Fintech Insider: The Pub Crawl Edition

This week’s Fintech Insider News show was a departure from tradition. Instead of recording in our WeWork offices we took the team on tour, specifically on a pub crawl round London Bridge and Bermondsey and recorded the news show as we went!

Listen to the episode in full here, stream it below or read on for the highlights.

David, Jason and Simon were joined by Chris Skinner and Monty Munford for this week's news show from a pub in Bermondsey, complete with pints and pie - the full British pub experience.

Open Banking (could it really be anything else to start the show!)

We’re now past “deadline day” so naturally our first batch of stories concerned Open Banking and what the banking landscape looks like so far in the wake of PSD2 becoming law on 13th January. “This was the weekend of change in banking” says Simon. The guys centred firstly on two explainer pieces in the FT and Business Insider. None of these stories really tell us anything we didn’t already know, but the swathes of articles that came out over the weekend are at least ensuring consumers have now heard of Open Banking, as previously 92% of people had not. In the guys' view however, the press surrounding Open Banking has only been negative and is serving to frighten people off, not highlighting the benefits to consumers. "The media [surrounding Open Banking] has been misplaced", says Jason, "media outlets have taken the easy way out - it’s easy news to portray banks as the bad guys and explain none of the benefits”, although Monty thinks the fault lies with the banks themselves: "Banks have missed out on a massive opportunity to put out a positive story. It’s their fault.”

"Banks have missed out a massive opportunity to put out a positive story. It’s their fault.” - Monty Munford

Chris also mentions how people are scared of any changes to the way they bank for security fears, stating that still "⅔ don’t use mobile banking, ⅓ don’t use internet banking because they’re frightened of the security of the systems" - therefore even if the benefits of open banking had been broadcast, would consumers be quick to adopt it? Possibly not.

Fail to prepare...

Another of the big 9 missed the deadline as Nationwide is the next to ask for an extension. A maximum of six extra weeks' preparation time had already been given to Barclays, Bank of Ireland, RBS and HSBC. Their "go live" dates are now:

• RBS - end of February
• Barclays - March
• Nationwide - March
• HSBC - end of April
• Santander - May
• Bank of Ireland - August / September

Allied Irish Bank, Danske and Lloyds Banking Group were the only ones “ready” to launch on time, causing the team to question whether hitting the deadlines is actually a good thing? Is it better to be late but get the product and service right for customers? "Is meeting the deadline a measurement of “good”?" asks Simon.

"Is meeting the deadline a measurement of “good”?" - Simon Taylor

David remains sceptical, as he is still convinced that the big banks will only do what the regulators explicitly require and do no more, missing a huge opportunity, that fintechs are taking advantage of. Speaking of which....

Monzo’s interim API

Monzo launched their API early in an interim phase in order to coincide with the PSD2 deadline. The three core functions supported, are:

• Getting a list of accounts
• Listing an accounts balance, including any money in pots
• Listing an account’s transactions

The Version 2 API is planned to be available in its complete state by EOY 2018. This is an example of a bank trying to work with Open Banking and to get ahead of the regulation rather than being forced into compliance, says David. Staying with both the Monzo and the open banking theme, the guys also discuss our interview with Tom Blomfield when he seemed confident that despite the opportunities offered to tech giants by open banking, it will still be a bank - and potentially Monzo itself - that offers the complete financial package for consumers on a global scale, not Google, Facebook, Amazon or Apple. Blomfield believes Monzo could become the financial epicentre for the West, more so than the GAFA companies, saying it’s not part of their core mission and they don’t have the trust required to be their customers’ trusted “financial confidante” - is this realistic? ...He does concede that Alibaba and Tencent are already doing this in the East.

Alibaba does (another) thing...

Speaking of Eastern tech giants, this week Alibaba and Microsoft AI beat human scores on Stanford University's reading test, with Microsoft coming out marginally on top. Alibaba's Institute of Data Science of Technologies scored 82.44 whereas Microsoft's own AI scored 82.650 on the same test. Chris has spent a lot of time in recent months in China with the Alibaba team researching for his latest book, which leads him to tell us about Alibaba's "global first" - beating GAFA to become a global transactions platform. Regulators in the West haven't allowed big tech companies to flourish in the way Chinese government has allowed Alibaba to in the East - is China the place we should be looking for innovation? ask David. Is it just a big petri dish of experimentation? This leads to a lot of philosophising from all sides on the perpetual East vs West conundrum and who is winning? Let us know your thoughts here.

