Your curated fintech news for the week of 12 December 2016.
Sandbox down under
Back in May, I reported that the Australian Securities and Investment Commission (ASIC) was planning a fintech regulatory sandbox. The details of the program have been made public with the release of ASIC’s fintech licensing exemption, well summarized by this infographic. The program is unique in that contrary to other jurisdictions where an application is required for admittance into a sandbox, in Australia's case, a fintech company must simply meet certain conditions and notify the regulator before beginning testing. In an interesting twist, the move hasn’t been unanimously lauded as consumer rights groups have accused the program of leaving consumers exposed to potential harm.
A crowdsourced hedge fund
A hedge fund startup has devised a way to tap the combined knowledge of a global pool of data scientists to build an AI platform for stock-picking. Numerai has gained success by crowdsourcing its financial models on the back of an independent group of data scientists paid in bitcoin. Although the company shares all its data with contributors in the hopes of honing its strategy, it has devised an innovative method to hide own proprietary information to prevent scientists from reverse engineering their own models based on Numerai’s trades. The company’s video explains the concept.
Blockchain applications for real estate in the Netherlands
Though the discussion around blockchain typically focuses on financial services use cases, the technology holds promise in other fields as well. With typical transactions requiring much time and human intervention, real estate presents promising avenues for exploration, something the Dutch have recognized. ABN Amro for instance has partnered with IBM for a pilot program to facilitate data sharing among the numerous parties involved in a deal. Not to be outdone, the city of Rotterdam is working with Deloitte and the Cambridge Innovation Center to record leases on the blockchain.
Robo-advisors gaining ground in China
Robo-advisors are on-line tools that open investing to the masses and keep costs down. They do so by replacing human advisors with investment algorithms that assemble portfolios based on client profiles. These platforms continue to make strong progress in the wealth management industry, having recently made a move into the corporate space by managing the retirement portfolios of companies. Their growth could be catapulted further with increased usage in China. As this article explains, Chinese fintech startups are popularising the financial tool among a growing middle class seeking unbiased investment advice often unavailable from traditional sources.
Trading shares on the blockchain
The current system of clearing and settling trades is cumbersome. Not only does the process take up to three days to settle a transaction (T+3 in industry parlance), but it is also capital intensive and expensive. With the eventual goal of eliminating middlemen, on-line retailer Overstock.com issued company shares on the blockchain. Founder Patrick Byrne is a strong proponent of distributed ledgers, his mission stemming from his contempt for naked short-selling and the settlement of securities. This article does a great job profiling his campaign.