What The FinTech : Weekly Update 17 Jan 2021

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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#Fintech101 series: Recently, we have been hearing Bitcoin and Crypto in the news almost every day. Many cryptocurrencies’ market cap has reached all-time high. Do you know what bitcoin ot Crypto is?

What was the FinTech this week in: 📰

Crypto - Digital Assets

Anchorage Becomes First OCC-Approved National Crypto Bank

Crypto custodian Anchorage has secured conditional approval for a national trust charter from the U.S. Office of the Comptroller of the Currency (OCC), making it the first national “digital asset bank” in the U.S. The safekeeping, management and trading of digital assets have been regulatory stumbling blocks for large financial institutions – but those obstacles are gradually being removed. The OCC, a part of the Treasury Department charged with keeping banks safe but also competitive, has now issued three interpretative letters that lay the groundwork for banks to custody crypto, participate in blockchain networks and become payment providers using the tech. 

Agricultural Bank of China tests digital currency at ATMs

The Agricultural Bank of China has equipped a number of ATMs with the means for customers to deposit and withdraw the central bank's new digital currency. The trial run, as reported by local news outlet Shenzhen News, is part of a series of phased tests of the digital yuan as the country prepares for a full-scale roll out of the central bank digital currency. Agricultural Bank of China took the lead in launching ATM machines, offering deposit and withdrawal function of digital renminbi guides citizen to adapt to the digitalization of cash and explore service transformation. Other major banks are also conducting trials of the new currency using alternative form factors, such as contactless cards and wearable devices. 

Big banks invest in HQLAx

Securities lending platform HQLAx has closed a €14.4m investment round led by BNY Mellon, Goldman Sachs, BNP Paribas Securities Services and Citigroup, and with participation from longtime strategic partner Deutsche Börse Group. HQLAx enables market participants to redistribute their collateral by exchanging the ownership of tokenised securities on Corda’s blockchain platform, which no longer requires the underlying securities to move across users. Each of the new investors will connect to the HQLAx platform later this year as they seek to improve liquidity management and address European collateral fragmentation. ING's blockchain team developed the initial version of the HQLAx application and together with Credit Suisse was the first to execute a live collateral swap with full legal exchange of contracts and settlement back in March 2018. 

Deutsche Bank and STACS collaborate for digital assets proof-of-concept

Deutsche Bank Securities Services and Hashstacs (STACS) have collaborated to explore a proof-of-concept related to the technological and practical feasibility of digital assets interoperability, liquidity, cross-border connectivity, and smart contract templates, including the support of sustainability-themed digital bonds. Singapore-based STACS is a FinTech focused on capital markets use cases, such as the trade lifecycle management of bonds, Environmental, Social, and Governance (ESG) FinTech, structured products and exchange-traded derivatives (ETDs). The Global Head of Product Manager from Deutsche Bank mentioned that “Investors will increasingly need to custodize their digital assets, ensure settlement finality, and have confidence in their safekeeping and security with the support of a bank’s institutional infrastructure. As a result, we see a clear place for an integrated platform that can service cross-border issuer-investor needs in Singapore and around the world.”

Crypto Custody Firm Leaves Singapore’s Regulatory Sandbox With License, ISO Rating

Propine, a Singapore-based digital asset custody provider, announced Monday it has been awarded a capital markets services license from the Monetary Authority of Singapore (MAS). The news comes as Propine graduates from the MAS FinTech Regulatory Sandbox, which allows financial institutions to experiment with new financial products under the close eye of the central bank. The firm also exits the sandbox with what it claims is the first ISO 27001 certification for a crypto custody provider. The ISO 27001 certification is an international standard providing a framework for preserving the confidentiality and integrity of vital data. As well as custody, Propine offers digital asset servicing, trade settlement facilitation and investor reporting with a focus on institutional clients.  

HONG KONG

The 14th Asian Financial Forum – Reshape World Economic Landscape

As the COVID-19 pandemic drives change across the world, the financial industry has been far from immune. The steady march of digitalisation which had been reshaping the global financial world has turned into a sprint. To help professionals from different places navigate their way through this new, digital, world, the 14th Asian Financial Forum (AFF) on 18 and 19 January 2021 will be held virtually and gather over 150 influential global financial experts, policymakers, business leaders, fintech enthusiasts, investors and entrepreneurs to examine the most pressing issues of the day, including post-pandemic recovery, sustainable development, fintech, 5G, digital assets, cyber security, entrepreneurship and venture investment as well as asset and wealth management.

