Do you envy Goldman Sachs? Join Marcus.

Do you envy Goldman Sachs? Join Marcus. 800 534 Efi Pylarinou

Do you envy Goldman Sachs? Join Marcus.

Come on, lets admit it. The world has long envied Goldman Sachs. This never faded away, even while Goldman Sachs was going through an identity crisis after the 2008 financial crisis.

Goldman Sachs is an example of how an incumbent builds a Fintech business. It is not in a lab, nor as a rebranding exercise. Goldman Sachs`s Marcus ecosystem is unique because it is positioned in the value stack below its established competence – an investment bank getting into retail banking and wealth management for mass affluent & the hoi polloi.

Goldman Sachs is an example of how an incumbent financial institution can grow Data pools by offering free access to its analytical tools SecDB – explained in my article in the 2018 WealthTech Book  `Empowering Asset Owners and the Buy Side`.

Goldman Sachs is an example of how an incumbent financial institution can grow Data pools by partnering with Apple on a credit card – Apple has 900 million devices and it is expected that the Apple Card will bring 21 million users to GS by year end.

Goldman Sachs is a publicly traded company that is trading right now below book value and there are more than enough GS analysts out there to get estimates on the revenues from the different GS `consumer banking` new initiatives.

For now, Goldman Sachs has been building up aggressively deposits (the usual way of offering above-market deposit rates when entering a new market). The 3yr old deposit business has accumulated now $46billion across the US and the UK! The expected growth is in the order of $10billion per year going forward.

Marcus has issued $5billion in personal loans. These are unsecured loans that naturally, may worry shareholders, who typically get nervous easily (even though this is crumbs when taken in context).

The credit card part of the Goldman Sachs business is newer and could also grow at double-digit annual rates. Goldman Sachs knows well that credit card lending gets favorable regulatory treatment – less capital is required against this kind of debt – and as long as this holds it is a win-win situation. Why? Simply because Goldman Sachs will get their hands on valuable data from retailers and their shoppers, in order to process the Apple credit card application.

Goldman Sachs hits two birds with one stone. It gets to issue consumer debt on a global scale with lighter capital requirements, and it gets to process new, valuable consumer data globally.

The Apple & Goldman Sachs card economic terms are not known. Even if they are not that juicy for Goldman Sachs and even though the GS logo is on the back of the Apple card; the consumer data access and processing from 40 countries that this brings to the table is invaluable.

Marcus Goldman Sachs

The Apple & Goldman card will grow an important global data pool for Goldman Sachs to leverage in its planned WealthTech offering.

Apple credit card

In case you haven’t noticed, Marcus has been moved into the Goldman Sachs asset management unit, which will be renamed the consumer and investment management division. The October 2018 memo says that Marcus has plans to “launch a broader wealth management offering.”

A global consumer outreach is being built in preparation for this broader wealth management offering. And for all those concerned about a growing unsecured loan book, Goldman has great risk management experience and could with great elegance securitize part of this debt, once there is enough to do so. Elizabeth Dilts and Anna Irrera, raise this point too in ` Goldman’s Apple pairing furthers bank’s mass market ambitions`.

Marcus is a brand whose heritage is in risk management and investment banking. They will use these competencies to manage growth in their retail-focused wealth management offering. This is a huge advantage compared to Fintechs that started with unbundling a specific financial service (be it loans, or deposits, or investments) and is now, growing by re-bundling additional services (e.g. adding robo-advisors to loans, or deposits to trading, etc).

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No Trade-offs: Give customers everything they want as cheaply as possible

No Trade-offs: Give customers everything they want as cheaply as possible

No Trade-offs: Give customers everything they want as cheaply as possible 800 420 Efi Pylarinou

No Trade-offs: Give customers everything they want as cheaply as possible

XY planning Network XYPN deployed successfully a subscription based offer for financial advisors in the US, 5years ago. They actually celebrated their 5yr birthday on April 4th with 900 members that use the service. This is evidence that a subscription service for financial advice works at the B2B2C level.

On the 28th of March, Charles Schwab took the subscription service of financial advice to another scale.

Charles Schwab subscription service rhymes with Apple`s news service.

For $30 a month, Schwab offers a financial planning package.

Schwab Intelligent Portfolios Premium (rebranded name) is offered at $30 a month after a one-time $300 fee with a $25k minimum. Asset allocation is from a universe of 50+ ETFs, including a financial plan with a customized roadmap and unlimited one-to-one guidance from a CFP professional. Regulated financial-investment advice at $630 a year. 

