Fintech and Blockchain: sum up the year and make a forecast for the next

There are only a few days left until the end of the year, which means that the time has come to take stock of the outgoing year and make predictions for the future. According to the already established tradition, I will talk about the most interesting events, trends and achievements of 2015 in the field of financial innovations and blockchain technology.

Results of the year. Fintech

For the FINTECH industry, such annual reports are particularly relevant, because the events that occur during the year determine the vector of development of the industry in the future. Over the past 2015, the venture investment market in Fintech has broken records of past years. The largest players in the financial industry have decided on large transactions. Young startups announced interesting projects. But first things first.

Launch of a range of payment brands

The LTP portal highlights the events of the year that Google, together with partner payment networks, introduced Android Pay , the long-awaited launch of which occurred in September 2015. Now owners of Android smartphones with NFC support (KitKat version 4.4 or higher) can make contactless payments throughout the US.

August 20 in Korea, the first launch of Samsung Pay took place, and in September the service also earned in the US. According to the company, since its launch, the user base has grown by 25 thousand people every day. The daily turnover at the same time is more than 620 thousand dollars.
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At the Money20 / 20 conference in Las Vegas, JPMorgan Chase, the largest bank in terms of assets, announced the launch of its own digital wallet called “ Chase Pay ”. Starting from 2016, Chase Pay will allow 94 million holders of credit, debit and prepaid debit cards of the bank to make purchases in offline stores, online stores and applications.

Technology sector players enter Fintech

On March 17, Facebook loudly announced its entry into the payment services market, adding the ability to send personal payments through its instant messenger.

Alibaba introduced its own model of smart watches called Pay Watch, manufactured jointly with the Chinese manufacturer of sports accessories FiiSmart. The device, which costs $ 110, will allow the company to realize its plans to strengthen its position in the wearable device market.

Tencent, together with two other major shareholders, established China’s first online bank. WeBank will provide services to small and medium businesses using “innovative financial products” based on WeChat.

Investments in fintech

In 2015, total investments in financial technology exceeded $ 5 billion

In the course of the investment round E, SoFi started a record $ 1 billion record for fintech companies. SoftBank Group has become an active investor. In addition, Baseline Ventures, DCM Ventures, IVP, Renren, Third Point Ventures and Wellington Management also took part in the round. During the round C, the German online microcredit service Kreditech collected about 92 million dollars. Investors in the project are JC Flowers & Co, Amadeus Capital Partners, Blumberg Capital, HPE Growth Capital, Peter Thiel and Ward Partners.

Stripe received $ 90 million during the C round. Among the main investors, Visa is worth noting, as well as companies such as Sequoia Capital and American Express. About 67 million managed to get the manufacturer of mobile payment terminals iZettle in round D of venture financing. Active investors were Intel Capital, Zouk Capital and Santander InnoVentures.

The manufacturer of payment terminals, Lightspeed POS, raised $ 61 million under the C series. The Avant loan area raised $ 325 million in September 2015, Affirm received $ 275 million in May, a service to select credit products for consumers.

The top four most active venture capital players include Digital Currency Group, Sequoia Capital, Blockchain Capital and SV Angel.

Among the interesting deals on the Russian market, it can be noted that QIWI Venture invested up to $ 100,000 in the Panda Money mobile app. The service is developed according to the principle of the popular Tamagotchi game. The user feeds, clothes, entertains a virtual pet, and all the money spent on it goes to the account of the "player" on the project website. So the application helps to save money for any purpose.

Major events in the market of personal payments

In May, MasterCard announced the launch of MasterCard Send (not to be confused with MoneySend) in the US, the first of its kind payment service that allows you to make domestic and international personal money transfers within a few seconds. Merchants and commercial organizations can use the MasterCard Send platform to return the value of goods or accrue bonuses, government agencies and insurance companies to make social and insurance payments, and ordinary customers to send money to each other, pay bills and other similar transfers.

Apple is discussing with US banks the possibility of developing a mobile transfer service that allows users to send money to each other from their smartphones, like the work of the Venmo and PayPal applications. Like other mobile payment systems, Apple Pay pays great attention to switching from physical money carriers, such as wallets, cash, checks and cards, to direct, contactless and mobile solutions. The launch of this service will mean for Apple to enter the highly competitive market, a significant share of which is owned by Venmo and PayPal.

