Payments & Transactions, the fintech opportunity
is discussing the key outputs in a series of blogs. This blog focuses on Payments & Transactions, which is one of the four key strategic priority themes.
The way we pay for things is changing. Throughout the development of the Research & Innovation Roadmap, payments and transactions were referred to in the broad context of the transfer of value (either money, goods, or assets) in exchange for goods and services.
The Roadmap pinpoints the significant move from physical exchanges to digital transactions, and identifies several significant trends that could mean payments will change significantly in years to come. These changes will have a significant impact on the economy, and could also have a substantial impact on citizens and businesses, which is why the future of payments is one of the four priority themes identified.
The importance of Payments & Transactions
The pandemic accelerated the move from physical to digital in many aspects of our lives, including how we make transactions. Customers’ digital expectations and a shift towards more instant electronic payments are having a significant impact on our economy, and a new digital economy is emerging strongly, with major implications for consumers and SMEs alike.
Across the development of the Roadmap, when looking at the theme of the future payments we considered the topic of digital currencies and crypto currencies. These innovations present new ways for value to be stored and exchanged. It is clear there is a still a lot to learn about the potential, the impact, and the implications of cryptocurrencies as a method for mainstream payments. Stablecoin is a form of cryptocurrency that is linked to an asset that is stable in value, and stablecoins are generating significant interest for future payments and value exchange.
The UK Government has established a crypto assets taskforce, and the UK regulators are considering the benefits and risks on a range of issues connected to this topic, including a separate digital currency backed by a central bank. Since the publication of the Roadmap, HM Treasury has confirmed its commitment to the development of appropriate regulation for crypto.
As we further explored the payments theme, we identified technologies of particular interest, such as AI, blockchain and distributed ledger tools. Industry expressed interest about how these technologies could offer a completely different way to organise and manage payment systems, providing a route to real-time, cross-border payments worldwide. These developments pave the way for a potentially very different future of value exchange. According to the World Economic Forum, up to 10% of global GDP could be stored on blockchains by 2025.
Embedded payments is one of the hottest topics in FinTech in 2022, and was another area of particular focus. Technology is advancing the methods to embed payments in everyday experiences and allow customers and businesses to pay for purchases without entering bank details, credit, or debit card information.
Historically, the payments process has lived at the edges of experience for businesses. Payments were either taken in cash, or offline, with no real lasting insights into the customer and the goods or services they purchased. Technology businesses are now fully embedding software that enables a change to this experience, creating more choice and allowing businesses to have a deeper connection with customers. In addition to high profile examples such as Uber, many embedded payment innovations are emerging, such as in-car payments, smart fridges and connected homes.
Priority areas in Payments & Transactions
The industry contributors to this roadmap offered a view that the future looks set for significantly more change. Our analysis highlighted three topics of interest:
Digital currencies
- Cryptocurrencies and stablecoins
- Distributed ledger technology
Embedded payments
- SME market
- Retail consumers
Security for digital payments
- Cyber security
- Biometrics
Roadmap next steps: Payments & Transactions
A range of proposed next steps are laid out in the published Roadmap, which specifically identifies 10 actions relating to Payments & Transactions, and categorises each into one of three phases over the next 10 years. These actions are illustrated in the graphic below. The report also references 23 different stakeholders who can support the implementation of these actions, which are broken down into research projects and innovation calls.
More information about FinTech Scotland’s Research & Innovation Roadmap can be found here, where the full Roadmap can also be downloaded.
The FinTech Research and Innovation Roadmap
Season 2, episode 1
Listen to the full episode here.
In March 2022, FinTech Scotland released its 10-year Fintech Research & Innovation Roadmap for the UK.
In collaboration with leading universities, large financial institutions, fintech businesses, citizens, industry experts and senior officials this report explores the opportunities that will help the UK maintain its fintech leadership globally.
In this episode we explore what this roadmap means for Scotland and what the next steps are to deliver on the roadmap recommendations.
