Pondering the cool discussion of InsurTech carrier Lemonade- is it as sweet as presented?

https://dailyfintech.com/2019/05/23/pondering-the-cool-discussion-of-insurtech-carrier-lemonade-is-it-as-sweet-as-presented/

TLDR As discussed in the prior post Lemonade is many things, per CEO and co-founder, Daniel Schreiber– revolutionary tech platform, charitable giver, P2P service provider (no, strike that), but at its core it is a property insurance company.  The hows and whys matter not when the application for license goes before the respective jurisdiction’s regulators.  The company must be organized and operated in a manner that is recognized as secure for its policyholders and adequately financed as such, must comply with the same accounting standards as other insurance carriers, and must be ready and able to comply with the agreements, provisions, and conditions its policies include.

Why belabor these points?  Because the company leads with its innovation chin, its behavioral economics, and its promises to act as a totally different insurance company than what those crabby octogenarians (who) think we are making too much noise companies do.

One of the foundational points the firm makes at its outset is that there is a recognition by Lemonade’s founders that, “There’s an inherent conflict of interest in the very structure of the insurance industry.”  (Chief Behavioral Officer, Prof. Dan Ariely, see around 0:54 of the video).  He continues, “Every dollar your insurer pays you is a dollar less for their profits.  So when something bad happens to you, their interests are directly conflicted with yours.”  

Of course there is conflict between payment of premiums and indemnification- absent the ‘tension’ insurance would not exist, or perhaps would be free! It might be said that Professor Ariely’s perspective has an inherent flaw in not acknowledging that an insurance policy is a contract for risk sharing between an insured and carrier, that a respective policy premium and deductible are the insured’s agreed cost of sharing the risk covered by the policy, and that the carrier promises to indemnify the insured for damages due to causes of loss the policy covers.  It’s not a pure quid pro quo financial agreement because the cost of underwriting, selling and administering the policy falls upon the carrier, and the deductible and premium cost falls upon the insured.  The use or equality of the costs are only considered upon inception of a claim.  In addition, the insured is not involved in devising the terms of the policy, as a contract of adhesion a prospective insured’s sole power is accepting the contract in its entirety or not.  Absent optional inclusion of additional contract scope or details (endorsements and/or coverage limits), the insured is powerless in respect to a contract that ostensibly is in equilibrium between the parties- premium on one side, equivalent policy benefits afforded by the other side.

The price of the risk is determined by the carrier and approved by regulators based on volumes of data, actuarial smarts and with an eye to profitability balanced with service.  The frequency of CWPs (closed without payment) and paid claims is part of the actuarial machinations (regulators are comforted by carriers whose data are in concert with the industry at large), as such denials of coverage are, if absent, a concern for regulators. Is there an undue conflict of interest for incumbent carriers where policy provisions apply, or is Lemonade leveraging a message based on clever marketing?

Consider the typical property insurance claim pool:

Not every policyholder has a claim each premium period; in fact less than 20% of a typical insurance carrier’s homeowner’s customers experience a claim during a policy year.  Of that pool of claims the  frequency of denial is on average less than 30% of the total claims closed.  Extending the thought process, a carrier with 500,000 policyholders experiences on average 100,000 claims during a year, and of those 100K customers 30,000 may be denied coverage, so one can say approximately 6% of the subject carrier’s customers’ insurance services end in coverage disappointment.  Compare that with the carrier’s YOY customer retention rate and it may be clear that denials of coverage are not the only factor in customers’ renewal algorithms.  Is that the basis upon which differentiation can reside?

There may be a stronger position for the firm to take that the inherent issue may be in pricing losses, confirming losses at FNOL, or sorting out the spurious (read as fraudulent) claims.  Per the firm 90% of FNOL reports are through Maya or similar service bots, and since that service entry is tied to the entire suite of AI it can be said that FNOL may be the best vehicle to mitigate the effect of any ‘inherent conflict.’ 

Why that?  The firm (through marketing and per discussion) relies on the position that a ‘Ulysses Contract’ is in place for the firm- a figurative ‘tying of hands’  for Lemonade in focusing on denials of claims since any excess of earned premium over the firm’s flat fee is donated to the policyholders’ charities of choice.  No path to the bottom line, no incentive for capricious denials.  Is there legitimacy to this position?  Insurance is a contract, 90% of Lemonade’s claims are being handled by bots, pricing is established by regulated filings, and claim denial ‘touches’ affect only a small percentage of customers.  It’s probable that most denials of coverage are due to contractual reasons, i.e., policy provision reasons including the cause of loss not being a named peril.  At this juncture the carrier has primarily renters’ policies as its portfolio, and claims are comprised of unscheduled personal property that has relatively concrete pricing.  In addition, claim customers have limited knowledge of what comprises effective claim handling- other than prompt receipt of proceeds into one’s account.  If there’s a Nash Equilibrium in place, customers seem to be unaware, and can a bot be adversely subject to the vagaries of Game Theory?   

Lemonade must be respected for its InsurTech effect on the property insurance industry- everyone knows of the Lemonade entry and journey.  The growth of the firm (while overall PIF is small) continues to engage the attention of all.  As Daniel Schreiber said in our discussion and in his recent blog entry Two Years of Lemonade: A Super Transparency Chronicle, “ the fact that our reinsurance agreements protect us from too many claims can’t hide the fact that, since launch, we’ve paid out more in claims than we’ve collected in premiums. Clearly, that can’t continue indefinitely.”

