investorID Launches in Europe to Allow Investors to Compliantly Access Tokenised Securities

investorID is a market-driven decentralised application allowing investors to generate their on-chain identity to access and trade compliant tokenised securities. As an open initiative developed by key players in the blockchain and finance industries, the system aims to become the principal solution for investors to manage their own data and become identified on the blockchain infrastructure.

For the compliant ownership transfer of securities on the blockchain, its imperative for issuers to identify and know their token holders. investorID enables issuers to quickly understand whether or not their participants are eligible for the offering. Once this is validated, the jurisdictions rules and regulations can be automated.

Once investors create their identity, they can reuse and access multiple tokenised securities with increased ease, speed and cost efficiency. Personal data rules are respected as participants have complete control of their data and can give and restrict access accordingly. investorID features an easy recovery process, meaning users cannot lose their identity or their assets linked to it.

Tokeny CEO, Luc Falempin mentioned, By creating investorID,  issuers can act in full confidence that their securities are being accessed and traded compliantly. There wasnt a solution on the market that accurately identifies the different stakeholders on the blockchain infrastructure, but it is a mandatory piece in order to apply securities laws in Europe.

Luc added, On the buy-side, Its fundamental for investors to know they are respecting the necessary rules and regulations in relation to security trading. investorID relieves this worry and enables individuals and financial institutions to seamlessly create their on-chain and validated identity. This allows investors to trade tokenised securities in total confidence.

The legislation across Europe has recently been progressive, with Luxembourg having recognised the blockchain as a legitimate infrastructure to register and transfer securities in the form of tokens. As other countries begin to follow suit, its imperative for the necessary systems to be in place to enable investors and issuers to act in full compliance.

Quedex Poised to Become the First Regulated Crypto-Centric Futures and Options Exchange

The Gibraltar Financial Services Commission (GFSC) has made an in-principle decision to issue a Distributed Ledger Technology (DLT) licence to Quedex. An in-principle decision is the final stage of the licence authorisation process, where Quedex needs to satisfy the GFSC with respect to one or more conditions before obtaining a licence. The licence that would follow at the end of this process would make Quedex the first regulated crypto-centric futures and options exchange in the world.

Quedex offers its users the opportunity to trade in futures and options contracts on crypto assets on a fully-fledged, transparent and secure financial platform. It was the second exchange in the world to offer this, and, after the positive decision is now well on course to be the first ever regulated operation of its kind. Quedex gives its client base, consisting of institutional investors, miners, hedgers and active traders the opportunity to hedge against cryptocurrency volatility. The current crypto-centric futures market sees a $4bn daily turnover and has been growing despite the bear market.

Now that an in-principle decision regarding the licence has been made Quedex is set to be the only company of its kind to be able to offer compliant services, potentially opening up enormous possibilities for institutional investors and other traders looking for a platform under proper supervision of a financial regulator. A final DLT licence would mean submitting to the strict regulations outlined by the GFSC and injecting much needed transparency into a traditionally opaque industry.

Wiktor Gromniak, CEO and co-founder of Quedex was quoted saying: “The in-principle decision is a landmark moment for us. The licence that we are now well on our way to obtain will give customers additional protections that they can’t get anywhere else, for example around IT security, financial auditing processes and policies around effective corporate governance arrangements. It will help push crypto from unregulated grey areas into transparent environments and we are very proud to be pioneering this movement.”

Quedex is backed by committed investors with deep knowledge of the DLT economy. One of them is Wojtek Kostrzewa, former CEO of media holding ITI and former CEO of mBank among other high profile c-level roles, who currently serves as Quedex’ chairman parallel to his responsibilities as CEO of successful blockchain startup Billon. “Quedex is that rare combination of the right idea, executed by the right people which is what investors are always looking for. Crypto futures exchanges are hot right now, just look at the recent 9 digit acquisition of CryptoFacilities by Kraken, or Nasdaq’s and ICE’s efforts to enter the arena. With the upcoming licensing Quedex has gained critical advantage and is well positioned to seize on the future.”

Digital Securities – Crossing the Chasm

As we move from the innovators and early adopters of cryptocurrencies and ICOs on DLT, to a broader early majority market of digital securities, Jeffery Sweeney CEO US Capital Global points to Geoffrey Moore and Ev Rogers’ theories of

technology diffusions and ‘crossing the chasm,’ that impact the five stage chronological life cycle and transition of early technology adopters. He questions the difference in views between early adopters and early majority populations in terms of their key issues related to perceived risk.

Sweeney submits in this article that what is critical to the early majority category is the availability of clear High Value Assets and the Adoption of Standards.

What is the ultimate goal?

The ultimate goal here is not ‘technology adoption’ per se, and not just reallocating the financial pie, but

technology(Jeffrey Sweeney, Chairman and CEO, US Capital Global)

more money for more people. The ultimate goal is democratising access to alternative investments, creating wealth, and growth for investors, and for businesses. How do you do that?

In financial markets the early stage investors are sophisticated enough to be able to take significant risk for large rewards and wealthy enough to be able to meet high minimum investments associated with private markets. Ultimately the capital markets want to broaden the participation to other investors and institutions, to benefit smaller investors and smaller cap companies.

Won’t technology solve everything?

One view on the key aspects of ‘chasm crossing’ focuses on technology infrastructure and platforms. Technology in general, and in this specific case digital ledgers and digital securities based on smart contracts, certainly reduces transaction friction. Yes this technology differentiation is very attractive to innovators and early adopters and technology adoption in this case, can reduce transaction friction, and cost, and allow for easier reporting and regulatory oversight.

The ultimate goal here is not ‘technology adoption’ per se, and not just reallocating the financial pie, but more money for more people.

But, while technology clearly helps facilitate the transition, it won’t solve the problem 100%. There are other key components to solving the larger problem. Remember, while the profile of innovators and early adopters is a higher risk tolerance, the characteristics of the early majority is to accept less risk for more inherent value. The early majority will ultimately be attracted by high value assets.

The other chasm – Alternative Investments.

There’s actually two revolutions going on. Of course there’s the new digital technology/digital securities revolution, but we’re still trying to finish the transition to broader access to Alternative Investments. Alternative investments include private equity, real estate, commodities and derivatives contracts, not the public stocks and bonds of traditional investors. But, while ‘alts’ may not be as widely accepted, they offer some special advantages to the broader market, including non-correlation with the stock market and the potential for incremental improvement in returns even when focused on demonstrated high value.


Who’s already invested in alts? Already the ‘early majority’ for alts? – Institutional-type investors, large multifamily offices, asset managers, rich investment advisors, are savvy in alternative investments. And these institutional investors certainly are interested in the use of new digital technology to reduce transaction friction and to improve access to opportunities.

Early adopter success – key to chasm crossing

It is generally accepted that to ‘cross the chasm’ you need significant momentum from early adopter success, and so we’re at a point where a combination of these two groups’ interests may provide the larger accelerator. We’re talking about an intersection of early adopters successful in cryptocurrencies, seeking to expand and diversify their holdings into other asset classes, and the early adopters / early majority of alternative investors, seeking to leverage the new technology platforms for improved efficiency and opportunities.

So perhaps then this combination is the key to a tipping point for general adoption. Bring high value alternative assets up on reliable digital platforms, offer extremely easy to identify, reliable, and valuable opportunities, and this will not only attract the blockchain ‘natives’ but also bring in the asset managers and institutional investors. Then, from that base, you can launch generally into the ‘early majority’ for digital securities, the general public, the smaller asset managers, into the dual-accredited investors – people like that that will begin to participate, and then – it explodes.

There’s actually two revolutions going on. Of course there’s the new digital technology/digital securities revolution, but we’re still trying to finish the transition to broader access to Alternative Investments.

There’s a logical sequence or progression for this. One of the key additional underpinnings is, besides valuable assets, is reliability and trust. You have to have reliable assets – and to have that trust you have to have regulated best practices in value assessment and things of that nature, by regulated entities, and then you need a trusted place to transact. It’s all about trust.

It’s all about standards

This brings us to an alternative theory about chasm-crossing. If it’s not purely about infrastructure platforms, then the competing concept is all about emerging standards. This is the viewpoint elaborated by Irving Wladawsky-Berger. Crossing the chasm for ‘blockchain’ is more than just ‘Apps’, it’s about the emergence of standards and governance. Whether you send a letter, or make a phone call, or travel by plane, from London to Bangkok, this is only possible because the global regulatory bodies have agreed on standards, not just technology standards, but standards of practice.

