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Weekly Research Highlights – 27 October 2020

We present you research reports and white papers we discovered this week. The studies showcase latest insights into trends, challenges, changes and regulatory frameworks. We hope that these reports will help you get a more accurate and comprehensive picture of developments in and around fintech, to offer you a solid knowledge basis, enabling you to establish new strategies for your own business. Enjoy the materials!

Public Digital Currency

According to a recent report from Global Digital Finance a new UK body for the promotion of distributed and digital finance – called “The Age of Public Digital Currency: A Guide To Issuance,” with new technological advancements such as Facebook’s Libra, the private sector has started to become more important, acting as a mediator of exchange and store of value. The findings of the research paper show that at least 48 central banks now have some active research or proof of concept in development for CBDC. The new focus has been primarily encouraged by the latest growing trend of cashless payments. Read more

Suptech & Regtech

In a recent analysis report, the Financial Stability Board (FSB) highlights a rise in technology adoption by institutions to comply with the imposed regulatory frameworks (regtech) and for the overseeing authorities to also enhance their supervisory capabilities (suptech). The main factors which contributed to a mass implementation of new technological innovations are developments in the availability of data, cloud computing & API connectivity. Read more

AI adoption through learning

According to a paper conducted by MITSloan, “Expanding AI’s impact with organizational learning,” there is a low rate of success inside companies using AI technology, with only 10% of companies obtaining significant financial benefits. The main reason behind the figures is a lack of organizational learning, which can be challenging for businesses due to the dual nature of the learning process – humans and machines not only working together, but also learning from each other. The main finding of the report suggests that by implementing organizational learning, the significant financial benefits can increase to 73%. Read more

InsurTech Investments

According to Fintech Global, a new analysis finds that in terms of InsurTech deals, Q3 2020 is so far the best quarter. Companies in the sector raised nearly $2.4bn during the period, which is double the amount of capital raised in the previous quarter of the year. The high funding sums are primarily due to 5 large deals in Q3 over $100m, including the top three funding rounds raised in the sector so far this year completed by Bright Health ($500m), Ki Insurance ($500m) and Next Insurance ($250m). However, compared to Q3 2019, the number of overall transactions has fallen from 85 to 80 during Q3 2020. Read more 

Fintech Lending

Harvard Business Research issued a new revision of“Fintech Borrowers: Lax-Screening or Cream-Skimming?”, a report by Marco Di Maggio and Vincent Yao. It brings additional findings for the personal credit sector, highlighting that fintech lenders acquire market share by first lending to higher-risk borrowers and then to safer borrowers, and mainly rely on hard information to make credit decisions. The study analyzes over 3.79 million loans for 1.88 million borrowers to offer an overview on borrowers that either used a fintech company or a bank to obtain a personal loan. Read more

Digital Asset vs. Crypto asset

In a Cambridge Center for Alternative Finance paper, “Legal and Regulatory Considerations for Digital Assets,” the increased popularity of blockchain-based token offerings has seen a need for regulatory frameworks. The main purpose for regulatory agencies and government bodies has been to provide a clear approach and conduct when trading with digital assets.  The confusion arises primarily from the inconsistent terminology use and the lack of clear definitions regarding the difference between “digital asset” and “crypto asset.” Read more

UK & Debt Payments

According to a survey conducted by the Financial Conduct Authority (FCA), 12 million UK adults are struggling with debt repayments. The analysis, based on responses from 7,000 consumers, states that the primary causes behind the inability to pay back are changes in employment. Potentially 12 million UK consumers are experiencing increased stress on their financial  resilience. This has prompted the FCA to put a support package in place which works in collaboration with UK lenders. Read more

Australian fintechs focus on Lending

According to the EY FinTech Australia Census 2020, nearly a third of Australian fintechs (30%) are focusing on payments, wallets and supply chain, closely followed by lending (29%). The survey gathered 111 responses from people working in the fintech industry during July-August 2020 and qualitative interviews with “fintech leaders” and found that compared to 2019, 21% of fintechs are focused on the lending sector in 2020. In addition, Australian fintechs are also positive about offshore opportunities, with 88% planning on expanding internationally in the nearby future. Read more

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