Fintech Digest

Mastercard Contributed to Banks Taking a Step Toward Web 3.0

Fintech Weekly | 17.10-23.10

Here’s what happened in the fintech world the previous week: Mastercard contributed to banks taking a step toward Web 3.0, Blockchain-based digital passports became a reality, Twitter may possibly face layoffs, and the metaverse is becoming a safer place.

Wanna find out more? Keep reading

TOP NEWS | 17.10-23.10

  • Mastercard contributed to banks taking a step toward Web 3.0
  • Blockchain-based digital passports became a reality
  • Scientists has turned your phone into a payment acceptance device
  • A new crypto-trading service is rolling out
  • New fintech sandbox has been launched
  • There are no good news for Twitter 
  • Founders and investors will get closer
  • Stablecoins bankruptcies won't affect CBDC
  • AI usage should be more ethical — CFA
  • Metaverse is becoming a more safe place 

Mastercard Contributed to Banks Taking a Step Toward Web 3.0

With the help of Mastercard, banks will now be able to trade cryptocurrency. The financial corporation introduced the Crypto Source service; it allows financial institutions to provide clients with access to cryptocurrency transactions.

The Crypto Source program will serve as a connector between Mastercard's partner banks and cryptocurrency trading platform Paxos Trust Co. It will be Paxos Trust that will provide virtual currency trading and storage services on behalf of the banks. This means that credit institutions will not hold the crypto-assets.

The development follows a recent Mastercard New Payments Index survey, which found that 65 percent of respondents would like cryptocurrency-related services to be provided by a financial institution where they are served and trusted.

The service will be launched early next year. As part of the pilot program, it will first appear in the U.S., Israel, and Brazil. It is unknown which banks will participate in the project.

Blockchain-Based Digital Passports Became A Reality

South Korea is introducing blockchain-based digital passports. From 2024, South Korean residents who use smartphones will be able to replace physical passports with their digital versions based on the blockchain. 

According to the Korean government, 45 million citizens will receive blockchain-based ID passports within two years.

Digital passports embedded in smartphones are one of the latest technologies underpinning the digital economy. As more and more people work remotely, make cashless payments and explore the meta-universe, they can no longer use the outdated document format. Currently, Koreans use resident registration cards for identification.

Scientists Has Turned Your Phone Into a Payment Acceptance Device

National Australia Bank has entered the mPOS market with the release of an app that turns mobile phones into contactless devices for accepting cards. A single condition is that the device must be running Android.

The NAB Easy Tap app is developed by payment technology partner Quest and is designed for small businesses and people with "side hustle." The developers guarantee no minimum purchase amount and no upfront costs.

According to NAB's Business and Private Client Services team leader, the app's target audience is Australians doing side businesses, such as local farmers' markets, coffee carts, and mobile hairdressers that don’t have a payment terminal.

A New Crypto-Trading Service Is Rolling Out

N26, a digital financial services company from Germany, has launched a crypto trading service. The service will initially be available to some of the bank's customers in Austria, and in coming months it will be available to customers from other countries. At first, the N26 Crypto service offers 100 cryptocurrencies including bitcoin and ether; by March 2019 it plans to expand its token list to 194 currencies.

To complete a transaction, customers choose a cryptocurrency from the menu and enter the amount of money they wish to purchase or sell. When they are finished, their funds will be removed from their main account balance and shown next to the token of their choosing.

Customers can also move funds from their primary bank account into their N26 crypto portfolio by dragging and dropping cash from their account.

New Fintech Sandbox Has Been Launched

Lloyds, a prominent British bank, has taken interaction with fintech companies to a new level by introducing its NayaOne-supported innovation sandbox.

The sandbox is designed to speed up the collaboration with emerging fintech startups and develop any goods and services resulting from the collaboration. The bank also claims several trials have already been carried out in the sandbox.

Lloyd's plans to work more closely with fintech companies were announced, citing a survey in which 46% of financial services firms said they plan to do so.

