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Global Intel - Mojaloop
Is blockchain having its moment - courtesy of Bill Gates?

The announcement barely registered a ripple in the financial press, but the news emerging last week during the SIBOS conference that the Level One Project's Mojaloop is launching as an open source and blockchain-based payments system is nothing short of revolutionary. Perhaps it's fitting that the announcement came during SWIFT's annual global gathering SIBOS, which is a must-attend event for banking insiders. Lafferty's recent Nairobi Council came to the conclusion that, for now, there is no obvious private player with the reach to install an Africa-wide network that joins together all of the payments networks. It will be necessary for a range of players, including governments and NGOs, to work together with incumbents and fintechs to deliver interoperability among payments systems and financial providers across the borders of African countries. The One Level Project was established to find just such a solution, kicking off three-and-a-half years ago with a white paper laying out a desired outcome, and answered last week with the Mojaloop announcement. The Level One Project, incidentally, is the financial inclusion arm of the Bill and Melinda Gates Foundation, one of the best-funded philanthropies of the modern era. But it's the context of the announcement that makes it interesting. Sibos is attended by about 8,000 bankers and is organised by the interbank messaging system SWIFT. SWIFT has been agonising somewhat over its new competitor, blockchain. Last year, SWIFT CEO Gottfried Leibbrandt sounded optimistic about the potential of blockchain. This year, he was critical of cryptocurrencies. "Speaking in front of an image of what he claimed was a bitcoin mining farm in Mongolia, Leibbrandt waxed poetic about the cryptocurrency's meteoric and unpredictable rise to its current price, while noting the 'interesting valuations' observed across the asset class", reports Coindesk. "As the screen switched to an image of tulip bulbs, the audience erupted in laughter. 'For a very brief moment in the 17th century these things were worth as much as a house', Leibbrandt told the crowd."Leibbrandt interviewed Microsoft CEO Satya Nadella on stage, and posed a question about the future of blockchain. Nadella threw the question back to Leibbrandt, suggesting that it was up to SWIFT to develop applications of blockchain that are useful to the banking industry. (SWIFT is testing its own blockchain proof-of-concept under the guise of the Global Payments Innovation initiative.)While Leibbrandt was having a go at cryptocurrencies at SIBOS Toronto 2017, Ripple was holding its own conference a few kilometres away, with former Federal Reserve head Ben Bernanke and world wide web inventor Tim Berners-Lee in attendance. Is it a coincidence that Microsoft's CEO and the Gates Foundation made major announcements the same week regarding blockchain? Perhaps. But in his interview with Leibbrandt, Nadella noted that he and many others have long been waiting for the arrival of a trusted distributed database. "Ever since at least I've been in this industry, we've always looked for a distributed database with a trust harness that allows multiple organisations to collaborate, and that performs," he said. So why was Tim Berners-Lee at the Ripple event? Perhaps because the new Interledger project, built by Ripple, is designed to be a step ahead of all of these multiplying blockchain projects, and offers a kind of interoperability layer for blockchains. More accurately, it's an interledger protocol that allows providers to connect private ledgers rather than a "single, consensus-based open ledger". It was "invented at Ripple, and developed by the Interledger W3 Community Group," according to Berners-Lee is the director of W3C. Many commentators point to blockchain technology as a platform on top of which users can build all kinds of other applications, and that's the intent of the Level One Project. Here's the 'whitepaper' published in 2015 by Level One, setting out the type of solution it was looking for. It acknowledged that retail banks and the existing payments system is not up to the task of profitably providing payments solutions — actually micropayments solutions — to the many people who live on $2 a day. The Level One Project has now arrived at an answer and unsurprisingly, software figures centrally. The open source code is designed to be adapted by individual countries and their associated financial providers, fintechs, MNOs and entrepreneurs. Run through a few websites of companies working in the digital financial inclusion area and you'll find many instances where the companies talk up the two to four billion potential customers out there. They are not lacking in ambition. More detail of the Level One Project on its website.

