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#24 | DECEMBER 2018 | £2



Top 7 Fintechs to watch page 08

Fintech Asia Orichal Partners - Crypto Private Capital page 14

Expert Column Jeffrey Sweeney Unlocking Liquidity with STOs

page 16



SHAPING A SINGLE VERSION OF TRUTH Haytham Kaddoura, CEO of SmartStream Technologies,

CEO Interview

discusses AI and blockchain strategies for increasing data

Juston Lyon - Rise of Simulation Technology

quality in combatting trade failures. page 19

Continued on page 3

Wonder Woman Gemma Rogers - Fighting Financial Crime page 26

Disruppng trillion dollar markets With DAPPS for businesses. Modex is launching a Smart Contract Marketplace that allows for easy, user friendly access to smart contracts. Companies can easily find Smart Contracts that meet real-world needs, are already audited and secure, without having to scout developers and manage one-off development projects. Modex plans to make deployment of Smart Contracts significantly easier, faster and more cost-effeccve, speeding up blockchain technology adoppon. www.modex.tech


News Updates UK’s Appetite for Innovation is Driving a “Brexit-Proof” Boom in Fintech The UK’s passion for innovation means it is now seen as a global leader in the development of financial services that are powered by prepaid technology, according to data released by Prepaid International Forum (PIF). PIF, the not-for-profit trade body representing the prepaid sector, reports that the percentage of UK adults using tech-based financial services has risen to 42% (up from 14% in 2015). The UK is at the forefront of this growing market in Europe, ahead of Spain (37%) and Germany (35%). The UK is third globally to only China (69%) and India (52%). Fuelling this growth in the UK is prepaid, which has become a driving force for the fintech companies who are rapidly transforming the way we pay and get paid. The prepaid sector in Europe is growing faster than anywhere else in the world (up 18% since 2014 compared to just 6% growth in the US) is now worth $131bn*. Experts believe that the UK’s passion for innovation may help to offset the potential negative effects of a no-deal Brexit, should UK financial service providers lose its right of automatic access to EU markets. Diane Brocklebank, spokesperson for PIF, says: “The UK is a globally significant player in the creation of prepaidenabled financial services with consumers keen to adopt new and innovative services and a growing industry of experts with the knowledge needed to develop such products and bring them to market. In a global sector, the

Mattereum Publishes New White Paper Outlining Smart Property Register London-based legal-tech firm Mattereum has solved the problem of bringing real-world assets under the full, legal control of the blockchain, opening the floodgates for the next phase of blockchain integration into the real world. They have described this in the new summary white paper, which can be accessed here. Mattereum’s solution enables business on the blockchain by building a smart property register to underpin a system of decentralised commercial law comprising smart property rights, automated smart contract execution, and reliable dispute resolution and enforcement. Chris Wray, Mattereum’s Chief Legal Officer said: “The Mattereum Smart Property Register is the legal, technical and commercial infrastructure layer for on-chain property transfer and control in accordance with the Mattereum Protocol”.


UK stands out as being a key market and one that should retain its prized status even if it loses its financial passporting rights as a result of a no-deal Brexit.” The UK’s status in prepaid is significant as it is a sector that is growing much faster than other financial services. In Europe, the 18.6% growth in prepaid since 2014, compares to just 7.8% growth in consumer debit and 5.8% growth in consumer credit markets*.

Diane Brocklebank, continued: “Prepaid and Fintech are the areas where people looking to invest in financial service businesses are seeing the most potential. This is being driven by increased dissatisfaction with mainstream financial services and a desire for greater innovation and flexibility, particularly amongst consumers looking for lower costs and fees as well as smartphone accessible products. The UK’s status as a global player is therefore crucial to it continuing to be seen as a key market for such investment. To maintain this, it must continue to be a positive environment for innovation with a supportive regulatory environment and strong skills base.”

Added Mattereum Chief Technical Officer Rob Knight: “The Smart Property Register turns smart contracts into legal contracts that can be efficiently enforced all over the world, without needing new legislation, creating liquidity for $50 trillion of assets globally.” One of the first on-chain assets on the Smart Property Register will be a $9,000,000 Stradivarius violin. It will not simply be tokenised and sold in a crowd sale. The governing committee for the instrument will have legal decision-making powers over the instrument, protecting and curating it on behalf of the token holders and posterity, in accordance with a written constitution. Unique records which validate the instrument will create an indestructible title deed and register of interests in the violin. Mattereum’s Chief Executive Officer Vinay Gupta said: “We have assembled a team of lawyers, cryptographers and programmers, completed the initial legal and technical research and development, and prepared for registration of the first assets. Smart property is now a reality. Finally blockchains can support the legal operations which realise their transformative potential.”

Mosaic Smart Data Launches Instant Reports for FICC Analytics Mosaic Smart Data (Mosaic), the real-time FICC data analytics company, has launched a new feature for its MSX platform enabling users to instantly generate text reports on their trading activity data using machine learning. The feature will be available to all MSX users and will allow a trading activity report, which would take a member of staff hours to create, to be generated instantly. Using a machine learning technique called natural language generation (NLG), MSX can generate trading activity reports on any set of analytics on the platform including both voice and electronic trade data. These reports highlight trends and identify anomalies in the transaction data which provide points of interest for traders and sales teams. Using advanced machine learning techniques, the reports can also provide explanations for these anomalies, moving the analytics beyond simple description to providing causative analysis. The feature offers significant productivity gains for banks’ staff by rapidly generating accurate reports which would otherwise take several hours to compile. The reports can be shared internally to monitor FICC performance or created to provide clients with additional insights on the market and their activities. The data analysed by the NLG reports is fully customisable by the staff member and can be selected in real-time. This is subject to limits by permissioned controls set by compliance and management, ensuring that data and analytics is only viewable to staff authorised to see it. Matthew Hodgson, CEO and founder of Mosaic Smart Data, said: “Having advanced analytics at your fingertips is one thing, but for it to really be powerful it needs to be comprehensible to anyone in the bank who needs to use it. This new feature allows users to instantly create the narrative around the data analytics, highlighting the key outliers or trends in the data which they need to pay attention to, enabling rapid understanding of the information. “Imagine if the bank’s highest performing, most experienced quant could write all the reports it generates. And now imagine those reports could be produced in seconds across the entire global bank 24 hours a day. The gains in efficiency, performance and business insight would have an almost immediate impact on the bottom line.”

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2 I December 2018

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SmartStream Technologies is blazing a trail with a number of future forward activities within the fintech industry. From the growth of its Reference Data Utility (RDU), that has had buy-in by Goldman Sachs, JPMorgan and Morgan Stanley for delivering reference data management services to the banks, to the launch of its Innovations Lab in Vienna, SmartStream is doing its bit to combat trade failures. Zoya Malik, Managing Editor TFT spoke to SmartStream’s CEO Haytham Kaddoura about his AI and blockchain strategies for increasing data quality and reducing data management costs for SmartStream’s partners ZM: What are SmartStream’s activities in the fintech market? HK: We are a player in the fintech space, starting as a processing platform provider, primarily addressing reconciliation and over the years we have branched out into other ancillary areas such as cash and liquidity management, corporate actions and expense management, which handles charge backs between brokers and other counter parties. Since 2015, we have formed a joint venture with JPMorgan, Goldman Sachs and Morgan Stanley to develop The SmartStream Reference Data Utility (RDU) that picks up data from various financial exchanges, along with data feeds from digital financial news and information providers such as Bloomberg and Reuters in order to deliver a greater level of accuracy. RDU is about delivering clean and rich data to financial institutions via more developed data sets than banks can access individually. The more accurate and the more comprehensive this data is, the easier it becomes to avoid losing trades because of data failure. At the moment, we are focussed on ETDs (Exchange Traded Derivatives) and expanding into equities and in 2019, we will be looking at fixed income as an asset class. We are well supported in these efforts by the aforementioned three highly credible partner banks and we are increasingly targeting Tier 1 institutions globally.

ZM: What are the problems you are addressing for bank partners? HK: The data that is being pumped into banks’ various operations is not necessarily consistent; inaccuracies creep in from individual exchanges and financial news agencies. These discrepancies can be time consuming and costly for the banks who end up spending significant resources on addressing the shortcomings of the data i.e. filling in the blanks. So instead, we do that leg work on their behalf whilst making that data available to a whole host of financial institutions. This eliminates a duplication of banks’ individual efforts and ensures an improvement in speed, accuracy and cost effectiveness in the processing of reconciliations.

ZM: Over the past year, how has SmartStream invested in AI and blockchain within your business? HK: In the early days, I was really cautious about jumping onto the AI and blockchain bandwagon but, eventually, I

became confident about what value add it could bring to our industry and to our clients. So confident that, in fact, towards the latter part of 2018, we announced the set-up of the SmartStream Innovations Lab in Vienna, with the objective being to build a team to look at implementing AI and blockchain within our existing solution sets. We took a really dynamic and young team of data scientists, with great analytical skills, lead by an AI academic to study financial institutions’ pain points and to address their needs. Prioritising AI and blockchain solutions as a strategy prerogative means that this is a critical investment for us and thus far, it’s proving a great success. The Innovations Lab team even invites banks to sit “within” the organisation and, with the appropriate Chinese walls in place, these institutions can share their anomalous data so that we can make it more intelligible, enabling them to better understand why they have breakdowns in processes. Don’t forget that SmartStream has almost 30 years of market expertise within the industry and our solutions are running at 70 of the world’s top 100 partner institutions, so with the expertise we have working at the SmartStream Innovations Lab, we are able to test our blockchain technology while increasing our understanding in tandem with our partners’ growth plans, to evolve strategic solutions. Testing our solutions is a critical way to develop and prove our technologies. In 2019, these solutions will become commercially available to even smaller partner institutions who may not have the data volumes of a Tier 1 organisation. Designed to be plug and play and modular, these solutions can sit on both our own existing platforms and directly on the client’s system.

So, for me, innovation is really end-to-end. It has to start with the team that innovates and has to be put into the product line. It has to go to all the customers.

ZM: How is the Innovations Lab finding solutions for clients?

ZM: Where are you seeing business growth?

HK: If you look at the financial markets, you can see that they’re changing at great speed. Typically bank transitions were originally driven by cost efficiency and I think that with conventional technology we have raised everything to a certain level, where they can’t easily optimise any further. However, there is progress with Blockchain and AI or machine learning. The blockchain and AI teams were asked by clients to innovate and our product managers had a lot of great ideas. They reviewed the products and they found all the areas where we could apply innovation. For example, if you look at the reconciliation process specifically where data doesn’t allow exact matching, then AI gives our customers a lot of possibilities. If they allow for an AI engine to come up with suggestions, they can process much higher volumes in less time. Then, due to inexact matching, of course, there might be more mistakes however, this is typically still a great business case for them.

ZM: How many proof-of-concept projects are underway? HK: At the moment we have 11 that the SmartStream Innovation Lab is working on. We were able to discuss these in October this year at SIBOS and Money2020.

ZM: How do you set up an environment that supports innovation? HK: We focus specifically on real world problems of our clients in the POCs. We want to meet client needs and innovate in that direction. When the POC is done and successful, then we seed the innovations back to our product centre so that all the other SmartStream customers benefit.

ZM: How is SmartStream investing in blockchain? HK: One of the solutions that we are developing is communication of verification and reconciliation of orders which is happening at around 20 banks as an on-premise offering. We can put this solution for them onto a blockchain environment so that clients can then see the data online, as a single version of truth and thus discrepancies can be reduced between organisations. We demonstrated the prototype at Sibos earlier this year and are testing it with one of our clients. We will have a major announcement on AI and I am confident we will have a major impact in the blockchain space.

ZM: How will blockchain transform the payments industry? HK: We support digital payments and this is high on our agenda for 2019 as it is for financial institutions, especially where banks are reconciling and processing payments from mobile phones, credit cards, e-payments gateways and now even crypto currency level payments. Banks are aiming to develop a unified platform that is able to handle such payments seamlessly, so this is one of the areas we have on our drawing board for 2019. In terms of payment processing by blockchain operators, we support the infrastructure providers such as Ripple by assisting with their payment management.

HK: Corporate actions processing is one of our fast growing business lines. Let’s say that an organisation announces an action globally across multiple financial jurisdictions where they must communicate, for example, a stock strip or an

“Prioritising AI and blockchain solutions as a strategy prerogative means that this is a critical investment for us and thus far, it’s proving a great success.” December 2018 I 3


M&A, buy back or dividends declarations. This information gets disseminated through different channels, whether it’s the stock exchange or the corporation themselves, and every country and every jurisdiction has its own modes of communication. The data needs to be acquired by financial institutions so that it can understand the implications of that on their clients’ portfolios. Historically, that’s been a massively labourious undertaking by banks because very few institutions are able to afford automated processing of that data. What we are doing is creating solutions for smaller institutions to automate their process and adopt technologies that permit them to keep pace.

ZM: Which are these smaller financial institutions? HK: Everybody. From small brokers to small hedge funds to any entity that hold securities that are subject to corporate actions. It has global implications whether in terms of source of data that is being produced by the corporations, or the people at the end of the trail who are assessing this data for their clients’ portfolios.

ZM: What other non-banking sectors will look for growth by leveraging fintech? HK: We are seeing growth in other sectors and have signed deals with the telcos and oil and gas corporations. Many of these corporations historically relied on banks to provide them with an assessment of their exposures to various currencies, various jurisdictions, to be able to manage their liquidity. Now by asking us to provide this service, they are able to run that on their own. For instance, a big oil and gas conglomerate can see what is its exposure to the Japanese Yen or Pound Sterling, so that Treasuries can act on a more active and dynamic basis. The saving in time can have a real impact on the corporate’s portfolio.

ZM: What are the leading jurisdictions for fintech startup development? HK: We are seeing interest in Emerging Markets coming from African countries in adopting new technologies and from Dubai. For instance, they are doing some interesting things at The Hive in Dubai sponsored by DIFC and Accenture and fintech accelerator activity in Singapore. I think it has to be done as a concentrated effort; it starts with academic institutions producing concepts and, from there, entrepreneurs and developers building solutions. From the government side, we need IP protection and the infrastructure and guidance for the start-up entrepreneurs. The whole environment has to work together for the proposition to work and once these are there, the investors will come. The DIFC and The Hive launched a roadshow that invited InsureTech firms and Tier 1 banks to step up and give guidance to entrepreneurs in one-on-one sessions, so a great example of a government enabling exposure to institutions.

ZM: As the industry embarks on the regtech journey, how can banks convince regulators that the technology works? HK: Regulators themselves will have to look into AI technologies, I believe it will solve the challenges we do not have the answers for today. A good example is the BCBS-248 regulation and its requirement for cash and liquidity stress testing. Regulators require banks to monitor internal stress,

counter party stress, and market stress. The monitoring requires a technology that understands the nature of a normal behaving market and can sense abnormalities. This is a perfect example of a machine learning use case and SmartStream is currently implementing a stress monitoring tool to address this.

ZM: How does SmartStream partner with startups in terms of your business model? HK: Again, I believe it’s everyone’s responsibility to support start-ups. We partner with them and they offer us exposure to their client-base and we work with them to develop their proposition when it directly works with our business model. We like to do our fair share. The criteria for partnering these firms is by the track record of the team that they have evolved from a concept and which offers us confidence that our time in nurturing them will be well spent and that they have something unique and not just a me-too solution. We would like something unique, something that we are proud to take to our clients. Of course, regulations are significant drivers for our growth and we’ve witnessed, for example in KSA, Dubai and across the GCC and in other Emerging Markets, that there is a strong push by regulators and market authorities to help create opportunities. Regulators in these jurisdictions have shown confidence in us, knowing we can deliver projects on time. So certainly, the change and speed of adoption of regulations in our industry, is a major part of our growth story. uTFT

“We focus specifically on real world problems of our clients in the POCs. We want to meet client needs and innovate in that direction. When the POC is done and successful, then we seed the innovations back to our product centre so that all the other SmartStream customers benefit. So, for me, innovation is really end-to-end. It has to start with the team that innovates and has to be put into the product line. It has to go to all the customers”. Haytham Kaddoura

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December 2018 I 5


MALTA - The Blockchain Island Malta’s launch of three new laws are attracting great interest as a destination for crypto and blockchain businesses to find a secure home. Dr Christian Ellul and Karl Schranz, Directors E&S Group discuss how their firm has pioneered legal advisory in this jurisdiction in tandem with the Maltese government creating confidence for industry entrants to navigate and structure compliant virtual asset businesses On November 1st, 2018, the Maltese Government enforced three acts that would provide much needed regulatory certainty for operators in the fields of Distributed Ledger Technology (DLT), cryptocurrency and other forms of virtual asset. This move also placed Malta at the forefront of industry on a global scale as it became the first jurisdiction to provide a comprehensive legal framework for the developing sector. In March of 2018, just prior to the laws being drafted and presented to parliament, a public consultation was launched that was led by the Parliamentary Secretary, Hon. Silvio Schembri along with key stakeholders within the industry. During this time, as news of the impending legislation spread, Malta began to attract a lot of attention from foreign-based enterprises such as BitBay, OKEx, and Binance - the world’s largest cryptocurrency exchange - all of which, relocated their operations to the country. Since the introduction of the Malta Digital Innovation Authority Act, the Virtual Financial Assets Act, and the Innovative Technology Arrangements and Services Act, interest in Malta as a destination for crypto and blockchain businesses has increased. This influx of interest in operating in the country, as well as the burgeoning local business sector led to the country being dubbed “The Blockchain Island”. Thanks to the progressive and well-structured laws laid down by the government, Malta is set to become a leading location for businesses such as exchanges, ICO start-ups, and other service providers catering to the DLT and virtual assets industry. A pioneering Maltese company In 2017, Dr Christian Ellul and co-founder Karl Schranz of E&S Group advised their first client who was set to launch an ICO. At this time, it was a totally unregulated market and E&S Group decided after assisting their first customer in terms of legal advice and document drafting, that they would take 3 months to dedicate to studying token distribution. Much time and money was invested in learning the technical ins and outs of token distribution and blockchain. Technological and legal knowhow After publicising the fact they were able to assist with ICOs, E&S Group began being inundated with requests for assistance with clients appreciating their legal plus technical know-how. Through word of about referrals, the market boomed for E&S Group in October 2017. Today, E&S Group have 8 lawyers specialising full-time in blockchain and cryptocurrency, and two tokenomics advisors; these are all fully qualified accountants that are able to advise on the financial aspect of clients’ projects. So far E&S Group have assisted in over 90 ICOs as well as other crypto and blockchain-related projects, for both local and international clients.

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The impact on clients Whilst many other countries are still unsure of how to handle ICOs and cryptocurrency, Malta is trailblazing by providing a clear framework that explains what is acceptable, how things should be categorised, and what recourse can be pursued- this is a valuable seal of approval for both Malta and the industry as a whole. With uncertainty being the biggest enemy of business, the fact that Malta offers greater certainty is vital for both the country, and businesses operating within the sphere.

