Money Metaverse Crypto Tokenization 

Money Metaverse How Crypto Is Reinventing Tokenization

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Money Metaverse How Crypto Is Reinventing Tokenization

How Crypto Is Reinventing ­Finance and Unlocking Value via Tokenization

DEDICATION
To the world-class investors who have been with me right from the beginning
of my 11 years of independent research: Eric Bushell, Adam Levinson, Amit Rajpal,
David Courtney, Rob Citrone, Tomonori Tani, Todd Tibbetts, Scott Sleyster, and
Gary Ang. Thank you for letting me stand on your tall shoulders.
Paul Schulte
To my father.
William Dogger

CONTENTS
ACKNOWLEDGMENTS v
Foreword vi
Introduction xi
Chapter 1: NFTs and crypto 1
Chapter 2: Fintech and Blockchain 43
Chapter 3: Insurtech and blockchain 95
Chapter 4: Proptech and Blockchain 131
Chapter 5: Case study – The fight for Southeast Asia: Sea, Grab, and Payoneer 152
Index of companies 158
ABOUT THE AUTHORS 160

iv

ACKNOWLEDGMENTS
Many people helped me to drag this book over the finish line. One person
helped me with profound insights on a higher plane, and that is David Lee. Another
is Taiyang Zhang, a unique world-class thinker on crypto issues and the evolving
world of digitization. Adam Levinson is another superb thinker on these issues who
always sees around the corners. Those who offered support, friendship, and sanity
checks along the way were John Fowler, Brian Ganson, JY Phuang, Roman Shemakov, Gary Ang, Dillon Hunter, Jim Stent, Matt Zayco, David Sheldon, David
Halperin, Peter Early, Rob Jesudason, and Austin Groves. Also, great thanks to my
co-author William Dogger, one of the best hires I have made in 10 years! Special
thanks to Marcus Frontera for his great work.
Paul Schulte
For the continuous support by my family in France, Norway, and Iran. For the
friends I have made along the way in Nice, Paris, Milan, London, and Toronto:
Angie, Clément, Jonathan, Benjamin, Vincent, Loubna, Mona, Matthias I., Marcus,
Stefanos, Matthias H., Manó, Giorgos, Isis, Clémence, Rayan, and many others. For
my colleagues JY, Tom, and Dean. Paul, for the trust you placed in me.
Thank you.
William Dogger

v

FOREWORD
When Amazon bought Whole Foods in 2017, many were scratching their heads. Why
would an offline entity buy a physical property? As it turns out, this was ingenious as
this revolutionized the O2O business model that is ubiquitous. In this same way, the
digital world steeped in crypto and gaming has moved into the physical market of currency, art, wine, entertainment, and even securities to create a new “offline to online”
market leveraging blockchain — let us call it O2B or offline to tokenized blockchain.
The nexus of this is the non-fungible token, or NFT. This is simply a unit of data of a
unique digital object stored on a digital ledger or blockchain, which can then be saved
or traded. In this way, it stands as a unit of exchange and as a store of value.
An example of this is Axie Infinity, developed by Sky Mavis and uses Ethereum. Its
NFT collection is valued at $42 mn. Another example of this is Sygnum, which boasts
NFTs ranging from wine to Picasso’s. The digital world is increasingly bringing the
physical world into its universe via blockchain, and this extends to cards, collectibles,
art, gaming, currency, content, and carbon credits, among many others. As more and
more younger people live in this digitized world for almost all their needs (and with
increasing wealth!), these millennials are creating a metaverse of blockchain-based tokens, which are likely to explode in value. This world promises to be a more inclusive,
more innovative, and more creative than a physical world from which many of these
younger people feel they have been excluded.
This metaverse is parallel to the physical world — a world of avatars, virtual substitutes, and XR designed to interact in what we will call an ABCD fashion. This
form of artificial intelligence (let us call it A), when joined to the blockchain (let us
call this B), could add around 16% to global output, or about $13 trillion. Indeed,
it is clear that both AI and blockchain are immature technologies and are subject to
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Paul Schulte

glitches. Nevertheless, this is true of all technologies. AI can overcome many types of
human biases that bring about bad outcomes. Blockchain offers a way to create trust
through an immutable transaction with no need for an intermediary that takes a big
cut, often initiates new inefficiencies, and usually involves cartelized franchises. The
governance function of the blockchain I describe is a self-sustaining mechanism to allow for maximum improvement and inclusion for all participants. By buying an NFT
on a blockchain, you own an immutable digital space in the binary trustless virtual
world sustained and protected by the consensus of the decentralized nodes. One of
the most important aspects of a blockchain-based metaverse instead of a centralized
cloud-based network is that ownership on a cloud can disappear with it or be changed
by the centralized authority.
This leads us to the C of ABCD: cryptocurrencies. In the metaverse, crypto is the
foundation of “DeFi”, the D of ABCD. This new form of blockchain-based finance
has evolved for many reasons: impatience with unfair structures, profit-seeking entrenched oligopolies, irresponsible monetary policy, among others.
Crypto is the currency of choice to interact within the metaverse. It relies on
smart contracts, mainly through Ethereum. It bypasses the traditional structure of the
use of paper currency as issued by central banks. (Please refer to my recent book Financial Management in the Digital Economy for more details). This world of crypto
is how almost all non-fungible tokens are traded. The value of these NFTs surged to a
new high of $2.5 bn in the first half of 2021. Christie’s has sold $70 mn of NFT art.
Sotheby’s has also entered the fray. Even Visa has entered the scene, buying a “Cryptopunk” avatar for $150,000.
The D of ABCD is where Paul Schulte’s book, which you are about to explore,
becomes essential. DeFi is seen as integrating AI, blockchain, and crypto with a
digitized metaverse to save, trade, transact, and manage wealth. It does not rely on
centralized financial institutions such as commercial banks, clearing banks, or central banks. It does not rely on traditional securities exchanges or other entities ——
like SWIFT for banks or DTCC for brokers. China has taken a decisive lead here,
with other countries such as Singapore, Thailand, HK, and the UAE in advanced
stages of rollout.
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Here is the rub. This is clearly a threat to most traditional commercial and investment banking structures, although Goldman Sachs and JP Morgan have done
remarkable work in advancing their blockchain systems. However, is it a threat to the
fintech firms that have only recently created a new generation of financial services
which are purely digital but lack blockchain applications? This book explores who in
the fintech space is capable of and ready for more change and upgrades in their relatively new systems.
Among those companies that have a real chance to (yet again) leapfrog into the
world of DeFi, we put our money on Visa and Master Card. Square and PayPal are
also doing quite advanced work in this area. The book nicely covers this. Facebook,
Google, and Apple are threatening to move into this area aggressively, but they are
very low-key in articulating their strategies. The book also covers Coinbase and what
they are up to. The book also addresses some of the more helpful valuation parameters
that can value these companies. On the unlisted side, companies like Circle are in the
middle of the traffic and are essential to understand.
The other part of this book analyses whether the new crop of insurtech will be
capable of making the leap to the blockchain metaverse. So far, Schulte’s conclusions
are somewhat dire. Few if any of them have mastered a purely digital model that offers even a hope of profitability. As they bleed losses trying to master a strictly digital
approach to insurance, can they also pour money into complex new metaverse DeFi
functionalities that require complex blockchain systems? He is skeptical. This is probably because insurtech got off the ground in 2017-18, much later than fintech, in
2013-2014. If the evolution of fintech is anything to go by, insurtech will likely begin
to move into the metaverse in 2022-2023. However, the speed of the pure metaverse
companies like Coinbase, Envelop, Sygnum, or Silvergate could leapfrog them and
move into the insurance space. The blockchain-based world of insurance is open field
running, and there are virtually no players. Surely, this is a place to dig.
Lastly, the book explores two other vital areas. One is the world of proptech.
Schulte and his team have picked Linklogis in China and Bukalapak in Indonesia
as two companies redefining logistics. Linklogis has done more than any other company globally to link blockchain into working capital for small and medium-sized
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­enterprises. Their business model is fascinating and represents the best of DeFi — creating a working capital metaverse for entire systems. Bukalapak is looking for a new
way to fund small shops across Indonesia’s archipelago. The best of all worlds would
be Bukalapak’s “distribution and logistics” system and Linklogis blockchain “working
capital and logistics: system.
The last part of the book is essential from the viewpoint of Singapore. SE Asia is a
global hotspot for new finance applications to hundreds of millions of unbanked and
generally unresponsive banks. Grab, Payoneer and SEA are the major players here. As
these morph into digitized payments platforms and then stretch into the metaverse,
his money is on SEA. After all, the world of gaming is the best teacher for the DeFi
metaverse. Grab’s losses grow by the year, and Payoneer operates in dozens of regulated jurisdictions. This will be a battle royale to watch.
Lastly, there is extensive coverage on Chinese Big Tech companies. They are continuously improving AI, data, machine learning capabilities and rolling out blockchain-based services to stay on top of the market, improve margins, and ultimately
reach an interoperable infrastructure. This is fundamental to communicate and share
data on a new set of digital rails: seamless, immutable, secure, and scalable. The “laissez-faire” attitude in the last 20 years in China led to the rise of massive conglomerates
with valuable proprietary databases and the emergence of systemic risk from a narrow
pool of companies.
Recently, these companies confronted political risk underpinning the Chinese
government crackdown. Alibaba, Tencent, and Ping An are technologically and operationally way ahead. However, they are fighting fierce headwinds from aggressive
regulators. The latter are bent on curbing China’s Big Tech and redefining the Chinese
regulatory landscape: greater state control on data, monopolistic activity, payment
channels, and consumer lending habits.
I strongly encourage readers to look into this book. Paul Schulte and his colleague
William Dogger dissect each company in fine detail and then circle back, offering a
strategic view of where things are going sector by sector. Finally, they package everything up in the front of the book with important themes for professors, investors,
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M O N E Y M E TAV E R S E

­ olicymakers, and central bankers to gauge success or failure on a corporate or nap
tional level. It has extensive text at the beginning of each section to offer insight and
context but is also well articulated in PowerPoint for too many of us lost in the Twitterverse. All in all, it is the right book at the right time and in a cutting-edge area of
finance. The metaverse will only grow. There is no way regulators can put this genie
back in the bottle. They must evolve with it and, at best, tame it. Trying to get rid of
it will only broaden it.
David Lee, Ph.D.

x

INTRODUCTION
This book is a kind of illustrated look at the evolution of finance and insurance as well as property – from the now musty world of digital apps to a very recent shift
into blockchain-based functions. The latter can shape both the quantity and the quality of digital information of people, places, things, and ideas. It is happening at great
speed, as all new technologies can and must. It is happening to several different,
although related, industries simultaneously but in slightly different ways. This book
is very detailed and case-specific about exactly how these changes are happening and
how they will affect the lives of consumers, bankers, investors, and regulators.
The picture below lays out the theme of this book. Fintech, proptech, and insurtech
are now in an intermediate stage of development. They have done what they can for
customer acquisition, AI, edge computing, elaborate credit scoring, telematics, IoT,
cloud, and display. New digital sub-sectors have been created in payments, eCommerce,
wealth management, lending, buyer/seller platforms, smart homes, cities, and end-toend all-digital insurance products. Much of this has been done autonomously from
traditional platforms. In this way, a new industry born twelve years ago, starting with
pioneers such as Alibaba, PayPal, and Square, has now reached a stage of maturity.

Figure 1
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In 2020 and 2021, we have seen this technology move to a whole new level with
the acceptance and integration of blockchain technologies. They are causing a profound fracture in traditional financial services because they can create open- and
closed-chains for all kinds of services as noted above — property, finance, insurance,
broker/dealer activity. At best, all of this can be done without the traditional systems
for banking such as SWIFT, DTCC for securities, or expensive mortgage brokers
for property. At worst, they can exist alongside and offer a fringe group of “financial
anarchists” an opportunity to operate outside a system they have grown to distrust.
We submit that the acceptance and integration of blockchain technologies in finance,
insurance, and property would not have been workable without the increasing acceptance of cryptocurrencies. In many ways, the themes we lay out in this book clarify that
the growing popularity of crypto and the ever-increasing use cases of blockchain are a
“hand in glove” affair. They go together. The chart below shows a new set of tools that
have grown out of blockchain and crypto activity. These include financial services, healthcare, clinical trials for drugs, government and civic action, transportation, and insurance.
We think that the greatest need for blockchain applications lies in insurance. The
spate of newly listed insurtech companies have impressive technologies, but they have
no blockchain applications almost to a man. This is remarkable since insurtech evolved
long after fintech, a recent phenomenon dating back to 2017. There is a gaping hole
in the insurtech landscape for blockchain/crypto projects. Blockchain applications in
property are only now bearing fruit in 2021.
So, the companies we highlight have little blockchain technology but are candidates for “bolt-on” crypto activity.
Centralized blockchain infrastructure
Focus on Government services, Healthcare, and Transport
Banking and Financial
services
Healthcare

Schulte Research

Research & Clinical
trials

Faster and more secure payments, settlements, and clearance

Securely share data across Healthcare institutions

Reconcile disparate data

Increase efficiency, minimize fraud, and increase accountability

Government & public
records

Casting, tracking, and counting votes

Public transportation

Commuting and transit data to improve transportation systems

Claims management

Improve back-end healthcare and insurance infrastructures

Sources: Schulte Research

5

Figure 2
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Paul Schulte

As 2021 draws to a close, we think a new phenomenon will become standard
over the next two to three years: NFTs — non-fungible tokens. The manifestations of NFTs we see today are talked about as hype, glamorous, over the top,
activity for those with cash to burn. We think this is a mistake to believe that
this is a flash in the pan. We will show in this book the natural use of blockchain
to extend the maturity and uses of digital fintech products. In the same way, we
believe the use of NFTs is a natural extension of blockchain and crypto. Indeed,
a strong case can be made that NFTs can only arise out of a world encased inside
blockchain and crypto.
The page below shows how NFTs can extend the uses of blockchain and create yet
again a new set of industries that we have never seen. Blockchain’s indelible creation of
universally recognized ownership and identity — as well as fungible smart contracts —
solves many problems of ownership and financial rights for amateur digital art, film
characters, unique avatars, and talented gamers. It solves many issues of minimal royalties for products bought by millions of people. It can play a role in public and civic
activity. It creates whole new digital worlds in gaming and education. And it creates a
store of value that can be in the gate of hundreds of billions.
Initial applications of NFTs
Applications of NFTs are broad and growing
Entertainment
Collecting
Creation
Governance

Schulte Research

Gambling
Investing
Gaming

Own sporting moments, film characters, or amateur memes
Store assets safely, relying on underlying wallet
Unique ownership of an item, with continual proof of authenticity
Anyone can share their talent publicly and own it indefinitely
Claim royalties on future sales, guaranteed by smart contracts
Voting functions (i.e., choosing next signing for sport team)
Could develop to decentralization of political and corporate decisions
Offers a new item to wager

the digital file itself

Zed Run has sold tens of thousands of virtual horses that can be bred and raced for money up to US$65 k
Uniqueness of assets leads to appreciation in price as popularity grows
Both in gambling format and with a more recreational focus
In-game items are tokenised, to be exchanged outside of the game

Sources: Schulte Research

26

Figure 3

We will also unabashedly explore the political ramifications of this massive shift
in technology. Control of cities along the Silk Road is an essential part of this. We
must examine the US-China conflict to see who will control the new digital railroad
systems these blockchain products will travel. The regulatory issues are paramount
since regulators have sovereign financial autonomy problems to consider. They need
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to raise debt shortly and use old copper-based systems to pump out this debt to old
buyers. New technologies could very well compromise this ability. Exchanges are primarily a private sector affair and are naturally jealous of new entrants that can disrupt
profitable businesses.
Furthermore, when it comes to insurtech and the oncoming freight train of blockchain technology and tokenization, these fairly new creatures with novel solutions
to insurance will need yet another investment cycle reasonably soon. It is not good
enough to say that the technology is three years old, so it is sufficient. Technology is
changing rapidly. Fintech companies like Visa and PayPal have invested in crypto and
blockchain since four or five years ago, so they are ahead.
Insurtech will need costly programs to create newer technological solutions for
2022 dilemmas. This will involve investing in parallel blockchain solutions, which
are expensive. Bolting on blockchain solutions to existing “older” technology is not a
sufficient solution. This will be expensive. And it will require new forms of interoperability. For us, it makes sense to think of insurance products as a universal insurance
offering. The new blockchain technologies speak to a unified platform that can be
spun off later after interoperability is established.
Lastly, we add an insurtech case study that shows the kind of insurance super
app we would want if we had a magic wand. It envisions an easy-to-use interface
that is interoperable and universal in its offerings of insurance products. Specialized
insurance runs against the grain of the ubiquity that is offered by multiple layers of
data. This app lays out the app features which combine the best of health tech and
insurtech with blockchain in the background. Again, these new technologies beg the
use of universal ubiquity and not niche specialization. Platform ubiquity will lead to
specialization. Gathering specialist niche platforms in the hopes of creating one integrated system may be a fool’s errand with blockchain.
The movement from fintech and insurtech based on AI and IoT to blockchain-based NFTs is to us as natural as the move from whale oil to electricity. It is as
easy to grasp as the move from the horse to the car. It is as simple to comprehend as
the move from the telegraph to the telephone. It is unstoppable. It will be accepted
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Paul Schulte

and regulated. It will provide vital solutions to governments. It will bury those who
refuse to adopt it.
Enjoy this book. We are exploring new trends as they develop – technical, political, geographical, and civilizational. With tokenization achieved through cryptocurrencies, the move from physical to pure digital on all fronts will have massive implications for existing financial, political, and economic infrastructure. Figure 4 to Figure
8 below explain what drives home the front. The economic and financial essence of
tokenization cannot be understood without connecting them to the political and diplomatic shifts appearing before our eyes. May the best man win!
Welcome to the money metaverse.
Key issues in Blockchain infrastructure:
How the public-private intersection will work
Monopoly, data privacy, regulations, systemic risk, proprietary/public infrastructure?

Will the development of Blockchain-based infrastructure be led by privately-owned entities,
governments, or collaboratively?

Schulte Research

VS.?
With?

Sources: Schulte Research

8

Figure 4
Key issues in Blockchain infrastructure:
How the public-private intersection will work
Monopoly, data privacy, regulations, systemic risk, proprietary/public infrastructure?
Private infrastructure

Public infrastructure

Threat of monopoly behavior can lead to antitrust
investigations, hindering advancements

Government controls data

Fragmented market leads to inefficiencies in the
treatment and usage of Big Data due to unconsolidated
data

and absence of trust in the government

Schulte Research

Lack of incentives in developing proprietary technology
due to systemic risk posed by data monopoly

Fragmented government entities in the US slowing down

Centralized control in China lead to faster advancements
harmonization of internal and external data

Trust and accountability of private companies
Sources: Schult
Schulte Research

9

Figure 5
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M O N E Y M E TAV E R S E
Key issues in Blockchain infrastructure:
How the public-private intersection will work
Monopoly, data privacy, regulations, systemic risk, proprietary/public infrastructure?

Schulte Research

Our take

Data in China will be owned by the PBOC?

Data in the US does not have consolidated
control. Fragmented data in FB, APPL, AMZN,
GOOG plus investments by government in
privately-owned companies

Blockchain and DC/EP powered by the BSN?

Blockchain in the US now heavily funded by the
Department of Defense

Data are the cars on the railroads, Blockchain is the railroad

Railroad monopoly controls how much it charges, when, how, who, and at what frequency its usage
Sources: Schulte Research

10

Figure 6
Global Summary:
Deviation between sectors
Deviation between sectors on valuation & operating metrics, but all adopting similar business models

Fintech and Crypto companies trading at far higher multiples relative to Proptech and Insurtech

Valuation

Early listings resulting from a plentiful supply of capital that is spurring record valuations and company growth
Fintech giant Visa spearheads trading multiple rankings

Fintech companies are seeking a path to profitability;
They need headway to reach scale and market;

Operating metrics

Fintech is an industry characterised by high technological barriers;
Meanwhile, Insurtech is struggling to reach profitability;
Select Insurtech companies are still achieving loss ratios comparable to traditional insurers due to poor proprietary technology

Schulte Research

Fintech, Insurtech, Crypto, and Proptech

Business Models

A one-stop-shop super app seems to be the weapon of choice to achieve CEN, supporting cross-selling/up-selling benefits. This remains elusive
Ping An has achieved this by leveraging an O2O strategy to offer a variety of services in a single app
PayPal is on this bandwagon by recently announcing the creation of its own one-stop super app

Sources: Schulte Research

11

Figure 7
Global Summary:
Similarities between US & China
US & China both focused on antitrust & data, whilst shared goals between sectors are driving trend commonalities

Key goals focused on solving pain points at both ends of the value chain

Goals and Limitations

Ultimately look to achieve harmonised decentralized platforms, remove intermediaries and improve efficiency
Limitations are related to poor transparency, uncertain regulatory landscape, fraud, fragmented markets, etc.

Blockchain a key railroad for all sectors
Record funding

Trends

it is a transportation system for all data

Q1 and Q2 2021 have seen a flurry of capital fuelling growth

IoT, Big Data, AI and analytics becoming a mainstream technology for all sectors across all aspects of their business model
operations and customer experience

fraud,

Schulte Research

Decentralisation and data as a store of value are hot emerging topics

US and China at cross roads on regulation

Regulations

Both are focused on addressing issues related to antitrust, data privacy and data monopoly
Chinese IPOs in the US to redirect to Hong Kong in response to cybersecurity reviews requirements before listing overseas

Sources: Schulte Research

12

Figure 8

xvi

Chapter 1:
NFTs and crypto
Section 1: The world of finance, insurance, property, and health is rapidly morphing into a crypto-led digital metaverse where all physical movement (people, places,
things, and ideas) is being tokenized, valued, and traded. Increasingly, all of this
must be seen as a whole, and financial institutions which fail to see this will be out
of business.

Global Summary:
Blockchain as the railroad, Big Data as the cars
Fixing transparency, traceability, AML, KYC for future advancements in data analytics (e.g., edge/quantum computing)

US key players

NFT
Intellectual property

Crypto

Fintech

Property
Money
Insurance
Art/Wine/Sports

NFTs

Gaming
Rewards and incentives

China key players

Insurtech

Proptech

Risks

Schulte Research

Monopoly behavior
Antitrust hindering
development

Railroads Required

Blockchain (e.g., BSN)
Central Bank Digital Currency

Incentives to develop
proprietary technology
Fragmented data
Public trust

Sources: Schulte Research

14

Figure 9

There is a new railroad being laid; only it is digital. This railroad is blockchain.
China has the lead so far, but the western alliance is rapidly catching up. Central
bank digital currency will be the main railroad, though it is unsure who will own
it. More importantly, who will operate the railroad station franchises. In China, it
is Alibaba and Tencent now securely under the thumb of the PBOC and the State
Council. In the West, it is still hard to say, but Visa has done a phenomenal job
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M O N E Y M E TAV E R S E

of commandeering much of the activity of railroad stations. PayPal is catching up
quickly. JPM and Square are also powerhouses. Coinbase is a significant player but
just cannot get any love from investors.
Digital currency: institutional investors
CBDCs as the first step to democratization of digital currencies
Remarks

Primary role for a crypto in a portfolio or treasury account
The Economist survey of 200 institutional investor and corporate treasury management

Issuance of CBDCs necessary to establish functioning market for new
financial instruments

Capital appreciation, 33%

will increase demand for other forms of

digital currencies

Alternative asset diversification, 31%

Institutions sees a demand for international institutional-only currency
exchange platform

Monetary transfers for large settlements, 29%

Increased regulatory clarity needed

F/X or currency exchange, 28%

Preference for transactional use in the future, but currently used as a store of
value

Hedge against inflation, 28%

Schulte Research

Governments and regulatory entities:
1. must work together to bring clarity and investor protection when
investing in crypto-assets; and
2. must educate and provide guarantees for both investment in
crypto-assets as a store of value and as a medium of exchange

Hedge against low interest rates, 27%
Protection against geopolitical uncertainty, 25%
Simplified digital settlement/transaction only, 24%
Speculation, 21%
Deflation protection, 16%
They should have no role, 1%

Sources: The Economist Intelligence Unit: Digimentality 2021: Digital currency from fear to inflection

20

Figure 10

Figure 10 shows just how rapidly cryptocurrencies have become an integral part
of investing. According to the EIU, only 1% of participants in its survey said crypto
does not belong in a portfolio. The suggested uses include capital appreciation, diversification, transfers, inflation hedge, and a political risk hedge.
Digital currency: institutional investors
Catalysts and obstacles to acceptance of digital currencies
Primary triggers to enhanced activity in digital currencies

Primary obstacles to institutional investor of digital currencies

The Economist survey of 200 institutional investor and corporate treasury management

The Economist survey of 200 institutional investor and corporate treasury management

Wider adoption of CDBCs, 31%

Market trust or understanding of digital currencies/assets, 47%

Availability institutional-only digital currency exchange, 29%
Financial market structures, 43%

More robust AML controls, 25%
Increased economic instability, 25%

Asset volatility, 36%

Sharp rise in other asset prices, 23%
Support digital currencies by leading corporations, 23%
Reduction purchasing power, 21%

Provide regulatory
framework and
institutional investor
protection

Sharp fall in other asset prices, 21%

Internal technological challenges, 32%

Regulations, 32%

Lack of related digital financial services, 27%

New regulatory framework, 21%
Lack of corporate support, 24%

Schulte Research

Rising interest rates, 19%
Continued low negative interest rates, 18%

Insufficient interoperability, 19%

Significant social unrest, 13%

Sources: The Economist Intelligence Unit: Digimentality 2021: Digital currency from fear to inflection

21

Figure 11

Figure 11 shows the obstacles to greater use. Frankly, we boil it down to two:
absence of insurance and regulatory approval as a tradable commodity asset class on
the CBOE.
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Paul Schulte

Stablecoin categories
Growing base of stablecoins displaying a movement beyond traditional crypto use cases
Fiat-backed

Coins backed by a corresponding US$ in a treasury

Crypto collateralized

Stablecoin collateralized by other digital assets (e.g., ETH, BAT, USDC)

Interest-bearing

Token created to represent stablecoin deposit earning interest

Backed by SNX holders who are rewarded for providing collateral and stability
with fees generated by Synth transactions

Schulte Research

Synthetic

Algorithmic

Coin programmed to optimize search of highest yield opportunities

16

Figure 12

Crypto lending
Crypto lending booming

a trend picked up by blockchain projects

Obtains crypto loans

Deposits fiat currency

Lender

Borrower

Deposits crypto assets as collateral

DeFi Lending
Platform

Schulte Research

Repays the loans with interest

Receives collateral back after
repayment

Receives funds back with interest
(passive income)

Sources: Medium.com

18

Figure 13

NFTs: Crypto Art Boom
NFTs have grown to account for c.10% global art market sales where Millennials account for 71%+ resell art
NFT sales by category
Collectibles

NFTs quarterly sales1
Sports

Games

Art

Utility

Data in US$ m

Me taverses

$2,929.2
5% 3%
11%
40%
10%

Schulte Research

31%

$424.0
$9.2

$7.7

$18.4

$31.6

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

$503.9

Q2 2021

Q3 2021

Sources: Consensys, NonFungible
(1) Q3 2021 until 15-Sep-2021 included

19

Figure 14
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Then, we get to the evolution of non-fungible tokens. The first element of this
is the inclusion of DeFi to trade, collateralize, securitize, and perform government
functions (Figure 12, Figure 13, and Figure 14).
The second is to guarantee an immutable, connected, and transparent establishment and public recognition of this thing or this person. Solana is seen as a strong
candidate for this space.
The third element of this is the theme of this report — the metaverse. This includes the public valuing of assets outside of any intermediary. This includes artistic
expressions which live only in the digital domain.
Summary

Schulte Research

Special benefits, opportunities, and use-cases
Authenticity

Validity, uniqueness, and properties
are immortal and decentralized

Connectivity

Immediate access to creators,
buyers, and sellers globally

Smart contracts

Enable price-fixing, royalties, loyalty
rewards, and infinitely many other
functions

Fresh engagement

Incentivise fans and encourage
repeat-purchase of other products

Provide voting rights, with all of the
above benefits

Transparency, yet
anonymity

Assets owned on public keys, visible
and tracked, without direct
identification

Decentralized
governance

Immutability

Once minted, an NFT is immutable

Metaverse immersion

Ownership is validated by the
underlying blockchain

Security

Inclusion

A key step towards a digital,
tokenised world. More
interoperability and sectors must
follow

Involvement of the general public
into any space

Sources: Schulte Research

24

Figure 15

NFTs unique representation of a digital file
Exist on the blockchain: capable of exchange and ownership, with the benefits of immutability, traceability, and security
Accessibility

Schulte Research

Uniqueness NFT

Anyone can purchase (or even create) an NFT
Most popular public marketplaces: OpenSea and Rarible
Unique: can not be interchanged with another
Underlying digital file allocated to single owner on the blockchain
Similar to cryptocurrencies

Controlled by private
cryptographic key

Most users connect to a wallet (i.e., Coinbase) to the marketplace, allowing non-custodial storage

Laws and regulations

The nascency of NFTs limits the associated laws and regulation currently

Minting

Smart contract

Process of converting a file to an NFT

Usage and ownership of an NFT igoverned by smart contracts

25

Figure 16
4

Paul Schulte

Initial applications of NFTs
Applications of NFTs are broad and growing
Entertainment

Own sporting moments, film characters, or amateur memes
Store assets safely, relying on underlying wallet

Collecting

Unique ownership of an item, with continual proof of authenticity
Anyone can share their talent publicly and own it indefinitely

Creation

Claim royalties on future sales, guaranteed by smart contracts
Voting functions (i.e., choosing next signing for sport team)

Governance

Could develop to decentralization of political and corporate decisions
Offers a new item to wager

Schulte Research

Gambling

the digital file itself

Zed Run has sold tens of thousands of virtual horses that can be bred and raced for money up to US$65 k

Investing

Uniqueness of assets leads to appreciation in price as popularity grows
Both in gambling format and with a more recreational focus

Gaming

In-game items are tokenised, to be exchanged outside of the game

Sources: Schulte Research

26

Figure 17
NFTs trends: integrate financial frameworks
Integration into DeFi and Portfolio management
Virtual objects type of cultural capital
Traditional and emerging art expected to be integrated into emerging financial frameworks

Schulte Research

DeFi

Collateral for borrowing or
fractionalized

Portfolio management

Attached to fixed income
instruments

Government participation tokens

Sources: Blockchain Council

27

Figure 18
NFTs trends: metaverse, DAOs, digital museums
Difficult to implement in the fiat universe

Schulte Research

Ethereum

to send and lock NFTs to individual
addresses

Decentralized autonomous
organizations

Applications

Software-defined investment
collectives that bid on the acquisition
of artistic expressions

Sources: Blockchain Council

28

Figure 19
5

M O N E Y M E TAV E R S E
NFTs trends to watch: multichain and institutional
protocols & networks
IPFS and multi-chain support to avoid losses of digital assets in case of blockchain discontinuity
IPFS and multi-chain support

Enterprise IP networks and emerging media

Token market collapse in 2018 caused majority of crypto community
to shift focus to institutional enablement models

NFTs allow ownership of a reference to a file stored on IPFS

Led to proprietary protocols and networks
Problem: if business ceases to exist, unclear what happens
to your digital asset

Schulte Research

Resulted in digital asset and consultancy programs aimed
at developing blockchain controlled operations

Expect similar chain of events in traditional media: film, music, and
art

Possible solution: IPFS secures NFTs in the multichain world
Sources: Blockchain Council

29

Figure 20
NFTs provide new opportunities within
entertainment
Secure and reliable revenue stream, providing traceability, engagement, and governance
New revenue stream

Offerings and transactions can continue outside of the sporting-season
Security and traceability of all tickets

Ticketing

Tickets with fixed price on the blockchain, preventing scalping and touting

Fan engagement
Customer relationship
management

Schulte Research

Fans are willing to pay to for inclusion and interaction

Advertisement

Exclusive offers and loyalty rewards tracked and distributed via ownership of NFTs
Data value at the core
Ownership segmentation, quantity, and composition within a wallet offer insights to the customer base. Leveraged for
tracking improvement, advertising, and collaborations

High-profile NFTs draw attention to the underlying entertainment (e.g., NBA Top Shop for the NBA)

Governance

Fans can contribute to decisions: revenue generation and benefit from wisdom of the crowd

Sources: Schulte Research

30

Figure 21
Crypto is the cashflow, NFTs are the assets
Nascent market expanding at a rate that can not be ignored
Transaction volume

Famous NFTs

Schulte Research

Ownership of a file?

Pandemic as a catalyst

c.US$2.5 bn of sales in H1 2021

CryptoPunks have had more than US$1 bn in volume
Beeple

Everydays

the most expensive NFT ever sold for US$69 m

How can it be pictured in this PowerPoint, yet sold for US$69 m?
Comparable to photographing or copying the Mona Lisa: the value is in unique ownership

The pause in entertainment and sport required a new way to engage and monetise fans worldwide
Aligning with the surge in blockchain-based products

31

Figure 22
6

Paul Schulte

The fourth element of this is the enterprise or institutional, which are a betrayal
to the purists in that they are proprietary. This includes central bank coins and aspects
of traditional media like music and film. Figure 15 to Figure 22 are clear pictures
showing the trends in NFTs.
The bottom line for us is that crypto is the cash flow and NFTs are the assets. This
will flow into art and wine but also tickets, fan engagement, advertising, governance,
and member wallets. This market is $2.5 bn and rising sharply by the month.
NFTs: Crypto Art Boom
NFTs have grown to account for c.10% global art market sales where Millennials account for 71%+ resell art
NFT sales by category
Collectibles

NFTs quarterly sales1
Sports

Games

Art

Utility

Data in US$ m

Me taverses

$2,929.2
5% 3%
11%
40%
10%

Schulte Research

31%

$424.0
$9.2

$7.7

$18.4

Q1 2020

Q2 2020

Q3 2020

$31.6
Q4 2020

Q1 2021

$503.9

Q2 2021

Q3 2021

Sources: Consensys, NonFungible
(1) Q3 2021 until 15-Sep-2021 included

19

Figure 23

Key risks associated with NFTs rollout
Volatility

Environmental

Licensing

Schulte Research

Regulatory

NFTs are difficult/impossible to value, due to their unique nature. Combined with rapid and global exchange; prices
change quickly
Ethereum, currently the leading blockchain for NFTs, demands vast amounts of energy for its Proof-of-Work structure
Ethereum switching to Proof-of-Stake consensus mechanism
Owners-rights are dependent on the marketplace and NFT, these should be reviewed prior to purchase
Newer projects are offering more commercial rights
Novelty, uniqueness, and complexity combine to uncertainty of future regulation and laws for NFTs
Global reach and semi-anonymity further disrupts regulation

Criminal activity

High fees

Blockchain transactions fees, marketplace fees, and infrastructure costs cause expenditure upon purchasing an NFT
(typically between 1-10% of the price)

Sources: Schulte Research

36

Figure 24

Figure 23 shows the art market activity. Ethereum and Flow are likely winners in
this area. Figure 24 shows all the risks, and there are many.
7

M O N E Y M E TAV E R S E

Section 2: The integration of crypto into the new blockchain rails created a digital
data transportation system that confers ownership. This is the metaverse. A perfect
“tangible” example of this metaverse is Somnium. Somnium is a self-contained VR
reality customizable and ‘lovable’ because it has AI capabilities that bring avatars to
life. It is a “persistent” social VR world. You can live in this world and buy, sell, transact, learn, shop, and travel. (Somnium means “dream” in Latin. Kepler wrote a book
called Somnium and anticipated space travel — in 1608).
Partners of Somnium
-level specifications

Pimax
Somnium has partnered with Pimax

-based domain

Somnium has partnered with Sony via their state-of-the-art 3D model creation technology
In addition, Sony houses a VR-based store within the Somnium universe that is one of the first in the world

Somnium is a part of the specialized Microsoft for Startups program.

Schulte Research

Bring advertising revenue for users on the platform

platform transactions.

-two solution offers speed and near-zero transaction costs for Somnium users with respect to on-

Sources: Metaverse series Part II

42

Figure 25

Partners of Somnium
OpenSea provides an accessibility, highly-liquid marketplace to empower these new economies, and offers tools that
permit developers to build such marketplaces for their digital assets

VR Education uses the Somnium space VR platform to enhance experiences and drive more education with respect to VR
adoption

Collaborative efforts towards constructing a truly decentralized and immersive metaverse

Schulte Research

Enabling teleportation between VR worlds

One of the most trusted and secure digital currency exchanges/custodians globally enabling customers to transact and
store digital assets
Sources: Metaverse series Part II

43

Figure 26

8

Paul Schulte

People who never had a computer in their home wondered why you needed a
computer – until you got one. People who never had smartphones wondered why
you needed them — until you got one. The same will be true, in our opinion, for
new equipment which offers us a self-contained world of AI-driven entertainment,
learning, and commerce. This is the gamification of finance and investment. To
this end, Somnium has partnered with Sony, Microsoft, and Polygon, among many
others – Figure 25 and Figure 26.
Economy in Somnium
Product/service offerings that allow platform users to generate revenue

Schulte Research

Characteristics

Economic activities

VR-based economies are unfettered by restrictions such as physics
and geography

Tokenizing and selling their productions directly via open
marketplaces

Applications involving blockchain and digital asset

Owning and monetizing broader digital assets within the Somnium
Economy

Safety, privacy, encryption, traceability, and verifiability of ownership
of digital items/asset transacted on platform via the network.

VR world navigable by thousands of users simultaneously

Users to maintain full ownership over their digital assets/possessions in
the form of NFTs.

Creation, building, and monetization of land

Sources: Metaverse series Part II

44

Figure 27

Figure 27 is a taste of what is to come in the metaverse — everything can be tokenized in Somnium. Players have a digital wallet, NFTs, marketplaces, art, learning,
events, thousands of interactive friends, and even land.

Developers

Collectors

NFT collectors exhibiting their collections on their land as
well trading amongst each other

Entrepreneurs

Entrepreneurs can build and sell digital/tangible goods

Traditional companies

Schulte Research

Developers selling tokenized digital assets and avatars

Game developers

Cornerstone principles
Sominium Economy

Somnium Space monetization and business
models
Tokenization of virtual land
Tokenization of digital
assets/experiences
Decentralized marketplaces

Traditional companies and businesses creating a store presence within the Somnium Space

Game developers inserting short/large demos or gaming experiences into the Somnium Space

Sources: Metaverse series Part II

45

Figure 28

9

M O N E Y M E TAV E R S E
Somnium Space monetization and business
models
Content creators

Content creators can showcase a variety of virtual
experiences (e.g., vlogs, commentary, etc.) and monetize
them within the Somnium Space/platform

Universities

Universities and other higher-learning institutions building
courses and experiences such as an immersive
planetarium

Artists

Artists can showcase a variety of creations such as 2D/3D
paintings and sculptures

Native token of Somnium: Somnium CUBEs
CUBEs can be used for a broad array of product/service
offerings including:
interacting in entertainment (e.g., race cars)

Schulte Research

land purchases or renting
digital asset/item sales in the marketplace
eCommerce

Streamers

Streamers (e.g., Twitch, etc.) having their own virtual studio from which they can record within the Somnium Space

Unity SDK

Developers can build anything – for fees or otherwise – and upload it via the Somnium Unity SDK for other users to engage,
interact, and transact with

Sources: Metaverse series Part II

46

Figure 29

Investing, Buying & Renting Land
Brand new area of virtual real estate
Overview

Value of parcels

Each land parcel is unique, unreplicable, non-forgeable, and has verifiable
ownership.

The value of various parcels within the Somnium Space varies as a function
of factors: popularity of areas, the view of different areas, size, etc.

Owners of these NFT-based land parcels have direct autonomy over
contents that are built on top of their land parcels

The average land parcel in the Somnium Space across the different size
ranges sold for roughly 6.57 ETH, or equivalently US$14,560
Throughout the COVID-19 pandemic, as more users enter the Somnium
scarce digital real estate within the Somnium Space will continue to
increase in value.

