One of the leading Scandinavian startups has been acquired by Visa; Fiserv and Deutsche Bank form a joint venture; several leading banks are backing up Swift’s new platform; the UK competition watchdog is issuing a serious warning to the fintech startup Monzo as it breached a crucial rule; an AI-based ML platform has just raised $10 million; experts believe that other countries can follow El Salvador’s example in making bitcoin a legal tender; UK adults have changed how they interact with banking in a post-pandemic world; the date Wise will debut on London Stock Exchange has been announced; the largest banking and finance solutions provider for the cannabis industry, Dama Finance, has introduced a new platform. Find out more details about these and other fintech stories as you finish your week with the latest fintech weekly.
The biggest M&A announcement this month has undoubtedly been yesterday’s news that Tink was acquired by the payment giant Visa. Founded in Stockholm, Sweden back in 2012, Tink offers an integrated API-based approach that allows customers to access aggregated financial data, utilize smart finance features and create personal finance management. Being one of the early leaders among the Open Banking startups, Tink has enjoyed dynamic growth, quickly going through the Series A, B, and C financing and advancing to one of the best Scandinavian startups and serving millions of customers across 18 markets.
With the pandemic not disrupting Tink’s momentum, the company has secured an additional $213 million funding coming from two VC rounds. Now, in a surprise development, Visa announced yesterday it has signed an acquisition agreement valued at $2.15 billion.
“Visa is committed to doing all we can to foster innovation and empower consumers in support of Europe’s open banking goals,” said Al Kelly, CEO, and Chairman of Visa. “By bringing together Visa’s network of networks and Tink’s open banking capabilities we will deliver increased value to European consumers and businesses with tools to make their financial lives more simple, reliable, and secure.”
“For the past ten years we have worked relentlessly to build Tink into a leading open banking platform in Europe, and we are incredibly proud of what the whole team at Tink has created together,” added Daniel Kjellén, CEO and Co-Founder of Tink.“By joining Visa, we will be able to move faster and reach further than ever before. Visa is the perfect partner for the next stage of Tink’s journey, and we are incredibly excited about what this will bring to our employees, customers, and the future of financial services.
Another exciting partnership was announced in Germany as Deutsche Bank announced it formed a joint venture for payment acceptance with Fiserv. The JV will combine Fiserv’s Clover EFTPOS device with Deutsche Bank’s integrated banking services and the goal is to serve small and medium-sized enterprises.
“By combining Fiserv payment solutions with our banking products, we will be able to deliver accounts, payment solutions, and banking services to our SMEs,” says Stefan Hoops, head of corporate Bank at Deutsche Bank. “Today, no other provider of such services in Germany can offer this in-depth combination of acceptance solutions with banking services being a true “one-stop-shop” for our clients. This will translate into a better client experience, lower costs, and reduced complexity for clients.”
Thousands of clients are expected to benefit from the joint venture right from the beginning as Deutsche Bank alone has around 800 000 SME clients.
Six leading banks that function globally are supporting Swift as it is preparing for the launch of its transaction management platform. Bank of China, Bank of New York Mellon, BNP Paribas, Citi, Deutsche Bank, and Standard Chartered have all confirmed they are preparing for the platform that will roll out in November 2022. The building blocks of the platform are based on the ISO 20022 standard that included upfront validation of beneficiary details, central management of exceptions, an extension of Swift’s high-speed GPI rails to lower-value payments, and new rich data services.
Manish Kohli, global head of payments and receivables, treasury and trade solutions, Citi says: “Swift’s platform strategy helps provide the industry with a clear path towards a ubiquitous instant and frictionless cross-border payments experience, which, coupled with Swift’s established global reach and scale, represents a credible path to success.”
Ole Matthiessen, managing director, global head of cash management, Deutsche Bank says: “Swift’s platform will be a powerful catalyst for innovation for the financial services industry. We can already see how the platform will allow our industry to seamlessly integrate new features that will reduce costs and provide for faster, frictionless payments. It perfectly complements and integrates with Deutsche Bank’s own planned products and services to support future industry demand.”
CMA, the UK’s competition watchdog has warned Monzo as the company breached a rule that requires it to send banking transaction histories to more than 143 000 former account holders. All UK banks and building societies must make transaction histories available to customers to facilitate potential switching banks and ensure the customers that opt for switching do not lose their banking history.
If Monzo branches that rule again, the CMA could take further actions such as mandating compliance audits or specialized training to prevent it from happening. However, as of now, CMA cannot impose financial penalties for breaches like the one Monzo has committed, even though it is fighting for power to do so.
Adam Land, CMA senior director of remedies business and financial analysis, says: “Nearly 150,000 people were affected by these banks’ breaches, with the majority being former Monzo customers. This may have made things harder for people trying to borrow money or apply for a mortgage. We will be watching closely to make sure these leading names stick to their word and don’t let their customers down again. The Bank of Ireland, Monzo, Natwest Group, and Virgin Money should be in no doubt that the CMA stands ready to take further action if these failures are repeated.”
Hawk, an AI-based AML platform, has just raised $10 million in a Series A round led by BlackFin Capital Partners. The money from the round will be used to finance global expansion for the software. The platform identifies suspicious activity occurring in financial transactions and can help AML experts significantly with an AI-based system that can detect these potential financial crime attempts easily.
Founded in 2018 by Tobias Schweiger and Wolfgang Berner, Hawk AI already has several big customers such as Ratepay, North American Bancard, and Modularbank.
