Author: kristirhong

You Might Be Able to Pay for Things with Sunglasses Soon

On March 13, Visa unveiled a payment-enabled sunglasses prototype at multiple festivals and competitions in Texas and Australia. The glasses look exactly like normal plastic sunglasses would with the addition of a tiny chip on its side. To pay using the glasses, a person would take them off and tap them on a Visa near field communication (NFC) enabled terminal, similar to how people can pay with Apple Pay, Google Wallet, and Samsung/Android Pay.

These glasses are not yet available for public sale, as Visa is assessing market demand and if any brands or banks would like to help sponsor the product. Visa has experimented with other wearables such as payment-enabled rings and wristbands.

While all of this sounds convenient and cool (imagine how trendy you would look if you just took your sunglasses off for a second and then walked away with a bag full of other cool things), my first question would be, “What’s the security outlook of this wearable?” People lose small things, especially sunglasses, when in public. The article does not mention any sort of user verification mechanism, such as a pin or ID check, as those things would conceivably make paying less convenient. Could I find someone’s forgotten sunglasses on a Starbucks table and buy every drink on the menu? I wouldn’t touch these until I know what kind of security features they have.

Source: http://www.cnbc.com/2017/03/13/visa-pay-with-sunglasses.html

FinTech Underprepared for Cyberattacks – Risks Create Opportunity for Change

Earlier this week, Amazon Web Services (AWS), a cloud-computing service provider, suffered a major outage that affected much of the Internet. Although many Internet-wide outages are caused by malicious intent, this event was caused by a typo. Since so many web services are reliant on AWS, this outage has reignited the debate surrounding internet dependencies and security. FinTech is highly integrated with Internet access, so insufficient security/backup providers are also an issue.

A study in the first quarter of 2016 found that there have been 40% more attacks targeting financial institutions. A Deloitte study also found that many members of management at various firms are concerned with IT security. However, talent in this field is still lacking and is difficult to attract and attain; there is often only one person responsible for cybersecurity at an entire firm.

Since FinTech clearly has a technology component, I believe FinTechs should be aware of the impact cybersecurity (and lack thereof) has on their entire businesses. While there are many FinTech products/services that serve the average consumer, many are not trusted because of the lack of apparent security. This leaves room for growth as they continue to improve not only existing offerings but the security of these services.

Source: http://www.valuewalk.com/2017/03/fintech-cyber-security-risks/

New Hub for FinTech: Hong Kong

FinnovateAsia is a one-day event in Hong Kong (HK) hosted by the Finovate Group, Inc to showcase the thriving FinTech industry in HK. The event is part of a weeklong FinTech conference hosted by InvestHK, which is a department of the HK government responsible for Foreign Direct Investment (FDI). Both HK FinTech Week and FinnovateAsia show that Hong Kong is promising to be an increasingly FinTech hub as the government facilitates the gathering of such companies. Hong Kong has seen a growth of 38% in the number of FinTech startups establishing their business in the area.

I’m not surprised that Hong Kong is a new FinTech hub, as it has always been a center for financial services. As a child of immigrant parents from Hong Kong, I have spent much time in the Central district, which is the main business district. Some of Hong Kong’s most recognizable buildings are the two razor shaped skyscrapers called the International Finance Centres One and Two. Both house a vast number of offices and headquarters, as does the entirety of Central. Investment banking is also huge in Hong Kong, providing more opportunities for merging technology and financial services.

Sources: FinovateAsia, HK FinTech Week Videos, InvestHK

Process mining startup Celonis accepts $27.5M from VCs

Celonis, a Munich-based process mining startup, has accepted $27.5M from VC companies Accel Partners and 83North Venture Capital to expand its already successful business into other markets, like the United States. As Celonis is a German company, its main markets are in Germany and Europe, despite the product’s applicability worldwide.

Celonis emphasizes the importance of process mining, a subset of big data mining. Process mining focuses on individual business processes. Alexander Rinke, CEO and co-founder of Celonis, gives the example of identifying a standard customer service procedure that frequently resulted in callbacks, indicating that the response was not clear enough for consumers. This type of information is beneficial to businesses as it allows management to identify what particular processes are creating inefficiencies in operations, as well as some hints for how to improve. Incorporated in 2011, Celonis has integrated with around 60 ERP IT systems, serves 200+ customers, and is already profitable. Why does it need additional VC funding if it already makes its own profits?

I believe that it’s great that VCs have provided additional funds, as process mining is widely applicable to many businesses and is a useful operational tool. With additional automation and computer use, the amount of data becomes difficult for consultants to process, but Celonis has the ability to give data analysts a new tool that can do make their job a lot easier and more effective.

Source: https://techcrunch.com/2016/06/07/celonis-takes-27-5m-led-by-accel-83north-to-grow-the-market-for-big-data-process-mining/#

Future of FinTech: FinTech in the Spotlight

CBI Insights, a company that aggregates data using machine learning, algorithms, and data visualization, hosts an annual exclusive FinTech conference for financial institutions, FinTech firms, and venture capitalists. 2017 marks the second year the two-day conference has been held. Hosted FinTech companies must apply through the CBI Insights website, featuring their business solution to a problem, business model, and relevant FinTech sector. The 2017 conference will feature many speakers from companies such as Paytm, an Indian payment and commerce company; Sequoia Capital, an American venture capital firm; Lemonade, an American renters and home insurance company, among many, many more.

The Future of FinTech conference seems like a fantastic opportunity to see what other disruptive technologies and services are up and coming, but unfortunately, it lives up to its exclusive nature, as you must be either a paying CBI customer, corporate/VC investor, lawyer, banker, accountant, or consultant and pay $1,995 or more to attend the conference. I wonder if this conference is streamed or reported on, as it would be very interesting to see what other companies are doing, beyond the more consumer based payments and personal finance FinTech that most commonly reaches the average consumer.