Schulte Research

Metaverse Property: the first VR-based real estate company in the entire industry
Property Management
Renting property to clients, maintenance of
technical and visual aesthetic, collecting rents from
clients

Property Development
Architecting, designing, and developing the build, as well
as establishing on-map development

Consulting
Helping property owners/renters make important
decisions in VR-based real estate using their
knowledge of virtual land across metaverses

Marketing
Metaverse Property has strong access to the burgeoning
advertising network that exists across the various
metaverses

Sources: Metaverse series Part II

47

Figure 30

The world of “Ready Player One” is here – Figure 28, Figure 29, and Figure 30.
The future of conferences is here. Think of a world where every elementary or high
school has a chance to become an avatar for their students. It is scary, but that is where
this is going.
PayPal is one of the major companies which is young enough to be hungry and
not yet old enough to rest on its laurels. It is aggressively moving forward with a
broader product range and expanding geographically. Square is also doing terrific
things in this area, but we prefer PayPal on valuation grounds.
10

Paul Schulte

Visa vs. Mastercard vs. PayPal vs. Square
Content/Section Title

1.
2.
3.
4.

Products

Buy, hold, sell using Visa credentials
Cash-out to Visa credentials
Crypto APIs
Direct settlement in USDC

1.

1.

Customer segment

2.

Visa network to facilitate access for
partners to crypto APIs and transaction
settlement
B2B Visa Connect for blockchain crossborder payments
Visa sees a global opportunity in crypto,
besides China, which is restricted by Union

Geographies

Buy, hold, sell using Mastercard
credentials
Cash-out to Mastercard credentials
Crypto APIs

2.
3.

Cryptocurrency trading and as a funding
source
Adds a lower cost of funding for PayPal
Supportive of users & engagement
1.
2.

1.

Mastercard network to facilitate access
for partners to blockchain APIs (smart
contracts, fast pay network in P2P, P2M,
and B2B)
Stablecoins settlement in 2021

2.

Crypto Checkout: settled in fiat currency
Buy, hold, and sell Bitcoin, Bitcoin Cash,
Litecoin, and Ethereum
No Balance sheet exposure
Product exposures: benefits from buying
and selling via third-party Paxos. No
exposure to the volatility of underlying
crypto-assets

Looking for consumer protections, strict
compliance protocols with regulations, and
pure payment not as an investment in
potential crypto-assets

No direct exposure to crypto as Visa
enables partners to leverage crypto APIs
and access its network

Risk exposure

Schulte Research

Through partnerships and collaboration
Issuance of Mastercard credit cards with
crypto-related rewards
Plans on rolling out stablecoins settlement
in 2021

Through partnerships and collaboration
Issuance of Visa credit cards with cryptorelated rewards
Involvement in stablecoins

Crypto approach

PayPal users – Retail consumers

Mastercard network

Launch in the US first
UK rollout in Q3 2021

Transactions settled in fiat currency only
89 blockchain patents granted, 285
pending
Acquisition CipherTrade for crypto analytics

Transactions are settled in fiat currency
No private key issued: impossible to transfer
crypto out of digital wallet

Cryptocurrency trading and as a funding
source
Buys and sell crypto directly from its
customers

1.
2.

Buy, hold, and sell Bitcoin
P2P transfers
Balance sheet: holds $220m in Bitcoin
Product exposures: benefits from buying
and selling of consumers without volatility
exposure. Square earns spread from buying
and selling

Square users – Retail consumers

Launch in the US

network
Visa Research Team to improve scalability
and offline use of digital currencies
CryptoPunk
Plans crypto services integration in Brazil

Other

Withdrawing to an external wallet possible
Plans for decentralized exchange

Sources: PayPal public filings, Capital IQ, Credit Suisse, CNBC, Wall Street Journal, Pymnts, Financial Times

49

Figure 31
PayPal approach to crypto
Safe rollout on/off ramp to traditional crypto products in the US and in the UK
Crypto products: Crypto Checkout and PayPal Crypto
Products Overview

Crypto Checkout: Launch Q2 2021, cryptocurrency as a funding source to pay. Transactions settled with fiat currency1

Cryptocurrencies

Bitcoin, Bitcoin Cash, Ethereum, and Litecoin

International Expansion

Planned in H1 2021

Rationale

Adds a lower cost funding for PayPal. More supportive of users & engagement

Regulation

BitLicense from the NYState Department of Financial Services in Q4 2020
PayPal Crypto: ~2.5% take rate

Transaction fees

Schulte Research

PayPal Crypto: Buy, hold, and sell experience since Q3 2020 in the US on PayPal, Q2 2021 through Venmo

including variable fee based on the amount from 150bps to 230bps and a spread of ~50bps

Crypto Checkout: only spread on the conversion from crypto to US$

User engagement

Crypto users sign into the app twice as much as they did before buying crypto on PayPal
Cannot transfer crypto in and out of the wallet

Limitations

Limited crypto-assets available

Sources: PayPal public filings, Capital IQ, Credit Suisse, CNBC, Wall Street Journal, Pymnts, Financial Times

51

Figure 32
PayPal crypto investments
Indirect exposure to digital assets and blockchain-related companies via acquisitions, investments, and partnerships
Investments in the Crypto space
Company

Transaction

Details

Acquisition announced Q1 2021

Cloud-based wallet for storing and protecting digital assets using cryptography

Estimated ~$200 million

Bring secure-storage expertise

Private investment

Cryptocurrency tax software solutions for consumers and enterprises

Undisclosed amount

Serves regulatory agencies worldwide

Q1 2021
Partnership since Q3 2020

Powers

PayPal participated in Series C funding in Q4 2020

Crypto compliance and Risk Management

Private investment Q4 2019

Schulte Research

crypto service enabling US users to buy, hold, and sell crypto

APIs, market expertise, and regulatory framework

PayPal participated in Series D funding in Q2 2021

Anti-money laundering, prevent fraud, and compliance

Acquired by Blockchains Management in Q4 2020

Blockchain-based identity management and compliance software solutions for
financial institutions

Private investment in Q4 2019
Deal fell through Q4 2020

Crypto custody and trading firm

Estimated ~$750
Sources: PayPal public filings, Capital IQ, Credit Suisse, CNBC, Wall Street Journal, Pymnts, Financial Times

52

Figure 33
11

M O N E Y M E TAV E R S E

Visa approach to Crypto
Crypto steps as partnerships instead of solo initiatives, with the aim to provide ecosystem infrastructure surrounding crypto
Late implication but significant impact in the crypto space

Created Zether1 & Fly Client2

Different approach than Square or PayPal, as in Visa takes crypto steps as
partnerships instead of solo initiatives

Team is now focused on new mechanisms to improve scalability and
enable offline digital currency transactions

Collaboration with the World Economic Forum on a set of policy
recommendations for central banks exploring CBDC

Offline use of CBDC transactions via Bluetooth or NFC to
expand financial inclusion by helping unbanked individuals

2016

2018

Announced B2B Connect with Chain Core,
enterprise blockchain infrastructure
Patent blockchain-based transaction system
Partnership BTL cross-border settlement

Schulte Research

Visa Research Team

Visa approach to crypto came later than its direct competitors

2020
Engagement with World Economic Forum
Circle joined Visa Fintech Fast Track
Settlement of USDC in fiat currency

Partnership IBM
Integration open source Hyperledger Fabric

Pilot phase B2B Connect in collaboration with
Commerce Bank, Shinhan Bank, Union Bank,
and United Overseas Bank

FIS integrated Visa B2B Connect
Commercial launch B2B Connect
Collaboration Infosys
Patent for digital fiat currency

2017

Settlement in USDC directly
Launch API Offerings for First Boulevard
Partnership with Tala for API Offerings

2019

2021

Sources: Visa public filings
(1) Zether is a privacy-preserving payment mechanism. JP Morgan Chase announced plans to integrate into its own blockchain efforts.
(2) FlyClient is a framework that makes it easier for mobile devices to validate blockchain transactions

54

Figure 34
Visa crypto and blockchain partnerships
Visa estimates that these partnerships could yield 50m+ new Visa credentials1
35 partnerships in the Crypto space2
Details

Details

Transactions settled in UDSC, stablecoin powered by Ethereum
Circle Visa Corporate Card to spend USDC

Improve process of interest disbursements and create new crypto
products

First Federally Chartered Digital Asset Bank
Powers Visa crypto-native settlement with USDC through APIs
Exclusive relationship with Visa2

World
Economic
Forum

Fiat lending with crypto collateral via Crypto.com Visa Card at 9.9%
interest. Up to 8% cashback on purchases
10 million users

Visa Cards

Visa engaged with policy makers and organizations to shape the
future of digital currencies
Visa provided set of policy recommendations for CBDC

USDC co-founded with Circle

Schulte Research

Rewards program of 4% in Stellar or 1% in Bitcoin
International B2B Payment Solution
technology since 2017

Visa
Innovation
Program

Partnership for development of new Fintech solutions powered by
blockchain technology for B2B and cross-border payments

Visa Fintech
Fast Track

Example Visa leveraging partnerships
Co-founded

Created USDC

Blockchain based solution for cross-border money transfer
Log sentinel: Secure audit trail solutions through blockchain
Mobile blockchain-based loyalty program
pay with Visa at over 70m+ merchants
Most crypto partnerships have been borne out of this program

Anchorage powers

Partnership

1st USDC-settled Card

Sources: Anchorage, Business Insider, Circle, Crypto.com, Coinbase, BlockFi, Fold, Binance, Xapo, Line, Visa public filings, Nasdaq, Centre, Paytm, Bitpanda, Lastbit, Coinzoom
(1) Table is non-exhaustive. 35 digital currency platforms and wallets. Alfred Kelly, Visa CEO at Q2 2021 Earnings Call on 27th April 2021
(2) Ryan McInerney, Visa President at KBW Fintech Payments Conference on 23rd February 2021

55

Figure 35

Purchase

Schulte Research

APIs2

Settlement

Differentiated value: brand, capabilities, reputation, safety, security, and experience1

Working crypto exchanges and wallets to allow customers to cash-out onto a Visa credential
Opportunities in the cross-border B2B space

APIs to offer the ability to purchase, custody, and trade cryptocurrencies
Partnership with Anchorage to provide back-office infrastructure

Visa Key Partnerships

Cash-out

Wallets and exchanges to use Visa credentials to purchase cryptocurrencies

Settle in digital currency starting with USDC stablecoin
Potential for crypto settlements for their B2B Connect product

Sources: Visa public filings
(1) Alfred Kelly, Visa CEO at Goldman Sachs Technology & Internet Virtual Conference on 11th February 2021

etwork for the neobank and clients
s customers will have access to USDC for remittances

Figure 36
12

56

Paul Schulte

Stablecoins settlement and Anchorage
Coinbase, Visa, Circle, and Anchorage working together to bridge the gap for USDC adoption via settlement on Visa Card
Stablecoins
Visa started investing in stablecoins
20 months ago1

Anchorage partnership
backed 1:1 with fiat currencies

First federally chartered digital asset bank

over

Exclusive Visa digital currency settlement partner to provide back-office
infrastructure, such as custodial, security services, accounts tracking, etc.

Visa upgraded infrastructure to enable partners to settle in digital currency
starting with USDC stablecoin

Launched pilot of USDC settlement with Crypto.com Visa Card

Increased conversation with central banks about designing CBDCs2

Anchorage and Visa plan to expand to other partners soon

Visa sees potential for crypto settlements for their B2B Connect product3,
leveraging Circle partnership to enable payments with crypto wallets3

Besides Crypto.com Visa Card, USDC standard settlement process requires
partners to settle in a traditional fiat currency

Schulte Research

Share of Total Stablecoin Supply

Total Stablecoin supply in US$ bn

Sources: Visa public filings, Coin metrics
(1) Ryan McInerney, Visa President at KBW Fintech Payments Conference on 23rd February 2021
(2) Oliver Jenkyn, Visa Executive President at Morgan Stanley TMT Conference on 1st March 2021
(3) Vasant Prabhu, Visa CFO at Wolf Research Fintech Forum on 10th March 2021

57

Figure 37

Visa vs. PayPal. Figure 31 to Figure 37 review our work comparing Visa, MasterCard, PayPal, and Square. Every time you turn around, Visa is in the right place and
at the right time. Figure 34 to Figure 37 review the partnerships and product launches
that allow Visa to go from strength to strength and remain highly relevant and profitable. It is a marvel how a monolithic credit card company managed to pull this off.
And valuations are simply not demanding. As the Cold War with China accelerates
and the NATO alliance takes a much more aggressive line toward China not only to
contain it but to weaken it, Visa is in an advantageous position to challenge Alibaba
and Tencent.
BOTTOM LINE: Blockchain confirms identity, so we need digital theft insurance (for cases like blackmail and kidnapping). It ensures trades, so we need
digital fraud insurance. It proves property ownership, so we need digital property
insurance. It confirms intellectual property, so we need digital insurance remedies
for corporates, patents, trademarks, and copyrights. It secures smart contracts, so
we need insurance for digital breaches of smart contracts. And blockchain CBDC
will require a substantial new market for digital insurance for sovereign CBDC distribution (counterfeit insurance), store of value (deposit insurance), and means of
exchange (fraud and larceny).
This is the real Insurtech that the world craves. It is nowhere in the current
crop of Insurtech. Our real worry is that by the time this generation of Insurtech
13

M O N E Y M E TAV E R S E

makes the transition from a “half in and half out” approach involving off-the-shelf
digital solutions to physical harms, they will have missed the boat when it comes to
the purely digital world of blockchain-based solutions. This is true terra incognita
where there are NO incumbents. Entities like Sygnum and Silvergate are quickly
filling this void.

Section 3: The new crypto exchanges and banks have finally gotten big enough to
merit their sector.
Company overview
Towards full-stack crypto platform, from trading crypto to providing services for DeFi, NFTs, cloud, lending, and derivatives
Business model

Go-to-market strategy

Easy-to-use platform for accessing the broader cryptoeconomy by
investing, spending, saving, earning, and using crypto

Retail: provides investments, storage, spending, earning, and use of crypto
assets

Build brand as trusted space

Institutions: provides hedge funds, money managers, and corporations a
one-stop-shop for accessing crypto markets through advanced trading
and custody technology

Focus Coinbase Cloud, equivalent to Amazon Web Services (AWS) for the
global cryptoeconomy

Ecosystem partners: provides developers, merchants, and asset issuers a
platform with technology and services that enables them to build
applications that leverage crypto protocols, participate in crypto networks,
and securely accept crypto as payments

Continuous development of new products and services to enhance value
for consumer and business partners
Since inception, c.US$3.4 bn in revenue, largely from transaction fees
earned from volume-based trades by retail users and institutions

Goals

Limitations

Create a one-stop shop for institutional investors and solve ecosystem
issues:

Due to a different standard of regulatory scrutiny, competitors:
1. Operate under less stringent local rules and regulations;

Lack distribution, trust and usability

2. Can more quickly adapt to trends;

Schulte Research

Availability of easy-to-use and scalable infrastructure

3. Support a greater number of crypto assets; and

Offset effects of any future fee pressure due to economies of scale

4. Develop new crypto-based products and services faster

Proprietary full-stack scalable infrastructure surrounding crypto (e.g.,
blockchain integrations, crypto compliance infrastructure, cybersecurity,
cryptography)

Reliant on crypto asset volatility
Uncertainty regarding regulatory framework globally

Sources: Coinbase public filings

60

Figure 38

Future prospects, products, and services
8.8m Monthly Transacting Users, 9k institutions, and 160k ecosystem partners as of Q2 2021
New products and services developments

Coinbase direct listing implications

Coinbase Asset Hub to help asset issuers integrate tokens with Coinbase
Bitcoin-collateralized loan product and a staking product 6% APR for staked
ETH2

1. Public listings amongst crypto firms;
2. Greater legitimacy of crypto within global finance;

Coinbase Cloud powered by Bison Trails for new suite of cloud-based crypto
computing services (similar to AWS)

3. Bridging the gap between crypto and traditional investors;
4. Playing a pivotal role in

; and

Smart order router product for institutional investors, routing orders to the
exchange with the best pricing amongst 10 liquidity venues

5. Increasing the market capitalization of large crypto assets through
enhanced investor participation

Launch Crypto Council for Innovation in partnership with Fidelity, Paradigm,
and Square: help regulators, policy makers to understand crypto
Recent partnerships with PNC Bank, SpaceX, Tesla, Third Point, and
WisdomTree Investments

Outlook and future potential for growth
Non-fungible tokens (NFTs) represent unique opportunity to transform the
relationship between creators and consumers

Now offers reward across six tokens, including ETH2 staking
Launch Coinbase Card and Coinbase Prime brokerage

Schulte Research

Diversification revenue streams with addition of new products and services,
notably Coinbase Cloud

Acquired Skew for institutional data analytics

Future growth in nascent services for institutional investors such as Borrow &
Lend in addition to Trading and Custody
Crypto long-term prospects (i) crypto as an investment; (ii) as a financial
service with the rise of DeFi; and (iii) as an app platform such as NFT usage
Lending with Ethereum as collateral provided enough liquidity
Sources: Coinbase public filings

61

Figure 39
14

Paul Schulte
Quarterly catalysts 2021 earnings
Catalysts Q1 2021 earnings

Catalysts Q2 2021 earnings

Higher MTUs and elevated trading volumes per MTU

MTUs +44% QoQ to 8.8m

Addition 7 new assets for trading and 13 new assets for custody

High volatility with Bitcoin reaching c.US$64k in April followed by c.45% drop
to c.US$30k

Growth institutional trading customers and volume traded per institution

Assets on Platform c.US$180 bn, -19.3% QoQ

Growth institutional interest in Ethereum and other crypto assets for
commerce, payroll, and custom white label solutions

Elevated Trading Volume at c.US462 bn, +37.9% QoQ driving trading
revenue growth

Substantial growth Subscription and services revenue
Increase interest in stablecoins, added support for Tether
Top 10 free app on iOS and Android

Schulte Research

Outlook Q3/Q4 2021
Lower MTUs and
Lo
d ttotal
t l Tradi
Trading Vol
Volume iin Q3 compared
d tto Q2
Meaningful growth institutional revenue in 2021 driven by transaction and
custody
Increase ARPU compared to historical US$34

45 per month

Sources: Coinbase public filings

62

Figure 40

Coinbase has been a preferred holding for us, but we must admit there is much
resistance among our client base. Its move from higher-margin consumer to lower margin but more reliable (and much higher volume longer-term) enterprise customer has
investors nervous. Also, Coinbase’s strategy of bigness and cartel structure is the kind of
structure that crypto is precisely designed to undermine. We do not see “strong hands”
holding Coinbase despite compelling valuations – Figure 38, Figure 39, and Figure 40.
SEN Leverage product
Access to capital through US$ loans collateralized by bitcoin

Provides credit

Enters into an
agreement with the
Bank to borrow US$ to
deposit at exchange

US$

leverage account on its
platform

EXCHANGE
EX

TRADER
ADER

Settlements
M
Maintains order
book

Executes tradess
Moves assets

Holds assets

US$ & Bitcoin

Schulte Research

Exchange uses SEN to

Holds/moves
assets

(Collateral)
US$ & Bitcoin

Trading activity
SEN US$ Transfers
Sources: Silvergate public filings

65

Figure 41

Silvergate vs. Sygnum. These are the first two purely “digital universal banks”.
Among its similar peers, Silvergate is trading at a sharp premium on P/E and P/B, so
we think it may have a breather here. It has a solid business model and a good product
line. Figure 41 explains the business model very simply.
15

M O N E Y M E TAV E R S E
approach to digital assets: custody as
first layer
Create series of global partnerships to launch a comprehensive suite of crypto products and services
Institutional-grade security to invest in the digital asset economy

Development

Launched institutional-grade access to DeFi in Q2 2021

Partners

Co-developed custody platform with Custodigit, a joint venture with Swisscom

Schulte Research

Competitors

Examples
cryptocurrencies
supported

Bitcoin

Aave

Ethereum

1inch

Ripple

ICP

Litecoin

Maker

Tezos

Uniswap

Sources: Sygnum public filings

69

Figure 42
Brokerage and trading: 2nd layer;
Lending: 3rd layer

3rd layer: lending

Schulte Research

2nd layer: brokerage

Extending to brokerage and trading for crypto, and lending via crypto-collateralized LTV
Brokerage and trading services for digital assets in a secure and seamless way

Brokerage

Trade BTC, ETH, XRP, XTZ, LTC, BCH, and DeFi tokens
Exchange from major fiat currencies (e.g., CHF, EUR, SGD, USD)

Functionalities

Settlement within Sygnum platform
Regulated European OTC options for BTC and ETH

Increase fiat liquidity against digital assets (e.g., Bitcoin, Ethereum, XRP, Litecoin, Bitcoin Cash, and Tezos)

Investors

Interest paid on actual drawings to dynamically adjust liquidity based on current needs

Flexible Loan-To-Value (LTV) to optimize interest rates charged on loan amount

Flexible LTV

Achieved through LTV of c.40%

Sources: Sygnum public filings
Sources

70

Figure 43
Asset management and DeFi: 4th layer
Asset management

Focus on asset management: vehicle for digital asset and high net worth investors

Customer segment

Sygnum Platform
Winners Index ETP

First focus on digital asset investors, second for high-net-worth investors via ETP
Provides range asset management investment products including alpha-oriented multi-manager fund

Tracks index leading protocol tokens, dynamically weighted by real world adoption, tracking the network effect
of the investor, user, and developer communities
Fully collateralized and physically backed, beta exposure to blockchain protocols

Launched regulated banking services for DeFi tokens, first step in

ambition

Next focus on suite of DeFi yield-generating products and services across banking and asset management
offering
Finally, custom solutions for clients with selected DeFi partners

DeFi

Schulte Research

Platform DeFi

DeFi tokens

Aave, Aragon, Curve, Maker, Synthetix, Uniswap, 1inch Network, USDC, Bancor, Chainlink, Compound, Polygon

Sources: Sygnum public filings
Sources

71

Figure 44
16

Paul Schulte
Tokenization of physical assets and Bank-tobank white-label as 5th and 6th layer
Tokenization of physical and digital assets and white-label for traditional financial intermediaries
Tokenization physical and digital assets, focus on equity shares next

Tokenization

For example, Digital Swiss Franc (DCHF), wine in collaboration with Fine Wine Capital, and Fillette au
Artemundi

by Picasso with

Primary market issuance platform

Desygnate

Digital securitization of assets on the blockchain
Increases efficiency of capital raising and automates corporate housekeeping processes

Secondary market trading venue

SygnEx

Access to Venture Capital, Mid Cap, Real Estate, and Arts & Collectibles

Schulte Research

Payment and settlement instant and direct with Digital CHF token
Provides regulated digital asset products and services through B2B banking and operational compliance services

Bank-to-bank activity

One-stop-shop modular suite of banking services including accounts, payments and custody, brokerage, tokenization,
lending, and asset management
Partners can broaden offering and access new client segment, with wallets segregated off balance sheet

Sources: Sygnum public filings

72

Figure 45

Silvergate also has impressive marquee partnerships. Sygnum also has an impressive array of partnerships – Figure 42. Sygnum, as we see it, is looking to act
as a global crypto exchange to legitimate the coming world of NFTs. It uses its
exchanges to create liquidity, increase product range, offer leverage, and become a
significant asset manager of crypto assets – Figure 43 and Figure 44. In Figure 45,
it also wants to become a white label connector between crypto and banks. Sygnum is finishing a Series A imminently but is in the right place at the right time
and working very closely with Swiss and Singapore regulators to embed crypto
into the financial system as a legitimate asset class with which regulators can feel
comfortable.
Exchange revenue model
Redesigned the exchange to benefit asset holders, enable traders, & increase market integrity
Generated from trading activity
attributed to margin trading and
interest received

Margin interest fees

Market making fees

Spot (Maker) fees: 10bp
spread

Net revenues
Charge 25% on all revenues

Traders

Generated from trading activity on the
G
hybrid order book

No taker fees

Share weighted

Liquidity
providers

Schulte Research

Bullish Treasury

Sources: Bullish SPAC Investor Presentation

78

Figure 46
17

M O N E Y M E TAV E R S E

Circle and Bullish are hybrid entities — think of Cisco and BAML for crypto.
Circle can be a powerhouse in this space, but its valuation out of the SPAC gate is
very rich, and it has a narrow pool of customers. It is bleeding losses also. Circle is
an important player, but the stink of SPAC lingers. Circle is no exception. Beware.
Lastly, we look at Bullish. It is a pure-play — for now — on its holdings of BTC and
Brendan Blumer’s EOS. Its platform will be operational sometime in 2021. The exchange model is in Figure 46. Is this another potentially great company that lists too
early when it is only half-baked?

Section 4: Additional research in PowerPoint format.

Schulte Research

Chapter I: NFTs and Crypto

13

Global Summary:
Blockchain as the railroad, Big Data as the cars
Fixing transparency, traceability, AML, KYC for future advancements in data analytics (e.g., edge/quantum computing)

US key players

NFT
Intellectual property

Crypto

Fintech

Property
Money
Insurance
Art/Wine/Sports

NFTs

Gaming
Rewards and incentives

China key players

Insurtech

Proptech

Risks

Schulte Research

Monopoly behavior
Antitrust hindering
development

Railroads Required

Blockchain (e.g., BSN)
Central Bank Digital Currency

Incentives to develop
proprietary technology
Fragmented data
Public trust

Sources: Schulte Research

14

18

Paul Schulte

Stablecoin use cases
Stablecoin is faster, lower cost, borderless, transparent, and programmable
Settlement

Payments

Operates 24/7 allowing instant
transaction

Avoid transaction fees that
accompany the intermediary
processing fees

Remittance

Lending & Alternative Banking

Schulte Research

Avoid high fees related to crossborder payments
Inherent price stability could lower
fees further

Lending is high yield opportunity for
debt investor
Only need internet access to own a
stablecoin bank account, increasing
bank accessibility

Payroll

Escrow

Streamline sending and converting
payroll

Automate escrow process through
smart contracts

Sources: Medium.com

15

Stablecoin categories
Growing base of stablecoins displaying a movement beyond traditional crypto use cases
Fiat-backed

Coins backed by a corresponding US$ in a treasury

Crypto collateralized

Interest-bearing

Token created to represent stablecoin deposit earning interest

Backed by SNX holders who are rewarded for providing collateral and stability
with fees generated by Synth transactions

Synthetic

Schulte Research

Stablecoin collateralized by other digital assets (e.g., ETH, BAT, USDC)

Algorithmic

Coin programmed to optimize search of highest yield opportunities

16

DEX Volume Growth
DeFi has gained immense traction

automates exchanges, portfolio management, lending, and market-making functions

DEX Volume1
Data in US$ bn

162.8
142.0

92.7

86.2

95.3

87.0

62.3
49.5
39.5

Schulte Research

30.9
14.0
0.7

1.5

1.7

1.0

1.2

1.9

1-Jan-20 1-Feb-20 1-Mar-20 1-Apr-20 1-May-20 1-Jun-20

21.4

18.1

26.3

4.9
1-Jul-20 1-Aug-20 1-Sep-20 1-Oct-20 1-Nov-20 1-Dec-20 1-Jan-21 1-Feb-21 1-Mar-21 1-Apr-21 1-May-21 1-Jun-21

1-Jul-21 1-Aug-21 1-Sep-21

Sources: Dune Analytics
(1) DEX is a decentralized exchange volume tracker provided by Dune Analytics

17

19

M O N E Y M E TAV E R S E

Crypto lending
Crypto lending booming

a trend picked up by blockchain projects

Obtains crypto loans

Deposits fiat currency

Lender

Borrower

Deposits crypto assets as collateral

DeFi Lending
Platform

Schulte Research

Repays the loans with interest

Receives collateral back after
repayment

Receives funds back with interest
(passive income)

Sources: Medium.com

18

NFTs: Crypto Art Boom
NFTs have grown to account for c.10% global art market sales where Millennials account for 71%+ resell art
NFT sales by category
Collectibles

NFTs quarterly sales1
Sports

Games

Art

Utility

Data in US$ m

Metaverses

$2,929.2
5% 3%
11%
40%
10%

Schulte Research

31%

$424.0
$9.2

$7.7

$18.4

$31.6

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

$503.9

Q2 2021

Q3 2021

Sources: Consensys, NonFungible
(1) Q3 2021 until 15-Sep-2021 included

19

Digital currency: institutional investors
CBDCs as the first step to democratization of digital currencies
Remarks

Primary role for a crypto in a portfolio or treasury account
The Economist survey of 200 institutional investor and corporate treasury management

Issuance of CBDCs necessary to establish functioning market for new
financial instruments
digital currencies

Capital appreciation, 33%

will increase demand for other forms of

Alternative asset diversification, 31%

Institutions sees a demand for international institutional-only currency
exchange platform

Monetary transfers for large settlements, 29%

Increased regulatory clarity needed

F/X or currency exchange, 28%

Preference for transactional use in the future, but currently used as a store of
value

Hedge against inflation, 28%

Schulte Research

Governments and regulatory entities:
1. must work together to bring clarity and investor protection when
investing in crypto-assets; and
2. must educate and provide guarantees for both investment in
crypto-assets as a store of value and as a medium of exchange

Hedge against low interest rates, 27%
Protection against geopolitical uncertainty, 25%
Simplified digital settlement/transaction only, 24%
Speculation, 21%
Deflation protection, 16%
They should have no role, 1%

Sources: The Economist Intelligence Unit: Digimentality 2021: Digital currency from fear to inflection

20

20

Paul Schulte

Digital currency: institutional investors
Catalysts and obstacles to acceptance of digital currencies
Primary triggers to enhanced activity in digital currencies

Primary obstacles to institutional investor of digital currencies

The Economist survey of 200 institutional investor and corporate treasury management

The Economist survey of 200 institutional investor and corporate treasury management

Wider adoption of CDBCs, 31%

Market trust or understanding of digital currencies/assets, 47%

Availability institutional-only digital currency exchange, 29%
Financial market structures, 43%

More robust AML controls, 25%
Increased economic instability, 25%

Asset volatility, 36%

Sharp rise in other asset prices, 23%
Support digital currencies by leading corporations, 23%
Reduction purchasing power, 21%

Provide regulatory
framework and
institutional investor
protection

Sharp fall in other asset prices, 21%

Internal technological challenges, 32%

Regulations, 32%

Lack of related digital financial services, 27%

New regulatory framework, 21%
Lack of corporate support, 24%

Schulte Research

Rising interest rates, 19%
Continued low negative interest rates, 18%

Insufficient interoperability, 19%

Significant social unrest, 13%

Sources: The Economist Intelligence Unit: Digimentality 2021: Digital currency from fear to inflection

21

Digital currency: consumers
Need to educate consumers on the benefits of cashless society as catalyst to widespread acceptance of digital currencies
Remarks

Consumer expectations of major barriers to cashless society
The Economist survey of 3,053 people in February and March 2021

Covid-19 heightened use case for digital currencies/assets especially
CBDCs and open-source digital currencies
Actual public use of CBDCs is extremely limited and primarily in test phases

Habits with physical cash, 40%

Move to cashless society increasingly accepted and anticipated by
consumers

Understanding of the technology, 38%
Data privacy concerns, 36%

Governments and Businesses as key players for the current trend towards
digital cash

Low customer acceptance, 29%

Benefits include contactless transactions, real-time monitoring, and
improved money laundering initiatives

Unable to pay small transactions, 25%

Risks include asset volatility and uncertainty regarding market structures and
regulations

Government regulations, 20%
Unproven technology, 14%

Schulte Research

Low business acceptance, 13%

Need to educate
consumers on the
benefits of cashless
society

Ease of use inadequate, 12%
Don’t know, 5%
Other, 2%

Sources: The Economist Intelligence Unit: Digimentality 2021: Digital currency from fear to inflection

22

21

M O N E Y M E TAV E R S E

Schulte Research

Section 1: NFT landscape

23

Summary

Schulte Research

Special benefits, opportunities, and use-cases
Authenticity

Validity, uniqueness, and properties
are immortal and decentralized

Connectivity

Immediate access to creators,
buyers, and sellers globally

Smart contracts

Enable price-fixing, royalties, loyalty
rewards, and infinitely many other
functions

Fresh engagement

Incentivise fans and encourage
repeat-purchase of other products

Provide voting rights, with all of the
above benefits

Transparency, yet
anonymity

Assets owned on public keys, visible
and tracked, without direct
identification

Decentralized
governance

Immutability

Once minted, an NFT is immutable

Metaverse immersion

Ownership is validated by the
underlying blockchain

Security

Inclusion

A key step towards a digital,
tokenised world. More
interoperability and sectors must
follow

Involvement of the general public
into any space

Sources: Schulte Research

24

NFTs unique representation of a digital file
Exist on the blockchain: capable of exchange and ownership, with the benefits of immutability, traceability, and security
Accessibility

Schulte Research

Uniqueness NFT

Anyone can purchase (or even create) an NFT
Most popular public marketplaces: OpenSea and Rarible
Unique: can not be interchanged with another
Underlying digital file allocated to single owner on the blockchain
Similar to cryptocurrencies

Controlled by private
cryptographic key

Most users connect to a wallet (i.e., Coinbase) to the marketplace, allowing non-custodial storage

Laws and regulations

The nascency of NFTs limits the associated laws and regulation currently

Minting

Smart contract

Process of converting a file to an NFT

Usage and ownership of an NFT igoverned by smart contracts

25

22

Paul Schulte

Initial applications of NFTs
Applications of NFTs are broad and growing
Entertainment

Own sporting moments, film characters, or amateur memes
Store assets safely, relying on underlying wallet

Collecting

Unique ownership of an item, with continual proof of authenticity
Anyone can share their talent publicly and own it indefinitely

Creation

Claim royalties on future sales, guaranteed by smart contracts
Voting functions (i.e., choosing next signing for sport team)

Governance

Could develop to decentralization of political and corporate decisions
Offers a new item to wager

Schulte Research

Gambling

the digital file itself

Zed Run has sold tens of thousands of virtual horses that can be bred and raced for money up to US$65 k

Investing

Uniqueness of assets leads to appreciation in price as popularity grows
Both in gambling format and with a more recreational focus

Gaming

In-game items are tokenised, to be exchanged outside of the game

Sources: Schulte Research

26

NFTs trends: integrate financial frameworks
Integration into DeFi and Portfolio management
Virtual objects type of cultural capital
Traditional and emerging art expected to be integrated into emerging financial frameworks

Schulte Research

DeFi

Collateral for borrowing or
fractionalized

Portfolio management

Attached to fixed income
instruments

Government participation tokens

Sources: Blockchain Council

27

NFTs trends: metaverse, DAOs, digital museums
Difficult to implement in the fiat universe

Schulte Research

Ethereum

to send and lock NFTs to individual
addresses

Decentralized autonomous
organizations

Applications

Software-defined investment
collectives that bid on the acquisition
of artistic expressions

Sources: Blockchain Council

28

23

M O N E Y M E TAV E R S E
NFTs trends to watch: multichain and institutional
protocols & networks
IPFS and multi-chain support to avoid losses of digital assets in case of blockchain discontinuity
IPFS and multi-chain support

Enterprise IP networks and emerging media

Token market collapse in 2018 caused majority of crypto community
to shift focus to institutional enablement models

NFTs allow ownership of a reference to a file stored on IPFS

Led to proprietary protocols and networks
Problem: if business ceases to exist, unclear what happens
to your digital asset

Schulte Research

Resulted in digital asset and consultancy programs aimed
at developing blockchain controlled operations

Expect similar chain of events in traditional media: film, music, and
art

Possible solution: IPFS secures NFTs in the multichain world
Sources: Blockchain Council

29

NFTs provide new opportunities within
entertainment
Secure and reliable revenue stream, providing traceability, engagement, and governance
New revenue stream

Offerings and transactions can continue outside of the sporting-season
Security and traceability of all tickets

Ticketing

Tickets with fixed price on the blockchain, preventing scalping and touting

Fan engagement
Customer relationship
management

Schulte Research

Fans are willing to pay to for inclusion and interaction

Advertisement

Exclusive offers and loyalty rewards tracked and distributed via ownership of NFTs
Data value at the core
Ownership segmentation, quantity, and composition within a wallet offer insights to the customer base. Leveraged for
tracking improvement, advertising, and collaborations

High-profile NFTs draw attention to the underlying entertainment (e.g., NBA Top Shop for the NBA)

Governance

Fans can contribute to decisions: revenue generation and benefit from wisdom of the crowd

Sources: Schulte Research

30

Crypto is the cashflow, NFTs are the assets
Nascent market expanding at a rate that can not be ignored
Transaction volume

Famous NFTs

Schulte Research

Ownership of a file?

Pandemic as a catalyst

c.US$2.5 bn of sales in H1 2021

CryptoPunks have had more than US$1 bn in volume
Beeple

Everydays

the most expensive NFT ever sold for US$69 m

How can it be pictured in this PowerPoint, yet sold for US$69 m?
Comparable to photographing or copying the Mona Lisa: the value is in unique ownership

The pause in entertainment and sport required a new way to engage and monetise fans worldwide
Aligning with the surge in blockchain-based products

31

24

Paul Schulte
Ethereum and Flow as primary contenders for
the underlying blockchain
Optimal choice of blockchain depends on the purpose of the NFT
Majority of NFTs are built upon Ethereum
2nd largest market capitalization cryptocurrency, robust ecosystem of users, developers, wallets, and applications

Ethereum

Transaction fees are high, due to gas fees (compensation for miners in the Proof-of-Work blockchain validation)
Ethereum moving to Proof-of-Stake consensus mechanism
Some companies opt for a 2nd layer network on top of Ethereum, to achieve lower fees and higher transaction speed

Hosts NBA Top Shot
Energy-efficient blockchain transaction validation approach. Lowering gas costs, to encourage developers and customers
Built to have a greater throughput

Schulte Research

Early-stage, causing limited developer and application ecosystem
Proof-of-Stake mechanism causes energy/environmental advantage over Ethereum (temporary advantage)

Considerations include transaction costs, throughput, applications and developer ecosystem, extent of decentralisation, and degree of focus on NFTs
In the future, NFT infrastructure could become interoperable inter-blockchain
Sources: Schulte Research

32

Minting protocol to access public ledger, become immutable, and tamper-proof digital art
Minting

Storage
Directly on the blockchain: however, limited storage capacity limits
size file to avoid large costs

Digital contents decided for the NFT
Cryptographic key generated to create token on the blockchain

Decentralized: NFT content spread across distributed network (P2P
storage)

Properties (i.e., name, description edition, and file size) included in
the minting
NFT becomes immortal and immutable on the blockchain

Schulte Research
Centralized: Cloud storage cheap and readily available, however
trust and reliability required to avoid losing NFT on discontinued
blockchain

Minting dictates the smart contract: governs future behaviour of the
NFT, including royalties, provenance, and functionality

Custodial and non-custodial wallets: easy access for the general
public with security reliant on wallet-provider

Schulte Research

NFT minting platforms suitable for particular needs (e.g., Rarible to
Bitski NFT drop for Adidas offerings)
Minting can contain reference to the digital file instead of the
complete digital file

Sources: Schulte Research

33

Marketplace is another decision for NFTs
Open marketplaces
Crypto native curated
marketplaces
Existing closed
marketplaces
White-labelled
marketplaces

Anyone can create then sell NFTs
Cryptocurrency only for transactions

Similar functionality to open marketplaces, except that creators require approval

More general-public focused
Custodial and accepting of fiat currency (often via card payment)

Varying levels of infrastructure, including a storefront, branding, and back-end

Schulte Research

Largest and oldest (2017) NFT marketplace

Community-centric (2020)
RARI token provides governance rights to holders
Sources: Schulte Research

34

25

M O N E Y M E TAV E R S E

Further opportunities for NFTs
Loyalty

Gamifying

Governance

Schulte Research

Metaverse cohesion
Analyze fan data with
pseudo-anonymity
Ticketing

Incentivize habits and behaviour of fans
Smart contracts facilitate rewards for tailored actions

Tokens can make attendance (and spending on related products) quest-like, again driving engagement

Fans gain voting rights and can compete in online leaderboards (e.g., choosing a fantasy team)
Offers revenue stream and enhanced engagement
Immerse fans into a virtual world
Harness collaborations with other NFTs

identity
Marketing strategies can be evaluated
Before the event, it can regain royalties on secondary sales and has clear validity
Post-event it survives as a collectible/memento

Sources: Schulte Research

35

Key risks associated with NFTs rollout
Volatility

Environmental

Licensing

Schulte Research

Regulatory

NFTs are difficult/impossible to value, due to their unique nature. Combined with rapid and global exchange; prices
change quickly
Ethereum, currently the leading blockchain for NFTs, demands vast amounts of energy for its Proof-of-Work structure
Ethereum switching to Proof-of-Stake consensus mechanism
Owners-rights are dependent on the marketplace and NFT, these should be reviewed prior to purchase
Newer projects are offering more commercial rights
Novelty, uniqueness, and complexity combine to uncertainty of future regulation and laws for NFTs
Global reach and semi-anonymity further disrupts regulation

Criminal activity

High fees

Blockchain transactions fees, marketplace fees, and infrastructure costs cause expenditure upon purchasing an NFT
(typically between 1-10% of the price)

Sources: Schulte Research

36

26

Paul Schulte

Schulte Research

Section 2: Metaverse case study: Somnium Space

37

What is Somnium?
Metaverse: collectively shared virtual space that arises through convergence of virtual and augmented reality, and Internet

Schulte Research

Somnium is a metaverse implementation
Open, social, and persistent VR world with its own economy and currency, marketplace, social
experiences, games, land ownership, and more

Open, social, persistent Blockchain VR metaverse

Built with proven/secured standards

Ownership security

Variety of creative tools: software development kit (SDK),
Builder, etc.

