My Cashless Experiment

£72,000,000,000 - the estimated value of all notes and coins in circulation in the UK. This equates to around 31 billion pieces of metal, paper, and now plastic. Wouldn’t it be great if we could get rid of all of this? Cashless societies or economies have been talked about for many years and some countries are a bit further along the path than others. Just a few weeks ago the Indian Prime Minister urged businesses and citizens to embrace digital payments saying "We can gradually move from a less-cash society to a cashless society.”

One of the leaders in this is Sweden (of course) where only 2% of all payments use cash and over half of bank branches neither accept cash deposits nor give out cash to customers.

To see how far along this path the UK is I thought I’d try a little experiment, I wanted to see how far I could get without using cash for a week. Armed with my Mondo (now Monzo) card I set off. Here’s how it went:

My experiment started on a Sunday with a trip back up to London from Southampton. I needed to get to the train station. I check Uber and there’s no cars available but I know the local taxi company accepts cards, this should be easy. We get to the train station and I asked to pay by card, the driver huffed and groaned. We sat there for a good few minutes while the card machine booted up and I got charged an extra £1 for the pleasure. Not a good start I thought.

I was hoping the rest of the week would go a bit better, particularly as I was now in London, the FinTech capital of the world.

The first test on Monday was a lunchtime trip to a cafe now known between my colleague and I as the ‘crazy Italian’ simply as it’s utter chaos in there (but the food tastes great). Anyway, I order my sandwich and go to pay but of course they don’t accept cards. Luckily my colleague lent me a tenner (which I probably still owe, sorry). Again, not a great start to the week.

Tuesday was a rainy day so it was lunch in the office canteen, unfortunately. Here they do accept cards although there’s a £3.50 minimum spend. Not great I’ll take it.

After just a few days in I wasn’t feeling hopeful. Lunch for Wednesday was at a local bakery which amazingly accepted card payments - YAY!!! The day ended with an evening in Hyde Park’s Winter Wonderland. Getting their on the tube was super easy just using contactless at the station barriers but of course nowhere in Winter Wonderland accepted cards - it was a trip to find one of only a few cashpoints on the site.

By Thursday I was really not feeling great (and not because of a hangover) about the experiment. Only twice so far (baguette shop and tube) had I had a nice and easy cashless experience. The day consisted of various meetings around London, travelling via tubes and buses - again super easy with contactless. One of the meetings was in a nice little coffee shop, we order our drinks and then realise they don’t accept cards. Neither of us had cash so we had to go to Pret next door. I was getting really bored of this experiment by now.

Finally, the last day. It was straight to the pub after work where thankfully they welcome card payments. I don’t remember what happened the rest of the evening :)

So what I thought was going to be a nice, interesting experiment turned out to be pretty rubbish. I had high hopes for London’s small businesses. I mean it is 2016 in the financial capital of the world.

I learnt that week that we’ve got a long way to go before the UK becomes a cashless society. Oh well.

The Problem with Trolley Problems

There’s a runaway train barrelling down the tracks. It will kill 5 people, but, there’s a lever you could pull to divert the train and it will then kill only 1 person. What do you do?

This is the trolley problem. Everyone has heard something similar and there are an infinite number of variants. I remember them featuring heavily in high school R.E. and Philosophy lessons as a way to engage the class in debate and to help us easily understand the different philosophical approaches.

Now though they've recently been used by many as a way to ask what an autonomous vehicle would do in a situation where it could, let’s say, either kill a group of pedestrians or kill the vehicle’s passengers. I have a problem with this.

The first issue is that the situations often described are entirely unrealistic. I’ve seen everything from a cyclist pulling out to a group of children suddenly being in the road. When was the last time a group of pedestrians suddenly entered the road right in front of you? I’ve been driving for something like 8 years and it’s certainly never happened to me. Yes, people can step out in to the road but the chances are you’ve seen them on the pavement, perhaps even looking as though they’re about to cross. They certainly don’t appear in the front of your vehicle to the point that an emergency stop isn’t sufficient.

Secondly, we’re saying that a vehicle will have the ‘intelligence’ to make reasoned and complex decisions within a matter of milliseconds but will not have the capability to either a) identify the situation unfolding and take proactive action (e.g. slowing down, pre-engaging brakes, changing lane) or b) take emergency action and very quickly bring the vehicle to a stop or avoid a collision altogether by some other means. In a situation where proactive action could not be taken why would the vehicle do anything but perform an emergency stop just as we do today? Surely if the vehicle has the technology to make complex decisions it will also have the technology to simply avoid a collision altogether (by a combination of reacting quickly and with advanced mechanics and materials i.e. braking systems).

