Mastercard to Enable Better Cross-Border Business Payments Into China

https://thefintechtimes.com/mastercard-to-enable-better-cross-border-business-payments-into-china/
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Mastercard and Bank of Shanghai have announced the ability for businesses in virtually any geography to more efficiently, seamlessly and securely send payments to China. With Mastercard Cross-Border Services, business customers will be able to transfer money to any local bank in China, reduce the cost of transactions, and access real-time exchange rates for the Chinese Yuan, all with a reduced need for additional documents and process.

Bank of Shanghai joins a growing list of global banks working with Mastercard to offer people and businesses a more predictable and more certain way to pay and get paid across borders. Mastercard Cross-Border Services connects 90 percent of the world’s population via cards, bank accounts, digital wallets, cards and cash agents, all through a single and secure point of access.

Stephen Grainger, EVP, New Payment Platforms at Mastercard comments: “China is a critical market for Mastercard’s customers, so we are delighted that Bank of Shanghai will help us advance the modernisation of cross-border payments into China. Our Cross-Border Services will enable our global partners to deliver a more convenient, cost-effective and certain payment experience for people and businesses everywhere.”

Mastercard Cross-Border Services enable financial institutions and partners to build flexible solutions that support multiple use cases and can reach a variety of payment endpoints nearly anywhere in the world via a single connection. Mastercard’s platform plays a key role in improving world-wide connectivity and provides innovative payment applications that enable customers with the choice to route transactions over card or
account-to-account infrastructure.

According to the World Bank, China is now the largest export economy in the world. In 2018, China exported $2.49T to destinations including the United State ($479B), Japan ($147B), South Korea ($109B), and Vietnam ($84B).

Huang Tao, Vice Chairman, Bank of Shanghai comments: “Cross-border financing has always been a core offering of Bank of Shanghai and the current climate has led to a heighted customer demand for this service. Now, more than ever, it is critical for us to support our customer’s international trade requirements, ensuring efficient and timely cross-border payments. Enabling Mastercard Cross-Border Services will ensure an improved cross-border payment solution with high efficiency, low cost and enhanced compliance. We believe that the Mastercard partnership will have a huge impact on businesses and consumers and will ultimately serve to support the growth of Chinese enterprises globally.”

  • Editorial Director of the The Fintech Times

https://thefintechtimes.com/mastercard-to-enable-better-cross-border-business-payments-into-china/

FIs and fintechs innovate with an eye on SMBs

https://bankinnovation.net/allposts/biz-lines/corp-bank/fis-and-fintechs-innovate-with-an-eye-on-smbs/
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Share At the start of the year, Bank Innovation predicted, “if 2019 was the year of the challenger bank, 2020 will be the year payments companies move closer to bank territory.” But as 2020 would have it, not much is what it seemed at the beginning of the year, with the coronavirus pandemic disrupting the …Read More

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Weekly Wrap: Fintech funding rebounds and lenders move into bank accounts

https://bankinnovation.net/allposts/biz-lines/lending/weekly-wrap-fintech-funding-rebounds-and-lenders-move-into-bank-accounts/
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Share Fintech funding rebounded during the second quarter. According to a report from CB Insights, funding increased 17% quarter over quarter to $9.3 billion from $7.9 billion in the first quarter. Fintech lenders, meanwhile, are trying to gain deeper customer relationships with bank accounts, while big banks are working to make their voice chatbots conversational. …Read More

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https://bankinnovation.net/allposts/biz-lines/lending/weekly-wrap-fintech-funding-rebounds-and-lenders-move-into-bank-accounts/

JPMorgan Chase’s Sairam Rangachari to speak at Bank Innovation Build

https://bankinnovation.net/allposts/biz-lines/payments/jpmorgan-chases-sairam-rangachari-to-speak-at-bank-innovation-build/
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Sairam Rangachari, global head of digital channels and open banking for wholesale payments at JPMorgan Chase, will speak at Bank Innovation Build, which will be presented in a fully digital format Sept. 9-10. He will give a presentation on open banking and best practices in innovation risk management.

Rangachari has been with JPMorgan Chase for almost three years. His work helps the bank connect corporate and institutional clients through digital channels and open banking strategies. Rangachari’s experience includes time with startups and banks, including a previous role as the head of digital engineering and card partnerships at Capital One. 

Rangachari previously told Bank Innovation that JPMorgan Chase is working to diversify its open banking and digital payments offerings. “Our business customers want to have a process where they manage by exceptions, as opposed to keeping track and managing every step of the way,” he said. “They’re trying to create agility for their business needs as their own customer experiences are changing.”

Bank Innovation Build speakers come from Citi, Wells Fargo, KeyBank, Royal Bank of Canada, Brex, BlueVine and other industry leaders.

Bank Innovation Build, which will take place Sept. 9-10 as a virtual experience, is a must-attend industry event for professionals overseeing financial technologies, product experiences and services. Other agenda items include changes in banking innovation operations and focus in the age of COVID-19, case studies on getting digital transformation back on track, and principles of design thinking implementation. This is an exclusive event for executives eager to learn about the latest innovations. Register here.

https://bankinnovation.net/allposts/biz-lines/payments/jpmorgan-chases-sairam-rangachari-to-speak-at-bank-innovation-build/

The great digital migration: 78% of consumers are changing payment methods

https://www.mobilepaymentstoday.com/blogs/the-great-digital-migration-78-of-consumers-are-changing-payment-methods/
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Visa’s Back to Business global study reveals small businesses and consumers, from around the world, that may initially been reluctant to adopt digital technology are now embracing it. But will this digital landscape remain in place for the future?

There’s a lot of talk, and a lot of percentages, being thrown around about how so many consumers are going digital and how so many small businesses are changing payment methods and a global study by Visa backs up the anecdotal information with research data.

The verdict: a portion of consumers and small businesses once reluctant to go digital prior to the pandemic have not only changed their payment methods, but are looking to continue the exploration of mobile and contactless payments moving forward.

Visa’s Back to Business study

The Back to Business study assessed the shift to digital commerce for consumers and small business, according to a press release. Conducted in the U.S., Brazil, Canada, Germany, Hong Kong, Ireland, Singapore and UAE, the study was directed by Wakefield Research between June 18 and June 29. For the study, 250 small business owners at companies with 100 employees were surveyed. For the consumer portion, Wakefield Research surveyed 1,000 adults age 18+ in the U.S., and 500 adults ages 18 and older in Brazil, Canada, Germany, Hong Kong, Ireland, Singapore and UAE. The data was weighted to ensure an accurate representation of adults ages 18 or oder in each market.

Throughout the height of the pandemic, consumers had expectations for a safe and ‘touchless’ payment experience, which was evident from the accelerated adoption of contactless payments and e-commerce. The study uncovered data that emphasized the importance of small business recovery efforts, and how consumers are adjusting.

According to the eight-market study of both consumers and SMBs, nearly eight-in-10 consumers worldwide (78%) have changed how they pay in order to reduce contact. For small businesses, more than two-thirds of SMBs (67%) have tried a new approach from launching an e-commerce site or changing POS technology, to keep their business on track.

“Consumers are putting COVID-19 safety measures at the top of their shopping lists and rewarding businesses that do the same,” Suzan Kereere, global head of merchant sales and acquiring, Visa, said in the release. “Historically, we see behavior change at the point of sale as a gradual shift over time. But, COVID-19 has created an immediate need for safer, more efficient shopping experiences both on and offline and consumers are responding by rapidly migrating to digital commerce. We want small businesses to know that Visa is here to help them navigate these new consumer needs and expectations, which will make their businesses stronger now and in the long run.”

The new expectation: Make it digital, make it safe

There’s an old saying about the difference of giving someone a fish to temporarily satisfy their hunger or teaching them to fish so they will never be hungry again, which is essentially what the pandemic has done for the consumer and small business owner. It taught them if they wanted to survive, they needed to change.

The pandemic forced new thinking, innovative ideas and even collaboration. Without such a global issue as the COVID-19 pandemic, would businesses have made the digital shift and would customers focus so intently on safety and health?

In each market Visa surveyed contactless payments are a driving differentiator. Nearly two-thirds (63%) of consumers would switch to a new business that installed contactless payment options. For close to half of global consumers (46%), using contactless payment methods is among the most important safety measures for stores to follow. Nearly half (48%) would not shop at a store that only offers payment methods that require contact with a cashier or a shared device.

Nearly four in five (78%) consumers have made changes to the way they pay, including shopping online when possible (49%), using contactless payments (48%) and not using cash as much (46%). A majority (70%) of consumers have used a new shopping or payment method for the first time, including 26% who have used tap to pay for in-store purchases, shopping for groceries or household items online (34%), curbside restaurant pick-up (28%) and buying online then picking up in store (25%).

