Blockchain Weekly Front Page: Big Old Money Bets on Bitcoin & Blockchain


The Blockchain Weekly Front Page is a CXO level briefing. Our mission is to serve the mainstream business community by selecting one major theme in the Blockchain Economy each week and three news stories to illustrate that theme. This is all you need to know, each week, jargon free for CXO level business leaders and investors who will use this technology to change the world, in your email inbox each Monday at 7am CET. 

For more on the format please click here.

Last week our theme was “Decentralized Exchanges (DEX)”.

If you are still having doubts about cryptocurrencies, it looks like the old is meeting the new. Its been going on for a while now and in some cases not always getting a lot of coverage.

Last week in an announcement, Yale University invested in a $400 million in Paradigm, a crypto fund operated by veterans from cryptocurrency and finance industries.

Paradigm was created by Fred Ehrsam, Coinbase’s co-founder, Matt Huang, former Sequoia Capital partner, and Charles Noyes, an ex-employee from the Pantera crypto hedge fund.

The university has allocated 60% of its assets for 2019 in alternative investments, like venture capital, hedge funds, leveraged buyouts and now cryptocurrencies. Yale is among the few large institutions to invest in the cryptocurrencies, which has tumbled, since its rocket growth in 2017.

While in February, 96% of endowments and foundations responding to a survey by consulting firm NEPC said they don’t invest in digital currencies and didn’t expect to change their stance, a recent poll by Apeiron Ventures showed that around 40% of family offices are looking to invest or have already invested and view cryptocurrencies as a new asset class.

Crypto funds have been launching at a record pace, with more than 90 new crypto funds having launched this year alone. At this rate, there will be 120 new crypto funds launched this year. The total number of crypto funds is now approaching 500.

It has been reported that multiple high profile banking interests have also moved into cryptocurrency, most notably, George Soros, the Rockefellers, and the Rothschilds.

George Soros is looking to trade various cryptocurrencies and the Soros Fund Management venture internally approved the trading of virtual coins. In January of 2018, he described cryptocurrency as a bubble. With the price of Bitcoin at third of the price in December, Soros has turned into a believer. George Soros may be controversial, but when it comes to investments, he’s rarely wrong.

The Rothschilds connection to cryptocurrency has been documented in several articles. Last summer, the family purchased Bitcoin for the first time. In February, Tether accounts of Bitfinex were opened in the Dutch bank ING, owned by the Rothschild.

The Rockefellers have also joined the party. Venrock, the official venture-capital arm of the family, reportedly signed a partnership with Coinfund, a cryptocurrency investment fund, to back virtual tokens and blockchain business innovations.

In the past, bankers and large financial institutions have not a had a clear position, one minute bashing cryptocurrencies and the next praising them. I think they are starting to realize the attractiveness of Bitcoin and other cryptocurrencies, and their ability to hold value in a decentralized network, that is not dependent on the global economy.

For a while now, Bitcoin has been relatively stable in mid-$6,000 range. IMHO, Bitcoin stability is extremely healthy indication. The low volatility we’ve witnessed, is very important for large investors and in part we can probably can attribute the stability to institutional investors coming in.

In September, billionaire investor Mike Novogratz tweeted that the crypto market has already reached a bottom at $186 billion, and is ready for new rally:

“This is the BGCI chart… I think we put in a low yesterday. retouched the highs of late last year and the point of acceleration that led to the massive rally/bubble… markets like to retrace to the breakout..we retraced the whole of the bubble.”

Novogratz also said that a “Herd of institutional investors are moving into crypto”. The entrance of pension funds, academic institutions, and large-scale financial companies into the market could trigger FOMO, amongst institutional investors.

According to research conducted by Satis Group, crypto trading volume will grow by over 50% in 2019. In the United States, the volume of cryptocurrencies traded will overtake the trading volume of corporate debt this year. And even more significantly, the trend shows that crypto trading volume is set to reach 10% of the equity trading volume in the world’s largest economy and home to the globe’s biggest stock market. Currently, the volume of U.S. equities is estimated to be over US$74 trillion, while that of crypto trading is US$7.3 trillion.

