Future of FinTech | Edition #38 – Sept 2022

Whatsup FinTech Fanatics!

We know there’s no better cure than a warm, revitalising cuppa of goodness, and we ensure to deliver just that with another new edition of the Future of FinTech newsletter! Help yourself to a fresh brew of the latest FinTech activities and enjoy the buzz brought about by the six segments that capture the essence of this bustling ecosystem!

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We recently extended our magnifying glass to dig deeper into the?workings and events of the Banking-as-a-Service?sector, bumping up the?BaaS?on how the unbundling and re-bundling of offerings allows any company to conveniently add financial services to their existing frameworks.

Or, to put it simply:

Edition #38?brings a cup full of bubbling hot stuff that is sure to keep you glued to your seat in curiosity!

Here's the TL;DR:

• The tea is always piping hot in the FinTech universe, and last week was no less in serving up some steaming goss that had us thoroughly invested. We weren’t alone, though – as?HSBC?was also seen to be investing $35M in?Monese?as part of a strategic partnership to grow the latter’s cloud-based Platform-as-a-Service (PaaS) business.
• Numerous industry players were equally teaming up to bring novelty to the table –?Aiia?and?NORD.Investments?collaborated to secure top-up Open Banking payments;?Plaid,?TrueLayer, and?Yapily?banded together to launch the not-for-profit Open Finance Association; and?Visa?announced a BaaS partnership with?Finastra?to co-develop its Payments Hub solutions and implement Visa Direct.?
• Taking the partnership game up a notch was the?European Central Bank, which selected five companies to collaborate with to develop potential user interfaces for the digital euro. Charting upon the notion of digital currencies,?Revolut,?too,?expanded its crypto services by adding Shiba Inu (SHIB) and Dogecoin (DOGE) for US customers. And as if that wasn’t enough, it also set sail all the way to expand into Mexico and Brazil with plans to hire 250 more employees.
• The?Central Bank of Bahrain?understood the assignment as well, as it gave the nod to?EazyPay?for launching crypto payments for more than 5,000 payment gateways in the country.?
• No more?blocks?for Canadian vendors and shoppers when it comes to shopping with instalments, for?Block Inc.?got the ball rolling for BNPL options in the Great White North. Rolling in with a new product update was also?Weavr, adding a new level of convenience for cardholders to add their cards to Apple Pay and Google Wallet.

For the longer read, let's get going –

Opening the week with a bang, the?Open Finance?space was astir with new collaborations, product updates, and launches. Indulging in the taste of the partnerships first:

• Aiia, a MasterCard company, partnered with?NORD.Investments?to enable quick, easy, and secure Open Banking payments to scale top-up payments solutions across Europe. NORD.Investments acquired an Investment Firm licence from the Danish Financial Supervisory Authorities, granting them access to expand the platform into new European markets.?
• Adding more flavour to the brew,?Teenit?tapped into?Nordigen’s?freemium platform to obtain Open Banking data to generate accurate insights and perform detailed analysis.
• Three’s a company with?Plaid,?TrueLayer?and?Yapily, who banded together to form a not-for-profit trade association called the Open Finance Association.

Boosting up the caffeine were a few product-related initiatives:

• MX?added product updates to its platform to bolster the platform’s ability to deliver financial data to financial institutions (FIs) and FinTechs.
• Axis Bank?made the news for starting digital lending based on the Account Aggregator Network, which enables sharing of data and information between financial service providers.

Boarding the launch ship,?GoCardless?rolled out Verified Mandates in France that combines the Account Information Services (AIS) capabilities of Open Banking with bank debit to stop fraud before it happens. Serving the regulatory affairs next –?Cuscal Limited?got accreditation to participate in the Consumer Data Right (CDR) as an unrestricted accredited data recipient by the Australian Competition and Consumer Commission (ACCC).

Partnerships took the most precedence with some delightful happenings in the?Digital Finance?sphere. Taking a sip right into it:

• Galileo Financial Technologies?teamed up with?DataVisor?to offer more fraud solutions to its clients by debuting the Payments Risk Mitigation platform.
• HSBC?invested $35M in?Monese,?a mobile-only banking app, as part of a strategic partnership to grow its cloud-based Platform-as-a-Service (PaaS) business.
• Zopa?Bank?and?ClearScore?joined forces to tackle the UK’s cost-of-living crisis with a focus on improving financial resilience in four areas: savings, credit, debt consolidation, and utility switching.
• Citadel Credit Union?chose?Lumin Digital?as a digital banking services partner to support Citadel’s 245,000-plus members and $5B in assets when the platform gets launched in 2023.
• Neobank?N26?integrated?Bizum?into its payment methods to further expand into the Spanish markets.
• JP Morgan?partnered with?Cleareye.ai?to streamline and digitise trade finance transactions.

