https://thefintechtimes.com/what-is-driving-the-rise-in-ethical-banking-insight-ethicsgrade-netguru-impaakt/

The world is dependent on global finance working towards a fairer financial system for people, the environment and culture with a focus on sustainability, climate change and social justice. This July at The Fintech Times we are putting the spotlight on ethical finance/ethical banking, including environmentally and socially-conscious practices.

More and more people are investigating the benefits of sustainable and ethical finance. Two thirds are looking for more sustainable options for products and services across all aspects of their life, and over half are more likely to buy financial products from providers who demonstrate sustainable values.

But why? Following on from yesterday’s insight, we once again industry experts: what is driving the surge in ethical banking? 

EthicsGrade

Charles Radclyffe, founder and CEO of ESG data provider EthicsGrade, says the pandemic has led many to reevaluate aspects of their lives.

He says: “There is no single factor, but the pandemic has certainly given all of us pause to think carefully about what matters most to us, and so whether we are looking for our next job or looking to switch banking provider – the sense of purpose and values alignment is now much higher up the priority list than it was ever before.

“Over the past few years there has been a dramatic surge in ESG-focussed capital (three-times growth in eight years to > $40trillion), and this has had a trickle-down effect in the focus that companies have had.

“We’re also in the age where a tweet from Deborah Meaden in response to the war in Ukraine can cause a company’s corporate strategy to turn on a dime. Big brands are realising that they need to be authentic to their values throughout their operations, and banks are just one sector that is re-orientating around these principles.”

Mambu

Ethical banking is not new; however, we are clearly seeing another wave of demand for it from consumers, says SaaS cloud banking platform Mambu.

“Customers are demanding more from their banks, with an emphasis on access to digital services and a commitment to environment, social and corporate governance (ESG),” comments Anna Krotova, director of sustainability at Mambu.

Research from Mambu shows that almost two thirds (63 per cent) of global consumers say they would like the core financial services they use to be sustainable, and 60 per cent say they would like every financial service they use to be sustainable.

“Consumers are looking for more sustainable services, coupled with greater transparency from banks. Banks and financial institutions need to demonstrate that they can deliver on ethics, efficiency, and innovation, to retain their customers, and expand their market.”

Netguru

The surge of ethical banking is driven by several factors, according to Krzysztof Grzeszczuk, senior innovation consultant at software firm Netguru.

“With increased awareness of climate crises, consumers are more cautious when it comes to choosing their brands and their bank. And while in the past, a tree-planting programme for switching from paper to electronic statements might have been enough, customers are now sensitive to the overall impact of their bank on society and the planet.

“What use is there in a payment card made of recovered plastic if the corporate part of the bank is still financing a coal-based industry.”

Impaakt

It’s not just about demand but necessity, says Bertrand Gacon, CEO and co-founder of Swiss fintech Impaakt, who is committed to accelerating the transition towards an impact-driven economy by harnessing the power of the financial industry.

“Sadly, the surge is driven by the dire environmental and social challenges that we face,” comments Gacon. “Governments, companies and individuals are realising that the world needs to change, and that finance is critical to that change. The whole financial sector – banks, investment managers, pension funds and insurance companies – is under pressure.

“Customers want to understand the impacts of their own savings and investments and the wider activities of the banks and asset managers they use. Do they still fund oil and gas? How well do they check the supply chains of borrowers? Are they actively funding solutions to climate change?

“Shareholders and activist groups are asking similar questions and legal challenges are becoming more widespread. Finally, there is regulatory pressure (e.g. SFDR, EU Taxonomy) as governments look to improve the disclosures around sustainable finance and prevent greenwashing.”

Infosys

There are 3 main factors contributing to the acceleration of ethical banking as an industry trend, says Jay Nair, SVP, industry head, financial services and public sector at IT consultancy Infosys.

1. A shift in consumer behaviour: The pandemic has triggered lifestyle changes, brought in a
   hybrid working culture, and led people to a greater awareness of their priorities and choices.
   Milestone events like the Paris Climate Accord, COP26 and extreme nature incidents have
   spurred a greater level of social and environmental awareness amongst consumers.
2. Regulatory shifts – In some countries or jurisdictions like the UK, laws have also been
   established to hold firms accountable, such as ensuring companies are disclosing their
   climate-related financial information. This in turn is encouraging many banks to consider
   new ways that they could operate more ethically.
3. Competitive pressures – Big Tech and fintech organisations are disrupting the banking
   industry. Several new segmentation-based banks have also sprung up, appealing to different
   consumer needs. Banks are actively considering developing innovative product propositions
   to tap into new sources of revenue growth and retain consumer trust by ‘doing the right
   thing’.

Follow all our ethical banking/finance
articles this July for more industry insight

https://thefintechtimes.com/what-is-driving-the-rise-in-ethical-banking-insight-ethicsgrade-netguru-impaakt/

https://thefintechtimes.com/uk-revealed-as-europes-open-banking-pioneer-in-yapily-league-table/

Although open banking continues to mature across Europe, regional discrepancies could slow progress; according to Yapily’s annual European open banking league table.

The data ranked the UK as the continent’s most mature open banking data, followed by Germany and Sweden.

The open banking infrastructure’s league table measured local regulatory oversight and enforcement against API performance and standardisation, digital readiness, domestic payments infrastructure and bank integrations, including the presence of third-party providers (TPPs), to rank 18 European countries on a 10-point scale to reveal the maturity of their open banking market.

The top three

With significant political support and a pro-innovation regulatory environment, open banking adoption has continued to skyrocket in the UK.

There are now six million active users in the UK with open banking payments growing 500 per cent YoY; according to the latest statistics from the Open Banking Implementation Entity (OBIE).

The UK also boasts the highest number of registered third-party providers in Europe, helping to turbocharge the development of its open banking ecosystem.

Germany follows close behind in second place, aided by its strong regulatory supervision and usage of Berlin Group’s API standards; the most prescriptive after those adopted by the UK’s OBIE.

The country also makes the final with high payment conversion rates, maturity of local Bank API standards and rich coverage across all payment types scoring highly.

In third place, Sweden leads some impressive results for the Nordics in this year’s table, with regional regulatory regimes, highly developed digital infrastructures, and a collaborative approach to cross-border payments driving open banking maturity in the region.

