What The FinTech #126 - 30 Jan 2023
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What The FinTech Episode 49
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Hong Kong braces for start-up influx as open border, SFC’s new virtual asset rules aim to turn city into a hub
More start-ups from mainland China and other parts of Asia will come to Hong Kong in the Year of the Rabbit to raise funds and develop their businesses, thanks to the reopened border and regulatory reforms involving virtual assets and new listings, according to industry watchers. The city has a unique position that other markets, such as Singapore, cannot compete with. immigration Department figures showed that Hong Kong had a total of 46,343 mainland visitors across the land border in the first seven days after the border reopened on January 8, a 125 percent increase over the previous week. Hong Kong was home to 3,985 start-ups in 2022, a 25 percent increase over 3,184 in 2019.
Chinese scientists design wearable sensors capable of monitoring facial expressions
Chinese scientists have developed an ultra-thin, anti-microbial, and breathing-friendly wearable sensor that can monitor human body movements and even subtle facial expressions. The sensor is a three-layered nanogenerator with a sandwich structure, which can harvest renewable and abundant mechanical energy with high efficiency. The nanofiber in the middle serves to convert the mechanical energy into electricity, and it is plated by two nanofiber membranes on both sides, with a 110-nanometer silver layer on one side that serves as the electrode layer. The sandwiched structure is only 91 micrometers thick and has a high air permeability and significant antibacterial effects. The design demonstrates good sensitivity to human motion, indicating great potential for application in flexible self-powered electronic wearables and body health monitoring.
China unveils Ripple’s competitor for Stablecoins and CBDC payments
A Chinese firm is developing a new payment system interoperable with stablecoins and CBDCs –that acts as a link for central banks to transfer and swap regulated digital currencies –recently unveiled at the WorldEconomic Forum in Davos, Switzerland. Dubbed the Universal Digital Payments Network (UDPN) and developed by Red Date Technology, the new system would reportedly work with the private sector, unlike the rival Ripple network, which mainly serves central banks. Several major banks, including HSBC, Deutsche Bank, and Standard Chartered, have been selected to participate in the pilot phase. UDPN, in particular, noted that it would not work with decentralized public cryptocurrencies like Bitcoin, perhaps underscoring its efforts to comply with the ongoing Chinese ban on cryptocurrencies. Beijing is keen to prevent any form of capital outflow in the form of stablecoins or digital assets. UDPN has a common messaging standard in multiple digital currency systems, which is essential in enhancing interoperability in CBDC and stablecoins. The system will also accelerate access to a fully decentralized economy by commercial banks with a system managed by an alliance of financial institutions and fintech firms.
Upgraded digital yuan now with smart contract function
China’s digital yuan has seen an increase in use cases over the last few weeks as the central bank races for a full-scale launch. The latest development is the deployment of smart contract functionality to the central bank digital currency (CBDC). The smart contract functionality was integrated into the food delivery app Meituan, allowing users of the digital yuan to automatically compete in a raffle draw, 8BTC reported. The smart contract searches users’ keywords and if a user’s purchase is part of the keyword for the day, they are eligible to take part in the prize. Selected users are allowed to jostle for a “red envelope” worth around $1,300 or 8888 yuan as part of celebrations leading up to the Chinese New Year. The red envelopes, known traditionally as ‘hongbao,’ are used to send money to friends and family during the New Year celebrations. Payment companies like Alipay and WeChat have leveraged the tradition to offer customers the option of sending digital red envelopes to their loved ones.
Bangladesh central bank pilots interoperable national QR code payments system
The Central Bank of Bangladesh is trialing an interoperable payments system that will enable customers of more than 15 major banks and payment service providers to pay for their purchases by scanning a standardized QR code at a participating merchant’s point of sale with their smartphone. The system forms part of Bangladesh Bank’s Cashless Bangladesh initiative and is built on the country’s existing Bangla QR mobile payments service that to date has only enabled customers of specific banks to make QR code payments at merchants that have an account with the same financial institution. Bangladesh Bank’s pilot upgrade has now extended the interoperability of that service so merchants can accept payments from customers with accounts at any of the participating banks and payment service providers.
