China’s central bank bolsters liquidity in the market – Industry roundup: 28 October
by Monica Zangerle, Writer, CTMfile
The Portuguese fintech market sees emphasis on crypto and blockchain investment in 2022
The Portugal Fintech Association revealed in its 2022 edition of The Portugal Fintech Report, which typically recognizes fintechs in the national and global landscape on an annual basis, that the Portuguese fintech sector has now become globally significant, with blockchain and crypto firms accounting for over 75% of all capital raised in fintech in Portugal. Furthermore, the top fintech businesses in Portugal have reportedly raised more than €437 million in financing in 2021, with cybersecurity, regulatory technology, blockchain, cryptocurrency and insurance receiving the most capital. Additionally, the fintech association has established the introduction of the Portugal Fintech Fellowship, a scholarship for start-ups that offers support for six months at the Fintech House and aims to sustain continuous growth.
The market has reportedly shifted since last year, with payments, lending and credit accounting for approximately 39% of all new businesses. However, blockchain and cryptocurrency continue to expand gradually, currently representing 17% of the economy. According to forecasts, the Portuguese fintech market is expected to raise in excess of €1 billion in 2022, more than twice as much as 2021, highlighting its expansion.
Despite the current year’s instability and conflict, the Portuguese fintech sector is said to have demonstrated high levels of resilience, closing multiple rounds and raising overall funding for the year, said reports. Joo Freire de Andrade, Founder of Portugal Fintech, commented that Portugal continues to attract larger businesses that create offices in order to tap into the talent pool and benefit from the strong feeling of community.
The research is said to contain two special sections on collaboration between start-ups and established businesses, as well as a chapter on the cryptocurrency landscape and how established firms might explore potential crypto-related possibilities. In addition, the report explores why Portugal is emerging as a “start-up hub.”
BNY Mellon launches a new US-based aggregated payments platform
BNY Mellon has introduced Vaia, a new aggregated payments platform, to provide domestic businesses access to the latest up-to-date digital payment solutions for disbursements. The new platform, which was reportedly developed in partnership with Verituity, a cloud-based system that links banks, payers and payees to first-time and on-time digital payouts, aims to cut down on the time and resources required for businesses to connect with different payment channels.
The Vaia payment alternatives, which include real-time payments, same-day ACH, tokenized payments with Zelle, and debit cards, are now accessible to US-based institutions through a single interface with BNY Mellon, with plans to facilitate cross-border payments in future phases.
In efforts to reduce the ever-growing payment fraud incidences globally, the platform reportedly make use of the investment company's account validation services to authenticate accounts from beginning to end and to confirm the identities of payees. Jennifer Barker, CEO of Treasury Services, BNY Mellon, commented that although customers desire more payment options, businesses are finding it difficult to keep up with and connect to the newest capabilities given the proliferation of digital payment options.
Australia-based firm, Earlypay, introduces AI-driven invoice finance platform for SMEs
Earlypay, an Australian provider of company financing solutions, has introduced
an AI-powered low-doc invoice finance offering that will enable small businesses to enhance their cash flow by tapping into client invoices. Additionally, the new solution is expected to aid firms in contending with an unprecedented storm of late payers, escalating interest rates, supply chain bottlenecks, skyrocketing expenses, labour and skills shortfalls and economic uncertainty. Xero, a New Zealand-based technology company, reported that delinquent payments continue to spread rapidly throughout Australia. As a result, over half of all invoices sent by companies to clients are paid late, on average by 23 days.
The invoice finance platform allows firms access to the equity in their unpaid invoices in order to obtain advance payments, with the invoices serving as collateral. With the use of the technology, firms can expect to have 24-hour access to loans of up to US $500,000. Additionally, the system reportedly supports automatic pre-approvals tailored to certain industries, such as manufacturing, transportation, wholesale, hiring, equipment rental and security services.
In addition to cashflow management, the system offers debt collection services and could also be linked with clients' existing accounting technology. Lee Trego, Head of Growth, Earlypay, stated that, in response to the increased demand for multi-product finance solutions, Earlypay will now exclusively offer equipment finance in addition to its cash flow loan programs.
NorthOne secures US $67 million, aiming to become the preferred digital banking provider for small businesses
NorthOne, a NY-based API-enabled digital banking platform, is reportedly dedicated solely to the needs of small companies, raising US $67 million in a Series B round, bringing the total funding raised to $90.3M through investors including Battery Ventures, Don Griffith, Drew Brees, Ferst Capital Partners, FinTLV, Next Play Capital, Operator Stack, Redpoint Ventures, Tencent and Tom Williams.
