Where Finance Finds Its Future

It is not surprising that RegTech attracted so much money and so many entrepreneurs as the Fintech start-up boom took off from 2012. Banks, asset managers and insurers were hit by successive waves of regulation in the long aftermath of the great financial crisis of 2007-08, and automation of transaction monitoring and reporting, KYC, AML, CFT and sanctions screening checks, data protection, mis-se...

The global pandemic has left no aspect of life untouched, and FinTech investing is no exception. Jan Arp, founding managing partner at Montreal-based Holt Accelerator, the leading early stage FinTech investor in Canada, told Dominic Hobson, co-founder of Future of Finance, that although the pandemic has reduced appetite for early-stage risk, investors have not lost their enthusiasm for the sector....

A Future of Finance Case studies: an interview with Matt Addison and Lucy Mullins from StepLadder StepLadder is a fintech start-up currently embarked on a crowd-funding campaign to fuel its growth as a peer-to-peer borrowing and lending platform for first-time buyers. The company is currently growing its membership by 13 per cent a month and already planning to extend its techniques and technology...

In late March 2021 a path to liquidity and growth opened in the security token markets. The Private Markets Digitization Steering Group (PMDSG), a group of banks, financial market infrastructures, technology vendors and FinTechs formed under the umbrella of Global Digital Finance in the spring of 2020 went public with a specification that will make inter-operable blockchain networks a reality...

Crypto-currencies are already an established asset class in the wealth management industry. A number of adventurous wealth managers and private banks have developed crypto-currency brokerage and custody services for high net worth and ultra-high net worth clients. The decision in November 2020 by Ruffer Investment Management to invest £550 million in Bitcoin as a hedge against unstable monetary co...

RegTech is one of the more predictable targets of the FinTechs. The sheer volume of additional regulation imposed on the financial services industry after the financial crisis of 2007-08 demanded automation. Not just to contain the costs of data collection and reporting but to mitigate the risk of compliance failures leading to fines and reputational damage as well. By 2018, a decade after the acu...

Peer-to-peer platforms are one of the many promises of the blockchain age. More than one has emerged in the giant foreign exchange (FX) markets, as entrepreneurs look to wean institutional and corporate users of the FX markets off their habit of paying too much to banks by netting buy-side trades before going to market. But FX HedgePool, founded by former State Street and BBH currency management v...

Trade documentation and trade finance are notoriously fragmented, manual and poorly digitised. So it is not surprising that Tradeshift, a San Francisco headquartered supply chain digitisation company, has expanded rapidly since its origins in Copenhagen in 2010. As it solved one set of data flows it grew naturally into the adjacent areas and is now a multi-faceted provider of a B2B marketplace, a...

Artificial intelligence (AI) is not yet what its pioneers imagined or what its detractors fear. At the moment it is no more than a branch of computational statistics, which looks for correlations in large vats of digital data through brute force processing guided by algorithms. That it is producing useful findings and outputs is not in question. Most of the apps we use would not exist without it....

The banking industry in the United Kingdom is so consolidated that it is not surprising the Treasury and the Bank of England identified competition as the most urgent need in the wake of the great financial crisis of 2007-08. Metrobank has had a banking licence for more than decade now. Monzo (2015) and Starling Bank (2017) are the best recognised followers and fellow banking unicorn Revolut (2015...

The investments in Bitcoin by Ruffer and MassMutual may have caught the headlines, but crypto-currencies are becoming a tool for corporate treasurers to manage their liabilities as well as a source of capital growth for asset managers. Near-zero to negative interest rates and repeated central bank interventions are encouraging a more adventurous approach in the corporate as well as the retail mark...

Security tokens are coming. In fact, they are here already, and have been for a while. Though most of the security token offerings (STOs) in the last three years were hard to distinguish from Initial Coin Offerings (ICOs), several corporates and banks (Banco Santander, Bank of China, BBV, Daimler, Deutsche Bank, Société Générale) have tokenised bonds or loans on public as well as private blockchai...