Contactless Interview with PPRO

It is over a decade since the first contactless payment was made in the UK, and the technology has showed little sign of abating — but how far away are we from seeing a fully-cashless economy emerge on British shores?Where once contactless payments were something someone more tech-savvy than you engaged with at the till, as you strained your neck to see, they are now part of the fabric of everyday life for many Britons.So, Lafferty News recently tracked down PPRO Group's Chief Product Officer Christian von Hammel-Bonten to discuss a decade of contactless payments in the UK, the prospect of a fully cashless society there and whether the future of cash is really as bleak as some suggest.A little background on PPRO Group: It is a fintech business that has been an e-payment specialist for more than ten years. A self-confessed 'one platform, two business' firm, it specialises in helping payment industry leaders as well as providing business customers with prepaid card solutions."Well, considering that a third of UK consumers claim they never use cash anymore, and 59 per cent believe that the UK will become a cashless society soon, I would say that the future of cash looks bleak."However, the speed at which we become fully cashless is hard to predict. It's a collaborative effort between consumers and retailers. Consumers provide the demand and retailers provide the means and it is only when the two become perfectly aligned that the UK could potentially become entirely cashless", said Mr von Hammel-Bonten.Nothing is easy to estimate in the world of financial services, so it is unsurprising that a date for a fully cashless society (if that's even a genuine possibility) is proving tough to figure out for those in the sector — however, it does make one wonder where the hidden dilemmas lie.Trusted security is certainly one of the cornerstones of a reliable payment method, and it is the same with contactless — so when I raise recent comments from John Griffith-Jones, Chair of the Financial Conduct Authority, about the powers-that-be needing to take steps to reduce contactless fraud so that public confidence in contactless is not eroded, I'm interested to hear Mr von Hammel-Bonten's thoughts."For payment systems to successfully grow, they need to be managed properly and the right balance between security, speed and convenience needs to be found. Consumer confidence or trust in a payment method is one of the key success factors for the success of a payment instrument."But making a payment instrument too secure may negatively impact the speed and convenience of it."It has always been the biggest challenge of all payment schemes to find the right approach. With this regards, John Griffith-Jones is right to address the rising concerns in order to ensure that consumers feel safe and secure when using contactless cards."Indeed, as discussed in the Lafferty News 26 October daily briefing, anti-fraud shield wallets that block radio waves from card chips to fraudulent card readers available to purchase on the open market is especially interesting. It suggests that people are still wary of the technology, especially with contactless fraud jumping from £153,000 in 2014 to £7 million in 2016.Ten years might sound like a long time for a technology to still be considered developing but contactless is certainly in an evolutionary phase.Despite being in use for over a decade, popular adoption has only taken place in the last four or five years — to gain a little insight into this, it's interesting to note that Near Field Communications tech surpassed $1 million for the first time in the UK as recently as 2014).The tussle for power between convenience and security is a never-ending one, and Mr von Hammel-Bonten knows all too well how much of a priority getting that balance right is for the future of contactless, especially when it comes to the debate about whether the cap of £30 per transaction should be lifted.So, how important does he think that development could be?"It is important as it increases the speed of payment by simply increasing the value of a contactless transaction that can be conducted without PIN entry."However, the continued success of contactless payments with or without PIN will depend on finding the right balance between speed and security. Increasing the cap, increases the risk of money spent without proper authorization. It will boil down to how consumers perceive the security risks and that could be a big enough hurdle to negate the potential increase in transactions."Indeed, as far as von Hammel-Bonten is concerned, consumers will continue to be the main factor in any major developments."As long as consumers continue to shop and retailers continue to target consumers internationally, there will always be the demand for e-payment services and organisations. Global e-commerce is only going to grow and as long as fintech organisations continue to understand what consumers want and how they want to pay, then there is always the chance to flourish", he said.

