Real-time international #payments are not far over the horizon anymore. San Francisco-based Ripple announced that seven global #banks have joined its network to improve their cross-border payments experience. Among the banks are Santander, UniCredit, UBS, ReiseBank, CIBC, National Bank of Abu Dhabi (NBAD), and ATB Financial. All of the banks tested transferring moneyRead More
Bank Innovation
With the dust barely settled, it is time to take a deeper look at the potential consequences of the UK leaving the EU for good.
Licensing: The strategy of acquiring a license from the FCA then passporting to operate across the EU is dead. New strategies will have to be implemented. Some firms will move their operations to the EU, others will have to acquire an additional EU license. The higher the level of dependence a firm’s model has on pan European, the higher the probability a firm will chose to relocate for licensing purposes. Some firms may even have to rethink their entire business models due to the loss of passporting – in situation where it neither makes sense to relocate and the additional cost of compliance and licensing in the EU will render their models uneconomical.
Payments Businesses: The entire value chain is going to be impacted to the extent business is conducted across the EU. The problem is going to be exacerbated as many payment businesses operate with thin margins. If you are a UK merchant acquirer of small to medium size doing business in various EU countries, you are going to hurt going forward. Brexit might force some M&A activity down the road. The problem will not stop with merchant acquirers, think gateway providers, speciality providers around mobile payments, fraud, any type of service that requires some type of licensing. Size is going to be a major differentiator as admin and licensing costs will increase.
Remittance Businesses: Those firms that do extensive business with the EU are faced with an existential decision. I will not be surprised to see some startups pack up and leave for an EU city that offers the best of all worlds (workforce skills, tech hub, infrastructure, local regulator reputation). Even incumbents will be impacted &8211; maybe not to the point of fully relocating, but certainly to the point of rebalancing their operations.
#Fintech startups building a digital experience: Other than remittances businesses we have startup #banks, PFM like aggregators of data, lead generators, digital insurance wallets, roboadvisors, payment wallets, digital brokers. For those EU startups, the UK may not be as high of a priority. Might it be farfetched to see EU startups looking at the US before eyeing the UK? UK startups eyeing Asia or the US before Europe?
US Fintech Startups: Will these startups be attracted to Dublin, Frankfurt, Luxemburg or Paris ahead of London?
Payment Networks: Quid of Visa and MasterCard? Visa Europe is headquartered in the UK while MC is located in Belgium. Will Visa rebalance its operations towards continental Europe? If so London will suffer. Beyond location, these two behemoths rule over network rules and regulations for the acquirers and issuers that participate in their respective networks. We may expect change to some of these rules over time. How much divergence will that create to interchange fee schedules for example?
Regulators: How will the FCA approach current and future European Directives for the financial services industry. Will the FCA try to keep gaps in interpretation and implementation as minimal as possible to facilitate UK based startups and incumbents competing in the EU? Will the FCA be proactive and collaborate with Brussels? Will Brussels be receptive to collaboration? These questions are very difficult to answer. What is guaranteed is the bigger the gaps going forward the more difficult it will be for UK based companies. The leadership of the FCA&8217;s sandbox approach also has to be in doubt. Paris, Frankfurt, Dublin, Luxemburg or Brussels will want to raise their hands to welcome a EU regulatory sandbox and that sandbox will attract more activity, more innovation, more attention than its FCA counterpart. Mark my words what happens in the arena of regulatory sandbox is going to have a major impact on fintech, none of which will be positive for the UK.
Future Initiatives: Has anyone forgotten about the Tobin tax? I am forecasting or advocating such an initiative. My point is that with the UK not being able to influence or block certain initiatives, it is probable we may see high level initiatives revisited or drafted within the EU, favoring EU members or favoring a tighter integration with non-EU members to the advantage of the EU. Fintech startups based in the EU would benefit from such trends.
Capital Markets fintech: Supply will follow demand, inevitably. Several i-banks have already announced their plans to relocate to continental Europe. I would not be surprised if other participants in the ecosystem were to follow suit &8211; buy side firms, service providers. Fintech startups will want to be close to their clients. Relatively speaking this means less emphasis on London.
Fintech Lending: Probably not much change in SME lending which tends to be more local than multi country. With consumer lending any EU based lending platform will hold a clear advantage due to potential economies of scale. UK based lenders with operations in EU will be faced with higher operating costs.