TranSwap receives EMI authorisation in the UK
TranSwap, a Singaporean fintech with a growing presence in Scotland just announced it had received authorisation from the FCA to conduct payment activities as an Electronic Money Institution (EMI) in the UK.
This will allow the fintech firm to offer its comprehensive suite of services, including global payments and collections, borderless digital wallets, cards & spend management, platform-as-a-Service (PaaS).
The company had recently opened its Global R&D Center in Edinburgh and is now well positioned to provide cutting edge fintech services for its customers globally.
TranSwap can facilitate borderless trade and investment activities through technology allowing companies from Asia, UK and Europe to expand in those markets the same way local firms would.
Scottish Government Trade Minister Ivan McKee said:
“This is a significant development for TranSwap and a further indication of the strength and level of innovation in Scotland’s globally competitive fintech sector.
“By receiving EMI authorisation, TranSwap will be in a position to support Scottish companies active in south east Asia and those looking to expand into this important market.”
Commenting on the significant milestone, Benjamin Wong, Chief Executive Officer of TranSwap said,
“We are excited to receive the EMI authorisation in the UK to scale our international business banking services for our existing customers and partners in Asia and potential customers in the UK. We very much looking forward to becoming the global business banking partner for businesses that are currently trading between Asia, UK and Europe.”
Appreciating TranSwap’s agile practices since its inception, Nicola Anderson, Chief Executive Officer of Fintech Scotland said,
“The fintech sector is adept at modifying business models and adapting in order to achieve better products and services. TranSwap brings new experiences to the FinTech Scotland community and consistently demonstrates its abilities across different international markets. We’re delighted to work with them and look forward to their successes.”
Fraud Academy ”“ Cryptocurrency: Opportunity vs Threat
Fraud Academy ”“ Cryptocurrency: Opportunity vs Threat.
Are you familiar with the legislation and rules that pertain to cryptocurrencies in the United Kingdom? What can be done to prevent crime involving cryptocurrency, where could fraudsters go from here, and how do we begin to investigate this?
PwC are hosting a highly informative virtual event and will explore these questions, and more.
Date: Wednesday 9th February 2022
Time: 13:00 – 14:15 (GMT)
Location: Virtual / Webcast
Within the first nine months of 2021, cryptocurrency related fraud is estimated to have cost the UK over £146 million; a figure already 30% higher than that noted for the whole of 2020. Over 7,100 reports of fraud involving cryptocurrency have been made to the UK’s national reporting centre for fraud. More than half of victims were aged between 18 ”“ 45.
Cryptocurrency will only become a bigger part of how we do business, presenting both an opportunity and a threat; yet how ready are we to make the most of the opportunity and to deal with the threat?
Are you aware of the legislation and rules which exist in relation to cryptocurrencies in the UK? What can be done to prevent crime using cryptocurrency, where could fraudsters go from here and how do we start to investigate it?
At this highly informative virtual event, we will explore these questions, and more with a panel of deep subject matter experts.
We are delighted to be joined by Jim Robertson (DCI, Police Scotland), who will give an overview of the current lay of the land’ from a policing perspective in relation to cryptocurrency and discuss how law enforcement is dealing with the challenges of an increase in this crime type.
Jim will be joined by Craig Kennedy (Partner, Dentons), who will discuss the legal powers available in relation to cryptocurrency in the UK and the potential risks and benefits of using cryptocurrency.
We will also be joined by Haydn Jones (Senior Blockchain Market Specialist – PwC) who will share his own opinions and thoughts on the opportunities and threats presented by the rise in cryptocurrencies from his own experiences investigating and providing expert witness testimony on cases involving cryptocurrency.
Attendees will also have the opportunity to put questions to our speakers during a Q&A session.
We look forward to welcoming you to our event on Wednesday 9 February 2022 at 1:00pm.
If you have any questions about this event, or have any issues registering for this event, please contact the team via uk_fraud_academy_scotland@pwc.com or uk_ni_fraud_academy@pwc.com.
