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Industry roundup: 21 June

Sis ID and Trustpair win Kyriba's Open Liquidity Platform Challenge

Kyriba has announced that Sis ID and Trustpair have won the Open Liquidity Platform Challenge, the start-up challenge organised by Kyriba during VivaTech. This completes the validation of Kyriba’s application development and marketing portal project.

Sis ID is a French fintech created in 2016 that supports companies in the fight against bank transfer fraud. Trustpair is a solution of reference to thwart wire-transfer fraud. They were judged to offer the most suitable use cases for the Kyriba platform in terms of connectivity. The judges were particularly impressed by the use of APIs and the response to current fraud detection issues faced by treasurers.

The two winners will benefit from immediate access to the Kyriba platform and dedicated technical support to develop their applications. As the first application providers on the Kyriba platform, they will also get go-to market support. The successful candidates are also now members of the worldwide Kyriba ecosystem and will get visibility with Kyriba’s 2,500 clients from June 2021.

Kyriba notes that the identification of two use cases shows the attractiveness and feasibility of its portal for applications development and marketing in the areas of payment security. In order to pursue this approach in other areas of liquidity management such as cash management, payments, risk and working capital, Kyriba will collaborate with four other companies that took part in the challenge - Copper, Infotrie, TreasurySpring and Upswot - with a view to integrating them into the platform later on.

 

RBC helps Canadian businesses with real-time market insights

RBC has announced that its Insight Edge Canadian platform for real-time data and insights is now available for direct access through a subscription to commercial clients and small to medium retail business clients. The tool is part of RBC’s overall pursuit to help Canadian businesses scale and manage their operations through enhanced digital capabilities and solutions that go beyond traditional banking. Through a dashboard, the platform offers real-time intelligence based on anonymised credit and debit card transactions, and demographic and location data.

RBC Insight Edge has helped clients, such as Vancouver-based Purdys Chocolatier, to make informed decisions about growing their business. Leveraging insights on neighbourhoods across Canada, the analytics have helped the retailer to tailor product selections and to inform decisions around new locations, supporting them in achieving efficient, profitable and sustainable expansion.

"We use RBC Insight Edge to investigate potential new locations for Purdys, both in regions we are currently in but also new regions that we are exploring," said Ron Young, director of product and insights at Purdys Chocolatier. "Within minutes we get a really good visual idea of the success we may have in that location, giving us confidence in the decision we are making based on accurate, qualitative and quantitative data."

 

ICICI Bank launches suite of digital banking solutions for corporates 

ICICI Bank has announced the launch of 'ICICI STACK for Corporates', a set of digital banking solutions for corporates and their entire ecosystem including promoters, group companies, employees, dealers, vendors and all other stakeholders. The bank says that the range of solutions will enable corporates to seamlessly meet all banking requirements of their ecosystem in an expeditious and frictionless manner. With this launch, ICICI Bank aims to be the preferred banking partner for companies and their entire ecosystem.

The environment in which corporate customers operate is becoming increasingly dynamic and competitive with accelerated digital adoption transforming every business. In this ever-changing environment, a banking partner, which can serve not only the corporates but also the entire ecosystems where they operate in, adds significant value to corporate customers. With this backdrop, the bank has created ‘ICICI STACK for Corporates’ to serve the companies and their ecosystem by bringing the full bank to the customers.

The suite of solutions aims to provide customised digital banking services to companies in over 15 industries, including financial services, IT/ITES, pharmaceuticals, and steel - and their entire ecosystem. The four main pillars of the ‘ICICI STACK for Corporates’ are: (1) digital banking solutions for companies; (2) digital banking services for channel partners, dealers and vendors; (3) digital banking services for employees and (4) curated services for promoters, directors and signatories. 

In order to supplement these digital efforts, ICICI Bank has opened eight ecosystem branches - five in Mumbai and three in the National Capital Region (NCR). It plans to launch another four in this financial year. These ecosystem branches are full service centres that house multi-functional teams with expertise required to nurture relationships and bring the entire range of services of the bank to each of these corporates and their ecosystem.

 

Proposed Basel crypto regulation reflects risk of exposure for banks

The recent consultation on the prudential treatment of banks' crypto asset exposures from the Basel Committee on Banking Supervision (BCBS) would provide a much needed regulatory framework as banks globally are exploring the potential risks and rewards from increasing exposure in this rapidly evolving asset class, Fitch Ratings has said.

The BCBS proposal recommends a differentiation in the prudential treatment of crypto assets. Tokenised traditional assets would be eligible for the same capital requirements as the underlying assets if they confer similar legal rights. The prudential treatment of fully reserved crypto assets with stabilisation mechanisms such as stablecoin would aim to capture the risks of the underlying assets and of the unsecured commitment of the entity that exchanges the crypto asset for its underlying assets or cash. An add-on operational risk charge could apply for these types of crypto assets. The BCBS's proposals explicitly exclude treatment of central bank digital currencies (CBDC), which, if introduced, would likely have similar risk profiles to central bank cash.

The proposed treatment of tokenised traditional assets or those with a stabilisation mechanism is not expected to hinder developments of new transaction and settlement technology, which could improve the liquidity of some assets and reduce transaction costs. Increased oversight requirements related to the transfer and settlement of crypto assets could also reduce operational risks related to these assets.

Crypto assets that cannot be classified as tokenised traditional assets or that have no stabilisation mechanism would attract a much higher risk-weight of 1,250% to reflect their significantly higher risks to banks, owing to their volatility and opacity. This treatment would be applied to cryptocurrencies such as bitcoin and Ethereum, which would also not be considered as redeemable within 30 days for the calculation of the regulatory liquidity coverage ratio.

To avoid higher capital requirements, banks holding stablecoin would be required to monitor daily the difference in value to the underlying pool of assets and to perform a detailed assessment of the stabilisation mechanism, which would exclude newly established crypto assets. Banks would also be required to verify ownership rights of the underlying pool of traditional assets, with classification requiring formal approval from supervisors. The associated regulatory burdens of this exposure are likely to discourage banks from holding stablecoins, especially those issued by third parties as the bank has little control over the underlying reserve pool and stabilisation mechanism.

Banks' exposure to crypto assets remains small according to the BCBS. However, the rapid development of the asset class and the fast growth of crypto currencies that are not stabilised increases material risks for banks with cryptocurrency exposure. The extreme price volatility of some of these assets and an unproven track record of liquidity will make it challenging to hedge positions when providing derivative instruments to institutional clients or when manufacturing investment products that reference crypto assets. Allowing less sophisticated retail and private customers access to this asset class also entails substantial reputation and legal risk. However, the higher capital and operational requirements related to cryptocurrency could hinder wide-scale adoption by banks, which would most likely hold these assets as custodians and not on balance sheets. The punitive treatment of cryptocurrencies and their derivatives will likely discourage trading of cryptocurrency, or at least restrict banks to client transactions where exposure is kept neutral.

Governments are increasingly focused on issues surrounding cryptocurrencies, with some central banks exploring CBDCs. The recent notable exception is El Salvador, the first country to introduce bitcoin as legal tender. In a communique following the G7 meeting earlier this month, finance ministers and central bank governors stressed that global stablecoins should adhere to strict standards and should not begin operation until relevant legal, regulatory and oversight requirements are adequately addressed.

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