Southeast Asia financial comparison startup Jirnexu lands $3M to expand to digital banking services
Malaysia-based #fintech #startup Saving Plus has closed a $ 3 million Series A round and renamed itself as #Jirnexu. Read More
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Report: US Postal Service Could Create its Own Digital Currency
The US #Postal #Service has released a new #report outlining how it #could adopt #blockchain #technology within its operations.
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FCA, IOSCO and FINRA to regulate FinTech and Blockchain
In the aftermath of the financial crisis 2007-09, financial regulators across the world implemented tighter controls on the majority of sectors within the financial services industry. One of the reasons for their activism may have been the lot criticism regulators have received for often being ineffective when it mattered most.
In any case, the onus lying on regulatory bodies to ensure fairness within financial markets is now greater than ever. And one of the lessons learnt over the last eight years or so, regulators are today more alert to the far-reaching implications of the #FinTech industry.
The booming industry
Investment in the booming sector tripled to over $ 12bn last year and is expected to hit $ 46bn by 2020. Given such explosive growth, the immediate challenge for regulators is how to keep up with the industry’s development and ensure consumer protection is maintained, particularly when many FinTech sectors, such as peer-to-peer lending, operate outside of the traditional regulatory space for financial services. Indeed, this is the view taken by David Wright, secretary general of the International Organization of Securities Commissions (#IOSCO), the global standards setter for the securities sector which brings together the world’s securities regulators.
Wright warned in October that regulators across the world need to quickly become au fait with the FinTech revolution, otherwise it will be too difficult to implement reform on areas such as clearing, settlement and collateral management further down the road, once the floodgates have opened. While praising FinTech’s ability to provide credit to small companies, Wright has urged the need to address the possible risks, adding that the IOSCO needs “to get up to speed very, very quickly”.
The UK’s Financial Conduct Authority (FCA), a non-governmental regulatory body whose mission is to ensure the successful operation of financial markets, has been one of the most pro-active authorities in responding to FinTech growth. Christopher Woolard, the FCA’s director of strategy and competition, recently outlined three major challenges that regulatory bodies need to consider when facing FinTech:
- What do we think about the emergence of ‘#robo-advice’?
- What are the benefits and risks of #blockchain?
- Can #technology help solve some of the problems we face around identifying customers and combatting financial crime in a more frictionless way?
It has also been just over one year since the FCA launched Project Innovate, an initiative designed to effectively engage with FinTech innovators, and as part of the project, the FCA has also created Innovation Hub which more specifically provides support for innovation in financial services. A team of FCA staff guides FinTech start-ups through the process of regulatory authorisation and then provides support for one year after receiving approval. The FCA will also explore how regulation can continue to be adapted to encourage growth without sacrificing consumer protection.
Regulatory Sandbox
Most recently, the FCA has emerged with the idea of a ‘regulatory sandbox’, effectively a controlled ‘playground’ environment where UK start-ups who are currently unauthorised to conduct business within the financial services industry can test their new products without having to apply for a full license. The FCA’s chief executive Martin Wheatley has perhaps best described the UK regulatory approach towards FinTech: “Innovation can benefit consumers; whether by reducing hassle, reducing costs, or improving products. So we want to ensure that regulation unlocks these benefits, rather than blocks them”.
Global regulators also appear to be creating specific institutional initiatives, much like the FCA, to ensure they can work alongside FinTech companies as closely as possible. For example, Malaysia’s Securities Commission launched the Alliance of Fintech Community in September, a project in which the regulator intends to promote the country’s network of FinTech stakeholders, in order to drive growth and innovation. It also seeks to provide regulators with more clarity about the way in which to promote financial innovation responsibly.
The commission’s chairman Ranjit Ajit Singh believes that the regulator “could play a facilitator’s role in a number of ways – be it by assisting businesses in navigating the regulatory environment, sponsoring accelerator programmes or strengthening the venture capital and private equity ecosystem to provide much-needed financing for FinTech entrepreneurs”.
What is Asia regulating?
