Silvergate Bank, known for offering banking services to the emerging cryptocurrency industry, has taken advantage of a quasi-federal lending program, the Federal Home Loan Bank of San Francisco, in order to stay afloat during a run on the bank. In Q4 of 2022, the bank saw customer withdrawals of $8.1 billion, accounting for 70% of the bank’s deposits. The Federal Home Loan Bank system was created during the Great Depression in order to make homeownership more affordable.

“FHLBs are allowed to offer secured loans to member banks so that those banks could turn around and offer mortgages to homeowners at lower rates. But, let’s be honest here. Silvergate may be a member bank, but it is certainly not in the business of offering reduced-interest mortgages to consumers. Because they received a short-term advance rather than a long-term advance, there are no restrictions which mandate that they use the funds to further mortgage-related work,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.

“There are a few reasons why this is concerning. From a purely financial perspective, the structure of the FHLB program is an issue. As a privately funded institution, it enjoys a lien priority which puts it ahead of the FDIC in bankruptcies. That means that if and when Silvergate finally succumbs to bankruptcy, the FDIC would be responsible for honouring deposit insurance on the bank’s FDIC-backed accounts, while the FHLB gets paid back first. Conceptually, the entire scheme is insane,” said Gardner.

“Beyond simply the financials, though, there’s more. This is a program that has stood the test of time for nearly a century. It was designed especially to encourage homeownership during rocky financial times. As interest rates climb through the roof and as we enter a global recession, Main Street is being bled dry from massive pandemic-era spending packages which, combined with supply chain shortages and a land war in Eastern Europe, have brought forth the worst inflationary crisis we’ve seen in a generation. In the midst of all of that, Silvergate has its hand out. It’s disgusting,” said Gardner.

“The bank is clearly trying to support its capital reserves to endure the bank run it has seen. While that’s admirable, it is just not acceptable that a quasi-federal lending program designed to bolster homeownership is actively bailing out crypto. In no world should that be okay. Not to the public, not to the government, not to the industry,” said Gardner.

Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.

“Crypto enthusiasts often have a hard time grasping how detractors could fail to get on board. This. This is why. Some companies and exchanges within the industry act with impunity. They are bad actors who have no regard for society. We saw it play out with Sam Bankman-Fried, and now we’re seeing it play out with Silverfish, though that’s just the tip of the iceberg. There’s a reason that Binance is being probed by the DOJ. The industry needs a thorough cleansing. It needs increased regulation. It needs to operate under the law, as any other industry would. Right now, it isn’t, and that’s a major problem,” said Gardner.

Alternative data specialist QuantCube Technology today announced the availability of QuantCube CPI nowcast indicators for Brazil and China. The new indicators, which quantify the Consumer Price Index at a country level in real-time, are available on the QuantCube Macroeconomic Intelligence Platform (MIP). The launch of these new indicators forms part of a planned expansion of QuantCube’s CPI nowcasts for both emerging and developed economies.

With updates delivered daily, the new indicators will give traders and investors crucial insights on inflationary trends in Brazil and China ahead of official CPI numbers which are published on a monthly basis with a time lag. QuantCube’s indicators demonstrate a strong correlation of up to 99% with official consumer price data. 

To construct the new CPI indicators the QuantCube team leveraged the proven methodology and bottom-up approach created for other developed countries – collecting frequently-published alternative data on the key subcomponents of CPI – and applied different weightings to this data, based on the specific consumption patterns of each country.

QuantCube’s CPI indicator calculations for China and Brazil incorporate two specific observations:

• Food and tobacco, together with transport-related prices such as motor fuels, best explain the dynamics of inflation in China;
• Transport prices, especially motor fuels and public transport, and essential food prices for items such as vegetables and meat are the key factors driving CPI in Brazil.

“The launch of these new CPI indicators for Brazil and China is part of our plan to expand our coverage of emerging markets and to provide real-time insights on the outlook for inflation in countries where an accurate assessment of economic conditions has historically been challenging,” explained Thanh-Long Huynh, CEO and Co-Founder, QuantCube Technology.

“Using these new CPI indicators for Brazil and China, investors can gain a significant competitive edge to generate additional alpha in currency hedging and fixed income strategies. Once combined with QuantCube’s other indicators such as GDP nowcasts, these indicators can also help determine the current macroeconomic regime effectively and can be used to guide asset rotation and inform other, more complex investment strategies.”

