A library of snippets
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A corrupt law official was jailed for six years for illegally using Crown Prosecution Service computers to slip information to organised crime gangs.
Paralegal Rachel Simpson, 39, made repeated searches on CPS and crown court computers regarding cases she was not working on – to find vital information for the criminals.
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Actually, maybe there is a use of a virtual bank branch. Until late 2022, Bank of America branch staff would learn how to handle a potential armed robbery through books and videos. As for today, however, they are immersed in a 3D VR environment in which a gunman aims a weapon at them or hands them a threatening note or whatever. The software measures people’s and provides analytics for instructors to use in targeted coaching to remain claim and make the right choices. For their safety and the safety of others. Similarly, when I was last in Canada a friend who used to work in the far north told me that her “bear attack” training (I’m not sure what it called, but they are trained to defend themselves from bears, not to attack them) had been done in VR.
The White House recently released the United States Government National Standards Strategy For Critical And Emerging Technology (May 2023) to set out their eight key areas where
One of these was Digital Identity Infrastructure and Distributed Ledger Technologies, which the document say “increasingly affect a range of key economic sectors”. While I am second to none in my increasingly strident calls for a digital identity infrastructure, it is not entirely clear to me why this has been conflated with shared ledgers (I prefer to use the term “shared” because it suggest purpose while “distributed” implies technical architecture), which led to media reports about the U.S. government wanting to standard “blockchain”.
I always thought that “unicorns” was the wrong name for fintechs that reached a billion dollar valuation. After all, unicorns do not exist (sorry kids) but such fintechs do. They are not mythical, but they are rare. What’s more, they seem to be getting rarer. We probably should have called them fintech red wolves or fintech Amur leopards.
Despite the obvious downturn in parts of the economy, fintech is in reasonable health. While global fintech funding fell by almost a half last year, it was still a fifth of of all funding globally, which would see to indicate that investors remain positive. A CB Insights recently found that two of the largest global VC firms (Sequoia Capital and Andreessen Horowitz) actually backed more fintech companies in 2022 than any other category, putting around a quarter of the total investments into fintech startups.
This doesn’t mean that fintechs are heading for the stratosphere though. However, there are signs that some startups may be overvalued. In recent months, several high-profile fintech companies have seen investors mark down their investments. In April, Schroders devalued its stake in Revolut by about 46%, while Allianz is understood to be selling its holding in N26 at a $3 billion valuation—a steep discount to the $9 billion price tag the company picked up in 2021. While VC funding pushed up valuation in recent years, as of the first quarter of this year the the median pre-money valuation for European fintech startups stood around €19 million (according to PitchBook data). So far this year, this increase has been consistent across all stages, with the notable exception of venture growth, which saw a decline of almost two-thirds.
Valuations are, some would say, becoming more realistic. This can be seen from the increasing number of fintech deals but the falling multiples across the last year. For example, the median revenue multiple range as of Q1 2023 was 1.6x – 5.5x, which is almost a half down on the 2021. Observers seem to be expecting more down rounds, or at best flat rounds, as companies who raised money in the good times look to scale.
These broad surveys correlate to recent experiences. As someone who is privileged to sit on some boards and advisory boards as well as advise a small venture fund, I can say that broadly speaking good startups are still getting investment — in fact in the last few months I’ve made a couple of pre-seed investments myself — but that scale-up money is getting harder to come by. Getting to that billion dollar valuation is going to take a fair bit longer for many good companies.
Where is the sector going next then? Well, while the payments space attracted $53 billion, the largest share of funding in 2022, it was actually regtech that was the fastest growing segment. Investment almost doubled to almost $19 billion and my sense of the market is that this will continue to be the focus. When you take a hard look at costs and benefits in financial services, the sexy front-end apps may attract the attention (and who doesn’t think Apple is doing some amazing things) but it is the back-end compliance that is a huge and growing boat anchor on companies across the sector. A good regtech idea will save companies a lot of money and that makes it a priority.
One thing that might help tilt the cost-benefit scales around compliance is digital identity. Kirsty Rutter, the Fintech Investment Director at Lloyds Banking Group in the U.K. points that as a specific area where there may be growing opportunities in 2023. Numerous fintech companies have emerged working to tackle different aspects of the identity challenges across identification, authentication and authorisation and digital onboarding accelerated throughout the pandemic but so did fraud, increasing the pressure for co-ordinated national and international action here. As she says “our digital identity has become our most valuable digital asset” and so providing tools for the banks to safeguard that asset look like serious business.
