Category Archives: Big Tech

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Here are a couple of fascinating facts for retail bankers to chew over: First, nine out of ten 90% of Gen Z respondents would consider obtaining a banking account from a nonbank company, and more than half (53%) of consumers overall would do so.

Second, 85% of Gen Z consumers say that for certain types of financial accounts they would only apply for them in person. For consumers overall almost two-thirds (64%) say the same.

While its true these are attitudinal would you questions, not descriptions of actual behavior, the sheer size of the numbers on two sides of the digital banking question coming from the same respondent base is eye opening.

Veteran financial services researcher Bill McCracken, President of Phoenix Synergistics, which fielded the national research, has a couple of key takeaways from this pair of statistics:

Two large retail banks that currently are getting this new digital/physical formula right are Bank of America and Capital One, says McCracken. Another, smaller, institution he singles out is Umpqua Bank with its signature Go-To banker program that enables every customer to have their own personal banker, reached digitally through its mobile app.

The Phoenix Synergistics survey, based on detailed online responses from 1,500 consumers collected in August 2020, focused on how the customer journey in banking has been changed by the rise of digital banking. In an interview with The Financial Brand, McCracken elaborated on several of the most significant findings.

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The research does not contradict the importance of digital transformation among financial institutions. If anything, the willingness of a majority (53%) of all consumers to obtain a banking account from a nonbank company affirms its importance.

More than that, the fact that nine out of ten Gen Z respondents are willing to turn to nonbank companies for banking accounts is more than eye-opening, its an overwhelming number, as the report states.

Amazon topped the list of specific nonbank companies consumers would be willing to do banking with, followed by PayPal and Walmart. Clearly youth reigns here as just under a quarter of Baby Boomers feel comfortable banking with big techs. As McCracken observes, even though older consumers use these digital platforms, Millennial and Gen Z users are much more comfortable with them. Younger consumers apply the same mindset for buying a new mobile phone case online in under five minutes to acquiring a checking account or a credit card or a mortgage, he states.

Baby Boomers, on the other hand, sometimes have difficulty online knowing where to go next or what to click, says McCracken.

Theyre thinking, A mortgage is a complicated product, do I want to do that on Amazon? Its a whole different mindset between those two generations, he observes.

Overall, the main reasons why so many consumers are willing to consider doing banking with big tech firms are more advanced technology and faster/easier processes, according to the survey.

All this should be a message in neon to financial institutions, McCracken states. Hes not sure how many have gotten the message, however. There are so far only a handful of what he calls technologically progressive financial institutions, including the ones named earlier. Bank of America is trying to be very close to an Amazon type of experience, the researcher states.

A telling statistic is that the average customer age at these institutions is much lower than the industry average: 38 at Capital One and 39 at BofA compared to the overall industry average of 44, according to McCracken. Credit unions as a group have an average customer age of 47, and some banks have an average age over 50, he says.

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The other striking statistic from this study, as noted earlier, was that 64% of consumers overall say that for some type of banking accounts they would prefer to apply in person and would not consider any other method. And again, Gen Z respondents stood out here with 85% agreeing with that statement. McCracken believes consumers are saying: Dont take away from us the ability to meet face-to-face or at least speak with a human by phone, video or live chat.

McCracken admits to being shocked by the fact that the type of account consumers most often prefer to open in person is the checking account. He and his team had expected it to be retirement accounts or mortgage-related accounts.

The more we thought it through, says McCracken, the more we realized that banks have done a tremendous job in making the checking account sticky. Today consumer checking accounts are tied into many products including direct deposit of payroll and ACH payments for mortgages, auto loans, credit cards and utilities.

Theres a level of complexity and importance with checking accounts that goes beyond simply signing the application and making a $25 deposit to open the account, McCracken points out.

By contrast, digital has become the preferred channel for opening credit card accounts and this is beginning to creep into lending products secured by homes.

In a separate survey during the summer of 2020, Phoenix Synergistics found that while a majority of consumers dont expect to change their branch or digital banking behavior post-pandemic, just over a quarter (27%) say they will use branches less. The figure is 40% among Gen Z respondents.

The results of the customer journey survey, however, indicate that consumers, and especially younger consumers, still do want to use every channel. To eliminate the branch channel altogether, McCracken believes, would be shortsighted for most institutions. You would be telling individuals that need or want face-to-face interaction that thats not an option, he states.

That said, the researcher suggests that institutions cant get by with the same branches of ten or 20 years ago. Self-service options and universal bankers who can knowledgeably handle a wide range of financial issues are examples of what is needed, McCracken believes.

Younger consumers need branches for different reasons, he states. I dont think Gen Zers go to a bank to deposit a check. Theyve got their phone for that. But theyre also not going in to meet with Sally or John sitting behind a wooden desk. Thats not their idea of a physical interaction, McCracken maintains. Something closer to an Apple Store experience would be, he says.

Banks and credit unions may not need as many branches as they have, but rather than closing all or most of them, McCracken suggests they should ask What do our branches need to be? What does our staff need to be? And then look at the digital banking elements and ask How should we integrate all of that?

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If the competitive challenge seems daunting and for many institutions it is , consider that the research also found that incumbent primary providers of banking services have an edge in getting additional business from existing customers.

However, once again, age is a major factor. While a minority of older and middle-aged consumers (and even Millennials) comparison shop among multiple financial institutions when looking for a new product, more than half of Gen Z do this.

See the article here:

Gen Z Says They're Eager to Use a Big Tech for Banking But Will They? - The Financial Brand

Following Trump's threat to ban TikTok in the US, the app has announced plans to become a standalone US company, with Oracle, a US software company, taking a minority stake. ByteDance, TikToks Chinese parent company, will remain the majority stakeholder.

After a lot of toing and froing, the latest update is that Trump has given his 'preliminary approval' of the deal, though he also announced that TikTok would be creating a $5 billion patriotic education fund, which they later denied.

As tension rises between China and the US over who has access to the data generated by the app, a gap is emerging between social media and politics. Instead of connecting people across nations, the TikTok circus has inflamed geopolitical tensions and highlighted a potential split between eastern and western internet infrastructure.

While TikToks announcement is a big story, Betsy Sigman, professor at Georgetown Universitys McDonough School of Business, points out that its far from a done deal.

Partnering with Oracle makes some sense, since Oracle CEO Larry Ellison is one of the only Silicon Valley tech leaders to vocally support Trump.

