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

  • Bank products and services are becoming increasingly digital.
  • That said, the financial industry is a laggard when it comes to API usage.

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

Let's get digital

Everyone's still trying to figure out this digital thing. Some financial institutions are doing better at it than others. USAA's customer-centric charter leads digital innovation, not the other way around. "Since the military community moves more often than the average consumer, USAA found a way to move with them." One entity that doesn't quite get it is, well, the Fed. The organization launched a Facebook page recently. That's when things started to go a bit off the rails. The Fed is using its social media presence to give a kinder, gentler view of its inner workings but the user comments are just flat out hysterical. It appears the public isn't quite ready for this level of access. The Australian Stock Exchange was shut down by a technical failure that stopped trading for a few hours. ING suffered a similar fate when a loud boom was followed by an outage at one of the bank's data centers in Bucharest. When they do decide to put rubber to pavement, banks and asset managers may do so using an advanced form of surveillance technology.

I don't think P2P means what you think it means

There's been a lot of excitement about Lemonade, the new well-capitalized insurance startup that launched this week. Much of that interest stemmed from the company's marketing of its new peer to peer model of insurance. Looking at the app, Lemonade must mean something else when it says it's P2P. Regardless, the app still looks pretty sweet. Also, as more devices track our every move, some insurance companies are using this data to craft more personalized insurance policies around our behavior. In some instances, insurers are using this data to help modify policyholder behavior to nudge better outcomes (for both the guy who pays the premiums and the insurer itself). Not sure how this fits in? Mike Galarza understands what fintech success means. The immigrant founder of Entryless was inspired by a talk Peter Thiel delivered at Stanford to do something he was passionate about. And he did.

Domo arigato, Mister Roboto

Roboadvisors have, by default almost, become the poster boys for consumer fintech. As they've grown and acquired more assets, they've also changed their focus. Lex Sokolin, who founded one of the first robos, joins us on the Tradestreaming Podcast this week to discuss what he calls, the four stages of roboadvice. It's an interesting discussion and perspective, given the fact that Sokolin, who's director of fintech research for Autonomous, believes we're currently in the third wave. According to a new McKinsey study, digital finance could add more than $3 trillion to emerging market GDP. Sure, the consulting firm is just talking up its book, but when you look at what's happening, incumbent financial institutions are paying attention. 25 percent of them are actively considering acquiring fintech firms. Speaking of robos, robo tax manager, Avalara raised close to $100 million.

Is bitcoin really money or not?

There's still a lot of dickering going on about Bitcoin. The U.S. legal system, for example, is still trying to figure out if the cryptocurrency is money. After a local Miami judge ruled that Bitcoin wasn't money, a U.S. judge just ruled that it actually is money. Lots of banks are getting into the P2P game. But, honestly, it's an interesting phenomenon that more banks haven't gotten into the digital gifting game, which is weird because Christmas expenditure on gifts alone is $830 billion in the U.S.. As we explore the changing role of banks, we'll probably see some financial institutions experiment more with this type of thing.

API-ification of banking

We've been exploring the theme of increasing use of APIs in banking. Here's a good place to start answering the question, what is a bank API? What's starting to happen is that banks are making their banking rails available, either publicly and or privately, to third parties to build stuff on. While the financial industry is behind other industries, it's slowly legging into APIs. Regulation will help encourage the sharing of data, too.

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