Cobalt uses Blockchain tech to process FX trades

It was around this time last year when I first started looking into blockchain technology and its capabilities. Even though blockchain technology was initially developed to accommodate Bitcoin transactions, my personal interest has been much more in its potential to act as “shared ledgers” for a wide variety of transactions or ‘contracts’ (see Fig. 1-2 below):

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Fig. 1 – High level outline of smart contracts via shared ledgers – Taken from: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/492972/gs-16-1-distributed-ledger-technology.pdf

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Fig. 2 – High level outline of distributed ledger technology – Taken from: http://www.thegeniusworks.com/2016/02/blockchain-from-geeky-bitcoin-technology-to-a-revolution-in-everyday-processes/

In the past year, I’ve seen a lot of initiatives and companies pop up in the shared ledger space. I’ve looked at the likes of Abra, Ripple and R3. London based Fintech startup Cobalt is another promising player in the shared ledger arena. Andy Coyne, Cobalt’s Co-Founder and CEO, explains the problems that Cobalt is looking to solve:

“The speed at which trades are executed between participants across every corner of the globe has altered on a scale that previously seemed unimaginable, while competitiveness has increased and costs related to market access and execution have shrunk.

In contrast with execution technology, associated post-trade infrastructure has failed to keep pace. Legacy systems and practises being used to support these processes have changed little since their inception; they are now so inefficient and unfit for purpose that they introduce risk and unnecessary cost, having a serious impact on trading institutions’ profitability. This comes at a time when there is a move away from revenue to a real focus on true profitability.

The root cause is a glaring mismatch, where back office processes that evolved to support profitable voice and proprietary trading of 25 years ago are failing to support high volume, low margin electronic trading.

This is exemplified by the huge degree of unnecessary replication. A single transaction executed in today’s trading environment creates multiple records for buyer, seller, broker, clearer and third parties, introducing inconsistencies throughout lifecycle events such as affirmation, netting, allocations and confirmation, through to trade finality and nostro reconciliation. This hugely increases the probability of creating discrepancies, caused by multiple system hand-offs, normalisation and reconciliations. High frequency trading firms are particularly vulnerable, incurring huge costs for high volumes of low value tickets.”

Fig. 3 – Andy Coyne, Co-Founder and CEO of Cobalt on his company’s mission – Taken from: http://www.cobaltdl.com/blockchain/

In short, Cobalt are trying to remove any inefficiencies and unnecessary (operational) costs or risks related to the processing of foreign exchange (‘FX’) trades. Using the blockchain and its shared ledger functionality, Cobalt aims to simplify the way in which foreign exchange transactions are being processed. Instead of creating multiple records for one and the same transaction, Colbalt creates a single view. It this thus looks to significantly reduce the number of system hand-offs and reconciliations for one transaction, typically inherent in current processing of FX trades by legacy systems.

Cobalt’s focus is predominantly on the “post-trade” phase, and the risks and costs currently associated with this phase (see Fig. 4 below):

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Fig. 4 – Potential benefits of Blockchain for capital markets – Taken from: http://www.oliverwyman.com/content/dam/oliver-wyman/global/en/2016/feb/BlockChain-In-Capital-Markets.pdf

Main learning point: By providing a single view of a transaction between multiple parties, Cobalt aims to significantly increase the transparency of FX trades and remove complex back-end systems and processes i.e. banking legacy systems.