(L-R): Karl Schranz, Eman Pulis (organiser of MBS+Sigma) and Dr Christian Ellul

A world first Not only is E&S Group leading the way in terms of the scope and breadth of its experience in the ICO, tokenomics and blockchain sector, but it was also the first in the world to tokenise its services in the field. The group became the first of their kind to accept tokens instead of fiat currencies, in exchange for their services. The token called “ESTS” works on a proof-of-work protocol on the Ethereum blockchain platform. Clients are able to pay for the services of the group by acquiring ESTS tokens via the platform. The project has been a success so far with clients being incredibly receptive to this new way of doing things and it also acting as something of a vote of confidence that not only do the professional services firm know about the industry, but they are implementing it into their own operations as well. The Malta Blockchain Summit 2018 In November 2018, Malta hosted the world’s first blockchain summit to resounding success with over 8500 attendees from all over the world and around 400 businesses exhibiting their services. As well as the exhibition that took place over three days, there were a range of panels and seminars hosted by local and international stakeholders and speakers, workshops on marketing, investment and business development, and a hackathon. Dr Karl Schranz was a panellist speaking on, “Post ICO: With Millions in the Bank, What’s Next?”, joined by distinguished speakers to include Joseph Muscat, Prime Minister of Malta, John McAfee, Founder of McAfee Crypto Team, John Matonis, Founder of Bitcoin Foundation, and Justin Sun, Founder and CEO of TRON. What the future holds Despite a promising start to 2018, the last two quarters have seen a decrease in the amount of ICO projects being launched locally, not just in Malta. This slow-down is due to a number of factors, notably a lack of understanding from the general public, and a lack of confidence from those that entered the market without undertaking proper due diligence and treading carefully. But E&S Group are positive that this is just a lull and that another boom, albeit a much more measured and mature one, is imminent. As Malta’s new legislation begins to take root in the industry and other jurisdictions begin to introduce copycat legislation, it is expected that those that were previously

doubtful about the industries potential will begin to view it with more legitimacy. Whilst banks (both locally and abroad) may still need some convincing, through education and a gentler approach to adoption and development, it is anticipated that 2019 will be a much smoother year. Malta’s Blockchain Laws The Virtual Financial Assets Act (VFA) The introduction of the VFA will be instrumental in the fight against illicit activities such as fraud and money laundering. The VFA specifically pertains to the regulation and monitoring of Virtual Financial Asset Offerings (ICOs) and Virtual Financial Assets (tokens, cryptocurrencies etc.). It also makes provision for ancillary matters or any connected entities or business activities. Under the definition of the Act, a cryptocurrency can be classed as a VFA and the Act lays down a specific set of rules that protect consumers and support industry growth and all stakeholders. It mentions strict requirements for those that are launching a cryptocurrency, as well as for other service providers such as brokerages, custodians, portfolio managers, eWallet providers, investment professionals, and cryptocurrency exchanges. Under the VFA, an ICO is defined as ‘a method of raising funds whereby an issuer is issuing virtual financial assets and is offering them in exchange for funds’. The Act provides clear details on the applicable license requirements and conditions which must be adhered to by those entities that are either issuing VFAs, or who provide specific activities as stipulated within the Act. The VFA also makes clear demands in terms of what a whitepaper should include, the fact that it should be registered, how collected funds may be used, and the required due diligence that should be carried out on all individuals behind the fund-seeking entity. It also clearly stipulates principles that apply to advertisements, virtual tokens, licensing requirements and a financial instrument test that determines whether a service falls under financial services legislation or the scope of the VFA. For any entity to apply for a VFA License, they must do so via an accredited agent that has been approved by the MFSA. E&S Group qualify for the role and are therefore able to apply for the role on behalf of their clients as well as advise them through every step of the process and other related matters.


The Innovative Technology Arrangements and Services Act (TAS) The TAS Act is designed to provide regulation for innovative technology arrangements (ITAs), innovative technology services (ITSs), and to exercise regulatory functions on behalf for the MDIA (Malta Digital Innovation Authority Act). ITAs are defined as software and architectures that are utilised to design and deliver DLT platforms. They can include smart contracts and any related applications such as decentralised autonomous organisations and similar. The government has stated that the definition of what is categorised as an ITA can be extended in the future to include other arrangements. Under the Act, a technology service is described as review services that are provided by system auditors, and technical administration services that are provided by technical administrators. The MDIA will keep a register that will be available to the public and will include all the different kinds of recognition that can be granted to applicants as well as any applicable information that is needed to identify applicants and their activities. Any individual that wants to obtain ITA or ITS recognition can apply on a voluntary basis to the Authority including all information, documentation and assurances that are required by the MDIA. Certification is then awarded based on how a range of predefined criteria is satisfied. The Malta Digital Innovation Authority Act (MDIA) The Malta Digital Innovation Authority will promote

and develop an innovative technology industry in Malta consisting of elements including code, software, hardware, protocols, and other architectures that are used in Distributed Ledger Technology- in other words, the services that are specified by the Innovative Technology Arrangements and Services Act. The Act will seek to promote and enforce ethical and legitimate criteria for the design and use of innovative technology arrangements and it will also harmonise practices and facilitate the adoption of standards in Malta that are in line with international norms, standards, and laws. Furthermore, it will promote transparency and auditability, an integral part of the future success of the industry. The MDIA within its role as a regulator will be responsible for the granting, issuance, refusal, review, revocation, suspension, or cancellation of authorisations when it comes to innovative technology arrangements and services that are provided in, or from Malta. E&S Group believe that the pursuit of these objectives will lead to increased integrity in the Maltese DLT market as well as ensuring that any measures implemented in Malta will not differ from international policies and rules. This means that both consumers and providers can benefit from increased legal certainty, especially when it comes to operations and transactions originating in or from Malta. Blockchain and iGaming Before the blockchain and cryptocurrency boom, Malta was well known for its online gaming industry. Over the

last 14 years, he country has worked hard along with the Malta Gaming Authority (MGA) to create a jurisdiction of excellence with a sterling reputation for compliance. Businesses that received a Malta gaming license could wear it like a badge of honour that demonstrated their business met the highest regulatory and legal standards. Whilst the iGaming industry is still going strong and accounts for around 12% of the country’s annual GDP, blockchain and its associated industries, is set to cause quite a stir. Rather than blockchain and crypto pushing iGaming to the bottom of the pile, it is anticipated that the two industries will find a point of convergence and synchronicity. “I think blockchain is usable for everyone in the world, including gaming that tends to lend well to blockchain. So we have certain ICOs that are funding, for example, a gaming company. We have other gaming companies that want to start using crypto currencies and basically the MGA is issuing this sandbox regulatory framework, so they really do link in well”, stated Dr. Ellul. iGaming, eSports, and online casinos are finding that cryptocurrency and blockchain-based transactions have a wealth of benefits for their existing business models, and many are looking to integrate the technology into their operations. Rather than existing in competition with each other, it is expected that both industries will support the other and increasing levels of collaboration will be seen as both sectors continue to develop. In terms of Malta’s reputation as a jurisdiction of excellence, blockchain and crypto is just another string to its bow. uTFT

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Top 7 Fintechs to watch Seven companies have impressed Flavia Alzetta, CEO of Contis over the last 12 months. Each OTW was selected due to its positioning and performance in one of four categories: Profit, Innovation, News and Awards.

informs the business, allowing a quick turnaround of information. This has dramatically reduced the time spent on onboarding, leading to companies such as Google, Morgan McKinley, Revolut and Tesco using the app as part of their onboarding process. This service has been so effective that Onfido recently raised $30 million in capital from investors. Azimo – CEO, Michael Kent. Azimo is a fully-integrated money transfer platform. It allows migrants working in the UK to transfer money back to family members in different countries at the touch of a button. They charge minimal fees for the process. The platform allows the money to be sent to mobiles, banks or 300,000 cash pick-up locations. The platform now has over one million users. The user sending the money is able to follow the transaction through all of its various stages, with notification updates informing members of where their money is. Their significant lack of overheads in comparison to established banks means they can offer better currency conversion rates.

Advanon – CEO, Stijn Pieper. Advanon are a Swiss company that provides an online platform for invoice-financing SME’s. Since their founding in 2014 (by three students who met at Google) they have grown tremendous amounts. They now provide for a variety of services such as Battere AG (A company that rents mobile recharging batteries out of retail outlets), Exurbe Cosmetics (An ethically-facing cosmetics company that specialises in producing high-quality vegan cosmetic products). Their service enables companies to get their invoices approved and paid within 48 hours of submitting the request, rather than a 4-8 week turnaround in a standard bank. This allows their clients to be able to better manage their cash flows and concentrate on their core business. The business has recently announced its latest hire, former Head of Strategic Partnerships at EY, Andrea Punchera has been appointed as CYO.

WeFox (otherwise known as FinanceFox) – CEO, Fabian Wesemann. WeFox are a next-generation insurance app that are built entirely on the SalesForce platform. They combine cutting-edge technology with traditional insurance business methods in a bid to better connect insurance companies with their clients. The German-based firm inform customers and businesses alike of their rates in less than 5 minutes, using innovative algorithms to analyse your chances of being insured from the details you submit.

Finimize – CEO, Maximilian Rofagha. Finimize is a Londonbased startup that strives to provide the millennial with an affordable alternative to a financial advisor. The app is a fully-secured savings plan. The AI configures your min-max savings amount per month based on the details you provide e.g. Salary, position, bills, children etc. Based on a number of factors, the app will then tell you via a chat forum whether there are stock movements that should warrant investment. They have been subject to massive growth, transforming from a newsletter that was previously read by 100 users, to a fully-integrated savings and advice app that is used by over 250,000 people, in just under two years.

TrueLayer – CEO, Francesco Simoneschi. TrueLayer is a startup that builds API interfaces that allow other fintech startups to access banking information, providing they have permission. As Open Banking has come into force in the UK, TrueLayer has built the ‘Data’ API that allows startups easy access to the API without the complication of building their own integration system. TrueLayer then provides this service for a fee. TrueLayer are also in the process of building a ‘Payments’ API that promises to ‘allow users to transfer funds to different places without the use of a card or direct debit’. TrueLayer assure users that this software is fully compliant in the post-GDPR world.

“The fintech industry is subject to constant change at an incredibly fast pace. It is a tough industry to crack when you’re starting out, however, having been working in the space for over 15 years, I’ve learnt what attributes are necessary to make it in fintech. We’ve been watching these companies for a while and I think that these seven have vast amounts of potential to disrupt and make an impact in finance.” Flavia Alzetta, CEO of Contis

Onfido – CEO, Hussayn Kassai. Onfido combines business needs for total candidate transparency with fresh innovative methods. Started by three Oxford graduates in 2012, Onfido provides a fully-secure background check using Artificial Intelligence. There app can scan an official document and decide whether the document has been tampered with in any way (forged, stolen etc.). The app then immediately 8 I December 2018

Yielders.co.uk – CEO, Abdul Haseeb Basit. Yielders.co.uk is the UK’s first fully Shariah-certified Fintech company. They specialise in property crowdfunding investment and have taken the idea a step further, by eliminating the vetting and search for applicable opportunities. The ethical advantage of Yielders.co.uk is that they take no interest from crowdfunded investment and pride themselves on being fully-transparent.

Flavia Alzetta is the CEO of Contis. With 25 years’ leadership experience across financial services, payments, leisure, technology and consumer goods, Flavia has a proven track record of managing complex enterprises and delivering high growth in global organisations.


Disruppng trillion dollar markets With DAPPS for businesses. Modex is launching a Smart Contract Marketplace that allows for easy, user friendly access to smart contracts. Companies can easily find Smart Contracts that meet real-world needs, are already audited and secure, without having to scout developers and manage one-off development projects. Modex plans to make deployment of Smart Contracts significantly easier, faster and more cost-effeccve, speeding up blockchain technology adoppon.


December 2018 I 9


PSD2 – A PARADIGM SHIFT FOR THE PAYMENTS INDUSTRY With EU’s PSD2 (Payment Services Directive) March 2019 deadline looming, Zoya Malik spoke to Eran Vitkon, Open Platform Solutions Group Head, Finastra about the opportunities and challenges financial institutions must face in order to compete and remain relevant to their customers’ payments experience ZM: What’s your view on PSD2 impact on creating competition and consumer protection in the market? EV: The original scope of PSD2 was to try and facilitate taking cash out of society by making electronic methods of payments easier. It also aims to put power into the end-user’s hands by allowing them to grant consent to any regulated third-party provider (TPP) to manage their account and initiate payments on their behalf. The introduction of these new players into the market adds competition. TPPs, being significantly less regulated than banks, have the potential to be more agile and become the customer’s new channel. This puts pressure on banks to innovate and create value added services to attract consumers to their online service and differentiate themselves. PSD2 also has the potential to increase competition between banks and credit card companies. The combination of Pay From Account and Immediate Payments is something very appealing to merchants, so much so that it’s even possible that they might incentivise consumers to opt for that payment option over credit card. From a consumer perspective, once the banking services are on par with what credit card companies provide in terms of financing options and online experience, then this shouldn’t be a hard sell. Banks need to understand that the changes brought about by open banking go beyond just regulation. The enablement of open APIs allows banks to extend their services outside of bank applications. This is an opportunity, for example, to allow a car buyer to take an immediate loan at the car agency without going into the bank and without switching between applications. This allows banks to provide payment initiation services and exploit the tremendous amount of data in these payments to deliver a high level of personalisation to the consumer, while also improving big data analysis for the bank. Banks recognise that PSD2 is both a retail and corporate banking opportunity and should develop use cases based on customers’ needs and pain points. In fact, in the responses to the initial thinking, corporates gave the EU the most feedback; more than citizens and banks put together. ZM: How feasible is this for banks to invest and implement over 2019? What targets would they want to meet? EV: For most banks the first milestone, and the one which is of the most

Eran Vitkon 10 I December 2018

immediate concern, is compliance with the PSD2 regulation. This will likely be their major focus well into mid-2019. That said, it should be evident to most banks that becoming a TPP and being proactive is the next logical steps. This is something we have seen the larger and more advanced banks already doing. As already regulated entities, banks will have less hurdles to jump to become a TPP compared to technology companies, but still have many other technology and business challenges to overcome on the road to compliance. Key to meeting these targets on time will be knowing which of these pieces should be done in-house and which will require partnering with an external technology vendor. Open banking also requires a move to 24/7 operations and will mean banks must update their legacy systems to integrate with modern application programming interface requirements. Banks must also implement new security measures, given they may no longer own the channel. Overall, there are two key end-user stakeholders here: the consumer and the corporate. Both have similar needs (access to account aggregation and initiation), but will be implemented very differently. The corporate side will be a major opportunity for closer system relationships between the bank and its customers. ZM: How will this impact service providers to the industry? What are the opportunities and what will be the focus of their R&D and products? EV: Some of the major areas where we see opportunities are: -Value Added Services – Banks are spending lots of time and money on complying with PSD2 but providing only basic services will give them zero revenue benefits. Banks are keen to find additional products and services which can leverage this work and enable them to attract other banks’ customers and/or monetise them to gain revenue. -Risk and fraud – Currently banks have the privilege of owning the channel which the customer is using, whether mobile or web, the bank has access to a rich set of data upon which they (through their service provider) can assess each interaction. In a post-PSD2 world these interactions may come from a third-party channel, and the data they are able to analyse will be drastically smaller. This creates a major challenge. -User Experience – PSD2 introduces a lot of complexity and friction into consumer interactions with banks via TPPs. The constant authentication and authorisation requirements somewhat break the current online experience consumers have grown used to. Both banks and TPPs should invest in solutions to help mitigate this effect. -Tighter integration – with the corporate’s line of business applications such as ERP, payroll and supply chain. ZM: What conditions do banks need to partner with these service providers and what are the opportunities? EV: First and foremost, banks should understand that the open API is a new channel and should be treated as a product. Technology vendors can help banks ensure all standards and security requirements are met in full compliance with the rule book. The bank’s own flavour comes in the ‘shape and color’ of the APIs the bank chooses to expose. The bigger banks are mostly tackling PSD2 compliance internally, though we can expect that once PSD2 truly kicks in they will find that

they have some loose ends which would be best tackled by a service partner. The real opportunities currently lie with smaller, local banks with smaller development bandwidths to handle the required changes. This will also apply for large foreign banks with small European footprints. These banks must comply with PSD2 as they service European customers but may not be well-versed in the regulation and what it entails. This is a prime opportunity for a partner to step in and provide its services. Smaller banks have greater opportunities to be disruptive despite their size. The opportunity for collaboration can help these banks innovate more quickly, rather than being dependent on in-house and organic capabilities like the bigger banks. ZM: Are banks doing enough to educate their customers on open-banking new payment schemes? EV: Banks are still educating themselves on this subject. Many of the emerging leading standards in Europe are still a work-in-progress, and there is still a lot of uncertainty between TPPs and banks regarding implementation approaches and operating models. There is some comfort in having customers that are not aware of the new openbanking payment schemes as it keeps the demand low for something new. However, if one of the big tech giants were to propose a significant service, that could change everything. It could lead to customers putting pressure on their banks to offer something similar. Think about mobiles. We had mobiles and were happy with them until Apple introduced the iPhone and changed customer expectations. ZM: What’s important to control risk for banks and security and protection for retail and corporate customers of openbanking payments developments? EV: As mentioned previously, TPP access to APIs is somewhat of a blind-spot for banks in terms of risk and affects both retail and corporate banks. Where corporate and retail diverge is mostly in the payment service user (PSU) authentication and authorisation. The introduction of the corporate as an entity and the need to support multiple levels of authorisations per action is something that is challenging. Initially PSD2 was seen as purely a retail initiative, as the innovation level in retail applications in terms of efficiency and usability is much higher, but slowly it has been realised that where PSD2 brings the most value is in corporate use cases. Though the challenge in implementation is significantly higher, banks are eager to do it as they know that the benefit to the corporates is much greater and corporate banking is where the revenue lies. Specification schemes have caught on to this as well and some now include support for corporate use cases in their latest specifications. ZM: For Finastra, what new payment activities are offered to your clients? EV: The combination of open banking along with instant payments is key, and we see it almost as one value proposition with very strong synergy. We also look at the value-added services (VAS) like Request For Pay, Pay Later and others as part of the core proposition. The basic Payments Initiation and Account Information is not good enough and will not fulfil the promise. Exposing all of these valueadded services will allow fintechs to innovate and develop applications on top of these capabilities. Our corporate-facing customers are keen to help their


customers take friction out of their systems and become more agile. A combination of PSD2 and Open APIs can help here. ZM: Which are Finastra’s clients and what are their requirements currently for new payments provision? EV: The majority of our clients are starting with compliance, but also understand the need to widen their offerings to provide more advanced and comprehensive solutions. Because of this, banks are starting to look for open solutions which allow flexibility in adopting new services developed by third parties. Connecting to open ecosystems such as these is becoming more and more significant for banks. Other requirements we are seeing are in enabling data monetisation. Banks understand they are sitting on a gold mine when it comes to their data but are still unsure of how to monetise it. We are working with our customers to help them find the best way to monetise their data in the context of payments and beyond. ZM: What is your advice to clients and partners going forward to upgrade their payment systems? EV: Be open. The ability to open up a bank’s internal services to the outside world is critical in a world where open banking is becoming a reality. An open platform is the future proof solution for this environment: exposing services in an easy, standardised way, and allowing banks to onboard innovation quickly by consuming new services from partners at any scale. This will help banks to meet regulatory compliance needs, with the ability to move faster as open banking gains more traction. We also see value in the ability to provide an integrated solution, for example, solutions that can allow banks to pose more complex use cases combining payments with other Finastra products. Here is an example: A car agency is selling cars. For those who need a loan, the car agency would propose an instant loan. The buyer would do the entire car loan initiation without going into the bank to complete the form/loan. The loan once given will call the payment initiation API periodically to pay off the loan. ZM: What’s your view on trends in cryptocurrency payments and current market environment for future investor growth and consumer interest? EV: For a long time, cryptocurrency was a solution looking for a problem. This is an emerging environment that still needs regulatory work before it really takes a major hold in payments. Nevertheless, one cannot ignore the benefits and value of this technology. This market is evolving and even if not yet matured, it is something to observe, trial and test. Key features in the maturity of this industry will be: security and speed while not compromising on the data being delivered. The winners will be those who are able to provide all three in one solution. uTFT

ARE YOU OPEN FOR API BUSINESS? Christian Visti Larsen, Co-Founder & CEO NewBanking spoke to Zoya Malik about the prospects for PSD2 to be kickstarted by Open Banking and User Centric Encrypted ID to facilitate secure and trusted operations.

