Helping Employees Avoid Late Fees, Bounced Checks And Pay Day Lending With Their Own Money

Posted on September 16, 2019 by Tom Groenfeldt

PayActiv gives workers access to the money they have earned without requiring them to wait two weeks for their paycheck, said Safwan Shah, the company’s CEO. It advances the money and then is reimbursed by the employer when checks or direct deposits are issued.

“It delivers access to affordable financial services at scale to a financially stressed community. We have two guard rails that are always available,” Shah explained. “One is a cap on the amount you can access, which can be 40 to 60 percent of what you have already earned. Second, you don’t pay per transaction, you only pay $5 a pay period when you use PayActiv. And we don’t provide just access to your money, you can pay bills, load cards, you can call Uber, pay for Amazon through us. or get cash with no fees from a Walmart ATM.”

PayActiv became a Public Benefit Corporation, a certified B corporation, four years ago, Shah said. Its articles of incorporation describe its missions is to deliver affordable financial services. He’s in good company — Patagonia is another B corporation.

“I am the bank of the unbanked and underserved.”

PayActiv also helps them save money, with an interesting twist — they save in time.

“We allow users, who are hourly workers, to save in units of time. A backpack may be three hours of work. Or they can allocate 5 minutes a day toward savings, and in 10 days they can save $15. It all happens behind the scenes.”

Unlike some other wage access companies, PayActiv does not require users to transfer their accounts and direct deposit to the company or use a proprietary stored value card — they can move advanced wages to any card or account they choose.

PayActiv, which launched in 2014, now has more than 100 participating employers, including Walmart where it works with Even’s Pay Access, and empowers more than one million employees, Shah said.

Employers value it because companies have come to realize that financial stress has a real cost to them in employee distraction and occasional absenteeism.

PayActiv is a benefit that costs employers nothing, although some, around 20%, will pay part or all of the $5 fee when an employee takes early payout of his or her earnings.

That’s because it is good business — PayActiv employers saw a 19% reduction in turnover, Shah said, and the cost of replacing an employee can easily run $2,000 to $3,000. It also improves recruitment.

“We’ve become almost a financial services center for the unbanked,” Shah said. Between Uber, bill pay, and records of hours saved, employees may turn to it several times a day. A third say they use it to pay bills, another third to avoid late fees and a third to avoid payday loans.

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DHS Updates U.S. Critical Infrastructures Including Payments And Securities Settlement

Posted on June 10, 2019 by Tom Groenfeldt

The U.S. Department of Homeland Security last week released an update to its list of 16 critical infrastructures, which included financial services such as payments and clearing and settlement of securities.

“The Financial Services Sector-Specific Plan details how the National Infrastructure Protection Plan risk management framework is implemented within the context of the unique characteristics and risk landscape of the sector,” the department said in its announcement. “Each Sector-Specific Agency develops a sector-specific plan through a coordinated effort involving its public and private sector partners.”

The Department of Treasury is designated as the agency for the financial services sector. Other sectors considered critical include energy, transportation and communications.

Valerie Abend, managing director, Accenture Security, said the department took a comprehensive view of security.

“It took a look at what functions have to be done all the time, and let’s figure out how to protect them,” she said. “You pick one function and it will cross more than one entity; I think it is a really good way to manage risk.”

The DHS Cybersecurity and Infrastructure Security Agency (CISA) April 30 released what it termed the “inaugural set of national critical functions” but, in fact, the list goes back to 2010, 2013 and 2015.

“Led by CISA’s National Risk Management Center (NRMC), this effort represents an evolution in thinking with respect to risk management that focuses security and resilience efforts on cross-cutting functionality, instead of more static asset, organization, or sector-specific view.,” the departments said in its announcement.

“Identifying these National Critical Functions has been a collaborative process between public and private sector partners and marks a significant step forward in the way we think about and manage risk,” said CISA Director Christopher Krebs. “By moving from an individual, sector-specific lens to a more comprehensive, cross-cutting risk management framework, we can identify and manage risk in a more strategic and prioritized manner.”

