David Durand, Advisor, Innovation and Advocacy
September 9th, 2020
David Durand, LL.L., B.Sc. chem., – Founder and Managing Partner of Durand Lawyers – Lawyer (Québec)[...]
Category Archives: Fintech International
The future of European payments: Strategic choices for banks
McKinsey & Company and Euro Banking Association | Nov 24, 2020
Payments and accounts services are at the core of banks’ offering to customers. They contributed about a third of European banks’ total revenues in 2019 (Exhibit 1), and represent banks’ leading source of customer interactions.
Banks’ payments revenues have grown steadily at about 3 percent per year over the past six years. However, some specialist payments providers—processors, acquirers, schemes, and others—have achieved double-digit growth rates over the same period (Exhibit 2). This suggests that banks’ traditional role at the centre of the payments ecosystem may be coming under challenge.
High ambitions, significant challenges
Almost two-thirds of the executives and experts who were surveyed as part of a joint effort undertaken by McKinsey & Company and the Euro Banking Association between November 2019 and November 2020, believe that banks will continue to be the leading players in European payments over the next five years.
See: Fintech Fridays EP46: Making Business Borderless: International Payments and Partnerships
However, survey respondents and interviewees identified a number of challenges faced by banks. These included increasing competition (especially from tech companies and fintechs), the rise of technologies that could allow other payments providers to come between banks and their customer relationships, the lack of flexibility in banks’ operating models, the constrained revenue environment, rising customer expectations, and the complex regulatory outlook. Executives also identified gaps in the capabilities and practices needed to grow their payments business, especially in technology, organisational agility, and monetisation models.
The outlook for the European payments sector
On the stock markets, payments specialists outperformed the overall European banking sector between January and November 2020, with a shallower decline and a bigger rebound. Interviewees noted that banks continue to be affected by mounting credit losses and low interest rates; payments specialists stand to gain from the shift to digital commerce and electronic payments; fintechs have opportunities to target a broader pool of customers and capitalise on their cost advantages, but are more exposed to structural factors because of the narrower focus of their customer relationships; and big tech companies have ample resources to invest but may come under increased scrutiny from governments and regulators.
Despite the uncertainties, the interviewees saw the outlook for payments as broadly positive. Most felt the crisis of 2020 would not damage their strategic position, and could even improve it.
The strategic choices facing banks
In defining their strategy for each customer segment and step in the payments value chain, banks can choose to lead, accelerate, follow, or reduce their payments footprint, depending on their wider aspirations and starting point.
See: Banks have lost a quarter of the payments franchise to new players
As technological advances, evolving customer behaviour, new market dynamics, and changing regulatory agendas converge with the after effects of the pandemic, the early 2020s may become an inflection point for payments. Despite the uncertainties of the current environment, this could be the moment for banks to secure the growth of value in their payments business over the next cycle—and to come together with other stakeholders to solve sector-wide challenges and capture opportunities.
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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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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS!   |
The EU is hoping to create one of the most innovation-friendly regulatory regimes for blockchain technology globally
Lakestar | Insights | Nov 30, 2020
In September 2020, the European Commission proposed a comprehensive legislative package for crypto assets and blockchain technology as part of its broader European Digital Finance Strategy. Pēteris Zilgalvis, one of the key contributors to the proposal, provides insightful context to the current draft and makes a bold invitation for industry participants to contribute and provide feedback.
Lakestar Partner Nicolas Brand in conversation with Pēteris Zilgalvis, Head of the Digital Innovation and Blockchain Unit at DG Connect within the European Commission. Pēteris has been working for over 25 years at the European Commission, the Council of Europe and the World Bank. Originally with a background in environmental law, he started covering financial markets, cryptocurrencies and blockchain innovation in 2013, when he was a Visiting Fellow at the University of Oxford. He is also co-chair of the European Commission’s Fintech task force.
Today we want to talk about two legislative packages recently proposed by the European Commission.