Challenges on the horizon

Of the advancements identified in the table, it also discusses challenges to its adoption in equal measure, underlining how improved collaboration across the board is needed to ‘address a lack of standardisation and inconsistent levels of regulatory oversight and enforcement.’

Reflecting on the data, the company’s founder and CEO, Stefano Vaccino, comments how the industry is “on the brink of a financial revolution,” adding that further adoption will help to cultivate “better and more accessible financial services for everyone.”

Adding to this, the company’s director of public policy, Maria Palmieri, comments that despite the advancements, “discrepancies across EU member states could slow the rate of progress.”

“Although the European Commission has proposed to implement an open finance framework by 2024, member states that are still behind in open banking could face a number of interoperability challenges, exacerbating the fragmentation that already exists,” Palmieri comments.

“At the same time, the UK may have retained its position at the top of the leaderboard, but other markets are fast catching up. To stay there, the UK Government must act quickly and decisively to encourage further growth and innovation,” she added.

https://thefintechtimes.com/uk-revealed-as-europes-open-banking-pioneer-in-yapily-league-table/

https://thefintechtimes.com/adatree-introduces-industry-first-cdr-compliant-open-data-marketplace/

The world’s first open data marketplace has come into fruition with 10 participating platforms so far. 

Created by the Australian fintech and data intermediary and recipient platform Adatree, the Adatree Exchange will shift how organisations are able to procure regulated consumer data right (CDR)-ready, third-party software capabilities.

Co-founded by Jill Berry and Shane Doolan, former Tyro Payments and Volt Bank employees, the Exchange expands the use cases of CDR data.

Introduced by the Australian government back in 2018, CDR provides individuals with control over which businesses have access to their data. The framework requires access to consumer data to be approved by the consumer themself and has been hailed by the financial industry for its ability to refine which services are offered to the consumer.

Before the Exchange, businesses would engage a CDR intermediary to procure the raw data and then go out to market to find additional services to help digest that data or functions to apply to their unique business needs.

Following this, they would have to integrate with them and make sure the business meets the CDR outsourced service provider’s technical and security requirements too.

Now, businesses can leverage the Exchange to find a variety of CDR-ready third-party services to access capabilities like data categorisation, customer verification, data enrichment, credit application automation, de-identification, product comparison and account verification.

Many businesses are still unsure of what they could do with CDR data, and they faced the challenge of finding service providers that are accredited and competent in working with CDR data.

Around 90 per cent of the conversations Adatree had with businesses wanting to receive CDR data was about what they could do with the data. The Exchange aims to help businesses see the possibilities available to accredited data recipients.

The Exchange started organically, with Adatree’s clients and prospects wanting to access data initially, then asking for different use cases, augmentation and transformation to be built out.

Speaking on the origin of the Exchange, the company’s COO, Alex Scriven, comments “When Adatree launched at the infancy of the CDR in Australia, it was created as a data recipient platform for organisations to access CDR data.”

However, with the natural evolution of the industry, Scriven describes customers “wanting more options and capabilities around what they can do with this data,” adding that the more the company can do to increase open data use cases, the better the long-term result for the consumer.

Scriven confirms that the company has already begun to curate, vet and integrate with organisations across various sectors as part of its Exchange.

While Adatree will continue to build out its own capabilities, the Exchange will accelerate the ability of the company’s clients to access new capabilities from many different companies.

The Exchange is launching with 10 participants on the platform including energy comparison platform Accurassi, data analytics provider Personetics, end-to-end digital comparison platform CIMET and the product recommendation engine Stryd; among others.

https://thefintechtimes.com/adatree-introduces-industry-first-cdr-compliant-open-data-marketplace/

https://thefintechtimes.com/etoro-finds-only-5-of-uk-retail-investors-sold-investments-during-a-bear-market/

UK retail investors are standing their ground amid global market sell offs with more than nine in 10 (95 per cent) either holding onto their investments or ‘buying the dip’, according to the latest ‘Retail Investor Beat’, a quarterly survey of 10,000 retail investors across 14 countries, from social investment network, eToro.

Of the 1,000 UK investors who were surveyed as part of the study, only one in 20 (five per cent) have sold their investments in response to recent turmoil, whilst seven in 10 (71 per cent) have held firm and one in four (24 per cent) have bought the dip. The data suggests that those who started investing during the pandemic have also held their nerve and avoided knee-jerk reactions. Among investors with up to two years’ experience, 29 per cent have bought the dip, while 64 per cent have held onto investments and just seven per cent sold when markets went south.

Ben Laidler, eToro’s global market strategist, says:  “The golden rule of investing is that ‘time in the markets beats timing the markets’, so it’s encouraging to see investors, particularly those who are relatively new to investing, refraining from making any knee jerk decisions when things became choppy.

“Those who only started investing since the pandemic have been on a rollercoaster ride over the past two years. However, the message to these people is the same as it is to all investors: if you back firms you believe in and you have a long-term investment horizon, you significantly increase your chances of making a good return on your money.”

Commodities have been a particular favourite with UK investors looking to fortify their positions, with the proportion of people holding the asset class up 40 per cent since Q1, as investors battle the twin demons of rocketing inflation and rising interest rates. Investors largely turned to defensive sectors to help weather the storm, with energy (18 per cent) and utilities (16 per cent) up, but also snapped up tech stocks (16 per cent) – the new defensives in some circles – to help navigate market volatility. Healthcare and real estate (both 14 per cent up) also proved popular.

The data also highlighted that UK retail investors are feeling bullish in their approach – a third (33 per cent) plan to increase their holdings over the coming 12 months, with 47 per cent planning to invest roughly the same. Just 20 per cent plan to invest less.

However, they also recognise a number of risks to their portfolio – the biggest concern being inflation (50 per cent), followed by international conflict (43 per cent) and the state of the UK economy (40 per cent). That being said, only one in three (34 per cent) had repositioned to help protect their portfolios.

Laidler adds: “Despite a barrage of setbacks across global financial markets, our latest Retail Investor Beat shows that UK investors have found the strength to look past the short-term volatility and use these drops in prices to bolster their portfolios for the long term.

