Fintech

Cross-border payments in Asia are at the forefront of innovation

Published

7 months ago

19 June, 2024

Cross-border payments in Asia are at the forefront of innovation

Of Rebecca Oi
June 19, 2024

As Asia continues its rapid rise to become the world’s economic powerhouse, the region’s fintech startups and financial institutions are revolutionizing cross-border payments

The cross-border B2B payments space is worth an astonishing $150 trillion, which offers immense opportunities for innovation.

However, challenges related to high costs, lack of transparency, limited liquidity and slow transactions persist.

In response, payments pioneers in Asia Pacific are leading the effort to build a faster, cheaper and more transparent cross-border payments ecosystem.

The frontier of B2B cross-border payments

Anupam Pahuja, EVP, APAC & MEA, Nium comments on the state of cross-border payments in Asia

The B2B cross-border payments space represents a vast opportunity, dwarfing the B2C space at $100 trillion compared to $2.8 trillion. Yet inefficiencies abound.

Anupam Pahuja, Executive Vice President of APAC and MEA at Nohighlighted,

“It takes four to five days for a payment to go from one case to another. The cost is just crazy and there is no transparency. You don’t know where your payment is going to be.”

Nium, a Singapore-based fintech unicorn, has emerged as a powerhouse. Starting with consumer remittances in 2014, Nium has focused on B2B payments.

“We realize that there is a much larger space that we need to address on the B2B front than B2C fraud and within that space we are the Intel inside. We are not the computer. We are not outer space. We are not UI/UX. We are the infrastructure player that makes these payments,”

Anupam explained.

“Our revenue opportunity was $80 million years ago, reached $120 million last year, and this year we hit our goal of $170 million. Our travel business is booming in Asia Pacific, growing 100%, in part due to our status as one of the largest virtual credit card issuers globally,”

He added.

“We issue 40 million cards a year, and partnerships with companies like Tredd allow us to operate faster, better and more conveniently”

He said.

Empower consumers through targeted spending

Mitherpal Sidhu, COO of BigPay, comments on how targeted spending is driving cross-border payments

In the consumer space, fintech like BigPay innovates to “improve people’s lives one transaction at a time.”

Serving 1.4 million card consumers in Singapore and Malaysia, BigPay offers personal loans, microinsurance, card payments and cross-border payments.

“We found that foreign domestic workers, I mean, the myth is that they send small amounts monthly. They actually send about 80% of their salary. They send it in small pieces. This is because they don’t know what the other party will do with their funds.

said Mitherpal Sidhu, Chief Operating Officer at BigPay, revealing this key insight.

“BigPay is building targeted spending capabilities to solve this problem, allowing you to allocate funds to specific uses like education or medical expenses. ‘This feature is what we are building. And strategy comes into play,’”

– added Mitherpal.

Building highways for seamless cross-border payments in Asia

Farhan Ahmad, PayNet Group CEO, comments on how Project Nexus will reshape cross-border payments in Asia

Companies like Nium and BigPay aren’t the only ones pushing the innovation needle. Institutions also play a key role in enabling a faster, better and cheaper cross-border payment experience.

One example is PayNet, Malaysia’s national payment infrastructure, which has made many strides in cross-border payments.

Farhan Ahmad, CEO of the group Payment Network Malaysia (Paynet), he imagined “a world in which trade, commerce and travel are so fluid that for him the possibilities are endless.

“And I think this is a vision that will fuel the future of the planet,”

He said.

PayNet is collaborating Nesso Projecta multilateral, non-cloud solution for cross-border remittances.

Farhan elaborated,

“Nexus aims to be a pilot case for building a cross-border, non-cloud multilateral solution, primarily for remittances, P2P. We are working with Bank Negara Malaysia, supporting them in this mission to create this functionality to make remittances seamless. For example, I can send money to someone in any other country using a phone number. This brings enormous benefits to end users.”

By building the necessary infrastructure, PayNet and its partners ensure that Malaysians and others can use their existing payment devices across borders.

This effort is part of a larger global vision to create a transparent and seamless payments ecosystem, improving the ease of trade, exchange and travel.

Enabling payments pioneers

Cecilia Tan, Regional Vice President at Thredd, comments on how payment service providers play an important role in the entire cross-border payments ecosystem.

Behind-the-scenes players, like Thredd, play an equally important role. With their experience, they realize the magic of payments.

They have helped ambitious innovators like BigPay and Nium become digital payments pioneers.

Cecilia Tan, Regional Vice President of Sales (APAC) for Business Development at Threddshared,

“In the past we have actually helped several fintech unicorns like Revolution to Nium expand from one market to multiple markets. I think Thredd, as an issuer processor, is well positioned to help fintechs drive cost efficiencies and improve the payments experience.”

With over a decade of experience, Thredd helps Asian fintechs overcome payments complexities with its proven technical infrastructure, including APIs, transaction tools and tokenization.

“We have been in the industry for more than ten years. We are considered market leaders in our home market, the EU and the UK, and are able to leverage such rich experience and understanding of the complexity of payments to bring them to Asia Pacific,”

– Cecilia underlined.

