Fintech Briefing

Welcome to the Fintech Briefing where we look at trends, innovation, investment and news to keep your team informed on financial technology.

In this pilot issue, the Competition and Markets Authority has given UK banks two years to embrace fintech, while blockchain technology is shaping to become an essential component of the financial system. We also look at some of the latest deals.

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Blenheim Chalcot Intelligence Team

Fintech Innovation

Following the input of new regulation in the UK banking market there is hope that fintech challengers will be able to effectively crack the banking sector. UK banks have been given two years by the Competition and Markets Authority (CMA) to embrace the new technology made available by fintech firms which are anticipated to make it easier for customers to control their own financial data and provide information allowing them to make informed decisions to switch bank accounts.

UK Banks given two-year deadline to embrace fintech

A 2016 PWC fintech survey found that payment firms are more concerned about the threat from new fintech companies compared to other firms in the financial sector. As a result, payment companies are a lot more active in fintech, with 84 percent of payments executives stating that fintech is at the heart of their strategy, and a large percentage either partnering with or investing in fintech startups.

Payment Firms Fear Fintech Challengers More than Other Sectors Do, Study Says

A new report by Credit Suisse explores the blockhain's impact on payments, capital markets, financial services and media by analysing 14 existing market participants. The report also discusses barriers to Bitcoin's adoption as a currency.

The non-financial side of Blockchain
11th August 2016 • Express Computer

In an interview with Express Computer, Professor Thomas Keenan of the University of Calgary discusses blockchain technology and its potential applications, including non-financial uses. Blockchain enables direct ownership and transfer of any digital assets without the need for an intermediary; for example, Honduras is currently experimenting with using blockchain tech to secure land titles.

A new report from the World Economic Forum expects that blockchain technology will become a fundamental part of the global financial system by creating a more secure, transparent and effective infrastructure, and it estimates that 80 percent of banks could start distributed-ledger projects by next year.

Despite recent digital innovation from fintech companies the financial world has proved stubbornly resistant to disruption. It is vital that companies reflect the changes brought on by digital innovation if we want to see improved efficiency and pricing in the financial market.

Fintech companies are able to target SMEs while offering certain niche products and services that may not be available with larger more traditional banks. However, it is believed that, while we can expect a large amount of disruption thanks to these fintech companies, we cannot expect a revolution in the market without also experiencing some setbacks.

Bank of America Merrill Lynch and HSBC have formed a partnership and together will create a blockchain prototype for trade finance innovation, taking trade finance business technology to the twenty first century.

FinTech: mapping a long term future for a short term lender
10th August 2016 • Finextra Research Community blogs

The short-term loan sector is an area that fintech can work to allow providers to engage more with customers, allowing lenders to take advantage of innovation in the digital world.

"For any lender in the industry, applying financial technology to their business model is essential if they want to stay relevant in modern credit." - Finextra
Expert shortage hampers Japanese financials in blockchain race
17th August 2016 • Sharenet News Headlines

Japanese financial firms risk falling behind on the world stage due to a dearth of blockchain startups. Blockchain technology is set to revolutionise the financial industry in the next few years, and financial institutions tend to draw talent from startups when the technology is at a very early stage. However, executives in Japan are finding it very difficult to recruit engineers and developers in the field.

Fintech Hot Companies

Xero, the developer of cloud-based accounting software, has collaborated with PayPal to release its PayPal Express Checkout for Xero, which allows clients to pay from directly within an invoice and allows business owners to automatically view and reconcile PayPal transactions within Xero. The collaboration is an attempt to create a smoother and faster paying experience after Xero's own research showed that over 60 percent of invoices are paid late.

Xero and Paypal join forces to speed up payday
TransferWise for Business launches
16th August 2016 • Finextra Research Transaction banking channel

Transferwise, the London-based peer-to-peer money-transfer service, is expanding from the consumer market to SMEs with the launch of TransferWise for Business, which leverages the company's international network of banks to allow business to make and receive international payments with lower costs than when using business bank accounts.

"Businesses can now use TransferWise to pay suppliers or employees overseas, request payments from customers and transfer funds between their own accounts in different countries." - TransferWise
Woes continue at Lending Club
9th August 2016 • City A.M.

Peer-to-peer lending firm Lending Club has released its second quarter results, and they are worse than expected. After initial optimism, the company's share price has fallen.

Fintech VC Deals

Zoona secures US$15-m in funding
18th August 2016 • Frontpage Slideshow (by JoomlaWorks) - African Business...

Zambian fintech company Zoona has raised USD 15 million in a series B round led by International Finance Corporation, a member of the World Bank Group, with Accion, Omidyar Network, The Lundin Foundation, 4Di Capital and private investors also participating. Zoona providers mobile money transfers for people without access to banking services, which applies to a large majority of the African markets the company is targeting.

Millennial fintech service Stash raises Series A funding
17th August 2016 • Banking & Financial News - Banking & Financial News...

Stash, a New York-based startup that offers investment services aimed at small investors and young people, has raised USD 9.25 million in a funding round led by Goodwater Capital and Valar Ventures, bringing its total funding to USD 13.75 million.

Millennial fintech service Stash raises Series A funding

Financial-software developer NYMBUS raised USD 12 million in a round led by Vensure Enterprises. The company was founded in 2015 and develops cloud-based core banking software.

Rubicoin seals €1.2m in funding
18th August 2016 • Irish Independent - Business News

Rubicon, an Irish fintech startup that develops tools with the aim of making investing more accessible, has raised €1.2 million in funding to expand into new markets, bringing the company's total funding to €3 million.

B2B-payments startup Finexio announced it has raised USD 1 million in seed funding led by James R. Heistand. Finexio's platform helps companies cut costs by replacing paper-based payments with the most affordable electronic payment rail.

"Not only are [...] suppliers forced to undergo a costly manual effort to receive their money, but they are also forced to pay a 3.5–5 percent fee for processing costs"
- Ernest Rolfson, CEO, Finexio
Bermuda insurer makes big investment in UK insurtech start-up
16th August 2016 • Insurance Times - News

Buzzmove has raised GBP6m from backer White Mountains, an insurance company based in Bermuda, which the startup says that it will use for product development. The UK-based firm provides an online price comparison platform for people looking for removal services and also allows people to buy home and contents insurance.

A new report by KPMG amd CB Insight has found that fintech funding in the UK is on a decline, with Q2 2016 figures being the lowest for the last five quarters, although the drop was not as dramatic as feared after the EU referendum. However, Germany still overtook the UK, with German startups pulling in USD 186 million compared to $103 million for British businesses.