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Chinese SWIFT is growing – Industry roundup: April 27

Fiserv to offer banks fintech-enabled capabilities and accelerate open finance via AppMarket

With the launch of the AppMarket by Fiserv, a global payments and financial services technology provider, financial institutions will be able to access a set of advanced, fintech-enabled solutions allowing them to reach new customers, operate more efficiently and compete effectively.

According to the recent press release, fintech solutions accessible through the AppMarket should enable Fiserv’s financial institution clients to leverage open finance strategies to explore new opportunities in crypto finance, gig economy banking, small and mid-size business (SMB) lending, and other priorities. Additionally, the AppMarket will support financial institutions of all sizes to accelerate time to market, provide customized services to their target markets, and appeal to the younger generation.

Emerging technologies such as fintech apps continue to climb. Fiserv's recent consumer trends survey, Expectations and Experience: Fintech Adoption, revealed that 86% of consumers are using some type of fintech app, a trend that can potentially jeopardize financial institutions' revenues and weaken customer relationships. The report suggested that partnering with fintechs would enable financial institutions to expand their customer relationships while diversifying and expanding their bottom line.

David Albertazzi, Director, Retail Banking & Payments, Aite-Novarica Group, commented that the effectiveness of fintech providers is assessed not only by the power provided by the individual solutions, but also by the breadth and openness of the ecosystem they offer. In short, an effective provider makes it easy for customers to gain access to a variety of fintech solutions and providers.

Fiserv stated that fintechs will be able to connect with sponsor banks through its AppMarket solution and select Fiserv services to enhance their digital experience, including ledger-as-a-service and know your customer (KYC) as-a-service at some point in the future.

Belarus completes connection to China’s version of SWIFT

According to the Belarusian Finance Ministry, Belarus has completed the integration process to transition into “CIPS”, the Cross-Border Interbank System, SWIFT's Chinese equivalent system. Yury Seliverstov, Finance Minister, Belarus, said this week that the work was underway in Belarus to connect to Chinese systems, with the goal to finalize promptly. Additionally, Seliverstov commented that this integration will only speed up the processing of payments, release of revenue, and, correspondingly, tax revenues for the treasury.

Seliverstov further added that Belarus trades often with their Chinese partners in their own RMB “yuan” currency. Since China has their own system to transfer RMB, Seliverstov stated that the process of doing business would be easier as imports and exports can be facilitated using their currency and transferring funds seamlessly through their system.

As a result of sanctions affecting access to the international payment system, Belarus has been unable to fulfil its obligations to creditors regarding foreign debt. With the system integration, Belarus’ Ministry of Finance should be able to pay their foreign debt timely.

According to Roman Golovchenko, Prime Minister, Belarus, all 24 Belarusian banks including Belagroprombank, Bank Dabrabyt, and the Development Bank of the Republic of Belarus, along with Chinese banks, can now participate in Russia's Financial Messaging System (SPFS), Russia’s equivalent of SWIFT. Belarusian banks were all disconnected from SWIFT by a European Union decision in early March. In addition, Golovchenko commented that the share of Chinese yuan in Belarus' foreign trade settlements is increasing, and the Belarusian Currency and Stock Exchange began trading daily on the Belarusian Ruble / RMB pair in mid-March.

BNY Mellon boosts rapid shift from paper to electronic payments following stringent ESG regs

One of the largest check processors in the United States, BNY Mellon, a global investment company, is said to be leading efforts in reducing check-based payments as sustainability goals and environmental concerns are drawing attention around the world. BNY Mellon stated that they are leveraging a variety of digital innovations and financial benefits to help US customers move from paper to electronic transactions. According to the press release, BNY Mellon’s initiatives include research into carbon tracking tools that can show customers the true environmental costs of paper payments, discounts on specific digital payment solutions, and exemptions from some upfront implementation fees for customers specifically working on digital transformation.

Reports estimate that approximately 2.3 billion checks are written by US companies each year to pay their invoices, which is equivalent to nearly 455,000 trees. Furthermore, checks are not only environmentally unfavourable, but they also pose mail delays. In comparison, digital payment channels offer a variety of efficiencies, including reduced risk of fraud, faster access to liquidity in rising interest rates, and a better customer experience.

BNY Mellon indicated that customers have reduced the number of checks sent to them for processing by 3% in 2020 and by 8.5% from 2019 levels, reducing check volumes to 291 million in 2021. Eric Boughner, Chairman, BNY Mellon Pennsylvania, commented that the bank will continue to support checks. However, the main focus is providing innovative and improved solutions that can advance customers' paper-to-digital journey while supporting their broader sustainability efforts.

