Natwest Announces New Green Initiatives for Customers Through Fintech CoGo

To mark Zero Emissions Day, NatWest has launched a package of new initiatives to encourage customers to take control of their carbon emissions. NatWest customers can now sign up to participate in a pilot scheme with fintech CoGo, which will give them access to a real-time carbon footprint tracker based on their spending habits.

As soon as a customer connects their bank account to the app, CoGo will automatically calculate their real-time carbon footprint based on their transactions, and this will update with every spend, showing them their climate impact from morning coffee to lights out. CoGo also provides actions for users to lower their carbon footprint from lowering meat intake to nudging users towards switching to renewable energy. Also, each month, CoGo provides users with the ability to offset their impact too.

NatWest hope that, through the CoGo partnership, it will be easier for customers to make informed choices about how their spending is linked to carbon emissions. Georgina Bulkeley, Personal Banking Chief Operating Officer at NatWest commented: “At NatWest, we know our customers are as passionate about climate change as we are – but it’s really hard to change what you can’t measure. We are pleased to be working with CoGo to ensure that our customers have access to the best tools so that they can make informed decisions about their spending and the impact that has on the environment. 2020 has been a challenging year for everyone, but for us as a bank it’s important that we are providing support in the short-term as well as investing in tools and education that address longer-term issues and ambitions.”

The bank has unveiled plans to offer a £100 ‘thank you’ payment to customers who participate in the Government’s Green Homes Grant scheme and take out a personal loan with NatWest. The payment will help towards the cost of installing or upgrading climate-friendly home improvements, such as energy efficient boilers, insulation or installing solar panels. To get the £100 thank you payment, customers simply need to produce their green home grant voucher. This package of measures has been driven by research that found 70% of NatWest customers are concerned about climate change, but don’t know what steps to take to reduce their climate impact.

Emma Kisby, Managing Director of CoGo commented: “I am thrilled to be working with NatWest – a trusted partner who shares our passion for finding a solution to the biggest challenge facing our generation, climate change. At CoGo, our mission is to empower consumers to understand the impact of their everyday spend on people and planet. This exciting new partnership will deliver real-time personalised carbon footprints to NatWest customers and nudge them towards actions and suggested businesses to help drive to a sustainable lifestyle.”

Building on its 25-year commitment to financial education in the UK, MoneySense – NatWest’s award-winning financial education programme – has launched a new workshop for schools addressing climate change. Aimed at 8-12 year-olds ‘Save our pennies, save our planet’ explores the topic from a money-saving angle, with pupils tasked to think about everyday activities that use a lot of energy, the role they play in climate change and how to reduce energy costs for a household. In May this year NatWest launched Island Saver, a free to download and play game for PlayStation®4, Xbox One, Nintendo Switch, and Steam.

Recent research suggests a third (32%) of parents say computer and phone games influence their children’s ideas of money and how to spend it. Island Saver has since been downloaded more than 1.7m times and is being released for mobile devices (Apple/Android) this month. NatWest customers also have access to educational support and advice on reducing their carbon footprint via NatWest’s Sustainable Banking Hub.

When NatWest Group CEO Alison Rose announced the bank’s new purpose and strategy in February this year, she announced an ambition to address the climate challenge, with the goal of making NatWest’s own operations net carbon zero in 2020 and climate positive by 2025. Last month, NatWest Group become the first major UK bank to sign up to the Partnership for Carbon Accounting Financials.

  • 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.

Interview with Helie d’Hautefort about adoption trends for CBDC (Central Bank Digital Currency) in Switzerland and globally.

Inspired by Ilias’s post entitled Switzerland Is Calling, I spoke with Helie d’Hautefort, Founder of  Reserve Currency Solutions, about the possibility of a Central Bank Digital Currency (CBDC) in Switzerland and likely adoption trends for CBDC.

Central Bank Digital Currencies sit at the intersection of Legacy Finance and Cryptocurrencies. In that guise they get little love from people who are firmly in one camp or another:

  • People in the Legacy Finance camp tend to look at anything that has any relation to Bitcoin, Blockchain and  Cryptocurrency with suspicion.
  • People in the Cryptocurrency camp look at anything coming out of Legacy Finance with suspicion.

Pragmatic entrepreneurs look for practical solutions that solve real problems. Those  entrepreneurs need to understand both Legacy Finance and Cryptocurrencies. Helie d’Hautefort really understands both worlds, which is why I wanted to talk to him about the trends driving Central Bank Digital Currency in Switzerland and elsewhere.

Helie has been working in Switzerland for the last 20 years (in Forex and currency investment management). So he also understands why, how and when  Switzerland could adopt a  Central Bank Digital Currency.

  • Q 1: Is Switzerland likely to be an early adopter of a  Central Bank Digital Currency?

Switzerland is a crypto friendly jurisdiction and has an avowed aim to become the world’s first “crypto-nation”. As Illias pointed out “More than 1,000 crypto startups have made Switzerland their home. The leading crypto projects, like Ethereum, Bitmain, Shapeshift, Tezos, DFinity, Cardano and many others are based in Zug.”  The Swiss people trust the Swiss Franc and so are  likely to trust a Swiss Franc CBDC.

Yet Helie gave us a reality check, pointing out that Switzerland takes democracy very seriously and getting democratic consensus takes a long time. So Helie suggested that CBDC adoption in Switzerland is likely to start with institutional not retail use cases. Pressed to come up with institutional use cases for CBDC, Helie offered two:

  • Correspondent banking settlements. Today this means SWIFT and Nostro/Vostro accounts which is 1970s era technology.
  • Getting Government stimulus money quicker to citizens (aka  “helicopter money”) via banks to improve velocity (ie make stimulus more effective).

Helie mentioned 20 central banks looking seriously at CBDC. My thesis is that once one does it we will see a lot of followers quite quickly. Which country will be first? One candidate is China.

  • Q 2: What is the impact of Facebook Libra on Central Bank Digital Currencies?

Facebook’s Libra announcement in June 2019 forced regulators around the world to take a closer look at digital currencies.

Helie pointed out that Libra V2 is more likely to be tied to a single currency than to a basket. It is unlikely to be the basket of currencies initially envisaged. The impact of Libra on CBDC is that their clout and the threat they pose to Government monopoly on currencies has speeded up CBDC adoption and the Libra wallet may encourage millions to store CBDC and other cryptocurrencies and not just Libra.

  • Q 3: What is the likely impact of Central Bank Digital Currencies on how will do cross border payments and foreign exchange?

As BOE Governor Andrew Bailey rightly pointed out recently : “Cross border payments can still take as long as 10 days to transfer money to different jurisdictions and the transaction cost can sometimes be 10% of the value of the transfer.”

CBDCs (and more generally stablecoins) can reduce friction in cross border payments by increasing the speed , lowering the cost while significantly improving the customer experience . The risk is that CBDCs could “uberize” (or let’s say disintermediate) one of the most profitable business of  the banking sector that might impact the cost of other basic banking services . Technology opened many opportunities to radically change  the cross border payments eco-system. We think the future of  payments will see a coexistence between the existing banking infrastructure (enhanced due to clients pressure), privately issued stablecoins and CDBC’s ; in the future digital technology will become the norm . The remaining question is what will be the role and responsability of each actor and how will they interact ?