Cities: Dublin, Frankfurt, Paris, Luxemburg… will grow in stature with more activity leading to more innovation, more investments. I will even venture to state that Geneva & Zurich will emerge as winners to. Switzerland may integrate further with the EU to take advantage of Brexit which will lead to fintech and finserv firms having an easier time choosing Geneva or Zurich as a base. Expect a surge of p.r. and special deals aimed at attracting business from a variety of european cities. Further, these cities will reinforce, explicitly and implicitly, their ties with one another, as a network operating off the same EU framework. London may become a lonely place disconnected from that grid.
Data: How data is treated will have untold consequences given the array of activities involved &8211; data processing, data storage, data sharing, data privacy. If you process data as your first order of business or as a derivative, where will you want to locate if you are a newcomer or relocate if you are established in the UK. Payment processors, sell and buy side firms in capital markets and asset management deal, fintech startups building digital front ends to acquire customers (roboadvisors, PFM, insurance&8230;), startup banks&8230; everyone deals with data. Where will they want to locate themselves, operate their back office, acquire customers. Will it be more efficient to cover the EU from the UK or the UK from the EU, or split. The EU has more stringent approach to data privacy and security &8211; a more consumer centric one &8211; which may be a material deciding factor for commercial purposes.
Venture Investing: You invest where you see the biggest opportunities. If opportunities shift towards the EU based on access to a wider market, as an investor you will shift your investments away from the UK, relatively speaking. Of course some investors have strict mandates. Funds that raised to only invest in the UK will not adjust their investments. Those whose mandate is to invest in Europe will adjust. Those whose mandate is to invest in the EU will adjust drastically. To a certain extent venture investors, through their preferences may favor certain business models against others.
Fintech M&A activity: With the value of an FCA license impaired and doubts about business models soundness, it is not unreasonable to state that more than a few acquisitions of UK based startups will either be put on hold or cancelled altogether. On the other hand a UK based startup acquiring or reverse merging in the EU to mitigate Brexit may be an interesting strategy.
Fintech Talent: How many young, educated fintech engineers, growth hackers, compliance officers, business development executives will leave London? Even more appropriate to ask, how many will leavers will it take for a marked reduction in the rate of innovation?
Scotland: Given that Scotland voted overwhelmingly to remain in the EU, will the Scottish National Party plan to organize another referendum on independence? If independence wins the day and Scotland elects to join the EU &8211; I know this is a long shot and not an immediate move &8211; Edinburgh could rise as a global fintech center and in the process cripple London&8217;s standing. Edinburgh is the second largest financial center in the UK just after London and is home to Royal Bank of Scotland, the Bank of Scotland, Sainsbury Bank, Tesco Bank, Virgin Money, TSB Bank, Scottish Widows, Standard Life and many other top asset managers, insurance companies and global tier 1 asset servicing firms.
The EU: The more accommodating the EU will be to the UK when negotiating new trade deals, the better Fintech will fare. The more accommodating the EU will be, the more it may embolden political parties from other countries to stage their own exit.
General Comments:
To me “fintech” is all about reorganizing the financial services industry away from a vertical, closed and siloed framework and towards a networked, collaborative, opened and sharing framework. In a certain way this reorganization mirrors the societal and cultural reorganizations we are witnessing and experiencing with how countries interact with one another and how we interact within countries. Nation-states are dying because they are vertical, siloed and closed.
The Brexit vote, as far as I interpret it, is a reaction against some of the consequences of a realignment away from the vertical organization of our lives. The consequences of the excesses of globalization have been ill-understood or underestimated. Increased wealth disparities, increased unemployment or under-employment and exclusion from value creation have left many seething. This helps explain why only those who benefited from globalization and change voted to remain: the young, the educated, urban centers. I bet an overwhelming majority of individuals employed in fintech specifically and the financial services industry in general voted to remain.
Those that voted for Brexit had the reflex of yearning for the past, for the UK as an independent nation state, better off on its own. &8220;Britain for British people&8221; may be there motto. This vision is fundamentally flawed and may be the main &8220;meta&8221; explanation for why UK fintech will suffer going forward.
