In the fast-paced world of financial technology, shifts occur daily as companies strive for innovation, customer satisfaction, and enhanced market reach. Today’s briefing covers a spectrum of developments, from Visa Direct’s groundbreaking integration in Korea to challenges plaguing the app economy. We’ll also touch on recent acquisitions, strategic partnerships, and expansions in fintech ecosystems. Here’s what you need to know about today’s most pressing fintech trends.

Visa Direct’s Milestone in South Korea: SentBe’s Card Transfer Service Launch

South Korea’s fintech ecosystem has taken a notable leap forward with SentBe’s implementation of Visa Direct’s Card Transfer Service. This collaboration marks a milestone, positioning SentBe as the first Korean fintech company to offer card-to-card international money transfers, a feature in high demand given the rise in cross-border financial activities. Visa Direct’s real-time card-to-card transfers are a potential game-changer for consumers and businesses alike, facilitating faster and more secure global transactions.

The collaboration exemplifies Visa’s larger strategy of partnering with regional fintech players to broaden its influence across Asia’s dynamic fintech markets. By tapping into SentBe’s growing customer base and extensive user insights, Visa is embedding itself deeper into local markets, simultaneously offering Korean users a more streamlined and efficient money transfer experience.

The service’s design allows individuals and small businesses alike to benefit from quicker transaction processing times, marking a significant evolution from traditional remittance processes that rely on intermediary banks. The move is especially critical in a digital age where customer expectations lean heavily towards instant, seamless financial interactions.

Source: Electronic Payments International

Fintech App ‘Trap’ Enrages Consumers Struggling to Cancel Subscriptions

In the modern subscription-based economy, some fintech companies are facing backlash over what customers perceive as the ‘trap’ of endlessly renewable subscriptions that are nearly impossible to cancel. A recent expose revealed mounting frustrations among consumers who signed up for digital services but later found themselves locked into subscriptions they could not easily terminate. The piece highlights the darker side of user retention strategies deployed by some companies to mitigate churn by making cancellation processes intentionally convoluted.

The app-based economy relies on recurring revenue, which remains a vital lifeline for startups and established firms alike. However, industry insiders argue that lack of transparency and difficult cancellation processes have an adverse impact on customer trust, leading to a growing dissatisfaction that may ultimately backfire on these companies. As consumers grow more savvy, fintechs relying on these practices could risk higher attrition rates, regulatory scrutiny, and brand erosion.

This emerging issue has raised questions about ethical standards and customer-centric models in fintech. As competition intensifies, companies must balance growth with transparent practices that foster customer loyalty, rather than coercion.

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Source: Forbes

Pinwheel and Terafina Partner to Streamline Omnichannel Customer Onboarding

Pinwheel, a fintech infrastructure company known for its payroll and income data connectivity solutions, recently announced a partnership with Terafina, a leader in omnichannel sales and service platforms for financial institutions. This collaboration aims to simplify and enhance the onboarding process for new customers, providing them with seamless experiences across multiple channels, whether online, mobile, or in-branch.

The partnership combines Pinwheel’s data integration capabilities with Terafina’s expertise in customer onboarding, allowing financial institutions to create more personalized and flexible account opening processes. With consumer expectations evolving towards instant service and mobile-first access, this integration empowers banks and credit unions to meet these needs by delivering cohesive and smooth digital onboarding journeys.

In an industry where customer acquisition and retention are increasingly dependent on first impressions, the significance of streamlined onboarding cannot be overstated. By improving access to real-time employment and income data, this partnership enhances user verification and compliance while also allowing institutions to better assess applicants’ creditworthiness, which is crucial in today’s lending environment.

Source: PR Newswire

nCino Acquires FullCircl in $135 Million Deal: Expanding the Scope of Relationship Management

Fintech giant nCino recently completed its acquisition of FullCircl, a move that underscores its ambition to broaden its reach in the financial services sector. FullCircl, known for its focus on customer relationship management (CRM) solutions tailored to financial institutions, brings a robust set of tools that will allow nCino to enhance its cloud-based banking platform. The acquisition, valued at $135 million, positions nCino as a stronger player in the relationship management space, especially crucial for institutions looking to build deep, long-term client relationships.

With this acquisition, nCino aims to expand its footprint in Europe and boost its offerings in the CRM space, providing banks and credit unions with innovative tools for client engagement and retention. The integration of FullCircl’s CRM capabilities will also support nCino’s existing portfolio, which includes loan origination and digital banking solutions, strengthening its position as a one-stop platform for financial institutions.

This acquisition is part of a growing trend of consolidation in the fintech sector, where larger firms acquire specialized players to fill critical service gaps and offer more comprehensive solutions. By building a holistic platform that spans multiple functionalities, nCino is better equipped to compete in the increasingly crowded digital banking software market.

Source: The Paypers

DriveWealth’s European Expansion: A Strategic Base in Lithuania

DriveWealth, a digital brokerage technology firm, has chosen Lithuania as the launchpad for its European operations. By establishing a base within Lithuania’s burgeoning fintech hub, DriveWealth is strategically positioning itself to tap into the European market, leveraging the country’s favorable regulatory environment and proximity to major EU economies.