ZM: Tell us about your view on Open Banking take up rates by banks globally in 2019? CVL: As a close observer of the development of Open Banking, I see a clear divergence in adoption rates. It is most alarming that some banks still haven’t implemented a productive and functional gateway/API to meet Open Banking requirements. Even in the Nordic countries where I believe the banks purport to be digitally ready, they seem to be lagging behind. Will they be ready by March 2019 for PSD2 Open Banking? I doubt it. ZM: What is the attitude of banks currently towards Open Banking? Where must they invest? CVL: We do see some banks actively promoting themselves as “Open for API Business,” but when it comes down to real products and services, there is still a great deal of reticence. In terms of where they should invest? I truly believe, that the ones that are actively looking for API partnerships and that can generate new customer channels, will be the winners in the Open Banking arena. We tend to see the “innovation circus.” where all intentions are good, but there is a huge lack when it comes to implementing solutions. There seems to be a skepticism by banks towards customer acquisitions through digital channel as opposed to than their existing ones. ZM: How well are banks advising their customers about using apps, options with their accounts, on-boarding and the benefits and value? CVL: Not well at all – I think banks are still afraid to enter into partnerships due to a potential reputation risk. It’s still better to decline a partnership and forego a potential positive relationship, than risk failure. I don’t really blame them being cautious – banks are really taking the heat at the moment. ZM: What more do regulators need to do to encourage banks to invest in Open Banking and secure ID? CVL: It’s time for regulators to ensure that banks that do not participate in Open Banking or that are trying to create obstacles, are penalised. However, I do believe that the banking industry has a lot of lobbying power. We are facing age-old attitudes that become problematic. It’s hard going for services providers to the banking and finance industry to make good, due to the banks making it difficult for providers to utilise their APIs.

Christian Visti Larson ZM: What are critical concerns for banks and customers in signing up to Open Banking? CVL: I’m sure that security is the most critical factor. Banks’ concerns and questions should be, “are our users really ready to have banking Data exposed to any third-party provider and do they understand the risks”? ZM: What is “user centric encrypted identity” and how is this different from current online access to banking platforms and FB and Google ID access? CVL: The absolute biggest difference on our platform, is the ability to facilitate the shift of ownership in data. It is a Personal Encrypted Data Vault that allows 100% ownership and control of data. At the same time APIs implement easy on-boarding for multiple organisations with Secure Data sharing, the possibility to upload and verify that data, and execute GDPR i.e. ‘The right to be forgotten’. In other words, ‘Self-Sovereign Due Diligence on Identity Data’. ZM: Where else will there be a trend for user centric encrypted identity to drive assurance and trust in deploying services in other related finance sectors? CVL: Yes indeed, we see trends currently also in the legal and medical sectors, and have identified the need across most others sectors. ZM: How can user centric encrypted identity be applied to blockchain and cryptocurrency activity? CVL: Well, we have enabled blockchain as a means for our audit trail. Our CTO, Morten Helles is on the international ISO standard board for blockchain. Within this standardisation however, it is currently not possible to use blockchain for storing any personal information, as it is does not meet GDPR requirements. uTFT

December 2018 I 11


TOP 5 TRADING TOKENS BASIC ATTENTION TOKEN Founded by Brendan Eich, the creator of Javascript programming language, Basic Attention Token (BAT) is an opensource, de-centralised advertising exchange platform based on Ethereum. The project comprises of various components such as machine learning algorithms, analytics dashboards, and action measurement systems. The platform has monetised human attention to the content produced with a pay-to-surf business model. The BAT tokens can be used by the advertisers to purchase advertising space or user attention, by the publishers to receive advertisement revenue, and by users to view BAT ads. The platform is also integrated with the Brave web browser and is now listed on Coinbase Pro. The team behind this project has already been tremendously successful with their nonblockchain startups. The three famous personalities who need to be mentioned are Brendan Eich, Yan Zhu, and Marshall Rose. The company raised $30 million in 30 seconds through ICO. The token is performing stably in the markets. The market is expecting a bullish trend due to the increase in BAT tokens adaptations by various platforms. uTFT




Nexo has recently garnered a Bytom is a public blockchain Ethereum’s smartAN OPINION, contracts Metaverse is another DISCLAIMER: THE ARTICLE REFERENCES AND IS FOR INFORMATION PURPOSES ONLY. ITpublic IS NOT INTENDED TO BE INVESTMENT ADVICE. decent amount of interest in the protocol designed to solve brought a revolution in the and open-source blockchain cryptocurrency community. Nexo interoperability issues blockchain industry. According platform but it will be competing aims to provide crypto-loans specifically for asset management to Novum Insights, more than with all the projects involved in while using cryptocurrencies as operations. The mission of 91% of blockchain projects are digital assets, digital identities, collateral. These cryptocurrencies Bytom is to connect the physical still operating on Ethereum. and oracles in a smart contract can be locked as collateral in world with the decentralised However, there is one limitation network. The objective is to build exchange for fiat currency. This digital world to enable the in Ethereum’s architecture: a network of smart properties fiat can be transferred to the user’s exchange of physical assets on integrating off-chain data with and a decentralised exchange bank account or to a prepaid credit its platform. The native assets the smart contracts of Ethereum’s with a secure infrastructure. card. This credit card also has the of Bytom blockchain are Bytom blockchain. ChainLink targeted Metaverse was founded by Eric feature of adjusting the market Coins. Their value is generated by this limitation and created a Gu and Chen Hao in 2016. Gu value of cryptocurrency in case measuring the digital economic way to use oracles was GOLEM one of the co-founders ofDIGIBYTE AETERNITY NANO to pull data DECRED Nano, formerly for Bytom Dapps havefrom is seen as a decentralised DigiByteinis a rapidly growingvolatility. DecredMost is aof the self-funded, of market activity on the Platforms blockchain. off-chain sources.called These Golem Neo and has been involved RaiBlocks, wants to overcome fought to be successful in this world supercomputer to allow public blockchain, which can community-based and open 14 team members of Nexo hold coin ownership represents the ChainLink oracles will make other high-profile blockchain all the shortcomings of top competitive market and Aeternity people to earn money by protect digital information such blockchain platform, which is high-level positions ownership ofhas a part of thesuch Bytom pools, APIs, and The team has already like other Bitcoinreal-doing projects. left many companiesdatacryptocurrencies nothing, and combining as data, currency, assets, or other similar intoa European other competitors and Ethereum. Nano also uses and succeeded. With suchworld computing power. It was kinds of information. It’s company been likeCredissimo. Ethereum and NEO. The fintech Both blockchain - behind the holders receive data sources accessible developed a founded DAPP Supernova DAG (Directed Acyclic Graph) competitiveness, platforms need in Poland by Julian Zawistowski, used by shopkeepers in the company was founded by a few and Credisomo share the the benefits of participating in the by like Ethereum smart contracts. which is running on theNetherlands mainnet. to payNexo IOTA, but with its own novel to have unique features in their and the team released its first companies in Bitcoin core developers who same co-founder Kosta Kantchev. e-governanceplatform of thetoblockchain. nodesalpha product Othercalled developments aresince 2015. technique these called a oracle block lattice. compete for betterCurrently, Brass in 2016. which Hong Kong set out to develop a currency Nano user will get own than similar giants likeare Each If you are a contributor in Golem’s is improving Jared Tate, tired of Bitcoin’s never be hijacked or The team which has cannoteworthy Bytom coin services can also be used designed only fortheir Ethereum next in the roadmap blockchain called an ‘accountEthereum and Neo. Aeternity can lend spare shortcomings related to speed, dominated by a few centralised experience in the financial services, for transactional purposes. The smart contracts future,ecosystem, the you compatibility of Metaverse chain’, which theybut can in modify provides the unique feature of space and computer power to the founded DigiByte in 2013. The authorities. The environment in token has performed fairlyscalability well bythe according company is requirements. planning tonetworkblockchain ERC-20 tokensdidn’t investment to their increasing the to help handlewith complex company gain much banking, Decred ise-commerce, very democratic, as they This means the blocksblockchain in their the smart contracts off-include computations Its initial popularity back then compared to treat every community member and the technology surrounding even in thetaking extreme bearish other with and thetasks. help of cross-chain part of the blockchain can be chain. The smart contracts use case can be seen Metaverse with giant its competitors. The scenario and closest or teamcompetitor member equally. them. The to phases of the market. The team will benetworks and smart contract solutions. ETP the ‘updated’ by the users themselves running on a private state channel media and animation companies its adaptations changed in favor This is one of the main reasons Nexo is SALT, based in the US and based in China, the founder of ecosystems in their operations. token running on Metaverse only after verifying the match in network between the parties like Pixar which has 2000 of DigiByte in later years. It was the community has grown sender’s and the receiver’s bycomputers other countries. SALT better Bytom Chang Jia, has previously Thethebiggest development blockchain, has shown involved in the contracts. set up worldwide to theunusual first company 30 to implement to where it isistoday. It uses a amount. Few risks frames theirmarket movies. bya showing segwit and has had hard forks combination of as PoW and PoS in 5 terms of inclusiveness the founded 8BTC.com andattached the co-to thisChainLink has been seenthey in therender the trends inofthe The blocks are not added, project include the threats from Companies like Amazon and IBM since then. This made DigiByte a in its consensus mechanisms. platform supports additional fiat founder Duan Xingxing is the partnership with the SWIFT its largest spike in June 2017 and are updated or replaced by a regulations, use of multi-party buy thousands of computers to faster and a more decentralised 60 percent of the mined coins new block with a DPOS network. model However, former vice-president of OKCoin. transaction notcomputational in Januarypower 2017 when channels, security, and naivenessbanking sell the system. the It has currencies a dedicatedbesides go toUSD. the mining community, of consensus. This structure of the technology. But with theThe two teams are developingat highentire price premiums. Golem community percent to the staked Nexo nodes accepts 30loan repayments uTFT cryptocurrency marketwith 100,000 helps Nano to achieve latency, scalability and hybrid consensus aims to acquire this market with spread across the planet. DigiByte community, and 10 percent in other cryptocurrencies, fiat, SWIFT Smart Oracle to possiblya decentralised was itsandpeak. The tokens are scalability, energy-efficiency, models it uses, the benefits more pricecan add blocks in just 15 seconds, to the developer community. and a lack of fees. Other plans in or minutes NEXO intokens, fiat through outweigh the risks. Aeternity wasintegrate the gigantic SWIFTfriendlygenerated environment. AddingPoW as mining. compared to 10 DCR not is just the in cryptocurrency Nano’s roadmap include pruning founded by Yanislav Malahov,financial industry to ChainLink.to this Although, network, developers can Bitcoin. DigiByte also wants to of Decred’s network, with which is the case of SALT. 30% the company is of its chain, development of who is said to be one of the early also build dapps on this platform, keep its blockchain flexible to a maximum supply of 21 of profits generated by Nexo ChainLink has enhancing not released awhich will planning to switch the validation light wallets, the minds in the cryptocurrency also increase the usage incorporate changes occurring million. The token is mineable block explorers, and helping the a dividend model PoS orwill a Hybrid PoS. to goes space. He gathered a team offormal roadmap anywhere soof its GNT tokens.to This token in the market, keep it to usable and is pool focusedwhich on ensuring unbanked population around the very experienced individualsit is hard to figure out what areact as any medium of transaction for all sectors thethen economy. decentralisation and security distributed to the Nexo The project is not focussing on of is globe. The company was launched and has brought this project to or reward in the network. token has similar roles platform. The company 2015 by Colin LeMahieu asofa the token holders.in the Currently, these the inupcoming milestones replacing Ethereum orDigiByte’s Neo in where it is today. Aeternity had Currently, 1 billion GNT tokens assigned in the network as they has a well-organised future, low-latency platform to execute dividend payments are todone in the The oracles might beare in the future. The three prongs of a successful ICO in 2017 and hasproject. circulation, out of which generally have been usually in with plans implement P2P transactions. XRB tokens, the shown tremendous progressneeded distributed to the other make cryptocurrency ecosystems, majority of the new is innovations Ether (ETH), however, there a in the future to was unfold the are project collectively will cryptocurrency of Nano, first the82 percent since then. It is available to befull distributed and only 6 percent which are a servinggood as a medium happening on the will blockchain. 2017. 90 andcrowd funders, chance that this service potentialinofOctober blockchains Metaverse highly scalable and traded on all the major exchanges among the team. The GNT token of transaction, rewards, fees, and These innovations include the percentboost of Nano’s expand cryptocurrencies. thetrading valueactivity of LINKstarted unique project evaluate in the developers now. Trading volumes have beenthisiscan its journey from to $0.01, encouraging to setto upother development of a stakeholder observed to be on Binance and also hascontrolled an inbuilt notably. tokenrose tofuture. uTFT low since January, however, thistokens $0.68 and fell back to their businesses. Nexo The company DAO,oracle decentralised 80 percent out ofThe this inLINK BTC/XRB is due to the market’s plunge andis available in the control development pair. The company also released monitor all theof aspects of funds, for purchase on all the$0.20 during the crash. The team will mine 21 billiontotokens not something for which the has a few partnerships in hand course of 21 years and has already implementation of the lightning its wallet, functional on mobile, the platform which include major exchanges. uTFT project is responsible. In the 3rd but nothing significant. This mined 8.1 billion so far. Their network, and enhancements in desktops, and as hardware. If the analytics, loangovernance distribution, asset Decred quarter of 2017, the price of AE project’s USP is its concept and its first milestone is to reach 2000 and privacy. company keeps to its roadmap was about $0.55 and then $5 in market. With more exploration of txs/second mark set by Visa. The wallet wants tomaintenance be an example in the path, there may be a day when monitoring, May of 2018, which is an gain of use cases, growth in its network, token has shown turbulent trends market, making these innovations people will be buying their and others. The cryptocurrencies 800 percent. The prices faced a improved marketing strategies, since its inception. The prospects implementable. The project is frappuccinos using Nano wallets are generating real-world utility downward trend after this peak, and better partnerships, Golem remain optimistic as the team working in the right in direction and tokens. but the community is still hopeful has the potential to reach heights is advancing withcase its DigiByte progress inevitably of transferandofthe value andwill this to see a great ROI in the future. which they have claimed to reach Foundation, DigiByte gaming, be seen in the coming future. The will increase belief in projects like in their vision and whitepaper. technological developments, team seems to be focused on their There istasks a high possibility partnerships, andNexo. community and have proven to produce developments. Digibyte can be magnificent returns can when the that cryptocurrency lending a cryptocurrency to keep an eye mentioned plans come to life. become a multi-billion industry on the longer term, if the steps of which fuels the mentioned advancements are the Nexo opportunity. taken in the right direction. uTFT


Research provided Research provided by Novum Insights by Novum Insights Novum Insights unpicks the sub-sectors that use the Novum Insights unpicks the sub-sectors that use latest thinking in Blockchain, Cybersecurity, AI and IoT, the latest thinking in Blockchain, Cybersecurity, AI with a database of ICO’s. and IoT, with a database of ICOs.

12 I December 2018


To find out more To findInsights’ out more from from Novum Novum Insights’ Top Ten ICOs, please Top Ten Tokens, share your please details share your using Yoti details using Yoti.





Timebox is providing services to secure your digital assets safely, not by using digital wallets, but by using digital safety boxes. The HETACHAIN digital assets can be saved for infinite period of time without Ox vulnerability is a protocol of thathacks facilitates the and the decentralised of permanent losses. exchange Numerous digital assets tokens content types and can ERC20 be stored in operating on the Ethereum these boxes, which includes text, blockchain. The wills, primary audio, video, photo, and objective of the The platform is to cryptocurrencies. company build interoperability between has taken appropriate measures the dApps working on the in their identity management Ethereum network. The as protocol regarding verification well operates an open as privacy.onGiven, any standard kind of and is open source - developers data can be valuable, Timebox can build their provides safe own ‘timeapplications capsules’, for the can exchange and the tokens which be operated using operable on the exchange. Trades Smart Contracts on Ethereum’s on the exchange Blockchain. The are termexecuted ‘time with the help of Ethereum Smart capsules’ refers to the user’s Contracts, are publicly ability to set which timed execution of a accessible andwhich free to The smart contract, canuse. include platform also a or layer of transferring of anhas asset other decentralised governance in place desired actions. TB Coin, the to integrate updates without cryptocurrency of Timebox, will hindering the the occupations of be used within network for dApps. Itsset-up ICO fees, in August 2017 usage fees, and further raised $24m, by 12,000 rewards. The backed company has investors.toThe team,200 as million well as planned release theCoins exchange, is based South TB in total, out ofinwhich Korea, and the token all the 100 million will be meets distributed andThe has atregulatory the timerequirements of token sales. a high chanceinof beingand listed on team is based Taiwan have Coinbase.funding The unique property restricted participation of Ox is the it provides only in USA. Thelink soft-cap is set at between on-chain and off-chain $4m, with a hard-cap at $20m. ramps, assists in partners reducing The listwhich of Timebox the load on the blockchain. The include Zagama, Cloudmax, exchange could a majorThe role Blocklancer and play Bitrewards. in speeding up trading volumes Pre-ICO stage has ended and the and pouring liquidity into the company is currently in its crowd crypto marketplace. As been the sale period. The project has Ethereum received veryblockchain well by thematures, market Ox’sto growth should accelerate. due the services it offers. This growth may also slow, since its fate is tied to the future of the Ethereum project, but it could nonetheless prove to be a great long-term investment opportunity. uTFT


Kepler Technologies is building an international platform for the development and production of AI and Robotics. The platform will COTRADER be a network to bring together who want to produce innovation CoTrader is two decentralising, related to these technologies democratising, disrupting and the investors and who are seeking the $85 trillionto investment such projects invest in.funds This industryindicates by opening an online clearly the company’s leading crypto asset investing plans to develop a decentralised and trading marketplace. wealth distribution systemThe to projectthe has beenof dubbed ‘the shape future robotics and Uber of Hedge as anyone mankind. TheFunds’ management can create join the an investment intends to orkeep ecosystem fund on the blockchain. transparent, accountable,It will and be better to callThe it ‘thecompany’s Ethereum progressive. of Hedge Funds’ robotics seeing and the choice of choosing advantages CoTrader’s own AI as the primary technologies blockchain technology be to push innovation is will a great offering to the this entire project. Onehas of move since planet the many advantages is to solve realised the potential with which the complexities in industries. investing they can disrupt the in Cryptocurrencies, and Automation is an ICOs, essential otherof tokenised assets. CoTrader part the future and Kepler has already released Technologies, with its theMVP helpthat of supports ICO will futures and cryptos blockchain, push digital on the live and testnet automation in on-chain its ecosystem. structures. helped The projectThis will release be developed CoTrader to build trust in and the on Ethereum’s blockchain market backcirculating the projectinwith the KEPand token the a massivewill social media following. network be an ERC-20 token. CoTrader also trade The token is the aims driver to of all the non-tokenised securities like funding, transacting, and voting stocks, options, and derivatives in the blockchain network. The by tokenising CoTrader company has setthem. the soft cap at consist of the smart funds $5m and hard captoatsupport $25m. ICO based trades, The team is based inCoTrader Georgia Protocol to implement a privacyand is very sound with ample preserving to zero-knowledge experience accomplish a protocol ring signatures, project likewith Kepler Tech. and CoTrader DEX to allow trading of crypto and tokenised assets. uTFT


Buddy is a development automation platform with a functioning product in hand. It is already partnered with Amazon, AGENTMILE Github, Microsoft, Docker, and Google with a strong base of Commercial Real spread Estate leasing 7000 developers across is going more than to 120become countries.easier, The securer, and fasterusing withBuddy the companies already help of blockchain technology. include INC., CGI, Docplanner, Agentmile is a start-up Baremetrics, and attempting many to makeBuddy this plausible. The use more. has introduced of AI in the Real Estate industry development environments has made diligence checks and called dappos as a solution decision-making processes for bootstrapping blockchainmuch easier. TheThe dataproject entered based projects. is in the platform unchangeable functioning well isand the reviews and this will help the investors on various internet services to track an trail of regarding its immutable services have been transfer and maintenance the positive. Buddy will have aofBUD property. Agentmile built by token circulating in itsisecosystem AgentDrive, a corporation with to tokenise this development more than industry. 1000 employees automation BUD is an across 100 clients in ERC-20 tokencorporate which will be used over 20 countries. company for utility, a mediumThe of transaction, will also of exercise the smart execution governance, and contract tobenefits for better security the participants. In cash flow management, lower short, the token will be utilised transactional dependencies, by the developers, the users, and and reduce the burden of the network expertsmiddlemen who are with automated responsible for code procedures. audits and The team already has builtwill a certifications. The company prototype and is now be raising at least 8,000working ETH in to optimise the product its full their soft cap and 60,000toETH as potential. The The teamtotal members their hard cap. tokens are supply located will in Estonia andmillion Hong in be 670 Kong. uTFT while 300-470 million will only be released during the sale. 60 percent of the tokens are being released for the contributors because of the requirement of dynamic circulation of tokens in the system. The project itself and partnerships have surmounted a phenomenal social media presence. The project is rated excellently on almost all the ICO rating websites and the investors have also realised its potential.