Granted it is an understatement to state there is much to criticize about the EU. The path towards a supra nation state is as flawed as the one towards reinforcing a single nation state. Still, the EU has created a large and peaceful open market and cutting oneself from such a market comes at a cost, especially without a clear plan to do so.
We need to consider two paths for the EU. Either the EU will reform itself and optimize along a more open and integrated framework, or it will go about its business as usual. Even if going about its business as usual is not tenable &8211; other countries will be faced with similar Brexit moments and capitalism needs a reformation moment &8211; considering it as an option still leaves the UK facing the above changes, choices and negative consequences I outlined above. Reformation of the EU is the most probable path and that will make Brexit even more of a suboptimal decision.
The UK could adopt two strategies after Brexit. One can be loosely translated as &8220;To Hell with the EU, let&8217;s look somewhere else.&8221; Fintech and Finserv would be royally fu&*%d if that were to be the case unless and only unless the EU crumbles which I view as extremely unlikely although not impossible &8211; again successful reformation is much more likely. The level of integration the UK economy at large enjoys with continental Europe both explains why this would be a poor strategy as well as the very low probability of such a strategy to occur. The other strategy can be labelled as &8220;Let&8217;s figure out how to keep on integrating with the EU.&8221; which will inevitably mean more free circulation of people, goods and capital rather than less. This is the most likely strategy in my opinion and the best outcome for Fintech. Needless to say that such a path would disappoint many who voted for Brexit.
Whatever the rollercoaster of Bremotions, Branger for some, Bregret for others, Brisapointment, Bronliness, Brictory, Bredemption &8211; i am pushing corniness to its limit here I realize &8211; Fintech #Brexistentialism tells me it is easier to influence an integrative movement from the inside than the outside.
63% of customers across the globe are using #fintech products or services, according to Capgemini and Efma. Most particularly, penetration is the highest in #emerging #markets and among millennial population, but is also expected to increase in all geographies and ages, the firms claim in a report.
The report, which draws on one of the industry’s largest customer surveys with responses from over 16,000 customers across 32 countries and 140 industry executives, found that fintech ventures are increasingly attracting referrals, new customers, and gaining trust.
Users claim that fintech ventures are providing products that are easy to use (82%), services that are faster (81%), and an overall good customer experience (80%).
Customers said they would rather recommend fintech providers (55%) to their friends and relatives, rather than their own bank (38%). Only 15.9% of customers said they are likely to purchase another product from their bank, “pointing to the need for more innovative product development,” the report says.
In reply to the increasing competition, #banks in more than 85% of countries have improved customer experience. That said, younger generations remain the most unsatisfied, raising concerns about the ability of traditional banks to meet the higher expectations of these segment.
While over 90% of banking executives believe that change is accelerating towards digital banking, only 12.9% say they have the systems in place to support the change.
&8220;Banks are underestimating the value fintech firms provide in delivering a good experience and efficient service, as well as their potential influence on all areas of banking,&8221; the report says.
Findings suggest that banks are struggling to respond to &8220;increasingly aggressive fintech competitors.&8221; 65.3% of banking executives said they view fintech firms as partners and pointed out that the most appropriate ways to partner with these ventures are through collaboration (45.5%) and investment (43.6%).
&8220;Banks and fintech firms will need to work together and leverage each other&8217;s strengths to create the best possible future ecosystem,&8221; the report advises. &8220;By being proactive, banks can reduce the risk of being marginalized as the ecosystem evolves.&8221;
The report argues that APIs are essential to the future of banking as they offer the ability to take advantages of fintech assets such as speed and creativity. While some have embraces the open architecture of APIs, the industry as a whole still has a long way to go.
Additionally, regulation such as the EU&8217;s Directive on Payment Services 2 (PSD2), which aims at establishing the legal foundation for the creation of an EU-wide single market for payments, will further pressure banks to expose banking core ledgers openly and transparently to third-party solution providers.
&8220;Today&8217;s partnerships are a stepping-stone toward a much bigger role banks are expected to play in creating a digital banking ecosystem. In the emerging ecosystem, existing bank infrastructures and new fintech #technology will both play strong parts,&8221; the report claims.
By teaming up with fintech ventures, banks can be &8220;better equipped to meet rising customer expectations for enhanced experiences and innovative services,&8221; it states.
