And the Winner Is …

socal blog pic

Inspired by last night’s Academy Awards, I wanted to link this week’s post to a couple of related themes, namely Los Angeles area startups (including those in FinTech), and explore the concept of winners vs. losers in the FinTech category.

But to kick off, as far as this year’s Oscars, I think John Battelle said it all:

So damn over

Yes, the awards show was a bit of a let down – but having just returned from a trip last week to Los Angeles, where I’d lived for about five years, I wanted to talk a little bit about the area (not traditionally known for its startup scene).

Last month, I was excited to hear the news that that my friend, Bill McKnight, had joined RealtyMogul as SVP of Product.

realtymogulI’ve known Bill since 2006 when he was at (acquired and later spun out of eBay). RealtyMogul is a FinTech success story, but will write more about real estate in a future post.


But since the focus is on Los Angeles, I have to call out another innovator in this space that’s more focused on lending (vs. buying an ownerships stake in a building) and with a slightly greater emphasis on residential vs. commercial property: Patch of Land.

patchThey get a lot of buzz in the FinTech circles, and should have a break out year in 2015.

Beyond RealtyMogul, other local FinTech firms to track are Zest Finance, FastPay, CapLinked, and StockR.

Later I’ll write a more detailed overview of these, but one SoCal company I’d like to call out for special attention is Acorns.


To me, Acorns is one of the better FinTech stories out there. It combines many things that I believe in. First, the move away from a “unified app” view of the world, i.e. the idea that’s championed by the big banks out there that you need to sign into your bank account  to do anything. I think in today’s world, it’s far better to have a focused app strategy.

Second, Acorns employs good “behavioral science” to actual problems. Specifically, most people say they want to save, but due to inertia or banks making it hard, people often don’t do the right thing. Prof. Schiller from Yale has written persuasively on this, leading to simple but effective changes, such as auto enrollment of people into 401k plans (vs. requiring filling out forms).

I’m also a fan that they take something somewhat arcane, i.e. the Markowitz portfolio theory of investments (which was maybe my favorite concept from B-school) and make it simple to understand and apply to real life.

By encouraging savings (“pay yourself first’), making it inexpensive and smart, I think Acorns has a lot of potential to do real social good, which is the other reason I like Acorns, with the last being its a mobile first business. Check them out!

FinTech startups or banks should check out LA-based startup, Prevoty.


Winners vs. Losers?

Sticking with the Oscar theme, a question I’ve been thinking a lot about of late is who are the winners and losers in FinTech. What’s striking to me is the recent focus on which regions will win.

I was intrigued by a recent claim by a UK newspaper that 50k people work in FinTech in London. The article didn’t say, but I think the figure makes sense only if you include tech workers at banks (e.g. Barclays) and related providers (e.g. IBM).

This table shows the SF / Silicon Valley FinTech players ranked by employees (adapted from recent SF Business Times article).

FinTech SF : SV

While I’ve seen lots of lists of “most innovative” players in FinTech, I would like to see this table showing actual employment for other cities (e.g. London, New York).

It’s a Wrap

As an Oscar night-inspired post, I’d like to give a shout out to those based in Los Angeles I admire:  Gary Braitman, a colleague from Scient, now EVP at Wells Fargo. Jason Farmer, at Dollar Shave Club. Bridget Baker at Baker Media (ex NBC Universal).  Robert Cerny, investor and lawyer at Hinshow & Culbertson. Drew Planting, real estate investor.  Bennett Pozil at East-West Bank.

In terms of FinTech VC’s, there is of course CoreVC, which is one of the best, led by Arjan Schutte, who founded Core after leaving CFSI. I’m also a fan of Kat Utecht at CoreVC. It’s good there are other tech-oriented VC’s like Upfront Ventures in Santa Monica.

It’s appropriate that I wrap up this Oscar inspired post with a short video: Just in case you missed it, here’s the short commercial narrated by Martin Scorcese from last night’s ceremony (reportedly made entirely on an iPad 2): Roll tape (link)

Good night!

Key Themes: API’s & UX



I’ll keep it brief, since I have guest blog post on Yodlee’s web site this week.

In it, I discuss a couple of themes I see as important to startups and incumbent players in financial services: the growing role of open API’s and UX (or focus on the user experience), a traditional strength of consumer Internet businesses like Yelp.

I’ll reiterate few points. Although API’s have been around for many years, my experience is that big banks have seldom focused efforts on them for internal or third-party integrations due to security, being slow to adopt modern development frameworks, and a need to focus on legacy systems. That simply needs to change.

I recently spoke with Joe Floyd, a principal at Emergence Capital about FinTech. We agreed many functions of financial services companies risk being disrupted by startups (such as LendingClub) and the role of API’s.

We envisioned – in the context of today’s mobile solutions and app-centric world – a world in which the user grants permissions to their financial apps – just as you allow apps like Twitter to access your contacts.

new slider

In this world, your financial apps – which may be from your bank or not – e – might have the ability to see your bank balance and move money between accounts. Solutions would focus on the user’s priorities, e.g. budgeting.

I also met up with former work colleague working in customer experience strategy at Wells Fargo. While Wells Fargo excels at this area, he was open about how far the bank has come.

Our talk reinforced my view that banks are seldom naturally strong at UX, given their focus on annual budgets, long development cycles, and numerous stakeholders.

Case in point: Contrast your average bank’s user experience with what you see at Betterment. Check out its web site or try its service and you’ll see why they’ve been called the “Apple of Finance.”

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Yet banks can – with their deep understanding of client needs – achieve similar UX  success by being more agile and user-centric.

As a glimpse of what it might be like, imagine instead of Microsoft Word, Excel and PowerPoint, your team uses modern collaboration tools, like Asana or Slack (winner of last week’s TechCrunch Crunchie award).

Cue video!


FinTech Fever: London


It seems only right to focus on FinTech in London this week, given the headlines about companies getting funding and gaining recognition in the marketplace.

While it makes sense to talk about London’s startup scene, I want to go beyond that topic to explore whether there may be a bit of frenzy going on with FinTech in London.  I think it may time to step back and be wary about a few of the headlines.

One reason London made headlines this week was that TransferWise, a popular peer-to-peer money transfer service, received major funding from Andreessen Horowitz (with the VC Firm’s co-founder, Ben Horowitz, joining its board). The total funding for the C round (including all firms) was $58m, and this startup now has a valuation of around $1B.