Analysing the Ecobank winners

Back in January this year, Ecobank — the pan-African financial institution — announced that it was launching a fintech challenge, inviting innovators from around the continent to come up with solutions to some of the most pressing financial dilemmas.In July, the top three winners were announced after being whittled down from 20, so a few months into their relationship with Ecobank, it's time to take a look at each individual winner and analyse their merits.It was perhaps no coincidence that the three victors — Ziroopay, Kudi AI and Paylater — all have roots in Nigeria because according to Trading Economics, Foreign Direct Investment (FDI) in the country is approaching $1 billion for this year. Plus, there has been a big push in the fintech industry of late, with growth hitting 90 percent in the last three-to-four years according to market research firm Kantar TNS. Plus, the Fintech Association of Nigeria was set up earlier this year as a platform to help nurture the financial technology industry. So, lots of positive steps have been plodded to place Nigeria in a positive destination — and that is where the Ecobank winners' potential comes in.ZiroopayIroFit's ZirooPay was the overall winner of the challenge, claiming a reported $10,000 along with invaluable guidance and partnership from Ecobank (who have a presence in close to 40 countries across the African continent) that could set them up to become a major player in the payments process.Designed with the small-to-medium business owner in mind, ZirooPay offers a small, portable card reader so that people can take their business with them on the go and never miss an opportunity to make a sale. Seamless, secure and convenient for both merchant and consumer, the card reader also allows businesses to create visual menus, complete with images, as well as enabling e-receipts to be sent to shoppers.However, it is ZirooPay's micro-credit advance that is surely its most ingenious feature. The commoditisation of data is always an interesting topic for fintech and commercial finance-aficionados to discuss, so it is worth noting that they can offer businesses low-interest capital.It brings to mind just how influential data is as a resource for firms deciding who is worth investing in, and who is not. For ZirooPay, while they do not store customers' information on the app, businesses can track sales and generate reports — so, while it is safe end-to-end, it is clearly possible for ZirooPay to discern which businesses deserve venture capital/injections of finance.It's a two-way system: the businesses themselves get value from consumer data, and ZirooPay can use data to benefit firms who are loyal to the Nigerian start-up, nurturing relationships along the way.Lafferty News is going to catch up with founder and chief executive officer Omoniyi Olawale in the coming weeks for a more in-depth chat about ZirooPay.Kudi AIKudi AI is a much more customer-facing service than the other two. Essentially a chatbot app that works inside Facebook Messenger, Skype and Telegram (no, not the old-fashioned one), Kudi AI provides a conversational, convenient way for people to transfer money as well as paying bills with minimal costs (around $0.30 per one).Apparently, Kudi AI is part of Facebook Free Basics meaning that it doesn't require any data to use, but considering that smartphones are becoming more commonplace in Nigeria now than ever and that research firm Ovum predict that smartphone users across Africa will jump from around 300 million to 930 million between now and 2021 it is little wonder the tech with so much potential was selected in Ecobank's top three.Having received seed-funding from Y Combinator, Kudi has received good backing from the get-go and by intertwining itself with the popular platforms it has, there is every reason to believe it will flourish in the years ahead.Lafferty News also plans to discuss Kudi AI with Yinka Adewale, the company's co-founder and CEO, in the near future.PaylaterPaylater is perhaps the most straightforward of all the start-up ideas that reached Ecobank's final three.Essentially, Paylater is a service provided by One Finance & Investments (regulated by the Central Bank) that Nigerians in need of money to cover unexpected expenses can avail of through short-term loans. By downloading the app via the Google Play Store, users fill out a few personal details forms and then hit request. If your credit score checks out, you can accept the loan offer pretty much straight away.Unlike Kudi, Paylater does need the internet to work which means that the country's modest 53 percent internet penetration could prove a stumbling block in the app's growth and increasing adoption.Plus, there is also the notion that Nigeria has something of a problem with bad loans at the moment which could be either good or bad for the app — positive for now because Nigerians like to take out loans, but perhaps negative in the long run.According to Vanguard, the first half of 2017 saw customers not honouring their loan repayments, resulting in '14 banks booking ₦177.3 billion (almost $492 million) impairment losses for the period.'

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