Month: February 2017

OpenFin is a financial services software developer which recently raised $15 million in a funding round that included JP Morgan Chase, the DRW Trading Group, NEX Group Plc, among others.  OpenFin’s software helps financial institutions create and upgrade trading applications using HTML5 as quickly and frequently as technology companies update their applications on smartphones.  Currently, it is noted that it takes roughly six to 18 months for new applications or updates to reach a trader’s computer at major banks.  HTML5 is the newest website coding language, and is becoming more popular on Wall Street because it allows software to be run on different devices.  Another feature on OpenFin’s software is the interaction of their app with other apps such as those for real-time market data or news and research.  OpenFin plans on using this funding to expand their New York and London offices, and bring in a total of 50 new employees over the year.  OpenFin is trying to become “the OS” for financial services.  Their software is very impressive, and seems to be a disruptive technology for Wall Street trading.

 

https://www.nytimes.com/reuters/2017/02/16/business/16reuters-openfin-investment.html?_r=0

https://openfin.co/press/

In this day and age it is not difficult to send payments to friends. Applications like Venmo have made check payments nearly extinct. However, this idea is now reaching a new market, B2B consumers. Symple is a payment processing company that is using its system to help companies track receivables and payables, as well as analyze payment trends.

I thought it was very surprising to learn most small businesses still use checks to make payments, particularly restaurants and bars. However, with Symple users can take a picture of their invoice and send it to Symple who will record the critical details, and then when it comes time to pay users just press a button.

I think platforms such as this one have many benefits for users. Over time this will increase speed and efficiency. Also the data analysis tool will make it easier for the businesses to budget for the future. Finally I think the online nature of these systems will implement controls that will ultimately stop fraud.

There could also be some potential consequences for users. Data security is very important, and new systems like this one might not have the capability to properly protect clients money.

Symple wants to be Venmo for business payments

Based in San Francisco, California and founded in 2011, Metromile has been disrupting auto insurance industry by providing users with a pay-per-mile insurance solution and a driving application. By using a device called Metromile Pulse which is hooked up to your car’s diagnostic port, the company keeps tracks of your miles to determine insurance premium. In addition, the Pulse records your driving routes and advises accordingly how to optimize travel time and gas usage. More interestingly, Metromile won’t charge you more than 150 miles a day if you go for a road trip. In terms of coverage structures, Metromile offers the same as other auto insurance companies. In terms of pricing, you get charged monthly by the actual miles you drive plus a fixed rate determined by your driving history, age and coverage selection. Despite those benefits, the claim process has been reviewed to be slow, troublesome and not satisfactory.

Thus, Metromile is a best fit for seniors who do not often drive and tend to drive carefully or for those who own several cars which they rarely use. Also, anyone who has a tight monthly budget and doesn’t mind the unresponsive claim process should consider Metromile. I believe Metromile will succeed if it could improve its customer service and additionally consider partnership with conventional insurance companies to create synergy.

Source:
1. https://www.valuepenguin.com/metromile-auto-insurance
2. https://www.crunchbase.com/organization/metromile#/entity

In the last blog, I briefly introduced the DAO. Today, I am going to introduce the DAO attack and discuss what the DAO attack taught us about the future of IOT.

The DAO was launched on May 28th 2016 after raising over $150 million. On June 5th, an antipattern was found in the reward system of Ethereum, but it was quickly fixed and claimed not to post risks to the DAO. However, at the same time, a similar antipattern exited in the splitDAO function but was not discovered by anyone but the attacker. On the 17th, the attacker exploited this bug and moved $50 million to a child DAO. Despite that the Ethereum community quickly made it impossible for the attacker to cash out the Ether, the market value dropped from over $20 per Ether to $13. The attacker could have already benefited by shorting Ether beforehand.

While the idea of Internet of Things based on blockchain seems promising, the attack definitely taught us some lessons. Since both the Ethereum and the DAO are immature technologies, and it may be of benefit to take a conservative approach and launch new products more gradually. Reducing complexity of codes can also reduce bugs in the codes.

However, one thing I want to argue is to increase governance and probably create some centralized plans to address emergencies such as hacks, despite the main idea of the DAO and IOT is to eliminate central governance. Without central governance, it makes reaction to emergency very slow, since every decision takes time to vote and may not be passed by 50% of the users.

Source: https://blog.slock.it/the-history-of-the-dao-and-lessons-learned-d06740f8cfa5#.61xux96k5

According to the firm PitchBook, the total investment in Fintech technologies have increased by 11% (to 17B). This was also the first year that China outpaced the US in investment by over $1b. The UK took 3rd place, most likely due to skepticism of Brexit.

A common theme amongst all investments can be found in artificial intelligence. Specifically, using AI instead of humans to perform stock trades and manage portfolios. Many investors believe that the lack of emotion and implicit bias provide an edge in investment. This technology can also be used to help with regulation to ensure trades are meeting requirements. I believe that AI will help reduce the current overhead brought by human traders.

Fintech continues to be a growing field. It will be interesting to see the movement of AI in FinTech for 2017.

Reference: http://www.forbes.com/sites/lawrencewintermeyer/2017/02/17/global-fintech-vc-investment-soars-in-2016

The current regulations regarding various licenses and charters are out-dated and ill-suited for financial technology. The Office of Comptroller of the Currency (OCC) could either hinder or promote the growth of fintech firms. Currently, the OCC supports the traditional financial sector, which promotes stability, security, and safety. For the OCC to boost fintech, it needs to go against the values of traditional finance and tolerate failure. If the OCC grants charters to fintech firms, it needs to get rid of its zero failure goal. Instead, the OCC should focus on requiring companies to have a clear exit strategy in the event of a failure.

