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NexChange, Horton Point launch digital asset market

The aim is to create an environment for investors to build and manage portfolios.

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Asia-based blockchain venture firm NexChange Group announced a partnership with New York alternative investment firm, Horton Point, to launch a marketplace for the institutional digital asset management industry.

The Nexyst platform will provide access to a broad range of professionally managed, actively traded crypto strategies and passive investment solutions. Nexyst will debut its initial offering in October 2019.

Nexyst is created to provide better transparency and to improve investment decisions for institutional investors interested in the digital currency asset class. 

The platform will enable qualified investors to perform online fund sourcing, due diligence and monitoring, and customize portfolios by a number of parameters such as risk, return, correlation and drawdowns. Nexyst utilizes proprietary optimization technology powered by Eleven Marketplace OS to deliver customized portfolio solutions to each investor.

Nexyst will also provide fund managers with integrated access to CRM, data room, behavioral analytics and customer engagement solutions for enhanced marketing and investor relations.

The Nexyst ecosystem is supported by an active global blockchain community developed by the NexChange Group. Horton Point is responsible for manager sourcing and due diligence. In addition to a transactional component, the platform will provide manager research, value-added content and tools enabling both sides to interact efficiently.

“Our goal is to create a one-stop platform where qualified investors and fund managers can actively engage with each other in a secure and compliant manner,” said NexChange Group CEO and Nexyst co-CEO, Juwan Lee.

The intent is to create an environment in which qualified investors can make informed decisions about this new asset class, said Nexyst co-CEO and Horton Point CEO Dimitri Sogoloff.

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Cloud, A.I. and new possibilities for finance

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Bernard Gavgani, BNP (2nd from right) & David Hudson (middle), with Pauline Wray, Jonathan Larson, & Rico Usthavia Frans

For many financial institutions – the incumbents – the tech wave has often seemed overwhelming. And the pace of breadth of change is unprecedented. But banks, asset managers, brokers and, insurance companies are increasingly finding opportunities.

New business models are creating new opportunities to massively expand the pie, with cloud computing among the most vital of these foundational technologies. Here is a sample of some of the most interesting updates DigFin caught during Day Three at the Singapore Fintech Festival.

Wholesale markets going digital

Kate Birchall, head of Asia Pacific at clearinghouse LCH, says technology is now taking over from regulation as the main driver of change in interbank markets for derivatives and finance. Post-2008 financial crisis, banks have been consumed with new regulation, but now they are implementing new technology to comply more efficiently. “Banks keep cutting costs in processing and in reconciling trades. Tech is now at the forefront of trading at the institutional level much more cost-effectively.”

Kelvin Tan, head of innovation for treasury and markets at DBS Bank, said, “One of the least value-added activities banks do today is reconciliation.” Right now the focus is on deploying artificial intelligence to improve the situation. Over the longer term, institutions may adopt blockchain to eliminate reconciliation altogether, or at least standardize processes to make them manageable.

More technology companies such as SmartStream Technologies are providing services to help financial institutions grapple with the challenges of reconciliation.

SmartStream offers its TLM OnDemand, the market-leading functionality of its TLM solutions through secure, resilient, cost-effective and fully managed web-based services. “TLM allows middle and back offices to process transactions,” said Haytham Kaddoura, SmartStream’s CEO. “Clients gain a lower total cost of ownership for their operations, while at the same time improving risk control throughout the transaction lifecycle.”

BNP taps IBM for hybrid cloud

Bernard Gavgani, group chief information officer at BNP Paribas, says the bank is working with IBM to find a path to migrate what it can to the could while also continuing its legacy systems work. “My challenge is running legacy system with cloud, securely,” he said.

Migrating to cloud is not as cheap as advertized for banks that need to keep using their mainframe servers; instead it’s an added cost. And having some data computed on prem and other data with a vendor can leave banks exposed to attack, as happened earlier this year to Capital One. So in summer 2020, BNP Paribas will go live with part of its data on IBM’s public cloud but with the servers on the bank’s premises. So the bank benefits from having a big tech vendor, as it continuously upgrades its cloud security and service, while also keeping client data protected internally.