Crossing the chasm for ‘blockchain’ is more than just ‘Apps’, it’s about the emergence of standards and governance.

For aircraft and operations there are technical standards by IATA, the International Air Transport Association, and other regulatory bodies, and right now this ‘technical standards’ is where everybody in digital securities is concentrated on for the most part, like the smart contract terms and specification of Hyperledger and R3. But like in air travel, where beyond assembling the plane, you want to be confident that the crew is trained how to handle the aircraft. Similarly in digital securities, we need to know that the digital security technology is operated under relevant professional standards and practices.

Standards are important for sophisticated investors, but they’re even more important for the general marketplace, so that they can understand not only the basic terms of the smart contract transaction – how many shares am I getting, and how much does it cost, and how can I see it in my portfolio, but equally or more importantly – what is the assessment of the valuation of those shares, and who did that? What type of licensed professionals were involved, and how can I rely on them?

And then what about interoperability?

Not to take the air travel example too far, but what if you had to have a different airport for each different airplane manufacturer? That would severely increase costs and blunt air travel for the general public, and mean that many places wouldn’t be served by flights. So within certain technical limitations, today any airline can fly any airplane to any airport. And to truly cross the digital security chasm, I want to buy and sell digital across markets.

With digital securities at this stage, for the most part you sell them on the platform you issue on. But, if I’m an issuer of digital securities, I really want to be able to go to multiple markets. As an investor, I want be able to select the right market/broker for me that provides the right service, integrates with my existing accounting mechanism and such. I’d like to be able to pick and choose, be able to compare, and not feel like, “Well, if I only go with this guy, he can’t get me that other digital security.”

The standards are critical i.e. the collaboration amongst the professionals and amongst the emerging marketplaces are vital to be able to identify and offer high value alternative investments, to offer the issuer a broader access to multiple marketplaces, and to be able to offer investors a complete selection amongst digital securities as well as amongst dealers of traditional securities.

The standards are critical i.e. the collaboration amongst the professionals and amongst the emerging marketplaces are vital to be able to identify and offer high value alternative investments

I would like to know that my broker/dealer, who’s been involved in my life, is also participating in evolving the standards for interoperability across digital marketplaces. It’s crucial that we in the industry, existing financial professionals, get together to perform the same kind of function that you see in FINRA. Self-regulation of the marketplace to improve the standards, visibility and reliability to issuers and investors, for what they’re participating in – are the responsibility of the professional.

In Summary

Stay focused on the goal. It’s not tokenisation. Nor just technical efficiency in markets. The ultimate goal is democratising access to alternative investments, creating wealth, and growth for investors, and for businesses. More money for more people. To achieve this we in digital markets must cross the chasm from innovators and really adopters in cryptocurrencies, to the early majority of a larger private market in digital securities.

Emerging adoption of institutional investors to digital securities for high value alternative investments can not only provide the proof point of digital markets, but provide the momentum to deliver the promise of digital markets to the broader class of investors. Delivering these high value digital securities requires technology plus the trust that can only come from professional standards in an evolving private securities market place.

Apple Card: KASKO’s CEO Weighs in on the World’s Coolest Credit Card

Everybody’s talking about the latest offering from Apple, the Goldman Sachs-backed Apple Card, and the insurtech dynamos at KASKO are no different.  Here we quiz its CEO and Co-Founder Nikolaus Suehr on the world’s coolest, not to mention hardest (it’s made from titanium, don’tcha know?), credit card…

The services offered by the new Apple Card have been described as “rare but not unique”, how is it going to compete in a crowded market?

I think that this is fair, after all, most financial services are not truly unique, at least not for long. Is there really much being offered here that isn’t in existence on Monzo, N26, Revolut, Curve, Starling or one of the plethora of other starter banks out there?

What really matters in this case, from the start, is distribution access. Low cost, high scale production costs and an unfair advantage through brand or bundling, whether a fanboy/girl or not, one thing that Apple has in spades is brand. Apple can pass its usual financial services margins on to the consumer as they earn a high margin on their existing services and products, or even subsidise the service at a loss if it extends overall customer lifeline value.

Is there really much being offered here that isn’t in existence on Monzo, N26, Revolut, Curve, Starling or one of the plethora of other starter banks out there?

Do you see the partnership of Apple, Goldman Sachs and Mastercard as a sign of things to come? What does such a union signify?

It certainly signifies the age of corporate ecosystems, it’s interesting that Apple doesn’t pretend to control the entire value chain but shouts about a partnership with a best-in-class provider. In terms of consumer brands breaching into financial services (payment, credit, insurance) we will see two main partnership plays happening.

  • Large international corporates banding together for international footprint (as is the case here)

  • Selection of national networks of best-in-class services provided by both corporates or consumer facing fintechs

In both cases, enabling fintechs and tech providers will glue the ecosystems together.

Does the partnership spell trouble for the smaller fintechs?

Potentially, unless smaller fintechs enable large corporations to deliver technical capabilities into these types of partnerships or even own-branded services in the long run. At KASKO, over on the InsurTech side of life, we were just that, a smaller firm going it alone until we realised our core product strength, now we work with some of the largest insurers on the planet, adding startup speed to their well-established networks.

As big tech moves ever closer to big finance, what measures if any, should governments be taking?

Governments need to ensure that big tech adheres to local financial regulation. Customer data for offering free advertisement-funded digital services is one thing, but destabilising and monopolising finance and insurance services (without which commerce and the economy doesn’t function) is another. Especially given the reputation of US-based tech giants and their history of limited corporate citizenship, for example, Governments need to be careful of enabling local jobs and services to continue to work whilst allowing a new financial future for its citizens.

Anything else you have to say on the matter?

Yet another flickering light of the advent of ecosystem-based value networks where cluster focus, connectivity and openness trump the traditional IP resource-based view.

Putting A Famous Face To A Product

Celebrity-backed brands are nothing new. As PYMNTS has previously reported, the original celebrity-endorsed products date back as the far as the 1760s, when the British royal family was tapped to endorse fine china.

But the modern era of celebrity brands dates back to 1991, with Elizabeth Taylor’s release of her first perfume line, White Diamonds. That opened the floodgates – and through the 90s and early 2000s, it seemed the number of celebrities who had perfume brands to call their own outnumbered those who didn’t.

And, of course, it’s not just perfume.

In any category, from leggings to tequila to face cream, there is almost certainly someone famous who is driving massive, top-line sales for that brand.

And then there’s Kylie, the first billion-dollar celebrity, made famous for selling lipstick kits on Instagram.

Not everyone fares so well.

Although there was a time in this country when one could buy 17 different Christina Aguilera-themed scents, that historical epoch has sadly passed. There are now only nine ways to smell like the singer.

Why, then, do some celebrity-backed brands go the distance, while others fade away? And why are there so many such brands, despite the fact that so few go the distance? As it turns out, it has a lot to do with the celebrities themselves – and what exactly one means when they say they are “backing a brand.”

Why Do We Buy from Celebrities?

According to psychologist Peter Noel Murray, the reasons consumers look to celebrity brands are both very simple and really complicated. The simple stuff is built mostly around admiration: Celebrities embody a way of life that people want to participate in. Their options for doing so are rather limited, Murray noted, as they are not celebrities – but the products associated with their favorite star carry a peculiar kind of intimacy.

“This transference of deeply held personal values gives these brands the quality of authenticity in the mind of the consumer,” Murray wrote. “Through this connection, consumers not only enjoy the design and features of the brand, they experience the celebrities themselves.”

But not every celebrity is created equal, which is why so many brands have varying degrees of staying power. As Murray pointed out, the basics of branding is licensing a name, and that is only as valuable as long as the name is famous. When a star hits his or her peak of fame, their associated brands usually also hit their peak, sales-wise.

Why do so many of these brands end up being flashes in the pan? Because, let’s face it, many celebrities are also flashes in the pan – very popular for a short time, but ultimately pushed aside for the next new thing in a few years. The brands that bear their name tend to follow suit.

“Their afterlife is a lingering existence in internet auctions and yard sales,” Murray noted.

A chilling epilogue to fame if there ever was one.

But that fate, he said, is not a fait accompli. Some celebrities are iconic enough that their brands don’t really fade, because they are never less famous: Liz Taylor’s perfume is still a big seller, eight years after her death.

