What The FinTech #60: 25 Jul 2021
Medhy Souidi
Transformation Lead - Head of Innovation & Experiences at DBS HK | Host of What the FinTech | Senior Editor at Money20/20
Happy Sunday and Welcome back to What The FinTech, your regular FinTech & Innovation Newsletter focusing on Hong Kong & Asia ! Here are the selection and the top headlines for this week.
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BLOCKCHAIN - CRYPTO - DIGITAL ASSETS - DE FI
Payments company Square is launching a business dedicated to “decentralized financial services” using bitcoin. Square CEO Jack Dorsey said on Twitter that the company is “focused on building an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services.” The new unit will include the Seller, Cash App and recently acquired Tidal businesses. Dorsey said the team is committed to building in a transparent way that includes an “open roadmap, open development, and open source.” DeFi applications allow for financial transactions that are more easily accessible, efficient, and relatively low cost. They’ve also been highly attractive to yield seekers who can generate returns between about 15% and 30% by participating in the DeFi ecosystem – by “locking” capital in smart contracts.
Mastercard will enhance its card program for cryptocurrency wallets and exchanges, making it simpler for partners to convert cryptocurrency to traditional fiat currency. Working with Evolve Bank & Trust and Paxos Trust Company, a blockchain infrastructure and regulated stablecoin issuance platform, and Circle, a global financial technology firm and the principal operator of the stablecoin USD Coin (USDC), Mastercard and its partners will test this new capability to enable more banks and crypto companies to offer a card option to users wanting to spend their digital assets anywhere Mastercard is accepted. With the enhancement to Mastercard’s Crypto Card Program, Paxos and Circle will use their platforms to facilitate the conversion of crypto to fiat through fiat-backed stablecoins
Gotrade’s mission is to make investing accessible to literally anyone. Fractional shares is the game changer that powers this mission and will unlock the next 100 million brokerage accounts globally. Combined with commission free trading, Gotrade levels the playing field between the haves and the have-nots. A farmer in Southeast Asia or a student in South America can own a fraction of the same portfolio as Warren Buffett. With Gotrade, anyone in the world can invest as little as $1 into some of the largest companies globally including Tesla, Apple & Amazon.
HONG KONG
Fuiou Pay (Fuiou) has partnered with Visa and Nium to launch a B2B global payment solution in Hong Kong. The collaboration seeks to create global payment products and solutions for cross-border e-commerce, advertising, overseas education, and cross-border travel, among other major payment categories. It aims to offer services such as card customisation, multi-format support, and service support to different sectors across a wide range of payment scenarios. Users can tailor their payment cards based on their needs, including customising payment scenarios, regions, the period for actual usage, etc. The card is also compatible with different operating platforms for both B2B and B2C users, and exclusive communication channels are provided to different customers to ensure their payment issues are addressed in a timely manner.
A year after Hong Kong issued eight digital banking licences, Mox and ZA Bank have emerged as the early leaders. Together with WeLab, the three banks account for 86% of all virtual banking deposit in Hong Kong. A growing number of customers are embracing digital platforms and services. This can be viewed as both an opportunity and a challenge for virtual banks. On the other hand, the growing awareness of digital platforms and services presents an opportunity for virtual banks – which have built their digital infrastructure from scratch – to offer bespoke products and an improved user experience to attract more customers.
SINGAPORE
Even as more Singaporeans are investing in popular cryptocurrencies like Bitcoin, it would take a long time for digital currency to gain traction as a mode of payment in Singapore, according to industry watchers. They note that too few mainstream merchants are accepting cryptocurrency for it to become an alternative to fiat currency. While Kopitiam foodcourt at Funan Mall started accepting cryptocurrency two years ago as it wanted to attract "a growing segment of highly tech-savvy customers", it stopped doing so last year. In Singapore, entities dealing in or facilitating the exchange of cryptocurrencies or digital payment tokens (DPT) are required to be licensed and regulated. However, the Monetary Authority of Singapore (MAS) does not regulate DPTs and does not set requirements on whether businesses can accept DPTs for payments. Today, there are about bitcoin 10 ATMs in Singapore. However, high transaction fees and non-instantaneous transaction completion times could have prevented greater adoption.
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Group buying, which involves people in the same estate banding together to place bulk orders for items in order to cut delivery costs and enjoy discounts from suppliers, is gaining traction in Singapore, fuelled by COVID-19 restrictions. A search on Instagram yields more than 50 group-buy profiles tagged with the names of different estates. Group buys have also sprung up island-wide based on shared interests, like for those buying children’s toys or for couples looking to renovate their homes. Experts say group buys are a win-win deal for both customers and businesses. Customers benefit from low prices while businesses like bulk orders because there’s a very stable recurring revenue. Group buying comes under a new business model called consumer-to-manufacturer (C2M), which involves “finding opportunities to cut out the middleman”. If the Chinese example is anything to go by, Singapore could see e-commerce platforms muscling in on the act and possibly crowding out individual community hosts.
