To date, my career has revolved around financial services. Prior to attending Goizueta, I advised financial institutions, ranging from banks, FinTechs, and digital assets firms, on regulatory compliance, risk management, and strategy. My professional goal coming to business school was to gain the business acumen and network necessary to join and help grow an early-stage FinTech. My personal goal coming to business school was to get uncomfortable and dive into unknown areas and topics — climate change and ClimateCAP sat squarely within this goal.

I spent my summer internship within FinTech venture capital (which you can read more here), which was within my comfort lane of financial services. As Summer Fellows, we each pitched an investment thesis at the end of the internship. After much thought, I decided to pitch Climate FinTech, the intersection of FinTech and climate solutions. This was the beginning of my journey into understanding the need for climate solutions and how I can embed climate into my career. With that, here are five things I learnt about climate-smart innovations during ClimateCAP:

Embedding Climate within Business Strategies

The conference kicked off with a keynote from Paul Polman, the former CEO of Unilever, discussing the future of sustainable business. As future business leaders, I had two key takeaways on how we can embed climate within business strategies to drive innovation. First, it is critical that businesses integrate climate goals into their core business strategy. This includes setting science-based targets aligned with both the United Nations Sustainable Development Goals (SDGs) and the Paris Agreement. Jane Ewing, the SVP Sustainability at Walmart, echoed this sentiment when she said her sustainability team ideally should no longer exist in the future, since sustainability will be embedded throughout the organization and processes. Secondly, companies need to embrace long-term thinking, by shifting from short-term profits to long-term value creation, considering the broader social and environmental context. Together with embedding climate into business strategies, companies should also redefine success metrics and incentives to prioritize long-term sustainability. This can prove challenging with the way business performance is measured on a quarterly basis and executive compensation based on metrics such as earnings per share and stock price, but the far benefits outweigh the current status quo.

Circular Economy

Ron Gonen, Founder and CEO of Closed Loop Partners, an investment firm focused on the circular economy, provided interesting perspectives on building a waste-free world. We inherently believe that landfill is free, and garbage is free, which is an economic scam. For example, the New York government spends $400 million a year on landfill costs, just to ship what it collects from homes, schools and government buildings. Focusing on the circular economy can help address pressing environmental issues such as climate change, resource depletion, and pollution. By reducing waste and making better use of resources, we can decrease greenhouse gas emissions, protect ecosystems, and preserve natural resources for future generations. Gonen also highlighted Mori, a foodtech focused on extending shelf-life to reduce waste and create a more sustainable supply chain. Through this technology, we can reduce food waste and carbon footprint, and create flexibility in the supply chain.

Moving Power

In a breakout panel about powering business and transportation, the issue that stuck with me was the constraint in moving power. In today’s world, the existing energy infrastructure is often designed for centralized power generation, where electricity is produced in large power plants and then transmitted over long distances to consumers. This centralized approach can lead to transmission constraints, as the infrastructure may not be able to accommodate the increasing demand for electricity or the integration of renewable energy sources. A distributed energy system involves generating electricity closer to where it is consumed, using smaller-scale technologies such as solar panels, wind turbines, or microgrids. This reduces transmission losses, increases grid resilience, integrates renewable energy sources, and creates flexibility and scalability. The opportunities are significant.

Gamify, Changing Behavior

Gamification has been used on consumers for a long time, such as Robinhood gamifying retail investing, as it encourages desired behaviors and engages users. Within sustainability, gamification is used to incentivize and motivate individuals to adopt more sustainable habits, such as adjusting their power usage or charging electric vehicles at specific times. Many consumers may not even be aware of their energy consumption patterns. Gamification can help raise awareness and encourage users to shift their energy to off-peak hours. Another layer of gamification is social comparison and competition, which can motivate individuals. This cannot only lead to energy conservation and cost savings for consumers, but can also help reduce the strain on the power grid and support the transition to cleaner energy sources.

EnergyX

During the second day of the conference, we heard three founders pitch their companies and talk about their journey and successes so far. One founder that caught my eye was Teague Egan, Founder and CEO of EnergyX. EnergyX seeks to innovate throughout the battery supply chain from brine lithium extraction and refinement to the development of solid state batteries with high safety and energy densities. Despite a career in media and entertainment, Egan saw the opportunity in energy transition and sustainable energy while on a trip abroad visiting lithium fields. This highlights that no matter your background, you can make an impact in the transition for a sustainable future. In April, General Motors announced that GM Ventures is leading a $50 million Series B financing round in EnergyX.

