2018 Year-end review through 3 distinctions


In my first Daily Fintech post[1] of 2018, I wrote about Vitalik who “sounded the alarm on Twitter as he has become deeply concerned about all crypto communities getting lost in a pile of monetary gains instead of being ambassadors of a radical, positive and purposeful societal change.” (BTC/USD around 14k).

12 months later there is no FOMO left in the crypto markets. Decentralization has taken a regulatory hit in more than one ways. From exchanges being forced to shut down or find an accommodating jurisdiction (Binance) or become more centralized (Lykke, Shapeshift).

The blockchain ecosystem is more focused on solving scalability issues and has had to put aside some of its “decentralization” ammunition.

The bottom-up blockchain movement has been embraced by corporates/institutions who experiment more and more. 2018 has seen more supply chain and logistics blockchain projects go live (IBM & Maersk, Wall Mart).

As the New Year starts, let’s all reflect on three main distinctions that I have identified as essential in this tech wave:

Traders versus investors.

Corporations versus communities.

Private success versus social impact.

Blockchain Traders & Investors. In 2018, the crowd got slaughtered because it fell into the Crypto Currency Trading trap. Investors with all sorts of exposures in Blockchain ventures, where tortured with regulatory guillotine threats.

Sadly, retail investors got cut out of the next generation of crowdfunding promised by ICOs.

Corporations versus communities. 2018 was not the year that the corporate structure lost grounds to a bottom up community structure of governance. In traditional Fintech, we saw more unicorns globally – Ant Financial, Stripe, Lu, One97, Robinhood, Coinbase, Sofi,. [2]  “Go Big” remained the way to go in Capital markets.

Fintech acquisitions were strong with an increase in total dollars due to mega deals. Notable acquisitions from incumbents include iZettle, Kensho, Seedinvest, Quandl, Cashcare, Lumo, Poloniex, Bittrade, Chain, ….

And incumbents like Blackrock, Vanguard, State Street, and Fidelity, continue to grow their assets managing close to $17trillion and Vanguard brought $1billion a day of new money last year[1]. I call this the mushrooming of the Buy-side[3].

Even in the Venture Capital sector saw the rise of mega-funds and a shift of focus towards later-stage and large dollar investments. Early-stage entrepreneurs are left with less services from VCs as they favor opening their networks and sharing their wisdom for those with the network effects already visible. I call this another new financial exclusion trend.

Divestitures of Fintechs from incumbents were also notable, showing that Fintech/Finance partnerships are as challenging as marriages. BPCE’s purchase of mobile bank Fidor in 2016 seemed like a 21st-century fintech love story. In November 2018, the Fintech romance ends with a cultural clash. Chris Skinner, wrote Clash of clans … or new bank versus old bank (Fidor, BPCE). 

The only disruptor of the corporate structure and its strategies was the appearance and use of Utility tokens that promised to build large, decentralized communities with network effects. In 2018, the narrative of the Utility token potentially revolutionary use, got crushed[4]. Lots of peculiarities exist and we can only say that we are in the experimentation phase still.

Utility tokens are not dead by no means IMHO. I foresee that they will re-emerge in some combination once the markets take a breather.

Private success & social impact. In 2018 Sustainability gained a tad more ground in our consciousness. In spending choices and even in investing[5]. There is more awareness of the silos that persist in our current setup which has finance and tech on a throne and Sustainability and Social impact as an add-on.

#DeleteFacebook proved not to be enough, for the Self-Sovereign identity movement to attain mass adoption. From my personal anecdotal evidence, not even 10% of people know that there is an alternative to being captive through our data. The Internet is broken but the narrative is not strong enough by any metrics. We remain trapped in an ever-connected world in which loneliness is increasing simply because it lacks purpose. As soon as we use technology to turn purpose into a competitive advantage, then social impact a private success won’t be competing and we will be living in a better world. Easier said than done, but the tools are there.

Looking forward to 2019

Daily Fintech has been and continues to be a unique insight-driven content platform. We are committed to this work of love. You can tap into our knowledge and expertise with the Book an Expert for an hour service and benefit in a private and customized setup.

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

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[1] Vitalik’s concern hit the nail on the head: The seasaw problematic


[2] One97 – From selling Astrology services over the phone to a Global Fintech Unicorn


[3] What has changed a decade after the financial crisis?


[4]Like blind men groping around an elephant, we all see Utility Tokens from our own perspective. This Chapter aims to offer a wide-angle view so that we can actually see the elephant.” In Investing in Utility Tokens.

