SETL Clarification – Re-Org, Not Bankruptcy

From the esteemed Julia Streets:

SETL announces start of corporate reorganisation further to successful completion and approval of the regulated CSD development 

Roadmap to position business for strong financial future.

London 07 March 2019, In line with its 2018 strategic and operational plan, SETL the London based institutional payment and settlement infrastructure provider using blockchain technology, has focussed its resources on successfully developing and funding the establishment of the ID2S and IZNES platforms in Paris.  Of particular note, SETL made significant capital contributions to ID2S, the regulated CSD. In October 2018, the platform successfully completed its T2S connection testing and was fully approved under CSDR.

Now that the CSD is operational, the organisation can move forward with the next phase of its corporate development plan.  Having made an early investment in the development of ID2S, SETL Development Ltd recognises that as an early stage technology firm it is not sufficiently placed to contribute the capital required.  As such it is now now seeking to place its ID2S holding with a larger financial services firm, one better placed to provide the capital required to support the growth trajectory.

In recognition of the structural complexity and the need for a neutral party to represent the interests of all the current creditors and stakeholders, the board of SETL Development Limited has today appointed Quantuma LLP as an independent administrator.  Quantuma’s role will be to help shape the future structure, enable the company to balance its strategic infrastructure holdings and continue its software development activities on a business as usual basis.

Sir David Walker, the company’s chairman added “Separating the software development business from the investments portfolio is a highly complex process, requiring expert, experienced and neutral management of the interests of all the creditors and stakeholders.  The directors are all fully engaged and aligned in this approach.”

Anthony Culligan, the co-founder and largest shareholder added, “I am absolutely satisfied that this is the most positive step for the company and will form the basis of a strong future”.

Andrew Andronikou, joint administrator and Quantuma partner added, ‘This marks a significant moment for SETL and we are honoured to have been entrusted to work on behalf of the business and its investors.  We are highly experienced in navigating these milestones to ensure that businesses are fit for the future and look forward to helping SETL in its quest for growth.’

Posted in Uncategorized

OpenFin Wins Award At Trading Tech Summit In London

OpenFin won the Fintech Innovation Award at the TradingTech Summit in London on the 27th February.

This award complements OpenFin’s recent accolades, including: winning Best open source initiative at the HFM Technology European Technology Awards 2018; being named FinTech of the Year at The TRADE’s Leaders in Trading Awards 2018; winning Best use of the Agile methodology by a technology vendor at the Buy-Side Technology Awards 2018; and being included in the The Financial Technologist’s list of The Most Influential FinTechs of 2019, published earlier this month, for a second year running.

OpenFin OS provides a common platform on which banks, buyside and the FinTech community can collaborate, build and deliver innovative workflow enhancements for end users. As a result, innovative solutions can be brought to market faster, enabling end-users to benefit from new features and functionality at an accelerated rate.

Adam Toms, CEO of OpenFin Europe, said that more than 1,000 applications have now been built and deployed on OpenFin OS providing solutions to over 1,500 major banks and buy-side firms.

OpenFin enables rapid and secure deployment, native experience and desktop interoperability by building on HTML5. See my Forbes story last month. Used by the largest industry players through to the newest of FinTech innovators, OpenFin deploys more than 1,000 desktop applications to more than 1500 buy-side and sell-side firms.

 

 

Posted in Uncategorized | Tagged , , , , ,

Why The Fed Will Create Its Own Real-Time Payments System

Prediction — The Federal Reserve will announce before Labor Day that it will build a real-time payment system to offer an alternative to the system that has been started by TCH and Mastercard using the Vocalink technology it acquired when it bought the company.

The UK implemented a faster payments system 10 years ago. Admittedly the country has a far simpler banking system with just a handful of major banks. It also has a regulator that takes a far more active role in promoting consumer interests vs. banks than the Fed does.

