Telefonica pairs up with Santander for banking 5G usecase

Telefonica Spain has announced a tie-up with Santander to launch a joint-innovation project to test out 5G applications in the banking sector.

The project will focus on three different usecases, 4K video conferencing, low latency cloud storage and virtual reality. The hope is to more readily engage customers and adapt their financial products to meet the new demands of the digital economy.

“The initiative with Santander Spain is the result of the collaboration with our corporate customers to ensure that 5G technology is deployed in a way that fully meets their needs, prioritizing the development of the most demanded capacities,” said Emilio Gayo, CEO of Telefónica Spain. “With initiatives like this we also ensure the early adoption of 5G and the positive impact on the Spanish industrial network.”

“This agreement with Telefónica responds to Santander’s commitment to innovation and to accompanying our customers in the transformation process towards the new generation of 5G communications,” said Rami Aboukhair, CEO of Santander Spain. “The new technology will allow us to have a better connectivity and faster speed of response in transactions and to offer all our customers the best experience and the best possible solutions.”

Starting with the video application, a 4K video conferencing link will be set up between two bank branches to offer ultra-high-resolution image, 4096×2160, and natural motion with zero delay. Secondly, a low latency cloud storage solution will be provided by Telefónica, based on the Hitachi Content Platform Anywhere Edge solution embedded on Telefónica’s edge computing infrastructure.

Finally, the pair will introduce co-working spaces developed in collaboration with Idronia that use Virtual Reality, 360 video and Edge Computing technologies. The aim is to offer an immersive reality service allows customers to remotely visit co-working spaces such as the Santander Work Cafe located at the Santander banking office in the centre of Madrid.

5G is being switched on in numerous locations and now it is the time to focus more heavily on the commercial side of telco. There might be some gain in offering eMBB products to both consumer and enterprise customers, but to see the promised value the telcos will have to explore new areas. European telcos might be behind other regions when it comes to engaging the verticals, but progress is being made.

UK is the tech start-up centre of Europe – research

A new report from Tech Nation has crowned the UK as the European hotspot for technology start-ups, and fourth worldwide for scale-up investment after US, China and India.

While the US led the rankings by a considerable margin, the UK managed to attract 5% of global high-tech scaleup investment, with capital investments in UK firms topping £6.3 billion for 2018. Digging down into the details, Tech Nation estimate the fintech firms are doing even better, attracting £4.5 billion of investment between 2015 and 2018, with the UK leading the world.

“The UK continues to exceed all predictions when it comes to tech growth,” said Gerard Grech, CEO of Tech Nation. “This report shows how the UK is a critical hub when it comes to global technology developments, with scale-up tech investment being the highest in Europe, and only surpassed by the US, China and India. This is a testament to the innovation, ambition and tenacity of tech entrepreneurs across the UK.”

The claim itself is based on various datasets, including information from PitchBook. By identifying the number of scale-up companies in each of the determined countries, and the value of investments made into these companies, Tech Nation has drawn-up the ranking. Scale-up companies are identified as those which have either achieved employment or revenue growth of 20% for two consecutive years and have a minimum of 10 employees.

The US is leading the rankings, which will come as a surprise to few considering the dominance of Silicon Valley on the technology industry, with China coming in second and India coming in third. US firms attracted 49.3% of the world’s scale-up investment, while China accounted for 20.4%.

The total scale-up investments made in UK firms was also 2.5X the value of what would be expected for a nation the size of the UK. In fact, tech scaleup deals delivered £5 billion of the £6 billion investments made in tech companies in the UK across 2018. AI seems to have taken the crown, accounting for £1.3 billion of the total.

Critically, this demonstrates the work which has been done to attract and encourage innovation, investment and start-ups in UK society is working. Perhaps there is some method to the government madness. Looking forward, all the signs seem to be heading in the right direction. With 5G networks on the horizon, the catalyst for growth is about to emerge.

5G will not necessarily change the world overnight, but the power of the networks has the potential to foster the unicorns of tomorrow. This is a network which will deliver new services in the same way as 4G did, demonstrating the importance of being one of the first to scale the connectivity boom.

The US led the deployment of 4G networks did not spur the economy into any great revolution, but the tools offered allowed innovation. Companies like Uber scaled because evolution of the networks, while an entire new segment of the economy was allowed to flourish. Without the connectivity tools to play with, these companies would have not had the potential to scale; the same can be said about 5G.

5G offers an opportunity to create new products and services. Artificial intelligence, cyber security, latency, MEC and high-consumption/speed data-applications can all exist without 5G, but they are more attractive, practical and viable with the next evolution of the network. Uber could have existed without 4G, but it is a disruptive success because of it. Joe Bloggs cannot conceive what products and services will be available over the next couple of years, but the right tools have to be in place to ensure the innovators can scale them.

5G won’t change the world, but it will offer the opportunity for innovators to create value for themselves, customers and the national society which fosters them.

