Fintech Digest from Autonomous ?NEXT -- Rise of Crypto Capital; Virtual Assistants: Chase, Finn or Facebook; Insurtech VR vs AI

Hi fellow futurists -- here are our top 3 favorite thoughts. 

Rise of Crypto Capital.  

An alien spaceship has landed on Earth. Its technology is superior to ours. Its pilots speak a different language. Do we fire our regulatory weapons at it? Do we build bridges and find ways to adopt its technology? Do we berate it for being alien? Or do we think it is a hoax, operated by some Wizard of Oz behind the curtain? Such is the entry of the crypto economy into our financial system. We have been tracking closely the response of the financial industry, and to many participants (120 crypto funds in fact), this spaceship is a savior that helps them ascend to another plane (i.e., not be destroyed by passive ETF roboadvisors).

Financial infrastructure is maturing. First data point is LedgerX, an institutional derivatives platform for crypto currencies regulated by the U.S. Commodity Futures Trading Commission that has completed swaps and option trades with exposure over $1 billion in a single week. CBOE and Gemini will do the same. Second data point is Overstock and its announced ICO for tZero, an alternative trading system approved by the SEC, leading to 150% appreciation in its public equity. Remember also the planned $50mm IPO for NexBlock Global, the Tapscotts' liquid venture crypto fund. Third point is Airswap, the decentralized exchange ICO coming out of ConsenSys that has just raised $36 million to move trading from a central counter party to smart contracts themselves. There are other decentralized efforts as well. And last, CoinList has officially sprouted out of AngelList and will champion the SAFT Agreement and crypto as venture capital, rather than day trading.

The work is of course not done. One open question is how to build traditional FIX connectivity into the new ecosystem and plug it into existing trading workflows. The lack of such infrastructure means plenty of room for automated arbitrage bots and dedicated AI/Quant crypto funds, of which there are at least 13. Exchange regulation and common data standards are yet to evolve, and projects like Messari will lay the groundwork for open-source financial data. Valuation frameworks are still speculative, but thinking from Vitalik, Brendan Bernstein, Evan Van Ness, and Chris Burniske help move the conversation forward.

Source: Autonomous NEXT

Virtual Assistants: Chase, Finn or Facebook? 

Financial virtual assistants. They will know everything about us, give us sage financial advice, and implement everything through financial products available via open APIs. Roboadvisors and microinvesting companies have pointed the way, but these FVAs will be far more powerful and embedded into the core of our daily life. So who will be the winner? First contender is non other than JP Morgan, leader in our Bankosaurus innovation analysis and heavy investor into Fintech. The banking giant launched a neobank app called Finn, which is targeted at Millennials. While the design may be new, the idea has been pretty well established before by companies like Simple (not to mention Mint in 2007) -- a Personal Financial Management tool. The idea could get incumbent traction by default, like Zelle, but doesn't seem particularly thought leading.

Speaking of Finns, the second alternative to win the FVA market is a software like Finn.ai, which is a chat-based AI-powered private label software that banks can deploy to interact with their customers. Not just interact, but check balances, move money, and pay bills. The company raised $3mm and launched a partnership with ATB financial. One day it may live inside all other chat and voice bots, like Facebook and Alexa, or connected in a decentralized manner through something like Hut 34.

Speaking of Facebook, the tech giant is in a prime position to own the virtual assistant market more generally, and also control the feature set of financial products that access their customers. McKinsey just pointed out that big tech is a bigger danger than Fintech, something we highlighted in the Future Vision analysis. Two examples of Facebook following an Amazon strategy are (1) integrating Visa's tokenized payments services into the platform for digital payments and (2) lending made available to small businesses on the Facebook platform for up to $500,000 in growth capital via digital lender Clearbanc. Finance is a platform enabler in this equation, not a standalone product pushed at strangers. The cash advances are often spent back on Facebook advertising, which provides insights into how well businesses connect with customers, which could further inform underwriting risk. We still need the manufacturer, but they are far less powerful.

Source: Chase, Tearsheet

  Insurtech Virtual Reality vs Machine Learning. 

For something even more futuristic, check out this news of Farmers Insurance using virtual reality to train its property claims representatives for 500 scenarios of damages and customer interactions. The course is about 15 minutes long, rendered in video game engine Unity with randomly generated layouts, can be watched by other reps and managers on a big screen, and leads to a performance assessment on completion. 

This year, 50 reps will be trained using the simulation, growing to hundreds or thousands in the years to come. You can see the hyper-realistic rendering in the linked image. Other enterprise examples of using VR to simulate human experiences and create learning outcomes have popped up in medicine, such as surgical training, and education. 

What's curious, however, is that we are using machine simulations to enable human learning. At the same time, we are using real world imagery to facilitate machine learning, for essentially the same job. See for example this article, which describes how 70% of auto damage claims could be analyzed and estimated by machine vision by insurtech Tractable. Race between the AIs and the transhumanists in on!

Source: Farmers, Fortune, Tractable

Thanks for reading!

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