Whose perspective is it? Insurance remains not what it seems at first view

https://dailyfintech.com/2020/04/09/whose-perspective-is-it-insurance-remains-not-what-it-seems-at-first-view/

goofy_school_cartoons3

It’s beginning to wear on the insurance industry.  COVID-19?  Kind of.  Moreover it’s the unexpected ripple effects of the outbreak on how lives are led, how insurance intersects life, how perspectives color how insurance news is celebrated or questioned.  We’ve discussed much of COVID-19’s current effects on business and how the future of insurance will need to adapt.  Let’s take this week to see insurance happenings through different lenses, or from a reverse of the Insurance Elephant- from differing perspectives as per sight-impaired gents in the image.

image- MA Devine

Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners in his day job. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

  • COVID-19 cannot be overstated as being a health danger/terror. People have minimal control over exposures, and no control over the extent of symptoms if infected.  Similar thought process applies in business livelihoods of employees and SMEs – there’s little control for an individual over business operations, closures, availability of customers, and recovery funds.  Social distance helps in one aspect, but could be business fatal for the other.
  • Reductions in driving due to implementation of working from home protocols and staying at home is resulting in renewal of discussions for mileage-based auto cover. While that’s being considered carriers in the US announce premium rebates (Allstate, Liberty Mutual/Safeco, American Family, and now Progressive) and/or premium credits for renewals (GEICO).  Overall the rebates/credits are estimated to total $3.5 billion;  contrast that with the findings of  The Consumer Federation of America estimating US carriers are benefiting in additional profits in the amount of $2 Bn per month.  Carriers need to ensure this does not become a PR issue like business interruption cover has.  The upside?  Fewer auto accidents.
  • Government financial recovery programs have been announced in most countries, building optimism for the citizenry and businesses. Problem with government programs for disasters like pandemics is it’s easier to ramp up politicians/ rhetoric than it is to implement and produce the programs’ results.  Example- US Small Business Administration has an effective economic injury loan program, in essence a working capital backstop.  Plenty of funding has been planned but few loans processed to date.  Scaling up and staffing has been a significant challenge.

The time is nigh for the SBA to hand off disaster financial response to fintechs and InsurTechs– the vetting process for disaster loans is just right to digitize, from app to approval to funds distribution.  Just need to change some of the Code of Federal Regulation.

  • AXA’s CEO, Thomas Buberl, has suggested formation of a government/insurer risk pooling scheme to hedge future pandemic responses by insurers. Other similar schemes exist for property damage; need to ensure more than just cost hedging is planned (see Ten C’s Project  and broadening the spectrum of change).
  • Lloyd’s offered a parametric hotel product last fall that would provide payments to hoteliers when occupancy rates fell beyond an agreed index. Few chose to participate; all now have regrets post-COVID.  Whether there was sufficient capacity to take care of all potential interested parties will not be known.  My drumbeat – parametric will become the cover of the coming decade.
  • Worker injuries will be reduced due to business closures and work from home status (hmmm- what if an employee gets injured during mandated work from home sessions?), but potential high severity COVID-19 claims will be prompted for WC due to exposures during work. It’s not just state regulators in the U.S. who see the virus as a potential occupational disease, the Social Security Organization in Malaysia has deemed the disease as such, India has guidance to employers that WC applies if an employee contracts the disease (and has advised salary compensation applies for quarantine ordered staff).  The Province of Ontario, Canada has also followed suit for WC guidance for essential workers .
  • A promising entry into risk financing is the principle of Insurance Linked Securities (ILS), or capital vehicles used to hedge risk, provide coupon return, and widen the source of risk funding into the huge capital pool. Who wouldn’t want to obtain a return on bond investment that is greater than Treasuries,  and certainly better than potential negative rates?  Well seems the reinsurance world has some early grumblings that ILS are muddying the water and softening the rei market.  The remarks in the market that ILS have a destabilizing effect can be read through as injecting some competition and perhaps scraping some cream off the glass of whole rei milk. Thanks to AM Best and Steve Evans of Artemis.Bm for that commentary.

As is typical- insurance doings are strongly influenced by perspective, and little is as it first seems. Stay safe and well.

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https://dailyfintech.com/2020/04/09/whose-perspective-is-it-insurance-remains-not-what-it-seems-at-first-view/

Fintech Lenders Incentivised To Help SMEs Navigate Stimulus Packages

https://dailyfintech.com/2020/04/08/fintech-lenders-incentivised-to-help-smes-navigate-stimulus-packages/

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia

As governments unleash rapid amounts of COVID-19 stimulus money for SMEs, one thing seems to be consistent between business owners across the world; utter confusion. With policy changing rapidly, small businesses owners are finding it difficult to assess their eligibility for government assistance, not to mention private sector help. All this is framed against a backdrop of shifting lockdown laws and restrictions, and employees working from home. Not a fun time at all.

It’s an equally confusing time for fintech lenders, who are scrambling to get their heads around what companies in their book are most likely to stop making repayments, and what companies they should be lending to going forward. There is no question some businesses are booming right now, but working out what industries are experiencing ‘flash-in-the-pan’ growth verses sustainable long-term growth is like reading tea-leaves.

In the midst of all of this, is a real opportunity for lenders to do something significant for the small business community, and also protect their own book. This would be to value-add by helping SMEs quickly navigate and access the funding support from governments that they are eligible for. This would de risk the client from a lending perspective, plus truly differentiate the lender from its peers.

Government policies are hard to interpret at the best of times, and offering simple online eligibility calculators and application assistance would I’m sure be hugely welcomed by time poor business owners. Many are in a position where they need to rapidly rethink and pivot elements of their business. How can they be expected to do this, while worrying about applying for funding, or reading screeds of government fine print?

It’s far from business as usual, and lenders who want to survive are being handed the perfect opportunity, on a platter, to do something of real value for their client base, so that both can survive the crisis.

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https://dailyfintech.com/2020/04/08/fintech-lenders-incentivised-to-help-smes-navigate-stimulus-packages/

Interview with Alan Scott about how Stablecoins will change our world.

https://dailyfintech.com/2020/04/07/interview-with-alan-scott-about-how-stablecoins-will-change-our-world/

alan_laughing

Stablecoins is a big wave of change in in Fintech. So I was delighted when Alan Scott agreed to speak to me about how Stablecoins will change our world.

Alan Scott is currently Managing Director EMEA at 24 Exchange. Alan and I first started working together over 12 years ago and I have enjoyed talking to him over the years about all subjects related to cryptocurrency and FX, particularly Stablecoins. Alan is that rare combination, both deeply knowledgeable and an outside the box thinker. He is a serial entrepreneur and senior executive who knows how innovation actually gets traction in the real world. You can read all about Alan on his LinkedIn profile.

I started off by asking Alan to pick the markets most likely to be impacted by Stablecoins. Alan picked 3:

  • The Foreign Exchange market.
  • Loyalty Coins for marketing.
  • New currencies for use by billions of people.

Each is a massive market and a complex subject and so my next question was much harder. I asked Alan to explain succinctly how Stablecoins are likely to impact each of these three markets. Here is what he told me:

How Stablecoins will change the Foreign Exchange market.

FX is a big market, with US$5 trillion traded every day (25x the daily trading volume in global equities).  FX is a hyper efficient market, but the market structure has remained fundamentally unchanged for decades and is dominated by a few big banks (the Interbank players) that quote prices in currency pairs. Stablecoins could change that game. One way to visualise the FX market today is like a hyper efficient version of the early telephone exchanges where each call was connected by an operator. Stablecoins that are designed to be non-volatile against all the major currencies could enable a centralized switchboard where each currency is quoted against that Stablecoin rather than against another currency. That would be a game changer in one of the biggest markets in the world.

How Stablecoins will change Loyalty Coins for marketing

There are two visions of a Stablecoin future. In one vision, we will have one maybe two that get network effects and dominate the market. In another vision, we will have thousands, even millions, of Stablecoin-powered Loyalty Coins that get used for marketing. Maybe the future will be some combination of the two with one or two dominant Stablecoin powering a large number of Loyalty Coins, some of which will compete by offering greater levels of fungibility while still rewarding customer loyalty.

Stablecoins could enable new currencies for use by billions of people.

That is what Facebook wants to do with Libra, which is due to be launched later  this year after their big announcement last year. The idea of a stateless global currency is clearly both big and game-changing. It is unlikely that the nation states who currently control currencies will give that up without doing some innovation of their own.  So we can expect lots of announcements of Central Bank Digital Currencies.

You get 3 free articles on Daily Fintech. After that you will need to become a member for just US$143 a year (= $0.39 per day) and get all our fresh content and our archives and participate in our forum.

https://dailyfintech.com/2020/04/07/interview-with-alan-scott-about-how-stablecoins-will-change-our-world/

Breaking Banks, Silos, or Networks: which is harder?

https://dailyfintech.com/2020/04/07/breaking-banks-silos-or-networks-which-is-harder/

Efi
Pylarinou
 is the founder
of
Efi
Pylarinou Advisory
and a Fintech/Blockchain
influencer – No.3
influencer in the finance
sector by

Refinitiv Global Social Media
2019
.

In innovation, we frequently talk about `Breaking Silos`, one of
my favorite cross-disciplinary topics. This past weekend (unusually
warm and sunny creating the temptation to be outside) I was ironing
as there is no cleaning lady anymore and listening to
Episode 19 of `Breaking Banks Europe`
. This one was hosted by
Matteo Rizzi and Spiros Margaris and with an Ecosystem Zoom into
Luxembourg. And who better to discuss this with, than Nasir
Zubairi, the CEO of The
LHoFT
– the Luxembourg House of Financial Technology.

I recalled meeting briefly Nasir for the first time at SIBOS in
Geneva in September 2016, before he had given birth and baptized
LHoFT. [ SIBOS size conventions may take really long to happen
again if they ever happen in that globalized format.] Today we are
looking at 4 years of an important ecosystem stakeholder, The
LHoFT, whose role in Luxembourg has been vital. Luxembourg is like
perfumes that come in small bottles and has distinct top global
roles in the fund industry, in green finance, and microfinance (to
name a few). As a result, Regtech is a big focus for the LHoFT,
especially around anything related to funds. We can actually think
of Luxembourg as a predominantly B2B fintech hub with an interest
in fund administration technologies, payments (always a core
component of finance), and lately blockchain for capital markets.
Nasir mentioned a few names of Blockchain4Finance companies in
Luxembourg during the podcast, like Tokeny, StokR, FundsDLT which are focused on
Tokenization. Such companies are leading the way for the evolution
of Capital markets which includes the fund industry.

FundsDLT is a homegrown
initiative that I have covered before (Sep 2019) in `Two
live Blockchain use cases in Mutual Funds administration and four
pilots
` along with Calastone and other cases. Just last month

FundsDLT announced the closing of a Series A investment
to
develop a Decentralized platform for fund distribution.
Clearstream, Credit Suisse Asset Management, and Natixis Investment
Managers were the investors that joined the seed investor the
Luxembourg Stock Exchange.

Nasir also highlighted The LHoFT
CATAPULT
3rd cohort which is focused on African Fintechs for
financial inclusion.

