Now, amid warnings that the “fragile” fiat currency system will be put under strain in years ahead, Germany’s troubled Deutsche Bank has asked, “will fiat currencies survive,” in what it calls the “multi-trillion dollar (or bitcoin) question.”
“The forces that have held the current fiat system together now look fragile and they could unravel in the 2020s,” Deutsche Bank strategist Jim Reid wrote in a report looking at 24 alternative ideas for the next 10 years.
“If so, that will start to lead to a backlash against fiat money and demand for alternative currencies, such as gold or crypto could soar. The demand for alternative currencies will therefore likely be significantly higher by the time 2030 rolls around.”
Central banks are still struggling to offset the effects of the global financial crisis that birthed bitcoin, with worries another so-far-unidentified crisis could be looming on the horizon.
“Will fiat currencies survive the policy dilemma that authorities will experience as they try to balance higher yields with record levels of debt,” Reid asked. “That’s the multi-trillion dollar (or bitcoin) question for the decade ahead.”
Bitcoin is often touted as an antidote to the central bank, debt-based monetary system, picking up the moniker “digital gold” for its built in scarcity. There will only ever be 21 million bitcoin, with the supply drying up in the distant year of 2140.
Deutsche Bank, which has seen its value cut by 90% in the ten years since bitcoin was created, has also predicted corporate and government banked cryptocurrencies will drive crypto adoption.
“Assuming governments back cryptocurrencies, and consumers want them, adoption rates will drive the timeline for mainstream use,” Reid wrote. “If current trends continue, there could be 200 million blockchain wallet users in 2030.”
Deutsche Bank has forecast there could be more than 200 million bitcoin and cryptocurrency users … [+]
Deutsche Bank
Meanwhile, other banks are warning that the year ahead could bring an overhaul of the “status quo.”
“We see 2020 as a year where at nearly every turn, disruption of the status quo is an overriding theme,” Saxo Bank’s chief economist Steen Jakobsen wrote this week in a report titled “10 Outrageous Predictions for 2020.”
“The year could represent one big pendulum swing to opposites in politics, monetary and fiscal policy and, not least, the environment. In policy making, it could mean that central banks step aside and maybe even slightly normalize rates, while governments step into the breach with infrastructure and climate policy-linked spending.”
I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com. Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.
The sky is the limit,” gushes MoneyLion founder and CEO Dee Choubey as he strolls into Manhattan’s Madison Square Park, the oak and ash trees turning color in the October sunshine.
Choubey, 38, is taking a midday constitutional from MoneyLion’s cramped offices in the Flatiron District, where 65 people labor to reinvent retail banking for the app generation. He ticks off a couple businesses he looks up to—ones that have fundamentally changed the way money flows around the world—putting his ambitions for his six-year-old startup into sharp relief. “PayPal,” he says. “Square.” Two companies worth a combined $150 billion.
“The promise of MoneyLion is to be the wealth manager, the private bank for the $50,000 household,” Choubey says.
At last count, MoneyLion’s app had 5.7 million users, up from 3 million a year ago, and a million of those are paying customers. Those people, many from places like Texas and Ohio, fork over $20 per month to maintain a MoneyLion checking account, monitor their credit score or get a small low-interest loan. In all, MoneyLion offers seven financial products, including unexpected ones like paycheck advances and, soon, brokerage services. Choubey expects revenue of $90 million this year, triple last year’s $30 million. His last round of financing, when he raised $100 million from investors including Princeton, New Jersey-based Edison Partners and McLean, Virginia-based Capital One, valued the company at nearly $700 million. By mid-2020, he predicts, MoneyLion will be breaking even. An FDIC-insured high-yield savings account will be rolled out soon, while credit cards are on the schedule for later in 2020. To retain customers, he says, “we have to be a product factory.”
Like most other entrepreneurs, Choubey thinks his company’s potential is essentially unlimited. But having spent a decade as an itinerant investment banker at Citi, Goldman, Citadel and Barclays, he’s also a guy who knows how far a horizon can realistically stretch. And he is far from the only one to see the opportunity for upstart digital-only banks—so-called neobanks—to transform retail banking and create a new generation of Morgans and Mellons. “I just heard a rumor that Chime is getting another round at a $5 billion valuation,” he says.
Leading the Neobank Pack
In 20 years, these VC-backed startups could dominate consumer banking, but they’ll face plenty of competition. Fintech companies that originally offered investing are rushing to add bank services.
