Facebook Launches Facebook Pay, Google to Offer Checking Accounts in Partnership with Banks, Visa Acquires Minority Stake in Nigeria's Interswitch

This week (11-15 November) was super interesting and really exciting in the world of FinTech. Facebook has launched Facebook Pay to go deeper into everyday finances, Google will offer checking accounts starting next year, Apple Card faces investigations over sexist credit limit claims, and much much more.

Without further ado, let us dive into what has happened in the financial technology sector this week.

JPMorgan Invests in Financial Research Startup Limeglass

JPMorgan has taken an undisclosed stake in another of its In-Residence startup graduates, Limeglass, which filters financial research documents for use by different industry users.

Limeglass technology automatically analyses the paragraphs in research documents in real-time, considering the underlining context and structure. It uses proprietary Natural Language Processing (NLP), AI, and machine learning to smart-tag each paragraph in context, empowering banks to personalize their research output for both internal and external audience 

Rowland Park, CEO and Co-founder of Limeglass, commented:

The volume of financial research, and the lack of innovation in how it is delivered, mean that market participants can spend hours searching through their email to find information on the trades they are considering. It is all too easy to miss vital information buried deep in large documents, wasting time and valuable research insights. Limeglass cuts through the noise, providing users with only the relevant paragraphs in their financial research with a simple search.

Limeglass recently completed JPMorgan’s In-Residence Program, which incubates emerging technology companies to develop production-ready solutions solving for critical wholesale banking problems. Other firms to have benefited from the approach, include trade matching outfit Wematch, post-trade startup AccessFintech, and data management firm Mosaic Smart Data.

Immersive Labs Raises $40M

Immersive Labs, a British cyber skills startup created by a former GHQ staffer, has raised $40 million in Series B funding through Summit Partners and existing investor Goldman Sachs.

The Immersive Labs platform uses real-time feeds of the latest attack techniques, hacker psychology and technological vulnerabilities to build cyber wargames for IT and security teams to learn from. 

The company was founded by ex-GCHQ researcher James Hadley and is chaired by former GCHQ chief Robert Hannigan. Other big corporates on the client list include BAE Systems, Sophos and Grant Thornton.

The latest funding round comes 11 months after Goldman Sachs injected $8 million into the firm, saying its technology had helped hone the skills of the people at the front line of its cyber defenses and to identify new talent throughout the organization.

The company, which has achieved 750% year-over-year growth in annual recurring revenue and hired over 100 employees, says a share of the funding will go towards growing its presence across the Atlantic, having already set up an outpost in Boston.

Apple Card Faces Investigation Over Sexist Credit Limit Claims

US regulators have opened a probe into the algorithm used to determine the credit worthiness of Apple Card applicants after a man took to Twitter to call it sexist for giving him a credit limit 20 times higher than his wife's.

On Friday, David Heinemeier Hansson, a prominent technology entrepreneur, complained to his 355,000 Twitter followers that the Apple Card is "such a fucking sexist program" because its "black box algorithm thinks I deserve 20x the credit limit she [his wife] does".

The Twitter vent, in which Hansson revealed that his wife has a better credit score than him, quickly went viral, with Apple co-founder Steve Wozniak among those chipping in to report similar issues.

By Saturday, regulators were involved with New York State Department of Financial Services superintendent Linda Lacewell tweeting that "financial services companies are responsible for ensuring the algorithms they use do not even unintentionally discriminate against protected groups. @NYDFS will take a look."

Goldman Sachs, which issues the Apple Card, says in a statement: "Our credit decisions are based on a customer's creditworthiness and not on factors like gender, race, age, sexual orientation or any other basis prohibited by law."

Meanwhile, one couple has carried out an experiment, both applying for an Apple Card, with the wife offered a higher limit and lower APR:

??All You Need to Know About Apple's New Credit Card??

Visa Acquires Minority Stake in Nigeria's Interswitch

Visa is to acquire a 'significant' minority equity stake in Nigerian payments processor Interswitch in a deal that propels the African firm into Unicorn territory.

Visa will join existing investors, Helios Investment Partners, TA Associates and IFC, as shareholders in Interswitch, alongside company management.

