For their part, financial technology companies argue that giving banks a tight grip over the flow of information will allow the big lenders to snuff out new competitors and make it harder for customers to compare rates and prices for different services.
Category Archives: Digital, NEO and Open Banking
LatAm in Focus – Podcast: The Future of Fintech in Argentina
AS/COA | Luisa Horwitz | February 19, 2020
In a region where a large portion of the population is underbanked, fintech offers an innovative solution for Latin America, paving the way for wider financial development, competition, and inclusion in the region.
In the case of Argentina, fintech startups are sprouting and spreading fast. Pierpaolo Barbieri, founder of the startup Ualá, talked with AS/COA Online’s Luisa Horwitz about what motivated him to make the financial system more accessible in Argentina, a country where more than half of people have never had access to a non-cash payment method. “What we try to do is democratize access to financial services,” says Barbieri, who in this episode also covers the generational divide when it comes to fintech, as well as what the sector looks like across Latin America.
“We don’t want to change the system from within; what we want is a new system.”
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See Fintech Friday Podcast Episodes
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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FCA Report (Feb 2020): Sector Views – Key Areas of Harm Identified
UK FCA | Feb 21, 2020
This analysis also contributes to the decisions we make affecting consumers, market integrity and competition.
Drivers of change
The first chapter describes the common themes across sectors with a focus on those themes that are having the greatest impact on the sectors we regulate. And in the light of EU withdrawal and its impact on financial services markets, we give an overview of our position in the current international context.
The 7 sectors
The remaining chapters cover all the markets we regulate:
- retail banking and payments
- retail lending
- general insurance and protection
- pensions savings and retirement income
- retail investments
- investment management
- wholesale financial markets
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Download the 86 page PDF Report - Sector Views (Key Areas of Harm Identified)
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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Why LendingClub’s Acquisition Of Radius Bank Is A Smart Deal
Forbes | Ron Shevlin | Feb 21, 2020
LendingClub, one of the nation’s first peer-to-peer lenders (oops! I mean, “marketplace” lenders—real ”peer to peer” lending lasted all of about a month), announced it plans to acquire Radius Bank, a relatively small Boston-based bank, unknown to most people outside of the industry (and within, for that matter).
The press release announcing the pending deal contained the usual platitudes from the acquiring CEO:
“This is a transformational transaction that allows us to reimagine banking in a way that is free from legacy practices and systems. We will create a category-defining experience for our members that will dramatically enhance the resilience and earnings trajectory of our business.”
Despite the buzzword-laden proclamation, this acquisition makes a lot of sense for both parties for reasons that go beyond what many observers have reported on.
The Short-Term Benefits Aren’t About Radius Bank
Much of the discussion about the deal has focused on the obvious and shorter-term benefits of the acquisition, including a more stable source of funding and a $40 million reduction in bank fees and funding costs, both of which will help boost the spread Lending Club earns on the loans it keeps on its balance sheet.
If that was the only impetus for the acquisition, however, LendingClub could have acquired WebBank, the current issuer of loans through LendingClub’s platform.
Or it could have acquired any number of banks with a bank charter, no?
Radius Bank is a Strategic Acquisition
Lending Club went after Radius for a higher purpose: Its APIs and banking-as-a-service business.
See:
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The future of fintech: lending + services
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Banks, fintech startups clash over ‘the new oil’ — your data
Lending Club’s long-term vision is to become what it calls a “marketplace” bank. In my terminology, that means pursuing a platform strategy: attracting both buyers and sellers (borrowers/savers and lenders/investors) and providing transaction integration and processing capabilities.
Amazon is a great example of a successful platform strategy: It makes money by serving both buyers and sellers, and in fact, there doesn’t seem to be any limit to how much Amazon can make by increasing the services (e.g., AWS) it provides to the merchant side of the coin.
It’s the same with LendingClub.
Yes, LendingClub wants (needs) to expand beyond being just a monoline lending provider. It could have achieved that goal by acquiring any bank willing to sell itself to the company.
