Germany recently received quite bad news that could affect its economy and financial system. In order to settle the claims in the diesel emissions scandal, Volkswagen agreed to pay about $15 billion to the US authorities and Deutsche Bank, the country’s largest bank, received a $14 billion charge (pending final settlement), again from the US authorities, for mis-selling residential mortgage-backed securities (RMBS) in the 2008 financial crisis. However, we will see its not all bad news for Germany. In the second quarter of 2016, the investments received by VC-backed German financial technology companies, have been 80% higher than those for UK ventures, and its fintech ecosystem is now growing at a good pace.
The benefits of technology applied to existing processes making them more efficient or effective should be very practical. However, it’s easy to get lost in over hyped terms such as ‘fintech’, ‘peer-to-peer markets’, ‘crowdfunding’ and forget what the practical benefit is.
“In the U.S., 33 percent of millennials (ages 15-34) believe that within next five years they will not even need a bank”. - McKinsey & Company. Global Payments 2015: A Healthy Industry Confronts Disruption.
It is difficult to conceive a reality where banks stand redundant and, while the probability of such a happening is highly unlikely, a large number of individuals globally are adopting a new set of expectations for the infrastructure that supports their pecuniary activities on a p2p, p2b level, e-commerce, or for cross border transactions.
The Hong Kong Monetary Authority (HKMA) last week announced the launch of a financial technology sandbox, to allow banks to test new innovative products that do not yet meet compliance standards. The new regime is valid as of September 6.
Fintech has not been on the radar in Spain long, it was long not known by most of the people and with just 50 financial technology companies, and with few successes. But things have improved quite rapidly and accordingly to Fintech Radar Spain 2016, prepared by Finnovista, the sector can now count 208 startups, with a 400% increase in just three years, and few players that are making waves.
China announced rules to tighten regulation of the national $60 billion P2P lending industry, with a document issued by the Ministry of Public Security, China Banking Regulatory Commission (CBRC), the Ministry of Industry and Information Technology, and the Cyberspace Administration of China. The new regulations took effect on August 24, 2016, but platforms now have one year to adapt their practices according to the framework.
The Global Fintech Hubs Federation (GFHF), has been announced on August 25, 2016, on initiative of Innotribe and Innovate Finance, to foster innovation across the world’s financial services industry and help startups and institutions gain visibility into new markets. Stakeholders from more than 20 cities around the world, including London, Shanghai, Frankfurt, Istanbul and Nairobi, have already decided to join the federation, with more groups to come.
The Bank of Japan (BOJ) returns talking about the adoption of financial technology in their system in a seminar hosted at their HQ in Tokyo July 29. This comes after the central bank announcement this year in April to have established an in-house section at the BOJ in charge of fintech to explore the opportunities and to offer guidance to financial institutions seeking to step into the fintech market.
According to the World Bank’s Global Financial Inclusion Database, only 51% of the population in Latin America and the Caribbean has a bank account. This figure varies greatly between countries, with more than 80% of the adult population remaining ‘unbanked’ in Nicaragua for less than 35% in Brazil and Costa Rica.