Category Archives: Fintech Interviews and Podcasts

Expert Roundup: DeFi Smart Contract Audits

DeFiprime | Nick Sawinyh | Sep 19, 2019

defi decentralized finance - Expert Roundup: DeFi Smart Contract AuditsWhen it comes to “being your own bank,” having the ability to evaluate the security of the tools at your disposal becomes a necessity.

A software audit is a process where an individual or team examines the code that lies behind a piece of software with the goal of uncovering any bugs, security breaches, or violations of programming conventions before the code gets deployed. Smart contract audits play a critical role in evaluating the technical risks associated with a dApp but as a relatively new form of code, the standards for software audits of smart contracts remain in their infancy.

Companies like ChainSecurity, Trail of Bits, and Certik provide smart contract audits and have adopted their own standards for how a proper audit should be conducted. Until the industry adopts its own standard, however, customers have to rely on the reputation of these companies and the team members conducting the audit to evaluate the quality of a potential audit. To help you understand the current state of smart contract security, we’ve gathered insights from a number of industry experts.

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Q1: What is the smart contract audit exactly

There is a lot of misconceptions in the space, like many of DeFi users thinking that smart contract audit is a sort of silver bullet and sign of security (or lack of) of the dApp.

Hubert Ritzdorf, ChainSecurity:

A smart contract audit is an independent review that assesses the security and correctness of the code. This provides the following advantages. First, users obtain an independent opinion on how the smart contract behaves, which can alert them about potential threats. Project managers receive valuable feedback about their projects and can take the necessary steps to mitigate security risks. Finally, developers receive important security advice and concrete security bug reports. However, not all audits are the same. The value provided by an audit depends on the technology used to conduct it and the expertise of the audit team.

Dan Guido, Trail of Bits:

Think of security assessments like getting your car inspected: If you do it early enough, the mechanic can recommend parts to replace and preventative maintenance that can avert leaving you stranded at the side of the road later. If you wait until 300,000 miles to get your first service, the damage might be irreparable.

The amount of time you allot for inspection also makes a big difference: Give the mechanic 30 minutes, and they might only have time to use an automated scanner to determine that your spark plugs are bad. Give the mechanic a day, and they might have time to diagnose the underlying cause of why the spark plugs became bad (failed sensors? wiring? engine running rich?).

Scope also matters: Request that the mechanic only diagnose problems with the alternator, and the car may drive away with a repaired alternator as well as a latent, undiagnosed issue with the transmission.

It is the mechanic’s job to provide advice, but it is ultimately up to the owner to decide if, when, and how to implement the recommendations.

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Daryl Hok, CertiK:

In the simplest sense, a smart contract audit is a third-party review of the source code of a smart contract. Although a completed audit means that the code was reviewed, the rigorousness of the audit may vary substantially - and this rigor is really what matters for security, not merely the presence of an audit. For instance, a dApp may flaunt that no errors were found during the audit process, but it’s difficult to determine whether this means that the code quality was extremely high or whether the auditor was really bad.

At CertiK, we specialize in using Formal Verification to prove or disprove the correctness of source code; we apply mathematical proofs to compute source code outcomes and prove the absence of bugs, meaning that, if there are no bugs found, it is not possible for the specified vulnerabilities to exist.

Q2: Are there degrees of “approval”?

Are there some contracts where you’re more confident they are solid vs. others where you can’t find a problem, but you are less confident?

Hubert Ritzdorf, ChainSecurity:

A limited audit scope affects confidence levels. Before the audit begins, we determine the scope together with the customer. It can be decided not to review certain dependencies or components due to time or budget constraints. To clarify this, our audit reports always precisely state the scope of the audit.

Dan Guido, Trail of Bits:

We try to make it easy to understand what happened on a security review. If you’re investigating the health of a project, then pay attention to these sections in our reports:

  1. Executive Summary. This section includes a brief review of what we did, what we found, and what we recommend as next steps. It should make clear how much work is ahead of the project to remediate the risks we identified.
  2. Project Dashboard. This easy-to-read table summarizes the level of effort applied to review the codebase and what was found. Did we identify systemic issues? Was every bug identified high severity? Get a visual indicator by glancing at this table.
  3. Engagement Goals. This section describes our scope, or, what we set out to do on the project. Did we seek to identify risks that you care about? You’ll find out by reviewing our own goals for the project.
  4. Coverage. This section discusses our ability to achieve our engagement goals within the constraints of the project. You’ll find information on specific contracts and techniques we used to review them here, as well as pointers for future review.

It’s no accident that these are the top four sections in all our reports.

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Daryl Hok, CertiK:

In the case of Formal Verification, the results are binary - when the mathematical model runs, it either identifies an example of the vulnerability in the code, or it does find anything, which means that it’s secure. As a result, our confidence is tied to the output of these results in these instances. When it is not feasible for Formal Verification to be applied, we utilize various tools to test the security, while also performing thorough manual examination.

Our confidence level is a collective consideration of the usage of commonly accepted best practices, patterns, libraries, as well as the quality of documentation and test cases. Rare, complex patterns typically reduce our confidence or require more customized review of whether the output is consistent with the intention. Overall, we work with projects to correct all critical vulnerabilities and antipatterns before publishing any passing audit scores.

Q3: What are the five most common things people miss in smart contracts that make them vulnerable?

Hubert Ritzdorf, ChainSecurity:

  1. Improper access control: granting access to unauthorized parties or denying access to authorized ones
  2. Front-running or back-running: No enforcement of execution order
  3. Improper input sanitization: insufficient filtering of untrusted user inputs
  4. Logical errors: logical flaws in the code due to faults in the code
  5. Numerical errors: rounding errors and incorrect arithmetic calculations

Dan Guido, Trail of Bits:

It has everything to do with development process rather than awareness, or not, of individual security issues.

  1. Developers are simply not using security tools. Ask any developer about unit tests, and they’ll say they won’t ship without 100% test coverage. Yet, many of those same people will have never used, or even tried to use, security testing or verification tools. Don’t leave it for the security consultants – nearly all the best tools are free.
  2. Developers still look at security as the last step before production. I’m writing this interview about a month ahead of DevCon, and my schedule has never been so busy. Developers should seek guidance earlier, including developer training, architectural review, and brief checkins over the lifetime of the project.
  3. Developers are writing too much code without a clear idea of its purpose or whether it is needed at all. Developers should start with a specification and then write the minimum amount of code to meet it. Our best-performing clients have documented security requirements in their spec. Complexity breeds insecurity; keep it simple.
  4. Developers rush to use bleeding-edge third-party dependencies that increase complexity and reduce the safety of their project. Examples include low-level optimizations, delegatecall proxy upgrades, ABIEncoderV2, and even the latest version of the Solidity compiler. Be judicious about inherited risks.

I don’t think there is a step five. You’ll be ahead of nearly every other project if you can do these four.

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Daryl Hok, CertiK:

  1. Integer overflow/underflow
  2. Not updating the balance first before further operations. (reentrancy vulnerability)
  3. Writing loops without considering the gas cost. (DoS vulnerability)
  4. Lack of balance checking for value transfer operations.
  5. Lack of permission settings and permission check for public/external functions.
  6. Use of block.timestamp and block.number without considering their drawbacks (block.timestamp can be modified by miners; time between two consecutive block numbers is dynamic so block.number is not ideal for a stable time delta estimation).

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NCFA Jan 2018 resize - Expert Roundup: DeFi Smart Contract Audits The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Toronto Centre Podcast: Industry and Regulatory Perspectives of the Distributed Ledger Technology ASX Implementation

The Toronto Centre | Podcast | Sep 28, 2019

torontocentre podast - Expert Roundup: DeFi Smart Contract Audits

In this podcast, Ilana Singer, Chair of the Securities Advisory Board, Toronto Centre interviews Katie McDermott General Manager for Equity Post-Trade Services, Australian Securities Exchange.

In this podcast, Ilana Singer, Chair of the Securities Advisory Board, Toronto Centre interviews Oliver Harvey, Chief Supervisory Officer, Australian Securities and Investments Commission (ASIC).

 

 

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NCFA Jan 2018 resize - Expert Roundup: DeFi Smart Contract Audits The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Fintech Fridays EP37: Funding is Female with Jill Earthy

NCFA Canada | Sep 13, 2019

JOIN US ON A STORYTELLING JOURNEY EVERY FRIDAY.

FF EP37 female funders 1 - Expert Roundup: DeFi Smart Contract Audits

Sep 13: Funding is Female with Jill Earthy EP37

GUEST: JILL EARTHY, Head of Female Funders (Linkedin)

HOST: Manseeb Khan, Fintech Friday's show host

BIO:  Jill Earthy is an entrepreneurially minded leader who believes diversity drives innovation. As Head of Female Funders (powered by Highine BETA), she is empowering female leaders to become investors in early stage companies. Her background includes being an entrepreneur, supporting entrepreneurs in various leadership roles and working as Chief Growth Officer of FrontFundr, an online investment platform. She is a community leader and active mentor, currently serving on the national Board of Sustainable Development Technology Canada and as Board Chair of the Women’s Enterprise Centre in BC, and as Co-Chair of We for She. Jill was recently recognized by the Canadian Centre for Diversity and Inclusion award as a Community Champion, by Business in Vancouver as an Influential Woman in Business and by WXN as one the Top 100 most powerful women in Canada in 2019.

 

About this episode: 

On this episode of NCFA'S Fintech Fridays Podcast, our host Manseeb Khan sits down with Jill Earthy the Head of Female Funders. The talk about what the Angel Academy is, why female funders matter, and the holistic approach to innovation.  Enjoy!

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Subscribe and tune in each Friday to check out the latest movers and shakers in fintech.

Listen to more podcasts here: Season 1 | Season 2

 


Transcription of Interview

Intro: Welcome fintech Friday's a weekly podcast brought to you by the National Crowdfunding and Fintech Association of Canada and partners.Covering all things fintech block chain be AI and alternative finance.

Manseeb Khan : Hey everybody Manseeb Khan here. Thank you for tuning to another fantastical episode of the FinTech Friday podcast. I'm thinking of actually creating fantastical T-shirts because we should use this. Every single show as fantastical is not a word. Last episode I said I was part of the Oxford Dictionary actually might come highly considered actually trying to make it an actual word just for the sake of my introduction, sort of look like an idiot. But this week I'm super excited to have Jill. Thank you so much for coming on the show.

Jill Earthy: Great to be here. Thanks for having me.

Manseeb Khan : Absolutely. Jill. Could you for the five or six people or actually for the five or six people that may not know who you are and what Female Funders is, could you just give us a little bit of introduction of your background and the amazing work that you're doing?

Jill Earthy: Thank you. Yeah, absolutely. So, yeah Jill Earthy a program called Female Funders. And, you know, it's interesting, you come out, you ask about my background. And I've always been passionate. I think, like many of your audience members, about disrupting and changing things and looking at things in new ways. And certainly, my career has, as you know, shows that path. So, as an entrepreneur, then leading several organizations, supporting entrepreneurs, or  working as chief growth officer at a fintech company, Front Funder online investment platform, creating new ways for entrepreneurs to access capital and broadening the reach for investors. And then, you know, it all circles. It's funny how it’s kind of all kind of comes full circle. So Female Funders is a program focused on female leaders, primarily senior leaders in corporations and technology companies or seasoned entrepreneurs themselves who have a curiosity about investing in early stage companies, but maybe haven't had exposure to it in the past or aren't sure where to start. And so, our goal is really to demystify the process, make it easy and make it accessible and increase the number of women participating as investors.

