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. UK: New Peer to Peer Lending Rules Kick in on December 9th: “A Watershed Moment for P2P”

II. Top US Financial Regulators Urge Monitoring of Digital Assets, Stablecoins

III. Korea to open fintech support center in Singapore

IV. Nigeria Turns To FinTechs To Boost Financial Inclusion

V. EBRD and EU support digitalisation of Ukrainian SMEs

VI. Report: Bank of France to test digital currency in 2020

VII. Italy’s largest bank UniCredit to cut 8,000 jobs by 2023 to reward shareholders

VIII. Japan’s Biggest Bank Pivots ‘MUFG Coin’ After Digital Currency Flop

IX. Banking app Monese launches “first” cross-border joint account in Europe

X. China's AI market to reach 11.9 bln USD by 2023: white paper

XI. Kredivo’s Parent FinAccel Raises US$90 Million; Doubles Down on Growth in South East Asia

Law New peer to peer lending rules come into effect on Monday, December 9th. The new rules were the result of a review by the UK Financial Conduct Authority (FCA).

The UK largely created the entire sector of peer to peer lending. One of the most prominent sectors of Fintech, P2P lending has emerged as a viable asset class generating better risk-adjusted returns in a low-interest rate environment. While not without a few growing pains, P2P has been a net positive for both credit markets and for smaller investors seeking higher rates of return on their money.

At the time the updated rules were announced in June of 2019, the FCA stated:

“[The] P2P sector had developed a wider, more complex, range of business models. Many platforms in the sector are now taking a much more active role, by taking decisions on behalf of the investor. In addition, we explained that we had also seen some poor business practices, for example, in disclosure of information to clients, charging structures, wind-down arrangements, and record-keeping.”

The response by platforms has mostly been positive with some questioning if the net effect will be to dim innovation in the online lending sector. The UK P2PFA, the advocacy group representing the P2P industry, stated at the time the new regulations were announced that the rules “reflect what is already good practice in the peer to peer lending market and we welcome that.”

Orca Money, a P2P investment aggregation site, worried that institutional money would now take over the P2P sector.

The Final Rules are available here.

Zopa, the grande dame of P2P lending in the UK, recently published a blog post seeking to “demystify” how the rules will impact individual investors in P2P assets. Going forward, individual investors on will be classified within various categories including:

Certified sophisticated investor – no restrictions on how much you can invest – based on past activity.

You have made more than one investment in a P2P agreement or portfolio in the past 2 years

You work, or have worked in the past 2 years, in a professional capacity relating to finance, resulting in an understanding of P2P

You are currently, or have been in the past 2 years, a director of a company with an annual turnover of at least £1 million

You are a member of a network or syndicate of business angels and have been so for at least the last 6 months

High net worth investor – you earn more than £100,000 per year, or hold net assets of at least £250,000.

Restricted investor – you may invest 10% of your net assets with certain exclusions

Other new rules that impact the platforms include:

More explicit requirements to clarify what governance arrangements, systems, and controls platforms need to have in place to support the outcomes they advertise, with a particular focus on credit risk assessment, risk management and fair valuation practices.

Strengthening rules on plans for the wind-down of P2P platforms if they fail.

Introducing a requirement that platforms assess investors’ knowledge and experience of P2P investments where no advice has been given to them.

Setting out the minimum information that P2P platforms need to provide to investors.

Applying the Mortgage and Home Finance Conduct of Business (MCOB) sourcebook and other Handbook requirements to

P2P platforms that offer home finance products, where at least one of the investors is not an authorised home finance provider.

RateSetter, one of the largest peer to peer lending platforms in the UK labled the regulation a “watershed moment” for P2P – a positive for the evolution of the peer to peer lending industry.

RateSetter said that the FCA’s approach “decisively addressed any sense that P2P is lightly regulated” and the rules put the regulation of P2P “on par with other mainstream financial sectors.”