The race to innovate cross-border payments in Asia

The race to innovate cross-border payments in Asia Pacific is heating up, with the ecosystem working together to build a more efficient, transparent and accessible payments future.

The impact of these innovations on Asia Pacific growth cannot be overstated, as the value of cross-border payments is expected to reach $250 trillion by 2027.

With cross-border payments still riddled with inefficiencies, the demand for innovation in this space is intensifying. From traditional to DLT-based payment systems, we expect to see rapid changes over the next decade.

These advances hinge on the future of trade, commerce and travel, promising a world where cross-border transactions are seamless, transparent and instantaneous.

Clock “$80 billion in cross-border payments in Asia Pacific” to see how innovation is transforming the region’s financial landscape.

Featured image credit: Edited by Youtube

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Fintech

US Agencies Request Information on Bank-Fintech Dealings

Published

6 months ago

30 July, 2024

FinCrypt Staff

Federal banking regulators have issued a statement reminding banks of the potential risks associated with third-party arrangements to provide bank deposit products and services.

The agencies support responsible innovation and banks that engage in these arrangements in a safe and fair manner and in compliance with applicable law. While these arrangements may offer benefits, supervisory experience has identified a number of safety and soundness, compliance, and consumer concerns with the management of these arrangements. The statement details potential risks and provides examples of effective risk management practices for these arrangements. Additionally, the statement reminds banks of existing legal requirements, guidance, and related resources and provides insights that the agencies have gained through their oversight. The statement does not establish new supervisory expectations.

Separately, the agencies requested additional information on a broad range of arrangements between banks and fintechs, including for deposit, payment, and lending products and services. The agencies are seeking input on the nature and implications of arrangements between banks and fintechs and effective risk management practices.

The agencies are considering whether to take additional steps to ensure that banks effectively manage the risks associated with these different types of arrangements.

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Fintech

What changes in financial regulation have impacted the development of financial technology?

Published

6 months ago

30 July, 2024

FinCrypt Staff

Exploring the complex landscape of global financial regulation, we gather insights from leading fintech leaders, including CEOs and finance experts. From the game-changing impact of PSD2 to the significant role of GDPR in data security, explore the four key regulatory changes that have reshaped fintech development, answering the question: “What changes in financial regulation have impacted fintech development?”

PSD2 revolutionizes access to financial technology
GDPR Improves Fintech Data Privacy
Regulatory Sandboxes Drive Fintech Innovation
GDPR Impacts Fintech Data Security

PSD2 revolutionizes access to financial technology

When it comes to regulatory impact on fintech development, nothing comes close to PSD2. This EU regulation has created a new level playing field for market players of all sizes, from fintech startups to established banks. It has had a ripple effect on other markets around the world, inspiring similar regulatory frameworks and driving global innovation in fintech.

The Payment Services Directive (PSD2), the EU law in force since 2018, has revolutionized the fintech industry by requiring banks to provide third-party payment providers (TPPs) with access to payment services and customer account information via open APIs. This has democratized access to financial data, fostering the development of personalized financial instruments and seamless payment solutions. Advanced security measures such as Strong Customer Authentication (SCA) have increased consumer trust, pushing both fintech companies and traditional banks to innovate and collaborate more effectively, resulting in a dynamic and consumer-friendly financial ecosystem.

The impact of PSD2 has extended beyond the EU, inspiring similar regulations around the world. Countries such as the UK, Australia and Canada have launched their own open banking initiatives, spurred by the benefits seen in the EU. PSD2 has highlighted the benefits of open banking, also prompting US financial institutions and fintech companies to explore similar initiatives voluntarily.

This has led to a global wave of fintech innovation, with financial institutions and fintech companies offering more integrated, personalized and secure services. The EU’s leadership in open banking through PSD2 has set a global standard, promoting regulatory harmonization and fostering an interconnected and innovative global financial ecosystem.

Looking ahead, the EU’s PSD3 proposals and Financial Data Access (FIDA) regulations promise to further advance open banking. PSD3 aims to refine and build on PSD2, with a focus on improving transaction security, fraud prevention, and integration between banks and TPPs. FIDA will expand data sharing beyond payment accounts to include areas such as insurance and investments, paving the way for more comprehensive financial products and services.

These developments are set to further enhance connectivity, efficiency and innovation in financial services, cementing open banking as a key component of the global financial infrastructure.

Sebastian Malczyk

General Manager, Technology and Product Consultant Fintech, Insurtech, Miquido

GDPR Improves Fintech Data Privacy

Privacy and data protection have been taken to another level by the General Data Protection Regulation (GDPR), forcing fintech companies to tighten their data management. In compliance with the GDPR, organizations must ensure that personal data is processed fairly, transparently, and securely.

This has led to increased innovation in fintech towards technologies such as encryption and anonymization for data protection. GDPR was described as a top priority in the data protection strategies of 92% of US-based companies surveyed by PwC.