[5] Stop Borrowing from the future

Basis shuts down. Will regulation kill crypto?


Last week our theme was “The Action in China.”

Our theme for this week is “Basis shuts down. Will regulation kill crypto?

Basis, a cryptocurrency stablecoin, is shutting down and returning the capital to its investors because of regulation challenges. Basis, raised some $135 million from top VCs, but decided to shut down because of concerns that regulators would view its tokens as securities.

Ventures capitalists that lend funds to Basis were one-time Federal Reserve governor Kevin Warsh, longtime hedge fund manager Stan Druckenmiller, Digital Currency Group, NFX Ventures, Valor Capital, Bain Capital Ventures, GV, WingVC, Ceyuan, Andreessen Horowitz,one-time Lightspeed Venture Partners, Zhenfund, Sky9 Capital, Foundation Capital, and others.

Basis had a specific contract with investors defining how the majority of capital raised was required to be held. Most of the money was legally required by contract to be held in the currency in which it was contributed and could not be touched by the company until Basis launched its stablecoin.

2018 has been the year of the stablecoin. According to a report from Blockchain.com, the amount of stablecoins skyrocketed in 2018.

What is a stablecoin? A stablecoin is a form of cryptocurrency that is pegged to other stable prices or assets. Some of main advantages of stablecoins are that they are global, have no affiliation to a central bank and rarely are prone to price volatility.  But, one of biggest issues they face, is trying to establish if they are subject to national securities and money service laws.

One of the big themes at the recent G20 Summit in Buenos Aires was regulation:

“We will regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF [Financial Action Task Force] standards and we will consider other responses as needed.”

The summit also focused on taxation, mentioning that it is working on a “globally fair, sustainable and modern international tax system” based on tax treaties and transfer pricing rules.

The main issue governments have with crypto is that there are too many blind spots. No one can give a clear answer of what a cryptocurrency is. Is it an asset? How should it be taxed? How should it be monitored; How can we identify confidential transactions? Another big gray area, are ICO tokens.

For some time now, ICOs have been a headache for financial institutions. Initial Coin Offerings are a way for companies to raise money, by issuing tokens and selling them to the public for Bitcoin, Ethereum, other cryptocurrencies or fiat currency. In many cases, projects promise investors, not just the product they plan to develop, but speculative returns from the potential price of the token, when it lists on exchanges. But some companies that collected funds using an ICO, turn out to be scammers. The worse part is that they took the money and ran and never delivered the product.

The most infamous case is Tezos, that collected $230 million. A class-action lawsuit against the Tezos has been filed by a group of investors in the Supreme Court of San Francisco, accusing the the company of fraud and trade of unregistered securities. Tezos is not the only one facing a lawsuit, the list includes other high profile ICOs, like Paragon Coin, Cloud With Me and Latium Network.

Can governments protect investors from fraud?

The most fearsome of all regulators for the cryptocurrency world, is the U.S. Securities and Exchange Commission. The SEC is waging a war on ICOs and in recent months its been handing out fines like its candy. The SEC’s 2018 report already mentions dozens of ongoing investigations, so virtually any startup that recently had an ICO is probably being investigated by the SEC.

In Singapore and Switzerland, central banks have issued guidelines for conducting an ICO and described cases when tokens are be defined as securities and thus must fall within the scope of the law. The Chinese government went even further and completely banned Chinese companies to hold token sales or its citizens from participate in them.

In the short-term, stablecoins are undoubtedly the key to mass-implementation of cryptocurrencies in everyday life. But, scalability and trust will be the biggest issues in 2019 and regulation will play a important role in the adoption of cryptocurrencies. Considering how popular stablecoins have become and the fact that they are very closely linked to fiat, it’s clear that financial regulators, will try to find a legal framework for stablecoins, especially the ones pegged to the U.S. dollar.

People have different opinions if crypto should be regulated or not. Some crypto supporters argue that regulatory control contradicts the philosophy of cryptocurrencies. Others believe regulation is a sign that cryptocurrencies are already accepted by authorities and regulation can only help them grow.

The key to successful regulation of cryptocurrencies is to ensure that it does not stifle innovation.

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.

Announcing Jessica Ellerm, SME & PensionTech  expert in Oz, joining the Daily Fintech Expert Service


Each week we are adding a new Expert to the Daily Fintech Expert Service. Today we are bringing on board Jessica Ellerm who has been writing every Wednesday on the Daily Fintech platform since February 2016. 