Asian regulators, similarly, are keen to support the development of FinTech during this crucial growth phase. At the World Capital Markets Symposium in September, which brought together regulators from across the region, many policymakers emphasized that they must strike the right balance between promoting innovation and protecting market participants. Liu Jun, head of the Research Centre at the China Securities Regulatory Commission, believes that the Chinese government is adopting “a so-called laid-back approach in dealing with FinTech companies…allowing market forces to do their decision making process”, and adding that “the authorities watch closely but don’t want to intervene the consumer-facing industry”.
However, the reality is that China’s regulatory authorities have been far from reticent when proposing potential market intermediation. Indeed, the Chinese central bank is currently mulling over whether to impose a cap on online transactions as a way to curb the growth of China’s exploding mobile payments and third-party payments market (which includes notable FinTech firms such as Alibaba).
For Australian regulators, trust and confidence for the investing public appears to be top of their priority list. John Price, commissioner of the Australian Securities and Investments Commission (ASIC), recently asserted that without the trust and confidence promoted by regulatory bodies, ‘investors, consumers and participants in the financial services sector, including FinTech start-ups, are less likely to participate in it”.
Indeed, in much of its literature to date, the ASIC has taken a more risk-averse approach to FinTech innovation than a number of its peers in that it appears to determine potential risks to investors first before proceeding with discussions about collaboration.
On balance, the UK’s FCA appears to be leading the global regulatory discussion on FinTech – undoubtedly due to its status as a hub for both finance and technology, and regardless of the fact that the overwhelming amount of FinTech investment still originates from the US. This means that the position of US regulators on FinTech still carries the most weight from a global perspective. The director of the US Consumer Financial Protection Bureau Richard Cordray has emphasised the need for the legal and regulatory framework to keep up effectively with FinTech “so that all consumers can be well served and remain protected, whether they are opening their wallet or scanning the screen on their smartphone”.
Thomas Curry, the US Comptroller of the Currency (the top regulator for national #banks) has also recommended that policymakers remain alert, noting that some FinTech innovations “signify real points of departures that will require a significant amount of scrutiny to ensure that they can be offered safely and soundly, consistent with applicable laws and regulations, and in a way that ensures adequate consumer protections&8221;.
Conclusion
The cost of regulation and compliance is often one of the biggest hurdles for new FinTech companies to overcome. Therefore, it makes sense that while the industry is in a significant growth phase, the regulatory burden is not so heavy as to unnecessarily choke off innovation. Furthermore, the role the FinTech firms will play in the finance industry, especially in relation to traditional financial institutions, has not yet been ascertained – will they largely be collaborative friends to big banking, or competitive foes? It is probable they will be both; nonetheless, FinTech’s growth has triggered alarm among banks who have voiced concerns that the regulatory playing field is becoming increasingly uneven. Addressing the disparities between the two industries on an international level is likely to be a key area of focus for regulators going forward.
The post FCA, IOSCO and FINRA to regulate FinTech and Blockchain appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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Shifting gears: Insurers adjust for connected-car ecosystems
Insurance companies seek to deliver enhanced products and services by investing in new technologies and partnering with others in the smart-car environment.
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Dubai Government to Sponsor Upcoming Digital Currency Conference
#Dubai is set to play host to a #conference on #digital currencies months after a #blockchain effort in the country was first unveiled.
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Israel Innovation: Fintech and Cyber Conference and Showcase in Zurich
#Israel #innovation is organizing an event in Switzerland later this month to connect senior representatives of the Swiss financial industry with the Israeli #fintech and #cyber scene.
The Israel Innovation Effect: Fintech and Cyber showcase 2016 (IIE 2016), occurring on May 30 at the UBS Grünenhof #Conference Center in #Zurich, intends to foster new business opportunities and #technology partnerships between players from both country.Organized by the Economic & Trade Department of the Embassy of Israel in Switzerland, in partnership with UBS and Accenture, the event will provide Swiss financial professionals and bankers with the opportunity to have 1:1 meetings with Israeli startups.
15 Israeli innovative companies to present in Zurich
15 companies, that are tackling areas such as #blockchain technology, big data, portfolio management and optimization, will be presenting at the event.
