IPO not the end of its global growth story in B2B invoicing

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia., one of the big success stories of the fintech SME space, is expected to list on the New York Stock Exchange this Wednesday the 11th of December. The company sits squarely in the sweet spot of SME action, namely combining business software and payments to ease friction in the unsexy AP and AR space. It will look to raise US$100,000, with a target price of $19 – $21.

It might be the back office, but AP and AR are mission critical for SMEs. Despite this, so many US businesses still rely on cheques and inefficient manual processing workflows, that can suck the cash flow life blood out of a small operation.

In 2016, the SMB Technology Index reported that 90% of SMBs surveyed still relied on paper cheques to make and accept B2B payments. According to, today they help US businesses approve more than 2.4 million bills online, per month. That’s against a backdrop of 1.8 million network members and $22 billion in payments processed in the three months leading up to September 2019 alone.

Between 2018 and 2019 revenue at grew from $64.9 million to $108.4 million – an increase of 67%. However growth hasn’t yet delivered profitability. The company recorded losses for the past financial year of $7.3 million.

So, what’s the opportunity? Well, turns out there is certainly a global story here, not just a US one. While the direct addressable SME market in the US sits at 6 million small businesses, globally that shoots up to 20 million, based on data sourced from the SME Finance Forum.

If can consistently generate $1,500 in average revenue per business (the total it claims is possible based on its 2019 numbers) from just a fraction of this global market, then the valuation of the business could skyrocket in the coming years.

But isn’t the only player in this space. Payments and software is increasingly coming together, and the ecosystem is fragmented. Take Telleroo for example, which just this week also announced its software would integrate with payments provider Moorwand, to provide a like service for UK customers. While US based is years ahead of many of these smaller players, it will need to move fast to capitalise on that global opportunity and solidify its footprint.

How innovative can Goldman Sachs be with its planned robo-advisor?

Maybe Goldman Sachs leads the way so that Digital Advice reaches the $1.26 trillion projected by 2023.

The large players are moving down-market, slowly and steadily. Goldman Sachs moved Marcus into their asset management division last year and has just announced that they will launch a robo-advisor with a $5k minimum next year. They acquired early on, Honest Dollar for digital retirement savings and Clarity Money, a PFM app. Both are mobile offerings.

Goldman at a high-level glance


Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.

The details of their planned robo-offering are not known yet and Goldman`s offering with the masses is a work in progress.

 Will Goldman develop a first-class Mobile digital advice app?

 Now that would be a great First in the US market. My intuition tells me that Goldman Sachs will integrate its existing partnerships, like the one with Motif, into this offering and use its existing brand name to build a pipeline of new customers. The partnership with Motif (established earlier this year) aims to launch innovative ETF products and indices based on machine learning and artificial intelligence.

  • Goldman Sachs Motif Data Driven World ETF (GDAT)
  • Goldman Sachs Motif Finance Reimagined ETF (GFIN)
  • Goldman Sachs Motif Human Evolution ETF (GDNA)
  • Goldman Sachs Motif Manufacturing Revolution ETF (GMAN)
  • Goldman Sachs Motif New Age Consumer ETF (GBUY)

Goldman and the newly acquired network of United Capital, are a great launchpad for the upcoming GS down market offering. Imagine it is Christmas next year and your mass affluent dad, aunt, or older friend already banking with GS and or UC, offer you a new investment account at GS which you can be fund with only $5k. Goldman remains a very sticky brand name that is envied by many in the market, and it will become accessible to the masses. The second trick up GS`s sleeve is that their product offering is not only the basic, mass-produced ETFs only but the innovative, in-house branded forward-looking ETFs too.

Smart products via a low-cost offering, by a top brand name provider. And if GS`s offering is mobile-first, then it has a great chance to leapfrog the existing pack.


What are the obstacles blocking the mass-adoption of cryptocurrencies?


It’s been more than ten years since Satoshi Nakamoto published Bitcoin’s white paper. The market capitalization for cryptocurrencies is over $200 billion, but cryptocurrencies haven’t had much success in going mainstream. Over the years, the adoption of cryptocurrencies has been rising and the sudden price hikes in 2013 and 2017 did help raise awareness and encouraged adoption. Bitcoin has faired far better than other cryptocurrencies, with giants like Microsoft, Expedia and a few others accepting Bitcoin payments. Yet, cryptos original goal has not been realized, and cryptocurrency still has few use cases. As another year is coming to a close, cryptocurrencies still need to overcome some major roadblocks.

Ilias Louis Hatzis is the Founder at Mercato Blockchain Corporation AG and a weekly columnist at

There could be a tipping point for cryptocurrencies in 2020 according to a new report, by Nobl Insurance, that estimates at least 25 million Americans will own cryptocurrencies in 2020, approximately 10% of the population.

At present, there are more than 2,000 cryptocurrencies in the market. All these coins claim to be better than one another and solve some problems in different industries. The sheer number of alternative coins launched in the last 5 years show us, how fluid the market is and the number of experiments happening in the space.


While digital currencies are on the rise, Bitcoin and other cryptos are yet to gain global mass adoption for several reasons.

There are a few stages for mass adoption to happen. The first was awareness, which was kicked off by the hyper-innovation stage that happened with the ICO craze. The current stage is institutional adoption. Libra is trying to open the way, by enabling institutional, political and regulatory acceptance. The next will be an easy and seamless experience for both users and institutions, where users don’t have to deal with the difficulties that come with today’s crypto technology.

More fiat to crypto on-ramps
The single biggest point of friction in crypto is the on-ramp. Moving from fiat to crypto requires an interaction with a centralized, regulated entity and going through AML and KYC, can lead to a huge drop off. The cryptocurrency prohibition policies aren’t necessarily motivated by an effort to protect consumers from misinformed investment decisions or credit card debt. Banks have been defensive when it comes to cryptocurrencies, as they are trying to build a moat around themselves, by not banking cryptocurrencies. This has made it more difficult for early innovators to bridge fiat and cryptocurrencies and to find trusted custody partners.

Better regulation 
Some have been restrictive and hostile like China that banned ICOs in 2017 and clamped down on all cryptocurrency trading with a ban on foreign exchanges. Chinese regulators have taken steps to deter the use of cryptocurrency in the country, as they get ready to launch their own digital money. Other countries have been friendly and most, that don’t know what to do, have buried their heads in the sand, doing nothing. Western countries have been somewhat reluctant with the regulation of digital currencies. Some regulators do not understand the technology well enough to put in place suitable regulation laws. It has taken the  US almost 10 years to take a stance through the IRS and SEC. Smaller countries like Malta have seen cryptocurrencies as an opportunity and have been leading the way, creating legal frameworks that support the crypto industry.

More Education
Most people do not know how cryptocurrencies work and can’t differentiate between blockchain and cryptocurrency. The learning curve for cryptocurrency is particularly steep. Learning about cryptocurrency and blockchain seem like an abstract concept that is almost impossible to grasp. Fear of not understanding how cryptocurrencies work is a huge deterrent for most people that want to get into the space. I really love Coinbase Earn, a system that provides free cryptocurrency by performing various educational tasks and viewing educational content. Education is a critical layer that must be addressed in order to achieve greater adoption. It would be great to see more initiatives like this, by some of the bigger exchanges.

Ease of use
Managing private keys is going to be a huge factor. The average person does not want to worry about losing their private keys along with their funds. Multisig, scorched earth vaults, uPort-style social account recovery, hardware wallets, are all good, but lots of work. Having to remember a 64 character seed phrase or writing it down on a piece of paper at risk of losing all of your money is a huge barrier to entry in today’s world of easy resettable passwords. IMO, the development of private key management services are without a doubt going to play an increasingly important role. The introduction of new wallets won’t bring adoption until users can buy, spend, and hold cryptocurrencies without having to understand cryptography and blockchain consensus mechanisms.

Stabilize Volatility
Facebook’s Libra project made it clear that we are moving towards the privatization of money. Stablecoins can open access to the 1.7 billion unbanked and poor. Stablecoins will bring in the masses, which that is the reason that central banks and governments are trying to make sure we never get to use Libra.

Improve Safety
According to Investopedia, $9 million is lost each day in cryptocurrency scams. It is because of this behavior that people and businesses forget about the benefits of blockchain and instead refuse to invest in a currency they see as ideal for criminals, terrorists, and money launderers. People need safety and an authority that can solve their issues when it comes to digital cash. In the decentralized systems, it is hard to track down the defaulters and punish them. Taking responsibility for frauds and reporting them is a tricky role. That’s one of the reasons why national governments do not talk about the regulations openly.

Integration with existing products
Interacting wallets into existing products can help bring crypto into mainstream. While we are seeing companies like Robinhood, Revolut, Square and others adding crypto functionality into their products, it is still very limited. Hopefully we will see companies like Apple, Amazon, Google and Facebook, with billions of users worldwide follow suit. If Libra manages to get off the ground, it might just be all that is needed.

Before we can make the jump to mass adoption, two things need to happen. Governments must create an enabling environment for cryptocurrencies. And we need to build better experiences, so less technical people can use cryptocurrencies, just like they use their phones, drive their cars and charge their credit cards, without necessarily understanding how they work.

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Christine Lagarde pioneers ECB climate change policies – what can Fintechs do?

Christine Lagarde made waves when she got chosen as the first woman president of the ECB. Now she is making waves with her push for climate conscious monetary policies.

In her new role as the ECB president, she is hitting the ground running with some amazing policy work around climate change. The vision is to make sure that the ECB considers climate change as a ‘mission critical’ priority. Some say, she won’t achieve it. But few have even tried it before.

