What The FinTech #56: 27 Jun 2021
Medhy Souidi
?? AI, FinTech & Digital Banking Strategist | Gen AI, Payments & Web3 Innovation | Ecosystem & Partnerships Leader | ??? Industry Speaker & Podcast Host
Happy Sunday and Welcome back to?What The FinTech,?your regular FinTech & Innovation Newsletter focusing on Hong Kong & Asia ! Here are the selection and the top headlines for this week.
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What was the FinTech this week in:???
BLOCKCHAIN - CRYPTO - DIGITAL ASSETS - DE FI
- Crypto crackdowns could drive mainstream adoption
- Banks chart cautious crypto policy with regulators taking aim
- Goldman Sachs begins trading on JPMorgan repurchase blockchain network
- Central bank digital currencies herald a new chapter for the monetary system: BIS
- Asian banks' trials with 'tokenised securities' stuck in silos: industry body
Recent crackdowns in the cryptocurrency space could pave the way for more mainstream adoption of the alternative asset class. While fragmented laws across jurisdictions complicate how an international crypto marketplace can be set up, legal experts and industry observers point to the convergence of stricter rules in this segment. Most observers are largely in favour of tightening regulation, with many saying this will raise investors' confidence by weeding out bad actors. But this is provided the new rules do not stifle innovation or disproportionately increase costs of compliance. According to some industry players, the digital payment token (DPTs) industry will not achieve meaningful adoption if consumers are unable to rely on basic regulatory frameworks to protect them. However, regulation should be activity-specific and take into account the unique qualities of DPTs and cryptocurrencies. More attention must also be paid to encourage international cooperation on the legislative front.?
Banks looking to expand into the crypto space received a pointed reminder from regulators this month of the risks involved. The Basel Committee on Banking Supervision said on June 10 that it is planning to assign Bitcoin, among other crypto products, the toughest capital requirements for any bank that wants to hold it. The Committee noted that the risks to financial stability would be significant if banks do expand their offerings in the volatile market. That warning comes with clients showing increasing interest in the assets, leaving firms like JPMorgan Chase, Goldman Sachs Group and Morgan Stanley to wrestle with how best to offer exposure to the burgeoning, and volatile, asset class. This year has seen more lenders examining how they might broaden their offerings even as caution remains the watchword, according to a Bloomberg analysis of the offerings from some of the world's biggest banks. While several now clear crypto futures, most have largely steered clear of other services.
Goldman Sachs Group has joined the blockchain-based network created by JPMorgan Chase & Co for repurchase agreements that uses smart contracts and a digitized version of the US dollar. Its first trade came on June 17, when it swapped a tokenised version of a US Treasury bond for JPMCoin, JPMorgan's internal representation of a digital dollar. The value of the trade was not disclosed. Unlike in the traditional repo market, the exact amount of time the banks took to complete the transaction was quantifiable. In this case, it was three hours and five minutes. JPMorgan created the new repo market using its version of the Ethereum blockchain, with its first trades in December. It has since gone on to trade more than US$1 billion a day through its Onyx blockchain platform. The firm is speaking with more than 10 banking and investing clients about joining the repo network.
Central bank digital currencies (CBDCs) open a new chapter for money grounded on trust in the central bank, according to the?Bank for International Settlements' (BIS) in its latest annual report.?As a technologically advanced representation of money, BIS notes that a CBDC can further the public interest. CBDCs function best as part of a two-tier system, with the bulk of the customer-facing activities taken on by banks and other payment service providers. The most promising design for general use is a CBDC built on a digital identity scheme, safeguarding data privacy while offering protection against illicit activity and potentially streamlining cross-border payments. CBDCs would build on the central bank's traditional roles in the payment system, to ensure that payments are final and certain; that there is enough liquidity for the payment system to function; and that the playing field is level, by making central bank money available on an equal basis to all parties.?