ClimateCAP was an action-packed fast-paced two-day conference. It was energizing to see so many future business leaders passionate about climate change and the transition to sustainable energy. There are many innovations within this space and no matter what your background is or where your passions lie, you have an opportunity to define the future.

A delegation of 11 MBA students from Emory University’s Goizueta Business School recently attended the ClimateCAP Global Summit. Along with hundreds of leading students and professionals from across the nation, they explored the enormous influence and responsibility business leaders hold in driving toward a climate-smart world. Want more insights? Check out #GoizuetaClimateSmart to access additional student blogs and the “Innovating in a Climate Smart World” podcast featuring professor Wes Longhofer and student Danni Dong.

Blog post originally posted on Goizueta Business School’s blog on voiceofgoizueta.com.

Human behavior and structures must change as the world strives towards net-zero and decarbonization. The Paris Agreement, adopted in 2015, calls for keeping global warming to well below 2 °C, preferably 1.5 °C. The key structure to support climate transition is the financial system, the largest industry in the world, with a market value of $22.5 trillion.

I will not dive into the science behind climate change, as much has been written about the need to reach net zero by 2050 to avoid irreversible catastrophic events such as loss of coral reefs and the Arctic. Nor do I have the credentials. Instead, I will focus on the financial sector and how it is driving the transition to a net-zero economy.

Quick background

Many developed countries pledged to reach net zero by 2050. The term net zero is thrown around and makes headlines, but what does it really mean? All greenhouse gas emissions produced are counteracted by an equal amount of emissions eliminated. Sounds simple enough, right? However, doing so requires rapid decarbonization through two ways:

1. Reduction: Reducing the greenhouse gas emissions through the use of zero-carbon renewable energy sources such as wind and solar.
2. Absorption: Absorbing carbon from the atmosphere by capturing emissions and enhancing carbon storage in agricultural lands and forests.

To achieve decarbonization, all aspects of our current economy must change — from how we generate energy to how we produce and deliver goods and services. The financial sector must be at the forefront of all efforts to transition to a net zero economy, with FinTech playing a vital role.

Lagging regulation leads to incumbents driving innovation

In a perfect world, regulation moves in tandem with innovation, but we all know that is not true. As startups, FinTechs move faster than our world’s slow-moving regulatory environment and love to break things. This is profoundly true in the U.S. due to its fragmented regulatory system, and climate risk regulation is no different. Despite adopting the Paris Agreement in 2015, the U.S. looks to other countries to lead the charge.

Climate change poses a threat to the well-being of not only the environment but also financial markets and institutions, and it is no surprise to see 70% of the global central banks and regulators view climate change as a ‘major threat’ to financial stability. Banking regulators are paying attention to the climate crisis. But similar to other aspects of oversight, regulation lags behind required actions. Therefore, incumbent banks and established FinTechs have taken actions to address the climate-related risks.

Doconomy has become a star in the Climate Tech startup ecosystem, providing banks, startups, and FinTechs with tools to offer their customers a digital-first platform for everyday climate education, information, and action. They have raised over $43 million to date from the likes of CommerzVentures, MasterCard, and Citi Ventures. Both MasterCard and Klarna have partnered with Doconomy in recent years. With Klarna, Doconomy partnered to create a carbon impact calculator, helping educate consumers around climate impact information. With MasterCard, Doconomy partnered to launch a free and easy-to-use mobile banking service that lets users track, understand and reduce their CO2 footprints through carbon offsetting.

Climate Tech market is a rapidly maturing asset class

In 2021, Climate Tech funding peaked at almost $45 billion across 1,100 deals. It followed a similar trajectory as FinTech deal funding, but at a fraction of total deal value and deal count, accounting for approximately a third of the FinTech deal value in 2021. Similar to FinTech, the US and EU accounted for the majority of the climate VC deal value, with over 77% of the deal value. I believe Climate Tech is on the cusp of transforming sustainability as FinTech did to finance.

Many VCs that invest in FinTech have already made their mark in the Climate and Climate FinTech space. Sweep, the leading carbon management platform for large enterprises, raised $73 million in Series B funding led by Coatue earlier this April. Coatue has invested in the likes of Monzo, N26, SoFi, and MoonPay. Kleiner Perkins has not only made investments in the Climate FinTech space, but the chair John Doerr and his wife Ann Doerr donated $1.1 billion to Stanford University to fund the creation of a new school focused on sustainability and climate change.

As we are still in the early innings of Climate FinTech so we haven’t seen many IPOs or M&A activity. However, there are a few companies on the IPO path.