Founded in 2002, Interswitch now processes over 500 million transactions per month in a market that is seeing soaring growth in electronic payments. Further progress is expected to be driven by population and urbanization growth, GDP growth above the global average, increased mobile and internet penetration, as well as a supportive regulatory landscape for electronic payments and financial inclusion.

Mitchell Elegbe, Intersitch Founder and CEO commented:

Sub-Saharan Africa is the fastest growing payments market in the world, with growth driven by a young and dynamic population, rapidly evolving consumer behaviour, and an increasing desire for payment solutions that can be accepted across the continent and abroad. I am delighted that Interswitch has formed a partnership with Visa, with whom we plan to drive the next phase of transformation in the African payments landscape.

In addition to its switching and processing services, Interswitch owns Verve, the largest domestic debit card scheme in Africa with more than 19 million cards activated on its network, and the Quickteller consumer payments platform from which consumers can initiate peer-to-peer transfers, bill payments, airtime purchases, and other e-commerce transactions. The latter processes 42 million transactions monthly through direct, indirect and Paypoint channels. 

Andrew Torre, Regional President at Cemea, Visa, said:

Africa is a priority region for us, and we continually seek strategic partnerships with local players to further strengthen our leadership position and enhance the payments ecosystem across the continent. This partnership aligns with our global strategy to work with and invest in innovative partners, and we look forward to working with Interswitch to provide new consumer and merchant experiences and support the rapid growth of digital commerce across Africa.

The transaction is expected to close by Q1 2020.

Australian Neobank 86 400 Rolls Out Digital Mortgage Offering

Just nine weeks after going live to the general public, Australian neobank 86 400 has entered the mortgage business, offering entirely digital home loans through a network of brokers. 

The offering provides brokers with a digital platform embracing everything from electronic statement capture to mobile ID verification, and electronic signatures, delivering a faster time to a home loan decision with just a single piece of paperwork needed for a purchase - the contract of sale.

Eighteen months in the making, 86 4000 worked with an array of service providers to develop the platform, and has signed a partnership deal with Specialist Finance Group to strengthen its national distribution of home loans, with a select network of 2,800 brokers.

Melissa Christy, Home Loan Lead, 86 400 comments:

Our smart technology works on the brokers behalf, to make their life simpler every step of the way. We know mortgage brokers drive competition and choice for consumers, which is why we have focused on erasing their pain points so they can deliver the best value to customers. This is the first offering in recent years that offers real, tangible benefits to both brokers and homebuyers.

Led by CEO Robert Bell and chaired by Anthony Thomson, 86 400 launched in September 2019 with transaction and savings accounts.

EU Looks to Join Digital Currency Wave in Response to Libra

The European Union believes the European Central Bank should look into issuing its own cryptocurrency in the vein of the beleaguered Libra project by Facebook. 

The social media giant announced its proposition for a stablecoin in June 2019 and was met with a frosty response, with the idea of a company the size of Facebook carving out a slice of the financial world not sitting comfortably for politicians or regulators.

This came to a head in October with Mark Zuckerberg facing a grilling in front of Congress for the proposed cryptocurrency. Facebook’s prior record on data usage and the lack of clarity on regulatory oversight were the main talking points.

Concerns are also rife across the Atlantic with France and Germany blasting Libra. French finance minister, Bruno Le Maire, and German counterpart, Olaf Scholz, said that digital currencies threaten “the monetary sovereignty” of European states and that Facebook’s venture “fails to convince that those risks will be properly addressed”.

This statement coincided with the ECB expressing a deeper interest in the long-term potential of a public digital currency, which may undercut projects like Libra. However, it is likely that such plans were mooted before Libra’s announcement in June.

The ECB would not be alone in looking into a centralised digital currency. China’s plans in this area are well known, while Turkey, Tunisia and the Marshall Islands all announcing similar ventures.

“Governments have been discussing this issue well before Libra was announced,” says Kiran Raj, CEO of cryptocurrency trading platform, Bittrex Global.

“Libra, however, may have created an atmosphere where more folks are paying attention to the work that governments have been doing.”

