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Jan 20 2021

Gemini Becomes World’s First Digital Assets Custodian and Exchange to Complete SOC 1 Type 2 and SOC 2 Type 2 Examinations

US-based digital assets exchange Gemini has completed SOC 1 Type 2 and SOC 2 Type 2 examinations.

The Gemini team noted in a blog post published on January 19, 2021 that they’ve successfully cleared the SOC 1 Type 2 and SOC 2 Type 2 examinations, which covers their exchange operations and Gemini Custody products as well.

As confirmed by Gemini, the exams were carried out by Deloitte & Touche LLP and reportedly make the digital assets firm “the world’s first cryptocurrency custodian and exchange to demonstrate this standard of financial operations and security compliance.”

The cryptocurrency exchange and custodian stated:

“At Gemini, we aim to foster trust by demonstrating through action that as a company we follow through on the commitments we’ve made to upholding the highest levels of security and compliance for the benefit of our customers. We have done so by showing definitively through these independent third-party SOC evaluations that our operations and security compliance structures meet robust industry standards. We believe that these standards should be upheld by any cryptocurrency exchange and custodian.”

Gemini confirmed that in January 2019, they notably became the first digital asset exchange and custodian in the world to successfully complete a SOC 2 Type 1 examination, and followed it up with a SOC 2 Type 2 examination in January of last year. Gemini further noted that “building on these milestones, we completed a SOC 1 Type 1 examination in April 2020 and recently completed our SOC 1 Type 2 examination in December 2020.”

As explained by Gemini, the SOC 1 aims to assess or evaluate the overall design and implementation of their financial operations and related reporting controls, meanwhile, the SOC 2 aims to evaluate the effectiveness of the design and implementation of their “security, availability, and confidentiality controls.” As noted by the crypto exchange, the Type 1 examinations “assessed those processes at a point in time while our Type 2 examinations test that our system controls across our exchange and custody product have been operating over the period covering 2020.”

The US-headquartered firm confirmed:

“Gemini will continue to uphold the highest standards of security and operational compliance by undergoing SOC 1 Type 2 and SOC 2 Type 2 examinations on a yearly basis moving forward.”

As reported recently, Gemini, a New York Trust Company and Qualified Custodian, now has over $10 billion in digital assets under custody

Source

Written by bizbuildermike · Categorized: Crowdfunding · Tagged: 2020, 2021, AIM, Blockchain & Digital Assets, blog, company, compliance, crypto, crypto custody, crypto trading, crypto-assets, cryptocurrency, Cryptocurrency Exchange, custody, deloitte & touche llp, Design, digital, digital asset, digital assets, digital assets custodian, digital financial services, exchange, gemini, Investment Platforms and Marketplaces, New York, product, Products, security, soc 1 types 2, soc 2 type 2, United States, us, world

Jan 13 2021

Plaid Has Decided to Terminate Pending Acquisition By Visa & Remain An Independent Company

Plaid, an open banking platform, announced on Tuesday it has decided to terminate its pending acquisition by Visa and will remain an independent company. The latest news on the acquisition was made just a little over two months after it was revealed that the U.S. Department of Justice has filed suit in federal court pertaining to the acquisition.

As previously reported, Visa announced in January 2020 it was planning to acquire Plaid for $5.3 billion. In purchasing Plaid, Visa was reportedly to jumpstart its push for digital prominence. Kelly called the acquisition a “natural evolution” as it connects consumers with digital financial services. At the time Al Kelly, CEO and Chairman of Visa, stated:

“The combination of Visa and Plaid will put us at the epicenter of the Fintech world, expanding our total addressable market and accelerating our long-term revenue growth trajectory.”

At the time of the lawsuit’s announcements, Visa refuted the suit:

“Visa strongly disagrees with the Department of Justice (DOJ), whose attempt to block Visa’s acquisition of Plaid is legally flawed and contradicted by the facts. This action reflects a lack of understanding of Plaid’s business and the highly competitive payments landscape in which Visa operates. The combination of Visa and Plaid will deliver substantial benefits for consumers seeking accessto a broader rangeof financial-related services, and Visa intends to defend the transaction vigorously.  As we explained to the DOJ, Plaid is not a payments company. Visa’s business faces intense competition from a variety of players – but Plaid is not one of them. Plaid is a data network that enables individuals to connect their financial accounts to the apps and services they use to manage their financial lives, and its capabilities complement Visa’s. Together, Visa and Plaid will deliver better digital experiences and more choice for consumers in managing their money and financial data. Visa is confident that this transaction is good for consumers and good for competition.”