Major events in the lending market

Goldman Sachs plans to launch an online banking division, the main purpose of which will be direct lending to small businesses and consumers. Loans will be available through the website or application.

Lending Club together with Google announced the launch of a new pilot program for the simplified issuance of loans with low interest rates to companies that have the status of "Google partners".

The British Metro Bank is now issuing loans through the Zopa mutual lending platform . The agreement signed in May, according to which the bank will be able to issue loans through a personal loan web service, was the first such deal in the United Kingdom.

CPA.com and the leading online platform for receiving loans Biz2Credit , announced the beginning of a joint work within the framework of a marketing partnership involving the joint provision of services to customers of both companies.

Major events in the market of mobile payments

McDonald's global restaurant chain has signed a partnership agreement with AliPay, the leading independent payment system in China. This cooperation will allow McDonald's to complete the gradual equipping of all 2100 Chinese company establishments by March 2016.

Global Payments , the world's leading provider of payment technologies, announced the launch of a new series of mobile payment terminals in Canada called Ingenico Companion Mobile Payments . The product is a turnkey solution that provides the seller with the ability to accept all types of payments using credit and debit cards, as well as contactless NFC payments.

OmnyPay has announced the creation of a unique payment system that allows merchants to integrate their own branding, loyalty programs and special offers into the payment process. According to the founders of OmnyPay, service-using sellers are able to reduce transaction costs and increase sales by simplifying the payment process, supporting all types of distribution channels, contact and contactless payment methods, as well as all modern iOS and Android devices.

Vector ITC Group has signed a partnership agreement with Sequent Software , a company that provides solutions for converting traditional payments to a contactless format. This collaboration will help Vector ITC improve its Air Wallet application by adding tokenization to it, supporting NFC and HCE technologies, and enhancing the protection on the device side.

Key events in the field of biometric authentication

Bank of America launched the identity verification service using fingerprints and Touch ID in its mobile application. This measure is designed to make mobile banking more reliable and secure.

In April, FIS added the ability to authorize in its mobile banking application using Apple's TouchID technology. Thanks to this innovation, FIS became the first company to offer biometric access to mobile funds management without using payment cards.

The Royal Bank of Canada was the first bank in Canada to offer voice authentication to its customers. The new Secure Voice feature allows you to confirm the customer’s identity using the customer’s voice fingerprint analysis. Processing and comparing voice data takes only a few seconds and is possible directly during a conversation with a bank manager. Such a measure eliminates the need to use passwords, PIN codes, or a series of personal questions and answers.

USAA launched an identity verification feature based on voice checking or recognizing a client’s face to enter an account through a mobile device.

Ant Financial, a subsidiary and part-time financial division of Alibaba, is working on face recognition technology with a view to its subsequent introduction into the AliPay payment system, as well as AliPay Wallet.

Major Mergers, Acquisitions and Acquisitions

Visa acquired Visa Europe , a subsidiary established shortly before the 2008 IPO. The cost of the transaction amounted to 23.4 billion dollars. Among other Visa acquisitions, TrialPay , the leader in payment technology, is worth noting.

BBVA acquired Spring Studio in accordance with its plans for the development of digital banking. Early Warning acquired Authentify . Prosper Marketplace has acquired BillGuard .

Diebold, a leading ATM manufacturer, swallowed a $ 1.8 billion competitor Wincor Nixdorf . Shares of Square mobile payment service began to be quoted on the NASDAQ in November of this year.

The PayPal division, which is responsible for mergers and acquisitions, has achieved great success this year: the company has acquired PayDiant and Xoom , major players in the payment market. Boston PayDiant, which developed the mobile cloud platform for making payments, was acquired in March, and Xoom, an international money transfer service listed on NASDAQ, in November. In addition to these two deals, the company also acquired Modest , a Chicago-based startup that helps salespeople create mobile apps and online storefronts for their stores.