&8220;They can explore ways of generating revenue from #fintechs that want to tap their expertise in traditional banking areas like risk management and payments. Putting a price on assets like geo-enhanced data, customer authentications and money transfers could held banks generate new revenue streams.&8221;
Capgemini and Efma&8217;s ‘World Retail Banking Report 2016&8216; echoes previous papers released that advise for more collaboration between the banking and the fintech sectors.
The Economist Intelligence Unit issued a report in December last year, arguing that banks and fintech startups have more business interests in common than issues that divide them.
Another document, by Deutsche Bank, claims that banks and fintech ventures should collaborate rather than compete against each other.
Finally, in Accenture&8217;s &8216;Fintech and the evolving landscape&8217; report, the consultancy firm argues that banks should consider fintechs as enablers, urging them to assess, adapt and adopt new technologies.
The post Fintechs Gain Significant Traction Notably in Emerging Markets appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
IBM’s new Watson, Garage, and Design Studios in Singapore mark a radical departure for how IBM engages its clients. For those in IT this engagement model may be new, but as a former banker it feels very familiar, IBM built a #trading floor for #Fintech.
“ IBM has captured a trading floor’s sense of immediacy, focus on talent, and culture of collaboration“
Now let me immediately dispel any notions that IBM is buying and selling #technology like stocks and bonds, it isn’t. You won’t find traders on the phone selling software licenses or servers. What you will find is that IBM has captured a trading floor’s sense of immediacy, focus on talent, and culture of collaboration and put these traits to work for the benefit of its clients. It radically changes how product lines within IBM work with one another, and how we come together to work for our clients. It is immediate, doesn’t take “no” for an answer and is focused on results.
“ We’re not just playing a bigger game, I thinkwe’ve invented a new game.
Need an interface developer? There’s one in that corner. Could this software be used to capture a certain risk management function? Ask him, he’s an expert. There is simply no precedent for the immediate feedback and collaboration available in the studio and how it will help shape our progress when building something new. The new “trading floor” creates an environment where you are defined not by the limitations of your own knowledge, but by your ability to harness the imagination of the vast pool of talent around you. We’re not just playing a bigger game, I think we’ve invented a new game.
“ Our clients come in and sit with us..…and are free to reimagine their bank without limit “
So why is this a breakthrough for Fintech? Fintech isn’t a specific product or technology, it is discipline that borrows technology from anywhere it can to reimagine finance. The new trading floor makes this easier than ever. Our clients come in and sit with us on the trading floor and are free to reimagine their bank without limit. There are no traditional silos, or cubicle walls, nothing at all that would prevent a banker from talking to a social media expert, or the other way around. Its not about the technology that you know about, its about the technology that you didn’t know existed being brought to you by the people who work with it everyday.
“ All of my #banking clients, no matter how senior, now work in technology, they just don’t know it yet “
There is a paradigm shift underway in finance. All of my banking clients, no matter how senior, now work in technology; they just don’t know it yet. The convergence of finance and technology is so new, that many haven’t realized the full extent to which design thinking is reimagining the future of finance. What is already clear is that it’s the re-engineering of technology to serve finance that is driving the process. Cellphones weren’t made for banking, but with re-engineering do it very well. Our “fintech trading floor” is designed to speed the process of re-engineering and get bankers using the latest tech that IBM has to offer.
“you are defined not by the limitations of your own knowledge, but by your ability to harness the imagination of the vast pool of talent around you “
I feel that I’ve now come full circle in my career back to where I started. I have to confess that I’ve always missed the buzz and excitement of the trading floor. Its great to be back, and even greater to know that I’ll be playing a small part in helping to reimagine the future of banking.
IBM Watson Centre, Garage & Design Studio open in Singapore
[linkedinbadge URL=”https://www.linkedin.com/in/turrin” connections=”off” mode=”icon” liname=”Richard Turrin”] is Fintech evangelist transforming #banks and changing paradigms and this article was originally published on linkedin.
This June 28th in #Zurich, #International Money-Tech is a #fintech event features 20 international digital payment and finance #technology company #pitches and offers 1:1 meetings in Zurich
Innovations presented will include digital currencies, mobile banking, peer-to-peer lending, crypto finance, new trends insurance tech, #robo advisors, among many others.
