Starting conversations in a networking setting can be nerve-wracking and sometimes awkward. This is especially true if you are an introvert by nature and actively approaching and chatting up strangers drains …
Inflection Point Artificial Intelligence (AI) is the ability of machines to perform tasks that would normally require human intelligence. The rise in computer power, along with digital data, is what makes …
Samsung’s Galaxy S23 range delivers the most anticipated Android smartphones of the year, but international buyers are in for a shock when they see the prices. A new leak from Roland …
Starting conversations in a networking setting can be nerve-wracking and sometimes awkward. This is especially true if you are an introvert by nature and actively approaching and chatting up strangers drains …
Starting conversations in a networking setting can be nerve-wracking and sometimes awkward. This is especially true if you are an introvert by nature and actively approaching and chatting up strangers drains your energy.
Nevertheless, as a startup founder working behind closed doors is rarely a good idea. Connecting with different people is crucial for reaching success for a multitude of reasons.
Obviously, you need to reach out actively in order to find partners, investors, advisors, employees, etc. Equally importantly, however, reaching out is your primary tool to gather feedback about your project from people with different perspectives. Doing this could prevent you from making a lot of mistakes.
Consequently, the best thing you can do is to put yourself out there and try to connect with people. Here are three tips on how to make this process easier and more effective.
1. Prepare A Few Context-Appropriate Conversation Openers
If you are shy, it might be much easier to approach people if you know in advance what you want to say. Consider what the context is of the networking opportunity and prepare a few lines.
For example, if you are attending the event, it could be something as simple as asking
“What brings you to this event?”, or ask the person you are starting the conversation with about the event (e.g. panel, presentation) both of you saw.
2. Follow Up By Asking Questions
After opening the conversation, the best way to keep it going is to show interest in the person you are talking to – try to find out about their project, job, opinions, etc. Most people are quite happy to talk about themselves, so it is a great idea to use this to your advantage.
It is crucially important, however, not to fake interest only to sneak your real agenda into the conversation.
“The currency of real networking is not greed but generosity.”– Keith Ferrazzi
The reason you are talking to them is to find out if you can create value for them. Like all relationships, professional relationships require reciprocity. Because of this, it’s appropriate to try to provide some value first as you are the one initiating the conversation and forming the relationship.
The worst thing you can do while networking is to seem needy.
“You can have everything in life you want if you will just help enough other people get what they want” – Zig Ziglar
3. Keep Trying
“I’m convinced that about half of what separates successful entrepreneurs from the non-successful ones is pure perseverance.” – Steve Jobs
While this quote from Steve Jobs is mostly about persevering through hardships and failure, showing real consistency and stamina in doing what you need to do is also important.
In the context of networking, this is true because of two main reasons.
First, attempting to connect with a greater number of people simply gives you a higher probability of finding people that fit you well.
Second, as with any skill, you get better at networking as you practice more. Actively communicating with people is a skill like any other – treat your attempts as needed exercise. This way even if when your attempts are not fruitful, they make you a better communicator for next time.
People skills are extremely important for startup founders. Actively reaching out to people and trying to have genuine, interesting, and productive conversations is a great way to develop some of these skills and become more fluent in the art of conversation and connection.
Inflection Point Artificial Intelligence (AI) is the ability of machines to perform tasks that would normally require human intelligence. The rise in computer power, along with digital data, is what makes …
Artificial Intelligence (AI) is the ability of machines to perform tasks that would normally require human intelligence. The rise in computer power, along with digital data, is what makes AI important today. Although forms of AI have existed since 1956, the next phase of artificial intelligence is only recently visible[1]. A recent report by UNESCO estimates that artificial intelligence research grew 50% from 2015 to 2019. The combined research growth, along with an increase in spending, is creating a technological land rush in the field of artificial intelligence. The World Intellectual Property Organization has highlighted AI as one of the most rapidly growing areas of issued and filed patent applications. It has also been identified as one of the key frontier digital technologies along the Internet of Things (IoT), blockchain, the metaverse, big data, and cloud computing.
The next wave of artificial intelligence is rapidly approaching. For instance, Artificial General Intelligence (AGI) is a strong form of AI; and AGI has recently made a breakthrough in technological advancement. AGI is a machine that can match a human’s cognitive capacity to perform any task, but with vastly improved efficiency.
The best example of what AGI could possibly resemble is OpenAI, a private company that Sam Altman and Elon Musk started. Recently, OpenAI released a large language model called ChatGPT that demonstrates the potential of AGI. ChatGPT is a chatbot that emulates forms of human intelligence. For example, ChatGPT can pass the Turing Test, a way to measure a machine’s intelligence. Additionally, ChatGPT can pass the United States Medical Licensing Exam and the Bar Exam. In summary, the advancement of AI is impacting every sector and industry. In addition to Open AI, there are several leading commercial AI research labs that are working on AGI, such as DeepMind, a British subsidiary of Alphabet, and Meta AI Research.
The best way for investors to capitalize on the advancement in AI is through sectors that implement AI-based tools and companies that use AI to increase productivity and efficiency.
[1] The field of Artificial Intelligence (AI) AI was born in 1956 by John McCarthy at Dartmouth Research Project.
Sectors
At O’Neil Global Advisors we focus on small capitalization companies in disruptive themes and sectors like artificial intelligence. Similar to the Internet, artificial intelligence will modernize and reshape many industries. AI is already used to some degree in many everyday applications, such as web search, user-targeted advertising, and software agents like Apple’s Siri, Amazon’s Alexa, and Google Assistant. But, with new advances, AI will enable many other tasks like allowing vehicles to drive themselves, computer programs to discover drug therapies, and software to write code for developers instead of the other way around. Initially, the sectors that should benefit the most from AI are Technology and Health Care.
