Weekly Update of Global Fintech

Editor’s note:

In order to strengthen the exchanges and information integration of member institutions of Fintech region, promote the discussion of the frontier issues, and exchange the newest ideas, Fintech Cooperation Committee (FTCC) of AFCA launched the "Weekly Update of Global Fintech" to sort out news of global Fintech hotspots and key information in the past week for reference by relevant institutions.

If you have information about Fintech to share, please send us by E-mail: zhaiminghao@afca-asia.org. We will indicate the source. 

Thank you for your support!

【CONTENTS】

I. Vestager: EU Should Be Willing To Act On Digital Tax

II. US regulators targeted with bipartisan Financial Transparency  Act

III. Japan’s Central Bank Chief Calls for International Effort on Libra Regulation

IV. Over 100 overseas firms to attend Light of the Internet Expo

V. Portugal’s largest bank signs Tink to underpin its new app   Dabox

VI. Deutsche Bank turns German fintech Deposit Solutions into unicorn

VII. CICC Announces to Establish a Technological JV with Tencent

VIII. GSMA launches first 5G innovation, investment group in China

IX. Fibank, Mastercard and Garmin launch pay watch

X. Cambridge Centre for Alternative Finance Publishes 2nd Global Blockchain Report: Enterprise Utilization and Network Development

XI. Vanguard Preparing to Offer Digital-Only Robo-Advisor

In a move that increases pressure on multinationals, European Union commissioners-designate said the bloc should come to an agreement on a digital tax if a deal doesn’t happen at a worldwide level by the conclusion of 2020. The incoming commissioners also noted their priorities on the bloc’s financial reforms and fiscal rules in written answers to lawmakers that were published, Reuters reported.

The new commissioners are set to come into office in November following the approval from EU lawmakers in hearings that start in the week to come. Moves to change corporate taxation to reflect the profits that digital multinationals take in have not been able to yield results as separate nations have varying tax approaches. 

Margrethe Vestager, the incoming commission’s vice president, said per the report, “If no effective agreement can be reached by the end of 2020, the EU should be willing to act alone.” Paolo Gentiloni, the commissioner-designate for taxation, mirrored her comments. He would aim to prevent separate bloc governments from having the ability to nix tax decisions. (Some EU states were against a bloc-wide agreement on the digital tax in 2018.)

In separate news, the new European Commission (EC) had reappointed Vestager as antitrust chief in what some had referred to as a surprise move. Her term was expected to end with elections for the European Parliament and the new European Commission taking office. Vestager is widely seen as a strict and meticulous enforcer who has taken on Big Tech companies without fear. She has reportedly put harsh penalties on them as well as taking them to task for perceived abuses of power. 

The official will also reportedly take on a new initiative involving Europe and the digital age. Particulars of that endeavor were not released, however, per reports. “Digitalization has a huge impact on the way we live, work, and communicate,” European Commission President-Elect Ursula von der Leyen said about Vestager’s role. “In some fields, Europe has to catch up — like for business to consumers — while in others we are frontrunners — such as in business to business.”

（2019-09-27 Source: Pymnts.com）

A bipartisan group of members in the US House of Representatives’ Committee on Financial Services have put forward a new bill to make financial information more easily accessible by requiring US regulators to better organise their data.

The Financial Transparency Act, also known as HR 4476 or the “Regtech Bill”, has been put forward by New York democrat Carolyn Maloney and North Carolina republican Patrick McHenry. It calls for the US Treasury and its secretary to create uniform machine-readable data standards for US regulators.

It would require affected regulators to adopt a set of data collection and dispersion standards for the information they collect under current law, including the adoption of electronic forms to replace paper-based forms.

All data would be made available in an open source format electronically searchable, downloadable in bulk and without license restrictions.

Among the affected regulators would be the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corp. (FDIC), Federal Reserve, Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), the National Credit Union Association (NCUA) and the Federal Housing Finance Agency (FHFA).

“The Financial Transparency Act will bring financial reporting into the 21st Century, will make information easier to access, and will reduce unnecessary regulatory burdens for businesses across the country,” said representative Maloney.

“This bill is a true win-win because it helps investors, businesses, and the government. I’ve long been an advocate for structured data in financial reporting, and I’m proud to introduce this bill with Ranking Member McHenry.”

President of global capital markets at Donnelly Financial Solutions, a Chicago-based risk and compliance firm, believes the new bill will modernise and streamline compliance across the industry. “These common standards are critical to the efficiency of the reporting process and ensuring data is being used effectively by all parties,” he says in a statement.