But as most look at prices as a measure of performance, it’s certainly not the only way to look at things.

Adoption is a equally important, if not more important. Potentially, usage and adoption are what will drive prices up in the future. Crypto has being growing on all fronts. When we compare Internet and crypto adoption, we’ll see a steep upward trend for wallet growth.


Bitcoin has been making significant steps with the Lightning Network. CoinGate, a payment processing gateway, recently announced its support for Lightning Network, across its entire merchant base. This could be a major boost to Bitcoin adoption, as CoinGate, will be  adding all 4,000 of its merchants to the off-chain system. In September the capacity of Lightning Network reached 100 BTC, according to data from monitoring resource 1ML. The network’s capacity six months ago, was as low as 3 BTC.

The articles we’ve been reading paint a completely different picture, not necessarily reflected by today’s crypto prices.

NYSE’s parent company introduced Bakkt, that will bring big brands, like Microsoft and Starbucks, into the market and drive the adoption at the merchant level. The UAE has a vision to be a world leader in the adoption of blockchain technology. The EU recently ratified its Blockchain Resolution. Leading giants, like IBM, MasterCard, Microsoft and others, are continuously applying and accumulating patents for crypto and blockchain. Facebook has put together a Blockchain team to develop the technology in their products. Walmart wants to store payment data on a blockchain. Revolut introduced a card allowing  its customers to receive cash back in Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and XRP. Over 90 central banks across the globe are engaging in research and development of the blockchain technology.

And these are just some of stories that have been floating in the news.

Bitcoin’s present stability was necessary. We needed a cooling period, during which a stronger base would be established, for the next bull run. This period is useful because it can be used to further develop the network and allow institutional capital to flow in. The entrance of some major institutional money, could spark more and more major organizations to invest at a large scale in cryptocurrencies. Ultimately this will benefit the entire crypto ecosystem and over time shoot prices upward, driving even greater adoption.

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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.

Venezuela’s Petro: Does Blockchain deserve this?

May be you are tired seeing the Petro saga unfold and spam your social media feeds. May be you are thinking, there you go, the joke of the decade. May be you are angry that the PR nightmare that has affected Cryptos is getting worse with this.

I must confess, I had all these thoughts going through my head when I saw that video of the Venezuelan President, Nicolas Maduro talk about Petro. The question that popped on my head is, how can human greed create so much mess? Does Blockchain deserve this?

Philosophical points aside, I must share my brain dump of the thoughts I have around this episode. Let us start with where Venezuela are economically – and perhaps that will set the context.petro

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Venezuela’s currency Bolivar has been hit by hyper-inflation which is at about 16800%. What does this mean? An economist and an entrepreneur originally from Venezuela told me this week that he has had experiences of buying a property, and going to bed only to find the property value had depreciated by 30% the following day.

That is the reality on the ground when hyper-inflation hits. Its worse than the worst Bitcoin price action.

Venezuela has been hit with sanctions which meant they don’t have free access to world markets and in essence capital. They have historically relied on their oil reserves to bail them out.

Venezuela is one of the most crypto savvy nations in the world. Their per capita crypto usage is one of the highest across the world. Put all these points together, there can be a logical happily-ever-after finish with a state-backed-stable coin. And that is exactly what they have tried to do.

While that is the logical way forward to get back some economic sanity, it can only be fruitful if the transition from Bolivar to Petro was well executed. Well executed in this case would include words like integrity, transparency, governance, monetary policy etc.,

The Petro has its own Blockchain, and derives its value from oil, gold, diamonds and iron. 50% of the value is derived from oil, and the supply of the Petro has a cap. But the state owned oil firm PDVSA has debts which is almost 8 times the market cap of Petro. So, I would doubt the integrity behind the decision of using Oil as an asset to back the crypto.