Asian financial regulators should do more to support large-scale trials of "tokenised securities", according to financial industry body the Asia Securities Industry and Financial Markets Association (Asifma). While many banks are exploring the concept, trials so far involve "three or four firms working together on proofs of concept which are not interoperableâ€. According to Asifma, the next step should be a regulator-endorsed full-ecosystem experiment that would explore all the interactions and competitive dynamics. An Asifma report said regulators should expand the scope of their existing sandboxes for experimenting with fintech initiatives to enable industry-wide trials. Regulators in Hong Kong, Singapore, and Japan have already issued some guidelines about tokenised securities. However, Asifma said regulatory and legal challenges were still the main obstacles for companies involved in tokenised securities.?
HONG KONG
- Hong Kong virtual lender Livi Bank expands collaboration with Mastercard
- HSBC, StanChart eye $624 million fee windfall on new China investment link
- HSBC and HKTDC partner to help SME growth in Greater Bay Area
Hong Kong-based virtual lender Livi Bank has expanded its collaboration with Mastercard to launch a payment innovation that integrates tokenization technology with the bank’s debit card line-up to provide a more seamless and secure online payment experience for customers. With Mastercard Token Connect, customers can tie their Livi Debit Mastercard and PayLater debit cards to designated merchants online using the Livi app. Customers can then make payments at the merchants’ checkouts in a single click, without having to manually enter their card details, ensuring a fast, and seamless checkout process. By clicking the Token Connect button on the Livi app, customers can select from a list of merchants available for the service. This includes JD.com, a leading e-commerce platform related to JD Technology, and one of Livi’s shareholders.?
Global banks including HSBC Holdings and Standard Chartered are ramping up hiring to tap China's latest market opening - a new investment link with Hong Kong that could yield three billion yuan (S$624 million) a year in fees. The "Wealth Connect" plan, set to launch in the second half of the year, will allow bank customers in nine southern Chinese cities, such as Shenzhen, to invest across the border in Hong Kong and vice versa, further integrating the US$1.7 trillion (S$2.3 trillion) Greater Bay Area economy. Mainland residents will initially face a one million yuan quota for investments in Hong Kong, and the investments will likely be limited to safe products. More than 80 per cent of mainland investors in the Greater Bay Area plan to invest in Hong Kong through the wealth management connect, according to a survey conducted by HSBC and Nielsen Company (Hong Kong).?
HSBC and the Hong Kong Trade Development Council (HKTDC) have inked a strategic partnership to help small-to-medium enterprises (SMEs) across all sectors unlock growth potential in the Greater Bay Area (GBA), and connect the wider business community to new opportunities in the urban cluster. HSBC will become HKTDC’s GBA strategic partner in four main areas: co-hosting GBA knowledge and insights on their respective digital platforms; organising networking events in mainland GBA cities; conducting proprietary research, and providing dedicated services and solutions in their respective fields. HSBC will feed HKTDC’s recently launched GoGBA WeChat Mini Programme with articles and market insights related to doing business in the GBA. HSBC’s business-to-business community platform – HSBC VisionGo – will also be integrated into the GoGBA app, to aid SMEs with value-added resources from the wider business ecosystems that are beneficial for their cross-border business.?
SINGAPORE
- Singapore’s mobile virtual network operator?Gorilla Mobile lets users turn unused mobile data into digital tokens
- Singapore is laying the groundwork for fintech growth
- Private exchange HGX graduates from MAS FinTech Regulatory Sandbox, attains RMO licence
- NTUC Income offers usage-based coverage for electric vehicles
A new mobile virtual network operator (MVNO), Gorilla Mobile, has launched in Singapore. It aims to serve PMETs (professionals, managers, executives and technicians), as well as local and global businesses. Gorilla Mobile’s blockchain-powered SwitchBack feature is an auto switchback function that lets users convert their unused mobile data into digital tokens, known as GorillaGo tokens, which are powered by Ethereum. GorillaGo tokens, which have no expiry date, can then be used to offset future bills, redeem other mobile services, or be shared with others such as colleagues, including those who are overseas. By tokenising mobile data, users can share, transfer, and trade their mobile data with their family and friends who use different telcos in different countries.?
