Fintech Digest

FCA Finally Said «Yes» to Revolut

Here's what you might’ve missed last week: FCA finally said «YES» to Revolut, Apple did it again, Klarna goes for round two with layoffs, and much more in our weekly digest.

Join us to go over the most important things from the fintech world.

Top News | 19.09-25.09
  • FCA Finally Said «Yes» to Revolut
  • Klarna Goes for Round Two
  • Microsoft CTO Issued a Warning. Beware the Deepfake
  • Apple Did It Again
  • Cryptocurrency Regulation Is Tightening in the US
  • Porsche Entered a New Era
  • Israel, Norway, and Sweden Pooled Efforts
  • Dubai Seeks Leadership in the Metaverse
  • Digital Euro Access Will Be Limited
  • Your Account Is a Target for an Attack

FCA Finally Said «Yes» to Revolut

Revolut has been greenlighted by FCA to provide crypto services in the UK. Prior to that, the neobank operated under the FCA's temporary registration regime (TRR).

The British fintech unicorn has been added to the FCA's cryptocurrency register as a crypto-asset firm on Monday, September 26, CoinDesk reports citing Relolut's spokesperson. Revolut has been deleted from the temporary registry as well.

The FCA's approval is a sign of hope for Revolut, which is still awaiting the supervisory authority's approval to obtain a banking license in the UK. The neobank applied for a license back in January 2021.

How exactly Revolut will dispose of the license is unknown. However, earlier Revolut head Nikolay Storonsky announced that the company is considering options for introducing new services such as decentralized cryptocurrency wallets.

Klarna Goes for Round Two

Klarna announces a new round of layoffs, less than a month after the previous ones were completed.

Camilla Gieseke, the company's COO, told employees on Monday that the company needs to layoff more employees in several departments. According to the Swedish news site SvD, roughly 500 Klarna employees in three departments would be affected; this is the number of persons featured in the newsletter.

However, the startup's official response to Sifted's request states that less than 100 workers are anticipated to be laid off.

In addition, the publication's sources also revealed that Klarna's revised budget is now for 6,000 employees.

Background info: The Swedish fintech startup Klarna was the most expensive startup in Europe. However, in the summer, the company's valuation fell to $6.7 billion, which is 85% less than last year's figure of $45.6 billion. Furthermore, in the first half of 2022, the net losses of BNPL services provider Klarna quadrupled due to increased credit defaults, increased staff costs, and investments in market expansion.

Three weeks ago, Klarna's CEO told Bloomberg that all layoffs are completed and the company is moving on. As a result, the company's staff was reduced by 10%.

Microsoft CTO Issued a Warning

Beware the Deepfake

Last week, Microsoft employee Eric Horwitz expressed that interactive and composite diplomats are two growing fields in information security. In addition, he argues that the increasing functionalities of discriminative and generative AI systems are approaching a milestone.

According to Horwitz, the level of development already allows the authorities and individuals to create highly realistic disinformation. After a while, a scientist predicts the generator that creates content will be able to "deceive" the discriminator, a technology that evaluates its quality. As a result, neither image recognition methods nor people can reliably recognize fakes.
Horwitz also outlined several ways to deal with this kind of disinformation. Among them are: 

  • increasing the requirements for journalism, monitoring, and reporting; 
  • increasing media literacy of people;
  • introducing new authentication protocols for identity verification; 
  • constant monitoring of the content;
  • development of standards to confirm the origin of content.

Apple Did It Again

App Store, Apple’s online store has received the long-awaited update; Apple has granted developers permission to sell NFTs via the in-app purchase option. However, the company rolled out the opportunity in its own manner, committing to take a 30% fee on all transactions that occur when a token is purchased. In some regions, the fee may exceed 35%.

The community has already expressed its position, calling this decision of the company "absurd" because Apple isn't involved in these deals except the company's smartphones are used to make them. 

There is a realistic assumption that Apple may cease to attract crypto-app developers, as creating a crypto-app for Android will become more profitable than developing for iOS.

Apple has ignored the existence of NFT for a while. Although the App Store includes such apps as OpenSea and Rarible, their functionality is severely limited. It is not yet clear what exactly caused the company's change of heart.

Cryptocurrency Regulation Is Tightening in the US

US legislators are proposing an amendment to cybersecurity legislation that would require crypto-asset businesses to disclose possible risks. The Cryptocurrency Cybersecurity Information Sharing Act would allow these companies to share cyber-threat data with government authorities.

