TFU | Aug. 13-19

Leading Off

The WSJ reported that fintech firms are increasingly moving into the subprime credit-card lending market; USD-pegged cryptocurrency Tether is facing scrutiny over its lack of audits and concern over its reported cash reserves; Coinbase acquired blockchain identity startup Distributed Systems; the WEF released a report exploring the effect of AI on financial services; and U.K. challenger bank Monzo is close to a $150M funding round, which would value it at nearly $1.5 billion.

In the News

 

Fintechs move into subprime lending.  According to a Wall Street Journal report, fintech firms are increasingly issuing credit cards to customers with subprime credit ratings, a market largely occupied by banks in the lead up to the global financial crisis. The new entrants say their use of machine learning, AI and data not included in applicants’ credit reports helps them effectively manage risk.

Concerns grow over Tether’s opacity.  The U.S. Dollar-pegged cryptocurrency has grown to a daily trading volume of $3 billion in the year since launching, is coming under greater scrutiny by market analysts for its lack of transparency. Tether claims to have dollar reserves backing each of its coins, but the firm has never produced proof that the reserves exist, nor where it is based and regulated.

Coinbase makes acquisition in digital identity play.  The U.S. cryptocurrency exchange bought Distributed Systems, a blockchain identity startup, for an undisclosed fee. With the acquisition, Coinbase hopes to create a login tool and identity platform based on decentralized identity, allowing individuals to confirm their identity without providing underlying identifying information for proof.

 

WEF publishes report on AI and financial services.  A new World Economic Forum (WEF) report concluded that AI will create new operating models and reshape competition in financial services, rewarding data-rich companies. Examples of transformations cited in the report include more AI-enabled back office solutions, improved customer service, and more powerful data regulators.

Square Cash overtakes Venmo in downloads. Square’s push into the cryptocurrency market is leading to a surge in downloads for the firm’s Cash app. Square Case has been downloaded 33.5 million times, surpassing Venmo’s 32.9 million downloads. Square recently secured a BitLicense from New York and approvals to make bitcoin purchases using the Cash app in all 50 states.

Bank of China and China UnionPay to partner on blockchain payments. Under the terms the agreement, the two institutions will jointly develop and promote the deployment of distributed ledger and big data technology within mobile payment services. The announcement follows China’s Ministry of Industry and Information Technology call to accelerate blockchain development efforts nationally.

Cambodia sets up fintech association. The country is the latest to establish a national body to focus on cooperation in fintech with the launch of the Cambodia Fintech Association (CFA). The CFA has signed Memorandums of Understanding with fintech associations in Singapore, Taiwan and Thailand and plans to register with the Asean Fintech Network.

South Korea budgets for blockchain technology.  The South Korean government plans to invest over $880 million to boost innovative technologies in 2019, including “promoting big data and AI, developing blockchain technology . . . and boosting the sharing economy.” Some of the country’s agencies are also working to develop pilot programs that will apply blockchain to major public services.

Monzo eyes unicorn status. British challenger bank Monzo is looking to close a $150 million funding round by the end of the year, which would value it nearly $1.5 billion. Despite adding 18,000 customers weekly, Monzo’s growth figures have yet to translate to profits, with the startup last year posting a £33 million pre-tax loss on revenues of £1.8 million.

 

 

 

 

 

 

 

 

 

 

 

EY to invest $1B in technology and innovation. The $1 billion investment by the Big Four accountancy firm will take place over the next two years and focus on new solutions in areas including financial services, risk management, cyber and cloud-based technology. The firm also announced new appointments for the global chief client technology officer, global CIO and global CISO roles.

 

 

 

 

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