Fintech Favorites

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Banking and Payments

Finovate/FinDEVr veteran Token (F15; FD15) is leveraging its digital payments technology to help banks meet new requirements when it comes to third party data access. The company announced last month that it has signed a memorandum of understanding with fellow Finovate/FinDEVr veteran Fidor Bank (F11; FD16) that will make Token’s software available within Fidor AG’s digital banking and open community middleware technology, Fidor OS. For Fidor, the partnership will help it fulfill PSD2 requirements in Europe that mandate FI’s provide third party providers with access to customer data. “Our platform can be used as a springboard to generate revenues from PSD2 and XS2A,” Token founder and CEO Steve Kirsch explained. “In the longer term, it can be applied to enhance the security, speed, cost, and efficiency of a massive range of transaction-based banking functions which currently rely on traditional legacy process.” Kirsch included billpay, international money transfers, and e-commerce, as examples.

Meanwhile, neobank Tandem finished off 2016 with a $42.8 (£35) million “initial commitment” from the House of Fraser. The funding comes as part of an agreement that will have the U.K. based retailer offering its shoppers financial services via Tandem. House of Fraser currently offers consumers credit and loyalty cards; it said it will detail how it will use its new relationship with Tandem in the first half of 2017. Tandem currently offers savings accounts and is expected to add current accounts and credit cards later this year.

FI/fintech partnerships and investments such as the above notwithstanding, the U.S. Office of the Comptroller of the Currency (OCC) questions the ability of banks to respond “to the evolving demands for financial services and the entrance of new competitors, such as out-of-market banks and fintech firms” in its semi-annual risk report. At the same time, the OCC is doing what it can to make it easier for fintech companies to become a part of the regulated federal financial system. This includes a new chartering system announced in December, that would, among other things, enable fintech companies to operate across state lines.

misskaya_roboWealth Management and Investing

Gender-oriented financial advisory just picked up another win. The first licensed robo advisor in Singapore, Miss Kaya, was unveiled this week. Developed by former hedge fund manager, Gina Heng, the technology is designed to move beyond the “jargon, financial lingo, analogies” of investing and offer instead a solution that is less “daunting for the modern woman,” Heng explained. The platform includes educational resources on investing and financial planning, budgeting tools, and an e-wallet linked to a Miss Kaya debit card.

Blockchain

The fifth largest private sector bank in India, Yes Bank, announced that it successfully deployed blockchain technology to digital vendor financing. Yes Bank used Hyperledger technology supported by IBM (and demonstrated at FinDEVr Silicon Valley 2016 last fall) to enable its client Bajaj Electricals to digitize both fund discounting and disbursal to vendors.

Using blockchain to facilitate corporate payments, BNP Paribas reported that it has deployed the technology to process real-time payments in a variety of currencies for a pair of corporate clients – Amcor and Panini Group. The effort, part of BNP Paribas’ Cash Without Borders pilot project, is designed to provide an example for corporate treasury managers considering blockchain technology. “This proof of concept demonstrates that blockchain technology offers real opportunities to considerably improve our offer,” Head of Transaction Banking EMEA at BNP Paribas Jacques Levet said.

Putting their bucks where the blockchain is, a number of big banks are putting $18 million behind blockchain technology startup, Axoni. Among the FIs participating in the company’s Series A are Goldman Sachs, J.P. Morgan, Thomson Reuters, and Wells Fargo, which led the round along with Euclid Opportunities. Axoni now has more than $20 million in total funding. The company’s distributed ledger technology has been sought after by Wall Street firms, looking to use the blockchain platform for credit default swaps.

Lending

British Business Bank (BBB) gave UK P2P lender, Funding Circle, another $42 (£40) million to lend to small businesses. Funding Circle has received a total of $84 (£80) million from the BBB, which provided the lender with an earlier, $48.7 (£40) million infusion of capital in 2014. Funding Circle says more than 10,000 businesses have benefited since March 2013, and more than $5.2 (£5) million in interest generated “on behalf of the UK taxpayer.”

InsurTech

Auto financing is one of the areas where insurtech has held the most promise in terms of innovation. Idea Bank of Poland has unveiled a pay-as-you-drive financing solution that uses GPS technology to determine payment. The solution, Happy Miles, sets a rate per kilometer based on vehicle type. GPS tracks the distance, sends the data to be processed, and the borrower gets a bill each month for the amount due. Happy Miles is currently just for auto loans. But the company sees expansion into financing for trucks, as well as agricultural machinery and construction equipment and vehicles.

