Is it possible that central banking is getting cool, while fintech becomes the hot stuff?

Could it be that Facebook is the father of disruptive approach of some digital firms nowadays? As peculiar as it may sound, yes. Mark Zuckerberg’s rebellious philosophy represents somewhat the same values that the digital market has today. To be acting fast, and break the order. And although Facebook has moved on from that philosophy, it still remains within the fintech market.

Neo-banks have captured it, as they are mostly the disruptors tackling the current status quo on different levels. But let’s not generalize, as not the whole market is focused on dismantling and disrupting the system. There are some institutions that are focusing on regulating it, and those are central banks of course.

Current economy has requirements for them. Central banking needs to be relatively stable even in the times of big shakes (such as Covid-19 times). And with the increased uncertainty of the current world, the circumspect bastions are much in demand. And to correctly respond to the market demands, central banks have to make a shift and invest in innovation - there seems to be no other way.

But maybe central banks are innovative too?

Collapse )

The Annual FinTech-Aviv Summit. Why it is so important for banking and technology to collide

While most countries put technological advancements aside during the pandemic (completely understandable), the Israeli tech scene seems to be boasting. And we’ve seen stories about the developments there. FinTech-Aviv only proves the good conditions for innovation there. 

They have been organizing the Annual FinTech Summit for a few years now, and have helped to get hundreds of Investors, Corporations, and Startups together. All this during the FinTech Weeks that are being thrown in Tel-Aviv, the Israeli capital of innovation. So far there have been 80 events, all of them free for everybody who wants to learn more about the complicated world of FinTech. This year, despite the pandemic, is no different (well, there are some differences).

The 2021 edition of Annual FinTech-Aviv Summit

With most of the countries still navigating their way towards the Covid-19 exit day, Israel seems to be really setting the trends of how to do it. The country has been simply progressing faster than others, and as they managed to vaccinate quickly and efficiently, their economy is slowly opening up.

The global FinTech enthusiasts have once again been able to ‘visit’ Tel-Aviv and experience the fascinating FinTech event. The only difference is that this year’s edition was held online, as the pandemic is still blocking the world. Actually, the 2020 edition of the event was managed to be organized right before the first lockdown.

Collapse )

The currency boards are the way to quash the risk of hyperinflation - or so does Steve Hanke say

There is an increased risk of hyperinflation and the developing countries are now facing it. And according to the expert, applied economics professor Steve Hanke from Johns Hopkins University, there are ways to prevent it. Currency boards are one of them.

Hopkins believes that the most effective way of fighting the possible hyperinflation would be the mothballing of central banks and putting them straight into museums. He presents two options for developing countries. 

What is Steve Hanke suggesting?

The first solution would be to use a sound currecy (foreign) and operate with it instead of the local one. This has a name, “dollarization”, and is actually a solution existing in 37 countries. Hanke has worked as an expert and advisor in some of them, i.e. in Montenegro, where he was helping to replace the Yugoslav dinar (that was rapidly hyperinflating) with the German Deutsche Mark.

The second option presented by him is to issue the local currency, but do it via a currency board. This would bring a fixed exchange rate with one anchor currency and would mean that the local currency becomes backed eternally by the reserves of the sound currency. So basically, we’re cloning the sound currency.

Why should we trust Hanke?

Collapse )

The Britcoin - will it be the first CBDC success?

There are different ways to spend time, once you’ve retired from politics. The former Greek minister of finance, Yanis Varoufakis, has recently published his novel titled Another Now. It became a playground for his rather anti-capitalist approach, and the story presents us with the new universe, parallel to ours, where the stock markets have been totally abolished.

In Varoufakis’ utopia, technology has completely democratized finance (just what some fintechs are trying to achieve currently). Each citizen receives a monthly allowance paid out by the central bank, which is also holding all their accounts. The ‘pocket money’ is actually called the “personal capital”, and just like every payment there, is administered with the use of digital currency (CBDC). This system is transparent and leaves no place for fraud. Moreover, it successfully bypasses retail banking.