I believe that financial technology has shown its potential and that the OCC should update its rules to adapt to fintech firms. With the help of OCC fitech firms can better compete with the traditional financial sector. This is a win-win situation by allowing for more innovation and keeping the market competitive. Failure is prone to happen, but the benefits of a company that can dominate globally outweighs the risks of the few companies that don’t make it. With more risks comes more rewards, so the OCC should expand its policies to charter rising fintech firms.

Source: How Fintech Can Take Off Without Getting Hampered by Regulations

Mobile payment began with smartphones followed by smartwatch and similar wearable bands. Recently there has been a new add-on to the family of mobile payment wearables: Sunglasses. Now apart from using cell phones and smartwatches, user can use their glasses to make payment.

This initiative known as WaveShades is a new contactless payment system built into sunglasses, born from a partnership between Australian startup Inamo, sunglasses-maker Local Supply and Visa. The prototype is rolled out ahead of St. Jerome’s Laneway Music Festival and handed out to goers to make their contactless payment.

I feel the idea here is to present a use case where user (specially millennials who frequently attend such festivals) only need to worry about keeping track of one thing, which is almost always right in front of their eyes.

The payment procedure is similar to other wearables, where there is a NFC chip in one arm of the glasses. The user just need to wave his glasses in front of terminal to make the payment.

The ever growing mobile payment family continues to see new innovations like these more frequently than ever. This definitely opens up the possibility of contactless payment being a dominant industry of its own in payment segment making traditional payment methods obsolete in near future.

references:  http://www.geek.com/tech/get-smart-with-waveshades-tap-to-pay-sunglasses-1687654/

https://www.cnet.com/news/waveshades-contactless-payment-sunglasses-laneway/

Facebook with more than 1.55 billion active users each month, has entered into the payment sector recently. Hence proving it can be more than just a social media, and a platform for commerce as well. With such a large growing community, Facebook is taking this slow as a one-time chance to get it right.

Best payment experience than a rushed job: There are several strong competitors in the payments sector like Apple Pay, Android Pay, Samsung Pay, Paypal, Venmo etc… Now the point comes which of theses gives the best payment experience. Of course right now these apps may have the best experience, but Facebook gets its users slowly by releasing updates gradually to make sure it will give a best payment experience. Then the very fact that Facebook is getting the large population of eyeballs will set a huge service differentiator from the rest of them. Therefore, Facebook is taking its time to give its users a best payment experience rather then just getting the job done.

Potential for growth in markets of third world nations: Considering growing mobile market in third world nations like India, and Facebook’s efforts to connect the rural parts of the nation with its ambitious plans of giving free internet, its potential keeps growing with added user base. As people get more aware of taking advantages of these freely accessible technologies in the palm of their hands, Facebook will reach immense scales in the payment industry too. So basically Facebook may some day be a social currency with more than billions of customers.

Considering the advantages, it has over its rivals like billions of users in social media platform, and how it has acquired the giants in communication sectors like WhatsApp and Instagram, rolling out the payments in its Messenger app seamlessly will have a huge potential for the company’s strategy heading forward in the growing FinTech industry.

Source: https://blog.faisalkhan.com/how-facebook-s-messenger-payments-will-win-big-2c0259764097#.lel2pv29h

June 2016 certainly marked Britain off the EU but with that came unprecedented possibility of a negative effect on Britain’s sector. Whether that happens or not is a topic for later discussion but Sweden is certainly making efforts to become a hotspot in the European Fin-tech sector.

Factors in Sweden’s favor:

• An established track record for attracting investments: Highest number of fin-tech investments per capita in the last 5 years within Europe.
• A relative ease of access to the government authorities that aids businesses create a well balanced and favorable ecosystem.
• Sweden is on its way to become the first country to become a cashless society by 2030.
• Formation of the Swedish Financial Technology Association (SweFinTech) that would ease the overall regulatory environment for FinTechs (including upcoming startups as well).

But according to me, if the speculation is true, it is the timing that will matter for Sweden to actually beat UK to top spot. Brexit has ironically opened the floodgates in the form of a wild card entry for many such entities to pierce the European market.

Reference – http://www.newsbtc.com/2017/02/19/sweden-post-brexit-fintech-destination/; https://www.cryptocoinsnews.com/sweden-see-opening-brexit-boost-fintech/

 

Falling under the philosophy of ‘If it’s not broken, don’t fix it’, the way payroll functions today is based on outdated conventions and processes. Payroll is currently managed by firms on an individual and monthly basis. This encompasses the traditional payroll system seen throughout most of corporate America. Teams at SAP have thought about this issue and have blueprinted potential future functions and practices regarding payroll. Of these blueprints, a particular innovation revolves around a new notion of self-service payroll. Instead of a company’s payroll department facilitating a single monthly pay run, the system can be reinvented to allow individual employees to decide when and how much of their pay they demand.

I think such a change has the potential to cause major disruptions in the industry and economy as a whole. I say this because a self-service pay roll system could change consumer behavior based on their more flexible purchasing power and demand for money. This could increase economic activity but is accompanied by the risk of more irrational money management decisions. If such an idea can overcome the hurdles of existing regulations and policy, it may become an integral part of worker compensation management in the future.

http://diginomica.com/2017/02/02/digital-payroll-futures-thoughts-sap-others/