Mueller Jackson
Jackson Mueller
Associate Director, Center for Financial Markets
Jackson Mueller is an associate director at the Milken Institute's Center for Financial Markets. He focuses on fintech, capital formation policy and financial markets education initiatives. Prior to joining the Institute, Mueller was an assistant vice president at the Securities Industry and Financial Markets Association (SIFMA), where he focused on...
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FinTech in Focus

By: Jackson Mueller
November 30, 2016

Milken Institute in London Next Week!

Our London Summit takes place on Dec. 6! Yours truly has put together a public panel discussion on financial inclusion and a private roundtable on efforts to enhance SME capital access in the UK and the EU. I will also take part in a private event on FinTech and Brexit Dec. 7. For those of you interested in attending the latter gathering, at Level 39, please contact me ( And, for those of you that actually want to meet a self-promoting millennial and are available in London, let me know, as I will be in town Dec.  4–8.

Stop, Collaborate and Listen

Seriously, who isn’t a Vanilla Ice fan? Anyway, the global law firm Mayer Brown published a new survey covering FinTech investment by financial services firms over the next three years. Of the 120 UK firms surveyed (50 FinTech platforms and 70 financial services firms), the results "show that collaboration between FinTech businesses and established financial services firms is well underway." Nearly one-third of financial services firms expect to acquire a FinTech business in the next three years, up from 11 percent over the prior three years. While more than 80 percent of financial services respondents are of the view that collaborations with FinTech firms yield both cost savings and an opportunity to refresh their brand, " only half (54 percent) believe they have delivered enhanced revenues." 

Which financial services sector will see the most collaboration between FinTech and traditional firms over the next three years?  

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Source: Mayer Brown, The ABC of Fintech: Acquisitions, Brexit and Collaboration.

Switching to Instant Payments Could Save You Money

A report from Icon Solutions and Lipis Advisors explores the challenges and costs for banks to tap into instant payment systems. The study provides three cost scenarios for implementing solutions for instant payments that apply to small and medium-sized banks and large banks in secondary markets, while excluding large financial institutions. The study finds in the first five years after implementation, expenses under the low-cost scenario never reach €500,000; under the medium-cost scenario they barely breach €2 million; and they never quite reach €5 million under the high-cost scenario.

Percentage of cumulative cost by type of cost

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Source: Icon Solution, Lipis Advisors – Instant Payments: Insights from Early Adopters. 

Happy Holidays from Apple and Samsung

And no presents unless you use us! Two surveys covering Apple Pay and Samsung Pay were released over the past week. The first, by USA Technologies, measured the impact of targeted digital advertising screens on consumers’ use of mobile wallets — primarily Apple Pay — at 35 vending machines in New York and Louisiana. Vending machines displaying a “call to action” for consumers to use Apple Pay saw sales increase 36.5 percent, while the number of NFC, or contactless mobile wallet transactions, “increased by an astounding 135.2 percent on machines with targeted messaging.” Meanwhile, Samsung released its own survey identifying trends and attitudes toward the use of mobile payments at small businesses. While 90 percent of small businesses polled viewed offering a method of paying with a mobile device as a competitive advantage, more than 80 percent expressed concern about the cost of upgrading current systems and less than 60 percent said they had payment terminals that accept NFC payments.

Global Developments

A few global FinTech developments:

Asia: In South Korea, the Korea Exchange has launched the Korea Startup Market, where blockchain technology is being used to record and authenticate shares of early stage startup companies traded in the open market. In China, SIX Payment Services, Bank of China and UnionPay have joined together to launch the “Europe Card” targeted at Chinese travelers in Europe which can be used at select merchants. In Japan, Mitsui Sumitomo Insurance is developing an insurance product in collaboration with a Japanese bitcoin exchange that will offer coverage for customer losses or damages at bitcoin exchanges up to 1 billion yen. Coming off the heels of the government’s recent decision to ban certain notes from circulation, the Reserve Bank of India has increased the limits on mobile wallet transactions for users and merchant banks, while Vodafone India announced that M-Pesa customers would be allowed to withdraw cash from their digital wallets from Vodafone M-Pesa outlets across the country. And in Malaysia, PWC, in collaboration with the Asian Institute of Chartered Bankers, published survey showing that financial institutions are very concerned about the competitive threat FinTech poses, especially in the areas of payments, consumer banking and insurance. That said, roughly 35 percent of financial institutions prefer joint partnerships with FinTech platforms, though regulatory uncertainty remains a major hurdle. 