Technology: Numerous technology companies are using artificial intelligence today to create new products and services. For example, Baidu BIDU (NASDAQ: BIDU IDU ) has developed a tool called Deep Voice that uses AI to clone voices in a matter of seconds. Baidu uses the same technology to create a tool that reads books to you in the author’s voice. The entire process is automated due to the help of AI. Additional technology companies that are implementing new forms of artificial intelligence today are the following:
Alphabet (NASDAQ NDAQ : GOOGL) has established Google AI, a research division of Alphabet that is dedicated to artificial intelligence. The most notable products to come out of Google AI are TensorFlow, which allows for neural networks to be used by the public. Additionally, Alphabet implements AI into YouTube to automatically detect and remove violations. Utilizing AI has resulted in an 85% reduction in content that violates YouTube’s policies.
Meta Platforms FB (NASDAQ: META) uses AI to add structure to its data sets. For example, Meta Platforms uses DeepText, a text understanding engine, to identify and interpret content in multiple languages. It then uses AI to automatically remove derogatory images and text from its platform.
Microsoft MSFT (NASDAQ: MSFT) uses artificial intelligence in many of its products today. However, the company is expected to increase the use of AI in its products significantly in the coming years. Not surprisingly, Microsoft recently announced an additional $10 billion investment in Open AI, following on its previous investments of $1 billion in 2019. Microsoft is speculated to use ChatGPT- functions in many of its products, such as Microsoft Office and Bing, the company’s search platform.
Exhibit 1: Technology Companies
William O’Neil + Co.
Health Care: Biotechnology companies are applying AI to drug development, potentially creating new medicines. Traditionally, Biotechs use a loose estimation framework for drug discovery that is suboptimal and inefficient. However, Biotechs are now using large data sets with the help of AI to identify patient response biomarkers. Morgan Stanley MS believes early-stage drug development success rates enabled by AI could lead to a $50 billion opportunity. Subsequently, Biotechs are increasing their R&D budget to incorporate more spending on AI:
Exhibit 2: AI Spend as % of Biopharma R&D
Source: Morgan Stanley Research. Company data AI spend as of $% of Biopharma R&D
William O’Neil + Co.
Investors that want AI exposure through Biotechs can benefit from considering the following companies:
Exhibit 3: Health Care Companies
William O’Neil + Co.
Conclusion
The recent advancement in artificial intelligence will have a profound impact on numerous sectors. Artificial intelligence will impact global productivity like the Internet impacted global connectivity. The two sectors that are currently benefiting the most from AI are (i) Technology and (ii) Health Care. Investors can gain exposure to these groups by carefully considering the previously mentioned companies. The companies listed in this article are all large cap stocks as that is where most of the headline spending has been. However, we focus our research on finding smaller cap names for the portfolios we manage that will one day become the next mega cap. Alternatively , investors that are risk-averse and prefer ETFs instead of stocks can consider the following ETFs:
Exhibit 4: Artificial Intelligence ETFs
William O’Neil + Co.
Jason Thomson is a Portfolio Manager for O’Neil Global Advisors, Inc. He covers fundamental equities while overseeing idea generation, portfolio construction, and managing expected returns. Jason made significant contributions to the data compilation, analysis, and writing for this article.
References
How ai could speed drug discovery. Morgan Stanley. (n.d.). Retrieved January 23, 2023, from https://www.morganstanley.com/ideas/ai-drug-discovery#:~:text=Biotechs%20are%20applying%20AI%20and,new%20drugs%20is%20costly%20guesswork.
Booz Allen. The Artificial Intelligence Primer. (n.d.). Retrieved January 23, 2023, from https://www.boozallen.com/content/dam/boozallen_site/sig/pdf/publications/the-artificial-intelligence-primer.pdf
Samsung’s Galaxy S23 range delivers the most anticipated Android smartphones of the year, but international buyers are in for a shock when they see the prices. A new leak from Roland …
Samsung’s Galaxy S23 range delivers the most anticipated Android smartphones of the year, but international buyers are in for a shock when they see the prices.
A new leak from Roland Quandt, one of the most reliable leakers in the business, reveals that prices for the Galaxy S23 lineup in Spain, Germany, Netherlands and Belgium will be increasing by as much as €300 ($325) — the biggest generational price rise in Galaxy history. And those rises are unlikely to be isolated.
Quandt breaks down the prices for each Galaxy S23 model, stating that the Galaxy S23, S23+ and S23 Ultra will start from €959, €1,209 and €1409 in Spain and €10 less per model in Germany and Benelux. For comparison, last year the Galaxy S22, Galaxy S22+ and Galaxy S22 Ultra started at €719, €898 and €1,079, respectively, in those countries.
These jumps contrast sharply with the US. Last week, an alleged internal Verizon document revealed pricing for all Galaxy S23 models would be unchanged. This means the entry-level Galaxy S23 starts from $799, the Galaxy S23+ from $999 and the Galaxy S23 Ultra from $1,119.
Galaxy S23 Series leaked marketing images
Evan Blass
Prices for smartphones internationally have been skyrocketing in recent years, particularly iPhones. Those hikes have been resisted in the US until now, due to the strength of the US dollar. But Apple is expected to break this stasis with global iPhone 15 Pro price rises when the new phones launch in September.
In Samsung’s defence, it will bring a lot to the table with the Galaxy S23 range, including a 200MP Galaxy S23 Ultra primary camera. But whether international buyers consider them to be worth over $300 more remains to be seen.
iPhone 15 leaks have revealed many of the phone’s biggest upgrades. Now a new report claims Apple will equip models with Wi-Fi 6E, described as “the most disruptive boon for Wi-Fi …
iPhone 15 leaks have revealed many of the phone’s biggest upgrades. Now a new report claims Apple will equip models with Wi-Fi 6E, described as “the most disruptive boon for Wi-Fi users in the last 20 years.”
The news comes via a Barclays analyst research note seen by MacRumors. The move makes sense because Apple has already brought Wi-Fi 6E to its iPad Pro, MacBook Pro and Mac Mini lineups. Unfortunately, Barclays does not reveal whether Wi-Fi 6E will come to all iPhone 15 models or just the Pro models. I suspect it may be the latter, which would be a shame.