PRESS RELEASE: Automation the key to growth and data management for banking and payments sector, finds new report
A new report from leaders in reconciliation and finance automation software, AutoRek, has found widespread concerns around the ability of businesses to grow amidst scalability and regulatory pressures over the next three years, affecting 92% of professionals surveyed.
The report ”“ Banking and Payments in 2022: Digital transformation and trends in financial technology ”“ was designed to provide an insightful view of the key challenges and solutions that will face the financial industry as it enters 2022.
AutoRek gathered insights from senior professionals across the banking and payments industry on the barriers they face surrounding the handling of payments data, compliance and growth, and new technologies in use or consideration.
Automation was found to be a key source of hope for enabling growth and regaining competitive advantage. Other key findings include:
- Manual processes form the biggest roadblock to achieving automation, cited by 46% of firms, followed by legacy systems (42%), poor interoperability (40%) and regulatory requirements (38%).
- In-house IT solutions are the most common for data handling across payment operations, used by 44% of firms ”“ a higher reliance on in-house systems than in most other sectors.
- Almost one-third of firms consider their jurisdiction’s regulatory body audit and control around regulatory reporting infrastructure somewhat or far too strict, while 22% consider it somewhat or far too lax. Just under half consider it appropriate. Financial institutions in central and south America were considerably more likely to view their regulators as lax than their European and Asia-Pacific counterparts.
- When selecting a solution to handle payments data, almost 80% of respondents consider its ability to integrate easily with existing infrastructure a key factor.
- Over half of respondents (56%) either already have or are in the process of deploying modern technologies such as artificial intelligence (AI), machine learning (ML) and application programming interfaces (APIs) to help monitor and streamline their data management processes. One-third had onboarding planned in the next 12-24 months. Only 12% reported having no plans to apply technology to improve data management processes.
Firms slow to adopt emerging technologies should be aware that they are now falling behind in an increasingly automated and competitive landscape, according to Nick Botha, Banking Lead at AutoRek.
Commenting on the findings of the report, Nick Botha continued: “While automating data flow has been a priority for some years now, this survey makes clear how many inefficiencies continue to plague firm’s day-to-day operations when it comes to data processing and reconciliation. Legacy banks in particular are grappling with often more than 20 disparate systems written in varying generations of software, none of which are designed to interact with one another.”
“While a decade ago that might have flown under the radar, the last few years have seen control of the payments space shift from banks into the hands of Payment Service Providers (PSPs), whose ability to deliver totally user-native customer service is forcing the whole industry to step up.”
“Beyond competing for market share, it’s a question of compliance. The costs associated with non-compliance are substantial both from a financial and reputational perspective, and regulators are increasingly less forgiving, as we have witnessed in the last few months with significant fines incurred by some of the world’s largest banks.”
“New technologies like AI, ML and APIs can be used to create greater interoperability and remove or significantly reduce manual interventions and use of spreadsheets. Investing in these capabilities today will enable firms to address evolving customer preferences, mitigate risk and achieve regulatory compliance down the road ”“ essential elements for remaining competitive in the payments landscape of today.”
Scotcoin ”“ download a Scotwallet!
Scotcoin is one of the longest-lived country crypto currencies, having been founded in 2013. Under the present management team since 2015, the number of holders now stands at around 7000 and in over 50 countries.
Scotcoin is on the Ethereum mainnet as an ERC20 token. It has been verified by Etherscan and code audited by Hacken.io. They have given Scotcoin their highest rating.
Scotcoin was early into recognising that governments would require regulation. New holders require to go through KYC (Know your customer) and AML (Anti money laundering) procedures. Scotcoin’s ecosystem is directly connected with the charity sector.
Scotcoin occupies the social good works ecosystem and plans are well advanced to accelerate this, with a Third Sector manager appointed. Scotcoin very much wants everyone in Scotland to be better off. Everyone within Scotcoin is working to achieve this. Charities will be able to apply to receive Scotcoin to work within their own ecosystem in a number of ways. The Scotcoin Project CIC (TSPCIC) – Scotcoin’s educational and informational arm – recently held an event for Social Enterprise Scotland to showcase how crypto and especially Scotcoin can help.
