Author: masonwoodsk

FactSet has recently purchased BISAM Technologies for $205.2 million from Aquiline Capital Partners and company insiders.  FactSet is mostly known for portfolio and risk analytics and client reporting which will go well with BISAM’s performance measurement support.  BISAM has more than 160 employees worldwide, and they provide portfolio and attribution, multi-asset risk, GIPS composites management and reporting.  Officials say, “Many of the world’s largest asset managers use BISAM’s software to evaluate and enhance their investment strategies and better serve their clients.”  While this was a good addition to FactSet, they still had to borrow $575 million “under a new resolving credit facility to fund the transaction and repay existing debt”.  FactSet was founded in 1978 and they currently offer analytics, services, content, and technology to over 66,000 end-users.  They are listed on the New York Stock Exchange and the NASDAQ Stock Market under the symbol ‘FDS’.  FactSet has a market capitalization of $7.12 billion and is located in 43 locations with more than 8,500 individuals.

A London fintech world leader in cross-border payments called CurrencyCloud recently raised $25 million from Google’s venture capital arm, Google Ventures.  CurrencyCloud is a five-year-old startup which raised this money in the Series D round, as Google joins other investors such as Notion Capital, Sapphire Ventures, Rakuten FinTech Fund, and Anthemis.  The start up has more than 200 customers in 35 countries, as they work with banks and payment providers to set up multi-currency payments and conversion tools for millions of end-users.  The way they make money is by taking a small portion of all payments made through their API.  Google Ventures has invested roughly $500 million to companies worldwide, but this is their first investment in the financial technology sector.  According to a report from the Financial Times, the general partners of Google Ventures have stated that a major interest for Google Ventures is that of fintech.  It will be interesting to see if there are any more fintech investments made soon.

 

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

In today’s world, there are many hackers trying to produce malware and steal from large companies and corporations.  With that said, the banking industry is one of the main targets for hackers because of the large amount of money they can make if successful.  While banks are currently being attacked over the web, a recent report by the Internet Registry SIDN discovered that only 6% of online banking websites were using Domain Name System Security Extensions, which is significantly behind other industries.  In addition to this, another study found that only five out of eleven leading high street banks had adopted a two-step authentication to protect customers when they logged into their accounts, despite having the technology to do so.  Banks are constantly releasing statements stating that security is their top priority, but experts feel they are not doing enough, as 755 million pounds were stolen in 2015 alone–a jump of 26% from the previous year.  This number accounts for all types of financial fraud including online attacks with malware and data hacks, deception scams, and impersonation fraud.  The number of people using online banking has escalated tremendously, but the cybersecurity has not followed suit.  For many people, password verifications, authentication processes, and alerts are a major nuisance, but without these forms of online security protocol, peoples’ bank accounts and information are easily available for hackers.  The main problem, however, lies with the fact that even multi-layer security protocols can be hacked by the best hackers.

 

http://www.bankingtech.com/749122/are-banks-taking-security-seriously-enough/?utm_medium=email&utm_source=fintechweeklycom

Currently, many fintech products available to the financial advising market are targeted to either end clients or larger dealer groups and institutions, leaving the smaller advising companies behind.  The reason it is difficult to make technology for independent financial advisers is because the more money they spend on software, the less they have for their clients.  Independent financial advisors typically have 80-200 clients, and are unable to pay the expensive premium for a large piece of software without heavily effecting them or their clients.  In order to meet the needs of smaller firms and break into the market, Mr. Robinson, the CTO of InvestmentLink, says fintech firms will need to produce software that is “easily customizable by the technical layman” so that smaller businesses are able to invest in the technology and use it for their own needs.  The key to emerging in the financial advising sector is to release products that are targeted towards specific needs and best-practice ways for small and medium sized financial advisers and accountants, while still giving them all the control in how they present themselves to their end clients.  This way they can deliver the products as their products while still bringing a lot of value to their customers.

