1021. News: Revolut takes on phone snatchers - and banks still need to take sustainability seriously

30:12It is interesting because when I saw the press release on this, I thought, that's very revolute. There's just something very revolute about this, which just kind of makes sense. the other angle there is sometimes we get so hung up on this whole personalization and customization and give my client what they need problem that we kind of miss the reason why your client might want something and again this goes back to the point you made this is a very revolute way of doing things they are not changing anything for me versus you versus Virginie they're finding like a bigger problem which is a lot more societal and systemic almost there is no personalization about it applies to the whole of london but they're still doing something very intelligently about it and it's almost like you can still get that loyalty you can still get that wow factor by doing something which is not personalized at all but it is still an important service to provide yeah i think i think what they've done actually is quite personal because the locations that you're picking, they're personal to you that you want to trust.

31:25The amount that you're putting as your threshold of things to kick in, that again is very personal to you. You can set it up differently across commodities, crypto, cash, etc. So I think there are lots and lots of very good tailoring options in there to make it personal. Where I think Revolut can't do better on their own is that, yes, they're going to make Revolut customers safer. That is a finite statement. The problem is the thief doesn't know that you have a Revolut account before they steal your phone. So the risk of the theft will persist while the majority of providers don't have this or similar protections in place because the ROI on stealing a phone is is frankly phenomenal it's uh it's well into the four figures you you're right and and that's kind of a nice circle back to to what I said in the end about the sat the satellite thing with with the iPhone is that the vast majority of people are not lost on a mountain right um however the idea persists.

32:37So we can keep talking about this because it is very interesting. But I just want to say at 11FS, we like this so much that we actually did a video on how banks and particularly fintechs think about developing services like this called digital riches. And we've included a link to an explores video in the show notes below this episode that breaks it down into more detail. So if you want to have a little bit of a peek into how product teams think about developing services like this, take a look at that video. All Right. On that note, we're just going to take a quick pause here and back shortly. Through 2025, we saw brands from every corner of financial services take their user experiences to the next level.

33:18From personalization and investments to AI chatbots and crypto, end users are more empowered than ever when it comes to managing their money. And we expect that trend to continue through 2026. If you're interested in keeping up with the latest product trends, feature releases, and UX insights from brands like Monzo, Revolut, Starling, Nubank, and more, then 11FS Pulse is the tool for you. Benchmark your product against the very best by analyzing over 20 ,000 user experiences from more than 850 global brands, each handpicked and analyzed in depth by product specialists. Find out more at 11fs.com slash pulse.

34:01Now, a quick break from the headlines to spotlight our latest insights episode. We are diving back into stablecoins, but this time we're focusing on the practical side, regulations. They might not grab the headlines, but they're crucial to getting ready for the next wave of innovation. So in this episode, Benjamin Ensor is joined by Formance, along with representatives from Fireblocks and Worldline, to unpack what fintechs, platforms, payment providers, merchants, and corporates need to know right now. So if you're looking for the shortcut to becoming stablecoin ready, this episode is your go-to guide.

34:33Find it on the same feed as this one. Right, now back to the news. And our next story, this one is from Finextra. FCA aims to rebuild trust in ESG ratings. The Financial Conduct Authority, FCA, has launched proposals to regulate ESG ratings providers, aiming to rebuild trust by setting new rules for transparency, governance, and oversight. The move responds to widespread concerns over poor reliability, lack of comparability, and opacity in how ESG scores are calculated. FCA research found roughly half of ESG ratings users are worried about how ratings are built. That's 55%, that's really high, or how transparent they are, 48%, also really high.

35:15Under the draft framework, ESG rating firms will have to follow stricter standards around disclosure of methodology, governance, conflict of interest management, stakeholder engagement, and complaints handling, aiming to make ratings easier to benchmark across companies and funds. The FCA says these reforms, expected to come into effect in June 2028, will strengthen market confidence, support sustainable finance growth in the UK, and enhance the UK's reputation as a global hub for ESG investing. So first off, I relate to this. I'm sure a lot of you do. I find these reporting numbers, I mean, you just look at my like investing app, it gives me an ESG rating.

35:52I don't have a clue what that means. Virginie, let's go to you first. Tell us like, what are the FCA doing here? I mean, well, so ratings have been a big issue for a long period of time in the ESG realm, largely because it's such a subjective area and it's very heavily influenced by politics. I don't know if anyone's noticed, but across the pond, we've got quite a lot of pressure to move away from ESG. So it's become an immensely politicized topic. So the concept of having sort of neutral data providers is sort of in the US, maybe not actually viable. So in the rest of the world, there's certainly a lot of discussion about how do you make this data more transparent, reliable, accurate, all of the things that you have to sort of feed into things like trading decisions or long-term investment strategies and things like that.

