Goldman Sachs May Launch Stablecoin as Libra Schools Old Finance in Innovation

Facebook’s Libra coin, a stablecoin crypto, may eventually falter and fail. It will take some time for Libra to get its digital sea legs or not. But whether or not you are a Libra fan or detractor, old finance is standing up and taking notice. Facebook is attempting to do something old banks should have done long ago – improve the payment ecosystem by speeding things up and lowering cost.

Today, French business newspaper, Les Echos, is out with a note that Goldman Sachs (NYSE:GS) is considering launching a stablecoin – following in the footsteps of JP Morgan’s crypto and Facebook’s Libra project.

Speaking with Goldman Sachs CEO David Solomon, the report states that he would not confirm or deny discussions with Facebook, but they are doing extensive research on tokenization. More specifically, on the creation of creating a stablecoin using blockchain:

“… the creation through the blockchain of a stable digital currency based on a basket of real currencies that can move money across borders and without friction. This is the direction in which the payment system will go,” said Solomon. “But as to whether it is this platform or one of the other fifty that people are watching that will make the most progress, I can not tell you.”

Like JP Morgan, Solomon says many people are looking to do the same but it is too early to say who will prevail.

Solomon said to “assume that all major financial institutions around the world are looking at the potential of “tokenization”, “stable wedge” and frictionless payments.”

Regarding regulation, Solomon said government officials will change their approach “for sure.”

Facebook’s blockchain ecosystem is really a direct challenge to the traditional banking system. Their iteration of the tech also incorporates smart contract technology – similar to what Ethereum has done. So will Libra, or another challenger, vaporize old banks?

“I do not think banks will disappear because of that. Admittedly, they will have to evolve, because the trades linked to the payment flows will become less profitable. But there are many other reasons why banks must remain innovative, otherwise, they will disappear.”

Solomon believes that Facebook, and others, will eventually partner with banks instead of trying to eliminate them. He cites the partnership with Apple and the soon to launch Apple Card as an example of a solid tech partnership.


Goldman Sachs CEO Says They Get No Credit for Digital Bank Marcus

Goldman Sachs (NYSE:GS) CEO David Salomon reportedly told an audience last week that his company is getting zero credit for its digital bank startup Marcus. “If we were out in Silicon Valley and made 20% of the progress that we’ve made, we would get a lot of credit and people would be throwing money at us to own a piece of this business,” said Salomon, according to CNBC.

Fintech Marcus is apparently capturing deposits at an accelerated rate of $1 billion a month – juiced by its comparatively high-interest rate (currently 2.25%) paid to savers.

It’s a pretty simple message. Move your money to us and earn more money than a traditional bank savings accounts. And if you want to eliminate high-cost credit card balances, Marcus can help you out too with a lower cost loan.

This approach has worked with consumer interest surprising even Goldman Sachs management.

Crowdfund Insider reported last month that in the UK, the first market outside the US where Marcus has expanded, the bank has surpassed £8 billion in deposits. Marcus only launched in the UK in September of 2018.

So how has Marcus’ booming performance helped shares of Goldman Sachs?

Hard to tell really, but GS is far from its 52 week high of $245, currently trading at $189/share and a trailing PE ratio of just 7.9x. Heck, even Citi has a higher PE ratio than that.

Meanwhile, digital challenger banks are one of the hottest sectors of Fintech peppered with a growing herd of Fintech unicorns. Revolut recently raised $250 million at a valuation of $1.7 billion.

Stealth-bank Transferwise recently raised $292 million at a valuation of $3.5 billion declaring they see no need to go public anytime soon.

Back in January, Germany-based digital bank N26 raised $300 million at pegged its value at $2.7 billion.

There are other digital-only banks receiving solid valuations – yet none of them are publicly traded.

Now, each of these Fintechs provides a diverse portfolio of services. They are also significantly smaller in contrast to Goldman’s investment banking service.

Marcus is pretty basic right now with its lending & saving model. But more services are coming including wealth management – leveraging their deep expertise in helping high net worth individuals get even richer.

The biggest recent news coming out of Marcus is its relationship with Apple and the forthcoming credit card which will help burnish both brands.

So is Goldman Sachs getting credit where credit is due?

If Marcus was a stand-alone digital bank and part of the Silicon Valley mafia – would it be receiving tons of VC love at a solid valuation?

Most definitely yes.

While it is difficult for most investors to gain access to the fast-emerging digital banking sector, Goldman Sachs may end up being the easiest path for smaller investors to ride the Fintech future of banking. At some point over the next few years, maybe Goldman Sachs will receive better recognition for Marcus. Or maybe they will spin it off as a standalone operation.

Money Management App Money Dashboard Announces Integration with Revolut, Chip and Marcus by Goldman Sachs

Money Dashboard, a UK-based online personal financial management service, announced on Tuesday it has released integrations with three new account providers – Revolut, Chip, and Marcus by Goldman Sachs. According to Money Dashboard, the integrations help consumers track spending and progress towards their savings goals in real time.

Through the integrations, users may connect their various accounts to Money Dashboard, allowing them to see how much they’ve saved and spent, set budgets and plan for the future,  no matter who they bank with, with Money Dashboard connecting to more than 60 financial institutions including challenger banks Monzo and Starling. Money Dashboard is leveraging Open Banking, a government initiative implemented to free up the way consumers share their financial data with regulated third parties. Speaking about the integrations, Steve Tigar, Money Dashboard CEO, stated:

“We’re on a mission to help people master their money by making it easy to manage all their accounts and see them in one place. The growing popularity of fintech apps is a positive sign for what’s to come in Open Banking and it’s exciting to be working with other ambitious fintechs to deliver better solutions for users.”

Money Dashboard launched a crowdfund on Crowdcube last month, raising more than £2 million within the first 24 hours.

Digital Bank Marcus UK Tops 250,000 Customers, £8 Billion in Deposits

A report in Yahoo Finance indicates that Marcus, Goldman Sachs’ digital only challenger bank, is doing quite well in the United Kingdom. Des McDaid, the Managing Director for Marcus in the UK, stated:

“We’ve passed a quarter of a million customers and just over £8bn in deposits or savings, so for us it’s hugely exciting.”

Marcus, first established in the US, crossed the Atlantic to establish a beachhead in the Fintech friendly UK in September of 2018. The number of UK account holders soon ballooned to $2 billion in deposits and more than 75,000 individual accounts in October. Today, that number stands considerably higher as Marcus appears to be a hit with the Brits.

