We’re back after a nice, long UK Bank Holiday and US Labor Day break. We hope you had a restful and relaxing end to the summer, and we’re looking forward to continuing to bring you the latest in the world of fintech as we enter the final third of 2018.
– The Fintech Update Team
Varo won preliminary approval for a US national bank charter; HSBC is reportedly launching a digital bank startup; IBM plans to demonstrate a blockchain-based cross-border payments service in October; British Airways was hacked, exposing customers’ personal and financial information; and U.K. challenger bank Monese raised $60 million in Series B funding.
In the News
Varo preliminarily approved for US national bank charter. San Francisco-based Varo Money was given preliminary approval by the U.S. Office of the Comptroller of the Currency (OCC) to form a de novo national bank. The approval paves the way for Varo to “become the first all-mobile national bank in the history of the United States.”
HSBC is reportedly working on a digital banking start-up. The stand-alone digital bank, which would target small business customers, is viewed as an attempt to fend off upstart “challenger banks” in the U.K. and Europe. A beta version of “Project Iceberg” could launch as early as this year, and helping HSBC join other high street banks like RBS are already exploring digital banking offerings.
IBM is developing a blockchain-based alternative payments system. IBM is aiming at SWIFT and Ripple’s xRapid with its new Blockchain World Wire service, which would “provide banks with a means to simultaneously clear and settle near real-time payments transactions across borders.” IBM is working with DLT firm Stellar on the project, which it plans to demonstrate at Sibos in October.
BA hack exposes financial data for almost 400k transactions. British Airways (BA) experienced a “sophisticated, malicious criminal attack” of its website and mobile app, exposing “personal and financial details of customers” across roughly 380,000 transactions. BA said the breach took place between August 21 and September 5, and that passport information was not accessed.
ASX pushes back blockchain settlements roll-out. The Australian Settlements Exchange (ASX) has postponed the launch of a blockchain replacement for its CHESS clearing and settlement system from 2020 to 2021. The date change was prompted by concerns expressed in a consultation on the timeframe for the project due to the scope and significance of technological developments required.
Rakuten buys a Bitcoin exchange. Japanese e-commerce giant, Rakuten, has announced its plans to acquire Everybody’s Bitcoin Inc., a small domestic cryptocurrency exchange platform, for $2.4 million. The deal, expected to be finalized by October 1, follows Rakuten’s announcement earlier in 2018 to launch its own cryptocurrency as part of a new blockchain-based loyalty program.
Monese raises $60M. The U.K.-based challenger bank raised $60M in Series B funding led by Kinnevik. According to TechCrunch, the large funding round suggests that investment into challenger banks in the U.K. “shows no signs of abating,” as regulators there and across Europe have pushed for more innovation in financial regulation and created conditions for fintech firms to thrive.
The most high-tech way to protect your crypto holdings is… paper? Wired takes a deep dive into Coinbase’s procedure for generating and storing encryption keys for users’ crypto assets, as it works to provide the services of a qualified custodian. The process involves computers, cryptography, a Faraday cage, and… a printer. The result is binders full of paper “hidden in a reimagining of a bank vault.”
Wired profiles debt collectors using machine learning techniques. Debt collection startups like TrueAccord claim machine learning can increase the amount of debt collected and personalize the experience. Proponents of the technology say it keeps debt out of the hands of aggressive and shady collection agents, while detractors are skeptical of claims of a “gentler” collection process.
Are fintechs a systemic risk? A new paper by Federal Financial Analytics argues that the biggest risk facing financial companies and government agencies is the increasing reliance on third-party cloud service providers. “It’s a classic concentration risk, but it’s in the critical infrastructure,” argues the report’s author, Karen Shaw Petrou.