Today, we’ve got another popular fintech disruption news roundup including new products, new funding and market insights. Amazon Go is poised to gain market share from card payments and impact point of sale terminals manufacturers according to a research report from Morgan Stanley. No-fee investor app Robinhood gets new VC investment from Russian tech Angel Yuri Milner and a $1.3 billion valuation. French startup Ledger just raised a $7 million Series A round for market expansion for its hardware security devices.
Honda and Visa, MasterCard and GM and other auto manufacturers are jumping into the in-car payments market according to a post by Scott Blum. Starbucks is out to fix its mobile ordering app problem-success with a mobile-order-only coffee outlet at corporate HQ in Seattle. Goldman Sachs plans to build a robo-adviser to give investment advice to clients. Deloitte partner Andrew Goulden said bots are key to banks improving retail customer service in the future.
KPMG says the rise of AI such as robotic or cognitive automation could replace up to 75% of outsourced financial service jobs within 15 years. Metromile pay-per-mile insurance could similarly impact the insurance industry through its use of big data. CaixaBank, Global Payments, Visa, Samsung and BNP Paribas’ subsidiary Arval have set up Spain’s “first” payment innovation hub in Barcelona.
Amazon Payment Platform Likely to Impact US Payment Industry
Amazon payments model Amazon Go is likely to have a significant impact on the Payments industry. According to Morgan Stanley analyst James Faucette, the platform is expected to pose highest disruption risk to Ingenico and VeriFone Systems. The company is also likely to adversely impact Vantiv, owing to its leading position in the US grocery vertical. Consequently, Amazon shares, which have already jumped 18.23% since the beginning of the year, rose further 1.16% on Friday.
In his updated research note issued to clients yesterday, Mr. Faucette further mentioned that in comparison to Ingenico and PAY, Chase Merchant Services is expected to be a primary beneficiary of the new service as it gains popularity. In this regard, Chase Merchant benefits both as a merchant acquirer as well as issuer, as it provides 5% cash back Visa card with Amazon. Additionally, Synchrony is also expected to make profits as an issuer, given its 5% cash back store card.
Moreover, he added that the company would continue to focus on brick & motor as it channels its efforts to grab a greater share of $770 billion US grocery market. He stated, “One focus for Amazon Go is to push payments as far to the fringe as possible, and that means no payment terminals whatsoever.” The new service is likely to snatch away market share from card payments, which will impact Point of Sale terminals manufacturers, including VeriFone. Via smartstocknews.com
Robinhood stock trading app valued at $1.3 billion with big raise from DST
Zero-fee stock trading app Robinhood is completing a huge fund raise to fuel its attack on old brokerage firms that charge around $7 to $10 per trade. According to sources, the round is led by Yuri Milner investment vehicle DST Global and values the company at $1.3 billion. Robinhood declined to comment.
Robinhood got its start in 2013 by offering a way for younger, less-wealthy users to start investing. It provides an easy-to-use app for free tracking and trading of stocks. Robinhood replaces the traditional brokerages like Scottrade and E*Trade which charge per trade to cover their brick-and-mortar franchise, sales staff and marketing spend.
Because Robinhood instead employs a leaner engineering-focused team and doesn’t need physical locations, it can pass the savings on to customers and undercut competitors by charging no per-trade fee. Via techcrunch.com
Ledger grabs $7 million for its cryptocurrency hardware wallets
Things are going incredibly well for Ledger these days. People find bitcoins, ethers and other cryptocurrencies exciting again. And the French startup just raised a $7 million Series A round to make hardware security devices ubiquitous.
Ledger makes hardware wallets for multiple currencies. These tiny devices have a secure element. You might not even realize it, but your smartphone also has a secure element to handle fingerprint readers or NFC payments, such as Apple Pay or Android Pay.
Ledger runs some tasks directly on the secure element, making it much more secure than running an app on your phone or your computer exclusively. This way, you can easily protect your bitcoins without a lot of security knowledge. Nobody can access the private keys on the device. And the device constantly checks the integrity of the firmware. Via techcrunch.com
Vroom, Vroom: Vehicles Accelerate the Future for Payments
As the Internet becomes ubiquitous, consumers could someday pay for gas, parking, food and tolls from their cars without using credit cards or even stepping out of their vehicles. Car companies increasingly are betting that such transactions will gain importance for consumers. A glimpse of that future comes from the following projects:
At the 2017 Consumer Electronics Show in Las Vegas in January, Honda introduced an in-vehicle payments system that lets drivers pay for gas and parking simply by pushing a button in their cars. The technology provides notifications to drivers when they can make payments from meters or pumps, and the drivers can make the payments without leaving their cars.
