What are the most promising Fintech innovations you have seen in your jurisdiction?

The following article discusses session two in the IR Global Virtual Series on 'A Fintech Paradigm – The Changing Face of Financial Services'

USA – DS The emergence of financial discipline and professionalism in the blockchain, smart contract and crypto space is beginning to give the sector real credibility within the financial services industry. An example of this is the creation of crypto hedge funds.

Enhanced Security and KYC applications are also growing in importance within the Fintech space.

Cyprus – SF The Fintech industry is touted as one of the most promising industries in Cyprus, as it has the potential to lead to direct innovation and new paradigms.

Wargaming, an award-winning online game developer, is based in Cyprus and this is a very promising innovation, considering that it is a leading firm using technology to promote sports and gaming.

Additionally, SafeCharge, which provides alternative payment methods, along with other similar Fintech firms, has also launched its Cyprus office. Its technology allows consumers and businesses to more easily conduct business and carry out transactions through the use of alternative forms of payment. Furthermore, Cyprus plays host to other major platforms, including MetaQuotes, which is a leading developer of financial trading software providing evolutionary services for mobile trading, algorithmic trading and web trading, helpful to businesses and brokers.

Covve is another up-and-coming start-up that revolutionises the way professionals’ network and drives effective business development. It utilises an intuitive, visual interface and a sophisticated engine to cleanse and privately share contacts between colleagues and trusted networks, facilitating warm referrals, while introducing colleagues to trusted networks. Finally, the branches of the Big4 accounting firms in Cyprus have all taken some steps to set up their Fintech departments. A promising example is a start-up which is being launched by KPMG Cyprus in cooperation with the Department of the VAT, which will enable clients to calculate any relevant amounts and pay any fees or instalments.

All these promising Fintech innovations in Cyprus strengthen the belief and hope that Cyprus will soon have its own established Fintech ecosystem.

Curaçao – LS Compliant token launches have led the way in terms of Fintech innovation in Curaçao. Tokens are designed and actively managed with stringent KYC/AML components and include economic value parameters that are triggered by adherence to compliance requirements. Furthermore, local payment processing is based on platforms including full compliance, while securities settlement is being driven by the tokenisation of securities through the DCSX as a regulatory platform using blockchain to achieve innovation in current systems.

As far as enhanced security or know your customer (KYC) requirements are concerned, Curaçao investment funds and token platforms employ stringent requirements, as well as GAAP and IFRS compliant audit capability.

Belgium – KB Lita. co which stands for ‘Life Impact Trust Act’ is an FSMA approved crowdfunding platform. As from June 2017, they aim to be the first impact investing platform in Europe focusing on ethical investments (social real estate, ethical property, waste management). This shows evidence that a solid regulatory framework provides for a good investment ecosystem.

Also, Spreds, formerly MyMicroInvest, is a Belgian company ranked among the top 100 leading Fintech innovators. Spreds is a leading European crowdfunding platform with an impact tracer that allows people to invest alongside impact venture capital companies.

Hong Kong – CM A promising area of innovation has been the use of initial coin offers or ICOs to raise capital for Hong Kong tech start-ups as mentioned earlier.

Other important Fintech innovations include the regulatory sandboxes established by the Hong Kong Monetary Authority (HKMA), Securities and Futures Commission (SFC) and Insurance Authority (IA). HKMA’s Fintech Supervisory Sandbox (FSS) was launched in September 2016 and allows authorised institutions to pilot trials of Fintech and other technological initiatives in a controlled environment with a more flexible supervisory arrangement, before launching them on a fuller scale.

Fintech technologies covered by the FSS include mobile payment services, biometric authentication, the blockchain, robotics and augmented reality. Hong Kong’s property market is embracing Fintech with an example being that Bank of China Hong Kong currently processes 85 per cent of its mortgage valuations by blockchain. The traditional time-consuming mortgage loan application process is expedited and revolutionised with efficient coordination between parties as well as a reduction in operating costs.

Another example is the new era of smart banking. An Open Application Programming Interface (API) framework will be established to facilitate the increased adoption of API by the banking sector. This will promote innovation and improve the efficiency of financial services through collaboration between banks and tech firms.

The HKMA published its consultation proposals for an Open API framework in January 2018. It is also consulting on a guideline to facilitate the creation and regulation of virtual banks in Hong Kong. The HKMA has also established a Fintech facilitation office to support the sustainable development of a Fintech ecosystem and entered into collaboration/co-operation agreements with relevant bodies in Singapore, the United Kingdom, Dubai, Switzerland and Poland.

UK – CB Leading Fintech innovators in the UK look to be taking on the traditional banking world head-on. Disruptors such as Starling Bank, Clear Bank, Monzo and Tandem are all classed as challenger banks for just that reason.

Clear Bank, for example, is not only a Fintech bank but exists to provides services to financially regulated businesses and Fintechs. Starling, Monzo and Tandem provide mobile-only bank accounts that empower the customer with innovative reporting, notifications and payment services. Some say that the innovative approach of Fintechs such as these have caught many traditional providers on the hop as they play catch-up because the appeal of accessible technology solutions to the millennial consumer is overtaking the high street at a considerable rate.

