BNP Paribas and Bank of China partner on e-CNY wallet services

BNP Paribas (China) Limited and Bank of China are partnering to launch digital wallet services and promote the interbank wallet application of the e-CNY digital currency. BNP Paribas will connect with Bank of China and launch straight-through business operations, including various e-CNY functions like digital wallets, to meet corporate e-CNY payment needs.

To promote broader e-CNY use cases and a wider scope of e-CNY functionalities, the pair aim to drive the use of e-CNY in domestic online and offline payments, supply chain finance and utility payments, and through its application in smart contracts and cross-border payment settlement via the m-CBDC Bridge.

The e-CNY, or digital yuan, is the CBDC issued by the People’s Bank of China. The digital currency has been piloted in various cities since its launch.

“With this collaboration, we can further seize the opportunities brought by the digitalisation of banking industry in China,” commented CG Lai, Chief Executive Officer at BNP Paribas (China) Limited. “While this collaboration can supplement the Bank’s offline payment collection capabilities and further optimise our clients’ account structure, this also reinforced the Bank’s commitment in China market.”

“The e-CNY will effectively increase the diversity and versatility for payments, and will help improve the efficiency and security of the payment system,” added Bruno Weill, Chief Group Representative of BNP Paribas for China.

 

Middle-market US companies embracing modern payments, yet traditional methods persist

Corporate treasury departments in the US are embracing social tokens, real-time payments, virtual cards and other digital innovations for their speed, security and convenience, according to research from Citizens. Yet, traditional payment modes - cheques, automated clearing house (ACH) and physical credit cards - still have a stronghold.

Middle-market companies report that they use about five payment methods on average. As the menu of payment methods expands, companies are assembling a custom mix to meet their needs - but they could be overlooking the strategic benefits of streamlining or upgrading outdated modes. Payment usage is all over the place, with all payment methods showing some popularity. Physical credit cards and wire transfers topped the list. Some relatively newer methods, such as virtual cards, still face lower adoption levels. Half of businesses continue to use paper cheques.

Companies also show a high level of interest in expanding their payment mix. Six in 10 non-users of real-time payments said they were “very likely” to consider incorporating them into their payments strategy. This is likely partly due to the speed of real-time payments solutions. About 40% of non-users said they would consider virtual or digital credit cards or business-to-consumer (B2C) payment alternatives (platforms such as Zelle).

Companies are using B2C options such as peer-to-peer payment for several treasury functions. Consumer payments have seen much innovation in recent years, with new options such as Venmo, PayPal and Zelle. Middle-market businesses have started to embrace these tools as well. Among companies who said they currently use B2C options or are likely to soon, most say they will use these tools to pay vendors. Paying salaries is another popular choice. Nearly half of all companies say they would use B2C alternatives to issue refunds.

One innovation in B2C technologies is social tokens, which allow payments to be sent to a phone number or email address rather than needing bank account information. Most companies rate social tokens as both easy and secure, and they would use them for both bill pay and payment requests. They also like the security of not retaining bank account info on their servers.

Virtual cards, a digital alternative to physical credit cards, are another emerging payment technology earning more interest from middle-market companies. The sectors with the highest virtual card adoption include human capital management and business services. These sectors typically have a less complex accounts payables environment with a supply base that tends to be more susceptible to accepting card payments. Consumer sector businesses have been the slowest to adopt virtual cards.

“This is a time of disruption in the payments world,” said Matt Richardson, executive vice president and head of treasury product solutions, Citizens. “While we see many treasury departments taking advantage of new technologies, some have been slow to adapt.”

The Citizens survey of 205 treasury executives at middle-market businesses (US$50m to US$1bn annual revenue) in February and March 2023 focused on company use of payment modes today and what treasurers think of their options.

 

Danske Bank fintech partnership provides invoice management tool

Danske Bank has partnered with Norway’s Axeptia Credit Intelligence to roll out a solution in Denmark, Sweden and Finland to provide companies with an overview of their customers’ challenges and gather all relevant information in one place.

Customers gain access to the tool through an app or via Danske Bank’s financial platform for business customers, which is called District. The programme assimilates data from the customer’s ERP system, credit information provider and debt collection provider and visualises it to provide an overview and ease of use.

Axeptia provides decision-makers with a coherent overview of the vast amount of information they possess and guides them towards what they should focus on. The system also allows companies to act intelligently and thus ensure faster payments from customers.

“Norway has had the solution up and running for some time, and what we hear is that once a company has begun to use the solution, they can’t do without it,” commented Claus Harder, Global Head of Markets and Transaction Banking at Danske Bank. “What’s more, this is not a solution offered by anyone else, at least according to our research.” 

