Fintech news for the week of 21 November 2016.
Prominent members walk away from consortium
The R3 blockchain consortium of banks and other financial institutions had a difficult week. News first came that heavyweight members Goldman Sachs and Santander had decided to leave with some speculating that the departures were due to issues related to the current fundraising round. R3 was looking to raise $200 million but later downsized that amount to $150 million. Rumours indicate that as much as 7 additional banks may also be planning their departures.
Fintech isn’t the only threat to banks
Much is made of the need for financial institutions and fintech to cooperate. The view is that startups shouldn’t be seen as threats but rather as opportunities for partnerships. However, prior to looking outward for innovation, it may be a good idea for banks to look inwards at their aging legacy systems as these may pose an impediment to modernization. Although this article approaches the topic from a Canadian perspective, the need for banks to invest heavily in their infrastructure is a global phenomenon.
UK BMW CEO a fintech advocate
As a nascent concept in the world of finance, the fintech discussion has centred around conventional banking services such as lending and investments. Young startups have successfully carved a place for themselves in an industry which has sometimes been guilty of complacency. With the maturation of the technology comes new areas for disruption. The CEO of BMW’s UK branch for one believes automotive finance could be next and is calling for the industry to partner with startups to find new ways to serve customers.
Governments look to nurture fintech growth
I recently penned an article in which I discussed the global race for fintech supremacy. One of the tools used to achieve this goal is the fintech sandbox where usual regulatory requirements are relaxed. The Swiss government is jumping into the race as it looks into creating a sandbox and easing the regulatory burden on startups. Indonesia on the other hand has established a fintech office to help young companies navigate the regulatory landscape in addition to opening the doors to its own sandbox. Not to be outdone, the UK’s Department of Trade plans on making £500,000 a year available to fintech “specialists” focusing on such areas as wealth management and money transfers.
As always, feel free to contact me to discuss these and related topics.