Biz Builder Mike

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Institutions

Citigroup Launches Crypto Trading and Custody Services

Citigroup, a banking giant, is launching a crypto trading and custody service. The new service aims to meet the growing demand for crypto assets.

Itay Tuchman, the global head of forex for Citigroup, has confirmed that the bank had witnessed a rapid accumulation in Bitcoin (BTC) interest from institutional clients. Tuchman announced the move in a report published in Financial Times.

According to Tuchman, banks could venture into crypto through proprietary trading, where they use their resources to make profits. “There are different options from our perspective, and we are considering where we can to best service clients. This is not going to be a prop-trading effort,” said Tuchman.

Not happening any time soon

However, Citigroup has confirmed that it is taking its time to launch crypto services. Tuchman stated that the bank would only jump into the crypto space when it was sure that its clients could benefit. It would also consult with regulators to build something robust and compliant.

“I don’t have any FOMO [fear of missing out] because I believe that crypto is here to stay and that we are just at the very beginning of the market. This isn’t a space race. There is room for more than just one flag.” Tuchman said.

In March this year, the bank released a report saying that Bitcoin could become a global trading currency after evolving. The report indicated that people’s perceptions about Bitcoin were changing. This would create a new opportunity and make the token more mainstream.

Citigroup Launch Crypto Trading and Custody Services
BTC/USD 1 day chart, Binance, 7 May 2021. Courtesy TradingView

Citi’s interest in Bitcoin

Citigroup analysts have written a paper on Bitcoin titled, “Bitcoin: At the Tipping Point’. The report indicated that BTC would change from a nascent form of payment to a store of value. Also, if there’s a boost in Bitcoin’s global reach, the crypto asset could easily become an international currency. This can be achieved through Bitcoin’s attributes such as decentralisation and borderless design.

Citi’s report on the currency shows that BTC may come in handy to exporters and importers. It would simplify international trading and may even be preferred to fiat currencies. Bitcoin lacks forex risk exposure. It is also fast, traceable, and guarantees the security of online payments.

Citigroup is not the only Wall Street bank to venture into the crypto space. Top banking institutions that have ventured into crypto include Bank of New York, Goldman Sachs, Mellon, and Morgan Stanley. This latest move comes amidst increased retail and institutional demand for crypto assets.

Citigroup Launches Crypto Trading and Custody Services

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Fintech Ant Group Affiliate MYbank Is Planning to Expand Operations in China to Serve More Rural SMEs

China-based MYbank, an online private commercial bank and an affiliate of the Ant Group with a special focus on working with rural areas and SMEs, has revealed that it will be doubling the number of rural counties it serves in the coming years.

MYbank and its business partners plan to provide financial services in 2,000 rural counties in China within the next four years (by 2025). This should coincide with the bank’s 10th year since its launch. The initiative will ensure that rural clients are able to access the same modern financial services that are offered in some of China’s largest cities. The initiative should also help with addressing the last-mile problem in the rural finance sector.

This latest announcement from MYbank has come along with the release of the firm’s 2020 annual report, which reveals that MYbank had been serving 70% more (year-on-year) SMEs in 2020 when compared to 2019. This rise in activity has mainly been driven by MYbank’s expansion into rural areas.

Since launching operations 6 years back, MYbank has managed to serve clients in over 750 different counties across China.

Xiaolong Jin, President of MYbank, stated:

“We have continued to record remarkable growth in customer base for five consecutive years. We expect rural finance to play a significant role in advancing financial inclusion, and will further our efforts to make rural finance more accessible with our financial institution partners.”

MYbank has reportedly kept its non-performing loan ratio at around 1.52%, which is a lot lower than the 2.99% average for Chinese SME loans (as of June of last year).

MYbank had teamed up with the All-China Federation of Industry and Commerce and the China Banking Association (in March 2020) in order to introduce a “Contactless Loans” initiative, in which 118 Chinese banking institutions had come together to provide supportive loans for small and medium-sized businesses as they tried to maintain operations.