Singapore-based insurtech firm Zensung has partnered with insurance firms ERGO and Munich Re to launch green insurance policy ‘Parrot Safe Driver’. Using an Artificial Intelligence (AI)-based proprietary platform, delivered through Zensung’s ‘Parrot’ mobile app, the policy aims to make buying and monitoring car insurance simpler, greener, and fairer. Through the app, users can purchase a policy, make a claim, and receive safe driving rebates using their smartphone. The Parrot app also allows policyholders to monitor their trips and compensate for the CO2 emissions caused. It uses the globally recognised Greenhouse Gas Protocol (GHG) to calculate emissions. Parrot also offers its policyholders the choice to become CO2-neutral by buying carbon credits straight from the app.
Singapore-based fintech Tinvio, which provides supply chain merchants with a streamlined way to communicate with buyers, is now preparing to launch financial services, including financing and credit card issuing. Tinvio’s app was originally launched as a way to consolidate orders from different places, including email, SMS and WhatsApp, and let suppliers keep real-time digital ledgers. It has recently added digital payments collection and reconciliation features to its app, and has raised a $12 million Series A to build out its B2B transactions platform. The round was led by AppWorks Ventures, with participation from strategic investor MUFG Innovation Partners (MUIP). Tinvio has a 12-month roadmap for its other financial services, including transaction financing, credit card issuing, and invoice factoring, with pilots planned for the next two quarters. Tinvio supports payments through credit cards, direct debits and automated bank transfers, and is integrated with regional payment gateways.
OCBC customers can now view and pay their income and property taxes through the bank's digital banking platform, OCBC Financial OneView. The bank has integrated the Inland Revenue Authority of Singapore's payment application programming interface (API) with the bank's digital platform. The new feature leverages the Singapore Financial Data Exchange (SGFinDex), which allows the sharing of personal financial information across participating banks and government agencies. Since the instant tax view and payment feature was made available in May this year, OCBC said 30 per cent of its customers who used the service paid their taxes through the bank. OCBC is working on adding information on insurance policies and stock holdings.
CHINA
Foreign travellers to China will be able to use the government-developed digital yuan without a local bank account, according to a paper published by China’s central bank. The People’s Bank of China (PBOC) has been working on developing a digital version of the yuan, known as e-CNY, since 2014. It has recently released a paper (in English and Chinese) on the research progress. According to PBOC, the e-CNY system “collects less transaction information than traditional electronic payment” and internally, the PBoC keeps information related to the digital yuan separate from other departments. As of the end of June, following about a year of e-CNY tests across the country, more than 20.87 million personal wallets and more than 3.51 million corporate wallets have been opened, with a transaction value of about 34.5 billion yuan (US$5.39 billion), the paper said.
A "digital yuan insurance policy" has been issued in Shenzhen, South China's Guangdong Province, according to media reports, marking the use of digital yuan in China's insurance industry for the first time. The Shenzhen subsidiary of Pingan Property Insurance, working with the Bank of China branch in Shenzhen, issued the first batch of "digital yuan insurance policy". The insurance is targeted at medical workers in Nanshan district, and will provide medical workers with 300,000 yuan ($4,6221.40) compensation if an insured medical worker died as a result of COVID-19, 50,000 yuan allowance if a medical worker is diagnosed with COVID-19, and 50,000 yuan compensation for accidental death. Applicants are eligible for exclusive preferential allowance if applicants use the digital yuan wallet to make payments.
ASIA
Buy now, pay later fintech Afterpay to launch banking app in October
Buy now, pay later (BNPL) fintech Afterpay will launch its banking app in October to widen its offerings beyond buy now, pay later (BNPL) services for its 3.5 million-plus Australian users. Afterpay users can place deposits in saving accounts created in partnership with Australia's No.2 lender, Westpac Banking Corp, earning interests of 1 per cent per year. With the new app, called 'Money by Afterpay', Afterpay users will also be able to set savings goals with up to 15 separate accounts, designed to offer greater money management tools. The company has received a financial service licence to provide debit cards and general financial product advice. RBC Capital Markets said the accounts would help Afterpay save on processing fees and improve its margins, apart from offering a "large revenue stream from referral fees across a broad range of banking products."
Grab has deepened its partnership with payments platform Adyen by enabling more merchants, starting in Singapore and Malaysia, to offer its PayLater service to consumers. Available through the GrabPay wallet, merchants will now be able to offer PayLater payment methods at checkout. Customers will be able to choose between interest-free payments over four instalments (PayLater instalments), or the following month (PayLater Postpaid). After e-commerce firm Zalora introduced this deferred payment method in May 2021 via Adyen, it reported a 20% increase in new shoppers and a 15% increase in users using GrabPay to complete a purchase. The online retailer has also seen an increase in sales as shoppers who used Grab PayLater had larger basket sizes, compared to those who used Grab Wallets. Basket sizes were 32% larger in Malaysia and 12% larger in Singapore.
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Medhy