Schwab Intelligent Advisory (the original robo name) was at 28bps per annum 0.28% of assets.

Think of the 300,000 Schwab Intelligent Advisory accounts ($37 billion). Some will remain in the free, no-advisory offering. But a significant part will switch over to Schwab Intelligent Portfolios Premium and get advice.

Evidently, any account with enough assets ($125k seems to be the magic number) will switch over.

What will this move do to the rest of the large players?

When will Vanguard follow suit?

This is another discount brokerage moment in the investment industry. This is the subscription financial advice retail moment.

Eric Balchunas, the Bloomberg Intelligence analyst, has baptized the fee war that has been going on in the US, “the Vanguard Effect” simply because the major ETF producers rush to cut their fees, responding systematically to the lead of the 43yr old low-cost producer.

Now the Vanguard Effect` for financial advice is upon us but led by Schwab.

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[1] “You’re able to get extraordinary quality at extraordinary value now,” Bettinger says. “That’s where our industry is. And in reality, that’s where the whole economy’s going.”
Bettinger is president of the Charles Schwab corporation

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post. 

Data Centers, AI and finance

Data Centers, AI and finance

Data Centers, AI and finance 800 533 Efi Pylarinou

Data Centers, AI and finance

Future data centers of all kinds will be built like high performance computers,” — Nvidia CEO Jensen Huang 

We are living in a world in which, more or less unconsciously, we increasingly “Trust in Math”. After the GPU adoption in business, we moved to new hardware that is not only faster but also smaller in size. We basically reinvented how data rooms looked.  

And this the world from Nvidia’s angle. They have facilitated the growth and new value creation, all powered by Artificial intelligence tools.  The use cases in Finance are immense. Fintech solutions for:

  • Operations: automating claims processing and underwriting in insurance
  • Customer service & engagement: alerting customer for fraud, chatbots, recommendations
  • Investing/Trading: automating research, trading signals, trading recommendations
  • Risk & Security: fraud detection, credit scoring, authentication, surveillance
  • Regulatory & Compliance: AML, KYC, automating compliance monitoring and auditing.

Marc Stampfli, the Swiss country manager at Nvidia shared the journey of the Artificial Intelligence Fall, Winter and into Spring, during his talk at the Fintech+ conference last year in Zurich. He explained neural network concepts borrowed from biology and the initial difficulties of neural network computations outperforming statistical approaches. The first tipping point came with increased data availability through the internet, and only then we had evidence that neural networks could outperform statistical models.

Data Centers, AI and finance

After that point, we ran into the next problem which was the lack of computing power to process all this data and multi-layer neural networks. And this is where GPU – a kind of parallel computer – was created and first used in vector mathematics. This is the technology of Nvidia’s processor.

The next inflection point came with the use of GPU to accelerate the next generation of machine learning algorithms. This led to an explosion of AI research, development and application, all powered by NVIDIA.

Today, NVIDIA is turning into a data center company. This positioning has become evident with NVIDIA’s announcement to buy the data center networking company Mellanox for $6.9B. This is the first large size acquisition for NVIDIA and one that is in alignment with their belief that Datacenter will play an ever-increasing changing strategic role whose architecture will need to be agile and scalable.

“Future financial service centers will be powered like high performance computers”.

2020 is only a year away. In March NVIDIA`s GPU Technology Conference (GTC) is the place to hear use cases and innovative approaches to AI from some of the world’s largest financial institutions at GTC.

Banks should steal the 2002 Bezos internal memo

Banks should steal the 2002 Bezos internal memo

Banks should steal the 2002 Bezos internal memo 800 533 Efi Pylarinou

Banks should steal the 2002 Bezos internal memo

Dear Banks,

It only takes an internal memo to ignite your own Bezos moment.

Five clear and crystal commandments[1] (“good artists borrow, great artists steal”)

that you can steal from Jeff B.:


All teams will henceforth expose their data and functionality through service interfaces.


Teams must communicate with each other through these interfaces


There will be no other form of inter-process communication allowed: no direct linking, no direct reads of another team’s data store, no shared-memory model, no back-doors whatsoever. The only communication allowed is via service interface calls over the network.


It doesn’t matter what technology they use. –(tech neutral)


All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No except

Bezos ended his 2002 now famous mandate with a chilling little twist:

“Anyone who doesn’t do this will be fired. Thank you; have a nice day!”