With Radius Bank’s APIs—and fintech relationships—LendingClub takes a big step forward towards becoming a multi-line platform, and not just a multi-line bank.
Many banks are falling over themselves trying to partner with fintech companies. In its latest survey, Cornerstone Advisors found that 70% of financial institutions consider fintech partnerships to be an important aspect of their 2020 strategies.
For better or worse, many are focusing their partnership efforts on digital account opening instead of product and service expansion.
LendingClub’s acquisition of Radius leap frogs a lot of those institutions.
See: Citibank to Save $600 Million in 2020 Through Digital Investments
Through its banking-as-a-service offering, Radius brings relationships and integration with firms like Brex, MaxMyInterest, Aspiration, NerdWallet, Stackin’, FutureFuel, and NorthOne.
Any bank can provide a charter. Not any bank can provide those relationships. And not any bank can bring to the table the APIs that Radius has already developed. With the exception of the largest banks, most banks are playing catch up on the API front.
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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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N26’s UK Customers Scramble After Bank’s Exit
Pymnts | , 2020
Online bank N26‘s decision to exit the U.K. has customers feeling left behind, CNBC reported.
The Berlin-based digital bank said it would not be able to operate in the country anymore in the wake of Brexit, as it will no longer have a license to do business there. The startup will shutter all of its U.K. locations on April 15.
N26 made its entry into the U.K. in October of 2018 — more than two years after the U.K. made its decision to leave the European Union, but six months before Brexit was officially planned.
However, the fact that N26 used Brexit in its reasoning to leave the U.K. hasn’t sat well with some.
One customer in London told CNBC that he was “outraged” that the company had used Brexit as an excuse, calling it “fake news.” He said N26 needed “an excuse” for investors, and had found in Brexit a convenient scapegoat so that it wasn’t N26’s own failure.
Others said they were disappointed in the closure, enjoying the extra bonuses that come with accounts.
See: Majority of London FinTechs not prepared for no-deal Brexit
N26 is one among a new breed of branchless banks, looking to gain favor with consumers through a parade of slick marketing and eye-catching slogans. The entry in Britain pitted N26 against challengers like Monzo and Revolut, which were trying similar things.
The competitors, meanwhile, have pounced on the exit of N26 as a way to attract more customers to their own brands.
Starling Bank, posted in a Tweet on Monday (Feb. 17), “Just found out your bank’s making a swift Brexit? Don’t worry — we’re here to stay.”
Monese tweeted, “If you’re in need of a Brexit-proof GBP account, we can be your perfect match.”
Continue to the full article --> 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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HSBC launches Treasury APIs for business clients
Bank Innovation | Rick Morgan | Jan 22, 2020
HSBC is improving payments for its business clients through a suite of tools launched last week called Treasury APIs, which are designed to speed up payments for small businesses and large corporate clients alike.
HSBC’s Treasury APIs embed payment capabilities into other workflows. According to the bank, this allows treasurers to make payments from their own workstations without logging into a proprietary bank platform. Clients receive confirmation that a payment request has been received and can track payments from their accounts to recipients.
Nadya Hijazi, head of digital, global liquidity and cash management at HSBC, said clients using the tool include e-commerce platforms, treasury teams and mutual fund teams.
The new products let HSBC business clients pay suppliers more quickly; Hijazi said payments that used to take anywhere from one or two days in the past now take about 10 or 20 seconds.
HSBC, which is headquartered in London, has $2.7 trillion in assets. Treasury APIs are now available in 27 markets throughout Asia, Europe, the Middle East and the Americas. The bank piloted the tools in India last summer.
See: HSBC Canada Breaks from Big Six Banks in Call to Encourage Fintechs
In addition to paying suppliers, HSBC business customers can also issue refunds to customers with speed and efficiency. In the past, e-commerce platforms would have to wait until the next day to refund customers, but HSBC’s new tools allow clients to refund customers in real time. Treasury APIs connect business clients’ banking data directly to back-office systems and clients can also view their liquidity positions in real time, without having to wait until the end of the business day.
