A true story: Techfins (Amazin) beat Fintechs and Banks on SME lending

No – the title doesn’t have a typo. It actually started as a typo, but I chose to keep it that way. Google SEO will learn.


They are really Amazing Amazon for the work they do in the SME lending space (not for just that). This is a real life story, where I was involved with an SME and witnessed first hand how hard they had to struggle before they got funded by Amazon.

The SME is Ausha foods, I know them personally as they are run by a friend. After a few months of ideation and planning in 2016, they launched in 2017. They sell organic food products in the UK, based out of London. Their supply comes from Kerala (mostly) in South India.

They made sure they went for all the top certifications and are very quality focused across their supply chain. Now, this is not to provide free marketing for them, but just to set the ground for the firm under discussion.

Ausha listed themselves on Amazon as seller, and for a year have seen some serious sales happen through the platform. They have sold 18 products on Amazon over the past 12 months. After hitting good revenues there, and with 4.8 stars on Amazon reviews, they decided to expand. They wanted to ship larger volumes of their products, and needed some financing options. And like any typical funding request, they wanted the monies in 2 weeks.

For an SME who haven’t done fund raising for expansion before, it can be quite daunting. They reached out to me, and I gave them a few tips, and suggested to go for debt rather than equity as their need was small, and my ecosystem of equity investors were largely tech focused.

I put them in touch with a Fintech I knew, who were good at connecting SMEs to lenders. They got two lenders who were interested in talking to them. But both lenders wanted them to fill in tonnes of paper work, and gave a minimum time line of 6 weeks to even get to the approval stage. The result could also be a reject.

The founding team didn’t give up, and reached out to Amazon for financing their expansion. Amazon already had all the details about their products (about 18 products listed on the platform), the sale they make and the reviews they have from customers. They knew that the business was scalable, and gave them the approval for the funding request on the same day of applying. Ausha got the money in their bank account in 2 working days.

I met the founding team at a party, and I was surprised when they told me what had happened, and felt compelled to write this story.

Its critical that SMEs felt well supported by the financial services ecosystem they operated in. The founders of Ausha were well educated engineers who knew the right doors to knock on – but most SMEs don’t.

Its critical that SMEs atleast have the information on who to reach out to when they need funding. Despite the efforts of the British Business Bank, I believe, there is still a lot of work to be done in the UK to bring awareness in this space. It is also critical for these lenders to tap into data available on social media and other platforms where a borrower trades.

In an open banking day and age, they can proactively reach out to these firms when they see anomalies in their transactions, and find out if they needed any funding help. How hard can that be?

Techfins like Amazon and Alibaba have an information advantage over the Banks, and even Fintechs. These giants have transaction level information on the SMEs trading on their platform and get to see demand for their products. And when an SME fully relies on, say Amazon, it is an Amazon family SME. By funding the SME, Amazon are really funding their own growth in the e-commerce space and in the Financial Services space.

Amazon rules. Go Ausha.

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

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On the anniversary of the Lehman collapse, Satoshi Nakomoto is finally revealed


On this historic day, the story was finally revealed, on an obscure Fintech discussion forum.

Was that a good clickbait headline?

The Satoshi Nakomoto story starts in 2002, after the Dot Com crash, when Elon Musk created SpaceX. Believing that mankind was doomed unless we could populate Mars he took some of his winnings from PayPal to create the rockets to get us to Mars.

That part of the story is well known. What was revealed today is the part of the story that has so far remained secret. Musk also took an idea that was being hatched in the early days of PayPal, to create a digital currency that was Internet native, and brought it to life.

PayPal had discarded the idea, even though the founders were super excited by it, because the team had opted for the more pragmatic strategy of working within the existing bank payment rails.

This is where the story gets weird. 

When Musk dusted off the early plans for a cryptocurrency and exposed them to some serious cryptographers, they found some showstopper issues.

Musk is not a man who gives up easily. He also knew two things. The first is you cannot rush great software. The second is that timing is everything.

So he did a deal with the cryptographers – who agreed on condition of anonymity forever. The deal was that they would get first class tickets to Mars in return for creating a “purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution”. They could take as long as they needed and were instructed to release it when they could see an event back on earth that shook human’s faith in the existing financial system.

It took them 100 years. They finished it in 2102, in the MuskVille colony on Mars. Fortunately some colleagues on Mars had perfected digital time travel. So they programmed their AI machine to release the code just after the Lehman Brothers collapse. In the news release today, they also uploaded what looks like a documentary. It is the history of mankind on Earth after 2008 WITHOUT Bitcoin. It is tough to watch. 

So now we know! Satoshi Nakomoto is an AI program from the future sent back to help mankind during dark times, created by a new breed of Humano-Martians.