Sources: the companies, CB Insights, PitchBook.
Globally, a vast army of neobanks are targeting all sorts of consumer and small-business niches—from Millennial investors to dentists and franchise owners. McKinsey estimates there are 5,000 startups worldwide offering new and traditional financial services, up from 2,000 just three years ago. In the first nine months of 2019, venture capitalists poured $2.9 billion into neobanks, compared with $2.3 billion in all of 2018, reports CB Insights.
Underlying this explosion is new infrastructure that makes starting a neobank cheap and easy, plus a rising generation that prefers to do everything from their phones. While it can take years and millions in legal and other costs to launch a real bank, new plug-and-play applications enable a startup to hook up to products supplied by traditional banks and launch with as little as $500,000 in capital.
“Now you can get your [fintech] company off the ground in a matter of a few months versus a few years,” says Angela Strange, a general partner at Andreessen Horowitz, who sits on the board of Synapse, a San Francisco-based startup whose technology makes it easier for other startups to offer bank products.
Using such middleman platforms, tiny neobanks can offer big-bank products: savings accounts insured by the FDIC, checking accounts with debit cards, ATM access, credit cards, currency transactions and even paper checks. That frees fintech entrepreneurs to concentrate on cultivating their niche, no matter how small or quirky.
Take “Dave.” Dave (yep, that’s its real name) is a little app that rescues folks from the pain of chronic bank overdraft fees. Created by a 34-year-old serial entrepreneur named Jason Wilk who had no prior experience in financial services, Dave charges its users $1 a month and, if they seem likely to overdraw, instantly deposits up to $75 as an advance. Nice little business, but nothing to give Bank of America jitters.
Franco Vogt for Forbes
Betterment cofounder Jon Stein at his New York City startup. It took a decade to get 420,000 clients for its robo-advisor business managing stocks and bonds; as a neobank newcomer, Betterment already has 120,000 on a waiting list for a checking account.
But then Wilk decided to turn Dave into a neobank. In June, using Synapse, Dave rolled out its own checking account and debit card. Now it can make money on “interchange,” the 1% to 2% fees that retailers get charged whenever a debit card gets swiped. These fees are split between banks and debit-card issuers like Dave. Wilk optimistically predicts Dave will bring in $100 million in revenue this year from its 4.5 million users—up from $19 million in 2018, the year before it transformed itself into a neobank. Dave was recently valued at $1 billion.
Established fintech companies that didn’t start out in banking are getting into the game too. New York-based Betterment, which manages $18 billion in customers’ stock and bond investments using computer algorithms, recently rolled out a high-yield savings account. It pulled in $1 billion in deposits in two weeks. “The success has been unprecedented. In our history we’ve never grown this fast,” marvels Betterment CEO and cofounder Jon Stein. Now he’s launching a no-fee checking account with a debit card, and credit cards and mortgages might be next, he says.
Neobanks are swiftly emerging as a huge threat to traditional banks. McKinsey estimates that by 2025 up to 40% of banks’ collective revenue could be at risk from new digital competition. “I don’t believe there’s going to be a Netflix moment—where Netflix basically leapfrogs Blockbuster—where fintechs basically put the banks out of business,” says Nigel Morris, a managing partner at QED Investors, an Alexandria, Virginia-based VC firm specializing in fintech. “[Traditional banks] are really complicated businesses, with complex regulatory issues and consumers who are relatively inert.” But, he adds, “If [neobanks] can get people to bundle, [they] can get more of a share of a wallet of a consumer. [The] economics can move dramatically. It changes the game.”
Diwakar (Dee) Choubey was supposed to be an engineer, not an investment banker. Born in Ranchi, India, he came to the U.S. at 4 when his father was finishing a graduate degree in engineering at Syracuse University. The family ended up in New Jersey. Choubey’s mom taught autistic children, while his dad worked as an engineer at Cisco—and plotted his son’s future.
When Choubey started at the University of Chicago in 1999, he signed up for a bunch of computer science classes picked by his dad. But after earning a couple of B-minuses, “I cried uncle,” Choubey says. He became an economics major, strengthening his grades and job prospects by taking corporate finance and accounting courses at the business school. After graduating with honors, he went into investment banking, where he remained for the next decade.