Humancoin, with a concept of mining called Proof of charity, will be building a network of philanthropists and charity UNIFOX funds in a single P2P platform. Lack of trust is one of the major The crypto industries face problems in the charity still industry shortages fiatmost gateways and and hence,ofthe important Unifox of aims to remove this qualities this project is building shortcoming. The project wants convenience, transparency, to bridge the between traceability, andgap security for fiat the currencies and cryptocurrencies contributors. Humancoin wants with blockchain to makeits theown payment system technology and a stable coin simplified with donators being called Unicash. The startup able to track their donations and also wants to contribute to the its usage throughout. The platform adaptation of cryptocurrencies. will also be deploying automated They will be achieving this the by intellectual contracts to keep making cryptos on promises of the spendable qualities they pointdone of saledoable. terminalsWith whichthese will have allow Humancoin users to buyalso goods plans, aimsand to services aonline, cryptos. The become globalusing loyalty programs Unicash coin beHumancoins used to pay aggregator by can using blockchain relatedThese fees, security in its ecosystem. tokens fees, and utility fees since will be other convertible to other the entire ecosystem contains entities like points, bonuses, a single Since the loyalty token miles, or token. coupons. These will be pegged to fiatHumancoin currencies, programs can help the team has decided keep the superimpose its to emotional supply of tokens limited. This wavelength with its partners. step platform has beenalso taken to keep the The allows voting tokens unharmed from and a ranking system toinflation. measure 60% of the will be projects and tokens philanthropists distributed in the ICO, 25% to help them get reviewed will and be distributed among the team, evaluated. The project has and the rest be utilised for managed to getwill a decent following thesocial advisors, on mediabounty with itsprograms, motto of airdrops, and other future ‘token of kindness’, with around activities. The primary 10k followers on objective Telegram of theTwitter. team is The to build a Unifox and Humancoin exchange and make Unicashthe a Foundation will integrate currency. The executives of the charity, the cryptocurrency, and team are competently skilled the e-commerce project together in a the financial market as single project. The soft and cap cryptocurrency The of the project is industry. $6m, whereas team hascap experienced advisors the hard is $26m. The team from a large of industries is from thevariety United Kingdom and the team planet, is also with aimsdeveloper to cover entire well- equipped with theirtoskill set bringing contributors their to succeed in this project. Unifox platform from around the world. does not have any special features but its simplicity can make it a painless solution for investors to trade crypto assets and real assets together. uTFT


Open Data Exchange (ODX) aims to provide free internet access to all emerging markets in the world. Founder Nix Nolleredo, MOBUXurpas, one of who also founded the largest tech companies in the There is realised much focus in Philippines, the speed crypto markets on creating a at which smartphone presence regulatory compliant was increasing in the security markets token, however not prices. easy. with the decreaseit inis unit Mobu is being introduced a He envisioned providing asthe decentralised launch second most platform importanttothing to compliant security with a smartphone aftertokens its battery, its own MOB20 protocol to which is internet. This project standardise all theall regulatory will be targeting emerging requirements forworld, any ICO. The countries of the however, regulations are Reg D, Reg focusing covered predominantly on S, and Reg A+. South The MOB protocol regions like Asia, Africa, will a variety of services Latinoffer America, and the Middleincluding KYC/AML East. ODX will be makingchecks, the use legal and technical support, fiat of blockchain by decentralising to the crypto internetconversions. and helpingThese their services will be provided by third users around the world build parties. willapps help MOBU to websitesThis and on their build a healthy community of platform to grow their businesses. service providers and receivers. This means that the blockchain Moreover, protocol will havethe 3MOBnoteworthy provides investor verification components - B2B, B2C, and a and services, smartescrow contractaccounts system. The team other legal support, technical has tremendous experience in support, and fiat to crypto the telecommunication and conversions. MOBU development The space but token lacks is the currency for the entire a little on the blockchain side. ecosystem and isa itself a utility However, being subsidiary of token. members are a large The tech team company, ODX will based in South Africa and haveits a not face this problem during substantial amount progress. ODX hasof blockchain remarkable development experience. The backing from the top blockchain company has set hard cap at institutions, liketheDNA Fund, $35 million. Theand crypto industry Pantera Capital, Israel’s Hexa is still in need of a security tokena Labs. The expanse of such platform and MOBU has well project, if truly successful, can be identified thishence, need. the uTFT colossal and company has already raised $60m in its private sale. The capital to raise target for their ICO is set at $100m. The implementation of such a project has generated skepticism in the market regarding its plausibility, but the team is confident to pull off its vision and help the emerging markets with their internet needs.

December 2018 I 13


ORICHAL PARTNERS: THE MULTI-STRATEGY CRYPTO PRIVATE CAPITAL Orichal Partners is one of the first multi-strategy cryptocurrency investment and blockchain advisory firms in Asia. It was founded by a group of experienced finance professionals to venture into blockchain investments and to work with token companies, as a strategic advisor. Katia Lang, CEO of The Fintech Times met Orichal managing partners Scottie Siu and Chris Kim to discuss their strategies for the challenges facing the global token market.

How was Orichal Partners founded? Scott: The name of our company Orichal Partners stems from the mysterious Orichalcum, metal ingots, as valuable as gold, that were linked to the mythical civilisation of Atlantis; these were used as a commodity to transact. Established just over a year ago, we have grown to 13 staff, of which 3 are managing partners, across the two offices in Hong Kong and Korea. I have known Chris for six years from my hedge fund days, one of the most trusted people I know. He now runs the Korea office, and I have known Anthony, my other co-founder and managing partner for over 10 years. We began our careers together at JPMorgan and we all come from traditional finance backgrounds. I was fortunate to have worked for three high profile hedge funds, where I have shadowed and learned so much from the smartest people I know. Henry as a partner and our legal counsel, runs his own law firm that specialises in fintech and the crypto-space; his office of 25 members advise many of the top exchanges and industry players. His strong network-base has proven to be of great value to Orichal. Last year, no lawyers entertained us, as no one wanted to touch crypto, but with Henri’s support and belief in us, we are now on the industry’s radar. Unlike other block-chain and crypto-currency firms, having an experienced law-firm partnering with us, allows us to work at a higher calibre, to Tier 1 standards supported by a proper legal and compliance practice. It is our collective background, resources and our vision to build a long-term financial institution with utmost professionalism, which sets us apart.

What’s the purpose of your venture? Scott: We are here to build the best-in-class investment vehicle to access the digital-asset class (crypto). The same mind-sets and standards that we have been investing, trading and thinking about in portfolio construction within traditional assets, are the same way we approach this new ‘crypto’ asset class. Orichal as a firm believes the value of portfolio construction, liquidity and risk-management, as well as portfolio and trading technologies, are all just as important as investment strategies design. We take a multistrategy investment approach to navigate our exposure in the most efficient way, with a long-term view. We believe if any institutional investors are looking for exposure in this asset-class, they ought to benefit from investing with more of a long-term bias, rather than short-term. At Orichal, we are constantly curious and adaptive to the markets. This is also where our value is. We realise there 14 I December 2018

are lots of inefficiencies on this side, and as for any early stage of one asset class, there is a huge need to bring more professionalism and real application in this field; in order to open up the sector for mass adoption. For sure, there is a lot of risk and volatility in this industry, but to us, from a riskreward perspective it is more interesting than any other asset class. My vision for Orichal is to become a true pioneer and role model in this space; to grow our intelligence and offer the best-in-class exposure vehicle to our private investors. Additionally, it is to continue to foster the blockchain industry through our advisory and collaborative works with trusted partners across the field. Chris: Since my time as a ‘prop trader’, I’ve realised that finance has not really changed that much. It’s mostly permutations and hybrids of existing products. The way people and companies raise capital hasn’t changed much either. Moreover, the problem in the traditional finance space has been lack of transparency, gruelling and slow processes, plagued with over-regulation stemming from the aftermath of the financial crisis in 2008, all of which impede growth. There is a clear reason why blockchain is gaining interest across sectors. At the same time, there is a need for companies such as Orichal Partners to bring order to the chaotic crypto space that has historically had a lot of scammers and pyramids. Our lawyers regularly liaise with regulators but unfortunately, there’s a tremendous gap between what the market needs and wants to do, versus how fast regulators can provide the proper framework. This is due to a lack of understanding of what is required for this industry’s foundation and development. As a multi-strategy private capital, we at Orichal are attempting to bring traditional financial discipline and methodologies into the cryptocurrency sphere. By doing this, we are grateful that our brand is recognised amongst the community.

What’s your opinion on cryptocurrencies as a new asset class impacting financial service providers and investors? Scott: Cryptocurrency has been around for about 10 years with Bitcoin being most prominent, but this asset class really drew serious attention last year. There is no doubt, this led many uninformed retail investors to follow the space, also courting more media attention for better or worse. Of course, with cryptocurrency’s secondary market, for the first time we are putting a live mark-to-market price mechanism to early stage companies on a tradable exchange. If we had done that for Uber back in the day, or even smaller companies, we would see the same volatility too. But this is a major breakthrough. Digital asset now gives people access to PE and angel type of investments, where they may not have had access earlier, but it also comes with a risk, meaning that this is not close to what we have been used to, i.e. it’s not a security currently that is backed by dividends or assets. It could may be very soon, but not at this moment. It’s a different way of accessing risk and reward in this jungle. So, you may see a little more volatility and it’s exactly why the market needs a company like Orichal Partners, to come in

with the operational and portfolio management expertise in this space. It may also not make sense for a traditional institution, or a family office to come in to try to tackle this space themselves, in having to learn about custodian and legal issues and how to value certain tokens, as they may wish to make better use of their own time. Instead, these institutions are coming to us as we have all of the management experience in place i.e. we have the legal component, we understand how to work with custodians, the security of hot wallets and how the ICO structure works. This goes on top of all the investment strategies and portfolio management tools that we have built internally. Even when there is a high correlation in this asset class among all the token-assets, investors can diversify correlation to some degree with multi-strategy approach. The same way our portfolio operates. We specifically constructed our portfolio with three strategies such as the Research/ Tactical strategy, ICO strategy, and Quant-Algo strategy, balanced in one single portfolio. We believe this is the best portfolio construction approach for the long-term. Chris: In terms of these strategies, on the Quant side we are co-developing trading algorithms between our Korea and Hong Kong offices. So, everything is completely automated and everything is going into the exchange via APIs. We see this as a key component within our portfolio to exploit market inefficiencies and reduce costs. For instance, one of our algorithms reads 150 plus coins within one exchange and it reads all three pairs, four times in one second and it calculates the spread on each three pairs and shoots the order automatically at the range that we input and the entire trade finishes within 2 seconds. So, we leave it on 24 hours and it’s creating about 1% every two days, in terms of profit. Orichal is focusing not just on the performance generation, but also on the tech of our algorithm, our portfolio management systems, and also on our legal side. As partners, we wanted to build the Blackrock of cryptocurrency - this is the early stage, but we want to build a structure where we have everything under one roof with tech, legal, and strategy-all with a proven track-record. Scott: If I may just take a step back, we are in the early stage of cryptocurrency so a lot of the token metrics and traditional, fundamental valuation approach don’t really apply at this time. Characteristics are almost a hybrid between foreign exchange, angel investments, and maybe high growth equities. With all the moving parts, I would say regardless where we are in the investment cycle you need the best vehicle for the right exposure to it, if you believe digitalassets and blockchain assets are here to stay. Right now, institutional investors are very keen to look for an exposure early - they want to find the best vehicle with the best security system that knows how to rebalance the portfolio in the most sophisticated manner. While absolute performance is important, investors are looking for trusted managers to help them navigate the volatility. Our private capital consistently outperform the broad markets with significantly higher Sharpe. We try to be very dynamic and adaptive to market conditions. Even when the market is very bearish, we are using quantitative methods to take in Big Data, to analyse fund flows, sentiment analysis and this data is calculated and


trades are executed automatically via algo. So, when there is any inefficiency in the market, our quantitative strategy captures these opportunities right away. These are 5 seconds to 3 minutes holding period’s type of play and works 24 hours, much smaller gains relatively to 10x ICO returns we saw in 2017, which we don’t see this year, but they add up and attributes to alpha even in a bear market. Our interaction affects the market and although we are not a 100 percent Quant fund, this strategy helps to dampen volatility. So, from top down, this is how we are positioned.

Where did the initial investment come from for Orichal Partners? Scott: All of us have invested our own private capital but we are opening for external investors in Q1 2019. Chris: We also have a lot of commitments from some big Korean institutions and we are preparing paperwork with legal. These companies are from the Top 10 crypto institutions globally that require everything to be 100 percent compliant, as everything traces back to them. Scott: We were lucky that we started last year when the price was going up and then, later, going down. Using our own capital, we test run the strategies and it’s an ongoing development, consequently, we have learned from this bear market as well. Over the past four months, we have been expanding the Quant team for instance an ex-tier 1 investment banker of 15 years, who was heading their FX systematic trading has joined us; he had built the back-end trading engine for the bank’s electronic trading platform. He has now brought that type of discipline and mentality to Orichal and is building a market-making engine for us to test our strategies.

being a huge retail market and Hong Kong being the huge capital market, the succeeding wave of institutional money is around the corner and will be the next catalyst for the industry. A lot of the Asian fundraising activity will happen in Hong Kong.

What’s your take on utility tokens versus security tokens? Scott: A security token is going to be something that most institutional investors will be greatly familiar with, as it will be connected to further cash flow and have more assetbacked like features, so we would have different evaluation metrics at play. Security Tokens potentially could be the next phase of growth requiring more regulatory framework all around. These will be huge for the industry because again it’s all about giving access to a new generation and a new

Scott: I think that utility tokens hold a different kind of risk as you are really backing an angel investment, it’s a different kind of risk and finding another kind of gem such as the next Facebook is one in a million chance, and so I think most of these utility tokens will go away. With the STO (security tokens), it’s more formalised. STOs would have more regulations around them, they may have an asset-backed to them, and they may pass through dividend, or through the rent if it’s a REIT, i.e. if it’s a real-estate backed kind of STO. This gives the investor a little bit more comfort and a baseline in terms of evaluation. It’s a different type of asset and the STO will be a bit more attractive and comfortable for certain investors as it will be seen as more closely aligned with what one sees in stocks and this is what we will see as the greater influence going forward. Chris: To be honest, I think it’s all going to be about regulation. I think regulation should differ between

What is the need for the two offices in Korea and Hong Kong? Chris: Korea is a much localised market in terms of FX regulations. There are strict rules with regards to money in-flow and out-flow to and from Korea. Cryptocurrency regulation in Korea is following closely with Japan, but is very different from other countries, especially those in Europe. So, working just in Korea has its limitations. A company can have a Hong Kong office and work worldwide, but Korea has a very large cryptocurrency market that is impossible to ignore. If you look at the top 10 exchanges, at least three of them are Korean.

What’s the position with cryptocurrency regulation in Korea? Chris: Regulation is still vague as they do not have a clear stance on accepting cryptocurrency in the mainstream market. But the retailers love cryptocurrency and so you see everyone trading cryptocurrency at coffee shops. There are coffee shops supporting cryptocurrency payments popping up everywhere around town. That is how popular blockchain and cryptocurrency are in Korea right now. So, Korea is the only country where cryptocurrency traded at 50-60% premium in the past versus other countries because there’s so much demand for it. In addition, it also trades at a premium because it is very hard to move money between countries and it’s very difficult for Korean investors to have access to foreign markets. Scott: The premium is much smaller now but one advantage is that with some of the arbitrage strategies, we have onshore and offshore access so we can buy and sell at the same time, whenever the opportunity arises. With Korea

audience to PE or angel investment. Chris: People say security tokens are the future and utility tokens are dying, because “there is no utility in it.” Utility tokens are dying not because of the effectiveness of the utility but the immaturity and the malpractice that is happening in the market right now. When you do an ICO, you are raising capital to build an ecosystem and to build infrastructure so that the utility token itself has an actual utility; the problem lies with a lot of ICOs that they are misappropriating or mismanaging the funds. Moreover, there are no regulations to follow how things should be done, and many scams have managed to get away without accountability, unlike in a regulated market with a traditional IPO. There are barely any governance models to perform actual financial reporting or auditing available to token holders. One year from now, I think that security tokens will be the next big thing. However, when regulations do come in with set rules to regulate utility tokens, only tokens that create an actual infrastructure will survive, regardless of being either a Utility or Security token. At the end of the day, the purpose of raising money through cryptocurrencies, means you are raising money off of a product or service based off blockchain technology.