Lagarde is keen to ensure that the ECB will start focusing more on Green assets (green bonds for example), and unwinding assets in their portfolio with high carbon footprint.

The COP25 climate conference is happening in Madrid this week. Just before it kicked off, the European parliament declared a climate emergency. On the contrary, the FED chose to dig its head into the sand, and stressed that Climate change was a political issue and not an economic/financial one.

I disagree with the position of the FED. Top down recognition of where we are with climate change, is very critical to get to a sustainable world for future generations. Climate change is not just a political issue, it is not just an economic issue, it is an existential issue – both literally and philosophically.


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So what needs to be done bottom up? A lot.

Let us take an example of how climate change affects all of us at the grass root level. Forget extreme weather conditions for a bit. Forget rising seas and melting ice.

I was at the Sustainable finance event on 04/12, in London, hosted by Finextra and Richard Peers. We had several interesting discussions, but there was one story that came out in the discussions that hit me hard was this.

Last year, several Scandinavian countries became net importers of corn, from being net exporters. This was largely due to dry weather and a fall in crop production, that they hadn’t really planned for. As a result, countries like Sweden had to import Corn from other parts of the world, as customer demand for the crop had to be met.

When they tried to scale the import activities, they found that, they didn’t have enough port capacity for the ships that carried corn – they hadn’t planned for that. They hadn’t planned for the logistics around getting the crops integrated into the country’s distribution network.

All this meant additional costs to get the crops to supermarkets and as a result, the price of the crops and products based on the crops went up.

When such sporadic occurrence happens at scale, we see a systematic risk leading to inflation – and then perhaps the FED will start looking into it. This is also an example of how climate change can affect global trade balance, which is another key economic issue that the FED can’t ignore either.

The BoE on the other hand has already planned to integrate climate risks into the stress testing framework for banks. It is good to see that the UK and Europe are moving in the right direction – they often have.

That’s the top down work that is ongoing and more needs to be done. Let’s look at how Fintechs can help the bottom up push. There are several use cases where they can help. Some of my favourite ones are are,

  • A climate rating startup for corporates – like an Experian for credit
  • Climate risk calculators using alternative data
  • Trade and supply chain data capture – to identify climate efficiencies and spot pain points
  • Crop insurance that triggers claims when there are climate anomalies
  • An IoT based data capture mechanism that will give retail customers climate points – that they can cash out or use for borrowing

.. and I haven’t even scratched the surface with that list. We should see more such Fintechs starting to become main stream in the near future.

I have touched upon ET Index – a startup based out of Level 39 in London before. We will need more such firms to gather data about corporates and how green they were. We also have firms that are looking at climate credits – however, we will now see some of them going big.

On supply chain and trade finance – startups can add a lot of value by capturing and sharing climate data across the value chain. Data captured need to be validated and validated data could be used as a credibility score for different stakeholders in the supply chain. It could be everything from how green the manufacturing process was, what the carbon footprint of the logistics was, usage of plastics, water footprint etc.,

These are all pretty basic use cases that can add value for future generations. The key question is, will startups see these as major opportunities? And if they did, will the innovation ecosystem be supportive?

Now, as the bottom up tech driven initiatives ramp up in the next few years, we should ideally see a point of convergence with top down climate policies. A massive challenge and an opportunity to get there – may be that’s the next big thing in Fintech.

Is Lack of Trust a First Order Function in Narrowing the Insurance Protection Gap?



The Geneva Association released an ambitious discussion of trust and its effect on insurance transactions, particularly in the perspective of well-known ‘protection gaps’ that are pervasive across many lines of insurance within mature economies.  Is, as Jad Ariss, Association Managing Director notes in the publication’s foreword, a “lack of trust fundamentally impeding insurance demand,” or are there systemic barriers to insurance demand that trust simply exacerbates?

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’.

In reading the Geneva Association’s recent publication, “The Role of Trust in Narrowing Protection Gaps”, one finds a comprehensive discussion of trust within the context of insurance, including input from a cadre of industry experts.  Clearly the focus is on P&C lines more than health or life, and commercial/reinsurance covers are seemingly purposefully excluded from the piece.  The primary defining paragraph:

“In insurance contracts, trust is embedded in a dual and reciprocal way. On the one hand, the insured, when entering into the contract and paying the insurance premium upfront, has to trust that the insurance company will pay promptly if and when the insured event occurs. On the other hand, the insurance company should be able to trust that the insured, once the premium has been paid, does not act in a way that unduly increases the probability of loss occurrence by adopting a riskier behaviour, known as moral hazard.”

It’s an apt description of the trust expected through a risk sharing contract.  However- does this establishment of trust add to (or detract) from presence of coverage or sales of policies?  Insurance contracts are typically contracts of adhesion, where the carrier holds superior knowledge of the contract provisions and delivery of same, and the customer generally accepts the policy as written.  There’s a ‘quick trust’ that the purpose is resolved- insurance being in place.

Protection Gap or Communication Gap?

Insurance is a bilateral contractual relationship but seldom is comprised of simply a carrier/insured service relationship.  The primary trust concern for an insured when service is required remains focused on expectations and meeting of same;  a claim is suffered, filed for, damage assessed, valued and reimbursed.  That’s what insureds ultimately trust- will my issue be resolved in a manner I expect?  Protection gaps that can be anticipated may not include concerns the insured encounters when coverage is not afforded due to policy provisions that preclude coverage, e.g., excluded causes of loss.  Again, a knowledge gap associated with what might be an unresolvable protection gap.  An expectation of cosmetic surgery reimbursement is not as much a protection gap as it is an expectation gap, same could be said for an insured expecting reimbursement for worn tires.  An insured would not suffer a loss of trust for these instances since protection is not expected.

Figure 5 of the publication denotes sources of distrust in insurance contracts:

fig 5

Distrust Factors

Lack of competition among insurers, be it typically available breadth of coverage (often from a regulated policy form) or price uniformity may not be an invitation to ‘act opportunistically’.  Truly a fear of competition in a low-margin business suggests carriers pricing policies as tightly as underwriting and analysis data allow.  In most jurisdictions underwriting information is essentially a commodity and with price as the marketing lead for carriers competition is fierce. There is a modicum of truth in the presence of inelasticity of supply as data analysis improves, and carriers become more selective in risks they accept.

Adding in concerns for insurers not wanting lengthy claim services presses carriers to work to de- emphasize these distrust factors; in fact, the opposite may be present in the carriers’ pursuit of retention and loyal customers.  The ubiquity of Net Promoter Score (NPS) use as a measure of customer loyalty suggests competition in a zero-sum game industry supports a reverse approach.

Can we look to risk aversion as a corollary to distrust?  Insurance buyers do not focus on what ifs as in many instances insurance would not be purchased at all if not mandated by law or required by an associated lienholder.  Mandated cover somewhat removes trust from the purchase equation- I need it, you can write it, done and done.  The buying customer buys the requirement with little concern about contractual benefits.  Quick trust goes as far as the purchase, an efficient agent, website or aggregator completing the task.  Do customers consciously trust the promise from the carrier that indemnity will occur when a claim is filed?  One can say certainly for auto/motor cover as customers understand that insurance line better than others, as for homeowners cover the majority of customers lack the requisite knowledge of the HO policy to do anything other than expect cover.  It’s not a protection gap as much as it’s a knowledge gap.

Trust Affecting Insurance Demand

The Association touches well on a key function of customer behavior- excessive discounting, or “an irrationally high preference for money today over money tomorrow.”  Potential purchasers of insurance may consider not paying premiums as a substitute for perhaps obtaining a payout in the future from an insurance policy- it’s a form of denial, certainly, but clearly also a “bias that affects the perception of the value of insurance.”  One might contend this is less a trust issue than it is a game theory choice where the consumer sees a very low probability of incurring a claim and premium dollars are better spent on anything else, now, an approach that can simply be noted as personal risk retention.  Even the most trustworthy carrier or agent may not convince someone to buy cover if there’s an imbalance in knowledge of a future need, and no presence of a mandate to force one’s purchase.

Considering other demand anomalies, the article cites complexity aversion (avoidance of options that are complicated to evaluate) as a rational for lack of trust, that being insurance is simply too complex.  Carriers can mitigate the effect of complexity through introduction of new approaches to insurance benefits, e.g., parametric products.  No issues with coverage determination for parametric cover, the parties agree that if trigger X occurs, payment Y is made.  There are not many parametric options available in many lines but in time that may change (see, “Want Property Insurance to Really Change? The Full Indemnity Model Has to Go” )  Yes, a premium still applies but the downstream effect is clear for the insured, and the factors behind the need are clear in the insured’s mind.  Self-trust.

In further considering trust and demand, the better an insurer can provide information and insurance purpose, and then performs well in providing cover and service, the more trust is built, and a more favorable environment of price elasticity of demand will exist.  Distrust surely has the opposite effect, if the customer buys at all.

Trust Affecting Supply?

Fraud.  There it is- the article cites Insurance Information Institute projections that fraud costs the US P&C industry 10% of the total incurred loss and loss adjustment expense annually, an estimate $US 30 Bn.  As a qualifier, the methodology is based on a twenty five year old study, and as a comparative, premium leakage for US auto PIF alone is an equal $US 29 Billion. Combine that with significant AI improvements in detecting fraud and one could say that in time carriers’ trust in the insured population should improve as detection efforts serve to make customers more ‘honest’ by default.