Fintech collaborations are a demanding process for all parties involved, and the journey towards Danske Bank’s Nordic rollout of Axeptia Credit Intelligence has taken more than three years. On the other hand, Danske Bank says the ground has now been prepared for more projects where its customers’ needs are met through solutions developed with external partners.

“What drives us is the desire to develop tools and solutions that can benefit our customers, and we have realised we can achieve our goals faster by working with partners like Axeptia,” added Harder.

 

Increasing reliance on climate scenarios come with challenges for investors

Corporates, financial institutions and regulators are increasingly using climate scenario analysis amid growing awareness among decision-makers about climate change and the scale of disruption it will bring, according to a new report from Sustainable Fitch. 

For investors, scenarios are becoming a critical tool for managing climate-related risks and informing portfolio strategies around decarbonisation and net-zero alignment.

The use of climate scenarios is still in its early stages, as only a small number of companies have the capacity to run these analyses. This raises questions about the credibility of transition plans and long-term risk management processes of the entities not applying scenarios. Even when used, there is often little mention of the results or their application in sustainability reports. However, rates of scenario-informed reporting will rise amid tightening regulatory requirements and growing demand from investors and other stakeholders. Scenarios will also become increasingly integrated into decision-making. 

Given their novelty, Sustainable Fitch expects it to be several years before entities improve their use of scenarios, gauge what is required to produce materially relevant insights and communicate these to the market. 

Research by the firm shows that mainstream climate scenarios are open to misinterpretation and underestimation of climate risks that could create interpretation risks for investors. The issue is not with the scenarios per se but rather that users often poorly understand the scenarios’ analytical limitations. Seemingly similar pathways, e.g. 1.5°C scenarios, can produce wide variations in projected demand for particular technologies, depending on the scenario’s underlying assumptions and the models used.

 

BaaS to revolutionise European financial services

The potential opportunities for banking-as-a-service (BaaS) in Europe could lead to a revolutionary shift in the financial service industry, according to a report by research firm WhiteSight, commissioned by fintech SaaS provider Toqio. “The State of Banking-as-a-Service in the UK & Europe” suggests that changes have already begun and are gaining momentum, indicating a rapid evolution of BaaS and BaaS-powered business models.

Regulation changes leading to the rise of BaaS providers have rapidly altered the financial landscape throughout the last decade. The market has seen a surge of challenger banks, neobanks, and embedded finance providers seeking to bring about positive change to the financial service sector - the global BaaS platform market is poised to expand at a 15.7% compound annual growth rate (CAGR) between 2021 and 2031.

The report lists five significant trends on the horizon, including incumbent banks’ role in betting on BaaS to become a key driver of growth and innovation, expansion of use cases, heightened regulatory scrutiny, sector consolidation, and ecosystem collaboration.

The study highlights a substantial rise in BaaS across Europe. The UK and Germany remain the largest markets for BaaS platforms, representing around 60% of the market share. However, the research also shows BaaS gaining a foothold in several other European countries, including Lithuania, Sweden, Finland, Spain, and France. 

While a few major players currently dominate European BaaS market share, mid-sized to large incumbent banks are gradually expanding their market presence by forging alliances with technology providers to offer new propositions.

The report states that BaaS unlocks two significant market opportunities in the financial industry: embedded finance and fintechs. The first pertains to the growing integration of embedding financial services into the customer journeys of non-financial companies with large customer bases, such as those in the retail and e-commerce industries. The second centres on niche-focussed fintechs emerging that offer targeted financial products for specific customer segments through technology and business model innovations.

The experts interviewed for the report think the top three most critical factors to accelerate the adoption of BaaS in Europe are regulatory clarity and guidance, ecosystem collaboration, and more licensed players. When it comes to the top three use cases enabled by BaaS in the short to medium term (one to three years), experts believe digital payments, embedded bank accounts, and card issuance will lead on the retail side of operations while embedded credit, embedded bank accounts, and digital payment acceptance will lead on the business side.

“One of the main use cases for BaaS has always been to enable early-stage innovation,” said Eduardo Martinez Garcia, CEO and Co-Founder of Toqio. “Yet, it seems that with fewer early-stage businesses set to participate in the market over the next 12-24 months, new use cases need to be identified to drive growth. As more mature businesses, specifically those outside of financial services, look to take advantage of BaaS, we expect this to drive a shift in player make-up.”

Companies that were interviewed for the report include Alviere, BBVA, ClearBank, Currencycloud, Enfuce, Griffin, SEB, Standard Chartered, and Thistle Initiatives.