#Startup Pitches will inlcude:
Kantox, a pioneering firm in the foreign exchange industry, bringing light and fresh air to an uncertain, static market. Kantox offers a comprehensive FX management solution for SMEs and mid-cap companies.
Validity Labs educates patrons so they can adapt early an exploit opportunities rather than being rolled over by the #blockchain wave. Our courses, workshops and seminars provide hands-on education about smart contracts and the technology stack beneath it.
SynerScope, the next generation platform that provides analytics solutions to help discover critical information from massive amounts of data and turning it into useful insights. Synerscope combines Scientific Visualization Technologies, ultrafast predictive analytics and machine learning on top of its proprietary enterprise data navigation, -search and -linking. This technology stack provides enterprises high speed detection of abnormal behaviours and anomalies in complex data.
RaiseNow supports ambitious fundraisers to grow their online fundraising. Using solutions for all digital touch points – from SMS donations and mobile phone apps right up to peer-to-peer event fundraising and donation forms. The platform integrates your email and social media channels and makes everything tightly work with your existing fundraising and donor database.
Meniga is transforming the way #banks and advertisers use transaction data, by helping people becoming smarter consumers with great products. With current implementations worldwide Meniga is already serving +35 million consumers.
Speakers will include academics and executives from fintech startups and financial services firm including Roland Berger, Ascribe, the Ethereum Foundation, Nexussquared, Wikifolio, Crowdhouse, and more.
Stefan Greunz – Wikifolio, Head of Business Development
Stefan Greunz &8211; Wikifolio, Head of Business Development
wikifolio.com is Europe’s leading online platform for trading ideas by private traders and professional asset managers.
The Fintech company launched its Social Trading platform in Germany in 2012, followed by its Austrian launch in early 2013 and expanded to Switzerland in 2015.
All signs are pointing to continued growth,’ says Andreas Kern, CEO and founder of wikifolio.com, ‘during the past year we have at least doubled all relevant figures and we want to continue like that.’
More than 13,000 trading ideas called ‘wikifolios’ were already published, of which more than 4,300 are tradable as wikifolio-certificates at the Stuttgart stock exchange. So far 5.3 million trades in wikifolios triggered already a trade volume in excess of 7.9 billion euros.
Ming Chan &8211; Ethereum, Executive Director
Ming Chan &8211; Ethereum, Executive Director
Ethereum’s rapidly growing popularity has become the most talked about topic in #cryptocurrency ecosystem. It particularly came under spotlight when it crossed the $ 1 billion mark in March this year, making several cryptocurrency exchanges to announce their support for ether trading.
The market cap of Ethereum’s has once again surpassed the $ 1 billion mark as ether price recently found upward momentum and currently trades at $ 14.45 levels. Finance Magnates attributes this to the success of the DAO crowdfunding drive.
Speaking with EconoTimes, Aurélien Menant, CEO of Gatecoin, said that the surge seen earlier in Ethereum’s market cap was partially due to some concerns about the future of #bitcoin, which have been recently addressed following the announcement of the upcoming SegWit and Lightning network upgrades that will improve the scalability of bitcoin. He attributed the subsequent drop in the market cap to a correction to an “overly excited market”.
If you consider that the market even grew anywhere near 1 billion in less than a year since it was released that is very impressive. We are still very bullish about Ethereum and believe ether’s value will increase in the long term, Menant added. Source.
Special offer: Register with code “fintech16” to get 15% discount for event tickets!
The post International Money-Tech in Zurich: Startup Pitches Round 1 and Speaker Profiles appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
#Banks spend a great deal of time, money, and energy building #technology to compete with #fintech companies, but the CEO of innovation software maker Spigit has a message: Don’t bother. Why is that? “You&8217;re too late,” Spigit CEO Scott Raskin told Bank Innovation, referring to the banks.&8221;By the time these companies reachRead More
Bank Innovation
#MasterCard announced that it will #bring its #Swiss #customers and cardholders #Apple Pay, which is transforming mobile payments with an easy, secure and private way to pay that’s fast and convenient.
Apple Pay allows MasterCard cardholders to use their cards where and how they want with a seamless payment experience. For consumers and merchants alike, that means that every purchase made with Apple Pay will offer the security, benefits and guarantees of any MasterCard transaction. MasterCard is working with several #banks and card issuers to enable cardholders to use their MasterCard credit or prepaid cards with Apple Pay.
