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#27 | APRIL 2019 THE WORLD'S FINTECH NEWSPAPER
Vendorcom Europe Future of Payments Conference Industry and regulatory hot topics explored
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Top 100 Women in Fintech
Lattice80 in collaboration with Miss Kaya highlights female fintech founders working in diverse and innovative fields
Safeguarding payments security for the travel industry
THE FAULT IN OUR STARS
CEO Interview The New Home For Digitised Assets Scott Davies, CEO, Torca solves 3 major pain points in tokenisation page 10
SmartStream’s search for hybrid talent CEO Haytham Kaddoura discusses ways in which SmartStream is scouting and developing talent to meet industry demands page 21
Digital Securities Crossing The Chasm CEO Jeff Sweeney advises the market to look towards the next phase in High Value Assets when weighing up risk page 18
Fintech for Schools Initiative Innovate Finance’s CEO and member partners discuss the importance of teaching digital skills at school level and the mentoring programme
Picture credit left: Unsplash, concept Somari van der Westhuizen
Biometric verification technology and advances in AI play a critical role in detecting imperfect human behaviour patterns that impact payment fraud
People Making the World a Better Place Five women founders tell of the inspiration behind their companies and the passion that drives them page 24
Read online at: thefintechtimes.com
FINTECH NEWS AND UPDATES
THE FIN TECH TIMES
PRINCIPLES • To deliver fintech opportunities and solutions to mainstream audiences • To identify social, economic, political, and cultural trends • To bring stakeholders together to develop solutions • To connect the elements of the fintech ecosystem
Apple Card Gets By With A Little Help from Its Friends (Goldman Sachs, Mastercard and Oprah!)
Published by Disrupts Media Limited 40 Islington High St, London N1 8EQ thefintechtimes.com
Matthew Dove, Digital Editor
email@example.com Apple has launched “a new kind of credit card” today in close association with Mastercard and Goldman Sachs. The Apple Card, available this summer, has arrived with spirited fanfare which coincides with the starry introduction of Apple TV+, a streaming service closely associated with Hulu and HBO. Besides the bells, whistles and celeb cameos what are these products actually offering? Well, it’s a little hard to tell… Apple TV+ was unveiled by Steven Spielberg, who’ll be creating content for the new platform, and will launch in the autumn. A raft of other big names - Reese Witherspoon, Steve Carell, Jason Momoa and Big Bird (I kid you not) - showed up to the launch in exchange for big cheques and small canapés. The only truly noteworthy takeaways from the launch were omissions; Netflix will play no part in the cross-device venture and no subscription fee was specified. Apple TV+ will live or die on the quality of its content then and competition is fierce. What of the credit card? Again, the water is murky. Apple Card is perhaps more accurately described as Goldmans Sachs’ first credit card as the legacy
giant, along with Mastercard, is doing all the heavy lifting when it comes to the fintech. The partnership certainly makes for eyecatching headlines but details of the offering remain unclear. For instance, no mention has yet been made as to what credit limits or interest rates will be. To compete in such a crowded market, Apple Card will need to stand out and it certainly does that. I mean, have you seen the card? It’s sooo cool! Cool card, Marissa... Unfortunately, Apple Card’s appeal may prove to be as thin as the titanium it’s made from if industry insiders are to be believed. Despite Apple CEO Tim “Apple” Cook boldly declaring that the card’s arrival was the sector’s biggest leap forward “in 50 years”, Kevin Morrison of Aite Group disagrees. The senior analyst told the FT that Apple Card isn’t offering any features not presently available from other providers; “They’re integrating all of the one-offs that are already out there” Before adding that consumers, “already have four other cards in their wallets. You still have to compete with Citibank, Chase and the rest.”
We quiz CEO and Co-Founder Nikolaus Suehr of KASKO Ltd on the world’s coolest, not to mention hardest (it’s made from titanium don’tcha know?), credit card... Do you see the partnership of Apple, Goldman Sachs and Mastercard as a sign of things to come? What does such a union signify? It certainly signifies the age of corporate ecosystems, it’s interesting that Apple doesn’t pretend to control the entire value chain but shouts about a partnership with a best-inclass provider. In terms of consumer brands breaching into financial services (payment, credit, insurance), we will see two main partnership plays happening. • Large international corporates banding together for international footprint (as is the case here) • Selection of national networks of best-inclass services provided by both corporates or consumer facing fintechs In both cases, enabling fintechs and tech providers will glue the ecosystems together.
2 I April 2019
Does the partnership spell trouble for the smaller fintechs? Potentially, unless smaller fintechs enable large corporations to deliver technical capabilities into these types of partnerships or even own-branded services in the long run. At KASKO, over on the InsurTech side of life, we were just that, a smaller firm going it alone until we realised our core product strength, now we work with some of the largest insurers on the planet, adding startup speed to their well-established networks. As big tech moves ever closer to big finance, what measures if any, should governments be taking? Governments need to ensure that big tech adheres to local financial regulation. Customer data for offering free advertisementfunded digital services is one thing, but
One big plus could be Apple Card’s 2 per cent cash back on all purchases and no annual, late or other fees. Brian Riley, an analyst at Mercator Advisory, asserts that this selling point is “rare but not unique.” He also pours cold water on the card’s daily cash back feature, calling it “neat” but lacking any real value. Riley notes that a credit card account running charges of 20,000 USD a year, would accrue daily rewards worth roughly 1 USD. Thin gruel indeed! Riley concludes by asking, “What’s going to compel me to apply for that Apple card?” Whether the Apple Card bears fruit is anyone’s guess but only a fool would write off the tech juggernaut’s latest effort, as Ms Winfrey herself put it, “They’re in a billion pockets, y’all!” Apple have got plenty of form for “bringing together innovations first developed by others” i.e. getting money for old rope. Furthermore, an association with Goldman Sachs - whose presence is goliath and relationship with the US Treasury Department is “cordial” - will do the Apple Card’s prospects no harm at all... uTFT
Managing Editor: Zoya Malik
Digital Editor: Matthew Dove
Associate Editor: Kate Goldfinch
Content & Marketing Associate: Charley Brooke Barnett
Somari van der Westhuizen
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COMMENT Copyright The Fintech Times 2019. Reproduction of the contents in any manner is not permitted without the publisher's prior consent. "The Fintech Times" and "Fintech Times" are registered UK trademarks of Disrupts Media Limited.
Connect with us destabilising and monopolising finance and insurance services (without which commerce and the economy doesn’t function), is another. Especially given the reputation of US-based tech giants and their history of limited corporate citizenship, for example, governments need to be careful about enabling local jobs and services to continue to work whilst allowing a new financial future for its citizens.uTFT
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COVER STORY: PAYMENT FRAUD THE FIN TECH TIMES
from page 1
THE FAULT IN OUR STARS -
ZOYA MALIK Managing Editor
In the finance sector’s hunt to improve ways to combat the scourge of payment fraud, biometric verification technology is coming to the fore and being adopted by banks, especially when it comes to card fraud. Artificial Intelligence, often touted as the next major evolutionary step in technological advancement, will also play a key role in the development and deployment of crucial tools to help gather customer behaviour data for the banking industry to deliver safe, secure and meaningful services to their customers. ZOYA MALIK, managing editor TFT speaks to biometrics, cards and payment experts to discuss trends in averting payment fraud
The status quo Financial institutions are routinely subjected to the costly consequences of card and payment fraud. With fraudsters inflicting both financial and logistical damage upon these organisations, the challenge of clearing up the mess that’s left behind can be highly alarming and significantly costly. UK Finance reports that in the first half of 2018, fraud losses on just debit, credit, charge and ATM cards alone issued in the UK, totalled an astonishing £281.2 million. Such is the gravity of the issue. In fact, there were 1,036,367 cases of unauthorised financial fraud across payment cards, remote banking and cheques during January to June 2018, a rise of 10% compared with the year before, which highlights just how serious and urgent this problem really is. The picture is even more
PUNEET TANEJA, EVP at Teleperformance Digital Integrated Business Services (TP DIBS)
COMBATTING PAYMENT FRAUD
have no real option but to stop the fraudsters. The obvious question is, how? Financial institutions currently bear much of the impact of card fraud, and in response are investing heavily in machine learning, predictive analytics and other cuttingedge technologies to beat the criminals. These are having some effect; in 2017, fraud losses on payment cards fell somewhat, which contrasts with 2016, but even so there was still £566 million lost to payment card fraud alone and seven pence in every £100 spent was fraudulent, a very worrying statistic in a society that is rapidly increasing its reliance on cards. In other words, payment card fraud has been a huge problem for a sustained period of time and the steps currently being taken to stop it, are not effective enough. In a society that, increasingly, relies on technology, payment cards are the weak link; or rather, the behaviour of the people who own and use payment cards are the weaker link. It is human nature to make the mundane administration of life easier, but we all know how dangerous writing down your PIN can be because you
alarming when you look at the overall figures covering other areas of the payments industry but to understand the numbers, you have to be aware of a ludicrous distinction made by the finance industry between “authorised” and “unauthorised” fraud. The UK Finance report, Fraud The Facts 2019, defines an “authorised fraud” as an “authorised push payment fraudulent transaction where the genuine customer themselves processes a payment to another account which is controlled by a criminal.” An “unauthorised fraud” is “a transaction where the account holder does not provide authorisation for the payment to proceed and the transaction is carried out by a third party.” Taken within that context, unauthorised financial fraud losses across payment cards, remote banking and cheques totalled £844.8 million in 2018, an increase of 16% compared to
DAVE ORME SVP, IDEX Biometrics
2017. Banks and card companies prevented £1.66 billion in unauthorised fraud in 2018. According to UK Finance, this represents incidents that were detected and prevented by firms and is equivalent to £2 in every £3 of attempted fraud being stopped. In addition to this, in 2018 UK Finance members reported 84,624 incidents of authorised push payment scams with gross losses of £354.3 million. However fraud happens, the threats to the efficiency and security of the banking system manifest themselves every day as institutions are subjected to the costly consequences. The damage can be pervasive within an organisation and, naturally, affects the customer as well. Dave Orme, SVP at IDEX Biometrics, gets to the heart of
the matter, “How would you react if you saw a transaction that you know you hadn’t made, show up on your payment history? Aside from an initial sense of dread, cardholders are forced to take time away from their lives to report stolen cards, cancel cards and wait for new ones. No matter who you are, payment card fraud can be a serious problem.”
The fault in our stars? There is no single reason for these figures; impersonation and deception scams, as well as data breaches, have all played their part. But the UK is becoming an increasingly cashless state with debit card payments having overtaken cash payments for the first time recently, so institutions
How would you react if you saw a transaction that you know you hadn’t made, show up on your payment history? - David Orme
April 2019 I 3
COVER STORY: PAYMENTS FRAUD THE FIN TECH TIMES
THE FAULT IN OUR STARS
from page 3
keep forgetting it (and worse still, keeping the card and the PIN together.) Many people are also guilty of sharing their PIN and card with their friend/ partner/relative to enable transactions without the need to be present. Others give out cards and PINs to trusted people because they are elderly or have mobility problems and getting the necessities of life is so much easier that way. All these behaviours are very common but they are also making card crime very easy. Orme suggests that people fail to keep their PINs or other card details safe not because they are inherently foolish or lazy, but because PINs are simply unfit for purpose. To be effective they demand a far higher standard of discipline and security from human nature than human nature is ever likely to produce. The result is a massive headache for individuals, financial institutions and businesses all over the world. But if not PINs, then what?
Biometric breakthroughs! Biometrics, including fingerprint recognition, is a field increasingly recognised as holding the key to card fraud prevention and while financial services firms may now be looking at large-scale use of biometrics, in other securityconscious sectors this has already happened. For example, many smartphones, which are themselves fast becoming the twenty-first century replacement for the wallet, are protected via fingerprint authentication. Passports are also routinely
If customers view banks as being up to date on the relevant technologies to keep on top of inbound fraud, reputational equity builds and so too does customer satisfaction. - Puneet Taneja 4 I April 2019
issued with biometric authentication built in, as are government ID cards. Biometrics are used where security is nonnegotiable. Orme explains that, “Until recently, including biometric authentication in a payment card was very difficult. This is because it required a sensor to be incorporated in the card and for many years those sensors were too large and inflexible to make that viable. However, there have been breakthroughs in this technology recently and we are now able to deliver a very thin, flexible fingerprint sensor that is easy to add to a standard card, so the major barrier to using biometrics with payment cards has now been overcome.” In the pursuit of mass market adoption, biometrics companies are now working to make biometric authentication affordable, practical and available for payment card users and issuers. With biometric companies already partnering with banks, financial institutions, payment processing firms and smartphone manufacturers, biometric smart card payments will soon be a reality for all. Through the arrival of this advancement, financial and security businesses, are given a far stronger barrier of defence against payment fraud. As if on cue, NatWest Bank have just announced that they are launching a biometric payments card pilot with about 200 customers. As part of the trial, these customers will use biometric fingerprint data to verify transactions over £30, increasing security and making it easier for customers when paying for goods or services at the tills as no PIN is required. David Crawford,
HARDIK SHAH Group Head of Product at Currencies Direct
Head of Effortless Payments at NatWest said, “We are using the very latest technology across our business to make banking easier for our customers and biometric fingerprint cards are one of the many technologies we are exploring further. This is the biggest development in card technology in recent years.” NatWest is working closely with digital security company Gemalto along with Visa and MasterCard to bring the service to customers in the UK. Howard Berg, UK MD of Gemalto said, “Using a fingerprint rather than a PIN code to authorise transactions has many advantages, primarily enhanced security and greater convenience. Cardholders can pay quickly and easily with just a simple touch, and they no longer need to worry about the limit on contactless payment transactions.”
What about AI? Traditionally, there has been an emphasis, not just in banking but in many industries, on having large customer support teams providing face-to-face service to their clients with even bigger teams, in the background, working out customer needs and the products/services required to satisfy that demand. All of that costs money and, in itself, presents management challenges. This modus operandi had modulated slightly with the advent of Fintech products but it is the advancements in AI which are actually allowing both banks and Fintechs to significantly reduce their costs for dealing
HOWARD BERG UK MD, Gemalto
with their customers whilst still providing personalised and dedicated support. As Hardik Shah, Group Head of Product at Currencies Direct puts it, “When it comes to customer engagement and retention, conventional wisdom emphasises the need for a ‘personal touch’ when addressing consumer needs. Fortunately, AI has the potential to both help streamline customer interactions and to sift through customer data in a far more efficient manner, allowing firms to more easily tailor their promotions and the consumer journey.” The run-on effect is that AI can be adapted to spot fraudulent transactions. Companies like Currencies Direct, who maintain a payments platform utilised by a number of banks for providing online local and international payments facilities for their customers, are also relying, increasingly, on the use of AI to aid in fraud detection and prevention. Shah explains the philosophy behind the growing reliance on AI, “As machine learning comes into its own, AI is fast becoming the cornerstone of the financial industry’s fight against fraud and is already being used for anomaly detection throughout the sector. It’s the ability of AI to quickly and efficiently process large volumes of data that has elevated it to the holy grail of fraud protection and prevention, with AI able to pin-point malicious trends and adapt to new data far faster than any human”. He continued, “Ultimately and as pertaining to payments, CNNs (Convolutional Neural Networks) can help drive machines into determining fraud intent and customer
COVER STORY: PAYMENTS FRAUD THE FIN TECH TIMES
profiling, again effectively allowing the system to intercept the fraudsters. These models are able to process equally complex data sources encompassing the qualitative, as well as the purely quantitative. When combined with the benefits of speed and efficiency, this makes AI an increasingly formidable force in the fight against fraud.” Puneet Taneja, EVP at Teleperformance Digital Integrated Business Services (TP DIBS), offers an additional perspective stating, “The rise of cybercrime has led to a new generation of fraudsters using technology to come up with new and innovative ways to steal hundreds of millions of pounds from customers, all while remaining undetected. Overcoming fraudulent losses has the natural flow-on effect of boosting customer satisfaction, one of the key factors to banks’ long term financial health. If customers view banks as being up to date on the relevant technologies to keep on top of inbound fraud, reputational equity builds and so too does customer satisfaction. This relies on banks being able to tackle the issue of fraudulent transactions in real time, in a proactive manner, rather than taking a reactive approach.”
accomplished through digital profiling, which examined customer data available from an existing information source, alongside determining how data can be stored and changed. Encouragingly, Taneja adds, “While it is all well and good to harness the power of existing technologies and data analytics to spot irregular data patterns to highlight suspicious transactions, this is only half the story. Employing a greater number of customer service agents who can aid in the risk management process can similarly help banks pre-empt fraud and treat the causes of financial loss, as opposed to the symptoms.” This is a familiar sentiment with other industry experts agreeing that the “human touch” should not be forsaken. While there are clearly many opportunities for fintech firms to leverage AI to improve efficiency, security and customer service,
they should also be aware of the development needs. Shah adds, “First of all, most AIs have a very narrow focus, excelling at a single task but unable to deviate, resulting in a large investment in a resource that cannot easily be diverted to different areas of the business. On top of this, financial firms must be vigilant in regards to the quality of data inputted into systems, this may require the investment of significant time and effort to prevent the risk of rogue data distorting the algorithms. But, potentially, the greatest challenge is how to solve the question of liability should something go wrong. AI is far from infallible and still requires human input at various stages, such as the validation of critical activities, so we won’t be moving to a fully automated world anytime soon.” The International Data Corporation (IDC) predicts the world will be creating up to 163 zettabytes of data a year
by 2025 necessitating greater incorporation of intelligent algorithms in day-to-day life and as AIs become increasingly affordable to develop, deploy and manage, we are likely to see more widespread use in the fight against crime. According to Gartner, by 2020 chatbots will be handling no less than 85 per cent of all customer service interactions. This necessarily means that chatbot technology algorithms will become more sophisticated to measure sentiment, mood and customer behaviour as a way to track customer interactions and to prevent fraud throughout the end-to-end process of the digital customer journey. uTFT
The IDC predicts the world will be creating up to 163 zettabytes of data a year by 2025 necessitating greater incorporation of intelligent algorithms in day-to-day life
What is the next waypoint on this technological journey? The results, thus far, are encouraging. TP DIBS claim that their work with a leading bank has seen a 50% reduction in anti-money laundering alerts and a 98% increase in fraud detection – good news for risk management. This was
DAVID CRAWFORD Head of Effortless Payments, NatWest
April 2019 I 5
PAYMENTS CONFERENCE THE FIN TECH TIMES
Mo Paytech, Mo Problems at the Vendorcom Europe Future of Payments Conference MATTHEW DOVE Digital Editor
CHARLEY BROOKE BARNETT Content & Marketing Associate
A veritable who’s who of payments tech turned out for March 5th’s Vendorcom conference in Marylebone, London. Compered by Vendorcom’s chairman and TFT columnist Paul Rodgers, the day saw presentations and panels featuring delegates from all areas of the sector. Legacy providers and fintechs shared the stage with hoteliers and outsourcing professionals which leant the occasion a holistic feel often missing from similar meet-ups. Whilst the Chatham House rule was invoked by a number of speakers, discourse flowed freely in a room clearly concerned with the pressing need for cross-sector collaboration in the payments industry. Even Rodgers’ opening words were less an introduction to the day’s agenda and more a call to
Some commentators are arguing that the speed with which challenger banks and fintechs have taken the payments world by storm could now prove to be their undoing.
