Bank devices, inefficiency and bigger bags.

Looks like destiny is telling me I have to write now my next post.
First BA trip to @SMEfinanceforum in Perth, late flight form Brussels, lost connection in London, few hours in the lounge (and in the plane).

This post is about bank devices, identity and security.

Back from my SWIFT time, when I still had a “in the box” job, I was dealing with the mythical “SWIFT for Corporates” solution. In a nutshell, the treasury department of a corporation has often dozens (if not hundreds) of bank accounts in several banks, and the poor treasurer (talking of 10 years ago) had a number of bank devices/proprietary connection (HSBCnet, CITIDirect, etc) to validate their payments (and more often than not to retrieve the bank statements).

SWIFT came up with the idea of mutualising the connection to the system using a bank-like interface, connecting the corporationS to the SWIFT network and allowing to reach out to every bank connected to SWIFT and subscribing and implementing the service. In this way, the channel became a commodity, and each bank had to differentiate itself with the service (needless to say this made much easier to switch between one bank to another, reason why banks were a bit resistant at the beginning).

Now, thousands of corporations later, this looks like a no brainer.

In the retail space, we saw the rise of the Mint and Yodlee of this planet.
You can consolidate in one app your different bank accounts, and also do some fancy analytics about how much you spend at Starbucks across all your accounts last month, if you remotely care (one day I will do some cynicism around these “spending apps”).

It does not work well in Europe though. Many banks have these fancies little devices not only to validate your payments, but also to simply access your online banking services. It s the case for #fortisbnpparibas in Belgium for instance.

Now: can someone explain me why we are still at Stone Age in this matter?
It s about digital identity, I get it.

But WHY is has to be considered a differentiation factor?

None of this would be ideal, but already if…

1- I could use my phone to generate the unique code to access my account instead of these stupid devices (that by the way have batteries, so need to be replaced etc).
This for each bank, both for login and payments approval. Embedded in their banking app.
Few Startups are in this space. sequent is one of them

Still not ideal …

2- I could use my phone to generate the unique code for ALL my bank accounts.
It s a generated unique code with a timestamp, is not rocket science. Could not at least banks in the same country agree about that?

Better, but what about multiple accounts in different countries?

3- if I could prove that I am who I am, that’s the only thing that bank would need to approve a transaction in an account they know it s mine right?

In the credit card AND E-commerce space, this need has been well understood, recently.
I saw few Startups (Wallabi, TrustPay, Cards Prepaid, and others) that have been created with the purpose of consolidate, simplify and enrich the payment experience of the retail customer (a topic for another post, by the way)

Back in the past, few large banks partnered and created Identrust, but technology wasn’t there yet. The intention was good though.

SWIFT tried (Innotribe, actually) with the Digital Asset Grid, to tackle some of these issues. Technically, DAG had a way broader scope than identity, but it took the problem from the right, open, portable, institutions-agnostic point.

Respect Network deals with the concept of “your private cloud”, where your data can be stored and access being given to applications, according to the principle that “data don’t move, only access to them does”.
In other words, I am not giving my data to anyone, I am simply allowing others to access to them.

So my question remains.. For how long do I need to carry stupid code-generating devices, in some case not even the same for a personal and a business account within the same bank?

Probably few Startups will react claiming they have solved the problem, and I am sure that – technically – they have.
Point is, until few big fellows will agree on cross-operational adoption, or some smart regulator with noble intentions won’t interfere, I ll just need to buy bigger bags.

Putting an image concerning the same problem, but in the telco space… A whole other issue here … And smaller items ;-)


Stay tuned


Fintech funds : two questions, two answers.

At Sibos this year, we will talk about Fintech funds, in a session on Thursday morning.
Why is it relevant ?

