Fintech weekly deals and partnerships roundup

Medici Ventures takes minority stake in blockchain banking platform

Overstock announced its wholly-owned blockchain subsidiary, Medici Ventures, has purchased a 5.1% stake in Bankorus, a blockchain banking platform focused on custody, lending, and exchange of assets on the blockchain. Bankorus was founded in 2017 and has offices in Europe and China.

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Deloitte and Dataiku team up to systematize enterprise AI

Deloitte France announced a partnership with Dataiku, in which Dataiku will initially be available to 150 French team members across different areas of consulting and auditing. Thanks to the collaborative nature of the tool, multi-disciplinary teams within Deloitte France will be able to work together using Dataiku to systematize the use of AI on client projects.

The big 4 auditor is already planning to expand on the use of Dataiku to other areas, for example in the context of its dedicated investment program around artificial intelligence. Mathieu Colas, a partner at Deloitte, said in a statement: “The multidisciplinary approaches that we’ve put in place to solve complex problems with the support of data and AI are valuable, and Dataiku systemizes them.”

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Appen to acquire Figure Eight for $300mn to create ML training data solution

ASX-listed Appen has agreed to acquire Figure Eight, a machine learning software platform which uses automated tools to convert unlabeled text, image, audio and video data into high-quality AI training data. Appen will pay $175 million upfront and an additional payment of up to $125 million in 2020 based on 2019 performance.

Appen deploys a global crowd of over 1 million skilled contractors, working in over 180 languages and more than 130 countries, to support its customer base that includes eight of the world’s ten largest technology companies.

“The acquisition combines the scale, quality and language expertise of Appen’s global crowd with Figure Eight’s innovative data annotation platform to create an end-to-end training data offering,” the company said in a statement. The unified business is positioning itself to serve the increasing volume, quality and speed requirements for training data to support machine learning and AI.

Founded in San Francisco in 2007, Figure Eight (previously known as CrowdFlower) has played a critical role in the artificial intelligence ecosystem, having delivered 325 million human judgments in 2018 alone. Figure Eight has released a variety of innovative capabilities to enhance its platform – including machine learning-assisted data labeling and video object tracking – that can create high-quality training datasets up to 50 times faster than human labeling alone.

Through the end of 2019, Figure Eight will operate largely independently as a division of Appen to ensure it remains focused on its product development and customers. Beyond 2019, Figure Eight’s experienced team and powerful technology will be integral to Appen’s future success.

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Amun AG choosing Solactive to provide index calculation for bitcoin and ethereum ETP

Frankfurt-based Solactive announced that Amun AG, the issuer of the first two physically-backed crypto-currencies single-coin exchange-traded products, bitcoin (BTC) ETP and ethereum (ETH) ETP, has chosen Solactive’s ETF Services Department to perform the IOPV (Indicative Optimized Portfolio Valuation, also known as Intraday Value) calculation and Portfolio Composition File (PCF) creation.

“The collaboration signifies Solactive’s ability to stretch beyond conventional index provider’s capabilities to process exotic indices, which lie outside of traditional assets classes such as equities and fixed income,” the index provider said in a statement.

Amun AG is a company specialized in the facilitation of investing in crypto assets, allowing investors to access cryptocurrency markets via SIX Swiss Exchange, making it possible to buy physically backed bitcoin and ethereum in a professional and reputable jurisdiction without worrying about custody.

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Nvidia to acquire network tech firm Mellanox for $6.9 billion

Nvidia is set to acquire Mellanox Technologies for a total enterprise value of approximately $6.9 billion. Combined, Nvidia’s computing platform and Mellanox’s interconnects underpin over 250 of the world’s top 500 supercomputers and have as customers every major cloud service provider and computer maker.

Mellanox provides end-to-end Ethernet and intelligent interconnect solutions and services for servers, storage, and hyper-converged infrastructure. The companies have a long history of collaboration and joint innovation, reflected in their recent contributions in building the world’s two fastest supercomputers, Sierra and Summit, operated by the US Department of Energy.

“The emergence of AI and data science, as well as billions of simultaneous computer users, is fueling skyrocketing demand on the world’s datacenters,” said Jensen Huang, founder and CEO of Nvidia, in a statement. “Addressing this demand will require holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant datacenter-scale compute engine.

