News > FinTech

Would you take your paycheck in bitcoin?
FinTech
<p>The idea of getting paid in a cryptocurrency as volatile as Bitcoin would probably put most people off, but the idea is gaining traction. We already have services like Bitwage – a Bitcoin-based payroll platform for international payments – now Europe is getting in on the act.</p> <p>The Coin Telegraph reports that Bitcoin service Cashila has just released it's own Euro-to-Bitcoin payroll system that allows European employees to request their wage in bitcoin through simple bank payment, regardless of whether the employer runs a Bitcoin scheme or not. </p> <p>For a platform like Cashila, the hope is that the payroll system will fuel wider adoption of Bitcoin and therefore add value to the broader ecosystem of bitcoin services, including their own flagship product. Assuming of course that a sufficient number of employees are bold enough to quite literally stake their livelihood on a cryptocurrency.<br /> Photo: BTC Keychain</p>
Swedbank hack attack highlights pitfalls of digital economy
FinTech
<p>As Sweden forges ahead with its ambitions to become the world's first cashless society, a recent hack attack on Swedbank’s website offers a sobering reminder of the perils of a digital economy. </p> <p>Finextra reports that the Swedbank site vanished from the web on Friday morning after the bank suffered its second distributed denial of services (DDoS) attack* in as many months. </p> <p>Thankfully, the hack attack did not compromise the bank’s security or its assets. But it is a reminder that cybersecurity will have big role to play as Sweden tries to convince its citizens that digital money is safer. </p> <p>For its part Swedebank seems largely unfazed by the episode with a spokesman saying: </p> <p>"It is not the first time and it will probably not be the last one.”</p> <p>*A DDoS attack is an attempt to make an online service unavailable by overwhelming it with traffic from multiple sources. Attackers build networks of infected computers, known as 'botnets', by spreading malicious software via emails and social networks.</p> <p>Photo: Vincent Diamante</p>
DLA Piper's Veramallay on launching a startup and expanding overseas: NY vs California
FinTech
<p>Shayne Veramallay, venture pipeline manager for DLA Piper, says New York is a great jumping point for international investing in startups -- but lags the West Coast in its connection to Asia.</p> <p>Veramallay will be part of a New York City panel on November 18 discussing startups seeking to raise funds and go global in Asia. For more information and registration, follow this link here.</p>
Apple maintains a competitive advantage in consumer payments
FinTech
<p>What is the natural cost of a consumer payment? Close to zero. Electronic signals are almost costless. Once in place, verification systems are low upkeep. Fraud costs something, and someone other than the consumer has to cover that. Whether payment is from an account or as credit seems irrelevant.</p> <p>Costs of course will not be zero and providers will naturally want to charge whatever they can for the service. But JPMorgan Chase coming out with its own system and undercutting Apple Pay by offering more to merchants shows how competition will work here, as it has worked in every other electronic system. Think about a phone call or a stock transaction or an email or text—the costs keep being driven down.</p> <p>That does not make JPMorgan Chase wrong to start its service. The payments system is one of the most profitable parts of banking. The large banks have to try to defend their franchise, and consumers will benefit the most from the competition.</p> <p>The WSJ recently  wrote about this subject, fairly intelligently for the most part. But then it threw in this clunker:</p> <p>J.P. Morgan has already lined up a huge group of merchants, including Wal-Mart and Best Buy to accept payments through its technology. How the bank won this business is instructive: The fees for Chase Pay transactions will be lower than for payments made with traditional methods such as debit and credit cards. That effectively means J.P. Morgan is willing to cannibalize profits from its traditional payments business to win market share.</p> <p>While that can be painful, it is less so for banks. They can offset lower fee income with what they make lending money. The same largely isn’t true for tech rivals. As the struggle heats up, it is likely anyone who wants to be a big payments player will have to offer increasingly expensive incentives to merchants and consumers.</p> <p>What I am focusing on here is the notion that banks can make up for lower fee income by making more on loans. If anyone has been around banking for more than a few years, they will remember that the search for fee income came about because banks were not sufficiently profitable based solely on the spreads they earned. And lending is a dangerous business because it is pro-cyclical. It makes money when times are good and loses money when times are bad. Fee income is less cyclical and therefore provides a suitable balance to spread income.</p> <p>Have the WSJ writers forgotten this history? Or do they think that lending has changed? Whatever the reason, there is no difference between the profit per transaction for a bank or for a non-bank. Both have to use capital to create the system they use and both have to operate the system. Profit for either depends on cost per transaction, what they charge per transaction, and volume (crucially, volume). The conglomeratization of a bank through its several business lines or Apple through its far broader set of business lines or of PayPal through its narrower set of business lines is irrelevant. All the players will drive costs as close to zero as they can, and all will compete for business by charging consumers as little as they can while earning profits. The advantage that Apple has is that it sells the phones that originate the transactions; therefore it potentially benefits not only from Apple Pay transactions, but also from everyone else’s transactions that are originated using iPhones—and maybe the iWatch even newer devices as well.<br /> Photo: LWYang </p>
Q&A: Ex-Mt.Gox exec Thomas Glucksmann-Smith shares the perils of the fintech frontier
FinTech
