Crypto market chaos indicates potential risks for traditional financial markets

The collapse of FTX and other recent crypto-market turmoil, according to the Federal Reserve's top banking regulator, is reportedly a warning sign for the wider scope financial system. According to Michael Bar, Vice Chair for Supervision of the Federal Reserve, additional regulation is essential for digital assets, and crypto firms should be subject to rules similar to those that apply to Wall Street.

The recent developments are reportedly an indicator of the potential for systemic risk if interconnections develop between the existing crypto system and the traditional financial system. According to many, the crypto-asset-related activity necessitates effective oversight.

Currently, the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation are collaborating to assess the risks and opportunities posed by a variety of crypto-asset-related activities.

US banking industry unveils a proof-of-concept for a regulated digital asset settlement platform

The US banking industry has launched a proof of concept (PoC) project to investigate the feasibility of an interoperable digital money platform identified as the regulated liability network (RLN). The proposed platform, which would reportedly use distributed ledger technology, would improve financial settlements and is expected to include participation from central banks, commercial banks of various sizes and regulated non-banks.

During the 12-week PoC, a version of the RLN design that operates solely in US dollars will be tested. Commercial banks plan to issue simulated digital currency or "tokens" that represent their own customers' deposits and expect to settle through simulated central bank reserves on a shared multi-entity distributed ledger, said reports. The PoC aims to assess the viability of a programmable digital currency structure that could be potentially customizable to other digital assets, while also evaluating compliance with existing laws and regulations.

The New York Innovation Center (NYIC), a division of the Federal Reserve Bank of New York, along with other members of the US banking and payments community, will reportedly collaborate with the following financial institutions and payment organizations in this project: BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo. SETL is expected to provide the technology through Digital Asset, which is reportedly powered by Amazon Web Services. SWIFT aims to support interoperability across the global financial ecosystem.

After the pilot project is complete, its results are expected to be publicized.

Brightwell introduces ReadyRemit, a new cross-border payment solution powered by Mastercard and Bancorp Bank, N.A.

Brightwell, an Atlanta-based global payments tech firm, has launched ReadyRemit, a new cross-border payments solution operated by Bancorp Bank, N.A. in conjunction with Mastercard's Cross-Border Services. ReadyRemit enables fintechs, businesses and program managers to boost revenue and commitment by providing a simple cross-border payment solution that includes compliance functionalities. Additionally, the collaboration will reportedly result in faster access to funds and nearly real-time, potentially same-day service.

Mastercard’s Borderless Payments Report 2022 found that 42% of people worldwide are initiating or receiving more cross-border payments than they were a year ago, fuelling demand for a zero friction, integrated and secure payment experience. ReadyRemit provides clients with access to payments to over 100 countries and 280,000 cash pay-out locations, facilitating a variety of payment methods and delivery channels, including bank accounts and mobile wallets (B2B, B2P, P2P and P2B).

In order to differentiate the service in the face of intensifying competition, ReadyRemit reportedly offers clients the technological building blocks that leverage a thorough regulatory engine and a customer-first platform. Hal Ramakers, Senior Vice President, Brightwell, commented that many fintechs and companies want to incorporate remittances into their products to satisfy the needs of their international customer base but are constrained by the difficulties associated with the current options. The collaboration is expected to enable customers to provide low to no-code platform integrations through a complete package, allowing clients to start a global payments program within thirty days if needed.

Mastercard and JP Morgan launch Pay-by-Bank, introducing open banking technology to ACH payments

JP Morgan Payments and Mastercard have collaborated to launch Pay-by-Bank, an ACH payment solution that utilizes open banking. The new solution will reportedly enable customers to share their financial data in a streamlined manner between authorized entities, paying bills directly from their bank account with increased data protection. Additionally, clients will no longer have to manually type the routing and account numbers every time they need to pay a bill. The solution will also automate the customer implementation process for billers and merchants, while lowering the risk and expense of storing bank account information.

Pay-by-Bank is expected to offer significant benefits for billers, such as alleviating manual entry in recurring payments where ACH is the primary mode of payment, such as rent, utilities, government payments, tuition, insurance and health care payments. In addition, Pay-by-Bank employs machine learning capabilities in Mastercard's smart payment decisioning tools in order to determine the optimal time to initiate payments based on the bill payer's historical transaction behaviour and risk patterns. This will reportedly protect both the consumer and the merchant by ensuring important payments are made and by potentially lowering the risk of returns due to insufficient funds.

Reports indicate that JP Morgan Payments and Mastercard are currently evaluating the Pay-By-Bank solution with a limited number of billers and merchants in the US, with a full rollout expected in 2023.

Stronger market cooperation required to synchronize cross-border payments, per new P20 report

Payments 20 (P20), a UK and US-based firm that supports the global payments industry, has released a new report titled Towards Borderless Payments: Best Practice Recommendation. The report encourages industry cooperation in order to increase the effectiveness and accessibility of cross-border payments.