Themed “Reshaping the World Economic Landscape,” the upcoming AFF will showcase the latest financial innovations and next-gen business ideas from over 130 global fintech solutions providers and startups, as well as offer a curated investment matching platform for investors, projects owners and startup entrepreneurs from around the world.

A host of global thought leaders will headline AFF 2021. Paul Romer, 2018 Nobel Laureate for economic sciences and a policy entrepreneur, will analyse the current state of the global economy and posit the path towards a new and sustainable growth engine, while Alexis Ohanian, Co-Founder of Reddit and Seven Seven Six, will share his insights on innovation, technology and investment. Financial heavyweights from around the world, including Blackstone’s Stephen Schwarzman and Hillhouse Capital’s Zhang Lei, will discuss a wide range of issues, including global outlook, impact investment, inclusive development and philanthropy.

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SINGAPORE

Record number of firms flagged on MAS Investor Alert List last year

A record number of companies were placed on the Investor Alert List last year as the pandemic placed unprecedented stresses on financial markets. There were 104 firms put on the list, up from 82 in 2019, as show on the Monetary Authority of Singapore's (MAS) website. The list details companies that are not licensed by the MAS but may have given investors the impression that they were in fact sanctioned by the Singapore regulator, which has now grown to 644 companies including those registered overseas. The record numbers listed last year came amid the pandemic, which saw an increasing number of people begin trading on the stock market. The list has continued to grow this year with eight companies added, including five associated with Singapore-founded crowdfunding platform CoAssets Group. 

Sea acquires Indonesian bank to gain foothold in financial tech

Singapore's Sea Ltd, the tech startup that's become South-east Asia's most valuable company, has acquired Indonesia's Bank Kesejahteraan Ekonomi, according to people familiar with the matter. Sea has gained full control of the Jakarta-based lender, better known as Bank BKE, after buying stakes from existing shareholders Danadipa Artha Indonesia and Koin Investama Nusantara through its subsidiary Turbo Cash Hong Kong. The move accelerates the company's ambition to establish itself as a leader in financial technology and services across its region, much as it has done with mobile gaming and online shopping. 

Innovation centre to develop Singapore as base for advanced manufacturers

An innovation centre aimed at boosting the competitiveness of Singapore's electronics and advanced manufacturing sector was launched on Tuesday at Changi Business Park. The PlanetSpark Innovation Centre plans to nurture Singapore-grown hardware technology startups in the artificial intelligence (AI) and Internet of Things (IoT) sectors. Through PlanetSpark, companies can accelerate their product development journey and deliver a proof-of-concept within six months. Startups pay S$20,000 to participate in the accelerator programme, with Enterprise Singapore subsidising up to 70 per cent of the fee. The centre will also connect startups to a network of semiconductor partners and manufacturers for product development and commercialisation. 

OCBC launches solar panel consumer loan for landed property homeowners

OCBC has launched a consumer loan for landed property homeowners looking to install solar panels on their homes. The loan facility, which is Singapore's first, provides these owners with a term-financing option for installing solar panels, defraying upfront costs to enable and accelerate clean energy adoption. Each homeowner can borrow up to S$30,000 with a tenure of between one and five years to allow for greater flexibility on the repayment period. Moreover, the bank has exclusively partnered Sembcorp Industries' electricity retail arm Sembcorp Power to provide homeowners with onsite solar panel installation assessment. Initial consultation costs will be borne by Sembcorp Power, OCBC said. 

CHINA

Chinese Hospital Issues First Electronic Bill on Blockchain

A hospital in China sent the first electronic bill to a patient on its blockchain-based invoice management platform on Monday. The People’s Hospital of Chengmai County, a public hospital in the Hainan province of South China, is the first hospital to issue and keep track of invoices on a blockchain in the province, according to a report by Chinese state media China News Service. The hospital sent invoices to so-called “ticket holders” on its patients’ phones. The patients can check the immutable medical and billing records for reimbursement without going to the hospital. The platform is now only available in the city but it is set to branch out to the rest of the province as the local government is focused on applying blockchain technology to processing official documents for other public institutions. 