There have been numerous bullish signs from China in the area of cryptocurrency and blockchain. Most recently, the state-run news outlet, Xinhua, published a Bitcoin explainer on its front page, referring to it as the “first successful application of blockchain”.

It is likely that the European states are keen to express their interest in a centrally-backed cryptocurrency in light of China’s plans. Rumours circulated in August that a launch could happen as soon as November 11th, though the People’s Bank of China has subsequently described this as “inaccurate speculation”. 

European digital currency - good news or bad news?

Questions will surround the EU and ECB having the wherewithal to launch a digital currency with the agility to keep up with a fast moving and evolving industry.

“It’s understandable that the US and Europe would want to follow suit,” says Iqbal Gandham, UK managing director at eToro. “But most governments and central banks will struggle to develop a sovereign cryptocurrency because they still don’t understand how the sector works.”

The technical challenges are sure to be a barrier, especially when paired with concerns over security, cybercriminals and consumer protection. Projects by governments and central banks are likely to be deliberate and cautious, and it remains to be seen how much progress has already been made by the ECB on such a proposed digital currency.

With this in mind, some commentators will suggest that the EU and ECB would be advised to embrace a currency that already exists and has at least some fledgling mainstream use.

“Bitcoin has been established for over a decade now, with a growing number of big companies happy to pay their employees in Bitcoin and retailers accepting it as payment,” Gandham says.

“You have to ask yourself, ‘why re-invent the wheel?’”

“Bitcoin is here to stay” is a popular refrain of its many enthusiasts. While its mainstream use appears to be growing and even its dreaded volatility shows signs of simmering down, its finite supply means it’s unlikely any Western governments would embrace it as a sovereign cryptocurrency. 

Governments and central banks are unlikely to endorse anything that they cannot control, which also helps explain their less than positive response to Mr. Zuckerberg’s scheme.

“Libra has certainly opened the eyes of governments to the potential concern of private companies creating their own currencies, therefore taking away control from the governments and central banks,” says Danny Scott, CEO of Bitcoin exchange, CoinCorner.

The removal of influence by governments and central banks formed the basis of appeal of cryptocurrency for many of its early adopters, so the idea of an ECB-controlled digital currency is unlikely to be met with enthusiasm.

However, as the cryptosphere has evolved, many participants have become more philosophical in this area and, recognising the importance of regulation, welcome any signs of positive intent from financial and political elites.

“You can look at this both ways - it's positive in the manner of shining a light on cryptocurrencies, but you could also argue that it's negative because these are centralised entities attempting to gain/keep control,” says Danny Scott.

“Personally, I think it's positive - it gives cryptocurrencies credibility. Watching how Libra has played out so far, I also believe that this just highlights the true power of the decentralisation aspect of Bitcoin.”

The view then may be that there is no such thing as bad press when it comes to cryptocurrency.

“The more that blockchain technology is adopted and understood by governments around the world, the better it will be for the industry as it will foster increased innovation, regulatory clarity, and consumer protection,” Kiran Raj sums up.

Facebook Pay is a New Payment System for WhatsApp, Instagram, and Facebook

Facebook is launching a new payments system today, appropriately named Facebook Pay. It will be available across Facebook, Messenger, Instagram, and WhatsApp, and it’s designed to facilitate payments across Facebook’s popular social networks and apps. You’ll be able to use Facebook Pay to send money to friends, shop for goods, or even donate to fundraisers. The service will be separate from Facebook’s new Calibra wallet and the Libra network, and it’s “built on existing financial infrastructure and partnerships,” according to the company.

Facebook is planning to start rolling out Facebook Pay on Messenger and Facebook in the US this week. It will initially be available for fundraisers, person-to-person payments, event tickets, in-game purchases, and some purchases from pages and businesses that operate on Facebook’s Marketplace. “Over time, we plan to bring Facebook Pay to more people and places, including for use across Instagram and WhatsApp,” explains Deborah Liu, Facebook’s vice president of marketplace and commerce.

Facebook Pay will be available in the settings section of the Facebook or Messenger apps, and it will support most debit and credit cards and PayPal. Facebook is using Stripe, PayPal, and others to process these payments. 