Manseeb Khan : That's incredible. So, you guys created this new kind of academy called the Angel Academy. Could you talk a little bit more about that and how I can get of all people can get involved and just essentially what the Angel Academy is?

Jill Earthy: Yes. So, the Angel Academy is our core education program and we work with cohorts of leaders from across North America. And that's really neat to right because they're coming at it from a variety of different backgrounds perspectives. It's primarily, primarily women. And the program runs over. The Angel Academy program runs over eight weeks. It's virtually run. We have four online learning modules which are self-directed full of all sorts of great content and articles and links. And thanks to podcasts, we'll have to add this one and other content. But the most important part is we host office hours where we bring in investor mentors. And those investor mentors are men and women, incredible venture capital partners or experienced angel investors to share their experience and expertise and provides an active learning opportunity for us to all work together. So that happens over an eight-week period. And then we have an apprenticeship component where we match each of our participants with a mentor, an experienced investor. And that's super powerful as they're starting their investing journey. I'm starting to identify companies that they're interested in and having that guide to ask questions I've learned from as they're getting ready to write the first check. So, the bulk of the program is it's a really over eight weeks of education, four-month apprenticeship, so a six month program. And then we wrap a whole number of other things around that, including investment learning labs, bringing different cohort participants together and an in-person event as well.

Manseeb Khan : That's incredible. That sounds like a lot of fun and like very important work because like becoming an investor or, you know, if the audience wants to just quickly, maybe follow along, just I kind of read a little bit about it having a guide or just having somebody kind of walk you through. You know, you have enough capital to start investing in a couple of companies that you definitely have your eye on. Having a mentor or having a system, having a more or less academy to kind of teach you the ins and outs of the realm of investing. It's super important, super crucial, because every single day we have the opportunity to keep more and more investors right now having academies and having institutions to create more and more smart investors. That's an interesting, incredible and it's super exciting.

Jill Earthy: Well, I think you're absolutely right. Because I think we should make sure that it's clear that these are high risk investments. This is an asset class in that that is high risk in early stage companies. Right. You're taking a you're taking a huge risk, but also it could result in a big opportunity as well. But you're absolutely right. Like having that support, expertise, know, sharing, sharing experiences. You know, we know the importance of having diverse perspectives to make better decisions. And we're hoping that mitigates some of the risk greater to result in greater outcomes for all.

Manseeb Khan : So why are female fund funders and backers important? Very important, especially when it comes to funding. I mean, this is a topic that I've very briefly touched on the second episode of this podcast but haven't really had the chance to really go in depth. So, could you just talk a little bit about why Female Funders and backers are very important, especially in the fintech space?

Jill Earthy: Well, you look at just, you know, our economy as a whole and the huge, huge opportunity that we have. So Female Funders in partnership with Highline data released a report earlier this year that looked at some of the numbers and I was fine. Obviously, numbers are great. They tell a story for factual. So just as an example, you know, in Canada last year, 14 percent of angel investors were women, 17 percent of angel investors this year were women. So, we're seeing a shift, which is great, but there's a huge opportunity to increase that. You know, you look at the diversity of those making investment decisions within venture capital firms. And, you know, this is relevant as the growth of the fintech ecosystem continues. But now 15 percent of venture capital leaders are women and 8 percent are partners. Right. So, we look at that as like, wow, OK. We have an opportunity here right now. How do we unlock some of their capital? Because we know that the growth of female leaders is continuing. We have incredible resources. And so how do we how do we connect those dots? I think one of the key challenges that women we don't often identify as investors, you know, certainly as champions and mentors and advisors. And so how do we just connect those dots? And by doing so will unlock new capital, which benefits everybody. Because, again, by having those diverse perspectives making decisions, we'll see a broader range of companies from seed funding, new models. And then everyone benefits.

Manseeb Khan : Yeah. No,  I absolutely agree through. And in a sense of like creating you said something interesting creating more like I guess more or less like diversity and a sense of like, hey, you know, having more female funders, having more female investors, that's just going to, you know, just fast forward innovation in any space. Right. Not a fintech, but any realm of investing, having new ideas, having new concepts, having new models. It just it's a win for.

Jill Earthy: 100 percent, 100 percent. You think about I mean, we're focused primarily on gender diversity, although I would also say very much within our cohorts of women, we have incredible cultural and ethnic diversity and certainly a lot of industry experience diversity, which is powerful, too. But our goal is, is not to continue to run this. This program focused on women. We'd rather not, but. Absolutely. We do have some catching up to do so. So, there's huge power. And that's certainly why we love these conversations and having so many incredible male champions involved in our in our program. And we're just trying to bridge the gap, bring these great women into the ecosystem.

Manseeb Khan : So, yeah. So, you know, I mean, you don't want to be running this program for like six years and be like, OK, well, now we're a two out of five females. Our investors well crap. Exactly. Exactly. So, yeah. Could you talk a little bit more? So, you did briefly mention you guys focus on gender diversity and ethnic diversity. You could talk a little bit how you guys are going about that and just some of the initiatives you have in place to further that mission.

Jill Earthy: Yeah. Yeah. So, with our core program in Angel Academy, we know the types of people that are participating in the program tend to come from three, three groups, I guess primarily so senior leaders within large corporations. I mean, you indicated the need for corporations to continually innovate to That's, especially the financial institutions. Well, every company, you know, oil and gas, you know, there's every sector need to continually innovate. And so, we have a lot of senior leaders within those companies are going, OK, we need to innovate, but we need to do that. We need to understand the venture ecosystem and we need to understand how these startups operate. And so, we're seeing more and more of those types of leaders come into our program for professional development and better understanding and direct connection to the ecosystem, but also for personal interest, of course, as they look to potentially invest to as they become more comfortable and familiar. And then the other group is those in those technology companies. When you think about, you know, even thinking of some of the fintech companies across North America, where they've grown to a point and they're leaders within those companies maybe who didn't start at the very beginning, but who have seen this company grow and are likely to second to be involved with those companies from the from the start. So, they're interested in coming into this program. And then the third group is are those seasoned entrepreneurs who have built businesses to a point where they may still be involved, but they're not as involved in the day to day and can actually step up. And participate on the other side of the table. Or maybe have exited and want to get one. You complete the circle.

Manseeb Khan : And of course, under. And give back. Right. Because one of the core things that you kind of learn, especially in entrepreneurship, is it's great that you know, it's good that you're learning. Creating a network, but also giving back to network is always very crucial. It's very clear that it's the it's the full circle. Right.

Jill Earthy: Absolutely. Absolutely. Yeah. No. It's amazing. And even you look at, you know, there's so many great leaders in fintech now, too. I mean, some of our partners are you know, you look at someone like Lisa Shields of Flies Van and Natalie Cartwright, and there's just so many great. Yeah, great, great leaders, men, and women. But there are some real opportunities to continue to enhance the tech sector.

Manseeb Khan : Yeah. No, absolutely. I like hopefully, you know, not in the fintech sector, but other sectors as well. So, this is, again, very, very exciting, exciting work. So, could you talk about the current challenges that female founders and funders face? Yeah. Top five or even top 10.

Jill Earthy: So, I think there's a couple of key ones and I like to think about. So, there's a lot of a lot of articles and things that talk about women being risk adverse. I think that holds true on women entrepreneurs’ access and capital as well as women investors. I much prefer the term risk astute, meaning that women tend to be more methodical in their approach, especially when it comes to accessing, financing, or writing checks. Want to really understand the process, demystify it, understand the lingo. You want to talk to a number of people. That's not a wrong way of doing things. It's just a different way of doing things. And so, I think by embracing that, there's a lot more opportunities. And we're seeing the data now show, too, that, you know, women entrepreneurs they're building companies in different ways and accessing different buckets of financing and putting this together. The results are much stronger. They're actually using less capital to grow more and focused on revenue growth. And that's pretty powerful. I see that as an opportunity. It's just a different model because often we you know, certainly in the venture ecosystem, success is often based on how much money you've raised. And so, you know, which is one benchmark. But I don't think that's the that that should be the only one to benchmark. No, not like I personally would much rather invest in companies that are focused on revenue growth and customer acquisitions. But that that's different anyways. And then so and on the investor side, too, it's the same thing. Women are less likely to just immediately write a check. Really. They want to do more research, dig it, dig in deeper, understand that more. Not a bad thing, just a different path. And therefore, the process takes a little bit longer and the numbers aren't quite as high. Also tend to write smaller checks versus larger checks, more maybe more smaller checks. But again, just different approaches. So, I'm not sure yet. There's lots of data around that challenges. I think sometimes it's also around access to networks and women are getting better at doing that. But we have to invite them in sometimes. That's another common challenge. Like often.

Manseeb Khan : Are they? So, when you mean access to networks, are they just a little adverse to joining? These said networks are like what is like what is the challenge specifically of them having access to these networks.

Jill Earthy: Yeah, well, you think about it and I'll just use angel groups as an example. Right. Typically, haven't been very many women involved in those groups. And so, you know, but that's where the deals happen or in other groupings like that, right. Or no. I have a lot of friends to get a call from their friend saying, hey, do you want to go in on this deal with me? And women are just for whatever reason, you know, it's not. Not necessarily that they've been excluded, maybe just not completely invited, or haven't put their hand up to be invited. Right. There are multiple factors, but I think we need to. Yeah. So. So that's why you're seeing an increase in the number of women's networks. And I don't believe just in women only networks. But I think that's a starting point to get and start to have those conversations and create access. And we'll see that. And now. As I said, our goal is to make sure we're just growing the networks overall. So, people are connecting and identifying deals and opportunities together and collaborating on those. So that's just a shift right there where a lot of all know the term old boys’ networks and where we're trying to shift that.

Manseeb Khan : Yeah, I know for sure. I mean, definitely having a focus on first like an equality, it comes to both parties and then starting to network. I think that's definitely one of the better approaches when it comes towards that. I guess I guess I'm going to I'm going to try to throw it to you. Is there something that we should be aware of when it comes to Female Funders and female founders? Is it something that we, the audience can kind of do to help is? Yeah. Is there a way that we can kind of hope or is it ways that we're just not aware of that we can help?

Jill Earthy: Well, I think what you're doing right now is awesome because it's really often about just having the conversation right and putting it out there and hearing people's stories. So I think for all of us, it is about just getting engaging with more people, reaching out, talking about it, you know, and certainly as it pertains to Female Funders, you know, where I get excited and most passionate about it is, you know, I'll just start talking about at the dinner table or a dinner party. Right. About an opportunity to participate in investing in this new venture. And, you know, it's amazing when you just start to open up the conversation that how people are like, oh, that sounds interesting. I thought that I had to write a million-dollar check to and not look like I look like that. And I think that's for young people. I think that's for women. I think that's for everybody. Is just a start to have the conversation about finance and about investing, you know, whether you have the capacity to do it now or in the future? It's starting to just think about that differently and starting to plan because again, these are high risk investments. So, you need to plan you need your traditional investments, for sure, but starting to plan a small portion. Your first check is small or maybe it's five thousand dollars. Or through something like Front Funder , it's a thousand dollars or whatever it is. That being the thought of being coordinated and collaborating with others. Have more experience or all are all critical.

