Hello readers,
We hope you are enjoying the holiday season.  We want to offer a special shout-out to those celebrating Boxing Day today. This week, we discuss whether April Fool’s Day came early this year and if roboadvisors will continue to surge in a down equity market. We also look at the Venmo juggernaut, Ant Financial and a super simple guide to Bitcoin.
Is it Christmas time or April Fool’s Day? A Christmas-time pitch from Point Digital Finance left us wondering what time of year it is. For potential borrowers with significant equity in their homes but a credit score below 620, the company is offering an alternative to home equity loans. Here’s how it works: Point sells a fractional equity stake in the cash-seeker’s home. The seller can buy back the stake at any time during the term of the deal at the then appraised property value. But according to this Bloomberg story, if the homeowner doesn’t pay back the money at the end of the term, Point has the right to sell the home to recoup equity gains. Point is a well-funded startup backed by a fintech dream team including Vikram Pandit, Greylock Partners and Andreessen Horowitz. The company’s CEO, Eddie Lim, a Harvard trained son of “debt averse Korean immigrants,” said he was compelled to start the company after seeing how frustrating it can be to refinance a home in Silicon Valley. “If your home does well, we both do well, “ says Lim. Sounds like a brilliant idea hatched by brilliant Silicon Valley stars with a great pulse on the nation. What could ever go wrong?

Guess which Internet powerhouse has its eyes on financial services? Probably all of them — Google, Amazon, Facebook and Apple — says Citigroup’s Huy Nguyet Trieu in this thoughtful post. Trieu’s overarching point is that with the possible exception of Facebook, three of the four have a vested interest in making  financial services a core priority. However, these giants are playing for the long-term and so it isn’t likely that any one of these companies will dominate any segment of the financial services industry any time soon. Amazon, Trieu says, has the greatest motivation of the four to put financial services front and center. Regarding Google, Trieu suggests that the company will likely participate more as an agent, providing access to end-users, rather than as a principal providing financial services itself. We encourage you to read more of his analysis plus get his take on the fintech strategies of Facebook, Apple and Alibaba as well.  

Venmo victor in payments (again). Apple Pay, Chase Pay, Walmart Pay and Square’s IPO were all hyped high and hard in 2015, but once again, Venmo remained the brightest star in the payments landscape. The company, owned by PayPal, has established itself as the app of choice for Millennials seeking to move money, with the average user opening the app four to five times a week, says PayPal CEO Dan Shulman. How has Venmo managed to stand-out in an intensely competitive and crowded space? According to Shulman, part of the secret sauce is Venmo’s feed, which lets everyone in a user’s network know what was bought and who was paid. As a result, Venmo payments have become closely tied to a user’s overall social networking life. Does making your financial activity public seem crazy? If you think so, you’re probably over 30. Read more of Shulman’s interview at Business Insider’s recent Ignition conference here

Wither roboadvisors and a stock slump. What happens to algorithm-based roboadvisers like Betterment, Wealthfront and a slew of competitors if stocks head south in '16? That’s the question asked by Arielle O’Shea in her predictions for the roboadvisor market on NerdWallet, which is like Kayak for personal finances. We’re happy that O’Shea implicitly raises the point that an industry built on low-cost index tracking ETFs may experience turbulence if account holders see red next year. Granted, part of the appeal of roboadvisors is that their offerings encourage a disciplined and long-term approach to investing that discourages customers from trying to time the market’s ups and downs. However, we suspect that active human management could get a second look next year and that robos could find themselves in the unaccustomed role of trying to grow while facing market headwinds.

Bitcoin demystified — really. There is no shortage of material promising to explain Bitcoin and the blockchain in easy-to-understand language. Unfortunately, many of these attempts revert to techno-speak and wind-up confusing the reader more than they elucidate. That’s why we were happy to come across this piece, by Nik Custodio of FTI Consulting, which explains Bitcoin in a way even a five-year-old could understand. Read it, and if you want more, check out this article.

Company of Note: Ant Financial.
Ant Financial is no ant. In fact, the China-based company spun-out of Alibaba Group is one of the world’s largest fintech companies. Founded in 2004, this online payments company is partially controlled by Alibaba chairman Jack Ma and boasted a $50 billion valuation during its Series A financing. Read more about the financing here. Ant is also the creator of Sesame Credit, a trust-based “social credit” scoring system that has been endorsed by the Chinese government. By 2020, in fact, everyone in China will be required to opt-in to the system, which intends to capture every citizen’s trustworthiness into one number. Sounds like an Orwellian version of a FICO score. 

This week’s little known facts about…the day after Christmas.
  • In 1941, one of the world’s greatest leaders, Winston Churchill, became the first British prime minister to address a joint session of the U.S. Congress.
  • In 1966, the first day of the first Kwanzaa was celebrated in Los Angeles under the direction of Maulana Karenga, the chair of Black Studies at California State University at Long Beach.
  • In Ireland, Boxing Day is known as St. Stephen’s Day, and is observed by figuratively hunting down a wren and stoning it to death in remembrance of St. Stephen, the first Christian martyr. Today, the practice of killing these peaceful birds has morphed into bands of roving singers who travel from house to house exchanging food and drink.
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