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Also this week there was a widely circulated article on the FinTech 50 – a list of the 50 most significant new companies in FinTech – with 50% based in London. On its face, good news for London and an interesting fact about the industry.

But, with a more critical eye, I did read that the “shortlist was judged by several of the City’s technology-focused venture capitalists, the technology giants Google, Microsoft and American Express, and the banks Santander and Silicon Valley Bank.” (according to City A.M., one of the smaller of London’s newspapers).

In other words, those voting were based in London (whose financial district is known as The City), so the vote doesn’t seem entirely fair.  But, while the panel had some bias, there’s truth to the story of a lot of good FinTech firms based in London (the article at this link has several good metrics on investment and employment for London).

Another driver of headlines is FinTech Innovation Lab (backed by the likes of Accenture, Morgan Stanley) announced the latest class for its London accelerator: Cytora, Duco, Pontus Networks, Ripjar, Torusware and xWare42.

Finally, the London Mayor’s office announced that its colorful mayor, Boris Johnson, would be headed to New York in February with FinTech on the agenda. Boris creates headlines whatever he does, so getting support and associating the London FinTech scene with Boris is a shrewd PR move.


I myself lived and worked in London for many years – working with clients such as Prudential, NatWest, Abbey National, Friends Provident, Barclays, Lombard Bank, Bank of Scotland and Ford Credit Europe – so I have some first-hand experience.

London’s historic trading role, banking center, and associated advantages (talent, infrastructure, nearby banks, technology) and the startup support system (e.g. Level 39, The London FinTech Innovation LabInnovate Finance, Bindi Karia at Silicon Valley Bank‘s London office), all contribute to its momentum.


Furthermore, given the loss of jobs in the Financial crisis of 2008-9, the general boom in technology in the U.S., and global nature of finance, it’s not surprising that London would emerge as a center (or centre, I should say) for FinTech.

The positive story here is there’s real innovation going on, with a lot of people doing thing to enable market disruption, and assist startups. Those making a difference should be applauded (and as I’ve said earlier, those who appropriate the term FinTech or startup who say provide payday loans – like London’s Wonga –  at high rates that hurt the poor, should not).

Too Much Spin?

London deserves its success, but keep in mind that London is also a marketing and press center, so without diminishing the achievements, it’s wise to be aware of a certain amount of PR and “spin” is taking place around FinTech.

As my former Morgan Stanley colleague, Julian Levy (now at Index Ventures), who also worked in the Bank’s Technology Business Development team, that put on Firms’ CTO Summit in London (and Silicon Valley) – once told me by phone when I was on Sand Hill Road, “Mate – it’s London, we’re the desert [when it comes to startups] – and you’re in the Amazon.”

There is some hype to be discounted (some “mirages in the desert”), in my view. For instance, there always were a large number of companies trying to sell to banks. (Morgan Stanley has thousands of vendors to operate its network, supports its thousands of applications, 85000+ employees, and its millions of clients.)

Let’s not be rush to label all vendors to banks as Fintech – and include in same category as disruptors, like LendingClub, (whose CEO Renaud LaPlanche attended London Business School).

Still, London is gradually becoming a bit more like SF and Silicon Valley, with arrival of funding and models to thrive in the US (e.g. Funding Circle coming to SF from London, just as Skype set up US offices and found a US buyer.)

FinTech Fever

As I’ve become more active on social media, such as Twitter, I’ve come to discover the community interested in fintech, and  its luminaries, such as Brett King, Chris Skinner, Brad Leimer and Jim Marous. I respect them, and those just starting out on Twitter to learn about Fintech, and add their voice to conversation.

I think everyone should have a voice, but let’s all try to be, as my former Morgan Stanley colleague Ian Ellis (a founder of the London Enterprise Tech Meetup) put it, “mindful of ‘overhyping’ a topic” (including FinTech).

Screen Shot 2015-02-04 at 10.26.28 PM

There’s a lot of headlines – and a lot going on in the Twitterverse on FinTech, so let’s try to keep some perspective. Personally, I think there’s actually SF startups can learn from London  — along with Australian firms, like Lend2Fund, which put up one of the best videos on Marketplace / P2P lending this week).

But the triumphalism (‘50% of World’s Top FinTech firms based in London!’ ) should be checked at the door, in my view.

I’ll keep it short this week, as I’ve been working on a guest blog for Yodlee, whose offices I visited this week in Redwood City.

Overall, a good week for London and those elsewhere following FinTech, given the the news about TransferWise, the funding round for SoFi, and the Google partnership for LendingClub.


Apple: FinTech or Not?


Is Apple a FinTech company? Will Apple ever launch a bank? It’s an intriguing idea – Apple is rightly admired for delivering something magic to its customers through its products simplicity, usability and design.

When was the last time you used those words to describe your bank?

But, while others have speculated on the the idea of an Apple Bank (glance at this 2013 article to see a few predictions that came true), I heard a convincing story in 2014 that made me confident that Apple will not be launching a bank.

Deborah Hopkins, CEO of CitiVentures and Chief Innovation Officer for Citi, addressed a group of us from a NewCo event at CitiVentures’ offices in Palo Alto in Oct. of 2014. She told us how she had proposed, several years earlier, to create ‘white label’ bank for Apple, where Citi would provide all the back-end services, but the bank would be branded as Apple. Pretty interesting.

Apple took the proposal seriously enough to have an internal discussion, but Eddy Cue, SVP of Apple, later told Citi’s executives that while a lot of the ideas were intriguing, at the end of the day they decided: “Apple isn’t a $%*!’ing bank.”  🙂


Beyond Apple – Partnership Models for FinTech

I worked as a consultant in retail banking, consumer credit and target marketing in the UK after getting my MBA from London Business School – and ended up getting a lot of experience with affiliate marketing.

We worked for Bank of Scotland’s affiliate banking operation, which sold credit cards and loans to members of groups, such as the Automobile Association (like U.S. AAA). I also worked at Ford Credit Europe. During the same period in the late 1990’ss, in the US, a tech savvy bank Capital One, followed this model – and has often been called the “original FinTech company.”

I think that private label bank operations, where clients receive banking services from a brand that is not a bank, e.g. an airline, retailer, or even technology company (such as Apple) is that they can work, but only under very specific circumstances.