Catapult: Inclusion Africa 2020

► A-Trader –
Tanzania

► A-Trader –
Tanzania

► CinetPay – Côte
d’Ivoire

► Dundiza – Tanzania

► Esusu – Nigeria

► Eversend – France

► Exuus – Rwanda

► OZÉ – US &
Ghana

► PaddyCover –
Nigeria

► People’s
Pension Trust – Ghana

► Pezesha – Kenya

► SmartTeller –
Nigeria

► SympliFi – United
Kingdom

► uKheshe – South Africa
& UK
.

Zooming out of Luxembourg as a Fintech ecosystem

Nasir`s tweet from last week about the persistent use of Fax
machines in financial services, highlights that it is difficult to
Break the network effects that are ingrained in financial services.
Calastone confirms the challenges from the use of fax machines in
fund distribution, during this global abruptly forces shift to
remote working.

At
#calastone
we have been busy the past 3 weeks helping
distributors who no longer have access to their fax setup a direct
link into our network and giving them access to the TA’s and
asset managers from their laptops via our EMS tool

— Louis Wright (@LouisWr96015371)
April 2, 2020

The Global Fax market is growing. Part of it is on the Cloud but
a significant part of it stubbornly uses standalone fax machines.
Business workflows are networks that cannot be easily Broken. If
your supplier, or customer, or service provider uses-requires a
Fax, you will too. Breaking those networks is very hard. If we
don’t manage to get rid of fax machines during this crisis, when
will we?


A 2017 IDC report
on the Fax market showed that 36% of fax
volume (monthly pages) was sent or received using standalone fax
machines, which is more than the fax volume sent or received using
all other fax technologies.

Screen Shot 2020-04-06 at 11.24.31

The same report showed how the West (naturally) has Fax networks
that stronger and more difficult to break. In North America, for
example, 88% of respondents expect fax usage to grow or remain
steady.

Screen Shot 2020-04-06 at 11.26.47

Finance is not as bad as manufacturing in terms projected usage
of Fax. However, a 20% increases was projected.

Screen Shot 2020-04-06 at 11.28.37

The top reasons of usage and expected growth of usage are
that

  • Fax is an integral part of workflow – Networks
  • Fax is evolving and integrateable with email –
    Digitalization
  • Fax is secure, compliant and with a verifiable receipt –
    Compliance, Traceability

Culture eats software. While innovations in Regtech and
Blockchain for Capital markets are advancing, those pushing these
innovations are challenged by a financial world that uses Faxes for
trade confirmations of all sorts of assets, fo receiving mortgage
and all kinds of loan applications, processing claim forms in
insurance etc.

Breaking business flow networks that operate in a certain way,
is difficult.

New readers can see 3 free articles before getting the Daily
Fintech paywall. After that you will need to become
a member 
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The post
Breaking Banks, Silos, or Networks: which is harder?
appeared
first on Daily Fintech.

https://dailyfintech.com/2020/04/07/breaking-banks-silos-or-networks-which-is-harder/

Could Bitcoin on DeFi displace banks? Yes.

https://dailyfintech.com/2020/04/06/could-bitcoin-on-defi-displace-banks-yes/

tbtc_bridgeDecentralized Finance (DeFi) is building a new financial system. The DeFi movement is picking up steam. DeFi has been successful in remittances, loans, stable coins, and other core elements of the fiat world. With a little over a year under its belt, DeFi hit a major milestone a couple of months ago, with more than $1 billion in value locked in the DeFi markets. Bitcoin (BTC) dominates the cryptocurrency market, its 8x bigger than the Ethereum, the second cryptocurrency by market cap, but Bitcoin doesn’t have Ethereum’s sophisticated on-chain lending, derivatives, trading capabilities . While there are already several centralized BTC lending platforms like BlockFi/Nexo/Celsius. Bitcoin DeFi has been a dream for Bitcoiners. Maybe the dream is over and new tBTC project will bring Bitcoin to the DeFi world. Maybe it will do a lot more than that!

Bitcoin could greatly transform DeFi and that is exactly what the team behind the Keep protocol understands. They recently raised $7.7 million, led by Paradigm Capital and other companies including Fenbushi Capital and Collaborative Funds, to launch a trustless platform for creating Bitcoin-backed tBTC tokens, on Ethereum. The tBTC platform extends on multiple concepts like Multisig custody, SPV, and MakerDAO’s bonding system to build a decentralized Bitcoin peg, better than anything else we’ve already seen.

The tBTC token is an ERC-20 token fully backed by BTC that allows people to safely use BTC on the Ethereum blockchain. The tBTC is a 1:1 Bitcoin-backed ERC-20 token. This means that if you have 1 tBTC, you can redeem it for 1 BTC. The new tBTC token combines the strengths of both chains, and offers BTC holders a way to spend their BTC on Ethereum.

To spend Bitcoin, users have to deposit BTC into a threshold signature contract. Once the deposit has been made, the “signers” submit a proof of deposit to the Ethereum network, and then a tBTC token is created and transferred to the BTC holder’s Ethereum (ETH) wallet.

To process transactions, tBTC uses a system of “signers”. Signers operate in groups of three, reducing risk and eliminating trusted middlemen, to ensure transaction safely and transparency. All three signers must approve a transaction. The network incentivizes signers for their role, with a micro fee of 20 basis points (bps) for every tBTC “minted” in exchange for a BTC.

But, Bitcoin on Ethereum is nothing new.

In the past we’ve seen other Ethereum-based tokens pegged to Bitcoin, the most notable being wBTC, an ERC-20 token created by BitGo. tBTC is unique from its competitors, because it offers a redemption feature for Bitcoin, something not offered by other projects.

What impact will a Bitcoin pegged token on DeFi have on crypto and the world?

DeFi scales with Ethereum, but imagine what will happen once DeFi has access to Bitcoin’s liquidity. Ethereum is the home for protocols, like MakerDAO, Compound, and Uniswap. Bitcoin’s hard money features make it fantastic for collateral. Using BTC within these protocols will instantaneously bring more liquidity and let Bitcoin holders access a variety of new services.

Bitcoin is synonymous with crypto. When people thing of Bitcoin they think of crypto and vice versa. With Bitcoin being a strong store of value, it will become far more easier for non-crypto holders to join crypto and earn interest with their Bitcoins or get a loan.

What does that mean? For starters, the price of BTC will go up, sky high!

Being able to use Bitcoins for more things, beyond speculation, will increase demand for BTC and as a consequence its price. It will also limit its supply. Circulating Bitcoins will become harder to find, since people will have the option to keep them locked and make passive returns.

With the Bitcoin’s halving approaching and Ethereum 2.0 being deployed, the value of Bitcoin will rise and Ethereum’s use will grow exponentially.

But what this really means is that Bitcoin on DeFi can potentially displace the existing financial systems. By the time we recover from the coronavirus, we will be able to opt-out of the existing financial system and find the liquidity, cash flow, loans and everything else we’ve come to expect from banks, from the crypto world.

Ilias Louis Hatzis is the Founder at Mercato Blockchain Corporation AG and a weekly columnist at DailyFintech.com.

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https://dailyfintech.com/2020/04/06/could-bitcoin-on-defi-displace-banks-yes/

6 technology silver linings in the dark Coronavirus cloud

https://dailyfintech.com/2020/04/03/6-technology-silver-linings-in-the-dark-coronavirus-cloud/

6 positive impacts from Coronavirus enabled by technology .001

It is human nature to seek a silver lining in what is obviously a very dark cloud.

This is the third in our series on how Coronavirus is changing our world. The first looked at how this is crashing legacy financial markets. This was the destructive part of creative destruction. The second in the series was a hopium dream of a positive post Coronavirus future in general terms – not business as usual but better. Now we turn to some specific positive impacts from Coronavirus enabled by technology.

Futurology warning – the direction of travel is clear, the speed of travel is much harder to figure out ie don’t ask me when this will happen.

1. Faster/cheaper drug development. 

The problem: new drugs costs $2.6 billion to develop, so they have to be sold at a high price. Worse for people who need help now is that it takes 10 years when 10 months is too long.

The pieces of the puzzle to create a solution to this have been around a long time – the Internet to share research, generic drug vendors, open source, genome data. 

We need what Linux did to software to happen to medicine.

The desire for that and the pieces of the puzzle are there. The bug from Wuhan brings us two catalysts for positive change:

  • Urgent need from billions of people. If you have a vaccine or a cure that works, finding customers will be easy.
  • Political pressure to create economically viable solutions in months not years. The big cost in money and time is in proving that it works and is safe ie in the trials phase.Think of the motivation of people who work for regulators such as the FDA. There is every motivation to slow down the process; releasing a dangerous drug is very bad for your career. Now those same people have to weigh the cost of doing nothing – which could be equally career damaging.

In the past we had diseases that impacted lots of poor people that the market ignored or diseases that impacted a few rich people with little political clout to put pressure on the regulators. Bill Gates famously pointed out the market failure of more budget going towards curing male baldness than malaria. Coronavirus impacts everybody, rich and poor alike, so there is both cash to fund development and political incentive to speed up trials.

Faster/cheaper drug development is a natural for new technology such as Security Tokens that democratise investing (see point 6). Imagine somebody on a clinical trial seeing many people starting to get better and asking “I wonder if I can buy a stake in the company that makes this drug?”

2. Better air quality

The images from space showing reduction in pollution in places like Wuhan and Italy are inspiring. Clearly factories will restart and planes will carry passengers again, so this maybe just a temporary halt to destroying our planet.  However there is likely to be some behaviour change when people figure out that better air quality improves health and productivity and that it is a talent magnet. You hear this when you speak to foreigners making fortunes in China who want to return home, albeit to less money, because pollution is harming them and their family (and bad health is costing them money as well as ruining their quality of life).

Some people may also change their behaviour because they believe that factories and transport built to run on fossil fuels are driving climate change (some may disagree, but behaviour change does not need everybody to change, just enough people).

The people invested in fossil fuels know this. That is why oil prices are so low, making it hard for renewable energy to compete. This is where technology, specifically Fintech has a big role to play.

Renewable energy that is funded through both Security and Utility Tokens can tip the balance towards renewables. Security Tokens can reduce the cost of capital and Utility Tokens can reduce the cost of marketing. Imagine working with a community to switch over to renewables using a particular supplier and everybody in that  community investing in the Security Token of that supplier.

This the same thing that can enable faster/cheaper drug development.

3. Better decentralized work.

Millions have been forced to work from home by government decree. For many this is a very bad experience. It does not need to be. Some companies have done very well with decentralized working (aka work from home) and have achieved benefits for both the company and the employees.

There are two scenarios for our post Coronavirus world. One scenario is that as soon as the lockdown is over we will return to commuting to work. The other scenario is that some employers and employees will change their behaviour in a way that ushers in a new era of decentralized working.

Many employers are looking at this as a simple cost cutting lever by not renewing office rental leases.

However there are also companies such as Automattic (creators of WordPress) that have operated a decentralized work environment at scale for many years and take a more strategic view that it is about being a talent magnet. As Daily Fintech (which uses WordPress) has also operated a decentralized work environment since inception in 2014, I can vouch for this personally. When looking for talent, location is not a factor we need to consider. Listen to CEO Matt Mullenweg explain how and why they do it.

