Fintech TempCheck #2: Cryptocurrency

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Want to stay ahead of the game in fintech? Then kick-start your week with Foco’s ‘Fintech TempCheck’ – your insight into what’s on the minds of the sector’s top thinkers.

The format is simple: every fortnight we’ll pick one theme and ask one question. That’s it. This week’s theme is Cryptocurrency.

Our question is: 

"Lloyds Bank recently announced that they’re dumping bitcoin yet some airlines have decided to use it? Is this the end of cryptocurrency?"

Victor Cruz, MD of FinTech Talents

One of the key issues around cryptocurrency is the lack of certainty when it comes to the regulatory frameworks. Banks (and other financial institutions) operate in a highly regulated space and have been caught out and hit with increasingly large fines in recent years. It is no wonder that they are a bit risk averse when it comes to cryptocurrency and, in particular, the association between bitcoin and some unsavoury transactions. I think that regulation in this space will evolve over time and deal with some of the key issues in relation to KYC (Know Your Customer) and AML (Anti-Money Laundering) concerns.

I think the case with Lloyds is actually a bit more straight forward as the ICO (Initial Coin Offering) craze has really driven up the value of cryptocurrencies and they are clearly concerned about consumers running up huge credit card debts in an attempt to get in on the rush. If the value drops significantly and suddenly they could be faced with a large number of consumers who are unable to service that debt; not an ideal outcome. This again points to the lack of clarity around regulatory frameworks and the treatment of ICOs as assets. There is a tricky balance to be struck between allowing consumers to do what they want with their money and protecting them from poor financial decision making and investing in the absence of advice or potential fraud.

Accepting bitcoin (or another cryptocurrency) as a payment mechanism (as many retailers do) is a very different issue than the difficult question of how best to protect consumers without stifling innovation and remaining compliant. That conversation will continue to evolve but I certainly don’t think this is the end of cryptocurrency. This is an immature market and, particularly in the case of ICOs where regulation and consumer protection frameworks are still very much a work in progress.

(Connect with Victor on Twitter @CruzFintech‏)

Jamie McNaught, CEO of Solidi

What I read from Lloyds (and others) banning the use of their credit cards for purchasing cryptocurrency along with central banks and large investment banks sounding off in various guises is the incumbents beginning to get very concerned about cryptocurrencies.

This treatment by the large banks is neither new or unusual. You only need to look at the bank's resilience and attempts to derail Open Banking in the UK along with the difficulties UK fintechs have with establishing and maintaining a decent banking relationship to understand just how self serving and anti competitive the UK banking industry really is.

The genius of cryptocurrencies is that at their core they don't need the banks. The banks know this and they are terrified. Companies, such as airlines, are looking for viable alternatives to the existing uncompetitive global banking system and crypto is there to take the business.

Cryptocurrencies are not dead - far from it - they are in their infancy and the next decade they will grow far beyond what the existing banking system provides.

(Connect with Jamie on Twitter @solidifx)

 

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Fintech TempCheck #1: Open Banking

jonas-leupe-425132.jpg

Want to stay ahead of the game in fintech? Then kick-start your week with Foco’s ‘Fintech TempCheck’ – your weekly insight into what’s on the minds of the sector’s top thinkers.

The format is simple: every week we’ll pick one theme and ask one question. That’s it. This week’s theme is Open Banking.

Our question is:

"Two weeks into Open Banking, what are the lessons?"

Louise Beaumont, co-chair of the Open Banking Working Group at TechUK

That six of the nine banks weren’t fully ready for the initial Open Banking compliance deadline is disappointing but not entirely surprising as the 13 January date was always viewed as a ‘rolling start’ to Open Banking.  
For consumers, Open Banking appears to be nothing more than a change of Ts and Cs and a lot of scary legalese around the dangers of sharing data with third parties. The communication from the banks to consumers and SMEs has been poor and must improve to help people understand the opportunities, as well as how to stay safe.

(Connect with Louise @louisehbeaumont, @sr_  and @techUK)

Benedetta Arese Lucini, CEO and co-founder of Oval Money

Open Banking is the beginning of a new era in which banks will increasingly leverage their strength in their distribution network and their existing infrastructure for transactions, partnering with consumer-friendly and data driven start-ups that can revolutionise the last mile delivery of financial services. Today, the consumer experience is cumbersome, but Open Banking APIs will mean a faster, easier and more seamless service across all providers.
For Oval Money, with due care for privacy laws and anonymisation of data, Open Banking will mean an enhanced experience for our users and account connectivity with the full range of banks. This will make the benefits of regular saving available to even more people with the opportunity to deliver customised solutions for groups that are often left out.

(Connect with Benedetta @OvalMoney)

Steve Tigar, CEO of MoneyDashboard

With five of the UK’s large banks being granted extensions by the Competition & Markets Authority, the introduction of the standards set out by Open Banking has, of course, been slower than consumers have hoped. This delay presents a challenge for fintechs that want to use Open Banking to provide a comprehensive service that all consumers, regardless of their bank, are able to enjoy.
While this is the case, our users have taken comfort in the increased protections now firmly established around credential-sharing with Account Information Service Providers and will continue to enjoy services like ours without fear of contention with the guidelines previously set out by some banks' T&Cs.

(Connect with Steve @SteveTigar)

Peter Myatt, co-founder of Bean

While there have been some predictable issues, for example some banks missing the implementation deadline, it is undoubtedly good to see the industry taking a crucial step towards a standardised and regulated environment in which consumers can access their account data.
It seems a number of key players, like Bean, are holding off on launching their Open Banking solutions in the early months, instead waiting to see how the standards work now they have been launched. One thing is for sure, it is going to be an exciting year.

(Connect with Peter @usebean)

Devie Mohan, CEO of Burnmark Research

I think there are two different trends emerging in Open Banking.
This is perhaps one of the best things to happen in the fintech world – several fintech firms and startups have announced new features, new capabilities and new data points in the past two weeks.
However, the customers have said that they do not care, or see a difference around Open Banking. They say they are satisfied with their current switching capabilities (fewer than 20% of banking customers in the UK switch accounts) and 10% of people in a recent survey said they would never go for a product using Open Banking (most likely due to safety and security concerns).

(Connect with Devie @Devie_Mohan)

Catherine McGuinness, chair of policy and resources at City of London

Opening up competition in the banking sector is a welcome measure and something that promises to offer consumers more choice.
We have seen through the growth of fintech, which is burgeoning in the UK, that regulatory change really can shake up a sector for the benefit of all.

(Connect with Catherine @City_McGuinness)

Get the weekly Fintech TempCheck sent to your inbox by subscribing below.

Are you a fintech thought leader? Then email us at enquiries@foco-global.com  so we can add you to our list of sector voices – and we’ll be in touch soon.