Disruption Banking Magazine, May 2018 by Disruption Banking

FINTECHMAGAZINE by DIGITALSTARTUP MAY 2018

THE FINTECH

GUIDE TO SINGAPORE QUALTRICS – ANOTHER US SUCCESS S TORY – COMES TO KRAKOW WWW.DISRUPTIONBANKING.COM

VOLUME 1 / ISSUE 1 WWW.DISRUPTIONBANKING.COM

THE JOBS OF THE FUTURE: CAN WE PREPARE BETTER? FROM BANKING CRISIS TO FINTECH STARTUPS

WELCOME #DisruptionBanking is a global Fintech and economic affairs magazine, dedicated to Fintech startups and the global banking community. The publication offers a unique blend of technological and economic observations, as well as exploring the challenges posed by disruption in banking. Published monthly, the magazine already reaches over 10,000 readers and will eventually be available online only for a small subscription fee. Keep up to date with our latest news by following #DisruptionBanking on Twitter, Facebook and LinkedIn.

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ANDREW SAMU EDITOR-IN-CHIEF

elcome to #DisruptionBanking, which we hope will become your reference point for all things related to the world of Fintech startups and the technologies that are transforming the banking industry. Keeping pace with Fintech startups and disruption in the banking sector has been a passion of mine for a number of years. Watching banking become digitalized has become something of a rollercoaster ride. So why Fintech? I’ve worked with banks and consulting companies in various locations over the past 15 years, from Barclays back in the early 00s to helping banks with their near-shoring and off-shoring strategies in the recent past. With some experience of writing about and studying politics, I’ve found that the playing field is much the same when writing about Fintech, with banks and startups at the opposite ends of the spectrum, as it is with covering political parties – with the same amount of passion in evidence. We hope you will enjoy reading this edition of #DisruptionBanking and we look forward to being your monthly guide on an enthralling journey into the future of financial technology.

BRUSSELS • LONDON • NEW-YORK • TEL-AVIV

Connecting the dots in fintech

B-Hive is a European collaborative innovation fintech platform that brings together major banks, insurers and market infrastructure players. We work on common innovation challenges and build bridges to the startup and scale-up fintech community. We aim to put Brussels on the map as the smart gateway to Europe and leverage on the opportunities offered by the digital transformation for the financial services industry. DISCOVER OUR INNOVATION PROGRAMS AND JOIN OUR FINTECH COMMUNITY! www.b-hive.eu Get a 25% discount to our next big event with your code: DISRUPTIONBANKING To register, visit www.digitalfinanceeurope.com

DIGITAL FINANCE EUROPE

Partnering for growth

September 26, 2018 - Brussels, Belgium www.digitalfinanceeurope.com

CONTENTS 06 The Fintech Guide

28 Qualtrics – another US Success

to Singapore

Story – comes to Krakow

The economic success of Lion City has given rise to a healthy Fintech startup scene that is attracting some of the world’s top talent

34 Estonia – the best-kept

The Jobs of the Future: can we prepare better?

startup secret

As new jobs emerge in industries that didn’t exist until recently, it is vital that people possess the right skills for a rapidly changing world

Andrew Samu attends Qualtrics’ recent launch in Poland and finds out why this fast-growing company is enjoying such success

This small former Soviet state punches well above its weight in developing digital technology, offering an ideal home for Fintech startups

38 Startup Nation: Israel –

From Banking Crisis to Fintech StartUps

Inside Silicon Wadi

The global financial crisis of 2008 still casts its shadow, but will Fintech startups and Blockchain technology help the world to emerge from the darkness?

Exploring the many reasons why Israel’s second city has become a magnet for startups and a global leader in Blockchain technology

Volume 1 / Issue 1 – May 2018 Editor-in-Chief Andrew Samu Publishing Manager Barry Davies Creative Director Andrzej Peszek

@DisruptionBank

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Published by Digital Startup Ltd Level 39, One Canada Square Canary Wharf London E14 5AB United Kingdom Inquiries | hello@disruptionbanking.com Orders | order@disruptionbanking.com

www.disruptionbanking.com © 2018. The entire contents of this publication are protected by copyright. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means: electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. The views and opinions expressed by independent authors and contributors in this publication are provided in the writers’ personal capacities and are their sole responsibility. Their publication does not imply that they represent the views or opinions of Disruption Banking or Digital Startup Ltd and must neither be regarded as constituting advice on any matter whatsoever, nor be interpreted as such. The reproduction of advertisements in this publication does not in any way imply endorsement by Disruption Banking or Digital Startup Ltd of products or services referred to therein.