The obvious play is using/investing in tools to enable communication such as Zoom, Skype, Teams, Slack, Hangouts & WebEx. However it is more about the culture than the technology as Matt Mullenweg explains.

For the employees,  hitting delete on the commute is the easy part. The hard part is: 

  • finding companies with a good decentralized work culture.
  • replacing external discipline (what your boss tells you to do) with internal discipline (what you decide is needed to be effective).
  • Replacing work relationships with local relationships (family, neighbours etc)

4. Digital + Private payments.

Cash payments are less popular due to  coronavirus. Some businesses ban cash payments to protect staff from potential infection risks associated with contaminated cash. Some consumers do this voluntarily, using a card even for small payments, rather than run the risk of infecting the cashier.

With health and safety top of mind we don’t worry about privacy (eg the cops noting I have more than my allotted amount of toilet paper!)

In the ideal world we will get the payments magic quadrant of digital + privacy. Many in the cryptocurrency world are working on that. We are not constrained by technology. The constraint is human inertia. Maybe we don’t care about privacy until it is too late, until an authoritarian government can track and control your every move. That is already true in China.

I am optimist who believes that enough people will choose freedom and that private digital payments will be a key part of their life. The people who care about privacy may be derided as fringe nuts today when the consensus is that it is OK to sacrifice privacy to get security and a better shopping experience, but innovation adoption usually happens first at the edge.   

5. Democratized AI & automation.

There are many reasons why we do not want to go back to business as usual. We want freedom of movement and assembly of course, but we do not want to go to path we were on leading to machines making everything for and decoding everything for us.

AI & automation can be good if that power is democratized.  AI & automation can lead to deflation which, despite the scary use of the word, can be a good thing – who does not like prices falling?

AI & automation are not good if they take away our ability to work and get paid and if all the profits go to a handful of people, leading to even greater inequality

What we want is AI As A Service and Robots As A Service, both based on an open source software and open source data. The pieces are in place – open source business models, Internet delivery, civic minded developers willing to donate time to a good cause – so it only takes an entrepreneur to bring these services to market. Then those services can be used in businesses that are funded via Security and Utility Tokens.

6. Democratized investing.

Back in the day, individual investors funded their retirement and kid’s education by actually researching the fundamentals of a company.

Some did it spectacularly well, like Warren Buffet, but thousands did the same thing on a much smaller scale, researching the stocks of companies that made products that they liked.

The reality during the everything bubble was that 75% of stock market trades were done by computers. The algorithms look at things like words in a speech by central bankers and sentiment expressed by day traders on Twitter.

The 25% of trading done by humans is mostly done by Hedge Funds which means that investors pay 2 and 20 (2% of funds under management and 20% of the capital gains aka profit) for the privilege of human judgement.

Patient investing in individual publicly listed stocks only makes sense when valuations are low enough. Post the Coronacrash, prices are low enough. Great profits can be made and here is the secret that the financial services industry does not want you to know. Your competitive advantage comes more from knowing which products are good than from financial expertise. You need some basic financial analysis tools and techniques, but they are simple and many are free or very low cost. What matters more is seeing from your own experience which products are better.  For example look at tools we use from our lockdown location such as Zoom, Skype,  Hangouts and WebEx. Each is owned by a public traded company where you can buy or sell the stock.

Ultra High Net Worth  Individuals (UHNWI) working through their Family Offices are retail investors on steroids. Like JoeQ Public they make their own decisions, they are not intermediaries who are motivated to go with the herd. Unlike JoeQ Public,  each Family Office can deploy a lot of capital.  Family Offices are the decentalized central bankers of the post Coronavirus era, who may lead the investments that will both profit their family and create a better world.

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https://dailyfintech.com/2020/04/03/6-technology-silver-linings-in-the-dark-coronavirus-cloud/

This Week in Fintech ending 3 April 2020

https://dailyfintech.com/2020/04/03/this-week-in-fintech-ending-3-april-2020/

this week in Fintech .001

This weekly summary from our 5 experts, brings you insights based on their experience as investors, entrepreneurs & executives.

Ilias Hatzis started his first company, an internet search engine, during the dot-com era & now focusses on crypto.

Efi Pylarinou worked for top tier Wall Street firms and is now a top global Fintech influencer.

Jessica Ellerm is CEO of Zuper Superannuation & previously worked for a top Fintech startup, Tyro.

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners.

Sheldon Freedman is a Fintech lawyer at Hassans International Law Firm

Bernard Lunn is the CEO and Editor of Daily Fintech and author of The Blockchain Economy.

If you want to continue receiving This Week in Fintech, you can either become a paying Member for $143 per year (and receive all our content in addition to this weekly summary) by clicking here.  If you just want to receive This Week in Fintech for free, you will need to fill in this form. Or fill in the same sign up form at the bottom of this post.

Your Editor is Bernard Lunn. He is also the CEO of Daily Fintech and author of The Blockchain Economy.

Monday Ilias Hatzis @iliashatzis our Greece-based crypto entrepreneur (Founder & CEO at Mercato Blockchain Corporation AG and Weekly Columnist at Daily Fintech) wrote Coronavirus will shape the next decade. Will we prep before the next one?

Everywhere people are dying, global lockdown and massive government intervention. The coronavirus pandemic is disrupting global industries and supply chains, causing disastrous problems for businesses, consumers and the global economy. Just like the disease is killing older people at high rates, it is also about to kill mature western economies. Businesses are struggling to produce and distribute products and services, that consumers depend on. The coronavirus outbreak has limited our ability to produce and consume goods. Its financial ramifications are already severe and will only get worse. 

Editor note: Ilias identifies the problem “This is not just a health pandemic, it’s a pandemic of fear and mistrust” and then goes on to look at how Blockchain and IOT  based data networks could provide more trusted data for future pandemics.

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Tuesday Efi Pylarinou @efipm our Swiss-based Fintech Adviser,  founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019 wrote A Buoyant Digital coin at a tender age – Ndau

The Ndau (XND) is a stateless Buoyant digital currency with a built-in design to act as a store of value, is less known as it is not conducive to pump and dump. It was launched 2 yrs ago out of  the Cayman Islands.

It is more actively traded on BitMart exchange with a presence in New York, China, Hong Kong, and Seoul. According to Cointelligence, BitMart is included in the top 20 exchanges by volume.

Editor note: Efi takes an early look at what could be a new stateless digital currency. If it can become both a store of value and a unit of account this will be a very big deal. 

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Wednesday Jessica Ellerm @jessicaellerm, our Australia-based Fintech entrepreneur and thought leader specializing in Small Business and the Gig Economy & CEO/Co-Founder of Zuper, a new superannuation startup in Australia wrote ‘Know Thy Customer’ A Key Trend Going Forward in Fintech Innovation For SMEs

The world is rapidly becoming a very different place and businesses will need to adapt fast to survive. Never has the phrase ‘survival of the fittest’ been so literal, for so many.

Over the coming months (or years?) many businesses will encounter survival pains that would have been unthinkable several months ago. How the fintech community responds to these challenges will also make or break many new startups in this space.

Editor note: Jessica has identified one of those big opportunities coming out of the Coronavirus crisis, which is how small business can make genuine connections with their customers without that lovely old face to face time. Not an easy one, but a big one.

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Thursday Patrick Kelahan @insuranceeleph1, our US based Insurtech expert (a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners who also serves the insurance and Fintech world as the ‘Insurance Elephant’) wrote The best product insurers provide is empathy. It’s been missed in COVID-19 response.

Strategy sessions begin now for the insurance industry- addressing coverage gaps, policy forms, staff utilization, remote working methods, customer engagement, scalability of digital methods, virtual claim adjusting techniques, parametric products, and business interruption cover among others, and the big challenge of the insurance world- systemic risk.

 And the big, big elephant in the room- selling empathy as a key deliverable.

 Outside of health cover being broadened in most countries, there are few COVID-19 positives the insured public have seen recently from the insurance industries, and several negatives.

How to avoid repeating the COVID-19 outcome?  Learning starts now. 

Editor note: Pat raises a risk subject that should be top of the agenda for Insurance Boards – reputation risk.

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Friday  Sheldon Freedman, Fintech lawyer at Hassans International Law Firm

wrote: Security Token news for Week ending 3rd April 2020

Editor note: This weekly snapshot is the news that matters for busy senior people in the Security Token market.

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https://dailyfintech.com/2020/04/03/this-week-in-fintech-ending-3-april-2020/

Security Token news for Week Ending Friday 3 April 2020

https://dailyfintech.com/2020/04/03/security-token-news-for-week-ending-friday-3-april-2020/

Security Token news for Week Ending Friday 27 March 2020Here is our pick of the 3 most important Security Tokens news stories during the week:

Telegram Aftershocks:  Court Bars Telegram from Distributing Grams Outside U.S. as Well; Covid-19 Adds Pressure for Investors to Accept Refunds

On April 1, U.S. District Judge P. Kevin Castel, responded to Telegram’s request for clarification as to the scope of the court’s March 24 preliminary injunction. He denied Telegram’s move to distribute tokens to its non-US-based participants.  Approximately $1.27 billion of the funds raised to finance the development of the Telegram Open Network (TON) came from overseas-based investors.

Why it matters:

This slam from the Court was not anticipated by everyone.  Some observers and players expected Telegram would be allowed to distribute Grams outside the United States. This week, lawyers for Telegram wrote to the Court asking for clarification whether the relevant laws were being applied extraterritorially. Some $1.27 billion of the funds raised in the ICO were derived from investors outside of the U.S. In slamming the door, Judge Castel derided the letter as Telegram’s attempt to relitigate, “really a motion for reconsideration in disguise”.

It is rumored many participants are now willing to take the refund offer from Telegram for a reputed 72% of the amounts invested, as the coronavirus disaster has created considerable opportunities for alternative investments, while at the same time disrupting all markets.  Cash is king.

Nomura Research issues first Japanese blockchain bonds, forms research consortium

Monday, Nomura Research Institute (NRI) offered the first Japanese blockchain-based digital bonds directly to investors. Last year NRI and Nomura Holdings created a joint venture BOOSTRY to develop a tokenized asset platform called ibet.

Two bonds were issued, with one of them referred to as a digital asset bond. Instead of paying interest, it provided redeemable points – the digital asset – for buying coffee. This was a 25 million yen ($232,000) bond with a three month maturity. The second five million yen bond was more conventional, offering a low interest rate.

Why it matters: Japan is moving toward with STO’s, led by Nomura. Nomura Institute of Capital Markets Research announced a new research consortium focused on blockchain technology in financial markets, including security token offerings (STO).  NTT is also a participant in another Japanese group, the Security Token Research Consortium initiated by MUFG, which includes Mitsubishi, Accenture, KPMG and startup Securitize.  Later this year, the Japanese Financial Instruments and Exchange Act will clarify the legal treatment of STOs and rights transferrable using distributed ledger technology (DLT). 

Major Security Token/Crypto Players Hunker Down during Covid-19 Crisis – e.g. ConsenSys operations and services unaffected

Ethereum (ETH)-focused major blockchain company ConsenSys is in remote mode. Already in January, ConsenSys began taking precautions to limit business travel, and as the situation escalated in February, the company transitioned to remote work. According to their spokesperson:

  • all of the operations and services are unaffected, and the level of commitment and support for the customer remains unchanged;
  • all offices are closed and the staff operates 100% remote;
  • the company is working with its third-party providers to understand the potential impact and develop adequate contingency plans to avoid any disruption to the customers’ businesses.