Why? In the words of Kevin Robinson, senior vice president for the Wi-Fi Alliance:
“You’re going from one to maybe two 160 megahertz channels [with Wi-Fi 6], and these are ultra-wide channels that allow very, very high performance… up to seven of these super-wide channels in the 6GHz [Wi-Fi 6E] band. It’s critical when you’re in, let’s say, multi-dwelling units. Think of New York, Chicago and with high-rise buildings around the planet, think of stadiums, that’s where it becomes essential to have that additional capacity.”
Moreover, it isn’t only the peak performance of the 6Hz band which makes Wi-Fi 6E crucial long term, it is the saturation of the 5GHz band currently used by most routers and devices sold today. As Robinson explains, “We were simply approaching a scenario where there would not have been enough spectrum and capacity for people to do everything they wanted to do, and what we envision happening over Wi-Fi.”
And this is the key factor in the transition to Wi-Fi 6E. iPhones are sharing bandwidth with ever more WiFi networks and connected devices, particularly smart home devices. This makes breaking into a new band critical if users want to maintain ultra-fast and reliable WiFi connections long-term.
Apple iPhone 15 Ultra is tipped to have dual front-facing cameras – concept render
aliartist3d
Consequently, while it may not get the headlines it deserves, Wi-Fi 6E is perhaps the most future-proof functionality you can bring to any device today. Given the standard was expected to come to the iPhone 13 and iPhone 14, and has already been adopted by most Android flagships, it is a necessary and overdue upgrade.
Almost everyone has broken their phone at some point. In fact, many of us have broken multiple smartphones over the past decade. As you might suspect, young people are slightly more …
Almost everyone has broken their phone at some point. In fact, many of us have broken multiple smartphones over the past decade. As you might suspect, young people are slightly more likely to break their phones, with 77% of us between the ages of 18 and 29 having broken a phone. But older generations are not immune to the dropsies, with a very similar 74% of us between 30 and 44 having broken a phone.
All this breakage adds up: according to the data AT&T shared with me, 1.5 phones are broken, lost, or stolen every single second.
The most common way we break our phones?
Dropping them, as you might expect.
But 3% of people have also had the misfortune of having their dog chew on their smartphones. And 5% have done what many of us only do in our dreams: throwing their phones in a fit of rage.
Here’s how Americans break their phones:
Dropped it while taking it out of my pocket or purse: 25%
Slipped out of my hand while talking or texting: 20%
Forgot it was in my lap when I stood up: 16%
Dropped something on it: 10%
Dropped it while taking a picture: 9%
Dropped it in the toilet: 8%
Child broke it: 7%
Went into a pool, ocean, or lake with it: 6%
Threw it in a fit of rage: 6%
Broke it while intoxicated: 5%
Dropped it in the bathtub: 5%
Dog mistook it for a toy: 3%
(If you want some radical honesty, I’m personally guilty of #1, #4, and #8. My wife, however — and she’ll probably kill me for mentioning this — comes in a close second in our family phone breakage sweepstakes by having dropped not one but two phones into the toilet … at exactly the same time.)
To limit phone breakage, AT&T suggests keeping your phone in your pocket and using earbuds for audio and a smartwatch for checking notifications and — of course — using a quality case. But you knew that already, right?
One thing all that phone breakage will do is stimulate the economy. Or at least the smartphone economy. Smartphone shipments dropped a record 18.3% last quarter, according to the IDC, as we continue to deal with the aftereffects of Covid, supply chain disruptions, high inflation, and various economic ills.
In fact, 2022 saw the lowest number of smartphones shipped since 2013, according to IDC, with 1.21 billion units shipped.
What does it mean to be a chief information officer? More than ever, businesses are leaning on their CIOs to deliver digital transformation on a large scale — and that means …
What does it mean to be a chief information officer? More than ever, businesses are leaning on their CIOs to deliver digital transformation on a large scale — and that means understanding a vast and ever-changing landscape of technologies.
That’s the word from Foundry’s 22nd CIO survey, in which a majority of 837 responding executives, 77%, say their roles have been elevated due to the state of the economy, making them one of the most visible proponents of change within their organizations. The top three activities CIOs plan to focus on in next three years are driving business innovation; redesigning business processes; and modernizing infrastructure and applications.
Most CIOs (85%) believe their role is becoming more digital and innovation focused. Another 70% anticipate their involvement in cybersecurity to increase over the next year, and just over half (55%) also anticipate their involvement in data analysis, data privacy/compliance, and AI/machine learning to increase.
The CIO’s role now demands greater immersion, inspiration, and insight — into both technology and the business. “The CIO role is very quickly becoming much more technical hands-on, as well as being the delivery engine of transformation for the business,” says Fletcher Previn, CIO of Cisco, in an interview at the company’s New York offices. “A lot of companies require a less of a CIO generalist and more of an IT practitioner with deep subject matter expertise on how technology can deliver what the business is trying to do.”
That means leading with technical expertise, as well as leading with business expertise. Sixty-eight percent of IT leaders say they currently have revenue-generating responsibilities, up from 65% a year ago. While last year when cybersecurity was the top-cited business and technology priority, this year “it was all about transformation in pursuit of higher efficiencies,” the Foundry survey authors state. Increasing operational efficiency was the top business initiative, cited by 45%. Transforming existing business processes through tactics such as automation and integration was the third-ranked objective, cited by 38% of respondents.
Security and risk management technologies are still expected to drive the most IT investment in 2023, cited by 38% of IT leaders. IT leaders also cited data and business analytics (34%), application and legacy systems modernization (28%), and machine learning or artificial intelligence (26%) as other target areas for investment.
Previn foresees CIOs assuming greater roles in supporting hybrid workplaces, along with design roles to enhance workplace technology as well as corporate enterprise systems. “It’s a very servant kind of role,” he relates. “We serve those who serve others. I’m here to enable everyone to do the best work of their lives. Every minute people spend struggling with something is a distraction from the thing they were hired to do. Our job is to get after those experiences, remove friction from the environment, and enable people to do their best work.”