Mark Johnston, head of security and networking specialists in APAC at Google Cloud, says financial institutions are becoming savvier users. “The industry is moving beyond cloud as ‘infrastructure as a service’ to a ‘platform as a service’,” he said.

For example, one institution is using Google Cloud computing to reduce calculating daily liquidity positions from eight hours to 30 minutes. If more banks follow suit, it creates a seachange in how they can manage their liquidity risk as well as report it to regulators, especially once they add data analytics on top.

Alan Jones, business solutions director at SmartStream Technologies, says as banks continue to embrace cloud computing, it brings down the costs of difficult manual work such as corporate actions processing.

Standards, standards, standards

As banks and fintechs innovate, they are creating new complexities. Competition is good for the end user but it also creates so many platforms, protocols and networks that innovation can be at risk if the industry doesn’t develop standards for interoperability and benchmarking.

“Collaboration requires open, interoperable standards, with so many new players in the payments industry,” said Chris Clark, regional president at Visa.

Johan Toll, head of digital assets at Nasdaq, noted his company delivers its technology to over a hundred markets. “How to increase interoperability among them?” he asked. Two solutions: moving more services and data into the cloud, and using A.I. to improve how firms view and analyze that data.

David Hudson, J.P Morgan’s global co-head of digital and platform strategies, said adopting such technologies aren’t really about cost savings, but to enable big institutions to be agile and to drive standardization. “There’s always a ‘new something’ so our ability to move fast with the times is essential,” he said.

MAS works with industry for AI rules

Monetary Authority of Singapore is developing a framework with financial institutions for promoting responsible adoption of artificial intelligence and data analytics.

The framework is called Veritas, and will let banks, asset managers, insurers and others benchmark their AI and data solutions against MAS’s principles of fairness, ethics, accountability, and transparency. That in turn will drive trust in big data and A.I.-driven solutions.

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Digital payments to the fore in Singapore

Google Pay, NETS, SmartStream and MasterCard announce new efforts at Singapore Fintech Festival.

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Andreas Burner, SmartStream

One of the biggest themes at the Singapore Fintech Festival is digital payments. It’s a field full of innovation from fintechs, Big Tech, and lenders. DigFin presents some of the biggest announcements.

ATM for rides

NETS Group runs Singapore’s payment rails. The company has a track record of innovating: it was the first in Asia to adopt an electronic debit network, even while global payment companies like Visa and Mastercard still relied on franking. (Franking is referring to postal stamps to confirm a payment was sent by mail.) Other “firsts” followed.

Today the company is now helping Singaporeans use their bank debit and credit cards to pay for transportation, says Jeffrey Goh, group CEO. It has just introduced NetsClick, the first ATM card tokenized for taxi rides, with the user’s bank account debited for the journey. And it just followed this up with allowing bank customers to use contactless ATM cards to pay for rides on the city’s MRT subway system.

OCBC partners with Google

OCBC Bank has entered a partnership with Google to reintroduce the Google Pay app to Singapore. Starting in January 2020, OCBC customers will be able to make C2C or C2B transfers between mobile phones using Google Pay.

Bank customers won’t need an electronic wallet to make mobile payments, says Ching Wei Hong, the bank’s COO. The bank is using the partnership to boost users of Singapore’s new PayNow digital payments network.

Users of Google Pay can also earn rewards when they use it for transferring money or making payments, which go directly to the user’s OCBC bank account.

Google Pay offers a similar feature in India, where it gained rapid adoption on the back of India’s interbank payments system, United Payments Interface (UPI). PayNow, which went live in Singapore in 2017, is a similar peer-to-peer transfer service. The Association of Banks in Singapore estimates the first half of 2019 saw 28 million PayNow transactions worth S$4.6 billion. With Google Pay now supporting PayNow-based payments, the company expects volumes to grow rapidly.