Exactly one year ago, at Sibos in Dubai, I started my new professional adventure in SBT Venture Capital. You can read about it here.
Back then, aside from the mythical Citi Ventures (must admit never got close enough to understand how it works) and BBVA (credit to them for being there already), no bank had its own startup fund (although maybe Atlante Ventures, from my friends at Intesa San Paolo could exists already).
Certainly, no one (including the one I mentioned so far) had a Fintech fund in place, which is the reason why I believe I joined SBT. There is no real proudness of being the first, as barrier to entry is not that big (if you have the money) but what was interesting was the intention.

I am on a bumpy flight to Moscow now, so I believe this post will be written in a couple of phases (and maybe I two separate posts even) but what I want to wrote about, in case I fall asleep now, is an answer to the following questions :
1- What is the difference between a fund and a “bucket of money set aside to make investments” ?
2- What is the #1 challenge any bank faces once the fund is up and running ?

Answer #1
A fund is typically structured as a separate entity, with a management company (another entity) hired by the fund with the mission to set up the strategy of the fund, find the right companies to invest, and manage the portfolio of invested companies to give a return to the fund (a profit) on the top of returning the invested money of course, plus a compounded interest (called the hurdle).
The management company receives a fraction of the fund to pay resources and expenses, and obviously the partners of this entity are not employees of the bank, and strongly motivated to maximise the profit of the fund as most of the time their reward is strongly measured on this.
I am not making a crash course on how to build a fund, because this is not the point, but I wanted to give some details as this is not the way other banks decided to do this.
Another way of investing in Startups, on paper way simpler, is to set aside in the bank’s balance sheet a money pot, and use it to make investments. Is that simple.
Often, banks call it a fund, as this is what the money is for. To take equity In startups or to buy them, using bank’s capital.
As opposed to the previous case, money is managed by (very senior) employees, the amount of the fund is “declared” but flexible, and one of the challenges (but not the main one as that is #2 answer) is to establish a legal framework for which entity is actually the one taking the equity stake in the companies.

Now : I will be happy to talk extensively about the above to whomever believe this could be of value to them (meaning bring me on board for a while and allow me to issue an invoice) but it s time now to move to the second answer …

Answer #2
In theory, it could be resumed in three words :
Strategic vs profit
Few considerations, before to expand :
No one likes to loose money and banks hated it particularly. If they do by definition, they are in trouble,
Everyone wants to appear (or need, in most of the cases to survive)to innovate or improve its services (true for everyone, banks included),
– More often than not a Fintech startup manages to do cheaper and faster what a bank would implement in the sextuple of the time and at ten times the cost (at least),
– Not invented here syndrome added to fear of change added to “if they do it we can do it as well” makes startup adoption not very easy.

In summary and especially in Fintech, what is strategic for the bank does not coincide with what can – potentially – give the higher return for the money being invested.
So the biggest challenge is to manage the tension between the (product, market, geography, business) strategy of the bank and the fact that if the “fund” does not make a profit, then you might as well use it to sponsor Wimbledon tournament for four years, at least your customers will say thanks to be able to see Roger playing while drinking some champagne at the lounge…

A concrete example : crypto currencies are one of the hottest spots for Startups this year. My friend Chris Skinner rightly pointed out – here – that more funding went to Bitcoin in 2014 than to the whole internet in 1995 (whatever means to compare investments with 20 years ago, but I still think it s impressive).
No bank has made a major investment in crypto currency Startups (I am pretty sure about it as I made a 3 seconds search on Google..) simply because it s hard to tell which role banks will play in this (although at Sibos there is a full Innotribe day dedicated to this topic).
Yet, with a venture capital hat, that seems to me like a wise position to take, providing you find the right startup to invest in.

I took this example which is – granted – as compelling as a bit easy to spot, as the dichotomy between banks strategy and market potential value is obvious… there are more examples, but will talk about it in the Freemium version ;-)

Very happy to continue this dialogue on stage @Sibos2014 with some old and new friends.

