Category Archives: Finance

Financial Technology – Categories of FinTech Solutions

FinTech refers to new solutions which demonstrate an incremental or radical / disruptive innovation development of applications, processes, products or business models in the financial services industry. These solutions can be differentiated in at least five areas.

  1. First, the banking or insurance sector are distinguished as potential business sectors. Solutions for the insurance industry are often more specifically named “InsurTech”.
  2. Second, the solutions differ with regard to their supported business processes such as financial information, payments, investments, financing, advisory and cross-process support.[4] An example is mobile payment solutions.
  3. Third, the targeted customer segment distinguishes between retail, private and corporate banking as well as life and non-life insurance. An example are telematics-based insurances that calculate the fees based on customer behaviour in the area of non-life insurances.
  4. Fourth, the interaction form can either be business-to-business (B2B), business-to-consumer (B2C) or consumer-to-consumer (C2C). An example are social trading solutions for C2C.
  5. Fifth, the solutions vary with regard to their market position. Some for example provide complementary services such as personal finance management systems, others focus on competitive solutions such as e.g. peer-to-peer lending.

Global investment in financial technology increased more than twelvefold from $930 million in 2008 to more than $12 billion in 2014

Source: Financial technology – Wikipedia, the free encyclopedia

FinTech: End to End Framework for Client, Intermediary, and Institutional Services

Is it all about being the most convenient,  payment processing partner, with an affinity to the payment processing brand?  It’s a good place to start; the Amazon Payments partner program.

FinTech noun : an economic industry composed of companies that use technology to make financial systems more efficient

Throughout my career, I’ve worked with several financial services  teams to engineer, test, and deploy solutions.  Here is a brief list of the FinTech solutions I helped construct, test,  and deploy:

  1. 3K Global Investment Bankers – proprietary CRM platform, including Business Analytics, Business Objects Universe.
  2. Equity Research platform, crafted based on business expertise.
    • Custom UI for research analysts, enabled the analysts to create their research, and push into the workflow.
    • Based on a set of rules,  ‘locked down’ part of the report would  “Build Discloses” , e.g. analyst holds 10% of co.
    • Custom Documentum workflow would route research to the distribution channels; or direct research to legal review.
  3. (Multiple Financial Org.) Data Warehouse middleware solutions to assist organizations in managing,  and monitoring usage of their DW.
  4. Global Derivatives firm, migration of mainframe system to C# client / Server platform
  5. Investment Bankers and Equity Capital Markets (ECMG)  build trading platform so teams may collaborate on Deals/Trades.
  6. Global Asset Management Firm: On boarding and Fund management solutions, custom UI and workflows in SharePoint

*****

A “Transaction Management Solution” targets a mixture of FinTech services, primarily “Payments” Processing.

Target State Capabilities of a Transaction Management Solution:

  1. Fraud Detection:  The ability to identify and prevent fraud exists within many levels of the transaction from facilitators of EFT to credit monitoring and scoring agencies.  Every touch point of a transaction has its own perspective of possible fraud, and must be evaluated to the extent it can be.
    • Business experts (SMEs)  and technologists continue to expand the practical applications of Artificial Intelligence (AI) every day.  Although extensive AI fraud detection applications  exists today incorporating human populated Rules Engines,  and AI Machine learning (independent rule creation).
  2. Consumer “Financial Insurance” Products
    • Observing a business, end to end transaction may provide visibility into areas of transaction risk.   Process  and/or technology may be adopted / augmented to minimize the risk.
      • E.g. eBay auction process has a risk regarding the changing hands of currency and merchandise.  A “delayed payment”, holding funds until the merchandise has been exchanged minimized the risk, implemented using PayPal.
    • In product lifecycle of Discovery, Development, and Delivery phases, converting concept to product.
  3. Transaction Data Usage for Analytics
    • Client initiating transaction,  intermediary parties, and destination of funds may all tell ‘a story’ about the transaction.
    • Every party within a transaction, beginning to end, may benefit from the use of the transaction data using analytics.
      • e.g. Quicken – personal finance management tool; collects, parses, and augments transaction data to provide client  analytics in the form of charts / graphs, and reports.
    • Clear, consistent, and comprehensive data set available at every point in the transaction lifecycle regardless of platform .
      • e.g. funds transferred between financial institutions may  have a descriptions that are not user friendly, or may not be actionable, e.g. cryptic name, and no contact details.
      • Normalizing data may occur at an abstracted layer
    • Abstracted, and aggregated data used for analytics
      • e.g. average car price given specs XYZ;
      • e.g. 2. avg. credit score in a particular zip code.
    • Continued growth opportunities, and challenges
      • e.g. data privacy v. allowable aggregated data
  4. Affinity Brand Opportunities Transaction Management Solution
    • eWallet affinity brand promotions,
      • e.g. based on transaction items’ rules; no shipping
      • e.g.2. “Cash Back” Rewards, and/or Market Points
      • e.g.3. Optional, “Fundraiser” options at time of purchase.
  5. Credit Umbrella: Monitoring Use Case
    • Transparency into newly, activated accounts enables the Transaction Management Solution (TMS) to trigger a rule to email the card holder, if eligible, to add card to eWallet

