Category Archives: Technology

Fintech & KYC (Know Your Customer)

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Each thematic area of the fintech ecosystem is important, but I believe that infrastructure will determine the fintech industry’s future.

Data is becoming more important every day, as is privacy. In addition, it is not possible to build a system and expect people to use it without proper security measures in place. Enhanced encryption and speed of execution is key for infrastructure.

The most challenging part of the job is getting through the ‘know your customer’ (KYC) process.

According to a recent Thomas Reuter survey, the average bank spends GBP 40 million a year on KYC compliance and customer due diligence 

Requests for an excessive number of documents and a lack of understanding of the client background from the KYC team gives out the wrong messages to new clients and means they are frustrated in their business relationship with the bank from the very start.

Fintech, with the help of blockchain technology, is a great opportunity for clients and financial institutions.

It currently takes a considerable amount of time and money to perform the necessary due diligence on people and companies.

An open source ledger, where data on HNW individuals and companies can be collected, verified and constantly updated will not only help financial institutions but also the client, as they will not have to give the same documents to each bank in which they want to have an account.

It will increase efficiency, reduce costs and make the client’s experience smoother. The idea is not particularly new and there are some companies which are already working in this space.

During the recent Singapore Fintech Festival in November 2016, IBM announced a blockchain project with Singapore fintech startup KYCK! to help enable financial institutions to have a more rapid on-boarding process

Another company, Slimpay, is also exploring opportunities in this space. It has broken down the process into steps, such as as ‘Paper KYC’ and ‘Internet KYC’ to help financial institutions.

In addition, a group of entrepreneurs have founded ComplyAdvantage in the United Kingdom with the aim of gathering better anti money laundering insights and helping banks to deal with the due diligence of customers.

All the best from Singapore.
Sukru Haskan
Twitter: @sukru_haskan

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Lattice80 – Largest Fintech Space

The world’s largest fintech hub opened in Singapore on 10 November and I was honoured to be at the launch.

Singapore’s deputy prime minister and chairman of the Monetary Authority of Singapore, Tharman Shanmugaratnam, was the guest of honour at the opening ceremony. His speech was full of insights regarding the stance of the Singaporean government and the regulator towards fintechs.

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The Singapore government fully supports the fintech industry and sees fintech as complementary to the banks in the financial industry, rather than a direct competitor.

Besides that, the Singapore government fully acknowledges that there will be a lot of fintech startups going bust, but it is vital to create the right ecosystem to create a fintech unicorn from Singapore.

Lattice80 is located at the centre of the central business district of Singapore and occupies two floors at the moment and plans to host 350 people in the coming week/months.

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Compared with its peers The Floor in Israel and Level 39 in the UK, it is now officially the largest fintech startup space.

Singapore Fintech Association and Finlab are already in the space, which shows the strong commitment to create the right ecosystem.

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It was established by the Marvelstone group founded by a Korean entrepreneur and hedge fund manager, Joe Cho.

It is a great step for Singapore to fully leverage its well established common law system with its highly skilled labour force. There is no doubt that Singapore will be playing a key role in fintech space.

Personally, I am thrilled to enrol on the MIT Fintech Course, which will take place during the next 12 weeks. It will kick off on 21 November.  It is not only a regular academic education, but importantly the course will need students to participate in business planning of a fintech idea to pitch to venture capitalists.

I look forward to sharing my experience about the course within the next weeks.

All the best from Singapore.
Sukru Haskan

Twitter: @sukru_haskan

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Fintech idea #2: SmartBonds

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Last week, I published the deposit shifting fintech idea and I got quite a lot of positive and negative feedback as to why it would work or not.

It is always great to get some feedback.

This week, I will publish another fintech idea which specifically targets retail and low end HNW clients.

As many of you know, USD denominated international bonds have been quite popular for the last few decades as interest rates were declining steadily and these bonds were a great source of income for investors.

Although with interest hikes in the coming years, the trend will not be that sexy anymore, there will always be an interest in the bond market since it provides a fixed income, unlike the uncertain and highly volatile equity and commodity markets.