This could also help position Oracle well for the ongoing period of trade wars between China and the US, and expand into cloud operations and advertising, Betsy adds.

After a series of U-turns, its still hard to know wether the proposed deal actually satisfies the Whitehouse. Both Trump and the Committee for Foreign Intervention in the United States (CFIUS) want to ensure TikTok wont be passing any data from its many young American fans back to China, or posing any threat through malware.

In a recent stipulation, China insisted that TikToks algorithm counted as sensitive information that cant be shared with the US, adding further complications to any deal being made.

Kislaya Prasad, professor at Robert H Smith School of Business, believes this stipulation was made in order to delay a distressed sale. My guess is that they will stretch out the finer points of the deal until after the US election, he says.

Though Microsoft was tipped as the more likely partner, they turned down a deal after TikTok refused to give them end to end control of US data. It's possible the Oracle deal may have too lenient in this crucial area, causing further complications and doubts.

TikTok may appear nothing but a mindless, if addictive app, but the platform has become a battleground for ongoing political tensions between Washington and Beijing. There is an element of wrong place, wrong time, says Kislaya.

In a way, TikTok is a victim of its own success, he adds. There are over 100 million monthly active US users on the app.

Chinese tech companies may be more at risk of becoming pawns in the trade war with the US, since Chinese manufacturing is so hard to compete with. As the home to Amazon, Google, Facebook, and Microsoft, America can afford to throw its weight around in this arena.

Just as tense are concerns over data sovereignty, privacy, and security. When it comes to state access to information, China is playing by a completely different rulebook, says Kislaya.

State control of information is enshrined in Chinese law, and all Chinese companies are required to cooperate with any intelligence operation and request for data from the Chinese Communist Party.

The professors remain divided over the level of threat TikTok actually poses. Kislaya believes its alarmist to see TikTok as a huge threat to American security in its current state.

Betsy is more cautious, having already advised her American students to delete the app. There is a threat of software malfeasance if apps are connected to a company controlled by a country whose leadership has a past record of disregarding human rights, she says.

Both Betsy and Kislaya predict tensions will only continue to rise, as neither China nor the US show signs of backing down.

The drama over TikToks sale comes at a critical time for big tech, and in the wake of Silicon Valleys CEOs facing a grilling from the US congress anti-trust panel.

The issue is that tech giants have monopolized the market, but monopolization is often baked into the very premise of social media apps. Facebook becomes more valuable if there are lots of people on it, as does TikTok, says Kislaya.

Big tech will want free movement of data with no constraints at all, he adds, which is at direct odds with increasing government concerns over data protection.

In India, where TikTok is already banned, there has been a goldrush of new startups creating social media apps to fill the nations sudden vacuum.

Since ByteDance has had to break up its company to keep TikTok in the US, it may be that the age of establishing a new giant tech company is over. New companies may find it tough to break into different countries amid government tensions.

The whole situation highlights that there are really two different internets, Chinas, and Americas, says Kislaya. It seems increasingly unlikely any one company will ever operate in both America and China successfully.

Betsy also highlights how US tech giants have been quick to launch competitors to TikTok, such as Instagram Reels and YouTube Shorts. If such apps take off, the strength of the American tech giants may grow stronger still.

For both professors, the most important takeaway from the drama with TikTok is the need to regulate tech better, though this is a huge challenge in the current political climate.

For regulation around data sovereignty to work effectively, Kislaya suggests an international, institutional framework which sets out clear rules about how data is used and transferred between nations.

But if Trump wins in November, it may be a while before progress is made in this area.

Given the level of sophistication and constant developments in modern tech, its a difficult sector for politicians to keep up with. Awareness is increasing, but it may take a generational shift until those in power have the technical knowledge necessary to regulate properly.

For Betsy, this is too long to wait. The U.S government has to work harder to stay on top of cybercrime, data security, and the threat to digital misinformation. Too much is at stake to risk.

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How The Turmoil With TikTok Could Change The Course Of Big Tech - BusinessBecause

Stock investors focused on new worries about the coronavirus and economy, selling into a market Monday that was already technically shaken and set for further declines.

But Monday's sharp sell-off was different than the September slump that has centered on tech and growth stocks. Instead it was led by the cyclical names that had been gaining on expectations for a recovering economy, and not so much by the frothy growthnames that have been correcting.

"Things had to have changed for investors to be so nervous," said Sam Stovall, chief market strategist at CFRA. "With Europe starting to see a sharp increase in Covid cases, does that mean they 're going to reimpose shutdowns?" The U.K. government's top scientists warned the country could expect to see almost 50,000 new coronavirus cases per day in mid-October if no action is taken.

Another factor is the political uncertainty following the death of Supreme Court Justice Ruth Bader Ginsburg, with Republicans moving to replace her immediately and Democrats pushing for a delay until after the inauguration in January. That has intensified an already contentious divide, increases election uncertainties, and makes it less likely Congress will be working together on a stimulus package to support the economy, analysts said.

"Because the recovery from the earlier Sept. 8 low was so anemic, it was an indication that the market needed to go through more backing and filling before it's ready to advance," said Stovall.

Technical analysts say the market has seen a breakdown that could take the S&P 500 to its 200-day moving average at 3,104 or even lower.

Scott Redler, a technical strategist and partner with T3Live.com, said the S&P could test the psychological level of 3,200. "I would say there's a high probability we at least test 3,200 if not the 200-day," said Redler.

The S&P 500 was already down more than 7% from its early September high as of the closing bell Friday . The 200-day moving average is is a technical indicator broadly watched by many investors, not just technical analysts. It literally is the average closing price of a stock or index over the past 200 days and is looked at as a momentum indicator. It often acts as support in a declining market, but if it is broken, it could be a sign of more selling.

After a sharp sell-off during the trading day, the major indexes recovered much of their losses into the close, with the Dow off 1.8%. The S&P 500 was down 1.2% at 3,281, and tech-heavy Nasdaq, which had been leading the selling previously, was off just 0.1%. The Nasdaq was helped by a recovery in Apple and Amazon.

Apple, already in a 20% bear market decline, found its footing Monday and was slightly higher, as was Tesla. Strategists had expected tech to be a battleground in the market this week, with dip buyers looking for opportunities to buy the market favorites.

