Technology is transforming finance. Stock-trading was first to be disrupted, then came banking and Insurance is next in line.

Technology is transforming finance. Stock-trading was first to be disrupted, then came banking and  Insurance is next in line.

5 ways technology is transforming finance

An Apple iphone 6 with Apple Pay is shown in this photo illustration in Encinitas , California June 3, 2015. Interviews with analysts, merchants and others suggest that Apple's forecast may be too optimistic and that many retailers remain skeptical about the payment system.  Photo taken June 3, 2015. To match story APPLE-PAY/     REUTERS/Mike Blake  - RTX1FA2C

For decades, banks and insurers have employed the same relatively static, highly profitable business models. But today they find themselves confronted on all sides by innovators seeking to disrupt their businesses. Crowdfunding, peer-to-peer lenders, mobile payments, bitcoin, robo-advisers – there seems to be no end to the diversity, or to the sky-high valuations, of these “fintech” innovators.

Yet, some might note that they have heard this tune before. The direct banks and “digi-cash” of the 90s captured the imagination of journalists and investors in a similar fashion, but ultimately had little impact. In fact, the financial services industry has been remarkably impervious to past assaults by innovators, partially due to the importance that scale, trust and regulatory know-how have traditionally played in this space.

However, as they say in investing, “past performance is not an indicator of future success” and the same may be true for banks’ and insurers’ record of besting innovators.

A new World Economic Forum report takes a look into what the future holds for the industry. It draws on over 100 interviews with industry experts and a series of workshops that put strategy officers from global financial institutions in the same room as high-flying fintech innovators to discuss the issue. Their findings suggest this round of innovation just might make the big names in financial services rethink their business models in some very fundamental ways.


InnovativeFinance

Here are five characteristics of today’s innovators to suggest this time might really be different when it comes to disruptive innovation in financial services:

1.     They’re deploying highly focused products and services

Past innovators often tried to replicate the whole bank, resulting in business models that either appealed only to the most tech-savvy or price-conscious customers.Today’s innovators are aggressively targeting the intersection between areas of high frustration for customers and high profitability for incumbents, allowing them to “skim the cream” by chipping away at incumbents’ most valuable products. It is hard to think of a better example of this than remittance – banks have traditionally charged very high fees for cross-border money transfers and offered a poor customer experience, with transfers often taking up to three days to arrive at their destination. UK-based company Transferwise is challenging this process using an innovative network of bank accounts and a user-friendly web interface to make international transfers faster, easier and much cheaper. Thanks to this business model, the company now oversees over £500 million of transfers a month and has recently expanded into the US.

2.     They are automating and commoditizing high-margin processes

Innovators are also using their technical skills to automate manual processes that are currently very resource intensive for established players. This allows them to offer services to whole new groups of customers that were once reserved for the elite. “Robo-advisers” like WealthfrontFutureAdvisor and Nutmeg have automated a full suite of wealth management services including asset allocation, investment advice and even complicated tax minimization strategies, all offered to customers via an online portal. While customers must forego the in-person attention of a dedicated adviser, they receive many of the services they would offer at a fraction of the cost and without needing to have the $100,000 in investible assets typically required. As a result, a whole new class of younger, less wealthy individuals are receiving advice and support in their efforts to save, and it remains unclear if they will ever have the desire to switch to a traditional wealth adviser, even as their savings grow to the point where they become eligible for one.

3.     They are using data strategically

Customer data has always been a central decision-making factor for financial institutions – bankers make lending decisions based on your credit score while insurers might look at your driving record or require a health check before issuing a policy. But as people and their devices become more interconnected, new streams of granular, real-time data are emerging, and with them innovators who use that data to support financial decision-making. FriendlyScore, for example, conducts in-depth analyses of people’s social networking patterns to provide an additional layer of data for lenders trying to analyse the credit-worthiness of a borrower. Does your small business get lots of customer likes and respond promptly to complaints? If so, you might be a good risk. Are all of your social connections drinking buddies “checking in” at the same bar? Well that might count against your borrowing prospects.