McDaid added:

“I think we came out of the blocks very fast as a business. Our first month was huge, it’s settled down now but we’re still growing fairly consistently … Our goal was you could open an account in a few minutes, it was supposed to be quick. When you phoned us, we were there, we didn’t have automated voice systems that made you press one, press two.”

What is missing from Marcus is the fact they do not really have an App. They do have Clarity Money – the benefit of an acquisition in the spring of 2018.

The digital challenger bank market is red hot in the UK. Marcus is competing with the likes of Revolut, Monzo and more. But, at least on the outside, it seems that Marcus is holding its own.

The next question is, when will Marcus cross the channel and invade continental Europe?

Goldman Sachs is Betting Big on Fintech

While most of the headlines covering Goldman Sachs’ (NYSE:GS) Q1 earnings report targeted the decline in earnings and profit, for investors that tuned in to the earnings call they were able to learn more about Goldman’s transformation into a financial services firm of the future.

Sure. Equity trading dipped but Fintech initiatives may be indicative of a promising future for the world’s most prominent investment bank.

“We are on an evolutionary path,” explained Goldman executives.

The partnership with Apple, and the new Apple Card that will seamlessly integrate with the Apple ecosystem of products and services is just one of several Fintech projects for Goldman. While the call did not reveal too much detail on the card, which is scheduled to hit iPhones this summer, Goldman said it was an “important step” in their future.

Goldman said they will help facilitate the “level of innovation that Apple is known for.”

Marcus, which started as an online consumer lending platform and has now morphed into a global digital challenger bank, now holds a whopping $46 billion in deposits across both the US and the United Kingdom.

Goldman said that deposit growth has experienced a 16% compounded rate over the last 3 years. They expect to add more than $10 billion a year in the UK/US markets combined.

As opposed to most other big banks, Goldman is not hobbled by a tech stack anchored in the past viewed on green screens.

“An absence of legacy business enables us to be innovative,” said Goldman.

No legacy tech. No Legacy business. This helps Goldman to be “more disruptive in a broader sense.”

Goldman said they are interested in markets that are big that also include significant “pain points” for users.

“We are looking to build a cohesive business that is Marcus.”

Goldman wants to scale Marcus beyond cards and lending into other areas where they can be disruptive. So expect other lending verticals as well as other financial services. The money center bank of the future – minus brick and mortar locations.

Next up, it appears, is a wealth management service that can serve the “mass affluent.” By combining their deep experience in investment banking with new Fintech, Goldman will challenge more traditional services as well as emerging Robo-advisors.

Goldman did emphasize they will not compromise risk and compliance.


Apple and Goldman Sachs to Partner on Credit Card Linked to iPhone Wallet

Apple (NASDAQ: APPL) and Goldman Sachs (NYSE: GS) are hooking up with a new credit card scheduled to launch this spring, according to a report in

Rumblings of a Goldman – Apple partnership first emerged in May of 2018, again reported by WSJ. At that time the report wondered if the relationship would include in-store loans and other Fintech features. Goldman is said to have budgeted $200 million to support the new credit card roll-out.

Goldman’s push into retail has garnered much attention and solid traction. Marcus, a digital-only challenger bank, has quickly emerged as a viable alternative to traditional banks in the US. Recently, the success in the US was extended to the UK where the rapid growth of the digital bank surprised even Goldman.


According to the most recent report, the credit card will be paired with new features including the ability to help users manage their money. The integration will include a pairing with Apple’s Wallet and perhaps additional features such as rewards or expense tracking. There is a possibility that users may receive discounts on Apple products.

Apple Pay is a feature that is now used by tens of millions of individuals. Apple earns a very small slice of each transaction. During the last earnings report, Apple said that active Apple Pay users doubled versus the year prior. Currently, there are over 120 million Apple Pay users but this number continues to grow as Apple rolls out the service in additional countries.

Apple has struggled a bit as iPhone fervor has dimmed. Longer life cycles for the handheld computers and high prices have slowed sales. To offset stagnant iPhone demand, Apple is focusing on its growing services business. Apple is expected to launch Netflix competitor at an event next month, among other initiatives.

Fintech and big tech is an interesting arena. In China, the largest Fintech market in the world, the pairing of finance and tech has occurred organically. Big firms like Alibaba and Tencent provide a host of financial offerings. In the US, big tech firms have slowly moved into financial services due to the highly regulated (some say over-regulated) nature of the industry.

Several years ago, Apple and other big tech firms formed Financial Innovation Now (FIN) to lobby Congress on behalf of the tech sector and financial services. Clearly, finance is going 100% digital and big tech needs to be there.

Business Financial Management App Nav Secures $44 Million During Series C Funding Round Led By Goldman Sachs

Nav, a business financial management app that helps small business find the best financing by giving them free access to business and personal credit reports from major commercial and consumer credit bureaus, announced on Monday it secured $44 million through its Series C funding round, which was led by Goldman Sachs Principal Strategic Investments with participation from Point72 Ventures, Experian Ventures, Aries, and CreditEase Fintech Investment Fund.

Founded in 2012, Nav describes itself as a venture-backed fintech company that helps business owners manage their financial data to get more funding, lower their costs and save time. The company reported it provides free access to credit reports and scores specifically for small business owners, including both business and personal credit reports, cash-flow analysis, tools to help business credit, and a marketplace with more than 100 financing products, plus credit cards. While sharing more details about the platform, Levi King, Co-Founder and CEO of Nav, stated:

“Imagine a single platform that uses data to anticipate and deliver all of a small business owner’s financial needs. Because we can see the pattern of everything from who gets approved for financing to who has strong cash flow, we can solve for the myriad financial considerations for small businesses. This also means we’re doing legwork for lenders by matching them to the most appropriate candidates.”

Rana Yared, Managing Director in the Goldman Sachs Principal Strategic Investment group, also commented:

“We are pleased Goldman Sachs led this round of funding. We look forward to continuing to support Nav’s efforts to scale their platform as they make financial options more readily accessible for millions of small business owners.”

Nav added it plans to use the funds from the round to expand enterprise partnerships, introduce more small business owners to its platform and drive additional data insights for its customers

U.S. Fintech Climb Credit Secures $50 Million Investment From Gold Sachs Urban Investment Group

Online student lending platform, Climb Credit, announced on Wednesday it secured $50 million in lending capital from the Goldman Sachs Urban Investment Group.