The blockchain era has spawned a great deal of innovation, but its most lasting impact might well lie in the fact it forced us to think more imaginatively about data. A decade ago, every business wanted to be the next Facebook or Google, by selling its data to third parties. Today, the coming businesses are those which have grasped that data naturally belongs not to corporations but to consumers b...

One reason institutional money is now being invested in crypto-currencies is that it is safe to do so. Fireblocks, the provider of an institutional-grade safe custody and settlement platform for digital assets, can take a good measure of the credit for what is happening. Dominic Hobson spoke to Michael Shaulov, CEO and co-founder of the firm, as it completed a US$133 million Series C fund-raising...

Central securities depositories (CSDs) were imposed by regulators in the 1990s to solve the securities settlement problems of the 1980s. They have succeeded admirably in that task but so far only a handful have sought to move decisively beyond it and embrace the new opportunities created by the tokenisation of financial assets on blockchain-based networks. Instead, the majority of CSDs have appeal...

As blockchain technology emerges from the Trough of Disillusionment (© Gartner) and ascends the Slope of Enlightenment (© Gartner) the original promise of what it can deliver once it reaches the Plateau of Productivity (© Gartner) is being rediscovered. Capexmove, a London-based business applying blockchain initially to the debt markets, emphasises the savings in external and internal reconci...

Personal lines insurance is a byword for low levels of customer satisfaction, and none attracts less enthusiasm from buyers than motor insurance. The scope to cut prices through automation and improve customer service by moving away from form-filling and call centre queues, is correspondingly high. Peppercorn Insurance is a start-up that aims to cut motor insurance premiums and lift service l...

Questions posed from the October 2020 discussion and will provide the framework for the March 2021 discussion: How can a DataNet be realised most efficiently? What role can government play in accelerating progress towards widespread adoption of digital IDs? What can we learn from a comparison of the digital ID schemes in those jurisdictions which have adopted them already? How can Open Data initia...

With all the excitement being generated by institutional investment in crypto markets, it is easy to forget that a strong business case has to be implemented as well as advanced. Institutional investors entering any market need to be confident they can buy the assets, safekeep them, collect any entitlements and sell them . The recent investment by Ruffer in Bitcoin has captured headlines, but inst...

Questions posed from the Payments Part I discussion in June 2020 and will provide the framework for the February 2 discussion: Payments still create significant costs in capital held for liquidity purposes. In what ways can the cost be reduced? Cross-border payments are still not instant in most cases. How can a genuinely global instant payments network of networks be built? The value of mobile te...

Questions posed from the Open Banking and Open Finance discussion Part 1 in October 2020 and will provide the framework for the Open Data Part II discussion on 2 March. Why is data such a powerful tool for consumers? How exactly does consumer control of data put companies under pressure to cut prices, innovate and personalise? Is the data of sufficient quality and extent to achieve the vision of a...

Topics for discussion include: The relative importance of cost-cutting versus improved customer service Whether finance is especially well-adapted to RPA and AI Whether the projected savings are being achieved Attitudes of employees towards the technologies Impact on levels of employment and skill Whether the IT department is a source of resistance to RPA and AI and ML How it alters the threat of...

Programmable money is one of the technologies to have emerged from blockchain. In fact, its origins in the trustless promise of primitive blockchain are not hard to discern. It is, in essence, tokenised cash controlled by a smart contract rather than a bank or central bank. The smart contract decides, for example, to make a payment automatically when an invoice is received, and nobody can stop the...

The asset management industry has always consumed data. The quantitative investment management depended on plentiful supplies of the price data that financial markets produce. But prices and statistics are now being supplemented by social media, satellite and mobile telephone data that highlights investment opportunities rather than exploitable patterns in the markets. But data is no longer the pr...

Questions posed from CBDC discussion Part I in July 2020 which will provide the framework for the January 12 discussion: 1. Is a CBDC issued directly to retail consumers, and not via the banking system, a serious near-term or long-term possibility? 2. Which entity (or type of entity) is best placed to resolve how CBDCs will interact with private sector crypto-currencies? 3. Which entity (or type o...