Category Archives: Digital, NEO and Open Banking

Google is getting into banking with the search giant set to offer checking accounts next year

CNBC | Jeff Cox | Nov 13, 2019

big tech unable to self regulate - Google is getting into banking with the search giant set to offer checking accounts next yearKey Points

  • Google plans to offer checking accounts next year.

  • The project, code-named Cache, will be run in conjunction with Citigroup and the Stanford Federal Credit Union.

Google will offer checking accounts next year, according to a source familiar with the company’s plans, representing Big Tech’s boldest move yet into the consumer banking business.

Most previous efforts have focused on credit cards and payment platforms.

The accounts for the project will be run by Citigroup and the Stanford Federal Credit Union, the source said, confirming a report in The Wall Street Journal.

As part of a project code-named Cache, the company will become the latest Silicon Valley leader to try its hand at the banking space. Previous attempts by Apple and Facebook faced obstacles, with consumers growing increasingly skeptical over providing large technology companies with their personal information.

Google does not intend to sell customers’ data, Caesar Sengupta, an executive at the firm, told the Journal.

“If we can help more people do more stuff in a digital way online, it’s good for the internet and good for us,” Sengupta said.

For years, banks had been concerned about competition from small, nimble fintech upstarts. But it turns out that Big Tech companies like Google and Amazon, already armed with relationships with hundreds of millions of consumers, may prove to be the larger threat.

See:

 

Last year, Amazon had reportedly been in talks with J.P. Morgan over a checking account. Apple launched a credit card for iPhone users earlier this year with Goldman Sachs. Uber announced its push into financial services last month, and just Tuesday Facebook announced a new system to facilitate payments across its social media and messaging systems.

Apple’s offering has run into multiple issues. Its partnership with Goldman has been tense after Apple said it created the card without help from a bank. Also, complaints have arisen recently that the algorithm used to determine customers’ credit limits is biased toward men.

Facebook’s foray into digital currency saw major financial backers drop out over regulatory concerns.

Sen. Mark Warner, D-Va., a leading voice on regulating tech companies on Capitol Hill, told CNBC’s “Squawk Box”  on Wednesday,

“I’m concerned when we got, whether it’s libra or the Google proposal, ... these giant tech platforms entering into new fields before there are some regulatory rules of the road.”

Continue to the full article --> here

 


NCFA Jan 2018 resize - Google is getting into banking with the search giant set to offer checking accounts next year 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

Latest news - Google is getting into banking with the search giant set to offer checking accounts next yearFF Logo 400 v3 - Google is getting into banking with the search giant set to offer checking accounts next yearcommunity social impact - Google is getting into banking with the search giant set to offer checking accounts next year
NCFA Newsletter subscribe600 - Google is getting into banking with the search giant set to offer checking accounts next year

REGISTER WITH NCFA 25% DISCOUNT CODE -> BLOCKCHAIN-19 (case sensitive)


NCFA Newsletter Banner Ad Blockchain  - Google is getting into banking with the search giant set to offer checking accounts next year

NCFA Fintech Confidential Issue 2 FINAL COVER - Google is getting into banking with the search giant set to offer checking accounts next year

 

Open Banking in the UK: what’s happened so far

11fs Pulse | Joanne Kumire | Aug 27, 2019

open banking 2 - Google is getting into banking with the search giant set to offer checking accounts next yearIntroduction to Open Banking in the UK

The first step towards banking automation came in 1967 following the installation of an ATM in the UK. Over 50 years later, Open Banking arrived, ushering in a new era of digital banking, which ironically is lessening the need for ATMs.

It is no secret that the financial industry was in dire need of a makeover, I mean except for a few bankers (if that), no-one really understood how most of banking worked even though it plays an integral role in our everyday lives. The 2008 global financial crisis was evidence of that and this disaster led to a review of regulations, from which Open Banking – the first enactment of PSD2 – was birthed.

Since January 2018, we have heard a lot about Open Banking, the regulation that has released the financial data of consumers from the banks’ ownership and into the hands of consumers. That means regulated banks in the UK are now required to let customers share their transaction data such as spending habits and regular payments with authorised third-party providers (TPPs) offering other services – as long as the customer has given permission. This is done in a secure manner through the use of Application Programming Interfaces (APIs), which provide TPPs with access to banking systems and customer databases. This allows end-users to manage bank accounts via third-party service interfaces that do not belong to the primary bank. There has already been a lot of discussion on what it is and how it will revolutionise the financial industry going forward, so I will skip all that and focus on the impact that it has had on the UK banking industry thus far.

See:  Open Banking Era Starts in Australia (Feb 2020)

Many of those in the media and the financial industry are still questioning whether there has been any change as a result of Open Banking’s implementation. The short answer is “Yes, a lot has changed.” It took us over a century to build the mess that was the banking industry, especially the lack of transparency for consumers, and somehow Open Banking is expected to result in a complete overhaul in one year (go figure). We can liken this to how contactless cards are now an essential component of payments, yet they were only initially introduced in 2007. The massive rates of adoption we’ve seen (and even then only in some countries) have only occurred in the past three years. Change takes time and the wheels are in motion.