6 I April 2019
arms, his sentiments echoing throughout proceedings. Urging delegates not to allow insights gained at the conference to be squirrelled away but rather broadly communicated for the mutual benefit of the sector, Rodgers implored, “Do take the message beyond these four walls because it’s important that, whilst we can get the benefit of all of this stuff, there’s a lot of people out there across the industry that need to hear some of the things that we’re going to hear today” The other sentiment echoing around the auditorium at the Cavendish Conference Centre was one of slight foreboding in light of the impending issuance of FCA payments regulatory technical standards. The proposed standards, which will come into effect in the event of a no-deal Brexit and centre on “strong customer authentication and common and secure open standards of communication”, were described by Rodgers as an “economy damaging Sword of Damocles.” Good job then, thata regulator was in attendance to allay any uncertainty as to what would be expected of payments service providers when the standards come into force later in the year. However, such assurances would have to wait as the day’s first keynote fell to Julian Sawyer, Head of Banking Services at Starling. Sawyer’s remarks acquired considerable topicality given the pickle one of Starling’s main rivals, Revolut, has been getting into of late. Not only has Revolut inspired the chagrin of former employees - who’ve charged the challenger with garnering a toxic working environment - they’ve been accused of “single-shaming” as well (the company’s Valentine’s Day ad campaign included asking customers who’d ordered takeaway-for-one on the 14th, “you OK hun?”). Furthermore, Nikolay Storonsky’s outfit find themselves the subject of an FCA probe (news of which unhelpfully coincided with the departure of CFO Peter O’Higgins) and reports of an “assessment” by Action Fraud. Some commentators are arguing that the speed with which challenger banks and fintechs have taken the payments world by storm could
now prove to be their undoing. Mr. Sawyer’s exuberant turn at the conference will have done little to convince the doubters. In a speech intended to dispel some of the myths surrounding innovative new financial solutions, Sawyer was eager to reassure the audience that Starling doesn’t merely inhabit what he calls the “Shoreditch fintech bubble.” In fact, Starling doesn’t even confine itself to the M25, outside of which it’s experiencing its highest levels of growth. In addition, the digital bank’s services don’t just appeal to app-happy millennials, as 35-40% of its customers are over forty. It was only when Sawyer shifted from what Starling do to how they do it that those finding the pace of fintech development a tad alarming may have found cause for renewed concern. Challengers, it turns out, have “a very different way of working and thinking.” With a “culture that’s closer to a Spotify than it is a Barclays”, it’s clear that Starling take their lead from the speed racers of Silicon Valley rather than the pleasure beach donkeys of Cheapside. Sawyer was keen to highlight the key distinction between banking norms new and old, “by having a much more agile mentality, and that’s not just a technological agility but that’s about a business agility, then you can execute things a lot, lot faster.” What followed was primarily related to, not so much the products and services Starling offers, but how fast they’re implemented. Take, for example, Starling’s partnership with the FitBit watch. Sawyer proudly exclaimed that it, “took us about five days with one software engineer to give us FitBit Pay.” He then pondered how the old guard (none of whom got involved with FitBit) would’ve approached the prospect of such a deal, “can you imagine how some of the incumbent banks were going into steering committee meetings about whether they should do it instead of just doing it?” And what about SME banking, Julian? “Let me tell you the story of SME banking at Starling. On January 1st or 2nd of last year, we decided to go into SME banking, a current account on a mobile
phone [pause for dramatic effect] Twelve weeks later … we went live with that product…” So, like a Ferrari Testarossa, Starling can do 0-60 in 5.3 seconds. Just picture it slaloming through some arid landscape in a widescreen promo to the thumping strains of Aerosmith! Sawyer even gave us the perfect tagline: “Being a fintech isn’t about a regulatory status, it’s about a mindset” To bring the advertising analogy full circle, the “just do it” philosophy may work for hocking trainers and sports cars but how well it stands up to the rigours of long-term regulatory compliance remains to seen. One thing we should all “just do” is share the wealth and a panel featuring Pennies Foundation highlighted paytech’s central role in making charitable donations more accessible in an increasingly cashless world. Pennies Foundation, represented here by Paul Seaman, enables retailers to implement point-of-sale (PoS) donation options across their entire operation, be it in-store, online, or app. Customers are prompted by the card machine, website or app checkout to donate a few pence. It’s a yes or no choice, and no personal data is retained by Pennies or the retailer-selected charity. Serving as a paradigm for the implementation of innovation, Pennies Foundation, “have kept it simple all the way through and that’s to follow the most loved way of giving in the UK; dropping a few coins into the collection box.” Find a problem and solve it, it’s a winwin, enough said. Once you’ve taken the Ferrari out for a spin, opened a Starling SME account, made a digital donation and gone for a jog in your Nikes, you’ll have worked up quite the appetite. Fortuitously, Mark James (Principal Sales Consultant of Oracle) was on hand to tell us about food and beverage paytech. James framed his presentation on, “the age-old frustration of being in a restaurant when you want to pay the bill. So, you might be on a bad date and you just want to get out of there or maybe the kids want to go home. You may have an
important meeting or maybe you’ve been on an extremely good date and you want to get out of there!” James argued that not only can the wait for the bill be inconvenient, it can be downright costly too. “If [the restaurant] can save 5 - 15 minutes of that waiting time and get that customer out when they want to leave … get that payment processed and turn that table a little bit quicker … that could be 25% addition revenue we’re gaining at a difficult time” Just to drive home the seriousness (or wait?) of the issue, James added that, “65% of people will not go back to a restaurant where they’ve had a really long experience trying to pay.” When assessing the extent to which payment technology can be used to ameliorate operational problems in the “age-old” restaurant trade, James raised more questions than he answered. • How do businesses incorporate complex and cumbersome tech solutions into an already hectic working environment? • Are customers ready for self-payment apps? Doesn’t it just feel like you’re leaving without paying? However, the most pressing dilemma posited the man from Oracle was; can the myriad idiosyncrasies of hospitality be satisfactorily serviced by paytech? The group discussion that followed explored these issues more thoroughly. In addition to James, the panel consisted of Ashley Arlott (Head of Sales, UK and Ireland - 3C Payments), Travis Henry (Business Development Manager, Pay360 by Capita) and Rajesh Vohra (Director, Sarona Hotels). James appears to have faith in the tech’s ability to revolutionise the business but less so in the customer’s ability to adapt to some of the more challenging innovations in the space. When asked what he thought about the possible implementation, in the UK, of the kind of facial recognition technology that can be found in some Chinese fast food outlets, James responded,
“There are cultural challenges, certainly. Just look back five years and there was a reluctance to just walk out and pay. We’re very suspicious of things like that in our culture … I think from a technology point of view it’s more than likely to be available. The adoption, I think, is going to be the challenge … The technology will come quickly and I think the adoption will lag behind it significantly.” As the sole representative of the hotel trade, it was left to Rajesh Vohra to speak for his entire industry. The disparity between what the techies told us and Vohra’s outlook illustrated nicely the need for robust dialogue throughout the value chain. When moderator Rodgers asked about the need for a cohesive industry standardised approach Vohra answered, “Our space is notoriously bad at upgrading technology … there’s technology there that’s 15-years old and, frankly, we don’t change it because it’s not broken so we maintain it and we keep using until it falls apart.” Therein lies the kicker, Mr. Vohra is an hotelier. If you’re not improving his customers’ experience, then he’s not interested. He confirmed as much when he said, “The idea of facial recognition at the reception desk to pay your hotel bill fills me with complete and total horror. Apart from the personal identification issue with GDPR, from a technology point of view, I can’t even begin to imagine how we would implement that. It would be decades before we’d be ready to do something like that.” Revisiting Rodgers’ original enquiry, Vohra bluntly concluded that, “The truth is
PAYMENTS CONFERENCE THE FIN TECH TIMES
5th Vendercom Conference, Marylebone, London
The proposed standards, which will come into effect in the event of a no-deal Brexit and centre on “strong customer authentication and common and secure open standards of communication”, were described by Rodgers as an “economy damaging Sword of Damocles.”
that standards can do what they like and be damned, that sort of technology takes a long time to catch up.” Ashley Arlott of 3C payment struck the sort of reconciliatory chord that one suspects the conference was designed to encourage. In his response to Vohra’s concerns, he cited that tech shouldn’t enter the market with the intention of reinventing the wheel, but rather to optimise and improve its performance. He explained, “One of the key things stated there relates to the utilisation of existing technologies and infrastructure. Market disruption doesn’t always come from a grand gesture, a complete change of things as they currently stand. Sometimes it comes from using the services and infrastructure that are already in place in a much more innovative way.” However, at least one member of the audience had come to the Cavendish Centre intending to kick some arse and eat pancakes, and the last of the pancakes got snapped up in the coffee break… Admirably blurring the line between monologue and enquiry the disgruntled delegate opined, “Back to you, the hoteliers and the restaurateurs, you’ve really got to be pushing your payment services providers
to grasp that innovation and bring it forward … it’s all within your grasp and I think, as vendors within the payments industry, we’re making those solutions increasingly available, so hopefully you’ll be receptive to taking it on … but my question is; how many of you are actually investing time and effort in investigating that, both from a supplier viewpoint, for say Oracle, and from the hotels and restaurants you deal with?” The answer received was sparingly curt, “All that you say is there, is not there.” At the business end of the stick then, the world of paytech innovation may be neither as new nor as brave as we’re being lead to believe. On the one hand, you’ve got the techies saying, “Use all our cool stuff!” and on the other, you’ve got the industry saying, “It’s not good enough yet!” Could Travis Henry - whose operation, Capita, finds itself “caught in middle” - offer a viable compromise? [Spoilers: no] Capita’s challenges as Henry see them are with “our own guys, our developers and our roadmap,” as well as lengthy consultations with providers like Oracle. All this leads to delays of, “a couple of years until we’ve got integration, so I get it from both sides.
I wish I had the silver bullet answer but… y’know?” We do, Travis. After an hour or so of this back forth, we really do… With delegates beginning to doodle on their complimentary stationary and hack journalists amusing themselves with potential mottos for next year’s event (“Non mea culpa, vestrum erit flagitium” is the best TFT could manage), we broke for lunch… In the afternoon session, collaboration was the name of the game once more, this time reiterated by Arnaud Crouzet, Secretary General, Nexo Standards. He emphasised that a “working together” mentality is paramount for the continued progress of the payments industry. With everyone abiding by the same rules, Crouzet promised interoperability and reduced costs across the board. The following panel was a veritable pAy-Team of industry big hitters discussing how standards create value for the payments ecosystem. Jeremy King, International Director, PCI Security Standards Council, pointed out the challenge of undertaking payments in a frictionless manner with the legacies that exist. These “legacy burdens dictate how we do certain things.” Nevertheless,
community input of standards and the benefits of engagement with fellow members were lauded across the panel. Comfortably sheltered by the Chatham House rule, it was the regulator’s turn next. After being told that, “payments should be boring” we were briefed on the new rules and requirements coming in from September 2019 around strong customer authentication. Trust, reliability, resilience, and security topped the bill. Then we were told that firms should no longer rely on onetime passcodes (OTPs) as their only means of verifying identity, “the needs of all its customers must be taken into account, whether they’re in signal black spots or simply not using smartphone technology.” The closing keynotes reviewed the uncertainty surrounding Brexit, and Toni Vitale, Head of Regulation, at Winckworth summarised its effects: “If we do a deal, the law will stay the same until December 2020 and in that time we’ll negotiate a new treaty with the EU. If we don’t have a deal, then the Data Protection Act 2018 will be our law.” Whilst it may be fashionable to jump on the doom and gloom Brexit bandwagon, Vitale was quick to assure us, “there won’t be queues
at Dover” come deadline day. With so many unknowns and misinformation, Vitale wrapped things up by urging the audience to seek out their own facts (from government sources) and to be wary of buying into “scandalous” myths such as those surrounding the WTO’s Article 24. If its opening gambit espousing a harmonious and mutually beneficial payments ecosystem proves a touch optimistic, then at least the Vendorcom Future of Payments conference cast a bright light on the problems facing the sector. As the payments valuechain is broken down into ever more specialised increments, achieving the kind of balance whereby all parties, including the end-user, are satisfied is perhaps a loftier ambition than most attendees had first imagined. uTFT
April 2019 I 7
THE FIN TECH TIMES
TOP 5 UPCOMING ICOS TO WATCH
Cyber-crimes are touching new zeniths with further advancements of information technology. With new technologies like AI and IoT entering various sectors of the market, the need of cyber security services is increasing more rapidly. The current cybersecurity measures have become too archaic to defend new threats. Heroic aims to bring a new AI powered cyber security platform with P2P safety protocols. According to their whitepaper, their core components include Heroic Arc Reactor, an open threat intelligence exchange that allows developers and experts to trade ideas and software codes; and a Heroic Guardian which is a security management platform for further research into privatisation of business blockchains. The platform provides compensation directly proportional to the amount of participation. All the incentives, compensations, and payments on the platform will be executed with the help of HRO tokens. The company also aims to make the cyber security services cheaper with the help of their exchange and advancing third party cyber solution development. Such project requires majority of the funds to be used in the technical developments. Hence, 42% of the raised amount will be allocated for R&D and another 22% for the network operations. The team has the required experience in the fields of cyber security, business development, marketing, and software development but lacks blockchain experience. The team’s vision has clarity to understand the needs of the future. Therefore, long term investors can consider this project to hold in their portfolio. uTFT
Gambling industry has been at the forefront to make the best use of the blockchain wave and the ICOs have shown tremendous success ratio. Another project trying its hands in this industry is Faireum. The company aims to make the industry more transparent, low-cost, secure and obviously decentralised with the help of a public blockchain. The blockchain platform comprises ledger nodes, P2P networking for game developers, a virtual machine for smart contracts, and a well-constructed governance model to facilitate token distribution, payments, rewards, compensations, digital asset exchange, and cross-chain atomic swap. The main blockchain uses the Web Assembly Virtual Machine to run its default Smart Contracts. The blockchain uses Byzantine Fault Tolerance with Delegated Proof of Stake as its consensus protocol. The platform supports its services across various games like Lotteries, Casino, Digital Games (e-sports), horse betting, and sports betting. The Faireum Smart Node (FSN) can turn a user’s smartphone or computer into a blockchain node with wallet and proxy server functionalities. The project is based in Japan with team members located in different parts of the world. Faireum currently faces competition with Edgeless and Wagerr, and like these projects, Faireum’s progress also depends upon the number of users on the platform. If the project succeeds in building a strong community, Faireum can manage to jump at least in the top 200 crypto currencies of the world. uTFT
Madana or Market for Data Analytics is a decentralised marketplace for analysing data built on Lisk’s sidechain. Lisk is considered to be a promising project mainly because of its sidechains, made possible along with the main blockchain. Madana is the first ever ICO to be announced on a Lisk Sidechain. Data is becoming one of the most valuable assets to companies all over the globe. Madana aims to build a marketplace to share data and analytical models with proportionate compensations. In brief, producers, analysts, and consumers of data can be brought together on the same marketplace to fulfil their needs. The data with its insights can then be sold to third parties who require the insights for a price. Currently, Madana is in a patent-pending process. This gives Madana an upper hand over its competitors. Madana has a large well-experienced team having good personal relationship with Lisk. This is one of the main reasons why Madana chose Lisk’s sidechain for its operations. Adding to this, the team aims to include other tokens and companies working on other Blockchains. Madana envisions being the project of the future with IoT and devices connectivity improving at tremendous velocity. With more data generated by devices and consumers all over the world, the number of users who can benefit from a platform like Madana are expected to increase. uTFT
Soundcloud has seen tremendous success with its social music service model. Somesing is here with a social music service based on blockchain, making a decentralised model of such service available in the cryptocurrency market. The platform adds new songs every day using a studio-grade recording system. Users have the facility to share their music with people all around the world with a personal studio in their rooms. Music creators are rewarded in accordance with the activity occurring on their uploads. For musicians looking for a platform to express their creativity and reasonable compensation, Somesing could be the right platform for them. Somesing also provides more than 400,000 Karaoke covers across various genres. The songs as well as the earnings of a user are stored in a Somesing wallet. Somesing chose ICON blockchain for its operations. The team is based in Singapore with professionals covering all departments of a well-established company. The only drawback of such social-based projects is that the ecosystem needs content creators as well as content users in order to succeed. Thus Somesing has to focus essentially on its marketing campaigns. If the company manages to build a large community which companies like SoundCloud and TikTok that has managed to build on centralised models, then Somesing can be a huge success in coming years. uTFT
Volentix is a multifunctional blockchain based ecosystem which currently stands on 4 pillars which work in synergy with each other. First is Venue, which is a dynamic community platform particularly designed to promote awareness of its initiatives. Venue rewards the participants for their participation in submitting bug fixes and claiming bounties. Second is VDEX, the most vital pillar of the platform. VDEX is a decentralised asset exchange that manages communities, governance, and P2P transactions by collecting a portfolio of DApps buildt on EOS.10 smart contracts. Third is Vertika, a multi-currency wallet that ensures the funds are continuously managed by VDEX users with the help of smart contracts. The last pillar is Vespucci which is an analytics engine with real-time and historical market data with sentiment analysis and crypto assets ratings. Given the comprehensiveness of this project, the team has made all the user-accessible platforms (particularly VDEX) are easy and intelligible to use. Another remarkable feature of VDEX is that it allows bridging of the order books with those of other decentralised exchanges. VTX is the cryptocurrency used in VDEX and within the four pillars of Volentix. Based in Georgia, the project has gained massive popularity over the last two months on its social media platforms. The team has won the trust of the investors and can prove to be an attractive long-term investment for them. uTFT
8 I April 2019
GLOBAL TOKEN REVIEW THE FIN TECH TIMES
DISCLAIMER: THE ARTICLE REFERENCES AN OPINION, AND IS FOR INFORMATION PURPOSES ONLY. IT IS NOT INTENDED TO BE INVESTMENT ADVICE.
