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Industry roundup: 6 January

Increase in cyber risk predicted

The incidence of cyber attacks and related litigation is likely to increase in the year ahead, according to Lloyds of London insurer Beazley.

Raf Sanchez, Head of Cyber Services at Beazley writes that a relatively unexpected impact of many cyber incidents is the damage to reputation and goodwill. Although many organisations know to expect short-term technical and operational impacts, they are often unprepared for the longer lasting impact on their reputation. This is because many incidents are notifiable not just to regulators but often must be disclosed to clients, who have inserted mandatory notification obligations into supply contracts).

In addition, staff may find out about these incidents when they are asked to help remediate them or if they are impacted themselves, for example, if payroll is delayed. Beazley expects an increase in directors’ and officer’s (D&O) liability claims linked to cyber-attacks in the coming year as well as an increase in third-party litigation arising out of cyber events.

Sanchez notes that Covid-19 forced many organisations to change how their core operations were performed due to pandemic lockdown restrictions. Often this meant hurriedly allowing operations to be made accessible remotely for homeworkers. Unfortunately, this also meant that some organisations did this without sufficient preparation or understanding of the greater risks to which this exposed them and many inadvertently opened the door to cyber criminals who moved fast to exploit staff, processes and networks that were suddenly exposed.

“With many organisations stating that hybrid and remote work is here to stay, attackers are continuing to exploit this attack vector even more efficiently so the requirement for cyber insurance that protects against malicious attacks has dramatically increased and will continue to do so,” he writes.

Sanchez predicts that the cyber-criminal landscape will continue to develop over the coming year; the tactics currently being implemented are so effective at generating financial rewards that they are only likely to increase in frequency, innovation and efficacy.

“The specialisation we have seen emerging over the past year, with certain groups of cyber-criminals concentrating on specific strategies,” he reports. “Despite the efforts of various stakeholders in the risk management space, from private organisations to insurers, ransomware will continue to be a persistent and evolving threat in the coming year, making a layered defence including technical and operational measures backed by robust cyber insurance cover essential”.

Standard Chartered HK responds to Omicron

Standard Chartered is reported to have started operating in split teams in Hong Kong, after the Asian financial hub tightened restrictions after an increase in new Covid-19 cases.

A bank spokesperson said that critical teams of the London-headquartered bank, which has about 6,000 staff in Hong Kong, has implemented a Team A/Team B working arrangement this week, while other units are being encouraged to follow suit.

According to reports, an internal memo issued by the bank instructs employees to take their laptops home every day and urged to avoid large-scale organised events and social gatherings. “We’ve managed through multiple Covid-19 waves before, so we know we can overcome this,” the memo adds.

Hong Kong leader Carrie Lam said that the government will introduce a series of new measures to curb the spread of the pandemic’s latest wave, as she warned the city was on the verge of a further outbreak. Passenger flights to and from eight countries – the US and Canada, the UK, Australia, France, India, Pakistan and the Philippines – will be temporarily suspended from midnight on Friday for a period of 14 days.

Financial offices in Hong Kong have continued to operate at nearly full capacity over recent months, unlike in New York or London, as the city pursued a zero-Covid strategy by largely isolating itself from the world.

Both Hong Kong and mainland China aim to minimise the number of new Covid-19 infections ahead of the Chinese New Year celebrations early next month, when traditionally many people in the country travel to visit family.

DailyPay launches US digital wallet for real-time payments

US fintech start-up DailyPay, which specialises in on-demand payments, is launching a digital wallet solution that it says makes it easier for individuals to receive payment in real-time each time they work for a company partnering with DailyPay.

A press release from the company claims that the DailyPay wallet is the only digital wallet that refills every day a user works and shows real-time pay balances. The company is always growing its company partnership network, it adds, which could mean the elimination of the regular payday as people know it.

“Most digital wallets today are underutilised because they’re frequently empty,” says DailyPay’s founder and CEO, Jason Lee. “That doesn’t benefit anyone. The DailyPay wallet solution changes this by constantly refilling with the money you earn at your job, in real-time. If you are working, your DailyPay wallet will never be empty, giving you access to your money whenever you need it.”