ACID Technologies, a cyber-security company that provides solutions to detect potential threats and risks;
Argoscope Detelix Software Technologies Ltd. develops and provides fraud and embezzlement protection to organizations;
AU10TIX, a digital identification and verification company that provides solutions for ID document authentication and client onboarding for both branch and online platforms;
BondIT, a provider of comprehensive analytics solutions for the fixed-income market;
Checkmarx, a comprehensive Application Security platform used for finding & fixing application layer vulnerabilities during software development as well as blocking attacks in real time.
Finnovest uses mobile devices to enable advisors to generate personalized and suitable investment recommendations to numerous clients simultaneously;
Hermetic helps end users and services providers protect sensitive assets, resist account takeover, and improve user experience;
Kensee, a company that provides a management information system for commercial real estate;
OffLa patented security process is based on a smart risk calculation algorithm, operates inside the wallet during the transaction;
PayKey, a blockchain technology company, enables payments within any social network, including Facebook Messenger, WhatsApp and Twitter;
SecBi, a tool for security analysts to reduce breach response time and optimize mitigation;
Votiro, a cyber-security company that develops and licenses software solutions for organizations;
Windward, a maritime data and analytics company, bringing unprecedented visibility to the maritime domain;
Wisesec offers a technology to set an abundance of solutions, including integration for cardless ATMs;
YCD Multimedia provides a digital signage playback, distribution and content management platform for informational, educational and commercial messaging
15 fintech and cyber companies presenting at IIE 2016
Areas of focus
Essentially, IIE 2016 will be focused on five particular topics:
- Alternative views on investment management;
- Disintermediation in financial services and industry (peer-to-peer, blockchain use cases, etc);
- Security and authentication technologies including federation with partners;
- Identity protection, controlled sharing/privacy, avatars; and
- Service meshes.
The event will be split into two parts: the morning will be dedicated to keynote presentations on topics such as the Swiss fintech landscape and the blockchain industry; and the afternoon session will be dedicated to 1:1 meetings of 20 minutes each.
Speakers will include;
- Stefan Arn, global head of technology of UBS Wealth Management and UBS Switzerland and Group IT
- George Schmidt, Managing Director of Accenture
- Jonathan S. Rouach, an Israeli blockchain expert
Please note that registration to the event is mandatory and all delegates are invited to schedule the 1:1 meetings in their registration form.
The event is also on Twitter: Follow @IsraelInEffect and the hashtag IIE2016
The post Israel Innovation: Fintech and Cyber Conference and Showcase in Zurich appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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Fintech in action on Western stock exchanges
Source: The money project (size accounts for all asset classes, not only stocks) Bats, speed bumps, Transatlantic M&A bids; are part of the tangled web of #exchanges as we speak. I’ll focus only on equities on exchanges, even though they aren&8217;t the largest asset class (bonds and derivatives – futures, options; are huge) but for the…Read more #Fintech in #action on #Western #stock&160;exchanges
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FinTech is not about disruption. It’s renovation.
2016 is the year of big changes in #FinTech.
While VC investments have continued to rise in the first quarter of the year,many question marks are arising on real capacity of FinTech startup to build up enough critical mass and reach a long-term sustainable and scalable business model (see for instance the growing critics to pure web #robo advisors and recent troubles of Lending Club).
Is it FinTech wave in trouble? Is it it’s disruption promise already dead?
My own answer is that those who really thought that FinTech startup could disrupt and replace #banks got it all wrong. Yet, at the same time those from banks who are thinking that resistance will prevail got it all wrong too.
Banking is going under a major transformation since the arrival of internet. Digital banking, born at the end of last century in many geographies, is a reality and it is here to prove that banks can transform and embrace the digital world providing customers with the expected UX and solutions. There are so many examples, of digital first banks especially in Europe, Poland and Turkey leading the way, where they already enjoy millions of customers. Yet, digital banking is transforming itself and it is getting in to its second phase, converging with FinTech recent developments.
From one side FinTech startups are starting to collaborate, consolidate, inevitably moving to a more sustainable marketplace banking model (partnering with banks and/or among themselves).
On the other end the rise of open API banking and a pro-market regulation (see PSD2) is going to open up the doors also for banks, and especially for digital banks, to a broader, fruitful collaboration also with FinTech companies. Digital banks are the best positioned to get the most of the second digital phase. New FinTech aggregators will arise too.