领英推è
Initiatives by the Monetary Authority of Singapore are creating a fertile ground for a burgeoning fintech industry. Banking-as-a-service (BaaS) company MatchMove is partnering with traditional banks to help them lower customer acquisition costs, and is offering lending and buy now, pay later services to other firms. Foreign BaaS players are also attracted to Singapore as a financial hub and the prospective of growth in surrounding countries. Railsbank says that its Southeast Asian business has tripled since launching in Singapore at the end of 2019, and is seeing use cases in insurance, lending, wealth management, travel, and payroll. The global “embedded fintech†market offers large potential, with Bain Capital estimating the overall value at USD 3.6 trillion. Temasek-backed Nium, which has 65 “real-time payments corridors,†just made its first acquisition and is planning for a US listing before the end of next year.?
HG Exchange (HGX) has graduated from the Monetary Authority of Singapore (MAS) FinTech Regulatory Sandbox with a Recognised Market Operator (RMO) licence. With the RMO licence, HGX can now support the issuance and trading of both digital and non-digital capital market products. The member-driven private securities exchange entered MAS's fintech regulatory sandbox in June last year to test a marketplace for private-company shares. It then began trading three months later. Established by Fundnel, PhillipCapital, PrimePartners and Zilliqa, HGX allows for digitised securities issuance and secondary trading of digital securities. It aims to build a strong marketplace where investors can access everything from equities in high-growth companies, funds, and loan products to more unconventional financial products such as high-end luxury goods like art, wines, and whiskies.?
NTUC Income is expanding its coverage on electric vehicles (EVs) by offering new usage-based motor insurance (UBI) to EV owners. Drivers can choose from three types of UBI plans and need only pay the insurance premium pegged to the mileage of their EVs). The move is part of the company's aim to insure all EVs in Singapore and accelerate EV adoption?amid the?Singapore Green Plan 2030.?The inter-ministerial Green Plan, announced in February, included aims such as reducing carbon emissions by transitioning to EVs from internal combustion engine vehicles. To calculate insurance premiums, NTUC Income will partner automotive marketplace Carro to integrate its artificial intelligence-enabled pricing system with the latter's in-vehicle telematics technology. Launched on the new self-service platform Covered, the UBI allows EV owners to choose from three types of usage-based motor insurance plans - comprehensive, third-party, and third-party with fire and theft.?
CHINA
- China urges banks, Alipay to crack down harder on cryptocurrencies
- China's Ant Group highlights distinction between NFTs and cryptocurrencies
China's central bank has recently urged some banks and payment firms, including China Construction Bank and Alipay, to crack down harder on cryptocurrency trading. The People's Bank of China's (PBOC) meeting came after China's State Council said last month it would tighten restrictions on bitcoin trading and mining. The PBOC urged institutions at the meeting to launch thorough checks on clients' accounts to identify those involved in cryptocurrency transactions, and promptly cut their payment channels. "Speculative trading in virtual currencies roils economic and financial order, spawns the risks of criminal activities such as illegal asset transfers and money laundering, and endangers people's wealth," the PBOC said in a statement. The PBOC asked banks and payment companies to invest more in technologies used to better identify crypto-related transactions, and know their customers better.
China's Ant Group has sought to draw a distinction between non-fungible tokens (NFTs) available on its platforms and cryptocurrencies currently subject to a crackdown by authorities, after users expressed confusion. Ant put on sale two NFT-backed app images via its payment platform Alipay and all the items quickly sold out on Wednesday. "NFT is not interchangeable, nor divisible, making it different by nature from cryptocurrencies such as bitcoin," said a spokesperson at AntChain, the Ant unit that develops blockchain-based technology solutions. He said that NFTs can be used to create a unique signature for digital assets. In addition to app images, NFT digital artworks are also auctioned on Ant's Alipay platform. AntChain said in product agreements that it provides blockchain technologies to NFT products. China has over the past month intensified a campaign against cryptocurrency trading and mining, part of efforts to fend off financial risks.?