Major U.S. banks have blocked real-time payments for years, mostly obviously in 2011 when they voted against making the ACH system real-time. See Kevin Wack’s article in The American Banker

The reasons aren’t clear because the banks haven’t tried to justify their anti-consumer stance. However, among the reasons usually discussed are that they don’t want to reduce their income from wires, they make a lot of money from overdraft charges, moving to real-time is an obvious expense with no obvious increase in revenue, and they would cut into their earnings from financing payday lenders.

Why change now? Sheer embarrassment that banking systems around the world — from Australia to Mexico —have achieved real-time payments? Maybe, if you thought that bankers whose behaviors have led to billions in fines and compensation payments were truly capable of embarrassment.

More likely they are aware that the Fed, which has pursued a strategy of consultation and cajoling for years, may eventually run out of patience.

And they’re not exactly leaping to real-time. TCH says that about half the accounts in the country are already connected to real-time payments, but that is more a commentary on the degree of concentration in banking than evidence of a drive to real-time. Fewer that half the TCH members have implemented some level of real-time payments and they have no deadline.

How long will the Fed let this continue?

In response to the Fed’s request for comments, the Congressional Black Caucus wrote that “Delay is costing Americans billions of dollars they do not have and contributing to the growing income inequality that the Fed rightfully agrees is harming our nation. Specifically, research conducted by the Brookings Institution, Pew Charitable Trust, Center for Financial Services Innovation and others has illustrated the prohibitively high costs of our nation’s slow payment system and the sizable benefits for communities of color that would begin to accrue savings from adoption of real time payments. The increased prevalence of overdraft fees, high cost small dollar credit, and check cashing has cost our constituencies tens of billions of dollars that a real time payments system would help ameliorate.”

Estimates of those costs run to about $10 billion a year, or as Brookings noted, the delay has cost Americans $100 billion in fees since the UK went to faster payments more than 10 years ago.

Other than TCH, just about everyone else involved in commerce and payments, from convenience store associations to the NRF to Walmart and Amazon and community banks, wants the Fed to set up a Real Time Gross Settlement System RTGS so they won’t have to depend on a system run by the big banks. NACHA would prefer a bigger role for itself and BAFT thinks it would be fine for the Fed to wait a few years and see how the TCH solution works.

TransferWise noted that in many respects “banks are subsidized by governments and protected from competition and they enjoy exclusive access to the payments system. When firms face excessive barriers to entering a market competition stagnates, prices remain high and innovation remains low.”

And it specifically said access to an RTGS should not be limited only to banks, a position also endorsed, not surprising, by Amazon.

Consumer Reports said that “the payment options available to most Americans are dated and inefficient, due to complexities and lack of competition at a systemic level…non-bank providers like PayPal were early to build a system that met consumers’ need for a way to transact person-to-person over the internet. Only after consumers flocked to these services were traditional providers like major banks motivated to develop similar services. “

One big change over the five years the Fed has been studying (dawdling) is that the House of Representatives now has a Democratic majority and Rep. Maxine Waters is chair of the banking committee. Lower costs for banking services as a campaign platform? Socialist subsidies for big banks? Privatizing the profits, socializing the losses? Edit to see if it fits on a bumper sticker.

The three former Fed payments experts who comments made several arguments for the Fed to develop a RTGS. One is that in a crisis, the Fed is the financial resource the country depends on. If the TCH system freezes and the Fed doesn’t have an alternative, as it has with Fedwire and the Fed ACH, what could it do, and how long would it take to get authorization?

Another, as Bruce Summers noted in a detailed commentary, is that payments are moving to real-time and digital, pushed by the growing use of smartphones for banking. If the Fed doesn’t develop its own RTGS it could be left with check processing and its ACH, not exactly the cutting edge in payments.

““If the Federal Reserve banks don’t develop and take an operational role in faster payments then their competency will further deteriorate. They are at a tipping point…If the Fed doesn’t participate in this it will be really left behind, and then it will be too late for society to rely on the Fed going forward over time…if the big banks had complete control over the digital payment system and we have another crisis we will be in double jeopardy.”

And besides being trusted by community banks, which provide small business and agricultural loans and are core assets in their communities, the Fed is already connected to banks across the country, while TCH is not.