“For many, this is their first experience of a pullback in markets. Managing risk, mastering emotions and maintaining a focus on long term goals is something that even the most established investors struggle with. With bull markets ultimately built on the shoulders of bear markets and near four times the length and magnitude, staying the course should serve these investors well.”

https://thefintechtimes.com/etoro-finds-only-5-of-uk-retail-investors-sold-investments-during-a-bear-market/

https://thefintechtimes.com/this-week-in-fintech-tft-bi-weekly-news-roundup-07-07/

The Fintech Times Bi-Weekly News Roundup.

Funding and investment

Insurance startup YuLife has raised $120million in a Series C funding round. It takes YuLife’s total funding to $206million. YuLife will use the capital to broaden its reach into new global markets as well as scale its product range and deliver financial products.

Konsileo, the commercial insurance broker, has completed a £4.7million Series A funding round. The round was led by Growth Tech VC Committed Capital.  New investors also include a £900,000 investment from ACF Investors, a UK venture capital fund and angel investors. It plans to use the investment to accelerate its recruitment of UK insurance brokers and also further develop its technology platform.

Lucinity has closed a $17million Series B investment round, led by Keen Venture Partners. Its mission is to ‘Make Money Good through Human AI’. The funding round will help fuel growth as it expands its customer base, partner network, global team of experts and product offering.

Appointments

Kueski, a buy now, pay later provider in Latin America, hires Sung Hae Kim as the company’s chief people officer. Kim will promote Mexico as a technology and innovation hub, scale Kueski’s people practices around company culture and values, as well as help the company hire and develop talent.

Fintech Broadridge has appointed Tyler Derr as chief technology officer. He is responsible for overseeing Broadridge’s global technology teams including enterprise-wide software engineering, product delivery, architecture, infrastructure, cybersecurity, and technology operations.

Former head of Estonia’s financial regulator appointed to establish new office for crypto fintech SG Veteris. In this newly created role, Raul Malmstein will also secure a cryptocurrency licence. He will also act as director and money laundering reporting officer for the group.

American Express appoints Hannah Lewis as UK country manager and senior vice president, head of UK for international card services. She succeeds Charlotte Duerden who is promoted to the newly-created role of executive vice president, chief international customer officer.

Greenfield One, the early-stage crypto fund based in Berlin, has expanded its leadership team. Markus Hujara is named vice president (VP) marketing & communications, while Marie Hanowski is taking on the role of VP people. Greenfield One said it is pushing ahead with the expansion of its expertise despite turbulent markets.

Digital brokerage GCEX is expanding into the MENA region with Mehtap Önder named MD, GCEX MENA.  GCEX’s launch in Dubai follows the firm bagging regulatory approval to operate as a crypto exchange. GCEX enables brokers, funds and professional traders to access deep liquidity in digital assets.

Finally, Anchor – the B2B billing & collections platform – has onboarded Tal Ben Bassat to VP of finance & operations. He previously spent three years at Mastercard’s New Payment Platform division. Anchor aims to ‘flipping accounts payable and receivable on its head’.

Partnerships

Worldline and fintech manager.one have partnered to manage expense policies on corporate cards. The partnership will combine Worldline’s pan-European card issuing processing platform and manager.one expertise into business expense management.

SurePay, the confirmation of payee provider, and CBI, an Italian company that develops open finance services, have signed a partnership. This enables payment service providers to use the Check IBAN service to check gradually on Italian, Dutch and European account holders, including the UK.

The Lithuanian fraud prevention and digital identity verification startup iDenfy has partnered with Backed, a platform that allows users to speculate on the future of private companies. iDenfy will provide Backed with remote identity verification services to ensure a smooth and frictionless onboarding process.

Singapore-headquartered fintech UNOAsia has built the UNO Digital Bank in the Philippines in less than one year using Amazon Web Services (AWS). It is a ‘full-spectrum credit-led’ digital bank licensed under the digital banking licence framework established up by the Philippines central bank, Bangko Sentral ng Pilipinas.

RSwitch, the national e-payment switch of Rwanda, has announced a new partnership with African fintech giant EFT Corporation to enable Rwandans to access their money across all technological platforms. RSwitch will benefit from EFT’s extensive suite of end-to-end payment solutions.

Visa is partnering with fintech Flocash to promote digital capabilities for African SMEs through digital payments, supplier solutions and access to financial services. The first step in this partnership is the launch of Flostore, powered by a Visa digital wallet and the Flocash pan -African payment platform.

Launches

London fintech Plum has launched a debit card to help its customers take control of their finances. The card is Plum’s first move into spending, consolidating its position as a comprehensive money app. The plum-coloured debit card is made up of 57 per cent sea salt and 43 per cent crude oil.

https://thefintechtimes.com/this-week-in-fintech-tft-bi-weekly-news-roundup-07-07/

https://thefintechtimes.com/software-engineers-in-dubai-earn-30-more-than-those-in-other-global-tech-hubs-like-london-berlin/

According to global consulting firm Mercer, software engineers in Dubai with a minimum of three years in experience earn the third highest salaries in the world, when compared to other global technology hubs such as London, Amsterdam and Berlin – earning almost 30 per cent more.

This difference in compensation indicates the high demand for tech talent, while reaffirming the emirate’s ambition to attract the top digital talent, and become a global tech talent magnet that supports the growth of the digital economy as a key strategic priority for the UAE.

Additionally, and according to Mercer’s Cost of Living 2022 survey, while Dubai is the most expensive city in the GCC to live and work in for expatriates this year, ranking 31st in the world, it also shows that the cost of living in Dubai remains considerably lower than most tech-hubs, including London (7th), Singapore (8th), New York (11th), San Francisco (19th), and Amsterdam (25th).

The reasons for Dubai being a relatively more affordable city to work in are two-fold, the survey reveals. Given the rise of remote and flexible work globally, almost 60 per cent of UAE employers offer flexible working which reduces employees’ transportation costs significantly. For employees that do travel to work, purchasing a car as well as fuel costs on average remain the lowest in Dubai when compared to other technology hubs like London, New York, and Berlin.

Dubai is more affordable when it comes to housing and rental costs, which represent a significant portion of the cost of living in a city, with comparable accommodation costing double in London and New York, and 50 per cent more in Singapore. The cost of public transportation is also lower in Dubai as compared to other cities such as London and New York, which are markedly higher than Dubai at 152 per cent and 67 per cent more expensive respectively.

