Future of FinTech | Edition #45 – Nov 2022

Hola, FinTech geeks!

A good cuppa adds a hearty boost to the day, and what could be better than a brew infused with the latest FinTech headlines across six intriguing segments?

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When over one-third of asset managers were receptive to investment opportunities in the FinTech sector, one trendsetter became an early mover in taking FinTech bets. With a vision to help more people experience financial well-being, BlackRock has taken meaningful steps to achieve its mission of empowering more inclusive economies. Discover how the asset management behemoth is forging various relationships with FinTechs in?The Bedrock of Investments: BlackRock’s FinTech Foray!

An assortment?of FinTech affairs is here to refreshen your curious palate in?Edition #45?of the Future of FinTech newsletter!

Here's the TL;DR:

• We begin our exciting journey for the week with some celebratory champagne for cheering super-app?Revolut, which surpassed 25 million customers worldwide in its quest to expand into multiple geographies. At the same time, pumping the?BaaS was?Mettle,?which partnered with?Vodeno?to create a banking-as-a-service business venture by dedicating its core tech team to support it.
• Taking a spin on the partnership wheel,?Truelayer?joined hands with?Coinbase?to provide near-instant deposits for UK users through Open Banking. Coming in with the Christmas cheer,?BrandAlley,?Boden,?and?UGC?teamed up with?Clearpay?to offer flexible payment options ahead of the holiday season.
• While payment seems to be the highlight of the week, further on the partnership bandwagon,?American Express?joined hands with?Square?to launch an exclusive credit card for sellers on the Square platform. Sailing further into the payments galore,?MoneyGram?collaborated with?Beyon Money?to enable users to use Beyon’s app to send money in real-time to over 200 territories, thus enhancing the cross-border payment experience for its Bahrain customers.
• As new initiatives see the light of day,?Plaid?released its machine-learning risk engine named Signal after two years of beta testing. Rolling another spin on the launch space, UAE-based FinTech?Liv.?rolled out digital IPO subscriptions for its customers. Taking charge of the charge card game,?Unit?now enables its clients to use the startup’s API to build custom-designed charge cards.
• Europe seems to be rolling in initiatives that mark its commitment to developing a more sustainable environment. Gambling on the same, the?European Financial Reporting Advisory Group (EFRAG)?approved the final version of the European Sustainability Reporting Standards (ESRS), which set out the rules and requirements for companies to report on sustainability-related impacts, opportunities and risks under the EU’s upcoming Corporate Sustainable Reporting Directive (CSRD).

For the longer read, let's get going –

With the onset of winter just around the corner, some hot-brewing partnerships, expansions and launches in the?Open?Finance?segment are just what is needed!

To begin with the partnerships:

• Technology provider?Codat?and specialist insurance broker?Capsule?teamed up with?Aviva?to pilot a new tech-led approach to ensure high-growth businesses have the right level of cover in place.
• Crypto exchange?Coinbase?made headlines for its plans to add near-instant deposits for all UK users in the coming weeks with the help of Open Banking provider?TrueLayer.
• Central Bank of Bahrain-licensed open banking FinTech platform?Spare?partnered with Bahraini payment service provider?EazyPay. With this partnership, EazyPay’s merchants can accept open banking payments powered by Spare. This will be an addition to the options available to the merchants currently.
• Treasury?Prime, a leading banking-as-a-service (BaaS) company, announced a partnership with?Plaid?to deliver seamless integration between Treasury Prime-supported accounts and any external FinTech available via the Plaid ecosystem.

Plaid also made the bulletin for releasing its machine learning (ML) risk engine Signal, which will be available to customers seeking to upgrade their automated clearing house (ACH) transaction services with fraud detection.

Open?Finance?happenings reached new geographies the past week:

• Global open banking pioneer?Salt?Edge?announced its expansion to the Kingdom of Saudi Arabia, aiming to help banks and other financial institutions to bring innovative solutions to the market and contribute to the Kingdom’s efforts toward the digital rise of technologies via open banking.
• Sweden’s?Zimpler?expanded its operations to Latin America. The company has established its LatAm headquarters in S?o Paulo, catering to the growing local and regional markets.

That’s not all – BNPL giant?Klarna?opened up its open banking technology, Klarna?Kosma, for select FinTech startups and larger companies to use free of charge for three months. The offer requires companies to apply and detail their use case along with expected users, and it also comes with a limit of 300 transactions or active users per month.