Security and privacy is at the core of Apple Pay. When you use a credit or prepaid card with Apple Pay, the actual card numbers are neither transferred to Apple, nor stored on the device or on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on your device. Each transaction is authorized with a one-time unique dynamic security code.
Image source: Apple.com
‘Apple Pay allows consumer to pay easily and securely, wherever contactless MasterCard cards are accepted at POS or Apple Pay is accepted for in app payments, be it in Switzerland or across the globe,&8217; said Guido Mueller, Country Manager Switzerland. &8216;MasterCard was the first in the world to offer contactless and mobile payment solutions, and the Swiss are rapidly adopting #this well-established global standard for convenient, secure payment with a tap. In Switzerland, at more than 100,000 locations including Migros, Coop or Kiosks, more than 3 million contactless purchases are made every month, up 100% compared to the previous year[1] .
With this clear shift in payment preferences, we are excited that MasterCard cardholders will soon be able to make payments in store or in app with Apple Pay, knowing that every purchase brings the unrivaled ease and security of NFC payments to mobile payments, together with all the same guarantees and benefits they&8217;ve come to expect from using their MasterCard.&8217;
Apple Pay is easy to set up and users will continue to receive all of the rewards and benefits offered by their card of choice. In participating stores, Apple Pay works with iPhone 6s, iPhone 6s Plus, iPhone 6, iPhone 6 Plus, iPhone SE and Apple Watch. Online shopping in apps accepting Apple Pay is simple, without needing to repeatedly fill out lengthy account forms or type in shipping and billing information. When paying for goods and services within apps, Apple Pay is compatible with iPhone 6s, iPhone 6s Plus, iPhone 6, iPhone 6 Plus, iPhone SE, iPad Air 2, iPad mini 3, iPad mini 4 and iPad Pro.
For more information on Apple Pay, visit here
The post MasterCard Will Bring Apple Pay To Swiss Customers This Summer appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
Researchers from the Massachusetts Institute of #Technology, therefore, have developed a guaranteed privacy system based on #blockchain, in which #data can be stored, verified and shared without ever being revealed to any of the network’s parties. ‘Enigma’, which is powered by the blockchain, is essentially “different computers that are talking to each other, but they don’t do mining, they just provide resources to the network, bandwidth, some of their hard drives, some of their CPU power”, according to co-founder Oz Nathan, a technology entrepreneur with experience working with the Counter Terror Unit of the Israeli Defence Forces. This will purportedly allow #banks, for instance, to confidently sign up to private blockchains, knowing that sensitive #client data will remain private.
Enigma’s founders are also speaking to medical companies, particularly those who are unable to put huge swathes of client medical #information onto the blockchain. As a solution, Enigma breaks down data into smaller pieces, and rather than performing conventional encryption, a “secret sharing” method is used, according to co-founder Guy Zyskind where the system “guarantees mathematically that each of these pieces are completely masked, completely random and completely #secure&8221;.
Moreover, there does not appear to be a limitation to the magnitude of projects that can be put onto the blockchain. The UK government is now looking to blockchain technology to protect itself against data breaches within some of its biggest industries. Guardtime, which provides cyber-security services and uses blockchain to secure sensitive data, recently announced it will be in charge of protecting the UK’s nuclear power stations, flood defence systems and electricity grids from cyberattacks.
According to a recent report by think tank Chatham House, a ‘culture of denial’ currently exists in the UK’s nuclear power industry with regards to the risk of cyberattacks. Blockchain’s permitted ledger, however, can be used by Guardtime to boost the security of some of the largest systems of UK infrastructure. The system uses hash-function cryptography that is based on ‘signature’ authorization, known as Keyless Signature Infrastructure (KSI). Ultimately, the technology allows all data across the system to be securely authorized, while allowing for independent verification of the records, without the need for centralized authorities.
Although blockchain’s technology has been synonymous with the rise of #Bitcoin, Guardtime has been using similar technology for the purpose of security prior to Bitcoin’s emergence. The company employs cybersecurity experts who have experience in the US military, as well as state-level digital security experts from Estonia, who resolutely defended the country from a comprehensive cyberattack by Russia in 2007. Indeed, Estonian innovations in addressing confidentiality and data integrity have been deemed by the US as cutting-edge, which has in turn led to the formation of the #FinTech partnership.
