FinTech in Focus
Reports, and More Reports
Tech City UK and Nesta published Tech Nation 2016, an in-depth review of the UK’s digital tech economy, which consists of 58,000 businesses employing nearly 1.6 million people. FinTech currently represents 5 percent of “digital tech businesses,” with expertise found in Edinburgh, Glasgow, Exeter & Newton Abbot, Leicester, Manchester and, not surprisingly, London. And speaking of FinTech hubs, Swiss FinTech and Holland FinTech released reports about their FinTech industries and regulatory barriers to further development.
Meanwhile,Deutsche Bank released FinTech 2.0, which throws an olive branch at FinTech firms by highlighting the importance of strategic alliances between banks and companies that “can together create long-term success and revolutionize the payments market and wider financial sector.” And speaking of payments, PEW Research published a white paper touching on some of the legal ambiguities and regulatory gaps regarding consumer use of mobile payments. If you want a quicker read, the folks at PEW have provided a summary of the paper.
Governments Promote FinTech and Financial Innovation
There has been a lot of movement recently by governments looking to promote FinTech and/or innovation. Australia launched an inquiry in early February calling for input on how to promote innovative industries, including finance; the UK government formed a new advisory board to the Government Digital Service which will “support, advise and challenge the government to deliver better services for users and evaluate how emerging digital and technology trends can be applied to public services.” In the U.S., California’s Department of Technology opened a new office to “foster the development of technology solutions based solely on open source technologies,” according to a report; while in the Netherlands, economist and Labour Party politician Willem Vermeend was appointed special envoy of the Dutch FinTech sector.
Bitcoin & Blockchain Developments
Not a week goes by without mention of the European Union’s intention to apply more oversight to digital currencies, with draft regulation expected by June 2016. And even though Europol found no evidence of ISIS using bitcoin or other digital currencies to finance terrorist activities, a recent Action Plan unveiled by the European Commission notes that “highly versatile criminals are quick to switch to new channels if existing ones become too risky.” The document recommends oversight of virtual currency exchanges at the EU level and, potentially, wallet providers.
And regulators aren’t far removed from blockchain developments either, according to Blythe Masters, CEO of Digital Asset Holdings. The Financial Stability Board (FSB), for instance, noted in recent remarks that it is seeking to better understand distributed ledger technology and that the global regulatory community “have not taken a final stance” on its use. In other developments, the International Securities Association for Institutional Trade Communication convened the inaugural meeting of its Blockchain Working Group; the Linux Foundation’s Hyperledger Project announced its founding members and governance proposals; and Deutsche Börse, Nasdaq and five UK fund houses have announced blockchain initiatives.
More Headlines Worth Mentioning …
The Spanish bank BBVA shut down its venture capital arm BBVA Ventures after investing $250 million in San Francisco-based Propel Venture Partners. With the investment, BBVA becomes a limited partner in Propel. Separately, Efma, Microsoft, and Avanade will go live in mid-April with a new global FinTech portal to connect financial services firms with innovative companies. And speaking of connections, nine telecommunications operators launched the Partnering Operator Alliance, which has already partnered with 30 innovative businesses, providing partnering firms with the ability to scale their services in the digital ecosystem across 80 countries to provide roughly 1 billion potential customers with innovative products and services. Meanwhile, European peer-to-peer (P2P) platform Bondora becomes “the first online lender in Europe to open its API to the public.” At about the same time as the Bondora announcement, former UK Financial Conduct Authority Chairman Adair Turner provided a pretty depressing outlook on the P2P lending industry.
A Peek Inside Financial Wellness in the U.S.
Prosper, a U.S.-based marketplace lender, released a study examining the “current state and sentiment around personal finance” in the U.S. The study of 1,000 Americans, aged 18 and up, found less than 40 percent of Americans have a financial plan in place, while an additional 38 percent said they plan to create one in the future. The survey also found that only 40 percent of Americans expressed confidence in their ability to weather a financial shock. Meanwhile, nearly 70 percent of respondents said they used financial applications to manage their finances, and 18 percent of people who don’t use online applications or websites expressed interest in using them in the future.