 

Middle East claims fastest-growing real-time payments market title

The Middle East is fast becoming the global hotspot for the real-time payments revolution sweeping the globe. The region is the fastest-growing real-time payments market globally, with transactions in the region expected to grow from US$675m in 2022 to US$2.6bn by 2027, representing a CAGR of 30.6%, according to the 2023 Prime Time for Real-Time report, published by ACI Worldwide in partnership with GlobalData.

According to the report, the Kingdom of Saudi Arabia (KSA) and Bahrain are the leading real-time payment markets. While KSA is the biggest market for real-time transaction volumes, Bahrain leads in consumer adoption thanks to new, sophisticated use cases and digital payment services. As governments and regulators in the Middle East set new mandates for adoption, several countries in the region, including the United Arab Emirates (UAE), Qatar, Kuwait and Oman, are expected to launch domestic real-time schemes soon with innovative features and overlay services high on the agenda.

“Real-time payments growth and adoption in the Middle East has been remarkable,” commented Santhosh Rao, Senior Vice President, MEASA, ACI Worldwide. “Thanks to visionary governments and support of central banks, the region now has a great opportunity to drive economic growth and financial inclusion through real-time payments.”

With consumers and businesses demanding cheaper, faster and more efficient ways to pay and merchant acceptance of real-time payments on the rise, consumer and business adoption via popular new use cases is heating up. This year’s report analyses real-time payment transactions per head of population per month for the first time, highlighting where consumers and businesses most actively use them.

According to the report, Bahrain is projected to be the world’s leader in consumer adoption of real-time payments. By 2027, every Bahrain citizen is expected to make an average of 83.3 real-time transactions per month, which makes Bahrain the world’s leader, ahead of Brazil and Thailand and its closest regional competitors, KSA and UAE.

The report highlights that real-time payments are strongly embedded in the everyday lives of consumers and businesses in Bahrain. In 2015, the Central Bank launched Fawri+, a real-time payments system that sets the standard for instant payments in the region. Today, nearly 60% of electronic payments in the country are processed in real-time - forecasted to rise to 78.6% by 2027. With the support of the Central Bank enabling easier use through digital apps like BenefitPay, real-time payments are helping promote financial inclusion and increase financial stability across the economy, leading to stronger economic growth.

Total real-time transactions in the country are expected to grow from 276 million in 2022 to 1.3 billion in 2027, representing a CAGR of 35.5%, outpacing any other market in the Gulf.

KSA continues to lead the real-time payments revolution in the Middle East as the region’s largest real-time payments market. Some 352 million real-time transactions were recorded in 2022, forecasted to climb to 1.2 billion in 2027, a CAGR of 26.1%.

In light of the government’s support to advance the real-time payments modernisation of the national payments infrastructure, KSA has seen an accelerated shift towards non-cash payments in recent years. In 2027, most payments in the Kingdom are expected to be electronic, with 7.4% being real-time payments and 48.6% other electronic payments.

The report also reveals that KSA has broken into the global Top 10 for mobile wallet adoption - taking spot number 9 - with 80% of consumers in KSA stating they are avid mobile wallet users. This can be partly attributed to the Kingdom’s response to Covid-19, as the government urged consumers to adopt new forms of cashless payments.

Much of KSA’s real-time payments success can be credited to the Kingdom’s Vision 2030 plan, which promotes the modernisation of the country’s payments infrastructure and the adoption of digital payments to foster economic growth and financial inclusion.

According to the ACI report, 37.2 million real-time transactions were made in the UAE in 2022, and this number is expected to increase to 146 million by 2027, representing a five-year CAGR of 31.5%. Moreover, real-time payments accounted for only 1.1% of total paperless transactions in 2022; this figure is expected to rise to 12% of electronic payments by 2027.

Since last year, ACI Worldwide has been working closely with all market participants to build the UAE’s domestic real-time payments scheme. The phased rollout of a national Instant Payment Platform is expected later this year, through which payments and fund transfers in the UAE can be processed 24/7 and in real-time. The scheme, which will require the participation of all financial institutions in the country, is expected to offer core payments based on the new instant payment rails and overlay services such as Request to Pay.

 

International payment collection service to Indian exporters launches

Cashfree Payments and YES BANK have partnered to offer Global Collections, an international collection service for exporters who are account holders of YES BANK.

Under this partnership, the bank’s account holders can collect payments in over 30 foreign currencies using the Global Collections service. The funds can then be converted into Indian rupee and settled into their local bank account in India within one business day.

