Random FinTech Notes
posted by Collin Canright on November 28, 2016 - 2:44pm
I loved the Random Notes column in Rolling Stone magazine when I read it in high school. This week's email and its collection of FinTech links seems pretty random to me, and one of the articles focuses on a FinTech firm that goes back to 1976, when I was reading Random Notes rather than FinTech news.
How to Justify a high valuation and low growth simultaneously
Most of the articles analyzing FinTech growth focus on the early-stage VC perspective. Even PayPal and Yodlee, both more than 15 years old, can seem like the FinTech old guard. One investor took a FinTech perspective in looking at the stock price and fundamentals of Jack Henry, a bank software provider founded in 1976. It's doing quite well, thank you very much.
FinTech 2016: the top 100 influencers and brands
Social media analytics firm Onalytica provides insight into the FinTech ecosystem, its influencers, and top topics through an analysis of tweets. I especially like the optimism displayed in the comment from the #1 influencer, VC and advisor Spiros Margaris. "The future of FinTech is still unknown, thrilling and potentially wonderful. The industry offers possibilities we cannot currently imagine. We are living in very exciting times, when almost anything is possible if we work hard enough.”
The regulatory effect in faster payments
Global financial regulators are increasingly discussing the chance to improve economic productivity by speeding up interbank processing, but it’s difficult to convince consumers to pay for faster payments, Eric Glover asserts in a piece for BAI Banking Strategies. The interbank payment processing system lacks competitors and overall visibility, so the absence of both makes it difficult to facilitate change. Yet banks are looking to charge fees in order to address the costs of implementing such systems—banks can rake in an estimated $1.1 billion in fee revenue for real-time cross border payments—they risk being undercut by FinTech competitors offering similar services cheaply or for free. The true benefit for real-time payments could in potential analytics of real-time payments or cutting operating costs, according to Paymentssource.
The FinTech grief cycle for bankers
As FinTech firms enter and shake up the financial services sector, traditional banking enter a five-stage "grief cycle" beginning with denial and ending with acceptance, according to JP Nichols. “Fintech is the new normal, and the bankers who move from Denial to Acceptance faster and step up their own innovation efforts will reap the benefits in this new era of digital disruption,” Nichols writes on his site.
Lessons from a long-forgotten 'FinTech bank'
In another bit of financial history this week, American Banker covers the lessons from the first digital bank, formed back in 1999. AeroBank, a San Jose-based commercial bank, began in business banking but wanted to move into consumer banking. Bryan Yurcan interviews the bank's co-founder Stephen Troy.
THE BLOCKCHAIN WATCH
10 VC firms betting big on bitcoin and the blockchain. Excluding private deals, nearly 200 venture capital firms have invested in bitcoin companies, and CoinDesk has a listed IDG Capital Partners, AME Cloud Ventures and Lightspeed Venture Partners as among the top 10 VCs you need to pay attention to in the bitcoin sector.
Building the trust engine. UBS’s new whitepaper outlines what blockchain has the potential to do for banks and businesses and holds the technology up as a possible means to improve the financial system. “We have begun also to see a clear outline of what a block-chain enabled financial system might look like.”
Blockchain-based banking backend Vault OS from Googler emerges from stealth mode. ThoughtMachine, a company founded by ex-Google engineer Paul Taylor, aims to change the traditional banking model with a modern, fully integrated, blockchain-based banking operating system called Vault OS. But the operating system leaves many questions unanswered. “Each instance of the OS will run its own private blockchain and cryptographic ledger, hosted as a service by ThoughtMachine. Of course, whether banks will be willing to essentially permanently outsource their most fundamental operations is yet another big question,” writes Devin Coldewey for Techcrunch.