So, what’s the prospect for security tokens and giving people access to a different asset class, property and commodities?

countries. In Korea, I think going forward there will be set standards for doing an ICO, similar to an IPO and regulations are already appearing whereby regulators are going to require a company to have an X amount of initial working capital and Y number of employees etc. So, all tokens may be classified as the same. Scott: We agree that whether ICO or STO, it all needs to be regulated. STO may be more attractive to a certain investor type and ICOs may be less so, but that will play out in an equilibrium fashion. At the moment, there is not a lot of STO due to a desire to avoid regulatory sensitivity. As a new market opens up, everything will settle down so people can choose according to their risk profiles and with regulation coming in, this will be helpful to the market. Institutional players will take a little longer to come in due to lack of certainty in regulations, the immaturity of custodian services and immaturity of the infrastructure overall - there is no ETF and futures volumes are very low. We are waiting for these things to develop, for institutions to come. Also, if regulation comes in, then taxation is one of the biggest issues that many are not talking about. At least in Korea, they haven’t been able to find a way to tax this. Yet, for example, a US person pays, similar on properties or equities returns. But in Korea, you pay zero tax currently. That is why US regulators are so against it because there is a huge market that is being created in terms of growth that is outpacing traditional markets. uTFT

December 2018 I 15


UNLOCKING LIQUIDITY WITH STOS There is a large and increasing demand for private security secondary markets and the digital technology that can improve access and liquidity. Dr. James Baty and CEO Jeff Sweeney of US Capital Partners met TFT at a joint event in London on 20 November 2018 to elaborate on the potential of STOs offering investors a new asset class and market reach

What’s the appeal for digital private securities? We have established in previous debates that there exists a robust and increasing market in secondary trading of private securities. And there are many commonly known examples, such as Spotify and Uber. It’s a multi-billion dollar market, but historically limited to very large transactions, because these transactions can be awkward and expensive, and are not subject to widely distributed knowledge. However, along with increasing demand we now see the advent of blockchain transactions and digital securities reducing secondary market transactions friction, reducing cost, thereby making transactions less awkward and allowing greater access to smaller transactions of value. This same technology, had it been available earlier could have been used to make transitional large block secondaries less complicated and more affordable. And there is another reason for great demand in secondaries - the longer maturity time for private companies.

16 I December 2018

Traditionally VC investors would hope to move quickly through B and C round financing, to be recognised as a ‘unicorn’ and launch an IPO, providing a major liquidity event for early investors. But this traditional VC market has slowed, IPOs come later, the market wants more intermediate-term liquidity, so there’s more demand for liquidity than there might have been three to five years ago. Thus, given the current state of the marketplace, there are trillions of dollars of value that have been locked up in private security holdings, and now we see that tokenisation of securities and transactional market efficiencies offers timely promise to unlock liquidity and provide broader market access.

What is the mind-set needed to focus STOs as an asset class? Not all private securities are the best candidates for secondary trading, or the adoption of digital security models and blockchain transaction models. So many of the early examples of digital financing are the now infamous ICOs, underlying questionable assets, attempting to skirt securities laws. In other cases, some of these may have been legitimate offerings, but they were still confined to early stage venture round financing, a very small rounding error of the overall large private market, with an intrinsically high failure rate. There may have been a lot of buzz, but this is not really a valuable or very big asset class. In the end, the SEC (US Securities & Exchange Commission) came out and admonished, corrected and fined many of these early ICO efforts, but it also reiterates a continued goal to want more main-street participation in private securities for qualified investors because they just want that for investment, retirement, and all kinds of things. I.e. investment in successful, later round private placements, that will benefit from improved digital transaction efficiencies.

How can blockchain and digital security technology be used to improve market access to high value assets and a more efficient digital private equity market? Technology, tokenised securities, digital ledger technology, are important, but what’s equally key are assets of value, and the ecosystem of underwriting broker dealers, transfer agents / custodians, securities lawyers and alternative trading systems (ATSs). More than just an infrastructure or everybody creating their own marketplace, it’s going to take some of the large trusted brands (because an investment’s made out of trust), to build the marketplace where investors will go, for example the New York Stock Exchange and NASDAQ. The vast majority of this ecosystem continues to be governed under the applicable regulations and guidance of the SEC, CFTC, and FINRA etc. But some of this functionality may benefit from additional guidance and standards in terms of what kind of high-quality offerings are going to become available and who takes responsibility for filtering and vetting those offerings for integrity? Even though you may not be able to guarantee the financial growth of them, certainly there has to be a guarantee that they’re not fraudulent, that the representations are accurate, where the investors or the analysts can make assertions as to whether they’re a good investment or not, on the platforms where these are represented. In summary it takes the new digital equity technology, but beyond this technology it takes quality assets, the professional ecosystem, and an emerging evolution of standards and guidelines. In any case there are some significant issues to consider.

What steps to take to begin? Where you start depends on the ‘readinesses of your existing equity for tokenization, vs. beginning with a new issue. The elements to consider if you start fresh, is how you


would structure your contracts, your offering, your tokens potentially, in a way that would support secondary market activities. On the other hand, if you’ve already issued securities, is there a way that you can tokenise for liquidity opportunity on existing investments? This will likely be more complicated in terms of the terms and the contracts, etc.? One route is to perhaps amend the existing contracts to allow for and guide secondary sales. That means you have to send it out to shareholders and you’ve got to either go the way of the shareholder vote or might be by negative consent. So an alternative, even when you have existing shares outstanding, is to consider doing another round. Even if an additional raise is not needed, the additional round could be used to provide secondary market liquidity through a stock swap to the new contract terms. In any case, the basic proposal is to start making all privately issued securities compliant and capable of secondary sales. You must consider the appropriate terms to potentially govern secondary sales, ROFR (right of first refusal) clauses, waiting periods, voting requirements etc., to find the right mix of potential liquidity and desired control.

Who will run the digital secondary markets? At this early stage there is little standardisation or interoperability for secondary markets and token issues. One may question the relationship between token issuers and secondary markets? Having to incorporate some of the contract terms of the token into the secondary market permissions and approval, etc., there’s probably a handful of types of relationships between issuer and market that can exist. One model would be: I’ve got a captive secondary market associated with a token-issuing platform. As an issuer I go to company X, they issue my tokens, and they are the secondary market. This assumes that company X, has appropriate licensing and registration for all of the relevant ecosystem components (broker, custodian, ATS, etc.). Another model is where the issuer issued tokens or not issued tokens, but they go to an independent secondary market and onboard the issuer with their smart contract terms being incorporated into the blockchain. Both the captive and independent secondary market implies that the contract terms would have to be freshly encoded for each secondary market the issuer would allow trades on. The ultimate goal is secondary markets that support token issuers from many different types of platforms. So, whether I’ve issued my own tokens or I’ve issued tokens with a third party, I can go to this market and plug in because there’s a common infrastructure or a common terminology, contract terms and APIs.

Where do the terms get recorded? In dealing with blockchain transactions the relevant information may be recorded on-chain (in the blockchain computation) or off-chain (e.g., in a separate indexed database). The blockchain must include the bare minimum of the identity of the security token and the history of the owners. We might conceive that there are natural levels of

Jeffrey Sweeney, Dax Cabrera, Edd Carlton, Graham Rodford, Ivor Colson, Teresa Grobecker this allocation of data. 1 – Bare minimum ownership of record – i.e. the normal data that is recorded in a cap chart entry – number of shares (identity of tokens), owner and transaction date, etc. 2 – Ownership augmented with detailed transfer terms – when can this token be exchanged under what conditions, restricted date window, accreditation requirements of investor, etc. 3 – Total and complete contracts terms incorporated in the blockchain. Given the complexities of many contracts this may be limited to particular industries or business niches where the contract terms are already highly standardised. The standardisation and semantic encoding of more generalised smart contracts, is a large and ongoing activity of several industry consortia. The sweet spot would seem to be category two – where the availability of secondary trading is facilitated by having all of the relevant ownership and transfer terms encoded in the blockchain for ready visibility and compliance.

The Future is Already Here In summary, digital ledger technology [DLT] using blockchain technology can provide a significant platform for not just the basic issuance of digital securities, but an avenue towards increasing desirable secondary market liquidity for private securities. But just because the algorithms and servers exist, that doesn’t mean there’s not still a lot of work to do to leverage the technology. Issuers need to plan carefully for the contractual terms that anticipate future secondary sales. Ideally digital smart contract standardisation will emerge that enables interoperable secondary markets. In the meantime, multiple competing proprietary platforms and markets will emerge and issuers will have to make careful choices. uTFT

“We now see the advent of blockchain transactions and digital securities reducing secondary market transactions friction, reducing cost, thereby making transactions less awkward and allowing greater access to smaller transactions of value”.

December 2018 I 17

00 M100 Y35 B55


Payments Giants and the Big Brother effect Adrian Cannon, MD Witstock Limited debates the need for a new payments model for retailers that can bind and grow quality customer relationships without the reliance on using personal customer data to grow their revenues Reading the history of the rise of the internet giants there is a common thread that binds them. They have all come to expound a business model that provides a product or service for free and then over time, have found ways to monetise the relationships they form with their customers. The virtue they claim is that the service is available to all and easily adopted and stratospheric rates of uptake can be achieved. However hiding behind this virtue is the reliance it creates on the use of personal data to generate revenues. The use of this data takes many forms but ultimately it leads to the same place. Personal and often private data is filtered, cross-referenced and further information inferred and then sold to companies that wish to sell things to us. The internet giants have also made a virtue of the “freemium” model, where a very large number of users that pay nothing, are actively “farmed” to become super-users or “fans”, willing to pay for exceptional or privileged access to services. Privilege in this instance may merely mean not being exposed to endless adverts but it rarely means that personal data will not be sold on. The necessity that both these models have turned into a virtue is the absence of a viable means of taking very small or micro-payments that is available to all and affordable to both buyer and seller. Had there been such a service would we have the business models Dégradé

we have today? Could Facebook and Google have achieved a better social outcome by charging very small amounts for each interaction with their service? Could they have created a world in which people are paid for providing data that is sold to third parties? The dominant retail payment systems of today evolved over many years to support payments for relatively large value items at physical locations such as stores. The systems, processes and economic model that they rely on could not serve the emerging internet giants. Importantly they have struggled to overcome their inherent limitations and are still unsuited to support such business needs. One way to avoid the data driven, privacy breaching business model of today would have been to build an effective payment method. That would have required collaboration between market entrants because a fundamental requirement of successful payment services is ubiquity. Even very large ring-fenced payment services fail because they cause the payer to place funds in multiple payment silos and this reduces their ability to manage their wealth. If we imagine a micro-payment solution that could have addressed this need and avoided today’s business model what characteristics would it have had? It would have been similar to cash in many ways; available for use by all and not dependent on credit-worthiness. No account would have been necessary and value would pass from participant to participant seamlessly without centralised clearing and settlement processes. It would allow in-flight conversion from one store of value to another. For example from Sterling to Bitcoin. It would provide the basis for identifying the individuals involved in the transaction and leave an

audit trail for customer service and regulatory purposes. It would be usable in the physical and virtual worlds and it would have costs for payer and payee that were low and proportional to the value of the transaction. Finally, it would treat payer and payee as equals with the ability to send value in either direction. In the presence of such a service the internet would have been a boon to many businesses not just the tech start-ups. It would have allowed newspapers to charge for news items delivered through digital channels. The ability to charge small amounts and receive payment for an article would have supported the growth of proper journalism in the internet age instead of crowd driven fake news. Advertisers could have paid a small fee to those interested in watching their ads or even a fee proportional to the viewers’ net worth. The payment schemes have tried to deliver a solution with schemes such as Mondex and VisaCash. However, these were built on yesterday’s infrastructure and failed for that and other reasons. Until a payment service is developed that meets this need, the internet giants must continue to generate revenues by selling personal information. How long this model can last in the face of regulatory pressure and rising consumer concerns is open to debate. If such a payment service does not exist when today’s data driven business model comes to an end it is interesting to ponder the future of the internet giants. Fortunately technologies are emerging that would enable this new payment model and provided these are made available to all, in a universal model for payment services that mirrors the openness of the internet, the future looks different. uTFT See witstock.com for more information

Dégradé Ultra

220+ CEO speakers 150+ fintechs 60+ countries 2600+ attendees

0 M100 Y35 B40

0 M96 Y90 B0

85 M50 Y0 B0

85 M26 Y0 B0

Christine Lagarde

Bruno Le Maire

J. Van Overtveldt

Vilius Šapoka

F. Villeroy de Galhau

Carlos Torres Vila

JL. Bonnafé

Frédéric Oudéa

Vanessa Colella

Banque de France (FR)


BNP Paribas (FR)

Société Générale (FR)

Citi Ventures (US)

Nikolay Storonsky

Charles Egly

Kristo Käärmann

Anne Boden

Brad Garlinghouse

Mark Mullen

Revolut (UK)

Younited Credit (FR)

TransferWise (UK)

Starling Bank (UK)

Ripple (US)

Atom Bank (UK)

Managing Director

International Monetary Fund (US)

Minister of Economy & Finance (France)

Minister of Finance (Belgium)

Minister of Finance (Lithuania)

Valentin Stalf

David Vélez

Kathryn Petralia

N26 (DE)

Nubank (BR)

Kabbage (UK)
















18 I 01_ad_ft-times_265x157_nov1.indd December 2018


31/10/2018 16:43


DON’T WAIT SIMULATE - THE RISE OF SIMULATION TECHNOLOGY. Justin Lyon, Founder and CEO of Simudyne met Katia Lang, CEO, The Fintech Times to discuss the business benefits of modelling and simulation for crisis prediction and aversion

KL: Why is it important for businesses to adopt modelling and simulation strategies for decision making? JL:The idea of computer simulation has been around for a while now and I have been building simulations for the last 15 years. The simulations I have built range from financial markets to analysing traffic and energy flow on smart city grids. At Simudyne, our thesis has been that in the 21st Century you have to make critical decisions which can be made much more intelligently with the information that simulations provide. So I have been building simulation platforms for a range of quite interesting clients from around the world. Simulations are how we train our intelligence, whether human and AIs. Your AI is only as good as the simulator in which it has learned its decision-making policies. Given these limitations, I realised over some time that there was an opportunity here that would allow that kind of decision making in the 21st Century. So we set out to build a next generation simulation platform.

KL: How did your career path lead you to modelling and a simulations business? JL: I am a serial entrepreneur! I have built three companies now. For 15 years I was busy establishing a career as a creator. I started by building websites after attending university in Missouri. In 1999, I realised there was something dynamic out there happening in Silicon Valley. I joined a dot.com backed by Omnicom which we took public on Nasdaq in 2000 - that was our first taste of success. It turned out to be lucrative for all the employees i.e. we had a good opening day on our share price and everyone became liquid and sold. It was exciting. After that, I enjoyed life for a while in Vail, Colorado. Then 9/11 happened and things rapidly changed. I went to MIT and took Mathematical Modelling on terrorism, which took me further in working with the MOD on counter-insurgency - in the fight against radical Islamists, affecting the deployment of teams in countries such as Iraq under General Brown and working alongside US homeland security. Since then, my experience with simulations has led me to operating in such disparate fields and industries, developing simulations for disaster aversion and control. For 5 years, I worked with the Bank of England. I have worked with Port operations of Seattle where we simulated the destruction of the port. I have worked with the Centre for Disease Control and with an oil company in the Gulf of Mexico. I took on a project in Kuwait for two years where I worked on simulations of the Arab Spring and the impact of this on the balance sheet of a Kuwaiti bank. I have to say that my work and my travels have taken me to some weird and wonderful places.

KL: So what attracted you to get back into tech start-up mode?

JL: After 15 years of working with the DOD, the Bank of England and major software companies, I realised I had been

using a lot of off-the-shelf ranges of software from basic, cutting edge, open-source, out of network, to niche and highly expensive. Yet coming from a startup background myself, across all of these areas I could see where the gaps were. Glaring discrepancies presented themselves when there was a requirement to build something big for the Governor of the Bank of England, a chief economist, a chief risk officer of a global bank and a Prime Minister. The challenges then lay in creating technology that needed to be different i.e. robust and scalable. That’s when the idea hit me, and I questioned “why don’t I do that”? Four of us in partnership built a MVR (minimum viable product) and on the back of that we raised money and applied to a fintech accelerator, TechStars in London. London is where I started my company Simudyne, launching the software 1st version in 2017, where we went through a three months accelerator programme. We approached Barclays Bank to take our product on and they put us through our paces for 9 months before buying it. That trial finally paid off as both the CEO and Chief Risk Officer have publicly endorsed it. Now we have a major card processor and an Australian bank amongst many other well-known brands, as our customers.

KL: What’s the need for Simudyne expertise and simulations? JL: I find it strange that companies may not want to talk much about using our product. Why is that you may ask? Well, it’s because it has to do with the evolution in mismanagement that no one wants to address. For instance, one only has to think about the glaringly obvious 2008 financial crises and how companies and the economy want to avert the next catastrophe. So we see simulations as putting into place preventative analysis; it’s about foresight and what could happen in the future, which up until now the market hasn’t been able to work out, for all sorts of reasons. The 2008 crisis has driven entities such as the Bank of England, US Treasury and the European Central Bank to reassess via a whole range of simulated scenarios, “how to survive”. The world already understands about training humans such as pilots on computer simulations of flight scenarios so they can have a ready solution, in order to survive. Simudyne can build a hyperdelic simulation that captures the real world, that allows CEOs and risk management officers to explore all sorts of plausible futures, by seeing how a crisis could unfold, hence giving them a playbook of decisions they can use to choose a preferred future. Simulations can inform and benefit an organisation. However, humans can only train meaningfully for so many times and hours whereas in training AIs, this unlocks real value as they can play 100s and 1000 times a day and in so many permutations.

Kl: What is your strategy for banking and finance institutions? JL: Banks are in the business of two main things, managing risk and making money. Banks have a lot of data to put to the test and want to use simulations to see an aggregate impact. In building a simulation, you can recreate the world in quite some detail. Currently,

I am building a mortgage-model, For instance, there will be people taking out a mortgage and each householder has a different annual income. What we simulate is if there is a shock to that income and people cannot make their mortgage repayment then the bank can plan and calculate for its ROI and accounting write-offs, by studying the volatility of that income. Our modelling approach is agentbased. Moreover, The Bank of England began collating its research on crisis prevention from lower tech levels ten years ago, but even these traditional methods such as machinelearning are not enough. As Alex Brazier, Executive Director for Financial Stability Strategy and Risk and a member of the Financial Policy Committee (FPC) has proposed in 2018, “Don’t wait, simulate.” The Chief Economist at the Bank of England says simulations work, so I would say machine learning and simulations must work in conjunction, hand in glove. Robust predictions will be a way for policy makers and politicians to make better decisions by identifying plausible futures in light of shocks.

KL:What happens after Brexit? JL: Brexit could be a big opportunity. There are many companies building models currently to understand the impact of Brexit. We are a tool provider, we build software and offer this to banks and hedge funds to accommodate to their own requirements. In terms of Brexit, financial institutions may look at counterparty contagion risk or a hedge fund may look at what might happen under an asset price decline, as a result of fire sales. So managing risk and making money are two use cases combining machine learning and simulations to seek Alpha. I see it this way, these are the guys that are looking to find the gold and we sell the picks and shovels for them to find that gold.

KL:So what future plans are there for Simudyne? JL: Our company has grown from 4 to 30 people quickly. We are fully invested in serving the finance market because it’s important to the world and touches everyone’s lives. I believe, if we can manage to make our macro financial systems stronger, we can make meaningful changes across the board. For example, if simulations can help manage the environment and weather conditions, then we can avoid quite a few natural disasters. This could make strides into ensuring food security. There are so many other financial and regulatory considerations, to avert another global economic crisis.

KL:So what’s your personal goal with all this?