• Watershed, an all-in-one software platform for running a climate program, raised $70mm Series B at a $1bn valuation co-led by Sequoia and Kleiner Perkins. This is hot on the heels of its Series A just a year ago.
• Xpansiv, a San Francisco-based provider of a premier market-infrastructure platform for global carbon and environmental commodities, raised $400mm venture funding from Blackstone.
• Persefoni, a SaaS platform that enables companies and financial institutions to easily meet stakeholder and regulatory climate disclosure requirements, raised $101mm Series B at $271mm post-money valuation.

Climate FinTech subsectors

With B2B startups raising almost six times more funding than B2C startups, I focused mostly within the B2B segment when developing a thesis and market map. Here is how I see the sub sectors within Climate FinTech.

Three initial areas of opportunity

Within the ten categories, I believe the three initial target areas are ESG Data, Analytics, and Reporting, Carbon Accounting, and Carbon Offsetting and Removal.

• ESG Data, Analytics, and Reporting: With more focus and capital towards decarbonization, it is imperative that carbon data and reporting is accurate. This data will be used by financial regulators to supervise banks and FinTechs, providing insights and trends to both the public and private stakeholders. With growing regulatory complexities in both the requirements and taxonomy, Climate FinTech startups can play a pivotal role.
• Carbon Accounting: This is the first step for consumers and businesses to understand their carbon footprint in order to improve sustainable behavior. Carbon accounting or tracking serves as the tools to track and calculate emissions to give a company an understanding of the impact of their daily actions and transactions.
• Carbon Offsetting and Removal: After we have the robust data, reporting and understanding of carbon emissions, the next step is to compensate for the generated emissions. Carbon offsetting is typically integrated at the end of a consumer’s checkout journey, offering them an opportunity to pay a fee to reinvest in carbon offsetting projects.

Institutional demand drives opportunity and innovation

There are three key areas driving opportunity in Climate FinTech. New sources and ways of treating data combined with emergent government policy and regulation are allowing FinTechs to harness technology that informs environmental standards and product design. Here we see many banks and insurers pushing towards the same goal line, whether it is achieving net zero by 2050 or elevating the role of ESG within the bank.

Climate FinTech is just the tip of the iceberg

Climate FinTech is just the tip of the iceberg, with FinTech touching all verticals within Climate Tech.

Connect with me on LinkedIn and Twitter for insights on fintech.

Background

I spent my early years growing up in Hong Kong, attended boarding school in Australia, and made my way to the United States for undergrad. After graduation, I began my professional career at Promontory Financial Group in Washington, D.C. Promontory provided me the incredible opportunity to work and solve a wide range of diverse business problems and make an impact in the financial services space, all while building my own skill set and making connections with some incredibly smart and driven colleagues and clients. Throughout my time there, I worked with top US megabanks, European financial services companies, Fortune 100 diversified financial services companies, regional banks, mortgage servicers, digital assets banks, and FinTechs.

When IBM acquired Promontory in 2017, I gained exposure working with the IBM Watson team, helping banks develop customer complaints analytics and tools. As a Principal, I joined the FinTech and Digital Assets Team, advising the first federally chartered digital assets bank following a series of OCC interpretive letters to allow for such activities.

Going to business school was the next step in my journey to marry my consulting experience in financial services with a business toolkit. While my initial goal was to recruit for a FinTech product or strategy role, I deferred for a year due to COVID and reconsidered my career path following conversations with alumni and current students. Which is how I ended up in an office across from Bryant Park in NYC for 11 weeks this summer. (Stay tuned for a separate post on my Alice-like journey into the venture capital rabbit role!)

Fin Capital

Fin Capital is an asset management firm investing full lifecycle in FinTech and adjacent verticals in B2B enterprise SaaS companies principally in the US and UK-EU, and selectively in LatAm, Israel, and Canada. Fin has three primary investment vehicles: pre-seed (Regatta, checks of $100K-$1M), early-stage defined as seed to Series B (Flagship, checks of $1–10M), and growth defined as Series C+ (Horizons, checks of $25–50M+). Fin also has a SPAC in the market (Constellation). Within FinTech B2B SaaS, Fin invests in six primary thesis areas: Embedded finance, Asset Management & Capital Markets, CFO Tech Stack, Enterprise Blockchain, InsurTech, and Infrastructure/Enabling Technology. Fin also looks at opportunistic companies. You can learn more about Fin on their website, here.