Meanwhile, a new breed of insurance company is identifying ways to generate streams of data that help them make better pricing decisions and encourage their policy-holders to make smart decisions. Oscar, a US-based health insurer provides its clients with a wearable fitness tracker free of charge. This lets Oscar see which policy-holders prefer the couch to the gym and enables them to provide monetary incentives (like premium rebates) to encourage customers to hit the treadmill. As the sophistication of these analytic models and wearable devices improves, we will likely see more and more financial services companies working to nudge their customers towards better behaviour and more prudent risk management.

4.     They are platform based and capital light

Companies like Uber and Airbnb have shown that marketplace companies, which connect buyers and sellers, are able to grow revenues exponentially while keeping costs more or less flat. This strategy has not gone unnoticed by innovators in financial services. Lending Club and Prosper, the two leading US marketplace lenders, saw their total originations of consumer credit in the US grow from $871 million in 2012 to $2.4 billion in 2013. Lending Club alone issued $3.5 billion in loans in 2014. While this is only a fraction of total US consumer debt, which stood at $3.2 trillion in 2013, the growth of these platforms is impressive. Analysts at Foundation Capital predict that marketplace lenders will issue $1 trillion in consumer credit, globally, by 2025. Even more impressive, they have done so without putting any of their own capital at risk. Instead, they have provided a place where borrowers looking to get a better rate can meet with lenders (both individuals and a range of institutions such as hedge funds) who are eager to invest their money.

Crowdfunding platforms have achieved something similar, becoming an important source of funding for many seed-stage businesses. These platforms connect individuals looking to make small investments in start-ups with an array of potential investment targets, and allow the “wisdom of the crowd” to decide which companies will and will not be funded (while taking a slice of the funds from those that are successful).

5.     They are collaborating with incumbents

This one might seem strange. After all, disruptors are supposed to devour the old economy, not work with it. But this is an oversimplified view. Smart investors have realized that they can employ bifurcated strategies to compete with incumbents in the arenas of their choosing while piggy-backing on their scale and infrastructure where they are unable to compete. For their part, incumbents are realizing that collaborating with new entrants can help them get a new perspective on their industry, better understand their strategic advantages, and even externalize aspects of their research and development. As a result, we’re seeing a growing number of collaborations between innovators and incumbents. ApplePay, the most lauded financial innovation of the past year, doesn’t attempt to disrupt payment networks like Visa and MasterCard, but instead works with them. Meanwhile, regional banks, like Union Bank in California, are forming strategic partnerships with marketplace lenders, providing referrals for customers they are unable to lend to. This helps them meet their customers’ needs while avoiding the risk that they will leave for another full-service financial institution.

Clearly, there is more to this story than simple disruption. How it will play out is still to be seen, although we can safely say that innovators will force incumbents to change, which should ultimately benefit the consumer. But it doesn’t necessarily mean that the brand names we know will be disappearing any time soon – particularly those who learn to play with the new kids on the block.

The Future of Financial Services report is available here.

https://agenda.weforum.org/2015/06/5-ways-technology-transforming-finance/

The Malta Citizenship by Investment Programme

The Malta Citizenship by Investment Programme

maltaway_malta_gozo_Sunset

Introduced in the first quarter of 2014, the Malta Individual Investor Programme (IIP) offers citizenship in a EU Member State that is stable, neutral and highly respected, tying in a solid investment and a lasting bond with the country. The program allows for the grant of citizenship to duly qualified, reputable foreign individuals and families (EU and non-EU nationals) who make a significant contribution to the economic development of Malta.
The new Malta Individual Investor Programme (also referred to as the Malta Citizenship Programme) will be a good opportunity for investors to contribute to the local Maltese economy whilst at the same time benefiting from a citizenship in Malta. Successful candidates will be granted citizenship by a certificate of naturalization, which can also be extended to include their families and dependent.
The Maltese authorities guarantee an efficient application process, and the world’s strictest due diligence standards and vetting of applicants, thus ensuring only highly respectable clients will be admitted.
Benefits
Successful candidates will be awarded Malta citizenship, which automatically includes EU citizenship, thus giving the right of establishment in all 28 EU countries and Switzerland. Other benefits include the ability to work and/or set up business in Malta and visa-free travel to more than 160 countries in the world, including the USA.