Just 17 years later, you can feel free – I would say you should feel inclined to do so – and steal this. You can end your internal memo with a kinder twist:

“Anyone who doesn’t do this will no longer be with the team. Thank you; have a nice day!”

2019 in Finsev

I am using `Banking` to refer to financial institutions that have traditionally been in the business of serving retail, institutional, and corporate clients across all the spectrum of their needs. The Banking business model has been a PUSH operating model and the opaqueness and regulatory barriers to entry have allowed them to morph into a predominantly product business.

I celebrated this past March, 4yrs with Daily Fintech., during which I have been writing every single week on global innovations in Capital markets, wealth and Asset management[2].

I can safely say by now, that the only sustainable banking model is a PULL operating model that at its core becomes a platform as a service business. Much like Bezos transformed Amazon from a digital bookseller business, into a platform as a service.

For this to happen, the core transformation needed is in the `middle office` (conventional parlance) via APIs. Unless banks realize this, they will become suicidal and victims of a `lemming effect`. Their herd behavior to keep up with digitizing the `front office` to improve their customers` experience and even their engagement; will prove futile. The reason being, that as long as the culture remains that of selling products eventually; banks will find themselves in a commoditized business with margin going to zero.

“Any bank that does not transform its `middle office` via APIs; will become extinct. Thank you; have a nice day!”

The good news about this transformation is that it has lots of possibilities and variations. But a bank has to start its platformification process, first internally.

Think first Private APIs that enable each and every department to access data and workflows in real time. Then, one can think of Public APIsPartner APIs, and the Οpen Banking obligation or opportunity. Banking transformation needs to look more like 2/3 internal APIs in the first phase.

Bank API Bezos Article

Chris Skinner and Jim Marous, have been preaching relentlessly about these issues. But it seems that it is difficult to convince `Doubting Thomas`[3]. There is no reliable data (to my knowledge) on this topic that is essential, despite the fact that it may seem a `detail`. The devil always hides in the details.

Over the past 3yrs, I have been monitoring the Financial APIs from the Programmable Web and there is clearly an increase. From 2016 to date, we have gone from 1700+ to 3800+ financial APIs. Of course, there is no quality differentiation or usage stats with this doubling. And none of these stats, are related to the paramount internal transformation measured by Private or Internal APIs, and their usage.

Caravaggio incredulity of saint thomas.

The one piece of evidence that I can share with you, is from Goldman Sachs. Marquee [4], is the GS sophisticated freemium platform for its institutional clients, which I have used as a great example of `Empowering Asset Owners and the Buy Side` WealthTech Book, 2018 Wiley.

Adam Korn, who has spearheaded the project of giving out Marquee for free, reported late last year that:

` After months of work, Marquee now fields more than 100 million API calls each month, about 5 million of which come from outside Goldman’s four walls. Marquee now has roughly 12,000 monthly active users, split evenly between internal and external clients. And the number of users is beginning to increase, according to Korn.`

Efi Pylarinou Quotations Pointer

It only takes an internal memo to ignite your own Bezos moment.

[1] The API Manifesto Success Story


[3] A doubting Thomas is a skeptic who refuses to believe without direct personal experience—a reference to the Apostle Thomas, who refused to believe that the resurrected Jesus had appeared to the ten other apostles, until he could see and feel the wounds received by Jesus on the cross.

[4] Named in honor of CIO R. Martin Chavez, known by everyone as “Marty”.

 I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Are robo-advisors about Low-cost products or `Passive beats Active`?

Are robo-advisors about Low-cost products or `Passive beats Active`?

Are robo-advisors about Low-cost products or `Passive beats Active`? 800 449 Efi Pylarinou

Are robo-advisors about Low-cost products or `Passive beats Active`?

We live in a world that is using new words in an accelerated pace. I recently ran across the hashtag #phygital. Which reminded me of the hybrid nature of robo-advisory services that has emerged from the growth of robo-services.

The various robo services that have been launched over the past ten years, have transformed the investment management space into a predominately low-cost product space.

Last year, Victor Hagahni and James White – Victor is the Founder and CIO of Elm Partners, and James is Elm’s CEO – wrote an article Is Vanguard More Rolls Royce, or Hyundai? that highlighted an investment world particularity:

With most products and services – cars, doctors, food etc – better quality normally goes hand-in-hand with a higher price. Not so with investing.

