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THE DATA BREACHES REPORT: The strategies companies are using to protect their customers, and themselves, in the age of massive breaches

Sun, 03/24/2019 - 10:07pm

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

Over the past five years, the world has seen a seemingly unending series of high-profile data breaches, defined as incidents in which unauthorized parties access and retrieve sensitive, secure, or private data.

Major incidents, like the 2013 Yahoo breach, which impacted all 3 million of the tech giant’s customers, and the more recent Equifax breach, which exposed the information of at least 143 million US adults, has kept this risk, and these threats, at the forefront for both businesses and consumers. And businesses have good reason to be concerned — of organizations breached, 22% lost customers, 29% lost revenue, and 23% lost business opportunities.

This threat isn’t going anywhere. Each of the past five years has seen, on average, 1,704 security incidents, impacting nearly 2 billion records. And hackers could be getting more efficient, using new technological tools to extract more data in fewer breach attempts. That’s making the security threat an industry-agnostic for any business holding sensitive data — at this point, virtually all companies — and therefore a necessity for firms to address proactively and prepare to react to.

The majority of breaches come from the outside, when a malicious actor is usually seeking access to records for financial gain, and tend to leverage malware or other software and hardware-related tools to access records. But they can come internally, as well as from accidents perpetrated by employees, like lost or stolen records or devices.

That means that firms need to have a broad-ranging plan in place, focusing on preventing breaches, detecting them quickly, and resolving and responding to them in the best possible way. That involves understanding protectable assets, ensuring compliance, and training employees, but also protecting data, investing in software to understand what normal and abnormal performance looks like, training employees, and building a response plan to mitigate as much damage as possible when the inevitable does occur.

Business Insider Intelligence, Business Insider’s premium research service, has put together a detailed report on the data breach threat, who and what companies need to protect themselves from, and how they can most effectively do so from a technological and organizational perspective.

Here are some key takeaways from the report:

  • The breach threat isn’t going anywhere. The number of overall breaches isn’t consistent — it soared from 2013 to 2016, but ticked down slightly last year — but hackers might be becoming better at obtaining more records with less work, which magnifies risk.
  • The majority of breaches come from the outside, and leverage software and hardware attacks, like malware, web app attacks, point-of-service (POS) intrusion, and card skimmers.
  • Firms need to build a strong front door to prevent as many breaches as possible, but they also need to develop institutional knowledge to detect a breach quickly, and plan for how to resolve and respond to it in order to limit damage — both financial and subjective — as effectively as possible.

In full, the report:

  • Explains the scope of the breach threat, by industry and year, and identifies the top attacks.
  • Identifies leading perpetrators and causes of breaches.
  • Addresses strategies to cope with the threat in three key areas: prevention, detection, and resolution and response.
  • Issues recommendations from both a technological and organizational perspective in each of these categories so that companies can avoid the fallout that a data breach can bring.
Subscribe to an All-Access pass to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

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This is how insurance is changing for gig workers and freelancers

Sun, 03/24/2019 - 9:05pm

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

The gig economy is becoming a core element of the labor market, pushed to the fore by platforms like Uber and Airbnb. Gig economy workers are freelancers, such as journalists who don’t work for one publication directly, freelance developers, drivers on platforms like Uber and Grab, and consumers who rent out their apartments via Airbnb or other home-sharing sites.

Gig economy workers are not employed by these platforms, and therefore typically don't receive conventional employee perks, such as insurance or retirement options. This has created a lucrative opportunity to provide tailored insurance policies for the gig economy. 

A number of insurtech startups — including UK-based Dinghy, which focuses on liability insurance, and US-based Slice, which provides on-demand insurance for a range of areas — have moved to capitalize on this new segment of the labor market. These companies have been busy finding new ways to personalize insurance products by incorporating emerging technologies, including AI and chatbots, to target the gig economy.

In this report, Business Insider Intelligence examines how insurtechs have begun addressing the gig economy, the kinds of policies they are offering, and how incumbents can tap the market themselves. We have opted to focus on three areas of insurance particularly relevant to the gig economy: vehicle insurance, home insurance, and equipment and liability insurance.

While every consumer needs health insurance, there are already a number of insurtechs and incumbent insurers that offer policies for individuals. However, when it comes to insuring work equipment or other utilities for freelancers, it's much more difficult to find suitable coverage. As such, this is the gap in the market where we see the most opportunity to deploy new products.

The companies mentioned in this report are: Airbnb, Deliveroo, Dinghy, Grab, Progressive, Slice, Uber, Urban Jungle, and Zego.

Here are some of the key takeaways from the report:

  • By 2027, the majority of the US workforce will work as freelancers, per Upwork and Freelancer Union, though not all of these workers will take part in the gig economy full time.
  • By personalizing policies for gig economy workers, insurtechs have been able to tap this opportunity early. 
  • A number of other insurtechs, including Slice and UK-based Zego, offer temporary vehicle insurance, which users can switch on and off, depending on when they are working.
  • Slice has also developed a new insurance model that combines traditional home insurance with business coverage for temporary use.
  • Other freelancers like photojournalists need insurance for their camera, for example, a coverage area that Dinghy has tackled.
  • Incumbent insurers have a huge opportunity to leverage their reach and well-known brands to pull in the gig economy and secure a share of this growing segment — and partnering with startups might be the best approach.

 In full, the report:

  • Details what the gig economy landscape looks like in different markets.
  • Explains how different insurtechs are tackling the gig economy with new personalized policies.
  • Highlights possible pain points for incumbents when trying to enter this market.
  • Discusses how incumbents can get a piece of the pie by partnering with startups.
Get the insurtech and the gig economy

 

SEE ALSO: These were the biggest developments in the global fintech ecosystem over the last 12 months

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A look at the global fintech landscape and how countries are embracing digital disruption in financial services

Sun, 03/24/2019 - 6:36pm

This is a preview of the “Global Fintech Landscape” premium research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence,  click here.

Since sprouting in the US and UK around 10 years ago, fintech has spread globally. Now, after years of proliferation, countries around the world are starting to see their fintech industries mature. Additionally, we continue to see the emergence of new hotbeds for fintech. This indicates that the space is still far from being fully developed, and that there are many new ways in which startups and their technologies continue to change financial services.

The fact that many new players are emerging in the space also suggests that attention is shifting away from the main countries where fintech is prevalent, and that investors are seeing the potential of newer, conventionally untapped markets.

The spread of fintech can be largely seen in the emergence of fintech hubs — cities where startups, talent, and funding congregate — which are proliferating globally in tandem with ongoing disruption in financial services. These hubs are all vying to become established fintech centers in their own right, and want to contribute to the broader financial services ecosystem of the future. Their success depends on a variety of factors, including access to funding and talent, as well as the approach of relevant regulators.

In this report, Business Insider Intelligence compiles various fintech snapshots, which together show the global proliferation of fintech, and illustrate where fintech is starting to mature and where it is just breaking onto the scene. Each snapshot provides an overview of the fintech industry in a particular country, and details what is contributing to or hindering its further development. We also include notable fintechs in each geography, and discuss what the opportunities or challenges are for that particular domestic industry.

Here are some of the key takeaways from the report:

  • Besides the US and UK, there are plenty of other countries developing strong fintech hubs. Australia, Switzerland, and China, which are profiled in this report, have managed to leverage their stable financial centers of Sydney, Zurich, and Shanghai, respectively, to spur fintech development and attract funding.
  • There are also a number of emerging fintech markets, including Brazil, Israel, and Canada, that are likely to play a big part in the global fintech ecosystem in the future. These countries have nascent but rapidly developing fintech hubs, as well as supportive regulatory environments, that could help them cement strong positions in the broader fintech scene.
  • Many more fintech hubs will likely morph into big fintech players. This could push investors to increasingly wake up to the opportunities in new markets, leading fintech funding to become more diversified in the future, particularly outside of the UK and US.