 

Related links for further learning:

  1. http://www.reuters.com/article/us-banks-forex-blockchain-citigroup-idUSKBN14413A
  2. http://uk.businessinsider.com/citi-invests-in-foreign-exchange-blockchain-startup-cobalt-dl-2016-12
  3. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/492972/gs-16-1-distributed-ledger-technology.pdf
  4. http://www.chyp.com/sharing-ledgers/
  5. http://www.thegeniusworks.com/2016/02/blockchain-from-geeky-bitcoin-technology-to-a-revolution-in-everyday-processes/
  6. http://www.cobaltdl.com/blockchain/
  7. http://www.fxweek.com/fx-week/news/2475678/first-commercial-dl-solution-to-handle-14bn-daily-transactions
  8. http://financefeeds.com/this-is-not-a-noise-this-is-serious/
  9. http://cobaltdl.com/wp-content/uploads/2016/07/Blockchain.pdf
  10. http://www.oliverwyman.com/content/dam/oliver-wyman/global/en/2016/feb/BlockChain-In-Capital-Markets.pdf

 

App review: Plum

When I reviewed Cleo a few weeks ago, I also came across Plum. Plum describes itself as “your personal savings” assistant and lives in Facebook Messenger.

How did Plum come to my attention?  I came across Plum whilst reviewing Cleo, another virtual savings assistant. I then spoke to Victor Trokoudes, co-founder and CEO of Plum, who gave me a first introduction to Plum.

My quick summary of Plum (before using it) – I expect Plum to not only monitor my spending and saving habits, but to also do my saving for me and transfer savings directly to a savings account of my choosing.

How does Plum explain itself in the first minute? – From the headline to smaller print on the landing screen, it’s apparent that Plum is all about saving, helping me to save. Plum “monitors your daily spending and automagically sets money aside for you.”

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Getting started, what’s the process like?  After I’ve clicked on the “Sign up for free” button, I’m taken to Facebook Messenger where I see a landing page that explains about Plum; “I’m a robot. I was built to help you save money so you don’t have to worry about it.”

At this stage, I’m not entirely sure about how exactly Plum will help me to save money, but I decide to click on the “Get Started” button to find out.

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On the next screen, I’m presented with the choice between signing up and learning how Plum works. I decide to do the latter and click on “How it works”.

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And I’m pleased that I asked the Plum bot to explain how it all works, because I like the response that I get in return:

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I now feel more confident about how Plum works and how it can help me with saving money, so I decide to click on “Sign up”. After entering my email address, the Plum bot asks me for some more information to complete my setup. After clicking on the “Complete setup” button, I’m taken to separate page where I can enter my personal details.

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After I’ve entered my personal details, the next step is for me to link my bank account to Plum. I like how Plum is keeping me posted on progress by striking through the previous two steps of the onboarding process. There’s copy there to assure me that my bank login details will be treated securely by Plum; making it clear that Plum “will never, ever store it (my bank login, MA) on our system.”

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Did Plum deliver on my expectations? – Once I’ve managed to sync my bank account info, and have completed my Plum set up, the app starts helping me to save money. For me, Plum’s biggest draw is that I can add money to my Plum savings. Plum tells me how much of my cash is still available for withdrawal, and prompts to me decide on how much money I’d like to set aside.
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Similar to the standard account and transaction info that your traditional bank offers, Plum provides a neat overview of my monthly and total savings, and I can see my most recent transactions at a single glance. Ultimately, I feel I can only truly answer the question about Plum delivering on my expectations once why I’ve achieved a specific savings goal. In the meantime, I feel that Plum does offer a pretty smooth onboarding journey and a clear path to actually saving money. If you’re struggling to save or understanding how much you can save in the first place, definitely worth checking out Plum and start setting money aside!

Learning more about the Fintech ecosystem in China

In a few weeks’ time, I’ll be travelling to Hong Kong for the first time, looking to visit Shenzhen as well. I’m hoping it will be a great opportunity for me to learn more about the needs of Chinese customers and get a better feel for the Chinese Fintech scene. To start preparing for my trip, I used a recent report by EY/DBS Bank titled “The Rise of FinTech in China” to learn more about key characteristics of the Chinese Fintech space.