Open Banking has brought a lot of significant propositions that were impossible two years ago to market. The use of open APIs to expose various data from a bank to TPPs has become one of Open Banking’s great achievements. To assist with delivering Open Banking, the organisation Open Banking Implementation Entity (OBIE) formed by the Competition and Markets Authority (CMA) have developed a suite of tools to enable firms to join the Open Banking ecosystem, share data securely and swiftly via the APIs and implement the standards consistently. More in-depth analysis on Open Banking APIs can be found here.

Ecosystem Players

Open Banking platforms

In response to the introduction of Open Banking standards, a lot of financial services providers launched their own Open Banking platforms. These platforms enable access to various banks in different countries through a secure, single API.

One of the largest such platforms is offered by payments firm Klarna, the most valuable fintech company in Europe as of August 2019. The firm offers a range of online services including direct payments, instalment plans and pay-later options, for both consumers and businesses. Klarna’s XS2A API enables access to more than 4,300 banks across 14 European markets and can be used by fintechs and other businesses, to develop, test and bring new services and products such as payment initiation and switching services to market.

Volt, a Dutch payments provider, is another platform which operates across 14 markets and enables TPPs access to over 4,000 banks. By connecting to this platform, these TPPs can perform a range of services such as the ability to initiate payments on behalf of consumers.

See:  The Case for Open Banking: Benefiting The Underserved

The significant advantage Open Banking platforms promise to the industry is the ability to empower consumers by increasing their ability to find new products and offering clarity over their finances and, in doing this, bringing the focus back to customer needs. Firms can meet this goal by connecting to the platforms in order to develop offerings like payment initiation, new credit products, advisory services and the ability to switch between mortgage providers.

What is also interesting is that in an effort to maintain their positions in this ever-changing market, card scheme providers are also looking at ways in which Open Banking can expand their offerings. Mastercard recently launched suites of Open Banking applications and has four separate offerings, which include verifying the real-time status of TPPs and an advice centre for banks building out Open Banking strategies. Educating consumers on the potential benefits of Open Banking will be critical to enabling adoption at scale and the platform aims to assist banks in this. As an organisation with a global reach, it will be helping banks explore and access solutions that are safe, reliable and trusted by customers. By entering the Open Banking ecosystem, it can also provide the nascent sector with expert advice – especially regarding data security, one of the key concerns when it comes to consumer adoption. Therefore, an organisation that already specialises in payments technology and securing consumer data will support adoption.

Such platforms are essential components of the Open Banking ecosystem, as they assist both financial institutions and TPPs navigate the opportunities and challenges presented by the API economy.

Third-party providers

PSD2 has identified two types of TPPs; Account Information Service Providers (AISPs) and Payment Initiation Service Providers (PISPs). An AISP is any business that uses a customer’s account data to provide services such as aggregating financial information in one place, tracking their spending or planning their finances. A PISP is any company that initiates digital payments on behalf of the user, directly from their bank account, offering an alternative to the use of a card.

All TPPs wishing to connect to bank APIs have to be authorised by the UK’s financial regulator, the FCA and can be found on this register. There were 137 regulated providers, made up of 85 third party providers and 52 account providers, and 32 regulated entities with at least one proposition live with customers by the end of June 2019, according to OBIE. This is in comparison to 57 regulated providers, 36 TPPs and 21 account providers a year earlier, evidencing the growth of the ecosystem and potential for its use.

So far, AISPs are the most common type of TPP, and a lot of the changes enabled by Open Banking that this report will explore are heavily linked to AISPs. Some of the services and tools that are associated with ASIPs include; price comparison, money management tools, quicker and more accurate access to financial products and speeding up manual processes such as applying for a mortgage, a loan and so on.

Services already being offered by banks

A single view of accounts

Account aggregation is the most common implementation of Open Banking so far, as account information APIs were the first type of API mandated on the CMA9 banks. It is a service which many customers including those unaware of this regulation are taking advantage of. Those customers that have adopted account aggregation found the benefits of keeping track of many different bank products in one place out-weighed the reluctance to share their data.

See:  Lack of open banking framework forcing Canadian consumers to choose between convenience and security, TD exec says

The initial focus was just on debit accounts; however, banks found customers needed to see different types of accounts in order to get the most use out of the products, and are starting to include credit and savings account aggregation. Lloyds has already introduced this feature to its app, and Monzo will be rolling out this functionality soon. It should be noted, however, that though open banking will be applied to this, this functionality is still largely achieved via screen scraping.

Aggregation also paved the way for new personal finance management (PFM) tools, something newer market entrants built in-house, from the beginning as part of their customer acquisition strategies. PFM tools and the best-in-class offerings in this space were already extensively covered in a previous report.

PFM

Traditional banks have done well at providing basic payments functionality and infrastructure but arguably have done less well at helping customers effectively manage their spending. PFM tools help with this by providing insights into spending habits and guidance around budgeting and savings they can garner from accessing transactions. HSBC was the first UK incumbent bank to offer PFM tools via it’s Connected Money app, which lets customers view their accounts at up to 21 different banks; however, this is done via screen scraping. Other providers in this space include Yolt, built and owned by Dutch bank ING, which is integrated with all CMA9 banks and many more. It also offers a marketplace of services, connected via APIs, and payment initiation services.

A change in business models

Challengers vs. Incumbents – who benefits most?

