Search Engines with a twist [Apr '21 edition]
AI Ethics based ratings & Layered Platformication
We’re already half way over this wistful year, with our North American east coast carrying dark gloomy rains and doleful weathers. Mental (and emotional) health has been more than critical these past few months as our work-from-home setups, initially a respite, now seem like golden handcuffs preventing us from ever seeing our erstwhile teammates again.
Nonetheless, this April has been a smorgasbord of interesting bits from the fintech industry - more crypto ETFs, the clamor of social platforms to occupy the live audio landscape, banking alternatives for overlooked segments and the Russian ecosystem surprising us slyly with their fintech preoccupations.
To Russia, with love
Yandex, Russia’s leading search engine and internet-services provider is all geared up to offer banking and financial services to its consumers, with its acquisition of Acropol Bank, thereby amassing a universal banking license.
A ‘search engine’ company offering fintech services might take the form of comparative banking products and solutions right when you start searching for related services, or it might proactively suggest its homegrown branded credit card, savings or mortgage products to unsuspecting consumers. Competition is necessary, but when the platform you use and trust to provide you an objective stream of information, expands to create its own proprietary banking brand with a vested interest in its profitability, its no brainer that there’d either be some fierce pushback from the regulators, some more consolidation amongst the movers and shakers in the Russian banking space or some truly healthy competition leading to more choice for the end consumer.
One piece of news that I missed out in March was of Yandex starting a payment service called Yandex.Pay that allows merchants to process payments by putting a Yandex Pay button on their websites. Consumers would be able to store their card details on their Yandex accounts for seamless (one-click) checkout on the merchant sites that integrate into Yandex.
To date, Yandex has processed payments for its own services via its own technology. But now, it is extending this technology to third-party merchants via Yandex.Pay.
The Big Tech offers a direct integration for merchants, or businesses can connect via an aggregator such as Robocassa, Payture, or RBK.money.
This is a space I’d love to lookout for.
While we’re on the subject of Russia, here’s another fintech that allows consumers to aggregate their cards at one place for a digital-first experience.
Koshelek is Russia’s only mobile app for aggregating bank cards, loyalty and discount cards, and coupons.
Koshelek helps users rid themselves of plastic and transition entirely to digital cards. To receive a discount at checkout, the user shows their discount card on their smartphone screen.
Banking for niche audiences
Welcome Tech, a US based fintech has launched banking services aimed to provide immigrants and their families a seamless transition and greater success with their move to the Unites States.
Welcome Tech has focused on building out a platform that provides educational resources, information and services that “they need to thrive in a new country.” Its efforts are initially primarily focused on the Hispanic community in the U.S.
Armed with knowledge and data that it has gathered over the years, Welcome Tech six months ago launched a banking service, including a debit card and bilingual mobile app. And in January, it launched a monthly subscription offering that gives users access to discounted resources such as medical and dental professionals.
Ensemble provides financial tracking and planning tool for co-parents and their kids; basically disjointed families whose finances are too complicated to handle, what with child support payments, medical bills, extracurricular activities, transportation, etc.
The expense tracking app quietly launched ..with the mission of reducing tension among co-parents and making sure kids’ needs aren’t negatively impacted by a divorce.
Eventually, the company is planning to build out a paid subscription model. Over the long term, it’s also planning to expand beyond being an expense tracking app to offering a suite of financial products and primarily banking products, for things like shared credit cards with tight spending controls.
JD.com, a major Chinese online retailer has started paying some staff in digital yuan. China has been leading the CBDC (central bank digital currency) ecosystem with the launch and testing of its national digital yuan currency (e-CNY) last year, and its push for its usage in mainstream retail market.
In October, Shenzhen, doled out 10 million yuan worth of digital currency to 500,000 residents, who could then use the money to shop at certain online and offline retailers.
The electronic yuan initiative is a collective effort involving China’s regulators, commercial banks and technology solution providers. At first glance, the scheme still mimics how physical yuan is circulating at the moment; under the direction of the central bank, the six major commercial banks in China, including ICBC, distribute the digital yuan to smaller banks and a web of tech solution providers, who could help bring more use cases to the new electronic money.
