Financial Innovation Roundup e17: week of June 25 – July 1, 2023
Hello everyone,
Very interesting times in the ESG space.?In my weekly digging, I noticed a lot more activity around ESG – mostly because Larry Fink made headlines, but also because regulators in Canada and abroad chimed in on some of what they were seeing with ESG disclosure.
Noting that the last product I launched at Tangerine was a family of portfolios that considered ESG factors. I decided to look back at the performance of those portfolios since they launched on Jan 6, 2022, relative to their sister Global ETF Portfolio, out of curiosity.
For background purposes: we took our flagship Global ETF Portfolios –which we launched about a year before - and created a sister fund which removed companies that violated certain ‘ESG’ factors, based on our customer input.
We called them the Socially Responsible Global Portfolios. Not only was this name more appropriate at the time, it has also been more fortunate, given the politicization of the term ESG that has followed in some regions.?The source information for the background and what follows is available here : ?
Over the past year: all 4 Socially Responsible Portfolios have performed better than their sister fund.
This isn’t meant to debate which will perform better long term, nor is it meant to be taken as financial advice. Behaviourally, it’s more important to pick something you can stick with for the long haul.
I’m just noting an interesting contrast between the performance over the past year and the negative headlines we are seeing about ESG over that same time.
There are still some barriers for consumers to buy into the promise of ESG.
The Socially Responsible Portfolios have gathered just under $100M since their launch, which pales in comparison to the $1.2B accumulated in the sister Global ETF Portfolios since Nov 2020.
As you will see if you check out the ESG segment below, everything is not rosy in ESG land – but it’s not as bad as you think either.
Here we go with 22 financial services innovation stories from the past week (June 25 – July 1, 2023).
INDUSTRY VIEWS
1.????Let’s take a look at funding from the past week, from FinTech Global
This week’s FinTech deals predominantly saw mid-to-late stage companies securing funds.
This week saw a total of 28 deals closed, raising $1.39m collectively. The top 10 deals of the week, which came from a mixed bag of sectors, accounted for?$544m of this.
The biggest deal of the week came from data security firm Cyera, which raises ￡100m in Series B funding in a round led by Accel. The firm has positioned itself at the forefront data security in the age of generative AI technologies.
Congratulations to everyone getting funded last week. You can catch more on all the deals here .
2.???? Oliver Wyman with: Four Visions For The Future Of Digital Money
Very interesting read here on the future of money from Oliver Wyman. Here’s a brief summary, but I highly recommend you read the whole article (22 pages) linked above.
Money is about to undergo fundamental changes in the way it is created and used, potentially unleashing a dramatic reordering of the financial system. While volatility has shaken cryptocurrency markets over the past year and caused a string of failures, many parts of the digital asset ecosystem continue to advance largely unaffected by the turmoil, as we explored in an?earlier paper. These include the areas with the greatest long-term potential to transform finance, including the tokenization of financial assets and deposits and the development of central bank digital currencies (CBDCs) by most of the world’s largest economies. The rise of digital assets and distributed ledger technology (DLT) continues to have the potential to upend the competitive landscape, creating new, efficient, nimble competitors, but also offering incumbents a potential new lease on life. Executives and policymakers need to stay focused on the opportunities and risks associated with digital assets.
The future of digital assets as a whole depends heavily on the future of digital money, as payments power the financial system.?However, digital money could evolve in quite different ways; for example, there are different forms of digital money that could form the basis of new approaches, spanning CBDCs, tokenized deposits and different types of stablecoins. Executives and policymakers must think in terms of multiple scenarios rather than relying on a single prediction. These approaches will transform business models as they favor different types of issuers and their adoption will reshape liquidity, market-making, and risk management, which could impact the broader financial system considerably.
To help industry executives and policymakers frame their thinking, this report presents four paradigms based on the issuers of money, the technology they choose, and the use cases they target.
CUSTOMER VIEWS
3.????Banks not quite delivering on financial advice says J.D. Power
Canadian Banks should be invaluable to their customers during a cost-of-living crisis, but some are just not getting it right.