First, regulation on Markets in Crypto Assets – or MiCA – and second, a pilot regime for market infrastructures based on distributed ledger technology. Both proposals together are 206 PDF pages full of content and thought leadership. Can you give us an idea of the amount of resources that went into drafting them?
There is a joke going around that there are more Google lobbyists looking at the digital services act than there are people drafting it in Brussels. With MiCA in reality it’s a couple of colleagues under the leadership of a head of unit in DG FISMA, as well as myself and two colleagues contributing on the decentralised ecosystems and utility tokens.
See: European Union Approves New Crowdfunding Rules that Apply to Member States, Funding Cap Set at €5 Million
We spent only a share of our time on it on my side so it’s probably equivalent to two or three full-time roles altogether, however not taking into account the discussions by the Commissioners and the time now being spent in the European Parliament. We are quite efficient I believe.
How do the proposals fit in with other relevant European legislation such as the Digital Finance Strategy overall?
We see the whole Digital Finance Strategy as tackling fragmentation in the digital single market and giving the EU a framework that facilitates digital innovation. We also want to address new challenges and risks and in particular give crypto assets legal certainty.
We want to support innovation as well as consumer protection and this is where we are in agreement with our colleagues across the Atlantic in the Securities Exchange Commission: we don’t have a mandate to get rid of protection for consumers or investors. We are also focused on market integrity, financial stability and mitigating risks to monetary policy transmission and monetary sovereignty.
See: No going back: New imperatives for European banking
The approach is pro-innovation but one that does not expose the consumer or the investor to more risks than with traditional financial products.
It is remarkable that you are in effect creating a new asset class that gets its own legislative treatment, crypto assets, and a set of new actors, such as Crypto Asset Service Providers. What are you hoping to achieve with this current package?
We are creating a taxonomy of crypto assets. Those that are qualifying as financial instruments, we clarify that they are covered by existing rules. Then you see the pilot on distributed ledger technologies for market infrastructures which is also firmly within existing financial markets. Then there are the crypto assets that are not covered by the existing rules and are subject to MiCA. These are the utility tokens and the asset reference tokens, including e-money tokens.
With this we make sure there are no more grey areas. We want innovation but we also want regulation and certainty. After MiCA in combination with MIFID, the Markets in Financial Instruments Directive, there won’t be tokens any more that are in an unknown space. Everything is covered with a regime that is risk based. Where there are less risks there will be a much lighter level of regulation.
You are, in effect, legitimising an entire asset class. Could you share with us the process unfolding now before this becomes law?
It follows the usual EU legal process. We produced this proposed regulation and the civil servants prepared the draft, which was adopted by the Commission’s political leadership, the College of Commissioners. Now it has been submitted to the European Parliament, the Council and the member states for adoption. Nothing is adopted without the consent of the member states and if there is disagreement between the parliament, the Council and the member states, it goes into conciliation procedures.
See: European Crowdfunding Network Publishes Blockchain Study Analyzing Current Regulatory Environment
This is an important message for people in the community who feel that a definition or a provision could have been better drafted – they can contact their Members of the European Parliament and their national representatives and propose adaptations. This negotiation and debate is going on right now.
You are creating a new actor to be regulated, Crypto Asset Service Providers. Could you describe briefly what regulation is planned to apply?
Crypto Asset Service Providers offer services such as custody, the operating trading platform, exchange services, execution and placing of orders, reception and transmission of orders and advice. They will be authorised to provide their services in the EU and will be able, via passporting, to operate in all the EU countries. The authorisation can be withdrawn, which is important: this underlines that consumers and investors are protected.
Providers are obliged to act fairly, honestly and professionally in the best interest of clients. These principles have arisen from previous Commission regulation of financial services based on prudent requirements, organisational requirements, safekeeping of clients’ crypto assets and funds and complaint handling procedures. Just because we are using a new technology does not mean that complaints are over. We also need to prevent conflicts of interest and supervise certain degrees of outsourcing.