“With a global footprint, we are carefully monitoring the situation in each region. We have adopted social distancing best-practices early on to help flatten the curve of infections and there is full support for our employees and their well-being,” the spokesperson said.

The company started releasing more training materials, and they will have a number of online webinars and virtual events. They have launched their Enterprise and Developer Libraries, educational resources for developers and enterprises, while ConsenSys Academy released the first five modules of Blockchain Developer Program for free.

We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.

For context on Security Tokens please read the chapter on Security Tokens in our Blockchain Economy book and read articles tagged Security Tokens in our archives.

New readers can read 3 free articles.  To  become a member with full access to all that Daily Fintech offers,  the cost is just US$143 a year (= $0.39 per day or $2.75 per week). For less than one cup of coffee you get a week full of caffeine for the mind.

https://dailyfintech.com/2020/04/03/security-token-news-for-week-ending-friday-3-april-2020/

The best product insurers provide is empathy. It’s been missed in COVID-19 response.

https://dailyfintech.com/2020/04/02/the-best-product-insurers-provide-is-empathy-its-been-missed-in-covid-19-response/

April2018_empathy-636x396

Strategy sessions begin now for the insurance industry- addressing coverage gaps, policy forms, staff utilization, remote working methods, customer engagement, scalability of digital methods, virtual claim adjusting techniques, parametric products, and business interruption cover among others, and the big challenge of the insurance world- systemic risk.

 And the big, big elephant in the room- selling empathy as a key deliverable.

 Outside of health cover being broadened in most countries, there are few COVID-19 positives the insured public have seen recently from the insurance industries, and several negatives.

How to avoid repeating the COVID-19 outcome?  Learning starts now. 

Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners in his day job. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

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Late December 2019 into early 2020 there were indications that business interruptions would become a concern for commercial customers operating in China.  The city of Wuhan was quarantined by the end of January, the Hubei Province by mid-February, Starbucks closed branches in the immediate coronavirus outbreak areas by mid-February, hotels and non-essential businesses closed shortly thereafter.  Global supply chain partners became aware of the COVID-19 problems, the effects on normal business became clear to all, as were the concerns the outbreak would spread into other parts of the globe.  Risk managers would have been examining their portfolios and projecting financial effects from what was and what probably would be.

At that time there was little being reported regarding the greatest insurance exposure- business interruption.  The cover was surely being considered as Claims Pages published  “Many Global Firms, Excluded From Epidemic Insurance, Face Heavy Coronavirus Costs,” on January 29.  Carriers were moving into defensive postures since BI losses were surely to be claimed, and the financial breadth of global BI while not certain at the time, would have been anticipated to be in the billions (now known to be in the trillions of dollars.)

In knowing that in most cases BI claims would be found to have no coverage carriers simply planned the defense- less said seemingly, the better.  No one carrier (or the industry) could have anticipated a pandemic, but in the post-SARS and post MERS insurance environment there were clear actions taken by carriers to exclude pandemics or disease outbreaks from business cover, absent specific endorsements. Additionally, the industry-wide expectation of no need for financial protection from an outbreak is found in the fact that little or no reinsurance for pandemics existed at the onset of COVID-19.  That is not wrong, that is simply traditional risk management.  Where insurers, governments, and insureds went wrong was not having alternative paths in place to deal with an outbreak, and for insurers, not taking a more public, empathetic position for their customers.

This quotation from Lombard Opinion Editor Kate Burgess in the Financial Times hits the sentiment well ( “Insurers show we are not in this together”):

“A look in Lombard’s crystal ball reveals three possible outcomes of turning a deaf ear to reputation risk: first, customers will ask what’s the point of insurance if it doesn’t pay out at the time of greatest need. Many will self-insure. Second, politicians will threaten to force insurers to pay up. Already US state legislators and lawyers have threatened to force the payment of virus-related claims. Third, businesses in extremis will band together to launch class actions.”

Indemnity models for pandemics remain a non-starter for P&C products; simply too difficult to rate, and if rated, too expensive for those who might choose the cover.  But that does not preclude insurers from recognizing a need to help.

A timely posting by Dr. Marcus Schmalbach speaking on alternative risk management techniques cites parametric products as an apt option for systemic risk, mentioning this key phrase:

“Parametric insurance is based on inclusion rather than exclusion.” 

Indemnity insurance models are generally tied to proof of loss, estimated values, etc., all time consuming and processing heavy lifts, and subject to what is NOT covered.  Considering parametric options for the next pandemic allows an agreed payment based on an agreed, readily measured trigger (index), and fully transparent policy expectations.  All that’s needed for payment is the index being reached, all the processing can be automatic, even leveraged through distributed ledger technology for transparency among the parties.

Keep in mind- parametric products will not satisfy all costs as an indemnity model/policy might, but parametric products can fill the immediate need gap.

That’s a big start to what to do next time, and other thoughts:

  • There can be global efforts to build catastrophe vehicles (as have been discussed in prior articles.)
  • There can be carrier outreach that simply serves as information and advice.
  • There can be collaboration among carriers, government agencies, and legislatures to ensure focus is not lost between COVID-19 time and the next pandemic or other systemic risk occurrence.
  • There can be learnings to get in front of disasters in lieu of efforts to hide behind policy provision walls.
  •  There can be empathy expressed early and often.

You get three free articles on Daily Fintech; after that you will need to become a member for just US $143 per year ($0.39 per day) and get all our fresh content and archives and participate in our forum.

https://dailyfintech.com/2020/04/02/the-best-product-insurers-provide-is-empathy-its-been-missed-in-covid-19-response/

A Buoyant Digital coin at a tender age – Ndau

https://dailyfintech.com/2020/03/31/a-buoyant-digital-coin-at-a-tender-age-ndau/

ndau

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.

The Ndau (XND) is a stateless Buoyant digital currency with a built-in design to act as a store of value, is less known as it is not conducive to pump and dump. It was launched 2 yrs ago out of  the Cayman Islands.

It is more actively traded on BitMart exchange with a presence in New York, China, Hong Kong, and Seoul. According to Cointelligence, BitMart is included in the top 20 exchanges by volume.

Programmable money, like Bitcoin, are available in the market even though the verdict is still out there as to which of the existing cryptocurrencies (if any) qualifies for a digital means of payment, or a digital store of value, or a digital unit of account. Bitcoin is clearly a living proof of an autonomous organization, with no CEO, no CFO, and no board. It went live with a fixed supply and a fixed predetermined monetary policy. The developer and user community has had several disagreements about the direction that the network should take which has resulted in forking the Bitcoin source code.

The fact remains (with its pros and cons) that the fixed supply of 21million Bitcoins cannot be tampered with. The programmed monetary policy allows for new bitcoins to be created only through mining at a fixed rate. This rate is fixed but it decreases as new bitcoins come into circulation and we approach the 21 million supply ceiling. There are proponents and critics to this kind of rigid monetary policy as it has not been tested in economic downturns, in which a flexible monetary policy can have benefits. It definitely sits on the other end of the spectrum from the Quantitative Easing (QE) that Central banks in the Western world have been engaging in after the 2008 Global financial crisis and the 2020 COVID19 induced economic crisis. Devaluation of currencies is a big thorn that is yet another reason that we have been soul searching technological solutions for better stores of value. Data from the Official Data organization and several other sources shows that the purchasing power of the almighty US dollar has been dropping precipitously.

Screen Shot 2020-03-29 at 21.46.25

Soul searching for programmable money that is enabled by blockchain technology that can mitigate this frightful drop in purchasing power of even the No.1 reserve currency, is only natural. Can we create a rather autonomous store of value with a tamper-proof and effective monetary policy? The market has not yet decided whether Bitcoin which is stateless and not backed by any real asset, is our Digital Gold alternative. During the recent downturn, Bitcoin and Physical Gold, similar to several traditional financial assets, have not behaved as expected.

One example of a better potential Digital Gold alternative, is the blockchain-enabled solution of a stateless Buoyant digital currency, the Ndau.  The Ndau (XND) was launched in September of 2018.  Its design is to act as a long term store of value and therefore rewards token holders the longer they hold it. Ndau token holders earn Economic Alignment Incentives (EAI) ranging from 4% to 15% based on the number of months of their holdings.

Screen Shot 2020-03-29 at 21.57.15

The total supply of Ndau tokens is fixed to 30million and there is a programmed market intervention to maintain price stability every time the price moves more than 5%. The supply of Ndau is increased only when demand increases based on a predetermined price curve.

https://player.vimeo.com/video/356906197

Ndau is the intellectual child of the Ndau Collective. An anonymous group of early Bitcoin enthusiasts more than 20 leading experts from world-class institutions including MIT, Columbia University, Carnegie Mellon, New York University, University of Chicago, and Goldman Sachs and who specialize in disciplines ranging from economics and monetary policy to cryptography and computer science.

Buoyant

Dictionary definition = able to keep afloat or rise to the top of a liquid or gas.

In virtual currency terms, it means a currency whose value rises and whose downside volatility is mitigated.

Ndau – The name comes from en-dow (endowment).

The proceeds from the sale of Ndau tokens are kept in an endowment and invested in other asset classes. The purpose of the endowment is to serve as a source of liquidity to support ndau’s price. The investment decisions are taken by the Blockchain Policy Council (BPC), a group of nine digital delegates continuously elected by ndau holders. The tokens are native the Ndau blockchain which uses a proof of stake consensus mechanism.

The corporate entities behind Ndau are Oneiro, which is backed by COSIMO Ventures. Oneiro received a seed round of $3mil initially and in October 2019, another $5million. At launch, Oneiro sold $15million worth of Ndau Tokens (which means a bit less than 1million tokens). The recent economic downturn seems to have found Ndau at a fragile point on its journey of adoption and therefore was not able to live up to its design.

At issuance, Oneiro placed Ndau tokens at a price of $17.26 during a private sale. The price remained stable for a long time (about one year) and then started rising. By early 2020, it had actually risen close to $22 (27% increase). By mid-February 2020, it seems that the price stabilizing mechanism of the endowment couldn’t cope with the tsunami of liquidation that hit all assets indiscriminately.

Screen Shot 2020-03-29 at 22.47.46

This indicates that the endowment was too small to cope with the severe changes in demand. According to their website the total tokens in circulation had grown to 4.3million and the price had dropped to $6.97.

Stay tuned and monitor the development of Ndau. We need at least a one-year history in such market conditions to be able to make any meaningful conclusions.

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https://dailyfintech.com/2020/03/31/a-buoyant-digital-coin-at-a-tender-age-ndau/

Coronavirus will shape the next decade. Will we prep before the next one?

https://dailyfintech.com/2020/03/30/52192/

Bitcoin-mask.png

Everywhere people are dying, global lockdown and massive government intervention. The coronavirus pandemic is disrupting global industries and supply chains, causing disastrous problems for businesses, consumers and the global economy. Just like the disease is killing older people at high rates, it is also about to kill mature western economies. Businesses are struggling to produce and distribute products and services, that consumers depend on. The coronavirus outbreak has limited our ability to produce and consume goods. Its financial ramifications are already severe and will only get worse. The COVID-19 pandemic will change this decade, just like 9/11 changed the 2000s. The impact from pandemic on global economy will be severe, but eventually the crisis will all end and life will resume. The question what direction will we follow and how prepared will we be when the next one comes along?