What might be a hurdle before too long are the deployment plans of the UK telcos. Having a test-bed to create these products and services in the first instance is all well and good, but soon enough these start-ups will need customers to scale the business. The faster networks are deployed, the quicker these start-ups can get to market, engage customers, tweak the proposition and potentially create the Uber of the 5G generation.

The UK Government has been looking for ways to shore-up defences against the future, hoping to give the economy and society the greatest opportunity to thrive. This is why fibre rollouts, or mobile coverage gains are so important now even if there is no immediate benefit; it’s all about making the country future-proof, ready for the unknown and resilient to the future challenges. And cultivating start-ups is a critical component.

Not only does this have the potential to address the questions surrounding wealth in-equality, it removes the UK dependence on the financial sector. Tech is the dominating growth sector in the global economy, and the best way to reap the rewards is to create an environment suitable for start-ups, the companies who could steal the headlines in the future.

The UK Government has been preaching about the world it is doing to encourage innovation and start-ups over the last couple of years; perhaps this report is vindication of the work which has been done.

Facebook financial foray flops face first

Facebook has killed a feature which allowed users to pay connections through its Messenger app due to a lack of uptake.

The idea was a relatively simple one; Facebook’s Messenger app could be used to transfer funds between connections. The banks clearly thought it might be a goer, all the major institutions in the UK signed up, though a lack of consumer interest led the social media giant to pull the plug.

“The Facebook messenger functionality got all of the major UK banks on board when it was launched in 2017, but consumer uptake never took off,” said Oliver Wintle, Banking Analyst at GlobalData. “GlobalData’s 2018 Retail Banking Insight Survey found that 55% of users in France and 71% of users in the UK have never used Instant messaging to complete banking tasks.”

Why this feature failed to capture the attention of consumers is down to interpretation, GlobalData is suggesting it is simply down to breadth and depth. Considering how accessibly banking apps are nowadays, and the additional features which are available in the banking apps themselves, Facebook seemed to be addressing a problem which didn’t exist in the eyes of the consumer.

Another factor which you have to consider is the credibility of Facebook. Over the last 18 months, the social media firm has been central to a number of scandals, all of which has damaged the reputation of the brand. Asking consumers to trust Facebook in handling financial transactions, dealing with real money, might have been a step too far.

Facebook might be able to ask for user’s birthday or for data on their interests, but this is different to asking for financial information. In facilitating payments, Facebook is asking users to trust it with their hard-earned cash. To do this you have to have a lot of credibility in the bank.

While Facebook has certainly tarnished its reputation, it might also be the case no social media brand has the repute to introduce such an initiative yet. 55% of users in France and 71% of users in the UK have never used instant messaging to complete banking tasks, suggesting users do not view these platforms in this way.

Alongside the credibility issue, numerous telcos have launched features which allow customers to pay their contacts through text. Although this has the potential to fail in the same way Facebook has done, a lack of functionality compared to banking apps, customers trust telcos with their credit card details.

Facebook hit with Italian fine as share buy-back ramps up

The Italian watchdog is the latest to slap a fine on Facebook for misleading and abusing consumer confidence.

The Autorità Garante della Concorrenza e del Mercato (AGCM) has imposed a €10 million fine on Facebook after a lengthy investigation which begin in April. The watchdog has come to the conclusion the social media giant has violated articles 21 and 22 of the Consumer Code, misleading the consumer on how data would be collected, what information would be sourced and the commercial purpose.

To rub salt into the wounds, the AGCM also believes articles 24 and 25 of the Consumer Code were also ignored. These violations are a bit more nefarious as the AGCM has stated Facebook implemented an aggressive practice as it “exerts undue influence on registered consumers, who suffer, without express and prior consent”. A rather devilish picture is being painted by the Italian watchdog, with Facebook portrayed as the antagonist of a fair and transparent society.

For Facebook, this is simply another example of a government turning against it. It wasn’t that long-ago Facebook was a business every government wanted to get into the good books of and a brand which was admired by the majority of consumers. The Cambridge Analytica scandal has sent the reputation of the social media giant into freefall, pulling back the curtain on the terrifying complexities of the data economy. The difference between how the machine functions and how these billionaires have educated the masses who provide the fuel is quite staggering.

Despite the world turning against Facebook, it seems the management team is embracing the phrase ‘no such thing as bad publicity’.

Last week, an 8-K filing was made by David Kling, Facebook’s General Counsel and Secretary, to the Security and Exchange Commission, which authorises an additional $9 billion in the share buy-back scheme which commenced in 2017. This is the second time the management team has bolstered the chest, taking advantage of a decline in share price to seemingly take back more control of the business from investors.

Facebook Shareprice

As you can see from the image above (courtesy of Google Finance), Facebook share price has fallen by almost 37% since the summer, as the fallout of the Cambridge Analytica continues to scare investors. The management team clearly believe Facebook shares are being undervalued by the market, pumping cash into the share buy-back scheme perhaps to dilute the influence external shareholders can have on the business.

