Software giant Citrix is looking to “leapfrog” typical text-file-based legacy connections by transitioning to an API-driven treasury management system, and announced today it will use a solution from API-maker FinLync to do so. Treasury management can be cumbersome given how diversified cash holding is for corporate clients, but APIs, or software gateways, allow distinct databases […]
The rising importance of Fintech innovation in the new age
The rise of fintech has opened an array of opportunities for smart cities to develop and thrive. Its importance has actually increased in the age of the pandemic that calls for social distancing or contactless transactions.
The leading global payment solutions provider Visa recently indicated the increasing role of digital payments. Thanks to the expanding role of fintech, digital payments are expected to enter different smart city sectors.
Reportedly, fintech application is going to be instrumental in the transportation sector. It will come to people in different forms of contactless payments. It will also ease the process of paying for parking or hiring bikes and scooters.
More than that, whether it’s about loans, money transfer, investment, accounting and bookkeeping, airtime or fundraising. Smart cities and businesses are going to hugely rely on fintech in the coming future.
Going ahead, we are delving into understanding the fintech situation in three smart cities. All three are important fintech hubs that the entire world looks upon.
In the smart city culture, London has the reputation of being the ‘fintech capital’ of the world. The number of fintech giants in the city is valued at more than $1 billion.
However, the pandemic has caused a number of businesses to shut down. At the same time, it has also catalysed the shift to digital and contactless. Businesses are now adopting new ways to support their customers.
Even in this time of crisis, London is at the foremost position of producing the next generation of fintech leaders. This is as per the Ed Lane, VP of Sales for the EMEA region at nCino, a US-based cloud banking provider.
Remote work is becoming a necessity due to COVID-19. Hence, investments in different technologies and solutions in financial organisations and service providers are “more important than ever”. And so Lane claims that this has increased the adoption of cloud-based banking software developed by his firm.
The UK recently introduced the Bounce Back Loan Scheme and the Coronavirus Business Interruption Loan Scheme (CBILS). This is helping Lane’s company nCino and others. They are offering a Bank Operating System to aid SMEs with effective processing of loan applications.
Fintech companies are surviving and tapping into benefits in the COVID-19 age due to their disruptive mindset. The dot.com crash of 2001 and the financial crash of 2008 are drivers that lead them to become proactive.
Innovatively, fintech companies started offering mobile banking, online money management tools and other personalised solutions. Today, the same is enabling them to prevail during this pandemic. Besides all, partnerships have proven to be key strategies in achieving even the impossible, as experts say.
Singapore is showcasing a pioneering move in the fintech industry. Fintech is at the core of Singapore’s vision to become a ‘Smart Nation’ with a “Smart Financial Centre.”
To achieve the dream, the city-state has been showing constant efforts by using innovative technology. With this, it intends to pave the way for new opportunities, enhance efficiency and improve national management of financial risks.
Until 2019, Singapore was already home to over 600 fintech firms. These companies attracted more than half of the total funding for the same year. And amidst the COVID-19 pandemic, the Monetary Authority of Singapore (MAS) introduced two major support packages.
First on April 8, 2020, it announced a S$125 million COVID-19 care package for the financial and fintech sectors. This package aims at aiding the sectors in fighting the challenges from the COVID-19 health crisis. It will help in supporting workers, accelerate digitalisation, and improve operational readiness and resilience.
Second, on May 13, 2020, MAS, the Singapore Fintech Association (SFA) and AMTD Foundation launched the MAS-SFA-AMTD Fintech Solidarity Grant. The S$6 million grant proposes to support Singapore-based fintech firms.
A specific focus is on managing cash flow, producing new sales and seeking growth strategies. At the individual level, many industry participants have launched their own initiatives to support the sector.
HongKong’s fintech startup sector tells us a different story which involves the role of blockchain. Blockchain-based companies are dominating the city’s startup sector.
In 2019, enterprise DLT and crypto-assets exchanges earned rankings as the most popular sectors in Hong Kong’s fintech industry. The report comes from the Financial Services and Treasury Bureau. It confirms that blockchain startups make up 40% of the 57 Fintech firms established in the city in 2019.
