Posted In:

Regulation, Indonesia

Regulatory Balance


Aug 03, 2019


Posted In:

Regulation, Indonesia


Aug 03, 2019



Emerging markets have become incredibly fertile ground for fintech startups providing more accessible, digital-first financial services. These startups often serve consumers who distrust or simply cannot gain access to traditional financial services. Some big winners have begun to emerge, such as Nubank in Brazil - which last week raised capital at a $10b valuation.

However with the pace of innovation accelerating, regulators in some countries are worried about unintended consequences. As a result, some are passing new fintech-specific regulation and stepping up enforcement.

For example, in Indonesia regulators have shuttered 826 fintech startups (citing lack of proper licensing) despite broad consumer appetite and adoption. In Mexico, a new law has been passed specifically regulating fintech startups. The Mexican law imposes new standards for consumer protection, anti-money laundering, and compliance reporting for most payments, lending, crowdfunding, and banking startups.

And in Africa, regulators in Nigeria passed a law in 2018 forcing many banking and payments startups to pony up $14m for a new license – an insurmountable amount of capital for many.

These new regulations are likely well-intentioned, typically citing consumer protection as a core principle. But the laws can also increase the cost of starting a company or launching a new product – often in ways that are prohibitive for early-stage startups, which can further entrench the incumbents.

In every country, regulators are walking on a tightrope – trying to balance the need to prevent bad actors without quashing innovation that helps consumers. We just hope regulators can keep their balance!

Portfolio News

Flutterwave partners with Alibaba - Flutterwave and Alipay, Alibaba's digital wallet, announced a partnership that will enable digital payments between Africa and China. Through this partnership, African merchants will be able to accept payments from 1bn potential customers. Read more

Reonomy partners with Black Knight - Reonomy and Black Knight, a Jacksonville, FL based provider of integrated software, data, and analytics to the mortgage and real estate industries, announced that Black Knight's property record data will be incorporated into Reonomy's platform. Read more

Co-founder and CEO of Octane Lending to speak at PowerSports Finance Summit 2019 - Jason Guss, co-founder and CEO of Octane Lending, will be featured at a panel during the upcoming PowerSports Finance Summit 2019 in San Diego on Oct 23rd. The topic of the conversation will be using technology to enhance the finance experience, encompassing the use of chatbots, mobile technology, and automated decision making. Read more

Regulatory Balance

Indonesia has already shut down 826 fintech startups in 2019 - Indonesia’s Financial Services Authority, known as OJK, has shut down 826 fintech startups so far in 2019 for operating without a license. 90% of Indonesians don’t carry credit cards, and most have no access to formal banking services, but positive signs like the nation’s internet economy being the fastest growing in the region give hope that fintech innovations will improve those stats. Read more

Industry News

London Stock Exchange clinches acquisition of Refinitiv for $27b - Blackstone is poised to double the value of its investment in Refinitiv in just 10 months, but won’t be able to sell down completely for some time. Read more

Brex is the next big startup aimed at helping other startups - San Francisco based provider of charge card services to startups has achieved a value of $2.6b in just two years, after realizing during their time together at Y Combinator that startups had so much trouble obtaining bank credit from traditional sources. Read more

Capital One database breached - In one of the largest thefts of data from a bank, a former Amazon engineer hacked Capital One and was able to access personal data of over 100m people. Among the data that was accessed, she stole 140k U.S. Social Security numbers, 80k bank account numbers, and 1m Canadian social insurance numbers. Read more

Failure of Japan’s 7pay system deals blow to payments industry - Japan’s 7-Eleven convenience stores said it would close its 7pay smartphone payments service after it was hacked, dealing a blow to the country’s hopes of becoming a more cashless society. Read more

Director of CFTC experimental fintech initiative “LabCFTC” is stepping down - Daniel Gorfine, the director and chief innovation officer of LabCFTC, is leaving the CFTC to pursue a private sector job after having spent two years at the CFTC. LabCFTC, which was launched in May 2017, aims to help regulatory policy keep pace with a rapidly changing industry. Read more