Design thinking within enterprise technology areas “was a really novel concept for people, thinking about it from the lens of the experience first, and the solution second,” says Previn. “Before, we just accepted the fact that things were difficult to work with — a clunky bad experience. Now people come to work and think, ‘you know who I am, you know what my job is, and people spend billions of dollars on this.’ They should be better than this on experience, it should be the best experience of my life. That’s easy to say and hard to do, but that’s directionally where the CIO job is headed. Surrounding people with the things that they need without them being aware of it, and enabling hybrid work, which is going to be a very significant set of IT challenges which need to be solved right – with security, remote access, ways of working, and culture.”
A friend of mine recently started his Social Security benefits at age 66, justifying his decision because interest rates have risen recently from virtually zero to the four percent range. That …
A friend of mine recently started his Social Security benefits at age 66, justifying his decision because interest rates have risen recently from virtually zero to the four percent range. That made me question if the conventional wisdom still applies: This wisdom says that for most people, delaying the start of Social Security benefits as long as possible, even to age 70, is the best approach from a purely financial perspective.
To determine if that’s still the case, it’s important to understand the significance of the so-called “real” interest rate—the rate you can earn on guaranteed investments after adjusting for inflation. But inflation has also risen significantly at the same time as interest rates. As a result, real interest rates haven’t increased as much as the actual interest rates have.
When analyzing the financial advantage of a Social Security claiming strategy, it’s essential to take the real interest rate into account because Social Security benefits give you important protection against inflation. This was evidenced by the recent 8.7% increase that applied to benefits paid during 2023.
Two experts weigh in
Because Social Security claiming strategy analysis is complex, I asked two experts via email for their views. Let’s start with Mike Piper, author of an excellent book, Social Security Made Simple. He says, “The fact that real interest rates have increased significantly over the last year does push the math in the direction of filing earlier. But the push isn’t large enough for most people. For an unmarried person, it’s still slightly advantageous to delay filing for benefits, though not as advantageous as it was in recent years. For the higher earner in a married couple, it’s still generally very advantageous to delay—all the way until 70, ideally. For the lower earner in a married couple, it’s usually not advantageous to delay.”
Wade Pfau, a respected retirement researcher and the author of The Retirement Planning Guidebook, agrees. “While the case for delaying Social Security weakens as interest rates rise, it is still quite strong,” he notes. “Long-term TIPS yields are still around 1.5%, while the 1983 Social Security reforms that created the delay credits to be actuarially neutral assumed a 2.9% yield.”
Both Piper and Pfau noted that interest rates are just part of the analysis: You also need to consider the protection that Social Security benefits provide against the risk of living a long time. Although the thought of living a long time may be appealing, it happens to be a serious financial risk that deserves your attention.
When considering when to start Social Security benefits, Piper adds, “…critically, the above is only dealing with the math of maximizing spending over the household’s “expected” lifetime(s). Delaying benefits also has the important effect of reducing longevity risk. That is, delaying filing reduces the risk of outliving your money, because delaying works out well in the live-a-long-time scenarios.”
Pfau agrees: “…people are living longer today, and for couples, the high-earner’s benefit lasts for the lifetime of two individuals. The odds of benefiting from the insurance value of delaying Social Security are much greater than 50% for reasonably healthy individuals.”
Social Security protects against being old and poor
I agree with both Piper and Pfau—Social Security benefits protect against being very old and very poor. I know several older relatives and friends who claimed Social Security as early as they could, with the lowest possible benefit. Now they’re in their late 80s and struggling financially. Often these people are widows (it’s often the wife who survives the husband). If the husband has been the primary wage earner of the couple, delaying his Social Security benefit as long as possible is one way he can show his wife how much he cares for her.
By the way, Piper has developed a tool you can use to help determine the best claiming strategy given your situation. It’s called Open Social Security, and it’s an excellent, free, online system that does all the complex math for you, taking into account current real interest rates.
The friend I mentioned at the beginning of this post happens to be single and has some health issues. As a result, it’s possible he might have made a good decision to start his benefits at age 66, considering Piper’s comment above about outliving your money.
On a personal note, I’ll be starting my Social Security benefit on May 1 of this year at age 70. It feels great to have been able to wait for the maximum longevity protection it will offer to both my wife and me. By working part time at work I enjoyed, I was able to delay my benefit and have ample time to enjoy my extracurricular activities. I earned enough through my part-time work to replace the Social Security benefit I was delaying, so I wasn’t missing out on income that I needed. My plans and patience have paid off!
With the economy in turmoil and mass layoffs in the sector beginning to happen, I think Money 20/20 said it best when framing its predictions for the new year: “Who in …
With the economy in turmoil and mass layoffs in the sector beginning to happen, I think Money 20/20 said it best when framing its predictions for the new year: “Who in the *F* Knows?”
Based on the unpredictable ups and downs of the last few years, I tend to agree with Money 20/20’s statement. Nevertheless, there are some 2023 predictions worth paying attention to.
Big Tech and fintech layoffs could be good for banks and credit unions
A pool of very talented tech workers has recently been laid off. Many of them came from Big Tech, but plenty also came from fintech startups. Stripe laid off 1,120 people (14% of its workforce) in November 2022; Robinhood has had two layoffs, pink-slipping roughly 1,000 employees. Meanwhile, nearly every crypto firm has shrunk like the price of Bitcoin.
These moves have supplied the labor market with lots of talented workers who have specialized knowledge in areas like wealth management, alternative assets, blockchain and so on—and who understand not only the technology but also niche industries and highly regulated spaces. At the same time, banks—notably smaller community banks and credit unions—can benefit from talent with this experience as they work to digitally transform so they can keep up with fintechs and challenger banks.
The larger pool of non-fintech workers recently let go in other sectors could also be a gold mine for financial institutions. Wells Fargo’s CIO and head of enterprise functions technology, Jason Strle, understands the value of the technical knowledge available in the labor market and noted that the bank is looking for expertise in programming languages, development frameworks and data analytics—but banking experience is not a prerequisite.
