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US FedNow instant payments service to launch in July - Industry roundup: 17 March

Surecomp and Contour look to accelerate interoperability between digital trade finance solutions

Surecomp has announced it is partnering with global digital trade finance network Contour to drive the digital transformation of trade finance across financial institutions.  

Through the collaboration with Surecomp’s trade finance platform, Rivo, Contour’s member banks can access digital letter of credit workflows directly on Surecomp’s back-office applications, providing automated straight-through processing, which should reduce costs and improve operational efficiency.  

Trade is the engine of the global economy, but trade financing is complex and traditionally reliant on paper. One pain point for many financial institutions has been the lack of a network to support collaborative workflows within the trade ecosystem and a lack of interoperability between solutions.

The partnership between Surecomp and Contour addresses this issue by streamlining and simplifying trade finance processing. The pair hope this will lead to new business opportunities, improved trade productivity and, ultimately, a sustainable future for global trade. 

“This partnership encapsulates Surecomp’s value in driving collaboration rather than competition, by bringing the ecosystem together to facilitate trade and boost economies,” comments Enno-Burghard Weitzel, Surecomp’s SVP of Strategy, Digitization and Business Development. “Financial institutions using the Contour network will now be able to automatically process trade finance applications on the back-end providing a seamless, straight-through process for heightened efficiency and customer support.”


Italian Sea Group sets sail with new reverse factoring agreement from Banca Ifis

The Italian Sea Group S.p.A. (TISG), a global luxury yacht operator, has finalised a reverse factoring agreement with Banca Ifis - a challenger bank specialising in financial products and services for small and medium-sized businesses - to support its supply chain.

The agreement provides TISG’s suppliers with a €20m limit to optimise their working capital through easier access to liquidity. Specifically, the service allows companies in the supply chain to transfer their invoices owed to TISG directly to Banca Ifis.

The partnership with Banca Ifis thus directly supports TISG’s supply chain, as suppliers can more easily and quickly receive the liquidity they need to invest in their development, thanks to reverse factoring.

“The focus on our suppliers who have always contributed with their excellence to our business, is one of the core values of our Group and especially of the path of sustainability to the territory that we have been steadily promoting for some time now,” says Giovanni Costantino, founder and CEO of TISG. “This agreement with Ifis is a further step towards an increasingly solid and fluid relationship with the companies of excellence that support us in our growth path.”


Reuters: US Treasury says bank stability actions have not changed debt ceiling ‘X-date’

The US Treasury's actions to protect depositors in failed banks SVB Financial and Signature Bank will not affect the date on which the Treasury may no longer be able to pay all US obligations without a debt limit increase, a department spokesperson told Reuters.

Asked by the news agency whether a record US$40bn draw by the Federal Deposit Insurance Corp. from the Treasury General Account last Friday could bring the so-called “X-date” closer, a spokesperson in an emailed statement to Reuters commented: "The actions we have taken to protect depositors and the stability of the banking system have not affected the X-date for the debt limit.”

Reuters’ David Lawder reported that the Treasury had not revised its forecast that it will be able to pay US obligations at least through early June, despite predictions from the Congressional Budget Office and private forecasters that Treasury's cash balances and extraordinary cash management measures may last until September without action by Congress to raise the debt ceiling.


BNP Paribas and Hokodo partner on BNPL solution for B2B commerce

BNP Paribas has joined forces with fintech Hokodo to deliver a B2B buy now, pay later (BNPL) solution designed to benefit large companies to provide payment alternatives to their business customers.

With the booming rise of B2B digital sales, B2B sellers require a streamlined order-to-cash experience. They want to be paid on time without worrying about credit or fraud risk while offering their buyers a frictionless purchasing experience and advantageous credit terms through any channel. This can encourage repeat business and increase the average spend of customers.

The solution from BNP Paribas and Hokodo aims to provide a fully digital experience and easily integrate into existing checkout systems via API. It gives instant buyer approval through a real-time credit decision process. A broad acceptance rate is possible due to the bank’s configurable underwriting models, which adapt to the activity and client typology of the B2B seller. The full service includes proprietary credit decision-making, transaction financing, credit and fraud insurance, collections through an e-mandate and dunning, and different financing options to accommodate merchants’ needs.

“Historically, B2B e-commerce has been critically underserved, but with our combined strengths, BNP Paribas and Hokodo are going to offer BNPL options to more business buyers than ever,” commented Louis Carbonnier, co-founder and co-CEO of Hokodo.


