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Bitcoin and Robin Hood

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By Pablo Agnese, PhD, Lecturer at UIC Barcelona (tenured) and Research Fellow, IZA

How many times have we, as kids, been told about Robin of Loxley and his merry men from Sherwood Forest? In one of the most English yet universally recognized folk stories ever concocted, our hero and his band of braves roam around with one single goal in mind: restitution for the downtrodden. But therein lies the rub. Every time we hear the story we are told about wealth changing hands from the wealthy to the poor. A moment of introspection should however dispel the charm if we only dare delve deeper into the nature of such wealth and how it originated. Sherwood’s locals, the story goes, are constantly faced with unaffordable taxes and the whimsical arbitrariness of its tyrannical sheriff in what looks like the reverse of any idea of fairness.

However, the ‘wealthy caste’, represented in the tale by the king and the nobility, can only enjoy its riches by relying on coercion and legal privilege, both of which come under threat by the dash and dare of our green hero. But let us be blunt, Robin and his merry friends were not only taking from the wealthy to feed the poor. Rather, they were undermining the legal monopoly and abusive power of the king and nobility, which would squeeze the last penny from its subjects without a second thought. Similarly, bitcoin is on a crusade to restitute the ‘dispossessed’ and become the greatest redistributor of wealth in modern times.

To follow up with the analogy, bitcoin and its underlying technology, the blockchain, are bound to bring about a major channeling of wealth from long-standing and well-established legal monopolies back to the people at large.

So what is this legal monopoly we are hinting at and what is wrong about it?

Let us first define a monopoly as the market situation where the supply of a commodity or service is under the control of one specific person or enterprise, thus leading to higher than usual prices due to a restriction in supply. Both the textbook and experience show how the market eventually delivers itself as higher prices call new players in, which in turn puts a downward pressure on those very prices as part of the market’s self-adjustment
mechanism. In other words, monopolies do not last forever. A legal monopoly, by contrast, is sanctioned and upheld by the state, and more often than not, it provides the incentives to invest in risky ventures and enrich interest groups for a very long season, without any contestation whatsoever.

Central banks and traditional banking make up one such big group holding power and control upon the supply of money, a non-trivial matter when it comes to organizing society under certain civilized parameters.

However, central banks have been pushing interest rates to extremely low levels for way too long, sometimes even negative in real terms, to keep the world economy moving as if it was on steroids. Indeed, low interest rates result in banks needing to expand their credit supply to make a living, sometimes incurring in the moral hazard of lending indiscriminately. This, in turn, makes for the well-known financial bubbles and the booms and busts cycles, where an artificially created expansion or boom, based on a credit expansion, precedes the hard landing once expectations are adjusted and the bubble finally pops. Bitcoin has come to challenge this mechanism, and the first step in that direction is to expose it.

But how are bitcoin and other cryptos challenging traditional banking?

By offering a decentralized system of payments that can potentially become money, at the same time. If you will indulge me the pun, money and the payment system will be, if successful, the two sides of the same coin. This value-adding feature would imply that central banks and traditional banking will see their monopolistic status seriously undermined, thus prompting their fast recycling into other lines of activities, possibly crypto-related.

Recycle they must, but will they? And if they do, will it happen on time? What if they decide to rally together against this phenomenon, as China and India have shown signs of in recent times? No doubt countries have the resources to pull the plug and kill the technology for good if they feel threatened, but it seems increasingly unlikely as institutional money is making a big move into the crypto ecosystem, while reinforcing the need to come to grips with the unknown before it is too late. In a more positive light, it might just be the right (and humble) change of tracks the banking sector is in serious need of—at least JPMorgan’s Jamie Dimon sounds like a different man now that bitcoin is no longer the ‘fraud’ it used to be, when he endorses a 1% allocation as a hedge against fluctuations in traditional asset classes. A very significant change of view indeed for America’s largest bank’s CEO, and a very welcome one too. Not surprisingly, other sectors outside banking are openly embracing the technology, and the family picture would not be complete without Elon Musk’s crypto awakening, which has recently shaken the crypto world by making a USD 1.5 billion bet. But the real crux of the matter lies with the seemingly innocent coda, namely, that Tesla expects to start accepting bitcoins as payment in the future—and this, ladies and gentlemen, is how money comes to be.