 In full, the report:

  • Outlines how the fintech industry has changed over the past 10 years.
  • Details which cities are the most likely to succeed as fintech hubs at present and going forward.
  • Highlights notable fintech startups in each of these markets.
  • Discusses the potential opportunities and challenges these countries are facing today and in the future.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >>Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of the fast-moving world of Fintech.

SEE ALSO: Latest fintech industry trends, technologies and research from our ecosystem report

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THE DIGITAL EVOLUTION OF WEALTH MANAGEMENT: How emerging technologies can improve the user experience, while cutting costs and boosting revenue

Sun, 03/24/2019 - 6:02pm

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

An increasing number of wealth managers are using new technologies to make their operations more efficient and to increase customer satisfaction.

The technologies they are implementing include robotic process automation (RPA), chatbots, machine learning, application programming interfaces (APIs), and explainable AI.

In this report, Business Insider Intelligence analyzes how emerging technologies like RPA and AI are transforming the wealth management industry, on both the front and back end, by increasing efficiency and opening up the space to new demographics. We explain how both incumbents and startups are applying these technologies to different business areas, and how successful they've been at implementation. Additionally, we take a look at the challenges wealth managers are facing as they look to revamp their businesses for the digital age.

Here are some of the key takeaways from the report:

  • Startup wealth managers and digitally savvy technology suppliers are bringing emerging technologies to the fore to make wealth management more time- and cost-efficient. These include RPA, machine learning, and AI. Big players in the space are also beginning to wake up to those opportunities.
  • The technologies can improve consumer-facing elements of wealth management, like onboarding and customer service, to increase customer satisfaction.
  • Machine learning and APIs can help wealth managers improve functions like portfolio management and compliance, and help them better stay on top of regulations, and increase customer satisfaction by offering improved and additional services.
  • However, there are some challenges wealth managers are facing when implementing these tools, ranging from a lack of customer trust in emerging technologies to difficulty finding appropriate talent.

 In full, the report:

  • Outlines how the wealth management industry is implementing emerging technologies.
  • Details which technologies they are using, and what their specific benefits are. 
  • Discusses the potential challenges wealth managers are facing when implementing new technologies.
  • Highlights what wealth managers need to do to stay relevant in the field.
Subscribe to an All-Access pass to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

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Bitcoin 101: Your essential guide to cryptocurrency

Sun, 03/24/2019 - 1:36pm

Bitcoin is everywhere.

The cryptocurrency is seemingly in the news every day as investors and businesses try to understand the future of this digital finance.

But what is Bitcoin all about?

Why is it suddenly on every financial news program?

And what does it mean to you?

Find out the answers to these questions and more in Bitcoin 101, a brand new FREE report from Business Insider Intelligence.

To get your copy of the FREE slide deck, simply click here.

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Share your opinion — become a BI Insider!

Sun, 03/24/2019 - 12:18pm

As a dedicated Business Insider reader, we’d like to invite you to join our BI Insiders Panel, an exclusive online community of Business Insider readers!

Here are some of the TOP benefits of being a BI Insider!

  • Earn points towards cutting-edge research reports (a $495 value) from the Business Insider Intelligence report store.
  • Special reports and content from Business Insider Intelligence, like The Next Smartphone and The Internet of Everything.
  • Results from the surveys that you helped create paired with expert analysis from Business Insider Intelligence.
  • The satisfaction that your input will help guide decision-making at the most influential companies around the world.

As a BI Insider, you'll be invited to take online surveys via email a few times a month to provide opinions and insights on a variety of topics and emerging trends, based on your personal and professional experiences. 

To become a BI Insider, you'll be asked to complete a short survey, after which you'll receive a notification within 24 hours to let you know if you've qualified. We want to hear from you!

 

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And today we're giving you one more reason to join:

You’ll receive an exclusive slide deck from Business Insider Intelligence, Business Insider's premium research subscription service. Currently sold for $495, "The Future of Fintech Slide Deck" can be yours today FREE.

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A software developer who retired in his 30s says he went back to work less than 2 years later because the free time didn't make him any happier

Sun, 03/24/2019 - 11:45am

Early retirement isn't all it's cracked up to be.

At least, it wasn't for Tony, who retired at age 37 and prefers not to reveal his last name. He was able to retire with savings in the mid-six figures thanks to a high income working as a software developer and low expenses; he paid $400 a month for a house and land owned by distant relatives, where he started a farm.

However, not long after making the leap into early retirement, he found himself in a "spiral of thinking," he said in a recent podcast with Brandon of The Mad Fientist, who retired early at age 34. He had intended to build skills and learn new things but never followed through with them because he was depressed and anxious, he said.

"Because of privilege and just lucky timing, and then all the hard work that I did to save so much money, I just
felt like, 'I have all of [this] stuff. I have all [this] free time. I live in this beautiful valley on this farm. And yet, here I am, miserable,'" he said. "That was some of the lowest times I've ever had."

Less than two years into early retirement, Tony went back to work part-time in the tech world — an easy decision, he said, because there were three things he missed during early retirement.

Read more: 5 people explain how their life unexpectedly changed after retiring early

Early retirement lacks 3 things, according to one early retiree

Tony said the biggest thing he missed was human connection.
 
"After I retired, I kind of built my own lifestyle that didn't include a lot of habitual human contact that was not at work," he said. "And so that was a big thing. I think if I was going to do something different, the biggest part of it would be building human contact into your daily — not daily routine, but definitely your weekly routine."

Even on days he felt like being social, he added, all his friends were busy working their nine to five jobs.

He realized that he missed his own nine to five: Early retirement also lacked the fulfillment his work had brought him. "It's really fulfilling to work on something you're good at doing," he said. "So, I think me, especially, and a lot of people I'm sure, we like to learn new things and do things that are difficult. And a big part of that is failing over and over again. And that can get fatiguing after a while."

He continued: "So, I think just doing something that you're competent at is its own reward in a lot of ways. And then, I'd also say that working on hard problems with other people that you respect is totally a drug. I don't know, there's something juicy about that."

How close are you to being able to retire? Find out with this calculator from our partners:

 

The money didn't hurt either, he said. While one can pull from investments and savings during early retirement, the steady cash flow that comes from a job (unless you have passive income from a side hustle) is often missing. "I just view it as like a bounty now," Tony said. "It's like I don’t need to worry about taking care of my needs. I know they're taken care of."

Read more: It's been 2 years since I retired at 52 with a $3 million net worth — here are some of the biggest challenges of early retirement

Early retirement isn't for everyone

Tony experienced some of the early retirement drawbacks that early retiree John of "ESI" Money previously highlighted in a post published on Business Insider. They included loss of income and reduced social security, mental and physical decline, loss of social interaction and identity, boredom, and lack of challenge or purpose.

Tony's not alone. After retiring early at age 34, Sam Dogen of Financial Samurai suffered an identity crisis, felt stuck in his head, was disappointed he wasn't that much happier than when he was working, and felt like he lacked purpose.

Seven years later, he decided to go back to work full-time because there was nothing more he wanted to do in early retirement and he wanted to "feel normal again." And, like Tony, he missed the camaraderie at work and wanted to make even more money.

Read more: I retired early and the freedom is priceless, but there are some downsides to early retirement that nobody likes to talk about

"Having the freedom to do what you want cannot be overstated," he wrote. "However, your mind will play games with your spirit during the first few years after leaving work. Some of you won't be able to handle early retirement life and will go back to work."

According to Brandon, a job can offer opportunities you can't access on your own. For example, he noted, working for a big corporation might give you more leverage.

"I think people get so hung up on the early retirement part, but the whole point is happiness," he added. "So if you step away from work and realize that you're missing a lot of these things, and the easiest and best way to get those things is to get another job — a full-time job, even a part-time job, or whatever — there's no shame in that."