And it’s the customers that the banks should be going above and beyond for at the most difficult times financially, that appear to be losing out according to a new report.
The JD Power 2023 Canada Retail Banking Advice Satisfaction Study shows that the Canadians who are least satisfied are those deemed financially unhealthy– based on metrics such as spending/savings ratio, creditworthiness, and safety net items like insurance coverage.
Jennifer White, senior director for banking and payments intelligence at JD Power says banks should be more in tune with their customers’ needs and provide tailored advice based on their current challenges and future goals, especially during times of financial hardship.
“Delivering advice can increase customer trust by 9 percentage points, and when the advice is completely personalized, trust rises 15 percentage points,” she said. “Unlike their US counterparts that demonstrated an improvement on that front,?Canadian banks have yet to rise to the occasion and are still lagging in delivering the right advice at the right time to make a positive impact on their customers’ satisfaction.”
4.????Investment advice seen as a key benefit of open banking, according to 德勤 survey
Nearly one in three Canadians believe they would benefit from the availability of investment advice through a national open banking model, according to a survey conducted by Deloitte Canada.
In an online survey of 1,030 Canadians, the consulting firm found that 66% see at least one benefit of open banking, a system that allows financial institution to share client account details (with consent) with a third party.
Among the most attractive use cases of open banking were the ability for consumers to get a complete financial picture of all balances across all their accounts (37%), the ability to track their spending patterns (33%) and suggestions for investment and savings opportunities (32%).
“Overall, it seems that Canadians can recognize the benefits of open banking and are likely to embrace it once it goes live,” the report concluded.
ARTIFICIAL INTELLIGENCE & DATA ANALYTICS
Skript is excited to announce its partnership with Saasu, an innovative online accounting software provider. This collaboration will empower Saasu to leverage Skript’s solution to automate bank data feeds into their platform via the Consumer Data Right (CDR).
Saasu provides comprehensive online accounting solutions designed specifically for Australian small businesses. With invoicing, expenses, cashflow forecasts, and inventory management, Saasu has established itself as a trusted ally for entrepreneurs across the country.
As part of the partnership, Saasu has become Skript’s CDR Representative. By integrating Skript’s proven technical solution, Saasu will enable seamless and secure automation of bank data feeds directly into their platform, eliminating the need for manual processes and ensuring accurate and up-to-date financial information.
“We are thrilled to partner with Saasu and support their vision of delivering cutting-edge accounting solutions to small businesses in Australia,” said Eric Tsang, CEO of Skript. “Through our CDR integration, Saasu users will benefit from streamlined access to their bank data, enhancing the efficiency and accuracy of their financial management.”
BLOCKCHAIN/CRYPTO
6.???? Ripple obtains in-principle regulatory approval in Singapore
Ripple, the leader in enterprise blockchain and crypto solutions, today announced that its Singapore subsidiary Ripple Markets APAC Pte Ltd, has obtained In-Principle Approval of the Major Payments Institution License application from the Monetary Authority of Singapore (MAS). This license will allow Ripple to offer regulated digital payment token products and services in the city state, and further scale its customers’ use of its crypto-enabled?On-Demand Liquidity?(ODL) service.
Ripple experienced unprecedented business momentum for ODL globally in 2022 – with a majority of this growth driven by its Singapore operations. In 2022, well over a majority of global ODL transactions flowed through Singapore, which serves as the company’s Asia Pacific headquarters. As a result of this monumental growth trajectory, Ripple doubled its headcount in Singapore over the past year across key functions such as business development, compliance, finance, legal, and sales – with plans to continue increasing its presence in the world’s fastest growing region.?
“Singapore is a leading global financial center, and a prominent gateway to business in Asia Pacific. We’re incredibly proud to receive an in-principle license from the MAS, reaffirming our commitment to the region and ongoing proactive engagement with regulators globally,” said?@Brad Garlinghouse, Chief Executive Officer of Ripple. “The MAS continues to be a global leader in establishing clear rules of the road to recognise the innovation and real-world utility of digital assets, and its benefits to the global financial system. We look forward to strengthening this partnership to collectively propel the growth and development of the digital assets ecosystem in Singapore.”?