They even quote Bill McNabb, former CEO of the Vanguard Group saying:

The whole cost argument from an investment perspective is counter-intuitive.

Listening to Bill McNabb`s short interview at the 2019 Academic and Practitioner Symposium on Mutual Funds and ETFs, he makes a very important point that is not well understood.

The transformation in the investment management space is clearly turned the space into A low-cost product space.

This often is confused with a transformation into A passive beats active space.

The growth of robo-advisory (apologies for the umbrella term) is Not about passive over active. Robo-advisory is about the wide spread use of low cost products. We live in a world that it is becoming more difficult to imagine high cost investment products.

One of the best examples of low cost, active and passive management, is Elm Partners.

12bps, tax harvesting, portfolio construction based on economic fundamentals and other liquid risk premia in addition to equity market Beta.

Listen to Victor Hagahni and James White discuss their approach which is for accredited investors only. Their offering includes less than half a dozen investment programs and the possibility of SMAs.

Elm Partners does not aim to do everything for everybody. Low cost and transparency is paramount for their business. You can follow their quarterly reporting on Seeking Alpha, here. You can follow their thoughtful research here. You can savor Victor`s Tedx Talk Where are all the Billionaires? & Why should We Care?: where he uses the puzzle of the missing billionaires to help us explore how and why most investors fail to capture the returns offered by the market. This actually leads into the main reasoning for Elm Partners investment strategy, the so-called “Active Index Investing.”

Listen to Victor Hagahni and James White discuss with me their approach which is for accredited investors only. Their offering includes less than half a dozen investment programs and the possibility of SMAs. Elm Partners does not aim to do everything for everybody. Low cost and transparency are paramount for their business.


[1] Former Chairman and CEO of Vanguard, Bill McNabb Discusses the Future of the Investment Industry from the 2019 Academic and Practitioner Symposium on Mutual Funds and ETFs. Presented by UVA Darden and the Investment Company Institute.

The AI powered tech rating agency with no conflicts of interest - Early Metrics

The tech rating agency with no conflicts of interest – Early Metrics

The tech rating agency with no conflicts of interest – Early Metrics 1100 636 Efi Pylarinou

The tech rating agency with no conflicts of interest – Early Metrics

Early matrix Logo

Early Metrics is an independent rating agency focused on early stage innovative tech startups. Operating out of Paris since 2014 and with significant presence in London, Berlin and TelAviv.

The tech startup world continues to grow as the cost to enter has dropped substantially and the capital looking to invest in the private markets is ample. Cost of failure for entrepreneurs is dropping too.

At the same time, the failure rate continues to hover around 90% which makes it challenging for investors. Corporate VC, VCs, private equity funds, family offices, angel investors are eager to pay for high quality deal flow that is conflict-free.

Undoubtedly, the subprime crisis brought to the forefront the long-standing conflict of interest in the oligopoly of rating agencies. The business model of all agencies has traditionally been that their “clients” are the companies that want to be rated.

Early Metrics is Not paid by the startups they rate.

Their business model puts the entities that are interested in partnering or investing in tech innovation, in the client position. Early Metrics clients can subscribe to one kind of service that offers a few select rated startups per month. A client can also request a detailed rating analysis for a tech growth company that they are focused on. The “to be rated” company can be a partnership candidate or a first investment prospect or under consideration for the next round of investing. In other words, Early Metrics offers a conflict-free high quality deal flow service to subscribers. Focus is always on the growth potential of the tech innovation. It is a clear equity approach that offers certain KPIs and a proprietary qualitative component that covers elements that are traditionally gaged by instinct. We all know that VCs for example, access the founders, the team with a “gut + experience=instinct” kind of approach that they typically, brag about as “the” differentiation factor.

Early Metrics’ “secret sauce” has developed a process that accesses each team member, their management skills and actions, and most importantly, the value and risks of the team as a whole organism. This process entails training and certifying Early Metrics “analysts” that can interview the tech team and feed the data into the proprietary algorithm that is can provide signal on many fronts. In addition, the project and the technology is accessed and the ecosystem it is operating in. Therefore, the rating is a combination of an IT filter, data automation that allows a continuous rating (instead of a one-time snapshot), and the interview with the certified analysts.

Artificial Intelligence
Early Metrics is a great example of technology that addresses a significant agency problem in the corporate rating market.