Jessica is the person to call if you are involved with with Small Business Finance & Payments or the reinvention of pensions (aka “PensionTech”) or if you plan to launch your Fintech service in Australia or New Zealand. Jessica also has a lot of experience in how to apply digital marketing & behavioural economics to Fintech.

Now you get a chance to talk to somebody who really understands those markets as a serial entrepreneur,  for only CHF 380 per hour.

For more on Jessica, please go here, or click on her LinkedIn profile, or see Jessica’s posts on Daily Fintech.

To book an hour with Jessica for CHF 380, please click here to send her an email.

Crumbling Behemoths: why banking size is a liability not an asset in the Blockchain Economy.

Crumbling Behemoths.jpg

In January 2008 I started writing a book called Crumbling Behemoths. I should have finished it. In October of that year, after the Lehman collapse, it could have been a bestseller. My experience in the Fintech engine room of core banking helped me see the fragility in what looked like an invulnerable system of giant global banks.  Here is the TLDR version that book, just after the 10 year anniversary of the Lehman collapse and just before the 10 year anniversary of Satoshi Nakamoto’s White Paper (January 3rd).

Banks are vertically integrated, tightly coupled, politically dependent entities. Most have been in business for hundreds of years. Their decline is inconceivable; like the decline of car manufacturing in Detroit, Blockbuster, bookshops, Kodak, etc, etc. Size gives some Banks great power today and size looks like an obvious asset on their balance sheet. However in the network age, their size is actually a liability.  This post explains why, with a focus on:

  • Legacy IT meltdowns and the liability of “technical debt”


  • Wells Fargo and the Creative Destruction 7 Act Play


  • Why Blockchain is the realisation of Coase’s post-Corporate vision


  • Satoshi’s vision of 7 billion banks is the long term threat


  • The networked small bank is the imminent threat


  • Regulators typically arrive about the time that technology is doing the job for them


  • Why Bailouts will not be possible next time


  • How Analog  Scale is fundamentally different from Network Scale


  • Trading Takeaway – how to profit from this insight


Legacy IT meltdowns and the liability of “technical debt”

Hello, my name is Bernard and I am a core banking system salesman. Yes that sounds like the intro to an AA meeting. i should say “was”, but in honour to AA I use the present tense.  My days in the engine room of Fintech, selling core banking systems to the biggest global banks for companies such as Misys, meant I was not surprised to witness the Legacy IT meltdowns and the gradual crumbling of the Bank Behemoths.. Those of us selling replacements for paper-based systems decades ago never imagined that those systems would still be operational in the 21st century. They are and now they have moved from the asset to the liability side of the Bank’s ledger.

Bankers often talk about the millions invested into IT as an asset. Anybody who writes code knows that software degrades over time and at a certain point that “technical debt” becomes a liability and not an asset. It is now cheaper to build the IT infrastructure for a startup bank, using open source and APIs, than it is to adapt Legacy IT for a modern world. The $ millions invested in IT now have a negative ROI.

I use terms such as assets, liabilities, technical debt and negative ROI is to make this accessible to non-technical bankers and investors. There is one technical concept that is critical but also easy for non-technical bankers and investors to understand, which is tight vs loose coupling.

Any programmer will tell you that a loosely coupled architecture via APIs accessible via networks is better than tightly coupled systems (aka “spaghetti code”).

The programming cost is not the issue. The big issue for the Behemoths, the reason they are crumbling is:

  • The banks cannot change their business model fast enough. Bank CXO teams are perfectly away of the threat of disruptive technology and that they must change their business model at a fundamental level. They know what they should do. The problem is that they send instructions to the engine room of their ship to go faster and to change direction to due West and the person in charge of the engine room tells them that if they shovel in a lot more coal they can increase speed by 10% and will take two hours to change direction to due West, but warn them that this means they will run out of coal before they arrive at the next port. Meanwhile the Bank CXO team in the captain’s tower sees a flotilla of small boats going due West at 10x their speed.
  • Loss of consumer trust. Consumers might be enraged by bailouts, but they still assume that banks are at least reliable and the only game in town. Some consumers read about Cyprus where the government unilaterally took money from their bank; this is “bailout in your face” (strangely described as a “bail-in”), but at least one can think “that is in some tiny far away island”.  Closer to home, a series of IT Meltdowns, such as at TSB and RBS, mean that consumers have days when they cannot get cash from an ATM or use their credit cards; banks are no longer “reliable”. Finally they hear from a friend who is raving about one these startup banks; the big old banks are no longer the only game in town.
  • Aggressive action that only makes it worse. This is what we saw in the Wells Fargo scandal.