Continuing, can too much attention be paid to moral hazard in purchases and policy performance on the part of insureds?  This effect can be estimated to extent, but proof of a moral hazard component or fear of lack of attention to the condition of insured property is found only in claim behavior, and policies have defenses against egregious behavior in the form of coverage exclusions.  And, in the world of increasing use of IoT devices and telematics (see IoT Observatory), moral hazard can be better prevented/detected, and may have an ultimate result in changes in policy language.  Symmetry of information builds trust, but absent other carrier supply mechanisms may not build demand.

The real protection gap

The missing discussion in insurance supply is natural disaster perils’ effect on the protection gap, and the according spike in customers’ distrust of the insurance industry when events occur.  Few carriers afford coverage for flooding, earthquake, or wave action in standard policies yet these perils are becoming more prevalent in frequency.  However, in most jurisdictions these perils can have coverage through separate policies or endorsements.  Is the discussion of coverage for these protection gaps commonplace?  No.  The admin and sales of these add-ons is not a smooth process, and the carriers and agents do not enjoy a significant financial benefit from sales of the covers.  Explain that to a coastal resident when storm surge and wind damage are concurrent, and a claim is denied for surge as the proximate cause.  Or, the confusion of what constitutes a property’s presence in a flood-prone area reinforcing a customer’s decision to not acquire flood cover.  Another tough explanation.  Poster child means to address a protection gap and enhance trust, sent by the wayside because of perceived complexity by carriers, misinformation and a lack of financial benefit to the potential seller.

Carriers and agents have more and more tools available to them as technology improves- call it trust-enhancing tech.  The downside- carriers will need to invest in these tech improvements and educate customers.  Not trust, but economics.

This discussion could carry on for more pages than the reader wants to consider.  The Geneva Association enumerated a pretty good accounting of trust mechanisms found within the insurance industry in the publication, but it’s not certain that trust is the primary challenge carriers and customers face regarding protection gaps.  Customers purchase insurance more often because they have to, rather than due to an independent assessment of their risk (insurance is sold, not bought, so it’s said).  Expectations of downstream outcomes become important only upon encountering the need for policy service.

At that point trust becomes the preeminent concern, and retention/loyalty the primary effect on demand.  The author wishes more could be said here, but absent that, please do take time to read the publication.  My thanks to the Geneva Association for providing much to consider and discuss.

The SME trends fintech companies need to know in the MENA region

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia.

This week we turn our eyes to the middle east when it comes to SME fintech trends. Dubai based SME lender Beehive, has released its SME State of the Nation 2019 report, as part of its 5th birthday celebrations, and it contains some fascinating insights into the big issues and areas of development for local SMEs owners in the MENA region. The report is the culmination of discussions with SME founders and CEOs in the region, as well as collated survey data from 175 SMEs.

For those with a keen eye on the region, with respect to potentially launching SME focused fintech services, it presents a must-read. We delved into the report and extracted some of the key takeaways, for those of you looking for a ‘Blinkist’ approach to your weekly fintech content.

Hiring and talent

  • 38% of senior positions in the region are held by women, much higher than the global average of 29% quoted in the report.
  • 60% of SMEs reported that finding the right talent was difficult to very difficult.
  • 28% of the MENA SME workforce is under the age of 25, with nearly half of all SMEs surveyed indicating they would hire someone under 25 with no experience.

Fintech takeaway: The high percentage and probability of younger hires could suggest an increased propensity digital financial solutions versus traditional banking.

Financing growth

  • 28% of respondents see innovation as a priority for growth, yet only 2% of those surveyed are currently trying to access finance to fund it.
  • 66% of SME respondents stated late payments as being the biggest challenge for growth.
  • 45% of respondents would use a peer-to-peer loan to finance their business.
  • 32% of respondents are using or considering short-term financing like invoice finance

Fintech takeaway: Simple unsecured SME lending services that flex with cash-flow are likely to be well received in the region. More niche lending solutions that also understand how to finance efficiency gains and digital transformations will help MENA SMEs start prioritising innovation.

To read the full report, head here.

Not another Crypto Exchange; by BondEvalue & Northern Trust

We like

We foresee adoption of

Blockchain not Bitcoin

Digital Currencies not Cryptocurrencies

Stable Coins not CBDCs

Blockchain not Bitcoin

LIBRA not Cryptocurrencies

CBDCs from China & the BRICs not the US

These are picks of business media talk from the past and the present. As Ajit Tripathi, said to me in a conversation last week, `2015 was all about Colored Coins, 2016-2017 was ICOs, and 2019 has been DeFi`. His market pulse was more from the (small on a relative scale) crowd involved in the space.

I`ll take the torch from Ajit today, and zoom in even closer to Blockchain, crypto (I am at loss honestly, at this point, as to which umbrella term to use) to highlight the pilots that are growing in the bond space. And boy, is that space a huge one.

I will touch on what the incumbents are doing.

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.

The World Bank has been courageous in issuing bonds on the blockchain. BBVA has issued a structured green bond and Santander and Société General have also stepped up with bonds too. With the exception of the World Bank, all the other bonds are first ones and or internal placements.

Now over to MAS Sandbox Express (not a drivethrough) that just gave permission to BondEvalue to launch a Blockchain-based Bond exchange in Singapore. BondEvalue would deploy a permissioned blockchain infrastructure to enable electronic trading of bonds in $1,000 denominations with instant settlement (clearing obviously too) and greater price transparency. The focus will be on large high-grade bonds that through tokenization can be fractionalized.

The bond market remains a market with high bid ask spreads and problematic liquidity for small lots (in the 10s thousands) even for large, high-grade bond issues.

We like

 A blockchain-based exchange for high-grade Bonds Not another Exchange for Cryptocurrencies

I do like

bondblox-lg.jpg The incumbent that will custody the tokenized bonds is Northern Trust. The US bank that ranks 24th in the US (by assets) and globally 10th as a custodian bank (by assets under custody).

Northern Trust is not an amateur with regards to blockchain. Their innovation and research center built and sold a blockchain platform for private equities. Broadridge Financial bought the platform from Northern Trust this past summer. They are developing it further by integrating their own blockchain patent for proxy voting at annual shareholder`s meetings.

2020 will see more DLT implementations in financial services to upgrade archaic business processes in the post-trade lifecycle of various financial instruments. While these steps forward can reduce overall costs, counterparty risks, can improve transparency, and liquidity; I have to call them out as mere tech upgrades.

D for Digital not for Distributed

In the mind of of central bankers… to create their Bitcoin


Undoubtedly, Libra was a wake-up call for governments and central banks. The demand for fast, reliable and cheap cross-border payments is going to grow even more in the coming years. Countries around the world will be rolling out their own versions of digital money. Governments have gone from dismissing digital currencies, to revealing they are working on their own digital currency. The speed at which these events are unfolding is unbelievable. Germany wants a digital Euro, Switzerland and Sweden are on their way to create their own digital currencies. China has openly embraced blockchain and digital currencies. At the moment the three biggest currencies in the world are racing to make their fiat digital. Should central banks issue digital currency? This is the million-dollar question.

Ilias Louis Hatzis is the Founder at Mercato Blockchain Corporation AG and a weekly columnist at

A few days ago Benoît Cœuré, an executive board member at the European Central Bank (ECB), said that digital currency can become an alternative to cash. He also mentioned that EU’s Central Bank will explore the effect of digital currencies on the current financial system.

It sounds to me like the ECB is planning its foray into the world of digital money. I am not surprised at all.

On November 1st, Christine Lagarde the former Managing Director at the IMF, assumed her new duties as ECB’s President. Since 2016, Lagarde has been very consistent in her stance on digital currencies, when she said that she sees banks adopting digital currencies within 5 years. In October 2018, she talked about the possibility of the IMF adopting its own cryptocurrency. It looks like she’s already putting things in motion at the ECB.

The primary reason we are seeing central banks and governments scramble is Libra. Facebook’s Libra has rattled everyone. But Libra is nothing new, there have been plenty of proposals in the past, to create Libra like projects. The Special Drawing Right (SRD) at the IMF is a similar example, even though it has limited access. Libra like proposals, date back to the pre-internet era. What makes Libra interesting is that we are in the Internet era and that Facebook has vast network in place with more that 2 billion people, that can talk to each other.

Money is information. Moving money is the same thing as moving information. Anyone that opens an account on Facebook will be able to debit their account with Libra and credit someone else’s account on network. Because of Facebook’s massive scale, the impact will be huge and everywhere, potentially affecting payment systems, central banks and weaker economies. That’s exactly the reason that the existing establishment is running scared. It might not only be Facebook they need to deal with, as more big tech companies decide to enter the game.

Right from the start, Germany and France called for a ban on Libra. Now, Spain, Italy and the Netherland have teamed up to block Facebook’s digital money. To counter Libra, the ECB is already thinking about issuing a digital Euro and creating a framework that would ban high-risk cryptocurrency projects. And it not just Libra. A couple of months ago, the former ECB President, Mario Draghi, attacked plans for an Estonian state-operated cryptocurrency, saying: “No member state can introduce its own currency… The currency of the Eurozone is the Euro.”

In the US, lawmakers and Federal Reserve officials are also concerned about Facebook’s plans to launch a new digital currency. They are contemplating of having the FED create a retail competitor. The reality is the FED already has a central digital currency. All retail banks in the US have accounts with the Federal Reserve that are digital currency accounts, and up to now have been restricted only to commercial banks.

In Europe the ECB will work together with national central banks to develop the digital Euro. These efforts could render commercial banks obsolete and  drive them to oppose to such a scenario. But in Darwinian world, banks need to wake up and become more vigorous about competing and bringing value to their customers, in payment services and trying to retain customer deposits.

What are the risks posed by private stablecoins?

Besides the standard concerns, that Bitcoin, Libra and other cryptocurrencies can be used to circumvent capital controls, facilitate crime and terrorism, the real concern is whether you can trust a technology company with your money.

