CRED business model under threat; Finfluencers now regulated; Open Banking's big shake up
A round up of the global fintech news for the last week of June; June 24 - 30th , 2024! Catch up on the top items from the world of Fintech.
The last week of June has been an exciting one for the world of Fintech, not just in India but world over too. This week we talk about Finfluencers, Credit card payments in India, Crypto going mainstream, why GenZ in the US trust their banks for insurance and a lot more.
Lets dive in.
India:
1. The Reserve Bank of India's recent mandate to process credit card payments through the Bharat Bill Payments System (BBPS) is causing quite a stir in the fintech world. It's like the RBI is trying to herd all the financial cats into one corral, and not everyone's jumping the fence willingly.
Imagine you're throwing a party, and suddenly you're told everyone has to enter through one specific door. That's essentially what's happening here, with BBPS becoming the sole entryway for credit card payments starting July 1st. But here's the kicker - some of the biggest names in the game aren't ready for this party yet.
Take HDFC Bank, ICICI Bank, and Axis Bank, for instance. These banking giants, with their millions of credit card customers, are like the popular kids who haven't RSVP'd. Their absence from BBPS leaves platforms like PhonePe and Cred in a bit of a pickle. It's as if these fintech companies have set the table, but the main course isn't showing up.
Only eight out of 34 credit card issuers have hopped on the BBPS bandwagon so far. It's like watching a slow-motion game of musical chairs, with everyone eyeing the July 1st deadline nervously. The payments industry is practically begging for a 90-day extension, crossing their fingers that the RBI will throw them a lifeline.
But here's where it gets really interesting: credit card payments are just a drop in the BBPS ocean right now, making up a mere 1.5% of transactions. It's like discovering a hidden room in your house - there's enormous potential once it's fully utilized.
So, why is the RBI pushing for this change? Think of it as installing a high-tech security system. By centralizing credit card payments, the RBI aims to keep a sharper eye on fraudulent activities and gain deeper insights into payment patterns. Although I am conflicted here. Frauds happen at the time of sale, while bill payments after the billing cycle ends. If the RBI wanted to monitor the number of disputes raised on the billed transactions wouldn’t it have been easier to set up a centralised Online Dispute resolution, with strict TATs? Or is the inuendo that a lot of fraud is being caried out during bill payments? In which case reassessing the certifications of the current BBPS agents could suffice?
Anyway for now, it's a waiting game. Will the big banks fall in line? Will the deadline be extended? And how will this affect the average credit card user?
Full report here :
2. India has its first fully compliant crypto trading platform: Delta!
Delta Exchange has decided to jump into the fray, launching a platform that's all about crypto futures and options trading. But here's where it gets intriguing...
They're not just another crypto company trying to cash in on the trend. Delta Exchange is playing it smart, fully registering with India's Financial Intelligence Unit. It's like they're saying, "Hey, we're here to stay, and we're playing by the rules."
Now, here's what might make you raise an eyebrow: they're letting users settle trades in good old Indian rupees. No need to juggle stablecoins or worry about the wild swings of crypto tokens. It's almost like they're building a bridge between the wild west of crypto and the familiar territory of traditional finance.
But wait, there's more. They're not allowing crypto deposits or withdrawals. It's a bold move that basically says, "We'll handle the crypto stuff, you just focus on trading." It's like they're trying to give you the thrill of crypto trading without the headache of managing digital wallets or worrying about hacks.
Does this mean the Indian Markets are finally warming to the idea of crypto as an asset class ? Only time will tell!
3. Looks like Flipkart is ready to go the SuperApp route, with the launch of their latest new product Super.Money!
They're diving headfirst into the fintech pool with their new app, Super.Money. And boy, are they making a splash, with a 5% “real cashback” offer. Not points, not vouchers, but cold, hard cash. It's like they're saying, "Hey, we know you're tired of useless rewards. How about some actual money back in your pocket?"
All this, with the speed and efficiency of UPI rails. Now that's a combo that could turn some heads. They've got Utkarsh Small Finance Bank, Axis Bank, and IndusInd Bank in their corner too. Talk about a financial team up!
Now, let's zoom out for a sec. UPI transactions in India hit a mind-boggling 13,115 crore in FY24, worth nearly Rs 200 lakh crore. That's a lot of digital dough changing hands! And with India leading the global fintech charge, Flipkart's timing couldn't be better
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But here's the million-dollar question: Can Flipkart really shake up the fintech scene? They're promising a clutter-free experience and meaningful rewards, but let's face it, that's easier said than done in the crowded fintech space.
4. The recent Financial Stability Report from the RBI does not bode well for Fintech who are into lending. The Reserve Bank of India has flagged the high levels of delinquency being seen by fintech lenders for small loans below INR 50,000. This has led to the central bank increasing their risk weightage for certain consumer loans segments, which will impact the business of Lending tech companies.