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The expansion is particularly significant given the increasing demand in Europe for retail investing platforms that provide accessible and affordable market entry. DriveWealth’s solutions enable digital brokers and financial platforms to offer customers fractional shares and real-time trading experiences, which have proven highly popular in markets like the U.S. This move aligns with DriveWealth’s long-term growth strategy and its commitment to democratizing access to investing across the globe.

Lithuania’s supportive regulatory framework and well-developed fintech infrastructure make it an ideal location for DriveWealth’s entry into Europe. The country’s fintech-friendly policies allow innovative financial service providers to set up and scale efficiently. DriveWealth’s presence in Lithuania not only adds to the growing cluster of fintech firms but also reinforces the country’s reputation as a rising fintech powerhouse within the EU.

Source: Finance Magnates

Key Takeaways and Strategic Insights

As seen from today’s top stories, several overarching themes shape the fintech landscape:

1. Global Partnerships and Local Expansion: Visa’s collaboration with SentBe exemplifies how partnerships enable fintech firms to break into regional markets by addressing specific customer needs.
2. Transparency in Subscription Models: The customer backlash against difficult-to-cancel fintech services raises concerns about the sustainability of current subscription models.
3. Innovation in Customer Onboarding: Pinwheel and Terafina’s partnership highlights the importance of streamlined onboarding processes as a means to increase customer satisfaction and improve retention.
4. Mergers and Acquisitions to Fill Service Gaps: nCino’s acquisition of FullCircl illustrates a broader trend of consolidation, where fintech companies acquire specialized players to broaden their product portfolios.
5. Regional Hubs as Strategic Launch Pads: DriveWealth’s decision to establish a base in Lithuania underscores the importance of regional fintech hubs in providing a supportive environment for global expansion.

Today’s roundup underscores the adaptability of fintech companies as they navigate emerging challenges and opportunities. From addressing regional financial needs to innovating customer experience, fintech firms continue to redefine what it means to engage in modern finance. As the industry grows, so too does the necessity for ethical practices, robust infrastructure, and agile customer solutions. In this competitive environment, the companies that prioritize transparency, customer satisfaction, and strategic expansion will set the standard for the future of finance.

The post Fintech Pulse: Your Daily Industry Brief – Breaking Trends and Insights in Fintech appeared first on HIPTHER Alerts.

HONG KONG, Oct. 31, 2024  MANTRA, a layer 1 blockchain purpose-built for tokenized real-world assets (RWAs) has partnered with Libre Capital, a UAE-headquartered financial instruments tokenization and issuance platform, to provide investors with onchain access to a diverse range of attractive investment funds. This partnership will provide those MANTRA users that are institutional or accredited investors with investment opportunities across a number of notable onchain funds, including leading hedge funds, private credit funds and the BlackRock ICS Money Market fund.

By leveraging Libre’s capabilities and MANTRA’s robust ecosystem, the partnership will facilitate the issuance of a tokenized BlackRock ICS Money Market Fund, and expand investment horizons for institutional and accredited investors seeking to diversify their portfolios within the digital asset landscape. The initiative underscores MANTRA’s commitment to leading the development of a comprehensive and diverse digital asset infrastructure, and strengthens MANTRA’s position in the growing digital asset spectrum within the financial services industry.

Libre operates backbone infrastructure that allows investors to access tokenized versions of real world assets such as money market funds, private credit and hedge funds and other alternative asset products on public blockchains. Libre does this through the on-chain Libre Gateway DeFi dApps (decentralized applications) deployed on each public chain. This enables accredited, professional and institutional investors to directly access top-tier funds on MANTRA Chain in a fully compliant manner. 

“We’re honored to be partnering with Libre to give users access to this caliber of funds,” said MANTRA Co-Founder and CEO John Patrick Mullin, “with the addition of protocols like the Libre Gateway, MANTRA can better equip users with a best-in-class collection of tools to continue to grow the real-world asset economy.”

“The launch of the Libre Gateway on MANTRA Chain is a huge step forward to enable access to wealth and treasury management tools for users on MANTRA, and for Libre to take advantage of MANTRA’s RWA-specific infrastructure,” said Dr. Avtar Sehra, CEO and founder of Libre.

This partnership comes after MANTRA recently announced the launch of its mainnet, simplifying the process of bringing RWAs onchain and marking a significant step in the integration of traditional finance with blockchain technology. For more information about MANTRA and access to the money market funds, visit mantrachain.io.

About MANTRA Chain:

MANTRA Chain is a purpose-built Layer 1 blockchain for real-world assets, capable of adherence to real world regulatory requirements. As a permissionless chain, MANTRA Chain empowers developers and institutions to seamlessly participate in the evolving RWA tokenization space by offering advanced technology modules, compliance mechanisms, and cross-chain interoperability.