Wells Fargo and the Creative Destruction 7 Act Play

The Wells Fargo fake accounts scandal was a more subtle version of the Cyprus bail-in. Money was taken out of your account, not by the government, but by your bank via a fee that you never actually authorised. This is Act 3 in the Creative Destruction 7 Act Play (described in Part 2, Chapter 1 of The Blockchain Economy book):

“Act 3. Denial. The changes are now real and the old guard management can see it, but they don’t know how to react so they reach for high pressure management to make the numbers work. In some cases, management also reach for creative accounting tricks to smooth out earnings and make it look as if nothing has changed (known as fraud in most circles). This Act can go on a long time as most investors work on surface numbers. A famous example of the Denial Act 3 was subprime mortgages that blew up in the Global Financial Crisis in 2008. For a long time the surface numbers looked good until a few nonconformists looked below the surface (watch The Big Short movie for an entertaining take on that story). A more recent example in Finance was the Wells Fargo fake accounts scandal (which was going on for a long time before it was uncovered). “

To understand why big Banks like Wells Fargo are under such pressure, one has to dig back to an obscure academic paper written in 1937.

Why Blockchain is the realisation of Coase’s post Corporate vision

Part 1, Chapter 14 of The Blockchain Economy book describes why Blockchain is the realisation of Coase’s post Corporate vision. Coase’s 1937 essay The Nature Of The Firm asked why hire employees instead of contracting tasks? His answer – a company exists because it is cheaper to do transactions within a company than outside. Blockchain has resurfaced this theory by dramatically reducing transaction costs.

The Internet seemed to be the  realisation of Coase’s post Corporate vision. However, although Dot Com and Social Media changed our world, that change was limited to exchanging content online.  The Internet was the perfect free copy copy machine. Blockchain enables us to exchange value online – where copying is not allowed (if I send you that asset I no longer have it).

This enables literally everybody on the planet to be their own bank. Satoshi’s vision of  7 billion banks (one for each person on the planet) is outrageous but not impossible.

Satoshi’s vision of 7 billion banks is the long term threat

Anybody can be their own bank. All you need is a wallet that can hold cryptocurrencies.

The Central Bank is encoded in the math (whether Deflationary for Bitcoin or mildly inflationary for Ethereum). You no longer need to trust a Central Bank and whoever guides their actions. You trust the math and the code, both of which you can verify.

Although most people won’t choose to be their own bank, it is the fact that it is possible that is such a wake-up call for big banks. This is the Napster moment. Napster proved that digital audio/video was possible. It was free and illegal. After that came cheap and legal in services such as iTunes and Spotify. Those services were only possible because the alternative of free illegal services such Napster and Kazaa was possible.    

This is why a network of small banks is the imminent threat

The networked small bank is the imminent threat

SIBOS is the big annual gathering of bankers organized by SWFT. At SIBOS 2016 in Geneva I attended a session on Blockchain and correspondent banking – The way to go? This was standing room only. My observation at the time (recorded on Fintech Genome) was that:

“The problem of the current dialogue about a Blockchain replacement of today’s correspondent banking network is very simple – correspondent banks are being written out of the script. Look at the panelists and you see a) technologists and b) global banks. Both agree that the future is bright.

Elsewhere in the conference there was a lot of talk about reducing the number of Correspondent Banks in your network. The driver was Compliance. You cannot have a Correspondent Bank in your network who does not comply with the latest regulations from governments related to tax, money laundering, terrorist financing and all the other bad actors who use money alongside the good actors – and these regulations get more onerous every day.

It is fashionable to say that Correspondent Banking is dead. This conflates the current incarnation of Correspondent Banking which is batch based with the concept of Correspondent Banking itself. I am convinced that Correspondent Banking will survive the transition to real time and that SIBOS will always be key to Correspondent Banking.

The Correspondent Banking is dead meme suits the global banks. It is inconvenient for them to deal with regional banks and much simpler to have a global network that is totally under their control. The technologists will deliver that for them. Voila – a handful of global banks control global trade.

Technically this is simple – really simple. Blockchain will be like Internet – we will use it invisibly every day. TCP/IP is not rocket science (but might have been perceived that way in 1996).

If you step outside the innovation echo chamber and talk to the regional banks you can sense the discomfort. They are being forced to consider a future without themselves in that future. Yet in the real world, these regional banks are prized by their customers.

