Investment vs Bank partnership tech, Artificial Intelligence sees and speaks, Bitcoin ETF fails but price shrugs it off — Autonomous NEXT

Hi fellow futurists -- we are trying a new format this week. Deeper analysis upfront on most important topics, and faster treatment of the coverage universe. If you enjoyed this newsletter, please share with others!

Lendit Partnership Takeaways - Investment Tech Lags Behind. Autonomous moderated a panel on building next generation investment portfolios at Lendit, thinking through how products like markeplace loans (NSR Invest), crowdfunded real estate (Realty Shares) and alternatives (Artivest) should be delivered in a digital wealth world. Our takeaway was that the products themselves are familiar -- perhaps more precise using underwriting AI, or more efficiently executed using middle office automation -- and they should fit into the existing advisory model. Firms like Lending Club made the point at the conference that their loans should be moved out of the "Alternatives" bucket into the "Fixed Income" bucket, looking for boring vanilla legitimacy to bestow upon them AUM.

But at a panel on banking and lending partnerships (think Ondeck/JPM, Kabbage/Santander), the story was a bit different. The tone was more gushing -- Ondeck has reduced the user conversion experience from marketing to product to 6 screens for Chase. Kabbage took a 3 week process and can do it in less than a day using smart underwriting and automation. You just don't hear this yet about FutureAdvisor, SigFig or AdvisorEngine. My takeaway is that we are yet to see real tech innovation in the manufacturing side of asset management. Distribution efficiency is not enough for massive distributors to appreciate a technology.

Bitcoin ETF fails, Price Shrugs it Off. The SEC has taken a long and hard look at the proposed Bitcoin ETF, backed by Cameron and Tyler Winklevoss, and killed it. The pair had tried to bring the ETF to market in 2013, and have been embroiled in process, examination and delays until now. The key reason for striking down the application for the ETF is that the markets on which the underlying commodity trades must be regulated. The SEC has not closed the door on the possibility that some day Bitcoin will be regulated and a market of a "significant size" will develop, but today the digital currency is not mature enough. 

This response has little to do with Bitcoin and its maturity, but rather with the social implications of an independent digital currency. By definition, Bitcoin is anti-sovereign, allergic to regulation by a particular nation-state, and requiring no government backing. Its appeal to many, particularly in the developing world where institutional structures are frail or corrupt, is independence from traditional financial and political powers. Therefore not allowing a state-sanctioned amplifier, like an exchange traded fund structure meant for American consumers, is a philosophical disagreement, not a demerit. We will continue to see public cryptocurrencies develop outside of accepted political phenomena, funded by Initial Coin Offerings and not traditional investors, meeting continued resistance from powerful sovereigns. The price of Bitcoin wiggled a bit (technical term) but did not collapse on this development, because it doesn't need it.

Source: SEC

Artificial Intelligence Sees and Speaks. Two key developments in AI last week made us feel human and redundant. First, Google Cloud is now able to see the objects in videos and categorize them using neural networks. We are familiar with this technology as facial recognition (or cat/dog recognition). But to do this process on videos is much more computationally intensive. Imagine digitizing and searching all recorded video activity -- tons of usecases in insurance, intelligence, investing, and elsewhere, all powered by Google APIs.

Second, Baidu has created project Deep Voice, which is a text-to-speech system built, again, on neural networks. This is another step towards the demise of screens and the rise of conversational interface. Since this is AI, it can speak in any learned language and can take abstracted software and customize to the right user. Audio synthesis in real time from text is a game changer, and is bad news for the financial services call center providing customer service. 

Source: Google, Techcrunch

Deeper curation of our themes is below, and this week’s artist excerpt is Claude Monet. Thanks for reading!

Best,

Lex Sokolin

Featured

• Autonomous Research launches fintech initiative, highlighting the digitization of $6.5bn of industry revenue.
• Check out our new website at next.autonomous.com with an evolving service offering for institutional investors and C-suite execs.

#Roboadvisor 

• Merrill suggests it may reverse course on commissions. Will the chaos over the DOL fiduciary rule hurt consumers and roboadvisors as Merill changes its mind?
• Motif's Robo Is More Than a Values-Based Approach To Digital Advice. Is adding stock-level customization to the roboadvisor idea enough for Motif to justify its valuation and remain relevant in the face of $8 billion Betterment?

#Blockchain 

• State Street Wants to Monetize Blockchain With Artificial Intelligence. How can smart contracts on distributed ledgers go beyond automation and into actual decision making?
• Blockstack Launches Decentralized Internet Platform on Amazon's AWS. Will Amazon compete with Microsoft's backing of Ethereum by focusing on other ledgers?

#ArtificialIntelligence

• What does Goldman Sachs say Kensho allows it to do that's worth the $500 million valuation? Test institutional sales/trading ideas cheaply, as we learned at Lendit.
• Scientists Want to Build a Super-Fast, Self-Replicating Computer That "Grows as It Computes". Is it a good idea to put software code into DNA?

#Neobanks 

• USAA backs digital identity firm ID.me to the tune of $19 million. Can identity-as-a-service turn (what some would say are) banking dinosaurs into efficient neobanks?

Financial #APIs and Banks-as-a-Service

• Dwolla Moves Same Day ACH Out of Pilot, Now Available to Access API Partners. Are data aggregators (Plaid, Quovo, Yodlee) across payments, banking and wealth management converging into a single type of solution? 
• Envestnet-Yodlee, Finicity and others reach beyond wealth management. Can underwriting be the killer use case for data aggregation, per Kabbage?

#Chatbots & Voice

• Chatbot that overturned 160,000 parking fines now helping refugees claim asylum. Is the future of assistants not just conversation but action, especially with social impact?
• In a data point that would suggest YES, a Lendit panel on AI featured Trim, a financial assistant that runs out and negotiates down or cancels your unnecessary subscription fees. Start building your army of robots, people.

#Regtech, #Crowdfunding

• UK and Japanese financial services regulators to encourage sharing regulatory best practices. Why does the US not have its own regulatory sandbox, and how likely is it that it will be at a competitive disadvantage as a result?

#Bitcoin & Cryptocurrency

• Monetary Authority of Singapore eyes more efficient way to settle cross-border payments. Is this the first step to Singapore-issued digital currency?

#Insurtech

• The Hanover launches corporate innovation initiative. How will the insurance giant manage innovation and leverage partnerships and licensing arrangements?
• Two points on insurtech from Lendit: (1) Brendan Dickinson of Canaan Partners thinks that although insurance has been historically sold, not bought, that will change with digital distribution to Millennials, and (2) insurance companies are finally making purchasing decisions with vendors and investments, says Maria Gotsch of Partnership Fund for New York City.

#AttentionEconomy

• Snapchat, for people who don’t understand Snapchat. If you're like us you still ask -- what is Snapchat really about and how do people use it?
• Forget Spotify for News. Let's Fix the Real Problem. What does media abundance, rather than scarcity, do to traditional business media models and how to do we deliver unique value to clients?

#VirtualReality & #AugmentedReality

• Magic Leap | Demos: Waking Up with Mixed Reality. Trust us, you really have to see this futuristic video. Will this mixed reality interface be a new operating system for the world?

#InternetOfThings

• Jaguar launches in-car payments at Shell gas stations. Will the car become a new operating system capable of payments, banking and speech, supplanting mobile and desktop?

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This content is not investment research, investment advice and is not intended to lead to a transaction (see disclosure).