On the surface, Open Banking plays into the hands of challenger banks as connectivity and agility of this nature are very much their domain; they are selling themselves on their technology and the ability to provide integrated, on-demand and tailored services. At the same time, the regulation was widely hyped as bad news for incumbent banks as it risks turning them into commodity providers. That’s because most banking solutions are outdated, and interfaces are not intuitive. However, Open Banking APIs offer real opportunities to deliver innovation internally. It has provided mainstream banks with the opportunity to increase loyalty by offering their customers the best-of-breed products and services via already widely-used APIs.

That said, the enforcement of Open Banking threatened the very existence of the traditional banking business model and incumbents couldn’t help but resist. Deadlines were met with excuses, case in point, five of the UK CMA9 having to be issued with warnings after failing to implement Open Banking functionality meant to allow third parties consent within their mobile apps by March 2019.

A lot of the resistance has been blamed on the lack of clarity and the debates around how to comply. It could also be argued that incumbents were non-cooperative as they felt it was not in their best interests to actively engage in something that offers new challenger brands even more opportunity to disintermediate them.

See:  Open banking has a big branding problem, government’s public opinion research suggests

One thing is becoming evident though, the incumbents have come to the realisation that their disdain for Open Banking is not going to stop it, and if anything it will only slow their progress in addition to costing them a lot of money in hefty fines for failing to comply, not to mention the potential loss of customers. This has resulted in a tangible shift on the part of banks, who are now viewing Open Banking as an opportunity to compete and innovate, rather than a compliance exercise. This is evidenced by the number of incumbents introducing account aggregation.

Partnerships and platforms

Open Banking has brought about new business models including deep partnerships and marketplace banking. It is safe to say, it was about time customers were offered such options in a space as important as personal finance and banking. This model offers convenience to customers as they have a digital shop window for the best products and services on offer in a single place, irrespective of who supplies them.

On the banks’ part, Open Banking has allowed them and their partners to build platforms that include integrations with other service providers, enabling them to build up their offerings faster and create a one-stop-shop without having to develop additional proprietary products. Challenger banks took to this idea with alacrity – Monzo developed a dynamic API system from the beginning, allowing different fintech front-end systems to communicate with its back-end core systems. Starling built a marketplace which features insurers, mortgage brokers and many other kinds of financial services providers.

Continue to the full article --> here

 


NCFA Jan 2018 resize - Google is getting into banking with the search giant set to offer checking accounts next year 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

Latest news - Google is getting into banking with the search giant set to offer checking accounts next yearFF Logo 400 v3 - Google is getting into banking with the search giant set to offer checking accounts next yearcommunity social impact - Google is getting into banking with the search giant set to offer checking accounts next year
NCFA Newsletter subscribe600 - Google is getting into banking with the search giant set to offer checking accounts next year

REGISTER WITH NCFA 25% DISCOUNT CODE -> BLOCKCHAIN-19 (case sensitive)


NCFA Newsletter Banner Ad Blockchain  - Google is getting into banking with the search giant set to offer checking accounts next year

NCFA Fintech Confidential Issue 2 FINAL COVER - Google is getting into banking with the search giant set to offer checking accounts next year

 

Recession gatecrashes Hong Kong’s fintech party | SFC outlines VATP regulatory framework and China’s digital currency

Reuters | Sharon Lam | Nov 8, 2019

HK - Google is getting into banking with the search giant set to offer checking accounts next year

Recession gatecrashes Hong Kong’s fintech party

HONG KONG (Reuters Breakingviews) - Hong Kong’s economic travails are an unwelcome guest in the city’s fintech party. Enthusiasm for online-only banks was palpable at the Fintech Week conference. Yet months of political unrest have hit small businesses, and the added risks may delay local launches by the likes of Standard Chartered and Tencent.

Attendees this week descended on Hong Kong’s Lantau Island for the financial hub’s fourth annual gathering. With appearances from top officials like Financial Secretary Paul Chan to executives at Singapore’s $14 billion Grab and other rising stars, there was plenty of buzz. Hot topics included central bank digital currencies and cross-border payments.

See:  News on China cryptocurrency and more reforms

Virtual banks, as these branchless outfits are known in Hong Kong, took centre stage. Earlier this year, Hong Kong authorities granted eight licenses for such firms to offer payments, deposits and other services, in a long overdue shakeup. HSBC, Bank of China Hong Kong, Hang Seng Bank and Standard Chartered account for some three-quarters of the city’s mortgages and two-thirds of retail loans. Online challengers, including a joint venture between Chinese handset maker Xiaomi and AMTD, as well as insurance giant Ping An, are ready to muscle in. About 30% of total banking revenue, or $15 billion, is up for grabs, analysts at Goldman Sachs reckon.

Yet just 40 kilometres away from sunny Lantau, Hong Kong’s central business districts and elsewhere are reeling from broader malaise. The financial centre’s economy shrank by 3.2% in the third quarter, plunging it into recession for the first time in a decade, as increasingly violent anti-government protests took hold. Lenders now face lower profitability as risks of loan losses and higher credit costs rise, Morgan Stanley analysts warned in a recent note. The protest-battered city’s 340,000 small and medium-sized businesses, prime customers for online-only banks, have been hit the hardest. Virtual banks say they remain fully committed to Hong Kong.

