Daily Dash: Starling Boss Flies Away

May 26, 2023
Starling’s CEO and founder has said she is stepping down from the role after £453m in revenue, 365-day payments launch in New Zealand and the EU’s data protection body elects a new chair.

Boden Announces CEO Exit At Starling

Anne Boden, the chief executive of Starling Bank, has announced that she is stepping down as CEO to avoid a conflict of interest being also a major shareholder. 

“I have spent nearly a decade here as both the founder and CEO, a dual role which is unique in UK banking,” she said. “It’s been all-consuming and I’ve loved every minute of it.

“Now that we have grown from being an aspiring challenger to an established bank, it is clear the roles and priorities of a CEO and a large shareholder ultimately differ and require distinct approaches,” Boden continued. “As Starling continues to evolve and grow, separating my two roles is in the bank’s best interests.”

Boden, a former Royal Bank of Scotland and Allied Irish Banks (AIB) executive, holds a 4.9 percent stake in the challenger bank. 

John Mountain, the company’s chief operating officer, is taking over as interim CEO. He has spent seven years at the company and is a former director of Pay.UK. 

Boden’s announcement comes in conjunction with record pre-tax profits of £195m for the year to March 31, 2023, a sixfold increase on the previous year’s figure of £32m.

365-Day Payments Arrive In New Zealand

Starting today (May 26), New Zealanders will be able to transfer money each day of the week, including public holidays and weekends, Payments NZ has announced.

Up until now, banks in New Zealand could send and settle payment transactions only on business days.

“We’re excited to see the next evolution of payments in Aotearoa [Maori name for New Zealand], which is the end of the traditional ‘five business days’ model for electronic bank payments,” says Payments NZ chief executive Steve Wiggins.

The move to 365-day payments will primarily affect retail payments, including direct credit transfers, direct debits, automatic payments, and bill payments. High-value transactions will continue to operate under the existing five business days model.

The change will in particular help small-to-medium businesses to improve their cashflow over weekends and public holidays.

The new feature will be available for customers of ANZ, ASB, Bank of China, BNZ, Citi, HSBC, ICBC, Kiwibank, TSB and Westpac, which together serve the majority of consumers in New Zealand, Payments NZ said.

European Data Protection Board Elects New Chair

The European Data Protection Board (EDPB) has elected a new chair, Anu Talas, who will take over from outgoing chief Andrea Jelinek.

Talus got 19 votes out of 27 in two rounds. 

Talus is currently the head of the Finnish Data Protection Authority (DPA), a function she will combine with the role of EDPB chair.

“Part of the newly adopted EU digital legislation overlaps with the GDPR,” said Talus upon appointment. “Going forward, it is crucial to ensure that the legal framework related to the data protection is coherent, that the competences of the EDPB are safeguarded and that fragmentation is avoided.

“Grey areas are in no one’s favour, not the individuals whose personal data we protect, nor economic operators who need legal certainty.”

The EDPB is responsible for ensuring the General Data Protection Regulation (GDPR) and the Law Enforcement Directive are applied consistently and ensures cooperation between national authorities, including on enforcement.

FBI Cracks Down On 4k Money Mules

US law enforcement agencies have carried out more than 4,000 actions against individuals responsible for facilitating a range of fraud schemes involving money mules.

The announcement marked the conclusion of a three-month campaign by the Justice Department, FBI and US Postal Inspection Service (USPIS) that disrupted networks used by foreign fraudsters to obtain fraud proceeds.

According to the announcement, some individuals knew they were facilitating fraud, while others were victims and may have been unaware that their activity contributed to criminal activity.

The enforcement actions were targeted at those who knowingly assisted fraudsters. Some of them were served warning letters, while others faced criminal prosecutions or civil actions.

“The money mule campaign was an effort to educate the public, disrupt criminal enterprises, and provide feedback to financial institutions who go to great lengths to implement anti-money laundering programs,” said assistant director Luis Quesada of the FBI’s criminal investigative division.

This was the fifth US law enforcement campaign aimed at disrupting these money transmitting networks. Since the first campaign, agencies have collectively taken more than 12,000 actions, the announcement said.