As the carrier evolves into a multi line policy organization (renters’, condos, homeowners) the bot approach to claim handling will be tested.  Renters’ claims are personal property tasks- named peril, concrete loss description, concrete valuations.  A house claim may involve multiple parties- the insured, emergency services vendors, public adjusters, field adjusters, third party administers, and so on.  The Nash Equilibrium will be complicated to affect in that multi-player game, and a Ulysses Contract will be toothless to address the covered damage, partial denials, additional living expense wranglings, and other unknown factors. 

Regardless of the company’s cover portfolio, the need to become viable within the framework of insurance accounting looms over the discussion of social good. To quote from a October, 2018, article posted by Coverager, “Lemonade’s Cards“,

“And while Lemonade ‘solved’ this conflict by only taking a flat fee and giving unclaimed money to charity, are they really a conflict-free company? Do they not have a strong desire to improve their loss ratio? Isn’t the loss ratio an important part of their business? Will they be able to attract investors or potential buyers with a high loss ratio?”

The firm will find its data aggregation, analysis, and predictive capabilities invaluable from underwriting to claim settlement, and may find the expected diversity of its claim portfolio meaningful in building its flow of ‘excess’ to charitable organizations. There’s a cadre of claim staff developing their service skills- in other words they are learning to be insurance pros.  And at a minimum Lemonade has been patient with the industry placing them under a magnifying glass, watching every step being made- that’s not a bad thing and has added to the collective knowledge of insurance innovation. However, at this juncture having a Ulysses Contract as a mainstay of its business model appears to serve Lemonade’s marketing more than it does its loss ratio.

image source

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join the 25,000 other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).

https://dailyfintech.com/2019/05/23/pondering-the-cool-discussion-of-insurtech-carrier-lemonade-is-it-as-sweet-as-presented/

Congress Supports Facial Recognition Regulation

https://www.pymnts.com/legal/2019/congress-supports-legislating-facial-recognition-technology/

Members of Congress supported a plan to draft legislation aimed at the use of facial recognition software by law enforcement on Wednesday (May 22), according to reports.

The House Committee on Oversight and Reform called for action on the plan, which gathered support from both sides of the aisle.

“You’ve hit the sweet spot that brings progressives and conservatives together,” Rep. Mark Meadows told committee chair Rep. Elijah Cummings. “When you have a diverse group on this committee, as diverse as you might see on the polar ends, I’m here to tell you we’re serious about this, and let’s get together and work on legislation. The time is now before it gets out of control.”

As the meeting was held, Amazon shareholders held a meeting and voted against two proposals regarding its own facial recognition software, called Rekognition.

“That just means that it’s more important that Congress acts,” said Rep. Jimmy Gomez in response to the Amazon shareholders’ vote.

Cummings and the Committee even discussed having a moratorium on the technology. “I do expect that we are going to be able to get some legislation out on this. I talked to the ranking member, and there is a lot of agreement,” he said. “The question is, do you have an all-out moratorium and at the same time, try to see how this process can be perfected? But there’s a lot of agreement here. Thank God.”

Facial recognition technology is accessible to one in four law enforcement agencies across the country, according to a study by Georgetown University Law Center. Also, the use of databases of drivers’ license photos means about half of adults in the U.S. are included in searches.

One of the other concerns is use of the software during protests, which some experts worry could dissuade Americans from protesting, which is a First Amendment-protected right.

“It is fundamentally American to protest, and frankly un-American to chill that kind of protest,” University of the District of Columbia Law Professor Andrew Ferguson said at the Committee meeting.

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/legal/2019/congress-supports-legislating-facial-recognition-technology/

Trustly and Collector Bank Bring Instant Payments to Nordic Merchants

https://finovate.com/trustly-and-collector-bank-bring-instant-payments-to-nordic-merchants/

A new collaboration between online banking e-payments innovator Trustly and digital bank Collector will bring instant bank payments to the checkouts of Nordic merchants of all sizes. The partnership seeks to take advantage of the popularity of online bank payments in the region; nearly one in three shoppers in Finland, for example, expressed preference for paying directly from their online bank, according to a recent report.

Trustly’s cross-border pedigree was an important factor for Collector Bank. Calling the company a “great match” on this score, the bank’s General Manager for Payments Mikael Anstrin said, “(Trustly’s) cross-border payment solutions are available in our all of our existing markets and its vast coverage also opens up the opportunity for us to expand into new geographies.”

Trustly enables users the ability to shop and pay directly from their bank accounts. Individuals can Pay with Trustly by simply choosing and logging into their bank, selecting the account from which they want to pay, and then confirming the payment with the authentication option of their choice. The company processes transactions to and from consumer bank accounts at more than 3,000 banks in 29 European markets.

“We’re delighted to partner with Collector and offer our fast, simple, and secure bank payment solution to their hundreds of merchants,” Chief Commercial Officer for Trustly, Johan Nord said. “The partnership is very much aligned with our strategy of delivering the best, most versatile and, for PSPs as well as merchants, most operationally easy-to-use bank payment solution in the markets where we operate.”

Trustly demonstrated its Direct Debit solution at FinovateEurope 2017. The technology adds support for recurring charges and one-click payments from a bank account, and offers the highest encryption standard available. More recently, the company teamed up with fellow Finovate alum Eurobits Technologies to help form the European Third Party Suppliers Association (ETPPAO, and announced that it had reached the 300 employee mark.