For more in our science fiction series please see:



If you want a more serious look at the next ten years of the global financial system, please come to the event called  Finance Disrupted 2018 (the next ten years) in New York, on 2nd October 2018. This conference is managed by the Economist and as I have been a subscriber to that publication for decades I am excited to attend. They have assembled speakers who really understand the intersection of tech and finance as it relates to major disruptions such as the Global Financial Crisis and what may happen in the next ten years. There is a 15% discount for Daily Fintech readers. Here is the link to learn more about the event. To get the 15% discount for Daily Fintech readers please quote: dailyfintech15

While there are still a few tickets to this conference, I am told that the first flight to Mars is fully sold out and non-millionaires need not apply.

Bernard Lunn is the CEO of Daily Fintech and author of The Blockchain Economy. He provides advisory services to companies involved with Fintech (reach out to julia at daily fintech dot com to discuss his services).

An interview with OKCoin CEO after the incident in SH

Xu Mingxing

Since the afternoon of September 10th, a video clip of a conversation between Xu Mingxing, CEO of OK group and police officers in Shanghai has been circulating in China’s media platform.

Soon the news becoming Xu Mingxing was taken by the police to assist an investigation. Many individual investors came to the police station to file allegations against Xu Mingxing on swindle the second day.

Media reporters managed to reach out to Xu Mingxing on September 12th. During the interview, Xu explained what on earth has happened and the reasons behind.

Original interview can be read here.

Xu also said he does not suggest Chinese users to engage in digital assets trading and he does not think it’s a good idea for ordinary users who are not specialized in risk control and trading to participate in leveraged deals.


On the incident in Shanghai

Q: Several OKEx users whose crypto position was wiped out due to leveraged deals have filed allegations to Shanghai’s police office. According to the description of witnesses, those users have called police on you. What have you been through on that day?

A: No one called police on me. Some strangers knocked my door so I called the police and briefed them.

Q: Investors have filed allegations against you and your company for fraud and swindle. How do you want to respond to that?

A: It’s everyone’s civil right to call police when they are accused of fraud, theft, robbery or battery. Police will also ask you to make a brief.

So when someone called police on me in Shanghai, I went to the police station to make a brief and to prove that I did not commit frauds. I don’t think my behaviors constitute fraud. The one who called police on me has never made wire transfers to me or my companies, nor did he sign a contract with me. I have nothing to hide. I never committed frauds.

After I finished my brief, I left the police station.

Q: But the informant was a victim of the leveraged deals on OKEx. He believes that OKEx is your company.

A: I’m not legal representative of OKEx, nor its shareholder, board member. OKEx is a Malta company.


On the leveraged deals

Q: What’s your opinion on the leverage tools provided in digital asset exchanges?

A: Leverage deal is invented by mathematicians and financial workers. It is designed for arbitrage and hedge deals. Leverage is a neutral tool. But there is a lot to learn in its application. It’s harder to handle and requires much more professional knowledge on risk management.

One major risk regular investor will meet in leverage deal is out of position. They need to have enough margin to run leverage deals. When their account can’t meet the requirement of margin call, they will be out of position.

Leverage is a tool to optimize user’s trading strategy.

Q: If leverage deal requires professional knowledge, should exchanges set a few restrictions to keep it away from regular users?

A: Leverage deal is not suitable for regular users. When your deals are leveraged, the rate of profit/loss is amplified. I do not suggest Chinese users to engage in digital assets trading and I do not think it’s a good idea for ordinary users who are not specialized in risk control and trading to participate in leveraged deals


On digital asset exchanges

Q: What’s your opinion on digital asset exchanges?

A: Digital asset exchange is under different regulation in different districts. In China, all the crypto-related business is forbidden. And exchanges in China have all been shut down last year.

In US, you need to acquire licenses from FinCEN and MTL to run a crypto exchange platform. If the tokens on your platform are considered as security, you will also be regulated by SEC.

Anyway, digital asset exchange is clearly prohibited in China.

Q: As far as I know, Chinese exchanges like OKEx, Huobi, Binance are still serving Chinese users.

A: As far as I know, most of the users are non-Chinese users in those platforms. Some Chinese users might be using VPN to access to them.


On Xu Mingxing himself

Q: OKcoin has set an office in Shanghai, what do you come to Shanghai for?

A: We have acquired an instrument examination company in Shanghai in 2016. The office belongs to that company.

We are working on blockchain technology and have set up OK Blockchain engineering lab. We want to explore blockchain in a higher level. That’s what I’m doing now.

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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Clearcover’s Expanded API and the power of incidental Insurance


Prediction #2 from my 2018 Insurtech predictions focused on 2 buzzwords that I thought would be quite prevalent this year; API and Ecosystems.

For APIs, this centered around a couple key premises:

  1. APIs help to enable digital ecosystems/platforms to distribute Insurance products with more ease and,
  2. Insurance carriers with API-enabled police admin systems/infrastructure will be able to be more nimble in their ongoing operations.