These markets are not easily accessible by retail investors since many of new issue require a minimal nominal investment of USD 200K. This is a substantial amount of money and it keeps many investors out of this market.

SmartBond can solve this problem by aggregating demand and it can help retail investors to have access to international bonds.

Since there are many bonds in the market, SmartBonds can market bonds in a Groupon fashion (an e-commerce site which aggregates demand for specific products for a certain period with some discounts to its customer by achieving economics of scale). SmartBond can collect bond orders from retail clients and, once the minimum order amount is reached, it can trade in the market and allocate accordingly after the trade.

SmartBond will be a full pledged technology company like Groupon and it will not recommend any specific bonds to buy or sell. From this point of view like SmartDeposit, it should not be regulated as a financial institution.

Clients may choose to keep their bond holdings in any bank available through the SmartBond platform or in an institution of their own choice.

One may ask what would happen when the client wants to sell their holding since they will again need a minimum order amount of a nominal 200K. The same logic will apply and there will be sell platform along with a buy platform and once the order is aggregated, it will be executed.

In the beginning phase, it will not be possible to include all the bonds available for trading. According to the demand from clients, the platform can be enhanced and this could be a very profitable business if it reaches enough volume quickly.

Please continue to post your positive/negative feedback through my blog, twitter or email.

I will continue to write my ideas in the coming weeks.

All the best from Singapore.

Sukru Haskan
Twitter: @sukru_haskan

 

 

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Book Review: Sapiens by Yuval Noah Harari

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A couple of months back, I published my next five books to read and one of them was Sapiens. Since this week marked Chinese New Year (Gong Xi Fa Cai!), it was a great opportunity to read Sapiens over the four-day break. I will share some of the author’s own sentences with my own comments and I hope that you find it interesting enough to read the whole book.

The author, Yuval Harari, divided the book into four different parts according to humankind’s developments: the cognitive revolution, the agricultural revolution, the unification of humankind, and the scientific revolution.

“The cognitive revolution kick-started history about 70,000 years ago. The agricultural revolution sped it up about 12,000 years ago. The scientific revolution, which got under way only 500 years.”

The author argues that prehistoric humans were insignificant animals with no more impact than gorillas, fireflies and jellyfish, and our closest living relatives include chimpanzees, gorillas and orang-utans. Legends, myths, gods and religions appeared for the first time with the cognitive revolution.

The transition to agriculture began around 9500–8500 BC in the hill country of south-eastern Turkey, western Iran and the Levant. Yuval believes that the agricultural revolution was history’s biggest fraud since the average farmer worked harder than the average forager, and received a worse diet in return.

He names this fraud as the luxury trap by stating that, “The pursuit of an easier life resulted in much hardship, and not for the last time. It happens to us today. How many young college graduates have taken demanding jobs in high-powered firms, vowing that they will work hard to earn money that will enable them to retire and pursue their real interests when they are 35? But by the time they reach that age, they have large mortgages, children to school, houses in the suburbs that necessitate at least two cars per family and a sense that life is not worth living without really good wine and expensive holidays abroad. What are they supposed to do, go back to digging up roots? No, they double their efforts and keep slaving away.

He rightly argues throughout the book that worries about the future became major players in the theatre of the human mind.

So why study history? Unlike physics or economics, history is not a means of making accurate predictions. We study history not to know the future but to widen our horizons, to understand that our present situation is neither natural nor inevitable, and that we consequently have many more possibilities before us than we imagine.”

So true… Everything is happening because of a series of past events and it is important to evaluate the reasons and continue our lives accordingly.

The scientific revolution started with human beings accepting the Latin injunction ignoramus, in other words “We don’t know”. This is still a huge problem in many countries as people think they know everything. Instead, when you accept that you don’t know enough, it opens the door to investigate, observe and learn.

He explains the necessities of holding societies together in quite a comprehensive way and explains why scientific revolution took place in Europe rather than anywhere else.

“In 1500, annual per capita production averaged $550, while today every man, woman and child produces, on the average, $8,800 a year.” 

The scientific revolution has definitely increased our productivity, but has it really improved the overall satisfaction of our lives as well? The book also discusses this point in quite a nice way as well.

