Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Research
The Impact of Fintech on Central Bank Governance
IMF | Marianne Bechara, Wouter Bossu, Yan Liu, Arthur Rossi | Aug 24, 2021
Fintech presents unique opportunities for central banks. The rapid changes in technology that are transforming the financial system will allow central banks to enhance the execution of various of their core functions, such as currency issuance and payment systems.
But some aspects of fintech pose major challenges.
Central banks have always been at the cutting edge of financial technology and innovation. In the past, the invention of the banknote, the processing of payments through debits and credits in book-entry accounts, and the successive transitions of interbank payment systems from the telegraph to internet protocols were all transformative innovations.
See:
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BIS Research: CBDCs beyond borders: results from a survey of central banks
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Fintech Research and reports
Today, central banks are facing new and unprecedented challenges: distributed ledger technology, new data analytics (artificial intelligence [AI] and machine learning), and cloud computing, along with a wider spread of mobile access and increased internet speed and bandwidth.
The purpose of this note is to discuss the authors’ preliminary views on how, from a legal perspective, central banks can best deal with the impact of fintech on their governance. These preliminary views are based on a review of central banks’ reaction thus far to the challenges posed by fintech to the legal foundations of their governance.
Download the full 23 page PDF report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Open data for finance as an emerging source of GDP growth
OECD The Forum Network | Olivia White | Aug 10, 2021
Even before the COVID-19 crisis, policy makers in the OECD and beyond were identifying the potential for innovation and productivity growth that could be derived from building out digital financial infrastructure including greater sharing of financial data. This focus has helped give rise to the Open Banking Implementation Entity in the United Kingdom, the European Union’s second payment services directive, and broad discussion in the United States around a consumer-authorized data-sharing market, among other initiatives.
To what extent could open-data ecosystems for finance go beyond greater convenience and easier interactions between financial providers and their customers?
Our research suggests that the upside in terms of generating GDP growth is considerable. At the same time, we find that the size of that GDP lift, and how the economic value can be shared among the various market participants, depend in large part on the design and working of each ecosystem, and in particular the degree to which data are standardized and how broadly they are shared.
In our recently published study, we focused on four regions—the European Union, India, the United Kingdom, and the United States—and identified seven mechanisms for value creation from the adoption of open-data for finance.
See: Open Finance data adoption varies by country (but one thing is certain)
For consumers, these ecosystems can increase access to financial services, including for individuals and small businesses who might otherwise be shut out for lack of credit history. They can also improve user convenience, including with potentially substantial time savings from less routine form-filling, among others, and provide a much larger range of financial product options.
For financial providers, the value-creating mechanisms we identified include increased operational efficiency arising from more efficient data management, along with stronger fraud prevention, improved workforce allocation, and reduced friction from data intermediation, given the reduced need to pull in data from third-party providers.
We sized 24 use cases across these seven mechanisms. Extrapolating to a country or regional level, our analysis suggests that the boost to the economy from broad adoption of open-data ecosystems could range from about 1 to 1.5 percent of GDP in 2030 in the European Union, the United Kingdom, and the United States, to as much as 4 to 5 percent in India. All market participants benefit, be they institutions or consumers—either individuals or micro-, small-, and medium-sized enterprises (MSMEs)—albeit to varying degrees.
Only a fraction of that potential value is being accessed currently
- We estimate the UK has accessed about 30 to 40 percent of the potential value
- European Union and the United States are at about 10 percent of the potential
- India, which has been building out its digital financial infrastructure on the back of its Aadhaar digital identification system, has managed to access about 60 percent of the value of open data for finance to date
See: Minister Freeland releases final report with 34 recommendations on Open Banking from the Advisory committee
Capturing more of the potential value will require a greater degree of data standardization and broader data sharing. For now, both are quite varied across the four regions we examined.
Key takeways from our research include the critical importance of establishing trust in the system, along with the infrastructure to support it. Financial data are particularly sensitive, and users are more likely to want to share data if they know what they are sharing and why that sharing is valuable to them.
Digital infrastructure is also a must, and ecosystems with high-assurance digital ID have an advantage in being able to control use of data and reduce friction in managing online accounts.
Continue to the full article --> here
Download the full 36 page PDF report -- > here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CipherTrace August 2021 Crypto Crime Report: Crypto Fraud Dips as DeFi Hacks Grow
CipherTrace | Aug 23, 2021
By the end of July 2021, major crypto thefts, hacks, and frauds totaled $681 million. While this number continues to be dwarfed by previous years’ highs, a breakdown of the types of thefts and fraud confirms a trend observed at the beginning of last quarter—DeFi-related crimes continue to grow quarter over quarter, with Q2 2021 netting criminals new highs in DeFi-related proceeds.
