After two weeks of a relatively quiet period in the tech world, the first week of 2022 has already shown itself to be quite busy. Starling’s chief Anne Boden has been accused of thwarting innovation by many fintech founders. UK Treasury is about to close its consultation on BNPL as regulatory measures are prepared. P27 becomes the new National Clearing House in Denmark. Goldman Sachs predicts Bitcoin can go as high as $100 000. Record high amount was paid in GDPR fines in 2021. Studies show stricter crypto regulation would allow more investors to enter the sector. Only ⅕ of UK’s SMEs are open to digital transformation. Samsung forecasts a huge profit for Q4 of 2021. Sanofi expands its investment into the AI-powered drug R&D. China announces companies wanting to list overseas will have to go through a security review.
Starling’s Boden Accused Of Stifling Innovation By Fintech Founders
Last week, it became known that the chief of Starling Bank, Anne Boden, was accused of thwarting innovation in financial services by no less than 53 fintech founders. The accusations come after Boden made some comments to the Treasury Select Committee, claiming Open Banking did not encourage bank account switching, adding “Open Banking has not been a success”, and stating that other measures would work in a better way.
Boden’s comments have been met with strong criticism in the fintech community and a group of fintech founders united in order to co-sign a letter to the MPs, calling out Boden. In the letter, founders claim Boden’s statements were a “dramatic oversimplification of the proposition provided by Open Banking”.
“This is not our view, and we believe that this view is uncompetitive and typical of banks trying to thwart the future of innovation in financial services,” The group writes regarding Boden claiming Open Banking has proved to be a failure. “Although the technology has only been live since November 2018, Open Banking has already led to the formation of a whole host of new start-ups, raising hundreds of millions of dollars in new venture capital investment. There are now over 2.5 million Open Banking payments a month, compared to just 320,000 in the whole of 2018. Whilst the implementation has been far from perfect, and there are challenges – but we are still in the early stages of the journey.”
Boden has since then replied to the open letter using Twitter and highlighting that the vast majority of those who co-signed the letters were men, calling for broader diversity in the fintech innovation circle.
UK Treasury’s Consultation On BNPL Closes
UK Treasury is about to close its consultation regarding the BNPL regulation. After a recent study that we reported on a few weeks ago, the consumer group Which? Has urged the treasury to start with stronger safeguards.
Some of the current regulatory proposals are ensuring the customers understand the risks associated with the BNPL services, laying out the terms of the teals, and applying section 75 of the Consumer Credit Act to the BNPL sector. If that would occur, BNPL providers would bear the liability for the contract with the retailer. Currently, research shows that customers have low engagement with the terms and conditions set out by the BNPLs and many of them do not fully comprehend the possible consequences of delayed payments.
“Buy now, pay later (BNPL) schemes can offer speed and convenience at the checkout, but our research shows that many users do not realize they are taking on debt or consider the prospect of missing payments, Rocio Concha, Which? director of policy and advocacy, comments. “That is why there must be stronger safeguards to protect consumers and warn about the risks of using the schemes. Payment terms, late fees, and the potential consequences of missed payments should be communicated at the point of transaction.
“There must also be no further delay to plans for BNPL regulation, which should include much greater marketing transparency, information about the risks of missed payments, and credit checks before consumers are cleared to use BNPL providers,” he adds.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown highlights further, “Regulation of buy now, pay later needs to start now – not later,” she says. “The Treasury’s consultation closes today, and the FCA has said regulations will kick in this year, but it can’t afford to drag its feet, because while it’s going through this process, the sector is mushrooming before our eyes.”
P27 Becomes The New National Clearing House In Denmark
Last week, it was reported that the cross-border payment platform P27, developed by several Nordic banks, will replace Finance Denmark as the national clearinghouse for Denmark. P27 is banked by a number of big names such as Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank. Now, it will be responsible for all of Denmark’s retail payment systems, striving to achieve a more efficient and easier system that Danish citizens and businesses can benefit from.
“P27 will have a very important role since it will be the sector’s new clearinghouse, not only in Denmark but also in Sweden and Finland. Hopefully, Norway will also join our Nordic clearing-family,” Michael Busk-Jepsen, director of digitization at Finance Denmark, says. “This can potentially result in a Nordic clearing setup with full interoperability across the region, replacing the current national clearing operations.”
“I believe the Nordic region will soon be one of the first regions in the world where sending real-time payments in different currencies between different countries will be just as easy as sending a text message,” he added.
Goldman Sachs Predicts Bitcoin Can Go Up To $100 000
Goldman Sachs released a new report on the asset classes and how well they performed in terms of the return on investment. While the S&P 500 is often compared to bitcoin ended 2021 with roughly 29% return on investment, bitcoin was at 60%, beating all other assets.
Goldman Sachs’ co-head of foreign exchange strategy Zach Pandl, says “Hypothetically, if bitcoin’s share of the ‘store of value’ market were to rise to 50% over the next five years (with no growth in overall demand for stores of value) its price would increase to just over $100,000, for a compound annualised return of 17-18% (accounting for growth in bitcoin supply over time).”
2021 GDPR Fines Higher Than €1 Billion
Atlas VPN published data that show that the total of 412 GDPR fines in 2021 topped €1 billion, with the big techs paying a significant chunk of the amount. This is a huge increase from last year, where all GDPR penalties amounted to a little over €171 million. What is the cause of this 521% increase? It must be mentioned that Amazon Europe alone suffered a
€746 million fine, with Whataspp Ireland snatching up the second biggest fine at €225
Cybersecurity writer at Atlas VPN Vilius Kardelis comments, “GDPR continues to successfully hold businesses accountable when they misuse people’s data or are ambiguous about their privacy policies. Companies became more responsible when handling their client information to avoid hefty fines from regulators, ultimately benefiting every EU citizen.”
