Privacy & iHealth++ [June '21 edition]
Fintech valuations & New revenue strategies
The revenge spending season is finally on! Or so I surmise after reading repeated proclamations from news articles and opinion pieces. But I’m glad vaccination rates have gone up, which opens up the exciting possibility for international travel with vaccine passports that can be added to your Apple or Google Wallets, and that are universally acceptable for ease of entry into foreign territories. Waiting with bated breath on that one!
June has also been a month of sweltering heat, periodic rain storms and (finally!) drinks on the patio (ice-cold lemon water for me). On the tech side, we had a slew of updates announced at Apple’s annual WWDC conference, the usual crypto antics, an eCommerce store from Netflix that made a low-key appearance and some well-deserved IPOs.
Apple Health
And why not?! The platform strategy at the outset has definitely bore fruit(s) for Apple in a long term strategic play. All that health data that Apple has been tracking about you over many years can be used to provide consumers an online health identity (containing your medical history, EMR records, ailments, daily activity status, allergies, frequency of water intake & workouts, health & travel insurance etc.) that can be shared with medical practitioners, clinics & hospitals for a seamless healthcare experience in a country (and probably for emergency purposes as well). And given Apple’s focus on privacy, this health identity will be controlled by the consumer, who will be able to decide the kind and amount of data they want to share with the recipient entity. Choice will be an important ingredient, with easy portability of individual health data across different providers, allowing consumers to move between healthcare providers, should one turn out to be less than satisfactory.
And if you can bundle these various components into a subscription, well good for Apple. But given the subscription fatigue many of us face today, how many of us would be willing to fork over our discretionary spending, yet again?
Apple considered a plan to launch its own subscription-based healthcare service.
Apple was trying to figure out how the reams of data collected from Watch users might be used to improve healthcare.
A decision was made to provide a medical service of its own "linking data generated by Apple devices with virtual and in-person care provided by Apple doctors
Apple would not only offer primary care but subscription-based personalized health programs.
One of the initiatives was supposedly an app called HealthHabit that connected employees with clinicians via chat and encouraged them to set health goals.
Privacy features from Apple
A slew of privacy features are expected on iOS15 : Apple IDs, Privacy Relay, Apple Mail Protection.
Privacy Relay encrypts users’ internet traffic on Safari by giving the user an anonymous IP address.
Hide my email lets you generate random email addresses when you signup to a newsletter or when you create an account on a website.
The third feature on my favourite list is having the ability to store your digital IDs in your Apple Wallet. This feature will allow you to add corporate badges, hotel & house keys for smart homes as well as driver’s licenses and other such identities into your Apple Wallet.
a16z to launch crypto fund
June saw the launch of a new $2.2B crypto fund by Andreessen Horowitz, one of Silicon Valley’s most darling VCs. With crypto making quite a dent in the world both on the upswing and the downswing - UK regulators recently banned Binance, one of the world’s largest cryptocurrency exchanges - a16z’s move seems to indicate that Silicon Valley is still bullish about the technology as well the use-cases around it.
a16z was also one of the earliest investors in Coinbase which had an IPO recently.
Visa to buy Tink
After the failed takeover attempt with Plaid, Visa is finally getting a grip on Tink, an open banking rival to Plaid. This Swedish fintech startup aims to leverage the open banking regulation, currently speeding at full throttle in UK and Europe.
Open Banking makes it easier for financial data to be transferred between various financial institutions (through APIs), thereby providing choice and control for the end consumer with financial products and services, while at the same time bolstering accessible financial innovation in the market.
Tink initially started out as a financial management app but later pivoted to focus on providing its technology to other businesses instead.
Google News product
Over the last year, Australia and other countries across the world pressured big tech players, namely Google and Facebook, to pay content/news publishers and media outlets for the use of their content, which currently is accessible to everyone on the tech platforms. While Facebook is undergoing some skirmish with the Australian regulators to comply with their new legislation that requires the social media firm and Google to negotiate content-supply deals with media outlets, Google seems to have complied in Canada by signing agreements with eight Canadian publishers for a new product and licensing program that will pay news organizations to create and curate high-quality journalism.
Google News Showcase will provide customizable space for newsrooms to produce, distribute and explain essential information to readers.
The company says it’s paying news organizations for access to select paywalled content as part of the licensing deals, giving Canadians access to a wide range of news content and potentially driving subscriptions for the media outlets.