When breaking down crypto crimes by those DeFi and non-DeFi related, a clean pattern emerges. By July 2021, DeFi-related hacks total $361 million, already making up three-quarters of the total hack volume this year—a 2.7x increase from 2020. DeFi-related fraud continues to rise, as well.
See: How Corporations Are Protecting Themselves From Fraud
At the time of this report, DeFi-related fraud accounted for 54% of major crypto fraud volume, whereas last year DeFi-related fraud only made up 3% of the year’s total.
The proliferation and escalation of ransomware targeting critical infrastructure marks another disturbing trend in 2021. In July, REvil ransomware actors demanded $70 million—the highest ever reported ransom— for universal decryption keys as the US Government set its sights on combating ransomware the same way it combats terrorism globally.
On the regulatory front, the world is set to accelerate the implementation of the cryptocurrency “Travel Rule” as the global financial crime watchdog the Financial Action Task Force (FATF) declares that no jurisdictions reported being aware of any virtual asset service providers (VASPs) that are fully compliant with the Travel Rule.
See: Comparison of UK banking providers’ fraud controls
The lack of Travel Rule implementation globally is a major obstacle to effective global AML/CFT mitigation. As such, the FATF has indicated that one of its major next steps will be to accelerate the implementation of the Travel Rule across the world. This move comes as some countries, such as Canada, have postponed Travel Rule enforcement as VASPs continue to examine possible solutions.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Are you a Pig, Gazelle or Bear? Beyond Unicorns, Zoology of startups
Sifted | Maija Palmer | Aug 18, 2021
We all know about unicorns, the term for a startup company with a valuation of more than $1bn which was first popularised by VC Aileen Lee in 2013.
But these days the ranks of unicorns are filling out — there’s now a herd of 672 of them globally — thanks to a glut of investor money. We’ve had to invent the ‘decacorn’ — a startup valued at more than $10bn — and the ‘hectocorn’ — valued at $100bn — to distinguish the standout successes.
See: Forget Unicorns. Zebras are (more sustainable) and the future!
But there are other paths to success than VC-backed rapid growth, and not every startup even wants to be a unicorn. It’s worth taking a moment to consider some of the other animals in the startup menagerie:
Zebra
Zebras, unlike unicorns, are focused more on generating profits than growth at all costs. They are also dual-purpose, both black and white, so they fuse social purpose with shareholder returns.
Rhino
The rhino is a lot like the unicorn — both animals have horns after all. But rhino startups aim to be both big and profitable. In this Tech in Asia article, Nick Nash, cofounder and managing partner of Asia Partners, defines rhinos as companies that have a valuation of $1bn on a price-to-earnings multiple, not on a revenue multiple. Rhinos are actually far rarer than unicorns.
Pigs
Pigs are startups that take advantage of the fact that it has become relatively cheap and easy to make a web product. You can get the development work done at a modest price and even raise some initial capital with a sexy kick-starter campaign.
See: Canada attracts record $4.8 billion in fintech investment in H1’21: how high can it go by year end?
Pigs aren’t building the company for long-term world domination — they’re aiming to sell to a big corporate or a competitor at the right moment.
Bear
A bear is a solitary, awkward creature that values its independence and therefore doesn’t want to take VC money. The founders of these companies choose the bootstrapping route, which makes life harder for them. But if it pays off, they end up rich AND in control of their companies.
Camel
Recently, VCs have been talking more about camel startups. These are creatures that depend less on venture capital to survive. They may raise a few smaller rounds to get going, but can also survive for longer periods in the ‘desert’ of cash-strapped markets.
Cockroach
Cockroach companies aren’t glamorous, aspirational or exciting. But they are great at surviving. Dave McClure, founder of 500 Startups, is credited with coining the term in 2013 to describe resilient companies that optimise for sustainable, steady growth. Like its namesake, the term lived on to grow in the shadows, popped up here and there, and generally survived without making many headlines.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Take home now, pay later with no interest fees
McKinsey & Company | Aug 17, 2021
Financing at the point of sale may be a small share of unsecured lending in the United States today, but it’s growing fast. Banks seeking long-term growth should explore market entry, and merchants should reassess their financing offers.
