News > FinTech

UK finance minister wants London to claim the fintech crown
FinTech
<p>London already soars ahead of most other cities when it comes to fintech, but the UK’s finance minister George Osborne wants the city to be nothing less than the world leader.</p> <p>Speaking at the Bank of England Open Forum event on Wednesday, the chancellor of the exchequer said the government was working with big four audit firm EY to draw up a benchmark to compare London with international fintech rivals like New York, Silicon Valley, and Hong Kong, reported the Financial Times (paywall). </p> <p>Osborne has already long since pinned his colors to the mast as a champion for London’s fintech industry. Earlier this year he chose VC Passion Capital’s Eileen Burbidge as the UK’s special envoy for fintech. The government has also put 10 million pounds ($15 million) towards research into blockchain technology. </p> <p>His latest speech, however, seems to recognize that London has some serious competitors, he said: “The race is on, but we’re determined to win it”. Plenty of other cities have echoed a similar sentiment, but given the size of the industry and opportunity, one has to wonder: is it really a zero-sum game?<br /> Photo: Altogetherfool</p>
Robo-advisors moving into Bank of America Merrill Lynch
FinTech
First robots took over the world of trading, and now algorithmic eyes are focused on human financial advisors. Among the first major warehouses to submit to the trend of offering “robotic” advice options to its customers is Bank of America Merrill Lynch. Reported robo-advisors firm at Bank of America Merrill Lynch to initially tackle accounts with under $250,000 in assets
No guarantee against hackers
FinTech
<p>The alleged hacking scheme against 10 financial institutions and other US companies highlights the importance of cybersecurity for every firm.</p> <p>As Manhattan attorney Preet Bharara, who’s office has indicted three men, said, “[It is] a brave new world in hacking for profit…It is hacking as a business model.”</p> <p>So, a speech by Singapore’s former head of cybersecurity at FinanceAsia’s Annual Compliance Conference in Hong Kong on Tuesday was rather timely. (paywall)</p> <p>“We can never be 100% secure from cyberattacks. Never,” warned Alan Seow who was employed at Singapore’s Ministry of Communication and Information.</p> <p>Companies can put up some resistance by adopting a three-tiered approach: having effective defensive measures, rapid response processes and robust recovery systems.</p> <p>But, “even companies that spend a lot of money on experienced staff and put sensible measures in place have no guarantee of keeping ahead of hacking opponents,” reports FinanceAsia.<br /> Photo: Brian Klug</p>
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>