Month: February 2017

The article is about Chain, a blockchain company that partners with banks and financial firms to integrate blockchain technology into financial services. In 2016, Chain released a version of its software on open source for all developers to access. Chain hopes that giving people access to its software will allow faster innovation of financial uses for blockchain.

On the one hand, this is a good move because it brings Chain back to the roots of blockchain’s origin. BitCoin started as an open source project that found great success. Opening up software allows for more collaboration and progress. On the other hand, not everyone understands the needs of the financial services industry. If Chain wants to use blockchain for banks and financial firms, it needs to be designed with that in mind. Random developers will bring new tweaks to the software, but not all of these changes will be useful for Chain’s goals. Time will tell if Chain gains enough innovation from realesing the software for it to be worthwhile.

 

 

 

http://fortune.com/2016/10/24/visas-blockchain-chain-open-source/

According to the article, many fintech companies are have missed their targets set after elongated fundraising cycles, mounting losses and dropping stock prices. The first reason the article states fintech firms are failing is largely due to the fundamentally strategic contradiction between technology and finance. Fintech firms are pressured by investors to return investments quickly, however the finance sector is slow growing in nature. The second reason is that market realities encourage short-term thinking. Companies abandon long-term investment in innovation for quick growth using traditional sales techniques. Lastly, incumbents in the market are powerful and resistant to change. Financing and banking services are highly regulated and conservative, and do not see fintech companies as a current threat.

Although I agree that fintech firms still have a long way to go before replacing banking and financial services, if they ever do, I still believe they have succeeded in disrupting the market. While they may not replace traditional firms, they have pressured finance and banking companies to be more innovative and offer services incorporating technology to stay competitive. I believe in the future, the blend between finance and technology will be inseparable, so traditional firms will need to adopt and adapt to stay on top.

Source: 3 Reasons Why Fintech is Failing

IoT Cloud Drive

As interconnected consumer devices become increasingly common, it’s only a matter of time before commerce follows. While entertainment typically moves the market, monetization is often quick to follow. This has held true in every internet-based movement so far, and there’s no reason to suggest that the trend is going to end now.

When mobile Internet was in its infancy, companies like Google, Facebook and Apple were the driving forces behind a push to speed up connection speeds and connect more devices worldwide. Revenue is a powerful motivator for change, and without it, the status quo would remain indefinite. The  IoT (Internet of Things) is no different. As profit motive increases, adoption and roll-out will as well. In a future dominated by mobile technologies, interconnected devices, and the need for on-the-go payment solutions, the IoT could be the movement that nudges everything in the right direction.

Alternative Currencies can become viable

For all alternative currencies such as BitCoin, the one thing that remains a key roadblock to consumer adoption is accessibility of technology. Altcoins have real value in the consumer marketplace if the barriers to entry are lowered by ensuring safety, ease of use, and retailer adoption. The problem currently is strictly technological, but as wallet makers begin the slow process of integration, digital wallets could be the key to unlocking the potential held by alternative currencies.

Digital wallets for altcoins isn’t a new idea. In fact, several of them already exist. Bitcoin Wallet, Mycelium, and Hive are just a few of these technologies that allow consumers to store altcoins on a mobile device. The problem is, outside of a payment network that allow customers to use them, they are essentially worthless. While the technology exists, it’s a hard sell to get consumers to move to a single technology in order to store alternative currencies that they aren’t using in the first place. This is why digital wallets made by trusted companies such as Google, Apple and others could spur real innovation as well as viability in the altcoin space.

Linking alternative currencies to well-known wallet makers not only lends trust to alternative currencies, but gives retailers the option to process all of these different methods (credit, debit, loyalty cards, alternative currency, and others) through one piece of point of sale technology. This is how we can bring altcoins to the mainstream.

Reference:  http://Reference: https://sites.google.com/a/utexas.edu/digitalwallets/secur

Robinhood Markets Inc. is a U.S. based company founded in 2013. The founders announce their mission to democratize access to the financial market. To fulfil its mission, the company is swiftly stealing commission charges from online brokerages from the rich, and giving access to the stock market to the poor. The Robinhood smartphone app allows individuals to invest in publicly traded companies listed on U.S. exchanges without paying a commission . 

To sign up for the app, users must fill out an application. Once accepted, users are sent a brief video that explains the app, how to make trades and how they can get away with $0 trades.

How the company makes money:

Originally, Robinhood planned to make money off of order flow– a common tactic used by discount brokerages in the 1990s to generate revenue. Robinhood backpedaled on the idea because it executes orders through a clearing partner and, as a result, receives little to no payment for order flow. The company is willing to return to its original plan in the future if it receives order flows directly or begins to generate a lot of revenue from them.

For now, the app stays afloat for mainly two reasons. First, the business itself is extremely lean: no physical locations, a small staff, no massive public relations campaigns. Robinhood also generates interest off of unused cash deposits from user accounts according to the Federal Funds rate.

Second, venture capitalist such as Index Ventures, Ribbit Capital, Google Ventures, Andreessen Horowitz, Social Leverage, have invested more than $16 million in the app.

Some main features of the Robinhood product in addition to no commissions are account protection, secure and encrypted, fast execution by low-latency trading systems, real-time market data and smart notification.

How technology helps your investment: to describe the impacts of technology in stock market it is better to compare Robinhood with traditional players in the market. In fact, technology and competition has brought the cost of trading stocks for individual investors down to zero with the introduction of Robinhood. In addition, Robinhood does not have a minimum initial deposit requirement, whereas E*TRADE as one of its main competitors requires that its customers deposit at least $500 to get started.

In general, FinTech helps people to invest in the stock market who could not imagine entering this market due to lack of enough money or understanding the market. So it can be said that they are achieving their goal to democratize the market.