“Each year the US population spends more money on diets than the amount needed to feed all the hungry people in the rest of the world. Obesity is a double victory for consumerism. Instead of eating little, which will lead to economic contraction, people eat too much and then buy diet products – contributing to economic growth twice over.”

This is another sad fact of our age. Because our distribution of goods and services channels are not well developed (or maybe we don’t want to develop?) whilst many people suffer from famine, some other people battle against obesity.

He argues that there will not be a large-scale war in the future, which I don’t really agree with. He puts forward the argument that the economical benefits of peace are so great that countries will avoid a large-scale war. Even though the economic benefits of peace along with social benefits are huge, these benefits are being shared by only fraction of the world’s population. Due to this fact, I personally expect a large-scale war to arise from low income people if these issues are not addressed immediately.

He finishes his book with a question: “Is there anything more dangerous than dissatisfied and irresponsible gods who don’t know what they want?”

Overall, the book enlightens us about the series of past events that took place in the history of the humankind and it helps us to think why certain institutions, beliefs and behaviour exist in our lives.

I rate this book 5/5 and recommend you to read it as well. Yuval Harari also has a website where you can watch his videos and even subscribe to his public courses.

All the best from Singapore.

Sukru Haskan
Twitter: @sukru_haskan

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Autonomous Cars: Are you ready?

I love technology and I hate driving. The inclusion of both love and hate presents a conflict, but the two can help each other in numerous ways.

Many news stories have recently emerged regarding autonomous cars, which makes me very excited. Having lived in Istanbul, London, and briefly in Zurich and Singapore, I know that the traffic can be annoying; in Istanbul, the commute can be trying.

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According to CNN, commuters spend 125 hours per year stuck in traffic, which is not an acceptable way to live one’s life. Since, when driving, we are in front of a steering wheel, we cannot be effective during those hours: this is a perfect way of explaining the term “waste of time”.

At present, technology is evolving, will continue to ease our lives, and, most importantly, enable us to be more effective.

Autonomous cars are breaking into the market in a big way. In other words, driverless and fully robotic cars will soon be widely used.

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Silicon Valley has become recently one of the top destinations for car companies. An increasing number of conventional car companies are teaming up with technology companies to explore this market. If they do not make this transition, conventional car companies are at risk of having their market captured by companies like Google.

Google has been testing the driverless car technology for some time now, and Ford has just tested its own autonomous car in snow!

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The CEO of Tesla, a revolutionary car company, believes that fully autonomous cars will be hitting the market shortly. In fact, Tesla is preparing for an immense test drive: from one coast to the other in the US. “If you’re in New York and the car’s in Los Angeles, you can summon your car to you from your phone and tell the car to find you, and it’ll automatically charge itself along the journey,” Tesla’s CEO said on a conference call prior to the Detroit Auto show this week.

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Not only will the technology enable us to be effective in terms of our time, it will help us to be safer. Specialists believe that autonomous vehicles will be significantly safer than human-driven vehicles. Toyota is another car company that is exploring the options in this market.

It is scary, but whatever industry you are in may be swallowed by a tech company in the next decade. Thus, perhaps it is better to collaborate with them rather than trying to compete with them.

Consider an example: banks. Conventional retail banks are at risk of being swallowed by fin-tech companies if they lag behind the curve in the coming years.

Fiat Chrysler’s CEO, Sergio Marchionne, stated that carmakers risk losing proprietary control. He said, “Having initially manufactured all their own components, carmarkers currently retain primary control of making only vehicles power trains – their engines and transmissions. If we start losing any of that … we will not be able to hang on to any proprietary knowledge and control of that business.”

On the other side of the coin are drivers, whose responsibility will be overturned shortly. It will be difficult to reallocate workers in low-skill positions in the next decade. Governments should prepare training programmes for these people to ensure that they continue to have a place in the economy. Otherwise, while these improvements are positive, they may create conflicts.

The world is becoming a very competitive place, and survival for the weak is becoming difficult.

The Detroit Motor Show began this week, and it will be interesting to watch: not because I am interested in cars, but because I am interested in the current evolving technologies.

All the best from Singapore.

Sukru Haskan
Twitter: @sukru_haskan

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