While there were close to 200,000 global purchases of the crypto as per the government, there hasn’t been any audit of these purchases. That makes the decision sound like a scam. There have been several other complaints about the petro. But for me, if a state backed stable coin cannot demonstrate sound policy and principles behind it, it is prone to a major failure.

However, if this is a genuine attempt by the government to turn its economy around , and if it managed to succeed, it would become a case study for many emerging markets countries to follow. And it would be a stark warning to the global markets that an alternative capital market is born.

I really hope the anger from the crypto community is more with the HOW of this petro episode, rather than the WHAT and the WHY. If the fears of the sceptics are found to be baseless, this could be the best thing that could have happened to the world of Blockchain and Cryptos.

Arunkumar Krishnakumar is a VC investor focusing on Inclusion, a writer 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: Cross-Industry expansion


The Theme this week is cross-industry expansion. This indicates that insurance is getting a higher degree of integration with our lives.

The Insurtech Front Page Weekly CXO Briefing is all you need to know for the week, jargon free for executives, entrepreneurs and investors who want a piece of this huge, fast changing market. Each week we select one theme illustrated by 3 news items, because we know that you are busy. Our job is to filter out the noise, so you can read the signal. We bring you the raw news plus our take on why it is significant.

For this week we bring you three stories illustrating the theme of cross-industry expansion:

Story 1: Credit Karma Makes Significant Move with New Insurance Experience

Extract, read more on Business Wire:

“Credit Karma today announced its expansion within insurance. Launching today in California and Texas, Credit Karma’s members will be able to see what they could be paying for auto insurance based on what members like them are paying for the same coverage.

This move will address the mis-pricing issue of Americans’ auto insurance policies and will soon arm its more than 80 million members with the information needed to make the best decision on their insurance policy, without the headache. Credit Karma estimates that Americans overspend on auto insurance by nearly $21 billion per year.”

Credit Karma is already providing auto-related services to its users such as loans and evaluation of their cars. This move into insurance is apt and can be effective.

Story 2: Flipkart forays into insurance space, teams up with Bajaj Allianz

Extract, read more on The Economic Times:

“E-commerce major Flipkart Sunday said it is foraying into the insurance segment after securing a corporate agent license. To begin with, Flipkart has partnered Bajaj Allianz General Insurance to offer customised insurance solutions to power its mobile phone protection programme for all leading mobile phone brands that are sold on its platform, Flipkart said in a statement.”

News from India that is globally significant because it is one more example of an e-commerce giant moving into insurance. Amazon from America and Alibaba from China are already making this move. India is a big market with it’s own local champions like Flipkart, but what makes India such an interesting market to watch is that it is a market that big global players, such as Amazon and Alibaba, are fighting over. India is a battleground market. If any of these e-commerce giants can make the user experience of Insurance as easy as the user experience of e-commerce, they will change the lives of billions and make fortunes.

Story 3: WeWork taps Lemonade to offer insurance to WeLive members

Extract, read more on Techcrunch:

“WeWork has partnered with Lemonade to provide renters insurance to WeLive members.

WeLive is the residential offering from WeWork, offering members a fully-furnished apartment, complete with amenities like housekeeping, mailroom, and on-site laundry, on a flexible rental schedule. In other words, bicoastal workers or generally nomadic individuals can rent a short-term living space without worrying about all the extras.”

This is a great example of two big innovative ventures innovating together to deliver unique customer value. It is a fine example of the art of the partner.  When your customers are almost from the same group, a partnership would be great to improve the quality of your service. That’s what Lemonade and WeWork are trying to accomplish. It is also another example of how Insurance is central to our lives and how if one makes what is essential but boring easy to buy and consume, then customers will buy.

Cross industry expansions can be actions like establishing a new business as well as building a partnership with players in other fields. Integration can amplify the value propositions for insurance industries. Tech giants like Amazons and Alibaba have done this in earlier times and I’m sure we will see more and more integrations between insurance and other industries.

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

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.