Small businesses are optimistic

Despite the unpredictable nature of the pandemic, 75% of SMBs are optimistic about the future. Additionally, 71% of global SMB owners say they have received support from their local communities, with the most coming in the form of business referrals (33%) and favorable reviews (31%). An area for improvement: where consumers shop, as just 9% of consumers say they shop exclusively at locally owned businesses, whereas 15% shop exclusively at larger retailers, with a large mix of combined approaches falling in between these two extremes.

Globally, SMB owners estimate at least six to 10 more challenging months before their business is fully operational. Their greatest immediate concerns include revenue declines (52%), attracting new customers (46%) and having to reduce wages or salaries (22%).

More than a quarter of SMBs (28%) have tried targeted advertising on social media or sold products or services online (27%). Another 20% have adopted contactless payments. One-third (33%) of SMBs report they have accepted less, or stopped accepting, cash since COVID-19. Millennial SMB owners (41%) are significantly more likely to have accepted less or stopped accepting cash, compared to Gen X (31%) and Boomers (21%).

More than half (53%) of SMBs are likely to purchase a fraud management solution to help protect their business due to the shift to digital commerce.

In the United Arab Emirates (UAE), 44% of SMBs, compared to 20% globally, have enabled contactless payments for the first time since the start of COVID-19. Nearly 94% of UAE SMBs have changed or launched new efforts to keep their business on track, compared to 67% globally. SMBs in Brazil (84%) and Hong Kong (87%) also are trying new approaches in large numbers, including selling online (50% in Brazil compared to 27% globally).

Keep it clean if you want to stay in business

Two-thirds (67%) of consumers said they are taking some measure to keep their payment cards clean, with 33% stated they disinfect them. An overwhelming majority of UAE (89%) and Brazilian (87%) consumers are taking some measures to keep their cards clean, whereas Singaporean (50%), German (53%), Canadian (60%) and Hong Kong (65%) consumers fell below the global average.

This is a new era for both the consumer and the business. How each group chooses to move forward will dictate the future. And from the research it seems the future holds a world of digital possibilities.

https://www.mobilepaymentstoday.com/blogs/the-great-digital-migration-78-of-consumers-are-changing-payment-methods/

Intercontinental Exchange Agrees to Acquire Ellie Mae in $11 Billion Deal

https://finovate.com/intercontinental-exchange-agrees-to-acquire-ellie-mae-in-11-billion-deal/
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In a late-breaking announcement on Thursday, Intercontinental Exchange (ICE) announced that it has agreed to purchase mortgagetech platform provider Ellie Mae from Thoma Bravo. Valued at $11 billion, Ellie Mae will add to Intercontinental Exchange’s growing presence as a major workflow solutions provider for the U.S. residential mortgage industry. This growth includes ICE’s acquisition of a majority stake in MERS in 2016, and the comany’s acquisition of Simplifile three years later.

Ellie Mae President and CEO Jonathan Corr referred to these other players and the chance to collaborate with them in his remarks about the acquisition agreement. “We are excited to be joining the Intercontinental Exchange family and having the opportunity to work closely with Simplifile and MERS in helping our industry to realize the true digital mortgage,” Corr said. “We have been on a journey, as we have long said, ‘to automate everything automatable’ for the mortgage industry, and joining ICE, which has followed a parallel journey in global exchanges, will allow us to further accelerate realizing our vision.”

Founded in 1997 – and acquired by Thoma Bravo in February of last year in a deal valued at $3.7 billion – Ellie Mae offers a digital lending platform to help mortgage lenders originate more loans, reduce origination costs, and shorten the time to close. An alum of both our developers conference, FinDEVr, and making its Finovate debut in 2017, Ellie Mae reports that its customers save an average of $813 per loan, and close loans seven days faster, producing an average annual ROI of 698%.

During its time as part of Thoma Bravo, Ellie Mae recorded “nearly double revenue” while improving profitability, partnered with firms like AI Foundry to further streamline the mortgage origination process, and acquired fellow mortgagetech company Capsilon. Both AI Foundry and Capsilon are also Finovate alums.

“We partnered with Jonathan Corr, Joe Tyrrell, and the Ellie Mae team to advance their vision to automate the residential mortgage industry while also using Thoma Bravo’s deep software expertise to greatly improve the company’s operations and accelerate growth,” Thoma Bravo Managing Partner Holden Spaht said. “We are confident that being part of ICE will enable Ellie Mae to continue transforming an industry still in the early innings of digitization, and we look forward to following Ellie Mae’s continued success as part of ICE for many years to come.”

A Fortune 500 company formed in 2000, Intercontinental Exchange owns financial and commodity exchanges, operating 12 such regulated institutions in the United States, Europe, and Canada. The Atlanta, Georgia-based company also owns and operates six central clearing houses around the world. With revenues of $6.5 billion in 2019, Intercontinental Exchange is publicly traded on the NYSE under the ticker ICE. The firm has a market capitalization of $54 billion.


Photo by Scott Webb from Pexels

https://finovate.com/intercontinental-exchange-agrees-to-acquire-ellie-mae-in-11-billion-deal/

BBVA USA Works With Google To Offer Digital Bank Accounts

https://thefintechtimes.com/bbva-usa-works-with-google-to-offer-digital-bank-accounts/
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●  Digital bank accounts via Google Pay:​ ​BBVA will offer interested consumers digital bank accounts through Google Pay

●  Customer benefits, strategic alignment​: Customers will benefit from Google’s ability to build great customer experiences, BBVA capitalizes on its innovative capabilities

●  Open banking readiness​: BBVA’s Open Platform initiative underscores bank’s readiness for collaboration with tech companies of all sizes

BBVA USA​ today announced that it is collaborating with Google to offer consumers a digital bank account through Google Pay, continuing its focus on innovation in the financial industry.

This collaboration underscores ​BBVA’s strategy​ to continue organically growing the bank throughout the U.S., even as it deepens its transformation and capitalizes on the innovations that have changed the way it does business.

“When we launched our new 5-year strategic plan in January, we said that two key pillars were to ​reach more customers​ with our digital offerings and use our expertise in finance, digital and innovation to help them improve their ​financial health​,” said BBVA USA President and CEO Javier Rodríguez Soler. “This collaboration with Google is fully aligned with this effort – even more so in today’s world where the ability to conduct your financial life in a digital manner, from account opening to transacting to understanding financial health, is an imperative.”

When launched in 2021, the co-branded, FDIC-insured digital account will be offered via Google Pay and built on top of the bank’s existing infrastructure. Google will provide the front-end, intuitive user experiences and financial insights.

“Google is excited to work with BBVA USA in enabling a digital experience that is equitable for all and meets the evolving needs of a new generation of customers,” said Felix Lin, vice president of Payments Ecosystems at Google. “We believe that we can use our technology expertise to benefit users, banks and the entire financial ecosystem.”

For BBVA, the collaboration was made possible thanks to its decades-long focus on digital transformation and innovation, specifically its open banking initiative, ​BBVA Open Platform​, that enables the bank and its partners to acquire and engage customers by embedding financial products that create powerful consumer value propositions. BBVA Open Platform is a comprehensive developer platform that provides a suite of banking and payments services in the U.S. backed by a global financial institution.

“BBVA has focused for decades on how it could use digital to advance the financial industry, and in so doing, create more and better opportunities for customers to manage their financial health,” Rodríguez Soler said. “Collaborations with companies like Google represent the future of banking. Consumers end up the true winners when finance and big tech work together for their benefit.”

The new accounts will be available in 2021.

For more BBVA news visit, ​www.bbva.com​ and the ​U.S. Newsroom​.
Additional news updates can be found via ​Twitter​ and ​Instagram​.
For more financial information about BBVA in the U.S., visit ​bbvausa.investorroom.com​.

  • Editorial Director of the The Fintech Times

https://thefintechtimes.com/bbva-usa-works-with-google-to-offer-digital-bank-accounts/

The great digital migration: 78% of consumers have changed payment methods

https://www.mobilepaymentstoday.com/blogs/the-great-digital-migration-78-of-consumers-have-changed-payment-methods/
http://nmgprod.s3.amazonaws.com/media/files/2c/6f/2c6f9b45f98505ca6f3f380ee658b5ae/cover_image_1596804055.jpg.760x400_q85_crop_upscale.jpg?#

Visa’s Back to Business global study indicates small businesses and consumers from around the world that may originally been reluctant to embrace digital technology, now utilize it. But will this digital landscape remain in place for the future?