From an insider’s vantage point, he saw that traditional banks were excruciatingly slow to respond to the preferences of their customers and exploit the power of smartphones. That, plus a never-ending series of bank scandals, convinced him that there was an opening for a digital “private banker.” In 2013 he walked away from his near-seven-figure salary to start MoneyLion.
Choubey raised $1 million in seed funding and started out offering free credit scores and micro-loans. But he struggled to raise more money. Forty venture investors turned him down, deeming his vision impractical and unfocused. “I was laughed out of a lot of VC rooms in our early days,” he recalls.
While Choubey banged unsuccessfully on VC doors, MoneyLion putt-putted along, bringing in a little revenue from loan interest and credit card ads and collecting a bunch of data on consumer behavior. Finally, in 2016, he persuaded Edison Partners to lead a $23 million investment. That enabled MoneyLion to add a robo-advisor service allowing users to invest as little as $50 in portfolios of stocks and bonds. In 2018, it added a free checking account and debit card issued through Iowa-based Lincoln Savings Bank.
Managing rapid growth, while striving to keep costs low, has proved tricky. MoneyLion was hit with a deluge of Better Business Bureau complaints over the past spring and summer. Some customers experienced long delays transferring their money into or out of MoneyLion accounts and, when they reached out for help, got only computer-generated responses. Choubey says the software glitches have been fixed, and he has bumped up the number of customer-service reps from 140 to 230.
Other neobanks have had operational growing pains too. In October, San Francisco-based Chime, with 5 million accounts, had technical problems that stretched over three days. Customers were unable to see their balances, and some were intermittently unable to use their debit cards. Chime blamed the failure on a partner, Galileo Financial Technologies, a platform used by many fintech startups to process transactions.
Franco Vogt for Forbes
Tim Spence, Fifth Third’s chief strategist, in the regional bank’s downtown Cincinnati headquarters. Most of his neobank competitors are losing money, but “the lesson . . . learned from Facebook and Amazon and Google . . . is that the internet is amenable to a winner-take-all market structure.”
On a warm fall day Tim Spence speed-walks his 6-foot-3 frame through the towering, 31-story Cincinnati headquarters of his employer, Fifth Third, a 161-year-old regional bank with $171 billion in assets. Clad in a plaid sport jacket with no tie, Spence doesn’t look like a traditional banker. And he’s not.
A Colgate University English literature and economics major, Spence, now 40, spent the first seven years of his career at digital advertising startups. He then moved into consulting at Oliver Wyman in New York, advising banks on digital transformation. In 2015, Fifth Third lured him to Ohio as its chief strategy officer and then expanded his mandate. He now also oversees consumer banking and payments, putting him in charge of $3 billion worth of Fifth Third’s $6.9 billion in revenue. Last year, he brought home $3 million in total compensation, making him the bank’s fourth-highest-paid executive.
Fifth Third has 1,143 branches, but today Spence is focused on Dobot, a mobile app the bank acquired in 2018 and relaunched this year. Dobot helps users set personalized savings goals and automatically shifts money from checking to savings accounts. “We reached 80,000 downloads in a matter of six months, without having to spend hardly anything on marketing,” he says.
Scooping up new products is one part of a three-pronged “buy-partner-build” strategy that Spence has helped devise to combat the neobank challenge. Partnering means both investing in fintechs and funding loans generated by the newcomers. Fifth Third has a broad deal with Morris’ QED, which gives it a chance to invest in the startups the VC firm backs. One of Fifth Third’s earliest QED investments was in GreenSky, the Atlanta-based fintech that generates home remodeling loans (some funded by Fifth Third) through a network of general contractors.
The best of these partnerships provide Fifth Third access to younger borrowers, particularly those with high incomes. In 2018, it led a $50 million investment in New York-based CommonBond, which offers student-loan refinancing to graduates at competitive interest rates. Similarly, Fifth Third has invested in two San Francisco-based startups: Lendeavor, an online platform that makes big loans to young dentists opening new private practices, and ApplePie Capital, which lends money to fast-food franchisees.
Funding Bonanza
Global venture capital funding for digital banks is exploding. This year, it’s on pace to exceed 2017 and 2018 combined.
Source: CB Insights
“The thing I’m most envious of, when it comes to the venture-backed startups that we compete with, is the quality of talent they’re able to bring in. It’s really remarkable,” Spence says.