Nick Hart, CEO of the Data Coalition, adds that the US financial reporting system is “fragmented at the moment. “The bipartisan Financial Transparency Act will modernise how financial regulatory agencies collect, report and publish information. When enacted, the legislative proposal will enable policymakers and the American public to have access to more reliable information about financial markets.”

The United States House of Representatives is the lower house of the United States Congress. Together with the upper house, the Senate, it composes the national legislature of the US. It has 435 voting members, who serve two-year terms.

Its Committee on Financial Services recently challenged Facebook over the social media firm’s development of its Libra digital currency. Maxine Waters, chairwoman of the Committee, wrote in a statement that she believed Facebook should halt all progress on Libra until it has answered to regulators in the country.

（2019-09-27 Source: Fintech Futures）

The head of Japan’s central bank has called for international cooperation in regulating stablecoins like the Facebook-led Libra.

According to a Reuters report, Haruhiko Kuroda, governor of the Bank of Japan, said:

“If Libra is introduced, it could have a huge impact on society.”

Talking at an event in Osaka, Japan, on Tuesday, Kuroda said the highest level of regulation must be applied to such stablecoins.

That phrase is one that’s been used a lot in relation to Libra.

Earlier in September, Sigal Mandelker, under secretary of the U.S. Treasury for terrorism and financial intelligence, echoed the phrase when saying Libra must achieve the highest standards of U.S. regulatory compliance prior to any launch on a trip to Switzerland – the home nation of the Libra Association.

And back in July, a task force set up by the G7 to examine the issues raised by Libra said that rules of the “highest” standards are needed to minimize the use of digital currencies in money laundering and funding terrorism.

Around the same time, Japan set up a working group, also to examine the issues raised by the launch of the cryptocurrency project.

（2019-09-24 Source:Coindesk）

More than 100 overseas internet enterprises will attend the Light of the Internet Expo to showcase their latest products and achievements at the sixth World Internet Conference in Wuzhen, Zhejiang province, said the event's organizer on Wednesday.

The expo, to be held Oct 18-22, "will focus on enhancing the visitors' and users' experiences by introducing technologies and products that integrate 5G, AI and VR with people's daily lives," said Wu Junqing, deputy head of the Department of Economy and Information Technology of Zhejiang.

Over 600 internet and innovative enterprises from home and abroad have so far registered to display their 5G, AI, cloud-computing, big data and cybersecurity products and technologies at this year's expo.

Organizers will also host sideline events such as a job fair and internet project matchmaking events to boost collaboration and industrialization in the industry.

VR and sports-tech businesses will also launch augmented reality booths to allow visitors have a firsthand experience of smart living.

More than 1,500 guests will attend the sixth World Internet Conference on Oct 20-22 in Wuzhen, the nation's top internet affairs regulator said earlier this month.

Among them will be internet experts, scholars, government officials, international organizations and entrepreneurs.

The theme of this year's conference is Intelligent Interconnection for Openness and Cooperation: Building a Community with a Shared Future in Cyberspace.

(2019-09-26 Source: China Daily)

Portugal’s banking heavyweight, Caixa Geral de Depósitos (CGD), has inked a new partnership with Swedish open banking platform Tink.

CGD’s newly launched app – Dabox – has Tink’s products integrated into it, namely aggregation payment initiation, data enrichments and personal finance management (PFM). Tink’s cloud-based open banking platform will underpin the app, which is now being rolled out to CDG’s domestic customer base of four million people. The vendor says it will help customers “to make smarter financial decisions”.

Tink has been working with Portugal-based payments processor SIBS, helping the country’s APIs to meet the standard required under PSD2 regulations. The implementation period took six months in total, says Tink, including integrating the PSD2 APIs, applying machine learning (ML) to all categories and launching PFM in Dabox.

“The open banking movement is fundamentally changing the financial services industry – transforming how millions of customers engage with banking services,” states Daniel Kjellén, co-founder and CEO of Tink. He described CGD as “a forward-thinking partner” and says Dabox will give CGD’s customers “a complete overview of their financial lives”.

The new app, which is launched today (24 September) will enable users to see their current accounts from all Portuguese banks and make payments and transfers between these accounts.

CGD “is undergoing a major digital transformation”, says Maria João Carioca, executive board member of CGD. Tink – “an innovative and challenging partner” – will enable the bank “to combine innovation and a ‘fresh look’ on the financial business with the universal service and trustworthiness that have been CGD’s trademark”, Carioca adds.