There’s been a lot of talk and a lot of percentages thrown around about how so many consumers have gone digital or so many small businesses are changing payment methods but a new global study by Visa backs up the anecdotal information with clear research.

The verdict: a portion of consumers and small businesses that were reluctant to go digital prior to the pandemic have not only changed their payment methods, but look to continue the exploration of mobile and contactless payments moving forward.

Visa’s Back to Business study

Visa released a global Back to Business study that assessed the shift to digital commerce for both consumers and small business.

Throughout the height of the pandemic, consumers had expectations for a safe and ‘touchless’ payment experience, which was evident from the accelerated adoption of contactless payments and e-commerce. The Back to Business study uncovered new data that emphasized the importance of small business recovery efforts, and how consumers are adjusting.

Conducted in the U.S., Brazil, Canada, Germany, Hong Kong, Ireland, Singapore and UAE, Visa’s Back to Business study was directed by Wakefield Research between June 18 and June 29. For the study, 250 small business owners at companies with 100 employees were surveyed.

For the consumer portion of the survey, Wakefield Research surveyed 1,000 adults age 18+ in the U.S., and 500 Adults ages 18+ in Brazil, Canada, Germany, Hong Kong, Ireland, Singapore and UAE. The data was weighted to ensure an accurate representation of adults ages 18+ in each market.

According to the eight-market study of both consumers and SMBs, nearly eight-in-10 consumers worldwide (78%) have changed how they pay in order to reduce contact. For small businesses, more than two-thirds of SMBs (67%) have tried a new approach from launching an eCommerce site or changing POS technology, to keep their business on track.

“Consumers are putting COVID-19 safety measures at the top of their shopping lists and rewarding businesses that do the same,” Suzan Kereere, global head of merchant sales and acquiring, Visa, said. “Historically, we see behavior change at the point of sale as a gradual shift over time. But, COVID-19 has created an immediate need for safer, more efficient shopping experiences both on and offline and consumers are responding by rapidly migrating to digital commerce. We want small businesses to know that Visa is here to help them navigate these new consumer needs and expectations, which will make their businesses stronger now and in the long run.”

The new expectation: Make it digital, make it safe

There’s an old saying about the difference of giving someone a fish to temporarily satisfy their hunger or teaching them to fish so they will never be hungry again, which is essentially what the pandemic has done for the consumer and small business owner. It taught them if they wanted to survive, they needed to change.

The pandemic forced new thinking, innovative ideas and even collaboration. Without such a global issue as the COVID-19 pandemic, would businesses have made the digital shift and would customers focus so intently on safety and health?

In each market Visa surveyed contactless payments are a driving differentiator. Nearly two-thirds (63%) of consumers would switch to a new business that installed contactless payment options. For close to half of global consumers (46%), using contactless payment methods is among the most important safety measures for stores to follow. Nearly half (48%) would not shop at a store that only offers payment methods that require contact with a cashier or a shared device.

Nearly four in five (78%) consumers have made changes to the way they pay, including shopping online when possible (49%), using contactless payments (48%) and not using cash as much (46%). A majority (70%) of consumers have used a new shopping or payment method for the first time, including 26% who have used tap to pay for in-store purchases, shopping for groceries or household items online (34%), curbside restaurant pick-up (28%) and buying online then picking up in store (25%).

Small businesses are optimistic

Despite the unpredictable nature of the pandemic, 75% of SMBs are optimistic about the future. Additionally, 71% of global SMB owners say they have received support from their local communities, with the most coming in the form of business referrals (33%) and favorable reviews (31%). An area for improvement: where consumers shop, as just 9% of consumers say they shop exclusively at locally owned businesses, whereas 15% shop exclusively at larger retailers, with a large mix of combined approaches falling in between these two extremes.

Globally, SMB owners estimate at least six to 10 more challenging months before their business is fully operational. Their greatest immediate concerns include revenue declines (52%), attracting new customers (46%) and having to reduce wages or salaries (22%).

More than a quarter of SMBs (28%) have tried targeted advertising on social media or sold products or services online (27%). Another 20% have adopted contactless payments. One-third (33%) of SMBs report they have accepted less, or stopped accepting, cash since COVID-19. Millennial SMB owners (41%) are significantly more likely to have accepted less or stopped accepting cash, compared to Gen X (31%) and Boomers (21%).

More than half (53%) of SMBs are likely to purchase a fraud management solution to help protect their business due to the shift to digital commerce.

In the United Arab Emirates (UAE), 44% of SMBs, compared to 20% globally, have enabled contactless payments for the first time since the start of COVID-19. Nearly 94% of UAE SMBs have changed or launched new efforts to keep their business on track, compared to 67% globally. SMBs in Brazil (84%) and Hong Kong (87%) also are trying new approaches in large numbers, including selling online (50% in Brazil compared to 27% globally).

Keep it clean if you want to stay in business

Two-thirds (67%) of consumers say they are taking some measure to keep their payment cards clean, with 33% saying they disinfect them. An overwhelming majority of UAE (89%) and Brazilian (87%) consumers are taking some measures to keep their card clean, whereas Singaporean (50%), German (53%), Canadian (60%) and Hong Kong (65%) consumers fell below the global average.

This is a new era for both the consumer and the business, even if it was driven by a pandemic. How each group chooses to move forward will dictate the future. And from where Visa sits, the future is a world of digital possibilities.

https://www.mobilepaymentstoday.com/blogs/the-great-digital-migration-78-of-consumers-have-changed-payment-methods/

RBI announces offline digital payments hub

https://www.mobilepaymentstoday.com/news/rbi-announces-offline-digital-payments-hub/

The Reserve Bank of India has announced it will be encouraging banks and other financial institutions to develop offline digital payments options for India. The goal of this initiative is to encourage underbanked rural communities to migrate from cash to card, according to a report by Finextra.

Due to a lack of internet connectivity in many rural areas, the banks will need to provide offline banking solutions. The RBI will provide an innovation hub to help other banks develop these cards, mobile wallets and other products and services, according to the report.

https://www.mobilepaymentstoday.com/news/rbi-announces-offline-digital-payments-hub/

COVID-19 driving contactless card use, mobile payments despite security, cost worries

https://www.mobilepaymentstoday.com/news/covid-19-driving-contactless-card-use-mobile-payments-despite-security-cost-worries/
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Safety and health concerns related to the ongoing coronavirus pandemic is “significantly,” increasing use of mobile payments and contactless credit and debit cards, according to data from the National Retail Federation and Forrester, an industry research firm.

“Health experts say there is no clear evidence that COVID-19 is transmitted by cash or credit cards but retailers are putting health and safety first and have rolled out a variety of no-touch payment options in order to err on the side of caution,” NRF Vice President for Government Relations, Banking and Financial Services Leon Buck said in a press release on the findings. “While mobile payments and contactless cards have accounted for a minority of payments in the past, the pandemic has clearly driven consumers to change their behavior and retailers to accelerate their adoption of the technology.”

The State of Retail Payments study, conducted every other year, found 67% of retailers surveyed accept some form of no-touch payment, and that includes 58% that accept contactless cards that can be waved past a card reader or tapped on the reader. That figure is up from 40% last year. Today 56% of retailers take digital wallet payments on mobile phones, up from 44% in 2019.

“Touchless payment methods are an important part of ensuring the health of retail workers and consumers but they do raise concerns about the security of payments and the fees charged to merchants to process transactions,” Buck said. “Retailers, banks and card companies need to work together to ensure that these transactions remain secure. And the card industry should not take advantage of this situation to rake in extra fees merchants would not pay otherwise. Card processing fees already drive up costs for retailers by far too much and ultimately increase prices paid by consumers.”

Since January, no-touch payments have increased for 69% of retailers surveyed.

Among retailers that have implemented contactless payments, 94% expect the increase to continue over the next 18 months. As of the time of the survey, 19% said no-touch accounted for more than half of their in-store transactions while 30% said it was 10% or less.

On the consumer side, 19% have made a digital payment for the first time since May, and of those, 62% used their phone and 56% used a contactless card.

In regarding to the experience, 67% were satisfied and 57% expect to continue using the purchase option once the pandemic has ended.

The main worry for retailer in using contactless technology is cost, cybersecurity and data privacy issues. One reason for the cost worry is that banks charge merchants the same 2.5% fee with contactless transactions as they do with credit card purchases and the fee goes up to 2.8% if the card is used via online or phone.

That means retailers are expected to pay about $1.6 billion more this year, according to payments analysis firm CMSPI.

