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Weekly Analysis & Opinion Highlights – 14 December 2020

For this analysis & opinion piece, we dived into the latest fintech news and discovered updates on UK fintechs and Brexit, the importance of customer relationships for financial services, what AI and automation can do for banks, why fraud is still on the rise and how regulators are handling the situation, whether Buy Now Pay Later transactions are really worth it, if greenfield challenger banks can be advantageous, the Latin American fintechs funding rounds Q1-Q3 2020, and the top  RegTech investors of 2020 so far.

Enjoy the reading!

UK fintechs & Brexit…what’s the future holding?

No-deal Brexit a “nightmare” for fintechs (Bobsguide.com)

After the latest meeting between UK prime minister Boris Johnson and European commission president Ursula von der Leyen, the chances of a deal being agreed between the UK and EU look increasingly slim. The trade deal currently being discussed by the UK and EU doesn’t relate to financial services, but is likely to signal the level of goodwill in place for equivalence decisions that can be made unilaterally by both parties. When analyzing the importance of the financial services, this sector provides around 7% of the UK GDP, according to the latest parliamentary figures from 2019. Read more

Customer relationships & financial providers…

Digital Onboarding For Small Businesses Falls Short (Forbes)

According to Scarlett Sieber, fintech contributor at Forbes, highlights the importance of customer relationships for financial service providers. With this year’s shift from physical to digital, customer experience became especially essential for small businesses. One of the most important needs has centered around digital onboarding, specifically online account opening (OAO). However, OAO is still lacking for business accounts, with one example of misalignment between small businesses and banks regarding the onboarding via the Paycheck Protection Program (PPP). More than $700 billion in forgivable loans was released, yet according to data from the analytics firm Greenwich Associates, nearly 30% of small businesses had a lower opinion of their banks following the PPP loan application process. Read more

AI and automation for finance…

How digital labour helps financial firms cope with market volatility (Fintech Futures)

Kevin Moran, Managing Director at Broadridge Financial Solutions, dives into the benefits of AI technology for financial firms, such as managing increases in operational workload due to market volatility. Financial institutions have been able to deploy AI and automation technology across multiple use cases to drive business value, like post-trade operations. For example, AI and machine learning-driven solutions in areas such as reconciliations can drastically boost match rate performance and reduce the manual effort involved in dealing with breaks, while RPA solutions add tremendous value in settlements, asset servicing, and account services, among others. Automation and digital labour can further help financial companies to manage peaks and troughs in volume, ease up the process bottlenecks and conduct processing when human supervision is not possible. Read more

Fraud is on the rise, regulators stay alert…

How can AML combat the meteoric rise in financial crime? (Fintech Bulletin)

In a recent analysis by Guðmundur Kristjánsson is CEO of Lucinity, it is shown that the first half of 2020 was marked by the extreme increase in fraudulent activities and regulators’ issuing fines. The majority of 2020’s anti-money laundering fines stem from customer due diligence, which resulted in businesses having a hard time complying with the regulatory requirements. The primary solution which can be implemented for AML implies collaboration, knowledge-sharing, and problem-solving not just between banks themselves, but between regulators, governments, and the private sector. Read more

Buy Now Pay Later…good or bad?

#KlarNAAA? Is #BNPL a good or bad thing? (The Finanser)

According to Chris Skinner, an independent commentator on the financial markets, Buy Now Pay Later (BNPL) transactions present both interesting advantages, but also disadvantages. 

With the BNPL platforms market reaching over US$7billion valuation in 2019, and is expected to reach near US$35 billion by 2027 at a CAGR of 21.2% between 2020 and 2027, the business model is especially a good opportunity especially for the younger generations. The issues that arise for BNPL transactions involve the potential debt rates, bad marks on your score (you get reported to the credit agencies if you do not repay on time), and also the fact that it is an unregulated market. Read more

On greenfield Challenger Banks…

Building greenfield challenger banks is a major opportunity for issuer processors (Finextra)

According to Tom Mowat, Senior Manager at Be , Shaping the Future, explains why the preferred disruptive strategy that major banks undertake is the ‘Add’ and ‘Acquire’ options, with a particular interest in creating their own ‘green-field’ challenger banks. While this task remains a real challenge for the banks, it is an incredible opportunity for those who sell relevant services to banks, specifically issuer-processors. These ‘challenger processors’ provide banks with the formula for the successful greenfield challenger bank, as they’re the very companies that helped support the challenger banks in the first place. Read more

Latin American fintechs Q1-Q3 2020…

Latin America and teen-focused FinTech services are coming of age as the industry closes 32 rounds (FinTech Global)

According to a recent market analysis by the FinTech Global, there is a growth of fintechs in Latin America, partly due to the increased adoption of open banking and also the popularity of teen-focused fintechs. With 32 completed rounds last week, including crypto transactions, challenger banks and money exchange providers, the Latin American fintech sector sees maturity. Looking at the biggest rounds in 2020 so far, WealthTech space is in the lead. The top ten rounds raised nearly $1.5bn, making up 77.3% of the overall investment in the region during the 2020 period. Five of the companies in the top ten rounds this year have been in the WealthTech industry (see a complete overview in the graph below).

Top RegTech investors 2020….

Revealing the top ten RegTech investors in 2020 so far (FinTech Global)

RegTech sees active rounds for 2020, with the sector rocketed from 2017 to 2019 and growing at a compound annual growth rate (CAGR) of 119.1%, as investors increasingly backed companies looking to solve and bring efficiency to outdated compliance processes. Accelerators, leading venture capital firms and financial institutions all backed companies in the sector lured by the potential size of the market for regulatory technology (see below a complete overview of the top 10 active investors). Read more

Gamification and financial literacy…

How Gamification can help consumers reach their savings goal (Think Forward)According to Nethal Hashim, Irene Scopelliti and Janina Steinmetz, the financial literacy of EU citizens is rather low. With 1 in 3 Europeans (29%) having no savings at all, and a further 36% have three months or less of monthly income stockpiled, they are at risk in case of a financial emergency. One solution proposed by the analysis is for financial institutions to implement elements of gamification, which can lead to a more fun experience for the consumer and consequently, more interest shown in the topic of finance. Read more

On SEPA Request-to-Pay….

European scheme for the Request-to-Pay (IN4PAY & iPlan)Mark Munne, Partner at iPlan, and Paul van der Valk, Senior Payments Consultant at IN4PAY, present in an updated analysis on the “Practical guide to SEPA Request-to-Pay” considerations for banks, payment processors and corporation to join and benefit from the scheme. The SEPA Request-to-Pay scheme could bring the payment actors together and provide impetus for additional innovation on top of the Instant Payments rails. The findings of the analysis provide a clear overview on how the EPC designed the RTP scheme, what use cases are the most promising, and what benefits they would bring to consumers and merchants. Read moreDo you have any news to share: please put feed@https://hollandfintech.com/ on your press list. Curious to read and find out more from fintech? Then subscribe & read our full newsletters here: https://hollandfintech.com/featured/newsletters/. In order to see our other weekly highlights, check out the following links: funding, news, research.

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