Additionally, there is the issue that there is a huge degree of uncertainty in these situations, even those that are mildly realistic. How can the vehicle ever know how external actors are going to behave? For example, if there is going to be a collision between a vehicle and a cyclist how can the vehicle ever know how the cyclist is going to be behave in such a situation. Let’s say the vehicle makes the decision to put itself in to a wall to avoid hitting the cyclist but the cyclist manages to move out of the way anyway. The vehicle has now potentially injured the passengers for no reason. My point here is that there are far too many variables and unknowns for a vehicle to ever do more than perform an emergency stop or take proactive action if it recognises a potential incident might happen. It is not unreasonable to say that the vehicle will always perform the action with the greatest certainty in the outcome and that will always be protecting itself (and therefore the passengers) as that’s the only thing it has control over and the only thing it knows the behaviour of.

Now I’m not saying I don’t like trolley problems in their entirety, they certainly have their place, as I mentioned at the start but I don’t think that the application of autonomous vehicles is one of them. I will say this though, it has been great that these sorts of debates have and are being had but I don’t see there ever being a decision like this being made by a vehicle.

The IoT Iceberg

The Internet of Things. A bit of a buzzword since it’s inception in the late 1990’s by a guy called Kevin Ashton (a Brit by the way). Almost every day we hear some companies hot take, hear about some start-up developing new hardware, hear about an incumbent building 'yet another IoT innovation lab’, and almost every time we dismiss it as nonsence that no-one would ever need. There’s good reason we’ve thought this. IoT products have largely been a bit pointless, security has almost completely been ignored, and lots of the backend systems haven’t been developed properly, if at all. There’s even a dedicated, and quite successful, Twitter account (@internetofshit) posting about the (mostly funny) failings of IoT. However, I think we’ve now reached an inflection point where the ‘usefulness’ of IoT is on the up.

You see, most of the IoT is actually behind the scenes, it’s under the water, it’s the bits that the average consumer doesn’t see, and it is recently started being developed at an astonishing rate.

Specific Internet of Things networks are going up all over the world. Countries such as South Korea and the Netherlands have country wide IoT networks based on LPWAN (Low Power Wide Area Network) technology such as LoRa and LoRaWAN. Additionally, nearly all of France, Spain and the Czech Republic have Sigfox coverage thanks to their private investment in those countries. Sigfox is another LPWAN based technology. In the UK we have a bit of piecemeal approach to IoT networks. For example, Sigfox is present in some of the larger cities such as London and Liverpool while rival LPMESH based technology such as ZigBee is present across Hampshire.

The Hampshire network is quite a good example of what I’m talking about actually. I’ve lived in Southampton, a city in Hampshire, for about 3 years and had no idea that the whole county was covered by a ZigBee network. It was not until I went to a conference in Berlin that I learnt about this network. It happens that since 2010 every one of the 150,000 or so street lights in Hampshire have been replaced by a ‘Smart Lighting’ system where each lamppost has a ZigBee sub-node on it allowing each street light to be centrally controlled and for new IoT sensors to be added. The main aim of this was originally to save money and its provided around a 40% reduction in lighting energy consumption so far which equates to about £2 million/year - in part due to more efficient lighting and in part due to smart control. Now though this network is being used to test and trial a whole host of other ideas such as monitoring available parking spaces and environmental monitoring. The point I’m making here is that this huge enabling network now exists and most people don’t know about it - it’s the part of the iceberg that’s under the water.

In the news recently was the huge £24 Billion acquisition of ARM by SoftBank. ARM are well known for being ahead of the field in terms of processors for mobile. Their processors are the most power efficient on the market which is a huge advantage for IoT devices where potentially years of battery life are required. It think it’s no coincidence that ARM have been purchased at this point in time.

So, all of this stuff that the consumer doesn’t see is starting to enable consumer facing products that actually offer some benefit. We’re starting to see a number of the big players get seriously in to IoT and actually develop useful products. I don’t normally have good things to say about Samsung but in IoT they’re probably leading the way with their SmartThings product line. One of the major advantages of this is that the SmartThings Hub works with a wide range of products other than those developed by Samsung. This means that your Philips Hue Lights, Bose SoundTouch, or your Yale Smartlock all work off of one hub and one smartphone app. One of the key pillars of IoT will be interoperability.