The future is open and full of possibilities, but as cryptos reach the USD 1.4T market cap (as of March 2021), it seems that we are getting closer to that point of no return where potentials are more than likely to become actualities, that is, from potential money to money proper. To put things in context, gold features a market cap of roughly USD 10-11T and silver adds yet another USD 1.4T—gold and silver being the oldest forms of commodity-moneys and, along with bitcoin, all three assets showing consistent and
very bullish behaviors in post-covid times. Central banks and traditional banking must make up their minds, if they have not already—maybe the old adage can be offered here ‘if you can’t beat’em you’d better join’em’.

 

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Lakeba ranks in FT’s High Growth Companies for the second year running

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The annual Financial Times Asia-Pacific High Growth Companies ranking places Lakeba as the fastest growing Fintech in Australia.

“Our no-nonsense approach is paying off,” says Lakeba’s CEO, Giuseppe Porcelli.

Lakeba’s growth is driven primarily by its fintech business portfolio, including eziTECH, Verimoto, ezidox, BRICKLET and Quixxi. Whilst it has 12 businesses in its portfolio, its fintech businesses deliver hyper growth. With the Financial Times also recognising Lakeba as part of Australia’s Top Fastest.

Lakeba’s eziTech Banking as a Service technologies are now being utilised by a growing consortium of organisations in the financial services sector, including some of Australia’s most progressive neobanks.

Verimoto provides remote asset and identification verification for vehicle and asset financing. It posted 170 percent YoY growth in March.

Lakeba’s electronic document curation platform, ezidox, saw significant growth. Fuelled by increased broker usage while COVID restrictions eliminated physical document transactions, and deeper integration in one of Australia’s big-5 banks and their key challenger bank. Its CDR accreditation is already fuelling the growth of ezidox’ development as a data rights intermediary.

Quixxi Security’s patented obfuscation technology is used by one of the biggest US insurers, Allstate Insurance Company; Africa’s Standard Bank Group and some of Australia’s most recognised brands. Increased adoption of 5G and eventual 6G technologies in financial services accelerate the need for Quixxi’s technology.

While Lakeba’s property fragmentation service, BRICKLET, remains unchallenged the world over. Currently limiting fragmentation to Australia, it’s portfolio of property fragments is growing in excess of $45 Million.

“We were quite happy to be the biggest fintech you’ve never heard of. But this two-year consecutive ranking by the Financial Times and Nikkei Asia puts pay to that”, smiles Porcelli.

Lakeba‘s doubling down on recruiting senior financial services executive talent, adding to its appointments of Ubank, Judo Bank, eftpos and Citi Bank executive, Alex Twigg; Goldman Sach’s Frank Zhu and Macquarie Bank’s Telly Desillas. Recently hiring Adrian Valinno, BNY Mellon’s former Digital Transformation Lead.

“It’s really important to us to keep attracting the right talent and challenging the ridiculous notion that fintech shareholders need extreme patience in seeing their returns. Our continuing rate of achievement blows that notion out of the water,” concludes Porcelli.

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Source: https://australianfintech.com.au/lakeba-ranks-in-fts-high-growth-companies-for-the-second-year-running/

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Praemium FUA up, opens Edinburgh office

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The platform has recorded increased funds under administration (FUA) of $37.9 billion as it expands its presence in the UK with the opening of an office in Edinburgh, Scotland.

For the March quarter, Praemium recorded an 11% increase in FUA, and a 96% increase compared to March 2020.

The Australian platform FUA increased 224% on the previous corresponding period to $16.9 billion while the international platform increased 42% to $4.4 billion.

The platform recorded $801 million in net platform inflows with $448 in the Australian platform for the quarter, up 149% on the previous corresponding period.

Praemium has doubled in size over the past year. Despite the pandemic, the past 12 months have been the most transformational in our story thus far,” Praemium chief executive Michael Ohanessian said.

The results follow the opening of a Praemium office in Edinburgh.

To read more, please click on the link below…

Source: Praemium FUA up, opens Edinburgh office | Financial Standard

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Source: https://australianfintech.com.au/praemium-fua-up-opens-edinburgh-office/

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Mambu research reveals global consumers are hesitant to use Open Banking

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A study of 2,000 global consumers released by Mambu, the market-leading banking and financial services platform, revealed that a significant misunderstanding of open banking is hampering its adoption. The Censuswide survey, commissioned by Mambu, found that more than half (52%) of respondents have never heard of open banking and 61% have never used it, in spite of 80% of respondents using one or more mobile finance apps.

