News > FinTech

Backing startups
FinTech
<p>Investment banks suffering from falling sales and trading revenues are turning to Silicon Valley to boost income. None more so than Goldman Sachs, reports the Financial Times. (paywall)</p> <p>“The bank has climbed back up the league tables for tech IPOs, according to Dealogic, and was recently appointed lead underwriter on the IPO of Square, the payments company. So far this year Goldman ranks second among tech underwriters behind Morgan Stanley, and is a clear number one in M&amp;A,” writes the FT.</p> <p>But, there are risks. </p> <p>“If one individual does much of the legwork, banks make themselves vulnerable if that person leaves. That was the case at Goldman when Anthony Noto [one of the three leaders of the bank’s tech, media and telecommunications division] left last year and joined Twitter, via a short spell at a hedge fund."</p> <p>In addition, “cosying up to young start-ups with unpaid work and other favours can also create 'awkward situations', notes another rival banker, if there is no obvious reward at the end of it.”<br /> Photo: Patrick Nouhailler<br /> &nbsp;</p>
The global race to win the crown of fintech capital continues apace
FinTech
<p>The battle is on to create a global fintech center. Top contenders: The U.S. and U.K. Startups around the world (especially Israel) may be idea-machines but they need large markets to scale. In Asia, Hong Kong and Singapore are vying for the startup crown, lagging well behind mainland China.</p> <p>Enter Funding Circle, which Daily Fintech argues could be giving London an edge in the global competition:<br /> Funding Circle looks like it is joining the really big Lending Marketplaces such as Prosper and Lending Club. As this marketplace is in hyper growth phase with maybe 5-10% penetration of a massive market, this is a huge opportunity for Funding Circle. They have one big advantage – Funding Circle focus has always been on small business lending rather than consumer and as our research showed in November 2014, that is were the action is.</p> <p>So it looks like Funding Circle could be one of those big winners that London needs in order to earn its coveted Fintech Capital of the World status. Lots of exciting new ventures is not enough. London needs a couple that scale to be global winners (like Hanson Trust). To do that, they need to win big in America.<br /> The ultimate crown goes to the host of the largest and most numerous IPOs. Where will Funding Circle list when the time comes?<br /> Photo: Christian Bucad</p>
Why users are raging at WeChat's new payment charges
FinTech
<p>WeChat, the popular Chinese social messaging app owned by Tencent, has started to charge its users for its payments and money transfer services and they are very unhappy about it.</p> <p>The amount being charged is small — 0.1% on spending and transfers over 20,000 yuan — but it has still managed to irk users who until now have been getting the services for free, according to Tech In Asia.</p> <p>The most galling aspect is that WeChat is competing Alibaba's Alipay which currently holds the lion's share of the market. Alipay doesn't charge users for its services (unless they are using the website were it charges 0.2%). Tech in Asia quoted one Zhengzhou-based user as saying:<br /> "Alipay controls more than 70% of the market, and WeChat only controls more than 10%. I really don’t know where [Tencent CEO] Pony Ma’s confidence is coming from?"<br /> It's a good question, but there is perhaps an equally good answer. While Alipay dominates now, WeChat has a few tricks up its sleeve. As the country's number one messaging app WeChat has a suite of products it can draw from to incentivise users to sign up to its services.</p> <p>These services include WeChat's Chinese New Year red envelopes promotion, for gifting money to relatives, and City Services, a platform that allow users to manage things like a doctors appointments and handle utility bills via its chat app. This is likely why users are so angry, because many are so tied into WeChat's ecosysyem that there is very little they can do about it.<br /> Photo: Steven Depolo<br /> &nbsp;</p>
Wealth management plays fintech catch-up
FinTech
