Happy Friday everyone and welcome to The Week That Was from OFF3R.
The Amazon bank account is coming. This has been in the offing for years now: Amazon offering a current account service. And this week, The Wall Street Journal reported that the retail marketplace titan is discussing the idea with JP Morgan Chase. The accounts will be aimed at younger customers, along with those without bank accounts – but the firm won’t become a bank itself.
Amazon’s market cap – £527bn – is bigger than the US’s two biggest banks (JP Morgan and Bank of America) combined. Yet the report says it’s likely to focus on a partnership with an existing bank, rather than become one, because of the stringent capital controls to which it would be subject.
Will it take off? If you think fintech has changed banking, just wait for the nimble, sophisticated products the tech giants will unleash in the coming five years. I’ve cited this before, but almost three-quarters of US millennials say banking services from Amazon, Google, Square or Paypal would excite them more than new services from their bank. One in three say they don’t need a bank at all. We expect products and services to be in one place: that is what Amazon will offer.
Meanwhile, Sweden is worried about how fast it’s going cashless. In 2016, just 1 percent of the value of all payments made in Sweden were done so using coins or notes. Eighty percent of all transactions are made using plastic, children have debit cards, and less than half of the country’s 1,600 bank branches keep cash on hand or take deposits. The country started going cashless faster than other developed economies as early as the 1960s, when digital bank transfers for wages were encouraged by banks. In the 1990s, they started charging for cheques.
Now, however, authorities are starting to worry that the country is moving cashless too quickly, and a review is now underway.
But don’t we want cashless societies? It’s easy to forget that it costs more to go cashless – for businesses, and therefore their customers. If you pay by card in a shop, it has to pay to process your payment – a cost that it either has to shoulder or pass on. This means the world gets that little bit more expensive for people who use cash (who are often poorer anyway). And while younger people make mobile payments and use online banking, the older or financially excluded may find it harder to use any services, or even do their shopping.
On the earnings side of things (March is one of those times of year), Just Eat dipped into the red on Tuesday after it reported a £76m loss for 2017. The food delivery firm made a £91m profit in 2016, but its Australian and New Zealand business took a £180m hit last year, and it’s having to ramp up spending in the face of increasing competition. Good news for us consumers: standards are going up, with more players offering wider ranging and faster services.
And the numbers in this story are staggering: Chinese investors’ are betting big on Latin America. Really big. In 2015, Chinese venture capital investment in Latin America stood at about $30m. Last year, it hit $1bn. Investor Tang Xin, who developed Mexico’s most popular news app, says China used to copy business ideas of other countries, but now it’s exporting its own successful models.
The shift seems shrewd. The LatAm market is (population-wise) twice the size of the US, with little competition and vast opportunity. Another reason to wonder why Silicon Valley remains so US-focused.
CAUGHT OUR EYE
In the face of increasing numbers of crypto scams, taking matters into his own hands, Ethereum founder Vitalik Buterin has changed his Twitter name to “Vitalik ‘No I’m not giving away ETH’ Buterin”. While most people familiar with crypto wouldn’t be fooled by the various rackets out there, the sector is unregulated, with little formal guidance to help investors navigate through. There is plenty of expert and honest crypto community-led information out there, but invariably some individuals still come a cropper.
For companies operating in the crypto space, businesses like Coinfirm are offering bank-grade compliance to help them improve their offering.
A Belgian firm called Turbulent has disrupted dams, coming up with a green alternative that’s actually pretty effective at delivering power. The firm’s piece of tech is a whirlpool turbine (you can watch a video of it in action here). Relying on a river (aimed at rural areas in need of small-scale solutions), it conduits water out of the flow and into a whirlpool. It can provide enough energy to power 60 homes, 24 hours a day. It’s also wildlife friendly: fish can enter the whirlpool and pop out further downstream.
A favourite Green family pastime (read into it what you will) is imagining micro energy solutions so anyone could own their own energy source. Bring on the community fusion reactors!