“What is important, in Poland, due to tax regulations, a popular and economical form of car financing is leasing. It’s like the market’s asking us to be transformed,” Idea Bank executive Dominik Fajbusiewicz said. Idea Bank has also earned attention for its fleet of mobile ATMs operating in 12 of Poland’s largest cities, including Warsaw.

Speaking of Europe, remember that FinovateEurope is right around the corner. Join us in London, February 7 and 8 for two days of the latest in fintech innovation from the Europe and around the world.

Fintech Favorites: Blockchain, the Banks, and the Underbanked

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Bye-bye blockchain consortium?

What are blockchain watchers to make of the recent decision by three big banks to withdraw from blockchain consortium, R3?

Goldman Sachs was the first to break ranks. One of the founding members of R3 in 2014, Goldman let its membership lapse as of the end of October, according to the Wall Street Journal. The withdrawal from R3 was not a reflection of Goldman’s interest in the technology; WSJ reports that the bank continues to focus on blockchain technology internally, pursue patents in the field, and last year was part of the team that invested $50 million in bitcoin startup, Circle Internet Financial.

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Santander was second, announcing its decision “within hours” of Goldman Sachs. The Spanish bank has said little about its decision (Santander provided CoinDesk with a nine-word response that confirmed their withdrawal and nothing more). And this past week, Morgan Stanley announced it was leaving R3.

So why are these banks headed for the R3 exits? One argument is that R3 is passing the hat, looking for equity investment in order to take the consortium to the next level. In fact, R3 is said to have lowered its funding target from $200 million to $150 million, and give bank members an equity stake of 60%. In a statement issued the same day as Santander’s announcement, R3 noted that consortium members “all have different capacities and capabilities which naturally change over time.” If the $150 million fundraising target is not reached, the round will be opened up to “the strategic investors.”

Blockchain and the underbanked

  • The role of the blockchain in supporting underserved communities is more than social justice hype. This week, more than 100 migrant workers from Myanmar concluded a test of a blockchain remittance solution developed by Everex. The mobile payments app is based on the Ethereum blockchain, and more than 850,000 Thai baht (approximately $24,000) was transferred.
  • A new paper by the Charities Aid Foundation cites blockchain technology as a way to help charities better manage donations, handle complex accounting challenges, as well as conduct research. The report, “Giving Unchained—Philanthropy and the Blockchain,” discusses a variety of ways the blockchain technology could be put to use, including enabling the donation of intangible assets such as intellectual property, “radical transparency,” and smart, “self-governing contracts.”

Blockchain.gov?

RJ Krawiec and Jason Killmeyer took to TechCrunch recently to look at ways that blockchain technology can be used to improve government services. “Blockchain is already driving a tremendous amount of investment and innovation across a wide range of industries, starting with financial services,” the pair wrote. “The government could be next.”

For Krawiec and Killmeyer, the just-concluded presidential election season in the U.S. provides one example of how blockchain technology’s “unique and seemingly contradictory combination of attributes” could be put to use. Digital voting and identification, electronic health records, and “audit-free tax audits” were among the use-cases the two suggested could be right around the corner given a sufficiently motivated public sector.

Bitcoin’s mini boom

Blockchain opened its 10 millionth digital wallet this week. Peter Smith, Blockchain co-founder and CEO, credited the election victory of President-elect Trump for the surge in interest in the alt-currency. Quoted in Business Insider, Smith said, “People are basically hedging against economic instability. It’s a worrying time to be holding a lot of British pound, or if you’re America, people flee to safe-haven assets. Bitcoin is one of those.”

Part of the gain in bitcoin prices is also widely believed to be a function of India’s rumored decision to ban the importation of gold. The country is one of the largest gold importers in the world, buying 700 tons a year. But efforts to fight money-laundering and reduce corruption may lead the Indian government to put restrictions on gold imports, as criminals shift toward alternative “safe haven” assets like gold.

A bitcoin pioneer’s blockchain-based comeback

Bitcoin pioneer Charlie Shrem has launched Intellisys Capital, a startup that will offer a private equity investment portfolio called Mainstream Investment that will issue tokens representing “blockchain-based shares” in a variety of companies in manufacturing, real estate, and other industries.

“The strategy is designed to create symbiosis between blockchain assets and traditional finance and to help many traditional sectors move toward state-of-the-art improvement,” Shrem’s company said in a statement.

