Fintechs Are More Likely To Complement Rather Than Disrupt Capital Markets
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Digital currencies to disrupt the payments industry
The US Faster #Payments Task Force received 16 proposals for faster payment solutions. Guest blogger Ginna Rodriguez takes a look at two less-traditional entries by WingCash and nanoPay.
The Faster Payments Task Force received 16 proposals for faster payment solutions using different #technology approaches to increase the speed of payment in the United States. Some of the proposed solutions work similarly to traditional payment systems, while others involve significant changes to the way we think about cash and the roles that #banks play in the payments ecosystem.
Among the less traditional entries were proposals submitted by WingCash and nanoPay, which suggest creating #digital #currencies that would enable consumers to conduct digital transactions without the need for a bank account or payment card. While both involve the introduction of digital currency, one would replace the existing fiat currency for digital payments, while the other would be a digital exchange of value tied to the existing currency.
WingCash
WingCash proposes creating a digital fiat currency. Under its proposal, the Federal Reserve would own the Faster Payments Network (FPN) and issue Digital Fed Notes, similarly to its issuance of cash notes today. Each Digital Fed Note would be a unique and unchangeable URL with a single monetary value, and it would include the issuer’s URL, the current holder’s URL, a currency code and unique identifier (like a serial number). Payments would be conducted by changing the owner of the URL.
The Faster Payments Network could be used for both in-person payments and remote payments (for example, using “digital cash” to pay for online purchases). The exchange of digital notes would occur without transfer fees, with funds immediately available, similarly to how physical notes are exchanged today.
As with cash notes, Digital Fed Notes would not require a bank account or credit card. One of the advantages WingCash highlights in its proposal is that a digital currency solution could increase access to the electronic payments system, opening the door for users who may have been excluded from the traditional banking system. However, potential barriers to implementation include regulatory changes that would allow the Federal Reserve to issue a digital fiat currency.
nanoPay
nanoPay also proposes a digital currency, but the system of value would operate outside of the Federal Reserve. nanoPay proposes a good-funds, collateralized bearer-asset transfer system in which users would exchange fiat currency (collateral) for nanoPay’s MintChip (asset). The fiat currency would be stored in a pooled account, while the equivalent MintChip amount would be stored in a Secured Asset Store (SAS). Transactions completed in the MintChip ecosystem would be a transfer of value between two SASs using Value Transfer Messages.
In the MintChip model, an Asset Manager would protect the pooled funds of fiat currency and invest the funds in instruments where the principle is guaranteed. Depository institutions would act as brokers that pre-purchase MintChip “coins” and use APIs to provide end users access to the MintChip platform. Regulated non-bank providers and larger retailers could also participate as Brokers.
nanoPay’s proposal does not depend on the Federal Reserve’s willingness to create new monetary policy or serve as the originator of digital currency. As a non-fiat currency, however, nanoPay could face challenges of perceived trust and security, particularly regarding the management of the pooled funds that serve as collateral for the digital currency.
As highlighted in the two proposals, digital currency solutions could increase the speed of payments while decreasing payments system costs and expanding financial inclusion. However, WingCash and nanoPay acknowledge that their proposals could pose a threat to traditional payment card revenue streams. Despite these challenges, central banks in other countries like China, Canada and the Netherlands are exploring digital currencies, and the US may follow suit.
Summary of faster payment solutions proposals submitted by WingCash and nanoPay
Source: Accenture compilation of proposals submitted to the Faster Payments Task Force.
Whether replacing fiat currencies, creating a digital exchange tied to existing currency or another idea yet unknown, payments solutions built on the faster, more efficient digital form will transform payments and banking. #Industry players need to prepare for the pending change and their role in it. To discover more about how other digital currency forms will #disrupt the industry, read our report on The (R)evolution of Money.
Ginna Rodriguez, Manager
The post Digital currencies to disrupt the payments industry appeared first on Accenture Banking Blog.