But the more likely divider is the firms that produce the products, and the famous person’s actual relationship to that company.

The Celebrity Partner

Often, when we are talking about a celebrity brand, we are technically talking about a collection or offering that another retailer or brand is selling with that celebrity’s name on it. A good example of such a pairing was announced this week, as Drew Barrymore is launching a line of home goods with Walmart. Available for purchase on and, the 200-plus items, which are described as “boho-chic,” include a wicker cat bed with pointy ears for $74,  a “hand-woven macramé” basket set for $70 and an $899 pink velvet Parisian sofa.

In these cases, the parent brands tout the heavy involvement of a celebrity backer – but the reality is usually quite different. What a celebrity actually does is usually quite vague; nine times out of 10, they do little beyond letting someone put their name on a product.

Quite often, these products or product lines have been nearly created in their entirety before the celebrity is even brought on board. And even when they are there from the start, the involvement might involve a few high-level observations about color palettes, styles or scents early on in the process  before the actual work of construction and design is handed off to AI, human experts and focus groups.

That might not be all bad.

When Beyoncé released her Ivy Park athleisure line for sale at Topshop, the store had a hard time keeping the goods on its shelves worldwide. The most popular item was the leotard, despite reports at the time that it might actually be physically unhealthy to wear it. Given that, and the fact that cotton leotards had not exactly been a common piece of workout wear before Queen Bey’s approval, it seems reasonable to assume she was the moon that moved those retail tidal forces.

But it does come with a risk, just like any other celebrity endorsement. “Ultimately, the success of these brands lies in selling the lifestyle of a star. It’s a fantasy – and once a fantasy is ruined, disappointment follows,” one industry insider explained.

If the star is the draw, the star has to be … well, actually still shining.

The Celebrity Founder

Under this umbrella are brands like William Rast, which is marketed as “Nashville meets Hollywood,” specializing in premium denim founded by Justin Timberlake and longtime friend Trace Ayala. Then there is Reese Witherspoon’s Draper James, a “Southern charm-inspired” fashion and accessories line. And Rihanna’s buzz-generating cosmetics firm Fenty and its associate lingerie line Savage (though Fenty is a bit of an outlier; Rihanna is credited as the founder and is listed as the trademark holder on the name and some patents, but LVMH, for all intents and purposes, is the actual owner of the brand). And then there is George Clooney’s recently sold Casamigos tequila brand.

These products tend to have a somewhat longer shelf life, because the celebrity in question often has more than their name and likeness associated with them: They also have some of their own funds in the game.

Casamigos was dreamed up by Clooney and a friend who were on a shared quest to drink tequila all day without hangovers. Realizing no such product existed, he and pal Rande Gerber did what every innovator does when they have a problem the market can’t solve: They introduced a solution to the market.

And they reportedly taste-tested every batch before sending it out.

Not everyone is so involved, but celebrity founders tend to have more day-to-day participation, particularly in marketing, and a good deal more input on creative direction. The brands also have a tendency to gain popularity outside their celebrity connection. Casamigos, for example, eventually sold for $1 billion purely on the merits of its quality as a spirit. George Clooney was not part of the deal.

So, what’s the secret of a great celebrity brand?

It seems it’s not too different than the secret to a great brand in general: Make something that delivers value and that consumers want to buy.

And if that happens to be hangover-free tequila … well, all the better.


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

The Path To Mainstream Adoption Of Bitcoin Is Not Through Legacy Finance Institutions, It Is Through The Excluded

mainstream (1)

TLDR. The conventional wisdom is that Legacy Finance Institutions will lead the way to mainstream adoption of Bitcoin.  This post outlines an alternative thesis that the route to mainstream adoption of Bitcoin is by building a second leg as a currency for everyday spending among those excluded from financial services today, starting in countries with a Fiat currency crisis such as Venezuela

This is an update to this chapter of The Blockchain Economy digital book.

This post describes:

  • The conventional wisdom trajectory
  • Bitcoin’s second leg will be built from the wreckage of exotic Fiat currencies
  • When Bitcoin gets traction in developed markets, it will be via those who feel excluded by Legacy Finance
  • Traders are from Venus, Investors are from Mars and Martians need to study Venezuela
  • Profit comes from serving the excluded said Captain Obvious
  • Investors who understand Bitcoin users will do best
  • Serving the Bottom of the Pyramid is a lot easier when the marginal cost is zero and payment cost is close to zero
  • Blue and Red Ocean strategies of Legacy Finance Institutions in the Blockchain Economy
  • Watch what is happening in the Exotic Fiat Currency Countries.

The conventional wisdom trajectory 

The conventional wisdom trajectory has 3 phases – from past, through present, to future.

  • Phase 1. The past (still with us). Cypherpunks, Anarchists & Libertarians. This created the early traction that got Bitcoin from an obscure message board to the possibility of game-changing innovation.
  • Phase 2. The present. Speculators. This classic speculative bubble of late 2017 (followed by the bear market of 2018 and early 2019) brought in new players and new capital (and excited the Legacy Finance Institutions). 
  • Phase 3. The future. Institutions & Governments. This is when Bitcoin is supposed to grow up and put on a suit, to make it make it easy for the masses to use services offered by Legacy Finance. Conventional wisdom sees this like a pivot from Phases 1 and 2. In this pivot scenario, the Cyperpunks, Anarchists & Libertarians are thrown into the dustbin of history and the speculators are told to grow up and trust in the products sold by Legacy Finance. 

This chapter argues a contrarian thesis that bitcoin’s path to mainstream is not a pivot but rather a continuation of Phases 1 & 2. The conventional wisdom scenario plays well at Davos (World Economic Forum), the gathering place of those with wealth and power (Big Tech & Big Bank). This post shows why that conventional wisdom is wrong.

Bitcoin needs a second leg to be stable. Bitcoin’s first leg – store of value – will eventually become unstable if it has to stand on its own. Bitcoin needs a second leg – a currency for everyday spending. That second leg will not be built by Institutions or Speculators, it will be built by entrepreneurs (maybe with Institutional partners) who know how to serve the needs of those who have been excluded by Legacy Finance (who need Bitcoin as a currency for everyday use).

Bitcoin’s second leg will be built from the wreckage of Exotic Fiat currencies 

We can witness this happening today in countries such as Venezuela that are suffering from hyperinflation (as described in this post). This has reached Act 4 in the Creative Destruction 7 Act Play This is “when the going gets weird, the weird turn pro” (quote from Hunter S Thompson, who was certainly weird but also professional enough to write best-selling books).

It is likely that the Bitcoin habit, which we can witness in Venezuela, will spread to countries that are close, physically and/or culturally, to countries with hyperinflation. These neighbours will witness the horror of hyperinflation and see how practical Bitcoin is as an alternative. For example, Argentina and Peru, while not yet suffering hyperinflation, may follow the example of Venezuela. This has reached Act 3 in the Creative Destruction 7 Act Play. Act 3 is Denial. A famous example of the Denial Act 3 was subprime mortgages that blew up in the Global Financial Crisis in 2008. For a long time the surface numbers looked good until a few nonconformists looked below the surface (watch The Big Short movie for an entertaining take on that story). A more recent example in Finance was the Wells Fargo fake accounts scandal (which was going on for a long time before it was uncovered).

If Bitcoin is limited to countries with hyperinflation, those of us working in developed markets with strong Fiat currencies can dismiss it as a phenomenon (like wheelbarrows full of cash) that have nothing to do with “normal” countries.  The next bull market needs a use case story that more people can relate to.

If  Bitcoin spreads from Venezuela to other countries such as Argentina and Peru, the markets will have a story to relate to. There are 180 currencies listed as legal tender, of which only 8 are considered as “major” by the FX market. Contagion spreads rapidly.

When we see that contagion spread to developed markets with Fiat currencies that are perceived to be strong today, then we will have reached mainstream adoption. Again we need to look at edge cases aka those who feel excluded by Legacy Finance.

When Bitcoin gets traction in developed markets, it will be via those who feel excluded by Legacy Finance

This is Act 2 in the Creative Destruction 7 Act play. Act 2 is when we see Straws in the Wind. It takes guts to see a few straws blowing about and bet that this is caused by an invisible wind. The signs of change are far from obvious but “the answer my friend is blowing in the wind”.