Founded in 2008, Trustly was acquired by Nordic Capital last spring. The company is based in Stockholm, Sweden.

https://finovate.com/trustly-and-collector-bank-bring-instant-payments-to-nordic-merchants/

Sale rumors boost NCR share price

https://www.mobilepaymentstoday.com/news/sale-rumors-boost-ncr-share-price/

NCR Corp. shares have added several percentage points in value since Monday, when Deal Reporter, citing unidentified insiders, said that private equity firm Warburg Pincus was in talks to buy the ATM-maker. Shares closed at $31.98 Tuesday afternoon, a 5.09% increase from $30.43 at the opening bell Monday.

Speculation has swirled about the possible sale of NCR in recent weeks, however, the company has kept mum about its plans. Asked during the company’s Q1 earnings call on May 7 about “strategic interest” in the company, president and CEO Mike Hayford offered an oblique reply, according to a transcript of the call published by Seeking Alpha:

I don’t think we’re going to try to get our words ahead of our actions and our results. I think our board is 100% behind us on what it is going to take and how we’re going to get there [i.e., value creation]. Our focus is executing on the products that can take care of our customers and executing the plan. I think our board understands that that execution will yield value to our shareholders at some point in the future and I think they are patient enough to stick with us on that.


Topics: ATMs, Mobile Banking, NFC, Technology Providers, Transaction Processing

Companies: NCR Corporation


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https://www.mobilepaymentstoday.com/news/sale-rumors-boost-ncr-share-price/

Despite No-Go On Deutsche Bank Merger, Commerzbank Open To Other Tie-Up Options

https://www.pymnts.com/news/banking/2019/commerzbank-deutsche/

Even though a potential merger with Deutsche Bank fell through, Commerzbank CEO Martin Zielke said he’s still open to the possibility of merging with another bank, according to a report by Reuters.

At an annual shareholders meeting, Zielke said the discussions with Deutsche “showed where we should possibly sharpen our strategy.”

“We will be able to say more about this in the autumn,” Zielke said at the meeting.

The talks with Deutsche Bank fell apart after six weeks, with both banks saying that there were risks to doing a deal and also restructuring costs and capital demands were big concerns.

“It made sense to evaluate this option for domestic consolidation in Germany. However, we were always clear: we needed to be convinced that any potential combination would generate higher and more sustainable returns for shareholders and allow us to enhance our value proposition to clients,” Zielke said at the time. “After thorough analysis, we have concluded that this transaction would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements associated with such a large-scale integration.”

A combination of the two German banks via a merger has been cropping up since 2016, before either of the two banks were forced to restructure. With the health of Deutsche Bank ailing, the German government urged the two companies to merge.

The idea was to create a national bank that could support the economy, which is export-focused. Had a deal happened, it would have been the third-biggest bank in Europe with $2.04 trillion in assets. HSBC and BNP Paribas would be the only two European banks to trump it in assets.

Now that it’s a no-go with Deutsche Bank, other banks have expressed interest in a merger, like Italy’s UniCredit and Dutch ING Groep. Zielke told shareholders that Commerzbank was open to growing “inorganically,” through mergers and acquisitions.

He also said he’s been meeting regularly with other bank CEOs, like ING CEO Ralph Hamers, but that there haven’t been any concrete offers just yet.

Commerzbank profits went up in 2018 but Zielke said they need to continue rising. Commerzbank is still partly owned by the state due to a bailout during the financial crisis. The bank has been cutting costs and investing more in technology.

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/banking/2019/commerzbank-deutsche/

Treasury Sec. And Walmart CFO Discuss China Trade War Price Effects

https://www.pymnts.com/news/retail/2019/treasury-secretary-walmart-cfo-trade-war-price-effects/

U.S. Treasury Secretary Steven Mnuchin told Congress on Wednesday (May 22) that he spoke with Walmart Chief Financial Officer Brett Biggs about the effects of the U.S.-China trade war on prices, according to a report by CNBC.

They spoke about how Walmart can best position itself to keep prices down during the escalating tensions between the two countries. The tariffs could raise prices on diapers, strollers, baby-related items and other products that are commonly sold at Walmart.

“I can tell you I am monitoring the situation very carefully. I was on phone with the CFO of Walmart, which obviously is one of the biggest sellers of the items that you’ve described, to specifically understand from Walmart what things they can source from other areas and what items they can’t,” Mnuchin said at the House Financial Services Committee hearing. “I would say we haven’t made any decisions yet, but we will be especially sensitive to the consumer items.”

When he spoke about the issue on the company’s first-quarter earnings call on Thursday (May 16), Biggs said Walmart was watching the situation.

“In regard to tariffs, we continue to monitor the situation. Our goal is always to be the low price leader, and we’ll continue to actively manage pricing and margins with our customers and shareholders in mind,” Biggs said. “We’re going to continue to do everything we can to keep prices low, that’s who we are. However, increased tariffs will lead to increased prices, we believe, for our customers.”

Greg Foran, Walmart’s chief executive on the American side, said the company is working to resolve the issue for consumers. “Merchants are managing costs and retails on an item-by-item basis. We are working closely with domestic and international suppliers to drive higher efficiency and reduce costs.”

When asked by the Committee whether he thought Americans would have to pay more as a result of the tariffs, Mnuchin said he didn’t “necessarily agree with that, and that’s something we’re monitoring very carefully.”

“There may be a small number of items where the tariff may be passed on,” he continued. “If we issue an exception, then there will be no price increase. And again, most of those companies are moving products to other places.”