Website | Twitter | LinkedIn | Discord

About Libre Capital:
Libre is building the investment infrastructure to enable asset managers to seamlessly connect with distributors and enable unparalleled access to global alternatives investment funds. In addition, Libre is working on enabling access to value-add services in the alternative assets ecosystem such as collateralized lending and automated rebalancing. Currently, Libre only makes its tokenized funds available to institutional and accredited investors. https://www.librecapital.com

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The Financial Stability Board (FSB) has published a consultation on the impact of the G20 regulatory reforms on securitization. Here, John McGrath and Aaron Scott, partners at global law firm Dechert, summarize its findings.

Key Takeaways

• Funds have overtaken banks as the largest issuers of securitizations in the U.S. and Europe.
• The Financial Stability Board will concentrate on funds in its securitization regulatory review.
• CLO risk retention and leveraged loan criteria are identified as areas of risk.
• Specific areas for reform in EU securitization rules have been highlighted.

LONDON, Oct. 31, 2024 /PRNewswire/ — The Financial Stability Board (FSB) has published a consultation report on the impact of the G20 regulatory reforms on securitization. ¹ The report finds that these reforms have shifted securitization issuance from banks to non-bank financial intermediaries (NBFIs) in Australia, Europe, and the U.S. since 2011.

For the FSB, the growing role of NBFIs in securitization is a double-edged sword. Transferring risk outside the banking sector could diversify and strengthen the financing ecosystem if managed prudently. However, the FSB questions whether NBFIs can handle securitization risks given their funding structures and ability to withstand losses during stress events. It acknowledges that the diverse nature of these entities and their regulatory and funding frameworks suggests there is no one-size-fits-all answer. The FSB plans to continue its work on NBFI resilience and apply these principles to the securitization sector.²

Likely impact on CLO market of an increased focus on funds

The FSB’s analysis of the CLO market shows the likely impact of an increased focus on funds.

First, NBFIs are seen as responsible for increased complexity and opacity in both the leveraged loan and CLO markets. In particular, the FSB finds that weaker underwriting standards in the leveraged loan market may lead to higher defaults on loans held by CLOs, which will ultimately lead to lower CLO recovery rates. To address this, the FSB encourages the adoption of the recently published IOSCO good practices for leveraged loans and CLOs.³ 

Second, CLO managers’ preference for “light balance sheets” has led to the creation of risk retention vehicles to attract third-party investors. The FSB’s main concerns are that this practice may:

1. Not fully align with the goals of risk retention regulation, as the vehicle often isn’t part of the CLO manager’s corporate group, thereby shifting risk to parties not originally envisioned.
2. Complicate authorities’ efforts to determine who is exposed to risk retention-related losses.
3. Result in leveraged risk retention vehicles subject to high asset volatility, especially where the retained risk consists of first-loss tranches.
4. Lead to concentration risk given the niche nature of these vehicles.

The FSB does not propose any specific remedy for this issue. In this context, it is noteworthy that the FSB finds no material adverse effects from the lack of retention in U.S. open-market CLOs. It may be that the larger concerns are opacity and concentration risk.

Critique of regulatory regime for securitization in Europe

Another focus of the report is the regulatory regime for securitization in Europe. In Europe, some FSB stakeholders attribute a perceived decline in issuance to the implementation of the securitization regulatory regime, which has increased costs for issuers and investors. Although the FSB says there is no empirical evidence to support this claim, it highlights several issues with the European regulatory regime:

1. Burdensome due diligence and disclosure requirements.
2. Overly restrictive Simple, Transparent and Standardized (“STS”) securitization regime.
3. Adverse treatment of securitizations under the capital framework for insurers.
4. Bank capital calibration for securitization exposures, which is viewed as overly prudent and exhibiting too high a degree of non-neutrality.

Fund industry organizations such as AIMA have been vocal lobbyists for changes to the EU disclosure regime and for an expansion of the STS label to CLOs. It may be that with the increased focus on funds there is now an opportunity to reset these parts of the framework.

Next steps

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The FSB plans to publish its final report by the end of the year. Proposals adopted following the consultation will likely shape the next round of G20 securitization reform.

Dechert & Private Credit

Dechert has advised private credit clients for over 30 years, helping them to innovate and thrive as the industry has grown into a complex and diverse US$1.7 trillion market. We create value on the full spectrum of strategies and sub-strategies, including asset-based, distressed debt, permanent capital, direct lending, subordinated debt, specialty financing, special situations and venture debt. With more than 80% of Private Debt Investor’s top 100 private credit firms as clients, we offer market-leading fund formation, financing, regulatory, M&A and tax expertise across the U.S., Europe, the Middle East and Asia.

Footnotes

1. See “Evaluation of the Effects of the G20 Financial Regulatory Reforms on Securitisation: Consultation report“. The current regulatory approach to securitization is largely based on the G20 reform agenda set by, among others, the FSB, International Organization of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision (BCBS).
2. See “Enhancing the Resilience of Non-Bank Financial Intermediation: Progress report“. 
3. See “Leveraged Loans and CLOs Good Practices for Consideration“. 

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