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Crypto firm Circle acquires crowdfunding platform SeedInvest

Goldman Sachs-backed crypto finance company Circle announced it’s acquired SeedInvest, a US equity crowdfunding platform and operator of a registered broker-dealer that also helped shape the JOBS Act in the US.

Circle said it wants to bring the economic and technical breakthroughs of crypto assets and blockchain technology to traditional forms of financial contracts such as equities and other securities, and is betting that the tokenization of financial assets will ultimately unlock capital for growing companies and investment opportunities for people everywhere.

“Over time, more functions of private equity will be tokenized — including voting and governance, dividend payouts, and other economic features. Tokenization will also create new opportunities for businesses to build better relationships with their customers by leveraging tokens linked to ecosystem behaviors,” the company said in a blog post.

Also in the statement: “SeedInvest will continue to operate just as they do today, but with additional support behind the company. We will also explore future opportunities enabled by tokenization. As with other areas of our business, we will work closely with US regulators such as the SEC and FINRA as we evaluate the evolution of private capital market products and services using crypto assets and blockchain technology.”

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German fintech Raisin acquires MHB Bank

Berlin-based open banking fintech Raisin announced it’s buying MHB Bank of Frankfurt, a long-time service bank to expand its areas of operation as well as its value chain. Raisin recently closed a €100 million ($112.3mn) financing round and in 2017 took over the firm of PBF Solutions of Manchester, which runs the fintech’s UK branch.

Raisin provides its 165k customers direct access to a wide variety of some 250 savings and investment products from 70 European banks across its seven platforms. As its service bank in Raisin’s largest market of Germany, MHB Bank handles aspects of the value chain related to account management, customer identification and financial transactions, all the preserve of licensed financial institutions.

The new acquisition is expected to expedite Raisin’s growth in the European Economic Area and streamline the onboarding process for deposit banks as well as distribution partners like o2 Banking of Telefónica Germany and N26. With its German banking license, MHB is governed by the German deposit guarantee scheme and supervised by BaFin.

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RBS and Gemalto trial biometric tech for payments

As part of a national trial, NatWest, part of RBS Group, is piloting biometric fingerprint technology with 200 customers. The trial is due to begin in the coming weeks. Customers will use their fingerprint to verify transactions over £30, which is expected to increase security while raising the contactless limit.

The bank is working closely with digital security company Gemalto along with Visa and Mastercard to bring the service to customers in the UK. Howard Berg, UK MD of Gemalto said: “Using a fingerprint rather than a PIN code to authorize transactions has many advantages, primarily enhanced security and greater convenience.”

Deutsche Börse, Swisscom and Sygnum plan to build a digital asset ecosystem

Deutsche Börse Group, Swisscom, an Information and Communication Technology (ICT) company and Sygnum, a Swiss and Singapore-based fintech in the regulatory process to obtain a Swiss banking and securities dealer license, announced a strategic partnership. The aim of this cooperation is to jointly build out and grow a trusted and regulatory compliant financial market infrastructure for digital assets.

Core elements of the new ecosystem will provide issuance, custody, access to liquidity and banking services using Distributed Ledger Technology. The first products and services provided by the new ecosystem for digital assets are expected to be launched in the course of 2019.

The strategic partnership includes an investment by Deutsche Börse in Custodigit AG. The company was founded in 2018 as a joint venture by Swisscom and Sygnum. Custodigit provides a technical solution for the custody of digital assets for regulated financial services institutions. The integrated platform allows bank customers to manage the entire life cycle of their digital assets. As one of the main shareholders, Deutsche Börse will actively support the growth journey of Custodigit and its service offering.

Also, Deutsche Börse and Sygnum will become shareholders of daura AG. The company has developed a platform that uses Distributed Ledger Technologies to issue, securely transfer and register Swiss SME-shares, enabling non-listed companies to access the capital markets. As investors, Deutsche Börse and Sygnum will be actively involved in the companies’ future development.

And, Deutsche Börse and Sygnum are currently conceptualizing the establishment of a further building block of the ecosystem – a listing and trading venue for digital assets in the Swiss market. Access to liquidity via an open, regulatory compliant marketplace is considered a critical element for building a scalable digital assets ecosystem.