Rhydian Lewis, RateSetter CEO, distributed a statement on how the rules will impact the P2P industry calling it the moment when “peer-to-peer investing came of age as an asset class, competing against other mainstream investment options and the banks as an attractive way to put money to work.”

To quote Lewis’ letter:

“Stronger regulation with harmonised standards means that people can invest in P2P with greater confidence than ever.  P2P will now become a logical choice for any individual or financial adviser building an investment portfolio diversified across different asset types. 

For first-time P2P investors, 10% is a sensible place to start and once you are experienced you can invest more.  This is exactly what we have seen over the last ten years, with people dipping their toe in and then growing as they see the value.  The limit will become a target, encouraging every investor to think about diversifying some of their money into P2P.”

Lewis said that RateSetter’s growth is set to “snowball” from here.

 (2019-12-05 Source: Crowdfund Insider)

A panel of top U.S. financial regulators including Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell urged federal and state officials to monitor risks from digital assets like bitcoin.

The recommendation came in an annual report published Wednesday by the Financial Stability Oversight Council, set up after 2008 to help identify emerging risks that could trigger a new banking crisis. The panel also includes U.S. Securities and Exchange Commission Chair Jay Clayton and Commodity Futures Trading Commission Chair Heath Tarbert. 

"The council recommends that federal and state regulators continue to examine risks to the financial system posed by new and emerging uses of digital assets and distributed ledger technologies," the report said. 

U.S. lawmakers and administration officials including Mnuchin and President Donald J. Trump have warned of the risks to the financial system from cryptocurrencies and stablecoins like Facebook's proposed Libra. But some former officials, including ex-CFTC Chair Christopher Giancarlo, have pushed for faster adoption of blockchains, arguing that the country could fall behind other countries as the fast-moving technology develops. 

According to the new report, the risks of "existing and planned digital-asset arrangements" could put financial-industry stability in peril "via both direct and indirect connections with banking services, financial markets and financial intermediaries."

The report also cited "risks to consumers, investors and businesses associated with potential losses or instability in market prices" along with "illicit financial risks; risks to national security; cybersecurity and privacy risks; and risks to international monetary and payment system integrity." 

Mnuchin said in January 2018 that the FSOC had formed a working group focused on crypto. and the council earlier said the use of decentralized ledgers to store data raised challenges for regulators used to centralized systems. 

 (2019-12-05 Source: Coindesk)

The government will establish a help desk in Singapore early next year to support local fintech startups' expansion into Southeast Asia, the Financial Services Commission (FSC) said Wednesday. The tentatively named Korea Startup Desk will open at the Korea Development Bank's branch in the city-state, which many Korean firms use as a bridgehead for inroads into Southeast Asia.

The desk will help Korean fintech startups understand industry trends and build networks with local financial firms, investors, accelerators and other startups,.

The Korea-ASEAN Financial Cooperation Center, which will be established in Jakarta next year, is also designed to provide support for international fintech cooperation.

In addition, the nation's financial services firms will open at least two additional fintech labs in ASEAN member states by the end of next year. 

These are part of measures to scale up the nation's fintech industry and foster Korean startups so that they grow into "unicorns" ― privately held startup companies valued at over $1 billion.

The FSC has pursued 24 tasks in eight sectors to achieve this goal.

According to the financial regulator, the tasks can also be categorized as three pillars ― easing regulations, boosting investment and supporting overseas expansion.

Among measures on regulation and investment, the FSC mentioned a larger regulatory sandbox (testing environment), a lower barrier to the listing of fintech startups on the stock market, tax benefits and the creation of a 300 billion won ($251 million) fund over the next four years for investment in the fintech industry.

As for overseas expansion, the regulator vowed to support fintech firms making inroads into the ASEAN market.

"Despite fintech startups' growing interest in overseas expansion amid their difficulties in attracting enough customers in Korea, there has been insufficient support for them," Kwon Dae-young, director general of the FSC's financial innovation bureau, said.

"There has been demand in the ASEAN market, but they have complained of the lack of experience, information, network and capability to research the market."

