Weekly Briefing #15: Unfrozen Caveman Financial Advisor is Here.

If the dizzying markets are making you blue, cheer up — there’s a bull market in fintech. Unfortunately, there’s also a booming market in fintech bull.  We try to sniff out the difference, and this week our efforts lead us to a fintech charm offensive by banks and Microsoft, a zinger from Zenefits, a financial caveman from the pre-robo era, and a company poised to capitalize on the current global credit turmoil.

In-depth

Unfrozen caveman financial advisor is here. A derivative of the famed Saturday Night Live character came to mind when we watched this interview of Riskalyze’s Aaron Klein at a recent TD Ameritrade conference.  Aaron’s core point — that people would much rather work with human advisors than automated solutions — is dated to put it kindly. Many people want the latter, and some want both. Moreover, his characterization that “Wealthfront is 'E-Trade with an expensive coat of paint” makes him appear oblivious to the importance younger investors place on a mobile-first experience that keeps fees and broker babble down and convenience high. But like Phil Hartman’s famed character, Klein makes some sense at other times during the interview, especially when he discusses the benefits of a blended human-robo solution for some customers. As the year progresses, we wouldn’t be surprised to hear more about hybrid solutions as the roboadvisors seek to accelerate their market share gains while traditional managers work to defend their franchises.

Banks start humming a friendlier fintech tune. This time, it sounds like they mean it. First they were oblivious. Then they sneered. Then they started throwing a few bucks around to check the innovation box. Now, after realizing that maybe they can’t do it themselves all that well, several major banks are talking about how they and fintech companies can march together into the future. In recent weeks, Deutsche Bank, UBS, Lloyds and others have expressed a desire to work with fintech companies beyond the consortiums, accelerators, sound bytes and symbolic funding efforts they’ve tried so far. Deutsche in particular has adopted a new tune, even as it undergoes a painful overhaul under Co-CEO John Cryan. Deutsche says it’s serious about integrating innovation into the core of its business model — maybe because it realizes that it has no other choice. Still, fintech start-ups would be wise not to smirk. Securing enterprise deals as a start-up or acquiring millions of customers isn’t easy; having a big, old bank as a partner shouldn’t be dismissed cavalierly.

Download Deutsche Bank’s white paper here.

Zenefits gets zinged (and it deserved it). It’s a high-flying provider of cloud-based human resources software that makes money the old-fashioned way: it earns a commission if its corporate clients buy insurance after using its platform. Unfortunately, Zenefits did something else old-fashioned: it scoffed at complying with insurance regulations. That resulted in the ouster of the company’s founder and the appointment of a new CEO, David Sacks, an alum of PayPal and Yammer. Until the recent shake-up, Zenefits was a Silicon Valley darling with swagger and a half-billion dollars in the bank raised from gilded VCs and VIPs. Certainly it had ample resources to fulfill its regulatory obligations, but it instead decided to just move fast and break things. Sacks was smart to eat humble pie and stress that the company will work on its culture. Still, the Zenefits fiasco speaks to the differences between the highly regulated financial sector and other sectors of the economy. Similarly, fintech is a singular vertical within technology that should have its own rules. Institutional investors should remember that when they dream of backing the next fintech Uber.

In-brief

Mr. Softee’s Blockchain Superstore... It may be hard for some to believe, but the Microsoft reboot is more than just cosmetic. The company’s Azure division is seeking to partner with an unlikely array of start-ups to provide a welcoming environment for blockchain exploration. In a related development, Microsoft also recently co-launched a fintech portal to connect retail banks and insurance companies with fintech firms.  It looks like Redmond wants in on financial innovation in a big way.

30 trillion reasons why this is our favorite chart of the week… The average per capita student debt in the U.S. is on par with Greece’s per capita sovereign debt (amazing but true). Still, millennials are poised to inherent about $30 trillion according to Federated. This makes them a very juicy demographic and that’s why we like this nifty chart from CB Insights to visualize the start-ups vying to help millennials manage their personal finances.

A Bitcoin by any other name... What is Bitcoin’s legal status? The IRS and CFTC have determined that it’s a commodity; the SEC and FinCEN consider it a currency. If a bankruptcy court in California chooses to rule that Bitcoin is a commodity as opposed to a currency, a Bitcoin entrepreneur will have to pay back 3,000 worth of BTC at today’s value rather than the value when he received it in September, 2013.  Ouch.

Africa: The fintech continent... Last in landlines, Africa is a leader in mobile. An astounding 50% of Africans have mobile phones, and that number is rising at double the rate of the rest of the world. As African economies grow and poverty declines, the expanding finance sector is bound to be fintech-based, almost by default.  Click here for a list of fintech products generating traction on the continent.

Amex finds a new squeeze after getting dumped by Costco... Necessity is the driver of American Express’s newly announced partnership with Fundera. Thinking outside the Costco big box, Amex will pay Fundera to feature its charge card option alongside other loan alternatives on the Fundera site. The company, which is like a Kayak for small business loans, has built a popular platform that demystifies and streamlines the loan application and selection process. Now, it may have to walk a fine line as it seeks to keep its other funding partners happy on one hand while delivering for the charge card giant on the other.

Company of Note: Reorg Research.

The distressed debt corner of the fixed income market hasn’t exactly been a hotbed for entrepreneurs seeking to bust-up Wall Street. Reorg Research is an exception to that rule, and with credit markets undergoing a level of turbulence not seen since 2008, we think Reorg has a great opportunity to grow its market intelligence and analysis products.  See more here.

Comings and Goings: Rich Ricci.

The former Barclay’s banking star has been recently named chairman of freemarketFX, where he will work with a management team led by Alex Hunn. In commenting on his new role, Ricci expressed excitement over “joining the fintech revolution.” Welcome to the club, Rich.

This week’s little known facts about…airports.

Need a beer before your flight? You’re in luck if you happen to be at Nashville International Airport, which allows travelers to carry alcohol throughout the terminal instead of just the bar areas.

Barra Airport in the Outer Hebrides, Scotland, is the world’s only airport where scheduled flights use a beach as a runway. 

When planes approach or depart from Gibraltar Airport, officials close a highway that cuts through the middle of the runway. That’s reassuring.