36:50So certainly there's been a lot of pressure and requests on all of the regulators, not just the FCA, but all of the global regulators to crack down on benchmarks and ratings. And now in the traditional world, benchmarks and ratings providers are heavily regulated. Just in the ESG world, it hasn't been the case since its inception, largely because it's such a fast evolving area in it and the actual data sources and how you're using those data sources changes over time. Because if you think about how you're breaking these three things down, environmental data could be everything from, you know, satellite information about, you know, particular areas and how much CO2 is being outputted by a particular factory through to, you know, it could be, you know, anything to do with, I guess, the governance side of things is the G.

37:42So that's how companies are being governed from a transparency perspective of, you know, how much you're paying your directors, have what kind of balance of directors do you have, all of that kind of thing. And the social equally in terms of equal pay, gender parity, all of these other things that feed into these various aspects. So there's been a big focus on the E, so the sustainability aspect, but the G has been there long term. But the S has been slightly less well regulated, if I would say, in terms of how much information is out there. And obviously, a lot of the US companies now are reporting this information, but are coming under scrutiny from the government there in how much data is coming out.

38:23So there's a lot of pressure on the data providers and the ratings providers to get this data in the first place. It's not actually easy to get some of the information and it's not very comparable. So you're pulling a lot of information from unstructured sources, as I said. So it could be anything in the world with regards to lots of unstructured data sources. It's not like traditional reference data that you're sort of reliant on within the financial services world. So I understand the regulators want to try and make it more, what's the word, stable and structured. But that is not an easy thing to do with something that's so heavily politicized.

39:01Yeah, because that was going to be my kind of follow-on question is like, can they actually get to the there they want? If it's so difficult to measure and get reliable data sources, is this going to be possible? Well, ratings are very subjective, again, so that's why you've got such a lot of variance. And they're very much looking at conflicts of interest is important because the G bit is the governance bit. It equally applies to the ratings providers themselves because obviously they provide a lot of data in other areas. They may be providing other services related to this. So you really want to make sure that they are, you know, Chinese rules are in place.

39:35They're sticking to the letter of the law, that there's no potential outside influences on that data being produced. So certainly that is, you know, one of the tenets that's, you know, common sense regulation, I would say. But the other aspects are probably harder to assess because it really depends on the analyst that's making those ratings decisions as to the inputs that they're gathering. So there is still going to be a high degree of subjectivity. There's still going to be variants and you're still going to have preferential data. So, you know, if you're an asset manager, you may want to work with a particular provider for a particular reason.

40:08and somebody across the street from you might be using someone else for a completely different reason. So I don't think it's an area that is going to be totally standardized, but it's something that did need to be regulated. Yeah. What does everyone think about this? I think you've got a problem, not a problem, well, there is a problem where you're trying to compare companies using a single scale that are entirely different. So a very well-run factory will always use more power than the worst staffed office. And if you're looking to get a standardized set of reporting metrics that fit for everybody, I don't see how you can have a meaningful comparison between entities that are so disparate.

40:58So for me, it felt like as a consumer and not someone who's particularly up on the ESG world, I don't see the value in putting everything into one scale. If I want to look at my bank's ESG, I want to compare it to other banks. I don't want to look at it versus automotive manufacturers because that's just not a comparison that's useful. And if you start doing it on a more targeted, like this is my services firm ESG rating, you then start to get numbers that do make a lot more sense. And I think that is the goal here is that you can make an objective interpretation of what you're seeing about that business.

41:43And I think trying to do it as a one size fits every business will only ever lead to a set of compromises that you wouldn't need to have if it was industry specific. I mean, ratings providers do do industry specific ratings. So just to make that clear, they're not comparing apples to oranges. I do not know what I'm talking about. Don't worry. No, I mean, it's not common knowledge, I don't think, but certainly they make different inputs and different decisions, right? So the transparency is the important bit. They're not always going to be coming out with the same ratings. I think that's the issue here.

42:15But your perception, I think, is accurate, James, in terms of how a lot of people see these ratings. I think it's important. Additi. So on the point of perception, the way I see it is making investment or lending decisions on the back of ESG ratings is like buying a house in London based on what you see on an estate agent's website. Like that is how reliable it is, right? It's always a lie. It's always a lie. There are some numbers, there are some metrics, some of which might be verifiable. Most of them are not. There are some pictures which look completely different from when you actually go and see the house.

42:51And the problems across these are very similar. So I almost think of it as a three-phase process. And ESG, data, ratings, monitoring is a huge use case in the AI space. And that's one of the biggest application sets in the FS space for AI. But the three columns, one is acquisition of data. So this goes back to what Virginie said. So many of the sources are unstructured. They are so hard to verify. You might have a valuation agency walking in with a dampness counter. You might have like some mine in Africa demonstrating that the humidity is enough or not. So that unstructured data acquisition piece is a big problem.

