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You can't sail Today's boat on Yesterdays wind - Michael Noel

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Accenture and Digital Dollar Foundation to trial United States CBDC this year

Fortune 500 company Accenture has teamed up with Digital Dollar Foundation to conduct Central Bank Digital Currency, or CBDC, trials in the United States.

Announced on Monday, May 3, the newly formed Digital Dollar Project will carry out five CBDC pilot programs over the next 12 months. The project’s objective is to generate data to inform U.S. policymakers on how to develop a domestic digital currency.

The Digital Dollar Project will launch three pilot programs in the next two months, generating data on the functional, sociological, and business benefits of a digital greenback.

Al Jazeera reports that former chair of the Commodity Futures Trading Commission and co-founder of the Digital Dollar Foundation, Christopher Giancarlo, emphasized the lack of U.S. data regarding CBDC:

“There are conferences and papers coming out every week around the world on CBDCs based on data from other countries. What there is not, is any real data and testing from the United States to inform that debate. We’re seeking to generate that real-world data.”

However, the Fed is taking a cautious approach as the guardian of the world’s reserve currency, the report added, with chairman Jerome Powell responding that it is far more important to get a digital dollar right than it is to be fast.

Giancarlo countered that Powell was correct to be cautious, but warned that the U.S. could fall further behind as China pushes ahead with its own CBDC testing and deployment.

While the U.S. Federal Reserve has been conducting research into the technology and applications for a CBDC, the United States lags behind the digital currency initiatives currently ongoing in numerous other jurisdictions.

China’s central bank and leading state banks have recently been preparing to test the digital yuan for a shopping festival on May 5.

Accenture has also worked on a number of CBDC projects in other countries, including Canada, Singapore, France, and Sweden — which has already completed the first phase of its pilot.

According to a study by the Bank for International Settlements, 80% of the world’s central banks are already researching central bank-issued digital currencies.

Accenture and Digital Dollar Foundation to trial United States CBDC this year

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Barclays Appoints Helen Kelly as Head of Europe Corporate Banking

Barclays recently announced it has appointed Helen Kelly as Head of Corporate Banking, Barclays Europe. According to Barclays, Kelly has more than 30 years of experience in banking with Barclays. She previously was Head of international Corporate Banking – Ireland and Country Manager – Ireland.

Speaking about the appointment, David Farrow, Head of International Corporate Banking at Barclays, stated:

“Helen’s appointment as Head of Corporate Banking for Barclays Europe is an important step forward in our commitment to supporting businesses operating on the continent. Helen has a proven track record in delivering for our colleagues and clients, and will play a key role in continuing to expand our presence in Europe over the years ahead.”

Barclays went on to add that it has continued to develop its digital banking platform in Europe. The platform has already been rolled out in Portugal, France, Spain, Ireland, Germany, the Netherlands, Luxembourg, and Belgium. The banking group added:

“The benefits of the digital platform include streamlined KYC and account opening, digital on-boarding, improved self-help capabilities, and multilingual servicing. By working closely with partners across the Group, including in investment banking, Barclays will build on the momentum generated by this growing European footprint in order to deliver for clients – and to support the bank’s wider growth ambitions through its Barclays Europe entity.”

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Astorya, Search Engine for Insurance and Banking Tech, Reviews 10 Years of Insurtech in Europe

Astorya.io, which aims to serve as the search engine for Insurance and Banking technologies, has published a blog post, titled InsurTech Europe: 10 Years Of InsurTech In Europe Analyzed Through 800+ Startups (based on data from astorya.io).

While discussing how InsurTech startups are gaining considerable ground across Europe, the blog post notes that insurance tech firms are “moving the lines in the insurance world.” This, according to the study performed by astorya.io for L’Argus. These startups have played a key role in the transformation of the sector which is expected to expand further.

As noted in the blog post:

“Unrecognized five years ago, InsurTech startups seem to have found their place in the insurance industry, despite pockets of resistance. A recent study by research firm Juniper thus underlines that globally they already account for 5% of the turnover of the entire market, a rate that is set to double over the next four years. But this groundswell covers distinct trends.”

The blog adds that the US and China have witnessed the rise of a relatively large number of online or digital insurance providers “oriented B to C (business to consumer), the size and regulation of local markets allowing it.” The post further notes that this may be “an approach that is less suited to Europe, even if Alan or Luko are showing [solid] growth.”