“Non-traditional technology verticals like banking offer similar but unique opportunities to work with the foremost innovators to redefine future customer experiences,” Strle said. “The benefit is that a longstanding institution like Wells Fargo comes with an added layer of stability, consistency and scale.”
Savvy leaders at financial institutions—from your local credit union on up to giants like Wells Fargo—understand that recent layoffs have made for ripe pickings in the market for technical talent, and they are definitely taking advantage of the opportunity to hire great people.
Consumers will be presented with more ways to save and invest than ever
This prediction comes from Dani Fava, group head of product innovation at Envestnet. Fava is charged with identifying and prioritizing opportunities for financial advisors to provide transformative advice in a rapidly evolving market. She calls this “impulse investing” or “impulse saving.” She explained it like this: “Whether through a consumer banking app, mobile wallet, gig work or credit card, consumers will experience an onslaught of ways to save and invest without much planning, mirroring impulse [shopping] behavior.”
As in so many of our interactions with products and services we already use, there is an opportunity when brands have consumers’ attention and can offer them something of true value. Brands can look at this transaction as not merely a purchase but something that could generate savings and wealth for future purchases, investments or other financial services. For example, the Cash App Card and Acorn App both do this with “round-ups.” Small remnants from purchases and transactions can be designated for micro-investments, which can really add up over time.
Dani Fava, Envestnet
Envestnet
“This marks a tipping point in the market,” Fava says. “We’re on the cusp of experiencing truly democratized infrastructure for wealth accumulation.”
Leap Global Partners, a VC firm focused on talented LatinX founders and startups, agrees. Its recently issued 2023 Leap Outlook report, “Top 10 Investment Themes Worth LEAPing Into” included a section on “contextual financial services.” The thesis is that “trusted brands will offer timely, relevant and often customized financial services directly to their customers.” Importantly, these services may not come from traditional financial institutions like banks and brokerages, but from fintechs and other companies that position themselves to offer exactly the right service or product at just the right time to consumers and even merchants.
Open banking will become a reality
I tuned in to watch Plaid’s2023 Fintech Predictions webinar, which was thoughtful and entertaining. CEO Zach Perret and a panel of executives riffed about various topics, giving different perspectives on technology, consumer behavior, financial inclusion, regulation and compliance. One stand-out prediction from the webinar matches one that Patrick Moorhead, CEO and chief analyst of Moor Insights & Strategy, and I have talked about on our podcast for more than a year: open banking.
Open banking is a practice that grants third-party financial service providers access to customer banking, transaction and other financial data from banks and other financial institutions. Achieved by using APIs, open banking facilitates the networking of accounts and data across institutions for customers, financial institutions and third-party service providers. Banks control consumers’ financial data and, unlike in the U.K. and the rest of Europe, there are currently no regulatory guidelines in the U.S. for open banking. However, there is consumer demand for control of personal data, and for regulatory moves to enforce open banking standards. While open banking currently exists in the US without a formalized regulation framework, I believe that open banking will take hold in the U.S. in 2023, provided that all parties—fintechs, banks and regulators—can come to an agreement on how it should be governed. When that happens, there will be a marked difference in the open banking experience. Plaid’s head of policy, John Pitt, likened it to “going from a dirt road to a superhighway.”
2023 will be the beginning of the age of centaurs
Huh? What’s a centaur? This prediction comes from Money 20/20 managing editor Sanjib Kalita. He explains it like this: “Unicorns will become history as we’ll see the creation of centaurs …a combination of man and beast … or of Fintech and ? The expected ones are banks, but we could see retailers, telecoms and tech companies get into the action as well. The driver behind this trend will be the funding environment coupled with greater ability of acquirers to see or anticipate value creation.”
Thanks to the power of APIs, value can be created at the place of engagement, meeting the consumer with customized products precisely at their time of need, regardless of the channel. This can also be referred to as embedded finance or embedded fintech. All kinds of financial services—not only banking—are already embedded into software, a trend that is on the rise and will continue in 2023 at an even faster pace. As banks face a slowdown in loan volume, they will need offerings that cater to customers’ needs at the right time and place.
I think that soon this will extend to automobiles as well—your car will be your new electronic wallet. Think about it: For years now your car has been able to pay for tolls using either a bulky transponder or a simple RFID tag, so why can’t it store payment information to pay automatically for gas, drive-through ordering and pick-up, parking and so on? I wrote about this during the United States Grand Prix in Austin last year. This approach will provide automobile companies and OEMs (original equipment manufacturers) with a unique differentiating feature, and I think it’s inevitable.
Social Features Will Aid Younger Retail Investors
Benjamin Chemla, cofounder and CEO of investment-app, Shares, told Verdict, “Over the last year, we’ve seen many banking and investment apps look to social media for inspiration—many have made a conscious effort to add social-first features to their platforms to attract a younger audience. We’re confident that this trend is not only set to grow in 2023 but become an incredibly important component of any tech company within the financial space.”
Public, which offers thematic investments and social features, has done this as well. My twentysomething daughters enjoy the social features of connecting on investments with like-minded environmentalists and conservationists on the app. Reddit essentially does the same thing with StockTwits for all ages. Meme stock mania aside, retail investors now account for nearly 25% of total equities trading volume. While many of these people are sophisticated investors, they don’t have the same technology and trading power that’s enjoyed by institutional investors. Sharing information can help retail investors execute more sophisticated strategies and gain access to information beyond their personal research. Power to the people!
CB Insights says: Challenger banks are back
Noting that five of the top fintech funding rounds in the last quarter of 2022 went to challenger banks—or fintechs with banking offerings—CB Insights says this trend is “signaling that this category might be making a comeback after seeing sharp drops in funding in 2022.”
While it didn’t crack the top five, Neo Financial, a Canadian challenger bank, raised a hefty $146 million (CAN $185 million) Series C round in May 2022, bringing its total funding to $234.7 million (CAN $299 million) since its inception. The digital bank has also surpassed one million customers and then some.
