The Democratization of Finance: How Fintech is Making Financial Services Accessible to All
The democratization of finance has been a hot topic in recent years, with the rise of fintech paving the way for a more inclusive and accessible financial system. Financial services that were once only available to a select few are now being made available to everyone, thanks to advances in technology and the ingenuity of fintech startups. In this blog post, we'll explore how fintech is making financial services accessible to all.
The traditional financial system has long been criticized for being exclusive and only serving a select few. Banks and other financial institutions typically require high account balances, credit scores, and other prerequisites that leave many people out. Fintech is changing this by creating innovative solutions that are accessible to everyone, regardless of their financial situation.
One of the primary ways fintech is democratizing finance is through mobile banking. Mobile banking apps allow users to access their accounts and conduct transactions from anywhere, at any time. This is especially helpful for those who don't have access to physical bank branches or who have difficulty traveling to them. Mobile banking also eliminates many of the fees associated with traditional banking, making it a more affordable option for many people.
Another way fintech is making finance more accessible is through lending platforms. Peer-to-peer lending platforms like LendingClub and Prosper allow borrowers to obtain loans directly from individual investors, cutting out the middleman of traditional banks. This means that borrowers can often get better interest rates and more flexible repayment terms than they would through a bank.
Investment platforms are also helping to democratize finance. Robo-advisors like Betterment and Wealthfront allow investors to get started with a small amount of money and provide personalized investment advice based on their goals and risk tolerance. This makes investing more accessible to those who may not have had the knowledge or resources to invest in the past.
Fintech is also helping to democratize finance through cryptocurrency. Cryptocurrency like Bitcoin and Ethereum allows people to transact without the need for a central authority or traditional financial institution. This makes it easier for people who may not have access to traditional banking systems to participate in the global economy.
Finally, fintech is helping to improve financial literacy and education. Many fintech startups offer educational resources and tools to help users better understand their finances and make informed decisions. This is especially helpful for those who may not have had access to financial education in the past.
In conclusion, fintech is playing a major role in the democratization of finance. By creating innovative solutions that are accessible to everyone, regardless of their financial situation, fintech is helping to create a more inclusive and fair financial system. As technology continues to evolve, we can expect fintech to continue to break down barriers and make financial services available to all.
Zilo Secures £25m in Series A Funding
The funding was spearheaded by Fidelity International Strategic Ventures (FISV) and Portage, with additional contributions from State Street and Citi. According to PitchBook data, the company had previously raised $10.6 million in a seed round in October 2022.
Established in 2020 and headquartered in London, Zilo's mission is to enhance cost efficiency, reduce complexity, and generate sustainable value for global asset and wealth management firms, along with their clientele. Zilo's software facilitates the replacement of outdated legacy systems with a digital, real-time user experience. The platform went live with its inaugural client in July 2023.
The newly secured funds will be channeled towards accelerating product development, fostering user acquisition, and expanding its presence in the market. Additionally, the capital will be allocated to entering new markets and establishing strategic partnerships to diversify its offerings.
Philip Goffin, the founder and CEO of Zilo, commented on the funding, stating, "We are committed to empowering financial service institutions to phase out obsolete legacy technologies and significantly enhance the cost efficiencies of their operations by leveraging Zilo to transition to a modern digital solution that supports existing fund structures, new digital assets, and improves client experiences."
SOURCE: Fintech Inshorts
Amethis buys majority in CBS
Headquartered in Paris, France, CBS has been delivering banking solutions internationally for the past 25 years. Its prominent offerings include CapitalBanker, a core banking solution, and CapitalPrivate, a wealth management solution tailored for European private banks and wealth management specialists.
CBS, employing over 300 professionals, operates in multiple locations, including France, Monaco, Switzerland, the USA, Morocco, Lebanon, and Ivory Coast.
Amethis, through its investment, aims to support CBS in accelerating organic growth, especially on an international scale. The strategy includes facilitating CBS's external growth through strategic acquisitions, expanding its geographical reach, and reinforcing existing services.
In this transaction, Amethis secures a majority stake, collaborating with CBS's president and CEO, Samer Hanna, COO Michel Tueni, CFO Aziz Akl, and other key executives, all of whom are reinvesting their proceeds. Founded in 2012 and based in Paris, Amethis manages assets exceeding €1 billion, with over 30 investments to date. As a partner member of Edmond de Rothschild Private Equity, Amethis provides growth capital to mid-sized businesses across various sectors through its six offices in Europe and Africa.