Facebook isn’t revealing exactly when this payment system will be available across all of its apps, nor when it will launch internationally. Facebook Pay comes just weeks after a large number of payment companies dropped out of Facebook’s Libra project. PayPal, which is supporting Facebook Pay, was one of the first companies to distance itself from the Libra Association, the nonprofit organization that oversees the creation of the cryptocurrency and its rollout. 

Every major US payment processor has now exited the association, and it’s left Facebook with the daunting task of convincing governments that Libra is an option, just when trust in Facebook is at an all-time low. That’s not stopping Facebook from launching a more traditional payment system today, though. 

“Facebook Pay is part of our ongoing work to make commerce more convenient, accessible and secure for people on our apps,” says Liu. “We’ll continue to develop Facebook Pay and look for ways to make it even more valuable for people on our apps.”

??Catching Up with Apple, or Why Does Anyone Need Facebook Pay???

EML Acquires Prepaid Financial Services for ￡226M

Ireland-based Prepaid Financial Services has agreed to sell 100% of its share capital to Australian payments firm EML for ￡226 million upfront plus an earn-out component worth ￡55 million.

PFS, which employs more than 100 people in Meath, provides electronic payment products, including e-currencies and virtual and physical prepaid cards in more than two dozen countries.

Its platforms support more than 26 currencies. 

Noel Moran, CEO of PFS said:

From humble beginnings over a decade ago, PFS started life at a kitchen table and now we are so happy to be listed on the Australian stock exchange as a result of this transaction. The EML product suite adds considerably to our existing capabilities and our combined global reach enables the group to service clients worldwide.

Moran and his wife own a combined 81.5% stake in the business, netting them a cool ￡228 million from the sale.

Google to Offer Checking Accounts in Partnership with Banks Starting Next Year

Google is the latest big tech company to make a move into banking and personal financial services - the company is gearing up to offer checking accounts to consumers, as first reported by The Wall Street Journal, starting as early as next year. Google is calling the project Cache, and it’ll partner with banks and credit unions to offer the checking accounts, with the banks handling all financial and compliance activities related to the accounts.

Google’s Caesar Sengupta spoke to the WSJ about the new initiative, and Sengupta made clear that Google will be seeking to put its financial institution partners much more front-and-center for its customers than other tech companies have perhaps done with their financial products. Apple works with Goldman Sachs on its Apple Card credit product, for instance, but the credit card is definitely presented primarily as an Apple product.

So why even bother getting into this game if it’s leaving a lot of the actual banking to traditional financial institutions? Well, Google obviously stands to gain a lot of valuable information and insight on customer behavior with access to their checking account, which for many is a good picture of overall day-to-day financial life. Google says it’s also intending to offer product advantages for both consumers and banks, including things like loyalty programs, on top of the basic financial services. It’s also still considering whether or not it’ll charge service fees, per Sengupta — not doing so would definitely be an advantage over most existing checking accounts available.

Google already offers Google Pay, and its Google Wallet product has hosted some features beyond simple payments tracking, including the ability to send money between individuals. Meanwhile, rivals, including Apple, have also introduced payment products, and Apple of course recently expanded into the credit market with Apple Card. Facebook also introduced its own digital payment product earlier this week, and earlier this year announced its intent to build its own digital currency called “Libra” along with partners.

The initial financial partners that Google is working with include Citigroup  and Stanford Federal Credit Union, and their motivation per the WSJ piece appears to be seeking out and attracting younger and more digital-savvy customers who are increasingly looking to handle more of their lives through online tools. Per Sengupta’s comments, they’ll also benefit from Google’s ability to work with large sets of data and turn those into value-add products, but the Google exec also said the tech company doesn’t use Google Pay data for advertising, nor does it share that data with advertisers. Still, convincing people to give Google access to this potentially sensitive area of their lives might be an uphill battle, especially given the current political and social climate around big tech.

Plum Raises Another $3M and Launches on Android

Closing a second round of funding with a $3 million investment, AI powered smart savings app Plum now boasts a total lifetime investment of $9.3 million.

With the launch of its Android app this week, Plum extended its existing digital offering across iOS and Facebook Messenger to plough toward its objective of 2 million UK customers by the end of 2020. It expects that the new app will increase new monthly users by 40%.

