Giesecke+Devrient: The Opportunities CBDC Presents for Fintechs

With such a strong focus on the use of digital currencies within recent weeks, it’s really important that fintechs fully understand all of the options that are available to them. 

Dr. Wolfram Seidemann, CEO, Giesecke+DevrientDr. Wolfram Seidemann, CEO, Giesecke+Devrient
Dr. Wolfram Seidemann, CEO, Giesecke+Devrient

To illustrate this point, and specifically the important differences between cryptocurrencies and central bank digital currencies (CBDCs), is Dr. Wolfram Seidemann.

Seidemann is CEO of the Giesecke+Devrient Currency Technology GmbH (G+D). He was appointed Group Executive Banknote in November 2016. Seidemann joined G+D in 1999 as Head of International Research and Development Chipcard. He subsequently held various senior management positions at G+D subsidiaries, among them Managing Director G+D Asia in Singapore, President of G+D Teco Taiwan, Taipei and Member of the Board G+D India, New Delhi.

Practically all over the world, central banks are working under high pressure on digital currencies. The British Central Bank recently set up a task force, Sweden extended the test phase for its own Central Bank Digital Currency (CBDC), and China announced the launch of its digital currency DCEP (Digital Currency Electronic Payment) as early as the Winter Olympics in February 2022.

Just recently the European Central Bank (ECB) gave the go-ahead for the possible issuance of a digital euro. Fintechs should be paying attention because CBDCs form the platform for the digitisation of the financial system and open up new opportunities. Central bank digital currencies are designed as a digital supplement to analogue central bank currencies. They are intended to provide a stable, universal, user-friendly, state-authorised and protected currency to counter digital means of payment such as stablecoins and cryptocurrencies, which should be viewed critically.

Currency or speculative object?

Both cryptocurrencies and stablecoins raise critical questions about transparency, the cost situation as well as data protection and integrity. Especially the so-called cryptocurrencies such as Bitcoin are increasingly proving to be purely speculative in light of recent events. Their enormous volatility alone makes them unsuitable as a reliable means of payment for companies. Moreover, unlike real currencies, they are neither legally legitimised nor linked to real values and do not offer universal access to payment transactions. They also require a lot of explanation and are on the market in a confusing number of competing formats.

Centrally controlled private digital currencies or stablecoins promise lower volatility. But beyond that, the same restrictions apply to them as to cryptocurrencies. They also do not stand for a legally legitimised monetary value backed by a central bank. This makes them unsuitable as a secure digital supplement to cash in the sense of a medium of exchange, unit of account and store of value.

New technologies open up new business models

In contrast to the weaknesses of these already existing digital means of payment, a CBDC fulfils the parameters of anonymity, stability, state sovereignty and data protection that are indispensable for a currency. A CBDC combines the advantages of cash with the speed, convenience and efficiency of digital payment options, is free of charge for the user, meets high security standards and has global acceptance.

For fintechs, a CBDC can provide risk-free cash along with a high level of standardisation. What’s more, it introduces greater opportunities for network building and access to new markets. Another advantage is that new automated and decentralised financial products can be developed on the CBDC’s basic function. By using distributed ledger technologies (DLT), fintechs can use a CBDC to open up new forms of automated, ultra-fast payment transactions.

In addition to digital payment transactions, the new application possibilities are manifold and include the most diverse fields of use. Automated payments in pay-per-use scenarios are conceivable and feasible, for example when a rented machine independently bills for the time used and this is automatically paid by the tenant.

Other possible applications include transactions in the Internet of Things, machine-to-machine (M2M) payments in which machines pay machines, for example when charging an electric car, automated settlement payments in which smart contracts trigger payment processes as soon as certain values are reached or in automated supply chains. For the digitalisation of business models, this means an enormous boost and at the same time an enormous relief from routine tasks in payment transactions.

A CBDC thus becomes the engine of the digital economy, provided it is properly conceived and designed for these application scenarios from the outset. The requirement profiles, rules and framework conditions for a future digital monetary order are being defined now. A CBDC has the potential to revolutionise the economy, accelerate the economy of things and lead our world into an increasingly digitised future.

The Payments Association Bridge the Gap Between CBDCs and the Current Payment System

Some have argued the traditional payments system is on its last legs as a result of increased digitisation and blockchain technology. Debating this new era of finance, The Payments Association (formerly The Emerging Payments Association (EPA)) has formed an Innovation Hothouse Bridge (‘the Hothouse’ or ‘the group’) to bridge this gap in the financial industry. This will initially be done by the publication of a green paper exploring multiple use cases across the digital currency landscape that could arise from the creation of a new digital currencies infrastructure for financial markets.

The consortium is led by top-level fintech experts from The Payments Association, Boston Consulting Group, a management consultant company, and, a Dutch-based FinTech company working extensively with artificial intelligence and distributed ledger technology. The consortium will publish its recommendations and use cases in a green paper, on the 4th of February 2022.

Currently, financial processes ranging from retail payments to international trade and capital markets infrastructure have inefficiencies that can be solved through digital technologies, such as artificial intelligence, distributed ledger and smart contracts. Although the proposed Central Bank Digital Currencies (CBDCs) could solve these problems and many more, their full implementations may be a decade or more away for most countries, so the question becomes how to make the most of the UK’s financial infrastructure during the interim period between now and the implementation of fully digital currencies. The new Bank of England Omnibus Account is seen as something that could potentially form the basis of a modernised financial markets infrastructure as it is the first BoE account to provide 24/7 access.

The aim of the use cases would be to reduce the ‘friction’ in the financial world, giving financial institutions, merchants and ultimately consumers much greater flexibility and control over their money. Following on from the publication of the green paper, a plot will commence which is led by who will use its interoperable iDC/EP platform to enable a bridge between the old payment rails and the new CBDC world.

The Payment Association’s Director General, Tony Craddock, says, “The UK will soon be entering a world where some countries are using digital currencies, much of the current financial infrastructure will soon be in place and consumers are using a mixture of traditional currency, cryptocurrency and stablecoins. Our aim with this project is to bring together a consortium of the best minds in payments to find the best way to link the old world and the new, and we believe that modernised settlement accounts at central banks are needed to enable this. They would form the lynchpin of a new financial infrastructure that could offer services that would impact everyone, from the largest financial institutions to individual consumers.”

Kunal Jhanji, Managing Director and Partner at Boston Consulting Group, comments, “This project has the potential to form part of a new era for the GBP. After the global financial crisis of 2007-2008, the creation and growth of blockchain solutions for payments, new data standards like ISO 20022, the increasing focus on the billions of unbanked people across the world and the focus on reducing cash use since the pandemic the financial world is in clear need of modernisation, and the UK can be leading this effort. This consortium has the potential to be a stepping stone to a new world of financial technology that can enable change throughout the established world of finance.”

Paul Sisnett, Chief Executive Officer at, adds: “Our unique collaboration brings together heterogeneous but ultimately invaluable expertise to seed true innovation. We support the initiative to make the UK an innovation-led economy but we are convinced that innovation must go hand in hand with public-private collaboration and regulatory considerations. Embedding this perspective from the very beginning has enabled us to develop pragmatic solutions that can actually be implemented in the real world, whilst pushing the envelope on what is possible with the next generation of financial markets infrastructure.”

  • Francis is a junior journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

Mobiquity: 80% Of Wealth Management Firms Benefit from Digital Transformation during COVID-19

Peter-Jan Van De Venn, Strategy Director Fintech at Mobiquity shares his views on the benefits of digital transformation for wealth management firms during Covid-19.

Peter-Jan Van De Venn, Strategy Director Fintech at Mobiquity

In April 2020, Microsoft CEO Satya Nadella famously remarked that society had seen around two years’ worth of digital transformation in the first two months of the Covid pandemic.

Knowledge workers adopted remote working en-masse, retailers scrambled to go online, healthcare and education providers adopted virtual consultations and lessons respectively. It seemed that no sector remained untouched, with the pandemic providing a “burning platform” that innovation experts often believe is required to drive meaningful and enduring change.

While the wealth management sector is not renowned for being at the cutting edge of digital transformation, it too was affected by the winds of change, with companies adopting a range of digital tools to keep their workforce functioning and to serve customers in the best way possible. For many, this transformation was about keeping their heads above water, but for those at the vanguard, it was an opportunity to rethink business models and steal a march on competitors by truly giving customers what they want.

A changing landscape

It’s a period defined by rising customer expectations, with research from Oracle illustrating that half of investors will move their money elsewhere if their needs aren’t being met. It’s no surprise that industry veteran Rodolfo Castilla urged companies to disrupt or be disrupted.