LGBTQ+ Banking Start-Up Shuts Down Mired In Scandal

Daylight, a digital banking app built for the US' LGBTQ+ community, is shutting down weeks after three former employees filed a lawsuit against the start-up.

“I’m incredibly sad to announce that today we are closing Daylight, the first and only LGBTQ+ banking platform in the USA,” said co-founder and CEO Rob Curtis in a blogpost.

The closure comes just weeks after an article in NY Magazine alleged inappropriate behaviour by Curtis.

The final day of banking operations will be June 30.  

“The banking industry is in a time of great change and after a long period of soul searching, I feel now is the right time to exit this market.”

ChatGPT An Opportunity, Not A Threat, For Banks, Says Lux Association

Bankers think that ChatGPT will be beneficial for the financial services industry, a new survey by Association des Banques et Banquiers du Luxembourg (ABBL) and Societe Generale has found.

“ChatGPT and the like will have a positive impact on efficiency and could be part of the answer to growing pressure on banks' profitability,” said Ananda Kautz, head of innovation, digital banking and payments at the trade association.

Some 76 percent of respondents said that they see tools such as ChatGPT as an opportunity for their organisation. 

Meanwhile, 57 percent said they had plans to implement ChatGPT or other AI-powered chatbots for specific use cases. This figure is even more striking for credit institutions, where the survey found 88 percent planned to do so.

“The release of ChatGPT marked the beginning of a new era for business,” said Laurent Marochini, chair of ABBL’s fintech and innovation forum. “The first movers will be rewarded with lower costs, increased speed, and greater accuracy.” 

Hong Kong Central Bank Launches Latest Phase Of CBDC Pilot Programme

The Hong Kong Monetary Authority (HKMA) has launched the latest phase of its e-HKD pilot programme, with support from 16 companies that will be participating in the pilot in 2023.

In a statement, the HKMA said the 16 companies will work on 14 individual tests across six major categories, including offline payments, programmable payments and settlements using Web3 transactions and tokenised assets.

The 16 companies include Alipay Financial, Mastercard Asia, Ripple Labs, Visa and HSBC.

“I am very excited to see that the pilot programme has attracted immense industry interest,” said Eddie Yue, chief executive of the HKMA. 

“These innovative use cases proposed by the industry truly open our eyes to new possibilities of what central bank money can do, and how e-HKD can potentially benefit the general public and businesses in Hong Kong.”

Pandemic Payment Habits Stick, US Fed Finds

New research from the US Federal Reserve has found that payment trends from during the COVID-19 pandemic have continued, including a shift toward credit card payments and a slight decrease in the share of cash-based transactions.

“We found that some of the major payment trends that started early in the Covid-19 public health emergency have continued into the pandemic’s later stages,” said Kathleen Young, executive vice president of the Federal Reserve Bank of San Francisco and chief of FedCash Services.

Consumers have continued to use credit cards, the most used payment method in 2022, more often, while the share of in-person purchases and person-to-person (P2P) payments has remained steady since 2020, at 81 percent.

At the same time, cash usage declined slightly from 2020 and 2021, to 18 percent of all payments.

“This enduring demand [for cash] indicates that there are consumers who need or choose to use cash, underscoring the need for a strong and resilient payments system,” Young added.

Tencent Launches WeChat Palm Pay, As Beijing Metro Goes Biometric

Chinese tech giant Tencent has launched a new feature that allows WeChat users to pay at facial recognition scanners using only the palm of their hands.

WeChat Palm Pay authenticates transactions by pairing surface-level palm prints with the unique pattern of veins running through the hand, both of which are tethered to a user’s device.

The new feature has already been tested among selected merchants in Shenzhen, and will now be rolled out for other use cases, such as public transport payments.

In Beijing, this week the Daxing International Airport Line became the first metro line in the world to support palm payments after launching WeChat Palm Pay functionality, according to state-owned news agency China Daily.

EU Council Agrees Instant Payments Position

The European Council has agreed its position on the instant payments proposal, meaning it can proceed to negotiations, otherwise known as trilogues, with the European Commission and the European Parliament once lawmakers have reached an agreement of their own. 

“Today we agreed our position on revised rules which will boost the speed of money transfers in Europe,” said Elisabeth Svantesson, minister for finance in Sweden. “This will increase the choice of payment options for consumers in Europe.”