There Are No Good News for Twitter

Twitter staff is likely to face significant cuts. Elon Musk informed potential investors in his offer to acquire the company that he intends to lay off over 75% of Twitter's 7500 employees.

However, Twitter employees' fate was sealed even without Musk's part. Even if Musk's deal with the social network fails, the company's staff will still be reduced. This is reported in Twitter's corporate documents; it says that the company's payroll will be reduced by $800 million by the end of next year, which means the dismissal of almost 25% of the workforce, according to The Washington Post.

In addition to personnel reductions, Twitter management intended to significantly downsize its infrastructure, including data centers that provide the site to more than 200 million daily users.

What does this mean for us, ordinary users? According to Edwin Chen, a former data processing specialist at Twitter and CEO of Surge AI startup, the planned cuts initiated by Musk may create a risk of hacking for Twitter users and the ingress of prohibited content into the social network.

Founders and Investors Will Get Closer

JPMorgan Chase has introduced Capital Connect, a tool that assists entrepreneurs in building a network of investors. It is already operational and assists founders in developing a network of investors, gaining access to benchmarking data, raising funds, and even trading shares on a secondary market.

To work on the project, JPMorgan has engaged a team of 125 people led by Michael Elajian, Head of Digital Investment Banking and Digital Private Markets.

Eladjian anticipates the new initiative to differentiate itself in the venture capital industry by developing a scalable digital platform that combines the companies' investment and the private bank's experience, data, and contacts.

Stablecoins Bankruptcies won't affect CBDC

The Hong Kong Monetary Authority announced that the central bank's Central Bank Digital Currency (CBDC) might operate alongside private digital currencies even if intermediary operators go bankrupt. The prototype central bank digital money for retail trading provides flexibility, anonymity and security.

Private stablecoins are intended to keep a consistent value against a benchmark currency, such as the US dollar, or an asset, such as gold. Central bank digital currencies (CBDCs) also serve as digital equivalents of sovereign currencies.

Aurum, called after the Latin word for gold, has demonstrated that CBDCs used by retail clients may be private and flexible.

The Atlantic Council reports that more than 100 countries worldwide are considering issuing central bank digital currencies, which would function as a type of CBDC. These projects often involve banks or other payment companies acting as intermediaries for the service. Importantly, Aurum has also tested a system in which regular customers do not receive CBDCs directly but instead use private Stablecoins — just as modern card payments use commercial bank money backed by central bank guarantees.

According to the study, the prototype did track cash so that clients could get their money back if the intermediary went bankrupt, but it would still safeguard privacy by using pseudonyms.

AI Usage Should Be More Ethical — CFA

The CFA Institute has urged the investment management sector to be more ethical when employing artificial intelligence.

The CFA Institute is concerned that the use of artificial intelligence with capital and assets is increasing, not only in the investment industry but also in risk management, trading, and automated advice. On the one hand, it expands the data sources and can improve investment decision-making. But, on the other hand, it can bring additional difficulties to investing. However, the CFA didn't specify what kind of challenges they were talking about.

In their latest study, experts stress that companies need to develop a "culture conducive to client-centric AI innovation," ensure the integrity of any data used, and avoid bias, excessive complexity, and lack of transparency.

CFA researchers also call for regular testing and validation of AI models used within any government system.

Metaverse Is Becoming a More Safe Place

The global police organization Interpol introduced the first-ever metaverse intended for law enforcement organizations worldwide during its 90th General Assembly in New Delhi. It enables registered users to access a virtual copy of the organization's headquarters in Lyon, France. 

The virtual world is based on Interpol's secure cloud and users can connect to it using a virtual reality headset. 

Interpol also announced the formation of a meta-universe expert committee to oversee security.

The new "policeverse" is expected to give law enforcement new tools to investigate crimes, conduct training, and create new jobs with remote work. Interpol also noted that they are counteracting the increased activity of fraudsters in the metaverse.