News > FinTech

Aberdeen CEO talks technology and his paranoia
FinTech
<p>All asset management CEOs are worried about industry disruption, says Martin Gilbert, CEO of Aberdeen Asset Management.</p> <p>"As a chief executive I’m paid to be paranoid!" Gilbert wrote in a recent blog for the Press and Journal. Asset managers are waiting for the financial equivalent of Uber or iTunes to completely rip apart their traditional business models, he says.</p> <p>If Apple were to announce it was entering the money management world next year, it would strike terror in the hearts of Gilbert and his fellow CEOs. Apple isn't a financial company with the expertise of Aberdeen, Goldman Sachs, BlackRock, or others, but the company is such an innovative force that has shaken the world in less than a decade that any industry should be afraid of it, says Gilbert. "I’m not arrogant or complacent enough to think that we can rest on our laurels for a second," he writes. Even if a money manager is flexible and tries to keep up with the times, it will still be inhibited by its size and regulations.</p> <p>Gilbert isn't waiting for technology to come to him. The CEO is visiting Silicon Valley himself to learn about new fintech and encourage Aberdeen's new "innovation committee"</p> <p>"What is certain is the way we do business and interact with clients in ten-years’ time will be completely different to how we work today," Gilbert says.<br /> Photo: Niall Kennedy </p>
Robo-advisors: Rise of the machines
FinTech
Are robo-advisors a threat to their traditional human counterparts? The role of artificial intelligence in portfolio management is still relatively nascent and limited in scope -- by the end of 2014 robo-advisors managed just $19 billion, according a recent Citi study -- but that is changing. Already robo-advisors like Betterment and Wealthfront are proving the space has massive potential. Even the
Apple vs Google vs Samsung: The war for the mobile wallet
FinTech
<p>It’s on! Google and Samsung are now among the first mobile wallet providers to join MasterCard's newly launched Digital Enablement Express, a platform intended to speed up the roll-out of digital commerce.</p> <p>This comes as Apple cranks up its bank partnerships in the US and Europe ahead of today’s “Hey Siri” media event.  The war for the mobile payments supremacy is in full swing, but how do the belligerents compared?</p> <p>Apple </p> <p>Apple’s OS-based proprietary system Apply Pay allows you to pay by taping your iPhone over an NFC-enabled point-of-sale (POS) terminals. It has ready partnered with over 2,500 banks and credit card issuers, and the number is growing. But they have teething problems, Apply Pay adoption rates have been disappointing to date.</p> <p>Google</p> <p>Google’s first foray in payments - Google Wallet - will soon be discontinued,  making way for its latest offering - Android Pay- which will be launched with the Android 6.0 Marshmallow OS. It doesn’t have as many partnerships as Apple yet, but it hopes to make life harder for its rival by leveraging its one  big advantage: it works across all NFC-enabled Android devices. </p> <p>Samsung  </p> <p>The South Korean firm is a latecomer to the space but will no doubt shake things up with Samsung Pay. This system has wider coverage than its rivals because it allows users to make payments by placing their phone on, or near, magnetic stripe card readers already in wide use. So merchants do not have to install special equipment.  It has already signed up the like of Visa, MasterCard and Chase as partners.</p> <p>The other guys</p> <p>You  cannot talk about mobile payments and neglect to mention Alibaba’s AliPay or Tencent’s WeChat payments platform, both NFC-based. Focusing on China for now, these two are at each other throats but are yet to do battle with the other three. That said, they still have foothold in Asia, potentially bringing them up against Samsung, or putting a damper on any ambitions by Apple or Google to expand into China.  <br /> Photo: Thomson20192</p>
Is China leading the global banking revolution ?