In addition to having dedicated facilities in four currencies (USD, GBP, EUR and CAD), the product also enables global collections in over 30 currencies up to the equivalent of US$10,000 in line with the Reserve Bank of India’s (RBI’s) Online Payment Gateway Service Providers (OPGSP) guidelines.

Exporters will be able to share their payment collection details with their buyers over email, SMS or WhatsApp, and the buyers will be able to make payments using local rails like ACH and SEPA, for example.

“The partnership… aims to simplify and revolutionise the way Indian exporters receive payments from across the world,” explained Ajay Rajan, Country Head - Digital and Transaction Banking, YES BANK. “This is aligned with the government’s focus on boosting exports, especially in the MSME sector to make India a global manufacturing and services hub. The launch of Global Collections will empower the exporters to have real-time access and control over their payments and collections journey.”

 

CMA launches initial review of artificial intelligence models

Foundation models, which include large language models and generative artificial intelligence (AI) that have emerged over the past five years, can potentially transform much of what people and businesses do. To ensure that innovation in AI continues in a way that benefits consumers, businesses and the UK economy, the government has asked regulators, including the Competition and Markets Authority (CMA), to think about how the innovative development and deployment of AI can be supported against five overarching principles: safety, security and robustness; appropriate transparency and explainability; fairness; accountability and governance; and contestability and redress.

In line with the government’s AI white paper and the CMA’s role in supporting open, competitive markets, the review seeks to understand how foundation models are developing and produce an assessment of the conditions and principles that will best guide the development of foundation models and their use in the future.

This initial review aims to:

• Examine how the competitive markets for foundation models and their use could evolve.
• Explore what opportunities and risks these scenarios could bring for competition and consumer protection.
• Produce guiding principles to support competition and protect consumers as AI foundation models develop.

The development of AI touches upon several important issues, including safety, security, copyright, privacy, and human rights, as well as the ways markets work. Many of these issues are being considered by the government or other regulators, so this initial review will focus on the questions the CMA says it is best placed to address - what are the likely implications of developing AI foundation models for competition and consumer protection?

“AI has burst into the public consciousness over the past few months but has been on our radar for some time,” noted Sarah Cardell, Chief Executive of the CMA. “It’s a technology developing at speed and has the potential to transform the way businesses compete as well as drive substantial economic growth. It’s crucial that the potential benefits of this transformative technology are readily accessible to UK businesses and consumers while people remain protected from issues like false or misleading information. Our goal is to help this new, rapidly scaling technology develop in ways that ensure open, competitive markets and effective consumer protection.”

The CMA is seeking views and evidence from stakeholders and welcomes submissions by 2 June 2023. The CMA encourages interested parties to respond and be proactive in identifying relevant evidence. Following evidence gathering and analysis, the CMA will publish a report which sets out its findings in September 2023.

 

Westpac offers customers the ability to track carbon footprint

Westpac has begun rolling out a new capability where customers can track their estimated carbon footprint in the bank’s app and gain insights to help make more environmentally friendly choices.

The tool will provide customers with an estimate of their carbon emissions tracked from spending from their eligible accounts based on aggregate industry categories such as home energy, car fuel or groceries. The Carbon Footprint Tracker technology has been developed in partnership with carbon management fintech, Cogo.

Westpac’s Carbon Footprint Tracker will enable customers to compare their estimated carbon footprint with Australian individual and household averages in similar categories. The tool will also link to articles and resources with ideas from Cogo on how consumers might make better choices to live more sustainably. Customers will see a comparison to their previous month’s overall estimated carbon footprint and their monthly average trend over time.

Over the coming weeks, the Carbon Footprint Tracker in the Westpac App will be supplemented by resources on the Westpac website, including information on how an estimated carbon footprint is calculated, key insights and helpful information for customers to explore their individual estimated carbon footprint.

The Westpac App uses two pieces of data to calculate a customer’s estimated monthly carbon footprint: the transaction amount and the transaction’s industry category, which has an associated emissions factor calculated based on Australian industry average data. Each eligible transaction is multiplied by an ‘emissions factor’ (how much greenhouse gas that type of activity emits per dollar spent) to work out the estimated carbon footprint for that transaction. 

The bank’s partner, Cogo, has provided these emission factors, mapped to their database of industry categories for Australia. The estimated carbon footprint is based on the total transaction amount, and not the individual items making up that purchase.

“Our research shows Australians are increasingly concerned about sustainability,” said Westpac Consumer and Business Banking Chief Executive, Chris de Bruin. “However, there are knowledge gaps that prevent people from engaging in more sustainable behaviours. The Westpac Carbon Footprint Tracker will give customers high-level insights into the carbon footprint associated with everyday purchases, such as takeaway food, transport, and groceries.”