Mueller Jackson
Jackson Mueller
Associate Director, Center for Financial Markets
Jackson Mueller is an associate director at the Milken Institute's Center for Financial Markets. He focuses on fintech, capital formation policy and financial markets education initiatives. Prior to joining the Institute, Mueller was an assistant vice president at the Securities Industry and Financial Markets Association (SIFMA), where he focused on...
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FinTech in Focus

By: Jackson Mueller
October 25, 2016

Banks & Bank Branches

A few studies to note over the past week or so. First, the UK’s FSB, otherwise known as the National Federation of Self Employed & Small Businesses, released a report covering the impact of bank branch closures on small businesses. According to the report, the number of branches in the UK has been declining steadily from nearly 18,000 in 1989 to a projected 8,000 by the end of this year. Small businesses operating in rural areas, in particular, face greater constraints when bank branches close. The report highlights previous studies to derive a series of recommendations on how best to address branch closures.

And it’s not just small businesses that need branches, but consumers as well. According to a recent study, the in-person bank experience is still important. Nearly 20 percent of the 9,500 participants surveyed in a Market Force Information study stated that they had been to a branch to discuss new products and additional services in the past 90 days. In a separate EY study that measured the attitudes of 2,000 Canadian consumers towards retail banking, while a growing number of consumers go online to shop products and view a digital banking presence as important, 60 percent of consumers still prefer to speak with someone for advice and view a bank's physical presence as "highly important."

And while physical presence may still be important to consumers, if traditional banks fail to keep up with the times and adapt to changing consumer preferences and demands they will be left out in the cold. For instance, in a survey of 2,000 U.S. adults, 80 percent said financial institutions need to focus more on helping the average American and small business owner, and nearly the same percentage of respondents were of the view that the underserved need access to financing options outside traditional banks. 

Global Developments

Thailand: The Bank of Thailand released a regulatory framework for the country’s P2P lending industry. The paper applies to the matchmaking model and includes a number of proposed requirements such as limitations on the amount an individual investor can invest, the ability to handle consumer complaints and an up-to-date IT infrastructure to reduce cyber risk.

Malaysia: Bank Negara Malaysia, the country’s central bank, released details regarding its FinTech Regulatory Sandbox Framework. You may recall that back in August the central bank released a discussion paper on the formation of a sandbox. The central bank received over 60 comments and suggestions since then to help guide the development of the Framework, which now takes immediate effect.

India: A number of peer-to-peer lending platforms have formed a trade association as the Reserve Bank of India is expected to release guidelines covering the industry by the end of this month. The Alternate Finance and P2P Lenders Association will attempt to establish industry-led guidelines and promote awareness.

Singapore: The Monetary Authority of Singapore (MAS) has been busy over the past week with two FinTech cooperation agreements signed with other governments. On Oct. 22, MAS and the Indian state Andhra Pradesh signed a cooperation agreement that “will explore joint innovation projects on technologies such as digital payments and blockchain, and collaborate on the development of education programs/curricula on FinTech.” On Oct. 24, MAS signed a cooperation agreement with South Korea to  “explore potential joint innovation projects on technologies such as big data and mobile payments.”

China: The Chinese Ministry of Industry and Information Technology recently published the country’s first report covering blockchain technology. Meanwhile Shanghai PaiPaidai Financial Information Service Co. ( is looking to launch an IPO in the U.S. in the second half of 2017 which could value the company at $2 billion.

Hong Kong: Both Visa and Global Payments Inc. announced support for Android Pay in Hong Kong. Meanwhile, InvestHK - a provider of services that help overseas companies set up shop in Hong Kong – created a dedicated team to help attract FinTech startups to Hong Kong. Financial Secretary John Tsang provided an overview earlier this month on efforts underway to promote Hong Kong as a FinTech hub.

Kenya: The Capital Markets Authority has signed a cooperation agreement with the Australian Securities and Investments Commission. “The parties have agreed to share information in their respective markets including on emerging market trends and regulatory issues arising from the growth in innovation,” according to the press release. Information shared, according to the agreement, will include emerging market trends and developments and regulatory issues pertaining to innovation in financial services.

US: The Federal Trade Commission (FTC) released an agenda and list of speakers for its upcoming FinTech Forum on P2P payments and crowdfunding. The Securities and Exchange Commission will also meet this week to discuss intrastate crowdfunding. Approximately 35 states have enacted investment crowdfunding regulations at present. Separately, both the American Bankers Association and the Information Technology & Innovation Foundation (ITIF) released reports covering the strategies banks can deploy to adapt to new technologies, and how policymakers should approach FinTech, respectively. ITIF also held a panel discussion covering FinTech policy with representatives from the FinTech community, the FTC, and the Conference of State Bank Supervisors. Lastly, the Consumer Financial Protection Bureau published its first-ever Project Catalyst innovation highlights report, and Manatt, Phelps & Phillips LLP published a report, Collaboration Between Regional and Community Banks and FinTech.

Canada: The Ontario Securities Commission has officially unveiled the OSC LaunchPad — the “cooler” name for sandbox — which “will provide direct support to eligible new and early-stage FinTech businesses that provide innovative services, products and applications of benefit to investors.”

UK: The government named Matthew Gould as its first director general for digital and media. Gould will oversee the Department of Culture, Media and Sport’s digital media and policy issues. Meanwhile, Katharine Braddick was appointed HM Treasury's new director general of financial services.

Europe: The European FinTech Alliance, formed over the summer, held its first meeting last week in Berlin. The group, which includes 10 companies, plans on organizing a policy event in Brussels by the end of the year. Separately, five major European insurance and reinsurance firms have formed a blockchain consortium, the Blockchain Insurance Industry Initiative. According to a press release, the firms "have agreed to cooperate for a pilot project, using anonymized transaction information and anonymized quantitative data, in order to achieve a proof-of-concept for inter-group retrocessions by the use of the Blockchain technology."

The World Bank: For those that may have missed the release, the World Bank published a report compiling insights from its Innovations in Big Data Analytics program on big data's potential across a number of areas including, financial services, financial inclusion, urban congestion, mapping poverty, securing property rights, and others. The report profiles 16 "extraordinary initiatives" selected by the program, and the case studies "examine the application of big data analytics and how it can help achieve project goals."

Mobile Payments Awareness

A new report by Accenture finds cash use among the 4,000 consumers surveyed in North America has fallen seven percent from 2015, while awareness of mobile phone payments increased four percentage points, even as “regular use” of mobile payments remained flat at 19 percent. The report also forecasts the changing payments environment over the next couple of years, as detailed in the figure below. That said, trust is essential as more than half of surveyed consumers indicated that they would be more likely to trust larger technology companies, established retail banks, alternative payment providers (like PayPal), and traditional card providers. Less than one-quarter of respondents viewed tech start-ups as trustworthy.

Comparison of consumer use of payments options in 2016 to 2020

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