Forecasts for 2016

Over the past 5 years, mobile payments have been causing a fairly strong consumer interest, but they still will not be able to reach first place next year, I am sure Ralf Ohlhausen, director of strategic planning and development at PPRO. However, for mobile payment providers, 2016 can be decisive. Apple Pay is planning a massive expansion of the European market, which could have a significant impact on the entire mobile payment market. And despite the fact that it’s too early to talk about creating a global payment system, the American giant Apple Pay will do everything possible to speed up this process, because its competitor, Google, is also striving to take a leading position in the mobile payment market.

Another trend is that mobile payments will be distributed between smartphones and smart gadgets, such as smart watches, bracelets and rings, equipped with payment modules.

In 2016, biometric identification and tokenization will have a significant impact on the scope of payments. There are currently no standards governing the use of this technology. But next year the situation may change and the tokenization process will be standardized.

User authentication also change. Preference will be given to two-factor authentication, providing a higher level of protection. Such identification methods as vein pattern scanning, palms scanning, voice recognition, heart rate, etc. will also gain popularity.

Speaking of venture investment, in 2016, some experts expect a decline. This is explained by the “boom-decline” pattern in force in the market. In Russia, according to a Venture Barometer Russia 2015 study, 88% of respondents expect a decline in investment. Nevertheless, 92% of respondents made new investments in 2015 and 38% in 2016 are going to increase the volume of their investments in Russian projects. At the same time, 90% of respondents believe that it is necessary to invest only in those projects that have international potential.

In 2016, the refusal of cash payments will continue. The most popular payment methods will be bank cards and smartphones. Of course, this primarily applies to European countries. In Russia, 2016 will not be a turning point; cash will remain the most preferable instrument of payment for retail transactions. Thus, according to the Bank of Russia, in 2015 the amount of cash in circulation not only did not decrease, but even increased from 8,315 billion rubles to 8,849 billion rubles. Of course, this does not mean that non-cash payments in Russia are not used at all. In the first half of 2015, the turnover of mobile payments amounted to more than 120 billion rubles.

As for e-commerce, entrepreneurs who are striving to enter the international arena should think not only about organizing efficient logistics and translating websites, but also about developing an international strategy. It is important to configure local payment methods. For example, in the markets of Asia, Latin America and Eastern Europe, where card penetration is lower than in other regions, it is important to focus on alternative payment methods.

Results of the year. Bitcoin

2015, without exaggeration, can be called the year of Bitcoin. Venture investments in the cryptocurrency ecosystem exceeded $ 1 billion. Banks, commercial enterprises, charitable organizations, and the government are showing interest in Bitcoin and the underlying blockchain technology all over the world.

Worldwide, banks and payment systems are exploring the possibility of applying the technology underlying Bitcoin. The attitude towards cryptocurrency itself is gradually changing. While disputes over the place of Bitcoin and the blockchain in the world economy, its merits and failures are taking place in the international arena, large banks and recognized payment systems prove in practice the benefits of technology.

In April 2015, the Singapore government made a very ambitious statement, outlining plans to turn the country into an Asian center for financial and blockchain technologies through the development and implementation of a legislative framework conducive to the development of Fintech and blockchain startups. Since then, various government agencies, including the nationwide coordinating organization of the Smart Nations Global Initiative, are working closely with start-ups working on projects that can modernize existing banking systems.

The potential of Bitcoin is studied in various aspects, including from such a non-trivial point of view, as its use in conflict zones, in war-affected countries, where the financial infrastructure is broken or not functioning at all. For these purposes, a working group CFLP has been established at Boston University to study bitcoin, blockchain and how to use them in the field of money transfer.

It seems that the Central Bank of India has changed its positive attitude to cryptocurrency, expressing interest in Bitcoin. In August 2015, a representative of the Bank made statements regarding Bitcoin, in particular, the integration of technology into the financial environment. The idea of ​​mastering digital currency in India is, first of all, remarkable for the fact that previously the country's government held a neutral-negative position. From time to time there were even rumors in the society about the prohibition of Bitcoin. But this is probably already in the past, because The Reserve Bank of India has recognized technology can help modernize the financial sector.