Eligibility criteria for the Malta Individual Investor Programme

woman

The main applicant must be at least 18 years of age and may also add to a citizenship application for his/her spouse, as well as children and parents or grandparents, given that certain conditions are met.
Financial contribution
All individuals and families applying to the Malta Individual Investor Program must make a significant contribution to the National Development and Social Fund established by the Government. This consists of a financial contribution of €650,000 for the main applicant and an additional €25,000 per direct dependents, including the spouse and minor children. In the case of dependent children that are 18 to 26 years of age, or dependent parents over 55 years, a €50,000 contribution is applicable.
Property
The applicant must also commit to retain a residence in Malta for a period of at least 5 years, either through the purchase of a property for which the minimum value must exceed €350,000, or by renting out a property for which the minimum annual rent must exceed €16,000. Ask to us to advice and serve you on these matters and look into casa malta database

maltaway_rabat_malta
Bonds Investment
An investment of €150,000 in Government approved financial instrument is required, which must be maintained for a minimum period of 5 years. We can assist you as well
Residency status
on buying/renting their property in Malta, citizenship candidates are issued an identity card. Citizenship is granted after 12 months from date of property purchase or rental. Candidates need not spend 365 days in Malta before citizenship is granted. Residence is defined under Maltese law as an intention to reside in Malta for any fiscal year, usually evidenced by a stay of a minimum of 183 days or by the purchase / rental of property together with a visit to Malta.
Fit and proper test
applicants must show they are in good standing and repute and will undergo a ‘fit and proper’ test. They must also show they do not suffer from any contagious disease.
Clean Criminal Record
The applicant must have no criminal record. Applicants must provide a police certificate which may be submitted subsequently to the submission of the application but before approval. A person who has been denied a visa to a country with which Malta has visa-free travel arrangement shall not be entitled to apply under the program. A person who is deemed a potential national security or reputational risk, or is subject to criminal investigation will also be denied citizenship.

Application and Due Diligence fees
Standard due diligence fees are applicable as follows: For main applicant: EUR 7,500; for spouses, adult children and parents: EUR 5,000; for children between 13 and 18 years of age: EUR 3,000 each.
The programme is limited to the first 1,800 approved applications.
The application will be processed by Identity Malta (a government institution) and is to be submitted through a local Approved Agent.

Through its hands-on participation in promoting Malta on an international level, and in association with a number of local approved agents Frank Salt Real Estate can assist international clients in obtaining Malta residence and citizenship under the respective programs, including the Malta Individual Investors Programme.

Taxation Merits tied to the Malta Citizenship by Investment Programme
The acquisition of Maltese citizenship under the IIP does not have any tax consequences, and even if one’s residence is moved to Malta, one would still retain the status of a non-domiciled person and thus have a limited, advantageous tax exposure.
The acquisition of Maltese citizenship under the IIP does not have any tax consequences, and even if one’s residence is moved to Malta, one would still retain the status of a non-domiciled person and thus have a limited, advantageous tax exposure.
Candidates that become residents and domiciled in Malta are required to pay income tax on their worldwide income. Personal income is taxed at progressive rates of up to 35%. However, individuals that are resident in Malta but not domiciled in Malta will only be required to pay tax on income arising in Malta and income (excluding capital gains) that arises outside Malta that is received in Malta.
Capital Gains Tax: Malta does not impose estate or donations tax but it does levy a capital gains tax on various assets (mainly immovable property and shares). Capital Gains Tax is not levied on transfer of immovable property if the person transferring the property has owned it and occupied it as his main residence for a period of three years and has not vacated it for more than one year. Otherwise tax shall be levied at the 0 to 35% tax regime on the gain if the property is sold within the first 12 years of ownership or 12% of the sales consideration if the transfer is effected after 12 years of ownership. However the 12% final tax does not apply if the individual property owner is not resident in Malta.
Malta has concluded double taxation treaties with around 70+ countries with a number of other agreements signed but not yet in force.
The standard VAT rate in Malta is of 18%. The corporate tax rate is 35%, however special tax concessions apply for non-resident / non-domiciled owners.

MALTA has now a mobile digital finance platform solution

MALTA has now a mobile digital finance platform solution…in English and Italian as well

Calamatta Cuschieri launches mobile online trading platform
The company has also announced some major developments, including its intention to take the platform to overseas markets.