We have an interesting few years ahead of us as the IoT networks get rolled out behind the scenes and useful consumer products start to slowly enter the market. This is all even before the behemoth that is 5G comes our way by 2020.

I’ll leave you with this great tweet from @BenHammersley:

A Month with Mondo

UK FinTech (Financial Technology) is on fire at the moment and one of the start-ups at the forefront is a challenger bank called Mondo. Mondo is still a relatively small start-up with somewhere in the region of £7 million of Venture Capital funding with Eileen Burbidge's Passion Capital funding £6 million and the other £1 million being raised in a record breaking 96 seconds on Crowdcube earlier this year. Mondo is currently in Beta with apparently around 20,000 customers and a waiting list even longer. Now Mondo isn’t a bank just yet and as such gives customers what is essentially a pre-pay MasterCard but they say they aim to get their banking license (at least a restricted one) in a few months time. What the Mondo Beta has shown so far though is a glimpse in to the future of banking and I have to say it’s quite bright.

To understand why Mondo is great, oh and this isn’t in any way sponsored by the way, Mondo won’t know I’ve published this post unless they read it themselves here, you have to look at what is wrong with the traditional banks and it all ultimately boils down to the fact that they don’t understand mobile and they don’t understand UX (User Experience).

The traditional banks saw mobile as a way to simply provide a bank statement, in fact, if you look at your mobile banking app it’s pretty much the same as getting a paper statement in the post in that it’s just a list of transactions, search is limited if it exists at all, and if you want to do anything even mildly useful you generally have to logon to the desktop website or even phone them (what the?).

Mondo, like most start-ups, have adopted a mobile first philosophy. They don’t have a banking website and they don’t have phone banking either and why would they? Everything you could ever need to do is or at least will be done through the app, and that is one of the major things missing from traditional banks. If you read some of the Mondo founder’s blog posts and listen to/watch some of his interviews then you’ll notice that the way they think about mobile is completely different to traditional banks, for example, using your mobile’s location services to determine whether or not transactions are fraudulent i.e. if your phone is in the same location as the transaction it probably isn’t fraudulent - particularly useful when you’re abroad. Mondo seem to realise that mobile allows them to overcome some of the biggest annoyances we have with consumer banking.

It’s not just their attitude to mobile that makes them great though, it’s their entire ethos to customer experience. A recent trip to Paris is a perfect example. My traditional bank charge a 2.75% fee for non-sterling transactions and another 2% fee for using a cashpoint abroad - crazy right? Mondo don’t charge a penny for either. This completely changed the way I travel. I used to search online for the best exchange rates, order currency online and then go to a physical store to get a big wod of cash - hundreds of Euros or Dollars. Now you’d never have £400 in cash when you’re at home (unless you want to be mistaken for a drug dealer perhaps) but somehow we do it when we're on holiday. Well as you can imagine with Mondo I didn’t need to do any of that, I behaved as I do at home and paid for 99% of things with my card and had about €20 in my wallet for those few times I needed cash. What’s more I could see immediately what the cost in both £ and € was straight on the app. You get none of this transparent experience with a traditional bank.

There’s a few other really good features of Mondo too. Merchant info is crowd sourced, you can see your entire history with a merchant including total and average expenditure in just a tap. If you misplace your card you can freeze it immediately from within the app. You get a breakdown of your monthly expenditure by category, and you can manually change the category of each transaction individually. Search though is one of the major features of the Mondo app for me. Search in Mondo seems to use somewhat of a natural language processing technique to allow search over time periods, locations, merchants, category and more just be typing. So, a search for ‘Lunch in London last month’ will show all transactions marked as ‘Lunch’ that happened in June and that look place in London.

Mondo also provide an API for 3rd party app developers to interact with the platform and develop new tools.

Now that I’ve banged on about all the good things I do of course have to discuss some of the improvements that need to happen. Something that’s missing but seems really simple is a low balance notification with an action to top-up the card. I’ve had multiple occasions where the card has declined due to insufficient funds. It would be great if there were a ‘suggested top-up amount’ based on previous spending habits and perhaps an auto top-up option.

Another major let down is the lack of Apple Pay. There’re a lot of things I don’t use Mondo for because I can’t use Apple Pay. For example, I use Deliveroo almost daily and pay on their using Apple Pay just because it’s the most convenient and secure method. Same with Uber, same with Tesco. Apple Pay is on the roadmap for Mondo but I’m amazed that such a mobile focussed company hasn’t supported Apple (and Android) Pay since the start.

