Nikolay Storonsky is the founder and CEO of fintech start-up, Revolut.

Revolut, the biggest European digital bank with 13 million users, is close to applying for a banking license in the U.S., CNBC has learned exclusively.

The London-based fintech firm plans on applying for a charter with the Federal Reserve Bank of San Francisco and California’s Division of Financial Institutions within weeks, said people with knowledge of the matter.

The move from Revolut, valued at $5.5 billion in a February fundraising round, is the latest example of one of a new breed of digital challengers seeking to become a regulated bank. In March, payments giant Square won approval to start a bank. Earlier this year, Lending Club, a fintech pioneer, bought Radius Bank for $185 million in part to gain a national bank charter.

Even though Revolut’s bank charter will be with California, it will allow the lender to operate widely throughout the U.S. via interstate agreements, said one of the people, who declined to be identified speaking about the start-up’s private plans.

Still, its move to apply for a state banking charter rather than one through a national regulator like the Office of the Comptroller of the Currency drew questions from some industry observers.

The U.S. financial regulatory regime is large and fragmented, and fintech startups have taken several different approaches to breaking into the market. The most successful so far, like Chime and Current, have simply partnered with existing banks.

Square’s bank will be an industrial-loan company based in Utah and supervised by the Utah Department of Financial Institutions and the Federal Deposit Insurance Corp. Last month, cryptocurrency exchange Kraken Financial won a bank license in Wyoming.

Meanwhile, state financial regulators have clashed with the OCC over its move to create a special charter for fintech firms.

Chad

Lufax Holding, the operator of one of China’s biggest online wealth management platform, filed to go public in the US market, the latest Chinese company to shrug off concerns about worsening relations between the world’s two largest economies.

The Shanghai-based company is backed by China’s biggest insurer Ping An Insurance (Group) and follows in the footsteps of the insurer’s unit OneConnect Financial Technology, which raised US$312 million in its New York Stock Exchange (NYSE) debut in December.

Lufax said it plans to list its American depositary shares on the NYSE under the symbol, LU, it said in a regulatory filing early Thursday.

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Lufax did not disclose the size of its offering, using a common place holder figure of US$100 million in its filing with the US Securities and Exchange Commission. But sources have said the IPO could raise between US$2 billion and US$3 billion.

Lufax was valued at US$39.4 billion during its last-known funding round at the end of 2018. It previously considered a Hong Kong listing in 2018, but that never materialised. Details of potential US listing by Cayman Island-registered Lufax first emerged in July.

In Thursday’s filing, Lufax showed it had a net profit of 7.2 billion yuan (US$1.03 billion) for the six months to June 30. It reported a net profit of 7.5 billion yuan a year earlier.

The company said it plans to use the proceeds from the offering for general corporate purposes, including product development, sales and marketing activities and improving its technology infrastructure.

The company stopped facilitating new peer-to-peer loans in August last year. As of June 30, outstanding peer-to-peer loans as a percentage of total client assets had declined to 12.8 per cent.

Goldman Sachs,


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Access to financial services is one of the most pressing issues of the modern days. In theory, the modern financial system provides a lot of opportunities and financial services, such as bank accounts, savings, credit, investment products, etc, but in reality larger populace of even most countries do not have access even to the very basic financial services. Investment is even worse in terms of accessibility. 

Traditional finance, unfortunately, can do very little to solve this issue. For example, in the United Kingdom, financial inclusivity is one of the main priorities for the House of Commons Treasury Committee, but in its annual reports the committee admits that the existing situation is not really improving. Regulatory and banks interests don’t allow much to be done outside of direct government sponsorship of very limited programs.  Obviously, such programs are only a palliative solution.

In developing countries the situation is even worse. For example, in Egypt, less than half of registered companies actually work with the banks.

Additionally, in developing countries local banks charge much higher interest due to unstable economic output and access to credit is restricted unduly to mitigate any losses on the local financial institutions. Large banks in developed countries are also unavailable for developing countries residents—partly due to local government policies, partly due to banks’ rules.

This is where fintech tries to help.  

Seeing these gaps in the financial services industry, providing wider access to financial services became the focus of the fintech industry.

Proliferation of cryptocurrencies led to development of a whole plethora of projects and full-fledged ecosystems, whose goal was to ensure easy access to financial products. Money transfers, lending platforms, even investment opportunities—blockchain and cryptocurrency made all of it available for everyone.

LONDON (Reuters) – Citigroup Inc

has made a strategic investment in Genesis Global Technology Limited, a London-based startup that develops technology to make it cheaper and faster for financial firms to build applications such as trading systems, the companies said on Monday.

The companies did not disclose the amount and terms of the investment.

Genesis has developed a so-called “low-code application platform”, or tools to enable banks and other financial institutions to build new software for various business lines with fewer amount of coding.

Genesis’ technology can make it on average 80% faster than building an application from scratch, said the company’s Chief Executive Stephen Murphy.

“It gives you every building block you’ll need to cover any use case that you would want to implement in the financial markets,” Murphy said in an interview.

The investment comes as banks continue to partner with young technology companies that they hope can make their IT operations more efficient and less costly. The need to automate more processes faster and keep costs in check has grown during the COVID-19 pandemic, as more bank business is now carried out remotely.

Citi backed Genesis through its Markets FinTech Investments and Sprint groups, the company said.

“The low code development as a paradigm is catching on quite quickly, it has the potential to change the way the financial industry builds applications in the future,” Nikhil Joshi, global head of spread products technology and head of markets technology for North America said in an interview.

Citi tested Genesis technology to build a proof of concept for a structured credit trading system, he said.

(Reporting by Anna Irrera; editing by Diane Craft)

Copyright 2020 Thomson Reuters.

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  • Fintechs expect embedded finance to be a dominant trend by 2030, with big techs leading the charge.
  • This would open partnership and customer acquisition opportunities for fintechs.
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry with the Fintech Briefing. You can learn more about subscribing here.

The fintech industry expects financial services to increasingly be embedded into nonfinancial platforms over the next decade, so much so that fintech will no longer be a distinct sector, per a press release seen by Insider Intelligence.

Fintechs' view on big tech firms offering financial services

Fintechs expect embedded finance to be a dominant trend by 2030.

Business Insider Intelligence


“Embedded finance” is a term for nonfinancial firms directly offering financial products and services to their customers while retaining complete control over the customer experience. The findings are based on the study “Fintech 2030: The Industry View,” by payments provider Tribe Payments, which surveyed 125 fintech executives.

Respondents expect big tech firms in particular to accelerate this trend, with fintech integrations powered by advances in machine learning, IoT, and automation.

  • Big techs will increasingly embed fintech offerings on their platform. Thirty-four percent of fintechs expect that big tech firms will become aggregators of bank and fintech services, as seen with Google’s checking account, where Google handles the consumer-facing front end while accounts are held by FDIC-backed partner institutions. And 24% of respondents go as far as to say big tech firms will compete on an equal footing with banks and fintechs, similar to what we have seen with Alibaba-backed Ant Financial in Asia.
  • Algorithms and data collection tech will power the shift to embedded finance. Respondents predict that machine learning (71%), IoT (49%), and automation (40%) will be the most important technologies, as these support nonfinancial firms’ access to financial services. For example, booking platform Campings.com has integrated