Andrew Chau, CEO and cofounder of Neo Financial, agreed with CB Insight’s assessment and gave it some context. “Rising rates and increasing inflation have impacted the economy. However, challenger banks with banking offerings, particularly those with a diverse set of products, have been able to weather that storm,” he said. “They did this either by having variable-rate lending products or, for those with bank charters, by benefiting from rising interest rates in the form of higher deposit float revenues.”
Chau also told me that 2023 will be a year of focus for his own company and other challenger banks—focusing on core products, improving margins by increasing revenues and reducing costs per customer. The challengers that have established distribution channels or efficient growth loops will continue to be able to grow at the same time. Chau’s outlook is that coming out of 2023 and into 2024, challenger banks will be stronger than ever, with improved economics, and will be ready to deploy their next investments into new products and features for growth.
Money movement will become a customizable, personalized experience
Consumers using online services are accustomed to instant, simple transactions, and they want their money-handling tools—whether for business or personal finances—to mirror the convenience of the other apps they use in their daily lives.
One example of this comes from Alacriti’sOrbipay Unified Money Movement Services, a cloud-based platform that enables banks and credit unions to deliver money movement “experiences” quickly and seamlessly. This encompasses modern, intuitive digital payments, including bill pay, disbursements, transfers and more for both consumers and businesses.
In a conversation I had with Mark G. Majeske, senior vice president of faster payments at Alacriti, he explained, “No one cares about the payment rail [a payment platform or network that digitally moves money from payor to payee]; they care about efficiency and the experience.” He then offered the analogy of making a money transfer the same way you would send a package. When you take a package to a shipping location or print a shipping label online, you’re given choices about how and when you’d like the package to arrive—with corresponding costs. This empowers you to make whatever tradeoff makes sense for you in terms of speed and expense.
Some choices simply aren’t available for sending money in a bank branch—for instance, on a weekend or a holiday—just like you can’t ship a package from New York to Australia in four hours. What people do care about is the experience of handling the transaction. So, whether it’s a holiday or an ordinary Tuesday, the customer can be presented with options for securely transferring money at different speeds for corresponding prices; the power is in their hands, and the experience is tailored to their needs. I think that this way of addressing the payment experience will be transformational for the industry.
This will be especially valuable for the B2B payment space, which is still bogged down by inefficiencies. In a world where the entire money ecosystem is being digitally transformed, the B2B payments market is drastically behind. Sure, B2B payments are more complicated because they need to be tied into more processes, such as invoicing and approvals. Nevertheless, many inefficiencies and pain points remain.
All in all, we should expect a big change in the payments space. “We have a set of tools … that are competent in doing any transaction,” Majeske said. “What we have to do as an industry is identify the needs and then look for the tools to solve for this business gap.”
BNPL will finally give credit where credit is due
Sometime soon, BNPL will face a reckoning around its biggest issue: credit reporting. There are two main drivers for this. The first is consumer protection—making sure that consumers aren’t overextending themselves. The second is financial wellness—helping credit-invisible, credit-thin or sub-prime consumers to build their credit. BNPL was built to serve those customers, and the goal should be to help people beyond the convenience of splitting up their payments.
The credit bureaus and BNPL companies have yet to figure out how to report these transactions in a way that gives credit where it is due. Different trade lines and timelines of transactions—for example if someone opens too many new lines of credit in a short time span—can temporarily lower a credit score, even if everything is paid on time. Meanwhile, unreported payments don’t help a consumer’s credit score at all. Most BNPL companies report only delinquent payments, which leaves consumers with no credit-building upside. The big four bureaus and the BNPL players are discussing this, and I’m hopeful that a consumer-friendly solution will arise this year.
RegTech will have its debutant moment
This year we will see more compliance-driven technologies that will help financial services businesses optimize their risk management procedures by providing automated and accurate risk analysis. These technologies, which span data management, cloud computing and machine learning, aim to ensure that companies remain compliant with relevant regulations—without impeding the speed or scale of their operations. Such advanced technologies should make compliance in financial services both more robust and secure.
I asked my Moor Insights & Strategy colleague Will Townsend, a security expert, what he thought of this prediction. This is what he said: “The financial services industry is highly regulated, driving the need for hardened security. Cloudification presents an opportunity to scale new services and back-office capabilities for fintech players, but it also expands the threat surface for bad actors. Regtech is poised to help in closing security gaps and ensuring compliance.”
Tokenization will make private equity funds available to the masses
Private equity is one of the most opaque and difficult markets in which to participate, yet it has outperformed the S&P 500 by more than 70%, and with less volatility, since 2001. Naturally, in this age of the democratization of finance, you’d think that funds would find a way to provide access to this asset class for retail investors.
According to Jamie Finn, cofounder and president of Securitize, this is happening. “Access to some of the most important private equity funds is now happening at scale thanks to tokenization. Firms like KKR, Hamilton Lane and many others are quickly adopting this new format to reach the masses. “Using blockchain technology for automation and increased efficiency creates the opportunity for lower investment minimums—which means more inclusive access—and greater potential for liquidity via secondary exchanges like Securitize Markets.
While the phrase “democratization of…” may be getting old, “inclusive access to…” isn’t.
Wrapping up
While fintech has been somewhat unpredictable over the last few years, watching the trends across the industry provides valuable insights into the current state of the economy, consumer behavior and preferences—revealing emerging opportunities. Years of innovation were consolidated into a very narrow timeframe during the pandemic. Fintechs and financial institutions now have the luxury of breathing room to iterate and innovate to offer efficient and cost-effective methods for managing finances, making payments and more, ultimately capitalizing on the trends that are changing how money is handled. I look forward to writing a 2023 year-end review where we’ll see where everything nets out.
I am told I have a knack for identifying companies making waves in specific technology areas. One such company is Kyndryl, marking its second anniversary of separation from IBM. I believe …
I am told I have a knack for identifying companies making waves in specific technology areas. One such company is Kyndryl, marking its second anniversary of separation from IBM. I believe it could be a compelling turnaround story about the growth that was not possible when it was a part of IBM. And quite frankly, who doesn’t like a turnaround story?