Is Intuit an acquisition target because of Quicken’s capabilities to provide users consistent reporting of transactions across all sources?  I just found this note in Wiki while writing this post:

Quicken is a personal finance management tool developed by Intuit, Inc. On March 3, 2016, Intuit announced plans to sell Quicken to H.I.G. Capital. Terms of the sale were not disclosed.[1]

For quite some time companies have attempted to tread in this space with mixed results, either through acquisition or build out of their existing platforms.  There seems to be significant opportunities within the services, software and infrastructure areas.  It will be interesting to see how it all plays out.

Inhibitors to enclosing a transaction within an end to end Transaction Management Solutions (TMS):

  • Higher level of risk (e.g. business, regulatory) expanding out service offerings
  • Stretching too thin, beyond core vision, and lose sight of vision.
  • Transforming tech  company to hybrid financial services
  • Automation, streamlining of processes, may derive efficiencies may lead to reduction in staff / workforce
  • Multiple platforms performing functions provides redundant capabilities, reduced risk, and more consumer choices

 Those inhibitors haven’t stopped these firms:

Payments Ecosystem
Payments Ecosystem

 

The Race Is On to Control Artificial Intelligence, and Tech’s Future

Amazon, Google, IBM and Microsoft are using high salaries and games pitting humans against computers to try to claim the standard on which all companies will build their A.I. technology.

In this fight — no doubt in its early stages — the big tech companies are engaged in tit-for-tat publicity stunts, circling the same start-ups that could provide the technology pieces they are missing and, perhaps most important, trying to hire the same brains.

For years, tech companies have used man-versus-machine competitions to show they are making progress on A.I. In 1997, an IBM computer beat the chess champion Garry Kasparov. Five years ago, IBM went even further when its Watson system won a three-day match on the television trivia show “Jeopardy!” Today, Watson is the centerpiece of IBM’s A.I. efforts.

Today, only about 1 percent of all software apps have A.I. features, IDC estimates. By 2018, IDC predicts, at least 50 percent of developers will include A.I. features in what they create.

Source: The Race Is On to Control Artificial Intelligence, and Tech’s Future – The New York Times

The next “tit-for-tat” publicity stunt should most definitely be a battle with robots, exactly like BattleBots, except…

  1. Use A.I. to consume vast amounts of video footage from previous bot battles, while identifying key elements of bot design that gave a bot the ‘upper hand’.  From a human cognition perspective, this exercise may be subjective. The BattleBot scoring process can play a factor in 1) conceiving designs, and 2) defining ‘rules’ of engagement.
  2. Use A.I. to produce BattleBot designs for humans to assemble.
  3. Autonomous battles, bot on bot, based on Artificial Intelligence battle ‘rules’ acquired from the input and analysis of video footage.

G.E. Plans Big Entry into IoT, Providing Analytics and Predictive Rules

G.E. Plans App Store for Gears of Industry

The investment of $500 million annually signals the importance of the so-called Internet of Things to the future of manufacturing.

G.E. expects revenue of $6 billion from software in 2015, a 50 percent increase in one year. Much of this is from a pattern-finding system called Predix.  G.E. calls its new service the Predix Cloud, and hopes it will be used by both customers and competitors, along with independent software developers. “We can take sensor data from anybody, though it’s optimized for our own products,” Mr. Ruh said.

[Competitive solutions from IBM, Microsoft, and Google] raises the stakes for G.E. “It’s a whole new competition for them,” said Yefim Natis, a senior analyst with Gartner. “To run businesses in a modern way you have to be analytic and predictive.”