For example, Maif announced last year that it had managed to acquire 66,000 new clients “across all of its products.” Meanwhile, Luko, on home insurance alone, “won nearly 100,000” customers — according to Florian Graillot, founder astorya.vc, an InsurTech fund.

The post further noted that “beyond these exceptions, the world of European InsurTech has experienced certain structural and historical trends, which astorya.io (database on InsurTech and FinTech, created by the founders of astorya.vc) analyzes in a study for L’Argus.”

The Astorya team added:

“First observation: the European InsurTech ecosystem has entered a phase of maturity for two years, as shown by the significant decrease in the number of newcomers. And for good reason: in France, Alan, Luko and Shift Technology have monopolized new financing, as has pet insurance specialist Bought by Many in the UK, or even, in Germany, players such as Coya and WeFox. For several years now, these three countries alone have grouped together three-quarters of the continent’s InsurTech startups.”

The report pointed out that another key highlight is “the positioning of these newcomers in the insurance value chain.” It also mentions that in this regard, the astorya.io study emphasizes one important point: “the preponderance of these InsurTech startups in the individual insurance segment, mainly car and home, to a lesser extent health.”

The blog post added that P&C insurance products are “simple, therefore standardized, and have low margins … For traditional insurers, they are primarily starter products. ” It also noted that to gain a foothold, InsurTech startups must “rethink its distribution” — according to Florian Graillot.

The  blog post continued:

“Although there have been a number of failures in this segment, the founder of astorya.vc believes the market is far from saturated and new start-ups may appear: E-commerce is estimated to account for 30% of total commerce, almost 50% if outside of the food market. Where are we in insurance? Comparators represent 10% of the market … In short, if insurance follows other sectors of the economy, there is still plenty of room for these new digital native players.”

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Cross-border Fintech Wise Talks IBAN Discrimination on World Consumer Rights Day, Other Fintechs Join Wise to Address Challenges

This World Consumer Rights Day, which took place on March 15, 2021, Fintech firm Wise (previous TransferWise) talked about what they consider to be IBAN “discrimination.”

Wise clarified that IBAN discrimination is “against the law – and has been since 2014.” However, the company claims that it’s “still common practice by many providers.”

Wise also confirmed that all EU nations have their own domestic IBAN, beginning with their country code (Think FR for France). Wise added that “regardless of which country your IBAN is from, it should be accepted anywhere in the EU.” And if a provider does not accept your IBAN – they’re “breaking the law,” Wise added.

Wise further noted via Twitter:

“Let’s say you want to pay for your gym membership in Spain (where local IBANs start with ES) using your Wise IBAN (which is Belgian, and starts with BE). If your Spanish gym doesn’t accept that Belgian IBAN, that’s IBAN discrimination.”

Wise revealed that it has teamed up with other Fintech companies in order to “put an end to this shady practice.” However, they still need the help of the general public.

If you’ve ever had to deal with IBAN discrimination, then you can let the company know.

As covered recently, moving money in 2021 should be like sending an e-mail – instant, according to Nick Catino from Wise.

Catino, who is responsible for Policy, Campaigns, and Regulatory Strategy at Wise (formerly TransferWise), recently noted that payments are the part of finance that consumers experience “most on a day-to-day basis.”

Catino also mentioned that there are certain important initiatives that will help “ensure the financial success” of Canadian consumers and businesses.

Payments Canada, which offers the payments infrastructure that allows Canadian residents, their businesses and their institutions to exchange value, notes that with the introduction of advanced payments methods “comes a need for modernizing existing payments regulations and infrastructure.”

Catino told Payments Canada that while “modernizing payments regulations and infrastructure” might “sound technical,” it is really one of the most “important” financial policy initiatives the Canadian government can lead. He explained that payments are the part of finance that consumers “engage with most” on nearly an everyday basis.

Catino added:

“Much like our mission at Wise, governments should strive to make payments instant, convenient, transparent, and as low cost as possible. Payments modernization will help meet those goals and ultimately help ensure the financial health of Canadians and keep more money in their pockets.”

Last year, it was reported that Transferwise (recently rebranded as Wise) had been approved in the UK to offer investment services for retail accounts. According to the FCA registry, “TIVN” is approved to offer various retail investment services. At that time, it was expected that investment features would be out before the end of 2020.