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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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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
We’re the first neo-bank to break-even, says Starling Bank
AltFi | Daniel Lanyon | Nov 20, 2020
A boom in business banking has helped boost Starling Bank’s coffers.
Strong momentum in new customer accounts and increasing revenues have prompted digital bank Starling to break even, according to a trading update for the three months to 31 October.
Starling Bank, which was launched by Anne Boden five years ago, is the first ‘neo-bank’ to reach this milestone, the company said.
In October Starling hit 1.42 million retail accounts compared to 827k, an increase of 71.7 per cent. Over the same period business accounts were the standout growth area with an increase of 245 per cent, from 74,000 to 256,000. Business accounts saw a 500 per cent increase in total deposits with the average amount held by SMEs also going up.
Starling now has total customer deposits of c.£4bn.
This has all helped Starling generate a positive operating profit of £0.8m for the month of October 2020, which represents £10.1m on an annualised basis.
See:
Neobanks Can’t Fight the COVID-19 “Flight to Quality”
Investment Crowdfunding Advocates Join to Launch New Fintech Startup GUARDD in Move to Boost Secondary Markets for Exempt Securities
In total Starling generated total operating income of £9m for the month of October 2020. This, it adds, translates to an annualised revenue run rate of c.£108m. This figure is split £5.5m of net interest income and £3.5m of gross fees and commissions income.
The figure represents a 400 per cent increase in revenue compared to 12 months ago and a c.30 per cent increase from Starling’s last trading update three months ago.
“Interest income continues to be supported by strong growth in lending volumes, particularly the extension of government-backed lending schemes,” Starling said.
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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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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
Investment Crowdfunding Advocates Join to Launch New Fintech Startup GUARDD in Move to Boost Secondary Markets for Exempt Securities
Crowdfund Insider | | Nov 24, 2020
The exempt securities marketplace can be arcane and challenging to manage for entrepreneurs seeking to raise capital. The advent of online capital formation has helped to democratize access to capital as well as streamline securities offerings but hurdles do remain. A new startup co-founded by several prominent names in the investment crowdfunding industry seeks to facilitate secondary transactions for private securities.
Sherwood “Woodie” Neiss, co-founder of Crowdfund Capital Advisors, Doug Ellenoff, Managing Partner of Manhattan law firm of Ellenoff, Grossman, and Schole, and Jim Dowd, founder and CEO of North Capital Private Securities, have joined to launch GUARDD: A Fintech designed to support secondary market trading for private company securities, including digital assets/tokens to facilitate compliance with both federal transparency requirements and state blue sky laws.
According to a note from the company, GUARDD enables the necessary disclosure and dissemination of private company information for investors, regulators, and market participants. This allows issuers to comply with federal and state financial disclosure requirements related to the trading of private company securities in secondary markets, thus addressing a challenge regarding exempt securities that tend to be illiquid. Overall, more liquidity can help price discovery while boosting interest in private securities.
Following the announcement that the platform is now live, Crowdfund Insider contacted Neiss with questions regarding the platform’s operations and his expectations for GUARDD. Our discussion is shared below.
You have been in the securities crowdfunding space for a long time so you understand the sector well. How did the concept for GUARDD emerge?
Woodie Neiss: When the final rules came out for Regulation Crowdfunding (Reg CF) we knew that these securities could be available for secondary transfer after the one-year holding period was up. We also knew for Regulation A+ offerings those securities could be transferred immediately. However, nothing in the rules addressed the obstacles issuers would have to face to be in compliance with state laws that govern the secondary transfer of securities nor pre-empted state laws.
See: SEC Votes to Approve Changes to Regulation Crowdfunding Increasing the Maximum Raise to $5 Million
At that point, a seed was planted but it didn’t sprout until the industry had a chance to evolve and Online Investment Platforms, as well as Alternative Trading Systems (ATSs), started to express interest in facilitating the secondary transfer of securities.
