??? Banking & boundaries

Recent scandals surrounding "debanking" practices have ignited controversies around the intersection of politics and finance.?

In today’s crunch, I take a look at the background, current debates, and uncertain future surrounding banks closing customer accounts based on political affiliations

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Now let’s dive in.

?? Banking & boundaries

The Background

• Debanking refers to the practice of banks denying accounts or closing existing accounts of certain customers.

• This can happen for reasons such as compliance with anti-money laundering regulations or based on perceived risks of financial crimes or reputational concerns.

• The issue entered the spotlight when Nigel Farage, a British politician, accused Coutts bank of closing his account owing to his Brexit stance and released documents alleging political bias.

• The resulting scandal led to resignations of top executives at Coutts and its parent bank NatWest.

• Banks are required by AML regulations to screen for "politically exposed persons" who may pose corruption risks but critics argue they now close accounts too fast over lawful political views.

Today’s State of Affairs

• Farage's case seems far from isolated. Government figures show UK banks have been closing thousands of accounts annually, with the rate skyrocketing to almost 1,000 a day in 2021 and 2022.

• Other banks like Monzo have faced similar accusations around discriminatory account closures of political figures. And many everyday citizens, not just public personalities, are impacted.

• In light of the public outcry, the UK government is now reviewing AML policies that may have given banks too much leeway to terminate accounts based on political biases rather than concrete risks.

What’s Next?

• While Coutts is reconsidering its decision on Farage's account, he has launched a campaign called AccountClosed.org to gather data on improper debanking practices affecting both retail and business customers.?

• Farage aims to pressure regulators and policymakers into enacting reforms. Banks, meanwhile, need to ensure their account screening processes target genuine financial crimes, not lawful political affiliations.?

• If banks are perceived as unfairly policing opinions rather than illegal activity, it could deal a devastating blow to public trust.

• The debanking controversy already compounds existing resentment over banks profiting during the economic crisis while customers suffer.

Do you trust banks to fairly enforce regulations? Why or why not?

?? Fintech & Payments

? Tabby is entering the Saudi fintech scene after receiving approval from SAMA.

? In under four months since its debut, Apple Card's high-yield savings account has gotten over $10 billion in user deposits.

? The Bank of England has once again increased its interest rates, now standing at 5.25%., marking the fourteenth consecutive hike.

? Digital bank Monzo has joined the "debanking" discussion by closing the business account of Gina Miller's political party, saying that it doesn't permit political parties to have Monzo Business accounts.

? Expense platform Jeeves surpassed $40 million in annualized revenue, expanding with prepaid cards and cross-border payments after introducing corporate credit cards in 2021.

? flynas and Tabby are partnering to offer travelers convenient payment options, where flynas customers can split their trip costs into four interest-free installments.

? Hong Kong and Saudi Arabia signed an MoU to collaborate on tokenisation and payments research.

? Middle East's fintech sector is experiencing rapid growth, with startups securing $2 billion in funding across 140-160 deals from 2021 to 2023, annd UAE contributing 40% to 43%.

?? Open Banking & Open Finance

? Klarna is rebranding “Klarna Kosma,” its open banking sub-brand, in less than 18 months after its launch, naming it Klarna Open Banking & Bank Transfer and keeping “Kosma” for the core B2B banking infrastucture service.

? Open banking lender Koyo Loans is shutting down due to difficulties in raising funds.

?? The World of Web3

? India's web3 tech company, Beyond Imagination Technologies, is expanding into the Middle East through a partnership with Saudi Arabian software firm Aba’ad Alkhayal.

? Enjinstarter MENA is driving Web3's UAE growth with 1,800+ organizations, supported by initiatives like Abu Dhabi's $2 billion startup fund and national digital currency strategy.

?? Crypto & Defi

? Oman is moving closer to introducing its own crypto regulations as the Capital Market Authority of Oman invites public input on the proposed framework for digital assets like cryptocurrencies and virtual assets.

? Japanese finance firm Nomura announced that it’s been granted authorisation to offer cryptocurrency services in UAE through its subsidiary, Laser Digital.

?? The Future is AI

? JP Morgan and Tifin are partnering to launch a studio that creates and develops AI-powered fintech startups.

?? The State of Investment

? Shara Senderoff and Aaron McDonald, the co-founders of Futureverse, launched a $50 million venture fund.

? London-based fintech company Pockit raised $10 million to make financial services more accessible for low-income and underserved communities.

? HeavyFinance, a climate fintech investment marketplace, funded over €40 million in agricultural loans for over 1,000 projects.

? Orbital, a london-based blockchain startup that offers traditional fiat payment, global FX solutions, and crypto payment services, raised $6.4 million in funding.

? Investment in the UK fintech sector has dropped by 57% in the first six months of the year.

? Dutch neobank bunq raised €44.5 million in growth capital, valuing the company at €1.65 billion and marking its total funding for the year at €100 million.

? Bloom Money, a UK-based fintech company, raised ￡1 million in funding to transform and digitise the traditional financial management practices for ethnic communities globally.

? UDENZ, a healthtech company based in the UAE, has raised $5 million in Series A funding.

?? In Other News…

? Cage fight: Elon Musk announced that his upcoming cage fight with Mark Zuckerberg will be livestreamed on X.

? Retail: By 2026, Millennials and Gen Zs are projected to make up 75% of luxury goods shoppers, making a massive shift in the luxury market's dynamics.

?? Report of the Week

Investing in DeFi: This Cointelegraph report looks at the shifts happening in DeFi. It covers DeFi's progress since 2021, moving beyond just cryptocurrencies like Bitcoin. It also highlights the increased adoption of DeFi in regions like Southeast Asia and South America. The report also considers DeFi's potential relevance in a changing banking sector, and provides practical advice on DeFi investment strategies. Read the full report here.

?? The Podcast for Fintech Enthusiasts

In this episode of Couchonomics, I have an engaging conversation with Khalifa AlShamsi, CEO at e& life. We talk about digital disruption, fintech, and the rise of super apps. Khalifa, with over 29 years of experience in telecom, media, and ICT, shares e& life's strategic moves in B2B and consumer digital spaces, focusing on high-value services that go beyond traditional telecom offerings to reshape digital services across various markets. Listen to the full episode above.

?? This Week’s Payments News

This week?we have news from?Zalando,?Microsoft,?Xbox Game Studios Publishing,?Venmo,?PayPal,?Aevi,?Shopify,?Mastercard,?Visa,?Weave,?Fiserv,?Amazon,?Billtrust,?Flutterwave, and more.

??? And that’s all for today…

If you enjoyed today's edition of the Couchonomics Crunch, be sure to share it with all the other fintech enthusiasts you know.?

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And thank you to our sponsors Adyen, ToYou, Visa, Geidea, and M2P Fintech for making today's edition possible.