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Banking technology FinTech week in numbers

£32 million…Zopa has closed a £32 million funding round as it moves ahead with plans to launch a retail bank. This was headed up by two new investors, Indian financial services group Wadhawan Global Capital and European VC fund Northzone. It’s Zopa’s first investment round since early 2014, when it pulled in £15 million from Arrowgrass Capital Partners. The venture has now raised over £80 million in equity funding.

Last month, it became the first major UK peer-to-peer lender to win full FCA authorisation, although Funding Circle also achieved this soon afterwards. Giles Andrews, co-founder and Chairman, Zopa commented: “Zopa, both individually and as a founder member of the Peer-to-Peer Finance Association (P2PFA), has campaigned for peer-to-peer lending to be a regulated activity for a number of years. We are delighted to receive our full FCA authorisation.”

Late last year, it revealed plans to launch an online-only bank offering Financial Services Compensation Scheme protected deposit accounts to savers and overdraft alternatives to borrowers. It has applied for a banking licence, with the regulatory application process set to take about 15-24 months.

2%…There is massive resistance among consumers when it comes to automated financial services, according to the ING International Survey Mobile Banking.

The research, involving 15,000 people in Europe, the USA and Australia, found that one-third aren’t interested in this at all. Just 2% would trust a fully automated robo-adviser to invest their money on their behalf and only 26% would opt for this even if they got final approval on all decisions.

Nathalie Spencer, Behavioural Scientist at ING Group Research, comments: “People have a lot of faith in their own ability to make the best decisions. At the same time, we know from research that computer programmes can outperform humans, so technologies like robo-advice have the potential to be very advantageous for consumers.”

She adds that, as people learn more about this tech, they will likely be drawn to the convenience and personalisation on offer. “It’s up to us now to understand better how we can address that need for control so that people can take advantage of robo-advice’s potential to improve their financial positions.”

85%…The United Nations-based Better Than Cash Alliance has highlighted a project in which agriculture nonprofit organisation One Acre Fund, in partnership with Citi Inclusive Finance, enabled farmers in Kenya to make loan repayments via mobile money instead of cash.

One Acre Fund says that it can now reach more farmers with greater reliability, and staff can spend almost half as much time collecting payments in cash, using that extra time to help farmers increase their incomes through training and educational programmes. Other findings include: 85% decreased instances of repayment fraud; Reduced processing time for each repayment from 12-16 days to 2-4 days; farmers now know immediately when their payment is received; 80% decrease in repayment processing costs; 46% of time reduced for staff working on collections, allowing for more time helping farmers improve agricultural practices; Women farmers benefited especially, feeling safer about payment deliveries.

“For companies and nonprofit organisations who want to work in rural Africa, this success story is a must-read,” says Oswell Kahonde, Africa Regional Lead at the Better Than Cash Alliance. “Digital payments are essential to building sustainable business models and creating long-term impact. By enabling smallholder farmers to make and receive payments digitally, we are creating transparency and accountability which translates to numerous benefits and empowers people to take control of their finances.”

£21 million…UK challenger bank, OakNorth, has completed its largest deal since launching in September 2015: a £21 million loan for the development of a new hotel, L’Oscar, in central London, set to open its doors in early 2018. The hotel is being designed by Jacques Garcia, the man behind Hotel Costes in Paris, as well as the Nomad hotel in New York and Vagabond Hotel in Singapore.

Ben Barbanel, Head of Debt Finance, and Deepesh Thakrar, Debt Finance Director at OakNorth, comments: “We’ve worked on a number of hotel deals since our launch in September 2015 – the development of a 200-bedroom aparthotel in Liverpool, the acquisition of the Ramada Plaza Southport Hotel, the merger between Whittlebury Hall and Whittlebury Park – but this is the first we’ve done in the hotel development space. We look forward to the opening of L’Oscar.”

20,000…The government of Estonia’s e-Residency programme, which launched in 2014 with more than 20,000 people applying, has partnered with Finnish FinTech Holvi to roll-out borderless digital banking. One of the benefits of the initiative is that e-residents can register bank accounts in Estonia, although previously they had to visit the country in person first. The Holvi partnership eliminates this need. Setting up an account costs €35.00 per month and applicants get a Mastercard as part of the deal.

In a blog post, e-Residency Programme Director Kaspar Korjus says: “Business banking is radically transforming for almost everyone on earth and this can help unlock global growth by democratising access to entrepreneurship. We’re delighted that Holvi has decided to invest in our borderless digital nation by offering borderless business banking specially tailored to our growing community of e-residents. This partnership with Holvi will further lower the barriers to entrepreneurship and help expand e-Residency to many more people around the world who have been unable until now to establish a trusted company with the tools needed to conduct business globally.”

Antti-Jussi Suominen, Holvi CEO, says: “Entrepreneurship is on the rise and no matter the location of these businesses they all share one common problem; they are currently being underserved in their financial matters. Ever since Holvi was founded we have been helping small businesses manage their finances digitally. We have followed the e-Residency initiative since the beginning and see this partnership as an excellent match to help entrepreneurs around the world run their businesses successfully.”

17…UK new entrant, ClearBank, has become a member of Bacs Payment Schemes, the company behind Direct Debit and Bacs Direct Credit, taking membership up to 17 FIs.

Michael Chambers, CEO at Bacs, says: ” ClearBank will provide access to our payment schemes to many organisations who can benefit from using our products. And, with the record six billion-plus transactions we processed last year, it is evident that our payments are still in great demand. As the first new clearing bank in the UK for more than two centuries, becoming a full member of Bacs is a natural step, and one we’re happy to facilitate.”

ClearBank launched earlier this year, built on a combination of Microsoft public and private cloud infrastructure and headed up by Nick Ogden, former Worldpay CEO. It will open its doors during the autumn to FS providers, FCA-regulated businesses and FinTechs that require access to UK payment systems and core banking technology to support current account capabilities. Former CFO of RBS Ulster Bank and CFO of Royal Bank of Canada Europe and Asia, Charles McManus, is ClearBank CEO and leads an executive team including: Chief Financial Officer, Marc Jenkins; Chief Risk Officer, Steve Barry; Chief Technology Officer, Andrew Smith; and Chief Governance Officer, Philip House. The venture has secured an investment of £25 million from PPF Group and CFFI Ventures in addition to investments from the founding management team (all members of the team participate in a share programme).

Ogden comments: “ClearBank is the first new clearing bank in more than 250 years, delivering full and direct access to all of the UK payments infrastructure. We started talking to Bacs in 2015, as a key component of our strategy to open access and create competition. As the first bank to connect to all the UK payment schemes concurrently, Bacs worked with us to agree an ambitious timetable which I’m delighted to say we have met. In early 2016 we jointly agreed a process and timetable which has been followed and delivered, exactly to the day. ClearBank is the first UK bank ever to concurrently connect to all the UK payment schemes. The support and commitment from the Bacs team ensured that we achieved this key business goal.”

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