This disruption is taking place across the entire value chain, from the way employees operate to the way customer experience is delivered. For instance, research from the Universität der Bundeswehr München, Germany, shows that augmented reality can boost customer engagement and brand perception by up to 40%. CitiBank has been using the technology to allow traders to access a more immersive trading environment from home.

Virtual reality has also been increasingly popular, with Fidelity Labs creating “StockCity” to present a 3D virtual city for investors to immerse themselves in the data around each and every stock in their portfolio.

AI has also been increasingly deployed, with data from Reports and Data projecting that spending on AI in financial services will reach over $26 billion by 2026 as companies strive to make sense of the huge quantities of financial and alternative data that is available about both markets and individual firms and industries.

Meanwhile, open banking has really come to the fore to provide consumers with seamless transitions between both financial products and indeed the wealth they have with various providers. Companies like Nutmeg and Revolut have led the way in a field that is predicted to be worth $43 billion by 2026.

Appetite for digital

This change in customer appetite for digital services was clear in our recent study of 400 decision-makers across the wealth management sector in the UK, US, Switzerland, and the Netherlands. Across all markets, there was a clear desire to capitalise on digital transformation to strengthen relationships with customers and stand their business in good stead for the post-Covid world.

In both the UK and Switzerland, customer expectations were a key driving force behind the transformations seen in the sector, with over half of respondents saying that the pandemic had sent demand for digital products and services soaring.

Respondents were effusive in their support for the investments they have made in digital technologies during the pandemic, with around 80% of wealth management executives in Switzerland and the UK reporting that they felt the investments had improved their customer engagement strategy.

This perhaps underlines the enthusiasm for further investments in digital technology in the future, with nearly 3 in 4 executives planning to use digital technologies, such as AI, open banking, and virtual reality, more commonly in their practices in the post-Covid era in a bid to provide both more efficient ways of working and personalised service to consumers.

The strong returns seen on these investments mean that the various barriers to progress encountered, which include issues such as compliance and privacy, were insufficient to curdle the general enthusiasm for change seen in the sector.

Making the change

The wealth management sector has been crying out for digital disruption for some time, and the Covid pandemic provided the impetus to make this change happen. With client expectations changed indelibly, the digital genie is now firmly out of the bottle and firms will have to embrace all that digital has to offer if they are to thrive in the post-Covid world.

Our report uncovered various barriers to digitisation that are important to address if transformation is to achieve its potential. Any kind of change requires a degree of learning as you go, and the pandemic has provided a rapid crash course given the speed and breadth of change we have seen. Now is the time to digest that learning and crystalise the changes into a new business as usual that has digital at its core.

Such a transition can deliver the kind of personalised customer experiences that consumers have come to demand, with an expectation that they can manage their finances seamlessly both within a single provider and between multiple providers. This has the potential to empower new business models in the sector where the true possibilities of digital technologies, such as AI and open banking, are embraced and baked into a company’s offerings at source.

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

Women in Fintech: Pathways to Positive Change with Jennifer Valdez of intelliflo

Supporting more than 30,000 advisors, representing more than three million end-investors, and servicing more than $1 trillion in assets across its platforms, intelliflo has delivered SaaS-based solutions for the financial advisory industry since its founding in 2004.

Headquartered in the U.K. and recognized as one of the leading technology platforms for financial advisors in the country, intelliflo announced earlier this year that it had successfully integrated five advisory solution businesses – Jemstep, Portfolio Pathway, RedBlack, i4C, and intelliflo U.K. – under the Intelliflo brand. The move to consolidate its advisory services was designed to enable the company to better compete with rivals like Finovate alum Envestment.

We chatted with Jennifer Valdez, intelliflo’s President of the Americas, to discuss the company’s rebrand and how the wave of digital transformation has impacted the financial advisory space. We also talked about the role of women in financial services and the importance of changing mindsets as a key step on the path toward positive change.

What was the driving force behind intelliflo’s recent rebrand?

Jennifer Valdez: Earlier this year, Invesco brought together its five separate software businesses to form the new intelliflo, a single, API-driven platform to run the end-to-end advisory experience. intelliflo’s technology is comprehensive, representing a broad spectrum of capabilities including financial planning, practice management, digital account opening, reporting, as well as trading and rebalancing capabilities. The open architecture drives new levels of flexibility, efficiencies, and personalization across financial advice, empowering organizations of all sizes with digital tools to better serve modern investors and widen access to financial advice. intelliflo supports over 30,000 financial advisors worldwide, representing more than three million end-investors and over $1 trillion in assets serviced on the platform. 

What tips do you have for clients beginning to embark on digital transformation projects?

Valdez: Before starting any major digital or business transformation project, it’s critical to pause and really think through the pain points you’re trying to solve. This includes listening to your internal team members, advisors, and clients. Technology simply for technology’s sake won’t be effective or productive; you must be solving a true business problem that will move the needle and better position your organization for meaningful change and success. Once that direction is clearly defined, then it’s time to engage your technology partner(s) to ensure you are fully maximizing technology to support your future vision.

Why is it so important for women to have a seat at the table? What steps can individual organizations and the industry as a whole take to ensure greater representation?

Valdez: Representation matters, and in order for organizations to accurately and comprehensively represent all audiences, these groups must have a voice (and vote) when making decisions. This doesn’t mean just women, but all traditionally underrepresented groups such as people of color and those in LGBTQ+ community. 

As a collective industry, we can all choose to do more to raise awareness against bias and stand up for equality, giving everyone an opportunity to thrive. Challenging current mindsets is the pathway to driving positive change.

How have the last 18 months changed the industry?

Valdez: The past year and a half have significantly impacted the financial advice space. Financial advisors are not regularly sitting across the desk from their clients, which challenges them to determine how to continue to meet investors’ needs and help improve their overall financial health. At the same time, investors are increasingly wanting tailored advice, so financial advice professionals are being challenged to deliver a high level of service in a new digital way.

While this has been difficult, it’s also created an opportunity for the industry to embrace modern technology in new ways, digitizing workflows and back-office capabilities to help increase efficiencies and reduce costs. Streamlining the advisory experience in this way is not only beneficial for the financial advice professionals, but also the end investors – it enables quicker, more transparent communication and collaboration all around, while also driving greater personalization.

Can you share a recent professional accomplishment and/or a goal you hope to accomplish?

Valdez: Being asked to lead the Americas for intelliflo has been a significant personal milestone. I’ve always recognized the importance of financial advice and have been passionate about helping investors strengthen their financial wellness. In my role, I get to lead an amazing team that executes on our company’s mission to widen access to financial advice.

At intelliflo, we firmly believe that financial advice should be accessible to all, not just the wealthy. That’s why we’re dedicated to providing the digital technology necessary to make this a reality, helping advisors improve the financial lives of their investors. I’m excited for what’s to come.

How do you see the advisory experience evolving this year and next? What role does technology play?

Valdez: Looking toward the end of this year and into next, I expect more financial services firms to embrace a hybrid advice model, a strategic, flexible mix of digital and human advice. Such an approach enables advisory firms to meet investors whenever and wherever they want to be met, while also allowing these firms to deliver products and services more efficiently and effectively.

Another significant benefit of a hybrid advice model is the ability to close notable product gaps. Many firms have clearly defined offerings for those who want full advice and for those who are primarily self-directed, but more choice should be made available to those investors that fall somewhere in between. With a hybrid strategy, financial services firms can cost effectively provide products and services that meet the needs of every investor on the continuum – and in their engagement models and delivery channels of choice.

Technology is key to making the shift to a hybrid model successful. More firms will forgo bespoke software solutions in favor of a single platform that can support the end-to-end advisory experience, allowing them to boost efficiencies. Leveraging open architecture and sophisticated APIs will be critical in helping to optimize margins, reduce costs, and enable greater personalization across the advisory experience.

Photo by Pavel Danilyuk from Pexels

Part 4 Has to work with both small & large amounts of capital

The law of large numbers is brutal in investing aka pity rich Mr Buffet and Mr Munger.

Think about what it takes to go 10x from:

  • 10k to 100k
  • 100k to 1m
  • 1m to 10m
  • 10m to 100m
  • 100m to 1b
  • 1b to 10b
  • 10b to 100b

All numbers assumed in US$ but actually the principle and math is the same in any currency.

Going 10x from 10k to 100k is much, much easier than going from 10bn to 100bn for two reasons:

1. Risk aversion increases as you get more capital. This is not logical. If you have 10k to invest and want to get to 100k and you are willing to risk all the 10k, the risk is exactly the same as if you have 10b to invest and want to get to 100b and you are willing to risk all the 10b. All that changes in reality is one letter but emotionally everything changes. This is a lesson that all poker players have to learn – play the cards and the people not the amount of the bet.

2. You have a lot more assets to invest in.  You obviously cannot deploy 10b in a company with a market cap of 2b. If you are investing 10k, almost an asset is investable.