Further countries will be added to QuantCube’s CPI nowcasts over the next quarter.

RegTech innovator Global Screening Services (GSS) today announced the completion of a successful initial funding round, having raised over $45m / c.£37m from major investors, including AlixPartners, The Cynosure Group, and MUFG. Randal Quarles, chairman and co-founder of The Cynosure Group, and former Vice Chairman of the Federal Reserve System and Chairman of the Financial Stability Board, has joined the GSS board. William Langford, Global Head of Financial Crimes Compliance and Chief Compliance Officer for the Americas at MUFG, will serve as an observer to the GSS Board.

Over the past two years, GSS has partnered with leading financial institutions around the world to create a new collaborative approach to compliance, initially focusing on sanctions screening. In October, SWIFT announced a formal partnership with GSS, providing their expertise on security and data privacy, along with sanctions-specific support on RFIs and assurance.

Incubated by AlixPartners since 2021, GSS is now a standalone company with over 140 people supporting the business on a full-time basis. The GSS platform establishes new standards, leverages cutting-edge technology, including artificial intelligence, and an ecosystem of financial institutions and industry partners to provide streamlined compliance screening for sanctions. As well as improving standards, GSS will drive efficiency, speed up transactions and materially reduce friction for banks’ customers.

The end result will be significantly improved sanctions screening, helping to decrease the millions of international payments that are delayed by screening, whilst improving standards across the industry.

Ancoris Capital Partners (www.ancorispartners.com) served as financial advisor to GSS for this financing.

Tom Scampion, CEO of GSS:

“Sanctions screening is both an international security imperative and one of the major sources of friction in the global payment system - at a time when consumers and businesses are increasingly demanding real-time settlement . GSS is uniquely position to deliver improved regulatory compliance and an enhanced customer experience. We’re delighted to have closed this funding round and to be working with such incredible partners to take GSS to market.”

John Cusack, Chair of the GSS Development Board:

“The future of compliance will be partnerships and platforms, GSS is both. Working with banks, regulators and the industry as a whole, the GSS platform will improve standards, reduce cost and help deliver effective compliance worldwide.”

Randal Quarles, Chairman and co-founder of The Cynosure Group:

“Cynosure invests in rapidly growing, founder and management-owned businesses. Within the world of screening, GSS is the right business at the right time, addressing a problem that is well understood but until now, poorly addressed. We are excited to be partnering with Alix Partners and the GSS management team to be a part of this solution.”

Bluefin, a leader in integrated payments and data and payment security, today announced it has teamed up with Visa for network tokenization.

Through this collaboration, Bluefin will integrate directly with Visa to provide network tokens across card brands.  Bluefin will provide the network tokenization option through ShieldConex, a vaultless tokenization service that provides data security by protecting payment and ACH account data, Personally Identifiable Information (PII), and Protected Health Information (PHI) entered via an iFrame or API. In addition, Bluefin’s payment gateway, PayConex, will have the ability to process network tokens.

“The acceleration of digital commerce and card-not-present (CNP) transactions has underscored requirements for secure payment processing and data input,” said Tim Barnett, Chief Information Officer at Bluefin. “We are excited to provide our partners and merchants with greater flexibility around how they tokenize cardholder data through the addition of this network tokenization option.”

According to LexisNexis Risk Solutions’ 2022 True Cost of Fraud Study: Retail and E-commerce, the cost of every $1 lost to fraud for U.S. merchants increased 19.8% since 2019, rising from $3.13 to $3.75. Expected benefits of network tokenization include an improved payment and checkout experience, an increase in authorization rates and, according to Visa, a 28% average reduction in fraud.

“Tokenization is an imperative aspect of a safe and secure digital economy,” said Ansar Ansari, global head of platform products at Visa, Inc. “Bluefin’s collaboration with Visa helps not only secure payments, but also improves customer experience.”

Network tokenization differs from traditional payment card tokenization, where tokens for credit and debit card data are issued by a merchant’s acquirer or payment processor. Instead, the card brands issue a token and unique transaction cryptogram, which makes network tokens interoperable across acquirers, payment processors, and payment gateways.

Bluefin is performing all necessary technology enhancements to implement network tokenization on ShieldConex and PayConex with Visa technology, and the service will be available to Bluefin’s partners and merchants.

A Universal Digital Payments Network (UDPN) for stablecoins and Central Bank Digital Currencies (CBDCs) was launched at the World Economic Forum (WEF) in Davos. The network aims to provide interoperability between these digital currencies.