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/retail/2019/treasury-secretary-walmart-cfo-trade-war-price-effects/

Vymo Partners with Microsoft to Help Sales Teams Leverage AI

https://finovate.com/vymo-partners-with-microsoft-to-help-sales-teams-leverage-ai/

Giving sales professionals the ability to leverage AI to provide better service is the goal behind the new partnership between Vymo and Microsoft. Specifically, the two will work to grow the market for Vymo’s intelligent personal assistant for sales, bringing predictive and actionable insights to customer relationship management (CRM).

“We are helping organizations move to a more proactive CRM experience powered by mobility and intelligence,” Vymo co-founder and CEO Yamini Bhat explained. ” With Vymo, salespeople can operate more effectively in a deskless environment and that has translated into a significant revenue impact for businesses. We look forward to working closely with Microsoft as we scale.”

Vymo’s intelligent personal assistant delivers intelligent and actionable insights to sales professionals. The solution helps boost productivity by more than 30% by detecting the sales representative’s actions, and anticipating what the rep should do next. The technology learns from the most effective sales reps in the network and helps users achieve the best possible outcomes for customers. Sales productivity metrics from conversion percentage to turnaround time to activity per opportunity are among the KPIs Vymo can help sales teams improve.

The collaboration between Vymo and Microsoft builds on the existing relationship between the two companies. Vymo is a 2015 graduate of Microsoft’s Winter Accelerator, and won the Microsoft’s AI for All award in 2018. Vymo is already working with more than 85,000 users in verticals ranging from banking and financial services to insurance and pharmaceuticals, powering machine learning and AI-based tools backed by Microsoft Azure.

In Vymo’s statement announcing the news, Microsoft General Manager for Partner Ecosystem Rajiv Sodhi said the partnership represented “Microsoft’s commitment to enabling its partner ecosystem to leverage AI capabilities to be able to build powerful solutions and tap growth.” Satya Nadella, Microsoft CEO, added that the Vymo “was fundamentally changing both how retailers work and (how) financial services work.”

Headquartered in Bangalore, India, and founded in 2013, Vymo demonstrated its technology at FinovateAsia 2018. The company began this year with news that it would be a part of Bangkok Bank’s 12-week accelerator program, and announced that Zurich Topas Life, a division of Zurich Group, had selected Vymo’s solution to boost sales productivity.

In March, Vymo announced that it was going live in Vietnam courtesy of a partnership with local consumer finance firm, FE CREDIT. That month the company also announced that it won the FICCI (Federation of Indian Chambers of Commerce) Award for Innovation in Artificial Intelligence and Data Analytics. Vymo also reported that its technology was available on the Salesforce AppExchange.

Vymo has raised $5 million in funding. The company includes Sequoia Capital India, who led the company’s Series A round in 2016, among its investors.

https://finovate.com/vymo-partners-with-microsoft-to-help-sales-teams-leverage-ai/

EU Antitrust Chief Says Google Is Compliant With Competition Boosting

https://www.pymnts.com/news/regulation/2019/google-competition-compliance/

European Competition Commissioner Margrethe Vestager said measures put in place for Google to boost competition in online shopping results appear to be working, according to a report by Reuters.

The European Commission slapped Google with a fine of 2.4 billion euros ($2.7 billion) about two years ago for promoting its own comparison shopping service over competitors. Since then, Google has offered rivals the chance to bid for space on the top of a search page, which they say gives them equal footing to compete.

Vestager said she saw no issues with how Google was handling the order, even though some other companies say it hasn’t been enough.

“Now we are in a situation where in 75 percent of queries there would be at least one rival to Google in the shopping box and 40 percent of clicks would go to a merchant hosted by one of the rivals,” Vestager said. “This means we do not have a non-compliance case but at the same time also means that we keep monitoring monthly developments.”

Kelkoo, a British online shopping outfit, said Vestager’s views didn’t match up with its own.

“Overall, there has been no meaningful change in the number of users accessing comparison services other than Google’s,” Kelkoo Chief Executive Richard Stables said.

That sentiment was echoed by the Open Internet Project, which is also a Google rival.

“By putting these Google-powered Shopping Units at the top of every relevant results page, above more relevant comparison services, Google continues to reserve the important market for comparison shopping services to itself,” it said in a statement.

Vestager has also recently shared her views on whether big tech companies like Facebook and Google should be broken up. She said that breaking them up should be a last resort, and that regulating data usage might be a better idea.

“To break up a company, to break up private property would be very far-reaching, and you would need to have a very strong case that it would produce better results for consumers in the marketplace than what you could do with more mainstream tools,” she said. “We’re dealing with private property. Businesses that are built and invested in and become successful because of their innovation.”

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/regulation/2019/google-competition-compliance/

Moves To Curb Facial Recognition Usage Rejected By Amazon Shareholders

https://www.pymnts.com/news/biometrics/2019/amazon-shareholders-facial-recognition/

At a meeting on Wednesday (May 22), Amazon Shareholders shot down two proposals to monitor and curb the eCommerce giant’s facial recognition service, according to a report by Reuters.

Amazon’s technology, called Rekognition, has been under scrutiny as critics of the service have warned of false arrests and incorrect matches. Other voices in favor of the tech have claimed the service keeps the public more safe. The technology has been used by law enforcement in Oregon and Florida.

Amazon tried to stop the voting on the two non-binding proposals, which had the support of civil liberties groups, but it was overruled by the U.S. Securities and Exchange Commission.

One of the proposals would have put forward plans to conduct a study to see how much Rekognition harms human rights and privacy. The other would have made the company stop giving the technology to governments unless it was determined that selling it didn’t violate civil liberties.