Manseeb Khan : Yeah, no, I agree. I mean that's kind of what kick this. That that's just one of the reasons why I actually invited you to come on the show. It's because of, you know, we're thinking of creating this new initiative where we kind of focus on female founders, female funders, and kind of sharing the stories. I know when we had when I had  Sue Britain on, one of the fears was that like, hey, especially in finance is an old boys club. Slowly but surely, you're seeing some of that remnants bleed into fintech. And that's one of the biggest worries of OK. I definitely don't want that to happen here because the because the whole purpose of fintech is to be different. Right. From the traditional sense. Right. So having amazing people like you and some of the other guys that we have lined up should be a really interesting set of conversations that we're going to have a, you know, talk about the challenges, talk about opportunities, how we can how what we can do and just, you know, hope furthering long the conversation of like, hey, you know what? There should be an even playing field for anybody and everybody. That's. That's. There's no there's no it is no budge on that, there's no leeway. Right.

Jill Earthy: Yeah, no, absolutely. And there's so many more opportunities now, right? I mean, you look at some of the new fintech initiatives or programs and there's. Yeah. I mean, a lot of the point of it is to make it a bit more inclusive. Right. Because it's more transparent. A lot of the platform are more accessible and so there's things are really exciting opportunity.

Manseeb Khan : Well, yes. And now like a TV to switch gears a little like when it comes to investing. And now you have you have the chance of crowdfunding and, you know, getting money from people. They want to see that you're doing amazing work. They want to see that like, hey, like, what are what are some of the initiatives that they're that they're doing? What are the social causes that they're involved in? Right. Cause if you're putting if I'm putting my money towards something beautiful, a regular Joe Schmo like me or an actual seasoned investor, they want to see that you guys are doing something different, something that, you know, having female funders or even having a team of like really kickass female executives matters. That works.

Jill Earthy: Yeah, yeah, definitely. Chuckling Yeah. There are so many new incredible opportunities for people to participate. And even as you said, like even starting small, I mean, my first my first cheque was five thousand dollars for my RSP, which I didn't realize I could do. And was eligible for 30 percent tax credit. This was four or five years ago. And it's just those things where nobody talks about those and you're like, wow, that's amazing. And I get to participate. And it's not all opportunities are like That's. There are obviously much higher minimums and sometimes there's much lower minimums and there's pros and cons. And sometimes you want a whole mix of all those things. Course. Yeah, but the point is there's a lot there, a lot more opportunities out there everywhere and a lot more people that can now engage and participate in the right way.

Manseeb Khan : Yeah, no, I absolutely go through. This is really exciting things. So, before I wrap this up, I'm going to throw it to you. Is there anything else that the audience should be aware of when it comes to the great work that you're doing?

Jill Earthy: Thank you. Yeah, I mean, it's just. Just keep talking about it. I mean, we run our Angel Academy program twice a year, bringing together these leaders through a virtual environment. Our next programs and we run in the fall, the end of October and one in the spring. So, if you know anybody who's interested and love to hear from them or any questions. We also talked to founders all the time and help to direct them to the right resources. So, we're happy to support there. But I just think it's such you know, it's an exciting ecosystem at the moment, right. Technology fintech, you know, everybody's talking about it. Everybody has a role to play in it. So, it's just figuring out what your role is and how you how you want to engage. But it's amazing. And I keep telling these great stories. Yeah.

Manseeb Khan : No, I mean, definitely I'm going to flip to you to you if there is any amazing funders or founders that you think wish that I should personally talk to you just to come on the show. By all means, it's an open invitation for anybody. I mean, the more conversation, the more stories I can share, the more exciting my job becomes, right?

Jill Earthy: Yeah. And the more impact we can have.

Manseeb Khan : Absolutely. Absolutely. Joe, before we wrap this up, are there a couple of golden nuggets that you want the audience to kind of go home with and just, you know, a year from now? Oh, yeah. Jill told me That's. Yeah, I know that that makes total sense. So, what are some golden nuggets that you want to leave the audience with?

Jill Earthy: That's a lot of pressure. Yeah. I think I think a key thing is just, you know, I think sometimes we get overwhelmed. There's so much noise, there's so much information. You know, you are reading information online and you hear about the technology in an ecosystem and innovation and what does it all mean. And I think we each have a role to play in it. And so I think it's identifying, you know, our own strengths, our own interests, our own goals, whether that's as an art partner and how we want to engage and participate and make a difference as an investor, you know, putting our hand up and reaching out to learn more about what that can look like, because it can look a lot of different ways and engage that way or just as an advisor or a mentor supporter, because we all have strengths and skills and expertise. But I think just the power of that and continuing to talk about innovation as a whole as a holistic approach. It's pretty exciting time, but it can get a bit overwhelming. So just keep me be clear on your mission and connect with others who align with

Manseeb Khan : That's incredible. Jill, thank you so much for sitting down today. Super excited to have you back on the show and super excited to have any of the amazing people a part of your network on the show.

Jill Earthy: Thank you.

Outro : you've been listening to fintech Fridays brought to you by NCFA and partners. Tune in weekly for the latest fintech Friday podcast by subscribing to this channel. The National crowdfunding and FinTech Association of Canada is a non-profit actively engaged with social and investment fintech sectors around the globe and provide education research industry stewardship services and networking opportunities to thousands of members and subscribers. For more information please visit and see if a Canada dot org. Oh yea.

 

End of Podcast

 

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NCFA Jan 2018 resize - Expert Roundup: DeFi Smart Contract Audits The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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National Post | Andy Blatchford | Oct 5, 2019 The letter was drafted by a lobby group representing signatories run domestic firms that employed more than 35,000 people last year and generated more than $6 billion for the economy OTTAWA — More than 110 Canadian tech CEOs have signed an open letter urging political parties to take action to strengthen the country’s innovative economy, and avoid falling further behind international peers. So far, major parties have put forward pledges in areas like affordability, first-time home-buyers and climate change, but the campaigns have offered few promises designed to drive economic growth in the digital age. “We’re writing because Canada’s productivity is lagging and our future economic prosperity is at risk,” reads the letter addressed to Liberal Leader Justin Trudeau, Conservative Leader Andrew Scheer, NDP Leader Jagmeet Singh and Green Leader Elizabeth May. “You can help by developing economic policies that advance innovative Canadian companies, including increasing their access to skilled talent, growth capital and new customers.” The letter was drafted by the Council of Canadian Innovators, a lobby group representing some of the country’s fastest-growing companies. Combined, its signatories run domestic firms that employed more than 35,000 people last year and ...
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CarefulCents  | Ryan Friend | Sep 17, 2019 Of all the types of insurance out there, health insurance is perhaps the most important. After all, without our health, it’s difficult to do much else in life. However, in the United States, which relies mostly on a private health insurance system, costs are high, and it’s often very confusing to know how much you can expect to pay. This is because you can get health insurance in many different ways. You can buy it on your own, receive it from your employer as part of your compensation package, or get it from the federal government. However, just because the world of health insurance is confusing, it does not mean you need to pay more than you should, and knowing the average costs of the many different types of health insurance can help you understand if your premiums are fair or if it’s time for a change. Below we’ve outlined all the different factors that determine the cost of your insurance and also identified the average rates for the various options out there. In addition, you will find some tips to help you save on your insurance so that you can get ...
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Coindesk | David Pan | Oct 9, 2019 Mutual fund giant Vanguard has partnered with Nasdaq Ventures-backed blockchain startup Symbiont to develop a trading platform for the $6 trillion currency market, the companies said. With the new platform, Vanguard, which manages $5.2 trillion, aims to lower transaction costs for the trillions of dollars worth of currencies it trades annually by boosting peer-to-peer trading for investors, connecting them directly via blockchain technology. Symbiont CEO Mark Smith told CoinDesk the company teamed up with Vanguard to build the currency platform, confirming a Bloomberg report that cited an anonymous source. The platform has been operational for two months and completed its first trades during the time, according to the report. A Vanguard spokesperson told CoinDesk: “Vanguard is currently piloting a project focused on improving the efficiency and reducing risk of FX hedging.” The new platform is part of the fund manager’s commitment to lowering the cost of investing for all investors, the spokesperson said. Neither company would provide further details of the pilot. See:  HSBC settles FX deals worth $250 billion on blockchain in last year Machine Learning in Finance – Present and Future Applications The project, if successful, would be another important milestone ...
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Finextra | Oct 8, 2019 The Swiss National Bank (SNB) is working with the Bank for International Settlements (BIS) on an innovation hub in Switzerland that will initially focus on research into digital central bank money and distributed ledger technology. The SNB is working with SIX on the research, embarking on a proof of concept to explore how digital central bank money could be used in the settlement of tokenized assets between market participants. The project is making use of the SIX Digital Exchange (SDX) platform, which is currently being built and promises to be the world's first end-to-end exchange for digital assets when it launches next year offering listing, trading, settlement and custody service. See:  Mark Carney’s Trojan Unicorn — Are Central Banks Considering Stealth Nationalization in Sovereign Digital Currencies? The SDX system will be used to explore technical possibilities for integrating digital central bank money into DLT platforms. Options include the connection of the existing Swiss Interbank Clearing System or the issue of digital Swiss franc tokens by the SNB for financial market participants. Jos Dijsselhof, CEO, SIX, says: "We are pleased to contribute to this initiative and, through SIX Digital Exchange, to explore the technological possibilities with ...
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Andreessen Horowitz | Anish Acharya In 2006, LendingClub introduced a then-novel business model: the ability to offer online personal loans to millions of underserved customers. The peer-to-peer lender was a media and investor darling, hailed as a tech-enabled alternative to traditional banks. When LendingClub went public in 2014, it was valued at $8.5 billion, the year’s single largest US tech IPO. Now, five years later, that fintech pioneer has lost 85 percent of its market value. Meanwhile, mobile upstart MoneyLion launched in 2013, also providing online personal loans—a direct competitor to LendingClub. Today, MoneyLion claims more than 5 million users and is valued at nearly $1 billion. See:  Peer to Peer Lending: The Future of Fintech is Now LendingClub had significant competitive advantages, from low customer acquisition costs—back then, personal loans keywords weren’t nearly as competitive on Google and Facebook was actively promoting LendingClub as an early F8 partner—to improved underwriting (the company provided lenders with access to customers’ credit score, total debt, income, monthly cash flow, and social data). So why is LendingClub experiencing growing pains while MoneyLion sees significant growth? Though the latter started out solely as an online lender, it quickly morphed into an all-in-one lending, savings, ...
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CNBC | Chloe Taylor | Oct 8, 2019 Singapore has overtaken the U.S. to become the most competitive nation in the world, according to the World Economic Forum (WEF). In its 2019 Global Competitiveness Report, the WEF measured the strength of 103 key indicators, such as inflation, digital skills and trade tariffs, across 141 countries. The key indicators in the report were organized into 12 pillars, which included institutions, macroeconomic stability and health. The U.S., which held the top spot in 2018′s ranking, dropped into second place this year, although the report’s authors noted that it “remains an innovation powerhouse.” America received the highest score in the world in several subcategories, including ease of finding skilled employees and venture capital availability, with the U.S. also being ranked higher than any other country in the business dynamism pillar. However, the country scored relatively low in some categories, with increasing trade tariffs, declining life expectancy and low digital skills among the American population taking a toll on the United States’ overall ranking. The WEF noted that life expectancy in the U.S. is now lower than it is in China, with the U.S. having only the 39th highest life expectancy in the world ...
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McKinsey & Company | Oct 2019 Ten years ago 10 years ago, the US retail banking industry was in the depths of the global financial crisis, with many one-time leading institutions struggling to survive. Since then, after bringing in billions in fresh capital, US banks have made a return to stable ground and greater liquidity. Despite this progress, aggregate return on equity is at the lower bound of sustainability, and the industry’s price-to-book value is about 1.4, not far above where it stood in 2009. Customer trust has improved from the downturn but is still well below pre-crisis levels. Though most banks were able to avoid unsettling challenges in the following ten years, few were able to break out and significantly outperform the industry. Now, however, several major forces are accelerating the evolution of the US banking industry–the encroachment of new competitors, rising expectations from customers on service levels and corporate responsibility, and an intensifying war for talent—and promising to make doing business more challenging in the coming ten years. Further, US banks have yet to go through the restructuring that has already swept European and Asian markets, where a majority of services are delivered digitally. In this report, we ...
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Fintech Fridays EP36: Techfins with Michael King, Lansdowne Chair in Finance, Gustavson School of Business at UVic

NCFA Canada | Aug 9, 2019

JOIN US ON A STORYTELLING JOURNEY EVERY FRIDAY.