But while Spence envies them sometimes and partners where he can, he isn’t convinced the neobanks will make big inroads into traditional banks’ turf. “None of them have shown that they can take over primary banking,” he says. He also argues that having physical retail branches is still important for building long-term relationships with customers. In a recent Javelin survey of 11,500 consumers, an equal number rated online capabilities and branch convenience as the most important factors when deciding whether to stick with a bank.
Fifth Third has been reducing its overall number of branches an average of 3% a year, but it’s opening new ones designed to be Millennial-friendly. These outlets are just two thirds the size of traditional branches. Instead of snaking teller lines, there are service bars and meeting areas with couches. Bankers armed with tablets greet customers at the door—Apple Store-style.
That raises the question of whether any of the neobanks will be so successful that they’ll eventually open physical outposts, the way internet retailers Warby Parker, Casper and, of course, Amazon have done. After all, it’s happened before. Capital One pioneered the use of big data to sell credit cards in the early 1990s, making it one of the first successful fintechs. But in 2005 it started acquiring traditional banks, and today it’s the nation’s tenth-largest bank, with $379 billion in assets and 480 branches.
I cover fintech, cryptocurrencies, blockchain and investing at Forbes. I’ve also written frequently about leadership, corporate diversity and entrepreneurs. Before Forbes, I worked for ten years in marketing consulting, in roles ranging from client consulting to talent management. I’m a graduate of Middlebury College and Columbia Journalism School. Have a tip, question or comment? Email me jkauflin@forbes.com or send tips here: https://www.forbes.com/tips/. Follow me on Twitter @jeffkauflin. Disclosure: I own some bitcoin and ether.
Dear banks, Game Over. Disruptive challenger banks are here to wipe the floor with traditional banks, who have, according to Chad West, head of comms and marketing at challenger bank Revolut, failed to make their offering open and transparent to customers, and failed to give them control over their money. Digital bank alternative Revolut has scaled to 1.8 million customers in three years – and now offers cryptocurrency processing. ABOUT WIRED SMARTER Experts and business leaders from the worlds of Energy, Money and Retail gathered at Kings Place, London, for WIRED Smarter on October 9, 2018. Discover some of the fascinating insights from speakers here: http://wired.uk/V29vMg ABOUT WIRED EVENTS WIRED events shine a spotlight on the innovators, inventors and entrepreneurs who are changing our world for the better. Explore this channel for videos showing on-stage talks, behind-the-scenes action, exclusive interviews and performances from our roster of events. Join us as we uncover the most relevant, up-and-coming trends and meet the people building the future. ABOUT WIRED WIRED brings you the future as it happens – the people, the trends, the big ideas that will change our lives. An award-winning printed monthly and online publication. WIRED is an agenda-setting magazine offering brain food on a wide range of topics, from science, technology and business to pop-culture and politics. CONNECT WITH WIRED Web: http://po.st/WiredVideo Twitter: http://po.st/TwitterWired Facebook: http://po.st/FacebookWired Google+: http://po.st/GoogleWired Instagram: http://po.st/InstagramWired Magazine: http://po.st/MagazineWired Newsletter: http://po.st/NewslettersWired
Topline: Another major U.S. bank beat earnings expectations on Tuesday, showing that despite ongoing tariff pressures, interest rate cuts and slowing trading revenues, Wall Street had a solid quarter.
Bank of America reported profit and revenue that came in higher than analyst estimates—with a net income of $0.56 per share compared to $0.51 expected—thanks to strong consumer and advisory businesses that helped counter declining trading revenues.
Shares of Bank of America rose over 2% in early trading; the stock has now risen almost 17% so far this year.
The bank is the second-biggest lender in the U.S., making it especially sensitive to interest rate cuts—but despite the Federal Reserve’s recent slashing of rates, Bank of America grew loans by 7%.
Three out of four of the bank’s main divisions saw revenue gains: an 8% increase in its global banking business, a 3% increase on consumer banking revenue and a 2% increase in wealth management revenue.
While revenue fell 2% in the bank’s trading division, total company revenue was largely unchanged from a year earlier at $23 billion, beating analysts’ $22.8 billion estimate.
Tangent: Bank of America is one of billionaire investor Warren Buffett’s favorite stocks. Through his holding company, Berkshire Hathaway, Buffett recently asked the Fed for permission to raise his stake beyond 10%, according to a Bloomberg report.
Crucial quote: “In a moderately growing economy, we focused on driving those things that are controllable,” CEO Brian Moynihan said in a press release.
