When the first fintechs started taking nibbles out of the banking industry a few years back, fintech leaders promised to upend finance without even thinking about a banking licence. Banking licences were for boring old banks. Not anymore. UK peer-to-peer lender Zopa now becomes the latest fintech to pick up a banking licence. "The company said on Tuesday that it had been granted an initial permit with restrictions from the Financial Conduct Authority, the UK's financial watchdog, to open a bank," reports CNBC.com. "Zopa is considered to be one of the world's first peer-to-peer lenders. It was launched in 2005, ahead of U.S. rival LendingClub and U.K. enterprise-focused lender Funding Circle." Zopa says it will launch a credit card, a savings account and a money management app. The company follows Klarna as former fintech which has applied for and gained a banking licence.
Africans will be watching with interest as three new banks launch in South Africa soon. "The mobile banking newcomers, Discovery Bank, TymeBank and Bank Zero, all expect to have substantially lower cost-to-income ratios than the big five lenders, giving them scope to disrupt the pricing of retail banking products in South Africa," reports Reuters. Sandile Shabalala, chief executive of Tyme Bank, told Reuters: "We are here to shake up the status quo. Much the same as Uber did in the taxi industry." It's likely that at least some of the three will look to expand in due course, as they will build on the digitalised scale-up model that has allowed fintechs such as Revolut and N26 to expand into other markets at speed and with low personnel costs. And the costs, according to Michael Jordaan, are remarkably low. Mr Jordaan will have something to compare to, as he was previously the chief executive of FNB. "I have been dumbfounded at how low the cost can be," said Bank Zero's co-founder Michael Jordaan, best known for turning FirstRand's retail banking operation into the most profitable in South Africa. "Our technology cost is 1 percent of 1 percent of the annual tech budget at one of the big banks."
In India, WhatsApp is looking to properly start its payments business as chief executive Chris Daniels has written to the RBI looking to re-start WhatsApp Pay across the country. "In a letter to the RBI, Daniels reportedly said: 'I write to request your formal approval to immediately expand WhatsApp's BHIM UPI (Unified Payments Interface) compliant payments product to all users in India.'" After starting testing earlier this year, the company was forced to close the service after the Indian government stated that the company must have a physical presence and personnel in India, and issues around data localisation that have also forced a major re-think for Facebook in Europe. Facebook's Basics programme also rubbed the government the wrong way.
FirstRand scored four stars in the 2018 Lafferty Banking 500 study. The maximum score is five stars.
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