It has worked in the UK, where banks are often held in such low esteem that alternatives, like Tesco Bank (owned by a grocery chain) do well. But other popular brands – that are arguably similar to Apple – such as Virgin, launched services like Virgin Money, only to see them struggle to make them successful.  I don’t think the strategy makes sense for Apple.

But not being a bank doesn’t mean Apple isn’t a FinTech company, especially given ApplePay.


apple pay chase


Apple Pay

As I tweeted during it’s earnings call when it announced record (and historic) profits, CEO Tim Cook took time early on – surprisingly to me – to call out Apple Pay, giving some new metrics, and saying “2015 will be the year of ApplePay.”

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I think that’s pretty significant, even if a debate on Apple Pay continues: One of the better articles on Apple Pay came from Forbes, though you can easily find articles similar to what Re/code published, which take the opposite view.

Like the debate over iOS vs. Android, I am already getting a little tired of the current debate since its too early and key metrics aren’t available, so won’t continue the debate any further here. But I predict that it will be successful.

(Incidentally, if you’re not up to speed on what Apple Pay really means, I strongly suggest listening to Benedict Evans and Michael Copeland’s excellent podcast from Andreessen Horowitz: “Apple Takes on Payments and Your Wrist.”)

One key take away from the podcast is the importance of Apple Pay to online purchases, while the media tends to focus on its use in everyday shopping. It’s also worth reading the TechCrunch article on Apple Pay’s use in self-service situations, such as vending machines, taxis and the like (all good use cases).


apple watch-pay

Apple Watch & Apple Pay

Turning to Apple Watch, that we learned this week will debut in April, let’s not forget a core part of its appeal is its integration with Apple Pay: “Your Wallet. Without the Wallet.”

And if you don’t have an iPhone 6, with Apple Watch you’ll be able to use Apple Pay, since it works with Apple 5 models.

I won’t to go into the chatter that’s arisen on other mobile wallets, e.g. rumors of Samsung Pay, ongoing drama over MCX and CurrentC, or the rumor of Google potentially buying the other player in NFC, Softcard.

(I’m 100% in agreement with Pete Casella, who invests in FinTech at JP Morgan Chase, who noted mobile payments seem like a potential duopoly in the US – and sees it as a crowded category for startups in the US and UK).


Is Apple is a FinTech business? To me, yes – it provides financial services technology that is relevant and making a difference – even if it’s not yet a core part of its business, and may never be one (Apple makes just 15 cents on each $100 spent using Apple Pay): It’s driving innovation in financial services through technology.

For all that it’s done for customers, its record success in its most recent quarter – and for being partnered with some of the best FinTech innovators, like Stripe, I’m incredibly excited about what Apple could do next in financial services.


I think we should follow Apple’s example by doing amazing things – as as they did in bringing security, convenience and “magic” to payments – elsewhere within financial services … and delivering from initial conception to roll out at rapid speed (based on conversations I’ve had with someone at a bank involved in launch, who said it was unlike anything they’d seen).

Innovation and speed-to-market should drive all of us in the world of FinTech – whether you’re a bank, investor or a startup.

Online / Mobile Banking

online banking

Without a doubt, at least some of the buzz with FinTech has been associated with online banking (and recently, mobile only) banks, such as Moven and Simple.

There are fewer startups in this space compared with either alternative lending or wealth management, yet it’s an important FinTech segment.

In truth, some are not true startups, but standalone offerings branded separately from their parent (e.g. Simple was acquired by BBVA, but operates as a standalone brand).

Some services, such as Bluebird from American Express, also aren’t truly banks, but position themselves as bank alternatives (offering mobile services with a debit card). Yet overall lately, it seems like a brand new world of banking. Or is it?


I’d like to put context around the rise of these pure play providers, and provide a view on why they might struggle to reach scale, yet shouldn’t be ignored.

For those less familiar with the US banking market’s historical peculiarities, due to the federal system and decentralized approach to regulation, for a long time it was fairly difficult in the US to operate bank branches across state lines.

With the passage of the Bank Holding Act, and other regulatory changes, together with rise of the superregional banks, and later consolidation due to M&A, interstate banking came into being over the last three decades.

Today the US has four big national banks – Bank of America, Citi, JP Morgan Chase, and Wells Fargo – yet is also is remarkable for its huge number of banking institutions (over 6,000) including local banks, credit unions, and the like.

First Wave of Online Banks

Beyond consolidation, technology started to enable a lot of things at banks to operate at scale, including the ability to serve clients from call centers. In the mid to late 1990’s, the US industry also saw the emergence of online banking.

While generally the banks, who traditionally have accounted for around 40%+ of the world’s technology spend, did not miss the rise of the Internet, there was a wave of startups that focused on disrupting traditional financial services.

Working in London for Gemini Consulting at the time, I was involved in the launch of egg, an online only bank from Prudential Assurance PLC, the UK’s largest insurer. It did well, meeting its 5-year growth target in 6 months, gathering $5B in deposits.


(My role was focused on the launch of Egg Investments as part of a stellar team including John Casey, Head of Product, my boss on the project, in particular partnership deals with content providers, such as Motley Fool and Morningstar, working alongside Rob Hudson, now at Aberdeen Investments in London).

Yet I’d be the first to say a more typical result of this wave of online banks was that of WingSpan Bank, which went from launch to swift demise within two years. The truth is most people value digital channels, but want other channels on occasion.

Second Wave – Online/Mobile Banking

After what a former boss calls “the lost decade”, when few FinTech startups made much impact, and innovation occurred in hardware, networking and then cloud-based software, we are seeing startups very much like the first wave of online banks.

Say what you will – heirs to same maverick spirit, a desire to remake banking, or just work at a place more like Google than the US Post Office, which how it felt working in banking at some points, I’ll admit, the new startups are getting some good press.

My goal is not to provide a comparison of any of these services, since that’s found on sites like SF-based NerdWallet, but rather share that my view is that these new startups will struggle, as did their precursors in the first wave of online only banks.


While technology changes, and game changers like AWS make businesses much easier to scale, I predict they will struggle to gain customers profitably, just as their forebears did. The business of banking requires scale, service, regulatory focus, a brand, and the incumbents have a lot going for them (even despite fact that US & UK customers do tend to dislike their banks).

I would look for many of the banks to get absorbed, and while I’ve read that Millennials prefer to use alternative solutions (and I wouldn’t write off the FinTech space around payments, such as Venmo or Apple Pay), I feel the acquisition of Simple by BBVA underscores a lack of ability to scale. I’ve already started to read predictions that Moven will be bought by PayPal in 2015.

