FinTech Briefing: December 2015



New UK digital bank secures license. Tandem has become the second digital-only bank to receive authorisation from the Bank of England (Atom is the other; Starling and Mondo are hot on their heels).

Number26 adds more numbers. Berlin based Number26 announced that its digital banking app will be made available in six additional eurozone countries, including France and Spain. The bank's service is currently limited to Germany and Austria.

Barclays unveils new app. 'Launchpad' will enable Barclays mobile banking customers to experiment with (and give feedback on) new features and apps during their beta phase.

Are challenger banks really disrupting the banking experience? Customers are actually fairly satisfied with their banks' digital offerings (or not dissatisfied enough to make them susceptible to changing account). Mondo's promise of automated TfL refund applications would be something genuinely (if not massively) disruptive.

Wearables on the way. A poll of 166 financial services executives from around the world has found that around half are planning to introduce a wearables app within the next 18 months. 'Biowearables', or 'tech tattoos', could be a new addition to the wearables landscape, according to design agency Chaotic Moon. 

PropTech pair-up. Landbay, the P2P lender, has added My Home Move to its panel of conveyancing firms. California's Lenda, an online mortgage platform, has announced $2m in seed funding.

Walmart Pay. The US groceries behemoth has introduced its own mobile payment service. ING also announced a mobile payments app (for customers in the Netherlands). Samsung Pay is rumoured to arrive in the UK early 2016. Swatch has announced Bellamy, an analogue watch equipped with NFC contactless payments technology. WorldPay, the UK payments processor which listed earlier this year, has predicted that 2016 will be a breakthrough year for alternative payment methods (download the report here).

Romania, M-Pesa and international remittance transfers. Friends and family of the 16.5 per cent of Romanians who live and work overseas can now receive remittance payments using their mobile phones, thanks to Vodafone's M-Pesa service. Romania is the first EU Member State to authorise mobile remittance payments.

Debit cards dominate plastic. A new report from the The UK Cards Association reveals that spending on cards has risen from £270bn in 2005 to £566bn in 2014, with debit cards' share of the spending rising from 58 per cent to 71 per cent.

The magic of CVV codes. BBVA Bancomer has implemented OT Motion Technology replacing static three digit CVV codes with dynamic CVVs that change every 20 minutes. The technology is being made available to the bank's mobile wallet customers, but in theory it could be added to physical credit and debit cards via a small screen display.

Cardless ATMs. Turkey's Isbank is considering an overhaul of its ATM fleet. The old machines would be replaced by new bluetooth enabled alternatives, which would allow users to withdraw cash using the bank's mobile phone app.

Black cabs may accept credit and contactless cards in 2016. TfL has been negotiating with card companies to keep transaction fees low.

Plastic bitcoin. Coinbase has introduced the first US-issued bitcoin debit card. Called the Shift Card, the VISA debit card enables online and offline bitcoin purchases. Meanwhile, CoolbitX Technology has released "the first wireless hardware wallet that can be used by smartphones to manage Bitcoin transactions" (courtesy of Coin Telegraph).

Lloyds offers support to personal financial health app. Swave, which is building an app that will enable users to track their spending on luxuries and encourage saving, has been offered space in the bank's digital hub.

Sharia compliant mobile banking. Al Rayan Bank, the UK's only wholly Sharia compliant bank, has launched a mobile banking app.

Xbox One's virtual mall. Microsoft and e-commerce company Von Bismark have partnered to provide US Xbox One users with a virtual mall, enabling users to "try on" clothes using the console's Kinect motion tracking camera.

Feather in TransferWise's cap. Apple has named TransferWise 'Most Innovative' iOS app of 2015.

What has the Internet of Things got to do with banking? Not much, apparently.


Blockchain and the R3 snowball. BNP Paribas, Canadian Imperial Bank of Commerce, ING, MacQuarie and Wells Fargo are the latest banks to announce that they will be joining blockchain consortium R3CEV. Sberbank, Russia's largest bank, is weighing up whether to participate. In other blockchain and digital currency news:

SWIFT has shepherded in new rules designed to provide corporates with faster and more transparent payments services. But the financial messaging platform may "look at changing correspondent banking settlements and maybe having blockchain technology rather than bilateral correspondent accounts", according to Wim Raymaekers, global head of banking markets.

Goldman Sachs has filed a patent for SETLcoin, a "cryptographic currency for securities settlement". 

Lloyd's has signalled its interest in deploying blockchain technology as part of its Target Operating Model modernisation plan for the London Market.

Microsoft will offer banks the opportunity to develop cloud-based blockchain applications for securities and derivatives markets.

Pierre Omidyar's investment vehicle, Omidyar Network, has announced a stake in eCurrency Mint, the Dublin based start-up seeking to enable central bank issued cryptocurrencies.

