FinTech Briefing | February 2016


 

Regulation

UK

Number one. An EY report (commissioned by HM Treasury) ranked the UK number one among the world's seven biggest FinTech hubs. The Chancellor was heartened:

The report coincided with the government backed UK FinTech week. Business Insider UK has a helpful summary of the week's highlights. For an independent look at the performance of (non-listed) UK FinTechs, check out Novitas' recent report.

Bank of England thinking aloud. The London Business School Centre for Corporate Governance and Bank of England held a 'FinTech Revolution' conference. Here are the slides from Andy Haldane's opening remarks. Meanwhile, Ben Broadbent, deputy governor for monetary policy, delivered a speech on the merits (or otherwise) of a central bank digital currency.

"Regulating for innovation". Christopher Woolard, FCA director of strategy and competition, provided an update on the impact of the Innovation Hub - and marked out the regulatory sandbox as a priority for 2016. The Hub has received 413 requests for assistance and provided support to just over half of these enterprises, 18 of which went on to receive authorisation (with another 21 currently in the authorisation pipeline). 

RegTech market hotting up. RegTech (technology enabled compliance) is a hot topic at the moment. Lombard Risk CEO John Brazier spoke to Waters Technology about AgileReporter, the company's new RegTech product (paywall). iGTB and OutsideIQ announced DDIQ, a new due diligence screening tool. Nasdaq joined Goldman Sachs and Credit Suisse as an investor in Level39 based Digital Reasoning, which uses cognitive computing for market surveillance purposes. Nasdaq and Digital Reasoning will collaborate to create a single interface for their market surveillance tools. 

AROUND THE WORLD

FSB eyeing up FinTech threats. Mark Carney, writing to G20 finance ministers as chair of the Financial Stability Board, stated that the international body will be paying close attention to systemic threats arising from new financial services technologies. 

Stricter rules to protect against cyber risks. The Basel Committee proposed tougher rules for determining the amount of capital banks should hold to protect against cyber attacks, fraud and fines. A new report from the Institute of Directors, supported by Barclays, warned that businesses are under-reporting the number of cyber attacks interrupting their business operations.

Governments ramp up support for Asia Pac FinTech. The FT reported that Japanese authorities will be easing barriers to FinTech innovation. The Australian government is also looking to create a FinTech friendly environment, and will seek input from a FinTech advisory group. Hong Kong too is stepping up support for its FinTech ecosystem.

A 'start-up' approach to regulation. This Anthemis Group blog post calls for a leaner model of regulatory reform.


Consumer

Yours and now mine. NatWest and RBS announced that they will change their security policies after two journalists from BBC Radio 4's You and Yours programme broke into an online account and removed money.

FinTech team up. Number26, the Berlin based mobile bank, and TransferWise, darling of the FX FinTech world, announced a partnership. Customers will be able to benefit from TransferWise's service without leaving the bank's mobile app.

Irving will serve you now. Citi is testing a prototype ATM system, Irving, which uses iris identification and a mobile app in place of good ol' fashion chip and pin.

Ask Luvo. RBS will trial a new AI virtual assistant capable of answering customer queries, following successful in-house uses of the product among staff.

Always be closing. Standard Chartered announced that it will expand its iPad based Retail Workbench tool worldwide after a successful trial in Korea. The tool enables sales staff to open client accounts and sell products from any location (and without a paper trail). MasterCard has teamed up with Rainbird Technology to provide its UK sales staff with access to an AI support system.

New kid on the robo block. MoneyFarm, the European digital wealth management company, launched in the UK.

New financial advice service for millenials. Former Canaccord Genuity Wealth Management CEO Neil Darke has launched TheLifeHouse.co, which combines technology with behavioural psychology to help young savers manage their finances. Said Darke: “People used to be taught how to save and budget, but these days they are simply a loan target and prey to ever more sophisticated marketing strategies that use their behavioural biases against them.” In other financial inclusion news, PayPal announced a partnership with Village Capital to support FinTech entrepreneurs serving the low paid. A YouGov survey for Moven Research found that one in four US millenials use (or would consider using) internet search to access financial advice.

PropTech. Dublin based Deposify, which handles rental deposits on behalf of tenants and landlords, raised 1.1m euros to fund expansion into the US. Property Partner, which aims to make investing in property easier, secured nearly £16m in funding. Property rental app Movebubble raised £1.1m in funding.