At this point, we knew that it would be incredibly difficult and costly for issuers to tackle the 50 different state laws that govern the secondary transfer of securities. But we also knew the Manual Exemption could be a pathway. It would require getting issuers to provide ongoing disclosures in a National Securities Manual. Such a pathway for private companies didn’t exist. It was then that we decided to embark on developing a Technology solution to enable this.
Effectively, you are making private securities compliant under Blue Sky rules for secondary transactions. How do you accomplish this?
Woodie Neiss: There are very few exemptions under which issuers do not have to register their offerings or resales under state laws. These include non-solicitation and private isolated offers and sales to accredited investors. The only way one can have broad exemption is to publish ongoing company and financial information in what is known as a National Securities Manual. We spent almost 3 years building the technology and solution and socializing it with NASAA and the state regulators.
See: Bid – Ask: Seedrs Secondary Market Now Allows Variable Pricing for Listed Securities
GUARDD standardizes private company reporting much like a 10k or a 10q does for a public company. We work with issuers that have performed an audit so that a CPA has verified the integrity of information disclosed. We then take their GUARDD report and audit, run it through our blue sky compliance team, and publish it in a National Securities Manual.
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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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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
China’s Draft Anti-Monopoly Guidelines on Platform Economy
Paul | Weiss | Nov 18, 2020
China’s competition regulator, the State Administration for Market Regulation (“SAMR”), issued a consultation draft of the Anti-Monopoly Guidelines on the Sector of Platform Economies (the “Draft Guidelines”) on November 10, 2020. This marks China’s first major step in formulating a comprehensive regime to regulate competition among platform businesses operated on the Internet (the “Platform Economy”) and signals SAMR’s changed regulatory priorities with a focus on anti-competitive behavior in the Platform Economy.
The Draft Guidelines attempt to address perceived shortcomings in applying traditional antitrust analysis to the Platform Economy. SAMR has drawn upon the experience of regulators and academics in this emerging area and attempted to consolidate the lessons learnt in various jurisdictions. The Draft Guidelines set out in detail the considerations that may be taken into account and the defenses that may be available, providing some guidance to platform businesses on how to achieve compliance.
See:
China Stops Jack Ma’s $35 Billion Ant IPO From Going Ahead
DOJ files antitrust lawesuit challenging Visa’s $5.3 billion acquisition of Plaid
While the Draft Guidelines are brief in length, only 23 provisions in total, they are wide‑ranging in their scope. Rather than an exhaustive review of the Draft Guidelines, this note examines selected provisions. If implemented in the current form, many more mergers and acquisitions may be subject to China’s merger control clearance and antitrust investigation and enforcement may become a much more realistic and serious prospect for Internet-based businesses participating in the China market.
The Draft Guidelines represent a comprehensive guide to how SAMR intends to regulate anti-competitive behavior in the Platform Economy and signal SAMR’s determination to make regulation of anti-competitive behavior in the Platform Economy a priority. If implemented in their current form, the Draft Guidelines may significantly increase the number of mergers and acquisitions in the Platform Economy that are subject to merger control review and increase the likelihood of findings of antitrust violations and enforcement, resulting in increased regulatory risks and costs for participants in the Platform Economy in China. This may have far-reaching effects, not only on the operators in the Platform Economy in China and their transaction counterparties, but also indirectly on private equity and venture capital investors who have been active in investing in this sector.
SAMR invites public comment on the Draft Guidelines before November 30, 2020.
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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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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
China Says It Remains Open to the World, but Wants to Dictate Terms
The New York Times | Steven Lee Myers and | Nov 24, 2020
China’s leader, Xi Jinping, is pursuing a strategy to make the country’s economy more self-sufficient, while making other places more dependent on it than ever.
After Australia dared last spring to call for an investigation into the origins of the coronavirus, China began quietly blocking one import after another from Australia — coal, wine, barley and cotton — in violation of free-trade norms. Then this month, with no clear explanation, China left $3 million worth of Australian rock lobsters dying in Shanghai customs.