USPN has been in development for the last two years with contributions from GFT, Red Date Technology, TOKO, and DLA Piper. A sandbox was launched in July of 2022, where multiple banks were actively testing stablecoin transfer and FX transactions.

The network was launched at Davos with a panel discussing the rapidly evolving digital currency, interoperability, and infrastructure. The panel included representatives from Deutsche Bank, HSBC, Standard Chartered, The Bank of East Asia, and Akbank.

The UDPN reports that several Tier 1 banks will participate in a series of proof-of-concept use cases throughout the rest of this month to demonstrate how UDPN could be used to solve current and future challenges in integrating digital currency into daily business, banking and payment scenarios.

The first two of these proofs-of-concept will involve two global banks testing UDPN’s digital currency cross-border transfer and swap transaction capabilities, and how the critical “Travel Rule” can be easily implemented on the UDPN between two financial institutions for anonymous stablecoin transfers.

“The purpose of UDPN is to investigate a potential alternative to existing payments systems by enabling interoperability between fiat-backed tokens of stablecoins and regulated protocols,” said Marika Lulay, CEO of GFT. “The decentralised approach and geographic breadth of participating firms, combined with the advanced technology solution deployed for these trials, set this network apart.”

PhonePe, one of India’s largest fintech platforms, today announced it has raised $350 million in funding from General Atlantic, a leading global growth equity firm, at a pre-money valuation of $12 billion. The General Atlantic investment marks the first tranche of an up to $1 billion total fundraise that PhonePe has commenced in January 2023. Another new marque global and Indian investors have already been signed up for the second tranche, which is expected to close next month. The fundraise follows PhonePe’s recently announced change of domicile to India and full separation from Flipkart.

PhonePe plans to deploy the new funds to make significant investments in infrastructure, including the development of data centres and help build financial services offerings at scale in the country. The company also plans to invest in new businesses, including Insurance, Wealth Management, and Lending. The fundraise is expected to support PhonePe as it seeks to turbo-charge the next wave of growth for UPI payments in India, including UPI lite and Credit on UPI to enable greater financial inclusion for Indians.

Founded in December 2015, PhonePe has become a home-grown success story, with the company’s significant expansion powered by India’s emerging digital ecosystem. By building products and offerings tailored for the Indian market, PhonePe today has over 400 million registered users, meaning that more than one in four Indians are on PhonePe. The company has also successfully digitized over 35 million offline merchants spread across Tier 2, 3, and 4 cities and beyond, covering 99% of pin codes in the country.

“I would like to thank General Atlantic and all our existing and new investors for the trust they have placed in us. PhonePe is proud to help lead India’s country-wide digitization efforts and believes that this powerful public-private collaboration has made the Indian digital ecosystem a global exemplar. We are an Indian company, built by Indians, and our latest fundraise will help us further accelerate the Government of India’s vision of digital financial inclusion for all,” said Sameer Nigam, Founder and CEO at PhonePe. “We look forward to delivering the next phase of our growth by investing in new business verticals like Insurance, Wealth Management and Lending, while also facilitating the next wave of growth for UPI payments in India.’’

“Sameer, Rahul and the PhonePe management team have pursued a clear mission to drive payments digitalization and significantly broaden access to financial tools for the people of India. They remain focused on driving adoption of inclusive products developed on the open API-based ‘India stack.’ This vision is aligned with General Atlantic’s longstanding commitment to backing high-growth businesses focused on inclusion and empowerment,” said Shantanu Rastogi, Managing Director and Head of India at General Atlantic. “We are excited to partner with the PhonePe team to help enable the next generation of digital innovation in India.”

PhonePe also recently announced a full separation from the Flipkart Group. After a partial separation from Flipkart in December 2020, a number of Flipkart shareholders, led by Walmart, acquired shares in the recent separation. This move will allow both companies to chart their own growth paths, build their businesses independently, and help unlock and maximize enterprise value for shareholders of the two companies. 

Pilon, a Singapore-headquartered FinTech firm that offers a cloud-based Supply Chain Financing system, announced today that it has successfully raised a seed round of USD 5.2 million (both debt and equity). Wavemaker Partners led this round, with participation from Octava Pte Ltd and Polaris Kin Pte Ltd.