Ilias Louis Hatzis is the Founder at Mercato Blockchain Corporation AG and a weekly columnist at DailyFintech.com.

When businesses are unable to make money, they can’t pay employee wages and operating expenses. As business revenues decline, employee layoffs accelerate, which eventually leads to people not being able to pay their rent, mortgage and loans, buy goods and services or spend money at restaurants, sporting events, vacations.

This is not just a health pandemic, it’s a pandemic of fear and mistrust that is hitting advanced economies in Western Europe and the United States. Governments are announcing travel restrictions within their borders and from outside, and are shutting down businesses everywhere. In mature economies, when people become fearful for their lives, they withdraw and stop spending money on things they frequently do. Businesses that operate in face-to-face service industries, which usually dominate high-income economies, are the one’s that get hit the hardest, when people are in lockdown.

This is not to minimize the damage the pandemic is causing to the global product supply chain. The production around the world is out of action for an indefinite period of time. We are already seeing shortages for things like auto-parts, electronics and products like iPhones, and Diet Coke and don’t be surprised when we see disruptions for food, condoms and so many other basic things we take for granted.

In 2015, the year after West Africa’s Ebola outbreak, Bill Gates gave a TED talk called “The next outbreak? We’re not ready.” Gates saw the COVID-19 outbreak coming and he knew we weren’t prepared for it.

“If anything kills over 10 million people in the next few decades, it’s likely to be a highly infectious virus rather than a war,” Gates said during the Ted Talk. “Not missiles, but microbes.”

Authorities around the world are doing their best to contain the coronavirus pandemic. Disease outbreaks can happen at any time and anywhere, with little or no warning. These are events that have occurred in the past and will occur again in the future.

We are facing an uphill battle, but blockchain can help. Blockchain will not prevent new viruses, but it can help create a first line of defense, through a network of connected devices with a single purpose: to alert us about disease outbreaks. The use of blockchain can help prevent pandemics by enabling early detection, fast-tracking drug trials, and impact management of outbreaks and treatment.

Blockchain platforms could help connect local hospitals and health organizations. Local hospitals could record medical data about patients with flu- or virus-like symptoms. The data could be used by health organizations to predict the spread of the virus, to help them take preventive measures (increase medical staff, supply medical equipment) in the areas where the virus could spread.

Recently, the World Health Organization (WHO), IBM and Oracle teamed up to create an open-data hub that will use blockchain technology to check the veracity of data relating to the coronavirus pandemic.

Blockchain based livestock tracking could help to better trace an outbreak at the source, before it becomes impossible to contain. Deadly viruses have originated by contaminated livestock, that made it into our food supply. Imagine how many lives and resources we could save, if we could collect and analyze data to assess livestock risks for various regions.

We could also improve the medical supply chain for products and vaccines. It’s vital to be able to track where things are and where they came from and ensure they are genuine.

Researchers, biotech and pharmaceutical firms are racing against time to create the vaccine for this virus, as well as develop potential treatments for COVID-19. Blockchain based platforms could help vaccine development across various stages starting from exploration to pre-clinical stage, clinical development, regulatory approval to production and distribution and continuous quality control & monitoring.

Like the September 11 terrorist attacks, the fall of the Berlin Wall, the financial collapse of Lehman Brothers, the coronavirus pandemic is a world-shattering event that will lead to permanent shifts in political and financial power.

Many, fear the pandemic will strengthen state control and reinforce nationalism. Governments everywhere are adopting measures to deal with the health and financial crisis, and some governments will find it difficult to give up these new powers, when the crisis is over, similarly to what happened in the wake of 9/11, when civil liberties around the world were trampled.

More than a hundred years ago, in the “The Machine Stops“, E. M. Forster wrote about a dystopian future where humans relied on a machine to provide food, clothing, shelter, and interaction with each other, using audio and visual devices. This story sounds like the present, and the pandemic is pushing us even more in that direction, to become more reliant on the “machine”.

But the coronavirus pandemic is also causing everything to come to a grinding halt. Health care, government and business “machines” are breaking down and stopping. Maybe this is a wake up call, that pushes in the exact opposite direction, away from centralized machines and structures.

The coronavirus global health crisis has the potential to massively disrupt our lives, both economically and socially. I can only hope, we move in the right direction.

Image Source

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https://dailyfintech.com/2020/03/30/52192/

This Week in Fintech ending 27 March 2020

https://dailyfintech.com/2020/03/27/this-week-in-fintech-ending-27-march-2020/

this week in Fintech .001

This weekly summary from our 5 experts, brings you insights based on their experience as investors, entrepreneurs & executives.

Ilias Hatzis started his first company, an internet search engine, during the dot-com era & now focusses on crypto.

Efi Pylarinou worked for top tier Wall Street firms and is now a top global Fintech influencer.

Jessica Ellerm is CEO of Zuper Superannuation & previously worked for a top Fintech startup, Tyro.

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners.

Sheldon Freedman is a Fintech lawyer at Hassans International Law Firm

Bernard Lunn is the CEO and Editor of Daily Fintech and author of The Blockchain Economy.

If you want to continue receiving This Week in Fintech, you can either become a paying Member for $143 per year (and receive all our content in addition to this weekly summary) by clicking here.  If you just want to receive This Week in Fintech for free, you will need to fill in this form. Or fill in the same sign up form at the bottom of this post.

Your Editor is Bernard Lunn. He is also the CEO of Daily Fintech and author of The Blockchain Economy.

Monday Bernard Lunn @LunnBernard, CEO and Editor of Daily Fintech and author of The Blockchain Economy wrote What do you want a post #Coronavirus world to look like?

Ilias is taking a break today to focus on his family. The Coronavirus crisis is becoming very real for many of us. 

We are learning what words like disruption, creative destruction and viral really mean. They are not just words on a pitch-deck any more. 

The Greatest Generation were tested in the Second World War. Baby Boomers (like me) had it easy thanks to their bravery & sacrifice. Now we are being tested (more than other generations because this virus is worst for older people).

This too shall pass.

In our Coronavirus series, we started with a description of the destruction to the financial system – the destructive part of creative destruction. 

This post envisages what a post #Coronavirus world could look like – if we make it happen.

Editor note: This post looks at 10 principles that could make a post Coronavirus world a better place. All are visible in small ways today – the future is unevenly distributed. Many could reach mass scale with some better tech solutions – which is what the next post in this series will focus on. 

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Tuesday Efi Pylarinou @efipm our Swiss-based Fintech Adviser,  founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019 wrote Technology helping governments & citizens, one line of code at a time

Moral hazard issues are endemic in financial crises, as we all know from the most recent GFC triggered from subprime mortgages. As we are witnessing a bazooka round of government aid ready to hit the market, the moral hazards are being revisited.

I will attempt to stay on topic and not comment on social & political issues around the current stimulus policy decisions in each country. I will focus on how technology can be used to make things better in these circumstances.

Editor note:Efi contrasts the legacy absurdity of the US Govt sending paper checks with modern digital GovTech initiatives around the world.

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Wednesday Jessica Ellerm @jessicaellerm, our Australia-based Fintech entrepreneur and thought leader specializing in Small Business and the Gig Economy & CEO/Co-Founder of Zuper, a new superannuation startup in Australia wrote Coronavirus To Kill Cash For Good

If there is one financial instrument particularly exposed to the coronavirus, then it would have to be cash payments. For several weeks now, as virus fears ramp up in Australia, I have noticed local businesses banning cash payments overnight, to protect staff from potential infection risks associated with contaminated cash.

Editor note: I have noticed my own behavior changing as a consumer. Just in case I could infect the cashier, I use a card even for small payments.

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Thursday Patrick Kelahan @insuranceeleph1, our US based Insurtech expert (a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners who also serves the insurance and Fintech world as the ‘Insurance Elephant’) wrote Business interruption- cover that’s too big to cover- but needs to be next time

On February 27  Daily Fintech published this article, “Dominoes fall- business disruption and risk management in the COVID 19 environment,” wherein there was a discussion of the indirect effects of the then China-based COVID-19 outbreak, and the estimation of economic damage due to the outbreak being $1 trillion.  We now know the effects of the pandemic will be in the many trillions of dollars, and business enterprises around the globe are realizing that business interruption (BI) financial losses due to the outbreak are generally not covered by their commercial insurance policies.  

Editor note: Business Interruption (BI) Insurance is being overwhelmed by the Coronavirus crisis. This article explains how and why this happened and should be required reading for anybody who works in, finances or regulates the Insurance business.

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Friday  Sheldon Freedman, Fintech lawyer at Hassans International Law Firm

wrote: Security Token news for Week ending 27 March 2020

Editor note: This weekly snapshot is the news that matters for busy senior people in the Security Token market.

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To continue receiving ‘This Week in Fintech’, the weekly recap of our articles, you will need to fill this form to give us consent to send this to you. Please note that Daily Fintech requires your organizational email address (e.g. corporate, educational or government) and your LinkedIn URL. This information is required for subscribers who want ‘This Week in Fintech’ for free. If you prefer to not provide this information, you can still receive all our content by becoming a paying member.

https://dailyfintech.com/2020/03/27/this-week-in-fintech-ending-27-march-2020/

Security Token news for Week Ending Friday 27 March 2020

https://dailyfintech.com/2020/03/27/security-token-news-for-week-ending-friday-27-march-2020/

utility security tokens.001

Here is our pick of the 3 most important Security Tokens news stories during the week:

Federal court judge grants temporary injunction against Telegram
A federal court judge Tuesday sided with the SEC against Telegram and granted a preliminary injunction in Telegram’s $1.7 billion initial coin offering. 

Why it matters: All eyes have been on messenging platform Telegram’s plans to distribute its digital tokens, Grams, via its soon to be launched Telegram Open Network secondary public market.  In 2018 Telegram sold 1.9 billion Grams to 175 global purchasers in exchange for $1.7 billion pursuant to a SAFT (Simple Agreement for Future Tokens), an investment contract designed to provide a compliant alternative to an ICO.  The SEC has opposed the distribution on the Telegram Open Network, asserting Grams are unregistered securities. 

Telegram claims the original ICO was a compliant exempt sale of securities, and the Grams then and now and in future are not a security, but a currency/commodity.  The case is pivotal as many token players have already issued tokens through SAFTs; the industry is gauging behavior related to this outcome.  This court ruling against Telegram makes it easier for the SEC to impose penalties on such companies, force repayment of money back to investors and enjoin new issuances and trades.

  A token deemed a security under US law (as distinct from a currency, commodity or something else) is subject to registration requirements. Financial services companies assisting in the buying, selling, structuring or trading are subject to registration and licensing.  The SEC has not issued clear guidelines defining security tokens.  The SEC determined Grams are a security applying a legal test that Grams involve an investment of money that comes with an expectation of a profit derived from the efforts of others. The present case was for the court to rule on a preliminary injunction blocking Telegram from proceeding with the issuance and secondary market distribution of Grams, pending a court determination on the merits. The court, agreeing SEC has a substantial likelihood of success alleging Grams are securities, granted the preliminary injunction.  It remains to be seen if Telegram will take the case to Court of Appeals, return proceeds to it 175 purchasers, or something else.  Telegram certainly possesses sufficient funds to pursue the course it chooses.

