Month: March 2017

Blockchain Internet of Things:

As blockchains and sidechains increase rapidly, there are several important implications for the Internet of Things and the development of Smart Systems. Blockchain technology could provide a way to track the unique history of individual devices, by recording a ledger of data exchanges between it and other devices, web services, and human users.

Examples include electronic couriers to securely transfer sensitive information, escrow services to transfer ownership rights, or even auto-installation services to verify and push updates to the software governing other Digital-to-analog converters (DACs).
Interesting startups in this field:
Chimera-inc: Chimera connects the Internet of Things to real-time analytics performed on the edge node. It is a hub that links the home network to the cloud and electrical devices around it.
Filament: Filament is building a decentralized IoT stack to ensure that devices can securely communicate and transact value without any infrastructure. Filament builds sensors (called “Taps”) that are used by companies such as Amazon and Space X.

I think IoT with its capabilities has the ability to redefine the scope and possibilities in the financial technology sector. Frauds and other discrepancies would be easily detectable and prevented with all electronic trace being maintained in any kind of financial information exchange. Large corporations are heavily investing in this domain to be the first to market.

Reference: https://everisnext.com/2016/05/31/17-blockchain-disruptive-use-cases/

http://time.com/money/4036511/venmo-more-check-than-cash/

Venmo is a very popular transaction payment program that is primarily used on mobile devices. It is a service application that is owned by Paypal, which is another payment transaction company. However, in the research that I have done on Venmo’s security, there were a lot of concerns initially with how effective the structure of the mobile app was in deflecting and detecting fraud.

Typically people use Venmo as a cashless way of sending money to others. These type of transactions range from personal transactions and small business transactions. Initially, Venmo did not have a notification method for changes in email and physical addresses which allowed scammers and hackers to send up to three thousand dollars to themselves. Venmo has implemented more precautions to avoid mishaps like this.

Additionally, the most common scam, according to Wolff-Mann is when someone sends you a payment but then cancels the transfer process before you could fully transfer their money to your account. In the same way that a paper check could bounce or be nulled out, Venmo scammers implement the same trick after they received their reciprocal payment.

Whether it’s implementing a security deposit initially for transactions or slipping in a contract that obligates the sender to fulfill their payment request, using Venmo definitely has its risks and benefits.

According to Business Insider the 3 fintech segments that grew the most in 2016 included: cloud core processing solutions, artificial intelligence, and product personalization solutions.

The article describes the key reasons behind their success to be “the evolving technology in each of these segments” and consumer willingness to interact with these products. I think these reasons provide good insight into why certain fintech sectors experience so much growth. However, I think as technology becomes more complex and capable we need to keep consumer preferences in focus. If consumers go against a technology, the business will diminish quickly.

Over the past year we have seen the cloud expand quickly, and through many parts of our life. New technology has allowed most businesses to run through cloud servers, allowing different platforms to be more cost efficient. However, I think as this technology gets more appealing businesses need to be wary of the safety of their data. We have seen cloud databases be hackers new challenge of choice. This makes both enterprise and consumer customers nervous to keep important information on cloud databases. If cloud companies can not figure out how to keep their information safe, this sector growth could decline.

As business insider said artificial intelligence has grown over the past year. New technology in this sector has been very prevalent particularly in the consumer goods sector with the release of products like the Amazon Echo. However, I think this fintech sector also needs to be wary of consumer opinions changing about AI. Privacy has become a big worry of people using AI machines, especially those in your home that can record everything you say. Companies who issue AI machines will need to ensure customers this data will not be used against them for growth to continue.

The final fintech sector that has grown because of new technology is product personalization solutions. Much like AI technology consumers enjoy have machines help them on a day to day basis. However, these machines are constantly collecting data about all its users. If consumers become uncomfortable with this fact, then this sector will see growth decline.

Overall I believe these fintech sectors can continue to flourish if they keep balancing consumer privacy and safety with advances in new technology.

http://www.businessinsider.com/these-are-the-fintech-segments-most-likely-to-grow-in-2017-2017-3

FinTech is a segment sitting right at the intersection of the financial services and technology sectors, and its goal is to innovate products and services that are traditionally offered by the financial services industry. FinTech is gaining significant momentum and causing massive disruption to the traditional value chain. Listed below are the emerging trends that will be most significant in the years to come in each area of the Financial Services industry. These key trends not only promise to enhance the customer experience and sophisticated data analytics, but also enhance cybersecurity.

1) Banks are adopting technologies that will improve the digital customer experience: Traditional banks are now shifting focus towards virtual channels by implementing technology solutions and are developing new methods to reach, engage and retain customers. With a goal to pursue a renewed digital customer experience, banks are engaging in FinTech to provide customer experiences on a par with large tech companies.

2) Money Transfer and Payment segments are prioritizing security and increased ease of payment platforms: The key driver of the evolving money transfer and payment platform is the adoption of smartphones. Consumers who prefer using cellphones to carry out transactions, expect immediacy, convenience and security to be integral to payments. Fintechs are working in conjunction with technology firms and traditional money transfer platforms to develop solutions that enable transfer of funds globally in real-time with enhanced security.

3) Use of Robo-advisors for asset and wealth management: There is a clear shift from technology-enabled human advice to human-supported technology-driven advice in the area of wealth and asset management. Financial institutions are focusing on increased sophistication of data analytics to better identify and quantify risk. The proliferation of data along with new ways to capture it and the declining cost of performing these operations, is reshaping the investment landscape.

