping up as fintech startups and major tech companies like IBM and Microsoft are working on different apps for the blockchain. How fast these experiments turn into something real comes down to one question: Small scale projects or moonshots? In other words, do companies want to take on a major project all at once or take their time with small-scale stuff?

When You’re Curious …

What’s the better approach? Working on small, achievable applications or taking the risk and shooting for the stars? Tell us in the comments!

WHAT ELSE IS GOING ON?

Keeping It on the D.L…

While many financial peeps gathered this week in NYC, a select group including NASDAQ, Citigroup Inc., Visa Inc., Fidelity, Fiserv Inc., Pfizer Inc., had a pow-wow on the down low back in April. Yes, there was talk of the blockchain. But, we heard that digital U.S. dollars as an alternative to virtual coins like bitcoin came up too. Fiserv Inc. even created a digital dollar for show and tell.

SPOTLIGHT

CBS 60 Minutes Lesley Stahl talked fintech on this past Sunday’s episode. She sat down with John and Patrick Collison, Irish brothers and co-founders of payments company Stripe. The whole point of the company is to allow small businesses to get their online payments from anywhere in the world hassle-free. Check it out here.

QUICK POLL – RUN THOSE NUMBERS …

Young people are into their Venmo app, and the numbers prove it. It’s grown 154 percent from last year.

THE STREETS ARE TALKIN’

Young people may heart Venmo, but the U.S. Federal Trade Commission won’t be saying “Venmo, me.” The agency, which is responsible for making sure businesses are on the up and up with their practices, is looking into the PayPal-owned, peer-to-peer payment service for “unfair and deceptive” practices. BTW, Venmo would appreciate if U.S. users stayed clear of using words like “Syria” and “Cuba” on Venmo on account of it’s still illegal to send money to those countries.

San Francisco startup Varo Inc. is building mobile banking app complete with deposit accounts, budgeting tools, and other services. For now, it’s looking to partner with banks but eventually wants to be a bank of its own. New U.S. bank these days? Don’t see that every day.

Android Pay is now an official payment options for your Uber rides.

Virtual Skinny FinTech Edition: The Block Is Hot …

Posted by The Virtual Skinny on April 6, 2016 in FinTech Edition, Newsletter

4.6.2016

Good to Know: “ We are actively exploring these issues and their implications.” – U.S. Securities and Exchange Chairwoman Mary Jo White putting everyone on notice that she gets that blockchain tech is en fuego and her agency’s got its regulatory eye out.

THE SKINNY

When You’re Not About Empty Threats …

Payments company PayPal had plans to set up shop (costing US $3.6 million) in North Carolina (NC). But, not anymore. It’s put the kibosh on that.

When You Need To Get Caught Up …

NC is pretty committed to what could be called its new LGBT discrimination law. Back in March, NC passed a law preventing cities from protecting the LGBT community and banning transgender people from using restrooms or locker rooms for the gender not listed on their birth certificates.

When You Don’t Listen …

The company’s CEO Dan Schulman joined a letter with over 80 other tech execs. The letter listed all the reasons why the then-bill was not a good look. The execs even warned that quality professionals would peace out of the state.

When You’re Back On the Market …

NC ignored the letter, passed the bill anyway, and now PayPal (and other projects) are back on the market and are looking for alternative locations. NC, say goodbye to what would have been 400 new jobs and US $3.6 million, at the very least…

WHAT ELSE IS GOING ON?

Still DEL(ly) From The Block …

The U.S. state of Delaware is a fan of the blockchain. State governor Jack Markell just let the cat out the bag on what the state is calling “the Delaware Blockchain Initiative.” It’s the state’s way of saying to businesses incorporated there that they need to get up-close and personal with distributed ledgers and smart contract technologies. Kind of a big deal. BTW, if you want to hear more details on this from Markell, catch him giving the keynote at this year’s Consensus 2016 conference, which will be held from May 2- May 4, 2016 in the concrete jungle where dreams are made of…

QUICK POLL – RUN THOSE NUMBERS …

Check out all the fintech startups for all your banking needs …

THE STREETS ARE TALKIN’

When money goes social … PayPal-owned Venmo is now a thing with young people. And, it’s not all about the money. They just want to know what their friends are getting into on the app.

Owe your co-workers some coins? With the help of startup Current, workplace messaging app Slack will soon offer money transfer services to help you settle your office debt.

The British government just gave the go ahead to Boston-based startup Circle. In other words, for the first time, the government has given an electronic money license to a virtual currency company. London … Building its Innovation Hub one fintech startup at a time.

Speaking of building empires … Amazon is looking to make some fintech-related purchases.

