2017 have been an eventful year in the world of technology, digital transformation, and fintech. As we are approaching the end of the year, these have been the top ten topics of the year on my blog according to post popularity.
1. Bitcoin is useless. As the world is in the middle of a bitcoin fever, the success of bitcoin as a speculative object renders bitcoin useful as its original purpose, a decentralized electronic coin that could replace today’s money transfers controlled by the financial system. It is close to impossible to predict the future of bitcoin but a plausible scenario is that bitcoin will go down in history as the Myspace of cryptocurrencies. Read more here.
2. What is the value of a fintech company? Fintech valuations are often cumbersome. Market trends show that deal volume has declined some, but remain at a relatively high plateau in terms of the number of deals. Late stage valuations have experienced a drop and remain low as the sector matures. Despite this, early stage (early venture, seed and angel investments) valuations are steadily increasing. For potential investors, there are a couple of obvious pitfalls to avoid. What are the value object(s) of the company at hand and how sound are the assumptions that make up the business case? In the complex environment surrounded by hype and fear of missing out, how should entrepreneurs and potential investors go about to determine the value of a fintech company? Read more here.
3. Why Amazon is the most likely western tech giant to fully enter finance. Competition from the technology sector is the recurring theme in the financial industry, and of the four horsemen of tech (Google, Apple, Facebook and Amazon) most attention have been devoted to Apple and Google ever since the announcement of Google Wallet back in 2011. Even though Google, Apple and Facebook are more visible in the payments space, Amazon differs from these players by relying on a low-margin business model with the already proven ability to deliver payment services, affordable loans for SMEs and current accounts for both businesses and consumers. Read more here.
4. Skandiabanken (now Sbanken) taking the next step. Banking used to be somewhere you go, seventeen years ago Skandiabanken made it something you do as the first online-only bank. During those years, we have continued to maintain our position as the leading challenger bank, and now we are stepping up the game and taking digital banking to the next level. A shameless clickbait posted prior to our capital markets day. The presentation and material can be found here.
5. Open banking: A playbook for banks and fintechs. It has been impossible to miss the discussions surrounding open banking in 2017. After looking into the subject, it is becoming clear that it is time to stop talking about it and start implementing. There is no one size fits all open banking strategy. Rather, there are several tactical moves that are being played about by a variety of both banks and fintechs. I will attempt to describe some of the widely applied moves, as well as give some examples of the type of players that are conducting these moves. Read more here.
6. The promise of machine learning in anti-money laundering. One of the biggest hurdles for banks is the never-ending growth in complexity and regulations in the compliance department. This is one of the areas in banking where Artificial Intelligence (AI) shows vast promise. I have already covered this topic in a previous post, but as both the technology as well as my own understanding of the field advance, it was time for an update. Read more here.
7. The next generation of robo-advisors. Robo-advisory is a hot topic, and the use of machine learning to democratize wealth creation is an area I am heavily involved in by planning a launch of Sbankens robo-advisory service early 2018 as well as chairing the board at Quantfolio. My friend Thomas Brand shares many of my thoughts on the field and has written an excellent piece as a guest blog post that can be found here.
8. What does PSD2 mean for online merchants? The coming payment service directive from the European Commission marks a shift in banking regulations. Instead of prohibitions and limitations, the overall purpose of PSD2 is to create an even playing field and encourage innovation in the payment space as a part of SEPA (Single Euro Payment Area). Although all the technical details is yet to be sorted out, the directive states that banks need to offer payment APIs to third party-providers of financial services, also known as TPPs (Third Party Provider) under the XS2A (Access to account) rule. The players on this field include banks, fintechs, the PCI (Payment Card Industry) and merchants. I have explained the basics of the directive in this post. While banks are at risk of losing up to 43 percent of retail payment revenues by 2020, the directive represents several opportunities for online merchants. Read more here.
9. Fintech and the disruption of banks – Where are we now? Payments. Payments is still the biggest and most mature field within fintech. Changing consumer behavior, eCommerce, smartphone adoption, digital currencies and PSD2 are just some of the trends that are making payments ripe for disruption. This used to be a field of opportunities for promising startups, and has given us successes such as Klarna, iZettle, Square and Venmo. Now this field is gearing up for a clash of the titans, where fintech challengers like Klarna and Transferwise face off with tech behemoths like Facebook, Apple, Google, converging industry players from the telco and retail industry, incumbents from the payment industry such as Paypal, Visa and Mastercard, the banks and Alipay as the dark horse in this battle royale for the future of payments. Read more here.
Thanks for all the great feedback and recognition throughout the year, and to be recognized as one of three best practice examples of how top executives should be visible on social media thanks to my blog. Make sure to hit subscribe to get the latest updates as 2018 should be an even more exciting year.