10x sounds good but how long does it take to get 10x? If it takes 100 years your annual return is not that good. If you get 10x in 5 years (like many VC promise) the annual return (IRR in fund speak) is 58.49%.

50%+ a year is very, very good and very, very unusual, if it it is net of inflation. To get that kind of return you need:

A. To be both contrarian and right. Sometimes that is as easy as being greedy when others are fearful. For example in 2002, after the Dot Com crash all you needed was a belief that there was still some value in software. Being both contrarian and right is harder when the market is bullish as it is today – hard but not impossible.

B. Patient but not delusional. If you trade a lot you will make brokers rich and because computers can trade faster than you, you probably won’t make yourself rich; be patient. Nor is buy and hold ie never sell good in a world with a lot of disruptive innovation. Sometimes it is good to throw in your hand and accept that you have been contrarian and wrong; do not be delusional. Choose your time horizon and check in regularly. Companies in the the US stock market report quarterly and that is a good time to check in, even if you choose 1 year as your time horizon.    

10% of your capital that increases 10x is meaningful. It does not matter whether you are investing 10k or 10m or 10b, if your total assets are 100k or 100m or 100b. You can take a high risk/return approach with 10% of your portfolio. Let’s say your portfolio is 100k; if you lose 10k it is bad but not catastrophic and a 10x return doubles your portfolio assuming the 90% stays the same.

Mr Buffet and Mr Munger are of course OK. They are in the 1% of the 1%. Up to $1m you are “retail” derided as muppets; this is the world of rapacious brokers and mission-driven impact ventures that care about genuine democratisation of markets. Above $1m you enter the market segments known as mass affluent and from HNWI to UHNWI that a lot of wealth managers target.

Some subjects are too complex for our short attention spans, so we do 4 posts one week apart, each one short enough not to lose your attention but in aggregate doing justice to the complexity of the subject. Stay tuned by subscribing.

Part 1

Part 2

Part 3

Part 4

Some may not be published yet.

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.

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KeyBank Acquires Banking-as-a-Service Provider XUP

Ohio-based KeyBank made its sixth acquisition today. The bank purchased Banking-as-a-Service company XUP, a platform that helps banks take control of the merchant experience. Terms of the deal were not disclosed.

Founded in 2018, XUP connects merchants, third party financial service providers, and acquirers across channels to help banks offer a more integrated and seamless payments experience. KeyBank will use XUP’s technology to improve its embedded banking strategy and improve the user experience for its commercial users. The bank describes the move as the “next step in providing digital innovation at scale.”

Today’s news is only the latest development in the relationship between KeyBank and XUP. The bank contributed to XUP’s $3 million Seed round closed in February and the two were strategic partners. According to KeyBank, XUP helped accelerate the volume growth of its merchant payments capabilities. The bank now counts 150 million card transactions each year, accounting for $13.6 billion in annual card volume.

“We’ve long embraced the software innovation that’s sweeping through the financial services industry, and the acquisition of XUP allows us to continue to be a leader in this space,” said KeyBank’s Head of Enterprise Payments & Analytics Ken Gavrity. “XUP’s highly experienced team has accelerated us on the journey to build connectivity across our systems, our partners, and our customers, to make it easy to do business with Key.”

XUP will continue to operate as its own entity and support its customer base. “Our end-to-end software solutions, combined with Key’s scale and deep financial services expertise, will perfectly blend to provide clients a best-in-class payment experience,” said XUP President Chris May.

KeyBank was founded in 1825, has $187 billion in assets under management, is headquartered in Cleveland, Ohio, and has 1,000 branches across the U.S. The bank’s other acquisitions include AQN Strategies, Finovate alum HelloWallet, First Niagara Financial Group, EverTrust Financial Group, and Leasetec. Among the company’s strategic partners are AvidXchange, BillTrust, and

Photo by Amina Filkins from Pexels

TEMPO Payments: In-Store and Online Retail Payments Done Best by Blockchain

Blockchain’s large utility is finally starting to be realised by fintechs across the globe. Old fashioned payment methods are on their way out, and new digital methods to improve accessibility to financial services are on the rise. The retail industry is starting to capitalise on this as 900 retailers are now accepting cryptocurrencies of some kind; blockchain technology not only improves B2C transactions, but also merchant and supplier ones. 

That short introduction echoes the views of Suren Ayriyan, Managing Partner and CEO at TEMPO Payments when he spoke to The Fintech Times.TEMPO Payments, a European-wide anchor for Stellar blockchain payments, offers online, offline and digital backed remittances to nearly 100 destination countries with over 300 physical agent locations as well as a secure bridge to purchase and sell digital assets. 

Having worked for various financial institutions across the globe, Ayriryan is well placed and experienced on how blockchain technology could have a lasting impact in different areas of the world:

Suren Ayriyan, Managing Partner and CEO at TEMPO PaymentsSuren Ayriyan, Managing Partner and CEO at TEMPO Payments
Suren Ayriyan, Managing Partner and CEO at TEMPO Payments

In 2021, blockchain cannot only revitalise payment infrastructures itself but also specific industries such as retail. Globally, we are experiencing an exponential growth of fintechs in eCommerce and medium businesses. Blockchain enhances supply chain management, every sale activity, and improves both in-store and online payments. As a means to decrease transaction fees, blockchain is beneficial for retail overall.

Merchant use of blockchain payments

Undoubtedly, the pandemic accelerated the digital payment ecosystem by leaps and bounds. Online retail sales surged to $794.50billion, a 14.4% increase of total US retail in 2020.

Cryptocurrencies replace the credit card, no wonder the retail adoption of cryptocurrency payments is growing. At least 900 retailers will now accept cryptocurrencies of one kind or another.

As one of few actors providing multiple payment options to consumers, retailers are in fact the ones that can make the greatest impact with blockchain solutions.

And it goes without saying that retailers in the global south and in developing economies, with the most governmental constraints, accessibility limitations for users and overall infrastructural challenges, will create the greatest impact using blockchain-based payments.

The multiple benefits of electronic retail payments

Retail payments are typically payments between consumers, businesses, and public authorities. They are everyday consumer transactions, but also the salary and tax payments made by companies. The key to streamlining a customer experience is integrating the latest technology to reduce customer and revenue churn. This is why blockchain as a secure payment option is essential to the retail industry.

Today, constraints and regulations often prevent us from upholding private obligations and doing business abroad. Laws and regulations from a market, technical and legal perspective are what limit money transactions and payments for retail companies regardless of region. Fast, secure, and easy transactions are the incentive for using blockchain technology both in in-store and online eCommerce.

The benefits of electronic blockchain payments for retailers are: 

  1. Security (cash is more liable to theft, loss, and fraud).

  2. Better and faster assessment of business operations (e.g., cash flows, profit, and loss).

  3. The ability to generate revenue from new channels and digital financial services.

  4. Value-added services that come bundled with payments or make or receive payments (e.g., loyalty, credit, marketing support).

Central banks have traditionally shown interest in retail payments due to their stability and efficiency in preserving confidence in national currencies. But how can independent solutions such as blockchain facilitate payments in the retail industry globally?

How blockchain impacts payment infrastructure

Equal to high cash usage is a fragmented payment infrastructure in a country characterised by regulatory constraints. Constraints that have much to say for further development, growth, and innovation, such as:

  1. An inadequate value proposition for merchants.

  2. Weak product and stakeholder economics in traditional card models.

  3. Insufficient aggregate customer demand needed to reach the “tipping point” that drives demand and supply towards an electronic payments ecosystem.

  4. Inconsistent technological infrastructure and regulatory environment in developing markets to support electronic payments.

  5. Ineffective distribution models to serve hard-to-reach merchants in areas with limited economic infrastructure.

  6. The difficulty in formalising enterprises and reluctance of merchants to pay the full tax on sales.

Depending on the country and its entrepreneurial environment, these factors can determine the number of solutions available to consumers and small and medium merchants. The existing challenges can be solved by facilitating the opening of a transaction account (while protecting customer data privacy), stimulating merchants’ formalisation, and forge private-public partnerships.

The keyword being accessibility as making money transfers available to a significant number of users, regardless of geographic location, also bolsters infrastructure globally. This way, merchants can significantly contribute to strengthening a country’s economy.

The power of retail fintech

In developing countries, electronic payments are already shifting consumer behaviour. Merchants should already enhance their setup by advancing payment solutions using blockchain. Doing so will surely have a positive impact at the individual level in any country or region.

As a universal instrument enabling global transactions, blockchain payments can impact the entire retail industry by strengthening how money is transferred from the consumer to the store as well as between merchants and suppliers. Ultimately, solutions that allow retailers to both receive electronic payments from consumers and pay their immediate suppliers digitally will advance the payment infrastructure at all levels.