G.E. is running the Predix Cloud on a combination of G.E. computers, the vast computing resources of Amazon Web Services, and a few [local] providers, like China Telecom.

China, along with countries like Germany, [are] sensitive about moving its data offshore, or even holding information on computers in the United States.  
The practice of “Ring fencing”  data exists in dozens of jurisdictions globally.  Ring fencing of data may be a legal and/or regulatory issue, that may inhibit the global growth of cloud services moving forward.

Source: G.E. Plans App Store for Gears of Industry

Abundant Content: Selecting Your Movie / TV Show is Burdensome

Although content is still ‘King’, the side effect of Streaming Services aggressively rolling out content makes the connection between the ‘ideal’ content and consumer burdensome to initiate.

Streaming Services create a ‘funnel’ to get ‘ideal’ content to the consumer through the use of custom carousels and search.

5 minutes max, I stroll around the Streamers’ carousels for random movies or TV shows that catch my interest.  If I don’t find anything worthy to commit my time, I bounce to another streaming service, and repeat the process.

The problem is compounded when you add broadcast Content Channels: ABC, CBS, Comedy Central, HBO, SyFy,  USA, etc, in addition to Streamers like Amazon Instant and Netflix.

The cost of making a decision of which Movie/TV episode to watch comes down to a basic Microeconomic theory.

In order for the consumer to make an accurate assessment of Opportunity Cost, one has to consider ~ALL available options.

Therefore, the cost of making a decision is inefficient, and most importantly inaccurate due to the amount of Video On Demand, (VOD) repositories available to the consumer.

Opportunities to Curtail Consumer Search Time:

  • On demand chat with a Genre Aficionado, video or text chat, 24/7, an employee of the Streaming Service, or central service contracted to the Service.
  • More robust search that has the capacity to drill down on metadata.  E.g. Filter: N stars rating; Sort: ‘added’ date,
  • Add Closed Captioning  to Search metadata
  • Add object and facial recognition index of objects to Search; Open and Play media at time code. E.g. Nike Sneakers
  • ‘Mad Libs’ style secondary search; fill in fields such as leading actor or actress, director of photography, etc.
  • Inbox – recommendations ‘people’ have sent you, manual and automated messages.  Queue up Search results to notify you once per week.  User may send a message with a link to a movie.
  • Cross Video On Demand (VOD) libraries Searching.  Industry Standards derived and implemented.

New PhD program pioneers ‘Big Data’ solutions

UDMessenger – Our Students – Big Data.

OUR STUDENTS | The University of Delaware’s new PhD program in Financial Services Analytics (FSAN) has gotten off to a strong start.

“I love how UD was able to merge finance, data mining, statistics and other areas to create the FSAN program,” said Leonardo De La Rosa Angarita, a current FSAN student. “This is also reflected in the diversity of the students. We come from different fields, and it is wonderful how we are able to complement each other in so many different ways.”The unique program, a collaborative effort between JPMorgan Chase & Co., the Alfred Lerner College of Business and Economics and the College of Engineering, teaches students to become experts at researching and analyzing large swaths of electronic information, known as “big data” in the business world.

Big Data
Big Data

Long Chen, another FSAN PhD student, said, “After I joined the program, I expected to learn about a broad range of disciplines to fill my toolkit, and that is exactly what we are doing—taking courses from the areas of finance, statistics and computer science. Although the program just started, I can tell we are heading in the right direction.”

Bintong Chen, Director of the FSAN program, said that students are trained as researchers and professionals who play key roles in interdisciplinary teams, applying their knowledge and skills to convert vast amounts of data into meaningful information for businesses and consumers.

Bintong Chen added that the first semester put students’ skills to the test, “due to the intensity and breadth of the core classes designed for the program, ranging from very technical subjects, such as machine learning and data mining, to very business-oriented topics about financial institutions.”

Students are interacting with JPMorgan’s Corporate and Investment Bank during the spring semester to identify topics for their research projects and potential summer internships.

“I always wondered what would happen if engineers and economists would speak the same language, if professors would be more open to the world outside the walls of their offices and if industry would get more interested in what we study in our classrooms,” said Eriselda Danaj, another student in the program. “It is challenging and I love it.”

Article by Sunny Rosen, AS14

Is Petabyte Transfer a Commodity to be Traded on Open Markets?

There is a lot that goes into the electronic transfer of information, excluding your personal computer or smartphone device.  You have cellular towers, fiber optic cables (or pipe), infrastructure to help exchange that information through the pipe, as well as possible optimizations that compress and transfer, or route the information through the networks.