Helie pointed to the massive market opportunity in the $700 billion remittances market with its antiquated technology and high fees. Facebook is likely to implement in classic  remittances  corridors such as USA to Mexico, Brazil, or India.

One Fintech making inroads into cross border payments is Revolut. Helie pointed out that while Revolut’s growth from 10k to 10 users is impressive, they are still a rounding error compared to Facebook.

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.

The FinCEN Files: How Criminals Moved Trillions of Money Through JP Morgan, HSBC and More

Banks such as HSBC, JP Morgan, Standard Chartered and more have been implicated in thousands of suspicious transactions across the globe totalling $2 trillion after secret government documents were released to investigative journalists.

The leaked documents showed that $2 trillion (£1.55 trillion) of potentially corrupt transactions had been enabled through the US financial system between 1999 and 2017. The information was leaked to an international group of investigative journalists (the International Consortium of Investigative Journalists). For the past 16 months, 400 journalists in 88 countries have investigated the transactions, with Buzzfeed News breaking the story on Sunday 20 September.

These documents, dubbed The FinCEN files, are made up of suspicious activity reports (SARs) amongst other US documents, and highlight the global financial corruption that has gone unchecked by the government. They show trillions of dollars of “dirty” money passing through major financial institutions, enabling money laundering from Ponzi schemes, terrorists and mobsters. These documents are compiled by the banks and shared with the government but usually kept from the public eye. Banks and other institutions file SARs with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCen) when they have reason to believe a client is using their services for potential criminal activity, but are not required to stop doing business with said client despite the concern of where the money has come from.

This exposé has taken the world by storm, as it exposes the empty threats of banking safeguards and how easily criminals are able to exploit them. Even the banks own employees were alleged to be warning the institutions of this problem, as in interviews with the ICIJ and Buzzfeed News confirm, over a dozen former compliance officers at HSBC were said to question the effectiveness of the banks anti-money laundering programmes with their warnings falling on deaf ears.

The laws that are in place to stop this kind of financial crimes do very little. As long as a bank files the SAR notice, it is protected from any criminal prosecution – acting as a “free pass” to move the money and collect on the fees. At no point are banks required to stop taking money from criminals, and even in the rare cases that banks have been prosecuted or fined for financial misconduct, some continued to carry out suspected criminal money laundering – including HSBC, Standard Chartered and JPMorgan Chase. From the investigation its also possible to see a pattern in which several of the banks process multiple transactions for the same risky clients, despite having previously filed the report.

Unsurprised at the news, Ivan Zhiznevskiy, CEO at 3S Money said “To file a Suspicious Activity Report is easier than run proper KYC on a client. Banks file SARs and let the regulator deal with the problem. If there’s no response – does not matter, it is not their business anymore, carry on. And in 99% of the cases there’s no response. This is because 478,437 SARs were filled in the UK last year alone. And there’s just 80 officers processing this. Quite a significant amount of SARs were filled as a precaution. Serious crimes simply get unnoticed.”

The documents are the latest in a series of financial corruption scandals made known to the public over the last decade, one of which was HSBC’s deferred prosecution agreement in 2012.

The repercussions of this leak can already be seen across the globe, with shares in the banking sector falling just one day after the report was released, where in London Barclays fell by 4% and HSBC lost 3%. In Hong Kong, HSBC dropped over 4%, the lowest their shares have been since May 1995.

Ilia Kolochenko, Founder & CEO of web security company ImmuniWeb said, “This sensational and unprecedented leak clearly demonstrates a wide spectrum of data protection weaknesses in the governmental sector, affecting even the most developed Western countries. In light of the diversity and long timeline of the leaked documents, we may hypothesize that the documents were likely stolen by an insider, or in a silent breach of FinCEN or one of its suppliers.

“From a cybersecurity standpoint, we may expect a growing lack of trust to governmental agencies, which on one side have quasi unlimited access to the most sensitive data of the largest organizations, while cannot duly safeguard this data on the other side. A transparent investigation is required to restore confidence. We might likewise foresee a further hardening of data protection laws that could dramatically exacerbate the situation if implemented too rapidly or overbroadly.”

Nasdaq Launches Anti-Money Laundering Investigation Technology

Nasdaq has announced the launch of the cloud-deployed Nasdaq Automated Investigator for AML, the first automated solution for investigating anti-money laundering (AML) for retail and commercial banks and other financial institutions. Designed, built and offered in partnership with UK-based Caspian. Nasdaq Automated Investigator for AML further expands Nasdaq’s global efforts in combatting financial crime and promoting market integrity in the capital markets and beyond.

“The financial industry is making a structural shift to more intelligent technologies and real-time adaptive analytics based on much larger, more diverse data pools to detect and investigate financial crime,” said Valerie Bannert-Thurner, SVP and Head of Sell-side and Buy-side Solutions, Market Technology, Nasdaq. “As both a market operator and technology provider, we have a commitment to the capital market ecosystem to keep markets healthy and safe to fight financial crime. Through the years of expertise we have gained as an industry leader in trade surveillance, we are both moving beyond our alerting capabilities to investigation, and expanding our solutions to help eradicate illegal money transactions.”

The Automated Investigations Management space is a historically underserviced area of financial crime operations that presents a significant gap in the investigations management process for banks. Many techniques are used to launder money, causing banks to cast a wide net to catch perpetrators. The wide scope of surveillance means AML Transaction Monitoring (AMLTM) systems could potentially trigger as many as 200,000 to 300,000 alerts a month in extreme cases. In response, many banks have tightened the parameters within their AMLTM systems or added additional scoring mechanisms, thereby reducing alerts. However, when banks tune their models too tightly, they run the risk of missing criminal activity and exposing themselves to regulatory sanction. Even those that have tightened their parameters can experience 20,000 to 25,000 alerts in a month.

To support these efforts, the Nasdaq Automated Investigator ingests alert data from any transaction monitoring system, collates all of the necessary data required for analysis, analyzes the data and then replicates complex human decision making to provide a clear, auditable justification for all alerts regardless of volume, and in seconds. The technology is powered by multiple variants of artificial intelligence including both supervised and unsupervised learning in conjunction with business rules to provide a significant increase in operational efficiency. Beyond AML, Nasdaq sees broad applicability for this new category of solutions that the Nasdaq Automated Investigator has established, and plans to roll out functionality across complementary financial crime segments in the future.

“We have designed the Nasdaq Automated Investigator to automate the complex stages of an alert investigation process with tools focused on the mechanics and effectiveness of the actual investigation,” said Darren Innes, Head of AML Technology, Sell-Side and Buy-Side Solutions, Nasdaq. “Our solution improves the manually intensive anti-financial crime process by fully automating all stages of the existing manual alert investigation process to deliver accurate, consistent decision-making at scale. This pinpoints the highest-probability of nefarious activity for analysts to prioritize, and provides them a layer of demonstrable explainability that does not currently exist in financial crime investigations.”

Nasdaq’s market technology powers more than 250 of the world’s market infrastructure organizations and market participants, including broker-dealers, exchanges, clearinghouses, central securities depositories and regulators, in over 50 countries with end-to-end, mission-critical technology solutions.

  • 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.

