Cyber Risk Insurance translates Nerd-Speak to Boardroom-Speak


Cyber Risks Extra Extra

Reposted, as it is Chinese New Year for Zarc Gin, our regular Insurtech Expert based in China.

Why do Banks exist? That is not some deep, philosophical question about the role of money in society. Banks exist to protect your assets from thieves. Because they do a good job of this, they can make a lot of money lending some multiple of what they store in the vaults. The only difference now is that the modern version of Butch Cassidy and the Sundance Kid are getting monitor tans as they cyber-attack the vaults from their computers.

Money is one asset to protect. Data is another. So is data about assets. In the digital age, it is all about data. And data is easy to steal.

All the good things that we write about on Daily Fintech – all that agility/productivity enabled by data and connectivity – also benefit Butch Cassidy and the Sundance Kid.

Cyber Risk is one nerdy subject that gets Board level attention because the risk is so high. Global 2000 companies can lose $ billions from a single hack. The problem is that cyber security is also an intensely complex subject technically.

One reason that so many influential leaders subscribe to Daily Fintech is that we are good at translating Fin to Tech and Tech to Fin. So we are attracted to the challenge of translating Cyber Security Nerd-Speak to Boardroom-Speak. It is one of the toughest translation jobs around. Even with a lot of technical experience, Cyber Security can be daunting. Even with a lot of business experience, understanding how a Global 2000 Board thinks can be daunting. Both are tough on their own. Translating between the two is even tougher, because they could not be further apart.

That translation, though hard, is ultra-critical. The Board has to really understand Cyber Security and they are currently failing at this task. This article on LeadingBoards describes the problem very well

Cyber Security technology = big budgets & bigger risk

The global cybersecurity market reached $75 billion in 2015 and is expected to hit $170 billion in 2020 (source, Forbes).

This is one market where the “you never get fired for buying (insert Big Tech vendor)” mantra breaks down. In most other enterprise technology markets, the big vendors tend to win because the Boardroom does not really care who is picked. So the senior IT managers making the decision go for the vendor that is competent enough to do the job and big enough that if it all goes wrong they can say “but all our well-respected peers made the same decision”.

That defence breaks down in Cyber Security because the risk is so high. Nor can a Board simply say “the CISO who made the decision has already been fired”. The Board has to take direct responsibility. Which means the Board has to understand Cyber Security.

How is the Board supposed to understand something as nerdy as Cyber Security?

We take a lot of briefings on cyber security technology, because we know how important it is. Listening to all these super-smart tech guys explaining the latest cyber security teaches us that a) it is hugely complex and b) there is no silver bullet.

We use a simple mental map that translates Cyber Security to the analog world:

  • Perimeter Security is where most money is spent. Think fences, guards, dogs. The fundamental problem is that somebody will always get through. The bad guys also benefit from Moore’s Law and can use SMAC (Social Mobile Analytics Cloud) to collaborate and share (what has been dubbed Crime As A Service). You can be the biggest bank or the biggest government and you still get hacked.
  • Digital ID. Think body part scanners (finger, eye, voice etc) that determine who can get into the building. We have written a lot about Digital ID technology and it is improving at a remarkable pace. The problem is collusion with a trusted inside-person who is part of the crime gang; the person with perfect Digital ID is a criminal.
  • Protect from the inside. This assumes that both Perimeter Security and Digital ID is imperfect. One way to protect from the inside is process controls (for example needing more than one person to send a wire). This also suffers from the collusion problem, but it is better as it is harder for criminals to corrupt the two individuals in a process. Another way is to write code that is secure. The problem is that both better process and better code hit the agility/efficiency problem. Banks have to move fast and efficiently to beat competition AND be secure. One alone is not enough. For example, Banks want to use high level languages and tools that enable rapid time to market even if that means the developers are not thinking much about security.
  • Protect when data leaves the vault. This assumes that all three methods above will fail. The analogy here is marked banknotes used in a kidnap ransom. Again, the bad guys have very sophisticated technology to get rid of these markings, so this is yet another arms race.

If you cannot measure it, you cannot manage it

That is one of the oldest truisms of business. If you listen to the pitches of any Cyber Security vendor, you will hear that they have the solution. The problem – as any reasonable attentive business person can observe – is that even companies with all this smart technology still get hacked. The empirical evidence is that there is no silver bullet.