Kiwi fintech FNZ lands deal with Al Gore’s investment fund

You’ve got to love the Kiwi entrepreneurs for just getting on with it, and quietly building billion dollar businesses from the middle of nowhere.

And it seems they have a penchant for financial services businesses. While Rod Drury and his team have built a billion dollar SaaS accounting behemoth in the form of Xero, from Wellington, another Kiwi, Adrian Durham is hot on his heels. And his billion dollar wealth management business just landed what is possibly the biggest fintech transaction of the year.

Canadian pension fund CDPQ and Generation Investment Management (Al Gore’s fund) have jointly acquired a stake in FNZ that values the company at £1.65 billion.

Since 2003, FNZ has acquired a stunning £330 billion in assets under administration. It is the caretaker of 5 million investors, courtesy of its partnerships with the likes of Santander, Lloyds Bank, UBS, Barclays and many more. The platforms reach extends across 60 financial institutions across the globe.

What is remarkable about the business – and possibly speaks to the fast-tracked success, which requires intense focus and energy – is that around 400 employees remain shareholders, and will continue to own about one third of the equity of the company going forward.

The platform has also taken on building out Vanguard’s direct-to-consumer platform, which is a significant coup, and something BlackRock will no doubt be watching closely.

Platforms are a big play, and wealth management is grappling with how to bridge the expensive, advisory driven world and the new digital, millennial driven AI advice space. The majority of platforms are still trying to find ways to accommodate the old model while re-skinning for the new.

The big question is can you do both? My intuition says no – at least not particularly well. Which means there is a huge opportunity for a digital wealth platform that doesn’t have to retro-fit to the old.

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.

In the EU Blockchain Resolution we Trust

Bictoin EU

It was my name day on September 20th – a significant day for a Greek Orthodox – but I was by no means going to miss the “Blockchain: Building Trust in Society” event with Dimitrios Psarrakis, a Greek leading specialist in European regulatory policy. This was the first event in PwC Switzerland’s joint thought leadership series with the blockchain hub Trust Square. I was not disappointed; on the contrary, both the speech, the panel discussion with Daniel Gasteiger, Founder, Trust Square & Founder, Procivis, Doris Fiala, Chairwoman, Swiss Control/Parliamentary Oversight Committee & President, Swiss FDP Liberals Women, Guenther Dobrauz, Dimitrios Psarrakis; and the party; were unique.

Greeks built the principles of Democracy. Eva Kaili, is the Greek EU parliamentarian that is leading a team with a mission to raise awareness in the European Parliament on the revolutionary potential of Blockchain and how to grab the opportunity to lead in the 4th industrial revolution with relevant and powerful policies.


At the opening of his speech, Dimitrios Psarrakis, spoke about their team work in the EU parliament to educate, raise awareness and understanding about blockchain. They slowly but surely managed to obtain nearly 750 votes in the parliament for the Blockchain Resolution, a long and detailed policy for the EU which is based on the principle that Blockchain holds the potential to build Trust in our society in a different and better way, at many levels.

Driven by the fact that the internet has been a technological development that has undoubtedly created more convenience and connectivity, but has fallen short in creating more fairness and trust; Blockchain presents an opportunity to build trust and fairness in a very different way.

Driven by the belief that Blockchain will restructure several sectors: energy, healthcare, capital markets, Intellectual property etc.; the EU wants to mobilize capital to fund this revolution – the 4th industrial revolution.

The Blockchain Resolution includes several articles and aims to be fully in place in 2019. It has no intention to regulate any instruments – like coins, tokens etc-. It will only regulate the use of them on the newly created platforms. The Blockchain Resolution sees these new digital assets as legitimate instruments and does not attempt to categorize them as securities or commodities. The Blockchain Resolution sees them as alternative investments or contractual arrangements. Therefore, applying the Regulation in the EU for alternative investments, which is fairly flexible, is appropriate. The due diligence process on the platforms should be similar to the due diligence process in crowdfunding.

In Europe there is no consensus on the definition of a Security. Europe has MIFID, without a standard definition of a Security.

