Rojin Nair, Advisor
June 1st, 2021
At Incyub8 Inc, Rojin is focusing on nurturing and guiding various national and international start-[...]
Category Archives: Digital, NEO and Open Banking
US consumers agree trust in protecting assets is essential before they’ll share their bank credentials
eMarketer | Matthew Gaughan | Nov 4, 2021
A June 2021 survey from Klarna and Nepa found that 52% of US adults trusted banks, while just 17% trusted neobanks. The fragmentation of open banking in the US has led to slow adoption of the technology by consumers—55% of US adults have never even heard of the service.
See: Paying for coffee with crypto? Get ready, the future of payments is already here
According to a PYMNTS.com survey conducted in collaboration with MX, more than a quarter of US consumers surveyed said trust in their financial institution to protect their financial assets is the most important factor in sharing bank credentials with third parties.
- 16.0% said that trust in the third party they were connecting to was the most important.
- 14.4% picked the belief that the connections are secure as their top choice.
- 11.6% noted that transactions becoming much easier because the accounts are connected as their top factor.
Having said this, among survey respondents that connected third-party apps to their bank accounts, 29.9% were very or extremely interested, and 25.7% were somewhat interested in using an open-banking portal offered by their personal bank. The level of interest grew within certain groups—particularly younger generations or those already comfortable with sharing credentials.
See: Should the age of Nubank’s customer base worry incumbents?
- 47.1% and 37.2% of Millennials and Gen Z, respectively, were very or extremely interested.
- 59.8% of consumers that were very or extremely comfortable sharing credentials showed the same high level of interest for open banking as younger generations.
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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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Should the age of Nubank’s customer base worry incumbents?
eMarketer | Tom Auchterlonie | Nov 3, 2021
The news:
Nubank revealed that its customers skew younger than those at established banks, per findings included in its newly disclosed US initial public offering (IPO) filing.
The Brazilian neobank attributed its data to a mix of its own research and assistance from Oliver Wyman. The findings, dated September 30, 2021, show:
- 59% of Nubank’s customers were under 35 years old, versus just 30% for incumbents.
- The gap is also stark when measuring people under 45, with the demographic comprising 81% of Nubank’s customers versus 52% for incumbents.
- Nubank also predicts that a subset of its young customers—those ages 20 to 24—will experience a real-income boost of about 70% over the coming decade.
Note: The neobank disclosed its most detailed customer and performance statistics to date in anticipation of going public.
See:
Brazilian neobank Nubank Raises $400M Series G at $25B Valuation
Nubank Investment Underscores Tencent’s Quick Investing Pace
Banks Are Offering Five-Figure Raises and Time Off To Make Young Bankers Happier
Latest from BIS and a group of 7 central banks including Canada on retail CBDCs
Strong customer stats:
- Nubank’s overall user base reached 48.1 million as of September 30, 2021, up 62% year over year (YoY), when it was 29.7 million.
- Monthly active customers, defined as those who generated revenue within a 30-day window, stood at 35.3 million as of the same date, an 89% YoY increase from 18.6 million.
- Deposits rose by 98% YoY, for the period, going from $4.1 billion to $8.1 billion. The percentage growth has been decelerating over time while the dollar amount has increased further.
- Growth in small and medium-sized business (SMBs) users was up 189% YoY for the same period, surging from about 370,000 to nearly 1.1 million.
- More than half of Nubank’s active customers that have been with it for over a year are considered to have a primary banking relationship, which the company defines as when an active customer has at least 50% of their monthly post-tax income flowing in or out of their accounts.
- A track record of low customer-acquisition cost (CAC), with an average around 80% to 90% per year due to word of mouth or direct unpaid referrals. Nubank posted a $5.0 per customer CAC for the first nine months of 2021—and it believes, based on its research, that it has one of the world’s lowest CACs among consumer fintech companies.
