Funding the revolution: the dawn of digital banking
If you happen to have noticed a decrease in waiting times at your local bank branch recently, you’re not alone. The digital banking revolution is taking the world by storm and traditional banking giants are feeling the
squeeze. The youth of today may never know the stress of rushing to the bank on their lunch break only to be faced with a mile-long queue.
These days, physical bank branches are becoming an antiquated idea, with many new online digital banks featuring no physical branches at all. From the early days of simple cash transfers and a basic ATM card, the digital banking sector has now evolved to become a serious contender in the financial world. Let’s look at some of the major tech start-ups that are leading the charge.
London-based Wirex is a fintech start-up that’s licensed by the Financial Conduct Authority (FCA) with its finger on the pulse of the emerging assets industry. Back in 2017, the budding start-up formed a strategic partnership with Japanese banking giant, SBI Group, to secure a $3 million funding round, solidifying its place as a serious financial player in the Asian market. Following a brief period of regulatory uncertainty in Japan, Wirex has now been accepted as a Type II member of the Japan Virtual Currency Exchange Association (JVCEA), bringing it one step closer to acquiring a full FSA-license.
Wirex understands the complex and varying investment needs of young professionals who have become disillusioned with slowly-maturing stocks and bonds. It has embraced the rapidly growing digital assets industry and is working in partnership with forward-thinking financial providers to enable safe and secure investment solutions for the nascent sector. It remains one of the few digital banks that offers the opportunity to spend digital assets directly via a Visa debit card.
A relatively new start-up, N26 has broken into the digital banking scene with a flurry of large funding rounds. In January this year it closed one of the largest private equity financing rounds for a fintech business in recent European history. The massive $300 million Series D funding round brought N26’s total valuation to $2.7 billion – making it one of the most valuable tech start-ups in the world.
German tech start-up Raisin is a modern-day saving and investment platform that offers an innovative way for small-scale investors to enter the larger market. It provides a simple entry point for new users to access a host of different investment opportunities from 65 different financial institutions worldwide.
Earlier this year Raisin closed a Series D funding round to the tune of $114 million, driving its overall valuation past $200 million. Online payments giant Paypal is just one of many high-profile companies included in its impressive list of investors.
Developing custody solutions in the digital banking world
With the growth of digital banking and the alternative asset classes that come with it, the preparation of new custodial solutions has become paramount. Traditional solutions are not enough to cover emerging financial technologies, creating a need for advanced custody solutions that meet the requirements of new government legislation. Forbes recently highlighted the need for well-developed custodial solutions to enable fresh institutional investment entering the digital asset space.
Relatively new fintech start-up EQIBank is at the forefront of the provision of custodial solutions for digital and alternative assets. A strategic relationship with world-famous Kentucky-based insurer, Kingdom Trust, gives EQIBank unrivalled access to some of the most advanced custodial solution technologies available.
“We are constantly seeking ways to improve our services to clients,” said EQIBank CEO, Jason Blick, “and a secure and transparent approach to digital asset exposure has been something funds and asset managers have demanded.”
Kingdom Trust oversees $12 billion worth of investments for its 100,000 clients globally and can now ensure EQIBank clients assets for up to $50 million for a single event.
Fidelity digital assets
Major US investment firm Fidelity Investments, one of the largest financial services providers in the world, recently formed subsidiary company Fidelity Digital Assets to offer its customers digital asset custody solutions. The new subsidiary provides institutional-grade, vaulted cold storage to secure digital assets offline. The move follows four years of research and development into the emerging digital asset industry extensive testing of sophisticated cybersecurity systems.
“We just completed a survey of about 450 institutions, so everything from family offices to registered investment advisors to hedge funds,” Tom Jessop, head of corporate business development at Fidelity Digital Assets, told The Block following the launch of the new company. “It’s interesting, I think about 20% indicated that they currently allocate to digital assets with an intention to grow that.”
By Aubrey Hansen
Follow her on Twitter