Consumer engagement and financial education look like a key route to market for Fintech businesses. The provision of advice to deal with the information, financial freedom and empowerment that Fintech can bring seems to go hand in hand with current developments.

AI also seems prevalent in many Fintech applications with chatbot technology becoming an increasingly popular method of simplifying the user experience.

Switzerland – HK By far the most frequent innovations that Fintechs have to offer financial services are around automation. This is good and well and greatly overdue, but not overly exciting in the sense that it will disrupt existing value chains or even terminate existing banking business models.

Examples of these non-disruptive Fintechs include robo-advisors, most payment services based on traditional technology and systems and also regulatory technology (Regtech). Another example is regulatory arbitrage, including many crowdfunding platforms and ICOs, to the extent they are trying to avoid regulation.

Only a very limited number of Fintechs have a truly disruptive potential. In addition to the blockchain, or distributed ledger technology, I would mention here artificial intelligence, e.g.: for credit risk assessment and ICOs.

Brazil – AC A lot of investment is being made in mobile, user experience, data analytics and payment gateways, following the growth of these areas in the Brazilian market.

The relationship of the Brazilians with the financial market has already been positively affected by the innovations implemented by various Fintechs in specific segments. I am not sure there is any innovation that is disruptive, but clearly, there are innovations that are being very well received by the population, particularly in connection with retail banking, robo-advisors and online lending.

A lot of attention is also being paid by all players to blockchain and artificial intelligence.

Luxembourg – MTA In our view, the most promising Fintech innovations in Luxembourg are in the areas of payment services and blockchain-based financial services, which build on the foundational pillars of the country’s financial sectors.

In the payment services market, start-up companies such as Payconiq (a digital wallet and payment service provider) are growing and there are even signs of consolidation. For example, Payconiq is expanding to neighbouring countries and has acquired Digicash Payments (a mobile payment platform with over 450 partnering companies).

Meanwhile, established companies are ramping up their development. For example, Daimler AG’s Mercedes Pay (formerly PayCash Europe S.A.) is a mobile payments platform allowing the carmaker to develop mobile services for its clients, which it may soon use to enter the ‘connected cars’ market. Other promising innovations in payment services may also come from Amazon and Paypal. Both companies have Luxembourg subsidiaries which are licensed by the Luxembourg financial markets authority (Amazon Payments (Europe), e-money institution; Paypal (Europe), credit institution) and are central to the companies’ upcoming innovations in peer-to-peer payments.

Other promising innovations are in the blockchain space, where there is a lot of public-private collaboration between actors, and efforts are being made to stimulate consumer adoption. One example is Fundchain, a Luxembourg blockchain research initiative which explores uses for the technology in fund management services and includes among its partnering companies Big Four accounting firms, asset managers and financial institutions.

Another example is FundsDLT, a fund market infrastructure platform developed by Fundsquare (a wholly owned subsidiary of the Luxembourg Stock Exchange), InTech and KPMG, connecting transfer agents, payment systems and investors.

Malta – GM The Fintech ecosystem has already delivered a number of disrupting solutions to traditional operators, however, this is just the start of what can be achieved with such a disruptive approach enabled through technology. Many existing Fintech operators offer similar services, cutting through various layers and riding on top of an ecosystem of partners to deliver quicker, easier payments solutions.

The ecosystem has been moving ahead with credit and lending facilities too, however through AI technologies and the power delivered through the analytical capabilities of volumes of data, Fintech organisations have started and will continue to deliver other innovations in areas such as robo-advisors and offer better tools towards the fight against money laundering and financing of terrorism.


Luis Santine (LS) InfoCapital – Curaçao www.irglobal.com/advisor/luis-santine-jr

Adriano Chaves (AC) CGM Advogados – Brazil www.irglobal.com/advisor/adriano-raposo-do-amaral-pinto-chaves

David Sorin (DS) McCarter & English LLP – USA www.mccarter.com/David-J-Sorin/

Craig Blackmore (CB) Verde Corporate Finance – UK www.irglobal.com/advisor/craig-blackmore

Soteris Flourentzos (SF) Soteris Flourentzos & Associates LLC – Cyprus www.irglobal.com/advisor/soteris-flourentzos

Clinton Morrow (CM) Charltons Law – Hong Kong www.irglobal.com/advisor/clinton-morrow

Hans Kuhn (HK) Zulauf Partner – Switzerland www.irglobal.com/advisor/dr-hans-kuhn

Evelyn Maher Bonn Steichen & Partners – Luxembourg www.irglobal.com/advisor/evelyn-maher

Melvin Tjon Akon (MTA) Bonn Steichen & Partners – Luxembourg www.bsp.lu/professionals/associate/melvin-tjon-akon

Gordon Micallef (GM) RSM Malta – Malta www.rsm.global/malta/people/gordon-micallef

Kevin Bertouille (KB) Everest Law – Belgium www.everest-law.eu/nl/advocaten/kevin-bertouille

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