As part of BNY Mellon’s digital transformation strategy, they recently launched a first-of-a-kind, real-time electronic billing and payment solution to enable US companies the ability to present real-time digital invoices to consumer clients and accept instant payments through their consumers’ preferred online and mobile banking systems.

TrueLayer introduces industry's first API for variable recurring payments

Europe's open banking platform, TrueLayer, has reportedly developed the industry's first variable recurring payment (VRP) API for sweeping and non-sweeping payments. The Competitive Markets Authority (CMA) has mandated nine major UK banks to implement VRPs to support the automatic transfer of funds between two accounts owned by one person, also known as sweeping or "me-to-me" payments. However, Matt Parish, VRP product leader, TrueLayer, states that while the mandatory approach is beneficial, it only supports payments between single customer accounts, limiting the ultimate potential of VRP. Parish commented that they are the industry's first recurring payment API that goes beyond this mandate and offers comprehensive payment options that create a better customer experience.

According to TrueLayer, sweeping payments should support third-party providers, such as fintech companies, to meet a variety of recurring payment needs, especially in lending, savings and current account markets. Additionally, TrueLayer is said to work with some banks pertaining to non-sweeping services by enabling businesses to offer recurring payment options to their customers for a variety of services, including utility bills, subscriptions and other forms of digital payments.

With this capability, the report indicated that users will not have to re-approve all recurring payments, such as invoices for utility bills that have a fixed monthly payment date but different due dates. Accordingly, businesses are said to provide their customers with direct debit and debit card alternatives that are inexpensive, faster, less vulnerable to fraud, and improve customer management. The report noted that several companies are set to go live with payments imminently, as well as businesses with non-sweeping recurring payments in May 2022 at the earliest.

Sonovate shifts focus to embedded finance, targeting £3 billion in lending

Sonovate, a fintech lender that provides invoice financing to recruitment firms since 2014, announced it is aligning its business to support the embedded finance market. Additionally, reports state that Sonovate has been working on a new cloud-native API-first lending platform after expanding its technical team from 20 to 60 across its London and Cardiff offices. It is said the new platform will enable ad hoc-based finance to support more enterprise-level organizations.

Richard Prime, CEO, Sonovate, commented that enterprise companies are organizations that generate average annual revenues of over £10m, many of which are related to the growing trend towards more flexible and freelance contracting operations. Prime further added that as the demand for flexible working styles increases, customer needs are becoming more sophisticated.

Sonovate states that their new platform not only enhances lending services, but will also enable them to expand into new regions and fund more types of businesses, especially large corporations. Additionally, the new billing platform should provide capabilities such as instant funding decisions and credit limits, variable advance and facility management, improved automation and improved reporting via APIs.

According to Sonovate, business transactions from their enterprise clients have increased substantially, currently accounting for about one-third of its funding. Sonovate’s lending to these clients has also increased by 144% over the past year due to the pandemic, a funding total of £700m in 2021 (up 58% from £444m in 2020).

The report indicated that more than 30,000 freelancers, contractors and gig workers in over 40 countries have received payments from more than 3,500 companies funded by Sonovate. Additionally, Sonovate is expected to reach £3 billion in funding by summer 2022.

UnionBank to complete acquisition of Citi Philippines’ consumer business portfolio

UnionBank of the Philippines (UnionBank) announced they are on target to reach their strategic milestone to acquire the consumer business of Citibank Philippines by July 2022. Edwin Bautista, President and Chief Executive, UnionBank, commented that the bank has received approvals by the Philippine Competition Insurance Commission to acquire Citi's consumer business portfolio. Additionally, the bank’s stock rights offering will fund the acquisition and is currently underway to finalize the transaction in May 2022.

UnionBank’s digital bank, UnionDigital, is also in the process of being launched, scheduled for the second half of 2022. Bautista added that they are collaborating with regulatory agencies to meet key requirements for starting their operations.

The Canadian dollar remains the currency in the Canadian financial system, crypto still in development

The Bank of Canada confirmed that the Canadian dollar will remain at the centre of Canada's financial system. Nonetheless, they are currently working on their own central bank digital currency, called “digital loonie”, which would potentially be launched if private digital currencies were to take off as a payment system. Deputy Governor Carolyn Rogers told policymakers earlier this week that the central bank has entered the development phase with digital currencies. However, it has not been finalized with the government.

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