Since launching in 2014, Climb reported it has originated nearly $100 million worth of loans, funded the education of nearly 10,000 students and partnered with over 100 schools in career paths that have strong earning potential in today’s economy, which ranges from data science to healthcare to heavy construction operation.

“Climb’s Mission is to expand student access to quality education. We do this by partnering with educational programs, which have proven to deliver results to their students, and providing financing options to students attending. We strive to assess, track and maintain the outcomes from our partner schools to ensure that the programs we are financing are ROI positive.”

Speaking about the investment,  Margaret Anadu, managing director and head of the Goldman Sachs Urban Investment Group, stated:

“The Urban Investment Group is proud to partner with a company that is making career-focused post-secondary education accessible for students from all income levels and backgrounds. We look forward to supporting Climb as they help create opportunities for students to deepen their skills and create opportunities for their futures.”

Angela Ceresnie, CEO of Climb Credit, also commented:

“We are excited to use this lending capital to strengthen and extend our offerings so we can help new students, career-switchers and employees who need to up-skill. The funding will allow us to help more people across the country build hard skill sets and transform their careers. By aligning school motivations with student career and salary goals, we open the door for thousands of people who want to change their lives through education.”

Climb added that the new capital allows it to expand access to career-transforming education for more students by providing financing with competitive interest rates and a clear, measurable return-on-investment.

Nutmeg Secures £45 Million Through Latest Investment Round Led By Goldman Sachs & Convoy

UK-based fintech firm Nutmeg announced on Tuesday it secured £45 million through its latest funding round, which was led by Goldman Sachs and Convoy, which is an existing investor of the company. As previously reported, Nutmeg is described as the UK’s first online “discretionary investment management company.”

“Nutmeg is changing the way people manage their money. Specializing in investments, ISAs and pensions, our online investment management service is intelligent, straightforward and fair.”

CEO of Nutmeg, Martin Stead, claimed the company has delivered strong investment returns over the past six years and has more than 60,000 investors. It was reported that 40% of its customers have never invested before, 35% are female (compared to a market average of 26%), and the average investor age is 40 (around 10 years younger that the industry average. Stead also revealed:

In six short years, as well as being the largest digital wealth manager in Europe, we’ve grown to be the eighth largest wealth manager in the UK. It’s an honour – and, moreover, a huge responsibility – to be entrusted with our customers’ investments. We manage these investments as though they were our own. I think it goes without saying that challenging the wrongs of the industry and doing the right thing for our customers runs through our DNA, and this is our first priority.”

Speaking about the investment, Stead reported that the funding will enable the company to deliver on its objective to be the most trusted and fastest growing digital wealth manager by delivering new products and features. The funding will also enable Nutmeg to expand, with an international B2B plug-and-play partnership model which leverages its proprietary technology and operational expertise. Stead then added:

“This is the largest ever investment into a digital wealth manager in Europe. The round was led by the Goldman Sachs Principal Strategic Investments Group, which makes long-term investments in fast-growing technology companies. Their investment firmly positions Nutmeg to be the global WealthTech winner, and is an endorsement of our investment proposition, our track record, and the brilliant team of committed professionals I am humbled to lead.”

Digital Bank Marcus Now Has $35 Billion in Deposits. “Our Plan Has Always Been to Build a Platform”

Digital only bank Marcus continues to gain traction in both the US and the UK. During the Q4 earnings call by Goldman Sachs (NYSE: GS) yesterday, the management team shared some additional insight into the Fintech’s growth. Goldman, by the way, reported blowout numbers which helped to drive shares in the bank considerably higher following the release.

According to Goldman, Marcus now has a whopping $35 billion in deposits – $7 billion of that from UK account holders. Marcus has only been available to UK consumers for a few months.

“In the UK, we opened up, to be perfectly candid, to much more demand than we anticipated … We were the beneficiaries of hitting a nerve in the UK market where we were paying more [in interest] than high street banks and deposits came our way but the influx of that will give us more maneuverability on the rate side.”

Marcus began life as an online lender – a single financial service provider. Since inception, Marcus has slowly morphed into a digital-only bank – benefiting from its lack of green screen legacy tech and a management team not rooted in a brick and mortar past.

But Marcus / Goldman Sachs has bigger plans. Marcus is positioning itself to become the money centre bank of the future challenging both high street banks and regional operators. A better comparison for Marcus are the other banks of the future like Revolut, N26, Monzo, and more.

One of the next products that will be made available to Marcus customers will be a wealth management feature. Goldman Sachs has “a massive wealth management business as the very, very high end.”

Previously, if they wanted to extend that expertise to the masses they would have needed to acquire a big retail broker. But advancements in technology mean that Goldman can easily extrapolate their services and experience to anyone that has a smartphone in their pocket. “Our plan has always been to build a platform,” said Goldman execs.

Expect a growing number of services to be added to the feature list of the digital bank in the not so distant future.

In the US, Goldman will continue to juice deposits by being in the “top 3 or 4 of interest rates” paid to deposit holders. When you compare the current 2.25% paid to savers by Marcus to some other big US banks you start to wonder why, Chase, Citi, B of A, and Wells Fargo don’t step up to the plate and compete with the Fintech. Those four traditional banks are currently paying savers less than 0.07% on savings. Perhaps their business model simply cannot afford it?

Fintech News: The Biggest Fintech Stories of 2018

Fintech, or financial innovation, is pervasive within the financial services industry. Innovation has always existed in this sector of business but the advent of the internet combined with the creativity of risk taking entrepreneurs has engendered an accelerated period of disruptive change in finance.

Think about how the newspaper and magazine industry has been crushed by the internet. Do you know anyone who reads a paper news product anymore? If you said yes, well then you are most likely above a certain age demographic. The dead tree industry is, pretty much, dead.

But finance comes with an interesting caveat. It is a highly regulated sector of industry. While some people, in some jurisdictions, believe that finance may be over-regulated, most everyone understands regulation is dearly needed for Fintech to survive and thrive.

As for 2018, it was a momentous year for innovation in the financial services industry. Cryptocurrency and blockchain boomed. Initial coin offerings (ICOs) rocketed to unbelievable levels as regulators struggled to maintain control. Today, ICOs are swiftly morphing into security token offerings (STOs) as the reality of regulation sinks in.