For every success on a new frontier there is also a horror story. For many Bitcoin users that horror was Mt. Gox, the Japanese Bitcoin exchange that went from handling 70% of all bitcoin transactions in early 2013 to losing $473 million of the cryptocurrency a year later. Thomas Glucksmann-Smith had a front row seat on the collapse. He joined the
Bitcoin dismissed as 'kind of cute'
FinTech
<p>A couple of financial heavyweights don't think much of bitcoin. J.P. Morgan CEO Jamie Dimon told delegates at Wednesday's Fortune Global Forum that: "It's just not going to happen. You are wasting your time," reports The Daily Telegraph.</p> <p>"There will be no real-time, non-controlled currency in the world. There is no government that is going to put up with it for long. It's kind of cute now, a lot of senators and congressmen will say, 'I support Silicon Valley innovation', but there will be no currency that gets around government controls."</p> <p>Sharing the platform, Christine Lagarde, managing director of the IMF, was equally scathing.</p> <p>"Pause for a second. As long as those new technologies are going to abuse and take advantage of the yield for anonymity, I think the banking industry has quite a few good days ahead of it; as long as it takes ownership of those issues of capital and culture in order to restore trust, without which no trade, no transaction, no business can take place," she said.</p> <p>It's hard to know whether their scorn is a genuine expression of contempt or hides a deeper feeling of panic.<br /> Photo: BTC Keychain</p>
ING mulls China online banking venture
FinTech
<p>Dutch financial services giant ING says it's looking into the prospect of launching a joint online banking venture in China with its long-term local partner Bank of Beijing.</p> <p>Reuters reports that ING CEO Ralph Hamers let slip the plans during an earnings call on Wednesday. The two institutions reportedly signed an MOU last week and are now researching the feasibility of the venture. </p> <p>This is not the first time ING has dabbled in fintech ventures, after all it was an early backer of PayPal, but like many of its banking peers the Dutch lender has been pushing extra hard on the fintech front in recent months. </p> <p>ING launched its first fintech accelerator in Belgium in July and just chipped in for a $135 million Series E round of funding for U.S. fintech startup Kabbage last month. If this latest venture comes to fruition, however, it will be will be ING’s first notable fintech play into Asia.<br /> Photo: ING Nederland<br /> &nbsp;</p>
Betterment hits $3B in AUM
FinTech
<p>Betterment has been crowned the new king of the robo-advisors.</p> <p>The 7-year-old wealth management platform now holds more than $3 billion in assets under management, almost three time as much as it managed in January, reports the New York Post. Betterment has made strides across the industry, as Goldman Sachs recently approved the platform for Goldman employees to use for investing. Betterment is also in talks with JP Morgan for a similar agreement.</p> <p>Wealthfront, Betterment's main fintech rival, manages "nearly" $3 billion in assets, according to its website. Charles Schwab's robo-platform has the backing of a traditional firm, but a product that rivals fintech firms like Betterment. The Schwab robo-platform manages more than $4 billion.<br /> Photo: OTA Photos</p>
The three big challenges facing fintech founders
FinTech
<p>As large as the fintech opportunity is in Asia, it is also complex and full of pitfalls for even the most capable entrepreneur. </p> <p>At Accenture's Fintech Innovation Lab Investors' Day at Hong Kong’s  Cyberport on Wednesday — during which seven fintech startups pitched to an audience of prospective investors — Jonathan Allaway, senior managing director at Accenture, highlighted three of the key challenges facing fintech startups entering his company's  accelerator program:</p> <p> Anticipating demand</p> <p>"Many founders underestimate the sheer demand in the market for their innovation. They have to learn to prioritize, and learn that adopting a less-is-more management approach is a good thing. That is probably paradoxical when there are entrepreneurs who want to capture as much market share as possible. But they can't physically do it given the scale of their business so they must always prioritize." </p> <p> Balancing scale and innovation</p> <p>"A lot of financial institutions want to differentiate and become bespoke. There is a tendency to take a startup's standard product that is already innovative and to try and make it unique to each instance it's applied it in. Founders will have to make management choices about how they can get standardization to scale and also keep innovating." </p> <p> Human resources</p> <p>"Another challenge is that founders underestimate the importance of people in their business for pre-sale and post-sales support as the company grows and accelerates. One CEO told me he felt like the chief HR officer not the CEO, spending more time looking at people issues. But that is just a natural reality of being innovative and being in a market that is growing and investing."<br />  Photo: NexChange</p>
Financial services get a 'wake-up call' as Asian fintech deals quadruple
FinTech
<p>Fintech investments in Asia Pacific are set to quadruple this year as venture capitalists and financial institutions hungry for piece of the action pile cash into the rapidly growing sector.</p> <p>These are the findings of a report released by management consulting firm Accenture on Wednesday. The report estimates 122 deals netted $3.46 billion of investment in the region's fintech space for the first nine months of the year, dwarfing the $879 million raised over 117 deals for the whole of last year. Beat Monnerat, senior managing director at Accenture and the company’s Financial Services lead in Asia Pacific, commented:<br /> “The increasing deal size should serve as a wake-up call to financial services companies in China and across Asia-Pacific that if they do not offer truly useful, customer-friendly digital solutions, competitors will step into the breach not just on the retail front but also in commercial transactions.”<br /> The report neatly  coincides with the Fintech Innovation Lab Investors' Day being hosted by Accenture at Hong Kong's Cyberport. The event — which marks the culmination of Accenture's 12-week fintech accelerator program — showcases seven of the most promising fintech startups operating in Hong Kong.<br /> Photo: Peyri Herrera<br /> &nbsp;</p>