The initiatve reportedly offered more than RMB 870 billion worth of loans to many different SMEs in sectors that were negatively impacted by the COVID-19 outbreak (including local dining and retail outlets).

During the 6 months since the campaign began, MYbank and its partner banks have waived RMB 665 million in interest payments for Chinese SMEs.

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Monetary Authority of Singapore Dedicates S$42 Million for Regtech Initiatives

The Monetary Authority of Singapore (MAS) has announced a new grant program targeting Regulatory Technology or Regtech that is said to be an enhancement of the Digital Acceleration Grant (DAG) scheme to accelerate technology adoption.  In a public statement, MAS said it will commit S$42 million for the Regtech grant scheme and enhanced DAG scheme.

Sopnendu Mohanty, Chief Fintech Officer at MAS, stated:

“MAS remains committed to the digital transformation of the Singapore financial sector. We expect the RegTech ecosystem to flourish with widespread use of innovative solutions to aid risk management and compliance. The Digital Acceleration Grant has enabled the smaller FIs and FinTech firms to adapt to the challenges in the past year and we will continue to support these firms as they accelerate their digital transformation journey. We encourage FIs to tap on these grants to embed technology into the firms’ DNA.”

The grant is being made available to Singapore-based financial institutions (FIs) and seeks to promote the adoption and integration of technology solutions in the risk management and compliance functions of financial services firms.

There will be two tracks for the grants including:

  • The pilot track: FIs can seek funding to pilot potential RegTech solutions before embarking on full-scale integration of the product into its operating environment. Funding for this track will be capped at S$75,000.
  • The production level project track: FIs can seek funding to develop larger-scale customised projects that can be fully integrated into the FI’s systems. Funding for such projects will be capped at S$300,000.

MAS states that both tracks can be used to support either in-house development or commercial partnerships with Regtech firms based in Singapore.

The DAG was launched in April 2020 to help smaller FIs and Fintech firms adopt digital solutions to better cope with the impact of COVID-19, and to position themselves for subsequent recovery and growth. As of 31 March 2021, MAS reports that it has received over 1,100 applications from both FIs and Fintech firms.

MAS said it will commit an additional S$30 million to the DAG until 31 December 2021 to encourage the industry to adopt digital solutions that enhance productivity, cybersecurity, and operational efficiency. This brings the total grants available under the DAG scheme to S$65 million.

Ian Lee, Vice President of Business Development at Merkle Science, a Singapore-based blockchain transaction risk monitoring and analytics platform, issued a comment on the new Regtech funding.

“Regtech solutions are having a difficult time gaining market share here in Singapore and abroad. Oftentimes, startups at their initial stages have to give away their solutions at a low cost — or sometimes even for free — in order to gain traction and receive feedback on their product. With startups’ limited resources, it is difficult for these innovative new startups to compete with larger legacy firms. With this new $42 million grant, the MAS is supporting the development of local Regtech startups and encouraging innovation in two ways. Firstly, the grant furthers the existing Digital Acceleration Grant (DAG) scheme, which is available to any startup that services financial institutions. Through the extension of the DAG, financial institutions can also use the grant to subsidize their cost of operation.”

Lee added that an interesting feature of the new Regtech grant is for providers to pilot their solutions and test for efficacy under a paid model.

“While the details on this feature have not been released yet, it sounds like there may be subsidies for established companies to use and test the solution before the startup moves the solution to full-scale production.”

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Thought Machine, a Cloud Native Tech Provider for Banks, Integrates Fintech Wise’s Money Transfer Platform

Thought Machine, a company that builds Cloud-native technology for banks, has reportedly integrated Wise‘s (formerly doing business as TransferWise) global money transfer platform into its core banking engine, Vault.