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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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Liquid Avatar Technologies and Optimize Financial Technology Partner to Launch Fintech and Neobanking Solutions for US Markets
Liquid Avatar Technologies | Cara Buckspan | Oct 28, 2021
Toronto, Canada - TheNewswire - October 28, 2021 -Liquid Avatar Technologies Inc. (CNSX:LQID)(OTC:LQAVF)(FRA:4T51) a global blockchain, digital identity and fintech solutions company announce that it has signed an agreement with California based Optimize Fintech Technology (“OptimizeFT”) to launch a fintech and neobanking solution for the Liquid Avatar Mobile App initially for US markets and consumers. The program is expected to begin rollout sometime in the first two quarters of 2022.
The new Liquid Avatar payment card account will be powered by the OptimizeFT’s Engage360 payment card and digital banking solutions platform. The Engage360 platform contains a robust library of financial technology features and services that enable a wide range of financial solutions including a prepaid card and neobank accounts. Liquid Avatar will be well positioned with its security-conscious user base, to expand beyond its initial US Card offering to launch financial solutions targeting multiple demographics within its consumer base.
See: Liquid Avatar Technologies Partners with the Ontario Convenience Stores Association (OCSA) to Provide Digital Age-Verification Solutions to Over 8,000 Stores
The neobank and alternative banking market is experiencing explosive growth. According to KBV Research, the global neobank market is expected to grow from a baseline of $34 billion in 2019 to an expected US$333 billion by 2026. The number one factor for consumers selecting a digital or alternative bank, is security and increased risk. With users having to create their Liquid Avatar Digitally secured ID as the first step to getting an account, Liquid Avatar provides an extremely high level of security to launch and generate significant opportunities from neobank and other alternative financial solutions.
“We are very excited to enter into an agreement with Liquid Avatar Technologies to develop and launch industry-leading payment card and digital bank (neobank) solutions,” said Jim Collas, CEO of OptimizeFT. “The Liquid Avatar mobile app is in a unique position to offer security conscious consumers financial solutions aligned with its Verifiable Credentials Ecosystem, which elevates account security to the next level.
In our experience, a perception of enhanced account security can drive account use by consumers, which in-turn generates increased account revenues. We anticipate working with Liquid Avatar Technologies to develop and launch an array of uniquely branded financial solutions that will strongly resonate with their user base.”
According to Allied Market Research, prepaid cards have taken the place of cash, cheques, and other payment cards where consumers or businesses want to use an electronic means of payment, without linking the payment to a credit or debit account. The global prepaid card market size was valued at $1.73 trillion in 2019, and Allied predicts that it is projected to reach $6.87 trillion by 2030, growing at a CAGR of 18.2% from 2021 to 2030. The prepaid card market is expected to exhibit high growth during the forecast period, owing to the convenience offered being similar to that of a credit or debit card with the ability to allow the end user to set the spending limit according to the budget.
See:
Digital IDs Help Open Banking Reach Its Fullest Potential
Liquid Avatar Releases Major Update to their Digital Identity Mobile App
Liquid Avatar Technologies has developed the Liquid Avatar Verifiable Credential Ecosystem (LAVCE) and a digital wallet that supports digital credentials for multiple forms of verification. The LAVCE platform has been developed to allow users to leverage their government issued and other digital ID, as they become available to verify who they are at healthcare facilities, testing labs, government agencies, financial institutions, schools, sports arenas, transportation, trade shows, age-restriction programs, and workplaces.
Available to consumers at no cost, the Liquid Avatar Mobile App is available in the Apple App Store and on Google Play and allows users to hold, manage and control digital credentials using the LAVCE. Additionally, Liquid Avatar users can benefit from a wide range of discounts and cash back offers from over 600 brand named merchants across North America.
“We are very excited to have formalized this partnership with OptimizeFT,” said Michael Konikoff, Chief Revenue Officer - Liquid Avatar Technologies. “We believe that the OptimizeFT solution is ideal for our emerging US audience, and we believe that we can jointly provide value to Liquid Avatar Mobile App users and provide them with neobanking, engagement and loyalty solutions as we continue to accelerate our programs.”