Scotcoin already engages with the likes of Social Bite, The Big issue and the IPPR; it partners with Better Internet Search and BBX. These organisations help people that have problems to get on their feet again. This is both Scotcoin’s goal and desire. TSP CIC Temple Melville says: “Please help with our ongoing development and mission.”
Please follow us on
WEBSITE: https://scotcoinproject.com
FACEBOOK: https://www.facebook.com/scotcoin
TWITTER https://twitter.com/ScotcoinProject
Instagram https://www.instagram.com/scotcoin_official/
Telegram: https://t.me/joinchat/ZSE4_pfcRqEzNjU0
If you wish to be involved with our vision and work, get in touch. You will need a
wallet ”“ go to https://scotwallet.com/signup and download one. Also available on
Android and Apple.
There will be lots of interesting things to tell you!
For further information please email: TEMPLE@SCOTCOINPROJECT.COM.
Rise, created by Barclays, launches new Insights report that decrypts crypto
Rise Insights report lead, Colin DeLarso (Assistant Vice President ”“ Innovation, Barclays) shares some highlights
The latest edition of the Rise Insights report, “Decrypting crypto”, reviews the new world of digital assets in financial services. It demystifies some of the most pertinent and often complex concepts, explores what the innovations might mean to FinTechs and institutions, and examines ways they can both benefit ”“ from subjects as diverse as regulation, efficiencies in payment systems, rolling out Central Bank Digital Currencies and what it means to bring about universal participation in the crypto-economy.
The FinTech ecsosystem is leading the charge in this blockchain-driven space, designing the platforms on which crypto-assets are created, stored and exchanged, and developing the decentralised apps (dapps’) that support some extremely new use cases. The pace of change is so fast, and market interest is so high, that now everyone is taking notice – even large banks.
Charlotte Kanagasabapathy, Global FinTech Platform Director in Barclays Innovation, makes the point that:
“it’s only a matter of time before technological limitations such as scalability and interoperability are overcome. Beyond that point, a financial system built on blockchain may be unrecognisable by today’s standards.”
In the report, Shreepad Shukla, Enterprise Architect in Barclays’ Chief Technology Office, makes the case for deep and collaborative enterprise engagement.
“Turning crypto-use cases into workable solutions will require organisations to innovate alongside FinTechs, central banks, regulators and even competitors,” writes Shreepad.
Digital assets are being implemented by traditional financial institutions. Compared with the wildfire of FinTech disruption, it’s been a slow burn for larger enterprises, but they’re definitely accelerating their adoption of blockchain technology. Here’s a survey of some of the work taking place and the considerations many enterprises face. Read more about these subjects in the report.
Corporate infrastructure meets blockchain
Alisa DiCaprio, Head of Trade at R3, explains why implementing Distributed Ledger Technology (DLT) is such a huge task for any enterprise financial services firm, and how they can keep up to date. This involves both DLT interoperability and, unsurprisingly, careful consideration of legacy systems.
Enterprise-ready security opens the crypto-economy to institutions
Financial institutions will be one of the biggest contributors to growth of the crypto-economy. The signs are that this is more than a research project for them. They’re investing in crypto in record volumes, say Coinbase’s Brett Tejpaul, Head of Institutional Sales, and Greg Tusar, Head of Institutional Product. While security remains a concern for larger organisations, infrastructure is being created that allows crypto-trading to become a reality for them.
STOs and smart contracts are reinventing securities
Security Token Offerings (STOs) have built-in restrictions to make them more compliant with securities regulations. STOs combined with smart contracts are allowing companies to formulate new financial propositions, save costs and simplify processes. Chris Housser, Interim CEO of Polymath, leads us through these concepts and suggests ways for traditional financial institutions to adapt to and take part in new forms of investing.
DLT innovations at Barclays
Barclays’ Chief Technology Office (CTO) is at the cutting edge of Distributed Ledger Technology (DLT) and has a long history of innovation. Shreepad Shukla, Enterprise Architect in the CTO, describe the work he’s been doing on two crypto-projects: digital fiat currencies and wholesale payments. The key to success with both innovations is close collaboration with governments, regulators and FinTechs.