TokenSoft Partners with Ex-Military Cyber Firm Hub Security

TokenSoft, a platform for issuing digital securities using blockchain technology, is tapping into Israel’s experience in cyber security, having signed a new partnership with ex-military Cyber firm Hub Security.

Effective immediately, clients of TokenSoft’s transfer agent, DTAC, will leverage Hub Security’s miniHSM solution, which provides token issuers with a cryptographic environment for the whole lifecycle of digital assets. Among other things, miniHSM helps companies grappling with the threat from organised crime and hackers through enforcing end-to-end encrypted USB and wireless Bluetooth connectivity, making its endpoint usage accessible.

Why it matters: Attacks, including breaches at top crypto exchanges such as Binance, have made improved cybersecurity a high priority, and TokenSoft needed to up its game. HUB security offers military-grade cybersecurity tactics including FIPS140-2 Level 4 protection. Built for the use of blockchain-based products, the product offers a combination of hardware and software solutions including a multi-signature vault, hardware firewall, access control, and a neural network learning system designed to anticipate cyberattacks.

France: Blockpulse Pursues First Security Token Offering in Partnership with Lemonway, Plans Stock Exchange for Startups

Blockpulse is the first company in France to pursue a security token offering (STO). Blockpulse is a blockchain-based shareholding management solution. The company launched its service last week in partnership with Lemonway, a Fintech providing payment services. Blockpulse offers a blockchain-based software solution for digitizing securities issuance and management operations for unlisted joint-stock companies

Why it matters: Blockpulse aims to become a “Stock Exchange for startups” within the next 18 months.

We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.

For context on Security Tokens please read the chapter on Security Tokens in our Blockchain Economy book and read articles tagged Security Tokens in our archives.

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https://dailyfintech.com/2020/03/27/security-token-news-for-week-ending-friday-27-march-2020/

Business interruption- cover that’s too big to cover- but needs to be next time

https://dailyfintech.com/2020/03/26/business-interruption-cover-thats-too-big-to-cover-but-needs-to-be-next-time/

Business interruption insurance

On February 27  Daily Fintech published this article, “Dominoes fall- business disruption and risk management in the COVID 19 environment,” wherein there was a discussion of the indirect effects of the then China-based COVID-19 outbreak, and the estimation of economic damage due to the outbreak being $1 trillion.  We now know the effects of the pandemic will be in the many trillions of dollars, and business enterprises around the globe are realizing that business interruption (BI) financial losses due to the outbreak are generally not covered by their commercial insurance policies.  This is not a surprising finding since BI cover has the policy need of direct physical loss, which a viral pandemic does not produce.  Many implications here regarding coverage gaps and systemic risk, and global application of moral hazard.

Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners in his day job. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

In one month’s time the anticipated BI losses due to COVID-19 increased manifold, became global, and have become difficult to quantify accurately, an apt expression of the unexpected outcome a systemic risk like a pandemic can cause- an uninsurable risk due to those exact criteria.

Business interruption cover is described by Marsh & McClennan as follows:

  1. We will pay for the actual loss of business income you sustain due to the necessary suspension of your “operations” during the period of “restoration.” 
  2. The suspension must be caused by the direct physical loss, damage, or destruction to property.
  3. The loss or damage must be caused by or result from a covered cause of loss.”

The problems with the BI cover regarding COVID-19 effects are…all three points.  Items 2 and 3 are not applicable due to the outbreak being the cause, and a viral and item 1 sets such wide expectations for the insureds as to be impossible to summarize.  Loss of business income? Is that cash flow, ongoing bills, net income reduction (based on what?)

Even in the most direct loss cases, say a fire experienced by a business owner, BI losses are seen differently by the business as compared with the carrier.  Again, what constitutes loss of income, and how is the loss indemnification supported and adjusted?  BI cases are difficult to wrangle and often are simply negotiated.

If that handling were to occur say, in the U.S. for all the COVID-19’s affected insured businesses, the twenty-five million or so claims would need to be adjusted throughout the decade, would result in indemnity amounting to  two to three trillion dollar total severity, would make all commercial carriers insolvent, and result in a consequential insurance catastrophe of loss of the industry.

There is no retrofit that would have the expected effect the insureds would need.  Take for example the intention the New Jersey Assembly has in Assembly Bill 3844.  The NJ Assembly proposes the insurance industry provide BI coverage to NJ businesses with full knowledge that BI cover does not apply and is excluded from cover.  NJ would like carriers to pay the cover through legislated changes to the insurance policies’ contractual intentions, with NJ then reimbursing the carriers in the future for all or part of the payments.  Just that one state’s businesses may have BI claims that exceed $100 billion!  That is not a reasonable nor a legal option (would surely be challenged if enacted) and would challenge the solvency of the state’s carriers.    Ex post legislation is not an answer.

Firms have already initiated legislation in the U.S. for breach of contract, and while most in the industry agree that BI cover is a long shot, the irony is that the claims being made trigger the need for loss and expense reserves, and the initiation of litigation will- absent cases being considered unworthy by courts- require that the respective carriers recognize worst case scenario reserves being placed on their balance sheets- a profitability hit that could be significant due to the volume of potential claims (think asbestos.)

Truly there is not a practical answer to the enormity of the question, so the industry and businesses must be forward looking in anticipation of another like occurrence, whether it’s a viral outbreak, cyber outbreak, or regional natural disaster.  Systemic risk effects will occur again, and mitigative actions need to be considered now.

I considered one of many scenarios of systemic risk in the recent article published in InsurTech360, “Rethinking excluded pandemic (and other) risks.  The article discusses just one of many loss occurrences- events and conferences, and considers the many aspects of planning, response, potential cover, admin of the response and potential payments for what is for an indemnity product an excluded peril.  Future cover cannot be full reimbursement as we have discussed- the indemnity factors are troublesome to adjust.  Parametric approaches to shared risk are discussed in the article as is planning and segmentation of the loss layers.

Insurance veteran Mark Geoghegan recently recorded a ‘solo podcast’ on the Voice of Insurance that addressed the topic in depth, and touched on the many issues of BI claims and COVID-19.  The ‘selfie’ podcast, unfair-punishment-and-pandemic-re editorialized on the two-edged sword that BI handling by carriers will produce- 1) carriers cannot reimburse insureds for BI claims in that there is no policy cover, and there are not sufficient resources within the industry to do so, and 2) the carriers will still be left as the parties with record levels of capital that will not be applied to the situation, not a good view for the insured public to consider.  Mr. Geoghegan walked through some efforts that could be put into place going forward, and some collective global actions that would distribute future systemic risk that would have similar effects as COVID-19.  He clearly agrees with the writer that BI indemnity cover remains unreachable, but parametric hybrid products might be a compromise, if there is sufficient global participation by carriers, insureds, and governments.  The industry knows that government subsidized products such as the U.S. NFIP flood program are not the answer.  In fact there are some influential insurance persons who suggest private parametric plans supported by alternate risk sources are the most effective and stable answer, and not government backing as is found in the U.S. Terrorism Risk Insurance Act (see Dr. Marcus Schmalbach’s article, implement-pandemic-perils-into-tria-no-a-free-market-solution-is-needed ).  Dr. Marcus is a knowledgeable proponent of capital markets being a primary force in financing these unique risks.

Mr. Geoghegan suggests that cooperative programs such as might be gained through premium contributions to a global pool of insurance backing for systemic risk response built over years is an option to consider.  The pool would also help fund an important initiative going forward- research into causes of pandemic outbreaks, anticipating new viruses, be prepared to respond with strategic supplies, and with several years of global contributions, a substantial response fund that is not indemnity-based and available to all.  However, what does that mean?  Participation by all countries, carriers, and governments, a daunting task for the best of motivations.  And as Mark reminded the listener- memories are short, and large sums of money are attractive targets for raids by cash-short governments.  The concepts are provocative and if actionable in small part a sure improvement.

The author had a related thought-provoking discussion this week with  Thomas Verduzco-Weisel, Director Central Europe at Symbility – Mobile Claims,  a colleague in Germany who has seen the effects of disappointed customers; the chat focused on any actions that might be taken to respond to customer concerns- now.

We settled nothing categorically but did consider some options carriers can take to mitigate the effects of the constant drum beat in the press coming from businesses that have experienced or anticipate substantial BI losses:

  • Reduce or suspend premiums based on companies’ reduced operations.
  • Coordinate with other carriers in establishing a response fund that can provide direct cash benefits to business customers.
  • Extend coverage for risks that are solely associated with COVID-19 actions, e.g., forward-looking coverage for credit risk, health risk.
  • Partner with government regarding establishing captives- immediately- for mutual sharing of risk within affinity groups
  • Establish help centers for staff to assist in navigating insurance and finance issues
  • Look for coverage within policies that were in force at the inception of the pandemic, e.g., cover for civil authority actions in temp closures.  Don’t wait for a claim to be initiated, create the claim and contact the insureds proactively
  • Know how your product lines will evolve going forward- parametric options, review and retest exclusions, etc. The efforts must be uniform for all like insureds, and reproducible for similar perils.  Not taking any action is going backwards.

Plenty of discussion of a problem that has grown into a multi trillion dollar beast, and a challenge for the industry and its customers, and not to forget, governments. Systemic risk from pandemics can no longer simply be a line in the exclusion section of insurance policies, but by the same token cannot be relegated to macro government response.  For COVID-19 all players have been guilty of the oldest of risk management dodges- moral hazard.  Why bother insuring the outcome if someone else will cover the effects?  Well, that time is now gone.

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https://dailyfintech.com/2020/03/26/business-interruption-cover-thats-too-big-to-cover-but-needs-to-be-next-time/

Coronavirus To Kill Cash For Good

https://dailyfintech.com/2020/03/25/coronavirus-to-kill-cash-for-good/

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia

If there is one financial instrument particularly exposed to the coronavirus, then it would have to be cash payments. For several weeks now, as virus fears ramp up in Australia, I have noticed local businesses banning cash payments overnight, to protect staff from potential infection risks associated with contaminated cash.

Banning cash isn’t fearmongering on the part of retailers – the risk of infection is real. For those still clinging on to their polypropylene bank notes, maybe don’t (or at least wear gloves). The novel coronavirus, COVID-19, has been found to linger around on this surface for up to three days.

Copper coins on the other hand, aren’t so bad. Thanks to the long understood anti-microbial properties of copper, you’ll only need to wait 4 hours before your pocket change is safe to touch again.

While cash has been on the decline for many years, it has refused to die out completely, despite the best marketing efforts of the payments industry. While nearly every sector around the world is hurting right now from a drop off in demand, causing a softening in payments volumes, could acquirers be buffered somewhat by the overnight shift of cash to card? Quite possibly. This buffer could well be sustained, spiking card payments in a short space of time.

This is because even when the pandemic relents, the public’s mood will continue to be one of heightened awareness around cleanliness, making a shift back to cash unlikely. It also means acquirers, which might be hurting somewhat now from the drop off in discretionary spending, have a potentially cashless future to look forward to.

Europe might be one of the first regions to see this spike.