I am a New York—based reporter for Forbes, covering breaking news—with a focus on financial topics. Previously, I’ve reported at Money Magazine, The Villager NYC, and The East Hampton Star. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com
Aug.16 — Bank of America Chief Executive Officer Brian Moynihan said this week’s bond-market turmoil has been driven by issues outside the U.S., and that recession risks are low in the country as consumer spending remains strong. He spoke to Bloomberg’s David Westin in New York.
There’s a new fashion trend going on out there, but it might be one that’s hard to see–it’s people accessorizing their bank accounts.
For years, fintech startups have boasted of coming into the market and “disrupting” (i.e., displacing) traditional banks. That hasn’t happened.
Instead, what’s happening is that consumers are using new tools from fintech startups in conjunction with their existing bank accounts. These new tools help consumers:
Optimize their savings. Tools like Digit and Qapital won’t help you get a better rate on savings, but they can help you save more money. Digit analyzes users’ spending behavior, determines how much can be safely saved, and then automatically transfers small-dollar amounts from users’ checking accounts to Digit-managed accounts. Consumers have opened more than seven million automated savings “accounts” and used them to save nearly $6 billion in 2018.
Reduce their bills and negotiate fees. Truebill and Trim both promise to reduce consumers’ monthly bill payments by helping them identify and cancel unwanted subscriptions and get them refunds on fees and outages. Cushion and Harvest provide AI-based tools that identify bank fees and negotiate on behalf of consumers to reduce or eliminate the fee.
Get better interest rates and rewards. Although digital banks like Ally, Chime, and Varo pitch themselves as alternatives to traditional banks, most of their users accounts open accounts with the firms to get better interest rates or better debit card rewards–and keep their existing bank accounts open.
Oxford defines the word accessorize as “provide or complement with a fashion accessory” which accurately describes how consumers are using fintech startups in relation to their primary bank accounts.
Consumers Want Accessories From Their Banks
A new study from Cornerstone Advisors shows strong interest among consumers to get checking account add-ons and accessories from their existing banks, however, in categories like:
Digital services. Many consumers already have–and pay for–services like cell phone damage protection, identify theft protection, and data breach protection. Three-quarters of Millennials said they’d be interested in getting cell phone damage protection bundled with their checking account from their current bank, and six in 10 said the same thing about identify theft protection and data breach protection.
Fuel rewards. Just over half of consumers belong to fuel reward programs. Consumers could be motivated to make more use of their financial institutions’ debit cards, however. A little more than half say they would pay with a debit card instead of a credit card in order to get a 10-cent discount on gas. In addition, 11% of Millennials in their 20s would even open a new checking account in order to get that discount.
Purchase-related services. Purchase protection plans and extended warranties have been around for a while, and nearly one in five consumers pay for these services. Among the Millennials who have–and pay for–these services, roughly 40% expressed interest in getting purchase protection plans from their bank, and a third said they’d entertain the idea of getting subscription-cancelling services from their financial institution.
Banks Need to Accessorize Their Checking Accounts
Although 94% of US households have at least one checking account, today’s reality is that the product isn’t as important in consumers’ financial lives as it used to be. Checking accounts have become paycheck motels: Temporary places for people’s money to stay before it moves on to bigger and better places.
Consumers’ behaviors and attitudes show that they:
Don’t see enough value in today’s checking accounts, and feel the need to turn to accessories to get more value, but…
Are willing to pay for accessories if they see the value in them, and are willing to get them bundled with a checking account from their existing banks.
Fintechs may be providing bank account accessories today, but it’s easy to see how they could become the primary provider in the near future.
For a complimentary copy of Cornerstone Advisors’ report Accessorizing the Checking Account, click here.
Ron Shevlin is the Managing Director of Fintech Research at Cornerstone Advisors. Author of the book Smarter Bank, Ron is ranked among the top fintech influencers globally, and is a frequent keynote speaker at banking and fintech industry events.
Here’s a perfect example of how we can learn from the experience of others. My bank account was recently hacked- not fun and so i share with you several ways to protect your money so it doesn’t happen to you- watch to the end as you need to know how and why to protect your pin number!
SoftBank Group Chairman and CEO Masayoshi Son delivers a keynote speech during the SoftBank World 2018 conference on July 19, 2018 in Tokyo, Japan. (Photo: Tomohiro Ohsumi/Getty Images)
Everybody is wondering what Warren Buffett will buy next. With more than $100 billion in cash, aspirations for another megadeal and an 89th birthday approaching, the Sage of Omaha says he’s on the prowl for big targets.