"I think Apple gave a little bit of confidence for tech to have some dip buying. It helped lift the overall indices off the lows. Does that give us confidence that we've seen the low of the week or next week? No, it was just a trade," said Redler, adding Apple was 22% off its highs. "If it continues, maybe it's better for the overall market, but for now it's hard to have a lot of confidence."

As for major sectors, materials were the hardest hit, followed by energy and industrials, all more than 3% lower. They were followed by financials, off about 2.5%. Airlines were down 7%. Tech turned positive, and was up 0.7% in the final hour, after being down most of the day. Communications services, including Alphabet and Facebook, was down 1.2%.

"I think some of it is that [cyclicals] had a good month. I think you have the algorithms that say to buy the stay-at-home names after the drubbing that went on in Europe, with the possibility of the U.K. crackdown again, and what that means for growth," said Peter Boockvar, chief investment strategist at Bleakley Advisory Group. "To me, this is an allocation shift. Let's go back to buying Zoom, Walmart and Peloton and selling anything that's leisure or travel-related. The sell-off in tech that started in early September started a very different tenor in the market. We were on a much more vulnerable footing going into today."

Redler said the S&P 500 chart also appears to be forming a head and shoulders chart pattern, a negative sign for stocks."That would give us a measured move down to 3,136," he said.

He said the market has been warning a bigger sell-off was in store."There are four or five things that are nipping at the heels of the market," he said. "In the last two weeks there have been many signals that this kind of action could happen and overall, it could be healthy," he said.

Redler said a move from the Sept. 2 high of 3,588 back to the 3,140 area would not be surprising since it started the rally in March at 2,190. "It's a way for people to buy the dip without thinking they're chasing it," he said.

Stovall said the market is in a seasonally negative time, with September the worst month of the year on average. The end of the month and quarter end is also approaching, though some analyst say that may be good for stocks as big investors rebalance stock and bond holdings.

"October tends to be a capitulation month," said Stovall.

Fundstrat technical analyst Rob Sluymer said he expects as bottom to be formed by October, and the market could see a move higher into the election. He said there are signs that tech stocks are ready for a bounce for a period, but then they and the market could continue to be choppy.

"A lot of the short-term indicators are starting to get oversold. Certainly names like Amazon and Apple, and a lot of the tech names are reaching short-term oversold levels," he said. "I think you're going to have this ebb and flow between technology and cyclicals into October."

Stovall said he still expects a shakeout in growth names which are still highly valued relative to value. The majority of the name in the tech sector are growth.

"The 12-month return for S&P 500 growth minus the 12-month return for S&P value at the end of August was at an all-time high of 35 percentage points," he said. As of Friday, that number was 29.6, lower but the highest since during the tech bubble in 2000. Stovall said he expects valuations to come more in line.

Paul LaRosa, chief market technician at Maxim Group, said he expects the S&P could go to 3,100, and Nasdaq could slide under 10,000, if it breaks support at 10,639. He said the Dow should see support at 27,450 but could see downside to 26,000.

"We don't see it as a market correction. You could see it more as a rotation than a broader market 'everything's going down' correction," he said. He noted that Apple is in a correction.

"I think Apple is in that small universe of companies that have just outperformedWe see it as a potential shift out of those namesinto some that haven't participated," he said.

Continued here:

Stock sell-off accelerates and is expected to get worse before it gets better - CNBC

AUSTIN (KXAN) The Longhorns truly start the 2020 season with the Big 12 opener at Texas Tech after the dismantling of UTEP in the season opener.

Normally, a trip to Lubbock would prove to be very difficult due to an intimidating environment of Red Raiders fans. However, this year, fan capacity will be limited due to restrictions during the COVID-19 pandemic.

Texas Tech struggled in its opener against Houston Baptist, fighting off a potential two-point conversion to hold off the Huskies for the 35-33 win in Lubbock on Sept. 12. The Red Raiders have also been battling COVID-19 outbreaks throughout its locker room. Last week, Texas Tech head coach Matt Wells said the Red Raiders had six active cases.

Its a 2:30 p.m. kickoff in Lubbock between the Longhorns and Red Raiders on Saturday.

Texas head coach Tom Herman met with the media on Monday to breakdown the match-up with Texas Tech.

I hate to even talk about it because I dont want to jinx it. We could certainly be next. I dont think anyone has a secret formula. I think our guys are really bought in. I dont know that were doing anything magical. I think part of it is that we got our rash of them out of the way early, but other than that I think our guys have bought in which is not easy thing to do in Austin at the Univeristy of Texas having to to live the life in order to stay safe and COVID free. For the most part, our guys have continued to be diligent because they believe and understand for us to have a successful season, theyre going to have to go above and beyond and its up to us to make sure that we continue that level of diligence.

I think even distribution is what were after and in 2020 youre going to make sure that these guys stay safe and healthy. I dont know how more emphatic I can be thatI know you guys want to judge whos on the first line in the two-deep and who jogs out on the first time. To us and those guys, its irrelevant.

I think supposed to is very subjective. You guys get to decide what supposed to looks like. As long as we play to the best of our abilities, we feel very confident. We have watched the HBU game numerous times. Its difficult to get a beat on Texas Techs defensive philosophy simply because we know how potent HBUs passing attack is. Any time a team is heavy on one side, run or pass, thats going to affect your defensive game plan. This will be a good test of in game adjustments for us, I think. Id imagine theyre going to play us different. Theres a quiet confidence. I think our guys know what they are capable of. With the veterans being around here and the make up of this team, I do believe theres a lot of confidence in that locker room.

I like the fact that we threw the ball in the upper 40s and had zero sacks. I didnt like that our quarterback got hit a couple of times. When we decided to run, we didnt exert our will necessarily maybe in the way we did in the throw game, but Im not too concerned when you only attempted 10 or 12 runs. Its going to be tough to get in a rhythm. I think some of that is to be understood.

I think one of the reasons we do what we do at home isso its not different on the road. Youre going to sleep in a hotel bed. Youre not going to have a roommate80 something beds to check last week. That took a while. I think what Ive learned with the contact tracing on an airplane. If a kid tests positive within 48 hours of being on that airplane, the two rows behind him and in front of him are going to be wiped out and thats regardless of wearing a mask. Thats going to be difficult in how we seat the team on the airplane. We had to make a lot of changes. We didnt have a team meal on the night before the UTEP game. Felt a lot different and it stinks.