Source: http://events.cbinsights.com/future-of-fintech

Move Over Cloud Computing, Welcome Microservices!

According to Steve Singh, CEO of Concur Technologies, despite cloud computing’s widespread utility and strength in current technologies, we should expect “microservices” as the next big thing. Concur was recently acquired by SAP, a multinational company that produces enterprise software to manage business operations and customer relations. SAP has an extensive list of cloud computing services, so it’s interesting that Singh believes that cloud computing will soon fall second to microservices. Microservices are apps developed in small, separate pieces rather than as one complete program. Singh gave an example of how microservices could benefit users: “When…your producer, sent me an email saying, ‘hey would you like to come on the show’…I said, ‘I’ll be there Thursday.’…it automatically decided that I should book travel for Steve out to New York…I don’t go into Concur. I just go about my normal daily routine and the [apps] start to take actions for me all seamlessly.”

I think that microservices could be helpful in automating processes in our daily lives. However, where does the human preference come in? What if someone joked to a friend through email about traveling, and the service began booking a flight out of state? How does the system know what is legitimate and what isn’t?

Source: http://www.geekwire.com/2017/sap-president-steve-singh-says-cloud-computing-yesterdays-news-microservices-future/

Banks and FinTech: Which Way Will the Power Shift?

Banks are lobbying against the EU legislation, which may cause a power balance shift between European FinTech firms and banks. A Financial Times report discusses PSD2, the second payment-to services directive that intends to improve competition between banks and FinTech by getting banks to allow third parties to access customer data. Banks want more regulation on FinTech and access to customer data, but FinTech believe that having to go through the bank for any customer query will overly slow down transaction lead times.

I believe that security should be prioritized over convenience and instantaneous transactions. As mentioned last week, all of my friends who do not use mobile banking or money transfer apps avoid doing so for security purposes. They likely do not know how the digital money transfer/management works well enough for them to feel safe using these technologies, no matter how convenient they may seem. At the same time, however, I believe there should be a balance between security and response time. If an online transfer is secure but takes longer than traditional banking, which is allegedly safer, I may opt to go to a bank. There should be a reasonable balance between security and speed.

Source: https://www.cryptocoinsnews.com/fintech-firms-big-banks-are-lobbying-to-block-change/

Consumers Torn Between Embracing FinTech and Traditional Banking Options

Ever since FinTech has extended to the consumer market through alternative loans, personal finance apps, and other technologies, consumers struggle with what they are willing to integrate into their lives and what might be left at the expert level. Marketers of these technologies are also confused how to target consumers because users’ attitudes often contradict their behaviors.

Salesforce says retail financial institutions should develop customer-centric business models and simplify the user experience so it is appealing to consumers of all ages and familiarity with technology. The rest of the article on The Financial Brand goes on to cite business reasons and statistics regarding the FinTech usage differences between generations. Only at the end of the article is the issue of security of personal data addressed. Among Millennials, I argue that this is the primary reason why people who are skilled at using recent technology still do not have personal banking or finance apps like Venmo on their smartphones. Since security of digital tech is still insecure at times, it may only be when FinTech has shown to be sufficiently secure in the long run may more Millennials (and members of other generations) adopt more personal FinTech options.

Sources: https://thefinancialbrand.com/63386/banking-channels-switching-fintech-strategies/

https://consumercomplianceoutlook.org/2016/third-issue/fintech-for-the-consumer-market-an-overview/

California’s FIS Will Take Longer and Cost More than Estimates

In our Financial Information Systems class, we have been discussing why it is imperative for companies to maintain a FIS and why many don’t have one. One huge barrier to entry is the sheer cost and complexity of transitioning to a FIS. Fi$Cal, California’s planned FIS demonstrates this.

California began transitioning its accounting system to Fi$Cal in 2005, eleven years ago. As the system serves an entire state, it’s reasonable for it to take a long time, as CA needs it to be functional at all times despite the ongoing transition. However, according to state auditor Elaine Howle, the project will take at least another two years and an extra $237M, putting total costs above $900M. Clearly, costs (opportunity and financial) are much too high for every company to afford.

Although it is costly and daunting to switch to a comprehensive FIS, I am proud of California for staying on top of its financials and utilizing the technological expertise of the state. The costs of installation are massive, but the rewards and utility gained are even more so once fully installed. I’m curious to see how California’s reporting and management of assets will change after the FIS is installed.

Source: http://www.sacbee.com/news/politics-government/the-state-worker/article124839264.html

Belgium and London working together on FinTech

After the Brexit vote in 2016, which caused the United Kingdom (UK) to separate from the European Union (EU), many European countries are attempting to dethrone the UK from its top status as a financial technology hub. FinTech, as it is now colloquially described, is technology that assists in transacting financial services. According to Innovate Finance, a UK non-profit organization focusing on the development of FinTech, although financing for FinTech companies has grown by 150% in the first two quarters of 2016, the UK’s FinTech funding fell by 33%. Belgium, however, would like to develop FinTech with London and the rest of the UK and support FinTech startups.

Despite VC’s witholding their funding from the UK, the Belgian government gave its support to a Brussels-based hub for the FinTech platform called B-Hive. The association has garnered the attention of more venture capitalists and funding. With London’s previous status as an attractive destination and hub for FinTech, further development is likely between the two countries. Not only will this association assist the UK in gaining back some of their FinTech traction, the UK’s goodwill will help Belgian companies to grow as well.

Source: https://www.cryptocoinsnews.com/belgium-london-work-fintech/