There are of course numerous reasons a company would repurchase shares. It might believe there is simply too much exposure on the market, it might be trying to reduce the influence on the business from external factors or it might not know what else to do with the free cash which it has available.

With Facebook increasingly coming under scrutiny by regulators and governments, it makes sense the management team want fewer shares on the exchanges. This minimises the damage which can be struck by negative press and unfavourable regulations, but also reduces the scrutiny which can be placed on decisions and future strategies. The management team have been under pressure recently for, what the market believes are, poor growth prospects.

However, there is a downside. Sometimes investors might consider the ramping up of a share buy-back scheme as a lack of ideas from the firm. Firstly, it is trying to protect itself for future earning calls, and secondly, it perhaps indicates the business does not know what to do with free cash, of which Facebook has a lot of.

Facebook has not been an innovative company for some years now. Most of the ‘new’ products and services introduced by the team are reinventions of something which already exists with the Facebook brand slapped on (marketplace, enterprise communications etc.), or are a blatant rip-off of a competitor’s idea. The Stories feature on Facebook and Instagram is clearly an imitation of the My Story feature on Snapchat. Some believe share buy-back programmes are evidence a firm has run out of new ideas.

Facebook is increasingly coming under pressure from consumers, governments, regulators and investors, though little is being done to reverse this trend. Posters have been displayed across the major cities promising the consumer it does care, and while executives have been meeting with governments, the answers being provided are increasingly unsatisfactory. The release of 250 Facebook emails and memos by the UK government has shed further light on the deception, though the response has been on par with Facebook’s form.

It’s almost like Zuckerberg and his cronies don’t care anymore. Instagram seems to be offsetting (at least partially) the decline in engagement on the Facebook platform, so there are still prospects to participate in the digital economy. The image of the company which is being created right now is one of arrogance. Facebook seems to think it is untouchable, and perhaps €10 million fine demonstrates it is.

How long will it take Mark to pay off this fine? Is Facebook actually going to be held accountable for wrong-doing?

Microsoft CEO and other execs offload $47 million of shares

It might be nothing, but it is always intriguing when major amounts of stock in public companies start shifting around, especially when it’s owned by senior executives of that same company.

Microsoft CEO Satya Nadella, President Jean-Phillipe Courtois and Executive Vice President of Business Development Margaret Johnson have collectively pocketed more than $47 million between July 26 and August 10 through disposing of Microsoft stock. Executives are of course entitled to sell shares to bolster bank accounts, it is after all part of their annual package, but when the three most senior executives sell off such amounts in a small window, the sceptical individuals in society will start looking for explanations.

During the period, five Form 4 documents were filed with the US Securities and Exchange Commission, these forms detail instances of named directors are either selling or purchasing additional shares in the company. Three of these documents were filed by Courtois, with one each for Nadella and Johnson. As you can see from the table below, we are certainly not talking about chump-change; in the case of Nadella, it was roughly 30% of his holding. The last time he offloaded cashed in was in 2016, though he still holds 778,596 Microsoft shares.

Beneficiary Date Shares sold Price Total
Nadella 10/08/2018 328,000 $109.4396 $35,896,188
Johnson 02/08/2018 47,000 $107.6716 $5,060,565
Courtois 26/07/2018 4,493 $110.83 $497,959
Courtois 08/07/2018 28,941 $109 $3,183,290
Courtois 09/08/2018 28,939 $110 $3,154,569

All three offloading shares at a similar time might be nothing more than coincidence, rewarding themselves some summer spending money. Looking at the Microsoft share price, selling shares bang in the middle of two quarterly reports does look like a good time to maximise cash, though the share price has consistently gone upwards at a very healthy rate since Nadella was appointed as CEO. Most might come to the conclusion there is no reason not to assume it would continue to.

Since his appointment in February 2014, share price has gone up by roughly 190%. Pivoting more to a cloud orientated business, Nadella was EVP of the cloud business unit prior to assuming the top office, has seen Microsoft reclaim its position as one of the most influential companies in the technology world. During the most recent earnings call, Microsoft reported $110.4 billion in revenues across the 2018 financial year, the first time $100 billion has been exceeded. Cloud and artificial intelligence were the winners in 2018.

As CEO, Nadella currently collects a base salary of $1.5 million, while receiving nothing for his position on the Board of Directors. According to the latest proxy statement from Microsoft, executives are paid 7.6% as a base salary, 73.2% as equity and 19.2% through cash incentives. By meeting all his personal targets, Nadella received an additional $7,032,406 in cash incentives over the course of 2017, while Courtois and Johnson pocketed $2,762,884 and $2,168,795 respectively.

Of course, the trio might have just preferred to have cash in their bank accounts than subject part of their salary to the sways of the financial markets, however the movement of significant amounts of cash is certainly noteworthy.