Recently I was fortunate to speak with Martin Schroeter, Kyndryl’s Chairman and CEO, about his scorecard a little over a year after the spinoff from IBM.
Dealt a challenging hand out of the gate
When officially separated from IBM on November 4, 2021, Kyndryl started life with $2B in cash on its books, 4,000+ enterprise customers in 60+ countries, and annual revenues of nearly $19B. Hardly a small startup!
That may sound fine, but under the covers, the business was experiencing declining revenues due to a lack of investment and a limiting charter of supporting the product-oriented business. Although the organization was critical to how IBM engaged with its customer base, it did not attract the investment it perhaps deserved and became a drag on IBM’s overall business. No one I discuss this with at IBM or Kyndryl disputes this with me.
What to do with the autonomy
Now a separate company, Kyndryl has taken the opportunity to invest in the offerings and practices that customers want from the company. The Kyndryl story is about growth and creating value for customers.
The company now has the autonomy to pursue opportunities, build capabilities, and join the ecosystems that matter to customers. Investing and the independence to act have set Kyndryl on the path to turning the business around.
Business offerings informed by customers
As a first step, Martin created a new business strategy shaped by the customer base. A Venn diagram of the following three questions; “What does the company do today that has real value?”, “Where are you investing for the future? “and “where do you give us brand permission to operate?” defined the company offerings – in fact, six new practices.
In the category of what “can we do for you today that has real value,” Kyndryl offers a Core Enterprise and zCloud practice. A firm offering, as today, Kyndryl manages about half of the mainframes in the world. The second practice in this category is the digital workplace, an open platform to foster employee collaboration and productivity.
Even in the core business, Kyndryl had struck some deals that would have been difficult to imagine when the company was part of IBM. The new Mainframe Data Pipe to Azure lets customers connect mainframe and midrange data with the Azure cloud. Similarly, Kyndryl supports Google Cloud’s Dual Run, which enables parallel processing to create digital copies of mainframe systems that run simultaneously on Google Cloud without negatively impacting core business processes or end-user experience.
In the “investing for the future” category, Kyndryl invests in four new practices. The first is Network and Edge, providing the expertise and technologies for the next wave of cloud with 5G-enabled edge and software-defined networking technologies such as SDN and SD-WAN. This practice is very different from previous networking practices under IBM, which were about reselling network gear.
The Kyndryl Cloud practice is also much broader in scope. In IBM, the business had to lead with the IBM Cloud precluding any engagement with Google, Microsoft, or AWS. The new cloud practice focuses on the large hyperscalers in the cloud space. Kyndryl has wasted no time forming cloud-focused partnerships with Microsoft, AWS, Google Cloud, and Oracle.
Customers have said, “to be part of the future, not just part of my past, you need to build capabilities that I need, and you need to work with the partners with whom I work.”
Kyndryl has wasted no time by moving into and joining the ecosystem that the customer base uses to meet digital transformation needs. Kyndryl has formed agreements with 20+ partners, including the cloud-focused partnerships mentioned above, enterprise-oriented alliances with Red Hat, Cloudera, NetApp, and Nokia, and expanded partnerships with Dell and SAP.
New solutions for emerging business needs
Kyndryl has launched three new, homegrown solutions and services attuned to modern and emerging business needs. Kyndryl Bridge is an open integration platform that helps customers deal with the complexity of mission-critical systems with greater oversight, interoperability, and AI-powered analytics. You can think of Kyndryl Bridge as IPaaS or an integration platform as a service designed to streamline IT operations.
The company sees strong interest in the platform. In fact, Stellantis, a global automotive manufacturer, has just signed an agreement to use Kyndryl Bridge. The platform will support IT infrastructure management and real-time insights across Stellantis’ technology environment. The project is designed to give them smoother and more efficient IT operations across manufacturing facilities spanning the U.S., Latin America, Italy, France, Poland, and India.
Kyndryl Vital is a collaborative co-creation effort that helps customers better understand and fully envision the future states of the business and understand the challenges to get there. Vital spans problem definition to a deliverable solution to solve complex real-world business problems. Kyndryl Consult works with Kyndryl Bridge, Kyndryl Vital, and other solutions to help customers advance digital transformation initiatives.
Wrapping up
Kyndryl has been making solid moves in forming new alliances and investing in new offerings. The proof is in recent customer engagements. According to the company, there have been new contracts with global enterprise customers, including Michelin, CaixaBank, BMW, Raytheon, Bangalore International Airport, CarreFour Belgium, Spain Ministry of Defense, Ricoh, Honda, Yamaha, and Singapore Airlines.
Now that Kyndryl is an independent company, there are exciting opportunities for future growth, such as the need for digital transformation services and managing and modernizing mission-critical information systems.
I look forward to following the next chapter of Kyndryl’s turnaround and hearing from customers who have benefited from Kyndryl’s expertise.