FinTechs featured in the report
Contributors to this edition of the Insights report include:
- Chainalysis is an alumnus of the 2015 New York Barclays Accelerator, powered by Techstars, and provides data, software, services and research to government and law-enforcement agencies, exchanges, financial institutions and cybersecurity companies in over 50 countries, helping them to ensure cryptocurrency compliance
- R3 delivers trust technology for multi-party applications, connected networks and ecosystems, and regulated markets expertise. R3 is the creator of Corda, a permissioned blockchain platform allowing businesses to build networks so they can transact directly and privately using Distributed Ledger Technology (DLT)
- Coinbase operates the largest cryptocurrency exchange in the United States by trading volume[1] and is enabling universal participation in the crypto-economy for institutions and corporations
- Solana is a decentralised, permissionless blockchain built to enable scalable, user-friendly apps for the world. The project is Open Source and has an extensive ecosystem of developers and validators (who validate transactions added to the blockchain ledger)
- Polymath has an Ethereum-based solution for securities trading using security tokens. Polymath’s Polymesh platform supports confidentiality, identity, governance and cross-jurisdiction execution
- Arch is an alumnus of the 2015 New York Barclays Accelerator, powered by Techstars. Arch (formerly Smash) untangles DeFi, allowing investors to buy into diversified strategies at the crypto frontier
- Andrea Maria Cosentino is Co-Founder of Licas Ventures and Global Business Strategy & Development Manager at Bloomberg. He has extensive corporate and startup experience in financial markets and technology
Get involved
“I’m a big believer in the ability of blockchain technology to effect fundamental change in the infrastructure of the financial service industry.” ”“ Bob Greifeld, CEO of NASDAQ
- Download the Rise Insights report to learn more about how digital assets are impacting financial services, and for more on the FinTech companies mentioned here
- Listen to the latest episode of the Rise FinTech Podcast
- Contact the Rise team in London or New York to meet any of the companies featured in the report or in the Rise ecosystem of over 100 FinTech startups
Scottish fintech zumo posts 100x user growth
One year on from a 150% oversubscribed £1.66 million seed funding round closed in just a few short hours, Scottish fintech Zumo has reported that its customer base grew a hundred-fold over the course of the year, increasing from 500 in August 2020 to 50,000 in August 2021.
Founded with the mission statement smart money for everyone’, the Edinburgh-based crypto wallet and payments platform is one of a range of Scottish-born fintechs thriving amidst the vibrant Scottish fintech scene, with underpinning GBP payment services provided by fellow young company and FinTech Scotland member Modulr.
Backed by early investors including Murray Capital, Coldplay’s Guy Berryman and the Scottish Investment Bank, Zumo’s mobile app and B2B product offering aims to bring the benefits of cryptocurrencies and blockchain technology to people and businesses everywhere, and it will continue to pursue ambition plans for growth over the course of 2022.
Other highlights from the past year included:
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Product: launch of a new virtual Visa debit card offering seamless cash-to-cryptocurrency payment functionality, alongside innovative smart price alert and smartfolio portfolio tracking features;
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People: a doubled workforce, with key strategic hires and appointments including Chief Operating Officer Dagmara Aldridge; Chief Technology Officer Tim Sabanov; and Non-Executive Director Andy Downes;
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Enterprise: the launch of ZumoKit, a B2B crypto-as-a-service solution that allows fintechs, banks and payment providers to connect to the blockchain, adopt digital and crypto currency solutions and profit from decentralisation; and
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Awards: recognition as a start-up to watch’ by Sifted, the FT-backed start-up monitoring platform, alongside further individual wins and nominations at the UK FinTech, Women in FinTech and EY Entrepreneur of the Year awards.
Nick Jones, Zumo CEO, commented:
“As we grow, it’s great to see the fintech ecosystem around us growing, too – not least through the efforts of organisations such as FinTech Scotland.