TOP 5 TRADING TOKENS
SKYCOIN The internet on which all of blockchain works is still owned by colossal centralised giants. Bitcoin and Ethereum managed to decentralise various aspects of the payment and business solutions, but the team of Skycoin believes these two cryptos still don’t cover the most important aspect, the internet. Skycoin aims to build a fast, scalable, and ‘truly’ decentralised blockchain using three components. Skywire, a privacy protocol used to provide users with cheaper, faster, and user-controlled internet; Fiber, to access and develop decentralised applications; and Skycoin, the cryptocurrency used within the network to facilitate transactions. Skycoin deploys a unique consensus mechanism called Obelisk which allows anyone even with a normal computer to contribute equally in the network’s decisions. Obelisk uses Web-of-trust which gives nodes with more subscribers more power within the network. Although, the subscribers can independently subscribe to any node they want, this model helps ensure more trusted nodes are given more command in the network in a democratic manner. For each Skycoin ownership, users receive one Coin Hour every hour which can be used for transaction fees and other VPN services. Two of the three founders have been earlier contributors to Bitcoin and Ethereum. The third contributor has substantial experience in e-commerce and software development. The team already has the required capabilities to build a successful operational business. If they manage to build a large community base being in competition with giant ISP providers at the same time, the project can be of enormous success. uTFT
THEThere ARTICLEhave REFERENCES OPINION, AND IS FOR INFORMATION ONLY. IS NOT INTENDED TO BE INVESTMENT Connectivity between DISCLAIMER: autonalwaysAN been debate HolochainPURPOSES has built a IT decenTomochain wasADVICE. specifically omous vehicles is going to be an in the blockchain industry regardtralised computing network designed to solve the scalability essential feature as these vehicles ing the privacy, anonymity, and with the help of blockchain issues on the Ethereum keeping hit the road. In the midst of this scalability of the blockchains. technology. Holochain aims to a near zero transaction fee with connectivity, protecting autonParticl has taken its stand in this distribute the network worlda high speed time of confirmaomous vehicles from cyber or debate regarding these three wide in order to achieve infinite tion. Tomochain, which will network attacks will be of parmajor concerns. Particl aims to scalable capacity through P2P host all the financial transactions amount importance. With the build a decentralised blockchain networking. Having a platform that occur on Tomochain apps, help of blockchain technology, with emphasis on security, prowith distributed cloud-based will act as a sidechain to Etheartificial intelligence, and quantected-user data, and middleinfrastructure in mind, the coreum to ensure interoperability tum based hash cryptography, men-less transactions in a trustfounders of the project Arthur using atomic cross chain transfer Cube aims to ensure protection less environment. The consensus Brock and Eric Harris-Braun between the two. Tomochain AETERNITY NANOin the platform of these vehicles from any mamechanism used haveGOLEM a spell-bounding vision.DIGIBYTE supports all EthereumDECRED smart Nano, formerly called Platforms for Dapps have Golem is seen as a decentralised DigiByte is a rapidly growing Decred is a self-funded, licious attacks. The product of is Proof of Stake (PoS). PoS brings The team is completely focused contracts but its base layer has RaiBlocks, wants to overcome fought to be successful in this world supercomputer to allow public blockchain, which can community-based and open Cube is unique and market first in environmentally friend-people onto delivering its by product a masternode and service node which is all the shortcomings of top competitive andthe Aeternitymore earn money protectwith digital information such blockchain platform, cryptocurrencies like Bitcoin at has leftinmany such companiesly and doing nothing, and which combining as data, currency, system. assets, or other similaralready to other competitors industry. Usually these cases, efficient environment Holo.host is Holochain’s The project faces and Ethereum. Nano also uses and succeeded. With such computing power. It was founded kinds of information. It’s been like Ethereum and NEO. The attackers trybehind to disrupt smooth the DAG expense of decentralisation. flagship testnet app. The token heavy competition with indus(Directed Acyclic Graph) competitiveness, platforms need in Poland by Julian Zawistowski, used by shopkeepers in the company was founded by a few communication between the au-in theirPART, on Par-and therunning on Holochain is called to paytry giants in suchBitcoin as Bitcoin, NEO, like the IOTA,cryptocurrency but with its own novel to have unique features team released its first Netherlands companies core developers who called blocksignatures lattice. platformand to compete for betterticl’stechnique alpha product called Brass in 2016. Hong Kong since 2015. out to develop tonomous vehicle the traffic platform usesa ring Holochain Token (HOT) which EOS, and ICON.setHowever, Tomo-a currency Each Nano user will get their own than similar that giants likeor ring contributor intraded Golem’s on Jared Tate, tired of Bitcoin’s which can never be hijacked or center. Cubeservices aims to ensure confidential transactionsIf you are is a currently leading chain differs from these projects blockchain called an ‘accountEthereum and Neo. Aeternity ecosystem, you can lend spare shortcomings related to speed, dominated by a few centralised the attackerprovides is unable to gain to ensure privacy in the network. crypto exchanges including Bibecause its compliment to Ethechain’, which they can modify the unique feature of space and computer power to the founded DigiByte in 2013. The authorities. The environment in according to their requirements. increasing the In scalability to help Once handle complex gain while much other Decredprojects is very democratic, access of the networks. case byThese protocols anonymisenetworknance. the main company net goesdidn’treum are as they This means the blocks in their the smart computations andHOTs tasks. Itswill initialbe converted popularity back then compared to to treat every community member the attackertaking manages to contracts gain off-transactions by merging multiple live, all competitors it. Tomoapp, the part of the blockchain can be chain. The smart contracts will be use case can be seen with giant its competitors. The scenario and or team member equally. access of therunning network, the vehicle addresses together, thus making to Holofuel on 1:1 ratio. With first app to integrate Tomochain ‘updated’ by the users themselves on a private state channel media and animation companies its adaptations changed in favor This is one of the main reasons after verifying the destination match in will recognise the foreign source and the the launch of its2000 mainofnet, Ho- in later in years. its architecture, a social Q&A network between comthe partiesthe only like Pixar which has DigiByte It was the is community has grown the sender’s and the receiver’s in the contracts. computers set upcan worldwide to in the first companyapp to implement to where it is today. It uses a mand and involved immediately block address of a single transaction lochain succeed its vision in which the users will be amount. Few risks attached to this render the frames of their movies. a segwit and has had 5 hard forks combination of PoW and PoS it. The market cap of CUBE coin difficult to determine. Particl of covering the enterprises using rewarded basedinonitsthe contribuThe blocks are not added, they also project include the threats from Companies like Amazon and IBM since then. This made DigiByte a consensus mechanisms. are updated or replaced by Partia touched $100 millionusebut has comprises a decentralised cloud computing to the network. Theofproject regulations, of multi-party buy thousands of computers and to shift fasterthem and a moretion decentralised 60 percent the mined coins new block with a DPOS model security, andthe naivenesscl marketplace computational power (not system. It has isafounded dedicated go toVuong, the mining community, continuouslychannels, slumped since but unlike othersell thetowards distributed decenby Long one of of consensus. This structure of the technology. But with the at high price premiums. Golem community with 100,000 nodes 30 percent to the staked cryptocurrency crash in January centralised tralized) computing. But like mathe former founding members of helps Nano marketplaces, to achieve latency, the scalability and hybrid consensus aims to acquire this market with spread across the planet. DigiByte community, and 10 percent scalability, energy-efficiency, 2018. Despite that,it Cube jority ofand themore blockchain projects, NEM blockchain. rest of the models uses, holds the benefitsdata can’t be shared with any 3rd a decentralised pricecan add blocks in just 15 seconds, to The the developer community. and a lack of fees. Other plans in outweigh Aeternity wasparties. Particl platform offers its friendlythe environment. as compared 10 minutes in DCR is the cryptocurrency a high ground in the therisks. industry success ofAdding Holochain will to team is focused on accomplishing Nano’s roadmap include pruning Yanislav Malahov, to this network, developers can Bitcoin. DigiByte also wants to network, with thanks to itsfounded uniqueby proposition. users a decentralised depends on the strength and the milestonesof on Decred’s its roadmap. of with its chain, development of(but 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 light wallets, enhancing the One major concern that such PoS based) secure voting plat-which will thealso innovations of theincorporate commu- changes The occurring testnet hasmillion. been made pubminds in isthe cryptocurrency increase the usage The token is mineable block explorers, and helping the He focused gathered a on team ofform to implement better goverof its GNT tokens. token will project in the will market, to licly keep available it usable along and iswith focused on ensuring a futuristic space. project nity. TheThis ambitious a demo unbanked population around the experienced individuals medium ofwith transaction for all sectors ofwallet. the economy. decentralisation and security automobile very industry requires a nance and in theact as any compete the tech giants The team has demonstratglobe. Thecommunication company was launched and has brought this project to or reward in the network. DigiByte’s token has similar roles in the platform. The company in 2015Particl by Colin LeMahieu asanona huge amount of funds coupled network. also has an like CISCO who is also focused ed their capabilities by delivering 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 successful in 2017 and hasymous out of which generally have been usually in with plansproducts. to implement the with a team ato deliverICO a flawless messaging basedare in circulation, on improving their operations alpha versions of three P2P transactions. XRBsystem tokens, the shown tremendous 82 percent are the distributed other cryptocurrency of theitnew innovations product. The UK-based team progress is on cryptocurrency the BitMessage platform. with help to ofthe blockchain in As ecosystems, the project majority progresses, will of Nano, was first Parsince then. It is available to be crowd funders, and only 6 percent which are serving as a medium happening on the blockchain. distributed in October 2017. 90 highly experienced to build the ticl has its own set of principles all fronts. Holochain can take attract more developers and busitraded on all the major exchanges among the team. The GNT token of transaction, rewards, fees, and These innovations include the percent of Nano’s trading activity product, butnow. theTrading team volumes might have be beento thrive in this market with goodstarted the advantage the market by developers nesses onupits platform considerits journey from of $0.01, encouraging to set development of a stakeholder is observed to be on Binance and lowfor sinceanother January, however, rose tobeing $0.68 and businesses. ing The the company decentralised needing to go fund- thisqualities of out Bitcoin, Monero, onefell of back the to earlytheir originabenefitscontrolled they are DAO, offering. 80 percent of this in BTC/XRB and is due to the market’s plunge and $0.20 during the crash. The team will mine 21 billion tokens in the control of development funds, pair. The company also released ing round (not necessarily The combinations bring ahas a few torspartnerships of the concept app only has 10,000+ downnot something for ICO) which theDash. in hand of ‘distributcourse of 21 years The and has already implementation of the lightning its wallet, functional on mobile, in the future.project If theisteam succeeds in as the projectIf and ed computing’, manage Google playstore and responsible. In the 3rduniqueness but nothing significant. and This canmined 8.1 billionloads so far.on Their network, and enhancements in desktops, and hardware. the its of 2017,product the price of AEplatform is its concept andlong its term first milestone to reach 2000 governance privacy. Decred company keeps to its roadmap in building quarter a flawless can be useful to variousproject’stoUSP succeed in the with is will need a much larger and customwas about $0.55 and then $5 in market. With more exploration of txs/second mark set by Visa. The wants to be an example in the path, therewhich may be arequire day whensuch which ensures safety of these veindustries its cheaper, secure, and token fasterhas serer and community base to sucMay of 2018, which is an gain of use cases, growth in its network, shown turbulent trends market, making these innovations people will be buying their hicles, it can 800 be apercent. splendid uTFT vices. uTFTstrategies, since its inception.ceed in this eminent competitive The opporprices faced aqualities. improved marketing The prospects implementable. The project is frappuccinos using Nano wallets downward after this peak, and better partnerships, Golem remain optimisticmarket. as the team working ininfiltrates the right direction and tokens. tunity for investors as trend a long-term If Tomochain the community is still hopeful has the potential to reach heights is advancing with its DigiByte and the progress will inevitably buy. uTFT but high-throughput use cases (like to see a great ROI in the future. which they have claimed to reach Foundation, DigiByte gaming, be seen in the coming future. The financial services and remittance in their vision and whitepaper. technological developments, team seems to be focused on their partnerships, and community tasks and have proven to produce market), the company’s chances developments. Digibyte can be magnificent returns when the of succeeding and becoming an a cryptocurrency to keep an eye mentioned plans come to life. impressive on the longer term, if the steps oflong term investment the mentioned advancements are can grow remarkably.uTFT
TOP 5 TRADING CRYPTOS
taken in the right direction.
provided Research provided by Research Novum Insights by Novum Insights Novum Insights unpicks the sub-sectors that use the Insights unpicks latest thinking in Blockchain,Novum Cybersecurity, AI and the IoT,sub-sectors that use the latest thinking in Blockchain, Cybersecurity, AI with a database of ICO’s. and IoT, with a database of ICOs.
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April 2019 I 9
CEO INTERVIEW THE FIN TECH TIMES
TORCA: THE NEW HOME FOR DIGITISED ASSETS SCOTT DAVIES, CEO of Torca, met Katia Lang and Charley Brooke Barnett of TFT to discuss his career experience and Torca’s full-service account for managing and securely storing digitised assets.
PROFILE Scott James Davies
OCCUPATION Chief Executive Officer
BIRTHPLACE Doncaster (the same place as Jeremy Clarkson and Tom Simpson (a famous cyclist)
CAREER I founded my first Fintech (before fintech was called fintech) in 1999 V12 Finance. In 2003, I sold 70% of it to a group PLC at age 29. In 2005, I bought it back and then sold it wholly in 2006. I then invested again in a company called PayBreak in 2009 and exited in 2013.
BOOKS Do Androids Dream of Electric Sheep, Blink, The Hard thing about hard things, Rework and Lean Startup.
FILMS Star Wars - A New Hope, Heat, Interstellar
RESTAURANTS Luca in Farringdon, Stokie Veggie Vegan, La Bastide St Antoine
HOBBIES It’s all about the bike (cycling), yoga and some light working out
BUSINESS PHILOSOPHY There are no shortcuts! Work hard, treat your team like family, reward them, but ask a lot of them in return, and never ever stop pushing the envelope. Without taking some risk, you do not create value.
TFT: How did you get into Fintech? Scott: My finance background has been in retail banking, predominantly working with leaders within tech segments. My father owned his own business and instilled the importance of hard work in me; so, quite early on in my career, I had outstripped my competitors and very soon I had the ear of the Board. Opportunities began to open up for me and I was headhunted to work at a RegTech business. The aim was to build and manage a layer of technology over a retail finance business - a very simple idea, but one that was ahead of its time. Ultimately, we didn’t end up working together, but I started my own business to create exactly that. I’m ruthless about automation and measuring metrics, so I grew a really successful business on a few small heads. What you measure, you can manage, and feel I was on point with my unit economics. The business and the technology grew and grew and I sold it to a group PLC in the North West. After that, I founded a second FinTech which, due to having a young family, I exited early out of personal choice. I moved to the South of France in 2008 when the economy was going south to take a lifestyle break. When my children were older, I was offered an opportunity to work for a Google-backed FinTech venture in London. Around the same time, the Chairman of Torca, who knew of my providence in FinTech, told me about what Torca were doing. The prospect of working in this space was extremely exciting to me, so I turned those guys down and here I am. TFT: Tell us how Torca came about? Scott: I was brought into the company about a year ago, which was right at the beginning of its life. We were exploring a range of ideas in the
10 I April 2019
digital asset sector, including an exchange or an investment syndicator. We soon identified a gap in the blockchain market for RegTech services and saw a viable and valuable opportunity for us there. Now, operating as a regulated business, we are building a full-service account for digitised assets. TFT: What problems are Torca solving? Scott: We uncovered three major pain points in this space: regulatory onboarding (RegTech), custody and payments services. At the moment, high-tech businesses operating within the Decentralised Ledger Technology (DLT) space need a regulated, high-tech partner to fulfil their onboarding, KYC, AML and fund-collecting needs and that’s where we come in. We are also exploring the tokenisation of assets and we’re currently working with a DLT platform to look at tokenising property. Beyond that, we’re seeking regulatory clearance for the tokenisation of a company shareholder register, which is really exciting. Beyond the service problems that Torca solves, we’re aiming to solve the numerous problems that businesses and individuals both face with usability and customer service in financial services. TFT: What’s the business model? Scott: We’re building a home for digitised assets. The whole ecosystem revolves around the three pain points mentioned earlier – onboarding, custody and payments. For businesses and individuals in this ecosystem, they need first to be legally identified (KYC/AML); second to be able to hold their digital assets, digital currency and fiat currency in a safe, secure place and third, to be able to efficiently monetise those digital assets, digital currencies and fiat currencies. All of these require a regulated counterparty to facilitate them.
Currently, we tackle onboarding extremely effectively ourselves. We deliver custody and payments solutions with best-in-class partners, but we’re quickly developing our regulatory profile and our proprietary technology to bring them in-house in due course. TFT: Who are you selling to? Scott: At the moment, we’re technically not selling to anybody. We’ve got a healthy pipeline of business clients despite not having done any selling or marketing - customers are finding us, having a great experience and then making recommendations. We’re ahead of the curve with a niche product and businesses operating with a DLT-based model are responding positively to that, which is great. I was speaking with a potential client recently who is experienced in renewable energy resources. He’s Swiss-Canadian, so we spoke a bit of French with each other. It was great - I didn’t have to do any pitching or selling. He wanted KYC, AML, custody and settlement services and he already understood that we can do all of this in one end-to-end solution, all under one roof. It just seems like we’re really well placed, at a really great time. We watched the market carefully and we’re developing an excellent product that has broad potential applications in the future. I’ve also never worked in a business with a revenue generative cost of acquisition - ever. By offering regulatory onboarding services to businesses that are undergoing a fundraise, we are onboarding investors who we can then resell to as our products and services develop. So that’s our sales model and roll out for our business plan. It’s not my first startup – I know how easy it would be to go out there with a big plan, get a load of money in and then spend it all, but we’re building up steadily.
TFT: What are the main issues surrounding KYC and AML? What is Torca’s approach to addressing these? Scott: The biggest issue for me is that there are cutting-edge businesses operating in the DLT space that need regulated services and are struggling to access them. The DLT space is deemed risky and few regulated businesses are willing to – or have the infrastructure to – undertake that service. We set out from the beginning to tackle these challenges and, as a regulated firm that is fully insured, we are truly breaking the mould. Firms can onboard through our platform and everything we do is user journey and design led. ICOs (Initial Coin Offerings) provided a good proof of concept for blockchain fundraising and investing, but the vast majority didn’t adhere to global KYC regulations. According to a study, over 80% of ICOs conducted in 2017 were fraudulent, which evidences the need for regulatory compliance and for security tokens as a more advanced solution. TFT: If 2017 was the year of the Cryptocurrency, is 2019 the year of the Security Token? Scott: Security tokens aren’t going anywhere. This is not the Wild West any more - no revving Lambos outside hotels like we saw with crypto in 2017. There is much more of a sensible and measured approach to security tokens, as there has to be. For us, facilitating asset tokenisation will probably come in 2020. For 2019, we’re offering regulated services to businesses that issue security tokens to investors and we’re helping them, through our technology and our partners, to securely hold and to use the money they raise. These companies are cuttingedge and they struggle more than most businesses to access banking services due to the perceived risk. We’re not a bank
CEO INTERVIEW THE FIN TECH TIMES
and we’re not going to be, but we experience the same issues ourselves, so we’re our own first customer. We believe in the massive potential of security tokens and DLT and in my opinion, this technology will become - in the not too distant future - the basis of the world’s economy. TFT: What’s your favorite thing about Torca? Scott: Any CEO’s key priorities should be people, culture and strategy and I really enjoy working with my team to build a great culture and a great product. One of the reasons I exited my second Fintech early was because of a slight crisis of morality. Wonga was in the news and we were getting tarred with
the same brush. On top of that, my son was at the age where he was asking me: ‘Dad, what do you work as?’ I realised quite quickly that I didn’t want that to be my legacy - I had bigger aspirations than that. What I really enjoy about Torca is that we are creating a financial ecosystem that is much more open, much more serviceable and much more accessible than that which currently exists. That really excites me. Opening up new opportunities, creating jobs and stimulating the economy. That’s a great legacy to leave and that’s what I’m here for. This is probably going to be my last rodeo and that’s why I chose this over the other business that I mentioned. I could have had a semi-exit there by now and this
We’ve got a healthy pipeline of business clients despite not having done any selling or marketing customers are finding us, having a great experience and then making recommendations.
is harder work, but we’re doing something here at Torca that I truly believe in.
agent for their token issuance, they should be speaking to us. We’re the best show in town.
TFT: As a CEO, what would be your advice to not mess up?
TFT: What changes do you expect to make in light of Brexit?
Scott: You’ve got to get your culture right, treat your staff well and employ the right people at the right time. Mistreating your staff is the easiest thing you can mess up. Treat them well, and you can sleep at night knowing you’ve got a great business that is in safe hands. My job is to empower and motivate the team to make good decisions, so surround yourself with successful people and bask in their glory - I’m very much a believer in that. A lot of people that I work with have become my life-long friends. My CTO and I have a very strong bond and he’s been with me for the past eight years. The second thing you can mess up is managing your resources; the worst thing you can do when you have a great business is run out of cash. People mismanaging money and misspending cannot happen, especially at a startup. Get your numbers right, get your economics right and you’re away. TFT: What are your future plans? Scott: We’re coming out of stealth now. It took a long time to get to a place where Torca was within a regulated entity, which is a huge step in our journey. That took nine months of my career here and I’m only now getting on with my day job. We are now onboarding customers and we’ve just engaged with an amazing project. Our doors are open for business and anybody that’s looking for that safety net of having a regulated settlement
Scott: The thing that I would say business leaders need to be careful of, is talking themselves down through Brexit. We’re still a very strong nation. I wouldn’t have voted for it - I was living in the South of France at the time. I lived there for eight years, my kids grew up there. Rather than trying to talk yourself out of what Brexit can do you out of, it’s about embracing the opportunity. It’s shouting about the best things that you can make out of it. For us, it’s being FCA-regulated in London, which will always be a globally credible jurisdiction. It’s like buying a tailored suit from Saville Row; London financial services will always be perceived in that manner. We’re great at knocking ourselves, it’s a very British trait. We’re the world’s best! The Americans are great at blowing their own trumpets and we need to take a leaf out of their book. TFT: What about your global ambitions? Scott: At a pivotal time in Britain’s political and social history, we’re focused on a space which is inherently borderless and we’re working with companies from all over the world. We’re a UK-regulated business, but we’ve got clients with US businesses as well as other clients in Italy, Malta and in Switzerland. Our customers are truly global and they come to us because of the weight London holds as a financial epicenter.uTFT
April 2019 I 11
CYBERSECURITY THE FIN TECH TIMES
Equifax: Senate Goes Once More into the Breach MATTHEW DOVE
The Damage Done by the Hackers Could Have Been Minimised
Equifax told the subcommittee that it had decided to structure its networks “to support efficient business operations rather than security protocols.” In other words, once inside, the hackers helped themselves to a free lunch, easily locating “a data repository that … contained unencrypted usernames and passwords.” Subsequently, the theft of countless “Social Security numbers, birth dates, addresses, and, in some instances, driver’s license and credit card numbers” went undetected.
he committee’s findings were as damning as the testimony given by top Equifax execs was nonchalant. The Senate heard how a catalogue of errors made the loss of more than 150 million American’s private information all but inevitable. These failings ranged from instances of individual ineptitude to the kind of systemic indifference and wilful delusion more commonly associated with outfits like Lehman Brothers or CitiBank, at the height of the financial crisis. Unfortunately, the profitover-process model favoured by the rogues gallery which crippled the world’s economy in 2008 was alive and well at Equifax a mere 18-months ago. Furthermore, if incumbent CEO Mark Begor’s testimony is anything to go by, it’s still alive and kicking now! As well as considering Begor’s beliefs, let’s have a gander at the key areas identified in Sen. Tom Carper’s subcommittee report on the subject, How Equifax Neglected Cybersecurity and Suffered a Devastating Data Breach.