The reason change comes from the excluded is obvious. Their needs are not being met by Legacy Finance. We see that happening today in Venezuela. When the issue is feeding your family, the clunky UI and risks of Bitcoin do not seem a big deal. Using Bitcoin gets onto your Must Do Today action list.

Are there markets like this in the developed world? Are there enough people excluded by Legacy Finance in the developed world to make sure that the Bitcoin contagion spreads to the developed world? I believe the answer is yes and that we can see this answer blowing in the wind of three niche markets in developed world that have excluded by Legacy Finance:

  • Financially excluded because they are poor. The Western underbanked, excluded from or ripped off by Legacy Finance market providers will see the appeal of Bitcoin. When told by Legacy Finance that “Bitcoin is bad for you” they may take the view that if Legacy Finance does not like it, then it must be good.
  • Excluded by Banks because they are Small Business. Daily Fintech has dedicated one day a week (Wednesday) to Small Business finance because Small Business owners are a good example of the Excluded – banks did not want them because they were neither Corporate or Consumer (the two models that Banks understood). This is why Square is such a big player in Bitcoin. Small Business owners who want to avoid problems with credit card networks (see here for more) will be motivated to accept Bitcoin and spend in Bitcoin.

Traders are from Venus, Investors are from Mars and Martians need to study Venezuela

The difference between traders and investors looks small on the surface – it is simply the length of the holding period. In reality, the approach is fundamentally and completely different.

Bitcoin traders look at price charts. Bitcoin investors look at how people are using Bitcoin.

Given that real Bitcoin usage today is quite limited, Bitcoin investors have historically looked at what products are being built today that will enable new forms of usage in the future. To give an example from an earlier era, an investor would look at an early version of Hotmail and extrapolate that mass use of email via browsers was possible.

The hope story on Bitcoin is getting a bit long in the tooth. The market needs to see real usage traction, not just products with potential use. For that we need to look outside the developed world.

So Bitcoin investors need to understand how Bitcoin could serve the Excluded

Traders need a story. Bitcoin as a one-legged stool (digital gold store of value) is not enough to power the next bull market. To reach the mainstream investor, Legacy Finance Institutions will need more than the how (things like Custody), they will also need a usage story. They will need to show why Bitcoin will change the world and how that is already happening.

Traders will still trade and their liquidity is essential. Some of the traders who got into Bitcoin during the last bull/bear cycle will get back into active trading during the next bull/bear cycle. Many will do this via Institutions, others will use startups.

Profit comes from serving the excluded said Captain Obvious

Question: which market looks more attractive?

  • A. Markets where customers have many options. You will need to persuade them to switch from their current way of doing things and the advantages you offer are not really life-changing.
  • B. Markets where customers have few, if any, good options. If you can deliver them a solution it will be  life-changing for them and they will take whatever steps are needed to get your solution.

You probably answered B, yet most solutions target A. A big reason is that most developers today work in developed markets (where Customer A is located) and we find it easy to build solutions for people who are like us.

Investors who understand Bitcoin users will do best

That is another Captain Obvious statement and yet most investors work in developed markets and feel comfortable investing in solutions for those markets.

We can see this in some early Bitcoin entrepreneurs such as Wences Casares of Xapo who comes from Argentina.

Serving the Bottom of the Pyramid is a lot easier when the marginal cost is zero and payment cost is close to zero

The Bottom of the Pyramid (BOP) is a socio-economic concept that allows us to group that vast segment  – in excess of about four billion  – of the world’s poorest citizens constituting an invisible and unserved market blocked by challenging barriers that prevent them from realising their human potential for their own benefit, those of their families, and that of society’s at large.

Technically, a member of the BOP is part of the largest but poorest groups of the world’s population, who live with less than $2.50 a day and are excluded from the modernity of our globalised civilised societies, including consumption and choice as well as access to organised financial services. Some estimates based on the broadest segment of the BOP put its demand as consumers at about $5 trillion in Purchasing Power Parity terms, making it a desirable objective for creative and leading visionary businesses throughout the world. One of the undeniable successes in this process is the explosion of the Microfinance industry witnessed in many parts of the world.

The first person to really focus on BOP was C.K. Prahalad (1941-2010), who in the process has inspired influential leaders and countless ordinary citizens sharing his vision, to joint efforts for the unleashing of their creative and productive potential as part of an inclusive capitalist system, free of paternalism toward the poor. Source

The iconic use case was Unilever with their single serving soap packages in India. That took real innovation.

Serving the Bottom of the Pyramid is a lot easier when the marginal cost is zero, for obvious reasons. You can deliver at the price point needed in the market without having a margin problem with cost of goods sold .

The advent of fast, low cost micropayments via offchain technology such Lightning Network also make it much easier to profitably serve the Bottom of the Pyramid. Credit Cards obviously don’t work in that market and physical cash has hidden costs (theft, time, handling etc).

Blue and Red Ocean strategies of Legacy Finance Institutions in the Blockchain Economy

The Cypherpunks, Anarchists & Libertarians who kick-started the Bitcoin Blockchain engine tend to relegate Legacy Finance Institutions to the dustbin of history. Clearly Bitcoin is a big bang disruption for Legacy Finance and many will suffer a Blockbuster/Borders/HMV/Kodak type fate.

We see two fundamental strategies for dealing with this kind of big bang disruption:

  • Red ocean. Beat your current Legacy Finance competitors, even at risk of disrupting your current business, by aggressively offering Bitcoin related services 

Institutions need help from a range of service providers such as strategy to code to legal. Serving the Institutions will always be a profitable business.

Watch what is happening in the Exotic Fiat Currency Countries

The bridge from hyperinflation “broken Fiat” Currency Countries to developed markets will be via “exotic Fiat” Currency Countries.

The 8 most traded currencies are

U.S. Dollar (USD)

European Euro (EUR)

Japanese Yen (JPY)

British Pound (GBP)

Swiss Franc (CHF)

Canadian Dollar (CAD)

Australian Dollar (AUD)

South African Rand (ZAR)

There are 180 current currencies across the world, as recognized by the United Nations. That is a lot of what FX traders call the “exotic” currencies.

Watch the currencies/countries that are physically and or culturally close to “broken Fiat” currency countries. For example, If Bitcoin spreads from Venezuela to Argentina and Peru, the markets will have a story to relate to and other countries may copy this way to avoid the horrors of hyperinflation.

Image Source.

Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is the author of The Blockchain Economy and CEO of Daily Fintech.

Check out our advisory services (how we pay for this free original research).

To schedule an hour of Bernard’s time for CHF380 please click here to send an email.

Daimler Eyes Self-Driving Truck Market With Stake In Robotics Firm

German carmaker Daimler, which sells the most Class 8 tractor-trailer semi trucks, will take a majority stake in Torc Robotics, a U.S. autonomous vehicle technology company, according to a report by CNBC.

It’s not known how much Daimler is going to invest or how much of the company Daimler will own.

“Torc takes a practical approach to commercialization and offers advanced, road-ready technology, plus years of experience in heavy vehicles,” said Roger Nielsen, CEO of Daimler Trucks North America, in a statement.

Torc and other companies developing self-driving technology have attracted attention from venture capitalists and automakers alike as the idea of autonomous trucks inches closer to reality.

Torc is based in Virginia and was founded in 2005 by CEO Michael Fleming. It’s considered to be a leader in the field by many analysts. Fleming said the U.S. is a main target for getting autonomous trucks on the road.

“With the ever rising demand for road transportation, not the least through e-commerce, there is a strong business case for self-driving trucks in the U.S. market,” he said.

In January, Daimler announced plans to invest $573 million (500 million euros) into developing autonomous trucks. The move would create 200 jobs, the company said.

Daimler wants a “global push to bring highly automated trucks (SAE level 4) to the road within a decade,” the company said.

“Highly automated” means the vehicles will “travel in defined areas and between defined hubs without any expectation of the system that a user will respond to a request to intervene,” according to a report by Freightwaves. Vehicles that are designated level 4 can drive fully autonomously, in most conditions.

Level 5 means there’s no need for a human driver, and by reaching level 4, Daimler will be close to that distinction.

Daimler Trucks CEO Martin Daum said he wanted to put a level 4 truck on the road in the United States this year, but declined to say where. He was speaking at CES.

“Why are we here?” asked Daum. “Because our trucks are all about technologies.”