Speaking about Plaid remaining an independent company, Zachary Perret, Co-Founder and CEO of Plaid, shared:

“Since founding Plaid 8 years ago, we have been maniacally focused on expanding access and improving financial outcomes for consumers, developers, and financial institutions – and the intent of joining Visa was to accelerate that work. Unfortunately, the pace of a multi-year regulatory review is not compatible with the fast-moving realities of a startup – and delaying close another year or more is not in the best interest of our customers, the financial system, or consumers themselves.”

Perret further revealed despite the struggles that happened in 2020 globally, the past year has been one of exciting growth for Plaid, with hundreds of new banks joined the Plaid platform, and more than 4,000 companies turned to the platform’s service as the infrastructure to support their businesses, including many of the largest Fortune 500 companies who are focused on bringing digital financial products to their customers. In regards to his 2021 predicts, Perret added he expects the year to be more of the same as 2020.

“In addition to our ongoing focus on helping companies of all sizes deliver digital financial products, we have made significant progress in the ways that we work with financial institutions. Delivering on the promise of open finance is in everyone’s best interest, and we’ll be working in lockstep with our customers and financial institutions to bring this to fruition globally.”

Source

Written by bizbuildermike · Categorized: Crowdfunding · Tagged: 2020, 2021, acquisition, Apps, Banking, Banks, business, Businesses, ceo, Co-founder, company, Court, data, digital, digital financial services, doj, finance, financial data, financial services, fintech, Infrastructure, market, money, more, news, open banking, payments, plaid, Products, revenue, startup, transaction, u.s., United States, us, visa, work, world

Dec 05 2020

How is Fintech Developing During COVID? The Global COVID-19 Fintech Market Rapid Assessment Study Answers Your Questions

The Cambridge Centre for Alternative Finance (CCAF) released a report this week entitled The Global Covid-19 Fintech Market Rapid Assessment Study. The report seeks to better understand the development of Fintech during a time of a global pandemic. The research was supported by the UK Foreign, Commonwealth and Development Office (FCDO) and the Ministry of Finance of Luxembourg.

Produced in partnership with the World Bank and the World Economic Forum, the study tallied responses from almost 1400 Fintechs around the world. While the results are interesting to anyone engaged in financial services, policymakers and regulators should find the study particularly useful as they look to enable access to services that help consumers and businesses in an economy that is in the midst of a profound digital transformation.

Bryan Zhang, co-founder and Executive Director of the Cambridge Centre for Alternative Finance, stated:

“This study reveals a global Fintech industry that has been largely resilient in spite of COVID-19. Nonetheless, its growth must be interpreted with nuance and in the context of unevenness, and the opportunities for the industry should be juxtaposed with the challenges it faces.”

COVID-19 is accelerating change in how people interact with financial services said James Duddridge MP, the UK’s Minister for Africa at the Foreign, Commonwealth & Development Office (FCDO).

“Whilst it is encouraging to see the growth reported by Fintechs in the study, there are also cautionary indicators that some firms are suffering a deterioration in their financial position and are concerned over their ability to raise capital in the future,” said Duddridge. “This is something that the Fintech community should be mindful of given the significant economic opportunities that Fintech presents.”

In a public statement by CCAF, the authors noted that 60% of surveyed firms have either launched new products or revamped existing ones. However, the growth is highly uneven and Fintechs are still facing significant headwinds from certain operations as well as fundraising.

Regulation is key. The study states that there is a need for more regulatory and governmental support in light of COVID-19.

Overall, 12 out of 13 Fintech sectors reported year-on-year growth for the first half (H1) in 2020, compared to the same period in 2019, prior to the pandemic. On average, firms reported growth in transaction numbers and volumes of 13% and 11%, respectively. The impact of COVID-19 on market performance was found to be uneven across industry sectors, geographies and depending on the levels of economic development as well as COVID-19 stringency in a given jurisdiction.