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Aug 23:  Techfins with Michael R. King, PhD CFA EP36

GUEST:  MICHAEL R. KING, PhD CFA, Lansdowne Chair in Finance, Gustavson School of Business, University of Victoria, (Linkedin)

HOST: Manseeb Khan, Fintech Friday's show host

BIO:  Professor Michael R. King is the Lansdowne Chair in Finance at University of Victoria’s Gustavson School of Business. Prior to joining UVic, he held the Tangerine Chair in Finance at Western University’s Ivey Business School (2011-2019), where he co-founded Canada’s first FinTech research centre (the Scotiabank Digital Banking Lab). Before joining academia, he worked in investment banking in Zurich, New York and London from 1990-1998 (Credit Suisse, RBC Dominion Securities) and central banking in Ottawa and Basel from 2001-2011 (Bank of Canada, Bank for International Settlements). Michael completed his PhD at the London School of Economics in 2001 and his CFA designation in 1999. He has taught finance to undergraduates, MBAs and executives. His research focuses on FinTech, banking, international financial markets, and corporate finance.

About this episode:  On this episode of NCFA's Fintech Friday's Podcast, our host Manseeb Khan sits down with Prof. Michael R. King PhD CFA, Lansdowne Chair in Finance at University of Victoria’s Gustavson School of Business. They chat about transformational fintech, big tech vs techfins and fintech 3.0.  Enjoy!

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Subscribe and tune in each Friday to check out the latest movers and shakers in fintech.

Listen to more podcasts here: Season 1 | Season 2

 


Transcription of Interview

Intro: Welcome fintech Friday's a weekly podcast brought to you by the National Crowdfunding and Fintech Association of Canada and partners.Covering all things fintech block chain be AI and alternative finance.

Manseeb Khan :  Hey Everybody Manseeb Khan here. Thank you for tuning in to another fantastical episode of the FinTech Friday podcast, Fantastical is now in the Oxford Dictionary. It's not. I'm just kidding. I really want it to be. I mean, fantastical. I love using that word. But this week, today, I'm very, very thrilled. I've been sent a message to all my friends of how excited I am for this episode. I got Michael King. Michael, thank you so much for sitting down today.

Michael King : It's great to be with you, man. Thank you for having me on FinTech Friday.

Manseeb Khan : Awesome. Michael, could you just for the five or six people that may not know who you are and may not share the same level excitement that I am currently sharing? Could you tell us a little bit of who you are, a little bit of your background?

Michael King : Okay, great. Yeah. So, I'm a university professor out on the West Coast at the University of Victoria has kept this in school business. This is my third act when it comes to my career. I did my first decade was in investment banking and trading in New York, London, where I got to see what things look like on the private sector side. My second act in the in the 1990s was in the 2000s was with US Central Banking with the Bank of Canada in Ottawa and also with Bank for International Settlements in Switzerland, where I was there during the financial crisis and got to see how regulators look at the world. And since 2011, I've been in academia. I was at Ivey School of Business at Western University, and back in 2016, I was approached to co-found a fintech research center with my colleague J.P. Varian. And we've been following fintech avidly since then. And then I'm actually in the process of writing a book on fintech called FinTech Explain, which should be out later in the year.

Manseeb Khan : That's incredible of why I can't wait for that book. So, could you talk a little bit more of the traditional versus the transformational views of fintech?

Michael King : Yeah, I mean, I as somebody who's been coming at this from the banking side, from the financial services side for a long time, I shared the same skepticism as most people did that fintech is just the application of technology to financial services. Banks have been doing that for decades, ever since they made the transatlantic cable, the telex, the fax machine and the A.T.M. So, what's so new about fintech? And it really started to dawn on me, you know, as I was writing my book, that there's really two views about fintech. And there's one view that it's evolutionary. And this is the sort of traditional view that we're using technology to reduce costs and to automate back office and digitize a lot of processes. But there's also a transformational view, and that's more of a viewing fintech as a reason, a revolution that's coming out of, you know, the application of technologies in many different industries, consumer products and cars, automation and that back to fintech is really redesigning or reimagining financial services as part of a larger product offering. So, the traditional view is very product centric. We're going to offer customers a loan. We're going to offer them a wealth management product. We're going to offer them a means of payment. And that's kind of the way that traditional financial intermediaries are set up. If you look at the big banks there, they have divisions with names like capital markets, personal and commercial banking, and insurance. And people in those divisions tend to have titles that sort of say what they do. Mostly focused on the product. But when you start looking at a number of these new marketplaces, these multi sided platforms that are being set up and in particular by a techfins  like Ali Baba and Tencent you see that they're looking at this really from the customer's point of view. And it's very customer centric. They're saying, what does the customer want? What's their pain point and how can we provide them with, you know, a great experience? And that great experience may be social networking and maybe ecommerce and maybe gaming, but there is typically a financial service product that makes its way in there somewhere. And so financial service products are being bundled along with other customer products in a new and imaginative ways. And that's where I think the real revolution, or the transformation is taking place right now.

Manseeb Khan : I couldn't agree with you more. I mean, I'm just explaining what fintech is. A lot of you know, a lot of people may think, oh, yeah, it's a very product focused thing. This is just okay, you know what? We are just going to digitize the loans. We're just going to digitize mortgages. We're just going to digitize X, Y and Z payment method. It's very product focused and a kind of I mean, it's a little heartbreaking because. FinTech, it's so much more, right? It has the capability. I mean, you've been hit on the fact that you're having tech companies like Apple that recently released a credit card. These guys are very customer focused, customer centric, right. Because there is around. We've recently had on the on the show a stat that there's 2 billion people that are under serviced and you're having fintech companies come in and service is under serviced, under banked individuals. Its very customer focused, is very good. What do the people want? How do we build a product around the people? Not a product for the people or like a product that the people who just give it to them.

Michael King : Yeah, I'm. And Manseeb. I don't want to say that all. But these two types, traditional and transformational fintech, they kind of co-exist in this ecosystem. And you look at some of the startups that we have here in Canada and abroad and really, they're focused entirely on the customer and on how to make that experience great and simple and less costly. Or as he pointed out there, they're trying to serve customers that have been ignored or underserved or under banked. And that's true both in the United States but also in emerging markets, places like Kenya and Africa. But there are a lot of fintech that are basically just trying to automate what's already out there. And you know, I would say that There is a twist on the existing business model. But, you know, if you look at balance sheet lending online, that's pretty much the same thing as what banks have been doing for a long time. And if you look at electronic banking, well, we've had digital banks since the 1990s, and that's not particularly new. It just may be a better experience that they're getting now.

Manseeb Khan : Yeah. No, I couldn't agree with you more. So, could you talk a little bit more of the main differences between fintech and techfin and essentially like our data? And like, you know, just like the contrast and I guess the similarities between the two?

Michael King : Yeah. This term tech fin, actually, I only heard it about a couple of years ago and I got curious about it. I wondered where does this term come from? They've basically just taken fintech and turned it on its head. It turns out that it was first used by Jack Ma, the founder of Alibaba, back in 2016, to describe his company Ant financial. Where Ant financial is the formerly known as Ali Pay and was spun off prior to Ali Baba's IPO on the US stock market in 2014. And he said Tech fins are basically technology companies that are trying to provide financial services to underserved customers. Jack Ma, he kind of is critical of the existing financial system, probably looking at his home market in China, which was very undeveloped. It's all state-owned banks and state-owned enterprises. So, keeping that in mind, he said, you know, a lot of these fin techs are simply using technology to make a profit by selling financial products and services to customers. And tech fins are really trying to help people that are under banks, whether it's small businesses, whether it's in emerging market countries or whether it's some individual customers. Now, tech fins are really that term is really stuck for Ali Baba and Tencent in their financial service arms. When we go to North America, we tend to use the term big tech, where big tech is Amazon, Apple, Facebook, and Google. The big U.S. headquartered technology companies that are also moving into financial services slowly but surely.

Manseeb Khan : So, should fintech’s be afraid of the big tech companies and the techfin companies, or should they see this more as an opportunity of, you know what? Hey, now that we have these bigger tech players coming into our space, should we start creating partnerships or should we be a little bit more averse to them?

Michael King : Yeah, you've hit it. You've hit it right on the nail there because it can be these tech fans in the big tech are a real threat to incumbent financial intermediaries such as banks, insurance companies, wealth management. But they could also be an enormous opportunity for fintech who are partnering with them. I know on one-year earlier podcasts back in September, you had Paul Schulte also talking about Alibaba, Tencent, and Wal-Mart in India. And what we've seen there is that these companies are really opened to partnering and helping other fintech to basically provide their customers, their users and their ecosystem with the products and services that they need. So, I would say that tech fins and big tech do represent a threat to incumbents, but I think they also represent an opportunity for partnerships with startups in fintech.

Manseeb Khan : Yeah, I mean, but if you have the financial incumbents adopting the mindset of like, you know what? Hey,  let's start transitioning from the traditional view of how we see fintech into something transformative. Then like the partnerships are just going to be astounding, right? Like if we have just one of one of the big five banks partnering up with Apple, you know what? We're to start backing Apple into the credit services or just whatever the case may be, that in and of itself, they'll be very, very interesting to see.

Michael King : Yeah, it's become a really fascinating landscape because there's a lot of things going on. And as you point out, some of the big banks are really forward looking. They've really caught on to this kind of customer centric point of view. I'd highlight Royal Bank of Canada at home here at JP Morgan and Goldman Sachs in the United States. They those big players are recognizing that these partnerships with these fintech can really deliver a great experience to their customers. It can give them an edge over other incumbents. And it's the way of the future. In particular, with the development of these marketplaces. No bank is going to want to be on a dropdown list on Amazon when it comes to offering a mortgage or a loan. But that seems to be at least from looking at what's happening in China in some other countries. That seems to be the direction we're going, where it's coming very. You know, banks backed loans and mortgages were very commodities, financial products. And it's going to become even worse if these ecosystems come between a bank and their customer. So, some of these banks are developing these marketplaces themselves or they're partnering up. And that's, I think, the way to go. And you mentioned Goldman Sachs is actually backing Apple with their credit card yet to be launched. It was announced with a lot of fanfare, but it's not out there yet, but it's a retail credit card. MasterCard and Apple have said specifically, we do not want your data. And Goldman Sachs has said data privacy is going to be key to our customer offering. Right. They seem to be taking a swipe at Facebook and at Google and their ad-based business models. So just showing that you can't just lump all these big players, big tech, and thin tech fans together into the same bucket. They're really pursuing different strategies.