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Technisys – Ready With A Digital Banking Core For North & South America

Posted on May 28, 2019 by Tom Groenfeldt

North America has a newcomer in core banking — Technisys, originally from Argentina. It is implementing a digital first system at Alberta’s ATB in a new subsidiary bank called Brightside, and it recently raised a $50 million Series C investment round from Riverwood, a Silicon Valley fund.

Co-founders Miguel Santos, CEO and co-founder Adrián Iglesias, COO both came out of IBM Argentina while a third co-founder German Pugliese Bassi, CMO & Alliances is a well-known entrepreneur in Latin America. The company now makes its headquarters in Miami.

Santos said the company will use the new round of funding to pursue business worldwide disrupting the market in financial services.

“We are helping banks transform to digital and powering new challenger banks.”

He thinks the funding shows two major trends — continued growth in technology and continued expansion into North America.

North American banks are so dissatisfied with the big three core providers — FIS, Fiserv, and Jack Henry — that the American Banking Association (ABA) and the Independent Community Bankers of America (ICBA) are each backing new vendors.

The ICBA  is investing in, and supporting through an incubator, Agora which provides real-time banking that sits in front of legacy core banking platforms and provides such features as mobile accounts, shared accounts, children/parent accounts, advanced real time card controls, budgeting and saving tools and money pooling.

Meanwhile the ABA is in a consortium behind Finxact, developed by fintech industry veteran Frank Sanchez. It has announced $30 million in equity financing from the ABA, Accenture Ventures, SunTrust Bank, and Finxact’s existing investors, including Live Oak Ventures, First Data, Woodforest National Bank, and T.N. Incorporation Ltd (TNI) of Thailand.

Rob Nichols who has been CEO of the American Bankers Association for three years, said in his travels around talking to banks, the core banking systems were a common source of dissatisfaction.

“Early on I learned that outside public priorities, their chief desire is to have a nimble and agile core offering. We saw this (Finxact) as an opportunity to invest in an innovation which could push the whole core processing dialogue in an interesting direction.”

So Technisys is well-positioned for a market that is unhappy with incumbents.

In addition to ATB in Canada, Technisys has non-disclosed clients in the U.S. and is dealing with mid-size American banks, Santos said.

“We are seeing many small and medium banks tied to FIS, Fiserv and Jack Henry, which are old technologies. We have a lot to offer Tier 2 and Tier 3 banks that want to differentiate.”

Technisys has projects in more than 15 countries including U.S, Canada, Brazil, Colombia, Argentina, Chile, Mexico, Perú and Ecuador.

One challenge for non-American banking vendors is the complexity of the U.S. regulation, including state regulations. Some firms have been reluctant to invest without a bank committed to buying their technology, and banks don’t want to contract for a system that hasn’t been developed yet.

Santos said the Technisys platform has been readied to meet U.S. financial regulatory requirements.

Technisys offers a modern fully digital core and a digital front end for a 100% customizable customer interface and a layer for Open APIs to plug into, giving flexibility to the banks to offer their clients a superior experience while being able to innovate. The core and digital platform can be installed separately or implemented together. The digital platform provides the opportunity for banks to differentiate and emphasize their brand or create special services or new financial products.

“We can actually install the digital platform into a customer’s operations and interact with their existing core banking system, and make them free to create new experiences and differentiate from the competition, which is going to be harder and harder,” Santos said.

“The value proposition on the digital banking platform, we are convinced, is differentiation for not only banks, but technology firms going into finance. Having a platform that lets you create, that allows you to differentiate is key. More than key, it will be mandatory.”

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Z/Yen Group Designs New Index Linking Finance and Tech

Posted on May 25, 2019 by Tom Groenfeldt

London’s Z/Yen group has developed a Smart Centres Index, designed to track the development of commercial and financial centres across the world in their support for and readiness for new technology applications.  Smart centres are cities across the world which encourage a high degree of innovation in business using new technologies.

The index is intended to help investors, governments, and regulators track the attractiveness of centres for new technologies and products by measuring how attuned centres and their regulatory systems are to attracting innovation and growth in Science, Technology, Energy Systems, Machine Learning, Distributed Ledgers, and Fintech.