Since NFTs are all the rage currently, another company is trying to capitalize on its wake through exclusive collaborations with athletes to create NFTs with unique sports-related content.
A new startup called SportsIcon aims to deliver even more value via sports-focused NFTs, with direct collaboration with athletes and lessons from the pros to accompany the one-off digital collectibles.
SportsIcon will be debuting between 15 and 20 NFTs, created in collaboration with athletes, that commemorate specific, historic moments from their sporting careers. Accompanying these NFTs will be “two-hour masterclasses,” which the company said in a press release will give “fans access to their mental and physical training methods, techniques and best practices.”
I’d not be surprised if other mainstream celebrities start dabbling into NFTs, producing exclusive content about their personal and professional lives, packaging it into NFTs and selling (or donating) for considerable sums of money. As we know, any kind of content, from tweets to memes to exclusive pictures can be auctioned off as non-fungible tokens.
You can now own a part of Coinbase on the stock exchange. Previously I’ve covered how Coinbase has made headway into cryptocommerce by letting businesses take payments in Bitcoin, Ethereum and more, and allowing customers to pay directly via crypto for everyday retail transactions (such as buying a coffee or shopping online).
The company's stock market debut, done through a direct listing where no shares are sold ahead of the opening, comes amid a surge in the value of cryptocurrencies.
If you’re bearish on crypto, there’s an ETF for that!
Canadian investors with a bearish outlook on Bitcoin can now bet against the price of the asset with Horizon’s BetaPro Inverse Bitcoin ETF “BITI.”
Majority of retail investors remain skeptical about cryptocurrency as an asset class.
“BITI will offer a way for investors to achieve 'short' exposure to bitcoin without having to use a margin account or shorting futures directly."
But now Reddit & LinkedIn are getting on the bandwagon as well.
Reddit Talk is the latest audio-only chatting product to rival the likes of Clubhouse and Twitter Spaces. The new feature will be available to different communities on Reddit.
The new feature will let moderators on Reddit communities conduct voice-only calls with members of the community. The calls can comprise of Questions and Answers (QnAs), Ask Me Anything (AMA), lectures, sports-radio-style discussions, and community feedback sessions.
LinkedIn has now confirmed it’s also testing a social audio experience in its app which would allow creators on its network to connect with their community. Unlike the Clubhouse rivals being built by Facebook and Twitter, LinkedIn believes its audio networking feature will be differentiated because it will be connected with users’ professional identity, not just a social profile.
We all may have heard about this one, or anticipated Amazon’s move in this direction at some stage. But if you’ve access to Wholefoods in your locality, there might be a chance you’d be able to pay with your palm (biometric payment) at one of their locations.
Amazon is bringing its new biometric device, the Amazon One scanner, to Whole Foods store. The retail giant this past fall introduced the Amazon One scanner, which allows shoppers to enter a store by having their palm scanned. The customer’s palm signature can be associated with their payment mechanism in a retail environment — like Amazon’s cashier-less Amazon Go stores, where customers shop, then walk out without having to go through a traditional checkout process. Now at Whole Foods, the Amazon One scanner will be added as a payment option at checkout.
Payment-as-a-Service enables companies to offer their proprietary payment infrastructure as a re-usable service to other entities (fintechs/companies etc.) who can further customize it for their own usecase/solution.
Money transfer company MoneyGram International has joined forces with peer-to-peer (P2P) and business-to-business (B2B) payment firm Sigue.
The partnership is the latest integration in the new MoneyGram as a Service business line launched by the company last month.
This service looks to enable other companies use MoneyGram’s API-driven infrastructure and other technologies to access the global money transfer network.
Another example of API driven service is Mastercard’s Carbon Calculator launched in partnership with Swedish fintech Doconomy.
The Mastercard Carbon Calculator enables banks to equip people with carbon footprint data and insights to help inform consumer spending and offer ways to contribute to reforestation.