In the long run, what does this mean? There is no need to despair. If you have a good idea in the fintech space, go for it. A recent Boston Consulting Group report (Global Fintech 2023) projects fintech revenues growing sixfold from $245 billion to $1.5 trillion by 2030 and suggests that the sector as a whole, which now has a 2% share of the $12.5 trillion in global financial services revenue, will account for 7%, of the total and that fintechs will constitute almost 25% of all banking valuations worldwide by 2030. There won’t be an extinction. There will be more fintech red wolves.
The Bank for International Settlements (BIS) Innovation Hub Nordic Centre has published a comprehensive handbook exploring key aspects of how central bank digital currencies (CBDCs) could work for offline payments, by which they mean payments made without being connected to the internet, either temporarily or because of coverage limitations. The handbook, produced as part of the BIS Project Polaris, intends to help central banks considering the potential implementation of CBDCs with offline functionality to take into account a complex matrix of issues including security, privacy, likely risks, the types of solution, their maturity and applicability, and operational factors. The handbook, compiled in partnership with Consult Hyperion (disclosure: although I had nothing to do with this project, I am a Director of Consult Hyperion) addresses these issues as well as objectives for resilience, inclusion, cash resemblance, accessibility and other desired attributes.
At the same time, a survey by Kantar for the European Central Bank (ECB) revealed that Europeans perceived offline payments to be the most innovative digital wallet feature with its use in specific situations, e.g. in areas without internet coverage, when mobile data isn’t available, or when using flight mode.
(Despite this, most participants expected they would not often use offline payments, which tells me is that neither the pollsters nor the public understood what offline payments are for or how they will be used at population scale, but that’s a different point.)
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Why it matters: More businesses are eschewing cash — a trend accelerated by the pandemic — but states and cities are passing laws banning them from doing so, in deference to people who don’t have bank accounts or credit cards.
Handling cash is also a hassle for retailers, with problems including theft and constant runs to the bank.
Driving the news: Reverse ATMs — also known as cash-to-card kiosks — are quickly being installed in all manner of venues that want to go cashless without flouting the law or turning away the “unbanked,” who represent 4.5% of Americans, per the FDIC.Amusement parks, casinos and sports stadiums are taking the lead.
Reverse ATMs have been installed at most Major League Baseball and National Football League ballparks, plus cashless attractions like Hersheypark, Six Flags and many waterparks.
“Cash digitization” is the term that’s catching on for converting cash to electronic currency — which is increasingly necessary as transit systems and other public accommodations also go cashless.From Cashless stores accept money, dispense cards with “reverse ATMs”:
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What happened to Cristina – a Financial Times technology correspondent and a friend and former colleague of mine – is what TikTok and its parent company, ByteDance, have consistently denied happens at all, which is why she has decided to tell BBC News about it. TikTok has confirmed members of its internal audit department looked at the location of Cristina’s IP address – the unique number of a device – and compared it with the IP data of an unknown number of their own staff, to try to establish who was secretly meeting with the press. They “misused their authority” to do this and were acting unauthorised… Cristina’s TikTok account was on her personal mobile handset – and in the name of her cat, Buffy. Her own name and occupation were not mentioned in the bio.
From TikTok tracked UK journalist via her cat’s account – BBC News.
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Some 19 per cent of UK adults surveyed by finder.com said they would “consider getting financial advice” from ChatGPT, while another 8 per cent say they had already taken financial advice from the chatbot.
From ChatGPT ‘portfolio’ outperforms leading UK funds | Financial Times:
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However, he said research in 2021 indicated that half of UK investors used social media for investment advice.
“Would you rather get your advice from an unqualified TikTok star or AI that is capable of processing millions of data points from around the web and giving tailored advice?”
From ChatGPT ‘portfolio’ outperforms leading UK funds | Financial Times:
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In a change to the online safety bill, video footage that shows people crossing the Channel in “a positive light” will be added to the list of illegal content that all tech platforms must proactively prevent from reaching users. The culture secretary, Michelle Donelan, said that posting positive videos of crossings could be aiding and abetting immigration offences.
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As we look into the payments space five to 10 years from now, what are you most excited to see?
The biggest one would be the tokenization of everything
From Mastercard Chief Innovation Officer on the Reimagining of Money:
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Snippings