1.UK – FinTech
“Lanistar, a new fintech start-up with big ambitions and some controversy, has been approved by the Financial Conduct Authority to provide payments services.
The news follows a series of events last year when Lanistar announced its intentions to be the next fintech unicorn (although this has recently been upgraded to a ‘deca-corn’) through an attention-grabbing social media campaign. Not long after, the FCA put out a statement warning that it may be a scam only to row back a few days later and remove the warning.
Modulr was flagged by Lanistar as a key partner at the time of the FCA rebuke in November 2020 but soon clarified that it was early days: “Lanistar has not completed our due diligence process, so it does not have any right to refer to Modulr or suggest that it has the right to provide regulatory services on behalf of Modulr,” it said at the time.
Notification of Lanistar’s latest FCA approval, allowing the handling of e-money and provision of certain payment services on behalf of an e-money institution meaning Lanistar can offer its customers digital accounts to send and receive payments, shows it has been operating with the new license for the past three weeks.”
2. UK – FinTech
Pennyworth, a new digital bank founded by former-Barclays executives to serve the needs of young professionals and middle managers in the UK, has begun beta testing of the first version of its financial planning app on iOS devices, according to Finextra.
“Founded by Jeremy Takle and Ben Harvey, formerly managing director and head of product at Barclays’ US Digital Consumer Bank, Pennyworth began the pre-application process to become an authorised UK bank in March 2020.
The new iOS app is aimed at busy professionals earning more than £40,000 per year. It features features augmented intelligence technology to support advanced goal-setting, create tailored financial plans, and provide smart suggestions to help customers achieve their goals.
An Android version of the app will be made available in early May.
Jeremy Takle, founder and CEO, comments: “We are putting a bank manager in the pockets of busy people and making it easier for them to get the most out of their finances. Helping people fulfil their goals is crucial for truly personalised banking and allows us to build new and unique services that help achieve those goals faster.”
3. UK – FinTech
“In January 2009 Bitcoin’s genesis block was famously mined by Satoshi Nakamoto.
In April 2021 the world oldest established central bank joined the revolution, announcing not just its Central Bank Digital Currency (CBDC) Taskforce – with the e-£ (the digital Pound) quickly dubbed the ‘Britcoin’ by the press.
But it wasn’t the first – far from it in fact. By this time according to BIS (the Bank of International Settlements) 86% of Central banks around the world are similarly engaged with remaking their national money digital.
Fintech, like most success stories, has a disputed history – with revisionism clearly evident to those of us who lived through it.
Over eight years ago in August 2012 this outspoken article appeared making the then seemingly outrageous suggestion that the UK financial regulator should not only support financial innovation but, in order to do so, it should create an ‘Innovation Unit’. Embracing, rather than merely tolerating, financial innovation, saying “This is no small matter and could be crucial to our future as a nation”.
A small unit whose job it is to challenge and balance the thinking of the regulator right in there at the start”
Pointing out that given this change Fintech could play a major role in the future of UK PLC – and help redefine our place in the world. (It did not use the word ‘Fintech’ because it was not yet in common use.)
And so it has proved. It took far longer than it should have – 20 months of campaigning before it was announced and over two years to launch. But the Innovation Unit has proved such a great success that it is an idea that has now been copied around the world.
Now Fintech is poised to remake money itself – digital.
The Chancellor, Rishi Sunak, has also supported a central bank digital currency taskforce so the UK can “lead the digitisation” of finance. Announcing a joint taskforce with the Bank of England to creation of the digital pound at UK Fintech Week 19th April Chancellor Rish Sunak said:
“The UK is already known for being at the forefront of innovation, but we need to go further. The steps I’ve outlined today, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward. And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre.”
But things look very different, depending where you stand – both geographically and in other dimensions. Those steeped in the innovations of the cryptosphere well know that the Bank of England is very much on catchup – no matter what the Chancellor says.
The variety and pace of innovation in crypto and DeFi (Distributed Finance) would make anyone’s head spin and it is other places; Switzerland, China, the Bahamas and even Cambodia who’ve been able to steal a massive lead on both the USA (who’ve yet to announce) and the UK.
But announce they will – and compete. Because despite the identical tone of the UK on the e-£ and ECB (European Central Bank) on the digital Euro – that this is a decision yet to be taken – this is, in fact, a foregone conclusion. China has made it so.
When Two Worlds Collide
China is quite simply years ahead with not just plans but action both internally and globally – and is arguably now starting its second wave.
The first was provided by and Ant Group’s Alipay, Tencent’s WeChat which have already transformed payments to an extent unrecognisable elsewhere – with pay-by-QR codes a common sight wherever you look or buy – from vending machines to market stalls and major retailers. Many people no longer carrying cash.
The second wave is not in the planning but is a reality and has already started, with city-wide ‘trials’ of their CBDC the e-Yuan (aka e-CNY) now active in at least four cities including Shenzhen. China embraced Blockchain early and has been working on this for at least six years.