Insurance has historically worked on statistical models. This works fine – until it no longer works. When something fundamental changes, the models become deeply flawed. We have tracked this as it relates to catastrophes created by climate. The use of data and connectivity by cyber-criminals is analogous. The risk went up in unpredictable ways. It is no longer good enough to rely on historical models. Cyber Risk is like Climate Risk – the historical models do not predict the future accurately enough.

What companies want is something as simple as a cyber security safety rating. Insurance Companies have the right motivation to give an honest rating (unlike credit rating agencies that are paid by the seller). Insurance Companies won’t award a AAA cyber security safety rating to a BBB company, because they will pay in claims for getting it wrong.

That means Insurance Companies need to turn into cyber security experts. A tech vendor may say “we have the secret sauce” to change your rating from BBB to AAA and thus lower your premiums. The Board will say “sure, if you can convince our Insurance Company that this will lower our premiums, we have a deal.”

Startups in this risk metrics space include CyenceBitSight and Security Scorecard.

Cyber Risk Insurance is a data game and that is a problem

Cyber Risk is one of the fastest growing parts  of the Insurance market, accounting for over $3 billion in premiums.

Banks are in better shape than others. Protecting against thieves has been a core competency for longer.

Cyber Risk Insurance people differentiate between Micro and Macro. The latter is the news-worthy hacking between governments (cue image of the nerdy young Q in recent James Bond movies). Our concern is the more boring Micro Cyber Risk Insurance – exciting enough as this is about whether huge companies can lose $ billions from a single hack. The Micro could become the Macro if a number of Micro hacks led to a crisis of confidence in the financial system akin to September 2008.

Talking to experts in this relatively new field it is hard to get a lot of on the record quotes. That indicates a market that is nascent enough that the solutions are not obvious. To entrepreneurs that signals opportunity.

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

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Fintech India boosted as Blockchain Consortium for SME lending kicks off

Fintech India saw a boost in 2018 with over 132 investments in startups, with a large proportion of them going into Lending and Insurance. The total investment was about $2 Billion as of Nov 2018. Sequioa, Omidyar, and Kalahari capital were the top investors in the sector.

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The New Year opened with a bang as 11 Indian banks have now come together to form a Blockchain consortium to address the under served SME lending market.

The rise of India Fintech in comparison with the likes of China, is still dwarfed. However, the policy makers have provided ample support to the innovation ecosystem to thrive. Initiatives such as NPCI (National Payments Council of India), Digital India Programme have helped.

The Reserve Bank of India (RBI) has approved 11 fintech firms
who could now be payment banks that offer deposit, savings, and remittance services. Unified Payments Interface (UPI) has been the bedrock of the digital payments boom in the country.

You are probably thinking – too many TLAs (Three Letter Acronyms), but the impact of all these measures on digital payments and lending in the country has been significant.

Inspite of all this, the SME lending market in India has been particularly challenging. SMEs in the country relied on a complicated supply chain that was broken and lacked transparency. A Blockchain network would provide lenders with public credit data, that they could use for their underwriting decisions.

The Micro SME lending market is about 17.3% of the overall corporate lending market in India. And after the recent IL FS scam, the corporate lending market needed a boost to tap into the under served SME sector. The 11 banks involved in the Blockchain consortium would first reach out to supply chain vendors and get their records digitsed.

The consortium includes names like ICICI, AXIS and State Bank of India, who together make up a big proportion of the lending market. Getting them all on a single network along with digitised supply chain information, should allow them to make near real time lending decisions to Micro SMEs.

Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email

Financial Inclusion Party – Top 7 startups to follow


Appa, have you finished saying “this is good about you, this is bad about you” is how my 5 year old enquires about my VC job. I am sure there will soon be a time when I explain to her that its not quite as binary as that.

The next generation of entrepreneurs really have it in them to rebuild the world, and they really care about and believe in what I often call Inclusive Capitalism. I love my job because it gives me a sneak peek into the future, and gives me an opportunity to be part of the transition.

The journey of the past three months with Crowdcube, Deloitte and Linklaters through the Thrive for Fintech programme has been a great learning experience. The last couple of months have made me love my job even more!!

