Category: Uncategorized

Christopher Giancarlo, the commissioner and acting chairman of the U.S. Commodity Futures Trading Commission (CFTC), called on the regulators and agencies to speed up their process in supporting distributed ledger technology and fintech innovation. Giancarlo has seen the digital financial markets as “one of the biggest threats to economic stability and functioning world markets”.

He also listed five key elements that needs special consideration for making market reform work in the U.S., including “providing customer choice in trade execution, fixing swaps data reporting, achieving cross-border harmonization, encouraging fintech innovation, and cultivating a forward thinking regulatory culture”. Giancarlo recommended U.S. financial regulators to study cases in which other countries had successfully regulated the digital markets, with “first, do no harm” as his top-most instruction.

Though Giancarlo only expressed his personal idea, not represented any of his fellow commissioners, CFTC staff or U.S. government agencies, he did make an important point on how should U.S. government catch up to the biggest trend happened in financial markets during the 21st century. Unlike other technology and economics developed countries, U.S. is lagging its jurisdictions in promoting fintech, which is unexpected, over-conservative and inconsistent with other domestic and international regulations it had made.

Source: https://www.cryptocoinsnews.com/cftc-chairman-calls-agency-support-blockchain-fintech-innovation/

Chris Myers the co-founder and CEO of fintech startup BodeTree – a financial management solution for small business organization, argues that the fintech industry is failing. While he firmly believes in the future and growth of fintech, the industry itself needs to approach things differently and come up with creative solutions to the opposing forces of fintech.

Firstly, Myers believes that there is a contradiction between the fundamental values of finance and tech itself. While technology is fast and eager to change, finance, on the other hand, is a slow moving industry. When investors fund fintech companies, they expect growth similar to the speed of tech. However, the truth is that fintech companies need to grow similarly at the speed of the financial industry.

Secondly, fintech at the core is similar to many social media companies, it is in the business of handling and processing data with the difference in financial transactions. Because of this, investors are pressing fintech companies for rapid growth, rather than gradual growth, in which fintech organizations begin to make risker and risker decisions.

Lastly, financial institutions hate change. Due to the nature of financial institutions, the industry itself is highly regulated and more conservative in values. Innovation within the industry poses many questions to even the simplest of solutions.

In my opinion, fintech is still a relatively new industry that is rapidly growing. Although finance and tech are two completely different industries with different core values, fintech is a new industry that is needed to improve financial transaction for consumers. While it might be true that financial institutions hate change, and that investors are pushing unrealistic expectations for these fintech startups, the smart investors, those who are pursuing growth in the long term, the ones who are willing to stick to the core values of fintech will be the ones who lead the fintech industry when it matures.

Source: http://www.forbes.com/sites/chrismyers/2017/02/07/3-reasons-why-fintech-is-failing/#511f77cf7b6b

While Nasdaq is best known for running stock exchanges around the globe, it is also one of the largest providers of technology to other exchanges and companies involved with trading. Nasdaq plans to set up a venture capital arm to invest in financial technology companies that can help grow its own businesses. It isn’t the first financial firm to set up a venture arm as a way to stay competitive: CME Group Inc, JPMorgan Chase & Co , Citigroup Inc and Banco Santander SA have similar units.

A venture arm would formalize some of the investing Nasdaq is already doing in fintech companies that are just starting up. It was one of the earliest supporters of blockchain, which is a record-keeping tool that some expect will fundamentally change the cost, speed and accuracy of trading. Nasdaq’s current investments include San Francisco-based blockchain startup Chain.com and artificial-intelligence company Digital Reasoning.

