Report finds fintech sector continues to make positive impact on UK

The vast majority of fintechs in the UK (90%) are a force for good when analysed against the framework of five impact categories linked to the United Nations’ Sustainable Development Goals: Productivity, Peace, Planet, People and Place. This is a key finding in The Fintech Impact Report 2024 released by Innovate Finance and Vested Impact, produced in collaboration with Accenture.

The report, which assesses the impact UK FinTech has on the economy and society, found the UK’s fintech sector has an overall net impact score of 24 (in a spectrum from -100 to +100), indicating a net positive impact on society, higher than industries including Capital Markets, Construction and Retail but lower than Telecommunications and Education.

Virtually all (98%) fintechs have a significant positive impact on productivity in the UK, encompassing economic growth, job creation, innovation and infrastructure. Fintechs are driving productivity and digital infrastructure, increasing access to finance and financial resilience of the vulnerable. However, with a drop in investment by 37% in the first half of 2024 from the previous period, more support is needed for the UK to remain competitive.

Around one-quarter (26%) of UK fintechs are positively contributing to the protection of fundamental freedoms around data privacy and access to information. Fintechs are a positive contributor to financial security and regulatory compliance but face challenges as the digital landscape evolves. Against a backdrop of the UK’s Corruption Perception Index declining in 2023 for the second year running and a rise in mobile banking services, fintechs have seen a decline in their positive impact on addressing money laundering and illicit flows of money. However, tackling the challenge will involve multi-sector collaboration. The UK’s emergence as the European market leader in regtech investment has also contributed to enabling financial institutions to comply with regulations in a more efficient and transparent manner.

Only 10% of UK fintechs are driving a positive path for our planet. The Planet Impact pillar addresses key issues such as climate change, responsible consumption and production, water usage, and land management. While the proportion of UK fintechs negatively impacting the planet has decreased from 86% to 73% from last year’s report, the overall negative impact has increased, making this the highest negative impact area. Furthermore, the positive contributions from UK fintech companies are currently not enough to offset the growing negative effects on emissions.

Over one-third (39%) of fintechs are having a positive impact on people, an impact category that covers issues from social and economic inclusion to education, offsetting the negative impact of 17% of companies in the sector. Relative to fintechs, incumbent financial institutions have a larger relative scale of influence on people (25% versus 10%) and place (10% versus 3%) due to their vast customer and employment networks. However, their depth and quality of impact on people, especially for vulnerable groups, trails behind fintechs (18% versus 25%).

Some 14% of fintechs have a positive contribution to local communities and infrastructure, with only 3% having a negative impact. The net impact rating for “Place” is the second highest for UK fintech after “Productivity”, addressing Sustainable Cities and Communities through greater access to adequate, safe and affordable housing and services.

Across all of the UN’s Sustainable Development Goals, the report shows that the UK fintech sector is having a positive impact. However, to unlock the potential for fintech and foster further innovation, the report urges greater collaboration between industry stakeholders and policy makers.

 

German manufacturers see weakest export conditions since January

September data indicated a fractional downturn in business activity across overseas markets, which represented a reversal of fortunes for German manufacturing exports after a marginal expansion during the previous month. The headline HCOB Germany Manufacturing PMI Export Conditions Index posted 49.8, down from 50.7 in August and the lowest reading since January.

All three main global regions registered a loss of momentum in September. North America (52.7) remained the fastest-growing, despite the rate of expansion easing to a five-month low in September. Moreover, on a trade-weighted basis, output growth in Asia (51.1) increased at the weakest pace since October 2023. This was largely due to a slowdown in private sector activity growth across China.

Meanwhile, lacklustre export demand persisted in Europe (48.6), with this index in contraction territory for the fourth consecutive month. Renewed declines in private sector output in France and Italy more than offset pockets of growth in Spain, the UK and Ireland.

German manufacturers signalled a steep and accelerated decline in their volumes of new work from abroad in September. At 39.7, down from 40.8 in August, the seasonally adjusted HCOB Germany Manufacturing PMI New Export Orders Index was below the 50.0 no-change mark for the thirty-first consecutive month. Moreover, the rate of contraction was the fastest since October 2023.

Survey respondents widely linked falling export sales to weak global demand for manufactured goods, as well as challenging market conditions. There were also reports that heightened geopolitical uncertainty had led to delayed decision-making among clients, especially on major capital spending projects. Where growth was reported, firms mostly noted rising demand from US clients. This contrasted with relatively weak spending patterns across Europe and Asia.