To support the index, it has launched a survey aimed at professionals working in the development, application and regulation of new technology.  The survey seeks the views of interested professionals on the regulation, depth and quality of new technology in centres across the world.

Professor Michael Mainelli, Executive Chairman of the Z/Yen Group, said:

“The opportunities presented by new technology and science across all areas of commerce and trade are incredibly rich.  We at Z/Yen are deeply engaged with the development, application, and regulation of new technology in the world’s commercial and financial centres. This survey will help form the next edition of the Smart Centres Index.”

Z/Yen says it helps organisations make better choices.

“Our clients consider us a commercial think-tank that spots, solves and acts. Our name combines Zen and Yen – ‘a philosophical desire to succeed’ – in a ratio, recognising that all decisions are trade-offs. One of Z/Yen’s specialisms is the development and publication of factor assessment indices combining factor analysis and perception surveys.”

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Ohpen Gets New Investment, Adds More Bank Clients

Posted on May 18, 2019 by Tom Groenfeldt

Ohpen, a banking tech firm in the Netherlands that was the world’s first cloud native core banking provider, has announced that its first and long time investor, the investment management firm Amerborgh, has sold part of its shareholding to NPM Capital, which now has a 35% stake.

“We have had Ohpen in sight as one of the most promising technology companies that we have seen in the past few years,” said Rutger Ruigrok, managing director at NPM Capital. “We are impressed with their achievements over the past 10 years: a cloud native core banking engine, an impressive customer base and a wonderful foundation for further growth. The technology sector is an increasingly important focus point in our investment portfolio,” he added.

“Having the new shareholder on board means a broadening of our options to finance future growth, although Ohpen can still advance with the growth capital that we raised early 2018, says Matthijs Aler, CEO of Ohpen. “With Amerborgh and now also with NPM, we have a well-balanced long-term shareholder structure that enables Ohpen to realize all of its future growth ambitions. I am really looking forward to working with the NPM team.”

Ohpen was the first SaaS core banking engine in the world that runs entirely in the cloud, predominantly on AWS.. Ohpen liberates its customers from their legacy systems, making them more flexible, safe, scalable and compliant.

Last year Ohpen moved more than 400.000 savings and investment accounts from Aegon to its core banking engine. Ohpen also signed up LeasePlan Bank which will use its cloud-based engine to replace several on-premises applications, reducing complexity and increasing LeasePlan Bank’s technological and functional capabilities to better support its retail banking customers.

““In Ohpen we have found a partner that allows us to further increase our efficiency and enhance our capabilities to keep track of market developments and changing customer demand,” said Danny te Brinke, director LeasePlan Bank & Strategic Finance. “This will help us deliver on our commitment to bring user-friendly, clear and competitive savings products to our customers.”

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Pew Blasts CFPB For Reversal On Payday Lending

Posted on May 18, 2019 by Tom Groenfeldt

Midnight on the 15th ended the CFPB’s comment period on its proposal to rescind the payday loan rule to protect borrowers that it had finalized in 2017.Pew said the CFPB rule on payday ending could save consumers billions.

“Pew is deeply concerned that the Bureau’s proposal to rescind the ability-to-repay provisions it finalized in 2017 will harm consumers and dissuade lenders from providing affordable credit at scale.”

Pew took issue with the Republican-controlled CFPB’s assertion that the rule developed under the Obama administration would restrict access to credit.

“The Bureau’s 2019 proposal neglected to account for the provision of installment loans and lines of credit in its assessment, repeatedly and incorrectly equating a reduction in the number of short-term balloon payment loans with a decrease in access to credit generally. In addition to continued payday and vehicle title lending, installment lenders, banks, credit unions and financial technology firms have said that they are also ready and willing to extend access to credit under the 2017 final rule, and they are likely to expand their small-dollar lending —something the Bureau failed to address.”

The Bureau’s 2019 commentary justifying revoking the rule is dishonest, Pew said, in somewhat more diplomatic language.