Stay tuned


One of (my) greatest projects EVER, and an example of failed startup: ……If someone picks it up, would love to collaborate

Back to my Innotribe times, in one of a kind sleepless night, I came up with something that every large corporation, including banks, needs,badly: a smart, efficient, flexible tool to manage employees skills.

I went to SWIFT CEO with a 4 slides deck and got his endorsement, took a couple of very skilled developers and the idea was on rails: it was called MINDTAGGER.

The idea came out of a very simple consideration: in 13 years at SWIFT I did change 4 positions, and unless you know me personally you actually can’t possibly guess what else I can contribute to, within the company, on the top of the skills required for my current job.
The trend is to make every corporation more collaborative, flexible, silosless (neologism) and make easier to build cross-divisional team (particularly facing some innovation challenge for instance).

What is (was) MINDTAGGER?
Imagine if every employee of a company could add a TAG CLOUD of his own skills and competences each with a rating at the beginning self-assessed then endorsed (or not) by the other employees, including the option to propose skills to others and get them accepted or not.

Something including hard and soft skills, say with a 1-5 stars rating:

In my case, something like

Innovation management *****
French *****
Market Infrastructures ***
Presentation skills *****
Venture Capital ****
. ….. And so on.

We decided that the best way to publish this skill set was in the intranet page, built on Sharepoint, so the first version of Mindtagger was a Sharepoint plug-in.

Yes, you would say, this is cool, but so what?
Well, this is the REAL idea then: an intuitive browser able to search the employees marching the requested skill set in the weighted fashion you (the searcher) wanted.

Applications of Mindtagger were obvious:
– internal recruiting for a new position
– cross divisional project team for a new challenge
– expertise required on a topic that the company has no skin in the game yet
– mapping existing or required competences inside a given team (for example, make sure there are at least two people with a certain skill to back up each other)

Needless to say, every search could be drilled down by division, geography, number of years in the company, department, and so on.

Let me show you how the browser looks like:


This is actually the “LinkedIn” version of the tool, using a parsing of the profile (as LinkedIn DID NoT have the “skills” yet back then) and the reason why you see “Profeshion” on the top is because in the meantime we rebranded the whole tool with a new name.
The difference between the LinkedIn version and the SWIFT version is the fact that in the case of SWIFT the bubbles have different colours, to reflect the wight associated to each skill. The darker the bubble, the bigger the degree of expertise.

Obviously, search is dynamic.
Meaning if you have too many result (or too little) you simply move the cursor of the expertise up or down and the graph changes dynamically.

If anyone wanted to search on more than four tags, there is the option to “pin” a tag. Think of it as a pre-requisite, on the top of which you can run the visual search.
Say for instance I wanted Chinese AND English as a pre-requisite, I could then run a

Payments ***
Mobile Payments *****
Presentation skills ****
GUI design **

The result of that query would be a 6 skills combination output.

SWIFT has Mindtagger (now Profeshion) live and running now.

LinkedIn in the meantime came up with skills and endorsements, but to my knowledge not a visual tool to search amongst them.
I also would like to thank everyone who made this project possible, if they read this they would know who they are.

Maybe I should/should have put it on kick starter?

Stay tuned


Alternative lending landscape (for dummies…)

I think this is a good opportunity to talk about something concrete we are actively looking at, explained in a way that (I hope) will catch the attention of everyone (including my mum, who I can see right now with her dictionary on… And no, she does not use Google translate)

The two big families of the new lending landscape are P2P lending (person to person) or SME lending (to small businesses).
There are also some hybrid versions of it like corporate lending money to their employees or persons lending a fraction of the capital to a business, in a crowd funded way, but I would say these are less populars.