According to The 2018 World Cash Report by G4S, cash represents 78.8% of all transactions in volume and 53.8% in value in Europe. In Italy, one of the hardest hit regions when it comes to the COVID-19 pandemic, a European Central Bank Payment Usage Survey estimated cash transactions made up 86% of all transactions.

There will be financial winners and losers in the post COVID-19 world. My money is on cash not being king much longer.

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https://dailyfintech.com/2020/03/25/coronavirus-to-kill-cash-for-good/

Technology helping governments & citizens, one line of code at a time

https://dailyfintech.com/2020/03/24/technology-helping-governments-citizens-one-line-of-code-at-a-time/

Screen Shot 2020-03-23 at 17.56.08

Moral hazard issues are endemic in financial crises, as we all know from the most recent GFC triggered from subprime mortgages. As we are witnessing a bazooka round of government aid ready to hit the market, the moral hazards are being revisited.

I will attempt to stay on topic and not comment on social & political issues around the current stimulus policy decisions in each country. I will focus on how technology can be used to make things better in these circumstances.

In America the government, the states, the municipalities, the cities are far from being Digital, let alone having technology that allows them to track flows of the money flows allocated in the economy.

A “stimulus package to the American worker” is underway that practically means a check of $1,000 or $1200 to pay rent, bills or buy groceries. The details of who and how this check can be claimed are going to be announced soon.

Americans will receive by traditional mail, a check and will have to be creative on spending it as bank branches are unable to service these deposit needs. American may countersign the check to their landlord or create a community secondary market of checks that is facilitated by those that have cash from ATMs (good for grocery shopping).

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.

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Juxtapose this with the Digitization in Singapore. In 2016, Singapore announced the launch of the Government Tech Agency

Here’s how Singapore plans to make its services as easy as Facebook Connect.

A long-term plan to digitize the functions of governance and public life.

I pick the Singaporean example of GovTech led digitalization (there are other well-publicized ones, like Estonia) because in these `never seen before` circumstances they were able swiftly to launch three services

TraceTogether A community-driven contact tracing app to help during the COVID19 spread. Own your data and use Bluetooth P2P communications to share your close contacts. Give permission to the Ministry of Health to quickly reach out to your close contacts if you are a COVID-19 patient. TraceTogether aims to protect families and communities, and stop the spread of COVID-19.

MaskGowhere An app to use your zip code and get info on mask distribution points

FluGowhere An app to facilitate the following: If diagnosed with any respiratory illness (even just a cold) you get full subsidy for medical treatment

Now imagine if America or state by state had built a GovTech ecosystem that would allow to not easily channel each of this one off payments but also to transparently trace that they are used accordingly.

Transparency of money flows would be a blessing in this situation. It would save the government and the citizens from all the moral hazards that were experienced during the GFC. One of the most eye-popping examples were banks that were eligible for favorable loans with subsidies which they subsequently used for share buybacks.

The digitalization of municipalities, states and governments is not only about operational savings but also about Transparency that can allocate capital and manage risks in a fairway.

So much to learn from other Smart nations, states, or cities.

Singapore has two kinds of IDs …

CorpPass, a digital identity to do business efficiently and safely online with the government.

MyInfo simplifies banking transactions by eliminating the need to re-produce documents for verification.

And on and on…

The Technology is available and inexpensive, the people to customize it for each country, state, city, are available, and the Need is screaming. Come on America, Switzerland, United Kingdom, Germany, ….

Come on New York State, Canton de Vaud, England, Bavaria,…

A boom in GovTech initiatives should be one of the positive side effects of this crisis. And since I am a BIG DREAMER, maybe we will finally get a Decentralized Digital Identity so that it can serve as a way to act collectively in similar situations that we all have the same interests and risks.

Image source

https://dailyfintech.com/2020/03/24/technology-helping-governments-citizens-one-line-of-code-at-a-time/

What do you want a post #Coronavirus world to look like?

https://dailyfintech.com/2020/03/23/what-do-you-want-a-post-coronavirus-world-to-look-like/

Shiva Coronavirus.001We are learning what words like disruption, creative destruction and viral really mean. They are not just words on a pitch-deck any more. 

The Greatest Generation were tested in the Second World War. Baby Boomers (like me) had it easy thanks to their bravery & sacrifice. Now we are being tested (more than other generations because this virus is worst for older people).

This too shall pass.

In our Coronavirus series, we started with a description of the destruction to the financial system – the destructive part of creative destruction

This post envisages what a post #Coronavirus world could look like – if we make it happen. 

If you want data about the spread of the disease or what you can do to avoid getting it or how to boost your immune system (all good subjects), this post is not for you.

Nor is this about politics or public health policy. These matter and we may have strong opinions, but that is not the subject today.

If you simply want to look at cat videos to escape this damn subject, that is cool too.

Future posts in this series will look at tech and media solutions.  The world is awash in amazing tech & media solutions.  The more urgent question is what do we want to do with what is on offer? What is a positive future that we can envisage?

A post Coronavirus world based on 10 core principles will help create a better world:

1. The end of our obsession with growth at all costs. If we only see this as an interruption to business as usual, Coronavirus will be all destruction and no creation.

2. A more sustainable planet. As a Gen Z person put it to me recently, “this stopped us talking about Climate Change”. Pictures from space showing reduction of pollution in China & Italy are inspiring – if we can end our obsession with growth at all costs.

3. Truth matters however uncomfortable it is. We can go online to have every crazy opinion validated, but a virus does not care a damn about our opinion.  An amazing thing is happening – we are searching for people who tell the truth. For example, Dr. Anthony Fauci, is somebody who I believe, but I also think technology will give us new ways to aggregate facts in a way that is not opinion-driven or controlled by institutions that may be controlled by people who do not have our best interests at heart,

4. We are all in this together.  That mantra used to come with moral or spiritual overtones. Coronavirus makes this totally practical. If I have a huge stockpile of hand sanitizer, so that you have none – I will get the virus from you.

5. Use communications tools to communicate not to isolate or brag. Communication can mean singing from balconies or using FaceTime to communicate with distant loved ones or remote yoga or passing true information (or cat videos) around to loved ones. 

6. The power of love needs to replace the love of power. That is an old hippy mantra (aka boomer in their younger idealistic phase). Without that, fear mongering fascists will seize power because the Coronavirus certainly inspires fear that they can exploit.

7. Hyperlocal means loving the one you are with. That can mean in your home or in your neighborhood or your country depending on the current extent of the restrictions. Working from home can either be isolating or a powerful motivation to build strong local relationships depending on how you approach it.

8. Billions of people making a living is more important than a few people making billions. If billions of people cannot make a living they will back revolutionary leaders who will seize power (and use that power for selfish ends rather than helping the people). We need to get rid of our obsession with growth at all costs, but there are still billions of people who need to make a living without destroying the planet

9. We are all the same under our skin. A virus doesn’t care about our skin color, nationality, religion, sex or sexual preference. Neither should we.

10. Human-powered emergent solutions driven by decentralized technology. This is where already today we can see people changing their behaviour when faced with the awful reality of Coronavirus. In the future we see this behaviour going mass scale, powered by  decentralized technology.

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https://dailyfintech.com/2020/03/23/what-do-you-want-a-post-coronavirus-world-to-look-like/

This Week in Fintech ending 20 March 2020

https://dailyfintech.com/2020/03/20/this-week-in-fintech-ending-20-march-2020/

this week in Fintech .001

This weekly summary from our 6 experts, brings you insights based on their experience as investors, entrepreneurs & executives.

Ilias Hatzis started his first company, an internet search engine, during the dot-com era & now focusses on crypto.

Efi Pylarinou worked for top tier Wall Street firms and is now a top global Fintech influencer.

Jessica Ellerm is CEO of Zuper Superannuation & previously worked for a top Fintech startup, Tyro.

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners.

Sheldon Freedman is a Fintech lawyer at Hassans International Law Firm

Bernard Lunn is the CEO of Daily Fintech author of The Blockchain Economy, advisor, serial entrepreneur and blogger

If you want to continue receiving This Week in Fintech, you can either become a paying Member for $143 per year (and receive all our content in addition to this weekly summary) by clicking here.  If you just want to receive This Week in Fintech for free, you will need to fill in this form. Or fill in the same sign up form at the bottom of this post.

Your Editor is Bernard Lunn. He is also the CEO of Daily Fintech and author of The Blockchain Economy.

Monday Ilias Hatzis @iliashatzis our Greece-based crypto entrepreneur (Founder & CEO at Mercato Blockchain Corporation AG and Weekly Columnist at Daily Fintech) wrote The Crypto-Coronavirus Opportunity

We are facing challenging times globally, that affect all of us economically and for some even our existence. The Coronavirus is a global pandemic that has brought the world economy to a grinding halt. While we do not know how bad it may turn out to be, a crisis can alway be an opportunity. It can help us reshape and implement digital strategies and create new opportunities that accelerate the application of new technologies. How will Bitcoin and cryptocurrencies fare during this chaos?

Editor note:Read this post to learn about some proximate causes of why Bitcoin crashed so much harder than other asserts and to learn which very credible technologist is saying that it is a good time to buy Bitcoin. From the perspective of the end of the week, after a price rally, you might wish you had read this post and acted on it.

Bernard Lunn, CEO of Daily Fintech, author of The Blockchain Economy, advisor, serial entrepreneur and blogger wrote A Bug Is Crashing The Financial System And Decentralization Is The Best Way To Fix It

Yes that is a play on words. Software programmers borrowed a medical word – bug – to describe an error that could crash their software systems.

Now a bug from Wuhan is crashing the financial system. Yes global finance is a system and systems are vulnerable to bugs.

Editor note: This, the first in a series on the world that comes after the coronavirus crisis, focusses on the destructive part of creative destruction by looking at how our financialized economy is being destroyed.

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Tuesday Efi Pylarinou @efipm our Swiss-based Fintech Adviser,  founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019 wrote Time to check US Consumer debt, delinquencies, and refinancing applications

It was only a month ago that economists were talking about interest payments on debt for individuals in the US (the top G7 indebted country on a personal basis) being low and manageable as the job market was strong.

Fast forward to today and the same numbers have to be interpreted differently. The global economy is taking a hit and both businesses and individuals are at risk. We need to look at the facts & figures and then see what can be done by banks or fintechs.

Editor note:Efi reports on data that was troubling pre Coronavirus and may turn into crisis in April. Both Banks and Alt Lender Fintechs will be tested in this economic cycle.

Bernard Lunn, CEO of Daily Fintech, author of The Blockchain Economy, advisor, serial entrepreneur and blogger wrote the XBRL news for week ending 17 March 2020 

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Wednesday Jessica Ellerm @jessicaellerm, our Australia-based Fintech entrepreneur and thought leader specializing in Small Business and the Gig Economy & CEO/Co-Founder of Zuper, a new superannuation startup in Australia wrote Niche Fintech Could Catch The Coronavirus Bug

After being the darlings of the fintech space for so long, startups in the payments space have been some of the first stocks to feel the full force of the economic punch that is the coronavirus.

Around the world retail, hospitality and tourism are coming to a screeching halt, faced with a combination of forced lock down and pure consumer avoidance. With jobs on the line across multiple industries, discretionary spending is basically dead for the foreseeable future.

