Consensus: Invest

The digital asset class has grown into a $150 billion market. Enormous returns have been made in 2017. Despite hundreds of digital asset obituaries from the financial press, these asserts are here to say. Many smaller retail investors have taken advantage of this new opportunity, but the majority of sophisticated, professional investors are still on the sidelines.


That changes now.


CoinDesk is hosting the world’s first digital asset investor outlook event, Consensus: Invest, on Tuesday, November 28 at the New York Marriott Marquis. At the center of this asset class, Consensus: Invest brings 600+ professional investors, hedge funds, wealth managers, banks, and family offices together and offers attendees the chance to get connected with how to invest, store, trade and judge value in this new asset class.


Ultimately, attendees will walk away with a richer idea of where the digital asset market is headed in 2018.


Major speakers at the event include:


  • Michael Novogratz, formally at Fortress Investment Group and now CEO of Galaxy Investment Partners
  • Chamath Palihapitiya, CEO of Social Capital
  • Glenn Hutchins, Chairman & Co-Founder of North Island & Silver Lake
  • Joshua Brown, CEO, Ritholtz Wealth Management
  • Howard Lindzon, Founder & General Partner, Social Leverage


Breaking Banks listeners can save $400 on their ticket by using the code BreakingBanks at registration:

Initial Coin Offerings and Increasing Participatory Flow

Not everything that counts can be counted, and not everything that can be counted counts ~ Einstein

Gearing up for Sibos in Toronto this week I took some time to revisit Don Tapscott’s four principles for the open world (2012):

  • Collaboration
  • Transparency
  • Sharing
  • Empowerment

Perhaps the most powerful point he made was “this is not an Information Age but an Age of Networked Intelligence.”

Networked intelligence is alive, adaptive and always seeking new forms to in which to emerge. Today, networked intelligence is making itself known in the form of Initial Coin Offerings (ICOs). An ICO is a ( so far) unregulated means by which funds are raised for a new cryptocurrency venture. An ICO is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies. Cryptocurrency is still not mainstream and most people think of Bitcoin when they hear about cryptocurrency. In July 2017 there were over 900 cryptocurrencies available and that number is sure to grow exponentially.

The existentialist in my wants to establish a bit more context prior to moving forward. Let’s break down the etymology of currency:

currency. 1650s, “condition of flowing,” from Latin currens, present participle of currere “to run” (see current (adj.)); the sense of a flow or course extended 1699 (by John Locke) to “circulation of money.”

Currency = to flow! Ideas need momentum. Start-ups need momentum. The predominate funding models are full of regulation and bureaucracy that are the very antithesis of flow. I remember hearing Kiva’s Premal Shah talk about “codified lending” back in 2012 where people were given loans not by their credit score but by their social score. If peers supported the endeavor and expressed confidence — one could secure a Kiva loan. That was disruptive. ICOs are disruptive in a similar way. When individuals appreciate and support an endeavor, an idea, a cause — they can in fact participate in breathing economic vitality into that endeavor, idea or cause by purchasing allocated tokens for the designated compaign. In and ICO one doesn’t just affirm an an endeavor, idea or cause — one becomes an economic engine by way of token participation. The deployment and aggregation of participation happens at an unprecidented pace and even more importantly it is distributed. The reason I selected the spider web with dew as a header for this article is the way it expresses distribution.

The ICO landscape is gaining traction which also means it is soon to be regulated. To keep up with new emerging patterns in this “flow” the voices I encourage you to track include:

Kenzi Wang, Co-Founder of Superbloom Capital

George Burke and Chandra Duggirala, Founders of Aqua Foundation

David del Ser the Director of Inclusive Fintech, and of the Catalyst Fund from BFA.

You can listen Brett King’s recent program “ICO’s are Hot! Can they include more people in investing?

What makes me most excited about the ICO wave is what is possible for the unbanked. According to Kosta Peric, our current finacial system excludes 40% of the population. I would much rather that those who are gaining economic access for the first time to be introduced to a participatory model (ICO) vs. an extractive model (VC).

What makes me the most concerned about the ICO wave is the ways in which participation can be commoditized. David del Ser and I are on the same page — we need to ensure we create scenarios for both optimism and dystopia. Every system has unintended consequences. This is a good time for Foucault: you may know what you do and why you do it, you don’t know what what you do does. Justin Timberlake was in the movie In Time which was a dystopian movie about the value of incremental time, a person was valued by seconds. There is a fundamental desire to quantify every aspect of running a platform. Not everything that counts can be counted, and not everything that can be counted counts, classic Einstein. Even with new technology — we are not allowed to buffer the intangible. The quantifiable “awe” still aludes us and for that I am happy.