<p>&nbsp;</p> <p>New technologies are disrupting the financial industry. Innovative applications and alternative service providers are transforming the sector across the spectrum, from payment systems to cryptocurrencies, from client accessibility to more efficient trade execution.</p> <p>However, wealth management firms have been slow to introduce technologies that have been vigorously implemented in other parts of the industry. The arrival of new entrants with vast databases, such as Alibaba and Google, has been a catalyst for a change in mindset.</p> <p>“There are so many exciting trends and developments taking place on the internet, and so much that wealth managers can adopt and apply in order to enhance their services and reduce costs,” says Mads Faurholt-Jorgensen, managing partner, Nova Founders, who will be delivering a presentation at the Cyberport-Nexchange O-2-O Meetup in Hong Kong on 27 October. (Register here.)</p> <p>This need is nowhere more evident than in Asia. China and India are home to the fastest growing number of rich individuals on the planet, according to the RBC Wealth Management and Capgemini World Wealth Report (2015). Banks and the new pretenders are eager to tap into these growing markets, but costs are high and competition is feverish.</p> <p>The winners are likely to be firms that not only introduce new technologies rapidly, but also create viable, long-term business models.</p> <p>“There is fierce competition in the industry. Wealth managers are investing in financial technology, often through accelerator programs, and are now implementing essential services demanded by a digital-savvy new generation of clients,” says Joanne Murphy, managing director, Asia Pacific, CAIA Association.</p> <p>"They must branch out digital channels to connect with customers and reduce cost pressures," agrees Peter McMillan, head of wealth management, Asia, Thomson Reuters.</p> <p>Asian operations, in particular, suffer from high cost-to-income ratios and a shortage of experienced, well-connected relationship managers. They are also under pressure to offer open architecture products, differentiated by specialist services such as high-prestige property investments and philanthropy.</p> <p>This means that robo-advisors will not take over their world yet. There is clearly still a requirement for the personal touch.</p> <p>“New technology is supplementing not replacing the role of relationship managers,” argues Phillip Yoon, CEO, Phinary Advisors.</p> <p>Nevertheless, “if a bank were to start up a wealth management firm now, its business model would look very different if it made full use of the technology available today,” says Dr. Cédric Jeannot, founder and CEO, APrivacy.</p> <p>“Costs would be lower and client satisfaction greater,” he adds.</p> <p>The potential uses of state-of-the-art technology are extensive. Both relationship manager and client can benefit from more focused research and data, providing a customized service. Portfolio allocation, rebalancing, optimization and measurement can all be improved, and trade execution made cheaper and faster.</p> <p>And this is where new entrants have an edge.</p> <p>“Often, they are can create nimble platforms catering for specific demand. In addition, the conventional wealth management industry is being challenged by niche family office service providers, as well as from penetration by firms ranging from Google to insurance companies with access to large databases,” says Andrew Crooke, editorial and content director, Hubbis.</p> <p>Editors note: Cyberport and NexChange are hosting a three-hour “Wealth Management and Fintech” Meetup on 27 October (16:00-19:00) at Cyberport 3, Hong Kong. It will be the second in a series of events that will examine the impact of new technology in the</p>
Fintech companies build financial basics in Africa
FinTech
<p>For a region where only one-third of people have bank accounts but more than two-thirds have cellphones, fintech isn't just revolutionary. It's essential.</p> <p>Fintech in Sub-Saharan Africa is beginning to chip away at cash's dominance, giving more options for banking, payments, and transfers, reports CNN. Here are five fintech startups can are impacting finance in Africa:</p> <p> 22Seven: This Cape Town-based app links to bank accounts to allow users to create budgets and make investments.<br /> Nomanini: Linked to cloud software, Nomanini is a payments platform for informal vendors in unstructured markets making small transactions.<br /> Zoona: Similar to the popular Kenyan system M-Pesa, this Zambian cellphone-based service allows money transfer for the unbanked.<br /> GetBucks: Another South African startup, GetBucks wants to be the "private bank of the underbanked," providing short term loans and other products online.<br /> Cellulant: The Kenya-based company works across 10 African countries allowing mobile payments and banking services.</p> <p>Photo: David Stanley</p>
