C2B pay-by-bank (PBB) transaction flow; How do neobanks compare in 2024?; Australian Open Banking Ecosystem;
Welcome to the latest edition of Fintech Wrap Up, where we delve into the evolution of modern core banking platforms, the competitive landscape of neobanks in 2024, and the rise of innovative payment solutions like Pay By Bank (PBB)
Insights & Reports:
1️⃣ Main features and benefits of a modern core banking platform supporting the digital age
2️⃣ How do neobanks compare in 2024?
4️⃣ C2B pay-by-bank (PBB) transaction flow
5️⃣ Australian Open Banking Ecosystem
6️⃣ Enabling offline payments in an online world
Curated News:
1️⃣ Accend Raises $3.2M to Reinvent Fintech Operations and Compliance Workflows
TL;DR:
First up, let’s talk about modern core banking platforms. These systems are crucial for financial institutions aiming to thrive in the digital age. They significantly accelerate time to market and reduce IT costs thanks to their flexible parameterization. This adaptability not only fuels growth but also allows banks to meet future regulations. With a focus on product standardization and innovation, these platforms separate core functions from customizations, ensuring that updates and patches are handled efficiently by the vendor. Furthermore, the modularization and composability offered by cloud-native solutions, like Tuum, allow banks to integrate a range of services — from digital wallets to AML compliance — while enhancing connectivity through APIs.
Shifting gears, let’s look at the neobank scene in 2024. Companies like Revolut, Starling, Wise, PayPal, N26, and Monzo are all in a competitive race to provide users with a unified financial service experience. Revolut is seeking a $40 billion valuation and has rolled out new features such as bond investing and a European debit loyalty program. Interestingly, even remittance services like Wise and payment processors like PayPal are now offering banking features that put them on par with traditional neobanks. The focus remains on minimizing fees for international transactions, with players like Monzo and Revolut enabling fee-free withdrawals and providing travel insurance to their users.
On the topic of payment methods, I explored various types of cards, including prepaid, debit, and credit cards. Each has its unique characteristics: prepaid cards are flexible and lower-risk, debit cards allow direct access to bank accounts, while credit cards offer a revolving line of credit with added benefits. As the market evolves, we also see a rise in virtual cards that enhance online security and usability.
One payment trend worth noting is Pay By Bank (PBB) solutions. This method allows direct transfers from customer bank accounts to merchants without relying on card networks. With lower transaction fees and instant settlement, PBB enhances trust and efficiency, making it an appealing choice for both consumers and merchants alike. The demand for such payment methods is growing, especially with the rise of instant payment systems in places like the UK and the US.
In terms of open banking, the Australian ecosystem is witnessing significant growth, with a surge in accredited data recipients and use cases. The major banks are now active participants, moving past compliance and toward innovation. Upcoming regulatory changes, particularly concerning non-bank lending and action initiation, are expected to further enhance this landscape.
Before I wrap up, I want to highlight some noteworthy news: Accend, a Y Combinator startup, has raised $3.2 million to reshape fintech operations and compliance workflows. Anne Boden, founder of Starling Bank, has left to pursue a new venture in AI. And in a major development, Stripe has reached a valuation of $70 billion through a deal with Sequoia Capital.
Insights & Reports
Main features and benefits of a modern core banking platform supporting the digital age
The main features of a modern core banking layer are:
• Accelerates Time to Market, and reduced IT costs, through flexibility of the parameterization. Flexibility enables and fuels scalable and sustainable growth and adapting to future requirements and regulations.
• Product Standardization & Innovation: the core layer of the platform is completely segregated from the added customizations/business logics added and it will be maintained by the core banking vendor in terms of new releases/patches.
• Enables Modularisation and Composability: Modularization and Composability refer to the existence of numerous players in a decentralized value chain, each using digital technology to provide a specialized service that meets the need of other value-chain players or end-customers. Modularization represents an alternative to the vertically integrated model, traditionally offered by incumbent financial institutions. A modern, modular, cloud native banking platform which supports APIs such as Tuum enables Modularization and Composability, helped both by platform-based marketplace like the one offered by MIA Platform and by Open Banking standards and practices. It also makes the traditional model more flexible and scalable. Types of Modular Banking Services include: Digital Wallets, Deposits, P2P Payments, B2B Payments, Identity Management, AML, KYC, Retail Lending, Liquidity Management.
How do neobanks compare in 2024?
Prior to recent news that it was seeking an updated, $40bn valuation, Revolut added a number of new features to its app — namely the ability to invest in bonds, as well as a pan-European debit loyalty card programme in the UK. We’ve taken a look at the company’s key features, alongside other neobank competitors, to see the lay of the land in 2024.
Revolut — alongside Starling, Wise, PayPal, N26 and Monzo — offers extensive features for users. Wise is best known for being a remittance service and PayPal a processor, but both of them have come to offer features in their apps that put them in competition with Revolut and other players in the space, such as debit cards, investing service and savings accounts (in PayPal’s case).
Notably, these companies offer a variety of similar services, with all of them offering international transfers; in the case of Monzo and N26, these services are powered by Wise. There has also been a focus on providing services supporting overseas travel, such as fee-free card transactions within the European Economic Area (EEA) for Monzo and Revolut, as well as fee-free ATM withdrawals within limits while abroad (not including local ATM provider fees).
Curated News
Accend (YC S23) Raises $3.2M to Reinvent Fintech Operations and Compliance Workflows
The round was led by Adverb Ventures with participation from Y Combinator, General Catalyst, 645 Ventures, and angels from Brex, Stripe, and Carta. Accend has landed marquee customers in US and Europe including Slope, Pleo, Rho, Pliant and more.