The report showed that the growth rate in personal loans declined to 30% as of March 2024 from 31% in the year-ago period. In particular, NBFC-fintech lenders, which have the highest share in sanctioned and outstanding amounts, also have the second-highest delinquency levels, only below that of small finance banks.
Even the vintage delinquency, which is a measure of slippage, remains relatively high in personal loans at 8.2%.
5. How would this impact Slice, who recently introduced a new unsecured credit line for their consumers?
slice is dipping its toes into personal loans, offering up to ₹5 lakh for a whopping 5-year tenure. And they're cherry-picking users with high credit scores for this pilot product. Smart move or playing it safe?
Now, you might be thinking, "Wait, doesn't slice already do lending?" You're not wrong. But this new product is like their existing 'slice borrow' on steroids. We're talking bigger loans and longer repayment periods. Moving into the realm of what traditional banks and NBFCs do?
But here's where it gets really interesting. Slice isn't just expanding its product line; it's also beefing up its war chest. They recently raised $30 million in debt funding. That's a lot of dough! Are they gearing up for a lending spree, or is there something bigger on the horizon?
Because let's not forget about that merger with North East Small Finance Bank.
So, what does all this mean for the average Joe? Well, if you've got a stellar credit score, you might just find yourself with more borrowing options. But it also raises some questions. Is slice moving away from its roots as a youth-focused credit card alternative? Are they trying to compete with traditional banks now?
6. Everyone and their grandma seem to be dabbling in the stock market these days. India's seen a wild surge in trading accounts, jumping from 36 million in 2019 to a whopping 154 million by April 2024. Talk about a financial fever!
With this boom, we've seen a whole new breed of social media stars emerge - the financial influencers, or "finfluencers" if you're feeling fancy. They're dishing out investment advice like it's candy, and people are eating it up. Instagrma, Whatsapp, Telegram. They are filled with it.
Now, SEBI's stepping in, and they're not playing around. They're telling brokers and mutual funds to cut ties with these unregulated finfluencers. It's like they're saying, "Thanks for the enthusiasm, but let's leave the financial advice to the pros."
But here's the million-dollar question: Is SEBI overreacting, or are they just trying to protect the average Joe from potentially bad advice? And what about those finfluencers who are actually providing solid, educational content? SEBI's giving them a pass, but where do we draw the line?
This move is stirring up quite the debate. On one hand, it could help prevent novice investors from falling for get-rich-quick schemes. On the other, are we stifling a new, more accessible form of financial education?
One thing's for sure - the days of taking financial advice from Social Media University might be numbered.
7. HDFC is following the steps of issuers like SBI, ICICI, and has recently introduced a new fees on their credit card. A 1% fees for all rent payments, capped at ₹3,000 per month.
Issuers have also stopped issuing reward points on these rental payments.
8.
BNPL now comes to Groceries, with Payu’s LazyPay tying up with BlinkIt. With the integration of LazyPay, Blinkit users will experience a streamlined digital payment process supported by a convenient credit line
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The service is offered at no additional cost to merchants. LazyPay’s payment mode and dashboard will be accessible to Blinkit merchants, enabling them to monitor their business performance efficiently.
Asia:
1. Last year, Bhutan’s parliament passed a law to embrace the National Digital Identity on the blockchain, making it one of the first in the world to embrace the decentralised self-sovereign identity. And as of writing this, the country has achieved 10% voluntary enrolment. This paves the road for enhanced service delivery, especially as their citizens move more and more online with their lifestyle.
The reason that Bhutan chose not to go the Aadhar way, like what India did, was also a conscious policy decision, one with citizen identity and privacy being at the Center of it. And now they are looking to roll out the digital identity to work on feature phones and with low internet speed as well.
2. Virtual banks just need to be good at one or two features or products that they can scale and generate revenue, and that deposit sizes shouldn’t really matter. According to CEO WeLab Bank CEO Tat Lee, at least. To that end, the bank is focusing on two areas: Wealth management and lending.
And to bolster their loan offerings, the bank just announced it is consolidating the online lending business of sister company WeLend with the bank’s. This is meant to create scale. WeLend has been operating big-data-driven alternative credit-scoring models for more than a decade. It’s the main financing partner in Hong Kong to Tesla and Apple.
https://www.digfingroup.com/welab-welend/
3. The Philippines' fintech scene just got a whole lot more interesting!
Remember when credit cards were all about annual fees and foreign transaction charges? Well, Zed, the new kid on the block, is here to shake things up. This neobank, brainchild of Silicon Valley engineers Danielle Cojuangco Abraham and Steve Abraham, is rolling out a credit card that's giving traditional banks a run for their money.