Equifax Failed to Prioritise Cybersecurity The ratings giant had “a reactive approach” to patching vulnerabilities in its systems and had no “standalone written corporate policy” for such a process until 2015. In the lead-up to the breach, an audit revealed an astonishing 8,500 unpatched vulnerabilities, 1,000 of which were deemed “high or medium” risk. Perhaps more worryingly, the audit found that Equifax didn’t have a complete “IT asset inventory”, meaning it didn’t
12 I April 2019
On March 7 2019, a U.S. Senate committee hearing was convened to pick through the debris of the “devastating data breach” experienced by credit reference agency Equifax, in the summer of 2017.
even know which of its systems might be exposed to attack. As Carper notes in the report, “If a vulnerability cannot be found, it cannot be patched.” No further audits were conducted after 2015 and issues previously raised went unaddressed.
Equifax Could Not Follow Its Own Policies in Patching the Vulnerability That Ultimately Caused the Breach On March 8, 2017, the U.S. Department of Homeland Security made the agency aware of a flaw in the commonly used web application software, Apache Struts. The flaw had been given the “the highest criticality score possible” by the National Institute of Standards and Technology. The next day, an internal alert was sent to 400 Equifax employees. No immediate action was taken. Monthly meetings were held to flag cybersecurity risks but were poorly attended by senior management. Of those interviewed by the subcommittee “none” were a regular feature at these crucial debriefs. The chief information officer at the time of the 2017 breach, David Webb, distanced himself from the vital work being done by his team, insisting that patching faults was a “lower level
responsibility that was six levels down” from him. The flaw had been given the “the highest criticality score possible” by the National Institute of Standards and Technology. Tellingly, Webb maintains a healthy buffer between himself and the events of 2017 to this day. The technologist’s LinkedIn page fails to mention any work experience beyond 2010 (when he left Silicon Valley Bank to join Equifax). That said, he still had a better innings than his successor, Jun Ying, who had his new position “rescinded” when it emerged that he’d divested himself of Equifax stock options shortly before information regarding the breach was made public. He also shares his former boss’s modesty regards his role at Equifax, completely omitting the word “Equifax” from his LinkedIn profile. Of his present role at Keenly Health though, Ying states, “Health tech, IoT, streaming data, ML. Need I say more?” To which the logical response is, err, yes, quite a lot more actually.... Anywho, enough booting dogs whilst they’re down (ample time for that later!), back to our litany of logistical lunacy...
Equifax Failed to Locate and Patch Apache Struts The Equifax developer who was aware of the company’s use of Apache Struts wasn’t
one of the 400 employees who received the alert. His manager, however, was and failed to pass on the information. Oh dear. Clearly, if you spend too much time dealing in 1s and 0s, putting 2 and 2 together can become problematic. It was also policy for developers to subscribe to push notifications from software vendors on a voluntary basis. The developer with knowledge of Equifax’s Apache Strut exposure didn’t subscribe to notifications from Apache so was entirely unaware of the fault. Oh dear, oh dear.
Equifax Waited Six Weeks Before Notifying the Public It Was Breached Sorry Senator Carper, could you repeat that? “Equifax publicly announced the data breach on September 7, six weeks after learning of it and nearly four months after the hacker’s entered Equifax’s network.” Hmm, I see. It actually sounded much worse the second time. On the bright side, at least Equifax’s customer services department was quick to react to an enquiry we made earlier this year...
Equifax Left Itself Open to Attack Due to Poor Cybersecurity Practices Equifax Executives Even if you place the Apache Believe They Did All Strut vulnerability to one side, Equifax was a decidedly leaky They Could to Prevent ship. From November 2016 the Breach until July 2017, the blundering behemoth neglected to update expired Secure Sockets Layer (SSL) certificates (which help secure and encrypt online interactions) for its disputes portal. This allowed hackers exploiting Apache Struts’ weakness to pilfer Equifax’s customers data unimpeded for 78 days. For a touch of contemporary context, 2017 also saw Brit Mark Beaumont taking roughly the same amount of time to circumnavigate the planet on a bicycle!
It wouldn’t be a hugely damaging corporate scandal without a healthy dose of abdication and the head honchos of Equifax, past and present, didn’t disappoint. David Webb was left shrugging his shoulders and puzzling why the systemic fallacy “was not caught” whilst the former countermeasures manager defiantly claimed that Equifax’s response was “not only defensible, but justifiable.” It’s one thing for the old guard to remain indignant when presented with their myriad failings but surely the incumbent
CYBERSECURITY THE FIN TECH TIMES
management, specifically CEO Mark Begor, has something fresh, perhaps even encouraging, to offer? “The fact that Equifax did not have an impenetrable information security program and suffered a breach does not mean that the company failed to take cybersecurity seriously” Guess not.
TransUnion and Experian Avoided a Breach Both of Equifax’s main rivals, TransUnion and Experian, managed to avoid a similar fate, but how? By some Herculean effort? No? Dumb luck or massive expense, then? Well, not quite… “Both companies had deployed software to verify the installation of security patches, ran scans more frequently, and maintained an IT asset inventory.” TransUnion and Experian implemented basic security measures to safeguard the incredibly sensitive material with which they had been entrusted. Equifax did not. Peter White (Co-founder and CEO Rethink Technology Research) emphasised this dichotomy when he told TFT that, “The changes are not
excessive and security is not a mystery. There are many companies that can audit and make recommendations, for stronger security, and their cost is not exorbitant, but it can amount to a few percentage points of profit – but if a credit reference agency cannot look after data, which is its lifeblood, then what can it do.
If it had observed basic security protocols and still been hacked, that’s another matter, but in the Equifax case it was clearly a basic lack of care, and less than the minimum standard necessary.”
Equifax Failed to Preserve Key Internal Chat Records Despite having software requiring more patches than Worzel Gummidge, Equifax went to inordinate lengths to cover one very specific area. Its own arse! The shame-faced data sieve had policy in place designed to halt the loss of “potentially responsive documents” in the event of a security breach. However, personnel were using Microsoft Lynx - an instant messaging app whose default setting routinely discards old conversations - to discuss the breach.
Monthly meetings were held to flag cybersecurity risks but were poorly attended by senior management. Of those interviewed by the subcommittee “none” were a regular feature at these crucial debriefs. Equifax considered these exchange’s “disposable” until September 15 (a full 48 days after the hack was discovered) when it decided to start archiving them and changed the app’s settings. With the gate securely bolted and the horse long gone, Equifax had left the subcommittee with a conveniently incomplete record of events to assess. Despite having software requiring more patches than Worzel Gummidge, Equifax went to inordinate lengths to cover one very specific area. Its own arse! Carper surmised that the breach was indicative of a “cultural indifference to cybersecurity” at the credit scoring goliath. It’s a conclusion with which Peter White wholeheartedly agrees,“The senate subcommittee found what most investigations find, which is that because security is a “grudge” purchase, during periods when things are not being hacked, finance guys cut funds to support proper process. It certainly amounts to cultural indifference.” He continued that, “Anything less than a senior management cull of Equifax would be, in my view, a betrayal of the customers the company serves.” It would seem that “cultural indifference”, avarice and institutional arrogance still prevail at corporations whose power and influence remain astronomic. This makes the grim prospect similarly mammoth cockups just as likely now as they were in 2017. uTFT
Juniper Research Offers TFT Exclusive Equifax Hearing Insights MATTHEW DOVE, Digital Editor
Following TFT’s coverage of the March 7 U.S. Senate hearing on the “devastating data breach” experienced by Equifax in 2017, we asked Steffen Sorrell, Principal Analyst at Juniper Research for his insights Matt: Do you think that the “cultural indifference” cited by Sen. Tom Carper (in his subcommittee report on the subject) is a fair assessment of Equifax’s security provisions? If so, how widespread do you think such an attitude is elsewhere in the sector? Steffen: The ‘cultural indifference’ refers to the persistent perception of security as a cost-centre as opposed to something that is valuable to the bottom line. Although this perception is now slowly changing, it remains widespread. The failure to ensure that proper security processes and architecture were implemented at Equifax highlights that even large companies in ‘high risk’ environments have not properly considered security by design principles in terms of risk assessment and consequent mitigation measures.” Matt: What changes need to be made by companies handling huge amounts of data in order that such breaches can be prevented? Steffen: The main issue is that proper security implementation is generally an expensive undertaking, involving a risk assessment, layered solutions, architecture design, and penetration testing and so on. The reality is that, particularly as the Internet of Things becomes more widespread and society becomes increasingly digitised, a reputation as a secure business will be a differentiation point and will pay itself back over time. Unfortunately, breaches cannot be prevented, no matter how good the security; particularly where a well-funded and persistent attacker is involved. There will always be potential weak points in the chain: often these are company employees themselves, who are susceptible to social engineering. Therefore, companies in high risk environments must build security around the assumption that a breach will occur: this means applying mitigation measures to reduce risk. Data encryption at all stages, network segmentation, ‘zero trust’ models and robust implementation of process management for updates, patches and so on, are critical here.” uTFT
April 2019 I 13
BLOCKCHAIN THE FIN TECH TIMES
Usability – a driving force for blockchain adoption Modex helps developers, teams and businesses of all sizes get started on blockchain, providing the full set of tools needed to learn, create, test, deploy and sell smart contracts and DApps. TEODOR STEFAN, Head of Content, Modex forecasts blockchain developments in 2019
What developers should focus on in 2019 as the blockchain industry grows. Even though 2018 was a rollercoaster year for cryptocurrencies, blockchain developers, entrepreneurs, and FinTech professionals around the world made progress in promoting blockchain technology as a game-changer, highlighting its advantages through various projects and events. With blockchain adoption set to further grow this year, here’s what blockchain developers should focus on. Before forecasting how 2019 will look in the blockchain industry, let’s take a brief look at the challenges faced in 2018 as seen by some professionals in this field. Cecily Mak - Venture Partner Solutions stated, “One of the biggest challenges faced by the blockchain space in 2018 was enduring and persistent misunderstanding of the differences between blockchain and cryptocurrency. A pervasive initial sense of distrust and speculation regarding “blockchain” as equivalent to “cryptocurrency” or “Bitcoin”, has slowed innovation and adoption in the areas these technologies are well positioned to contribute to meaningful advancements and improvements.’ Constantin Kostenko, Senior Solutions Architect and Strategist added another challenge in
14 I April 2019
understanding is, “A realisation that people don’t buy blockchain, but they buy sustainable value realised through blockchain. Just like we don’t buy cars for their shape, engine, or looks. We buy cars to get us from point A to point B on terms that manifest themselves through shape, engine, or looks.’
Some other experts maintain that blockchain has a reputational problem because it is still associated with cryptocurrencies, and especially with Bitcoin
Main topics in the blockchain industry for 2019 According to experts in the blockchain space, corporates and governments - will continue to try to find ways to control and /or maintain some form of centralisation in a space that is built on a collective motivation to decentralise. “This will result in a useful global dialogue in both the private and public sectors about the cost and merits of decentralisation and the power of blockchain to advance humanity as a whole”, stated Mak. Others think that the dominant topic of blockchain in 2019 will be the creation of security tokens that are regulated like traditional stock exchanges. Security tokens are revolutionising security markets and mitigating most of the problems associated with conventional security trading. Blockchain technology promotes transparency as all trades and ownership records are stored on public ledgers which cannot be tampered with. Security tokens make it possible to tokenise securities, so financial assets such as stocks, bonds, futures, equities, swaps, and forwards can all be managed via distributed ledgers. Industry analysts believe that security tokens will attract an enormous share of Wall Street’s money during 2019. This expected shift has urged many venture capitalists and entrepreneurs to invest in the establishment of
security token exchanges, during the past couple of years. Another dominant topic in the blockchain industry for 2019 will be the increasing adoption of Enterprise Ethereum by businesses that want to leverage its technological innovations to improve organisation inefficiencies, unlock new business opportunities and gain sustainable competitive advantages. Also, in order for blockchain initiatives to be a success, and become mainstream, they need to be solving real-user problems.
Improving the image of blockchain, a shift in terminology Some other experts maintain that blockchain has a reputational problem. It is believed that a lot of businesses are skeptical of blockchain and unwilling to adopt this revolutionary technology just because it is still associated with cryptocurrencies, and especially with Bitcoin. The blockchain industry is expected to further work on its image in 2019, and separate blockchain from crypto in the minds of businesses. Moreover, in order for blockchain adoption to happen on a larger scale, it should be broadly communicated that blockchain technology can have numerous use cases that are completely unrelated to cryptocurrencies. Also this year, we expect to see a shift in terminology as the term “blockchain” will be gradually replaced by a more neutral one:
BLOCKCHAIN THE FIN TECH TIMES
DLT or Distributed Ledger Technology. This shift in terminology should send a clear signal to executive teams within corporates that their projects have nothing to do with the hyped world of cryptocurrencies and ICOs. Once this becomes clear to more people in business, blockchain will be able to experience a much wider adoption.
New solutions to solve the trilemma problem The imbalance between scalability, decentralisation and security is considered a “trilemma problem”. This is seen as a stumbling block that the industry faces, due to technical barriers that have undermined the trust and capabilities necessary for the mainstream adoption of blockchain. How do we overcome this trilemma? Major research on possibilities to overcome the key shortcomings in existing architectures have been exploited - scaling solutions such as sidechains look promising - and this should enable developers to build applications that solve real-world business challenges. In 2019, real breakthroughs in scalability and performance are expected to begin coming to fruition, helping speed up blockchain technology adoption.
From proof-of-concept projects to real-world applications According to Deloitte’s 2018 Global Blockchain Survey, companies are starting to move from proofof-concept projects to real-world applications. There will be a particular focus on discovering not just where blockchain could fit, but to find places where it is the best fit. Therefore, in 2019 we should see a transition of enterprise interest towards identifying tangible, productive use cases for blockchain. Projects will therefore move away from a “blockchain-for-everything” approach to back-to-earth implementation. Also this year, it is widely expected that blockchain projects will become more mature. With technology and valuation starting to converge at rational levels, the stage will be set for the blockchain industry to enter the next phase of maturity. As dedicated blockchain teams are stepping up their game to deliver interesting, real-world applicable projects, a level of maturity within the blockchain space is expected throughout the year.
More players and bigger investments in the blockchain space 2019 should see blockchain adoption on a broader scale as an increasing number are seeing that such technology would provide benefits for their companies as well. Now, the hot issue moves from ‘What is blockchain?’ to ‘How can we use blockchain technology?’ and many industry experts expect the technology to be more widely adopted by mainstream companies. As more and more companies are moving towards this innovative technology, we can expect that investments in blockchain will further rise. PricewaterhouseCoopers (PwC) reported that many of its customers “are spending big money” on blockchain initiatives, and that blockchain spending should only keep growing. According to a 2018 Deloitte’s Global Blockchain Survey, 40% of respondents reported that their organisation will invest $5 million or more in blockchain technology in 2019. In addition, a survey from International Data Corporation found that the respondents to the survey were willing to invest millions into blockchain technology this year.
Decentralised apps (DApps) will continue to grow
For developers, soft skills will be a differentiating factor
As companies shift their focus from, “What is blockchain?” to “What can we do with this technology?,” another trend in 2019 will be more decentralisation of apps themselves. These are key aspects for wider spread of blockchain as they will make blockchain more affordable and accessible. IBM has already developed a new blockchain product that allows start-ups and developers who are interested to build their own distributed ledger products. And some even predict that we are going to see the first DApp that will hit a million users a day sometime this year.
Jeremy Auger, co-founder and chief strategy officer at D2L, a LMS platform serving millions of students across North America, Europe, the Middle East, Africa, and Australia opined, “Technical skills have been the Holy Grail of hiring in past years, but these skills have rapidly declining shelf lives. The rise of AI and automation means employees are increasingly tasked with jobs that only humans can do: thinking creatively, using judgment and employing empathy, etc. Adaptability will be the most durable skill in the years to come, as the ability to learn and adjust becomes more important than any one skill. Companies, as well as education systems, will need to shift how they assess and train people accordingly”.
Convergence between blockchain, AI and IoT The convergence between blockchain and the Internet of Things (IoT) is already picking up pace. According to a report by International Data Corporation (IDC), many IoT companies will be incorporating blockchain technology into their products. IDC predicts that 20 % of IoT deployments will have blockchain services installed by the end of 2019. Using blockchain in products connected to the Internet of Things - such as wearable devices and smart appliances - also means consumers will be using the technology without even realising it. This usability will be a key-factor in encouraging the uptake of blockchain technology across industries. Moreover, progress in the Artificial Intelligence (AI) segment is set to transform the industry, with advancements being used in blockchain and in cyber security. Companies are set to use AI to enhance customer experience and potentially reduce costs in certain areas of their operations. Blockchain is beneficial for these industries because it has a secure framework and it automates data exchange.
According to a 2018 Deloitte’s Global Blockchain Survey, 40% of respondents reported that their organisation will invest $5 million or more in blockchain technology in 2019.
The best-performing companies of 2019 will be developer-driven Steve Burton, DevOps evangelist at Harness, a continuous delivery startup with Fortune 500 customers and 300 percent headcount growth in its first year remarked, “Developers will need to be in the driver’s seat at all times and in the room when decisions are made. Traditional IT and operations will disappear and instead, they will support the needs of development and engineering teams. They will be measured on driving developer velocity versus server availability.”
A bigger role across the organisation: agile development Bill Press, SVP of engineering at Optimizely, which powers thousands of digital experiments every month, serves a billion impressions per day, and is used by more than 26 Fortune 100 companies stated, ‘In 2019, the role of agile will take on a broader role in product development - one in which developers and designers will use agile processes to enable experimentation, not just development. Just as agile comes from collaboration and cross functionality, so should experimentation - the more data, the more collaboration, the better. They’ll test ideas early on, measure the results of their campaigns and make logical improvements, all based on data. As consumers continue to demand more personalised experiences, we’ll see more organisations lean on this experiment-driven approach, which will help them to quickly pivot when things aren’t working out and focus their time and resources on developing products that matter most to their core audience.’
apps. Additionally, developers will increasingly add security detection features at the code level. Not only will code be better protected against intruders; it will watch out for abnormal activity as well.’
FinTech industry developing dynamically This year, innovative solutions will be adopted in order to improve various financial services such as online payments, currency exchange or taking a loan. According to the Statista portal, global investments in enterprises in the field of FinTech will have exceeded 46 billion dollars by 2020. Experts predict that in 2019 more and more companies, as well as FinTech startups, will emerge in this industry.
Take part, at least once, in a hackathon! In 2019, blockchain developers should look for hackathons as these events are great for learning many things and for building their network as a developer by meeting new people, professionals from the industry, and potential investors. Modex, the world’s first App Store for blockchain, believes in the power of hackathons in order to speed up blockchain adoption and spread the technological advancements made. In June 2018, Modex Blockchain Labs was launched worldwide through a series of hackathons. In October 2018, Modex’s tools for developers were tested at Travel & Blockchain Hackathon and in December 2018 Modex’s Online Hackathon offered big prizes for students. Modex’s hackathons will continue to play an important role in the company’s interaction with blockchain developers throughout 2019! uTFT
Security moving upstream Derek Choy, CIO of Rainforest QA, an ondemand quality-assurance testing company that was named one of Inc.’s 2018 “Best Places to Work” and services hundreds of companies, including Adobe and Oracle stated, ‘Everybody is waking up to the fact that data security is a critical problem that needs to be addressed earlier in the development process. This is true not only for customers whose data is on the line, but also for business leaders and software developers who are charged with protecting it. Today, these parties are trying to understand how they can incorporate security into their DevOps process. In 2019, businesses will implement what they have learned. Tech leaders will educate developers on how to avoid errors like coding security holes into their
April 2019 I 15
THE FIN TECH TIMES
CITY WEEK 2019
“Financial Services as a Driver of Inclusive Globalisation”
Guildhall, London, 20 - 21 May Now in its ninth year, don’t miss this opportunity to network with 700 + delegates from over 50 countries and hear from a stellar panel of speakers including: • Luis de Guindos, Vice-President, European Central Bank • Nadia Calviño, Minister of Economy and Business, Ministry for Economy and Business of Spain • Rt Hon. Dr Liam Fox MP, Secretary of State for International Trade and President of the Board of Trade
• Pablo Hernández de Cos, Governor, Banco de España • José Manuel Barroso, Non-Executive Chairman, Goldman Sachs International and former President of the European Commission • Clare Woodman, CEO EMEA, Morgan Stanley
2019 topics include: • Evolving role of the City of London in the global economy • The new EU-UK agreement on financial services • Towards an EU capital markets union • New priority markets for financial services • Trade and Investment Flows with China • Emerging Financial Hubs in Asia • Political Risks and Global Trade
www.cityweekuk.com 16 I April 2019
• • • • • • • •
Climate finance and sustainability Global Financial Regulation – where next? Transforming Culture in Financial Services The Evolution of Financial Crime The Future of Europe Cyber Security and Operational Resilience AI, Big Data and Machine Learning Skills and job requirements of an industry in transition
RESEARCH THE FIN TECH TIMES
Global WealthTech investment increased nearly 5x since 2014 Total amount invested in WealthTech companies surpassed $4.5bn last year Capital raised by WealthTech companies reached $4.6bn across 220 deals in 2018. This was an increase of 65.9% from the previous year. There were 27 transactions valued at $50m or above which collectively raised $2.7bn, as opposed to only 13 deals in this bracket in 2017 which raised approximately half of this amount. The biggest deal last year was Robinhood’s $363m Series D round. The Menlo Park-based startup offers commission-free trading for stocks, ETFs, options and cryptocurrencies all available in one platform. The funding round in March last year was led by DST Global, a venture capital firm specialising in late stage investments. Venture capital firms Kleiner Perkins, Sequoia Capital, CapitalG and investment firm ICONIQ Capital also participated. Robinhood plans to use the capital injection to expand product line-up. The second largest funding round in 2018 was $250m raised by Revolut in a Series C round. The London-based challenger bank, which was valued at £300m in 2017, reached unicorn status with the funding round valuing the company at £1.2bn. Currently, the neobank has more than two million customers globally and said in a press release last year that it is signing up between 6,000 and 9,000 new users each day. Deal activity in the WealthTech sector, which peaked in 2016 with 281 deals, declined 21.7% to 220 deals last year.