In the rigor,


2016: Fintech’s Amazing, Stupendous Year

Reading Facebook news or Twitter feeds you’d have to conclude that 2016 was a pretty awful year, but by all accounts, Fintech had easily its best year yet. In 2015 we saw a net investment in Fintech ventures that has been estimated at $22.3[1] Billion in total, but by January 2016 some $7 Billion[2] had already been invested into the sector globally. While a Series A and Series B crunch took hold in the second half of the year post-Brexit and pre-Drumpf, we know that 2016 saw similar net investments in Fintech to 2015. This all means that since 2010 more than $60 Billion of venture capital and private equity has made its way into the sector. Roughly in line with what US banks have spent on digital transformation over the same period. PWC estimates Fintech investment will exceed US$150 Billion over the next 3-5 years. That’s putting aside the fact that bitcoin is hovering around $1,000 again too

More importantly, we’re now seeing a clear trend that Fintech’s are deploying capital much more efficiently than their incumbent counterparts, a fact borne out by what has been achieved by the estimated 14,000[3] Fintech startups globally in the last couple of years. Here are a few examples:

The 800 pound Unicorns

In the US we talk about FANG stocks (Facebook-Amazon-Netflix-Google) as the foundation of NASDAQ’s growth curve coming off the Global Financial Crisis, but in China it’s all BAT (Baidu-Alibaba-Tencent). The reality is that while the US has given birth to more than 20 Fintech Unicorns, compared with just a dozen in China, the top 6 Chinese Unicorns are worth 3 times their US contemporaries combined. This is largely due to the fact that Fintech in China is outpacing the rest of the globe in terms of consumer impact. How do we know this to be true?

Ant Financial, the holding company that incorporates AliPay, raised $4.5 Bn at a $60Bn valuation in April of 2016, that’s just a shade under the $68Bn valuation of Uber’s last funding round. That puts Ant Financial’s market valuation at almost 3x that of Deutsche Bank. In fact, at one point earlier in 2016 Ant Financial was worth 4x what Deutsche Bank was worth. Think it’s overvalued?

Let me give you two reasons why it isn’t.

Firstly, Alipay is the world’s largest payments network by far. To illustrate, Visa’s network peaked at 9,000 transactions per second in 2015, Alipay at 87,000 transactions per second. Alipay is now available in 77 countries globally, and that is expanding rapidly. On November 11, 2016, Alipay settled RMB 120.7 billion (USD 17.8 billion) of gross merchandise volume (GMV) through it’s network – 82% via mobile handsets. Apple Pay hit $10Bn in total transaction volume for the year in 2015. Considering Visa’s market cap is $181Bn, Alipay looks like a bargain right now. The mobile payments market in China exceeded US$500Bn in 2016, and it’s growing at 40-60% right now. Ant Financial and Tencent claim 70% of that market today.

Secondly, Alipay has demonstrated better than any other company in the world, with the possible exception of Starbucks, the ability to leverage mobile for deposit taking. In 2015, Alipay through their Yuebao wealth management platform, managed $96 Billion in AuM – all via mobile and online channels. Alipay has no branches.

This has spurred a mobile deposit war in China with Tencent and Baidu launching competing initatives. WeChat’s online savings fund raked in $130m just on its first day of operation. However, Alipay clearly set the benchmark and established the market. The downside for banks is that the with 20% of the Chinese deposit market shifting to mobile providers, cost of liabilities in the mainland banks has risen 40%.

Dramatic efficiencies

Fintech banks like Atom, Simple and ourselves at Moven, are now consistently able to acquire customers at 1/20th of the cost of chartered banks who rely on branch networks[4]. Alipay and Wechat are acquiring deposits at 1/100th of that of US banks.

Name a major retail bank that has been able to build a middleware and cloud-based core system, deploy mobile, wearable and online channels, and acquire hundreds of thousands of customers for under $25m consistently.

Simple, Moven, Atom and Number26 have between them less than 700 employees, but have successfully deployed retail banking capabilities in 23 countries.

How long before the market recognizes that Fintech’s are simply more efficient at doing banking than listed banks, especially when it comes to utilizing technology for market growth and customer acquisition. The Neo-Banks and tech payments networks have proven you just don’t need branches to acquire customers or deposits, and traditional retail banks won’t compete on the same basis.

