This week, there have been several big fintech and regtech stories that we will be focusing on. Some of them include the Amazon UK ban on Visa cards, UK banks required to reimburse customers for APP fraud, US banks required to report on any cybersecurity breach within 36 hours, a Cryptio ledger making the data importing and indexing much easier, AML guide for fintechs, and a new study showing fintechs are overtaking traditional banks. Apart from fintech, we will also discuss the approval of Verizon’s acquisition of TracFone, Nokia unveiling a new SaaS strategy, and Enanta dumping its work on the HBV drug as Phase 1 trials showed serious safety concerns.
Amazon UK just announced it will no longer accept Visa credit cards. The reason given by Amazon is the “high cost of payments”. The official Visa ban will be enforced starting January 19th. Amazon’s spokesperson said, “The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers. These costs should be going down over time with technological advancements, but instead, they continue to stay high or even rise.”
With the UK going through with Brexit, Visa increased the fees for online purchases to 1,5%. However, the spokesperson for Visa said the company is disappointed in Amazon’s decision that would “restrict consumer choice in the future”.
“When consumer choice is limited, nobody wins,” a spokesperson says. “We have a long-standing relationship with Amazon, and we continue to work toward a resolution, so our cardholders can use their preferred Visa credit cards at Amazon UK without Amazon-imposed restrictions come January 2022.”
The UK government decided that all UK-based banks will be required to publish data showing their response and reimbursement in relation to APP fraud. The government’s move comes as the APP fraud has been record-high lately. The UK payment watchdog stated it expects the financial institutions to immediately take actions that will help stop the APP scams and protect the customers who have fallen victims to the crimes. Currently, more than three-quarters of victims have not managed to receive reimbursements from banks. Thus, the government now proposed a legislative change that would make such a reimbursement obligatory.
John Glen, economic secretary to the Treasury says of the government’s plans: “The Government’s position is that liability and reimbursement requirements on firms need to be clear so that customers are suitably protected. It is welcome that the Payment Systems Regulator is consulting on measures to that end, and to help prevent these scams from happening in the first place. The Government will also legislate to address any barriers to regulatory action at the earliest opportunity.”
Chris Hemsley, managing director of the PSR adds,“The range of steps we plan to take will show people which banks and building societies are likely to respond to frauds in the right way and will put the onus on financial institutions to get better at detecting and preventing scams.We are also setting out the way to make reimbursement mandatory for those blameless victims so that, when the law is changed, we are ready to act as quickly as possible to get protections to the people who need them.”
A new rule has been approved by the US regulators last week, stating that banks in the US must report any “significant” computer security incident within 36 hours of finding out about it. All banks are now required to inform a primary federal regulator within the given framework if the incident has materially affected the operations or stability, or is likely to do so. In line with the new regulations, banks are now legally obliged to notify customers as soon as possible after the customer has been affected or if there is a reasonable belief the customer will be affected for over four hours. All banks must comply with the rule by 1st of May in 2022.
One of the large challenges in the crypto industry is importing, indexing, and categorizing the various crypto transactions into an accounting system. Now, a crypto accounting software provider Cryptio has come up with a solution that can make this process much easier. That will be especially helpful as the regulatory pressure on the crypto sector is increasing. Cryptio’s Ionic is a general ledger that allows businesses to merge several on-chain activities. The solution solves a range of problems such as importing transaction data from institutional custody, crypto-to-flat valuation, categorizing and resolving transactions, charting of accounts mapping, and several other indexing and processing issues.
Antoine Scalia, CEO of Cryptio, commented on the launch: “Crypto-native businesses, hedge funds, family offices, and company treasuries now face sophisticated accounting, audit, and compliance challenges as a result of increasing regulatory demands for accountability and auditable records on their crypto activity. Proposed amendments as part of the US Infrastructure bill to US tax code section 6050I are evidence of this. With this pressure only going to intensify, Ionic provides organizations with software enabling them to comply with their tax and reporting requirements.”
Wiehann Olivier, Partner and Digital Asset Lead at Mazars, added: “As the appointed auditors of various cryptocurrency and digital asset service providers, Cryptio has become an essential tool in our tech stack. We have seen a massive uptick in operating companies allocating cash to digital assets and cryptocurrencies, as well as new crypto-native businesses. Cryptio helps us service this growing client base. We are able to track assets and transactions from DeFi protocols, wallets, exchanges, and institutional custodians to construct a complete picture of our client’s digital asset activity.”
An international data tech company ComplyAdvantage has just released a new Anti-Money Laundering (AML) guide for Digital Banks. The guide provides a clear overview of the regulatory challenges that digital banks including neo and challenger banks are facing in today’s fintech world. It also explains how a customer-centric and effective AML program should be structured and implemented. While digital banks have been a true phenomenon over the last few years, they are extremely prone to external threats such as money laundering. As a result, regulators around the world have been working on scrutinizing the industry.