Digital Payments, Digital Savings, Wealthtech, and Digital Asset Exchanges, all reported year-on-year growth in transaction volumes in excess of 20%, whereas Digital Banking, Digital Identity, and Regtech sectors showed more modest growth increases around 10%.

The only sector reporting a decline during the period was Digital Lending, which saw an average 8% decrease in transaction volumes.

Growth of Fintech in Emerging Markets or Developing Economies (EMDEs), saw an average increase in transaction numbers and volumes of 15% and 12% year prior. This is compared to 11% and 10% for firms from Advanced Economies (AEs).

Geographically, the highest transaction growth regions were the Middle East & North Africa (MENA) (40%), North America (21%), and Sub-Saharan Africa (21%). This contrasts the 13% transaction growth seen in Latin America and even slower growth in Europe and the Asia-Pacific region.

The data indicates that Fintech markets with high stringency COVID-19 lockdown measures averaged transaction growth 50% higher than those in low stringency countries.

While growth remains positive, COVID-19 still presents external risks for Fintech firms, as well as the operational and funding challenges. Approximately 40% of firms surveyed indicated that they have either introduced or are in the process of introducing enhanced fraud or security measures as a response to business conditions under the pandemic.

Other operational challenges include a 4% increase in agent or partner downtime and a 6% increase in unsuccessful transactions, queries or access requests. Fintechs also reported a 6% in expenses related to onboarding and a 9% rise in data storage expenditure.

 Caroline Freund, World Bank Global Director for Finance, Competitiveness and Innovation, noted that Fintech has shown its potential to close gaps in the delivery of financial service.

It’s clear COVID-19 has disrupted the global economy with lasting implications for corporates and consumers added Matthew Blake, Head of Financial and Monetary Systems, World Economic Forum.

Crowdfund Insider had some additional questions after reviewing the report. First and foremost, where does establishment finance stand in all of this. Are they falling behind? Are they keeping pace?

Karsten Wenzlaff, co-author of the Study, and Research Affiliate, CCAF & Alternative Finance Researcher at the University of Hamburg, said:

“Since this study was specifically focused on Fintech activity, we did not capture their data since it was out of scope. However, what we can see is that Fintechs are increasing their collaboration with traditional finance stakeholders and vice versa. COVID-19 has pushed these two groups closer together rather than pushing them further apart. This study, and previous CCAF research, have highlighted the increasing synergies between the traditional and the ’alternative’; and this trend seems to persist.”

The agility of Fintechs has long been a key characteristic in the ability of these firms to quickly pivot and adapt. So is it correct to assume that digital-first finance that iterates quickly is beneficial for both consumers and businesses. Is that correct to assume?

Tania Ziegler, Lead of Global Benchmarking-CCAF, Lead Author of the study, concurred:

“Yes, I would think so. We see a lot of added functionalities and new tools being experimented with. Our study found that more than two thirds of all Fintechs surveyed had made at least two or more changes to their existing product suite, and around 60% had also introduced or launched at least one new product!  Certainly, COVID-19 has shown that FinTechs are not shielded from large shocks, but at the same time can pivot their processes, terms and products very quickly.

While agility can be beneficial it is always a balancing act when it comes to regulatory requirements. As was noted in the report, Fintechs need more support from policymakers. So are regulators a bottleneck when it comes to change? Are the people in positions of power creating too much regulatory friction?

Ziegler diplomatically said yes:

“As shown in the Global COVID-19 Fintech Regulatory Rapid Assessment Study that was conducted in parallel by the CCAF and World Bank, we know that regulators globally are trying to evaluate and implement new tools, such as sandboxes and innovation offices, as well as support core regulatory activities. That said, our market study did find that on balance, most Fintech verticals had not yet received regulatory support. Overall, most firms reported urgently needing ‘faster authorization for new activities’ followed by streamlined product or services approvals, and then those which face client onboarding – simplified CDD, support for remote onboarding, etc. Now, interestingly firms in Emerging Markets tended to already utilise regulatory support more than those in Advanced economies, yet they also reported ‘urgently needing’ support at much higher rates. The study found that nearly half of all firms in EMDEs urgently needed regulatory support, with particular emphasis on faster authorization (just shy of 50%) and streamlined approvals (40%).”