Defence systems, telecommunications companies and financial-services firms are all looking at the technology, according to CTO Matt Johnson, who also believes that Guardtime&8217;s permitted blockchain can provide proof of time, identity and authenticity, while preserving confidentiality of the data, on an industrial scale.
The post Blockchain to Optimize and Secure Client Data Information &8211; Part 3 appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
Let’s assume #Brexit will happen. How will the the UK #FinTech community react? We already know that more than a few financial services firms – mostly #banks I believe &8211; have drawn plans to relocate some of their staff away from London and scale back operations in the UK. Will FinTech firms follow suit? Have some started planning for Brexit? Are Brexit responses being hatched as we speak? Will moves out of the UK be sudden and immediate or gradual? All are questions worthy of an answer.
With the demise of its offshore business, London needed to reinvent itself to retain financial services relevance. Fintech, while maybe not being THE answer, was one of the answers. In the past years we have seen the City of London, the Bank of England, the Financial Conduct Authority and Government signaling they were all opened for FinTech business, launching initiatives and making it altogether easier, relatively speaking, for FinTech entrepreneurs to choose London as their home base.
The attractiveness of the UK as a homogenous market (think South East England with a concentration of tech savvy and affluent individuals in one time zone), a skilled workforce, the lure of a flexible UK economy and labor laws all helped. The relative strength of venture capital funding (both in terms of quantity and quality) compared to Europe should not be discounted.
There has also been a fair bit of regulatory arbitrage going on. There is no question many entrepreneurs will chose a country where the regulator is more sophisticated, enjoys a positive reputation globally, is “open for business” and easier to deal with than in one&8217;s home country; especially when this choice will result in a FCA approved license that is recognized across the European Union, thereby providing optionality around a bigger addressable market. In other words, resisting the allure of London as a FinTech hub while noting all what you build can and will be applicable all over the EU is very difficult to do.
What happens if the EU link is altered? I doubt an FCA license would be recognized across Europe then, which means increased licensing and compliance costs, presumably. Further, as mentioned above, some financial services firms will reduce their operations in the UK and relocate &8211; to continental Europe, to the US… Plus there is the rising uncertainty of how #life will be #after Brexit &8211; financial services life, business life, how removed the UK will be from EU, the types of barriers that will exist.
If you are a Fintech startup thinking of moving to the UK you are going to think twice. The decision will not be as easy as it was.
If you are a Fintech startup already in the UK, in the early stages of of building your operations you will start thinking whether a move is the right decision.
If you are a d2c Fintech startup with aspirations for European roll out you may decide to relocate some of your operations to continental Europe sooner than you had planned or more than you had planned.
If you are a b2b Fintech startup you will tend to follow your clients and their operations wherever they go.
Additionally, if Brexit results in a less opened environment for foreign workers, the tech community might see a net outward flux of engineers out of the UK which may sway Fintech startups to follow talent.
All in all, these trends are not net positives for UK Fintech dominance.
Where would Fintech startups move? There is no obvious FinTech hub that can immediately challenge London. None of the potential contenders are ideal candidates.
Berlin has a strong pool of tech talent and a vibrant startup scene and Frankfurt is the financial services center of Germany. Fintech startups relocating to either would deal with Bafin, the German regulator which is a strong and very well regarded regulator. Yet, language is an issue and the German market is not that easy to crack for a non German entity. Bafin would also have to show a tad more forward looking intent a la FCA.
Paris enjoys great infrastructure and a deep pool of tech talent, but the language is also an issue and the local regulator is not well known for its international and forward looking bent.
Stockholm, Amsterdam, Zurich/Geneva are also interesting candidates.
New York might even be a candidate &8211; same language, much larger market, strong financial services hub.
I tend to think there will not be one clear winner among the above mentioned candidates. Most if not all will benefit. Although this might not be a good thing from a geopolitical point if view for Europe &8211; as London&8217;s Fintech star wanes relatively speaking compared to its global competitors and as no clear European city emerges as the clear leader &8211; there may be a silver lining. Indeed, sensing an opportunity to gain market share, Euro regulators may become more open and forward minded &8211; sandboxes, friendliness and collaboration with startups &8211; thereby creating a healthy competitive environment across the continent towards tech innovation; Euro legislators in Brussels and Strasbourg may help with that process; City Councils may jockey for position with local laws and initiatives to attract startups. Further, UK Fintech VCs may allocate more funds to continental Europe. I can think of many intended and unintended positive consequences and far from putting a damper on Fintech in Europe we may see a revitalization of Fintech across Europe.