One wonders, though, if the investment world is looking in the wrong direction. The focus on Buffett, the man and the legend, is about more than nostalgia, of course. In today’s chaotic and disorienting economic climate, the next big move by this value-investment icon will turn many heads.
But 6,000 miles away from Nebraska, SoftBank’s Masayoshi Son is pioneering a new era of value investing. Whether Japan’s richest man can live up to the Buffett-of-Japan hype is anyone’s guess. The report card on the $100 billion Vision Fund he rolled out in 2016 is incomplete, at best. And that’s vital to keep in mind as Son ups his firepower to the $200 billion mark.
Before launching a second $100 billion fund, Son might want to convince the globe that his first one hit his own intended targets. Son can start by answering three questions.
One: What’s the theme here? Don’t get me wrong–Japan needs more risk-takers like Son. Prime Minister Shinzo Abe spent the last six-plus years urging ultra-conservative Japan Inc. to rekindle the innovative mojo that drove the nation to such great heights in the 1970s and 1980s. By becoming the world’s top venture capitalist, Son, 61, is showing peers in Asia’s No. 2 economy how it’s done.
Well, we hope so. His splashy investments smash the Japanese CEO mold. But they also raise questions about the grander strategy at play. SoftBank’s journey from software company in 1981 to telecom titan–gobbling up Vodafone and Sprint–has a certain Buffett-esque logic. His aggressive bets on everything from Uber to WeWork to messaging system Slack to online lender SoFi to robot-pizza-maker Zume to Fortress Investment to food-deliverer DoorDash to solar panels to AI (artificial intelligence) to indoor farms to satellite makers, though, are as scattershot as you’ll find among today’s billionaires.
Son doesn’t often swing for the fences the way Buffett does at times. Buffett’s 2016 megadeal purchase of Precision Castparts for $37 billion is a case in point. Consider Son more of a “Moneyball” player who tried to recreate the Buffett-like income streams in the aggregate. Still, investors are anxious to know how dominating the ride-sharing space, betting $3.3 billion on money-manager Fortress and overpaying for startups around the globe can gel together in profitable ways.
Two: Where’s Son’s General Re? One year ago, a tantalizing story swept the markets: Son might be buying a nearly $10 billion stake in Swiss Re AG. It seemed classic Buffett to stabilize Son’s broader constellation of futurist bets the way General Re helps anchor the sprawling Berkshire Hathaway. What better way to reconcile the gap between an increasingly eclectic balance sheet, a discounted SoftBank share price and Son’s global ambitions?
Those ambitions have their roots in a 2000 investment Son made in a then-little-known Chinese visionary. The $20 million Son wagered on Jack Ma helped seed Alibaba. It paid off spectacularly, too. By 2014, when Ma took his e-commerce juggernaut public, Son’s bet was worth some $50 billion. The Vision Fund aims to recreate that success in the aggregate, as many times over as possible.
Anchors are important, though. Son’s talks with Swiss Re ultimately failed. Yet it’s time to build in some Vision Fund cash-flow stability.
In 2016, here’s how Son explained his strategy: “I think I’m better than others at sniffing out things that will bear fruit in 10 or 20 years, while they’re still at the seed stage, and I’m more willing to take the risks that entails.”
Great, so long as there are ample shock absorbers for when some of those risks go awry. The need becomes greater as Son’s arsenal doubles to $200 billion.
Three: How to finesse the Saudi dilemma? A major source of Vision Fund’s seed money–$45 billion–resulted from a September 2016 meeting between Son and Muhammad bin Salman. The Saudi Arabian crown prince, you might’ve noticed, has been in a few headlines since then. None flattering, and it’s not a great look for SoftBank.
The apparent murder of dissident and Washington Post contributorJamal Khashoggi in a Saudi consulate put a cloud over Riyadh. That, coupled with a gruesome war in Yemen and locking up relatives, made MBS, as the prince is known, a less appealing business partner. In late October, a who’s-who of chieftains dropped out of MBS’s “Davos in the Desert” conference–from JPMorgan’s Jamie Dimon to HSBC’s John Flint.
Can SoftBank avoid the taint? Time will tell, but Son may have another Saudi challenge on his hands: divergent visions. So many of Son’s Vision Fund bets are in the renewable energy space. How, though, does that track?