JL:I think my goal is to make radically better decision-making, a reality - we really need it as a species! All joking aside, I want to be able to say, “Computer what is my next course of action?” I want the computer to run millions and millions of scenarios for me to suggest my next best move. I want to take that suggestion with some assurance that it will help me move forward with my objectives. uTFT Justin Lyon December 2018 I 19


SETTING THE RULES OF THE CRYPTO ASSETS GAME Helen Disney explains the need for regulations to cover the different activities and jurisdictions for crypto assets. For the industry to develop a set of rules that protect the public from financial risk are vital. When it comes to new technologies, the innovator’s role is to invent and disrupt. Sometimes this means breaking the mould and perhaps - unwittingly or even intentionally - going beyond the parameters for which the current set of societal rules have been formulated. The evolution of bitcoin and other cryptocurrencies over the last decade, combined with innovation in the use of blockchain and distributed ledger technology for enterprise applications, has left regulators and policymakers in a quandary. The technologies are moving so fast and throwing so many traditional ways of doing things up in the air, that it is hard for even people close to the industry to keep up, let alone for those trying to decide how and whether to come up with a new set of rules to protect the public from financial risk. As a consequence of this uncertainty, jurisdictions around the world are all treating so-called crypto-assets in different ways and the result until now has been a high degree of regulatory arbitrage, with projects looking to settle wherever the business environment and access to capital is most favourable. Often this is linked to where there is less fear of possible regulatory reprisals for starting up a new venture, but regulators may not know how to handle this behaviour . A number of locations have fought for the prize of being the home and host to this new wave of technological innovation. Zug in Switzerland

20 I December 2018

has become known as Crypto Valley while other jurisdictions such as Singapore, Gibraltar, Malta, Bermuda, Thailand, the Cayman Islands and the Isle of Man have all created the conditions for start-ups to find access to banking or other services, which may not yet be so readily available in the traditional financial capitals of the world. London and the UK in general has been supportive of blockchain and cryptocurrency businesses – at least in words and in some cases actions such as the growth of the FCA’s regulatory sandbox. Yet companies in the UK still complain that they struggle with basic issues like being able to open bank accounts. Moreover, the climate of uncertainty surrounding the future implications of Brexit, has also been a challenge. This week the UK government published the muchawaited second report from its recently formed Crypto Assets Task Force (CTF). Highlights of the report include the announcement that the UK government will issue guidance by the end of 2018 on which types of cryptoassets fall within existing regulations and they will also make proposals for extending this existing regulation to cover other cryptoassets. There will be a further consultation in 2019 on a possible ban on retail sales of crypto based derivatives (CFDs) – most likely these sales will be restricted to accredited investors only, which already happens in the US. Next year will also see a further consultation on regulation of tokens as well as a crackdown on the use of cryptoassets for illegal purposes. The report has generally been well received with an overall view emerging that the UK is taking a measured approach and consulting intelligently with a wide range of experts - and with a valid concern to protect consumers. But some critics of the findings argue that this type of regulatory approach may be too much of a blunt instrument which does not take into account the variety of types of uses for cryptocurrencies and

tokens that now exist beyond our traditional understanding of investing. Industry experts are now trying to classify different types of crypto assets and think about taxonomies for how they should be treated. In operationalising this concept, There may be certain rules that should apply to cryptocurrencies like bitcoin which are being used as a store of value which would not be suitable for other emerging uses of tokenisation. At around the same time as the UK report came out, in contrast, Japan’s Financial Services Agency (FSA) took a rather different line, giving its cryptocurrency industry a self-regulatory status. Unlike the UK, it will allow the Japan Virtual Currency Exchange Association to police and sanction exchanges for any potential violations. France and Thailand have also gone down a more self-regulatory road asking Initial Coin Offerings (ICOs) to self-register and sign up to some minimum standards, although France is now also considering making its rules and oversight stricter. There have been some further calls for this at the EU level including from the Brussels-based think tank Bruegel, which has argued in recent months that there is the need for the EU to regulate the cryptocurrency market particularly around ICOs and exchanges. Post-Brexit this could present an opportunity for the UK to take a different approach. While much remains up in the air, the race to capture the value of this new wave of technological innovation is on and it will be interesting to see how 2019 plays out as the cryptocurrency market continues to mature and evolve and in particular with greater interest growing from the institutional space. Ten years on from the publication of the Bitcoin white paper, the debate has moved from a handful of developers to the mainstream of political and policy debate. That, in itself, is a milestone worth celebrating. Helen Disney is a serial entrepreneur, the CEO of Unblocked, a blockchain education and events platform and a founding partner at Dots Ventures. uTFT


THIS YEAR, THE THREE MOST DIVISIVE LETTERS IN FINTECH HAVE BEEN I, C AND O… Matthew Dove On balance, the initial coin offering has proved the most controversial development to emerge from the advent of cryptocurrency. Given that we’re talking about an innovation which also gave rise to Mt. Gox, the Silk Road and a new breed of bank-baiting cyber anarchists, that’s no mean feat. There are stats a-plenty to suggest all is not well for the ICO. Those published by ICORating recently are particularly damning; • Only 7% of ICOs from Q2 (2018) have been able to secure exchange listings • 55% of all ICOs from this period failed to hit their funding target • Only 15% of projects already had a working business Findings by two other major studies published recently have similarly highlighted the increasingly dire prospects of the once promising ICO market. EY has revealed the woeful performance of most of the cryptocurrency projects which made initial coin offerings in the last 12 months. The EY ICO report deals exclusively with “The Class of 2017”, the first wave of cryptocurrencies launched onto the market shortly before the boom of December last year. The study revisits the projects which made up 87% of the total ICO funding for 2017 (across 141 separate cryptocurrencies) and measures their progress over a 12 month period. Whilst it’s common knowledge that the market has contracted in 2018, EY’s findings still make for a pretty grim read. Of the 141 projects considered, 86% have tokens whose trading values are below their original listing price. Of this group, 30% are bereft of any practical monetary worth and have, according to EY, lost “substantially all value.” There will be few holders of cryptocurrency who have failed to notice the decline in the value of their portfolio since the beginning of the year, but in case further confirmation were needed EY’s ICO report states that; “an investor purchasing a portfolio of The Class of 2017 ICOs on 1 January 2018 would most likely have lost 66% of their investment.” Looking more closely at the products themselves, the study found that only 29% of the projects which received ICO funding in the studied period now have a functional platform or prototype, a mere 14% improvement from December 2017. Even more worryingly, 71% have, “no offering in the market at all.” So, the ICO market appears bleak but perhaps as well as highlighting the problem, EY may also hold the solution.

In the years leading up to the economic crash of 2008, another struggling financial enterprise, Lehman Brothers, was staring into the abyss and sought out the services of a large accountancy firm to help deceive its investors about the condition of the company. The firm they hired to undertake what has since been labelled in a major lawsuit as a, “massive accounting fraud” was one Ernst and Young, latterly EY. Since then, EY has paid more than 100 million US dollars in damages and is still, somewhat remarkably, well respected in its field. So, if any of the failing ICOs listed in the report are reading this, a word of advice; If you have a problem that only “creative” accounting can solve, if no one else can help, and if you can find them…. maybe you can hire… The EY-Team. Elsewhere, a second study, commissioned by New Yorkbased Satis Group LLC, has broken down ICOs into 6 groups: Scam, Failed, Gone Dead, Dwindling, Promising, Successful. “On the basis of the above classification … we found that approximately 81% of ICO’s were Scams, ~6% Failed, ~5% had Gone Dead, and ~8% went on to trade on an exchange.” Scams are classified in the study as; “Any project that expressed availability of [an] ICO investment (through a website publishing, ANN thread, or social media posting with a contribution address), did not have/had no intention of fulfilling project development duties with the funds, and/or was deemed by the community (message boards, website or other online information) to be a scam.” Failed ICOs are defined as having; “Succeeded to raise funding but did not complete the entire process and was abandoned, and/or refunded investors as a result of insufficient funding (missed soft cap).” Whilst those considered Gone Dead are any ICO to have completed funding, “[but] was not listed on exchanges for trading and has not had a code contribution in Github on a rolling three-month basis from that point in time.” Despite all the doom and gloom, the humble initial coin offering was used to raise a staggering 8.4 billion US dollars in the second quarter of 2018 which can hardly be seen as a death rattle. As 2018 draws to a close, the jury’s still out and the debate rages on as some herald the demise of the ICO whilst others claim that this is only the beginning for one of the most explosive fundraising mechanisms ever conceived. Let’s have a look at the rival camps a little more closely...

The King is Dead!

One of the speakers who joined The Fintech Times for its Are ICOs Dead? discussion panel on November 20th was

Jeff Sweeney of US Capital Global and he shared his unique take on the fate of the initial coin offering and its potential successors. In a piece for our October print edition, Sweeney spoke of his firm belief that the time for utilising an, “ICO to avoid securities regulations is over.” Whilst he heaps praise on the notion of digital securities in general, calling them, “an exciting way to hold and trade valuable assets electronically”, Sweeney is entirely dismissive of ICOs in their present form, referring to them as “discredited.” Sweeney argues that the future of digital ledger technologies (DLTs) lie beyond the ICO as we know it. US Capital Global’s chairman feels that blockchain technology would be better served handling “alternative assets” which he asserts are, “any asset that is not a public security or a ‘rated’, i.e. rated by a rating agency, like Moody’s or S&P.” The worth of such assets dwarf those being covered by ICOs presently and the market is unspoilt, as the financier explains; “This is a multi-Trillion-dollar asset class with very narrow public distribution. Few are able to participate in this asset class – even though the population of qualified investors has quadrupled over the last 20 years, participation in this asset class has barely increased.”

Long Live the King! The team behind BlockEx, a digital asset exchange platform, have a slightly different conception of where ICOs sit in the grander scheme of things. Edd Carlton, the exchange’s global head of ICO listings doesn’t see the mechanism, “as a standalone asset class. Instead, it is a subset of a larger asset class.” He feels fundamental misunderstandings surrounding the function of an initial coin offering have, in part, lead to their reputation becoming soured. Carlton has argued that ICOs should be viewed as a means of participating in blockchain innovation rather than as traditional investments. Furthermore, their global reach in terms of both fundraising and attracting technical expertise to projects shouldn’t be underestimated. BlockEx analyst, Denis Vinokourov, predicts a future where ICOs and other asset classes will co-exist harmoniously following what he sees as an inevitable wave of state regulation. In fact, he feels that the end of the crypto Wild West will herald in a new golden era for fundraising in the space; “Quick buck ICOs are dead...long live the mature market ICO.” uTFT

December 2018 I 21


Getting your Fintech ready for investment Jon Dawson, Senior Manager haysmacintyre advises fintech start-ups on the right time in their business growth to woo investors With Warren Buffett’s recent investment in payment provider Paytm, my sense is that now is a good time for fintech companies to start preparing for investment. In their earlier stages, fintech start-ups may have pulled together some money from seed round funding or investment from family and friends. There may, however, come a point when these businesses need to consider more significant external investment. It’s worth keeping in mind that securing an investment is a two-way relationship. Business owners need to impress investors, but they also need to ensure the investment suits their company’s needs.

When is the right time to look for investment?

Businesses should consider what makes them attractive to investors. Within the sector, many non-revenue generating businesses are attractive because of their prospects, usually because they have developed a product that has huge market potential. Revenue generating businesses should consider further investment when they have a strong history of stable or growing revenues. Start-ups may also need to consider any recent events that are likely to enhance the price of their offering, such as whether they have been working with any notable companies, or if there have been any changes in legislation that could alter the value of their offering.

Choosing the right investor

When a business is ready for investment, decide that aside from funding, what else do you want to receive from their investor? For many start-ups, an ‘angel’ investor will be the preferred choice. These investors can offer extensive experience and expertise, helping the business leaders through unfamiliar territory, whilst standing back from the day-to-day management of the business. Often referred to as “patient capital”, angel investors are generally less concerned with rapid returns, supporting the business throughout its growth. Alternatively, fintech companies may turn to venture capital (VC) investment. It is, however, worth considering that the VC investor will want to exit at some point down the line, many frequently departing within five years of Series A investment. It should also be kept in mind that they may want some control over the day-to-day operation of the business, and would possibly want a position on the board.

Start-up businesses often receive investment that is particularly hands-off, where the investors pay little attention to day-to-day matters. As the scale of investment increases, businesses should prepare for this dynamic to change. Investors in more mature businesses, often expect to know everything the company is doing and have an influence on decision-making. Some investors may also not completely understand exactly how fintech works: the standard VC model expects to make a return within two to five years, but the standard fintech model will often be non-revenue generating for three to five years. As a result, VCs may wish to accelerate any sales prematurely, which may not be in the best interest of the company going forward.

Seek external advice

As business owners embark upon the journey towards investment, it’s worthwhile consulting external advisers. Having worked on both sides of the deal and having seen the level of detail that we would investigate on behalf of investors, I would recommend appointing external advisers before going to the market for funds. Businesses should look to take on board both legal advisers and accountants, ideally with names investors will recognise. Regardless of the discipline, advisers should have the director’s interest at heart, and should be considering the outcome for director as an individual, including the tax structure going forwards and ensuring that not too much of the business is sold off at this early stage.

Consider the internal structure

The structure of the business is another key consideration for those seeking investment. Many investors appreciate when a founder can admit where their strengths and weaknesses lie; if the founder is best placed as an innovator (sometimes the case for fintech companies), it is important they acknowledge this. Appointing an external CEO, who has more appropriate leadership skills and business acumen, to take on the dayto-day issues of managing the business is certainly worth considering. Once the business has reached a certain size (some would say 12 to 15 employees), it may also be worth employing a COO to take the strain of the daily business management off the founder and CEO, so they can focus on their own responsibilities. As the business moves forwards, an employee incentive plan may be required. With expansion and structural changes on the horizon, incentivising employees to remain with the business in the long term is vital, especially if they are future candidates for senior management positions. It’s useful to

consider how a share option scheme might work and how this might impact investment.

What is an investor looking for?

Once organised internally, businesses will need to consider how to appeal to the right investor by preparing their investor deck and forecasts. An investor deck is effectively a sales pitch, but the best investor decks also explore weaknesses. These can include how the business compares to competitors or any difficulties they may face and how they would counter these issues, rather than waiting for the investor to address them. It’s also worth moulding the pitch around how the investor could eventually exit the investment, in view of the business’s longterm future. Of equal importance are the forecasts of the business. Fintech companies will have developed some form of technology and will be raising investment on the basis that their product has superior potential compared to competitor products, and will be of significant value. The danger with this is that many forecasts are over optimistic, and aren’t appropriately justified, which may be seen as unrealistic by prospective investors. The amount required from the investment should also be carefully thought out: businesses shouldn’t request the absolute minimum which, in theory, is required to keep the company’s cash flow positive. It’s important to factor in a buffer when considering the investment value, which could be used to mitigate future hurdle Ultimately, an investor wants to work with a company that is open and honest with them.

Consider the implications on tax reliefs

From the director’s point of view, a business will need to consider how the director may wish to exit in the future, and the ripple effects this could have on various tax benefits which they might be entitled to. In several cases, founders will be eligible to entrepreneur’s relief, so will pay tax at ten percent on their proceeds. Often, founders will set up EIS or SEIS schemes in the early stages which can allow a tax free sale for founders who have invested through the scheme. It’s important that eligibility is considered throughout any major events to ensure the founder remains eligible for the relief. Ultimately, consider when external funding can offer leverage for growth, but business owners should be careful to time their approach. The right investor can offer not just financial support, but also invaluable expertise, so businesses will do well to be sufficiently prepared to secure the investor who is the best match for their company. uTFT

How often are you speaking to your accountants and tax advisors? We’re here to help! haysmacintyre understand the challenges Fintech scale-ups are facing and offer our clients year round support. Your trusted partner through growth Structuring international expansion

Management accounts, budgeting and cashflow forecasting

Share incentive schemes

Tax breaks including (S)EIS and R&D tax credits

For further information visit www.haysmacintyre.com or fintech@haysmacintyre.com 22 I December 2018


Fintech Start-ups Employing skilled non-EEA workers via this Tier 2 visa alternative As businesses prepare for Brexit Ward Hadaway’s immigration expert, Flora Mewies discusses an alternative route employers can go to acquire highlyskilled workers One of the common pain points for start-ups, multi-nationals and everything in between is the struggle to recruit top tech talent in the UK. This has been compounded by Brexit and the UK’s immigration system. For EU citizens already living in the UK, they will be able to remain here indefinitely post-Brexit and these rights will be extended to EU citizens arriving before the end of the implementation period on 31 December 2020. Businesses therefore will be able to continue to recruit from the pool of talent offered by the EU in the short term. However due to a decline in applicants from the continent, many businesses are unable to find the highly skilled employees they need across junior, mid-level and senior roles. They are therefore looking to recruit from outside the EU and EEA.

Maximising success If employers struggle to recruit candidates under the Tier 1 Exceptional Talent visa route, there are other ways they can help maximise their chances of success through the Tier 2 system. They must first make sure the candidate meets the English language requirement, ensure the role is broadly a professional or managerial role and advertise the job extensively to ensure that no settled workers are suitable. The Tier 2 visa requires the employer to sponsor its prospective employee and so a pre-requisite is that the employer is registered with UKVI and holds a sponsor licence. To obtain registration, there is an online application to be completed, prescribed information to be provided about the employer and those key employees who will hold responsibility for managing the sponsor licence, as well as multiple supporting documents to be provided. The aim of this process is to determine whether: you are a genuine organisation oper-

ating lawfully in the UK; you are honest, dependable and reliable; you are capable of carrying out your sponsor duties and complying with UKVI’s requirements; and you can offer genuine employment which meets the required skill level and salary level for the role as required by UKVI. Provisions are made in the application process for start-ups who will inevitably have a less established infrastructure and this does not rule out the possibility of them becoming a sponsor. UKVI has in place a ‘shortage occupation list’ which is a list of roles that it believes the UK is commonly unable to fill from the local labour market and routinely has to recruit into from outside the EEA. The roles currently on this list include: IT Product Managers; Data Scientists; Cyber Security Specialists; and Senior Software Developers. All must have a minimum of five years’ experience and experience of having led a team. The purpose of the shortage occupation list is to make it quicker for an employer to sponsor someone for these roles, as it removes the need to advertise the role before moving on to sponsorship. However there are significant gaps between this list and reality. For example, the list doesn’t take into account the difficulty of recruiting good junior level developers or those in to software engineer, business analyst or solutions architect roles. This is felt widely across London, but even more so in the regions such as Newcastle, Leeds and Sheffield by both new and established companies in the tech sector. Having become a sponsor, there is a requirement to advertise the vacancy you are seeking to fill in certain locations, one of which is the Government’s Find a Job service. It’s highly unlikely that the specialised talent required for these roles will not already be in employment elsewhere and will be searching the Government database for roles. Regardless, the role must be advertised on this site and using another prescribed method, for at least 28 days, following which a full and fair recruitment process must take place. This is required in order to demonstrate that there aren’t any settled workers suitable for the role before they are able to go on to sponsor a non-EEA worker. The job advert must contain a salary range on offer for the role.