Another challenge is fragmentation. Different firms providing similar services can interact with users, as well as other firms, if there is a consistent rule book to follow. We asked the report authors if any best practices are emerging from around the world and what should policymakers do to manage this challenge.

Ana Fiorella Carvajal, Lead Financial Sector Specialist at the World Bank Group, said indeed this is critical:

“… policymakers [must] strike the right balance so that they do not stifle innovation, but at the same time ensure that consumers are protected, and that financial markets remain sound. And precisely the best way to do that is by looking at the risks embedded in the activities that Fintech firms conduct as the guiding principle to determine the level of regulation and supervision that would apply to them. So, rather than a one-size-fits-all approach, the idea is to have a regulatory approach that is tailored to the type of activities conducted and proportionate to the risks they entail. This means, for example, that the approach and regulatory requirements that would apply to a Fintech in the digital payments space would be different than those that apply to an equity crowdfunding platform, because the activities are different and so are the risks.”

Ziegler said that interestingly, the study is not suggesting greater fragmentation of the Fintech industry. Rather, they are observing Fintechs broadening their customer base, and establishing new ways of operating.

“On balance, firms are making changes to their existing products and services, and launching new ones, at fairly high rates. Changes to existing activities tend to focus on how they engage with their existing and new customer base, mostly to make processes easier or to change their pricing structures. Changes to the way that firms processed their fees or positioned their pricing structure were among the top tweaks – in the face of COVID-19 firms have had to be flexible with their payment terms. We also observed firms releasing new services or launching new products. In some cases this was adding new components to existing offerings, and in other cases this was launching totally new streams. Where it relates to the latter, this is where regulators may have to become more reactive, to create faster or more efficient ways for firms to license new products or streamline their approval processes to reflect the increasing demand from new users.”

She added that firms in emerging markets tend to already utilise regulatory support more than those in advanced economies, but they also reported better/faster support at much higher rates.

“We found that these firms urgently needed regulatory support on faster authorization (just shy of 50%), streamlined product or service approvals (40%) and regulatory support for e-KYC (39%).”

So what should policymakers do, in general, to encourage innovation while maintaining sufficient protection protocols?

Carvajal said that while the individual measures are country-specific, in general policymakers need to work on two main fronts:

(i) expanding and improving the financial and technological infrastructure of the country, and

(ii) implementing legal and regulatory frameworks that support the delivery of digital financial services, along with the tools to monitor and supervise FinTech activities as appropriate.

“With regard to the latter, it is critical that such frameworks are proportionate to the risks posed by Fintech so that they don’t stifle innovation, but at the same time ensure that risks to consumer protection, integrity and financial stability are well managed,” Carvajal stated.

Ziegler explained that they have seen that Digital Payment firms have been the biggest beneficiaries of the most proactive regulatory support with a focus on e-KYC:

“Despite this, the study did show us that Fintechs, in general, are not yet able to benefit from additional regulatory support, especially as it relates to client onboarding, authorization and licensing for new products, or streamlined approval processes. From the Regulatory study, we found that none of the surveyed Regulators had any plan to stall innovation initiatives, such as Sandboxes or Innovation offices. But what our study really pointed to is that firms aren’t placing an emphasis on regulatory innovation tools, but rather core-regulatory support or supervisory procedures. In order for them to service their clients, their needs relate far more to day-to-day, but highly critical, core regulatory support,” Ziegler explained.

The report may be downloaded here or it is available below.


CCAF The Global Covid-19 FinTech Market Rapid Assessment Study v0_5

Source

Written by bizbuildermike · Categorized: Crowdfunding · Tagged: africa, ana fiorella carvajal, author, Banking, business, Businesses, cambridge centre for alternative finance, caroline freund, ccaf, CENTRE, Co-founder, Community, coronavirus, covid-19, Crowdfunding, data, digital, digital asset, digital banking, digital financial services, digital lending, digital payments, digital transformation, Economic Development, economy, Emerging Markets, Europe, Exchanges, Featured Headlines, finance, financial services, fintech, fraud, funding, fundraising, Future, Global, global covid-19 fintech market rapid assessment study, Global economy, identity, Infrastructure, innovation, karsten wenzlaff, legal, lending, Luxembourg, market, markets, matthew blake, mena, Middle East, North America, Offerings, other, pandemic, partnership, payment, payments, Politics, Legal & Regulation, product, Products, Regulation, report, research, security, Space, storage, Study, supported, tania ziegler, transaction, us, work, world, World Bank, world economic forum