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

Novo raises $4.8M in seed funding for mobile small business banking

Novo, a startup mobile bank aimed at small business, has said it raised $4.8 million in venture seed financing led by Crosslink Capital, along with Red Sea Ventures and RRE.

Other investors in the funding round include Hack VC, Rainfall and the Stanford Law School Venture Fund, according to a company press release.

Novo co-founder and CEO Michael Rangel said the company will use the funding to focus on onboarding customers who have been on the waitlist; to create strategic partnerships with other value-added services; and to add new members to the team.

Launched in September, Novo provides a free business checking account and debit card, which are managed through a mobile app.

Account application takes 10 minutes, and the bank, which works with FDIC-insured community banking partner Middlesex Federal Savings, does not charge hidden fees or require a minimum balance.

The bank also coordinates with Stripe, Slack and Zapier to provide customers with insights into their financial health.

Topics: Financial News, Mobile Banking

Sponsored Links:

Related Content

Latest Content

Could Starbucks’ Revamped Rewards Alienate Customers?

Research and analysis firm Bernstein said Starbucks’ changes to its rewards program could alienate some of its customers, according to a report by CNBC.

The coffee giant announced it was revamping its rewards program in a push to attract new customers, in the midst of slowing traffic in its North American stores.

The company’s loyalty program makes up about 40 percent of its daily transactions. With the new version of the program, members still get two stars for every dollar spent, but the company is getting rid of the tiers and offering a wider range of items to redeem.

“We want to make the program more appealing to more people,” said Matthew Ryan, chief marketing officer at Starbucks. “We want members more engaged out of the gate.”

Under the rules of the program, when customers spend $62.50 at the store, they get 125 points and are eligible for a free item. When the new changes go into effect on April 16, customers will have to spend $75 to redeem certain items at 150 points. A salad or a sandwich will cost even more: $100 for 200 points.

“We think the new rewards plan runs the risk of alienating the core customers,” Bernstein Analyst Sara Senatore wrote in the research note. “With lower discounts on higher-value items, the program should be margin accretive – assuming no change to customer habits. But customers are savvy, and higher spenders are likely to recognize that the effect reward rate is lower (as much as 50 percent lower on some items).”

The last time Starbucks tinkered with its rewards program in 2016, it faced backlash on social media. It remains to be seen if customers will react in a similar way this time around.

“We are confident the upcoming enhancements to Starbucks rewards will lead to the continued growth and customer enjoyment of the program,” Starbucks spokeswoman Maggie Jantzen said. “These changes will bring immediate value and increased choice to our members, and we’re looking forward to introducing them on April 16.”


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

982M Email Accounts Leaked From Online Database

Close to 1 billion email accounts were leaked by a marketing company in what some researchers are calling the “biggest and most comprehensive email database” breach ever.

The Daily Mail reported that personal information from 982 million email accounts included names, gender, dates of birth, employers and even home addresses in the database. The info did not contain passwords or credit card details.

The online database was created by a company called, which reportedly had no security measures in place. The company offered an “enterprise email validation” service for marketing companies to check whether email addresses were valid or not.

Cybersecurity expert Bob Diachenko discovered the breach and contacted the support team. The company has since taken down its website. It’s not clear whether hackers got hold of the information or not.

Diachenko did some checking by cross-referencing the breached info with the HaveIBeenPwned database, which lists public breaches. He found out that there were new records that had never been exposed before.

“Upon verification, I was shocked at the massive number of emails that were publicly accessible for anyone with an internet connection,” Diachenko said in the report. “Some of data was much more detailed than just the email address and included personally identifiable information.” offered marketers the chance to “verify” email addresses, a common tactic deployed to do the work, which is often tedious and takes a long time. It involves manually sending out emails to see if they’re active or not.

The company, which is based in Estonia, sent out thousands of emails to verify addresses, usually with the only a message saying “hi.”

Once the addresses are verified, marketing companies will start emailing in earnest. It also puts people at risk for robo calls and phishing attacks, which will try to lure even more personal information out of people.


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

Want To Build A Retail Experience? Get An Incubator

You’ve probably gotten the memo already, but in case you missed the message, here you go: Mere retail is boring. Mere retail is not enough. What works today – or, at least, what is supposed to work – are commerce and payments experiences.

The thing is, someone, or some organization, has to give birth to those experiences and the ecosystems that support them.

Foot Locker has become the latest big brand to embrace the concept of retail incubators, joining such companies as Walmart and Target in hopes of fostering innovation that will translate into more sales and customer loyalty. Called “Greenhouse,” the incubator, which was introduced at Foot Locker’s recent investors’ day, “encompasses three new facets: collaborations, concepts and a think tank – all aimed at feeding new ideas into the organization,” according to Footwear News.

More specifically, according to Foot Locker CMO Jed Berger, the Greenhouse incubator project “is a development platform to build and cultivate new relationships, new initiatives, new brands and new ideas, all while looking at what they could be in the future as opposed to what they are today.” According to the report, he said that “Greenhouse will operate as a separate unit that sits outside of our walls, both figuratively and literally. We did this purposefully to allow the team to take on industry challenges while being progressive, disruptive and responsive to perpetually evolving consumer and culture.”

New Concepts

That’s as much detail as Foot Locker shared about Greenhouse, but a look at the brand’s recent moves confirms the company, like so many other digital commerce and payments players, is interested in creating customer experiences – something beyond the normal sales and transaction process.

The retailer recently launched its Power Store concept, with the newest one opening in January in Eastpointe, Michigan near Detroit – even as Foot Locker wrestles with closing older, more traditional stores.

According to Foot Locker, that store has 8,500 square feet of retail space and “is home to an activation space that will host regularly scheduled events and activations for the sneaker-obsessed.” Beyond that, the Michigan store – like such “Power Stores,” it is meant to be specific to local tastes – offers “exclusive, city-centric products including adidas AM4DET, a new SPEEDFACTORY shoe designed by Kayla Donaldson, a Detroit native who took inspiration from her city.”

It’s hard to say if any store or in-person retail concepts will emerge from Greenhouse, but it’s certainly not a stretch to think they might. But incubators from other retailers tend to have a broad mission when it comes to commerce, tech and even payments.

Incubator Aims

Take the Walmart example.

Its tech incubator has given birth to tech innovations and entrepreneurial efforts, as PYMNTS has covered. Target, via its new incubator program – called Target Incubator, plainly enough – is, according to the retail chain, “designed to help Gen Z entrepreneurs-in-the-making nurture and grow their better-for-people or better-for-the-planet businesses, even if they haven’t launched yet.”

Again, providing a retail experience is part of the foundation for the incubator effort. “To truly engage our next generation of guests, it’s not enough to create great brands. We need to cultivate communities and have real conversations,” said Rick Gomez, executive vice president and chief marketing officer of Target. “So we’re using our expertise and brand power to connect with our young guests, amplify their voices and support their great ideas for the future.”

While incubators seem so very of-the-moment, the general idea comes from the days when analog, not digital, dominated the worlds of commerce and payments. “The first business incubator program opened in 1959 to give new business owners access to the practices and assistance needed to grow successful companies,” reads one history of the concept.

Granted, those incubators were more about various young and small businesses coming together to share resources and ideas, but that spirit is certainly part of the go-it-alone incubators operated by major retailers and brands, at least on paper. Today, the U.S. has about 1,250 incubators, according to the National Business Incubation Association, though the vast majority – more than 90 percent – are unlike the Foot Locker, Target and Walmart efforts, and instead operate as nonprofits dedicated to local economic development efforts.

It’s safe to say more retail concepts and experimentation will emerge from these latest brand-specific incubators as merchants strive to build more experiences for consumers.


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

Sizzle Fizzle: Lyft’s Liftoff Sizzles

IPOs are everywhere, it seems, but Lyft may be a special case.

Yes, Levi Strauss was a star earlier in the month, with a debut on the public markets that sent the 160+-year-old firm’s shares up more than 30 percent on the first day of trading.

Now comes Lyft. At this writing, post the stock market’s open, the company brought a bit more than 32 million shares to market, with an initial price of $78, notably above the $62 to $68 range that had marked the beginning of the week and pricing indications of $72 into the open.

So, count it as a sizzle even before the sizzle began for real. Want more sizzle evidence? Four brokerages initiated coverage of the company even before the first shares traded hands. Talk about enthusiasm (we note that such public pronouncements on newly-public companies usually take place after the IPO).