Facebook in the live audio space
I may have already talked about this one in my previous newsletters, but the live audio space is another distribution channel for social platforms to expand on and unravel exciting new experiences for. Now Facebook is launching podcasts and live audio streams in the U.S. that will see public figures with verified accounts start live audio rooms and invite others to speak. FB will be helping creators with audio tools to further develop and launch ‘Soundbites - short creative audio clips’.
So after the resounding success of short-form video (Tiktok, Insta Reels, Vines!), the spotlight is on audio. No wonder, every amateur and sophisticated creator is launching their own podcast or creating ClubHouse communities with a powerful subtext of garnering more followers and engagement for themselves.
El Salvador becomes the 1st country to approve Bitcoin as legal tender
Bitcoin won't replace the U.S. dollar as official currency but businesses that can accept it now must
The exchange rate between the two currencies will be established by the market and all prices will be able to be expressed in Bitcoin — although for accounting purposes, the dollar will continue to be the currency of reference.
The president said it would increase financial inclusion, investment, tourism, innovation and economic development.
Amazon SideWalk : Amazon Echo might be stealing away your bandwidth
What if you were told that your internet bandwidth is being subtly sneaked away to power a neighbourhood network of IOT devices? That’s exactly what Amazon seems to be doing for its Amazon SideWalk program. This way, street lights, smart locks, security cameras and other IOT gadgets can stay working even if they don’t have continuous access to a wifi network. The program uses Amazon Echo speakers and Ring security cameras to automatically share a small portion of your home wireless bandwidth with neighbours and the surrounding area. Eerie, but I get it.
Amazon's Echo and Ring devices band together to create a this network by grabbing a slice of bandwidth from each cooperative home network. That can extend the range of devices designed to work with Sidewalk so they'll stay connected even when away from your home network.
One example of such a device is Tile, a tracking device that can be placed on keys or a dog's collar. If your dog goes missing in a neighborhood where Sidewalk is working, it might turn up quickly via Tile.
Other products that work with Sidewalk include smart locks that can be controlled by phone and wearable devices that can track people with dementia who may wander. Amazon expects additional devices, including outdoor lights and motion detectors, will work with Sidewalk before long.
Amazon is tapping into a variety of radio technologies, including one called LoRa for its long range and better known for industrial and business applications such as keeping track of cattle roaming through pasturelands.
Twitter subscription service
Twitter has launched a premium subscription service called Twitter Blue that lets users edit their tweets 30 seconds after they’ve sent it, along with a host of other premium features. Advertising, data licensing and now premium subscription service are the some of the primary ways Twitter will be cushioning up its revenues.
In addition, Twitter’s acquisition of Revue would allow users to create and monetize their own newsletters, a new ‘Super Follower’ option would allow users to monetize their platform presence by offering exclusive content to super followers only, Twitter’s audio service Twitter Spaces for live audio conversations with your audience, Twitter Communities and an array of other experiences could very well position Twitter to leverage its long standing community for some ironclad future dividends.
The subscription will allow Twitter users to access premium features, including tools to organize your bookmarks, read threads in a clutter-free format and take advantage of an “Undo Tweet” feature — which is the closest thing Twitter will have to the long-requested “Edit” button.
The subscription service isn’t just a way to better serve Twitter’s power users, it’s part of the company’s broader plan to reduce its reliance on advertising revenue as its only source of profit. As Twitter has struggled to grow its user base over the years, it’s more recently begun looking to generate more money from the dedicated users it does have. These plans will include offering tools to creators, including the upcoming Super Follow subscription, as well as Twitter Blue.
Google & Shopify’s partnership
Google brings in the real estate or virtual townsquare where merchants and retailers can get noticed and sell their wares. Whilst Shopify brings in the merchants from its ecommerce platforms. This partnership was inevitable, as Google tries to stand off direct ecommerce competition from Amazon.
Google is now adding Shopify’s ‘Shop Pay’ feature as an option for consumers on its sites (Google search, Google Maps, and even Youtube). Shopping and buying options will be displayed more prominently on Google’s sites, adding even more ways to turn it into an e-commerce bazaar.
One of Ready’s earliest decisions was to kill the fee Google charged merchants to list on its shopping service. Over the past 12 months, the company has seen an 80 per cent increase in participating merchants, including “significant growth” among small and medium-sized businesses, Google said in April.