There are quite a number of companies within the Insurance industry now offering APIs across the Insurance value chain.  There have also been a number of new API announcements over the past couple of months.

This week, Clearcover, an Insurance MGA headquartered in Chicago and currently selling auto policies in California launched an expanded API offering for its product.  

I had the chance to catch up with Clearcover’s CEO and Co-Founder Kyle Nakatsuji to learn more about his background, how Clearcover compares to other incumbent and startup Car Insurance companies as well as what their expanded API offering is all about.  

Kyle’s background and why he started Clearcover


Kyle started his career as a startup attorney.  In 2013, he left to co-found American Family Ventures (the VC arm of American Family Insurance) along with Dan Reed.  

‘I spent four years there investing in all sorts of really cool insurtech startups.  At the beginning, we were mostly investing in software companies that sold to the Insurance industry.  Towards the end of 2014 and early 2015, Insurtech started gaining momentum and people started getting interested in the category.  We started to see all sorts of really interesting startups that were no longer just doing things that were adjacent to Insurance, but were actually trying to be integrated in the insurance value in a more meaningful way,’ Kyle explained to me.

He went on to add, ‘One of the things that we got really interested in as we started exploring Insurtech more in-depth was this idea we called incidental Insurance.  What we believed was that if you could use a modern technology stack and APIs to integrate Insurance more naturally and seamlessly in places where it was going to be highly relevant to people, you could give them great customer experience, make the product easier to buy and use, and also save them a lot of money because you could avoid spending on things that end up driving costs.’

With this in mind, Kyle left American Family Ventures in 2016 and founded Clearcover with co-founder Derek Brigham.  They decided that Car Insurance was the right line of business to start experimenting with this model.  

‘In P&C, we thought that the last fundamental distribution innovation was back in the 1930s, when GEICO started selling its product without the traditional commissioned agent.  In doing so, they were able to dramatically change their cost structure as an insurance company.  Because of that, they were able to offer the product for less money. Fast forward 80 years, the Internet came around and it changed how much money people spent or where they put their money, but it didn’t fundamentally change anyone’s (Insurance carrier) cost structure the way that the first distribution innovation did.  So, when we looked at what categories where customers serve to benefit the most from the affect of our distribution and business model, it was clearly Car Insurance.’

Clearcover went live with auto products in California February of this year.  As of today, they have sold over 6000 policies with annualized written premium approaching $10 million USD. Their premium run rate for the year is $17-18 million USD.

Clearcover’s Value Proposition

When it comes to startup Car Insurance providers in the US, many look to Root and Metromile.  

Both are fully-licensed Insurers, have raised some recent large funding rounds ($90m Series E for Metromile and $100m Series E for Root) and have Usage-Based Insurance (UBI)offerings within their products.  

Further, because they are fully-licensed Insurers who file quarterly earnings, their financials are regularly analyzed by Insurtech Influencer Matteo Carbone and Deputy CEO of P&C Partners for SCOR, Adrian Jones (a great quantitative analysis I must say!).

While these type of UBI offerings can be an interesting propositions for consumers, they are not for everyone.  ‘With a lot of these UBI-based products, you have to drive around for a while before you can get a quote. It’s not the type of system which lends itself well to relevant moments, because you have to commit to the insurance process for a very long time before you can make a decision,’ Kyle shared with me.  

Personally I agree.  While I like the concept of UBI, it is a bit of a commitment to me in terms of time and my personal data that I am not willing to give.

Building on the concept of incidental Insurance which Kyle mentioned to me above, is where Clearcover stands out in the current new offerings of Car Insurance in the US.

‘Kudos to them (Root and Metromile) for positioning and marketing this way.  For us, we have an Insurance product that doesn’t have a lot of complexity to it and is of really high quality, which also doesn’t require you to do much different than you would do if you were buying from a GEICO, Progressive or a State Farm. The difference is that the technologies that we’ve built allow us to deliver a better customer experience at a much lower price. Further, the use of integrated channel partnerships and our API to deliver the product in moments when it’s relevant to people allowing us to be more efficient with our advertising marketing money compared to what incumbents and startups spend,’ Kyle said.  

‘When we launched, we began with a product called Quote API, which helped us to work with price comparison engines and neo agents (digital agency platforms).   These were places where the customer is already looking for an Insurance quote. The Quote API also works in places like online shopping for a car, financing for a vehicle and online personal finance managers.  We think these areas were where we thought seeing an insurance quote would be relative to people and signed up a whole bunch of partners really quickly to use that API.’

Expanded API Offerings

‘What we’re now launching is an expanded API platform with more integration options for a partners outside the insurance industry so we can go directly to a consumer whether it’s when they’re shopping for a car, financing a vehicle, managing their personal finances, getting a loan, looking for ways to save money on bills, exploring different vehicle options, etc.’