Could it be that we’re close to this vision?

Close? Not really, but the recent advancements could be good news for the enthusiasts of the CBDC idea. Not that long ago the Chancellor’s Taskforce has been announced in the United Kingdom. The sole purpose of it is to develop the fully-functioning central bank digital currency (CBDC). The announcement came during the United Kingdom’s Fintech Week, and the Taskforce has already promised to work closely with stakeholders in order to analyze all the aspects of allowing consumers to open accounts in the Bank of England.

Collapse )

The banks should decide whether they’ll come back to offices, or maybe keep on working remotely

The pandemic surely hasn’t been a pleasant experience. And it’s so good to see that every day brings us closer to normality. But the stories we’ve been hearing from financial institutions’ employees have been really concerning. In the last weeks, a lot of stories about Goldman Sachs hit the media, and as we’re unable to judge them fully objectively, we can say one thing for sure: the working conditions for bankers and bank employees have been really harsh. There are some reasons for that (which does not by any means justify some of the scandals).

David Solomon, the CEO of Goldman Sachs has rejected the idea that his employees could keep on working from homes. Solomon backed his decision with the worry for ‘Cultural Capital’ of the bank, as well as the ‘Connective Tissue’ of the organization.

Behavox shocking report

Also, recently the company Behavox published their research results, and they are honestly frightening. They managed to research the United States, Canada, and the United Kingdom’s bank employees, and some statistics are as below:

- 12% of employees received sexist jokes, 13% of them received racist jokes, and another 12% were recipients of other inappropriate comments.

- 9% of employees witnessed outbursts of anger while on a video call, with almost half of those outbursts terminating the call.

- Almost 50% of employees witnessed some other inappropriate behavior (in different forms) during video conferences and online meetings.

Collapse )

The investor who’s disrupting Wall Street for living, and is really successful at it

Should you be looking for somebody infamous on Wall Street, we have the perfect candidate. Cathie Wood is an investor who is not afraid to speak her mind. She’s also pretty open about her investment strategies, and she’s sharing a lot of her work’s background via YouTube and other social media platforms.

Her company Ark Invest is really popular among the people, as their ambitious and rather relentless focus on innovations meets a really great enthusiasm (among the people, not the Wall Street). Ark’s main strategy is to believe companies that in their opinions have the right mindset and ideas to change the world. And if not change it, then at least shock it.

The established firms do not really like this disruptive approach, but Wood’s success is really undeniable. She’s taking high risks, when investing in cash-burning, and fast-growing companies, but the returns are impressive in her case. Only in 2020, all five of Ark’s EFTs gained more than 100%.

How did Cathie Wood get here?

That’s not something a lot of people know, but Wood was already really successful in New York when she started Ark. In 2001, she quit her job at Jennison Associates, where she was a co-founder of the hedge fund and has worked there for 18 years. She became the Chief Investment Officer in AllianceBernstein, and was managing $5 billion assets in the Global Thematic Strategies division. That is where she first pitched her ETF idea that would be based on innovations disrupting the market.

Collapse )

The United Kingdom’s inflation rate - what happened to it during the pandemic

The new economic environment has recently forced people to look for ways to save their money from the inflation. And as it was pretty interesting, seeing some of the harshest crypto-skeptics, change their mind, there may be some truth in this. The latest trends are really focusing on cryptocurrencies but in the meantime some experts seem to be rediscovering gold’s virtues.

And while there are dozens of questions about what will happen to the economy, there are even more factors that will influence the future outlook of it. Jerome Powell, the Chairman of the Federal Reserve claims that the economy is (or was at the time) at an inflection point, meaning that although things seem to be stabilized for now, the huge changes (in this case, the post-Covid inflation) are right around the corner.

How exactly was the UK’s inflation affected by the pandemic?

