Challenger banks are on the rise

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Challenger banks, neobanks, whatever you want to call them, have been making significant in-roads in the banking sector and are attracting large chunks of venture capital investment says KPMG. There are some subtle differences between the two: challenger banks are often established firms that compete with larger financial institutions, while neobanks tend to be completely digital and favour operating via mobile devices, but the difference between them is somewhat blurred. What they do share in common is this: “these banks don’t carry the weight of legacy technology, so they can leapfrog over traditional infrastructure and disrupt the status quo.”

Two of the most prominent – Monzo and Atom Bank—raised $93 million and $140 million respectively last year. Starling Bank, which is ‘digital-only’ is raising a further $54 million in a new funding round. These are all British startups by the way.

Why are so many challenger banks British?

The chief reason for the fact that so many challenger banks are UK-based is this: Britain isn’t as saturated with big banks and their branches as the US, so there is more opportunity for non-traditional financial institutions. Furthermore, the UK was an early adopter of digital banking, dating back to the dotcom era of the late 1990s and early 2000s. Basically, the UK has had a head start in this financial area, although it would be a mistake to think that challenger banks are a UK-only phenomenon.

Challenger banks worldwide

There are currently about 100 challenger banks worldwide: Brazil has Banco Original and Nubank, while Germany is home to SolarisBank and N26 and in Asia there is MyBank, WeBank, Timo, Jibun, K Bank and Kakao.

What advantage do challenger banks have?

They don’t have a legacy system and because most of them don’t offer a full suite of banking services they don’t have to operate within such tough regulatory environments. This means they have more freedom and flexibility, which in turn allows them to develop their customer base faster, especially in developing countries where bank branches are more rare than in the west.

What services do challenger banks offer?

Their focus is usually on niche products rather than trying to provide all the services that the big banks provide. For example, customers can open a current account with a relatively high rate of return and get loans, but they may have to go elsewhere for services such as credit cards, mortgages and wealth management. Some of the challenger banks do have banking licences, although not all follow this model.

Although challenger banks are on the rise, the old guard hasn’t disappeared just yet, and the traditional banks are aware of the threat the challengers pose and are preparing for battle. The traditional banks have the advantage of a large and well-establish customer base and strong branding that promotes trust. The challenger banks will have to earn trust. That will most likely come from the millennial generation over the next decade, because they are the group that have lost trust in the banks their parents use, and this is the audience that challenger banks will need to court if they are to become an established sector in banking.

 

 

 

 

How to use AI in your business

As a business owner you may have heard quite a bit about Artificial Intelligence and its benefits for business. However, you may not be aware that adding tools based on integrated machine learning, deep learning algorithms and other products is not as difficult as it sounds. Indeed, you may not even be aware that some of these are examples of AI.

Chatbots and virtual assistants

Have you visited a services website recently and had a box pop up offering to have a chat with you? Chatbots and virtual assistants are appearing on more and more websites. It isn’t difficult to find a chatbot service for you business and you can get a writer to provide you with a bespoke script that suits the tone and style of the rest of your website.

Online courses

It doesn’t have to cost you anything to get taught by the best. For example, Udacity offers a free Intro to AI course. Stanford University has a AI: Principles and Techniques course, and there are many others, including a Microsoft’s Cognitive Toolkit and MonkeyLearn’s ‘Gentle Guide to Machine Learning’.

Know what you want to do with AI

Once you’ve learnt the AI basics, it’s time to establish how AI can help your business. Think about how you can add AI capabilities to your existing products and services and look for ways n which AI can solve problems and add value.

Bring in the experts

Once you’ve identified some goals in your business where AI provides a valuable solution, it is probably time to organise consultations with AI experts. Setting up a pilot project that can be evaluated over a two to three months period, is one way to do it and bring in consultants to work with a small internal team. Once the pilot has been completed, you’ll be able to decide whether or not to take it forward for the long term.

Integrate AI in daily work routines

Once you have AI on board, make sure all workers have a tool to make AI part of their daily routine, rather than something that replaces it. AI scares some employees who feel threatened by it in the sense it might replace them, so it’s important to demonstrate that it is a help to them instead.

AI can really improve your chances of success and help teams to work more efficiently — so it’s time to get on board with the bots in business.

The Tech Giants Growing Behind China’s Great Firewall

The Tech Giants Growing Behind China’s Great Firewall

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Every day, your feeds are likely dominated by the latest news about Silicon Valley’s biggest tech giants.