See: Digital Payments in America – Scaling the Peak
Point-of-sale (POS) financing services in the United States have grown significantly over the past 24 months, especially since the onset of COVID-19. Trends fueling growth include digitization, rising merchant adoption, increasing repeat usage among younger consumers, and an expanding set of players targeting lending at point of sale, a service also known as “buy now, pay later.”
Thus far, fintechs have taken the lead, to the point of diverting $8 billion to $10 billion in annual revenues away from banks, according to McKinsey’s Consumer Lending Pools data. In our view, only a few banks are responding fast enough and boldly enough to compete. Banks that underestimate the threat may see continued loss in share and could lose out on participating in a growing value pool and gaining share among younger and new-to-credit customers, as banks in Australia and China did when facing a similar situation. To avoid that outcome, US banks need to understand the landscape for POS financing and choose from among the emerging models.
See: 3 Ways Fintech Is Changing Homebuying
Our annual POS Financing Survey shows that US consumers are getting used to seeking merchant-subsidized credit at point of sale: about 60 percent of consumers say they are likely to use POS financing over the next six to 12 months.
about 60 percent of consumers say they are likely to use POS financing over the next six to 12 months.
Fintechs are capturing almost all the value being created in POS financing because banks have been slow to respond. Consequently, banks have lost about $8 billion to $10 billion in annual revenues to fintechs. Far worse for banks, they are losing access to an acquisition channel with potential to serve highly engaged younger consumers.
Five distinct offerings with integration across the purchase journey
The growth in POS financing for consumers involves five distinct sets of providers and models, each with varying strategies and value propositions (Exhibit 2). 1 Understanding these models gives a sense of the segments they target, the merchant and consumer needs they address, and business models banks and traditional lenders are competing with.
See: Swift launches ‘Go’ moves into low value cross-border payments
Integrated shopping apps
The most prevalent misconception across banks and traditional players is that shopping apps offering “buy now, pay later” (BNPL) solutions are pure financing offerings. While that may be true for the smaller players, the leading Pay in 4 providers are building integrated shopping platforms that engage consumers through the entire purchase journey, from prepurchase to post-purchase.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Meta-analysis shows Emotional intelligence is more important for being a successful entrepreneur than mental ability
PsyPost | | Aug 20, 2021
A meta-analysis including data from over 65,000 business owners points to the importance of emotional intelligence in entrepreneurship. The study, published in the Strategic Entrepreneurship Journal, found that emotional intelligence was a stronger predictor of entrepreneurial success than general mental ability.
See: Culture and Diversity Leadership: Tale of Two Doors
General mental ability refers to the cognitive skills necessary for higher-order thinking, such as reasoning and problem solving. Emotional intelligence, by contrast, describes the ability to recognize, understand, and effectively manage one’s emotions.
While general mental ability has been found to be most important for success in workplace settings, study authors Jared S. Allen and his colleagues proposed that emotional intelligence should be more important for success in entrepreneurship. They reasoned that given the uncertain context, social demands, and emotional challenges involved in starting a business, emotional intelligence should be particularly beneficial in this setting.
When analyzing the data, the researchers found that both general mental ability and emotional intelligence were positively tied to entrepreneurial success. However — as they had predicted — emotional intelligence was a far stronger predictor of success than mental ability. While emotional intelligence explained 89.1% of the variance in entrepreneurial success, mental ability explained only 10.9%. Even when controlling for the type of success (e.g., financial success, firm growth), emotional intelligence remained a stronger predictor of success than mental ability. Neither firm size nor the age of the firm were found to moderate the relationships of either mental intelligence or emotional intelligence on success.
“While our study shows that emotional intelligence is more important for entrepreneurial success compared to cognitive intelligence, we were not able to test possible interactive effects between the two,” Allen noted. “It is possible that cognitive intelligence has a stronger relationship to entrepreneurial success when emotional intelligence is high. Individuals with high levels of cognitive resources perform better when experiencing less stress, suggesting emotional intelligence could aid in the utilization of high cognitive ability.”
See: Three Human-Centric Practices to Become a Better AI Fintech Leader
Allen and his colleagues say that the context of entrepreneurship differs from typical workplace settings in ways that might explain their findings. Building business relationships, dealing with unexpected losses, and remaining motivated through ups and downs are everyday realities for entrepreneurs, and these are all skills that require emotional intelligence. Indeed, studies suggest that people high in emotional intelligence are better at forming positive relationships with others, more resilient in the face of stress, and more self-motivated.