Banks can also integrate the calculator into their mobile apps through new APIs.
And for some other peripheral news -
SMBs are being the prime vehicles for change across the industry. Hit hard by the pandemic, small businesses and merchants have a ton of innovation coming their way. Most recently, NatWest’s business payments service, Tyl Rewards, aims to help SMBs set up their own rewards programmes. Hence in addition to offering gift cards and stamp-based rewards at their stores, these small business owners can leverage NatWest’s Rewards ecosystem to offer customized rewards to their consumers.
Being an all-encompassing platform helps, especially if you can use your phone to get up-to-date information about COVID travel requirements across various airports in the world, just as you get weather and local time data as soon as you land at your destination by air.
Apple Maps on iPhone, iPad and Mac will now show COVID-19 health measure information for airports when searched via the app, either through a link to the airport’s own COVID-19 advisory page, or directly on the in-app location card itself.
The type of information provided includes requirements around COVID-19 testing, mask usage, screening procedures and any quarantine measures in effect.
If you want to understand how ethical are Facebook, Google or Twitter with their data or AI standards, EthicsGrade might be able to provide some interesting insights. It aims to calculate an “ethical” rating (I’d call it footprint) of social media companies (or platforms that use AI algorithms) in order to understand how fair, transparent and privacy-preserving these companies are w.r.t consumer data, privacy and regulation. The hope is that these ratings will enable asset managers and asset owners to rate these companies on their “AI” risks, similar to ESG risk.
EthicsGrade says it is evaluating “the extent to which organizations implement transparent and democratic values, ensure informed consent and risk management protocols, and establish a positive environment for error and improvement.” And this is all achieved through publicly available data — policy, website, lobbying etc. In simple terms, they rate the governance of the AI, not necessarily the algorithms themselves but what checks and balances are in place to ensure that the outcomes and inputs are ethical and managed.
With the advent of the API and SaaS based economy, companies who had anything proprietary to offer started providing API-based services so that other companies don’t have to reinvent the wheel and can leverage specific products and solutions off of these original providers. This led to the ubiquity of banking-as-a-service, with sub-segments such as lending-as-a-service, payments-as-a-service, kyc-as-a-service and so on.
However, we’ve seen players of a different kind in this ecosystem, who don’t own banking licenses themselves, but are “sponsored” by traditional banks, and who provide banking services infrastructure and other core services (via APIs) to their own customers (neo-banks, challenger banks, tech companies etc.). Such players can be called ‘API banking platforms’ (eg. Stripe, Marqeta, Galileo, Fidel etc.). In North America, we’ve a few sponsor banks such as Peoples Trust in Canada, and Evolve bank in the US.
Another model is where full-service banks provide the banking infrastructure and core banking services directly to customers (neo-banks, challenger banks, tech companies etc.) via APIs. Although such legacy banks that offer direct embedded finance are few and far in between (eg. Goldman Sachs, Barclays through some shape or form).
However, there are also cases where legacy/incumbent banks partner with startups or API banking platforms and create enhanced point solutions and services (eg. BNPL, virtual cards etc.) for end consumers, and package them as a service for customers (neo-banks, challenger banks, tech companies etc.). I’d like to call this effect Layered Platformication where you’re rebundling /repackaging services to be offered as enhanced services for other players (consumers/ businesses/tech companies) to consume and build off of. Eg. As noted above, MoneyGram (FI) partnering up with Sigue to offer international money transfer as a service to other companies via APIs. Or Mastercard collaborating with Doconomy to offer carbon calculator capabilities to banks and fintechs, through out-of-the-box, white-labelled solutions or APIs.
Books & other stuff
Some books that caught my interest last month -
Little Black Stretchy Pants | Chip Wilson
Endurance : Shackleton’s Incredible Voyage | Alfred Lansing
Currently reading : Atlas Shrugged | Ayn Rand
“Who’s John Galt?” Guess.
Did you like this snapshot of the underlying shifts & currents brewing in the Payment, Cards & Innovation space? If you found this useful, feel free to comment, share and subscribe.