Banks Plan Payment Wallet to Compete With PayPal, Apple Pay Big banks are teaming up to launch a digital wallet that people can use to shop online. Wells Fargo, Bank of …
Banks Plan Payment Wallet to Compete With PayPal, Apple Pay
Big banks are teaming up to launch a digital wallet that people can use to shop online. Wells Fargo, Bank of America, JPMorgan Chase and four other banks are working on a new product that will allow shoppers to pay at merchants’ online checkout with a wallet that will be linked to their debit and credit cards. The digital wallet will be managed by Early Warning Services, the bank-owned company that operates money-transfer service Zelle. It will operate separately from Zelle. EWS, whose owners also include Capital One, PNC, US Bancrop and Truist, plans to begin rolling out the new offering in the second half of the year. One goal of the new service is to compete with third-party wallet operators such as PayPal and Apple Pay, according to people familiar with the matter. Banks are worried about losing control of their customer relationships. [The Wall Street Journal]
This Credit Score Change Could Work to Your Benefit
As of July 1, 2022, there’s a required one-year waiting period before unpaid medical debt is allowed to show up on your credit report. This change was put into place largely to give consumers more time to appeal rejected insurance company claims before having their debt show up as delinquent. Also, as of July 2022, credit bureaus must remove all paid medical debts from consumer credit reports. That’s a big deal, because normally, debts in collections can take seven years to drop off your credit report, even once they’re paid in full. [The Motley Fool]
Generation X Carries the Most Credit Card Debt
When it comes to credit card debt, Generation X may be struggling the most. The average amount owed by people in that cohort is $7,004, according to a new report from New York Life. That compares with $6,785 for baby boomers, $5,928 for millennials and $2,876 for Gen Zers. Research from CreditCards.com also shows more members of Gen X (77%) have any type of personal debt compared with other age groups. Baby boomers are defined as people ages 59 to 77; Gen Xers, ages 43 to 58; millennials, ages 27 to 42; and Gen Z as age 11 to 26. [CNBC]
New to Credit Consumers Are ‘Good Risks’
Qualifying for a loan or credit card for the first time can be a challenge because lenders are wary of extending credit to those with no credit history. But once they’ve been approved, new-to-credit (NTC) customers tend to perform as well or better than borrowers with established credit, according to a new study from TransUnion. In the United States, NTC consumers with credit scores in the near-prime tier had lower delinquency rates than credit-served consumers with the same age and risk profiles on the initial credit cards they opened—an indication that many are careful to make timely payments on their first-ever credit cards in order to preserve ongoing access to this new source of credit. [GOBanking Rates]
Credit Card Charge Disputes on the Rise as Consumers Cheat Businesses
Consumers are cheating businesses out of payments at increasing rates by fraudulently disputing credit card charges that they genuinely made. Incidents of “friendly fraud” are up anywhere from 20% to 30% in 2022 depending on the market. Friendly fraud includes an array of situations in which a customer improperly disputes a charge on their credit card bill, including when they forgot about a purchase or don’t recognize the name of the merchant on their bill; don’t realize that a friend or family member used their card to buy something; or intentionally spend money with the intent of disputing the charge after the fact. [Axios]
Credit Karma Tricked Customers into Thinking They Were Pre-Approved for Credit Cards
The Federal Trade Commission ordered personal finance company Credit Karma to pay $3 million to customers the agency alleges were deceived into applying for products they weren’t eligible for. Credit Karma used “dark patterns” to trick consumers into thinking they were “pre-approved” for credit card offers that they usually did not qualify for. Dark patterns refer to website and app interface designs that can be used to manipulate or mislead consumers. [CBS News]
Walmart-Backed Fintech Startup Plans to Launch Its Own Buy Now, Pay Later Loans
A Walmart-backed startup is looking to compete with buy now, pay later companies. The venture, called One, is gearing up to launch its own version of the payment service as soon as this year. One, which is majority-owned by Walmart, wants to launch a service that shoppers could use at Walmart’s website and stores, as well as at other retailers, the source said. The effort was motivated in part by a more challenging economic backdrop and consumers feeling pinched by inflation. [CNBC]
PayPal Accounts Breached in Large-Scale Credential Stuffing Attack
PayPal is sending out data breach notifications to thousands of users who had their accounts accessed through credential stuffing attacks that exposed some personal data. Credential stuffing are attacks where hackers attempt to access an account by trying out username and password pairs sourced from data leaks on various websites. This type of attack relies on an automated approach with bots running lists of credentials to “stuff” into login portals for various services. Credential stuffing targets users that employ the same password for multiple online accounts, which is known as “password recycling.” [Bleeping Computer]
Credit Card Debt Prevents Nearly 20% of Americans from Becoming Homeowners
As Americans deal with high inflation and a heated housing market, growing credit card debt poses a major barrier to homeownership. Credit card debt has prevented one in five or around 18% of those with credit card debt from purchasing a home in 2022, according to study by Clever. Credit card debt was a larger threat to homeownership than student loans and medical debt, a Rocket Homes survey also noted. [Fox Business]
How Long Do Collections Stay on Your Credit Report?
A collection account, sometimes referred to as a charge-off, can occur if you miss payments or ignore a debt you owe. If you neglect to pay a bill, whether it’s your credit card, medical bill or utility bill, it can end up going to a collection agency. With a credit card balance, the lender usually waits until your payment is overdue by at least six months. When the creditor decides there’s little chance of collecting the money you owe, your account could be sold to a collection agency. The agency then likely reports your delinquent account to the credit bureaus. A debt can be sold to a collection agency if you miss several payments on an account. A collection account stays on your credit report for approximately seven years. Collection accounts decrease your score, but the impact lessens after two years. [U.S. News and World Report]
FTX Owes Money to Netflix, Binance, Wall Street Journal
It’s the list everyone has been waiting for, minus 9.7 million redacted customer names. But the 116-page FTX creditor list, which names companies such as Netflix and Apple, still paints a comprehensive picture of the now-bankrupt crypto enterprise’s reach and the impact of its collapse. Among those listed are media companies like the Wall Street Journal, Fortune, Fox Broadcasting and CoinDesk as well as big crypto firms such as exchanges Coinbase and Binance. American Airlines, Spirit Airlines and Southwest Airlines, as well as Stanford University were also listed in the document. The list also names Gisele Bundchen Charitable Giving as a creditor. The Brazilian supermodel and then husband Tom Brady were famously invested in the company, even appearing in its Super Bowl ad. [CoinDesk]
CFPB Wants Information About Consumer Credit Cards
The CFPB is asking consumers and others about their experiences with credit cards. The information is to be used in a review of the industry that the CFPB does every other year. The report that is to include this feedback is mandated by the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) and aims to help determine if regulatory adjustments are needed. Examples of things the CFPB would like to hear about are terms of credit card agreements, practices of credit card issuers, effectiveness of disclosures and the adequacy of consumer protections. Other examples include credit cards’ cost, availability and product innovation. [PYMNTS]