‘There’s all sorts of opportunities for us to now say, look, you are doing something where Insurance is relevant, if you’re interested in saving a bunch of money, here’s a really easy way to start and finish that process with Clearcover.  We’re expanding the breadth of opportunities to bring Insurance to people when it’s going to be relevant to them, but the time in which they can go from interested shopper to Clearcover customer [and all while saving a bunch of money] is the fastest it’s ever been,’ Kyle explained to me regarding their new API offering.  

‘By the end of Q3 2018, we should have somewhere around 20 integrations live and that’s just the beginning.’

Some of the companies they are working with are Cars.com, Gabi, Insurify and The Zebra (to name a few).  They are also starting to add more independent agencies as they continue the move some of their business online.  

If you are interested in learning more about their API for your business, visit this link.  A further write up of their expanded API from Clearcover’s VP of Product, Adam Fischer, can be found here.


As I was preparing for this article this week, I was speaking with one of my closest friends, who is in the tech industry.  I told him that this week’s article was on APIs. His reply was ‘oh, are APIs now the buzzword for Insurtech? That’s soooo 3-4 years ago, bro.’

Well, we know the Insurance industry has taken some time to catch up to the rest when it comes to digital and innovation.  Once we are in it, though, there is no turning back.

There are a number of reasons why the API is important to the Insurance industry.  As mentioned at the beginning:

  1. APIs help to enable digital ecosystems/platforms to distribute Insurance products with more ease and,
  2. Insurance carriers with API-enabled police admin systems/infrastructure will be able to be more nimble in their ongoing operations.

Ryan Hanley, now CMO of Bold Penguin, wrote a very interesting article last week about the value of APIs.  In this, he highlighted the APIs of Lemonade, Ask Kodiak, Roost, Bold Penguin and Risk Genius.  

A list of all Insurer, Intermediary and Enabler APIs can be found here from Coverager. You can also find links to many of the Insurance APIs themselves here.

Looking at all of these offerings, one can see that APIs are adding to the flexibility that needs to come into our industry.  

What Clearcover is doing is leveraging the concept of that flexibility along with the power of the ecosystem (the other buzzword mentioned in Prediction #2) to create cost-savings that they pass along to customers in the form of significantly more affordable car insurance paired with great service.

The combination of these two buzzwords and the concept of incidental Insurance may help to turn it from a product that is sold, not bought, to one that is bought without the need to sell.  

Stephen Goldstein is an experienced Insurance executive and Insurtech dealmaker with a core focus on growing revenue, launching go to market initiatives and advising industry leaders.

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4th Money Laundering Directive for Prepaid Cards

Dear Valued Clients:

As you are probably aware, on the 20th May 2015 the European Union approved the Proposal to Amend Regulation 648/2012. This has become commonly known as the 4th Money Laundering Directive (4MLD).

As stipulated by the EU, the 4MLD will be finally adopted by all member states on the 26th June 2017. Gibraltar, being a member of the EU, will be adopting this Directive and it has already been transposed into local legislation.

The 4MLD brings along several important changes to the way that PAA CAPITAL can do business. It also makes important changes to the way our products can be sold and used.

Although our ability to continue issuing prepaid cards has not been affected, the initial load limits under which we can issue cards without cardholder verification, which you already know as KYC 1 (Know Your Customer Level 1), has significantly changed.

What are the main changes?

As of the 26th June 2017, the maximum load limit for KYC 1 cards will be reduced from . 2,500 to .250.

KYC 1 cardholders with less than .250, will have limited spend up to .100 through ATM or point of sale transactions.

To summarize, to load more than .250 or to exceed spend of .100, the cardholder must be verified.

What does this mean?

Prior to 4MLD, a KYC 1 cardholder could load .2,500 onto his prepaid plastic or virtual card before his identity and address information required verification. With 4MLD in place, a cardholder.s identity and address information must be verified to allow any loads above the new limit of .250.

A verified cardholder becomes KYC 2 and the full range of services of your Program would be available under the corresponding KYC 2 limits.

What will happen to KYC 1 cardholders on 26th June 2017?

As of 12:00 AM BST, on the 26th June, KYC 1 plastic and virtual cardholders, with a card balance that exceeds .250, will be unable to use their card(s) for any transaction. KYC 1 cardholders would need to have their identity verified to be able to spend their funds.

4MLD allows KYC 1 cardholders with less than .250 to spend up to .100 through ATM or point of sale transactions. To exceed spend of .100, the cardholder must be verified.

What does PAA CAPITAL recommend for Cardholders?

We recommend that KYC 1 cardholders verify their identity prior to the 26th June 2017.

Do these limits also apply to residents of France and Overseas Territories of France?

No. These new limits do not apply to residents of France or Overseas Territories of France as they are covered by the limits which have already been released and provided prior to this 4th Money Laundering Directive for Prepaid Cards.