FinTech Briefing: November 2015


 

From the CSFI blog

Why we need to act now to retain blockchain leadership in the UK. "While huge amounts of venture capital money are flowing into digital currency start-ups in the US and elsewhere, those of us in the UK are largely missing out, hindered by a lack of regulation and the refusal of UK banks to work with us." Read the post here.


Digital Banking

BBVA backs Atom. Spanish Bank BBVA has paid £45m for a near 30 per cent stake in Atom, the UK digital-only bank. Neil Woodford, Jon Moulton and Jim O'Neill have also invested.

Mobile banking good for customer loyaltyThe Financial Brand highlighted this conclusion from a recent Bain & Co report:

In its sixth annual report on consumer banking behaviors, Bain found that consumers who rely on digital channels for their banking needs are 40% less likely to switch vs. those who use mobile rarely or never. Conversely, those who frequently use branches say they are three times more likely to switch compared to those who rarely use branches.

In simple terms, the more people use branches, the more likely they are to switch.

Banking tech ‘a barrier’ to digital sales according to a new global study published by Efma and Misys. The survey of 185 banking professionals revealed that only 12 per cent of customer acquisition globally was conducted digitally, and 87 per cent of banks generated less than 10 per cent of their sales via digital channels – a figure that fell to less than one per cent for one in five banks.

FinTech fashion - wearable banking catching on. According to Juniper Research, the number of banking apps accessed via smartwatches will reach the 10 million mark in 2017, rising to more than 100 million by 2020.

World Bank infographic on mobile banking.


Payments / digital currencies

Apple working with banks to turn Apple Wallet into a P2P payment systemPayPal shares dropped nearly two per cent on Apple announcement.

McKinsey on payments disruption. Its latest report highlights four main innovations:

Nonbank digital entrants will transform the customer experience, reshaping the payments and broader financial-services landscape; 

Modernization of domestic payments infrastructures is under way; 

Cross-border payments inefficiencies are opening doors for new players; and

Digitization in retail banking has important implications for transaction bankers. 

Post-Paris crackdown on bitcoin and pre-paid cards. EU ministers agree to tighter checks on anonymous payments.

The eyes are the window to your wallet. In Japan, people are paying for things with their eyes. In fact, eye tracking could have wider implications for financial services. Apple has received a patent for eye-tracking technology, which (and this is pure speculation) could become a feature of its iPhones. That could raise some interesting possibilities for banking apps wanting to track how customers respond to product offers or read terms and conditions - and whether they are nervously eyeing that overdraft button.

Digital currencies could usurp central banks. A new report from the Bank for International Settlements notes that widespread uptake of digital currencies could lead to a "reduction in central bank earnings that constitute central bank seigniorage revenue".

From zero to hero (and back again). BitReserve has announced that it will be moving away from bitcoin (and changing its name to Uphold). It's not the only company doing so. After all, bitcoin company names suck.

Apple Pay to launch in China by February 2016. Apple has struck deals recently with China's big four state-run banks.

How Mobile Payment Works in China. In China, mobile payment has become a part of  everyone’s daily lives. The Wall Street Journal’s  Menglin Huang spends a day without cash in the southern city of Shenzhen and finds out how you can pay for things digitally.

Making adverts pay. BNP Paribas and digital signage company Think&Go are partnering to trial new advertising display screens incorporating contactless payment capabilities.

Nigeria's top five financial technology companies. They're all payments enterprises, according to Tech Africa.


Blockchain

Peak blockchain hype. Three great posts to check out: Chris Skinner highlights some useful blockchain primers; Let's Talk Payments offers a handy timeline; and William Mougayar landscapes the blockchain in financial services.


P2P lending / investing

Yirendai planning IPO. The Chinese P2P lender has filed its F-1 form to the SEC, announcing its intention to list on the New York stock exchange in a US$100 million intial public offering.