To quickly put the programme in numbers – we (Green Shores Capital), set out to invest upto £500k in Financial Inclusion firms, spread over 2-3 firms, in partnership with Crowdcube, Deloitte and Linklaters. The programme was announced in early December.

More than 70 companies wanted to apply for the programme. Just over 50 applications were accepted. Green Shores team then spent time with these firms to choose 7 for the final pitching event. The final pitch happened yesterday. It was amazing to see a diverse mix of Entrepreneurs, from London, Bristol, Edinburgh, Israel and Haiti come together.

It felt more like a celebration of Financial Inclusion, than a pitching event

These were the firms and their themes

Stork Card – A firm focused on young parents, who have just stepped into the expensive yet rewarding journey of parenting. They provide proactive financial services, and other childcare benefits through data analytics. Their go-to-market is interesting, as they partner with corporates to provide Stork card services to their employees. This helps employee retention, especially through the child birth and early years of parenting. I just could relate to their story straight away!!

Tickr – A startup that offers impact investing through a robo advisory angle. Impact investing has been largely an institutional play all these years. Tickr have two asset managers who have come together to bring institutional quality investment opportunities to the retail audience. They also narrate the impact that investors have made through their investments in different parts of the world.

Tumelo – Tumelo are also a robo advisor for retail investors to access impact investing. They take a different approach to their business model, where they call the robo advisory capability as just a means to an end. Through partnerships they have cracked with top NGOs and charities, they also want to allow retail investors to have a voice in the board room of top corporates.

I must stress this, and I don’t intend to give any team special treatment here.

It was so much fun talking to Tom @ Tickr and Georgia @ Tumelo. Both are trying to solve similar problems, but have a whole different approach to it. It is going to be super exciting to follow them through the next few months and years.

Confirmu Confirmu use psycho analytics and AI to the credit scoring world. They have a proprietary chat system, which is part of their customer onboarding process. When an individual, who doesn’t have a credit file wants to borrow, often the request is rejected because the lender doesn’t have a clue on whether he/she intends to repay. The chat process includes questions, pictures, emojis and voice recognition in 5 languages, and gives a score on the borrower, that will help the lender make a decision. Special thanks to Yatir @ Confirmu for traveling from Israel to meet us and for the event.

ITI Group : ITI Group was founded by a group of bankers who feel there weren’t a good reliable retirement plan. They also feel strongly about onboarding people into the habit of saving very early in their lives. They have a debit card solution, which will yet again be a means to an end, and a clever go-to-market, with some exclusive partnerships to onboard customers. However, the retirements plan they offer is differentiated from the crowd, and when the two capabilities (retail end and retirement fund end) are put together, they are a compelling use case.

Money DashboardMoney Dashboard to most UK Fintech followers need no introduction. They are the top UK personal finance management app, and they have won awards and accolades for their work in this space many times. So whats so special? Closing in on 100,000 customers onboarded, data richness, and a very decent annual recurring revenue. I am not going to say more here, I will let you do your research.

AgriledgerLast but in no way the least, Agriledger are providing economic identities, and supply chain finance options to Farmers across the world, using Distributed Ledger technology. Through their solution, they bring transparency to the food supply chain, and in the process making sure, the farmer is the owner of the food, and the end consumer buying the product has complete transparency of the journey and quality of the food. They have already got a contract with the World Bank to deploy the product in Haiti.

With so many exciting and varied use cases, we now have the enviable job of getting to the decision of where to invest. Watch this space!!

Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email

Blockchain Front Page: Anonymous transactions in Bitcoin


Last week our theme was “Bitcoin Whales, Bulls & Bears Heading to zero? Or heading to $1 million? Your call”

Our theme for this week is “Anonymous transactions in Bitcoin

Are transactions made through Bitcoin really anonymous?

When one person sends Bitcoin to another person, their identities are not needed to complete the transaction. They do not need to share with each other, their names, addresses or phone numbers.

It sounds pretty anonymous, right?

A cryptocurrency transaction has three parts: the sender’s address, the receiver’s address, and the amount being sent. For Bitcoin, all three are public. For any transaction, we can see address of the sender, receiver and value of the transaction. Now, since every Bitcoin transaction is recorded on Bitcoin’s public ledger, anyone can view any Bitcoin wallet and transaction.