“With a global outlook, and breadth of product offering covering both mainstream consumer and business needs, we believe ourselves well placed to capitalise on unprecedented and growing consumer and institutional interest in digital assets and decentralised applications.
“We’re here to provide a new generation of smart money solutions for a new, decentralised economy – bringing financial wellness to people everywhere, not just the most tech savvy or financially literate.”
Swipii releases new feature for local businesses
Scottish start-up Swipii has released its latest feature, the Win-Back Offer enabling local business owners to utilise tech to retarget lost customers.
Swipii is a cashback app that rewards customers with cashback when they spend directly with local bars, cafes and restaurants simply by using their own bank card. Business owners can sign up to Swipii at no cost and use the technology to reach and retarget customers without the need for complicated integrations or marketing experts.
Louis Schena, Swipii co-founder and CEO explains; Local independent businesses form the backbone of our economy. The unfortunate truth is they are decades behind online businesses and big corporations when it comes to the technology they have and as a result are at a significant disadvantage. COVID has widened this disadvantage and our mission is to level the playing field as markets open up! We all have our part to play in shopping local with benefits ranging from investing in our communities to even reducing our carbon footprint!’
To date, businesses featured on the app have been leveraging Swipii’s cashBack offers to target customers at various times and days when they want to drum up footfall such as off-peak hours. Since launching the app in 2018, the Glasgow based app has helped local businesses increase customer engagement and spend, generating spend of £440k to date. Even during lockdown, Swipii cashback offers saw businesses increase customer spend by 16% on average.
Now, businesses can maximise their revenues even more by taking advantage of Swipii’s latest Win-Back Offer. The Win-Back Offer works by targeting customers who haven’t visited a business in a defined period of time, anywhere from 2 weeks to 6 months or longer. The technology crunches data in the background and identifies a cohort of users that fits this criteria and the Swipii app will send out a special cashback offer on behalf of the business getting customers back in store spending.
Bringing affordable tech to local businesses has never been more pertinent as:
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digital adoption surged during COVID with many companies seeing online customer interaction accelerate by 3 years ahead of expected forecasts*
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75% of UK shoppers said they had been shopping more online compared to before the pandemic**
Backed by VCs such as LocalGlobe and Par Equity, Swipii is the easiest way for local businesses to increase revenue, loyalty and retention as shopping behaviours adapt post lockdowns.
Paymob Launch Tap-to-Phone in the US with ZmBIZI
Paymob is launching in the US through our partner ZmBIZI and their smartphone app. Alongside ZmBIZI, Paymob will be speedier and more accessible to small businesses.
Their US launch coincides with Visa launching its very first US Tap to Phone pilot in Washington D.C. as a method of supporting the region’s black-owned small businesses. This will see Visa providing ZmBIZIZ’s Z1 devices with Tap to Phone technology empowered by Paymob, on a six-city SMB revitalisation initiative, which also includes Atlanta, Chicago, Detroit, Los Angeles and Miami.
“With the ZmBIZI Smartphone integrated with the Paymob SoftPOS we are now able to create the next generation of mobile merchants who are doing business on the go’.
This is how we empower communities across the globe to become truly self-sufficient . A one stop business solution that is also a verified partner for Visa Global Small Business Solutions” says Alpesh Patel, Co Founder of ZmBIZI
This has been a long-term project for Paymob, this such a significant and exciting milestone for the company. The Co Founder and CEO, Kosta Du notes;
“This is a huge leap for the paytech space, the move will allow more independent businesses across the country to accept payments without the upfront costs for external POS hardware, meaning small businesses and gig economy workers can accept card and digital payments quickly, on the go, anytime.”
The ZmBIZI app enables business owners and their employees to use the app to type the amount they wish to charge, the customer simply taps their contactless card or e-wallet on their smartphone and finally, it will send them an e-receipt to the customer in the matter of seconds. For Paymob this project with Visa is the necessary place to start as we launch our solution in the US, enabling those who will feel the benefit of Paymobs SoftPOS technology the most.