In September 2015, almost immediately after the opening of R3 - an international group to study the blockchain - 13 banks were immediately included, including such reputable organizations as Deutsche Bank, Morgan Stanley, Bank of New York Mellon, Bank of America, HSBC, Citi and Societe Generale. A month later, they were joined by 3 more major banks - the Swedish bank Nordea, the Italian UniCredit and the Japanese Mizuho. Today, the consortium includes more than 30 financial institutions.

The American multinational technology company Microsoft took part in the development of cryptocurrency technologies by entering into a partnership agreement with venture start-up ConsenSys . The companies will work together to create new products based on the Ethereum blockchain. The solutions that emerged as a result of this collaboration will be provided to clients of the Microsoft Azure cloud platform in the form of a model called “blockchain-as-a-service”.

US bank Goldman Sachs is expanding its activities in the field of digital currencies. In December 2015, he filed a patent application for creating his own SETL coin cryptocurrency for securities settlements. The implementation of the blockchain took the Royal Bank of Canada. Deutsche Bank, the largest German banking group, conducted a successful test of the blockchain, testing the possibility of using it for smart bonds.

Many companies and organizations continue to introduce Bitcoin to simplify the payment process and collect donations. Thus, the Argentine branch of the international environmental organization Greenpeace, in collaboration with the payment operator BitPagos, announced the start of accepting Bitcoins as donations. Bitcoin turned their attention to the Bill & Melinda Gates Foundation, the world's largest charitable foundation, where digital currency is viewed as a means of developing new payment systems. The largest Czech payment system GoPay this year provided the merchants with the opportunity to accept cryptocurrency as payment.

This year, Sberbank of Russia joined the international community, expressing a desire to study blockchains. Of course, we are not talking about releasing our own cryptocurrency. Sberbank plans to develop modern financial solutions that can simplify the conduct of transactions and improve the reliability of the banking system as a whole, as well as the use of the blockchain for internal settlements and settlements between subsidiaries and other banks.

In addition, the bank is considering joining R3 CEV, an international blockchain consortium created to standardize blockchain protocols and facilitate the implementation of new financial solutions. The final decision on joining R3 has not yet been made, however, the idea itself is progressive for the Russian market.

A large Russian payment system Qiwi announced the beginning of the development of its own cryptocurrency Bitruble. The company plans to start issuing digital coins in 2016, if, of course, the payment can settle all disputes with the Central Bank of the Russian Federation. The currency will be developed on the basis of blockchain technology. According to the company’s management, several hundreds of millions of rubles will be needed for the issue.

Interest in Bitcoin and showed Yandex. At the Finnopolis FinTech forum, Yandex.Money director Maria Gracheva said that the company is counting on support for payments in bitcoins. Of course, it is impossible to draw any conclusions about the integration of cryptocurrency into Yandex services, the process is long and still painful for the Russian market, but there is no doubt that the weather in the Russian crypto environment as a whole changes to a favorable one.

Bitcoin cost

By the end of the year, the cost of Bitcoin reached its maximum for the year ($ 450), significantly exceeding the value recorded on January 1, 2015 ($ 314), but turned out to be almost half its value compared to the price set on January 1, 2014, when 1 Bitcoin cost $ 770 Particularly exciting were the last months, when the course of Bitcoin first lost in value, and then sharply increased. However, such “roller coasters”, as some experts call it oscillations, are an inevitable stage through which Bitcoin must pass.

What will happen with Bitcoin in the future?

This question was answered by businessman Andreas Antonopoulos, well-known in the Bitcoin community.

To date, Bitcoin has gone through 4 such jumps. Everyone knows about November 2013, when the rate fell from $ 1,000 to $ 230. Now bitcoin is $ 450. But not everyone knows that this is not the biggest leap that Bitcoin went through. 2 years before, Bitcoin from $ 30 has fallen off to 25 cents. In relative terms, this was a more significant event and a much greater collapse. It took Bitcoin almost 2 years to recover from this. But it was the second largest jump, because the biggest jump was when it turned from a thousandth penny to a dollar. Then the real birth of bitcoin happened. The equality of these currencies seemed practically unattainable. The dollar for Bitcoin - was the ultimate dream. Nothing like this has happened before.