The Fed can do it — it has the technical skills and the connections and trust of banks of all sizes.

Thomas Hoenig, former president of the Federal Reserve Bank of Kansas City and a member of the Federal Reserve Banks’ Technology and Financial Service Policy Committees, said the U.S. needs to upgrade its payment system, starting now.

“We should stop talking about it and start moving forward on it…the Fed with a nearly 100 year history in payments has the infrastructure, knowledge, technical capability and is the more transparent in price, as we learned in check and in ACH.”

The links below go to the Fed comments page, and to the six articles I have written on this, which provide a fairly quick overview of the issues.

The Fed comment pages

Google And Amazon Favor Fed Role In Real Time Payments

The Benefits to consumers

What retired Fed payments experts have to say

How community banks don’t trust TCH and want the Fed to provide RTGS

Merchants of varied sizes want a Fed RTGS

The TCH argument

And take a look at “How the Other Half Banks” by Mehrsa Baradaran, a very impressive book that looks in depth at how many people are left out of banking. She proposes postal banking, which I think is a look backwards — smartphone banking would be a useful alternative. It is a great book, and as perhaps only a university press could, provides pages of detailed footnotes that will be a boon to anyone looking into these issues.

See also Mayra Rodriguez Valladares in her detailed coverage of these banking topics.

Great article about Mehrsa and her sister, Shima, who is also a law professor and leaving Iran at 6 and 8. And if this interests you at all in Iranian culture and learning, at least take a look a “Reading Lolita in Tehran” by Azar Nafisi.

 

Posted in fintech, payments | Tagged , , , , , , , ,

Payments Are Moving To Real-Time Around The World, The U.S. Plays Catch-Up

Payment systems are moving to real-time around the globe, according to a the fifth annual “Flavors of Fast” report from FIS, the financial technology powerhouse. The annual report was begun by Clear2Pay, which FIS acquired in 2014.

FIS found 40 active real-time payment programs around the world, up from 25 in 2017 and nearly three times as many as the company’s inaugural 2014 study. In addition it identified five payments programs under development, plus another 16 expected to be live in the next 12-18 months.

The report rated the faster payments systems around the world, rating India 5, the highest rating, Australia 4+ and Singapore 4+. Somewhat improbably, the United States got a 4 rating even though its system isn’t operational at scale. It launched some small segments at the end of last year but lags well behind other countries, including the UK which celebrated the 10th anniversary of its faster payments system this year.

“We rated the countries at a point in time,” explained Elena Whisler, head of global product management, open payments at FIS, “meaning that we rated the country as is regardless if they were just launched. The main reasons US is currently a 4 is because it hasn’t got ubiquity yet,” she added in a bit of understatement.

The main reason for slower adoption in the U.S. is the lack of a mandate, said Whisler. The Fed when it started work on faster payments, focused on what faster payments would need but it did not require financial institutions to participate. TCH and other closed networks have stepped up to provide infrastructure, she added.

“Now banks have the question, when something isn’t mandated and doesn’t go through a compliance budget cycle, banks need a business case, which is difficult to do with real-time payments. It’s difficult to have a business case when we don’t know where value will come from.”

At a Federal Reserve meeting on faster payments in Chicago last week, the Federal Reserve Board invited public comment on actions the Federal could take to support faster payments in the United States.

In its official announcement, the Fed said:

Posted in Uncategorized

Money 2020 USA Hackathon Aimed At Financial Health And Inclusion

The Money 2020 USA Hackathon in Las Vegas this year set a challenge of financial inclusion.

Reshud Dani and Jay Lohokara

“Help Visa create a future where consumers, families, or small businesses are able to reach their financial goals using innovative solutions. Join us to help solve the challenge of financial exclusion. Think about a use case for the following categories: cash free solutions, credit, access to financial education and business skills, identification verification.”

Sponsors included Synchrony, PayPal and Envestnet|Yodlee

Sunday morning at The Venetian’s Marco Polo ballroom looked seriously casual as developers put final touches on their apps or just slept at the tables while colleagues did the work. Many sported the Visa Developer Squad Hoodie and Visa Developer Blankets in blue and gold. Empty Coke cans and pizza box decorated table tops.