Origin authenticity

Cross-platform VR client

Tradable/translatable via decentralized marketplaces
Sources: Metaverse series Part II

38

Metaverse mechanics

Schulte Research

A metaverse VR world on Ethereum
Cross-platform usability

All major VR headsets

Social

Persistent social VR world

Customizable PC client

Somnium users create and manage
own layout setup for quick and easy
in-game interactions

Ownership

Ownership of virtual land

Long-term livability

automated recording mode for
-game avatars on their
properties that enables an AI-based
analysis to bring avatars to life

Programmability /
scriptability

users can program/develop personal
experiences within the Somnium
universe, as well as monetize these
developments via the asset store or
on their property

Blockchain integration

operates on top of the Ethereum
blockchain network, which enables
transparency and authenticity for
transactions, thus verification of
ownership of a wide variety of digital
assets across the platform including
virtual land, avatars, wearable
items/accessories, and other digital
goods

Space monetization

fully programmatic VR advertisement
plug-in enables users/developers to
capture and analyze gaze tracking,
engagement, and conversion rates

Sources: Metaverse series Part II

39

27

M O N E Y M E TAV E R S E

Metaverse mechanics
A metaverse VR world on Ethereum
Programmability /
scriptability

Program/develop personal experiences within the
Somnium universe
Monetize asset store or on property

Fully programmatic VR advertisement plug-in

Space monetization

Schulte Research

Long-term livability

Blockchain integration

Capture and analyze gaze tracking, engagement, and
conversion rates

Automated recording mode of avatars on properties
Enables AI-based analysis to bring avatars to life

Powered by Ethereum blockchain for transparency and
authenticity of transaction

Cross-platform
usability

All major VR headsets

Customizable PC
client

Create and manage
own layout setup for
quick and easy in-game
interactions

Social

Persistent social VR world

Ownership

Ownership of virtual land

Verification of ownership of digital assets
Sources: Metaverse series Part II

40

Technology stack

VR Headsets

Compatibliity with all major VR headsets, including Oculus,
HTC VIVE, HP, Valve, all Windows Mixed Reality headsets,
and others

Native builder

Most well-equipped/featured with respect to the desktop,
where included native assets enable users to build a widevariety of things as desired

In-house server
architecture

In-house server architecture enables thousands of users to
simultaneously interact in the same, persistent VR world
without the need for network sharding via sub-servers or
mirrored instances

Karma

Social status and how others perceive them in the
metaverse. Karma level is calculated through a
variety of factors:
Building activity on parcels

Schulte Research

Organization and participation in events
Total play time
World discovery rate
Land ownership
Active engagement in economic
activities/transactions

Unity-based SDK

Somnium supports the creation of bespoke, unique user
avatars via imports and a Unity-based SDK enabling highlevel of design flexibility

Ratings from other Somnium Space users

Sources: Metaverse series Part II

41

Partners of Somnium
-level specifications

Pimax
Somnium has partnered with Pimax

-based domain

Somnium has partnered with Sony via their state-of-the-art 3D model creation technology
In addition, Sony houses a VR-based store within the Somnium universe that is one of the first in the world

Somnium is a part of the specialized Microsoft for Startups program.

Schulte Research

Bring advertising revenue for users on the platform

platform transactions.

-two solution offers speed and near-zero transaction costs for Somnium users with respect to on-

Sources: Metaverse series Part II

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Paul Schulte

Partners of Somnium
OpenSea provides an accessibility, highly-liquid marketplace to empower these new economies, and offers tools that
permit developers to build such marketplaces for their digital assets

VR Education uses the Somnium space VR platform to enhance experiences and drive more education with respect to VR
adoption

Collaborative efforts towards constructing a truly decentralized and immersive metaverse

Schulte Research

Enabling teleportation between VR worlds

One of the most trusted and secure digital currency exchanges/custodians globally enabling customers to transact and
store digital assets
Sources: Metaverse series Part II

43

Economy in Somnium
Product/service offerings that allow platform users to generate revenue

Schulte Research

Characteristics

Economic activities

VR-based economies are unfettered by restrictions such as physics
and geography

Tokenizing and selling their productions directly via open
marketplaces

Applications involving blockchain and digital asset

Owning and monetizing broader digital assets within the Somnium
Economy

Safety, privacy, encryption, traceability, and verifiability of ownership
of digital items/asset transacted on platform via the network.

VR world navigable by thousands of users simultaneously

Users to maintain full ownership over their digital assets/possessions in
the form of NFTs.

Creation, building, and monetization of land

Sources: Metaverse series Part II

44

Developers

Collectors

NFT collectors exhibiting their collections on their land as
well trading amongst each other

Entrepreneurs

Entrepreneurs can build and sell digital/tangible goods

Traditional companies

Schulte Research

Developers selling tokenized digital assets and avatars

Game developers

Cornerstone principles
Sominium Economy

Somnium Space monetization and business
models
Tokenization of virtual land
Tokenization of digital
assets/experiences
Decentralized marketplaces

Traditional companies and businesses creating a store presence within the Somnium Space

Game developers inserting short/large demos or gaming experiences into the Somnium Space

Sources: Metaverse series Part II

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M O N E Y M E TAV E R S E
Somnium Space monetization and business
models
Content creators

Content creators can showcase a variety of virtual
experiences (e.g., vlogs, commentary, etc.) and monetize
them within the Somnium Space/platform

Universities

Universities and other higher-learning institutions building
courses and experiences such as an immersive
planetarium

Artists

Artists can showcase a variety of creations such as 2D/3D
paintings and sculptures

Native token of Somnium: Somnium CUBEs
CUBEs can be used for a broad array of product/service
offerings including:
interacting in entertainment (e.g., race cars)

Schulte Research

land purchases or renting
digital asset/item sales in the marketplace
eCommerce

Streamers

Streamers (e.g., Twitch, etc.) having their own virtual studio from which they can record within the Somnium Space

Unity SDK

Developers can build anything – for fees or otherwise – and upload it via the Somnium Unity SDK for other users to engage,
interact, and transact with

Sources: Metaverse series Part II

46

Investing, Buying & Renting Land
Brand new area of virtual real estate
Overview

Value of parcels

Each land parcel is unique, unreplicable, non-forgeable, and has verifiable
ownership.

The value of various parcels within the Somnium Space varies as a function
of factors: popularity of areas, the view of different areas, size, etc.

Owners of these NFT-based land parcels have direct autonomy over
contents that are built on top of their land parcels

The average land parcel in the Somnium Space across the different size
ranges sold for roughly 6.57 ETH, or equivalently US$14,560
Throughout the COVID-19 pandemic, as more users enter the Somnium
scarce digital real estate within the Somnium Space will continue to
increase in value.

Schulte Research

Metaverse Property: the first VR-based real estate company in the entire industry
Property Management
Renting property to clients, maintenance of
technical and visual aesthetic, collecting rents from
clients

Property Development
Architecting, designing, and developing the build, as well
as establishing on-map development

Consulting
Helping property owners/renters make important
decisions in VR-based real estate using their
knowledge of virtual land across metaverses

Marketing
Metaverse Property has strong access to the burgeoning
advertising network that exists across the various
metaverses

Sources: Metaverse series Part II

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Paul Schulte

Schulte Research

Section 3: Visa, PayPal, Square, and Mastercard in
the crypto space

48

Visa vs. Mastercard vs. PayPal vs. Square
Content/Section Title

Products

1.
2.
3.
4.

1.

Schulte Research

Geographies

Buy, hold, sell using Visa credentials
Cash-out to Visa credentials
Crypto APIs
Direct settlement in USDC

1.
2.
3.

2.

Visa network to facilitate access for
partners to crypto APIs and transaction
settlement
B2B Visa Connect for blockchain crossborder payments
Visa sees a global opportunity in crypto,
besides China, which is restricted by Union

Buy, hold, sell using Mastercard
credentials
Cash-out to Mastercard credentials
Crypto APIs
Looking for consumer protections, strict
compliance protocols with regulations, and
pure payment not as an investment in
potential crypto-assets

No direct exposure to crypto as Visa
enables partners to leverage crypto APIs
and access its network

Risk exposure

Customer segment

Through partnerships and collaboration
Issuance of Mastercard credit cards with
crypto-related rewards
Plans on rolling out stablecoins settlement
in 2021

Through partnerships and collaboration
Issuance of Visa credit cards with cryptorelated rewards
Involvement in stablecoins

Crypto approach

1.

2.

Mastercard network to facilitate access
for partners to blockchain APIs (smart
contracts, fast pay network in P2P, P2M,
and B2B)
Stablecoins settlement in 2021

Cryptocurrency trading and as a funding
source
Adds a lower cost of funding for PayPal
Supportive of users & engagement
1.
2.

Crypto Checkout: settled in fiat currency
Buy, hold, and sell Bitcoin, Bitcoin Cash,
Litecoin, and Ethereum
No Balance sheet exposure
Product exposures: benefits from buying
and selling via third-party Paxos. No
exposure to the volatility of underlying
crypto-assets

PayPal users – Retail consumers

Mastercard network

Launch in the US first
UK rollout in Q3 2021

Transactions settled in fiat currency only
89 blockchain patents granted, 285
pending
Acquisition CipherTrade for crypto analytics

Transactions are settled in fiat currency
No private key issued: impossible to transfer
crypto out of digital wallet

Cryptocurrency trading and as a funding
source
Buys and sell crypto directly from its
customers

1.
2.

Buy, hold, and sell Bitcoin
P2P transfers
Balance sheet: holds $220m in Bitcoin
Product exposures: benefits from buying
and selling of consumers without volatility
exposure. Square earns spread from buying
and selling

Square users – Retail consumers

Launch in the US

network

Other

Visa Research Team to improve scalability
and offline use of digital currencies
CryptoPunk
Plans crypto services integration in Brazil

Withdrawing to an external wallet possible
Plans for decentralized exchange

Sources: PayPal public filings, Capital IQ, Credit Suisse, CNBC, Wall Street Journal, Pymnts, Financial Times

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31

M O N E Y M E TAV E R S E

PayPal in the Crypto space

Schulte Research

Case Study

50

Case study 1 – PayPal in the crypto space

PayPal approach to crypto
Safe rollout on/off ramp to traditional crypto products in the US and in the UK
Crypto products: Crypto Checkout and PayPal Crypto
Products Overview

Crypto Checkout: Launch Q2 2021, cryptocurrency as a funding source to pay. Transactions settled with fiat currency1

Cryptocurrencies

Bitcoin, Bitcoin Cash, Ethereum, and Litecoin

International Expansion

Planned in H1 2021

Rationale

Adds a lower cost funding for PayPal. More supportive of users & engagement

Regulation

BitLicense from the NYState Department of Financial Services in Q4 2020
PayPal Crypto: ~2.5% take rate

Transaction fees

Schulte Research

PayPal Crypto: Buy, hold, and sell experience since Q3 2020 in the US on PayPal, Q2 2021 through Venmo

including variable fee based on the amount from 150bps to 230bps and a spread of ~50bps

Crypto Checkout: only spread on the conversion from crypto to US$

User engagement

Crypto users sign into the app twice as much as they did before buying crypto on PayPal
Cannot transfer crypto in and out of the wallet

Limitations

Limited crypto-assets available

Sources: PayPal public filings, Capital IQ, Credit Suisse, CNBC, Wall Street Journal, Pymnts, Financial Times

51

PayPal crypto investments
Indirect exposure to digital assets and blockchain-related companies via acquisitions, investments, and partnerships
Investments in the Crypto space
Company

Transaction

Details

Acquisition announced Q1 2021

Cloud-based wallet for storing and protecting digital assets using cryptography

Estimated ~$200 million

Bring secure-storage expertise

Private investment

Cryptocurrency tax software solutions for consumers and enterprises

Undisclosed amount

Serves regulatory agencies worldwide

Q1 2021
Partnership since Q3 2020

Powers

PayPal participated in Series C funding in Q4 2020

Crypto compliance and Risk Management

Private investment Q4 2019

Schulte Research

crypto service enabling US users to buy, hold, and sell crypto

APIs, market expertise, and regulatory framework

PayPal participated in Series D funding in Q2 2021

Anti-money laundering, prevent fraud, and compliance

Acquired by Blockchains Management in Q4 2020

Blockchain-based identity management and compliance software solutions for
financial institutions

Private investment in Q4 2019
Deal fell through Q4 2020

Crypto custody and trading firm

Estimated ~$750
Sources: PayPal public filings, Capital IQ, Credit Suisse, CNBC, Wall Street Journal, Pymnts, Financial Times

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32

Paul Schulte

Visa in the Crypto space

Schulte Research

Case Study

53

Case study 2 – Visa in the crypto space

Visa approach to Crypto
Crypto steps as partnerships instead of solo initiatives, with the aim to provide ecosystem infrastructure surrounding crypto
Late implication but significant impact in the crypto space

Created Zether1 & Fly Client2

Different approach than Square or PayPal, as in Visa takes crypto steps as
partnerships instead of solo initiatives

Team is now focused on new mechanisms to improve scalability and
enable offline digital currency transactions

Collaboration with the World Economic Forum on a set of policy
recommendations for central banks exploring CBDC

Offline use of CBDC transactions via Bluetooth or NFC to
expand financial inclusion by helping unbanked individuals

2016

2018

Announced B2B Connect with Chain Core,
enterprise blockchain infrastructure
Patent blockchain-based transaction system
Partnership BTL cross-border settlement

Schulte Research

Visa Research Team

Visa approach to crypto came later than its direct competitors

2020
Engagement with World Economic Forum
Circle joined Visa Fintech Fast Track
Settlement of USDC in fiat currency

Partnership IBM
Integration open source Hyperledger Fabric

Pilot phase B2B Connect in collaboration with
Commerce Bank, Shinhan Bank, Union Bank,
and United Overseas Bank

FIS integrated Visa B2B Connect
Commercial launch B2B Connect
Collaboration Infosys
Patent for digital fiat currency

2017

Settlement in USDC directly
Launch API Offerings for First Boulevard
Partnership with Tala for API Offerings

2019

2021

Sources: Visa public filings
(1) Zether is a privacy-preserving payment mechanism. JP Morgan Chase announced plans to integrate into its own blockchain efforts.
(2) FlyClient is a framework that makes it easier for mobile devices to validate blockchain transactions

54

Visa crypto and blockchain partnerships
Visa estimates that these partnerships could yield 50m+ new Visa credentials1
35 partnerships in the Crypto space2
Details

Details

Transactions settled in UDSC, stablecoin powered by Ethereum
Circle Visa Corporate Card to spend USDC

Improve process of interest disbursements and create new crypto
products

First Federally Chartered Digital Asset Bank
Powers Visa crypto-native settlement with USDC through APIs
Exclusive relationship with Visa2

World
Economic
Forum

Fiat lending with crypto collateral via Crypto.com Visa Card at 9.9%
interest. Up to 8% cashback on purchases
10 million users

Visa Cards

Visa engaged with policy makers and organizations to shape the
future of digital currencies
Visa provided set of policy recommendations for CBDC

USDC co-founded with Circle

Schulte Research

Rewards program of 4% in Stellar or 1% in Bitcoin
International B2B Payment Solution
technology since 2017

Visa
Innovation
Program

Partnership for development of new Fintech solutions powered by
blockchain technology for B2B and cross-border payments

Visa Fintech
Fast Track

Example Visa leveraging partnerships
Co-founded

Created USDC

Anchorage powers

Blockchain based solution for cross-border money transfer
Log sentinel: Secure audit trail solutions through blockchain
Mobile blockchain-based loyalty program
pay with Visa at over 70m+ merchants
Most crypto partnerships have been borne out of this program

Partnership

1st USDC-settled Card

Sources: Anchorage, Business Insider, Circle, Crypto.com, Coinbase, BlockFi, Fold, Binance, Xapo, Line, Visa public filings, Nasdaq, Centre, Paytm, Bitpanda, Lastbit, Coinzoom
(1) Table is non-exhaustive. 35 digital currency platforms and wallets. Alfred Kelly, Visa CEO at Q2 2021 Earnings Call on 27th April 2021
(2) Ryan McInerney, Visa President at KBW Fintech Payments Conference on 23rd February 2021

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33

M O N E Y M E TAV E R S E

Purchase

Schulte Research

APIs2

Settlement

Differentiated value: brand, capabilities, reputation, safety, security, and experience1

Working crypto exchanges and wallets to allow customers to cash-out onto a Visa credential
Opportunities in the cross-border B2B space

APIs to offer the ability to purchase, custody, and trade cryptocurrencies
Partnership with Anchorage to provide back-office infrastructure

Visa Key Partnerships

Cash-out

Wallets and exchanges to use Visa credentials to purchase cryptocurrencies

Settle in digital currency starting with USDC stablecoin
Potential for crypto settlements for their B2B Connect product

Sources: Visa public filings
(1) Alfred Kelly, Visa CEO at Goldman Sachs Technology & Internet Virtual Conference on 11th February 2021

etwork for the neobank and clients
s customers will have access to USDC for remittances

56

Stablecoins settlement and Anchorage
Coinbase, Visa, Circle, and Anchorage working together to bridge the gap for USDC adoption via settlement on Visa Card
Stablecoins
Visa started investing in stablecoins
20 months ago1

Anchorage partnership
backed 1:1 with fiat currencies

First federally chartered digital asset bank

over

Exclusive Visa digital currency settlement partner to provide back-office
infrastructure, such as custodial, security services, accounts tracking, etc.

Visa upgraded infrastructure to enable partners to settle in digital currency
starting with USDC stablecoin

Launched pilot of USDC settlement with Crypto.com Visa Card

Increased conversation with central banks about designing CBDCs2

Anchorage and Visa plan to expand to other partners soon

Visa sees potential for crypto settlements for their B2B Connect product3,
leveraging Circle partnership to enable payments with crypto wallets3

Besides Crypto.com Visa Card, USDC standard settlement process requires
partners to settle in a traditional fiat currency

Schulte Research

Share of Total Stablecoin Supply

Total Stablecoin supply in US$ bn

Sources: Visa public filings, Coin metrics
(1) Ryan McInerney, Visa President at KBW Fintech Payments Conference on 23rd February 2021
(2) Oliver Jenkyn, Visa Executive President at Morgan Stanley TMT Conference on 1st March 2021
(3) Vasant Prabhu, Visa CFO at Wolf Research Fintech Forum on 10th March 2021

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Schulte Research

Section 4: US corporate

58

Coinbase

Schulte Research

Case Study

59

Case study 3 – Coinbase

Company overview
Towards full-stack crypto platform, from trading crypto to providing services for DeFi, NFTs, cloud, lending, and derivatives
Business model

Go-to-market strategy

Easy-to-use platform for accessing the broader cryptoeconomy by
investing, spending, saving, earning, and using crypto

Retail: provides investments, storage, spending, earning, and use of crypto
assets

Build brand as trusted space

Institutions: provides hedge funds, money managers, and corporations a
one-stop-shop for accessing crypto markets through advanced trading
and custody technology

Focus Coinbase Cloud, equivalent to Amazon Web Services (AWS) for the
global cryptoeconomy

Ecosystem partners: provides developers, merchants, and asset issuers a
platform with technology and services that enables them to build
applications that leverage crypto protocols, participate in crypto networks,
and securely accept crypto as payments

Continuous development of new products and services to enhance value
for consumer and business partners
Since inception, c.US$3.4 bn in revenue, largely from transaction fees
earned from volume-based trades by retail users and institutions

Goals

Limitations

Create a one-stop shop for institutional investors and solve ecosystem
issues:

Due to a different standard of regulatory scrutiny, competitors:
1. Operate under less stringent local rules and regulations;

Lack distribution, trust and usability

2. Can more quickly adapt to trends;

Schulte Research

Availability of easy-to-use and scalable infrastructure

3. Support a greater number of crypto assets; and

Offset effects of any future fee pressure due to economies of scale

4. Develop new crypto-based products and services faster

Proprietary full-stack scalable infrastructure surrounding crypto (e.g.,
blockchain integrations, crypto compliance infrastructure, cybersecurity,
cryptography)

Reliant on crypto asset volatility
Uncertainty regarding regulatory framework globally

Sources: Coinbase public filings

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35

M O N E Y M E TAV E R S E

Future prospects, products, and services
8.8m Monthly Transacting Users, 9k institutions, and 160k ecosystem partners as of Q2 2021
New products and services developments

Coinbase direct listing implications

Coinbase Asset Hub to help asset issuers integrate tokens with Coinbase
Bitcoin-collateralized loan product and a staking product 6% APR for staked
ETH2

1. Public listings amongst crypto firms;
2. Greater legitimacy of crypto within global finance;

Coinbase Cloud powered by Bison Trails for new suite of cloud-based crypto
computing services (similar to AWS)

3. Bridging the gap between crypto and traditional investors;
4. Playing a pivotal role in

; and

Smart order router product for institutional investors, routing orders to the
exchange with the best pricing amongst 10 liquidity venues

5. Increasing the market capitalization of large crypto assets through
enhanced investor participation

Launch Crypto Council for Innovation in partnership with Fidelity, Paradigm,
and Square: help regulators, policy makers to understand crypto
Recent partnerships with PNC Bank, SpaceX, Tesla, Third Point, and
WisdomTree Investments

Outlook and future potential for growth
Non-fungible tokens (NFTs) represent unique opportunity to transform the
relationship between creators and consumers

Now offers reward across six tokens, including ETH2 staking
Launch Coinbase Card and Coinbase Prime brokerage

Schulte Research

Diversification revenue streams with addition of new products and services,
notably Coinbase Cloud

Acquired Skew for institutional data analytics

Future growth in nascent services for institutional investors such as Borrow &
Lend in addition to Trading and Custody
Crypto long-term prospects (i) crypto as an investment; (ii) as a financial
service with the rise of DeFi; and (iii) as an app platform such as NFT usage
Lending with Ethereum as collateral provided enough liquidity
Sources: Coinbase public filings

61

Quarterly catalysts 2021 earnings
Catalysts Q1 2021 earnings

Catalysts Q2 2021 earnings

Higher MTUs and elevated trading volumes per MTU

MTUs +44% QoQ to 8.8m

Addition 7 new assets for trading and 13 new assets for custody

High volatility with Bitcoin reaching c.US$64k in April followed by c.45% drop
to c.US$30k

Growth institutional trading customers and volume traded per institution

Assets on Platform c.US$180 bn, -19.3% QoQ

Growth institutional interest in Ethereum and other crypto assets for
commerce, payroll, and custom white label solutions

Elevated Trading Volume at c.US462 bn, +37.9% QoQ driving trading
revenue growth

Substantial growth Subscription and services revenue
Increase interest in stablecoins, added support for Tether
Top 10 free app on iOS and Android

Schulte Research

Outlook Q3/Q4 2021
Lower MTUs and
Lo
d ttotal
t l Trading
Tradi
Volume
Vol
in
i Q3 compared
d tto Q2
Meaningful growth institutional revenue in 2021 driven by transaction and
custody
Increase ARPU compared to historical US$34

45 per month

Sources: Coinbase public filings

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Paul Schulte

Silvergate

Schulte Research

Case Study

63

Case study 4 – Silvergate

Company overview
Cash management services for digital currency-related businesses on top of traditional banking products and services
Business model

Go-to-market strategy
Precise targets:

Traditional finance: Business checking, Business savings, Commercial real
estate, Cash management, Personal banking

Digital currency exchanges: advanced integration and support
services for well-established digital currency exchanges

Digital currency business:
Silvergate Exchange Network (SEN) enables digital currency realtime settlement in US$ between counterparties

Institutional investors: bank accounts, services, and support tailored
to the unique needs of digital currency investors

c.US$239.6 bn transaction volume in Q2 2021, +44% QoQ and
+968% YoY

Software developers: bank accounts, advanced APIs, and expert
support for digital currency developers
Fintech companies: bank accounts, services, and support designed
to meet the needs of Fintech companies

Exchanges tied into the SEN via an API, connecting SEN deposit
clients

Schulte Research

Goals

Limitations

Leading provider of innovative financial infrastructure solutions and services
for the growing digital currency industry

Growing competitive landscape from incumbents (e.g., JP Morgan
accepting Coinbase and Gemini as digital asset customers)

Develop and deploy fee-based solutions in connection with their digital
currency initiative

Regulations surrounding digital currencies, especially SEN Leverage (e.g.,
SEC threatened to sue Coinbase over lending product)

Expand solutions and collaborations with Fintech companies, Institutional
investors, Digital currency exchanges, and Software developers

Downturn in digital currencies market, volatility, and regulations intensifying
Requires frequent funding to increase loans provided (e.g., ATM equity
offering in Q2 2021, issuance preferred stock in Q3 2021)

On/off ramp network for institutional investors to access digital currencies
(stablecoins and legacy digital currencies)

Potential outflow due to nature of non-interest-bearing deposits

Exclusive minting and burning issuer of Diem US$ stablecoin
Sources: Silvergate public filings

64

SEN Leverage product
Access to capital through US$ loans collateralized by bitcoin

Provides credit

Enters into an
agreement with the
Bank to borrow US$ to
deposit at exchange

US$

leverage account on its
platform

EXCHANGE
EX

TRADER
ADER

Settlements
M
Maintains
order
book

Executes tradess
Moves assets

Holds assets

US$ & Bitcoin

Schulte Research

Exchange uses SEN to

Holds/moves
assets

(Collateral)
US$ & Bitcoin

Trading activity
SEN US$ Transfers
Sources: Silvergate public filings

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37

M O N E Y M E TAV E R S E

Silvergate Exchange Network framework
The SEN executes in virtually real-time what legacy solutions do in several hours to several days
SEN

virtually real-time execution

API enabled
Sell BTC

Institutional
investor

Buy BTC

24/7/365
Digital currency
exchange A

Digital currency
exchange A

Schulte Research

Legacy solutions

longer execution

Sell BTC

Institutional
investor

Institutional
investor

Buy BTC

Traditional bank

Digital currency
exchange A

Clearing bank

Traditional bank

Digital currency
exchange A

Institutional
investor

Sources: Silvergate public filings

66

Key metrics and consumers
Focus on expanding digital currency offering, especially via lending and continuous innovation in the digital asset space
Digital currency and other deposits

Key Customers

Data in US$ bn
Digital currenc y deposits

Other deposits
$11.4 bn

$7.0 bn
$5.2 bn
$1.7 bn

$2.3 bn

$1.5 bn

$2.1 bn

Q2 2020

Q3 2020

Loan composition

$5.0 bn
Q4 2020

$11.1 bn
$6.8 bn

Q1 2021

Q2 2021

c.12% of Total assets
1-4 Family Real
Estate, 9.7%

Schulte Research

SEN Leverage,
13.7%

Commercial Real
Estate & Other,
23.0%

US$1.5 bn
Yield: 4.46%

Mortgage
Warehouse, 53.6%

Sources: Silvergate public filings

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Paul Schulte

Sygnum

Schulte Research

Case Study

68

Case study 5 – Sygnum
approach to digital assets: custody as
first layer
Create series of global partnerships to launch a comprehensive suite of crypto products and services

Development

Institutional-grade security to invest in the digital asset economy
Launched institutional-grade access to DeFi in Q2 2021

Partners

Co-developed custody platform with Custodigit, a joint venture with Swisscom

Schulte Research

Competitors

Examples
cryptocurrencies
supported

Bitcoin

Aave

Ethereum

1inch

Ripple

ICP

Litecoin

Maker

Tezos

Uniswap

Sources: Sygnum public filings

69

Brokerage and trading: 2nd layer;
Lending: 3rd layer

3rd layer: lending

Schulte Research

2nd layer: brokerage

Extending to brokerage and trading for crypto, and lending via crypto-collateralized LTV
Brokerage and trading services for digital assets in a secure and seamless way

Brokerage

Trade BTC, ETH, XRP, XTZ, LTC, BCH, and DeFi tokens
Exchange from major fiat currencies (e.g., CHF, EUR, SGD, USD)

Functionalities

Investors

Flexible LTV

Settlement within Sygnum platform
Regulated European OTC options for BTC and ETH

Increase fiat liquidity against digital assets (e.g., Bitcoin, Ethereum, XRP, Litecoin, Bitcoin Cash, and Tezos)
Interest paid on actual drawings to dynamically adjust liquidity based on current needs

Flexible Loan-To-Value (LTV) to optimize interest rates charged on loan amount
Achieved through LTV of c.40%

Sources: Sygnum public filings
Sources

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M O N E Y M E TAV E R S E

Asset management and DeFi: 4th layer
Asset management

Focus on asset management: vehicle for digital asset and high net worth investors

Customer segment

Sygnum Platform
Winners Index ETP

First focus on digital asset investors, second for high-net-worth investors via ETP
Provides range asset management investment products including alpha-oriented multi-manager fund

Tracks index leading protocol tokens, dynamically weighted by real world adoption, tracking the network effect
of the investor, user, and developer communities
Fully collateralized and physically backed, beta exposure to blockchain protocols

Launched regulated banking services for DeFi tokens, first step in

ambition

Next focus on suite of DeFi yield-generating products and services across banking and asset management
offering
Finally, custom solutions for clients with selected DeFi partners

DeFi

Schulte Research

Platform DeFi

DeFi tokens

Aave, Aragon, Curve, Maker, Synthetix, Uniswap, 1inch Network, USDC, Bancor, Chainlink, Compound, Polygon

Sources: Sygnum public filings
Sources

71

Tokenization of physical assets and Bank-tobank white-label as 5th and 6th layer
Tokenization of physical and digital assets and white-label for traditional financial intermediaries
Tokenization physical and digital assets, focus on equity shares next

Tokenization

For example, Digital Swiss Franc (DCHF), wine in collaboration with Fine Wine Capital, and Fillette au
Artemundi

by Picasso with

Primary market issuance platform

Desygnate

Digital securitization of assets on the blockchain
Increases efficiency of capital raising and automates corporate housekeeping processes

Secondary market trading venue

SygnEx

Access to Venture Capital, Mid Cap, Real Estate, and Arts & Collectibles

Schulte Research

Payment and settlement instant and direct with Digital CHF token
Provides regulated digital asset products and services through B2B banking and operational compliance services

Bank-to-bank activity

One-stop-shop modular suite of banking services including accounts, payments and custody, brokerage, tokenization,
lending, and asset management
Partners can broaden offering and access new client segment, with wallets segregated off balance sheet

Sources: Sygnum public filings

72

40

Paul Schulte

Circle

Schulte Research

Case Study

73

Case study 6 – Circle

Company overview
Organically building a global internet-native settlement infrastructure
Business model

Go-to-market strategy
Target customer base: FIG, institutional traders, crypto finance, digital
content, fintechs, blockchain startups, and commerce & marketplaces

Building internet-native settlement infrastructure to operate a suite of
financial services:
USDC: created and operates core market infrastructure of USDC in
partnership with Coinbase

Free Circle account is first point of entry for using USDC & Digital Currency
service customers

Transaction & Treasury Services (TTS): Accounts and API services
provide comprehensive suite of payments and treasury services

API services provides an attractive alternative for customers to build custom
payments, commerce and financial apps only available once a
registered free member

SeedInvest: crowdfunding platform evolving into a platform for
tokenization of private capital markets

Utilize internet-native settlement infrastructure connecting USDC rails to over
180 countries

Goals

Limitations

Open, connected, and interoperable financial system

Trust among users: Crypto is an early-stage technology, and with increasing
occurrence of fraudulent behaviour, many companies are hesitant to trust
the security of such technology

Payments that are frictionless, immediate, and free

Schulte Research

Borrowing and lending decisions embedded in autonomous software

Blockchain interoperability: tendency for organizations to develop own
blockchain systems that are disjoint from others. Creates a non-universal
standard that is difficult to integrate
Political risk: still no transparency on digital assets regulation in US and
Europe

Sources: Circle SPAC Investor Presentation

74

Demonstrative illustrations
CBDC a focal avenue for Circle
Coinbase & Circle linked together to create first stablecoin authorized on the network that powers Visa

Co-founded

Created USDC

Anchorage powers

Partnership

1st USDC-settled Card

Single point of entry account to utilize CBDC & Digital Currency services

Schulte Research

Free Circle Account acts as first entry
point

Add on services

API & Yield

Convert, Mint, Redeem
USDC

USDC Storage & Custody

API Services

Yield Services

Send & receive on-chain
payments free and easy

Open accounts from 180+
countries

Embed
E
b d Ci
Circle
cle payments,
nt
payouts, and account
capabilities into customs
apps

Earn interest on USDC lent
into collateralized
borrowing markets

Sources: Circle SPAC Investor Presentation

75

41

M O N E Y M E TAV E R S E

Bullish

Schulte Research

Case Study

76

Case study 7 – Bullish

Company overview
Highly speculative play at c.US$9 bn valuation

Strong management in the crypto space despite Block.One track record

Business model

Go-to-market strategy

Bullish Exchange: Beta Trading Interface generating revenues from trading
fees and margin revenues

Institutional: focusing on institutional investors, financial service corporates
and other corporates who produce, hold and/or manage crypto

Hybrid order book: AMM provides liquidity at prices calculated
deterministically based on the size of the liquidity pool and ratio of assets

Retail:
Advanced retail investors

Bullish Treasury: participates in liquidity pool to earn & add liquidity, create
barriers & competitive advantages, and create trust & alignment

VIP/Whales
Global strategy, but focusing on Asia

Combines benefits of traditional crypto exchanges with DeFi

Large liquidity pool: pricing less impacted by single trades
book depth at same price level of competitors

Goals

Bullish better

Limitations
Platform not operational yet, expected in H2 2021

Increase market integrity

c.US$9 bn valuation includes 142.0k BTC and 20.2 m EOS
and volatile

Generate high yield for investors

Schulte Research

highly speculative

Block.One disappointing track record with smart-contract platforms EOS
that raised c.US$4.1 billion via ICO in H1 2018

Power traders with liquidity
Eliminate hidden slippage costs

Sources: Bullish SPAC Investor Presentation

77

Exchange revenue model
Redesigned the exchange to benefit asset holders, enable traders, & increase market integrity
Generated from trading activity
attributed to margin trading and
interest received

Margin interest fees

Market making fees

Spot (Maker) fees: 10bp
spread

Net revenues
Charge 25% on all revenues

Traders

Generated from trading activity on the
G
hybrid order book

No taker fees

Share weighted

Liquidity
providers

Schulte Research

Bullish Treasury

Sources: Bullish SPAC Investor Presentation

78

42

Chapter 2:
Fintech and Blockchain
Section 1: Focus on the fintech firms only and compare the US and China. First, let’s
look at the large caps.
Global Summary:
Blockchain as the railroad, Big Data as the cars
Fixing transparency, traceability, AML, KYC for future advancements in data analytics (e.g., edge/quantum computing)

US key players

NFT
Intellectual property

Crypto

Fintech

Property
Money
Insurance
Art/Wine/Sports

NFTs

Gaming
Rewards and incentives

China key players

Insurtech

Proptech

Risks

Schulte Research

Monopoly behavior
Antitrust hindering
development

Railroads Required

Blockchain (e.g., BSN)
Central Bank Digital Currency

Incentives to develop
proprietary technology
Fragmented data
Public trust

Sources: Schulte Research

80

Figure 47

Who can safely and quickly create a super app (while pleasing regulators) to
incorporate fintech, insurtech, proptech, and crypto to bring a rapidly digitizing
physical world to a whole new level via ecosystems of non-fungible tokens, which
are liquid, tradable, and legal? And which can connect to CBDCs in the coming 2-3
years? See Figure 47 for an illustration that we think explains where this is all going
(Alibaba was closest to this until Jack Ma’s waxen wings melted as he approached
the sun).

43

M O N E Y M E TAV E R S E

We conclude that PayPal and Visa are the two most plugged in, adaptive, and capable of gaining acquisitions and partnerships to achieve this target in the US. Square
is also a likely candidate, but it is among the most expensive stocks in the world. Mastercard also has exceptional capabilities, but Visa always seems to be ahead.
Consumer and Merchants ecosystem
Business lines
Payments
Checkout

Payment Processing

Charitable
Giving

P2P

QR Code

Checkout

Merchant Services

Schulte Research

Debit Card

Check
Cashing

Direct Deposit

Goals

Remittances

Business Debit
Card

PayPal
Working
Capital

Transactional
Credit

Buy Now, Pay
Later

Credit Card

Crypto
Buy/Hold/Sell

Money Pools

Consumer
Financing

Risk Services

Shopper
Insights

Dynamic
Banners

Shopping Tools
Droplist

Price Tracking

Business Loans

Point of Sale

Inventory
Management

Payouts

Invoicing

QR Code

Merchants

Consumer

Financial Services

Deals and
Offers

Unbranded
Processing

Marketing Tools
Rewards

Deals Engine

Store Cash

Business
Profiles

Sources: PayPal public filings

95

Figure 48

Consumer and Merchants ecosystem
PayPal objectives for Merchants and Consumers centred around a single platform

Schulte Research

Merchants

Consumers

Power all aspects of digital
checkout online, on mobile, and in
store

Provide solutions to help people
manage and move money both
domestically and internationally

Offer access to seamless credit
solutions to enable growth

Offer credit services that are
accessible and cost effective

Help identify fraud and improve risk
management

Facilitate simple, secure payments
across devices

Offer tools and insights to attract
new customers and increase sales

Deliver flexibility with payment
options globally, across platforms
and merchants

Sources: PayPal public filings

96

Figure 49

PayPal is giving birth to a super app whose algorithms resemble the exceptional
abilities of Alibaba five years ago. It is getting there (see Figure 48 and Figure 49).

44

Paul Schulte

Multi-sided platform
Foundations

Value-added services

New flows

Issuer & Consumer Solutions

Technology

Consumer
Payments
Merchant & Acquirer Solutions
P2P

G2C

Core Business

Security

Schulte Research

Brand

Credit Debit
Prepaid
Global ATM

Fraud Management &
Security Services

B2b

B2C

Data Solutions

Visa Consulting & Analytics
Talent

B2B

Sources: Visa public filings

99

Figure 50

Visa is outstanding at creating partnerships that can leverage Visa’s platform to enter any B2B or B2C business line. Figure 50 shows the powerful places where Visa can
go that few firms in the US can go simultaneously, reinforcing circles of overlapping
data. These include government to consumer; logistics for SMEs; B2B, B2C; and P2P.
Visa is rapidly entering the tokenization of digitized data. And Visa is a natural digital
rail if the Fed wants to launch a digital coin.
Company Overview
Business model

Go-to-market strategy
Frictionless Seller ecosystem, enabling cross-selling / up-selling financial
services and products including loans

Square Seller end-to-end solution for merchants (i.e., Hardware, software,
data analytics, payments, financing)

Cash App ex-Bitcoin revenue at US$605.9 m (+86.5%) in Q2 2021

Square for Restaurants and Square for Retail key POS software verticals,
offering all-in-one POS systems

Seller Ecosystem revenue at US$1.4 bn (+86.7%) in Q2 2021

Square Cash App P2P transactions expanding into super app (i.e., full suite
financial services)

Global expansion underway across key markets (e.g., UK, Europe, Australia,
Japan)

7 m weekly Cash Card actives
Revenue generated from transaction fees (merchants) or value-added
services (e.g., trading, instant deposits)

Goals

Limitations

Expand SMEs financing (Square Bank launched Q1 2021), facilitated 136 k
loans for US$923 m in Q1 2021, +68% YoY

Increasing credit risk from SMEs financing and BNPL following
acquisition

Schulte Research

Super app potential with Cash App (e.g., BNPL following Afterpay
acquisition, enhance crypto offering)

Direct exposure to bitcoin volatility, holding US$220 m on BS
Competitive landscape from incumbents with similar products (e.g., iZettle
and Venmo by PayPal)

Square Financial Services Bank in Q1 2021, suite financial products for SMEs
Embark merchants with US$125
>US$500 k

500 k in GPV and larger sellers with

c.7.4% ex-Bitcoin revenue from International

Sources: Square public filings, Financial Times, Wall Street Journal, Credit Suisse

104

Figure 51

45

M O N E Y M E TAV E R S E

Funding since inception
Valued at c.US$2.9 bn at IPO, Square is approaching US$130 bn market cap in 2021
Amount raised, lead investors, and post-money valuation
IPO: US$243 m raised at a US$2.9 bn valuation, now approaching US$130 bn
Investor base: Vanguard, BlackRock, Morgan Stanley, and FMR LLC as top institutional holders
Post-money valuation

Amount raised

$10m

$32m

$100m

$200m

$150m

$243m

6-Nov-09

5-Jan-11

29-Jun-11

17-Sep-12

6-Oct-14

19-Nov-15

$6,000m

Schulte Research

$3,250m

$2,900m

$1,600m
$45m

$240m

Series A

Series B

Series C

Series D

Series E

IPO

Sources: CB Insights, Crunchbase Pro

105

Figure 52

Square dual-sided platform
High cross-selling / up-selling potential with dual-sided platform merging merchants and consumers
Seller Ecosystem

Cash App Ecosystem

POINT OF SALE

P2P

HARDWARE

PAYROLL
DIRECT DEPOSIT

ONLINE

CROSS-BORDER

MANAGED
PAYMENTS

Schulte Research

CASH CARD

TEAM
MANAGEMENT

Sources: Square public filings

BITCOIN

CUSTOMER
RELATIONSHIP
MANAGEMENT

DEVELOPER
PLATFORM

BOOST

BUSINESS
BANKING

STOCKS

106

Figure 53

Mastercard is similar but seems to be behind Visa. Square’s buildout is on Figure
51, Figure 52, and Figure 53 and is fascinating — it is going in the same direction but
brings echoes of Cisco or IBM. PayPal makes more sense.