Following obtaining a Swiss banking and securities dealer license from the Swiss regulator FINMA, Sygnum will provide comprehensive banking services such as custody, deposits, credit & lending, capital issuance via tokenization, brokerage and asset management within the digital asset ecosystem. The ecosystem established by the partners is based on Decentralized Ledger Infrastructure developed and operated by Swisscom, meeting security requirements of financial services institutions and allowing for scalability.

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SIX Digital Exchange picks R3’s blockchain platform

SIX has picked Corda to provide the underlying blockchain technology for its digital asset listing, trading, settlement and custody service, SIX Digital Exchange (SDX). Corda Enterprise has been designed specifically for highly regulated environments and is the commercial distribution arm providing a key element for SDX’s digital assets.

Many of R3’s Members and Investors such as ABN AMRO, Barclays, BNP Paribas, Citi, Commerzbank, Credit Suisse, CS Affiliates, Deutsche Bank, HSBC, Natixis, RBC, SocGen and UBS are also SIX stock exchange trading members.

Sven Roth, member of the management team at SDX, said in a statement that one of the considerations in picking Corda Enterprise is R3’s wide developer community, open-source code base and experience across a range of industries.

Sven Roth, the chief digital officer at SIX Digital Exchange (SDX), told CoinDesk that the platform, which will be launching in the second half of 2019, will begin with classical bankable assets such as equities, bonds, funds and structured products “that are directly issued on our DLT.”

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Ant Financial launches distributed core banking platform with Chinese IT firm Hoperun

Ant Financial Services Group and Jiangsu-based Hoperun Information Technology unveiled its Distributed Core Banking Platform (DCBP). The platform aims to help financial institutions tackle digital challenges, including distributed development, financial product management and accounting liquidation.

It’s the first co-developed integrated solution in Ant Financial’s technology product portfolio. It has successfully completed the pilot stage after running in the core computing systems of several banking partners. MYbank, for example, was able to build its distributed cloud-native capabilities, including flexible scaling, agile development and immediate disaster recovery within only six months.

DCBP builds on the bPass (Business Platform as a Service) product which Ant Financial launched in September 2018, which helps financial institutions with product management, asset management, capital verification and full-link pressure tests.

Liu Weiguang, vice president of Ant Financial, said in a statement: “This is just the first of many collaborations that we plan to form with other talented partners that will enable us to provide better technology solutions to the challenges faced by financial institutions.”

In collaboration with more than 200 service partners, Ant Financial has helped the digital transformations of over 200 financial institutions, including over 100 banks, around 60 insurers, and 40 wealth management companies and security brokerages.

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Goldman Sachs and Motif launch ETFs created by rules-based processes

Goldman Sachs Asset Management announced the launch of five exchange-traded funds (ETFs) that invest in the creators and adopters of innovation, across a range of sectors, market caps and geographies. The ETFs seek to track indices created by Motif, a leading provider of systematic, data-driven indices and strategies.

The 50bps NYSE Arca-listed ETFs provide exposure to the themes that GSAM views as driving transformational changes to the global economy: Data-Driven World, Finance Reimagined, Human Evolution, Manufacturing Revolution and New Age Consumer. These funds tap into the asset management expertise of Goldman Sachs and the proprietary technology of Motif to provide exposure to technology-driven structural growth opportunities across various developed and emerging equity markets.

To construct each index, Motif employs a rules-based methodology to analyze both traditional and alternative data in order to calculate a company’s ‘thematic beta’1 and quantify its exposure to a specific transformational change. Proprietary technology is used to select and weight securities in the index, based on their relevance and investability.

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Banco do Brasil’s London branch deploys CloudMargin for global collateral processing 

CloudMargin announced that Banco do Brasil in London, a branch of one of Latin America’s largest banks, has deployed the CloudMargin platform for its global collateral processing. The branch is now fully onboarded to CloudMargin, using the platform to process collateral for its over-the-counter (OTC) foreign exchange (FX) transactions, including FX forwards and cross-currency swaps.