# D I S R U P T I O N B A N K I N G

The

Fintech Guide to S I N G A P O R E S

ingapore’s start-up scene is making waves, but it is not the first time the island city-state has made headlines. The country was founded in 1819 as a trading post of the British East India Company. In 1965, it gained independence and became the Republic of Singapore, and today, the so-called Lion City is an economic giant. Alongside Hong Kong, South Korea and Taiwan, it is one of the original Four Asian Tigers – the first newly industrialised countries set on a path to become advanced, high-income, developed economies. As well as growing into a hub for established business, Singapore became home to banks that are ranked among some of the strongest in the world by Bloomberg – OCBC, DBS and UOB are just three of the country’s topperforming banks. Such strong foundations have given rise to a healthy Fintech start-up scene in Singapore. In March last year, Singapore overtook Silicon Valley as the number-one country for start-up talent, according to a report by the US-based Startup Genome project. The research report covered 10,000 start-ups and 300 partner companies, and credited Singapore’s innovative policies for its successes in this area.

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In March last year, â&#x20AC;&#x153; Singapore overtook Silicon Valley MAY 2018

as the number-one country for start-up talent

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Asia is being disrupted, and Singapore is at the frontier As well as enjoying a favourable geographical location, Singapore’s start-ups benefit from significant government subsidies and support in becoming established as globally relevant companies. Whether it’s cause or effect, Singapore is leading the charge in attracting top talent. And it’s easy to see why. The country has favourable economic conditions, a good tax rate and one of the most corruptionfree economies in the world, making it an attractive investment destination. Though Hong Kong may be a stronger financial hub, Singapore boasts a much more diverse economy. The island

state is also more Westernised, which is behind a stronger tech scene than in Hong Kong. For Fintech in particular, the country ranks among the top five global Fintech start-up hubs alongside Silicon Valley, London, New York and Chicago. Such qualities are drawing big names to the Singaporean startup landscape, with PayPal, MasterCard, Wells Fargo, HSBC and Citi all involved in accelerators here – cohort-based programmes that help fledgling companies receive the funding and support needed to elevate their ideas. In a smart move, these global names are recognising the talent emerging from Singapore; companies such as CoinPip, a unique Fintech start-up that makes payments cheaper by using Blockchain technology

– particularly useful at a time when the cryptocurrency market is making global headlines. Or take Datarama, a regtech (regulatory technology) platform popular among bankers and investors that uses new tech to facilitate the delivery of regulatory requirements. Europe might be considered a traditional hub of innovation, but outside of London anyone would be hard-pressed to find a country marked on the global start-up map. With Stockholm, Berlin and Tel Aviv trying to keep up with London, and Sydney and Hong Kong trying to keep up with Singapore, the start-up ecosystem is constantly evolving and giving rise to healthy, productive competition. Evidently, banking is changing – but not just as a result of trends such as Blockchain. The internet has been a major disrupter, and MAY 2018

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will continue to be, driving transparency and creating space for future Fintech start-ups that offer solutions to problems that we are perhaps not yet aware of. Certainly, Asia is being disrupted, and Singapore is at the frontier. This year alone, the country is hosting some major global Fintech events. In May, Seamless Asia 2018 takes place, covering the future of seamless payments, e-commerce and retail. July will see Singapore welcome attendees to MoneyLive: Digital Banking ASEAN 2018, which brings together hundreds of banking innovators from across the ASEAN (Association of Southeast Asian Nations) region for exclusive insights into artificial intelligence, open banking, digital payments and Fintech collaboration. Later in the year, RegTech

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Summit APAC will explore innovative technologies to solve key regulatory pain points. The Singapore Fintech Festival is another major event. It takes place in mid-November and brings together Fintech industry players, policymakers, financial industry representatives, venture capitalists, investors, tech entrepreneurs and academics in a festival dedicated to Fintech and digital finance. The 2017 edition welcomed more than 13,000 participants from 60 countries, and organisers plan to build on those numbers for this yearâ&#x20AC;&#x2122;s event. The countryâ&#x20AC;&#x2122;s prominence in the Fintech events scene is no accident; the Singaporean Government is a huge champion of Fintech and broad digital development. In fact, special agencies have

been established in this area. Take the Government Technology Agency of Singapore (GovTech), which is tasked with transforming the delivery of government services by putting citizens and businesses at the centre of development activities. GovTech is also responsible for developing the Smart Nation infrastructure and applications. Such grassroots work is nurturing fertile ground from which future Fintech start-ups may emerge, and Singapore is reaping the fruits of its labour, establishing a start-up legacy that will have influence for generations.

