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THE RISE OF BANKING-AS-A-SERVICE: The most innovative banks are taking advantage of disruption by inventing a new revenue stream — here’s how incumbents can follow suit

“BaaS platforms enable fintechs and other third parties to connect with banks’ systems via APIs to build banking offerings on top of the providers’ regulated infrastructure” writes Lea Nonninger for businessinsider.com. This means banks that launch BaaS platforms can actually benefit from fintechs entering the finance space, as it turns fintechs into customers rather than just competitors.Fintechs are encroaching on incumbents’ share in the banking game, forcing them to explore new business models — but tech-savvy legacy banks can treat this as an opportunity rather than a threat by moving…

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Morning Brief 9.13.19: Australian legislators push faster payments for fintechs

“As fintechs and blockchain companies cut into traditional cross-border payments, Western Union and MoneyGram have both invested in more digital options” writes John Adams Is for paymentssource.com. Western Union has allied with Canadian payment technology firm Paramount Commerce to support online or mobile bank-to-bank transfers from Canadian consumers to recipients in more than 100 countries. The prevalence of payment cards, against the growing awareness of climate change, is driving some card issuers and manufacturers to revisit the way they use plastic. Source: paymentssource.com

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Revolut’s compliance predicament is a speeding warning to other fintechs

“Revolut has caught the attention of U.K. regulators over money laundering compliance, a predicament that sheds light on issues faced by the entire digital financial services industry” writes John Adams for paymentssource.com. The U.K.’s Financial Conduct Authority is looking into Revolut’s compliance controls, following a story in the U.K.’s Telegraph that reported Revolut turned off its AML monitoring system because it generated false positives.At issue is whether the speed and invisibility of a digital payment creates too much opportunity for risk in consumer and corporate transactions. Source: paymentssource.com

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Markets News 

Personal loans surge to a record $138 billion in US as fintechs lead new lending charge

“Last year, fintech companies issued 38 percent of all U.S. personal loans, according to TransUnion” writes Kate Rooney for cnbc.com. The unsecured personal loan market hit an all-time high last year, surging 17 percent year over year to a total $138 billion, according to data from TransUnion released Thursday. While their market share shrank, they still saw overall growth in total loan balances, according to Laky.Banks’ market share however, is heading in the other direction.Traditional banks’ share of those loans is down to 28 percent from 40 percent five years…

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Iranian fintechs reforming financial system: official

“Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century” reports tehrantimes.com. TEHRAN – The financial technology (fintech) startups launched during the past two years have paved the way for reforming the country’s financial system, the head of management development department of the vice presidency for science and technology, said on Saturday.He expressed his hope that startups transform the traditional banking system in Iran in near future.Financial startups grow more than two times during previous year in Iran, which is multiplied in…

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FinTechs Raised A Record $39.57B In VC Funding Last Year

“Asian FinTech startups raised a record $22.65 billion, while Europe saw a decline in deals but an increase of funding to $3.53 billion, also a record” reports pymnts.com. Reuters, citing data from CB Insights, reported the funding was on a global basis and was raised via 1,707 deals.What’s more, a $14 billion investment in Ant Financial represented 35 percent of the total funding in 2018.In the U.S. FinTechs brought in $11.89 billion in funding in 2018, setting a new record.Financial technology startups were able to raise $39.57 billion in venture funding last…

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Top venture investors tell us the 4 biggest fintech themes they’re watching in 2019

“Sugden of Edison Partners expects financial inclusion, or the ability to make mainstream financial services accessible at affordable costs, to be the next major theme for fintech startups” writes Madeline Shi for businessinsider.com. Disruption in financial services has been largely focused on the concept of unbundling banking products.Consumers are “looking now for how can I get all the things I need for my banking or financial services in one place?” he said.One example is N26, the German digital bank that has recently raised $300 million to launch its mobile banking…

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Israeli fintechs had a record breaking 2018

“This marks a record year for Israeli fintechs, topping the previous record funding year in 2016 when $639 million was raised” writes Lea Nonninger for businessinsider.com. Throughout 2018, fintechs in Israel secured $989 million, up 118% from $452 million in 2017, according to a report from Viola Group shared with Business Insider Intelligence.Additionally, by expanding outside of their home market, Israeli fintechs manage to serve global clients, scale more effectively, and attract interest from international co-investors, according to Ben David. Therefore, we expect that as more Israeli fintechs move from…

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Fiserv’s $22B purchase of First Data marks one of the largest acquisitions in the fintech industry

“US fintech solutions provider Fiserv has announced it will purchase payment processor First Data in an all-stock deal for $22 billion, marking one of the largest acquisitions within the fast-growing fintech industry, per The Wall Street Journal” writes Mekebeb Tesfaye for businessinsider.com. We expect to see this trend of consolidation within the financial services industry intensify further in the year ahead.First Data also offers a range of fintech solutions, including Clover, its point-of-sale (POS) product for middle-sized merchants that competes with Square.The deal highlights a growing trend of consolidation we’re…

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