As noted by, Wedbush initiated with a “neutral” rating and an $80 price target, as its analysts noted that “the ridesharing industry has become one of the most transformational growth sectors of the U.S. consumer market over the past five years, with Lyft establishing itself as a clear No. 2 player … the brand loyalty of Lyft has been quite impressive, as the company continues to attract drivers and riders with its brand.”

Ah, but what does the IPO itself tell us? We’ve noted in the past that the company has been losing money – a lot of it. In 2018, according to the prospectus, the company logged $2.2 billion on the top line while losing $911 million. Growth costs money. The company has said more than 18 million people used the service at least once in the fourth quarter of 2018, which compares quite favorably with the 6.6 million seen in the same period of 2016.

If a company loses money but is growing, investors are at times willing to overlook the red ink, with the expectations that it turns to black ink at some point. And indeed, Lyft is targeting EBITDA (a rough cash flow measure) margins of 20 percent – but when or how it will get there is not exactly clear. In terms of the business model – that is, of raid-hailing in general, across Uber and Lyft – there are headlines here and there about wage disputes (drivers want to be paid more, and Uber has just cut wages).

Public opinion counts, and it should be noted that Lyft, in tandem with the IPO, said it has started a civic engagement program titled City Works in the cities in which it operates. The debut is in Los Angeles, and the company will donate $50 million annually to the program. Initiatives will include working with transportation initiatives and promoting clean energy.

In terms of the competitive model, Lyft clearly – at least for now – is banking on ride-hailing, as are investors. Uber, of course, is banking on a more distributed ecosystem (food delivery, etc.). It remains to be seen what happens when both these firms face greater financial scrutiny (along with public filings). But for now, the sizzle of the week has wheels — literally.


Cannabis: It may soon be a case of “smoke ‘em if you got ‘em.” The U.S. House of Representatives is poised to vote to end the federal prohibition of marijuana within weeks, according to reports. Such a bill would then go to the Senate.

IPOs: Lyft is on deck, but indications are that the ride-hailing IPO is already pricing above its stated range of between $62 to $68. In the meantime, Levi Strauss shares, which debuted last week, were up more than 30 percent right out of the gate. All of this comes amid the strongest quarter for stocks in general logged in a decade. Old economy, new economy – everyone gets a bid in the stock market.

Loyalty: Credit unions sizzle when it comes to loyalty, with 81 percent of consumers surveyed in the latest Credit Union Innovation Playbook saying they use CUs as their FI of choice because they trust those institutions.


Wells Fargo corporate banking: The scandals have mounted, and the impact lingers. Reports came this week that Wells has been struggling to expand its corporate banking unit, on top of a 4 percent revenue decline in that segment in 2018, where once that unit was logging mid-single digit gains.

Bitcoin scam: The headlines continue that support for bitcoin payments is waning on a case-by-case basis, and that exchanges are pulling back on futures. In the meantime, scams continue. In one recent example, a trader offered U.S. investors the chance to buy discounted bitcoin – and investors sent $1.5 million to his brother, a fugitive in Europe, who then made off with the money.

Zappos gets a boot: The U.S. Supreme Court has rejected an appeal by the online shoe firm – and customers can proceed with lawsuits tied to a 2012 data breach that compromised the information of 24 million customers.


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

MoviePass Challenger Sinemia Said It Cancelled 3 Pct Of Accounts Due To Fraud

Sinemia, the movie subscription service in direct competition with MoviePass, surprised customers by cancelling a number of accounts, according to a report by TechCrunch.

“Sinemia is a FinTech company in the entertainment industry. Just like any other FinTech company, Sinemia  also faces its own challenges of fraud,” the company said. “After conducting a detailed fraud detection analysis earlier this month, Sinemia has terminated a very small number of user accounts for fraudulent activity and misuse.”

The statement said that 99 percent of users aren’t affected and that it would offer “full refunds of the difference between their membership payment (and) fees and ticket purchases” for those who were.

On Friday (March 29), the company announced that it was offering a $15 monthly plan called the Always Unlimited Plan, which lets customers see one movie a day. With the plan, the company released a statement about the account cancellations.

Sinemia said it did “a detailed fraud and misuse detection analysis earlier this month,” and that it got rid of 3 percent of accounts due to “misuse or fraudulent activity,” since March, which is a larger number than what it said earlier.

“When fraud is allowed to run rampant, it can take down an entire business, a scenario in which everyone loses,” the company said. “It’s critical that all our customers use the service correctly and that we take fraud and misuse seriously. This kind of vigilance helps us combat misuse, ensuring all our customers continue to enjoy movies at affordable and sustainable prices.”

The fraudulent activity, while not spelled out, could be due to the sharing of accounts.

Ted Farnsworth, CEO Helios and Matheson Analytics, which owns MoviePass, discussed that issue in the report. “They would share their code,” Farnsworth told the news outlet. “You’d have one person going to 20 movies a month, 30 movies a month. Which you know and I know, as much as we like movies, most people aren’t going to 30 movies a month.”

He said MoviePass fraud could be as high as 20 percent.

Sinemia customers have also complained about hidden fees, and the issue was big enough that a class action lawsuit was filed against the company.

“Sinemia, however, has essentially become a bait-and-switch scheme: it lures consumers in by convincing them to purchase a purportedly cheaper movie subscription, and then adds undisclosed fees that make such purchases no bargain at all,” the suit, filed in Delaware, alleges. “Sinemia fleeces consumers with an undisclosed processing fee each time a plan subscriber goes to the movies using Sinemia’s service.”


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

Lyft Shares Jump 20 Pct With IPO Debut

Lyft shares had a strong debut on Friday (March 29), trading at $87.24, which is 20 percent higher than its IPO price of $72, according to CNBC.

Lyft said it sold 32.5 million shares on Thursday at the $72 price. The company has raised about $2.3 billion from the listing.

The stock stayed at $87 for a few minutes before dropping to $80, but demand for the stock was strong and upwards of six million shares were traded.

The pop pushes Lyft’s valuation to around $25 billion.

“This is a lightning start for Lyft’s stock as investors are salivating (over) owning a piece of the $1 trillion ridesharing market,” said Wedbush Managing Director Dan Ives. “The robust start to trading is also a clear positive for other tech names that are watching Lyft to gauge investor demand and Street reaction on this transformational consumer tech name.”

Lyft said it had elevating revenue in its IPO prospectus, but posted a loss of $900 million in 2018.

“We’re ready to be held accountable. We’re excited,” said Co-founder and President John Zimmer. “In our case, I think what we’ve seen in talking to investors (is) that more people are maybe surprised to see the numbers that we’re putting out, and I think this is a great part of the process. For us, this wasn’t the goal – this is a milestone along the way – but we feel like it helps us with additional access to capital.”

Zimmer also said the company isn’t worried about being cheaper than Uber, and is more concerned with offering the best service for its customers.

“It’s not about a price battle between the two players anymore,” Zimmer said. “It’s about getting the best service, having the best software and real-world operations.”

In the past, Lyft has benefited from Uber’s troubles, especially the #deleteUber movement in January 2017. By the end of 2018, Lyft had claimed 39 percent of the ride-hailing market in the U.S.

“In 2016 and prior, there was a need for us to get up to scale – scale in our business is a three-minute pick-up time,” Zimmer said. “Now what we have is 80 percent of our passengers are coming in organically. They’re coming in because of the brand, because of the service (and) because of our driver community.”


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

Comviva Plans To Grow Contactless In India; Scotiabank Rolls Out Digital Mortgage Experience

Welcome to The Axis, your late look at payments news from around the world. Coverage includes Comviva’s plans to accelerate contactless payment growth in India. Scotiabank has rolled out its Scotiabank eHOME digital mortgage experience for Canadians, Google India has teamed up with Pine Labs for digital payments and consumers will be able to make contactless payments for rides on Metrolink trams in the U.K.

Mobile solution company Comviva plans to accelerate the growth of contactless payments via its mobiquity® Wallet Tap and Pay offering, according to reports. Through the solution, the company said, providers of digital wallets that are third parties along with issuing banks will be able to easily roll out contactless payment with a proprietary software development kit (SDK). Comviva Mobile Financial Solutions Chief Operating Officer Srinivas Nidugondi said, according to the report, “With the growing NFC POS infrastructure in India and mobile phones becoming de facto wallets for consumers, we expect ‘wave and pay’ or ‘tap and pay’ to become the future of contactless payments in India.”

