Month: February 2017

Currently, the business commercial banking segment is worth $1.85 trillion worldwide.  Banks have estimated that around $500 billion of that sum is expected to be removed by third parties or FinTechs over the next five to seven years, however.  A significant portion of this figure is supposed to come from paper payments that have moved into electronic form.  According to CEO and founder of FI.Span, Lisa Shields, API in banking is what the future of banking needs to use.  API stands for application program interface, which is a set of routines, protocols, and tools for building software applications.  At the Desutsche Bundesbank G20 conference in Germany, it was reported that the       desire for more choice, better-targeted services, and improved pricing for consumers were going to come through FinTech. Along with consumers, banks would also profit from FinTech with lower transactions costs, stronger operational resilience, and better capital efficiency.  With the amount of money banks are looking to lose over the next five to seven years, it may be smart to start working with FinTech firms rather than keeping themselves separate.

 

https://www.cryptocoinsnews.com/fintech-can-help-banks-tap-500-billion-hole/f

The biggest form of debt for millennials is the student loan from undergrad or graduate school. Roughly $1.3 trillion in student loan debt was issued last year and most of them were stuck in a lower-wage job, which made is difficult to pay off the debt. One advantage they have is that they utilize technological apps to help finance payments, track investments and gain financial advice to help grow and maintain wealth and credit. A startup company called Mint allows users to create budgets, track spending and check credit scores all on their mobile device. Another application called Acorn automatically rounds up your payments up and invests your change, which can be quite lucrative with everyday purchases and payments. These companies exemplify how the millennial generation are utilizing financial technology to help with their every day financing. However, an issue of security always looms when you trust your bank and credit information with an application. Many people stray away from this technology because of this issue and is something that can’t be dealt with until acquired by a larger banking institution. Nonetheless, the continuing growth of the fin tech industry will heavily impact millennials due to the tools and advice that young adults can use to grow their money.

These two articles talk about a recent partnership/promotion between Square Reader and Apple Pay. The articles go over what the promotion is, reasons for it, and why it may make sense for both companies.

Last week, I talked about how the retail industry hasn’t fully embraced mobile payments. Here, we have two companies working together to possibly change that trend. It is mentioned that Square merchants can educate and expand the use of Apple Pay (and by extension, mobile payments in general), which could allow Square to gain a greater foothold in a market that it helped grow. The partnership indicates that Square has some confidence in the potential growth of mobile payments systems, and that they are willing to take a likely short term monetary loss (from increased costs and loss of swipe fees) for future gains. It is also interesting that Square might be disrupting itself, since it’s core business relates to physical cards, and not mobile payments.

I think on paper, the deal makes sense, but it does carry some risk on Square’s part (not as much on Apple’s part). The merchants affected by the promotion might be too small to make a difference, and for a company that already has a cost problem, increasing costs with the new readers might not be the best idea.

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Square And Apple: Who Is The Big Winner Of Their Payments Pair-Up?

http://www.businessinsider.com/heres-how-free-apple-pay-could-help-grow-square-2017-2

The Swiss Federal Council is aiming to make regulatory changes to create a more prominent fintech market. With new financial technology  such as bitcoin becoming more valuable and relevant, the goal is to create a more welcoming environment for startups. The undecided regulatory amendments would be aimed at Switzerland’s domestic financial industry to account for fintech. The proposition is to have different regulations for “firms that accept less than 1 million Swiss francs in deposits”. This would create a “regulatory sandbox” that allows startups to experiment with new technology.

I think this will be a re-occurring trend in many different countries as fintech continues to disrupt norms and processes in the world of finance. Most developed and developing nations understand the strategic necessity of changing regulations to increase efficiency as the market structure changes. More importantly, a lack of proactive and effective regulations would pose a major security risk related to the leaking of confidential information. Paying close attention to these regulations is a smart and beneficial decision that will better Switzerland in the future.

http://www.coindesk.com/switzerland-attract-more-blockchain-startups/?utm_medium=email&utm_source=fintechweeklycom

Square has launched a new integrated retail app that will help very small businesses to keep track of different aspects of their business. The app is a next-level retail solution for merchants with finished, packaged products who need more than just the Square Reader and basic Square mobile app. The first aspect of the search-based app is the smart customer directory that storeowners and retail staff can use to track and find clients. The second part of the app is inventory management that can manage real time actions that can scale across locations. The last component is an employee management system that allows the employer to give access to certain people or groups What I believe this app will greatly do is track all of the users information and store it in Square’s servers so that they can sell the data to other companies that will utilize it for their own purposes. If this is true then this storage will be another intrusion of privacy by Silicon Valley companies that will just integrate our lives for better or for worse.