The company claims that the current financial system is inefficient, as while people earn wages daily, they have no access to their own money until a scheduled payday.  Lee adds that offering workers a way to instantly get to their earned money could eliminate the need for payday loans, while helping people avoid late fees and overdraft expenses. The company is striving to deliver “equity to the financial system and uplifting all working Americans.”

Originally launched in 2016 as PayEx, the DailyPay wallet now connects to over 6,000 financial institutions supporting any bank account, debit card or prepaid card. DailyPay partners with several major US brands, including Dollar Tree, HCA Healthcare, and Kroger. The wallet supports a range of capabilities such as bill paymnents, investing, buying goods and services and more.

DailyPay users are promised transparency on their earnings and more control over their money, with the company stating that it aims to “re-write the invisible rules of money” by developing the first technology platform that powers on-demand pay.

Tradeling and MODIFI form trade finance partnership

Tradeling, a B2B e-commerce site – aka eMarketplace – focusing on the Middle East and North Africa (MENA) region has launched a partnership with the fintech MODIFI.

An announcement posted on the MODIFI website by the two companies states that the partnership will support Tradeling users engaged in digital trade finance. MODIFI will assist Tradeling in giving customers payment terms of 30, 60 or 90 days, while paying their suppliers early.

“The partnership will further help businesses to secure additional liquidity to fund trades where traditional financing solutions cannot help,” says Tradeling CEO Marius Ciavola. “It will increase their buying power and qualify them for discounts, which will enable companies to further improve margins and make their operations more profitable.”

MODIFI CEO and co-founder Nelson Holzner adds that the MENA region is an important market for the company. “Like Tradeling, MODIFI believes that trade is a key driver for development around the globe, and we are happy to enable local buyers and sellers to grow their businesses,” he says.

In 2021 MODIFI launched in the US, the Netherlands and Bangladesh and now has nine offices globally. It was also able to upgrade its platform after raising US$24 million in a Series B offering that valued the company at more than US$120 million.

Tradeling says it offers trading assistance, help with logistics and financing solutions, to more than 100,000 registered buyers and sellers from 55 countries with gross merchandise value (GMV) growth of more than 65% month over month. In 2020 it launched a credit facility for small- to medium-sized business (SMB) buyers that lets customers access a revolving credit line for sellers listed on the platform. It enables businesses to free up capital, extend payment terms by 30 days and improve negotiations with sellers.

Finexio completes funding for expansion

US fintech Finexio, a specialist in Accounts Payable (AP) Payments-as-a-Service (PaaS) and B2B payments platform provider, has announced completion of its double over-subscribed US$10 million funding in partnership with new investor Mendon Venture Partners that provided incremental growth capital to meet demand for digital AP business-to-business (B2B) payments services.

Finexio aims to win further business from financial institutions and reports that it is already deploying at scale white label payment solutions in many global procurement and accounts payable software platforms across sectors such as hospitality, healthcare, higher education, manufacturing, and construction.

“Our PaaS platform allows banks to facilitate rich, personalised buyers and supplier interactions, more meaningful virtual card spend take rates, and more payment methods like international and supply chain finance than anything else out there,” said Ernest Rolfson, Founder and CEO. “Finexio's easily integrated payments solution and unique service culture make us highly attractive to financial institutions desiring deep differentiation to compete, win, and retain corporate treasury customers that generate fee income and enable more loan and deposit generation.”

The company reports that Mendon Ventures BankTech Fund, a recently launched fintech fund that helps regional and community banks find new technology for investment and deployment, contributed US$1 million of the US$10 million funding. Patriot Financial Partners, Finexio’s lead investor, provided additional funding after tracking the company’s continued growth in 2021.

Finexio also attracted investment in August 2021 from Banc of California, which will work with the company to build out payment and related loan and deposit services. They plan to roll out a AP B2B payments and working capital offering for both Finexio’s and Banc of California's customers by Q2 2022.

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