But the end of 2020 has morphed into 2021 minus any announcement on the new service. While Wise has continued to add new features, the ability to generate a return on cash held in a Wise account has been noticeably absent from the Fintech’s offerings.

And with the addition of investments, Wise will finally emerge from stealth bank to digital bank, executing on a mission established years ago. So when will the Wise Bank arrive in your market? Hopefully, we will know in the coming months.

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SME Lender October Confirms that French Government has Extended State-Guaranteed Loans Program to June 2021

European online lender October notes that in March 2020, the French State had announced a package of €300 billion in State-guaranteed loans (PGE) in order to support small and medium-sized enterprises during the COVID-19 pandemic.

Following the amendment voted on in April 2020, lending marketplaces like October had been eligible or qualified to take part in these French state-guaranteed loans schemes and were offering state-guaranteed loans to qualified borrowers.

Since the introduction of the first state-guaranteed loan on October’s platform in June of last year, 68 French state-guaranteed loans were reportedly funded by institutional and retail lenders for “a total amount of €13,167,000 and new loans will be granted in the coming months, following the government announcement to extend the guarantee program until June 2021,” October confirmed in a blog post.

In December of last year, the French government had also announced a modification or change to the repayment scheme for these initiatives. Companies or businesses that would like to delay the capital repayment of their state-guaranteed loan are now able to request a 1-year “additional deferral to their creditor, who will choose to grant it or not,” the October team noted.

While commenting on the initial repayment scheme, the October team explained that the state-guaranteed loans are different from the standard loans available on their platform. The characteristics of these loans (for instance, the duration, interest rate) have been “set by the French government,” October confirmed.

They also noted:

“French state-guaranteed loans are initially 12-month deferred loans with payment of interest (2%) and principal at the end of the loan. However, what makes the state-guaranteed loan unique is that the borrower can decide to extend their loan after the first 12 months, with a higher interest rate.” 

At the conclusion of this period, the borrower has the following options: loan fully repaid after 12 months; duration extended after 12 months with no capital repayment; duration extended after 12 months with partial capital repayment (Note: for more details on these options, check here.)

While discussing the new repayment scheme, the October team noted that following an announcement from the French Ministry of the Economy and Finance (on December 14, 2020), all firms that had been issued a state-guaranteed loan (regardless of their activity and size) may apply for “an additional one-year deferral to start repaying the capital of their state-guaranteed loan.”

October’s management further noted:

“If a borrower wishes to extend their loan, they can now ask October for the extension of the deferral period for another 12 months, during which the company would repay only interest every month, followed by an amortization period of up to 4 years, during which the borrower would repay both capital and interest (i.e. the maximum duration to fully amortize the loan remains 5 years).”

They also confirmed that the interest rate “applicable during the additional 12-month deferral period is between 3.71% and 4.91% depending of the project rating.”

They also mentioned that when applying for the extension of the deferral period, the borrower will have to “indicate whether they will repay their loan immediately at the end of the deferral or whether they will spread the repayments over several years (in that case, they will also need to state the duration of the amortization).” If the company “decides to spread the capital repayment after the extra deferral period, the loan will be repaid through annuities, with an interest rate comprised between 3.71% and 4.91%.”

The October team clarified:

“Contrary to the extension of the amortization period for a period of 1 to 5 years, this extra deferral period is not granted automatically. October will study the applications on a case-by-case basis and will verify the company’s need to request the extra deferral period by requesting additional documents, studying the impact of Covid-19 on the company’s sector…If the October Committee accepts the application, we will ask the October lenders to vote.”

While commenting on what these changes mean for retail lenders, October noted that if a firm you’ve financed requests the extension of the deferral period for their state-guaranteed loan, then you will be “notified by email and request to vote on the additional deferral period.”

And if the majority of institutional and retail lenders (in volume lent) “votes in favor of the additional deferral period, the extra 12-month deferral will be granted and the company will only repay interest during that time.” The interest rate you’ll get “will be increased.” The new repayments will be “displayed in [the client’s] portfolio, on the Future Transactions tab.” From June 2021 onwards, October confirmed that they would begin receiving “some extension requests from borrowers who were granted a state-guaranteed loan.”

Not all firms may request the “additional” deferral period, but still you should be “prepared in case that happens,” the lender noted. It also mentioned that the platform’s management is available for questions you might regarding this change or update.

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