However, the benefit of lower accommodation and transportation costs must be considered on balance with areas in which the emirate is more costly. For example, employees in Dubai pay significantly more for high-speed internet, which is essential for flexible working; paying between 50 to 60 per cent higher than residents of London, Singapore, Berlin, New York, and Lisbon. Moreover, the flexible working culture that often sees employees work from cafes or co-working spaces is more costly in Dubai where the cost of a cup of coffee can be up to 70 per cent higher compared to Berlin, New York and Lisbon and close to 50 per cent higher than in London and Amsterdam.

Vladimir Vrzhovski, workforce mobility leader at Mercer Middle East said: “Dubai’s status as a global business hub, coupled with its income tax-free environment, world-class infrastructure, safety, and high quality of life make the emirate a very attractive market for talent. The demand for tech talent in particular will continue to grow in the UAE given the nation’s drive to be a global capital of the digital economy. Above all, a key incentive for tech talent is the opportunity for a significant uplift in salary when compared to other tech hubs, where the cost of living is higher in terms of transportation and housing. While inflation and rising fuel costs are a pressure on cost of living around the globe, Dubai is building a nurturing and highly competitive tech-ecosystem that pays highly competitive salaries – creating an environment that promises to attract and retain the best talent globally.”

He continued, “Over the years, the UAE has also implemented several initiatives that make it easier for talent to live, work and stay in the country. The launch of Golden Visa program in addition to Dubai’s recently announced Talent Pass aims to attract global professionals in the fields of technology amongst other key areas. National initiatives such as the National Program for Coders launched last year, is designed to attract 100,000 coders from around the globe and set up 1,000 digital companies by 2026.”

Mercer’s Cost of Living 2022 survey provides employers with current, extensive and reliable data to help them navigate compensation strategies for their mobile employees in the unpredictable global markets. It looks at the rising cost of living across 227 cities worldwide including the cost of packages for employees, which depend on factors such as currency fluctuations, cost inflation for goods and services and accommodation expenses. Mercer measured the comparative cost of more than 200 components — including housing, transport, utilities, food, domestic supplies and entertainment, among others for its ranking.

https://thefintechtimes.com/software-engineers-in-dubai-earn-30-more-than-those-in-other-global-tech-hubs-like-london-berlin/

https://thefintechtimes.com/domestic-and-international-payment-processes-consolidated-by-monoova-and-moneytech-fx/

Monoova, the Australian payments automation provider, has merged with foreign exchange organisation, Moneytech FX, to deliver a single platform that enables businesses to consolidate domestic and international payment processes and take advantage of faster cross-border transactions.

The businesses merged under the Monoova brand will be ideally placed to fulfil their mission of automating and streamlining payment processes, with clients able to access a toolkit for domestic and global payment flows through a single API gateway.

“With the new Monoova platform, clients can automate the receipt, payment and management of domestic and cross-border funds – reducing costs and resource requirements and allowing teams to focus on growth and innovation,” says Christian Westerlind Wigstrom, co-founder and CEO, Monoova.

The business – recently named Fintech Organisation of the Year at Fintech Australia’s Finnie awards – aims to reduce the processing time for cross-border transactions involving G10 currencies – the Australian dollar, the Canadian dollar, the Euro, the Japanese yen, the New Zealand dollar, Norwegian krone, pound sterling, Swedish krona, Swiss franc and the United States dollar – from up to three working days to near real-time.

“Our ultimate aim is to make the experience of moving money from Perth to Berlin as easy as moving money from Sydney to Brisbane,” says Westerlind Wigstrom.

Monoova and Moneytech FX are proven performers in the financial technology sector. Over the past five years, Monoova has moved about $50billion through its pioneering domestic-automation platform, serving a growing number of technology-enabled businesses such as Jacaranda, Hnry and Wise.

Moneytech FX has grown rapidly over the last two years and has expanded the features of its platform through multiple integrations, providing a self-managed and fully compliant service to clients. The business has moved about $12billion in cross-border transactions over the last 18 months.

The merged business will be headquartered in Sydney, with 70 team members dedicated to enhancing the client experience by continuing to add features and functionality to the Monoova platform.

Andrew Kilroe, chief vision officer and leader of the FX business, says, “Moving money seamlessly and securely across borders helps clients provide a high-quality experience to their customers and partners in overseas markets and brings financial inclusion to underserved markets. We’re very excited at the opportunity to deliver this capability to the Australian market.”

https://thefintechtimes.com/domestic-and-international-payment-processes-consolidated-by-monoova-and-moneytech-fx/

https://thefintechtimes.com/iso-20022-payments-new-era/

There’s five months to go until the adoption of ISO 20022 in Europe – the international standard for exchanging electronic messages between financial institutions, covering cards, payments, securities, FX and trade. Here’s a reminder of what it is and the progress so far.

The International Organisation for Standardisation (ISO) first published ISO 20022 – a global standard for payments messaging – in 2004. The new standard creates a common language for payments data across the globe, enabling faster processing and improved reconciliation.

Benefits of ISO 20022 include increased transparency, automation and digitisation of payments. It provides richer and higher quality data which means much more detailed information about the payment is available.

Which sounds promising when the cost of failed payments – due to inaccurate or incomplete information, or poor reference data and validation tools – is estimated to cost the global economy $118.5billion in fees, labour and lost business a year, according to Accuity data.

There is a global ISO 20022 programme underway to assist all banks to adopt ISO 20022 for all payments and reporting exchanges, which will complete in 2025. The standard has already been adopted in 70 countries to replace domestic or legacy formats, including Switzerland, China, India and Japan.

SWIFT, the global provider of secure financial messaging services, will enable ISO 20022 messages for cross-border payments and cash reporting businesses, starting from August 2022, on opt-in basis, and November 2022 for general availability. MT messages supporting cross-border payments and reporting transactions will be decommissioned in November 2025.

Bank of England and Pay.UK will implement ISO 20022 in the CHAPS and NPA (New Payments Architecture) in April 2023. In the US, The Clearing House (TCH) – operator of CHIPS, the largest private sector USD clearing and settlement system in the world –  plans to implement the ISO 20022 message format by November 2023.

ISO 20022 is ‘good news’

According to financial services consultancy Projective Group, the new framework will alter the way in which payments are received forever, unlocking the speed and transparency associated with low-value domestic payments, and connecting the financial world with far less friction.