The share of WealthTech deals in North America has decreased by nearly a quarter since 2014
Companies in North America attracted a smaller share of transactions every year from 2014 to 2017, going from 54.8% to 38.0% during this period. Although, this share increased slightly, by 3.4 pp last year, it is clear that the US is loosening its hold on the global WealthTech market as FinTech hubs start to form in other regions around the world. Additionally, apart from the previously mentioned Robinhood deal, none of the top 10 WealthTech transactions in the last five years were raised by companies based in North America. Each of the other three regions, Europe, Asia and Rest of World, have increased their share of deal activity since 2014. Companies based in Europe attracted 38.3% of the total deals in 2017, the highest deal share of any region that year. In every other year since 2014 the share of deals in Europe has been second only to North America. Companies in Rest of World attracted 8.2% of total deals last year, a 2.3 pp increase from 2014. Out of all the WealthTech transactions completed in Rest of World across the last five years, 47.3% were raised by startups based in Australasia and 32.4% were raised by South Americabased companies. Additionally, one of the top 10 deals globally since 2014 was completed by a company based in that region. Sao Paulo-based challenger bank Nubank raised $150m in a Series E round in March last year. The funding round was led by the previously mentioned DST Global and CEO David Velez said the new capital would “serve to further strengthen our balance sheet to support the accelerated growth we have seen since launch.“
The data for this article is sourced from the FinTech Global platform. More in-depth research, data and analytics on investments and companies across all FinTech Global subsectors and regions around the world are available to subscribers of FinTech Global at www.FinTech.Global ©2019 FinTech Global
April 2019 I 17
DIGITAL SECURITIES THE FIN TECH TIMES
DIGITAL SECURITIES – CROSSING THE CHASM JEFFREY SWEENEY, Chairman and CEO, US Capital Global
As we move from the innovators and early adopters of cryptocurrencies and ICOs on DLT, to a broader early majority market of digital securities, JEFFREY SWEENEY CEO US Capital Global points to Geoffrey Moore and Ev Rogers’ theories of technology diffusions and ‘crossing the chasm,’ that impact the five stage chronological life cycle and transition of early technology adopters. He questions the difference in views between early adopters and early majority populations in terms of their key issues related to perceived risk. Sweeney submits in this article that what is critical to the early majority category is the availability of clear High Value Assets and the Adoption of Standards.
What is the ultimate goal? The ultimate goal here is not ‘technology adoption’ per se, and not just reallocating the financial pie, but more money for more people. The ultimate goal is democratising access to alternative investments, creating wealth, and growth for investors, and for businesses. How do you do that? In financial markets the early stage investors are sophisticated enough to be able to take significant risk for large rewards and wealthy enough to be able to meet high minimum investments associated with private markets. Ultimately, the capital markets want to broaden the participation to other investors and institutions, to benefit smaller investors and smaller cap companies.
Won’t technology solve everything? One view on the key aspects of ‘chasm crossing’, focuses on technology infrastructure and platforms. Technology in general, and in this specific case digital ledgers and digital securities based on smart contracts, certainly reduces transaction friction. Yes this technology differentiation is very attractive to innovators and early adopters and technology adoption in this case, can reduce transaction friction, and cost, and allow for easier reporting and regulatory oversight. But, while technology clearly helps facilitate the transition, it won’t solve the problem 100%. There are other key components to solving the larger problem. Remember, while the profile of innovators and early adopters is a higher risk tolerance, the characteristics of the early majority is to accept less risk for more inherent value. The early majority will ultimately be attracted by high value assets.
The other chasm – Alternative Investments.
There’s actually two revolutions going on. Of course, there’s the new digital technology/digital securities revolution, but we’re still trying to finish the transition to broader access to Alternative Investments. Alternative investments include private equity, real estate, commodities and derivatives contracts, not the public stocks and bonds of traditional investors. But, while ‘alts’ may not be as widely accepted, they offer some special advantages to the broader market, including non-correlation with the stock market and the potential for incremental improvement in returns even when focused on demonstrated high value. Who’s already invested in alts? Already the ‘early majority’ for alts? – Institutional-type investors, large multifamily offices, asset managers, rich investment advisors, are savvy in alternative 18 I April 2019
investments. And these institutional investors certainly are interested in the use of new digital technology to reduce transaction friction and to improve access to opportunities.
Early adopter success – key to chasm crossing It is generally accepted that to ‘cross the chasm’ you need significant momentum from early adopter success, and so we’re at a point where a combination of these two groups’ interests may provide the larger accelerator. We’re talking about an intersection of early adopters successful in cryptocurrencies, seeking to expand and diversify their holdings into other asset classes, and the early adopters / early majority of alternative investors, seeking to leverage the new technology platforms for improved efficiency and opportunities. So perhaps then this combination is the key to a tipping point for general adoption. Bring high value alternative assets up on reliable digital platforms, offer extremely easy to identify, reliable, and valuable opportunities, and this will not only attract the blockchain ‘natives’ but also bring in the asset managers and institutional investors. Then, from that base, you can launch generally into the ‘early majority’ for digital securities, the general public, the smaller asset managers, into the dual-accredited investors – people like that that will begin to participate, and then – it explodes. There’s a logical sequence or progression for this. One of the key additional underpinnings is, besides valuable assets, is reliability and trust. You have to have reliable assets – and to have that trust you have to have regulated best practices in value assessment and things of that nature, by regulated entities, and then you need a trusted place to transact. It’s all about trust.
It’s all about standards This brings us to an alternative theory about chasm-crossing. If it’s not purely about infrastructure platforms, then the competing concept is all about emerging standards. This is the viewpoint elaborated by Irving Wladawsky-Berger. Crossing the chasm for ‘blockchain’ is more than just ‘Apps’, it’s about the emergence of standards and governance. Whether you send a letter, or make a phone call, or travel by plane, from London to Bangkok, this is only possible because the global regulatory bodies have agreed on standards, not just technology standards, but standards of practice. For aircraft and operations there are technical standards by IATA, the International Air Transport Association, and other regulatory bodies, and right now this ‘technical standards’ is where everybody in digital securities is concentrated on for the most part, like the smart contract terms and specification of Hyperledger and R3. But like in air travel, where beyond assembling the plane, you want to be confident that the crew is trained how to handle the aircraft. Similarly in digital securities, we need to know that the digital security technology is operated under relevant professional standards and practices. Standards are important for sophisticated investors, but they’re even more important for the general marketplace, so that they can understand not only the basic terms of the smart contract transaction – how many shares am I getting, and how much does it cost, and how can I see it in my portfolio, but equally or more importantly – what is the assessment of the valuation of those shares, and who did that? What type of licensed professionals were involved, and how can I rely on them?
And then what about interoperability? Not to take the air travel example too far, but what if you had to have a different airport for each different airplane manufacturer? That would severely increase costs and blunt air travel for the general public, and mean that many places wouldn’t be served by flights. So within certain technical limitations, today any airline can fly any
airplane to any airport. And to truly cross the digital security chasm, I want to buy and sell digital across markets. With digital securities at this stage, for the most part you sell them on the platform you issue on. But, if I’m an issuer of digital securities, I really want to be able to go to multiple markets. As an investor, I want be able to select the right market/broker for me that provides the right service, integrates with my existing accounting mechanism and such. I’d like to be able to pick and choose, be able to compare, and not feel like, “Well, if I only go with this guy, he can’t get me that other digital security.” The standards are critical i.e. the collaboration amongst the professionals and amongst the emerging marketplaces are vital to be able to identify and offer high value alternative investments, to offer the issuer a broader access to multiple marketplaces, and to be able to offer investors a complete selection amongst digital securities as well as amongst dealers of traditional securities. I would like to know that my broker/dealer, who’s been involved in my life, is also participating in evolving the standards for interoperability across digital marketplaces. It’s crucial that we in the industry, existing financial professionals, get together to perform the same kind of function that you see in FINRA. Self-regulation of the marketplace to improve the standards, visibility and reliability to issuers and investors, for what they’re participating in – are the responsibility of the professional.
In Summary Stay focused on the goal. It’s not tokenisation. Nor just technical efficiency in markets. The ultimate goal is democratising access to alternative investments, creating wealth, and growth for investors, and for businesses. More money for more people. To achieve this we in digital markets must cross the chasm from innovators and early adopters in cryptocurrencies, to the early majority of a larger private market in digital securities. Emerging adoption of institutional investors to digital securities for high value alternative investments can not only provide the proof point of digital markets, but provide the momentum to deliver the promise of digital markets to the broader class of investors. Delivering these high value digital securities requires technology plus the trust that can only come from professional standards in an evolving private securities market place. uTFT
There’s actually two revolutions going on. Of course, there’s the new digital technology/digital securities revolution, but we’re still trying to finish the transition to broader access to Alternative Investments.
THE FIN TECH TIMES
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Welcoming an unrivalled speaker line-up across the festival week including: Alex Cruz Chairman and CEO British Airways
Sarah Greasley CTO DirectLine Group
Bob Strudwick CTO ASOS
Bruce Daisley Vice President EMEA Twitter
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April 2019 I 19
E-PAYMENTS THE FIN TECH TIMES
ECOMMPAY: Safeguarding payments security ZOYA MALIK, managing editor, TFT spoke to PAUL MARCANTONIO, Head of UK and Western Europe, ECOMMPAY about the company’s payment solutions growth plans and its strategic work within the travel industry Zoya: What is the full remit of ECOMMPAY’s business? Paul: If we’re talking specifically about ECOMMPAY, we’re an international payment service provider and direct card acquirer. Beyond developing bespoke payment solutions for our portfolio of eCommerce clients, we offer proprietary technologies, customisable products, business consultations, individual client management, and much more. With over 200 software engineers among our ranks, we tend to think of ourselves as a technology company. This means that we are incredibly flexible in our approach, developing industry specific solutions in response to client pain points, as well as introducing a host of “enhancements”, which help merchants boost their overall revenues. We’re also part of The ECOMMPAY Group, which is almost a standalone payments ecosystem of sorts, dealing with everything from company registration to opening an eAccount, to legal advice. Zoya: How have the different business lines grown over the last 5 years? Paul: We’ve diversified substantially. Maintaining a strong presence in our core verticals, we’ve applied our knowledge and expertise to exploring new directions. For instance, last year we made the strategic decision to dedicate considerable efforts to expanding our capabilities within the travel sector. ECOMMPAY already had a few travel operator clients, so we combined our experience in helping them achieve higher conversion rates with a comprehensive analysis of operator pain points to build a solution – a technological payment platform – that will streamline transactions, improve user experience, and increase efficiencies. We launched a prototype at last year’s World Travel Market exhibition in London, alongside a whole host of travel payments technologies, and received incredibly positive initial feedback. We took on board comments from current and prospective clients and headed to ITB Berlin earlier this month to beta-test our newest solution. This resulted in even more great feedback.
We launched a prototype at last year’s World Travel Market exhibition in London, and received incredibly positive initial feedback. We took on board comments from current and prospective clients and headed to ITB Berlin earlier this month to beta-test our newest solution. This resulted in even more great feedback.
20 I April 2019
Zoya: What challenges are there for ECOMMPAY in acquiring merchant business? Paul: ECOMMPAY still has some work to do in terms of brand recognition. Though I’m not experiencing much resistance whenever we enter new verticals or approach new businesses, I still get the sense that they’re leaning towards what they know, which means ECOMMPAY has to work that tiny bit harder. Unfortunately, low brand recognition in a crowded payments space often translates to a price war, essentially becoming a race to the bottom. We try not to engage on this level, because there’s a difference between price and value. Every merchant I’ve ever worked with has had precise aesthetic and functional demands, which requires time, technology, and resources. Many of the cheaper providers end up sacrificing quality by being unable to tailor individual solutions for individual clients. Zoya: What are the struggles for merchants in moving away from a cash business and investing in fraud and other protection? Paul: They’re dealing with what is, to them, an unknown. If they have no experience, it’s completely alien – instead of shoppers in their physical store, they’re now dealing with “invisible” people. The biggest struggle is understanding how to provide excellent customer service on this level, which is something we, as a payment service provider, can definitely help with. It’s not just about fraud, it’s about so much more. In an attempt to emulate a personal experience in the digital realm; merchants need to invest into seeking synergy between conversion and security. After all, your fraud protection could be amazing, but if it’s chasing away all your customers, there isn’t much of a point. Same goes for the opposite – if your
PAUL MARCANTONIO, Head of UK and Western Europe, ECOMMPAY risk management is weak, you might end up spending more on paying fines than the profits reaped. Zoya: What are the challenges for all payment ecosystem stakeholders with card fraud? Paul: Good question. This actually flows rather nicely from the previous one. The biggest challenge is knowing which barriers to put up. If you have an overzealous fraud protection tool, it can kill your conversion rates, i.e. the percentage of customers completing their intended transactions. If it’s too relaxed, on the other hand, you may inadvertently open the floodgates to fraudulent transactions. The solution is simple: establish a partnership with a dynamic, experienced partner capable of adapting to your specific style of business and category of customer. Zoya: What services does ECOMMPAY provide its clients to set up firewalls/protection against online and card fraud? Paul: To assist clients in safeguarding security, we engineered the proprietary FraudStop risk management system, which features automated risk scoring (an interdependent analysis based on multiple factors) on the basis of machine learning; flexible limits, restrictions, and payment scenarios; notifications of suspicious transactions; as well as offering merchants the ability to independently manage fraud filters and black/white lists. FraudStop’s automated functionality is complemented by our highly qualified risk analysts, who not only configure system settings to each client’s specifications, but also manually monitor suspicious behaviour and track patterns of fraudulent activity.
Additionally, ECOMMPAY relies on stringent security measures in handling data, such as Transport Layer Security (TLS) version 1.2 for the transfer of sensitive data between the customer’s browser and our payment application; tokenisation for the encryption of electronic payment data; a multifactor authentication system to remotely verify sensitive information; and Web Application Firewall (WAF) to secure against DDoS attacks. Zoya: How much has your company saved clients’ (merchants/ banks, etc.) business through ECOMMPAY’s advisory? Paul: It’s hard to put a value on that, because we don’t charge for our consulting services. At the same time, we have seen visible increases in traffic and payment acceptance rates, as well as helping businesses enter markets previously unknown to them. Though the objective is, naturally, to increase client profits, our solutions are comprised of many components: increasing conversion, building brand loyalty, safeguarding security, expanding into new territories, etc. As a result, it’s hard to quantify exactly how much we’ve saved our clients, but I would like to think that it’s significant. Zoya: How are you helping clients with risk management and data security? Paul: In addition to the risk management processes outlined previously, we also work with third party partners to provide comprehensive security coverage. For example, we hold Principal Membership with international payment systems Visa and Mastercard, which both have their own security mechanisms. Our employees also regularly participate in competitions and hackathons, such as Visa Challenge. Furthermore, holding PCI DSS 3.2 certification ourselves, we regularly assist clients in improving their security standards in order to become PCI DSS compliant. For instance, we provided a technical consultation to the subsidiary projects of Firebird Tours (Rail. Ninja and Russiantraintickets.com) on how to build, maintain, and monitor a secure network, as well as on how to protect cardholder data. Consequently, both sites received PCI DSS certification. Zoya: What led you into the payments business? Paul: It was a series of events. I was working within the video gaming industry, and became genuinely interested in the convergence of physical and digital. Witnessing the challenge to the high-street posed by the onslaught of online retailers, made me realise that I wanted to be part of this evolution – this revolution – and so here I am. The rest, as they say, is history. Zoya: What’s exciting in this industry? Paul: To me, the most exciting aspect of working in payments is the diversity. Because each client industry has its own nuances, each of us needs to be adaptable, dynamic, and agile in our approach. You can’t take anything for granted, because things are always changing, whether it’s new regulation being introduced or a new technological fad taking the world by storm. In payments, you’re always learning. Zoya: What are going to be new trends for the payments industry and for ECOMMPAY to invest to compete? Paul: It seems a bit counterintuitive for us to give anything away, because we don’t want to lose our competitive edge, but rest assured that we’ve got our eye on the next five years. This has always been our approach – looking ahead, trying to predict the trends. For proof, please see our incredibly advanced GATE2025 platform, which was released seven years ahead of schedule. uTFT
DATA ANALYTICS THE FIN TECH TIMES
SmartStream’s search for hybrid talent SmartStream Technologies CEO HAYTHAM KADDOURA spoke to ZOYA MALIK about his views on the search and development of future fintech talent to complement critical requirements in interpreting and delivering data analytics, satisfy compliance and enhance risk reporting for clients to achieve market success
Zoya: What are your current fintech industry concerns?
Haytham: I have just attended Money 2020 in Singapore and what I have observed is that banks and financial service institutions in Asia, as with their European and American counterparts, are anxious about the availability of talent and skillsets to support them in adopting new technologies particularly in AI and machine learning where there is heavy reliance on data analysis. The discourse has shifted from the conventional development and search for talent coming out of schools – which is a non-starter; we are now seeking graduates from a hybrid model to fulfil requirements; a hybrid model that brings together both knowledge of banking operations and technology. Financial service institutions are finding this a challenge as are the large technology players such as Google, which are after the same expertise. What emerged, is that this hybrid talent shortage will be felt over at least the coming 10 years.
Zoya: What trends are creating these pressures? Haytham: These days it’s quite common to hear in the industry that Data is gold; I believe that Talent is even more precious. With already large and ever growing pools of data, financial institutions are more than ever investing in teams
and technologies to better read and interpret the data. Whether aiming to serve their clients better, address regulatory requirements, enhance treasury operations, or mitigate risks, financial institutions are continuously tuning and re-tuning their peopletechnology relationship. Externally, there is a growing desire from some regulators to directly and proactively gain access to data of financial institutions. This is a major shift from the current model whereby regulators await institutions to periodically provide a set of reports. From an end customer angle, we are all demanding faster, more efficient, and cost effective services from our banks. Advances in digital payments, blockchain and cryptocurrencies are allowing global transfers to take place instantaneously and at a fraction of conventional costs. I believe that any financial institution not gearing up to be able to serve its clients in such a manner, will likely be struggling in the next decade. One of the areas that SmartStream is involved in with our clients is in enriching their data, and lessoning mismatch and inconsistencies in their data sets. Our AI platforms complement this by allowing for better quality analysis leading to insights that strengthen their financial and risk management capabilities. While we can undoubtedly support the technological aspect of the above, we find that one of the key challenges for financial institutions, is access to human capital that can assist in the above internally. That is in fact, one of the reasons why our managed services operation was created.
Zoya: What are your plans to recruit and groom this talent?
