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Industry roundup: 13 April

Potential US CBDC making progress initiated by US Depository Trust and Clearing Corp. (DTCC)

The US Treasury and Federal Reserve provided an update on the review of a potential US Central Bank Digital Currency (CBDC). One of the country's main processors for US securities transactions, Depository Trust & Clearing Corporation (DTCC), is building a prototype to measure the potential benefits of a US CBDC and is reviewing the results to help guide the design of future clearing and settlement offerings.

DTCC, a post-trade clearing and settlement firm, is said to guarantee that US stock and bond trades are paid and accounted for. According to a DTCC press release, this move comes at a time when approximately 90 countries are preparing to evaluate or initiate a CBDC. The DTCC CBDC pilot called
“Project Lithium” is envisioned to explore the potential benefits of CBDC and its potential value to the financial services industry. DTCC is working on this project in collaboration with the Digital Dollar Project, a non-profit organization founded to advocate the CBDC in the United States.

Jennifer Peve, Managing Director and Head of Strategy and Business Development, DTCC, commented that the experiment, which may likely be finalized by fall 2022, will help decipher whether the digitized form of CBDC will add value to the industry in the capital markets.

The report indicated that Project Lithium focuses specifically on the needs of the financial services industry, including how the CBDC facilitates the clearing and settlement of securities. The project is said to demonstrate direct bilateral settlement of cash tokens in real-time delivery-vs-payment (DVP) settlement.

Peve further added that the potential US CBDC will retain many of the existing elements of today’s US dollar but in a digitalized format and on blockchain. The pilot also seeks to identify potential for reducing counterparty risk and liquidity traps, improving capital efficiency, and reaching more efficient automated workflows.

Embedded financing services to SMEs via Finastra and Microsoft

Finastra, an open financial technology platform provider, announced a Banking as a Service (BaaS) partnership with Microsoft, offering new lending options to small and medium-sized enterprises (SMEs), a sector with minimal access to finance. Finastra's extensive network of over 5,000 financial institutions across the United States will provide SMEs access to the most relevant and valuable financing options for their precise business needs.

According to the press release, SMEs using Microsoft Dynamics 365 should be able to access and unlock key financing offers through their business management platform. This solution will facilitate the loan application process, with the SME’s consent, using the information that the SME already stores in Microsoft Dynamics 365. SMEs should also be able to improve credit decisions and time to fund by having the ease to provide banks with additional information such as accounts receivable and disbursement records.

Angus Ross, Chief Revenue Officer, Banking as a Service, Finastra, commented that this finance capability for SMEs enables them to access capital easily while also reinforcing open and embedded finance to the industry as a whole. The Finastra SME embedded financial solution on Microsoft Dynamics 365 is expected to integrate with open APIs via Finastra's FusionFabric.cloud platform by Summer 2022, initially focused on North American customers.

Crypto to expand footprint into Philippine market via fintech app

Voyager Innovations’ PayMaya, the Philippines' top digital payments app, has announced that it has achieved unicorn status and has a valuation of over US $1 billion after a recent round of funding. The company emphasized that the new funds will be used to develop cryptocurrencies, which were recently added to PayMaya.

The app’s cryptocurrency service enables consumers to buy, sell and earn cryptocurrencies. PayMaya reportedly also obtained a Virtual Asset Service Provider (VASP) license from the Central Bank of the Philippines. It is said that the company will also invest in PayMaya branded digital banking services such as savings and loans.

Voyager commented that the Philippine population is not well serviced in the internet and digital finance space and aims to expand the reach of this market. PayMaya has more than 47 million users as of March 2022. A study performed by Google, Temasek and Bain & Co. showed that the Philippines' digital economy grew 94% from 2020 to 2021 and is expected to reach US $40 billion by 2025.

The press release indicated that internet commerce growth in the Philippines has the potential to increase the acceptance of cryptocurrencies. There are currently no restrictions on digital currency trade transactions in the Philippines,although the Central Bank of the Philippines has repeatedly warned investors about emerging market risks.

Powering a robust fintech arrangement between Australia and Singapore

The Australian Treasury and the Monetary Authority of Singapore (MAS) signed the Australia FinTech Bridge Agreement to reinforce collaboration between the fintech ecosystems of both countries. The FinTech Bridge was announced in June 2021 when Australian Prime Minister Scott Morrison met with Singapore's Prime Minister Lee Hsien Loong. According to the press release, the FinTech Bridge aims to build a comprehensive framework for digital economic cooperation under the Digital Economy Agreement (DEA) between Australia and Singapore.

The Australia-Singapore FinTech Bridge established a framework for both authorities to collaborate on:

  • Deepening bilateral and multilateral fintech cooperation to promote trade, investment and ecosystem development in the fintech sector.
  • Supporting the mutual creation of fintechs looking to expand in each other's markets and encourage fintechs to explore new business opportunities and use the equipment and guidance available to break down barriers to entry.
  • Strengthening Australia-Singapore ties with political officials, regulatory agencies and trade associations based on current commitments. Additionally, sharing fintechs’ expertise and working together to facilitate the development of new opportunities.
  • Investigating collaborative innovation projects on new emerging fintech space topics to help the industry navigate the ever-evolving space, share information on emerging market trends and learn from national experiences. This should include collaboration in areas such as blockchain and distributed ledger technology, digital identity, cross-border data connectivity, data portability, and the application of tech to encourage sustainable finance.

The FinTech Bridge Agreement suggests that it will help businesses in Australia and Singapore take advantage of local, regional and global opportunities resulting from the flourishing digital world that is transforming industries and economies in the region.

US-based Quontic Bank unveils first ever wearable payment device

Quontic Bank, a NY-based adaptive digital bank, announced the launch of the very first tap-to-pay mobile payment ring in the US market. The press release reported that Quontic is an innovative, digitally-enabled, customer-centric bank aiming to redefine the way banks and their customers do business.

Steve Schnall, CEO and Founder, Quontic, commented that Quontic is the first bank to offer Bitcoin rewards in checking accounts and wearable payment solutions, driving further innovation in digital banking.

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