Paul Schulte, Advisor, Banking and Financial Services
August 22nd, 2019
Paul Schulte is the Founder and Managing Editor of Shulte Research based in Singapore. Paul's roles[...]
Category Archives: Personal Finance
FCA Report (Feb 2020): Sector Views – Key Areas of Harm Identified
UK FCA | Feb 21, 2020
This analysis also contributes to the decisions we make affecting consumers, market integrity and competition.
Drivers of change
The first chapter describes the common themes across sectors with a focus on those themes that are having the greatest impact on the sectors we regulate. And in the light of EU withdrawal and its impact on financial services markets, we give an overview of our position in the current international context.
The 7 sectors
The remaining chapters cover all the markets we regulate:
- retail banking and payments
- retail lending
- general insurance and protection
- pensions savings and retirement income
- retail investments
- investment management
- wholesale financial markets
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Download the 86 page PDF Report - Sector Views (Key Areas of Harm Identified)
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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N26’s UK Customers Scramble After Bank’s Exit
Pymnts | , 2020
Online bank N26‘s decision to exit the U.K. has customers feeling left behind, CNBC reported.
The Berlin-based digital bank said it would not be able to operate in the country anymore in the wake of Brexit, as it will no longer have a license to do business there. The startup will shutter all of its U.K. locations on April 15.
N26 made its entry into the U.K. in October of 2018 — more than two years after the U.K. made its decision to leave the European Union, but six months before Brexit was officially planned.
However, the fact that N26 used Brexit in its reasoning to leave the U.K. hasn’t sat well with some.
One customer in London told CNBC that he was “outraged” that the company had used Brexit as an excuse, calling it “fake news.” He said N26 needed “an excuse” for investors, and had found in Brexit a convenient scapegoat so that it wasn’t N26’s own failure.
Others said they were disappointed in the closure, enjoying the extra bonuses that come with accounts.
See: Majority of London FinTechs not prepared for no-deal Brexit
N26 is one among a new breed of branchless banks, looking to gain favor with consumers through a parade of slick marketing and eye-catching slogans. The entry in Britain pitted N26 against challengers like Monzo and Revolut, which were trying similar things.
The competitors, meanwhile, have pounced on the exit of N26 as a way to attract more customers to their own brands.
Starling Bank, posted in a Tweet on Monday (Feb. 17), “Just found out your bank’s making a swift Brexit? Don’t worry — we’re here to stay.”
Monese tweeted, “If you’re in need of a Brexit-proof GBP account, we can be your perfect match.”
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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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Latest fintechs focus on saving
Investment Executive | Donalee Moulton | Jan 31, 2020
Advisors beware: These innovations will soon be making their mark in Canada
As 2019 drew to a close, a team of banking, finance and technology experts, together with California-based HMBradley Inc., launched HMBradley, a digital-banking platform. The intent: to reward users for positive financial behaviours.
The new service, backed by fintech heavyweights including PayPal Inc. co-founder Max Levchin (now CEO of Affirm Inc.), will do this by offering the banking industry’s highest interest rates to accountholders who save a portion of their monthly deposits, regardless of how much money they earn.
“[HMBradley] was developed to help consumers be more responsible with their money,” Levchin stated in a release announcing the new venture.
See: Canada’s “spare change” saving and investing app gets backing from National Bank and Desjardins Capital
HMBradley Inc. may be ushering in a new year by disrupting the banking landscape, but the fintech explosion is not new. What is new is the focus on consumer services and enabling consumers to save and invest their hard-earned dollars.
“Canadians are becoming less focused on simply managing a portfolio and generating returns, and more interested in making sure they have enough through more advice-driven and goal-based approaches and coaching,” says Stéphanie Rousseau, a spokesperson with National Bank of Canada in Montreal.
New apps, services and mobile options are not only changing the way consumers and investors manage money, but also changing the expectations they have about saving and spending. Many of the new offerings originate in the U.S. and, at least initially, operate there exclusively.
Earny Inc., based in California, is one. The firm’s app helps shoppers get the best price for a purchase – even after they have paid for a product.
“We empower consumers with the ability to save,” says Oded Vakrat, Earny’s CEO. “Our intention is to ensure you never leave money on the table.”
Agreements with retailers, including the top 20 retailers in the U.S., enables Earny to monitor prices and offer refunds when a price drops shortly after purchase. Earny users have collectively saved $4 billion to date, says Vakrat. “Every month, we find a few million in savings for consumers.”
The Earny app, which also includes hotel services, has more than three million users.