The criteria According to the Home Office, the minimum salary threshold under Tier 2 (General) is £30,000 for experienced workers and £20,800 for new entrants (recent graduates and those under 26). In addition to this, UKVI allocates a salary to each role which, if higher, overrules the minimum salaries stated above. By way of example, the current minimum

salary payable for commonly sponsored roles in the tech sector are set out below:


Minimum 'new entrant' salary

Minimum 'experienced worker' salary

Business Analyst Software Engineer Quality Analyst Service Delivery Manager

£26,500 £24,000 £21,600 £27,400

£34,700 £32,000 £28,900 £41,400

These minimum salaries can often be a barrier for startups looking to bring in one, two or a team of technicians on board from overseas, but at present, there is no indication what these salaries are going to change and if they are, they’re only likely to increase. It is anticipated that a similar scheme of sponsorship will be introduced after 31 December 2020 for EU nationals and so the sooner employers familiarise themselves with this system the better. It has recently been proposed that the list of roles suitable for sponsorship is increased, that the annual cap on the number of EEA-nationals entering the UK for sponsorship is increased and that there are modifications to the advertising process employers are required to go through, perhaps with more roles or categories of individual being exempt from this requirement. Unsurprisingly however there hasn’t been any suggestion that the fees payable to UKVI for the privilege of sponsoring a non-EEA national are reduced. For a small business, the cost of applying for a sponsor licence is currently £536, there is a further £199 to pay to sponsor the non-EEA national and then the ‘immigration skills charge’ to pay on top of this. This charge was introduced in 2016 with the purpose of using the money levied to invest in developing talent within the UK. To date, we’ve not seen any details of how this money has been used or the resulting benefits. The charge to small employers is £364 and for medium or large employers is £1,000 per year of sponsorship. These fees are of course on top of the immigration health surcharge and the visa application fee payable by the applicant. Despite these costs and the complexity of this immigration route, it is still widely used by employers looking to recruit and retain the brightest and the best global talent in the tech sector. uTFT

Looking to cast your net wider and attract international talent to your business, but don’t know how? Our immigration specialist Flora Mewies can assist you in recruiting and retaining the skilled workers you need to maximise success. At Ward Hadaway we are able to provide advice to you and your employees on this as well as other employment matters. If you would like to discuss your options, please contact Flora Mewies on 0113 205 6797 or email flora.mewies@wardhadaway.com Ward Hadaway



Flora Mewies | Associate | Employment Team December 2018 I 23



In this Talking Heads interview, TFT met CEOs Anurag Yadav of Prima Felicitas, Joff Paradise of Cryptomatic and Chrissa McFarlane of The Patientory Association to find out about their companies’ market solutions and strategic plans for entering the African Fintech sector PRIMA FELICITAS, CEO ANURAG YADAV TFT: What’s your company’s USP and how are you going to change the world? AY: My company, PrimaFelicitas, primarily develops cutting-edge solutions based on Emerging Technologies. Our USP is developing these highly innovative solutions at the intersection of technology, for instance at the intersection of blockchain, Artificial Intelligence, Machine Learning and the Internet of Things. Developing products at the intersection of some of these novel technologies, we are able to leverage the collective power of these technologies and through it develop products and solutions that have the ability to impact society and world in big and meaningful ways. What are the major challenges for your business? Since these technologies are so novel most clients and potential users are not aware of these technologies or their benefits and strengths. Our challenge always is to educate and inspire people to appreciate the power of these technologies and be moved to try and use them. Despite our entire development team being based in India and therefore our prices being significantly lower than any teams based in San Francisco or London, clients during early discussion phase still find it expensive to invest and try out these technologies. 11/19/2018

How does your business extend financial inclusion and social impact? Most of the innovative digital technologies of the past 50 years benefitted large corporations who were able to invest in those still expensive technologies and earn huge profits. This happened with internet technology in the past and continues

Blockchain World Summit

even today with technologies such as AI. The real value was never shared with the society at large until much later. We are trying to bring access to these novel technologies to SMEs and common consumers at a fraction of a cost, thereby democratising the technology and ushering in widespread usage and benefits to society. Further, we are developing solutions that will let consumers earn passive income, for instance monetising access to their data, something that large corporations value a lot and will be very willing to pay for.

Cryptomitc - CEO Joff Paradise .png

CRYPTOMATIC, CEO JOFF PARADISE TFT: What’s your company’s USP and how are going to change the world? JP: The unique selling point of our company is providing full 24/7/365 support to our clients and unique software with its own eco-system. Cryptomatic customises software development to client’s needs and requirements to ensure the stable operation of the machines. We are planning to install at least 5.000 ATMs and change the way people buy

The world’s youngest continent is teeming with opportunities for a business future invigorated by the Blockchain technology. https://drive.google.com/file/d/1jnaR-txEXTzQgIgWuGcemr9cdihMzRNd/view


Join us at

Blockchain World Summit

Cape Town, South Africa 7th - 8th December, 2018

The underlying technology of the Blockchain could be exceptionally valuable and revolutionise many industries across the African continent. The opportunities could see more transparency across various businesses, a reduction in costs and improved efficiencies. This dynamic and exhilarating start-up scene has the ability to transform the technological landscape of this great continent. 24 I December 2018

What are major challenges for your business? The main challenge for our business is the human factor. We must change the way people think. By that I mean we are changing the world, by changing people’s minds, the way they understand crypto and the way they buy crypto. We are here to make complex things easier. How does your business extend financial inclusion and social impact? Cryptomatic opens capitalised, large and decentralised markets for an average citizen. The fact is that in our modern world with AI, crypto, blockchain and other technologies, people still want to remain conservative. Now our team is trying to open doors and show society how finance operations are shaping up in 2018. Why are you going to Africa? We are glad to visit this wonderful country – cradle of talented people such as Elon Musk and to take part in a brilliant event such as The Blockchain World Summit in Cape Town in December. Our team is sure that the majority of African citizens have been reading themselves for a financial revolution that began in 2016. Our goal for this event is to show how crypto-payments work and teach people how to make profit on it.

Why are you going to Africa? To share the latest technological developments in the fields of blockchain, AI and IoT and let the audience know how some of the developed parts of the world are already harnessing these technologies to improve their citizens’ 11/19/2018 CEO for Patientory Chrissa McFarlane.jpg lives and build better societies and countries. Africa can immensely benefit from these technologies by being one of the early adopters and experimenters. I offer all my technological help and support in letting Africa embrace and leapfrog this global technology race. This is the message that I want to bring to Africa.

Unlocking Africa with Blockchain Be a part of it!

cryptocurrency. We also want this process to become simple, clear and safe. The German made components used for assembling the ATMs, guarantee their reliability and quality.


In association with

Tumelo Ramaphosa

BWS in Africa

Blockchain World Summit endeavours to support and educate the community, specifically Start-ups looking to take the next step, by providing connections and insight. We are excited to be working with Tumelo Ramaphosa to make this happen.


What’s your company’s USP and how are going to change the world? The Patientory Association, a global non-profit healthcare member organisation enables the adoption of emerging technologies in the healthcare industry. Currently, the foundation connects healthcare industry adopters of the PTOYNet blockchain which comprise the PTOYNet consortium. The PTOYNet blockchain securely stores and manages health information in real time, and such storage and management is facilitated by a blockchain based token (called “PTOY”). The Patientory Association accelerates the development of standards that are essential to the implementation and adoption of the PTOYNet platform and token in securely protecting and managing healthcare information. Such standards are necessary for interoperability and auditability and for transparency purposes. These activities will help ensure the safety, reliability and usability of the use of the PTOYNet platform by its members and the general public, a prerequisite to the wide acceptance of the PTOYNet platform as a viable means of transacting business by the public and the acceptance of the industry as a whole. What are the major challenges for your business? 1/1 Our goal is to foster innovative ecosystems around healthcare technology and delivery. We overcome educational and technical challenges identified as barriers to entry for organisations, by providing subject matter expertise. How does your business extend financial inclusion and social impact? We particularly focus on those technologies that will transform low income and underprivileged communities. Why are you going to Africa? We are going to Africa to further develop our mission of transforming healthcare through emerging technologies across the world. uTFT


Cryptomatic powered by 11/19/2018

Patientory Association Artwork.png

December 2018 I 25


REGTECH WEALTHTECH The RegTech sector powers on with since WealthTech investments reached 80%nearly of last$9bn year’sraised total in Q1 2014 alone THE FIN TECH TIMES

Investors have already poured A record of $2.5bn was invested in twice as much into RegTech WealthTech companies last year, according to research from FinTech companies this year than they Global. Funding in 2018 is on track to did in 2017 surpass this, with $2bn raised in the opening The sector Just overquarter $8.8bnalone. was raised by RegTech is poised forglobally continued growth2014 as and companies between the wealthwith and714 asset management Q3 2018, deals completed industries transformed by the rapid during theare same period. Funding adoption of technology, doubled between 2014 and investors 2017, go after a multibillion opportunity. before jumping to dollar $3.75bn this year. Global WealthTech investments Investment reached almost $4bn have since 2014 duringnearly the firsttripled three quarters of the

year, settinginan annual funding record Investment WealthTech companies for the sector. increased from $928.6m in 2014 to $2.5bn in 2017 at a CAGR of 28.5%. This SenseTime raised $1.2bn across upwards trend is onover track to continue two Series C rounds in Q2, from in 2018, as capital invested in Q1 set a investors including Alibaba, with the quarterly record of $2bn which equates aim of defending its market position to 79.3% of last year’s total. Almost against competitors such as Face++; 60% of this funding came from six another facial recognition solution later-stage deals valued over $100m. provider in China. This pushed the In comparison, there were eight such funding for the sector to almost deals closed during the whole of 2017. $1.9bn during the quarter. Despite the high investment total in Whendeal excluding $1.2bnby of12.7% funding 2017, activitythe dropped that facial to recognition solution compared the previous year. The provider SenseTimeinraised in Q2, 51 deals completed Q1 2018 is 2018 funding is still 47.4% higher than the historically mid-range, and represents total funding from last year. 21.2% of last year’s total. Hence, if this trajectory continues for the remainder Annual activity hasisremained of 2018,deal deal activity set to fallabove again. 120 since 2014, reaching 123 transactions in the first three of 2018, setting Investors arequarters increasingly strong expectations that deal activity will favouring later-stage deals at least match 2017’s figure. There has been a shift towards larger deals moves Exiger,asa the NewWealthTech York-basedsector provider of towards maturity. Deals valued financial crime compliance and less risk than $1m dropped in share from management solutions, raised an38.7% $80m to 20.9% between 2014 and 2017. Series A round from Carrick CapitalThis downtrend continued in Q1 2018 Partners in Q3 2018. This was thewhen just 12.8% of deals completed in second largest deal of the thirdwere quarter this size bracket. and will enable Exiger to accelerate its

26 I December 2018

growth by continuing to build out and All categories above $1m increased in acquire differentiated technology deal share between 2014 and 2017.and technology-enabled The largest rise was insolutions. deals valued between $1-5m which jumped by 7.1 Large deals in Q3 percentage points (pp),push whileRegTech deals funding to $20m almost $4bn rose this by year in the above category 4.6pp. In Q1 2018, deals larger than More accounted than $1.3bn raised in the $20m forwas 44.7% of the top 10 RegTech deals in Q3 2018, total, while two thirds of all deals were equal to 92%$5m. of the capital invested in valued above the sector during the quarter. The maturing industry is also evidenced AI the facial recognition solutions by reduced deal activity last year, developer SenseTime, raised $1bn which is currently projected to acontinue Series D round from SB China Venture in 2018, as investors become more Capital inbySeptember 2018. This selective placing bigger bets oncomes fewer off the back of the $1.2bn Series C companies. funding that the company raised in Q2 2018, pushing the company’s The top ten WealthTech deals in valuation to $5bn. Q1 2018 raised $1.5bn The combined total the top ten Toronto-based Q4, of a Communications Monitoring deals and intelligence platform WealthTech in Q1 2018 reached to help$1.5bn, investor relations almost equating to professionals 73.1% of the complyamount with regulations as MiFID overall invested insuch the quarter. II, raised a $38m Series C round led by The largest was a $500m secondary Napier Park Global Capital. investment in Credit Karma, a credit and financial management platform, from The funds raised will be used to Silver Lake Partners. As a result of the further develop the platform, expand investment, Credit Karma’s valuation global sales and marketing, and increased by 23% making it worth pursue acquisitions. approximately $4bn. Forter is an fraud prevention Six of the toponline ten investments were solution provider based in New York, raised by companies offering Online and the company has raised $100m Banking solutions, three of which since 2013. Forter received $50m in are challenger banks: Atom Bank, Series D funding in September 2018, Nubank and N26. The Partners only investment led by March Capital with in a company based outside of North participation from Sequoia Capital and America or Ventures Europe went to Nubank, Salesforce among others. a Brazil-based challenger bank. The $150m Series E round was led Forter is not yet profitable butby it DST has tripledwith its customer base infrom the Thrive last 12 Global co-investment monthsand andRibbit the company says that it Capital Capital, among is on track grow by thanto150% others. Theto funding willmore be used between 2017 and further support the 2018. company’s growth and expansion.

Global WealthTech investments, 2014 - Q1 2018 (USD, number of deals) 276


248 186


760.1m 1,535.6m

2,534.6m 241


337.5m 1,198.1m




1,192.4m 1,715.6m

1,482.7m 818.3m


Less than $100m



$100m and above

Q1 2018

Number of Deals

Source: FinTech Global

Global WealthTech investments by deal size, 2014 - Q1 2018 (as a % of total number of deals) 10.9% 9.5% 9.5%

9.9% 9.9% 5.2%





5.4% 9.4%

12.3% 12.8%


10.6% 38.5%





2015 Less than $1m


2016 $1-5m


10.6% 21.3%

20.9% 2017 $10-20m

12.8% Q1 2018 Above $20m

Source: FinTech Global The data for for this this article article isis sourced sourced from from the the RegTech FinTech Analyst Global platform. The data platform. More More in-depth research, data and analytics on investments and companies in-depth research, data and analytics on investments and companies across across all all FinTech andand regions around RegTech sectors subsectors regions aroundthetheworld worldare are available available toto subscribers subscribers of of FinTech ©2018 FinTech Global Analyst RegTechGlobal Analystatatwww.FinTech.Global. www.RegTechAnalyst.com ©2018 RegTech


CONFIDENCE 2.0: AUTHENTICATION IN THE NOW ECONOMY RUPERT SPIEGELBERG, CEO, IDnow explains how video identification is helping fintech companies gain customer confidence In a world where data breaches are so commonplace they barely make the news, persuading a customer to share their personal and financial details online requires two important things: trust in the institution and a positive user experience. Fail on either of these levels and the customer will likely terminate any transaction before signing on the dotted line. This is particularly true for the financial sector, which experiences the highest number of failed sign-ups - known as ‘leakage’ in the industry – mainly due to stringent legal requirements for identity verification. Ultimately this makes for a long-drawn-out process for the customer. While transactions within this sector have to remain understandably airtight, they nevertheless need to factor in convenience for customers. This, after all, is why they’ve chosen to sign-up online in the first place, rather than visit a traditional institution. In the Now Economy of instant interaction and gratification, buying, selling, booking, renting, applying, publishing and account opening are all possible while on the move, or from the comfort of a customer’s home. Banks who can win customers over with their online offering and maintain their confidence to the end of the sign-up process will be rewarded with a closed deal and a happy customer. However, online banking is governed by special regulations, such as the Know Your Customer (KYC) standards set out in the EU’s Third Anti-Money Laundering Directive. This means that handling online transaction processes in the financial sector is considerably more challenging, than it is for example in retail. KYC, and regulations like it, mean that financial institutions must verify their customers’ identities appropriately, and this significantly increases the number of steps in the transaction process, making the online sign up process quite extensive. As a result, customers seeking to open a bank account online find that they are required to provide considerably more sensitive information than they would, say, when shopping online.

Customers of the Now Economy: priceconscious and discerning The factors that lead to customers to abandon the signup process – or that determine what they are prepared to put up with in order to see the process through – vary depending on the customer profile, the type of transaction they are looking to carry out and other, more personal considerations. For example, if customers discover, at the end of the identity verification process, that they are required to visit a post office or a branch of the bank to confirm their verification, the extra effort needed for this is likely to cause millennials – a demanding customer group – to abandon the process. On the other hand, older people are often inherently mistrustful about sharing sensitive information online, and are more likely to abandon a transaction at the first obstacle due to a lack of confidence. The lesson for banks lies in recognising that customers are not simply looking for the best-priced product; they also attach significant value to a signup process that they trust and that offers maximum convenience. Building online trust: authentication by videochat In January 2017, the financial market authority created a way of addressing this problem: it authorised the use of video identification procedures as a valid method of authentication in the financial sector. These semi-automated procedures, which are usually offered in the form of software as a service, significantly enhance cost efficiency while, at the same time, ensuring that customers have a user-friendly experience. The application first provides the customer with a brief and simple explanation of the identification process. Using videochat, a support worker then takes the customer through the various steps in the online procedure. Any questions that arise can be answered immediately. The real-time dialogue with an actual person boosts customer confidence in the process. Plus, the accelerated on-boarding process enables companies to increase their conversion rates. However, to achieve the desired results, the following points should be taken into account when choosing an identification solution: 1. Availability on all end devices Some customers will want to signup on their desktop, others on their phone. Banks

should try to find a solution that supports all devices, as to not alienate any potential customers. 2. Integration capability Switching to a separate app from an unknown service provider for the identification process can make customers hesitant and may result in abandonment. Integrating the solution into the company’s application interface, so that the process continues seamlessly, creates confidence and makes it more likely that the customer will see the process through to the end. 3. Supporting ID documents worldwide More and more people are now spending time abroad. If customers are unable to open an account with a bank because the authentication solution cannot handle their ID documents, customer satisfaction is at risk. If, however, the company can handle such issues quickly and easily, it is likely that customers will turn to the bank for other services in future and even recommend it to colleagues and friends. As customer groups become increasingly international, it is essential for companies to consider a solution that supports all ID documents. 4. Data security Regulatory standards like GDPR require the use of sensitive personal data to be controlled. End customers, too, are increasingly emphasising the importance of being able to request information on how their data is being processed and stored. Transparency and the ability to obtain information about the verification process is becoming increasingly important. Banks should, therefore, ensure that they choose an identification solution that gives them full control of the data collected from their customers. 5. High-quality support High-quality, friendly advice is an important factor in online business. This means that the chosen identification solution needs to offer a variety of language options. Depending on the company and the customer structure, it may also make sense to employ advisors with a knowledge of various languages, possibly including some less common ones. uTFT

Case study: Commerzbank and video legitimation Commerzbank is a leading international commercial bank located in more than 50 countries. Its core market is Germany. Commerzbank operates one of the widest branch networks of all German private banks with approximately 1,050 branches and more than 90 corporate customer advice centres. It looks after more than 16 million private customers and 1 million business and corporate customers. Commerzbank began its transformation with a strong digital strategy at the beginning of 2013. It has since then gradually evolved from the formerly pure branch bank into a powerful and future-oriented multichannel bank. Becoming a Commerzbank customer should be quick and easy for prospective customers, regardless of their location or the time of day. Until April of 2016, prospects were required to post a paper account application form to Commerzbank, even after video ID verification. Since then, however, and working with ID verification provider, IDnow, video legitimation has become the foundation for paperless account opening in realtime. The possibility of being able to open an account immediately and then use the online account straightaway has led to a further marked increase in the acceptance and successful implementation of video ID verification. Above all, video ID verification has significantly improved the conversion ratios from account application to actual opening. Commerzbank has increased its conversion ratio by almost 50% with a simultaneous reduction of ‘unverified’ account applications by more than 20%. By integrating a verification application into their online signup processes, banks can dramatically reduce the amount of customer signup fails. The right verification application will instil trust in the customer and make the on-boarding process smoother, so that both customers and banks can reap the rewards of the online banking process.