Today’s consumers want goods and services to be available at the click of a button, something that is also raising the bar for the checkout stage. As enablers providing and using several transaction solutions domestically and across borders, retailers have the power to facilitate all electronic payments by consumers with fintech. In sum, this can mean a significant use of cashless payments and less use of cash and checks long-term in developing countries.

The Small Business Administration’s Direct Lending Proposal is Well-Meaning but Flawed

Peter Lord is CEO and co-founder of Codat, the API platform for business data. Here he shares his thoughts on why the Small Business Administration’s direct lending proposal is well-meaning but flawed. 

By: Peter Lord, CEO & Co-founder @ CodatBy: Peter Lord, CEO & Co-founder @ Codat
Peter Lord, CEO & Co-founder @ Codat

Small businesses are one of the most important pillars of the US economy. They employ 47% of Americans and contribute $5.9 trillion to overall GDP. The nearby convenience store, the auto repair shop around the corner or the pizza parlour down the street are constants in our lives — and at the heart of local communities across the country. But times are tough and the future less certain than normal. The pandemic has exacerbated an already existing challenge of being a small business: access to credit.

This issue has been on the radar since after the global financial crisis, when traditional lenders tightened their credit requirements, leaving small businesses in the cold. In recent years, fintech lenders have stepped in to fill the gap, bringing updated underwriting and credit assessment practices to the table, but a small business lending gap has persisted. And the pandemic pushed the issue further. The government took immediate action to ensure credit flow, launching initiatives including The Paycheck Protection and Economic Injury and Disaster Loan and Programs. The latest government proposal to be voted on by the Senate is a $4.5 billion direct loan program to be managed by the Small Business Administration (SBA). It would sit under the current 7(a) program and be distributed over the next 10 years, meeting a need for smaller loans below $150,000.

The proposal pinpoints a key issue that needs attention: If small businesses do not recover from the coronavirus pandemic, the rest of the economy won’t either. However, it is flawed in that it underplays the importance of addressing the root causes of small businesses having poor access to credit, in particular for smaller loans. It’s not about the pools of creditors and credit being inadequate. It’s about the ability of existing creditors to accurately assess the creditworthiness of applicants. Moreover, lenders struggle to profitably process smaller loans. Because of the SMB’s thin file, the cost to process and risk compared to the amount they earn from these loans doesn’t stack up. Faced with a flooded demand side of the market, they have stuck to the same processes. Instead, they need to automate the data exchange and underwriting.

The last time the government discussed a direct lending program (yes, it’s been on the agenda before – back in 2010). Karen Mills, the Administrator of the SBA, now a Senior Fellow at Harvard Business School, supported the notion of the key issue being the ability of small businesses to provide sufficient financial data for a loan. “We can get them bankable by helping them with their package.

In other words, the problem of small business credit lies with small businesses being unable to provide a satisfactory loan package of data that the bank can understand and lend against. For example, take a four-month-old business set up to sell home improvement supplies online. They now need $40,000 for marketing and online advertising. While their business may be thriving, it’s unlikely that they would be able to secure funding via traditional methods due to their limited time trading. However, by accessing their accounting, banking, and commerce data, banks would be more confident in their ability to fund the business while sensibly managing risk and minimising costs. In addition, given small businesses can’t provide enough data for lenders to check their existing process boxes, solutions that allow for richer real-time data benefit all parties, giving a more accurate picture of creditworthiness.

There are other reasons why a direct lending program isn’t the best idea. For one, it would face practical challenges. Given that they have not historically offered loans directly, the SBA naturally does not have the necessary infrastructure (systems, trained lenders, computer systems) readily available. The current proposal involves the SBA partnering with community development financial institutions (CDFIs) to process the loans and earn a fee, while the SBA holds the loan and does the rest. To manage all this an online loan portal would be created. It is not unreasonable to assume it could take at least a year to staff, train and set up back-end computer systems for the program. But time is of the essence. As we all know small businesses owners are time-poor. They need smooth and efficient access to capital. Especially after the various PPP program delays and hiccups earlier this year.

Proponents of the SBA direct lending programme have been arguing that banks and existing creditors are no longer equipped to support small businesses. They seem unaware that over 24,000 lenders have been participating in the PPP and hundreds in the 7(a) loan program. Lenders today are well-capitalised and committed to championing small business. However, what they do need is better-digitised data that allows them to automate underwriting for smaller loans and access real-time insight. This would speed up the process and reduce manual error while providing a richer data picture. It’s the main thing that is going to help existing lenders meet the needs for smaller loans.

A public small business lending program might make sense at some point in the future, if the free market fails. But the demand for credit is urgent. Small businesses are trying to build back better today. They need the credit application process to be as clear, efficient and as quick as possible. In other words, it is not the time to roll out a new direct lending scheme. Instead, our collective energy and efforts—private industry, The SBA and publicly elected officials—should go toward making today’s system function better.

Youth Investing App EarlyBird Raises $4 Million in New Funding

EarlyBird, a mobile investing app for children and their families, has raised $4 million in seed funding today. Alexis Ohanian’s Seven Seven Six led the round, which featured strategic participation from Gemini’s Frontier Fund, Network Ventures, Rarebreed Ventures, and other angel and VC investors. The company will use the capital to continue building its solution, add to its engineering, product, marketing, and operations teams, and introduce new features – including the ability for users to invest and gift assets other than stocks and ETFs, such as cryptocurrencies.

The investment takes the company’s total funding to more than $7 million, having secured funding previously in November and January of last year.

Using a collaborative approach to next-generation wealth building, EarlyBird enables parents to set up an investment account, select from a number of diversified portfolio options, and begin making investments on behalf of their child. The platform also empowers members of a child’s extended network of family, friends, and others to contribute to the account (“gifted capital” EarlyBird calls it). Whether celebrating birthdays, holidays, or other occasions, these contributions are not only unique gift options, they also help young people begin to learn about the importance of investing and building wealth over time. The technology also has a feature that enables contributors to add a video or photo commemorating the gift.

“EarlyBird started with the vision to create an accessible way for all families to begin building wealth for their children, and to do so with the support, love, and contributions of their broader communities,” EarlyBird co-founder and CEO Jordan Wexler said. “Since our launch, we’ve seen incredible growth, adoption, and excitement from families with a wide range of financial knowledge and backgrounds. Seven Seven Six and all of our new partners recognize the importance of financial access and approachability in investing, and we’re thrilled to have them on board as we continue to take flight.”

Headquartered in Chicago, Illinois, and founded in 2019, EarlyBird recently announced a partnership with Benjamin Talks, a youth-oriented financial education platform launched by co-founders Nikki Boulukos and Carissa Jordan last fall. The collaboration will bring Benjamin Talks content to EarlyBird’s newsletter series “The Weekend Worm” which offers stock market news in an approachable way that parents can share with their children. This spring, EarlyBird introduced its Gifts for Good program. Starting this April, EarlyBird selected up to three “extraordinary kids between the ages of 3 and 12 years old to support and invest in.” With an eye toward young people showing achievement in areas such as music and the arts, athletics, academics, and “special acts of kindness,” EarlyBird will provide a gift investment of $250 to each child selected to seed their investment accounts.

“Investing tools are only available to families with investing knowledge and experience building generational wealth,” EarlyBird COO Caleb Frankel said in a statement accompanying today’s investment news. “We have a bold vision to make investing available for everybody. We are driving wealth creation not within the system of today, but for the world of tomorrow.”

Be sure to check out our interview with Jordan Wexler from earlier this year.

Photo by Radovan Zierik from Pexels

Citi to hire 100 people in push into digital assets

Citigroup Inc. is looking to hire 100 people as part of a new push into digital assets inside its institutional business, according to a person familiar with the matter.

Photographer: David Paul Morris/Bloomberg Mercury

As part of the effort, the firm tapped Puneet Singhvi to be its new head of digital assets inside the institutional-clients group, according to a memo to staff seen by Bloomberg News. He will report to Emily Turner, who oversees business development for the broader group.

“We are focused on assessing the needs of our clients in the digital-asset space,” Citigroup said in an emailed statement. “Prior to offering any products and services, we are studying these markets, as well as the evolving regulatory landscape and associated risks in order to meet our own regulatory frameworks and supervisory expectations.”

Citigroup’s latest hiring push comes as the country’s biggest banks increasingly look for ways to expand into the wild world of cryptocurrencies. Bank of America Corp. created a cryptocurrency research team earlier this year, while JPMorgan Chase & Co. and Goldman Sachs Group Inc. have begun offering crypto-futures trading.

Singhvi’s team will provide expertise and outline a strategy for how the different businesses inside Citigroup’s institutional-clients group — which includes trading, securities services, investment banking and its treasury and trade solutions arm — will use blockchain and digital assets.