Banks have decades of regulation and that regulation makes them a very integral part of every country’s economy. They are backed by governments that guarantee our money… most of the time. But banks, have a big weakness. Banks were built for the Industrial Revolution. They were built for paper and cash. Banks have a business model that is focused on the physical distribution of paper in a localized network of buildings and humans.

In a digital world, the existing banking model doesn’t make sense. Paper money is a relic from another century.

In 2018, in North America and Europe alone, we had 1,300 fintech venture deals worth over $15 billion, according to Pitchbook. During the same period, KPMG estimates that over $52 billion in investment poured into fintech initiatives globally.

When Jamie Dimon said we can’t let Silicon Valley eat our lunch, he was right. Banks needed to become technology companies that do banking, to survive. JP Morgan has gone through a process of reorganizing, to become more like a technology company, automating everything that can be automated. This is the reason why one third of their workforce disappeared in two years and their value increased by 50%. They’re using technologies like artificial intelligence, distributed ledger technology, machine learning apps, APIs and open banking to digitalize financial services, and the results are stunning. Today they have more developers than Facebook and Twitter combined.

I say, If you can trust fiat currencies issued by governments, that are not backed by any tangible assets, why can’t you trust a stablecoin that is issued by a private technology company.

What strikes me about this whole thing, is that central banks want to be the disrupter. The financial system I’ve known and used all my life, was invented two hundred years ago. How can a monopoly change its core and try become something like the challenger fintech startups that are trying to unseat it? That’s a big attitude change and I am not sure that banks can make that leap.

Even if central banks and governments manage to stop Libra in its tracks, to buy time and prepare, they can’t stop Bitcoin. Libra has a company behind it, that needs to be compliant with regulations. Facebook is one of the richest and most powerful companies in the world with resources and connections to do anything it wants, but for now they have hit a brick wall.

CBDCs, are inevitable, and in the coming years we will witness a new race for global reserve currency status. Billions will be allocated to capture the potential global dominance. Not that it really matters. Most countries in the world don’t have a reserve currency and its not critical for the well being of a nation to have a reserve currency. So far, China is winning and set to announce the digital Yuan, early next year. The US and the EU won’t be ready for a while. In my opinion, in order to stay in the game and counter China for now, they would have to back Libra.

On the other hand Bitcoin is a completely different animal, completely decentralized, causing difficulties to any government that want to control it, even if they impose bans to limit its use.

Governments understand that full well and that is why they are looking for ways to make cryptocurrencies like Bitcoin less secure. They are heavily investing in Quantum computing to crack the public-key cryptography and underpin Bitcoin. The Trump administration has committed $1.2 billion to this endeavor. China is active too.

We live in a digital world and we need digital money. The digital distribution of data is the core in everything we do, and money is data. Whether it’s Bitcoin, CBDCs or private stablecoins like Libra, cryptocurrencies represent the struggle between the old and the new, a radical shift in power that is challenging our ideas of what is possible.

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The Block vs Binance intersection of niche media implosion and Crypto Fintech cambrian explosion

What's up with The Block vs Binance saga? .001

Daily Fintech lives at this intersection. Thankfully we avoided the temptation to monetize via advertising and as we are self funded we have no pressure to meet external growth expectations (which is the sort of pressure that leads to sacrificing editorial independence). So the media implosion does not worry us and we can focus on creating useful content related to the cambrian explosion in the world of Crypto Fintech. Digging below the headlines and gory battles, this post looks at the trends behind The Block vs Binance saga and what these trends reveal about the state of media, of Crypto Fintech and of the intersection between the two.

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

The Block vs Binance saga explained

On November 21, The Block released a report stating that “Binance offices in Shanghai shut down following police raid”.

This had a negative impact on Binance, who responded quickly with  “No police, no raid, no office. Hope you didn’t pay to read that FUD block.” Binance then sued The Block claiming inaccurate reporting.

The Block later changed the headline taking out the bit about police raid, but that does not seem to be the full extent of the inaccurate reporting.

More cock-up than conspiracy

There are lots of conspiracy theories floating around, that The Block was paid by competitors of Binance or that they shorted Binance. I tend to believe  cock-up more than conspiracy, that this was simply shoddy journalism under pressure to create an exciting clickbait headline. That pressure, which leads to editorial integrity being challenged, happens when revenue is declining.

In ye olden days, a journalist would have spotted a potential story taken it to the Editor who said that they should investigate on the ground in Shanghai and, without factual backup from multiple sources, would have binned the post.

Hmm, where is the revenue to fund that sort of hard work?

Integrity is challenged when revenue is declining

High quality journalism and editorial independence was easy when the revenue was pouring in. Imagine All The Presidents Men with Woodward & Bernstein under pressure to crank out posts, clicks and page views each and every day.

Those days are gone.

When bits of destruction first hit media, the oft repeated line was that “$1 of print advertising revenue would return in the digital realm as 10c.” This decimation of revenue was brutal, but once media firms went digital it got worse!

Whether you call it Adpocalypse or less alarmingly, Adlergy, there are some alarming trend lines:

– rise of fake bot traffic (around 50% by many accounts).

– adblockers and ad-blindness (people “tuning out” ads even when the ads are shown) leading to decline in engagement as evidenced by click through rates.

– increasing resistance to privacy invasion among wealthy early adopters (prized by advertisers); this is accentuated by regulation in many markets.

With revenues declining, journalists are told to a) write more articles b) increase traffic. That is not conducive to thoughtful articles with lots of primary research and fact checking.

The Block also has a paid subscription model. They clearly aim to do quality work. This was no fly by night content scraping site. So them getting it wrong took more people by surprise and that is why we need to dig below the surface to look at the underlying trends.

An unregulated market needs a well compensated journalists

In Legacy Finance, there is some protection from the most egregious behaviour thanks to the regulation watch dog. 

An unregulated market needs some other watch dog.

How it works today with lots of fake news and an occasional legal battle is not a healthy market.

A media business under pressure to crank out posts, clicks and page views and accept payments from interested parties is clearly not that kind of watch dog. It does not matter how many times we say that journalists must do xy&z, if there is not a good way to compensate journalists well for doing that kind of work. It is unrealistic to say journalists must do very high quality work but also use Adblockers and tricks to get past Paywalls.

The money is there. Crypto Fintech is in a cambrian explosion phase, with money pouring into the space. There are also plenty of journalists who would like to exercise their skills to do a good job digging out the truth. Both parties want a solution. What is needed is a business model that connects the two. Shameless plug: Daily Fintech is working on that, please get in touch if you are interested on working on this with us.


Daily Fintech provides daily original insight from a select team of market practitioners. Subscribe to get your insights fresh from the knowledge bakery. Yes, we have a Paid Membership model. In case you don’t already have your own Membership, if you subscribe by 30 November 2019 (yes, TODAY) you get a 50% discount off your first year. Simply use the coupon code: Thanksgiving in the payment field of the Subscription page, and you’re on your way to being that well informed Crypto Fintech person at the next Thanksgiving table.

Has Softbank’s Vision fund lost sight as it invests in PayTM $1 Bn raise despite mounting losses?

They lost $4.6 Billion with the WeWork deal. They have struggled to raise fund-2. They are now focused on profitability rather than growth.

Yet, Softbank fund joined by Alibaba’s Ant Financial pooled in $600 Million for PayTM’s recent $1 Billion fund raise. PayTM is valued at $16 Billion at the end of this funding round. They were valued at $10 Billion just last year when Warren Buffet’s Berkshire Hathaway invested in them.

The recent IPO fiascos that Softbank’s portfolio firms have been involved in, have forced their hand to take a profitability focused investment strategy.

Softbank’s Masayoshi Son has mandated that his portfolio companies need to demonstrate a few years of profits before they can plan for IPOs.  However, the new investment into PayTM is in stark contrast to their new position on profitability.


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The India payments market has been a fairy tale ride since 2016. I have discussed this several times in the past, and perhaps the biggest contributor and beneficiary of this boom has been PayTM, and its Chinese investors.

However, the market is no longer completely dominated by PayTM. Their payments growth has slowed down. Walmart’s PhonePe have grown from 26% market share to 47% in about a year, and at the same time PayTM only grew from 51% to 52%.

Their losses have doubled in this time. In the financial year ending March 2019, they reported a loss of $549 Million, which is more than double their previous FY loss of $206 Million.

PayTM claim that they have cut down their costs by more than 33% in the last six months, with a view to doing an IPO in 2-3 years. The payments market is still growing in India, and it is expected to be $1 Trillion by 2023. But there are more takers now than there were a couple of years ago.

Google pay has also upped its game, and have about 67 Million daily users. Whatsapp is planning to roll out its payments app to its 400 Million users in India. PayTM really needs to find new revenue lines, with good margins – before they start trailing in the payments game.

The new funding round is primarily to grow their base of merchants from its current 15 Million to 35 Million. Vijay Shekhar Sharma, the CEO, mentioned that they would be spending $2.7 Billion in the next couple of years to grow their merchant base further. It looks like atleast another 24 months of further growth and loss making lies ahead.

PayTM have started to focus on improving their margins. They are moving from Peer to Peer payments to online and offline merchant transactions. Vikas Garg, the firm’s CFO, mentioned that in Q2 and Q3 2019, PayTM have reduced costs by 10%. Vijay wants to take back 66% of the payments market, and improve cashflows before any IPO plans.

From a Softbank perspective, they have got a stake of over 20% in the firm, and as per the deal, they can’t sell their stake in the firm for another 5 years, except when its via an IPO.