46

Paul Schulte

Section 2: Fintech small caps. Prefer Marqeta for technical reasons.

Company Overview
Blue Ocean B2B solution allowing flexible and quick go-to-market access for companies
Business model

Go-to-market strategy
Focused on new channels of card issuance vs. traditional banks

Tailored cloud-based open API platform delivers card issuing and
transaction processing services
Usage-based model based on processing volume

Enables any company or brand to issue card across a wide range of use
cases

Majority revenue from Interchange Fees generated by card transactions

Offers flexible and reliable on-demand service for modern card issuance

Substantial product & technology hiring to improve and expand products
and services offering

Backend-as-a-Service becoming the option of choice for costeffectiveness and go-to-market speed

Focused around single solution for best performance instead of end-to-end
solution

B2B customers: employers, on-demand platforms, challenger banks, core
payments & P2P platforms, Fintech issuers, brands

Schulte Research

Goals

Limitations

Diversify revenue streams by increasing transaction volumes with recent
partnerships (e.g., Marcus by Goldman Sachs)

Revenue highly dependent on Square, generating 60% and 70% in FY2019
and FY2020 respectively

Targeted sales strategies to act as both Program Manager and Issuer
Processor

Increasing competitive landscape from emerging issuers such as Adyen
and Stripe

Focused on improving current specialization instead of providing end-toend solution

Revenue streams dependent on Marqeta acting as Program Manager
revenues are more lucrative since Marqeta earns interchange fees and
processing fees
Risk consumers such as Square develop technology in-house

Sources: Marqeta public filings, FT Partners, Credit Suisse, Financeit

110

Figure 54

Funding since inception
Prominent investor base, including Visa and IconIQ as lead investors
Amount raised, lead investors, and post-money valuation
IPO: raised US$1,228 m at higher price of US$27 rather than initial price range of US$20

Post-money valuation

24

Amount raised

$6m

$14m

$25m

$25m

$45m

$260m

$150m

$1,228m

16-Jun-11

15-Mar-13

27-Apr-15

26-Jul-17

5-Jun-18

21-May-19

28-May-20

9-Jun-21

Schulte Research

$14,317m

$4,300m

$9m

$64m

$87m

$414m

$500m

Series A

Series B

Series C

Series D

Series D-II

$2,000m
Series E

Series E-II

IPO

Sources: CB Insights, Crunchbase Pro

111

Figure 55

47

M O N E Y M E TAV E R S E

Modern card issuance framework

Issuing Bank1
Issuer
Processor
Program
Manager

Schulte Research

Payment Network Providers

Non-bank
Issuer

Roles and key players in Modern Card Issuance
!

Owns the cardholder relationship

!

Marketing and/or distribution of cards

!

Holds bank license

!

Final approval on account creation

!

Minimal role

!

Routing of card transactions for approval

!

Account number & card generation

!

Offer APIs to developers

!

Oversees P&L of program, along with fraud and compliance

!

Maintains relationship with issuing bank and card networks

(1) Bank Partners used by FinTechs are typically exempt from Durbin debit interchange caps. Institutions with assets of less than $10 billion are exempts from interchange fee

112

Figure 56

Interchange Fee Regulations
High interchange fee in the US; Potential limits to international expansion
US average debit card interchange fee in 2019

Interchange take rate estimates
0.94%

Covered transactions: purchase transactions covered by interchange fee standard
Exempt Transactions: purchase transactions exempt from the interchange fee standard

Single -message interchange fee average

0.64%
0.69%

0.24%

0.19%
0.03%

Dual-message interchange fee average

0.54%

Square
rre

Source: Federal Reserve Regulation II (Debit Card Interchange Fees and Routing)

Marq
Marqeta
rrq eta

Sutton
Sutto
tto n Bank

Source: Federal Reserve Regulation II (Debit Card Interchange Fees and Routing); Marqeta S1
(1) Square used as a figurative example
(2) Square estimated based on exempt transactions dual-message interchange fee less fees
incurred by Card Networks, Marqeta, and Issuing Bank
(3) Card Networks, Marqeta, and Issuing Bank fees estimated based on net revenue from
Interchange and Processing fees and Costs of Revenue from Card Network and Issuing Bank

Durbin Amendment to the Dodd-Frank Act provides that Interchange Fees
that an issuing Bank or Card Network receives for debit transactions are
regulated by the Federal Reserve. Marqeta only contract with Issuing Banks
(Sutton Bank), who are exempt from the Durbin Amendment, to access
higher interchange rates

Schulte Research

Card
rrd Net
Network
t wor

1.41%

Interchange caps in Europe on credit (0.3%) and debit (0.2%)1, potentially

Federal Reserve proposing changes to Regulation II2 that would require
merchants have a choice in how online transactions are routed. Potentially
reduce interchange fee as merchants would be able to route their
transactions across Visa, Mastercard or smaller debit networks with lower
fees
Sources: Marqeta, Federal Reserve, Credit Suisse
(1) Interchange Fee Regulation 2015 and 2016
(2) May 7 2021: Federal Reserve Board invites public comment on proposed changes to Regulation II regarding network availability for card-not-present debit card transactions

113

Figure 57

Marqeta has a lot going for it. It is dependent on Square for much of its business –
Figure 54 to Figure 57.

48

Paul Schulte

Company Overview
Strong tailwinds with Galileo and conditional approval on Bank charter
Business model

Go-to-market strategy

Business lines: Borrow, Invest, Spend, Protect, and Business

Targets Highly Educated Not Rich Yet (HENRY) consumers notably student
debt lending and refinancing

Heavily relies on technology base for Lending to develop new products and
services

Focus shifting to High Earners Not Well Served (HENWS) consumers
Galileo provides API and payments platform powering the infrastructure of
SoFi and white label for card issuing and digital banking (e.g., Chime,
Monzo, Robinhood, Wise)

Cross-selling by offering diverse product portfolio at a one-stop-shop
Q1 2021 revenue of US$220.6 m (up 159.9% YoY) from Lending (76.2%
growing 105.5% YoY), Tech platform Galileo (20.9% up 46.2x YoY), and
Financial Services (2.9% up 200.0% YoY)

Capture share from traditional financial institutions

Limitations

Schulte Research

Goals
Widening comprehensive suite of products aiming to gain further market
share from single point solution providers

Risk of being overtaken by more agile competitors on innovation, brand
awareness, etc. (e.g., well-funded legacy banks, digital banks)

Aim to own entire technology stack by benefitting from developing inhouse to reach scalability, capitalising on the acquisition of Galileo

Unprofitable business with US($44.6) m in Adjusted EBITDA, expecting to
reach Adj. EBITDA profitability in 2021E of US$27 m

Preliminary approval for national bank charter (Q4 2020), plans to acquire
community bank to accelerate process

Lack of bank charter impacting access to lower cost of capital and
increasing lending capabilities

Fragmented nature of financial products and services landscape in the US
present opportunity for consolidation, with significant economies of scale
potential

Management projects cumulative incremental EBITDA gain from
bank charter of US$1,005 m until 2025E)

Sources: SoFi, Forbes, Seeking Alpha, Credit Suisse

115

Figure 58

Funding since inception
SoftBank-backed prominent one-stop shop in the US
Amount raised, lead investors, and post-money valuation
SPAC: raised US$2.4 bn at a US$8.7 bn valuation, including US$1,225 m from PIPE and US$370 m from T. Rowe
Softbank, SilverLake, and Qatar Investment Authority as Lead investors
Post-money valuation

Amount raised

$2m

$77m

$30m

$80m

$200m

$1,000m

$150m

$500m

$500m

$2,400m

8-Sep-11

11-Sep-12

2-Oct-13

3-Apr-14

3-Feb-15

19-Aug-15

27-Oct-15

24-Feb-17

29-May-19

1-Jun-21
$8,650m

$4,300m

Schulte Research

$4,000m

$4,800m

$3,065m

$7m

$195m

$87m

$413m

Series A

Series B

Series C

Series C-II

$1,300m
Series D

Series E

Series E-II

Series F

Series G

SPAC (completed)

Sources: CB Insights, Crunchbase Pro

116

Figure 59

49

M O N E Y M E TAV E R S E

One-stop shop for financial services
SoFi diversification to full play financial services
Student Loan Refinancing

Borrow

Private Student Loans
Personal Loans
Home Loans
Active Investing

Invest

Automated Investing
Retirement Accounts
Crypto
Home/Auto Insurance

Protect

Life Insurance
Real Estate Planning

Business

SoFi at Work

Schulte Research

Small Business Financing

Spend

SoFi Credit Card
Bank accounts

Sources: SoFi, Forbes, Seeking Alpha, Credit Suisse

117

Figure 60

SoFi’s significant X factor is Galileo as a payment processing platform. The API
provides card issuing, virtual card solutions and powers digital banking infrastructure.
Overall, we are skeptical – Figure 58 to Figure 60.

Section 3: Patterns emerging in China: did China suddenly wake up in the middle
of a pandemic raging in Asia, as well as a much-needed economic recovery and start
worrying about data security, education, wages, tutorial services, and adolescent gaming all at the same time?

What is common about the industries that the PRC government is targeting?
Nothing. What is common about the charges against the companies? Nothing.
Are these companies antagonistic toward the state? Except for Alibaba, no! Are
they in a particular region that is a gadfly for the center? No. Are they part of the
Shanghai mafia? No. So, talking about the 5-year programs and saying, “well,
there were concerns about education or tutoring or ‘too much gaming’ or data
breaches in the 5-year plan, so we should have known better” is rubbish. These

50

Paul Schulte

narratives are noise and miss the point. Should we conclude that a government
that is very busy trying to jump-start a $14 trillion economy and keep a dangerous virus at bay is suddenly interested in adolescent stress from after-school tutoring or driver data from Didi? Or wages at Meituan? Come on. We are looking
in the wrong place.

Tencent

Schulte Research

Case Study

139

Figure 61

Company Overview
Value-added propositions in B2B and B2C in Fintech
Business model

Go-to-market strategy

Key verticals: Gaming (#1 Global game operator by revenue on mobile
and PC), Fintech & Business, and Social Media (QQ, WeChat)

Minimize expenses across value chain through automation and low-price
value-added proposition

Most popular instant messaging platforms (QQ), and social mobile app
(WeChat). Revenue from digital advertising, digital content subscriptions,
and membership privileges

Value-added proposition:
Mobile payments for end-users with WePay
B2B-focused in online advertising and financial services

Tencent Games with internal development studios, investments in external
companies globally, and partnerships

B2C-focused in financial services, games, and social networks

Fintech (B2B and B2C): payments, wealth management, lending, insurance

Increased focus in Fintech services, greater transaction costs as TPV grows
Increased spending on Cloud Services business to enlarge scale

Limitations

Goals
BNPL access with Fenfu and repayment through WeChat

Anti-trust investigations due to Tencent potential position as a monopoly
(e.g., Tencent only offering their own payments systems instead of
competitors such as Alipay)

Schulte Research

Dive deeper into financial products for SMEs (c.90% businesses in China),
especially lending capabilities and supply chain financing with Linklogis
(c.15% equity stake post-IPO)

Chinese regulations on Big Tech

WeBank expanded credit to SMEs, leveraging massive user bases to bring
financial institutions on board

Tencent finance-related businesses ordered to restructure as a new
Financial Holding Company

Flywheel effect by leveraging existing payment app to encourage existing
customer base across all verticals

Sources: Tencent public filings, PBOC

140

Figure 62

51

M O N E Y M E TAV E R S E

Diversified revenue streams
Fintech and Business Services growing at a fast pace, benefitting from flywheel effects of other key verticals
Revenue from Business Segment1
Data in

bn

Segment

2%

5-year CAGR 33%

1%

Fintech and Business services

28%

27%

Transaction-based revenue

Enterprise and consumers
E

Payments, Wealth management, Fintech services
Cloud and other enterprise services

2%
2%

27%

Online advertising

17%

17%

Traffic-based revenue

Enterprise
E

Social: WePay, QQ, app store, browser, etc.
Media: news, video and music, etc.

23%
18%

18%
19%

Schulte Research

17%
11%
18%

41%

33%

47%
24%
2016

VAS: Games

32%

32%

23%

22%

2020

LTM 2021

Fee-based revenue

30%

24%

23%

23%

2017

2018

2019

VAS: Social networks
Fee-based revenue

Consumers
C

Mobile games
PC games
Console games

Consumers
C

Digital content subscriptions
Membership privileges
Virtual item sales

Sources: Tencent public filings
(1) Others include Fintech and Business services for FY2016 and FY2017

141

Figure 63

Fintech and Business services verticals
WeChat Pay and Alipay dominating micro-payments in China
Payment Solutions

Other Fintech services

LiCaiTong

Wealth management services including compliant and inclusive
financial products

Insurance services

c.1 bn average daily commercial payment transactions since Q4 2019

WeSure

Take rate from merchants for commercial transactions

Small-sized and maturity consumer loans

Social and other transactions including red packets, bill sharing, and utility
payment

WeiLiDai

Cloud Services

Distribution fees from WeBank with no credit risk or BS exposure

Other Business services
Tailored smart industry solutions to transform businesses to digital across all
major verticals

Schulte Research

Tencent Cloud

WeCom

Tencent Meeting

IaaS, PaaS, SaaS, and technology solutions for enterprises

Smart Retail

Smart Healthcare

Smart Transportation

Smart Education

IaaS: Star Lake server and T-block technology enhance service
PaaS: Security and real-time communication PaaS
SaaS: Tencent Meeting, WeCom, Tencent Docs for digitalisation
Sources: Tencent public filings

142

Figure 64

52

Paul Schulte

Tencent Cloud & Fintech sub-verticals
Investments in Blockchain, Cloud infrastructure, and AI paying off across Fintech sub-verticals
Technological capabilities

Fintech sub-verticals

Connecting industries, consumers, and business partners
Smart industry solutions leveraging Tencent Cloud infrastructure, proprietary technologies to assist
businesses achieve digital transformation

Leverages blockchain, AI, big data, cloud
computing, and edge computing capabilities to
power proprietary technologies across all Fintech
sub-verticals
Payments: Weixin Pay, QQ wallet, Transit QR
code

Smart Solutions
Retail

Software and
Services

Healthcare

WeCom

Meeting

Education

Docs

Transportation

Weixin

Weixin Pay

Wealth Management: LiCaiTong offers
financial products (e.g., money market fund,
investment-linked products, overseas
investment funds)

Finance

Trading platforms: Tencent Portfolio provide
users real-time market information

Security

Tax refund: WeTax Refund
B2B Payments: Business Tenpay offers secure,
compliant, and flexible corporate account
management system for eCommerce
platforms

Technologies

Schulte Research

Security

Autonomous driving YouTu AI Lab

AI Lab

Big Data

Location services

Range products & services (>300) on top of computing and storage
Infrastructure in 27 regions and 62 availability zones as of Q1 2021
c.1m+ paying customers since Q4 2019

Infrastructure
Sources: Tencent p
public
blic filings

143

Figure 65

AI, Machine learning, Big data, Blockchain
AI operating across all Tencent current and future verticals, continuously innovating (e.g., Big Data Tiangong)
AI & Machine learning

Big data and Blockchain

Artificial Intelligence Labs in 2016

Tencent blockchain applied to e-receipt, supply chain finance (equity stake
in Linklogis), judicial evidence management, etc.

Deep focus on machine learning, speech recognition, natural language
processing, and computer vision

Big data to target right audience accurately:

Ambition to help China become a leader in personalized medicine using AI

Integrate intelligent data management platform combining internal
and external data

Aim to integrate medical institutions with WeChat:

Provide advertisers with diversified, open, and safe communication
service platform

Book appointments online
Accept payments
Train AI algorithms with consumer data from these services
Partnership with Babylon Health, consumers access virtual
healthcare assistant

Platform launched in April 2021

Mying healthcare platform launched in 2017 to help diagnose cancer,
analyse, and manage healthcare records

Self-developed 4th generation fusion computing platform
Big data and AI basic operators, unifying metadata for execution
optimization, batch unification, stream, and graph computing

Schulte Research

Global investments on AI equity deals, notably in the US

Unify computing and compiling engine
trillions of data analysis

Sources: Tencent public filings, INF, Pandadaily, Bernard Marr & Co.

144

Figure 66

53

M O N E Y M E TAV E R S E

Ant Group

Schulte Research

Case Study

145

Figure 67

Company Overview
-payment for SMEs and consumers
Business model
consumers and merchants

Go-to-market strategy
Drive user engagement and expand user base through Alipay to propel
flywheel effect across Food and Beverage, Mobility, Entertainment, and
Healthcare & Municipal verticals

delivering micro-payments between

Develop comprehensive digital payment, finance, and daily life services
beyond China

Build value and maintain open platform with partners (i.e., Financial
institutions, Merchants, Service providers)

Constant product innovation to anticipate consumer and business needs
and deliver differentiated products and services

Refocus on core business following regulatory backlash

Focus on SMEs financing and helping them grow their businesses on a
global scale

Goals

Limitations

Technology innovation, especially blockchain:

Regulatory backlash following IPO

Build and upgrade digital infrastructure for new services

Forced to share Credit Data with SOEs, as a joint-venture with state-owned
enterprises in Q3 2021

Schulte Research

Improve understanding of customers and enable partners

Establish Ant Group as Financial Holding company, separating Jiebei and
Huabei as separate consumer finance company

Expand applications of AntChain
Continue digitalization of assets on AntChain

SMEs and consumers

Enable circulation of digitalized assets on a wider scale

, focusing on micro-payment for

Hold increasing amount of capital to offer loans, with commercial banks
limited to hold no more than 70% of capital when providing loans

Expand cross-border payment and merchant services by serving more
users, enabling more merchants, and broaden service offerings

Sources: Ant public filings, Schulte Research

146

Figure 68

54

Paul Schulte

Ant Ecosystem

Schulte Research

Alibaba entity

Chinese equivalent

West equivalent

Sources: Alibaba public filings, Quartz, Schulte Research

147

Figure 69

Alibaba Ecosystem, directly or via investments

Schulte Research

Alibaba entity

Key vertical

West equivalent

Alibaba entity

Key vertical

Online payments

Mobile messaging

Cloud services

Car service, ride sharing

Mobile apps

C2C e-Commerce

Mobile OS

Online travel booking

Maps and navigation

B2C e-Commerce

Retail outlets

E-learning

Group buying

Microblogging

Cloud storage

Streaming video

West equivalent

Sources: Alibaba public filings, Quartz, Schulte Research

148

Figure 70

55

M O N E Y M E TAV E R S E

Business and size
Summary size and scope of Ant Group
1,000+ m

80+ m

Alipay app

Alipay app

Annual Active Users

Monthly Active Merchants

711 m

729 m

Alipay app

Alipay app

Monthly Active Users

Digital Finance Annual Active Users

2,000+

200+

Partner Financial Institutions

Alipay app
Countries and Regions with Online Payment Services

118 tn

1.7 / 0.4 tn

Schulte Research

Digital Payments

CreditTech

Total Payment Volume in Mainland China

Consumer / SME Credit Balance

4.1 tn

52 bn

InvestmentTech

InsurTech

Assets Under Management
Sources: Ant public filings

Insurance Premiums and Contributions

Data as of 30th June 2020

149

Figure 71

Ant Cloud

Fintech & Smart Banking

Fintech of Ant & core products

Smart banking

Ant Cloud 100% owned by Ant Financial

Smart Banking service provides:
Intelligent customer service
Marketing
Big data risk control
Product and channel operation
Improve user experience
Improve operational efficiency
Reduce operating costs

Ali Cloud 100% owned by Alibaba
Close relationship: Many Ant Cloud products can be found in Ali Cloud
For life cycle of application, fintech will focus on: Financial intelligence,
financial security, financial distributed architecture, mobile development,
blockchain and financial distributed database

Advantages

Several core products:

SOFAStack

Advanced Risk Control

Fi
Financial
i l distributed
distrib t d architecture,
hit cture
t
providing
idi
project
p j t managementt and
nd
monitoring allowing for remote disaster recovery and low cost expansion

Integrates
t
t iinternal
t
l and
nd external
t
l
data,
Builds unified financial-level
intelligent risk platform,

mPaaS

Schulte Research

Financial-grade mobile development
opment platform
platf
providing cloud-to-endone-stop solution for App development, testing, operation & maintenance

Realizing comprehensive risk
management such as:
Marketing protection
Account protection
Transaction protection
Credit protection
Channel protection
Content protection

OceanBase
Financial-grade
i
i
distributed
is ri
relational
i
database developed by Ant
databa
Financial and Alibaba with online horizontal expansion capabilities

Sources: Ant public filings

Advanced Marketing
Build
il an online
li
and flexible
f i
marketing management platform
for financial institutions, including:
Customer insight
Event management
Channel push
Targeted delivery
Process automation
Marketing effect analysis
Marketing experiment
Event marketing
Creative center

Data as of 30th June 2020

150

Figure 72

56

Paul Schulte

Figure 73

Schulte Research

Participate in all parts of life

Sources: Ant public filings

152

Figure 74

57

M O N E Y M E TAV E R S E

How to get a loan in 3 seconds

Schulte Research

Credit line approval, drawdown, and repayment process

Sources: Ant public filings. Schulte Research

153

Figure 75

SME Credit risk management

Schulte Research

Process for SME lending

Sources: Ant public filings. Schulte Research

154

Figure 76

58

Paul Schulte

Services for partner Asset managers & Insurers
Value-added services powering asset management and insurance partners
Infrastructure for asset management
Ant leverages customer insights and massive
user base to enable partner asset managers:
To distribute simple, low-investment threshold,
and easy-to-understand investment products
for customers

Partner Asset Managers

Product Design

Product
Screening

Partner Asset Managers
Customer
Acquisition /
Education

Investment
Advisory

Interactive
Communication

Product Delivery

Infrastructure for insurance
Ant leverages deep customer insights, risk
management solutions, and technology to
enable partner issuers to:

+ Partner Insurers

Schulte Research

1. Acquire customers at scale and at low cost

Partner Insurers

2. Co-innovate products
3. Improve underwriting capabilities through
enhanced customer selection and pricing

Customer
Education /
Acquisition

Product Design

Underwriting
(Customer
Selection)

Claim

Solvency
Requirement

Product Delivery

4. Improve claims management through service
automation and fraud detection systems
Sources: Ant public filings. Schulte Research

155

Figure 77

Global Partnership & Investments
Independent

3rd

party credit agency under Ant Financial that uses cloud computing & machine learning

List of global partnerships & investments1
US

Delta Air Lines
EyeVerify
First Data
Marriott international
Stripe
Uber
United Airlines
V-Key
VeriFone Systems

UK & Ireland
InterContinental Hotels Group
Premier Tax Free

Schulte Research

Germany & France
Ingenico Group
PrestaShop
Worldline
Concardis
Wirecard
Singapore, India & Thailand
Alpha Payments Cloud
Grab
Resorts World Sentosa
Paytm
Ascend Money
Paysbuy
Sources: Ant public filings Data as of 30th June 2020
(1) Please note that words highlighted in blue indicate a partnership & words highlighted in orange indicate an investment

South Korea & Japan
Bankware Global
Orix

156

Figure 78

There is one commonality of all the investigations. First, they are ALL political
and mostly come from the CAC, which reports to the Vice Premier who reports to
the Premier. They come from the very top. Second, they are aimed at PRC companies that foreigners heavily own. Third, they all contain the most valuable resource in
the world: data. And we conclude that this vital national commodity (no longer oil,
gold, diamonds, or uranium) is digitized personal and credit data. This is now being
nationalized. The value of this data is being taken away from foreign investors in HK
59

M O N E Y M E TAV E R S E

and the US and being nationalized by the state. At the very least, this vital commodity
is being restricted to domestic ownership. That is why the stock prices in HK and NY
are falling. The trend is likely to continue. Our research on Tencent and Alibaba can
be found in Figure 61 to Figure 78.
Who is likely to remain untouched? Companies that stay in line with national
priorities will thrive.


Global cell phone and cell phone tower connections for innovative city
initiatives like Huawei.
Semiconductor producers will be revalued as the consumer fintech is
devalued.
Those who are genuinely involved in SOE reform like Ping An. Ping
An has embraced China Life to rehabilitate it, and it is at the center of
another national priority – healthcare.
Environment/climate change initiatives to clean up China’s air, land,
and sea.

As for companies in gaming, consumer eCommerce, tutoring, food delivery, and
self-interested data collection, value is emerging. But it will be decided by the state.
Watch for bottom fishing by entities like CIC. They are the ultimate insiders, for they
will be told when to buy.

60

Paul Schulte

Section 4: Additional research in PowerPoint format.

Schulte Research

Chapter II: Fintech and Blockchain

79

Global Summary:
Blockchain as the railroad, Big Data as the cars
Fixing transparency, traceability, AML, KYC for future advancements in data analytics (e.g., edge/quantum computing)

US key players

NFT
Intellectual property

Crypto

Fintech

Property
Money
Insurance
Art/Wine/Sports

NFTs

Gaming
Rewards and incentives

China key players

Insurtech

Proptech

Risks

Schulte Research

Monopoly behavior
Antitrust hindering
development

Railroads Required

Blockchain (e.g., BSN)
Central Bank Digital Currency

Incentives to develop
proprietary technology
Fragmented data
Public trust

Sources: Schulte Research

80

61

M O N E Y M E TAV E R S E

Schulte Research

Section 1: The architecture and infrastructure of
Fintech and Blockchain

81

Categorizing Fintech Business Models
He who makes the safest, cheapest and fastest Super App wins

Schulte Research

By Market

By Technology

Lending

Application Program Interface (API)

Payments

Artificial Intelligence

Wealth Management

Blockchain and distributed ledger technologies (DLT)

Insurance Technology (Insurtech)

Cloud computing (Cloud)

Regulatory Technology (Regtech)

Edge computing (Edge)

Quantum computing (Quantum)
Sources: Imperial College London

82

Online banking payment solutions: how it works
Payment model including Payment Initiation Service Provider (PISP)
Lower external fees

Risk mitigation

Schulte Research

Speed of funds

Operational efficiency
Sources: Everyday Bank Research, Federal Reserve

83

62

Paul Schulte

Online banking payment solutions: solutions
Instant payment use case opportunities
Individuals can transfer money
between accounts instantly

A2A

Request for payments electronically

Pay bills instantly, avoiding late fees
and improving cash flow
management

B2C

On-demand payment, freeing up
working capital by paying suppliers
upon receipt

B2B

Prepaid cards, electronic wallets,
investment account management,
and corporate cash pooling

Home service payment upon
delivery

C2B

E-commerce

Request for payment electronically

Pay family & friends immediately or
pay individual for services

Schulte Research

P2P

One-time payments such as
insurance payouts or rebate claims

B2C

Immediate payroll for expedited
payments

Screen-scraping1
make online payments: under PSD2, A2A providers can now access current accounts directly and initiate credit
transfers more securely using open APIs provided by banks
Sources: Every
Everyday
r day Bank Research
ry
Research, Federal Reserve
(1) Automated process whereby data displayed on one site is extracted to be displayed/used on another site

84

Key Trends Product Radar
Adoption in many areas is still primitive
Sales &
Marketing

Insurtech
L&H + P&C

P2P

!
!

Direct

!
!

Schulte Research

Management &
Marketplaces

!

Banking

SaaS

APIs

!

!

!

Team up &
consolidate
premiums

Digitization
Digital wallets
Banking-as-aservice

MAINSTREAM

!

!

Real-time
payments

Cross-border

!

Digital
distribution

!

Compare &
price terms

!

LOW

P2P

Traditional
Crypto
Marketplace
DeFi

!
LOW

Buy Now Pay
Later

!

Tracking &
administration
EMERGING

Crypto + Fintech +
Proptech

Payments

!

Currency &
Tokens

NFTs
Stablecoins

EMERGING

MAINSTREAM

Market Adoption
Sources: Schulte Research

85

Traditional 4-Party infrastructure:
How it works
Roles and key players
Diagram 4-party model
Customer

Provides
credit

Pays
debt

Key roles
Card Payment

ork

e
fe

n
tio
za
ori
th
Au

tw
Ne

Issuing Bank

Merchant

Network
(Clearing &
Settling)

Ne
tw

ork
Au
fe
th
e
ori
za
tio
n

Provides funds to merchant bank

Pays
MDR

Back-end
processing

Merchant
Acquirer

(net of interchange)

Merchant

Accepts payments and pays discount rate (MDR) to the
merchant acquirer

Network

Hub card payment transactions, relaying authorization and
settlement messages between issuing and acquiring banks

Merchant
Acquirer

Front-end: enables individual merchants to accept card
payments; captures card/transaction data, routes the message
to appropriate network for authorization
Back-end: Handles settlement and clearing messages, deposits
funds into
accounts

Card Issuer

Provides consumers and businesses with bank accounts, credit
extension, and cards

Issuer
Processor

Receives authorization request from the card network and relays
decision to the card network; clears and settles transactions for
the issuing bank

Key players

Schulte Research

Merchant

Network

Merchant Acquirer

Card Issuer

Issuer Processor

Front-end Back-end

Sources: Schulte Research

86

63

M O N E Y M E TAV E R S E
Online Banking Payment Solutions:
How it works
Payment model including Payment Initiation Service Provider

Instant Payment use case opportunities
Individuals can transfer money between accounts instantly

A2A

Prepaid cards, electronic wallets, investment account
management, and corporate cash pooling
Pay bills instantly, avoiding late fees and improving cash flow
management

B2C

Request for payment electronically

P2P

Pay family & friends immediately or pay individual for services
On-demand payment, freeing up working capital by paying
suppliers upon receipt

B2B

Request for payments electronically
Home service payment upon delivery

C2B

E-commerce
One-time payments such as insurance payouts or rebate
claims

Schulte Research

B2C

Immediate payroll for expedited payments

Lower external fees

Risk mitigation

Speed of funds

Operational Efficiency

Screenaccounts and use credit transfers to make online payments: under PSD2, A2A
providers can now access current accounts directly and initiate credit transfers
more securely using open APIs provided by banks

Sources: Everyday Bank Research, Federal Reserve
(1) Automated process whereby data displayed on one site is extracted to be displayed/used on another site

87

SMEs Cross-border segment:
How it works
Cross-border platforms focusing on SMEs merchants
Selected competitors for SMEs cross-border payments

Cross-border eCommerce market size growth1
in US$

HK-based platform focused in APAC
130+ countries and 50+ currencies

Cross-border is the fastest growing
g
g sub-segment
g
of eCommerce

Brazilian-based offering payments for eCommerce transaction
Provides global merchants access to Brazilian consumers

Cross-border payment volumes pre-COVID: c.50-60% tourism & travel and c.40-50% eCommerce
Cross-border payment volumes around 5 years ago: c.70% tourism & travel
Cross-border payment volumes around 20 years ago: c.90% tourism & travel

China-based platform with US$ 10bn+ in payments volume
Reduces cross-border fees for third-party sellers in China

$4.9 tn

CAGR 27%

Targets SMEs with emphasis on companies with less 100 employees
Simplifies cross-border payments for customers
International money transfer for marketplace sellers and freelancers
Working capital offerings, payout capabilities, fraud prevention
c.200 countries and c.150 currencies

$560 bn
2018

Payment solutions for SMEs, mostly cross-border payments
White-labels solution to banks

2027E

Expanded into B2B payments with business accounts for SMEs
150 countries, 90+ currencies

Schulte Research

Global B2B2X platform
Serves payments providers, challenger banks & issuers, marketplace
platforms, and traditional banks for multi-currency accounts
Payment platform and network with vertical-specific software
Facilitates payments flows across currencies, payment types, and
payment options
Operates through Fleet, Travel, Corporate, Health and Benefits verticals
210 countries and 150 currencies
Corporate payments solutions (e.g., AP, cross-border, virtual card)
200 countries and 145 currencies

Sources: Company filings, Credit Suisse, Payoneer public filings, Wise public filings, Capital IQ
(1) Zion Market Research
(2) Payoneer FY2021; pro-forma Market Cap and Enterprise Value adjusted based on number of shares outstanding disclosed in the SPAC investor deck

88

Global Fintech financing volume
Global Fintech Financing set to outpace 2019 and 2020 by a large margin; Q1 2021 YoY growth 153%
Global Fintech financing volume
Volume of 3 Largest Deals

$53.9
$4.8

$14.0

$45.3

$45.3

$2.6

$3.8

Ant $14 bn private
placement
$29.0
$21.9
$17.5

$9.0

$29.1

$27.0

$5.2

$4.1

$2.6

Schulte Research

$4.4

$5.2
$1.7

2010

$7.0

$6.6

$1.4

$2.7

$1.0

2011

2012

$6.1

Sources: Financial Technology Partners (FT Partners)

2013

Q1 2020
$11.5

2014

2015

2016

2017

2018

2019

2020

Q1 2021

Q1 2021 Fintech Insights

89

64

Paul Schulte

P2P Cross-border
Global cross-border payments market
2020 Global cross-border payments market1

Global cross-border payments market volume growth1

Estimated take rate in percentage for each segment

in US$ tn

Personal

SMBs

Enterprise

Personal

SMBs

Enterprise

$12.5bn

$15.3
0.10%

$12.5tn

$164.3bn

$12.5

13.9

1.69%

$9.7tn

9.7

Schulte Research

5% CAGR

5% CAGR

$87.8bn
3.14%

$2.8tn

2.8

Volume (US$tn)

Reve nue (US$bn)

11% CAGR

4.2

2020

2026E

Sources: Wise public filings
(2) Wise Prospectus from Edgar Dunn & Co. data

90

Consumer & Business growth
Volume per consumer and business customer as key growth drivers of revenue
Consumer growth rates1

Mix of transaction type by company1

2018 to 2020 CAGR

All digital

Mon
on
eyG
G ra
m
o ey
e
rram

Remit
Remitly

Ria

ria
Western Union

Digital

yGra
ra
Mone yGram
r m

s
se
Wise

0%

W or
or d
l rre
e mit

-10%

0%

10%

20%

30%

40%

50%

25%

50%

75%

100%

60%

Business growth rates1

P2P cross-border market

2018 to 2020 CAGR

Cross-border money transfer market: banks (c.68%), traditional money
transfer operators (c.13%), other non-banks (c.18%)

Wes
e te
es
t rn Un ion
o Bus
on
u ine ss
us
s

Competitors switching to digital transactions (e.g., Western Union switching
to digital remittances, with digital transactions grown from 15% of C2C
transactions in Q2 2019 to 31% in Q3 2020)

OFX

Schulte Research

All c ash

Worl
WorldRemit
rrl dRemit

WU

Int er
e me
m x
digital
Wes
e te
es
t rn Un ion
o di
on
dgita
t l
ta

Digital initiated to cash payout

Wis
iise
Wise

OF
OFX

Ebur y

Argen
Arg
r en
rg
e te
t x

Wise
s
se

-10%

0%

10%

Sources:
(1) FXC Intelligence estimates

20%

30%

40%

50%

60%

70%

80%

Wise and OFX FY ended 31st March

91

65

M O N E Y M E TAV E R S E

Schulte Research

Section 2: US corporate

92

PayPal

Schulte Research

Case Study

93

Case study 8 – PayPal

Company Overview
PayPal following Chinese Big Tech firms path with super app initiative
Business model

Go-to-market strategy
Industry-leading checkout conversion rate

Buy safely from merchants and accept worldwide payments

PayPal tech platform and brand recognized as one of the most trusted

Consumers: payments, financial services, and shopping
Merchants: payments processing, merchant services, and marketing

global leadership in payments

P2P payments, debit and credit card offerings with Venmo

Careful direct investments and acquisitions of prominent companies

Crypto Checkout and PayPal Crypto offerings

Venmo adding new products (crypto, bill-pay, credit card, Honey
integration, international expansion)

Payment processing with Braintree
Online and POS financing solutions including BNPL, credit card, working
capital and business loans for merchants with PayPal Credit

Braintree undertaking global expansion

Limitations

Goals
Super app initiative announced in Q2 2021, personalized to the end user
using AI and machine learning capabilities to

High checkout fees of 1.9% + 0.30 per card transactions in Europe and
3.45% + US$0.49 per PayPal checkout and 2.59% + US$0.49 card transactions
in the US Recent hike in prices from 2.90% + US$0.30 in August 2021

Schulte Research

Full-stack payments platform improving Alternative Payment Methods (e.g.,
BNPL) and Omnichannel payment processing with Braintree

High take rate on FX and Crypto take rate (c.2.5%)
Populated competitive landscape in POS (e.g., Square), BNPL (e.g., Klarna)

One-stop-shop for SMEs worldwide to take payments, register, track sales,
and get financing solutions with iZettle

Sources: PayPal public filings, Credit Suisse, TechCrunch, Forbes

94

66

Paul Schulte

Consumer and Merchants ecosystem
Business lines
Payments
Checkout

Payment Processing

Charitable
Giving

P2P

QR Code

Checkout

Merchant Services

Schulte Research

Debit Card

Check
Cashing

Direct Deposit

Goals

Remittances

Business Debit
Card

PayPal
Working
Capital

Transactional
Credit

Buy Now, Pay
Later

Credit Card

Crypto
Buy/Hold/Sell

Money Pools

Consumer
Financing

Risk Services

Shopper
Insights

Dynamic
Banners

Shopping Tools
Droplist

Price Tracking

Business Loans

Point of Sale

Inventory
Management

Payouts

Invoicing

QR Code

Merchants

Consumer

Financial Services

Deals and
Offers

Unbranded
Processing

Marketing Tools
Rewards

Deals Engine

Store Cash

Business
Profiles

Sources: PayPal public filings

95

Consumer and Merchants ecosystem
PayPal objectives for Merchants and Consumers centred around a single platform

Schulte Research

Merchants

Consumers

Power all aspects of digital
checkout online, on mobile, and in
store

Provide solutions to help people
manage and move money both
domestically and internationally

Offer access to seamless credit
solutions to enable growth

Offer credit services that are
accessible and cost effective

Help identify fraud and improve risk
management

Facilitate simple, secure payments
across devices

Offer tools and insights to attract
new customers and increase sales

Deliver flexibility with payment
options globally, across platforms
and merchants

Sources: PayPal public filings

96

67

M O N E Y M E TAV E R S E

Visa

Schulte Research

Case Study

97

Case study 9 – Visa

Company Overview
Built on top of proprietary processing network VisaNet, expanding into Blockchain with B2B Connect
Business model

Go-to-market strategy
Global presence in 200+ countries & territories, settlement in c.25 currencies

VisaNet proprietary processing network powers multi-sided platform,
connecting acquirers, merchants, cardholders, and issuers