“We believe in the potential of blockchain and digital assets including the benefits of efficiency, instant processing, fractionalization, programmability and transparency,” Turner said in the memo to staff. “Puneet and team will focus on engaging with key internal and external stakeholders including clients, startups and regulators.”

Singhvi is joining Turner’s business-development team from Citigroup’s trading business, where he was head of blockchain and digital assets. In that role, he led many of Citigroup’s first steps in the space and oversaw the firm’s relationships with major financial-infrastructure providers.

Shobhit Maini and Vasant Viswanathan will now be co-heads of blockchain and digital assets for the firm’s global-markets business, reporting to Biswarup Chatterjee, head of innovation for that business.

The institutional division’s “digital asset efforts are a continuation of our work with blockchain, and are consistent with our strategy to research emerging technologies, collaborate with partners to develop solutions and implement new capabilities enabled by robust governance and controls,” Turner said.

— By Jenny Surane (Bloomberg Mercury)

Regulators Across the UAE Unite to Issue the Guidelines for FIs Adopting Enabling Technologies

Guidelines setting out cross-sectoral principles and best practices for financial institutions when adopting enabling technologies for the development or offering of innovative products and services have been published as the “Guidelines for Financial Institutions Adopting Enabling Technologies” (the Guidelines). The Guidelines was issued by The Central Bank of the UAE (CBUAE), the Securities and Commodities Authority (SCA), the Dubai Financial Services Authority (DFSA) of the Dubai International Financial Centre (DIFC) and the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM). 

The enabling technologies the Guidelines refer to include Application Programming Interfaces; Big Data Analytics and Artificial Intelligence; Biometrics; Cloud Computing; and Distributed Ledger Technology.

The objectives of these Guidelines are to promote the safe and sound adoption of these technologies by financial institutions across the UAE, so that the risks arising from the adoption of innovative activities are proactively and appropriately managed. The issuance of the final Guidelines follows a public consultation launched in June 2021. In finalising the Guidelines, the Regulators have considered international standards, industry best practices and the valuable feedback received from market participants during the public consultation.

The Guidelines will apply to all financial institutions that are licensed and supervised by any of the Regulators and that utilise the enabling technologies, irrespective of the financial activities conducted.

Commenting on the launch of the guidelines, Saif Al Dhaheri, Assistant Governor – Strategy, Financial Infrastructure and Digital Transformation at the CBUAE, said: “Through the guidelines, we aim to direct licensed financial institutions to adopt technologies that enable modern financial services and promote innovation. These guidelines reflect the Central Bank’s keenness to team up with regulatory authorities
in various fields, including issuing unified and common guidelines to achieve the growth of the UAE’s economic sectors.”

Dr. Maryam Buti Al Suwaidi, Chief Executive Officer of the Securities and Commodities Authority (SCA), said, “Undoubtedly, the release of Guidelines for Financial Institutions Adopting Enabling Technologies is of paramount importance given that they enhance the safe and proper adoption of these technologies by the
financial institutions operating in the UAE’s financial sector, especially that they are consistent with the best global standards and practices. Serving as a guide for all financial institutions that fall under the supervision of SCA or the other regulatory authorities taking part in this initiative, these guidelines will encourage enhanced proactive management of the risks of innovative activities.”

F. Christopher Calabia, Chief Executive of the DFSA, said: “Finance has long drawn on the latest technology, now more so than ever. As a risk-based regulator, the DFSA welcomes innovation and the prudent adoption of enabling technologies by the firms it supervises. In developing this Joint Guidance with fellow UAE regulators, we encourage all firms to deploy new technology in line with good practice and clear guidelines so that the financial system and customers remain properly protected.”

Emmanuel Givanakis, CEO of the FSRA at the ADGM, said, “Modern financial institutions need their technology to be robust and resilient. These Guidelines will help financial institutions by providing best practices on how to manage and mitigate risks arising from the use of innovative technologies. In turn, this will let institutions better serve their customers. We have closely collaborated with the other UAE regulators on these Guidelines and look forward to similar joint efforts in future.”

  • Francis is a junior journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

Crypto Trends and the Rise in Alternative Personal Finance

As cryptocurrency celebrates its most successful year to date, analysis by and separate data from GWI has revealed the most sought-after coins in the market and the attitudes that surround them. 

The analysis by considered the number of times they had been searched for on search engines each month, and unsurprisingly, Bitcoin has remained in the limelight, scoring 24.6 million searches a month.

First created in 2009, Bitcoin has become the most successful and expensive cryptocurrency on the market, reaching an all-time high of $68,521 on November 5th, 2021.

Receiving an average of 13.3 million searches, the second most searched for cryptocurrency was Dogecoin. Mass public interest in the “meme coin” has resulted in unimaginable growth, with many considering the crypto to be a legitimate investing opportunity. The coin hit an all-time high on May 8th, 2021, reaching $0.7376.

Ethereum comes in third place, with 5.7 million global searches. Ethereum itself is an open-source blockchain, with Ether acting as the cryptocurrency, although the most common term for the cryptocurrency is Ethereum. The currency reached an all-time high of $4,865 this year, with the success of the NFT marketplace driving up the popularity and price of the coin.

SHIBA INU came in fourth place, receiving three million global searches. The second “meme coin” in the top 10 list, SHIBA INU has taken the crypto world by storm. The coin was created in August 2020, but already has market cap of $26.8 billion and growing.

Closing out the top five, XRP has an average 2.3 million monthly searches. The cryptocurrency is under Ripple and had seen a fall in popularity in recent years. After reaching an all-time high of $3.84 in 2018, the coin has seen a decline in trading volume, slowly regaining popularity once again in the past year.

Cardano comes in sixth place, with 1.6 million global searches, followed by Litecoin in seventh with 1.1 million searches, whilst Cosmos, Polygon and Uniswap come in eighth, ninth and tenth, respectively, with each holding below one million monthly searches.

The data presented in’s latest study is mirrored by similar research from GWI, which highlights how the increased public interest of cryptocurrency in the UK specifically is facilitating the emergence of crypto investors and alternative forms of personal finance.

According to their data, the number of cryptocurrency investors in the UK has increased by 57% since 2018. In addition to this, 20% of UK consumers stated that while they don’t use cryptocurrency, they are interested in doing so.

This is married with a 61% increase in UK consumers feeling more optimistic about their personal finances since Q2 2020 and 45% saying that saving money has become more important to them over the past year.

Chase Buckle, Head of Global Trends, GWIChase Buckle, Head of Global Trends, GWI
Chase Buckle, Head of Global Trends, GWI

Chase Buckle, Head of Global Trends at GWI comments: “The last few years have been tough on everyone. These trends make it clear that after putting their lives on hold through numerous lockdowns, people want more excitement and focus again – be it via a change in job, or seeking more purpose in their work and life. While brands have been talking about getting back to ‘normal’ since the pandemic began, it’s clear that consumers have no intention of that. They want more than just the old ‘normal’.”

Adding to this, a spokesperson for said: “The growth of cryptocurrencies in recent years has been colossal, with no sign of slowing down anytime soon. It is very interesting to see the growth and popularity of ‘meme coins’, with many people now seeing great potential in crypto coins that were originally perceived to be a joke. It will no doubt be exciting to watch the growth of the market and to see how the industry evolves.”

  • Tyler is a Fintech Junior Journalist with specific interests in Online Banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

What is a Central Bank Digital Currency (CBDC)?

This November, The Fintech Times is looking to broaden the understanding of digital currencies, ranging from blockchain’s use outside of crypto to CBDCs, in an attempt to replace the notion that digital currencies are a synonym for crypto.

Today, we’re looking at Central Bank Digital Currencies (CBDCs): what they are and how they differ from fiat currencies as we know them and cryptocurrencies.

What is a CBDC?

A CBDC is, in a nutshell, a new type of currency, aiming to work in tandem with fiat currencies used worldwide. The main component of CBDCs which sets them apart is the fact they operate on a blockchain, creating a token of the country’s currency and recording all transactions of that token in an immutable way.

CBDCs are still very much in their infancy, with most countries still experimenting with the concept. Should these experiments be successful, the digital currencies could leverage frontier technologies for the development of features such as programmable money, more inclusive payments services, and more robust and resilient payments infrastructure.

Some countries have prioritised their CBDCs development, however. As noted by Coindesk, Venezuela was a pioneer in this respect, launching its own cryptocurrency, the petro, in 2018. However, the petro is plagued by problems and very few Venezuelans actually use it. Besides Venezuela, the Chinese government is probably the furthest along in creating a CBDC. It is already trialling a digital yuan across several cities.