#DISRUPTIONBANKING #FINTECH #STARTUP #BANKINGINNOVATION #FUTUREBANKINGCAREERS #DIGITALFINTECHCAREERS

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₸ћё jОвs oҒ ₸ћё fu₸uяЭ

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# D I S R U P T I O N B A N K I N G

can we pre

rtificial intelligence (AI) and machine learning have long dominated headlines and conversations. Technological innovations are growing exponentially, and this

growth has widespread implications for the world’s workforce. Online firms and digital natives such as Google and Facebook are at the frontier of AI, investing billions of dollars in technology

that elevates their businesses and delivers unique solutions to consumers. Management consultancy McKinsey estimates that such companies funnelled between $20 billion and $30 billion into AI in 2016, including MAY 2018

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â&#x20AC;&#x153;

Online firms and //////////// digital natives such /////////// as Google and /////////////// Facebook are at the ////////// frontier of artificial ///////// intelligence. //////////////////

pare better? significant activity in mergers and acquisitions. And these big players are not alone. Private investors are claiming a share, too, investing an estimated $4-5 billion during the same period. Meanwhile, private equity firms MAY 2018

invested between $1 billion and $3 billion. According to McKinsey, between 2013 and 2016 AI investment figures tripled. While some AI investment is concentrated in Silicon

Valley, activity isnâ&#x20AC;&#x2122;t isolated to the United States. Countries as diverse as Israel, Sweden and China are also investing heavily. China is of particular interest, having issued an ambitious policy blueprint that seeks 11

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to establish the country as the world’s primary AI innovation centre by 2030. Within the next 12 years, it forecasts that China’s AI industry could be worth $150 billion. It is clear that there is universal vested interest in AI. Technology has already had a major impact on our personal lives. But while businesses, broadly speaking, have been utilising technology for a while, it is only recently that the floodgates have truly opened, and we are now seeing the influence and impact of rapidly evolving AI and technology in our jobs on a personal level.

Business leaders must adapt to attract employees

Adapting to smart work Back in the 1980s, the German Government coined the term ‘Industry 4.0’ – the fourth Industrial Revolution. The idea recognised that work would become ‘smart’, and that the most successful individuals will be those that adapt. Search any job site today and you’ll see posts seeking social media editors, digital content managers, online strategists… the list goes on. 12

Companies today need an online presence in order to rise above their competitors and succeed, but the playing field is constantly changing. A few years ago, it was relatively easy for a company to attract 1,000

followers to their Facebook page. Today, achieving this figure is significantly tougher. And that’s where these new jobs come in – people with specialist knowledge are needed to boost a company’s visibility MAY 2018

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////////////// //////////////// /////////// ////////////// //////////// within the next 12 years, China’s AI industry could be worth $150 Billion | photo&edit by Andrzej Peszek|

on the web; usually young people who are on top of Google’s changing algorithms, clued up on SEO and know the science behind a viral tweet. Even on an individual MAY 2018

level, these skills are becoming increasingly valuable. Establishing and maintaining an online presence has become an essential part of life for upcoming generations in the world’s largest

economies. Yet there is a disconnect between their experience and that of their parents, many of whom are still in the workforce. For members of Generation Jones and Generation X, many modern jobs are unrecognisable; the idea of managing your digital

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footprint is foreign; and technology, for most, is not a fundamental part of life in the way it is for Millennials and, to a larger extent, Generation Z. With a generation that has grown up with tech now entering the workforce, their skills and intuitiveness with technology is both being shaped by and informing a new era of jobs. Business leaders must adapt to attract employees and retain their customer base, but they are competing in an evolving job market. A new attitude to work is behind many Millennials pursuing entrepreneurial work – made easier by the interconnected nature of today’s workforce, where communication and networking is almost effortless. Knowingly or otherwise, these generations are part of the digital revolution. Even within the past 10 years, technology and AI has revolutionised the

“

way many businesses operate, simultaneously making roles redundant and creating new jobs previously unheard of.

To succeed in the future jobs market, individuals must accept and immerse themselves in the digital world. To some, this point is contentious. Many object to the mining, use and sharing of personal data by big companies. Many of us have willingly shared data with Facebook, Amazon, Google and Uber, alongside countless others, but it is only now that the implications of this are being discussed in the public forum. Internet anonymity is no longer possible, but is that necessarily a bad thing? Upcoming generations share their data as a matter of course, making them more open to this new era of work. It is frequently older generations who object to the collection and use

////////////// ////////////// ////////////// ////////////// ////////////// ////////////// ////////////// ////////////// ////////////// ////////////// MAY 2018

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/////////////////////////Many of ///////////////////////// us have //////////////////// willingly //////////////// shared data, //////////////// but it is only //////////////////now that the ///////////////// implications ///////////////////////// of this ///////////////////////are being ////////////////////// discussed | photo&edit by Andrzej Peszek|

