High 5! The five fintech stories we’re following this week

5 trends we're tracking in finance

Get on the fintech bus…or else

This happens every time a particular technology or sets of technologies get popular. Large, multinational consultants see an opportunity to make bank and quickly get to work pushing an industry’s panic button. You gotta get on the bus or risk getting left behind. Well, with report after report exhorting financial services executives to get fintech gospel, consulting firms are ratcheting up the collective FOMO.

Maybe they’re a little late? Fintech deals hit a five quarter low in North America. With private and public equity offerings slowing down, there’s still one place fintech companies are finding some funding success: debt. Many fintech startups are receiving investment from banks themselves, rather than turning to their friendly, neighborhood venture capitalist-man.

A better, faster payment mousetrap

There’s a lot of talk (and activity) around speeding up various forms of payments. There’s the usual taskforce and service providers encouraging upgrade cycles. Dwolla, which focuses on ACH, is helping the industry make payments faster. Fiserv, for its part, is rolling out faster P2P payments to more clients of financial institutions and businesses with its NOW network, encroaching somewhat on Venmo’s turf.

In order to ramp up things a bit, maybe it really is time to figure out the cost of maintaining a legacy financial platform.

Better security and more usability for financial products?

Well, usually not. There’s generally a tradeoff between security and usability when it comes to design. The more hurdles you make a user jump over to authenticate themselves, the more likely, the thinking goes, that the user will have a poor experience with the technology.

A company called BioCatch is changing all that. The company continuously authenticates a user throughout a session by analyzing her behavior. It gives users small cognitive games, like hiding the cursor, to see whether you are who you really claim you are. Behavioral science is cool.

Recruits are choosing tech over Wall Street

The face of New York is changing. No longer is Wall Street the job engine for the city. Tech is.

“Growth in these high-paying jobs is picking up much of the slack created by the softness of the securities industry,” New York Federal Reserve President William Dudley said last week.

Don’t say “thank you” like that

This is kind of a funny story. It seems Citibank has been suing AT&T over use of the tagline ‘AT&T thanks’ as part of the telecom’s loyalty program. Citi didn’t like that use because the banking firm has been using ‘thankyou’ as part of its own loyalty program, beginning back in 2004.

From the NY Post:

US District Judge Katherine Forrest acknowledged ‘thankyou’ and ‘AT&T thanks’ both “share five central letters, are partially pronounced similarly and both convey a message of gratitude.”

It’s a bit more complicated, actually. 1.7 million customers use a co-branded card that both AT&T and Citi market, containing the Citi’s ‘thankyou’.

Anyway, AT&T prevailed.


Working on the Street: The changing finance industry workforce

finding a job in finance

[alert type=yellow ]Every week at Tradestreaming, we’re tracking and analyzing the top trends impacting the finance industry. The following is a list of important things going on we think are worth paying attention to. For more in depth trendfollowing, subscribe to Tradestreaming’s newsletters .[/alert]

The structure of Wall Street’s current workforce sheds some light on the evolving role of finance in the economy. Top bankers predict that Wall Street has hit peak human – employees will be replaced by algorithms soon enough (some senior managers think 20% of current staff will be replaced by automation in just a few years).

It’s not just banking and trading losing jobs. Asset managers are feeling the roboadvisory pull and more brokers are, too. Etrade introduces its own robo product (though, explain to me how a 9 member investment team approximates automated software). In search of revenues, other old school wealth managers are being pushed further down market.

But, bucking all the trends, Deutsche Bank ditches its own plans to set up a digital banking service.

In a world where Goldman Sachs pitches itself as a technology company (“it has more engineers than Facebook), many top FIs see competition for top talent coming from Silicon Valley, not from their NYC-based neighbors. Jamie D has JPM relaxing its dress code to help make it cooler to work in finance. GS doesn’t seem to share the same concerns, though – it’s processing 250k student jobs applications, a 40% increase over 2012.

Of course, the vast majority of these jobs are destined for men, as women still struggle to break into hedge funds (and finance, in general). For young’uns, getting a CFA isn’t a panacea, either. Can you believe that 75% of job listings which require a CFA have salaries of $60-$100k associated with them?

Other news worth reading:

5 trends we’re watching this week

5 trends in finance this week

[alert type=yellow ]Every week at Tradestreaming, we’re tracking and analyzing the top trends impacting the finance industry. The following is a list of important things going on we think are worth paying attention to. For more in depth trendfollowing, subscribe to Tradestreaming’s newsletters .[/alert]

1. Is the marketplace lending industry in trouble? Here’s what we know. (Tradestreaming)

Trouble may be a bit strong but suffice it to saw, the business going forward looks a lot different than the fast-growth era we just emerged from. Here’s what’s going on.