Manseeb Khan : Of course. I mean, because now you're seeing how the consumer and just, I mean, not only our audience, but just like everybody else is starting to realize how important their data is and how powerful their data is. Right now, you're seeing how there's been this really big push for digital identity and digital privacy of just kind of, you know, hey, I should be able to pick and choose what and how much of what of information I get to give out to companies like Facebook, to Apple or to any of the companies. And the fact that Apple is taking a swipe and taking a stance of like, hey, you know what, we don't really, we don't want your data. We want you to be in charge of your data as much as you can. And that's kind of helping build that, I guess, like future brand equity.

Michael King : Yeah. Ownership of data is going to be central to competitive advantage of any kind of financial service company or non-financial service company. But customer trust in how you treat their data. Maintaining privacy and ensuring that you're a good custodian of that data is also going to be central to claim financial services. So, I think most people agree that more data that the competitive advantage, the big tech companies like Facebook and Apple is really they get to see so much of what customers are doing online and understand them in better ways. Amazon is certainly using that data to try and understand, hey, what kind of new products do our customers want? And it can be a great benefit to consumers if by understanding this data they can provide you with a product that you didn't even know you wanted. But on the flip side, if they go around and they sell it and they monetize it and there is a cyber hack or breach where your identity is stolen. That is a nightmare scenario and one that consumers, regulators, everyone is focused on.

Manseeb Khan : Yeah, that's definitely a very scary, scary situation of getting all of our data hacked. I mean, I mean, speaking of Apple and just the big five banks, this is slowly but surely moving towards open banking, which has been a theme on the show time and time again. This is like I'm a huge advocate for it. I mean like open banking it's a very bright future. It's a very exciting future, because now with Apple announcing their credit card, that's just one of the first of many steps towards, hey, you're looking for a mortgage. Well, you know what? Hey. Amazon actually has amazing rates on mortgages in Waterloo. So, once you get a mortgage to Amazon, right. You don't have to go through TD or RBC or anybody else. You can get it from a tech company. Right. Like in the next five to 10 to 15 years, getting a car loan from Facebook is not going to sound as crazy as it is today.

Michael King : Yeah. And I think open banking is really it's coming. It's coming to Canada. It's already presents in Europe, the U.K. and in some ways,  it's coming into the United States. But it's inevitable that we are going to own our own data and have control over it. And that whether it's held by a bank, whether it's helped by a social media company or by a utility, could be your Rogers could be your phone company. That data belongs to us. And we should be paid or at least given service for the access to that data. I think that forward looking companies are now recognizing that they've been able to use it as without compensating us for it. But at the end of the day, competition in the marketplace is going to lead people to focus on the ones that are best custodians and provide the best service. And I think bringing incisive that of that data is going to help consumers. You mentioned also that, you know, Apple is trying to really distance itself from that ad base, business models of Google and Facebook. It's going to be interesting to see how they have to pivot to address all the concerns that consumers have, although a lot of people seem to be favoring convenience over security when it comes to those to their data. By the way, a big shot up for one of Canada's best fintech companies, secure key. I think they in the realm of digital identity, are doing a fantastic job and really leading in terms of looking after consumers.

Manseeb Khan : Awesome shout out to secure key, you did mention a really good point of view. You know, it should be really interesting to see how Apple is going to pivot. I mean, you know, convenience over security. I mean, that's just kind of what that has been the norm for. I mean, forever now. Right. No one like when it comes to terms of services, everyone really laughs because no one's really reading them. I don't I'm in this space and I don't I don't either. I don't like any app that I download. I'm like, screw it. I'll be fine. I'm not going to whatever. I'll be OK. I'll have I'm not that crazy yet. But, you know, it should be really interesting to see how in the future companies not only like Apple, but all the big tech companies, how are they going to monetize or what does this pivot going to kind of look like? Because right now, the landscape has been very like ad focus. AD revenue focus. Right. That's what you're seeing. That's how traditional media has been. When it comes to TV and newspapers. That's now how you're seeing Facebook and Instagram and all these other social media platforms make money. It should be really interesting to see how the heck are these companies going to make money in the future if they're not selling me ads?

Michael King : Yeah. And I think Facebook, most recent announcement about its it's backing a stable coin, a digital cryptocurrency called Libra is a really fascinating look into potentially where they're going to see some more revenues in the future. As you know, and probably your listeners already know, they launched they announced this this plan to use this coin. That's basically going to be backed by. It's going to be held in by a consortium of companies at arm's length from Facebook announced with initially 27 partners. Not a single bank was in the initial group of partners, although they do envisage having banks and other companies there later. They did have a ride sharing on, you know, food companies as well as Visa, MasterCard and other kind of consumer products are there. But it's going to make payments, electronic payments free using WhatsApp and Facebook messenger. So, then the question is, if you're offering me something for free, how can you make money off of it? Clearly, by seeing all the ID that the spending payments is such a rich place to find out customer insights. You know, they must be believing that by seeing all that spending, they're going to be able to. On financial services where they make money from that, right?

Manseeb Khan : I mean, like you said, right. Like right now, they're not partnered up with any banks or anything based on our spending habits and based on where we're sending money, where we're receiving money, they're just going to add more and more players to the Libra ecosystem, right?

Michael King : Yeah, they will. If they've said they're going to basically expand it to at least 100 partners. And by the way, when you say that payments are free. We're talking about cross-border payments. So, there may not be a charge for actually sending the money, but there is a foreign exchange conversion. And typically, you know, PayPal and others, they add a two to three percent charge when converting currencies. Not to mention making a bid ask spread on that foreign exchange transaction. And that can be that can add up when it's billions or trillions of dollars of volume that can create a lot of profit for whoever is managing it.

Manseeb Khan : Yeah. It should be really interesting to see how Facebook handles that. And on top of that differentiates it from that. Right. Because if they're going to if they're going to still charge that 2 to 3 percent charge fee, it should be interesting to see how they kind of market it and how they kind of present it to the customers of like, oh, yeah, yeah. You want some money to Kenya for sure X amount of charge, but we'll try to like jazz it up.

Michael King : Well, it's instant and it's easy and it's convenient. So, you know, most people probably wouldn't think much about paying like 2 percent on a as a service fee.

Manseeb Khan : Yes. No, I actually agree with you. I like to throw it you what are you mostly excited about when it comes to I mean, like everything that we kind of talked about, what are you most excited about and what should I guess the audience and everybody keep in mind or keep top of mind when we're looking at Apple and all these big tech companies moving into financial services?

Michael King : What I'm most excited about is what this means for us as consumers or as customers and whether it's individuals or retail or it could be small business. I think we're going to just have a much better experience when doing our living, our digital or e-commerce lives and as well as offline in the physical commerce world. We're going to see that financial services are going to sort of fade into the background. They're going to not become front and center like the way or the way they are now. Nobody wakes up in the morning saying, hey, I can't wait to go to my bank, you know, pay those fees, or engaged with that individual and the bank. Most people would rather get on with their lives. They want to focus on their spending. They want to focus on their travel, their savings, meeting their friends. And I think financial services are going to become just the way that Jack Mind and Ant financial, they talk about it. They say it's just like tap water. You turn on the tap and water come out. You don't have to worry about where the water is. Is it clean? What's the source? It's available when you need it. You probably don't turn on your light and ask yourself, well, is this Ontario Hydro That's providing this electricity to me or who is. Where's this coming from? You just assume that the electricity is available. And I think that's what's going to happen with financial services. So, we're going to have a reimagined experience. It's focused on us. I would say that institutional markets, institutional clients have been getting a much better service for decades. And now it's the retail consumer and the small businesses turn. That's what fintech is going to deliver to us.

Manseeb Khan : Yeah. That's. That should be really exciting. I can't I can't wait for that future. Michael, is there anything else you want to share with the  audience before I let you go?

Michael King : Yeah, I would say that the model that we're seeing. I mean, we've talked about big tech. We talked about tech fins. There are some really interesting fintech companies that are actually building up marketplaces very similar to what we're seeing. You may have seen that Borrowell, for example, as has pivoted from being a platform providing loans to consumers to now being a basically a financial marketplace, offering at least products from 40 or more third parties. That's kind of the way that we're these multi sided business models are really going to become much more prevalent. I think we're going to get away from having individuals fintechs and seeing instead collaboration between them to offer us a variety of products and services. So, I don't know whether people call that fintech 3.0 or 4.0. I'm losing track, but I do think that this is a fast-moving industry and there's lots of innovation going on.

Manseeb Khan : Yeah, no, I'm super excited to see the future of fintech and for it to be just as background as turning the latter turning on the tap. Michael, thank you so much for sitting down with me today. What would the best way for the audience to either reach out to you personally if they have any more questions about the book, if they want to pick your brain out? If you have a new research paper like this through email, Snapchat, Twitter,

Michael King : They say they can certainly find me on LinkedIn, feel free to connect with me on LinkedIn or to email me at michaelking@uvic.ca. And once the book's out, I'll set up a Web site as. To add to advertising, to share the content with people for free.

Manseeb Khan : Perfect, can't wait to have you on when the book is officially launched. Michael, again. Thank you so much for joining me today and can't wait to have you on next.

Michael King : Thanks, Manseeb.

Outro : you've been listening to fintech Fridays brought to you by NCFA and partners. Tune in weekly for the latest fintech Friday podcast by subscribing to this channel. The National crowdfunding and FinTech Association of Canada is a non-profit actively engaged with social and investment fintech sectors around the globe and provide education research industry stewardship services and networking opportunities to thousands of members and subscribers. For more information please visit and see if a Canada dot org. Oh yea.

