A prominent treasurers’ group has overseen the successful test of a blockchain-based KYC platform across France, it has emerged.
Completed in early December, the test required 26 companies – including banks, insurers and multinationals – to simulate KYC requests between themselves via CordaKYC: a tool built by leading specialists R3. The banks involved were able to request access to KYC test data, while the businesses were able to approve requests or revoke access.
Among the non-financial corporates that took part were food company Danone, gas firm Engie and aerospace giant Daher. The test was coordinated by treasury body the Association Française des Tresoriers d’Enterprise (AFTE).
R3 CEO David E Rutter described his firm’s Corda software as “the ideal platform” for KYC solutions, “as it enables users to have full control over their data, safe in the knowledge that it won’t be shared with other parties unless they have given their express permission – and they have the ability to revoke that permission at any time”.
He added: “Existing KYC processes are often duplicative and time-consuming, and there has been increasing demand for blockchain-based KYC solutions. However, it is critical that we gather feedback and input from across a variety of participants. Corporates in particular have an important role to play in helping the industry evolve and adopt this technology for KYC, and the success of this trial demonstrates the benefits they stand to gain and builds a foundation for regional adoption.”
Ignacio Sánchez-Miret – chair of AFTE’s Fintech Commission – said that the trial had achieved two goals: “Firstly, to bridge the gap and demystify blockchain for corporates, and secondly, to bring together banks, insurers and corporates to work together at the same level.”
He noted that the results would help to shape the system’s full launch, adding: “We cannot stop here… collaborate or be left behind.”
A growing number of M&A deals may be stalling because of compliance concerns around the EU’s General Data Protection Regulation (GDPR), new research shows.
In a poll of more than 530 M&A professionals across the Europe, Middle East and Africa (EMEA) region, financial software provider Merrill Corporation found that since the GDPR came into force on 25 May, it had presented M&A procedures with a major hurdle.
More than half the respondents (55%) cited the compliance and data-protection measures employed by target companies as a primary reason why deals they had been involved with had failed to close. Plus, 66% of those surveyed believe that GDPR will increase acquirers’ scrutiny of the data-protection policies and logistics in place at target companies, adding further complications to the deal-making process.
Merrill Corporation chief revenue officer and EMEA general manager Hilary London said that the region’s M&A environment “faces a unique set of challenges” as deal parties look to comply with new regulations and privacy requirements.
“As we track transactions,” she said, “it will be very telling how these challenges will impact organisations’ due diligence processes. Streamlining transactions via increased accessibility of transaction data will support greater transparency and enhance compliance, strengthening M&A activity in this market.”
Treasurers’ working relationships with Chinese vendors have – for the most part – been unaffected by ongoing trade tensions between the US and China, according to a straw poll conducted at a recent industry event.
The finding emerged from a survey of 158 people who attended the Association of Finance Professionals’ annual Treasury & Finance Conference, held in November in Chicago, Illinois. In a statement, commercial data and analytics provider Dun & Bradstreet – who carried out the poll – said that 65% of companies “are not seeing US trade tensions impact their relationships with Chinese vendors, despite highly publicised tariffs and trade negotiations”.
Of the remaining 35% – who said they are experiencing challenges – the feedback showed that just 5% have actually changed their payment practices as a result of those difficulties.
The statement added: “Even when looking at tariffs and trade tensions globally, respondents did not indicate that this was a top concern for finance departments. Just 13% cited international tariffs and trade agreements as the most influential event on their finance operations since 2016. Instead, the [US] tax reform had the largest impact on corporate finance, as selected by one third (33%) of respondents.”
Runner-up factors and trends that have affected respondents were Federal interest rate hikes (22%), internal adoption of smart contracts and automated processes (15%) – and, only then, global tariffs and trade agreements.
One of the largest firms in the payments sector has launched a special task force to chart a path for setting up a pan-European Request to Pay (R2P) network.
Announced by payments specialists EBA Clearing, the task force is comprised of experts from a wide range of financial institutions, including Santander, BNP Paribas, Deutsche Bank and JPMorgan.
Their primary task will be to create a blueprint for the implementation of a Europe-wide system that will harness the most effective elements of R2P: a novel protocol for settling bills and invoices that typically overlays a more established payments infrastructure. As it devises the blueprint, the task force will also consider the many different use cases in which a pan-European R2P network could add value to both payer and payee.
EBA Clearing head of service development and management Erwin Kulk noted that R2P initiatives “are emerging around the world”, and there is a growing demand for new and enhanced solutions that leverage not just existing payment infrastructures, but instruments at large in the Single Euro Payments Area (SEPA).
“Against this background,” he said, “[we have] decided to contribute to the development of a pan-European R2P solution. Together with our user representatives, we will be working on a blueprint, which will provide a basis for wider industry engagement and for defining the timing for the development and implementation of such a pan-European R2P solution.”
Fitch forecasts that ratings across its global portfolio of money market funds (MMFs) will be stable over the coming year, thanks to a combination of calming, regional factors.
As the ratings agency points out, MMF reforms in the EU will reach completion in 2019; regulatory interventions into China’s growing MMF sector will persist and – having adjusted to 2016 reforms – US funds “could benefit from rising rates and the return of foreign cash”.
Expanding upon how China’s MMF sector is likely to fare next year, Fitch notes: “The US remains the largest region in terms of money fund assets under management; however, China’s MMF industry has experienced sustained demand – hitting record asset levels – and is expected to continue to grow throughout 2019.
“Chinese regulators remain active in tightening policy in order to manage potential liquidity and concentration risks as inflows persist, and the industry could possibly adopt certain products and procedures that have been popularised by recent US and European reforms.”
Fitch anticipates that, while their growth rate has been “expressively slower” than that of China’s funds, US MMFs will “continue to attract investors back to the space as yields rise and funds continue to exhibit muted net asset value volatility”.
It adds: “US tax reform enacted at the end of 2017 could also lead to additional flows into US funds, as corporations bring money back on shore.”