The?Digital?Finance?landscape seems to be getting more competitive with new collaborations between players and the advancement of products and services. Indulging into the brimming affairs:

• NatWest?transferred its core technology and staff from its SME digital bank,?Mettle, into a new UK-focused partnership with banking-as-a-service firm?Vodeno.?NatWest is making a capped commitment of $118M into the new partnership, aiming to break even within five years. It is also investing $60M in Vodeno, which will, in turn, own 18% of the joint venture.
• Furthermore,?Pomelo?selected Galileo Financial Technologies’ payment processing solution to introduce a new 'remit now, pay later' card, allowing families in the US to build and extend their credit access abroad without incurring expensive remittance fees.

Coming to the new launches last week:

• C6 Bank?launched the C6 Auto Financial Protection Insurance, which can be contacted at the time of vehicle financing. The insurance provides coverage for the death and disability of the contractor and also for income loss due to involuntary unemployment.
• Liv., the digital bank by Emirates NBD, launched in-app access to IPO subscriptions in strategic collaboration with Dubai Financial Market (DFM) to support investor participation for upcoming listings and reflects Liv.’s first-to-market ethos built on pioneering digital innovation.

As for advancements in existing products:

• Varo?captured headlines for offering?Zelle?in its app without the need to partner with a bank, solidifying Varo as a technology leader in digital banking. Zelle is a safe way to send and receive money with friends, family, and small businesses you trust.
• Nubank?announced the possibility of eligible customers opening an account with a debit card for those under 18. The novelty provides access for people aged 12 to 17 years after the consent of a responsible parent who is a Nubank customer in Brazil.

In other news,?Revolut?celebrated the milestone of crossing 25 million customers worldwide amid a comprehensive growth strategy which will see the super-app launch in India, Mexico, Brazil and New Zealand soon.

Partnerships came out on top in all things?Embedded?Finance?last week as companies came together to establish meaningful synergies.

• Tractor Supply Company, one of the largest rural lifestyle retailers in the US, announced a partnership with?Klarna?to offer customers a flexible payment option with Klarna’s Pay-in-4 offering.?
• Rejoicing in the Christmas spirit,?Clearpay?also announced partnerships with premium fashion and lifestyle favourites?BrandAlley,?Boden?and?UGG?– allowing them to offer online customers more choices in payment methods so they can manage their budgets and spend responsibly ahead of the Christmas shopping season.
• Railsr?bolstered its financial crime and fraud prevention efforts through a partnership with?Featurespace, combining its existing fraud team with Featurespace’s card and payment fraud prevention and anti-money laundering solutions.
• Royal Bank of Canada (RBC)?partnered with?Visa?to leverage Visa's BNPL technology to offer its credit cardholders the option of paying for purchases in instalments.
• Synchrony Financial?expanded its partnership with regional department store chain?Belk?to provide customers flexibility in purchasing through its BNPL option.
• American Express?and?Square?announced an expansion of their alliance, with plans to launch a new credit card explicitly built for Square sellers on the American Express network.

Serving some fresh launches of the week:

• Unit?charged ahead into the charge card space, with the startup now allowing customers to use its API to build custom-designed charge cards for their end users. Customers can offer their customers a charge card, credit card, revolving loan or any other credit products that the Unit’s bank partners provide.
• Swedish banking giant?SEB?reorganised its tech and innovation operations and set up a new business unit called SEB Embedded, created to commercialise its BaaS offering.
• Insurtech pioneer?Qover?unveiled embedded insurance orchestration technology, which promises to allow any business where customers or employees would or should adopt insurance to do so, bringing the industry up to speed with the digital age.

What’s more –?NAB?Now Pay later went live in Australia and will be available for the 52,000 customers who pre-registered. To give Australians more control of their money, customers can apply for and use the bank’s new instalment payments product in their NAB app.

Lastly, to support customers and the wider industry, as the pace of innovation continues to accelerate,?Amadeus?applied to the Bank of Spain for an eMoney licence to provide regulated services in Spain and, subsequently, the European Economic Area.

The?DeFi?world drove its wheels in recovery as new launches paved the way last week. Hopping onto the rollercoaster of headlines:

• Bitcoin.com?unveiled a 'CEX Education Program' to reward people affected by the insolvencies of centralised crypto companies like FTX, BlockFi, Celsius and Voyager while encouraging the adoption of DeFi and self-custody. Not only this, but Bitcoin.com wallet token VERSE also dedicates 5% of its total supply to support the program.?
• Further raising hands to support self-custody,?Metallicus?launched its Proton decentralised exchange, a P2P marketplace that connects cryptocurrency buyers and sellers while simultaneously ensuring that users remain in control of their digital assets and private keys.
• Swapping its way through the news,?Uniswap?rolled out two new smart contracts — Permit2 and Universal Router — to improve user experience in the DeFi space.

On the product side,?BabyDogeSwap?DEX introduced a feature to accelerate burns on BabyDoge tokens on DeFi swap. The move comes with an attempt to decrease the supply of tokens in the market and increase the prices of the remaining tokens in the long run.