Continue to the full article --> here

 

Latham and Watkins LLP | Simon Hawkins and Kenneth Y.F. Hui

SFC outlines new regulatory framework for virtual asset trading platforms, HKMA highlights recent FinTech initiatives, and PBOC discusses China’s forthcoming central bank digital currency.

The fourth annual Hong Kong FinTech Week conference kicked off with a major announcement from Mr. Ashley Alder, Chief Executive Officer of the Securities and Futures Commission (SFC), who introduced a new, formalized regulatory framework for virtual asset trading platforms (VATPs). A panel of central bankers also discussed stablecoins and central bank digital currencies, including the People’s Bank of China’s (PBoC) forthcoming central bank digital currency, referred to as the digital currency / electronic payment (DCEP) coin.

VATP Regulation

Last year, the SFC published its conceptual framework for the potential regulation of VATPs and, since then, the SFC has worked behind the scenes with some of Hong Kong’s existing VATPs to better understand their operations, and to explain the SFC’s regulatory expectations, while also assessing VATPs capability to comply with the SFC’s expected requirements.

Importantly, under Hong Kong’s securities laws, the SFC only has power to regulate a VATP that trades virtual assets or tokens that are legally “securities” or “futures contracts.” Bitcoin and other, more familiar, cryptoassets are not securities, and nothing in the SFC’s new framework alters this position. The new framework therefore only applies to VATPs, which include at least one security virtual asset or token for trading. Thereafter, the SFC’s new rules will apply to all of a VATP’s operations, even if the vast majority of other virtual assets or tokens traded on the platform are not securities.

See:  Hong Kong being pulled into the 21st Century — digital banking licenses finally arrive

Essentially, the new regulatory framework allows a VATP to “opt in” to SFC regulation by electing to trade at least one security virtual asset. The SFC’s view is that the principal benefit of being regulated is that the VATP would be able to represent itself to clients as a supervised business. Once licenses are granted to the VATPs that choose to opt in, investors will then be able to distinguish easily between regulated platforms and platforms that are not regulated.

VATPs that wish to opt in under the new framework may apply to the SFC to be licensed for Type 1 (dealing in securities) and Type 7 (providing automated trading services) regulated activities. The SFC will only accept license applications from centralized VATPs that are based in Hong Kong, so decentralized and peer-to-peer VATPs will not be able to obtain licenses (for the time being, at least).

License applicants must demonstrate that they are willing and able to comply with the expected standards under the regulatory framework published by the SFC. Under the key licensing conditions that will be imposed on licensees, a VATP operator must:

  • Only offer its services to “professional investors” (i.e., the general public will not be able to trade on SFC-licensed VATPs)
  • Have stringent criteria for the inclusion of virtual assets to be traded on its platform
  • Obtain the SFC’s prior written approval for any plan or proposal to add any product to its trading platform
  • Submit monthly reports to the SFC on its business activities
  • Engage an independent professional firm acceptable to the SFC to conduct an annual review of its activities and operations and prepare a report confirming that it has complied with the licensing conditions and all relevant legal and regulatory requirements
  • Only provide services to clients who have sufficient knowledge of virtual assets
  • Not conduct any offering, trading, or dealing activities of virtual asset futures contracts or related derivatives
  • Adopt a reputable external market surveillance system to supplement its own market surveillance policies and controls
  • Ensure that an insurance policy covering the risks associated with custody of virtual assets is in effect at all times

Notably, SFC-licensed VATPs should only include security virtual assets that are (i) asset-backed; (ii) approved or qualified by, or registered with, regulators in comparable jurisdictions; and (iii) with a post-issuance track record of 12 months.

VATPs

In light of the intensive assessment process and to meet the expected regulatory standards, the time required for processing a licensing application from a VATP may be longer than the 16-week period that is typically expected for a standard securities licensing application.

If a platform operator is licensed, its infrastructure, core fitness and properness, and conduct of virtual asset trading activities should be viewed as a whole. Although trading activities in non-security virtual assets or tokens are not “regulated activities,” the SFC’s regulatory remit over all of these aspects of platform operations will be engaged once a platform involves trading activities in security virtual assets or tokens, even if these activities are a small part of its business.

The SFC has stated that it will continue to monitor the evolution of cryptoassets and work with the Hong Kong government to explore the need for legislative changes in the longer term.

See:  The future of Asia: Asian flows and networks are defining the next phase of globalization

Other FinTech Initiatives in Hong Kong

Mr. Eddie Yue, Chief Executive of the HKMA, highlighted a series of recent initiatives aimed to foster the FinTech ecosystem in Hong Kong:

  • The subsidiaries of Hong Kong Interbank Clearing Limited and Institute of Digital Currency of the PBoC have signed a memorandum of understanding to connect the digital trade finance platforms of Hong Kong and the PRC.
  • The HKMA and the Bank of Thailand are conducting a joint research project to study the application of central bank digital currency to cross-border payments, with a view to facilitating HKD-THB payment-versus-payment among banks in Hong Kong and Thailand. A joint report is scheduled for release in the first quarter of 2020.
  • The first-ever innovation hub of the Bank of International Settlements (BIS) commenced operations in Hong Kong in November 2019. The mandate of the BIS innovation hub is to identify and develop in-depth insights into critical trends in financial technology of relevance to central banks, to explore the development of public goods to enhance the functioning of the global financial system, and to serve as a focal point for a network of central bank experts on innovation.
  • The HKMA is conducting a study on the application of artificial intelligence (AI) technology in the banking industry and will release a series of publications on this topic in the coming months. This announcement follows a circular issued by the HKMA earlier in November 2019, setting out high-level principles that banks should take into account when designing and adopting AI and big data analytics applications.
  • The HKMA has jointly launched the Fin+Tech Collaboration Platform with the Hong Kong Science and Technology Parks to support FinTech development. Industry players can use the platform to organize FinTech-related activities, such as hackathons.