CGD is largest bank in Portugal, wholly owned by the state since its inception back in 1876. It is a universal bank offering commercial and investment banking, asset management and specialised financing services. It has total assets of over €91 billion.

Founded in Stockholm in 2012, Tink has 250 employees and works with the likes of PayPal, NatWest, SEB, ABN Amro, BNP Paribas Fortis, Nordea and Klarna. Insight Venture Partners, Heartcore Capital, SEB, Creades, Nordea Ventures, ABN Amro Digital Impact Fund and PayPal are investors in Tink.

(2019-09-24 Source: FinTech Futures)

Deutsche Bank has bought a 4.9% stake in German open banking platform Deposit Solutions, making the fintech Germany’s second-largest fintech unicorn at valuation north of €1 billion.

The investment, the size of which is undisclosed, follows Deutsche Bank’s announcement of 18,000 layoffs and the disintegration of talks to merge with Commerzbank.

The bank expects to benefit from the fintech’s projected growth, having been a customer since 2017, offering alternative investments and increasing its fee income from the deposit business through the fintech.

Deposit Solutions lets retail banks which don’t sell savings products offer them to customers through open banking, often at higher interest rates. Deutsche Bank says it’s building the infrastructure for a “deposits business of the future”.

The bank says its been striving to operate as a digital platform “for a considerable length of time” now, and is unphased by the prospect of using third party vendors to provide this rather than its own technology.

“The investment is a milestone for us in two respects,” says Deposit Solutions’ CEO and founder Tim Sievers. “Firstly, the expansion of our platform to include other Deutsche Bank businesses in Germany and abroad will help us grow even faster. Secondly, for the first time a client of ours becomes a shareholder of the infrastructure they use.”

Now working with three banks, the German fintech is expecting an additional two to join their platform in the near future.

(2019-09-23 Source: FinTech Futures)

China International Capital Corporation Limited announced today that the Company entered into a shareholders’ agreement with Tencent Digital (Shenzhen) Limited (“Tencent Digital”), an indirect wholly-owned subsidiary of Tencent Holdings Limited, pursuant to which the parties agreed to establish a technological joint venture. The technological joint venture is proposed to, through providing technological platform development and digitalized operational support services, facilitate the Company’s wealth management，retail brokerage and other businesses to provide more convenient, intelligent and differentiated wealth management solutions, enhance the service efficiency of investment consultants, optimize precision marketing and strengthen compliance and risk control. The technological joint venture is expected to drive the accelerated transformation and scalable development of the Company’s wealth management business with digital and FinTech capabilities. In the future, the technological joint venture may extend its services to other financial institutions.

The proposed formation of the technological joint venture represents a joint innovation and exploration of the Company and Tencent to respond to the call and requirement of the state and regulatory authorities for the development of FinTech, and to grasp the significant opportunities along with the digitalization of the wealth management business leveraging their respective competitive strengths. Both parties will furnish the operation of the technological joint venture with sufficient resources required and give full play to their respective strengths to support the joint venture’s development. The Company will contribute its knowhow and experience in terms of investment advisory, financial products, asset allocation and risk control, as well as technological capabilities in the securities business and financial professionals; and Tencent will contribute its extensive customer base and ecological advantages, digital expertise and experience, and technical and operational professionals.

The proposed registered capital of the technological joint venture will be RMB500 million. The ownership of the joint venture will be held 51% by the Company and 49% by Tencent Digital. 

Mr. Bi Mingjian, CEO of CICC, said that the technological joint venture is part of CICC’s strategic initiatives in wealth management. We are pleased to collaborate with Tencent, a tech enterprise with outstanding capabilities and substantial experience in digitalization, to explore the huge growth potential of the digital future.

Martin Lau, President, Tencent Holdings said, digitalization of financial services provides a secular opportunity for the industry. Combining the strengths of CICC and Tencent, we look forward to offering more customized and differentiated FinTech services to users.

（2019-09-24 Source: Official Website of CICC）

GSMA, an international association in the mobile industry, has established its 5G Innovation and Investment Group in China, a world first, to help boost innovation and commercial applications of 5G technology.

The group, initiated with 12 other companies including the venture capital subsidiaries of China's top three telecom operators of China Mobile, China Telecom and China Unicom, aims to support the development of startups powered by 5G including in the fields of artificial intelligence, the Internet of Things and cloud computing.