Jacob Rider, head of payments for Projective Group, said: “The transition to ISO 20022 needs to happen – and fast – if the industry wants to reap the many benefits it provides. Payments have already become faster, more transparent and more trackable thanks to the widespread adoption of SWIFT gpi, but the current MT standard does not offer the quality of data needed in today’s digital world.

“With better customer experience, better compliance and better efficiency, ISO 20022 is good news for financial institutions, provided they manage this transition quickly and carefully.”

In the latest chapter of Mastercard‘s payment system modernisation insights series, publishd this month, it describes ISO 20022 as enabling several key pain points that exist for both banks and their end users to be addressed.

It says: “In an increasingly competitive landscape, ISO 20022 message standards can smooth the process of innovation, which is critical to long-term success. ISO 20022 delivers operational efficiencies while promoting and supporting the development of value-add products and services for banks, businesses
and consumers alike. As the shift to ISO 20022 rapidly picks up pace, those financial institutions that stay wedded to older standards risk being left behind.”

ISO 20022 adoption

A recent Mastercard review of 61 real-time payment systems around the world found almost two-thirds were based on ISO 20022 data standards.

Banking Circle says it has already adopted the ISO 20022 messaging standard, three years ahead of the 2025 deadline for completion.

Laust Bertelsen, CEO of Banking Circle, said: “To conduct business, financial institutions exchange massive amounts of information with their customers and other institutions. Such exchanges only work if the sender and receiver of a message have a common understanding of how to interpret this information. Rather than managing multiple market systems that speak different languages, ISO20022 offers a universal messaging language. Many real-time, low-value and high-value clearing systems around the world have begun their migration and are using ISO20022, with many more to follow by the end of this year.

“We are delighted to be part of the early wave of businesses that have adopted the new standard. It is perfectly aligned with our mission of simplifying cross-border payments, breaking down barriers to international trade by removing unnecessary delays and challenges with reconciliation and by being ready ahead of the deadline our clients can benefit immediately.”

What’s next for fintechs?

According to BrightBridge, a Midlands-based technology consultancy, banks who fail to initiate moving to the messaging standards of ISO 20022 sooner rather than later risk further setbacks down the line.

In a blog, it said: “With much change yet to pass in the coming years, 2025 may seem a long while off. Yet the institutions able to act now stand a greater chance of making the transition on time – before their existing products and services become obsolete.

“Compared to legacy formats, bank systems will need to process larger data volumes at higher speeds to allow for the real-time payments, daily liquidity management, and compliance checks of the modern world; and not forgetting sophisticated fraud detection and prevention.

“In an ideal world, testing should begin to take place from 2022 onwards – from ensuring the syntax and formatting information is accurate, to data within associated payment and clearing systems being mapped correctly.”

Are you ready for ISO 20022?

https://thefintechtimes.com/iso-20022-payments-new-era/

https://thefintechtimes.com/smes-enjoy-post-pandemic-profit-high-bolstered-by-international-trade/

Two in five SMEs in EEMEA are earning more money than before the pandemic, driven by digital growth and international sales opportunities, according to the latest Mastercard report.

Data from the company’s ‘Borderless Payments‘ report has brought to light how 46 per cent of small and medium-sized businesses (SMEs) in Eastern Europe, the Middle East and Africa (EEMEA) are now enjoying more revenue and profit than they did before the economic crash of the pandemic.

Its report identifies online business and international sales as key drivers of this, with 71 per cent recording above-global-average growth in online sales, while 77 per cent are planning to do more business internationally going forward.

The research, which covered 3,000 SMEs, highlighted that three-quarters had to make changes to their business model to survive the pandemic, while 64 per cent globally believe it has changed how they will do business forever.

The pandemic has accelerated digital transformation to tap into cross-border opportunities, with nearly half of SMEs in EEMEA saying they now do more business internationally.

Sixty-four per cent of respondents credit cross-border payments with enabling their business to grow, making it clear that cross-border payments will be a key focus for business growth across the EEMEA region, and therefore economic recovery, moving forward.

Fifty-nine per cent are now making and receiving more cross-border payments than they were prior to the pandemic, while 72 per cent say the pandemic has allowed them to source more competitive quotes from suppliers across borders and 46 per cent say using international suppliers reduces risk.

Speaking on the findings of the report, Stephen Grainger, executive vice president of Mastercard, describes how the impact of the pandemic and the unprecedented disruption it caused “realigned regional and global economics”, causing many SMEs to start exploring new markets.

“With small businesses in EEMEA and across the world growing their international customer and supplier networks at pace, especially online, it’s crucial that financial institutions have the right cross-border solutions in place to support them,” Grainger comments.

https://thefintechtimes.com/smes-enjoy-post-pandemic-profit-high-bolstered-by-international-trade/

https://thefintechtimes.com/chinas-fintech-and-internet-sectors-readjust-to-macro-risks-as-regulatory-environment-eases/

As the country continues its lockdown well into 2023 while consumer consumption slows, China’s economic challenges have become important drivers for internet companies’ credit profiles; dampening industry profitability and cash generation in the short term.

According to the findings of Fitch Ratings, China’s internet companies, including its fintech community, now face a diminishing threat of regulatory risk, bolstered by the attention of the country’s policymakers trying to support the economy. Yet in the aftermath of last year’s policy tightening, some companies may continue to encounter difficulties.

The American credit agency has predicted that China’s economic growth will fall to just 3.7 per cent this year, down from an 8.1 per cent expansion in 2021; a prediction that reflects the impact of lockdowns.

The recovery in activity is likely to be restrained and subject to setbacks, given that the government’s zero-Covid policy is set to remain in place well into 2023, with a high risk of new lockdowns if outbreaks re-emerge.

Although lockdowns can lead to some spending shifting to online firms, weaker economic growth will weigh on overall market growth.

Thus, even though the credit agency expects the market share of online retail to rise to 29 per cent of total retail in 2022, it only predicts a single-figure rise in revenue; slower than both years previous.

It puts forward that the strength of the recovery in consumption, expected in the second half of this year, will be affected by various structural changes, including price sensitivity among consumers amid macro-economic uncertainties and decreasing demand for specific non-essential goods and services.

Many Chinese internet companies have now realigned their strategic focus towards optimising costs, rationalising non-core businesses and pursuing more prudent mergers, acquisitions and investments.

