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Square extends lending arm to Australian businesses with Square Loans

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Today, Square announced it will be rolling out Square Loans in Australia, a program that helps small businesses grow by giving them quick and simple access to funds. Australia will be the first global market, outside of the US, where the payments company will launch its lending product.

“It’s no secret that small businesses in Australia have historically faced huge hurdles when it comes to accessing formal forms of funding,” said Samina Hussain-Letch, Head of Industry & Payments at Square Australia (pictured). “They’re often forced to pour over piles of paperwork, provide years of financial information, and put up personal guarantees that can be riddled with red tape.”

“As the Australian economy recovers from the effects of the pandemic, and government stimulus payments begin to dry up, small businesses need our help now more than ever to continue to run and grow their businesses, while creating jobs,” she said.

Research commissioned by Square has found that more than half of small businesses in Australia have been negatively impacted by the COVID-19 pandemic, with more than a quarter seeing revenue losses of more than 50%.

“There’s never been a more important time for more choice in the lending market, and so we’re delighted that we can offer our Australian sellers simple and quick access to funding through Square Loans,” Hussain-Letch said.

By using historical transaction data, Square Loans has a straightforward application process, where no paperwork is needed, and sellers get their money as soon as the next business day. Businesses will have one clear upfront loan fee which will automatically be paid back as a set percentage of daily card sales on Square — so they pay more back when sales are strong and less if things slow down. Unlike the structure of traditional loans, the cost to the seller never changes, regardless of how long it takes them to repay Square.

Research from Square highlighted that only one in four Australian small businesses have ever accessed any form of formal funding, such as a business bank loan, but two thirds of business owners have relied on private sources of funding, such as personal credit cards or borrowing from friends and family. The research also found that business owners were even less likely to have accessed formal funding, and more likely to have used personal finances, if they were women or aged under 40 years. As the country recovers from the COVID-19 pandemic, one in five businesses intend to apply for a formal loan.

“Many small business advocates have acknowledged that traditional lending processes in Australia aren’t flexible enough for small businesses,” said Hussain-Letch. “Overly onerous and lengthy processes from big banks will act as a deterrent to small businesses and will force many to borrow from less secure means. What we’re bringing to market solves that issue.”

Since the initial launch of Square’s loan product in the US, Square has facilitated more than USD$8 billion in financing to more than 435,000 small businesses.

Square expects to see similar momentum in Australia as local businesses continue turning to the platform as the engine to run their operations. Square recently added a number of products and services to its Australian portfolio, including an all-in-one payments processing device, dedicated point-of-sale software for retailers and restaurants, and deeper functionality for its Online Store to adapt to the changing business environment.

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Source: https://australianfintech.com.au/square-extends-lending-arm-to-australian-businesses-with-square-loans/

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Senate Votes to Halt True Lender Rule

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The US Senate has voted to nullify the rule issued by the Office of the Comptroller of the Currency (OCC) entitled the National Banks and Federal Savings Associations as Lenders and published on October 30, 2020. The vote in the Senate was largely along party lines with Republican Senators Collins and Rubio crossing over to support the Democrat-sponsored resolution.

This resolution impacts the “True Lender” rule that is of concern for some Fintech lenders which may originate loans in partnership with banks.

In brief, as explained by JD Supra, a nationally chartered bank is subject only to the usury limits of the bank’s home state when issuing loans. Each state sets these lending limits independently. Federal law allows banks to apply the interest rates set in the bank’s home state to borrowers in other states. When banks have made loans in partnership with Fintechs, some have argued that the bank is not the true lender, and federal preemption should not apply.

The OCC had attempted to clarify a dicey situation pertaining to lending relationships between banks and third parties, such as Fintechs, that may facilitate access to affordable credit and thus benefit consumers. The uncertainty about the legal framework that applies to loans made as part of these relationships was fogged by the fact that each state has different lending rules. The OCC had said this uncertainty may discourage banks and third parties from entering into relationships, limit competition, and chill Fintech innovation that results from these partnerships, all of which may restrict access to affordable credit.

When the OCC proposed the True Lender clarification, Congressman Patrick McHenry, the Ranking Member on the House Financial Services Committee, issued a  statement in support of the OCC’s move calling it an “important step toward providing clarity to banks and non-banks on the ‘true lender’ doctrine.” McHenry said the OCCs decision would “foster greater innovation in financial services—ultimately leading to greater financial inclusion.”

Now the joint resolution moves onto the House where it is expected to pass.

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Source: https://www.crowdfundinsider.com/2021/05/175246-senate-votes-to-halt-true-lender-rule/

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SWIFT and Accenture publish joint paper on central bank digital currencies in cross-border payments

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SWIFT and Accenture today published a paper on central bank digital currencies (CBDCs) in cross-border payments as part of broader digital asset innovation to help the financial community prepare for the possibility of moving payments in new forms of currency internationally.

More than half the world’s central banks are actively exploring the use of CBDCs, a development that could lead to profound change in the global payments ecosystem. This paper explores the practicalities of such a shift – from the ways in which CBDCs would move across jurisdictions to the integration of CBDCs into the mix of currencies that already exist — and details what is required for CBDCs to be a viable solution in international payments.

Interoperability will be key to their success, and while central bank digital currencies present new challenges and opportunities, the paper concludes that continued exploration of CBDCs are likely to leverage existing payments rails where possible, new solutions will become an extension of current infrastructure, and that SWIFT has a unique role to play in a payments ecosystem that includes CBDCs.