 

End of Podcast

 

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Interested in getting involved as a partner or participant? info@ncfacanada.org

 


NCFA Jan 2018 resize - Expert Roundup: DeFi Smart Contract Audits The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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NCFA Fintech Confidential Issue 2 FINAL COVER - Expert Roundup: DeFi Smart Contract Audits

National Post | Andy Blatchford | Oct 5, 2019 The letter was drafted by a lobby group representing signatories run domestic firms that employed more than 35,000 people last year and generated more than $6 billion for the economy OTTAWA — More than 110 Canadian tech CEOs have signed an open letter urging political parties to take action to strengthen the country’s innovative economy, and avoid falling further behind international peers. So far, major parties have put forward pledges in areas like affordability, first-time home-buyers and climate change, but the campaigns have offered few promises designed to drive economic growth in the digital age. “We’re writing because Canada’s productivity is lagging and our future economic prosperity is at risk,” reads the letter addressed to Liberal Leader Justin Trudeau, Conservative Leader Andrew Scheer, NDP Leader Jagmeet Singh and Green Leader Elizabeth May. “You can help by developing economic policies that advance innovative Canadian companies, including increasing their access to skilled talent, growth capital and new customers.” The letter was drafted by the Council of Canadian Innovators, a lobby group representing some of the country’s fastest-growing companies. Combined, its signatories run domestic firms that employed more than 35,000 people last year and ...
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CarefulCents  | Ryan Friend | Sep 17, 2019 Of all the types of insurance out there, health insurance is perhaps the most important. After all, without our health, it’s difficult to do much else in life. However, in the United States, which relies mostly on a private health insurance system, costs are high, and it’s often very confusing to know how much you can expect to pay. This is because you can get health insurance in many different ways. You can buy it on your own, receive it from your employer as part of your compensation package, or get it from the federal government. However, just because the world of health insurance is confusing, it does not mean you need to pay more than you should, and knowing the average costs of the many different types of health insurance can help you understand if your premiums are fair or if it’s time for a change. Below we’ve outlined all the different factors that determine the cost of your insurance and also identified the average rates for the various options out there. In addition, you will find some tips to help you save on your insurance so that you can get ...
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health insurance - Expert Roundup: DeFi Smart Contract Audits
Coindesk | David Pan | Oct 9, 2019 Mutual fund giant Vanguard has partnered with Nasdaq Ventures-backed blockchain startup Symbiont to develop a trading platform for the $6 trillion currency market, the companies said. With the new platform, Vanguard, which manages $5.2 trillion, aims to lower transaction costs for the trillions of dollars worth of currencies it trades annually by boosting peer-to-peer trading for investors, connecting them directly via blockchain technology. Symbiont CEO Mark Smith told CoinDesk the company teamed up with Vanguard to build the currency platform, confirming a Bloomberg report that cited an anonymous source. The platform has been operational for two months and completed its first trades during the time, according to the report. A Vanguard spokesperson told CoinDesk: “Vanguard is currently piloting a project focused on improving the efficiency and reducing risk of FX hedging.” The new platform is part of the fund manager’s commitment to lowering the cost of investing for all investors, the spokesperson said. Neither company would provide further details of the pilot. See:  HSBC settles FX deals worth $250 billion on blockchain in last year Machine Learning in Finance – Present and Future Applications The project, if successful, would be another important milestone ...
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Finextra | Oct 8, 2019 The Swiss National Bank (SNB) is working with the Bank for International Settlements (BIS) on an innovation hub in Switzerland that will initially focus on research into digital central bank money and distributed ledger technology. The SNB is working with SIX on the research, embarking on a proof of concept to explore how digital central bank money could be used in the settlement of tokenized assets between market participants. The project is making use of the SIX Digital Exchange (SDX) platform, which is currently being built and promises to be the world's first end-to-end exchange for digital assets when it launches next year offering listing, trading, settlement and custody service. See:  Mark Carney’s Trojan Unicorn — Are Central Banks Considering Stealth Nationalization in Sovereign Digital Currencies? The SDX system will be used to explore technical possibilities for integrating digital central bank money into DLT platforms. Options include the connection of the existing Swiss Interbank Clearing System or the issue of digital Swiss franc tokens by the SNB for financial market participants. Jos Dijsselhof, CEO, SIX, says: "We are pleased to contribute to this initiative and, through SIX Digital Exchange, to explore the technological possibilities with ...
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Andreessen Horowitz | Anish Acharya In 2006, LendingClub introduced a then-novel business model: the ability to offer online personal loans to millions of underserved customers. The peer-to-peer lender was a media and investor darling, hailed as a tech-enabled alternative to traditional banks. When LendingClub went public in 2014, it was valued at $8.5 billion, the year’s single largest US tech IPO. Now, five years later, that fintech pioneer has lost 85 percent of its market value. Meanwhile, mobile upstart MoneyLion launched in 2013, also providing online personal loans—a direct competitor to LendingClub. Today, MoneyLion claims more than 5 million users and is valued at nearly $1 billion. See:  Peer to Peer Lending: The Future of Fintech is Now LendingClub had significant competitive advantages, from low customer acquisition costs—back then, personal loans keywords weren’t nearly as competitive on Google and Facebook was actively promoting LendingClub as an early F8 partner—to improved underwriting (the company provided lenders with access to customers’ credit score, total debt, income, monthly cash flow, and social data). So why is LendingClub experiencing growing pains while MoneyLion sees significant growth? Though the latter started out solely as an online lender, it quickly morphed into an all-in-one lending, savings, ...
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CNBC | Chloe Taylor | Oct 8, 2019 Singapore has overtaken the U.S. to become the most competitive nation in the world, according to the World Economic Forum (WEF). In its 2019 Global Competitiveness Report, the WEF measured the strength of 103 key indicators, such as inflation, digital skills and trade tariffs, across 141 countries. The key indicators in the report were organized into 12 pillars, which included institutions, macroeconomic stability and health. The U.S., which held the top spot in 2018′s ranking, dropped into second place this year, although the report’s authors noted that it “remains an innovation powerhouse.” America received the highest score in the world in several subcategories, including ease of finding skilled employees and venture capital availability, with the U.S. also being ranked higher than any other country in the business dynamism pillar. However, the country scored relatively low in some categories, with increasing trade tariffs, declining life expectancy and low digital skills among the American population taking a toll on the United States’ overall ranking. The WEF noted that life expectancy in the U.S. is now lower than it is in China, with the U.S. having only the 39th highest life expectancy in the world ...
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McKinsey & Company | Oct 2019 Ten years ago 10 years ago, the US retail banking industry was in the depths of the global financial crisis, with many one-time leading institutions struggling to survive. Since then, after bringing in billions in fresh capital, US banks have made a return to stable ground and greater liquidity. Despite this progress, aggregate return on equity is at the lower bound of sustainability, and the industry’s price-to-book value is about 1.4, not far above where it stood in 2009. Customer trust has improved from the downturn but is still well below pre-crisis levels. Though most banks were able to avoid unsettling challenges in the following ten years, few were able to break out and significantly outperform the industry. Now, however, several major forces are accelerating the evolution of the US banking industry–the encroachment of new competitors, rising expectations from customers on service levels and corporate responsibility, and an intensifying war for talent—and promising to make doing business more challenging in the coming ten years. Further, US banks have yet to go through the restructuring that has already swept European and Asian markets, where a majority of services are delivered digitally. In this report, we ...
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Crowdfund Insider | JD Alois | Oct 7, 2019 Last week, the Alberta Securities Commission (ASC) adopted a “Blanket Order” for “Startup Crowdfunding Registration and Prospectus Exemptions.” In effect, the ASC was seeking to improve access to capital for smaller firms – a good thing- but the move also highlights the disparity between the provinces and a greater need for national harmonization of online capital formation rules. Financial services in Canada are all regulated at the provincial level thus there exists a degree of disparity regarding rules. While a smaller country by population, Canada has consistently ranked high in entrepreneurship and innovation. According to a recent KPMG report, the Canadian Fintech ecosystem is thriving but, like any other country, more can be done. Crowdfund Insider reached out to Denise Weeres, Director, New Economy at the ASC and Craig Asano, Executive Director and founder of the National Crowdfunding and Fintech Association of Canada (NCFA). The NCFA has long led the charge advocating on behalf of Canada’s emerging Fintech market and various securities crowdfunding platforms. The New Economy Division of the ASC works closely with staff to coordinate efforts to facilitate capital-raising by new economy companies entering the capital market. The Division ...
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TNW Hard Fork | Yessi Bello Perez | Oct 7, 2019 As Facebook deals with the loss of PayPal‘s backing for its ‘cryptocurrency‘ Libra, the tech giant must now get ready to answer EU regulators’ questions about the potential risks posed by the project. The European Commission has requested that Facebook and the Libra Association – the body tasked with supervising the digital currency – answer questions relating to financial stability, money laundering, and data privacy risks. According to the Financial Times, which saw the commission’s questionnaire last week, this is all part of EU financial commissioner Valdis Dombrovskis’ efforts to asses whether projects such as Libra should be regulated in the EU, if new regulation is required, or whether the ‘cryptocurrency‘ should be allowed to operate at all. See:  Libra: France opposes the development of Facebook’s currency “on European soil” News on China cryptocurrency and more reforms Competition Bureau’s call for intel on anti-competitive conduct in digital economy raises eyebrows The news couldn’t come at a worse time for Facebook, which has faced increasing scrutiny and opposition from regulators in recent months. Just last month, Libra‘s founders were subject to questioning by 26 central bank officials in what was the first encounter between the ...
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Betakit | Isabelle Kirkwood | Oct 4, 2019 This week, Hut 8 Mining Corp., a cryptocurrency mining and blockchain infrastructure company headquartered in Toronto, announced it would begin trading on the Toronto Stock Exchange (TSX) on October 8. In addition to expediting new listings and transactions, the Sandbox could also become a channel for new securities policy development. The company is the first blockchain or cryptocurrency company to be listed on the TSX, and is also the first to be listed via the TSX Sandbox. The program aims to accept more listing applications and transactions, and grant access to newer companies that don’t meet all the traditional requirements to be listed, such as market capitalization, a long-form prospectus, management team’s experience level, incorporation in Canada, or corporate governance practices. “Our move to the TSX, the senior public market of the TMX Group, is another significant step in our evolution to provide improved liquidity and enhanced public disclosure to investors,” Andrew Kiguel, CEO of Hut 8, said when the company first announced it would list last month. “We are grateful to the TSX for conditionally approving Hut 8 to be the first company through the TSX Sandbox.” The TSX said Sandbox ...
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Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace

NCFA Canada | Craig Asano | Aug 20, 2019

ExpoG logo final600 - Expert Roundup: DeFi Smart Contract Audits

TORONTO, ON Aug 20, 2019  The National Crowdfunding & Fintech Association of Canada (NCFA) is pleased to announce that the Exponential Group (Exponential Ventures, Exponential Capital and Exponential Markets) has joined NCFA as an industry partner.

NCFA's industry partners are builders, investors and innovators who have provided a significant level of service and/or contribution towards the sustainability and growth of NCFA and related fintech sectors globally.  We encourage the fintech ecosystem to support and collaborate with NCFA's global network of industry partners by engaging directly with their ventures of mutual interest.

"Since founding NCFA in the summer of 2012, one of it's core missions has been working with communities of change that are passionate about enabling inclusive opportunities for 'big vision' companies seeking to change the world but need access to capital and resources to innovate competitive products and services that otherwise may not exist.  These companies often focus on new economies of scale that look beyond 'for profit' models alone.  Supporting and leading this change by developing new infrastructure and partnerships while leveraging new technologies can be a beacon of light resulting in massive transformation and change." - Craig Asano, Founder and CEO, NCFA

 

Meet James Wallace, Co-Founder of the Exponential Group

Exponential Group is the world's first fully integrated early-stage seed capital, business advisory, later stage capital raising, digital issuance and trading.

 

Q1. How did you get to where you are today?

James:  A whole lot of failures that led to a massive amount of learning.

 

 

Q2. What can you attribute your achievements to date to?

James:  Empathy for the excluded, plus grit and determination.

 

 

Q3. What’s the story behind founding Exponential Group and specifically what problems are you interested in solving as a Founder?

James:  An unwavering intention to migrate society to a free, inclusive and abundant paradigm by resolving government and financial exclusion.  Alleviate suffering and expand human potential to enable meaningful living.

 

 

Q4. Can you tell us more about the Digital Asset Impact Fund?

James:  The exchange-traded diversified digital asset impact fund will allow anyone access to a fund that holds a board basket of digital assets. These assets include tokenized real estate, currencies, precious metals, art, and venture capital. This is the easiest way to participate in migrating the economy to the digital asset world.