New Cybercrime Report Reveals Opportunities and Risks for EMEA Online During Global Pandemic

LexisNexis Risk Solutions earlier this month released its biannual Cybercrime Report, which tracks global cybercrime activity from January 2020 through June 2020. The report dives deep into how the COVID-19 pandemic has impacted the global digital economy, regional economies, industries, businesses and consumer behaviour. The period has seen strong transaction volume growth compared to 2019 but an overall decline in global attack volume. This is likely linked to growth in genuine customer activity due to changing consumer habits.

The LexisNexis Risk Solutions Cybercrime Report analyzes data from more than 22.5 billion transactions processed by the LexisNexis Digital Identity Network, a 37% growth year over year. Mobile device transactions also continue to rise, with 66% of all transactions coming from mobile devices in the first half of 2020, up from 20% in early 2015. The Digital Identity Network® also notes an uptick in transactions from new devices and new digital identities. We attribute this to many new-to-digital consumers moving online to procure goods and services that were no longer available in person or harder to access via a physical store, during the pandemic.

The Europe, Middle East and Africa region (EMEA) saw lower overall attack rates in comparison to most other global regions from January through June 2020. This is due to a high volume of trusted login transactions across relatively mature mobile apps. The attack patterns in EMEA were also more benign and had less volatility and fewer spikes in attack rates. However, there are some notable exceptions. Desktop transactions conducted from EMEA had a higher attack rate than the global average and automated bot attack volume grew 45% year over year.

The United Kingdom is also a particular pain point. The UK originates the highest volume of human-initiated cyberattacks in EMEA, with Germany and France second and third in the region. The U.K. is also the second-largest contributor to global bot attacks behind the U.S.

One example of a UK banking fraud network saw more than $17 million exposed to fraud across 10 financial services organizations. This network alone consisted of 7,800 devices, 5,200 email addresses and 1,000 telephone numbers.

Additional Key Findings from the LexisNexis Risk Solutions Cybercrime Report:

  • Decline in attack rate – The overall human-initiated attack rate across the Digital Identity Network fell through the first half of 2020, showing a 33% decline year over year. The breakdown by sector shows a 23% decline in financial services and a 55% decline in e-commerce attack rates.
    Latin America experienced the highest attack rates of all regions globally and realized consistent growth in attack rates from March to June 2020. The attack patterns in North America and EMEA had less volatility and fewer spikes in attack rates from the six-month period observed.
  • Attack Vector Global View – Media is the only industry that recorded an overall year over year growth in human-initiated cyberattacks. The Digital Identity Network recorded the 3% increase solely across mobile browser transactions

Globally, automated bots remain a key attack vector in the Digital Identity Network. Financial services organizations experienced a surge in automated bot attacks and continue to experience more bot attacks than any other industry.

  • Across the Customer Journey – New account creations see attacks at a higher rate than any other transaction type in the online customer journey. However, the largest volume of attacks targets online payments. Login transactions have seen the biggest drop in attack rate in comparison to other use cases.

Analysis across new customer touchpoints in the online journey is included in this report for the first time, providing additional context on key points of risk such as money transfers and password resets.

  • During COVID-19 – All industries have felt the impact of COVID-19. There are clear peaks and troughs in transaction volumes coinciding with global lockdown periods. Financial services organizations realized growth in new-to-digital banking users, a changing geographical footprint from previously well-travelled consumers and a reduction in the number of devices used per customer. There have also been several attacks targeting banks offering COVID-19-related loans.

E-commerce merchants have seen an increase in digital payments and several other key attack typologies that coincide with the lockdown period. These included account takeover attacks using identity spoofing and more first-party chargeback fraud.

“This is the first LexisNexis Risk Solutions Cybercrime Report to include data on the new reality of conducting business during a pandemic,” said Rebekah Moody, director of fraud and identity at LexisNexis Risk Solutions. “The move to digital, for both businesses and consumers, has been significant. Yet with this change comes opportunity for exploitation. Fraudsters look for easy targets: whether government support packages, new lines of credit or media companies with fewer barriers to entry. We need to ensure that all consumers, especially those who might be new to digital, are protected. Businesses must arm themselves with a layered defence that can detect the full spectrum of possible attacks and is future-proofed against evolving threats.”

While the face of cybercrime will continue to re-shape to fit the growing global digital economy, the ability for businesses to reliably recognize good, trusted customers must remain constant,” added Dr. Stephen Topliss, vice president of fraud and identity at LexisNexis Risk Solutions. “We must identify and block fraudsters – whether opportunists or highly networked fraud rings – the moment they transact and knowledge sharing must be as pivotal to global businesses as it is to the cybercriminals that attack them.”

  • 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.

Decentralised Finance: navigating the rugged regulatory landscape

The rapid growth of Decentralised Finance – or DeFi – has been hitting headlines in recent months, often compared to the ICO boom of 2017. Broadly speaking, DeFi involves the provision of quasi financial services through a decentralised platform. Many players in the space have been operating on the assumption they are unregulated, often without fully understanding the complexity of the regulatory landscape. Our new publication highlights some of the subtleties in this area and the importance of precise legal structuring.

What is DeFi?

DeFi is a collective term for applications that deliver services through a decentralised platform which closely resemble regulated financial services. It encompasses a wide range of activities including stablecoin networks, decentralised exchanges, crypto-lending, collateral management platforms and “yield farming” services (which help crypto holders earn returns on their capital). 

Over the last year, the total economic value of cryptoassets locked in DeFi applications has grown exponentially – reportedly from around $0.5bn in September 2019 to almost $10bn in September 2020.

Our new publication

There is a perception that DeFi activities fall outside the regulatory perimeter by virtue of the use of unregulated cryptoassets as collateral and exchange of value tools and the lack of a central operator. However, in our experience the regulatory analysis in relation to these business models can be highly complex and often sophisticated multi-jurisdictional legal advice is needed to understand and respond to it.

Our new publication highlights some of the subtleties in this area and the importance of precise legal structuring.

1 in 3 Women Report Experiencing Sexual Harassment at Tech Events

According to Ensono’s recent annual Speak Up report, 1 in 3 women reports experiencing sexual harassment at tech events – up from 1 in 4 in last year’s report. 

Ensono surveyed 500 women across the US and UK who had attended a tech conference to uncover their experiences and their thoughts on how conferences can improve to become more inclusive. Tech has the second-highest incidence of sexual harassment among white-collar industries. 

 Women reported frequent experiences of sexism at events: 

  • “They had women handing out goody bags, and they refused to give me one as they were for ‘businessmen.’” 
  • “One of the organizers thought I was there to refill coffee — I was actually giving a keynote.”

61% of women said tech conferences are not designed with women in mind, to such an extent that some do not even have female bathrooms. Other examples include:

  • barstools as onstage seating causing problems for skirt-wearing panellists,
  • microphones designed to clip onto suit lapels making it awkward to attach to a dress,
  • equipment like projectors and screens too high up for women to reach.

The report also suggested that women of colour face the highest levels of discrimination at tech events. 59% of women of colour reported experiencing discrimination, compared to 43% of white women. Extraordinarily, 80% of women of colour said they have experienced being the only woman of colour on a panel.

“This year’s report comes at a tipping point for the tech industry, and the spirit of change has never been stronger,” said Meredith Graham, Senior Vice President of Culture and People Experience at Ensono. “While we never could have predicted how 2020 would unfold, now is the time to implement change and create cultures that champion diversity and inclusion, not only in tech but across industries.”