Shrem was arrested and convicted of money laundering and acting as an unlicensed money transmitter in 2014. He was released from a high-security federal prison camp this spring. The case was controversial, with some in the cryptocurrency community insisting Shrem did nothing wrong.

Like the blockchain? You’ll love FinDEVr

If you’re a developer working with blockchain technology, have we got a conference for you! FinDEVr returns to New York, 21/22 March 2017 for two days of presentations all about the technology driving innovation in financial services today. Visit our FinDEVr page for more information.

Fintech Favorites

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Kara Tham and Goh Wei Hao of Top Image Systems during their demo at FinovateAsia 2016.

Two of the companies in today’s Fintech Favorites, IBM and ACI Worldwide, led presentations at our developers conference, FinDEVr, earlier this year. FinDEVr returns to New York City, 21/22 March 2017, and will make its London debut in June 2017.

Fintech in Asia

  • Thailand’s KBank will deploy IBM’s (FD16) Hyperledger blockchain infrastructure to make it easier to manage complex corporate credit business processes. The bank initially is piloting the technology as a way to certify Letters of Guarantee.
  • “Leading by example,” in the words of Lawrence Ang, MAS has published its first set of data APIs this week. The 12 APIs include datasets on exchange and interest rates; they are part of what Ang, executive director of MAS’s IT dept., says is part of an effort to “encourage financial industry players to publish open APIs on their datasets.” Ang says more datasets will be published as APIs “in the coming months.”

Blockchain

  • KBank’s use of Hyperledger is part of a growing trend toward deploying blockchain technology to simplify and improve business transactions. IBM Technical Evangelist Stefania Kaczmarczyk discussed the opportunities in blockchain technology during her FinDEVr Silicon Valley presentation last month, “Implementation of the Hyperledger Project at IBM with Blockchain-as-a-Service.”

Payments

  • PYMNTS.com interviews W.A. Proctor, VP and product line manager of UP Immediate Payments at ACI Worldwide (FD16) in the wake of the company’s announcement that it would partner with VocaLink to bring end-to-end payments to FIs.

It’s a bot world after all

  • Among the four companies to win Best of Show at FinovateAsia was Finn.ai (F16), with its white-label, virtual bank assistant.
  • Bots are no longer bound to the two-dimensions of a smartphone screen. City Union Bank in Chennai, India, has launched Lakshmi, an AI bot housed in the body of a humanoid robot that responds in English (“and a range of physical gestures”?!) to “generic questions” on more than 125 subjects. The robot, which stands about 20 inches tall and is being tested at HDFC Bank’s innovation lab, can also provide more detailed information such as transaction history on its display screen.

Regtech

  • Mizuho Bank’s subsidiary in the Netherlands is the latest FI to implement risk and regulatory reporting technology from Wolters Kluwer. Along with BGFI, Banco Santander, Taiwan Business Bank, Bank BGZ BNP Paribas, and its parent Mizuho Bank, Mizuho Bank Nederland N.V. will deploy OneSumX to help it meet new regulatory changes from the Dutch National Bank. These changes include providing reports adopting the global standard Extensible Business Reporting Language (XBRL) when producing financial reports.

Fintech Favorites

Alt lending

  • On Deck Capital (F12), Kabbage (F15), and CAN Capital (F13) agree to disclose SMB loan pricing.
  • Lending Club (F09) partners with MileagePlus to offer borrowers and investors a way to earn award miles when they borrow or invest.
  • American Banker: Bizfi (F15) Hires Former Lending Club Exec as New CEO.

Fintech in Asia

  • Let’s Talk Payments projects AsiaPac as a clear winner in revenue growth in its fintech outlook for 2017.
  • Invest HK launches Hong Kong Fintech Week 7-11 Nov 2016 and features FinovateAsia 2016 on Tuesday, 8 Nov.
  • HSBC collaborates with Hong Kong Applied Science and Technology Research Institute Company to launch fintech R&D lab.
  • Ant Financial, which acquired Finovate Best of Show winner EyeVerify (F16) this year, invests in Thai mobile money innovator, Ascend. See EyeVerify at FinovateAsia this week in Hong Kong.
  • Shanghai-based China Foreign Exchange Trade System (CFETS) joins R3 consortium.
  • SBI Ripple Asia and Japan-based SBI Holdings introduce blockchain-oriented consortium of 42 Japanese banks and financial services institutions.
  • Fintech investment firm Senjo Group opens new global headquarters in Singapore.
  • Malaysia to expand funding options for SMEs with registration of xis’s new P2P platform operators scheduled to go live in 2017.