In Canada, Scotiabank has rolled out its Scotiabank eHOME digital mortgage experience in an effort to change how Canadians receive their mortgages, according to reports. Through the offering, users can apply for their mortgages on the web and finish a closing without an in-person visit to a financial advisor or mortgage specialist. The company also noted that a secure vault is used for the uploading of documents. Scotiabank Group Head of Canadian Banking James O’Sullivan said, per the report, “This is a huge milestone in driving forward Scotiabank’s digital transformation strategy.” O’Sullivan continued, “We are committed to investing in technology that delivers thoughtful solutions for our customers.”

On another note, Google India has teamed up with Pine Labs for digital payments in the offline market, according to reports. With the tie-up, retailers will be able to process Google Pay transactions within their shops with the help of point-of-sale (POS) terminals from Pine Labs. Payments can be started with the cell phone number of a user of Google Pay. That user, in turn, taps into the payment app to allow processing of the transaction. Pine Labs CEO Vicky Bindra said, according to the report, “We are excited to collaborate with Google and bring the convenience of UPI at point of sale for Google Pay users through our platform in India.”

In the U.K., consumers will be able to make payments through smartphones, smartwatches and contactless cards in the network of Metrolink trams, The Manchester Evening News reported. Through the system, riders will “touch in and out” on platforms through yellow card readers. And, as there are no barriers on the platform, fare checks will be conducted on passengers “as they currently are for all commuters” per the paper. At the time of a ticket inspection, consumers will present a mobile phone, a watch or a card. Ahead of a rollout, a marketing campaign will reportedly educate passengers about the system.


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

Square Partners With Washington Nationals To Offer In-Seat Concessions

Payments company Square has partnered with the Washington Nationals and Levy Restaurants to let fans order concession menu items right from their seats, according to reports.

Fans can use the Square-owned Caviar app and the Square POS terminal to order everything from food to beer and wine while enjoying the game from the stands. When the order is ready, they’ll receive a notification in the form of a beep.

Concession workers will also be carrying Square terminals with them during the pilot phase of the program. The terminals allow customers to pay with credit or debit cards and digital wallet payment options like Apple Pay or Google Pay.

“With Square’s point of sale and employee management software built right into Square Terminal, it’s easy for hawkers to quickly accept payments,” the company said in the release. “Square Terminal will help fans who don’t carry cash, and will speed transaction times as hawkers spend less time counting change and more time making sales.”

Alan Gottlieb, chief operating officer at Lerner Sports Group, said it was important for Nationals fans to get the most out of their ballpark experience. “The Nationals take pride in delivering a first-class experience,” he said. “So we are excited to work with an innovative partner like Square to offer our fans more payment options in the stands and a new ordering method via the Caviar concession stand.”

The concession items will feature a revolving list of Caviar partner eateries.

“Square’s ecosystem of services helps sellers never miss a sale; now, that extends to ensuring fans never miss a pitch,” said Kevin Burke, marketing and sales lead at Square. “We’re thrilled to bring Caviar Pickup and Square Terminal to Nationals Park. The Nationals organization has taken an innovative approach to the fan experience, and their commitment to enabling a tech-forward stadium that is convenient for fans sets them apart as a league leader.”


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

Why ‘Play Ball!’ Means So Much For Payments

Another baseball season has started, much to the delight of many consumers, including those insufferable and pretentious fans who consider football something that happens between the World Series and spring training. Cue the memories, the emotional music, the waxing nostalgic about past players and all those ballpark hotdogs with parents and pals.

Recall, too, all those instances in which sports helped shape payments.

Sports – or, more specifically, sports venues – function as hotspots for payments, sites of experimentation and deployment for the latest technologies and concepts.

Why wouldn’t they? You have tens of thousands of people (unless you are the Miami Marlins or some other unfortunate team) in a central location ready to spend money. And money they will spend: The average price of a hot dog at a Major League Baseball stadium runs $4.52, according to an estimate, while a soda will set you back $4.13 and a beer $5.90. On average, a fan can expect to spend about $80 or so at an MLB game, after buying the ticket (with prices much higher, of course, in bigger cities).

Cashless in Atlanta

One of the biggest developments in the ongoing relationship between sports and payments comes from Atlanta.

There, the Mercedes-Benz Stadium has gone cashless, with only credit cards, debit cards and mobile payments being accepted at the venue, with officials saying the move will help keep prices low for fans. Steve Cannon, chief executive of Falcons’ owner AMB Group, told Bloomberg, “There is a significant amount of effort and cost that goes into the handling and accountability around cash that will get completely removed from the equation.” At the same time, it was said the move would make transaction times quicker and provide more flexibility for price changes.

That said, people who only have cash can still transact there: The stadium will have roughly 10 machines that will let users exchange cash (ranging from $10 to $1,000) for a prepaid Visa debit card.

Soccer Progress

AMB Group, owner of the Atlanta Falcons, began its cashless strategy amid soccer season, as soccer’s fan base is generally more oriented toward technology. Facts support that. (Lest baseball fans forget, that sport might be “American’s pastime,” but soccer pretty much dominates the rest of the world.)

Late last year, for instance, Allianz Arena in Munich, where the German soccer team FC Bayern Munich plays, adopted NFC ticketing via Apple Pay, according to reports. “With Apple Pay, users will be able to use near-field communication chips to buy concessions and merchandise at the stadium with a tap of their iPhone or Apple Watch.” Not only that, but “Apple Pay is available at all kiosks and in the fan shops in Allianz Arena.”

Indeed, FC Bayern reportedly stands as the first member of the German soccer league Bundesliga “to offer Apple Pay ticketing at its front gates. Visitors to the stadium can load their tickets into their Apple Wallets and hold their iPhone or Apple Watch to a ticket scanner to enter the stadium without needing to establish an internet connection or unlock their phones.”

The last World Cup also brought digital payment activity and progress – specifically, contactless payments. Approximately 17 percent of purchases with Visa in the World Cup’s 11 Russian host cities, for example, used contactless payment technology with devices such as smartphones, bracelets and rings. However, the share of contactless payments inside the stadiums hit 54 percent, made by fans from Russia and other countries.

In terms of FIFA venues, Luzhniki Stadium led all sites for total number of payment transactions, where fans spent 139 million rubles ($2.2 million). Russian citizens and international visitors spent about the same within the stadiums. Russian citizens were responsible for 68 million rubles ($1.1 million) in purchases, while non-Russian citizens were responsible for 71 million rubles ($1.12 million) in spending.

Football, too – U.S.-style football, the game where giant men hit each other and where refs blow calls in New Orleans – has its share of progress in payments and commerce. For instance, the NFL during the 2018 season jumped into the voice-assistant technology game, too. It launched “The Rookie’s Guide to the NFL,” an Alexa skill designed to educate casual and new fans about the game, provide information about Super Bowl history, and give podcast previews about the league’s playoff games from Super Bowl winner Osi Umenyiora. Previous Super Bowls have seen efforts toward promoting contactless payments.

Welcome to a new baseball season. May your team do well. And may this year’s payments game be better than previous efforts.


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

India’s Federal Bank Teams Up With Blockchain Co Ripple For International Payments

Federal Bank in India has partnered with blockchain payments company Ripple to facilitate cross-border payments, according to reports.

Federal Bank confirmed the collaboration in an announcement to the Bombay Stock Exchange on Thursday (March 28).

This is to inform Federal Bank has entered into a partnership with Ripple Inc, a blockchain supported global remittance company, for cross border remittance through its network, the announcement said. Powered by blockchain-enabled solution, the Ripple platform ensures cross-border transactions much safer and secured.

It isn’t known if the partnership will include cryptocurrency or not, especially since the Reserve Bank of India (RBI), the country’s central bank, issued a statement saying it wouldn’t support the digital currency. Even though some appealed the stance, the country’s supreme court upheld it.

Regardless of its position on cryptocurrency, the country is very pro-blockchain.

In fact, in July of last year, RBI created a division geared toward artificial intelligence (AI) and blockchain, Cryptovest reported. The division aims to bring the bank up to speed on emerging technologies and potentially draft regulations in the future.

“As a regulator, the RBI also has to explore new emerging areas to check what can be adopted and what cannot,” a person familiar with the matter told The Economic Times. “A central bank has to be on top to create regulations. This new unit is on an experimental basis and will evolve as time passes.”