HAYTHAM KADDOURA, CEO SmartStream
Haytham: I see most of the solutions for these issues will primarily be driven by AI, but with the right people to harness that power. That means, we need to have the right human capital in place to be able to answer and rationalise the correct decision-making in data handling. Within SmartStream, we are strategically building stronger teams. We are ramping up our skill sets by employing data scientists and developers that are bringing in banking and tech know-how. We have our managed services business and so we identify the right people from within the Tier 1 bank teams and they come to work on our premises, and we also inject these teams with fresh talent. This two – fold approach is an effective strategy and is helping us to meet and deliver on our future partnership requirements both within financial services and the tech arena. On our recruitment side, our talent pool accessing is currently spread over various geographies. For instance, we have a dynamic team in India that is more than 500 strong developers and back office operators. We have tech teams in Vienna, Bristol, UK and the USA and we are currently looking to tap into talent in Belarus and the Ukraine and from recruitment specialists in Poland. Most critically, we are also looking at good seed talent coming out of universities from where we are evolving technocrats and augmenting that pool, with talent coming out of banks.
An example of this strategy is in our partnerships with universities in India for students to take up summer internships in our global offices for a duration of 3 to 6 months. Some of these recruits may also be alumni experts derived from Indian universities into a pilot sourcing project and we will roll them out into similar programmes across Mumbai, Bangalore and Jaipur. As mentioned, these recruits will sit within our managed services, product management, or R&D teams and work alongside the banks’ tech teams.
Zoya: What’s your experience of women entering the programme and industry in South Asia? Haytham: Some of our top staff in India and the region are women. We don’t differentiate in terms of recruitment between men and women. Based on my experience within my India team, I can categorically say that women bring a level of openness, and a high level of career performance and direction that is second to none and they are generally very proactive in all our business areas.
Zoya: How would you advise a new generation looking towards joining the fintech industry?
Haytham: If I was to start again, I would definitely look to becoming a data scientist - that is where the demand and the money is. Whether you are looking at joining a corporate, bank or software house, all these sectors are focused on analysing data and assessing how it could be used to differentiate and lead to business success. From a tech aspect, it’s hard to identify exact entry points because development platforms are changing so quickly, so it’s difficult to specify; suffice it to say for those entering the workforce and transferring sectors, they will need to keep reskilling to stay in touch and on top of their game. I think secondary and undergraduate schooling is not catering sufficiently to the needs of the real world and markets. Over 40-60 years of education hasn’t kept up with delivering realistic STEM (Science, Technology, Engineering, Maths) content that keeps in touch with the required skills for the corporate world and neither able to change the way youngsters need to think about progressing in this industry. What’s required are for example, scientists that have a strong background in technology. Look at the strides being made in Biotech with robots increasingly replacing surgeons’ skills. Advances in biotech have started to develop artificial brains and it’s a daunting picture we are unprepared for, where medical science is discovering a whole new world via imaging. Most of the globe is moving towards being automated and we need to nurture talent that can keep pace with these advances, to stay relevant and excel in the future
Zoya: What’s your view on the success and limitations for economies tied to the mobility of labour across countries? For instance, Brexit and possible future visa issues? Haytham: It’s a good point. Companies are looking for candidates more globally, to tap into talent pools and step outside their national borders such as the UK and pockets in US. That means to really look forwards onto new horizons of possibilities by cooperating with more far flung institutions, to build a ready fintech database. At SmartStream, we can tap someone from China, India, Europe, Asia and the US, because what is paramount for us, is that we strive to get the best people for each role irrespective of where they are geographically located. I think governments realise the value of good talent and those with regimens to restrict talent, won’t sustain their economies nor stay competitive. So for SmartStream, if one country refuses a visa for a prospective employee, I can hire that person into any of our other offices around the world. To me Brexit’s influence will not hamper us in this regard; I just happen to think visa constraints cannot necessarily endure in this day and age where people increasingly value greater mobility and cross-cultural exposure. uTFT
We need to have the right human capital in place to be able to answer and rationalise the correct decisionmaking in data handling, by employing data scientists and developers that are bringing in banking and tech know-how.
April 2019 I 21
TOP 100 WOMEN IN FINTECH THE FIN TECH TIMES
TOP 100 WOMEN IN FINTECH At a time when women are woefully underrepresented in both the financial services and tech, The Fintech Times’ CEO Katia Lang, Barclays’ Megan Caywood and Rainmaking Innovation’s Ghela Boskovich have been named among the Top 100 Women in Fintech. With just 1% of VC funding going to female founders, women are not only be denied access to opportunity, they’re also being starved of capital. This isn’t just bad for women, it’s bad for business. Diversity is the lifeblood of innovation; diversity of thought, diversity of approach and diversity of talent. As the struggle for parity continues, lists like the Top 100 Women in Fintech list, compiled by Lattice 80, offer us an insight into how far we’ve come but also highlight how far we still have left to go. Among this year’s London contingent were Rainmaking Innovation’s Ghela Boskovich, Megan Caywood of Barclays and TFT’s own Katia Lang. We asked the boss a few questions to see if her outlook has softened in the intervening years (Spoilers: They haven’t…) How does it feel to be named in such prestigious company? Katia: It feels wonderful. Also, it’s very pleasing to realise that we have featured some of these outstanding women in our paper over the years, observing their entrepreneurial journeys. It’s probably the most exciting thing about our business to be able to watch businesses that grow, pivot, change. And succeed. Or not. It’s doesn’t make it less of a journey. Megan: I’m honoured to be included in this list alongside such impressive women, many of which I know well and call friends. One of which is my good friend Emma Margetts, who I met when I first moved to London. Back in those early days it was nearly impossible for us to find time to get together sometimes though because we were constantly working, both intensely focused on our respective start-ups such that sometimes it didn’t leave much time for anything else. So it feels really good for all of that hard work to have paid off and to now be recognised in these lists together. Ghela: It is a mixed bag of feelings: surprise, humility and honour. Seeing my name alongside so many impressive
22 I April 2019
GHELA BOSKOVICH, Head of FinTech and RegTech Partnerships, Rainmaking Innovation
KATIA LANG, CEO, The Fintech Times
women I admire and respect always gives me pause for thought, why me and not someone else? The other side of the coin is that it validates what I’m doing, it confirms that I’m on the right path in working with others to make a difference. However, lists are a doubleedged sword. I think every list should come with a disclaimer: “This is our opinion of who to pay attention to at the moment and is subject to change, is contextual, and is clearly not exhaustive”. To what extent does fintech operate on a level playing field? Would you say that the space has equality of opportunity? Katia: I can’t speak for everyone, all I can comment on is my own experience. I come from a very conservative environment, where I was taught that “women talking about money is bad taste”, and that “no one likes a woman too clever”. I have moved across 3 countries before ending up in London, where I finally feel I can do anything. With regards to gender equality in fintech, there probably is still a lot to be desired. However, I come from the Arts, which felt about 90% female – and guess what, no one is trying to make it more equal and drag more blokes
MEGAN CAYWOOD, MD, Head of Digital Strategy, Barclays into doing fashion or ballet! I strongly believe that everyone should have equal opportunities whether they want to do finance, tech or modern dance for that matter. But there’s no one right kind of a career. Megan: Not yet, but what I love about the UK fintech community is that so many of the fintech leaders I know passionately care about diversity and are actively working to promote it and enable it in their organisations and in the ecosystem. The fact is that there are still fewer women in tech positions, in senior positions, on boards, etc and female founders still have a tougher time raising venture capital. That’s just the reality. Simply wishing for greater equality won’t change that – we have to take a note from Anne Boden and be proactive about building diversity in our businesses, it won’t just magically happen because we want it to. Ghela: Nothing operates on a level playing field, there will always be a party who has an
advantage. In fintech, gender parity is obviously skewed. Let’s talk stats: Women still only represent 30% of the fintech workforce. There are so many reasons for this, from STEM pipeline in schools, to the pay gap, to culture, and there is no silver bullet that would fix it, or bulldozer that would level out the playing field. On the other hand, I’d say there is equal opportunity for new and revolutionary ideas – they can come from anyone, anywhere. Great ideas are in abundance; what is not in abundance is the same type of access to support, to execute on those ideas. What measures need to be put in place at a governmental level to quicken the glacial pace of change? Katia: No idea. Maybe let us pay less tax? Megan: A number of things could be done – I think the Rose Review by Alison Rose articulates a number of great options (which is certainly worth reading), namely: focusing
LATTICE80 remains committed to recognising and advancing the contribution of female leaders as a global community partner to the financial technology industry and its sub-categories like blockchain, insurance, lending, personal finance. This Top 100 List was compiled in collaboration with Miss Kaya – a lifestyle driven financial platform for the modern woman. The 5 cities which saw the most number of female Fintech leaders in our list this year were: London (17), Hong Kong (12), New York (10), Singapore (8), and San Francisco (8). 44 women hold key management positions in Fintech and Blockchain startups; 26 spearhead efforts in enablers such as accelerators, government agencies, support communities, or research institutes; 20 are from corporates; and 10 are Fintech or Blockchain focused investors. Also, 34 women on our list last year are on our list again for 2019. By showcasing and highlighting these ladies and their achievements, we also hope to inspire more women to increase their participation in building the global fintech community, into a more vibrant one.
on increasing funding towards female entrepreneurs through tracking of public funding allocated to women and having funding dedicated towards majority women-owned businesses, perhaps through a specific new investment vehicle to increase funding going to female entrepreneurs. Providing greater family care support for female entrepreneurs. There is also already the Women in Finance Charter, which is worth noting as it’s a great step in the direction of motivating companies to have quotas for their diversity, even though signing up the Charter is voluntary. Ghela: Policy around education funding and STEM recruitment; policy that mandates parental leave for both mothers and fathers; policy that mandates better distribution of funding for entrepreneurs – from more fair risk assessment for lending to special funds for BAME and women founded SMEs. Also, more protection for those who whistle-blow on harassment and discrimination, and less reliance for closedarbitration in those cases, as well as fewer punitive restrictions on going public/taking the case to court. uTFT
What I love about the UK fintech community is that so many of the fintech leaders I know passionately care about diversity and are actively working to promote it and enable it in their organisations and in the ecosystem. - Ghela Boskovich
JURISDICTIONS THE FIN TECH TIMES
Fintech’s Storm In The Windy City Chicago has many names Chi-Town, Windy City, Second City and now it’s looking to add fintech hub to that repertoire. Chicago was recently ranked among the top five global fintech hubs by Deloitte and the Global FinTech Hubs Federation, thanks in part to native institutions like FinTex’s strong advocacy. There is no smoke without a fire as fintech and financial services companies account for 14 percent of the 50 fastest-growing companies in the city, according to Crain’s 2017 Fast 50. Big investors such as Jump Capital, Pritzker Group Venture Capital, MATH Venture Partners, Chicago Ventures and CME Ventures have pumped money and resources into this ecosystem. The apparent success of Braintree, Avant, Envestnet, Morningstar, Discover, Allstate and many more, suggest there must be something more than pizza and long cold commutes in the Windy City. TFT set out to find what it is about the Windy City that is catching the beedy eyes of investors and entrepreneurs? Chicago has caught industry eyes before in 2017 when the Global Financial Centres Index ranked Chicago as the competitive financial centre of the world (alongside cities such as London, Singapore, Hong Kong, Sydney, Boston, and Toronto). Moreover, some have dubbed Chicago as ‘the capital of the derivatives industry’ with commodity futures trading as far back as 1848. It’s not surprising that Chicago boasts five major financial exchanges, including the Chicago Stock Exchange (CHX), the Chicago Board Options Exchange (CBOE), the Chicago Mercantile Exchange (CME), the Chicago Board of Trade (CBOT), and NYSE Arca. Other financial notables are the Federal Reserve Bank of Chicago, Chicago Board Options Exchange, Chicago Mercantile Exchange, Citadel, Discover, DRW Trading, JPMorgan Chase, Morningstar and Northern Trust. 2017 brought more hype to the landscape when Deloitte published The Connecting Global FinTech: Hub Interim Review 2017 with the Global FinTech Hubs Federation which catapulted Chicago onto our radar. The Global Fintech Hubs Federation is a new initiative aimed at raising the profile of key Fintech friendly localities. Global FinTech Hubs Federation states, “We want to encourage global engagement, best practices, and knowledge sharing, as well as build bridges between all FinTech hubs for entrepreneurs and investors to connect.” Local stakeholders were obviously pleased for a slice of the Fintech pie. “Chicago has been the long-time nexus for financial services and technology in the region. The city’s emergence as a rising global FinTech hub is a natural extension of its deep roots in the financial services industry. It also demonstrates Chicago’s ability to attract and nurture business innovators” said Carl Allegretti, Chicago managing partner, Deloitte LLP. Chicago’s Mayor Emanuel echoed this sentiment, “Chicago is quickly establishing itself as an emerging global centre for financial innovation.” However, is there anything to this famed Deloitte report other than a big marketing budget? Far from comprehensive the report does try and draw in factors considered important by VCs and entrepreneurs. The report considers both hard and soft data to compare the status of 44 global hubs on the basis of the FinTech sector development in
that location. The report pulls in the World Bank Doing Business Index, the Global Innovation Index and the Global Financial Centres Index and also considers indicators based on self-assessments from Hub Representatives that indicate the strength of each component part of their FINTECH ecosystem. Fast forward to 2018, tech heavyweights like DocuSign and Salesforce, as well as food giants like Kroger and Pizza Hut came shopping for Chicago tech companies to snatch up the city’s growing talent pool. Some of the most notable mergers and acquisitions in the fintech space were GTY Technology Holdings’ acquisition of CityBase, a Chicago startup that provides online payment technology and other digital services to governments, for $160 million and Accenture’s
acquisition of Kogentix, a Schaumburg-based big data and artificial intelligence start-up. Furthermore, there is defiantly a commercial approach being enacted by local government and accelerators. FinTex, a significant player in the Chicago ecosystem, makes the bold claim, “ Chicago is exploding with talent, industry
leadership, and start-ups, contributing to the Midwest’s 20,000 financial institutions & counting. This increasingly attractive business environment is a magnet for disruptive ideas and industry experts, making it the ideal epicentre for the FinTech community.” FinTex aims “To foster a community of the leading organisations within FinTech & FinServ to spur collaboration, grow investment, and fuel innovation.” FinTex also is the founder of Currency, Chicago’s FinTech Center of Excellence. Currency has relationships with academic institutions like DePaul, Northwestern, and the University of Chicago, as well the State of Illinois in an attempt to create a robust knowledge base for founders to tap-into. The ecosystem is somewhat tight knit with a deep connection between knowledge hubs and cutting red-tape. “We’re delighted to see that the Chicago FinTech community – led by organisations like FinTEx along with 1871, Fintank, the Illinois Technology Association, and our exceptional universities – is being recognised on a global platform,” said Mark Tebbe, chairman of ChicagoNEXT, Chicago’s council of technology leaders. “Chicago’s financial services sector has a rich history of innovation, and is now following the path of others including healthcare and manufacturing to create new economic development opportunities for our legacy industries through collaboration.” One particular centre in Chicago that has drawn in significant talent is the Polsky Exchange, an innovation incubator. This University of Chicago affiliated incubator has over 3,400 members and is closely linked to New Venture Challenge
(NVC) accelerator program which has graduated more than 230 startup companies and created thousands of jobs for the economy. NVC start-ups have achieved more than $13 billion in mergers and exits, and include household names such as Grubhub, Braintree/Venmo, and Simple Mills. According to EJ Reedy, Director at the Polsky Centre, “The Polsky Centre is a uniquely powerful proposition by bringing together the unique aspects of Chicago’s location with the intellectual capital and broad community support of the University of Chicago, we have created an environment that we believe will produce breakthrough results.” In addition to the educational angle, Chicago has an active accelerator scene. One of the most prominent accelerators is FinTank. Launched in early 2017, the mission of FinTank “is to provide a physical location for FinTech startups to convene and market their ideas.” Accelerators have played a pivotal role for cities lobbying to become fintech hubs. “Through my experience leading programming efforts at 1871, I realised that the fintech sector in Chicago really needed a physical location to serve as a focal point,” said Dr. George Vukotich, founder and managing partner of FinTank. “Chicago has so much promise as a fintech centre and FinTank is the missing ingredient to help pull things together.” Corporate sponsors include heavy-hitters such as Morningstar and AWS, and services offered cover important areas like vendors (e.g. Barchart and Rival Systems), legal (Lens Legal Group and Polsinelli), and finance (Burling Bank and Silicon Valley Bank). This has been coupled with open meetings on such hot topics as blockchain, IoT, and AI and machine learning. Chicago has demonstrated that it is a developing fintech leader in the US. The strong advocacy from core institutions has laid the building blocks for success however the funding has been volatile and lacks scalability. uTFT
April 2019 I 23
PEOPLE THE FIN TECH TIMES
Making the world a better place KATIA LANG, CEO TFT speaks to female fintech founders about their business vision and challenges in the world of fintech and blockchain
LUCIA GALLARDO Founder: Emerge HQ: Toronto, Canada Est: 2018 Katia: What led you into starting this company? Lucia: Emerge has been inevitable since I was 12 years old. I wasn’t sure what the company would look like, but I was sure I would one day become a social entrepreneur obsessed with addressing systemic exclusion. The company is the manifestation of my lived experiences - from having worked with Central American undocumented immigrants to working on trade relations missions between Latin America and North America and joining an early-stage AI focused mobile tech company, etc. It is also a reflection of the diversity of our team and all the experiences and passions for social good that they bring with them. Katia: What’s the main problem you’re trying to solve? Lucia: Emerge is a humanitarian technology company that enables the more efficient, more humane, and more transparent movement of people, goods, and data around the world. We use emerging technologies to address the pressing challenges set forth by the United Nations Sustainable Development Goals. Our solutions include: Homeward, an identity management and intelligent resettlement system for displaced populations; Theseus, a logistics solution to transparently track, trace and optimise the global movement of goods, while reducing waste and fostering fair economic opportunities; Trusted Voices, which creates an immutable chain of custody for the source material used in today’s news; and, Safe Haven, a disaster relief temporary net that works with international organizations to train, deploy and pay locally 24 I April 2019
trained citizens in natural disaster prone countries in real-time after disaster strikes. In 2017, Emerge also published Leap, the world’s first report to track blockchain ecosystems in emerging markets. The 2018 version is forthcoming. Katia: What’s your vision behind the company? How is it going to change the world? Lucia: Emerge’s impact strategy is a tripartite approach: (1) What we build - addressing pressing challenges in an innovative and collaborative manner, impacting lives across the board, embedding social impact at every level of our products. (2) How we build - revenue and impact grow together and our company is looking to be exemplary in its values, its relationships, its operations and in our financing etc. (3) Matching pace - it is incredibly important for us to not just enable access to new technologies for too often excluded populations, but also to ensure that access matches pace with its evolution in richer economies. Historically speaking, by the time most technology has been massively adopted in emerging or underdeveloped economies, it has already been upgraded in Western economies. That’s still exclusive. Matching pace is how we support and complement locally driven innovation. The impact of our company, our products, and the precedents we set are what will change the world. Katia: Does it make any difference being a female founder VS a male founder in Blockchain? Lucia: Absolutely - it does. Women are contributing an
incredible amount to this space and a lot of the most impactful/successful/tangible projects are driven or co-led by them. Unfortunately, we tend to fly too far under the radar. Most speaking roles (keynotes, panels, and otherwise) are still going to men. We also see male speakers remunerated much more often than female speakers. We see massive funding rounds going to male-dominated or even male-only teams. None of these trends are exclusive to blockchain but they are certainly concerning in a space promising decentralisation, inclusion, and more just economies. A wave of toxic “lambo culture” negatively impacted the way blockchain projects are viewed, both internally and externally, and many events have had instances of blatantly sexist social events and participants. These instances need to be called out by both women and male allies. I’m also confident that as more and more women continue to carry on as they have, we will reach an inevitable breaking point where our contributions to the space will be visible and undeniable. Organisations like CryptoChicks are also doing an excellent job at recruiting more women into the space. I look forward to the next couple of years on this front. Katia: Your main piece of advice to other women in tech? Mass adoption of blockchain-based products and services can only happen when what we build reflects the world and the people in it - and women make up half of that. We not only want you in tech, we need you in tech, whatever the skillset. We need technical talent, creative talent, user-focused talent, business development skills, operational strengths, and more. And blockchain has a low barrier to entry because it’s nascent - we’re all learning constantly. So my advice is this: dive right in and learn alongside us. uTFT
SEEMA KINDA JOHNSON Founder: Nuggets HQ: London, UK Est: 2016 Katia: What brought you into starting this company? Seema: I started out in my career at a digital agency managing creative and technical teams, before moving on to focus on delivery and operations. From there, I took on leadership roles in various global businesses, building product and launching in global markets. So, why Nuggets, you may ask? I’ve always been fascinated by how rapidly technology can evolve, and particularly its potential for social good. And when Alastair Johnson, the founder of Nuggets, suffered the consequences of a data breach first-hand, it triggered a light bulb moment: it made me wonder, could we use technology to stop this happening to others? It’s a problem that puts everyone at risk. And it’s one I don’t think we should have to endure when we have so many innovative technologies available to eradicate it. That’s why Alastair and I founded Nuggets, a secure platform for payments and identity verification. Katia: What’s the main problem you’re trying to solve? Seema: I find it alarming how much information we’re surrendering anytime we interact with a business, often handing over card details, passport scans and utility bills just to gain access to a service. We’re being asked to trust not only that the service is honest enough not to resell our data, but also that their security is robust enough to deter malicious actors in the future. The scary thing is, it usually isn’t. Just look at the likes of Equifax and Marriott. Most businesses around the world continue to amass swathes of personal information in honey pot siloes. These huge banks of our data are extremely valuable, and as a result, they’re vulnerable. The average person
has over 100 online accounts (not to mention that most of us reuse passwords), and it only takes one poorly configured backend on one of these sites to compromise user data. Nuggets changes how information is shared – or to be more precise, we make it so that you don’t have to share it in the first place. With a stack of biometric authentication, blockchain security and zeroknowledge cryptography, Nuggets ensures that people stay in control of their own data, while still being able to buy things online and use services. Katia: What are future trends for your industry? Seema: We’re on-boarding those with plastic in their pocket, keeping them safe from exposure to data breaches. We’re also seeing the potential to go from cashless to card less with the technology that’s available now. From a security point of view, we need to switch the focus from educating people on avoiding cybercrime to developing products that block the illegal sharing of information. So that even if you are socially engineered, phished or tracked there’s no negative effect. In terms of business, we need to put an end to customers’ KYC and AML information being left everywhere. It’s a ticking time bomb, frankly. Attestation is the future, but currently one service won’t accept another’s KYC, so it ends up being duplicated and left vulnerable. Combine that with verified ID and payment. Trends point to serious industry growth as various technologies emerge and improve the online shopping experience (think allinclusive platforms like WeChat in China). But as it continues to scale, so, too, will incidences of fraud, chargebacks and false positives that end up impacting both consumers and merchants. What’s clear is that trends
are pointing to an increased use of multichannel strategies to engage with customers on a personal level, as well as streamlining the checkout process (both online and offline). On a grander scale, it seems that we’re beginning to shift towards a cashless society, where digital payments (via smartphone) are poised to overtake plastic cards. Katia: What’s your vision behind the company? How is it going to change the world? Seema: We believe personal information should be owned and controlled by the person it belongs too. That’s what’s at the heart of our business, and it drives everything we do. Nuggets represents a fundamental change in the way personal data is stored. Daily data breaches show that the current model – of data being stored by individual businesses – is broken. The current flow of data between individuals and businesses is too asymmetrical. It gives us a false sense of security and privacy when, in reality, neither exists. Nuggets aims to minimise – or totally remove – shared or stored personal data through tokenisation and attestation. As we move further and further into the digital age, our vision is to see the concept of self-sovereignty realised. I believe it’s time for people to reclaim both their security and privacy. We’re confident that we can spearhead this shift in conscience with Nuggets. And while we’re committed to growth, we also wish to see good causes grow with us. That’s why we’re allocating a percentage of fees to charity. Katia: Does it make any difference being a female founder VS a male founder in Fintech? Seema: I think so – but I’ve never been a male founder! On a serious note, a large part of running a company is access to capital, and the stats prove that women are granted significantly less funding than male founders. This has to change. Katia: Your main piece of advice to other women in tech. Seema: We’ve got to keep supporting each other and paying it forward. uTFT
PEOPLE THE FIN TECH TIMES
Katia: What led you into starting this company? Katherine: Ocean conservation will always be my passion, seafood became my focus. Recently, I realised that “seafood data” is not just about products, it’s about entire businesses, businesses fullydependent upon the context within which they operate: the environment. Furthermore, data is evidence of action; if you incentivise data, you incentivise action. I created SmallScaleOA to restructure incentives within the seafood industry and our coastal communities (initially Indonesia) to encourage collaboration, long-term thinking, and resource conservation. Katia: What’s the main problem you’re trying to solve? Katherine: Of fishing people aquaculturists, 85% live in Asia and 90% are small-scale. Though Indonesia is the secondlargest wild-caught seafood producer, and third-largest for aquaculture, environmental change is compromising Indonesia’s coastal resilience. 88% of Southeast Asian reefs are ‘at risk’ and fisheries landings are already 64% higher than can be sustained. Just ocean acidification alone is expected to cost the world $1 trillion annually by the end of the century. The seafood industry needs cheap, yet reliable information to monitor their operations, inform zonal management, provide evidence of compliance, and identify risk factors and associated mitigation/adaptation strategies. Yet, data is sorely lacking. Existing in-water, observatories only cover 9 – 15 per cent of global ocean surface at rough resolutions. Plus, today’s technologies are inaccurate, too expensive, or require high levels of operational expertise. Katia: What’s your vision behind the company? How is it going to change the world? Katherine: SmallScaleOA (SSOA) is a novel, incentivised, blockchain-based strategy to support coastal resilience.
