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New R.T.P. system to debut in UAE – Industry roundup: 16 December

A new real-time payment system to debut in UAE Q1 2023

The United Arab Emirates (UAE) plans to launch a new real-time payment platform to facilitate financial transactions in 2023. The new Instant Payment Platform (IPP), which will reportedly be introduced in phases, is expected to launch during the first quarter of 2023 with a pilot group of authorized financial institutions.

The initiative aims to process payments and fund transfers in the UAE 24/7 and in real time, said reports. The central bank of the UAE, along with bank CEOs and members from the country's Foreign Exchange and Remittance Group, joined to discuss the financial sector's digitalization objectives and the rollout of a new payment platform.

In efforts to build a cashless economy in the UAE, the IPP will reportedly work to ensure that electronic payments are secure, cutting-edge and practical for consumers and businesses.

Barclays evaluates return into the Saudi Arabian market amid surge capital markets

Barclays, a London-based multinational bank, plans to return to Saudi Arabia in order to tap into the country's rapidly expanding capital markets. The bank is reportedly in the early stages, seeking to obtain a license in the kingdom to manage transactions such as initial public offerings.

Reports indicate that the bank had relinquished its Saudi licenses in 2014, as part of a worldwide withdrawal of its investment banking operations under the previous CEO. The bank does reportedly have authorization to conduct business in Qatar and the Dubai Financial Center, but in its most recent annual strategic report, the bank stated that it intends to continue to expand its investment banking division in the Middle East region.

Approximately 70% of Barclays’ pre-tax profit in 2021 was reportedly derived from its corporate and investment banking operations, which also included trading, advisory and transaction banking. Businesses in the region raised US $21.9 billion through IPOs in 2022, more than half of the total for the larger EMEA region, including Europe and Africa, per reports from Deologic data.

Saudi Arabia has reportedly seen a number of IPOs as part of a government-led privatization program, noting state entities selling off some of their stakes in publicly traded companies, which may encourage local businesses and family-led operations to go public.

HSBC expedites commercial expense management solutions in the US via alliance with Extend

HSBC and Extend, a virtual card and spend management platform, have collaborated to assist US-based businesses with solutions for managing spend through the control and versatility of virtual cards. Mutual clients, with their HSBC commercial cards, will reportedly be able to streamline their critical functions, such as month-end journal closing, quickly enabling key individuals to make commercial payments from any location.

HSBC’s commercial card clients can now reportedly access Extend's digital solutions, with more features expected in early 2023. Extend, which claims to be widely used by countless companies, enables clients to build, transmit and operate virtual cards in a seamless manner, while also achieving better control of their expenditures throughout the company. Furthermore, administrators can reportedly establish one-time, multiple-use, or recurring card limits and rules, allocation of budgets for particular employees, and automation of payment reconciliation instantly, using the Extend mobile or web app.

Recent forecasts expect that the number of virtual card transactions will increase by more than 300% over the course of the next five years, with the US representing the largest market for these transactions. Faisal Jafri, Americas Head of Commercial Cards, HSBC, commented that more companies are seeking sophisticated digital solutions to help meet daily challenges such as reconciling expenses and paying vendors.

New York financial regulation authority publishes crypto guidance for financial institutions

The New York State Department of Financial Services (NYDFS) has released digital asset guidance that is effective immediately to state-regulated financial institutions on submitting requests for authorization to participate in virtual currency-related activities. The new regulation comes after an unstable month for cryptocurrencies that was precipitated by the collapse of FTX, one of the biggest crypto exchanges.

The cryptocurrency guidelines direct banks on a business plan submission outlining the proposed transaction and providing explanation of the service and its effects on the bank's capital and liquidity. Banks must notify NYDFS of their plans at least 90 days in advance. Prudential regulators will reportedly evaluate the data that is presented under the guidance thoroughly to decide whether a bank should be allowed to engage in a proposed crypto-related activity.

Reports indicate that banks planning to engage in such activities will reportedly be required to include a thorough risk assessment for the service offering, the expected project costs, and any applicable consumer protection policies in the business plan they submit to NYDFS.

Visa plans to invest US $1 billion in Africa during the next five years

Visa has announced a US $1 billion investment in Africa by 2027, as digital payments are becoming more prominent in the continent. The commitment, which was declared by Al Kelly, CEO, Visa, will reportedly enable Visa to expand its operations in Africa as well as strengthen collaboration with partners such as governments, financial institutions, mobile network operators, fintechs and merchants.