Focus on eCommerce growth, catalysts in travel industry recovery and POS
payments volume following the COVID-19 pandemic

Revenue from US (c.47%) and International (c.53%)

Aggressively expand into digital (e.g., eCommerce, contactless payments)

Key revenue streams: cross-border transactions, value-added services, data
processing

Emerging cross-border mix with B2B Connect scalability potential and
remittances: less cyclicality in cross-border volumes

Competes directly with Global or multi-regional networks (e.g., Mastercard,
American Express) and indirectly with Square, PayPal, Local and regional
networks, APMs, ACH and RTP networks, payment processors

Well-positioned to capture the trend of payments going towards digital
Continuous investments in emerging and prominent companies to keep up
as an incumbent (e.g., Klarna for BNPL)

At the centre of the traditional 4-party model

Goals

Limitations

Schulte Research

Continuously expand beyond B2C into emerging market opportunities (e.g.,
crypto, A2A) into G2C, B2B, B2b, and P2P

Requires unceasing investments to deliver continuous value to merchants,
cardholders, banks, and ultimately shareholders

Partnerships-oriented approach to innovation to stay on top of increasingly
complex network of payments

Card network processing fees pressure in the US (e.g., interchange caps in
Europe on credit 0.3% and debit 0.2%)

Provide rails across the entire payments industry for partners to build on top
(e.g., B2B Connect infrastructure based on blockchain architecture)

Set to raise fees in the UK following Brexit at 1.5% for credit and 1.15% on
debit. Plans on raising domestic UK and UK-EU transaction fees in 2022
More agile disruptors can rapidly scale technology in niche cases
Layers of regulatory oversights and compliance requirements

Sources: Visa public filings, Financial Times, Wall Street Journal, Medium, Lumos

98

Multi-sided platform
Foundations

Value-added services

New flows

Issuer & Consumer Solutions

Technology

Consumer
Payments
Merchant & Acquirer Solutions
P2P

Schulte Research

Brand

G2C

Core Business

Security

Credit Debit
Prepaid
Global ATM

Fraud Management &
Security Services

B2b

B2C

Data Solutions

Visa Consulting & Analytics
Talent

B2B

Sources: Visa public filings

99

68

Paul Schulte

MasterCard

Schulte Research

Case Study

100

Case study 10 – Mastercard

Company Overview
Higher exposure to international market and credit business compared to Visa
Business model

Go-to-market strategy

Core of the traditional 4-party model, providing network for acquirers,
processors, issuers, and cardholders

Purchase volume of Credit, Debit, and Prepaid represents c.36.8% in the US,
c.27.4% in EU

Revenue US$4.5 bn in Q2 2021 (+36% YoY), driven by Transaction processing
and Domestic assessments (+37% and +39% respectively)

Higher exposure to International & credit business compared to Visa
Proprietary data analytics and consulting for businesses

Notable increase of cross-border volume fees to US$1.1 bn in Q2 2021
(+69%), resulting from reopening of economies following COVID-19

Focus on eCommerce payments and Credit platforms, highest margins
Continuous partnerships and investments in emerging and prominent
companies to keep up with the pace of increasingly complex payments
landscape

Focus on product and services innovation to further gain market share or be
at the forefront of emerging business models in response to new entrants

Goals

Limitations

Schulte Research

Diversify revenue streams by expanding digital payments in emerging
markets and via financial inclusion

Payments, privacy, data, and security regulations

Develop data analytics, cybersecurity, AI organically or via M&A

Card network processing fees pressure in the US (e.g., interchange caps in
Europe on credit 0.3% and debit 0.2%)

Initiatives in new payments flows, including open banking (e.g., acquisition
of Finicity in Q2 2020)

Set to raise fees in the UK following Brexit at 1.5% for credit and 1.15% on
debit. Plans on raising domestic UK and UK-EU transaction fees in 2022

B2B expansion supporting multi-rail payments

Complex competitive landscape with Global payments network (e.g., Visa,
Amex, JCB, UnionPay), LPMs/APMs, Value-added products and service
providers

Sources: Mastercard, Credit Suisse, Financial Times, Lumos, Forbes, Wall Street Journal

101

Products & Services
-rail payment products and core position in the 4-party model
Core network

Products & Services

Core Network

Loyalty &
Rewards
wards
Cyber &
Intelligence

Consulting
Switching
Authorisation | Clearing | Settlement

Multi-rail
payment
products

Schulte Research

Data Analytics

Processing
Payment System Security

Value-added Products and Service
Loyalty and Rewards | Analytics Insights and Consulting
Processing | Cyber and Intelligence

Open Banking

Enabling digital payments

Sources: Mastercard public filings

102

69

M O N E Y M E TAV E R S E

Case study 11 – Square

Company Overview
Business model

Go-to-market strategy
Frictionless Seller ecosystem, enabling cross-selling / up-selling financial
services and products including loans

Square Seller end-to-end solution for merchants (i.e., Hardware, software,
data analytics, payments, financing)

Cash App ex-Bitcoin revenue at US$605.9 m (+86.5%) in Q2 2021

Square for Restaurants and Square for Retail key POS software verticals,
offering all-in-one POS systems

Seller Ecosystem revenue at US$1.4 bn (+86.7%) in Q2 2021

Square Cash App P2P transactions expanding into super app (i.e., full suite
financial services)

Global expansion underway across key markets (e.g., UK, Europe, Australia,
Japan)

7 m weekly Cash Card actives
Revenue generated from transaction fees (merchants) or value-added
services (e.g., trading, instant deposits)

Goals

Limitations

Expand SMEs financing (Square Bank launched Q1 2021), facilitated 136 k
loans for US$923 m in Q1 2021, +68% YoY

Increasing credit risk from SMEs financing and BNPL following
acquisition

Schulte Research

Super app potential with Cash App (e.g., BNPL following Afterpay
acquisition, enhance crypto offering)

Direct exposure to bitcoin volatility, holding US$220 m on BS
Competitive landscape from incumbents with similar products (e.g., iZettle
and Venmo by PayPal)

Square Financial Services Bank in Q1 2021, suite financial products for SMEs
Embark merchants with US$125
>US$500 k

500 k in GPV and larger sellers with

c.7.4% ex-Bitcoin revenue from International

Sources: Square public filings, Financial Times, Wall Street Journal, Credit Suisse

104

Funding since inception
Valued at c.US$2.9 bn at IPO, Square is approaching US$130 bn market cap in 2021
Amount raised, lead investors, and post-money valuation
IPO: US$243 m raised at a US$2.9 bn valuation, now approaching US$130 bn
Investor base: Vanguard, BlackRock, Morgan Stanley, and FMR LLC as top institutional holders
Post-money valuation

Amount raised

$10m

$32m

$100m

$200m

$150m

$243m

6-Nov-09

5-Jan-11

29-Jun-11

17-Sep-12

6-Oct-14

19-Nov-15

$6,000m

Schulte Research

$3,250m

$2,900m

$1,600m
$45m

$240m

Series A

Series B

Series C

Series D

Series E

IPO

Sources: CB Insights, Crunchbase Pro

105

70

Paul Schulte

Square dual-sided platform
High cross-selling / up-selling potential with dual-sided platform merging merchants and consumers
Seller Ecosystem

Cash App Ecosystem

POINT OF SALE

P2P

HARDWARE

PAYROLL
DIRECT DEPOSIT

ONLINE

CROSS-BORDER

MANAGED
PAYMENTS

Schulte Research

CASH CARD

TEAM
MANAGEMENT

Sources: Square public filings

BITCOIN

CUSTOMER
RELATIONSHIP
MANAGEMENT

DEVELOPER
PLATFORM

BOOST

BUSINESS
BANKING

STOCKS

106

Seller Ecosystem
Seller Ecosystem
Managed payments

Payments

POS + Business tools

Vertical-specific software
V

Square Point of Sale

Services

(Appointments, Invoices,
Virtual Terminal)

(in-person and online)

Financial services

Access to Funds

(Instant Deposit, Square
Card)

Customers

(Marketing, Loyalty, Gift
Cards)

Retail

Hardware

(Square for Retail)

Employee tracking &
reporting

Payroll

(Team management)

Risk Management +
Disputes

Food + Drink

(Square for Restaurants)

eCommerce

Financing

(Square Capital,
Installments)

Schulte Research

(Square Online Store)

Platform

(Integration & customization tools)

Payments API Integrations

(Reader SDK, in App Payments SDK,
eCommerce API)

Commerce APIs & Integrations
(8 APIs including Employees API,
Inventory API, and Customers API)

Partner App Marketplace

Sources: SSquare public
Sou
bli fili
filings

107

71

M O N E Y M E TAV E R S E

Schulte Research

US corporate second tier names

108

Marqeta

Schulte Research

Case Study

109

Case study 12 – Marqeta

Company Overview
Blue Ocean B2B solution allowing flexible and quick go-to-market access for companies
Business model

Go-to-market strategy
Focused on new channels of card issuance vs. traditional banks

Tailored cloud-based open API platform delivers card issuing and
transaction processing services
Usage-based model based on processing volume

Enables any company or brand to issue card across a wide range of use
cases

Majority revenue from Interchange Fees generated by card transactions

Offers flexible and reliable on-demand service for modern card issuance

Substantial product & technology hiring to improve and expand products
and services offering

Backend-as-a-Service becoming the option of choice for costeffectiveness and go-to-market speed

Focused around single solution for best performance instead of end-to-end
solution

B2B customers: employers, on-demand platforms, challenger banks, core
payments & P2P platforms, Fintech issuers, brands

Schulte Research

Goals

Limitations

Diversify revenue streams by increasing transaction volumes with recent
partnerships (e.g., Marcus by Goldman Sachs)

Revenue highly dependent on Square, generating 60% and 70% in FY2019
and FY2020 respectively

Targeted sales strategies to act as both Program Manager and Issuer
Processor

Increasing competitive landscape from emerging issuers such as Adyen
and Stripe

Focused on improving current specialization instead of providing end-toend solution

Revenue streams dependent on Marqeta acting as Program Manager
revenues are more lucrative since Marqeta earns interchange fees and
processing fees
Risk consumers such as Square develop technology in-house

Sources: Marqeta public filings, FT Partners, Credit Suisse, Financeit

110

72

Paul Schulte

Funding since inception
Prominent investor base, including Visa and IconIQ as lead investors
Amount raised, lead investors, and post-money valuation
IPO: raised US$1,228 m at higher price of US$27 rather than initial price range of US$20

Post-money valuation

24

Amount raised

$6m

$14m

$25m

$25m

$45m

$260m

$150m

$1,228m

16-Jun-11

15-Mar-13

27-Apr-15

26-Jul-17

5-Jun-18

21-May-19

28-May-20

9-Jun-21

Schulte Research

$14,317m

$4,300m

$9m

$64m

$87m

$414m

$500m

Series A

Series B

Series C

Series D

Series D-II

$2,000m
Series E

Series E-II

IPO

Sources: CB Insights, Crunchbase Pro

111

Modern card issuance framework

Issuing Bank1
Issuer
Processor
Program
Manager

Schulte Research

Payment Network Providers

Non-bank
Issuer

Roles and key players in Modern Card Issuance
!

Owns the cardholder relationship

!

Marketing and/or distribution of cards

!

Holds bank license

!

Final approval on account creation

!

Minimal role

!

Routing of card transactions for approval

!

Account number & card generation

!

Offer APIs to developers

!

Oversees P&L of program, along with fraud and compliance

!

Maintains relationship with issuing bank and card networks

(1) Bank Partners used by FinTechs are typically exempt from Durbin debit interchange caps. Institutions with assets of less than $10 billion are exempts from interchange fee

112

Interchange Fee Regulations
High interchange fee in the US; Potential limits to international expansion
US average debit card interchange fee in 2019

Interchange take rate estimates
0.94%

Covered transactions: purchase transactions covered by interchange fee standard
Exempt Transactions: purchase transactions exempt from the interchange fee standard

Single -message interchange fee average

0.64%
0.69%

0.24%

0.19%
0.03%

Dual-message interchange fee average

0.54%

Square
rre

Marqeta
Marq
rrq eta

Sutton
Sutto
tto n Bank

1.41%

Source: Federal Reserve Regulation II (Debit Card Interchange Fees and Routing)

Source: Federal Reserve Regulation II (Debit Card Interchange Fees and Routing); Marqeta S1
(1) Square used as a figurative example
(2) Square estimated based on exempt transactions dual-message interchange fee less fees
incurred by Card Networks, Marqeta, and Issuing Bank
(3) Card Networks, Marqeta, and Issuing Bank fees estimated based on net revenue from
Interchange and Processing fees and Costs of Revenue from Card Network and Issuing Bank

Durbin Amendment to the Dodd-Frank Act provides that Interchange Fees
that an issuing Bank or Card Network receives for debit transactions are
regulated by the Federal Reserve. Marqeta only contract with Issuing Banks
(Sutton Bank), who are exempt from the Durbin Amendment, to access
higher interchange rates

Schulte Research

Card
Network
rrd Net
t wor

Interchange caps in Europe on credit (0.3%) and debit (0.2%)1, potentially

Federal Reserve proposing changes to Regulation II2 that would require
merchants have a choice in how online transactions are routed. Potentially
reduce interchange fee as merchants would be able to route their
transactions across Visa, Mastercard or smaller debit networks with lower
fees
Sources: Marqeta, Federal Reserve, Credit Suisse
(1) Interchange Fee Regulation 2015 and 2016
(2) May 7 2021: Federal Reserve Board invites public comment on proposed changes to Regulation II regarding network availability for card-not-present debit card transactions

113

73

M O N E Y M E TAV E R S E

SoFi

Schulte Research

Case Study

114

Case study 13 – SoFi

Company Overview
Strong tailwinds with Galileo and conditional approval on Bank charter
Business model

Go-to-market strategy

Business lines: Borrow, Invest, Spend, Protect, and Business

Targets Highly Educated Not Rich Yet (HENRY) consumers notably student
debt lending and refinancing

Heavily relies on technology base for Lending to develop new products and
services

Focus shifting to High Earners Not Well Served (HENWS) consumers
Galileo provides API and payments platform powering the infrastructure of
SoFi and white label for card issuing and digital banking (e.g., Chime,
Monzo, Robinhood, Wise)

Cross-selling by offering diverse product portfolio at a one-stop-shop
Q1 2021 revenue of US$220.6 m (up 159.9% YoY) from Lending (76.2%
growing 105.5% YoY), Tech platform Galileo (20.9% up 46.2x YoY), and
Financial Services (2.9% up 200.0% YoY)

Capture share from traditional financial institutions

Limitations

Schulte Research

Goals
Widening comprehensive suite of products aiming to gain further market
share from single point solution providers

Risk of being overtaken by more agile competitors on innovation, brand
awareness, etc. (e.g., well-funded legacy banks, digital banks)

Aim to own entire technology stack by benefitting from developing inhouse to reach scalability, capitalising on the acquisition of Galileo

Unprofitable business with US($44.6) m in Adjusted EBITDA, expecting to
reach Adj. EBITDA profitability in 2021E of US$27 m

Preliminary approval for national bank charter (Q4 2020), plans to acquire
community bank to accelerate process

Lack of bank charter impacting access to lower cost of capital and
increasing lending capabilities

Fragmented nature of financial products and services landscape in the US
present opportunity for consolidation, with significant economies of scale
potential

Management projects cumulative incremental EBITDA gain from
bank charter of US$1,005 m until 2025E)

Sources: SoFi, Forbes, Seeking Alpha, Credit Suisse

115

74

Paul Schulte

Funding since inception
SoftBank-backed prominent one-stop shop in the US
Amount raised, lead investors, and post-money valuation
SPAC: raised US$2.4 bn at a US$8.7 bn valuation, including US$1,225 m from PIPE and US$370 m from T. Rowe
Softbank, SilverLake, and Qatar Investment Authority as Lead investors
Post-money valuation

Amount raised

$2m

$77m

$30m

$80m

$200m

$1,000m

$150m

$500m

$500m

$2,400m

8-Sep-11

11-Sep-12

2-Oct-13

3-Apr-14

3-Feb-15

19-Aug-15

27-Oct-15

24-Feb-17

29-May-19

1-Jun-21
$8,650m

Schulte Research

$4,800m

$4,300m

$4,000m
$3,065m

$7m

$195m

$87m

$413m

Series A

Series B

Series C

Series C-II

$1,300m
Series D

Series E

Series E-II

Series F

Series G

SPAC (completed)

Sources: CB Insights, Crunchbase Pro

116

One-stop shop for financial services
SoFi diversification to full play financial services
Student Loan Refinancing

Borrow

Private Student Loans
Personal Loans
Home Loans
Active Investing

Invest

Automated Investing
Retirement Accounts
Crypto
Home/Auto Insurance

Protect

Life Insurance
Real Estate Planning

Business

SoFi at Work

Schulte Research

Small Business Financing

Spend

SoFi Credit Card
Bank accounts

Sources: SoFi, Forbes, Seeking Alpha, Credit Suisse

117

75

M O N E Y M E TAV E R S E

Robinhood

Schulte Research

Case Study

118

Case study 14 – Robinhood

Company Overview
Pioneered commission-free trading with an intuitive UI but oversimplified functionalities
Business model

Go-to-market strategy
Pioneered commission-free trading by profiting from PFOF practices

Simple and easy-to-use mobile app and online brokerage, keeping
information streamlined

No minimum account requirements, targeting lower-income first-time
investor

Small margins on individual trades at scale by attracting large number of
users

c.80% of customers acquired through Referrals or organic growth

Transaction-based revenue (c.80.5% in Q1 2021) from routing user orders for
options, equities, and cryptocurrencies

Attracts users using incentives and retains them with behavioral triggers

Investing solutions for stocks, ETFs, and options with valuto market makerseadded functionalities (e.g., recurring investments, fractional shares, IPO
Access)

Goals

Limitations
Oversimplified UI, limited investing solutions offerings (e.g., no futures, fixed
income) and rudimentary charting

Cash management with Debit card and deposits earning interest
Micro-investing services, reinvesting spare changes (similar to Acorns)

Operating risks (e.g., service outage), liquidity issues (e.g., increase deposits
requirements imposed on RHS by NSCC)

Schulte Research

Diversify revenue, as Robinhood relies on PFOF to a higher extent than
competitors

Weakness in equity markets such as slowdown cause reduction in trading
volume

IPO Access for retail investors, by buying shares as an institutional investor
and reselling to Robinhood users

Regulatory risks looming over PFOF practices, representing c.80.5% of
revenue in Q1 2021

Heavy investments in compliance and risk management to avoid future
backlash from outages or trading suspension
Sources: Robinhood public filings, Financial Times, Investopedia, CB Insights

119

Funding since inception
US$3.4 bn raised to meet clearinghouse minimum requirements in Q1 2021 (Trading restrictions)
Amount raised, lead investors, and post-money valuation
Robinhood failed to meet clearinghouse requirements in Early 2021, forcing US$3.4 bn raise in Convertible Note. Customers prevented from purchasing specified securities
US$1.5 bn fair value adjustment to convertible notes and warrant liability in Q1 2021, resulting in a US$1.44 bn loss compared to US$52.50 m loss in Q1 2020
Post-money valuation

Amount raised

$13m

$50m

$110m

$363m

$373m

$320m

$460m

$3,400m

23-Sep-14

7-May-15

26-Apr-17

10-May-18

29-Oct-19

1-Jun-20

23-Sep-20

1-Feb-21

$11,700m

$8,600m
$7,600m

Schulte Research

$5,600m

$77m

$242m

$1,300m

Series A

Series B

Series C

0
Series D

Series E

Series F

Series G

Convertible Note

Sources: CB Insights, Crunchbase Pro, Robinhood public filings

120

76

Paul Schulte

Competitive landscape
Robinhood pioneered commission-

Millenials

Disrupted brokerage fees by introducing commissions-free trading

Number of accounts in k

Forced competitors (e.g., Charles Schwab, E*Trade, TD Ameritrade) to levy
fees on equities trading, options, and ETFs

Average account value in US$ k1
# Accounts

Ave rage Account Value
$232.0 k

Robinhood relies on PFOF (c.80.5% of net revenues in Q1 2021) to a higher
extent than competitors however

$113.0 k

22.5 m

$4.4 k

Robinhood

11.5 m

$106.7 k
31.9 m

7.5 m

TD Ameritrade

E*Trade

Charles Sc hwab

Payments For Order Flow by Average Account Value

Schulte Research

$74,444

Indirectly competes (different customers targeted)

Indirectly competes (full-suite financial products and services)

Robinhood

$3,806

$1,307

$337

TD Ameritrade

E*Trade

Charles Sc hwab

Examples other Fintechs (micro-investing, automated investing, fractional shares
trading, online banking facilities)

Sources: Robinhood public filings, Alphacution, Brokerage-review, Businessofapps, Wall Street Journal
(1) Estimated via Robinhood and Schwab public filings, Businessofapps and Brokerage-review data

121

Robinhood platform vs. US-based competitors
Pioneered free trading fees; low margin rates; investment options lacking in Futures, Forex, Bonds, and Mutual Funds
Trading fees
Minimum deposit

$0.00

Stock/ETF Trade fee

$0.00

Mutual Fund Fee
Options (per contract)

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$49.99

$0.00

$19.99

$0.00

$49.95

$0.00

$49.95

$0.65

$0.65

$0.65

$0.65

$0.00

$14.95
$0.65

$14.95
$0.65

Futures (per contract)

$2.25

$1.50

$1.50

Broker Assisted Trades Fee

$44.99

$25.00

$25.00

$32.95

$0.00

$0.00

$1.50

$0.85

$50.00

$30.00

Margin Rates
Under US$25 k

2.50%

US$25 – 50 k

2.50%

9.50%
9.00%

8.95%

8.33%

8.45%

8.33%

7.83%

7.83%

6.99%
6.49%

9.50%
9.50%

1.59%
1.59%

US$ 50 – 100 k

2.50%

8.00%

7.95%

6.88%

6.88%

6.49%

8.75%

1.59%

US$100 – 250 k

2.50%

7.75%

7.45%

6.83%

6.83%

5.99%

8.75%

1.29%

US$ 250 – 500 k

2.50%

7.50%

6.95%

6.58%

6.58%

5.49%

8.75%

1.19%

US$500 – 1 m
Above US$1 m

2.50%
2.50%

N/A
N/A

6.45%
5.45%

5.08%
4.70%

4.25%
4.00%

4.99%
4.99%

5.50%
5.50%

1.14%
0.75%

4357

11080

Investment Options
Stock Trading
Fractional Shares
OTCBB
Options Trading

Schulte Research

Futures Trading
Forex Trading
Crypto Trading
Mutual Funds (Total)

12330

9087

9860

9842

Bonds (US/Corporate/Municipal)
Advisor Services
International Trading
Sources: Stockbrokers.com

122

Robinhood platform vs. US-based competitors
Basic order types fit for retail investors; customer service; and charting features oversimplified
Order Types
Market
Limit
Stop
Trailing Stop
Contingent
MultiContingent
OCO
OTO
OTOCO
Customer Service
Phone Support

(Limited)

Email Support
Live Chat
24/7 Support
Charting Features
Trade Off
Indicators / Studies

5

489

119

41

129

44

290

121

Drawing Tools
Historical Trades

0

22

31

15

22

14

23

9

Schulte Research

Corporate Events
Automated Analysis
Save Profiles
Technical Analysis

Sources: Stockbrokers.com

123

77

M O N E Y M E TAV E R S E

Robinhood platform vs. US-based competitors
Oversimplified interface neglecting day trading and options trading functionalities
Day Trading
Basic Stock Alerts
Advanced Stock Alerts
Direct Market Routing Stock
Direct Market Routing Options
Ladder Trading
Level 2 Quotes – Stocks
Level 2 Quotes – Options
Short Locator
Order Liquidity Rebates
Options Trading
Option Chains – Quick Analysis
Option Analysis – P&L Charts
Option Probability Analysis
Option Positions – Greeks
Option Positions – Adv. Analysis
Option Positions – Rolling

Schulte Research

Option Positions – Grouping

Sources: Stockbrokers.com

124

PFOF by Wholesale Market Maker
Citadel and Susquehanna dominating PFOF order routing with c.43% and c.21% market share respectively in Q1 2021
Quarterly PFOF by Market Makers

Quarterly PFOF by Market Makers

Data in percentage of total PFOF
2%
1%
4%
10%
9%
11%

24%

3%
2%
3%
7%
7%
13%

24%

Data in US$ m
2%
3%

2%
2%
5%
3%

5%
3%

5%

8%

7%

4%
3%

7%

9%

12%

10%

25%

25%

2%
2%
4%

11%

3%
4%

$3,000 m
Others

$2.7 bn

Citigroup

$56 m
$62 m
$118 m
$130 m

$2,500 m

Jane Street Group
11%

$200 m

UBS Securities

$2,000 m

$301 m

Two Sigma Securities
24%

21%
$1,500 m

Das h Financ ial

$651 m

Morgan Stanley & Co.

$1.1 bn
$1,000 m

Schulte Research

Wolverine Se curities

38%

40%

42%

45%

42%

43%

Virtu Americas
$500 m

Susquehanna International
Group

$44 m
$99 m

Citadel Securitie s

Q1 2020

Q2 2020

Q3 2020

Q4 2020

FY2020

$412.9 m

$0 m

Q1 2021

$155 m
Q1 2020

$724.8 m

$730.0 m

$49 m
$91 m

$56 m
$88 m

$173 m

$182 m

$799.5 m
$57 m
$78 m
$197 m

$293 m

$309 m

$356 m

Q2 2020

Q3 2020

Q4 2020

$95 m
$117 m
$1,113 m

$234 m

FY2020

Q1 2021

$473 m

Sources: SEC 605/606 disclosures, Alphacution

125

78

Paul Schulte

Wise

Schulte Research

Case Study

126

Case study 15 – Wise

Company Overview
Disrupted fees for cross-border remittances, entering SMEs cross-border payments space
Business model

Go-to-market strategy

Network of local payment systems designed to replace intermediaries by
providing end-to-end solution for remittances and cross-border payments

Expansions and integrations by partnering with local financial institutions to
access domestic payment rails

Wise Business targeted at SMEs to provide cross-border payments (including
batch processing)

Built on single API to enhance efficiency, accessibility, and go-to-market
speed

Core engine advanced payments tech, including payments systems
integrations, global real-time treasury management system, smart multicurrency ledge, automated KYC and AML

Open API platform integration for Neobanks/Fintechs/traditional financial
institutions accessing Wise entire infrastructure

Revenue in Q1 2021 +43% YoY at £123.5 m, processing £16.4 bn (+54% YoY),
average take rate down 6bps at 0.75%

Goals

Limitations

Schulte Research

End-to-end solution for cross-border remittances and payments for both
retail and businesses

Comply with complex domestic regulations, including licensing coverage to
support further foreign exchange routes

Improve SMEs cross-border payments with batch payments, accounting
integration, payroll, etc.

Goal to reduce fees over time requires increasing scalability or
diversification of revenue streams in value-added services

Deepen connection by seeking own regulatory licenses

Limited presence of Wise Business compared to competitors for SMEs
especially

Directly integrate with local payment systems to reduce fees

Well-funded traditional competitors (e.g., Western Union) transitioning
heavily into digital remittances and SMEs financing

Global multi-currency bank accounts in partnership with Visa and
Mastercard for card issuance and local financial institutions
Sources:
(1) Footnote 1
(2) Footnote 2
(3) Footnote 3

127

Funding since inception
Backed by Andreessen Horowitz, Baillie Gifford, Jupiter, and IVP
Amount raised, lead investors, and post-money valuation
Direct listing: US$11 bn valuation, providing liquidity for existing shareholders

Post-money valuation

Amount raised

$1m

$6m

$25m

$58m

$26m

$280m

$292m

$319m

18-Apr-12

14-May-13

10-Jun-14

26-Jan-15

25-May-16

2-Nov-17

22-May-19

14-Jul-20

7-Jul-21
$11,000m

Schulte Research

$5,000m
$3,500m

$5m

$23m

$240m

$1,008m

$1,100m

Seed VC

Series A

Series B

Series C

Series D

$1,600m
Series E

Secondary Market

Secondary Market – II

IPO – Closing

Sources: CB Insights, Crunchbase Pro

128

79

M O N E Y M E TAV E R S E
Wise infrastructure replacing correspondent
banking system
P2P cross-border money transfer and FX, expanding into B2B2X for SMEs
Thai correspondent

US correspondent
d

Asia correspondent

Wise Thai bank

Schulte Research

Wise
i US ba
bank

eliminates intermediaries and manual processes for better
costs savings, transparency, and fewer delays
Sources: Wise public filings

129

Wise Transfer and Wise Multi-currency account
Core P2P transfers generating US$ 473.8m in revenue in FY2021, 35.6% growth YoY
Wise Transfer

Wise multi-currency account

Send money to 80+ countries, covering 85%

Holds 56 currencies

Wise Transfers uses local pools of liquidity to eliminate payment processing
inefficiencies

Debit card conversion fees at mid-market + conversion fee between 24bps
and 369bps similar to Wise Transfer

Accounts hold currency around the world from local payments received
from customers

Automatically spends in the currency with best conversion rate
License to carry out regulated investment activities granted in Q1 2020:
opportunity invest currency balances in funds protected up to £85,000

In-house treasury function to purchase currency in the open markets
Customers know exact amount charged before transaction initiated

Schulte Research

Pay in

C
Conversion

Pay-out

Payment order: amount, source, target currency
Fund transfer to local Wise bank
Bank transfers, card payment, or open banking

KYC, fraud, AML, due diligence checks
Conversion into target currency
Guaranteed mid-market rate

Pay out from Wise local bank
Timing depends on factors (e.g., currency, liquidity)
83% in 24 hours; 62% in 1 hour; and 38% instantly

Sources: Wise public filings
ngs

130

80

Paul Schulte

Core Service: Wise Transfer in c.80+ countries
One way send money to
Two ways send money to and from

Schulte Research

Wise Debit card available

Sources: Wise public filings

131

Wise Business and Wise Platform
B2B segment generating US$ 110.6m in revenue in FY2021, +56.6% growth YoY
Wise Business

Wise Platform

Tailored to freelancers, entrepreneurs, and SMEs
Money transfer
50+ currency balances
Debit card
Local account details
Direct debits
Business onboarding
Business verification
Batch payments
Multi-users access with roles & permissioning
Accounting syncs & reporting

Open API

Allows banks and enterprise partners to
into their own applications or online banking

!

!

Allows distribution partners (e.g., core banking software and technology
services providers) to enhance product offerings by pre-integrating Wise

!

!

Partners can cut operational costs and
compliance infrastructure

!
!
!

!
!

!

!

!
!
!

Integrations are free for clients and built on Open API

!

Wise Platform integrated with 14 banks in 11 countries across 4 continents



Invoicing, Payment automation, and Accounting integration with Xero,
QuickBooks, and FreeAgent

Schulte Research

Wise Business Debit Card handled in c.70 countries
Batch payments of up to 1,000 payments at a time
Multi-users accounts and real-time notifications
SME market dwarfs the consumer market, but human intervention implies
lower growth rates
Sources: Wise public filings

132

81

M O N E Y M E TAV E R S E

Flywire

Schulte Research

Case Study

133

Case study 16 – Flywire

Company Overview
More of a billing company than payments
Business model

success based on global network
Go-to-market strategy

Global payments platform facilitating payments flows across multiple
currencies, payment types, and payment options

Operates in c.240 countries & territories and c.130 currencies
Key verticals: Education (c.1.9k institutions), Healthcare (c.80 systems),
Travel, and B2B industries (c.200 clients)

Full-suite of solutions, including tailored invoicing, settlement and
reconciliation tools, single sign-on and checkout, recurring payments, and
split payouts

Sales channel: integrates into (i) existing A/R workflows and (ii) ERP systems

Global payments network to accept and settle payments, directly
integrated with alternative payment methods (e.g., Alipay, PayPal, Trustly)

Targets sectors lagging in technology solutions to facilitate complex
payments systems

Software package tailored for vertical-specific use cases

Development global network of bank, payment, and technology partners

Goals

Limitations
Exposed to fluctuations in foreign currency exchange rates

Leverage deep data and analytics to provide innovative solutions to
lagging sectors

Fragmented and increasingly populated competitive landscape
Global data privacy, regulations, and compliance risks

Schulte Research

Expand and develop new verticals, including relatively new B2B vertical

Unprofitable company, with
saturated Education vertical

Continuous investments in proprietary technology development in-house or
via M&A to stay competitive

Sources: Flywire public filings, Seeking Alpha

134

Funding since inception
High caliber of institutional investors pre-IPO, including Goldman Sachs, Marshall Wace, Bain Capital
Amount raised, lead investors, and post-money valuation
IPO: raised US$250.6 m at a US$2.4 bn valuation
BainCapital, Goldman Sachs, and Marshall Wace as Lead investors
Post-money valuation

Amount raised

!”#

$8m

$13m

$22m

$100m

$120m

$251m

22-Oct-10

16-Aug-11

30-Dec-13

13-Jan-15

26-Jul-18

13-Feb-20

26-May-21

Schulte Research

$2,395m

$1,000m

$10m

$39m

$40m

$100m

Seed VC

Series A

Series B

Series C

$453m
Series D

Series E

IPO

Sources: CB Insights, Crunchbase Pro

135

82

Paul Schulte

Technology Platform
Cloud-native infrastructure to provide seamless integration via open API or tailored-specific solutions for key verticals
Build your own

Education

Healthcare

Travel

B2B payments

Education SaaS

Healthcare SaaS

Travel SaaS

B2B SaaS

Application

Application

Application

Application

Data

Data

Data

Data

Schulte Research

Public API

Platform as a Service (PaaS)
Runtime

Operating Systems

Servers

Storage

Transaction
monitoring

Payment network

Sources: Flywire public filings

136

Payment Partners & Clients across Flywire key verticals
Payment Partners

Education Vertical

Healthcare Vertical

Travel Vertical

Admissions
Ad
i i
& Enrollment
E
ll
tM
Managementt

Software Services

ERP

Schulte Research

Industry Associations

B2B Vertical
Agent Associations

Sources: Flywire public filings
137

83

137

M O N E Y M E TAV E R S E

Schulte Research

Section 3: China corporate

138

Tencent

Schulte Research

Case Study

139

Case study 17 – Tencent

Company Overview
Value-added propositions in B2B and B2C in Fintech
Business model

Go-to-market strategy

Key verticals: Gaming (#1 Global game operator by revenue on mobile
and PC), Fintech & Business, and Social Media (QQ, WeChat)

Minimize expenses across value chain through automation and low-price
value-added proposition

Most popular instant messaging platforms (QQ), and social mobile app
(WeChat). Revenue from digital advertising, digital content subscriptions,
and membership privileges

Value-added proposition:
Mobile payments for end-users with WePay
B2B-focused in online advertising and financial services

Tencent Games with internal development studios, investments in external
companies globally, and partnerships

B2C-focused in financial services, games, and social networks

Fintech (B2B and B2C): payments, wealth management, lending, insurance

Increased focus in Fintech services, greater transaction costs as TPV grows
Increased spending on Cloud Services business to enlarge scale

Limitations

Goals
BNPL access with Fenfu and repayment through WeChat

Anti-trust investigations due to Tencent potential position as a monopoly
(e.g., Tencent only offering their own payments systems instead of
competitors such as Alipay)

Schulte Research

Dive deeper into financial products for SMEs (c.90% businesses in China),
especially lending capabilities and supply chain financing with Linklogis
(c.15% equity stake post-IPO)

Chinese regulations on Big Tech

WeBank expanded credit to SMEs, leveraging massive user bases to bring
financial institutions on board

Tencent finance-related businesses ordered to restructure as a new
Financial Holding Company

Flywheel effect by leveraging existing payment app to encourage existing
customer base across all verticals

Sources: Tencent public filings, PBOC

140

84

Paul Schulte

Diversified revenue streams
Fintech and Business Services growing at a fast pace, benefitting from flywheel effects of other key verticals
Revenue from Business Segment1
Data in

bn

Segment

2%

5-year CAGR 33%

1%

Fintech and Business services

28%

27%

Transaction-based revenue

Enterprise and consumers
E

Payments, Wealth management, Fintech services
Cloud and other enterprise services

2%
2%

27%

Online advertising

17%

17%

Traffic-based revenue

Enterprise
E

Social: WePay, QQ, app store, browser, etc.
Media: news, video and music, etc.

23%
18%

18%
19%

Schulte Research

17%
11%
18%

41%

33%

47%
24%
2016

VAS: Games

32%

32%

23%

22%

2020

LTM 2021

Fee-based revenue

30%

24%

23%

23%

2017

2018

2019

VAS: Social networks
Fee-based revenue

Consumers
C

Mobile games
PC games
Console games

Consumers
C

Digital content subscriptions
Membership privileges
Virtual item sales

Sources: Tencent public filings
(1) Others include Fintech and Business services for FY2016 and FY2017

141

Fintech and Business services verticals
WeChat Pay and Alipay dominating micro-payments in China
Payment Solutions

Other Fintech services

LiCaiTong

Wealth management services including compliant and inclusive
financial products

Insurance services

c.1 bn average daily commercial payment transactions since Q4 2019

WeSure

Take rate from merchants for commercial transactions

Small-sized and maturity consumer loans

Social and other transactions including red packets, bill sharing, and utility
payment

WeiLiDai

Cloud Services

Distribution fees from WeBank with no credit risk or BS exposure

Other Business services
Tailored smart industry solutions to transform businesses to digital across all
major verticals

Schulte Research

Tencent Cloud

WeCom

Tencent Meeting

IaaS, PaaS, SaaS, and technology solutions for enterprises

Smart Retail

Smart Healthcare

Smart Transportation

Smart Education

IaaS: Star Lake server and T-block technology enhance service
PaaS: Security and real-time communication PaaS
SaaS: Tencent Meeting, WeCom, Tencent Docs for digitalisation
Sources: Tencent public filings

142

85

M O N E Y M E TAV E R S E

Tencent Cloud & Fintech sub-verticals
Investments in Blockchain, Cloud infrastructure, and AI paying off across Fintech sub-verticals
Technological capabilities

Fintech sub-verticals

Connecting industries, consumers, and business partners
Smart industry solutions leveraging Tencent Cloud infrastructure, proprietary technologies to assist
businesses achieve digital transformation

Leverages blockchain, AI, big data, cloud
computing, and edge computing capabilities to
power proprietary technologies across all Fintech
sub-verticals
Payments: Weixin Pay, QQ wallet, Transit QR
code

Smart Solutions
Retail

Software and
Services

Healthcare

WeCom

Meeting

Education

Docs

Transportation

Weixin

Weixin Pay

Wealth Management: LiCaiTong offers
financial products (e.g., money market fund,
investment-linked products, overseas
investment funds)

Finance

Trading platforms: Tencent Portfolio provide
users real-time market information

Security

Tax refund: WeTax Refund
B2B Payments: Business Tenpay offers secure,
compliant, and flexible corporate account
management system for eCommerce
platforms

Technologies

Schulte Research

Security

Autonomous driving YouTu AI Lab

AI Lab

Big Data

Location services

Range products & services (>300) on top of computing and storage
Infrastructure in 27 regions and 62 availability zones as of Q1 2021
c.1m+ paying customers since Q4 2019

Infrastructure
Sources: Tencent p
public
blic filings

143

AI, Machine learning, Big data, Blockchain
AI operating across all Tencent current and future verticals, continuously innovating (e.g., Big Data Tiangong)
AI & Machine learning

Big data and Blockchain

Artificial Intelligence Labs in 2016

Tencent blockchain applied to e-receipt, supply chain finance (equity stake
in Linklogis), judicial evidence management, etc.

Deep focus on machine learning, speech recognition, natural language
processing, and computer vision

Big data to target right audience accurately:

Ambition to help China become a leader in personalized medicine using AI

Integrate intelligent data management platform combining internal
and external data

Aim to integrate medical institutions with WeChat:

Provide advertisers with diversified, open, and safe communication
service platform

Book appointments online
Accept payments
Train AI algorithms with consumer data from these services
Partnership with Babylon Health, consumers access virtual
healthcare assistant

Platform launched in April 2021

Mying healthcare platform launched in 2017 to help diagnose cancer,
analyse, and manage healthcare records

Self-developed 4th generation fusion computing platform
Big data and AI basic operators, unifying metadata for execution
optimization, batch unification, stream, and graph computing

Schulte Research

Global investments on AI equity deals, notably in the US

Unify computing and compiling engine
trillions of data analysis

Sources: Tencent public filings, INF, Pandadaily, Bernard Marr & Co.