The Blockchain Resolution sees digital assets as alternative investments and the regulatory framework that applies is fairly flexible. Europe, through the Blockchain Resolution, wants to create policies that will mobilize capital to fund the next wave of restructuring the way several markets / sectors function.

The view of the EU is to present regulatory principles that are Technology neutral, Business-model neutral, and pro-Innovation.

The main principle is to allow for Disintermediation Economics that build Trust. Such economics promise to (a) reduce transaction costs and create new efficiencies, (b) reduce operational frictions by increasing liquidity, (c) automate monitoring processes with limited informational asymmetries (e.g. agency frictions, moral hazard, adverse selection).

The Blockchain Resolution is brave enough to look into the promise of Blockchain for Public infrastructure. The view is to restructure (a) traditional public services like land registries, licenses, certificates etc. (b) ways to reduce tax evasion and fraud, (c) cross-border transactions, regulatory reporting, data transactions between European citizens via smart contracts.

The Blockchain Resolution just got support from the Strasbourg Plenary.

“Blockchain has united this House, as all the parties in the Committee on Industry, Research and Energy (ITRE) voted in favor of the resolution under the principle of being technology neutral and innovation-friendly in Europe.” “One of the core messages of our text was to signify that the European Union aspires to become the global leader in the fourth industrial revolution,” said Eva Kaili.

The European Commission will be next in November at the European Parliament Blockchain event. This will be followed by the Blockchain and international Trade Report. In December, the Crowdfunding Regulation will be updated.

Some of the recommendations that the resolution makes are[1]:

  1. For member States to establish non-profit “innovation hubs” to promote research, education and training among their citizens
  2. For the Commission and ECB to identify dangers for the public and incorporate cryptocurrencies into the European payment system.
  3. To develop technical standards for Distributed Ledger Technologies
  4. Conduct a clear analysis of legal enforceability of smart contracts among EU member States
  5. Decentralize the storage of EU citizens’ data in preventing the misuse of data
  6. Decentralize infrastructure to ensure no monopolies are held, for instance the storage of nodes and servers
  7. Use blockchain for tracking EU funding to achieve greater accountability
  8. Evaluate blockchain-based e-voting systems as a use case for the EU
  9. The creation of funding opportunities from the EIB, EIF and EFSI 2.0
  10. The creation of an Observatory for the Monitoring of ICOs and clarification of utility tokens and security tokens as unique asset classes
  11. For any regulations on blockchain to remove barriers and founded on principles of technology neutral and business model-neutral

In Q1 2019, the Blockchain Resolution will be seen and hopefully adopted by ESMA. Europe is leading the way.

We live a world in which Trust is lacking, Trust is being re-defined, Trust has to be re-built.

[1] Excerpts from EU Parliament Passes Blockchain Resolution

Efi Pylarinou is an independent trusted Fintech and Blockchain advisor

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 Weekly Front Page: Decentralized Exchanges (DEX)


The Blockchain Weekly Front Page is a CXO level briefing. Our mission is to serve the mainstream business community by selecting one major theme in the Blockchain Economy each week and three news stories to illustrate that theme. This is all you need to know, each week, jargon free for CXO level business leaders and investors who will use this technology to change the world, in your email inbox each Monday at 7am CET. 

For more on the format please click here.

Last week our theme was “Bridge to Blockchain mainstream adoption via the next bull market”.

There is no doubt that centralized exchanges (CEX), such as Coinbase and others, helped us reach this point. Centralized exchanges have been an important stepping stone in the development and adoption of cryptocurrencies.

Centralized exchanges are easy for new digital currency traders and some act as gateways, which allow fiat to crypto transactions. But philosophically, these centralized platforms couldn’t be further apart from the decentralized nature of blockchain and cryptocurrencies.