Let s start with SME lending.
There is no way a bank can profitably make a 20K loan to a business.
The cost of the paper and the time of the employee(s) required to assess, release, monitor and eventually recover the money back will easily eat all the mark-up that the institution would possibly charge (unless they apply illegal outrageous interest rates, which would put them out of business anyway).
This is what became the core business of many Startups of this space.
Use non-conventional (like aggregated data from the POS or geo-localised transactions data) and conventional (good old bank statements) data to make an assessment on how likely is the chance to recover the money if and when the loan happens.
Now : there are two big families of these Startups (I know, life is a binary tree) : the one competing with  the banks (by collecting their own capital and lending their own money) and the one trying to re-intermediate the banks in this process (in other words, selling their platform and services to the banks so they can use their capital  to perform the loans).

An example of the latter is Advanced Merchant Payments, out of Hong  Kong,
focused on the provision of working capital loans to SME’s based on an algorithm that credit scores Merchant payment and bank account data.
IWOCA, focused on the UK and European eTailer market uses an algorithm to provide working capital loans to eTailers based on their digital footprints across Ebay, Amazon PayPal etc. The latter is an example of a startup in competition with banks.
They are both doing quite well, and of course I will not put my Venture Capital hat on as the purpose of this is purely informative.
The default rate (the loans not repaid back) is reasonably low, and the return is good. Remember, for some businesses there is no other way to have access to capital.

Let s talk about P2P lending.
This space is very crowded, and actually even easier to understand : if I have a decent social presence, if my network is solid, if I am a regular customer of e-commerce platforms (like eBay) that allows some data about my transactions to be pulled off, if on the top of it I give access to my bank statements, you can have a quite educated guess whether or not I will be able to repay a small loan that I am asking.

Interesting enough, this “universal, empirical credit score” can be built using a number of different techniques, including NPL and psychological questionnaires (I am thinking specifically to EFL that releases microcredit based on a very specific profile questionnaire, started in developing countries.
Recently, many Startups have arisen just using Facebook and LinkedIn to assess credit worthiness. Still early stage, but promising.

P2P lending is booming in countries (like Latin America) where the Consumer loans have very high interest rates, but it started in US and more maitre countries as data were of course richer and available in an easier way.

Here is a US panorama of the most famous P2P lending platforms.
I am – on purpose – leaving out the crowd funding, for which a separate post will be due.


If any of you bothered to read so far, would be great to hear your thoughts on this. Obviously, if you are in the Fintech business you should have stopped a while ago.
The reason for this post is that I saw this morning on my Facebook wall a dear friend asking me : “Matteo, can you explain to my step-father why Bitcoin is or can become so important, in words he can understand?”.

I leave that challenge for a future post, and starts with something else…

Stay tuned


The question is: do banks even care (about Innovation) ?

Thinking out loud in the middle of my home town summer time…

You will not find a single financial institution saying “we don’t care about innovation” … It does not look right, not good to investors, and not very stimulating for your customers.
Without being too generalist, you innovate because you have something new to sell or build, or because you can do the same better, cheaper or faster.

Innovation means efficiency, more often than not. And unless you have very stupid customers or shareholders, efficiency means leaner cost structure, and very often it comes handy to no lay off people and keep doing the same with the double (conservative) of the resources needed.

Almost every banker will name regulation as the most compelling reason stopping innovation to happen, or at very least make that process very difficult.

This is half of the truth, if you hear me.
The other half is about …..
…. Technology readiness (and subsequent lack of agility).
You can build a full bank, in the cloud, in few months, with close to the same security and scalability standards of any other bank in the market. This “new” thing can also handle alternative currencies, multiple wallets, mobile payments, Personal Finance Management, and if they are honest enough, even services like forex AND remittances way cheaper than the actual bank rates (and for sure cheaper than Western Union).
Ask a “old world” bank to do the same, and the CIO will say: sure, but with a multimillion dollars budget and one of the IBMs of this world drinking too much champagne way before Xmas.

The question still remains: do banks even care ?