Correspondent Banking will go real time. The 9,000+ member banks of SWIFT will keep the human relationships and just switch over to a new system.

One thing preventing small banks from competing is lack of equity capital. It is much easier today to buy one mega global bank that grew by “rolling up” lots of smaller banks. That is really the only option today for investors.  The gamechanger is new equity, whether from Security Tokens or traditional Equity Exchanges. That is why an unknown Community Bank filing for an IPO – Silvergate Bank – is so exciting.

Silvergate is traditional regulated bank offering services to the Blockchain Economy. It presages the future and its S-1 is data treasure trove for those seeking to understand that future.

I wrote at the start that “Banks are vertically integrated, tightly coupled, politically dependent entities”

I now want to focus on that last part about “politically dependent entities”. Banks are licensed by sovereign governments and Blockchain is inherently a stateless global network. We shall soon witness the loud bang that happens when an irresistible force meets an immovable object. Which brings us to the R word – Regulation.

Regulators typically arrive about the time that technology is doing the job for them

When 2008 happened, the regulators in America threw a complex rule book called Dodd Frank at the banks. For 10 years, the lawyers and regulators have worked through the details and now some elements seem to be up for negotiation. It has become a political football, just when technology may be making it irrelevant.

This has happened before. Regulators typically arrive about the time that technology is doing the job for them. Look at what happened in two earlier waves of technological disruption:

  • IBM was being regulated just when the world was moving from mainframes to PCs.
  • Microsoft was being regulated just when the world was moving from PCs to Internet.
  • Today Google and Facebook are being regulated just when the world was moving against all our data being used as a tool to control us. Note: this is happening right now, which makes it a bit harder to see than the two previous waves.

The problem is that in 2008, the technological disruption was still in the mind(s) of Satoshi Nakamoto. So the regulators resorted to the only thing they knew – a complex legal document.

When the next financial crisis hits, the discussion around bailouts and regulation will be quite different.

Why Bailouts will not be possible next time.

  • Populism has a political voice. The rise of extremism of both right and left is all over the globe will make it harder to bail out banks again.
  • Governments are running out of firepower to pump in more liquidity. For every loan there has to be a lender and at some point lenders worry about inflation from money printing. Lack of funds will make it harder to bail out banks again.
  • The disruptive alternative (Bitcoin) is now more mature and tested. People now have the tools take control over their own financial resources, regardless of what politicians say.

How Analog Scale is fundamentally different from Network Scale

Analog Scale, what most Big Banks have, is all about vertical integration, management hierarchy, secrecy and control.  In short, hierarchy.

Network Scale is all about networked partnerships through APIs, online networking, knowledge networks and verifiable transparency. In short, wirearchy.

The thesis of this post is that wirearchy beats hierarchy.

Cryptoeconomics takes this wirearchy to a new level.

In October 2014, I was privileged to be at an Ethereum MeetUp in London to hear Vitalik Buterin talk about:

“Cryptoeconomic Protocols In the Context of Wider Society”

That is right. This was about as interesting to 99.999% of the population as the discussions at the Homebrew Computer Club in the 1970s when the PC revolution was starting. At the time I was more conscious of witnessing history in the making (as I recorded here) than really understanding  cryptoeconomics. Today I see cryptoeconomics as an updated version of what one the greatest investor of the 20th century (Charles Munger) talked about, which is the power of aligning incentives. I knew this to be true from my years leading enterprise sales teams. What is different about cryptoeconomics is that it takes these incentives out of the closed world of the enterprise and makes them available to 7 billion people in a permissionless network.

We can already see Network Scale in the big winners in the Centralised Internet. What Vitalik Buterin was talking about in 2014 and is now making happen is Network Scale in the big winners in the decentralised Internet. As Trace Mayer puts it, this will be a once in a species level transfer of wealth.

Trading Takeaway – how to profit from this insight

Investors will start to sell/short banks & buy Bitcoin, Blockchain & Cryptocurrency. The banks will resist change and have a lot of clout, so shorting at first will only be for those banks who face traditional balance sheet problems (such as Deutsche Bank). Problems with consumer trust and regulators at banks such as Wells Fargo don’t seem to translate into stock price weakness.

That is because there is a difference between inevitable and imminent. The changes I am writing about maybe  inevitable but it is really tough to figure out timing. That is why the simpler strategy is to go long Bitcoin, Blockchain & Cryptocurrency; you can hold for as long as it takes for this to play out. The Bitcoin, Blockchain & Cryptocurrency tsunami is likely to follow the usual rule of disruptive change which is is that a) it takes longer than people think and b) the change when it happens is bigger than people think.