The venture-built company enables Southeast Asia’s small and medium-sized enterprise suppliers and their corporate buyers to digitise their factoring processes and unlock cash flow by accessing credit from financial institutions–all via web and mobile interfaces using a cloud-based engine.

Pilon will use the funds raised to improve its digital product offerings, expand its footprint in existing markets like the Philippines and Cambodia, and make their foray into either Vietnam, Thailand or Indonesia within the next one year.

With the new funds, the company will also scale up business acquisition and talent in areas like marketing and technology. Pilon currently has 14 people across Singapore, the Philippines, and Cambodia.

“Pilon aims to bridge the gap and foster healthier relationships between buyers and suppliers which has been a longstanding concern. We are confident that our suite of offerings and solutions would provide a seamless, fuss-free experience for suppliers and buyers to easily access, predict, and manage their funds. With the fresh funds raised, we will be able to unlock the next phase of Pilon’s growth and resolve complex challenges,” commented Eddie Lee, Co-founder and CEO of Pilon.

Buyers frequently demand the longest payment terms possible, while suppliers are forced to accept them under their contractual agreements. Even after agreed-upon payment terms have been established, suppliers continue to experience late payments on occasion, affecting their cash flow which often leads to them missing out on future opportunities. Lenders are then brought into the picture to bridge the cash flow gap; however, lenders frequently conduct time-consuming and labour-intensive checks to verify the authenticity of the deal, adding to the cost and delay for the suppliers, which eventually results in poor experiences for all parties.

With Pilon, suppliers can easily access and track their owed invoices, and choose one or multiple invoices for early financing via their mobile app. They will also be able to choose the date they want the funds in their bank account (if they do not require it immediately), enabled by the built-in spot factoring and dynamic discounting, which will present the discounted offer to the supplier for consideration before accepting it. Above all, buyers and suppliers can now have a better working relationship as buyers are allowed up to 120 days of payment terms while suppliers’ invoices can be paid or financed on demand.

In 2020, Eddie Lee, together with Alex Chua, founded the venture built Pilon in collaboration with Goldbell Financial Services, one of Singapore's largest non-bank financial institutes, with the goal of helping suppliers, corporate buyers, and financial institutions digitalise their business processes, improve invoice financing through technology, and promote financial inclusion.

Paul Santos, Managing Partner at Wavemaker Partners, shared, “SME suppliers in emerging markets often face cash flow challenges due to the rigidity of the payment processes of their buyers. We were impressed with how Pilon’s platform helps suppliers get paid faster and with less friction, while providing buyers longer payment terms. With Pilon, SMEs that were traditionally excluded from the formal financial sector can now access much-needed financing to help them grow.”

Pilon aims to onboard another 1,000 suppliers and collaborate with another five banks or financial institutions across the region.

FNZ, the global wealth management platform, has agreed to acquire YieldX, a U.S.-based provider of fixed-income portfolio management technology, optimization services and direct indexing tools for the wealth management industry.

Financial institutions, advisors and their clients will benefit from the unique combination of FNZ’s full-service, end-to-end platform and YieldX’s digital infrastructure and technology solutions. These innovative capabilities, which will be integrated into FNZ’s wealth platform, enable clients to scan the universe of fixed-income opportunities globally, and quickly identify the outcomes that mirror their desired term and yield, based on their risk profile.

The acquisition will further meet FNZ’s mission to deliver personalized investment solutions to more people across the wealth management industry. This is part of FNZ’s ongoing focus on innovation, aiming to provide more investment options at scale as end investors increasingly seek variety and transparency in their investment portfolios.

FNZ combines cutting-edge technology, infrastructure, and investment operations into a single, state-of-the-art platform, enabling global financial institutions to rapidly deliver personalized services and innovative wealth products that are seamlessly aligned with the needs of their clients.

Founded by Adam Green and Steve Gross in 2019, YieldX is based in Miami and has an office in New York. It services a wide range of clients, from top-tier wealth and asset managers to B2C financial services and technology providers operating across the globe.

Following the acquisition, Adam Green will join FNZ as CEO of Asset Management, and Steve Gross will join FNZ as Head of Asset Management Strategy. Together with the senior leadership team, they will support the broader expansion efforts for asset management products, solutions, and technology across North America.

Today, FNZ administers more than $1.5 trillion in client assets representing over 20 million investors worldwide. It partners with over 650 large financial institutions and 8,000 wealth management firms in 21 countries, including abrdn, Barclays, Colonial First State, Envestnet, Generali, Lloyds Bank, Santander, and Vanguard.