FinTech
<p>The spread of digital banking has been vast and rapid in China but also largely ignored outside the country, as the biggest players focus first on the domestic market.</p> <p>This year we have seen two big tech giants - Alibaba and Tencent - launch into the banking space. First was WeBank, an offshoot of Tencent’s payments service QQ and its messaging app WeChat; this was followed by MYBank, formed out of Allibaba’s AliPay and ANT Financial.  </p> <p>With a lack of equivalent maneuvers by Western tech giants - who are just getting into payments - it begs the question: is China leading the way on financial innovation? This the question asked by Chris Skinner in his Financial Services Club Blog. </p> <p>Rivals Alibaba and Tencent have already been in the finance space for at least two years. Both launched payments services bundled in with their chat rooms and messaging apps. </p> <p>Tencent in particular enjoyed a massive uptick in the adoption of its payments service last year when it allowed users to send money to family and friends on Chinese new years in the form of virtual red envelopes - $64 million was transacted. Alibaba then upped to ante by giving away $96 million in lucky money gifts.</p> <p>This latest foray by both into the banking sector comes by dint of China’s regulators offering private companies the opportunity to apply for banking licences last year. The two banks differ from incumbents by focusing on micro-lending, due to restriction from regulators.</p> <p>This way China has opened up the banking sector to the private markets without threatening the state-owned banking sector. There will no doubt be issues down the road, particularly if they look to eventually target overseas users. But for now, it shows China’s tech giants are already some way down the road, while their Western counterparts are still putting their boots on.<br /> Photo: Tauno Tohk</p>
I'm outta here: How institutions spoiled peer-to-peer payments
FinTech
<p>When I first focused on peer-to-peer lending four or five years ago, I had great hopes for the medium. It seemed like a great use of technology to disintermediate lenders that painted with a broad brush and therefore overcharged their best customers.</p> <p>I put a little money with one of the lenders and began to invest in individual loans that I thought were safely relative to their interest rates. It took me a relative few minutes to find loans that I thought creditworthy, and they performed quite well. I felt good about it, too, because I was supplying the means for borrowers to reduce their payments and to get better control of their financial lives.</p> <p>Gradually, however, I noticed it was getting harder to find loans that met my criteria. There were more loans to choose from, but fewer good ones—and even fewer where the borrower had answered the kinds of questions that previously had been common. What was going on, I wondered.</p> <p>Then I learned. Institutions were buying the loans in bulk. They did not look at individual loans to cherry pick as I had done. They were back to their old way of doing business, merely using the peer-to-peer lender as a front end. Therefore the quality of the credits deteriorated. The companies like Lending Club became more profitable because they had greater throughput, but the original idea of disintermediating the institutions by evaluating the credits individually was pretty much gone.</p> <p>Was that progression a product of the low interest rate environment, where institutions were greedy for yield? Or was it a product of the way that value is created for the technologist in a society where going public is the logical (and, for success, perhaps necessary) end point? Or, as some people have suggested, is using the peer-to-peer lender as a front end a way to discriminate against some kinds of borrowers by using algorithms that exclude them?</p> <p>Whatever the causes, I regret the way the process has gone, and I hope competitors will arise that more truly will reflect the goals of the original peer-to-peer lending platforms. But perhaps the institutions, awash with cash and searching for yield, simply would defeat the purpose again. For my part, I am out of that market. Institutions are highly leveraged, and they look for a spread against their cost of funds, and because of their volume, they merely assume a level of defaults and write-offs. I use my own money, and my hurdle rate is higher than theirs seems to be—and I hate defaults. They are a sign that I did not underwrite well enough, and they reduce my yield.</p> <p>Too bad, there went another asset class to invest in. Nothing looks attractive recently. But who knows, maybe the time for oil has come again. Its downside seems modest and patience may be rewarded so long as one stays away from leveraged situations.</p>
Leapin' Lizards! The economics behind DDoS attacks and the lizard squad
FinTech
<p>&nbsp;</p> <p>The cybersecurity business is exploding, and not just for the good guys. Distributed denial-of-service attack (DDoS) company Lizard Squad claimed responsibility for taking down theUK’s National Crime Agency website just last week.</p> <p>Macquarie analyst Mike Cikos recently took a closer look at the business of DDoS-for-hire companies.<br /> What Is A DDoS Attack?<br /> The goal of a DDoS attack is to make a website unavailable for its intended users for a certain amount of time by utilizing thousands of unique IP addresses.</p> <p>The two general forms of DDoS attacks are those that are intended to bog down services with traffic and those that are intended to crash the service altogether.<br /> Booter Service<br /> Booter service providers like Lizard ...</p> <p>Full story available on Benzinga.com<br /> Photo: Steffen Ramsaier</p>