 

 

Q5. What role/impact do you think blockchain and digital securities will have on the future of financial services?

James:  Blockchain introduces trust to the Internet for the first time. Said another way, a trusted engagement is a secured value exchange, whether that’s an exchange of time reading content on a blog, giving personal data to your government, or trading any store of value such as a digital asset for fiat currency.

Different blockchains verify various aspects of user engagement online. As more and more blockchains connect to support the services of web users, non-blockchain equipped services will simply fall away, as they will not (and can never) be trusted.

Connections to web pages and native applications that are not secured and validated by blockchains will simply cease to exist over time. Bad players will slowly go extinct as blockchain-based services prevent their access to users.

The network of blockchains will eventually become the new Internet. And, because we believe absolute trust scales absolutely, ExV invests in platforms that create and grow trust with their users, in addition to adding significant value by solving a major problem.

 

Q6. What’s the greatest risks and challenges to improving mass adoption and education of blockchain and other technologies with the potential to impact great social change?

James:  Education and updating regulation. In parallel, we need to help everyday investors understand that there are only benefits to digital securities, as well as press the regulators to allow access to digital asset investments for retail investors. We believe the rest will happen naturally.

 

 

Q7. Where do you see Exponential Group in 3-5 years from today?  How can our community help out and get involved and where can we get more information?

James:  Exponential Group will continue to focus on expanding cross-border digital securities trading and as a result we believe in 3-5 years we will be one of the largest global investors, issuers and traders of digital securities.

Exponential Group is looking for dynamic founders to assist in issuing high quality digital securities and investors that wish to upgrade their investment portfolios to contain digital assets.

The best place to connect and get more information is at exgroup.ai.

 

Thanks to James and the Exponential Group for their support of the NCFA Community.  We look forward to collaborating and continuing to advance the development, adoption and growth of industry!

 


NCFA Jan 2018 resize - Expert Roundup: DeFi Smart Contract Audits The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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NCFA Fintech Confidential Issue 2 FINAL COVER - Expert Roundup: DeFi Smart Contract Audits

 

Fintech Fridays EP35: Autonomous Alternative Lending with Vit Arnautov of Turnkey Lender

NCFA Canada | Aug 9, 2019

JOIN US ON A STORYTELLING JOURNEY EVERY FRIDAY.

FF EP35 Vit Arnautov Turnkey Lender - Expert Roundup: DeFi Smart Contract Audits

Aug 9: Autonomous Alternative Lending with Vit Arnautov of Turnkey Lender EP35

HOST: Manseeb Khan, Fintech Friday's show host

GUEST: VIT ARNAUTOV, Chief Product Officer of Turnkey Lender, (Linkedin)

BIO: Vit is a skilled business executive with more than 10 years of experience in managing and delivering innovative fintech solutions. Since its foundation, Vit has been a part of the TurnKey Lender, a company creating intelligent AI-driven solutions for alternative lenders. Over the years he’s become its Chief Product Officer which gives him an incredibly deep insight into fintech in general and lending industry in particular. His areas of expertise include FinTech, digital lending, AI, and big data. Vit is happy to share his expertise with striving entrepreneurs and anyone else it can be helpful for.

About this episode: On this episode of NCFA's Fintech Fridays Podcast, our host Manseeb Khan sits down with Vit Arnautov from Turnkey Lender. They chat about how AI will help the lending space, underbanked countries and why cloud lending is a trillion dollar industry. Enjoy!

turnkey lender logo - Expert Roundup: DeFi Smart Contract Audits

Subscribe and tune in each Friday to check out the latest movers and shakers in fintech.

Listen to more podcasts here: Season 1 | Season 2

 


Transcription of Interview

Intro: Welcome fintech Friday's a weekly podcast brought to you by the National Crowdfunding and Fintech Association of Canada and partners.Covering all things fintech block chain be AI and alternative finance.

Manseeb Khan : Hi, everybody Manseeb Khan here and thank you for tuning in to another fantastical episode of the FinTech Friday podcast. This week I'm super excited to have Vit from Turkey lender. Vit Thank you so much for sitting down with me today.

Vit Arnautov: Hello. Happy to be here. Thanks for having me.

Manseeb Khan : Yeah, for sure. So, could you. For the I guess five or six audience members may not know who you are and what your company does. Could you just give us a rundown of a little bit of your background and what turnkey lender is?

Vit Arnautov: Okay, sure. So, I am a chief product officer, at Turnkey Lender. I mean, this business for about 10 years now, I've been in this company since the very beginning. So, this gives me a good understanding of all the processes in fintech and digital lending. Turnkey lender is the provider of intelligent lending automation. We were the first company to offer great software for the businesses of any kind. And we're focusing on digitalization processes automation and a loan decision making. But we're pretty much covering all the long lifecycle from the origination of the collection and through, of course, the decision. So, we have a line of products. The books version that can be delivered within a day. And with all the required functionalities to start lending and the enterprise solution for more sophisticated clients, this is a tool that allows you to build business processes, solve any complexity without coding. So, you can put it as a kind of Lego construct, a way you can build and automate your processes with blocks. We're Singapore based company we have offices in the U.S., in Ukraine, Indonesia, Malaysia.

Manseeb Khan : That's incredible. I like the Lego analogy you use. I think that's going to make it a lot easier for the audience members , especially to really understand the really amazing work that you guys are doing. So, could you just talk a little bit more of the approval process, right, and how kind of differs from the other alternative lenders?

Vit Arnautov: Yes, sure. So, the decision making, and approval process is still the biggest challenge for the lenders. We understand that this is also the main brisk source in their business. So, we provide several layers of the decision-making process using both traditional and alternative approaches. So, it goes like this first you have the fraud prevention to where you analyze information from internal and external sources like terrorists and other fraud lists. Then you have alternative scoring with more information from client’s house to fill in the application for how fast he's typing, how the application details. If there were copy paste that if there are too many replacements of attachments and understanding if this is a bot filling the application of these real plan. Now that we analyze also the mobile data, which is like mobile usage, number of contacts and so on, because for the entire statistics, about 80 percent of applications can come in from mobile platforms. Right? After that, we have the bank account statements, analysis, and after that goes the internal scorecard, which is the decision engine that we provide out of the box. It's powered by artificial intelligence. It learns about the borrowers and during the lifecycle of the loans. Right. And adjust in time by having more accurate and precise decisions later on. We don't have enough data to analyze. So, with more like advanced package, you can also have the champion challenge scorecards where, for example, if you want to have 10 or 15 percent of more riskier applicants and this is how you apply this on. And also, we provide, of course, the scoring reports for us or our class to analyze and track the performance and to fine tune in future the score.

Manseeb Khan : That's incredible, I'm glad that you have multiple like contingency plans when it comes time, actually like vetting and approving the process. Right. Like even under you, even though the process, I mean, as you know, has turned 200 does claim that it is. It is very fast. It is incredible that like even though it is fast, you still have multiple layers of channels you have to kind of go through.

Vit Arnautov: Yeah. Yeah. Absolutely. And this is like it has all those layers. And actually, can combine several of those. So, we also have like artificial intelligence with image forgery detector, for example, to analyze it attachments that are being in placed this is like an additional module that can be included. And all of this is combined all together. Or you can just use partially to use one block or use another one cause for different markets. It's different. And for different auditors, it's also different. Right. And so, you just can choose which of those you want to use.

Manseeb Khan : So, you do have the option to pick and choose the blocks that are appropriate for you and your business and your auditors. Could you talk about like the biggest technological challenges that alternative lenders face and how does Turnkey lenders solve them?

Vit Arnautov: Sure. So, from my point of view, the biggest ones are, first of all, of course, the regulations that we're having from our governments. There are literally a lot of them right now. And it's getting even worse because governments very strict in those regulations. And we, of course, understand that someone a good purpose. But so, we need to comply with that. And so, in case of Turnkey Lender, it's for example, we have signed an agreement with Thompson Reuters to streamline those military compliance for the clients in different countries because each country has their own compliance. And also, you want to buy a solution that is flexible enough to fit the regulations that are not there yet, but yet to come the fall of the governments. So, the second thing is you the need of one day fund transfer for the organizations and for borrowers. So, solution for that is in turnkey lender. That is fast decision making where you can provide a decision within seconds and you can transfer funds with some kind of automation of payment provider, comparing it to taking days or even weeks. In the past. So, this is a huge change right now. I say that is the growing competition among lenders due to a significant lowering of the entry barrier to the market. And this is also we provide the faster decision making which allows your business to grow faster and provide better decision and lowering risk, of course. And it's the intuitive user interface for the borrowers scores. Each of those question or another step in the application process and know your customer process. It lowers your sales funnel.

Manseeb Khan : Right that makes total sense. How do you see the role of A.I. in digital lending now and in the near future? Because you have mentioned a couple times, you know. How what differentiates you guys from other lenders? And what kind of makes you guys a little bit more pulling ahead is the fact that you guys actually use AI the most the fullest advantage currently to make sure your loaning process, your vetting process and security. And just to make sure the whole like you can optimize every single block to the fullest potential.

Vit Arnautov: Yes, absolutely. So, the first usage of the A.I. is obviously for chat bots that we can see this support that automates their first level and second level usually. And like using bots to kind of answer the questions faster. But what's the biggest application for me, as I see, is the risk evaluation and of course, the decision and process. So, the AI usage helps us to provide more accurate analysis in predicting the expected future behavior for a client and therefore to provide more precise decision making. So, the learning curve for the AI is exponential and in the nearest couple of years we are going to get a huge leap in this.

Manseeb Khan : Because you can totally mitigate a lot more risk. Right being able to map out certain behaviors of who you're lending out to, you get to know, you know, aside from who they are, from the financial statements and from the history and aside from all the documents that they already require having an additional layer of A.I. to learn their behavior patterns and to send it to kind of trend to see what they're going to do in the next five years. I believe that's very important for sure.

Vit Arnautov: Yes, absolutely. If I may add. So please, you've got the operational costs because you don't need to have like 20, 30 people in the office for decision making. You can automate it at all and provide the system within seconds. So, this also eliminates today human error and it helps you to cut costs. Right.

Manseeb Khan : Yeah, for sure. Absolutely. And like you can even start again adding more. And actually, this opens up the door to add more blocks in the future of having even more criteria as of getting approved for loans or what it or the case may be. You guys do something really interesting called Cloud lending. Could you explain a little bit more of what cloud lending is and why it's going to become a trillion-dollar year over year industry?

Vit Arnautov: Yeah, sure. So, cloud lending is really exploding and so we host all our solutions in the cloud, of course. And for each like if it’s a retailer or even a dentist wanted to stand their business and to go online. Or is it a fintech startups. A lot of new players coming into the market. And of course, they have our own challenges and many businesses struggle with the entry barrier. But with a bot platform that we provide, it can be deployed within a day. So, it's ready to use and compare it to the like millions of dollars that banks were investing in R&D to have the same functionality in the past. So, the way we see it is launching now a web platform. A cloud platform for lending is as easy as a WordPress site, which was a really heavy 10 years ago. And now it's a matter of hours. And so, we're even hosting it for you. So, you don't need to pay for hosting separately on your domain name. So, we have a goal in one place. You just buy a subscription and you go with your lending platform.

Manseeb Khan : That's incredible. That makes it a lot more easier to use. I like the WordPress analogy. How do you how do you see technology changing in the lending space in the next five years?