Innovative start-ups in the e-commerce sector
E-commerce start-ups are becoming more and more popular and are considered relatively safe in the fields of innovative start-ups in Việt Nam today. Việt Nam is considered to have a lot of potential for start-ups in the e-commerce sector, with 72.1 million internet users, accounting for 73.2 percent of the population, ranking 12th in terms of internet users globally by September last year. The size of the Vietnamese retail e-commerce market is estimated at US$16.4 billion, accounting for 7.5 percent of the country's revenue from consumer goods and services. The number of online shopping users reached 57-60 million people, accounting for 74.8 percent of internet users, last year, of which the online shopping value of a Vietnamese person is about $260-285. In addition, with a growth rate of 20 percent per year, Việt Nam is also ranked by eMarketer, an American market research company, in the group of five countries with the world's leading e-commerce growth rate. The booming e-commerce market has great potential, creating many opportunities for Vietnamese start-ups. start-ups are encouraged, and favorable conditions and open mechanisms are created for development.
Big Tech to encourage growth in Southeast Asia’s digital banking industry
Despite this turmoil, digital banking across Southeast Asia continued to grow, and 2022 saw the launch of a wide range of innovative new brands, products, and services developed by a growing number of fintech and financial service providers that are now operating across the region. In 2023, we expect this growth in digital banking to continue, with greater competition across the industry as new digital banking licenses come into play in some countries, and mainstream banks continue their own push toward digital transformation. While globally the digital banking scene is dominated by fintech startups, digital banks in Southeast Asia have, to date, been predominantly launched by conglomerates made up of existing successful businesses, most notably Big Tech organizations and existing banks. While this approach may have stifled startup innovation somewhat, it has meant that the emerging digital banking industries across Southeast Asian countries are being built on a solid financial foundation. Apart from having money in the bank, the intrinsic tech focus of the Big Tech organizations, coupled with their existing customer databases, gives them a significant advantage when it comes to launching customer-centric digital banking products and services. Evolving customer expectations and the influence of Big Tech are predicted to make a significant impact on digital banking this year, and, combined, will force incumbent banks to put more resources behind their own digital banking transformations.
Asialink teams up with Lazada, Shopee to broaden payments network
Asialink Finance Corp., one of the Philippines’ fastest-growing finance companies, has partnered with e-commerce giants Lazada and Shopee to give its clients an easier way to make loan payments. Asialink’s partnership with Shopee is powered by ECPay, a leading electronic customer purchase and payment system provider in the country, enabling both offline and online channels with the One-Stop-Shop proposition. On the other hand, Lazada partnership is powered by Bayad (formerly called Bayad Center), the pioneer outsourced payment collection service in the Philippines, and now a full-service fintech company, offering a whole suite of financial products and services, available in its physical and digital touchpoints. Asialink has tapped into these all-in-one payment platforms to make it easier for its clients to pay their loans and insurance premiums. Through ECPay, Asialink’s clients can also pay via Gcash, 7-Eleven CLIQQ, TrueMoney, ExpressPay, Gaisano Grand, Cebuana, Tambunting, and ECPay-accredited sari-sari stores. Loan payments are also made available thru Bayad’s all-in-one Pera transaction applications, the Bayad Online, a web-based facility accessible thru www.online.bayad.com; and the Bayad App, a mobile-based solution downloadable via Google Play, App Store, and Huawei App Gallery.
Seven countries to sign up to use India’s digital products
India’s digital infrastructure hasn’t only changed how Indians live and operate —UPI has made payments seamless, and Cowin helped more than a billion people book vaccine shots —but it’s also caught the fancy of other countries around the world. As many as seven countries will sign agreements to use India Stack’s digital public goods, Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar has said. The contracts will be signed at World Government Summit, scheduled to be held from February 13 to 15 in Dubai, where more than 140 countries are expected to participate. Among the products that are most in demand is Digilocker, which allows people to digitally store licenses, mark sheets, and other documents. Other platforms on offer are foundational identity programs like the Modular Open Source Identity Platform (MOSIP), instant real-time payments system Unified Payments Interface (UPI), Covid vaccination platform CoWin and Health Stack. Some countries have also expressed interest in the Digital Infrastructure for Knowledge Sharing (DIKSHA) and National Digital Education Architecture (NDEAR) on the education front. Several countries have already begun adopting Indian tech products. Countries including France, UAE, Nepal, Singapore, Oman, and Bhutan have already signed up to adopt the UPI framework.
India enters green bond market with US$1b debut auction
India’s first sovereign green bond will go to auction and policymakers have laid the groundwork to ensure a successful debut. Authorities have promoted the 80 billion rupees (S$1.3 billion) issue to the country’s biggest domestic asset managers, including state-run insurers and pension funds as well as foreign investors. The insurance industry regulator will allow the bonds to count toward insurers’ required infrastructure investments. Banks can use it towards mandatory government holdings, and there is no limit for foreign buyers. This offering will be sold in 5-year and 10-year tenors via a uniform price auction; a second, similar offering is set for Feb 9. Its proceeds will be used for unspecified projects that align with India’s green bond framework. Together, they make a modest trial balloon for the country’s broader goals for green finance. Prime Minister Narendra Modi has ambitious plans for renewable energy and projects that bolster the country’s resilience to extreme weather and higher temperatures, and India has said it hopes issuing green bonds will enable it to raise money at relatively lower costs.