Reports indicate that cross-border payments are expected to grow from US $150 trillion noted in 2017 to $250 trillion by 2027. The World Bank reportedly tracks the global average cost of sending a $200 global payment, which was 6.01% in June 2022, with the goal of reducing this figure to 3% by 2030.

The report describes a number of what it deems best practices that encourage collaboration between the public and private sectors in order to significantly improve the cost, speed, transparency and accessibility of cross-border payments. P20 says that the main goal of the new report is to reconcile cross-border laws and rules on interoperability, efficiency and cost while continuing to reduce money laundering activities.

The report’s suggestions for smoothly transitioning the industry towards borderless payments include strengthening legislation and guidelines (such as ISO 20022), standardizing KYC, AML and CFT sanctions, countering financial crime through awareness and AI, and increasing efficiency.

Banked Ltd. creates global Pay-by-Bank network, securing US $15M via strategic partnerships

Banked Ltd, a London-based fintech firm, is reportedly developing a next-generation international payment network and has raised over US $15 million in a Series A extension round, spearheaded by Insight Partners and supported by Citi and National Australia Bank Ventures. Rapyd, a recent commercial partner and global payments firm, also took part in the round. With this most recent capital injection, Banked Ltd. has now raised more than $50 million in total, with the participation of new international investors to support the firm's expansion into new geographical areas with greater emphasis on the US.

Banked’s advancement and development reportedly complements its significant partnership with Bank of America. Banked established an office in Palo Alto, California, and CEO Brad Goodall relocated from London to lead this expansion.

Nearly 100 people currently work for Banked, which is expanding at a time when many fintech competitors and the sector as a whole are reportedly under intense pressure to merge. Real-time payment rails are reportedly becoming increasingly popular around the world, and banks and merchants are eager to participate.

Japan-based payments provider, Opn, expands footprint into the US by acquiring MerchantE

Opn, a Japan- and Southeast Asia-based payments solutions provider, has announced the acquisition of MerchantE, an end-to-end digital commerce platform based in the US that offers payment processing and solutions to US businesses of all sizes. The acquisition is expected to accelerate Opn's development and innovation in this market and will reportedly help the firm transform into a provider of payment solutions globally.

MerchantE reportedly assists medium-sized as well as start-up businesses by providing comprehensive payment processing capabilities required to facilitate transactions. Opn's global presence has now expanded to seven nations with the acquisition, including the United States, the fastest-growing market for embedded finance solutions, where sales are projected to more than double to more than US $50 billion by 2026. Reports indicate that Opn and MerchantE processed payments totalling over US $19 billion for more than 20,000 businesses so far this year, reportedly making it a top 25 provider of payment processing in the US and in the Asia-Pacific region.

Opn and MerchantE have collaborated to offer digital finance solutions to several of the world's largest companies, including Oracle Netsuite, Magento, TrueMoney, and Toyota Financial Services. Opn expects to remain headquartered in Tokyo, and MerchantE plans to maintain its current headquarters in Georgia, US, while operating under its own brand. Over time, the two companies plan to define and pursue opportunities for sharing technology and lessons learned, as well as collectively creating new products.

LianLian collaborates with three fintechs based in Europe to broaden its working capital solutions

LianLian Global, a cross-border payment service provider, has partnered with three European-based fintechs to broaden its financial services for e-commerce merchants. RITMO, a Spain-based e-commerce technology company, YouLend, an embedded finance firm, and Iwoca, a small business lending platform, will reportedly assist LianLian in providing a wide range of capital-access product offerings to e-commerce sellers.

Kevin Boland, VP, International Business Development, LianLian, stated the “these partnerships signal our ambitions to become the world’s most integrated cross-border payments growth partner for e-commerce sellers around the world.” Furthermore, the company joined forces with Uncapped, a London-based lending technology firm, to offer e-commerce companies funding ranging from US $100,000 to $10 million.

Vantage introduces a UK-based liquidity service for institutional investors and corporates

Vantage, an international multi-asset trading platform, is unveiling Vantage Connect, a liquidity solution for UK-based institutions and corporates. The news, which is expected to be officially announced at the Finance Magnates London Summit 2022 to be held on 21-23 November, is reportedly one of Vantage's strategic initiatives to expand its institutional business due to the increasing demand for hedge funds, family offices, banks, brokers, money managers and asset managers for customized trading solutions.

Global trading volumes has reportedly increased 17.2% year on year as of September 2022 due to rampant market uncertainty. Institutions aim to explore various options as a result of the quickly evolving market conditions, such as the LSE’s expansion of the spread limit on UK gilts, as well as wider spreads on instruments such as CFDs and derivatives contracts that are frequently used in hedging strategies.

Vantage Connect enables institutional clients to effectively manage volatility and capitalize on market opportunities by utilizing Vantage’s deep liquidity portfolio to quickly buy and sell complex assets, said reports. The offering is reportedly tailored to the specific needs of the client, including in-house risk management and Vantage’s proprietary PAMM (percentage allocation management module). Clients can reportedly connect to the service via a secure API, ensuring quick time to market along with protection by Vantage's FCA license.