As per reports, 45% of new companies are focused on developing applications for large businesses. This is the reason that enterprise blockchain firms were the most popular. Another 27% account for blockchain-related firms in Hong Kong involved in digital currency.
The increase in the number of blockchain-based fintech startups is due to the Special Administrative Region of the People’s Republic of China. The authority introduced new policies towards blockchain tech development – making it a priority.
Blockchain is thriving in Hong Kong due to a number of reasons. The city has laid down clear regulatory guidelines for blockchain-related businesses. Many have leveraged the benefits of the QMAS program. It enables applicants to settle down in the region before having to look for employment. This has immensely encouraged several blockchain specialists to move to Hong Kong.
The city government is also entering partnerships to expand its fintech footprint in the right direction. For example, in November 2019, the government collaborated with Thailand’s officials to explore the development of Central Bank Digital Currencies (CBDCs). Blockchain is a promising technology for the fintech industry. It supports quick, secure and cost-effective transaction-related services.
More importantly, it provides transparency that other traditional technologies were not capable of. Thanks to the use of encrypted distributed ledgers. These enable real-time verification of transactions without the need for mediators such as correspondent banks.
Why Is Fintech Innovation Important For The Development Of Smart Cities?
Advanced cities that are now smart cities have been using fintech for their development. With that, they are also leading the way for others to follow. Many experts confirm that innovation in fintech is a must for any city to become a ‘smart city.’
It enables easy national as well as international business. For the residents, it makes life more convenient by encouraging contactless, economical, sustainable and efficient payment-related operations.
One important aspect that smart city development and fintech innovation has in common is their determination to cut bureaucracy. A city that manages to enable speedy and inexpensive international transfers will also enable its citizens with greater access to the global market. This is as said by Hans W. Winterhoff from KPMG in one of his articles.
Furthermore, fintech innovations of the past have demonstrated their success. Some fintech applications have simplified procedures that became unnecessarily complex over time. Traditional banking services are one of the biggest examples.
The innovative fintech services opened doors for online shopping and easy international money transfers. Fintech is able to provide the same product or service to consumers. But that’s happening in less time, with fewer steps, and at more affordable rates.
Besides, transparency is another important factor that is allowing consumers to have faith in fintech services. With the current potential of fintech, we can now say that it is one of the essential pillars of successful smart city development. The results are already here in the age of this pandemic.
New York based Earned Wage Fintech Clair Secures $15M to Help Gig Economy Workers
New York-based Clair, an earned wage firm for gig economy workers and technology contractors, has finalized a $15 million Series A round that was led by Thrive Capital.
Clair’s latest investment round brings the Fintech firm’s total funding to $19.5 million. The company’s seed round was carried out 7 months ago and was led by Upfront Ventures.
Clair allows HR technology and gig firms to provide hourly workers free instant cash advances on their earnings. The company has currently entered partnerships with platforms used by more than 1.5 million hourly and gig workers.
Clair’s CEO Nico Simko stated:
“We’re on a mission to give workers easier, faster access to their hard-earned cash. We want to promote financial inclusivity for everyone, and we are doing this by enabling existing HR tech providers through innovative fintech tools. This fundraising round gives us the runway we’ll need to expand our operations and realise that vision on a larger scale.”
The Clair team notes that even before the COVID-19 pandemic, millions of Americans had already been dependent on payday loans to “bridge the gap between expenses and paydays.” In 2019, there were around 12 million US residents that were using them, the Clair team revealed.
The Consumer Finance Protection Bureau reported that half or 50% of these people were “paying $185 in fees on top of exorbitant interest rates.” As noted by Clair, for many people, that’s the “equivalent of over 20 hours of work before taxes.”
Clair also mentions that payday loans charge as much as 20x the interest rates of credit cards and personal loans, however, the people using them do so “because they can’t qualify for anything else.” An individual who borrows $500 a year will “pay back almost $2,000 in fees and interest,” the company reveals.
Clair’s management also noted:
“This is the time to transform the way we pay our employees and, by extension, eliminate some of the predatory businesses out there trapping people in a cycle of debt for life. You may not be able to give your employees more hours right now, but you can give them the confidence of knowing you have their back in this difficult time.”