Their Promise? no annual fees, no foreign transaction fees, and up to 31 days of interest-free credit.
Zed just got the green light from the Bangko Sentral ng Pilipinas to operate as a standalone credit card issuer. That's like getting a golden ticket in the world of fintech. They're the first Philippine neobank to pull this off, and boy, are they excited about it! Zed isn't just slapping a fancy app on top of old-school banking systems. Nope, they're building from the ground up, which means they can innovate faster than you can say "credit limit increase."
Speaking of credit limits, Zed's got a fresh take on that too. They're looking beyond traditional credit scores, focusing on current and potential income. It's like they're saying, "Hey young professionals, we see you, and we believe in your potential!"
And they have over 40,000+ Filipinos waiting to be onboarded, just like that cool kid whose party every one waits to get an invite to.
And get this - they've already got some heavy hitters backing them. We're talking $6 million in funding from the likes of Peter Thiel's Valar Ventures and bigwigs from Nubank, Mercury, Cred, and Square. Talk about a vote of confidence!
Europe and Australia:
1. Société Générale wanted to build up a success story in the online banking domain, when they decided to acquire Shine, the fintech startup that offers banking services and accounting and reporting services to freelancers. Four years ago in 2020. However, recently they admitted they weren’t sure of that strategy. And since then the bank has signed and exclusive acquisition contracts with Ageras, to sell Shine to them.
Ageras isa consolidator in the fintech and accounting space. Founded in 2012 to serve as a matchmaker for small businesses and accountants, it’s since expanded to become all-in-one fintech platform for small businesses that covers banking, accounting, tax filing, etc and has acquired several fintechs in the process. Ageras is building a portfolio of companies that offer adjacent products. In some ways, Kontist, Tellow and now Shine more or less offer the same product. When you create an account, you get an IBAN and a card. You can create invoices, receive money from your clients, get reminders when it’s time to pay your taxes and generate accounting exports.
This M&A strategy is a way to diversify the company’s footprint in Europe as fintech still remains a fragmented market — there are some outliers that manage to successfully attract customers in multiple countries but those are exceptions.
2. Remember when teaching kids about money meant a piggy bank and a trip to the local bank? Well, Bling is here to flip that script, and they've just scored a cool $12 million to do it!
This isn't just spare change we're talking about. We've got U.S. fund Owl Ventures leading the charge, with neosfer jumping on board and existing investors Peak and Angel Invest doubling down.
So, what's all the fuss about? Bling isn't just another fintech app. They're on a mission to turn the whole family into financial whizzes. We're talking payments, investments, and even mobile communications all rolled into one super-app. It's like they're building the Swiss Army knife of family finances!
Talking about children growing up fast, did you know that just 2 years ago Bling was actually just a pocket money app, and pivoted to explode to a 6 figure customer base. And get this - they've got a feature where parents can set tasks for kids, and when they're done, boom! Automatic rewards hit the kid's account. It's like they've gamified chores and financial responsibility. Genius or what?
Now, the big question is: Can Bling really change how European families handle money? Are we looking at the end of pocket money as we know it? And more importantly, are parents ready to hand over the financial reins to an app?
One thing's for sure - with this fresh injection of cash, Bling is set to make some serious waves. Will they revolutionize family finances, or is this just another tech bubble waiting to burst?
The future of family finance is here, folks, and it's looking pretty... well, blingy!
3. Open Banking in Australia is getting hotter than our Summer barbie! FinTech Australia just dropped their latest report, and boy, is it a doozy! We're talking a whopping 165% increase in Consumer Data Right (CDR) participants. Quite a fintech explosion!
Now, you might be wondering, "What's the big deal with this CDR thing?" Well, imagine being able to share your financial data with trusted third parties as easily as sharing a meme. That's CDR in a nutshell, and it's revolutionizing everything from lending to personal finance.
What got me surprised, nearly all consumer bank accounts in Australia (we're talking 99.74%) are now hooked up to this ecosystem. This collaboration has spurred a lot of new innovative use cases on Open Baking in Australia. Climate and sustainability? Check. Health? You bet. Even hospitality is getting in on the action. Feels like Open Banking is the new avocado toast!
Now, don't think the big players are sitting this one out. Mastercard's jumping in with both feet, talking about empowering consumers and all that jazz. It's like they've seen the future, and it's all about open banking.
But hold on to your Kangaroos! The big challenge now is getting people to actually use this stuff.
But what is fascinating is that this ethos of collaboration goesbeyond just the Australian Borders. They're teaming up with New Zealand to spread the open banking love across the Tasman.
US, Canada and LatAm
1. looks like the SEC's not pulling any punches in the crypto world. They've just slapped Consensys with a lawsuit, and it's just getting started.