Governments were inspired by cryptocurrencies to create CBDCs, as there was a belief that Distributed Ledger Technology (DLT) could help with financial inclusion, and take away various pain points from the current payments system. Where crypto and CBDCs vary is that no central entity can turn users away from the blockchain, whereas governments use permissioned blockchain technology to limit who can view and who can change the blockchain.

Coindesk notes, Bitcoin has a limit of 21 million Bitcoins built into the protocol, and it is very hard, perhaps impossible, to change this limit. In contrast, governments each have a central bank, which is in charge of the country’s money supply. These powerful banks choose when to remove or add money to the supply, such as to stimulate the economy in troubled times, and set national interest rates, among other tasks. These roles aren’t going to change with CBDCs.

Different types of CBDC

There are two types of CBDCs: B2C and B2B.

  • The B2C CBDC is known as a Retail CBDC. Investopedia notes there are two types of Retail CBDC:
    • Value- or cash-based access: This system involves CBDCs that are passed onto the recipient through a pseudonymous digital wallet. The wallet will be identifiable on a public blockchain and, much like cash transactions, will be difficult to identify parties in such transactions. According to Riksbank, the development of a value- or cash-based access system is easier and quicker compared to token-based access.
    • Token- or account-based access: This is similar to the access provided by a bank account. Thus, an intermediary will be responsible for verifying the identity of the recipient and monitoring illicit activity and payments between accounts. It provides for more privacy. Personal transaction data is shielded from commercial parties and public authorities through a private authentication process
  • The B2B CBDC is known as a Wholesale CBDC. This type of CBDC’s DLT expedites the transfer of money across borders, enabling the automation of cross border transactions.
  • Francis is a junior journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

ForgeRock: As Open Banking Faces Its Biggest Shakeup in Years, What’s Next After The OBIE?

Open banking has seen a surge in interest, investment and innovation, as monthly active user rates doubled during 2020 and the UK’s authorised third-parties nearly doubled over the same period. However, the UK’s Open Banking framework is in a state of flux as the old body in charge of its implementation is being phased out; one possible successor is Open Finance.

This is the view of Nick Caley, Vice President of UK and Ireland at ForgeRock. Caley advises global clients in industry and government on security strategy and digital transformation focused on hybrid data architectures and data-driven business models. 

As ForgeRock’s VP of UK and Ireland, Caley has worked with regulators like the OBIE and businesses such as Yapily and HSBC on Open Banking matters, so he is well-placed to discuss what regulators need to do to ensure Open Banking’s adoption, the potential aims of the Future Entity including an expanded remit to Open Finance and the issues and pitfalls raised during the consultation period:

Nick Caley, Vice President of UK and Ireland at ForgeRockNick Caley, Vice President of UK and Ireland at ForgeRock
Nick Caley, Vice President of UK and Ireland at ForgeRock

In 2021, UK Open Banking will undergo its biggest shakeup since its inception – and perhaps not a moment too soon.

Building on years of similar criticism, Starling CEO Anne Boden in October castigated Open Banking as a failure – “it has not been a success” – in an appearance before the Treasury Committee.

However, there is an opportunity for real change on the horizon. As part of its responsibilities under the Retail Banking Market Investigation Order (the Order) in 2017, the Competition and Markets Authority (CMA) is currently reconsidering the whole framework for the delivery and implementation of Open Banking in the UK.

Among the mooted changes is a possible replacement of the Open Banking Implementation Entity (OBIE), the body directly responsible for Open Banking’s rollout, with a new regulator or merging its responsibilities with an existing one, like the FCA.

Among the fintech and banking community, nothing is liable to polarise opinion as much as Open Banking. For its proponents, Open Banking (and the OBIE) has created a flourishing and world-leading ecosystem with 700 market participants. But its critics point to its slow growth rate and the considerable upkeep costs.

For the CMA’s part, it believes that “the core elements of open banking are now in place” but it also tellingly warns that “it is not inevitable that it will continue on the same trajectory.”

The shape of the new regulatory framework for Open Banking will play a large part in either continuing the upwards trajectory or arresting its growth. In the end, consumers will be affected, for better or worse.

So what comes next after the OBIE?

The outsized role of regulators on UK Open Banking

Regulators have always had an outsized role in the development of the UK’s Open Banking ecosystem. The whole system resulted from a significant market intervention by regulators after all, kicked off by the Order. The “regulatory foresight” of the Order has now been proven.

Due to this arrangement, regulatory oversight is a cornerstone of the framework in which the OBIE and UK Open Banking ecosystem operates. Currently, the Implementation Trustee has a dedicated monitoring function, tasked with ensuring that the CMA9 are complying with the Order and that the broader system is operating as desired.

To date, this arrangement (though not perfect) has ensured that the CMA9 has largely acted in the interests of the broader ecosystem. Given their £26million contribution this year to the upkeep and promotion of the ecosystem, they may feel that they are entitled to benefit more than they currently are, however. The omnipresent danger is that the CMA9 begins to put their commercial interests ahead of the ecosystems.

The CMA is aware of this as a systemic risk that needs to be mitigated: “Further [Open Banking] innovation may be stalled where there are conflicts with banks’ commercial objectives.”

Perhaps understandably, this is somewhat of a red flag for UK fintechs. It was one of the key concerns raised through Innovate Finance, which represents the community, in its response to the CMA.

Right now, regulatory oversight of the OBIE and CMA9 is tied to the monitoring and enforcement of the Order itself, raising the possibility that the oversight currently in place will be decoupled from the future entity under UK Finance’s proposed transitional plan.

The needs of the ecosystem are evolving beyond the scope of the Order but this is one aspect of the current arrangement that should be carried over in some way if only to allay the concerns of other parties involved in the ecosystem.

If the scope of the future entity expands to Open Finance other regulators like the FCA could also have a monitoring and oversight role. Either way, there must be a clear and strong regulatory framework for Open Banking moving forward.

Is Open Finance the future of Open Banking?

Consumers are demanding more control and clarity over their overall financial health – beyond just banking. In the words of UK Finance, “consumers do not see the relevance of the PSD2 boundary to their financial lives”.

This raises the question: should we leapfrog Open Banking altogether and focus on kickstarting Open Finance instead?

The FCA already signalled its interest in pursuing Open Finance initiatives, applying the lessons and resources of Open Banking to get it off the ground. But under UK Finance’s proposals, the future implementation entity will still largely focus on Open Banking.

As it stands, discussions around Open Finance will be separated and subordinated to a secondary ‘Open Futures board’ outside of the current governance structure, purportedly to avoid conflicts of interest.

UK fintechs, ever eager for new innovation, have taken umbrage with this as it signals that Open Finance is a secondary concern for the future entity and that this would make its focus “too narrow.” They believe Open Finance initiatives should instead be the “overarching aim” of the future entity.

If the aim of Open APIs is to “transform financial services” and “enable [consumers] to take more control of their finances,” extending the regime into finance more broadly is a logical and natural next step.

When adopted across the financial services ecosystem, it would create a variety of secure, trustworthy, and user-friendly tools that empower users to engage more meaningfully with their finances – and their data.

Once again, the UK has another opportunity to deliver another open data financial revolution, this time on an even grander scale. To play on the words of the CMA, we must make the system work harder for consumers.

This starts with empowering the future entity as an enabler of Open Finance through a robust regulatory framework to protect the interest of consumers and the broader ecosystem.

VC money bets on crypto,450&ssl=1#

One way to understand how big crypto has become is to look at the prices of coins and at the industry’s market cap. But then when you check a few minutes or days later you might see a completely different picture because of the crypto industry’s volatility. In the last 10 days, bitcoin’s price dropped as low as $52,000 a coin, after hitting a record high of almost $69,000 in the run-up to bitcoin’s taproot upgrade being deployed. On the other hand, you could look at the market in a completely new way, and instead of worrying about prices and volatility, you could check out if accelerators and VCs are supporting early-stage crypto companies and if they are investing to help them grow and scale. In 2021 we saw an influx of major investment organizations entering the crypto world and so far this year has turned out to be the biggest year for investments in crypto startups. In my book, this is the most important factor on whether to invest in any market, especially in volatile crypto assets. As long as VC money keeps coming in and growing, I wouldn’t be worrying about volatility. Just buy what you can afford to lose, hold on to it and you’ll be a winner in the long run.

Ilias Louis Hatzis is the founder and CEO at Kryptonio wallet. Please participate in our Crypto Wallet Survey, we could use your help. It’s seven simple multiple-choice questions about crypto wallets and you should be done in 60 seconds. The survey is completely anonymous.

Back in June, Techstars announced Launchpool Web3 Techstars Accelerator, a new program in partnership with Alphabit Fund to work with entrepreneurs that are building blockchain technology, tokenization protocols, and web3 applications. Entrepreneur First launched with Tezos, Entrepreneur First Web3, a program to attract new promising founders to build startups in the web3 space.