43:38Now, a lot of that is still physical data, which is hard to solve with technology, and it will continue to be a problem. But the second piece is once you have actually collected the data, historically feeding that in into any kind of system which could actually interpret it was a challenge. But that challenge is now slowly being solved with AI. So if you get me the data, then I can ingest it. I can make sense of it. I can process it. So it's at least within the first vertical, two parts of the problem. The second one is getting solved bit by bit. The first one, still a problem. The second piece, which is the interesting piece here, is that interpretation of data.

44:19And again, I have actually met with startups whose sole purpose was to create an interpretation of the fund reporting rules as the regulator specified them, but as they would apply to the investment and so on. So not even creating a rating, but interpreting the rules was their only job. And I think in that space also, the more data we have, the more patterns and trends we can figure out, the more we can determine what the impact of those trends and patterns are, and the more consistency we can apply. And James, this kind of goes back to your point. We can create those differentiations as they are appropriate, but we can always create a shared language, a shared set of benchmarks, which whether you're a company or a regulator, whether you're in the UK or the US, it's the same language that we speak.

45:11So that's the processing or interpretation problem. And then the third problem is what that actually means, like the so what of it. OK, so what if you have a certain ESG rating? Are we actually then going to create enough either regulation or market resistance slash demand to only fund, buy or invest in stuff that has good ESG ratings or not? And that's where it ties back into Virginie's point around the political issues around it. So I think the ESG problem, again, has the evolution. But from my biased view, the fact that we are getting so much better at managing that data is definitely changing things in the space.

45:55And all of that kind of put together, if the FCA, what they can achieve through this is maybe just a little bit more transparency, which is what Virginie is what you're saying. Ultimately, this comes down to transparency. It's like, then that is better. because you sort of noticed this rollout across the internet. There was all this controversy over matters, fact-checking. If you remember when Trump came in, like, you know, Zuckerberg was like, oh, we're not going to do that anymore. We're going to fire all those teams. And then, you know, Elon Musk made a big deal about Twitter and whatnot. But I was actually on X the other day and like the fact-checking is pretty good.

46:34You know, they, believe it or not, like you'll have some article that will say something crazy and there'll be this long thing being like, actually, this is actually incorrect because of this reason, that reason it comes down to transparency. I'm not telling you what to value, but I am giving you some data and some information that is going to maybe, maybe improve, um, how, how things go. So yeah, I think this will be a, an interesting one to see. Fact checking as a, as a topic is actually inherently difficult because the, the half life of a fact is something like seven years so you can be completely correct on what you're saying today but the chances are that half of the things that you're correct on today you'll be the same thing will be wrong in uh in five to seven years yeah it's all a matter of interpretation i might say right depends on how you look at the world as to what's a fact and what's a not these days and and that virginie is political right as as you said um so yeah it's very very fascinating one to watch um final word on this virginie do you know what the timeline is on this like roughly when this is due to conclude and and happen i mean i believe it's next year and there's it's part of a wider program of work so there's going to be more um consultations i believe on on on the esg topic going forward because sustainability as a theme is is very big in Europe.

47:55It's not going away anywhere. Right. Over the next few years. Makes sense. Okay, brilliant. Right. And now on to the next article. And this one is from Finextra. Wise enters Africa. Wise has received its first regulatory license in Africa with conditional approval from the South African Reserve Bank, that's SARB, to operate as a Category 2 authorized dealer in foreign exchange. This license will allow Wise to offer cross-border money transfers to personal customers in South Africa, giving users access to international transfers with greater speed, lower cost, and giving more transparent exchange rate pricing than many legacy remittance services.

48:31The move fits into a broader context. South Africa, which is a G20 member, has committed to the G20 roadmap for enhancing cross-border payments, which aims to make global payments faster, cheaper, and more transparent by 2027. With this approval, WISE expands its global footprint, joining a network of 70-plus regulatory licenses worldwide, signalling its ambition to become a truly global payments infrastructure provider. So to tell us more about this, we have a voice note from Nadia Costanzo, Director of Banking and Expansion at WISE.

49:04NADIA COSTANZO, Recently we announced that we received our first regulatory approval in Africa. It's a conditional approval for an ADLA-2 license in South Africa. This marks for us a really exciting milestone as it's our official entry into this dynamic region as a regulated institution. So while we've been allowing people to send money to the region for years, this is significant as a license will actually allow us to offer products locally so people can finally move money from the region to around the world. It's a foundational step, which for us is crucial to expand our mission to a region that really still suffers from extremely high costs and lack of transparency and international payments.

49:42In South Africa, the average cost of sending money is exorbitant at 7%, while WISE's average global cost is 0.54%. Our relentless focus on bringing down costs allows us to save customers£2 billion per year. So our goal is to bring these savings to even more African customers by building the most solid local infrastructure. And this can really only be done by getting these authorizations in local markets and building products designed with the local customers in mind. You would have seen that we've been doing this across the Middle East and Africa region just a couple of months ago. We've also received our licenses to operate in the UAE.