Meanwhile, more routine types of Fintech innovation are becoming established or commonplace. Online lending is quickly becoming the norm – not the exception. Payments and transfer firms are going through a rapid period of consolidation as the concept of money, and how it is utilized, is Appified.

Online capital formation for investments in early-stage firms or real estate is playing a more pronounced role in certain jurisdictions. Robo-advisors are undercutting more traditional advisory firms with better advice and lower costs.

And could you ever imagine wanting to go to a bank?

I can’t … because the experience of visiting a bank branch just sucks. Long live digital-only challenger banks.

The following is a selection of some of the top stories in Fintech from 2018. You may have your own picks so please do share as this is just a small selection. Post in the comments or email them to – I may just add them below.

ICOs Zoomed. Regulators Warned. The Inevitable Followed.

2017 was an enormous year for initial coin offerings (ICOs). Billions upon billions of dollars were raised in lightly (or not at all) regulated offerings. But then 2018 came along and the ICO market went even higher.

In fact, by June of 2018 it was estimated that $13.7 billion had been raised via ICOs – more than all ICOs combined previously, according to a PwC / Crypto Valley Association report.

The exuberance was astounding simply due to the fact the US Securities and Exchange Commission (SEC) had warned everyone the enforcement drums were pounding. And you do not mess with the Feds.

SEC Chairman Jay Clayton slammed the legions of professional gatekeepers working the doors of the securities industry who were lured into the sexy world of crypto offerings:

“To be blunt, from what I have seen recently, particularly in the initial coin offering space, they can do better,” stated Clayton.

He said the SEC staff was on “high alert” regarding ICOs that conflicted with existing securities laws issuing a clear warning to token offerings and their minions.

How could he be any clearer?

The enforcement actions that first focused on clear acts of fraud, moved to unregulated securities offerings, crypto exchanges, and paid promoters pumping the ridiculous shitcoins that had become ubiquitous.

Naive investors were fleeced. Subpoenas were issued. Lawsuits followed. Fraudsters and scofflaws found themselves in court.

This is a story that will continue well into 2019.

The UK Leads the World with Open Banking Rules

Once again, the United Kingdom schools the rest of the world on financial innovation and why its cool to be a Fintech entrepreneur in Great Britain.

Open Banking, simple to say but challenging to comprehend, gives control of any and all financial data back to consumers. Banks may no longer own your info and sell it to whomever or whatever platform that pays the toll. You, the consumer, own your data and choose who may access it and who may not. High Street banks must provide simplified access via APIs to facilitate your control of this data while making it easier for the consumer to shop around for better financial services.

While Open Banking is still very much a work in progress, my only question is when will the rest of the world catch up?

Down Under, They Call It Crowd-Sourced Funding

Australia has been a hotbed of financial innovation for several years now. A smaller market that benefits from rule of law, the language of business, and proximity to many developing markets, Australia has had a good share of supportive elected officials and a robust advocacy group (Fintech Australia). But for some reason, the Aussie crowdfunding sector (or Crowd-Sourced Funding as they call it) struggled to emerge.

At the beginning of 2018, the Australian Securities and Investment Commission (ASIC) announced it had approved the licensing of the first seven “crowd-sourced funding” platforms.

Issuers are able to raise up to A$5 million online backed by both retail and professional investors.

But there remained another hurdle.

The egregious omission of allowing proprietary companies (ie most all smaller firms) to crowdfund undermined the efficacy of the process. But in September, the Parliament of Australia finally legalized the ability of proprietary firms to use “Crowd-Sourced Funding” (CSF) or investment crowdfunding. Finally.

The European Commission Publishes Fintech Action Plan

In March of 2018, the European Commission published its Fintech Action Plan designed to boost financial innovation in the member states by streamlining the marketplace for Fintech firms. This included a grand list of 23 different steps for Brussels to pursue. The Fintech Action Plan was described as “foundational to Europe’s Capital Markets Union (CMU), the ongoing pursuit of a true single market in the financial services sector.”

The plan also included a crowdfunding proposal that Valdis Dombrovskis, Vice-President responsible for Financial Stability, Financial Services, and Capital Markets Union, described as necessary to compete globally;

“Europe’s innovative companies need access to capital, space to experiment and scale to grow. This is the premise for our Fintech Action Plan. An EU crowdfunding license would help crowdfunding platforms scale up in Europe. It will help them match investors and companies from all over the EU, giving more opportunities for firms and entrepreneurs to pitch their ideas to a wider base of funders.”

In the Fall of 2018, the European Parliament produced draft legislation on their proposed crowdfunding rules that would create harmonized regulations including bumping up the crowdfunding cap to €8 million. The proposal even included ICOs (at least initially).

The European Crowdfunding Network vocally supported the initiative as an obvious policy improvement – something the group has been advocating for years. Just ask ECN Director Oliver Gajda.

Europe is still waiting but hope remains for change soon.

France Decides it Wants to Become Crypto Central in Europe

The French FranceFrance sees opportunity in blockchain tech and crypto innovation. While some smaller countries have moved far quicker to enable digital assets to thrive, France may become the first major economy to create bespoke rules under le Loi Pacte – pending legislation that is expected to become law in 2019.

None other than Bruno Le Maire, the Minister of the Economy and Finance of France, stated:

“A revolution is underway, of which Bitcoin was only the precursor.”

The National Assembly in France duly moved forward with the legislation that allows an ICO issuer to receive regulatory approval – or not.

Sebastien Raspiller, Head of the Service in charge of the financing of the Economy at the French Treasury (Directorate General of the Treasury – Ministry of the Economy and Finance), explained:

“We want France to become a leading jurisdiction for solid ICOs, as an emerging means for funding growth SMEs and larger endeavours.”

Goldman Sachs Takes Online Lender Marcus and Turns it Into a Digital Challenger Bank

No, Goldman Sachs has not lost their minds, said former CEO Lloyd Blankfein explaining their move into retail banking as Marcus morphed from online lender to a full-blown bank.

And, in my opinion, he is correct. Legacy businesses suffer from legacy tech and Goldman (or Marcus) suffers none of this baggage.

Jurassic banks are saddled with an epidemic of branches and green screen computers running COBOL.

Marcus is born of the pain and experience from early Fintech innovators and benefits from a clean slate. Marcus wants to be the money center bank of the future: Borderless, mobile, user-friendly and forward thinking.