Bitcoin is neither confidential or anonymous.

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Bitcoin is pseudonymous, because each user has a public address that can be traced back to an IP address or exchange account.

There are many ways to link a wallet address, someone’s identity. Some people share their wallet address online. If an address is used on an exchange, that implements KYC (“Know Your Customer”), the address can be linked to a person’s real-world identity. Merchants you pay can make the connection.

As usage grows and more transactions are recorded on blockchain, a massive public map is being stored, which is accessible by anyone. With the right tools, transactions can be placed under a microscope to give us a very clear picture of how Bitcoins are moving. This poses a huge privacy concern.

Companies like Chainalysis and Elliptic have developed software to analyze blockchain transactions. To link transactions to real identities, they use online and public information. Chainalysis’s most famous work was helping the FBI identify two agents, that were stealing Bitcoins from the wallet of Silk Road, an online drug marketplace.

Blockchain analysis software, goes far beyond just catching criminals. As more investors enter the market, blockchain analysis software can help banks and other financial institutions comply with KYC/AML, or monitor market trends. Increased Bitcoin trading in countries around the world, could mean pressure on national fiat currencies. This kind of information could provide insights to investors, long before official statements are public.

While, Bitcoin does not offer anonymous transactions, concerns about privacy have increased and so have the prices for some cryptocurrencies that offer anonymous transactions. Monero started last year at $12, reaching $136 in August. Zcash in  January was at $10, and in June it reached $376.

Currently, there are several efforts (TumbleBit, Chaumian CoinJoin and ZeroLink, Schnorr Signatures for CoinJoin, STONEWALL etc.) underway to increase Bitcoin’s privacy, the most prominent being “Confidential Transactions”.

Confidential Transactions (CT) provide a way to protect transaction values, so they are only visible to the people involved in the transaction. Everyone else only sees that Bitcoins are transacted, but not know how many. While, CT improves privacy by preventing others from viewing your account balance and transaction amounts, it not a silver bullet for privacy. Confidential Transactions masks amounts, but you can still see who is paying who.

Is it possible to be anonymous?

There are number services that let you buy Bitcoin with KYC.

BitQuick acts as an escrow for Bitcoin transactions via cash deposits at thousands of banks across the US. The seller deposits the Bitcoins at BitQuick. Once the buyer deposits the cash into the seller’s account the coins are released. A mobile phone number is needed for this process but no id verification is required. Unlike an photo ID a mobile phone number can be easily purchased with an anonymous email via Skype for example. You could also use Bisq to buy and sell Bitcoin, without AML/KYC. Bisq is a decentralized peer to peer Bitcoin exchange that lets you buy/sell Bitcoin with a variety of payment methods.

There are ways to stay anonymous. Bitcoin used together with the TOR network, allows anyone to pay anonymously for digital goods. In combination with Tor, anyone can get additional protection and encryption, using Tails, Bitcoin tumblers, and mixers. Also, technologies like Dark Wallet go even further. It uses a technique called CoinJoin: Every time a user spends Bitcoins, the transaction is combined with that of another user, chosen at random, who’s making a payment around the same time.

If I had to make some suggestions, here four rules of thumb:

1. Always try to use cash: If you’re want to buy and sell Bitcoins anonymously, the most private way would is in cash and in person. You can use services like LocalBitcoins to find someone who is willing to sell Bitcoins for cash close to your location. Another way to buy Bitcoins anonymously with cash, is to go to your nearest Bitcoin ATM and buy Bitcoins from the ATM using cash.

2. Never reuse Bitcoin addresses: Use a new Bitcoin address for every single payment you receive, and never send money twice to the same exact Bitcoin address. Re-using a Bitcoin address is a massive privacy and security risk. Fortunately, many of the newer wallets can generate an unlimited number of public addresses, from a single seed.

3. Never use SPV and hosted Wallets: Almost all SPV wallets (also known as thin clients) leak which addresses you own to whatever SPV server they connect to. SPV wallets do not store the blockchain locally. Instead, they query a single SPV server for the transactions that involve the addresses in your wallet. While this functionality is far more efficient and fast than parsing the blockchain locally, the trade-off is that every Bitcoin address you own is submitted to the SPV server.