It also fills in an under-served part of the rating market, as it is

focused on the equity aspect of innovative tech SMEs and early stage ventures, instead of the credit part that most conventional rating agency address.

In practice currently, Early Metrics “plays” in the tech growth part of the market, with companies that have up to $20mil annual turnover. Naturally, startups are applying to be rated but Early Metrics ranks the “to be rated” pipeline as a function of the interests and focus of its clients. In simple words, their needs to be a match between the Early Metrics clients and the SME or startup, to move up the “to be rated” pipeline.

Early Metrics has already an established client base of corporates that has extremely low turnover. The art of growing their business successfully lies in sourcing high quality deal flow and matching it with their client base. Their “human” rating secrete sauce is explained in detail in their webinar “How human factors affect the growth of early stage ventures” (free to watch here).

There are other companies that gather data and offer benchmarking reports in the startup space, but not with a laser focus. Oddup is the better-known name in the startup rating space but has a broad focus (not tech focus necessarily) and is strictly data driven. Mattermark was another player who was sold (liquidation kind of transaction) in December to Full Contact (details here).  StartupRanking focuses on social statistics (the SR web and the SR social).

In my opinion, the space has room for more service providers. Innovation in the rating methodology is needed and one way to develop the space is with a sector focus. An example is an impact startup rating service that can incorporate impact metrics. Impact metrics and innovation metrics are no low hanging fruit. Secret sauces can be developed for these.

“Early Metrics is growing and serves investors and blue-chip corporates such as Visa, LVMH, Barclays, Sanofi, and more.” They remain focused on bringing transparency to the rating process and serving the decision makers that fund innovation.

A look through Morgan Stanley’s WealthDesk platform

Incumbent Robo-advice platforms, software, products: A look through Morgan Stanley’s WealthDesk platform

Incumbent Robo-advice platforms, software, products: A look through Morgan Stanley’s WealthDesk platform 1300 867 Efi Pylarinou

A race for a holistic advisory system is on, albeit at the pace of the financial giants that have accumulated assets under management and have thousands of advisors using their tools and services. Morgan Stanley is less vocal than JP Morgan, Blackrock, Vanguard, Fidelity.

What caught my attention in November is the “WealthDesk” rollout which is an integration of Morgan Stanley’s Goal Planning System, their investment screening dashboard and their portfolio construction tools. Empowering advisors to deliver a holistic service even though fees continue to be under pressure. Add on to that, the integration of the Blackrock Alladin risk management software into the WealthDesk platform. Alladin was previously only available for institutional investors. Now, advisors using the WealthDesk platform can perform scenario analysis for their clients and discuss alternative investment strategies with clients. Empowering advisors in this way, gives them a strong value-add headwind compared to competitors.

Even though UBS has a partnership with Blackrock’s Alladin risk management system, it is not integrated in its advisory platform. It operates separately which makes it difficult for advisors to offer the same fast and customized service as the UBS MD of managed solutions can.

In the Dec 3, Autonomous Next newsletter where the BlackRock’s $120 million buy of Envestnet stock and Morgan Stanley’s platform, is discussed; I can only agree with the Lex’s statement that it is “…surprising that the best way to sell iShares is to give Morgan Stanley some high quality roboadvice software.”

Morgan Stanley’s platform shows how challenging it is to upgrade and integrate tools and services in a way that empowers the intermediaries and delivers a holistic service to the end client. The tools are there, the business models are not the problem. What is challenging is getting alignment internally for the optimal tech integration that will produce the X factor in customer service. Morgan Stanley’s experience of this journey, indicates that it may take others at their level 3-4 years to catchup on this holistic integration.

Morgan Stanley WealthDesk also integrates the new version of the so called “Next Best Action” Machine Learning system to their 16,000 RIA. This system has been around for several years but as a rule-based system suggesting investment options for advisors and their clients. A system that every single bank with a wealth management offering has and that we all as clients wonder which is “best” (as if that is the right question in the first place, since none of these rule-based systems could be customized).

Morgan Stanley’s “Next Best Action” is using Machine Learning to support advisors in increasing engagement. The success of this tool will be measured by its effectiveness in enhance the dialogue with the client whether it is through in person meetings, phone calls or pure digital channels.