There may be a time where futures commodities such as oil, gold, and silver are traded along side of petabyte transfers, the data packets, not the actual contents of the information.  This means that all the components that help you get from your PC or smartphone to another, as in the aforementioned, regardless if they are leased components (lines) or the ownership of proprietary solutions, such as data crunch utilities to help compress, will all be divided up the price of information transfer to their owners or IP licensees.  Trading the future (3, 6 month contracts) of data transfer (petabytes x rate speed = USD amount) sounds a bit odd, however, anything that we may correlate a value to may be traded on open markets.  Who is the buyer and more importantly, where does the contract originate, the seller, is derived.  I would think the data transfer commodities would be packaged and priced accordingly by an Equities firm, as they pull together all of the players, calculate each component amount, and then price the packaged commodity would be the driver.  So, an equities firm right now may have the opportunity to pull these asset backed securities together, price them, and sell them.  As the technology improves, the price of the contract may go down, however, in exchange, what we send across the pipe may also increase, such as more cloud services, e.g. Gaming as a Service, and then these contracts may be undervalued.  With the approval of all government and legal parties, such as the FCC and the SEC, you may have another commodity to trade.

Bitcoin Exchange, and Practical Usage: What Can I get for a Bitcoin?

I was reading the article, As Big Investors Emerge, Bitcoin Gets Ready for Its Close-Up, and am amazed how far people are taking Bitcoin as a real currency.  I read in the article that there are investors paying substantial real money to acquire Bitcoins.  The article states they hope retail places like Starbuck or Amazon may accept this currency.

When I go to Marketwatch.com and compare the currency exchange rates, GBP: USD, for example, I’d like to see this currency listed so I understand the actual value, the futures of this ‘foreign’ currency.  There are many economic questions regarding the creation of a currency, and the belief in that currency.  Look at Greece and the Euro, the Peso, the Loonie, speaking of, it seems that there may be a market for bitcoins, but not in the traditional sense that ‘physical’ goods are currently exchanged.

Bitcoins will be traded for the use of cloud resources and services, such as computation cycles, and other cloud applications and resources.  If Grid Computing, where users allow the utilization of their computation resources as I suggest in my Post Grid and Cloud Computing Going Head to Head: Profit for You, then both Cloud and Grid computing can trade in Bitcoins,and what they buy is cloud resource utilization.  An exchange may exist so people can trade,  and the value of these coins may have value, allowing for the  ‘tangible’ purchase of computation resource, which may actually mean something.

This approach gets muddied when you are able to apply cloud printing resources which print 3D ‘physical’ goods.    I would have to see major cloud players, such as Amazon to allow for the acceptance of these coins.

For starters, I can see, if you acquire an Amazon Visa or Mastercard, instead of the points system where the cardholder gets reward points, they can be allocated Bitcoins.  Amazon would have to acquire real Bitcoins, and an exchange would have to be established, so if Amazon’s clients are distributed Bitcoins, they are given the proper allocation, e.g. 1 USD to N Bitcoins.  Anyway, Starbucks coffee for thought.

Here are a few other ideas for Bitcoin Applications:

  • Atlantic City, Las Vegas, or Other Physical Casino slot machines that accept and pay out in Bitcoins
  • On line gaming, such as on line poker or slots, that accept and pay out Bitcoins
  • Affinity Card programs that pay out in Bitcoins, according to their own standard, anything from On line stores like Amazon, to Computer Electronics Brick and Mortar stores to Credit Cards
  • PayPal, or other intermediary transaction firms that allow their customers to send and receive Bitcoins as payment.  The transaction intermediary firm may have an independent account for Bitcoins specifically, exclusive from other currencies.

Hold on, a Paradigm Shift is here: From Browser to Operating System

In short, with Windows 8, the Internet Portal, Jump Page, or Home Page paradigm shifts toward the operating system being the gateway.  What will this do to the Search and Browser based companies?  It pulls the rug right from under their feet, and thus the push for Google Chrome Operating System to compete.  Read on for an exciting twist of fate.