“Although the overhaul of in-person conferences has increased the opportunity for women to gain representation at tech conferences and have better experiences, it doesn’t stop there,” said Lin Classon, vice president of product management at Ensono. “The industry still has a long way to go, but it’s research like this that provides companies with data and tools to initiate change.”

  • 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.

Women in Fintech: Caecilia Chu from Hong Kong

As The Fintech Times in September celebrates the Women in Fintech we take a moment to hear more from some of the leading female leaders in Asia. One of them is Caecilia Chu from Hong Kong, who is an expert in fintech and specifically in cross-border mobile payment in Southeast Asia. 

Caecilia Chu

Caecilia Chu is the CEO and Co-Founder of YouTrip, a regional financial technology company based in Singapore, Hong Kong and Thailand, dedicated to creating a next-generation digital banking experience for users in Southeast Asia. Guided by her vision to help people manage their money in a simpler yet smarter way, YouTrip first launched its multi-currency mobile wallet in Singapore in August 2018 in partnership with Mastercard and EZ-Link, the largest contactless payment system for Singapore’s public transport network. Less than a year later, YouTrip brought its “Truly No Fees” multi-currency mobile wallet to Thailand, in collaboration with Kasikorn Bank, Thailand’s largest consumer bank with over 11.6 million online banking customers in November 2019.

Under her leadership, YouTrip has grown to become one of the fastest-growing fintech companies in South-East Asia. The success was also further demonstrated when it raised a record US$26 million pre-series A funding in May 2019, the largest for a fintech start-up in Southeast Asia.

Describe your career journey:

Prior to founding YouTrip, I was a banker for a big part of my career, having worked at Citibank, McKinsey and Lufax. I was travelling frequently for work and sometimes, these last-minute work trips left me with no time to visit a money changer beforehand. I often had to rely on my credit card for overseas payment. And it’s only when my credit card bills came in, that I noticed how much foreign transaction fees I’m actually paying. It was this traveller’s pain that I experienced first-hand for many years that led me to found YouTrip to eliminate such fees. Plus, when I was studying cross border payment products in Lufax, I saw that there was absolutely no entry barrier and it was free for all users to use. I wanted to give YouTrip users a similar experience when using our product for overseas payment, a truly no fees proposition!

As a recognised thought leader and a female, what difficulties have you faced in your career?

Even though the tech industry is still largely dominated by men, I’ve been fortunate enough to never experience difficulties because of my gender. I’m a firm believer that gender doesn’t determine how successful a person can be. But having said that, I think it’s important that women professionals recognise the challenges that would come our way. It’s really about making the conscious trade off and sacrifices, or compromises in certain parts of our lives to achieve the wildest dreams that one has. Having that mindset, I think that’s very important. 

What are the future trends and predictions you see happening in the region? 

I expect to see more non-financial sector players venturing the payment space to launch adjacent products from their core offerings to cater an experience unique to their brand and the changing needs of their customers. The many untapped opportunities in the region will definitely entice many new players into the payment space, however, I believe YouTrip will remain to be the only pure-play in the multi-currency payment space in Southeast Asia. 

Another key development in the payment sector will be on payment security, especially on the usage of modern technologies like Machine Learning and AI, to combat fraud in a more efficient manner as online payment grows amid Covid-19. There is an increasing need for better fraud monitoring capabilities, as more consumers adopt mobile payment for e-commerce shopping driven by the pandemic. It’ll be exciting to see how such technologies can create meaningful impact to tackle financial crime faster than before.

For YouTrip, it’s a core focus of ours to enhance our machine learning capabilities to lead the fight against new methods of defrauding and safeguard our platform.

What advice and recommendations do you want to give future female entrepreneurs and thought leaders who are based in Asia?

The first step is having the mindset and understanding the awareness that sometimes being a female entrepreneur or female professional is hard, and we really can’t have it all. It’s important to find a supportive environment – choose the right people, choose the right team, choose the right culture that is inclusive and collaborative, which will help you grow. I hope that there will be more women joining the Fintech industry and YouTrip will be most supportive of them.

RegTech: An Opportunity to Boost Australia and UK Trade Relations?

Recent research shows that the RegTech (regulatory technology) sector is a huge opportunity to strengthen trade ties between the UK and Australia. Commissioned by the New South Wales Government and the Australian Trade and Investment Commission, new research by RegTech Associates highlights the advantages of the UK and Ireland as a market for regulatory technology firms with solutions that help regulated firms meet their obligations.

Stuart Ayres, the Minister for Jobs, Investment, Tourism and Western Sydney said, “As this report outlines, the UK and Australia share similar regulatory environments, making London and Sydney RegTechs well suited to expand in each other’s markets.”

As one of the biggest financial centres in the world, London is an international hub for RegTech firms. RegTech Associates data shows that in the UK and Ireland alone, there are 288 homegrown technology products solving regulatory problems from fighting financial crime to regulatory reporting.

Crucially, the UK and Ireland boast governments that are supportive of technological innovation. Financial regulators in the UK such as the Financial Conduct Authority are extremely forward-looking and are actively exploring the use of innovative technologies to address long-standing challenges, such as improving the efficiency of the mandatory reports that financial firms must submit to their regulators.

Some key findings from the report include:

  • The majority of RegTech products in both markets fall into the Financial Crime category, with 27.7% in the UK and 30.4% in Australia respectively
  • The UK RegTech market is more mature than Australia. 53.6% of Australian products are less than five years old’, however only 35.4% in the UK.
  • Australian RegTech products have the second-highest foreign presence in the UK with 9.1% market share, beaten only by the USA

Daren Cade, COO of Arctic Intelligence, a Sydney based RegTech firm that has expanded into the UK said: “The UK presents a unique and sizable opportunity for RegTech vendors from Australia and vice-versa. Close historical ties, relatively unrestricted movement of people, similar cultures and a single language all make this an easier move for expanding vendors than many others. Additionally, the UK regulatory environment and Financial Conduct Authority are world-renowned as being both ‘tough’ but supportive in equal measure, providing a perfect combination for early-stage technology vendors to expand.”

New South Wales (NSW) is an equally inviting destination for UK and European based RegTechs who want to expand overseas, as Minister Stuart Ayres explains: “Sydney is clearly the regtech leader not only in Australia but in the Asia Pacific and with investment from markets like the UK, there is enormous potential for jobs generation and investment. From backing the Sydney Startup Hub to launching Tech Central this year, the NSW Government has been right behind NSW’s booming tech industry.”

With free trade agreement talks between the UK and Australia proceeding well, and in light of Brexit, opportunities to further strengthen trade ties between the two countries are welcomed and the RegTech industry is set to be a big part of that.

Jason Bound, CEO of RegTech Associates said, “The UK is a leader in the growing and global RegTech market and as a specialist research company, we are delighted to have been commissioned by the Australian Government in supporting the growth of the market. The RegTech and RiskTech industries continue to thrive, despite or rather because of the pandemic, and we see a massive opportunity for global technology leaders to come to the UK, using London as a launchpad for their business.”