Mastercard is including its Masterpass mobile payment technology into a new platform called OnStar Go and is working with General Motors and IBM to implement the system. The vision for the combination is to allow drivers to order and pay for food, goods and services, as well as do other functions. The feature will be included with many GM vehicles this year. Via paybefore.com
Starbucks is going to try out a mobile order-only store
Starbucks introduced its mobile ordering system in 2015, and it’s been a victim of its own success in some ways. Customers at popular spots are eager to use the mobile ordering system to choose their selection and pay in advance, in the hopes of avoiding a line – but they’re having to wait anyway, thanks to a virtual queue that’s as large or larger than the real one, depending on the spot. Now, it’s looking for ways to make mobile ordering work better, and in pursuit of that goal it’s going to trial a location that exclusively serves mobile order customers, within its own Seattle HQ.
The location will go mobile-only starting next week, Reuters reports, turning one of the Seattle-based company’s two internal cafes into a dedicated mobile order and pay location. All mobile orders from building employees, which include 5,000 people, will be routed to the new location, and it’ll feature a different design, with a prominent pick-up window that also offers a view to baristas preparing the orders, according to the report. Via techcrunch.com
Goldman building robo-adviser to give investment advice to the masses
Goldman Sachs Group Inc (GS.N), known for advising the world’s richest and most powerful, is building a so-called robo-adviser geared to mass affluent customers, according to a job listing posted Monday on the bank’s website.
The bank last year launched Marcus, its first major foray into consumer lending, as well as a complementary deposit-taking platform after acquiring GE Capital’s online bank. It also acquired Honest Dollar, an online retirement savings platform for small businesses and startups.
The robo platform would sit within the bank’s rapidly growing investment management division, according to the ad. The unit, which Goldman has tried to build out in recent years to diversify its revenue, posted a record $1.38 trillion in assets under supervision at the end of 2016. Via reuters.com
Say hello to the Robo-bankers: how AI is affecting banking and finance
Where is this new technology having an impact in the finance sector? Retail banking, in particular, is taking advantage of the benefits of AI in the form of chatbots or AI assistants.
Royal Bank of Scotland, Bank of America and Swedbank are just a few examples of the banks that are incorporating this kind of technology into the day-to-day workings of the business.
Deloitte partner, Andrew Goulden, told Verdict bots are key for banks to use to improve customer service. Via verdict.co.uk
KPMGVoice: The Rise of Robots in Financial Services
Financial service companies have long used technology to outsource jobs to low-wage countries. Now, technology itself is making those same cost-saving measures obsolete.
Companies can now install advanced software to do complex financial tasks better and cheaper than people. Called robotic or cognitive automation, this process could replace up to 75 percent of outsourced financial service jobs within 15 years.
The impact will be huge. Companies that use robotic automation could cut costs by up to 75 percent. Not only that, but they would gain a competitive advantage by being faster and more accurate than firms that still use people for the same tasks. Via forbes.com
Future of Insurance
The insurance industry is ripe for disruption. Insurance is an old and disliked business because most customers feel that they are being ripped off. Metromile is looking to revolutionize this inefficient industry. Metromile claims that 65% of drivers overpay for their insurance so traditional insurance companies can cover the costs of higher mileage drivers.
The startup is a pay-per-mile car insurance company looking to provide millions of people hundreds of dollars of savings per year. This business model is radically different from traditional insurance providers by charging monthly premiums based mostly on the number of miles you drive. Metromile quotes that their customers are averaging savings of 500 dollars per year. The company raised over 190 million dollars last year. Metromile is the most disruptive company of 2017 because they are operating in a space that has yet to be revolutionized by technology.
Along with insurance, Metromile is introducing an app which can optimize your route, remember where you parked, run diagnostics for your vehicle, and even receive street sweeping alerts. This is a perfect business move by Metromile as they will be able to collect a vast amount of data, which will help them continue to optimize their insurance service. This type of synergistic business model is exactly what people have come to expect from Silicon Valley. Another wise business move was a partnership agreement made between Metromile and Uber as they plan to allow Uber drivers to only pay insurance for the miles that they drive. Via medium.com
Spain’s “First” Payment Innovation Hub
CaixaBank, Global Payments, Visa, Samsung and BNP Paribas’ subsidiary Arval have joined forces to set up Spain’s “first” payment innovation hub, according to Banking Technology.
The companies are jointly investing €5 million in the hub, which will be created to engage in new frontiers for payments in e-commerce and the internet of things. Located in Barcelona, the hub will “present society with the best possible user experiences in purchases and commerce, both online and offline.”
It will specialize in researching new commerce solutions for emerging consumer habits, starting off in three areas: solutions for connected cars; domestic applications, particularly the internet of things (IoT), and commerce. There will also be opportunities to collaborate with third-party research companies, such as startups, SMEs and major corporations, as well as institutions. Via pymnts.com
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