See also:

  • Professional marketplace lending association aims for clarity, transparency (Tradestreaming)
  • Marketplace lender, Prosper ends Citi securitization pact (Nasdaq)
  • Online lenders dial back marketing in response to softer investor demand (WSJ)
  • Institutional investors taking leap into marketplace lending (BusinessWire)

2. Wall Street’s top bitcoin projects (Tradestreaming)
Less than 1% of internet users are currently using bitcoin, but incumbent financial institutions are busy testing blockchain technology.

3. Asset managers, prepare to have your business disrupted (Institutional Investor)
The combination of new tech, shifting demographics, and client needs is bringing a sea change to the asset management industry.

4. LendKey deploys $1 billion in capital to borrowers (Finextra)
LendKey, a tech company that helps incumbent FIs manage private label online lending offerings, announced it has powered more than $1 billion in lender capital to borrowers.

5. Selling Data: The emerging role of finance’s Chief Revenue Officer (Tradestreaming)
Selling financial data is sexy again and because of that, we’re seeing examples of a new role forming: the Chief Revenue Officer. As revenue production enters the C-suite, we take a closer look at 5 things that drive success.

5 trends we’re watching this week

5 trends in finance this week

[alert type=yellow ]Every week at Tradestreaming, we’re tracking and analyzing the top trends impacting the finance industry. The following is a list of important things going on we think are worth paying attention to. For more in depth trendfollowing, subscribe to Tradestreaming’s newsletters .[/alert]

1. Technology is filling the void left behind by Wall Street layoffs (Tradestreaming): As Wall Street sheds some jobs, the robots are replacing them. It was just a few months ago that employment on Wall Street hit a post-crisis high. But now, the biggest banks are shedding jobs and in their place…software.

See also: Citi: Technology could cost 2m bank employees their jobs (WSJ)

2. Debt market opens to P2P loans (Tradestreaming): There’s the beginning of a serious debt market forming around p2p loans. Early securitizations are taking hold, slowly. It will be a long slog but the marketplace lending industry is maturing as an investable market.

3. DTCC, Digital Asset Holdings build blockchain for repurchase market (American Banker): The Depository Trust & Clearing Corp. and Digital Asset Holdings are targeting the repurchase agreement market as the latest use case for a blockchain solution. DTCC, a post-trade financial services company, plans to test a distributed ledger for managing repo transactions using software developed by Digital Asset.

See also: Bitcoin technology’s next big test: Trillion-dollar repo market (WSJ)

4. Banking regulator moves to create new framework to govern upstarts (CNBC): Now, in the face of rapidly evolving technology within an already heavily regulated business, the Treasury Department said it’s “considering various reforms” to existing policies, which could include establishing “a centralized office on innovation … to vet ideas before a bank or nonbank makes a formal request or launches an innovative product or service.”

5. Canaan Partners’ Dan Ciporin on investing in marketplace lending (Tradestreaming): Famed fintech investor, Dan Ciporin joins us on the Tradestreaming Podcast to talk about his investment thesis in marketplace lending and fintech and why the public markets don’t quite understand Lending Club. Worth a listen.


Technology is filling the void left behind by Wall Street layoffs

automating Wall Street, fintech, and layoffs

It was just a few months ago that employment on Wall Street hit a post-crisis high. As 2015 rolled to a close, more than 172,000 people called the Street their home away from home, according to a report from the New York State Department of Labor published in early March. That’s the largest workforce the financial sector has employed since 2008, but that may be changing now.

Wall Street is now feeling the pressure of a weak stock market. Lower share prices and cloudier financial forecasts have big banks laying people off and considering letting more people go. In a CNBC report on the bulk of the layoffs, Barclays CEO Jes Staley remarked that he’s already eliminated 6000 jobs since taking over the helm at the bank at the end of 2015, which is double the total number of cuts in the 3 years preceding him. RBS said in 2015 it would reduce its investment banking staff by 14,000 by 2019. Morgan Stanley reported late in 2015 that it had reserved $150m for layoff-associated costs, cutting 1200 positions. Bank of America recently set aside similar sums for severance expenses, the company’s CEO said on the bank’s most recent earnings call.

Rising Wall Street Layoffs


“[W]e did reduce head count in the business, the markets businesses and the related capital markets business,” BofA CEO Brian Moynihan noted. “We didn’t make big announcements, but that led to the $130 million in severance in the fourth-quarter numbers.”