I’ve looked at the ‘current state’ of Fintech in China, both from a customer and a market perspective, and these are my main takeaways from the EY/DBS report:

  1. Fintech activity in seven vertical markets – EY/DBS’ report outlines the seven key verticals in which Chinese Fintech businesses are active (see Fig. 1 below). At a first glance, that the lion’s share of innovation by Chinese Fintech players thus far has been in the payments and e-wallets space. I’ve written previously about the absolute rise of alternative payment methods in China, mostly via mobile and predominantly driven by Alipay and WeChat.
  2. Chinese customers are embracing alternative payment and insurance methods – The EY/DBS report contains a useful diagram that outlines the percentage of customers per Asian country using specific Fintech services (see Fig. 2 below). Based on this diagram, it looks like both payments/remittances and insurance are already quite established in China, with opportunities for lending and personal wealth management to truly take off soon.
  3. Customer focus on online experience and functionality – A recent study by EY explored the appetite of Chinese consumers for non banks over traditional banks. It was interesting to read about the value placed on “better online experience and functionality”, as a key reason for using non banks over traditional players. One of my assumptions here is that Chinese consumer prefer banking services which are fully integrated into their daily lives, thinking about how WeChat seamlessly integrates payments into its messenger app.
  4. Alternative payment methods; disruption hasn’t finished yet – I had never given that much thought to low credit card penetration rates across China, but the stats in the EY/DBS report speak volumes in this regard (see Fig. 4 below). The report offers a pretty straightforward explanation for this phenomenon; a strong adoption of alternative payment methods and e-wallets. Unionpay Quick is a good example of a contactless payment method that is becoming more and more ubiquitous in China, particularly in so-called “first tier cities”.

Main learning point: Having read the EY/DBS report, I do feel that China is quite far ahead of the Western world in certain areas of Fintech, particularly in the payments and e-wallet space.  In the west, Fintech has been responsible for a lot of ‘unbundling’ of traditional banking services. In Asia – in China in particular – my feeling is that things are moving in the opposite direction: seamlessly integrating financial activities with people’s day to day activities. Alipay, WeChat and, in India, Paytm are leading the way in this regard.

 

Fig. 1 – Chinese FinTech activity in seven key vertical markets – Taken from: “The Rise of FinTech in Asia – Redefining Financial Services” by EY / DBS 

  1. Payments and e-wallets A mobile payments ecosystem facilitated by e-commerce and social media players, of which Alipay (of Ant Financial) and Tenpay (a Tencent company) dominate the market. Other notable players include UnionPay, ICBC e-wallet, JD Pay/Wallet (of JD.com) and 99bill (of Dalian Wanda Group).
  2. Supply chain and consumer finance E-commerce players lend to underbanked or unbanked individuals and small medium enterprises (SMEs) by leveraging users’ merchant data on the platform. Key participants include Ant Financial and MyBank (Alibaba), WeBank with WeChat (Tencent), JD Finance (JD.com) and Gome Electronic Appliance, which recently ventured into providing financial services for individual customers and suppliers.
  3. Peer-to-peer (P2P) lending platforms P2P platforms create a marketplace for peers to lend to individuals and SMEs underserved by the traditional lending sector. Market leaders are Lufax (Ping An Insurance), Yirendai (CreditEase), Rendai, Zhai Cai Bao (Alibaba) and Dianrong (the co-founder of Lending Club).
  4. Online funds Funds linked to payment platforms that offer ease of access and more competitive returns than the historically low deposit rates. Primary participants are Yu’e Bao of Ant Financial, Li Cai Tong (Tencent) and Baifa (Baidu).
  5. Online insurance E-insurance sold through e-commerce and online wealth management (WM) platforms. Notable brands are platforms by the People’s Insurance Company of China (PICC), Ping An, and Zhong An (in partnership with Ping An).
  6. Personal finance management Recently developed mobile-centric finance solutions providing access to mutual funds though stock trading apps. These platforms offer offline-to-online activity, with online brokers accounting for over 92% of new clients. Key players include Ant Financial (Alibaba), Li Cai Tong (Tencent), Baifa (Baidu), Wacai, Tongbanjie, Zhiwanglicai (CreditEase) and JD Finance (JD.com).
  7. Online brokerage Investment, social network and information portals for investors in China, providing thematic investing via websites and mobile apps, and offered by FinTech firms such as Snowball Finance, Xianrenzhang and Yiqiniu.