“Our study highlights the fact that entrepreneurship is truly a unique work setting that favors those who can manage themselves and others effectively. The promise of entrepreneurship is that it provides a setting for people to chart their own direction in life through the development of a venture. This development requires the ability to work through one’s own emotions and to influence others,” Allen told PsyPost.
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A Deep Dive into the Best Discount Brokerages in Canada
Guest Post | Aug 13, 2021
With a growing number of options in Canada, the competition between discount brokerages such as Interactive Brokers and Questrade, has never been more fierce. Companies are introducing new and exciting features constantly in a bid to gain more attention and attract new users. With so many options available, users are taking more time to research their options and figure out which is the best choice for them.
Discount brokerages are constantly reviewing user feedback and looking at competitor offerings when developing new features. In the United States and Canada, major developments such as the introduction of commission free trading were made possible in response to customer demands. In the United States, Robinhood was the first brokerage to offer commission free trading to its user base. As Robinhood continued to grow and gain market share, competitors such as Charles Schwab sensed the threat posed. In response, Charles Schwab announced that they would also be offering commission free trading a few years later in 2019. That same day, both E-Trade and TD Ameritrade were quick to respond to these developments, announcing that they would also be offering commission free trading.
These developments not only impacted U.S. based brokerages but Canadian ones as well. Wealthsimple was the first to launch commission free trading for thousands of Canadian stocks and ETFs, following a similar timeline in 2019 as its American peers. Other brokerage firms like Questrade joined in as well, but only offer zero commissions on ETFs.
Over time, Wealthsimple introduced other new features in response to feedback from customers as well. Registered accounts like RRSPs and TFSAs were added to Wealthsimple, and a desktop application was developed to accompany the mobile app. In fact, the company has an entire forum dedicated to Wealthsimple Trade Feature Requests where users can submit ideas!
These are just some examples of how new features were introduced into the Canadian market. Each of these announcements helped to increase competitiveness between discount brokerages and provided users with more choices. But these were just the start, and the discount brokerage firms are continuing to develop new products and services to meet the needs of customers.
Wealthsimple New Features
A major feature that Wealthsimple Trade has recently introduced is fractional shares. Rather than buying an entire share, the feature allows users to choose to buy and sell portions of shares in US and Canadian companies, starting with increments as low as 1 dollar. This benefits users who want to buy shares of Amazon but do not have enough money in their account to invest in a single share that is currently worth over $3,500.
See: Tiger vs. SoftBank: Inside the investing playbooks that upended Silicon Valley
Wealthsimple is not the first Canadian company to offer the feature, as fractional share trading is already available on Interactive Brokers. The feature is currently being rolled out for fourteen stocks — four Canadian and ten American companies.
Shopify (SHOP)
Royal Bank of Canada (RY)
Toronto Dominion Bank (TD)
Canadian National Railway Co. (CNR)
Amazon (AMZN)
Google (GOOGL)
Apple (APPL)
Microsoft (MSFT)
Facebook (FB)
Netflix (NFLX)
Tesla (TSLA)
AirBnB (ABNB)
Coinbase (COIN)
Nvidia (NVDA)
Questrade new features
One of the biggest additions to the Questrade platform over the past few months has been the introduction of Instant Deposit. Launched in June 2021, the feature allows customers to deposit money and trade with it instantly rather than waiting for a transfer processing period. Users can take advantage of the feature through their Visa Debit accounts, with a limit of $3,500 per transaction. Later this year, Questrade is also planning on offering the service through transfers by Interac as well.
Interactive Brokers Canada (IBKR) new features
Already jam-packed full of features, Interactive Brokers released a major update in June 2021 that added even more products and services for their clients. The new tools include basic upgrades like a “Hot News” tab in the platform, redesigned menus for improved ease of access, and the addition of several new research providers. More sophisticated investment instruments also received important upgrades, such as the introduction of US Spot Gold trading and Micro Bitcoin futures contracts. A full list of updates is available here.
Qtrade new features
Qtrade has recently undergone a major rebranding, with a new look, name, and logo. Now known as Qtrade Direct Investing, the company hopes that the new look will help attract new investors to their platform. The new website features a large range of educational tools, with articles targeted towards both new and experienced investors.
Each brokerage firm is bringing their own fresh and new ideas into the market. As a result, consumers are benefiting from new and improved products and services. As new ideas become successful, other companies are likely to introduce similar services. Offerings such as fractional shares have been highly requested, and if Wealthsimple sees good uptake, other brokerages may also choose to follow suit.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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