What I did this summer

I was fully immersed into the team with my fellow Fellows and acted as a full-time associate. I was aligned to the Flagship fund and my responsibilities largely fell within three areas: sourcing, due diligence and investment execution, and portfolio company and operating support. Lastly, a summer internship would not be complete without special projects.

Although no two days were the same, my day-to-day typically looked like:

• Writing investment memos
• Taking founder calls
• Performing market research
• Evaluating startups and digging into data rooms
• Assisting internal projects and portcos
• Attending industry events (aka free drinks)

Now onto the four key lessons I learned.

1.) Prioritize an in-depth understanding the firm’s thesis and market landscape

This technically began in earnest during the interview process, as I researched the firm and portfolio companies, but became more nuanced once I stepped foot in the office my first day. Prior to the internshi, I understood conceptually what each of the six thesis areas represented separately — for example, Embedded Finance captures business models that allow FinTechs, banks, and others to efficiently embed financial products (e.g., payments, lending). But this takes on a different meaning when you understand how each of the six thesis areas and sub-theses categories fit within the bigger picture of the firm. Embedded Finance not only captures business models to embed financial products, but plays a role in banking-as-a-service (BaaS), lending-as-a-service, and embedded payments.

Along with the other Fellows, we developed a thesis map of all portfolio companies, pipeline companies, and market comparable companies to help Fin understand their opportunities and which areas to focus their time. This valuable exercise not only laid out where each company fit within Fin’s broader thesis, but informed how Fin should define each thesis and sub-thesis. We leveraged many publicly available FinTech market maps (e.g., CB Insights, FT Partners) to guide our thinking on market comparable companies. Fin’s ultimate goal is to pick category winners, and having all of the portfolio, pipeline, and market comparable companies organized in a coherent manner, the team can better assess and make decisions.

2.) Always add value

A venture capital check is a commodity. Capital is a commodity. For a VC firm to differentiate itself in the market and win the best deals, it must simply add more value than the next check, hence the term, “smart money”.

Fin adds value in numerous ways:

• Operators with deep corporate and status leadership experience
• As B2B investors, Fin’s LP base and network act as a distribution network for FinTech startups
• Platform Team with Head of Value and Head of Corporate Development. Fin built a Platform team with a Head of Value and Head of Corporate Development to assist startups with business development, partnership formation, GTM strategy, capital formation, M&A, and exit planning. (Think of this team serving as an in-house investment bank)
• Lighthouse. This proprietary platform developed by Fin to serve both founders and LPs, allows founders to utilize the platform to find connections (BD and co-investors), submit requests for help from the Fin team, access resources like vendor discounts and playbooks, find talent through a job board, and book meetings with the Fin team.

As a Fellow, my ways to add value were smaller, but no less important. I found ways to add value where I can. Whether taking a first crack at a startup’s data room, or taking the lead supporting a portco’s request.

3.) Importance of network

People always told me the FinTech community is small, but it wasn’t until this summer that I quite realized how small. The opportunity to spend 11 weeks (leaving my wife at home with a house, dog, and two cats) pursuing my passion in New York City is a privilege and I knew I had to make the most of it. I reconnected with former colleagues now in the venture or startup ecosystem, attended countless FinTech and VC happy hours, and built relationships with VCs with mutual connections and fellow MBAs also spending their summer in this space.

If I learned one thing, it is that the FinTech and VC world knows how to throw a party — here are some of my favorite events I attended:

• Kard’s Series A fundraising party at Roberta’s in Williamsburg
• NYC Fintech Women’s Navigating Fintech as a Female Leader at Current’s offices
• NYC Fintech Women’s Sweet Fintech Summer co-hosted by Ocrolus
• SVB’s Fintech Founders — NYC Whiskey Tasting at Great Jones Distilling Co
• FTT NYC Happy Hour
• Latam Summer Social in NYC
• Supernode Ventures & Four Acres Ventures VC Roof Deck Celebration
• GBS and LAW | NYC Young Alumni Summer Social
• NY Rooftop Series: August Sunset Mixer

Making the most of these opportunities allowed me to share a Climate FinTech thesis I built with a Kellogg MBA who works in the space and receive insightful feedback, grab a drink with a fellow Emory alum working in FinTech VC, and Zoom with friends in the FinTech space across the pond — I cannot wait to see my network grow because of these connections I made over the summer.