Image Source.

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

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Regtech Rising – How far are we from Robo Regulators?

Since the AI boom, there have been several stories about people losing jobs. Repetitive jobs are the ones that are most suited for robots to take over. So would there be a time when we get to tell the Regulators “You are Fired”?

Regtech had a phenomenal year 2017, with global funding reaching $1.1 Billion across 81 deals. And the first half of 2018 alone saw funding go past $1.3 Billion across 36 investment deals (KPMG Research). Thanks to an avalanche of regulations that banks had to comply with from PSD2, GDPR, MiFID2.

KPMG Research

Since the 2008 financial crisis, banks have paid $321 BILLION in fines

 CB Insights

The SEC allocated $1.78 Billion to employ 4870 who were making sure Banks were compliant. Now, with the rise of AI across the regulatory value chain, the efficiencies to be had are immense with intelligent automation. 

With an ocean of regulatory text to go through, and with several regulatory alerts to monitor on a regular basis, AI would be the way forward. I remember my Barclays days when there were several vendors claiming to make regulatory reporting easier through a workflow solution.

And why AI Can Help

When I was at PwC, we started exploring solutions like IBM Watson for regulatory and legal language parsing. Regtechs were getting more and more intelligent, and with the amount of capital that was flowing into this space, they had to. Thanks to those efforts, there are several players to proactively identify and predict risks.

As more innovation happens in this space, ease of use moves on to automation, and automation to intelligent automation. We also have started to see regulation specific solutions. Many of them existed in their simplistic form before, but they now come with better technology. Open banking has had a few focused Regtech solution providers like Railsbank. Droit provides post trade reporting for OTC transactions as per MiFID 2.

The SEC’s proposed 2017 budget is $1.78 BILLION

 CB Insights

This trend can further go up the value chain, and apart from serving banks, technology could serve regulators. Regulators have to parse through tonnes of data, use pattern recognition, NLP and predictive analytics to identify breaches proactively. Regulatory sandboxes help, and with more innovative firms looking at automating regulatory activities, Robo-regulators are not far away.

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 – Incumbents on customer engagement

Service Satisfaction Indicator

The Theme last week was InsurTech Upstarts at the Gate.

The Theme this week is incumbents exploring better customer engagement. Customer engagement can be improved with the combination of technologies and a human touch.

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: Humania Assurance Launches 5575

Extract, read more on Coverage:

“Humania Assurance has introduced a new portfolio of online health insurance products tailored for Canadians aged 55 to 75 years old.

“When retiring and leaving their workplace, this population loses its group insurance advantages. It is then difficult for these people to cover all expenses relating to their health. This portfolio of products will allow them to reduce their financial stress and focus on taking care of their recovery.” – VP Sales and Marketing, Kim Oliphant.”

A gentle gesture to care for the elderly. Efficiency can be improved by technology, but the warmth of insurance still need to be delivered with a human touch.

Story 2: Chubb Life Launches New Digital Platform to Enhance Customer Experience

Extract, read more on Chubb media room:

“Chubb Life Insurance Indonesia (Chubb Life) has today launched an online platform called Chubb Life Customer Corner as part of its ongoing commitment to putting customers first and providing them with the best customer experience, anywhere and anytime.

Kumaran Chinan, Chubb Life COO said, ‘We are proud to launch the Chubb Life Customer Corner which will make it faster and more convenient for our customers to access important policy information, including the latest claims information, anywhere and anytime they choose to.’”

Insurance penetration rate is still low in Indonesia, and the Internet-savvy youths will soon become a major purchasing force of life insurance in next 5 years. Selling it in a digital way can help Chubb become the first insurer for many young users in Indonesia.

Story 3: Aviva aims to disrupt the market with new subscription-style product

Extract, read more on Insurance Age:

“Aviva has launched a subscription-style insurance product, which it said was designed to address consumer concerns with the industry such as dual pricing.

AvivaPlus is initially a direct product, which the provider stated offers flexible cover, monthly payments with no APR, no charges to cancel or change the policy and a renewal price guarantee.

It is available for home and car insurance, but Aviva noted that it was looking to extend it to more product lines in the future.”

Dual price happens when there is a lack of direct channels. Technology certainly can play a big role in building channels.

Engagement is about building trusts. By caring for the elderly, launching online platforms and addressing information asymmetry, incumbents are making friendly gestures.