Not staying away from the limelight, the launch-related happenings in the Digital segment also added to the sweetness –

• WayaPay?launched its full-service digital bank and money transfer app targeting African immigrants.
• FintechCashier?grabbed headlines for its plans to release its first ‘Lite Label’ BaaS subscription that allows it to manage the merchants, affiliates, customers, acquirers and prepaid issuing, all from the backend solution.
• Revolut?rolled out Revolut Pro for freelancers and self-employed individuals, which is the same as their Revolut business account minus the benefits.?
• Revolut?was also in the news for announcing its plans to expand into Mexico and Brazil, intending to hire 250 new employees in both countries by 2025.

On the M&A side of the business,?Jupiter Asset Management?made the bulletin for disinvesting its stake of 7% in the neobank?Starling?at a 40% discount, where it is supposed a close a deal soon.

The?Embedded Finance?space remained abuzz with stirring events across various categories. On the partnerships front:

• Intermix?partnered with?Affirm?to dive into the BNPL sea, allowing customers to pay for clothing in instalments.
• Finastra?and?Visa?announced a BaaS collaboration to co-develop new functionality on its Payments Hub solutions and implement Visa Direct2.
• UNIPaaS?partnered with?Beelivery?to help solve legacy issues with traditional payment providers, improve customer experience and operational efficiency, and help scalability without increasing headcount.

The land of alternative payments also saw companies entering with some BNPL scoop:

• Amazon?launched?Affirm's?'Buy Now, Pay Later' option for users in Canada.
• Block Inc.?also introduced BNPL options for vendors and shoppers in Canada on its point-of-sale platform Square, following successful launches in the United States and Australia.

On the launchpad, we saw?Synctera,?which rolled out the ‘Synctera Line of Credit’, allowing FinTech developers to quickly create innovative lending products or embed lending services into existing offerings. Weaving its way into the segment was also?Weavr, which announced a product update that now lets cardholders add their cards to Apple Pay and Google Wallet, improving digital security and card usage.

In other news, Indian Commerce Platform?DotPe?raised $58M in Series B funding to add B2B financial service to its suite of product offerings.

The?DeFi?universe has witnessed quite some budding movements that are bringing tremendous progress to the industry. To begin with the launch-related affairs:

• Making things easier for cryptocurrency adoption in Bahrain, regulated FinTech?EazyPay?received the nod from the Central Bank of Bahrain to launch crypto payments for more than 5,000 payment getaways in the country in partnership with?Binance Pay.
• Keeping true to its name, DeFi Technologies’ subsidiary?Valour?made the headlines for its plans to debut its new Carbon Neutral Bitcoin Exchange-Traded Product (ETP) on the Frankfurt Stock Exchange. The ETP is positioned as a “sustainable and climate-friendly” exposure to Bitcoin (BTC) with a management fee of 1.49%.
• The icing on the cake was brought about by?Cake DeFi,?which launched its new hybrid investment product EARN, which allows users to enjoy competitive returns on their crypto assets via a single-sided liquidity mining service providing daily rewards while protecting users against market volatility.

Onwards to explore the novel products in the segment:

• After the Merge update activation,?EthereumPoW (ETHW)?is set to evolve into a full-scale programmatic blockchain, having received new NFTs and DeFi functionality where users can send and receive ETHW transfers, import ERC-20 tokens to EthereumPoW, and connect decentralised applications to a newly-launched blockchain.
• On the other hand,?Nasdaq?was in the news for its plans to enter the crypto custody market for institutional clients. If approved by the New York Department of Financial Services (NYDFS), Nasdaq will become a custodian of digital assets, placing the stock exchange in direct competition with centralised crypto giants, including Coinbase, Anchorage Digital, and BitGo.

And as for the regulatory scoop, the?European Central Bank?selected five companies – out of 54 applicants – to collaborate with to develop potential user interfaces for the digital euro. The bank explained that the five providers chosen best matched the “specific capabilities” required for the assigned use case.

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Enter the Wonderland!

The?Platform Finance?space observed a fair share of revolutionary initiatives the past week that added the much-needed zest to the already brewing tea in the FinTech landscape.