4.) Never stop learning

This might be a lesson I learnt before the summer, but I thought it was worth mentioning. Learning is a lifelong journey, and getting my MBA is merely a stop along this path. Outside of the classroom, there are many reasons to keep learning, from staying competitive in the workplace to adapting to the changing world. This is particularly prevalent in venture as you are always meeting new companies with new business models. Even focusing within B2B FinTech, I had the opportunity to meet with open banking startups in LatAm to InsurTech startups in the US all in one day. It was necessary to “get smart” on a domain before a call with a founder.

Things I will not miss about New York

• Prices
• Prices
• Did I mention prices?
• Trash everywhere
• Smells everywhere
• Lack of space
• Lack of public restrooms
• One bathroom in a big restaurant
• Waiting in lines

Things I will miss about New York

• Food
• Getting food at all hours
• Drunk pizza
• Chopped cheese
• Did I mention food?
• Convenience
• Subway entertainment
• Events
• Hustle and bustle

Helpful Resources

Books

• Venture Deals
• Secrets of Sand Hill Road

Podcasts

• The Twenty Minute VC (20VC)
• Wharton Fintech
• Business Breakdowns

Job Boards

• John Gannon Blog
• Accelerated Newsletter
• Gen Z VCs
• Nicole DeTommaso’s Twitter Threads

Newsletters

• Term Sheet
• StrictlyVC

FinTech Newsletters

• Fintech Brain Food
• This Week in Fintech
• Fintech Takes
• Fintech Business Weekly
• The Fintech Update

Tim Lam is an MBA candidate at Emory University’s Goizueta Business School with a passion for FinTech, venture investing, and expanding financial inclusion. Tim was a Fellow at Fin Capital. Prior to Fin Capital, Tim advised banks, fintechs, and digital asset firms on a variety of financial services matters, including strategy, risk management, and compliance at Promontory, a Business Unit of IBM Consulting. In his last role, he was a Principal in the firm’s FinTech and Digital Assets Practice Group, where he supported Anchorage, the first OCC-chartered digital asset bank during its conversion from a state trust charter to a national trust bank charter.

He is passionate about furthering financial inclusion and economic growth through fintech. He is a Managing Partner at Goizueta’s Peachtree Minority Venture Fund, the first student-run VC fund solely focused on investing in underrepresented minority founders. Outside of tech, Tim is fervent Liverpool supporter and is attempting to take his varsity college tennis experience onto the golf course.

Connect with me on LinkedIn and Twitter for insights on fintech.

To understand the potential impact of DeFi, we have to remember how traditional financial services provided goods and services to customers. From loans, payments, insurance, to trading, there is a company or institution in between those who are receiving and providing the goods and services. With DeFi, it is possible to execute those very services on the Ethereum blockchain, peer-to-peer without a bank or central authority. Imagine an open financial world, where you can access financial services with just a smartphone and an internet connection. By combining technology such as the blockchain, cryptography, and internet, DeFi has the ability to fundamentally evolve the financial services industry but more importantly, transform the global economy. DeFi is one of the most important sectors within the growing crypto space.

At the moment, the main programs in which we are seeing DeFi are decentralized applications, or dapps. Dapps are designed to function as decentralized networks, run without intermediaries, be it central banks, corporations, or companies. The idea of obtaining a loan or mortgage without a bank or lender may sound futuristic or simply farfetched. But many dapps are live and running today. Before taking a look at some of the use cases of DeFi dapps, let’s understand four fundamental differences between traditional financial services and DeFi dapps.

• Permissionless: The open-source code allows for anyone to examine the details and build on top of the code. Anyone can audit and validate the code. This is opposed to closed-source, where transparency does not necessarily exist. In open-source, there is no company or gatekeeper holding the keys for access. There are no approvals or hierarchical layers. Permissionless truly allows for anyone to participate.
• Decentralized: Similar to permissionless, there is no central organization, or groups of organizations that control the ongoing governance and operations of dapps. In a bank today, the rules are determined by the company (and the regulators). The bank holds the decision to upgrade software, and all the decisions are made by management, committees, and boards within the organization. In DeFi dapps, once the rules are written on the code, contracts and transactions are then run with no (or very little) human intervention.
• Interoperable: A major blockade in today’s financial world are the headaches when two systems cannot communicate with each other. Interoperability is the ability of computer systems or software to exchange and make use of information. With DeFi, dapps are built so that they can talk to each other, cross-chain communications. In its infancy, many blockchains were developed but could not communicate with each other, reducing the value of a blockchain, namely value transfer. DeFi dapps are interoperable.
• Globality: To access today’s financial services, you may need a NAB account in Australia, Bank of America account in the US, and HSBC account in Hong Kong to transfer funds to your family living around the world. With DeFi, whether you are in Athens, Georgia or Athens, Greece, you have access to the same services given the internet and a smartphone.

With bitcoin continuing it’s impressive gains in the first month of 2021, so too does ether, the second-largest cryptocurrency by market cap. According to Coindesk, the total value locked in DeFi crossed the $22 billion mark for the first time. This represents the US dollar value equivalent of cryptocurrency liquidity locked up in DeFi projects. This metric is commonly used in the industry to track the growth of the DeFi space. Now that we understand the four fundamental characteristics of DeFi, here are some of the current use cases.

• Lending: This sector of banking is traditionally slow and arduous. Everyone has had negative experiences applying for a loan. Compound tackles this through its lending protocol. Users can lend their crypto out to other users and earn interest in the form of crypto. Now, this may sound similar to existing banking services (substitute fiat currency for cryptocurrency), but the platform utilizes blockchain smart contracts to match borrowers and lenders and automatically adjusts interest rate based on the market, or supply and demand.
• Stablecoins: With the recent OCC interpretive letters and guidance (#1170, #1172, #1174) on national banks’ ability to custody and interact with stablecoins, this sector is growing in its importance and stature. As stablecoins are designed to hold specific value and pegged to fiat currencies. Stablecoins can be fiat-collateralized, crypto-collateralized, or non-collateralized. Although cryptocurrencies are still notoriously volatile, stablecoins offer price stability. Maker’s DAI is the prime example of a stablecoin.
• Exchanges: Automated market making systems are the new trading books. Decentralized exchanges (DEXs) are unlike centralized exchanges (think Coinbase). DEXs conduct peer-to-peer transactions of digital assets on smart contracts on the blockchain without intermediaries.

According to the latest report from the World Bank, there are about 1.7 billion unbanked adults globally. These adults remain without an account at a financial institution or through a mobile money provider. Living in the US, it may be hard to imagine over a billion adults in the world without banking services. Americans can walk into a branch of Chase or Bank of America and open a checkings account, or take out a mortgage. Or simply take out their smartphones from their pockets and trade stocks in a brokerage account. Many of these unbanked adults live in developing economies such as Indonesia and India. DeFi has the potential to bring banking access to this population, a critical component of economic development.

Cryptocurrency and digital assets are transforming financial services as we speak. Although DeFi may not necessarily be in the mainstream yet, with traditional finance still dwarfing DeFi, this space is poised for a breakthrough. It will take some time for DeFi to catch up and then surpass traditional finance. New innovations come with new risks. It will be incumbent for the regulators and the innovators to work together to minimize risks, in order to reap the rewards. Hop onboard this incredibly exciting journey on decentralization, watching how code can innovate and build a financial system for everyone. This is a paradigm shift.

From a customer acquisition perspective, Google has amassed over 150 million users in 30 countries during the five years in the FinTech market. This is particularly important as Google will not have to start from ground zero on customer acquisition. Many FinTech’s fail due to high customer acquisition cost, amongst other factors, and the subsequent inability to monetize those customers. But Google will not have to face this challenge as the FinTech challengers have before them.

The upcoming Plex account will aim to compete in both the millennial and Gen Z market with its fee-free and no minimum balance requirements features. Plex is where things get interesting with Google Pay. Neobanks have been able to differentiate themselves from the incumbent banks through not only their digital tech savvy nature, but also it’s fee free offerings. There are primarily two types of neobanks, one that partners with traditional banks to power its offerings, and one that has successfully maneuvered through the regulatory system to obtain a banking license. The latter is a costly journey for neobanks to navigate. Although the journey has certainly been easier recently with federal regulators examining the regulatory burden, only a handful of FinTechs have obtained the illusive federal banking charter. Varo Bank is the leading example having gone down the bank charter path, receiving approval from the FDIC, OCC, and Federal Reserve earlier this year after a 3 ½ year journey and over 5,000 pages of paperwork.

Google will begin its neobank journey with partner banks and credit unions. This decision will allow Google to focus on its strengths, such as design and technology, while leaving the regulatory aspect to their established bank partners. The name of the game is data. The more data Google gains, the more valuable its product becomes to the customer (don’t forget about the advertisers, who some would say is the primary customer). What is particularly interesting about Google and the bank partnership model is the incredible opportunity that the Google brand brings to the bank partners. Google’s largest bank partner is Citi, the fourth largest U.S. bank with approximately $1.6 billion in total assets. Jane Fraser, the CEO and President of the consumer bank noted that “by unlocking the power of our respective ecosystems, we can deepen our existing relationships and serve an exponentially larger and new generation of customers.” Not only does this mean that Citi will be able to reach a broader customer base without having to geographically expand its branch presence, which is a costly endeavor, Citi and Google could have first dibs on a new generation of banking customers, who do not have deep banking relationships like generations past.