Marcus crossed the Atlantic to establish a foothold in the land of Fintech innovation and quickly captured tens of thousands of UK users and deposits. Ironically, the digital bank helps to bring hope to traditional big banks watching with envy. Marcus also puts legacy online lenders on notice with their low cost of capital, constant user touch point, and far broader portfolio of services.

Digital Bank Revolut: Crowdfunded Fintech Unicorn

Speaking about digital challenger banks, it is hard not to think about UK based Revolut.

The iconoclastic startup raised early money crowdfunding on both Seedrs and Crowdcube. Luke Lang, co-founder of Crowdcube, called the success of Revolut a watershed moment for the crowdfunding industry. When it first crowdfunded, Revolut held a valuation of a mere £42 million. It then went on to raise additional money the more traditional VC method receiving a valuation of well over a billion dollars.

Meanwhile, Revolut added a plethora of new features and services while expanding across Europe and plotting an ocean crossing or two.

Is China the World’s Top Fintech Hub?

A report produced by the Sinai Lab from Academy of Internet Finance (AIF), Zhejiang University, in partnership with the Zhejiang Association of Internet Finance, published a “Global Fintech Hub Index” (GFHI). The Index sought to portray the global development of Fintech industry and increase the understanding of global Fintech hubs at both the regional and city levels. According to their research, China holds the top spot.

China is clearly the largest Fintech marketplace. Online lending alone easily surpasses every other market in the world in dollar volume. According to the most recent report by the Cambridge Centre for Alternative Finance, the alternative finance sector in the Asia Pacific (APAC) region increased to $358 billion in 2017. China dominated the market accounting for around 99% of the total volume. The next nearest market is the US at a mere $42.81 billion. But size is not everything, so I hear, and Fintech regulation in China is more than a bit opaque.

So does China surpass London (UK)? Singapore? And what about Silicon Valley?

Depending on how you look at it – yes and no. But this report affirms China’s relevance, and dominance, in certain categories of Fintech.

The US is Losing the Regulatory Battle. The UK Continues to Reign Supreme.

In July of 2018, the US Department of Treasury published an excellent report on Fintech innovation and what needs to be done to improve the emerging digital finance sector. The authors should be commended for their work.

Commenting on the document, Secretary of the Treasury Steven T. Mnuchin, said American innovation is a cornerstone of a healthy U.S. economy.

“Creating a regulatory environment that supports responsible innovation is crucial for economic growth and success, particularly in the financial sector. America is a leader in innovation. We must keep pace with industry changes and encourage financial ingenuity to foster the nation’s vibrant financial services and technology sectors.”

But while many people take for granted the ability of US entrepreneurs to break things and then fix them, the US suffers from a profound challenge of regulatory overlap that stymies far too many aspiring disruptors.

The Byzantine labyrinth of agencies, commissions, and state regulators, are mind-boggling, not to mention incredibly redundant and unnecessary.

Treasury, a part of the federal government that is well aware of this problem, said regulatory modernization must take place while wagging their finger at recalcitrant states. In fact, Treasury said, “if states are unable to achieve meaningful harmonization across their licensing and supervisory regimes within three years, Congress should act.”

Don’t hold your breath.

Meanwhile, the UK continues to forge ahead, determined to remain the leading Fintech Hub and global financial center in Europe. It certainly helps that in the UK there is a single regulator that is mandated to support Fintech innovation and competition. Brexit be damned.

Crypto Meets Traditional as SeedInvest is Acquired by Circle

SeedInvest, one of the more prominent investment crowdfunding platforms in the US, was purchased by Circle last fall. The acquisition by Circle, a “global crypto finance company” that has received over $250 million in venture capital, represented a paradigm shift in the crowdfunding sector.

Depending on who you speak to, some people believe investment crowdfunding has struggled in the US due to ham-fisted rules that over-regulated and under-appreciated the needs of early-stage firms. Crypto, or more specifically the ICO days of lore, provided rapid-fire financing quickly followed by secondary trading of digital assets. It is time for the two aspects of Fintech to mate? It appears so.

Security tokens, or blockchain based securities, may help alleviate some of the friction intrinsic to online capital formation under existing exemptions (Reg D 506c, Reg A+, Reg CF). SeedInvest has honed its crowdfunding tools to provide access to capital for vetted issuers while benefiting from the fact they are a broker-dealer.

So what is the sum of this equation? Let’s talk next year.

Neufund Issues Security on Blockchain for Parent Company Fifth Force GmbH

Europe has a crypto force to reckon with in Neufund co-founder and CEO Zoe Adamovicz. She has been championing the benefits of issuing securities on blockchain for some time now while dealing with Germany’s regulator BaFin which leans to the conservative side.

Their “equity token offering” or “ETO” successfully raised €3.4 million for parent company Fifth Force GmbH. As a shareholder in Neufund, you may be entitled to dividends and vote on shareholder resolutions. All managed by the Neufund platform.

Neufund’s mission is to “enable ownership for all” using blockchain to issue and manage shares and shareholders all in a regulatory compliant manner. Neufund already has a list of issuers queuing up to use their service. In fact, 11 companies in total are in the queue.

Neufund is a platform to watch as they aren’t just talking the talk – they are doing the equity token walk.

Wall Street Backing Off Its Bitcoin and Crypto Ambitions- For Now

The cryptocurrency mania of 2017 was impossible for Wall Street to ignore, but a mainstream avalanche into crypto is easier said than done, and a stampede of clients demanding crypto-based products from their institutional brokers just hasn’t materialized yet, Bloomberg reports.

“The market had unrealistic expectations that Goldman or any of its peers could suddenly start a Bitcoin trading business,” Daniel H Gallancy, whose firm, Solid X, is now seeking permission from the SEC to sell a Bitcoin ETF, told the outlet. “That was top-of-the-market-hype thinking.”

All eyes were reportedly on Goldman Sachs to lead the supposed blue- suit vanguard into the new “digital asset” sector, and the company has taken repeated runs at crypto by forming a dedicated trading desk, investing in the custodial company Bitgo, and hiring Justin Schmidt for leading its “digital asset” division.

But so far, a source to Bloomberg says only 20 clients have invested in a Goldman Sachs Bitcoin-based derivative product called “non-deliverable forwards,” and Schmidt has commented publicly that regulators are cramping his style.