Calamatta Cuschieri has unveiled the mobile version of its live online trading platform, CCTrader.

The company has also announced some major developments, including its intention to take the platform to overseas markets.

Other developments include lower costs on US Market Trades, which now start from $9.99, and the extension of trading desk support hours to US markets close at 10pm. US stock quotes are also live – rather than subject to a 15-minute delay. The platform now also features advanced HTML5 charting.

CCTrader was designed and is being developed entirely in-house, representing a considerable investment in IT.

Commenting on the Internationalisation, Calamatta Cuschieri’ s co- CEO, Alan Cuschieri said : “There are a number of reasons why CCTrader is generating international interest; it is a multi-asset platform which includes a number of customised functions which are very popular, but ultimately we believe its success is due to customer service.

“We have a growing number of overseas clients who are finding the platform to be user-friendly and competitive. We already have an Italian version of the platform as well as fluent trading desk and customer care staff. The company will be now establishing more dominant presence internationally, further details on this development will be announced in due course”.

CCTrader covers all the major investment classes, ranging from mutual funds, bonds, and savings plans to equities and ETFs on 35 exchanges. The platform provides access to over 30,000 instruments, including all local investments such as government bonds, IPOs and local retail funds.

No deposit is required to open an account. The platform can be accessed directly via live.cctrader.com.

Calamatta Cuschieri group had just 20 staff when it launched the platform in June 2011; it now has over 60.

Calamatta Cuschieri pioneered the local financial services industry in 1972, is a founding member of the Malta stock exchange and is licensed by the MFSA.

http://www.maltatoday.com.mt/business/business_news/54675/calamatta_cuschieri_launches_mobile_online_trading_platform

Technology is transforming finance. Stock-trading was first to be disrupted, then came banking and Insurance is next in line

Technology is transforming finance. Stock-trading was first to be disrupted, then came banking and  Insurance is next in line.

5 ways technology is transforming finance

For decades, banks and insurers have employed the same relatively static, highly profitable business models. But today they find themselves confronted on all sides by innovators seeking to disrupt their businesses. Crowdfunding, peer-to-peer lenders, mobile payments, bitcoin, robo-advisers – there seems to be no end to the diversity, or to the sky-high valuations, of these “fintech” innovators.

Yet, some might note that they have heard this tune before. The direct banks and “digi-cash” of the 90s captured the imagination of journalists and investors in a similar fashion, but ultimately had little impact. In fact, the financial services industry has been remarkably impervious to past assaults by innovators, partially due to the importance that scale, trust and regulatory know-how have traditionally played in this space.

However, as they say in investing, “past performance is not an indicator of future success” and the same may be true for banks’ and insurers’ record of besting innovators.

A new World Economic Forum report takes a look into what the future holds for the industry. It draws on over 100 interviews with industry experts and a series of workshops that put strategy officers from global financial institutions in the same room as high-flying fintech innovators to discuss the issue. Their findings suggest this round of innovation just might make the big names in financial services rethink their business models in some very fundamental ways.


InnovativeFinance

 

Here are five characteristics of today’s innovators to suggest this time might really be different when it comes to disruptive innovation in financial services:

1.     They’re deploying highly focused products and services

Past innovators often tried to replicate the whole bank, resulting in business models that either appealed only to the most tech-savvy or price-conscious customers.Today’s innovators are aggressively targeting the intersection between areas of high frustration for customers and high profitability for incumbents, allowing them to “skim the cream” by chipping away at incumbents’ most valuable products. It is hard to think of a better example of this than remittance – banks have traditionally charged very high fees for cross-border money transfers and offered a poor customer experience, with transfers often taking up to three days to arrive at their destination. UK-based company Transferwise is challenging this process using an innovative network of bank accounts and a user-friendly web interface to make international transfers faster, easier and much cheaper. Thanks to this business model, the company now oversees over £500 million of transfers a month and has recently expanded into the US.

