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Week 23: Neobanks vs. Banks vs. Big Tech

🤑 Universal Basic Income incoming? 🏦 Neobanks vs. Banks vs. Big Tech ⛓ Facebooks undecided cryp

This week in fintech

June 8 · Issue #16 · View online
A weekly summary of the latest news in our world of finance, design, and technology.

🤑 Universal Basic Income incoming? 🏦 Neobanks vs. Banks vs. Big Tech ⛓ Facebooks undecided cryptocurrency 🌍 Strategy in a constantly changing world 🛂 Who are you? 🙈 We’re blind to probability

🤑 Universal Basic Income incoming?
Chief economist in the Eika Group, Jan Ludvig Andreassen, argues that COVID 19 actualizes introduction of universal basic income (🇳🇴)A few weeks ago, we mentioned that he for years had forecasted that the key interest rate in Norway would eventually be zero. Is he on to something? Regardless there is a lot of complexities of introducing UBI.
🏦 Neobanks vs. Banks vs. Big Tech
The battle of banks vs. Neobanks during the pandemic has been a common theme. Some are comparing the old banking model to Blockbuster and the troubles they encountered when Netflix appeared. Others believe that pandemic will present a “moment similar to the bursting of the dotcom bubble” for Neobanks. Backbase, however, reports that three in five are likely to use digital banking offered by challenger banks by 2025. Which scenario will occur? One of the most thorough analysis we’ve read on this so far is: pandemic as a turning point for neobanks: will they sink or thrive?
One thing is for sure: Neobanks are not thriving at the moment. Monzo is cutting 120 roles, and Revolut is letting go of 50 members of its staff in Poland and Portugal. One exception seems to be Bulder Bank, a challenger-bank created by Sparebanken Vest, a local savings bank in Norway. They are flooded by loan applications so much that the CEO needs to answer customers(🇳🇴). At the same time persons who are rejected as a customer of Bulder Bank due to citizenship are complaining to the Norwegian Equality and Anti-Discrimination Ombud (🇳🇴). They are not the only bank that deems the cost of onboarding non-citizens as too high, but they might be the only ones who actually give their customers the real reason their applications are rejected? (Disclaimer: we’ve helped Bulder designing their app)
⛓ Facebooks undecided cryptocurrency
The widespread paradigm of “neobanks vs. banks” doesn’t take the elephant in the room into account: Apple, Facebook, Google, and Amazon realize that their reach is useful not only for digital services distribution but also for payment and banking. This might force traditional banks into infrastructure providers and neobanks into bankruptcy.
Facebook has already started dipping their toes into the water with the announcement of the Libra digital currency. This week, they rebranded their yet to be launched digital wallet from Calibra to Novi. Facebook says its mission for Novi and Libra remains the same: to make sending money as easy as “sending a message.” So far, they have had a lot of bumps in the road with regulatory concerns and new plans for their currency. Maybe creating multiple new cryptocurrencies isn’t the best way to make it easier for consumers to transfer money internationally? 🤔 
I have a slight suspicion that project is driven by internal politics and the desire to use a cool new tech for… something… Benedict Evans on Libra
🌍 Strategy in a constantly changing world
How do you begin to make sense of the future when things change constantly? Amazon is successful because it predicted how the world would change. But it’s been really successful because it bet heavily on what wouldn’t change – what is called a permanent assumption. From Jeff Bezos:
You can build a business strategy around the things that are stable in time. It’s impossible to imagine a future ten years from now where a customer comes up and says, “Jeff, I love Amazon; I just wish the prices were a little higher.” Or, “I love Amazon, I just wish you’d deliver a little slower.” Impossible.
🛂 Who are you?
The Nordic countries are front runners when it comes to the use of digital identification. Last week, Nets, which hosts the national eID services in Denmark and Norway, launched a Passport Reader app for remote identification. It is now being utilized by the Norwegian authorities to address a variety of identification needs for people who don’t yet have a Norwegian eID. Here is a link to the app for those of you interested.
🙈 We're blind to probability
This Monday reading is from Morgan Housel, a partner at Collaborative Fund, which is writing about why we’re blind to probability:
This happens during elections. Nate Silver can say there’s a 72% chance Hillary Clinton will win. Then when Donald Trump wins, people say, “Nate Silver was wrong.”
What about the other 28% in that estimate? Read about why probability gets ignored.
🙏 Don’t keep it a secret!
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Marius Hauken, Partner Stacc X
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