Australia: The Australian Accounting Standards Board has called for new accounting standards for digital currencies. As stated in the report, “We think that digital currencies should be measured at fair value with changes in fair value recognized in profit or loss. Furthermore, we think that the accounting for digital currencies highlights a broader issue with [International Financial Reporting Standards] in that there is no accounting standard that deals with investments in intangible assets or other commodity type assets that are not financial instruments or inventory. Consequently, we recommend that the IASB develop a standard that would address the accounting for investments in intangible assets and commodities.” The report comes a few weeks prior to an IASB meeting on Dec. 8-9 in London which will include a discussion of cryptocurrencies. Meanwhile, Australia's parliament has re-introduced crowdfunding legislation which includes certain suitability requirements for both investors and issuers, while the House of Representatives Standing Committee on Economics published recommendations that would force Australian banks to open access to customer and small business data. The recommendations include “the creation of a data sharing framework for customers’ and small businesses’ data by July 2018,” along with penalties for non-compliance. The API framework would largely be based on lessons learned from the UK’s data sharing framework “rather than seek to create an entirely new domestic system from the ground up.” 

Europe: Finland's Ministry of Finance has formed an internal FinTech working group "to monitor and enhance the conditions in which financial services technologies can evolve" with the objective of improving the competitiveness of the Finnish financial markets. In Luxembourg, the government has tapped Nasir Zubairi to be the CEO of the public and private-sector initiative, the Luxembourg House of Financial Technology. The aim of the partnership is to foster innovation and drive the technological evolution of the country's financial services sector. In Germany, the finance ministry published a report on the country’s FinTech sector. Among the findings, FinTech’s total market volume could reach €148 billion by 2035 and almost 90 percent of banks surveyed in the report are currently cooperating with a FinTech firm or looking to do so in the future.

UK: The government published its Autumn Statement which included a number of FinTech-related provisions including an annual £500,000 investment by the Department of International Trade (DIT) “to support FinTech specialists in the promotion of the UK market overseas,” an additional £400 million from the British Business Bank “to unlock £1 billion of new investment in innovative firms planning to scale up,” and the commissioning of an annual ‘State of UK FinTech’ report. Separately, the DIT has opened its application process for UK FinTech companies to participate in a trade mission to Australia March 20-23, 2017. Lastly, Tech City UK has formed the FinTech Delivery Panel with Eileen Burbidge as chair, to make policy recommendations to government officials and regulators. The organization has also launched a Fintech Professional Services Hub to help FinTech firms source legal, accountancy and other professional services.

U.S.: The House Committee on Agriculture sent a letter to the Commodity Futures Trading Commission urging the chairman, Timothy Massad, to refrain from pushing through controversial regulations before he steps down at the end of the year. Interestingly, the letter also states that the commission should “provide additional clarity about the regulation of digital currencies. Providing the public with more certainty will help to strengthen this new technology and protect the participants of these emerging markets.”

Africa: Senegal is expected to introduce a blockchain-based national digital currency named eCFA, becoming the second country in the world (Tunisia is first) with a national digital currency. And in Uganda, preliminary steps are underway to craft virtual currency regulations.

Millennials & Finance

A recent report by Mitek Systems, which surveyed 1,000 UK millennials aged 18 to 24 years old, found wide discrepancies between younger and older millennials when it comes to financial priorities. Not surprisingly, younger millennials are more concerned with paying off student loans and finding affordable housing than their financial future. Younger millennials are also less likely than older millennials to use their phones to apply for services or purchase goods, with 12 percent of younger millennials making at least one payment through their mobile device per day, compared to roughly 20 percent of older millennials. Older millennials are also more concerned about ID fraud and data security, yet more willing to use a phone’s camera to verify information and overcome security fears. That said, the most earth-shattering statistics from the report can be viewed in the chart below. In short, I’ve got to improve my selfie game.

                   Number of times British millennials take a selfie on a typical day by age
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