Welcome to the Fintech highFIVE! 🖐 Every day, I’m amazed by the sheer amount of news and innovation happening in the fintech industry. 🤯 Fintech truly has not stopped, even during these crazy times. I can’t help but notice common themes in this huge sea of news — so I’m trying something new to bring these headlines together. Bi-weekly, I’ll be hitting you with the biggest themes seen in the news — all counted down on just one hand. 👊 So gimme 5 🙏 as we celebrate 🙌 the best of fintech each week.
*We’re socially distant here. Virtual high-fives only 👏 Please don’t hit your screen.
The Bank of England laid out what their approach would be to digital currencies in a speech delivered by Sir Jon Cunliffe. Mr Cunliffe explored how the digital currencies might operate, how they would be distributed and touched on the bigger questions around disintermediation, financial inclusion and cross border payments. The main takeaways for me were: 1) Jon’s outright confirmation that the state needs to issue digital money; 2) Hearing that the BoE are working/sharing updates with the EU and a wide range of EU Central Banks on their developments; 3) What digital money means for cash, and also what they mean for the people who depend on it.
In other related news, SWIFT have released a joint paper with Accenture on why they have a role to play here, and in the UK, thousands of retailers have signed up to a pledge to guarantee acceptance of notes and coins as an alternative to digital payments.
A group of US banks have banded together in a government-backed initiative to start sharing data on customers’ accounts to extend credit to those who have found it difficult to borrow. This is a significant change in how banks underwrite credit as they usually reflect a person’s borrowing history, including whether they pay their loans back on time. With the new initiative, they would consider applicants’ account balances over time, their overdraft histories and their home and personal utility bills. Hopefully, these changes will positively impact the 53m adults in the US who don’t have a credit score, with Black and Hispanic adults more likely than White or Asian adults to lack them.
In Europe, open banking platform Tink has acquired their German counterparts FinTecSystems, which will help them further expand across Europe. Germany is a key market for Tink, the acquisition of FinTecSystems gives them access to customers like N26, Santander and Solarisbank, and connectivity to more than 99% of the banks in the DACH region. In the US, Plaid has started an open finance partnership with US Bank. The collaboration will allow their millions of customers to manage their accounts and connect to FinTech apps and services. The integration took place in record time.
The volatility of the crypto market was highlighted once again this week when practically every cryptocurrency lost value. The dips in value were largely the result of two blows: 1) Elon Musk, the so-called “Technoking” of Tesla, pulled bitcoin payments for cars citing the rapidly increasing use of fossil fuels for mining and transactions; 2) The other blow came from China, where the regulators said banks and payment firms were not allowed to offer clients any services involving cryptocurrencies, and warned of the risks linked to trading crypto assets. These blows contributed to the crash, leading to liquidations/sell-offs, the market has since risen back up, but not to the heights it was experiencing earlier this year.
The Facebook-backed digital currency Diem has quit efforts to gain a payments license in Switzerland, switching its focus to the US. The Diem Association, which oversees development of the digital currency, has shifted its operations to the US and partnered with crypto-friendly US bank Silvergate, which will become the exclusive issuer of the Diem USD stablecoin. While this move looks like another setback for the controversial project, which has faced stiff opposition from global regulators since it was announced 2 years ago, is it possible this was the plan all along? Ask for the moon, they say.
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