“Curbside pickup and buy online, pick up in-store transactions are treated as ‘card not present’ online transactions by the processors, so retailers are paying an online rate even when these purchases are picked up at the store,” Forrester Senior Analyst Lily Varon said in the release. “Retailers feel these are really in-store transactions so there’s some pain there.”

Contactless transactions also cost more as they are typically processed over networks such as Visa and MasterCard when a PIN is not used. CMSPI estimates retailers could save $2 billion a year if more banks that issue the cards turned on PIN-less capability and the transactions could be routed over the lower-cost ATM networks available when a PIN is used.

https://www.mobilepaymentstoday.com/news/covid-19-driving-contactless-card-use-mobile-payments-despite-security-cost-worries/

Kroger piloting mobile payments strategy

https://www.mobilepaymentstoday.com/news/kroger-piloting-mobile-payments-strategy/
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Kroger piloting mobile payments strategyPhoto provided.

Kroger Co.’s QFC grocery division is launching a contactless payments pilot that lets shoppers complete purchases with Apple Pay, Google Pay, Samsung Pay, Fitbit Pay, mobile banking apps and contactless chip cards.

The pilot involves near-field communication which relies on a radio frequency to transmit data between a payment terminal and a mobile device such as a smartphone, smart watch and even athletic wearables such as a Fitbit, according to a press release.

“QFC is excited to pilot contactless payments powered by NFC technology, providing our customers with an additional way to pay for their fresh food and household essentials,” Chris Albi, president of QFC, said in the release. “The contactless payment solution will help make life easier for many of our customers and provide the freedom of choice among various options, including cash, debit, credit and check.”

The COVID-19 pandemic is driving increased use of no-touch payments.

“Kroger continues to invest in innovative technologies that advance the customer experience, including our payment systems,” Kathy Hanna, Kroger’s senior director of payments, said in the release. “Providing our customers with flexibility — whether that means having the option to choose between shopping in-store or online for groceries or how you pay for them — we are committed to personalizing their shopping trip.”

Kroger offers a variety of contactless payments including Kroger Pay, a touchless mobile payment solution that provides a single-use QR code to scan at the terminal; Scan, Bag and Go, that allows customers to use a mobile device to bag their own products and pay through the Kroger app, or order via the Kroger website or mobile app for free delivery or pickup.

https://www.mobilepaymentstoday.com/news/kroger-piloting-mobile-payments-strategy/

Digital Currencies: Yield Farming in the US

https://thefintechtimes.com/digital-currencies-yield-farming-in-the-us/
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The ‘hunt for yield’ – something income investors in traditional markets will be familiar with during the past few years of abnormally low-interest rates – has become the adoption story of the year, and one of two tailwinds for digital assets. 

But the emergent financial instruments of the decentralised finance (DeFi) sector are far from traditional, which after all is the whole point. There is no room to apply natural yield theory to the income streams generated for liquidity providers to myriad digital asset interest-bearing protocols. 

Indeed, far from investing purely for the income and leaving the capital/principal alone, the crypto yield-hunters are in it for whoever pays the most. So they will switch at will between network protocols, owing loyalty to none. So technically speaking, they are interested, so to speak, in appreciation of their capital in parallel with harvesting the income.

There is no ex-dividend date to worry about in this game. 

It’s not prudent to do so, but if we leave to one side the naked speculative nature of yield farming, it might be said to speak to the “animal spirits” that Keynes said was so important to the harnessing of capital for productive endeavours. 

So although the original idea of incentivising liquidity to come into a network to spur adoption is laudable, it is not exactly the sort of organic growth in use of a native token to access a network’s utility that should be the primary aim. 

However, as with Cryptokitties, yield farming is demonstrating, perhaps more seriously, what is possible with decentralised applications (dapps) running on top of blockchains. 

In the example of yield farming, it shows how the issuance of bonds and loans can be carried out in a fully automated, programmable fashion. And before we get too carried away, due diligence requires it to be noted that financial dapps also provide plenty of unwelcome case studies in how smart contract bugs can be exploited to target and steal someone else’s property.

Ethereum – the king among dapp platforms – is benefiting handsomely from the growth in activity, and so is the Compound (COMP) protocol at the centre of creating these new money markets. Measured by total value locked (TVL), COMP capitalises at $792 million. On 15 June TVL was a comparatively lowly $97.7 million, according to defipulse. 

The second tailwind for digital assets is custody. 

Aside from the money-printing and the shrinking value of the dollar courtesy of Covid missteps, a huge stride towards addressing, if not eliminating, a critical barrier facing ordinary folk considering holding bitcoin could be removed relatively soon, at least in the US, and that is custody.

When the US Office of the Comptroller of the Currency let it be known a couple of weeks ago that US national banks will be permitted to store bitcoin, it created waves of euphoria that may have added substantial wind power to the sails of the current bullish breakout of the bitcoin price.

Custody, alongside UI and UX, is right up there with volatility at the top of the to-do checklist for a new, improved bitcoin and digital assets more widely.

Despite all the PR inadequacies of the big banks, most of us still trust them to not lose our money. 

However, for the aficionados of bitcoin, “not your keys not your coins” is still the mantra. Banks are still the evil ones to be overthrown. In this view it is one of the benefits of bitcoin that you are – or should seek to be – your own bank. 

But for the majority that was never going to be its attraction. Indeed, a self-sovereign approach presents something of a barrier for mere mortals. Contrary to umpteenth warnings, that’s why many holders of digital assets prefer to keep their funds on an exchange in a mobile wallet or in hardware and paper wallets.

The option we missed out there was paying a custodian service to look after your digital asset for you. Up until now that has not been taken up by many. The customers of such services are largely confined to corporate entities and high net worth individuals.

But with US banks given the green light to store bitcoin, it threatens to reshape the entire custody landscape.

Admittedly, the banks will move slowly because of the sizeable risks involved. They may also initially focus on the institutional marketplace. 

Nevertheless, whatever the pace of the rollout of the first products in whichever segments, there will eventually be progeny birthed from the heightened competition for consumer business.

Describing the news from America as a game-changer is for a change not cheer-leading hyperbole. 

The US is arguably falling behind in the digital asset development space because of the perceived weakness of its regulatory framework and its very real fragmentation due to its federal governance. In July, for instance, the Commodity Futures Trading Commission (CFTC) indicated that it doesn’t expect to see a fully rounded digital asset regulatory framework coming into being until 2024 at the earliest. 

This makes the custody shift on the US banking front even more critical. Where the US goes, the world follows, at least for now. And no more so than where financial markets and their regulation is concerned. 

As China continues to take forward its digital yuan, the chasm it is opening up with the US in payments and distributed ledger technology widens. This is not to discount the fact that the US is still the digital asset leader in many ways, given the preponderance of top dapps, projects and talent-based there. 

But it will be deployment and active user traction in projects that add value to our lives, as opposed to thrills and returns for speculators, that will matter most. 

Leveraging the US banking system to deliver secure and easy-to-access custody at a fair price will help the US catch up in payments and perhaps in helping to set the future standards and best practices of our digital asset futures.

  • Gary McFarlane was the cryptocurrency analyst at the UK’s second-largest investment platform Interactive Investor for three years and was responsible for initiating coverage of digital assets at Money Observer magazine. His expert commentary on digital assets has appeared in UK national media outlets as diverse as the Daily Telegraph, Evening Standard and The Sun.

https://thefintechtimes.com/digital-currencies-yield-farming-in-the-us/

How Suzhou is Taking Steps to Become China’s Leading Blockchain District

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Following a successful central banking digital currency (CBDC) trial, the Chinese district of Suzhou has signed a memorandum of understanding with Cypherium, the enterprise-focused blockchain platform, which will help to build products within the ecosystem. Suzhou is one of the pilot cities involved in China’s attempt to circulate digital currency electronic payment (DCEP), with its regional GDP recorded as in excess of 1.85 trillion Yuan in 2018. This puts it seventh in size for large and medium-sized cities in China.

In recent months, the state-owned Chinese banks have been conducting internal, hypothetical-use tests of the People’s Bank of China digital currency in the city however, the most notable step forward has been the decision to issue workers in the city with DCEP. This has led to a successful trial period within the area.

Therefore, the announcement to partner with Cypherium, signed during Suzhou International Elite Week which aims to foster an international epicentre of innovation and create an ‘entrepreneurship week that never ends’, is significant.

Cypherium is focused on the interoperability of digital currencies. It is an enterprise-focused blockchain platform with established partnerships with all the tech giants – Google, Microsoft, Amazon and IBM and has now developed the world’s first cross-chain interoperability solution for China’s new Central Bank Digital Currency. This will enable CBDCs to be able to communicate with their international counterparts as well as their domestic industries and wholesalers.