“The Bureau repeatedly paraphrased the rule’s language in ways that substantially change its meaning…The 2019 proposal has ignored the foundational rationale for the 2017 rule, failed to refute or reinterpret the bulk of research underpinning it, and has also mischaracterized the rule as being largely based on a concern about borrowers’ expectations at the time a first loan is originated….the 2017 rule’s safeguards provide a level playing field and regulatory certainty for lenders, along with strong protections for consumers, while maintaining widespread access to credit.”

The bureau’s action is not much of a surprise. Republicans have opposed the CFPB since Elizabeth Warren first proposed it. CNBC reported that “Since 2011, the CFPB has received more than 1.2 million consumer complaints about their dealings with financial firms. It has returned nearly $12 billion to 29 million people wronged by financial institutions, including credit card companies and banks. Most of the complaints received by the agency relate to debt collection (27 percent) and mortgages (23 percent).”

The billions saved or return come out of the profits of payday lenders and the money center banks which provide their funds while staying a long arm’s reach away from the payday business.

 

 

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Arab Tunisian Bank Goes Digital With Temenos

Posted on May 7, 2019 by Tom Groenfeldt

The Arab Tunisian Bank (ATB) has selected Temenos, the Geneva-based banking software company for its digital transformation program. ATB will transform its bank with Temenos Infinity, the breakthrough digital front office product, and Temenos T24 Transact, the next generation core banking software. These two banking software products combined with Temenos Payments Hub, Advanced Analytics and Financial Crime Mitigation (FCM) will enable ATB to benefit from an end-to-end digital banking platform, which will bring business agility and innovation.

ATB has a goal to increase revenues by 40% by 2020 and double the number of deposits with new products. It selected Temenos for its packaged model bank functionality and advanced cloud technology to meet those objectives, ATB also selected Information Technologies Solutions & Services (ITSS) as its implementation partner. ITSS was named Temenos Regional Partner of the Year 2019.

With more than 130 branches and 1,300 employees, ATB has grown to be one of Tunisia’s top five banks since its establishment in 1982. In 2017, the bank was also awarded the “Best Commercial Bank in Tunisia” by Global Banking & Finance.

“Tunisia is quickly embracing the new digital world, and banking is no exception,” said Mohamed Ferid Ben Tanfous, CEO, ATB. “With state-of-the-art banking software and 25 years of expertise, Temenos was the clear strategic technology partner of choice for us at Arab Tunisian Bank. Temenos’ end-to-end digital banking platform will enable us to offer enhanced, personalized digital experiences for our customers and become a global business partner for customers by developing new lines of business – a key priority at ATB. This digital transformation will help us achieve our ambitious growth objectives and fulfill our mission to contribute to the economic and financial development of Tunisia.”

Temenos’ pre-integrated, packaged banking software will provide ATB with faster time-to-market and dramatically reduce operational complexity and costs. With Temenos Infinity and Temenos T24 Transact, ATB will have the agility to create innovative products and services tailored to its customer needs.

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EDI Challenges Reference Data’s Big Four

Posted on May 7, 2019 by Tom Groenfeldt

A relative newcomer to the reference data business, Exchange Data International, is challenging the incumbents for what it terms anti-competitive practices. Specifically, EDI contends that the termination clauses in reference data contracts, which typically require users to return or delete their reference data, make it difficult for users to change providers because they would have to re-create their reference data libraries, which can be prohibitively expensive.

Burton-Taylor International Consulting, the leading authority on the market data business, estimates the global market for reference data is $2 billion to $3 billion.

EDI says that most data users are unaware that they are in effect only renting their data from major data vendors.

“It always comes as a shock to financial data consumers when they find out that they have only been ‘renting’ their data, and are effectively locked into their contracts. This has significant implications for all users of historical data, including quant analysts who rely on it for their algo strategies, and compliance teams which are required by legislation to maintain accurate data history. EDI’s strategy is to sell rather than rent data, and to offer hard-to-match cost-savings.”

EDI has obtained a mildly supportive legal opinion from a leading London law firm which said “Our assessment is that the Termination Practice could pique European antitrust authorities’ interest. There are cases which suggest that there are plausible arguments to be made that the Termination Practice infringes EU competition law.”

