Weekly Analysis And Opinion Highlights – 16 January 2023

And we’re kicking off the week with new analysis and opinions on fintech with new finance space for 2023, open banking, and more. Dive into the latest fintech insights and have a great start of the week! 

The new Brazilian regulation on digital assets and its possible impacts (The Paypers)
The crypto market has been churning out news about the advancement of a regulatory scenario around the world, turbulence at exchanges, and much discussion about expectations surrounding its evolution and maturation. In this scenario, the need for regulation is one of the hotly debated topics – and that’s why governments, companies, and regulatory agencies are constantly discussing good practices and the development of this revolutionary environment which holds tremendous potential, especially with regard to the security of transactions. At least 27 countries are already working on formulating regulations – and, in Brazil, in late 2022, Congress approved a bill regulating these digital assets in the country. Both the optimistic points and concerns are logical arguments right now, but the only valid scenario is that the regulatory movement is happening in Brazil and around the world – and companies will have to adapt in order to survive. The sector as a whole and the teams involved, especially the risk and compliance areas, must prepare for regulation, which we believe will bring greater security to the market, with clients of exchanges benefiting the most. Read more

Banking on youth: How can banks and fintechs maximise the opportunity around junior accounts? (Fintech Futures)
While children’s earliest interactions with money often involve cash – the Tooth Fairy, Santa, gifts from Grandma and Grandpa, the list goes on – digital payments are increasingly commonplace. 30% of respondents to a survey conducted by YouGov on behalf of said they paid their kids’ allowances using direct bank transfer, a debit card, or a money app. With cashless payments more popular than ever – in 2021, 80% of all US retail transactions were cashless, according to the findings from the latest Diary of Consumer Payment Choice published by the Federal Reserve Bank of San Francisco – that number will undoubtedly go up over the coming years. Yet, despite the explosion in demand for junior accounts and child-oriented money apps that this will probably create, data on the current state of the market is thin on the ground. And, without knowing who the key players are, what they’re offering, and where there are market gaps, how can banks and fintechs build a product that sets them apart in what could become a very crowded market? Read more

The top six trends set to shape the insurance industry, according to hx (Global Fintech)
The experts at hyperexponential (hx), a SaaS pricing platform for insurers, have outlined six key trends taking hold in the insurance industry. According to McKinsey’s 2022 Global Insurance Report, around half of insurers globally are not earning their cost of capital in revenue. The global climate has created a number of uncertainties and a tough economic environment In order to act proactively on these market conditions and adjust their capabilities with speed and agility, hx said the industry will see insurers leverage technology tools to harness data and stay ahead of the competition. This leads into the second top trend hx expects to see in 2023: competition between new entrants and legacy insurers. New insurers have been entering the market in recent years, equipped with improved processes and agile methodologies. This has spurred older carriers to simplify their traditional, slower, systems and build newer and more modern technology stacks. Read more

Rising rates aren’t the salvation US banks were looking for (EuroMoney
After years at zero, rapid Fed hikes last year led to sharp increases in NII and NIM at US banks. But it is not all good news. Deposit betas are rising, the banks’ own AOCI bond portfolios are underwater – complicating their liquidity positions – and 2023 threatens to bring a recession that could hit asset quality. On the face of it, 2022 was a great year for US banks. The Federal Reserve’s rapid hiking cycle fed into a banking system awash with liquidity: a mix of quantitative easing and fiscal stimulus that had left banks with swollen deposit bases. The parallel impact of all this liquidity was weak demand for credit, and some banks were put in the unusual position of actively declining additional deposits. Then in the second half of the year came a tightening of monetary policy, and the banks suddenly found these deposits generating some real net interest income (NII). With still no competition for deposits, margins spiked, too. Read more

BEST of 2022 Blog Posts: Global Findex: Digitalization in COVID-19 Boosted Financial Inclusion (CGAP
Good news has been difficult to find lately in the global economy, yet there’s reason for optimism in a major area of social and economic development: strong progress has been steadily occurring in financial inclusion, as measured by increased access to financial services for the world’s poor. The new edition of the Global Findex – the pre-eminent worldwide measurement of financial inclusion — has been published by the World Bank Group and documents a decade of progress. A great deal has changed since the last Global Findex indicators were collected in 2017. The average rate of account ownership in developing economies increased by 8 percentage points, from 63% to 71%. Remarkably, this growth has been widespread across dozens of developing economies, in stark contrast to the previous trend between 2011 to 2017, when most of the newly banked adults lived in just two countries: China and India. The Global Findex 2021 contains a deep array of insights on global account ownership, usage, and financial resilience. Two trends seen in the data are particularly worth exploring given the impact they have already had and the ways they point to opportunities for the future. They are the growth in digital payments that took place in the context of the COVID-19 pandemic, and the relationship between digital payment adoption and use of other financial services. Read more

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