The CEO of Cypherium, Sky Guo, said: “Securing the MOU with Suzhou is a significant step forward for Cypherium. As a pioneering city for China’s blockchain revolution, Suzhou is the perfect proving ground for our interoperable solution. By harnessing the Cypherium smart contract platform, Suzhou will be able to build forward-thinking blockchain products, avoid compatibility issues, and encourage innovation within the city—furthering its goal to become China’s foremost blockchain hub.”

And while Cypherium has its thoughts firmly focused in China right now, Guo believes that it won’t be long before others follow. The Fintech Times caught up with him to ask just how this part of the industry will evolve.

What have been the driving factors behind starting a framework?  

Simply put, no adequate framework exists yet, and the Cypherium team is capable of producing one. By bringing together developers from Microsoft, Google, Amazon and Huawei, who are really passionate about blockchain, we formed a team for Cypherium and started development. The Cypherium DCIF is a novel approach to the challenges facing the adoption of Central Bank Digital Currencies (CBDCs). Any attempt at digitizing public money will soon have to reconcile the many functionalities of national currencies not yet mandated by private-sector digital ledger technologies. A fully functional CBDC will have to interact with a wide range of private sector industries as well as other national economic systems. Cypherium’s Digital Currency Interoperability Framework enables these necessary connections.

It is a novel approach that consists of six major bodies: two clearing banks, CypherLink (a notary mechanism cross-ledger interoperability framework), Cypherium Connect (a third-party plug-in module for banking systems), Cypherium Validator (a verification machine), and finally the users. This structure maintains the autonomy and integrity of the central banks by allowing them neither to directly carry their users, issue or distribute CBDC units, nor supervise the transfer of CBDCs. This critically protects the banks, and, in turn, the national economies they support.

How can the CBDC approach be applied globally?

Curiously enough, that piece might take care of itself. Because the global financial system is so interconnected in the twenty-first century, and because digital payments have become so much cheaper, faster, and more efficient, adoption should be exponential and competitive among central banks. We have already seen national banks in China, France, the Netherlands, among many others, begin to adopt digital currencies. This is a decisive step into the future, and it seems inevitable now that within ten years we will have widespread adoption of central bank digital currencies. What remains to be seen is how this new framework will inform the coming decentralized revolution of blockchain tech. How will CBDCs look upon Bitcoin and private blockchains? How will an on-chain contract find validity in a given national legal system? Frameworks like Cypherium’s aim to scale solutions to these questions.

Are there any good examples of digital currencies or banking innovations in this area that you believe set a precedent? 

One of the best precedents for interbank digital frameworks is Ripple. From its inception in 2012, Ripple has demonstrated a clear understanding of the shortcomings in our current global financial system, as well as an effective analysis of how to address those issues from a business development standpoint. Ripple’s success has far surpassed any other blockchain or DLT in the banking sector. However, from a technological perspective, Ripple cannot fulfil the total needs of a public blockchain, which must be able to digitally interact with other banks and cryptocurrencies in a secure way. Stellar, another Jed McCaleb project, addresses this interestingly, but we believe Cypherium’s Digital Currency Interoperability Framework gives the most robust answer to these technological questions.

  • Gina is a FinTech journalist (BA, MA) who works across broadcast and print. She has written for most national newspapers and started her career in BBC local radio.

https://thefintechtimes.com/how-suzhou-is-taking-steps-to-become-chinas-leading-blockchain-district/

This Week in Fintech ending 7th August 2020

https://dailyfintech.com/2020/08/07/this-week-in-fintech-ending-7th-august-2020/
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this week in Fintech Temp 2 Aamber no Jess.001

This weekly summary from our 8 experts, brings you insights based on their experience as investors, entrepreneurs & executives.

To continue receiving This Week in Fintech, you can either become a paying Member for $143 per year (and receive all our content in addition to this weekly summary) by clicking here.  If you just want to receive This Week in Fintech for free, you will need to fill in this form

Your Editor is Bernard Lunn. He is also the CEO of Daily Fintech and author of The Blockchain Economy and occasional opinion columnist.

Monday Ilias Hatzis our Greece-based crypto entrepreneur (Founder & CEO at Mercato Blockchain Corporation AG and Weekly Columnist at Daily Fintech) @iliashatzis wrote Ethereum is Going to the Moon

The initial Ethereum team consisted of Vitalik Buterin, Anthony Di Iorio, Bitcoin Magazine co-founder Mihai Alisie, Amir Chetrit and Charles Hoskinson. The team printed black Ethereum t-shirts and started working on the Ethereum Blockchain in 2013. Later, they added three more co-founders Joseph Lubin, Gavin Wood, and Jeff Wilcke. They didn’t know each other very well or have a detail plan of what they would finally create. But they had a vision. They wanted to create a “world computer” that would transform not just money, but allow anyone to write smart contracts, decentralized applications and create their own arbitrary rules for asset ownership. Ethereum went live on 30 July 2015, with 72 million coins minted. That was five years ago. Today, stablecoins and DeFi, have turned Ethererum into the most used blockchain.

Editor note: Ilias makes a persuasive explanation of why Ethereum is doing well, citing traction in the key new markets of the future – stablecoins and DeFi.

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Tuesday Efi Pylarinou @efipm our Swiss-based Fintech Adviser,  founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019 wrote A selection of 7 themes on ETFs and robo-advisors

A mini digital detox in August, may reboot and upgrade my operating system. In this post, I am sharing a selection from this year`s posts focused on ETFs (a 50yrs old innovation) and robo-advisors.

 

Fintech contribution

2020 started with a healthy and growing $5trillion global ETF market. In the US there were 2,000 already trading on platforms with zero commissions.

Editor note: the trend towards low cost, mostly passive, investment vehicles stays very strong even if we are now past the Cambrian explosion era and into a consolidation phase when a few big winners emerge.

Alan Scott Managing Director EMEA at 24 Exchange @Alan_SmartMoney wrote Stablecoin News for the week ending Tuesday 4th August

This weekly snapshot is the news that matters in the Stablecoin market.

Wednesday  Guest author Amber Sutherland wrote A bankers guide to AI Part 2. What if the AI learns the wrong behaviours, such as bias?

Editor note: In every industry, banking included, much money will be made from AI automation (and sadly, many jobs lost). This 5 parter gives you some of the nuances and complexity of making that happen in banking.

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Thursday Patrick Kelahan @insuranceeleph1, our US based Insurtech expert (a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners who also serves the insurance and Fintech world as the ‘Insurance Elephant’) wrote Become a captive and be freed- an alternative to traditional risk management

Knowing there are risks that are challenging to underwrite or expensive to share with a carrier does not have to limit a firm’s or groups options for risk management, nor does a prospective firm need to engage a top-heavy syndicate where 40% of premium dollars result in expense costs.  For those firms with stout hearts, clever advisers and an urge to have closer management of risk there are captive insurance schemes.  And there just might be tax savings, too. 

Editor note: Required reading fornsurance companies figuring out how to add value to corporates who do insurance in-house.

Thursday Christian Dreyer @x3er, our Swiss based CFA who focusses on how XBRL changes our world wrote XBRL: real-time reporting, extensible lists and rulesets

Editor note: This weekly snapshot is the news that matters in the XBRL market.

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Friday Howard Tolman, a well-known banker, technologist and entrepreneur in London, wrote: Alt Lending Week ended 7th August

Editor note: This weekly snapshot is the news that matters in the Alt Lending market.

Bernard Lunn @lunnbernard, the CEO of Daily Fintech and author of The Blockchain Economy, wrote:Interview with John O’Neill of Silent Eight on how to use AI in financial services

Editor note: Read this to learn about AI for detecting money laundering, accounting fraud and consumer scams

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To continue receiving ‘This Week in Fintech’, the weekly recap of our articles, you will need to fill this form to give us consent to send this to you. Please note that Daily Fintech requires your organizational email address (e.g. corporate, educational or government) and your LinkedIn URL. This information is required for subscribers who want ‘This Week in Fintech’ for free. If you prefer to not provide this information, you can still receive all our content by becoming a paying member.

https://dailyfintech.com/2020/08/07/this-week-in-fintech-ending-7th-august-2020/

Pay360 Virtual Event Ends as EPA Award Nominations Announced

https://thefintechtimes.com/pay360-virtual-event-ends-as-epa-award-nominations-announced/
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The virtual PAY360 event has now come to a close but the two-day event featured a highlight of discussion from the world of payments and fintech.