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“

of their data by big corporations, even when such corps are using AI to make people’s lives easier. Take Amazon as an example. A user signs in, searches through Amazon Prime and selects a film to watch. Next time that user logs in,

Internet anonymity ///////////// is no longer possible, /////////// but is that necessarily////////// a bad thing?///////////////////////// Amazon suggests other films in similar genres that the user might also enjoy. It is a personal service being carried out by AI. And this is a service being mimicked across companies at the digital frontier. More importantly, this service is accepted – even valued – by younger users. They may have less brand loyalty, but upcoming generations appreciate clean, smoothrunning technology, and if obtaining this requires sharing a little data, few of them mind.

even contest what’s being said about them elsewhere. Uber has frequently been in the press under unfavourable headlines, yet it still has tens of millions of users. Further, Uber is actually an employer of choice, with vast numbers clamouring to get a job with the ride-booking app.

This idea is supported by the diminishing influence of the press. With social media accounts, brands can shape their own narrative, or

And Uber itself is a company reliant on technology. It sits along countless other businesses utilising AI and creating new jobs in the global digital workspace. The influence of AI has reached almost every industry – its effects can be seen in retail, with the rise of online shopping; in travel, where budget airlines can cut overheads by using online booking systems; in communication, with the immense popularity of channels such as WhatsApp, Skype and Slack; in hotels, with many struggling to compete against home-sharing site Airbnb; in entertainment, with viewers shunning traditional television in favour of Netflix and Amazon Prime; and, of MAY 2018

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course, in media industries, where news is written, shared and consumed in ways we could never have anticipated just a few decades ago. Behind these success stories are vast teams of engineers, UX designers, product innovators, data researchers, coders, software analysts, digital

content experts and analytics specialists. As smart as these systems are, a physical presence is still needed for when things go wrong. furthermore, many customers still appreciate a personal interactive experience with a real person.

////////////////////////////////////////////////////// ///////////////////////////////*///////////////////// ////////////////////////////////////////////////////// ////////////////////////////////////////////////////// Skills for a new era of work

To succeed in the future jobs market, individuals must accept and immerse themselves in the digital world

According to the OECD’s Skills for a Digital World report 2016, “Ensuring that everyone has the right skills for an increasingly digital and globalised world is essential to promote inclusive labour markets and to spur innovation, productivity and growth.” It goes on to detail the importance of equipping people with generic ICT skills, as well as ‘soft’ complementary skills, such as leadership, communication and teamwork – skills essential to the collaborative

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nature of many digital startups. Of course, as well as jobs that will evolve alongside technology, there are entirely new jobs being created in industries that did not exist a few years ago. Space tourism is a leading example. Jobs have already been

created for employees of Virgin Galactic and SpaceX, and these are ‘behind-the-scenes’ roles – when space tourism officially launches, there will be an entirely new category of front-ofhouse positions to be filled.

///////// //////// //////////////// ///////////////////// //////// ///////////////////// Back on Earth, we ///////////////// will start to see ////////////////////////////////// jobs such as social ////////// media lawyers, civilian ///// drone controllers //// and virtual teachers /// become increasingly common // / 18

Back on Earth, we will start to see jobs such as social media lawyers, civilian drone controllers

and virtual teachers become increasingly common. In 2016, The Independent newspaper listed 10 jobs that graduates will be applying for in future. These include a virtual habitat designer, an ethical technology advocate, a digital cultural commentator, an Internet of Things data creative, and a freelance biohacker. Also on the list is a personal content curator who helps users dip in and out of captured thoughts, memories, dreams and experiences at will, and a human body designer who can create customised human limbs, both fashionable and functional. Some of these may sound like science fiction, but with the rapid expansion of AI and machine learning and the widespread acceptance of technology by younger generations, science fiction is fast becoming reality. MAY 2018

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From

Banking Crisis to Fintech StartUps

t is sometimes hard to believe that the global economic crisis that gripped the planet in 2008 took place a decade ago, particularly as much of the world is still experiencing the ramifications. The crisis brought about unprecedented activity in global economies and markets, from which many countries and their populations are only just recovering. Âť MAY 2018

WHERE DID ALL THE MONEY GO? DISRUPTION BANKING

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â&#x20AC;&#x153;