See:
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Interested in a High Interest Bitcoin Saving’s Account? Interview with Ledn CEO, Adam Reeds
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Wealthsimple launches its first spending account
The ability to save appears to draw many users who would fall outside the reach of investment firms and financial advisors to contemporary fintech. The Acorns app, for example, helps users invest, save and spend responsibly for just $1, $2 or $3 per month. Acorns Securities LLC, based in California, promises “no surprise fees, just surprise upgrades.” The app rounds up debit and credit card purchases and invests the difference for users. The appeal is far-reaching: with 6.2 million users, the Acorns app is the fastest- growing financial-wellness system and leading micro-investment app in the U.S.
Insuretech is another fast-growing subset of fintech. For example, New York-based Lemonade Insurance Co. is taking an innovative approach to providing property and casualty insurance to clients. The firm, which is powered by artificial intelligence and behavioural economics, takes a fixed fee out of clients’ monthly premiums (to cover reinsurance and the expenses of running the business) and uses the rest for paying out claims. The company returns unclaimed money to clients in an annual “giveback.” The insurer insists it “gains nothing by delaying or denying claims.”
The new wave of fintech services go beyond traditional service offerings.
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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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Goldman Sachs, the 150-year-old investment bank, is staking its future on a mobile app
CNBC | Hugh Son | Jan 13, 2020
Key Points- When Goldman Sachs released a long-awaited app for customers of its Marcus consumer bank last week, it did so with little fanfare or hype.
- But the app will one day serve as the bank’s storefront and one-stop shop for an array of digital banking services, according to Adam Dell, a Goldman Sachs partner and head of product at Marcus.
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“There are two kinds of incumbent banks,” Dell told the audience at a financial conference in June. “There are banks that are screwed, and there are banks that don’t know they’re screwed.”
When Goldman Sachs released a long-awaited app for customers of its Marcus consumer bank last week, it did so with little fanfare or hype.
Unlike the intense attention on its last retail product, the Apple Card, the launch of the bank’s Marcus app was heralded by little more than a smattering of user reviews.
See: JPMorgan has a plan to help Amazon and Airbnb look more like banks
But the app may prove to be far more important to Goldman than its credit card partnership with Apple. That’s because the portal, which today lets customers check balances and set up recurring transactions, will one day serve as the bank’s storefront and one-stop shop for an array of digital banking services, according to Adam Dell, a Goldman Sachs partner and head of product at Marcus.
“Over time, our ambition is to extend the capabilities of the Marcus app and have that be the centerpiece of our consumer-facing experience,” Dell said in an exclusive interview.
The app comes at a crucial time for Goldman. Ahead of the bank’s first-ever investor day later this month and earnings report this week, shareholders are eager to hear about how 3-year-old Marcus will drive revenue growth. Last week, Goldman, which has served corporations, heads of state and rich individuals for most of its 150-year history, changed its reporting lines to give its retail operations a stand-alone division for the first time.
Goldman executives like Dell – an entrepreneur and brother of billionaire Michael Dell who joined Goldman in 2018 after selling his start-up to the bank for $100 million – have made no secret of their intention to beat big retail banks at their own game. That means expanding Marcus from its two products – savings and personal loans – to potentially include wealth management, mortgages, car loans, insurance and cards beyond the Apple Card.
See: JP Morgan is rolling out the first US bank-backed cryptocurrency to transform payments business
Dell, who is a part of a recent wave of outsiders to join Goldman at the senior-most partner level, said the firm spent much of last year planning, building and testing the app with hundreds of employees. The development team was led by Dell and former employees of Clarity Money, the personal finance start-up that Goldman acquired.
“Our aspiration is very clear: We want to build the best digital banking experience that any customer can have,” Dell said. “As I think about the competitive landscape of the incumbent consumer banks, I think there’s enormous opportunity for us to differentiate ourselves with great digital products.”
Perhaps more than at any time in decades, bank customers are up for grabs as consumer preferences evolve, driven by slick apps from tech firms like Uber. And unlike tech giants like Google and fintech competitors like Chime, Goldman doesn’t have to partner with a bank to offer services – it became a bank holding company in 2008.
But as last week’s disclosure showed, Goldman’s retail business is tiny compared with rivals. High expenses as the company ramped up investments in Marcus and the Apple Card meant the business generated a fraction of the profit of the bank’s other, mature lines. Marcus has collected about $55 billion in deposits and made $5 billion in loans, a pittance compared with the more than $1 trillion in deposits and $900 billion in loans J.P. Morgan Chase and Bank of America each have.