Usually, PAY360 is the flagship conference and exhibition of the Emerging Payments Association, bringing together attendees from across the entire payments value chain. It is a narrowcast event for the payments community, where senior decision-makers meet to do business.

This year due to COVID-19, decisions were made to hold the event virtually, allowing over 40 speakers and more than 800 attendees to join together online. This included virtual speaker sessions, panel discussions and even networking dedicated networking areas available over both Wednesday and Thursday earlier this week.

Top discussions included:

  • Bank of Tomorrow: Trends shaping the future of finance by Jill Docherty, Executive Director, Business Development, UK and Ireland, Visa
  • Mastering the post PSD2 landscape: Open Banking trends and opportunities around the globe? A panel discussion with speakers from Visa, UK Finance, Konsentus and more.
  • Global Payments 2.0: Instant, real-time and cross border innovation payments transformation with speakers from SkyParlour, SWIFT, and Modulr

One of the top sessions was on the Power of Partnerships featuring Scott Abrahams, SVP Business Development UK, and Ireland, Mastercard and Nathalie Oestmann, COO of UK fintech Curve.

The two talked about how important relationships can be for a fintech such as Curve, and why deciding on a significantly older financial partner was a great decision for the team.

During the session, Nathalie was keen to highlight what she was looking for in a partnership. She said, “In Curve, we have lots of partners but we have a special relationship, I’d say highly valued with Mastercard. We couldn’t have reached 1.3m customers without you.”

When pressed to break it down further, she gave a few pointers on shared values, such as they were both technology-orientated and wanted the same things. For Nathalie, it meant that “We have very open lines of communication – I can call you or anyone else and tell them anything I need to. Trust comes from a long-standing relationship. We are friends and enjoy working towards the same thing. Two final things are flexibility and agility – as a fintech it’s the most important thing for us. We need to move fast, although we sometimes change our minds flexibility is the way we work.”

Scott added, “Our approach is to bring those long-standing relationships we already have to our new partners but also look at how agile and innovative we can be, as well as trying to have some fun. Working with Curve is fun, and if you don’t have a foundation of a personal relationship it can often not be fun.”

Ahead of the event, The Fintech Times also spoke to Nathalie alongside other industry leaders such as Miles Stevenson, the CEO of Modulr, and Nigel Vernon from Railsbank. You can see these interviews in full alongside much more here.

PAY360 will be back as a physical event on March 23rd 2021, at the Business Design Centre in London.

Also launched at the event was EPA Award nominations finalists, ahead of the awards this autumn. The Emerging Payments Awards celebrate innovation, collaboration and emerging payments by recognising companies that have made significant advances in how we pay today. The winners will be announced at a glittering ceremony in London attended by 800 of the industry’s most senior opinion-formers and decision-makers. This year there was a 50% increase in the number of nominations received. The full list is below.

Best International Payments, Remittance or use of FX

  • Banking Circle
  • Crown Agents Bank – EMpowerFX
  • Ebury
  • Flywire
  • Ixaris
  • Post Office Ltd – Post Office Travel app

Best Financial Inclusion Payments Programme

  • Airtel Uganda and Comviva
  • Banking Circle
  • Prepaid Financial Services
  • Telenor Microfinance Bank

Best B2C Payments Programme

  • Curve – Go-Back-In-Time
  • Stocard
  • Swile, Treezor

Best B2B Payments Programme

  • Banking Circle – Banking Circle Virtual IBAN
  • Bottomline – Bottomline PTX
  • Ebury – Instant Payments Era
  • Modulr
  • Monzo Bank Ltd – Monzo Business
  • Payoneer
  • PPS – PPS and Countingup
  • WEX

Best Banking or Open Banking Initiative

  • Bankily by BPM & Comviva
  • Currensea and GPS
  • Konsentus – Konsentus Verify
  • Lloyds Banking Group – Payables API
  • Railsbank – Railsbank Open Banking Platform (Banking as a Platform)
  • Token
  • Trustly

Best Partnership Initiative

  • Banking Circle – Banking Circle and Cardstream
  • Lloyds Bank – I-safe
  • Osper
  • PPS – PPS and Monese
  • Vitesse PSP Ltd

Best Use of Payments Data or AI in Financial Services

  • ACI Worldwide
  • Chargebacks911
  • Ethoca – Alerts + Eliminator
  • Jumio – AI-Powered Identity Verification for Financial Services
  • Kani
  • Visa Europe – Visa Advanced Authorisation

Most Innovative Mobile or Financial Services Payments Solution

  • Airtel Uganda and Comviva
  • Judopay
  • Ordo
  • Stocard by Wirecard

Most Innovative Merchant Services Solution

Best Back Office Innovation

Best Customer Facing Experience

  • FIS – Premium Payback
  • ID-Pal
  • MuchBetter by Wirecard
  • Their Perfect Gift by Wirecard
  • Thyngs Ltd
  • Total Processing – Apple Pay For WooCommerce Payment Plugin

Marketing Campaign of the Year

  • Blue Train Marketing & Fintech Finance – Team Card at the Fintech Finance Payments Race 2019
  • CCgroup PR – Fame & Fortune in Fintech: Launching Tribe Payments

Leading Financial Services or Payments Start-Up

  • Currensea & GPS
  • Kani
  • Ordo
  • PayDock
  • SimplyPayMe
  • Tribe Payments
  • io

Leading Emerging Payments Organisation

  • GPS- The Super Processor™
  • PPRO
  • PPS
  • Trustly

Best Use of Blockchain in Financial Services

  • Eligma Ltd
  • Nuggets

Best Direct Account to Account Solution

  • Comviva – mobiquity® Money – COVID-19 Response
  • Nuapay by Sentenial
  • Ordo

Best Lending Initiative

  • Capital on Tap
  • DivideBuy
  • Starling Bank
  • Trezeo

Best CSR or Charity Initiative

  • allpay – Herefordshire Flooding – Prepaid Programme
  • allpay – National Lottery – Community Fund Prepaid Programme
  • EML
  • org
  • SumUp Payments Limited, Collecting, Claire House
  • Thyngs

Best Market Expansion

  • Ebury
  • GLINT PAY
  • Global Processing Services
  • Railsbank
  • Gina is a FinTech journalist (BA, MA) who works across broadcast and print. She has written for most national newspapers and started her career in BBC local radio.

https://thefintechtimes.com/pay360-virtual-event-ends-as-epa-award-nominations-announced/

Interview with John O’Neill of Silent Eight on how to use AI in financial services

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john

John O’Neill is the SVP of Regional Sales, Western US and Canada for Silent Eight. Although he is now in sales, John began as an engineer, for example working on some of the early browser technology in Champaign Illinois and later at Motorola.

We are publishing a 5 part series on AI in Banking by Amber Sutherland, also of Silent Eight.

I have recently also been diving down some other AI rabbit holes, such as what Open AI released recently (GPT-3).

John is a practitioner at the front lines of deploying AI in financial services. So, he seemed like a good person to talk to.

Open AI and GPT-3 is general purpose bottom of the stack technology. I was keen to dig below the surface hype about AI to also look at the limitations and, within that, the practical applications today. In our Artificial Intelligence (AI) week on Daily Fintech in 2016 we wrote:

“This exemplifies the AI mantra that hard is easy and easy is hard.

  • Hard is easy – Chess, Go and Jeopardy.
  • Easy is hard – understanding what the expression on your mother’s face means.”

4 years later this still seems to be true. This human’s reaction – “phew we are still needed a bit longer”

I started by asking John to tell us something about Silent Eight, starting with the name (a silent electric version of the V8 engine?). No. It is more to do with Silent Eight being founded in Singapore where 8 is a lucky number. I knew that from my years in Singapore and it is why our annual subscription price is $143 (add those 3 numbers to get 8).

John is based in Chicago and there are employees all over the world. As John put it – “we are where the where banks are”.

I then asked him three questions that concern people who work in finance:

Q1 how can Banks use AI to more efficiently comply with anti money laundering regulations?

I knew from my career selling to banks that you have to sell to an existential risk issue. Failing to comply with anti money laundering regulations is an existential risk to banks and can land executives in jail. So if you have a solution to that, the bankers will pay attention. That is why Silent Eight sells AI compliance solutions to banks.

I also knew from working with Fintech startups that there is a tradeoff between time/friction and security/compliance. You can design the most perfectly secure/compliant system that takes so long and is such a pain for honest customers that you lose your customers. So Silent Eight works hard to deliver solutions that are both compliant and fast.

Money Laundering is a massive business. A 2009 study estimates money laundering at about 2.7% of the global economy annually and If it were a country it would be in the Top 10 economies in the world, between France and Brazil (#7 and 8).

