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Banks have not prepared to retain control of customers and merchant payment interfaces in the face of blockchain or distributed ledger, according to managing consultant firm Bain & Company white paper. Such technology removes intermediaries, simplifies counterparty connections and records data in a tamper-proof manner. It also promises faster speed, more transparency and efficiency for […]

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Thomson Reuters, a multinational media and information corporation which employs 60,000 worldwide with a yearly revenue of more than $12 billion, is sponsoring a three day HackETHon to be held from the 9th to the 11th of September 2016. The event is focused on Ethereum based smart contracts with challenges and prizes for data-driven smart […]

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Bitcoin price decline takes a break. The market is struggling to buy price higher in a correction, thereby, heralding the next wave of decline. This analysis is provided by xbt.social with a 3-hour delay. Read the full analysis here. Not a member? Join now. Bitcoin Price Analysis Time of analysis: 14h00 UTC Bitstamp 1-Hour Candle […]

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Bitcoin software engineer Jameson Lopp takes a deep and enlightening dive into the unique attributes that make up blockchains.

Santander has given its fintech-focused venture capital firm InnoVentures another $100 million ($131 million) to invest after impressing with its initial investments.

Santander InnoVentures has spent just over 50% of the $100 million initially allocated to the fund, which started out in 2014. The rest of that first tranche of investment capital will be reserved for follow-on funding rounds for companies already invested in.

InnoVentures, based in London but with a global remit, has backed startups such as US online lender Kabbage, US blockchain payments company Ripple, Swedish mobile card reader maker iZettle, and London-based blockchain analysis startup Elliptic.

Business Insider caught up with Belinky to discuss what InnoVentures is looking to spend its new $100 million on, his take on the Brexit, and the trends he is seeing in the fintech market.

Geographically, the focus of the second fund will be Latin America, where Spanish bank Santander has a big presence.

As for areas of investment, the first fund featured, Belinky says "a lot of bets on the obvious. Kabbage in lending, a couple of things around payments like Ripple and MyCheck. We took out a lot of the big themes."

But the next $100 million will be targeting "a couple of new themes that we only started exploring recently — A.I., cognitive computing, and more of the little details around digital banking. And then I think there's going to be a lot of things that are really specific to Latin America like financial inclusion."

Belinky says the companies Santander InnoVentures have already invested in are "doing really well."

"I don't think anyone has had any impact from Brexit or what they call the bubble," he added.

"I don't buy this whole 'everyone's moving to Berlin or Frankfurt' thing"

Santander InnoVentures remains committed to the UK even after the Brexit vote. The bank's executive chair Ana Botin says in an emailed statement announcing the new funding:

"The fund’s base in the UK has allowed it to benefit from London’s position as a fintech hub, while talent-spotting our investments on a global basis. Santander remains committed to the UK and excited about its Fintech enterprises."

Belinky says Brexit "doesn't really change anything for us. Things that are hyperlocal like lending probably won't see much change. People who try to use passporting for business models might come into question but in the end we are on both sides — we are here and we are in Europe.

He thinks this will be true for most VCs: "People will add now one more question to their initial due diligence post-Brexit.

"We've had a couple of conversations over the past few weeks where in a CEO interview we ask, what is your Brexit plan? What happens if we really go separate ways? If they don't have a good answer then they will probably have a tough time raising money but that's just the same as any other question. It's one more way to check that you're dealing with a good company."

There have been some concerns that London could lose its place as the financial capital of Europe, which would no doubt hit the capital's flourishing fintech scene.

But Belinky says: "I don't buy this whole 'everyone's moving to Berlin or Frankfurt' thing. People are not going to pick up and leave. Maybe if there's continued uncertainty new companies will choose to start something on the other side but I've talked to companies and no one is saying we're moving."

We have hit a peak in valuations

He adds: "I think it will open up interesting opportunities on both sides if there is a divergence [between the UK and Europe post-Brexit]."

Belinky agrees that valuations could take a hit from the Brexit vote, but says it's "too early to tell."

"People are just waiting to see what the government comes up with. This is a weird couple of weeks. If there is any pressure on valuations I think we'll see it in September when people are back from vacation and there's a clearer view of what the government will try to negotiate."

More generally, Belinky believes "we have hit a peak in valuations."

"That was driven by the irrational exuberance we saw late last year and earlier this year, but that's unrelated to Brexit. It's become much more binary. Late last year, everyone was getting money. Now if you've got a good plan you'll get a good valuation but if you don't then you'll have a tough time attracting money."

He is not the only one to think we're past "peak valuations." As early as November last year Index Venture's Jan Hammer was telling BI that we had past the top.

'Chatbots are the blockchain of 2016'

I interviewed Belinky last November when he told me he had seen 820 pitches in the last year — he knows what is going on in the market.

So what is hot right now? "Chatbots are the blockchain of 2016 I think," he says.

Chatbots are a bit like an evolution of automated customer service on phones — the annoying robot voices that ask you what service you want. Chatbots are artificial intelligence-powered computer programmes that can automatically answer your questions over services like Facebook's Messenger or WhatsApp. At least that is the idea.

Belinky says: "Everyone's got a chatbot or building a chatbot. Everyone is getting on Alexa or Messenger or something else. It will probably become a commodity very quickly but now everyone is getting excited about it and throwing money at it."