The way forward is a bit murky to me. On the one hand, they want to grow, invest $2.7 Billion into tier 2 and 3 cities in India. On the other hand they are cutting costs with a view to going public. With Google Pay, Phonepe and Whatsapp payments breathing fire, Vijay may need to grow some extra hands and heads to tackle the next few months.

The question still remains though, growth or profitability?

Innovate from the customer backwards- but caveat innovator!



The insurance industry is in large part past the hysteria of disruption, innovation and entrants solving the issues of the insurance world, and is moving into the stage of implementation, collaboration and iteration. Startups that have gained traction are now broadening their markets, and in some cases, their offerings. And, the industry is recognizing that innovation is good, prevention is better, and combination of the two is best. But is prevention without issues? Can a large gray beast show the way?

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’.

It’s Thanksgiving Day holiday in the U.S., having a sumptuous feast with families and friends is de rigueur so this column may serve as an appetizer.  For those many readers outside of the feasting zone- perhaps serve as a substitute for your almond Khari tea biscuit, scone, pastelito, kuchen or kaya.


Prevention in P&C insurance has to date been a tech/device driven effort- telematic plug-ins like State Farm’s Drive Safe and Save developed by Cambridge Mobile Telematics, home moisture sensors, or driving habits observed by DriveWise or Snapshot. Getting customer buy-in has been a barrier to general adoption, as has been how to manage the cost of a program and how regulators might see programs where carriers provide equipment or premium reductions.

Some jurisdictions do not allow rebates or inducements, or activity that seems as such, however, the U.S. state of Florida recently announced passed legislation where the Department of Insurance is exempting certain prevention devices (read as IoT) from the insurance laws regarding inducements.  The state sees there is technology available that will serve to reduce frequency and severity of claims, and with some oversight will not act as policy inducements.

The Iot Observatory championed by Matteo Carbone has chronicled successes with IoT/prevention activities, particularly in the Italian motor insurance industry and positive steps taken by American Family Insurance (as reported by Coverager) in the US.

Additionally, German plumbing fixture company Grohe and Finnish insurer LähiTapiola recently announced and implemented a water sensing device initiative, with an estimated 100K installations planned by 2026.

Good efforts in these initiatives, but all typically emanate from the company to the customer.  Can value-addition for preventive insurance claim measures be a reasonable expectation?  Can customer engagement in prevention be an answer?  Perhaps yes, with the efforts of an active insurance startup, Hippo Insurance (already a forward-thinking carrier) in conjunction with the firm’s recent acquisition, Sheltr, a home maintenance and inspection service.  An apt case study of considering the customer as a focus of innovation and adopting operating strategy from that perspective.

The premise of the Hippo/Sheltr partnership is that a combination of periodic, comprehensive dwelling inspections will not only identify potential repair issues, but will through time and attention gain the involvement of homeowners in the prevention business, and be extension reduction in the frequency and severity of claims.  It’s not a new concept- auto owners conduct preventive measures programs now without considering the action to be anything other than part of auto ownership.  Of course, knowing that failing to have oil changed would lead to mechanical failure that would probably not be an auto insurance covered peril makes moral hazard is not an issue in that instance as dwelling maintenance and having homeowners’ insurance might produce.

Hippo Insurance has since its founders, Assaf Wand  and Eyal Navon conceived and rolled out the company felt responsible for end to end positive customer experience.  In discussion with Hippo’s VP of Growth Initiatives, Daniel Blanaru, the company’s concept of service was referenced as, “The Hippo Way.”  How has that manifested within the customers’ true experience?  NPS scores that significantly exceed the industry’s.  As the company’s geographic growth reached multiple US states the firm strategically vetted multiple potential partners to help build the vision of not just an insurance company, but an end to end service company that included proactive/prevention options as well.

Sheltr was identified as the option best able to synch with Hippo’s service concepts- excellent team caliber, apt tech leverage, ease of onboarding into Hippo’s culture, and a proven culture of customer communication.  Seemingly a very good choice.

But here comes I, veteran of property insurance, property claims, and obsessive customer experience person.  I read the announcement and thought, “Here comes another effort to mate insurance service, indemnification, and repair options!”  Realizing the homeowners’ insurance claim experience has been littered with the worn failures of contractor partnerships, flooring programs, TPAs (although some remain very successful to this date), and inspection services, speaking with Hippo might find a different take on that aspect of claim handling.

As much as Hippo had shown a proactive, ‘NPS is the True North of service’ approach, efforts to canonize the firm are surely premature.

Concerns that came to mind with the addition of an inspection and preventive maintenance company to the CX path on which Hippo’s customers are led included:

  • Will inclusion of the inspection/maintenance services to the insurance PIF portfolio be seen by regulators as a form of rebates or inducements?
  • Would customers be denied coverage if they fail to take action on an identified problem and a claim ensues?
  • How will CX perceptions be affected if a referred repair vendor performs inadequately?
  • Customer survey results are affected in a linear fashion as providers are added to the service chain, so even if each participant rates service as 98% effective, having four equal providers (insurer, adjuster, inspection co., and repair service provider) produces a net service effect result of 92%, not what the firm’s expectations are.
  • Having an inspection that identifies an issue may not reduce the effects of moral hazard for the customer since they know insurance will respond to any claim issues.
  • Can the inspection service and network of repair contractors be adequately grown to keep up with growth of insurance PIF?

These are not concerns that relate solely to the Hippo/Sheltr service partnership but can be in any prevention service environment.  How to engage the customers is the key, driving adoption of a preventive actions approach for the customers. Hippo had found that a majority of cases that had a prior preventive aspect resulted in significantly mitigated effects of damage when claims occurred.  Having the added service provided by Sheltr’s 30 item semi-annual inspection and repair regimen is expected to result in lower frequency and severity of claims, but as the relationship is new and the concept is just that, the firm is in ‘observation and adapt’ mode as of the writing of this article.  It’s really a behavioral economics experiment, not a charitable giveback approach for claim mitigation as with Lemonade, but a participative, preventive approach encouraging customer participation through early identification and remedying of concerns.  How many, how much, how scalable, not known at this early juncture per Mr. Blanaru. But it’s an effort taken to innovate from customer involvement backwards to insurance operations (and surely underwriting).  The bulleted points noted above did elicit a response from Hippo but those will remain outside of this article as in all fairness the relationship between the firms is too new to call.  However- having awareness of past industry failures surely helps with not repeating history.

Prevention innovation does have its tech aspects but Hippo may find its customer focus on prevention, end-to-end service through claim concierge principles, and careful growth without sacrificing service standards will make the Hippo/Sheltr approach successful.  It’s not just Hippo’s customers who will benefit from service ‘innovation from the customer backwards’, but any company in the industry who remains an observer of this iteration of the vendor partner experiment.

Thanks to Courtney Klosterman, MyHippo PR maven,  for background info.

Bluevine Banks Big On SMB Banking with Series F Raise

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia.

Fintech Bluevine is the latest SMB focussed startup to hit the headlines, after successfully completing its Series F raise. The business financing startup has banked $102.5 million from some of the biggest names in banking, technology and VC, including UK finance institution Nationwide, Microsoft’s venture fund M12 and Silicon Valley big name Menlo Ventures, as it looks to get deeper into SMBs pockets, with banking products.

In late October, Bluevine announced the launch of its business banking services, which offered a high yield business checking account, unlimited number of transactions with zero monthly fees and online account opening in 60 seconds.

It’s not rocket science, but it works, and investors are clearly lapping it up. It comes off the back of research conducted by Bluevine that found only 9% of businesses surveyed felt that their current bank met all their needs.

Bluevine are acting on that research and building a strategy that will see them potentially become a one stop servicing point for SMBs. Interestingly, it’s a strategy that goes against the grain of what the fintech ecosystem has so often tantalisingly promised us – the ability to seamlessly connect multiple financial providers to create our own very personalised financial world.

While this integration nirvana has been realised in the non-financial world of confluence, jira, slack, asana and more, financial players, including fintech to fintech, haven’t seemed, so far, to play that well with each other. There has been a relative failure in financial services to develop a symbiotic ecosystem of interconnected financial apps from which we can pick and choose from. Yes, there are some outlier examples, like Xero, but by and large, each fintech is still a relative island, much like their incumbent competitors.

Who or what’s to blame? Well, like many things, it’s complicated, but regulation and compliance requirements and unknowns are most likely the biggest showstopper, and the biggest moat for strategies like the one Bluevine is pursuing. That is certainly something to think about.

Transparency, Transparency, Transparency in portfolio performance

Four years ago, I started preaching about Transparency in wealth management. In the Global Transparency movement in Portfolio Performance from the Daily Fintech archives in October 2015, I asked for

`…  a world in which Barron’s top advisor annual rankings take into account performance. Believe it or not, right now these rankings don’t include performance (it is stated in the fine print) and are probably heavily influenced by AUM.`

The largest and most mature Western wealthTech market – the US – is nowhere close to a kind of Transparency that takes into account ACTUAL risk-adjusted PERFORMANCE. The market focus remains on size, measured by Assets under Management (AUM), and low-cost products, as the zero-commissions war has looted North America. Standalone Fintechs, like Betterment, Wealthfront, and Personal Capital add metrics like Numbers of clients or monthly active users (MAU). Robinhood, the `father of zero-commissions` sells order flow behind the scenes ( What has triggered the explosion of payments for order flow? Not Fidelity from our 10/2019 archives). Nobody publishes actual risk-adjusted performance. Some providers publish model portfolio performance.

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.