SOURCE: Amethis
Ant Group Close to Acquiring MultiSafepay
In its pursuit of global expansion, Ant Group had previously entered the Singaporean market through the acquisition of 2C2P in 2022. Known for operating the cross-border payments platform Alipay alongside its affiliate Alibaba Group, Ant Group has established itself as a key player in the worldwide financial services market.
MultiSafepay, generating an annual revenue of US$50 million, is poised to become a valuable addition to Ant Group's European portfolio. Unlike many companies, MultiSafepay has achieved substantial growth organically, with no external investment, expanding from its native market into Spain and Germany.
Ant Group's latest acquisition involves obtaining 100% ownership of MultiSafepay, a company renowned for providing payments acquiring and processing services to over 18,000 SMEs. Moreover, MultiSafepay collaborates with commercial partners to offer supplementary services to its clients. In 2022, the Dutch firm recorded a net profit of US$1.43 million on gross income totaling US$13.02 million. With this impending deal, MultiSafepay's CEO, Olaf Geurs, is expected to pass the reins to Ant Group.
SOURCE: Fintech Magazine
FirstOntario's Open Banking Readiness with Flinks and Everlink
This partnership is set to provide greater control over financial data to FirstOntario's members, enabling the credit union to deliver a more personalized range of financial services. Lloyd Smith, CEO of FirstOntario, emphasizes the importance of this capability as a "key strategic priority" and underscores the readiness to offer this emerging service once legislatively enabled, given the anticipation surrounding open banking in the marketplace.
Flinks, headquartered in Montreal and majority-owned by the National Bank of Canada, and Everlink, based in Markham, joined forces in March 2023 to spearhead the adoption of consumer-driven banking in Canada. They achieved this by combining Flinks' open banking infrastructure product, Outbound, with Everlink's digital solutions.
This collaboration aligns with the federal government of Canada's initiative, unveiled last November, to implement an open banking framework in its upcoming budget. The framework is slated to be nationally operational in 2025, prompting financial institutions like FirstOntario to establish partnerships with suitable providers in preparation.
Yves-Gabriel Leboeuf, CEO of Flinks, notes the growing momentum for a consumer-driven financial industry, emphasizing that the inclusion of open banking functionality within FirstOntario will "elevate the banking experience" for its members.
As per the federal Department of Finance, approximately 9 million Canadians currently use screen-scraping to share confidential banking credentials with service providers, posing privacy, liability, and security risks. Canada aims to replace this process with open banking, following the lead of countries such as Australia, the European Union, the UK, Japan, and Singapore.
SOURCE: Banking Frontiers
Global Fintech Investment Drops 48% in 2023
The number of funding deals also saw a notable reduction, with capital being distributed across a total of 3,973 deals compared to 6,397 deals recorded in 2022. The United States maintained its position as the leader in fintech funding by a considerable margin, attracting $24 billion across 1,530 deals. The UK secured the second spot with $5.1 billion, followed by India in third place with $2.5 billion. The UK's $5.1 billion in funding for 2023 was distributed across 409 deals, reflecting a 65% decrease from the previous year's $14.6 billion across 592 deals.
Innovate Finance highlights that this decline in funding aligns with trends observed in other major fintech markets, including the US, which experienced a 44% drop from 2022. An exception to this trend was the UAE, where investments surged by an impressive 92% compared to 2022. In the UK, female-led fintech companies attracted $536 million in 2023 across 59 deals, representing 10.5% of the country's total funding. The industry body also points out that "the UK received more investment in fintech than the next 28 European countries combined" throughout the year.
Janine Hirt, CEO of Innovate Finance, notes that despite economic challenges for fintech globally in 2023, the UK sector demonstrated resilience by maintaining its position as a global investment hub, ranking second only to the US and leading in Europe. Hirt sees a "clear opportunity" for UK fintechs to strengthen their presence in Asian markets, which collectively attracted "more combined investment than their European counterparts."
Innovate Finance compiled and summarized its report using data from PitchBook as of December 31, 2023.
SOURCE: Innovate Finance