2.     They are automating and commoditizing high-margin processes

Innovators are also using their technical skills to automate manual processes that are currently very resource intensive for established players. This allows them to offer services to whole new groups of customers that were once reserved for the elite. “Robo-advisers” like WealthfrontFutureAdvisor and Nutmeg have automated a full suite of wealth management services including asset allocation, investment advice and even complicated tax minimization strategies, all offered to customers via an online portal. While customers must forego the in-person attention of a dedicated adviser, they receive many of the services they would offer at a fraction of the cost and without needing to have the $100,000 in investible assets typically required. As a result, a whole new class of younger, less wealthy individuals are receiving advice and support in their efforts to save, and it remains unclear if they will ever have the desire to switch to a traditional wealth adviser, even as their savings grow to the point where they become eligible for one.

3.     They are using data strategically

Customer data has always been a central decision-making factor for financial institutions – bankers make lending decisions based on your credit score while insurers might look at your driving record or require a health check before issuing a policy. But as people and their devices become more interconnected, new streams of granular, real-time data are emerging, and with them innovators who use that data to support financial decision-making. FriendlyScore, for example, conducts in-depth analyses of people’s social networking patterns to provide an additional layer of data for lenders trying to analyse the credit-worthiness of a borrower. Does your small business get lots of customer likes and respond promptly to complaints? If so, you might be a good risk. Are all of your social connections drinking buddies “checking in” at the same bar? Well that might count against your borrowing prospects.

Meanwhile, a new breed of insurance company is identifying ways to generate streams of data that help them make better pricing decisions and encourage their policy-holders to make smart decisions. Oscar, a US-based health insurer provides its clients with a wearable fitness tracker free of charge. This lets Oscar see which policy-holders prefer the couch to the gym and enables them to provide monetary incentives (like premium rebates) to encourage customers to hit the treadmill. As the sophistication of these analytic models and wearable devices improves, we will likely see more and more financial services companies working to nudge their customers towards better behaviour and more prudent risk management.

4.     They are platform based and capital light

Companies like Uber and Airbnb have shown that marketplace companies, which connect buyers and sellers, are able to grow revenues exponentially while keeping costs more or less flat. This strategy has not gone unnoticed by innovators in financial services. Lending Club and Prosper, the two leading US marketplace lenders, saw their total originations of consumer credit in the US grow from $871 million in 2012 to $2.4 billion in 2013. Lending Club alone issued $3.5 billion in loans in 2014. While this is only a fraction of total US consumer debt, which stood at $3.2 trillion in 2013, the growth of these platforms is impressive. Analysts at Foundation Capital predict that marketplace lenders will issue $1 trillion in consumer credit, globally, by 2025. Even more impressive, they have done so without putting any of their own capital at risk. Instead, they have provided a place where borrowers looking to get a better rate can meet with lenders (both individuals and a range of institutions such as hedge funds) who are eager to invest their money.

Crowdfunding platforms have achieved something similar, becoming an important source of funding for many seed-stage businesses. These platforms connect individuals looking to make small investments in start-ups with an array of potential investment targets, and allow the “wisdom of the crowd” to decide which companies will and will not be funded (while taking a slice of the funds from those that are successful).

5.     They are collaborating with incumbents

This one might seem strange. After all, disruptors are supposed to devour the old economy, not work with it. But this is an oversimplified view. Smart investors have realized that they can employ bifurcated strategies to compete with incumbents in the arenas of their choosing while piggy-backing on their scale and infrastructure where they are unable to compete. For their part, incumbents are realizing that collaborating with new entrants can help them get a new perspective on their industry, better understand their strategic advantages, and even externalize aspects of their research and development. As a result, we’re seeing a growing number of collaborations between innovators and incumbents. ApplePay, the most lauded financial innovation of the past year, doesn’t attempt to disrupt payment networks like Visa and MasterCard, but instead works with them. Meanwhile, regional banks, like Union Bank in California, are forming strategic partnerships with marketplace lenders, providing referrals for customers they are unable to lend to. This helps them meet their customers’ needs while avoiding the risk that they will leave for another full-service financial institution.

Clearly, there is more to this story than simple disruption. How it will play out is still to be seen, although we can safely say that innovators will force incumbents to change, which should ultimately benefit the consumer. But it doesn’t necessarily mean that the brand names we know will be disappearing any time soon – particularly those who learn to play with the new kids on the block.

The Future of Financial Services report is available here.

https://agenda.weforum.org/2015/06/5-ways-technology-transforming-finance/