According to the company, these adjustments should help reduce pressure on profitability and cash generation and preserve liquidity and financial flexibility.

There is also a risk that some Chinese internet firms could respond to the difficult demand environment by expanding into new business areas to drive sales. For example, the apparel brand JD has considered launching online food deliveries, which would pitch it against the sector’s dominant players such as Meituan and Alibaba Group, which both have a rating of BBB-/negative and A+/stable respectively.

Increased competition could put downward pressure on ratings for a number of internet companies, but some, such as Meituan, have less headroom than others at their current rating level.

The agency recommends that it would be premature to say whether or not the more conciliatory comments of the government to feature over the past few months mark a sustained alleviation of regulatory pressure on China’s large internet companies.

However, it also emphasises how recent developments, including the resumption of issuing monetisation licences for specific online games, the potential conclusion of an investigation into rideshare firm Didi and the government’s approval of a plan for ‘healthy’ development of the payment and fintech sectors, might mark the loosening of its grip.

Still, the agency retains its belief that regulatory risk will recede as a sector credit concern relative to macroeconomic factors.

Risks to the creditworthiness of specific companies will decrease as they are released from or deal with regulatory challenges, allowing them to focus more on core business challenges and growth.

However, the repercussions of previous regulatory actions will continue to be felt and regulatory risk will remain an important consideration for Chinese internet businesses’ ratings, regardless of potentially positive developments over the next few months.

https://thefintechtimes.com/chinas-fintech-and-internet-sectors-readjust-to-macro-risks-as-regulatory-environment-eases/

https://thefintechtimes.com/only-14-of-bnpl-users-in-the-us-havent-had-to-pay-a-late-fee-finds-consumeraffairs/

https://thefintechtimes.com/only-14-of-bnpl-users-in-the-us-havent-had-to-pay-a-late-fee-finds-consumeraffairs/

https://thefintechtimes.com/shariyah-review-bureau-to-supervise-tribal-credits-sharia-compliance-for-new-corporate-cards/

To review, certify and supervise Shari’a compliance for its new corporate cards and working capital products in Islamic markets, Tribal Credit, a global company from Silicon Valley that provides integrated financial solutions for startups across the Middle East and emerging markets, has partnered with Shariyah Review Bureau (SRB), a GCC based Shari’a advisory firm.

With this announcement, Tribal Credit has become one of the first standalone credit and expense management solutions to offer Shari’a compliant products in MENA.

SRB has been at the forefront of Shari’a advisory for more than seventeen years and leads in providing Shari’a certification, Islamic product structuring and Shari’a Audit services to international financial institutions, asset management houses, fintech, insurance firms, and alternative wealth management organisations.

Amr Shady, CEO and co-founder of Tribal Credit said: “As a result of the partnership with Shariyah Review Bureau, we will also maintain a dedicated Shari’a supervisory resource to ensure that our products remain Shari’a compliant”.

He also adds, “through our deep knowledge of the corporate cards and financing market in the startup and SME eco-system, we expect to unlock new potential for businesses and investors with this new partnership.”

Tribal Credit is strengthening its network and strategically managing the Islamic financial ecosystem in order to adapt fast to constantly changing business needs and deliver innovative credit card and financing solutions to startups and SMEs in the coming years.

Speaking about the engagement of SRB’s services to oversee its Shari’a compliant side of the business, Duane Good, Tribal Credit’s, co-founder, and president, said: “SRB’s experience in Islamic financial markets and deep understanding of the evolving needs of credit and expense management will enable us to develop secure, 360° and powerful Shari’a compliant finance solutions that provides startups in emerging markets with flexibility and financial control.”

Yasser S. Dahlawi, CEO at SRB, said: “Our establishment is a trusted partner to clients worldwide seeking to attain Shari’a compliance in their products and investments. Our multi-sector product certification and development consultancies all under a single roof have become quite a hit with our existing client base.” Commenting on the partnership, Dahlawi added, “We are pleased to have formed this relationship with Tribal Credit. We will bring a seasoned team of experts with unique scholarly expertise to ensure ongoing Shari’a compliance.”

https://thefintechtimes.com/shariyah-review-bureau-to-supervise-tribal-credits-sharia-compliance-for-new-corporate-cards/

https://thefintechtimes.com/revolut-launches-bnpl-offering-in-europe-pay-later-to-be-first-used-in-ireland/

Revolut, the financial super app with more than 18 million customers worldwide, is rolling out its pay later product, ‘Pay Later’ in Europe as it continues to expand its suite of products to help people get more from their money. Revolut Pay Later is the first pay later product in Ireland that uses an approved credit limit, designed to focus on affordability, putting the customer in control of when they want to use Pay Later rather than being restricted to certain merchant partnerships.

Beginning this week, some Revolut customers in Ireland will be eligible for early access to Pay Later, which will gradually roll out to all users in Ireland – where 1.9 million adults have a Revolut account. Pending the sign-ups for Pay Later, Revolut will look to offer the product in additional markets from the end of 2022 and beyond, with Poland and Romania to be the next markets gaining access to the product later this year.

Qualified customers can use Pay Later for purchases up to a maximum of €499, with any of their Revolut cards, including when paying with a Revolut Disposable Virtual Card which provides an extra layer of security for online transactions.

Customers can spread the cost of a purchase across three monthly instalments with the first instalment paid upfront by the customer at the time of purchase followed by two monthly instalments. The fee of 1.65 per cent per purchase is repaid as part of the final two instalments. Fully integrated within the app, once approved, customers can activate Pay Later on-the-go with one tap. Customers can view their Pay Later balance in the Cards section and in the Pay Later hub. If a customer would like to repay the instalments early, there are no additional fees to do so.

Whether it’s a new washing machine, hotel booking, or a birthday gift, customers can use Pay Later at any merchant that accepts Revolut online or in store. Unlike other pay later products, merchants do not sign up to Revolut Pay Later, and Revolut does not charge them for Pay Later transactions. It also offers a more robust assessment as it approves the credit limit before the transaction rather than offering an instalments payment method at the point of sale.

The fintech checks customer affordability by linking to customers’ existing bank accounts through open banking. Revolut will assess customer suitability and affordability for ‘Pay Later’ through an underwriting process.