Wall Street has always been subject to bipolar swings, staffing up during strong economies and paring down when times get leaner. But something is different this time and you can see it when you look at how much money the Street is investing in technology. Employment may be shrinking at Wall Street firms but technology spending is enjoying its own bull market. Last June, SourceMedia conducted an online survey of 50 of the top banking CIOs and found that about 50% of them expect to increase their technology spending. About a third of the participating CIOs forecast budget increases of 20% or more.

When you look at what banks are spending their IT budgets on, one of the most popular areas of investment is cybersecurity. Most senior Wall Street technology leaders polled are increasing their budgets for security technology by at least 10%. While lawyers and compliance teams are going to be receiving larger kitties this year, banks are focused on building out their online banking, data analytics, and payments capabilities.

Technology spending is pretty much increasing across the board, from branch technology to upgrading the lowly desktop on trading desks. But money is also flowing to areas that were previously the domain of Wall Street’s brightest and most talented. Hundreds of financial analysts are being replaced with software. Big chunks of the number crunching tasks that analysts spend hours toiling away on every day are being automated. Sensitivity analysis, like what happens to Stock X when Economic Event Y occurs, is being increasingly handled by computers now. Firms are shedding the jobs that produce this type of cornerstone analysis as part of their equity research product.

The New York Times recently profiled the automation of the Wall Street workforce in the New York Times Magazine. In The Robots are Coming for Wall Street, the newspaper profiled the growing automated financial workforce. There’s an evolution going on here and it began years ago with lower-paid clerks, “many of whom became unnecessary when stock tickers and trading tickets went electronic”. Next up is where we find ourselves today: software capable of analyzing large sets of data more quickly and reliably than human analysts ever could. The next ‘‘tranche,’’ according to the article, could see client-facing responsibilities relegated to the machines.

‘‘I’m assuming that the majority of those people over a five-to-10-year horizon are not going to be replaced by other people,’’ said Daniel Nadler, founder of Kensho, a technology provider that’s developing automated financial analysis. ‘‘In 10 years Goldman Sachs will be significantly smaller by head count than it is today.’’

Photo credit: spenceyc via Visualhunt.com / CC BY-ND

5 trends we’re watching this week

5 trends in finance this week

[alert type=yellow ]Every week at Tradestreaming, we’re tracking and analyzing the top trends impacting the finance industry. The following is a list of important things going on we think are worth paying attention to. For more in depth trendfollowing, subscribe to Tradestreaming’s newsletters .[/alert]

Why banks like BMO are testing Pay by Selfie technology (Tradestreaming): Security is top of mind in finance and biometrics are just one way to address the issue. BMO is rolling out Pay by Selfie technology, developed by MasterCard, that will require the cardholder to snap a picture of him/herself at the point of purchase. But for banks like BMO, it’s not just about security.

An inside look at Wall Street’s secret client list (Bloomberg): There’s a secret list that Citigroup keeps on its equity-research desk at its swank campus in Tribeca. And if you’re not on it – well, you might as well be nobody. At the top is a handful of hedge-fund giants, the “Focus Five,” that bring in big money for Citigroup: Millennium, Citadel, Surveyor Capital, Point72 and Carlson Capital, according to a person with direct knowledge of the list. It represents a growing trend on Wall Street where the most-lucrative clients get the best service: the top trade ideas, hours-long calls with analysts, intimate soirees with executives, bespoke trading models, etc.

9 alarming facts about online lending (Tradestreaming): Billions of dollars have been poured into the online lending sector and tens of billions of dollars of loans underwritten. But beyond mainstream media’s fawning over online lending, something strange is afoot. Here are 9 data points that may alarm you about the space. *Further reading: As a venture capitalist, Frank Rotman (QED Investors) has invested in some of the most successful online lenders around the world. He addresses the changing environment in a post he has on American Banker, Answers to These Four Questions Will Determine Online Lenders’ Fate.

Is human capital investing finally going to be a thing? (Tradestreaming): Recently, entrants have come and gone to a form of financing called, income share agreements. Instead of taking out lengthly bank or federal loans to pay for college, ISAs give students the ability to pay back a percentage of their future earnings. Cumulus Funding, a new player, is the latest, and more recently funded, player to try their hand at ISAs.

Understanding the financial squeeze on Millennials (Bloomberg) :It may be that each generation is “free” to choose to consume or invest as much as it wants…But it’s certainly true that the U.S. and most other Western countries have invested less in the last 35 years than they did in the previous 35. That means that the baby boomers left their kids less, relative to their own consumption, than their own parents did. In a time of slowing productivity, that has been a tough blow to today’s youngsters.