We’ve seen this movie before. So, while Alex Sion, CEO of Moven said, “We’re heads down and hell bent on changing the world of banking,” when he jumped ship from Citi to join Moven in 2012, I remain skeptical about the outcome.


It’s clear Moven can raise money, has a superb PR team, and can forge alliances to build press, but look at how its banking app is rated on iTunes, Google Play store, or what people say on Credit Karma: It’s average.  A recent summary from Business Insider shows how Moven ranks vs. competitors – and it’s not pretty.

This month’s launch of a Moven smart watch app generated lots of headlines, but to me was underwhelming. At the end of the day, the financial health app (which is really just a port of its mobile app) was simply not compelling vs. what some of the other innovators, like Intuit, are doing these days in FinTech.

moven smartwatch

The Banks

A key  take away for me from the ratings for online banking and mobile banking is the banks are actually doing this pretty well by now (as well as offering multi-channel solutions), having invested and learned over the last few years.

Wells Fargo

Wells Fargo’s Digital Channels Group (recently renamed the Virtual Channels Group) is admired in the industry, and its online solutions win awards. I would even hold them up as a “FinTech company” to learn from in mobile and online banking. Borrowing a line from Marc Andreessen (“software is eating the world”), technology-driven banks are in many ways FinTech companies


Bank of America – led by great executives such as Paul Appleton, who works in retail bank strategy (and joined from Morgan Stanley, where I helped his team launch products/services, including online money transfer) – is viewed as an online banking leader. Some of my former co-workers at Hill Holliday, including Leslee Kiley, an EVP there, produce really outstanding work for BofA and its wealth management unit. (I worked at Hill Holliday for a couple of years, primarily working on the Fleet account, which was acquired by Bank of America in 2004).


JPMorgan’s known for its in online banking – serving consumer, middle market and corporate segments across a multi-channel infrastructure (managed by a former mentor, Yiannis Roussochatzakis). With a technology budget of over $20B, and a particular strength serving both consumer and small business/middle market consumers, BofA’s rightly well regarded. Focused upon online solutions for treasury/corporate clients, another former colleague, Nick Donohue (who worked with me in the Financial Services unit at Scient, along with Cesco Paola), delivers highly regarded solutions that are unlikely to be “disrupted” easily by an online only / digital bank.


One piece of news in the last week was that BankMobile launched what it claims to be the first mobile-only bank. The good news is that it seems pretty well done, but other news is – surprise – it’s a service from an existing bank.


To sum up my view on online banking: Go ahead follow the innovators, including venture-backed startups, but don’t expect them to scale. They can innovate, but at the end of the day, true disruption may be asking too much if history (and my own experience) is any guide.

One big caveat I would add is the global impact of mobile banking (given the % of the world with smartphones vs. desktop access to the Internet) is significantly different – but that’s a separate topic for later discussion.

What’s Ahead?

What’s ahead for FinTech as an industry in retail and mobile banking is still exciting since anyone can tell you that online and mobile banking, while pretty good today at the banks that really invest in user-centric design and technology (and service), can easily get better. Following the lead of Apple and Uber in payments, look for continuing innovations to come.

apple watch-pay

Open API’s, the emerging Financial Application ecosystem (such as with Yodlee Interactive), smart watches (and the Internet of Things in general) all still point to plenty of white space for startups and others to innovate.

FinTech in New York


While I focus on SF / Silicon Valley, since I am based in San Francisco, last week I spoke with Jonathan Lehr, my former co-worker at Morgan Stanley who is now working in venture capital (along with my former colleague, Julian Levy, who just joined Index Ventures) about New York’s FinTech ecosystem.

For the last few years, Jon has been running the New York Enterprise Tech MeetUp (, which he co-founded with another ex colleague, Rubi Gaddi, who continues to work at Morgan Stanley’s Technology Business Development team.


After speaking with Jon about the great deal flow at his venture fund and incubator for enterprise technology, Work Bench, I wanted to devote a post to New York.

I was reminded of the strength of the New York-based FinTech start up scene, which is many ways not surprising given the concentration of banks and talent.

Here’s some geographic analysis I did this week, after analyzing the Decemer 2014 Periodic Table of FinTech, which had a list of about 100 FinTech companies, and their main backers and potential acquirers, from CB Insights. 

Geo Chart

Source: CB Insights; graphic by theFinTechBlog

As you can see, SF Bay Area leads, but NYC is a close second (which makes sense given the characteristics noted above). Here is a snapshot of the Periodical Table of FinTech from CB Insights. Click here for the full-sized version.


(I liked the infographic, but SoFi, Stellar, and NerdWallet are obvious omissions. Also while chart had Level Money, it didn’t put Capital One as a potential buyer — and they announced its acquisition this week).

Since it’s hard to see on this page, if you don’t want to click through the full version, the list of New York FinTech firms was OnDeck, CAN Capital (whose head of People Operations is my ex colleague, Mandy Sebel, from Scient), Mozido, Betterment, LearnVest, Kapitall, BillGuard, Estimize, Axial, and IEX. 

I noticed that SF/Silicon Valley has edge in Lending, Payments, Personal Finance, but NY wins out in tools used by banks. There’s a more comprehensive profile of NY-based FinTech Firms from Jesse Podell which you can see on his slideshare.

It’s worth keeping in mind that last month’s IPO of SF-based LendingClub last month was larger, but NY-based OnDeck, a provider of small business loans, raised more than $200m. While startups like Plastiq that were founded in Boston will tend to relocate to Silicon Valley (following in the footsteps of WePay), New York has a critical mass of FinTech firms and is growing.

One other reason NYC is a hub for FinTech is the support of groups like Made in NY and the FinTech Innovation Lab, an accelerator backed by Accenture and a consortium of banks, with operations in New York (as well as London and Asia).


As I’ve posted earlier, I’ve attended lab events in New York, and was impressed by the caliber of the startups in the accelerator and the quality of advice, from mentors at banks, to talks such as “How to Sell to Wall St.” provided by Merritt Lutz.

(Merrit is a mentor of mine at Morgan Stanley and advisor to its SF-based private equity fund, Morgan Stanley Expansion Capital, run by tech investors Pete Chung and Lincoln Isetta, with whom I also worked at Morgan Stanley).