The Liquid Avatar Wallet mobile app is now available to everyone via Google Play and the App Store.
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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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Support NCFA by Following us on Twitter!Follow @NCFACanada For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate |
Fintech Card Space is Growing: Brim Financial, Float, Caary Capital, Jeeves, Neo Financial
Global News | | Oct 24, 2021
If you haven’t shopped for a credit card in a while, you may see some unfamiliar names in the offerings.
Companies like Brim Financial, Float Inc., Caary Capital Ltd., Jeeves Inc., and Neo Financial are part of a growing crop of tech-enabled lenders that are looking to snag a share of the lucrative credit card market from the big banks.
The startups have to be creative with rewards programs because they lack the scale to offer the big sign-up bonuses of the big banks, said Castaldo.
See: Any bank, merchant or Fintech on Mastercard’s vast network can soon offer crypto services
On corporate cards, companies like Jeeves, Float and Caary are aiming mostly at startups and small to medium businesses, offering fast sign-up, numerous digital cards, higher credit limits and no personal guarantee, as well as easier integration into some accounting and spend management software.
Jeeves directly monitors a client’s bank account and uses machine learning to assess risk, which Thazhmon said allows them to offer the higher credit limit and no personal guarantee.
The new competition for the big banks comes as the market is already feeling pressure. Credit card debt fell by $16.6 billion in the first year of the pandemic as people paid down debt, especially those with low credit, who generally pay higher interest. Banks are also seeing more competition from buy-now pay-later models, which some companies like Brim have integrated into their products.
But while the new entrants may have innovative offers, they still have a tough road ahead to break into the market, said Abhishek Sinha, who leads EY Canada’s banking technology consulting practice.
See: Canadian Prepaid Payments Industry Increases Financial Services Innovation and Choice
“It’s not that easy breaking into the credit card space because you’ve got a very mature, established market and it seems the Canadian consumer … we are a bit more risk averse, we are a bit more OK with status quo than our cousins down south. I don’t think it’s a question of fintechs picking up on a niche that’s underserved, I think it’s more fintechs picking up on niche where they think they can differentiate.”
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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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Support NCFA by Following us on Twitter!Follow @NCFACanada For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate |
Digital money is an opportunity for Canada – if we seize it
The Globe and Mail | and | Oct 21, 2021
Robert Fay is the managing director of digital economy at the Centre for International Governance Innovation. David Dodge is a former governor of the Bank of Canada and is senior adviser at Bennett Jones LLP.
Around the world financial systems are digitizing to provide faster, cheaper and more secure and comprehensive services to households and businesses.
Meanwhile, cryptocurrencies, stablecoins and central bank digital currencies are attracting substantial public attention. They are reflections of the continuing digitalization of the global economy, driven by innovation and competition, that is creating new opportunities worldwide.
The potential benefits are many.
Digital currencies and payments can speed up and lower transaction costs, both domestically and especially across borders, while bolstering security. Financial technology (fintech) is expanding the range of financial services available in the marketplace.
See: Bitcoin Electricity Consumption Index (CBECI): China’s crackdown puts US in pole position and Canada in 4th
Open banking allows consumers and small businesses to securely and efficiently transfer their financial data among financial institutions and accredited third-party service providers. It can stimulate competition, facilitate access, and expand the range of services available to households and businesses.
And central bank digital currencies can spur innovation and boost financial inclusion, ensuring all have access to digital services.
But fully harnessing the benefits of digitalization will require a sound and coherent framework that ensures collaboration between the public and private sectors.
We recently held a workshop to hear the opinions of international and Canadian experts in this domain. As we explain in more detail in a new report, we argue there are three essential steps that Canada must take.
First, Canadian governments and service providers need to work together to deliver what has already been placed on the agenda; namely, a modernized payments system and secure data transfer to facilitate open banking.