The FSC has pushed ahead to attract foreign startups to Korea by lowering entry barriers. It also plans to raise awareness of the industry by enlarging fintech-related events.

On Dec. 16, the Korea-ASEAN Fintech Conference will take place in Seoul to discuss the outcome of fintech cooperation in the ASEAN region and ways to bolster this.

The annual Korea Fintech Week event is due next May 28. The FSC has decided to increase the number of participating companies to 150 from 50 this year.

 (2019-12-09 Source: The Korea Times)

In an effort to expand access to financial institutions (FIs), the Central Bank of Nigeria is planning to license more payment providers, Bloomberg reported on Saturday (Nov. 30). 

The goal is to improve Nigeria’s financial inclusion rate by 20 percent, bringing it to 80 percent by the end of 2020.

“The provision of licenses to several players will help support innovation and competition as all parties work to increase their customer base,” Central Bank of Nigeria Governor Godwin Emefiele said in a speech in Abuja on Friday. “Nigerians in underserved locations will have access to cost-effective payment services, cash-in and cash-out facilities, and savings products.”

Emefiele said that three licenses have been issued by the central bank for “shared-agent” and payment-banks.

Africa’s most populous country — roughly 200 million people — is behind in offering mobile banking compared to the rest of Africa. Only one mobile banking license has been issued this year. Lenders are hoping to stave off mobile competition by expanding retail banking.

“Your Central Bank today is more committed to creating wealth and putting in place strong policies for creating jobs for our growing youth population; your Central Bank today is ever more committed to promoting a more stable and resilient financial system,” he said.

Regardless of the recession Nigeria experienced, the governor said that the country’s economy remained the largest in Africa by GDP. He pointed to a diverse “mix of opportunities across different sectors,” — manufacturing, solid minerals, trade and agriculture.  

He also said that the CBN was open to foreign investors “who were keen to support efforts at unlocking the immense opportunities in Nigeria’s economy.”

FinTech is helping to transform daily consumer life in Nigeria and other developing markets. One recent example comes from Kuda, Nigeria’s first digital-only bank with a standalone license. 

Other examples include FairMoney and PalmPay. FairMoney, a consumer micro-lending technology company that operates in Nigeria, raised $11 million in September in a Series A round. Payments startup PalmPay raised $40 million in a seed funding round this month and is working to become Africa’s largest financial services platform.

(2019-12-01 Source: Pymnts)

A new digital platform to support thousands of Ukrainian small and medium-sized enterprises (SMEs) has been launched in order to boost businesses’ development opportunities through access to vital information.

The digital initiative supported by the EBRD and the EU under the EU4Business initiative will provide information on trainings, events, advisory opportunities, knowledge tools and other relevant data.

The platform will also bring together the providers and the seekers of development opportunities and will make the market of business services more transparent.

Merezha.com.ua will streamline the existing SME development activities of the EBRD and EU and help bring them to a new level in terms of relevance and efficiency.

Ukrainian SMEs will be able to register online and have instant access to registered experts, case studies, business solutions library and useful data necessary for their planning and development activity. It is expected that Merezha, which means 'chain' in English, will attract up to 30,000 visitors monthly. 

Experts and business support organisations (BSOs) planning to provide services to SMEs via the platform will  have to submit case studies of successfully implemented projects, the description of their services and other relevant information. Ukrainian businesses will be able to select the right experts for their purposes applying necessary filters and browsing through the database of registered consultants.

The platform will offer an “Ask the Expert” section, which will streamline the communication between experts and SMEs seeking support and advice. There will be a special analytical tool open to all users designed to monitor typical business problems and their solutions patterns, which among other things, will help develop new SME support products.

The new Business Services Online Platform takes on board the experience accumulated through previous support mechanisms, including the existing online resources and is implemented in coordination with the government of Ukraine.

It is expected that during the next development stage, due in the second quarter of 2020, the registration will be open for other market players, such as business associations, accelerators, grants providers and others.