Just published Cashless: China’s Digital Currency Revolution opens a fascinating window into this phenomenon – and some important insights into the thinking behind it. Pointing out that it is not just a new currency but part of an overarching strategy to provide widely available global infrastructure for the future that is independent of the US / dollar hegemony, that has been so ‘weaponised’ by Washington. Reducing or removing their reliance in the US-dominated SWIFT international payments system.
LIBRA and the Great Debate
It was at London Fintech week Monday the 8th of July 2019 that I led a ‘Great Debate’ on the future of money in light of Facebook’s recently announced and highly controversial LIBRA predicting that this, finally, would provide the wake-up call that central banks across the world so badly needed.
So it has proved. While there was purely theoretical interest in the world’s central banks prior to this it was the Libra debacle that finally stirred action amongst a group of institutions used to a peaceful monopoly.
Which provides an interesting contrast with what is emerging now from China. That their own chief Fintech providers, who led the first wave in payments, Tencent and Ant/Alipay have been intimately involved with the PBoC (People’s Bank of China) since early 2018, providing technology and expertise.
While the Bank of England announcement is an important milestone it’s difficult to credit the Chancellors boasts and assertions in the light of all this.
Yes, as well as a taskforce and a consultation it announced the creation of a CBDC department within the Band of England – in itself a clear signal that it means business, belying the ‘exploratory’ framing of the announcement.
But this is little and late – very late.
The world is now on an irrevocable course. Like it or not it is remaking money digital.
The biggest systemic change since the web – and, arguably, the creation of money itself given the paradigm shift, and scope for innovation, it presages.
We may be ahead of the USA but that is no longer to say that we are ahead of the world – let alone “global leader in financial services”. Not by a long chalk.
Clearly China can no longer be dismissed or ignored. The Kalifa review is a decent start but in this context not nearly enough, even if fully implemented, to get us anywhere near that position.
So if Rishi Sunak is at all serious about keeping up – let alone the UK leading the “digitisation of finance” – it’s time to up the game very considerably.
To take a leaf out of China’s Fintech book – to get behind and make the most of the very considerable Fintech talent available.”
4. US – FinTech
B2B payments player Boost Payment Solutions has raised $22 million in a Series C funding round led by Invictus Growth Partners, according to Finextra.
“Existing investors Mosaik Partners, INGWE Capital and North Atlantic Capital participated in the round, the proceeds of which will be used to support expansion of sales, marketing and product development.
Describing itself as the only fintech acquirer focused exclusively on the B2B market, Boost is taking aim at a massive sector that still suffers from a lack of digitisation.
The firm says its technology provides a seamless, secure and cost-effective way for commercial trading partners to enable credit card transactions. The Boost Intercept STP platform automates the entire onboarding, credit card transaction and reconciliation process for buyers and suppliers.”
5. International – FinTech
“The Bank of Thailand has published a paper on central bank digital currency (CBDCs) entitle the Way Forward for Retail Central Bank Digital Currency in Thailand.
Thailand has been a fairly innovation-friendly nation in regards to Fintech. Several years ago, Thailand participated in Project Inthanon, a CBDC initiative. The project developed a prototype CBDC in partnership with R3 and Wipro (NYSE: WIT). The Bank of Thailand also worked with eight commercial banks as part of the development of the CBDC which could decentralize interbank settlements or “real-time gross settlement.” The eight banks included HSBC, Standard Chartered, Thanachart Bank, Siam Commercial Bank, Bank of Ayudhya, Krung Thai Bank, Bangkok Bank, and Kasikornbank.
This new paper published by the Bank notes that Thailand cannot go it alone and outlines their approach in considering retail CBDC issuance and what may lie ahead.
The key findings from the paper may be summarized as follows:
- The motivation for creating a CBDC is the assumption that privately issued digital currencies may become widely adopted and systemically important. This could put Thailand’s monetary stability at risk.
- The most promising benefits are a safe and secure currency that supports inclusion and financial innovation
- Risks include:
- 1) disintermediation of financial intermediaries,
- 2) exacerbation of bank runs especially in times of financial crises, and
- 3) maintenance of high-security standards and public trust in the CBDC system. Nevertheless, these concerns can be mitigated through the design of the CBDC itself and other measures.
- An initial assessment suggests a two tier approach for a digital Thai Baht that preserves the role of financial intermediaries and payment service providers, while utilizing their existing resources.
- The CBDC could be initially designed as non-interest bearing akin to cash, with specified limits for holding, transacting, and conversion.
- The CBDC should aim to harness the strengths of both centralized and decentralized technologies. While centralized technology offers advantages in terms of scalability and performance, decentralized technology offers greater resiliency and its cryptographic techniques can help enhance security.
- End-users should bear zero-to-minimal transaction costs when transacting with CBDC, and the CBDC system should be open to private sector programmability to drive financial innovation.
- There are three main capacities that would be crucial for successful CBDC implementation, namely
- 1) user accessibility,
- 2) digital infrastructure, and
- 3) legal and regulatory frameworks. Collaborative preparation efforts with relevant agencies on building capacities across these three areas will be of utmost importance going forward