Tag: Fintech

How fintech and neo banks are using IT

On By mehranmuslimiblogIn FintechLeave a comment

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Most people see fintech startups and neo banks are something run by young, terribly hip people of the kind you see on the TV drama ‘Silicon Valley’. That is only part of the truth; the people behind them are achieving success because they embrace the technology that allows them to understand their customers’ needs and have the flexibility to develop rapidly-evolving products.

They have an advantage over the traditional banks, because the banks have IT systems that are old, slow and complex. The newcomers are not encumbered with the same problem.

The Financial Times said about the banks’ IT: “The cost of maintaining these often ageing and unwieldy systems eats up three-quarters of banks’ IT spending, according to Celent. That leaves only a quarter to spend on innovations to keep up with the rapidly emerging threat from the many technology groups and start-ups trying to steal market share in areas such as payments.”

By contrast, the neo banks ands fintech startups are up-to-date with infrastructure and have a huge competitive advantage as a result. While banks are forced to fund costly projects to create IT solutions that will integrate with their ageing infrastructure, the fintechs can invest in whatever technology they need to drive growth, knowing it will integrate with their existing IT systems.

The newcomers also have better customer insights, because they have made to their business to get to know the consumer better than the banks do. They are using data analytics tools to collect data from research and surveys, social media, and their existing customers using online and mobile applications. And they use CRM systems to personalise their product offers. PwC’s Global Fintech report reveals 75% of financial services leaders think fintech’s biggest impact will come from its increased focus on the customer.

Finally, fintech startups and neo banks make grater use of Cloud tools and this enables them to deploy apps at greater speed and they can scale up or down to meet customer demand.

Will a customer prefer to get a loan from a fintech that can complete the process and transaction in 15 minutes or go to a traditional bank where it may takes days or weeks? The answer is logically that they will go to the fintech. And will the banks try to catch up with the IT innovations and speed up their systems? That remains to be seen.

 

 

Abra CEO predicts big investment in crypto in 2018

On By mehranmuslimiblogIn FintechLeave a comment

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Abra is a cryptocurrency investment app and its CEO has recently made the headlines in Cointelegraph by making a bold prediction that big investors will “make all hell break loose” in the altcoin market this year.

Speaking to Business Insider last week, Bill Barhydt of Abra, which is backed by American Express, explained that he believes the cryptocurrency sector will boom again this year when the really big investors stop sitting on the sidelines and decide to get involved.

He said: “I talk to hedge funds, high net worth individuals, even commodity speculators. They look at the volatility in the crypto markets and they see it as a huge opportunity. Once that happens, all hell will break loose.” And, as he also points out, once these guys open the door, it won’t be closed again.

Barhydt admits that the cryptocurrency market has been going through a massive wobble, reflected in the decline in the overall market value of crypto. It peaked at $800 billion in December 2017 and is currently around $300 billion. Searches on Google for Bitcoin and other cryptocurrencies have declined in tandem with this, and there is a correlation between crypto prices and Google activity.

However, he is confident that prices will recover as the year progresses and institutional investors, such as hedge finds, decide to explore the potential of the crypto market. He gave the example of Japan where the crypto prices went up as financial institutions invested in them. Now, Barhydt believes that the West needs to catch up with Japan.

He concluded the interview by saying: “There really is zero large-scale institutional money from the west in crypto right now. Once a large, sizable chunk of Western institutional money starts to come in — watch out.”

Once the floodgates open in the West, what is happening on Google trends will become irrelevant. Will 2018 be the year we see mass adoption of crytpocurrency by big financial investors? We still have a way to go to find out, but if Barhydt is correct then there is a compelling case to HODL your crypto, regardless of the recent volatility.

 

Twitter, Facebook and Google under fire from Eurasia

On By mehranmuslimiblogIn Blockchain, FintechLeave a comment

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The social media giants’ blanket ban on crypto and blockchain related advertising hasn’t gone down well in Russia, China and South Korea. According to a report in Cointelegraph the major blockchain associations of these countries are planning to file a joint lawsuit against Google, Facebook, Twitter and Yandex, says the news agency TASS.