Further ramping up the gas, the?Central Banks of France, Switzerland?and?Singapore?have started Project Mariana, which is coordinated by?Bank for International Settlements?in an attempt to automate the foreign exchange market using decentralised protocols to cut the cost of cross-border payments.?

The?Platform Finance?space brewed a myriad of interesting news, from partnerships and launches to product updates. Taking a sip into the same:

• Vodacom Group?was in the news for its plans to roll out Vodapay in its new market of Egypt, which it has developed alongside China’s?Alibaba Group.
• Klarna?launched a search-and-compare tool in its Klarna App to enable shoppers to compare prices between retailers.
• Finzly?unveiled an advanced version of its treasury experience platform for banks’ corporate customers – Finzly’s Experience Hub – which can be embedded into banks’ existing digital banking platforms or can be offered as the primary digital banking experience, enabling banks to offer global transaction banking to business, commercial and corporate clients.

Making our way onto the partnership front,?MoneyGram?grabbed the headlines for joining forces with?Beyon Money?to enable users to use the Beyon Money app to send money in near real-time to over 200 countries and territories worldwide. Floating between clouds,?Finastra?revealed the availability of?VeriPark’s?VeriLoan cloud-based solution on its FusionFabric.cloud open development platform to support lending structures of varying complexity.?

The?Green?Finance?space has been gearing up with more product advances, collaborative efforts and more in the wake of COP27.

Beginning the journey with product advances:

• NatWest?created a new Carbon Planner tool, a free-to-use digital platform designed to help cut businesses' energy costs whilst reducing their carbon footprint. The NatWest Carbon Planner provides personalised actions based on user data, enabling users to make better-informed decisions when looking to reduce their carbon emissions.?
• Berlin startup?ecolytiq?took the bold step of partnering with dedicated and ambitious financial institutions by offering its entire product suite for free for the first three years to those who commit to working with them by the end of COP27.
• Most homeowners hope to make energy efficiency-related home improvements within five years, but three-quarters admit they cannot afford them. To make these improvements more affordable,?Barclays?is offering a cash reward to residential mortgage customers who make selected energy efficiency-related home improvements.?

Onto the green pastures of funding events:

• Global venture capital firm?Energy Impact Partners (EIP)?announced the closing of its climate tech-focused EIP Deep Decarbonisation Frontier Fund, reaching commitments of $485M and substantially passing the fund’s initial $350M target.
• The?World?Bank?priced a 4.75-year $490M floating rate Sustainable Development Bond due June 2027 while engaging with investors on the World Bank’s strategy, projects, and programs that support developing countries in the sustainable management of biodiversity and ecosystem services and integrating nature in development.
• The Board of Directors of the?European Investment Bank?approved $10.9B of new financing to accelerate climate action and clean energy, business investment, health and sustainable transport investment across Europe and worldwide.

Updates on the regulatory affairs:

• The three?European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs)?published a Call for Evidence on greenwashing to gather input from stakeholders on how to understand the key features, drivers and risks associated with greenwashing and to collect examples of potential greenwashing practices.
• The?European Financial Reporting Advisory Group (EFRAG)?approved the final version of the European Sustainability Reporting Standards (ESRS), which set out the rules and requirements for companies to report on sustainability-related impacts, opportunities and risks under the EU’s upcoming Corporate Sustainable Reporting Directive (CSRD).

On the other hand, global investment firm?Carlyle?expanded across regions with the launch of?Telis?Energy, a newly created renewables platform to develop renewable energy projects in the UK, France, Spain, and Germany, to extend to other markets in Europe.

Climate First?Bancorp, the holding company for US community bank?Climate First Bank, acquired tech start-up?Ecountabl?for an undisclosed sum. Climate First Bank customers will have access to the fully integrated ESG platform in 2023 and will be able to track how their spending aligns with their values.

Wrapping it all up, global exchange and clearing house operator?Intercontinental?Exchange (ICE)?announced the launch of a new solution aimed at helping asset managers and financial institutions meet the requirements of the Task Force for Climate-Related Financial Disclosures (TCFD).

Some other happenings in the FinTech universe ??

A few more sweet additives to have on the go before we bring this edition to a close:?

• UAE investment FinTech?Baraka?landed $20M in its Series A funding round,
• ADDX?bagged $20M in expanded pre-Series B to develop its private market exchange and expand its presence, and?
• Indian lend-tech startup?Lentra?raised $60M in Series B funding round.

And that's a wrap ??

We hope you enjoyed this edition of the Weekly FinTech Brew!

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

Our latest publications include diving into the world of?The FinTech Unbundling of SME Finance?and exploring?The Bedrock of Investments – BlackRock’s FinTech Foray.

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 for features, sponsorships, and content marketing services, reach out to us at[email protected].

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