Daily Review: Technology Companies Are Invading the Financial World

Elena Mesropyan, LTP

 “Amazon knows something about me that a bank never will. It knows everything about my revenue, and they know my audience – that’s something that I might not even know. It lets Amazon take this risk that a bank cannot,” said Lex Sokolin, Global Director of FinTech Strategy at Autonomous Next. “Information makes risk-taking cheaper because you know who’s going to default and who’s not. It shows you how much more insidious it is to compete with a platform that truly knows you and your data.”

Big Tech’s Next Prey: Big Finance

  • Look for Big Tech – with caches of data about billions of people around the globe – to power the next jumps in financial technology, keeping users reined within their own, ever-expanding platforms and absorbing billions in profit that otherwise would have gone to traditional financiers.
  • Amazon Lending has lent $3 billion to merchants since 2011. Google’s venture arm is ramping up investments in cross-border currency transfers and Blockchain. China’s tech giants have crashed onto American shores: cabs in New York and Las Vegas began accepting Alipay, Alibaba’s mobile payment juggernaut.

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Groundbreaking Blockchain service that runs on Azure could transform how companies raise money

  • UK-based firm Nivaura helped launch the world’s first automated bond issue in a cryptocurrency on a public Blockchain platform.
  • Nivaura has developed an Ethereum Blockchain-based service, which runs on the secure Microsoft cloud platform Azure, that reduces the need for middlemen and costs associated with regulatory clearances. As a result, it can help firms raise money at a much lower cost than current methods; and more investors can take part because it’s public.
  • Under the oversight of the Financial Conduct Authority (FCA), the solution, which runs on the secure Microsoft cloud platform Azure, was recently used to enable online luxury retailer LuxDeco to issue ether-denominated bonds.
  • In a world-first, Nivaura’s technology automated the creation of the necessary legal documents, the coordination of covenants, conditions, and book-building, the required e-signatures, the creation of the asset and money registers, delivery versus payment of the instrument and the ongoing management of the bonds, all on a public platform.
  • JPMorgan, Allen & Overy and Moody’s helped with Nivaura’s bond issue, which had a week-long maturity and paid 10% annual interest – a premium was added to manage volatility in the currency.

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Uber inks its first mobile wallet deal in Southeast Asia

  • Uber has inked its first payments deal in Southeast Asia after it announced a partnership with Vietnam-based mobile wallet service Momo.
  • Momo, which (raised $28 million led by Standard Chartered), will become a payment option inside the Uber app in Vietnam, alongside cash and credit cards. The app is the country’s top mobile payment service. It is used by 5 million people to pay bills, transport tickets and more.
  • The deal is the first of its kind for Uber in Southeast Asia, a region where it has a tough challenge battling Singapore-based Grab in seven markets and local unicorn Go-Jek in Indonesia.
  • Both Grab and Go-Jek have put a heavy focus on mobile payments, with each building a mobile wallet service of their own that will eventually go beyond paying for ride-sharing to pay for other goods. Go-Jek plans to spin out its Go-Pay service into a standalone app next year. Go-Jek may expand its reach outside of Indonesia using Go-Pay, rather than ride-sharing, as its initial launch service.

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Alibaba-Backed Paytm Aims to Become World’s Largest Digital Bank

  • Paytm Payments Bank aims to create the world’s largest digital bank with 500 million accounts, envisioning an online financial services provider of everything from wealth management to credit cards and stock market trading.
  • The bank is targeting people who don’t have access to professional financial services.
  • “We are unveiling our money market fund, launching our debit card and we’ll have the capabilities to allow enterprises to open business accounts,” Paytm Founder Vijay Shekhar Sharma said. “Digital payments was our entry point, we want to become a vertically-integrated financial services company.”
  • Paytm was one of fewer than a dozen entities that secured permits to start payments banks, which can accept deposits and remittances but cannot lend.
  • The company will also operate a mobile-first bank with zero fees on online transactions and no minimum balance. Paytm Payments Bank is majority-owned by Sharma.
  • “We will launch share trading and insurance products very soon,” Sharma added. “We want to become an internet-age financial services company.”

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Banks are embracing technology

Credit Suisse Buys Majority Stake in FinTech Firm Tradeplus24

  • Credit Suisse is backing a Swiss FinTech firm in Zurich which offers a receivables financing solution that is designed for SMEs. SVC-Ltd., the lender’s VC investment arm, has bought a majority stake in Tradeplus24. The startup will use the new capital to further scale up support and delivery of its automated lending solution.
  • Credit Suisse plans to integrate Tradeplus24’s products in its own offering, which allows its clients to tap SMEs focused solution that offers a new simple way for companies to lend against their global accounts receivables.
  • Zurich has recently launched several initiatives to offer an attractive destination for entrepreneurs by way of venture capital and investors that support new ideas.
  • Credit Suisse has backed the rollout of some digital technologies, including the use of blockchain to clear and settle financial trades. Many of those innovations have been realized in close cooperation with startups and a host of well-known companies including Ethereum.


Source: LTP

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