SEE ALSO: I asked 3 early retirees how people know they're ready to stop working, and they all said the same thing

DON'T MISS: People retire early for 2 reasons, and neither of them is money

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NOW WATCH: Take a look inside a $28.5 million NYC apartment on Billionaires' Row

Delta is running a last-minute deal on its credit cards — their bonuses are worth double the normal amount

Sun, 03/24/2019 - 11:04am

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. Business Insider may receive a commission from The Points Guy Affiliate Network, but our reporting and recommendations are always independent and objective.

  • Delta is currently offering the highest-ever public welcome bonuses on its three main credit cards
  • With just over a week left, there isn't much time left to get this deal — the offer ends April 3.
  • Even if you've had one of the cards before, you can still get the bonus on the others.
  • When you open the $95 Gold Delta SkyMiles® Credit Card from American Express and spend $2,000 in the first three months, you can get 60,000 SkyMiles. The card normally offers 30,000 SkyMiles.
  • The $195 Platinum Delta SkyMiles® Credit Card from American Express is offering 75,000 SkyMiles and 5,000 Medallion Qualification Miles when you spend $3,000 in the first three months.
  • Delta's premium credit card, the $450 Delta Reserve® Credit Card from American Express, is also offering 75,000 miles and 5,000 Medallion Qualification Miles, although you'll need to spend $5,000 in the first three months.

Until April 3, Delta and American Express are offering the highest-ever publicly available welcome offers on their co-branded credit cards. These offers have been available a few times in the past, but we've never seen them go higher (other than for a few lucky, targeted people).

There are three offers available, and you're eligible only if you haven't had the card before. But because the three cards count as different products, you can earn a bonus on each of them. For example, if you've had the Gold Delta card before, you can still get the bonus on a new Platinum Delta card.

The three cards and offers are:

While Delta SkyMiles aren't necessarily the most valuable frequent-flyer mile currency out there, they definitely still offer value, and they remain worth collecting.

Read more: 7 travel-rewards credit cards that'll reimburse your Global Entry fee every 4 years

The cards have a lot of similarities

They all offer perks for Delta flyers, including one free checked bag for each person on the cardholder's reservation, priority boarding so you can settle in sooner and snag space in the overhead compartments, a 20% discount in the form of a statement credit on Delta in-flight purchases, and no foreign-transaction fees.

The cards all earn 2x SkyMiles for every dollar you spend with Delta and one SkyMile per dollar on everything else.

However, there are also a few differences between the three cards. The Gold Delta card has a $95 annual fee, waived the first year, which brings it in line with the less expensive, mainstream airline credit cards.

The Platinum SkyMiles card's annual fee is $195 and isn't waived the first year, but it has an exceptionally valuable benefit that makes up for it. 

Every year on your card-member anniversary, you'll get a free domestic companion pass. A companion pass is essentially a buy-one-get-one-free coupon. When you book an economy-class flight for yourself anywhere within the continental US, you can get a second ticket for free, other than minimal taxes and fees.

For me, the value of the pass at least cancels out the annual fee, and the card offers enough value to mean I'm making a profit in some cases. I used my first companion pass this past fall to book a flight for my wife and myself — the tickets were about $225 each, but when I redeemed the pass, we only had to pay $24 in taxes and fees for her ticket.

The Delta Reserve card has a higher $450 annual fee, but it has a few additional perks that can make it worthwhile for some frequent flyers. 

Like the Platinum SkyMiles card, it offers a domestic companion pass. However, that pass can be used for first-class tickets, not just economy. Additionally, the Delta Reserve offers full access to Delta Sky Club lounges whenever the cardholder is flying with Delta (the Gold and Platinum SkyMiles cards offer discounts on single-access Sky Club passes).

The Reserve has one other major perk, which can be crucial for travelers who hold Delta Medallion (elite) status.

Delta Medallion members are eligible for complimentary, space-available upgrades to first class and Delta One on flights within the US and the region, including Mexico and Central America, and extra-legroom seats on international flights.

Upgrades clear in hierarchical order based on a number of factors, including each passenger's Medallion status level, the original fare class they booked, and a few other factors. The first tiebreaker for people with the same Medallion level and fare class: whether they hold the Delta Reserve card. Reserve cardholders will be prioritized over those without it. If there's only one seat left and two members are still tied and both have the Reserve, it continues down the list of tiebreakers.

For travelers who fly a lot and frequently find themselves one or two upgrade-list spots away from getting that first-class seat, holding the Reserve can be extremely valuable.

The bottom line

Ultimately, all three of these cards offer a great value with useful perks. With the limited-time welcome offers, now is an ideal time to open one of them.

If you fly Delta with a partner, friend, or family members at least once or twice a year domestically, the Platinum SkyMiles card is probably more worthwhile for you because the companion pass can essentially pay for the annual fee. However, if you want a lower upfront fee, the Gold SkyMiles card still comes with useful benefits — and a fantastic bonus.

Finally, if you're looking for access to Delta Sky Clubs (and don't already have the Platinum Card from American Express), or want an extra edge in your Medallion upgrade priority, the Delta Reserve might be the card for you.

$95 annual fee (waived the first year): Learn more about the Gold Delta AmEx card from Insider Picks' partner The Points Guy. $195 annual fee: Learn more about the Platinum Delta AmEx card from Insider Picks' partner The Points Guy. $450 annual fee: Learn more about the Delta Reserve AmEx card from Insider Picks' partner The Points Guy.

SEE ALSO: The best credit card rewards, bonuses, and benefits of 2019

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Prepaid card transactions will hit $396 billion by 2022 — and new players like Apple, Amazon, and Venmo are trying to gain share

Sun, 03/24/2019 - 10:37am

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

The US prepaid card ecosystem is huge, with 10.7 billion prepaid card transactions made in 2016 reaching $290 billion. And it’s shifting focus from low-income, un- and underbanked consumers toward millennials and higher-income adults.

But as the market evolves, legacy prepaid issuers, like Green Dot, are under threat. The market is becoming more competitive as tech companies like Apple, Square, and Venmo develop their own prepaid offerings, likely as part of a push to drive customers to engage with their core peer-to-peer (P2P) transfer or digital wallet apps. These players’ robust digital offerings and ability to offer prepaid services for lower, or no fees are undercutting legacy businesses. And on top of crowding, the Consumer Financial Protection Bureau (CFPB) is implementing regulations next year that could impact some issuers’ monetization strategies.

As a result, the US prepaid card market is becoming an increasingly complicated space for issuers to navigate, so prepaid issuers need to rethink their strategies to best attract consumers. Companies can attract a bigger user base if they target younger users from both low-income and high-income segments. They should also provide convenient offerings, that integrate digital features to make account information accessible, to cater to young consumers’ preferences.

Business Insider Intelligence has put together a detailed report that explores the evolving prepaid card industry, identifies how issuers can maintain profitability in a market that’s being challenged by new players and impending government regulations, and evaluates various paths to success.

Here are some key takeaways from the report:

  • There were 10.7 billion prepaid card transactions worth $290 billion in 2016, according to The Federal Reserve. Business Insider Intelligence expects that to grow to $396 billion by 2022. 
  • The prepaid space has historically been filled with incumbents like Green Dot. But new players, like Apple, Amazon, and Venmo, are trying to gain share, which is pushing large prepaid firms to merge or acquire one another to grow.
  • Issuers can adapt to the change in the space, and grow their share of the market, by providing convenient, multichannel access, and doing so in a way that facilitates profitability. Targeting younger consumers, both from the underbanked and high-income segments, as well as accessing users from physical as well as digital channels, can help facilitate this growth.

