Author: jsteiner

This article highlights how fintech is going to be the way that developing economies can grow in the near future and how they will not have the same banking institutions that we have in developed countries because of this. The article references how a fintech agency call M-PESA, a mobile money system introduced in Kenya in 2007, is widely popular and has more than 15 million subscribers. As of 2014, the subscribers transact nearly 60% of the country’s GDP over the mobile platform. This is an insane number! A report last year indicated that the usage of digital finance platforms in developing countries could increase the GDP of all developing economies by 6%, or a total of $3.7 trillion, by 2025. While it is obvious that mobile money systems is incredibly convenient for those in developing countries, it will change the economics and the institutions that we are accustomed to seeing in developed economies. Big banks will have to adapt to this new technology and academics will have to change their models on how emerging economies transform into advanced economies.

Article Link: https://www.forbes.com/sites/oracle/2017/03/14/how-fintech-is-powering-the-global-economy/#436435d71b5e

Google Ventures just entered the world of fintech with its $25 million investment into Currencycloud, a London based startup. Currencycloud is a five year old startup that “provides a set of multi-currency payment and conversion tools that are helping hundreds of companies globalize fast.” The article discusses briefly how this would be a boost to the UK fintech sector after post-Brexit fears have struck much of the British economy. I believe that this will not really help the fintech sector of the British economy because Brexit’s impact is quite large. Due to the trade changes that will occur in the British economy, we will see investors shy away from UK based companies for quite some time. Since the economy relies heavily on trade from the EU, we will see the economy decline overall and see smaller, newer sectors of the economy become quite small and stagnate. It will take some time for the UK to recover from Brexit and see any large growth in its fintech industry because of this, but in time, the UK economy will bounce back and the fintech sector will become quite strong.

Article Link: https://www.cryptocoinsnews.com/google-ventures-conducts-first-fintech-investment/

Beehive is the first peer to peer lending platform to set up offices in the Dubai International Financial Center and becoming authorized and regulated by the Dubai Financial Services Authority. This new regulation is the first for the region and it is an important one because it signals some future growth for the fintech industry in this region of the world. The regulation will provide clear governance for fintech businesses, added protection and peace of mind as peer to peer lending is becoming an increasingly important avenue for small to medium business in the region to get funding. The UAE has been embracing fintech as the wave of the future to help their region grow. Their regulation has allowed them to grow their fintech industry and follows up the recent launch of the FinTech Hive accelerator program in the Dubai International Finance Center that will allow them to grow their fintech industry and help others get funding to finance the region’s growing economy. This will really get the region’s economy going and allow small businesses to take off.
Article link: http://finance.yahoo.com/news/fintech-business-beehive-first-peer-040000553.html

Coming days after very scathing allegations about the corporate culture at Uber and the claims of numerous incidents of sexual harassment from a female ex-Uber engineer Square’s CFO speaks out about the “systemic problem” that exists in the tech industry. Square’s CFO Sarah Friar notes that there is a large problem with sexism in not just the tech industry, but also in other industries as well. She noted that at Square to counteract this issue there is a culture of inclusiveness that the company’s employees and its merchants who use their products are a part of. The lack of women in tech and the sexual harassment that happens has been a known issue for quite some time. Sexual harassment is not limited to the tech industry and I agree it is a systemic issue. My mother started her own construction company in the 1980s and faced sexual harassment even as a business owner from other companies’ workers when she first started. It is a problem that will change as more women enter certain fields, but will also require work from everybody to make sure that it does not occur.

Article link: http://www.cnbc.com/2017/02/22/square-cfo-sarah-friar-interview-sexism-in-tech-a-huge-problem.html

Square’s stock jumped 4.2% in the markets on Friday after Citigroup called Square a “‘disrupter’ that can convert ‘micro’ and small merchants to its payment technology.” This is a huge jump since the stock only increased by 4% last year. The article discusses how Citigroup views Square and how Citigroup has encouraged investors to invest in the company due to its market leader status. For those that do not know, San Francisco-based Square makes credit card readers that plug into mobile phones and tablets. Usually known for sticking to the small business market, it is starting to attract big business clients and has expanded into providing financing and banking loans to small businesses. Analysts estimate that Square’s Q4 revenue to increase by 20%, but I believe this may be a bit of a conservative estimate. I believe that Square will probably be around the 25% increase range as the usage of these mobile card reader products has quickly grown into many businesses around the country and the world.
Article link: http://www.investors.com/news/technology/citigroup-initiates-square-at-buy-ahead-of-earnings/