Editor note: Coronavirus is hitting all the fun stuff that economists call discretionary spending hard. Niche payments vendors rely on this. Consumers  may revert to legacy payment methods when panic buying at the grocery store

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Thursday Patrick Kelahan @insuranceeleph1, our US based Insurtech expert (a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners who also serves the insurance and Fintech world as the ‘Insurance Elephant’) wrote COVID-19 supplants InsurTech – moving lower on Maslow’s Hierarchy of Business Needs

Staff working from home.

Premium growth or reduction?

Staff being repurposed or subject to RIF.

Claims- virtual handling or on-site assessment?

Innovation efforts underway- suspend or continue?

Customers with reduced access to the firm or agents.

Supplies- how much to stock, if the supplies can be found?

Start ups- traction had been tough, now there is no friction.

VC’s and funding orgs- how can we support any investment?

Coverage determination for pandemic or microbial infestation.

Vendor partners- how to maintain relationships or leverage their skills?

Editor note: Pat raises the question of whether Coronavirus will lead to a slowdown in innovation. This did not happen in the 2008 crash, when early stage financing was (counterintuitively) strong. Read Pat’s fascinating insights at this time because Insurance is critical for everybody in these difficult times and Pat deals with the subject from the point of view of those with the difficult job of actually insuring us.

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Friday  Sheldon Freedman, Fintech lawyer at Hassans International Law Firm

wrote: Security Token news for Week ending 20 March 2020

Editor note: This weekly snapshot is the news that matters for busy senior people in the Security Token market.

Most of our posts this week had a Coronavirus theme. It is hard to avoid the elephant in the room, but this too shall pass.

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https://dailyfintech.com/2020/03/20/this-week-in-fintech-ending-20-march-2020/

Security Token news for Week Ending Friday 20 March 2020

https://dailyfintech.com/2020/03/20/security-token/

utility security tokens.001

Here is our pick of the 3 most important Security Tokens news stories during the week:

One. Wave Financial to Tokenize $20M Worth of Bourbon for New Whiskey Fund

Digital asset manager Wave Financial is tokenizing a whole year’s production of Kentucky bourbon so global investors can gain exposure to the growing U.S. whiskey market.  Wave announced Wednesday it had finalized an agreement with the Danville, Kentucky-based Wilderness Trail Distillery to tokenize between 10,000 and 20,000 barrels of bourbon whiskey, worth up to $20 million, that will be made publicly available through a specialized digital asset fund.  By tokenizing it, Wave says investors can gain exposure to bourbon’s value appreciation and can also share some of the proceeds from when the whiskey is sold wholesale to merchants, three years after the whiskey is first distilled and tokens issued to investors.

Curator’s Note: The American whiskey industry has been steadily expanding production.  Whiskey is now the most exported US spirit.  Quality whiskey is an asset that has a long barrel life that tends to hold value and even appreciate with time. It is expected the fund administrator will valuate the inventory quarterly to provide a benchmark price for the whiskey-backed tokens, which will be tradable (after a one-year lockup period).

Two. BaFin Approves First Cross-Border STO in the EU – ParkinGO

This week, the German Federal Financial Supervisory Authority approved the first cross-border security token offering in the EU. The STO would give the mobility and airport parking sector giant, ParkinGO the ability to further its market dominance. The news demonstrates an expansion of the EU STO sector, as well as, a forward-looking stance on the part of BaFin.

As the first cross-border STO, the crowdfunding event would reach more EU investors than ever before…BaFin approved numerous other STOs in the past, but the ParkinGO campaign is unique in many aspects. For one, regulators allowed issuers to maintain their investors register on-chain. Additionally, the system permits secondary transactions with all rights attached to the digital asset.

Curator’s Note: ParkinGo, a large Italian parking conglomerate with a recognizable brand, provides airport, port and train station parking at 90 locations in 9 European countries, serving 2.7 million customers.  The token issuance platform is Luxembourg-based STOKR. The offering is to both institutional and retail investors and should be a highly visible token representing a brand European travelers know well. 

Three. Proptech KlickOwn Launches First Security Token Offering for Real Estate in Germany

KlickOwn has launched its first security token offering for real estate in Germany. Launched in mid-2019, the first digital security is for a building based in Lüneburg, Germany. The offering is debt-based seeking up to €1.5 million. As of today, the offering has raised over €350,000. Investors may anticipate a 5% annual rate of return on a “token-based bond.”

Curator’s Note: This small real estate token debt offering for a centuries-old landmark building is utilizing technology provided by Bitbond, which conducted the first German STO issuing its own digital bond. Germany-based KlickOwn recently launched its own security token offering as well. Security token players who have structured and managed their own STO’s issuing their securities earned the credibility and experience to perform in the STO marketplace.

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We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.For context on Security Tokens please read the chapter on Security Tokens in our Blockchain Economy book and read articles tagged Security Tokens in our archives. 

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https://dailyfintech.com/2020/03/20/security-token/

COVID-19 supplants InsurTech – moving lower on Maslow’s Hierarchy of Business Needs

https://dailyfintech.com/2020/03/19/covid-19-supplants-insurtech-moving-lower-on-maslows-hierarchy-of-business-needs/

Maslow biz

Staff working from home.

Premium growth or reduction?

Staff being repurposed or subject to RIF.

Claims- virtual handling or on-site
assessment?

Innovation efforts underway- suspend or
continue?

Customers with reduced access to the firm or
agents.

Supplies- how much to stock, if the supplies can be
found?

Start ups- traction had been tough, now there is no
friction.

VC’s and funding orgs- how can we support any
investment?

Coverage determination for pandemic or microbial
infestation.

Vendor partners- how to maintain relationships or
leverage their skills?

Patrick
Kelahan
 is a CX, engineering & insurance consultant,
working with Insurers, Attorneys & Owners in his day job. He
also serves the insurance and Fintech world as the ‘Insurance
Elephant’.

InsurTech funding efforts produced
$6.6 billion globally in 2019
, and plans for 2020
suggested a similar level of interest for this year.  That was
until a few weeks ago, when coronavirus caused insurance companies
to radically shift focus from growth, innovation, partnerships, and
lowering performance ratios to a focus on cash conservation, staff
support, changes in customer contact protocols, and concerns about
pandemic coverage, maintaining policies in force, and
stability.

The outbreak is a seismic strategic change event.  Not just
issues, but fundamental concerns that suggest fundamental responses
by the insurance industry, although I’ll admit there are too many
ramifications to fully organize and upon which to comment.

Without question insurance incumbents and startups will feel the
effects of Covid-19 on how business has been conducted in the
industry during the past several years.  The relationships and
collaborations between incumbent/InsurTech will be tested in
significant ways, including:

  • Will financial support for innovation contract
    substantially as carriers move to protect liquid
    assets?
  • Will personnel investment in carriers’ efforts in
    effecting change be altered to better focus on customer needs and
    staffing challenges brought by the simple acts of existing in an
    uncertain world?
  • Startups that have not yet come close to revenue
    generation- will they be left to wither on the development vine as
    VCs reconsider asset allocations and reduced confidence in
    profitable scale up.
  • Will incumbents temporarily abandon new
    projects/innovations in order to concentrate on core
    functions?

It’s clear that in the current economy organizations will be
moving down the business version of Maslow’s Hierarchy of Needs,
from the optional to the basics, from discretionary spending to
conservation of customer base.

These and other strategy thoughts found their way across my feed
during the past week (with the author’s observations added):

  • Coverage for effects of pandemics have in general been excluded
    from cover for personal lines and commercial policies, physical,
    business interruption and liability covers. Simply too broad of a
    risk (akin to flood) for carriers to underwrite, and typically not
    direct physical damage.    Put the effects into a global context
    that affects almost every business and there will be push back. 
    Arbitrary actions on the part of carriers to afford coverage where
    there isn’t any has ramifications in uniform claim handling and
    fair practices- shouldn’t do for one that you can’t for all. 
    Unfortunately the insurance industry will be seen as the ‘bad
    guys’  for avoiding cover.  There will be efforts that are
    ‘fashionable’ to force coverage, for example the US
    state of New Jersey is considering suggested legislation
    that
    will require carriers in the state to provide coverage for the
    effects of the crisis.  Not the insurance commissioner, the
    legislature.  Not amending a condition like California’s
    commissioner did requiring full replacement payment for contents
    instead of actual cash value, but altering terms of the insurance
    contract after the fact, and outside the privity of contract.  No
    one wants customers to have unexpected costs of risk, but the
    legislators’ suggestion is fraught with many cascading
    consequences.  Those broad brush benefits reside within the
    legislature’s grasp, but not using insurance carriers as the
    delivery pool.

 

  • John Neal’s Lloyd’s of London office
    put out a request to its member firms
    for estimates of
    potential current and final losses from coronavirus. Certainly,
    that is good information to know, but it’s due time for Lloyd’s
    to be able to access those data with a few clicks of a mouse or
    database query.  Surely the firm’s exposure to probable maximum
    loss for a peril is a strategic data point to have at arm’s
    reach, and the unique nature of pandemic cover would suggest PML
    for any policies in force.  It seems the integration of Blueprint
    One
    cannot come soon enough for Lime Street.

 


  • Worldbank’s Pandemic bonds
    are on the verge of being
    triggered to benefit the poorest countries in the world. The
    primary criteria for triggering have been met, with proof of
    economic growth among the beneficiary countries remaining to be
    confirmed.  These bonds provide quick response finds for the
    countries, and have proven to be a successful alternate risk
    funding vehicle for capital markets.  This bond type and other cat
    bonds/ILS are a significant future source of risk financing, with
    reinsurers and bonding companies working in concert.

 

  • How insurers work has been shaken with the almost universal
    shift to remote work (work from home, WFH). Insurance consultant
    Alan Walker
    composed a fine list of questions within an article posted this
    week,
    “Covid-19: Implications for Insurers.”
    :

    • How will we plug the service gaps that will arise if a
      large proportion of staff falls ill at the same time?
    • How long will remote working be required?
    • Do any of our product wordings need to be changed to
      deal with the return of Covid-19 in future years, or possible
      future pandemics? (author’s note- perhaps it’s time for
      parametric cover to take a leading role in dealing with effects of
      broad effect perils/covers)
    • Do we need to reduce our reliance on people being
      co-located… and the degree of “remote working as
      standard?
  • Rosenblatt Securities published a short analysis of the

    Implications of COVID-19 and Market Disruption on Private
    Fintech
    , and while the report included many important concepts,
    there was a historic treatment in graphical form of the Correlation
    of S&P performance and private capital investment in the U.S.
    that caught the author’s eye:

S&P

This chart from the 2008-10 market recovery period indicates a
six-month lag between market recovery and investment level
recovery; the current outbreak is of such broad spectrum
and probable duration that investment recovery will take longer
than that.
  Consider the outbreak disruption to last
several months and investment confidence to take an even longer
period to come back, and strategy decisions made now are even more
important than in 2008.

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The post
COVID-19 supplants InsurTech – moving lower on Maslow’s
Hierarchy of Business Needs
appeared first on Daily Fintech.

https://dailyfintech.com/2020/03/19/covid-19-supplants-insurtech-moving-lower-on-maslows-hierarchy-of-business-needs/