4. Use an anonymity network or VPN like Torguard: Always connect to the internet through a privacy network like those listed above or a VPN and use a privacy optimized version of Firefox, or the Tor browser.

A lack of privacy is a problem. Bitcoin anonymity is an uphill battle. All transactions are permanently etched in a transparent ledger. Being anonymous requires expertise and effort. For most users hiding their financial records from the government, will be impossible, but the vast majority of users might not necessarily want the world to know where they spend their money, what they earn or how much they own. For now its our responsibility to adopt good practices in order to protect our privacy.

For more about the Front Page Weekly CXO Briefing, please click here.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

Blockchain Weekly Front Page: Governments Love Blockchain


Last week our theme was “Coinbase IPO…waiting for the bull

Our theme for this week is “Governments Love Blockchain

In September, Nikos Kostopoulos, Secretary for Scientific Organizations at New Democracy, the main opposition party in Greece, invited me to speak during the Thessaloniki International Fair about how governments around the world are using blockchain to improve the lives of their citizens.

As the new year starts, I thought it would be good to touch up on this topic again. Blockchain’s incredible potential has become increasingly evident to governments worldwide.

We live in a world where centralization powers society. This includes banks, schools, health and so on. Blockchain has hit the world with force, bringing changes in almost everything out there. However, Bitcoin has been the catalyst for the growth of blockchain. Bitcoin’s price has skyrocketed from just $1000 in early 2017 to $19,000 in December of the same year. While prices in 2018 have dropped more than 80%, with Bitcoin hovering today around $3,800, over the last year the number of crypto users has almost doubled reaching 35 million people and on the commercial side we have things in the pipeline like Bakkt, the SEC decision on a crypto ETF, Facebook getting in the crypto game and so many other developments.

PricewaterhouseCoopers (PwC) reported that many of its customers are spending “big money” on blockchain, and that spending will keep growing, as it is expected to reach $1.7 billion this year. WCA100818-1.jpg

Many governments around the world have a love and hate relationship with cryptocurrency and blockchain. On one hand they show their love for blockchain and how they can use it, and on the other they take actions to prohibit or even ban the use of cryptocurrencies.

The best way to describe blockchain: A shared, decentralized, secure, immutable digital ledger. Blockchain lets a group of people, that are complete strangers, agree on the state of transactions and build trust.

A map published on March 2018 by the Observatory of Public Sector Innovation (OPSI), shows there are currently at least 202 government blockchain initiatives in 45 countries around the world.

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The blockchain supporters, love it because it cannot be tampered with or changed because of its decentralized nature. The practical applications are limitless.

Earlier this December, Swisscom and Swiss Post, the Swiss national telecom and postal service, announced the launch of a 100% Swiss infrastructure on blockchain technology. The aim of the initiative is to provide end-to-end blockchain related services to Swiss citizens and companies.

The Dubai Blockchain Strategy initiative, a collaboration between the Smart Dubai Office and the Dubai Future Foundation, is almost ready to implement 20 different blockchain based services. The aim is to create a paperless government, where 100 million documents currently processed each year, including visa applications, land deeds, receipts, license renewals, and voting ballots, all become electronic. Smart Dubai estimates, that almost $1.5 billion, will be saved just from document processing alone.

Blockchain has the power to disrupt and strongly reorganize accounting and the way tax collections are processed. With smart contracts, escrow conditions can be built to divert payments automatically and in real-time, without back office costs. In June 2018, Georgia, announced the government was going to explore how to use blockchain to administer all taxes. The new the tax system could reduce double payments, map payments and refunds to individual and businesses, ensure accurate tracking mechanisms, and ease the administrative burden. Last month in the United States, Ohio became the first state to accept Bitcoin for tax payments.

Over the years, the legitimacy of the voting process has been under scrutiny with reports about tampering and manipulation of election results. Countries like the United States, Germany, Russia, and China have had incidents. For this year’s upcoming elections in Greece, think of voters casting theirs votes directly from their smartphone and because of blockchain the process and results becoming transparent and immediately verifiable.

Estonia the small Baltic nation of 1.3 million people, is the first country in the world to adopt blockchain technology in 2008, with their e-residency program. Estonia utilized the distributed ledger technology to create their own identity system, improving citizen satisfaction and substantially reducing bureaucracy. In the last three years, with its e-residency program, Estonia has offered foreign entrepreneurs the freedom to easily start and run a global business in the country, opening its doors to 23,000 people from 138 countries that signed up to the program.