144

86

Paul Schulte

Ant Group

Schulte Research

Case Study

145

Case study 18 – Ant Group

Company Overview
-payment for SMEs and consumers
Business model
consumers and merchants

Go-to-market strategy
Drive user engagement and expand user base through Alipay to propel
flywheel effect across Food and Beverage, Mobility, Entertainment, and
Healthcare & Municipal verticals

delivering micro-payments between

Develop comprehensive digital payment, finance, and daily life services
beyond China

Build value and maintain open platform with partners (i.e., Financial
institutions, Merchants, Service providers)

Constant product innovation to anticipate consumer and business needs
and deliver differentiated products and services

Refocus on core business following regulatory backlash

Focus on SMEs financing and helping them grow their businesses on a
global scale

Goals

Limitations

Technology innovation, especially blockchain:

Regulatory backlash following IPO

Build and upgrade digital infrastructure for new services

Forced to share Credit Data with SOEs, as a joint-venture with state-owned
enterprises in Q3 2021

Schulte Research

Improve understanding of customers and enable partners

Establish Ant Group as Financial Holding company, separating Jiebei and
Huabei as separate consumer finance company

Expand applications of AntChain
Continue digitalization of assets on AntChain

SMEs and consumers

Enable circulation of digitalized assets on a wider scale

, focusing on micro-payment for

Hold increasing amount of capital to offer loans, with commercial banks
limited to hold no more than 70% of capital when providing loans

Expand cross-border payment and merchant services by serving more
users, enabling more merchants, and broaden service offerings

Sources: Ant public filings, Schulte Research

146

Ant Ecosystem

Schulte Research

Alibaba entity

Chinese equivalent

West equivalent

Sources: Alibaba public filings, Quartz, Schulte Research

147

87

M O N E Y M E TAV E R S E

Alibaba Ecosystem, directly or via investments

Schulte Research

Alibaba entity

Key vertical

West equivalent

Alibaba entity

Key vertical

West equivalent

Online payments

Mobile messaging

Cloud services

Car service, ride sharing

Mobile apps

C2C e-Commerce

Mobile OS

Online travel booking

Maps and navigation

B2C e-Commerce

Retail outlets

E-learning

Group buying

Microblogging

Cloud storage

Streaming video

Sources: Alibaba public filings, Quartz, Schulte Research

148

Business and size
Summary size and scope of Ant Group
1,000+ m

80+ m

Alipay app

Alipay app

Annual Active Users

Monthly Active Merchants

711 m

729 m

Alipay app

Alipay app

Monthly Active Users

Digital Finance Annual Active Users

2,000+

200+

Partner Financial Institutions

Alipay app
Countries and Regions with Online Payment Services

118 tn

1.7 / 0.4 tn

Schulte Research

Digital Payments

CreditTech

Total Payment Volume in Mainland China

Consumer / SME Credit Balance

4.1 tn

52 bn

InvestmentTech

InsurTech

Assets Under Management
Sources: Ant public filings

Insurance Premiums and Contributions

Data as of 30th June 2020

149

Ant Cloud

Fintech & Smart Banking

Fintech of Ant & core products

Smart banking

Ant Cloud 100% owned by Ant Financial

Smart Banking service provides:
Intelligent customer service
Marketing
Big data risk control
Product and channel operation
Improve user experience
Improve operational efficiency
Reduce operating costs

Ali Cloud 100% owned by Alibaba
Close relationship: Many Ant Cloud products can be found in Ali Cloud
For life cycle of application, fintech will focus on: Financial intelligence,
financial security, financial distributed architecture, mobile development,
blockchain and financial distributed database

Advantages

Several core products:

SOFAStack

Advanced Risk Control

Fi
Financial
i l distrib
distributed
t d architecture,
hit cture
t
providing
idi
p
project
j t managementt and
nd
monitoring allowing for remote disaster recovery and low cost expansion

Integrates
t
t iinternal
t
l and
nd external
t
l
data,
Builds unified financial-level
intelligent risk platform,

mPaaS

Schulte Research

Financial-grade mobile development
opment platf
platform providing cloud-to-endone-stop solution for App development, testing, operation & maintenance

Realizing comprehensive risk
management such as:
Marketing protection
Account protection
Transaction protection
Credit protection
Channel protection
Content protection

OceanBase
Financial-grade
i
i
distributed
is ri
relational
i
database developed by Ant
databa
Financial and Alibaba with online horizontal expansion capabilities

Sources: Ant public filings

Advanced Marketing
Build
il an online
li
and fflexible
i
marketing management platform
for financial institutions, including:
Customer insight
Event management
Channel push
Targeted delivery
Process automation
Marketing effect analysis
Marketing experiment
Event marketing
Creative center

Data as of 30th June 2020

150

88

Paul Schulte

Zhima Credit
Independent 3rd party credit agency under Ant Financial that uses cloud computing & machine learning
Credit Card

Renting

Consumer Finance

Travel

Schulte Research

Financial Leasing

Marriage

Hotel
Sources: Ant public filings

Classification

Data as of 30th June 2020

151

Schulte Research

Participate in all parts of life

Sources: Ant public filings

152

How to get a loan in 3 seconds

Schulte Research

Credit line approval, drawdown, and repayment process

Sources: Ant public filings. Schulte Research

153

89

M O N E Y M E TAV E R S E

SME Credit risk management

Schulte Research

Process for SME lending

Sources: Ant public filings. Schulte Research

154

Services for partner Asset managers & Insurers
Value-added services powering asset management and insurance partners
Infrastructure for asset management
Ant leverages customer insights and massive
user base to enable partner asset managers:
To distribute simple, low-investment threshold,
and easy-to-understand investment products
for customers

Partner Asset Managers

Product Design

Product
Screening

Partner Asset Managers
Customer
Acquisition /
Education

Investment
Advisory

Interactive
Communication

Product Delivery

Infrastructure for insurance
Ant leverages deep customer insights, risk
management solutions, and technology to
enable partner issuers to:

+ Partner Insurers

Schulte Research

1. Acquire customers at scale and at low cost

Partner Insurers

2. Co-innovate products
3. Improve underwriting capabilities through
enhanced customer selection and pricing

Customer
Education /
Acquisition

Product Design

Underwriting
(Customer
Selection)

Claim

Solvency
Requirement

Product Delivery

4. Improve claims management through service
automation and fraud detection systems
Sources: Ant public filings. Schulte Research

155

Global Partnership & Investments
Independent 3rd party credit agency under Ant Financial that uses cloud computing & machine learning
List of global partnerships & investments1
US

Delta Air Lines
EyeVerify
First Data
Marriott international
Stripe
Uber
United Airlines
V-Key
VeriFone Systems

UK & Ireland
InterContinental Hotels Group
Premier Tax Free

Schulte Research

Germany & France
Ingenico Group
PrestaShop
Worldline
Concardis
Wirecard
Singapore, India & Thailand
Alpha Payments Cloud
Grab
Resorts World Sentosa
Paytm
Ascend Money
Paysbuy
Sources: Ant public filings Data as of 30th June 2020
(1) Please note that words highlighted in blue indicate a partnership & words highlighted in orange indicate an investment

90

South Korea & Japan
Bankware Global
Orix

156

Paul Schulte

Schulte Research

Section 4: Acorns & Trustly

157

Acorns

Schulte Research

Case Study

158

Case study 19 – Acorns

Company Overview
Unsustainable fees for low-account investors; very attractive fees for high AUM at the expense of quality investment products
Business model

Go-to-market strategy

Micro-investing platform, investing spare change in a basic diversified
portfolio

Marketing efforts to reach
scalability rather than R&D to enhance product differentiation

Subscription-based pricing with three membership levels:

Famous brand ambassadors and celebrity investors (e.g., The Rock, Jennifer
Lopez)

1. Lite (US$1 per month): investment account in ETFs (individual stock
picking not supported)

Going public brings visibility, in line with current marketing efforts
Focuses heavily on millennial investors

2. Personal (US$3 per month): adds Retirement account and
Checking account

Continue M&A momentum to drive growth, following acquisition of Harvest
and Pillar recently

3. Family (US$5 per month): adds Investment account for kids

Goals

Limitations
Lack of product differentiation, competitors (e.g., SoFi) provide ecosystem of
financial services alongside robo-advisory, micro-investing services, access
to stocks trading

Investing, spending, and saving financial products and services

Schulte Research

Spare change and micro-investments in basic ETFs, customers select either
Core Portfolio (e.g., Core S&P, Vanguard 500, U.S. Bonds ETFs) or ESG
Portfolio with chosen level of risk

High fees for low account balance, not sustainable for targeted customer
base

Investment accounts for Retirement, Children

Attract and retain customers, especially to higher subscription tiers

Increase ARPU through additional products and services

Easy to replicate and integrate products and services for competitors

Create complete money management solution

Optimistic US$42 ARPU in 2023E projected by Management

Sources: Acorns public filings, TechCrunch, Investopedia

159

91

M O N E Y M E TAV E R S E

Funding since inception
Acorns SPAC pre-mature and would be sensible in 2022

2023

Amount raised, lead investors, and post-money valuation
In need of immediate financing to sustain negative operating cash flows in the future, SPAC proceeds fixes financing issues
High quality investors including Blackrock, Wellington Management, and PayPal
Post-money valuation

Amount raised

$3m

$16m

$23m

$67m

$50m

$105m

$623m

20-May-13

25-Sep-14

15-Apr-15

20-Jul-17

9-May-18

28-Jan-19

27-May-21

Schulte Research

$2,200m

$860m

$418m
$8m

$16m

$83m

$236m

Series A

Series B

Series C

Series D

Private Equity

Series E

SPAC (pending)

Sources: CB Insights, Crunchbase Pro

160

Competitive landscape
Competitors are better aligned on all fronts
Minimum Investment

from asset classes availability, to fees at different AUM

Fee Structure

Investment Funds

$1 – $3 – $5 monthly subscriptions

ETFs

$500

First $5,000 free, 0.25% AUM over

ETFs from stock, bond, real estate & natural
resources/energy asset classes

Low fee digital investment portfolio
Tax-loss harvesting, larger pool of ETFs

ETFs

Goal-based automated investment advisors
Tax-loss harvesting, access financial advisors, larger pool of
ETFs

6,000 stocks and ETFs
Schulte Research

Free robo-advisor, premium plan for sophisticated investors,
access to stocks and larger pool of ETFs

No minimum – $100 for Betterment
0.25% AUM up to $2 million
Premium

Schulte Research

Notes

$5

$100

$0 – $125 per year for M1 +

$500

0.24% AUM

ETFs, and other asset classes

$1

$0

ETFs, stocks

Large suite financial products
Individual stock picking with SoFi Invest, access to lending
products
Aimed for sophisticated investors, access to dedicated
financial advisor, analysis, recommendations, tax-loss
harvesting

Automated investment management, tax-loss harvesting,
slightly larger pool of asset classes

$100,000

0.79% at $100,000 to 0.49% at $10,000,000

Stocks, ETFs, Fixed income and Private Equity
for private/qualified investors

$3,000 Digital Advisor – $50,000
Personal Advisor

0.15% AUM Digital – 0.30% AUM Personal
Advisor

Digital: Vanguard ETFs; Personal Advisor: Stock Digital for low fee digital investment portfolio management
& bond mutual funds and ETFs
Premium for sophisticated investors

$5,000 for Schwab Intelligent $25,000 for Premium

$0 for Basic – $30 monthly for Premium

Stocks, bonds, real estate & precious metals
ETFs

$0

Free up to $10k – $3 per month up to $50k Mutual funds/ETFs
0.35% AUM over
-Advisor Pros, SoFi, Investopedia

Intelligent for low fee digital investment portfolio
management
Premium for sophisticated investors
Free for low-balance accounts, increases with AUM
Larger pool of ETFs/Mutual funds
161

92

161

Paul Schulte
Low-account balance AUM fees across
competitors
Acorns compared to similar robo-advisory1 fees breaks even for medium AUM ($4,800 for $1 Tier)
Management fees for robo-advisory services as percentage of Assets Under Management for low-balance accounts (US$500

5,000)

14.00%

12.00%
SoFi Investing and M1 Capital2 not represented:
0% fees for robo-advisory services
10.00%

8.00%

6.00%

4.00%

Acorns $1 drops below 0.25% AUM fee
Betterment, Wealthfront, Axos Invest offer ~0.25% fee

Schulte Research

2.00%

0.00%
$500

$1,000
Acorns $1

Acorns $3

$3,000
Acorns $5

-Advisor Pros, SoFi, Investopedia
(1) Robo-advisory services targeting same customer segments (i.e., beginner investors, millennials)
(2) M1 Capital Premium at $125 per year, designed for more sophisticated investors.

Wealthfront

Betterme nt

$5,000
Vanguard Digital Advisor

e.g., Betterment, Wealthfront, Axos Invest

162

162

High-account balance AUM fees across
competitors
Acorns1 subscription-fees model gains interest at medium-high AUM
Management fees for robo-advisory services as percentage of Assets Under Management for high-balance accounts (US$10,000

1,000,000)

1.40%

1.20%

SoFi Investing and M1 Capital2 not represented:
0% fees for robo-advisory services

1.00%

0.80%

0.60%

Acorns $3 drops below 0.25% AUM fee at $14,400
Acorns $5 drops below 0.25% AUM fee at $24,000

0.40%

Schulte Research

0.20%

0.00%
$10,000

$25,000

$50,000
Acorns $5

Wealthfront

$100,000
Betterme nt

Axos Inve st

-Advisor Pros, SoFi, Investopedia
(1) Acorns $1 not represented
(2) M1 Capital Premium at $125 per year, designed for more sophisticated investors.

$250,000
Vanguard Digital Advisor

$500,000

$1,000,000

Fidelity

163

93

163

M O N E Y M E TAV E R S E

Trustly

Schulte Research

Case Study

164

Case study 20 – Trustly

Company Overview
Leading A2A platform in the EU, expanding in the US
Business model

Go-to-market strategy

Leading digital account-to-account (A2A) payments platform in Europe

Key verticals: Gaming, Financial Services, e-Commerce, Travel

Bypasses traditional card-based payments value chain

Sales channel primarily indirect through collecting PSPs, technical PSPs,
Checkout Solutions, and Platform Providers

Offers merchants a more direct solution resulting in lower fees and reduced
transaction costs

Under PSD2, Trustly can now access current accounts directly and initiate
credit transfers more securely using open APIs provided by banks

Online banking payments leveraging Open Banking trend in Europe (PSD2)

EU-centred regulations has global reach, with US-based banks and Fintechs
forced to make changes to comply with EU laws

Instant payment facilitates open payments, embracing regulators that are
pushing for more competition creating a standardized market with low
barriers to entry

Limitations

Goals
End-to-end payments solution by offering a consumer-facing payment
method, enabling merchant acceptance and operating proprietary
payment network

Market-driven approach to Open Banking in the US, limiting international
expansion until all banks provide open APIs to leverage Trustly capabilities
Fragmented US market of c.11,000 financial institutions and US banks are not
required to make publicly available APIs

Schulte Research

Use cases in A2A, B2C, P2P, B2B, C2B, and B2C
Develop better digital services, increase customer personalization, and
reduce costs of customer acquisition

Slow modernization of IT systems internationally
Competes with screen scraping methods outside of the EU
Increasing direct competition in the EU (e.g., Klarna, iDeal), in the US (e.g.,
Plaid), and payments incumbents players (e.g., Visa acquisition of tink in Q2
2021)

Sources: Trustly public filings, TechCrunch, Financial Times, Pymnts, Credit Suisse, Worldpay, Aite Group & Juniper Research, Deloitte, Everyday Bank Research, Federal Reserve

165

Funding since inception
Amount raised, lead investors, and post-money valuation
Private Equity: Nordic Capital buyout c.70% in 2018, BlackRock and Investment Corporate of Dubai with minority investment in 2020
IPO:
Post-money valuation

Amount raised

$30m
24-Sep-11

4-Nov-14

14-Mar-18

10-Jun-20

$1,000m

Schulte Research

$865m

Seed

VC

PE Buyout c.70%

Minority

Sources: CB Insights, Crunchbase Pro

166

94

Chapter 3:
Insurtech and blockchain
Section 1: Isolated examples of sensible strategy in a sea of undercooked and immature businesses, exorbitant valuations, and zero blockchain technology.
On fundamentals, Amwell and Oscar seem to be doing the right thing at the right
time. Rapid buildout of sensible, comprehensive platforms. The rest are high-risk
strategies that are premature money pits with outsourced technology and are bogged
down in regulatory uncertainty.
Bright is a high-risk play but might eventually get it right. It has the potential to
gain traction in customer retention and drive revenue. Lemonade is awful from a fundamental and technical point of view. Ping An has been beaten to a pulp by regulatory
uncertainty inside China. This seems unjustified.
Global Summary:
Blockchain as the railroad, Big Data as the cars
Fixing transparency, traceability, AML, KYC for future advancements in data analytics (e.g., edge/quantum computing)

US key players

NFT
Intellectual property

Crypto

Fintech

Property
Money
Insurance
Art/Wine/Sports

NFTs

Gaming
Rewards and incentives

China key players

Insurtech

Proptech

Risks

Schulte Research

Monopoly behavior
Antitrust hindering
development

Railroads Required

Blockchain (e.g., BSN)
Central Bank Digital Currency

Incentives to develop
proprietary technology
Fragmented data
Public trust

Sources: Schulte Research

168

Figure 79
95

M O N E Y M E TAV E R S E

Section 2: Insurtech in a broader context and the thinking behind it. Insurtech is a
vital part of how fintech, crypto, and proptech create the NFT metaverse – Figure 79.
Business models: Insurtech or digital distribution channel?
5 key business models focused on injecting vitality into the insurance ecosystem
Direct Insurers

Insurance Management

Offer personalized, flexible,
and cost-efficient products
with lower coverage and
premiums

Tracking and administration
of all insurance policies and
contracts in one place

Tech utilization:

Marketplaces

Sales, Marketing &
Engagement
gag

P2P

Online platforms with
insurance products and
providers

Allows users to team up and
consolidate their premiums
together

Offer services to third
parties such as brokers and
insurers

Allows users to compare
prices and terms

Gives users hedge against
risk as well as derive
benefits regarding premium
proceeds

APIs or SaaS offerings to
improve the insurance
value chain

IoT
Big Data

Leads to fairer pricing and
better user experience

Schulte Research

Primarily digital distribution
channels

Sources: DashDevs

Introduction to Insurance

169

Figure 80

Insurtech is primarily creating a solution where there are already solutions. That’s
the problem. Innovative Insurtech is creating quasi-analog solutions for physical
problems using off-the-shelf primitive digital technology. Why isn’t Insurtech creating digital solutions for digital issues? Cyber security? Crypto security? NFT security?
Blockchain systems security? Government CBDC or ID systems security? See Figure
80 for the solutions. Pure Insurtech should live in the digital world of IoT and pure
digitized platforms. Only Ping An does this.
Goals & limitations: cheap, easy, now ideal plagued on
both ends of insurance value chain
Intend to solve pain points at both ends of the insurance value chain, but political risk at the crossroad of China & West
Goals

Key limitations

Insurtech intends to solve issues at both ends of the insurance value chain
through a Cheap, Easy, Now ideal:

Political risk, especially in China

Insurtech

Insurer pain points
Low user satisfaction
Fraud and fraud related losses
High enterprise integration costs
Poor profitability

High loss ratios
Customer pain points

Standardized business models

Cumbersome and inefficient
settlement process

Market saturation

Misleading sales as a result of
poor quality agents

Lack of proprietary technology

Difficult to understand product
terms

Late to blockchain party

Schulte Research

GOALS

One superapp

Personalized offerings

Scandals

Fraud prevention

Streamlined process

Misleading business models

Sources: Schulte Research

173

Figure 81
96

Paul Schulte

The rest are half in and half out. They are clearly not O2O. Figure 81 shows the
limitations of this business model. They are clinging to a physical/analog world of
powerful entrenched incumbents moving into the O2O world from the purely physical side. Insurtech startups will lose in this battle to monoliths that can adapt digitally.
Insurtech lacks blockchain strategies and proprietary technology readily available to
the incumbents. These Insurtech stocks also have high loss ratios while the incumbents have decades of retained capital to pour into new strategies.
Business models & customer segment: INSURTECH IS NO
DIFFERENT THAN THE BIG INSURANCE MONOLITHS
Global Insurtech showing primary focus on P&C business line & Personal customer segment
Global Insurtech focus by line of business, 2020
P&C

Health

Global Insurtech focus by customer segment, 2020

Life

Personal

16%

Corporate

SME

26%

47%

18%
66%

Schulte Research

27%

Sources: CB Insights, Dealroom, McKinsey Global Insurance Pools Insurtech Database

170

Figure 82

New technologies for the Insurtech startups should be innovative leapfrogging –
not half-baked off-the-shelf technology that quasi-competes with the big boys. Figure
82 proves the point – the lines of business and customer segmentation of Insurtech
are identical to a diversified traditional insurance company. Myriad digital insurance
opportunities are waiting. For instance, Envelop is an example of true Insurtech in
that it is a new digital reinsurance model for digital cybercrime. Can any of the leading Insurtech companies say the same thing? For instance, crypto will become mainstream (and CBDC with it) the minute there is a private sector solution with (likely)
state-subsidized insurance for it. This is the real opportunity here. Who among these
Insurtech firms is ready?
How Insurtech can command the purely digital world of wearables, smart homes,
and smart cities – rather than be a half-baked bridge between traditional insurance
products for physical activity – will be the key. The mystery of all this is why Apple
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M O N E Y M E TAV E R S E

and Google are so timid about Insurtech and wearables (are they afraid of regulators
and anti-monopoly reprisals?).
The Connected World IoT powering data capabilities
for insurance. BLOCKCHAIN is the perfect solution
Over 6x more devices than humans expected in 2025E, enabling faster & more efficient data capabilities for insurance
Networked devices

Global population

More devices than people since 2008

50 bn

Includes wearables, smart appliances and telematics
Helps insurers monitor driving habits, health, household issues, etc.
Ensures best risk assessment and pricing

25 bn

Schulte Research

13 bn
6 bn

7 bn

7 bn

2010

2015

8 bn

1 bn
2003
Sources: DashDevs

2025E

Introduction to Insurance

174

Figure 83

In any event, Figure 83 shows the coming explosion in connected devices and the
open field running, which a pure Insurtech play can command. Again, Envelop is one
of the only cases we see. Apple and Google are the others, but they are mysteriously
in radio silence at the moment.
Early-stage Robotic Process Automation (RPA)
Huge potential to disrupt the insurance industry

however, still an early-stage technology with lack of successful adoption

Insurance use cases of RPA:
Accelerate onboarding
Underwrite policy renewals

Business Impact

Autonomous RPA
Unassisted RPA
Early stage assisted RPA

Improve productivity
Partial automation
Difficult to scale

Schulte Research

Cognitive RPA with AI

Handle claims

High
Sources: Imaginea

End-to-end automation
Auto-scaling

End-to-end automation

Context aware

Easy to scale

Processing of
unstructured data
Predictive and
prescriptive analytics
Automation of tasks that
involve judgement

Advanced workflow
analystics

Work orchestration
Robot performance
analytics

Market Adoption

Low

Accenture

171

Figure 84

98

Paul Schulte

Figure 84 shows the potential for Insurtech. We are in a world of automation of activities, which is scalable and offers analytics. The next part of this is a
more ­complex world of auto-scaling, context awareness, and advanced workflow
analysis. The currently listed entities have mostly off-the-shelf technology with
primitive understanding. Again, this is likely due to the “strike while the iron’s
hot” IPO action rather than listing when the technology is ready. We will see in
the next section that much of the current wave of Insurtech lacks the very foundation of digitized insurance of “moving” people, places, things, and ideas —
blockchain identity. I worry that they have gone too far down the rabbit hole
of insurance-lite products with off-the-shelf technology rather than focusing
on the next chapter of insurance based on blockchain technology. This is how
blockchain will (or already has) created a new digitized world that is utterly
bereft of insurance products.
BOTTOM LINE: Blockchain confirms identity, so we need digital theft insurance (for cases like blackmail and kidnapping). It confirms trades, so we need
digital fraud insurance. It confirms property ownership, so we need digital property
insurance. It confirms intellectual property, so we need digital insurance remedies
for corporates, patents, trademarks & copyrights. It confirms smart contracts, so
we need insurance for digital breaches of smart contracts. And blockchain CBDC
will require a vast new market for digital insurance for sovereign CBDC distribution (counterfeit insurance), store of value (deposit insurance), means of exchange
(fraud and larceny). This is the real Insurtech that the world craves. It is nowhere in
the current crop of Insurtech. My real worry is that by the time this generation of
Insurtech makes the transition from a “half in and half out” approach involving offthe-shelf digital solutions to physical harms, they will have missed the boat when it
comes to the purely digital world of blockchain-based solutions. This is true terra
incognita where there are NO incumbents. Entities like Sygnum and Silvergate are
quickly filling this void.

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M O N E Y M E TAV E R S E

Section 3: China is miles ahead in blockchain but is struggling with the rights of
private companies versus the need for the state to protect consumer behavior traits,
digital currency, and health data. Who is responsible for this if something goes wrong,
and who will pay out claims?
Poor blockchain traction globally: A blind spot for the
West
Cybersecurity, big data & analytics identified as top priority investment, blockchain identified as low priority1
Deloitte global financial services survey 20201
Expect large increase in spend

Robotic process automation

7%

Bloc kchain

12%

AI

12%

Digital channels

12%

Data analytics

12%

27%

28%

Expect large decrease in spend

36%

14%

27%

42%

20%

29%

48%

19%

Blockchain
Negative
consensus

2%

16%

35%

40%

1%

25%

38%

37%

7%

25%

34%

34%

18%

Cybersecurity

Expect slight decrease

36%

17%

Cloud computing & storage

Expect no change

29%

13%

Data privacy

Schulte Research

Expect slight incre ase in spend

23%

2%

3%

2%

11%

14%

3%

Big Data
Positive
consensus

2%

Sources: Deloitte Center for Financial Services Global Outlook Survey 2020
(1) Survey predominately focused on western companies

172

Figure 85

Blockchain is a big blind spot in the West. Look at Figure 85. Lots of companies
will spend on cybersecurity, cloud, AI, and data analytics. Only 39% of firms said
they are increasing spending on blockchain, while 70% are increasing spending on cybersecurity. This makes no sense as blockchain offers so many solutions to paper-based
systems with unsecured Excel or disparate data systems sitting around.
Blockchain use cases in insurance
Digital ledger to streamline & increase transparency in the insurance process

US lag behind in blockchain utilization
On-demand insurance

Fraud detection

Record keeping functionalities for
quick on-demand services for policy
holders

Transactions are permanent and
timestamped
Prevents false claims

Structure data

Microinsurance

Collect more valuable data through
many connected devices
Manage data on a P2P basis
Store and process data

Parametric platform meaning fewer
local agents are needed

Reinsurance

Transparency & trust

Schulte Research

Protects insurers when a large
volume of claims are received

Customers understand what data
insurers have on them
Verify claims automatically through
third party personal devices

Blockchain in China: smart cities, autonomous cars, and drones are the next three to tackle when it comes to insurance
Internet of Things

Edge computing

Wearables

Blockchain

Sources: Mantra Labs

181

Figure 86
100

Paul Schulte

Figure 86 shows blockchain uses in insurance. Blockchain offers transparency, authenticity in storage, and security involving large volumes of claims or record-keeping. It bypasses human error as well as malicious human behavior. And it
is a two-way affair for customers to understand the data insurers have on them and
vice versa.

Figure 87

Figure 88

101

M O N E Y M E TAV E R S E

Figure 89

Figure 90

102

Paul Schulte

Figure 91

Figure 92

103

M O N E Y M E TAV E R S E

Drone powered solutions
Drone use gaining traction in the Insurtech industry, providing multiple cost saving & insurance process benefits
Present use of commercial drones

Drone use cases
Industrial inspec tion

Insuranc e

Agriculture

Risk engineering & pricing
Pre-loss

Real e state/Aerial photography
State & loc al government

Natural disaster monitoring
4%3%
17%

Inspection
48%

Risk assessment

Schulte Research

Post-loss

28%

Claims adjudication
Projected savings of c.US$ 7bn for the
insurance industry with principal application in
property insurance
Sources: FAA, Deloitte
De

Fraud prevention

Drone Use by Insurance Industry
r is Flying Higher
ry

1

Figure 93

Regulation framework
Global AI, Big Data & analytics regulatory crackdown
Regulatory tailwinds

Regulatory headwinds

China:

China:

Mass Entrepreneurship & Innovation Campaign: Initiative introduced by
Chinese government to incentivize entrepreneurs to drive technology
innovation

Online insurance: revised rules following concerns of improper collection,
usage and selling of user data without authorisation
Crackdown on Chinese companies listing in US, forcing them to list in HK

Insurtech was a key industry attracted to this

Antitrust: China getting serious as it ramps up efforts to crackdown on anticompetitive behaviour

Chinese government has played a critical role in supporting the integration
of tech and data analytics in the Chinese tech ecosystem:

US:

Mid 2018-2019 stimulus

Biden executive order on competition: expect increased merger scrutiny,
and increased focused on collection and use of sensitive personal
information

Accommodative monetary conditions targeted to private sector

NAIC in process of finalizing white paper on the role of chatbots and AI in
the distribution of insurance

Schulte Research

Supports a flurry of activity in the SME space, which will help mid-cap
Insurtech thrive with a plentiful availability of strategic partnerships

CASTF adopted white paper on regulatory review of predictive model
AUWG working on regulatory framework regarding use of external data and
analytics in accelerated life underwriting
Principles of AI
Fair & ethical, accountable, compliant
Transparent, secure, safe & robust

Sources: iResearch, insurancejournal, The White House

24

Figure 94

Figure 87 to Figure 94 offer a glimpse into the advanced nature of Insurtech.
China’s data growth is exploding Figure 89. Ping An as well as a few others have
access to a vast trove of blockchain-based data. This is part of the problems that the
West will surely face soon — the role of government when a few privately held companies know everything about everybody. As IoT and edge technology hook up with
wearables and are sorted via blockchain, truly powerful new industries will be born.
Blockchain-based genetics and smart car technology are coming soon. The next big
104

Paul Schulte

area for Insurtech will be what drones can and can’t do. This is where open field running can take place and where the multi-billion dollar companies will come from.
Lastly, in Figure 94, we lay out the regulatory framework for China and see how the
US will respond.

Section 4: Additional research in PowerPoint format.

Schulte Research

Chapter III: Insurtech and Blockchain

167

Global Summary:
Blockchain as the railroad, Big Data as the cars
Fixing transparency, traceability, AML, KYC for future advancements in data analytics (e.g., edge/quantum computing)

US key players

NFT
Intellectual property

Crypto

Fintech

Property
Money
Insurance
Art/Wine/Sports

NFTs

Gaming
Rewards and incentives

China key players

Insurtech

Proptech

Risks

Schulte Research

Monopoly behavior
Antitrust hindering
development

Railroads Required

Blockchain (e.g., BSN)
Central Bank Digital Currency

Incentives to develop
proprietary technology
Fragmented data
Public trust

Sources: Schulte Research

168

105

M O N E Y M E TAV E R S E
Business models & customer segment: INSURTECH IS NO
DIFFERENT THAN THE BIG INSURANCE MONOLITHS
Global Insurtech showing primary focus on P&C business line & Personal customer segment
Global Insurtech focus by line of business, 2020
P&C

Health

Global Insurtech focus by customer segment, 2020

Life

Personal

16%

Corporate

SME

26%

47%

18%
66%

Schulte Research

27%

Sources: CB Insights, Dealroom, McKinsey Global Insurance Pools Insurtech Database

170

Early-stage Robotic Process Automation (RPA)
Huge potential to disrupt the insurance industry

however, still an early-stage technology with lack of successful adoption

Insurance use cases of RPA:
Accelerate onboarding
Underwrite policy renewals

Cognitive RPA with AI

Business Impact

Handle claims
Autonomous RPA
Unassisted RPA
Early stage assisted RPA

Automation of tasks that
involve judgement

Context aware
Advanced workflow
analystics

Work orchestration
Robot performance
analytics

Difficult to scale

Schulte Research

Predictive and
prescriptive analytics

Auto-scaling

Easy to scale

Partial automation

Market Adoption

High
Sources: Imaginea

End-to-end automation

End-to-end automation

Improve productivity

Processing of
unstructured data

Low

Accenture

171

Poor blockchain traction globally: A blind spot for the
West
Cybersecurity, big data & analytics identified as top priority investment, blockchain identified as low priority1
Deloitte global financial services survey 20201
Expect large increase in spend

Robotic process automation

23%

Bloc kchain

12%

AI

12%

Digital channels

12%

Data analytics

12%

Data privacy

Schulte Research

7%

Cloud computing & storage

Cybersecurity

Expect slight incre ase in spend

Expect no change

Expect slight decrease

Expect large decrease in spend

29%

36%

27%

36%

28%

34%

34%

13%

17%

18%

14%

27%

42%

20%

29%

48%

19%

Blockchain
Negative
consensus

2%

16%

35%

40%

1%

25%

38%

37%

7%

25%

2%

3%

2%

11%

14%

3%

Big Data
Positive
consensus

2%

Sources: Deloitte Center for Financial Services Global Outlook Survey 2020
(1) Survey predominately focused on western companies

172

106

Paul Schulte
Goals & limitations: cheap, easy, now ideal plagued on
both ends of insurance value chain
Intend to solve pain points at both ends of the insurance value chain, but political risk at the crossroad of China & West
Goals

Key limitations

Insurtech intends to solve issues at both ends of the insurance value chain
through a Cheap, Easy, Now ideal:

Political risk, especially in China

Insurtech

High loss ratios
Standardized business models

Customer pain points

Insurer pain points
Low user satisfaction
Fraud and fraud related losses
High enterprise integration costs
Poor profitability

Cumbersome and inefficient
settlement process

Market saturation

Misleading sales as a result of
poor quality agents

Lack of proprietary technology

Difficult to understand product
terms

Late to blockchain party

Schulte Research

GOALS

One superapp

Personalized offerings

Scandals

Fraud prevention

Streamlined process

Misleading business models

Sources: Schulte Research

173

The Connected World IoT powering data capabilities
for insurance. BLOCKCHAIN is the perfect solution
Over 6x more devices than humans expected in 2025E, enabling faster & more efficient data capabilities for insurance
Networked devices

Global population

More devices than people since 2008

50 bn

Includes wearables, smart appliances and telematics
Helps insurers monitor driving habits, health, household issues, etc.
Ensures best risk assessment and pricing

25 bn

Schulte Research

13 bn
6 bn

7 bn

7 bn

2010

2015

8 bn

1 bn
2003
Sources: DashDevs

2025E

Introduction to Insurance

174

Development trend of Insurtech: THE FUTURE OF
INSURTECH POINTS DIRECTLY AT BLOCKCHAIN
Insurtech moving into the digital & intelligence age
Internet + Insurance

Digital + Insurance & Intelligence + Insurance

Gene Technology

Smart Driving Tech

Wearables
5G & IoT

Smart claims

Big Data, AI & Blockchain

Schulte Research

Mobile Internet

PCE Networks

Smart customer service

Automatic underwriting
2000

2016
NOW

Sources: iResearch Insurtech 2020 Report

175

107

M O N E Y M E TAV E R S E

Schulte Research

Section 1: China Blockchain it is already there with
edge computing, EV, drone, and smart cities

176

China far outpaces the US on blockchain capabilities
and applications
China investing huge resources into blockchain whilst the US is behind
Number of global blockchain patent applications, 20191

China insurance blockchain R&D investment projected growth
Data in US$ m

1,505

$93 bn

CAGR: 26%

Chinese companies issued
largest number of
blockchain patent
applications in 2019

$80 bn

$66 bn

$46 bn

724
561
402

Schulte Research

282

Alibaba/Alipay
baba/A
/ lip
/A

Te nc ent

Ping An

nChain

WeBank

2019

2020

2021E

2022E

Sources: iResearch Insurtech 2020 Report
(1) WeBank is founded by Tencent

177

China online insurance explosion
Insurtech influencing the Chinese online insurance market, supported by a rapid uptick in digitization and online payments
Chinese online insurance market concentration

Chinese online insurance market growth
Data in US$ bn

Consolidated

market dominated by small number of key players
CAGR: 41%

$440 bn

Schulte Research

China online insurance market
$79 bn

Fragmented

competitive market without dominated players
2019

Sources: Mordor Intelligence, Fitch Ratings
PitchBook

Digital Transformation of Chinese Insurers, Qichacha, Allianz

2024E

Is China Winning the Insurtech Race?, BCG FinTech Control Tower,

178

108

Paul Schulte

AI, ML, and Big Data to improve margins in insurance
Chinese data volume growth is an attractive opportunity for early-stage Insurtech companies
Chinese insurance AI investment projected growth

Chinese data volume growth

Data in US$ bn

Data in Zettabyte (ZB)
48.6

CAGR: 30%

$1,465 bn

CAGR: 29%
$1,093 bn
$839 bn

$663 bn

$535 bn

7.6

2018

2019

2020

2021E

2022E

2018

Global Insurtech technology utilization breakdown

20%

Big Data & AI
13%

Usage-based ins urance

19%

12%

IoT

Schulte Research

2025E

Where are global insurers focusing AI implementation?

10%

Gami-fication

43%

Product innovation

10%

Robo-advis ory

Process optimization

58%

Customer experience

4%

P2P
Bloc kchain

4%
3%

Micro-insurance

Sources: iResearch Insurtech 2020 Report

179

System model of an Insurtech blockchain
Blockchain framework enables multiple processes between different parties by starting, maintaining & executing policies
Client sends request to agent

Insurance company

Claim

Issue policy

Registration

Schulte Research

Agent submits request to blockchain network

Client’s request is completed
Sources: IEEE Xplore

example of an insurance based blockchain system

180

Blockchain use cases in insurance
Digital ledger to streamline & increase transparency in the insurance process

US lag behind in blockchain utilization
On-demand insurance

Fraud detection

Record keeping functionalities for
quick on-demand services for policy
holders

Transactions are permanent and
timestamped
Prevents false claims

Structure data

Microinsurance

Collect more valuable data through
many connected devices
Manage data on a P2P basis
Store and process data

Parametric platform meaning fewer
local agents are needed

Reinsurance

Transparency & trust

Schulte Research

Protects insurers when a large
volume of claims are received

Customers understand what data
insurers have on them
Verify claims automatically through
third party personal devices

Blockchain in China: smart cities, autonomous cars, and drones are the next three to tackle when it comes to insurance
Internet of Things

Edge computing

Wearables

Blockchain

Sources: Mantra Labs

181

109

M O N E Y M E TAV E R S E

Drone powered solutions
Drone use gaining traction in the Insurtech industry, providing multiple cost saving & insurance process benefits
Present use of commercial drones

Drone use cases
Industrial inspec tion

Insuranc e

Agriculture

Risk engineering & pricing
Pre-loss

Real e state/Aerial photography
State & loc al government

Natural disaster monitoring
4%3%
17%

Inspection
48%

Risk assessment

Schulte Research

Post-loss

28%

Claims adjudication
Projected savings of c.US$ 7bn for the
insurance industry with principal application in
property insurance
Sources: FAA, Deloitte
De

Fraud prevention

Drone Use by Insurance Industry
r is Flying Higher
ry

182

Regulation framework
Global AI, Big Data & analytics regulatory crackdown
Regulatory tailwinds

Regulatory headwinds

China:

China:

Mass Entrepreneurship & Innovation Campaign: Initiative introduced by
Chinese government to incentivize entrepreneurs to drive technology
innovation

Online insurance: revised rules following concerns of improper collection,
usage and selling of user data without authorisation
Crackdown on Chinese companies listing in US, forcing them to list in HK

Insurtech was a key industry attracted to this

Antitrust: China getting serious as it ramps up efforts to crackdown on anticompetitive behaviour

Chinese government has played a critical role in supporting the integration
of tech and data analytics in the Chinese tech ecosystem:

US:

Mid 2018-2019 stimulus

Biden executive order on competition: expect increased merger scrutiny,
and increased focused on collection and use of sensitive personal
information

Accommodative monetary conditions targeted to private sector

NAIC in process of finalizing white paper on the role of chatbots and AI in
the distribution of insurance

Schulte Research

Supports a flurry of activity in the SME space, which will help mid-cap
Insurtech thrive with a plentiful availability of strategic partnerships

CASTF adopted white paper on regulatory review of predictive model
AUWG working on regulatory framework regarding use of external data and
analytics in accelerated life underwriting
Principles of AI
Fair & ethical, accountable, compliant
Transparent, secure, safe & robust

Sources: iResearch, insurancejournal, The White House

183

110

Paul Schulte

Schulte Research

Section 2: US corporate

184

Metromile

Schulte Research

Case Study

185

Case study 21 – Metromile

111

M O N E Y M E TAV E R S E
Company overview: impressive telematics but zero
blockchain
Unproven business model with no future positive margins to back current trading multiples
Business model

Go-to-market strategy
Focused on building brand recognition in large US markets and penetrating
new markets in 2021

Pay-per-mile model composed of two key elements: Base rate and Per-mile
rate

Targets low-mileage drivers through a multitude of methods:

Initially determined using typical demographic factors (age, driving history,
credit, etc.)