• Speaking of the ‘revolutionary events,?Revolut?rolled out its Pay Later BNPL product to its 1.9 million users in Ireland following a successful three-month trial that uses an approved credit limit designed to focus on affordability.
• Revolut?also hit the headlines for expanding its crypto services to the United States by adding Shiba Inu (SHIB) and Dogecoin (DOGE) for US customers.?

In other news, digital payments infrastructure provider?PPRO?strengthened its market coverage of Malaysia by integrating major e-wallets GrabPay and Touch ‘n Go into its payments infrastructure. Through PPRO’s integration, these partners can supercharge their revenue by gaining direct access to Malaysian consumers. FinTech startup?Ratio?also raised $11M in venture funding and $400M in a credit facility for customer financing, furthering its goals as a platform that allows Software-as-a-Service (SaaS) companies and other recurring revenue businesses to provide embedded BNPL services that match their customers’ cashflow needs.

Several industry players were using their green thumbs to take sustainable actions in the?Green Finance?world last week.

• HSBC Asset Management?captured not one but two headlines – launching the HSBC GIF Global Equity Circular Economy fund to invest in companies that are enabling the transition to a circular global economy and unveiling a new policy to phase out its investments in coal-fired power and thermal coal mining with plans to exclude thermal coal companies in EU and OECD countries from its active funds by 2030.
• Bitgreen?secured $5M in crowdfunding to launch its parachain on?Polkadot?as the singular impact investing blockchain within the network. The Polkadot parachain deployment is set to occur within the coming months.
• Salesforce?also introduced the Net Zero Marketplace, a trusted platform that makes carbon credit purchases simple and transparent, allowing organisations to accelerate climate-positive impact at scale.
• Barclays?bagged a spot in the bulletin for announcing the launch of a brand new Sustainable Residential Development Framework, designed collaboratively with CBRE Environmental Consulting Group to help support the financing, monitoring, data collection and delivery of Green Residential Development Loans.
• Furthermore,?Fitch?launched ESG Ratings, Data & Analysis – a new ESG ratings product for investors providing sustainability scores and analysis at the entity, framework and instrument level.
• And to top it all was?TD Securities’?launch of a new Carbon Advisory business aimed at offering clients with end-to-end carbon market solutions.

Moving onto the other happenings that caused a buzz in the space, the?Danish Financial Supervisory Authority?was in the news for starting work on the EU’s DLT Pilot Regime, where a group of organisations will work on issuing tokenised green bonds within the Danish FSA sandbox, FT Lab. The?European Central Bank?also hit the headlines for its plans to give corporations climate scores before it buys their bonds, with the intent to prioritise those doing more to reveal and reduce greenhouse gas emissions. On another note,?Tandem Bank?joined the Green Finance Institute’s Coalition for the Energy Efficiency of Buildings (CEEB), becoming a part of a network of around 365 members representing sectors across finance, business, policy, and civil society to develop a market for financing Net Zero carbon and climate resilient buildings in the UK. And lastly, blockchain-based FinTech?Hashstacs?(STACS) partnered with France’s?Everimpact?to provide banks and corporates involved in the carbon market with greater transparency and trust. The partnership aims to promote data-backed carbon credits with end-to-end traceability.

Some other happenings in the FinTech universe ??

Adding a little more caffeine gusto to your FinTech news, a few more notable activities from the bustling world of FinTech are –?

• Sequence?raised $19M to build “the finance operations platform of the future” for B2B SaaS companies,
• Mexico’s?DolarApp?raised a $5M seed round to enable banking with digital dollars,
• FinTech startup?Ledgy?bagged $22M in Series B round, and
• Financial intelligence platform?Brightflow AI?raised $15M in Series A funding.

And that's a wrap ??

We hope you enjoyed this edition of the Weekly FinTech Brew. October is a season of festivities and celebrations, and we’ll be taking a moment to pause on serving some FinTech brew for the next week.

But don’t worry! We’ll be back with another fresh cuppa the week after so that you don’t miss out on your weekly dose of FinTech refreshment!

If you're hungry for more FinTech insights, check out some of our other work at?WhiteSight.?

Our latest publications include?Bump Up the BaaS: Banking-as-a-Service Roundup 2022?and exploring?The Etherium Expedition

If you're someone who likes to read think pieces, you will likely love our monthly blog,?Fintersections, where our team members analyse the convergence of FinTech with the world.

FinTech research is in the WhiteSight DNA, so if you'd like to get in touch with our strategic intelligence and research content services, reach out to us at?[email protected].

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