Continue to the full article --> here

 

 


NCFA Jan 2018 resize - Google is getting into banking with the search giant set to offer checking accounts next year 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

Latest news - Google is getting into banking with the search giant set to offer checking accounts next yearFF Logo 400 v3 - Google is getting into banking with the search giant set to offer checking accounts next yearcommunity social impact - Google is getting into banking with the search giant set to offer checking accounts next year
NCFA Newsletter subscribe600 - Google is getting into banking with the search giant set to offer checking accounts next year

REGISTER WITH NCFA 25% DISCOUNT CODE -> BLOCKCHAIN-19 (case sensitive)


NCFA Newsletter Banner Ad Blockchain  - Google is getting into banking with the search giant set to offer checking accounts next year

NCFA Fintech Confidential Issue 2 FINAL COVER - Google is getting into banking with the search giant set to offer checking accounts next year

 

Robinhood’s ‘infinite money’ glitch has reportedly drawn regulatory scrutiny

Markets Insider | Ben Winck | Nov 8, 2019

vault door - Google is getting into banking with the search giant set to offer checking accounts next year

  • Robinhood's "infinite leverage" glitch has placed the company back under regulator scrutiny, which could result in a fine, Bloomberg reported Thursday.
  • One person on the WallStreetBets sub-Reddit — the forum where much of the discussion around the glitch has taken place — described the bug as an "infinite money cheat code."
  • The Securities and Exchange Commission and the Financial Industry Regulatory Authority are the two agencies most likely to investigate the matter. Both have the authority to levy fines for financially-irresponsible behavior.
  • The glitch that allowed traders to borrow limitless amounts of capital was exploited by about 20 users and led to losses of less than $100,000 for Robinhood, a source familiar with the matter told Bloomberg.

Members of the WallStreetBets subreddit discovered the bug in late October, with one user deeming it an "infinite money cheat code."

The bug allowed traders to borrow seemingly-limitless amounts of capital without posting enough cash as collateral. The glitch was exploited by about 20 Robinhood Gold users and led to losses of less than $100,000 for the company, a source familiar with the matter told Bloomberg.

The Securities and Exchange Commission and the Financial Industry Regulatory Authority are the two agencies most likely to investigate the matter. They typically look into brokerage outages and irregularities, and are authorized to levy fines as a penalty for financially-irresponsible actions.

Robinhood said on Thursday it banned the participating accounts and made a "permanent update" to prevent the trading pattern. Some Reddit users debated the statement, commenting Thursday afternoon that the core flaws still exist in some capacity.

The trading platform is also seeking a bank license from the government, and the misstep could curtail efforts to expand in the highly-regulated finance sector.

The gaffe isn't Robinhood's first. The trading platform unveiled a cash management product last December that would pay 3% interest on deposits, and advertised the service as insured by the Securities Investor Protection Corp. The Washington nonprofit — which insures investors against losses should a trading platform go under — quickly noted that it never backed the service.

Robinhood subsequently pulled the product after increased public and regulatory scrutiny. An updated cash management service was unveiled October 8, but touted a 1.8% yield on cash deposits, nearly half the rate it previously boasted.

Continue to the full article --> here

 


NCFA Jan 2018 resize - Google is getting into banking with the search giant set to offer checking accounts next year 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

Latest news - Google is getting into banking with the search giant set to offer checking accounts next yearFF Logo 400 v3 - Google is getting into banking with the search giant set to offer checking accounts next yearcommunity social impact - Google is getting into banking with the search giant set to offer checking accounts next year
NCFA Newsletter subscribe600 - Google is getting into banking with the search giant set to offer checking accounts next year

REGISTER WITH NCFA 25% DISCOUNT CODE -> BLOCKCHAIN-19 (case sensitive)


NCFA Newsletter Banner Ad Blockchain  - Google is getting into banking with the search giant set to offer checking accounts next year

NCFA Fintech Confidential Issue 2 FINAL COVER - Google is getting into banking with the search giant set to offer checking accounts next year

 

Vancouver-based Grow Technologies acquired by Alberta’s ATB Financial

Betakit | Nov 8, 2019

Kevin Sandhu - Google is getting into banking with the search giant set to offer checking accounts next yearVancouver-based FinTech startup Grow Technologies, which develops software solutions in the loan management space, has been acquired by Alberta’s ATB Financial. The purchase price was not disclosed.

“With the Grow assets and team, we are strengthening that position by accelerating our digital experience for our customers.”

Through the acquisition, the majority of Grow’s team members, including founder and CEO Kevin Sandhu (who authors BetaKit’s yearly Canadian Tech Companies to Watch list), will transition to the ATB team. ATB said its customers will begin to use Grow’s digital services within the next few months. Customers will have access to Grow’s digital platform, which was designed to help financial institutions acquire new users and grow wallet share with existing users.