The Saudi royal family has expressed a desire to diversify its fossil-fuel-reliant economy. And yet that effectively means replacing the industry from which Saudi royals derive their wealth. If MBS changed his mind, restoring the primacy of the petrodollar model, the source of Son’s liquidity dries up.
Perhaps Son can indeed reconcile this disconnect. There’s a great deal riding on Son’s ability to juggle–and ultimately answer–these three questions. I’m certainly rooting for him. Few visionaries are doing more, at this very moment, to empower startups with the potential to alter humankind’s trajectory.
A key Son priority, for example, is helping seismically-active nations from Japan to India replace nuclear reactors with safer renewables. If Son and his ilk succeed, future generations won’t know from petrostates, oil rigs or gas stations. Cars, airplanes, ships and indeed buildings will be powered by batteries or other clean-energy sources.
Getting there, though, requires out-of-the-box thinking and even bigger risk-taking. That’s why the trajectory of the global economy will likely owe more to Son’s moves than Buffett’s.
http://bit.ly/2UB8XjX February 4, 2019 Australia’s corporate regulators will be subjected to a new oversight body in a shake-up of the banking sector designed to combat the excessive greed and unethical practices that have engulfed some of the country’s biggest financial institutions. The Royal Commission, Australia’s most powerful type of government inquiry, also advised in its […]
Santander Bank, the Spanish multinational commercial bank, and BBVA, the multinational Spanish banking group, are among the first banks to be invited to a blockchain forum organized by the European Commission in Brussels. The European Commission in Brussels is launching the International Association of Applications of Blockchain (IATBA), to promote blockchain.
The IATBA is expected to be established in the first quarter of 2019, and so far 5 banks will be a part of the association, although more are expected to be invited. Europe is making consistent moves towards supporting blockchain; in April 2018 the European Blockchain Alliance was formed, with 27 European countries joining. The aim of the alliance is “to develop a reliable, secure and resilient European blockchain infrastructure.”
This news highlights a positive trend towards blockchain in Europe. Because of EU legislation, European countries are best served by working together in forming blockchain initiatives. Different countries in the EU may have different experience levels with blockchain and have experienced different levels of participation from their citizens. By all coming together, they can share ideas about what is working in their countries, the attitude towards blockchain in their countries and form a plan for the future.
Countries around the world are scrambling to find ways to regulate cryptocurrency without suppressing it. The EU has historically had tight regulation laws, so it makes sense for countries in the block to collaborate, otherwise, they may find themselves outside of the law and playing catch up once regulations come in. You can drive more change from the inside than from the outside, which is why Santander and BBVA are probably excited to be a part of the early discussions.
It is also increasingly looking like blockchain is an area Europe may want to invest in, in terms of technological application and advancement. Getting these discussions going to Brussels, will likely lead to the pro blockchain sentiment filtering down through the individual governments. This will likely lead to universities funding research into blockchain applications, in order to get ahead in this exciting new area. The has been rumors that scientific and technological research has been declining in Europe in recent years, and with Brexit, the EU is set to lose some of its best Universities (Oxford, Cambridge, LSE, UCL). With this in mind, it would be a good idea for Europe to showcase its world leaders in tech and invest in research in the blockchain.
The Monetary Authority of Singapore (MAS), the country’s central bank, has broadened its regulatory regime for payment providers to bring certain cryptocurrencies under its jurisdiction. The development was reported by English-language local broadsheet The Straits Times Nov. 19. The new Payment Services Bill (PSB), submitted by MAS board member and education minister Ong Ye Kung before parliament, is set to replace two existing pieces of legislation, the Payment Systems (Oversight) Act (PS(O)A) and the Money-Changing and Remittance Businesses Act (MCRBA)………….
Recent court documents show that the Canadian Imperial Bank of Commerce (CIBC) has frozen accounts holding the large sum of assets – which include $69,000 USD and $25.7 million CAD (appr. $19.4 million USD). According to the court papers, the CIBC was not able to identify the actual owner(s) of the frozen assets. The court documents also state that the funds may have been deposited by QuadrigraCX’s customers, and that the assets were frozen because the CIBC couldn’t properly verify the identities of the individuals that made the deposits. However, QuadrigaCX’s management team has now taken legal action in order to reclaim the money – as the exchange’s users have been unable access their funds……………