So, for New York entrepreneurs considering entering FinTech, it would be smart to investigate the FinTech Innovation Lab. There are more details on the Lab’s site at

But since the Lab’s accelerator just closed for applications — I’d tweeted to my followers about last December’s deadline — any aspiring entrepreneurs should look into the 2015 FinTech Hackathon and the New York Enterprise Tech Meetup.


I’d read last week that New York’s FinTech Hackathon has had over 1,000 participants since it was started. FinTechHack

Impressive. I also saw that sign up’s for 2015 hackathon will start soon, and you can sign up online to find out more here.


In and around New York, both in FinTech and related areas, there is just so much to keep track of from startups like yext, whose leadership includes my former colleague Wendi Sturgis, to mobile team collaboration provider Lua Technologies.

Doing work similar to what I did at Scient, I’d like to highlight a top New York-based marketing strategy and execution shop with roots in Silicon Valley, called Cf – headed up by Arthur Ceria, former creative director of Ogilvy in SF and co-founder Michael Quinn. While they can support anyone in FinTech, they also deliver digital strategy and projects for the retail sector as well.


Incidentally, one of the FinTech firms I met with when I worked in NYC was Betterment, which I’ll profile in a future post.

Overall, I miss the days in NYC when Jon Lehr and I brought in outside innovators like Rachel Haot, the first Chief Digital Officer for New York City, and Misko Hevery, inventor of AngularJS framework, to celebrate innovation and technology.

Wrapping up, I’d like to note that while New York-based Moven announced its smart watch app this past week, I don’t think it will be much of a game changer. That said, I am upbeat about Apple Watch and will be tracking smart watch apps in 2015.


Best wishes to all the technologists (including those I’ve worked with), and innovators / startups in New York City.


2015 Predictions


OK, I’ll admit it. I’m already over all the New Year predictions…. I’ve read thoughtful predictions that contradict themselves, such as ApplePay will not succeed (or that it will), so I’ve decided not to make a list of predictions.

What I’ll predict, however – pretty confidently – is that the year 2015 will bring a lot of exciting developments in FinTech.

It’s been difficult to be upbeat lately, with the negative news coming from the Middle East, the slowdown of European economy (and rise of the extremist parties there), hacking and security incidents, the chasm between left and right in the US.

But I’ve been reading Abundance, the book by founder of the X Prize, Peter Diamandis, co-authored by Steven Kottler, who wrote The Rise of Superman, on the science of high performance sports (and concept of entering a ‘flow state’).


One key take-away from the book was the inbuilt bias we have to see risks, and to focus on negative events, which drives both media (since we tend  to read bad news more than good news) and influences everything from politics to career decisions.

For instance, companies like LendingClub had successful IPO’s, and innovations like Apple Pay are unveiled in 2014, yet instead of focusing on the positive, VentureBeat publishes articles like “Are We in a FinTech Bubble?

Just because something like financial services technology is doing well as industry, doesn’t mean we need to be looking around the corner for bad news to come. Speaking personally, I’m excited to be living in such interesting times in San Francisco:

“We’re living through a tech revolution. We get to work with the most exciting companies in the world..” (Michael Grimes, Global Head of Tech Banking quoted in New York Times article of 2014)

During my time at the 2725 Sand Hill Road offices of Morgan Stanley, I was glad to interact, even briefly – since the bankers are always busy – with its pantheon of talent, such as bankers Dave Chen, Paul Kwan, Paul Chamberlain and Andy Kearns.

Returning to predictions, will ApplePay be successful in 2015 or not? I do think so, but as I’ve said, I believe we have a tendency to focus on winners vs. losers, and I really don’t think that’s the most important question of the new year (or even FinTech).

A16Z’s Benedict Evans was spot on last year calling for an end to the debate over whether iOS or Android will “win.” I think 2015 will be an amazing year for FinTech, whether ApplePay achieves rapid growth or not, is my prediction.

What excites me? As someone who worked early on in my career launching an online bank in the UK, I’ll always be looking to see what startups will be doing, but the ‘FinTech bubble’ article in VentureBeat gets it wrong, when it says since Millennials do not trust Banks, therefore startups will be favored to win over the incumbents in the long term.

Give me a customer-obsessed, strong value proposition incumbent – such as Vanguard or BlackRock – that has completely revolutionized investing, disrupted industry cost models, and create low-cost, superior investment products, anytime.

Vanguard      blackrock

I’d gladly do business with these incumbents – versus FinTech startup like Wonga, a much-hyped UK peer-to-peer lender that charges high interest rates to low-income borrowers…. and has been criticized by everyone in the press, even the Church of England, for what it does to those who are least advantaged in UK society.


Back in the US, Silicon-Valley’s Personal Capital is an innovator in wealth management, like Motif, plus I was impressed by CEO Bill Harris’s talk at The Future of Money in San Francisco last month.

But I was surprised by its hyping $1B in AUM after five years in business. Seriously? Morgan Stanley’s star advisors like Mark Curtis and Greg Vaughan manage $27B and $14B+ (see Barrons report) while the Firm manages $2 trillion for its clients. I do wonder if some of the startups will achieve sufficient scale. Their value proposition and execution need to be compelling.

Turning to lending, given the momentum from last year IPO of LendingClub and OnDeck, I will be keeping an eye on the plethora of interesting peer-to-peer lenders trying to make things better for people and businesses who need credit.

I’m a fan of Prosper, that show vision and execution, going after a new market, and trying to deliver something demonstrably better, through its pricing, product innovation and UX.


While I also respect how Prosper’s marketplace has made $2B in loans, I like even more its message of having empowered 250,000 borrowers, through better rates than banks and increased transparency. Take that, Wonga!


As for SoFi, based in the Presidio section of the city (right by LucasFilm’s offices), I like how they began as a way to reduce the interest rates paid on student loans by leveraging the power of alumni to give people a better deal. To me, it’s a solid innovation like affiliate marketing, when places like MBNA, a former consulting clients of mine, signed people up for credit cards based on  their membership in groups, passing on the savings derived from lower default rates and acquisition costs.

Today, SoFi is expanding into mortgage lending. While in US, mortgage rates are low now, just as gas prices have swung from high to low over the last two years, I think SoFi is smart to go after the huge mortgage market and diversity from student loans.

What else will be exciting in 2015? Workflow and connected services have my vote. I’ll address this in detail in a future post, but everything I see points to a more API and app-centric world of financial services beyond anything we’ve seen to date.