Banks are, like every business, a collection of human beings, that in average tends to put their own personal agenda on the forefront of the criteria influencing their decision. It s human.
We are at this generational break, where most of the highest ranked managers of the top 100 banks in the world will NOT see the real disruption coming.
All they see today is that some guys not wearing suites anymore, few very successfully, building businesses in the banking space, and in a new paradigm.
Say peer to peer and peer to SMS lending.
Take all the IWOCA, WONGA, ZOPA, LENDDO, AFLUENTA. AMP and even the microlending platforms of this planet, all together: I don’t know if anybody has done it yet (why bother, again) but I am pretty sure they are, all together, damaging a single digit fraction of the whole credit business, worldwide.
So many of the today decision makers will no longer be by the time all that will become a real disruption.

Too simplistic? Maybe, but this is my blog and there is freedom of expression right ;-)?

It takes a bright, charismatic, outspoken, self awareness energy to embrace the innovation and disruption side of the financial services. You know why?
Because compared to the way they are today, the ” disrupted, innovation-driven, new ” financial services would be
– cheaper
– inclusive (not cheaper for the rich)
– more efficient
– for the greater good

… and there is only ONE Professor Yunus, of the Grameen Bank, every HUNDREDS of today financial institutions CEOs.

Stay tuned, have been off for a while, lot of things have happened, need to spend some more time writing …


Fintech Bootcamp rocks… #sbtvc proudly rocking with them!

In the past 24 months the rise of Fintech incubators, all over the world, has taken an incredible speed.
Looks like I am not the only one thinking that the disruption will hit our beloved banks (and financial institutions in general) sooner rather then later.

I have been quite on my blog recently, whilst my life has gotten busier than ever before, but the two facts are unrelated.
The reason why I thought this one was a good moment to “talk” is the launch of Startup Bootcamp in its very first Fintech instance, out if St. Catherine docks in London.


There are four point of attention I d like to make:

- the concept is great: 30 startups, 3 years, equity at stake, great network of entrepreneurs, tailored mentoring, no bullshit
– the team is awesome, and worth to mention another great chapter for my former colleague Nektarios (congrats dude), in all modesty brought to the Innotribe team by yours truly and infected with the innovation virus(es) to a point of no return – literally!
– the partners, the sponsors and the coaches of this adventure have a lot to say in the Fintech space, and I am talking about MasterCard, Lloyd’s, Rabobank, and many more I m sure you will hear a lot about very soon
– SBT Venture Capital, my fund, is proud to be one of the partners (which is kind of the reason why I am blogging this piece, obviously)

I must say I am quite familiar with this matter, in the sense that I always thought that the opportunity to take part of a qualified deal flow, vetted by the community, in the early stage startup space, and in a “sandbox like” environment was a good thing to do (all these drivers are already underpinning the Innotribe Startup Challenge).

Bank should do this too.

There are three different kind of attitudes towards startups banks are generally applying:
– “who cares, in any case what damage can they make, a fraction of a percent of our business?” (The “Dums”)
– let s watch them and simply buy the most successful one (The “Arrogant”)
– stay close. Try them. Eventually, invest. Learn from their lean approach. Engage. Get inspired (the “Smartass”)

So, Bootcamp is for the latter.
You (financial institutions) can stay around without necessarily invest in it.
We are planning to.
See you at the London st Catherine docks.

Stay tuned


Xmas cities …

Brussels (and 100km around), London, Paris, Geneva, New York, Setubal, Lisbon, Singapore, Hong Kong, Toronto, Madrid, Zurich,Nice, Milan, Turin, Rome, Tampa, Quito, Amsterdam, Luxembourg, Moscow, San Francisco, Seattle, Belfast, Beijing,Vienna,Trento, New Delhi, Portland,Bucharest,Marseille, Monaco,Rio, Stockholm, Los Angeles and of course my home lands and the places where my family is…
In every one if these cities there are people I respect professionally and/or deeply care about, and/or love. You know who you are.
This is my 2013 way to wish you all the best for next year, and some quality time with the people you care about.

Stay tuned