Weekly Briefing No. 178 | Insurtech Start-Ups We Have Our Eye On

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Welcome to The FR, where things are really heating up.

In this edition:

  • Insurtech Firms to Keep an Eye On

  • Tech and the Savings Crisis

  • Uber Creeps Further into Financial Services

  • Ye Olde (Fintech) Alma Mater

  • Can AI Save Bank Branches?

Insurtech Firms to Keep an Eye On

Insurance technology (or insurtech to those in the know) continues to be hot; more than $3 billion in funding was poured into the sector in 2018, and that figure in 2019 is expected to be even higher. In our travels to and fro in recent weeks, we have been fortunate enough to meet with and discover a number of interesting – and very diverse – firms in this space.

One such company is Kangaroo, which is not only one of the growing number of insurtechs named after a member of the animal kingdom, but an innovative smartphone-based home security company that recently raised more than $10 million in Series A funding, led by Greycroft. Kangaroo’s smart home security product features app-based controls and lets users self-monitor their homes for free, or choose to be connected to 24/7 professional monitoring for $60/year with no contract or cancellation fees.

Tech and the Savings Crisis

There is a savings crisis in America; half the population has less than $500 in a savings account, and 80 percent of Americans report that they live paycheck to paycheck. Some fintechs have responded to this and successfully lured some deposits away from traditional banks by offering high-yield savings accounts in an attempt to win new business. Some of these digital accounts feature interest rates upward of 2% APY and above – much higher than the interest rates offered in a typical bank savings account.  And for cash-strapped Americans, parking your money in an account where it will work harder for you is is quite appealing.

Uber Creeps Further into Financial Services

Uber’s IPO may not have gone as well as it would have hoped, but the company still has big plans to expand well beyond its humble beginnings as a ride-hailing app. The firm initially made waves a few years ago when it launched a branded debit card for its drivers. Since that time, Uber has crept more and more into financial services; the latest development is news that it is looking to hire several dozen engineers and product managers “to accelerate the creation of financial products with a new fintech outpost in New York,” according to CNBC. It seems like Uber’s designs on crashing the gates of financial services are only just beginning.

Ye Olde (Fintech) Alma Mater

While some fresh young minds head off to college to learn about Wordsworth, Lord Byron or Kierkegaard, a few others may be studying the words of Vlad Tenev or Kathryn Petralia instead. That’s because a small – yet growing – number of universities have begun to offer degrees in fintech, usually associated with an MBA program. Last month, Creighton University became the latest to offer such a degree, which will mostly focus on Python programming, machine learning, blockchain and the “foundations of fintech.” Are such degrees only passing fads, or the very beginnings of a whole new sector of study that will dominate academia in the coming decades?  

Can AI Save the Bank Branch?

It’s been said that the bank branch is dying, and while branch traffic is certainly down compared to, say, 20 years ago, rumors of its demise are greatly exaggerated. Still, the old days of banks just plastering new branches everywhere as if they were billboards are surely over; financial institutions need to be more strategic about where they decide to locate new branches. And some are turning to artificial intelligence to do just that.

American Banker reports that some are looking to AI to examine factors such as an area’s economy, population and real estate market to determine the optimal locations for new branches. Perhaps in this case, AI can help create new jobs for humans, as opposed to replacing them.  

Quote of the Week

“I have not failed. I’ve just found 10,000 ways that won’t work.”

–Thomas Edison