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The challenges of cloud computing services – Industry roundup: 10 February

US Treasury report advises financial institutions on the challenges of cloud computing services

The US Treasury Department, in a recent report, The Financial Services Sector's Adoption of Cloud Services, outlined a number of challenges faced by financial institutions as they increasingly turn to cloud computing services to facilitate a multitude of tasks in daily operational processes. Furthermore, the officials reportedly cautioned that failure to address these issues could result in security risks. The agency highlighted that small and medium-sized financial institutions are predominantly vulnerable.

Wally Adeyemo, Deputy Secretary, US Treasury, commented that banks and other financial institutions migrating towards cloud-based technologies must ensure security and efficiencies. Their report analysing the current level of cloud adoption in the financial industry their found that, while cloud services could aid financial institutions in becoming more robust and secure, there were some significant obstacles, such as financial firms' vulnerability to potential cyberattacks, the industry's reliance on a limited number of cloud service providers, as well as a shortage of tech professionals qualified to assist financial institutions with the deployment of cloud services. Additionally, the research highlighted the difficulty for larger companies to reliably use cloud systems globally due to the fragmented regulations.

Treasury officials suggested measures that would reportedly facilitate the industry's use of cloud computing, noting that they neither encourage nor oppose the sector's use of cloud services. The department plans to form a working group to address the issues outlined in the study as well as collaborate with global organizations, US financial regulators, and the sector to address the risks, said reports.

UK banks to participate in a new effort sponsored by the ICC to combat trade finance fraud

The International Chamber of Commerce United Kingdom (ICC UK) and the UK's trade finance institutions have launched a new project to combat duplicate financing fraud, which the business group claims has siphoned billions of dollars from the financial services sector across the world.

The programme, which is spearheaded by the Centre for Digital Trade and Innovation (C4DTI), aims to leverage the technology of fintech MonetaGo, which reportedly created the Secure Financing system to support the Trade Financing Validation Service over the entire SWIFT network as well as the Trade Finance Registry of the Association of Banks in Singapore. MonetaGo's solution, which was initially introduced in India and live since 2018, has reportedly processed over four million transactions and claims to avert double financing fraud across all forms of trade finance.

Reports indicate that the trade finance sector has recently been disrupted by duplicate financing fraud, where a borrower misuses the banks' inability to disclose information in order to secure funding for the same shipment numerous times. Due to high-profile scandals, some institutions have reportedly deferred from offering trade finance or have restricted their lending to the high end of the market, making it difficult for smaller businesses to obtain capital.

The solution aims to remove the barriers to information sharing by enabling lenders to encrypt specific components of a trade document with electronic fingerprints that are reportedly submitted to its secure data repository without disclosing any of the information housed on the document. The financial institution can reportedly assign specific jurisdictions to the document, such as registered or financed, enabling other lenders to determine whether a transaction has already been funded.

However, reports indicate that a majority of prospective lenders of an invoice or purchase order must use the service for it to be successful. The initiative is expected to be completed by the end of 2023, cited the C4DTI. The UK will reportedly become the first G7 nation to address this issue.

Standard Chartered shares drop after First Abu Dhabi Bank dismisses acquisition speculations

UK-based multinational bank Standard Chartered’s shares reportedly dropped 6% in early trading after First Abu Dhabi Bank (FAB), the largest lender in the United Arab Emirates, withdrew from its speculated acquisition, confirming that it is not considering a bid from Britain’s financial firm.

“Given that Standard Chartered has such a large footprint in emerging markets with its operations in 59 countries, and is highly active across the Middle East, it’s clear why speculation about a FAB takeover reached fever pitch given the opportunities presented”, commented Susannah Streeter, Head of Money and Markets, Hargreaves Lansdown.

The group is reportedly heavily exposed to commercial real estate debt in China, and as a result, uncertainties lie ahead. Although this is said to be a contributing factor in FAD’s resistance to acquisition, reports cite that it is also likely to be due to takeover rules.

Despite a recent decline, the share price is reportedly still quite high. However, reports indicate that there is a significant amount of conjecture on FAD progressing once the cooling-off period expires in July 2023. Nevertheless, a complete takeover would require a tremendous amount of regulatory work.