So we can expect a lot of creative intelligence applied to coming up with patterns that fool the AI compliance machines. John confirmed that AI is evolving fast and while today’s AI is not good at spotting new patterns we should expect next gen AI to do much better. Even today AI is very good at spotting bad actors in existing patterns. Replaying what we learned 4 years ago:

This exemplifies the AI mantra that hard is easy and easy is hard.

  • Hard is easy – reading millions of transactions or applications or financial statements in seconds.
  • Easy is hard – spotting that strange anomaly from a scheme created to fool those AI machines.

Fortunately humans are good at the latter. Freed from the grunt work by AI machines, they will have the time to spot those unknown new patterns.  John confirmed that once AI is taught a new pattern, it will track it it consistently, accurately and quickly. It won’t get fooled again by that pattern. The bad actors will have to apply a lot of creative intelligence to invent a new scheme (which they can only use one time).

Q2 How can investors use AI to find accounting fraud before the companies implode?

Silent Eight is focused on using a mixture of bank data and public data to pinpoint money laundering. Although accounting fraud isn’t strictly their problem domain, it’s not a big leap to see how the banks could use a similar approach to pinpoint accounting fraud.

The Investment Banking and Wealth Management part of the banks could profit from such a tool as it would benefit the Hedge Funds that they work with.

Market downturns surface a lot more frauds. As Warren Buffet puts it “only when the tide goes out can you see who was swimming naked”.  So there is a lot of money to be made/saved today in finding accounting fraud before the companies implode.

Think Enron, Madoff in past cycles and Wirecard (so far) in this cycle.

The data is out there in the public domain. That is what XBRL is all about and why we track that so closely.

Of course if the owners control the data, they also control the XBRL data. Most accounting frauds are perpetrated by people right at the top of the company.

Which brings us back to my hopeful vision of AI machines and humans working together. The AI machines look through millions of financial statements looking for patterns similar to Enron, Madoff, Wirecard and all the accounting frauds from the past. Meanwhile a few creatively intelligent humans, freed from the grunt work by AI machines,  slowly look for the new pattern where “something looks fishy” from the creative new fraudster.

Q3 How can financial education sites use AI to give consumers better early warning about scams?

This is fundamentally a business model issue. There is no obvious way to make money by saving millions of poor people from getting scammed. Technically it is the same solution of AI machines working with creatively intelligent humans.

Fortunately, as one learns by looking at Open AI, there are tech billionaires who will donate money to help AI to help humanity.

My big takeaway is that crooks will have to become so creative to beat the AI machine that they might as well apply that creative intelligence to something honest. They can invent a new scheme, but when they try replicating it they find the AI machine singing the Who song – won’t get fooled again. Once AI gets better the crooks won’t even be able to play those tricks once.

Daily Fintech’s original insight is made available to you for US$143 a year (which equates to $2.75 per week). $2.75 buys you a coffee (maybe), or the cost of a week’s subscription to the global Fintech blog – caffeine for the mind that could be worth $ millions.

https://dailyfintech.com/2020/08/07/interview-with-john-oneill-of-silent-eight-on-how-to-use-ai-in-financial-services/

Neobanking Consumer Intelligence [Report]

https://thefintechtimes.com/neobanking-consumer-intelligence-report/
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Research, conducted in partnership with Ten Bear Group covers the top 15 neo-banking leaders globally and includes detailed performance analysis, consumer trends, audience segmentation, and more. The data in the study reflects consumer behavior, usage, and consumption of neobanking apps between December 2019 and June 2020, covering trends before, during, and after COVID-19.

The study reveals that the Coronavirus pandemic has substantially increased neobanks’ penetration and consumption with YoY conversation growth of 7%. Consumers were highly critical of providers, citing security, convenience, fees transparency, and flexibility as of utmost importance to them. Customer service was a big detractor across all neo providers, leaving room for improvement. As many consumers used social media as the main method to reach Customer Support, long response times on Twitter and phone were also rated as the top barriers.

Kate Drew, Manager, Fintech Solutions, and Research at Grant Thornton added about this research study that “US banking giants are less hobbled digitally than their counterparts abroad, and consumers in the country tend to favor incentive-packed credit cards for spending, taking some of the punch out of the money management tools that have made many neobanks so popular. To win in this market, these upstarts are really going to have to think carefully about where they can play well and what features they need to get US consumers onboard, even if it means abandoning strategies that brought them great success at home”

The full report can be downloaded on RILA’s website using this link:
https://rilaglobal.com/neobanking-report-provider-performance-consumer-trends-and-audience-segmentation/

  • Editorial Director of the The Fintech Times

https://thefintechtimes.com/neobanking-consumer-intelligence-report/

Alt Lending Week ended 7th August

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Here is our pick of the 3 most important Alt Lending news stories during the week:

  1. Banks across Europe braced for further heavy loan-loss charges

Largest UK, Swiss and eurozone lenders expected to make at least €23bn in provisions as they tackle Covid pain

Why this matters: This is of course on going news. Nat West posted large bad debt provisions at the weekend and it comes on top of gloomy headlines from the UK and Eurozone economies.  The damage being caused by the Covid19 virus is unprecedented. The question is what can we learn from what is happening and who is going to come out of this best. A SWOT analysis might be a good starting point. The large existing players have both strengths and weaknesses in that they are in control of the macro data and have a better view on what their large and diverse client bases are doing in practice. They see the cash flowing in and out and are having difficult conversations with distressed borrowers struggling to explain how they are going to keep their businesses intact. They are also well established and, in some cases, too big to fail. However they also have the problems associated with a dominant position, legacy systems, largely redundant infrastructure etc. The newcomers have better technology, leaner and fitter, processes and are in a good position to pick up new business. They are also in a much better position to be able to pick who they would like to do business with and decide who is going to benefit or not in the post COVID environment. So far the signs are ambivalent. While there appears to be a good appetite for equity capital in the start up world others are not doing so well. It is difficult to judge how this will all pan out while some players can seemingly raise money on good valuation others who have taken a more risky approach are really struggling. In formulating strategy it is perhaps worth remembering 2008. As we all know the crash was largely caused by a systemic collapse in the US real estate market. In this case it is a pandemic but there are similarities. One thing seems certain: we are in very risky times and prudence should be a watchword.

2. Loans At Home owner pauses cash call after questions from watchdog

The Financial Conduct Authority raised a ‘number of concerns’ over Non-Standard Finance’s guarantor loans division.

Why this matters: From the Macro situation discussed above to the struggles at the low levels of credit services. The virus has hit everybody but surely the worse affected sector is the one in which poor credit borrowers have to find suitable guarantors to support the risk. A couple of weeks ago I reported on the problems facing Amigo loans the largest such lender in the UK. Now it appears that its smaller competitor NSF is also in trouble. Once again the FCA appears to have a hand in things. Now this sector is not something to be discussed in polite company. The borrowers are struggling to make ends meet anyway virus or no virus, the interest rates are huge and it is very difficult to effectively police so many distressed clients at the same time. Nevertheless this is a sector that needs to exist because there is a demand for it and the alternatives are not particularly appealing. I bring it up because this is the type of alt lending that technology cannot do much for and it is where KYC is probably the most important in terms of getting your money back. Nevertheless it is probably better to have a regulated sector than descending into loan sharking.

3. Metro Bank snaps up Ratesetter for £ 2.5 million

Metro Bank will acquire UK lending firm RateSetter for an initial consideration of £2.5 million to boost its unsecured lending ambitions.

Why this matters: The past year has not been great for Metrobank the newcomer bank founded in 2010 and which has tried to pitch itself as a “community bank” .  Metro’s fortunes were adversely affected last year when they suffered significant losses from rather risky property loans causing their share price to dip by over 90%. Yesterday following the announcement of their acquisition of Ratesetter their shares rose to  110p although they were trading at over 200p before the crisis hit in February. Ratesetter is a peer to peer lender which was also set up in 2010 and was valued by tarnished finance chief Neil Woodford in a 2018 at £ 200 million. Its principal competitor is  Funding Circle whose share price has also dropped by nearly 80% since it also floated in 2018. This demonstrates the volatility in technology start ups such as these two companies and displays the susceptibility of untested business models to systemic situations. The vulnerability is not limited to peer to peer lenders although this area might be thought more risky than most. Certainly it does demonstrate that underwriting and credit risk analysis in some companies is less than impressive and could do with improvement. In fact what lead people to invest in this type of risk in the first place is difficult to understand but the flight towards improved yield might be one of the key factors. In any case the whole sector is ripe for consolidation with the inevitable winners and losers being judged on vulnerability or the lack of it rather any potential benefits to consumers.