In its position, the Council specifies that the implementation of the new rules will happen faster in member states that are within the euro area. 

For payment service providers located in member states outside the euro area, meanwhile, there will be a phased implementation time. 

In the first phase, they will be obliged to carry out instant payments only during business hours, and in a second step the same rules as for euro area payment service providers will apply. 

The Council said that this is to address concerns that payment service providers outside the euro area could face challenges accessing euro liquidity outside regular business hours. 

Meanwhile, the sending of instant payments in euro from non-euro accounts will be only mandatory during business hours for those payment service providers who also provide standard transfers in euro.

PSR Names First Head Of Supervision And Compliance Monitoring

The UK's Payment Systems Regulator (PSR) has appointed Oliver Hanmer to serve in the newly-created role of head of supervision and compliance monitoring.

Hanmer will also become a member of the PSR executive team.

He will take up the role on June 26 to lead the newly-created Supervision and Compliance Monitoring Division.

Hanmer joins from the Bar Standards Board, the independent regulator of the barrister’s profession, where he is currently director of regulatory operations.

“Having led authorisation and supervision functions at the Bar Standards Board, Oliver has a proven track record of driving best practice in areas of public interest and delivering improvements when standards fall below what is expected,” PSR managing director Chris Hemsley commented.

New York Fed, Singapore Completes wCBDC Experiment

The Federal Reserve Bank of New York and the Monetary Authority of Singapore (MAS) have published a research report detailing the results of the second phase of a joint wholesale central bank digital currency (wCBDC) project.

As part of its so-called Cedar x Ubin+ experiment, the central banks settled hypothetical payments using simulated wCBDCs in a test environment.

The goal of the project was to examine whether distributed ledger technology (DLT) could be used to improve the efficiency of cross-border wholesale payments and settlements involving multiple currencies.

“Our research collaboration with the MAS reveals key opportunities for central bank innovation to play an important role in easing wholesale payment flows globally and improving settlement outcomes,” Michelle Neal, head of the markets group at the New York Fed commented.

Ripple Unveils CBDC Platform

Ripple has unveiled its new central bank digital currency (CBDC) platform, created to enable central banks and governments “to bring the next level of digitisation to their financial services”, as well as help bring financial access to the unbanked. 

“Partnering with Ripple to help create our national digital currency is part of our commitment to lead in financial innovation and technologies, which will provide the citizens of Palau with greater financial access,” said Surangel Whipps Jr, president of the Republic of Palau.

Alongside the Republic of Palau, Ripple is also currently engaged with work with the Central Bank of Montenegro and the Royal Monetary Authority of Bhutan.

“As a trusted partner to several central banks, we believe this platform will help solve problems for many central banks and governments who are devising plans and developing a technology strategy for CBDC Implementations, ” said James Wallis, vice president of central bank engagements and CBDCs. 

“The innovative capabilities of the platform will help enable instant settlement of both domestic and cross-border payments, reduce risk, and improve the user experience of quickly sending and receiving digital currency on either side of a transaction.”

Fall From Grace For Frank Founder

Charlie Javice, a once promising fintech CEO, has been formally indicted by US authorities in the Southern District of New York on charges of defrauding JPMorgan Chase in its $175m acquisition.

The US banking giant agreed to buy Frank in late 2021. However, last year, it sued Javice and accused her of creating a list of millions of fake users to get the deal completed.

Javice. meanwhile, had filed her own suit against JPMorgan in an effort to force the bank to cover her legal fees.

The New York native was arrested earlier this year for conspiracy, wire fraud and bank fraud, and released on a $2m bond.

Money Transfer Firm Zepz Lays Off Staff

Money transfer firm Zepz, which combines the former cross-border remittance firms WorldRemit and Sendwave, has announced that it is laying off 420 employees.

It is thought that the cuts amount to around a quarter of staffers. 

This is a stark turnaround from 2021, when WorldRemit raised $292m in primary financing and was at a $5bn valuation. It is then that it changed its name to Zepz.

However, last year the company delayed its plans to make an initial public offering (IPO), reported to be owing to accounting and management issues. 

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