70% of bankers see fintech making significant impact on banking
FinTech
<p>&nbsp;</p> <p> A new survey of bankers and Fintech executives highlighted the impact that Fintech is having on the banking world.</p> <p> Nearly three out of every four bankers foresee some form of major disruption from Fintech.<br /> Fintech executives expect the deposits and small business loan segments to be most impacted.</p> <p>&nbsp;</p> <p>The Fintech revolution has grown rapidly in recent years, and it appears as if it will not be going away anytime soon.</p> <p>How much of a threat does Fintech pose to traditional banks? A new survey of 100 Fintech executives and 100 senior bankers conducted by the Economist Intelligence Unit (EIU) and sponsored by Hewlett Packard Enterprise shed some light on where Fintech is headed and if big banks should be worried.</p> <p>Here’s a look at some of the key findings from the ...</p> <p>Full story available on Benzinga.com</p> <p>Photo: FamZoo staff</p>
Cybersecurity and Israel's booming fintech space
FinTech
<p>Cybersecurity was high on the agenda this week when a delegation of Israeli startups gathered in Hong Kong for the 2nd Israeli FinTech Forum.</p> <p>The event, hosted by the Consulate General of Israel of Hong Kong and Macau alongside FinTech HK, saw a total of 11 companies showcasing their businesses to attendees.</p> <p>Sectors varied from payments and big data analytics to software-as-a-service (SaaS) solutions, but security was overwhelmingly the biggest fintech sub-sector. Here are some of the start-ups that presented:</p> <p> Algosec (Cyber securuty)<br /> Beyond Security (Cyber securuty)<br /> BondIT (Portfolio managament)<br /> Checkmarx (Cyber Security)<br /> CyberInt  (Cyber Security)<br /> OffLA (Cyber Security)<br /> Pronto.ly (Payments)<br /> SentinelOne (Cyber Security)<br /> ThetaRay (Big Data)<br /> Wisesec (Payments)<br /> 2 Team (SaaS)</p> <p>Israel is a natural hub for the fast-growing cyber security industry which offers a range of fintech solutions including fraud preventation and anti-hacker software.</p> <p>The sector sits at a crossroads between the Israel's hi-tech industry and its sizable defense sector. The synergies are such that Israel startups are now poaching military and intelligence officers to give them the competitive edge in the space, according to the Wall Street Journal.</p> <p>For its part Hong Kong could be a big investor in Israeli cyber security. During the event, Sagi Karni, Israel's Consul General in Hong Kong, told the audience that in the last three years VC flows from Hong Kong to Israel's tech industry totalled $500 million, and the number is increasing.<br /> Photo: istock</p>
A Blockchain Alliance has been formed – not everyone is happy
FinTech
<p>As part of the industry’s ongoing fight for legitimacy, a group of blockchain companies have decided to club together and form the Blockchain Alliance in order to better aid law enforcement. Some in the industry are alarmed.</p> <p>Created by Coin Center and the Digital Chamber of Commerce, two Washington D.C. trade associations, the Alliance is a private sector initiative intended to create a forum whereby enforcement agencies and regulators can share information and get technical assistance from the industry on blockchain. </p> <p>Some 16 companies and organizations – see the release for a full list – have agreed to work with a several government enforcement groups including:</p> <p> The FBI<br /> U.S. Marshals Service<br /> U.S. Secret Service<br /> Immigration and Customs<br /> Homeland Security<br /> Commodity Futures Trading Commission</p> <p>Needless to say, in a post-Snowden world, this does not chime well with some liberty-loving bitcoiners. Knowing this, the Alliance has stressed that it will not be a backdoor for the government to get info on companies and their customers but rather a “higher level discussion about typologies, trends, and technical issues.”</p> <p>That said, there is still some skepticism and debate on both Reddit and on the Bitcoin community forums over the extent to which the bitcoin community should be engaging with The Man. People like Bitcoin foundation director Bruce Fenton and Bitcoin Foundation chief scientist Gavin Andresen have weighed in on either side of the argument. And then there are the twitter reactions: </p> <p>New Blockchain Alliance is a big step to ensure Bitcoin is used for innovation, not crime. Well done, @coincenter. https://t.co/lTrkf8DEeD<br /> — Rep. Jared Polis (@RepJaredPolis) October 22, 2015</p> <p>Blockchain Alliance -- at first glance, a profoundly bad idea https://t.co/Vini88Nt7g<br /> — Bruce Fenton (@brucefenton) October 22, 2015</p> <p>Value your privacy? DO NOT use any of the products or services listed in this Article. https://t.co/VfeCLTYIlN</p> <p>— Samourai Wallet (@SamouraiWallet) October 22, 2015</p> <p>@lightcoin Fintech is getting into Bitcoin that is why we nee</p>