"We founded the group in China as the country has started commercial use of 5G early, and has vibrant ecosystems," Sihan Bo Chen, head of GSMA Greater China, told Xinhua at a joint media interview.

"We hope that our group can provide a channel for China's startups to show themselves in the international arena," she said, adding that China's successful experiences could also inspire other countries on their own 5G journeys.

Sha Yuejia, the association's innovation advisor and previous vice president of China Mobile, is cautiously optimistic about the future development of 5G in all fields.

"It is hard to predict what fundamental changes or new business models 5G will bring. However, with such a platform, we could create a good environment for innovation and for those startups to grow," Sha said.

According to GSMA's report, China will top the world in terms of 5G connections by 2025, accounting for about one-third of the world's total.

(2019-09-26 Source: Xinhua ) 

First Investment Bank (Fibank) has teamed up with Mastercard and Garmin to launch a new pay watch in the Bulgarian market, reports Jane Connolly.

Fibank customers who have a Mastercard debit or credit card issued by the bank can make payments and ATM transactions via Garmin Pay, by tapping the watch to contactless point-of-sale (POS) terminals and ATMs.

Aimed at athletes and people who don’t want to carry a bag or wallet at all times, the technology requires a Garmin smart watch, which will be available to Fibank customers at “preferential” prices until January 31, 2020.

Customer data is secured by the latest Mastercard Digital Enablement Service (MDES) technology and card registration is carried out through the Garmin Connect Mobile (GCM) app.

“Central and Eastern Europe is a global leader in the development of contactless payments and their huge success has created a demand for even more functionalities,” says Vanya Manova, Mastercard manager for Bulgaria, Northern Macedonia, Albania and Kosovo.

“Bulgaria is among the countries where modern technologies are quickly finding a home and a favourable environment for development. Garmin Pay brings us one step further in delivering secure and convenient payment innovations.”

The pay watch project is the latest collaboration between Mastercard and Fibank, who were the first to introduce the Paypass contactless payment technology to Bulgaria in 2010. Six years later they launched the country’s first digital card.

(2019-09-27 Source: FinTech Futures)

The Cambridge Centre for Alternative Finance (CCAF) has published its 2nd Global Enterprise Blockchain Benchmarking Study. CCAF is the leading Fintech research in the world. The Centre has published multiple reports on the global alternative finance market which are frequently referenced by policymakers and industry participants.

CCAF’s first blockchain report was highly regarded and well-received by industry followers.

This newest report on blockchain “delves into the granular detail of how the enterprise blockchain ecosystem has evolved” since the publication CCAF’s first report in 2017. Between July and November 2018, the Centre collected data from more than 160 entities and 67 live networks. This data was augmented with data collected between April and June 2019 from 67 live enterprise blockchain networks.

The research notes that adoption of enterprise blockchains within the private sector has been increasing with several networks moving from ideation to production but the technology is “not a panacea.” Additionally, much of the progress in live projects is via permissioned blockchain networks and not the widely promoted permissionless iterations.

 

Key Findings of the CCAF Blockchain Report

As one may expect, the banking, finance and insurance industries are responsible for the largest share of live blockchain networks.

According to CCAF:

“The trend indicated in 2017 has continued: 43% of enterprise blockchain networks deployed in production can be attributed to Financial Services, far ahead of any other sector and industry. The specific use case of a network can be at times difficult to identify, but supply chain tracking, trading infrastructure, and document certification seem to currently dominate.”

While financial services may be the biggest beneficiary of blockchain, successful projects “require a long-term perspective and commitment.”

CCAF states that the median enterprise blockchain project requires 25 months from proof of concept to being deployed in a production environment. Some larger projects may take years to deploy.

Interestingly, 71% of live networks have been launched by a single founder even while popular perception has focused on “large scale consortia” developing blockchain projects. 

 

CCAF reports that:

 “88% of deployed blockchains are designed for shared use between multiple independent entities, but the majority are restricting membership to partners: only 19% are jointly operated by direct competitors.”

What are the incentives to deploy blockchain? Cost reduction.

“72% of live networks are currently primarily used to reduce costs for participants through reduced reconciliation efforts. However, 69% of network participants indicate that the key motivation for joining the project is the potential of generating incremental revenues through the provision of new products and services.”

CCAF says that Hyperledger Fabric appears to be the clear winner for enterprise blockchain projects with “48% of covered projects that are used in production have chosen Hyperledger Fabric as the core protocol framework underlying the network, followed by R3’s Corda platform (15%) and Coin Sciences’ MultiChain framework (10%).”