The Bank of England has launched a blockchain competition: "The point is that while the technology might include some risks, there are all sorts of far-sighted, game-changing, life-enhancing ideas to pursue. We want to hear about yours."

Chain, the blockchain start-up which recently raised $30m from Visa, has announced that it will be killing its free bitcoin API service. The company is seeking to become an enterprise platform for financial institutions wanting to issue and manage digital assets on the blockchain network.

KPCB Edge, the early-stage investment firm, has announced that it will be incentivising its investors with Edgecoin wallets, starting with entrepreneurs who recommend external investment opportunities to the firm.

Everledger, a diamond verification blockchain start-up, has joined Allianz France's accelerator.

Heike Mai of Deutsche Bank adds one more report to the literature on bitcoin, blockchain and payments.

The SEC has charged two bitcoin mining companies with running a Ponzi scheme.

A former US Secret Service agent has been sentenced to 71 months in prison after stealing $350,000 in bitcoins while serving on a taskforce investigating the Silk Road online marketplace. 

Australian Craig Steven Wright may be the founder of bitcoin

We can be sure of one thing: cybersecurity spending is going up ↑↑. Bank of England Deputy Governor Jon Cunliffe has indicated that cyberattacks may well feature in future bank stress tests. Criminality and technology risks have become two of the banking sector's primary concerns, according to the results of the latest CSFI banana skins survey. Those findings were echoed in The Depository Trust & Clearing Corporation's latest Systemic Risk Barometer Survey. A LexisNexis report for the BBA goes deeper into what is worrying UK compliance and financial crime professionals. And Citi's Walter Pritchard has surveyed 51 chief information officers, finding an increased appetite for security spending (eight per cent growth in 2016 compared with five per cent in 2015). In other cybersecurity news: 

A survey by ESET has found that a quarter of Brits who use mobile banking do so without security software on their device.

Demand for cybersecurity specialists has increased fourfold over the past years, according to a report by recruiter Manpower.

Target has agreed to pay $39.4m to settle claims by banks and credit unions whose customers lost money as a result of the US retailer's major data breach last year.

Hotels are the next big targets for hackers, reports the FT

Hong Kong toymaker VTech has admitted that personal details for 6.4m children have been compromised as a result of a hack. 

Bloomberg Business reports that cybersecurity firm Blue Coat Systems, which was acquired by private equity firm Bain Capital Partners earlier this year, is exploring a 2016 IPO.

ThetaRay, the Israeli anti-fraud and cybersecurity specialist, has raised $5m from Alibaba as part of a $20m funding round.

A giant, wanting to be fast on its feet. JPMorgan Chase raised a few eyebrows after agreeing to partner with online marketplace lender On Deck Capital, whose algorithmic technology enables it to approve or reject small business loan applications with minimal notice.

Funding Circle first P2P platform to launch investment trust. The SME Income Fund, which raised $150m during its first funding round, has listed on the London Stock Exchange.

First major takeover of a UK P2P SME finance platform. ThinCats, the peer-to-peer lending platform for small businesses, has been acquired by ESF Capital.

iwoca and EIF agree £40m lending line. The fast-approval SME credit provider will provide up to £40m in loans for 3,000 UK SMEs, backed by a guarantee from the European Investment Fund as part of the EU's Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME) programme.

WorldPay and Liberis announce partnership. WorldPay Business Finance will enable UK small businesses to take a cash advance on their future credit and debit card sales.

Secondary market transfers for equity crowdfunding. US real estate crowdfunding platform CrossMarkets is launching a new exchange, Crowdfunding CrossMarkets, in order to address liquidity issues in equity crowdfunding.

Deutsche Bank goes robo. The bank's maxblue online investment platform will offer portfolios generated by robo-advisors. Deutsche also announced a major computer system upgrade in order to enable big data analysis of its customer interactions. And its stock pickers have identified their top themes for IT investments in 2016: Cisco, Akamai Technologies and Commscope Holding Company all receive a thumbs up

Light CAPEX footprint for capital markets firms. Four in ten capital markets firms spend less than $250,000 per technology project, according to a survey by CCgroup.

What does FinTech mean for ratings? FinTech "not yet a negative rating driver over our rating horizon, which typically extends out to two years", says S&P.

US banks spent $1.8bn on big data in 2015. That's according to a recent report by IDC.

What next for advance analytics in banking? A free report from Infosys and Finextra.

Facebook at Work. The social media giant's workplace platform is set to launch early 2016, reports Reuters. More than 300 companies, including RBS, have been trialling the platform during its beta stage. 

Mobile corporate procurement. Real time notifications for buyers and sellers can speed up the procurement process, though submitting corporate payments through mobile may never take off. 