Reports indicate that approximately 500 million civilians or more in Africa are currently underbanked or unbanked. Visa states that less than half of the continent's adult population has initiated or received digital payments, and over forty million merchants do not accept digital payments. Through various partnerships and Visa’s role in Africa's current digital payments surge, the collaboration is expected to help with financial inclusion in the continent.

Furthermore, Aida Diarra, Senior Vice President, Visa Sub-Saharan Africa, commented that with Africa rapidly advancing in the digital space, an increasing number of customers, businesses and merchants are reportedly leveraging the benefits offered with digital payments. In efforts to advance Africa’s financial ecosystem, Visa has reportedly increased its investments over the past year through new offices, solutions and initiatives, promoting financial inclusion in the continent.

FIS's new CEO to perform in-depth examination of the company

Fidelity National Information Services Inc. (FIS) has publicized that effective today, 16 December, its incoming CEO, Stephanie Ferris, has plans to conduct a "comprehensive evaluation" of its business, business functions and structure in order to achieve greater returns, strengthen shareholder value and improve client services.

The review aims to concentrate on increasing revenues, maximizing profits and reducing costs. Furthermore, in order to optimize configuration and obtain the best outcome for FIS’s clients and shareholders, the review will reportedly also assess the company’s business structure and asset portfolio.

Compared to peers Fiserv Inc. and Global Payments Inc., whose stocks have reportedly decreased approximately 2% and 28%, respectively, FIS shares have dropped more than a third of their value over the course of the year. Reports indicate that the most recent earnings report caused the stock to have its worst one-day performance in over twenty years.

Ferris is reportedly working closely with other members to examine every detail of the business in to order to identify areas that require change as well as create a comprehensive action plan.

HSBC, Banque de France and IBM experiment with wholesale CBDC interoperability

HSBC, Banque de France and IBM have released study conclusions from experiments showing that DLT can be applied with current networks to carry out CBDC financial transactions in real time.

This experiment reportedly covered the entire end-to-end transactional lifecycle in a hybrid environment of public and private clouds using on-premises data sources. Earlier trials and tests had demonstrated how CBDC, digital securities or FX could work on DLT, said reports. The success of this experiment, according to HSBC, is a breakthrough in demonstrating interoperability across various DLTs and technologies, as well as showing how CBDCs could speed up transactions, lower market risk and improve security for clients globally.

The following three methods were reportedly chosen to test the efficiency and advantages of a wholesale CBDC implementation: issuance and distribution of debt instruments denominated in CBDC, opening of bond subscriptions in the primary market and settlement of trades in the secondary market followed by coupon payment, and execution of cross-border, cross-currency, cross-technology (DLT and non-DLT) and cross-network payments.

As a proof of concept, all three methods were reportedly merged into one experiment that was successfully carried out in a highly difficult configuration with a multitude of ledgers, system technologies and control tools. The DLT infrastructures of Banque de France and HSBC are reportedly independent of one another, but can be linked via bridging software to allow for interoperable transactions and cross-network DLT continuity. Using IBM Research's Weaver interoperability tool, distributed ledgers based on R3's Corda and IBM's Hyperledger Fabric were also combined, said reports.

The experiment reportedly demonstrates how CBDC and DLT can benefit real-world companies, exemplifying cooperation and partnership between central banks, commercial banks and technology providers within a short time span. Additionally, reports indicate that these experiments aim to lay the groundwork for central banks around the world to issue CBDCs securely, which HSBC expects may occur within the next 15 years. An indirect approach with CBDC distribution through banks like HSBC is reportedly the most likely outcome, underscoring how crucial it is for commercial banks to participate in the development and testing of these new currencies, said reports.

Suppliers of Knorr-Bremse incentivized for more sustainable business performance

Knorr-Bremse AG, a German-based manufacturing company, is reportedly collaborating with Deutsche Bank to advance its ESG initiatives and connect its ESG ratings of suppliers to its current Supply Chain Finance (SCF) program. Knorr-Bremse aims to make significant advancements towards building more sustainable value chains by offering financial incentives to encourage greater sustainability among its suppliers.

By incorporating sustainability components into the SCF program, suppliers who operate sustainably can reap benefits such as improved financial terms, said reports. As a result, the global program will reportedly incentivize more suppliers to enhance their ESG measures. 

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