Fintech Weekly Digest from Autonomous ↻NEXT: Battle for Augmented Reality, Wealthfront Offers Credit, Messenger as Enterprise Chatbot

Hi fellow futurists -- here are our top 3 favorite developments. If you enjoyed this newsletter, please share with others!

Facebook Messenger as Enterprise Chatbot Platform. Facebook's F8 conference hit the news last week, and one of the key developments for Fintech is the massive rise of text agents and their adoption. Some numbers first -- Messenger has 1.2 billion users, and those users send 2 billion messages a month. This is where a large portion of the world's conversation is happening, literally. The remainder is on WhatsApp (also owned by Facebook), WeChat, QQ and others. On Messenger, there are over 100,000 unique bots, built by over 100,000 developers. Things are not looking good for human customer service agents.

This new blue ocean platform is perfect for enterprise software, not just games and media sharing. It is an informal communication medium where smartly designed bots yield better conversation rates, higher customer satisfaction and productivity than other channels. New additions to the platform include a discovery section in the app (think iOS Appstore, owned by Facebook), modular functionality that can be inserted into group chats, and the virtual assistant "M" which may become an overarching voice that incorporates narrow functionalities into a more general artificial intelligence.

The fintech bots are plenty. From incumbents, see Wells Fargo, Mastercard, Western Union, MoneyGram, American Express, not to mention the native payments capability of Facebook. On the startup side, there are personal finance management tools like Trim or Cleo. In aggregate, these bots open accounts, answer questions, transfer funds across 200 countries, analyze your spending, and save/invest money. How prepared is the financial industry?

Source: Facebook, Techcrunch 

Wealthfront Offers Portfolio Lines of Credit. Passive investment roboadvisor Wealthfront is diverisfying its business by giving lines of credit to its larger accounts. The minimum account value is $100,000, and the loan value can be up to 30% of that amount. The sign up process is 30 seconds and money is processed in 24 hours. The CEO stressed that the interest rate of 3.25-4.5% is more competitive than the 5-7% rate on home equity lines of credit.

Two things come to mind. First, leverage and passive investing seem antithetical, but this is right in Wealthfront's playbook. They have pivoted before from a social network for active investing, and will continue to search for a business model that works. Second, there is a convergence in fintech startups to a one-stop shop. See SoFi, the student lender, or N26, the European neobank. These companies are adding lending, insurance, wealth management and banking together to make profitable the high cost of acquisition of clients online. The alternative is to shift to a B2B strategy, and that probably won't fly with their venture investors at this point.

Image Source: Wealthfront

Battle for Augmented Reality. Augmented reality is a digital overlay on the physical world that can be seen through our devices, like phones, glasses and virtual reality headsets. The digitization of the physical world is happening in two directions. With the Internet of Things and blockchain, physical things are becoming digital. With AR/VR, digital things are becoming more physical and two high-tech companies are fighting over the platform of the future.

Facebook has just announced an open platform for AR which will be available to developers, as well as virtual reality spaces where its users can hang out. Snapchat, on the other hand, just launched World Lenses, which allow 3D effects to be projected out into the world. Why does this matter? These technologies signal where retail will happen in the future – in the combination of digital and physical space. Companies like Mastercard and Alibaba are running experiments on how payments will function in this environment. The key to that competition will be watching who controls the payments API and online wallets. For example, Google had partnered with BMW and Gap to create augmented reality VR showrooms, and recently connected Android Pay to Paypal.

Source: Facebook, RoadtoVR

Deeper curation of our themes is below, and this week’s artist excerpt is Patrick Henry Bruce, 1920. Thanks for reading!

Best,

Lex Sokolin

#Roboadvisor 

• Oranj Gains Trading And Rebalancing With TradeWarrior Acquisition. Will the advisor platform now look more like a roboadvisor?
• Edward Jones Forms Partnership With SixThirty to Support Fintech Startups. Does that mean EJ wants to find strategic deals in fintech and robo?

#Blockchain 

• Factom Closes $8M Round to Bring Blockchain to the Mortgage Industry. Does the latest pivot suggest there are two many blockchain-as-a-service companies already?
• Application of Hyperledger Iroha to Central Bank of Cambodia. How long until we have meaningful fiat digital currency?

#ArtificialIntelligence

• Artificial Intelligence is Unshackling DHL's Supply Chain Potential. What role do predictive analytics, scheduling and resource planning, operational efficiency, customer insight and automation and robotics play? 
• Neural networks as the architecture of human work. Is human society and work itself in the process of being refactored?

#Neobanks 

• P2P Lender China Rapid Finance Sets Terms for US IPO. Will China Rapid Finance be able to replicate the success its competitor Yirendai has had?
• Are You Too Neurotic? Lenders Test Personalities to Determine Loan Eligibility. Your thoughts for a penny?
• Challenger Bank Revolut Partners with Trussle to Provide “Hassle Free” Mortgages. How active are Revolut's 360,000 UK-based users?

Financial #APIs and Banks-as-a-Service

• Banks can regain tech advantage through serverless computing. How is a container different than a virtual machine, and why it's better to have a common operating system for containerized apps.

#Chatbots & Voice

• Tata Capital Launches Artificial Intelligence based online Chatbot. How has this lending chatbot already helped answer 55,000 queries?
• Wells Fargo Announces Messenger Chatbot Plans. The company says a majority of Wells Fargo’s customer engagements are now conducted via Messenger. What happens to all the service reps?
• Chatbots evolve from greeting tool to customer service must-have. Gartner says that by 2018, 30% of interactions with tech will be through conversations with machines.

#Regtech, #Crowdfunding

• In 2015, social payments company Tilt was worth $375 million. Less than two years later, it had lost over 95% of its value. How did this crowdfunding payments company die, and what are the lessons?
• Strategic partnership between regtech artificial intelligence startup Neurensic and fintech Jordan & Jordan. Is this a sign of how AI is evolving in the regtech ecosystem?

#Bitcoin & Cryptocurrency

• Deadline for Ethereum Classic DAO Withdrawals Extended. About $4 million in ETC (different from ETH, the mainstream Ethereum) is still sitting in the Decentralized Autonomous Organization. If holders can't be bothered to withdraw, what does that mean for Ethereum Classic?
• Coinbase Launches Ethereum Based WeChat Competitor with ‘Token’. We don't know anymore where to categorize this news. Everything is blending together! How will this blockchain-based payments app work, and what will it do to Bitcoin?

#Insurtech

• Insurers to spend billions on tech in 2017. With digitization happening at a rapid pace, how much are traditional carriers willing to spend to keep up? 

#AttentionEconomy

• Digital advertising is broken. The Basic Attention Token (BAT) was developed to address this. Can the cofounder of Mozilla & Firefox heal the internet and give power back to humans? 

#VirtualReality & #AugmentedReality

• Lenovo’s Windows MR/VR Headset to Launch Mid-August or Earlier. Can Windows win the mixed reality race by focusing on a development environment? 
• Snapchat’s wacky new 3D lenses might just follow you around. What is Snapchat's strategy to dominate the augmented reality space?

#InternetOfThings

• Apple said to near road tests of self-driving car software. How will Apple be involved in insuring vehicles on demand? 
• Who needs IoT? Smartphones are the new tracking devices. Arity, an Allstate startup, is using phones instead of telematics. Will consumers agree?

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This content is not investment research, investment advice and is not intended to lead to a transaction (see disclosure).