Next up is London Transport payments, they’re confusing AF. For some reason Mondo shows all of Transport for London’s ‘active card checks’ and seemingly all sorts of other transactions that ultimately become you’re actual tube fare. This means that various transactions appear, disappear and change over the course of a couple of days. Please Mondo just show the actual fare.

User authentication is also missing which seems to be a bit strange. There’s no app login at all. This means if someone is using my phone, whether I’ve let them use it or otherwise they can just tap the app and see all of my transactions and freeze my card. You do need to know the card’s PIN to transfer money though. This isn’t necessarily a major issue as if I’ve let someone use my phone I probably trust them and if it got stolen they’d need to know my phone’s unlock code or have my fingerprint (if they had either of these I think them being able to see what I spent in Waitrose would be the least of my worries). It does just seem a little relaxed on the security/privacy side.

Just as I was about to post this they updated the app to include TouchID login.

Something I haven’t tried/need to use yet is the customer service side to Mondo. With what I’m presuming is a relatively small team I’m not sure how good it’d be in particularly urgent situations. In fact the app does say ‘… we try to get back to you within the hour, evenings and weekends may take a bit longer.’. I could see many people being put off by this and actually finding it quite concerning that they can’t speak to/message somebody immediately, particularly as Mondo is dealing with people’s personal finances.

So as I said at the start of this post Mondo has so far given a really good insight in to what the future of consumer banking should look like. I’ll certainly continue using it and I’m looking forward to seeing new and useful features.

Now I should also say that Mondo aren’t the only ones doing this. If you have a read of my previous post you’ll see there’s quite a few other. In fact, I’ve just received an invite for Atom Bank which I’ll to try out.

Have you tried Mondo or another Challenger Bank? What did you think? Comment below.

Why I'm so Bullish on Uber

In case you didn't know I like Uber. Actually, no, I love Uber. I love Uber as a customer and I love Uber as an analyst, for many reasons. It's a disruptive company which has brought about huge innovation in an industry that has been largely unchanged since its inception in the early 1600s. Any company that has the ability to almost single handedly disrupt a worldwide industry as big as the taxi industry is certainly one to take notice of and investors have. The company is valued at over $60 Billion, the highest valuation ever for a private company. In it's 7 year existence Uber has surpassed the likes of Honda, Ford and Nissan, and is quickly catching up to BMW and Volkswagen. This is something that can't be ignored.

This massive valuation doesn't come from nothing though. Uber has something, it has the business model. I always believe innovative and successful companies need two things; the business model and the technology. So far I think Uber has the business model, and that's by far the most difficult bit to get right. Think how many times you've heard people say the 'Uber for X' when talking about new ideas and start-ups. 'Uberisation' has become a commonly used term, it even has it's own Wikipedia page: https://en.wikipedia.org/wiki/Uberisation

As I write this Apple has announced a $1 Billion investment in Didi - Uber's main rival in China. This is a massive technology company investing in a business model and customer base.

Innovation Quad

In the quad above it's easier to move right along the x-axis than it is to move upwards along the y-axis. Right now I see Uber being in the 'Business Innovators' sector.

So if Uber has got this huge valuation without the technology imagine how it will develop once it has it. But what is the technology? Well it's autonomous cars of course.

All Uber has to do now is sit and wait until fully autonomous cars become available in the next 10 years. Once this happens Uber can eliminate one of it's biggest costs, the drivers, and the service then becomes available to a much wider audience as it can charge much less. It could become as cheap as public transport for many journeys. Right now a journey from Vauxhall to Waterloo would cost £2.40 on the London Underground, and it would cost £5 on Uber Pool. Imagine how much that cost would drop if there was no driver and the vehicle was electric (It's not just about paying a drivers wages as with autonomous vehicles you potentially get much higher asset utilisation).

Now, almost every vehicle manufacturer (and some tech companies) is working on autonomous vehicles but so many of them are forgetting about the business model that comes with it. Remember that personal car ownership will die away as autonomous vehicles are introduced (Link) so how are they going to make their money? Uberisation.

You see once Uber has the technology it already has the worldwide customer base to take advantage of it while others may have the technology but have no one to sell it to.

It's true that some incumbents understand this. We've seen General Motors invest heavily in and partner with Lyft while BMW have their Drive Now on-demand service. The question is though; is this enough? And when comparing these to Uber they don't even come close.