Mapping Insurance Tech125 key players:



European Commission consultation on cross-border choice in financial services. Here is the link to the consultation page. From the press release:

"The European Commission is today launching a consultation to look at financial services from the perspective of European consumers in order to boost competition, transparency and choice. The consultation looks at the retail market across Europe for products such as insurance, mortgages, loans, payments and bank accounts. It will seek to identify the unjustified barriers that consumers face when they want to use such services across borders, and find answers on how best to remove these barriers." 

The Centre for European Policy Studies has put out a commentary paper on the consultation.

EU supervisors studying robo-advice. The Joint Committee of the three supervisory authorities - EBA, EIOPA and ESMA - has released a discussion paper on automation in financial advice.

Possible end to geo-blocking in EU. The European Commission is looking to introduce legislation in 2017 that would enable EU consumers to access their digital content in any Member State. The initiative forms part of the Digital Single Market agenda.

Staying safe in the cloud. The European Union Agency for Network and Information Security has released a report with recommendations for the secure use of cloud computing in the finance sector.

EU's first cybersecurity law nears completion. EU lawmakers and Member States have agreed a cybersecurity law requiring companies in critical sectors - including finance - to report serious breaches to national regulators. Failure to do so will result in sanctions. Meanwhile, the EU Justice Commissioner announced that the EU will reserve the right to suspend a new Safe Harbour data agreement with the US should it develop "concrete" concerns about privacy protection on the other side of the Atlantic.

Euro area payments self-regulatory rules updated. The European Payments Council (EPC) and the Cards Stakeholders Group (CSG) published version 7.1 of the Single Euro Payments Area (SEPA) Cards Standardisation Volume.

Separating payment card schemes and processing entities. The EBA has opened a consultation on its draft technical standards for the separation of payment card schemes and processing entities under the Interchange Fee Regulation. It is also consulting on the framework for cooperation and exchange of information between competent authorities for passporting under the revised Payment Services Directive. And it has issued a discussion paper on requirements for customer authentication and secure communication (VISA issued a position paper on this topic).

Making instant payments a reality across the EU. The European Payments Council has issued its proposal for the design of an 'instant credit transfer scheme'.

"Step forward, away from the past". Steven Maijoor, chair of the European Securities and Markets Authority, delivered a speech on the implications of a "truly single capital market" for EU bond markets.

Not yet dead in the water? The Council of the European Union has issued a state-of-play update on the mooted Financial Transaction Tax. 

High frequency trading firm fined five million euros. Virtu Financial Europe (named Madison Tyler Europe at the time of the rule-breaking) was fined by the French regulator for submitting an excessive number of electronic messages in proportion to the trades it executed (on Euronext Paris, it accounted for 62.7 per cent of all messages and two per cent of trades).


Re-scoping the bank levy. The Treasury has issued a consultation paper seeking views on whether to move the levy from "a global balance sheet basis to a UK balance sheet basis". Challenger banks were stung earlier this year when the Chancellor announced plans to cut the bank levy, a tax which hit big banks the hardest, and introduce a corporation tax surcharge of eight per cent on all banks with profits of more than £25m per year. 

Funding for Lending Scheme extended, New Bank Start-up Unit on the way. The Treasury and Bank of England announced that the Funding for Lending Scheme, which supports SME lending, will be phased out more gradually. Challenger banks seeking their license will be aided during their initial stages by the PRA and FCA's New Bank Start-up Unit, which will have its own website. And senior Treasury officials have now committed to meeting with challenger banks four times per year under the guise of the Challenger Bank High Level Advisory Group.

FCA announces new measures for boosting cash savings competition. The regulator hopes to deliver seven working day switching for cash ISAs from 2017.

Treat SMEs more like individual customers? The FCA has issued a discussion paper exploring whether SME customers of financial institutions are in need of stronger protections.

What's changed? The FCA has issued a consultation paper setting out new rules to boost competition in the general insurance market when customers' policies are up for renewal. The headline proposal: insurance companies should have to disclose last year's premium at the time of renewal.

Keeping it private. The draft Investigatory Powers Bill will authorise GCHQ to download personal details from almost all "bulk data sets" held by businesses, Jill Killock, director of the Open Rights Group, warned a Parliamentary committee this month.

New chair of the Office of Tax Simplification announcedIt's Angela Knight.

'A better deal'. The Treasury has released its blueprint for boosting competition to reduce the cost of living. "FinTech" is mentioned once, in the context of the government's efforts to develop an Open Programming Interface (API) standard in UK banking.