Like me, most of us are sick and tired of emails with pdf attachments of several analysts covering Alibaba (that I care about accumulating) and not knowing how to make sense of that. All of us, are realizing that only because of KYC stringent requirements, advisors look to  incorporate our life events and goals into an investment proposal. Morgan Stanley’s “Next Best Action” system is using ML to advice clients what to consider based on life-events. For example, a client had a child with a certain illness, the system could recommend the best local hospitals, schools, and financial strategies for dealing with the illness. The system monitors and learns from the reaction of the client to the “Recommendations” and based on the client responses, improves the quality of ideas each day.

incorporate our life events and goals into an investment proposal. Morgan Stanley’s “Next Best Action” system is using ML to advice clients what to consider based on life-events. For example, a client had a child with a certain illness, the system could recommend the best local hospitals, schools, and financial strategies for dealing with the illness. The system monitors and learns from the reaction of the client to the “Recommendations” and based on the client responses, improves the quality of ideas each day.

In a way, the system thinks for the advisor on a daily basis and presents relevant information and continuously improved recommendations. The advisor has a choice and can send customized emails and texts to clients. The system in a few seconds finds the clients’ asset allocation, tax situation, preferences and values.

A look through Morgan Stanley’s WealthDesk platform

The system is empowering the advisor and this is where the potential of widespread adaptation lies. Never forget that tech adoption is always more of a cultural issue rather than a technical one. In machine learning, the more the system is used the better the next best actions are.

If the community of the 16,000 Morgan Stanley advisors make the “Next Best Action” their ally, then MS will have an edge and a loyal army taking care of their clients.

This not some version of robo-advisory focused on best on-boarding and low fee execution. It is enhancing a hybrid wealth management offering in a way that offers a cutting-edge (value) to those using Morgan Stanley as a platform provider (i.e. the advisors) and the end clients.

Morgan Stanley has established its tech center in Montreal – Montreal Technology Centre. It has grown to 1200 tech employees focused in innovation in low-latency and electronic trading, cloud engineering, cybersecurity, AI/machine learning, and end-user technologies.

Barron’s reports that it took MS about 6yrs to develop the “Next Best Action”. The main KPI is customer engagement.  The other five variables monitored are: cash flow, brokerage business volume, new advice clients, the level of banking business, and account attrition.

Part of this article appeared in Machine Learning for RIA loyalty and customer engagement; by Morgan Stanley

Is Sustainability your driver? Stop Borrowing from the Future.

Is Sustainability your driver? Stop Borrowing from the Future.

Is Sustainability your driver? Stop Borrowing from the Future. 1300 650 Efi Pylarinou

Sustainable Finance and Investing, remains misunderstood. Language remains tricky, inaccurate, and subject to interpretation; which inevitably makes Mathematics the only Language that can be trusted (100% internally consistent) [1].

Looking at Sustainable investing, there are different approaches to qualifying.

  • The first sustainable investors, negated sectors like tobacco. This is the exclusion approach.
  • Then came a portfolio management approach, based on which ESG factors are used in traditional investment process always with the aim to optimize risk/return.
  • Lately, impact investing is more direct and explicit, by choosing companies that aim to generate measurable environmental and social benefits (alongside the financial return).

As I review a UBS Global Insights report (What’s on Investor’s minds, Vol.2, 2018) it struck me that Investing is lagging big time in the Shift in Values that is affecting other areas of our life. UBS looks at how our personal values (I would say, the shift in the hierarchy of our personal values) is driving major decisions in our lives. Their statistics show clearly that the Sustainability theme is driving our spending decisions, our willingness to pay a premium, our donations to charity, and even our choice of employment.

Source: UBS Global Insights report

Sustainability, however, factors considerably less (below 40%) in our investment decisions.

Sustainability investing varies considerably by market. The number of investors with more than 1% allocation to sustainable investments in Singapore and Switzerland are only 35% and China, Brazil, and the UAE + Italy, are in the 50s% and 60s% (probably more investors with smaller amounts).

Source: UBS Global Insights report

The expectation for growth is also very different. In the US and the UK, there are weak signs of a sustainable investment momentum. Whereas investors in the UAE and China, are largely convinced that this is the way to invest.

In Brazil, which has also a high sustainable investing adoption, there is a strong expectation that returns will outperform traditional investments.

Looking into the UBS report, it is clear that there is a lot of interest that is sitting on the sidelines and that advisors and influencers can play a major role in tipping these non-adopters over. We need to invest in converting these non-adopters because we cannot afford to continue borrowing from the future.