“The entire Grow team is excited about a new chapter ahead of us as we look to bring our FinTech solutions and expertise to ATB,” Sandhu told BetaKit.

Grow offers a range of cloud-based digital banking solutions spanning retail and business banking. Founded in 2014, the company has developed a variety of software solutions, including account opening and lending for SMEs and retail, a personalized financial health tool, and Finsnap, a bank account data aggregator. Grow also uses big data and machine learning algorithms to improve the performance of its platform, aiming to make the platform “smarter and better over time.”

See:  How AI may help solve banks’ customer relationship issues

The startup has partnered with a number of financial institutions in its five-year history, including First West Credit Union, Celero, National Bank of Canada, and Motusbank, the digital spin-off of Ontario’s Meridian Credit Union.

“With the Grow assets and team, we are strengthening that position by accelerating our digital experience for our customers,” said Curtis Stange, president and CEO of ATB Financial. “This acquisition is part of our strategy of putting customers first while driving growth to support Alberta’s economy.”

Continue to the full article --> here

 

More from the original ATB Financial Release | Nov 8 , 2019

ATB Financial enhancing customer experience with acquisition

EDMONTON, Nov. 8, 2019 /CNW/ - ATB Financial is proud to announce its acquisition of the technology assets of Grow Technologies Inc. to bring a new, enhanced digital experience to our customers.

Through conversations with our customers, ATB heard their need for convenient online tools that operate seamlessly so they can quickly open accounts and request loans. With ATB's acquisition of Grow, customers will soon have access to an easy-to-use and time-saving digital platform that will significantly improve their banking experience.

Grow is a leading enterprise fintech company that is known for delivering exceptional, AI-powered customer experiences with hyper-personalized financial insights. The assets acquired include Grow's digital account and loan origination platform, FinSnap financial insights technology, and other proprietary digital banking technology solutions.

View release

 


NCFA Jan 2018 resize - Google is getting into banking with the search giant set to offer checking accounts next year 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

Latest news - Google is getting into banking with the search giant set to offer checking accounts next yearFF Logo 400 v3 - Google is getting into banking with the search giant set to offer checking accounts next yearcommunity social impact - Google is getting into banking with the search giant set to offer checking accounts next year
NCFA Newsletter subscribe600 - Google is getting into banking with the search giant set to offer checking accounts next year

REGISTER WITH NCFA 25% DISCOUNT CODE -> BLOCKCHAIN-19 (case sensitive)


NCFA Newsletter Banner Ad Blockchain  - Google is getting into banking with the search giant set to offer checking accounts next year

NCFA Fintech Confidential Issue 2 FINAL COVER - Google is getting into banking with the search giant set to offer checking accounts next year

 

Lack of open banking framework forcing Canadian consumers to choose between convenience and security, TD exec says

Financial Post | Geoff Zochodne | Nov 5, 2019

TD open banking - Google is getting into banking with the search giant set to offer checking accounts next yearOpen banking is already happening in the market and regulators need to catch up

A lack of action on open banking could be forcing Canadian consumers to choose between convenience and security when it comes to third-party financial service providers, according to the chief digital officer of one of the country’s biggest banks.

“For me, there’s a problem,” Rizwan Khalfan, Toronto-Dominion Bank’s chief digital and payments officer, told the Financial Post at the bank’s technology day last week. “That’s an unfair trade-off.”

So-called open banking is a framework that would allow consumers and businesses to let third-party companies access their financial transaction data via secure online channels known as application programming interfaces (API). This could allow companies to design products and services with the data, as well as possibly enable easier account-switching.

Ottawa has been weighing an open-banking framework since 2018, but has yet to release the results of a consultation process launched in January.

In the meantime, the financial technology industry has been developing quickly, and apps that use “screen scraping” — a process whereby customers hand over their login credentials to a third party which then retrieves their financial information — have grown in popularity. This process can violate the terms and conditions of a bank account and could lead to increased risk of identity theft and cyberattack, according to a Senate of Canada committee report.

Khalfan called this an “emerging problem” in Canada that must be solved.

See:  Open banking has a big branding problem, government’s public opinion research suggests

TD is proposing the government pursue an open banking model that is along the lines of the industry-led model in the United States, where TD already has the necessary technology in place.

“We’ve built out our APIs and we’ve actually gone live with them in the U.S. in the last month,” Khalfan told the Post. “Because we are North American, we leverage our investments on both sides of the border, so we are planning to use the same API gateways in Canada.”

Khalfan expects a third-party certification process in Canada, but TD is proposing an independent assessment organization that would be overseen but not run by regulators. Everyone in the open-banking “ecosystem” would have to follow industry standards, which would be encouraged by regulators.

“There’s enough industry data standards available that we can actually leverage one of them and then tailor it to our needs in Canada,” Khalfan said.

He also said they are working with regulators and financial-technology firms, and added sorting out standards could be done “in months.”

“An industry-led solution has the potential to be a lot faster,” Khalfan said.

An alternative to TD’s vision is the model that has been implemented in the United Kingdom, where a regulator found bigger banks did not have to compete all that hard for business, which left consumers paying more for their services.

Open banking was part of the recommended solution, and the U.K.’s biggest banks were mandated to make personal and small business account data available to third parties via APIs. Standards were set by the bank-funded Open Banking Implementation Entity and the Financial Conduct Authority approves third parties.