The US reportedly has 32.5 million small enterprises, making up 99.9% of all US businesses, according to the Small Business Administration. Reports indicate that 64.5% of the nation's newly created jobs are attributable to these companies. Despite the sector's significance to the economy, there are minimal local banking solutions that cater to the needs of this developing market.
With NorthOne, businesses can reportedly access the platform's banking services for a $10 flat monthly fee that includes advanced payment plans, budget planning tools, complimentary deposits/withdrawals and business debit cards. Accounts can be opened with no minimum balances, paperwork or long-term commitments. Additionally, NorthOne’s budgeting feature called "Envelopes" aims to give business owners the ability to allocate funds using custom instructions in order to prepare for future costs like rent, taxes and payroll.
The platform integrates with fintech service providers such as Paypal, Stripe, Gusto, Square, Cash App, QuickBooks and Venmo, enabling businesses to transfer data in real-time within their current technology and payment systems. NorthOne also intends to expand into working capital and lending solutions for its 320,000+ customer base.
China’s central bank bolsters liquidity in the market
The central bank of China has reportedly increased liquidity in the market to help offset significant cash demand by attempting to make the largest weekly infusion in the last four weeks. Additionally, the financial banking could potentially delay additional drastic tapering measures that could impact the declining currency, per analyst forecasts.
This week, the People's Bank of China (PBOC) infused a net 840 billion yuan ($116.14 billion) via reverse repos in open market operations, said reports, making it the largest amount of cash since late September and the second highest this year. The support options compensate for liquidity gaps, as corporations and financial institutions help bolster up their cash positions to fulfil numerous requirements and administrative verification at the end of each month.
The Chinese yuan reportedly reached a near 15-year low against the US dollar this week, and it has lost more than 12% overall this year. Beijing has been more concerned with trying to revive a downturn brought on by the pandemic than other countries, said reports, making it a major exception (along with Japan) in the global tightening to control high inflation.
Reports indicate that withholding the impending easing could halt the policy gap with other major economies from growing further, as the difference could potentially increase the risks of capital outflows and depreciation. Lian Ping, Chief Economist, Zhixin Investment, predicts that China could circumvent a more significant depreciation of the yuan that would cause financial risks and pressure on the economy in the fourth quarter of 2022 and beginning of 2023.
FTX, a cryptocurrency exchange, plans to develop a stablecoin
FTX, a cryptocurrency exchange, is currently developing a stablecoin, stated Sam Bankman-Fried, CEO, FTX. The company is currently considering a partner to work with on the stablecoin. Customers can expect to utilize a basket of US dollar stablecoins, such as TrueUSD (TUSD), USD coin (USDC), Pax dollar (USDP), HUSD, and Binance USD (BUSD), as collateral for margin trading at FTX, said reports.
Despite the down market, FTX has reportedly initiated numerous significant purchases, including a US $240 million deal to buy crypto lending company BlockFi. Although Bankman-Fried purchased a 7.6% stake in retail trading app Robinhood in May, he stated that FTX is not interested in owning the entire company.
India’s Ministry of Finance extends deadline for queries for the IDBI Bank stake sale until 10 November
The finance ministry in India has reportedly extended the deadline for potential bidders to submit queries on the IDBI Bank stake sale until 10 November. The IDBI Bank is known as a development finance institution under the ownership of the Life Insurance Corporation of India (LIC), the Ministry of Finance, and the government of India. A Preliminary Information Memorandum (PIM) inviting bids for an IDBI Bank stake sale was issued by the finance ministry on 7 October. Reports indicate that the central government and the LIC have announced a joint divestment of 60.72% of IDBI Bank.
The centre expects to receive financial bids for IDBI Bank by March 2023 and to complete the privatization process in the first half of the next fiscal year, beginning April 2023.
Reports indicate that the LIC and the government currently own 49.24% and 45.48% of IDBI Bank, respectively, while the public owns the remaining 5.28% of the firm. Furthermore, the government is expected to sell 30.48% of its stake in IDBI Bank, while the LIC plans to sell 30.24%. Following the stake sale, the government and the LIC expect to own 34% of the company, down from 94.72% at the current time.
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