Founder: SmallScaleOA HQ: Arlington, USA Est: 2019
Founder: Vanbex Group HQ: Vancouver, Canada Est: 2013
SSOA could enhance fisheries/farm productivity and efficiency; zonal management and marine spatial planning; product transparency/ traceability for quality and safety programmes or certification schemes; and even access to insurance, capital, investment, and financial services. Through inclusive, low-cost, localised data collection, sharing, and processing, SSOA will connect fishers/farmers/ researchers to each other and their surrounding communities. Katia: Does it make any difference being a female founder VS a male founder in Blockchain? Katherine: It is hard to tell if being female has been a major factor in my experience thus far. I can say it makes me hyper-aware. I have certainly heard stories from several women about the uphill battles they have had to fight due to their gender, so it makes me stay alert. I have heard that female start ups tend to get dramatically less initial funding in the idea stage, than those launched by males. There is no way for me to know if SmallScaleOA has been affected by this, but it is something I occasionally wonder about. My more concrete experience of being female is just being a minority. I expect to see more males than females at the blockchain events I attend, but I also have found ‘women in blockchain’ types of groups to be very active and visible. Katia: Your main piece of advice to other women in tech? Katherine: Keep going! If you love it, do it. Be diligent and do the best business and science you can. If for some reason your gender (or someone else’s) is brought up, call it out and stand up for each other. You are not here to be a woman in tech, you are here to be in tech. uTFT
Katia: What led you into starting this company? Like a lot of people I heard about Bitcoin through the news and at the time thought it was a crazy idea and an even more ridiculous name. It wasn’t until I had left my career in software that I came across a bounty to create a database for $500 in bitcoin. The bounty was on the Bitcointalk Forum and it was the first time I was really exposed to it. The project offering the bounty was Mastercoin and they soon offered me a remote position. It was with them that I was first introduced to token sales as they were the first company to have ever done one and they were working on their second called Maidsafe. The way token sales were approached was
still so new, and so unstructured that I felt there is a better way to do this — engaging people who were going to be users, talking to developers, and really driving the utility of the solution. This approach is what formed the bedrock for my company, Vanbex Group. Katia: What’s the main problem you’re trying to solve? There’s not enough companies that are helping others invent, develop and launch blockchain solutions that make the world a better place. Katia: What’s your vision behind the company? How is it going to change the world? We believe in blockchain’s potential to reshape our society and economy for the better,
GALIA BENARTZI Founder: Bancor HQ: Zug, Switzerland Est: 2017 Katia: What led you into starting this company? Galia: My team and I have been experimenting with community currencies for nearly a decade. Thanks to blockchains and the Bancor Protocol, for the first time in history, we’re now able to give community currencies sufficient levels of transparency and liquidity in order to get started and to thrive, enabling anyone to “tokenise” the economy around their community, cause or neighborhood, for example.
liquidity barrier by ensuring constant convertibility between cryptocurrencies of any size without needing a counterparty or an intermediary. This is the enabling technology needed to move us from highly centralised to truly distributed value systems - which we believe will fundamentally change and improve the landscape of human collaboration.
Katia: What’s the main problem you’re trying to solve?
Galia: By lowering the technical barriers to designing and deploying token-based economies, Bancor will enable new forms of value to be created and shared, allowing greater economic resilience, financial inclusion and peer-to-peer collaboration within online and offline communities across the globe.
Galia: Historically, changing one type of currency into another has required a trusted intermediary who matches two parties with opposing wants. This reliance on matching, creates significant barriers for small-scale and new currencies. Bancor Protocol solves this
Katia: What’s your vision behind the company? How is it going to change the world?
and our mission is to drive mainstream adoption by making its benefits accessible to anyone. Our vision is a world where people everywhere enjoy the use and empowering benefits of blockchain-based solutions on a daily basis. Katia: Does it make any difference being a female founder VS a male founder in Blockchain? From experience, male founders are more competitive and like being the top guy in the room. As a woman, I don’t care about being perceived as the most powerful person in the room, I want to make the right decisions. As a female founder, I focus on making sure everyone is heard and that we are all on the same page. I approach things with a practical viewpoint and want everyone to understand my thinking and strategy for why we do things. Katia: Your main piece of advice to other women in tech? Don’t be afraid to speak your mind, women in particular are much better at connecting the dots – you don’t have to be the loudest person either, just the most logical. uTFT
Katia: Does it make any difference being a female founder VS a male founder in Blockchain? Galia: Women leaders face some unique challenges in relation to our male counterparts, though all founders share many challenges in common when bringing new ideas into the world. Being a female founder is an asset to teams and projects, not a liability. Bringing together different perspectives begets progress. This is a great time to lean in, and together with men, be part of re-designing today’s global financial system. Katia: Your main piece of advice to other women in tech? Galia: Lean in to whatever opportunities for growth present themselves. Speak up, ask questions, educate yourself on the nuances of issues through different perspectives. Find ways to bring your perspective to the table in a way that’s additive rather than combative. We have an opportunity to imagine and embody feminine leadership, beyond being females leading within masculine paradigms. Ultimately, a balance of both is what’s needed - and we’ll all need both to help us get there. uTFT
April 2019 I 25
FINTECH FOR GOOD THE FIN TECH TIMES
Innovate Finance members Benedetta Arese Lucini and Jonathan Naismith talked about their outlook and involvement with the FinTech for Schools Initiative Zoya: Why is there a dearth of tech developer talent in the UK as opposed to other parts of the world? Why is investment lacking?
Fintech for Schools initiative
Innovate Finance launched its FinTech for Schools campaign over March 2019, designed to encourage young people to understand the increasing importance of digital skills in the workplace, with an emphasis on ensuring the sector’s appeal to girls. ZOYA MALIK spoke to Innovate Finance’s CEO CHARLOTTE CROSSWELL and two representatives from Innovate Finance member firms CEO and Co-Founder BENEDETTA ARESE LUCINI of Oval Money and JONATHAN NAISMITH, Business Development Manager at Exate Technology on their views on how the campaign will function to nurture future Fintech recruits. Zoya: What’s the reason behind the Fintech for Schools initiative? Charlotte: FinTech is one of the UK’s fastest growing industries, and one where we hold a strong competitive advantage. Success is however heavily dependent on talent, which is in short supply both domestically and globally. This is why supporting talent and skills in FinTech is a key priority for Innovate Finance in 2019 as we recognise this is one of the biggest issues for our FinTech community. FinTech for Schools is an important piece of our Skills and Talent work, which aims to support a future domestic pipeline of talent. It is vital that we ensure we are inspiring the next generation of entrepreneurs and innovators, and equipping them with the skills they will need to succeed.
CHARLOTTE CROSSWELL, CEO Innovate Finance
26 I April 2019
Zoya: How will FinTech for Schools initiative fill the fintech talent gap? Charlotte: It has been shown that by the age of 10, children already have a strong sense of identity of what they can and can’t do. Inspiring young girls from an early age, by providing them with a wide variety of role models from diverse backgrounds and skill sets, is a vital first step in creating a new model to deliver real change in terms of diversity. The main approach is to target secondary school students to inspire them at this crucial point in their lives, as they make decisions between universities or more specialised further education such as apprenticeships. This along with supporting Innovate Finance member companies with their skills and talent requirements, by providing an umbrella to tie together the various skills programmes developed across member firms. Our initiative is aimed at raising awareness of the importance of digital skills, rather than actually teaching the skills per se. We would like to show young people, their parents and their teachers that there are a wide range of career options within FinTech. We recognise that this is a massive undertaking and that we cannot do this alone. So, we want to involve our members in our FinTech for Schools initiative to help raise awareness of FinTech and support their own talent and skills initiatives.
Graph from innovatefinance.com/capital/ Zoya: What has been your approach to schools? Charlotte: We have already presented at two schools in South East England, but want to be able to reach as many regions and education establishments as possible, working with our members to leverage their own networks and existing initiatives. We have a range of resources that can be used by schools and are downloadable on our website. (https:// www.innovatefinance.com/ talent/#resources). These include a PowerPoint presentation that gives a brief explanation of FinTech and the importance of digital skills in the future; a video compilation explaining how you can get into FinTech, with a wide range of contributions from our community of FinTech innovators, talking about their experiences and giving their advice on how to succeed in
the sector; individual vox pop videos that were used as a base for the compilation video and a Kahoot! FinTech quiz. When we present the FinTech for Schools initiative, we also invite two of our members to give a brief outline of their pathway into FinTech. The presentation part (30 minutes) is followed by a networking session with 10-12 of our FinTech firms to give pupils a chance to talk and learn more, ask questions and hopefully connect with some really positive role models, who can help advise them on their future career choices. In this first phase of the initiative, we do not envisage running a formal mentoring programme. A future aim of the FinTech for Schools initiative is to create opportunities for students to gain work experience within the sector.
Benedetta: The gap in tech talent is not just a UK issue but a European one. European countries have not been investing in tech start-ups and innovation technology for a long time and there are still very few exits by successful entrepreneurs that create the culture that encourages the younger generation to see tech as a career. If we then look at women in this space, the percentages are tiny, still affected by bias in schools that considers coding a male role. Jonathan: On a more general basis, I believe there is the assumption that IT/ Tech is only a back office function, where opportunities
Zoya: How will a new generation of students be incentivised to join the fintech industry? Charlotte: Our future will increasingly be dependent on the growth of nontraditional areas of finance, and technological developments away from financial services, so demystifying the sector through initiatives like our FinTech for Schools programme will play an important role in attracting the next generation to consider it as a career.
BENEDETTA ARESE LUCINI are limited and you’re forced to work in a broom cupboard. Of course, the reality can be somewhat different with technological innovations enhancing the way we do business today. As such, IT specialists are the enablers of business tomorrow. More specific to the UK, because it is arguably the biggest financial hub in the world (New York would argue that - as a result of this reputation, the UK attracts the best talent in the world.
Zoya: What is the prospect for fintech growth and investment in the UK over the next 5-10 years? Charlotte: In 2018, Innovate Finance co-produced a report with WPI Economics to look at the global talent pool that supports the FinTech sector. Our report highlighted the growing importance of FinTech in the UK: the sector is set to top 100,000 employees by the year 2030, with 30,000 new jobs created and an estimated 3,300 UK FinTech firms. Our estimates suggest there were 1,600 FinTech Firms in 2018, employing 76,500 people. uTFT
Graph from innovatefinance.com/capital/
FINTECH FOR GOOD THE FIN TECH TIMES
Unfortunately, the majority focus on becoming the British equivalent of the next Wolf of Wall Street and not a technologist. Additionally, we are seeing this trend of efficiency and cost savings within the financial Industry. As such, offshore IT talent is more attractive to firms operating within the UK as it is far more cost effective for most organisations. That said, I do believe change is on the horizon. The continued innovation from Facebook, Amazon, Netflix and Google (among others), as well as the growing attention on FinTech, has certainly placed a spotlight on technology and the opportunities it can provide. Coupled with IT/coding being introduced as a subject in schools at an early stage, this may lead to an increase in young talented technologists within the UK.
Zoya: How will a new generation of students be incentivised to join the fintech industry? Benedetta: Fintech is one of the most interesting emerging sectors in tech. This is because it affects everyone’s lives and as such a new wave of disintermediated solutions are emerging in the last couple of
years, following the already mature disruption in other industries like travel and mobility. Disrupting the financial markets though requires a set of core competencies that includes coding, regulatory and legal and more creative skills that can become the incentive for a new multidisciplinary generation to find a role in this space. Jonathan: Having been a part of a FinTech for almost two years now, I can say, beyond any doubt, it has provided me with more opportunities, exposure and responsibilities than I would’ve had in a corporate. It hasn’t come easy or without its challenges but that has allowed me to develop new skills and grow as an individual. I have had the wonderful privilege of meeting and engaging with some incredible individuals, from all different backgrounds, who are changing the world and making a difference in the way we conduct business. As such, I believe that as FinTechs continue to mature and grow, opportunities within a FinTech will only increase, providing new and exciting journeys for new generations of talent. I would add, that if you are unsure of where you want to go or what you want to be, try
JONATHAN NAISMITH FinTech. It is a great opportunity to learn and try different experiences.
Zoya: What is the prospect for fintech growth and investment in the UK over the next 5 -10 years? Benedetta: I believe the fintech industry is just at the initial stage of its maturity and will experience a huge growth in the next 5-10 years. This is because consumers are starting to get used to a new range of experiences that are personalised and inclusive. Even though there is an explosion of new solutions in banking, savings, investing, insurance and loans, the current start-ups still reach a small number of early adopters, but they are ultimately ready to reach
a mass market challenging the traditional financial institutions to innovate themselves making the sector more dynamic than ever. Jonathan: Unfortunately, there is no way of looking at this holistically without taking into consideration the global environment, including “he who is that shall not be named” - Brexit. We have seen an increase in uncertainty in markets globally with several significant events transpiring, including the ongoing trade wars between the US and China, as well as political instability / changes across various regions. More pertinent to home, Brexit is still dominating headlines. Speaking to an individual who is highly connected in the VC and FinTech space yesterday, I was informed the EU in fact contributes £700 million every year to be invested in UK FinTechs. Post Brexit, it is uncertain if this investment will remain, decrease or cease to exist. In addition, these global phenomenon are also distractions, taking up resources from financial institutions, as they aim to mitigate their risk exposure. This results in less time and resources being devoted to FinTechs, making traction harder to come by and affecting VC investment decisions.