Google at the gates. Capgemini's annual world insurance report found that 40 per cent of insurers saw Google as a potential threat. The fear may be premature: Google announced that it will close its financial price comparison website, which launched in March 2015 and had since expanded across the US and UK.

All in one. Curve, a London based payments FinTech, released a physical card and app that aggregates customers' various bank cards into a single entity.

Android Pay on its way to the UK. As reported by The Telegraph.

Catching up with real time. A group of big US banks announced that clearXchange, a jointly owned payments system, will allow customers to send money instantaneously by mobile phone. However, real time functionality will not be opened up to all customers of the banks immediately. 

Secondary market for crowdfunded investments evolves. Euronext Expert Market, an electronic trading platform for non-listed securities, announced its first transaction for a crowdfunded security.


Institutional

Mondo breaks crowdfunding record. The mobile bank raised £1m on Crowdcube in less than two minutes. It also raised £5m from Passion Capital.

BBVA shifts FinTech strategy. The Spanish bank will ditch its VC fund, BBVA Ventures, and instead put $250m into Propel Venture Partners. BBVA will be only a limited partner in Propel.

RateSetter withdraws hand from the cookie jar. The company released a statement saying that, in response to investor feedback, it would no longer dip into its Provision Fund to facilitate larger loans on the platform.

Private deals, public boasts. AltFi Data has questioned Seedrs' claims to have facilitated £100m in equity crowdfunding deals. "Of the £100 million they claim, around £48million would, we think, be more accurately described as ‘angel funded’.  The crowd have never seen these rounds." 

Editor turned entrepreneur turned Crowdcube critic. Former editor of The Sun Kelvin MacKenzie claimed that Crowdcube, an equity crowdfunding site, encouraged one of his ventures to create an artificial impression of investor demand when raising funds on the platform. He alleges that his company was encouraged to raise funds in advance and then re-direct these through the platform (without disclosing the origins of the funds to other investors on the site). Crowdcube denied the claims.

Reducing friction for start-ups. BBVA announced that it has acquired Holvi, the Finnish provider of online banking services for start-ups and SMEs. Stripe Atlas, which aims to radically simplify the process for starting an internet company, launched in the USA.

Rating the little guys. Moody's acquired Finagraph, which specialises in automated data aggregation and analysis to assess the creditworthiness of SMEs. 

InsurTech for SMEs. CoverWallet, an online insurance manager for US SMEs, announced that it has received $2m in seed funding. This Insly blog post surveys the landscape for InsurTech innovation.

Utilities for cost efficiencies. A Capco reports examines why banks are not supporting third party or consortium-led utilities, despite widespread recognition of the scope for substantial cost savings.

Financial insight. AlphaSense, the financial search engine for investment professionals, raised $33m. Selerity, a start-up that generates personalised alerts for investors from unstructured data, announced a $4.2m funding round led by Citi. 

Messaging wars. Symphony, the Bloomberg messaging service rival, announced that it has signed up 75,000 users - and expects a number of major institutions to make the jump this year.

Mystery (murky) shopper? Yieldify, the London based e-commerce start-up which has received favourable VC and media attention, was accused by New York based Bounce Exchange of stealing code. The two companies look set for a fierce legal battle.

Another month, another thousand blockchain stories. Highlights included: R3, the blockchain company backed by a consortium of major banks, announced that it has successfully trialled five blockchain technologies in parallel; Japan's Mizuho Bank and Fujitsu tested a blockchain solution for cross-border securities transactions; and an FTI survey found financial institutions to be broadly optimistic about the impact of blockchain.


Bulletin Board

  • Innovate Finance released its 2015 Investment Landscape report. Paymnts has a helpful breakdown of the numbers.
     
  • Ben Brabyn, former chief operating officer at UKTI, was announced as the new head of Level39.
     
  • Finovate Europe held its annual conference.
     
  • Finextra held its NextGen Banking conference at Level39. A full wrap-up report will be made available for download.
     
  • The London Stock Exchange held a FinTech investor forum during FinTech Week.
     
  • Israel now has a dedicated FinTech hub - The Floor, based in Tel Aviv.
     
  • Deutsche Borse launched a FinTech initiative to support start-ups in Frankfurt.
     
  • Startupbootcamp launched an Internet of Things accelerator in London