 

http://www.fintechbusiness.com/industry/643-ifas-being-left-behind-by-fintech-companies

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/

Currently, the business commercial banking segment is worth $1.85 trillion worldwide.  Banks have estimated that around $500 billion of that sum is expected to be removed by third parties or FinTechs over the next five to seven years, however.  A significant portion of this figure is supposed to come from paper payments that have moved into electronic form.  According to CEO and founder of FI.Span, Lisa Shields, API in banking is what the future of banking needs to use.  API stands for application program interface, which is a set of routines, protocols, and tools for building software applications.  At the Desutsche Bundesbank G20 conference in Germany, it was reported that the       desire for more choice, better-targeted services, and improved pricing for consumers were going to come through FinTech. Along with consumers, banks would also profit from FinTech with lower transactions costs, stronger operational resilience, and better capital efficiency.  With the amount of money banks are looking to lose over the next five to seven years, it may be smart to start working with FinTech firms rather than keeping themselves separate.

 

https://www.cryptocoinsnews.com/fintech-can-help-banks-tap-500-billion-hole/f

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

FIS, a global leader in financial services technology, and PayPal created a partnership to increase customer engagement and increase spending with FIS’ banking partners.  This partnership will make it easy for consumers who bank with FIS clients to link a payment card or other financial account to their existing PayPal account.  It will also allow these users to display the financial institutions’ brand within PayPal, and allow the customers of financial institutions to set their default funding source in PayPal.  With digital commerce showing no signs of slowing down, this move by FIS and PayPal seems very strategic.  By enabling the bank branding within the checkout process, customers will be reminded of the ease with which they can shop, which will make them more likely to use PayPal accounts to shop, benefitting both the merchants and consumers.  Avidia Bank and the 15 chartered banks of Wintrust Financial, two FIS clients, will begin account linking in the first quarter of 2017.  This service will be available to all FIS clients beginning in the first half of 2017.

https://www.finextra.com/pressarticle/67467/fis-strikes-paypal-deal-to-embed-fi-clients-in-digital-payments

Not being paid on time is a problem many suppliers face all over the world.  To negate this issue, a cluster of new fintech firms have begun making a charge to change how supply chains are financed.  Greensill Capital, a fintech company founded out of Australia, uses an approach to take advantage of buyers’ low credit risk by raising funds in the capital markets and paying their clients’ suppliers on an agreed date.  The lender will then wait to collect the full value of the invoice from the buyer at a later date.  Currently, with low interest rates, and the period of finance being so short, the discount that Greensill takes is barely noticed by their customers, but it improves the cashflow for suppliers without shortening payment times for buyers–a win for both parties.

I believe this strategy for fintech firms could lead to a lot of success, but I don’t see there being room for as many firms as there are right now.  I think eventually the market will reduce into just two or three large short-term lending firms to help the cashflow problem for suppliers.

 

http://www.economist.com/news/finance-and-economics/21714377-factoring-invoices-has-become-cheaper-and-faster-hard-pressed-suppliers-how

Raisin is a German fintech company that allows customers in Europe to invest in savings accounts around the EU that offer the best interest rates. Raisin, formerly called WeltSparen, does not hold any of the customer’s money, but instead opens each saver an individual account at the bank where their money is invested.  The money invested by the consumer can be stored in any of the partner banks across the EU, regardless of which country the customer is from or currently has their money.  There are over 50,000 customers who use Raisin, accounting to $2.1 billion deposited in 27 partner banks across 14 European countries.  Raisin is continuing to add more banks as they grow, as well as find partnerships with other fintechs to make sure their products stay attractive.  They claim that customers have earned over 20 million euros in interest since their launch three years ago.  The employees at Raisin have stated that they believe the next billion will be easier than the previous one.

 

http://www.businessinsider.com/fintech-raisin-reaches-2-billion-investment-milestone-2017-1
https://fintechvalley.org/2016/11/14/fintech-valley-interview-raisin-a-company-profile/