FinTech Futures: Top five news stories of the week – 15 March 2024
Here’s our pick of five of the top news stories from the world of finance and tech this week, featuring Flagstone, Mastercard, Canton Network and more.
US Federal Reserve “nowhere near recommending, let alone adopting” a CBDC
US Federal Reserve “nowhere near” CBDC adoption
The US Federal Reserve is “nowhere near recommending, let alone adopting” a central bank digital currency (CBDC), according to comments by Jerome Powell, chairman of the Federal Reserve, made during the semi-annual Monetary Policy Report to Congress last week.
At the hearing, North Dakota senator Kevin Cramer voiced consumers’ concerns regarding the Federal Reserve’s research of and experimentation with a potential CBDC, specifically relating to privacy and government control.
Responding to this, Powell reassured Cramer it was “something we would not stand for, or do, or propose here in the US”.
“If we were to ever do something like this, and we’re a very long way from even thinking about it, we would do this through the banking system,” he said.
Republican presidential candidate Donald Trump previously stated that he would block the issuance of a CBDC should his presidential bid prove successful this year, while amendments to the Federal Reserve Act last month by Texas senator Ted Cruz currently seek to prohibit a CBDC’s issuance among banks entirely.
Flagstone lands £108m investment from Estancia Capital Partners
UK fintech Flagstone has received a £108 million equity investment from US private equity firm Estancia Capital Partners.
The raise comprises of both primary and secondary investments and forms one of the largest investments seen in the UK fintech sector this year.
The cash deposit platform says it plans to use the capital to “consolidate” its position within the UK’s £1.7 trillion savings market.
To do this, the fintech says it plans to invest some of the funds to boost its brand image, industry partnerships and customer service experience.
As part of its investment, US private equity firm Estancia Capital Partners will take a minority stake in Flagstone. It expects to close the transaction in Q2 of this year upon receipt of the relevant regulatory approvals.
Starling Bank names Ovo chief Raman Bhatia as new group CEO
Raman Bhatia, Starling Bank’s new CEO
UK challenger Starling Bank has appointed Raman Bhatia as its new group chief executive officer (CEO).
Set to take up the role “in early summer”, Bhatia is expected to spearhead growth initiatives across its business and retail banking units as well as its Banking-as-a-Service (BaaS) technology platform Engine, which the bank is actively trying to introduce to new markets in the Asia-Pacific region.
He is to take up the reins from John Mountain, the bank’s chief operating officer (COO), who assumed the CEO position on an interim basis following the departure of Starling’s founder Anne Boden last June.
His experience extends to UK-based renewable energy solutions provider Ovo, where he has served as both COO and CEO, and to HSBC, where he previously served as head of digital banking for its retail banking and wealth management business in the UK and Europe – a remit that also included responsibility for First Direct and M&S Bank.
Mastercard pilots new Smart Subscriptions feature in the US
Global payments giant Mastercard is currently piloting a new subscriptions management solution in the US designed to enable financial institutions to provide their customers with more transparency over their subscription-based payments.
Leveraging the open banking technology of its subsidiary Finicity, as well as its Subscriptions Control feature, which was launched last year, the company’s new Smart Subscriptions offering enables consumers to cancel, pause and resume subscriptions from a single hub.
The technology allows for spend analysis, expenditure categorisation and a reduced risk of chargebacks, supported by a single consumer interface which institutions can implement through a low-lift API.
Mastercard says it plans to make the new solution available in additional markets “later this year”.
Digital Asset’s Canton Network completes first trial with global banking heavyweights
Canton Network completes four-day trial
Major players across banking and capital markets have completed a four-day pilot of the Canton Network to test how interoperable distributed ledger applications (dApps) can leverage blockchain technology to complete atomic transactions.
The trial’s 155 participants, including BNY Mellon, BNP Paribas, Standard Chartered and Goldman Sachs, leveraged 22 dApps to execute over 350 simulated transactions for asset tokenisation, fund registry, digital cash, repo, securities lending and margin management.
According to a statement from Digital Asset Holdings, which developed and launched the Canton Network in May 2023, the success of these transactions showed how the network could “reduce counterparty and settlement risk, optimise capital and enable intraday margin cycles”.
It claims the network serves as the industry’s “first privacy-enabled interoperable blockchain”, capable of eliminating “the shortfalls of existing smart-contract blockchain networks”, namely in the arenas of data privacy and control.