Federal Reserve announces July launch for the FedNow Service

The Federal Reserve announced that the FedNow Service will start operating in July and provided details on preparations for launch. In the first week of April, the Fed will begin the formal certification of participants for launch of the service. Early adopters will complete a customer testing and certification programme, informed by feedback from the FedNow Pilot Program, to prepare for sending live transactions through the system.

Certification encompasses a comprehensive testing curriculum with defined expectations for operational readiness and network experience. The Fed and certified participants will conduct production validation activities in June to confirm readiness for the July launch.

Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow programme executive, commented: “With the launch drawing near, we urge financial institutions and their industry partners to move full steam ahead with preparations to join the FedNow Service.”

Many early adopters have declared their intent to begin using the service in July, including a mix of financial institutions of all sizes, the largest processors, and the US Treasury. In addition to preparing early adopters for the July launch, the Fed continues to engage a range of financial institutions and service providers to complete the testing and certification program and implement the service throughout 2023 and beyond. 

Montgomery also noted that growing the network of participating financial institutions will be vital to increasing the availability of instant payments for consumers and businesses nationwide. The FedNow Service will launch with core clearing and settlement functionality and value-added features. More features and enhancements will be added in future releases to continue supporting safety, resiliency and innovation in the industry as the FedNow network expands in the coming years.

The Federal Reserve Banks have been developing the FedNow Service to facilitate the nationwide reach of instant payment services by financial institutions - regardless of size or geographic location - around the clock, every day of the year. Through financial institutions participating in the FedNow Service, businesses and individuals will be able to send and receive instant payments at any time of day, while recipients will have full access to funds immediately. Access will be provided through the Federal Reserve's FedLine network, which serves more than 10,000 financial institutions directly or through their agents.


Central Bank of the UAE and Reserve Bank of India explore CBDC interoperability

The Central Bank of the United Arab Emirates (CBUAE) and the Reserve Bank of India (RBI) have signed a memorandum of understanding (MoU) to enhance cooperation and jointly enable innovation in financial products and services.

Under the MoU, the two central banks will collaborate on various emerging areas of fintech. Specifically, they will explore interoperability between the CBDCs of CBUAE and RBI. The two central banks will jointly conduct a proof-of-concept and pilot(s) of a bilateral bridge to facilitate cross-border CBDC transactions of remittances and trade. 

The MoU also includes technical collaboration and knowledge sharing on financial technology, products and services, such as emerging trends, regulations and policies.

The goal of the MoU is to foster joint experimentation concerning CBDCs and facilitate other digital innovation initiatives between the CBUAE and the RBI. This bilateral engagement, through testing a cross-border use case for CBDCs, is expected to reduce costs, increase the efficiency of cross-border transactions and further the economic ties between India and the UAE.


Climate promises of Australia’s biggest super funds questioned

A report by climate activist group Market Forces claims that Australia’s five biggest super funds are greenwashing and exposing themselves to legal risk by failing to effectively engage with companies expanding fossil fuels.

Managing more than AU$1 trillion of members’ retirement savings, the five funds analysed in the report - AustralianSuper, Commonwealth Super Corporation, Australian Retirement Trust, Aware Super and AMP - have all committed publicly to manage climate risk. Four of the five funds have also set targets to achieve net zero emissions by 2050.

The report, titled ’Stewards of Climate Disaster’, suggests all five funds claim to engage with fossil fuel companies to drive climate action but fail to demonstrate effective engagement strategies, including with Australia’s two largest oil and gas producers, Santos and Woodside.

“The findings of our report expose Australia’s biggest super funds for failing to hold the most climate-damaging companies to account over their fossil fuel expansion plans,” said Brett Morgan, report author and Superannuation Funds Campaigner, Market Forces. “There’s an appalling gap between climate commitments and real action by our biggest super funds, and this is a slap in the face for members who deserve a safe future to retire into.”

All five super funds are relying on influencing fossil fuel companies via ‘active ownership’ of shares and ‘engagement’ to meet climate targets and manage growing risk. Yet the report claims that the funds have failed to comprehensively adopt and implement effective active ownership practices identified by authoritative investor initiatives, including the UN Principles for Responsible Investment and Science-based Targets Initiative.

The report highlights that financial institutions which make net zero commitments are legally required to have ‘reasonable grounds’ to believe they will achieve their goals. If, as the report claims, super funds and their directors are failing in their duties in this regard, they could be open to being accused of engaging in misleading and deceptive conduct.

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