“The research reveals the majority of customers don’t understand what open banking is, how it works and what it means for them”, said Elliott Limb, Mambu’s Chief Customer Officer. “But it also reveals they do care about receiving better financial services that support their lifestyles – smart banking. If banks address this need and lack of understanding, it will help banks build customer loyalty and provide genuinely innovative, differentiating, revenue-generating services.”

Kristofer Rogers, General Manager ANZ for Mambu, added, “In Australia, one of the main reasons for the slow adoption of open banking so far is that open banking is built on modern technology, and the Australian banking and financial services industry is not. There’s a huge disconnect, with many established banks simply unable to deliver on the regulatory requirements of open banking with their existing technology – they need to adopt API-first, cloud banking tech to truly embrace open banking. And it’s imperative that we do make progress on this because beyond technology, open banking is ultimately an ideology of creating better financial outcomes for every Australian, and who doesn’t want that.”

Open banking sees increase post-COVID despite consumers being ‘scared’ to use it

Open banking has witnessed an increase in adoption globally as a result of the COVID-19 pandemic, and the research indicates a marked change in attitude and priorities as a result of the crisis. According to our survey, 52% said they wanted more control over their finances. At the same time, 40% said the pandemic had changed their attitudes to privacy and 24% to data sharing. Another boost came from the 41% who said they have had more time for research.

  • I have needed to take more control of my finances (52%)
  • I have had the time to do my own research and understand it better (41%)
  • My attitude to privacy has changed since the pandemic (40%)
  • I’m less worried about sharing data (24%)
  • I have had more time to set it up (40%)

However, existing concerns remain with 48% of consumers claiming they are ‘scared’ to use open banking and 53% still believing that open banking is a dangerous use of data sharing.

“Banks must accept that open banking is still a not fully comprehended phenomenon so this is the starting point,” said Dmitrii Barbasura, CEO and Co-Founder, Salt Edge, a Mambu partner. “We believe they need to invest time and effort in educating customers about the new possibilities they get access to, and also inform them about their rights and the high safety level covered by open banking.”

Change the Record

Demonstrating the opportunity for open banking, the survey revealed that 57% said they would be more likely to use it if their bank had more successfully implemented and promoted it.

When exploring further what consumers want from open banking, the survey shows that nearly half of respondents want instant digital money transfers; more than a third want aggregated bank balances at a glance; a third want tips on better money management and a quarter want money-saving suggestions for their bills.

  • Instantly transfer money between different accounts (48%)
  • See different account balances together at a glance (38%)
  • Help boost my savings automatically calculating spending patterns and moving spare money into savings or investments (36%)
  • Receive helpful hints about better money management (34%)
  • Receive one overall monthly bank statement (34%)
  • Allow access to banking data to receive automatic suggestions about money saving on bills and insurance (26%)

This is the first study of Mambu’s newly launched research series, Disruption Diaries. The series seeks to understand what customers think of the key trends driving the development of the financial services industry, in an effort to identify opportunities for banks and others. The full report on open banking can be found here: Let’s talk openly.

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Source: https://australianfintech.com.au/mambu-research-reveals-global-consumers-are-hesitant-to-use-open-banking/

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Zip Co raises $400 million for international expansion

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Zip Co (ASX: Z1P) has priced $400 million of senior convertible notes to fund expansion into new regions on the back of major growth in the US.

Co-founder and COO Peter Gray says the move will keep shareholders happy, with the notes set to mature in 2028.

“We are very pleased with the strong global demand for this offering,” says Gray.

“This transaction further diversifies Zip’s sources of capital and allows us to pursue our global growth aspirations while reducing potential dilution of existing shareholders. Another fantastic outcome for Zip and its shareholders.”

The $400 million in convertible notes mirrors the approach recently taken by buy-now pay-later (BNPL) competitor Afterpay (ASX: APT).

However, Zip’s latest raise doesn’t come close to the whopping $1.5 billion secured by Afterpay’s settlement of convertible notes due in 2026.

The offering is being marketed to eligible investors and the notes are set to be listed on the official list of the Singapore Securities Trading exchange. Settlement is expected on or about 23 April 2021.

To read more, please click on the link below…

Source: Zip Co raises $400 million for international expansion

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Source: https://australianfintech.com.au/zip-co-raises-400-million-for-international-expansion/

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