Working and napping after a long night

For the second year in a row, one of the top Visa teams that advanced to the Money 2020 hackathon finals won the overall grand prize (out of 80 top teams). In an effort to help send instant payments overseas, ViSync created an app designed to simplify and improve the remittance process to help migrant workers send money back to their home country, including the ability to set controls on how money is spent by the receiver and to enable the receiver to become banked.  The team used Visa Direct and Visa Transaction Controls APIs.

Posted in Uncategorized | Tagged ,

Nerdwallet Wants To Make Comparison Shopping For Financial Services Simple

“Most people don’t want to learn about personal finance in detail; they just want to know they aren’t screwing up,” said Tim Chen, who is CEO of Nerdwallet, the comparison site for financial products from credit cards to mortgages.

For a self-professed finance nerd, this lack of consumer obsession is something of a disappointment.  But he and the 80-plus researchers and writers have learned to live with it and by listening to their consumers they design advice that meets users’ needs and leaves them alone to enjoy life.

For example, Nerdwallet personal loan product page sorted loans by interest rates.

“All our consumers hated it. They wanted it sorted by monthly payments, which seems odd until you put yourself in their shoes and see what is going on month by month,” Chen said. “We have to meet them where they are. If you start by wagging your finger, that’s a good way to get them to hit the back button on their browser.”

Nerdwallet has three million members and more than 100 million visits each year, Chen said. Onstage at Money 2020 with Angela Strange of Andreesen Horowitz, she said the airline industry is far ahead in comparison shopping and its engines like Kayak and Expedia save consumers $10 billion.

Chen said the comparison engines in financial services are barely scratching the surface.

You could spend six hours reading about 529 college savings programs for your kid and still not know the ins and outs, he added. Nerdwallet users want to be triggered that the 529 exists, but they don’t want to learn all about them, just enough to find the best accounts.

“Education for education’s sake is overly complex. This is one areas where user research has been shocking. I am such a nerd and I love learning the ins and outs of all these things, but that’s not what the average person wants to learn.”

Tim Chen, CEO of Nerdwallet

For individuals, Chen said, Nerdwallet and other comparison sites have made financial products shoppable.

Posted in Uncategorized | Tagged , , , ,

Shazam! Experts Fell For a Fake Product From A Nonexistent Company In A Fraud Test

Cyber security pros and risk analysts should be better than the average person at detecting fraud, but a little over three percent submitted their personal identification information to sign up for an app described as “Shazam for voice identification.”

Credit Trulioo, a global identity and business verification company, which launched an online fraud experiment to evoke some interest around International Fraud Awareness Week. (It was also National Nurse Practitioner Week and Dear Santa Letter Week and almost overlapped with Intimate Apparel Marketing Week.)

Trulioo said that despite the abundance of online resources and press coverage on fraud and fraud prevention, the Federal Trade Commission (FTC)  received nearly 2.7 million fraud complaints in the United States last year.

So Trulioo set out to learn whether fraudsters, under the guise of a fake company, offering a fake product, could convince internet users to disclose their personal information.

It created a web page for a fictitious company called Agile ID Technologies, offering a fictitious mobile app, “Aurdentity”. Marketed as “Shazam for voice identification”, the fake mobile app claimed to use voice recognition technology to not only identify people when exposed to their voice, but also retrieve background information about them.

Trulioo ran a week-long campaign that delivered ads to compliance professionals, fraud and risk analysts, and other individuals who showed an interest in data privacy, cybersecurity and technology, and may even have had credentials. They were directed to a fake company’s web page where visitors were asked to sign up for Audentity by providing their personal information including name and email addresses. None of the information was recorded or stored, unfortunately eliminating the possibility of followup interviews.

The campaign resulted in a total of 2,139 unique visits to the fictitious company’s website. Of those visitors, 66 people completed the sign-up form.

Posted in Uncategorized | Tagged , , ,