Within the last 12-18 months, financial institutions have certainly started to embrace FinTech more. I believe this is due to the realisation of the benefits and threats FinTech poses to traditional banks who don’t transform. There has been a general uptake in VC investments from $14.7 billion in 2017 to $36.6 billion in 2018, as according the 2018 FinTech VC Investment Landscape by Innovate Finance 2019. In addition, there are some asking for FinTechs to be regulated, which could pose further obstacles. All things considered, I do expect FinTech and investment to continue growing in the next 5-10 years but potentially not at the current rate witnessed recently.
opportunity and I think we should take advantage of this to be competitive with other countries across the world. Jonathan: With the UK being a global financial hub, attracting the best talent from around the world and bringing with them their international experiences, many of the UK FinTechs are pioneering and leading the way for others to follow. This is evident in the huge success of the UK’s FinTech market globally. The FinTech for Schools initiative provides a wonderful platform for FinTechs, comprised of the best talent from around the world, to share their international knowledge and experiences with the younger generations. In doing so, we hope to inspire them in a number of different ways. We aim to inspire younger generations to challenge the way things are, in order to develop new ways of doing things. We aim to inspire them to try new things, by not being afraid to fail as it often provides the most valuable learnings. I believe if we can convey all these messages, in a manner that resonates and inspires, then we will equip the next generation with the knowledge and tools to continue competing globally. uTFT
Zoya: How will the initiative offer a new generation of developers in the UK a chance to compete with FinTech peers overseas? Benedetta: FinTech for Schools initiative is an important programme to encourage a new generation of leaders and entrepreneurs in the sector. The challenge should not be seen as a UK one but as a European one. Allowing trained young people from the UK to work in tech, anywhere in Europe is a huge
29th - 30th April 2019 The Guildhall, London www.innovatefinance.com/ifgs2019
Leading FinTech Companies
Top-Tier Industry Speakers
Innovate Finance Global Summit is one of the most prestigious FinTech events in the world. Attracting 2000 of the sector's most influential decision-makers and innovators, from CEOs and founders to policy-makers, regulators, and investors. Join a host of top-tier speakers, including: Mark Carney, Governor, Bank of England Nikhil Rathi, CEO, London Stock Exchange plc Alison Rose, Deputy CEO of NatWest Holdings RBS Andy Isherwood, Managing Director EMEA, Amazon Web Services Rishi Khosla, CEO Oaknorth
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April 2019 I 27
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TFT Opts Out of EU, Attends Payments Conference in Marrakech Along with some of the UK’s other most notable assets, TFT’s digital editor MATTHEW DOVE hurriedly deserted the country this March. As he sat by the pool of the Movenpick Marrakech, our man in Morocco was surprised to discover the unexpected joys of leaving the European Union. The weather’s great for a start… Having arrived at Gatwick wrapped in a rather unflattering cagoule, the newest addition to The Fintech Times’ foreign affairs desk now basked resplendent in the 30 degree North African sunshine. Whilst the glare from his pasty limbs startled hotel guests and staff alike, it mattered not. We Brits are no longer tethered to the drab confines of the EU, we’re positively international! The reason for TFT’s visit to Morocco wasn’t simply to assist the Fantastic Mr (Liam) Fox in his heroic drive to reestablish Pax Britannia nor was it merely to return some muchneeded colour to our greying complexion. Au contraire, we had a conference to cover, namely the HPS PowerCARD Users Meeting 2019. Here’s how that went… Whilst most outside of the Francophone world will probably be unfamiliar with Hi-tech Payments Solutions (HPS) that may be set to change.
TRYING OUT THE TECH
If HPS was looking to make friends and influence people (and TFT suspects it was), then its conference was one hell of a sales pitch. HPS is a payments provider clearly at home with hi-tech. Talks and panels took place in an auditorium Steve Jobs would’ve felt comfortable grandstanding in. No expense was spared on production; the stage was lit up with sweeping spot lights, swirling lasers and a pulsing soundtrack which even Hans Zimmer might consider “a bit much”. Each speaker was welcomed to the stage by the bombastic Ghela Boskovich whose formidable presence was supplemented by a digital assistant (think Alexa meets HAL 9000). Opening remarks were made by CEO Mohammed Horani who introduced himself to the 400 delegates from 50 nations with words that set the tone for what was to come; “Our relationship with time is being disrupted in a digital age”, he declared. Citing “deep, deep shifts” globally, both economic and societal, Horani listed the five main areas of innovation to watch in the coming months. First, he mentioned artificial intelligence and the rise of autonomous devices, as well as AI’s ability to democratise the analysis of data and the writing of computer code. In the broad church of “Digital”, Horani housed tokenised assets, edge computing, VR/AR and the algorithmic detection of emotions. Under the heading “Mesh”, Horani included the use of blockchain technology and the spread of “intelligent spaces” in the smart cities of the near future. He also covered the paramount importance of digital ethics and privacy before outlining his interest in the burgeoning study of quantum computing. He concluded by identifying that, “our common enemy is cash” and that “omni-channel payment is a must.” Rather encouragingly, Horani also championed financial
inclusion and emphasised the push to achieve gender parity within his own organisation (HPS currently consists of 30% women with full parity scheduled by 2025). Garry Ceaplen of HPS partner bank Al Ahli Bank (Kuwait) took to the stage next, alongside HPS’s Mohamed Abaddi. The pair extended Horani’s narrative to include the notion of family, an ideal intrinsic to the HPS user group operation. With golden nuggets like “community is the child of a happy marriage” and an incentive structure comprised of PowerUsers/PowerInfluencers (and their Silver, Gold and Diamond bandings), TFT started to feel as though it had stumbled into a HerbaLife recruitment drive! Anyhoo, the sales babble eventually gave way to some refreshingly candid insights. At a time where fintechs are acting now and thinking later, Ceaplen spoke of “going back to basics.” He was adamant that “our systems must work” before being released on to the market, a sentiment not always shared by the fintechs (see our Vendorcom coverage for more on that). Furthermore, Ceaplen considers “stability, stability, stability” a concept so important that he said it thrice! Next up, conference chairman Abdeslam Alaoui Smaili took to the stage for the first of numerous appearances. Smaili dispensed with talk of community, clubs and “mutual satisfaction” and focused on the heart of the matter; utility. Under the PowerCard umbrella, which Smaili calls a “software factory”, HPS offers a truly holistic array of products to its users. They include, but aren’t limited to, PowerCard eCommerce, WebPublisher, Fraud, ATM, eSecure and Wallet. Smaili argues that HPS is an inclusive one-stop shop for all users, big or small. On the day, he pointed to some pretty impressive stats; Club HPS consists of 500,000 PoS modules, 1 million merchants and 20,000 ATMs as well as 150 million cards issued.
None of this appears lost on HPS’s plethora of partners. Capgemini’s Jeroen Hölscher used a simple metric for success when considering the use of HPS products; “Conversion is GHELA BOSKOVICH, ABDESLAM ALAOUI SMAILI, Conference Chairman Presenter King.” He went on to add that the audience should expect paytech adoption to grow fastest in the East where fintech is, in general, less burdened by legacy payment infrastructure. TED-style talk by lamenting the infrastructure. For Ghana’s millions of gaps he sees emerging in society Over at American Express, unbanked citizens, the system whilst highlighting the role Jeb Million, pronounced that being implemented grants technology plays in sowing such the HPS Users Club shared a access to mobile payments divisions. “united desire to innovate across without the need for a bank Using recent unrest in Paris to organisations” with the endaccount. It also uses a “financial illustrate his point, the Draper goal being “mutually beneficial inclusion triangle” to link three prize winner noted the dangers outcomes.” separate mobile payment of establishing an elite global All this backslapping was networks thus avoiding the kind technocracy to the detriment of unceremoniously interrupted of homogeneity inherent in the the lesser-skilled masses. by FTAlphaville’s Jemima Kelly, M-Pesa model. Yazami opined that who first apologised for her If one heartwarming paytech technology’s greatest utility is in scepticism before chucking tale wasn’t improbable enough, the improvement of conditions cold water over proceedings. the conference’s star-turn Rachid for all humanity, not just a select Kelly agreed with Hölscher that Yazami offered a second, to close few. With a rhetorical gravitas paytech is growing fastest in the out the conference in style. not commonly associated with East but thinks that the rationale is rather different. Kelly believes that there’s a fundamental lack of utility in the West for cryptocurrencies, blockchains and even mobile payments. To this end, she noted that 30% of payments in the USA are still made with cash and that its mobile payments market is half the size of China’s. All too often, Kelly argued, fintech is a “solution looking for a problem”, with its true utility mostly being found in MOVEPICK HOTEL areas previously underserved by legacy systems. She calls this application of fintech “leapfrog Yazami helped develop the chemical engineers, he noted technology”, a prime example graphite anode of the lithium that “the man should be served, being the rise of M-Pesa in East ion battery, an innocuous little not the system.” Hearteningly, Africa. innovation currently powering this last remark drew the most Even in the case of M-Pesa the vast majority of the world’s enthusiastic round of applause - a mobile phone-based mobile devices. of the whole conference. money transfer, financing and The fact that the lithium Yazami’s address, whilst sunny microfinancing service - Kelly ion battery is one of the few and inspiring in Marrakech, rang keenly offered the success story’s progressions in its field since the bittersweet as TFT’s digital editor downside. Whilst the service has advent of the lead-acid battery stepped off the plane in a rain a whopping 30 million users, in 1859 (still used in cars today) sodden London. On the one it’s tantamount to a monopoly. makes this unassuming gent’s hand, it shone a light on how far Outages, corruption and misuse, achievements all the more we’ve come but, on the other, it therefore, have far-reaching staggering. cast into stark relief the distance negative consequences. After deadpanning that he still left to travel. uTFT A decent compromise knows nothing about payments, was found in the preceding Yazami joked that he expected presentation given by Archie members of the delegation to Hesse of GhIPSS. Backed by return next year with prototypes the Ghanaian government for a battery-powered smart and using HPS tech, GhIPSS card. The native of Fez ended his is modernising the nation’s
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TFT ONLINE THE FIN TECH TIMES
For the digital bank at the centre of a media storm this week … you OK hun? Nikolay Storonsky and his colleagues at Revolut have been “setting the record straight” again, this time being forced to deny that the company is under investigation for fraud. MATTHEW DOVE reports
he speculation - which involves a complaint made to Action Fraud over a missing payment - follows news that the bank is being probed by the FCA over lapses in AML protocols. Revolut has also found itself subject to criticism from former employees who assert the challenger has fostered a toxic corporate culture. Details of an alleged fraud investigation by the City of London Police were published and then withdrawn by the FT and a host of other online news sites. These accounts appear to have been based on a complaint made to Action Fraud by the husband of a Revolut business account holder who claims that his wife hasn’t received a
payment of 73,515 GBP which is owed to her. Action Fraud is said to be tracking the payment and making an assessment of whether any criminal activity has taken place. Only at the conclusion of this assessment, which could take days or weeks, will a recommendation for official police investigation potentially be made. In a statement to the Press Association, a spokesman from Revolut said, “There is no investigation into fraud at Revolut. One of our customers registered a complaint after funds did not reach their account because incorrect details were entered during the payment stage. Our team have proactively engaged with both the customer and our payments partners to resolve the case and to ensure that the funds were located. We understand that the customer escalated his dissatisfaction to the police authorities by submitting a non-fraud complaint via the action fraud portal - this organisation has no police investigatory powers.” Regardless of the veracity of the complaint, a dark cloud certainly seems to be stalking the challenger. As well as coming under fire from
former employees, the company’s attempt at a humorous Valentine’s Day ad campaign (in which customers who’d ordered takeaway-forone on the 14th were asked, “you OK hun?”) was met with accusations of single-shaming. This unpleasantness was followed by reports last week
of the FCA’s interest in Revolut’s practices, which, in turn, coincided uncomfortably with the resignation of the bank’s CFO Peter O’Higgins. However, if anyone can weather the storm it’s Storonsky. He began his career at Lehman Brothers after all... uTFT
“UK’s Largest Fintech” Also Takes Top Prize for Most IT Outages Having boldly claimed that they’re the “UK’s largest fintech” at Fintech Connect in December 2018, Barclays can now add “UK’s glitchiest bank” to its list of designations. By MATTHEW DOVE
n April 2018, the FCA introduced rules that require banks to report details of any security or technical issues which affect their customers’ ability to access payment services. In the following nine months, Barclays led the pack as it sheepishly assumed responsibility for 41 out of a total of 302 IT-related incidents. Whilst we’d expect nothing less than a market share in excess of 10% from the UK’s largest fintech, they can’t take all the plaudits. The Award for Most Embarrassing IT Clanger goes to HSBC. Their systems ground to a spectacular halt on the very day in November that a Treasury select committee was discussing the prevalence of online banking foul-ups. The Biggest Whoopsie Award, on the other hand, goes to the fine folks at TSB, who inconvenienced 1.9 million of their online customers following the bodged unveiling of their new IT infrastructure.
30 I April 2019
Honourable mentions must also go to Lloyds, who reported 37 outages to payment services, Natwest, who managed 26, the Bank of Scotland and Halifax, who chipped in with 31 each. In its acceptance speech for the banking equivalent of the Razzie Award for Worst Picture, Barclays said, “We take IT resilience extremely seriously and we welcome transparency for our customers which is why we report every incident to the regulator, even minor glitches that have minimal impact on customers.” Displaying an admirable level of sympathy, Peter Groucutt, managing director of Databarracks, had this to say in reaction, “Barclays’ response might sound a little defensive, but it does highlight the limitation of how these incidents are reported. Are all outages equal? For example, does TSB’s prolonged outage from its systems upgrade count as just one incident? If so, that makes it difficult to compare performance between banks.”
Concluding on a note which had more than a whiff of shooting-the-messenger about it, Groucutt listed improvements he feels the FCA should consider making (well, I never!). “The FCA has to strike a balance between the demands on the banks to produce this data and the value it adds. In future reporting our
recommendation would be to add: • Length of outage - the duration of the incident. • Severity of issue - from minor degraded performance of systems causing delays to complete outages with systems unavailable. • Number of users/customers affected - to distinguish between incidents that only
affect a small number of customers and major incidents that affect all (or a high proportion of) customers. For the small amount of effort, it would take to produce this data, the benefit to consumers is high and it would be equally valuable for the FCA to keep
track of IT outages for the industry. Lastly, we would also suggest reporting the cause of the issue, which could be taken from a small number of broad categories such as ‘cyber incident’, ‘systems upgrade’ or ‘human error’.” uTFT
EVENTS & BOOKS THE FIN TECH TIMES
16 - 17 April, 2019 Paris Blockchain Week, Paris Paris Blockchain week is the peak event gathering more than 3000 attendees and 60 speakers in Station F. Paris Blockchain week will take the main stage to discuss topics such as EU regulation, stable coins, decentralised exchanges, security tokens, governance, interoperability and many more. parisblockchainweeksummit.com
24 - 26 April, 2019 Blockchain Expo, London TOKEN2049 organises the premier digital asset event of Asia in Hong Kong, where we explore in-depth the growing crypto ecosystem. The event will shine a light on the global developments of this new asset class, while taking a unique and widening perspective on the token industry and its opportunities. blockchain-expo.com/global/
24 April , 2019 Blockpass Seminar on Security Tokens, London The arrival of security tokens represents a huge opportunity for investors as well as enormous potential for operational efficiencies in capital markets and provides for innovation in other sector verticals too. Blockpass is launching a series of leading security token events to help educate and inform business, investors and policymakers wishing to explore this trend and to help build the community that will drive the security token ecosystem of the future. blockpass.org/events/blockpass-seminar-security-tokens-london/
25 April, 2019 AI & Big Data Expo Global, London The AI & Big Data Expo Global, the leading Artificial Intelligence & Big Data Conference & Exhibition event will take place at the Olympia London. It is a showcase of next generation technologies and strategies from the world of Artificial Intelligence & Big Data, an opportunity to explore and discover the practical and successful implementation of AI & Big Data in driving forward your business in 2019 and beyond. 4 co-located events. 21 conference tracks. blockchain-expo.com/global/
26 April, 2019 Cyber Security & Cloud Expo, London The Cyber Security & Cloud Expo will host two days of top level discussion around cyber security and cloud, and the impact they are having on industries including government, energy, financial services, healthcare and more. The Cyber Security & Cloud conference agenda will highlight the most innovative advancements in technologies which are affecting these fields. There will be real life case studies and expert panel discussions within the dedicated tracks Enterprise Cybersecurity, Cyber Intelligence, Regulation and Compliance and Developing Cloud Security Solutions thefintechtimes.com/event/cyber-security-cloud-expo-global/
29 – 30 April , 2019 Innovate Finance Global Summit 2019, London IFGS 2019 will provide the definitive FinTech platform to explore the latest innovations in the sector. The agenda this year will feature discussions on key issues impacting the industry from talent and skills to diversity, whilst also focusing on important political shifts and developing technologies. innovatefinance.com/ifgs2019/tickets/
15 – 17 May, 2019 Fintech Vision 2019 @ London Join C-Level financial services peers at this exclusive retreat. The aim is to come and meet your CXO peers to learn, share your experience, be inspired, network, and create meaningful connections. Get together with your peers and access the latest thinking to drive forward your digital strategy, explore new technology advancements and meet other leaders who are shaping global financial services and FinTech. fintech-vision.com/
May 15, 2019 Fintech4Life, London Fintech4Life explores the opportunity to harness innovative thinking and create best in class financial products and services for the world’s fastest growing and most powerful consumer market – the over 55s. https://fintech4life.com/agenda/
To see the full list of upcoming events in London and around the world, visit
Five Books To Get Ahead: Investing By JAKE COURAGE, co-founder of the edtech company 42courses.com and avid reader, author & car fanatic Investing is one of those topics we weren’t taught at school which we probably should have been. As young adults, there doesn’t seem to be any point in learning how to invest. We’re far too busy doing other things. However, as we get older, we become more financially aware. We have responsibilities, with costs attached. One of the topics we begin to become aware of, is the stock market. We hear that so-and-so has a
tip for investing in such-andsuch. We want to play along, but sometimes we’re not sure of the language or even the rules. The books below do a great job of bringing you up-to-speed and will (in totality) give you a better understanding of investing, than a lot of so called ‘professionals’. Your time to begin becoming a better investor starts now.
The Long and The Short Of It: A Guide to Finance and Investment for Normally Intelligent People who Aren’t in the Industry by John Kay
This book is the best place to start. It is specifically aimed at smart people who don’t work in finance - they have money to invest but don’t know the terminology or how the system works. Kay has the authority to write such a book given his role as a journalist for the Financial Times as well as a visiting Professor of Economics at the London School of Economics. The book demystifies many of the investment buzzwords that confuse the first-time investor. You will also learn about practical investment strategies and how to implement them. Ultimately, this book explains how to put your finances in the only hands you can confidently trust - your own.
The Intelligent Investor: The Definitive Book on Value Investing A Book of Practical Counsel by Benjamin Graham Benjamin Graham was Warren Buffett’s mentor. The young Buffett worked for him in New York in the 1950s. What he learnt there provided the foundation to start Berkshire Hathaway and eventually make Buffet one of the richest people on the planet. Graham is widely known as the ‘father of value investing’. This is the idea of using analysis to identify assets that are underpriced. In other words, buying stocks for less than their intrinsic value. His philosophy also encompassed thinking long-term and the book explores his investment strategy in rich detail with updated commentary by financial journalist Jason Zweig. The Intelligent Investor has been the stock market bible ever since it was first published in 1949 and is a must read.
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns by John C. Bogle A giant of the investment industry, Bogle’s claim to fame was introducing the index fund in 1975. He argued that the majority of investors were better off buying a fund that tracked a stock index than over-paying for money managers to oversee their portfolio. In common with other maverick thinkers, his theory was initially rubbished by the established industry players. However, when his Vanguard fund began to consistently beat the incumbents whilst charging much lower fees, people began to take notice. This is a book filled with excellent common-sense advice that you can sense check all your investment decisions against.
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb The 2008 global financial crisis took everyone by surprise including many high-profile experts. Almost none of them predicted it. One of the few people who did was Nassim Nicholas Taleb. This book is the first in his ‘incerto’ book series which looks at luck, uncertainty, human error, and decision-making in a world we don’t understand. It’s a great ‘philosophy’ for understanding the behaviour of markets and how that impacts our investment decisions. All his books are well worth reading and are helpful for developing the mindset of a shrewd investor.
The Little Book of Behavioural Investing: How not to be your own worst enemy by James Montier Most of the decisions we make we are not aware of. This is fine when it comes to making choices that have little consequence like which sandwich to chose for lunch. It’s a lot more serious when it comes to long-term decisions that can have a significant impact on our financial future, such as making investments. Behavioural investing bridges this gap between human psychology and managing our money. It is about helping us to understand the biases behind our thinking and how we can avoid the inevitable traps. For example, we look for information which aligns with our existing beliefs rather than judging all information at face value. This is known as confirmation bias. This easy-to-read book will equip you with the necessary tools to identify the most applicable biases and steer you towards a rational, as opposed to an emotional, approach to investing. Can’t wait for the books to arrive? Try a master class in Fintech, Behavioural Economics, Problem Solving, Sleep, Social Media 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 firstname.lastname@example.org April 2019 I 31
THE FIN TECH TIMES
Next generation of payment is in the box
PowerCARD is HPSâ€™ comprehensive suite of solutions that covers the entire payment value chain by enabling innovative payments through its open platform that allows the processing of any transaction coming from any channel initiated by any means-of-payment. HPS created PowerCARD with the vision of offering solutions that meet your ever-evolving needs of innovation and performance.
32 I April 2019
In the finance sector’s hunt to improve ways to combat the scourge of payment fraud, biometric verification technology is coming to the fore...
Published on Apr 1, 2019
In the finance sector’s hunt to improve ways to combat the scourge of payment fraud, biometric verification technology is coming to the fore...