In full, the report:

  • Sizes the US prepaid card market and estimates its future trajectory.
  • Identifies industry leaders and the newcomers to prepaid that are threatening their market share.
  • Evaluates growth factors and inhibitors that are increasing competition in the space.
  • Issues recommendations and strategies that issuers can implement to stay ahead in such a rapidly shifting space.
Subscribe to an All-Access pass to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

Purchase & download the full report from our research store

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The legendary hotelier behind some of the world's top boutique hotel brands says luxury hotels are going to transform in 2 major ways in the next 10 years

Sun, 03/24/2019 - 10:15am

  • Ian Schrager, legendary hotelier and Studio 54 cofounder, says luxury hotels will change in two main ways over the next 10 years.
  • Luxury hotels will get smaller, with only 80 to 90 rooms, but each room will be larger, Schrager says.
  • These hotels will also be very expensive with the finest details, "catering to that 1%," he said.
  • Schrager, credited with inventing the modern boutique hotel, has created successful hotel brands including EDITION and PUBLIC, as well as the Delano Hotel in Miami and the Mondrian Hotel in West Hollywood.

Ian Schrager, the legendary hotelier behind hotel brands like EDITION and PUBLIC, says luxury hotels are on the precipice of a transformation.

Schrager, who cofounded Studio 54, the legendary New York City nightclub known for its wild parties and high-profile guests like David Bowie and Andy Warhol in the 1970s and early '80s, says that hotels are "manifestations of popular culture and the people."

Read more: Ian Schrager, the cofounder of Studio 54, says the legendary NYC nightclub could be recreated today — but it would be different in 3 key ways

And according to Schrager, the US is headed in a direction where "you have the 1%, and then you have everybody else, with a declining middle class," he told Business Insider. "And I see hotels following the same thing."

Luxury hotels will change in two major ways over the next 10 years, Schrager says.

"For the luxury hotels, I see them getting much smaller, maybe 80 to 90 rooms," but the rooms will be "much larger," he said.

These more intimate hotels will also be "very expensive" with the finest details, "catering to that 1%," Schrager said.

Checkin’ in

A post shared by @ nicoleschumann on Mar 19, 2019 at 1:40pm PDT on Mar 19, 2019 at 1:40pm PDT

 

"I see nothing in the middle," Schrager said. "And I see a lot of less expensive, value-oriented hotels, but very sophisticated and very cool, with lots of entertainment and food and beverage possibilities."

Schrager's PUBLIC Hotel in New York's Lower East Side opened in 2017 offering a modern luxury experience at rates as low as $150 per night, as Business Insider's Noah Friedman and Lamar Salter previously reported.

His newest hotel, the Times Square EDITION in New York City, has 452 guest rooms and nightly rates that range from $430 to about $2,800.

SEE ALSO: Take a look inside the most expensive hotel room in the world, a 2-story sky villa designed by Damien Hirst that runs $100,000 per night

DON'T MISS: The top 14 boutique hotels in the world that should be on every luxury traveler's list

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NOW WATCH: Take a look inside a $28.5 million NYC apartment on Billionaires' Row

Companies all across America are warning business is slowing down. Here are 6 you should pay close attention to.

Sun, 03/24/2019 - 9:02am

  • Amazon, Nike, and Shake Shack are just a few US companies that have this quarter warned that growth is slowing.
  • Nike said in its third-quarter earnings report out Thursday that while its profits were robust its North American sales growth slowed. 
  • A handful of notable US companies have warned of a slowdown as economic growth cools around the world.

Since the start of the year, some of the most visible companies in the US have warned growth is cooling in one segment or another of their businesses — at a time when global economic growth is under a microscope.

Apple set the stage back in January with a revenue warning. Then weeks later, the industrial giant Caterpillar said its outlook for this year assumed "modest" sales growth. Amazon offered weak sales guidance in February, and FedEx said this week that its sales and profits came up short due to macroeconomic weakness.

Then there was the homebuilder Lennar. And Shake Shack. And Nike.

Of course, each corporation carries its own unique story, structure, and outlook. And each sector comes with its own idiosyncratic challenges. But even as stocks have staged an impressive rebound this year, investors and analysts alike can't help but take notice of earnings growth slowing down

"This year is starting on a sour note for earnings, yet stock prices have rebounded nicely so far," said Ed Yardeni, the president of Yardeni Research, in a note to clients this week.

"While the Q4-2018 growth rate was still in the double digits, the typical upward earnings hook was anemic. Furthermore, corporate managements' guidance about the 2019 outlook during their latest conference calls was generally cautious."

Indeed, investment strategists say it's hard to ignore lowered earnings estimates.

Last year, earnings grew 27.5% year-over-year in the third-quarter and 14.2% year-over-year in the fourth-quarter, according to data compiled by Refinitiv. The first-quarter's earnings growth rate is slightly negative, at -1.5%, and second-quarter expectations call for growth of just 1.1%.

"Investors might be pleased with the market's recent performance, but it's unlikely they find the underlying dynamics — a more favorable risk backdrop, with decelerating economic and earnings growth — particularly inspiring," Jonathan Golub, the chief US equity strategist at Credit Suisse, told clients earlier this week.

Here's a snapshot of some US-listed companies who have said growth this year may slow from current levels.

Apple

Apple warned investors in January that its holiday-quarter revenue would fall short of expectations, pointing to weak iPhone sales, mostly in China.

While its earnings results came mostly in-line with its pre-announcement, the iPhone giant's second-quarter sales forecast also came in at the low end of expectations.



Amazon

Amazon reported quarterly profits and revenue that topped Wall Street's estimates back in February.

But the Jeff Bezos-led company offered investors weak sales guidance, causing at least five analysts to slash their price targets, pointing to slowing trends across some business segments.

Following the report, Morgan Stanley analysts said the fact that Amazon's growth was broadly slowing — though still growing — speaks to how incremental e-commerce growth is becoming "somewhat more difficult and expensive."

 



Nike

Nike shares tumbled Friday after the company's quarterly sales, and North American revenue specifically, just missed expectations. 

While robust quarterly profits beat out estimates, investors were focused on the outlook for the rest of the year.

Nike said on Thursday's call with analysts that foreign-exchange pressures would dent revenue growth during its fourth-quarter. The sneaker giant reported 7% revenue growth in North America and a 19% gain in China — both reflecting a quarter-over-quarter slowdown. 

Still, the stock is trading within striking distance of its all-time high.



See the rest of the story at Business Insider

9 red flags you're not building wealth, and how to fix it

Sun, 03/24/2019 - 9:00am

  • Most people don't get wealthy by accident, but through intentional habits and tried-and-true strategies.
  • You're probably not on the path to a rich future if you're focusing only on saving money, if you live above your means, or if you haven't started investing.
  • You can course correct by creating multiple income streams, investing in a retirement account, and making clear financial goals with plans to achieve them.

Wealth requires building a foundation of good habits. And the earlier you start, the better.

Here are 9 signs you're probably not yet on the path to a rich future.

1. You only work hard, not smart

In school, we learn that hard work will get us ahead in life. But "that's only half the story," says Ric Edelman, a top financial adviser.

"If all you do in life is work really hard, you're never going to get wealthy," he said. "Because it's not enough that you work hard to make money to set some of it aside."

Edelman says that to ensure future wealth, you must equally work smart. One way he suggests working smart is investing your money in the stock market or a retirement fund — that is, taking advantage of compound interest so that your money earns money.

"You can do this without taking a huge amount of risk. You can do this without a lot of effort. You can do this without a lot of time," he said.

2. You put too much emphasis on saving and not enough on earning

Another way to work smart? Increase your earnings, not just your savings.

Saving is crucial to building wealth, but you don't want to focus so much on saving that you start neglecting earning.

"In addition to saving money, we really focus on increasing our income," Eric and Kali Roberge said on a recent episode of their podcast "Beyond Finances." Cutting expenses, managing your cash flow, and not giving into lifestyle inflation is important, Kali said, but "if you can't increase your income, I think it's always going to be a struggle to get to where you want to go."