Second, Canada requires a thoroughly updated legislative framework for privacy and data management, and the adoption of industry standards for digital identification. Governments, the central bank, and regulators, working with market participants, must adapt existing policy frameworks to accommodate and harness change in a manner that supports a financial system that is efficient, competitive, stable, secure, inclusive, and one that instills trust. It is essential to ensure data security and privacy and enable consumers to have greater control over their financial data in ways that promote sound competition.
See: Bank of Canada to become new regulator of fintech companies doing payments processing
Third, regulatory gaps must be remedied. Existing regulatory frameworks are ill-suited to deal with new and emerging market structures.
Federal leadership here is crucial. Risks must be taken.
To deliver on these three essential steps, the federal government must exert strong leadership in mobilizing the necessary collective effort; making policy and market choices will require a careful balancing of objectives. Win-win solutions must be pursued, but there will be trade-offs at the margins – for example, between efficiency and stability, or between compliance and privacy.
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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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Support NCFA by Following us on Twitter!Follow @NCFACanada For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate |
Privacy Implications of an Open Banking System in Canada
McMillan | Darcy Ammerman, Mitch Koczerginski, Robbie Grant, Anthony Pallotta | Oct 12, 2021
Privacy and Open Banking
Since open banking is predicated on the free flow of information, privacy is key to an open banking system. In its February 2019 Review into the Merits of Open Banking, the Committee said “[t]he trust needed to allow the digital economy to flourish, and the social license that organizations will need from Canadians to innovate with their personal data, hinges on having an appropriate legal framework in place that puts at the forefront key privacy issues.” In its January 2020 review of stakeholder submissions, the Committee observed that all stakeholders considered privacy to be a significant risk of open banking. In its own submission to the Committee, the Office of the Privacy Commissioner of Canada (“OPC”) called for several privacy reforms to support an open banking system.
Many of those reforms are already making progress. Before the election was called, the government had introduced a substantive overhaul to Canada’s Personal Information Protection and Electronic Documents Act (“PIPEDA”), in the form of Bill C-11, which would have enacted the Consumer Privacy Protection Act (“CPPA”) (we summarized the proposed changes in a previous bulletin). Bill C-11 died on the order paper when the election was called, but since the liberal government has now returned to office, a new privacy law bill is expected to be forthcoming. There is added international pressure for privacy reforms too, as the EU reviews Canada’s adequacy status under the General Data Protection Regulation (“GDPR”). Maintaining such status is crucial as it permits data processed in accordance with the GDPR to be subsequently transferred from the EU to Canada without requiring additional data protection safeguards or authorization to transfer the data.
See: Canada’s Library of Parliament Report: A Comparison of Open Banking Recommendations
Meanwhile in Quebec, An Act to modernize legislative provisions as regards the protection of personal information (“Bill 64”) received Royal Assent on September 22, 2021. This Bill amends Quebec’s Act respecting the protection of personal information in the private sector (“Quebec’s Private Sector Act”) to include a data portability right, increased fines for non-compliance, and enhanced requirements for breach notification, consent, and data protection, among other changes.
Data Portability
In its June 2019 report on open banking, the Standing Senate Committee on Banking, Trade and Commerce recommended modernizing PIPEDA to align it with global privacy standards. It wrote that these changes “must include a consumer data portability right.”
In the context of open banking, data portability means a consumer’s right to direct that their personal financial information be shared with another organization. While this sounds simple in theory, it presents challenges for the organization sharing the data (typically the financial institution). First, personal information owned by the consumer is often grouped together with information owned by the sharing organization. For example, financial institutions may create “derived data” by processing consumer information together with proprietary algorithms and analysis. The Final Report takes the position that the financial institution should generally be able to exclude derived data from an open banking system. However, if such data is normally available to the consumer, the financial institution should have an obligation to justify an exclusion.
