CFIT delivers recommendations for open finance in UK

The UK’s Centre for Finance, Innovation and Technology (CFIT) has published a report outlining the full potential of open finance to deliver direct benefits for UK businesses and consumers. The findings show how better data-sharing can provide improved access to credit for companies and swifter, more effective financial advice for consumers.

A CFIT-led coalition of more than 60 partners – including Citizens Advice, Experian, EY, the FCA, FDATA, HSBC, IBM, Iwoca, KPMG, Lloyds Banking Group, Mastercard, Monzo, Revolut and various regional associations and industry bodies – worked together to develop new solutions unblocking barriers to secure data-sharing across the financial services industry. Alongside a strategy for the future of open finance, which allows SMEs and consumers to access and share a broader range of their financial data, CFIT published two proofs of concept (PoC) developed by the coalition that show the full potential of this technology.

The business-related PoC involved a pilot analysis with HSBC UK, which showed that open finance could deliver more lending to SMEs. It demonstrated that accessing new datasets and auto-populating business loan applications can significantly boost lending decisions. The exercise suggested that over a quarter of businesses in a sample of SMEs whose loan applications had been referred for manual underwriting, and who risked missing out on credit, could be given access to finance, had open finance been in place. The work – which used synthetic data and profiles of SMEs based on HSBC business customers – also showed that embracing open finance could lead to a fall in the number of businesses that give up on applications before they are complete.

The PoCs will now be released to the UK fintech and financial services industry to be built into fully-fledged prototypes. CFIT said the publication also delivers the new partnerships and blueprint for open finance previously called for by the Kalifa Review of UK fintech.

 

Rabobank completes €2bn trial runs in commercial paper issuance on blockchain 

Rabobank has completed a series of pilots to execute more than €2bn in commercial paper transactions on a blockchain platform. The platform, Ubermorgen, gives financial market participants instant access to funds through the automated issuance of commercial paper and certificates of deposit, highlighting the potential of blockchain technology for real-time settlement and enhanced real-time money market analytics.

The pre-production pilot programme, an industry-driven joint initiative, also underscores the adaptability and interoperability of blockchain in traditional financial instruments connected to multiple legacy infrastructures.

In the recent trial run, Rabobank Markets and Ubermorgen collaborated with Rabobank Treasury, TreasurySpring and two large asset managers, executing multiple commercial paper and time deposits in EUR, USD and GBP with a total notional of over €2bn. 

The pilot also integrated advanced analytics tools, giving market participants real-time insights into money market trends. This data-driven approach is designed to enhance decision-making capabilities for treasurers, dealers and asset managers, offering a competitive edge in navigating the dynamic financial landscape. 

Building on this pre-production pilot, Rabobank and Ubermorgen are committed to exploring and implementing blockchain technology in financial markets further. The company aims to collaborate with industry stakeholders to drive widespread adoption and unlock new opportunities for innovation in the global financial landscape.

“This successful pilot demonstrates the transformative potential of blockchain in enhancing efficiency, transparency, and analytics in the financial sector,” commented Youssef el Mir, Global Head of Trading at Rabobank.

 

US business owner optimism flying high in improving economic conditions

Business owner optimism about economic conditions over the next six months has reached a 22-year high in the US amid lessening fears of a recession, according to PNC’s latest semi-annual survey of small and mid-sized businesses.

A majority of those surveyed (55%) are highly optimistic about the national economy, rocketing from 34% last fall and 26% a year ago. Four in 10 (40%) are highly optimistic about the global economy, up from 25% last fall and 9% a year ago. Nearly two-thirds of business owners (63%) are highly optimistic about their local economy, up from 47% last fall and 30% a year ago.

Optimism also runs high about their own businesses. Eight in 10 business owners (79%) report that they are highly optimistic about the prospects for their own business, consistent with last fall (77%) and up substantially from a year ago (60%). Construction leads other sectors, with 85% anticipating better times ahead for their own businesses. Larger revenue (US$20m to US$250m) business leaders express the most optimism about the national and local economies and their own companies, while smaller revenue (US$100,000 to less than US$3m) business owners are the least optimistic.

Based on the survey results, inflation pressures appear to be lessening. Fewer than half (47%) of businesses expect to increase prices in the next six months, down from last fall (55%). Of those expecting to take that step, just over one in 10 (12%) plan to raise them by 5% or more, a drop from last fall (25%) and a year ago (23%); four in 10 (41%) expect a smaller increase of 1-2%, up from last fall (19%) and last spring (32%). 