The move aligns with the goals of Nasdaq’s chief executive, Adena Friedman, who wants to increase the company’s focus on technology. Friedman states that “It’s a matter of making sure that we continue to take all of the new technologies that are available in the marketplace and … offering them to our clients.”

https://www.nytimes.com/reuters/2017/02/09/business/09reuters-nasdaq-venture.html?_r=0

Rimon PC, a law firm based out of San Francisco, has hired Marc Kaufman, a former leader of Reed Smith LLP’s Fintech team. This move will aid Rimon PC’s services better by helping protect their clients against intellectual property right theft and asset protection. Though he is an attorney, he has vast experience in the technology and web analytics space. Combining these two skill sets has made him a very sought after lawyer. Although before this class I might not have initially seen the importance of having a specialist in the field, it is quite evident how much fraud is being conducted and having a law firm that can protect your assets against any time of fraud especially in the fintech space is crucial. As more and more companies are moving into this sector, I think the shift in this law firm will be apparent across industries. Any sector will be able to aid from having a fintech specialist to make sure all of their assets are protected especially as everything moves onto the internet.

https://www.law360.com/articles/883238/rimon-snags-ex-reed-smith-fintech-partner-in-dc

Fintech is one of the most popular topics in the world right now, and most people believe with the development of Fintech, there will be a huge change in almost every industry like banking, mobile payment apps, and so on so forth. Before reading this article, I think the regulation would be the biggest problem for Fintech to be more influential in our lives. However, interestingly, this article states reasons why Fintech is falling.
As a matter of fact, all reasons are related with finance field. Everyone from online lenders to bank technology companies has experienced elongated fun-raising cycles, missed targets and mounting losses. According to the article, one of the reasons why Fintech is falling is that there is contradiction between Fintech and finance. Since finance is a kind of slow-moving sector, but Fintech is fast. In addition, most companies are looking at short-term growth which means they do not focus on the innovation. It causes problems and risks to Fintech. Last but not least, most companies hate to change. This is a big problem that influence the evolution of Fintech, since it is costly and time-consuming for companies to adopt Fintech and change their systems which has been running for many years.
http://www.forbes.com/sites/chrismyers/2017/02/07/3-reasons-why-fintech-is-failing/#65eebb727b6b

More recently, women have made more banking decisions for their families and themselves, with a focus on practicality. In fact, studies show that “women influence up to 80% of household buying decisions worldwide but 73% of them report being unsatisfied with their banking services” (Cernuda). This shows a clear gap in the market and how it is currently not meeting the needs of most of its consumers. From both a business and sociological point of view this presents opportunities to create better services and technology.

While one solution the article presents is a pink bank and female employees, I do not think this is the only way to get women more engaged with banking services. Author Gemma Cernuda states that “developing products and services relying on male traits and values don’t resonate with female consumers and leave them annoyed and exhausted” (Cerduna). She suggests that banks need more data on women, which I agree is important. Ultimately, I believe that banks need to be flexible and understand the financial decisions women make, and integrate that into current technology like apps, allowing them to access services they need.

Source: http://blog.strands.com/bridging-the-gap-connecting-banks-and-women?utm_medium=email&utm_source=fintechweeklycom

After completing the Market Map individual assignment for mobile payments, I wanted to look further into how mobile payments are shaping retailers, specifically Starbucks. Starbucks has been notably recognized as a leader in mobile payment thanks to their mobile app that seamlessly integrates their loyalty program, My Starbucks Rewards, with the Mobile Order & Pay feature. Customers have adopted the mobile app rather quickly, and has ironically caused operational challenges to the business. The Mobile Order & Pay feature was designed to reduce long queues, but instead has created congestion at the handoff plane due to high volumes. This is discouraging walk-in customers to leave the store without making a purchase due to congestion and heavy rush. Currently, more than 1 in 4 U.S.-based Starbucks orders comes from a mobile device, one of the highest rates in the country’s retail sector and likely to continue to grow. Because of the large number of mobile-based orders, Starbucks is trying to deal with this demand that is causing operational challenges by introducing new in-store procedures and tools, adding new roles and resources to specifically support mobile order and pay and the testing of new digital enhancements.