Another source tells the outlet that Morgan Stanley is waiting on client demand for a Bitcoin futures-based swap product, which is available, but which has not yet traded due to insufficient interest.

Citigroup has a non-custodial Bitcoin derivative product waiting in the wings too, but none of these have been trading either.

Barclay’s Plc in London, is, reportedly, “almost back to square one,” with its inquiries into crypto as well.

The two people hired to look into the matter, Chris Tyrer and Matthieu Jobbe Duval, both left this fall, and Barclay’s has reportedly announced that it has no plans to launch a dedicated crypto trading desk.

2018 was a much different year than last, as Bitcoin traced back many of the gains achieved last year, when the coin briefly traded at $20 000 USD in December 2017.

Still, “crypt-optimists” will point out that Bitcoin, which currently trades for around $4000 USD, is still trading at around 3.3 times more than what it was two years ago, and many investors seem willing to ignore that the Bitcoin system appears to be zero-sum- meaning gains generally only come through the incorporation of more investors and not necessarily because of real-world value creation.

Gains are gains, and money must and may be made, especially if crypto is one “sector” not necessarily exhausted by regulation or institutional investors taking cuts again and again before dishing the remains to the public, vapourware or no.

Eugene Ng, a former Deutsche Bank AG trader in Singapore and current purveyor of the crypto hedge fund Circuit Capital, says institutions are building out their infrastructure now to harness the next wave of gold-dust-dazzled dupes:

“It appears as if progress is coming to a halt, yet nothing could be further from the truth…The bear market is going to allow many of these institutions to build the proper foundations without rushing to build-out infrastructure without adequate testing for fear of missing out on a gold rush.”

Report Confirms that Goldman Will Move Into Wealth Management for the Masses

As we predicted just yesterday, Goldman Sachs will move into the wealth management space, according to a note by CNBC. The additional service was alluded to in the most recent Goldman earnings call which took place last week.

The new financial advisor service will most likely take the form of a Robo-advisor application leveraging the profound amount of data Goldman correlates today. The service is expected to show up as part of the fast-growing Marcus digital bank brand and target the digital masses.

The report quoted an unnamed Goldman executive:

“We plan to launch a broader wealth management offering, combining Marcus’ digital capabilities with the more established sales channels and products currently housed within the investment management division.”

In recognition of the importance of their Fintech ambitions, Goldman is re-organizing a bit as the division in charge will be renamed Consumer and Investment Management. Harit Talwar, the executive who lead the online lending project at Goldman, will run the digital finance business globally.

While Goldman may have been slow to embrace the Fintech revolution at first the global investment bank now appears to be firing on all cylinders. Marcus UK has been experiencing “explosive growth” from consumer accounts. The UK is one of the most dynamic digital banking markets in the world. Unlike the go slow environment in the US, a regulatory ecosystem that can be described as byzantine at best, the UK has embraced Fintech innovation and new challenger banks. The fact that Marcus by Goldman Sachs, jumped from zero accounts in the UK to more than 75,000 in just few weeks is indicative of consumer demand for something better than a traditional brick and mortar high street bank.

Goldman Sachs’ Digital Bank Marcus Rapidly Gains UK Consumer Accounts

Last week, Goldman Sachs (NYSE:GS) shared their 3rd quarter earnings report. Buried within the report was an update on Marcus, the digital bank and online lender that recently crossed the Atlantic setting up a beachhead in Europe by opening up in the UK in late September.

Marcus has now evolved from a single product, consumer lender, to a multi-product platform. Today, it serves more than 2 million customers through their lending and savings products plus their personal financial management app.

Explosive Growth in UK Deposits

During the conference call reporting the financial results, Goldman Sachs stated that since launch, Marcus has received over $2 billion of UK based deposits – a pretty impressive growth curve. As of the day of the call, this encompassed more than 75,000 individual accounts in the UK (early on in the call the number was pegged at 55,000 accounts as of October 9th). These deposits were described as a very, very valuable channel for the bank.

In comparison, US deposits at Marcus now stand over $26 billion at the end of Q3. CI reported in February 2018 that Marcus had over $17 billion of deposits.

Regarding consumer unsecured loans, Marcus holds over $4 billion in loans on their balance sheet at the end of the quarter. At the end of 2017, Marcus had originated approximately $2 billion on consumer loans (deposits were stated at over $5 billion).

Goldman noted they are “very aware” as to where they are in the credit cycle – alluding to the expectation of a slowing economy at some point in the future. Marcus expects that loan growth will be governed by their assessment of consumers ability to pay. The company said they have “honed their underwriting standards.” Goldman is confident they will see an increase in origination during 2019, in comparison to 2018 numbers, but the “debate is about the size and the pace of the increase.”

“We are building this business for the long run and we are not chasing volume targets. We will continue to grow deliberately and carefully.”

Marcus is an interesting, and important, Fintech play. Unencumbered by a legacy consumer banking business, and an antiquated tech system, Goldman moved to enter the digital banking sector. While initially commencing with consumer loans, Goldman is quickly becoming a full stack banking platform.

Goldman has already invested in Trussle, a UK Fintech in the mortgage sector. Management expects additional acquisitions in the consumer vertical. Expect a wealth management application soon. Goldman’s aspirations are clearly to become the digital bank of the future. Marcus is expected to enter the German market soon with other jurisdictions to follow.

BitGo Attracts Goldman Sachs & Galaxy Digital Ventures As New Investors Through Series B Funding Round

Blockchain software firm BitGo announced on Thursday it has completed its latest Series B funding round, which raised $58.5 million. The company attracted new investors through the round, such as Goldman Sachs’ Principal Strategic Investments group and Galaxy Digital Ventures LLC, a venture investment firm founded by Michael Novogratz, join Valor Equity Partners, Craft Ventures, DRW, and Redpoint Ventures.

As previously reportedBitGo provides digital wallets, offline vaults, single integration APIs and private blockchains to world’s largest cryptocurrency exchanges and financial enterprises conducting over $12 billion in monthly transactions. 

“BitGo is the world’s largest processor of on-chain bitcoin transactions, processing 15% of all global bitcoin transactions, and $15 billion per month across all cryptocurrencies. BitGo supports more than 75 coins and tokens, has over $2 billion in assets in wallet, and our customer base includes the world’s largest cryptocurrency exchanges and spans more than 50 countries.”