One of the main concerns with Amazon’s tech is that it has more trouble than competitors’ software when it comes to identifying the gender of people with darker skin tones, which stokes fears of the technology putting innocent people in jail.

Amazon has defended the technology and it said all users of Rekognition must obey the law. It has also added a web portal for people to report abuse.

Amazon’s board recommended against the proposals, but some critics saw potential benefits.

“This shareholder intervention should serve as a wake-up call for the company to reckon with the real harms of face surveillance and to change course,” said Shankar Narayan of the American Civil Liberties Union of Washington state.

Also on Wednesday, in the United States Congress, there was an indication that there would be support from both sides of the aisle when it comes to regulating the technology.

A committee met to discuss the impact of the tech on civil rights. When he heard about the vote, U.S. Representative Jimmy Gomez said “that just means that it’s more important that Congress acts.”  

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/biometrics/2019/amazon-shareholders-facial-recognition/

Shares In Luckin Coffee Dip Below IPO Price

https://www.pymnts.com/news/ipo/2019/luckin-coffee-shares-slide-china/

Shares in Chinese coffee company Luckin fell below their IPO price on Wednesday (May 22), according to a report by CNBC.

The company, which aims to overtake Starbucks as the biggest coffee company in China, has joined the likes of Uber and Lyft with the distinction of dropping below its offering price days after a debut.

Luckin opened for trading on Friday (May 17) at $25 a share, which was higher than its IPO price of $17, and it did well – surging about 50 percent its first day on the Nasdaq. However, the stock has fallen by more than 5 percent since then.

The company is only about two years old, while Starbucks has been in China for more than 20 years. Ample funding from investors like BlackRock has helped with Luckin’s rapid expansion. The coffee outfit has about 2,370 stores and so far has not been profitable, reporting a net loss of $241.3 million in 2018.

Luckin raised about $561 million from its IPO, and it plans to use that money to fuel expansion throughout China, as well as to fund new stores, customer acquisitions, investments in technology and other corporate uses.

“We have done what most people do in 15 or 20 years,” Luckin CFO Reinout Schakel said.

Coffee sales in China are expected to continue to grow; analysts say they could reach $8.2 billion this year and grow annually by 11.3 percent for the next five years.

However, tea is still China’s go-to beverage, so Luckin is trying to reach that market by offering trendy tea beverages like fruit teas topped with cream cheese. Its stores are smaller and more compact than Starbucks.

Another method used by Luckin, which is part of the reason it burns through cash so quickly, is to attract new customers by discounting its beverages, a move that Starbucks CEO Kevin Johnson has said is untenable.

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/ipo/2019/luckin-coffee-shares-slide-china/

Thyngs Teams With CDS Global; Alipay Partners With Turkish FinTech

https://www.pymnts.com/news/international/global-payments/2019/thyngs-alipay-ininal/

Welcome to The Axis, your late look at payments news from around the world. Coverage includes Thyngs work with CDS Global to support contactless payments for subscriptions of magazines in the U.K. and Australia. Currencycloud is teaming with Lithuania’s Evarvest for cross-border payments, Alipay and ininal are working to help visitors from China connect with merchants in Turkey and BCS Global Markets is rolling out an international payments solution in the U.K.

In Australia and the U.K., Thyngs is working with CDS Global to support contactless payments for subscriptions of magazines, Thyngs said in an announcement. Inserts, packaging and leaflets can come with near-field communication (NFC) tags and quick-response (QR) codes to allow customers to sign as well as pay using their smartphones for their subscriptions. Their order information is subsequently transferred for processing to CDS Global. Mark Judd, managing director of CDS Global in the U.K. and Australia, said in an announcement that the technology could “create new marketing opportunities for our clients and optimise the subscription order process for their consumers.”

And global payments platform Currencycloud has teamed up with Evarvest, a startup based in Lithuania, Currencycloud said in an announcement. Evarvest is said to use the platform from Currencycloud to support cross-border payments for investors. Through the new tie-up, Evarvest will be able to scale from its initial five-country rollout and offer a seamless experience for users. Evarvest CEO Stephanie Brennan said in the announcement, “Currencycloud [has] been fundamental in supporting us to reduce our costs and providing a cross border payment and FX solution, so we can make investing accessible to the next generation of investors.” Evarvest offers a way for users to invest in bonds, stocks and exchange-traded funds (ETFS) “like a local” per the announcement.

In Turkey, merchants can connect with visitors from China through a partnership between Alipay and ininal, according to reports. The service will first come to the facilities of Dorak Holding, which is a firm that manages a number of merchants in Turkey and plans tourist activities. Consumers can make payments to scan a quick-response (QR) code at checkout card terminals. “Alipay is the most preferred payment method in China and is widely used by Chinese tourists overseas,” said ininal CEO Ömer Suner, according to reports, and the CEO also noted that “ininal will continue to work with powerful partners globally to bring advanced technology and services to Turkey.”

And, in the U.K., BCS Global Markets rolled out an international payments solution, according to reports. Through the service, institutional and corporate clients will be able to make secure and fast transactions across borders. The offering has 24-hour advanced functionality that institutions can tap into to execute FX transactions, check balances, check cash positions, authorize payments and receive payments. The solution offers corporate cash management functionality and supports multiple currencies per the report.

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/international/global-payments/2019/thyngs-alipay-ininal/

Ola Refocuses Its Indian Food Delivery Business

https://www.pymnts.com/news/delivery/2019/ola-foodpanda-india/

Ola, the Indian ride-hailing startup, is overhauling its food business.

