AI Investing and New Banking Trends

Robinhood promises AI exposure for retail investors

Vlad Tenev said Robinhood is looking to give “normal people” exposure to the
fastest-growing private AI companies through a new fund, writes the FT today. “AI
is going to create ‘widescale disruption and we want people to have exposure to
the drivers of that disruption’, he said. Robinhood plans to offer tradeable
shares in a new fund managed by its subsidiary Robinhood Ventures, which will
invest in a highly concentrated portfolio of five or more ‘best in class’
private companies – and may borrow money to boost its return.” As stocks and
crypto surged this year, so did Robinhood with its shares gaining 225 per cent,
the third-best performing stock in the S&P500. It has benefited from new US
rules allowing employers to include assets such as private equity in retirement
plans. The trading business, which has become the face of retail investing,
recently acquired prediction market Kalshi, with Tenev suggesting it could take
a bite out of the insurance market. “A lot of people think that this evolves to
become more bespoke and personalised, a direction that’s very exciting,” he
said. “If you could price the risk of someone’s house being subjected to a
flood or fire, that could be a much better product potentially than the
insurance products that one can currently get.”

Work from home proves hard to reverse

What’s happening with your work from home rules? Nubank, a
company that literally grew up during the pandemic, wants workers to spend more
time in the office. The bank had allowed workers to spend up to 93 per cent of
their time working remotely. “Starting in July, employees worldwide must head
to the office two days a week, and then three days a week starting in January
2027. Around 70% of Nu’s roughly 9,500 employees will be subject to
the new rules, with exceptions for some business areas or in specific cases,”
reports Bloomberg. “Nubank’s new policy brings the fintech more in-line with
Brazilian banks, which are also keeping workers in hybrid setups that allow two
or three days from home a week. The amount of office days has increased in the
sector since 2022, but it’s still a contrast to the push by many US banks to
bring staff back to the office five days a week. (Chief executive David) Vélez
said Nubank, in determining the new policy, took into account not only work
rules in the financial sector but also among other industries.”

Australia’s Westpac said it won’t appeal a ruling that
allowed one if its workers to continue working from home. The Fair Work
commission found in favour of Karlene Chandler who challenged the bank’s
assessment that she needed to be in the office twice a week. She said it would
require two hours of travel a day each way, and she was responsible for
dropping and collecting her children from school. “Westpac Chief Executive
Anthony Miller said at the bank's results briefing this week he believed an
in-the-office rule for two to three days a week was best for the bank's
workforce,” writes Reuters.

The Sports Bank?

Andrew Smith, one of the co-founders alongside Nick Ogden at
ClearBank and later at RTGS, has another idea in the works, called SPORTA: this
time it’s going to be a bank of sorts built for community sporting
organisations and their members. The crowdfunding campaign will start this
month, but Smith’s own blog about the origin of the idea is worth a read. “That
moment came when I had the opportunity to help save a local cricket club,” he
writes. “Like so many clubs across the UK, it relied on benefactors to survive.
I’d seen this before, but when I looked at the financials, the reality hit me
hard: yes, I could step in and save this club. But in three, maybe four years,
someone else would need to do the same. The cycle would repeat. At the same
time, I kept coming back to another idea I’d wrestled with since 2018: the need
for hyper-personalised banking,” he writes. “Back then, I feared digitalisation
would kill off the bank manager, the person who truly understood the customer.
I was right. Banking became efficient, but impersonal. The technology to fix
that didn’t exist then. But in 2025, it does. Today, we can build a bank that
is both digital and deeply personal. A bank designed around the needs of clubs,
athletes, and fans.” You can read the full
post here.

How Lloyds uses customer insights for its own staff

Lloyds Bank compared pay of staff with four years plus of employment to pay for
the general public to assess their financial resilience ahead of pay
negotiations, the FT writes. The analysis found that staff pay had risen by
more, and the bank used the insights in its pay negotiations. “The bank’s customer insights team compared
the spending habits, saving rates and salary increases of its lowest-paid
employees to those of customers and presented them in salary talks with UK
trade unions, two people familiar with the matter said. Lloyds, which employs
about 65,000 people, had been locked in salary negotiations with staff. Its
customer insights team found that employees had fared better than the general
public during the cost of living crisis.” The bank said it had used anonymised
data. It offered a raise of £1,200 for both 2026 and 2027, which was accepted
by the two unions but rejected by a third union. Lloyds Bank encourages its
employees to become customers, and employees sign up for an account as a condition
of employment. One union said the use of data was intrusive but another said it
was helpful. “The information that was presented to us was helpful in the
context of how employees are managing through the cost-of-living crisis,” said
Ged Nichols, general secretary of Accord Union. “These are interesting
insights into how Lloyd’s staff have fared through the cost of living crisis
and show that on average their salaries have gone up by more than the general
population.”