Here’s a glimpse… Last month, The Verge announced WorkFlow as one of the most exciting new apps to appear in the App Store. Essentially, it enables you to create customized workflows, using a simple drag-and-drop interface, so that you don’t need to follow repetitive, multi-step processes for multiple apps anymore, among other things.


Take the example of texting someone to let them know when you’ll be home. Using Workflow for iOS you can create a workflow to: 1) Open the Maps app; 2) Use app to see how long it will take for you to get home; 3) Open up your Messaging App (or email) and then text or write saying, “On my way. Be home in xx minutes” You can run it anytime using a single tap on your phone.

The possibilities are endless. The above use case is a simple example, but there are many in FinTech I can envision, i.e. you don’t want to open the online banking or brokerage app on your phone, but would like to check something, without multiple steps, using your fingerprint authorization and getting a quick summary of your balances and YTD time-weighted return.

Workflow screen shot

I sense innovation coming here, especially as providers like Yodlee, Intuit and others continue their focus on API’s and enabling developers using financial data. Using API’s and workflow, I see lots of cool solutions to be envisioned and built.

Here’s to an exciting future we all watch unfold in 2015!

Lending Club IPO


Last week, the biggest news in FinTech was Lending Club (NASDAQ: LC) went public in an IPO that was significant for 3 reasons:

  • First, it’s now one of the best-known public names in FinTech, and more specifically is new proof point that traditional financial services, such as credit, can be disrupted by a technology-focused startup.
  • Second, the size of the offering and the amount raised – which was over $1B, since the underwriters exercised their full option for 8.7 million shares – put it among the largest US technology IPO’s in recent memory. This is significant since the scale both generated headlines and calls attention to category.
  • Third, the business model: peer-to-peer (P2) or marketplace lending, is a key category for a range of players in FinTech, such as Prosper, OnDeck and SoFi.

The business model has been explained sufficiently elsewhere, but the essence is that the Internet enables customers to borrow more cheaply than they might have using traditional sources. On the other side of the balance sheet, lenders (‘investors’) can receive a higher return for a fairly transparent amount of risk than they would otherwise. A win-win.

And what growth….

LC graphic

Source: Company Filing

On a personal note, as a San Francisco area resident, I was also glad to see the success of Lending Club as a validation of this new emerging category of business to be based here.

Its HQ is right in heart of South of Market (SoMa) alongside Twitter, New Relic, Google, GitHub, DropBox, Quid and

Screen Shot 2014-12-17 at 11.13.44 PM

Note:  Lending Club was once based in Sunnyvale and Redwood City, moving to SF in 2011, so also constitutes an example of recent migration from Silicon Valley to SF.

As a former Morgan Stanley executive, Cynthia Gaylor, who worked at the office I did at Sand Hill Road in Menlo Park, tweeted in 2013 when she left the bank to head up Twitter’s corporate development team, “Let the migration north begin!”


While one could certainly argue – and analyst coverage would definitely support this view – that Lending Club is a financial services company, to me the company is also very much a tech company for 3 reasons: origins, culture and vision.

First, remember… this was literally one of the first apps you could use on Facebook! Further, the founders were not bankers, but rather included CEO Renaud Laplanche as a former the entrepreneur who had a successful exit, and then worked at Oracle).

The culture is also typical of that at most technology companies, in terms of what’s seen as positive about working in tech, i.e. open and collaborative culture, non-hierarchial, focus on engineering, importance of product, and “quirkiness” (e.g. offices to encourage a sense of play and collaboration).

In terms of culture, Glassdoor gives Lending Club gets a 4.6 / 5 star rating. Just compare that to traditional banks like Morgan Stanley, where it’s about 3.5: Lending Club gets ratings more like a well-run tech company or startup.

More importantly, the vision. As John Battelle said this fall at NewCo Silicon Valley’s kick off event at Survey Monkey’s HQ, the latest crop of tech firms based are looking more than just to make money – they want to change the world, or at least improve something that is broken. Lending Club definitely has that vision.

In fact, it was born of the founder’s frustration that typical credit card rates were 18%, which seemed altogether too high to him, so he envisioned a way to match borrowers and lenders directly. There’s obviously much more to it, but the best business idea also has a simple “story” to it, and clearly this is true for Lending Club.


This blog does not provide investment advice, so I’m not going to provide a view of their valuation, but I applaud their success. CEO Renaud Laplanche is not someone I know, but connected with when I when I moved to San Francisco, as a fellow graduate of London Business School.

It’s good to see a fellow graduate succeed, especially when these days an MBA carries less weight than being a full stack engineer. The world needs both!

From my experience in launching new products at established banks and startups, Lending Club provides a compelling example of how to embrace the value of technology in a really smart way, and deliver value to several market participants.

And the timing couldn’t be better. The IPO market is back on track in 2014, with recent successful IPO of Alibaba earlier this fall. Just today, another, albeit smaller marketplace lender, OnDeck focused on small business lending, went public.


Well done, Lending Club – here’s hoping many other FinTech firms will find similar success, rewarding entrepreneurship and risk-taking, and hopefully providing a push towards innovation among the larger financial services companies, as well as a shift in the corporate cultures of banks – both here in the US and around the world – towards a more inclusive, collaborative culture.

Not all banks will fully embrace user-centric design or Scrum, but I hope some do, along with view that making things better is more than just delivering a slightly better loan or APY…

 “We want to transform the banking system into a marketplace that is more competitive, more consumer-friendly, more transparent.” CEO Renaud Laplanche

Welcome news, and a model to emulate….. it takes more than just ping pong tables and pet-friendly environment!

Happy Holidays!

The Future of Money

Unlike Money 20/20 in Las Vegas last month, this week’s Future of Money and Technology in San Francisco was more of a true Silicon Valley event with generally more technical attendees and venture-backed start up’s, and fewer speakers and sponsors from traditional/online retailers or the card industry.

There was more discussion, as one might expect, on startup’s, bitcoin and where things are going in next five to ten years.

Personally I was struck that group of panelists drew a complete blank when asked which startup or relative newcomer would transform financial services in the next ten year (excluding Stripe and Square).  The field seems wide open to the experts.