Arid Islam

Financial Expert, Sterlinx Global

Regulatory Sandboxes Drive Fintech Innovation

Since the UK’s Financial Conduct Authority (FCA) pioneered sandbox regulatory frameworks in 2016 to enable fintech startups to explore new products and services, similar frameworks have been introduced in other countries.

This has reduced the “crippling effect on innovation” caused by a “one size fits all” regulatory approach, which would also require machines to be built to complete regulatory compliance before any testing. Successful applications within sandboxes give regulators the confidence to move forward and address gaps in laws, regulations, or supervisory approaches. This has led to widespread adoption of new technologies and business models and helped channel private sector dynamism, while keeping consumers protected and imposing appropriate regulatory requirements.

George Blandford

Co-founder, UK Linkology

GDPR Impacts Fintech Data Security

A big change in financial regulations that has had a real impact on fintech is the 2018 EU General Data Protection Regulation (GDPR). I have seen how GDPR has pushed us to focus more on user privacy and data security.

GDPR means we have to handle personal data much more carefully. At Leverage, we have had to step up our game to meet these new rules. We have improved our data encryption and started doing regular security audits. It was a little tricky at first, but it has made our systems much more secure.

For example, we’ve added features that give users more control over their data, like simple consent tools and clear privacy notices. These changes have helped us comply with GDPR and made our customers feel more confident in how we handle their information.

I believe that GDPR has made fintech companies, including us at Leverage, more transparent and secure. It has helped build trust with our users, showing them that we take data protection seriously.

Dr. Rhett Stubbendeck

CEO & Co-Founder, Leverage Planning

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Fintech

M2P Fintech About to Raise $80M

Published

6 months ago

30 July, 2024

FinCrypt Staff

Application Programming Interface (API) Infrastructure Platform M2P Financial Technology has reached the final round to raise $80 million, at a valuation of $900 million.

Specifically, M2P Fintech, formerly known as Yap, is closing a new funding round involving new and existing investors, according to entrackr.com. The India-based company, which last raised funding two and a half years ago, previously secured $56 million in a round led by Insight Partners, earning a post-money valuation of $650 million.

A source indicated that M2P Fintech is ready to raise $80 million in this new funding round, led by a new investor. Existing backers, including Insight Partners, are also expected to participate. The new funding is expected to go toward enhancing the company’s technology infrastructure and driving growth in domestic and international markets.

What does M2P Fintech do?

M2P Fintech’s API platform enables businesses to provide branded financial services through partnerships with fintech companies while maintaining regulatory compliance. In addition to its operations in India, the company is active in Nepal, UAE, Australia, New Zealand, Philippines, Bahrain, Egypt, and many other countries.

Another source revealed that M2P Fintech’s valuation in this funding round is expected to be between USD 880 million and USD 900 million (post-money). The company has reportedly received a term sheet and the deal is expected to be publicly announced soon. The Tiger Global-backed company has acquired six companies to date, including Goals101, Syntizen, and BSG ITSOFT, to enhance its service offerings.

According to TheKredible, Beenext is the company’s largest shareholder with over 13% ownership, while the co-founders collectively own 34% of the company. Although M2P Fintech has yet to release its FY24 financials, it has reported a significant increase in operating revenue. However, this growth has also been accompanied by a substantial increase in losses.

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Fintech

Scottish financial technology firm Aveni secures £11m to expand AI offering

Published

6 months ago

30 July, 2024

FinCrypt Staff

Aveni, Investment Management, AI, NLP, UK

By Gloria Methri

Today

To come
Aveni Assistance
Aveni Detection

Artificial intelligence Financial Technology Aveni has announced one of the largest Series A investments in a Scottish company this year, amounting to £11 million. The investment is led by Puma Private Equity with participation from Par Equity, Lloyds Banking Group and Nationwide.

Aveni combines AI expertise with extensive financial services experience to create large language models (LLMs) and AI products designed specifically for the financial services industry. It is trusted by some of the UK’s leading financial services firms. It has seen significant business growth over the past two years through its conformity and productivity solutions, Aveni Detect and Aveni Assist.

This investment will enable Aveni to build on the success of its existing products, further consolidate its presence in the sector and introduce advanced technologies through FinLLM, a large-scale language model specifically for financial services.

FinLLM is being developed in partnership with new investors Lloyds Banking Group and Nationwide. It is a large, industry-aligned language model that aims to set the standard for transparent, responsible and ethical adoption of generative AI in UK financial services.

Following the investment, the team developing the FinLLM will be based at the Edinburgh Futures Institute, in a state-of-the-art facility.

Joseph Twigg, CEO of Aveniexplained, “The financial services industry doesn’t need AI models that can quote Shakespeare; it needs AI models that deliver transparency, trust, and most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, and reviewed by financial services experts for specific financial services use cases. Generative AI is the most significant technological evolution of our generation, and we are in the early stages of adoption. This represents a significant opportunity for Aveni and our partners. The goal with FinLLM is to set a new standard for the controlled, responsible, and ethical adoption of generative AI, outperforming all other generic models in our select financial services use cases.”