In some cases, Eric said, spending less on everyday expenses is necessary, but if you've hit a limit and it's possible to earn more money, the benefit will be much greater.

"The masses are so focused on clipping coupons and living frugally they miss major opportunities," wrote Steve Siebold, a self-made millionaire, in an article for Business Insider.

There's no need to abandon practical saving strategies. However, if you want to start thinking like the rich, "stop worrying about running out of money and focus on how to make more," Siebold said.

How close are you to being able to retire? Find out with this calculator from our partners:

3. You buy things you can't afford

If you live above your means, you won't get rich.

Even if you start earning more or get a raise, don't use that as justification to give yourself a lifestyle raise — especially when it comes to housing.

"If you live in a pricey home and neighborhood, you will act and buy like your neighbors. The more affluent the neighborhood, the more its residents spend on almost every conceivable product and service," Thomas J. Stanley wrote in his book "Stop Acting Rich."

That's not to say you can't buy nice things or meaningful experiences, but it's difficult to keep building wealth when you keep spending more, too.

4. You're content with a steady paycheck

Average people choose to get paid based on time — on a salary or hourly rate — while rich people choose to get paid based on results and are typically self-employed or have multiple income streams.

"It's not that there aren't world-class performers who punch a time clock for a paycheck, but for most, this is the slowest path to prosperity promoted as the safest," Siebold said. "The great ones know self-employment is the fastest road to wealth."

While the world-class continue starting businesses and building fortunes, "the masses almost guarantee themselves a life of financial mediocrity by staying in a job with a modest salary and yearly pay raises," Siebold said.

5. You haven't started investing

One of the most effective ways to earn more money over time is to invest it, and the earlier you start, the more money you'll end up with.

"On average, millionaires invest 20% of their household income each year," Ramit Sethi wrote in his New York Times best-seller, "I Will Teach You to Be Rich." "Their wealth isn't measured by the amount they make each year, but by how they've saved and invested over time."

You don't have to be an expert on finance or use fancy economic jargon to start investing in the stock market. You don't have to come from an affluent family, and you don't even have to earn a massive paycheck.

Start by investing in your retirement or a low-cost index fund, and you'll see huge returns in the long run.

When you earn more, you can invest more. Consider these offers from our partners:

 

6. You're pursuing someone else's dreams — not your own

If you want to be successful, you have to love what you do, and that means determining and pursuing your passion.

Too many people make the mistake of chasing someone else's dream — such as their parents' — says Thomas Corley, who spent five years researching self-made millionaires.

"When you pursue someone else's dreams or goals, you may eventually become unhappy with your chosen profession," he wrote in "Change Your Habits, Change Your Life." "Your performance and compensation will reflect it. You will eke out a living, struggling financially. You simply won't have the passion that is necessary for success to happen."

Once you identify what it is you love to do, master it. Honing a skill is our "strongest weapon" when it comes to building wealth and career satisfaction, according to Cal Newport, an associate professor of computer science at Georgetown University and a bestselling author. 

"You could generate more money. You could generate much more autonomy and leverage over how you generate that money. You get much more flexibility about when and how you work," Newport said.

Read more: A Georgetown professor says the same skill that will help you earn more money in your job can help you retire early

7. You don't have goals for your money

If you want to build wealth, the process will be easier and probably more enjoyable if you have a clear, specific goal in place.

Do you want to buy a house? Live abroad? Travel once a month? Enjoy a cushy retirement? Write down these goals and make a savings plan to achieve them.

Rich people choose to commit to attaining wealth. It takes focus, courage, knowledge, and a lot of effort — but it's possible if you have precise goals and a clear vision, said T. Harv Eker, a self-made millionaire.

"The No. 1 reason most people don't get what they want is that they don't know what they want," he said. "Rich people are totally clear that they want wealth."

Read more: How much money you should save depends on 3 things

8. You spend first and save what's left over

If you want to get rich, pay yourself first.

"What most people do when they earn a dollar is pay everyone else first," David Bach, a self-made millionaire, wrote in "The Automatic Millionaire." "They pay the landlord, the credit card company, the telephone company, the government, and on and on."

Rather than spending and then saving whatever is left over, save first. Set aside an hour a day of your income — in an emergency fund, 401(k), or other savings account — and make the process automatic, Bach says.

This takes the effort out of manually saving and ensures your money will grow exponentially over time, thanks to compound interest.

Looking for a new savings account? Consider these offers from our partners:

 

9. You believe getting rich is out of your reach

"The average person believes being rich is a privilege awarded only to lucky people," Siebold wrote. "The truth is, in a capitalist country, you have every right to be rich if you're willing to create massive value for others."

Start asking yourself, "Why not me?" he says. Next, start thinking big. Rich people set high expectations. Why not $1 million?

If you're ready to start investing with a small portfolio and low fees, our partners Wealthfront and Betterment can help. »

SEE ALSO: 7 stupid things people do with their money that feel smart at the time

DON'T MISS: I made a mental shift to start saving more money and I'd recommend it to just about anyone

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Pinterest’s IPO structure could give CEO Ben Silbermann the right to control the company from beyond the grave

Sun, 03/24/2019 - 8:30am

  • Pinterest's S-1, publicly filed on Friday, revealed a unique share structure.
  • The company has dual-class shares, which give some shareholders, like founding CEO Ben Silbermann, greater voting powers than other investors.
  • But the structure also gives Silbermann's estate the ability to retain its extra voting superpowers for between 90 days and 540 days after his death. 

Silicon Valley's power players are already preparing for the grim spectre of mortality. 

Pinterest's S-1 paperwork, filed publicly Friday, disclosed an unusual stipulation that retains full voting rights for CEO Ben Silbermann's shares in the company from 90 days to 540 days after his "death or permanent incapacity." 

That phrase is part of Pinterest's description of its planned dual-class stock structure, which gives 20 votes per share to select Class B shareholders — which will likely include the founding team and some of the company's earliest investors. When investors buy Pinterest's stock after the IPO, they will buy Class A shares, which have just one vote per share.

The clause means that after Silbermann dies, whoever inherits his shares will retain his super-voting powers for a period of time.

Tom Holden, a securities lawyer with the firm Ropes & Gray, said it's uncommon to see language like this in an S-1, and added that expanded rights such as super-voting shares are often requested by the founders directly.

"It's typically driven by the founder's desire to have meaningful influence on the vote post-IPO," he said.

In the case of the death clause, Holden suspects Silbermann was motivated by the nuances of estate planning, rather than a posthumous power grab. It's unlikely that Silbermann's future beneficiaries could have a real impact on the company's operations within 90 days, he says. 

"It doesn't strike me that he's trying to gain something substantive," Holden said.

While it's rare, Silbermann is not the first CEO to seek such controls. Facebook founder and CEO Mark Zuckerberg's famously extra-powerful voting shares, which give him total sway over corporate decisions despite owning a minority stake in the company, are slated to persist for three years after his death, at which point they would convert to normal shares.

Similarly, super-voting shares owned by Snapchat's founders Evan Spiegel and Robert Murphy would keep their extra powers up to nine months after their deaths. 

Dual class structures are common; death clauses are not

Dual-class structures aren't often found in newly-public companies, but are becoming increasingly common at companies with prominent founders at the head, both inside and out of tech.

The clothing company Canada Goose, for example, which went public in 2017, also had a dual class structure. Zoom, which also filed its S-1 on Friday, also has a dual-class structure — to the benefit of founding CEO Eric S. Yuan, who owns 22% of the company. 

Read more: Hot video meeting startup Zoom filed to go public, and it's profitable

Typically in companies with dual-class structures, founders and early investors own Class B stock, which can have anywhere from 10 to 100 times the number of votes-per-share as the Class A stock, the type issued to retail investors after the IPO.

In the case of Pinterest, the Class B stock has 20 votes to every one vote held by the Class A stock. Pinterest didn't disclose what percent of the voting power will be held by Class B shareholders.