Key Takeaways

  • Look for the Cloud to drive up adoption of long-standing tools like account aggregation and data integration, with leaders like Yodlee continuing their evolution into platforms for other banks and partners.
  • While getting less buzz, especially given the chatter about Apple Pay, expect a shift from mobile payments to wealth management and big data solutions, in terms of what’s important in the FinTech landscape in 2015 and beyond.
  • In next 12 months, look for the big banks to embrace Bitcoin, initially just as investors as they will wait for clearer direction from regulators before the use of any form of cryptocurrency within their core businesses.
  • The Silicon Valley (vs. NY and London-centric) FinTech ecosystem is far more focused on disruption within FS (vs. incremental improvements) or enabling better services from big players, through selling to them.


Intuit and Personal Capital 

Starting the day off was a fireside chat with Bill Harris, CEO of Personal Capital and former CEO of Intuit, and Barry Saik, SVP of Intuit, who’s runs their consumer ecosystem including its product.


Harris remarked on the power of information to drive behavior, noting that people who see their actual spending and how it fits with their goals through online or mobile apps actually spend about 15% less to achieve their goals.

He also sees opportunity in FinTech for start up’s and established players to better serve the needs of consumers, at all levels of income, much as Personal Capital meets the needs of the so-called “mass affluent” by providing better returns through lower costs and more efficient use of technology.


Saik pointed out that Millennials in particular, and young people in general, are less taken with banks and traditional provides of financial services – comparing their online and mobile experiences with other activities; they ask, “why is it so complex/slow/confusing” and seek FS providers who are as easy to use as Uber.

In other remarks, both panelists commented on the problem of good information and advice on financial services, and cited that as an opportunity. I’ve often wondered why Motley Fool, a company that I negotiated with earlier in my career when launching an online bank, didn’t capture more of this opportunity and go after other segments than their core market of self-directed investors. Perhaps there’s an opportunity out there, where Ed Tech meets FinTech?

The session concluded with Harris noting that Big Banks, in the US, vs. FinTech startups are examples of East Coast (hierarchical, annual planning focus) vs. West Coast (whiteboards, collegial atmosphere) business culture.


The API Ecosystem 

Next up was an informative session on the API Ecosystem in Financial Services. Certainly from my experience working at Morgan Stanley and earlier with likes of Barclays, MBNA and CheckFree, I see the promise of greater integration and more innovation by means of the somewhat wonky (to the non-technical) API.

Although XML and web services fell short of their promises to transform, Restful API’s and the Cloud are enablers of new, consumer friendly services from established players, like Wells Fargo and Chase, plus start up’s like Simple (now part of BBVA) and Addepar.


The API Ecosystem demo started off with probably the highest energy moment of the whole day, with Justin Woo, a Developer Evangelist at PayPal. With great excitement, he showed how easy it to enable a site or app to accept cards, through adding a few simple lines of code calling the PayPal API.


Jeff Kaditz, CTO of Affirm, Max Levchin’s latest FinTech start up, spoke about the role of API’s in allowing people to break free from the traditional bank solutions that people increasing do not trust, he says.

Kaditz got a few laughs for making fun of Wells Fargo’s logo, which include the horse and stagecoach as an example of how rooted big banks are caught up in the past. Ironically, as I’ve tweeted on Nov. 19th, Wells Fargo’s Digital Channels is ranked among highest in the US, so I would disagree with him on that front.


But Affirm, like Simple or WealthFront, is a great example of a FinTech startup, with enormous ambition, strong backers, and a vision to “fix problems” using technology and a fresh approach, e.g. API centric solutions.

John Beatty, cofounder of Clover cited how Information Security approvals take months if not years at big banks. With an open API (unlike most banks), its platform for Android devices enabled POS solutions to reach the market quicker.

Christine Laredo of Yodlee, who moderated the API panel, also marked how FinTech start up investment was $3B for the last year — 3x the level in 2008.


Bitcoin, Stripe and Stellar

Although I couldn’t attend the entire panel, Sean Percival of 500 Startups joined moderator Mark Rogowsky of Forbes, and several other Bitcoin executives, including Sonny Singh of BitPay, and Jackson Palmer of Dogecoin.

The Bitcoin conversation continued with a panel on Stellar: Building a Common Financial Platform. Moderator Dan Rosen of Commerce Ventures and Joyce Kim of Stellar noted 30% of the session’s audience said they hold bitcoin, yet across the US and around the world, the percentage of much smaller.


Stellar, as a non-profit, was also represented by Jed McCaleb, who created Mt. Gox, the first bitcoin exchange, and Ripple, prior to founding Stellar.

Greg Brockman, CTO of Stripe, spoke about the relationship between Stripe and Stellar, noting that they invested $3M for 2M Stellars, a virtual currency, and work with Stellar since they share the vision of greater “inter-operability” between currencies, virtual and real currencies, and passion for the future of commerce. Brockman also noted that while Stripe is in beta with their bitcoin offering, he expected it to go live shortly.

Brockman talked about the frustrations with inter-operability, and the details that inhibit payment innovation, while Kim of Stellar highlighted innovations like the 1% inflation rate, the focus on a “freemium” model to encourage adoption.

Everyone on the panel agreed that the future of bitcoin and other crypocurrencies is just beginning. McCaleb noted he founded Stellar to address what he saw as issues with bitcoin, including mining that negatively impact the environment.

Although below the radar, just three months after their launch, I was impressed with Stellar’s vision, how clear Kim was about Stellar’s vision and mission, and the alignment of the panel on relatively “uncool” issues like protocols and messaging.

The panelists seemed unconcerned whether Stellars would be the next bitcoin – and came across as far more motivated to reduce payment complexity and inefficiency, and create a smarter, more transparent network for payments.

But with demand outstripping their forecast – and 4M wallets in use today (47% of whom did not hold another virtual currency like bitcoin), Stellar is worth watching both for its initial product as well as their long-term vision and set of partners in the FinTech space.


Angel & Corporate Venture Investments in FinTech

David Rose of NYC-based Gust, a rival to AngelList, and expert on Angel Investing gave a fact-filled talk on what it takes to be a good Angel investor, citing the need to have a long-term vision, people skills, self discipline, willingness to learn, self control, and desire to be at forefront of innovation (without the drawbacks of being an entrepreneur).


Rose cited statistics, such as the fact that 5 of 10 Angel-backed startups will fail and you will lose all of your money. Also, if you have the ability to back in 10 startups as an Angel, on average 2 of the 10 will return your money (by being acquired or bought for their IP). If you’re lucky or choose right, you will make money on 1-2 of the 10, but to achieve the 25% IRR goal for its investment class, you’ll need that 1 of 10 in your portfolio to achieve a 30x return.