Insurance

FCA study use of Big Data in retail insurance. The FCA has issued a call for inputs (see below). Earlier this year, ABI chairman Paul Evans called for the industry to develop a code of conduct for data usage.


Mortages

OK, Google, find me the best mortgage. Californians can now use Google to compare mortgages. The search engine giant received its mortgage broker license this month, and plans to move into other state later this year. Should marketplace mortgage lenders be worried?

A new home for home sales. Garage Soho invests in Settled, the online property platform which enables homeowners to control their own home sales.

"PropTech". A new buzzword - and the eight problems it has set out to solve.


RegTech, compliance and security

FCA issues RegTech 'Call for Input'. The regulator is seeking views on how it can "support the development and adoption of new technologies that facilitate the delivery of regulatory requirements".

“We no longer need convincing of the risks". Four out of ten UK consumers have suffered at least one cybersecurity breach, while one in five has had their bank account details used to purchase goods or services. The findings were revealed by surveys undertaken, respectively, by Norton by Semantec and Deloitte. 

Level playing field? The Clearing House, an industry body owned by 24 of the largest US banks, has released a white paper calling for US FinTech enterprises to be subject to closer regulatory scrutiny.


Alternative SME finance

National awareness campaign needed to boost alternative SME finance. A new report by GLI Finance has warned that: "With SMEs accounting for 65% of net job creation... failing to increase awareness of alternative sources of credit to help fuel growth could cost the economy up to £20bn by 2020 as traditional lenders continue to withdraw crucial funding lines." The report also points to data showing that "that since 2011 banks have withdrawn £5.7m a day in small business overdrafts alone – cutting available credit by £8.4bn (from £20.9bn to £12.5bn) at an estimated cost to the economy of £2.9bn."

Where are they now? A new report by AltFi traces the fortunes of the 367 UK companies funded through equity crowdfunding between 2011 and 2013.


Investment / wealth management

Nutmeg data breach. From the FT: "Nutmeg said that due to a fault with the code running its service, the company had emailed more than 30 investment suitability reports — including names, addresses and details of investments, assets and assessments of risk appetite — to the wrong people."


Hedge Funds

Hedge funds poach technology stars. “Traders used to be first-class citizens of the financial world, but that’s not true any more. Technologists are the priority now.” 


Clearing / trading technologies

Ant Financial trialing online private equity trading platform. Alibaba's financial services affiliate is beta testing Antsdaq, "the sort of private equity trading platform which would ordinarily send shivers down a regulator’s spine — you know, on account of all the potential risks associated with marketing highly illiquid securities to everyday qualified Joes using credit cards for funding".

Post-trade blockchain for the commodities market. Kynetix, a post-trade technology company, has assembled a consortium of commodity exchanges, investment banks, clearing houses and brokers to discuss industry uses for the blockchain.


Other news

Osborne still London's biggest FinTech cheerleader. The Chancellor, speaking at a Bank of England Open Forum event, reiterated his commitment to making London the world's FinTech capital.

South Wales, the new place to be. Treasury Secretary Harriet Baldwin launched the new South Wales Financial Centre of Excellence. The region is pursuing back and middle office functions that need not be located in the City.

What can the US learn from the UK on FinTech regulation? VentureBeat asks (and answers) the question.

UK's top 25 FinTech enterprises. Venture Radar offers its take.

Taking overLondon tech companies are now taking up more office space than banks and law firms.

The European start-up scene is still broken. Read Daniel Faloppa's blog post here.

FinTech investments in AsiaPac.  According to a new Accenture report, FiNTech investments in the region increased "from about $880 million in all of 2014 to nearly $3.5 billion in just the first nine months of 2015.”

PwC and Google launch combined European Innovation Lab. The PwC and Google Innovation Lab is only the third such facility worldwide.

UBS Future of Finance Challenge. Biowatch, embotech and Wayerz were announced as the winners of the Challenge's fourth regional final in London.

Why are robo waiters not selling? Robots have taken over restaurants (yet). Are there any lessons here for robo financial advice?