What caught my attention recently, was a monumental move out of Switzerland in the Global Transparency movement in portfolio performance. A free mobile app, the Performance Watcher, enabling clients of two Swiss banks to monitor on a daily basis, actual risk-adjusted performance in comparison to identical risk portfolios. No model portfolios. Full transparency of performance.

Switzerland has long been a wealth management hub for several reasons. Nobody can claim these days that one of the reasons is reporting opaqueness and lack of reporting transparency for international clients.


As of the end of 2018, CHF 6.9 tn of assets were managed in Switzerland (4.8% less than 2017). This includes both private and institutional assets, domestic and international. According to the Swiss Banking Aug 2019 report, the break down is: CHF 1.4 tn of domestic private assets, CHF 2.3 tn of private assets in cross-border customer relationships, and CHF 3.3 tn of assets originating from companies and institutional clients.


Switzerland has not escaped of course the downward trend in the wealth management margins. From 2013 to 2018, margins have decreased by 12 basis points, from 90 to 78 basis points, for the entire business. The reduction is more significant in the case of the cross-border businesses. Figures are from the Swiss Banking Aug 2019 report.


The market looks at the performance of wealth managers, as a business that offers a variety of financial products and services. Business performance is quantified by stock prices in the case of publicly traded entities.

Nobody talks about client performance as a service. This confirms the disconnect between the quality of service and price, which persists unfortunately in financial services.

In a customer-centric world, wealth managers should provide their clients with a transparent and easy way to compare (on a risk-adjusted way) performance. The industry has avoided this, claiming that such a comparison is difficult. Benchmarking portfolios to MSCI indices or other Equity indices, is a disservice to clients and is so 20th century.

Performance Watcher, is the solution to this. It has been developed by IBO, Investments by Objective. A simple data normalization algorithm that makes it easy and visual to do comparisons through a Performance Score and a Risk Score. The data needed for the algorithm is the anonymous daily total asset value of the accounts and the total in and outflows. The data is secure and completely anonymous. IBO only stores statistical data and does not manage any money.

Several Swiss banks have been using the service over the past 2 yrs. The number of institutions joining has been growing and IBO has been integrated into the Avaloq ecosystem. Currently, CHF 40billion are being processed from 15,000 accounts. Nicholas Hochstadter, CEO and Founder of IBO, makes the analogy of purchasing decisions through Comparis or TripAdvisor.

Customers don’t really know about it because it has been used only internally, up until recently. Either to compare different strategies or to improve the choice of financial products deployed for a certain investment theme.

Banque Cantonale des Grisons and Banque Gonet are the first two Swiss banks that are offering to their clients the comparison service.

Each client, in their own privacy, can monitor on a daily basis in a simple visual way whether they are compensated for the risk taken.

Example for the Anonymous account-client PF8742. Left is the 2019 ytd performance and right is the 2018 annual performance.

Performance Watcher Indices, calculated for 2019 ytd from the 15k portfolios

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We need to see more wealth managers joining and offering clients full performance transparency. Social trading platforms with copy trading, have taken this approach from the start. Traditional wealth managers are late but more surprisingly, Robo-advisors have not been eager to offer this kind of daily, visual, standardized benchmarking.

What is the value of insight?

Insights Apex.001

The value of online content is driven by how many clicks that content receives, because the Internet to date has mostly been funded by advertising. Daily Fintech was created to challenge that assumption by asking what is more valuable:

A.  10,000 people each of whom are leaders in the global Fintech market who influence how $ billions of value are created?

B. 1,000,000 (1m) people with no money or influence?

The currency of the web (advertising) says B is 100x more valuable than A. That is clearly broken. We all know that A is more valuable. That insight led us to build a media business that sits at the apex of the knowledge market by being insight driven not news or data driven. We track news and data as sources of insight but we do not focus on delivering either news or data. We have given ourselves the much harder mission of delivering unique insight about Fintech each and every day. To achieve that mission, we have assembled a team of experts who  have “walked a mile in your shoes”. Our experts add value because we bring the perspective of our work as entrepreneurs, bankers, senior executives, technologists, investors and consultants. Our insights are created by people like you who also like to write.

Everything we do is designed to protect the time of the small number of people who influence how $ billions of value are created, because time is the one thing we cannot manufacture more of. That respect for your attention drives how we write and what we write about. It also explains why we don’t employ any of the normal tricks to grab your attention – all of them are as annoying as somebody at a party using a megaphone to talk to you. Our respect for your time is why our platform is highly curated. In order to avoid wasting your time with one off posts with lots of overlap, our Experts write regularly (once per week) within a specific domain.

To answer the question posed in the headline, consider this question. What is more valuable:

A. A 50 page report full of charts, stats and other well presented data.

B. A single sentence telling you where the stock market or any other asset will be by the end of the day.

Conventional Wisdom values content by volume, so A is seen as more valuable than B, yet we all know that B is more valuable. We do NOT claim to tell where the stock market or any other asset will be by the end of the day, but we do aim to tell you where and how massive value is being created.

We charge directly, so that we never forget that our readers are our customers (not products that we sell to advertisers).

That insight is made available to you for US$143 a year (which equates to $2.75 per week or $0.39 per day). So your daily insight cost less than $0.40 and could be worth $ millions.

Even better is that for a few more days, we are giving new members a whopping 50% off your first-year fee. Subscribe before 30 November 2019 and pay just US$71.50 (or less than $0.20 per day)

Market based interest rates on DeFi during the days of negative interest rates – a fun topic for Thanksgiving

Market based interest rates on DeFi during the days of negative interest rate  .001

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

The path to mainstream adoption of Bitcoin is through people living with failing currencies & hyperfinflation They see Bitcoin as a way to put food on the table. That does not help you at the Thanksgiving dinner table, when a relative asks you to explain your fascination with Bitcoin. Hyperinflation is something that thankfully seems remote to our lives in the West. As you explain and watch the expression that says “you are as weird as Bitcoin” you can start a real conversation by asking how they are dealing with negative interest rates. Your prudent relative talks about how hard it is to live off savings when the bank takes your money.

The value of a Store of Value if you are not Scrooge McDuck


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Imagine Scrooge McDuck playing with a hardware wallet full of Bitcoin. It does not seem so much fun. Using a store of value to make somebody’s life better (including your’s) sounds a lot more fun. But if you think Bitcoin can increase 10x or 100x from here and you don’t want to be like the person who paid 3 Bitcoin for a pizza, hoarding seems like the smart thing to do.

If you want to get some value from your store of value without selling it, the option of using it as collateral for  loan looks sensible. In short you need a crypto Lombard Loan.

This is not your parent’s Lombard Loan

As you explain how lending/borrowing works in Decentralized Finance (aka DeFi), one of your wealthy relative chips in by saying “this sounds like a Lombard Loan”.

Your wealthy relative is correct, lending/borrowing borrowing on DeFi) works on a similar principle to a Lombard Loan; you borrow based on collateral held by the Lender. 

Now others are paying attention and somebody else chips in with “I never knew about Lombard Loans, but I thought that was how banks work in normal mode ie they can only lend what people deposit with them”. Your family is then actually listening while you explain how Fractional Reserve Banking works!

The wealthy relative who sparked the Lombard Loan conversation says he will call you tomorrow to learn more.

Now everybody is paying attention. Another relative who is always short on cash tells people about their experience borrowing through Lending Club. The older relative who looks for interest on their cash says “oh honey I wish I had known, I could have lent you some cash and we would both have done a lot better than doing this through a bank”.  That is how Peer To Peer (P2) Lending was supposed to work.

Could DeFi enable a decentralized P2P version of Lending Club?

Lending Club was conceived of as P2P lending/borrowing, but in an effort to scale to meet IPO valuations, it became a front end to institutional/bank lending.

The idea of P2P decentralization is obviously core to DeFi. If DeFi credit markets really do work, they will usher in a decentralized P2P version of Lending Club. Both lenders and borrowers are sitting around the same Thanksgiving table.

After a big meal and a snooze you wake up from your dream

The conversation has moved to sports and celebrities as everybody avoids talking about Trump. Bitcoin and DeFi is well and truly off the agenda.

However it was not only a dream. The wealthy relative does call you the next day and asks you about DeFi credit markets. Before explaining how they work you ask him a question “Why would a sane person lend at negative interest rates?”

Why would a sane person lend at negative interest rates?

The question has been bugging you. Clearly lots of people are lending at negative interest rates. They cannot all be crazy. Your wealthy relative explains it quite simply as being better than worse alternatives, telling you “I would prefer to lose 0.5% a year than lose 50% from a risky asset such as equities at the top of a bull cycle”. When you suggest being in cash, he asks you which currency and points out that the more stable the currency, the more negative the interest rates are. For example, if you want the famously stable Swiss Franc, be prepared to pay a high interest rate for the privilege of lending to bank that promises to repay you in Swiss Franc.

Now that he has answered your question he wants to know if DeFi credit markets are a real option for an investor/lender.

The realities of DeFi credit markets

You point him to a site called DeFi rate that shows what interest rates a lender can get in the DeFi credit markets. He rightly asked “but what is my risk adjusted return on capital?”