Adding A.I. to payments

SmartStream Technologies is developing artificial intelligence solutions to improve banks’ digital payments capabilities, says Andreas Burner, chief innovation officer.

The technology company is applying machine learning and neural networks to identifying patterns in the data that banks already possess. Banks hold the lion’s share of customer data, and SmartStream is helping them access it and make sense of it.

Digital payments solutions enable acquirers, card networks, issuers, gateways, ISOs and others to get a holistic view of their payments. “Our innovation lab is working with banks to understand how to apply machine-learning tools to payments innovations,” Burner said. “Volume, velocity and variation in digital payments is changing at an unprecedented rate.”

The company has established a dedicated practice to collaborate with all participants in a client’s digital payments world, creating innovation solutions to bridge the gaps in the areas that matter to end users – and to build models that can handle exceptions workflows that kick in when a payment fails or doesn’t go as planned.

All aboard the express

Mastercard has launched Fintech Express, a program to work with third-party fintechs to support them as they help grow the digital payments world, says Rama Sridhar, executive vice president for regional digital partnerships and new payment flows. Mastercard’s first partner is Rapyd, a fintech that uses APIs to provide customized payment solutions to regional and global e-commerce companies, among other corporations.

The partnership gives Rapyd access to Mastercard’s product, partnerships, licensing and legal teams, and helps Mastercard service Rapyd’s corporate clientele. This gives the fintech fast licensing as a card issuer, integration into the Mastercard network, and advice. Rapyd will be able to quickly issue cards for its corporate clients in Asia Pacific. Mastercard hopes its Fintech Express platform will attract more payment-oriented fintechs.

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Company News

MAS: make fintech sustainable

Data localization, reconciliation and open APIs leading themes at Singapore Fintech Festival’s first day.

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Raof Latiff, DBS; Radha PIllay, SmartStream; DigFin

The Monetary Authority of Singapore uses its humungous Singapore Fintech Festival (SFF) to drive the government’s agenda. And because of Singapore’s pole position in the industry, and the scale of its conference extravaganza, the MAS can use the event to shape its message.

And its message this year is sustainability. “We need to make the world greener,” said MAS managing director Ravi Menon. And that means a greener financial system, he said.

Data governance doubts

While Singapore’s government pushed green fintech, bank CEOs expressed concern about data and how it’s being regulated in some countries. Noel Quinn, CEO at HSBC, said local laws requiring customer data to remain within the country put at risk the global services that financial institutions are trying to create to serve financial inclusion goals.

Bill Winters, CEO of Standard Chartered, said storing data in local countries wasn’t a problem, but when the data can’t be transmitted abroad, it undercuts cloud computing and global data analytics.

DBS chief executive Piyush Gupta noted that such barriers obstruct progress in KYC, AML and other security requirements – although he also noted that governments and policymakers in some markets realize their localization laws need to be updated.

Reconciliations result

Companies used SFF to announce new initiatives. One of the areas that fintech has struggled to reach is reconciliations in payments and securities – a huge goal across the industry because of the intensely manual nature of such work. SmartStream Technologies used the exhibition to promote a new product, SmartStream Air, which uses artificial intelligence to carry out reconciliations in almost real time, by comparing and matching data, highlighting any disputes.

DBS Bank, for example, is using SmartStream products to bolster the digitalization of its institutional and trade-finance business, said Raof Latiff, managing director for the institutional banking group. Streamlining its operational workflows allows DBS to focus on new innovations for its customers.

Open banking options

Another major topic at the event was open banking, and open APIs. The rise of digital banking has given way to a need for open banking, said Francesco Simoneschi, co-founder of London-based fintech TrueLayer, which provides verification tools. Banks will begin to use APIs to communicate with other players in order to be able to verify customer identities, rather than rely on people providing bank statements – particularly in developing markets.

“Digital identity is the holy grail,” said Michael Tang, leader of global financial digital services at Deloitte. But financial institutions engaging in open banking will need to ensure trust, which requires a business model that values the customer, instead of seeking to take advantage of their data.

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NexChange, Horton Point launch digital asset market