Dec 01 2020

Cambridge Centre for Alternative Finance, World Bank and World Economic Forum Present Global Study on COVID-19 Impact on Fintech

The Cambridge Centre for Alternative Finance (CCAF), along with its partners the World Bank and the World Economic Forum, hosted a presentation this week outlining its findings in a study reviewing the COVID-19 pandemic and its impact on the Fintech industry.

The survey was launched several months back when it became clear that COVID-19 was quickly becoming a global health crisis compelling lockdowns and remote work in an attempt to slow the spread of the highly infectious disease. Fintech platforms have been dramatically impacted by the coronavirus with many experiencing accelerated growth as part of the overall digital transformation occurring in financial services. The Global Covid-19 Fintech Market Rapid Assessment Study surveyed approximately 1400 Fintechs operating in a diverse range of financial services to gauge how the pandemic has impacted digital financial services firms. The CCAF survey held three specific goals:

  • First, the research looked at the impact of the global pandemic on Fintech markets – understanding how Fintechs are performing financially based on their operating model and jurisdiction among other criteria
  • Second, they studied the responses of these organizations in shifting their products and operations throughout the pandemic –  seeking to understand how these companies are dealing with remote working measures and a more digitized economy
  • Finally, to identify issues Fintechs are facing on a regulatory front

As one may anticipate, the Fintech industry is performing pretty well during the health crisis with the singular exception of online lending that saw an 8% decline in activity when comparing H1 2020 to H1 2019. CCAF reports that this sector experienced an approximate 10% increase in defaults as borrowers struggled as the coronavirus spread – understandable in light of the economic challenges.

According to the report, the top sectors of Fintech in regards to percentage growth in transactions are as follows:

  • Digital custody – 36%
  • Digital asset exchange – 33%
  • Digital savings  – 26%
  • Wealthtech  – 24%
  • Digital payments – 21%

Anecdotally, there have been some prominent examples of the rapid rise in Fintech services as consumers and businesses were forced to adapt to a new way of existence. Digital payments that are contactless is a clear winner. The Robinhood phenomenon has enticed a new generation of investors to trade online.

Regarding how the various regions are performing the UK was the only sector that saw a transaction volume decline – perhaps due to the oversized impact of digital lending. Otherwise, all other reviewed regions experienced an increase led by the MENA region (Middle East North Africa) rising by 40% and followed by North America and South America (both increasing by 21%).

It is interesting to note that jurisdictions that experienced more stringent COVID protocols such as remote work requirements and business closures, saw higher digital finance transactions. CCAF said that “the higher the COVID-19 stringency, the higher the adoption of Fintech services. The increased adoption is not necessarily caused by the pandemic, but there is a direct correlation between strict lockdowns and increased adoption of Fintech services.”

Many Fintechs launched new products or adjusted services due to the pandemic, adjusting product supply as demand increased or changed.

Regulatory challenges remain a hurdle as many Fintechs indicated they are in need of more regulatory support and faster approvals for financial services.

CCAF said that retail facing Fintechs, in particular Digital Payments, Lending, and Banking, were among the most agile verticals to implement changes to their offerings with a vast majority making changes.

Regarding capital formation, CCAF reported that approximately 40% of “Digital Capital Raising Platforms” indicated that they had been hosting COVID-specific offerings – something Crowdfund Insider has reported on in the past.

One area that may be viewed in a disappointing light is that government entities have been slow to leverage the agility of Fintechs to deliver services during COVID as some governments instituted business support programs to backstop the sliding economy.

A panel followed the presentation of the data generated by the survey with some interesting comments emerging.

Blythe Masters, the former CEO of Digital Asset – now at Motive Partners, noted that while the US is a highly developed country there are still 55 million people or 22% of the population that are unbanked or underbanked. A pretty astounding number. Regardless, Masters said that COVID has accelerated digital transformation in financial services by at least 5 years and perhaps up to 10.