Links in the chain. The Board of the International Organization of Securities Commission has released a consultative report on ensuring cybersecurity in the outsourcing chain for financial institutions. The PRA announced that it has fined Raphaels Bank over £1.25m for failing to securely manage an outsourcing process. 

Opening up the secret sauce. Algorithmic traders in the US may have to open their source codes up to the Commodities Futures Trading Commission and Department of Justice under new rules for automated trading.

US investment advisers put on notice. The Securities and Exchange Commission announced that it will be stepping up efforts to sanction investment managers who do not take reasonable precautions against cyberattacks.

San Bernardino and the P2P connection. Syed Rizwan Farook, one of the alleged shooters in the recent terrorist attack in California, took out a $28,500 loan through Prosper Marketplace, an online lending platform. That loan, along with many others, was acquired by Citigroup, it has been revealed. It is too early to say whether the terrorist financing connection will bring greater regulatory scrutiny for online marketplace lenders.

China cracks down on underground banking. AgBank is under investigation after authorities busted a criminal underground banking network. 

Marketplace lending out West. Californian authorities have launched an inquiry into marketplace lenders operating in the state, with a view to reforming its regulatory approach.

Equity crowdfunding down under. The Australian government is moving to facilitate equity crowdfunding. 

Bulletin Board

  • Check out FinTech Weekly's calendar for a list of upcoming conferences and events from around the FinTech world.
  • Forbes introduces its FinTech 50.
  • CBI Insights maintains a list of unicorns - and these are the companies it predicts will reach $1bn status next.
  • Global FinTech investment could grow to $30bn in 2016, up from $20bn in 2015 and $12bn in 2014. The Financial Services Club Blog's Chris Skinner offers a breakdown of the figures.
  • A map of the US FinTech landscape.
  • Women are still being paid less than men in banking.
  • A new report from the World Bank Development Research Group, Better than Cash Alliance, Bill & Melinda Gates Foundation, and Women's World Banking shows how digital financial services can aide women's economic opportunities.
  • released the results of a UK survey, which found that 85% of the parents it surveyed don't know how to code and 43% would be unlikely to encourage their child to pursue a career in technology.
  • It's not going all one way in the talent battle between tech and finance. Citi is fighting back too. But tell that to Uber
  • Innovate Finance and BritishAmerican Business have announced a partnership to champion transatlantic FinTech.
  • A UK FinTech trade delegation visited Japan. Rakuten, a Japanese e-commerce company, announced a $100m FinTech investment fund, which will target the US and Europe. Makoto Fukuhara offers his thoughts on Japanese FinTech interest in London in City AM. Mediterranean FinTech representatives visited London late November.
  • UBS has announced the winners of its Future of Finance Challenge: Aesthetic Integration, whose technology automatically analyses financial algorithms for glitches and unfair behaviour, came first, followed by Capital Preferences (client profiling) and WealthForge (risk management and processing).
  • SWIFT has announced a shake-up of its innovation arm. Innotribe will restrict its annual FinTech prize to emerging markets ventures, while working with member banks to identify the most promising areas for innovation as part of an 'Industry Challenge'. 
  • Metro Bank has won the Financial Services Award at Microsoft's EMEA Visionary Awards for Outstanding Business Achievement.
  • Comerica Bank and RocketSpace announced FitPay as the winner of its Wearable FinTech Startup Challenge.
  • Canary Wharf's Level39, which hosts numerous FinTech start-ups, is launching a smart cities hub called The Cognicity Hub.
  • US equity analysts are the most positive about the outlook for global banks, according to Broadridge's survey of Asian, European and US equity analysts.
  • TheCityUK CEO Chris Cummings gave evidence to the European Union Select Committee on the government's EU reform agenda. 
  • The Centre for European Policy Studies has put out a paper on 'achieving European policy objectives through financial technology'.
  • Former Barclays CEO Anthony Jenkins spoke at Chatham House this month on Uber-style disruption of financial services.
  • Australian superannuation fund First State Super has announced plans to invest in FinTech start-ups through a partnership with H2 Ventures.
  • Google's interest in financial services: comparison, insurance, payments.
  • Google's Quantum AI team announced results from 'proof-of-principle' problems it has been running on the D-Wave 2X quantum computer it operates with NASA. The D-Wave 2X solved problems containing 1,000 variables 100m times faster than a conventional computer. WSJ has more on the story. Bloomberg looks at how financial institutions are already making use of quantum computing. Meanwhile, Commonwealth Bank of Australia has announced an additional $10m funding for a local effort to build the first silicon-based quantum computer.
  • Magic Leap, the mixed (augmented) reality start-up backed by Google, could be on track for a $3.7bn valuation if its next funding round goes to plan. Virtual reality is set for a big year in 2016; mixed reality (which projects computer generated images over real-life settings) is further down the technological pipeline.