If you are a UK based Fintech, I am curious what your current thinking is. Or maybe Brexit will not happen.
The financial services industry is another major area in which #client #information must be securely protected to prevent market manipulation. At the same time, however, compliance divisions must be aware of the identity of trading counterparties in order to mitigate potential money-laundering activity. As such, a system which balances both compliance requirements and trading anonymity is required.
Indeed, regulators may find the anonymity of #blockchain a challenge to wholly approve, as it makes it difficult for them to conduct their ‘know your customer’ (KYC) checks to prevent money laundering. Blockchain’s close association with #Bitcoin, moreover, hasn’t helped matters, especially as the #cryptocurrency has been notoriously used in criminal activity, and even funding for terrorist activity.
In November, Israeli start-up Polycoin showcased its blockchain-based compliance service, which will provide a verification system for financial transactions. This will help compliance officers to handle their anti-money laundering (AML) and KYC requirements. Polycoin’s platform scrutinizes financial transactions to try and identify who they are from, and they are then placed into a ranking system. Those transactions deemed as being suspicious – such as an AML breach – will be identified by Polycoin’s platform, which will then send an alert to compliance for further investigation.
Polycoin CEO Alfred Shaffir thinks his firm can provide a complete solution for blockchain compliance, and considers Polycoin’s innovations could have as profound an impact as digital financial crime prevention tool ‘NICE Actimize’ had in the late 1990s. As such, Shaffir is of the opinion that for any bank working with blockchain, transformation of compliance systems and procedures will be their first priority.
Indeed, #banks have already responded positively to Polycoin’s proposals, with the start-up participating in the innovation accelerator project in Israel conducted by financial services giant Citi, while also being chosen as one of 10 participants out of 170 applicants for Finnish bank Nordea’s accelerator in Helsinki. Shaffir has stated that Polycoin has received much interest from those banks that are interested in integrating blockchain into their businesses in the future.
Blockchain compliance specialist Tradle is simplifying the KYC process even further. Last August saw London’s Startupbootcamp #FinTech accelerator take place, where Tradle CEO Gene Vayngrib explained how blockchain #technology could ease the costly pain of compliance for banks. The company is creating a user-friendly smartphone interface that will allow documentation to be sent electronically, thus eliminating the need for inefficient paper-based communication. Furthermore, within each bank currently, separate KYC checks are conducted across products, divisions, locations and subsidiaries &8211; this lack of sharing elevates KYC costs unnecessarily.
Vayngrib instead proposes a blockchain-based app called Trust in Motion which stores KYC #data on a permitted ledger and which all authorized parties can access when required. He calls it the Instagram for KYC, as clients can snap a picture of their ID documents (their passport, for example) and send it directly to the bank. Once the compliance officer verifies the pictures using authentication processes, the documents are digitally signed and put onto the blockchain which, assuming the appropriate authorizations have been granted, can be co-managed by the bank and the client for updates and reverifications.
The technology could also be extended to include AML rules, whereby instead of having to prove to regulators that AML checks have been conducted by sending them mounds of data, automatic procedures can be established that perform AML duties such as the reporting of suspicious transactions. According to Vayngrib, the blockchain method wholly preserves the privacy of the data, while the regulator “could get information about suspicious transactions without banks sharing a lot of raw, private data with them”.
While regulators will like the fact that blockchain’s verification process involves a network of users providing authentication and security, bankers on the other hand will not like this lack of privacy, particularly when it comes to sensitive trading data. Furthermore, financial institutions (and other companies) have suffered numerous data breaches in recent years that have cost them dearly.
Even if several banks are operating on a shared private ledger (with only a limited number of network users), each bank will still want to keep data from every other user in the network. Banks are extremely secretive about the business they transact, as well as the clients with whom they conduct business, meaning that this information can’t be disclosed to competitors, even on a private blockchain.
The post Blockchain to Optimize and Secure Client Data Information &8211; Part 2 appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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