TFU | Oct. 30 – Nov. 5

Leading Off

The FSB released a new report on the impact of AI and machine learning in financial services; Visa is expanding its real-time payments program to Europe; CME said it will launch a futures contract based on bitcoin, bringing the cryptocurrency further into the mainstream; the SEC responded to celebrity endorsements of startups raising money via ICOs; and Quartz discusses how Amazon’s cloud service is changing the economics of starting a financial services firm.

The Week in Review…

FSB releases report on AI and machine learning.  The Financial Stability Board (FSB) published a report [full text] on AI and machine learning’s effects on the financial system. The report notes how AI-enabled regtech solutions can “help improve regulatory compliance and increase supervisory effectiveness.” An FT Alphaville summary of the report is also available here.

Visa will roll out real-time payments in Europe.  Visa is expanding its Visa Direct program to Europe after “experiencing strong growth in other key markets globally.” Visa Direct allows for instantaneous P2P, B2B, and B2C payments, “with funds transfers to recipient accounts taking place within minutes.”

CME to launch bitcoin-based futures contract.  The world’s largest exchange group announced that it intends to allow traders to deal in bitcoin futures, lending further “legitimization [to] bitcoin as an asset class.” The price of bitcoin rose to $6,400 with the news, bringing the value of all bitcoins in existence to $106.9 billion.

SEC warns celebrities about ICO endorsements.  In response to a growing number of celebrity endorsements of virtual currencies and initial coin offerings (ICOs), the SEC issued a statement [full text] warning that such endorsements could violate U.S. securities laws unless they “disclose the nature, scope, and amount of compensation received in exchange.”

Firms face increasing KYC compliance challenges.  New reports from Thomson Reuters suggest that “financial institutions and non-financial corporations [are] dealing with more compliance issues–and have more concerns about those issues” than before. Reported issues include longer onboarding times for new customers, higher costs, and “worries about data security.”

Shortage of cyber professionals sparks move to AI tools.  The MIT Technology Review surveys the current state of the cybersecurity industry, noting that the demand for experienced professionals significantly outstrips supply. The solution? Many compan companies are “taking matters into their own hands and relying on artificial intelligence to take on the workload.”

TransferWise raises $280M.  The London-based international money transfer firm raised $280 million in Series E funding, pushing the company’s value to $1.6 billion. The round was co-led by Old Mutual Global Investors and Institutional Venture Partners and joined by Sapphire Ventures, Andreessen Horowitz, and Richard Branson.

U.S. fintech on pace for record year of VC funding.  According to PitchBook, investment in U.S. fintech is on track to reach nearly $7.6 billion in 2017, largely driven by large fundraising rounds like SoFi’s $500M raise in February. The predicted total would represent significant growth in venture capital funding over the $5.4 billion invested in 2016.

Amazon’s Cloud is helping reshape financial services.  Quartz highlights how Amazon Web Services (AWS), the world’s largest cloud computing provider, has “massively” lowered barriers to entry for financial services startups by reducing the costs related to data storage, headcount, and data processing. AWS has more market share than its five closest competitors combined.

N26 aims for 2018 U.K. launch.  German digital bank N26 intends to launch in the U.K. next year, underscoring the firm’s plans for global expansion after it recently announced that it will enter the U.S. market in mid-2018. N26’s German banking license will allow it to operate in the U.K. without needing a separate license.

Ever wonder what happens if you lose the keys to your bitcoin wallet?  Just ask former Wired editor Mark Frauenfelder, who recounts his months-long saga of trying to recover access to his bitcoin wallet, now valued at nearly $50,000, after he lost the encryption key words. The moral of the story: don’t lose your PIN and key words.

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