The crisis had a profound impact, and against the backdrop of government austerity measures, and the fear of a looming repeat of the crisis, many top companies globally started to hoard

their capital reserves

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| edit by Andrzej Peszek|

The crisis had a profound impact, and against the backdrop of government austerity measures, and the fear of a looming repeat of the crisis, many top companies globally started to hoard their capital reserves. As the New York Times reported in January 2016: “Collectively, American businesses currently have $1.9 trillion in cash, just sitting around.” According to the report, Google was sitting on $80 billion, perhaps making a paltry 2% interest a year – money that could arguably be more effectively invested in acquiring the likes of Uber or Goldman Sachs! Other examples quoted were General Motors, which, at that time, held nearly half its value in cash, and Apple, which held as much as a third – all, it seems, in fear of a rainy day. Later that year, ratings agency Moody’s calculated that the five US companies holding the most cash – Apple, Cisco, Google, Microsoft and Oracle – held $504 billion between them at the end of 2015, much of which was held outside the US. “This amount reflects the negative tax 23

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consequences of permanently repatriating money to the US and the use of domestic cash for dividends, share buybacks and the majority of acquisitions,” explained Moody’s report. Later, the European Union also turned its attention to the practice of certain EU governments offering low rates of corporate tax to multinational companies, with Luxembourg, Ireland and the Netherlands among the countries in the spotlight. Leaks of previously confidential information about the offshore holdings of numerous multinational companies – such as those in the so-called Panama Papers in 2016 and the Paradise Papers the following year – further exposed the extent of corporations’ convoluted efforts to protect their assets and minimise their tax burden. Several senior figures at the heart of government were also named. Unsurprisingly, increased media scrutiny of this type of aggressive corporate tax efficiency and hoarding of capital stirred anger and resentment among populations in many countries. This ire was particularly felt among the poorest in society, who were already feeling the effects of government austerity as a result of the financial crisis. People started to see evidence of what they had sometimes suspected, quickly becoming more sceptical of the way big business and governments work together. Having looked back down the road to where we stand now, what about the future direction of global finance? One place to look for clues and insight is the World Economic Forum (WEF), which famously holds its annual meeting in the Swiss Alpine resort of Davos, where political and business leaders gather to shape global, regional and industry agendas. WEF’s vision of the future for financial services, as well as broader areas of industry and society, puts great store in the potential of Fintech and Blockchain, which have been on its agenda for several years. In January 2015, the Forum made aggressive predictions of virtual currency exchanges gaining up to 10% of global FX transfers. Plus a WEF report from August 2016 showed there had been US$ 1.4 billion of investment in Financial Technology companies in the Blockchain area alone over the previous three years. This represents almost 1% of

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Ratings agency Moody’s calculated that the five US companies holding the most cash Apple, Cisco, Google, Microsoft and Oracle – held $504 billion between them at the end of 2015 the cash held by all American businesses. Blockchain is the platform, and many people will have heard of Bitcoins, Litecoins and others as they are covered widely in the media. However, these MAY 2018

are just products on a complex platform that can do far more than facilitate the transfer of currency. Blockchain can make immediate digitally signed transfers of anything virtual or web-based with no

substantial running costs once applications are created. For example, in a recent article, WEF highlights how Blockchain is already making a difference in putting a stop to

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» illegal fishing and human

Blockchain technology can also be applied to a wide range of sustainability challenges, where it is also being used to reward people for recycling or making it easier for people to invest in renewable energy projects. Returning to virtual currency, capital markets perhaps provide one of best indicators of returns on investment over the past five years. For comparison, let’s look at the returns from some of the best-performing US stocks since 2013:

> Disney – $62 to $100 = 61% return > Amazon – $255 to $1527 = 499% return > Netflix – $31 to $328 = 958% return > Bitcoin – $138 to $8,938 = 6,377% return

rights abuses in the Pacific islands’ tuna industry. By using a smartphone to scan tuna packaging, inspectors can verify where, when and by whom the fish was caught. This means consumers know they are buying tuna that has been caught legally and without the use of slave labour, helping to ensure the industry’s sustainability.

* Prices over a five-year period to 24 April 2018

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How do you translate this massive jump in the value of virtual currency? Could it show that this new type of Financial Technology is going to continue to boom, or are we seeing its peak? Is it all just about volatility? Of course, what goes up can come down, but against the US dollar and even some of the most profitable investments, it does appear that virtual currencies have their place in the future. They will almost certainly have an important part to play in the Disruptive Financial Technology revolution that is now becoming a dominant movement among both corporations and the StartUp industry.

HOW DO YOU TRANSLATE THIS MASSIVE JUMP IN THE VALUE OF VIRTUAL CURRENCY? MAY 2018

# D I S R U P T I O N B A N K I N G

Qualtrics – another US Success Story – comes to Krakow BY ANDREW SAMU

rakow on a cold February night with temperatures south of -10 degrees C, and a special opening night for Utah’s biggest StartUp – Qualtrics. Heading up to the Japanese Museum in Krakow in the freezing cold, you’d have to wonder if Qualtrics really knew what they were letting themselves in for by coming to Krakow. There are warmer places in the world. Back in the US, Qualtrics is a huge player in the market, as the diagram below of the most valuable venture-capital-backed companies by state illustrates.

