Fintech Enroute: This Week’s Industry News and Analysis
No-Deal Brexit’s Impact on British Fintech
As the possibility of a no-deal Brexit becomes more likely, British Fintech startups brace themselves for the consequences. A hard Brexit will mean that British financial institutions — both banks and startups — will face more difficulty in gaining EU banking licences, meaning they will no longer be able to operate freely in the bloc. “It is obvious the bigger the market is, the better it is for fintechs, the faster it is they can start, the more opportunities they have,” says Wim Mijs, CEO of the European Banking Federation. What are the consequences of this no-deal Brexit anticipation? A licensing application frenzy, causing a shift to the European financial stage in terms of regulation and capital raising.
Read more at: https://www.cnbc.com/2019/01/31/brexit-latest-impact-on-fintech-and-banks.html
Mobile Payments Going Plastic
Mobile payments are heralded for granting customers the ability to pay instantly using a smartphone or other device as opposed to cash or cards. However, in a push to increase adoption and increase market share some mobile payment providers in developed markets have begun to offer cards backed by major credit card companies as well. This is an interesting phenomenon and seems antithetical to the idea of “mobile” payments. However, in developed markets many vendors are reluctant to upgrade their point of sale infrastructure to allow payments with a smartphone. Venmo now offers Visa cards tied to users’ accounts on their platform. Line, a Japanese messaging app popular in Asia excluding China that boasts 50 million users, has been offering its own payments service for a few years and is now offering its own Visa cards to users of its mobile payments service.
This development marks a growing rift between mobile payments providers in developed markets and emerging markets. In emerging markets such as India and Kenya, many mobile payments users have never had a bank account let alone a physical payment card. Thus, for these users the adoption of mobile payments services marks their first entry into the global financial system. In developed markets, however, customers and vendors are accustomed to using plastic payment cards and are not starting from zero in terms of commercial infrastructure. As a result, many vendors are reluctant to invest in upgrading their point of sale mechanisms. This rift is leading to a plurality of mobile payments offerings and the emergence of “hybrid” offerings such as Line’s and Venmo’s.
Read more at: https://techcrunch.com/2019/01/29/line-visa-card/
Monzo: The American Dream
If you’re a millennial in the UK, you might have heard of the digital banking disrupter, Monzo. The mobile-only debit card startup that, in just three short years, has revolutionized digital banking in Britain is looking to enter the US market. While the overseas expansion remains merely just a whisper at this time, the implications of Monzo possibly coming to the US are extremely compelling: as a company that holds “simplicity in finance” as its core value, what could this mean for the average American? To feel empowered over one’s financial capabilities — something that Monzo aims to bring its customers — is a possibility that may change the financial landscape of this country forever.
Read more at: https://techcrunch.com/2019/01/04/monzo-american-dream/
Musical Blockchain
There’s been a lot of chatter about the creative possibilities of blockchain, but up until now the technology’s more financial applications have stolen the show. There is hope, however: global blockchain company The Bitfury Group announced this week that they are launching a music and entertainment division, one that will create an open-source music platform secured by the bitcoin blockchain. What this initiative hopes to achieve is an injection of collaboration and innovation into the music industry, which continues to be characterized by competition and self-interest. While the SurroundTM platform is still being developed, its potential for shaping the future of the digital music age cannot be underestimated.
Driverless Finance
Tired of hearing of driverless cars? Enter Driverless Finance. This week SM UK Solutions Director Helen Oxley introduced the concept of Driverless Finance, an environment whereby our finances “manage” themselves in the same manner as driverless cars theoretically may. According to Oxley, driverless finance is powered by advanced AI to create a micro-personalised financial ecosystem. This system would “bring together data from banks, existing policies, borrowing history, and even an individual’s social media data to allow individuals to create their own tailored profiles and financial plans”. But, are we truly be willing to forfeit digital privacy for financial empowerment?
Read more at:
https://thefintechtimes.com/driverless-finance-sei/
A Bold Approach to Tackling Scaling Issues Plaguing Cryptocurrencies
Zilliqa (ZIL) has become the first blockchain project to implement a scaling solution called “sharding”. The solution basically divides a large database into smaller parts that can autonomously settle transactions. This strategy for tackling scaling issues is novel in that it differs from the strategy implemented by Bitcoin called Segregated Witness (SegWit), which caused the hard fork in the cryptocurrency two years back. Under SegWit, database capacity is freed up by the deletion of signature data from transactions after they have been settled. By contrast, “sharding” theoretically would not result in any data loss. Zilliqa (ZIL) has a capitalization of over $150 million and is ranked 32nd in market capitalization among the currencies tracked by Coin Market Cap.
Read more at: https://cryptonews.com/news/zilliqa-launches-first-public-sharding-blockchain-3304.htm