When it comes to the comparison of the fines across the European countries, Spain came on top with 351 fines totaling €36.7 million. Italy came in second with its 101 fines worth €90 million. Romania is currently the third European country as seen by the GDPR fines, having had to pay €721K for 68 GDPR breaches.
Data Shows Stricter Regulator Could Allow More People To Enter Crypto Market
Ziglu released research that shows that tighter regulation would allow more individuals to enter the crypto market. According to the data, with a more stringent regulation comes larger capital investments and more buyers to enter the crypto market. Currently, it seems that many potential buyers are hesitant due to the number of crypto scams and hackings, as well as the volatility of cryptocurrencies. The research shows that in case of stricter regulations, 23% more people would be likely to either increase their current crypto investment or start investing in crypto. Mark Hipperson, the Founder and CEO of Ziglu explains: “The cryptocurrency market has attracted support from a wide range of retail investors as well as major corporates”.
“There is still understandable worry about the regulation of the market and that is reflected in the research and concern we share at Ziglu. Although the FCA does not regulate crypto itself, companies providing crypto services can be regulated and authorized by the FCA. The crypto market needs to be better at protecting investors,” he adds.
Maely ⅕ Of UK SMEs Are Open To Digital Transformation
NatWest’s ‘Springboard to Recovery’ report shows that barely 20% of SMEs are tech savvy, even though numerous studies have shown that being open to digital transformation is a huge factor behind substantive revenue increase.
Lynne Darcey Quigley, CEO, and founder of Know-it commented: “Being open to modern technologies has always been a cornerstone to entrepreneurial success, and we have seen countless businesses fail to reach their growth potential if they are resistant to this change. Likewise, those who embrace new digital tools such as accountancy apps, CRM systems and marketing automation with open arms, flourish. New technological solutions can catalyse a dramatic improvement of productivity, staff and customer satisfaction, and any other factor that can impact a business’s growth – and the data shows this clearly.”
Gordon Merrylees, previously Managing Director of Entrepreneurship at NatWest, Ulster bank & Royal Bank of Scotland, now CCO at Know-it, added: “The pandemic has been a make-or-break moment for small businesses – and those who more readily adopt innovative technologies come out on top. Due to how vital small businesses are to the UK economy, improving SMEs’ access to this new tech and giving them the support, they need to adopt them will be crucial to future-proofing the UK economy and ensuring it recovers from the pandemic.
Samsung Expects A Huge Profit Jump For Q4 2021
Samsung has just issued its earnings guidance for Q4 of 2021. The most interesting part is the forecasted 52% profit jump. While this sounds like a terrific result, it seems that market expectations were even higher. What lies behind such a big year-on-year positive change?
“Samsung’s top-line boost reflects ongoing strength for chipmakers that have enjoyed elevated demand during a long-lasting supply crunch. The company is considered a bellwether for the tech world as it is both a major electronics maker and components supplier to big tech firms including Apple and Sony,” The WSJ stated. “Samsung and many other chipmakers have seen their revenues jump, as a pandemic-fuelled surge in demand for all sorts of devices requiring semiconductors has created widespread shortages and a run-up in prices.”
Similarly, GSM Arena believes that it is the chip demand that stands behind Samsung’s revenue jump. Cnet also agreed with that theory, saying: “Samsung didn’t say what affected its results, but the company likely received a boost in demand for its chips as more people, forced to work from home during the coronavirus pandemic, have been buying up an electronic gear and other goods.”
Sanofi Invests Heavily Into AI-Driven R&D
Sanofi has been known for its interest in AI for a long time. Now, however, the company is getting deeper and deeper into AI-powered R&D as it is expanding its existing partnership with Exscientia. Sanofi has been collaborating with this AI drug discovery company for five years and it will now put up $100 million with an additional $5.2 billion on the backend to start working on up to 15 molecules crucial in oncology and immunology.
“Our expanded collaboration with Sanofi will utilize the breadth of our platform to test AI-designed drug candidates against patient tissue models, potentially providing far better accuracy than conventional approaches such as mouse models. When you consider the change this represents—testing candidates against actual human tissue years before a clinical trial—it’s transformative,” Exscientia CEO Andrew Hopkins said in a statement.
Chinese Companies Will Need Cybersecurity Review Before Listing
On Tuesday, it was announced that China will boost its oversights of companies planning to list on the foreign stock market. The Cyberspace Administration of China’s (CAC) new rules will come into effect in February and will require companies that hold data on more than 1 million users to go through a security review before they can list their shares outside of China.
“With stock market listings there is a risk that key information infrastructure, core data, important data or a large amount of personal information could be impacted, controlled or maliciously used by foreign governments,” said the CAC in a statement. It was not specified whether the new rules will also include companies that plan to seek listings in Hong Kong.
“Hong Kong is being treated as part of China, offshore though not foreign market, and this paves the way for more deals to return to Hong Kong,” an investment banker at a Western institution told Reuters.
In an additional statement, CAC also announced it will implement another rule regarding algorithm recommendation technology, as it tries to have a better insight into the news providers. This particular rule will go into effect at the beginning of March.
Alex Roberts, from Linklaters in Shanghai, said, “The most significant change in these cybersecurity review measures seems to be the narrowing of the review’s application to only critical information providers, data processors that may impact national security, or platform operators holding over 1 million individuals’ personal data,”
“This ambiguity will be a real concern for successful multi-channel businesses in China’s digital economy given the current uncertainty of the review process,” he added.
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