Payments, Banking & FinTech roundup: May 2022

Cryptoassets and Central Bank Digital Currencies (CBDCs) have been hitting the headlines in May, with some regulatory updates to report on too.

It was also a busy month at Banking Circle. In the build up to Money 20/20 Europe, our UK Head of Compliance and MLRO, Mitch Trehan, spoke to Finextra about the collaboration between organisations and regulations in the financial services industry. Watch that here.

We also shared our thoughts on why FinTech relationships with Banks are still rocky, in this article for Sifted, which features research from our whitepaper on de-risking.

Earlier in the month our Co-Head of Institutional Banking, Jon Levine, was joined by guest speakers from Pay UK, Bank of England, UK Finance and Worldline to discuss ‘Who Will Plug the Service Gap as Large Banks De-risk?’

We were also pleased to report a significant uplift in our performance in 2021, with over 200 financial institutions now using our capabilities in Europe, more than 13 million Virtual IBAN accounts issued, and 20 million monthly transactions expected by the end of 2022.

We’re extremely proud to have won Digital Transformation of the Year at the National Technology Awards, and to have been announced as finalists in six PayTech Awards categories, as well as in two categories for the 2022 Marketing Innovation Awards from Financial Services Forum.

Here are some other important stories from the industry you may have missed in May:

Bank of England’s Duncan Mackinnon gives speech on operational resilience

In a speech given at the City & Financial 9th Annual Operational Resilience for Financial Institutions Summit, Duncan Mackinnon, Executive Director for Supervisory Risk Specialists, spoke about what operational resilience will look like going forward.

In the talk, he outlined where the Prudential Regulation Authority (PRA) expects firms to focus as they work towards building operational resilience by March 2025. By this date, firms will need to ensure they are resilient to disruption of their important business services, which if disrupted, could pose a risk to their safety and soundness or in certain cases to the financial stability of the UK.

Read the speech in full here.

SEC to bolster Crypto Assets and Cyber Unit

The Securities and Exchange Commission (SEC) announced it is hiring for 20 additional positions to its Crypto Assets and Cyber Unit (formerly known as the Cyber Unit) within the Division of Enforcement, bringing the number of dedicated positions to 50.

The purpose of the Crypto Assets and Cyber Unit is to protect investors in crypto markets from cyber-related threats. By increasing personnel, the SEC believes the unit will be “better equipped to police wrongdoing in the crypto markets” while still staying involved in disclosure and controls issues with respect to cybersecurity.

Amongst the new roles will be supervisors, investigative staff attorneys and fraud analysts.

Learn more about that here.

BNPLs offering indirect credit to be authorised by the Central Bank of Ireland

The Central Bank of Ireland has widened its consumer protection rules to now cover Buy Now Pay Later (BNPL) firms which will need to be authorised by its regulator.

Any companies that offer hire purchase agreements, including hire purchase, consumer hire, Personal Contract Plans (PCPs) and BNPL will be required to register as either a Retail Credit Firm or a Credit Servicing Firm.

The regulator has also capped the interest rates firms can charge customers for credit agreements at 23% APR and they will also be required to notify the Central Bank if they plan to introduce any new charges or increase their rates.

New research from the BIS on CBDCs

The Bank of International Settlements’ 2021 survey of the world’s central banks reveals that 90% of them are actively exploring CBDCs, with over half either currently developing them or running concrete experiments.

This progress has been accelerated by the pandemic, as well as the emergence of stablecoins and other cryptocurrencies, particularly in advanced economies.

The proportion of central banks currently developing a CBDC or running a pilot has almost doubled compared to the year before, increasing from 14% to 26%.

The report also shows that background work is progressing on preparing the legal foundations for CBDC issuance. In fact, compared with the year before, the share of central banks with a legal authority to issue a CBDC increased from 18% to 26%.

Find out more about that here.

FCA hosts two-day crypto sprint

On May 10-11, the Financial Conduct Authority (FCA) hosted a CryptoSprint event, attended by over 100 participants from the crypto industry, financial services firms, academia, consumer groups and subject matter experts.

The aim of the two-day event was to explore how the evolving world of cryptoassets could be regulated in the UK. Participants worked in mixed-discipline teams to explore some of the challenges facing the industry, including balancing innovation with high standards that protect consumers and markets.

It was the first time the FCA has gathered views from industry and other stakeholders to help shape future policy in such a way, and follows its three-year strategy, in which it commits to preparing financial services for the future by tailoring its rules to better suit UK markets in a global context.

European Commission launches public consultation

The European Commission launched a public consultation to gather evidence for the revised Payment Services Directive review and to inform its work on open finance.

The consultation is being addressed to the general public and a broad range of stakeholders, with views being welcomed from users of payment services (consumers, corporate users and merchants), relevant public authorities, national regulators and other parties interested in open finance such as FinTechs.

The consultation is open for contributions by filling in the online questionnaire before August 2 2022.

Learn more about the consultation here.

PSR Panel published Digital Payments Initiative Report

On May 10, the Payment Systems Regulator (PSR) Panel published its Digital Payments Initiative Report. Led by Dr Ruth Wandhöfer, the PSR Panel Chair, it was tasked with understanding potential barriers to the take-up of digital payments and with identifying potential solutions. This review was commissioned in response to last year’s Access to Cash Working Group’s recommendation for further work to enable digital payments.

The PSR Panel is independent of the PSR, and its role is to contribute toward the effective development of the PSR’s strategy and policy and offer advice and early input on the PSR’s work.

See the report here.

Study shows over half of Germans pay with a mobile or contactless card

Research from Postbank reveals that 6 in 10 Germans are already making contactless payments with their smartphone or card, up from 56% in 2021, and 47% in 2020.

Surveying over 3,000 Germans between January and February 2022, the study looked at which developments are emerging in relation to digitisation and financial issues.

According to almost half of recipients (49%), mobile payments are more convenient, as they always have their smartphone with them anyway and do not need to worry about taking their bank card with them or looking for their card.

71% of users under 40 use digital payment methods and 36% use both mobile payment and contactless card payments.

Find more stats from the research here.

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