The way Pinterest is set up, Class B shareholders will lose their super-voting powers in 2026 if they have sold off more than half of their stake in the company. Those high-vote Class B shares will automatically convert into low-vote Class A shares seven years after the IPO, under those conditions.

Notably, if Silbermann were to sell more than 50% of his shares in Pinterest, he would be subject to the same provision — meaning that he, and his heirs, would lose the super-voting powers that come with his current stock.

Pinterest hasn't disclosed what percentage of the company is owned by who, though those details will likely come out in an amended version of its S-1.

SEE ALSO: Billion-dollar startup Zoom filed to go public — and shares of a totally unrelated company also called called Zoom shot up 1,100%

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'Apple will be next:' Google's big plan to upend the video game industry could be a 'preemptive strike' against Apple, analyst says (AAPL)

Sun, 03/24/2019 - 7:55am

  • Analysts believe gaming could be Apple's next big push into services following its expected video streaming announcement on Monday.
  • Now that Google has unveiled its Stadia gaming platform, Apple is one of the few major tech companies without a significant stake in the gaming market.
  • One analyst believes Apple's video service could set the stage for a push into gaming. 

Just days before Apple is expected to introduce a dramatic shift in its digital entertainment strategy, Google made a splashy announcement of its own: a new video game platform called Stadia. It represents a major leap for Google into an industry that’s expected to be worth $174 billion by 2021 — and Apple likely isn’t far behind, according to analysts.

“We believe Apple will be next,” Daniel Ives, managing director of equity research at Wedbush Securities, told Business Insider when asked about Apple’s potential in the video game market. “It’s really the early innings of what could be a massive next-generation growth opportunity as more gaming moves to the cloud and streaming.”

With or without Google’s Stadia launch, the pressure has long been on Apple to delve into the gaming market. That’s because gaming could serve as an important building block in Apple’s overall services strategy moving forward, according to Gene Munster, managing partner at Loup Ventures and a longtime Apple analyst. Revenue from services like Apple Music and the App Store is more important than ever for the company as it seeks to offset slowing iPhone sales.

The company is expected to further fuel its fast-growing services business through the debut of two new products on March 25: a video-streaming subscription offering and a subscription news service, the former of which could set the stage for Apple’s gaming ambitions according to Ives. “We believe gaming is front and center,” he said, adding that if Apple were to launch its own gaming service it could attract tens of millions of subscribers in the next three years. Google's Stadia launch could have been a "preemptive strike" against Apple's plans to get into the gaming market, Ives said.

The notion that Apple could be getting into gaming surfaced in January when Cheddar reported that Apple is developing a video game subscription service that would allow access to a bundle of titles for one price. Apple is in the early stages of development according to the report, and is said to have been discussing the concept with developers since the second half of 2018.

Google’s decision to launch Stadia leaves Apple as one of the few large tech companies without a major stake in the gaming market, which games and esports analytics firm Newzoo estimates will jump from being worth $134.9 billion in 2018 to $174 billion in 2021. Microsoft and Sony have long dominated the console space, and Facebook entered the gaming industry in more recent years through its Oculus headsets. Amazon also acquired Twitch in 2014, the video game viewing platform that has made new age celebrities out of gamers like Tyler Blevins, better known as Ninja, who stream their gameplay sessions of games like "Fortnite" to tens of thousands of viewers.

A gaming service is not expected to be announced at Apple’s upcoming event, according to multiple reports from Bloomberg and The Wall Street Journal among other outlets. But Ives predicts Apple could leave “breadcrumbs” about a gaming service on Monday by hinting that there are more announcements in store over the coming months. Munster, meanwhile, believes Apple could announce a gaming service in the fall when it traditionally unveils its new iPhone models.

If Apple does decide to dive more deeply into the video game market, it would have an edge in its hardware business, which has yielded an installed base of 1.4 billion devices. A push into gaming would give the company another means of generating revenue from the billions of Apple devices already in use. And since Apple manages the hardware experience, the software that runs on its devices, and the App Store that its customers download games and apps from, it’s in a unique position to best optimize its devices for gaming down the road, says Munster.

That’s unlike Google’s Android operating system, which powers devices made by many different electronics manufacturers from around the globe. “I don’t know what the exact linkage between those three is, but it is an inherent advantage to have all three of them together,” Munster said.

Apple may not be a major console platform holder like Microsoft and Sony, but the iPhone did play a pivotal role in the rise of mobile gaming. Still, Munster believes Apple would target avid gamers that are interested in more than just casual games like “Candy Crush” and “Angry Birds” with a new service. Although Apple has an advantage in the iPhone, Google’s Stadia is better positioned to cater to players that want to watch games and stream their gameplay to broad audiences thanks to YouTube. “[Apple and Google] each bring something a little bit different, but with the same end goal,” said Munster.

Advancements in cloud-computing technology combined with the meteoric rise of Epic Games’ "Fortnite" — which can be played on smartphones, consoles, and computers — makes this an ideal time for newer entrants like Google (and perhaps Apple eventually) to compete against established console platform holders Microsoft and Sony. Ives referred to "Fortnite" as the “silver bullet” that pushed the market toward cloud gaming and streaming. “It’s kind of disenfranchised the whole gaming world,” he said.

Of course, Apple’s rumored gaming service wouldn’t be able to thrive without games. To that end, Ives believes the company will acquire game publishers in an effort to get content onto its platform. That aligns with comments that J.P. Morgan’s Samik Chatterjee made earlier this year in a note obtained by MarketWatch, in which he wrote that investors are hopeful that Apple will explore acquisitions to boost its services. “We believe the video gaming industry stands out to us as a potential sector of interest for Apple, particularly given the industry is rapidly transitioning to mobile,” he wrote. Chatterjee also previously suggested Activision Blizzard could be an ideal acquisition target for Apple.

But ultimately Apple’s success in the gaming market will depend on the company’s commitment to the product and the approach it takes in broadening its streaming offerings beyond video, according to Ive. “I think it’s been their Achilles heel,” he said. “They’ve waited too long and they’ve put one toe in the water instead of jumping into the lake.”

Join the conversation about this story »

NOW WATCH: Watch Google unveil Stadia, its new video-game platform that streams across devices without a console

THE EVOLUTION OF THE US NEOBANK MARKET: Why the US digital-only banking space may finally be poised for the spotlight (GS, JPM)

Sun, 03/24/2019 - 7:09am

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

Neobanks, digital-only banks that aren’t saddled by traditional banking technology and costly networks of physical branches, have been working to redefine retail banking in major markets around the world.

Driven by innovation-friendly regulatory reforms, these companies have especially gained traction in Europe over the last three years. While the US is home to some of the oldest neobanks — including Simple, which set up shop in 2009, and Moven, which was founded in 2011 — the country's neobank ecosystem has lagged behind its European counterpart.

That’s largely because of an onerous regulatory regime, which has made it very difficult to obtain a banking license, and the entrenched position incumbents hold in the financial lives of US consumers. Navigating the tedious and costly scheme for obtaining a banking charter and appropriate approvals has been a major stumbling block for the country’s digital banking upstarts. However, developments over the past year suggest these startups are finally poised for the spotlight in the US. 

In this report, Business Insider Intelligence maps out the factors contributing to this shifting tide, examines how key players are positioning themselves to take advantage, and explores how incumbents can embark on their own digital transformations to stave off disruption.

The companies mentioned in this report are: Aspiration, Chime, Goldman Sachs' Marcus, JPMorgan Chase's Finn, N26, and Revolut. 