To that end, SWIFT is undertaking a deeper dive into CBDCs through thought leadership and experimentation over the coming months. This includes trials to see how SWIFT’s evolving platform and renewed focus on transaction management services under its new strategy to enable instant, frictionless payments across 4 billion accounts globally – agnostic of standards, technologies and currencies – could interact with the cross-border use of CBDCs. In collaboration with the community, SWIFT intends to explore its role further – both as a carrier of authenticated information about CBDC transactions, as it does today for fiat currencies, and as a carrier of actual CBDC value in whatever form it is issued.

Thomas Zschach, Chief Innovation Officer, SWIFT said, “Making payments infrastructure based on CBDCs efficient and interoperable with the broader economy presents some new challenges, but the majority are the same as those faced by existing payment solutions. As a co-operative that is neutral and currency agnostic, with reach across 11,000 institutions in more than 200 countries, and oversight by central banks globally, SWIFT is well placed to engage closely in the debate and any future evolution of money. We look forward to actively supporting our community on issues related to CBDCs and driving responsible innovation aligned with our strategic vision for instant end-to-end transactions.”

David Treat, a senior managing director at Accenture, who leads its Blockchain and Multi-Party Systems practice globally said, “Central Bank Digital Currency has emerged as an important new tool in the global push to modernize financial infrastructure to meet the needs of our increasingly digital and connected world. As an integral part of the financial services infrastructure, SWIFT plays a critical role in illustrating the possible strategic moves its members may undertake as CBDC begins to transform the financial services landscape. We welcome this partnership and are eager to continue to drive responsible and valuable innovation together.”

To read the report, visit: www.swift.com/resource/exploring-cbdc

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Source: https://australianfintech.com.au/swift-and-accenture-publish-joint-paper-on-central-bank-digital-currencies-in-cross-border-payments/

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Virtual Banking: Kuwait International Bank Partners Digital Transformation Specialist Mobiquity to Streamline Financial Services

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Mobiquity, a digital transformation enabler, has teamed up with Kuwait International Bank (KIB), in order to support the institution’s goal of becoming a leading all-digital Islamic or Shariah-compliant financial service provider.

Through the partnership, KIB will be working with Mobiquity’s team of experienced professionals – including strategy, design, and engineering specialists – to help develop a digital banking solution for Kuwait‘s retail and corporate clients.

As a key part of the long-term collaboration, Mobiquity is creating a seamless, all-digital experience from scratch by introducing innovative products to attract more KIB clients to its new platform. The initiative will reportedly involve designing and creating digital products to offer a “frictionless” virtual banking experience.

For the initial product launch, Mobiquity is creating a selection of digital banking products, such as an intuitive digital onboarding experience, a current and savings account, payments services and personal finance management (PFM) tools.

The new virtual banking experience should be available to retail clients beginning in the summer months of this year. The migration of KIB’s corporate clients to the new all-digital platform will follow soon, the announcement confirmed.

Philip Nordenfelt, Innovation and Digitization Advisor, remarked:

“KIB recognized that there were gaps in the digital financial market in Kuwait, with several opportunities available to develop this segment in its proposition and scalability. In fact, there is a clear opportunity for KIB to lead the market in digital banking. We chose Mobiquity as our development partner due to the quality of the team and their rich digital banking experience in strategy, UX design, and software development.”

Thierno Diallo, VP of Client Delivery, Mobiquity, stated:

“We’re honored to work with KIB to build and …. enhance [products] whilst digitizing banking products and services to better serve their customer base with ease and convenience.Through a frictionless digital banking experience, customers will be able to set up a bank account in less than 5 minutes – a new and unique provision for Kuwait’s retail and corporate banking customers, to respond to the increased demand for digital banking.”

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Source: https://www.crowdfundinsider.com/2021/05/175205-virtual-banking-kuwait-international-bank-partners-digital-transformation-specialist-mobiquity-to-streamline-financial-services/

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Financial Management: Fintech InvestCloud Launches Wealth Advisor Platform by Japan’s Largest Bank, MUFG

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InvestCloud, a global Fintech company serving large banks, wealth management platforms and fund managers, revealed that it has launched its Wealth Advisor Platform by Mitsubishi UFJ Financial Group (MUFG), which is the largest bank in Japan and also one of the world’s largest financial institutions in terms of total assets.

InvestCloud’s Wealth Advisor Platform will reportedly be used by MUFG workers in order to support “end-to-end” wealth management and financial planning services.

This latest partnership reflects the multi-jurisdictional reach of the InvestCloud Wealth Advisor Platform. It’s also a good move for the company since Japan has one of the world’s largest wealth management sectors in the world.

InvestCloud managed to establish a dedicated local presence in 2019 and has also opened up a larger business office in Tokyo. InvestCloud is focused on expanding its professional team which includes IT and wealth management experts whose skill sets are well-suited for the requirements of Japanese financial service providers.

Christine Ciriani, CEO of the InvestCloud Private Banking division, remarked:

“We’ve made a significant investment in our Japanese presence. This means everything from supporting local regulation to adapting our wealth management platform to the Japanese script and the Japanese calendar. The strength of our local team is being recognised by some of the largest firms in Japan, because the team understands the financial culture and has the right discipline to deliver projects to our Japanese clients.”

Haruka Homma, Country Manager Japan, InvestCloud, stated:

“Thanks to our Japanese presence and expert knowledge of the local market, we have been able to ensure programme delivery to MUFG with our local team, while providing remote support from additional InvestCloud resources as needed. We are looking forward to growing our Japanese presence further and continuing to support MUFG through delivering innovative and market-leading platform for wealth management services amidst a fast-growing regional customer needs.”

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Source: https://www.crowdfundinsider.com/2021/05/175201-financial-management-fintech-investcloud-launches-wealth-advisor-platform-by-japans-largest-bank-mufg/

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