Source of table: Robinhood Market website

References:

http://blog.robinhood.com/news/2015/8/12/robinhood-at-a-play-store-near-youhttp://www.investopedia.com/articles/active-trading/020515/how-robinhood-makes-money.asphttps://www.quora.com/Should-someone-begin-investing-by-using-the-Robinhood-apphttps://www.robinhood.comhttps://techcrunch.com/2015/05/07/free-stock-trades/https://www.crunchbase.com/organization/analyst/timeline#/timeline/index

 

Funding: unknown amount;

Investor: Converge Venture Partners; 2016; Palo Alto
Enigma provides solution for protecting usage data. It allows sharing data with others for processing without actually giving it away. It ensures that data is guaranteed to be encrypted at all times, even when complex analytics functions are needed. Enigma combines Secure Multi-party Computation (MPC) with Blockchain Technology to enable this highly encrypted cloud platform that is built from a network of computers that can store private data and process it, without being able to see the data they are operating on. Core functions of privacy and security are layered on top of distributed cloud technology, as a result it is a dynamic combination that transforms how data is stored and retrieved; providing industries like finance, health, and civil services the platform for having a secure and trustworthy data. This can be further used for mobile application development in this domain.

Reference: http://www.enigma.com/

Grab is a Singapore based ride-hailing platform that holds a large presence in Southeast Asian countries such as Vietnam, the Philippines, Malaysia, Thailand, Singapore, and Indonesia.  Grab is planning a $700 million investment in Fintech companies in Indonesia, which is already their largest market.  With only 75 of the 250 million people in Indonesia having banking Fintech is a great avenue to provide access to a part of the population that hasn’t had the ability to use Grab’s services.

Grab co-founder and CEO Anthony Tan states it well, “We see this huge, unbanked population becoming bankable. If we can… give access to those who don’t have access to credit, it’s a massive opportunity.”

Fintech transactions are expected to grow at an annual rate of 20% in Indonesia. In addition to the rise in Fintech startups in the country, there is a significant rate of smartphone use.  This investment makes it evident of how important Fintech is, especially in emerging and developing markets.  It is easier for people to buy a cheap smartphone than get bank credit.  I see this investment having a high rate of return for Grab.

https://www.cryptocoinsnews.com/uber-competitor-grab-700-million-fintech-indonesia/

What the Article Says:

Dealnet Capital Corp., a consumer finance company, recently launched its new financial technology platform to increase security and certain automation services. The fintech platform is initially set to automate credit and application processing on mobile and web enabled devices, tying in the new functions with the existing platform. In addition, the improvements intent to streamline the funding process for dealers, while providing a closed secure network. Dealnet intends to put out additional modules to create a smoother lending experience and allow for an efficient engagement between dealers, consumers, and the technology.

My Thoughts:

I think that Dealnet is going about these tech improvements in the right manner. While offering more resources and a smoother experience for their users, the focus on security standards is increasingly more important. There are already so many risks when it comes to lending, and ensuring that the tech platform is functioning at its best is crucial. I am curious to see how other businesses and competitors respond to their improvements, and how they decide to go about their next steps.

Source: http://finance.yahoo.com/news/dealnet-launches-financial-technology-platform-122549422.html

There is currently a lot of pressure on financial advisors to make the client experience more efficient and user friendly for their customers.  This creates opportunity for fintech companies to build programs for these advisors to implement.  In one example, Redtail Technology will launch real-time communications for the advisor to be able to reach out and respond to both staff and clients using text messaging services built within their client relationship management tools.  This technology will also make sure all communications will tie into an audible trail, with quick responses that will allow everything to happen faster.  Another company, Orion, is working on a fee benchmarking tool so advisors will be able to compare the fees they charge households with 1,000 other firms that use Orion’s systems.  This will not only allow advising companies to come up with comparable pricing, but also will show clients whether or not they are paying too much for their services.  Lastly, the Envestnet Tamarac platform is planning on releasing new features which will allow investors to view and co-manage a series of accounts, such as those of an entire household.  Fintech has been a strong growing industry, and as shown by this article, 2017 will carry on this trend.

 

 

http://www.investmentnews.com/article/20161216/FREE/161219948/tools-financial-technology-companies-plan-to-bring-advisers-in-2017

Dodd-Frank legislation, originally signed into law in 2010 by the Obama administrations, was a series of legislative compliance rules targeted to the financial service industry in response to the industry’s 2008 major crisis.  With the recent announcement by the new Trump administration, the question remains as to what effect, if any, will their actions have on the financial technology industry? 

The predictions in 2011, following the announcement of the original legislation, was that business would be forced to put more money into IT solutions to satisfy compliance, and as a side-effect, this additional funding to the back office systems, would spur new innovation with data management as a whole. For the business, the idea of a more comprehensive understanding of its data, would lead to competitive advantages. I think when we look back over the last six years, the SAP solution to the integrated systems, and the current trends, such as the Blockchain distributed ledger, we can conclude that IT has seen growth due to Dodd-Frank.

 I believe that with the advantages that businesses have realized by concentrating on solutions to data management, along with the focus on integration across its sectors, this area will continue to grow for Information Technology, despite any attempt at the proposed reforms to the current legislation.

 https://www.nytimes.com/2017/02/03/business/dealbook/trump-congress-financial-regulations.html?_r=0

NY Times Dealbook – Trump Moves to Roll Back Obama-Era Financial Regulations

 http://www.institutionalinvestor.com/blogarticle/3547273/how-blockchain-can-aid-dodd-frank-compliance/banking-and-capital-markets-trading-and-technology.html#/.WJgk0RsrK01

Institutional Investor – How Blockchain Can Aid Dodd-Frank Compliance

 http://www.wallstreetandtech.com/regulatory-compliance/dodd-franks-impact-on-it/229200184?pgno=3

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