ONS (Office for National Statistics) has published data, according to which the inflation rate in the United Kingdom was 0.4% in April. Although it has already risen, and so it did everywhere in the world, the UK still manages to keep it under the target set by the Bank of England at 2%. Before that (in December and January) the rate was set at 0.6% and 0.7% (respectively). It fell because of a few reasons, one of them being the easing of CPI rates (the Consumer Prices Index).

Collapse )

Wall Street and the Tax Plan presented by Joe Biden

If there is somebody surprised by Joe Biden increasing the taxes in 2021, you really should not be. Biden wasn’t hiding his intentions when he was running for the seat. During the 2020 election campaign, he openly spoke about higher taxes, when on the contrary, his opponent Donald Trump has campaigned for lowering them.

And even though Trump managed to implement some of his ideas, society was not really happy about that. The Democrats must have noticed the dissatisfaction caused by the growing gap between the poorest and the wealthiest. And their reforms should help solve this problem a bit, as the ‘cannons’ are directed at the wealthiest percentile only.

Why should Biden care about what Wall Street thinks of that (yes, at Wall Street you’ll find a lot of wealthy people), as he is not a shareholder and the relationship between Washington and Wall Street has been worse in the last years. The scandals only helped that (we still remember how Goldman Sachs paid Hilary Clinton $600,000 just for a private speech), and we’ve gradually seen the drop in the donations for the politicians, not just the Democrats.

What exactly is this Tax Plan that Joe Biden is pursuing so much?

A lot of fuss has been circling around the President’s plans of raising the Capital Gains Tax to 43.4% when it is only 20% today. But no worries (for most of us), as this is supposed to affect only those who are earning more than $1 million.

Collapse )

Was UiPath’s IPO just another tech firm debut, or maybe it was something more than this

Technology has developed impressively in the last years. But we know that already. And since 1977 the Star Wars franchise presented us with their concept of a robot, the things have dramatically progressed. So dramatically, that we’re not speaking of C3PO-type robots as sci-fi anymore. They could become our reality relatively soon, especially with the pace of current technological advancement.

Just a few years back robot Sophia became the legal citizen of Saudi Arabia. And while this is just one case, it shows the direction we’re heading at. Especially with people like UiPath’s staff, who believe they could actually make this new reality come true.

UiPath - the origin and their ambitions

In 2007, in the Romanian capital, Bucharest, some developers gathered together and managed to start their own tech company. They began outsourcing their software and libraries to different, among them some very influential, customers.

Fourteen years have passed since then, Romania successfully joined the European Union, and UiPath has recently been listed by the Stock Exchange of New York. Daniel Dines, the CEO of the UiPath, and the co-founder of it believes in the company’s role in accelerating the achievements of humanity.

Back in 2017, they introduced a concept of a ‘robot for everybody’. This is somehow a follow-up to the Microsoft motto from the 1970s when Paul Allen and Bill Gets believed that they’ll be able to provide a ‘computer on each desk’.

Collapse )

What is the reason for the banks’ big investments in technology?

The banking industry has been having a lot of headaches caused by the rapid development of technology. The innovations are constantly disrupting the systems, and there was no other choice for the banks but to join the race. That is why major ones have decided to invest heavily, and on a really unparalleled scale in the BigTech. The best example should be J.P. Morgan with their $11 billion investment into numerous technologies and innovations. 

But the story that is being told less often, is the one of smaller companies being outsourced by the banks. One of those is Fusion Risk Management. And this model of outsourcing of the increasing share of banks’ work is extremely beneficial for both sides. Why? First, the bank could easily focus on developing their services, while eliminating the need of constructing their own structures from the scratch. Second, the products offered by the tech companies are often more reliable than the ones, that the banks would develop. Third, the tech firms have now a chance to have big and really rich partners, who will be funding their development, thus accelerating the process.

What is ‘operational resilience’?

This strange-sounding term is really not some made-up concept. In fact, it is a key element of planning the business’ steps and making sure that everything stays under control. In simple words, this is the company’s ability to work undisturbed even in troubled times.

Collapse )