The Crypto "blood bath"

This was arguably the biggest story of the week, as all cryptocurrency prices tumbled in what was dubbed a crypto "bloodbath". Thousands lost money, and no one really knows why the price tumbled for as far as it did for as long as did, or why it happened now. 10 of the biggest crytocurrencies crashed on Tuesday with all suffering “double-digit” losses; Bitcoin dropped to below $10,000 on Weds, almost 50% of its December peak value, was this the catalyst for all the others? The cryptocurrency market has lost $340 billion in value since the start of January. The crypto market's volatility seems set to continue even if no one can agree on the cause. Business Insider put together some predictions as to why that could be, Monty and the team also had a few of their own. In Monty's view, the lunar new year is to blame, causing a lemming effect of everyone selling out at once. He goes onto say "in two and a half days, it'll be back to normal". Chris chips in that bitcoin prices have historically dipped in January, and that bitcoin featured on Jeremy Vine's Radio 2 show and the BBC's One Show, pushing it mainstream, causing a shift and that prices will definitely go back up. Simon agrees, he also says the cultural shift in people's perceptions of crypto is far more important than the prices. David just can't believe that crypto has not featured on Black Mirror yet. What do you think of the crypto meltdown? Share your thoughts here.

"In two and a half days, it'll be back to normal" - Monty Munford.

Revolut’s new travel insurance service

Moving away from crypto assets and onto a new asset from Revolut, launched this week, where they now let you automatically buy travel insurance based on your phone’s location. Pay-per-Day is a new geolocation-based travel insurance product; if the company detects that you’re abroad, it’ll automatically sign you up to a policy. Coverage can cost as little as £1 (about $1.25) per day, and there’s an annual cap, so you don’t end up paying more than you would with an average annual travel insurance policy. You can tailor the policy to include friends or family, or add cover for winter sports such as skiing or snowboarding, but the downside is it only covers medical and dental, not delays, cancellation or theft. The team like this development, and Chris says that Revolut moving into areas like this so early makes them "a very interesting company to work for". The team discuss whether this is a move in the insurance industry in general to pay as you go services. For more information on insurance in general and the shifts in that industry in particular, check out our sister podcast, InsurTech Insider!

Xinja’s fundraising record

Turning away from UK fintech scene to the up and coming scene Down Under which saw Xinja raises $500,000 in less than a day this week, the first raise of its kind for a bank aiming to be the first fully digital bank in Australia. Crowdfunding only just licensed in Australia, and Xinja are one of the first companies to get funding. They are putting the cash towards a $10 million series B round in the hope of driving their digital ambitions forward. David says this fundraising is "pretty damn impressive". Xinja have been dubbed “the Australian Monzo” - and it's no surprise that our very own Jason is on their board, and he explains how the Australian market is ripe for disruption and, being 2-3 years behind the UK, the market is in roughly in the same position as the UK was 3 years ago, when Monzo/Starling launched and began to take customers off the big incumbents, and that is the role Xinja are playing right now. Simon points out that Australia has just launched it's faster payments scheme which will also help Australia compete in the financial markets. For more information on Xinja, check out our Fintech Insider interview with Eric Wilson, the CEO of Xinja.

And finally...

This week's "and finally" story is this one from CNN about U2's Frontman Bono's investment fund pouring funds into fintech for the first time. Bono’s investment startup, The Rise Fund, is diving into fintech, with its maiden investment in the segment going to a robo advisor, Acorns Inc - an investing-and-savings app tailored to people with small amounts of disposable income. Rise, with Bono’s help, has raised $2 billion to invest in projects that are designed to have a positive impact society and generate profits for the fund. The guys muse as to whether this a Beautiful Day for fintech? Could the Rise Fund achieve such Elevation with Bono’s help that they experience Vertigo? Or maybe they Still Haven’t Found What They’re Looking For.

Could the Rise Fund achieve such Elevation with Bono’s help that they experience Vertigo? Or maybe they Still Haven’t Found What They’re Looking For.

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