At the same time, four in 10 (40%) businesses say they expect the prices their suppliers charge to increase in the next six months, down from six months ago (49%) and last spring (47%). Four in 10 (41%) of those expecting increases in supplier prices only expect a modest 1-2% rise, while fewer (13%) expect an increase of 5% or more.

The outlook on profits for the next six months remains steady, with just over half of those surveyed (52%) expecting an increase, midway between the levels recorded last fall (55%) and a year ago (49%). Few businesses anticipate decreases in profits (5%) or sales (5%) over the same time period. Nearly two in 10 (18%) owners expect their business’ need for financing to increase in the next six months, up from 7% last fall and 9% a year ago. Among businesses expecting their need for financing to increase, fewer than three in 10 (28%) say they will definitely or probably request a new loan or line of credit during that period. This suggests that a significant majority are likely to tap sources other than new loans or lines of credit to meet their upcoming financing needs.

 

SC Ventures launches B2B invoice financing platform in Ghana 

SC Ventures, Standard Chartered’s innovation, fintech investment and ventures arm, is launching SOLV Ghana, a business-to-business (B2B) online marketplace that offers micro, small, and medium enterprises (MSMEs), short-term invoicing financing, buy now pay later services, and business loans via a trusted marketplace of verified buyers and sellers.

Ghana’s MSMEs account for 83% of people engaged in business and were responsible for 71% of business revenues in the country, but only account for 66% of the profits, according to a 2019 report from the World Bank. Ghana’s MSMEs face many challenges - such as limited access to efficient and fast credit or financing and affordable professional support services - which affect their profitability and impede their growth and ability to scale operations.

SOLV Ghana aims to address these challenges by creating a verified and secured digital marketplace relationship between MSMEs, their suppliers, and participating financial institutions, to offer pre-approved loan facilities to fund shortfalls between their cash flows and existing working capital required for restocking. SOLV Ghana also provides reliable and affordable business support services to improve operational efficiency. Financing and access to professional services are critical elements that will enhance MSMEs’ business growth, operational efficiencies, and set businesses for success across the country.

SOLV Ghana’s digital marketplace offers MSMEs access to a supply chain financing solution backed by multiple financial institutions and anchor relationships. The platform provides short-term invoice financing, buy now pay later services and business loans via a trusted marketplace of verified buyers and sellers. In addition, the platform provides business support services such as accountants, marketing professionals, and lawyers from multiple service providers to enhance operational efficiency and sustainable growth. The platform will also help MSMEs integrate into the Financial Trust Corridor established by the Ghanaian and Singaporean governments, which aims to integrate trade flows and business services discovery within the Asia-Africa trade corridor.

“At SOLV, our mission is to empower MSMEs by providing them with innovative solutions that address their financial needs, streamline their operations, and foster sustainable growth,” said Sam Kwaku Peprah, CEO of SOLV Ghana. “The SOLV Ghana platform has successfully onboarded 40 supply chain ecosystems linked to over 9,000 MSMEs participating on the platform. The launch of our marketplace in Ghana marks a significant step towards realizing this vision, and we are eager to contribute to the national economic development agenda.”

 

Treasury Prime initiatives aim to grow embedded banking 

Treasury Prime, an embedded banking software company, is launching a series of initiatives, including a Bank-Direct product, to help banks and credit unions directly sell, manage and service fintechs and other corporate customers. The tech firm says it will also reorient the company to concentrate on direct-to-bank partnerships and accelerate other efforts to drive growth.

The Bank-Direct product is designed to simplify real-time collaboration between bank and fintech partners. With self-service tooling and features, banks can access actionable insights, customise risk controls, and use a unified dashboard that fosters joint collaboration with their fintech partners.

The firm’s bank-direct approach reflects two developments as the fintech marketplace has matured. First, banks have expanded their own in-house business development capabilities. They are looking for a BaaS operating system to enhance their ability to sign up, manage, and support those clients. Meanwhile, regulators are calling for more rigorous oversight and compliance and have clarified that banking institutions – not intermediaries – are best positioned to manage the fintech customer relationship.

