Week In Brief - January 21, 2022

January 21, 2022
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A short roundup of some of the week's payments news you may have missed. This week we look at a U.S. lawsuit relating to fintech charters, a U.S. inquiry to update merger review rules, the National Bank of Greece's efforts to migrate to ISO 20022, Aldi's new till-free store and the most recent crypto hack at Crypto.com.

United States: CSBS Ends Challenge Against Figure Tech's OCC Fintech Application

The Conference of State Bank Supervisors (CSBS) has withdrawn a lawsuit that challenged the Office of the Comptroller of the Currency’s (OCC) nonbank charter programme and Figure Technologies’ application for a charter.

The fight between state banking regulators and the federal banking regulator has been going on for years, reaching its climax when the OCC started granting "de novo" charters to fintechs and crypto banks without depository insurance.

The CSBS filed the complaint against Figure’s application to the OCC in the U.S. District Court for the District of Columbia in December 2020.

By granting national bank charters to fintechs without depository insurance, the OCC “would redefine our entire banking system, create new systemic risks and set a dangerous precedent that any federal agency can act beyond its legal limits,” CSBS said at the time of filing the claim.

Since then, however, Figure has decided to amend its application to seek deposit insurance. Following the decision, the CSBS withdrew its challenge from the court.

“The federal banking laws are clear. Financial service companies, like Figure, that send and receive customers’ money or lend money, must obtain FDIC insurance in order to operate under a federal bank charter,” said Margaret Liu, CSBS executive vice president.

“State regulators are prepared to revisit this issue should the OCC take any future action to entertain a bank charter application from a company that will not be FDIC-insured.”

United States: Federal Agencies Launch Public Inquiry To Update Merger Rules

The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) launched a joint public inquiry aimed at strengthening enforcement against illegal mergers.

The agencies, which share antitrust regulatory and enforcement powers, are seeking comments on developments in the modern economy and new evidence of mergers’ effects on competition to inform potential revisions to the guidelines.

The inquiry is looking at various topics, including the need to update the purpose and scope of a merger review, the use of market definition in analysing competitive effects, and “unique characteristics of digital markets.”

“Our country depends on competition to drive progress, innovation and prosperity,” said assistant attorney general Jonathan Kanter of the Justice Department’s Antitrust Division. “We need to understand why so many industries have too few competitors, and to think carefully about how to ensure our merger enforcement tools are fit for purpose in the modern economy.”

Competition in financial markets and bigtechs’ practices have been a growing concern in the U.S. recently.

In a July 2021 executive order, President Joe Biden laid down that it is the policy of his administration to promote competition in a wide range of sectors, including financial services, and called on federal authorities to work together in a whole-of-government effort “to address overconcentration, monopolization, and unfair competition in the American economy.”

Meanwhile, progressive Democrats gave voice to concerns that the U.S. regime for a bank merger review is broken, pointing out that federal financial regulators combined had not formally denied a single bank merger in the last 15 years.

Following a controversial power struggle, which centered around the question of whether to launch an inquiry into bank merger review rules, Jelena McWilliams, chairman of the Federal Deposit Insurance Corporation, announced her resignation.

Europe: National Bank Of Greece Partners With Finastra To Deliver ISO 20022 Migration

The National Bank of Greece (NBG) and Finastra have announced a partnership that will see the UK software company help the commercial bank’s transition to the new ISO messaging standard.

ISO 20022 is a global data-rich messaging standard, providing a common language for payments data across the globe, enabling greater harmonisation and integration across different payments systems, both domestic and international. Its extensible message set means it can be adapted to and support new payments innovation and types, meaning it can evolve and grow with the market.

The adoption of the standard is accelerating around the world as key payment systems mandate banks to migrate to the new standard.

SWIFT will begin migrating to the ISO 20022 standard in November 2022, with a subsequent three-year period allowing member banks to use the old messaging type alongside the new standard.

Canada, the UK, and the eurozone’s TARGET2 system have also announced plans to migrate their respective real-time gross settlement systems by 2022, while the U.S. is aiming for migration across Fedwire to take place on a single day in November 2023.

In preparing for the migration, the Greek bank is upgrading to the latest version of Finastra’s Fusion Global PAYplus payments hub.

“Fusion Global PAYplus will enable NBG to fully harness the richness of the new ISO 20022 standard – improving the efficiency of screening, reconciliation and payment processing, and enabling a richer customer experience for domestic as well as cross-border transactions,” the announcement says.

The NBG is already using Fusion Global PAYplus to process mass payments, high-value payments and real-time payments and “will be adopting the ISO 20022 standard across all three rails, as and when applicable”, according to the press release.

United Kingdom: Aldi Pilots Checkout-Free Store

Aldi, the UK’s fifth largest supermarket, announced on January 18 that it had opened its first checkout-free store in London.

The new trial store, which is located on Greenwich High Street, allows customers to complete their shop without scanning a single product, or having to go through a checkout.

To buy goods in the store, customers have to download an app called Aldi Shop&Go.

The app allows them to enter the store, pick up their items, and then simply walk out when they have completed their shop.

Once a customer leaves the store they will then be automatically charged for their shopping via their selected payment method and a receipt will appear in the app, Aldi says in the announcement.

The system uses specially positioned cameras, provided by AiFi, to identify which products customers have picked up.

Aldi is the latest retailer to trial checkout free stores. Arguably the most famous example is the Amazon Go store, which has expanded across the U.S. and UK since its debut in 2016.

Global: Crypto.com Users Lose $14.6m In Crypto Hack

Crypto.com has revealed the platform has suffered an attack whereby hackers stole Ethereum and Bitcoin funds of 483 users.

On Monday (January 17), the crypto platform detected unauthorized crypto withdrawals on user accounts, totalling 4,836.26 ETH, 443.93 BTC and approximately US$66,200 in other currencies.

Blockchain security company PeckShield estimated that Crypto.com users suffered $15m losses, while others speculated even higher damages.

Despite this, Crypto.com said “no customers experienced a loss of funds”.

The platform claims it prevented the unauthorised withdrawal in most of the cases, while “all other cases customers were fully reimbursed”.

Following the hack, Crypto.com said it will introduce the Worldwide Account Protection Program (WAPP), which protects user funds up to $250,000 when an unauthorised withdrawal takes place.

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