7.???? 萬事達卡 to continue crypto foray with beta launch of ‘blockchain app store’
In its latest blockchain push, Mastercard on Wednesday said the payment processor would roll out a test version of its Multi-Token Network (MTN) this summer.
The product was set to be launched as a beta in the United Kingdom.?
Raj Dhamodharan, Mastercard’s head of crypto and blockchain products, in a Wednesday letter said that MTN will “act as a testbed for developing live pilot applications and use cases with financial institutions, fintechs and central banks.”
The plan is to roll out MTN to more global markets, pending additional partners. The idea hinges upon selling developers on building on Mastercard’s permissioned blockchain, which the company has positioned as capable of transforming its payments capabilities.?
DIGITAL BANKING
8.???? Segura Bank International, Corp. Selects Temenos to Power New Digital Bank in the Cloud for Latin Americans
Temenos announced that Puerto-Rico headquartered Segura Bank has selected Temenos to power the launch of a new digital bank in the cloud for mid to high earners in Latin America.
Segura Bank will run Temenos’ banking platform on Microsoft Azure to develop banking services faster and at lower cost, offer leading digital experiences and scale efficiently as the bank expands across the continent.
Segura Bank will leverage the cloud-native core banking capabilities of the Temenos platform for fast and efficient transaction processing, managing customer accounts and ensuring compliance with robust KYC functionality.
9.???? Nude. , the savings app for first time home buyers, launches AI copilot
Crawford Taylor , CEO and Co-Founder of Nude, announced the launch on his LinkedIn page.
Team?Nude have done it again: meet our brand new AI Copilot.
We’re revolutionising the way people interact with their finances at Nude and our Copilot is the next step to help people master their money like never before.
?? Imagine you had a friend who’s really good with money looking out for you, 24/7.
?? Imagine that friend could look into your future and steer you towards hitting your financial goals sooner.
?? Imagine your money could talk to you and help you to figure things out.
?? Imagine instead of having to work out your money, your money worked for you.
?? Imagine all of that was wrapped up into one app designed to help you to reach your goals.
…imagine no more, meet our Copilot.
It’s a game-changer: automating and simplifying finance for millions who need a helping hand. No more hunching over spreadsheets or feeling overwhelmed by money = more time to enjoy life.
In seconds, our bespoke AI engine can analyse and group past spends, predict future hurdles, handle tasks like automating the movement of money between accounts and guide people towards smashing their goal ??????
Make sure to check out the pdf in the LinkedIn Post HERE for more.
ESG/SUSTAINABILITY
10.?Some issues holding back ESG/Sustainable Finance
Sustainability-linked loans are supposed to facilitate the transition to a low-carbon economy, but a review by the U.K.’s Financial Conduct Authority (FCA) finds an array of regulatory concerns, including greenwashing risks, conflicts of interest and disclosure issues.
At the behest of government policy-makers, the FCA reviewed the sustainable loan market earlier this year. On Thursday, it set out the findings of that review, detailing market integrity issues that may inhibit the sector’s development due to a lack of trust and confidence in these vehicles.
领英推荐
This follows the Ontario Securities Commission finding that many funds including ESG disclosure were only considering ESG to a limited extent.
Since the publication of?CSA Staff Notice 81-334?ESG-Related Investment Fund Disclosure?(the?Staff Notice) and during the course of staff’s?ESG-focused prospectus, continuous disclosure and sales communication reviews, staff have observed a significant increase in the number of investment fund managers (IFMs) that include disclosure about environmental, social and governance (ESG) factors and strategies in the prospectuses of their funds.
Staff have learned from IFMs that, for many of these funds, the consideration of ESG factors plays only a limited role in the fund’s investment process. For example, some funds only consider ESG factors as one of many inputs in their risk management process. However, the prospectuses of such funds are not always clear that the consideration of ESG factors plays only a limited role in the fund’s investment process.
Referring to his annual letters sparking ESG controversy: "When I write these letters, it was never meant to be a political statement. … They were written to identify longterm issues to our longterm investors," he told the crowd.
