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.