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Industry roundup: 7 July

Deutsche Bank launches FX indices to track 21 EM currencies

Deutsche Bank has announced the launch of a new set of foreign exchange (FX) indices to track 21 emerging markets (EM) currencies, reflecting the growing importance of EM as an asset class. The set of four new non-tradable foreign exchange indices were developed by the bank’s EM research team to help investors more comprehensively track performance of emerging markets currencies.

The Deutsche Bank research team highlighted the following four key aspects of investment growth in emerging markets:

  1. Significant shifts in the relative size of emerging markets from an economic and investment point of view. For example, the inclusion of China in various global bond indices, including the FTSE World Government Bond Index scheduled for later this year. Deutsche Bank strategists expect cumulative global investment inflows of just under US$600bn into China local currency fixed income in the next five years.
  2. Issuance of a growing proportion of government debt in emerging markets in local currency. Total government debt issuance has more than doubled in the last decade, with the majority denominated in local currency.
  3. Growth of benchmarks and passive investing in emerging market debt. The number of countries in benchmark bond indices has grown from 11 to 19 since 2002. Foreign holdings of local currency government bonds in EM have increased from US$800bn in 2004 to almost US$2 trillion in 2019. This has increased the need for investors to track EM FX to help with the decision on whether to hedge their currency exposure on underlying bond holdings.
  4. Significant increase in the volume of transacted EM FX. The share of EM in OTC FX turnover has increased from 12% in 2007 to 25% today, particularly in derivatives. 

Available on Bloomberg terminals, the non-tradeable indices were designed to track EM currency performance.  The indices build on existing EM FX indices in four ways: 1) reflect a wider universe (21 currencies); 2) apply relevant and transparent weights; 3) shift weight dynamically over time (3 years); and 4) capture both spot and total return performance.

 

Swedbank and ACI Worldwide partnership combatting fraud

ACI Worldwide, a global provider of real-time payments and digital payment software solutions, has announced that its partnership with Swedbank has contributed to a 55% decrease in card fraud, helping to improve customer experience and business growth for the Swedish bank.

Swedbank, like many other financial institutions across Europe, had been under pressure to meet strong customer authentication (SCA) compliance mandates. SCA, a new regulatory mandate under PSD2, intends to protect businesses and consumers from fraud by making it more difficult for fraudsters to make payments from their accounts. Under the new regulations, businesses and consumers must verify their identity with at least two steps of authentication. SCA checks are mandated for every digital payment over €30 but can be exempted if the merchant has demonstrated low levels of fraud, for example.

The bank partnered with ACI to enhance its fraud platform with the help of ACI Fraud Management and has transitioned from a rules-based to a holistic fraud management approach - which now applies insights from machine learning and shared data in addition to rules - to exempt low-risk transactions from the SCA requirements. Using ACI’s model generator functionality allows Swedbank to create and maintain their own predictive machine learning models within minutes. The offering was recently enhanced with shared intelligence, empowering the bank to collaborate and build hybrid machine learning models.

 

TietoEVRY to deliver payment card production to Nordea across the Nordics

Nordea has appointed TietoEVRY as the bank’s provider of a complete set of payment card production and personalisation services in Finland, Sweden, and Norway. The long-term agreement aims to benefit the bank’s customers with quicker access to new card features.

TietoEVRY makes use of its partner network of card technology providers for the benefit of its issuer customers, this time in cooperation with smart cards firm Thales. TietoEVRY personalises Nordea’s cards, including printing card holder specific data on card surface, generating security keys and programming smart card chips to allow secure access to consumer’s account for payments.

Nordea’s extensive card portfolio was migrated to TietoEVRY’s personalisation sites in Finland and Norway in a very short period of time. The agreement has already entered into force and runs for five years.

 

Caixa and Fiserv complete first merchant transaction via Maquininha CAIXA Pagamentos

Caixa Econômica Federal (Caixa) and Fiserv have completed the first payment transaction for a merchant as part of the companies’ recently signed merchant acquiring services agreement. The transaction was completed via the Caixa-branded point-of-sale terminal, 'Maquininha CAIXA Pagamentos'.

The first transaction took place at Panificadora Santiago, a bakery in the city of Samambaia (DF), with representatives of Caixa and Fiserv attending to recognise the small and medium businesses that will benefit from the new payment acceptance capabilities.

The CAIXA and Fiserv agreement, signed until 2040, will enable card transactions through POS terminals (machines), in addition to a complete online payment gateway solution. The platform also brings the ability for a merchant to accept proximity payments via their own mobile device.

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