To show him you understand the issues you tell him that he will need to evaluate the risk against these criteria:

    • Insurance: you obviously won’t get government insurance like FDIC in these markets but are there any private insurance options?
    • Collateral Risk %: Legacy Lombard Loans work on the % the bank will lend against the collateral. The more volatile the asset the smaller % they will lend against. In Crypto Lombard Loans, the volatility is obviously high. In fact the DeFi credit markets do NOT assume that risk. Let’s say they ask for 150% collateral (eg to borrow 100 in USD, deposit equivalent of 150 USD in  ETH) and ETH falls more than 50%, the Lender loses all collateral and has to put up more.
    • Counterparty Risk: there is no centralised equivalent to a bank, so you do not have Counterparty risk. You do not worry about the bank holding your deposit going bankrupt (watcb the Lehman story if you don’t think this is as risk). Although you do not have  Counterparty risk, you do have Storage risk.
    • Storage risk: this is not an issue in legacy finance as the bank takes that risk. As Bitcoin and other crypto assets are bearer instruments you have storage risk, meaning you have to figure in the cost of storage (either doing it yourself or paying some firm to do it for you but in such a way that you control the private keys like ye olde lockbox in a bank vault). 
    • Repayment risk:you do NOT have traditional repayment risk because the borrower has deposited collateral, but the details matter around recourse in the event that their collateral is wiped out by a sudden market move.
    • Weirdness risk: very high!

You suggest he ask his/her financial adviser and leave in a hook “if they don’t get it yet, come back to me and I may be able to help you.”

Something to be thankful about

To those at the Thanksgiving table who want to be as well informed as you are, suggest they get an annual subscription to Daily Fintech.   Membership costs just US$143 a year (which equates to $2.75 per week or $0.39 per day).

In case you don’t already have your own Membership, if you subscribe by 30 November 2019 you get a 50% discount off your first year. Simply use the coupon code: Thanksgiving in the payment field of the Subscription page, and you’re on your way to being that well informed person at the Thnksgiving table.

Top 7 Global Fintech Trends 2019

This is my third year at DailyFintech. Looking back, this year has been the most eventful year of the three, with several significant Fintech trends emerging across the world.

Typically, I am not a big fan of the “Top” titled posts. But, I have had to use it, thanks to the events of 2019. A few key themes stand out for me.

Starting from Asia- be it China slowdown, India Payments or South East Asia for Financial Inclusion – there were some big headlines this year.

Facebook’s Libra, China’s Digital Currency and the FCA regulations for crypto businesses kept the crypto hodlers interested.

Softbank Fund 1 saw a massive hit due to a bad year at the IPOs, and there were several learnings from there. Fund 2 is now up in the air, although they are revisiting their strategy to be more profitability and less growth.

Google Bank, Apple Card, Facebook pay are perhaps giving wall street a few sleepless nights.


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The idea for a trend post came from Theodora Lau, when we were discussing a theme for our podcast episode. As we went through the recording of the trends episode, I felt this definitely deserved writing down as a blog post.  Anyways, here you go!

Trend 1: India – the key battleground

(I had to start with India)….. Asia Fintech was where all the action was this year. China saw a slowdown due to the trade war. Investments dried up, and India overtook China for Q1 and Q2 Fintech investments.

The more interesting aspect of India Fintech this year has been the growth of payments. It has been largely due to the rise of internet, thanks to Reliance Jio. 300 Million Indians suddenly got access to internet in a matter of 24 months. Many digital business models that weren’t viable before, started scaling quickly.

I personally made an investment into Niki.Ai, a voice app for even the rural population of India to do transactions in their regional languages.

Walmart’s 2018 acquisition of Flipkart hit jackpot with PhonePe – a payment business that was valued at about $300 Million last year. PhonePe has gone from 26% of payments market cap to 47% in 12 months since the acquisition. Its valuation is expected to be around $10 Billion now.

With China payments largely taken, India is the battleground for the big firms like Alibaba, Amazon and Google. In a “winner takes all” world, getting 20% of the world population onboard is a big deal for these firms.

Trend 2: Tech giants conquer Wall Street

Apple did it again. They picked up an already existing, relatively well executed product, and did it even better. The apple card experience is seamless, simple and sophisticated. We can argue that the challenger banks had done it already, but we all know that, when Apple does it, it takes some beating.

Google bank has been in the news for the last couple of weeks. Google’s announcement that they would be launching checking accounts shook social media. On the day it was announced, all I could see on my twitter feed was just that. People were predicting doomsday for mainstream banks.

Facebook pay is yet another recent development. Instagram got an in-app-checkout functionality that allowed users to make purchases from the app. Facebook pay however, is a common capability across all FB apps. They will be powered by Paypal and stripe, and plan to take over the mobile e-commerce market.

I believe, banks may have to accept that tech companies will be distributors of banking products. Banks will need to collaborate with them, rather than view them as competition.

Trend 3: Growth vs Profitability

As much as I like the VC job at Green Shores Capital, I often find that the industry is hyped up. This was especially the case until last year. This year though, funds are drying up top-down. I saw four Series A funding rounds fold because the funds (or their funders) pulled out of the round.

Nothing has been more pronounced than Softbank Funds portfolio. Softbank fund took a strategy of investing in pre-IPO firms, taking them to IPO, and making money in the process. A $100 Billion fund was seen as super powerful. But the market brought their portfolio firms to their knees.

The Wework collapse could be compared to the dot com bubble burst. This time it may be a graceful slowdown in the market, however, it has led to a much needed introspection within funds. Softbank has started focusing on profitability as a strategy for their next fund.

Even with their portfolio firm PayTM in India, Softbank have asked them to demonstrate profitability before an IPO.

Trend 4: Challenge banks look at Global Expansion

There are challenger banks across the world. For those in Europe and the UK – Monzo, Revolut, Starling and N26 have all had pretty decent growth stories. This year, some of them have started to plan an US expansion. They are all largely in growth mode, and there are still questions around if they can really be profitable. Something for them to figure out in 2020s perhaps.

The other set of challenger banks are in Latin America (Nubank) and Asia. These are markets that don’t have the burden of legacy banking infrastructure. As a result, their challenger banks have grown pretty fast. Softbank invested into Nubank, and their valuation has skyrocketed past $10 Billion.

So the key takeaway is that, when you are a challenger bank in an underserved part of the world, the opportunities are sky high. If you have the “misfortune” of being a challenger bank in an over-banked part of the world, you may have to quickly look outside your region.

Trend 5: A year of Financial Inclusion

While several public and private firms across the world have been trying to solve this issue, South East Asia over the past 12 months suddenly emerged as a case study. Only 18% of adults in S.E.Asia use a bank account and 11% use financial products. As a result, there is a genuine opportunity in this part of the world for a provider of last mile financial products.

Grab and Gojek have conquered S.E.Asia, and as they expanded through their ride sharing apps, they have also started offering payment services. As Singapore opened up their licenses for digital banks, Grab have applied for it too.

A key takeaway here is that, in several parts of the world, expansion could happen as a lifestyle business. Fintech offerings can follow.

A broader takeaway is that, distribution of banking is getting disrupted, not as much the banking services offered.

Trend 6: Blockchain Unchained

Libra has been quite noisy on social media. It should have ranked quite high on the hashtag list of the year. Despite all the negative press around anything related to FB, Libra still has its merits. It may or may not be the tool that brings banking and payments to every household. But it may have scared governments and central banks enough to act on digital currencies of their own.

As a result of Libra’s announcement, China have had to expedite their digital currency offering. Libra’s success may not be its own product. If sovereign digital currencies emerge, we will see transparency and ease of transactions at a global scale never seen before.

Trend 7: Climate Risks

This is my favourite trend of the year – without a doubt. The extinction rebellion, and dramatic climate patterns across the world has sent shock waves across financial services too.

Recently the Bank of England (BoE) released its supervisory text on how banks should include climate risks as part of their stress testing. This is a pretty interesting move.

If it is executed right, climate risk management would be overseen by financial regulators and central banks across the world. Banks would be asked to capitalise themselves against climate risks that they were exposing themselves to.

Therefore, if a bank had a counterparty that had a high carbon footprint, the bank would need to recognise that. They would have to rank a high carbon footprint transaction as a higher risk transaction, and as a result allocate higher capital against that transaction. This would soon change the way banks deal with their clients – and could help keep the wider business ecosystem climate conscious.

As the world welcomes 2020, it’s critical to note that these trends are green shoots of something big and mostly in the right direction too. That is perhaps what interests me the most. Despite the financial aspect of it, most of these trends have a strong social impact too!

What is the future of insurance?

2018 road with sunrise


Have we seen the future of insurance? No, unless you have conquered the whole space-time continuum thing, or yours is a parallax view of the insurance industry to come.  Is there good discussion and collaboration addressing what that future might be? Yes, if this week’s buffet of InsurTech news pieces is any indication, and if the efforts of energetic insurance development activities are a view of a potential insurance future. Carrier introspection, participants’ discussion, change examples, new tools, and supportive groups suggest with a little effort the future can be what the customers hope for.

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’.

The future of insurance was a front-line topic this week from three disparate sources- the UK, the US, and a setting in Bolivia.  Not the entire globe speaking but certainly diverse locales, the coverage touched on insurance prospects that have global reach, and the sources were uniform in the principal that innovation is important, but customer and risk changes are more so.

Consider insurance in the near future- more intangible risks, data sources that embrace forward-looking techniques and breadth of external data, customers that expect more than an annual ‘touch’ from their agents/carriers (if there are agents at all), and product/service evolution that is measured in days, not years.

Denise Garth of Majesco writes in a recent article, “Are Insurers Prepared to Meet Future Customer Needs?”, that today’s consumers are becoming accustomed to fluid transactions- order on an app, have delivery (and possible put away) within a day, track the purchase on one’s phone, tablet, television, smart watch, or computer.  Contrast that with changing your motor/auto carrier- phone calls, follow-up, and in some jurisdictions, extra cost for changing.  Sure, insurance is not a simple purchase like weekly groceries, but the insurance industry languishes in a world where admin status quo still rules.  Food purchases are not regulated in the manner of insurance, but how a firm does business is not either.  GloveBox is working to aggregate policies under one app, and One Insurance is working to aggregate multi-line cover within one carrier touchpoint, but in many ways the industry simply is “ducking the big problems”, as Anthony Hilton writes in the Evening Standard this week:

“Today the worth of a business needing to be insured is more intangible and much harder to value; the knowledge of the workforce; the quality of the supply chain; the uniqueness of the intellectual property; the proportion of IT, the strength of customer relations.”  Mr. Hilton continues, “Company executives say in the old days they used to be able to cover 90% of their risk because it was tangible. Now it is 30% tangible.” 