Ghana is building a blockchain-based land administration platform. With its current inadequate centralized system, based on paper records, its impossible for property to be used as a collateral on transactions made by banks. Using blockchain will allow Ghana to modernize its technology and organization, creating immutable land records that are easily verifiable.

Blockchain’s potential to build trust and transparency, support data protection and privacy has been well established. In countries where corruption and inefficiencies rule, blockchain has the potential to restore faith in government. Blockchain technology can make management and regulation immutable and instantaneous. We can move from a paper-based, delayed-reporting reality, to one that is dynamic and real-time.

For more about the Front Page Weekly CXO Briefing, please click here.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

The Taxman and Innovation – How UK and India compare

UK and India have consistently managed a top 5 ranking when startup ecosystems are compared. India VC investments were at $7.3 Billion in 2017, and UK received $8 Billion investments with $40 Billion worth of exits in 2018. However, their approach to tax policies supporting startup funding have been very different.

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The startup ecosystem in India received a new shock wave in the form of Tax policies. The taxman sent a bunch of notices to several startups to pay up what is called “Angel Tax” on funds received from Angel investors. The tax would be on the premium in valuation that the firm received from its investors.

This has caused a lot of noise in the local press, with big names like Anand Mahindra (who is also an Angel investor) asking the government to intervene. However, several factors come to mind around this issue.

  • The valuations of startups in India have been generally on the higher side. Startups who receive premium valuations in their early stages of funding, often find it hard to justify the valuations at a later stage. This is one of the factors that creates the funding gap.
  • Startup valuations aside, if the tax man decides to calculate a tax on the premium valuation – there should be a clear valuation methodology published for startups to understand their tax liability when they go for funding.
  • In a fast paced innovation ecosystem where at times abstracts such as quality of team, potential market, intellectual property (not so abstract), first mover advantage etc., decide valuation premiums – the government cannot come up with a comprehensive baseline valuation framework.

 “It needs immediate attention or else all chances of building a rival to Silicon Valley in India will be lost,”

– Anand Mahindra

Without the level of clarity described in the above points, it will be hard for startups to know where they stand. Any tax slapped on them without a comprehensive framework will see an uproar from both startups and investors.

At the Singapore Fintech Festival, when Narendra Modi gave a keynote speech, he referred to the Fintech ecosystem in India and its achievements. However, there seems to be a disconnect between his vision and policy execution.

On the other hand, UK have implemented the Enterprise Investment Scheme and the Seed Enterprise Investment Scheme as tax benefits for investors investing into early stage firms. The HMRC website should give details. But these are the key aspects of the schemes.

  • Investors get a refund (from previously paid tax) of upto 50% of their investment into startups.
  • If the investment is held for more than 3 years, there is no capital gains tax when profits are realised
  • If the investment goes bad, investors can claim refunds (from previously paid taxes) for upto 70% of their investment.

Thanks to these schemes, the early stage investment space in the UK is in pretty good shape. Often times these schemes are carried into Series A rounds by investors. Many funds use special structures to operate in compliance with these schemes.

Tax schemes supporting the innovation ecosystem often provide the much needed traction for startups looking for finance. But they have to be executed through well thought through operational steps to be effective. UK has certainly got it right for early stage backers. India has some work to do.

Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email

Insurtech Front Page Weekly CXO Briefing – Prospect, a preview for 2019


The Theme last week was a review for InsurTech in 2018.

The Theme this week, at the beginning of 2019 is Prospect, a preview for 2019. What trends have the potential to impact future market? Which startups should you pay attention to? Let’s find out.

For more about the Front Page Weekly CXO Briefing, please click here.

Incumbents embracing InsurTech is a common theme in our posts. This time, it’s about customer engagement.

Story 1: 10 insurtech predictions for 2019: XL Innovate

Extract, read more on Digital Insurance:

“XL Innovate are watching all of the InsurTech developments and trends closely and expect to see a number of exciting changes occur in 2019. Here are 10 predictions for the coming year.”

Predictions include tech giants’ potential expansion in InsurTech, technologies like AI and blockchain going different directions, influences InsurTech gradually imposing on insurance etc.