Shopify has 1.7 million merchant clients globally and the Shop Pay feature has generated more than US$20 billion in gross merchandise value since 2017. In addition to the commerce tie-up with Google, Shopify announced a deeper partnership with Google Cloud.
“Google loses if your homepage for e-commerce becomes Amazon.com,”
Yet Google’s edge may be in helping businesses that already pay to promote their products on Google turn around and sell it there, too. That’s particularly true of smaller, older companies. “Going direct-to-consumer has been a lot harder than many of them anticipated,”
With its new tools, Google will let retailers sell directly on Google Maps and list product features, availability and ratings on the Shopping tab. Google will also add more buying features to its Image search page, an area historically devoid of commerce. Google said it’s testing a service to put more buying functions directly inside its YouTube video platform.
In the world of Banking,
ICICI Bank BNPL EMI
‘Buy Now, Pay Later’ is not a new concept in India (EMI - equated monthly instalment - was already a ‘thing’ before the western world made it their own). But India is taking another crack at it with a revamped new look to cater to the new generation.
ICICI bank has extended its instant monthly instalments feature (previously available only in-store) to include eCommerce experiences, enabling customers to split their purchases when shopping online.
introduced instant ‘Cardless EMI’ facility for retail stores in the last festive season to help our customers to purchase products of their choice in a completely contactless, digital and secure manner.
customers can shop from over 2,500 e-commerce merchants and brands just by using mobile phone and PAN.
Personal Finance OS
Money Minx aims to build a “Personal Finance OS” for every household. It helps people keep track of all of their investments, including NFTs & crypto in once place.
Facebook Messenger adds P2P QR based payments in the US
FB is testing Venmo-like QR codes for person-to-person payments inside its app in the U.S.
Facebook Pay first launched in November 2019, as a way to establish a payment system that extends across the company’s apps for not just person-to-person payments, but also other features, like donations, Stars, and e-commerce, among other things.
Canadian click2pay - real time bill payment service
Peoples Trust Company has launched the first seamless, near-real-time bill payments service in Canada. The service uses Interac e-Transfer and enables customers to pay bills and invoices from their bank account by text, e-mail or QR codes.
Clik2pay provides an alternative to credit card, cheque and legacy systems including existing bill pay network and pre-authorised debits.
Businesses and charitable organisations issuing bills or invoices can initiate payment requests with Clik2pay via API, batch upload or on an individual basis.
Supercompanies
When you combine software and finance, you create new synergies that can transcend use-cases and experiences beyond what you originally thought possible. These specialized companies integrate the best of both worlds - intuitive software experiences with robust financial functions and tie them together symbiotically to generate novel business models, monetization strategies and new target markets.
Specialized companies — in some cases, software companies that also process payments and hold funds on behalf of their customers, and in others, financial-first companies that integrate workflow and features more reminiscent of software companies — combine some of the best attributes of both categories.
From software, they design for strong user engagement linked to helpful, intuitive products that drive retention over the long term. From financials, they draw on the ability to earn revenues indexed to the growth of a customer’s business.
The near-perfect example of this phenomenon is Shopify, the company that made its name selling software to help business owners launch and manage online stores. Despite achieving notable scale with this original SaaS product, Shopify today makes twice as much revenue from payments as it does from software by enabling those business owners to accept credit card payments and acting as its own payment processor.
Growth & Valuation
Marqeta’s IPO
After a host of other fintech players, Marqeta, a card issuing and payment processing platform, went public to amass a market cap of just over $16B.
Marqeta provides card-issuing-as-a-service to businesses and other companies to help them issue their own debit/credit/virtual cards for multiple usecases (B2B epayables, corporate spending, e-gifting campaigns, POS financing and lending, and a lot more).
Brazil’s NuBank growing
Nubank started as a digital lending and credit card issuing fintech, but has since expanded into numerous digital finance offerings. The Brazilian market had been ripe for disruption with its 200M+ inhabitants, out of which around 20% or more are unbanked or underbanked. Heavy fees, long wait times, underwhelming customer experience, friction in access to capital are few of the challenges that Nubank hopes to solve for its Latin American market.
Brazilian digital lender Nubank has bagged a $500m investment from Warren Buffett’s Berkshire Hathaway in a Series G extension to drive growth plans.