Prior to transitioning to CloudMargin’s platform, Banco do Brasil was using in-house solutions to manage its OTC collateral activity. It’s the first client to use CloudMargin’s new internal portfolio model, so that the bank can have a single ISDA Credit Support Annex (CSA) with its London branch and still allocate exposures globally across the bank’s head office and international branches.

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AI regtech Recordsure announces roll-out alliance with KPMG in Australia

KPMG Australia and regtech company Recordsure announced an alliance to roll-out the London-headquartered startup’s AI-driven customer trust and transparency solutions to financial institutions in Australia.

Recordsure was founded in 2013 in response to the FCA taking action against the industry on a host of issues similar to those raised in the recent Financial Services Royal Commission in Australia. Recordsure helps financial institutions such as banks and superannuation providers to capture data from customer interactions and improve both regulatory compliance and the customer experience.

Recordsure’s technology relies heavily on artificial intelligence and machine learning and is used by a number of UK banks, insurers and wealth managers. It provides analytics and automation tools to record and transpose speech to text, review documents such as emails and live chat and analyses the resulting data.

The technology is able to highlight possible risks early, such as behavioural triggers indicating a potentially vulnerable customer. It can also be applied within remediation programs to rapidly assess customer files providing a comprehensive means to review interactions and support customers across all channels.

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SWIFT, banks, SGX join forces for DLT e-Voting PoC 

SWIFT announced a proof-of-concept (PoC) on e-Voting, using distributed ledger technology (DLT). SWIFT will jointly conduct the PoC in the Asia Pacific region, with leading securities software provider SLIB and the Singapore Exchange (SGX), along with Deutsche Bank, DBS, HSBC and Standard Chartered Bank.

The PoC will explore whether DLT can help simplify the currently inefficient management of shareholder meetings and the associated voting processes that are often time-consuming and resource intensive. Proxy voting in particular often results in avoidable complexity and errors that could be eliminated through greater transparency and automation.

SWIFT will facilitate the PoC in its DLT sandbox testing environment with Deutsche Bank, HSBC and Standard Chartered Bank joining as participants, while DBS and SGX join as both participants and issuers. The participants will reuse the SWIFT network and their existing SWIFT infrastructure and interfaces to access, test and validate the applicability of DLT.

The PoC, which will run during the first half of 2019, is designed to:

  • test the deployment of a voting solution in collaboration with issuers and a Central Securities Depository (CSD), where the information is stored and managed on a permissioned private blockchain;
  • demonstrate the viability of hybrid solutions based on ISO 20022, combining messaging and DLT to foster interoperability and avoid market fragmentation; and
  • test SWIFT’s capacity to host third-party applications in its sandbox and reuse its security and interface stack; confirm the use of ISO 20022 as the foundation for standardizing for Application Programming Interfaces (APIs) that expose DLT node contents to parties with direct access to the ledger.

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Nasdaq and BRVM sign agreement for West Africa market surveillance tech

Nasdaq and Bourse Régionale des Valeurs Mobilières (BRVM) have signed a new agreement for Nasdaq to deliver market surveillance technology (SMARTS) to BRVM. BRVM is one of the world’s most integrated supranational organizations. It connects eight West African markets (Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo), which use a single common exchange, currency, central bank and language. BRVM will implement Nasdaq’s surveillance technology to monitor cross-market and cross-asset trading activity.

“Implementing an industry benchmark solution for surveillance is vital for ensuring a safe and transparent trading environment across multiple markets that constitute BRVM,” said James Martin, regional manager for EMEA in the Market Technology unit at Nasdaq, in a statement. “As Abidjan continues to strengthen itself as an important financial capital in Africa, it leads by implementing international best practices and market compliance standards. Further, this new technology agreement with Nasdaq gives a clear signal to Africa’s financial community that BRVM is dedicated to taking its markets to the next level.”

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Cognizant acquires automated post-trades processor MeritSoft

Cognizant announced it has acquired Meritsoft, a privately-held financial software company based in Dublin, Ireland. Meritsoft is best known for its FINBOS platform for post-trade processing, an intelligent automation solution for managing taxes, fees, commissions, and cash flow functions between financial institutions. Meritsoft’s products are currently used by five of the world’s eight leading investment banks. Financial details of the transaction were not disclosed.