Being one of the top reg tech innovators on the market, ComplyAdvantage works with digital banks on how they can grow without compromising and taking risks in relation to the AML and CFT regulations. “As the provider of an innovative money app, we recognized the importance of implementing rigorous AML and risk management processes right from the start,” said Chisato Kamimura, Head of Compliance at sync. “By working with ComplyAdvantage, we not only have a better understanding of the regulatory landscape but we also have the right tools and program strategies to ensure the highest level of customer vetting and transactional integrity.“
The newly released AML Guide includes topics such as global and regional policy trends, risk assessment considerations, and success stories. “Our research is intended to help both customers and the financial services industry by providing insights with prescriptive measures so they can maintain the greatest level of risk management integrity, “ says Charles Delingpole of ComplyAdvantage. “With areas from sanctions to cryptocurrencies evolving at such a rapid pace, what you don’t know can truly hurt your business.”
ClearScore has published their newest data that showed that fintechs have tripled their share of the credit card market, pointing out that 9.3 million adults in the UK alone would consider switching to a fintech to receive better offers, interest rates and better access to credit. The majority of those people are either underserved by the current offerings of the financial institutions or do not use credit products.
Andy Sleigh, ClearScore COO, commented: “The lending market has been changed forever by the pandemic. Fintechs and challengers have embraced open finance more readily than their larger competitors, as it allows them to expand their lending footprint, manage risk better and reduce their overheads. The fact is that open finance allows lenders to offer more competitive, personalized rates to consumers thanks to a far deeper understanding of their finances and risk profile. Traditionally, customers would first turn to their existing financial partner – i.e. their bank – if they were in the market for a credit product. But with the influx of challengers and fintechs, who, thanks to open finance and more agile technology, are able to offer not only highly competitive rates but also pre-approved products with a guaranteed rate and credit line. This all means that the traditional route to market is becoming less and less popular.”
“The size of the open finance market is huge and presents lenders with the opportunity to create innovative products that benefit the customer. Those customers are engaged, aware of the benefits, and ready to shop around. The lending market is still 30% down compared to pre-Covid, but we see open finance as the key to unlocking it and offering consumers better options than before. When it does, we expect the floodgates to open and the race to support those customers is one we’re excited to see,” he added.
Last week, California’s Public Utilities Commission gave Verizon the green light in relation to acquiring TracFone. However, the approval did not come without its strings attached. The first news of the acquisition came already in September of 2020 when Verizon publicly stated it has reached an agreement with the Mexico-based operator America Movil. In a deal that is estimated at nearly $7 billion, Verizon would acquire the pre-paid subsidiary of America Movil, TracFone.
The acquisition was not smooth sailing for Verizon. Back on February, 17 Attorneys General claimed FCC must inspect the deal closed as it could potentially limit TracFone subscribers’ access to LifeLine, an FCC program that subsidizes telecom services to low-income consumers. While Verizon ensured it would “continue to offer Lifeline service through TracFone and further develop its core brands, products, and distribution channels”, no details were disclosed.
Now, the California Public Utilities Commission has officially disclosed the conditions that must be fulfilled. Some of them include TracFone or Verizon participating in California LifeLine for 20 years after the close of the transaction, enrolling at least 200, 000 California LifeLine subscribers by the end of 2025, and TracFone or Verizon ensuring LifeLine customers receive a phone at no cost after the first year of the mergers. The newly merged entity will also be forced to offer plans that are at a comparable voice, text, and data-level at the same or a lower price as TracFone currently offers for a total of five years after the transaction is finalized.
“Our Decision imposes several important consumer protection conditions, beyond what the companies proposed in their application, to ensure that low-income customers in particular benefit from the merger,” said Clifford Rechtschaffen, a CPUC Commissioner.
“I appreciate the steps this Decision has taken to ensure that LifeLine continues to be provided to TracFone’s existing customers and that Californians will have even greater access to the LifeLine program through this acquisition,” added Genevieve Shiroma, another Commissioner.
Nokia has unveiled its new Saas software strategy. While Saas has been around for years, it has not become a huge part of the telecom sector. However, with the OpenRAN gaining popularity and a range of technological advancements, the telecom industry is becoming gradually more flexible. Now, Nokia has revealed it will be moving into the Saas sector as a part of its Everything-as-a-Service strategy. The Nokia Data Marketplace is already available on a SaaS basis and there are plans for the next two products, NetGuard Cybersecurity Dome and Nokia Anomaly Detection.
“The convergence of 5G, cloud-native software and SaaS creates a great and fast-growing opportunity for Nokia,” said Raghav Sahgal, President of Cloud and Network Services at Nokia. “With the groundwork, we’ve already been laying, our SaaS delivery framework is in a very strong competitive position. It enables a combination of rapid time to value with on-demand access for Nokia SaaS applications and low cost of ownership, based on a pay-as-you-go / pay-as-you-grow commercial model. This is a multi-year journey and we are going at it aggressively.”
Enanta Pharmaceuticals announced it will dump its research on oral hepatitis B virus as a serious of serious safety issues were found in the phase 1 study. Enanta’s EDP-721 was an RNA treatment in phase 1 clinical trials that enrolled healthy volunteers. However, after the trial participants received the drug, some potentially serious “safety signals” were observed. The company did not disclose details about the red flags.
“Patient safety is our top priority, and we have therefore decided to discontinue further development of this compound,” said Jay R. Luly, Ph.D., president and CEO of the biotech. “We believe core inhibitors will be an important component of a successful combination regimen, and we will look to advance our HBV program with additional mechanisms from internal discovery efforts, external opportunities, or both,” he added.