“With its Startup/Tech ecosystem, supportive regulatory bodies, and large financial services industry, the UK&I is fertile ground for RegTech and RiskTech companies. Our research will help The NSW Government, Austrade, and Australian startups to land and launch their businesses here. This forms a part of our ongoing work to help regulatory technology vendors expand into new markets, with a webinar taking place in early October on the same subject.

  • 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.

PNC’s Stoneman to speak at Banking Automation Summit

Bank Innovation is pleased to announce that Ken Stoneman, intelligent automation director for corporate and institutional banking at PNC, will speak at the Banking Automation Summit, a virtual conference on Nov. 9-10 designed to provide industry professionals with insights and best practices to automate bank functions.  

Ken Stoneman, intelligent automation director for corporate and institutional banking at PNC

Register for the event here.

Stoneman has been with PNC, which has $459 billion in assets, for 12 years, starting as a software engineer lead in 2008. Before taking on his current role, he was a senior enterprise architect lead for more than seven years and an intelligent automation IT product manager for almost three years. He leads a team that automates corporate and institutional banking processes with robotic process automation and machine learning.

Stoneman will speak on a panel about balancing automation and human intervention. The panel will dive into a discussion on achieving the right mix of humans and machine learning, and explore how the role of humans will evolve over time.

The BAS agenda highlights crucial industry topics, such as best practices for project implementation, automation successes and failures, and new developments in robotic process automation. BAS speakers come from Truist, Wells Fargo, Discover and BNY Mellon, among others.

FinovateFall Digital 2020: The Future of Finance is Digital and Social

The goal of FinovateFall Digital was straightforward: combine the dynamism and excitement of a Finovate conference with the flexibility and scalability of an all-digital event.

And if the response from attendees is any indication, the result was a job well done by all parties: event planners, event participants, and event attendees.

FinovateFall took the idea that the future of finance is digital to heart. For five days, via a blend of live addresses and panels on the one hand, and pre-recorded, on-demand discussions and presentations on the other, FinovateFall Digital was built to bring not only the kind of insightful commentary and innovative technological demonstrations our attendees have come to know and expect, but also something more.

For example, we all know that Finovate VP Greg Palmer spends a great deal of time working with demoing companies to ensure that they are able to put their best foot forward when the lights come on and it is their time to shine on stage. This year, by adding an interview component to the fintech demos, we get to learn about more than just the demoing technology. With an engaged interviewer as part of the presentation, we get these insights not from a stranger, but from someone who has spent the time to get to know the innovators and their vision as well as their innovation. The end result is something that is in some ways quite different from what Finovate has ever provided before.

Our all-digital format also provided greater access to our conference speakers and panelists. The increased availability throughout the day and the ability to schedule meetups digitally helped us provide the kind of socially-active environment that has always been a key part of the Finovate experience. Features like Meet at the Cafe, sponsored by Google Cloud, gave attendees, speakers, and analysts the opportunity to hangout before the start of each conference day, chat about the top fintech news and trends of the day, and make new connections. And our Scavenger Hunt incentivized attendees to check out a wide variety of FinovateFall Digital’s of live and on-demand content.

With FinovateWest only a few months away, we’re already looking forward to coming back with a whole new slate of innovative fintech companies. We’re also thinking about a new bunch of clever ways to ensure you get the most out of our conference and accentuate “the social” part of finance’s digital future.

Learn more about our upcoming, all-digital, FinovateWest event! And for a recap of some of the themes and conversations of this month’s conference, check out our daily summaries, Best of Show announcement, and more below.

FinovateFall Digital Daily Summaries

  • Monday: Digital, Demos, and Reinventing Fintech
  • Tuesday: Delightful Experiences and Fair Deals for Consumers
  • Wednesday: Building Consumer Trust and Creating a More Open Ecosystem
  • Thursday: Open Finance, Black Swans, and the Return of SME Banking
  • Friday: Collaboration, Mobile Security, and Fintech’s Bright Future

FinovateFall Digital 2020 Best of Show Winners Announced

Touchless UI in Insurance

This is a guest post written by KV Dipu, President & Head of Operations, Communities & Customer Service at Bajaj Allianz General Insurance Company.

COVID-19 has forced organizations to embark on new journeys in various customer facing domains and the fintech/financial services sector is no exception. Since it has become imperative for organizations to consider the health and safety of customers and employees, touchless technologies are gaining traction across the spectrum to avoid physical contact. While touchless technologies are not new – smart homes, smart health, augmented and virtual reality games, smart cars, etc. are all part of our lives – they have gained a new lease of life and are now being adopted at scale.

There are numerous ways in which human communication occurs; we connect with gestures, speech, and touch along with the choice to switch amongst them seamlessly. However, the human-computer interaction is different and complicated. Touchless UI is a classic approach to control and speak with your gadget without typing or touching the screen to carry out a task. In the “Home insurance” segment, where IoT devices are used for safety along with insurance to cover during theft or burglary, the gestures control becomes an essential tool to protect from intruders. The gesture recognition system can differentiate between people and can avoid unauthorized access. However, it relies on various lighting conditions as the cameras require a desirable ambience.

Gesture vs. voice commands

Gesture recognition uses computer vision; voice recognition uses natural language processing and does not depend on lights or cameras, which add to the cost. On the contrary, gesture recognition beats voice recognition because of its natural character. This is a key factor for the implementation of voice recognition technologies into several fintech products, making the process more efficient and inexpensive. Since users do not need to go through a steep learning curve, the need of change management is eliminated to a great extent.

Typically, the development of such innovations is not without challenges. Incorporation of such gestures requires deep study of human gestures and feature engineering them while developing deep learning algorithms. Error rates, false positives, and false negatives must be eliminated to attain six sigma status. Advanced Driver Assistance Systems (ADAS) in insurance plays a major role in the third-party claims of commercial vehicles. The gestures are not restricted to hand or finger movements; eye gestures help in understanding driver behavior while driving. It helps in deriving a driver score based on the eye movements that helps data scientists analyze whether the driver is drowsy, drunk, or distracted. Consequently, the driver score is used by underwriters to arrive at a premium based on the driver score.

UI design principles

The standard design principles for touchless UI are classified into three categories: action, navigation, and transform gestures.

  • Action gestures: Action gestures involve those related to tapping, long press and swiping that help interact with elements of GUI and access additional functionality.
  • Navigation gestures: Navigation gestures involve actions related to scrolling, dragging, swiping, and pinching that enable users to flip through a product with ease.
  • Transform gestures: Transform gestures involve actions related to compound gestures, pick up and move, and double tap that enable users to zoom into and out of content, reorder content, rotate graphics et al.

Interaction principles are changing by the day as human gestures keep evolving to keep pace with the new behavior brought in by millennials. Data scientists need to consider these changes while doing feature engineering. They also need to curate data sets accordingly as these data sets will eventually lead to the training for ML/DL algorithms.

Whilst the technology evolves, two aspects of customer experience need to be taken into consideration:

  • Ease of understanding: Gestures must be in line with the ones widely known and address gaps in existing ones. Cultural nuances (for instance, a gesture in country A can mean something radically different from the same gesture in country B) need to be taken into account.
  • Realistic responses: Latency is annoying and people switch products/services if the responses are not real time. Traditional authentication with user IDs and passwords/OTPs is not something users expect in the new era of banking and insurance. Gestures and voice commands enhance the customer experience by quick logins and payments. However, for certain aspects of banking, an extra layer of security is applied and the value of transactions is restricted to avoid risk.