The balance has become a challenge for carriers to address.  The future is now in business.

Consider the SME market (valued at $200 Bn in the US alone) and the announcement November 20 of Aon PLC’s acquisition of CoverWallet.  Clearly CoverWallet’s  innovative approach to addressing the needs of commercial customers was a driving force for the acquisition, but just as clearly Aon is expressing awareness of the previously underserved SME market, and with new tools to craft insurance relationships the firm will be well-placed to capitalize on how businesses are recognizing the need and availability of cover.

The Evening Standard article aptly notes the intangible elephants in the room- cyber, fraud, or loss of reputation.  Noting the need for devising policies which meet client needs overlooks a significant unmentioned problem- these intangible risks can have frequency and probable maximum loss, a perfect unplanned storm for underwriting.  The easy course has been off the rack policies, or low cover limits, but that must change as businesses demand more.  I was reminded of a data breach that a large US carrier responded to well (see “State Farm Hit by Data Breach”), and outside of the reminder that even big companies are victims, cyber and insurance expert Mica Cooper of Aisus/InsureCrypt reminded me- the attack was founded in credentials obtained elsewhere by the perpetrators, and held until the seeming right moment.  There are no off- the- shelf policies that anticipate the cascading consequences of that cyber action, and if SF had not been prepared technically the potential financial and reputational damage would have been enormous for the firm.

As to customer expectations for insurance in the future, Juan Mazzini of Celent covered the topic well in a video recorded at Fides Conference in Bolivia, September 2019 (the peacock seen early in the video is NOT a Bolivian insurance regulator 😊 ).  Customers will expect more than just annual service, or service only when a claim occurs.  Prevention, value-added services, and easy access to insurance will need to become the rule rather than the exception. Multi-channel access must be the plan for insurers, with anticipation of risk and not just response to claims.

How insurance is provided needs to evolve in response to rising tides and rising premiums- is it now time to change insurance from an indemnity model to a hybrid parametric/indemnity approach?  I have written of this before within,  “Want Property Insurance to Really Change? The Straight Indemnity Policy Needs to Go”.

And, is it time for underwriting data tools to change?  Sure is, per Renu Ann Joseph of Luminant Analytics.  Her firm’s current project of building analysis tools for helping actuaries and product managers price, select and segment risks better using external data is a forward-looking approach, a total sea change from carriers’ approaches utilizing historic, in-house data.  Data availability and analysis tool innovations will alter the risk-prediction landscape once the carriers’ openness to change and available innovations synch.  The smart folks at Intellect SEEC are also setting the foundation for the next method of underwriting through aggregation and analysis of hundreds of billions of indicative data.

Will an unexpected outcome of fraud detection technology also result in reduction of what might be called ‘admin friction’ in the health insurance industry?  We didn’t fully flesh out the conversation but Shift Technology’s UK Sales Director, Jeff Manricks agrees that Shift’s fraud tools very well may benefit users in resulting enhanced efficiency through application of fraud analysis, and intuitively one might agree- fraud develops on the edges of inefficiency and taking advantage of holes in process and detection of fraud may detect those improvement opportunities.

How to ‘prime the pump’ for innovation efforts?  There are plenty of existing options (InsTech London, Plug N Play, accelerators like GIA, MBRIF Accelerator, Hartford InsurTechHub, or Digital Insurance LatAm), and newer initiatives like the Zurich Innovation Championship (ZIC).

The Zurich Innovation Championship is somewhat unique in that it is a global contest that provides startups opportunities to work with a global insurer to grow their business.  There are fine global innovation contests, e.g., Hugh Terry’s Digital Livefest; ZIC is differentiated in that there are winners, but there are also mentoring opportunities through the judging period, and Zurich has experienced internal changes from the effort that have fostered “a one of a kind innovation spirit across the company.”

Whether it was the expectation of the firm’s Group Head of Strategy, Giovanni Giuliani, or an unexpected additional benefit, the firm is pleased with the program’s success, including the progress of contest winners including Chisel AI and zesty aiMark Budd of Zurich UK has been working directly with several finalists, including Shepherd (working on property IoT applications.)  Shepherd’s CEO, Stephen Chadwick, considers the utility of the contest this way:

“Getting involved in the Innovation World Championships and our continued pilot with Zurich has allowed us to talk to other insurers and businesses in different sectors.  It’s almost served as a springboard allowing us to reach out to a broader audience about what we do. “ 

An incumbent carrier collaborating and mentoring an innovation company that has their eye on improving risk detection by customers?  That sounds like how the future of insurance will be.

Funding Xchange lands major round, sets sights on white label

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia.

Do one thing and do it well. It’s a mantra that has quite possible served UK fintech Funding Xchange well. This week the SME lending marketplace announced it had secured a fresh round of funding, banking €9.3 million in a round led by Downing Ventures and Gresham House Ventures.

The company, led by co-founder and CEO Katrin Herrling, has built a platform that allows businesses to receive personalized funding quotes in minutes from its panel of over 45 lenders. It’s a lesson in power of APIs, and how they continue to transform financial services for businesses and consumers alike.

Take FundingXchange’s integration with notable SME fintech lender iwoca as an example. By integrating with iwoca’s API suite, actionable and real-time loan decisions are able to be delivered to small businesses on the FundingXchange platform, within 30 seconds. If the business then chooses to accept this loan, it’s just the digital equivalent of a hop, skip and a jump over to iwoca, where they can proceed to draw down the funds.

This is a financial marketplace that is more than just a lead generation platform for SME lenders. This is fundamentally changing the go-to-market strategy of a fintech lender. Yes, direct acquisition will always play a role, but API enabled acquisition is incredibly powerful. Be where they eyeballs are, rather than try to divert a potential customers attention. That is the new mantra of API enabled businesses who embed this thinking not just in how they build the underlying data collection that powers credit models, but in how they market and sell their products.

Aside from innovative integrations like this one, FundingXchange plans on rolling out a white label offering, which streamlines key steps in the underwriting process for other banks and lenders.

But why stop there? The ultimate end point of all of this, surely, is the removal of any concept of ‘applying to the bank or lender’ by a small business, when it seeks financing terms from a supplier. At-the-point-of-sale finance, enabled by API integrations between lenders and cloud accounting platforms, should eventually abstract this concept altogether. Instead, when I buy something and I want financing, I should receive the best terms available, embedded in my invoice, and sourced from a panel of lenders, similar to FundingXchange.

The API economy is an egoless economy, where integration and ease for the end user have the power to beat brand names. That’s today’s game.

Gamification via a Fintech ecosystem wins a UN Global Climate Action Award

A 3yr old Corporate Social Responsibility – CSR – initiative that took a life of its own, has resulted in a 2019 UN Global Climate Action Award for Alipay AntForest App.

A great example of gamification and network effects on an ecosystem like Alibaba. At launch, it was one of the many charity projects that were planning to collaborate with Chinese NGOs to plant trees and contribute towards creating the Great Green Wall to block the advancement of the Gobi desert.

China has been facing a huge problem from the northeast, as the desert has been growing and as China has very little land that is arable[1] (only 12%). Sandstorms in Beijing have become more frequent.

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.

In 2016 Ant Financial launched a charity app, AntForest, for Alipay users. People could choose from a list of low-carbon activities like, using public transportation and bikes, recycling, reducing plastic usage, and more; and earn `green energy points`. These points could be used to buy virtual seeds to plant trees, and once these virtual seeds had grown a bit, through virtual caring (watering etc), then an actual tree would be planted in some desert.


AntForest users, could watch their actual trees grow through satellite images. One salix mongolica in Kubuqi desert, a sea-buckthorn in Tongliao,  two alxa in Inner Mongolia etc. have been planted by Jessie-Chee. She watches them and is very proud of them. She competes with other friends who have more trees than she has.


AntForest gaming features and visuals have created a virtual social network that Alipay did not have before (unlike WEchat). In September, it was reported that AntForest and the Chinese NGOs that support the actual planting of the trees, have planted 122 million trees and the social network has grown to 500million users! The trees cover an area of 112,000 hectares, making the AntForest initiative the largest private-sector tree-planting initiative.

AntForest users living close to the borders with the desert have also been involved in planting the trees, changing lifestyles dramatically to earn energy points and feeling part of a virtual community with strong purposeful ties.

Alibaba is now using its ecosystem to extend the appeal of AntForest.

Its new retail concept store, Hema Fresh[2], offers customers 21 green energy points when they shop without any plastic bags. Hema fresh, not only has high-quality food and online ordering and delivery but also a next-level integrated smartphone experience. This includes complete product information by scanning QR codes of product labels, automated check out via RFID and payment via Alipay.

Alibaba`s second-hand trading platform, Idle Fish, rewards users recycling their old items with green energy points.

Alibaba`s Dingtalk, a chat and collaboration app for video conferencing also awards green energy points, for users that avoid commuting for in-person meetings.

AntForest has inspired and provided knowledge to GCash in the Phillipines to launch GCash Forest this past summer with the goal to 365 thousand trees in 365 days. Gcash[3] is the top mobile banking app in the Phillipines with 5million downloads and 20million users.




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