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Commerzbank and Deutsche Börse transact repo using DLT

Commerzbank and Deutsche Börse have for the first time successfully used distributed ledger technology to execute a legally binding settlement of a repo transaction. The prototype transaction based on delivery versus payment was executed as part of a joint proof of concept examining the possible use of blockchain technology in securities settlement. The repo transaction is based on a public note of KfW Bank Group amounting to €10 million and a seven-day term with a negative interest rate of -0.5%.

Digital tokens were generated for both commercial bank money (cash tokens) and securities (securities tokens), and then distributed ledger technology was used to execute the simultaneous swap of the tokens as a legally binding transaction. Deutsche Börse acted as the cash provider, Commerzbank as the borrower and main incubator, Commerzbank’s research and development unit, acted as the blockchain platform operator. The technology used and the underlying legal concept were developed jointly by the partners.

“In past pilots we have focused on new issue projects; with the transaction between Deutsche Börse and Commerzbank we were now for the first time able to convert existing securities into digital tokens,” said Michael Spitz, CEO of main incubator, the R&D unit of the Commerzbank Group, in a statement. The next steps are linked closely to the creation of underlying legal conditions which are a requirement for a binding assessment of contractual relationships.

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Smartereum: Japanese Banks and IBM Japan creating blockchain finance platform

Five banks in Japan have reached an agreement to create a new financial services infrastructure that will be based on blockchain technology, according to a joint press statement. The banks involved in the initiative include Bank of Iwate, Bank of Yokohama, Aomori Bank, Akita Bank, and Yamanashi Chuo Bank.

The English translation of the statement said: “Financial service platform is a service provider infrastructure system built on the cloud in order for financial institutions and business operators to jointly provide financial services.” The statement also noted that by jointly offering services on the platform, the collaborating banks will bring down certain costs using blockchain technology.

“For financial institutions and business operators who provide services, such joint service provision can make the system inexpensive compared to separate systems, as well as greatly reduce postage and mailing costs,” and “by combining the distributed register technology and the data encryption technology , we are building a safe and low-cost system…By integrating authentication functions, users are able to use services without being conscious of financial institutions.”

The venture is in partnership with IBM Japan which indicates that the tech giant will bring its vast experience in enterprise blockchain into the development of the system. The platform is expected to start its electronic delivery service in April this year. Local reports had earlier suggested that it will launch one year after it began testing in July 2018.

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Coinbase’s acquisition of blockchain analytics firm lacked due diligence

Coinbase’s recent acquisition of Neutrino revealed a gap in the crypto exchange’s due diligence process. Some Neutrino executives were former employees of HackingTeam, an Italian company that provides offensive hacking tools to law enforcement and intelligence organizations — including those of Saudi Arabia, Sudan, and other countries with poor human rights records, according to Ars Technica.

“While we looked hard at the technology and security of the Neutrino product, we did not properly evaluate everything from the perspective of our mission and values as a crypto company,” wrote Coinbase co-founder and CEO Brian Armstrong in a blog.

“We took some time to dig further into this over the past week, and together with the Neutrino team have come to an agreement: those who previously worked at Hacking Team (despite the fact that they have no current affiliation with Hacking Team), will transition out of Coinbase. This was not an easy decision, but their prior work does present a conflict with our mission,” he wrote.

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Discover and ZestFinance partner on AI credit score underwriting

US bank and credit card issuer Discover Financial Services and ZestFinance, an artificial intelligence (AI) software provider for underwriting, announced a partnership for AI-based credit scoring solutions in the financial services industry.

Discover will be using the Zest Automated Machine Learning (ZAML) platform to improve credit underwriting with interpretable machine learning approaches to make more accurate lending decisions. The companies expect to put their first ML model into production later this year.

In a successful trial, Discover and Zest found that the inclusion of more data and artificial intelligence techniques reduced default rates significantly without added portfolio risk. ZestFinance founder and CEO Douglas Merrill in a statement: “Using machine learning responsibly means deploying accurate, explainable and fair models.”

“Banks that fail to invest in machine learning will end up fundamentally uncompetitive in a couple of years,” said Roger Hochschild, CEO and president of Discover. “We found the best way to drive benefits faster was to complement our internal efforts with a partnership with Zest.”

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