November 7, 2023 FinTech Monitor

BFC FinTech Monitor (October 2023)

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Stay up-to-date on all the latest FinTech news and information from around the world in the BFC FinTech Monitor.

Around the World

#Reports and Studies

  • Data from MarketsandMarkets suggests that the financial sector’s cloud computing market is likely to expand from USD 135.6 billion in 2023 to USD 268.1 billion in 2028.
  • According to Goode Intelligence estimates, there will be 1.5 billion digital identify wallets in the world storing approximately 30% of all digital identity data by 2029.

#Payments

  • Apple has launched a buy-now-pay-later (BNPL) service for all users in the United States.
  • The Bank for International Settlements (BIS) is working with regulators from Australia, Korea, Malaysia and Singapore to explore incorporating regulatory requirements into cross-border transactions.
  • TrustPay has introduced an instant refund feature.
  • A class action lawsuit accuses PayPal of anti-competitive rules that cause consumers to overpay.
  • Google will integrate new features into its digital wallet at the end of the year, including a travel history, fare saving information and real-time schedule updates.
  • Fintech company Payoneer is partnering with US-based e-commerce app Etsy as it looks to expand into emerging markets and simplify its payment options.

#Artificial Intelligence (AI)

  • Visa has launched a USD 100 million venture fund for generative AI startups.
  • Leading AI researchers have called on governments and companies to take action to manage the risks involved with the technology.
  • The European Union (EU) may fail to adopt a law on AI before the end of the year as legislators cannot reach a consensus on the regulation of fundamental models.
  • OpenAI, the developer of ChatGPT, is forming a team to reduce the “catastrophic risks” associated with AI.
  • Deutsche Bank’s venture capital arm has invested in Kodex AI, a German company developing a large language model (LLM) specifically for the financial industry.
  • Swedish fintech company Klarna has launched a new shopping feature based on OpenAI technology that allows users to make purchases by taking pictures of the items they want.

#Cryptocurrencies, Blockchain, Non-Fungible Tokens (NFTs) and Decentralized Finance (DeFi)

  • The EU has officially agreed on new rules for the exchange of data on cryptocurrencies, obligating crypto companies to provide reports on client assets to tax authorities.
  • The market for tokenized assets could grow to USD 3.5–10 trillion due to the active implementation of blockchain technologies by traditional financial institutions.
  • Coinbase has applied to the Central Bank of Ireland for a license under the Markets in Crypto-Assets Regulations(MiCA). If granted, the company will be able to provide services throughout the EU.
  • Binance founder Changpeng Zhao lost more than 80% of his fortune after publishing data about a 38% decline in the cryptocurrency exchange’s income. He also failed to implement his billion-dollar plan to save the crypto industry after the bankruptcy of FTX.
  • The Bank for International Settlements (BIS) and regulators in Germany and the Netherlands are developing a system for monitoring crypto assets and DeFi (the Atlas Project).
  • Cryptocurrency fintechs (including Revolut and PayPal) are calling on European authorities to give them more time to comply with MiCA.
  • Bankrupt cryptocurrency exchange FTX is exploring options to restart operations.
  • MoonPay, a cryptocurrency payment app, is planning to partner with the Mastercard Crypto Credential system. MoonPay also plans to integrate Mastercard Send and Click to Pay technologies. For their side, Mastercard will explore possibilities for using MoonPay’s Web3 solutions.
  • The European Securities and Markets Authority (ESMA) has published two articles on DeFi, one stating that DeFi poses serious risks to investor protection and another identifying five main categories of smart contracts.
  • Crypto exchange eToro is preparing to enter the EU markets.
  • Mastercard is exploring cooperation opportunities with crypto wallets MetaMask and Ledger.
  • The volume of transactions with Visa cryptocurrency cards has exceeded USD 3 billion since 2021, mostly due to partnerships with 75 of the largest crypto exchanges.
  • The number of crypto investors in South Korea is now approximately 6 million, more than 10% of the country’s total population.
  • American financial holding JPMorgan has developed a blockchain platform that allows its clients to use tokenized assets as collateral.

#Central Bank Digital Currencies (CBDCs)

  • Joachim Nagel, head of the German Central Bank, expects that the digital euro will be ready for use as a payment mechanism within five years. At the same time, the European Data Protection Board has called for stronger privacy guarantees in the draft CBDC bill.
  • The Central Bank of Nigeria has announced that the digital naira does not pose a threat to the financial stability of the country.
  • Deutsche Bank and Standard Chartered have conducted the first transfer and exchange of digital currencies via UDPN, an alternative to SWIFT that currently has 25 participating banks from Australia, Europe, Latin America and the US.
  • Mastercard has created a new solution to allow CBDCs to be wrapped in multiple blockchains, giving consumers the ability to engage in commerce across multiple blockchains with enhanced security.
  • Central banks within the EU intend to introduce a wholesale CBDC in the coming weeks.
  • Deutsche Bank and SC Ventures have tested a SWIFT analogue for CBDCs and stablecoins.
  • Vladimir Gorgadze, head of the Blockchain Department at MIPT, discusses processes for introducing digital currencies in Central Asia.