Techstars and EF are only a couple of examples that I’ve read about in the last few months that are trying to catch the crypto and web3 wave early on. This is an important trend that’s going to grow even more because money is being poured into the space. But more importantly, it will help the market mature and create positive spillover benefits to the wider crypto industry because it will lead to better products and companies being built.

On many different levels, 2021 has a stellar year crypto.

In the first nine months of 2021 crypto startups raised $15 billion in venture capital, five times what they raised for the whole of 2020. The total for the year so far is already up 384% compared to 2020’s 12-month total of $3.1 billion. In the third quarter, 12 crypto unicorns, startups valued at $1 billion or more, were born, a record.

In the third quarter of 2021 funding reached $6.5 billion, an all-time high, invested in 286 deals, with Coinbase Ventures leading the pack, being the most active investor.

In Q3, Coinbase Ventures made a record 49 investments, averaging a new deal around every 1.8 days. This is up from 28 investments made in Q2, and 24 in Q1. At the end of Q3 2021, Coinbase Ventures portfolio stands at over 200+ companies and projects.

When you compare the largest deals in 2020 with those of 2021, crypto deals are becoming bigger in 2021. To support this growth VCs are launching bigger funds. Earlier this year Andreessen Horowitz launched a $2.2 billion crypto fund, and many others are reserving dry powder for the industry, as investments in crypto startups are only set to become more competitive and larger in nature. Last week, Paradigm announced that it was starting a $2.5 billion venture-capital fund aimed at the next generation of crypto companies and protocols.

Crypto VCs have been very active for the last 2 years, investing a lot of money in Layer 1, Layer 2, DeFi, DEX, Cross-Chain, and NFT projects.

So far, in 2021 the big winners were:

  • This year NFTs took flight. NFT funding skyrocketed to over $2 billion in 2021, with a growth rate of 6,523% over 2020s 12- month total. More than 90% of NFT deals this year have been early-stage. There were 46 deals to NFT startups in Q3’21, 3 of which were mega-rounds.
  • Decentralized finance startups saw 191 equity deals in the first 9 months of 2021, up 57% from the 2020 total. Total funding in 2021 this year is at $2.1B, over 6x the amount raised in 2020.
  • Crypto custody and wallet providers raised almost $4 billion in funding in 2021 so far, making up 26% of all dollars raised by crypto startups this year. Custody and wallet funding YTD is already up 333% from 2020’s year-end total.
  • Crypto exchanges were the leading segment in the quarter, raising nearly $2 billion in venture funding, up from just $84 million raised in the third quarter of 2020.

Exchanges will likely remain at the center of the crypto universe because they have spectacular revenue generation capacity and are much more likely to expand into new industries, as well as acquire down the value chain.

There’s a growing appetite for crypto startups, especially those that are creating the tools to build a blockchain-based future.

I expect that we’ll see investors double-down on their investments, as more capital will be needed by their portfolio companies to capture the growing market. But the market is still very small. Even though more and more venture capital companies are investing in crypto startups, investments in the industry only account for 1% of the worldwide venture capital market. This poses a high level of risk but also shows how early we are and the huge potential for growth in the future. There are a number of reasons we will see the investment surge continue. The most important being we are ready, both ideologically and technically.

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Fee Free Japanese BNPL Solution Launched by Smartpay for Credit Card Users

Online payments in Japan have tripled over the last decade to $200billion, and as such, many digital companies want to expand to the region. Competing with PayPal, which bought the Japanese “Buy Now Pay Later” (BNPL) paytech, Paidy, in September, Smartpay K.K. has announced the launch of its new BNPL service, which combines an all-in-one payment experience and interest-free payment solution in one app.

Built out of a passion for enabling Japanese merchants to succeed in eCommerce, Smartpay aims to remove the anxiety of shopping online for Japanese credit card users with the first completely free and secure, seamless, fully automated, online payment experience.

The company is backed by several high-profile investors including SMBC Venture Capital (SMBC-VC) and Global Founders Capital (GFC), the largest global investor in BNPL.

A series of new BNPL innovations for consumers and merchants in Japan

Japan has an eCommerce cart abandonment rate of over 80%, which is one of the highest in the world. Smartpay aims to increase the conversion rate for Japanese merchants by removing the friction that exists between cart and order completion.

Smartpay has redefined the eCommerce payment experience by addressing Japanese consumer anxiety about interest, hidden fees, sharing personal data and the time needed to fill in online forms to complete the transaction.

Smartpay is the first free of charge BNPL payment option for Japanese consumers who have credit cards. There are no sign-up fees, interest fees, settlement fees, or late charges. The payment experience is also Japan’s first cross-merchant, cross-platform, and single-click checkout BNPL service, allowing consumers to checkout in as little as 10 seconds. The BNPL payment solution is simple to understand, structured on three equal instalments over eight weeks. This means that unlike the existing BNPL services in Japan, customers do not need to go to the convenience store to make payments or pay any bank transfer fees.

For merchants, Smartpay also addresses key cost and administration pain points by covering all payment fraud risks and managing all consumer-led chargebacks. Smartpay integration has been built to reduce merchant integration time and therefore resource cost and can be integrated onto merchant websites in one day with the highest quality SDKs and APIs. In addition, to specifically help small and medium-sized merchants, Apple Pay and Google Pay are automatically integrated into the Smartpay solution. Research shows that Smartpay will improve sales conversion for eCommerce merchants by more than 10% over a 12-month period.

Built specifically for Japan

Smartpay was co-founded by Pieterjan Vandaele (ex-Paidy) and Sam Ahmed (ex-Facebook). The Smartpay team brings together 80 years of eCommerce, fintech and payment experience specifically relevant to Japan. Brought together by a passion for the quality, precision, and creativity of Japanese merchants, as well as an understanding of the unique obstacles that Japanese merchants and consumers face with online retail, Vandaele and Ahmed formed Smartpay to unleash the potential of eCommerce in Japan.

Accelerating eCommerce in Japan

Naoya Otsubo, Smartpay Country Manager explains that “Smartpay recognises the anxiety of merchants in Japan will cause some retailers to potentially invest in the wrong areas. We believe that we can help merchants increase online sales conversions and revenue by 10-20% without having to invest in costly advertising or infrastructure builds.”

Co-founder Sam Ahmed added, “Our team has been passionate about Japan and its eCommerce journey for many years. We are seeing more consumers enjoying purchasing online and we’d like to help connect these consumers to the merchants in a more efficient manner.”

Co-founder Pieterjan Vandaele said, “We are extremely proud to have built an exciting and unique service specifically for Japan. For consumers, we focused on taking away the worries around fees, providing simplicity for signups, and delivering the smoothest user experience. For merchants, we provide an accessible service that focuses on revenue growth.”

Smartpay’s purpose is to enable all Japanese merchants to succeed in e-commerce. From December 2021, Smartpay will be providing a free eCommerce training for 10,000 Japanese merchants to learn eCommerce best practices for onsite conversion, attracting new customers and revenue expansion.

  • Francis is a junior journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

Declining eCommerce Transactions From New Customers Is Costing Businesses Millions

Despite eCommerce exceeding $4.3trillion in 2020, and businesses dealing with new customers, they are five to seven times more likely to decline transactions from said customers, compared to returning ones. Forter’s Annual eCommerce Revenue Optimisation (AERO) report highlights the opportunity cost of falsely declining eCommerce transactions from new customers across industries.

The report looks specifically at the Apparel and Accessories, Food and Beverage, Home and Garden; and Health and Beauty industries.

Apparel and Accessories

  • The research highlighted that new users represent 4% of gross merchandise revenue for the apparel and accessories industry.
  • Forter’s calculations show a direct loss of $500,000 in revenue for every $500million in transactions processed.
  • Forter’s report notes these customers would complete five more transactions within 12 months, and remain loyal customers for an average of four years. Thus, the total impact is up to $10million in lost revenue per year at this transaction volume.

“That’s New User Missed Opportunity [NUMO], and it makes for a compelling case to invest in solutions that optimise genuine customer experience and lifetime value,” said Michael Reitblat, CEO and co-founder, Forter. “Indeed, Forter customers have chosen to instead step into a new era of online shopping with their approach to fraud prevention.”

Food and Beverage

  • The research highlighted that new users represent 6% of gross merchandise revenue for the Food and Beverage industry.
  • Forter’s calculations show a direct loss of $750,000 in revenue for every $500million in transactions processed.
  • Forter’s report notes these customers would complete nine more transactions within 12 months and remain loyal customers for an average of four years. Thus, the total impact is up to $6.75million in lost revenue per year at this transaction volume.