I was read an article this morning that said Google’s going to start charging usage of its applications. Is Google really trying to challenge Microsoft? Does Google think it is really ready? Using Google’s applications is free is one thing, paying is another. For example, Google+, don’t get me wrong, has a lot to offer, although, how long has it been around? 17 months, that’s a long time, let’s be frank…

Facebook, even in the early days, kicks Google Plus [BLANK] current platform, from the functionality and sexual appeal standpoint. Google has tons of money to catch up and kick Facebook’s but, right? 1 year, and 5 months, and this is the piece of garbage they produced. Wow, I guess Google isn’t made of money, hiring people like we seem to think, by the bucket load.

Then, why do we think they are trying to compete with Microsoft, an established player in the marketplace, and wisdom to evolve with human needs? I would most certainly use Google’s products for free, and I use their search, but to charge for more? I think Google is good to approach.

Although, how many evolution’s of Microsoft have we had of Windows and applications from Windows over Google with all their offerings? Microsoft Windows initial release11/20/85, 15 years. Microsoft Word has the wisdom and product, joined with human evolution, released in 83, two decades ago, generations of human and symbiotic evolution. Two decades of man and the machine, the technology evolving together into an interoperable, interchangeable, systems. Every generation the User Interface and system has had a change, to fine tune to the dynamics with human change. Now Google, just founded on 9/4/98, less than a decade ago, when did they start to show productivity? Also, how long were they focus on their core, Search? Until when? How mature are these tools you will blindly acquire, because guess what, you’ve ‘grown up’ with Google, evolved with it, and the organic tools created, such as document writing, versioning, photos, and so on.

Now Google wants people to PAY for an analogous Windows Word Version 2.0, in exchange for Word 11.0?! Seriously? That’s fourteen versions of evolution, and yes I counted. Now don’t get me wrong, if Google was rolling in it, had enthusiasm and drive like Apple did under Steve Jobs, the resources to do it. 17 months,this? http://bit.ly/QMQYnE People think I went around the bend, Is it the ability to lead a multinational, such as Google wouldn’t you think Google Plus would be stellar after 17 months. Is Google too ‘diversified’? Personally, I look at Google + as the red headed stepchild, which I feel bad about adopting, so I throw it some trinkets. But pay for it, really pay? That statement almost made me smirk. Are you nuts? It is competitive shopping time, oh yes, there are robust freeware and shareware products, cheap, and better. I wonder why we have so much robust free software. Maybe people with jobs, have lots of time on their hands to create products rivaling commercial ones, yeah, that must be it. So why in the bloody hell, G-d forgives me, are we going to pay up to Google? Only game in town to find the products? Google search is our page to go places, right? Now how about the new design of Windows Surface, or RT? Is it a complete game changer from a User Interface Standpoint. Has Microsoft really pushed the envelope of it’s creativity to actually produce a kick a$$ product, and make jump point, portal, or gateway the browser. Oops. Sorry Google. Actually, Microsoft may eventually go back to a monopoly for this is if wasn’t for Android tables, iStuff, and even little Google Chromebook. Microsoft Windows 8 no longer makes a flood gate to the world, in fact, the world is you, as natural and direct as to the applications you want. No more jump page, no more stop gap, or flow control. Our jump pages, or home pages have been the portal to everywhere. Google has been primarily our home page because it is simple. Our portals, jump pages, home pages, same stuff, control where we go, what we buy, and what we see.

Anyone remember a few years back, there was so much competition for the portal to the Internet, the jump or home page? Simply a text box and a picture, got you started, and it was like you evolved with a User Interface. Google began slightly to add on features, such as email, photos, but they were so minute, so undetectable. Google built an evolutionary platform literally from the ground up, a picture and a text box for a home page. Based on this assumption of human and machine evolution correlate to one another through user interface, ease of use, and paying it in kind. So then, primates, homosapiens, whatever, how long will you think it will take to evolve Google? George Carlin style answer: as long as it takes for humans to evolve, a 1:1 correlation. Are you going to really wait for Google to catch up, and since Windows 8 has entirely redesigned the paradigm of the machine, the portal may be superfluous, hence the push for Cromebooks. Hey, Android has a huge market share now after they by passed iOS, and Android help them do that. There are lots of Androids out there, as I told Ms. Whitman, and her predecessor, but you have to practically give away your Windows 8 OS, and mobile phones, and it’s an instant game changer. You don’t roll the dice; you sit out from the game. How would you react if you were at the helm of Microsoft, or Google?

Look, I am not trying to take sides, just state the obvious.  Also, I don’t care who threw which spear first, Google Chrome, but what I do care about…What I do care about…?The Doctor Who episodes.  Yep, maybe the kids, sometimes the wife.