#Miscellaneous

  • The Fintech Summit will be held in Istanbul on December 5–6 with the theme “New Trends in the Banking and Financial Ecosystem: Innovative Solutions, Fintech and Security”.
  • Elon Musk expects to add financial services to X (formerly Twitter) by the end of next year.
  • Mastercard has launches the First-Party Trust Program to protect small businesses from fraud.
  • Revolut now offers users the opportunity to buy shares in more than 70 European companies listed on stock exchanges.
  • David Velez, co-founder and CEO of neobank Nubank, believes that the future of finance, especially retail finance, is primarily associated with the emerging markets Brazil, China and India.
  • American fintech company PayZen has launched the PayZen Care Card to solve the problem of affordability for medical services in the US.
  • British startup BuildMyCreditScore has begun operations, hoping to help users effortlessly improve their credit score through daily debit card spending.
  • Citizens of Central Asian countries will be able to remotely open bank accounts in the Russian Federation.

Ukraine

  • The Antimonopoly Committee is allowing Mastercard and Visa to reduce the amount of domestic interbank commissions.
  • The National Bank of Ukraine has launched a chatbot to answer questions from national public figures and their family members (i.e. politically exposed persons).
  • Most Ukrainians prefer Tether (USDT), Bitcoin and BNB for storing savings.
  • The Global Payments Day Conference will be held in Kyiv on November 9. The event will feature key speakers from Revolut, PWC Legal Ukraine, Berlin Group, the Association of Banks of Georgia and the National Bank of Ukraine.
  • Privatbank and the European financial service ZEN.COM have extended the program of free transfers to Ukraine until the end of the year.
  • Representatives of Ukrainian crypto companies discuss their thoughts on the prospects for legalizing digital assets in Ukraine.
  • The Ministry of Digital Transformation of Ukraine has presented a roadmap for regulating AI.
  • Beginning December 21, Binance will stop servicing the crypto cards of Ukrainians in Europe.
  • Neobank izibank has launched cashback options from Ukrainian brands.
  • Privatbank is giving Ukrainian businesses a free test drive of a platform that allows them to buy and sell currency without commissions for three months.

Kazakhstan

  • The volume of non-cash payments in Kazakhstan has grown 16 times over the past five years.
  • Kazakhstani crypto users can convert digital currencies on the Intebix exchange into bonuses for the purchase of goods and services in the Technodom chain.
  • Cross-border transfers to Kazakhstan have grown 2.4 times over two years.
  • Tim Draper, a pioneer in venture business from the US, has stated that Kazakhstan is far ahead of the US in digital services.
  • President Kassym-Jomart Tokayev has ordered the construction of data centers specializing in AI. The President is also insistent that Kazakhstan develop its venture capital market to drive innovation and technological progress.
  • A course on the basics of AI from Google will become mandatory for students in Kazakhstan.

Kyrgyzstan

  • Kazakh payment companies continue to lead the Kyrgyz market.
  • Savings in electronic wallets will be protected in the same way as other deposits in Kyrgyzstan.
  • The National Bank of Kyrgyzstan has proposed changes to the legislation on the issuance of electronic money.
  • The testing of the ‘Oh! Money’ payment cards will be extended until 2024.
  • In the second quarter of this year, 165,000 transactions (worth KGS 74.7 million) were carried out via social networks. This is 116 times more than the previous year.
  • The national payment system Elkart has launched remote biometric verification.
  • MBANK plans to cover 90% of the Kyrgyz market by the end of 2023. MBANK also received the PLUS Award for ‘Best Mobile Bank’.

Tajikistan

  • The banking, transport and retail sectors have the highest interest in financial technologies.

Uzbekistan

  • According to the Uzbekistan Venture Capital Association and the analytical company Innotechnics, the fintech industry leads in terms of venture funding in Uzbekistan.
  • The Central Bank of Uzbekistan and VISA are launching World of Finance, an interactive educational online project.
  • Uzbekistan has become a participant in the Mastercard Center for Tourism Innovation, which will work to develop payment infrastructures, provide analytical data and design strategies for promoting Uzbekistan as a tourist destination.
  • Ecosystem services Uzum and Alif Tech won awards at the UZCARD FORUM.
  • The Ministry of Digital Technologies of Uzbekistan and Wildberries have agreed on a strategic partnership.
  • According to a regulation issued by the National Agency for Prospective Projects, only legal entities will be able to legally mine cryptocurrency in Uzbekistan.
  • The Uzum marketplace and international investment funds intend to invest about USD 300 million in the development of the digital ecosystem of Uzbekistan.

Azerbaijan

  • Five Azerbaijani fintech companies have entered markets in Kazakhstan, Pakistan, Turkey and Uzbekistan.
  • CBC TV reports on Baku Fintech Forum 2023.

Georgia

  • The Georgian National Bank plans to pilot a CBDC with the participation of Ripple Labs, Augentic, Bitt, Broxus Holdings, Currency Network, DCM, eCurrency Mint, FARI Solutions and Sovereign Wallet.
  • The FinTech Association of Georgia is ready to cooperate with Azerbaijan.

Moldova

  • Card-to-card money transfers will become free in Moldova from February 2024.

Prepared by BFC