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Banks Must Disrupt Themselves, Not Consumers, Citi Fintech CEO Says
AUSTIN — Better customer service comes from disruption within, not from trying to change consumer behavior, according to Yolande Piazza, CEO of #Citi #Fintech. “I think in fintech we talk a lot about disruption, but let’s be honest—if someone came up to you and said, ‘I want to #disrupt your life,’—I don’t think that’s what […]
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Activehours Raises $22 Million to Disrupt Payday Lenders, Nip Consumer Fees
#Activehours has raised $ 22 #million in debt and equity financing, bulking up its war chest to #disrupt #payday #lenders and help consumers avoid finance charges on credit cards and overdraft #fees on bank withdrawals. The Series A round was led by Matrix Partners with participation from March Capital Partners as wellRead More
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Activehours Raises $22 Million to Disrupt Payday Lenders, Nip Consumer Fees
#Activehours has raised $ 22 #million in debt and equity financing, bulking up its war chest to #disrupt #payday #lenders and help consumers avoid finance charges on credit cards and overdraft #fees on bank withdrawals. The Series A round was led by Matrix Partners with participation from March Capital Partners as wellRead More
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Roboadvisors Can Disrupt Investing with a Human Touch
By now, traditional investors are familiar with the threat coming from #roboadvisors. The fees and barriers to entry are lower, and millennials can do it all from their smartphones. But roboadvisors face considerable challenges of their own. Among other issues, standalone roboadvisors have steep customer acquisition costs. “Standalone roboadvisors doRead More
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87% of Financial Market Participants Say Blockchain Will Disrupt The Industry
A survey conducted by Deutsche Bank and FT Remark, the research arm of the #Financial Times, found that a staggering majority (87%) of financial #market #participants are confident that #blockchain #technology will #disrupt the settlement model for securities.
62% believe that the introduction of distributed ledger technology will produce substantial savings ranging from 11% to 25%. Almost half say that it will help the #industry cope with the risk of system failure and market disruption.
“Blockchain may completely change the settlement model for securities processing, creating a utility around securities processing and cash management,” commented David Rhydderch, Deutsche Bank’s head of alternative fund services.
&8220;The entire back end would become a far more efficient, far less costly, more accurate and less risk-prone function. This has an obvious knock-on effect on the cost of service provision. In the administration space, blockchain may not be quite the disruptor. It’s more in the functional utility elements within the securities processing settlement chain. In that context, it may be totally revolutionary.&8221;
Respondents believe that blockchain technology will be widely used within the next three to six years (75%).
The industry is still struggling to figure out how to implement the technology in the current web of legacy infrastructure, the report says, noting that market participants are trying to determine how it can be deployed in a way that works, given ongoing data protection and security concerns.
The document a previous report released earlier this year by Euroclear and Oliver Wyman which praised the merits of blockchain technology in capital markets and highlighted the potential of the technology to provide a new approach to data management and be a solution to many of the efficiencies afflicting capital markets.
The Deutsche Bank report, titled &8220;Powering the flow of global capital: Capital markets investor insights,&8221; highlights the key findings of a survey of 200 market participants to examine what is driving today&8217;s capital market.The research found that regulation, new technologies and emerging markets are key issues impacting strategic thinking. These three areas have caused the vast majority of respondents to partially or completely reshape their operating models, buying behavior and capital/fund allocations over the past two years.
&8220;These three themes are fundamentally redefining the securities services landscape and the knock-on effects will impact the business models of many capital markets participants,&8221; according to Satvinder Singh, head of global securities services and head of GTB EMEA ex Germany.
Notably, a majority of market participants are convinced of a revival of emerging markets. 54% believe emerging markets will deliver growth rates close to those seen during the 2001-2011 boom, noting that India and South Asia will likely be the most attractive region (88%).