Retail banking could witness “fintegration”: EIU
FinTech
<p>Over the next five years, retail banking is likely to see a growing trend of banks’ co-option of Fintech models, notes EIU.</p> <p>The Economist Intelligence Unit published a report titled: “The disruption of banking” after surveying over 100 senior bankers and 100 Fintech executives to ascertain the likely landscape for the retail banking industryover the next five years.<br /> Fintech will strongly impact retail banking landscape<br /> The EIU report points out that digital disruption is the top-of-mind technological issue in the C-suite today, with senior executives in virtually every industry wondering whether their firm will be Amazoned or Ubered. The report notes the multi-trillion-dollar banking industry is facing disruptive challenges by financial technology upstarts, known as “Fintech”. The EIU report reckons over $25 billion has been poured into Fintech in the past five years, making it the number-one target for venture funding.</p> <p>Highlighting the enormity of the challenge, the EIU report draws attention to JPMorgan CEO Jamie Dimon’s remarks to his shareholders about Fintech: “They all want to eat our lunch. Every single one of them is going to try”.</p> <p>The EIU report points out that though over 90% of households in developed economies use a bank, over 90% of bankers project that Fintech will have a significant impact on the future landscape of banking. However, a majority of bankers (54%) believe that banks are either ignoring the challenge or that they “talk about disruption, but are not making changes”.</p> <p>Touching upon the strength of banks, the report notes one of the hallmarks of the customer relationship is a reputation for trustworthiness and stability with no major retail bank failed in the 2008 financial crisis. Nearly 95% of bankers and Fintech executives believe that banks will remain in a strong position even as Fintech gains ground:</p> <p>Banks will continue to dominate<br /> The EIU survey reveals that Fintech executives respect the banks more than the bankers themselves do. Responding to the future balance between the two segments, Fintech executives were more than twice as likely to predict that banks would continue to dominate the market:</p> <p>The EIU report points out that Fintech firms have the ability to take a “category killer” approach to banking portfolios, as the Fintech firms are able to maintain a laser-like focus on a single product, building excellence into both the technology and customer experience:</p>
Silicon Valley is hot for insurance tech, and Google is leading the way
FinTech
<p>Insurance may be not be the sexiest area of finance but it certainly seems to be doing something for Silicon Valley where investors are courting disruptive start-ups, and internet giants like Google are looking for a piece of the action.</p> <p>Back in June, CBInsights reported that 2015 was already a record year for insurance tech investment with for $832 million being pumped into the space. That's a 9X increase from five years ago, accounting for more than a third of the $2.12 billion raised by insurance tech companies since 2010.</p> <p>A more recent report shows that Google in particular has been doubling down in this space, signing off six separate partnerships and investments in insurance tech just this year. Its biggest deals include the firm's own Google Compare service, an auto insurance comparison platform launched in March in partnership with CoverHound and Compare.com. But it goes beyond that.</p> <p>Google has backed three firms in the medical insurance space, via its investment units Google Ventures and Google Capital, the most recent being Collective Health.  It has also partnered with home insurers Liberty Mutual and American Family Insurance through its internet-of-things product line Nest.<br /> Photo: GotCredit</p>