Individualized plans

Base rate + (per-mile rate ! miles driven) = premiums paid by consumers

Higher savings

Additional services are offered through app

Unique value propositions such as parking ticket warnings

2019: Developed division offering cloud-based SaaS to legacy insurers

Leverage data to lower costs and increase efficiency on pricing

May 2021: changed reinsurance setup leading to a decrease in revenue

Goals

Limitations

One superapp: offer real-time digital pay-per-mile auto-insurance through
one mobile app

Market saturation: saturated auto pay-per-mile insurance market
No reinsurance coverage

Schulte Research

Fraud protection: reduce inefficiencies for customers in how they are
charged for car insurance

Tech transparency: UC Berkley researchers found OBD2 devices could be
used to hack car braking systems

Easy claims: improve digitization within the space to replace outdated and
slow auto-insurance claims process

Political risk: potential pushback from legislators on 24/7 real-time data
collection, analysis, and data privacy

Increase insurance coverage with independent agents via commissions
(lower margins for Metromile)

Blockchain: no evidence of blockchain utilization

Sources: Crunchbase, Metromile public filings

186

Funding since inception
Sufficient funding entering 2022 to sustain continuous operating losses – Avoid
Amount raised, lead investors, and post-money valuation
Funding: strong and consistent funding history raising a total of US$463 m
M&A activity: Recently completed SPAC transaction by merging with INSU Acquisition Corp in Feb 2021, raising US$390 m
Post-money valuation

Amount raised

$4m

$10m

$40m

$96m

$93m

$390m

5-Dec-12

29-Apr-13

10-Feb-15

16-Feb-16

24-Jul-18

1-Feb-21

Schulte Research

$1,300m

$540m

$12m

$44m

Series A

Series B

Series C

Series D

Series E

SPAC (completed)

Sources: CB Insights, Crunchbase Pro

187

112

Paul Schulte

Amwell

Schulte Research

Case Study

188

Case study 22 – Amwell
Company overview: impressive integration but zero
blockchain
Teladoc Health better positioned on revenue, profitability, and growth at a relatively lower premium
Business model

Go-to-market strategy
growth driven by B2B partnerships and seamless digital experience

Provides subscription-based telemedicine platform to healthcare providers
that connects patients with medical professionals online

Began offering teleconference access through a subscription service
available to both D2C and other organisations

Platform allows clients to integrate telehealth into existing healthcare
offerings

2014: enabled patients to set up on-demand, video-enabled visits with
physicians, but rebranded version of D2C app same year by establishing

Offer services across healthcare spectrum including primary-care, urgent
care, high acuity speciality consults, and telepsychiatry

Going forward: Focus on subscription-based revenues, and develop
partnerships with Marquee Health systems and improve tech with Google

Amwell Converge as future key platform to drive both top line and bottom
line growth in the future

Goals

Limitations

Schulte Research

One superapp & seamless integration: offer telemedicine platform for
healthcare providers and system integrations to embed telehealth into
existing workflows

Growing net losses: net loss to revenue increased from 46% to 93% between
FY2018 H1 2020
Market potential: McKinsey study shows providers have seen between 50
175x as many telehealth visits as pre-COVID and 76% of customers are at
11% in 2019).
However, only 46% use telehealth

Streamlined process: remote healthcare is scattered and inefficient.
Patients and doctors also have no way of securely communicating
remotely
Develop Amwell Converge open architecture that can host and operate
applications from digital health companies

Sources: Amwell public filings

189

Funding since inception
Poor share price performance at -58.7% YTD, stabilizing at c.US$10 since May

Potential buy or buy Teladoc Health

Amount raised, lead investors, and post-money valuation
Funding: Raised a total of US$811 m from a well recognised investor base
M&A: completed acquisitions of Alinged Telehealth and Avizia in 2019 and 2018 respectively
Post-money valuation

Amount raised

$32m

$23m

$86m

$291m

$75m

$60m

$134m

$742m

12-Mar-07

23-Oct-08

7-Aug-15

26-Jun-16

17-Jul-18

16-Dec-19

20-May-20

17-Sep-20

Schulte Research

$3,963m

$93m
Series A

$260m

$267m

Series B

Series B-II

$505m
Series C

Series C-II

Series C-III

Series C-IV

IPO

Sources: CB Insights, Crunchbase Pro

190

113

M O N E Y M E TAV E R S E

Lemonade

Schulte Research

Case Study

191

Case study 23 – Lemonade
Company overview: B-list technology and zero
blockchain
Use AI software to offer property insurance, taking a fixed proportion of premiums and giving the rest to reinsurance & charity
Business model

Go-to-market strategy

Operates as a licensed carrier of insurance, retaining claims liability on its
own balance sheet

Launched in 2015 through offering property insurance products through a
mobile app with AI-powered capabilities

Uses AI capabilities, online functionalities, and B-Corp charity model to:
lower costs, increase transparency, and improve customer satisfaction

Initial aim: attract first-time, millennial renters & homeowners

B-Corp Model:

aimed at donating extra

transparency

25% of premium revenue for administrative costs and potential
profits

Began offering additional product lines in 2019/2020 such as pet and life

75% for customer claims, reinsurance and taxes/fees

Goals

Remaining goes to charities that customers choose

Limitations

B-Corp model: aimed at lowering costs, increasing transparency and
improve customer satisfaction

Schulte Research

Fraud prevention:
model

Low-tier proprietary technology: p
seem to drive down bottom line costs
Misleading business model: US$1.1 m donated in 2020, and with growing
reliance on reinsurance, profit margins are already low

-Corp

Increase number of product offerings: began offering additional lines in
2019/2020 such as pet and life insurance to diversify away from home
insurance

Poor customer retention: Q1 2020 hovered between 75%-76% (traditionally
around mid-80s)

Streamlined process: aim to use AI to create a customer journey with zero
paperwork and instant everything
Sources: Lemonade public filings

192

Funding since inception
Down -58.8% from its peak in early January, with maximum loss of -67.2% in May – Avoid
Amount raised, lead investors, and post-money valuation
Funding: Raised a total of US$480 m from a well recognised investor base

Post-money valuation

Amount raised

$13m

$13m

$34m

$120m

$300m

$319m

8-Dec-15

23-Aug-16

2-Dec-16

19-Dec-17

11-Apr-19

2-Jul-20

$2,000m

Schulte Research

$1,592m

$500m
$39m

$74m

$175m

Seed VC

Series A

Series B

Series C

Series D

IPO

Sources: CB Insights, Crunchbase Pro

193

114

Paul Schulte

Oscar Health

Schulte Research

Case Study

194

Case study 24 – Oscar Health
Company overview: decent technology stack but zero
blockchain
Pioneering full-stack healthtech platform, impressive investor backing & steady user growth
Business model

Go-to-market strategy
Use IPO proceeds to expand operations and restructure:

Offer D2C health plans to provide consumers with sound value propositions:
Proprietary 24/7 virtual care services

c.US$160 m of proceeds used to finance existing debt

Simplifies the health insurance purchasing process

Grow 24/7 in-house telehealth offering
Expand existing product offerings

Quick and easy claims processing

Teaming up with clinics and private insurers to create co-branded
insurance plans

First health insurance company to use full-stack tech platform enabling 24/7
telemedicine service at no extra cost and greater member engagement to
maximise customer retention

Schulte Research

Goals

Limitations

One superapp: there is no one-stop-shop or personalized experience
available due to poor data collection and analysis

Widening net losses: net loss increased to US$407 m in 2020 from US$261 m in
2019

Streamline process: insurance sites are cluttered and difficult to navigate

Saturated competitive landscape: IPO prospectus highlighted competitors
with broader scope of products that are more competitively priced and
have a larger network of partners
Scandals:

Sources: Oscar public filings

195

Funding since inception
-56.1% YTD, rebounding in the last couple weeks from US$12.2 low

High risk high reward opportunity

Amount raised, lead investors, and post-money valuation
Funding: Raised a total of US$1.6 bn from a well recognised investor base

Post-money valuation

Amount raised

$80m

$145m

$33m

$400m

$165m

$225m

$140m

!”#$$%&

14-May-14

20-Apr-15

15-Sep-15

22-Feb-16

28-Mar-18

26-Jun-20

17-Dec-20

3-Mar-21

Schulte Research

$7,923m

$3,200m

$2,700m

$800m
Series A

$1,500m
Series B

$1,750m

Series B-II

Series C

Series D

Series E

Series F

IPO

Sources: CB Insights, Crunchbase Pro

196

115

M O N E Y M E TAV E R S E

Root Insurance

Schulte Research

Case Study

197

Case study 25 – Root Insurance
Company overview: impressive telematics but zero
blockchain
Disappointing Q2 results, with declining growth expectations and increasing loss ratios, CTO and CPO leaving since IPO
Business model

Go-to-market strategy
Currently licensed in 36 states and active in 30

Deliver faster and cheaper auto-insurance through AI telematic screening
capabilities that:

Breadth over depth approach by focusing on expansion across US markets
through select M&A

Improve underwriting rate for auto-insurance through improved
data gathering and analysis capabilities during initial driving period

Partnership with Carvana since Q3 2021 (eCommerce platform for used
cars) to integrate auto insurance solutions

Minimise risk exposure
Allow customers to sign up in < 1 minute
Customer can manage policies, claims and support through app
Root transfer 70% of risk exposure to reinsurance, while remaining 30% is
retained by Root

Goals

Limitations

Schulte Research

Streamline process:
AI telematics screening & demographics for higher underwriting rate

High loss ratios: average around 70 79% (with certain geographies
exceeding 90%) poor compared to average traditional auto insurers (c.60
70%)

Pass off 70% of risk to reinsurers

Poor customer retention: low customer retention of c.54%

Customers sign up <1min

Political risk: Consumer Privacy Act and evolving attitudes on privacy may
revenue and
ability to underwrite

Superapp: customers can manage policy, claims and support within one
app

Sources: Root public filings

198

Funding since inception
Mix poor share performance and volatile trading, -60.2% YTD

Avoid

Amount raised, lead investors, and post-money valuation
Funding: Raised a total of US$527.5 m

Post-money valuation

Amount raised

$5m

$5m

$22m

$51m

$100m

$350m

$724m

22-Oct-15

25-Oct-16

1-Jun-17

27-Mar-18

22-Aug-18

19-Aug-19

29-Oct-20
$6,746m

Schulte Research

$3,650m

$291m
Series A

Series B

Series B – II

Series C

$1,000m
Series D

Series E

IPO

Sources: CB Insights, Crunchbase Pro

199

116

Paul Schulte

Clover Health

Schulte Research

Case Study

200

Case study 26 – Clover Health
Company overview: regulatory issues and zero
blockchain
Troubled stock plagued by regulatory issues, Reddit squeeze, but expanding distribution channels & strong Medicare TAM
Business model

Go-to-market strategy
Launch in smaller markets, focus on improving quality of customer care &
targeting NPS to keep consumers within system

Medicare Advantage insurer utilizing proprietary predictive analytics
software platform (Clover Health) to create data-driven personalized
insights for patients and physicians

PPO provider networks enable members to see any doctor
participating in Medicare willing to accept them

Clover Assistant: uses machine learning to prioritize care recommendations
and used evidence-based protocols for primary care providers, raising the
level of care and further lowering costs

Continue to leverage data to improve care & lower costs, expand to
additional counties within existing markets (AZ, GA, NJ, PA, SC, TN, TX)

Platform collects, structures, and analyses health / behavioural data to
improve medical outcomes and lower costs for patients

Increases potential consumer base to 5 m Medicare eligible

Success depends on ability to convince PCPs to use Clover Assistant

Goals

Limitations

Streamline process:
reduce overall cost of healthcare

Scandals:

Schulte Research

Personalized offerings:

!

Ongoing SEC investigation regarding failure to disclose DOJ
investigation pre-IPO

!

2015: delayed paying bills for lab tests for senior citizen members as it
tried to get leverage over labs so it could collect data

!

2019: announced that it would

Sources: Clover Health public filings

201

Funding since inception
MCR at 97% ex-Covid, 111% including COVID in Q2 2021: bottom line losses increasing with revenue

Avoid

Amount raised, lead investors, and post-money valuation
Funding: Raised a total of US$2.1 bn, including US$1.2 bn from SPAC transaction

Post-money valuation

Amount raised

$13m

$35m

$160m

$130m

$500m

$1,228m

18-Sep-15

16-Dec-15

20-May-16

10-May-17

30-Jan-19

7-Jun-21

$3,700m

Schulte Research

$2,218m

$1,200m
$820m
$226m
Series A

Series B

Series C

Series D

Series E

SPAC (completed)

Sources: CB Insights, Crunchbase Pro

202

117

M O N E Y M E TAV E R S E

Bright Health

Schulte Research

Case Study

203

Case study 27 – Bright Health

Company overview: rapid scaling but zero blockchain
Fast growing top line with bottom line margins decreasing
Business model

Go-to-market strategy
Began working in tight-partnership with single health systems within a region
(i.e., Centura Health) to give better insights into physician cost and quality

Leverages technology platform and care providers to deliver personalized
virtual & in-person clinical care:

Expanded from initial markets to select locations across South / Midwest

Digital personalized plans for high-risk patients

Continued to grow partnerships to expand consumer base and
overall reach

Offer Individual, Family, & Medicare
Large portion of business stems from Medicare
Have 40 owned & managed clinics
-to-end health

Ultimately create

Goals

Limitations

Streamline process & personalized offerings: create personalized,
affordable and convenient end-to-end healthcare experience

Lack of proprietary technology; no real sustainable tech advantage over
competitors, company focused more on capturing local markets with

Schulte Research

Superapp: integrated tech platform offers variety of healthcare plan
products and everyday clinical care delivery services

Unclear business model
platform to gain traction and consumer retention

-focused

Sources: Bright Health public filings

204

Funding since inception
Down -40.7% since IPO in June stabilizing at US$9.5

Neutral, target at US$12

Amount raised, lead investors, and post-money valuation
Funding: Raised a total of US$2.5 bn, including US$924 m from IPO

Post-money valuation

Amount raised

$80m

$160m

$200m

$635m

$500m

$924m

5-Apr-16

1-Jun-17

29-Nov-18

17-Dec-19

22-Sep-20

24-Jun-21

Schulte Research

$13,416m

$281m

$663m

$950m

$1,000m

Series A

Series B

Series C

Series D

Series E

IPO

Sources: CB Insights, Crunchbase Pro

205

118

Paul Schulte

Apple

Schulte Research

Case Study

206

Case study 28 – Apple
Company overview: awesome technology stack
Apple afraid of regulators?

is

Healthcare focused services that provide an effective tool for insurance firms to implement prevent and postpone measures
Business model

Go-to-market strategy
Significant prevent and postpone functionalities

Healthcare providers:
Centralized and fully integrated platform to serve every day patient
and employee requirements

Create applications that suit your own data and analytics requirements

Key consumer of the Apple Watch to promote fitness and provide a
harmonised health manager service across other Apple devices

Empower individuals to take control of their health and wellbeing

Gather and synthesise client data to create personalised product offerings
through use of products such as the Apple Watch

Retail:

Fully integrated infrastructure to provide a suite of easy-to-use client
products

Goals

Limitations

Schulte Research

Primary care services: Link data from Apple devices to offer ongoing health
monitoring and primary-care as part of a subscription-based program
(Apple ultimately intend to franchise)

Data handling: Apple employees have publicly expressed concerns over
misleading data treatment that skew results in favour of Apple
Early stage technology: tech is still in preliminary testing stages and there is
no certainty such integrated healthcare system will be accepted by wider
population

Digital health: Recent initiative on a digital health app called HealthHabit
that connects people with clinicians via chat and encourages them to set
health challenges
Penetrate healthcare ecosystem: Singapore to become first country to
leverage benefits of Apple Watch by offering incentives for people to use it
to stay healthy and active

Sources: Apple public filings

207

119

M O N E Y M E TAV E R S E

Apple in healthcare
Supports all stages of the healthcare chain from research to implementation

potential to disrupt the insurance ecosystem

Apps on iPhone and iPad allow hospitals to work more efficiently

Apple in Hospitals
Appl

Clinicians can access health records and data rights when they
need them
Ensures better patient safety while administering medication

Patients stay informed about their own care by communicating
with medical teams

Home Patient Care

Visualize, store and record health data collected by institutions
and synthesized devices
Receive health and fitness plans

Schulte Research

Organizations can use off-the-shelf apps or use CareKit to create
apps that empower individuals to manage their health

Medical Research

Create your own apps that suit unique data and analytics
requirements
ResearchKit: Open source framework that streamlines the
process to make it easier to enroll participants, capture informed
consent, and gather medical data more frequently

208

Apple Watch core capabilities
Medical ID

ECG app

Allows first responders and
emergency room clinicians to
access critical medical information

Capture within ECG app and record
symptoms
Provides result of sinus rhythm or
atrial fibrillation, and prompts user to
enter symptoms that can be
exported from the Health app

or Apple Watch without passcode

Fall detection

Heart rate notifications

Allows users to easily call emergency
services when a hard fall is detected
If user unresponsive for 60 seconds,
emergency call will be
automatically placed

Detects abnormally high or low
heart rates which could be a sign of
underlying condition
Notifications can be viewed in the
Health app on iPhone

Health records

Security & privacy

Visualize and securely store health
records from institutions and
generated data from Health app
Creates holistic picture of health

Schulte Research

Health data in Health app is
encrypted on-device
If user chooses to sync health data
with iCloud, data is encrypted while
in transit

Mobility and cardio fitness

Irregular rhythm notifications

Indicates overall physical health and
a predicts long-term well-being
Provides estimates of mobility metrics
Provide tools to monitor mobility and
cardio factors

Checks for signs of irregular rhythms
that could indicate atrial fibrillation
Irregular notification will be recorded
in the Health app

209

120

Paul Schulte

private companies

Schulte Research

US corporate

210

Acko

Schulte Research

Case Study

211

Case study 29 – Acko
Company overview: low-income insurance, zero
blockchain
Offer simple policies to a niche customer base by reducing costs & forming strategic partnerships
Business model

Go-to-market strategy & traction
Online-only digital platform offering micro-policy auto-insurance

Offer bite-sized policies to Indian consumers
Focus on serving low-income, uninsured markets by:
Reducing consumer costs and policy size by focusing on volume
rather than ticket size

Fastest growing insurance company in the country
Team has grown from 6 to 400 people in 5 years

Partnering with various digital firms to grow sales distribution
channels for auth & health policies, reaching more consumers than
a typical insurance firm

Launched health insurance offering in H1 2020
c.60 m customer to date
Issued 650 m micro-policies to date

Goals

Limitations

Reduce costs: traditional insurance too costly to the average Indian makes
c.US$2.1 k per year

Political risk: current regulatory rules require insurance firms to underwrite risk
themselves (unlike several fintech startups in India that work with banking
partners to finance loans)

Bite-sized auto and health insurance through end-to-end digital experience

Schulte Research

No middle-man: enables Acko to offer more personalized policies
Underwriting tech accurately prices risk to create more affordable policies
Entirely digital process improves sign-up and claims speed

Sources: Acko public filings

212

121

M O N E Y M E TAV E R S E

BIMA

Schulte Research

Case Study

213

Case study 30 – BIMA
Company overview: emerging markets insurance, zero
blockchain
Increasing rate of natural/health disasters in developing markets proves a challenge for BIMA
Business model

Go-to-market strategy & traction
: provide memberships
Entered health
and access to tele-doctor services to emerging markets

Provide digital health and Insurtech services in emerging markets
Three fundamentals to microinsurance business model: high volumes, low
cost, and efficient administration

Use data analytics and AI for proprietary tech platform to design
personalized experience for consumers

Combine mobile app development and partnerships with mobile phone
carriers and financial institutions

Has expanded product catalogue and geographic presence
Currently in 3 continents

Agent-driven approach (currently 3,500 sales agents) to educate
underserved markets on benefits of insurance

31 m subscribers to date: c.75% of customers are accessing insurance for
the first time; c.93% of customers survive on less than $10 / day; 3m
customers in Pakistan

Goals

Limitations

Accessibility: Poor access for emerging market consumers to insurance
products and Typical insurance products too large for emerging market
customers

Uncontrollable claims environment: increasing rate of natural/health
disasters for developing markets

Schulte Research

Provide policies, underwriting, and telemedicine via mobile-first platform
Leverage higher mobile penetration rate in emerging market
Proprietary platform, and exclusive partnerships with mobile operators and
international insurers across 13 markets in Asia, Africa and Latin America

Sources: BIMA public filings

214

122

Paul Schulte

NEXT

Schulte Research

Case Study

215

Case study 31 – NEXT

Company overview: SME insurance, zero blockchain
Quick & affordable digital insurance policies tailored to SMEs
Business model

Go-to-market strategy & traction

Sell proprietary commercial insurance policies for smaller businessowners

Started by offering general liability and commercial auto-insurance

Policies focus on general liability, professional liability, and commercial
auto-insurance

Currently operates in 50 states

Offer quick and affordable digital insurance policies tailored to SMEs and
self-employed individuals

2019 GWP grew 3x
Serves 100 k + SMBs, which constitute 1,300 types of businesses

Use AI and machine learning to simplify the purchasing process and drive
down costs by up to 30% compared to traditional policies

Licensed to sell premiums in every US state
US$200 m GWP run rate by 2020 end

Goals

Limitations

Streamline process: SMEs face lengthy, expensive, and vague insurance
options for themselves. Furthermore, a lot of paperwork is required to
purchase insurance plans

Market saturation: heavy competition from larger traditional insurers

Schulte Research

Personalized offerings: Insurance offerings are becoming too expensive and
not tailored to specific business needs
Digital and affordable coverage, tailored to the self-employed and SMEs
Buy policies in <10 mins and access to 24/7 live Certificates of Insurance

Sources: Next public filings

216

123

M O N E Y M E TAV E R S E

Shift

Schulte Research

Case Study

217

Case study 32 – Shift
Company overview: white label insurance, zero
blockchain
Sell proprietary AI solutions to global insurance partners in Health, P&C and Travel
Business model

Go-to-market strategy & traction
Launched in 2014 by utilizing initial SaaS business model, launching
partnerships based on fraud detection for insurers

Sell proprietary AI solutions to large insurance partners globally
Offer products in Health, Property & Casualty, and Travel

Obtained 45 insurance partners by mid-2019 (up 70+ to date)

High barriers to entry with large data-set and improving AI model

Leveraged flywheel aspect of AI algorithm to improve product offering over
time
2 years after launching, Shift processed 50 m claims with an accuracy rate
of 75%
Established global footprint: 70+ insurance companies currently relying on
HyreCar US

Goals

Limitations

Streamline process: insurance companies under pressure to increase
efficiency and improve customer experience as policy lifecycle is proving
difficult to manage for large insurers

Market potential: Traditional insurers show a willingness to keep fraud
detection in-house

Schulte Research

FORCE solution automates and optimizes decision insurance professionals
make on a daily basis to improve efficiency and customer experience
AI-driven decision making for fraud detection and claims automation

Sources: Shift public filings

218

124

Paul Schulte

Hippo

Schulte Research

Case Study

219

Case study 33 – Hippo

Company overview: home insurance, zero blockchain
Utilise smart technology to provide personalized & affordable property insurance
Business model

Go-to-market strategy & traction

Create value by proactively identifying and resolving risks for homeowners

Started with creating new product that differentiated customer experience

Provide accurate and affordable coverage by developing a unique profile

Tested on smaller markets, then expanded offerings to a national scale to
reap flywheel benefits

over time using thermal
and satellite imagery, AI, machine learning and public records

Currently available in 32 states
Aim to reach 95% of US homeowners in 2021

Provide complimentary smart home devices, home care services, and
AI/underwriting to drive pricing efficiency

LTM GWP: US$270 m (140% growth YOY), compared to Lemonade’s $116 m
in 2019 (up 147% from 2018)

Recently switched model: Mitsui now acts as reinsurance & strategic partner

Goals

Limitations

Awareness: over 60% of US homes are uninsured

Political risk:
enacted reforms on outdated laws inhibiting Insurtech

Create fast, easy and, accessible homeowners insurance

Increased focus on potential future regulation of big data, AI, machine
learning, and accelerated underwriting

Schulte Research

Allow homeowners to purchase policies in < 5 minutes
Utilize AI to streamline underwriting, help customers prevent claims, and
facilitate smart home integrations
Provide free smart devices to help detect incidents in advance

Sources: Hippo public filings

220

125

M O N E Y M E TAV E R S E

Schulte Research

Section 3: China corporate

221

Ping An Insurance

Schulte Research

Case Study

222

Case study 34 – Ping An
Company overview: global leader in blockchain
insurance
Complete horizontally integrated O2O offerings providing one-stop-shop
Business model

Go-to-market strategy
First insurance company to create a completely horizontally integrated O2O
offering in growing healthcare and fintech industries

Ping An 3.0:
Open platform & market place that promotes customer migration

Rapidly integrating full hospital/clinic experience to include doctor,
pharmacy, bank and insurance company as one stop shop (e.g. Ping An
Good Doctor)

Shift focus to big financial assets & big health care
Embedding finance in online daily life services

Focusing on offline health data and expanding into healthcare (Good
Doctor) and lending (Puhui)

Customer centric operation model: initiate engagement with one
product -> extend to multiple services -> offer multiple products

Goals

Limitations
Political risk: Chinese crackdown on antitrust with increasing number of fines
US$2.75 bn fine in April 21 2021 after being found guilty of
monopolistic behaviour

Goals originating from Ping An 3.0 business model which looks to create:
One customer

Schulte Research

One account

Legacy: Ping An is hampered by legacy issues in old bank/insurance
models, cost problems, capital guzzling bank and excess labor capacity

Multiple services & products

Sources: Ping An, Schulte Research

223

126

Paul Schulte

Ping An ecosystem at a glance
Single sign on one-stop-shop platform
Financial DNA + Biometrics, Blockchain, Cloud, Big Data, AI

Real estate
P2P/Wealth

3rd party products

3rd party consumers

Core offerings

Core customers

3rd party products

3rd party consumers

Insurance
Asset management

New financial institutions

Schulte Research

Banking

Automotive
Healthcare
Entertainment
Sources: Medium.com

224

How does O2O benefit Ping An?
Improved consumer experience, reduced costs and better operational efficiency

Schulte Research

Health & Life Insurance

P&C Insurance

Fintech

Healthcare

Customer experience

67% increase in repeat
customers

Leader in customer satisfaction

12 hour loan approval

97% satisfaction rate

Efficiency

7.1% increase in sales per
agent

Onsite assessment under 10
minutes for 95% of crashes

30% decrease in interbank trading
times; 20% cost reduction

Imaging analysis time decline by 99%

Cost reduction

99% of claims handled
online

85% reduction in claims leakage

Stopped RMB300 bn in fraud for
partner banks

>8x consultation capacity

Accuracy

70% of claims paid in under
60% reduction in fraud
30 minutes

Credit loss ratios decreased by 60%

90% accuracy forecasting flu patterns

Sources: Ping An, Schulte Research

225

Fully autonomous financial ecosystem

Schulte Research

Ping An has made greater strides into becoming an autonomous financial ecosystem than any other company

Sources: Ping An, Schulte Research

226

127

M O N E Y M E TAV E R S E

First to integrate offline data

Schulte Research

Unparalleled offline data access and is among the first to actively integrate it & see it as one pool

Sources: Ping An, Schulte Research

227

O2O data strategy
Unparalleled offline data access and is among the first to actively integrate it & see it as one pool
Online Data
Social Media

Offline Data
Fintech

Medical Appointments &
Prescriptions

Health & Biometrics

Cloud Data Universe
44% (OneConnect)

Schulte Research

AI Analysis

Diagnosis, appointments,
treatment & health news
39% (Good Doctor)
1833.3 HK

Health, Life, P&C
100%

Asset Management
44% (Lufax)

CityConnect
(Healthcare Technology)

Zhong An
12%

Sources: Ping An, Schulte Research

228

Healthcare ecosystem
O2O strategy in action
Healthcare management
H
authorities

Health commissions

Medical Products
Administration

Healthcare Security
Administration

Implemented in 158 cities
across 30 provinces

Administrating local government finance,
supervising doctors, and institutions

Patients

Service providers

Retail

903k daily consultations
373m registered users

Institutions
Guiding
medical
healthcare
behaviors

Doctors

Payers
Pharmacies
Managing
medical
institutions
and
affecting
users

Online

Corporate

Ranked 1st by number of SHI
service subsystem bids won

Commercial Insurance

Offline

1,100+ enterprises

Schulte Research

Social Health Insurance

21k institutions
covered
1,000+ partner
hospitals across the
world

About 650k doctors
served
In-house medical
teams of 2,200+
members
21k+ external
contracted doctors

150k+ partner
pharmacies
No.1 health insurer in China
65m+ life insurance customers
RMB140 bn+ written premiums of
health insurance

L
Leveraging
i
ttechnologies
hn l i tto empower k
key
businesses

Technologies

Research
IInstitutions

Ranked 1st globally by digital healthcare applications

Investment
Institutions

Invested in nearly 100 companies in the healthcare industry

229

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Schulte Research

Section 4: Ultimate weapon for super app

230

Omnichannel digital insurance ecosystem
End-to-end customer platform

Data, AI, Scalability

H lth Wellness,
Health,
Health
Wellness and
Well
nd Lif
Lifestyle
t le
features
Diagnosis health and symptoms
Telemedicine
Sell insurance products seamlessly in
a one-app platform
Streamline connection with agents
Value-added services

P mote
Promote
t tailored
t il
d bite-sized
bit sized or
bundled insurance products
Auto-underwriting capabilities
based on customer risk assessment
Reduce need for manual processing
on time-consuming data collection
Promote connectivity with smart
wearables to fuel consumer data

Attract and retain customers

Data-fueled insights

Schulte Research

I
Improve
customer
t
experience,
experience
erie
establish greater trust, and foster
credibility
Encourages healthy behavior and
lifestyle decisions
Attract younger customer base
Engaged & easy-to-use experience
Offer incentives upon achieving
certain milestones

and ultimately profitability
Better policy cover and risk
identification
Create leads for agents to sell
regular-sized insurance products

One-app
platform

Just-in-time tailored policies

Dynamic pricing & risk mgmt.

A t
Auto-underwriting
Auto-underw
nderw
er riti
riting bit
bite-sized
sized and
nd
bundled insurance policies
Manage current policies held and
access large offerings at lower price
thresholds

Bett policy
Better
li cover and
nd risk
identification in less time
Administrative efficiency
Improve / reduce premiums
dynamically to reduce claims risk

231

Combining Healthtech and Insurtech
Data-driven insurance coverage, expanding from insurance protection to prevention and delay onset of disease
Consumer

Pricing and
underwriting

e.g., form submissions

Behavioral

e.g., interaction with platform

Personal &
demographic
e.g., KYC

Data Integration

e.g., physical activity

Engagement

Settling claims

Insights on customers
healthcare
Identity
Unification
Shape policyholder
behavior

Schulte Research

Data
Enrichment

Improve customer
experience

Preferences

e.g., interaction content

Data integration

Reduce need to seek medical care
Faster and partially-automated claims settlement
Fraud and abuse prevention

Data
Cleaning

Insurance coverage
e.g., current policies

Automated underwriting for bite-sized products
Dynamic risk management and pricing
Better policy cover and risk identification

Data
Transformation

Identify, unify, segment

Family history, health checks, symptoms checks
Data-fueled insights through smart wearables
Translate data into customer products

Free tailored insurance products as incentives
Predictive algorithms to provide relevant content
Incentives as requirements for lower price thresholds

Predictive algorithms to provide relevant content
Reduce need for medical care and early interventions
Encourages healthy behavior and lifestyle decisions

Data-driven opportunities

232

129

M O N E Y M E TAV E R S E

One-app creation

Schulte Research

A focused prevent and postpone
framework

Leverage Vitality and other white labels, enhancing efficiencies around the group starting with Prevent and Postpone
Enable effective actuarial dynamics and risk assessment capabilities
for more personalized protection

Clear integration into the Shared-Value insurance model

Customers can optimize health and wellness investments

Integration with doctors and nurses
Unlock greater value for both policy holders and insurers

Well-established and diversified partnership base

Scalable platform with concrete evidence that it can be used
across multiple geographies and insurance companies

Health record accessibility

Clear customer engagement

No direct policy offerings

Vitality One at the foundation:
Fully integrated, cloud-based framework offering a single point of entry for Vitality Group partners

233

One-app creation
Enhance efficiencies around the group with Protect

regular and bite-sized insurance policies

Cross-selling / up-selling insurance products

Integrate current policyholders

Direct to customer offering of bite-sized cover

Digital access of current policies underwritten in a transparent way

Customized packages, products, and 3rd party service offerings

Easy-to-use experience underlies repeated purchases

Schulte Research

Modular products with subscriptions and fee for service

Lead generation for agents with virtual face-to-face fulfilment

Manage current policies seamlessly

Drive revenue streams and operating leverage through scalability
of the platform

Avoid manual processing and agents contact, leading to more
time dedicated to selling regular-sized products

Engages directly with customers rather than push product

Higher sales generation via cross-selling / up-selling Health &
Wellness products and services and tailored insurance products

234

Dynamic risk management and pricing
Significant investments, M&A, and Partnerships required for upside potential across the insurance business
Dynamic pricing, risk management, and underwriting

Investments, M&A, Partnerships

Leverage Data Analytics and AI capabilities to maximize automation of
insurance product offerings via auto-underwriting for customers e.g.:

Requires modular platform that digitises core insurance processes while at
the same time allowing dynamic access to the services and products within
the ecosystem

free insurance coverage via milestones achieved through Health &
Wellness platform;

Need to update current infrastructure to participate in the digital health
ecosystem

bite-sized and bundled policies for underserved segments of
society; and

Leverage available data requires investment in data management and
analytics capabilities

Regular-size premiums by creating leads for agents

Develop a compelling digital insurance ecosystem involves structuring
meaningful partnerships with industry leaders, including technology
providers who enable customer access and utilisation

Just-in-time policies and products that offer value to the end customer
Data-fueled insights to better policy cover and risk identification for
customers in less time

Integrate and reassess risk management models for auto-underwriting
insurance policies and virtual face-to-face fulfilment with agents for regularsized products

Seamless data sharing among all parties, strong foundation to reduce the
need for manual processing or time-consuming data collection

Schulte Research

Realaccount specific risk models while offering a more personalised, predictive,
and preventive health service
Inform day-to-day insurance premiums and policies

235

130

Chapter 4:
Proptech and Blockchain
Section 1: With the rapid and sudden digitization of finance through BSN/PBOC
DCEP and many central bank coins, the proptech revolution will happen much faster
than fintech or insurtech. Figure 95 to Figure 99 show our summary of each company.
Chinese company sectors
Powered by superapps, 5G, edge computing and smart cities

My Dream+
ZiFiSense

9am

IoT

YITU

Dahua
JD.com 51VR

Energy

Retail

AI
GI
GISUNI
WIFIPIX
GeoHey

Real Estate
Xkool
Sources: Schulte Research

Figure 95
Chinese company sectors
Powered by superapps, 5G, edge computing and smart cities

WIFIPIX

Big Data

GISUNI

GeoHey

JD.com

Listings

YITU

Smart
cities

Data
ZiFiSense
Dahua
Xkool

My Dreams+

51 VR

9am

Property
Management

Sources: Schulte Research

Figure 96
131

M O N E Y M E TAV E R S E

Western company sectors
Powered by banks , SWIFT, credit cards
Neul

IoT

Aurora Solar
Urbint

EVERYTHNG
JD.com

Energy
Aquicore

AI SmartRent

Retail

Blueprint PowerAppear Here
Enertiv
Convene

VTS

Loft

Real Estate
Reonomy

GeoPhy

Sources: Schulte Research

Figure 97

Western company sectors
Powered by banks , SWIFT, credit cards

Pavegen

Big Data

Reonomy

GeoPhy

EVRYTHNG
JD.com Neul

Listings

Urbint
Aurora Solar
Blueprint Power

Smart
cities

Data
Appear Here
SmartRent
Aquicore

Enertiv

Property
Management
Convene

Sources: Schulte Research

Figure 98

The center of it is the necessity of artificial intelligence to manage an explosion of
data that is incomprehensible to any human mind or any group of humans. We think
it is separated into four areas. Firstly, the absorption of the digitized physical world
into software and hardware companies that can manage massive data sets. These are
Pavegen, Neul, and EVRYTHNG — primarily located in the Golden Triangle of
Oxbridge and GCHQ. Pavegen is best in show here – although we make it clear that

132

Paul Schulte

Greater China is at least one generation ahead of the West in proptech. Huawei has
swallowed up Neul, so we may never have a chance to see its technology.
Secondly, Energy is the other sector which plays a vital role in proptech. Whether
the ESG phenomenon is virtue signaling or genuinely effective, it is here to stay. Proptech for power can drastically reduce carbon emissions by more efficient energy use in
buildings and homes — full stop. Blueprint Power is best in show here.
Company Overview
Primarily hardware provider (c.80% of revenue) with recurring revenue from Hub and SaaS (c.20%)
Business model

Go-to-market strategy

Leading solution provider for owners / operators & residents, providing endto-end solutions for smart-home technology

Highly visible pipeline of demand with c.US$710 m revenue from committed
units

Key verticals in Home IoT, Building IoT, and Resident experience

Deploy new products and services including Smart Intercom, Alloy Access
Solo, and new Student housing division in Q2 2021

Revenue of c.US$21.68 m in Q2 2021, +274% YoY

Key customer channel in multifamily owners in the US: 13 out of 20 are
investors in SmartRent, 15 are clients

Distributes products and services directly to property owners (i.e., large
purchase orders and long-term technology commitment)

Sales channel: Channel partners, Single family rentals, Homebuilders,
Student housing, and Multifamily communities

Estimate EBITDA positive by the end of FY22

Goals

Limitations

Revenue opportunity from existing customer estimated at c.US$1.8 bn in
annual revenue

Supply chain issues during the pandemic, shortages of hardware in Q2 and
still ongoing

606 k committed units

Lack in-house hardware manufacturing, relying on third-party products

Schulte Research

c.US$710 m revenue from committed units
Integrate with AppFolio Property Manager Plus for larger businesses to
automatically synchronize units, leases, residents, and service orders with
IoT
Expansion in Canada underway, pilot program in the UK
Pilot program for student housing in the US

Sources: SmartRent public filings, Pymnts, Deutsche Bank Technology Conference,

270

Figure 99

Funding since inception
Content/Section Title
Amount raised, lead investors, and post-money valuation
SPAC structured to align with long-term investors: (i) no warrants; and (ii) FWAA subject to lock-up agreements of up to 3 years
Existing shareholders subject to 6-month lockup period
Post-money valuation

Amount raised

$2m

$5m

$32m

$60m

$31m

$500m

20-Mar-18

5-Oct-18

7-Jun-19

27-May-20

4-Mar-21

22-Apr-21

Schulte Research

$2,200m

$8m

$13m

$209m

Seed VC

Series A

Series B

Series C

Series D

SPAC (pending)

Sources: CB Insights, Crunchbase Pro

271

Figure 100

133

M O N E Y M E TAV E R S E

Fifth Wall sponsor & Strategic partners
Access to distribution lanes through c.70 strategic Real Estate LPs from 15 countries
Fifth Wall

Sponsor

NA: strategic LPs network

EU: strategic LPs network

Strong record of investing in Proptech companies, but has yet to
successfully take any businesses public through SPAC
c.US$2.5 bn of AUM, 5x closest competitor
c.70 strategic real estate LPs across 15 countries
Synergies potential with LP network
three years

Fifth Wall Investment Activity1

Asia: strategic LPs network

Data in US$ m
Number of deals

$1,480.9 m

$ 6
,1 0 m

20

$ 4
,1 0 m

$1,133.0 m

Schulte Research

$ 2
,1 0 m

$884.1 m

$ 0
,1 0 m

$693.8 m

$ 0
8 m
0

15
$614.0 m

10

$ 0
6 m
0

$ 0
4 m
0

$282.2 m

$ 0
2 m
0

5

$111.9 m

$ m
0

2016

2017

2018

2019

2020

Q1 2021

Q2 2021

Number of deals

Funding

0

Sources: Fifth Wall, SmartRent public filings
(1) CB Insights

272

Figure 101

The last two areas of the sectoral approach to proptech are platforms and retail.
SmartRent is interesting here. We did a profile on its business, shareholders, and fundraising history – Figure 99, Figure 100, and Figure 101. It is a mix of AI, retail smart
homes, and smart cities, digitizing homes, reducing insurance, implementing admin
software, fully automating management services, and rolling out third-party software.
It is approaching one million committed units.