Fig. 2 – Percentage of banking/financial services customers using FinTech services – Taken from: DBS Bank, 2016

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Fig. 3 – Reasons for using a non-bank rather than traditional bank – Taken from: EY Global Consumer Banking Survey 2016

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Fig. 4 – Payment method used most regularly the past 3 months – Taken from: FT Confidential Research survey, May 2016

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                                                       Source: Survey of 1,000 urban consumers conducted by FT Confidential Research, a unit of the Financial Times18, May 2016

App review: Cleo

I wrote about virtual assistants a few weeks ago, which made me realise that I hadn’t yet explored Cleo in more detail. Cleo is a virtual assistant that I believe can help me save money. However, my knowledge of Cleo ends there, so let’s have a closer look at Cleo and its onboarding process:

  1. How did Cleo come to my attention? – I came across Cleo a few months ago as I was looking at so-called ‘robo advisers’ like Betterment and Nutmeg.
  2. My quick summary of Cleo (before using it)? – When you search for Cleo, Google will tell you that it’s an “Intelligent assistant that helps you save money”. I therefore expect a virtual assistant that will give me a better view of my expenses and gives me tips on how to spend less. I expect an app that’s highly personalised, aiming to making saving fun. I guess a bit similar to Qapital, an app that I reviewed a few months ago.
  3. How does Cleo explain itself in the first minute? – I like how how the homepage of https://meetcleo.com/ talks about Cleo being “The simplest way to manage your money” (see Fig. 1 below). The page also mentions “bank level security” although I must admit that I’m not entirely sure what that means in the context of Cleo.
  4. Getting started, what’s the process like (1)? – Cleo’s onboarding process feels very intuitive and easy, particularly the part where Cleo syncs with my bank account (see Fig. 3 below). The messaging about how Cleo will treat my current account data instills trust and is clear, even to the point where I get a text from Cleo to say that banks are a bit slow when it comes to synching (see Fig. 8 below). However, when I’m asked to set my monthly income, I’m not sure what purpose this will serve and how I’ll benefit from sharing this data with Cleo (see Fig. 4 below).
  5. Getting started, what’s the process like (2)? – The simplicity of the onboarding process is reinforced by the text messages that I’m getting from Cleo on my mobile whilst onboarding on my laptop (see Fig. 8 below).
  6. Did Cleo deliver on my expectations (1) – After completing my onboarding with Cleo, I get a pretty comprehensive overview of my bills and spending (see Fig. 7 below). Perhaps I hadn’t fully set my own expectations when signing up with Cleo, but I’m left with a faint feeling of disappointment, expecting to receive more insights around my spending patterns or be able to ask Cleo specific questions about my balance. For example, when I ask Cleo about how to best increase my balance, she refers me to the generic balance call to action which she’d shared with me 3 seconds prior in the same exchange on Facebook Messenger (see Fig. 10 below).
  7. Did Cleo deliver on my expectations (2) – Some of the machine learning parts that underpin Cleo feel like they’re working pretty well, and getting started with Cleo felt very seamless and self-explanatory. I’m, however, keen to see how Cleo will develop further over the coming months, in becoming truly ‘intelligent’ about my spending habits and ways for me to save money.

 

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Fig. 1 – Screenshot of the homepage of https://meetcleo.com/

 

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Fig. 2 – Screenshot of the first step of the Cleo sign-up flow

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Fig. 3 – Screenshot of the second step of the Cleo sign-up flow

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Fig. 4 – Syncing a bank account with Cleo

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Fig. 5 – Screenshot of setting a monthly income in Cleo

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Fig. 6 – Screenshots of the workflow around adding bills

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Fig. 7 – Screenshot of the ‘outputs’ of the info entered into Cleo

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Fig. 8 – Text updates from Cleo throughout the onboarding process

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Fig. 9 – Chat message from Barney, CEO and Co-Founder of Cleo

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Fig. 10 – Chatting with Cleo through Facebook Messenger

App review: Zuora

One of the product areas I’m keen to learn more about is billing; understanding how small businesses go about (recurring) billing. A few years ago, I used Recurly to power subscription management and payments for a music streaming service. I’ve now discovered Zuora, who aspire to “turn your customers into subscribers.”