Tom Chard, CEO North America, FNZ, said: “We have a joint vision of opening up wealth by transforming the wealth management industry through more transparent, accessible, and personalized technology solutions. YieldX’s solutions perfectly complement our existing strengths and will further differentiate our offering for the benefit of all clients.”

“The acquisition also provides a unique opportunity to accelerate our growth and presence in the U.S. as we continue to add market-leading capabilities to our global wealth platform. We’re incredibly pleased to welcome Adam and Steve, as well as the wider YieldX team to FNZ. Like us they are highly innovative, customer-obsessed and are an invaluable addition to our team.”

Adam Green, co-founder and CEO of YieldX, said: “The demand for digital, personalized fixed-income solutions has skyrocketed over the last year as yields have risen. Pairing our capabilities with the world-class platform and team at FNZ will allow us to accelerate and scale the delivery of our solutions.”

“I am very excited about the opportunity to join FNZ and work with such a dedicated team. The opportunity to leverage YieldX to support FNZ’s expansion is a perfect fit.”

Channel Capital Advisors LLP (Channel) has appointed Bhoomika Kesaria as its new head of investor relations.

Channel is an FCA-regulated alternative investment fund manager (AIFM) specialising in fintech, working capital and trade finance investments. Since 2014, the London-headquartered company has deployed more than $9 billion of assets across fintech lending and working capital financing, including trade receivables, inventory, and supply chain finance.

Bhoomika will be responsible for Channel’s fundraising efforts across all products as well as nurturing the company’s relationships with investors and stakeholders. She will drive growth in Channel’s $300 million Fintech Lending Strategy, which delivers capital to leading fintech lenders to fund their loans to SMEs.

Bhoomika joins Channel from Lendable, an investor in fintech lending platforms in emerging markets. She has over 13 years’ industry experience across capital introductions, investor relationship management, private debt, and structured finance. She has worked with institutional investors across Asia Pacific, EMEA, and the Americas, including firms such as Goldman Sachs, Northern Arc Capital and IBM.

Bhoomika will report into Paul Wilson, Channel’s chief investment officer.

Paul said: “We’re delighted to welcome Bhoomika to the team. She brings a wealth of industry knowledge and experience in investor relations, fundraising and structured finance – she will be integral to our efforts to broaden the reach and strength of our relationships with investors.

“Bhoomika joins at a very exciting time for the company. With Channel having recently closed the first tranche of our specialist Fintech Lending strategy, she will play a key role in overseeing the firm’s capital raising efforts and furthering Channel’s ambitions to help digital platforms provide much-needed finance to SMEs.”

Bhoomika added: “I’m excited to join the very talented team at Channel. I resonate with the company’s passion for supporting the sustainable growth of finance across the SME space, enabled by data-driven underwriting and structuring. I look forward to enhancing the firm’s investor relations efforts.”

The British Business Bank has agreed an initial £175m ENABLE Guarantee with specialist commercial lending bank, DF Capital.

The Guarantee will enable Manchester-based DF Capital to provide up to £225m of additional inventory finance annually through its commercial floorplan and unit stocking solutions for UK SME dealer and manufacturing businesses.

This is the first time the ENABLE Guarantee programme has supported inventory finance. This specialist form of lending is critical to supply chains, supports the availability of working capital and improves cashflow across product distribution cycles. 

DF Capital received its banking licence in September 2020. One of the objectives of the British Business Bank is to increase the diversity of supply and type of finance available to smaller businesses. In supporting new market entrants in this way, the Bank can help rapidly build the number of businesses supported and provide more choices across the market.

The Guarantee commitment may be increased to £350m, which would support additional finance of around £450m annually.

Reinald de Monchy, Managing Director, Guarantee and Wholesale Solutions, British Business Bank, said: “Supporting lenders in providing finance for smaller businesses is key for us at the British Business Bank. This is a significant facility and has the capacity to generate growth for dealerships and manufacturers across the UK as well as providing a greater choice of finance for smaller businesses.”

Carl D’Ammassa, Chief Executive Officer, DF Capital said: “We are delighted to have worked closely with the British Business Bank to utilise an ENABLE Guarantee for inventory finance for the first time. This sizeable facility gives us a runway to grow our lending and support more manufacturers and dealers in the years ahead. This has been an important milestone in our capital strategy, giving us increased capacity to scale the bank.”