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👀 How Apple is embedding finance

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This week in fintech

October 19 · Issue #32 · View online
A weekly summary of the latest news in our world of finance, design, and technology.

🤯 Unprofitable Companies as the Best Performing Stocks in 2020?
If you bought every company that lost money in 2019 that had a market cap over $1 billion, and so they’re about 261 of those, and you bought every single one of those companies, you’ll be up 65 percent so far this year. Joel Greenblatt
Ben Carlson from “A wealth of common sense” has looked more into these numbers: A big reason for this might be that many of these companies are Software as a Service (SaaS) companies. Ben Thompson at Stratechery explains: “you are creating annuities with a lifetime value that far exceeds whatever you paid to acquire them.” For this type of business model, losses can be a good thing during different phases, assuming they can make their revenues recurring. 
Speaking of betting on unprofitable companies: Forbes has a fascinating profile on Cathie Wood, which beat Wall Street by betting Tesla is worth more than $1 Trillion . (So far this year, Tesla is up + 429%). Cathie Wood leads Ark Investment Management, which offers thematic ETFs all betting on technology. According to ETF Database , Ark has the top 5 performing ETFs over the past 12 months - their strategy catapulted by the Coronavirus. One interesting fact about ARK is that they make all of their research available on their website and even opens the firm’s Friday afternoon research meetings to outsiders via Zoom.
✂️ Divide and conquer APIs
While we’re talking about SaaS, stock performance, and investment advice: Quantfolio, a Norwegian fintech-startup that uses big data and algorithms to make savings and equity investments smarter, just raised NOK 15 million. The funding round happened after a strategic shift due to the pandemic, forcing them to close sales faster. Quantfolio had trouble selling its comprehensive savings advisor and decided to break up its technology into smaller API modules. This move was well received by the market, with many banks looking for digital tools to contribute to safer investments.
👀 How Apple is leading the charge for embedding finance
We’ve over the last few months written a lot of Big Tech venturing into Fintech. Facebook has launched Facebook Pay . Google will soon offer checking accounts , and Apple has launched a credit card.
 11:FS has written a deep dive into how Apple is making its mark in Fintech: The key takeaway is that Apple poses a greater threat to banks than fintechs and challenger brands do. “Apple is competing on an ecosystem; it’s playing a completely different ball game to any other card provider.” Another key differentiator is its brand. With billions of customers worldwide, Apple has an almost cult-like following where fintech start-ups can’t compete. It takes years to build such a loyal following.
The Economist has an interesting follow-up in this regard about how the Coronavirus’s digital surge will reshape finance. The main point is that the acceleration in digitization so far has been most visible in payments. The next step for Fintech, according to investors? Embedded finance — the integration of credit, insurance, and investment into non-financial apps or websites. Both banks and fintechs are, therefore, racing to integrate the services they offer. The end goal here is merging and exploiting data to get a full picture of users’ behavior and giving more personalized recommendations. The thought is that this will make the platforms even stickier. My take?
🦵 The implications of body part insurance
We’ve all heard about famous people insuring body-parts: Cristiano Ronaldo has insured his legs ($144 million), Gene Simmons his toungue ($1 million), Keith Richard his middle finger ($1.6 million) and Kim Kardashian has insured her behind ($21 million). The idea is that if the body part that is insured can’t be used as normal, the insurer would pay the total amount of coverage to recoup the losses for the star. But why stop with insurance? We’re not far from a world where Kim Kardashian can treat her behind like  a liquid asset. 
🧑‍🎤 25 Years of the Gartner Hype Cycle
For over 25 years, Gartner has published their Gartner Hype Cycle to present the maturity and adoption of specific technologies. This week we came across an exciting video analyzing and visualizing the trends in a new way. This is a video you could stop and explore every 5 seconds. 
A Quarter Century of Hype - 25 Years of the Gartner Hype Cycle on Vimeo
🙏 Don't keep it a secret!
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Marius Hauken, partner Stacc X 
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