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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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How to Spend Money
Of Dollars and Data | | Dec 3, 2019
Psychological Tricks for Worry-Free Spending
I want to teach you how to spend money. You may think that statement sounds ridiculous and say to yourself, “Nick, I don’t need help with spending money. I’m an expert at that!” But I’m not talking about how to spend money extravagantly. I’m talking about how to use your hard-earned cash in a worry-free way.
There have been thousands of personal finance articles written on how to spend money. Some of these articles emphasize frugality and reducing your expenses, while others focus on growing your income so you don’t have to worry about expenses at all. But, the problem with many of these approaches is that they are based upon one thing—guilt.
Between Suzie Orman telling you that buying coffee is equivalent to “peeing away $1 million” and Gary Vaynerchuk asking you whether you are working hard enough, mainstream financial advice is built upon sowing doubt around your decision-making. Should you buy that car? How about those fancy clothes? What about a daily latte? Guilt. Guilt. Guilt.
This kind of advice forces you to constantly second guess yourself and creates anxiety around spending money. And having more money doesn’t necessarily solve this problem either. A 2017 survey by Spectrem Group found that 20% of investors worth between $5 million and $25 million were concerned about having enough money to make it through retirement.
See: Managing Finances in a New Startup
But this is no way to live your life. Yes, money is important, but it shouldn’t alarm you anytime you see a price tag. If you have ever debated whether you could afford something even when you had sufficient funds, then the problem isn’t you, but the framework that you are using to think about your spending.
What you need is a new way of thinking about how to spend money so that you can make financial decisions without worry. To do this I recommend two different tips that, when combined, will allow you to spend your money 100% guilt-free.
The 2x Rule
The first tip is what I call “The 2x Rule.” The 2x Rule works like this: Anytime I want to splurge on something, I have to take the same amount of money and invest it as well. So if I wanted to buy a $400 pair of dress shoes, I would also have to buy $400 worth of equities. This makes me re-evaluate how much I really want something because if I am not willing to save 2x for it, then I don’t buy it.
I like this rule because it removes the psychological guilt associated with binge purchases. Since I know that my splurging will be accompanied by an equal-sized investment in income-producing assets, I never worry about whether I am spending too much.
And you don’t have to invest the money for The 2x Rule to work effectively either. For example, you could donate the other half to a charity and have the same guilt-free effect. Every “extravagant” dollar you spend on yourself could be matched with a “charity” dollar that goes to a worthy cause. Not only does this allow you to help others, but you won’t feel bad when you spoil yourself.
See: 4 Ways To Finance Your Business Venture
No matter how you decide to use The 2x Rule, this is one simple tip that can help free you from the prison of purchase guilt.
Maximizing Happiness or Fulfillment?
The second tip I use to spend my money worry-free is to focus on maximizing my long-term fulfillment. Note that I said “fulfillment” and not happiness. The difference is important. For example, running a marathon is probably a fulfilling experience though it may not necessarily be a happy one. The exertion and effort required to complete a marathon does not typically create a sense of moment-to-moment happiness, but it can create a deep sense of accomplishment and fulfillment once the event is over.
This is not to say that happiness doesn’t matter. Of course it does. The authors of Happy Money: The Science of Happier Spending found that spending money in the following ways was most likely to increase your overall happiness:
- Buying experiences
- Treating yourself (on occasion)
- Buying extra time
- Paying upfront (i.e. all-inclusive vacations)
- Spending on others
However, even these great tips are no panacea. You can buy the absolute best experiences and allow yourself all the free time in the world, but this does not guarantee that you will be fulfilled. So what can increase fulfillment?
See: Black Friday, data concerns, online sales: 5 killer stats
This isn’t an easy question to answer, but the framework proposed by Daniel H. Pink in Drive for understanding human motivation is a great start. In the book, Pink discusses how autonomy (being self directed), mastery (improving your skills), and purpose (connecting to something bigger than yourself) are the key components to human motivation and satisfaction. These same categories are also useful filters for deciding how to spend your money.
For example, buying a daily latte may seem unnecessary, unless that latte allows you to perform at your best while at work. In this instance, the daily latte is enhancing your occupational mastery and would be money well spent. You can use the same logic to justify purchases that would increase your autonomy or sense of purpose as well.
Ultimately, your money should be used as a tool to create the life that you want. That’s the point. The suggestions in this article were merely meant to reduce your anxiety around money, not to tell you where to use it. The hard part, therefore, isn’t spending your money, but figuring out what you truly want out of life.
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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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