While Plum’s original Facebook Messenger chatbot will remain, the new app also provides a chat system so that customers who are unable or reluctant to connect through Facebook aren’t compelled to. 

Existing Plum investors European Bank for Reconstruction and Development (EBRD) and VentureFriends joined Christian Faes of LendInvest to complete this second tranche, the first round having totaled at $4.5 million in May this year.

The firm has also scooped ￡50,000 in prize money as one of 15 finalists for UK innovation agency Nesta's ￡1.5 million Open Banking startup challenge.

The Plum app uses a mixture of gamification gimmicks and a host of savings rules to help users meet their savings goals.

Two of Plum’s recently launched intelligent saving rules, the 52 Week Challenge (which the firm claims can help users save ￡1367 over a year) and the Rainy Day Rule (which puts aside money when it rains), automatically direct users’ funds into savings accounts. 

Expanding to target European nations with poor savings rates, CEO & co-founder, Victor Trokoudes says: “Until now we have been focused on the UK but the Brits are not the only people who are struggling to save and grow their money. Our sights are firmly set on Europe; in Spain, for example, a quarter of the population don’t have any savings at all. 

"We plan to help these people by investing heavily in our product to make it as useful as possible. We have hired a behavioral scientist to ensure that the new features we’re building are trail-blazing and informed by actual human behavior rather than industry assumptions.”

Georgian Neobank Space to go Global with Visa Partnership

Georgian neobank Space, an app-only offshoot of FTSE 250 TBC Bank, is to expand its international footprint through a partnership agreement with Visa.

Launched in 2018 with just three employees, Space has achieved more than 400,000 downloads and 160,000 registered customers.

Structured as an autonomous business, Space provides customers with the full range of retail banking services including loans, saving products and payment cards. The business was developed from concept to launch in just eight months with the support of software-as-a-service engine Mambu.

Having consolidated its presence in its home market, the bank is now looking to expand to other countries focusing on CISSEE (Commonwealth of Independent States and Southeastern Europe). 

Nikoloz Kurdiani, deputy CEO of TBC Bank said:

When we launched Space, we wanted to move beyond the traditional banking approach and outdated technology to create a new type of bank in Georgia that would be better at responding to modern customers’ needs. Now, we are ready to go global.

Visa says it will share knowledge, best practices and its network of technological partners with Space to help it achieve its aims. 

Yevgen Lisnyak, senior director and head of strategic partnerships, fintech & ventures (Visa, CISSEE), commented:

We are witnessing a rapid transformation of the financial banking sector, where new players are playing a significant role. Neobanks are agile, consumer-centric, flexible and innovative, offering modern consumers completely new financial solutions and digital banking experience. We are excited to be able to support FinTechs to navigate the payments landscape in the Caucasus region to achieve their business growth and international expansion ambitions

Alipay Target: Serve 10M European SMEs by 2024

Alipay has set a target of supporting 10 million small to medium sized businesses in Europe over the next 5 years with new payment innovations and partner programmes.

Expanding its existing partnership with Worldline, Alipay’s Asian e-wallet partners will now allow European merchants to accept payments at Alipay-enabled points of sale. This will mean increased footfall and spending from Asian tourists in Europe. 

Alongside this, and following news last week that visitors in China will get Alipay - and WeChat Pay - access, the Ant Financial payments platform has developed 'Mini Programs', designed to capture tourists en-route at airports around the world. 

Alipay currently works with over 120 financial institutions in Europe and will continue to partner with third party providers, with a focus on travel agencies to seize growth opportunities, the firm says. 

87% of survey respondents aged 18 to 69 in China reported that they use Alipay for their financial needs, according to Statista data. Further, Alipay serves over 1.2 billion users together with e-wallet partners across the Asia Pacific region. 

Ahead of the Alipay Partners Global Summit, Eric Jing, chairman and CEO of Ant Financial, says that the company will need to leverage the strength in its partnerships. 

“Our growth has only been possible due to the network of partners we have established, and working together, we will make it easier for anyone to do business anywhere.”

“Our innovative solutions will continue to help merchants in Europe better serve the growing numbers of tourists as well as e-commerce shoppers coming to the region from all over the world,” Jing says.