    By 2025, 72% of the people across the globe are expected to have smartphones. As touchless UI/UX gains traction, we are in for the new normal – M2M (man to machine) interactions, human communication morphing from voice into gestures, design at the core of customer experience, amongst others, and, most importantly, healthy and happy human beings!

KV Dipu is President & Head of Operations, Communities & Customer Service, spearheading digital transformation, leveraging start-ups from fintech/insuretech globally, at Bajaj Allianz General Insurance Company (a joint venture of Allianz, the world’s leading insurer, and Bajaj Finserv & ranked #8 amongst the global top 100 digital insurers).

Photo by Laura Barbato on Unsplash

Banks face hard decisions about business models, Forrester’s Clarke says [Industry Pulse]

Share Banks are facing rapid transformation, and the pace doesn’t seem to be slowing down anytime soon. According to Alyson Clarke, principal analyst at Forrester Research, many banks will struggle with the pace of change over the next 10 years. “Banks need to make those hard decisions about business models and what they are going …Read More

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Neon Receives $300 Million in Series C Funding Round

Neon Pagamentos, a leading Brazilian fintech, has secured a Series C investment of $300 million led by General Atlantic, a leading global growth equity firm.

New investors participating in the round include funds and accounts managed by BlackRock, as well as Vulcan Capital, PayPal Ventures, and Endeavor Catalyst, in addition to former investors Monashees and Flourish Ventures. BBVA also participated via existing shareholder Propel Venture Partners. The investment will be split between two tranches of $150 million each.

The Series C proceeds will be used to support hiring efforts, grow Neon’s user base across consumer and business clients, enhance the platform’s technology capabilities, and invest in product development. Specifically, the financing will fuel key growth areas, including the release of new products and features on Neon’s consumer platform, including those geared toward direct deposit customers, as well as rolling out additional financial services to its growing user base of around 1 million micro-entrepreneurs through its MEI Fácil platform, which provides tax and payments products. Proceeds will also be used to scale the company’s credit offerings, which will be key to driving additional business monetisation. It will also enable Neon to pursue strategic M&A opportunities that can further enrich its offering.

The increased need for digital-based services amid the global health crisis has accelerated Neon’s already rapid growth trajectory. Neon’s platform has met this demand by providing an alternative to in-person banking solutions, and has seen a surge in deposits, investments, and online purchases, as well as an uptick of 26% in new users since March as a result. As Neon strives to become a full-service financial institution, its customer base has grown to more than 9.4 million accounts to date, which has expanded alongside the company’s broadening product offering.

“Neon was born with a clear purpose: to provide an accessible bank account to any Brazilian, placing user experience at the centre of everything we do. Unlike banking incumbents in Brazil, we do not transfer the cost of inefficiency to our customers,” said Pedro Conrade, Founder of Neon. “We are thrilled to partner with our existing and new investors to continue working toward this shared vision.”

“Brazilian banking penetration is relatively high for Latin America but still lags developed market peers, with a significant under-banked population that traditional banks have generally overlooked. Neon is focused specifically on providing access to this group and bringing them into the financial world,” said Jean Sigrist, President of Neon. “This new financing enables us to continue our mission of serving even more clients with an increasingly robust offering.”

“We’ve worked closely with the Neon team since our initial investment last year to build upon its strong brand and bolster senior leadership in key strategic areas, including technology, business development, and product,” added Luiz Ribeiro, Principal at General Atlantic. “We welcome the partnership of these high-calibre new shareholders as Neon continues to transform the banking space and expand its dynamic suite of solutions for Brazilian consumers and micro-entrepreneurs.”

Founded in 2016, Neon launched with a simple digital account and has since expanded its product suite to include investment products, credit cards, and personal loans, among other new offerings and features. It has expanded its initial focus on consumer clients to also serve small businesses, accelerated by its acquisition of MEI Fácil in 2019. Most recently, in July 2020, Neon acquired one of Brazil’s first brokerage platforms, Magliano Invest, in order to offer new investment products.

“At Vulcan Capital, we believe Brazil’s financial sector will see major transformation over the next several years, driven by technology innovation, demographic shifts, and regulatory tailwinds,” continued Rafael Costa, General Partner at Vulcan Capital. “Neon is well positioned to capture a significant share of the market as it provides a compelling set of products to both consumers and small businesses.”

“Neon’s digitally-native banking platform offers the features and convenience clients need, especially when going to their local branch may not be practical or desirable,” concluded William Abecassis, Head of Innovation Capital at BlackRock. “We are excited to be investing in a team and technology that is winning over its retail and small business users with innovative services, low fees, and simplified access via its mobile app.”

This is the company’s third funding round to date. It raised a $22 million Series A in May 2018 from Propel Venture Partners, Monashees, Quona Capital, and Omidyar Network, later spun-off as Flourish Ventures, followed by its November 2019 Series B financing of $92 million co-led by General Atlantic and Banco Votorantim, Neon’s banking partner.

  • Editorial Director of the The Fintech Times

Digital Identity Specialist Alloy Raises $40 Million in Series B

In a round led by Canapi Ventures, digital identity management innovator Alloy raised $40 million in Series B funding last week. The round featured participation from Avid Ventures, Felicis Ventures, as well as a trio of existing investors: Bessemer Ventures, Primary Venture Partners, and Eniac Ventures. The investment takes the New York-based company’s total capital to more than $55 million.

“Our mission is to help our customers deploy safe and seamless digital customer experiences,” company CEO Tommy Nicholas wrote on the company blog. “This investment will help us continue to support our growing customer base, while expanding our product offerings and scaling marketing, sales, and customer efforts.”

More specifically, Nicholas noted that the investment will help the company bring new products to market in the areas of transaction and credit decisioning, as well as document verification. He added that Alloy will also continue to invest in its onboarding decisioning system and build a new learning portal to help users maximize their use of Alloy’s technology.

Alloy’s platform enables financial institutions to increase the number of customers they can safely and quickly onboard, automate manual processes to reduce error and manual review burden, and reduce fraud and financial risk. The technology allows FIs to access more than 60 KYC and identity vendors via API, and leverages data from a variety of sources in order to provide real-time risk decisioning. The company includes Ally Bank, Evolve Bank & Trust, and Brex among its partners.

In a blog post titled “Why Canapi is Leading Alloy’s $40M Series B Financing,” the Series B’s lead investor makes a strong case for investment not only in Alloy, but also for investment in digital identity innovation in general. The post discusses the challenge that financial services companies face in meeting compliance and regulatory standards that “were not designed for a digital-first world,” and points out that the arrival of the public health crisis has only made this challenge more acute. “What was costly and ineffective in the past has become unsustainable in the COVID-19 era,” the authors write.

Founded in 2015, Alloy presented “KYC: The Customer Killer – Solved!” at our developer’s conference, FinDEVR Silicon Valley, later that same year. At the event, Nicholas and company CTO Charles Hearn showed how Alloy’s technology enabled businesses to create fully-customizable APIs for customer identification and compliance.

Photo by SHOCKPhoto by Szoka Sebastian from Pexels

The Developments and Accomplishments of Bahrain Past And Present from Dalal Buhejji

The Kingdom of Bahrain has been very active in 2020, which was highlighted in a previous article by The FinTech Times. Some of those accomplishments highlighted included a wider digital transformation acceleration and preparation even before the coronavirus, as well as a strong push towards economic diversification and development.

