It is all about perspective and there are often (at least) two sides to a story. That’s, of course, true for FinTech news, too, and in the ones we picked for the latest edition of the FinTechnologist Weekly seems to be the case all the more, but read for yourself:
The Two Sides of Innovation
A New Record
The Met Police (that is the Metropolitan Police of London, of course) last week seized a record £180m of cryptocurrency in London linked to international money laundering and arrested a 39-year-old woman on suspicion of money laundering.
That’s rather interesting, especially so, if you consider that a number of regulators a few weeks ago expressed their concerns about the operations of cryptocurrency exchanges being used for money laundering. Back then, we reaffirmed our surprise since cryptocurrencies have been used for money laundering for a while, so it’s just another example of the authorities catching up (rather late).
Just consider that if someone manages to amass that amount of money, the operations must have been going on for a while. And if you needed more proof that this isn’t an isolated case, be advised that the latest record comes on the back of the previous record set when the Met confiscated £114m of cryptocurrency that was set as recently as 24 June.Considering that these are cases where the bad guys got caught, you can imagine how many others and, more so, how much money has been and still is being laundered through cryptocurrencies.
Yet, this is only a fraction of the overall amount of funds from criminal proceeds that are integrated into the legitimate economy even if the Met’s Deputy Assistant Commissioner Graham McNulty said that “while cash still remains king in the criminal world, as digital platforms develop we’re increasingly seeing organised criminals using cryptocurrency to launder their dirty money“. That, of course, doesn’t make it any better really, so even if they have woken up to the threat, regulators ought to increase their efforts.
This one might not be that surprising but a recent study found that Artificial Intelligence is to have biggest impact on fintech over next five years.
A survey by a payment technology company revealed that two thirds of fintechs believe AI is the technology that is going to bring the biggest changes, but what is more interesting, in my view, is that 70% of fintechs actually are already using AI despite it generally being perceived as a future technology. That, naturally, raises the question of the exact nature of artificial intelligence that is employed by these companies and how, so it’s a bit of a soft statement and depending on how you would define it, you could expect this number to be higher actually.
It’s also not overly surprising since the survey was limited to five emerging technologies, i.e. application programming interfaces (APIs), AI, blockchain, low code and edge computing. The report also found that 90% of fintechs use APIs and they are the most widely used emerging technology today, primarily driven by the success of Open Banking and that 20% of fintechs are using blockchain technology, which is seen by the authors as an indication that it has moved beyond the hype and is now being implemented more widely.
East and West, North and South
Elsewhere, the calls for action in the crypto space get louder as the Federal Reserve Chair Jerome Powell last week during a congressional hearing said one of the stronger arguments for the U.S. central bank to set up a digital currency is that it could undercut the need for private alternatives such as cryptocurrencies and stablecoins. That’s, of course, just the other side of the coin (no pun intended) in the latest discussion about new cryptocurrency laws and yet underlines the transition of digital currencies into mainstream despite the latest funk at crypto markets, so I could see it either way as positive or negative – depending on your own views, that is.
And that’s also the bottom line of the crypto-related elements in the FCA’s publication of its latest annual report that makes a point on the work the regulator has done in the field, but the increased activity also highlights the transformation we just talked about.
These are, however, always discussions about how digital innovation is perceived and dealt with in the most important jurisdictions of financial services, but if you’re interested in other examples, I’d recommend reading reports like this research paper on FinTech impact on (young) people in Indonesia. It looks at Technology Based Financial Services Innovation, Financial Literacy and Its Impact on Financial Behavior, and what is highly fascinating is the look into region that show quick adaptation ability to any changes including changes in information technology, such as in utilizing available financial services, especially since traditional financial services are less well served. It’s a slightly different approach than you might see in western countries like the US or UK, for example, because it obviously comes from a different background, but nevertheless presents some valuable insights, but why don’t you decide for yourself, right?
Well, that’s all for this week but if you have an interesting story, please connect on Twitter. And if you would like to join me on the new FinTechnologist podcast, the same applies, of course. So, make sure you get in touch and in the meantime, have a good week!
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