The EBRD is the largest international financial investor in Ukraine. Since the start of its operations in the country in 1993, the Bank has made a cumulative commitment of almost €14.6 billion through 445 projects in the country.

 (2019-11-29 Source: Official Website of EBRD)

France is looking to test central bank-issued digital currency in 2020, according to news site AFP. 

In a Wednesday conference hosted by the French Prudential Supervision and Resolution Authority (ACPR), the central bank's governor François Villeroy de Galhau said that the bank will start testing digital currency soon and "will launch a call for projects before the end of the first quarter of 2020," per the AFP report. 

According to Villeroy de Galhau, France is keen on contributing to the digital currency innovation. However, he also cautioned that the country needs to experiment with the new technology "in a serious and methodical manner." 

The news came on the heels of France's Minister of the Economic and Finance Bruno Le Maire calling for the creation of a "public digital currency" at a European Union (EU) meeting. The minister previously expressed his opposition against Facebook's cryptocurrency project Libra, saying that France would block the project if it fails to address concerns over the potential threat it poses to monetary sovereignty.  

(2019-12-04 Source: TheBlockCrypto)

UniCredit, Italy’s largest bank by assets, has announced 8,000 job cuts as part of a three-year plan to increase shareholder value and reach a 2023 revenue target of €19.3 billion ($21.4 billion).

In a bid to reward shareholders through dividends and buy-backs, UniCredit will aim to release half of its underlying net profit to shareholders in 2023 – forecast to be just over €8 billion ($8.9 billion), and 40% each year until then.

Earnings per share are predicted to go up 12% per year, and UniCredit CEO Jean Pierre Mustier said the three-year plan would increase stakeholder value by €16 billion ($17.7 billion).

UniCredit says it’s shifting its focus for customers to “streamlined processes and innovative products”.

The bank is looking to close 500 of its branches and become a “paperless retail bank” by next year in Italy, and by 2021 in Germany and Austria.

Revealing that more than three quarters of the restructuring costs will be applied to Italy, local news agency ANSA quoted unions which said Italy will be hit with 5,500-6,000 of the job losses and 450 of the branch closures.

“Job losses in Germany and Austria will be negligible, while in Italy … those who lose their jobs will have a hard time finding another post,” says European lawmaker Fulvio Martusciello, who is trying to seek a meeting with Mustier to evaluate the impact of cutting so many jobs in the Italian economy.

 (2019-12-05 Source: Fintech Futrue)

A much-publicized plan by Japan’s biggest bank Mitsubishi UFJ Financial Group (MUFG) to launch a cryptocurrency has been scaled back.

The financial giant will instead use the digital currency in a mobile payments business, according to Nikkei Asia Review. The mobile payment service employing the MUFG Coin as the unit of transactions will be unveiled in partnership with HR firm Recruit Holdings.

Through the service, users will be able to convert money held in their bank accounts into the MUFG coin. Recipients of the MUFG coin will then be able to convert the digital currency to the Japanese Yen or any other currency that their bank account is denominated in. The bank accounts will not necessarily have to be held at MUFG.

MUFG Coin payment service will be run as a joint venture

Per the Yomiuri Shimbun, the two partners set up a joint venture in October. Recruit Holdings will hold the majority stake in the JV while Japan’s biggest bank will take a minority stake.

The mobile payment service is expected to be launched in next year’s first half. Currently, the two firms are awaiting regulatory approval. They are seeking a fund transfer service provider license.

Besides in MUFG’s banking halls, the mobile payment service available at Recruit’s associate firms. The HR firm owns the Indeed online recruitment tool and employer review website Glassdoor. Recruit Holdings also operates other internet properties in the hospitality sector.

Other than retail users, MUFG coin will also be eventually rolled out to corporate customers. Though there are already highly successful mobile payment services in Japan, MUFG will be banking on its wide reach. Currently, it boasts of 34 million retail customers and 1.3 million corporate clients.

(2019-12-01 Source: CCN)

Banking app Monese has launched a joint account service in the UK which it says is the “first cross-border joint account” to land in Europe.