Funds from the round are being used to continue work on BitGo’s $1 trillion crypto wallet. Speaking about the investment, Mike Belshe, CEO of BitGo, stated:

“This strategic investment from Goldman Sachs and Galaxy Digital Ventures validates both our market opportunity and unique position. No one is better positioned than BitGo to serve institutional investors who want to trade cryptocurrencies and digital assets. That’s why we’re focused on figuring out what it takes to secure a trillion dollars. The market’s not there yet but our job is to be ready first.”

Rana Yared, Managing Director of Goldman Sachs’ Principal Strategic Investments Group, also revealed that he and his team are impressed with BitGo’s products, service, and management team. His team believes the investment is an opportunity to contribute to the“evolution” of the crypto wallet infrastructure. Michael Novogratz, Founder of Galaxy Digital Ventures LLC, added:

“We have been impressed with BitGo’s world-class team, their deep technical understanding of digital assets as well as their ability to deliver institutional-quality products to investors. Our team is excited to support BitGo as it enters into this next phase of growth.”

From Goldman Sachs to Crypto: CoinFi Founder Believes it is the Dawn of a New Industry

CoinFi, is described as the “world’s first decentralized crypto market intelligence platform” designed to offer research, analysis and trading signals for crypto traders. The goal is to give users an edge when they speculate on the price movement of crypto – a higher that is well known for its extreme volatility. You could describe CoinFi as aspiring to become the Bloomberg Terminal for crypto. CoinFi’s platform claims to bring  “Wall Street caliber tools to the crypto market.” CoinFi is currently in Beta mode but it is accepting requests for early access

Of course, CoinFi did their own initial coin offering (ICO) earlier this year. The Hong Kong based firm raised $15 million for the COFI token in January and soon after traded on Kyber (Kyber Swap).

CoinFi boast a pretty impressive staff with tons of both crypto and traditional experience. Founded by Timothy Tam, a former Goldman Sachs trader and hedge fund manager, Tam gave it all up for the wild west marketplace of digital currencies.

Timothy Tam is a former Goldman Sachs equities trader, hedge fund manager and the co-founder  and CEO of CoinFi.  Tam began his career in the financial services industry as an analyst in Goldman Sachs working on statistical arbitrage and algorithmic trading.

Later, Tam moved to Asia to work as a Senior Trader with two hedge funds, Nezu Asia and Segantii Capital, each said to have more than $1.5 billion of assets under management.

Today, Tam is all in on crypto launching this new platform while hoping the current slowdown is just a pause as the cryptocurrency marketplace regroups and regains momentum.

Recently, CI had a chance to chat with Tam about his newest venture and making the leap from old finance to new and how he believes crypto is ready to continue its ascent. In an article earlier this year, Tam expressed his opinion that “the risk is extraordinarily high, but for those willing to venture into uncharted territory to stake their claim, it also means opportunity to sell picks and shovels in a digital gold rush.”

So why did you make the jump from more traditional finance to Crypto?

Timothy Tam: I saw a huge opportunity because it’s the dawn of a new industry. Like anyone who foresaw the hedge fund industry in the 90’s would have done very well before it got crowded with more competition.

Early movers get the advantage. I can see crypto evolving and maturing exactly the way equities did.

CoinFi did an ICO. What was the value proposition for the crypto?

Timothy Tam: We build trading tools for crypto traders and have the largest source of Ethereum data available for traders to make better decisions.

We leverage the uniqueness of the token model to incentivize users to add data to the platform and also require users to have tokens in order to access the platform.

CoinFi is a “market intelligence” platform. How do you source your data? Are you a trading platform as well?

Timothy Tam: We have a team of data scientists that ingests crypto data in realtime. As we grow and scale we’ll be using a crowd sourced incentivized model as well. We provide trading tools and signals but users need to trade directly on exchanges.

There are a growing number of crypto trading platforms that offer services for high frequency / institutional traders. What is different about CoinFi?

Timothy Tam: We offer data and trading tools to all traders.  The founders have an interesting mix of experience with Tim having institutional finance experience, Han having silicon valley tech experience and Nate having a marketing edge.

For a successful business it’s a combination of all 3 which is rare in crypto.  Most platforms are finance only founders or tech only founders.

The ICO / STO space appears to be going through a transition period as regulators begin to enforce existing law or craft new rules. What do you expect will be the outcome of these regulatory changes?

Timothy Tam: More regulation is better as it breeds confidence in the system.  STO’s will be a catalyst for the whole industry as once tokens can legally be issued that can issue income streams like dividends. It provides a traditional financial model to model these tokens and a floor valuation

In the US, pretty much everything is a security thus issuers must file for an appropriate exemption. What are your thoughts on this?

Timothy Tam: Under the Howey Test most tokens can be classified as a security.  All U.S. based Crypto companies or companies that target US investors when conducting and ICO need to fall within existing securities laws requirements.

Are we in a Crypto winter? We hear quite a bit about investors / funds pulling back simply because their crypto holdings have dropped in value so dramatically.

Timothy Tam: An 80%+drop from peak to trough definitely classifies as a crypto winter!  But as the saying goes you want to be buying when blood is on the streets and blood is definitely on the streets.

I feel confident if we look forward 2-3 years Bitcoin and Ethereum will be much higher than 6300 and 200 respectively.

[easy-tweet tweet=”I feel confident if we look forward 2-3 years #Bitcoin and #Ethereum will be much higher than 6300 and 200 respectively” template=”qlite”]

And what about Cybersecurity issues? In the US, the New York Financials Services Department just published a report on crypto exchanges highlighting the vast differences between operational controls and degrees of security. Isn’t this indicative that more regulation is forthcoming? What about self regulation?

Timothy Tam: This is definitely valid as for the first time in history exchanges are also responsible for the custodian of assets.

I think this year you’ll see more regulation on exchanges and regulators enforcing better trading guidelines like in the equities markets.

Self regulation is a starting point but not the solution you need the industry regulators to setup up.  The saying always goes would you go to a doctor that self regutes, would you trust them?  Hedge fund industry has attempted to self regulate and this hasn’t been that successful

What is your expectation for the crypto market 5 years from now. More of the same – just on blockchain? Or something vastly different?

Timothy Tam: You’ll see more professional investors coming in buying and trading tokens which will reduce volatility.

Quality of projects will go up which is a good thing.

A stronger / clearer regulatory framework which will breed more confidence in the industry.