December 2018 I 27


FIGHTING FINANCIAL CRIME FOR FINTECH’S ADVANCE Fighting financial crime is TFT’s Wonder Woman this month, GEMMA ROGERS, CEO FINTRAIL. She speaks to Zoya Malik about using regulation in an innovative way to protect fintech startups from financial crime by looking at their risk appetites and implementing control measures to stay the course. ZM: What is FINTRAIL’s objective? GR: FINTRAIL’s objective is to work with our clients across the Fintech sector to ensure they meet regulatory expectations and can effectively manage financial crime risks. We do this by helping clients understand the financial crime and compliance risks they may face and then work with them to deploy proportionate and effective controls. I believe fintechs have an important role in society and present huge opportunities, but with that opportunity comes risk that illicit and bad actors may take advantage of the new technologies and products to further crime – we work with our clients to stop that from happening. Fintechs and challenger banks are unencumbered by legacy systems, data and processes, so can have an advantage over mainstream banks, making it a really exciting area to work in for passionate anti-financial crime professionals. ZM: How are you advising fintech clients? GR: We are a consultancy offering expertise on antifinancial crime compliance controls to fintech companies. Our approach with our clients is based on four pillars, Build, Scale, Assure and Solve. In terms of Build we look at what financial crime risks a company may face and ensure they have the right controls to manage them. In terms of Scale, we look at how new products or expansion plans may impact a client and also how controls can and should be scaled as they grow, providing additional capacity and support where and when our clients need it. With reference to Assure, this pertains to more mature fintechs where they require a 3rd party such as ourselves to test their systems and controls and determine that procedures align with regulatory compliance. In terms of Solve, we may come in where a firm has had a bad audit report or may have incidents of internal fraud. We help investigate these issues and advise on how to prevent them recurring in the future. ZM: What is critical for fintechs in terms of setting up crime and fraud prevention controls? GR: So, one of the main elements we focus on with our clients is the risk assessment: what this entails is a fintech truly understanding what specific financial crime risks they are exposed to. What they are then able to do is focus the controls and preventative measures they apply on the risks that are most significant or where they have most exposure. This enables the fintechs to take a proportionate, risk-based but yet customer-friendly approach to how they fight financial crime, which can evolve as they grow their product offerings and business models. We also think it is vital that the industry benefits from collective learning and works together to fight back against the financial criminals. That is why we set up the FinTech Fincrime Exchange (FFE), a free members’ forum where we discuss best practices for fintechs, as well as the various permutations, or typologies, of what exactly financial

28 I December 2018

crime can look like. Sharing information of this sort also strengthens the Fintech community’s stance against financial crime, ensuring that this sector plays its part in the global fight against financial crime, something that we are really passionate about at FINTRAIL. ZM: How are you advising clients on crypto assets crime prevention? GR: We are really excited to be working in the cryptocurrency space. There is a lot written about cryptocurrencies and their utility in financial crime schemes, and while there are risks, there are effective ways to mitigate these, just as there are in other asset classes. When it comes into force, the Fifth Anti-Money Laundering Directive (5AMLD) will bring EU crypto exchanges and custodial wallets under the scope of ‘obliged entities’ for AML purposes. I believe this, and other recent regulatory developments is a really encouraging step forward, bringing crypto-assets into the mainstream and that the (hopefully proportionate) regulation will drive wider adoption and increase trust across all parties. Regulators want to see companies building controls according to their risk profile and this is precisely what they will want to see crypto related companies do. We are excited to be working with firms who are not only developing hugely innovative products and solutions but also taking a proactive approach to their financial crime risk mitigation strategies. ZM: What will be new in terms of financial crime regulations and FINTRAIL’s business in 2019? GR: We have recently expanded our business to the USA so we can offer fintech clients on both sides of the Atlantic access to specialist support, especially as companies are looking to expand and scale internationally. We will also be rolling out our services to Asia, in the early part of 2019. Next year, Brexit will likely have an interesting impact on the Fintech sector across the UK and wider EU. As such, we anticipate that FINTRAIL’s activities next year will include some advisory work for clients who are looking at how Brexit may impact their business and the changes in financial crime risk and compliance that may bring. In the EU we are also excitedly awaiting implementation of the 5AMLD, which is in my view a welcome and positive sign that regulators are aiming to keep pace with the rapid technology developments that we are seeing among fintech and more traditional banking players. Finally, we are going to be continuing the roll-out of the FFE network across the global fintech hubs in US, Asia and Europe to further expand the network of fintech financial crime professionals who are taking the fight to the criminals. ZM: What has led your career to financial crime prevention? GR: Having studied Russian and German at university, I started my career in national security in the UK, before moving into banking and realising that there was a huge crossover between the analytical skills required in government, and the skills needed to fight financial crime; when organisations are taking an ever more proactive stance against financial crime, and the need to be on the front foot to predict criminals’ behaviour is paramount having the ability to examine large amounts of data and set those findings into context is crucial. Also, being able to understand the level of threat that criminals and crime types pose to different organisations is crucial when building

Gemma Rogers out proportionate controls, and a prior career in national security was incredibly useful in that regard. ZM: Do you think there is a lack of women entering this part of the industry? If so, why? What can bring them into the industry? GR: I think the field is levelling out in anti-financial, largely because it’s such an interesting area to work in. Plus the opportunities for progression are great, particularly in the Fintech sector where companies are taking their responsibilities around anti-financial crime seriously and as such the subject is getting a good amount of board and senior management attention. Of course, more can always be done to encourage women to take up this career path: the Fintech Fincrime Exchange - a specialist industry forum for Fintechs to share and collaborate on financial crime issues - is proud to have signed up to the FinTech Parity Pledge to ensure we continue to have parity in our speakers; we already have an almost 50/50 split between male and female speakers, but we’re keen to do our bit to encourage this and promote diversity in FinTech. ZM: What are your personal goals? GR: Firstly, to ensure my colleagues and I at FINTRAIL are achieving our full potential whether that’s through having the right opportunities or through constructive, mutual feedback, and secondly that the Fintech community is equipped with the right skills and knowledge to fight financial crime effectively and efficiently. Tha was the goal behind the Fintech Fincrime Exchange Conference, that took place on 27 November 2018 where we aimed to provide some insightful content that disrupts traditional thinking around how to manage financial crime risks, and offered some practical skills-based sessions to add value to the ways in which Fintechs investigate and analyse financial crime issues. ZM: Any concluding thoughts? GR: Most importantly, we are passionate about fighting financial crime and the hugely negative impact it can have on society, customers and companies. We like to think we can have a positive impact through our work with the inspirational teams and clients we work with in the fintech sector. We won’t solve financial crime overnight but if we all work together we can start to make a difference, building trust with customers, stakeholders and regulators at the same time. uTFT

December 2018 I 29


Startups and ideas to change the world ANDRIY CHYRVA




Founder & CEO Mr.Booster

Founder LQID

CEO Spreedly

Co-founder and CEO MoneyFarm


e make a system that enables small and medium-sized stores in e-commerce to promote sales using AI. Powerful as Amazon and affordable for everyone. Our major challenge is to use limited budget to compete with GAFA on AI and DS. When we researched all the popular recommendation systems, we have realised that only large e-commerce companies were able to build really effective solutions. For example: one wants to go to the ski resort and needs to buy some new skis. What is wise to recommend to him is also to buy some boots and a helmet. In traditional e-commerce, one would be suggested a different pair of skis or a ski with a discount. How often do people buy skis for later use? And you can find many examples like this, almost in every online retail store. We tried to gather all the examples of such illogical recommendations and as a result created our own system that predicts the use behaviour and helps the merchants to sell their products in a logical and smart way. We have been providing data science (DS) expertise in our native country for over 3 years and we see that our own data science IT-school and all our efforts for businesses have paid off. For example, we help cut marketing budgets with the help of predicting customer churn or using A / B testing to select the most effective marketing tools. Many customers wonder how it is possible with the help of sentiment analysis to find out what their users in general, not only individuals think about their service or products, and we provide them with this possibility by embedding in the product, a chart of user satisfaction. And such requests become more and more frequently. People start to believe that there is a science capable of speaking the language of business. •

30 I December 2018


QID is positioning as a challenger bank. We believe there needs to be a better balance between technology and the human experience. People are moving forward digitally faster than the businesses that support them. It’s ironic, people love technology and are more digitally connected than ever before, but feel increasingly isolated. At LQID we see an opportunity for a socially connected economy that is driven by entrepreneurs and small to medium-sized business and the mass market consumer. In fact, these groups are one and the same. LQID can help entrepreneurs start and grow their own small business, and help people improve how they manage their money and build a better relationship with their bank. At the heart of all of this is creating a better human experience – an experience that embraces the convenience and speed of technology, with the reassurance and peace of mind of being able to speak to a real person when they need. People really value that. One of the major hurdles, which we are now very close to overcoming, has been achieving regulatory approval to operate as a bank. We chose to launch in the UK because of how well-respected its regulators are so it’s a challenge we were expecting, and we’re now very keen to start launching our products. We think digital-only challenger banks are great for some people, but haven’t managed to reach the majority of consumers. We want to bring the benefits of new technology to a wider market by retaining all the usual ways of contacting your bank. Widespread bank branch closures across the UK have left some communities without easy access to a local bank. We think our approach to digital branches can help to keep banking grounded in communities, while updating it with new technologies. Our impact will be tested as we start launching products. We’ve carried out research into what people think about banking and what they want from their bank to make sure we improve their experience. People have told us they need better service across the board, want to access their bank at a time and place to suit them, and need banks that can help them to improve their finances. We believe that using our proposition will help some people move out of the overdraft trap and others kick-start a new business opportunity. •


ast-growing, innovative commerce services win by providing a great customer experience. And a key part of delighting customers is to provide a compelling, frictionless, payments experience. These innovators grow via new markets, offers, partners, acquisitions, and new business models. But this innovation and growth strains their traditional, siloed payments infrastructure — compromising customer experience. These innovators can’t wait for their payment infrastructure to catch up. Their innovation demands more flexibility than a single payment provider or endpoint can provide. That’s where Spreedly comes in. We give innovators flexibility via a powerful payments infrastructure. Businesses can secure card data in our PCI compliant vault, and use tokenised card data to transact with hundreds of payment gateways and endpoints around the world. All through a single API. These innovative, commerce services are providing a really simple, repeatable front- end experience to their users, and using Spreedly to hide and manage all the complex routing that’s going on underneath the covers. We offer the foundation for businesses to build innovations that drive revenue — and deliver compelling customer experiences. And we’re growing incredibly fast too — processing over $10 billion in transactions per year. The first major business challenge is awareness. We’re providing a horizontal solution offering in a world of vertically integrated payment stacks. Making fast growing commerce companies aware that we’re out there, is a huge part of our challenge. We’ve actually had customers refuse to do a case study for us as, “we don’t want our competitors finding out you exist!” The second major challenge is keeping up with our customers. If you target fast moving commerce companies, they expect you to understand their DNA and expect you can move quickly with them. There are incredible revenue opportunities for these companies – but their needs for flexibility in their payments infrastructure hinders their growth. That business challenge is the opportunity for Spreedly – to provide a powerful payments infrastructure that meets the needs of these innovators. We’re proud that SeatGeek, Pushpay, Cabify and hundreds of other fast-growth companies depend on Spreedly to help drive online commerce. •


oneyfarm is a digital wealth manager that uses innovative technology and years of investment wisdom to provide cost-efficient investment advice to help consumers make better decisions with their money and reach their financial goals. Regulated to give investment advice on its fully-managed personal pension and stocks and shares ISA, Moneyfarm is committed to matching its customers to an investment portfolio suited to their long-term goals and risk appetite. Moneyfarm uses technology to provide this investment advice to those that have previously been excluded from traditional wealth management. This gives people the freedom and financial confidence to focus on the important things today, whether that’s spending time with loved ones, playing with the kids, or teaching the grandchildren how to garden. Uncertainty around Brexit has impacted consumer confidence and Moneyfarm has seen investors thinking more carefully about how they can get the best returns. Moneyfarm’s portfolio managers have been adjusting the portfolios over time to limit the downside and capture as much upside as possible in the final outcome. Moneyfarm remains optimistic, recognising the UK’s rich talent pool and status as the largest financial services hub in the world. However, a no-deal Brexit scenario could have significant consequences. In which case, the company has contingency plans scoped out. Gone are the days where you need £1 million to invest before you’re able to access any advice on the best way to invest. Moneyfarm is committed to providing quality investment advice, so all families can be empowered to make their money work harder for a more financially secure future. Moneyfarm’s investment model gives personal investors the knowledge and financial confidence to make the most out of their hard-earned savings. •


30 November CryptoCompare & MJAC London Blockchain Summit, London The MJAC & CryptoCompare London Blockchain Summit will take place on Friday, November 30th at Old Billingsgate, London. The event will host pioneers, innovators and thought leaders of the blockchain industry alongside an exhibition of eminent and emerging companies that are making waves in the sector. Those already confirmed for the show include: Circle, Coinfloor, NKB Group, Ripple, Coinbase, BlockEx and Cumberland. mjac.io/

4 & 5 December Regtech Rising, The Crystal , London Discover which new technologies will really be game changers for regtech and understand how developing common standards will be critical for scaling regtech solutions. Experts will reveal how they are harnessing AI, machine learning, distributed ledger technology and common standards to transform regtech. finance.knect365.com/finovatefall

5 & 6 December Fintech Connect, London Fintech Connect is the UK’s biggest fintech trade show. Taking place 5 – 6 December at ExCeL London, FinTech Connect is on its way to delivering over 5000 attendees with 175+ exhibitors and 250+ speakers. What’s more there will be 6 dedicated conferences: • Accelerating Digital Transformation • Reimagining IT Infrastructure • InsurTech Evolution • Powering Merchant PayTech • RegTech & Security Insights • Fast Growth Founders Forum DISCOUNT CODE FT15 www.fintechconnect.com

12 & 13 December AI & Big Data for Banking Summit: Smarter, Faster, Better Banking, London. With technological advancements and a greater amount of readilyavailable data changing the banking industry every day, hear how forward-thinking service providers and leading organisations are aligning to drive success. Key themes this year include Qualitative Analytics that will alleviate risks and optimise forecasts on customer intelligence. Leveraging Big Data while adhering to compliance requirements and security standards, using analytics to prevent cyberattacks and uphold cyber-security, banking technology and digital currencies to continuously transform your organisation by using data and insights to connect with their clients. This event is the part of DATAx New York festival. Registering for any of the summits will give you full access to all five. www.theinnovationenterprise.com/summits/big-data-analytics-forbanking-summit-new-york-2018

29 & 30 January 2019 Paris Fintech Forum 2019 Following the huge success of 2017 edition, Paris Fintech Forum 2018 had surpassed all our expectations: organised by Altéir with the support of 60+ international partners last January, we gathered 2,600+ attendees from 72 countries over 2 days in the heart of Paris, to listen to 240+ CEOs from banks, insurance companies, telcos, regulators and fintechs from all continents. Over 150 fintech CEOs from all over the world were both on panels, were interviewed and participated as panellists on stage dedicated to pitches and showcases. Most of attending Fintechs were exhibitors in one of our 100+ Fintech pods.

Five Book’s To Get Ahead: Sleep By Jake Courage, co-founder of the edtech company 42courses.com and avid reader, author & car fanatic Do you feel like you have had enough sleep in the last week? If you’re anything like most of us, the answer is probably no. Indeed, according to the UK Sleep Council, we are getting one to two hours less sleep today compared to the 1950s. How has it got this bad? And why do we seem to live in a culture that sees sleep as the enemy?

Whether we like it or not, sleep is non-negotiable and the consequences of not getting enough sleep can be serious. The good news is that attitudes appear to be changing in favour of making it a priority rather than a luxury. Below are five good books to get you started on the fascinating world of slumber.

The Sleep Revolution: Transforming Your Life, One Night at a Time by Arianna Huffington This book is written from the heart. The author became inspired to write it after a 2007 burnout as she was building her online news empire The Huffington Post. After many months with next to no sleep, things eventually caught up with her. She suffered a serious fall breaking her cheek bone. It was the wake-up call that spurred her mission to encourage us all to urgently reconnect with sleep. The book is packed full of quotes, science and helpful summaries of other’s work. It’s written mostly from an American perspective but there are references to the state of sleep around the world. Encouragingly, she makes the case that we have a better understanding of sleep than ever before and that’s allowing us to properly challenge the foolish ‘sleep is for wimps’ work ethic.

Sleep: Change the way you sleep with this 90 minute read by Richard Littlehales Littlehales is a former sales and marketing director for Slumberland, the largest sleeping comfort group. A chance encounter took his career in a different direction and he ended up becoming a sleep coach for some of the world’s most elite athletes. The author’s CV makes for impressive reading as he counts Olympians, the football superstar Cristiano Ronaldo and the Tour De France winning Sky cycling team amongst his former clients. The book is organised around his ‘R90 Sleep Recovery Program’ based on the fact that our sleep cycles naturally occur in 90 minute periods. At times, it feels like a bit of a sales pitch for his products. Nonetheless, it is likely to be of particular value to those practising sport at a high level. It might, though, fall short for those that don’t.

The Sleep Book: How to Sleep Well Every Night by Dr. Guy Meadows The focus of this book is the serious sleep disorder that affects many people around the world: insomnia. Dr. Meadows runs a 5-week programme at the aptly named ‘Sleep School’ to help his clients with this particularly pernicious condition. He explains that mindfulness and awareness are an important part of the solution and that many of the strategies we practice to combat sleeplessness can end up generating their own anxieties. It’s a touch light on the science of sleep and perhaps isn’t so beneficial for a more general audience. It is, however, likely to be a helpful and practical guide for those who are suffering from this unfortunate sleep disorder.

Night School: The Life-Changing Science of Sleep by Richard Wiseman Wiseman is a great storyteller and this book is packed full of interesting science that busts some of the common myths about sleep. Like the other authors, he makes it clear that despite the advances in science in the last couple of decades, there are still many things we don’t understand about sleep. Importantly, the author shares studies that show how even a small lack of sleep can have a detrimental effect on both your health and happiness. There are also questionnaires throughout the book making it both a practical and informative guide.

Why We Sleep: The New Science of Sleep and Dreams by Matthew Walker


Walker is a professor of neuroscience and psychology at the University of California, Berkeley. His scientific know-how comes through clearly in this international bestseller. It’s not hard to see why as it shares many fascinating insights as to what happens when we don’t get enough shuteye. For example, did you know that not getting enough sleep increases sweet and salty cravings by 30-40%? Or that an afternoon nap increases our learning capacity by 15-20%? Overall, this is a very valuable book. If you only have time to read one of the five then pick this one.

To see the full list of upcoming events in London and around the world, visit thefintechtimes.com/fintech-events/

Can’t wait for the books to arrive? Then try an online master class in Fintech, Behavioural Economics, Problem Solving, Happiness and many more. Head to the website and click on a course title. The Fintech Times readers get 25% off with the code ‘FintechTimes25’. Have you enjoyed other books on AI? Please get in touch via jake@42courses.com December 2018 I 31


Suvretta House St. Moritz, Switzerland


January 16-18 2019

Three days filled with insightful keynotes, interesting discussions and exciting networking activities – surrounded by majestic mountains and glistening snow. Crypto Funds – VCs – Angel Investors – Family Offices – Funds – Institutional Investors www.crypto-finance-conference.com

32 I December 2018

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The Fintech Times - Edition 24  

SmartStream Technologies is blazing a trail with a number of future forward activities within the fintech industry. From the growth of its R...

The Fintech Times - Edition 24  

SmartStream Technologies is blazing a trail with a number of future forward activities within the fintech industry. From the growth of its R...

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