He is not as hyped about chatbots as some, saying: "Probably 10 years ago all major companies switched to automated phone customer service. Everyone thought it would be the end of call centres and it didn't really do that. Chatbots — it's good and it can probably attack the low-value questions like forgetting your PIN or how do I check my balance. But it's not there yet in terms of this is really going to be able to answer users questions in an intuitive way.

Still, he adds: "The volume of low value questions is really high."

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The investment bank plans to begin offering its new online lending platform to consumers this fall, according to comments made by CFO Harvey Schwartz, during the company's Q2 earnings call. 

It originally announced the platform in July of last year.

The bank is moving away from its traditional market and targeting retail customers. This is not Goldman's only venture into the retail banking market — it began offering savings accounts with no minimum deposit in April. Goldman is likely looking to diversify its revenue streams  — Goldman Sachs' revenue has declined by more than a third since H1 2010, and it saw its worst quarter in four years in Q1 2016. 

Goldman Sachs has a plan to ensure it doesn't suffer the same problems as startup online lenders. It has been surveying consumers about their borrowing priorities and what they want from a lender and incorporating those responses into the new platform design. Goldman says it's taking its time to develop the product in order to ensure it is based on a robust business model. Harit Talwar is leading the initiative — Talwar was head of US cards at Discover before joining Goldman in June of last year.

But a change in US government could complicate Goldman's plans. The Republican Party has added reintroducing The Glass-Steagall Act to its economic platform. Glass-Steagall prevented commercial banks from engaging in investment banking activities. If the Republicans were to win the US election in November and this law were then reinstated, it could stall Goldman Sachs' forays into the retail banking market. 

No matter what happens, it's clear that we’ve entered the most profound era of change for financial services companies since the 1970s brought us index mutual funds, discount brokers and ATMs.

No firm is immune from the coming disruption and every company must have a strategy to harness the powerful advantages of the new fintech revolution.

The battle already underway will create surprising winners and stunned losers among some of the most powerful names in the financial world: The most contentious conflicts (and partnerships) will be between startups that are completely reengineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations, and total disruption of established technology & processes:

• Traditional Retail Banks vs. Online-Only Banks: Traditional retail banks provide a valuable service, but online-only banks can offer many of the same services with higher rates and lower fees

• Traditional Lenders vs. Peer-to-Peer Marketplaces: P2P lending marketplaces are growing much faster than traditional lenders—only time will tell if the banks strategy of creating their own small loan networks will be successful

• Traditional Asset Managers vs. Robo-Advisors: Robo-advisors like Betterment offer lower fees, lower minimums and solid returns to investors, but the much larger traditional asset managers are creating their own robo-products while providing the kind of handholding that high net worth clients are willing to pay handsomely for.

As you can see, this very fluid environment is creating winners and losers before your eyes…and it’s also creating the potential for new cost savings or growth opportunities for both you and your company.

After months of researching and reporting this important trend, Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has put together an essential report on the fintech ecosystem that explains the new landscape, identifies the ripest areas for disruption, and highlights the some of the most exciting new companies. These new players have the potential to become the next Visa, Paypal or Charles Schwab because they have the potential to transform important areas of the financial services industry like:

• Retail banking

• Lending and Financing

• Payments and Transfers
• 
Wealth and Asset Management

• Markets and Exchanges

• Insurance

• Blockchain Transactions


If you work in any of these sectors, it’s important for you to understand how the fintech revolution will change your business and possibly even your career. And if you’re employed in any part of the digital economy, you’ll want to know how you can exploit these new technologies to make your employer more efficient, flexible and profitable.

Among the big picture insights you'll get from The Fintech Ecosystem Report: Measuring the effects of technology on the entire financial services industry:

• Why financial technology is so disruptive to financial services—it will soon change the nature of almost every financial activity, from banking to payments to wealth management.
• The basic conflict will be between old firms and new—startups are re-imagining financial services processes from top to bottom, while incumbent financial services firms are trying to keep up with new products of their own.
• Both sides face serious obstacles—traditional banks and financial services firms are investing heavily in innovation, but leveraging their investments is difficult with so much invested in legacy systems and profit centers.
• Meanwhile, startups are struggling to navigate a rapidly-changing regulatory landscape and must scale up quickly with limited resources.
• The blockchain is a wild card that could completely overhaul financial services. Both major banks and startups around the world are exploring the technology behind the blockchain, which stores and records Bitcoin transactions. This technology could lower the cost of many financial activities to near-zero and could wipe away many traditional banking activities completely.

This exclusive report also:

• Explains the main growth drivers of the exploding fintech ecosystem.
• Frames the challenges and opportunities faced by incumbents and startups.
• Breaks down global and regional fintech investments, including which regions are the most significant and which are poised for the highest growth.
• Reveals which two financial services are garnering the most investment, and are therefore likely to be transformed first and fastest by fintech
• Explains why blockchain technology is critically important to banks and startups, and assesses which players stand to gain the most from it.
• Explores the financial sectors facing disruption and breaks them down in terms of investments, vulnerabilities and growth opportunities.
• And much more.

The Fintech Ecosystem Report: Measuring the effects of technology on the entire financial services industry is how you get the full story on the fintech revolution.

To get your copy of this invaluable guide to the fintech revolution, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the fast-moving world of financial technology.

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