How Showtime built an audience of financial professionals for hit show, Billions

Billions Gaming the American Dream Showtime

If TV offers a glimpse into a society’s tastes, Showtime’s new hit, Billions, may show that America is still fascinated with finance. The show tracks hedge fund billionaire, Bobby ‘Axe’ Axelrod, played by Damian Lewis who’s back on the network after starring in hit espionage serial, Homeland.

The show has a growing following of loyal fans who tune in every Sunday night to see what’s next for Axe Capital. Showtime revealed that Billions enjoyed the most successful debut performance the channel has logged to date, scoring over 3 million views and counting. According to Deadline, prior record holder Ray Donovan recorded 2.91 million views including linear premiere night and advance sampling on subscriber platforms in 2013.

Main character Bobby Axelrod is a likable, if not easily irascible, figure who can be a faithful husband, attentive father, and loyal friend while also running a fund built on trading inside information. Beyond his ego, Axe’s main nemesis is Chuck Rhoades, an old-monied U.S. Attorney for New York hell-bent to rein in Wall Street excesses. Rhoades is played by Paul Giamatti. The cat and mouse game escalates quickly as Chuck maniacally builds a case against Axe, who proves pretty resourceful at wiggling or thrashing his way out of every trap the prosecutor sets for him.

Some believe the main story line was inspired by US Attorney Preet Bharara’s pursuit of criminal charges against hedge-fund mogul Steve Cohen (though the show’s producers deny this connection ). But, there’s a growing sense of empathy viewers have with Axe, who, in spite of the fact he’s made billions via clearly illegal research methods used by his analysts, seems a genuinely affable rags-to-riches underdog. Rhoades, on the other hand, just doesn’t enjoy the same support among viewers in his ruthless pursuit of justice. It’s that contrast that’s another major theme throughout the series.

Here’s Lewis in an interview with the WSJ about his role: He says that position, along with Axe’s blue-collar background, is part of his appeal to the audience. “Immediately it’s a sort of David-and-Goliath story. You find yourself oddly rooting for an underdog,” even though he now works in a gleaming-glass building filled with valuable art.

Whether Axe is dodging a battery charge for slugging someone who drove his children while drunk or partying with the band before a Metallica show, users are rooting for him.

Launch and marketing of the show
The show, which debuted early in 2016, was heavily marketed to finance professionals. The WSJ, via its new content studio, produced a minisite for the show’s launch. The marketing website, entitled Gaming the American Dream, includes a short history of hedge funds, a look into who these money managers are and what they like to spend their billions on. As part of the marketing package, there’s also interview footage with real people who live and breathe this world.

According to Adweek, the show is also growing via strong influencer marketing. Goldman Sachs scheduled a screening of the pilot and hosted a panel discussion with the show’s writers and producers to discuss the show’s themes and characters. Showtime’s EVP and CMO Don Buckley remarked, “We think it’s going to be an important center of influence for conversation about the show.”

The show also ran a marketing promotion with swanky travel site, Jetsetter, including a survey that asked users to input where they’d travel if they were billionaires. The site, which caters to wealthy people looking to book exotic vacation packages, created 4 trip packages as recommendation depending on how users completed the quiz.

In a run-up to the debut episode, Showtime also partnered with music discovery app, Shazam. Users of the app could scan real US currency to unlock special content. Fans were encouraged to use the visual recognition feature of the app and scan any $1, $5 or $20 bill — each bill had unique content associated with it.

#TeamAxe in action. #Showtime #Billions #TV #BTS #SHOonSet #DamianLewis

A photo posted by Billions (@sho_billions) on

The show is very active on social media channels including Facebook, Instagram, and Snapchat. Showtime uses these channels to complement activity with insider views, commentary, apparel sales, and sneak peeks at future content.

Showtime is currently advertising its show, along with an offer for a free trial of its service, on prime time TV. The following ad was aired early in March on CBS during the show, 48 Hours.

Building an audience within the finance industry

Part of the magic the show is that it’s come post 2008 at a time when finance and its masters-of-the-universe leaders have been toppled from their public pedestals. In a world that doesn’t trust Wall Street, it could have been easy to produce a grassroots series that mocks this world and rejects the ostentatious wealth that it’s produced. But Showtime didn’t do that — instead, Axe is seen as a mega rich every-man, who’s not above helping out the struggling owning of a pizza joint he used to frequent as a kid. He’s shown as an attentive father, reading stories to his kids and playing with them on all fours. Axe seems just like us, except that he’s making million-dollar trades, kicking underperforming management out of a closely-held family business, and winning at merger arbitrage.