Here are some of the key takeaways from the report:

  • Despite lagging behind Europe, recent developments suggest that neobanks are finally ready for the spotlight in the US.
  • Three distinct influences are responsible for creating the fertile ground for this evolution: regulation, shifting consumer attitudes, and the activity of incumbent banks.
  • Among those driving this evolution in the US are foreign neobanks including Germany’s N26 and UK-based Revolut.
  • Meanwhile, two notable incumbent-owned outfits have deployed amid great fanfare: Marcus by Goldman Sachs and Finn by Chase. 
  • In this increasingly competitive landscape, incumbent banks have a range of strategic options at their disposal, including overhauling their entire business for the digital era.

 In full, the report:

  • Details the factors contributing to a shift in the US' neobank market.
  • Explains the different operating models neobanks in the US are deploying to roll out their services and meet consumer demands.
  • Highlights how incumbent banks are tapping into the advantages offered by stand-alone digital outfits. 
  • Discusses the key strategies established players need to deploy to remain relevant in the US' increasingly digital banking landscape.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >>Purchase & Download Now
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The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of the fast-moving world of Fintech.

SEE ALSO: Latest fintech industry trends, technologies and research from our ecosystem report

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US companies are going public later and later and it's having a major impact on investing

Sun, 03/24/2019 - 6:33am

  • US companies are opting to go public much later than they did in the past, which is having a major impact on investing trends. 
  • Late stage VCs are raising more money than ever before to take advantage of value creation opportunities from high growth businesses. 
  • Early stage or seed VC funding is seeing volumes shrink, meaning important initial investments are more difficult for new companies. 

US companies are opting to go public much later than they did in the past and it is having a major impact on investing trends and the ways that VCs are operating. 

In the past, going public was the best way to raise capital, access new funding, and develop businesses. But today, the US has "abnormally few listed firms," according to a working paper from the National Bureau of Economics.

In 1975 there were 22 public firms for every million Americans. Now that number is just 11, according to Quartz.

The dearth of investment options is stark for a number of reasons, among them that a lack of choice is shrinking the available market for average investors. It also removes from the investing public the opportunity to benefit from the value creation that typically occurs in the early years of a company's life.

"The amount of money in early stages is diminishing which means that the pipeline for funding is broken," according to Jonathan Breeze, CEO of Aardvark Compare, who talked to Business Insider.

The impending mega IPO for Lyft is a case in point. The company is valued at $23 billion, a sum so vast that it implies that much of its growth has already been captured by private investors and VCs who got in early, rather than the public to whom the company will now be sold.

Lyft is six years old and has yet to turn a profit. It has received $5 billion in total VC funding. It managed losses of $911 million in 2018.

For context, Amazon was valued at $438 million at the time of its IPO in 1997.

Lyft is a good example of what happens in a VC market that is more accommodating than ever before. "Mega-rounds" are now a major feature of the industry. Rounds for more than $50 million of new investment account for more than 62% of the entire start-up funding market, according to Suster. Similarly, last year, 256 funds raised $55 billion for VC funding — the most since the dot-com bubble.

For tech startups in particular, public listings can be tricky — making private capital preferable. High standards of disclosure and stringent public accounting standards make things difficult for companies whose main assets are intellectual property. US securities law requires companies to disclose their activities in detail. But startups are wary of sharing information that might benefit their competitors discouraging them from going public.

The rise of late-stage capital is having an distorting impact on the set up of the entire credit market for startups: companies are going public on average five years later than before. The average age of a company going public is now 20 years old, up from 12 in 1997, per Quartz.

SEE ALSO: These are the 15 European fintechs VCs think will blow up in 2019

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NOW WATCH: Physicists have discovered that rotating black holes might serve as portals for hyperspace travel

Stocks just traded like they do right before recessions begin — and one of Wall Street's biggest bulls warns a 'big test' of the worst-case scenario could fail

Sun, 03/24/2019 - 6:05am

  • The stock market's correction late last year was consistent with its historical pre-recession pattern, judging by its median decline before prior meltdowns, according to RBC Capital Markets. 
  • The sell-off was driven by concerns about US economic growth and to what extent the Federal Reserve was mitigating a slowdown.
  • Although stocks have rebounded from their lows, Lori Calvasina, RBC's head of US equity strategy, says they are still poised to face a big test of whether these growth fears are valid or not.

The so-called Santa rally was nowhere to be found at the end of 2018. 

Instead, investors endured a 20% correction from mid-September peak through Christmas Eve. Not only was it driven by fears of an economic recession, its scope was eerily similar to the sell-offs that preceded prior economic calamities, according to RBC Capital Markets. 

Data from the firm showed the median drop in the S&P 500 prior to recessions dating back to the 1930s was 24%. The average was higher — at 32% — but skewed by uncommon downturns like the Great Recession and tech bubble. 

Despite this, Lori Calvasina, RBC's head of US equity strategy, remains bullish on stocks — so much so that she raised her year-end price target for the S&P 500 to 2,950 from 2,900.

But even as one of Wall Street's biggest bulls, she says the next couple of weeks are full of hurdles that must be cleared in order to lift uncertainty about the economy and company's earnings potential by extension. If stocks proceed to price in a mild recession, the S&P 500 could tumble to as low as 2,200, Calvasina said, in line with its median peak-to-trough decline before prior economic slowdowns.

"Stocks face a big test in early 2Q," she said in a note to clients. 

She added: "We continue to believe the US economy will soon climb out of the rough patch that the stock market paid the price for in December. But for stocks to hang on to their YTD gains near-term and/or climb higher from here we think investors will need to see evidence that the economy is back on track relatively soon."

Read more: Legendary economist Gary Shilling sounds the alarm on a downward spiral confronting investors — one the Fed has signaled is fast approaching

The jobs market is a primary location where she sees red flags popping up, and where evidence of a continued expansion will be most welcome to investors.

Calvasina said all the employment indicators she tracks, from announced job cuts to manufacturing indexes in Kansas City and Philadelphia, have fallen or stalled in the last few months. She added that on the bright side, most of these indicators are still high relative to history and above the levels they fell to during the 2015-2016 growth scare. 

Another component of the stock market's test lies in whether big investors pile back into equity funds. Their allocations to tactical asset allocation and global large-cap equity funds fell from near-historical peaks amid the correction in Q4, Calvasina said. 

The slowdown in flows into equity funds has also been captured by Bank of America Merrill Lynch, which reported $20.7 billion in outflows this week. Cumulative flows into tech stocks, a major contributor to the bull market's gains, have fallen off a cliff and to levels last seen in 2017, the bank's data show. 

Looking beyond how investors are positioned now, Calvasina said they may soon consider selling US stocks to fund purchases in non-US markets that are not as richly valued. A chorus of experts has been recommending emerging markets to their clients, expecting a sharp rebound this year after last year's plunge.

For Calvasina, this possible rotation is just another reason to worry about how US stocks fare in the coming weeks. 

On Friday, the credit market provided a new reason of its own: the spread between the 3-month bill and 10-year note inverted for the first time in 12 years. Inversions like this — notably on the 2-10-year yield curve, which is still above water — have served as reliable recession indicators.  

SEE ALSO: Bank of America says these are the 3 triggers that should prompt investors to sell stocks imminently

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NOW WATCH: The founder and CIO of $12 billion Ariel Investments breaks down how his top-ranked flagship fund has crushed its peers over the past 10 years

This is China's playbook to pit EU countries against each other

Sun, 03/24/2019 - 4:57am

  • President Xi Jinping is on a six-day visit to Italy, Monaco, and France, where he plans to court individual EU countries and foster relationships with each of them.
  • It comes as the EU is trying to hammer out a coherent and aggressive policy against China in terms of trade and security.
  • Experts say China could be picking off EU countries and pitting them against each other to prevent the 28-nation bloc from having one united policy that could hamper Beijing's economic plans.

China has big ambitions for the EU — and the bloc seems rattled.

The EU is trying to hammer out a coherent policy to deal with China, while Beijing has been actively courting relationships with individual EU countries. 