 

Barclays sells US credit card receivables to Blackstone Credit & Insurance 

Barclays and Blackstone Credit & Insurance have announced that Barclays Bank Delaware (BBDE) has entered into an agreement with insurance accounts managed by Blackstone’s Asset Based Finance group, to sell approximately US$1.1bn of currently outstanding credit card receivables in relation to a defined set of Barclays-branded credit card accounts in the US. This is the first in a series of activities Barclays plans to conduct to reduce its risk-weighted assets (RWAs) and create additional lending capacity for BBDE.

As part of the transaction, BBDE will enter into a long-term strategic forward flow sale and servicing arrangement with Blackstone related to the accounts. Blackstone’s investment will be made entirely on behalf of the firm’s insurance clients. The transaction remains subject to certain conditions and is expected to fund in Q1 2024.

Under the transaction terms, BBDE will retain legal title regarding the accounts, and BBDE will continue to service the accounts for a fee. Barclays Bank will invest in the transaction alongside Blackstone’s insurance accounts.

The transaction is expected to release approximately £1bn of RWAs on a post-internal ratings-based (IRB) approach basis at the Barclays Group consolidated level, subject to notification to and possible review by the Prudential Regulation Authority. BBDE intends to use the sale proceeds to fund its lending activities.

 

Finix expands payments offering into Canadian market

Finix, a payments technology provider for business payments, has announced that its suite of unified payment offerings is now available in Canada. This marks the company’s first international launch. The offering is made possible through a partnership with Peoples Trust Company, part of Peoples Group.

Finix’s complete solution supports payment acceptance and payouts at scale. It also incorporates operations processes and tools, including embedded compliance, underwriting, intelligent fraud monitoring, consolidated reporting, and dispute management. By centralising these features into one platform and expanding into new markets, the firm says it provides Canadian and multinational merchants and platforms with a view of sales trends and transaction-level data. Businesses can use this information to drive conversion, improve customer experiences, increase revenue opportunities, and create a cohesive experience across siloed channels.

“We’ve talked to a number of customers and prospects who’ve had to piece together fragmented payment processing solutions across multiple providers in Canada to meet their customers’ needs,” said Finix CEO and co-founder Richie Serna. “Adding to our international footprint with our Canadian expansion helps even more businesses drive revenue while streamlining operations. This is a step toward unifying payments technology on a global scale.”

Mastercard looks to enhance debit and prepaid digital account opening experience

Mastercard has announced an Open Banking for Account Opening programme, providing a set of open banking products to benefit Mastercard consumer and small business debit issuers and consumer prepaid issuers in the US. 

The programme is designed to improve the digital account opening process by verifying account ownership, lowering account abandonment, reducing non-sufficient fund (NSF) returns, and minimising manual entry of payment credentials. 

A study from Insider Intelligence found that Gen Z mobile banking adoption continues to rise sharply at 12.4% year over year, from 20.7 million in 2020 to hit 47.8 million by 2026. To meet the demands of today’s increasingly digital world, Mastercard will provide participating US issuers who opt into the programme free access to Mastercard’s Account Owner Verification, Account Detail Verification and Account Balance Check solutions when used to support digital account opening of a Mastercard branded consumer and small business debit and general-purpose reloadable consumer prepaid product. 

Mastercard Open Banking draws on the safe exchange of consumer-permissioned data, leveraging industry standards and machine learning to support a seamless and secure digital account opening experience. With Open Banking for Account Opening, Mastercard issuers can verify account ownership, lower abandonment and inactive accounts through rapid account funding and a more seamless user experience, and reduce non-sufficient funds (NSF) returns with real-time balance checks. 

 

New MarketAxess CFO hired from State Street

MarketAxess Holdings, an operator of an electronic trading platform for fixed-income securities, has announced the appointment of Ilene Fiszel Bieler as Chief Financial Officer. Fiszel Bieler is expected to start with MarketAxess on or about 22 May 2024. She replaces Christopher Gerosa, who left the company on 31 January 2024.

Fiszel Bieler most recently served as Executive Vice President, Chief Operating Officer of State Street Global Markets and Global Credit Finance, and Global Head of Investor Relations of State Street. Before her time there, she served in various positions, including as Head of Investor Relations and Strategy for the Americas at Barclays and Head of Fixed Income Investor and Rating Agency Relations at Citigroup. At MarketAxess, Fiszel Bieler will be based in New York and report to CEO Chris Concannon.

“Ilene’s diverse financial services background and unique operational experience will be instrumental to our continued growth,” commented Concannon. “The board, along with Executive Chairman Rick McVey, and I all look forward to her partnership and leadership of the finance organization at MarketAxess.”