While the latest decline in new orders from abroad partly reflected an unfavourable global economic backdrop, the downturn in exports across Germany's manufacturing sector continued to exceed the worldwide trend by a wide margin. In fact, the rate of decline in new export orders was the second-fastest of the 29 economies monitored by PMI surveys in September, exceeded only by Austria.

 

Citi’s tokenised cash management solution goes live

Citi Token Services for Cash has moved from a pilot programme to a live commercial solution, facilitating multimillion-dollar transactions for institutional clients. This marks a milestone in the bank’s journey to deliver real-time, always-on, next-generation transaction banking services to some of its largest global clients. 

Citi Token Services for Cash processes multimillion-dollar transactions and provides clients with 24/7, always-on cross-border liquidity and payments between participating branches. The bank says that its Token Services solution was designed using a private and permissioned blockchain that it solely owns and manages, which is designed to ensure safety and ease of use. Clients are not required to hold or manage any tokens to access the services.

“At Mars, we are looking to a future where the treasury ecosystem is always on,” commented Mayela Stuparitz, Global Treasury Director at Mars, Incorporated. “As an early adopter of Citi Token Services for Cash, we have seen first-hand that this future requires dynamic, real-time solutions for movement of value… This solution has enabled us to initiate and program instant payments and liquidity movement between our Citi accounts, reducing the friction caused by cutoff times and streamline our transactions by tokenising cash.”

Initially, Citi piloted this solution between Singapore and New York, and continues to pursue onboarding additional branches to unlock further opportunities.

In addition, Citi Token Services for Trade also marked a milestone by facilitating pilot transactions in partnership with shipping agents CB Fenton and GAC Panama Shipping. These pilot transits are the first real-world use of Citi Token Services for Trade in global shipping. 

By replacing transactions such as guarantees and letters of credit with smart contracts backed by tokenised cash, Citi Token Services for Trade aims to bring trade finance into an increasingly real-time world. The completely digital process will enable 24/7 settlements, when predetermined criteria are met, between Citi clients and their counterparties to automatically execute and provide provisional payments. This technology should significantly reduce transaction processing times from days to minutes.

 

Deutsche Bank upgrades correspondent banking solutions

Deutsche Bank’s Institutional Cash and Trade has launched dbX, which it says paves the way for its next generation, fully integrated correspondent banking ecosystem. The bank intends the solution to give financial institutions (FI clients) access to enhanced functionalities designed to better leverage its thought leadership, investment and extensive global network.

The first wave of the launch focuses on enhancing Deutsche Bank’s commercial payments (dbXflow), transactional FX (dbXconvert) and treasury solutions (dbXtreasury) offerings, with the addition of dbXadvise, which combines individual advisory capabilities with extensive but flexible information and data tools. Trade finance functionalities will be launched in the second phase.

On the commercial payments side, dbXflow offers a range of cross-border services with enhanced bespoke pricing capabilities. New elements include a low value full-principal payment proposition, starting with EUR. With upcoming industry initiatives such as SEPA One-leg-Out and Swift Go, Deutsche Bank says its strategy is to support clients to optimise their transactional flows at the best possible price, without waiting for mass adoption within the industry. dbXflow will be available for EUR, USD and GBP payments.

Complementing the bank’s commercial payments solutions, dbXconvert offers transactional FX services. The bank’s FX4Cash engine will be upgraded to allow FI clients to fund Deutsche Bank in their own currency (e.g., DKK) without the need for a Deutsche Bank account in this currency. Clients can use the engine to convert into another currency (e.g., ZAR). In a second step, the bank will introduce its auto-convert solution to automatically convert commercial cross-border payments to the local currency of the beneficiary for specific corridors.

Exploring a holistic solution to optimise liquidity and treasury payment needs, dbXtreasury expands Deutsche Bank’s current liquidity offering, focusing on intraday solutions for managing FI treasury needs in an instant world. New functionalities, such as intraday liquidity optimisation with the use of advanced data and analytics, will be introduced that could help clients reduce liquidity usage and improve payments functioning.

As part of Deutsche Bank’s strategy to operate in a more efficient, safer and inclusive correspondent banking ecosystem, dbXadvise services now form an integral part of its cash and trade offering. Advisory services range from supporting clients with the complexities of conducting business in challenging markets, through to offering self service tools, data provision on liquidity positions and flexible API reporting capabilities.