See:
Betakit podcast with Senator Deacon on Open Banking and Competition
Reflections on Canada’s open banking report
The second and related challenge is that sharing organizations may store and process data in a variety of formats, but for data portability to be meaningful, the personal information must be shared in a usable technological form. The difference between a string of loose data, and a properly organized spreadsheet is significant to the utility of such information for a third party app developer. Financial institutions can look to Quebec’s Bill 64 as an example of how the concept of data portability could play out in practice. When it comes into force, Bill 64 will amend Quebec’s Private Sector Act to provide consumers with a right to request their computerized personal information in a “structured, commonly used technological format” unless doing so raises serious practical difficulties.
The introduction of a data portability right may require financial institutions to overhaul their data processing systems to ensure consumer data can be shared in a commonly used form, while separating out data that is unnecessary or proprietary to the financial institution. Depending on the sharing organization’s data processing systems, data portability may require significant lead time to implement. The challenges outlined above are likely why the technological format amendment to Quebec’s Private Sector Act does not come into force until September 22, 2024 (a full year after the majority of the amendments).
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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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Support NCFA by Following us on Twitter!Follow @NCFACanada For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate |
Digital Identity Should Be A Big Business For Banks
Forbes | | Sep 16, 2021
I got an e-mail to remind me to pay my credit card bill, so I went to log in to pay it. The browser filled in my username, I entered the missing digits from my PIN and I opened 1Password to get the password and typed it in, but it was rejected.
I thought maybe I typed it wrong, so I typed it again. Nope. So I clicked on “lost password” and got taken to another page where I had to enter all sorts of personal details, including my credit limit. Catch 22. I need the credit limit to reset the password but I don’t know what my credit limit is without the password.
I give up on the web and open the app on the phone. It lets me log in without having to remember a password, so I select pay. My credit card provider likes a heritage approach to payments, so instead of an xPay option it presents me with a web screen from the 1990s and I have to get out my debit card and type in the details.
See: Top 7 Steps for Preventing Loan Application Fraud
I then get redirected to my bank app and I have to enter my PIN number, OK the transaction, enter my PIN number again (I don’t know why) and then get a message saying that the transaction has been declined.
Oh well. That’s 2021 for you.
What should have happened, of course, is that I go to my credit card provider, enter my username, authenticate the log in from my bank app using my fingerprint. Then I select pay, approve the transaction from my bank app and go about my business.
Change. Yes.
There has been a change in the environment around digital identity over the past year. The coronavirus catastrophe has required many individuals, companies and organisations, who never had to do business online before, to shift to the new normal in double-quick time. This has in turn meant that the ability to create digital identities, to bind those identities to real-world legal entities and to use those digital identities to support online persona with the necessary collection of credentials to enable online transactions has become central to business and government. There has also been a change of attitude toward the business of identity and the perception of digital identity as a fundamental rather than as a “nice to have”.
See: Fintech & Cybersecurity: Key Risks and Solutions
Now, however, while we may be no nearer calculating the costs of having a digital identity infrastructure we now have some very accurate figures for the costs of not having a digital identity infrastructure. This is because the escalation of fraud through the pandemic has been staggering.
Why Banks?
Why do I single out the banking industry? Well, in the past two years, 37% of American consumers have been victims of application fraud and slightly more have experienced account takeovers. Since financial institutions are on the front line, surely we should look to them for some co-ordinated action to bring the problem back under control? Where is the “bank identity”? The “financial services passport”? The “money monicker” or whatever we choose to label it?
Many countries already have some form of bank ID. Norway, for example, where the pandemic experience was utterly different from that of the USA or the UK. In Norway, the Ministry of Finance and stakeholders delivered the SME loan guarantee scheme within three weeks and the first loan was granted and on account one hour after the scheme was authorised. The pandemic compensation scheme was similarly developed within three weeks. They were able to do this because they decided to create wholly digital schemes to process applications and deliver automated payments.
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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
| | |
Support NCFA by Following us on Twitter!Follow @NCFACanada For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate |
