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Week 19: The English edition


This week in fintech

May 11 · Issue #12 · View online

A weekly summary of the latest news in our world of finance, design, and technology.

⛺ Woodstock for Capitalists 📉 Interesting interest rates 🤥 Digital identity ⏳ Biometric cards and fintech sandbox ✂️ Bitcoin halving ⛓ Things happen 📖 Monday reading

Due to several requests, we’re testing out an English version of our Newsletter this week. Let us know what you think by hitting reply!
⛺ Woodstock for Capitalists
Last week Berkshire Hathaway’s held their annual shareholder meeting, often called “Woodstock for Capitalists". It’s a yearly event where usually more than 40k people attend to hear what one of the most successful investors in the world, Warren Buffet, has to say. This year it was held remotely, and you can read a transcript of everything here. Here are 3 key takeaways:
Morgan Housel, a partner at Collaborative Fund, is also reflecting on what we’ve learned from the last three months, and whatever our view of the future is, it’s probably wrong:
Whatever happens to the economy it will look obvious in hindsight. If we collapse into years-long depression people will say, “Of course we did. 20 million people lost their jobs in one month. What did you expect?” If we quickly develop a vaccine and optimism returns people will say, “Of course we figured this out. Every pharmaceutical company in the world was focused on defeating one virus. What did you expect?” – Morgan Housel
📉 Interesting interest rates
“Negative interest rates are the most interesting question in economics. We’re facing a period where we will test whether the world can continue to do this. We are doing things where we don’t know the ultimate outcome.” – Warren Buffet
We don’t have negative interest rates in Norway (yet?), but last week the Norwegian Bank lowered their key interest rate to zero. The chief economist in Eika has forecasted this happening in Norway for several years (🇳🇴). He also believes that Norway will need a weak Norwegian Krone in the future as it helps to make Norwegian labor more competitive abroad.
🤥 Digital identity
Norwegian consumers are early adopters of digital banking services compared to their European counterparts, and the number of cash-based transactions are amongst the lowest in the world. One of the main reasons for this is cross-collaboration between banks and especially the BankID solution which makes it possible to sign documents digitally. During the last week there has been large discussions about BankID and its implications because the government has proposed changes that give banks more responsibility in fraud cases. CDO in Sbanken, Christoffer Hernæs, makes a good point in this regard: We mustn’t create regulations that create a step backward for digitization. (🇳🇴)
⏳ Biometric cards and fintech sandbox
The Norwegian startup Zwipe is reporting that they can launch mass production of their debit cards with fingerprint readers in early 2021. They believe “hygiene can become an accelerator and game-changer for biometric payment”. That might be, but as we’ve stated before: why do we need a plastic thing to pay with when we always carry our phone? Apple Pay and Google Pay (and similar) also have biometric payment without carrying a card around. This is like continuing to bet on regular SIM-cards when eSims exists.
In February we mentioned that the Norwegian Financial Services Agency announced who had applied to participate in the first pool of the regulatory sandbox. Out of the ten applicants two companies have now been chosen: Quesnay and Sparebank1 SR-Bank. Quesnay’s project will develop AML solutions, while Sparebank 1 SR-Bank’s project will develop a solution for digital customer counseling.
✂️ Bitcoin halving
The Bitcoin Halving Explained
Today, May 11, Bitcoin will experience its third halving. The halving is a 50% decrease in the production of new bitcoins scheduled to happen roughly every 4 years (210 000 blocks). This is in contrast to how central banks react at the moment. Bitcoin is tightening its money supply at the same time central banks are loosening it. Grayscale, the largest digital currency asset manager, has written a report about the timing of this halving.
A lot of people are a bit skeptical about crypto-currencies, and especially how they can be based on open source code and still capture value. Jesse Walden in Andreessen Horowitz has written a good explanation of how the crypto business model is familiar, but not who benefits from it. Both Bitcoin and PayPal takes a fee per transaction, but while PayPal takes all the fees, Bitcoin distributes it to the miners.
⛓ Things happen
📖 Monday reading
One of the most interesting posts I’ve read this week was about signaling: that we think and say we do something for a specific reason, but in reality, there’s a hidden, selfish motive: to show off and increase our social status. This is also related to banks as Julian Lehr writes:
Neobanks such as N26 or Revolut reward their premium users with a fancy metal card that doesn’t just look nice but is also noticeably heavier than normal credit cards. There aren’t a lot of other benefits that justify the hefty €17/month price tag these banks charge for their premium tiers – clear evidence that the primary monetization driver is in fact signaling.
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Marius Hauken, Partner Stacc X
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