According to a report in TechCrunch, citing sources familiar with the matter, Foodpanda, the food delivery startup Ola purchased in late 2017, will now focus on making private-label food for delivery. Ola currently has more than 50 kitchens churning out food for four private labels Flrt, The Khichdi Experiment, Lovemade and Grandma’s Kitchen. These brands make shakes, biryani and khichri.

The move comes as Foodpanda is finding that competing against Zomato and Swiggy is a losing battle. Sources said that after Ola acquired Foodpanda it aggressively went after consumers, offering deep discounts at the beginning of 2018. Having committed $200 million for the Foodpanda operations, Ola decided to revisit the unit after the discounts started to lose their impact. With Zomato and Swiggy in a battle for first-place dominance it is hard for others to compete unless they have deep pockets. Foodpanda process around 3 million orders a month, which is tiny in comparison to Zomato and Swiggy. The two each handle more than 30 million orders each month, according to the report.

People familiar with the matter said even Uber is having a tough go of it, trying to sell Uber Eats to either Zomator and Swiggy, but failing to reach a deal. Uber, which went public earlier this month, has reduced its budget for Uber Eats in India since the failed talks.

“As part of our ongoing business repurposing initiatives, we are focused on building a portfolio of own food brands and curated food offerings through our fast expanding network of kitchens,” Ola said in a statement to the news outlet. “Many of these offerings are already available in all major cities through the Ola and Foodpanda apps. We continue to invest in expanding our facilities and kitchens, as well as our portfolio of food offerings for customers. We remain committed to our mission of building a superior food experience for millions of our customers.”

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/delivery/2019/ola-foodpanda-india/

Lowe’s Sees Online Sales Rise 16 Pct.; Shares Hit By High Costs

https://www.pymnts.com/earnings/2019/lowes-revenue-online-sales-shares-slide/

Lowe’s reported its Q1 earnings on Wednesday (May 22), and the results were mixed – the company’s online sales were up 16 percent, while shares fell 10 percent due to higher costs, forcing the company to cut its forecast, according to a report by CNBC.

The value of Lowe’s at the close of the market on Tuesday (May 21) was $88.4 billion, and its shares are up about 20 percent since the beginning of 2019. The company has been in a transitional period since new CEO Marvin Ellison joined about a year ago.

Many of the retailer’s improvement investments are weighing down profits, and the cut forecast caused a selloff. Earnings per share were $1.22 adjusted, while they were estimated to be $1.33. Revenue was better: $17.74 billion versus $17.66 billion estimated. Also, same-store sales beat expectations, up 3.5 percent versus the 3.2 percent estimated.

Lowe’s reported that net income was up, reaching $1.05 billion from $988 million a year ago.

“Our first quarter comparable sales performance is a clear indication that the consumer is healthy, and our focus on retail fundamentals is gaining traction,” Ellison said in a release. “However, the unanticipated impact of the convergence of cost pressure, significant transition in our merchandising organization and ineffective legacy pricing tools and processes led to gross margin contraction in the quarter, which impacted earnings.”

Ellison noted that cost increases hit gross margins by 90 points as the company completely revamped merchandising operations. “We are still in the early stages of our transformation, and with the changes we are putting in place, we expect to deliver improved gross margin performance over the balance of the year,” he added.

Lowe’s said it expects net income for fiscal 2019 to be around $5.54 to $5.74 a share. Adjusted, it will earn about $5.45 and $5.65 a share.

Oppenheimer’s Brian Nagel said he thinks the results of the quarter are good: “I think when the dust clears on this, it’s going to be a positive. The market’s going to say Lowe’s has been under-managed for a very long period of time, they figured out what they need to do, they’re starting to see the results in better sales … there’s just extra investment that needs to be made here in the near term.”

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/earnings/2019/lowes-revenue-online-sales-shares-slide/

Bill.com Debuts AI Business Payments Platform

https://www.pymnts.com/news/b2b-payments/2019/bill-com-artificial-intelligence-platform/

Corporate payments technology firm Bill.com is rolling out a new platform designed to deploy artificial intelligence (AI) for automated workflows.

In an announcement on Wednesday (May 22), Bill.com said it has launched the Intelligent Business Payments Platform for small and medium-sized businesses that need a more efficient business payments solution. Bill.com pointed to its own research, which found the payments platform saves SMB users an average of 5.5 hours every week, or 35 business days a year, by automating processes that professionals had previously completed manually.

The platform includes an Intelligent Virtual Assistant, which automates invoice processing and approval, and uses machine learning to automatically capture data from those invoices and identify potential errors. It can also recognize bill approval routing and payment thresholds. The platform includes faster payment options that support cross-border transactions, virtual card payments and automatic payments for recurring bills.

“Bill.com has focused on developing new technologies that help SMBs grow,” said Bill.com CEO and Founder René Lacerte in a statement. “Automating the back office is a huge industry-wide need. Our new intelligent platform, which is the most significant update to Bill.com since its inception, is built on 10 years of experience managing business payments and hundreds of millions of bills and invoices to train the AI. Increasing the speed and ease of payments will help businesses get ahead.”

The launch of the AI-powered payments platform follows a partnership Bill.com struck with Mastercard last month. That tie-up, which coincided with the announcement that Bill.com had raised $88 million and achieved unicorn status, sees Mastercard integrate virtual card payment technology into the Bill.com portal, enabling companies to pay their invoices with single-use virtual cards.

Mastercard, along with Franklin Templeton, Fidelity Investments Canada ULC and others, provided the funding for Bill.com.