There are four main issues with centralized exchanges:

  • Trust: The root problem with conventional currency is all the trust that’s required to make it work. Satoshi never envisioned centralized exchanges.
  • Personal Documents: Centralized exchanges often require personal information and proof of identity, in order to deposit or withdraw to and from the platform.
  • Security: With a single point of entry, it means they are accessible to hackers easily. If something goes wrong, on a CEX could end up losing all your crypto.
  • High fees: Many well-known exchanges charge anywhere between 0.20% to 3% in fees, whereas a decentralized exchange mostly requires a small fixed fee, or in some cases no fee.

Today the bulk of cryptocurrency trading takes place centralized exchanges, yet more than 30 of them have been hacked, since 2013. According to ConsenSys: “99% of cryptocurrency transactions still go through centralized exchanges; this trend is expected to be reversed in the coming years.

Currently, there are over 200 exchanges, compared to 70 exchanges in March 2015. Every day, billions are being traded on cryptocurrencies exchanges. Centralized exchanges generate massive profits from trading fees. In exchange for their services, traders are charged different fees, such as trading fees, withdrawal fees, deposit fees, etc. The top 10 exchanges generate as much $3 million a day in fees, according to estimates by Bloomberg.

The biggest problem for centralized exchanges is security. There are lots of examples of high profile thefts, the biggest being Mt. Gox in 2014, when 850,000 Bitcoins belonging to customers and the company were stolen, an amount valued at more than $450 million at the time.

Decentralized exchanges (DEX) are gaining popularity, because they enable users to trade peer-to-peer in an automated way and ensure that funds are not vulnerable to thefts.

We are already seeing this shift take place. In fact, two of the largest centralized exchanges are planning on launching decentralized versions of their platforms.

Bithumb, currently the world’s sixth largest by daily traded volume based on CoinMarketCap, will launch a decentralized crypto exchange in 2019. Bithumb is planning to use R1, a decentralized exchange protocol that was developed by OneRoot Network.

The Bithumb announcement follows that of  Binance, which is also set to launch a decentralized exchange by 2019. Binance CEO, Changpeng Zhao, on an interview at CNBC’s Crypto Trader (youtube video), said  that he believes decentralized exchange is the future of the crypto market:

“I believe that decentralized exchange is the future. I don’t know when that future will come yet. I think we’re at an early stage for that so I don’t know if it’s a year, two years, three years, or five years. I don’t know but we got to be ready for it”

Another key difference between centralized and decentralized exchanges is the middleman. On a decentralized exchange, a middleman doesn’t exist. Smart contracts power everything, and a decentralized exchange is able to operate autonomously. Smart contracts on a DEX, allow buyers to connect directly with sellers to trade, without the need for a third party.

In the case of DEXs, fees still apply to use the exchange, but they are often less than their centralized counterparts and in some cases zero.

In a recent article I read about Plutus, that is enabling users to convert and spend their cryptocurrencies without paying any fees through their decentralized exchange. PlutusDEX is a decentralized exchange on the Ethereum network, that facilitates the trading of Bitcoin, fiat currency and their token, the Pluton. PlutusDEX allows users to purchase cryptocurrencies directly from each other on the exchange without paying any fees. I love a free lunch, but there are not free lunches in this world. As stands now, this platform is cost-efficient for users, especially when you compare it to other centralized and decentralized exchanges.

While decentralized exchanges offer more security and control, investing through a DEX is even more complex than investing through a centralized exchange. Most DEXs struggle with liquidity, and lack fiat payments.

Liquidity is a vital element for any of the marketplace. Trading volumes on decentralized exchanges are minuscule and there is always the risk that traders will not get the best price for their trades. Bancor, the most liquid decentralized cryptocurrency exchange,in the last 24 hours had less than a $1 million in trades, a very small fraction of the volume of other exchanges.

Theoretically, governments and regulators cannot shut down a DEX because it is decentralized. While centralized exchanges are scrambling to get licenses in order to keep running, for now decentralized exchanges don’t really have to. It’s difficult for regulators to hold these exchanges accountable, since traded funds never pass through a centralized wallet and the entire process is peer-to-peer.