Much like Silicon Valley’s fanbase among entrepreneurs and employees in startups, Billions is captivating financial industry types. Dealbreaker, which itself covers the people and industry portrayed in the show, recaps the show regularly and provides its own layer of analysis of each episode. Others have said that it’s the first show to really get Wall Street right. So, while the show hasn’t received a lot of critical acclaim to date (save for the acting performances of Lewis and Giamatti), its realistic portrayal of the insider baseball of the finance industry (down to the fleece vests Axe and his analysts wear and the drinking games they play) may be enough of a following to make it a successful series.

From Maureen Ryan, a TV critic at Variety:

So Billions… is in the “buy” column for now. If it strays too far into repetition, and if its palpable energy and verve can’t hide a tendency toward predictability — common enough occurrences on soaps about rich people, and on Showtime programs in particular — it’d be easy to dump the show as ruthlessly as Bobby Axelrod excises a poor performer from his portfolio. But in the first half of its season, the lively momentum and diverting character studies of “Billions” offer reasonable dividends for those willing to invest.

That leaves room for future financial dramas. Maybe next up for Wall Street will be a reality show about marketplace lending?

Dueling investing apps: How to best forecast earnings

P2P Lending's Developing Debt Market

In investing, earnings drive stock prices. The thing is, though, for many higher growth firms, it’s really hard to determine just how likely a firm is to hit its stated targets.

An earnings miss — or even a hint of one – can be disastrous to share prices.

So, investors spend a lot of time listening to this analyst and that pundit explain his expectations for earnings.

The truth is, very few of these guys get it right.

A better way to get earnings estimates: crowdsource ’em

Most of the time we use analyst consensus earnings — an average of all the different Wall Street opinions.

The problem with using an average is that earnings estimates on certain stocks diverge pretty significantly and taking the average isn’t an entirely accurate way of trying to gauge earnings.

There are a couple of ways to do this better/smarter right now.

Continue reading “Dueling investing apps: How to best forecast earnings”

How to plan an awesome career in finance – with Roy Cohen

Roy Cohen is a master career coach. His experience as in-house career coach for Goldman Sachs launched a career in which Cohen has helped thousands of financial professionals.

He’s the author of the very useful The Wall Street Professional’s Survival Guide

In this week’s episode of Tradestreaming Radio, you’ll learn about:

  • where the jobs are headed on Wall Street
  • what successful candidates are doing to land their dream jobs
  • common mistakes people make with their financial careers
  • traits shared by top performers

Awesome opportunity

Roy is also joining me at the 4 Days to a Better Job: 2012 Finance Career Bootcamp. You’ll get access to Roy and 8 other experts to literally supercharge your job search. Great if you’re trying to break into Wall Street, hedge funds, etc and equally useful if you’re in the market for a better job.

Loyal listeners of my podcast get an additional 25% off  – if you sign up before January 31. Use the special code PODCAST  to get your discount. Go here to buy your tickets.

Continue reading “How to plan an awesome career in finance – with Roy Cohen”

Finding a job in finance in today’s market

finding a job in finance

I’m not going to pussyfoot around it: it’s tough to find a finance job in this market.

Whether you’re on Wall Street, working the buy side, or a recent (or soon-to-be) grad looking to break in — we’re in a contractionary cycle for finance jobs.

That means any existing jobs are more competitive and take longer to land.

Many Wall Street jobs have disappeared (as have the firms that employed thousands of people). Hedge funds have had a tough couple of years, some shuttered.

Tough going but you CAN find a job on Wall Street

The job landscape may be changing for Wall Street and the jobs may not be where you’d expect them to be. But there’s still PLENTY OF OPPORTUNITY for aggressive and driven people who want to make a go at it and work in one of the most rewarding industries known to man.

I’m going to help you do it.

4 Days to a Better Job: The 2012 Financial Career Bootcamp

That’s why I’m hosting the 4 Days to a Better Job: The 2012 Financial Career Bootcamp.

I’ve assembled some of the top experts with real-life experience helping professionals (young and more experienced) find their careers on Wall Street, in NYC, in Stamford, wherever people are employed in finance.

No BS — these are people who walk the talk. They’ve literally helped thousands of people build successful Wall Street careers over the past 2 decades.

We’ll focus on practical, actionable advice that will bring you one massive step closer to getting what you want.

I hope you decide to join me and students/graduates from schools like Harvard and UCLA Business Schools February 13-16 for an entirely online event, 8 sessions focused on practical advice to help you further your finance career — or get it jumpstarted.

You can read more about the event here.

Feel free to get in touch if you have any questions about the event.