The Bahrain Economic Development Board (EDB) is a dynamic public agency with the overall responsibility of attracting investment into Bahrain and supporting initiatives that enhance the investment climate

The Bahrain Economic Development Board (EDB) is a dynamic public agency with the overall responsibility of attracting investment into Bahrain and supporting initiatives that enhance the investment climate

The Bahrain Economic Development Board (EDB) is a dynamic public agency with the overall responsibility of attracting investment into Bahrain and supporting initiatives that enhance the investment climate

Some organisations that have long and currently are supporting both fintech and its wider ecosystem include The Bahrain Economic Development Board (EDB), a dynamic public agency with the overall responsibility of attracting investment into Bahrain and supporting initiatives that enhance the investment climate.  The EDB works with the government and both current and prospective investors to ensure that Bahrain’s investment climate is attractive, to communicate the key strengths, and to identify where opportunities exist for further economic growth through investment.

The EDB focuses on several economic sectors that capitalize on Bahrain’s competitive advantages – including financial services, manufacturing, ICT, tourism, logistics and transport. Dalal Buhejji, Director, Business Development – Financial Services highlights some of her country’s accomplishments in the financial services and fintech sector – both in the past and present.

The Importance of Bahrain’s Financial Services and Fintech Sector

The importance of financial services for Bahrain’s economy goes well beyond Vision 2030. We were the first Gulf Cooperation Council (GCC) country to begin diversification efforts, and much of our success in this regard is owing to our thriving financial services sector. Today, our financial services sector is the oldest and most established in the region, and is the most significant contributor to the Kingdom’s Gross Domestic Product (GDP) after oil, constituting some 17 per cent of non-oil GDP. More than 65 per cent of our workforce work in financial services and nearly 400 financial institutions call Bahrain home.

Indeed, it was this deep experience we were able to leverage to build one of the region’s most dynamic and pioneering fintech ecosystems. We built the region’s first onshore fintech regulatory Sandbox, where 32 innovative fintechs from all over the worlds are testing their technologies today. We expect to see two new graduates this summer. We established the region’s first and still largest fintech hub, which provides a supportive space for new fintechs. And perhaps most importantly, our award-winning, pro-innovation financial regulator, the Central Bank of Bahrain (CBB) has earned itself a reputation for its flexible and often pioneering regulation of emerging financial technologies, from cryptocurrencies to open banking.

In short we have put the framework in place for traditional financial institutions and challenger fintechs to work together to adopt new, innovative solutions to drive their business forward. We have seen Open Banking platform provider Tarabut Gateway – one of the first graduates from our Sandbox – partnering with the Kingdom’s banks to roll out open banking services. And we saw the CBB grant a license to Beehive – the region’s first regulated peer-to-peer lending platform – to launch a first-of-its-kind debt-based crowdfunding platform in Bahrain – a gamechanger for the region’s SMEs and startups. And we are helping to drive innovation across the entire region, as our friends and neighbours watch our progress closely and begin to make their own moves. Even Saudi Arabia has recently launched its own Sandbox.

Successes in Bahrain Despite The Global Challenges of COVID-19

COVID-19 has served as a catalyst for digital transformation across a range of sectors, and this is particularly true for financial services and fintech. In other words, many of the successes we’ve seen in recent months are owing to the new environment brought about by the pandemic rather than despite it. In particular, we’ve seen a near unprecedented uptake of fintech, ecommerce and digital banking as consumers in this traditionally cash-reliant region have adjusted their habits in line with the needs of social distancing, lockdown and quarantine. In Bahrain, for example, electronic fund transfer systems Fawri and Fawri+ saw staggering surges in usage – up 935.7pc year-on-year in the month of May alone.

Our traditional banking and financial services sector has responded in kind, with banks racing to meet the changing needs of Bahraini consumers. Al Salam Bank-Bahrain for, example, has in recent months launched a virtual branch, a mobile banking app that allows entirely digital onboarding as well as Whatsapp Banking.

But it is worth noting that while the pandemic has served as a catalyst for digitisation across the financial services sector, this was a revolution that was already taking place. Look to banks like Bank ABC, which launched Ila Bank, and National Bank of Bahrain – the first in the region to launch open banking services; look to BISB, which launched Bahrain’s first fully digital bank branch, and Meem – the region’s first shari’a compliant digital banking service. Over the last couple of decades we have invested considerable sums in building an ecosystem where innovation and collaboration between traditional financial institutions and challenger fintechs can thrive, and we are seeing the results.

In Honour of The Fintech Times’s September Focus on Female Fintech Leaders

To celebrate The FinTech Time’s September feature on women, I just wanted to highlight the accomplishments that Arab women have in this sector. From an op-ed I wrote on Entrepreneur’s Middle East edition earlier this year, I wrote, “When the Bahraini startup Docwhere was named the global popular winner in the prestigious international [email protected] entrepreneurial contest in December 2019, it didn’t just highlight how technology is helping find solutions for social issues in the Middle East and elsewhere. It was also a victory for women entrepreneurs in a region commonly, often erroneously, associated with gender inequalities and other stereotypes.

But one in three tech startups in the Arab world are led by women, significantly higher than in Silicon Valley, where female businesses only comprise 17% of the total. Bahrain, in fact, is a global leader on this front, having achieved gender parity in business ownership, with 49% of all commercial registrations in the Kingdom being female-owned, official statistics show.” I ended the piece by concluding, “Certainly, more remains to be done in terms of creating new opportunities, but investors and government entities are well on the road to gender parity in entrepreneurship across the region. Perhaps now that startups led by Arab women are being recognized internationally, the movement will receive greater support across the economic and social spectrum.”

  • Richie Santosdiaz, Contributing Reporter for Middle East and Africa

SMPs Continue To Be A Lifeline For SMEs In A Post-Covid World

SMEs (small medium-sized enterprises) are a fundamental pillar of the economy. The World Bank estimates they make up 90 percent of businesses globally and more than 50 percent of employment worldwide. Smaller accountancy firms, also known as small medium-sized practices (SMPs), are the most trusted advisers to the small business community – and provide a crucial lifeline to a sector vulnerable to business failure and poor governance.

In its most recent report, Responsible SMP Pacesetters, which surveys almost 50 global SMP leaders, ACCA (the Association of Chartered Certified Accountants) shows the importance of SMPs and why they act as a safety net for businesses trying to rebuild and steer their way through the Covid-19 pandemic. The financial impact of the crisis has been immeasurable with many SMEs and microenterprises not being able to survive mandatory lockdown measures, which have not only forced disruption to supply chains, but caused staff shortages and restricted commercial activity.

The study shows how agility and innovation have contributed to an unprecedented mobilisation of the SMP community; with smaller accountancy firms working round the clock to keep businesses afloat, all the while facing their own challenges, such as a lack of staff, delayed payments or the physical difficulty in conducting audits. The report also demonstrates how SMPs, now more than ever, provide a vital link between SMEs and the ecosystem they have to navigate. So they not only guide their small business clients to the support available to them, but they also articulate their clients’ needs to diverse stakeholders, such as government, regulators and banks.