“Regulators and financial institutions around the world understand that the problem of financial crime and compliance cannot be solved with legacy, rules-based software alone,” says Maxime Mandin, investment director at BlackFin Capital Partners. “In an increasingly dynamic market, Hawk AI stands out as the next generation solution for Transactions Surveillance, with strong references not only in the mid-market but also with large-scale, complex deployments.”
Two weeks ago, it was announced that Congress had voted in favor of the president’s proposal to make Bitcoin legal tender. The president, Nayib Bukele, has made the proposal of introducing bitcoin as a viable tender and an alternative to the US dollar which has previously served as the national currency. Under the law, bitcoin now must be accepted as payment for goods and services and everything including tax contributions can be paid using crypto.
The global reaction to the news has been mixed, some of the crypto enthusiasts claimed it was exactly what needed to be done to legitimize crypto while others warned it is a significant complication to what is a currency. Many larger economies have been cautious to adopt DeFi. Leon Gauhman, CSO at digital product consultancy Elsewhen has argued that this was a step in the wrong direction.
“While arguably something of a PR stunt, El Salvador making Bitcoin a legal tender is potentially an interesting template for global adoption of cryptocurrencies and DeFi. Smaller economies such as El Salvador’s with little to lose and a lot to gain from the enormous latent value of the crypto economy, are arguably well placed to lead the legitimization of DeFi and crypto. While the top economies are debating the risks and benefits associated with crypto and DeFi adoption, developing countries in the Americas and Africa are likely to move forward to integrate crypto and DeFi into their economies.
This is supported by Carlos Betancourt from BKCoin Capital who said that El Salvador’s decision will have incredible implications as many other Latam countries will likely follow and try to push similar legislation.
“In Paraguay, Congressman Carlos Rejala will be drafting a bill and submitting it for approval by next month to attract crypto businesses to Paraguay. The bill will position Paraguay as a crypto hub in LatAm focusing primarily on their advantageous cost of electricity. Paraguay can offer crypto miners average costs of $0.05/kilowatt-hour – some of the lowest rates in the region while mainly using hydroelectric sources,” he says. “Argentina and Brazil are two countries to track in the coming weeks. Both countries have politicians publicly supporting cryptocurrencies. In Argentina, electricity/power is subsidized by the government, making it very attractive for regular individuals to mine bitcoin at very affordable pricing – something that Venezuelan’s have been doing for years. The caveat will be the government shutting down small miners and eventually taxing them heavily as they did to commodity traders during Cristina Fernandez de Kirchner’s first presidency. As for Brazil, expect a crypto push by the Federal Deputy of Brazil, Gilson Marques, in the area of tax and payments.”
Kevin Kang, BKCoin Capital’s other founding principal said “For the first time in history, there is an alternative to piggybacking off of a large nation-state. If we see other LatAm countries following El Salvador’s move, it could be one of the most pivotal points in history. Emerging countries have nothing to lose as they’ve already been crushed by inflation and destroyed their own middle classes.”
The newest research from Nuance shows how UK adults will interact with their banks post-pandemic, emphasizing that 55% will use digital and virtual channels more. The study also found that more than half of the UK respondents would rather use apps or a website than visiting a physical branch of a bank.
“With convenience, speed, and ultimately getting the job done prevailing as clear priorities for buyers, organizations such as retailers, banks, and utilities companies must develop strategies for delivering consistently efficient and effective digital experiences,” said Seb Reeve, Intelligent Engagement Market Development at Nuance. “From slick and secure authentication processes to intuitive AI-powered intelligent assistants, technology must be able to manage the personalized needs of customers while seamlessly bridging to human intervention when required at the right moment.”
Apart from the pandemic causing people to become more comfortable with tech tools such as mobile apps, virtual assistants, and chatbots, UK adults are now trusting the tech more. It was found that 45% of the surveyed have increased their trust in tech that helps them access their personal information. A third of the study respondents also increased their trust in a form of biometrics, whether it is voice, facial, behavioral, or a fingerprint, as the authentication method.
“Customers expect immediate and effective conversations with the brands they engage with – whether those conversations are happening on the phone or via a chatbot on a company’s website. Empowering these engagements requires an integrated approach where an organization not only can understand the customer’s intent but also authenticate that customer and start personalizing their experience across every single channel – from in-person to phone, to web, to mobile,” added Reeve. “With the pandemic creating an increasing comfort, trust, and preference among consumers to use technology when engaging with brands, it will be critical that organizations prioritize delivering superior digital experiences if they want to retain customer loyalty and continue to scale.”
Last week, we were reporting on Wise planning to list in London during the summer. Now, we have the expected date of the market debut of one of the leading fintech startups. Bookrunners said the trading is expected to begin on July 7th. While several tech companies have had a rough start to their London market debuts, as seen by the example of Deliveroo and Alphawave, Wise is hoping it will be different for them.
Kristo Käärmann, CEO and co-founder of Wise, said: “This process will broaden the ownership of Wise, in support of our mission to move money around the world faster, cheaper, and more conveniently.
“Since announcing our expected intention to float last week, we’ve had over 60,000 expressions of interest in our customer shareholder program.”
Dama Financial, the biggest provider of access to banking and payment solutions for the cannabis industry in the US has just expanded its offering as it launched a comprehensive payroll solution that is integrated with its existing platform. The new payroll solutions offer employee timekeeping, labor management, workload planning, payroll, and more.
“People are the driving force of every company, so by adding Dama Payroll to our suite of offerings we’re not only making it easier for our customers to manage their employees, we’re making it easier for them to grow their businesses,” said Anh Hatzopoulos, Dama co-founder and chief executive officer. “Dama continues to become a one-stop-shop where cannabis companies can take care of all their banking and business needs.”
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