News Briefing - Crowdfunding, SME And Alternative Finance

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1.UK – FinTech


Digital challenger Revolut has submitted a draft application for its US banking licence and launches business accounts in all 50 states, according to AltFi. 

“The fintech, which submitted its application exactly one year after it first opened its digital oors stateside, has taken its first steps towards obtaining a licence, working with the FDIC and the California Department of Financial Protection and Innovation to help secure it. 

Nik Storonsky, co-founder and CEO of Revolut, said: “A US banking license would ultimately enable us to provide US customers with all the essential financial products and services they can expect from their primary bank including loans and deposits.” 

“We’re on a mission to build the world’s first global financial super-app, and pursuing a US banking license is an integral part of the journey.”  

To date, Revolut has amassed over 15m customers across nearly 40 different countries and was granted a European banking licence from the Bank of Lithuania back in 2018 and launched its first bank accounts in the country in May of last year, launching them in ten more countries earlier this month.” 


2. UK – FinTech 


UK TechNews reports: 


“Experts are already warning that first time home buyers could risk paying a premium under the new 95pc mortgage scheme. More education is needed to help buyers make informed decisions on the biggest investment of their life.  At the same time, Fintech innovation can help solve this. 

We welcome the news about the government’s support for first-time buyers, as outlined by the recent UK budget. With house prices continuing to outpace people’s salaries, there’s so much help that’s needed to get many people – especially ‘generation rent’ onto the property ladder.  

In a bid to offer greater flexibility to aspiring home buyers and democratise access to the housing market, the government has rolled out a new 95pc mortgage scheme. Under the plans, home buyers will be able to secure properties worth up to £600,000 with just a 5pc deposit.” 



3. UK – FinTech 

Finextra reports: 

“Based on an independent survey of 100 fintechs across the Netherlands, Lithuania, Sweden, Switzerland, and the UK, a report by ClearBank reveals a multitude of challenges fintechs experience at the hands of their agency bank’s shortcomings. 

The UK clearing bank’s report, ‘How well are fintechs served by banks? The state of agency banking across the UK and Europe’ outlines the ways agency banks have inhibited the ability of fintech business to thrive. These include intervention from the regulator, delayed launch of a product, unforeseen increase in costs, caused a loss of revenue, caused a service to go down or be unavailable.

CEO Charles McManus explains in the report’s introduction, ‘agency banking’ is the process of a fintech offering its customers a service that is provided and managed by an authorised bank as the ‘agent’ of that service. The provision of customer accounts, access to payment rails (such as CHAPS) are the most common services agency banks tend to provide to fintechs.

While most fintechs access these agency banking services through traditional high street banks, McManus adds that “the outdated technology architecture of incumbents creates problems for tech savvy fintechs. Integrations are complicated due to a lack of APIs or payments are process in batches rather than real-time. This adds up to a poor user experience for the customers of fintechs who see fast, flexible and real time interaction as ‘table stakes.’” 



4. UK – FinTech 


Crowdfundinsider runs an opinion piece: 

“CryptoUK issued a clarion call to the Financial Conduct Authority (FCA), the UK financial and anti-money laundering (AML) regulator, demanding that FCA grant licenses as prescribed by AML rules.  Too many applications have gone unanswered since those rules came into effect over one year ago.  

Through this action, cryptoasset services companies are essentially begging to be regulated.  It flips the old Pink Floyd song on its head: instead of admonishing teachers to leave kids alone, it pleads with teachers to let kids into school.  

Hopefully, FCA will oblige so that UK cryptoasset activities can proceed apace.  Regulators in other jurisdictions should also take note and ensure the processing of applications in a predictable, timely fashion. 

The UK implemented new AML regulations with an effective date in January 2020.  Among the main requirements, the new rules mandated various participants in the blockchain and cryptoasset space to register with FCA (Financial Conduct Authority) to obtain a limited license related to AML.  This trend towards using AML regulation to capture certain cryptoasset activities follows from Financial Action Task Force guidance in June 2019. 

Participants in the blockchain and cryptoasset world may not love everything about these regulations but they are prepared to comply.  

As CryptoUK points out, over 200 applications have been filed with FCA.  That number certainly belies the idea that cryptoasset companies are non-compliant and that all blockchain assets are used for unlawful activities.  With only four applications granted, according to CryptoUK, there is much work to be done. 

This lack of predictable, timely regulation was recently emphasized on the other side of the Atlantic by US SEC Commissioner Hester Peirce in an eloquent speech 

“While regulators need to understand and scrutinize new asset classes and technologies, excessive conservatism can impede competition, distort the market, and harm investors,”  stated Commissioner Peirce. 

The whole speech is in this vein and rings true for those who have toiled in the space for many years.  Hopefully, Commissioner Peirce’s proposed safe harbor will take center stage once a new SEC Chair is confirmed, and her fellow Commissioners will push the agency to tackle the myriad other regulatory questions that remain unanswered, as her speech suggests. 

Blockchain is not about evading regulations or failing to comply.  Cryptoassets are not just for criminals 

As both CryptoUK and Commissioner Peirce recognize, good actors need encouragement and nurturing not just from high cryptoasset prices but also from policymakers and regulators.  

Shackling good actors by slow-walking applications serves the interests of bad actors, not investors.  Bad actors distort the market and hinder competition.  Coinbase recently emphasized this point in its registration statement 

Let us join Commissioner Peirce, Coinbase, and CryptoUK in urging regulators: Don’t leave those kids alone!” 


5. UK - FinTech 


AltFi reports: 


Zopa has closed a new £20m fundraise from existing investors including Augmentum, Alternative Credit Investments, managed by Waterfall Asset Management, Venture Founders and IAG Silverstripe who led the round. 

The new fundraise comes just nine months after the launch of Zopa’s digital bank as well as the launch of savings products and its credit card. Zopa scored its full banking license, after lengthy delays, in June 2020 but says it is now on a clear path to profitability helped along by growth in its new savings and lending products.   

Jaidev Janardana (pictured), Zopa’s CEO said: “Less than a year since launching our bank, we have exceeded our plan for growth, both in terms of customers and balance sheet. This capital injection will enable us to continue on this accelerated path.”  

“Our strong entry to the UK savings and credit card markets shows the organic appeal of our products and we are happy to have investors who share our excitement at the opportunity to serve more customers across more product categories.”  

Since launching the bank, annualised revenue per customer is now almost doubling and it says it has now attracted c.£250m in deposits for its fixed-term savings accounts as well as become a top 10 credit card issuer.”