Also in India, in May of 2018, Infosys formed a blockchain with seven banks, and it is known as the India Trade Connect. The banks include IndusInd Bank, RBL Bank and Axis Bank, among others. Infosys stated that “the network is being used by the banks to run a successful pilot of Finacle Trade Connect, a blockchain technology-based solution developed specifically to address the trade finance process requirements of banks.”

The firms said risk management and transparency will be part of the network, with an eye on digitizing business processes.


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report

TymeBank’s AI-Powered Chatbot Key to Low-Cost Digital Strategy

Digital bank TymeBank and conversational banking technology provider Finn AI have teamed up to bring a low-cost, AI-powered experience to underserved consumers as well as small and micro businesses in emerging markets. TymeBank, which was awarded the first full banking license in South Africa in about two decades, signed up over 100,000 customers within the …Read More

The Amazon/Walmart Whole Paycheck Tracker: March Madness Edition

As this goes to press (so to speak), the annual NCAA March Madness tournament is rounding off the Sweet-16 round. There’s been plenty to watch as the tournament is hitting the halfway mark. UVA fans have been relieved to see their top seeded team not drop to a 16-seed in the first round of the tournament. Duke fans were shocked to learn that Beyoncé is a critical part of Coach K’s team management program. Yes, Mike Krzyzewski, Duke’s legendary tactician of a basketball coach for the last 40 years, is also a huge and vocally enthusiastic member of the Beyhive.

“He loves Beyoncé, he loves Beyoncé. He, like, loves Beyoncé,” former Duke star Quinn Cook said earlier this week on a podcast before relating that the coach would make the players watch Beyonce training videos to motivate them.

It remains to be seen if they Duke squad will be able to get in formation later today to advance to the Elite 8 — or if they will really try to match  Beyoncé’s athleticism by playing the entire game in high heels.

The race to be the best team in college basketball is fairly short and compressed — and will be over in about a week.

The race to control the consumer’s whole paycheck, on the other hand, is always ongoing, seven days a week, 365 days a year. And, given the actions of the two top “teams” in the league — Amazon and Walmart — one might conclude that the championship is happening weekly.

And, as always, we’ve tracked the more winning efforts.


Play of the Week:  Amazon’s Staggering Scale

That Amazon, by the numbers, is a massive force in retail and consumer spending is not much of a news item. But just how much might be. It has a 6.3 percent lock on the total of U.S. retail spending (and growing) and its ongoing war with Walmart for ever greater levels of control are the reason this entire tracker exists.

But new reporting out in Bloomberg this week refreshes the Amazon numbers — and gives a peek into just how extremely large Amazon really is. The report notes that in 2018 Amazon brought in $25.6 billion from AWW, over $234 billion in eCommerce sales and $7.4 billion in advertising revenue. It is behind 88 percent of eBooks sold, 83 percent of the eReader market, 42 percent of the market for analog books and 7.5 percent of the consumer electronics market. Amazon’s apparel and grocery efforts both bring in about $25 billion a year and about 200 million people visit the site monthly, half of them Prime members.

They are impressive numbers, and some in fact say too impressive; as the report noted, presidential hopefuls like Elizabeth Warren have repeatedly singled out Amazon as a prime candidate for trust busting, given its staggering size and success. However, as many have pointed out, based on the current interpretation of U.S. antitrust law — which focuses on harm to consumers via predatory pricing — there’s little to suggest that anything about Amazon is illegal since they’ve long since hewed toward offering customers greater selection at lower prices. And customers aren’t complaining.

Amazon has also in the past responded that its broad reach is not on its own an indication of market power since in every market it enters it finds entrenched competitors, some of whom compete quite successfully. Not every market it enters, after all, is a resounding success. The Fire phone, the expansion into travel and foray into online auctions were all Amazon experiments that didn’t go as planned — and even Amazon Restaurants has failed to gain traction in the massive market for food delivery.

Whether any of those factors will deter regulators like Senator Warren, however, remains to be seen. But as Bloomberg notes, Amazon can also always point to its main competitor in the whole paycheck race, and note that it is not alone when it comes to massive size and scale. Amazon has noted that Walmart, the biggest retailer in the U.S. by sales, dwarfs it in scale and geographic reach. Walmart has 4,750 brick-and-mortar stores. Amazon-owned Whole Foods and the cashierless Amazon Go convenience stores together add up to just 487 locations.

Of course, there is no such thing as Walmart Web Services, though …

Playing for Gamers (and Their Parents) With a New Prime Perk

Gamer perks on Amazon Prime are not a new thing — the “Twitch Prime” subscription bonus has long been a popular favorite.

But Amazon has leveled up its Prime bonuses for gamers in its first ever partnership with a console maker this week. Prime members with a Nintendo Switch can now claim a combined 12 months of free Nintendo Switch Online access (a $20 USD value) through a Twitch Prime perks page.

Those who have already paid their subscription fee can still use the bonus, by logging in and adding the promo, and the new free months are simply stacked on top of time already paid for.

To block cheaters — those who would sign up for a one-month membership to collect the bonus and scuttle off — the program only allows users to load the first three months of free time; only after that window has passed will Amazon load up the remaining nine months. The three-month offer expires September 24 of this year, while the additional nine-month offer must be claimed by Jan. 22, 2020.

The move also acts as a nice perk for one of Amazon’s key demographic — bridge millennial parents of young children. The Nintendo Switch is far and away the most popular gaming console among that demographic set. You can’t capture a whole paycheck without hitting the whole range of a family’s needs, after all, and increasingly video game systems make that checklist.


Play of the Week: Some Help From the Famous and Stylish

While historically not associated with the term “high style” in the past, Walmart in the last several years has been looking to up the ante in its merchandising game.

The latest steps forward this week included signing an exclusive deal with actress Drew Barrymore to bring a new collection of boho-chic furnishings, home decor and dinnerware on the company’s and sites.

The 200-plus items are described as “boho-chic” and include a wicker cat bed with pointy ears for $74, a framed painting of a “human dog” in a tuxedo for $59, a “hand woven macrame” basket set for $70, and an $899 velvet pink Parisian sofa.

The embrace of hipper home decor in store comes along with an expansion into higher fashion online. Care of its online sales partnership with Lord & Taylor signed last year, recent reports indicate that as of now designer label oriented consumers can find BCBG. carries both  BCBGMAXAZRIA and its lower-priced more youthfully focused BCBGeneration.

Both, reportedly, have some difficulty staying in stock on, as they sell out quickly.

Embracing the Supercenter Opportunity

While some have bemoaned Walmart’s extensive physical footprint as overdeveloped and out-of-date in the era of digital retail, Walmart does not agree. Brett Biggs, chief financial officer at Walmart, told investors at a meeting this week that the Supercenter is an omnichannel opportunity and no longer a disadvantage for the retail giant.

“The amount of change in recent years has been huge,” Biggs said with regard to the company’s investments in omnichannel. “This is a sharp contrast to the Walmart of 15 years ago when the central focus was putting more Supercenters in the ground. … In retrospect, this made us slower than we would have liked to get to the omnichannel customer.”

But these days, a few years into its great digital expansion, Biggs says, Walmart is starting to really see the investments pay out.

“We began to see the hard work of building 5,000 stores was already done, so we started investing in the technology capabilities of online pickup. The results have been huge because our customers love it,” he said.

Biggs noted that the average Supercenter carries 120,000 items and can offer same-day pickup for consumers. Meanwhile, he noted, 90 percent of the U.S. population is within 10 minutes of a Walmart — a fulfillment infrastructure about as close to the end user as humanly imaginable. Online grocery pickup has been a massive boon that has been critical in growing total eCommerce sales by a clip of roughly 40 percent this year. Online grocery shoppers also tend to spend nearly two times more than traditional store shoppers.

By the end of 2019, Biggs said Walmart will offer online grocery pickup in 3,000 stores, and the retailer will continue to add more general merchandise to its online grocery app to grow the basket margins.

So what is the week’s lesson, other than if Duke wins the championship, their coach will likely celebrate with a massive Beyonce dance party?

That the story, when it comes to taking on the consumer paycheck for Amazon and Walmart, is always going to be about more. Offering more, layering more services on and finding more inroads into the consumer’s wallet.

We’ll keep you updated on which one manages to sink more baskets.


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report