If passed, the bill will be re-named for the Cryptocurrency Cybersecurity Information Sharing Act. It will allow cryptocurrency companies to disclose data breaches and network damage to government authorities for assistance.

The information exchange will be voluntary. The bill is expected to help reduce the losses that crypto companies incur after data breaches, ransomware attacks, business interruption and network damage.  

Porsche Entered a New Era

Porsche IPO has become one of the largest in the history of Europe.

German automaker Porsche has conducted an initial public offering (IPO) on the Frankfurt Stock Exchange.

Volkswagen, the majority owner of Porsche, put 12.5% of the company's shares on the IPO, receiving 9.4 billion euros for them. Thus, the IPO has become the largest in Europe after the placement of Glencore Plc shares in 2011 in the amount of about $ 10 billion. The total capitalization of Porsche is 75.2 billion euros.

Israel, Norway, and Sweden Pooled Efforts

The Bank for International Settlements (BIS) has joined forces with the central banks of Israel, Norway, and Sweden to undertake a collaborative research, Icebreaker. Its goal is to discover how digital currencies issued by central banks (CBDC) can be utilized for international retail payments and money transfers.

Background info: Cross-border payments are time-consuming, costly, and inaccessible to many people. The G20's ambitious effort to improve cross-border payment efficiency intends to solve these issues by making them quicker, cheaper, more transparent, and inclusive. Central bank digital currencies (CBDCs) could contribute to these goals by bringing greater efficiency and accessibility to cross-border payments.

The Icebreaker project's purpose is to evaluate several key elements as well as the technological feasibility of merging CBDC's multiple internal systems.

The project is expected to be finished by the end of this year, with a final report coming in Q1 2023.

Dubai Seeks Leadership in the Metaverse

UAE Minister of Economy Abdullah Bin Touk Al Marri announced the opening of a new office in the metaverse. Notably, it will offer a comprehensive variety of services, including bilateral agreements with governments and enterprises.

The agency already has two offices: one in Dubai and one in Abu Dhabi. The new office is going to be functionally identical to them. There, visitors will be able to get advice, sign legally binding papers and conduct negotiations. 

According to Al Marri, this isn’t only a new technology, but also a real step towards easing diplomatic relations between the two countries. Thanks to this, officials don't have to travel to the UAE for minor agreements.

Digital Euro Access Will Be Limited

The European Central Bank (ECB) will most likely not release the digital euro until 2026. However, when that happens, financial service companies will not be invited to the party, said the ECB president during a conference in Frankfurt.

Work on the initiative is continuing, according to regulator Christine Lagarde, although it is clearly evident that not everyone will have access to the digital euro.

Christine said that the EU CBDC is the same as banknotes, but in a virtual format and with "slightly less" anonymity. Nevertheless, she said, the digital euro should not be compared to cryptocurrency.

At the same time, the ECB will not use the data obtained from CBDC owners for commercial purposes. Fintech organizations will not have access to it either.

As for the release date, EU Commissioner Mairead McGuinness has said that the launch of the digital euro could take place in 2026-2027.

CBDC is expected to be used for transactions between the state and counterparties at first. But citizens may eventually have access to the digital euro.

Your Account Is a Target for an Attack

According to the US fraud prevention company Sift, account takeover assaults surged 131% this year.

According to the report, titled the Digital Trust and Security Index for Q3 2022, no industry was spared from account takeover assaults (ATOs): in the first half of 2022, Sift's worldwide network experienced a 131% increase compared to the same period in 2021.

Fraudsters attempt to take advantage of inactive accounts and preserve payment details. The industries with the greatest increases in ATO attacks are fintech (up 71%), marketplaces (up 39%), digital goods and services (up 37%), and cryptocurrency exchanges (up 79%). 

Consumers have reported financial loss as a result of the ongoing, ATO assaults. 42% of ATO victims claimed unauthorized purchases made on their hacked account using credit card, or any other payment information kept on the website. Similarly, 30% of victims claimed to have lost reward points or credits.

51% of those affected didn’t know hackers had taken over their accounts until they logged in and noticed the unusual activity. This suggests that firms failed to warn their clients, most likely because they were ignorant of the security problems.

These results are based on data from Sift's global network of over 34,000 sites and applications and a survey of more than 1,000 users.