Story 2: 10 insurtech start-ups to watch out for in 2019

Extract, read more on Bobs Guide:

“The global insurance market has remained more or less untouched by philosophical shifts for decades. Yet thanks to a flurry of recent tech innovations, an influx of investment from venture capitalists and sky-high demand for bigger, better and faster insurance products, the sector is now engulfed in a proverbial evolution.

That evolution has been driven largely by a fresh crop of insurtech start-ups racing to leverage a variety of blockchain technologies, machine learning techniques and revolutionary product lines in order to squeeze out savings that can be subsequently passed on to customers and create an ecosystem of more efficient insurers.”

Well-known names like Lemonade and Metromile are included in the list as well as relatively new ones such as CyStellar and Ins For Renascence.

Story 3: 5 Insurtech Questions for 2019

Extract, read more on Medium blog:

“The return of investment market volatility could make 2019 a year when what life and annuity issuers really want out of information technology is stability.

When the environment is calm, insurers may dream of fancy tech worlds of tomorrow.

When the ground is rolling like waves on the ocean, insurers may cling to any tech systems that can help them stay upright as banks, securities brokers, asset managers, and poorly anchored insurers blow past.”

The questions have been repeatedly asked since the emergence of InsurTech. Answers varied from different insurers and startups. You didn’t thrive because you made the right answer, you know the answer is right because you thrived.

Once again, it’s time to set yearly goals. Do you still remember your goal one year ago? Set your goals, share with us, consult us, let DailyFintech help you see the future more clearly and achieve your goals!


Zarc Gin is an analyst for Warp Speed Fintech, a Fintech, especially InsurTech-focused Venture Capital based in China.

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

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

Blockchain my heart – Q4 of 2018


Time Stamp this past October! It was a decade since the Halloween white paper titled ““Bitcoin: A Peer-to-Peer Electronic Cash System” was sent to a mailing list of the few select cryptographers.

#AndTheIronyIs that the Nakamoto groundbreaking technology is being championed by banks as a way to radically improve the financial system. #AndTheIronyIs that this out of the UBS Blockchain site.

#AndTheIronyIs that Wall Street is working hard on structuring new derivative products (a business they know all to well) for crypto assets. Morgan Stanley and Goldman Sachs were the first to clear the Bitcoin futures for CBOE and CME. MorganStanley now plans to offer a Bitcoin swap trading product.

#AndTheIronyIs that my top October Tweet by all metrics was Screen Shot 2018-12-21 at 7.20.17 AM.png

At the Swiss Women Blockchain breakfast panel discussion, I shared my passion for Blockchain use cases in Financial inclusion. This is the reason I worked with Arun Krishnamkumar to launch a thematic podcast series on this exact topic. Listen to guests from Wala project in Africa, Stellar protocol, the Agentic Group in NY and more.

In Europe there is no consensus on the definition of a Security. Europe has MIFID, without a standard definition of a Security. The European Parliament supported the Blockchain Resolution, which presents regulatory principles that are Technology neutral, Business-model neutral, and pro-Innovation. The main principle behind the Blockchain Resolution is Disintermediation Economics that build Trust. Read details In the EU Blockchain Resolution we Trust.

This quarter I participated in three Blockchain conferences and several blockchain meetups. My talk in Athens at Decentralized is online:  “Unlocking value in Fintech: The Blockchain deity at work”.

Noteworthy news from my clients:

EquibitGroup, a P2P capital markets infrastructure, moved its headquarters from Toronto Canada, to Zug and was already listed as an upcoming challenger in the Swiss Crypto ecosystem of 400 companies (report presented at the CryptoSummit).

Desico, a fully compliant way to issue a Security token out of Lithuania, successfully raised 1million from the crowd through a Revenue Sharing Note (with an ISIN number allocated by Nasdaq CSD: LTM 000010008).

LCX, the early stage institutional grade exchange out of Liechtenstein, launched the Blockchain LCX event series. Dr. Zhang and Don Tapscott were two distinguished guests that gave talks and I had the pleasure to moderate a discussion thereafter. Watch here.

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

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The No-deal Brexit Shock and Fintech, who is the winner?

“Its going to be a No-deal Brexit.”