Experts say this could be part of China's playbook to pit EU states against each other, to avoid the bloc — its biggest trading partner — from formulating trade practices that could harm Beijing.

President Xi Jinping is currently spending six days in Europe, visiting Italy, Monaco, and France, where he plans to meet with leaders and undertake trade negotiations.

In Rome on Saturday Xi oversaw Italy's signing a memorandum of understanding to join the Belt and Road Initiative, China's flagship trade project aimed to connect the world via infrastructure.

The two nations also signed ten additional deals in sectors including port management, energy, steel, and gas, that could be worth up to 20 billion euros ($22.62 billion), Reuters reported.

Read more: Xi Jinping's dream to connect the entire world with Chinese-built infrastructure just claimed one of its biggest victories yet

Li Keqiang, China's premier, is also set to visit Brussels for an EU-China summit on April 9 before going to Croatia to meet with the 16+1, a consortium of 11 EU member states in central and eastern Europe,and five Balkan countries  that Beijing devised as part of its push into Europe.

Is China trying to divide the EU?

Robert Cooper, a EU foreign policy adviser, told the Financial Times last week: "China has discovered it can pick off different EU members and stop the EU having a China policy."

Teresa Coratella, program manager at the European Council on Foreign Relations in Rome, told Business Insider: "I think that China would definitely prefer to have 27 different policies instead of one united one, because this would leave more space for maneuvering and for pushing for its own primary interests. But this would be the case of any partner of the EU."

She said, however, that China wasn't trying to divide the EU — rather, the act of pitting EU countries against one another for Beijing's benefit was "simple politics and policymaking."

"China is pushing for its own strategic interests," she said. "The final objective is to go back to China with the best outcome that one could get."

"It's not in the interests of anyone to show a divided Europe, but again whatever would have China have the most of it, China will do it. It's just simple politics and policymaking."

The Chinese embassy in London did not respond to a request for comment from Business Insider for this story.

Europe's muddled policy on China

The EU has so far been split over its attitude to China's economic influence.

Some EU leaders have recently been trying to intensify the bloc's efforts to formulate a coordinated and aggressive approach toward China, particularly in terms of trade, while other countries like Italy have sought closer relations with Beijing, seeing it as a new source of investment for Europe.

Countries like Germany and France have been concerned with what they consider unfair subsidies affecting the price of Chinese imports into the EU, and state involvement in the economy.

The two countries have pushed for more stringent screening measures on foreign investment in what appears to be an effort to restrict China's access to the EU, Reuters noted.

"The period of European naivety is over," French President Emmanuel Macron told an EU conference on Friday, referring to the EU's relationship with China.

"China is a partner, but it is at the same time a competitor. It's crucial that there be fair trade conditions," Austrian Chancellor Sebastian Kurz added at the same meeting.

The EU has also been a bulwark against the US in terms of cybersecurity fears. The Trump administration has been pressuring the EU to ban Huawei, the Chinese telecom giant, from its 5G network. It even warned Germany that if it adopted Huawei's technology, it would risk losing access to US intelligence sharing.

The bloc has appeared unwilling to impose a blanket ban on Huawei, however.

According to a Politico report, Ulrik Trolle Smed, chief cybersecurity adviser to European Security Commissioner Julian King, said last month: "A complete ban, I don't think that's the European way."

Read more: Huawei's CTO for Germany dismisses spying claims as absurd and 'technically impossible'

'The perfect time' for China to visit Europe

Xi and Li's visits are strategically timed because the EU is distracted with internal politics, and is therefore more susceptible to foreign influences in their policymaking, Coratella said.

"All the member states are now totally involved in political campaigning or EU elections [from May 23 to 25]," she said. They are also preoccupied with Brexit negotiations, she said.

"Traditional parties and governments are fighting to regain some of the consensus that they lost, and on the other side, you have new political movements, new political parties gaining much consensus."

"The moment is perfect for an external actor," she said.

SEE ALSO: This map shows a trillion-dollar reason why China is oppressing more than a million Muslims

READ MORE: Germany first? Europe's biggest economy looks more protectionist by the day

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NOW WATCH: Alexandria Ocasio-Cortez is being praised for her line of questioning at Michael Cohen's hearing — watch it here

Here's how fintech is taking over the world — and what's coming next

Sun, 03/24/2019 - 12:06am

Digital disruption is affecting every aspect of the fintech industry.

Over the past five years, fintech has established itself as a fundamental part of the global financial services ecosystem.

Fintech startups have raised, and continue to raise, billions of dollars annually, pushing incumbent financial institutions to get in on the action. Legacy players have begun using fintech to remain competitive in a rapidly evolving financial services landscape.

So what's next?

Business Insider Intelligence, Business Insider's premium research service, explores recent innovations in the fintech space as well as what might be coming in the future in our brand new exclusive slide deck, The Future of Fintech: How Fintech Is Taking Over The World and What Comes Next.

To get your copy of this free slide deck, click here.

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[Report] Future of Life Insurance Industry: Insurtech & Trends in 2018

Sat, 03/23/2019 - 3:03pm
  • Life insurance is fundamentally hard to sell; it’s morbid to think about, promises no immediate rewards, and often requires a lengthy paper application with minimal guidance.
  • Despite the popularity of personalized products in other areas of finance and fintech, life insurance largely remains unchanged.
  • A small, but growing pocket of insurtech startups are shaking up the status quo by finding ways to digitize life insurance and increase its appeal.

Life insurance is a fundamentally difficult product to sell; it requires people to think about their deaths without promising any immediate returns.

And, despite tech innovations and the development of personalized services in other areas of finance, life insurance remains largely unchanged.

Luckily, there is a small but growing pocket of insurtech startups looking to modernize it. These companies are finding ways to digitize life insurance to  appeal to consumers — and they’re giving incumbents the opportunity to revamp traditional offerings, either by partnering with them or using their technology.

Business Insider Intelligence, Business Insider's premium research service, has forecasted the shifting landscape of life insurance in the The Future of Life Insurance report. Here are the key problems insurtechs are tackling:

  • Lack of education: Forty percent of US consumers told the Life Insurance and Market Research Association (LIMRA) that they feel intimidated by the life insurance application process, often drastically overestimating its cost and facing uncertainty about how much or which type of coverage to buy.
  • Inconvenient application process: It can take weeks or months for coverage to take effect because of the sheer number of meetings and parties combing through paperwork in each round of the application process. The risk for the insurer often warrants reviews from the carrier, a team of underwriters, a broker, and even a medical examiner.
  • Low customer loyalty: Life insurance tends to be a “set it and forget it” type of purchase, with very few people revisiting it after buying. Insurers and consumers therefore have limited contact for most of the relationship — with the exception of an annual bill, of course.
  • Inefficient data management and processing: The aggregate data life insurers rely on is typically fed into algorithms that make broad assumptions about particular populations, and often incorporate outdated medical documentation — all of which can delay applications and result in unnecessary rejections.

Want to learn more?

The need for modernization in life insurance is clear: Overall sales are slowing and policy ownership is hitting record lows. And because it’s such a tightly-regulated space, innovation from incumbents has stagnated — but they’re not helpless. Consumer-focused and insurer-focused startups have emerged to offer new technologies and process improvements.

The Future of Life Insurance report from Business Insider Intelligence looks at the two main strategies life insurtechs are adopting to drive change in this market, for the benefit of both buyers and sellers. In full, the report discusses best practices incumbents and startups should adopt to steer clear of the risks attached to applying emerging technologies to such a tightly regulated product.

Insurtech startups will soon set new industry standards and consumer expectations around this complex product. That, in turn will serve as a catalyst for innovation among legacy players.

Companies included in this report: Ladder, Haven Life, Getsurance, Tomorrow, Fabric, Atidot, AllLife, Royal London, Polly, Life.io, Legal & General, Vitality, Discovery, John Hancock, Dai-ichi Life.

Get The Future of Life Insurance

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