Weekly News Highlights – 16 February 2024

Welcome to the latest in fintech news, where cutting-edge technologies and innovative financial solutions converge to reshape the landscape of banking, investing, and payments. Stay tuned as we explore the trends driving the future of finance!

Tencent CEO Pony Ma asks fintech unit to cede share in payments market to avoid challenging banks (SCMP)

Pony Ma Huateng, the founder and CEO of Tencent Holdings, has advised employees that the company’s financial technology unit should decrease its market share in China’s  payments sector. This move is aimed at positioning Tencent as a partner of banks and maintaining positive relations with traditional financial institutions. Ma emphasized the need for a collaborative approach with banks, urging the financial technology unit to modify its products to be perceived as a supportive ally to the banking sector. Additionally, Ma cautioned employees to prioritize safety over speed when venturing into new fintech services like loans and insurance. The guidance reflects Tencent’s strategic efforts to navigate the financial landscape while fostering cooperation with established banking partners. Read more

ECB will only use European suppliers for digital euro build (FinExtra)

The European Central Bank (ECB) has clarified its decision to seek potential providers for the development of a digital euro platform and infrastructure. The ECB opened applications for vendors to supply components and related services for a potential digital euro, with contracts potentially exceeding EUR 1 billion. ECB board member Piero Cipollone assured Members of the European Parliament (MEPs) that the central bank is not immediately launching development but is preparing “framework agreements” for future use if the decision to introduce the digital euro is made. The goal is to be prepared for such a development while maintaining flexibility to accommodate legislative deliberations or technological advances. The ECB has called for applications to establish framework deals, emphasizing the need for closer engagement with platform suppliers, especially for components not yet on the market, such as offline digital euro functionality. Only legal entities with registered offices in the EU and controlled by EU entities or nationals are eligible for participation in the procurement process, aiming to strengthen the autonomy, resilience, and security of a potential digital euro through European infrastructure. The ECB will publish the outcome of the public tender process on its website. Read more

Citigroup starts tracking how often private bankers call clients (Financial Times)

Citigroup has implemented new tracking measures in its wealth management division, requiring private bankers to submit call reports for every client conversation, noting details of discussions. The bank aims to boost its struggling wealth management business and enhance client experience. The move comes as part of a broader effort to make Citi’s employees more productive, with a focus on squeezing more from its workforce. The private bankers are encouraged to contact clients at least once every 90 days. The initiative is part of Citi’s strategy to revitalize its wealth management division, identified as a growth area by CEO Jane Fraser. Read more

Euronet acquires Infinitium (The Paypers)

US-based financial technology solutions and payments provider, Euronet, has acquired Singapore-based digital payments company, Infinitium. The acquisition aims to integrate Infinitium’s products into Euronet’s Ren payments platform to enhance protection against consumer fraud and merchant chargebacks in online transactions. Infinitium provides risk management and payment authentication services, including 3D Secure (3DS), focusing on addressing fraud in ecommerce. The acquisition allows Euronet to leverage Infinitium’s technology for multi-channel transaction authentication, expanding its addressable market opportunities and strengthening its position in the industry. The deal includes Infinitium’s workforce of approximately 200 software developers and architects, who will remain with Euronet. Read more

Paytm: Rockstar Indian fintech start-up faces serious crisis (BBC)

Paytm’s founder, Vijay Shekhar Sharma, is facing challenges as the Reserve Bank of India (RBI) has raised concerns about the company’s operations, marking at least the fourth instance since 2018. The regulatory scrutiny has led to a decline in Paytm’s market value and a 20% reduction in app downloads. The RBI’s actions, which include restrictions on the Paytm payments bank, have triggered worries about the company’s customer retention and reputation. Analysts emphasize the need for transparency in managing boards and adherence to corporate governance in high-profile start-ups, raising broader questions about the fintech and start-up ecosystem in India. Read more

FCA launches inquiry into financial advisers’ ongoing services (Fintech Global)

The Financial Conduct Authority (FCA) has initiated a comprehensive survey involving 20 of the largest financial adviser firms to scrutinize the delivery and effectiveness of ongoing services for which clients are charged post-initial advice. This move is in line with the recently introduced Consumer Duty principles, emphasizing good faith, prevention of foreseeable harm, and support for clients’ financial goals. The FCA’s investigation covers areas such as firms’ evaluation of ongoing services, modifications made post-Consumer Duty, and the extent to which clients receive due reviews. The survey also explores instances where clients paid for advice but were refunded due to the absence of a suitability review. This initiative is part of the FCA’s broader strategy to enhance standards in the consumer investment market, ensuring that financial advice aligns with clients’ best interests. Read more

Nigerian Fintech, Carbon, Acquires Vella Finance and Launches AI-Powered SME Banking Platform (BitcoinKE)

Carbon, a Nigerian lending platform, has completed the acquisition of fintech startup Vella Finance, signaling a significant move in its mission to empower small and medium-sized enterprises (SMEs) with advanced, accessible financial services using artificial intelligence. Vella Finance, which terminated its crypto services in October 2023 to focus on SME banking, will now transition business customers to Carbon Business. The offering for business owners includes AI-powered transaction analysis, competitive low-interest loans, sub-accounts for financial organization, automated income splitting for financial planning, and team-based account management. The acquisition aims to strengthen Carbon’s position in providing innovative financial solutions to SMEs in Nigeria. Read more

Hindenburg Report Throws Swiss Fintech Temenos Into Turmoil (Yahoo!Finance)

Swiss banking software company Temenos AG is facing allegations of major accounting irregularities and manipulated earnings in a report by activist investor Hindenburg Research. The report claims that the company engaged in round-tripping revenue, pulled forward contract renewals, backdated contracts, and exhibited other classic accounting red flags. Temenos has denied the allegations, stating that the report contains factual inaccuracies and analytical errors. The company’s shares fell as much as 9.5% following the report. Hindenburg has a track record of targeting high-profile companies and wiping out billions in market capitalization with its damaging claims. Read more

RBI asks Visa and Mastercard to halt B2B fintech payments (The Paypers)

The Reserve Bank of India (RBI) has reportedly asked Visa and Mastercard to suspend card-based business-to-business (B2B) payments routed through third-party fintech firms. This move is intended to impact payments facilitated by business payment solution providers (BPSPs) that operate in the category of B2B payment solutions. The RBI’s decision is driven by concerns about the flow of money through card payments to non-Know Your Customer (KYC) compliant businesses, which may have KYC-verified bank accounts but are not authorized to accept card payments as merchants. The central bank aims to ensure compliance with regulatory guidelines and prevent fraudulent activities in transactions. Read more

Viva Wallet CEO Accuses JPMorgan of Stunting Company Growth (PYMNTS)

Viva Wallet’s founder and CEO, Haris Karonis, has sued J.P. Morgan, accusing the bank of hindering the Greek fintech’s growth. The lawsuit alleges that J.P. Morgan is attempting to push down Viva Wallet’s valuation and is blocking the company’s entry into the U.S. and new markets in Europe. Karonis claims that J.P. Morgan’s payments business is competing with Viva Wallet in some European markets, restricting the fintech’s growth. J.P. Morgan purchased a 48.5% stake in Viva Wallet in 2022 for $800 million. The lawsuit follows a legal battle between J.P. Morgan and the founders of college financing platform Frank last year. Read more

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