By contrast, TD’s proposal would see a customer engage with a third party provider or app, which would then — usually via an aggregator — send a request to the bank for the consumer data. The bank would ask the customer if they consent to sharing the data, Khalfan said. If so, the data would be sent through industry-standardized APIs.

See:  Open Banking Era Starts in Australia (Feb 2020)

Khalfan’s concerns appear to echo feedback the government received in meetings with around 200 stakeholders earlier this year, as detailed in documents obtained by the Post following an access-to-information request.

“An area of consensus among stakeholders is that elements of open banking are already happening in the market and there needs to be consideration of how this activity is managed,”

says a memo sent to an associate deputy finance minister ahead of a March meeting with the lead of Australia’s open banking review.

“Stakeholders are not of the view that the status quo (redacted) is tenable or desirable,” it says.

 

Continue to the full article --> here

 


NCFA Jan 2018 resize - Google is getting into banking with the search giant set to offer checking accounts next year 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

Latest news - Google is getting into banking with the search giant set to offer checking accounts next yearFF Logo 400 v3 - Google is getting into banking with the search giant set to offer checking accounts next yearcommunity social impact - Google is getting into banking with the search giant set to offer checking accounts next year
NCFA Newsletter subscribe600 - Google is getting into banking with the search giant set to offer checking accounts next year

REGISTER WITH NCFA 25% DISCOUNT CODE -> BLOCKCHAIN-19 (case sensitive)


NCFA Newsletter Banner Ad Blockchain  - Google is getting into banking with the search giant set to offer checking accounts next year

NCFA Fintech Confidential Issue 2 FINAL COVER - Google is getting into banking with the search giant set to offer checking accounts next year

 

Uber announces deeper push into financial services with Uber Money and Understanding its threat to the financial industry

CNBC | Hugh Son | Oct 28, 2019

Dara Khosrowshahi CEO Uber - Google is getting into banking with the search giant set to offer checking accounts next yearKey Points

  • The ride company announces a new division called Uber Money, which includes a digital wallet and upgraded debit and credit cards.

  • The emphasis, at first, will be expanding Uber’s efforts to give its 4 million-plus drivers and couriers around the world access to a mobile bank account so they can get paid after each ride.

  • Uber could one day offer a bank account to consumers on its platform, according to Uber Money head Peter Hazlehurst.

Ride-hailing giant Uber is making a deeper push into financial services.

The company announced on Monday the formation of a new division called Uber Money to house its efforts, which include a digital wallet and upgraded debit and credit cards. The emphasis, at first, will be expanding Uber’s efforts to give its 4 million-plus drivers and couriers around the world access to a mobile bank account so they can get paid after each ride, according to Peter Hazlehurst, who will head the new division.

“We wanted to help everybody understand that there’s a new part of Uber that’s focused on financial services and that has a mission of giving people access to the type of financial services they were excluded from,” Hazlehurst said in a phone interview.

Under pressure to turn a profit amid competition from new ride-sharing entrants around the world, Uber is betting that by building out its financial ecosystem, it can keep drivers and riders loyal to its platform. The company topped 100 million monthly active users this year. Many of them use credit cards to pay for rides and food orders. Future products could remove costs related to financial middlemen or generate new revenue streams.

See:  Uber is making a fintech push with a New York hiring spree

In June, CNBC was first to report that Uber was ramping up the creation of financial products by hiring engineers for a fintech outpost in New York.

Uber is rolling out globally a debit card with an enhanced “instant pay” service it has been testing in the U.S. and a few other markets. The feature has taken off in the U.S, with more than 70% of driver payments made using instant pay, according to Hazlehurst. It is essentially a no-fee banking account, with the debit card in the U.S. linked to an account provided by Green Dot.

“Not only do you get access to your earnings in real time, it doesn’t cost you anything to keep the money there and you can spend it whenever you want to,” Hazlehurst said.

Cash-strapped drivers

These payment innovations highlight the reality that many in the gig economy are struggling to make ends meet. Another popular feature, no-cost $100 overdrafts, helps cash-strapped drivers pay for gas to kick off a working day. It is, however, a better alternative than high-interest payday loans.

Uber’s ambitions could bring drivers into the realm of digital finance in parts of the world where cash is still king, like Pakistan and Bangladesh. About 40% of all Uber trips globally are paid using paper currency, Hazlehurst said, and Uber is eager to bring that figure down.

See:  Uber Banking: Fintech Aims to Revolutionize Financial Services in Canada

After equipping drivers with electronic bank accounts — echoing the model of so-called challenger banks like Chime and Varo — would Uber one day look to provide its many millions of riders with an account, too?

“I think so,” Hazlehurst said. “The reality is that the needs of our partners in the U.S. and in Brazil and in Australia and in India mirror in many ways the needs of consumers as well, particularly in the cash-heavy economies. And the opportunity that we have is to expand to help all of those people have access to financial services.”

One advantage Uber has over other new entrants into banking is its massive scale, which allows the company to negotiate better deals with vendors, he said. “We don’t have to take the traditional fee income model to operate these services,” Hazlehurst said.