Danish fintech Mazepay secures €4 Million, aiming to strengthen B2B payments

Mazepay, a Danish fintech platform that streamlines procurement and B2B payments, has reportedly raised €4 million in a growth round led by Scale Capital, with Hambro Perks, a multi-national investment firm, and Outward, a London-based early-stage venture capital firm, among the investors in the round. Mazepay intends to use the new funding to broaden its operations throughout Europe.

The fintech, which was founded in 2018 in Denmark, aims to enable medium and large-scale enterprises to simplify and manage all B2B expenditures using a reliable and compliant infrastructure. Additionally, Mazepay's payment solution platform is reportedly embedded into Mastercard’s ICCP (In Control Commercial Payments), enabling new banks to launch within 30 days.

Outdated techniques requiring approval and sign-off from numerous stakeholders are incredibly time consuming and prone to error, said reports. Mazepay, through its next-gen SaaS technology, aims to assist major organizations in coping with lengthy and cumbersome spend challenges that reportedly arise from the management of thousands of suppliers and numerous invoices.

Goldman Sachs estimates that by 2028, B2B payments will reportedly reach US $200 trillion, five times as much as B2C payments. However, Manhattan Venture Research forecasts that only 7% of the $120 trillion in B2B payments are made digitally, highlighting the industry's fragmented legacy systems and lack of data standards, stated reports.

Mazepay currently assists in streamlining B2B payments for clients in 21 countries across five continents through its banking partnerships, nationally and globally, as well as collaborations with various financial organizations.

Standard Chartered Bank partners with Singapore’s Allinpay, offering cross-border QR payments

Standard Chartered Bank and Allinpay, a Singapore-based company, have collaborated to provide merchants and companies in Hong Kong with immediate cross-border payments using QR codes via PayNow. Hong Kong merchants will reportedly be able to accept Singapore PayNow payments without incurring operational or infrastructure costs, eliminating currency exchange rates or cross-border expenses.

The resumption of travel makes it the perfect time for PayNow QR payments, according to Tay Tiong Hean, general manager of Allinpay Merchants Services. Hean also commented that the partnership aims to promote cross-border travel as well as generate revenues for merchants in Hong Kong.

Additionally, Standard Chartered plans to continue laying the groundwork for a digital economy, expanding the solution to more markets in the future and enabling its fintech partners to provide a quick and frictionless experience to their merchants as well as stimulate the tourism industry.

FNZ aims to procure ifsam, a B2B Fund Platform based in Luxembourg

FNZ, an international asset management platform, plans to acquire International Fund Services & Asset Management SA (ifsam), a B2B fund platform with offices in Luxembourg, subject to regulatory approval.

The acquisition aims to improve FNZ's ability to serve both asset managers and distributors globally by enhancing its current end-to-end wealth management platform with cutting-edge products, research, data and service offerings. Additionally, customers and distribution partners will reportedly gain from improved efficiencies throughout the wealth management value chain, as well as from expanded access and knowledge to handle alternative asset classes.

ifsam intends to serve as FNZ's centre of excellence for fund distribution and custody services throughout Europe, improving FNZ's array of digital products and services for the asset management and wealth management industries. With the new alliance, FNZ intends to expand access and personalized investment solutions within the wealth management sector.

New York regulators investigate Paxos, a stablecoin issuer

The New York Department of Financial Services (NYDFS) is reportedly investigating Paxos Trust Company, the stablecoin issuer that supports the Paxos Dollar (USDP) and Binance USD (BUSD), headquartered in New York. A representative for the NYDFS stated that the agency is committed to safeguarding customers from the risks involved in investing in the cryptocurrency market: “the department is in continuous contact with regulated entities to understand vulnerabilities and risks to consumers and the institutions themselves from crypto market volatility we are experiencing.”

Since its partnership with Binance in September 2019, Paxos has reportedly issued BUSD, a US dollar-collateralized stablecoin. With a market cap that is currently above US $16 billion, it is reportedly the third-largest stablecoin. Additionally, it also created the Paxos Dollar (USDP), which debuted in 2018, in addition to creating the PAX Gold (PAXG), a gold-backed Ethereum token. The company also backs itBit, a digital asset exchange founded in 2012.

Paxos reportedly received a "BitLicense" from the NYDFS in 2015, which allows businesses to lawfully engage in operations relating to digital currency in New York State. Reports indicate that despite the company’s preliminary permission received in April 2021, Paxos reportedly rejected allegations that the U.S. Office of the Comptroller of the Currency may require Paxos to withdraw its application for its full banking charter.

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