Referring to ESG: "I'm not going to use the word ESG because it's been misused by the far left and the far right," he added.
11.?Climate Startups are thriving Amid Global Fintech Funding Struggles, according to Tenity
Despite the doom and gloom associated with fintech funding in 2022,?Tenity‘s Climate Fintech report found climate fintech startups were anomalies to this trend, as funding increased globally. Tenity (formerly F10), the fintech innovation ecosystem, analysed data from 607 startups and found that Europe was the region that secured the most climate-focused funding.?
The Climate Fintech report found that every region saw accelerated funding. Though LatAm and APAC did not see much funding, it was still considerably more than other investment sectors. Meanwhile, North America saw $640million raised, while Europe secured just below $1billion.
The environmental, social and governance (ESG) regulatory space has vastly developed over the last few years. With consumers putting such an onus on this, more startups have tailored their products to cater to ESG. According to the report, the number of startups supplying digital assets solutions has increased from 46 to 72. Furthermore, 225 startups in total are classifying themselves as ESG data and analytics solutions.
12.? NEI Investments announces new impact funds, new net-zero targets, and changes to existing funds
NEI?Investments?announced ?the expansion of its impact offering with the launch of four new impact-focused funds, new net-zero targets for two funds, as well as other changes to the fund lineup. These initiatives reflect NEI's longstanding commitment to continuous improvement in both its responsible investment activities and its fund lineup while also extending its commitment to the fast-growing field of impact investing.
New Impact Mandates
NEI announced four new impact-focused responsible investing funds that extend its industry leading suite of impact investing solutions. This includes NEI Canadian Impact Bond Fund, a Canadian fixed-income fund, managed by Addenda Capital, a specialist in the field of impact investing. NEI also announced the launch of three NEI Impact Portfolios, a suite of fund-of-fund solutions that includes new asset allocation portfolios optimized for risk, return, and impact: NEI Impact Conservative Portfolio, NEI Impact Balanced Portfolio, and NEI Impact Growth Portfolio (collectively, the "Impact Portfolios"). These Impact Portfolios will be managed by NEI Investments and invest primarily in a mix of NEI impact funds and third-party ESG ETFs to provide diversified all-in-one impact solutions focused on providing intentional and measurable, positive environmental and social outcomes.
The launch of the new funds, and in particular, the inclusion of impact funds within the family of Impact Portfolios will improve access to Impact as both core and complimentary options.
INVEST/WEALTH
13.? Revolut launches Automated Investing in the US
Revolut, the global financial super-app with more than 30 million customers globally, has launched a Robo-advisor in the US. The new feature manages investment portfolios on behalf of customers to remove the friction from investing with lower fees than traditional companies.
Based on responses from customers, the Robo-advisor will provide users the opportunity to invest in one of five diversified portfolios based on their risk tolerance. Once a customer deposits money into their portfolio, the Robo-advisor automatically invests it in the market and then monitors and manages the customer’s portfolio.
The Robo-advisor rebalances the portfolio automatically to stay in sync with the customer’s risk tolerance determined at onboarding. Built by Revolut, the Robo-advisor offers an accessible way to grow wealth without the need of continuous management by the customer.
The Robo-advisor joins Revolut’s suite of products and services for managing money-related needs. With its low management fees and hassle-free experience, the Robo-advisor offers a value proposition of investments made simple and automated, with managed portfolios.
14.?UK Fintech Freetrade , The Builder of an App for Consumers’ Life Savings, Raises ￡1.76m+ Via Crowdcube
UK-based FinTech firm,?Freetrade, which portrays itself as the creator of a life savings app, has successfully surpassed its Crowdcube funding target.
The firm has raised an impressive ￡1.76m, significantly more than the ￡1m target it initially set, according to a report from?Crowdfund Insider.
The funding was garnered from 3,194 investors through the firm’s Crowdcube crowdfunding campaign. Since launching in 2019, Freetrade has amassed more than 1.6m registered users and ￡1.4bn in assets.
Freetrade offers a modern and user-friendly platform that facilitates investing. The firm’s vision is to build an app that sits on the home screen of users’ devices, becoming the central hub for their life savings.