The integration should allow Thought Machine‘s banking and Fintech clients the option to use Wise’s fast and affordable global transfers service more quickly and in a more efficient manner. The companies have developed an integration layer that, they explained, lowers the developer effort required for financial institutions to link up with Wise’s API (developer effort reduced as much as 60%).

Wise, which recently rebranded from TransferWise (earlier in 2021), began its business operations as a consumer-facing startup providing an alternative to slower, inefficient, and costly currency transmission services offered by incumbents.

While still working with millions of clients directly, Wise is now more focused on teaming up with banks in order to integrate its API within their platforms.

The latest deal sees Wise’s technology being provided to  Thought Machine’s clients, which includes Lloyds Banking Group, Standard Chartered, Atom bank, Monese, Curve, and SEB.

Stuart Gregory, MD, Wise Platform & Wise Business, stated:

“Our integration today makes it quicker and easier for financial institutions and banks to enable faster and cheaper payments for their customers and brings us one step closer to our mission of building money without borders.”

Wise, a top Fintech that may be described as a stealth bank, recently announced that it’s giving away shares in itself. According to the private company, it has gifted 2000 customers a single share of the firm that has emerged as popular global payments and transfer platform.

The UK-based Fintech firm noted that currently there are 2400 employees in 15 offices working at Wise. All of the employees are said to have shares in the company that has indicated in the past it will seek to remain private as long as possible. Of course, if and when, Wise goes public, early shareholders may benefit from their confidence in the company’s mission.

Wise stated:

“We believe our customers should also be shareholders. You have the strongest understanding of the problems we’re trying to solve and our mission, so it’s natural you should have a say in how Wise is built and run. We believe having you represented amongst our shareholders will help us move even faster towards completing our mission. That’s why we’re giving one share in Wise to 2,000 of our active customers. Having a share is a bit like having a slice of the Wise pie — it means you own a bit of Wise. If you’re one of the lucky 2,000, we’ll be in touch with how to claim your share.”

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Italy: Banca Sella and Workinvoice Partner to Build Fintech Services for Corporates

Said to be one of the first open banking partnerships in Italy, Banca Sella and Workinvoice have announced a partnership to develop end-to-end digital financial services for corporates.

According to a note from the company, Workinvoice will integrate digital products for corporates, like services for working capital and factoring, into Banca Sella’s platform. The collaboration between Banca Sella and Workinvoice will provide the bank’s corporate customers with more convenient solutions f0r accessing capital. Factoring is expected to be the first service offered which will allow companies to gain improved liquidity in their payment cycle.

This will be followed by a “digital reverse factoring service” for supply chain financing and will be available to medium-sized companies (revenue of €50M to €300M).

Workinvoice has developed a system that is entirely APIs based that allows for a constant dialogue with the platform provided by Banca Sella, so as to offer the bank’s customers fast, digital services and a simple, intuitive experience.

Doris Messina, Head of Digital Transformation and Marketing at Banca Sella, commented:

“Banca Sella was the first Italian institution to grasp the value that open banking could generate for customers. Therefore, this partnership with the Fintech company Workinvoice is an important part of our innovation process. Collaborations of this kind will make the difference in the future and will allow us to offer even more rapid and effective solutions, which are based on the customers’ needs and seize the opportunities that are made available by technological innovation.”

Matteo Tarroni, CEO and co-founder of Workinvoice, said the partnership with Banca Sella, is a great development for Workinvoice and for Italian corporates.

“Banca Sella’s history delivering the best services for their customers gives Workinvoice a market leading partner to scale best in class digital financial solutions, and, most importantly, gives corporates another tool to address their evolving needs. It also represents a further step in the development of our strategy in embedded finance, that is the integration of fintech services into the offer of financial institutions or corporates. In fact we have already made available truly digital financial services to the customer base of CRIF Group (the leading business information company in Italy) and EnelX (the innovation division of the major Italian utility).”

Tarroni explained that embedded finance has only recently entered Italy but they strongly believe in these types of services.

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