Chinese regulators to push tech giants to share consumer credit data

China plans to push tech giants including Ant Group, Tencent and JD.com to share consumer loan data to prevent excess borrowing and fraud, two people with knowledge of the matter said, in Beijing's latest tightening of scrutiny. The plan, if implemented, would effectively end the government's laissez-faire approach to the industry. Large Internet platforms have tended to resist handing over their data, a crucial asset that helps them run operations, manage risk and lure new customers. Chinese regulators, including the central bank, plan to instruct internet platforms to feed their vast loan data to some of the nationwide credit agencies. The agencies, which are run or backed by the People's Bank of China (PBOC), will share the data more widely with banks and other lenders to adequately evaluate risks and prevent over-borrowing, according to the sources.

ASIA

Grab raises US$300m for fintech arm from investors including Hanwha

South-east Asian ride-hailing and food delivery giant Grab said on Thursday it has raised more than US$300 million from investors led by South Korea's Hanwha Asset Management Co for its fast-growing financial services business. It is the first external funding for Grab's fintech business, which has chalked out ambitious plans in insurance, lending, wealth management and payments. Grab's early investors including GGV Capital and Singapore venture capital firm K3 Ventures also participated in the funding. Reuters also reported in September, citing sources, that Grab was in advanced talks with insurers including Prudential, AIA Group to raise US$300 million to US$500 million in investment for its financial services unit. 

UBS in talks to invest $400 million in India's Paytm

UBS is in talks to invest $400 million in Indian digital payments startup Paytm, according to Bloomberg. A fund run by UBS’s asset management arm is in discussions to buy a stake in Paytm alongside some of the Swiss bank’s clients from a group of the Indian fintech company’s employees. Paytm was last valued at $16 billion during a 2019 funding round, but its price is likely to have risen substantially in a market where regulatory pressure for a move away from cash and the Covid-19 pandemic have combined to create a perfect storm for digital payments. China's Ant Financial has a 30% stake in Paytm, although rumours abound that the Chinese giant is about to cash in its holdings due to rising political tensions between the two countries. 

E-commerce platform Bukalapak raises funding from Standard Chartered for expansion

Indonesia's e-commerce platform Bukalapak.com has landed funding from Standard Chartered as it makes progress toward raising US$200 million to finance its expansion in the country, according to people familiar with the matter. Naver and Mirae Asset-Naver Asia Growth Fund, both existing investors, are also close to signing an agreement for additional funding. Bukalapak has already pulled in US$100 million from Microsoft, GIC and Elang Mahkota Teknologi as part of the ongoing round reported in November. Standard Chartered and Bukalapak said on Thursday they formed a strategic partnership to collaborate on digital banking. The online marketplace, which competes with rivals such as Shopee, Tokopedia and Lazada, has about 100 million users and 13.5 million sellers in Indonesia. It is valued at US$3.5 billion, according to CB Insights.

Ripple creates Malaysia-Bangladesh remittance corridor

Ripple has signed a deal with Malaysia's Mobile Money and Bangladesh's bKash to power a wallet-to-wallet remittance corridor between the two countries. Bangladesh has the third largest remittance flows in South Asia, with Malaysia ranking as one of the top five sources of remittances for the country. The corridor will use RippleNet, Ripple's DLT-based global payments network, to enable Mobile Money and bKash to offer wallet-to-wallet transactions. Mutual Trust Bank will work as the local banking partner in Bangladesh to perform the remittance settlement. 

Indonesia sets new rules on payments systems

Indonesia's central bank on Friday announced new regulations, which takes effect on July 1, on payment systems to try to consolidate existing rules, with new requirements on share ownership and capital that could impact firms providing payment services and infrastructure. Non-bank payment services will now need to have at least 15 per cent Indonesian owners, while at least 51 per cent of shares with voting rights must be owned by Indonesians, individuals or entities. Non-bank payment infrastructure companies must be at least 80 per cent Indonesian-owned. Filianingsih Hendarta, the head of Bank Indonesia's payment systems department, said the new regulation reflects advancements in payments and technology and aims to mitigate potential risks in the financial system. 

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