Centralization is the norm even while many proponents tout the benefits of decentralization. But many projects expect to “gradually distribute control over time.”

“81% of covered networks have a leader entity dominating the governance process (centralized social consensus), and many networks — at least in their current form — use third-party service providers to host and operate nodes on behalf of network participants (centralized network consensus).”

Terminology, or industry semantics, tend to fuel sector hype. CCAF states that 77% of live enterprise blockchain networks “have little in common with multi-party consensus systems apart from incorporating some of the same technology components (e.g. cryptography, peer-to-peer networking) and using similar nomenclature.”

Even while blockchain hype reigns, the heightened attention is acting as a powerful catalyst to trump “corporate inertia” and fuel organizational change.

To quote CCAF:

“While two years ago, the industry landscape was mostly dominated by half-hearted experiments and short-lived proofs-of-concept – often announced with great fanfare and publicity – the hype has gradually given way to genuine development of sustainable blockchain networks that are increasingly being deployed in production environments.”

Dr. Robert Wardrop, Director of the CCAF at the Cambridge Judge Business School, comments:

“In multiple industries, enterprise blockchains are perceived as a solution to establish common data standards across organisations, eliminate organisational silos, and facilitate record reconciliation to help improve overall efficiency and enable the creation of new services,” explains Dr. Robert Wardrop, Director of the Cambridge Centre for Alternative Finance at Cambridge Judge Business School. “The new study also finds that financial services account for the largest share (43 per cent) of live blockchain networks as banks and other institutions seek to use the technology for greater efficiency. While the report points to revenue generation being the biggest strategic driver for blockchain investment, only six per cent of current enterprise blockchain networks’ value proposition focuses on incremental revenue generation.”

Dave Dowsett, Global Head of Technology Strategy, Digital Transformation, AI and Emerging Technology at Invesco – a sponsor of the research, says that a few points shine through in the research:

“One being that the success of blockchain cannot and will not happen in isolation as the power is in the network, that true transformation of ecosystems takes time, and that new technologies must prove themselves to build trust in the new paradigm.”

Once again, CCAF has produced an excellent, must-read research report on an important and growing sector of Fintech.

The Global Blockchain Report was authored by Michel Rauchs, Crypto and Blockchain lead at CCAF, Apolline Blandin, Research Manager, Crypto and Blockchain at CCAF, Keith Bear, Research Fellow at CCAF, and Stephen McKeon, Associate Professor at the University of Oregon and a Visiting Associate at CCAF.

(2019-09-19 Source: Crowdfund Insider)

Vanguard is preparing to enter the digital-only advisor space for retail investors with an offering that will charge far less than its Personal Advisor Services, which combines digital advice with a human financial advisor.

According to an initial disclosure brochure filed with the Securities and Exchange Commission, the service, called Digital Advisor, will charge 15 basis points, require a minimum $3,000 (PAS charges 30 basis points and requires a $50,000 minimum) and invest in a select number of Vanguard ETFs. Including the ETF costs, Vanguard expects total costs will be 20 basis points.

Digital Advisor is a discretionary service that has the authority to trade on behalf of clients and maintain a mix of recommended investments based on what clients have communicated about their investment goals, risk tolerance, time horizon, tax status etc. Investors must set at least one financial goal in order to enroll. The service will be based on a “personalized, goal-based financial plan.”

“Once you’ve agreed to ongoing management of your Portfolio, we will provide discretionary management based on the financial goal you set in the DA Website and Interface,” according to Vanguard’s SEC brochure.

The service will also be available to 401(k) account participants if their plan sponsor has approved the offering.

“Vanguard Digital Advisor appears to be more of a classic robo-advice product where clients mostly interact with digital tools, set their own risk tolerance and are able to invest at a low minimum balance,” Says David Goldstone, head of research at BackendBenchmarking, which publishes The Robo Report.

“In typical Vanguard fashion, this product will undercut the cost of most of the other digital advice products available today with a cost, including the expenses of the underlying ETFs, of just 0.20%.”

Goldstone expects the Digital Advisor will increase price pressures in the already competitive robo-advisor market.

The Vanguard filing with the SEC is preliminary and no date has been set for its official opening, but it is currently available to a limited number of prospective users by invitation only, according to a Vanguard filing with the SEC.

(2019-09-23 Source: Think Advisor)