Digital Banking: Line Introduces Virtual Bank Platform via Partnership with PT Bank KEB Hana Indonesia
Line has reportedly introduced its third digital banking platform in Southeast Asia through a partnership with PT Bank KEB Hana Indonesia.
The introduction of the smartphone-only bank in Indonesia has come after similar launches in Taiwan and Thailand.
The partnership between Line and Hana Bank Indonesia was formed back in October 2018, when Line Financial Asia had acquired 20% of Hana Bank Indonesia via a Share Subscription Agreement.
The new virtual banking platform will provide various user-friendly financial services such as a savings accounts, time deposits, easy bill payments, and debit cards with convenient access to Hana Bank ATMs for making cash withdrawals. Other features are currently being developed and may include loans and QR-enabled payments.
Young Eun Kim, Chief Operating Officer at LINE Financial Asia, stated:
“The demand for digital transformation in the banking industry is growing rapidly all around the world. In Indonesia in particular, due to this market’s unique geographical characteristics, we believe bringing banking services to people’s mobile phones will greatly increase their availability and convenience.”
Line says that it’s hoping to achieve the same level of success of its recently-introduced banking platforms in Thailand, which has already onboarded around 2 million users within its four months of operations.
In March of this year, the firm also formed a partnership with Mizuho in order to invest in a new digital banking joint initiative in Japan.
Virtual or online banking services have become increasingly important in a post-COVID business environment.
Earlier this year, Standard Chartered teamed up with Indonesia’s Bukalapak in order to offer digital banking services which will be hosted via the Nexus platform, an established Banking-as-a-Service (BaaS) solution by SC Ventures.
Standard Chartered and Bukalapak will be working closely so that they can provide innovation in financial and digital commerce solutions by offering various financial services via Bukalapak’s growing ecosystem.
Through the partnership, both companies are also planning to promote greater financial inclusion in the country as Bukalapak claims to have extensive coverage to 100 million consumers and many local merchants.
A survey conducted by Standard Chartered found that the Coronavirus outbreak served as a catalyst or accelerated the growth of online financial activities and businesses, with more than half of respondents saying they use more online services in a post-COVID environment. In fact, 56% of Indonesia-based consumers now prefer making payments and purchases via all-digital platforms, an increase of around 16% when compared to pre-COVID levels.
Digital Identity: Payments Giant Mastercard Finalizes Acquisition of ID Verification Service Ekata
Mastercard (NYSE: MA) revealed on Friday (June 11, 2021) that it has finalized its acquisition of Ekata, a provider of identity verification services that assist companies or businesses with making informed decisions when opening online accounts, conducting payments and handling various other digital interactions.
Ajay Bhalla, President, Cyber and Intelligence, Mastercard, stated:
“We’re delighted to welcome the Ekata team to Mastercard. Our focus will now be on bringing our talented teams together and advancing our identity capabilities to create a safer, seamless way for consumers to prove who they say they are in the new digital economy. Central to all of this is the balance of a frictionless experience with the trust delivered through a relentless commitment to customer privacy, control and security.”
Proving your identity is vital when trying to establish trust in the digital environment. Individuals or entities that don’t have an official identification usually face greater barriers to financial inclusion and when trying to access critical healthcare services.
Ekata’s ID verification data, machine learning tech, and international experience should add to Mastercard’s existing fraud prevention and digital identity solutions. The combined services stack should assist companies with confidently knowing who their clients are and, in turn, help those users safely interact in a digital world, while continuing to support the responsible use of data.
In May 2021, Mastercard joined a $25 million investment round in Australia-based payments-as-a-service Fintech mx51.
The capital secured represented mx51’s first major funding round, which has been finalized less than a year after the company branched out of Assembly Payments (in May of last year). The business is being led and was founded by ex- Westpac executive and ex- Assembly Payments co-CEO Victor Zheng.
Also in May, Mastercard welcomed six startups to its Mastercard Start Path program. The startups were notably dedicated to building blockchain-based payments solutions and also designing sustainable lending platforms.
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