HSBC Begins Beta Tests of App-only Business Bank Kinetic

HSBC is inviting early adopters to join a beta test of its forthcoming app-only business banking offshoot Kinetic.

The bank is joining the growing wave of UK financial institutions rolling out app-based business banking services. With neobanks such as Starling, Monzo and Revolut already shaping their offerings, established institutions such as Nationwide and RBS - with its Bo banking subsidiary - are set for imminent launch.

HSBC says it has worked with 2400 businesses to build out its offering, operating in agile test and development mode on the Google Cloud Platform.

The bank is promising no monthly account charges to beta customers and a ￡100 Amazon gift voucher for early sign-ups. 

The account offers automated onboarding, in-app overdrafts, a controllable debit card and a range of personal financial management type budgeting and cashflow tools. Direct integration with the Xero accounting platform is already up and running with similar arrangements for Sage and Quickbooks in the works.

In a promotional statement on the Kinetic site, the bank states: "HSBC Kinetic will be a fully integrated service that will help businesses thrive. With a dynamic, agile and collaborative approach, we’ve designed, built, tested and refined it to create the business banking experience for you. We’re about to invite our first customers for testing and plan to open it up to everyone in 2020."

Apple Condemns German Rule Change on Mobile Payments

German lawmakers have passed new legislation that would force Apple to open up its mobile payment system to rival providers.

The rule change, passed as part of an amendment to an anti-money laundering bill, represents an attempt to rein in the power of US Big Tech firms on German soil.

Banks in Germany and neighboring Switzerland have been striving to get Apple to open up its jealously-guarded NFC interface for some time, arguing that it discriminates against home-grown mobile payment schemes.

A previous effort to get Apple to open up its infrastructure in Australia failed to pass muster following a fierce battle between the US consumer electronics giant and five of the country's biggest banks.

The German bill does not name Apple specifically, but instead requires 'operators of electronic money infrastructure' to offer access to rivals for a reasonable fee. It is slated to come into force next year.

Apple has condemned the plans as an assault on user privacy and security.

“We are surprised at how suddenly this legislation was introduced,” Apple said on Friday. “We fear that the draft law could be harmful to user friendliness, data protection and the security of financial information.”

Nestle Store in Spain Trials Facial Payments

A Nestle grocery store in Spain has implemented a face payment system developed by CaixaBank and the bank's Payment Innovation Hub alliance, comprising partner institutions Global Payments, Visa, Samsung and Arval.

The Face to Pay Nestle Market application is available for download from the Google Play and Apple's app store. Users are required to register their personal details, card and facial image before making their first purchase at a dedicated checkout lane equipped with a tablet featuring a camera and internet connection.

The system will be tested in the wild for three months in order to analyse how well the technology works in periods of high demand, such as the Christmas season. 

The Nestle implementation follows a similar project with restaurant chain Vienna at one of its outlets in Barcelona.

CaixaBank views facial recognition as a coming wave in the trend for 'invisible payments'. The bank has already rolled out the biometric authentication method for making cash withdrawals at ATMs located at branches in Barcelona and Valencia.

??Subscribe?? to my weekly newsletters (followed by more than ??30,000?? people) about FinTech and Blockchain & Crypto:

?? Weekly FinTech Digest

?? Weekly Blockchain & Crypto Digest

Also, don't forget to ??subscribe?? to my monthly series and always stay up-to-date:

?? Month in FinTech

?? Month in Blockchain & Crypto

P.S. You might enjoy my earlier pieces as well:

?? Uber Money, or All You Need to Know About Uber's New Quest into Finance

?? Here's Why WeWork Simply Couldn't Work

?? All You Need to Know About Apple's New Credit Card

?? Apple Card vs. Amazon Card - Which One is Better?

***

About: I am a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading company's expansion into Europe , I'm an active member of FinTech community and a TechFin evangelist.

If you've enjoyed this piece, don't hesitate to press like, comment what you think and share the article with others. Let's spread the knowledge together!

For more, hit the subscribe button, follow me on LinkedIn & Instagram. I'm building the best community the social world has ever seen!????