“No-deal could be damage control”

“May might have left it too late.”

“It could be a managed explosion”

Image Source

And the headlines keep coming. There is some serious soul searching that the country and its leaders need to do after/if this saga comes to an end. An interesting article in The Guardian articulates with pictures, the catastrophe that is waiting to happen if a deal wasn’t reached.

While the nation’s and the region’s future, along with the livelihoods of people are at stake, today we focus on what it means to Fintech.

There was a time, not too long ago, when I felt that pragmatism would prevail through the Brexit deal making process. If that had indeed happened, London could have very well maintained its lead as the Global Fintech Hub. Yet again, mankind has proven to be less rational than I hoped.

I felt there were several factors that helped the City of London maintain its lead in Fintech.

  • A matured and a fundamentally strong Financial Services industry
  • A strong in-flow of skills from UK and Europe
  • The English language
  • Time Zone
  • A innovation friendly regulatory regime, thanks to the FCA

With the Brexit plans in motion, there was a stress test exercise conducted across UK’s high street banks and the scenario involved key three risk factors,

  1. 4.7% decline in UK GDP,
  2. 33% fall in house prices and
  3. 27% decline in the value of pound sterling

No surprises there, banks passed the stress tests. So the incumbents are prepared. However, as a precautionary measure many high street banks, asset managers and Fintechs have set up shop in Ireland. Thanks to Brexit, Ireland now has over 400 Financial Services firms, and over 100 firms queued up for regulatory approvals to use Ireland as their location to passport services to Europe.

Just looking at the above factors, Ireland shares many of the regional and language benefits that London benefits from. And with an attractive corporation tax of 12.5%, its going to be challenging UK’s might in attracting top Fintech entrepreneurs.

All the above factors are working in Ireland’s favour and it has most of the key ingredients to attract Fintechs if a No-Deal Brexit happened. Top FS players setting shop, a conducive environment for entrepreneurs, regional and language advantage.

The UK’s FCA is clearly struggling to cope with the uncertainties that the political landscape is throwing at them, there is a lack of clarity on how several regulatory aspects will be treated post Brexit – with a deal or no-deal.

From payments to passporting, from transaction reporting to fund management, the regulatory guideline is

KEEP CALM AND CARRY ON, and stay tuned for more updates.

With the EU and UK fighting hard, and with the uncertainty this has caused in the business landscape, Ireland may well be the winner, when it comes to Fintech.

Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

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Aussie fintech Douugh rises up to the algo challenge

Most of us consciously know there are certain environmental or external triggers that cause us to spend more and save less. If you’re me, you never go to the supermarket hungry – very strange purchases can happen.

What most people don’t realise, is that as we live more and more of our lives online, we are increasingly vulnerable to algorithms designed to part us with our money by amplifying those very same triggers sub-consciously.

For those of us who are aware, we’ve noticed some seriously creepy behaviour of late. Put your hand up if recently you’ve experienced seeing an online ad for something you hand over heart are sure you’ve only ever thought about silently in your head?

Now faced with seemingly telepathic algos, not to mention the standard bread and butter stuff, it’s starting to get pretty ridiculous to expect me, or anyone for that matter, with one brain at their disposal, to manage their finances. You and I can’t possibly compete.

The first generation of PFM apps did try to provide a line of defence. But spend categorisation and budgeting is now akin to bringing a knife to a gun fight. It’s time for the bots to fight it out.

Australian startup Douugh is one fintech startup taking on the challenge. Douugh’s AI powered personal financial assistant Sophie wants to one day become a ‘financial control centre’ for its users. To put financial management on ‘autopilot’. Considering most of our online spending is being driven by Facebook and Google’s ‘autopilot’ algorithms, the concept of Sophie certainly feels like it will even the playing field.

This week Douugh announced it had secured a partnership with Mastercard. The news comes as the local startup revs up its pre-IPO crowdfunding campaign, with listing plans slated for 2019, subject to approvals. The company will launch first in the US, through a partnership with mutual bank Choice.

Apps like Douugh are the antidotes we need to cure the spending behaviours we don’t even know are being triggered. Who knows – maybe we’ll be able to diagnose financial diseases in the future, and some of these algorithms will be viewed akin to the tobacco industry. It certainly is a brave new world.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.