Vit Arnautov: Yeah. First of all, the one that we just discussed, the way AI use each, of course. Now, the second thing I would mention is the whole lifecycle of the loan automation. And it's not only the A.I. usage, but all these flaws that are being now automated with lending solutions. So, it's also eliminating the human error and speeding up the process. It's all about processes. Automation is all things like servicing and collection, reporting, underwriting, and even notifications are all automated now. And you don't need once again 20 people to manage the software and be one engineer who's sitting in the office and fine tuning the software. And it works just as it is. No additional features required. Everything's in place already. Now, the one more thing worth mentioning is an expansion to under banked or unbanked regions and new demographics. Cause as far as I remember, it is two and a half billion people who cannot get access to banks right now in the world. Right. So, it's half of the entire population of the planet. And in really developed countries, the customer acquisition cost is already high. And it continues to grow. This why is many financial institutions having branches of them of their software to go with under banked regions and demographics. This is what's going to change in the near years, of course, because, for example, we're providing an international version of our solution that also you can just choose the country you're operating with and change it automatically change the unique identifier system, for example, and the date format, the currency, the language and stage, and it's ready to go and you can work with it. So, in an example within Asia, they have a lot of rural banks and fintech’s trying to reach out offline lenders outside of the big cities and provide loans to them. So, we can see that interest industry is growing faster.

Manseeb Khan : Yeah. I mean, you did bring up a good point of the fact that there are two billion people that are getting under serviced. And I think the future of that is very bright. I think there's a ton of opportunity there for helping, you know, very under underdeveloped countries. And just like infrastructure in and of itself and being able to service these kinds of people and help them develop, help them, you know, like foster new growing economies. That in and of itself is very exciting because like so many like so many new innovations and just ideas and just like so amazing things are to come out of that. And that to me is. That's can be very, very exciting.

Vit Arnautov: Yes, absolutely. I totally agree with you. And hopefully Elon Musk will cover the earth with the Internet connection very soon and all those people will be able to reach the Internet with loans to be able to grow their businesses. Because right now they just cannot access their banks, right? Yeah. Yeah. In the next few years, they will be able to get loans or their business and start to get in profit.

Manseeb Khan : Right? For sure. And this and this now start to become like an actual player. Right. In whatever space they may be in. Right. That's very, very exciting.

Vit Arnautov: Yeah, absolutely right. Yeah.

Manseeb Khan : So, I guess, how does alternative lending impact industries, I guess, such as telecom and like medicine then?

Vit Arnautov: Ok, let's start with medicine first, right? Cause medical is they say that 21st century is going to be a century of medicine and biotech and the industry's going to be bigger every year. I believe that in 10 or 15 years you will be able to replace your arm with a bionic we are if you want. But the costs for these such kind of surgeries are really high. And so that's where the lending comes in. And you have to get sometimes the service is very fast and you get money and not get a loan from this organization. And so, the second one is telecom and the previous logic goes there. When a user doesn't have money on their balance, they should be instantly offered with the with a credit line to continue communicating so they could repay it later on. And the second use case for telecoms is that they should be able to get a new tablet or new phone right from the office of the telecom. So, they are starting to finance their retails. And you don't have to go to bank anymore. You can get it right in place. So that's why I think it's going to be big in next couple of years.

Manseeb Khan : Mm hmm. The medicine that I never thought of it in the medicine field of like, hey, you know, you want a new bionic arm. Awesome well there is costs for that. I was like, oh, that now. I mean, it's a lot more sense, especially now with the new I guess now like we have robotics and medicine and like, you know, we can actually like sooner or later we able to replace any single body part we can.

Vit Arnautov: Absolutely agree with you Looking forward into this into that future.

Manseeb Khan : Yeah. One hundred percent. So, my I can't wait for that too. Um, are there any other spaces that turnkey lender or are looking into?

Vit Arnautov: Yes, sure. So, we think that retail will be big also. For example, the in-house retail, if you're producing anything you can just provide also services like lending services for that and you will be able to get to competitors with that. You just provide an installment program. Increase in your sales. And then it's very simple, but it's very effective because the sales rises.

Manseeb Khan : Yeah, for sure. because now you have one advantage compared to competitors of, hey, you know what? Sure. We sell. I don't know. Artisanal couches, whatever, whatever, whatever. I don't know whatever you might be selling if you know how to feel, if you do have the full amount. That's OK. We actually offer financing terms, and these are the actual financing terms. So, yeah, no, I agree.

Vit Arnautov: And the business gets their interest and the customer gets the reality. And then there are more clients and there is no downside in this in this approach for sure.

Manseeb Khan : Absolutely. So aside from, I guess, a telecom retail. Are there any other industries that you think alternative lending is going to impact next? And why?

Vit Arnautov: Actually, I think lending will be huge in years future That's to what you mentioned. Like 1 trillion dollars. And it can be anything. It can be e-commerce. It can be a medicine, retail, anything. It can be just installment loans, consumer loans, just anything. And the under banked regions, so that you are discussing. Right. So how about what the population will be getting loans?

Manseeb Khan : So, a little insight into the trends of the lending industry. I mean, such as P2P lending and house financing, which we talked about, debt financing, you know, factoring, invoicing. Could you discuss the areas a little bit more in detail and how do you see them developing more in recent years?

Vit Arnautov: Yeah, sure. So once again, the other bank regions, for example, are not just crowd lending and like crowd funding, it can be peer to peer for businesses in Africa, for example. They want to extend their business. They, for example, produce some great goods, but they don't have this capital to yet grow in. So, with the peer to peer, they can access funds from UK and US for from developed countries. Right. And they're just getting those money to expand their business. And this is very efficient loans with low risks, actually, because they have collateral on their businesses. I'm pretty sure that they will be able to give it back the loan within like short terms for business. It's two years, three years. And this is very effective. And for those lenders, for those businesses in Africa, that they just cannot get funding without it. So, this is the only source and the fastest source of funds that they can access. So, the effort to bear is great also.

Manseeb Khan : Right. And this kind of goes in the conversation of like open banking right now. You're going to have let's stick with the Africa example. Right. I'll let you have a business in Africa. They need money to actually start the business up or pay off whatever they need to pay off. And, you know, they could they can actually start getting more competitive rates. You know, hey, let's look at the banks and UK and let's look at the banks and like Germany or like the bank or the banks like Sri Lanka. Let's see. Look what all the rates are. What do we get? And it's kind of creating a more of a of a really creative, not creative, creative, and competitive marketplace for businesses to kind of have a lot more options and not be as and not have such a high bar of entry.

Vit Arnautov: Yeah, Exactly. And also, worth mentioning that for developed countries, the percentage for loans will get 3 percent. Right. And for Africa, the usual percentage might be like 12 percent or 14 percent. And it's OK for them because they just don't have access to money. So, for developed countries, they have the high interest for not developed or developing countries. It's to get money faster. So, the economy of the world is growing because of that, because money is distribution from one region to another. And are like the money is in the place in Africa producing goods and selling goods. So, the economy rises all over the world because of it.

Manseeb Khan : Right. No, absolutely not. You know, it's really helping fuel the flame of having of more of a globalized economy. Right. Exactly. Yeah. So Vit is there. Before we wrap up, is there anything else you want to add on? I guess a couple of things that you definitely want to keep. You want to make sure the audience kind of keeps in mind.

Vit Arnautov: If you're starting a business, just consider having a platform that is really user friendly and to its flexible enough to fit your business needs and flexible enough to fit your future business needs. So, there are platforms right now that allow you to start business with one day and start operations. So, yeah, it's good. It's great. It's like good for your business.

Manseeb Khan : Awesome. Yeah. So, make sure you make sure everyone or all the entrepreneurs that we have in the audience, make sure that you stay flexible as much as you can. So. Exactly. Yeah, that's awesome. So Vit Thank you so much for sitting down with me today.

Vit Arnautov: Thank you very much for having me Manseeb. Once again. Yeah.

Manseeb Khan : For sure. So, I guess we'll I guess we'll be the best way for audience members to either reach out to you personally and or to Turnkey Lender or if they have any more questions about anything.

Vit Arnautov: Absolutely. You have my contacts. If anything, you can contact me directly or with from our site on Turnkey Lender dot com where we'll be happy to help you. And we'll be happy to answer all of your questions.

Manseeb Khan : Ok. Awesome. Thank you very much. Yeah, for sure.

Outro : you've been listening to fintech Fridays brought to you by NCFA and partners. Tune in weekly for the latest fintech Friday podcast by subscribing to this channel. The National crowdfunding and FinTech Association of Canada is a non-profit actively engaged with social and investment fintech sectors around the globe and provide education research industry stewardship services and networking opportunities to thousands of members and subscribers. For more information please visit and see if a Canada dot org. Oh yea.

 

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NCFA Jan 2018 resize - Expert Roundup: DeFi Smart Contract Audits The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Here’s The Case For A $100,000 Bitcoin Price By The End Of 2021

Forbes | Kyle Torpey | Aug 4, 2019

Julia chatterly interview with anthony pompliano - Expert Roundup: DeFi Smart Contract AuditsThe Bitcoin price has been on a tremendous run in 2019, roughly tripling its price in U.S. dollars since the start of the year. That said, Morgan Creek Digital co-founder Anthony Pompliano thinks the party is just getting started.

Pompliano has predicted that the Bitcoin price will reach $100,000 by the end of 2021, and he was recently asked to explain his point of view during an interview with CNN’s Julia Chatterley.

Digital Gold and Loose Monetary Policy

In the past, Pompliano has described the trend towards loose monetary policy combined with Bitcoin’s upcoming halving event as the “perfect storm” for the rise of the digital asset. Pompliano explained this theory during his CNN interview.

See:  Check out the interview here on CNN with Julia Chatterly and Anthony Pompliano

“Whenever we get to a recessive period or kind of slowing growth, central banks have kind of two tools: They can cut interest rates, which they did yesterday, and they can print money (quantitative easing). And so, when they do both of those things, it usually takes anywhere between 6 to 18 months to feel the effect of those tools, and what it’s going to do is it’s going to coincide with the Bitcoin halving,” said Pompliano.

A halving event in Bitcoin is when the amount of Bitcoin that are generated by miners every ten minutes is cut in half. Bitcoin’s monetary policy was “set in stone” when the network went live back in 2009, and the scheduled issuance of new Bitcoin is halved roughly every four years.

Originally, 50 Bitcoin were created every ten minutes. Next year, the number of new Bitcoin created in each new block will drop from 12.5 to 6.25.

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While gold has historically been viewed as a safe haven asset in times of monetary easing, Pompliano covered a couple of the benefits of Bitcoin over gold during his CNN interview.

“The difference is, between Bitcoin and gold, with Bitcoin, we know exactly how many is getting created, so 1,800 Bitcoin are going to be created today. The second thing is we know the total supply available, which is 21 million. So, it’s not: Hey I wonder how much is in the ground. We know exactly how much it is, and we can actually go and audit or verify the software code of the system,” said Pompliano.

Pompliano is Not Alone

It should be noted that, back in 2017, Pompliano also predicted a $100,000 Bitcoin price by 2019. However, he’s not exactly alone with his latest forecast for 2021.

Pantera CEO Dan Morehead has said there’s a “good shot” the Bitcoin price will hit $42,000 by the end of 2019, and the data used as the basis for his prediction is even more bullish than Pompliano’s $100,000 price point.

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