The termination practice could qualify as abuse of dominance, the firm said, noting that the concept of abuse of dominance is evolving.

Andy Nybo, a director at Burton-Taylor, said there are a variety of unique licensing agreements for reference data, and termination clauses can be justified.

“On the surface it makes sense because the aggregation, cleansing and normalizing all come at a cost,” he said. “Reference data is not static. There is constant cleaning and refreshing of historical reference data because new information or corrections are made, names change. All those thing impact the quality of the data.”

If the users don’t own a perpetual license for the data, they’re leasing it and when they change vendors they lose access to the data, he added.

EDI is the only sizable data vendor which believes that clients should own what they pay for, the company says.

“The onerous termination clauses are an effective barrier to entry for new potential data providers and may even be anti-competitive under EU law and local/national laws,” said Jonathan Bloch, founder and CEO of EDI. “This is damaging to data users, who are locked into an expensive and inflexible relationship with the ‘big four’ data vendors; it also makes it difficult for would-be entrants to the industry.”

While some financial firms only focus on the last ten years of data, most quant traders will be working with a twenty-year data set and the loss of even several years’ data could force them to remain in an expensive and inflexible relationship, he added.

“Based on our legal advice we believe that a financial data consumer based in Europe and challenging this termination clause has a fair chance of getting it held to be in violation of European anti-competition law and therefore unenforceable,” Bloch said. “But this route is not available to U.S. users.”

EDI, which was established in 1994, is headquartered in London with offices in New York, India and Morocco. It was named Best Corporate Actions Initiative of the Year in the IMD/IRD Awards 2018.

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Russia’s Yandex.Money’s E-Wallet Goes Multi-Currency

Posted on April 10, 2019 by Tom Groenfeldt

Yandex.Money, the largest online payments services in Russia, has introduced a new service for multi-currency accounts and cards. In addition to rubles, the service allows users to keep money and pay in 10 foreign currencies: US dollars, euros, British pounds, Japanese yen, Chinese yuan, Swiss francs, Czech korunas, Polish zloty, Belarusian rubles, and Kazakhstani tenges. Users won’t have to switch currencies in order to pay for a purchase abroad with the card, as the service will independently determine which one to use for the payment, allowing for convenient and favorable payments in different countries with one Yandex.Money card, the company said in its announcement.

At first, the new service will be available to a limited number of users: those who would like to be a part of the test group will need to submit an application

“We expect the Yandex.Money multi-currency cards to be popular with a wide variety of users,” said Alla Savchenko, director of products at Yandex.Money.. “People residing or vacationing abroad will feel comfortable in any country, saving on currency conversion and not wasting time on switching between accounts. Users who want to save money can earn cashback for paying for purchases from the account of any currencies available from the service. Further on, freelancers will be able to receive earnings in foreign currency from foreign clients in the usual manner, to e-wallets,” she added.

Yandex.Money serves 46 million registered wallets and around 800,000 thousand physical cards and 17 million virtual cards on the Mastercard payment system. Physical Yandex.Money cards can be used for online and offline payments, including Apple Pay, Samsung Pay, Google Pay, and Garmin Pay support, as well as for cash withdrawal both in Russia and abroad. Identified users can withdraw money without a commission at any ATMs around the world within the limit set by the service.

Yandex.Money elected to leverage Moven Enterprise’s APIs and embed them into their existing platform to deliver a highly personalized smart banking experience to their customers.

Yandex.Money said the partnership provides its 46 million users with a real-time personalized financial experience (PFE) service in their e-wallet mobile app.

The company is the joint venture of the search engine Yandex and Sberbank. It said that “Yandex.Money’s service provides users with contextual personalized advice as part of the e-wallet mobile app experience. Analyzing the expenses on a daily basis, the service allows users to track their spending in real time, while reducing spending and increasing savings—all to drive financial wellness and good financial habits.”

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SETL Clarification – Re-Org, Not Bankruptcy

Posted on March 8, 2019 by Tom Groenfeldt

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.’

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