Link: https://techcrunch.com/2017/02/08/square-for-retail-aims-to-be-the-only-store-software-most-shop-owners-need/

Fintech is changing the world people manage their money, apply for loans, maintain credit ratings and other services that banks provide. This is true for the western more developed companies. Fintech is slowly trying to effect the developing countries in the same way. More than half the population is lives in the developing world category of which many of them are not tapped by the Fintech market. This article explains how several Fintech companies are adapting to the situations in their own country to increase the ability for people to manage their money and increase eligibility to get loans. One such example is SERV’D in India which helps informal workers such as drivers, cooks and nannies to create simple formal work contracts and pay them online. This helps in them in a big way to apply for loans as they now have a way to show their income and ability to get a loan and pay it back accordingly. With the help of such innovative Fintech startups in the future populations that do not have banking ability or services around them to grow and increase their ability to manage money and achieve a higher standard of living.

 

https://hbr.org/2017/01/fintech-companies-could-give-billions-of-people-more-banking-options

 

With increase of urbanization, The daily requirements of people are also increasing along with options of availability. Every Store and every bank offers there unique card discounts to attract people. Struggling with the amount of cards and the weight of wallet , Mobile wallets was introduced.As it came up as a new technology everyone in the tech market like Google, Apple, Samsung and PayPal wants to capture this. As Apple pay and Samsung are only restricted to their phone users, Android and PayPal are widely spread. Coming out of the tech competitors, there are other type of wallets available like Capitol One Wallet which is specific to some bank brands, Star bucks or Walmart which are specific to stores.The usage of these handy wallets is not dependent to only users but the vendors also play a very important part. The users are concerned about the security issues, therefore something that seems new to them is difficult for them to adapt.But for vendors ,they have to bear the initial cost of installing the contact less point of sale (POS ) equipment.Either way, the popularity of mobile wallet is increasing day by day and it is expected to get 22% more users by next six months.

References:

http://www.toptenreviews.com/business/payment-processing/best-mobile-wallets/

https://thefinancialbrand.com/55074/mobile-wallet-payments-digital-banking-report/

      In this article, there is a discussion of why banks need to stop copying startups and start creating their own innovation model. Corporations are envious about how agile startups are able to innovate, yet should understand the large difference is goals between a startup and traditional bank. Larger corporations naturally act in far more in strategic and slow manner attempting to access mass markets. On the other hand, startups are trying to create as many different things as possible in hopes that every one in a million idea will gain traction. 

Corporations can not follow the lean startup model as a way to answer their innovation needs. Corporations using this model often end up wasting a lot of resources and capital that could be used more effectively elsewhere. One of the main findings that can help aid corporation innovation without blindly following the startup model is for big companies to understand what the customer wants and uses. After this is understood, creating a project around this becomes a better use of time and the chances of success is much higher. Banks need to find new ways to efficiently and effectively innovate in this quickly moving landscape.

 

 

https://www.americanbanker.com/opinion/rather-than-copy-startups-banks-need-their-own-innovation-model

A consortium of Australia’s biggest banks aims to gain access to the iPhone’s NFC antenna, which is what makes contactless payments on mobile phones possible. Initially attempting to negotiate a bloc with Apple, the banks responded to Apple’s claims of them attempting to block the expansion of Apple Pay into Australia by calling such claims “conspiracy theories.” Even though the banks have invested in their own payment technologies, they fear that any competition with Apple Pay will be severely one-sided. The banks are also attempting to gain permission to negotiate together, boosting their negotiating power, a move the Australian Retailers Association supports. Apple claims that restricting access to the NFC antenna to their own apps is crucial to the security and usability of the system.

Apple Pay is not the only mobile payment application on the market – Android Pay, Samsung Pay, Chase Pay, and Bronco Pay (OK that last one doesn’t exist yet) are other mobile payment services that are being accepted at more and more businesses, though Apple Pay is probably the most ubiquitous. As mobile payment services become more popular, it would be remiss for banks to not try and get a foothold in the market as well.

However, I do think that the banks may be wasting their time trying to get Apple to grant them access to the NFC antenna on iPhones. Doing so could set a precedent forcing Apple to grant other banks across the world similar access. This probably wouldn’t hurt the iPhone’s usability, but it would negatively affect their ability to maintain their competitive advantage of using their closed app ecosystem to better maintain a quality standard of apps on their app store. It is difficult for me to see Apple folding on this just because the banks demanded them to, but at the same time Apple needs the banks’ cooperation to bring Apple Pay to Australia. Whether the banks may be better off fighting Apple or giving up and relying on the open ecosystem of Android must be a question on the banks’ mind.

Source: https://www.bloomberg.com/news/articles/2017-02-12/apple-pay-dispute-about-tech-access-not-fees-aussie-banks-say