“Businesses struggle with conventional payment processes, which are complex, manual, paper-based and not always secure,” Lacerte said in a statement at the time.

Bill.com has also partnered with American Express, a collaboration that integrates Amex’s virtual and corporate card technology into the Bill.com platform.

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/b2b-payments/2019/bill-com-artificial-intelligence-platform/

Wirecard Works With India To Create Digital Taxpayer ID Cards

https://www.pymnts.com/news/security-and-risk/2019/wirecard-india-taxpayer-identification-cards/

Wirecard, the global digital financial technology company, announced on Wednesday (May 22) that it has partnered with India’s government-owned UTI Infrastructure Technology and Services Limited (UTIITSL) to facilitate the issuing of physical and digital taxpayer identification cards.

In a press release, Wirecard said retail agents in India will collect the data needed for the cards – also known as PAN (permanent account number) cards – digitize that data and forward it to UTIITSL, which will then issue the cards and send them directly to customers.

“As the partner of choice for one of India’s leading government-owned financial service providers, we are delighted to be part of the project to bring PAN cards to more people,” said Anil Kapur, Wirecard’s managing director in India. “Through this cooperation, we have proven Wirecard’s power in global technology services and our ability to create solutions for a wide range of consumers and industries to create a better tomorrow for all.”

According to Wirecard, every citizen in India requires a PAN card to carry out the lion’s share of financial transactions, including opening bank accounts and transferring money. The cards can also be used as proof of identity. And because all data is stored in a centralized database, consumers can also use the cards to track tax payments and declarations. The cards are seen as an effective measure against tax fraud in the country, Wirecard noted.

UTI Infrastructure Technology and Services has a network of 62 branches across India. Through the partnership with Wirecard, 350 cities will be served by around 15,000 Wirecard agents. The agents are authorized to collate and forward citizens’ documents for the creation of the PAN cards.

Wirecard noted that UTIITS is one of two service providers in India authorized to issue PAN card in digital and physical forms. The company provides technology services to the financial and government sectors of India.

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/security-and-risk/2019/wirecard-india-taxpayer-identification-cards/

WeChat Pay And Alipay Banned In Nepal

https://www.pymnts.com/digital-payments/2019/wechat-pay-alipay-banned-nepal/

WeChat Pay and Alipay, the Chinese digital payment apps, have been banned in Nepal due to a loss of income as a result of the services, per the government’s claims.

Reuters, citing Laxmi Prapanna Niroula, a spokesman for the Nepal Rastra Bank, reported that the two digital payment services are not registered with the central bank in Nepal and are therefore illegal.

WeChat Pay is a unit of Tencent’s popular WeChat mobile messaging platform, while Alipay is operated by Ant Financial, an affiliate of Chinese eCommerce giant Alibaba. These payment apps are used by Chinese tourists who need to pay in Chinese-run businesses in Nepal.

“Any digital transaction made with unregistered foreign payment systems like WeChat Pay and Alipay is illegal,” Niroula told Reuters. “Anyone using such platforms can be punished.” Individuals found guilty of embezzling foreign exchange could face jail time of as much as three years, noted the report.

The spokesman said the apps were using Nepal‘s internet connectivity, but the transactions are being made in China and not in the country’s national accounts. “The government cannot tax such transactions nor check any crimes related to such unregistered payment systems,” Niroula said, noting the ban went into effect at the start of the week.

In a statement to Reuters, Tencent said its WeChat Pay unit meets all regulations in the countries where it operates. “As for illegal payment collection overseas, we are constantly using technical means to crack down and prevent this behavior,” it said. “Overseas vendors should work with WeChat Pay’s partners to enable WeChat Pay’s collection services.”

Meanwhile, Alipay said it also complies with local rules and regulations. “We request that all users abide by the Alipay Collection QR Code Agreement when using our QR code payment services. We have strengthened our measures to effectively prevent future cases where some users had wrongfully collected payments outside of China using domestic QR codes,” it said.

Of the 1.1 million tourists to Nepal last year, 153,000 were from China. They comprise the largest group after Indian tourists, which amounted to 200,000 in 2018.

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/digital-payments/2019/wechat-pay-alipay-banned-nepal/

Despite Growth, Questions Remain with Challenger Bank Numbers

https://bankinnovation.net/2019/05/despite-growth-questions-remain-with-challenger-bank-numbers/

With hefty injections of cash and ballooning customer numbers, challenger banks are gunning for a greater share of incumbent banks’ customers. They’re promoting customer growth as an indicator of ongoing success, but questions loom about whether these customers are using their challenger bank accounts as their primary account and whether customer acquisition gains are being …Read More

https://bankinnovation.net/2019/05/despite-growth-questions-remain-with-challenger-bank-numbers/

nbkc bank Taps Finastra to Build Conversational Banking App

https://bankinnovation.net/2019/05/nbkc-bank-taps-finastra-to-build-conversational-banking-app/

Kansas City-based nbkc bank is building a conversational banking app with Finastra on the vendor’s growing FusionFabric.cloud open platform. The digital-savvy community bank, which uses Finastra’s Phoenix core banking solution, wants to be at the forefront of new and evolving communication channels to ensure it can meet customers wherever and however they want to do …Read More

https://bankinnovation.net/2019/05/nbkc-bank-taps-finastra-to-build-conversational-banking-app/

German fintech Raisin to enter U.S. market next year

https://bankinnovation.net/2019/05/german-fintech-raisin-to-enter-u-s-market-next-year/

A  savings and investment platform based in Germany is opening up a new front in the war for U.S. customers’ deposit dollars. Raisin, which bills itself as a one-stop shop for online savings and investments, is planning to launch in the U.S. next year. Partnering with small and medium-sized institutions, the Berlin-based fintech acts like …Read More

https://bankinnovation.net/2019/05/german-fintech-raisin-to-enter-u-s-market-next-year/

Making Move-In Financially Feasible For Millennials

https://www.pymnts.com/news/alternative-financial-services/2019/staytony-rent-relocation/

In 2010 a small, obscure New York State political party grabbed a lot of viral attention with a video by its candidate for the governorship, Jimmy McMillan. McMillan’s party name and his message are one in the same: “The Rent Is Too Damn High.”