Pay Later is another tool to help customers manage their spending all from one app. The Buy Now Pay Later market in Europe is set to grow to £680billion over the next five years. Revolut’s ‘Pay Later’ offering meets the growing consumer demand for this personal finance tool, while offering it in a responsible way, with a heavy emphasis on customer affordability and suitability.

Joe Heneghan, CEO Revolut Europe, commented “Pay Later is an exciting and fast-growing area of personal finance and consumer spending, and we are excited to add Revolut Pay Later to our financial super app.

“Revolut Pay Later gives our customers more control and flexibility over their personal finances, in a responsible way, by enabling them to spread the cost of purchases over three instalments. This encourages people to pay within two months, rather than calling on overdrafts and credit cards which don’t carry the same emphasis on quickly paying back the amount borrowed.”

https://thefintechtimes.com/revolut-launches-bnpl-offering-in-europe-pay-later-to-be-first-used-in-ireland/

https://thefintechtimes.com/visa-expands-shes-next-initiative-to-egypt-following-cib-and-usaid-partnerships/

Visa, the digital payments company, has launched its global She’s Next initiative in Egypt to economically empower local women entrepreneurs and SMB owners. The initiative is launched in partnership with Commercial International Bank (CIB), a bank in the Egyptian private sector, and the United States Agency for International Development (USAID), the international development agency and a catalytic player driving development results.

She’s Next, empowered by Visa, is a global advocacy program that brings practical insights and tools to women-led small businesses, including networking, mentoring, and funding opportunities.

Since 2020, Visa has invested +$2.2million in over 200 grants and coaching for women SME owners through the She’s Next grant program globally including US, Canada, India and Ireland.

Women business owners across Egypt can join She’s Next and apply for funding and access peer networks and educational resources that help to address the challenges revealed in a recent Visa study of women entrepreneurs. Key findings include:

• A majority of women – 69 per cent – said getting funding for their ventures had been a challenge, with 77 per cent using their personal savings to start their businesses. Fifty-three (53 per cent) also cited finding a business partner as a key challenge, with four in six women concerned about the long-term success of their startups.
• Three in 10 women (32 per cent) admitted that gender stereotypes have negatively affected their work as an entrepreneur, with 80 per cent saying they felt that societal approval or disapproval played a role in their choice of career or business.
• Two in three women said they currently accept both cash and cashless payments from their customers. More than half (53 per cent) of women said they would use the additional funding to invest in advertising and marketing.
• Being financially independent ranked as the top motivation when starting a business, followed by the desire to realise a dream, to achieve a balance between ‘home and work’, and to be a leader and responsible for the results of their business.

The areas women entrepreneurs said they wanted to learn more about were how to better set goals for profitability of their businesses, how to develop stronger strategies, and ways to survive the continuing impact of covid-19. The She’s Next initiative includes a series of mentoring programs that provide women entrepreneurs with access to practical insights from women leaders in the public and private sectors, as well as valuable tools and educational resources they need to grow and develop their businesses.

She’s Next, powered by Visa, will also deliver significant networking and capacity building opportunities in partnership with USAID.s. She’s Next is one part of a new partnership agreement between USAID and Visa to empower Micro, Small, and Medium Enterprises (MSMEs), with a special focus on women-led small businesses. This partnership will facilitate the use of electronic payment platforms to promote financial inclusion and foster inclusive economic growth. Through this collaboration, hundreds of MSMEs will receive capacity building training, and opportunities to join online markets, digitalise their supply chains, and introduce digital payment systems to their customers. E-commerce opportunities will also be expanded to enable further economic opportunities, especially for women-led small businesses.

Malak El-Baba, Visa Egypt’s country manager, commented: “Women who own and manage businesses face a unique set of challenges including access to capital and peer networks as well as societal pressures. That’s why we are excited to help women business-owners across Egypt today through the first She’s Next grant program and offer access to coaching and support through IFundWomen as well as that injection of $10,000 in capital. We are also honoured to be partnering with CIB and USAID, who will help us in our mission to not only empower women entrepreneurs, but also create for them a supportive environment in which they can grow and thrive.”

“We are proud of this partnership, which falls in line with CIB’s strategy to support small- and medium-sized enterprises and empower women led-business. Through ‘She’s Next,’ we plan to harness the power of Visa’s global brand and network to build awareness of women entrepreneurs, invest in them, and provide them with the tools and funds to build their businesses in Egypt,” said Hany El-Dieb, head of business banking segments, products and credit relations management at CIB.

USAID acting mission director Mark Driver said, “The US Government reaffirms our commitment to empowering women through this new partnership. Through USAID and Visa’s collaboration, five Egyptian women-led businesses will have the chance to win a $10,000 grant to grow their business Hundreds more women entrepreneurs will acquire new skills through training, and have access to learning resources to take their careers and businesses to the next level.”

This new grant program builds on Visa’s commitment to digitally enable 50 million small businesses around the world to kickstart recovery from the covid-19 pandemic.

As the trusted engine of commerce, Visa is also providing access to entrepreneurial knowledge and tools to unleash businesses in the digital era via Visa’s Practical Business Skills platform. The Visa She’s Next Grant Program will further support small businesses, with a particular focus on unlocking the potential of the most promising women entrepreneurs.

Women entrepreneurs in Egypt from all industries and sectors are invited to participate in the Visa She’s Next Grant Program. The winner will receive one of five $10,000 grants, a one-year IFundWomen coaching membership, and access to resources such as the workshop library and community of entrepreneurs.

https://thefintechtimes.com/visa-expands-shes-next-initiative-to-egypt-following-cib-and-usaid-partnerships/

https://thefintechtimes.com/regulatory-reporting-remains-highest-priority-for-finance-firms-despite-some-costs-doubling/

As pressure on the compliance function grows in a fast-moving and increasingly complicated regulatory and operational landscape, almost 90 per cent of financial services firms have reported increased compliance expenditure over the past five years, with one in 10 saying costs have doubled.

In this light, 44 per cent of firms are planning to invest more in regtech solutions in the next 12 months to cope with the growing pressure on the compliance function, while a further 41 per cent expect to continue investing the same amount as they did in the 12 months prior.

However, the cost of compliance is rising with demand, with almost all financial firms encountering increased compliance costs over the past five years, while costs have doubled for one in 10.