Revolut launches commission-free share trading - Customers who pay for its £12.99 monthly “metal” subscription service will be able to buy and sell US stocks from Thursday. Revolut’s free users will receive three free trades a month, and pay £1 per trade for further transactions. Premium subscribers, who pay £6.99 per month, will get eight free trades. Read more

Smaller countries becoming keen on cryptocurrencies - A handful of smaller countries are coming up with specific rule books for digital currencies. These efforts can shape the global market's development, from exchange platforms to brokers. Read more

In South African townships,'unseen' businesses catch a Big Bank's eye - Enterprises such as Ram Thapa's (a beauty shop and fast-food outlet) with combined annual turnover of 19m rand (~$1.3m) but no business account is attracting the interest of tech enabled banks. Read more

Digital banks are racking up users, but will they ever make money? - Critics argue that these digital upstarts are surging thanks to a small number of novel features that older banks will copy, if they haven’t already. Startups respond with "death by Cobol," a reference to a programming language that still lurks in many of their tech stacks that dates back to 1959. Read more

Fintech financing and M&A activity continues to be strong in 2019 - According to data published by Financial Technology Partners, the $10.9b of fintech-focused financing volume in Q2 2019 made it the second most active quarter ever. Additionally, through the first half of 2019, global fintech M&A volume of $148b is already at a full-year record high, surpassing the 2015 mark of $138b. Read more

Fintechs at the gate: online brokers target affluent Brazilians - A new breed of digital brokers is taking on the handful of Brazilian institutions such as Itau Unibanco. Backed by investors such as China's Fosun and private equity firms General Atlantic, Advent and Warburg Pincus, the newcomers have already lured more than 10% of the 2.98 trillion reais ($736b) invested by Brazilians in local mutual funds, stocks and bonds. Read more

UK's Ipagoo falls into administration - Ipagoo, which offered online multicurrency accounts, has collapsed into administration just days after the UK financial watchdog ordered it to cease all regulated activity. Read more

Apple confirms the Apple Card is coming in August - Currently being beta tested by employees, Apple confirmed during its 2019 third fiscal quarter earnings call that it will begin accepting applications for its card in August. Read more

Select Financings

Aspire - Singapore based provider of online lending to SMEs raised $32.5m in Series A funding led by MassMutual Ventures Southeast Asia. Read more

Banco Inter - Brazil based provider of digital banking services raised R$1.3b (~$343m) in a share offering that included SoftBank as an investor. Read more

Digital Assets Data - NYC based provider of data feeds for the cryptoasset industry raised $3.2m in funding led by North Island. Read more

Drip Capital - Palo Alto, CA based provider of invoice financing to small and medium-sized exporters raised $25m in Series B funding led by Accel. Read more

FinFit - Virginia Beach, VA based provider of a financial wellness benefit platform raised $7m in Series B funding led by Galaxy Investment Partners. Read more

FNA - UK based provider of regtech services to map and monitor risks raised $5.5m in Series A funding led by IQ Capital. Read more

Gatsby - NYC based provider of a commission-free options platform raised $1.5m in Seed funding from SWS Venture Capital, Plug and Play Ventures, Irish Angels, and others. Read more

MYbank - China based online lending offshoot of Alibaba’s Ant Financial is seeking to raise $871m at a valuation of ~$3.5b in its first outside funding round. Read more

Nubank - Brazil based provider of digital credit card services raised $400m in Series F funding led by TCV. The Wall Street Journal reports that the latest round valued the company at more than $10b. Read more

Paysend - UK based money transfer platform raised £8.5m in Series B funding, of which £4.6m was raised on the Seedrs investment platform and £3.95m was invested by GVA Capital. Read more

Solana - San Francisco based provider of multi-threaded and fast blockchain solutions raised $20m in Series A funding led by Multicoin Capital. Firms that participated in this round received SOL tokens in exchange for their investment, not equity in Solana, Inc. Read more

StashAway - Singapore based robo-advisor raised $12m in Series B funding round, led by Eight Roads Ventures. Read more

Truework - San Francisco based provider of KYC solutions raised $12m in Series A funding led by Sequoia Capital. Read more


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