Decentralized exchanges represent a very small fraction of trades, which is why they are not on regulators radar. But as their trading volumes grow, we can expect regulators to take notice and try to regulate their transactions.

While decentralized exchanges are relatively new, most market participants agree they will be a big part of the future. As we evolve from centralized to decentralized, transactions will get faster, fees lower and security higher. Centralized exchanges dominate the market, but as DEXs mature they will become an appealing alternative and both will co-exist, each fulfilling its own unique purpose.

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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.

India debt market turbulence – Challenges and Opportunities for Fintech

The free money era is over. Atleast until the next recession. Its time India and its financial markets woke up to that. If they didn’t before, atleast the IL&FS crisis would have been a shock to the system. Infrastructure Leasing and Financial Services (IL&FS) are one of the top corporate debt issuers, and have 3% of the market.


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Let’s first look at the wider market factors before delving into the issue and its implications for Fintech.

Interest rates rise across the world has become the norm, and India is not alone. The Reserve Bank of India have already raised interest rates twice since June, and there is an expectation that by the time this article gets published, there might be another rate hike.

Rupee has taken a tumble this year. A 13% fall from the start of the year with a record low of 73.8188 recorded this week against the USD, doesn’t help. Rising oil prices is another factor. With all these macro factors stacking up, its hard for corporate borrowers, who have perhaps got a bit spoilt with the free money decade we have had since 2008.

Now, coming to the IL&FS crisis, these are the key points:

  • Infrastructure Leasing and Financial Services (IL&FS) provide infrastructure finance in India. With the push for infrastructure projects that happened in the last few years, they exploited the first movers advantage.
  • In August when IL&FS defaulted on a few repayments, panic hit and markets went into a selling mode.
  • The markets have taken a fall of about 6%
  • This has increased the risk of a contagion effect, and the Indian government has stepped in.

But the bigger worry, and probably the relevance for Fintechs is the failure of credit agencies that saw IL&FS as a safehouse. India Ratings and Research (A Fitch subsidiary) corrected their ratings on IL&FS from AAA to D after the defaults happened. Pointless.

There were so many warning signs. The debt size of IL&FS was $12.6 Billion. Infrastructure loans were notorious for non performance for the past three decades. And these infrastructure projects have been largely funded by short term debts. DEJA VU.

Its a failure in governance and is just a repeat of what we saw 10 years ago. If only the credit agencies had better technology to perform better analytics on firm, market and alternate data, this crisis could have been addressed differently.

What Lehman Brothers episode did to the Western world in the form of Fintech, the IL&FS saga could do to India.

My view is that the ripple this will create in the non banking financial services in India will open up new Regtech and Fintech opportunities. Some of the hyped up Fintech players in the lending space who are poorly capitalised and have bad credit models will disappear, and the fittest will survive. Better credit engines and underwriting mechanisms well supported by data analytics covering a bigger set of data to perform real time diagnosis would start to emerge.

I hope IL&FS is a blessing in disguise for Fintech in India. Once the dust settles, Fintechs should make the most of the inefficiencies in the debt markets.


Arunkumar Krishnakumar is a VC investor focusing on Inclusion, a writer and a speaker.

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.


What recent InsurTech early stage funding deals reveal about the market

Early Stage

The Insurtech Front Page Weekly CXO Briefing is all you need to know for the week, jargon free for CXO level business leaders and investors who want a piece of this huge, fast changing market. Each week we select one theme illustrated by 3 news items, because we know that you are busy. Our job is to filter out the noise, so you can read the signal. We bring you the raw news plus our take on why it is significant.

The Theme this week is early stage funding. This indicates that investors expect a robust growth for InsurTech.  A few weeks ago we looked at Insurtech Exits. The Exit is when all the hard work pays off. This week we travel back up the innovation funnel to look at 3 early stage funding deals in Insurtech, which may pay off in good Exits at some point in the future.