Australia nonetheless joined 14 Asian nations and just signed a new regional free-trade deal brokered by China. The agreement covers nearly a third of the world’s population and output, reinforcing China’s position as the dominant economic and diplomatic power in Asia.
See: What to expect from Biden-Harris on tech policy, platform regulation, and China
It’s globalization with Communist characteristics: The Chinese government promotes the country’s openness to the world, even as it adopts increasingly aggressive and at times punitive policies that force countries to play by its rules.
With the United States and others wary of its growing dominance in areas like technology, China wants to become less dependent on the world for its own needs, while making the world as dependent as possible on China.
“China wants what other great powers do. It wants to follow international rules and norms when it is in its interest, and disregard rules and norms when the circumstances suit it.” said Yun Jiang, a researcher and editor of the China Story at the Australian National University.
China’s strategy is born out of strength. The coronavirus has practically disappeared within its borders. The country’s economy is growing strongly. And China’s manufacturing sector has become the world’s largest by a wide margin, leaving other nations heavily dependent on it for everything from medical gear to advanced electronics.
Beijing is also pushing back against President Trump and his administration, taking advantage of the political disarray that has followed his electoral defeat. Beijing’s confidence on the global stage now compounds the challenge China will pose for the incoming administration of Joseph R. Biden Jr.
See: The new urgency of global tech governance
In a flurry of speeches over the last week, Xi Jinping, China’s ambitious, authoritarian leader, laid out his vision for this new world order, while making clear his terms for global engagement.
“Openness is a prerequisite for national progress, and closure will inevitably lead to backwardness,” Mr. Xi said in remarks that seemed to take a swipe at Mr. Trump’s America-first agenda.
“While making the Chinese economy more resilient and competitive, it also aims to build a new system of open economy with higher standards,” he said. “This will create more opportunities for the world to benefit from China’s high-quality development.”
Mr. Xi’s own economic and political policies this year have been the mirror opposite. China’s plan, Mr. Xi has said, is to lessen dependence on imports, insulating the country from rising external risks, including the threat of a long, pandemic-induced global economic downturn and the severing of Chinese access to American high-tech know-how.
“The world as it exists today cannot be reduced to the rivalry of superpowers” Laurent Bili, the French ambassador to China, said at a conference organized last week by the Center for China and Globalization, a Beijing research group.
“The United States is still in electoral chaos, while China is forming the world’s largest trade agreement,” the Ministry of Commerce in Beijing wrote on its official website recently.
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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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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
Payments Startup Stripe in Talks for Funding at $70 Billion Valuation or More
Bloomberg | Katie Roof and Scott Deveau | Nov 24, 2020
Private financial technology business Stripe Inc. is in talks to raise a new funding round valuing it higher than its last private valuation of $36 billion, according to people familiar with the matter.
The valuation being discussed could be more than $70 billion or significantly higher, at as much as $100 billion, said one of the people, who asked not be identified because the matter is private. That would make it currently the most valuable venture-backed startup in the U.S., according to CB Insights.
Stripe’s software, which competes with Square Inc. and Paypal Holdings Inc., is used by businesses to accept payments. According to its website, Stripe’s customers include Amazon.com Inc., Salesforce.com Inc., Lyft Inc. and Instacart Inc.
See:
Lightspeed and Stripe Partner to Launch New Payments Feature
Stripe, the world’s most valuable private fintech company, is getting into lending
The company has benefited during the pandemic with more shoppers turning to e-commerce. It’s gone on offense during the downturn this year, starting a card-issuing service for U.S. clients and agreeing to acquire a Nigerian startup to expand in Africa.
Brother Founders
Irish brothers John and Patrick Collison founded Stripe in 2010. The duo sold their first company for $5 million when they were teenagers and are now worth about $4.3 billion each, according to the Bloomberg Billionaires Index.
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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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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