Section 2: In Figure 98, we look at companies from the business niche point of view.
These include Big Data, Listings, Smart Cities, and Property Management. In the
center of the action is the management and use of data.
Appear Here is another company that deserves closer attention. It lies in the intersection of data, smart cities, and property management. Appear Here is dubbed the
Airbnb of retail and uses technology to create flexible leases for thousands of brands.
It is essentially an online marketplace to lease short-term space in the UK and US.
Loft is another company which comes up here. It is a solid company, but we are
concerned about startups that parade themselves as platforms. Loft is in Brazil – a
disorganized fractured market. It is the best “go-to” asset as an inflation hedge, and

134

Paul Schulte

Brazil is heading into another serious inflationary mess. So, this is a play on Brazilian
inflation as much as anything else.
Enertiv is a CRE company getting much attention in New York. It is an all-in-one
platform for CRE.

Section 3: Highlighting companies with public equity.
We reiterate SmartRent above. The very disappointing performance of SPACs has
caused a recent and dramatic reform in the way they are being rolled out. SmartRent
is on the road now and completed the SPAC process recently. This is definitely worth
paying attention to as it is a first mover in an important space.
The second company we highlight is KE Holdings. This is a recent China listing
on the NYSE as BEKE. It is another example of what can happen in digitizing assets when the proper infrastructure is laid – 5G, super apps, smart cities, cloud, and
blockchain infrastructure. Its partner is Tencent and does real estate transactions for
sales and rentals. It also engages in finance and renovation. It has a 15% market share
in second homes and a 5% share in new homes. It holds a number one share by far.
Coverage has been picked up by GS, Jefferies, and several Chinese brokers. It has no
leverage.

Section 4: A vitally important case study in this chapter is Linklogis. Excellent company with world-class technology but poor returns.
Section 4.1: Strong management, proven track record, high barriers to entry, number
one position.
Linklogis is the ultimate digitized supply chain finance ecosystem. It is the leader in a top priority of China: SME funding for working capital on blockchain and
connected to BSN. It is another company which is right time, right place, right

135

M O N E Y M E TAV E R S E

t­ echnology, right people. And we emphasize the importance of this company being in
the middle of two top priorities of China: BSN and SME funding. It is at the nexus
of the policy machine.
Linklogis’ mission is to redefine and transform supply chain finance through technology and innovation. Supply chain finance based on blockchain helps businesses along
the supply chain improve working capital and financing efficiency cost-effectively by:
(i) effectively authenticate supply chain transactions;
(ii) cooperating with other participants in the supply chain finance ecosystem;
(iii) managing operational risks; and
(iv) achieving integrated supply chain management.
Revenues are primarily generated from technology solution service fees based on
transaction volume. Fees typically range from 10 bps to 80 bps. Their SaaS model
offers a low cost of ownership for customers. It saves customers high upfront costs
and considerable investment in building their infrastructures and technology stacks
from scratch (i.e., ~¥30 – 40m upfront costs, and ~¥5 – 15m maintenance fees every
year). This efficient customer acquisition strategy benefits from an extensive network
of partners in the supply chain finance ecosystem.
Section 4.2: Technology – AI, OCR, blockchain, cloud, and eventual international
connectivity through BSN
First, AI-powered Optical Character Recognition (OCR) and Natural Language
Processing (NLP) technologies and data analytics automate workflows. AI accuracy
rates are ~99% for general documents and more than 90% for complex legal documents. Second, blockchain addresses information transparency and security issues.
With transaction data recorded on immutable ledgers, different parties can accurately
trace and validate transactions, building trust and managing risks more effectively.
Third, Cloud-based solutions can be accessed anywhere and anytime through mobile
devices or online portals.
Their SaaS model helps reduce the burden associated with system implementation, upgrading, and hosting. They have 400 technology professionals, 63% of total
staff, 233 patents, and 114 copyrights.
136

Paul Schulte

The primary offering is:
(i)

fully digitalized technology solution designed for securitization of supply
chain assets;

(ii) enhanced traceability and authenticity of supply chain finance and payment;
(iii) blockchain-powered cross-border supply chain finance technology solutions.
The practical workings are: public and indelible ledger include creditor and debtor
information, creditor’s rights amount, anchor enterprise confirmation date, asset maturity redemption date, and other information simultaneously recorded on the blockchain to form an immutable and traceable record. After the anchor enterprise cashes the
digital payment obligation, the platform will automatically allocate funds to all supply
chain companies that hold the debt. The result is lower financing costs, transparency,
and security. And any company entering into the system has virtually zero upfront costs.
The result is shorter payment cycles and cash flows improvement; improved access
to financing; digitalized, efficient, and convenient financing processes; and lower-cost
financing by leveraging anchor enterprises’ prime credit profile, with SMEs’ financing
cost-effectively lowered from a typical range of 10 – 20% to 5 – 6%.
Established partnerships mainly in China
Tencent-backed Standard Chartered support to access cross-border SCF market

Schulte Research

Receivables packaged for

Receivables funded by

Sources: Linklogis public filings

257

Figure 102

Figure 102: The company has a who’s who of financial institutions backing it.
These include (on the right) the Big Four banks, many regional and city banks, DBS,
137

M O N E Y M E TAV E R S E

OCBC, and Stan Chart. The customer base (on the left) is the entire Chinese economy, including the most significant cash cow in the universe (The Grid) as well as
problematic real estate firms – and everything in between. We suspect Linklogis will
become a key cog for BSN. Watch this space.
Section 4.3: Funding and risk: an awesome coterie of clients and funders.
The chart above shows the funders and the customers of Linklogis. It is essentially
a who’s who of China, including all the top Tier 1 banks and top regional city banks.
The top tier banks which fund it include ABS, CCB, BOC, and ABC. Of course, Tencent is a major founder since it is a controlling shareholder. Several large city banks
are also funders.
On the flip side, the customers whose receivables Linklogis packages represent the
Chinese economy: utilities, telecoms, industry, property, services, and exporters.
This company is very operationally geared to the Chinese economy, so it is a perfect proxy for growth expectations. Although it is well-funded, it does have exposure
to large property companies like Evergrande, which is known to have excessive leverage issues. As a factoring company, it has wild swings in working capital to the tune of
billions each quarter, producing high volatility in the stock price if there is a liquidity
squeeze when the balance sheet is leveraged.

Section 5: Additional research in PowerPoint format.
The PowerPoint deck in this chapter goes throughout the integration of smart
buildings with smart cities. It looks in detail at two other important companies. One
is in the US and is Compass. The other is Bukalapak and is in Indonesia. They are
both doing fascinating things in their way. Proptech now feels similar to fintech 5-6
years ago. A small group of entrepreneurs is taking it seriously. However, too many
giant monoliths are sitting and watching, slow to act, confused by the speed of things.
They remain paralyzed at their own risk.

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Schulte Research

Chapter IV: Proptech and Blockchain

236

Global Summary:
Blockchain as the railroad, Big Data as the cars
Fixing transparency, traceability, AML, KYC for future advancements in data analytics (e.g., edge/quantum computing)

US key players

NFT
Intellectual property

Crypto

Fintech

Property
Money
Insurance
Art/Wine/Sports

NFTs

Gaming
Rewards and incentives

China key players

Insurtech

Proptech

Risks

Schulte Research

Monopoly behavior
Antitrust hindering
development

Railroads Required

Blockchain (e.g., BSN)
Central Bank Digital Currency

Incentives to develop
proprietary technology
Fragmented data
Public trust

Sources: Schulte Research

237

139

M O N E Y M E TAV E R S E

Schulte Research

Section 1: Proptech landscape

238

Categorizing Proptech business models
Fintech and Proptech at crossroads: spin off from fintech in a move to better address the real estate industry

Schulte Research

By Market

By Technology

Indoor Mapping

Sharing Economy

Agent Tools

IoT

Real Estate Search

AR/VR

Property Management

RPA

Facility Management

Blockchain

Construction Management

Cloud

Home Services & IoT Home

ML & AI

Sources: Schulte Research

239

Smart city fundamental layers

Urban layer
Scenarios

Platform service
layer
Storage &
computing

Smart transportation

Smart security

Smart
environmental

Smart government

Smart education

Smart energy

Operation & mgt.
platform

Big data platform

Schulte Research

City service

Platform
m service
ce layer
ay platform
St
torSmart city
ting
g
Storage
& computing
operation

Smart healthcare

Command center

center

Communication

Sensor terminal
layer
Data collection

Platform
m service
ce layer
ayprotection
Storage
St
e & computing
mputing
ti

Platform
a Mobile
service
aye
networklayer
4G/5G
Storage
& computing
or
ng

Broadband

Smart camera

Smart sensor

Platform
a
service layer
aye
Smart phone
Storage
or
& computing
ng

IoT

Wearable device

Smart infrastructure

Sources: Schulte Research

240

140

Paul Schulte

Application: 5G slicing network
Slicing network empowers secure and integrated wireless police system

Converged
command center

Application

Public security intranet & video cloud network
Core network / network slicing

Network
5G base station

Schulte Research

5G CPE

Patrol car /
motorcycle

Terminal

Mobile surveillance

Patrol robot

AR goggle

Sources: Schulte Research

241

Application: 5G slicing network
Technical Framework of 5G Smart Healthcare

Application

Remote diagnosis &
treatment

Smart ward

Platform

Health
management

Internal medical application platform in hospital

Core network

Application

Hospital intranet

Schulte Research

5G base station

Internal mobile
medical device

Terminal

Remote diagnosis &
treatment device

Ambulance

Sources: Schulte Research

242

Application: 5G slicing network
Securitize smart cities using blockchain

Interface Layer

Smart Energy
Smart Parking

Smart Home
Smart Health

Smart Traffic
Smart Cleaning

Applications
Permissionless
(Public)

Database Layer

Permissioned
(Private)

Distributed Ledger

Communication Layer

PAN
Bluetooth
6LoWPAN

LAN
Wifi
Ethernet

Light
Humidity

Pressure
Stepper

WAN
3G
4G

Ethereum
NXT
Telehash

Schulte Research

Networks and Protocols

Physical Layer

Motion
Temperature

Soleniods
Motors

Sensors and Actuators
Sources: Schulte Res
Research
arch

243

141

M O N E Y M E TAV E R S E

Proptech use cases
Proptech covering a wide range of pain points for real estate start ups

58%
54%
48%
44%

46%

44%

42%

40%

Schulte Research

32%

Planning permission
proces s

Source: KPMG

Building management

Transactions

Customer experie nce

Data management,
security & privacy

Marketing & insights

Performanc e
measurement &
tracking

List management &
compliance

Lease renewals

An Annual Review of The Real Estate Industry

244

Key drivers of growth
Proptech trends disrupting the property & real estate sectors
Transforming the way customers are being served:

Assess profitability of
apartment purchase

Locate buildings

Real-time data on housing
In-depth market analysis

Big Data in Real
Estate

Rapid deal closing
AI saves c.US$1.2 m to a single business in 6 months
Automated workflows

Process & analyze data

IIoT
Ensures efficient natural resource consumption

Drones providing a 360 degree view display

Leads to an improved supply chain

Provides protection for on-site workers
inspect

Schulte Research

Nature-oriented solutions

they no longer have to manually

Drones pre-empt any maintenance requirements and planning

Minimize emission and pollution levels

Sources: byteant

245

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Paul Schulte

Key drivers of growth
Proptech trends disrupting the property & real estate sectors
Automate first point of contact: customer representative no longer needed
reducing business costs, and enhances likelihood of lead conservation

Smart retail can drive:
Reliability and security

Personalized experience: Chatbots becoming increasingly clever to create
a tailored experience through analyzing individual preferences

Easy deployment
Sales
Customer experience
Better decision making

Property walkthroughs accelerate sales process

Variety of benefits to real estate:

Geographically distant site tours

Transaction management: allow agents and brokers automate transaction
process

Schulte Research

Project management assistance from offsite experts
Avoid unexpected expenses through information modelling

3rd party integration: integrate into other systems such as payment
gateways, CRMs, etc.

Increase decision making activity from leasing customers by providing
efficient viewing

CRM: build and manage relationships
Marketing automation: create targeted campaigns
Property management: manage leases, properties and maintenance

Sources: byteant

246

Market map
Reshaping how properties are bought, sold & managed
List & Search Services

Investment/Crowdfunding

Schulte Research

Brokerage

Property Management

Sources: CB Insights

247

143

M O N E Y M E TAV E R S E

Schulte Research

Section 2: Company profiles

248

Linklogis

Schulte Research

Case Study

249

Case study 35 – Linklogis

Company Overview
Capital light business model with strong leverage, self-reinforcing supply chain finance ecosytem
Business model

Go-to-market strategy
Established and value-oriented partnerships with major anchor enterprises
and financial institutions both in China and globally

Leading technology solution provider for supply chain finance in China
Digitalized and specialized solutions to optimize mission-critical workflows
for SCF and payment, enabling financial institutions and anchor enterprises:

High technological barriers to entry, need to continuously enhance its
current position

To effectively authenticate supply chain transactions;

Transaction-based revenue model, generated from volume of transactions
on the platform

Cooperate with other participants in the SCF ecosystem;
Manage operational risks; and

Established customers (i.e., Anchor enterprises and Financial institutions)
refer Linklogis solutions, propelling flywheel effect on customer acquisition

Achieve integrated supply chain management

Goals

Limitations
Competes with large well-funded competitors backed by large
conglomerates with fire power

Re-define and transform supply chain finance
Expand overseas footprint and replicate business model in the international
market

Attractive financial profile combining growth and high operating leverage.
However, face significant liquidity and credit risks

Schulte Research

Shorten critical liquidity needs and cash collection cycle for SMEs

Unclear exposure to Real Estate market (e.g., Evergrande)

Strengthen existing industry verticals coverage and expand into different
verticals and geographies

ABS market demand and short-term borrowing loans availability

Continuously invest in technology and infrastructure to solidify current
leadership in an increasingly competitive SCF landscape

Customer concentration risk, macroeconomic, and regulatory risks

Launch Bill Cloud and Olea platform in H1 2021

Sources: Linklogis public filings

250

144

Paul Schulte

Funding since inception
c.US$365 m worth of cornerstone investment lock-up due to expire 9-Oct-21
Amount raised, lead investors, and post-money valuation
9-Oct-21: expiration lock-

FIL, SNP China Enterprises)

09-Apr-22: expiration lock-up period for other stakeholders (e.g., CITIC, Tencent, Trident, GIC)
Post-money valuation

Amount raised

$14m

$29m

$220m

$55m

$1,000m

1-Aug-16

10-Aug-17

15-Oct-18

9-Jan-20

9-Apr-21

Schulte Research

$5,800m

$1,525m
$1,050m
$26m

$101m

Series A

Series B

Series C

Series C – II

IPO Closing

Sources: CB Insights, Crunchbase Pro, Bloomberg

251

Blockchain, AI, Cloud, and Big Data
Blockchain-powered supply chain finance technology
Blockchain

AI and Cloud Computing

Blockchain technologies address information transparency and security

AI-powered Optical Character Recognition (OCR) and Natural Language
Processing (NLP)

Transaction data recorded on immutable ledgers

OCR, NLP, and data analytics capabilities to automate workflows, leading
the industry with AI accuracy rates of c.99% for general documents and
c.90% for complicated legal documents and contracts

Different parties can accurately trace and validate transactions
Solid trust foundation and risk management effectively

Cloud-based solutions accessed anywhere and anytime through mobile
devices or online portals

Joint venture with Standard Chartered to offer blockchain-based trade
finance platform Olea

SaaS model reduce burden associated with system implementation,
upgrading, and hosting

Cloud computing

Remarks

Linklogis first:

Team of 400 technology professionals (c.63% of total staff)
Launched second R&D centre in Wuhan, home to 30 R&D specialists

Schulte Research

To offer fully digitalized technology solutions designed for
securitization of supply chain assets;

233 patents, 150 trademarks, 114 copyright registrations

To apply blockchain technology to enhance traceability and
authenticity of SCF and payment; and
To launch blockchain-powered cross-border SCF technology
solutions

Sources: Linklogis public filings

252

AMS Cloud Solution

Schulte Research

Streamline supply chain financing

!”#

145

253

M O N E Y M E TAV E R S E

Multi-tier AR Transfer Cloud

Schulte Research

Blockchain permits transparency, scalability, efficiency, and security

!”#

254

ABS Cloud

Schulte Research

Securitization of accounts receivables in Asset-Backed Securities

!””

146

255

Paul Schulte

Cross-border Cloud

Schulte Research

Access to overseas market for cross-border supply chain financing

!”#

256

Established partnerships mainly in China
Tencent-backed Standard Chartered support to access cross-border SCF market

Schulte Research

Receivables packaged for

Receivables funded by

Sources: Linklogis public filings

257

147

M O N E Y M E TAV E R S E

Compass

Schulte Research

Case Study

258

Case study 36 – Compass

Company Overview
Traditional real estate agent selling tech valuation and trying to buy market share with investment money
Business model

Go-to-market strategy

Agent-centric business model, providing online platform for buying, renting,
and selling real estate assets

Aggressively expand using capital to hunt high-quality agents, acquire
brokerages and ancillary services such as title and escrow companies

c.2.5 3.0% taker fee on sale price of a home, with commissions paid to real
estate agents at

Improve efficiency of agents through technology stack including CRM
platform

Impressive QoQ (+72.3%) and YoY (+201.5%) growth in gross profit, reaching
c.US$372.7 m in Q2 2021

We believe hefty commissions and equity underpin growth agent network
instead of attractiveness to value-added technology Compass provides

Adjusted EBITDA profitability reached in Q2 2021 of c.US$74.3 m

IPO proceeds to fuel market expansion including internationally, focus on
ancillary services for higher margins

Goals

Limitations
Compass spending fortune buying smaller companies and paying out
higher-than standard commissions and incentives

Replace complex paper-driven antiquated workflow with seamless all
digital end-to-end platform for real estate agents
Increase agents count organically or through acquisitions

Technology centred around the agent seems overshadowed with Compass
buying market share with investment money

Schulte Research

Improve both business and agent efficiency through R&D investments
Accelerate adjacent services offering, including Title and Escrow services,
Real Estate Marketing

Disruptor by capital not innovation: aggressive expansion at the detriment
of their original business model by strengthening Compass as a luxury brand
hunting high-quality agents

Address international markets notably in Canada, Australia, and Western
Europe

Highly competitive market with little room to differentiate and increase gross
profit margins due to agents requiring high commissions to stay at Compass

Sources: Compass public filings, Protocol, The Real Deal, Mike DelPrete, Inman,

259

148

Paul Schulte

Products offering
Agent-centric business model, providing online platform for buying, renting, and selling real estate assets
Advising sellers
AI-driven renovation
visualization

Attracting and retaining clients
Home-improvement

Ticketing

Advising buyers
Title & Escrow

Listing search

AI-driven client prospecting
recommendations

Agent-client collaborative
home search

Open house management

Home valuation analysis

Listing tour scheduling &
coordination

Virtual tours & open houses

Marketing content creation & management, digital ad campaigns, email
and social Marketing

Market insights and reports

Listing analytics

Transaction closing management

Schulte Research

One-click listing video
creation

Mobile, Cloud native AI, and Data foundation

260

Funding since inception
Content/Section Title
Amount raised, lead investors, and post-money valuation
29-Sep-21: expiration lock-up period following IPO

Post-money valuation

Amount raised

$8m

$20m

$40m

$50m

$75m

$100m

$450m

$400m

$370m

$463m

17-Dec-12

25-Sep-13

21-Jul-14

15-Sep-15

31-Aug-16

11-Aug-17

7-Dec-17

27-Sep-18

30-Jul-19

1-Apr-21
$6,965m

$6,400m

Schulte Research

$4,400m

$1,800m
$150m
Seed VC

Series A

$360m
Series B

$800m
Series C

$2,200m

$1,000m
Series D

Series E

Series E – II

Series F

Series G

IPO

Sources: CB Insights, Crunchbase Pro

261

149

M O N E Y M E TAV E R S E

Bukalapak

Schulte Research

Case Study

262

Case study 37 – Bukalapak

Company overview
Transitioning from eCommerce to super app via partnerships instead of developing in-house
Business model

Go-to-market strategy
Core focus on eCommerce & inventory/supply chain for MSMEs, expanding
into other services (e.g., financial services)

Primarily eCommerce platform (c.76% of revenue in 2020)
c.70% of transaction volume in 2020 came from non-Tier 1 areas

Products and services through partnerships instead of proprietary
development (e.g., eWallet, mutual fund investment)

eCommerce platform to cross-sell/up-sell ancillary products and services

Broadened into financial services, such as loans and investment in mutual
funds (Reksa)

Goal to increase scalability to establish barriers to entry and anchor
network effect of family-businesses

BukaPengadaan: create own goods (e.g., office supplies)

MSMEs
of national GDP

Access to internet and eCommerce through local Warung (O2O)

Schulte Research

Goals

Limitations

Make Indonesia (particularly non-Tier 1) more financially inclusive and
establish itself as the go-to-lender and services provider

Lack of proprietary technology, white label partners to fuel growth instead
of developing in-house

Focus on Fintech space and digitising fragmented supply chain

Currently most of profit for non-Tier 1 commerce is captured by
manufacturers at the top of the supply chain

Continue to grow and leverage partnerships to establish barriers to entry
through number of users instead of proprietary technology

Focuses on niche non-Tier 1 cities, facing increasingly competitive
landscape from well-funded competitors (e.g., GoTo, Grab, Sea)

Supported by a network of Mitra, small/micro retailers with limited internet
access

Operating solely in Indonesia, limiting economics of scale

Sources: Bukalapak public filings, The new normal: digitalization of MSMEs in Indonesia

263

Funding since inception
Chinese Tech Giants are Investing in Bukalapak or Competitors
Ownership
Traditional banks investors (e.g., Standard Chartered, Madiri, Shinhan, BRI) help implement financial services

not the way forward for digitalisation of MSMEs

Alibaba with c.17.4% tied-in via Ant Group (investor in Lazada, eCommerce in SEA and Tokopedia now GoTo)
Microsoft holds c.1.21% stake pre-IPO
No intention to issue new shares in first 12 months of public trading
Post-money valuation

16-Nov-17

Major investors

Amount raised

$50 m

$100 m

$234 m

$400 m

$1,500 m

4-Oct-19

11-Mar-20

14-Apr-21

8-May-21

8-Jun-21
$6,000 m

$5,200 m

Ownership
31.90%
17.40%
12.60%
CEO

Schulte Research

Co-Founder
$2,500 m

3.53%
3.30%

$2,800 m

Co-Founder

2.78%
2.48%

$1,000 m
Series C

5.76%
4.22%

c.$4,400 m

Series D

Series F

Series F-II

Series F-III

IPO

2.40%

Sources: CB Insights, Crunchbase Pro, Momentum Works

264

150

Paul Schulte

Future Products/Services
Platform is proprietary; assisted/ran by outsourcing
Collaboration government, partners, and financial institutions

Technology
Focus on proprietary products and services recently through acquisition Five
Jack in 2021 (i.e., company behind largest marketplace for entertainment
and gaming goods)

Teaming with Bank Mandiri to turn Warungs into banking agents

Outsources most of the IT infrastructure

Indonesian Central Bank froze issuing of new eMoney licenses in 2019:

Selected by the government to disburse subsidies

Disrupted plans for own wallet, joint venture with Emtek and Ant for
DANA digital wallet
Tokopedia similar position and paired with Ovo

Infrastructure

Prospects

Databases

First mover advantage in the digitalisation of Warungs, currently c.39%
market share

Schulte Research

Leverage Big Data to provide added value in supply chain logistics and
financing

Analytics

BigQuery

Dataproc

Dataflow

Expand SaaS, logistics services, and financial services, building on top of
eCommerce platform to reach underserved population
Improve internet penetration and digitisation in non-Tier 1

AI
Sources: B
Bukalapak
kalapak p
public
blic filings
filings, Frost and Sulli
Sullivan
an

265

Indonesian digital landscape
Indonesia eCommerce Marketplace reached c.US$40 bn GMV in 2020
Key economic and eCommerce factors

Non-tier 1 access improving for Bukalapak

c.276m population, combined with young digitalised demographic

Non-tier 1 TPV as a % of Total TPV

c.66% unbanked or underbanked in Indonesia

70%

c.70% of ecommerce transactions from cities, where only c.10% of
population live
Rapidly growing internet-based economy: eCommerce GMV c.91%
increase from 2019 to 2020

61%

59%

Non-Tier 1 expected to contribute c.48% of Indonesian eCommerce market
in 2025E
2018

2019

2020

Indonesia digitalization poised to accelerate
High logistics costs for MSMEs especially, government rolling out Ecosystem Structuring National Logistics.
Initiating in Tier 1

Schulte Research

Government pushing to promote digitisation in Tier 2 and Tier 3
Non-Tier 1 currently more reliant on cash than Tier 1, unique opportunity for digital financial services
High barriers to entry in non-Tier 1, partnerships with Mitra and Warung provide Bukalapak competitive
advantage

Sources:Alpha JWC Ventures and Kearney Report, The Jakarta Post

266

Competitive landscape
Competitors better positioned to dominate eCommerce, Bukalapak unique selling proposition in O2O for MSMEs in non-Tier 1

Schulte Research

Competitive landscape

Visitors on the platform

1.
2.
3.
4.
5.
6.

Focus: O2O ecosystem for MSMEs in non-Tier 1 areas
GMV: c.US$3 bn GMV in 2020
eWallet: Partnered with DANA for eWallet through joint venture
Investor base: Backed by Emtek, Ant Group, GIC
Logistics: Increasing in-house logistics
Metrics: 14.3 m web visits and 7.0 m downloads in 2020

1.
2.
3.
4.
5.
6.

Focus: Local sellers & digital synergies, potential synergies with Gojek in
eCommerce, on-demand, and financial services
GMV: c.US$14 bn GMV in 2020
eWallet: Partnered with Ovo for eWallet through joint venture
Investor base: Merged with Gojek to form GoTo Group
Logistics: Outsource logistics via partnerships
Metrics: 356 m web visits and 16.3 m downloads in 2020

1.
2.
3.
4.
5.
6.

Focus: Fast-moving products in closed-loop ecosystem
GMV: c.US$14.2 bn GMV in 2020
eWallet: Proprietary eWallet
Investor base: Direct subsidiary Sea Ltd, regional dominance in SEA
Logistics: In-house logistics
Metrics: 391 m web visits and 37.9 m downloads in 2020

1.
2.
3.
4.
5.
6.

Focus: Premium products
GMV: c.US$4.5 bn GMV in 2020
eWallet: Proprietary eWallet
Investor base: Acquired by Alibaba, regional focus in local Indonesia
Logistics: In-house logistics via Lazada LeL Express
Metrics: 104 m web visits and 25.7 m downloads in 2020

First mover advantage in non-Tier 1
Low overlap due to MSMEs focus
No direct competitor in O2O space

!
!
!

Visitors from 01-May-21 to 31-Jul-2021
Visits Mobile

Visits Desktop

172.0 m
63.1 m

104.5 m
27.8 m

18.1 m

108.9 m

Bukalapak

Tokopedia

76.7 m

18.0 m

15.8 m

Shopee

Blibli

Lazada

3.8 m
14.4 m

6.2 m
11.8 m

3.0 m
12.7 m

Comparison key metrics
Scoring system (1-5): green (1/5)

Sea Ltd. / GoTo better potential super app
Higher take rate for MSMEs but lower
scalability potential
Limited expansion potential

yellow (3/5)

red (5/5)

Monthly visits

29.0m

156.2m

130.9m

27.3m

Monthly unique visitors

12.5m

49.8m

41.2m

11.1m

17.6m
9.3m

Visits / Unique visitors

2.32

3.14

3.18

2.46

1.9

Visit duration

03:51

06:29

06:14

05:45

02:54

Pages per visit

3.64

6.64

6.69

5.77

3.5

48.65%

41.40%

39.80%

49.63%

54.52%

Bounce rate

Sources: Similarweb
Similarweb, Momentum work,
work Bukalapak
ak
kp
publics filings

267

151

Chapter 5:
Case study – The fight for Southeast Asia:
Sea, Grab, and Payoneer
The last part of this book discusses the fintech battle for Southeast Asia. This involves
the big guns called Grab, SEA, and Payoneer.
Our analysis of this battle royale is remarkable because the geographical center is
Singapore, positioning itself along with Switzerland as a blockchain/crypto headquarters. Yet, we note that while all of these companies have globally competitive product
lines, solid features, and capable management, none possess any active and currently
usable blockchain technologies. This is perplexing. As with insurtech, we suggest that
this will require a substantial investment or partnerships with companies (like Linklogis) to advance blockchain solutions, especially in the area of working capital. This
is right up Payoneer’s alley.
Of the three Titans battling it out in Se Asia, we would lay our money on SEA.
Why? We can see from earlier parts of this book that so much of how digitizing financial data into tokenized assets tradable via crypto has already been found in the
world of avatars and video games. In our earlier book “The Digital Transformation of
Property in Greater China”, we noted that we are encountering the world of “Ready
Player One” already. The world of fully integrated avatars in self-sustaining financial
ecosystems is already here. The new and primitive world of non-fungible tokens is but
a small reflection.

152

Paul Schulte

In this way, SEA has a natural advantage as it was born in this world and can make
the leap to a blockchain-based financial world of funding digitized assets through
non-fiat currency. It can create purely digitized worlds for individual, and SME needs
both in finance and insurance. Further lifestyle needs which can be satisfied through
digital technology can stretch as far as the imagination. We are at the very early stages
of this journey.
This will be very expensive and will need talent. After its fund-raising activity,
SEA will have a war chest of $4 billion, and its business continues to be very cash flow
positive with a large and stable customer base. It has fuel to burn. On the other hand,
Grab has already spent $4 billion in capital for customer acquisition in many countries. Grab has been called out for shooting its numbers to reduce accounting losses.
This is fair as long as it comports with international accounting sleight of hand. It
must, however, show a path to profitability soon by offering an approach to consistent
profitability and a credible capex program. It continues to plow money into Indonesia
to compete head-on with Gojek. In light of Gojek’s acquisition of Tokopedia, this
substantially raises the stakes for Grab.
As for Payoneer, they have a very impressive footprint in SME activity. They
have taken a leaf from Alibaba, which cleverly created its payroll and “whereabouts”
employee app DingTalk. Payoneer has created a massive footprint with its SME
working capital app. For us, linking up Payoneer and Linklogis makes the greatest
sense. Linklogis has the technology, and Payoneer has the footprint in China and
Southeast Asia. Partnerships are the only solution for these companies, which, at
this point, can’t fix the engines in mid-air with blockchain solutions. They need to
look at the best in class in partnerships — Visa! Visa lends its platforms in exchange
for a myriad of benefits — footprint, technology, manpower, vision. Payoneer will
need to do this right. It will face more significant pressure to become a regulated
entity in each jurisdiction and, therefore, will need much more time to implement
multi-country solutions.

153

M O N E Y M E TAV E R S E

Schulte Research

Chapter 5: Case study The fight for southeast Asia:
Sea, Grab, and Payoneer

273

SMEs financing core data analytics in SEA
Different data, same desire for a credit product for SMEs

Key data sources
Financing/Payroll

Key data sources
eCommerce

Blockchain-based, vertically
integrated architecture: who
will set there first for c.600m
consumer and c.30m SMEs

Cross-border payments

Gaming vertical

Schulte Research

Financial (Seamoney)

Key data sources
Mobility
Food delivery
Financial services
Sources: Schulte Research

274

154

Paul Schulte

Grab

Schulte Research

Case Study

275

Case study 38 – Grab

Company overview
#1 super app in Indonesia catering to full spectrum of everyday needs
Business model

Go-to-market strategy
Key geographies: Vietnam, Myanmar, Thailand, the Philippines, Cambodia,
Malaysia, Singapore, and Indonesia

Key verticals: Delivery, Transportation, Carpooling, and Financial Services
Management trimmed outlook as vaccination rates in SEA lagging (i.e.,
c.26% in Thailand, c.14% in Vietnam and the Philippines)

Targets c.60% of SEA is unbanked or underbanked with 2x US population
Incentive-fuelled growth, disclosing adjusted net sales in public filings to
enhance public disclosures prospects

Recovery mobility service, sustained growth in the next five years, and
declining expenses in incentives required to sustain current valuation of
c.US$40 bn
Slower MTU growth but higher GMV per MTU, explained by network effect

Goals

Limitations

Super app in south-east Asia, similar to Alibaba or Tencent in China

Bleeding losses to fuel aggressive expansion both geographically and into
new verticals

Banking license in Singapore awarded in Q4 2020 ahead of Sea Ltd

Drivers classified as employees instead of contractors

Schulte Research

Payment licenses in 6/8 countries served (missing in Cambodia and
Myanmar)

c.60.4% voting power concentrated in CEO with 2.2% stake
Competitive landscape in SEA with firepower, including Sea that has
operations in Latin America, and GoTo (former Gojek)
High debt levels and recurrent capital injections required to sustain growth

Sources: Company public filings
(1) Jireh Chan Yi-Le estimates

276

Key verticals
COVID-19 pandemic fueled decline in mobility but strong growth in delivery services
Delivery

GMV grew 58% YoY to US$2.1 bn representing 53% of total GMV
Revenue up 92% YoY to US$45 m
Expanding into groceries delivery with GrabMart, GrabSupermarket, and GrabKitchens

Mobility

Mobility revenue up 129% to US$118m
Demand for mobility services severely impacted by COVID-19 pandemic, management expects demand to improve in
the coming quarters as vaccination rates increase across the region

Schulte Research

Financial services

Health

Financial services revenue up 156% to US$6 m requires substantial funding to reach scalability
Payments, lending, insurance, and wealth sub-verticals
Includes eWallet, Grab Pay Mastercard, BNPL services, working capital loans, and driver & consumer insurance

Latest development in the Health Industry as part of a joint venture with Ping An Good Doctor
Good Doctor offered in super app with prescriptions delivery
c. 30% stake in Good Doctor in Indonesia

Sources: Company public filings, Bloomberg

277

155

M O N E Y M E TAV E R S E

Sea Ltd.

Schulte Research

Case Study

278

Case study 39 – Sea

Company overview
Cash cross-pollination between Garena, Shopee, and SeaMoney to avoid leverage and equity injections
Business model

Go-to-market strategy

Technology conglomerate focused on south-east Asia

Garena game development studio fuelling Shopee and SeaMoney
expansion

Key verticals: eCommerce (Shopee), Financial services (SeaMoney), Video
games (Garena)

Targets rising middle class and unbanked or underbanked in south-east
Asia, Latin America, India, and expanding in Europe (Launch Shopee in
Poland)

Shopee reached self-sustained operating cash requirements, excess to fund
expansion of SeaMoney together with Garena

Overtook Tokopedia and Lazada as top eCommerce player in SEA and
Indonesia

Raising c.US$6 bn in Q3 2021, including US$2.5 bn in convertible note at
US$477

Consistently reinvesting proceeds to fuel business growth, even though Sea
could achieve profitability. Efficient internal capital allocation and external
through continuous equity injections

Schulte Research

Goals

Limitations

Expansion beyond south-east Asia, including eCommerce in Latin America
(Mercado Libre), India, and Europe

Requires banking licenses to enhance financial services products and
services in key markets

Currently seeking banking licenses, currently providing credit and financial
services for SMEs and digital wallet through SeaMoney

Requires significant cash injections in SeaMoney but has high upside
potential

Entered food delivery vertical (ShopeeFood) in Indonesia

Consistent share dilution due to recurrent equity injections, however
revenue per share growing steadily to counterbalance dilution effects

C.US$1 bn Venture Capital arm established to fund start-ups in SEA

Sources: Company public filings

279

Sea ecosystem development strategy
Internal cash injections from Garena and Shopee into SeaMoney and proven track record of allocating capital efficiently

Garena & Shopee cash injections to fuel

growth

Cash injections to launch and fuel

Ecosystem

Schulte Research

Future as super app?
Conglomerate focus on
digital technology?

eCommerce

Game
developer

Financial
services

Core Sea business:
c.US$4.6 bn in
FY2021E

Self-sustain operating
cash requirements;
c.US$4.8 bn FY2021E

Focus on digital
payments and
financial services

Sources: Company public filings

280

156

Paul Schulte

Payoneer

Schulte Research

Case Study

281

Case study 40 – Payoneer

Company overview
Exposure to China, representing c.34% of revenue in Q2 2021): adverse current macro conditions notably Evergrande
Business model

Go-to-market strategy
-to-

Cross-border payments and commerce-enabling platform to facilitates
management of international payments in over 200 countries

Focus on batch payments and customers with at least c.US$20 k monthly
transaction volume

Transaction-based revenue model with take rate up to c.3% of transaction
volume

Targets SMEs and emerging markets by offering monthly fees on top of
current take rate

Ancillary revenue streams in working capital solutions, tax solutions, risk
management, card issuance, and FX solutions
Key competitive advantages in number of currency routes and batch
payments facilitator

Goals

Limitations

Centralize payments possibilities on end-to-end payments platform to
facilitate cross-border payments (e.g., acquisition Optile in 2020)

Margins reducing as volume is growing faster than transaction revenue
Regulation risks for merchant capital advances considered as lending
product

Increase Payoneer debit card issuance through MasterCard

Schulte Research

Targeted acquisitions to enhance technology stack and growth

Competes with incumbents and prominent Fintech including PayPal, Wise,
Stripe, and Bitwise

Achieve c.20% EBITDA margin while maintaining c.20% organic growth

Concentration risk by relying on specific partnerships (e.g., Amazon
generating c.26% of revenue) or geographical coverage (e.g., China)
generating c.34% of revenue

Sources: Company public filings

282

Payoneer core foundations
Technology stack, ancillary services, and established payments underpin high barriers to entry
Global banking infrastructure
Smart routing platform
100+ countries local clearing

Risk & Compliance

CRM indicators

API access across platform

300 k applications monthly

Accounting/ERP/Partner integrations

Localized global account management
Scaled regional operations

Lorem ipsum

Secured and scaled technology

Global SME onboarding and underwriting

Global operations

Schulte Research

Data & Machine learning
Fraud management and WC underwriting
models

Regulatory infrastructure
Regulated across key markets
Licensed MasterCard issuer
Comprehensive AML program

Sources: Company public filings

283

157

Index of companies
Case study 1 – PayPal in the crypto space
Case study 2 – Visa in the crypto space
Case study 3 – Coinbase
Case study 4 – Silvergate
Case study 5 – Sygnum
Case study 6 – Circle
Case study 7 – Bullish
Case study 8 – PayPal
Case study 9 – Visa
Case study 10 – Mastercard
Case study 11 – Square
Case study 12 – Marqeta
Case study 13 – SoFi
Case study 14 – Robinhood
Case study 15 – Wise
Case study 16 – Flywire
Case study 17 – Tencent
Case study 18 – Ant Group
Case study 19 – Acorns
Case study 20 – Trustly
Case study 21 – Metromile
Case study 22 – Amwell
Case study 23 – Lemonade
Case study 24 – Oscar Health
Case study 25 – Root Insurance
Case study 26 – Clover Health
Case study 27 – Bright Health
Case study 28 – Apple
Case study 29 – Acko
Case study 30 – BIMA
Case study 31 – NEXT
Case study 32 – Shift
Case study 33 – Hippo
Case study 34 – Ping An
Case study 35 – Linklogis
Case study 36 – Compass
Case study 37 – Bukalapak
Case study 38 – Grab
Case study 39 – Sea
Case study 40 – Payoneer