4) Blockchain: This technology is rewriting the Financial Services rulebook. Blockchain is a new technology that combines a number of mathematical and cryptographic principles in order to maintain a database between multiple participants without the need for any third party validator or reconciliation. In simple terms, it is a secure and distributed ledger. Blockchain represents the next evolutionary jump in business process optimization, along with offering significant potential for multiple other use cases, for instance healthcare, smart contracts, IoT.

In conclusion, whether or not financial institutions adopt digital strategies, integrating FinTech is going to be essential and given the speed at which technology develops, incumbents cannot afford to ignore FinTech.

References: http://www.pwc.com/gx/en/advisory-services/FinTech/pwc-fintech-global-report.pdf

Most people are familiar with plastic loyalty cards, where stores give you a credit card resembling discount card that tracks your purchases and points. However, as more and more stores begin to offer them, our wallets become too full and they can create more hassle than they are worth. A UK-based loyalty app called Bink seeks to address them by consolidating all these loyalty cards on their app. Currently, the app is only live in the UK, but is seeking funding to expand to the rest of Europe and Africa, and to the United States by 2018. More and more brands are signing onto the app and it is compatible with Visa, Mastercard, and American Express. Customers can securely link debit and credit card info to the app and access all their rewards and discounts at once.

I personally think this is a really smart idea. My mother is constantly sorting through her excessive pile of loyalty cards every time she goes to check out at a store, and making this digital could really solve this problem for her and many others, so long as the app is easy to use. I would also be interested in using this app as it saves the wasted resources on the physical cards and serves the same purpose. It is also really smart for businesses, as they save money on producing physical cards and can more effectively track purchases for marketing purposes.

Source:
http://www.businessinsider.com/fintech-app-bink-seeking-25-million-series-a-expand-us-europe-2017-3

The article predicts Germany surpassing the UK to become the new fintech hub in Europe. The Brexit vote has international investors wary of funding new London-based fintech startups, at least until business relationships in a post-Brexit market are sorted out. The article cites the increased funding of German fintech startups as a sign of Germany’s impeding supremacy.

However, the fintech CEOs mentioned in the article do not share the same thoughts. Niroumand of FinLeap fears that Brexit will make more room for competition with US and Chinese based fintech firms rather than being clearly beneficial to German companies. He sees benefits within the EU because there will likely be favorable agreements for business within the EU without the UK, but states that outside the EU competition will be unchanged.

Financial News also points out that German companies do not focus on beating British fintech. German fintech plans to grow mostly through partnerships with US and Asian markets rather than UK startups leaving. Ultimately, German startups are doing well, but the author is wrong to assume it is all because of post-Brexit uncertainty.

 

https://www.forbes.com/sites/madhvimavadiya/2017/03/14/fintech-germany-brexit/#5356eb1b45a0

As we wrap up the quarter, looking at what’s ahead in the Fintech industry in 2017 by studying the past couple years of fintech sector growth is important. PwC and UK-based fintech accelerator Startupbootcamp FinTech London studied the growth of the past 2 years in areas such as cloud solutions, crowdfunding, smarter/faster machines, and a cashless world. In their study, they were able to see that cloud solutions, smarter/faster machines – including machine learning, AI, and blockchain technology – and shifting consumer preferences (e.g. customer segmentation and product personalization solutions) all showed increasing growth between 2015 to 2016, suggesting the potential continued growth through 2017. This comes as no surprise considering the increased role that these segments have had on our everyday lives. Investments into “a cashless world” which is comprised of areas such as digital retail payment solutions and emerging payment rails saw a decline over the past 2 years. Again, this should come as no surprise to consumers because we’re not seeing any changes hitting the market. I was surprised however that crowdfunding seemed to have a steady investment growth. I would have expected that the growth would be increasing through 2017 but as the article states, this could be due to “some firmly established players which dominate these areas, [and] newcomers think there are still problems that their larger peers have not effectively addressed”. The maintained growth is because of this.

http://www.businessinsider.com/these-are-the-fintech-segments-most-likely-to-grow-in-2017-2017-3

Entrepreneurs in financial services are helping to create a new middle class in the developing world. At the end of 2016, only half of the world had access to internet. Internet usage in third-world countries is growing tremendously, and those emerging markets hold potential and opportunity for fintech. This is because fintech is a necessity in these countries, compared to first-world countries that have many alternatives. According to McKinsey Global institute, widespread adoption of digital finance could increase the GDPs of all emerging economies by $3.7 trillion by 2025. Fintech can also bring a level of service enjoyed previously by only the wealthy, such as wealth management advisor services as a reduced cost through robo-advisors.

I agree with this article that fintech will help to increase inflow of money into the economy. Through adoption of internet in countries that lack it, this service has a brand new market to service. It is also accessible as long as there is internet, and may be the only option for transferring and maintaining funds in a country. By offering services at a fraction of the cost of traditional banking, it is able to reach to all socioeconomic classes by providing different packages.

JP Morgan Chase, whose own Chase Pay mobile wallet has been making serious strides, has acquired the technology that underpins CurrentC, the MCX mobile payment product that never went beyond pilot stage.

Chase, whose Chase Pay got off the ground from its partnership with MCX, will use the technology buy to expand its own mobile wallet more efficiently, in lieu of building separate parallel technology to serve non-MCX members.

In my opinion, The acquisition will provide synergy for JP Morgan Chase. Chase is popular with its Quick Pay to transfer funds between customers. However, in order to earn revenue from merchants and business, Chases should expend its Chase pay like Visa pay.

Reference: http://paybefore.com/top-stories/chase-pay-acquires-mcx-mobile-payments-technology/