Image Source

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

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


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.

Marketplaces and gateways for financial advisors – Schwab’s approach

I’ve been a fan of  Bill Winterberg and his FPPad channel. If Alexa is in your Christmas shopping cart, you should know that Bill is on Alexa for you to listen while putting on makeup or shaving in the morning. Just say “Alexa, enable FPPad”.

In early November, Bill covered the Impact2018 annual event by Schwab for advisors. The Schwab Intelligent Portfolios, the infamous Schwab Robo-advisor, that we have covered on DailyFintech from the start of the robo movement, is not what was the focus at Impact2018. This is an annual event for advisors who are being empowered by brokers, custodians, tech companies, asset managers, and banks.  The sponsor of the Impact2018 FPPad interviews was Envestnet | Tamarac. As a side note (not an insignificant one) Blackrock invested in Envestnet by acquiring 4.9% of shares. The world’s largest asset manager buying a piece of one of the largest adviser technology providers. Add to that that Blackrock owns another 5% through its passive financial products.

 Charles Schwab in a way has it all. For the 100% DIY investor, there is Schwab’s brokerage arm and the free robo service (continuously criticized for the high cash allocation). In the middle, there is an automated investing management offering with a free personal finance guidance (with financial advisors) with only a $5,000 minimum balance requirement. And at the other end of the spectrum, a rich and improving marketplace for in-house (using Schwab as a custodian) and third-party advisors.   

Andrew Salesky is a 20yr Schwab veteran that now runs the Digital Advisor Solutions at Schwab. His vision is to transform Schwab into a Digital Services organization. He is focused on serving and empowering financial advisors, both those in-house but also with third parties in the Advisory space.

Schwab scores high when benchmarked as a Digital Services organization, for the in-house custodied part of the business.

First and foremost, they have mastered the Digital Account opening, which is now a completely paperless workflow for advisors which takes 5min to open an account (regular account, pension, or charitable). This electronic authorization, itself gives the end customer a great experience. The first impression always creates a predisposition, and Schwab has its advisors back covered in 80% of account opening cases. The remaining 20% is the so-called NIGO (Not in good order), which means incomplete or incorrectly filled applications; and Schwab is tackling this business opportunity by experimenting with technology that can serve electronically advisors’ customers in this case.

Second, the Schwab Advisor Portfolio Connect, is an all-in-one solution at no fee, that is simple and efficient. Its main advantage is an operationally efficient portfolio management solution. The magic happens behind the scenes, taking advantage of ‘custodial data direct’. Advisors using this service don’t need end of day downloads and reconciliations and creating performance reports, billing and other crucial reports because all is completely automated.

On top of these digital capabilities for all Schwab advisors, the Digital Advisors Solutions department is strategically positioning Schwab as a Marketplace and a Gateway for third party advisors. This is multifaceted.

First is the MarketSquare. I love the name by the way. It feels like Piazza San Marco or some such. Schwab advisors can research technology vendors and products to help them make better-informed buying decisions, see product ratings and reviews from peer advisors, who understand the specific needs of independent advisors. The MarketSquare is creating an advisor community and tech vendors compete for their attention.

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 Second is the OpenView Gateway: Third party advisors can enjoy secure, high-quality integrations, for example with Orion, Salesforce, Addepar, and at same time have access to Schwab data. These integrations combine the best of Schwab and third-party capabilities and include many of the major technology tools firms depend on, including CRM, portfolio management, financial planning, trading & rebalancing, risk analysis, and more.

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Several other tech vendors are in the pipeline to be listed on the OpenView Gateway. Advyzon a provider of CRM solutions, client reporting, billing, document management, and a client portal; and LifeYield allows advisors to get their ‘Taxficient Score’ for all their clients to measure their tax efficiency.  Reports can be shared directly with the clients to show where they are adding value.


Last week I took a look at Morgan Stanley’s “WealthDesk” rollout for its advisors which is an integration of Morgan Stanley’s Goal Planning System. In Incumbent Robo-advice platforms, software, products: A look through Morgan Stanley’s WealthDesk platform I highlighted the Machine learning support through “Next Best Action” tool.

Schwab’s approach is very different that Morgan Stanley’s. “WealthDesk” is the integrated toolbox that MS advisors operate their business on. Schwab allows for 3rd party advisors and in-house advisors more choices of vendors and in that respect each advisor can tailor their toolbox differently. The “WealthDesk” toolbox is not available for 3rd party advisors.