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/

Payment technological startup, Square, paired with Apple recently to encourage its merchants to accept Apple Pay. Encouraging in this case actually means allowing the merchants to accept Apple Pay for free for each transaction. How Square makes money is through a transaction fee per purchase incurred on the merchant. This fee is quite small and applies to all credit/debit card swipes that occur using their product. Square wants their merchants to accept Apple Pay and encourages them to do so by not charging them a transaction cost. Apple receives more awareness for Apple Pay for free and with the literature and campaigning for Apple Pay that Square is going to provide its merchants, usage for Apple Pay will increase as what happened in Portland, OR earlier. What Square gets out of this is the ability to provide a better service for their merchants and make them more marketable to other small businesses in the now crowded payment hardware business. I believe that Apple actually benefits the most from this partnership. While merchants in plugged-in communities like the Bay Area are more likely to have people use Apple Pay to purchase items, these areas are few and far between. As seen in Portland where a campaign to increase Apple Pay worked quite well, this campaign to encourage people to use Apple Pay will pay off in other parts of the country. Apple will get this usage increase without having to pay a dime, which makes them the big winners of this pair-up.

Article Link: http://www.pymnts.com/apple/2017/square-and-apple-who-is-the-big-winner-of-their-payments-pair-up/

For the 2017 year, David Klein of TechCrunch, has made five (safe) predictions on what he thinks will happen for the Fintech industry. I will make my prediction and provide reasoning on whether or not these things will come true this year.
Prediction 1: Fintech lending will further stratify as an industry
I feel that this will be correct, but not to the extent that he states it will be. Klein believes that from the 400+ lenders of 2016 will whittle down to around 10 lenders in total. I believe that this number will shrink but not to the extent that he believes, more likely there will be around 100+ lenders this year.
Verdict: Somewhat True
Prediction 2: The asset side of fintech will find its groove
I believe this will also be true because fintech companies are constantly looking for ways to disrupt traditional banking processes and digitize them for the 21st century.
Verdict: True
Prediction 3: M&A activity will start to become real
Similar to the same reasoning as the first prediction, there will be market consolidation as these companies become more established and companies will want to consolidate industry power.
Verdict: True
Prediction 4: Blockchain will have an impact on the financial services industry
I don’t really know what blockchain is or how it works. Because of this I really can’t make any comment on this prediction with any confidence.
Verdict: Unknown
Prediction 5: International investors will come to the U.S.
I don’t think that this prediction will come true. In my research I have found that there are robust fintech industries in foreign countries where investors are probably more keen an likely to invest. While the United States is a secure investment with minimal risk and decent interest rates, I believe foreign investors would rather work in their home country and try to develop a fintech company for their culture instead of a foreign culture.
Verdict: False

Article Link: https://techcrunch.com/gallery/fintech-predictions-for-2017/

This article discusses how there is a large market in developing nations for fintech companies because of their ability create a whole new mobile banking services where traditional banking services do not exist.  These companies will be able to do this because there are great indicators that mobile cell usage in developing nations is rapidly increasing across many income levels.  The first thing that popped into my mind at this point in the article was the challenges that these companies were going to face when digitizing a country that lacks the infrastructure to do so.  The article goes on to highlight the exact challenges that I was thinking of.  These challenges are lack of infrastructure and efficient cloud services, users without a data footprint, and consumers who have chaotic and cash based lives.  The most important of these issues is the users whose access to the internet is very limited.  I believe that market that these fintech companies can actually reach is going to be smaller than they believe due to the fact that people in these developing countries cannot afford smartphones and have access to the internet needed to utilize these fintech services.  Once the internet accessibility infrastructure in these countries is much better, these fintech companies will begin to thrive and grow even more.

 

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

A new report filed by the research group Australian Fintech, has found that FinTech Revenue in Australia is expected to grow rapidly over the next few years.  The group has predicted an annual growth rate of 76.3% and the valuation of Australian FinTech will be greater than AUD $4 billion, or roughly $3 billion USD, by the year 2020.  The research group found that, by 2020, there are three areas that financial technology services will grow rapidly in Australia.  These areas are digital payments, personal and business finance, and financial infrastructure and data analysis.  The growth of the FinTech sector is expected to bring about AUD $10 billion in revenue just from traditional financial institutions alone.  The rise of the FinTech will add roughly AUD $3 billion worth of added revenue.  With the large amount of money being invested into the FinTech industry each year it has shown to be one of the fastest growing industries in the world.  Australia has set up the right ingredients to make it a FinTech hub to appeal to companies to hopefully show FinTech firms that Australia is the place to establish themselves.  Because of this Australia has seen a boom within the industry.