Fake News! Goldman Still Pursuing Bitcoin Product According to Report

Earlier this week, a report circulated by Business Insider indicated that Goldman Sachs had paused its efforts to launch a cryptocurrency trading desk – something Goldman had confirmed it was pursuing earlier this year.

Today, according to CNBC, Goldman is still considering its options with Goldman CFO Martin Chavez calling the earlier report they were no longer investigating a crypto trading desk “fake news.”

Speaking at TechCrunch Disrupt in SF, Chavez stated;

“I never thought I would hear myself use this term but I really have to describe that news as fake news,” said Chavez, adding that clients want access to crypto. “The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they’re settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges.”

Chavez added that Goldman is exploring digital assets and their perspective would be evolving over time.

Demand Meet Supply

Following the “fake news” report, Bitcoin tanked. Today, Bitcoin pricing remains subdued – perhaps due in part to the ongoing ambiguity as to what, exactly, Goldman Sachs plans to do.

Virtual currencies, such as Bitcoin or Ethereum, have gained in acceptance in recent years as a method of value transfer and speculation. But these same virtual currencies are still criticized as being clumsy when it comes to everyday purchases. As for the broader universe of altcoins created by initial coin offerings, this remains a wild west type environment driven by casino like speculation.

Report: Goldman Sachs Bails on Cryptocurrency Trading Desk, Bitcoin Drops

A report from earlier today indicates that Goldman Sachs has decided to shelve its plans to launch a cryptocurrency trading desk. At least in the near term, Goldman is holding off on its crypto ambitions, according to Business Insider. The news immediately threw cold water on the price of Bitcoin which saw the price of the most popular crypto drop below $7000.00.

CNBC reported a cryptic message from the world’s most prominent investment bank;

“In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering.”

Market watchers immediately labeled the move as a negative for the legitimization of cryptocurrencies as a new asset class.

Goldman has been rumored to be going crypto for many months. The move was eventually confirmed this past May when Goldman Sachs executive Rana Yared stated in an interview;

“It resonates with us when a client says, ‘I want to hold Bitcoin or Bitcoin futures because I think it is an alternate store of value.’”

But the regulatory environment, for both virtual currencies such as Bitcoin and altcoins, remains in question. Add this to the fact that most crypto “exchanges” are lightly regulated, or not regulated at all, leading to questions regarding the accuracy of global trading volume – something that may have caused concern at the investment bank.

Simultaneously, there have been reports alleging the possible price manipulation of Bitcoin. Goldman’s decision to push pause on a crypto trading desk may also influence other banks sizing up the new market. While the decision by Goldman may just be temporary it is indicative of the relatively immature nature of cryptocurrency.

Aspiring Online Money Centre bank Marcus by Goldman Sachs Nears UK Launch

Marcus began its existence as a mere online lender seeking to provide consumers with affordable credit all online. But as time moves on, it is becoming more clear that Marcus is being positioned as not just providing loans but becoming the bank of the future: a digital money centre bank to replace the entrenched stalwarts.

Marcus, the creation of Goldman Sachs, is nearing its launch in the UK. According to a report by Reuters, the digital only challenger bank has already released its service to employees for some internal testing prior to wide release. The report states that Goldman “may seek to expand its consumer bank through acquisitions or even buying a traditional lender.”

While buying a traditional lender may be an option for Marcus, there are a growing number of  European digital banks that are poised to cross the Atlantic in the other direction, setting the stage for an epic battle between the yanks and the European contingency. Both Revolut and N26 have announced their intent to set up shop in North America at some point in 2018. But it appears that Marcus will strike first with its UK invasion as their online bank will launch within weeks.

While startups like Revolut and N26 may not have the 100+ year Goldman history, nor $20 billion in deposits from which to lend, what they do have is a keen focus on the younger generation that holds traditional finance in disdain. Both N26 and Revolut have focused on features that appeal to the youth. Travel friendly and light on fees. Not to mention a good does of attitude. Revolut event provides access to cryptocurrencies.  Both European challenger banks  provide a fast, simple service that captures rave reviews. Marcus, on the other hand, has focused on industry topping interest rates earned on savings accounts.

So who is going to win in this cage match?

The consumer, of course.

That is the beauty of this Fintech struggle. UK consumers will have choice, and selection, from a plethora of challenger banks. The losers in the battle are the traditional banks, burdened with too much green screen legacy tech and too many brick and mortar locations.

And what about the US? Good question. Garnering a banking license is pretty tough for any aspiring bank. Both N26 and Revolut may have to partner with an entity that already has a banking license. Even then, US financial regulators are not known for being very innovation friendly and at times they come across as simply jurassic. But competition is a good thing and Revolut, Marcus, N26, Varo (US) and more, represent the future of banking. And that is good for consumers.

Axoni Secures $32 Million Through Series B Funding Round Led By Goldman Sachs & Nyca Partners

Enterprise blockchain technology provider Axoni announced on Tuesday it secured $32 million through its Series B funding round, which was led by Goldman Sachs and Nyca Partners. The funding round included participation from Andreessen Horowitz, Citi, Coatue Management, Digital Currency Group, F-Prime Capital, Franklin Templeton Investment, J.P. Morgan, Nex Group, Wells Fargo, and Y Combinator.

Founded in 2013, Axoni notably develops novel blockchain solutions while focusing on the capital markets industry. The company claims it has demonstrated that its blockchain software may serve multiple asset classes and use cases at the world’s “most advanced” financial institutions.

Axoni fosters a collaborative, high-energy environment filled with individuals who want to proactively solve complex problems and deliver valuable solutions to clients.”

Axoni also explained that its AxCore technology has been deployed across a variety of markets ranging from complex derivatives to high-volume foreign exchange. The company stated it claims to use the latest round of financing to enhance its data synchronization technology, expand its suite of infrastructure products to support mission-critical deployments of AxCore, and broaden the network of enterprises leveraging distributed ledgers. The funds will also be used to advance the development of AxLang, an Ethereum-compatible smart contracting language to enable formal verification.

Speaking about the investment round,  Greg Schvey, CEO of Axoni, stated:

Our strategic partners have been critical to our success so far; we are delighted to strengthen and expand those relationships with this financing as we continue to deploy Axoni’s technology.

Ashwin Gupta, Managing Director of Goldman Sachs, added:

Axoni has established itself as a market leader in enterprise blockchain, delivering solutions that can be used at scale across financial markets. We are pleased to work with them as they execute their strategy.