Research Highlights - 31 August 2021

Weekly Analysis And Opinion Highlights – 8 May 2023

And we’re kicking off the week with new analysis and opinions on fintech with banking, Artificial Intelligence,  ESG, crypto, and more. Dive into the latest fintech insights and have a great start to the week!

Mixed Reaction to the UK Government’s new Fraud Strategy (The Fintech Times)
Rishi Sunak has revealed government plans to “take the fight” against scammers and fraudsters, as he explained that “the time has come to put the fraudsters out of business”. At a time when fraud accounts for over 40 per cent of crime in the UK, what do the new measures cover, and are they enough? Fraud costs people in the UK a total nearing £7billion a year. Most people in the UK have received calls or texts from fraudsters impersonating banks or organisations, trying to get access to their money. Authorised Push Payment (APP) fraud has also been especially prevalent. In 2021 the cases increased by 39 per cent, with losses surpassing £583million for APP fraud alone. With fraud remaining prevalent and causing so much disruption in the country, questions remain about whether the new government measures are far-reaching enough to make a significant difference. Read more

Could NFTs be the gaming industry’s next big revenue stream? (Fintech Magazine)
NFTs have become incredibly popular as digital collectibles, but could they offer the global gaming industry a lucrative new money-spinner? In the last couple of years, non-fungible tokens (NFTs) have opened up a whole new industry centred around the sale and purchase of digital assets – often digital artworks. But is one of the core applications for NFTs being overlooked? S&P Global Market Intelligence says that video game publishers currently make more than US$3.6bn a year in revenue from in-game NFTs, and he expects this figure to skyrocket to $15bn by 2027 as their popularity rises. Read more

After First Republic’s rescue, economists predict further pain with a ‘new era’ of higher inflation (CNBC)
After the rescue of First Republic Bank by JPMorgan Chase over the weekend, leading economists predict a prolonged period of higher interest rates will expose further frailties in the banking sector, potentially compromising the capacity of central banks to rein in inflation. The U.S. Federal Reserve will announce its latest monetary policy decision on Wednesday, closely followed by the European Central Bank on Thursday. Central banks around the world have been aggressively raising interest rates for over a year in a bid to curb sky-high inflation, but economists warned in recent days that price pressures look likely to remain higher for longer. The WEF Chief Economists Outlook report published Monday highlighted that inflation remains a primary concern. Almost 80% of chief economists surveyed said central banks face “a trade-off between managing inflation and maintaining financial sector stability,” while a similar proportion expects central banks to struggle to reach their inflation targets. Read more

Coming out of crypto’s regulatory ‘dark age’ (Fintech Nexus)
The headlining takeaway of Consensus 2023, along with most crypto conversations being had these days, is that regulation of the space is one of the industry’s single largest issues. In a poll made during the conference, almost 90% felt regulation is the most pressing issue facing crypto in the U.S. This issue is perceived as reduced outside of the U.S., with around 35% of respondents seeing crypto’s public image as an issue almost equal to regulation. This year U.S. regulators, perhaps burned by instances of fraud in 2022, have gone into enforcement mode, much to the dismay of many. Despite SEC Chair Gary Gensler’s, claims that crypto already has clear guidelines, the resounding response of the industry begs to differ. With every Wells notice and settlement, the parameters become ever more blurry, with regulators reportedly reluctant to enter into dialogue. Read more

Fintech to become $1.5 trillion industry by 2030 (Finextra)
Financial technology revenues are projected to grow sixfold from $245 billion to $1.5 trillion by 2030, according to a report from Boston Consulting Group (BCG) and QED Investors. The fintech sector, which currently holds a two per cent share of the $12.5 trillion in global financial services revenue, is estimated to grow up to seven per cent. 2022 proved a tough year for fintechs, which on average lost more than half of their market value, but, according to the research, this plunge was merely a short-term correction in an otherwise long-term positive trajectory. Asia-Pacific is poised to outpace the US and become the world’s top fintech market by 2030, with a projected compound annual growth rate (CAGR) of 27%. This growth will be driven primarily by emerging economies such as China, India, and Indonesia that have the largest fintechs, voluminous underbanked populations, a high number of small and medium-sized enterprises, and a rising tech-savvy youth and middle class. Read more

How Will Generative AI Revolutionise Digital Payments in MENA? (The Fintech Times)  
All things artificial intelligence (AI) related have boomed in 2023. Since OpenAI released its chatbot ChatGPT, it appears AI has a use case in every facet of life. But beyond generating images and conjuring up recipes for what you have left in the kitchen, how can generative AI impact the financial industry? The adoption of digital payments in the MENA region is growing at an unprecedented rate, fueled by the increasing prevalence of smartphones. With over 380 million mobile phone users, the region has one of the highest smartphone penetration rates globally, which presents a massive opportunity in digital payments. The rise of e-commerce has also contributed to the growth of digital payments, as consumers turn to online shopping for convenience and accessibility. While nearly 70 per cent of MENA adults remain unbanked, governments are also taking steps to promote financial inclusion, recognising the importance of digital payments in driving economic growth and development. All these factors have combined to create a MENA digital payments market that McKinsey forecasts will reach $80billion by 2025. Read more

New York AG proposes crypto law to take on ‘rampant fraud’ (Finextra)
New York Attorney General Letitia James has proposed a new state law designed to increase oversight of the cryptocurrency industry and boost consumer protections. James says the crypto sector lacks robust regulations, making it prone to dramatic market fluctuations and a tool to hide and facilitate criminal conduct and fraud. The crypto regulation, protection, transparency, and oversight (CRPTO) Act would require independent public audits of cryptocurrency exchanges and prevent individuals from owning the same companies, such as brokerages and tokens, to stop conflicts of interest. Read more

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