China, Indonesia, Russia and Turkey in particular are ranked highest for their capital market infrastructure. Respondents said that China and India have made the greatest infrastructure improvements during the last five years.
That being said, investing in emerging markets remains risky and some investors are hesitant.
Respondents ranked regulatory hurdles as their greatest or second greatest challenge (62%) when carrying out securities transactions in emerging markets, followed by political interference (53%) and instability as a challenge, and unreliable capital markets infrastructure (40%).
Featured image: Stock market chart by bluebay via Shutterstock.com.
The post 87% of Financial Market Participants Say Blockchain Will Disrupt The Industry appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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Upcoming Swiss Hackathon Seeks To Use Blockchain To Disrupt The Insurance Industry
An #upcoming #blockchain #hackathon organized by EPAM in collaboration with #Swiss Finance + #Technology Association and Validity Labs is looking for innovative solutions to #disrupt the #insurance #industry.
Image credit: Golden Bitcoins by Julia Tsokur via Shutterstock.com
The EPAM 2016 Blockchain Hackathon, taking place on November 18 and 19, 2016 in Zurich, is seeking dynamic teams to take on the challenges set by the three largest insurance companies in Switzerland, namely SwissLife, Zurich and SwissRe.
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Apply for Blockhain Insurance Zurich Hackathon
You still can apply for it or join as a visitor, hurry up!
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The teams will be judged by representatives from these three companies on the following criteria: originality and innovation, usefulness and practicality, business potential and commercialization to go to market, design and interface, and technical implementation.
Industry experts will assist the teams during the hackathon to provide insights and answer questions about specific industry characteristics.
Insurance and Blockchain?
Like #banks, insurers have been exploring the merits of blockchain technology to disrupt their industry and streamline payments of premium and claims.
According to a Deloitte paper, blockchain technology could support the significant digital transformation underway in the industry because much of this transformation relies on data.
“Smart contracts powered by a blockchain could provide customers and insurers with the means to manage claims in a transparent, responsive and irrefutable manner,” the report states.
&8220;Contracts and claims could be recorded onto a blockchain and validated by the network, ensuring online valid claims are paid. […] Smart contracts would also enforce the claims – for instance, triggering payments automatically when certain conditions are met (and validated).&8221;
Blockchain technology could allow the industry as a whole to streamline its processing and offer a better user experience for customers. Storing claims and customer information on a blockchain would also cut down fraudulent activity.
Early blockchain developments have tended to focus on optimizing current ways of working within organizations. For instance, London-based #bitcoin startup Everledger uses the blockchain to create a permanent ledger for diamond certification and related transaction history. The ledger lets insurers and potential buyers check the history of any individual stone, helping insurers prevent, detect and counter fraud.
Blockchain Industry Challenges
Despite the enormous potential, the biggest challenges to industry-wide implementation are facilitating collaboration between market participants and technology leaders, succeeding in the operational transformation, and shaping a stimulating regulatory environment, according to McKinsey and Company.
EPAM Systems is a leading global product development and platform engineering services company and one of Forbes’ 25 Fastest Growing Public Tech Companies.
Validity Labs, a startup created by several blockchain technology experts in Zurich, aims at bridging the shortage of educated blockchain engineers, entrepreneurs and executives. The company organizes various educational events and workshops in Switzerland.
Swiss FinteCH is an independent association aimed at promoting and supporting Switzerland&8217;s #fintech industry. It connects stakeholders, creates research papers, advocates for solutions and promotes Switzerland as a global fintech hub.
The post Upcoming Swiss Hackathon Seeks To Use Blockchain To Disrupt The Insurance Industry appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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Why Blockchain Won’t Disrupt Banks First
Despite the promise that #blockchain holds for banking, the sector will likely not be #first to put the burgeoning #technology into real-world action.
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Exchange Group: EU Blockchain Rules Shouldn’t Disrupt Financial Order
A major #exchange industry trade #group has joined an EU-level debate on #blockchain regulation.
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