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| edit by Andrzej Peszek|

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“ Qualtrics had looked

into opening their centre in Geneva, Prague, Budapest, Gdansk, Vilnius and even in Dublin, where they already had an office, but eventually chose Krakow

Companies like Qualtrics don’t make snap decisions, and the event they organized in Krakow reflected exactly that. Following in the footsteps of sleek and innovative companies like Revolut, Azimo, Uber and IG Group, which have all built up their Engineering and Support teams in Krakow over the last years, Qualtrics have entered the local market with a bang. Being welcomed at the entrance by the company’s Finance Director for EMEA, Brian O’Driscoll, is not something I am used to seeing in any city, let alone in Krakow in the sub-Siberian cold. Well before the presentations started, there was already a full house of local engineers, all keen to hear more about the phenomenon from Provo in Utah that is Qualtrics. With white T-shirts displaying details of their offices in Seattle, Provo, Dublin and Krakow, there was a huge presence of their engineers and other team members to answer questions about their business. Within minutes I was hearing all about their plans in Krakow. With people from Sabre, Ocado, Alexander Mann Solutions, AON, Luxoft and many others in attendance throughout the venue, it was great to hear about Qualtrics’

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plan to grow its centre in Krakow to 200 people over the next year or so. I also found out that Qualtrics had looked into opening their centre in Geneva, Prague, Budapest, Gdansk, Vilnius and even in Dublin, where they already had an office, but eventually chose Krakow. This was quite an accolade for the city, although I wondered why Stockholm hadn’t been on the list. The Swedish capital has after all created global brands like Spotify, Candy Crush and Minecraft; however, I was told that Stockholm is a gaming city and the engineers there may not necessarily have the right competencies. John Thimsen (Head of Engineering), Craig Kulfan (senior Director of Engineering), Ryan Debenham (Senior Engineering Manager) and Piotr MAY 2018

Uryga (Qualtrics’ Head of Poland) told us the story of Qualtrics and the impact that Amazon had on their lives leading up to the boom that happened in Qualtrics in 2013-14. With over 1,600 people working for them now, from a meagre few hundred in 2012, the company is growing astronomically, as well as being cash positive and backed by the illustrious Sequoia Cap, and is a main partner to huge players such as Citi, JP Morgan, Goldman Sachs and Swiss Re, to name but a few. Ryan discussed Neuronets in detail, in relation to Machine Learning and how these Neuronets help to create “sentiment” from the data with which their APIs are connected. Advanced stuff, and although Machine Learning is among the buzzwords today, there were some 31

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» people at the event that felt that Machine Learning only had a few more years to go before it hits its peak and becomes automated itself. Then there was the ‘twopizza team’ analogy (coined by Amazon founder Jeff Bezos, who said teams should not be larger than can be fed by two pizzas), but which sums up the approach that Qualtrics employs to create excellence. To prove this, the 10 newest engineers already employed in Krakow have already created an app that is being showcased by Qualtrics in the US #BIGDATA #MACHINELEARNING #DIGITALLEADER #DIGITALGENERATION #DIGITALHR #EMPLOYERBRANDING #DATAANALYST #DATASCIENTIST #EMPLOYEEBENEFITS #DIGITAL #DEVELOPER #BUSINESSANALYST #JOBSOFTHEFUTURE #DIGITALSTARTUP #DIGITALREVOLUTION #POLISHTALENT #GIGECONOMY #DIGITALCAREER #CHATBOTS #ARTIFICIALINTELLIGENCE

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as one of the most novel ideas recently developed – impressive for such a young new team, but then you really have to see Piotr Uryga in action to understand how charismatic he really is. Piotr also mentioned how the recruitment process had been quick and successful in Poland and that the team were well and truly able to compete with existing teams in both talent and scalability. Bearing in mind that Seattle is ridiculously competitive when it comes to talent (the bulk of Qualtrics engineers are based

in Seattle), then it appears that Krakow may not be as saturated as some people thought. On a final note, it was awesome to be able to talk to John Thimsen, who is a truly inspirational person, and together with Sol Hallam from ASPIRE in Krakow welcome him to the Shared Service

phenomenon that is the city. Although Shared Services doesn’t sound suitable for StartUps, in the case of Qualtrics, this is most certainly the case. Krakow keeps growing, and the stories of success from this hot tourist and business destination are getting more and more noticeable on the global stage.

“The 10 newest engineers already

employed in Krakow have already created an App that is being showcased by Qualtrics in the US as one of the most novel ideas recently developed

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Secret ESTONIA The Best Kept StartUp

# D I S R U P T I O N B A N K I N G

eyond the picturesque architecture and cobbled streets of Tallinn – Estonia’s vibrant capital city – activity is abuzz.