So what's the deal? The SEC's claiming Consensys has been playing fast and loose with securities laws, offering unregistered securities and acting as an unregistered broker. The culprits? Two services you might've heard of: MetaMask Staking and MetaMask Swaps.
Now, here's where it gets juicy. The SEC's enforcement chief, Gurbir Grewal, is throwing some serious shade. He's saying Consensys has been raking in hundreds of millions in fees while leaving investors out in the cold when it comes to legal protections. Ouch!
But hold on, Consensys isn't taking this lying down. They've fired back, saying they saw this coming and they're sticking to their guns. In fact, they're doubling down with their own lawsuit against the SEC. Talk about a high-stakes game of legal chicken!
What's Consensys fighting for? They want the courts to say the SEC has no business regulating ether, Ethereum-based software, or the Ethereum blockchain itself. It's like they're drawing a line in the sand and daring the SEC to cross it.
And let's not forget the bigger picture here. Remember when President Biden vetoed that bill limiting the SEC's crypto authority? Looks like that decision is already having some real-world consequences.
One thing's for sure: This showdown between Consensys and the SEC is going to have some major ripple effects in the crypto world. Grab your popcorn, folks - this is going to be one heck of a show!
2. 44% of all consumers would turn to their financial institutions (FIs) for insurance needs, contrary to the popular Insurtech narrative.
Gen Z consumers specifically are four times more likely than baby boomers to think that insurance offerings are important part of the decision-making process in choosing a financial institution.
consumers are more than twice as likely to name trust as a deciding factor on where they get their insurance, at 39%, than cost, at 19%.
the average consumer has 3.7 different insurance types. Wealthier consumers carry a bit more, averaging 4.4 different types. Most consumers have health (78%) and auto coverage (75%). Beyond the must-haves, consumers’ need for specific types of insurance — such as life, pet or travel— varies.
3. Thread Bank, one of the biggest names when it came to Fintech partnership, recently received consent order from Federal Deposit Insurance Corporation (FDIC).
Thread Bank is one of the largest banking-as-a-service partner banks, behind Evolve ,Blue Ridge Bank, Relay, Baselane, Cleo, and others.
The FDIC has highlighted 6 key areas for immediate coorective action, which touch upon the banks operations in banking-as-a-service and lending-as-a-service offerings.
The 6 areas are:
Board Oversight
Strategic Plan
Enterprise Risk Management
AML/CFT Compliance
Fintech Partnerships Oversight
Policies and Procedures
Incidentally, about a fortnight ago, Thread announced they added esteemed FinTech innovator Jim McKelvey, co-founder of Square, as a board observer. “It’s my foundational belief that banking is and always will be about deposits, loans, capital, liquidity, and payments – an ideology Thread not only shares but has advanced through their blend of banking and technology,” said McKelvey, when joined the board.
Crypto:
1. Remember a time when Bitcoin and Ethereum and other cryptocurrencies were reserved only for the super tech savvy dudes?
Well, times are changing, folks. Stripe and Coinbase just shook hands on a deal that might just push crypto into the mainstream.
Here's the scoop: They're teaming up to make crypto more accessible globally. How? By making it faster and cheaper to use. It's like they're building a highway or a bridge between the old-school financial world and the wild west of crypto.
Stripe's jumping back into the crypto game after a five-year hiatus. They're not just dipping their toes in; they're diving headfirst with USDC on Base. This means easier money transfers to over 150 countries. Think about it: Could this be the push needed for global businesses to embrace crypto?
But here's where it gets really interesting: Coinbase is letting you buy crypto instantly with your credit card or Apple Pay. It's like they're saying, "Hey, buying crypto should be as easy as ordering a pizza." (No reference to bitcoin pizza day whatsoever).
This move comes at a time when Coinbase is trying to diversify its revenue streams. With crypto trading becoming less volatile (and let's face it, less exciting for some), they're looking for new ways to stay relevant.
One thing's for sure: The line between traditional finance and crypto is getting blurrier by the day. Are you ready for a world where your dollar and your digital tokens live side by side in your wallet?
Funding:
1. Italian fintech Banca AideXa, a digital lender specialising in providing credit to micro and small businesses, has secured €16 million in fresh capital.
2. LXME, the first Indian platform for improving women’s financial health, secured $1.2 million.
3. BoltTech, and insurtech player in Hong Kong, raised $246 million in their series B.
4. Gynger, a platform that lends capital to companies for technology purchases, has raised $20 million in a Series A round led by PayPal Ventures.
5. Finbourne, which has built a platform to help financial companies organize and use more of their data in AI and other models, raised $70 million at a just over $356 million post-money valuation.
6. Cadana, the API based payroll management fintech, came out of stealth with a fund raise of $7.4 million.
7. Paris-based Ramify, a wealth management and financial advisory platform, raised €11m in Series A funding.