I think its important to praise small victories. I think any time you see anything that is a shining example of what youre expectations are, you need to celebrate them in a new program. Theres probably 100 stories but off the top of my head. Stay consistent, never relent and celebrate small victories.

He kept his head down and mouth shut and came to work everyday. He was the best player on the scout team last year and he did it with a smile on his face. The biggest thing with him and his return was his attitude. Did he make everything in terms of where he was supposed to be? Sure he did that. The hard part is doing it with a smile on your facegetting pushed around a little by the defense. Not just what he did but the way he did it.

Youve got to start fast when youre on the road on both sides of the ball. If you give them momentum on either side of the ball, I think thats something that you can feed off of at home. The formula is not too different. Normally, youve got to weather the crowd noise but crowd noise shouldnt be an issue this year. When you take the crowd out of the equation, there is no difference to playing on the road or at home. Weve been afforded a slight advantage that we dont have to contend with the home teams crowd.

Any time you throw for 430 and lead your team to 600 yards of offense, youre doing a good job. Weve felt when hes healthy, hes one of the better quarterbacks in the conference. He is more than capable, hes one of the better ones in our league.

I dont know that his success at Utah State has anything to do with his success at Texas State. I think hes the right guy for the job. I worked with his brother Luke for three years at Iowa State. The cool thing about Matt istheyre going to be innovative offensively but theyll never stray from the physicality and toughness I think that he wants from his program and Ive always admired that. You can see the beginnings of that start to take shape in Lubbock, as well.

Our training camp was so unique and so different we felt like we needed the extra work. Introduced a little scout team on Wednesday and Thursday/Friday were more Texas Tech centric, if you will. We went from a two and a half work week to a four day work week. You dont want to give 120 18 to 22 year olds, you know, 72 hours off, but we needed the work too. We missed so much regularity of training camp that it was important for us to continue to work.

I think theyre always going to be involved in the pass defense. Im happy that weve got some pretty athletic guys there. Guys that can run and change direction and cover a lot of ground. We feel good about those guys in covering a pass offense.

I thought they graded out really well. I thought three or four graded out as champion. I feel good about the four guys there. Brayden Liebrock rolled his ankle in practice, but hell be back today. I think youll see more 12 personnel and our guys are versatile enough to do it, but they can also stick their face in there and block.

A lot. We havent done anything yet. We beat UTEP. Thats good, it beats the alternative. We won the game and we did it the way we set out to do it, but at the end of that day that was our scrimmage. I think our starters played 30 plays. We understand this is a huge test on the road. The level of competition ratchets up significantly and I think were all crazy if, in 2020, we want to judge a team in 2020 off a game one performance. I think were going to be in for some really poor predictions moving forward if we judge a team off of one game. Were not doing it. I know that. Were going to see a much-improved Texas Tech team. I would like to think well be improved, as well. It will be a team that will provide a much stiffer competition and we know that. We know that every week is different. Just because a team won by two points in week one doesnt mean theyre not capable of beating you by 21. I would caution everyonelets not jump to too many conclusions after one game in the craziest offseason in the history of college football ever.

That decision is out of my control and Im not going to waste a brain cell even forming an opinon about it. Im happy for those players that will get an opportunity to play especially for those juniors or seniors that this might or will be their last time playing college football. I think they got that right. I dont even know the format. So chalk it up to something out of my control and were pretty focused on controlling the things we can control and worrying about the things we can control.

That was how many the team decided. We took a vote where everybody was eligible and these seven guys were head and shoulders above the rest of the team. Within these seven guys, to cut it to four wouldve been a vote or two. We had six last year so it felt like the right thing to do that the team was pretty adamant that these were the seven guys and I think its the compliment to all of them that their team isI guess, divided on who should represent them. A cool thing to see that many guys receive that many votes.

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Longhorns coach Tom Herman on the Big 12 opener against Texas Tech - KXAN.com

Katie Koch of Goldman Sachs.

Clouds could be forming on the horizon for FAANMG stocks, a portent that theyll potentially struggle to continue producing the growth rates investors have been accustomed to, argues Katie Koch, co-head of the fundamental equity business within Goldman Sachs Asset Management.

Hence, she recommends that investors seek out tech leaders with prospects of becoming the mega-cap tech names of the future, including those in high-growth emerging markets that, she says, could become local tech titans.

Inan interview, Koch indeed urges to look further than the FAANMGs Facebook, Apple, Amazon, Netflix, Microsoft and Googles parent Alphabet and talks specifics, pointing out that the pandemic has helped some tech-enabled innovators.

The GSAM FE team Steven Barry is co-head manages portfolios for institutional and individual clients globally, with $65 billion in assets under management.

Nearly 90% of the teams strategies are outperforming year-to-date, with net inflows of about $5 billion vs. peers, Koch says.

She maintains that at this juncture since the steep March decline, a lot is happening underneath the rally; for example, an adjustment between growth and value stocks. In the interview, she forecasts that this will increase and is therefore focused on a balanced portfolio thats not overexposed to growth.

Koch, 40, who started as an analyst at Goldman upon graduation from the University of Notre Dame in 2002, has spent her entire career at the firm. She became a partner at age 36.

She is a champion of gender diversity, believing that diversity drives better performance. To be sure, nearly half of GSAM FEs assets are managed by female portfolio managers.

In our conversation, Koch discusses why and how her team influences its portfolio companies to be gender-diverse as well.

She began in Goldman Sachs Private Wealth Management, then during a decade-long stint in London, led several of the firms businesses. She was named head of the global portfolio solutions group for institutional business and in 2011 became a managing director.

ThinkAdvisor interviewed Koch, speaking by phone from New York City, on Sept. 10, with a follow-up email the next day.

She has a big family as well as a big career: She and her husband are parents of three children, 5, 3 and 1; and she is expecting a fourth in November. In 2018, Working Mother magazine named her Working Mother of the Year.

Reflecting on her choice of career, Koch says: I always thought of investing as the art of predicting the future. Thats an audacious thing to do and believe that you can do to imagine a future thats different from the past and allocate capital around that. It was always exciting to me as a concept.

Here are highlights of our interview:

THINKADVISOR: Technology companies led a broad selloff on Sept. 3 and 4. Was that something of a prelude to the long-overdue correction?

KATIE KOCH: Obviously, a lot of the market strength has been led by tech and the FAANMGs Facebook, Amazon, Apple, Netflix, Microsoft, Googles parent Alphabet which are collectively still up about 48% year-to-date, with the other 495 [stocks] in the S&P 500 down about 1%.

The markets up, but theres a lot happening under that; and some of these trends are relevant to the decline [of two weeks ago].

Such as?

The growth part of the market is up around 24%, and the value part is down 10%. The trend that stands out to me most concerning the [9/3 and 9/4 selloff] is the compression between growth and value. The spread narrowed about 5%. So youre seeing some adjustment, but its off one of the historically widest extremes.

Will we see more of that?

I think were going to experience some compression of growth vs. value. Were trying to make sure we have a balanced portfolio and that were not overexposed to growth [stocks], which has had such strong performance.

What opportunities do you see for investing in tech?

We like tech a lot but strongly believe investorsneed to hunt beyond the largest, most well-known names to appropriately reflect the best future opportunities.

Why?

Investors are significantly over-exposed to the mega-cap tech names the FAANMGs but their dominance may be coming under threat. We continue to like several of them. However, after10 years of [these stocks] dominance, the next10 years could look very different.

What will be the cause?

The FAANMGs may struggle to continue to produce the growth rates that investors have become accustomed to. Clouds could potentially be forming on the horizon for them. Therefore, we believe investors should seek out future tech leaders.

How do you characterize those, and where may they be found?

[Theyre] the most innovative and differentiated smaller-cap tech names and rapidly emerging tech opportunities outside the U.S. Local companies applying proven business models in new high-growth markets are becoming local tech titans.

What are some specific areas in where you see the most opportunities?

Cloud-enabled software, digital payments, online entertainment, e-commerce. The pandemic has driven a big acceleration in adoption rates for many of these tech-enabled innovations.

Please elaborate.

We see many opportunities in the content-delivery companies, which provide technology to streaming games and movies. We believe that e-commerce leaders in emerging markets, where online retail penetration is still incredibly low, present strong long-term secular growth opportunities. Many of these companies have the potential to become the mega-cap tech names of the future.

Whats your investing strategy as it relates to the upcoming presidential election?

We need to think about running balanced portfolios because one way or the other, the [election] outcome will move markets. One of the most important qualities of successful investing is humility and knowing whether you have an edge. For us, its at the individual company level, allocating capital to companies that are going to outperform over the long term.

Whats your edge concerning the election?

We have zero edge in predicting whos going to win the election. Therefore, we try not to take risks around it. We have to run a portfolio that will be balanced and able to outperform regardless of the outcome.

Lets talk about another of your high priorities: gender diversity. The assets managed by female portfolio managers on your team total nearly 50%. Did you spearhead a diversity initiative?

As the leader of this business, I focused a lot on diversity, and then my co-head Steven Barry was in lockstep with me and also in pushing it with our portfolio of companies. It reflects the broader ethos of Goldman Sachs.

How do you push diversity with companies you invest in?

Were passionate believers that diverse teams will outperform and it also happens to be the right thing to do. Diversity by bringing in different perspectives drives better performance. Thats why we have [a number of female portfolio managers] and why wed like the portfolio companies to reflect diversity. We connect our highly gender-diverse team to the way we invest and the way we look at companies.

How do you influence the portfolio companies to practice diversity?

[One way is that] we work with their boards and management teams to give them suggestions of board-qualified women. And we have a policy of voting against the nominating chairs of any public company in the U.S. that doesnt have at least one woman on the board. Last year we voted against over 200 companies; and in less than 12 months, 40% of them added a woman to their board.

Whats the likelihood that your diversity strategy will be put in place by other investment firms?

If people get to the point where they can authentically believe in diversity aligned with performance, over the next10 years were going to make unbelievable progress on the issues of gender and race.

So you deliberately built your team to have 50% female portfolio managers. How did you go about that?

We hired talented women and put them in risk-taking seats, and weve also promoted women within the group into risk-taking seats. We were very deliberate about building a team that was representative of global demographics. Its really tough to pick great consumer stocks, for example, if you dont have some female representation and reflect the female perspective, given that women control or drive the decisions on 90% of daily shopping, according to Nielsen.

Some firms say their goal is to employ a certain quota of women in specific jobs. Is that a good way to boost diversity?

I dont think its a very sustainable strategy. You have to have diversity, which is representation. But you have to have inclusion, which is bringing out the ideas and perspectives of the diverse individuals. Independently the two are rather worthless; but together theyre extremely powerful. Just trying to hit a [number] target isnt going to be an advantage.

Whats required, then?

[First, the issue] is getting diverse people around the table, but the real art is pulling out their perspectives and creating a culture of inclusion where peoples voices can be heard. Thats the hard part, but its the part that has the return on investment, for sure.

Youve forged a highly successful career in the male-dominated financial services industry. Has being a woman posed any challenges?

I dont think so. Because in the investing world, you can use that to your advantage by bringing a unique perspective to the discussion. Its enabled me to be in a position to recognize the benefits of diversity. Its not accidental that half our assets are run by women: Because Im a woman, I was focused on that element of diversity perhaps more than others in the marketplace. So given that I think diverse teams outperform, its been an advantage for us.

When you were in Goldman Sachs Private Wealth Management, what were your responsibilities? Were you a financial advisor?

No. I started as an analyst, a long time ago, on one of the largest private wealth teams in Chicago. Id been an English and economics major; so I had to [acquire] financial literacy and learn how to think about a clients portfolio holistically and what individual clients care about. It was a great training ground for the rest of my career. I wanted to be on the institutional side of asset management, and Ive spent 80% of my career in that space.

Youve been with Goldman Sachs your whole career. What did you do after working in Private Wealth?

I lived in London for 10 years and got exposure to international markets. I ended up running our multi-asset-class investing team focused on international clients in Europe and Asia. A couple of years ago, I was brought in to co-lead our equity business.

Whats your reaction to Jane Frasers recent appointment as Citigroup CEO?

Shes eminently qualified for that role given her successful 16-year run at Citi, and especially the last year running the Global Consumer Bank. I think they had a pretty clear succession plan. It happened a little bit earlier than the market expected, but she has all the relevant experience and qualifications to be extremely successful at running Citi. Its really exciting to have the first woman at the helm of a [major] U.S. bank, and I know therell be more of that over time. Its great and good for the industry.

You and your husband have three young children and youre expecting a fourth in November. In 2018, you were named Working Mother of the Year by Working Mother magazine. How do you juggle your demanding career with raising a family?

My family is by far the biggest priority in my life. At the same time, I obviously care about my career; so its not possible for my family to come first every hour of every day. But they need to come first over time. Its [similar] to what I say about picking companies.

Whats that?

Were not going to get it right every time or outperform every day or every month. But weve got to outperform for our clients over time. Thats the horizon from which I integrate my family and my work.

Related on ThinkAdvisor:

Originally posted here:

Goldman Sachs Partner Has a Warning on Big Tech Stocks - ThinkAdvisor

The post-COVID landscape could see increased collaboration among insurers, insurtechs and Big Tech, Capgemini says in a new study.

The consultancy says more than 60% of insurers and insurtechs interviewed for its annual World Insurtech Report expressed interest in working with technology firms such as Facebook and Google.

Capgemini says the findings reflect the industrys awareness that it needs to lift its digitalisation efforts.

During the pandemic technology players have raised the bar in terms of operational crisis handling, earning even more customer trust as a result.

Whether subliminal or explicit, consumers superior Big Tech experiences are affecting the insurance industry, the report says. In every business in which success depends on consumer confidence and a wealth of customer data, Big Tech set the tone for defining the customer experience north star.

Customers cant unsee their Big Tech experiences.

The report says COVID-19 has exposed gaps around the technology, systems, products and processes of both insurers and insurtechs.

Responses from insurers and insurtechs indicate they intend to focus on improving the digital experience and crisis-proofing processes.

More than 80% of insurers and insurtechs say responding in real-time to client needs is a key focus area, and more than 90% say they want to improve their crisis-proof processes.

When it comes to digital experience, 94% of insurers ranked it as a priority and 89% of insurtechs expressed similar thoughts.

Capgemini says the pandemic has upped the ante for both insurers and insurtechs.

Insurers have to look beyond other insurance companies as their competitors, and instead include Big Techs and other new non-traditional players, which are often offering a superior customer experience,Financial Services Strategic Business Unit CEO Anirban Bose said.

Forming scalable relationships with insurtechs will help insurers digitise faster and more efficiently, deepening their customer relationships and helping them to fend off these new entrants.

For insurtechs, their biggest challenge is sustaining business operations while effectively managing more demand than they have ever seen.

The World Insurtech Report is based on insights from surveys and interviews with more than 175 senior executives from insurers and insurtechs in 26 markets. The markets include Australia, the US, Japan, Hong Kong and several European economies.

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Pandemic prompts more insurers to collaborate with Big Tech - International - Insurance News

Earlier this month, S&P Global Market Intelligence reported that the average total CEO compensation for tech, media, and communications executives was higher than in all other sectors in 2019, at $26.3 million. The next highest-paid group of CEOs were those in the financial-services sector, whose average total compensation was $8 million less.

To help people better understand the compensation that technology and communications executives were receiving, we created a database of the most recent publicly available compensation data for information-technology and communications firms in the S&P 500.

Natasha Oakley has been an entrepreneur since graduating high school, when she founded her own production company out of her native Australia. Now with an Instagram following that tops 2 million, her business savvy has taken social media by storm, and the startup she cofounded on a $30,000 loan is a multimillion-dollar brand.

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SUCCESS INSIDER: What people in the C-suites of Apple, Facebook, Disney, and 90 other big tech and media compa - Business Insider India

If the Australian government wants to subsidize high-quality journalism then it should, well, subsidize high-quality journalism. The new proposed ACCC code would mess with the entire business model of tech companies and ultimately harm consumers.

Editors note: follow our coverage of the dispute between Google, Facebook, and the ACCC here.

We Australians are rightly proud of a number of world firsts. We pioneered the secret ballot, were the first country to allow women to stand for elected office, and we initiated the use of ranked-choice voting.

And so it is, with both a degree of parochialism but also pride, that there has been considerable public fanfare about the Australian Competition and Consumer Commissions (ACCC) proposed News Media and Digital Platforms Bargaining Code which is under consideration by the Australian parliament. According to the proponents of this code, when legislated, it will be the first in the world to force technology companies to strike a fair deal in paying for content from media companies, thereby helping preserve high-quality journalism and the ensuing public benefits that flow from such journalism.

So should we chalk up another win for Australian democratic exceptionalism? Im not so sure.

The ACCC code is often presented (for example, by ACCC head Rod Sims) as being a simple matter of tech companies paying for getting free content from the media companies that produce it. As Australias Treasurer Josh Frydenberg put it: It was going to be very difficult to reach an agreement between the parties to ensure that the traditional media businesses that prepare the content, that they get rightly and fairly paid for itThis is really a question of fairness. If you prepare the content and the digital platforms are using it to bring traffic to their websites, then they should pay for it.

The reality is considerably murkier.

Yes, tech companies play an important role in the media market through search, and social media in the case of Facebook. And yes, which articles rank highly in a news search have an impact on the profitability of media companies, and hence on their incentives to invest in high-quality journalism. But tech companies do not, in fact, make much money out of clicks on ads from news-related queries in Australia (Google reported that it made about A$10 million in such revenue in 2019).

Perhaps more importantly, the proposed bargaining code will force tech companies to give media organizations advance notice of changes to their algorithmsan extraordinary infringement on core intellectual property. And the code has substantial penalties built-in: Failure to comply with it could lead to tech companies paying fines equivalent to 10 percent of local revenue, on top of other payments to news organizations.

It is little wonder then that Google and Facebook have suggested that, if this is the price of being in the Australian market, then they might simply prefer not to be in itseverely compromising the user experience of millions of Australians who use Google, YouTube, and Facebook for news content.

Its not hard to understand how we got to this position. An overzealous competition regulator looking to make a splash has targeted Big Tech companies. The journalists who report on the issue blame Big Tech for the loss of jobs in the media industry. And the media companies for whom they work stand to benefit handsomely from the new rules. Politicianswho live and die at the hands of the medianaturally end up siding with the press. Throw into the mix a good dose of nativismthe Big Tech companies are foreign but the journalists working for the media companies are mostly Australiansand you have a perfect storm of tech-busting sentiment that gets little scrutiny.

But is the proposed bargaining code good economics? I have my doubts. And it seems likely that issues to do with horizontal competition among media firms and appropriate investment in high-quality journalism could be better addressed with other policy tools, rather than the ACCCs code.

To assess the ACCC bargaining code, one first needs to understand a few facts about the modern Australian media market.

The first is that, as in most countries, Australian newspaper revenues have fallen significantly in recent decades. Consulting firm AlphaBeta found that between 2002 and 2018, newspaper revenues fell from A$4.4 billion per year to A$3.0 billion. The overwhelming majority of this decline was the loss of classified advertising, which fell from A$1.5 billion in 2002 to just A$0.2 billion in 2018. As the following chart shows, most of that was captured by online pure-plays targeting specific market segments such as motor vehicle sales, job ads, second-hand goods, or real estate listings. Companies like Google and Facebook captured essentially none of this revenue.

Other sources of newspaper revenues have been relatively stable. Print subscriptions have declined but online subscriptions have increased sharply. Print display advertising has fallen but has been more than offset by increases in online display revenues.

Over the same period, tech companies like Google and Facebook have captured a large share of the overall online advertising market, as the following figure highlights.

The size of online search advertising has grown from almost nothing (A$0.1 billion) in 2002 to A$3.6 billion in 2018. Most of this growth came from new sources, with only A$0.8 billion of the A$3.5 billion in revenue growth estimated to have come from print directories.

The contrasting fortunes of media and Big Tech companies are important in two ways. First, it shows that traditional media has lost about one-third of its revenues because of classified advertising being decimated. One might call this the Craigslist phenomenon. Second, it shows that tech companies have done very well over the same period, but not by cannibalizing media company revenues.

Yet it is arguably the decline of one sector (traditional media) and the rise of another sector (Big Tech) that makes for a tempting exercise in scapegoating. There is some relationship between Big Tech and media, and during the period that media has been hammered, Big Tech has flourished. But this is more a tale of one industry in secular decline while another is in the ascendancy, rather than tech companies outcompeting traditional media in the same industry.

This is more a tale of one industry in secular decline while another is in the ascendancy, rather than tech companies outcompeting traditional media in the same industry.

That said, Google and Facebook are important gatekeepers of news traffic in Australia. About one-third of news content comes from Google searches and a further one-sixth via Facebookso about half in total. But these tech companies do not allow users to bypass paywalls erected by media companies. Many major mastheads in Australia: the Sydney Morning Herald, Australian Financial Review, The Australian, The Age, and Daily Telegraph (all owned by either News Corporation or Nine Entertainment) have paywalls for accessing digital content. Indeed, these companies now generate around 50 percent of their revenues from subscriptions. And these companies employ a significant number of Australian journalists producing original content.

There are also sites like the Guardian, the national public broadcaster Australian Broadcasting Corporation (ABC), The Conversation, New Daily, and others that offer free content. They also employ many Australian journalists producing original content. Both paywalled and non-paywalled sites also report news from other sources like the Associated Press wire service, their competitors, and broadcast media.

All these sites benefit from internet search. Search directs traffic to their sites, where the media companies can show paid advertising or even convert those customers into subscribers. Deloitte estimates that such search generates about A$218 million a year for Australian media companies through these channels. The real point of contention is one about competition among different media organizations, not between media organizations and Big Tech.

Media companies with paywalls complain that their sites rank low down the list of searches on, say, Google. This is, in general, true. Just try searching for news yourself and see which news sites are near the top. In fact, a few years ago paywalled sites werent even indexed by Google. These companies complain that they are disadvantaged relative to free media sites. They are.

It is unclear that Google does this intentionallyit would be natural to conclude that free sites have better click-through and therefore do better according to Googles algorithm. In any case, it is the existence of these free sites apparently satiating the needs of many media consumers that causes grief for News Corp, Nine Entertainment, and other Australian media companies with paywalls.

This raises the question of whether Google or other tech companies are doing something that is not in the public interest with the way they order search results. Consider for a moment if one was a social planner designing search algorithms for news from scratch. Which results would rank near the top? It might well be socially optimal that free sites are ranked highly.

Moreover, competition in the market for news from media companies that dont charge for content is almost surely good for consumers. It expands choice and it has, as an empirical matter, led to some high-quality entrants into the Australian media landscape such as The Guardian and The Conversation. To the extent that tech companies facilitate competition that is good for consumers, it is hard to see why they should be sanctioned for doing so, especially by the competition regulator.

Regardless of where one comes out on the above issues, the question remains as to whether the way in which the ACCC code reallocates bargaining power is the most efficient one. As a matter of principle, an intervention that seeks to remedy a market failure should do so in a way that preserves as much economic value as possible, consistent with correcting the market failure.

Does the ACCC code do this? Again, it appears not.

The two key elements of the code are that:

There is also a requirement that tech companies inform media organizations about the nature of consumer data the tech companies collect through interactions with news pages.

The arbitration process involves an arbitration panel appointed by the Australian Communications and Media Authority (ACMA). The arbitration follows so-called baseball arbitration, where each party makes an offer and whichever offer is closer to the panels determination becomes binding.

As all economists know, the gains from trade in a bargaining situation are split among the parties to the bargain. The most useful framework for thinking about how those shares are determined is due to Nobel-prize winning mathematician John Nash (of A Beautiful Mind fame). Under (generalized) Nash bargaining, each party gets her outside options plus some share of the gains from trade (that share being reflective of the relative bargaining power). This share is known as the Nash bargaining weight.

The arbitration procedure above does something more than alter the Nash bargaining weight. It changes the outside options of the parties (potentially dramatically) and inserts the value judgment of a government-appointed panel. Given the relish with which politicians have sided with media organizations and against the tech companies, there is every reason to suspect that the panel members chosen will be more sympathetic to the media companies.

Given the possibility of losing a dramatic amount of completely unrelated advertising revenue in such an arbitration process, it is of little wonder that the tech companies might want to avoid being involved altogether by simply having nothing to do with media searches in Australia. This would lead to a significantly diminished consumer experience for Australians of all agesfrom kids doing school projects to citizens unwilling or unable to pay for subscription services wanting to stay informed. In short, it is a highly value-destroying regulation.

The algorithm-sharing provision is potentially even worse. We will have to wait until seeing the final details of the legislation to understand exactly how it would work, but it is hard to see how one can give effect to the intent of it without requiring tech companies to share important details of their algorithm. Those details are, in short, the very heart of their business. One could expect tech companies to avoid having to do so at essentially all costs. Lets not forget that Google became Google when its founders had a really good idea and built a better search mousetrap. Giving other companies visibility into that mousetrap constitutes an extinction-level risk for the tech companies.