“With the rise in delivery apps such as DoorDash, GrubHub and Favor creating increasing competition between food and beverage retailers, it is critical for these organisations to make sure they are doing everything in their power to attract and retain new customers,” said Michael Reitblat. “We hope that by sharing the results of the AERO report, these retailers gain insight into the importance of preventing false declines while also protecting against fraud.”

new customers

new customers

Home and Garden

  • The research highlights that new users represent 16% of gross merchandise revenue for the home and garden industry.
  • Forter’s calculations show a direct loss of $2million in revenue for every $500million in transactions processed.
  • Forter’s report notes these customers would complete three more transactions within 12 months and remain loyal customers for an average of four years. Therefore, the total impact is up to $24million in lost revenue per year at this transaction volume.

“With the pandemic bringing everyone inside, there has been a dramatic change in how we view our personal spaces. Individuals are choosing to upgrade their environment as they spend more time at home. The increase in revenue for home and garden retailers means it is imperative that these organisations use solutions that optimise fraud prevention and streamline the customer’s online experience,” said Michael Reitblat. “Customers of Forter are witnessing the importance of fraud prevention solutions that also prevent false declines in the wake of a new wave of buyers.”

Health and Beauty 

  • The research highlighted that new users represent 3% of gross merchandise revenue for the beauty and health industry.
  • Forter’s calculations show a direct loss of $375,000 in revenue for every $500 million in transactions processed.
  • Forter’s report notes these customers would complete three more transactions within 12 months and remain loyal customers for an average of four years. Thus, the total impact is up to $4.5 million in lost revenue per year at this transaction volume.

“As eCommerce brings in more new customers, businesses can optimise their lifetime value or lose them with a single decision. If a customer is falsely declined, there is a 40% chance you just lost all of their business for a lifetime,” said Reitblat. “We hope that the findings in our annual AERO report reinforce the importance of striking a balance between fighting fraud and delivering a memorable customer experience.“

Forter’s Persona Graph

Following the results, Forter has amassed a Persona Graph that included more than 1 billion online personas for each industry. This was a solution to assess the trustworthiness of a new customer when a retailer from any of the listed industries lacked historical context. That way, when a Forter customer in any of the industries interacts with a persona for the first time, Forter can determine whether they have seen that persona elsewhere across its global network.

All that history and context informs a decision on whether to accept or reject the transaction in a fraction of a second. And if Forter hasn’t seen that exact persona, it can use probabilistic linking, as pattern-matching a means to make decisions based on similar personas. This is faster and more accurate than rules-based solutions or transaction scores and scales without a dependency on manual reviews.

  • Francis is a junior journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

News & Views Podcast | Episode 56: Financial Inclusion, Digital Currencies & Sign for Small Campaign

On this weeks episode of News & Views, The Fintech Times Podcast team speak on a range of current topics and news stories around the world that they believe you should hear about, from Digital Currencies and Crypto, to campaigns set up to allow SMEs to develop.

The Crypto Industry Should Work With Regulators To Create Regulations, Not Oppose Them

Cryptocurrency regulation has been a hot topic as governments are calling into question the extent it must be controlled, as currently, crypto crime has seen a 25,000% increase since 2016.

Viktor Prokopenya is the Founder of VP Capital: the portfolio of which includes, and Banuba, an AI-computer vision lab specialising in neural networks and machine learning. and are two of a series of innovative technology and software businesses that Prokopenya founded after launching VP Capital. These cutting-edge fintech platforms are specialised in online trading and focused on the democratisation of finance, allowing for complex trading for global brands and bridging the gap between traditional finance and cryptocurrencies

Speaking to The Fintech Times, he uses his expertise in the financial technology field to explain how regulations are not hindering cryptocurrencies, but opposing them will slow crypto’s adoption. Prokopenya draws similarities between crypto’s regulation and that of other industries and uses them as examples for why working with regulators leads to success:

Viktor ProkopenyaViktor Prokopenya
Viktor Prokopenya, London based fintech entrepreneur and investor

Could we live in a world without rules? In theory, yes – we can live with an absence of government, and indeed our early ancestors did so. In its extreme, this is called anarchy – a state of disorder and lawlessness. In reality, humans have found that regulations are the building blocks of a harmonious society and critical to development: we need structures and rules to promote a positive culture.

The Noble Prize-winning economist Elinor Ostrom observed that when people have to manage shared resources such as land, fisheries, or water for irrigation, they spontaneously construct rules.

Indeed, through history, we have seen that every evolving industry goes through a process ending to a greater or lesser degree with regulation. The most regulated industries are those that have the potential to cause the most harm.

Take the case of the pharmaceutical industry – heavily regulated now, so that around the world, people can rely on affordable and safe drugs to protect their health. Before regulation, you had opportunistic conmen selling fraudulent cures to gullible members of the public.

Education is another example where regulation ensures the same high standards are upheld by different institutions, to engender trust across the sector.  Food supply and hygiene is also heavily regulated, to safeguard a basic human need. In these industries and countless more, regulation has had positive benefits.

Currently, this debate is raging around crypto. Tesla CEO Elon Musk was last month asked whether the US government should be involved in regulating the crypto space.

“It is not possible I think, to destroy crypto, but it is possible for governments to slow down its advancement,” he said. “I would say, do nothing.” The whole crypto world is driven by one word – freedom. The simple fact that governments cannot access your wallet is already a huge win when it comes to freedom. However, it does not mean that crypto should be used for criminal purposes and its image ruined by a minority using it for money laundering or crime.

For my part, I passionately believe that crypto needs to be regulated. Furthermore, I think that the industry should actively lead the way – and focus on the positive impact regulation can bring.

Why? Because up to now, crypto has been the new Wild West – and if we want to change that and become part of the reputable financial framework, we have to accept that regulation is a necessary part of growing up.

Ignoring regulation

Binance ignored regulation for too long and look what happened – it is now banned in many economies while allegations of tax fraud and money laundering are investigated. Regulation will come anyway as our industry grows – so let us welcome it. There are those who would curb the industry altogether, banning financial institutions from dealing in cryptocurrency and we play into their hands if we do not come to the table and behave responsibly.

Take the case of tech companies. The fact that tech companies were harvesting data without any limits led to GDPR and similar laws. Now, they are subject to an imposed framework and huge fines if they fail to abide by regulations. If tech companies had worked more responsibly with customers’ data and regulators, the restraints imposed could have been much lighter.

Working with regulators is the way forward

This is because, left alone, regulators err on the side of removing freedom. Working with regulators is the key to preserving freedom. Previously, companies could choose what to do with data. Now, that choice has been removed. Dialogue with regulators is the way to preserve this choice. If we want our industry to progress, there is only one way forward – we should help governments to shape regulation.

Hiding from this fact is childish and irresponsible towards employees, partners and consumers alike. The trouble with a ‘head in the sand’ approach is that one day you wake up and see that the world has changed without you, and probably not in the way you wanted. Rather than having to adjust, it is far better to shape this shift.

We industry pioneers should act as custodians of the system, preventing its misuse and protecting consumers. Conversely, regulation without the help of practitioners can lead to mistakes and misjudgements, unintended consequences and risks. After all, we are hardly the first industry that started with no rules. Twenty years ago, only a handful of countries mentioned the word ‘internet’ in legislation. Today most legal systems have adapted to the new connected world. The same will happen with crypto, whether we want it or not. The key is to lead this process and make it good; thus, dialogue, discussion and debate powered by informed opinion is the only way to move forward.


This will involve liaising with policy-makers in the UK, EU and US, along with governments in other parts of the world where mining and crypto processing is currently based. So what would good regulation look like? Cryptocurrencies are largely unregulated in the EU. The European Commission’s proposed Regulation on Markets in Crypto Assets (MiCA) is before the European Parliament. It will form part of the EU’s Digital Finance Strategy and is likely to impact significantly the operation of the crypto market in the EU.

Again, here it is useful for experts to help shape this regulation. Of course, we should make sure that crypto is not a safe harbour for money laundering, criminal funds or other nefarious activities.

The Kalifa Review of UK FinTech rightly recognises that FinTech is not a niche or sub-sector, but a permanent technological revolution that is changing the way finance works forever. It also frames development in this industry around trust, and its necessary foundation in leadership, regulation and the rule of law.

Some green principles addressing the carbon footprint of crypto are likely to be included in future regulation, and this is quite right – we have to ensure that cleaner technology and cleaner energy sources are used if we are to make next-generation finance sustainable. Critically, we do not need to see regulation as inherently threatening. Part of the problem here is that crypto is a disruptive technology, so the individuals involved tend to be out-of-the-box thinkers, who do not like to be confined by rules and there are others who are protectionist, fearing that mainstream attention will erode their profits. Human advancement is not driven by fear, however, it stops us from making the most of our potential.