UBS is the latest bank to launch lab to test Bitcoin-inspired technology for trading
FinTech
<p>Swiss bank UBS is elbowing its way into the digital vanguard with a prototype Bitcoin-inspired currency.</p> <p>UBS is developing something called “utility settlement coin” by making use of the same blockchain technology that drives Bitcoin. According to the Wall Street Journal, it hopes its virtual currency will be used by banks as a basis to settle mainstream financial markets transactions. </p> <p>The idea is that UBS will have its own blockchain-based platform to issue bonds, and another bank might have a blockchain-based stock trading platform - both will use the same utility coin for settlement. </p> <p>The advantage of blockchain is that the ownership of assets is verified by a decentralized network of computers rather than a centralized authority. This could potentially make transactions quicker, safer, and cheaper. </p> <p>The project - which is being developed with London-based fintech start-up Clearmatics - is helping to cement UBS’s reputation as a fintech player. Last month the Swiss bank launched a competition to attract fintech start-up to its incubator program.<br /> Photo: BTC keychain</p>
What finance can learn from Blockbuster
FinTech
<p>The growth in the number of fintech startups threatening to disrupt the financial sector has sparked both alarm and glee in equal measure. Its not the first time an industry has been flipped on its head by a group of plucky young newcomers, so comparisons are inevitable. One of the most popular is Blockbuster Video.</p> <p>If you don't remember, Blockbuster was the offline video rental giant that pretty much had the monopoly on movie night - that is, before Netflix. To its eventual demise, Blockbuster had dismissed this scrappy young tech startup when came onto the scene in 1997 - it even turned down an offer to acquire the business. The rest is history. </p> <p>The question today is could banks make the same mistake when it comes to fintech? It is a possibility says Ryan Caldwell, CEO of digital banking platform MX. In an article for The Financial Brand he writes that banks and credit unions will only avoid a similar downfall by investing in consumer-centric services like digital account opening, digital lending, and digital payments</p> <p>They also ignore young pretenders at their peril. Caldwell cites the example of San Francisco-based loan platform Lending Club:<br /> “Some people might say that Lending Club represents such a small presence in the loan business that there’s no need to worry. However, it’s worth keeping in mind that when Netflix first started out — nearly two decades ago — Blockbuster said the same thing.”<br /> He is not the first to make this comparison, Bank Director editor Jack Milligan made a similar observation this year, referring specifically to the lending space.</p> <p> However, the extent to which big banks have sought to invest in their would-be disruptive - Barclays, UBS, and DBS to name but three - would suggest some are not prepared to make the same mistake as our erstwhile home video store. <br /> Photo: trebomb</p>
Could China's chaos be a boon for Bitcoin?
FinTech
<p>While China’s ongoing market turmoil has had everyone counting their losses, Bitcoin might just be counting its blessings. The prospect of Beijing bringing in massive the capital controls in a bid to bring outflows under control has set the stage for a surge in the virtual currency’s value, says ZeroHedge.</p> <p>Just as fears of a Grexit, and return of the Drachma, had pushed up the value of the Bitcoin at the beginning of summer - before Bitcoin’s value dropped over fears of a forking last month - China fears also could trigger another digital rally. </p> <p>Looking at the various Bitcoin indices on Coindesk.com this surge is yet to happen.  The volatile currency is now trading at around $229.7 apiece and has been jumping around at that price for past two weeks having hit a trough in the middle of August of around $220. A far cry from mid-July when the Bitcoin was valued at around $310.  </p> <p>But that doesn’t mean it won’t happen, ZeroHedge’s Evander Smart reflects that - with over US$22 trillion on deposit - even a small shift by the Chinese market towards bitcoin could dwarf the surge of 2013, when Bitcoin’s value increased ten-fold with its introduction to China.<br /> Photo: BTC Keychain</p>
The real Apple flop: Do you know what it is?
FinTech
<p>How quickly we all forget. A new dawn, a new day, a new life -- well, never mine. Apple promised to change the face of payments with Apple Pay. And I had been betting the Apple Watch would flop. But the numbers suggest that consumers just don't  mind using their credit cards the old-fashioned way. Once more, the tekkies provide a solution to a problem that doesn't exist.</p> <p>Drum roll, please, for the data on Apple Pay via Bank Innovation:<br /> In a recent post from PYMNTS.com, retail data analytics firm InfoScout is reporting Apple Pay usage has been on a steady decline since a seemingly promising upswing in March 2015. In the three months that followed, usage fell two points from 15.1 to 13.1 percent. What’s more, of the nearly 40 percent of consumers surveyed in March who said they had used Apple Pay to complete a transaction, only 23 percent still said “yes.”<br /> Frankly, we think consumers would be much more excited if banks and retailers could thwart hackers more effectively.</p> <p>Photo: Allen</p>