The newly raised funds will be used to expand the company’s customer base within the UK, extend its reach into Europe, and further develop its product offerings. These are groundbreaking products and features designed to enhance user experience and create more value for customers.
OPEN BANKING
15.? Pleo extends partnership with Yapily to provide instant, frictionless wallet top-ups in the UK, France and the Netherlands
Pleo, the Danish business spend fintech serving 25,000 companies across Europe, extends its partnership with?Yapily,?the leading open banking infrastructure platform, as it expands into Europe and adopts Variable Recurring Payments (VRPs) to automate account top-ups.
In September 2022, Pleo partnered with Yapily to create a seamless and instant payment experience for finance teams when topping up their Pleo wallet. Through open banking, Pleo eliminates the lengthy, manual payment process that adds user friction and creates unnecessary cash flow uncertainty for businesses.
Yapily’s extensive bank coverage and single API integration have enabled Pleo to expand into new markets with ease, for example, the launch into the Netherlands has seen 60% of customers use open banking to top up their Pleo wallet since its launch in November 2022. It plans to use a similar approach to roll out open banking into more of its core European markets later this year including Germany.
Pleo is now also harnessing new innovations in open banking by leveraging VRPs to automatically sweep money into their Pleo wallets when funds have reached a set threshold limit. This will allow Pleo customers to automate their top-up rules and further streamline their expense management process with open banking.
16.?PSD3: The European Union unveils new open banking rules
PSD2 was transformative for fintech in the European Union and beyond, helping to usher in open banking in the UK and around the world. New rules could be just as revolutionary.
Open banking has been given a potential new set of rules after the European Commission today released its proposals to update the rules governing payments.
The revised Payment Services Directive?proposal?(which will replace PSD2 with PSD3) comes alongside the new Financial Data Access (FIDA) proposed?rules?as well as separate Payment Services Regulation (PSR).??
Overall, the new package of measures will have far-reaching consequences for banks and fintechs just as PSD2 has been key to the open banking industry over the past five years or so.
It includes measures aimed at increasing the baseline adoption, functionality and performance of open banking Application Programming Interfaces but is much more ambitious in scope than existing regulation.
PAY/SPEND
17.? Financeit acquires the consumer loan business of the Simply Group Financial
Financeit a leading provider of point-of-sale financing in the Canadian home improvement, recreational vehicle, and retail sectors, is pleased to announce its successful acquisition of Simply Group Financial, SNAP Home Finance ("SNAP"), and certain assets of EcoHome Financial ("EcoHome, and collectively with Simply Group Financial and SNAP, the "Simply Group Loan Business").
"We're thrilled to announce another milestone in our growth journey as we focus on expanding our market footprint and our enduring commitment to the Canadian POS financing market," says?@Michael Garrity, CEO of Financeit. "The Simply Group Loan Business team has consistently showcased deep industry expertise, remarkable market agility, and an array of competitive products and services for dealers. By combining our two businesses, we are confident that we can create a transformative impact on the lives of home improvement dealers, helping them drive business growth."
The announcement marks a significant new milestone for Financeit, building upon its acquisition by InterVest Capital Partners in 2022.
?
18.? Jack Henry Launches Real-Time Payments Fraud Feature
Jack Henry announced the launch of Payrailz???Fraud?Monitor , a cloud-native, AI-based feature of the Payrailz Digital Payments Platform that provides real-time?fraud?detection when payment transactions are initiated. This highly customizable, proprietary feature supports person-to-person (P2P) payments, consumer and business bill payments, and account-to-account (A2A) outbound external transfers powered by the Payrailz Digital Payments Platform.
Payrailz?Fraud?Monitor leverages AI and machine learning to simultaneously detect and weigh multiple?fraud?attributes and indicators, including known and previously unknown?fraud?instances and patterns, to generate an aggregated, actionable score as each payment transaction is scheduled. Financial institutions can configure score ranges and other thresholds based on their unique risk tolerance, and the AI-enabled?fraud?engine continuously learns to detect evolving and emerging?fraud?patterns. Based on behavioral analytics,?Fraud?Monitor can substantially mitigate payment?fraud, including account takeover (ATO) when a fraudster takes possession of an authentic user's credentials and attempts to quickly move funds out of their accounts.