The RITDH movement did not win the governorship, nor has it ever won any office, possibly because it is a bit of one-note political movement. Still, it is hard to say it is wrong on the facts, at least in most places in the U.S. Rents in America rose by 64 percent between 1960 and 2014 (adjusted for inflation), while real household incomes only increased by 18 percent, according to census data analysis by real estate platform Apartment List. The national average rent reached an all-time high of $1,405 last June, a 2.9 percent year-on-year increase from 2017, according to data from Yardi Matrix, and is expected to log another increase with the data to come in about a month.

And of course, depending on the area — think megamarkets like New York, San Francisco, Boston or Los Angeles — that $1,400 “average” is higher still. Monthly rent in San Francisco on a studio generally starts at around $2,500, and while Manhattan or Brooklyn show a lot more range, the lower end of that range starts at around $2,700. To live hyper-desirable neighborhoods (think SoHo, Tribeca or Park Slope) $3,500-$4,000 a month rent is considered pretty normal.

Too damn high indeed.

And the problem, StayTony Founder Tony Diamond noted, isn’t just the monthly payments themselves — high rents essentially make renting in some cities nearly impossibly expensive for people looking to relocate to them.  Because, he noted in an interview, the cost of moving into an apartment isn’t about handing the new landlord the first month’s rent on move-in day, from a financial point of view. New tenants in most markets can expect to pay first month’s rent, last month’s rent and/or a security deposit that is usually equivalent to one month’s rent. In high-demand markets where rent passed the $2,500 mark on average, move-in costs start in the $5k-$8k range and tend to skyrocket from there.

“And that just gets you into the door, the apartment is empty when you walk in so that means one is either choosing to purchase things to fill it, or moving things into it — and that’s now more costly,” Diamond said.

This creates a catch-22 for workers, particularly millennial workers who generally lack the kind of savings or well-established credit histories to smooth out these types of high upfront cost processes. Millennials might be able to land a job or work opportunity in a new city, he said, very likely a high-cost hub like Los Angeles or Atlanta — and thus have a chance to radically upgrade their income. But if they don’t have the $8K-$10 in cash or credit access necessary to move, they can’t afford to make more money through relocation.

The StayTony concept looks to act on that upfront cost pain point on two fronts — one familiar, one a bit less so.

The familiar track is offering up short-term housing mostly geared toward business travelers and other corporate types. The goal product has been described as something akin to an upscale Airbnb, or a boutique hotels meets corporate housing. Diamond himself noted the firm’s most common renters are “Airbnb refugees” who are “tired of playing Russian Roulette” with apartment for medium-term stays.

On the housing side, the StayTony advantage is quality and location.

While corporate condos have a reputation for being rather drab and utilitarian, the StayTony aesthetic is most commonly likened to a boutique hotel — with studio and one-bedroom units that tend to feel more homey and hip than average, with hand-painted wallpaper, designer furniture and luxury linens. One month is a required booking, and the average tenure of stay, the site reports, is about three months.

On the location side, StayTony properties in Los Angeles and Atlanta (the only two cities the firm is currently operating in) appear in highly desirable, high price tag locations such as Hollywood, Midtown Atlanta and Beverly Hills.

But what has gotten the firm a lot of attention of late isn’t the quality of housing units it offers, but the unique way it has partnered with POS financing firm Uplift to allow potential tenants to creatively finance their rent.

The big problem for many young professionals, Diamond noted, is that upfront costs of moving kill opportunities before they get started. The financing product the firm has developed with Uplift, on the other hand, allows a tenant to finance one to three months worth of rent on an apartment, to be paid back in even automatic installments over the next 12 months — without a hard credit pull. Tenants who pay their loans back within six months can often get interest-free financing. The move-in cost, instead of several thousand dollars, is simply the first installment payment on the loan. So an apartment that rents for $2,600 per month would have a move-in cost around $240.

“People already finance one-time life events like weddings, medical procedures, and vacations all the time. We thought, why not finance the life event of relocating to a new city or moving for a temporary job assignment?”

For many, the answer to that question will be cost. StayTony apartments, with their boutique hotel attention to detail and prime locations, often have high price tags, where $2,600 is a low-end price. Higher-end price tags come in closer to $5,500 a month. StayTony might be a great solution for young professionals moving to high-cost cities to start high paying jobs — but an aspiring starlet heading to Hollywood hoping to wait tables until she’s discovered might be better served by Craigslist.

But young professionals need better options, Diamond said, and in a world where high-skill professionals are increasingly joining the gig economy and working long-term contracts, a solution that allows them to benefit from opportunities in a financially manageable manner is an innovation the entire workforce can benefit from.

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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. The May 2019 AML/KYC Tracker, provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/alternative-financial-services/2019/staytony-rent-relocation/