Other highlights from the study reveal how smaller accountancy firms also contribute to the wider community and society as a whole, including:

  • Supporting the charity and NGO sector: SMPs make donations, fundraise and volunteer for charities. However, their biggest contribution is as accountants and business advisers – not just producing accounts pro bono but serving on boards and promoting good governance, financial accountability and best practice.
  • Promoting the accountancy profession and social mobility: SMP leaders promote accountancy as a progressive profession to schools and colleges; offering training and apprenticeship opportunities often to underprivileged or excluded groups. In doing so, they create diverse practices, with a clear sense of mission and values.
  • Financial inclusion and financial literacy: SMPs play a valuable role in fostering financial literacy among both individuals and organisations in their communities, promoting both entrepreneurship and personal responsibility. The adoption of digital technologies, in particular, is leading to a new era of engagement between SMP accountants and their clients, enhancing financial competence among small business owners.
  • Sustainability and ethics: SMP accountants are playing a leading role in transforming SMEs into robust businesses, which behave ethically and responsibly. As trusted advisers, they can guide clients through complex reporting frameworks, carbon accounting and waste reduction; helping them become both economically and environmentally sustainable.

 The report author and ACCA’s head of SME professional insights, Aleksandra Zaronina-Kirillova, says:

 ‘Today ACCA is pleased to support Small Business Advice Week by launching our timely report Responsible SMP Pacesetters. We really want to show just how vital small accountancy firms are to small businesses especially at a time like this.

Fazeela Gopalani, Head of ACCA Middle East says, ‘SMPs are a key part of the financial health system for the SME sector. They have proven to be the ‘emergency services’ to small businesses during the Covid-19 pandemic; providing enhanced business support and access to finance, enabling SMEs to make a contribution to overall economic growth. However, they also have a much broader and impressive role in society, which often remains untold, so we wanted to shine a light on these aspects by publishing this report.

‘ACCA is a proud advocate of the SMP space and we aim to develop a robust global ACCA-SMP community.’

Mark Fairley, owner of 247 Graphics, graphic design agency in Northumberland says:

‘The SMP Graeme Tennick Accountants (GTA) has offered me a wealth of free support through the current Covid-19 crisis. They have been invaluable in making sure small businesses, such as myself have knowledge, help and support which not only guides us through tough times, but helps us establish a stronger business to return to…

‘GTA’s support has been delivered by a variety of different methods including reactive newsletters, which keep business owners up to date on the current changes, webinars with the added benefit of trial software to help understand how we can change to grow and what impact it would have on our business. This has been immensely beneficial and a kind gesture to help small businesses like myself.’

Small Business Advice Week’s managing director, Adam Cox, says: ‘Small Business Advice Week has been giving advice to small businesses for almost 20 years. In the wake of a global pandemic, there is huge volatility and uncertainty for business owners but also opportunities. We welcome the support of ACCA as it’s never been more important for owners of SMEs to be aware of their business’s financial health and SMP’s can help smaller businesses make the right decisions in these uncertain times.’

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  • Editorial Director of the The Fintech Times

Sovereign Union, Apollo Fintech announce partnership

Blockchain companies, Sovereign Union and Apollo Fintech, have announced a partnership to bid and acquire blockchain-related government contracts across 26 Pacific island countries. The pilot program will begin in Palau and Micronesia, according to a report on Yahoo Finance.

Pacific governments have been exploring ways to become independent jurisdictions and issue their own sovereign electronic currency. The partnership between Sovereign Union and Apollo Fintech will enable pacific governments, through customized solutions, to have a secure digital nation.

Currently, a majority of Pacific nations use physical U.S. dollars for daily settlements and don’t have access to modern banking systems or infrastructure. National authorities are extensively studying central bank digital currencies as a way help the under-banked communities move toward a cashless society, and eventually, create their own sovereign currency.

“This exciting partnership brings communities in the Pacific the ability to utilize a cashless economy without the traditional barriers of ePayments, allowing any nation to take part in the cashless revolution,” Tridib Nandy, founder, Sovereign Union said in the report. “Frictionless commerce via digital stablecoins will empower economies across the Pacific to create new prosperity and to achieve a better economic future.”

Barter and Booth CEO to invest in Israeli fintech

Mohammed Al Beloushi, CEO of Barker and Booth Commercial Agency LLC in the United Arab Emirates, announced he will be investing in Israeli fintech startup, Fintica. Beloushi plans to develop Fintica’s capabilities and bring it to states within the Gulf Cooperation Council, according to a press release.

Fintica creates AI financial technology solutions, including self-learning technology, to gain more detailed market reports by organizing and categorizing the data available to support asset allocation and decision-making processes.

“Fintica is delighted and honored to embark on this historic partnership with our UAE counterparts, and together to work on expanding our impact in the investment market. Our two nations have begun a new era of cooperation, yet the world’s markets remain volatile and turbulent,” Philippe Metoudi, CEO of Fintica AI said in the release. “The ability to achieve a deeper understanding of changing market structures and conditions is crucial, and our agreement will help Fintica offer our unique solutions and technologies to investors around the Gulf.”

Small Business Platform Xero Calls the Government to Step in on SME Tech Adoption Due to Impact of Covid-19

The small business platform Xero is calling on the government to step in on tech adoption for small firms after its report reveals the recovery of a small business after Covid-19 is affected by how digitally enabled they are impact on the post-pandemic recovery.

Xero analysed the data of 300,000 customers for its report that indicated that small firms have been more deeply affected than large ones, with job losses looking to be almost twice as big.

Despite this, the report found that small businesses who used apps to manage their business before the crisis saw 12% less revenue declines and job losses than other small businesses. Small businesses with five more apps connected to their account had revenue falls that were one-third smaller and job losses that were 40% smaller than other SMEs during the crisis.

These findings have resulted in Xero calling on the Government to urgently step in to encourage small businesses to make more of digital tools. Its policy recommendations include digital tools tax relief, improved regional internet access and an offset of technology expenses against tax, to help small businesses to digitise and build resilience for future economic challenges.

“The post-lockdown economic recovery is at a crossroads now as furlough and eating out schemes come to an end. As unpredictable as this year has been, one certainty is that digitally-enabled businesses are likely to recover faster than those who aren’t,” said Gary Turner, managing director of Xero. “We’re calling on the Government to support business recovery with funding for tech adoption and the introduction of a tax offset for expenses against technology implementation. Driving digitisation will help countless small businesses to get back on their feet.”

The call comes after data from The Entrepreneurs’ Network shows that if the 1.1m micro businesses (0-9 employees) in the UK doubled their uptake of key digital technologies, the UK economy would get a £16.6bn boost.

Analysis of searches made by small businesses in the Xero app marketplace from February to July suggested that digital adoption is growing, with cash flow reporting and management apps, and tools enabling e-commerce such as Shopify and Stripe being particularly popular. The share of businesses connecting new apps through the Xero marketplace was also almost double in April 2020 than in an average month. Despite this, small business revenue fell more than a quarter in the UK at the start of lockdown and remained 13% lower in July than the previous year.

Internationally, Australia and New Zealand have been hiring as trading restrictions and social distancing measures have been lifted, but jobs continued to decline in July in the UK, highlighting the severity of the employment crisis as the Government’s furlough scheme begins to unwind.