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Open banking for larger audience – Industry roundup: 22 June

QNB launches open banking for larger audience

QNB, the Middle East and Africa's largest financial institution, has launched a broader open banking platform to include the bank's customers, partners and emerging fintechs in Qatar. The bank will purportedly provide its clients a one-of-a-kind banking experience with its upgraded API infrastructure, enabling them to safely access its core banking systems.

Adel Al Malki, General Manager, QNB Group Retail Banking, commented that they have been exploring the open banking space and initially implemented it ten years ago. He added that “it has now become a case study where wallets operated by a telecom have access to multiple banking facilities like virtual IBAN, Virtual MasterCard, Payroll Solution, Local and International Remittances and other services.”

Open banking aims to securely integrate the bank’s core financial services with its partners, making sharing customer data and sending payments between organizations easier.

According to reports, fintechs, internet of things (IoT) companies and other third-party providers are considering unified integration with banks for data sharing and payment processing. Using these open banking APIs would transform Qatar's fintech landscape and help to introduce cutting-edge, futuristic solutions for citizens, residents and visitors.

Kellogg’s split into three companies: snacks, cereals, plant-based foods

The Kellogg Co., a US-based 116-year-old manufacturer of Frosted Flakes, Rice Krispies, Pringles, and Eggo, shares jumped 8.1% on Tuesday premarket trading after the food company announced a plan to split into three businesses focused on cereals, snacks and plant-based foods. Kellogg’s expects to provide greater strategic, operational and financial focus for each of the new firms, which will be named later. Additionally, Kellogg's, which also owns the plant-based food company MorningStar Farms, announced on Tuesday that the spinoffs are expected to be completed by 2023, and headquarters for the three companies will remain unchanged.

Steve Cahillane, CEO, Kellogg’s, stated that the pandemic halted further changes. However, the company felt the time was right for the spinoff because the company had returned to growth, a 3% increase in net sales. The snack segment of Kellogg's, which produces brands like Cheez-Its, Pringles, and Pop-Tarts, produced US $11.4 billion (approximately 80%) of the company's $14.2 billion in net sales in 2021. Cereal sales accounted for $2.4 billion in 2021, while sales of plant-based foods generated approximately $340 million.

Cahillane commented that "cereal will be solely dedicated to winning in cereal and will not have to compete for resources against the high-growth snacking business.” However, the future of cereal and plant-based meat is less certain. According to reports, cereal sales in the US have been declining for several years as consumers have shifted to more portable products such as energy bars.

GoCardless introduces new open banking and anti-fraud solution in Germany

In response to the anticipated rise in open banking adoption in Europe, GoCardless, UK-based global payment network and technology provider, is launching two open banking features in Germany: a one-of-payments offering and an anti-fraud feature. Instant Bank Pay, currently available in the UK, enables merchants to accept one-time bank-to-bank payments. Additionally, Instant Bank Pay reportedly provides an alternative to handling single non-recurring payments for GoCardless merchants who use its direct debit service.

According to GoCardless' research, 88% of merchants with recurring revenues in Germany needed to collect additional ‘one-off payments’. GoCardless cited examples such as purchasing additional goods or services or adding funds to an account in addition to the client’s regular payment schedules. It claims that merchants in Germany will be able to future-proof their businesses by using Instant Bank Pay.

Reports indicate that GoCardless is also implementing Verified Mandates, an anti-fraud feature that blends open banking with direct debit payments. This solution is said to prevent payment fraud before it occurs, using open banking to instantaneously and automatically validate client data as part of the process of setting up a new direct debit mandate.

Although consumer acceptance of open banking is modest in Germany, GoCardless anticipates that there will be 64 million active open banking users across Europe by 2024. GoCardless' General Manager for Continental Europe, Alexandra Chiaramonti, stated that this new technology will help clients reduce high card fees and payment fraud, in addition to initiating payments in a secure and effective manner.

BIS to urge CBDCs amid cryptocurrency uncertainties

According to the Bank for International Settlements (BIS), the recent collapses in the cryptocurrency markets show that the long-foreseen risks of decentralised digital money are becoming a reality. BIS, the global organization serving central banks, issued a warning to urge more effort in developing central bank digital currencies (CBDCs). Agustin Carstens, General Manager, BIS, cited the recent collapses of the TerraUSD and Luna 'stablecoins', as well as a 70% drop in Bitcoin, the crypto market's main indicator, as signs of a structural issue. Carstens further added that “without a government-backed authority that can use reserves funded by taxes, any form of money ultimately lacks credibility."

The BIS outlined its vision for the future monetary system, in which central banks use the technological advantages of Bitcoin and others to create digital versions of their own currencies. Approximately 90% of monetary authorities are now investigating CBDCs. However, the BIS expects to address key issues such as ensuring the CBDCs work across borders. Reports indicate that the immediate challenges are primarily technological but also include the geopolitical issues between the West and countries such as China and Russia.

The BIS also revealed a market intelligence solution to address crypto and CBDC security concerns. In order to provide verified information about cryptocurrency initiatives, the institution's market intelligence branch will soon be formed as part of the Eurosystem Centre programme.

The Eurosystem Centre will be in charge of the market intelligence platform, which is expected to provide verified data on cryptocurrency projects. The recent depegging of multiple stablecoins as well as the liquidity issues confronting some decentralized finance (DeFi) protocols are said to be driving forces behind the launch of this project. According to BIS, "one reason is that most data on asset backing, trading volumes, and market capitalization is self-reported by unregulated firms." The project expects to develop an open-source market intelligence platform to provide information on market capitalizations, economic activity, and risks to financial stability.

CBDC security is also addressed in the BIS report, covering crypto's vulnerability to quantum computers. Quantum computing is said to have the ability to infiltrate cryptography technologies used by traditional financial institutions to process payments. The announcement stated that the “project will investigate and test potential cryptographic solutions that can withstand the vastly improved processing power of quantum computers.”

BlockFi and FTX enter into a US $250 million revolving credit deal

According to Zac Prince, CEO, BlockFi, the company has signed a term sheet with FTX, a digital asset exchange company, for a US $250 million revolving credit facility. The agreement is said to provide BlockFi with capital during a downturn in the digital currency market. BlockFi announced a 20% reduction in staff last week, in addition to other cost-cutting measures such as reduced marketing spend and executive compensation.

The aggressive rate hikes by the United States Federal Reserve, combined with recession fears, have caused turmoil in equities and a sell-off in cryptocurrencies. Reports indicate that companies are using revolving credit facilities as a safety net to offset negative effects on other sources of income, and it has been suggested that these facilities are largely underutilized.

Formance, French fintech, raises US $3 million to create solution for payment flows

Formance, a French-based fintech, has raised US $3.1 million in its first funding round from Hoxton Ventures, Frst and Y Combinator. It plans to use the funds to further develop its low-code, open-source payment-flow tracking platform. Formance reportedly provides pre-built, fully customizable use-case templates for tracking payment flows between pay-ins and payouts.

According to the press release, the offering includes an open-source modelling language and ledger as well as a library of pre-built use cases. It is intended to assist expanding firms with the ability to keep track of increasing volumes of money flows while capitalizing on new business opportunities.

Formance is expected to provide a suite of subscription-based real-time transaction tracking tools for finance and operations teams, allowing for the reconciliation of pay-ins and payouts as well as the identification of transaction-related issues. Reports indicate that Formance is currently piloting its offering with an unnamed fintech company and intends to use the funds to pursue a number of pipeline prospects among SMEs and marketplace businesses.

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