In the future there will be at least another 3-4 jumps, Andreas is sure. Bitcoin will not be stable, because every time attention comes back to it, its course rapidly grows and, since this course usually cannot be maintained, the course of Bitcoin falls again. This is a “roller coaster”, and they will continue for another 3-4 years, as was the case with the Internet. The only serious difference is that the Internet did not have an exchange price to which everyone would pay attention.

Bobby Lee, CEO of the Chinese stock exchange BTCC, adheres to a similar point of view. Previous market patterns point to a new, long-lasting rise in Bitcoin prices. The sharp rise in the cost of Bitcoin in just a few days, according to some experts, indicates the formation of a new bubble, which may be even more spectacular than the previous one, when the rate of cryptocurrency exceeded $ 1,000.

Bitcoin startups

2015 was the starting point for many startups working in the blockchain industry. In fact, there are so many of them that some experts even predict the “decline of startups”, explaining their point of view by the fact that there is simply not enough money for everyone. According to the head of the Digital Currency Group Barry Silbert, in the coming year many will be forced to leave the stage, also because consumer acceptance of Bitcoin does not occur as quickly as expected. The volatility of the Bitcoin course also does not contribute to its everyday use.

Of course, the experts are right, there is logic in their words. But we are not as critical. Competition and repression are common market realities. "In live" are the most powerful and useful projects. And uncompetitive startups, closing, give way to new ideas, and they in turn begin their own struggle.

Here are a few blockchain startups and developments that have attracted attention in 2015:

Australian startup Brighton Peak has launched its own bitcoin exchange, which should become the flagship product of the young company. The development of the exchange involved the technology of the American company AlphaPoint , which is developing blockchain-based solutions for storing, tracking and trading digital assets. The technology is capable of processing 1 million transactions per second.

Cryptocurrency service Pure Central announced the launch of a multi-currency platform based on P2P, on which it will be possible to obtain or issue a loan in cryptocurrency. Borrowers can get a loan in the cryptocurrency in which it is convenient for them, at 0.75%. Already, the platform supports 7 different cryptocurrencies - Bitcoins, Lightcoins, Pyrcoins, Dogcoins, Neimcoins, Darkcoins and Auroracoin. In the future, their number will grow.

File Sharing Sia launches a cloud platform for storing files based on blockchain technology. Files on this platform will be encrypted with the Twofish algorithm. The data is divided into fragments, each of which increases to 4 megabytes, is encrypted and transmitted to one of the many hosts. At the same time, the likelihood of access to user information by an outsider is practically excluded, since none of the hosts that store data fragments has a whole file.

BitReady has launched a platform for exchanging dollars for bitcoins in the process of buying goods. The buyer chooses “payment in Bitcoins” and sends the bill to BitReady. It accepts dollars and sends the equivalent bitcoins to the seller on behalf of the buyer. The commission at the same time will not be charged, according to the company. Thus, the buyer can save up to 5% on the transaction. A startup takes on the risks associated with using Bitcoin. In addition, BitReady provides an opportunity to purchase goods for cryptocurrency for those who do not have cryptocurrency savings. Currently, the service is available only in several US states, but in the future geography will be expanded.

Stampery , a Spanish startup created for notarization of documents in the blockchain. The service can be useful to anyone who works with personal documents: lawyers, intellectual property and copyright defenders. All documents certified by Stampery remain in the distributed account book and cannot be changed or deleted, thereby confirming their authenticity.However, the cost of certification in a distributed network is several times lower than similar services of a notary. Thus, each user will be able to download up to 10 documents per month for free. Certifying more documents will cost $ 9.9.

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2016

As is known, once every 4 years the volume of cryptocurrency, which miners can receive every 10 minutes, is halved. The next such reduction will be in the summer of the future, 2016. After division every 10 minutes, miners will be able to get only 12.5 bitcoins.

What else does the Bitcoin community expect in 2016? Next year, a final decision will be made on the size of the maximum Bitcoin block size. The discussion on this topic has been going on for 2 years. It emerged during the “bubble” of 2013, when the limited network bandwidth with a block size of 1 MB became apparent.

Interest in Bitcoin will not fade away. Large banks and financial companies will continue to explore Bitcoin, blockchain technology and the possibilities of their use. The interest of the government in the blockchain in different countries will also grow.

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