ASIA
- Southeast Asia enters digital banking era
- Thailand, Malaysia launch cross-border QR payment linkage
- Indonesia loans app Kredivo gets US$100m to tap Asia shopping boom
- GIC-backed South Korean fintech Toss eyes 12-fold growth, IPO by 2025
According to a?Boston Consulting Group (BCG) study, the transformation of consumer expectations and incumbent banks’ slowness to meet evolving consumer needs are creating significant opportunities for Southeast Asia’s new and upcoming digital banks. A survey of consumers and merchants conducted in Indonesia, Malaysia, Singapore, Thailand, and Vietnam found that lack of personalized advice (58%), high fees (45%) and an unattractive image (40%) are the top reasons for consumers to shift from traditional banks in Southeast Asia. This, combined with wider economic growth, growing digital penetration, and the large population of unbanked, are setting a fertile ground for digital banking to thrive in Southeast Asia. In Asia Pacific, China and South Korea are amongst the most developed digital banking markets in the region, with leaders like KakaoBank and WeBank rapidly gaining ground. These winners are branchless, customer-focused and tech-driven, which have enabled them to reach a wide range of customer segments rapidly and at scale.?
The central banks of Thailand and Malaysia have launched a cross-border QR (Quick Response) payment linkage to enable consumers and merchants in both countries to make and receive instant cross-border QR code payments. The move is the first phase in linking the real-time retail payment systems of Malaysia's RPP/DuitNow and Thailand's PromptPay. Users in Thailand are now able to use mobile payment applications to scan DuitNow QR codes to make payments to merchants in Malaysia. Under phase two, expected in the fourth quarter of 2021, users in Malaysia will be able to do the same with Thailand. The final phase will enable both countries to make real-time fund transfers and is due to be in place in the fourth quarter of 2022.?
Indonesian digital lender Kredivo has secured another US$100 million in debt financing from Victory Park Capital Advisors, seeking to accelerate consumer loans during an online shopping boom. Kredivo lets Indonesia's online shoppers "buy now and pay later", an option gaining popularity in a market where people have limited access to credit cards. The start-up plans to use the additional capital to expand in Indonesia and enter new markets in South-east Asia such as Vietnam and Thailand before the end of this year. It plans to partner with consumer finance businesses to launch 'buy now, pay later' in those markets. Kredivo was started in 2016 to let consumers apply for loans through a mobile app, with those qualifying getting approval in minutes. Since last year, it has focused on the "buy now, pay later" business. Similar to credit cards, Kredivo starts charging interest after 30 days.?
Viva Republica, operator of South Korea's largest fintech startup Toss, has raised more than US$400 million at a US$7.4 billion value, to help the super app grow sales 12-fold by 2025 as it heads for a potential initial public offering (IPO). Toss is among global companies like Ant Group and Grab Holdings that are offering all-in-one digital platforms that offer insurance, payments, credit scoring and even securities trading. Toss Securities officially opened its mobile trading system in March, and amassed two million users within the first month. Toss is planning to launch an online bank as early as September, which seeks to utilise its new credit scoring system to manage risk in borrowings and offer lower-interest loans to new users to help convert their existing debt. Toss aims to double its monthly users to 20 million and grow revenue to five trillion won (US$4.4 billion) by 2025, up about 400 billion won (US$352 million) in 2020.?
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I hope you find the information provided in this newsletter to be informative and helpful.?
To ensure that I am addressing the topics that are most important to you, I would welcome your feedback and suggestions.?
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Medhy
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Head of FinTech, StartupXchange & Customer Development at DBS | What the FinTech | Keynote Speaker - Focus on SMEs, AI and Machine Learning
Sr. Sustaining Program Manager at Collins Aerospace
3 年That’s not how you use WTF, Medhy. ???
ESG+Tech+Impact+Fin | Startup Advisor | Investor Engagement | Global Partnerships | International best-selling author
3 å¹´Good to note the incentives for increased EV usage