This insight was brought to light by SteelEye in its ‘Compliance Health Check‘ report, which was largely based on the compliance technology and data analytics firm’s survey of 170 senior compliance and risk professionals working within the UK and US financial service sectors.

Regulatory change and data fragmentation continue to be a challenge

Of the 170 professionals surveyed, 44 per cent states that they struggle with challenges related to data management. This included overlaying communications and trades to mitigate market abuse risk, using management information (MI) efficiently to demonstrate the risk and the consolidation and normalisation of structured and unstructured data.

A fifth of firms identified having to keep pace with regulatory changes as the biggest challenge in meeting regulatory obligations.

Opinions were split on dealing with regulators. While 42 per cent said that regulators are now more challenging to deal with, 48 per cent said they now find it easier to deal with the regulator, which could be down to technology making compliance processes more streamlined and straightforward.

When asked if they think firms are well equipped to handle more stringent regulatory rules over the next five years, encouragingly, three-quarters of respondents believe financial services firms are in a good position.

Compliance teams burdened with fragmented and manual processes

Administrative and repetitive tasks dominate compliance professionals’ work, pointing to the need for greater automation and digitalisation within the sector. In light of this half of the respondents reported that at least half of their firm’s compliance staff engage in administrative or repetitive tasks.

The survey demonstrated a clear trend toward centralised compliance management, with 56 per cent of respondents working within one team that oversees compliance for all branches and regions in which the company operates.

Meanwhile, a mere 12 per cent reportedly deploy a decentralised model where compliance is managed directly within individual jurisdictions, while it’s understandably more common for large organisations at 18 per cent.

In contrast, 88 per cent of small firms’ compliance management is fully centralised. Centralisation of the compliance function can enable businesses to be more strategic and allow for richer learning across multiple jurisdictions. However, this hinges on a strong data foundation for the business as a whole.

Regulation, surveillance and data management top of the priority list

When asked about their top two investment priorities for the year ahead, regulatory reporting ranked first overall.

However, when breaking this down by region it becomes clear that regulatory reporting is a leading investment area in the UK, whereas communication surveillance is the top priority in the US, particularly among banks.

This is unsurprising given the fact that US regulators are clamping down hard on communications rules. Last year’s $200million fine for J.P. Morgan by the Securities and Exchange Commission (SEC) demonstrated the importance of adequate monitoring of employee communications.

Firms are reaping the rewards of machine learning in compliance

Thirty-one per cent of firms said they have fully implemented a degree of AI or machine learning (ML) in their compliance processes. A further quarter are investing in the technology but are still in the implementation stage.

The subsections of larger firms and US-based respondents are even further along in that journey, with 75 per cent and 95 per cent respectively having partly or fully implemented AI and ML in compliance. And those that have implemented AI are reaping the benefits, including a marked improvement in the quality of their MI.

However, many firms are yet to take advantage of the potential of AI. Forty-four per cent have not started looking at AI’s possibilities for compliance. One cause of slow adoption might be the need for a strong data foundation which is necessary for successful AI deployments.

Speaking on the challenges that today’s compliance professionals find themselves currently facing, SteelEye CEO Matt Smith describes “keeping abreast with regulatory change, improving data quality and managing risks and controls within the business” as some of the main contenders.

However, the good news is that the benefits of using technology to remedy complex compliance challenges are now being fully realised, with Smith adding that “85 per cent expect to invest the same amount or more in regtech in the next 12 months.”

“Technology and data are key to establishing future-proofed compliance processes and procedures,” he comments. “It is great to see that a large proportion of firms view the enhancement of data quality as a top priority and that most firms are actively investing in technology.”

Smith adds that by prioritising how disparate datasets are consolidated and making better use of data firms can “more easily address regulatory change and other compliance challenges that will emerge down the line.”

The company remains “hopeful” that compliance programmes and compliance teams will be made more efficient by the influx of these investments.

“Doing so can enable the compliance function to pivot from reactive investigations and firefighting to a more proactive model for compliance management and risk detection.”

https://thefintechtimes.com/regulatory-reporting-remains-highest-priority-for-finance-firms-despite-some-costs-doubling/

https://thefintechtimes.com/real-estate-secondary-market-platform-launched-by-shojin/

Shojin, an FCA-regulated online real estate investment platform, has launched its secondary market offering to accommodate bespoke deals as the fintech scaleup continues to lower barriers to entry to the online property investment market.

Once the investment opportunity in a Shojin product has closed, the investor will then have the ability to list their investment on the secondary market, setting the number of units they are looking to sell and the price per unit. This market will function in a peer-to-peer format, like eBay, where a buyer and seller negotiate directly through offers and counter-offers to come to an agreeable price.

Shojin’s current investment threshold is £5,000, but the introduction of a secondary market will lower the minimum investment ticket size to £100, enabling more people around the world to create wealth by investing a fractional amount in real estate projects.

Sellers will have the ability to exit projects early releasing capital for upcoming or unexpected expenses, rather than staying in projects for the entire duration. Buyers will be able to participate in projects they may have missed on Shojin’s primary market and invest at different stages of project risk.

Both parties can be opportunistic and look to strike a mutually beneficial deal based on their risk and return appetites, along with real estate market sentiment. The negotiation capability of Shojin’s secondary market facilitates all these benefits which will ultimately increase investor confidence.

Jatin Ondhia, CEO of Shojin, said, “As a business, we are always looking for new ways to lower the barriers to entry to property investment. The introduction of a secondary market not only brings a larger number of prospective investors into the fold, but it means they can access the market with a lower initial investment, while simultaneously increasing liquidity for existing investors.

“Adding new investment opportunities to our platform is extremely exciting for us. As a business, we’re at an important inflection point within the real estate investment space. Having made our first investment outside of the UK and with substantial resources in place, we’re ready to continue with our global expansion plans.”

The launch of the secondary market follows Shojin’s Series A first tranche raise of £3million via a global pool of investors at a company valuation of £49million. Earlier in the year, Shojin secured a £5million underwriting facility provided by a London-based family office with a provision to increase it to £10million as the pipeline grows. Having focused exclusively on the UK property market until recently, closing its first non-UK real estate investment in Malaysia, the launch of the secondary market will help create liquidity to draw in new investors as Shojin sets its sights on new investment opportunities across the globe.

https://thefintechtimes.com/real-estate-secondary-market-platform-launched-by-shojin/