As a side note, opaqueness around search and other algorithms is important to prevent gaming of those algorithmsa core component of what it means for them to work well. This optimality of opacity is an important phenomenon in a range of contexts (especially in incentive schemes), as I pointed out in a 2018 paper with Florian Ederer and Margaret Meyer.

One thing there is fairly general agreement about is that high-quality news and journalism is a critical component of a well-functioning democracy. Whatever the market forces aresuch as the demise of classified advertisingthat have put the funding of such journalism under threat, there is a strong case for government intervention.

The most natural intervention is to subsidize high-quality journalism. This is something that has been done for decades through national broadcasters such as the BBC in the UK and, indeed, the ABC in Australia. This occurs in a more decentralized fashion in the US through organizations such as PBS, which rely on private fundraising.

To put this all in perspective, the figures outlined above show that the entire media industry in Australia has lost roughly A$1.4 billion per year in revenue. This is, according to the media companies themselves, the sum total of what has put journalism at risk. Lets be generous and adjust for wage inflation and call that A$2 billion a year.

We could discuss clever mechanisms to raise this money and then how to allocate it to the right media firmsperhaps acknowledging that there is something odd about taxpayers writing checks to Rupert Murdoch. But lets bracket all that.

If the Australian government wants to subsidize high-quality journalism then it should, well, subsidize high-quality journalism. Given that the 10-year bond rate in Australia is currently about 90 basis points, the carrying cost of A$2 billion a year of media subsidies would be A$18 million a year. Thats 72 cents per Australian per year. Seventy. Two. Cents.

I think we can cover that.

Messing with the entire business model of tech companies that deliver huge value to Australian consumers would be a vastly inferior option.

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Australias News Media and Digital Platforms Bargaining Code is Great Politics But Questionable Economics - ProMarket

FBI Director Christopher Wray arrives for a hearing of the House Homeland Security Committee on Capitol Hill on Thursday. Nicholas Kamm/AFP via Getty Images hide caption

FBI Director Christopher Wray arrives for a hearing of the House Homeland Security Committee on Capitol Hill on Thursday.

The FBI and Big Tech platforms are trying to combat foreign disinformation by rooting it out early and often to deny it mass and momentum, Director Christopher Wray told Congress on Thursday.

The more fake accounts that can get started sharing false stories or increasing agitation, the more consequential those efforts can become, Wray said.

So his strategy working with platforms such as Facebook and Twitter has been to act as swiftly as possible to step in and stop those efforts at the seedling stage before they grow into something more substantive and problematic.

"It's only effective if it seems credible and it's only credible if its built up a certain reservoir of credibility," Wray said. "If we're able to shut them down and knock them back quickly, it's not going to stop it but it means it's much, much less effective."

Wray gave the example of a recent operation in which the FBI told Facebook that it had identified some nascent mischief by Russia's now-infamous trolling and agitation mill, the "Internet Research Agency," and Facebook then deleted the accounts being used in that scheme.

This strategy and the cooperation it requires was the result of painful recognition by U.S. officials and Big Tech about the 2016 election, in which they missed or downplayed the importance of that year's social media agitation. The weeds, in this metaphor, took over the garden.

Wray says now the goal is to stay on top of those efforts, although he acknowledged what he called room to improve by both the FBI and the tech platforms.

"The strides we've made at the FBI has been very encouraging I'd like to see more progress especially from [Big Tech] but we're moving in the right direction."

Follow updates on the hearing here.

See the rest here:

Wray Touts Disinformation Strategy With Big Tech: Often-And-Early : Live Updates: House Hearing On Homeland Threats - NPR

Insurance technology (Insurtech) has been evolving rapidly since the past few years. The COVID-19 outbreak has forced the sector to take a serious look at how it communicates with other industry professionals.

A new Insurtech report questions and looks into whether agents can work effectively from their homes following the Coronavirus crisis.

The report asks:

Are insurance processes resilient to unexpected changes? Do policyholders receive caring service? Is WOW-factor digital experience the way to keep todays time-strapped, multi-tasking insureds engaged and loyal?

The Capgemini team claims they interviewed 200 industry executives to find the answers to these questions and gain other insights from incumbents who revealed the COVID has compelled them to fast-track digitalization.

As stated in the report, COVID has had a significant impact on the insurance industry customer engagement KPIs as BigTechs define the CX (customer experience) north star.

The report notes that the pandemic was a high-impact black swan event that forced insurance providers to reevaluate or re-assess customer engage performance metrics.

Capgemini adds:

BigTechs are earning even more customer trust by offering resilient processes, real-time crisis response, intuitive customer care, and digital experience (DX) with WOW-factor appeal.

The Capgemini team further notes:

As incumbents fast-track their digitalization efforts, they are seeking support from Insurtechs, which translates into sudden demand and need to scale up. BigTechs and other non-traditional players are making their presence felt in the insurance industry. More than 60% of insurers and Insurtechs we interviewed said they are interested in working with BigTech firms.

The report also mentioned the boundaries that existed between traditional insurance providers, Insurtechs, BigTechs, and tech partners are now blurring as the sectors key players begin to explore new initiatives.

Vighnesh Shahane, MD and CEO at IDBI Federal Life Insurance Co. Ltd., stated:

Early signs of a hit in customer retention are being evidenced as we witness widespread job losses, wage cuts, and business failures. This will be exacerbated if the COVID-19 pandemic situation is protracted. Todays new normal will likely be tomorrows business-as-usual.'

In an interview with CI, Gonalo de Vasconcelos, co-founder at SyndicateRoom and founder of Insurtech Rnwl, which was previously a top securities crowdfunding platform in the UK and has now become an EIS fund, revealed why hes moved into the Insurtech sector.

He claims that Insurtech is where Fintech was when he launched SyndicateRoom. He said that in terms of innovation, the digitization of insurance is barely scratching the surface with plenty of room to grow.

de Vasconcelos said:

The same way I wanted to be, and was, at the forefront of innovation in Fintech, I now want to do the same but bigger and bolder in Insurtech. Its a fascinating space to be in right now, which I never thought Id be using such words about insurance

Read more from the original source:

Over 60% of Insurtech Firms are Now Interested in Working with BigTech Companies: Report - Crowdfund Insider