Weekly Research Highlights - 28 September 2021

Weekly News Highlights – 2 March 2023

Stay up to date with the latest news from fintech! This week, we bring you updates on regulations, legislation, partnerships, and more. Enjoy reading!

Nexi to acquire 80% of Sabadell’s merchant acquiring business for €280m (Fintech Future)
Italian paytech Nexi is to acquire 80% of Banco Sabadell’s merchant acquiring business in an all-cash deal worth €280 million, valuing the business at €350 million. Once the deal has been completed, Nexi will have more 380,000 merchants and around €48 billion worth of transaction volumes as of December 2022. The merchant acquiring business is expected to generate an Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) of around €30 million based on 2023 figures. A long-term exclusive distribution partnership has also been agreed, with an initial term of 10 years and two potential renewals of five years each. Read more

Coinbase Delists Binance Busd Amid REgulators Scrutiny (Finance Feed
Nasdaq-listed crypto exchange operator Coinbase plans to cease support for trading Binance-branded token BUSD, the world’s third largest stablecoin, starting in two weeks. In a pair of tweets, the exchange said the suspension is scheduled for March 13 and will affect, Coinbase Pro, Coinbase Exchange, and Coinbase Prime platforms. However, the token holders will still be able to access their BUSDs and withdraw them at any time. Coinbase tweeted that “Our determination to suspend trading for BUSD is based on our own internal monitoring and review processes. When reviewing BUSD, we determined that it no longer met our listing standards and will be suspended.” Read more

Centre for Finance, Innovation and Technology launches to boost UK fintech (Fintech Future)
The Centre for Finance, Innovation and Technology (CFIT), a new private sector-led body, has officially launched in the UK with the aim to draw on expertise to set national strategy and drive growth in the sector. Born out of the 2021 Kalifa Review, CFIT will bring together “coalitions of experts” across finance, technology, academia and policy to help support fintech sector growth and the creation of “high-income” tech jobs. CFIT chair Charlotte Crosswell says: “The launch of CFIT today represents a significant moment for the UK’s fintech sector and our economy more widely.” The body will also aim to “power up” the UK’s financial innovation sector, maximising economic growth across all regions of the UK and ensuring better outcomes for fintech firms, small and medium-sized enterprises (SMEs) and consumers. Read more 

Revolut records first full year of profitability, plots global expansion (Fintech Future)  
UK-based financial super-app Revolut recorded £26.3 million in profit for 2021, marking the firm’s first full year of profitability. In its long-awaited annual report for the year ending 31 December 2021, Revolut says it tripled its revenue from £220 million in 2020 to £636 million in 2021, driven in part by products including subscriptions, Revolut Business and foreign exchange and a surge in payments. The firm generated £100.3 million in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA). Revolut credits its strong financials in 2021 in part to a “more than 50%” increase in weekly active retail customers, along with a rise in average spend per user, which grew by 10%. Customer deposit balances totalled £7.4 billion as of December 2021, a 58% increase from the £4.6 billion in 2020. Read more

Bank of Canada explores CDBC use for offline payments (The Paypers)
The Bank of Canada has released a research note that explores the use of CDBCs for offline payments in various scenarios. One potential scenario that would require an offline CBDC payment would be a temporary lack of internet access caused by a telecom outage, or simply because the user is on a plane. This particular use case is named intermittent offline CBDC. The paper also explored a scenario in which users would experience a long-term need to make payments without the internet. An extended offline CBDC could be necessary in the event of a natural disaster or a severe weather incident. The system would allow an intermittently offline user to perform a payment without being connected to the internet but the receiving party would only be able to spend the funds once the transaction has been confirmed as legitimate via internet access. In the case of an extended offline CBDC, hardware devices would replace the internet when it comes to guaranteeing the security of payments. In this case, the currency that is received offline can also be re-spent. The system would rely on smartphone-enabled hardware security or special-purpose devices. Read more

Bank of Israel releases a consultation paper for stablecoin regulation (The Paypers)
The Bank of Israel has released a consultation paper that includes a plan to regulate stablecoins before a full-scale digital asset push. Representatives from the central bank highlighted that the paper’s suggestions might end up codified into law or operate as rules issued by regulatory agencies. The committee behind the document is led by Deputy Governor Andrew Abir, and it considered all the legal, monetary, regulatory, and technological implications of stablecoins before releasing the document. The goal is to minimise the risks associated with stablecoins through proactive measures such as the prohibition of algorithmic stablecoins. Algorithmic stablecoins represent a type of crypto asset that relies on two types of tokens, namely a stablecoin and another crypto asset that supports it. This means that the algorithm (or smart contract) governs the relationship between them. Read more 

Cyber risk management impacts insurance pricing and credit ratings: S&P (Reinsurance News)
Despite a growing interest in cyber insurance, the organisational structures, workplace culture, and wider risk management ecosystems that combine to minimise cyber threats are still often lacking, cyber experts told S&P Global Ratings. They also highlighted that insurers are assessing their clients’ cyber preparedness to determine the cost of their premiums, among other things, and that cyber risk management can impact credit ratings. At the S&P Global Ratings webinar “Cyber Spotlight: 2023 Cyber Trends And Outlooks”, experts highlighted that the interest in insurance is unsurprising given the size of the financial challenges posed by cyber threats and the fast-changing and still nascent nature of the cyber insurance market. Read more

Rate increases drive industry to 69% rise in underwriting profit (Insurance News)
The general insurance industry booked a 69.4% rise in underwriting profit to $6.8 billion for the year to December, lifted by across-the-board premium rises, the Australian Prudential Regulation Authority (APRA) says today in a regular update. APRA says the strong underwriting result partly offset large unrealised investment losses of about $1.7 billion and helped the industry achieve a net profit after tax of $2.3 billion, up 34.3% from a year earlier. Pricing increases were “more prominent” in the Fire and Industrial Special Risks (ISR), Public and Product Liability, and Professional Indemnity product lines, according to APRA. “The improvement in industry underwriting results was driven by an increase in gross earned premiums across all classes of business,” the regulator says. Gross earned premium rose 9.2% to $62.8 billion but gross incurred claims also increased, by 19.8% to $46.2 billion due to the historic floods last year and other natural catastrophes. Read more

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