Virtual Skinny FinTech Ed: Back At It Again With The …

Posted by The Virtual Skinny on March 30, 2016 in FinTech Edition, Newsletter

3.30.2016

Good to Know: Calling all FinTech social entrepreneurs! If you’re working on solving the financial inclusion problem, Village Capital’s: US FinTech 2016 business-training program is for you. Learn more here and apply here. Hurry! You’ve got until April 3, 2016.

THE SKINNY

When It’s Time To Regulate On ‘Em …

The Office of the Comptroller of the Currency (OCC), a top U.S. banking regulator, thinks it’s time for some rules around the growing financial technology (fintech) industry. Traditional banks and fintech startups are here for it.

When You’re For It, Just For Different Reasons …

Traditional banks have long been regulated and want competing startups to join the regulatory party. Startups don’t mind because they actually want to play by new rules so they create and innovate without having to watch their backs like no one’s biz. Could be a win-win?

When It’s Hard to Lead From Behind …

Other countries like the UK have already made moves to put in place a more fintech-friendly regulatory framework (e.g., the UK now allows what it calls the “sandbox model” aka a fancy way to say it lets startups experiment under the government’s watch). U.S. regulators now want to get on their level…

When You’re Finna Do Something …

Other U.S. regulators have published papers and conferenced on fintech, but the OCC is taking it one step further. On Thursday (Mar. 31), it’ll publish its very own white paper on “responsible innovation” intended to get people running their mouths on the best way to put together new rules and processes. Top issue for discussion? A more systematic way for consumers to complain about new products and services.

WHAT ELSE IS GOING ON?

What’s HIGER Than Being #1?

Japan thinks Asia needs to be the top dog when it comes to blockchain technology. So, the country is doing its part to get there. Japan’s got some strict banking laws, but it’s willing to dial things back to encourage more investment in its fintech sector. The country’s banking regulator, the Financial Services Authority, are putting new laws re virtual currency exchanges on the table. Authorities think that changing the laws will be a good look for its fintech industry. More collabos between banks and fintech ventures are on deck with these changes (e.g., giving banks the go-ahead to buy stakes in non-finance related companies).

When You’ve Been Traded In For A Younger (FinTech) Model …

Bitcoin could be so yesterday. The virtual currency and its network are about to be replaced by Ethereum aka Bitcoin 2.0. Ethereum is taking advantage of the ongoing fight over software within the Bitcoin community. Things are looking up for the new virtual currency on the block. Its price is up 1000% just in the past three months, companies like IBM, Microsoft, and JP Morgan Chase are drinking the Ethereum Kool-Aid, and people think it’s better than Bitcoin. Apparently, it’s not just about its virtual currency network. It can do things like execute smart contracts or programmable transactions. Oh, and not to mention, people have already created applications for it (e.g., managing and paying for electricity, betting on sports, and not so legit things like Ponzi schemes). It’s not all sunshine and rainbows. There’s some concern about Ethereum’s potential security problems.

QUICK POLL – RUN THOSE NUMBERS …

FinTech brought in the doll-ah doll-ah bills in Feb. 2016. We’re talkin’ $1.5 billion in financing…

THE STREETS ARE TALKIN’

How do you reach millennials during tax season? Get Instagram star Pierce Thiot, responsible for the “Will It Beard” trend, to stick money in his beard. Just the latest attempt for small companies (Fishback Tax) and larger ones to reach millennials and their cash. #TaxSwag

Speaking of millennials, roboadvisor company Betterment just raked in US $100 Mill to bulk up on new products and services (retirement guides and account aggregation), which it thinks will attract young peeps.

Will Facebook soon let us make in-app purchases? Potentially. Code has been discovered within Facebook Messenger that’s got people talkin’.

Swiss banks want a mobile payments platform for the country. They’re chatting with retailers on how to make it happen.

Startup Purse wants to be the Bitcoin marketplace version of Etsy. Introducing Purse Markets. Sell anything on the platform in exchange for some virtual coins.

MIT’s Digital Currency Initiative is offering up $100k in scholarship to boost under-repped minorities and women at Consensus 2016, NY-based conference on virtual currency and blockchain technology.

This Is Its First Time at the Rodeo: PayPal Takes on Super Bowl

Posted by The Virtual Skinny on February 5, 2016 in Culture, Money 0 Comment

https://storify.com/virtualskinny/paypal-s-first-time-at-the-rodeo

Virtual Skinny FinTech Ed: When It Rains, It Pours …

Posted by The Virtual Skinny on February 3, 2016 in FinTech Edition, Newsletter

2.3.2016

Keep Spreading the Word: We’d appreciate if you’d tell your friends to get in on our FinTech weekly action. They can sign up here!

THE SKINNY

When People Are Coming For You …

The European Union (EU) wants to do more to track how funds are transferred among terrorists. Looking at you, Bitcoin (and prepaid cards).