Speak to proud locals, and they’ll tell you that Tallinn can compete with big hitters Prague and Krakow in the tourism stakes. But lesser known is the city’s prominence in the digiscape – a factor that accounts for plenty of visitor traffic. Just a couple of decades ago, Estonia underwent something of a transformation, shaking its reputation as a former outpost of 34

the Soviet Union and leading the charge in an e-revolution. The country was perhaps ahead of the times, rejecting the notion of computer programming as ‘uncool’ and instead embracing it as a way to elevate the tiny nation to the world’s competitive economic stage. Former President of Estonia Toomas Hendrik takes some credit for the success of this approach. He tells of reading “a neo-Luddite, neo-Marxist book called The End of Work, by Jeremy Rifkin. He was completely against new technology”. Rifkin used the example of a Kentucky MAY 2018

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Estonia became e-Estonia – a moniker that has persisted and which characterises the nation’s approach to technology

“

“This may be bad if you are an American,” says Hendrik. “But from an Estonian point of view, where you have this existential angst about your small size – we were at that time only 1.4 million people – I said this is exactly what we need.” With that, the country really began to go digital. Estonia became e-Estonia – a moniker that has persisted and which characterises MAY 2018

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steel plant that was automated and computerised to highlight how technology had made several thousands of workers redundant.

the nation’s approach to technology. By 2014, the country had become the first to offer e-Residency – a government-issued official identity that enables entrepreneurs around the world to set up and manage a location-independent business, 100% online and with no local director required. There are palpable overtones of technology within Estonian entrepreneurialism and, in Tallinn especially, investment in this area is evident. Take TransferWise, for example. In 2015, the Estonianfounded (and now London-based) 35

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the country’s “ Isdigital landscape

evolving quickly enough to convince young startups to stay ?

#DISRUPTIONBANKING #FINTECH #STARTUP #BANKINGINNOVATION #DIGITALFINTECHCAREERS

Fintech enterprise received $58 million in investment from Silicon Valley-based venture capital firm Andreessen Horowitz. TransferWise used the cash injection to accelerate the company’s global rollout, and in April this year it became the first non-bank to gain access to a central part of the UK’s payments infrastructure, Faster Payments.

Estonia is fertile ground for Fintech startups. Change, a Blockchain-based mobile finance app, has received almost $18 million in funding and is expanding globally, with ambitions of bringing cryptocurrencies to the masses. Speaking to BBC World in late 2017, CEO Kristjan Kangro said, “In two to three years, cryptocurrencies will be used just as your fiat currencies, and this is what Change is trying to do.” Elsewhere, companies such as Pocopay, which simplifies banking for the digital generation, have grown popular with millennials. Other successful Estonian startups include Admiral Markets, previously voted Best Forex Broker in the Baltic

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Region; Investly, a peer-to-peer finance platform for SMEs; and Bondora, which shares investment opportunities with those who wish to lend money to certified borrowers. Notably, Tallinn hosted last year’s international Fintech Forum. Prominent Fintech players and digital market experts were in attendance to discuss how to scale-up, expand and support financial technology companies throughout Europe. Yet for all its activity, there is some concern about Estonia’s ability to retain local talent, with the bright lights of nearby Finland and Sweden luring many away. Is the country’s digital landscape evolving quickly enough to convince young startups to stay? Certainly, Estonia is taking steps in the

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right direction. In March, Tallinn hosted the Blockchain and Bitcoin Conference. And in May, the country will host Latitude59, a flagship start-up and technology conference that unites the Baltic, Central and Eastern Europe and Nordic tech ecosystems and provides a platform for entrepreneurs, investors and leaders to connect. Last year’s event welcomed more than 2,000 participants, including 200 investors from destinations as far-flung as the United States and Japan. Estonia is also making headlines away from events, with rumours that it plans to launch a digital token backed by the Euro. There are rumours, too, that Satoshi Nakamoto, the anonymous designer of Bitcoin

who created the original reference implementation of the cryptocurrency and devised the first Blockchain database, is actually from Estonia. True or otherwise, it is conceivable that such a person could be Estonian. The country ranks third in Europe for start-ups per capita, boasts a high-functioning digital society, and offers the warmest of welcomes to entrepreneurs from around the world that wish to be part of one of the smallest, but liveliest, start-up communities in Europe.

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Notably, Tallinn hostedlast year’s international Fintech Forum 37

| edit by Andrzej Peszek|

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- Inside Silicon Wadi

oasting the highest number of tech firms outside of California’s Silicon Valley, Tel Aviv is an epicentre of Fintech startups and a global leader in Blockchain technology. Such is the concentration of tech companies that the city has become popularly known as ‘Silicon Wadi’ – ‘valley’ in Hebrew.