In a nutshell, FinTech development will prove to be the new lifeblood to digital banking, a second, stronger, broader, faster, stage where collaborations and partnerships will strongly increase (instead of disruption). M&A as well will see a strong hype (albeit not at the exit prices dreamed by investing VC just one year ago) not just between banks (needed for efficiency and regulatory constraints) but also between FinTech companies and from Banks buying startups.
This is not disruption, it is banking renovation on the go, thru the very strong impact of the #technology and the customer oriented design brought by FinTech, that will shape up the financial services of the new century, and will transform banking. You may call it FinTech banking or Markeplace banking.
FinTech disruption is dead. Long live FinTech.
[linkedinbadge URL=”https://www.linkedin.com/in/robertoferrari” connections=”off” mode=”icon” liname=”Roberto Ferrari”] is General Manager CheBanca!, Chairman of the board YellowFunds Sicav. This article was originally published on linkedin.
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CFA Swiss Fintech Survey: Swiss Bankers Convinced That Fintech Will Dramatically Impact Financial Industry
#Swiss #bankers are the most #convinced that #fintech will #impact the entire #financial services #industry, naming #robo-advisory and #blockchain #technology as the most impactful innovations, according to a new #survey by CFA Institute.
Released earlier this month, CFA Institute’s ‘Fintech Survey Report 2016&8217; measures the opinions of the organization&8217;s investment professional members to better understand their sentiment towards the emerging fintech scene.According to Christian Dreyer, CFA and CEO of CFA Society Switzerland, the survey results highlight “the fascination and respect that financial experts have for financial technologies.”
&8220;Swiss counterparts are particularly convinced by all things related [to financial technologies],&8221; Dreyer said in a media release.
Findings suggest that among the current innovations in the financial services industry, robo-advisors are expected to have the biggest impact in both short and long-term.
Asset management (55%), banking (16%), and securities (12%) are the three sectors that will be the most affected by automated financial advice tools.
70% of participants consider that mass affluent investors will be positively affected by robo-advisors in the form of reduced costs, improved access to advice, and improved product choices. In Switzerland, this figure rises to 80% of respondents.
That said, respondents also named the biggest risks affiliated with the increase in automated financial advices as technical flaws in the algorithms (46%), mis-selling of financial advice (30%) and privacy and data protection concerns (12%).
While robo-advisors are considered to be the technology that will have the greatest impact on the industry both 1 year and 5 years from now, blockchain technology is considered as the second technology with the greatest potential future opportunity (and risk) in the medium- to long-term.
Clearing and settlement, alternative currencies, and commercial banking are the top three areas that are thought to be under greatest impact of blockchain technology.
Crowdfunding and lending marketplaces on the other hand should have short-term impacts on the financial services industry.
38% of respondents believe that existing crowdfunding and/or peer-to-peer lending marketplaces do not have the right balance between ease of access and investor protection. 53% of them are not sure if such balance is possible.
As a leader in both financial services and innovation, Switzerland has the potential to become a frontrunner in fintech. That said, not all are convinced that the country is putting enough effort to fulfill its potential.
In a report released in February, EY argued that Switzerland is lacking governmental support when compared with the likes of London or Singapore.
In March, the Swiss Financial Market Supervisory Authority (FINMA) issued new rulings aimed at reducing obstacles for fintech startups and allowing the industry to flourish.
The circular allows financial intermediaries to onboard clients by means of online and video transmission and is targeted at digital businesses in particular.
Read CFA Institute&8217;s &8216;Fintech Survey Report 2016&8217;: https://www.cfainstitute.org/Survey/fintech_survey.PDF
Featured image: Graphs and charts with stacks of coins, by S.Dashkevych, via Shutterstock.com.
The post CFA Swiss Fintech Survey: Swiss Bankers Convinced That Fintech Will Dramatically Impact Financial Industry appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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How will marketplace lending become a mainstream investment asset class?
A friend who recently started his own business couldn’t obtain a mortgage from three #banks. I suggested he try #marketplace #lending platforms like SoFi to take advantage of the ongoing innovation in #fintech. However, SoFi turned him down, as well, because it abides by the same underwriting rules as traditional banks. Like the banks, SoFi sells their mortgage loans to Fannie Mae. Read More
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