Please Tell Me More …

After the Paris terrorist attacks in November 2015, the European Commission (being pushed by France) is focused on Bitcoin and prepaid cards for one main reason: identity. Using these services is a good way for bad guys (or anyone really) to hide financial transactions because it’s hard to uncover people’s identities.

When You’ve Already Got Summer Plans …

The Commission plans to pitch some new rules by the end of June 2016 that would make users reveal their true identity. We’ll have to wait and see how that turns out.

WHAT ELSE IS GOING ON?

When It’s Your Time …

Peer-to-peer (P2P) lending had a pretty good 2015 and looks like 2016 may be even better. New companies like Lending Club, OnDeck, Prosper, etc. popped up post the 2008 financial crisis to give people the loans they couldn’t get from banks. P2P lending startups will likely be on the rise this year thanks to things like an increase in interest rates, regulation, market size, and competition. Who knows? Internet companies like Facebook, Google, and Amazon have probably got next in the p2p lending game.

THE STREETS ARE TALKIN’

Stellar, an open-source payment network based in Silicon Valley, wants in on the instant money transfer situation in Nigeria. It’s teaming up with fintech company Oradian that deals with microfinance systems in the name of financial inclusion. Transferring money may just get a lot easier for underbanked rural Nigerians.

While we’re on Nigeria, fintech startup Interswitch is about to make it big! It’s CEO isn’t talking, but we have it on good authority that the digital finance infrastructure (think platforms used for processing payments) may soon make its debut on the London Stock Exchange and become Africa’s first tech unicorn (meaning its worth at least a billion dollars). Kind of a big deal…

Ex-JPMorgan Chase exec Blythe Masters is keeping it in the family. Masters’ startup Digital Assets and the bank are playing on the same team for a blockchain trial run on how to make trading faster and more efficient. Oh, and Goldman Sachs and IBM also want a piece of the company for about $8 million combined.

Bitcoin and blockchain are blowing up in Asia. Here’s the rundown: Japanese VC firm SBI Investment pours money into bitcoin exchange Kraken; Bank of Tokyo-Mitsubishi UFJ, Tokyo’s largest bank, has got its own digital currency, “MUFG coin.” Add South Korea’s Central Bank to the growing list of entities looking into blockchain technology.

ETFs, WTF?: When Financial Investments Go Robo

Posted by The Virtual Skinny on January 28, 2016 in Culture, Money 0 Comment

Earlier this month, we learned that Snapchat is reportedly working on a new feature for its app. This has nothing to do with special filters, but everything to do with money. That’s right, Snapchat is rumored to be working on a robo-advisor service to help advise users on how to invest their money. The app also plans to provide users with access to exchange-traded funds (ETFs), an easy and cheap way to find and access investment opportunities whether they are stocks (like Apple’s stock) or commodities (think, gold).

If you have recently come into some money by nabbing your first job, winning the lottery, or doing something in between, here’s what you should know:

Robo-Advisors Explained …

When it comes to robo-advisors, think more algorithms and less human interaction. In other words, robo-advisors are simply computer programs that use algorithms to propose automated investment recommendations suitable for you.

Who Are the Major Players?

According to Deloitte, automated investment advisers like Betterment and Wealthfront along with about nine other firms make up the growing robo-advisor industry. Though a nascent industry, Deloitte anticipates that the robo-advisor industry could grow to US $5 – US $7 trillion in the next decade. The industry’s growth will likely be attributable to new players wanting to get in on the robo-advisor action. The entities reportedly looking to enter the market could range from established wealth management firms like Vanguard and Charles Schwab to peer-to-peer and web-based services like Venmo, Snapchat, Inuit’s Mint, Twitter, etc.

What’s Your Angle, Snapchat?

With a 100 million monthly users, Snapchat is actively searching for creative ways to generate revenue. Increasing advertising efforts and its less than successful attempt to offer sponsored lenses via its Lens Stores are just a couple of ways the messaging app has tried to cash in on its growing audience. But, that was the past. Moving forward, it is possible that Snapchat is banking on its robust Millennial user base (about 70% of its users are between the ages of 18 and 34) to profit off of a potential robo-advisor service.

While Michael Kitces (partner and research director at Pinnacle Advisory Group) gives kudos to the Snapchat for its audience, Kitces is skeptical about social platforms entering into the “robo” space. Kitces explains that even the big guys in this space only bring in a few million dollars a year in revenue. He even questions what social media platforms see in a market where current players are folding and exiting the business.

Well, social media company Facebook may just have uncovered the answer. The company’s latest study of its Millennial users found that young people are increasingly trusting robo-advisors and turning to them for guidance on investments.

Bringing It All Together …

Snapchat’s angle seems pretty simple: Take a majority of your users who are financially prudent Millennials and want to know how to invest their money. Add their increased interest in using robo-advisors. That comes out to Snapchat potentially seeing a lot of green.