Sorry US and Europe, but chances are you will be second for innovative financial services

Two interesting pieces of information echoed in the recent days:

First Oliver Wyman published an extensive report on the Future of Banking. It gives a good overview of how macroeconomics/demographics trends will impact banks and signals the end of Golden Era and the reallocation to emerging countries.

 
 
 
 
 
As seen in the graphs above, the most important GDP growth is expected to come from developing countries (especially in Asia). This translates in an important increase for financial services as there is a direct link between GDP per Capita and Household Liabilities. On the other end, the economic and regulatory situation in Europe and the US is not as positive for financial services: the deleveraging of US households as well as stress of the economic crisis in both US and Europe will negatively affect the growth potential for banks. Continue reading Sorry US and Europe, but chances are you will be second for innovative financial services

Social Media relevancy is the new Credit Score

Techcrunch Disrupt just finished and I have to say it was a first class event (from the limited vision of the live feed at least). You can watch all the panels/interviews/announcement over at Techcrunch TV.

One of the panel I was most interested in was the New Mobile Frontiers panel with Laura Chambers (PayPal), Holger Luedorf (Foursquare), Keith Rabois(Square). The all conversation was top notch but one of the most interesting details given by Keith Rabois is how Square is using Yelp and Twitter to validate the existence of their customers.

Note: Square is famous for allowing credit card payment on the Iphone/Ipad with a small free plastic dongle, but what most people don’t realize is that one of Square key aspect is that you can receive those payments without opening a merchant account. There are almost no requirements to open a square account: no need to give years in activities / past years financial details / etc.. As described by Keith Rebois, Square is looking, in part, at helping the ebay vendors of real life. Small businesses that don’t want/don’t need to pass the hurdle of opening a merchant account but would benefit in being able to accept credit card payments.

Because of Square’s specific strategy described above, they need to innovate and one way to reduce their risk is to validate their customers in new ways (see video at 12:10) . It’s a clever strategy because there is a unique alignment on that perspective between Square, and companies such as Twitter and Yelp. For Yelp and Twitter bots/fake reviews are detrimental to the quality of platforms and they are actively implementing strategies to reduce those making it more probable that active users are companies/people with a relevant real-life existence, for Square, how long you have been on the platform, how many reviews you have, how many followers can help them make their underwriting decision (maybe satellite imagery next per Keith Rabois, who did not want to go into too much details on the algorithm) Continue reading Social Media relevancy is the new Credit Score