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But why is Israel, and Tel Aviv specifically, experiencing such an impressive tech boom? A key factor is the supply of young talent from the city’s universities, which rank highly in lists of the world’s leading research institutes. Israeli graduates also appear to have a strong business mentality, with twice as many becoming entrepreneurs in comparison to their US counterparts. Tel Aviv’s tech startups also reap the benefits of the world’s highest rate of R&D investment per capita, measured in 2015 at $423. This compared with $186 in the United states and a paltry $16 per head in Europe.

Government support is also crucial. This includes a technology incubator programme to assist startups and encourage innovation. Israel’s investment laws also allow foreign companies to take advantage of reduced tax rates and investment grants, while the country invest more than 4% of its GDP in research and development. The excellence of Israeli entrepreneurship in the Fintech sector is exemplified by the likes of payment platform Zooz, decentralised liquidity network Bancor, and Blockchain prediction market platform Stox – just a small selection from a plethora of Fintech startups across the country.

One of the catalysts in encouraging these and other startups and investors to consider Silicon Wadi was Mirabilis – one of the most successful startups in the history of technology. This Israeli company, founded in 1996, developed the ICQ instant messaging system that was a leader in online chat services. In 1998, despite never having made a profit at that time, Mirabilis by internet pioneer AOL for $400 million. Today, Oracle, Apple, Amazon, SAP, Cisco, MAY 2018

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Tel reap the benefits Aviv’s of the world’s highest tech rate of R&D investment startups per capita Microsoft and Motorola are among the big names making their presence felt in Israel’s booming tech market. IBM is also part of this number, boasting three research and development labs in the country. In a report last year, analysts at Expert Market ranked Tel Aviv an impressive sixth among the “Top 20 Cities to Live and Work in Tech”, when quality-of-life factors and cost of living were added to existing business-focused data. “Our idea was that often tech hubs are ranked based on purely economical factors, with people forgetting that you have to actually live in these cities,” Expert Market’s Bobbi Brant told Fast Company magazine. “That is why we added in quality-of-life factors to find a more balanced ranking of the top 20 tech hubs.” Looking specifically at the crypto market, Israel’s high standing in Blockchain is exemplified by the massive Initial Coin Offering (ICO) of Bancor in June 2017, which raised a phenomenal $150 million in just three hours – one of the biggestever fundraisers for a Fintech startup. The event piqued global media interest in MAY 2018

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the company and Israel’s expanding tech hub. Among the wider community in Tel Aviv there is also growing adoption of crypto currency, with an increasing range of local shops, bars and restaurants accepting Bitcoin, as well as Bitcoin ATMs gradually appearing around the city. Cybersecurity is another key area in which Israel has an excellent record, due in part to government initiatives to combat increasing cyber threats, and this is an area that lends itself naturally to the online payment industry. The country announced a new cybersecurity partnership with the United States at the Cyber Week 2017 conference in Tel Aviv, where Prime Minister Benjamin Netanyahu told delegates that Israel is the destination for “about 20% of the global private cyber security investment around the world”. “Once it was a disadvantage to say you are from Israel,” Netanyahu continued. “Today, when you talk about cyber or advanced technologies, it is an advantage. It is an advantage to say ‘I am an Israeli company’.”

is no shortage of supply in the workforce, unlike the situation in other countries. Also, many of the country’s leading companies in the cybersecurity field have been founded by former members of the Israeli military’s cyber units. The hub of Israel’s Fintech scene is undoubtedly The Floor, based at the Tel Aviv Stock Exchange, where a buzzing community of more than 500 Fintech startups is congregated. The Floor describes itself as “a Global Fintech Innovation Center – a focal point

Such is the number of cyber experts being produced by Israel’s education system that there

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of access to Fintech technologies for leading international financial players, tech giants and VCs”, and it’s easy to see why, with HSBC, RBS, Santander, Deutsche Bank, Intel, Accenture and KPMG among the major players providing support there. Tel Aviv’s Stock Exchange also played host to numerous events during Fintech Week 2018, which took place in March. The city also hosts the annual one-day Fintech Junction conference at the Hilton Tel Aviv, taking place in 24 June this year, which attracts “the leading entrepreneurs, innovators, investors, decision makers and chief officers of the world’s leading startups, banks, financial institutions and tech companies shaping the future of financial services”. With activity in Tel Aviv’s Fintech sector continuing to gather pace, Disruption Banking will be reporting regularly on the latest developments and innovations from Silicon Wadi.

It is an advantage to say ‘I am an Israeli company’ MAY 2018

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