With Google’s strength and power, it could be hard for competing FinTechs to maintain customer loyalty with the notoriously fickle generation of millennials and Gen Z. The natural next question is whether we will soon see similar forays by fellow Big Techs like Amazon and Facebook into the traditional banking space. Amazon has already assembled various banking capabilities such as Amazon Pay and Amazon Go. They have thus far taken the unbundling approach to banking, including credit card offerings with both Chase and Synchrony. The underlying financial services infrastructure is there for Amazon. Earlier this month, we saw Amazon jump right into the healthcare industry by launching Amazon Pharmacy. Although they have been plotting this move for years, with the acquisition of PillPack in 2018, they have swiftly disrupted the future of the healthcare industry.

There is no doubt that Google Pay will change the financial services landscape through its all-in-one solution app and Plex bank partnerships. How the other Big Techs will approach this industry, only time will tell. What we have seen is a potential roadmap for a Big Tech’s financial platform. The Bank of Big Tech is here to stay.

“Welcome to the Bank of Google, how may I assist you?” — your Google Nest speaker, probably.

Over the previous two seasons, the back four and the keeper picked itself — Alisson, Trent Alexander-Arnold, Van Djik, Joe Gomez, and Andy Robertson. Liverpool are now left with just Robertson and Alisson, who himself went through injury troubles early on in this season. With the condensed season, matches on both the club and international level are coming thick and fast. More so than ever, squad depth and sports science are key to managing and optimizing player health. Liverpool have been rightly lauded for their expert player recruitment led by Michael Edwards. Now is time for the medical and fitness team to step up during the unprecedented season.

Jurgen Klopp places great trust in his team, both on and off the field. The medical and fitness team can provide Klopp with all sorts of player management details, such as how much rest and recovery they require between matches, and how close they are to muscle overuse injuries. But a key problem this season is the extraordinary number of matches the professional football players are asked to play. With a fully fit squad, Klopp can field two competitive starting XI’s. But with the number of players on the treatment table, Klopp is forced to overuse some players or be criticized for fielding a weaker team.

With Liverpool in pole position in the Champions League group stage, Klopp is surely thinking of mass rotation in a couple of the remaining matches. A starting lineup of Alisson, N. Williams, Koumetio, R. Williams, Tsimikas, Milner, Jones, Keita, Minamino, Origi, and Jota, is surely not out of the question. After this international break, where some players will play three matches, they will return to the new Kirkby training facilities heading into a period of 11 matches in 37 days.

At the end of the day, Klopp can rotate his squad, employ the best sports scientists and physios all he likes. But with the football authorities cramming an absurd amount of football into the calendar, there is little Klopp can do to avoid further decimation of his squad. Until FIFA, UEFA, and the FA come together to discuss scheduling in the best interest of player welfare rather than commercial partners, the problem will only continue to persist.

The Payments Charter has the ability to bring FinTechs into the consumer mainstream. Payment companies would have the prestige of a national charter under the supervision of the OCC, giving consumer confidence in their services. So for Version 1.0 of the Payments Charter, Brooks laid out a national version of a state money transmission license that provides the advantage of a national platform with pre-emption from the states. There are significant advantages for payment companies to operate under a federal charter rather than a smattering of state money transmitter licenses. Operating under a state-by-state basis, a payments company would need to handle varying requirements, resulting in consequential operational challenges.

Brooks’ experience in the FinTech industry, having recently held the role of Chief Legal Officer at Coinbase and sat on the board of directors of Avant, Inc., a marketplace lending and technology platform company, bodes well for the FinTech industry. In his initial statement since becoming acting Comptroller of the Currency, Brooks said “we should support banks’ use of new technology, products, and models that safely and fairly accelerate the velocity of money, create greater financial inclusion and empower consumers and businesses with more control over their financial affairs.”

As innovation is a “personal passion” of his, it will be fascinating to see how the OCC leads the way in financial innovation and digital technology in the banking industry. According to an Accenture study, with $500 billion in incremental revenue from the payments industry up for grabs over the next 6 years, the payments industry is increasingly competitive. Recent acquisitions from Visa and Mastercard, two incumbent players in the payments market, further highlight this cutthroat nature.