Facebook started the ball rolling with this back in January, although after the emergence of its role in the Cambridge Analytica scandal, Zuckerberg and Co. don’t have much moral high ground to stand on when it comes to “misleading or deceptive promotional practices,” which was its given reason for banning ICO adverts and anything related to crypto.

Google also announced a ban in March, which comes into effect in June, and Twitter confirmed its ban this week. Yet, Jack Dorsey has been talking up Bitcoin as the world’s future single currency. It’s undoubtedly confusing and smacks of something like hypocrisy.

The Eurasian organisations, which include the Russian Association of Cryptocurrency and Blockchain (RACIB), the Korea Venture Business Associations, and LCBT, a Chinese association of crypto investors, are not going to just sit back and let it happen though. The RACIB has already stated at a conference in Moscow, “the actions of these four tech companies have negatively affected the crypto market.”

Its President, said:

“We believe that this is a use of the monopoly position of these four companies, which have entered into a cartel agreement with each other in order to manipulate the market. The ban from these four organizations has led to a significant drop in the market in recent months.”

To fund the lawsuit, the organisations have created an umbrella Eurasian Association of Blockchain, and they have been asking anyone to “chip in” whatever they can.

Most significantly, Yury Pripachkin of RACIB, said the “claim will also be filed against the companies’ shareholders if they have crypto wallets.” The lawsuit will be filed in the USA, primarily because Pripachkin noted that it has states like Wyoming that are “loyal to cryptocurrency.”

This is a story to watch, because if the Eurasian Association of Blockchain is successful, and even if it isn’t, we will all have a clearer view of social media’s muddy waters around the cryptosphere.

 

 

There’s another way to look at Crypto Tokens

On By mehranmuslimiblogIn Bitcoin, Blockchain, Ethereum, Fintech, ICO, Initial Coin OfferingsLeave a comment

Ethereum-ICOs-Bitcoin-Ethereum-Comparison

Crypto tokens, and their ICOs, have taken a fair amount of bashing in the media over the past few months, but a paper published by two researchers from MIT and University of Toronto, argues that utility tokens might have a “valuable price discovery role,” according to Coindesk. It also suggests that tokens that act as ‘true commodities’, which the report authors attribute to Bitcoin and Ether, could offer the same service.

When you look at crypto tokens form this perspective, it looks like consumers could turn out to be the biggest winners, provided the tokens are correctly designed.

The paper, called, Initial Coin Offerings and the Value of Crypto Tokens by Christian Catalini (MIT) and Joshua S. Gans (University of Toronto) explores how entrepreneurs can use initial coin offerings — whereby they issue crypto tokens and commit to accept only those tokens as payment for future use of a digital platform — to fund venture start-up costs. It makes interesting reading for ICO entrepreneurs, because as the paper’s synopsis states, “the ICO mechanism allows entrepreneurs to generate buyer competition for the token, which, in turn, reveals consumer value without the entrepreneurs having to know, ex ante, consumer willingness to pay,” amongst other things.

In fact, it goes so far as to claim that in the future, tokens will “empower consumers to choose an optimal price for a service collectively.” It also looks at the benefits of tokens, including the aforementioned benefits of entrepreneurs being able to test the token fundraising model with consumers to see how it goes. This could greatly minimise risk for ICO startups and their founders.

As we have seen, regulatory bodies like the SEC have started to show more interest in ICOs and the remarkable sums of money they are capable of raising. However, Gans, told Coindesk: “”The problem the regulators have is they don’t know what the goals are. Instead the regulators are coming in saying ‘I don’t really know how the market should be working, but it smells terrible.'”

This new paper and its authors want to start a new conversation about “the right way to think about tokens so that societies could rationally consider the correct approach to managing them.”

It’s a more helpful and sane approach than the ‘just ban them’ rhetoric that is coming from some corporate entities and other organisations. It is not against regulation; that is necessary for transparency and consumer comfort. As the guys admit, they have no idea how the ‘token economy’ will play out, but they have laid the groundwork for more research and more balanced thinking. That’s a good start.