Howard Tolman is a well-known banker, technologist and entrepreneur in London,

We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.

For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives.

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https://dailyfintech.com/2020/08/07/alt-finance-week-ended-7th-august/

Orange Bank Africa Created to Provide Greater Access to Financial Services in West Africa

https://thefintechtimes.com/orange-bank-africa-created-to-provide-greater-access-to-financial-services-in-west-africa/
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Orange, a major telecoms provider in Africa and the Middle East, and NSIA, which is a leader of bancassurance, recently announced the launch of Orange Bank Africa in Abidjan , the economic hub city of Côte d’Ivoire (Ivory Coast). Orange Bank Africa, which is headed by Jean-Louis Menann-Kouamé, aims to offer clients a range of simple savings and credit services available at all times via mobile devices.

One of the world’s leading telecommunications operators, Orange, had sales of 42 billion euros last year and 145,000 employees worldwide at 31 March 2020, including 85,000 employees in France. The Group has a total customer base of 253 million customers worldwide at 31 March 2020, including 208 million mobile customers and 21 million fixed broadband customers with a presence in 26 countries.

Orange is one of the world’s leading telecommunications operators

Orange is one of the world’s leading telecommunications operators

Orange is one of the world’s leading telecommunications operators

Orange Bank Africa will address the needs of a large part of the population, often excluded from the world of conventional banking, allowing them to borrow and save small amounts that are nonetheless essential for their everyday lives. When it launches, Orange Bank Africa via its Orange Money service will offer a range of savings and micro credit services allowing customers to borrow as little as 5,000 CFA francs instantly using their mobile phone.

Orange’s mobile financial services strategy in Africa aims to offer solutions accessible to the broadest population regardless of their income or where they live. Orange Bank Africa intends to become a leader in ensuring financial inclusion in West Africa.

Orange Chairman and CEO, Stéphane Richard, said, “New technology is needed to strengthen financial inclusion and support economic development, as proven by mobile money over the past few years. Banking is a new area of business for Orange in Africa. It falls squarely in line with our strategy as a multi-service operator and our desire to drive the digital transformation forward in Africa. Based on our association with NSIA, also a leader on the market in Africa, we provide easy access to bank services for as many people as possible, with simple and essential services that benefit all our clients.”

Jean Kacou Diagou, CEO of NSIA, said, “I am very pleased that the partnership between Orange and NSIA has resulted in the creation of Orange Bank Africa. For the past 25 years, NSIA Group has been developing bank and insurance solutions to address the needs of African people and make them available to as many people as possible. We know that electronic banking is vital for the financial inclusion of our customers. We are proud to have combined our expertise and human capital with that of Orange to create the fully digital Orange Bank Africa.”

Orange Bank Africa will expand into Senegal, Mali and Burkina Faso.

Having played an essential part in financial transactions for several years now, Orange Money and digital services became even more important and more rapidly adopted by users during the health crisis. With this in mind, Orange believes that mobile banking has an important role to play in Africa. It is the very essence of Orange’s purpose of providing everyone with the keys to a responsible digital world.

  • Richie Santosdiaz, Contributing Reporter for Middle East and Africa

https://thefintechtimes.com/orange-bank-africa-created-to-provide-greater-access-to-financial-services-in-west-africa/

SK Telecom new 5G-Powered Augmented Reality Tour for Changdeokgung Palace

https://thefintechtimes.com/sk-telecom-new-5g-powered-augmented-reality-tour-for-changdeokgung-palace/
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  • Together with the Cultural Heritage Administration and Google, SK Telecom launched ‘Changdeok ARirang,’ an augmented reality service for visitors to Changdeokgung Palace, a UNESCO World Heritage Site

  • To realise a truly immersive experience, the company installed 12 units of 5G base stations at the site and built the service in the 5G edge cloud

  • Aimed at increasing people’s accessibility to cultural heritage, Changdeok ARirang offers a special route for users of wheelchairs and strollers

  • For those who cannot visit Changdeokgung Palace in person due to the COVID-19 pandemic, the company will launch Changdeok ARirang at Home, a service that provides virtual tour of the palace via AR and VR contents

SK Telecom announced that it, together with the Cultural Heritage Administration and Google, launched ‘Changdeok ARirang,’ an augmented reality (AR) service based on 5G edge cloud to provide an immersive experience for visitors of Changdeokgung Palace.

Upon activating the Changdeok ARirang app and holding their phones towards the palace, users will get a surprise welcome from Haechi, a mythical creature believed to guard the palace. Haechi, a virtual guide, will escort visitors throughout the palace, providing detailed information on 12 different tourist spots within the palace as well as interesting historical stories.

To make the visit more interactive and memorable, Changdeok ARirang offers diverse AR experiences to visitors, allowing them to watch a royal court dance performance, play Korean traditional games in AR and take AR pictures.

With Changdeok ARirang, visitors can also take a close look around restricted areas such as Huijeongdang and the palace’s secret garden, Huwon, through 360-degree AR. For instance, upon reaching the entrance of Secret Garden, a restricted area, visitors will see an AR portal from which visitors can be transported to the beautiful Secret Garden.

5G Android smartphone users can download the Changdeok ARirang app from Google Play and One Store. The app supports both the Korean and English languages. Those who do not have a 5G smartphone can experience the service by borrowing a 5G smartphone for free at Changdeokgung Palace from July 28 to December 31.

Changdeok ARirang is designed to deliver a true 5G-based AR experience to users by realising ultra-low latency data communication. To this end, SK Telecom installed a total of 12 units of 5G base stations within Changdeokgung palace and built the service in the 5G edge cloud deployed at its Central Office in Seongsu-dong, Seoul. With 5G edge cloud, which enables data processing within the 5G infrastructure located closest to the end-user devices, visitors at Changdeokgung Palace can experience approximately 60 percent faster speed when downloading contents from the Changdeok ARirang app.

To recreate Changdeokgung Palace in AR, SK Telecom worked closely with Google and Nexus Studios, an animation and interactive studio based in the UK, and Seerslab, an augmented and virtual reality corporation in Korea. They built the AR experience based on Google Cloud, ARCore, Google’s AR platform, and other latest AR technologies including Lighting Estimation and Cloud Anchor.

With Google’s Cloud Anchor, which is used to enable digital information overlaid on top of the real work to be experienced by multiple users at any time, virtual Haechi can provide visitors with seamless guidance and immersive AR experiences throughout the tour. Lighting Estimation has been applied to create a sense of reality in AR by expressing hologram contents appear naturally depending on the level of lighting at the site.

SK Telecom, the Cultural Heritage Administration and Google expects to increase people’s accessibility to cultural heritage by offering contents realised through ICT. For the Changdeok ARirang service, they created a wheelchair mode to support wheelchair users and visitors with strollers. In the wheelchair mode, Haechi safely guides visitors through a special course that is accessible by wheelchairs. For areas that cannot be accessed by wheelchairs, the service offers AR contents to enable visitors to virtually experience the site.

Moreover, they will also introduce ‘Changdeok ARirang at Home,’ which provides a virtual tour of Changdeokgung for those who cannot physically visit the palace, in August 2020. By downloading the Changdeok ARirang at Home app from Google Play, anyone across the world can take a tour of the beautiful Korean palace regardless of his/her location through diverse AR and VR contents. The service, which is currently available in English and Korean, is expected to deliver a unique cultural experience to people at a time when travelling is not really an option due to the COVID-19 pandemic.

“I am very pleased to launch such a meaningful and exemplary AR experience powered by Google’s advanced AR and cloud technologies in Korea, the world leading 5G market,” said John Lee, Country Director at Google Korea. “It is particularly meaningful in that we can offer virtual experiences of the cultural heritage of Korea for people around the world amid COVID-19 situations.”

“The spread of non-face-to-face interaction (‘untact’) culture due to the COVID-19 outbreak is transforming how we experience arts and culture,” said Chung Jae-suk, the Administrator of Cultural Heritage Administration. “I hope that Changdeok ARirang will serve as a valuable opportunity for people around the world to enjoy Korea’s beautiful cultural heritage.”

“We are excited to introduce to the world an innovative 5G-powered augmented reality tour for Changdeokgung Palace, a UNESCO World Heritage Site, said Yea Hui-kang, Vice President and Head of Brand Marketing Group of SK Telecom. “We will continue to move forward with our creative ideas to make valuable contributions to the society through the use of our cutting-edge information and communication technologies.”

  • Editorial Director of the The Fintech Times

https://thefintechtimes.com/sk-telecom-new-5g-powered-augmented-reality-tour-for-changdeokgung-palace/