With the pandemic accelerating the digital first nature of banking, it is important that FinTech’s continue to innovate and are appropriately regulated in order to best serve the American consumer.

So how does US$2 billion just magically disappear? This is a classic case of corporate fraud stemming from corporate misgovernance. Corporate governance is an essential aspect of a financial institution’s success. In the US, the Office of the Comptroller of the Currency (OCC), the primary regulator supervising all national banks, as well as federally-licensed savings associations and federally-licensed branches of foreign banks, provides guidance in the Comptroller’s Handbook on Corporate and Risk Governance. Successfully implementing strong corporate governance not only keeps the bank on the right side of the regulators, but also out of the front pages on the Wall Street Journal.

The controversies started in early 2019 when the Financial Times reported senior executives forging and backdating contracts. Although the subsequent independent audit from KPMG did not find any discrepancies, this coincided with the delay in the publication of Wirecard’s 2019 annual report from EY. The auditor refused to sign off on the report due to its inability to confirm the existence of €1.9 billion in cash balances. This was the beginning of a spectacular fall from grace.

News media outlets were quick to coin the scandal, the “German Enron”. Following the Enron disaster, new regulations and legislations were created, and accounting standards were enhanced. The biggest corporate scandal led to Sarbanes–Oxley or SOX. The impact of SOX on corporate governance was profound, including the strengthening of audit committees and increasing management’s responsibility on financial reporting.

Bundesanstalt für Finanzdienstleistungsaufsicht, or BaFin to those across the Atlantic, is the primary financial regulator overseeing Germany’s financial system. Questions have been raised over whether BaFin could have done more to prevent the failure. But what is clear is that strong corporate governance was severely lacking at Wirecard. There had to be multiple levels of failure in order for fraudulent transactions to go unnoticed from the management-level all the way up to the CEO and the Board.

This is a lesson for any new burgeoning FinTech and tech startup not to lose sight of corporate governance. As a startup scales and grows with new users, new funding, and new features, it is paramount that decision makers scale and grow corporate governance at at least a parallel rate. This may mean creating new reporting cadences, developing internal controls, and hiring talented risk and compliance professionals.

The founder and CEO often promulgates the startup’s culture and charts the startup’s rapid growth journey. From a risk management point of view, the expectation from the OCC for incumbent banks is to set the tone from the top, meaning the Board, the CEO, and senior management setting the expectation, culture, and ethical climate. It would be wise for new FinTechs to instill this mindset from day one.

Since the 2008 financial crisis exposed the shortcomings of oversight on financial services and its ability to protect the consumer, this sector has been ever growing. As a result of the Great Recession, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the biggest financial regulation reform in the US, was born. Now, RegTech plays a particularly important role in today’s world, as we navigate through the pandemic and the economic consequences.

According to Bloomberg with data from Boston Consulting Group, banks globally have paid USD$321 billion in fines between 2008 and 2016. This is greater than the 2018 GDP for Pakistan, the world’s fifth most populous country. Imagine what we could have achieved if we redeployed the capital from even just a portion of the fines. And remember, this number does not include the ballooning annual costs that banks spend to address compliance, which is estimated to be upwards of USD$100 billion a year.

Where is regulatory compliance headed? A London-based think tank, JWG estimates that over 300 million pages of regulatory documents will be published by 2020. The average reading speed is between 200 and 250 words per minute, and you can’t speed read laws and regulations, as even a single word can fundamentally change the meaning of the text. The goal and the future here is simple. Technology, or more specifically RegTech.

RegTech can help reduce the cost of addressing compliance for financial institutions, unshackling up funds to invest in growth areas. As risk and compliance comprises many areas such as issue management, risk assessment, and complaints management, banks have many opportunities to utilize advanced technological solutions to address the overwhelming amount of regulations and reduce risks.

Incumbents such as MetricStream and IBM provide an integrated approach to Governance, Risk and Compliance (GRC) solutions, aiming to cover the breadth of the risk and compliance with a single app. On the other hand, you have innovative startups such as Ascent and ComplyAdvantage, addressing a single aspect of risk and compliance with their technology, regulatory change management and financial crimes respectively. Both have recently raised Series B funding in 2019.

What does this mean? There are already many players within the RegTech space, vying for funding. Add this to the regulators dishing out record fines from enforcement actions and issuing personal cease and desist orders to senior executives, there is a pressing need for positive actions. This is certainly one of the most important growing sectors of FinTech.

I hope you enjoy reading.