Specifically, they are addressing this issue with additional staff and in-store kiosks completely dedicated to the filling of digital orders. It might resemble the Apple store’s layout. They might get rid of the counter, and instead have latte and espresso stations, where customers can simply walk up to the station. Starbucks recently added a text-messaging feature that notifies customers when their orders are ready and last week introduced voice-activated orders through its mobile app and Amazon’s Alexa AI platform.

With mobile payments on the rise, other retailers offering mobile pay-and-go services will have to adapt their retail experience to complement the technological progress.

Sources: http://www.salon.com/2017/02/07/a-digital-bottleneck-mobile-payments-breed-new-challenges-for-to-go-retailers/

Legal Entity Identifiers (LEI) are unique codes assigned to companies during financial transactions. Similar to blockchain technology, LEIs would allow for greater analysis for historical transactions. These identifiers were first used in 2012 and have reached over 480,000 participants. However, it is important to note that the number of new registrations have dropped exponentially. In 2016, there was a net loss of 12,000 identifiers.  There is no incentive to renew because lapsed identifiers can be reported in financial transactions under current regulations in the EU. And in the US, lawmakers are opposed to making LEIs mandatory in anything other than the swap market.

LEIs have become irrelevant in business because of its loopholes. In an ideal world, companies would use them to maintain financial integrity. I believe that lawmakers should rethink their view on LEIs. After all the financial crises in the last decade, it would make sense to have an extra checks and balances. It works well with swaps. CUSIP numbers allow for secure and legit transactions. This can be easily translated to other markets as well. The idea of LEI sounds good on paper, but will only come to fruition if practiced by all.

 

Link: https://www.finextra.com/newsarticle/30117/global-lei-initiative-struggles-for-momentum

What the Article Says:

1. FinTech’s presence in modern-day society is coming to represent a variety of financial services that we use on a daily basis: mobile payments, money transfers, loans, fundraising, and asset management.

2. FinTech is shaving weeks off of the process of obtaining funds to start up a business. Crowdfunding allows businesses to raise money quickly and cheaply from people all over the world, even if there is no physical interaction. Not only that, people can even accept credit and debit payments through Square and Paypal, making business transactions easier than ever before.

3. FinTech is shaping customers and their expectations. People depend on these relatively recent developments to make purchases and do business. They also expect the same level of service and access from a small firm as a large firm. If a business is unable to keep up with customer expectations and the latest technologies, they will be left behind.

My Thoughts:

I thought this article was a great representation of how FinTech has shaped our lives over the past decade. The author mentioned that the industry has grown from $930 million to $12 billion since 2008, and I’m not surprised to see these numbers. While consumer expectations are increasing and the dependency on these technologies increase, I think the expectations for future developments also increase. It’s a growing industry and I’m interested in seeing which direction the consumers drive it in.

Source: http://www.forbes.com/sites/bernardmarr/2017/02/10/a-complete-beginners-guide-to-fintech-in-2017/#2d53ec597542

http://www.zdnet.com/article/square-launches-its-first-industry-specific-platform-for-retailers/
https://squareup.com/security

On February 8, 2017, Square launched their first industry specific platform for retailers (as noted in the article’s title). Prior to its launch, Square’s capabilities were limited in the sense that its system could not accommodate for growing businesses with a large catalog. The concern with Square’s expansion into the retail space raises the question of if more customers are exchanging their credit card information with this credit card processing service, who’s ultimately responsible for the upkeep and security of such sensitive information?

On Square’s website, the company lists different measures that they take to ensure the safety of their customers and customers’ users. Square provides a B2B service to usually, B2C businesses. This financial device and service has gained the reputation for being easily accessible and user friendly for businesses. However, as a credit card user with small businesses, it somewhat frightens me how easy it could be for small businesses to steal my personal information through the use of a device that looks similarly to Square’s. I think that although credit card processing can be streamlined and be more cost efficient, consumers must be more cautious and wary about where our personal information is going.