For this week we bring you:

Story 1: Slice Labs Raises $20M in Extended Series A to Globalize its On-Demand Insurance Cloud Platform

Extract, read more on Slice blog:

“Slice Labs (Slice), a leading on-demand insurance cloud platform provider, today announced it has raised an additional $20 million in Series A funding, led by The Co-operators with participation from XL Innovate, Horizons, Munich Re/HSB Ventures, SOMPO, Veronorte, the investment arm of Grupo Sura, and JetBlue Technology Ventures. This sizable, extended round will be used to execute on the higher than planned global demand for Slice Insurance Cloud Services (ICS).”

Hey! Compared with consumer-facing services, insurer-facing services like ICS seem to be better received among insurers. Incumbents want to be improved rather than disrupted.

Story 2: Insurtech Socotra Raises $5.5 Million Series A

Extract, read more on Crowdfund insider:

“Socotra has raised $5.5 million in a Series A funding round bringing total raised for to date to $12.8 million for the InsurTech startup. 8VC led the funding round with 8VC founding partner, Joe Lonsdale joining the Socotra board.

Socotra is a cloud-native backend with open configuration and APIs allowing insurers to deploy backend technology with their own engineering resources.”

Hey! Similar with the first piece of news. The next big leap for insurance might first be made by SaaS solution providers rather than direct-to-consumer ventures.

Story 3: Concirrus closes £5 million funding round to service customer growth

Extract, read more on Concirrus blog:

“Concirrus, the London based InsurTech company leading the Marine and Motor Analytics market change, has raised £5 million in equity funding, bringing the total raised to £12 million. The raise was co-led by Cambridge-based deep tech venture capital firm IQ Capital and specialist InsurTech investor Eos Venture Partners.

Concirrus, who have brokers, insurers, major fleets and reinsurers as clients, announced a global agreement with EY in April this year which sees the two working together to drive adoption of Concirrus’ technology in the market.  EY themselves are investing heavily in the insurance market through their Insurwave blockchain venture.”

Hey! Three in a row!  B2B SaaS solution providers seem to be resonating with early stage Insurtech investors.

The market  is open to B2B SaaS players with many different specialties. Insurers have strong demands in numerous aspects of their back offices. The digitization of core systems, scalability of internal engineering resources and data analytics offer many opportunities for startups.


Petal a flowering example of brand led fintech

Petal is a fintech startup to follow if you are hungry for brands using sophisticated design and unconventional approaches to positioning their product.

The brave startup has taken on an industry with a bad reputation – credit. Which means dislocating the visual experience is key, from the brand experience, right the way through to the product itself. This can’t feel like credit. It has to be credit, but feel like something else.

Like Starling Bank, Petal’s vertical credit card is a deceptively simple differentiator that shows the power of looking at something afresh, through a design first lens. In addition, the clever positioning of the card-holders name echoes the move towards personalised and monogrammed accessories amongst the insta-first generation.

The fintech startup, which uses ‘cashflow underwriting’ to score and set its customers credit limits, announced it had secured a $34M credit facility this week. American Banker’s catchy headline about the launch of the card to the masses – Startup lender Petal launches its subprime credit card – certainly made us chuckle. Not exactly the headline you’d like to see about your business, and somewhat of a slight on companies like Petal’s mission.

The reality is tens of millions of Americans don’t have credit scores, because they’ve either eschewed credit altogether (this is prevalent in younger demographics) or the systems designed to capture and record their ‘scores’ are hugely deficient. Many old bureaus have woefully inadequate technology and scoring algorithms, especially in the age of big data. That is a goldmine of opportunity for the right risk adjusted system.

So who else is in this space worth watching?

Keep your eyes on Deserve, another competitor in the space. Not quite up there in the branding stakes like Petal, but building a similar proposition.

Petal is smart. You don’t need to invent something new to be successful. Sometimes rearranging the furniture works just as well.

The key is obviously making sure the business growth incentives are aligned with the customer. Currently Petal makes money from interest charges, a typical approach – although it is fee free in every other regard. However in our debt fuelled economy, let’s just hope this isn’t a case of rearranging the deckchairs on the Titanic.

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.