Jon Frost, Senior Economist, Innovation & the Digital Economy, Bank of International Settlements, added that there is a risk of a digital divide and there is some work that needs to be done – alluding to the fact that certain demographics or regions lack access to digital financial products.

Fragmentation in products, more specifically Regtech, is inhibiting growth, said Robert Wardrop, co-founder and Director at CCAF.

Ana Fiorella Carvajal, Lead Financial Sector Expert at the World Bank Group, said please streamline the regulation and provide faster authorization – especially in emerging markets.

And what about the growth in digital assets and digital custody? Masters believes that a maturing industry with more institutional involvement is aiding sector growth. She said that over 8% of Americans own or have owned Bitcoin – a percentage that is increasing.

What is obvious is that Fintech adoption is accelerating and the digitization of finance is inevitable. COVID is acting as an accelerant fueling this digital transformation that bodes well for consumers as well as business – beyond some avoidable hurdles.

The full report will be released later this month. Stay tuned.

Source

Written by bizbuildermike · Categorized: Crowdfunding · Tagged: Adoption, africa, ana fiorella carvajal, Banking, bis, bitcoin, blythe masters, business, Businesses, cambridge centre for alternative finance, ccaf, CENTRE, ceo, Co-founder, contactless, coronavirus, covid-19, custody, data, digital, digital assets, digital financial services, digital lending, digital payments, digital transformation, economist, economy, Emerging Markets, exchange, Featured Headlines, finance, financial services, fintech, fintech adoption, General News, Global, government, health, infectious disease, innovation, jon frost, lending, market, markets, mena, mena region, Middle East, Model, North America, note, Offerings, online lending, other, pandemic, payments, platforms, product, Products, Regulation, remote working, report, research, retail, risk, robert wardrop, Robinhood, Study, trade, transaction, uk, Unbanked, united-kingdom, us, work, world, World Bank, world economic forum

Oct 04 2020

Southeast Asian Countries are Increasingly Adopting Digital Payments, but Regulatory Issues May Slow Adoption, Fintech Exec Argues

Fady Abdel-Nour, Head of Global M&A and Investments at PayU, a Fintech firm that provides payment technology to online merchants, has noted that regulators in Southeast Asia are working hard to ensure that digital payments are adopted by consumers.

Abdel-Nour has pointed out that UPI, digital wallets, and various mobile-based payment apps are now being supported by progressive regulations which have led to their successful adoption in many Asian countries.

He claims that there are still several Southeast Asian nations that need to be doing a lot more, in order to help consumers with conducting digital transactions. For instance, Indonesian Fintech companies have revealed that they’re now waiting for a really long time before their applications for banking licenses are reviewed by regulators.

Abdel-Nour argues in a blog post published by Fintech Magazine that these types of issues can slow down the adoption of digital platforms and services, which have become essential following the COVID-19 outbreak. Abdel-Nour recommends that regulators should ensure that they are taking measures and introducing policies that offer consumer protection (like appropriate KYC and AML guidelines).

In addition to regulatory challenges that may be slowing down the adoption of digital services, the Southeast Asia region has been hit hard (especially small businesses) due to the pandemic.

As reported in late September 2020, Indonesian regulators and Fintech firms are now focused on balancing regulations with responsible innovation.

While the payments sector of Fintech has managed to grow steadily, with more consumers conducting digital transactions, peer to peer Fintech lenders in Asia are struggling right now. As reported recently, the Indonesian Fintech Lenders Association has set up a task force to help P2P lending firms deal with the rising number of bad loans.

Other challenges faced by the Fintech sector in Asia include a general shortage of qualified finance industry professionals. As covered, the Southeast Asian country of Vietnam needs more qualified workers and better overall policies to expand its Fintech sector.

Source

Written by bizbuildermike · Categorized: Crowdfunding · Tagged: Adoption, Apps, Asia, Banking, blog, Businesses, covid-19, digital, digital financial services, digital payments, digital transactions, digital wallets, finance, fintech, Global, Indonesia, innovation, Investments, KYC, lending, online wallets, outbreak, p2p, p2p lending, payments, payu, peer to peer, platforms, small businesses, Southeast Asia, supported, Technology

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