The shared account number means two UK Monese customers can both get paid into one joint account directly, as well as set up direct debits to pay bills, access Apple or Google Pay and set up monthly spending budgets informed by analytic data.

Customers have to be European Economic Area (EEA) nationals and already have a Monese personal account wired up to PayPal to be eligible for the new joint account.

“[Joint accounts] are a crucial financial tool for many, and should easily fit around our modern ways of living and working,” says Monese CEO Norris Koppel.

“With traditional banks, opening a joint account can be a hassle for customers, who often have to endure lengthy processes and unnecessary red tape,” Koppel adds.

Monese says its version of a joint account is “free” and “instant” transfers between EUR or GBP currencies as well as globally, and there are no monthly fees to open one.

There is a £200 per month cap on fee-free ATM withdrawals, and a £2,000 per month cap on fee-free global spending. The contactless debit Mastercard which comes with the account does cost £4.95 to get delivered.

Working on a referral basis which emulates Monzo’s referral success, Monese customers can get “up to £20” in referral bonuses for recommending the banking service to friends, family and colleagues.

 (2019-11-27 Source: Lendlt Fintech News)

The artificial intelligence (AI) market in China is expected to reach 11.9 billion U.S. dollars by 2023, said a new white paper.

Driven by favorable policies, China's AI market is expected to account for 12 percent of the global total in 2019, with an annual growth of 64 percent, making it the world's second largest AI market, according to the white paper released by the global market intelligence firm International Data Corporation (IDC) and QbitAI, a Chinese technology media outlet.

The paper said Chinese enterprises increased their investment in AI technology this year, and the application scenarios of AI have become richer. The potential areas of China's AI market will focus on the fields such as service sector, health care and telecommunications.

According to the white paper, the lack of AI technicians and high-quality data sets are the primary challenges of AI development. Meanwhile, the unclear application scenarios and high project costs also hinder the development of the sector.

The paper also forecast that the market would reach 4.25 billion dollars by 2020, with an estimated annual growth rate of 51.5 percent. 

 (2019-12-08 Source: Xinhua)

Singapore-headquartered FinAccel, a fintech firm that enables Indonesian consumers to buy online and pay later under the brand Kredivo, has raised US$90 million in a Series C equity funding round to expand in Indonesia and the region.

Since inception just over three years ago, FinAccel has evaluated more than three million applications, disbursed nearly 30 million loans and created one of the largest credit-based payment platforms for ecommerce in Indonesia.

FinAccel plans to use the funds to double down on growth in the region, hire talent, and expand its range of financial services dedicated to creating a generation of financially savvy customers in Indonesia and the rest of Southeast Asia. Other investors participating in the over-subscribed Series C fundraise include Singtel Innov8, TMI (Telkomsel Indonesia), Cathay Innovation, Kejora Intervest, Mirae Asset Securities, Reinventure, DST Partners and others.

It aims to serve 10 million users in the next few years through Kredivo and other financial services. Near-term plans include the rollout of low-interest education, healthcare and Shariah loans and partnerships with banks for joint product development.

Commenting on the transaction, Akshay Garg, CEO of FinAccel, said,

“We are very excited to have Mirae Asset and Naver join our growth journey. These highly entrepreneurial companies bring deep domain expertise in financial services and consumer internet, Kredivo sits at the intersection of both areas. Additionally, we are very pleased that our incoming investors share in our vision of building a wide set of financial services that are fast, affordable and accessible for millions of customers in the region.”

The round was jointly led by Asia Growth Fund (a joint venture between Mirae Asset and Naver) and Square Peg. This funding round brings the total capital raised by the company in 2019 alone to more than US$200 million, across both debt and equity, with the debt being provided by a consortium of lenders including banks and credit funds.

Kredivo ranks among the top 10 most funded fintechs Indonesia, the top-funded Indonesian fintech is Akulaku, who similarly offers credit-based payments for e-commerce platforms.

 (2019-12-03 Source: Fintechnews. sg)