Not just for Silicon Valley, not just retail

Whether M-Pesa in Kenya, B-A-T in China, Xero in New Zealand, in India, SoFi and Funding Circle for SMEs, Transfer Wise, Klarna, Square, iZettle and Stripe in payments, Lufax, CommonBond, Prosper, Lending Club and Jimubox on Lending, the reality is that Fintech Unicorns are tackling every part of the financial services sector imaginable.

The 80 odd Fintech unicorns on the planet have a combined market capitalization of more than $200 Billion at the end of 2016, that puts them pretty close to level pegging with ICBC, the largest bank in the world. Considering we added 36 new Fintech Unicorns in 2016 alone, you can expect that number to grow.

What I’ve seen in 2016

Personally, 2016 was a monster year for myself and the teams at Moven, Breaking Banks and the team that supports me on the speaking circuit. I launched my 5th book Augmented: Life in the Smart Lane in June, and started BANK 4.0: Embedded, Ubiquitous, Extinct. Augmented hit #1 in a bunch of non-banking categories at launch, including Robotics, AI, Biotechnology, and Computing. The book achieved bestseller status within the first week of launch in more than a dozen countries. Bank 3.0 remained the #1 selling English language Banking book in China for the 3rd year in a row too.

I visited 25 countries in 2016, a reduction of about 22% based on 2015, but still more than 72 cities, and almost 200 sectors, most long-haul, eclipsing a total of 275,000 air miles. Or enough to get me to the moon conservatively. Most of that was a combination of speaking and Moven related travel, but I can say that the speaking business hit the US$1m gross fees level in September this year, and with less speaking days than in 2015. But I did get to do Lagos, Budapest and Prague for the first time.

Breaking Banks continues its 3-year unbroken record as the world’s first and the #1 Fintech Radio show and Podcast in the world. While others have recently claimed that their podcast has hit #1 on iTunes, BreakingBanks has cast a much broader distribution net and iTunes only represents about 17% of our total traffic. Our WVNJ 1160 AM band listenership in New York alone consistently outperforms iTunes on listeners, and of course, that doesn’t include syndication across American Banker, Asian Banker Journal, Bank Innovation, BankNxt, Next Money, Soundcloud, Google Play, Stitcher Radio, Podcaster, and many other non-iTunes channels. BreakingBanks exceeded 300,000 listeners in September and October, or about the annual listenership of our nearest global podcast competitors a16z in #2, Wharton Fintech in #3 and 11-FS in the #4 slot. BreakingBanks airs live in 76 countries, and is downloaded in close to 150 countries consistently, also making it the #1 Business Show on the Voice America network – the Internet’s longest running talk radio media outlet. We even launched a spin-off podcast, with our host Sam Maule, called Fintech5

On the Moven front, we launched in Canada with TD to critical acclaim under the TD MySpend moniker (and with a #1 slot on the App store). TD now boasts over 800,000 registered users, a result that exceeded target projections by almost 400%. Westpac New Zealand launched version 2 of the Moven service in the form of CashNav and got to 90% of their mobile user base in just 6 weeks. TD performance data shows that 30% of TD’s customer base using the app has reduced their spending by around 10% solely because of MySpend. This is the first time a so-called PFM tool has produced such significant savings across a broad cross section of customers, and certainly the only time via a mobile app. 1 million users are live with Moven in 3 countries, and in 2017 we expect to hit somewhere between 5-10 million app users in at least 6 countries.

With Moven smart savings launching in multiple markets in 2017, we expect to be generating world-class mobile cross-sell numbers and deposit generating behavior at a fraction of typical acquisition costs.

In the last quarter of 2016 Moven completed three major commercial deals that fund us at least for the next 2 years, and gives us line of sight to $20m in revenue for 2017. A 300% increase on our performance this year. It was a great way to finish out the year.

A hard act to follow

Personally, even though I was shocked at the Drumpf election and Brexit results and was, for a time, considering moving to Mars with Elon Musk… The reality is that in terms of Fintech and for me personally, I just don’t think we all could have achieved much more in 2016 than we did. 2017 has a tough act to follow, even with blockchain and AI developments.

[1] Source: Accenture Estimate – April 13, 2016

[2] Source: FT Partners – Jan 30, 2016

[3] Source: Various

[4] Typical range in cost of acquisition for a neo-bank is $5-40/customer, whereas the US average is $272/customer and the Big 4 generally pay $350/customer+.

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