Rose noted that angels are in it more for just the money – it’s also about keeping up with changes in the world, and making a difference. But he cautioned about being naïve about investing in startups, noting that the “J” curve where you invest in a money-losing venture, as most are, is not for the faint of heart.

Mike Sigal, CEO and founder of Cashflower, a FinTech startup based in S.F., led a similarly clear-eyed assessment of what corporate venture investment teams look for in FinTech. He noted that corporate VC is now 20% of FinTech investing.

Pete Casella spoke about how his team at JPMorgan Chase looks to make strategic investments of $5m+ in startups that can positively impact the Chase business, and the Bank requires a desk or P&L center sponsor the investment. While he said Chase seeks to “build its own” in key areas like mobile, UX and core business areas, Jaidev Shergill of Capital One ventures spoke about how the Bank seeks to learn, and learn where to invest in its infrastructure, by investing in non-strategic areas as well.

Casella also made a pointed comment that while he’s seen maybe 50 mobile wallet seeking financing in the last year, he sees the market for these services as maybe two or three providers at most.

Shergill cited the case of working with SnapLogic, a company founded by Gaurav Dhillon and backed by A16Z, as such a company, while Citi Ventures Ramneek Gupta gave example of Silvertail. He noted they helped foster a pilot, guide them to a commercial relationship, and how the firm was later acquired by RSA.


Overall the corporate VC’s came across as helpful, but cautious, not looking for a big return on their money, so probably easier to negotiate terms with vs. some other venture firms, but probably less motivated to help you win in the market, since they don’t need a 3-4x (let alone a 30X) return on their investment.

But all the VC’s mentioned, at least to some extent, how they brought value to the portfolio companies by providing startups with connectivity into the large financial services enterprise.

At Morgan Stanley, one role I held was precisely this kind of “navigation” role, helping to connect the Firm innovation (whether in the form of new business models, like or approaches to data center virtualization, like Bracket Computing) so I can say first-hand that these kinds of assistance do matter.

What are key lessons for FinTech entrepreneurs? I would call out the panelists advice to “Do your due diligence” with any corporate VC. Avoid term sheets with ROFA’s. Ask good questions about what they will do for you, and be clear about what type of help you need in growing your business.

One comment from Casella was to stay away from mobile payments, saying he’s looked at 50 companies targeting this space, and sees the need for at most two that will be successful – although I think on a global basis, this will be a higher number.

And, as one VC said, stay clear of anyone who makes a lot of demands of your time, especially for PowerPoint presentations 😉


2014 Future of Money Startup Competition

Powered by the startup competition platform, younoodle, The Future of Money & Technology event announced  several winners of its startup competition.

The winners were:

  • Linqto Personal Banker: a software development company specializing in Enterprise solutions for banking and educational verticals.
  • CrowdCurity: a marketplace for web security solutions
  • TrustingSocial: an innovator in credit scoring with social, web and telco data, to make lending faster, cheaper and friendlier.
  • Xignite: a provider of market data cloud solutions.
  • CUneXus: specialized sales & marketing systems to help lenders maximize the value of customer relationships.

FinTech: Who’s In vs. Out?

I think I speak for many when I point out that some of the lists of FinTech companies, such as the American Banker’s Top 100, well, just aren’t especially good examples of FinTech (see list).

Maybe I’m reflecting my SF/tech-centric view, but I’m not alone saying if you did a word association test with FinTech, most are more likely to mention companies like Square or Lending Club – and not IBM or TCS.

Square logo                      lending club logo

Yes – I know, IBM and TCS sell technology to banks. In fact, I negotiated the first core banking system license from TCS for use in U.S. at Morgan Stanley, and used to work as a strategy consultant at CapGemini, so I know that category well. I’ve also worked in Product Management teams launching online services, and new products. Partners are often pivotal to success.

But by saying FinTech is anyone who sells products or services to financial services companies — and including retailers and card/payments and Bitcoin – you may be technically correct, but it’s just too broad a category.

Those selling to banks, especially start up’s in New York and London, such as those helped by the accelerators like the FinTech Innovation Lab, do matter. I’ve attended the NY FinTech Lab’s final presentation, and Maria Gotsch does a superb job. In the UK, Ian Ellis of the London Enterprise Tech Meet Up, and leaders like Silicon Valley Bank and Level 37, are helping to create new technology jobs ithrough their engagement.

But selling services and products to banks is not my focus, which is leading technology-enabled apps, services or digital channel leaders for consumers and businesses. Money 20/20 says FinTech is “enabling payments and financial services innovation for connected commerce at the intersection of mobile, retail, marketing services, data and technology.”

I believe strongly that, by being too inclusive (e.g. including retail), you can define FinTech to the point of it being meaningless. In fact, as I tweeted, magazines like Forbes got it wrong: Pitney Bowes is not one of the FinTech leaders. But a big company, like Wells Fargo can still very much be a leader in FinTech.  As I noted, Wells Fargo is actually one of the world leaders from a UX and digital channels perspective.

But I intend to be a little exclusive with the FinTech definition and my scope. I think we are also right to give an bigger voice to the likes of Patrick Collison of Stripe, who spoke last week at the Technomy event on the future of payments and innovation, and maybe a little less to the likes of IBM, BCG and Fiserv.

There’s a lot to learn from start up’s – like Betterment, Personal Capital and Credit Karma – and big company disruptors, like Apple with Apple Pay, than speaking to the average executive at your typical bank or payment company.

credit karma             personal-capital-logo         betterment-logo-blue

I think it’s no coincidence that one of the bigger laughs at Money 20/20 came from a speaker who noted that while Apple Pay dominated a lot of the debates — and American Express and First Data sent their CEO’s to speak — no one senior had come to the FinTech conference from Apple.

The speaker went on say that Apple had apparently sent a couple of product managers to the event, although few had actually seen them, and boasted in jest that he’d in fact been lucky enough to shake one of their hands, telling the audience, “I still haven’t washed that hand.”

apple pay

Looking ahead, in early December I’ll be reporting live from Future of Money in San Francisco, and will be guest blogging on Yodlee’s blog as well as profiling them in light of their recent successful IPO, and recent positive analyst coverage.