With a presence in Brazil, Colombia and Mexico, the firm has expanded its core credit card product offering to a complete digital banking platform.
This covers personal lending, investment products, life insurance, products for micro entrepreneurs, and instant payment services.
Cloud - Financial services & 5G
IBM cloud for financial services
Public cloud providers have vertical product offerings to differentiate themselves from their competitors - AWS, Azure and GCP are leading the trillion $ cloud market today.
IBM has launched a cloud product specifically for financial services, with the aim to ‘modernize the industry with industry security and regulatory requirements’.
IBM’s fourth-generation confidential computing capabilities and “Keep Your Own Key” encryption is delivered via IBM Cloud Hyper Protect Services, So partners and their customers can retain control of their data and transact in a highly secured environment.
Canadian Bell partners with AWS for 5G
Under the deal, Bell will embed AWS computing and storage services at the edge of its 5G network.
Bell says its new network can respond faster and handle greater volumes of data than previous generations of wireless technology.
It says the integration with AWS will help minimize latency and allow new technologies such as immersive gaming, ultra-high-definition video streaming, self-driving vehicles and smart manufacturing.
a bit about crypto & CBDCs
The recent awareness of Bitcoin mining and environmental sustainability of that operation makes bitcoin a carbon-unfriendly (if that’s the term) resource, which has demoralized institutional investors.
Cryptocurrency mining is an energy-intensive process as a bulk of high-powered computers is required to generate it.
This amount of energy consumed is even higher than what countries like Argentina or Sweden consume, a waste of energy compared with standard currencies which have minimal environmental footprint.
governments would never be willing to give away their monopoly over currency issuance, seeing cryptocurrencies as a potential threat for the monetary system. Hence CBDCs are a way for governments across the world to issue, maintain, control and regulate digital currencies for their citizens, and thus potentially lowering the probability of unregulated digital currencies an ubiquity.
Unlike decentralized cryptocurrencies, which have no central organization that decides who can use the network, central bank issued digital money is controlled by the bank and they have the final say on its circulation.
benefits of issuing a CBDC. A range of illicit activities could be identified far quicker than today, as the location of every unit of currency is tracked, with tax avoidance, tax evasion and money laundering being almost impossible.
money transfers and payments would no longer require the use of banks and clearing houses, with real-time transfers being possible. For commercial banks and fintechs, it’s likely that CBDCs will pose challenges to some elements of conventional profit models, especially around transactions and holding deposits.
Besides meeting the potentially complex regulatory requirements around CBDCs, banks may have to offer new services or reduce fees to retain clients who want to move to the new digital currency.
how will each separate CBDC with its own unique regulations interact with each other? Seven central banks have joined a working group that’s aim is to research ways to establish CBDCs that are technologically harmonious.
About ‘Banking as a Service’ & ‘Embedded finance’
incumbents and new entrants alike are looking to disaggregate fixed assets – whether in the form of data, regulatory entitlements, security credentials, etc. – and white label them to third parties, drawing on the inspiration of large tech firms. This is a way to monetize sunk costs and diversify revenue streams to offset the capital outlay of transformation costs.
expect more banks to partner with third-party platforms to protect against disintermediation and/or expand reach. This creates new strategic questions around how to optimize a bank’s products and services for a third-party environment it cannot fully control, and the extent that third-party distribution dilutes or enhances a bank’s brand.
From platforms to platform-based ecosystems
platform : a business model that creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers.
ecosystem : network of organizations—including suppliers, distributors, customers, competitors, government agencies, and so on—involved in the delivery of a specific product or service through both competition and cooperation.
platform-based ecosystems : network where a platform owner encourages third parties to develop complementary innovations and the resulting network of firms manifests significant interdependencies.
Quotes I heard
“If you’re investor, both institutional and retail, and you’re looking for a long-term store of value, in my opinion gold fits that bill and Bitcoin’s not yet really in the debate. If you’re looking for a decentralized asset, completely free of oversight or institutional involvement, Bitcoin is what you’re looking for,” - Trey Reik, managing member of the Bristol Gold Group
Books I perused
The Daily Stoic | Ryan Holiday
For God, Country, and Coca-Cola | Mark Pendergrast
Hit Refresh | Satya Nadella
Have You Eaten Grandma? | Gyles Brandreth
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