“The world subscribed” – I really like Zuora’s vision – “the world subscribed” – and its 9 keys to building a subscription based business (see Fig. 2 below). Zuora aims to make managing subscription payments as intuitive as possible. For example, when I look at the info that Zuora provides on a specific customer account, it feels clear and clean, enabling the user to digest key account information at a glance (see Fig. 3 below).

Part of an ecosystem – The thing I like best about Zuora is the numerous integrations it has with partners and marketplace apps. As a result, Zuora users can integrate easily with payment gateways such as Adyen and link with accounting software packages such as QuickBooks. Similarly, there’s a whole host of apps and plug-ins that Zuora users can choose from.

Main learning point: Even though subscription management / billing forms the core of Zuora’s value proposition, I feel that there’s much more to it: helping people run their business operations as efficiently as possible. I don’t know whether the people at Zuora would agree with me on this vision, but I believe that, especially through it’s 3rd party integrations, Zuora can support its users more widely in their day-to-day operations.

Fig. 1 – Screenshot of Zuora’s “Quotes” overview – Taken from: https://www.getapp.com/finance-accounting-software/a/zuora/

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Fig. 2 – Zuora’s 9 keys to building a subscription based business – Taken from: https://www.zuora.com/vision/the-9-keys/

  1. Price – Find your sweet spot. Dynamically adjusting pricing and packaging is the surest way to attract and retain customers, and multiply the value of your relationships.
  2. Acquire – Boost subscription rates with tools like flexible promotions, integrated quoting and multi-channel commerce.
  3. Bill – Subscriptions mean more invoices and more payments. Automatically generate fast, accurate bills and deliver them online.
  4. Collect – Get paid. Collect payments instantly through automated and manual channels, while maximising completed transactions and minimising write-offs.
  5. Nurture – Build beautiful relationships. Keep your customers engaged and happy. Seamlessly manage rapidly changing upgrades, conversions, renewals and other orders.
  6. Account – Measure everything. Twice. Zuora plugs straight into your accounting software and General Ledger. Register subscription and process deferred revenue with ease.
  7. Measure – No paper, no worries. Analytics make forecasting, accounting close and audits a breeze. Plus, it gives you the right insight your subscribers, so you can make smarter decisions.
  8. Iterate – Try something new every day. Subscriptions can involve complex customer relationships. Zuora lets you iterate and test what’s working with just a couple of clicks.
  9. Scale – Get growing. Zuora is built on a secure, scalable technology infrastructure. So wherever you start out, we’ll keep the system running as you grow.
Fig. 3 –  Screenshot of Zuora’s “Customer Accounts” page – Taken from: https://www.crunchbase.com/organization/zuora#/entity
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Related links for further learning:
  1. https://www.boomi.com/solutions/zuora/
  2. https://www.zuora.com/product/partners/
  3. https://connect.zuora.com/appstore/apps
  4. http://fortune.com/2014/06/10/10-questions-tien-tzuo-founder-and-ceo-zuora/
  5. http://www.forbes.com/sites/edmundingham/2015/10/13/why-own-anything-anymore-zuora-founder-explains-rise-of-subscription-economy-at-subscribed-ldn/#735812d65a49
  6. http://blog.servicerocket.com/podcasts/episode-7
  7. https://www.zendesk.com/customer/zuora/
  8. https://medium.com/the-mission/the-greatest-sales-deck-ive-ever-seen-4f4ef3391ba0#.xbezrudzi