The UK seems to be a top location for closing branches, but
Santander came up with another option: rather than closing a branch which would
turn into a coffee shop, it’s kept the branch and added a café and co-working
space. “Around half of those who use the cafés are non-Santander customers —
from students using the co-working spaces, to small businesses using the event
spaces — as part of the lender’s push to rethink the role of physical branches,”
The Banker reports. The bank said its account openings per employee, a result
of both face-to-face and digital sales, had doubled after the bank relaunched
branches as work cafés. ‘The cafés have been a huge success with customers
across the world, and they continue to prove popular across our five sites in
the UK, with a sixth on the way, and plans to expand to further locations
nationwide as part of our future growth plan,’ said Andrew Booth, head of
digital and assisted channels at Santander UK. ‘Our work cafés offer a new and
distinctive experience for both individuals and SMEs, whether that’s through
being able to use co-working spaces, superfast WiFi or hosting an event in the
dedicated event space — all can be enjoyed for free, by all,’ Booth said.” The bank now has 200 work cafes worldwide.

The forever mortgages of the future

Dealing with a serious cost-of-living issue, US president
Donald Trump has floated the idea of a 50-year mortgage. News outlets compared
a $400,000 loan at 6 per cent interest rate over a 30- and 50-year period, with
a 30-year monthly payment of $2400 against $2100 for 50 years. (The median house price in the US is $415,000
and current interest rates are around 6 per cent.) Interest over 30 years would
amount to $463,000 while interest over 50 years would cost $860,000. In Japan,
some people take 100-year mortgages, which ends up spreading the principal over
four generations. As you might image, principal reduction is glacial, but these
mortgages are taken up by a small number of people. Switzerland has come up
with another way to fund its tremendously expensive houses, where banks offer
near-perpetual mortgages, which often pass down through families. With a
perpetual mortgage the loan amount remains constant and “buyers” pay only the
interest. However, Swiss banks typically limit perpetual mortgages to a maximum
of 65-67% of the property's value (loan-to-value ratio). This conservative
approach protects both lender and borrower from market fluctuations. Many Swiss
homeowners use a hybrid approach: they take out a mortgage with two tranches.
The first tranche (usually up to 65% LTV) operates as a perpetual mortgage,
while a second tranche (the remaining 15-20%) must be amortized over 15-20
years. This allows wealthy individuals and families to maintain liquidity and
invest their capital elsewhere while still owning property, rather than tying
up funds in real estate equity. The system works partly because of
Switzerland's historically low interest rates and stable property market, making
the ongoing interest payments relatively manageable and predictable.

Eyeballs: the final frontier for fraud

Someone hasn’t been keeping up with the Mission Impossible
franchise. China’s Ant International is proposing smart glasses with iris
authentication as a new form of payment authentication, and says it will work
with Xiaomi and Meizu to create the devices. “Iris authentication is viewed as
being more resistant to the spoofing attacks that can plague other biometric
methods, such as voice, face or fingerprint recognition, thanks to a larger
number of distinguishing feature points,” reports Finextra. “Alipay+ GlassPay's
iris authentication feature compares over 260 biometric feature points to
verify and protect the identity of the user. It uses AI and advanced liveness
detection technology to counter fraud attempts using photos, videos, or 3D
masks.” While AI-enabled criminals are now able to create authentical copies of
your voice and even moving image, eyeballs still seem safe. It’s not as wild as
you might think. Mark Zuckerberg’s Meta is still convinced of the potential for
smart glasses, and Sam Altman has created a side business for eyeball
authentication connected to his World (formerly WorldCoin) cryptocurrency. Ant
Financial suggests the new glasses could be used for hailing taxis. We wonder
if the smart glasses fire laser beams to attract the driver’s attention?