"It's an unfortunate reality that every payment channel is being impacted by?fraud?and?fraud?attempts," said?Tede Forman, president of Payment Solutions at Jack Henry. "And we know that mitigating payments?fraud?takes a multi-layered approach that targets?fraud?attempts at the different stages of a payment transaction. We're excited to offer?Fraud?Monitor to our clients and empower them with a sophisticated, AI-driven feature that scores 100% of P2P, A2A, and bill payments in real-time. The ability to leverage transaction attributes, user profiles, and atypical behavior patterns uniquely balances the ability to immediately detect and prevent fraudulent transactions with a frictionless payments experience."
19.? Fortis Expands Into Canada, Enhances Capabilities for Marketplaces and Software Platforms, and Acquires SmartPay
Fortis, a payment and commerce technology leader for software providers, marketplaces, and scaling businesses, today announced that the company now offers its solutions in Canada, its first expansion outside the United States. Fortis also announced the acquisition of embedded payments provider SmartPay and rolled out enhanced funding and settlement capabilities to meet rising demands from marketplaces and software platforms.
Visa announced it has signed a definitive agreement to acquire Pismo for $1 billion in cash. Together, they will be positioned to provide core banking and issuer processing capabilities across debit, prepaid, credit and commercial cards for clients via cloud native APIs. Pismo’s platform will also enable Visa to provide support and connectivity for emerging payment rails, like Pix in Brazil, for financial institution clients.
Visa is a world leader in digital payments, facilitating transactions between consumers, merchants, financial institutions and government entities across more than 200 countries and territories.
“At Pismo, we aim to enable our clients to launch cutting-edge payments and banking products within a single cloud-native platform, regardless of rails, geography or currency,” said Ricardo Josua, Co-Founder, CEO, Pismo. “Visa provides us unrivalled support to expand our footprint globally and help shape a new era for banking and payments.”
Pismo will retain their founders and current management team. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close by the end of 2023.
SMALL BUSINESS
21.? CROSS RIVER MICROFINANCE BANK LTD and FINTAINIUM? Expand Fintech Payment Offerings for Small and Medium Businesses
Cross River Bank announced its strategic partnership with Fintainium, a cutting-edge financial technology company providing innovative and comprehensive payment methods. Through the collaboration, Cross River will provide a range of payment services, including connection to the automated clearing house (ACH) network, check processing with positive pay fraud prevention, and push-to-card capabilities to enhance Fintainium's payment offerings for their business customers.
"We are thrilled to partner with Fintainium to enhance their payment offerings for small and medium businesses," said @Keith Vander Leest, Head of Payments at Cross River. "Cross River's expertise in providing secure, compliant and efficient payment services aligns perfectly with Fintainium's commitment to delivering innovative financial solutions. Together, we will empower businesses with faster B2B payment capabilities, enabling them to streamline operations and achieve greater financial agility."
Fintainium has quickly established itself as a leader in providing innovative financial technology solutions, catering specifically to the needs of small and medium businesses and the software solutions that power these businesses. By teaming up with Cross River, a trusted and forward-thinking financial institution and technology provider, Fintainium will now be able to further strengthen its position in the market and expand its range of payment capabilities.
22. Wise will lend its bank licence to let fintechs open business accounts
London-listed Wise will offer its special class of banking licence to local fintechs and other non-banks to allow them to create business deposits and payments services, as so-called banking-as-a-service presents a new front for competition for the major banks.
Wise – whose share price on the London Stock Exchange rose 16 per cent on Tuesday on the back of better-than-expected results – has launched a local platform business that lets other companies offer Australian dollar and multi-currency accounts and payments.
Parpera and ProSpend will be the first Australian fintechs to use Wise’s infrastructure, to create deposit accounts and digital debit cards via their own apps.
The deal effectively lets the fintechs operate like a bank, without actually becoming one, by using Wise’s purchased payments facility?licence, granted by the Australian Prudential Regulation Authority in late 2020.