Whether it’s Facebook’s newest algorithm changes, Amazon’s announcement to enter the healthcare market, a new acquisition by Alphabet, or the buzz about the latest iPhone – the big four tech giants in the U.S. are covered extensively by the media, and we’re all very familiar with what they do.

However, what is less commonly talked about is the alternate universe that exists on the other side of China’s Great Firewall. It’s there that four Chinese tech giants are taking advantage of a lack of foreign competition to post explosive growth numbers – some which compare favorably even to their American peers.

BIZARRO WORLD

Like the “Bizarro Jerry” episode of Seinfeld, the Chinese-based tech giants look recognizably familiar – but markedly different – to the ones we know so well.

ALIBABA

Likely the best known of China’s tech giants, Alibaba is the dominant online retailer in the country. The company had revenues of $25.1 billion in 2017 and is seeing that revenue grow at impressive speeds. In its most recent quarterly results (Q3, 2017), the company noted a 56% jump in revenue.

Amazon’s tough sell: Amazon does exist in the Chinese market, but it just has trouble competing with Jack Ma’s creation. Amazon has less than a 1% share of the e-commerce space in China, after a decade of trying to get a foothold. Further, Alibaba also runs AliCloud, which provides direct competition to Amazon’s AWS.

BAIDU

Baidu is the largest search engine in China and also a leading player in AI. It’s the most visited website in China, and ranks #4 globally. The company will announce 2017 annual results in the coming weeks, after reporting a 29% jump in revenue in Q3 2017.

Google’s searching for a way in: Google was blocked in China in 2010 after refusing to filter search requests. However, since then, the giant has been able to take very small steps in entering the Chinese market – even though its signature search engine is still blocked, Google now has at least three offices in the country.

TENCENT

Tencent has recently been in the news for its rapidly surging stock. The company, which owns the dominant social platform in China (WeChat), is now valued at over $500 billion. For those keeping tabs, Facebook is currently worth $550 billion.

It’s complicated: Facebook remains blocked by China, meaning that Zuckerberg and company can’t take advantage of a 1 billion plus market of people with growing buying power. Even if it found its way in, there are multiple social platforms in China and competition would be stiff.

XIAOMI

Dubbed as “China’s Apple”, Xiaomi is one of the world’s most valuable private companies. Things have been hot and cold for the ambitious smartphone manufacturer, but recently reports have surfaced that Xiaomi will IPO in the second half of 2018 for upwards of $50 billion.

EU to combat fake news with blockchain

 

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The election of Donald Trump as President of the United States brought with it, amongst other things, the whole idea of ‘fake news’. POTUS is always talking about it and has done a lot to create an environment where the public now doubt whatever they read.

In the past we generally accepted that what we read in newspapers or heard on news bulletins was reasonably close to the truth, although the smart people have always been aware that every paper has a specific political agenda and that any story needs to be read with that bias in mind. But, now we have reached a stage where completely false stories are pumped out, with social media channels being the chief way of ensuring they spread like wildfire.

The European Commission (EC), according to an article published in Techcrunch, has announced that it is going to use blockchain technology in a bid to combat the spread of ‘fake news’ and its press release said it has “identified blockchain as a critical part of what it will call the Code of Practice on Disinformation, which it intends to introduce by summer 2018.”

The announcement also stated that blockchain is, “one of emerging technologies which are changing the way information is produced and disseminated, and have the potential to play a central role in tackling disinformation over the longer term.”

The EC points to the fact that DLT can aid the transparency, reliability and traceability of news on the Internet. It said:

“Innovative technologies, such as blockchain, can help preserve the integrity of content, validate the reliability of information and/or its sources, enable transparency and traceability, and promote trust in news displayed on the Internet. This could be combined with the use of trustworthy electronic identification, authentication and verified pseudonyms…”

The commission’s next step is to develop the EU-wide Code of Practice on Disinformation that will be published by July 2018.

This represents a new application of blockchain technology in a very important arena – that of the news media. We cannot underestimate the value of once again being able to know that information has been verified and sources checked. And those who claim that certain stories are ‘fake news’, as POTUS frequently does, will find it harder to do so. This could change voters’ views in elections, as well as of government policies, in the coming years. We will be able to trace the trail of truth and lies, and that will be a good thing.