APAC will step up digital identity management for stronger security in 2023
Though the companies are digital natives and IT savvy, they still fell prey to cyberattacks that targeted vulnerable users within the organizations, for example, by tricking them into giving access through phishing and deception. With credential theft now the primary means of attack, APAC organizations are expected to fight back by pivoting to online authentication mechanisms that offer greater resilience to such threats. Specifically, here are five actions we predict they will take to shore up their defenses in 2023 In the new year, more APAC organizations will pivot to online authentication mechanisms that offer greater resistance to phishing attacks. In simpler terms, this means that the domain address of the website you are signing in to is tied to your authenticator, to ensure it won’t issue your credentials to a fake phishing web page. These can be combined with systems that check passive signals such as user behavior, atypical Web traffic, and physical location to bolster defenses against access via stolen credentials. Integrating identity governance and administration (IGA) and privileged access manager (PAM) capabilities with identity and access management (IAM) ensures that IT has more power and control over access management without compromising on security or user experience. In the coming year, more APAC organizations will invest in these areas to close a potential loophole. Instead of relying on centralized databases, organizations in the region will look to more decentralized forms of identity to bolster their defenses against credential theft.
BLOCKCHAIN - CRYPTO - DIGITAL ASSETS - DE FI
National Australia Bank mints stablecoin in blockchain push
National Australia Bank has created its own stablecoin pegged to the Australian dollar, a move that it says will help large institutional customers with transactions that use blockchain technology. The Melbourne-based lender will start testing the token –named AUDN –before expanding its use cases and getting feedback on the needs of corporate clients. It follows the unveiling of a stablecoin last year by the Australia & New Zealand Banking Group. Stablecoins are intended to hold a set value, for example, $1, and come in a variety of forms. Some are underpinned by a matching reserve of assets like cash and bonds. The TerraUSD ecosystem, a stablecoin that relied on complex algorithms and trader incentives, suffered a US$60 billion wipeout last year, roiling the digital-asset sector.
Injective launches $150M ecosystem fund to accelerate interoperable infra and DeFi adoption
Injective, a layer-1 blockchain focused on building financial applications, has launched a $150 million fund ecosystem initiative. The group aims to support projects building on Injective or Cosmos blockchains in the interoperability, DeFi, trading, proof-of-stake infrastructure, and scalability solutions sectors. In the current market, there are a lot of quality projects looking for backing but having more difficulty reaching investors. They’re still deploying and this consortium is a strong signal that they’ll be backing new projects and their funds are actively participating in the ecosystem.
Digital assets move one step closer to standardized processing in multibank partnership
SC Ventures, Landesbank Baden-Württemberg (LBBW) one of the largest banks in Germany, DekaBank and financial software specialist Comyno have entered into a joint venture to create SWIAT, a blockchain platform that enables real-time settlement and trading of traditional and digital data, assets and transactions. The newly created joint venture will create a uniform standard for processing blockchain-based securities. It will provide software to create a decentralized financial infrastructure and frictionless, real-time settlement in multiple use cases including securities lending, repurchase agreements, derivatives, and bond issuance. The move will allow banks to conduct business more efficiently in these areas at a lower cost with better risk management, higher speed, and greater flexibility. It will also enable economies of scale and create new business opportunities like providing custody services. The platform will be open to partners with the aim to be built as a market consortium and eventually expanded into an international network.
Oreo enters the metaverse partnering with Meta
Popular cookie brand, Oreo, launched its metaverse experience “OREOverse“ this week. Built on Meta’s Horizon Worlds, the metaverse allows fans to play cookie-themed games. The games involve several levels with exploration, twisting, and dunking the cookies, and are intended to promote the latest edition of the cookie – “The Most Oreo Oreo”. With Meta’s association with the Oculus virtual reality headsets, Oreo was keen to emphasize that its experience can also be accessed via mobile and computers. While the OREOverse games are built on Meta’s platform, several other consumer goods companies are marketing their new products in other existing gaming worlds. In October 2022, McCain Foods, the company behind the famous McCain fries, collaborated with metaverse platform Roblox and NFT-themed restaurant, Bored & Hungry to educate audiences on regenerative agriculture. Similarly, Unilever’s popular Magnum ice cream launched a virtual museum in Decentraland, another virtual destination for digital assets.
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