Fintech Update

Revolut slashes fraud with disposable virtual cards

Digital banking startup Revolut is hailing its recent introduction of disposable virtual cards for online purchases, claiming a 30% reduction in card fraud cases. In March Revolut began letting customers create disposable virtual cards in seconds, with card details that automatically regenerate after every transaction. This means that, even if the credentials of a large online retailer are compromised, customers are protected as their card details are no longer in existence. Meanwhile, the bank is rolling out machine learning technology to boost its compliance efforts, applying personalised limits to customers based on their transactional activity. This means that individual risk ratings have been assigned to all of Revout’s two million plus customers, who will begin to start to notice the existing limits being removed over the next couple of weeks.

Americans are splurging on personal loans thanks to fintech startups

The stock of US personal loans outstanding has grown to about $120 billion as of March 2018. That compares with $71.9 billion a decade ago—worth around $90 billion adjusted for inflation—when the subprime mortgage crisis crescendoed. Upstart financial technology companies like Lending Club, Prosper, and Avant account for about a third of this lending, up from less than 1% in 2010. Fintechs are aggressively pushing into this space, but banks and credit unions are also ramping up their efforts. Tech upstarts account for about $31 billion of this type of debt, compared with $22.5 billion for banks and $18.7 billion for credit unions, according to TransUnion data. The amount of personal loans outstanding originated by banks has more than doubled since 2010. Goldman Sachs has jumped in with its Marcus online bank, which the Wall Street stalwart introduced in 2016. Goldman says Marcus has more than 1.5 million customers and has originated more than $4 billion in consumer loans since it launched. Read more here.

Singapore Airlines launches blockchain digital wallet ‘KrisPay’ for travelers

Singapore Airlines, one of the world’s leading and best-rated airline operators, has launched KrisPay – a digital blockchain wallet that allows frequent fliers to convert airmiles into digital currency. Announced on 24th July, the digital wallet app will be accessible for users of the airline’s ‘KrisFlyer’ frequent flyer program and will use blockchain technology to enable travelers to spend their air miles at retail establishments, hotels, petrol stations and other partner merchants in the island nation. SIA will use its own private blockchain developed with technology partner Microsoft. The airline operator completed a successful proof-of-concept trail of the application in KPMG’s Digital Village in Singapore. Available as an app on both Apple and Android platforms, SIA has laid claim to KrisPay being ‘the world’s first blockchain-based airline loyalty digital wallet.’ German airline giant Lufthansa has invested and is partnering Swiss blockchain startup Winding Tree to use a decentralized and public Ethereum blockchain to build travel applications. Air New Zealand has followed suit in partnering Winding Tree toward developing a B2B marketplace on a public Ethereum blockchain.

Capital markets firms to ramp up spending on cloud technologies

Capital markets firms plan to accelerate their investment in public cloud technologies, with spending on off-premise computing set to consume 47% of IT budgets by 2019, up from 30% last year. Over 90% of the 250 buy and sell-side institutions interviewed by Thomson Reuters for the survey, expect to be using public cloud for the majority of their market data needs in less than four years. A quarter (24%) expect to use public cloud for the majority of their market data needs within just one year. The figures back up views in a recent paper produced by the DTCC, which asserts that the cost and value of cloud computing technologies is challenging long-standing justifications for provisioning and/or sustaining individually owned and managed data centres and that capabilities, resiliency and security of services provided by cloud vendors has surpassed on-site capabilities. Thomson Reuters Financial & Risk recently announced plans to deliver all its financial data and tools in the cloud.

Perk up your wallet

Digital receipts startup Flux partners with Costa Coffee and Barclays Launchpad
Paperless receipts and digital rewards startup Flux has teamed up with Costa Coffee to trial its tech in a number of central London stores. The trial will begin with a first phase of cashback rewards via Flux’s challenger bank partners Starling and Monzo, which is in a closed pilot, before expanding from there to explore providing users with itemised receipts inside their banking app. Flux is also launching its partnership with Barclays Launchpad, the bank’s early adopters platform for testing new features, before the feature is evaluated to go live to all Barclays’ customers in their mobile banking app. Costa Coffee joins Flux’s other retail partners that are currently trialling its services, including on-the-go food retailers Eat and Pod. Founded by three former employees of digital banking unicorn Revolut, Flux was a product of the Barclays Techstars accelerator program in 2017.

Banks stand to reap $512 billion revenue boost from ‘intelligent automation’

With banks the world over exploring the business case for AI and robotic automation, a new report estimates that hundreds of billions of dollars in additional revenue may be up for grabs as the focus moves away from costs savings to income generation. Capgemini interviewed 1500 senior executives from 750 global organisations to draw out the benefits and challenges facing banks as they enter a new machine-learning era. The study found that, on average, over one-third of financial services firms have seen a 2-5% increase in topline growth from automation, with faster time-to-market and improved cross-selling efforts as the key factors that influence gains. Meanwhile, 64% of organisations from across different segments have seen improvement in customer satisfaction by more than 60% through intelligent automation. Challenges remain however, with a dearth of talent and legacy infrastructures seen as key barriers to adoption.

Funding for U.S. Fintech Startups Rose 40 Percent Last Quarter

A big initial public offering and strong signs of growth in the financial technology industry are giving startups in the sector a funding boost. Venture backed U.S. fintech companies received about 40 percent more funding in the second quarter of this year than the previous one, according to a report released Wednesday by CB Insights and PwC. The total deal value for the quarter was about $3 billion. That funding uptick follows a slew of positive market signals for fintech companies. In June, Dutch payment startup Adyen NV went public, and saw its shares more than double. In April, Adam Dell’s Clarity Money was acquired by Goldman Sachs Group Inc. for roughly $100 million. And this year a number of public companies in the fintech sector have been outperforming the broader market, with Jack Dorsey’s Square Inc. up more than 90 percent in 2018, and PayPal Holdings Inc. up more than 20 percent. However, while investors were more willing to reach deeper into their coffers, the total number of fintech deals fell slightly, from 157 in the first quarter of this year to 142 in the second.

Handelsbanken trials micro contactless cards

Nordic bank Handelsbanken is entering the wearable payments market, trialling a micro contactless card that can be put into a wristband, bracelet, watch strap or keyring. The bank is working with Norway’s national payments system, BankAxept, and local IT firm Evry to trial the mini card before offering it to all customers later this year. The waterproof card is equipped with Evry’s contactless technology that can be linked directly to the user’s bank account for PIN-free payments of up to NOK 200. Anthony Brady, manager, cards, Handelsbanken, says: “This micro bank card makes paying for small purchases quicker and simpler than any other solution currently available to customers.” You can, for example, have this small waterproof card in a wristband on the beach so you can buy an ice cream as soon as you get out of the water without having to first fetch your wallet or mobile.”