MS is focused on empowering and retaining its current advisory network of 16,000 advisors. Schwab is increasing its outreach through a marketplace approach that if successful, can become the app store for tech targeting advisors (with genius capability and a community tying them together).

The end customer will decide of course; Financial advisors are being served through Fintech vendors that offer them dazzling choices. The platform that can help advisors make smart choices for their toolbox, will be the winner.

MS claims that their integration is ahead of the curve. Schwab positions itself as hub that filters tech vendors continuously and offers integration a la carte plus peer reviews.

Stay tuned.

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

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Blockchain Weekly Front Page: The Action in China


Last week our theme was “Legacy Finance, Big Tech and Government move into Blockchain.”

Our theme for this week is “The Action in China

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

In September 2017, the Chinese government banned ICOs, and a year later it banned crypto entirely. Everything related to crypto trading and investment has been banned, including news sites, social media accounts, events, and exchanges. In July, the Central Bank of China reported that the country’s cryptocurrency ban has been very successful, reducing Yuan trading activity to less than 1%, when it once accounted for more than 90% of global trading volume.

But can China continue to innovate in this space, while it has imposed a cryptocurrency ban?

Yes it can and it does.

At the end of March 2018, China had a total of 456 blockchain companies, which included security services, investment and financing, media and human resources services, platform services, hardware manufacturing, and industrial technology application services.

While protocols like Lightning Network and Tumblebit attempt to solve the Bitcoin scaling problems, Conflux, a Chinese company, claims to have solved the network’s speed limitations.

Conflux is a new protocol led by a group of professors, that counts among their ranks Andrew Yao, a recipient of the Turing Award, known as China’s “Godfather of Computer Science.” Conflux raised $35 million from notable investors, that include Sequoia China, Metastable, IMO Ventures, FreesFund, Rong 360, Shunwei Capital, F2Pool, and major crypto exchange Huobi.

Conflux is a fast, scalable and decentralized blockchain protocol that process concurrent blocks, without discarding any as forks. Conflux achieves a transaction throughput of 6,400 transactions per second, for typical Bitcoin transactions.

Conflux’s co-founder Fan Long, a University of Toronto professor, told Fortune“Conflux’s main idea is how to make the whole blockchain scalable. We’ve changed the structure of the blockchain so that it’s no longer a chain in the sense that it records each block based on what its parent block says.”

Another project out of China is led by Chinese cryptocurrency billionaire Li Xiaolai, known in China as a “Bitcoin evangelist.” He’s developing a new stablecoin that is expected to roll out in 2019. The project will operate within Hong Kong blockchain fund, Grandshores Technology. The upcoming stablecoin won’t be attached to the Chinese Yuan, instead it will follow the Japanese Yen.

Huawei, the Chinese tech giant and the world’s second largest smartphone maker, announced the launch of its Blockchain Service (BCS), in an official press release. Huawei’s new service solves many problems businesses face, when deploying a blockchain. The service allows entrepreneurs and developers around the world to create, deploy and manage blockchain applications on Huawei Cloud, at a blistering pace and cheaper cost.

Chinese mining companies are the undisputed global leaders, controlling more than 74% of the Bitcoin network’s hash rate. According to data from Genome, the PBoC has filed 41 blockchain patents. Chinese companies occupy six of the top ten spots for blockchain patents, with Alibaba filing 90 patents.

China is committed to blockchain innovation, doubling down on its $3 billion investment in the blockchain technology since the second quarter of 2018. Yet it’s ironic that Chinese citizens don’t have direct access to investment. Its decision to ban everything Bitcoin seems odd on the surface, but China wants to assert itself as a technology leader and blockchain, may be one way to do it.

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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.

Announcing Zarc Gin, our man in China, joining the Daily Fintech Expert Service

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Each week we are adding a new Expert to the Daily Fintech Expert Service.

Our Experts work all over the world, giving Daily Fintech a global perspective.

This week we profile our Expert in China, Zarc Gin, who works for a Fintech, Insurtech and Blockchain focussed VC fund in Hangzhou, China.

China is not only a massive market. It is also a market that operates quite differently from the West, because it went straight to the digital and mobile age.

Zarc is the person to talk to if you want to:

– learn from what is happening in China to apply to your home markets.

– think about how to enter the China market.

Now you get a chance to talk to somebody who lives in China and who knows Fintech, Insurtech and Blockchain for only CHF 380 per hour.

For more on Zarc, please go here.

To book an hour with Zarc, please click here to send him an email.