Fintech news for the week of January 9 2017.
Amazon pushes further into financial services
Although mostly known as the world’s largest on-line retailer, Amazon is also making a push into finance. Last year, it acquired Indian payments processor Emvantage Payments and was on the prowl for other acquisitions. It also introduced the “AWS Financial Services Competency” program, providing fintech companies that meet the requirements with instant recognition and credibility. Continuing on this path, the company has announced the launch of a new credit card. In addition to offering the standard fare of services such as travel insurance, concierge and roadside assistance, the card also provides discounts on purchases and waives foreign transaction fees.
Blockchain makes inroads on Wall Street
IBM, the R3 consortium and fintech startup Axoni have joined forced to help the DTCC, the predominant entity in settling and clearing stocks and bonds in the US, to move the record-keeping for credit-default swaps (CDS) onto a blockchain by early next year. The bellwether project is significant for the technology. If successful, it will save market participants from time consuming and paper intensive reconciliation exercises, not to mention the associated costs. Fail and the unforgiving spotlight will dampen the industry’s appetite to explore further applications.
Fintech index fund
Investing in fintech companies has become easier with a new index fund. The “FactSet Global FinTech Index” will be comprised of securities from 17 “fintech-related” industries such as banks, credit cards, electronic payment processors (think PayPal) and insurance software providers to name a few. Although the approach appears novel, the broad description of the securities and the inclusion of banks may lead investors to hold conventional blue chip stocks as opposed to pure-play fintech.
Another fintech accelerator in Dubai
The Dubai International Finance Centre (DIFC) has partnered with Accenture to launch a 12-week fintech accelerator program. According to the DIFC’s site, the program aims at “identifying leading technology entrepreneurs and companies through a competitive process and then offering them the opportunity to develop, test and modify their innovations in collaboration with top executives from DIFC and regional financial institutions.” Local banks such as Emirates NBD and Mashreq will be joined by Visa and HSBC as the first participants. The programme follows last year’s blockchain accelerator which was supported by a $275 million investment fund.
SWIFT moves into blockchain
When SWIFT, the global leader in interbank financial messaging, announced plans to incorporate blockchain into its platform, the industry response was tepid with some dubbing it as nothing more than a “me too” moment. Despite the criticism, the company continued work on the project and has announced the launch of a proof of concept to explore distributed ledger technologies (DLT) in the context of correspondent banking and NOSTRO accounts. Speaking with Coindesk, the company's head of banking markets outlined the goal: “We’re going to use DLT as a proof-of-concept to synchronize those databases in real-time, so that banks can optimize their liquidity globally.” It remains to be seen how the industry reacts this time around.