“The launch of our dbX solutions highlights our commitment to empowering FI clients to succeed in the global marketplace,” said Patricia Sullivan, Global Head of Institutional Cash Management at Deutsche Bank. “Correspondent banking remains a core strategic business for Deutsche Bank. Our investments in dbX reaffirm our commitment to meeting both the current and future needs of our clients. Dedicated to our clients’ lasting success, we continue to innovate and invest in solutions that drive their growth and efficiency.”

 

GSS teams up with Swift to drive frictionless cross-border payments

Global Screening Services (GSS) has announced an extended partnership with Swift that is designed to enable financial institutions around the world to access its end-to-end sanctions screening platform over the same infrastructure that they already trust to move money between more than 200 countries and four billion accounts globally.

The collaboration progresses a strategic relationship the two organisations announced in October 2022, and reflects a commitment by Swift, GSS and the GSS Advisory Board, comprising 35 of the world's leading financial institutions, to reduce inefficiency in the global payments ecosystem.

GSS provides a cloud-based, standardised and centralised screening service to eliminate unnecessary screening repetition, frequency of false positives and time to investigate. Enabling connectivity via Swift's secure and resilient network, and standard API solution, adds to the efficiency and significantly reduces the time for financial institutions to implement the GSS utility.

Beyond enabling access to GSS via the Swift network, the agreement also encompasses ongoing collaboration on the development of screening standards, enhancing the effectiveness of sanctions compliance testing, and supporting institutional performance benchmarking.

“lndustry-wide collaboration is vital if we're to remove friction from the cross-border payments ecosystem and achieve our collective goals,” commented Thierry Chilosi, Chief Business Officer at Swift. “Working with GSS will enable our community to streamline their sanctions screening processes using their existing Swift connectivity, with GSS’ services complementing our own existing capabilities which are helping drive the industry towards an instant and frictionless future.”

 

Standard Chartered introduces digital RFQ for LC pricing

Standard Chartered has announced the introduction of Autoquote, a digital request for quote (RFQ) module available on its digital banking platform, Straight2Bank Next Gen. The digital capability offers its clients globally the ability to request pricing quotations for their letters of credit (LCs) confirmation and discounting/negotiation and receive a digital response on demand, from anywhere and at any time.

By digitising the end-to-end LC confirmation and discounting/negotiation price discovery process, the self-service capability lets clients access pricing for their LCs by submitting a digital form at their convenience and receiving a quote digitally. In addition to improved efficiency, the bank says its clients also benefit from the added transparency of staying informed of the status of their quotations through platform alerts and notifications, as well as the ease of managing and retrieving their past quotation history.

“The process of clients requesting and accepting LC confirmation and discounting/negotiation pricing quotes is usually a multi-step and manual process across the industry,” noted Samuel Mathew, Global Head of Documentary Trade, Standard Chartered. “The digitalisation and simplification of this price discovery and acceptance process is in line with our continuous efforts to improve client experience and offer our clients efficient, safe and transparent digital trade finance solutions and services.”

 

Enterprise Singapore and Credit Europe Bank establish trade finance facility 

Enterprise Singapore (EnterpriseSG) and Credit Europe Bank (CEB) have signed an agreement to enhance access to financing for Singapore companies venturing overseas. This is the first partnership between EnterpriseSG and a foreign-based financial institution.

The agreement was signed as part of EnterpriseSG’s Enterprise Financing Scheme – Foreign-based Financial Institutions (EFS-FFI), which enables Singapore companies to tap new sources of financing from selected foreign-based financial institutions when expanding overseas.

The EFS-FFI provides risk-sharing of up to 50% to support lending to Singapore companies from partner foreign-based financial institutions. The scheme covers a range of financing facilities, including working capital, fixed asset, trade, project and mergers and acquisition. The financing partnership with CEB will initially focus on international trade and commodity financing, with a view to be subsequently expanded to other products.

 

Saudi EXIM Bank and DL Hudson sign $50m credit facility agreement

The Saudi EXIM Bank has signed a $50m credit facility agreement with DL Hudson, which aims to promote the growth of Saudi non-oil exports by connecting local exporters with international buyers in more than 22 markets around the world.

Under the agreement, the Saudi EXIM Bank, through the International Buyer Finance Product, will provide financing to DL Hudson to purchase Saudi products and distribute them to its customers across various global markets. UK-based DL Hudson specialises in trading ferrous and nonferrous metals, and energy.

The Saudi EXIM Bank, a development bank under the National Development Fund, plays a key role in diversifying the Kingdom’s economic base. It strengthens the export system for national non-oil products and services by addressing financing gaps and minimising export risks. These efforts support the growth of the non-oil economy in alignment with the Kingdom’s Vision 2030.