Join me, as I will be moderating a panel on Sustainable Finance at the Fintech+ event on October 1, in Zurich. I will be discussing with Sabine Döbeli, CEO of Swiss Sustainable Finance, Oliver Marchand, founder and CEO of CARBON DELTA, Anna Stünzi, researcher and co-lead of the foraus programme „Environment, Energy and Transportation“, and Rochus Mommartz head of Responsibility Investments. Come to participate in this exciting discussion, as I will be asking some tough questions around this topic that touches on a much broader issue:

Shift in values and technology

[1] A major topic that is worthy of a longer interactive discussion.

What has changed a decade after the financial crisis?

What has changed a decade after the financial crisis?

What has changed a decade after the financial crisis? 1300 865 Efi Pylarinou

What has changed a decade after the financial crisis?

Here we all stand about a decade later from September 15, 2008, when Lehman Brothers filed for Chapter 11 bankruptcy protection and when the tremors of the subprime crisis continued to shake the grounds where we built our homes, our pensions, and our dreams. Collapses, rescue plans, and a wave of socializing the costs of failures of several financial institutions; can describe in a nutshell the economic policies that have followed since. Bernard Lunn started the week with Do you remember where you were on 15 September 2008? and inspired me to reflect back too.

On Sep 15, 2008 I was living in Montreal and McGill University had asked me to teach Real Estate Finance with a one month notice (a part-time practitioner engagement). No textbook could reflect the unfolding reality. Freddie Mac, Fannie Mae, Ginnie Mae, the three GSEs (Government-sponsored agencies) were going to be restructured and it was exciting to understand the complexity of the evil mortgage-backed structures rather than the outdated textbooks.

Outside the university, everybody was affected, from end consumers, homeowners, corporates and the globalized economic activity whose Gas is mainly creditThe trusted institutions – the Gas stations – through which Gas is distributed to the people and to businesses of all sizes, have since created since a bottleneck that continues to choke the global economy. Over this decade, 2008-2018, we have seen (in retrospect) how this Gas station monopoly was affected by Central Bank policies that on the one hand, increased their inventories of Gas (more money has been available for banks to borrow from the Central Banks) but at the same time, new Regulations (changing the rules of the game for banks without consulting them) has led to these Gas stations shrinking their franchise network, reducing their willingness to provide service to their customers, and overcharging them/us.

Outside the university, everybody was affected, from end consumers, homeowners, corporates and the globalized economic activity whose Gas is mainly credit.

These licensed Gas stations who are led to dis-serve their clients but still hold a monopoly (granted by central governments) have led to movements like Occupy Wall Street and to lots of innovations around financial services – Fintech. From peer-to-peer lending, crowdfunding, to robo-advisors, and freemium PFM apps; and to Bitcoin. Let’s not forget that the genesis block of Bitcoin had hardcoded the title of London Times newspaper of Jan 3, 2009

“Chancellor on brink of second bailout for banks”

The hash of this genesis block is


There is a strong belief that this is no coincidence but a clear message of the failure of the financial monetary system which is designed and managed by states. A credit system based on the fractional reserve system and thus, creating Gas (Credit) out of thin air. A Credit system that can and will change the rules of Gas (Credit) creation and in the name of saving the financial system, it will pass on the costs of these bailouts onto taxpayers. Andreas Antonopoulos keeps reminding his audiences around the world, that a decentralized p2p network like Bitcoin is incompatible with fractional reserve banking and that Bitcoin is born out of the failure the latter system; Hello from Argentina (that is my addition and not Aantonop’s).

As traditional Fintech continues to make inroads – albeit by partnering with the licensed Gas stations or obtaining such licenses themselves – and as decentralized protocols, like Bitcoin, or God protocols (as introduced by Nick Szabo before even the internet was mainstream) are being tested left and right (still in early stages); what has happened to the branded Gas Stations over this decade and what has actually been accomplished regarding the Big Black Swan that haunts us since 2008  – The “Too Big to Fail” Black Swan?

What has changed a decade after the financial crisis?

Congratulations to the Central Banking system for reducing the size of the Big Wall Street houses – the Sell Side. The Wall Street Journal reported this week that their assets have shrunk 6% over this past decade.

Congratulations for kicking out from Wall Street all CEOs from the previous era. Jamie Dimon maybe one of the few, still standing strong.

Congratulations for dethroning Wall Street from being the Mortgage Kings.

