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Sunday, February 05, 2023
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The Fintech Fix 01/12/22

Welcome to The Fintech Fix, where we cover the biggest fintech stories of the working week. Whether it’s the next groundbreaking trend in crypto, or a new partnership that’s about to change the global economic landscape, this is the place to keep up with the breaking news of the future. 

Partners in Growth 

The notion that partnerships equal success in fintech is well ingrained within the industry psyche. The ramifications from the cost of living crisis and geopolitical events has led to a dry spell in funding and a need for more sustainable and cost-effective business models. Fortunately, the industry has adapted well to this transition and an enclave of fintechs hyperfocused on specific solutions have joined forces and developed products that not only tend to specific client needs but do so with a more attentive eye. 

This week’s Fix dives into the varied partnerships of the past week and how they’re helping the fintech community to flourish. 

Wise has another successful integration under their belt with the recent partnership with a digital bank, ZA Bank, offering Hong Kongers international transfers with no added FX mark-ups or hidden fees, becoming the first bank in the region to do so. The alliance also marks Wise’s collaboration with a neo-bank in East Asia. 

A Wise-commissioned Coleman Parkes study found that 86% of Hong Kong respondents could not identify the correct cost of sending money abroad, due to the steep add-ons of hidden fees. With this new integration, customers of ZA bank will be able to transfer their HKD into 14 currencies, including AUD, USD, GBP, CAD, and SGD. Other features include the instant transfer of funds, mid-market rate with zero mark-ups, and notifications on where client funds are in the payments journey. 

Continuing to prove its status as a central hub for technology, Hong Kong, and its neighbouring Macau, will be the beneficiaries of Checkout.com’s collaboration with Xiaomi to provide a simplified end-to-end payment solution for members of those regions. Being one of the first mobile manufacturers to launch payment functions, Xiaomi decided to partner with fintech to further enhance their online payment processes using their open API infrastructure and global reach. 

The launch of consumption coupons by the Hong Kong government has boosted sales in their already burgeoning retail industry, and further popularised the use of online payments. The second phase of coupons will be available on 6 different payment tools, and Checkout.com can support several of them, the most popular including WeChat Pay HK and Alipay HK. Xiaomi expects not only to consolidate the number of payment options available to customers in the East Asia region but also globally with the help of Checkout.com. 

M&As also made a splash this week with payment platform, BVNK, acquiring UK e-money fintech System Pay Services Limited (SPS Ltd) – who provide a plethora of multi-currency accounts and e-wallets – making it easier for merchants and business owners to send and receive money. 

The FCA-approved acquisition comes off the back of BVNK’s registration in Spain as a Virtual Asset Services Provider. 

“This is just the start for us, said Jesse Hemson-Struthers, the CEO of BVNK. “We’re building the modern payment rails that global businesses deserve — instant, borderless, and resilient. We believe that regulated, fiat-backed stablecoins combined with the best parts of traditional payments will provide the infrastructure needed to deliver this vision. We will continue to obtain new licences and build out our capabilities to provide our customers with an unparalleled offering.”

UK wealth manager, Luna Investment Management (Luna), who has been partners with investment platform, Third Alliance, since 2020, revealed that they have grown their assets to over a whopping £500 million with the company. A trusted partner to more than 70 wealth management companies and IFAs, Third Financial has been instrumental in Luna’s historical growth and represents one of Third Financial’s high-profile client renewals. 

On the success of their partnership, Co-Founder of Luna, James Carter added: “During our sustained growth we have used Third’s technology, custody, and execution services, including for our investments in structured products. The relationship has been nothing but positive and we had no hesitation in renewing our contract.”

Commitments to Sustainability and Security 

We’re not done with Wise – the company has kicked it up a notch in its ESG efforts and launched its first eco card. Using the non-plastic material of Polylactic acid (PLA), made through sourcing resources like non-edible corn, the card will not release toxins when incinerated, compared to their plastic, PVC-based, counterparts. The minimal design also omits the inclusion of a signature plan, PAN number, CVV, expiry date, and VISA hologram printed on the card. 

With the reliance on mobile and app-based banking, customers can now access information on their card/account details through digital needs, however, there is a dent in the card to help visually impaired customers when using the card the right way. 

With great power comes great responsibility, and that rings true, especially in the retail game. As eCommerce sales skyrocket, so does the volume of fraud and ID scams. In an exclusive article from the VP of Product, Risk and Identity at Checkout.com, Ido Lustig discusses the main issues merchants now face and how fraudsters have now learned how to side-step Strong Customer Authentication (SCA). 

From risk-based segmentation to machine learning solutions, Lustig suggests that businesses invest more in new, decisive, technologies to separate the high-risk from the low-risk customers so that they will have better control over whom they are doing business with and when potential fraud is likely to happen. Looking at the pace of fraud in the industry, the solution lies in fighting fire with fire. 

A Silver-lining in Economic Crisis 

Funding scarcity is sorely felt, but for those who are getting the financial backing to thrive, it is a testament to which fintechs were built to last. App-based Atom Bank has added £30 million in equity to its balance sheet in agreement with BBVA, Toscafund and Infinity Partners. Adding on to the £75 million the bank raised in February, Atom has raised over £100 million in the last 12 months. The funding will be used for business growth and to further support the bank lending customers, they include homeowners, first-time buyers, and SMEs. 

The continued growth of Atom on their lending and retail front shows that products centred around savings have become a priority for UK customers. With the confidence of investors and customers, the bank has set out a precedent for customer-centricity in times of economic disparity. 

Our last story on growth celebrated ClearBank, which has finally reached profitability, generating £45.4 million in revenue, and reaching monthly profitability since October. Tripling its revenue compared to last year, the company can attribute its success to growing transaction volumes, new customers, and the bank’s new FX and multicurrency proposition. 

Along with their single API cloud native embedded banking platform, ClearBank also launched its international proposition that includes multi-currency accounts and international payments in 11 currencies and 65 FX currency pairs -their Faster Payments Originating Overseas product has also made it a lot easier to action GBP Faster Payments from abroad. 

“In the last few years, we have seen the market shift from agency banking services to BaaS and now Embedded Banking driven by the demand from institutions and increasingly brands to integrate sophisticated and regulated financial services into their customer offerings,” said Charles McManus, the CEO at ClearBank. “As the macro-economic environment continues to be turbulent, there is a renewed focus on the security, resilience and utility offered by fully licensed banking products that unlock the potential of businesses and their customers while ensuring peace of mind.”

That concludes your weekly Fintech Fix! Stay tuned for another round of big fintech buzz, right here at FF News

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