Weekly Briefing #18: Don’t Laugh at Snapchat’s Entry into Roboadvising.

This week, we are honored to feature Bankable’s Eric Mouileron in our first ever CEO interview. Also this week, we tackle Snapchat’s expected robo-foray, invoice payment tardiness, blockchain tech’s downside and a cool digital insurance start-up.


Don’t laugh at Snapchat’s entry into roboadvising. In the last few months, we’ve been following the buzz over Snapchat’s potential entry into roboadvising with amusement. But now that Cantor Fitzgerald’s ETF trading king, Reginald Brown, has weighed in on the idea, it’s time to think about it carefully.  Despite Brown’s credibility, we can understand the eye rolls from industry pros questioning what Snapchat knows about ETFs or portfolio management. Our first reflex is to join the naysayers and view this move as another example of a tech powerhouse trying to carpetbag its way into fintech. But in this case, we‘re reserving judgment. Why? Because the power of Snapchat, which has barely begun to monetize yet, shouldn’t be underestimated. Snapchat has over 100 million daily active users — perhaps closer to 200 million according to some reports — 71% of whom are under 34 and 70% of whom are female.  And with the company’s recent appointment of Cosmopolitan Editor Joanna Coles to its board, Snapchat seems focused on continuing to nurture its compelling user demographics. Ellevest and SheCapital are two worthy start-ups also targeting female investors, but they have standard customer acquisition challenges. Snapchat, meanwhile, has a dominant position on the phone of perhaps 100 million young, female prospects. That kind of edge probably won’t vanish like a Snapchat image.

Bankable CEO: Bank-bashing is a waste of money. According to Bankable’s colorful CEO, Eric Mouilleron, spending “shareholder money on advertising that says banks are bad” is a pretty lousy strategy.  That sentiment, along with others expressed during The FR’s 1-on-1 interview with him, illustrates that Mouilleron is not the kind of fintech CEO out to Uberize banks. His six-year-old “banking as a service” company is building traction with incumbent banks seeking advanced payment solutions as well as upstarts in need of back-end horsepower. Serving both markets isn’t easy, but Bankable’s team has managed to do it while preparing for global expansion. Mouilleron’s willingness to speak openly about his company’s plans and fintech trends left us wanting to spend more time with him.

Check out the full interview here.

Corporations weren’t built to run on code… We were intrigued by this piece published in Harvard Business Review, excerpted from Douglas Ruchkoff’s new book, in which he asserts that legal strictures of modern corporations don’t mesh with digital technologies. As a result, he says, even companies that have been able to exploit new technologies may be living on borrowed time.  Unsurprisingly, many of our financial services colleagues disagree. According to Marvin Chang, global head of loans at First Data, Ruchkoff would serve his readers better if he spent more effort in prescribing a new paradigm. “Ruchkoff is correct that technology has enabled Google and Facebook to achieve a rent-seeking status much more swiftly than the likes of The British East India Company or Standard Oil. But instead of decrying how corporate motivations are ‘not good for business,’ the author would serve his readers better if he also highlighted the need for lawmakers to update absurdly antiquated rules constraining incumbent businesses.” 

In brief

Do some consumer banks want to drive young customers into the arms of digital banks? Most customers begrudgingly accept overdraft fees, which even flashy digital banks charge. But this New York Times article discussing “reordering” is a bridge too far in today’s world. In this evil-but-legal (sort of) practice, banks deliberately process large transactions out of time sequence to maximize overdraft fees. Amazingly, one big bank actually referenced the fine print to cover its asset.

Could blockchain tech hurt top lines more than it helps bottom lines? That’s the question posed by Dominic Elliot in this Breakingviews article. His point is that while banks are going gaga for the possible ROE benefits that could be achieved by reducing technology costs, blockchain tech may reduce trading and underwriting revenues as well. Custody banks and clearing houses should also keep a close watch on blockchain developments as their roles could be threatened too.

Dimon gets an A in Politics 101. Any politician will tell you: Control your narrative, or your opponents will do it for you. It’s Rule #1 in campaigns. Fresh off J.P. Morgan’s investor day, Jamie Dimon is on his own campaign to kill the “Jurassic Bank” moniker leveled at his firm and others. The latest proof point is this heart-to-heart sit down with Bloomberg. Our favorite quote: “We have 23 million customers who bank on their phones now. It will be a challenge for anyone to be better, faster, cheaper than us.” We’re not surprised by such a strong comment given the bank’s intent to launch a Venmo killer later this year. In other words, Dimon is staying on message, which is Rule #2.

Global invoice payment tardiness is a huge problem/opportunity. In 2015, the proportion of invoices paid late were 62.3% in the UK, 45.7% in the US and 72.5% in the non-European/UK world. You read that right if you believe a new report published by MarketInvoice. Yes, it’s true that MarketInvoice is talking its own book; however, there’s no denying that the cash flow challenge caused by late payments is a massive issue facing small businesses everywhere.

Company of Note: Knip.

This Swiss digital insurance broker provides users with an analysis of their existing coverage and ideas on how to improve overall protection. The company already works with several German insurance providers and, in a sign that the company understands its market, employs actual brokers to provide guidance on thorny insurance questions.  Check out the company’s site here.

Comings and Goings.

We’ve questioned SoFi’s Super Bowl advertising strategy, but we’ve never doubted its business model or management. Simply put, SoFi is a best-in-class marketplace lender and its decision to bring on battle-hardened ex-Deutsche Bank CEO Anshu Jain as an advisor (and perhaps future board member) is a shrewd move.

This week’s little known facts about…Don Norman.

The author of “The Design of Everyday Things,” Don Norman’s user-centered design work impacts everyone who has ever used a smart phone.

Norman’s fame extends to something he hates: “Norman Doors,” which have a handle that looks like it should be pulled, although the door must be pushed to open.

A Norman insight: “When you get paid $100 an hour, people expect you to do real work. When you get paid $1,000 an hour, people only expect you to have lunch with the CEO.”