Other banks are also working to improve the payments experience for business clients. In September, BNP Paribas partnered with Kantox to help corporations automate foreign exchange transactions. Meanwhile, Citibank recently partnered with HighRadius to speed up cross-border payments for its corporate clients. And last summer, American Express acquired business-to-business payments company Acompay to eliminate pain points for its corporate clients.
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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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HSBC Canada Breaks from Big Six Banks in Call to Encourage Fintechs
The Logic |By Zane Schwartz | Feb 12, 2020
While Canada’s Big Six banks urge caution about the introduction of open banking, the Canadian subsidiary of U.K.-based multinational HSBC wants the federal government to require banks to share information with the fintechs trying to compete with them.
In a February 2019 submission to the finance department’s advisory committee looking at open banking rules, recently made public, HSBC Canada CEO Sandra Stuart requested the government introduce legislation mandating “open banking.”
The call comes as the Big Six banks are urging caution on open banking. HSBC Canada is the only foreign bank or subsidiary to make public its submission to the committee.
Download HSBC Canada's response to Finance Canada's open banking consultation --> 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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Banks, fintech startups clash over ‘the new oil’ — your data
Politico | Victoria Guida | Feb 7, 2020
Fintech companies argue that giving banks a tight grip over the flow of information will allow the big lenders to snuff out new competitors.
The nation’s banks are locked in a bitter fight with upstart technology companies over the control of their customers' financial data — and the consumers whose personal information is at stake are mostly spectators.
JPMorgan Chase, PNC and other major lenders are threatening to limit the access of middlemen that are hired by financial apps like Venmo and Betterment to grab customers' account information from the banks' websites. The banks warn that financial information is less secure in the hands of these data aggregators, a worry shared by federal investigators, and that there are few controls over the sale of the information to third parties like hedge funds.
See: Minister Morneau announces second phase of open banking review with a focus on data security in financial services
The ability to maintain access to that data is so valuable that the powerful middlemen, which work on behalf of thousands of financial apps, are doing something that companies almost never do: asking the government for more oversight to prove that they are responsible handlers of sensitive data.
“Data is the new oil,” said Linda Jeng, a senior fellow at the Georgetown Institute of International Economic Law and a former Federal Reserve official.
“If you have access to data, then you have the ingredients to build better services.”
The conflict is part of the existential challenge that the fintech upstarts are posing to banks and their record profits as they increase the speed and convenience of transferring money or getting mortgages approved. Much of the battle is over information, and it has escalated in the absence of government rules establishing that customers themselves control their own personal data, as in the European Union.
The dispute, brewing for some time, is now spilling out in the open. JPMorgan Chase is making moves to cut off the ability of data aggregators to obtain customer data without the bank’s consent.
See: Fintechs divided on screen scraping ban
The middlemen — called “screen-scrapers” because of the way they get the data — include Plaid and Yodlee, which most payment app users might not even know exist. They use a consumer’s bank username and password to pull account information, a right that people sign over to the digital payments companies when they do business with them, giving the aggregators the ability to grab more data whenever they like.
The aggregators have access to any data that the customer can see when they log on to their bank's website — account balances, transaction data, mortgage information.
JPMorgan wants to require companies to negotiate a standardized set of data fields that they can request. In December, it reached a deal with Yodlee to that end and has previously struck agreements with other aggregators.
"We want to protect our customers’ financial data while giving them more visibility and control when using the financial apps," said Paul LaRusso, managing director of digital platforms at JPMorgan Chase.
Meanwhile, PNC has already started restricting the information that aggregators like Plaid can get using customer-provided login information.
“PNC’s goal is to accommodate our customers’ choice to connect to the fintech apps they want to use while also ensuring that those connections are made safely and securely,” said Karen Larrimer, PNC’s head of retail banking.
Continue to the full article --> 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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