Continue to the full article --> here

--------------

Understanding Uber Money its threat to the financial industry

Future of Finance | Lex Sakolin | Nov 4, 2019

Uber has entered finance! The end is nigh! The boogeyman is here!

Oh. So what's involved? There's a debit card and a "debit account" powered by Green Dot, the same bank that's behind Apple Pay's person to person service. That means that Uber isn't a bank, but is renting shelf space on one. There's a wallet that will be integrated into the Uber app, within the driver's experience. So tracking your earnings and spending will be a feature that is part of the app -- not unlike what Amazon has had for years for merchants. There is a credit component, letting drivers withdraw money against their payckeck. And there's a Barclays credit card, private labeled for Uber, riding on the VISA rails.

Hear ye, hear ye, beware the disruption and tremble under its glory!

So maybe you can tell I am not terrified of this offering, as it relates to the position of banks in the world. But it would be a mistake to underestimate it, and in particular, to miss the various trends that are pulling this together. One lens to understand these developments is the Gig Economy theme. The 2008 Great Recession created high levels of unemployment across the world, and the technology sector was ready with solutions. It is expensive to have employees – they have all sorts or rights, like the ability to organize and the expectation of health and pension benefits. On the other hand, contractors have no such expectations and can be hired and fired at will. To that end, contracting gig websites – from home repairs, to deliveries, to driving pseudo taxis – sprouted like flowers after a fresh rain.

See:  Omer Ismail — Head of Marcus U.S. (Goldman Sachs’ Consumer Business)

The issue with lots of part-time work, other than being a psychological nightmare for people that want full-time work, is that you lack the benefits and stability employers provide. In the nonsense world of the United States, employers are responsible for worker healthcare and retirement, and compete to provide such benefits. One could reasonably expect that such social benefits should come from society, but that’s a topic for another day. So when you take away employers, and replace them with venture blitz-scaling start-ups like Uber, the end result is a lot of people who have earnings volatility, a lack of access to traditional financial services, an inability to buy a home under a mortgage, a lack of affordable health care, and a variety of other monsters.

No good pain point is left unserved, however. A number of neobanks have been formed to help with exactly these problems, across categories. The examples below, including Oxygen and Joust, offer a full financial solution for contractors. This includes accounts and consumption smoothing through credit, but it also includes things like merchant gateways and other enabling small business and freelancer technology. Uber's entry point into finance is first and foremost competing with companies like this -- the teams trying to build good financial offerings for those with a contractor's set of problems. And these are more fully featured apps, though they are less tightly coupled and not integrated directly into Uber's experience.

If these targeted gig-banks are too niche from your point of view, we can then just highlight the US neobanks that focus on the same income/wealth demographic. The killer feature for those is credit, not information or aggregation. See Chime or MoneyLion below, with millions of customers each. Who doesn't want to get free money every week? The pro-Uber argument you could make is that Uber has advanced data on its drivers, like Amazon for its merchants. Amazon can better underwrite merchants, because it knows the web traffic to their pages on its own marketplace, and the conversion rates into purchasing a product. Similarly, Uber can project out the trips an individual driver will likely experience in their location based on the massive data set, and use that to adjust the underwriting model. But still, there is real competition.

See: 

Another lens you can take to analyze the offering is by looking at personal financial management companies that focus on the employer. Two examples come to mind, though there are countless available. Hello Wallet was a fintech start-up focused on helping employers provide a Mint.com-like benefit to employees, with the concept that financially healthy employees are better at their work. You can see the screenshots below. The company was sold to Morningstar for about $50 million, and then sold off again to KeyBank. The largest analytics company was not able to sufficiently commercialize the data/analytics play, and divested to a bank, for whom PFMs are more core and strategic. Times change certainly (e.g., Plaid vs. Envestnet), but this commercialization challenge remains real. Further, Uber is just a single employer, albeit with 3 million drivers, while these PFMs had targeted a broader market.

Think also about Financial Engines. One of the original digital wealth management companies, FNGN was started in the early 2000s (way before you, Wealthfront) to target corporate workplace programs and sit on top of 401(k) retirement providers. It helped employees make better investment decisions, and focused on the place most of us actually make that investment decision. FNGN was eventually combined with the Mutual Fund Store (a store! of mutual funds!) and Edelman Financial to create a $200B+ assets under management player. Could Uber roll out a meaningful competitor? Can it offer a digital financial advisor that moderates between investments, banking, and credit to Uber drivers? Yes, but remember that for most of the drivers, the key issue is to have enough money for rent during the middle of the week.

Continue to the full article --> here

 


NCFA Jan 2018 resize - Google is getting into banking with the search giant set to offer checking accounts next year 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

Latest news - Google is getting into banking with the search giant set to offer checking accounts next yearFF Logo 400 v3 - Google is getting into banking with the search giant set to offer checking accounts next yearcommunity social impact - Google is getting into banking with the search giant set to offer checking accounts next year
NCFA Newsletter subscribe600 - Google is getting into banking with the search giant set to offer checking accounts next year

REGISTER WITH NCFA 25% DISCOUNT CODE -> BLOCKCHAIN-19 (case sensitive)


NCFA Newsletter Banner Ad Blockchain  - Google is getting into banking with the search giant set to offer checking accounts next year

NCFA Fintech Confidential Issue 2 FINAL COVER - Google is getting into banking with the search giant set to offer checking accounts next year