#AndTheIronyIs that we need to make sure that we “Feed the Fink”, we network with Jamie Dimon and all those that were “cleaned up”, and we get our mortgage from our phone.

Blackrock, Vanguard, State Street, and Fidelity, have doubled their assets since 2009! They manage close to $17trillion and Vanguard brought $1billion a day of new money last year[1]. I call this the mushrooming of the Buy-side. Let’s all make sure that we “Feed the Fink” and we know from which direction the Black Swan may appear from.

Vikram Pandit, Citibank CEO until 2012, now founder of the Orogen Group investing in Fintech; Blythe Masters, the designer of Credit Default Swaps (CDS) at JP Morgan, now CEO of Digital Asset Holdings; Brad Katsuyama, protagonist in Michael Lewis’s book, now the co-founder/CEO of IEX Group; Susan Estes, MD at Morgan Stanley, Deutsche Bank and Countrywide Securities Corp, now the president/CEO of OpenDoor TradingLet’s be all clear that financial engineering is not dead and experience remains a valuable asset.

Non-bank lenders have become larger than Citigroup or Bank of America lending businesses. The WSJ journal reports[2] that US non-bank mortgage originators have grown from 9% to 52% over this past decade. Let’s all shop for homes in a new way (not from a bank but a kiosk or our favorite social app). And let’s make sure we know from which direction the Black Swan may appear from.

Growth in less regulated areas. From assets under management, mortgages, and experienced human resources.

Markets are still plagued from Black Swans that belong to the bread of “concentration of power and illiquidity risks”. From miners accumulating power of digital assets to the Buy Asset accumulating i-shares and passive AUM.

Markets overall continue to shift resources rather than reinvented themselves. #WhereMortgages, #WherePeople but same financial instruments designed and sold by the same people in different packaging and at different POS. Banks have been forced to downsize and be risk-averse and the Sell Side has taken over along with Fintech startups.

#WhereGas – #WhereCredit is where we can look for true innovation. Too early to see a newspaper title like:

“God Protocols on brink of privatising State Gas (Credit) monopolies”

inspired by Nick Szabo and Eric Lombrozo.

This post has elements of cynicism mixed with insights. Readers are left to distinguish the ironies from the insights.

Robo-advisors: What are the fact and figures telling us?

Robo-advisors: What are the fact and figures telling us?

Robo-advisors: What are the fact and figures telling us? 1300 813 Efi Pylarinou

Robo-advisors: What are the fact and figures telling us?

I am listening to my followers and readers. I see that Linkedin is not the first choice of quality content producers in the Fintech/Blockchain ecosystem. Other platforms like Medium are stealing market share with an accelerating rate. However, Linkedin is a better platform in spreading the word, the message, the vision and in getting others to interact.

My Daily Fintech post from last week Barron’s exclusive Robo-advisor ranking and 3 unanswered questions resonated and the digital KPIs alerted me to that. From double the views on Daily Fintech to 15,000 views on Linkedin but more importantly, several great insights shared in the commentary.

Who said What?

It is grape harvest season in the south of Europe. I’ve harvested the conversations and distilled them (not word for word).

Seth Godin “It’s far more dangerous to fly too low than too high” – “The Icarus Deception” book

Efi Pylarinou – “Doing Nothing in this new era, is Unsafe” – from my  Dec 2015 year end post Digital wealth management and the Icarus deception

Efi Pyalrinou – “We seem to be chasing existing customers instead of growing the customer base”

Richard Turrin – “The incumbents were initially “Robbing Peter to pay Paul”. This maybe continuing.”

Paolo Sironi -“Cheaper costs doesn’t mean, higher value for underserved clients that need help with understanding investing and investment products”.

Vinay Jayaram – “The robo-advisory adoption over the past few years, is mostly evidence of a Lemming effect at play and at scale.”

Lex Sokolin and April Rudin – “The devil is in the details. Qualitative comparison of features remains tricky.”

The facts and figures are not disputed but the true impact from this robo-advisory adoption is not at all clear.

Lemmings are small rodents that have been observed to follow each other as they charge to their deaths- into raging rivers or even off cliffs. They soon become victims of a psychological affliction known as “the lemming effect.” 

By Frits Ahlefeldt

The lemming effect has been frequently highlighted in the investment behavior of managers and is a behavioral reality that we like to ignore. The robo-advisory segment will have to demonstrate that it is not plagued by the Lemming effect. Lest gove it more time.


Originally published:

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