50:22And we're really committed to keep the momentum going so that customers everywhere can continue to have access to fair financial services.

50:31I mean, why is it just kind of killing it a little bit, aren't they? they're a little bit like revolute in that they they and i suppose revolute did also start from forex so so there's that kind of there's that relation there so that's interesting but like i just keep seeing them do all of this stuff you can kind of see where they're going which is a very revolute like direction in in in in some way anyone have any thoughts i was shocked when i read this that it like it wasn't a thing already because you just my brain from the early noughties going forwards was that money sending services were predominantly from the west to africa and therefore i thought this this would have been like day one for for people likewise to have this in place and it was only um when you had the explanation that actually sending money in was fine, but it's sending money around and out, that this made more sense.

51:34I think that is showing how certainly South Africa and other more developed African nations are now forming part of, South Africa is in the G20, and the fact that they now need services to move money in the other direction is a sign of their growing relevance on the global stage. Yeah, and I think exactly like you said, David, it's interesting to see how Revolut and Vice sort of originated with the same seed idea of the FX transactions and cross-border payment transfers and so on. Vice has very much doubled down on that offering set. Revolut has very much gone on the, we want to be the bank and do so much more than just the transfers.

52:23But especially from that perspective, if you look at it from WISE's point of view, it's an extremely strategic means to an end. And I say that because they are increasingly moving from a consumer-only offering to more often SME commercial corporate offering. Now, if you are a corporate and like this is me with my old like FX payments hat on, if you are a corporate, your objective is to find a partner or to find a platform that can service as much of your cross border needs, whether that is payments, whether that's liquidity management, whether that's any kind of like local banking for your subsidiaries as you can.

53:08So the more distribution and the more spread you have, the better it is. So therefore, a lot of these banks, like if you look at the cross-border payments offerings across Deutsche and JP and so on, they all talk about 120 currencies, 140 currencies, of which we can do 82 way, 121 way and so on. So for WISE to establish that global presence and coverage, just like was mentioned earlier, they've tackled the Middle East. They'll tackle Africa. then they'll sort of tackle LATAM and so on. But from an Africa point of view then let's assume okay we need to get into Africa we need to establish presence there.

53:47How do you go about it? And then South Africa becomes a very obvious choice for quite a few reasons. So the first one is like we said there is already that drive to push the costs down. You want to go from 7 % to ideally the World Bank, SDG stipulated 3 % and even lower. So you will have the necessarily lean in from the regulators, from the local infrastructure, from the powers that be in the market. The second piece is as a foreign exchange market, South Africa is one of the most traded emerging market currencies. So across the African region, most other currencies are non-deliverable. they're restricted markets.

54:31So the inflow is fine, the outflow is not. So South Africa is an obvious choice. And then the last piece of it is from an overall banking system maturity. I was going to say rule of law, but you can't really say that blanket about South Africa, but more from like how the banking system operates. It is a much more mature market than the rest of the space. So it makes sense for VICE to use that as the stronghold, like the first place they go into, build out from there, and then add on other markets over time once they have established their presence in Africa. From my perspective, obviously, because I cover capital markets, it's quite a well-established and quite mature capital market as well.

55:15So certainly a lot of that sort of the corporate world and the money flowing through is definitely, you know, significant within South Africa. But I think if we look at it from the tech provider perspective, I would say looking at the African region overall, the Western firms have been very far behind the Eastern firms in terms of establishing footprint. So, you know, I think we're sort of playing catch up here, aren't we, in terms of trying to get into various African markets where we've already, we're, you know, quite a few years late to some of these things like Alipay and all of that kind of stuff that's been making head roads for a long while.

55:56It's actually such an interesting point, Virginie. I'm glad you raised that because the story is not about, oh my God, now South Africa is a thing. The story is more about why and how they're expanding. Because as you say, there's a couple of examples. There are lots of competitors already existing in South Africa that do this kind of stuff. So there's Mukuru, there's Mama Money, there's Exchange for Free. There's lots and lots of different, I'm sure there's way, as you say, there's Alipay, there's way more other types of services there. It's probably more, I think, as you were saying, Aditi, for the sort of feather in the bow for the corporate clients they have when they're trading in the RAND or, you know, having a subsidiary or something in South Africa.

56:39That makes a lot of sense. It is very interesting. We don't cover Africa enough in the podcast. It's very interesting to see, like, Africa's kind of growth overall. I mean, there's other countries like Nigeria and Kenya, for example, which are in Egypt, which is growing like crazy. James? Yeah, and this could, again, be my ignorance of the topic. But given that all I'm hearing from other institutions is the move to stablecoin settlement as how things are going to go for moving money in the future, why is it important for WISE to be locally regulated in RAND, non-regulated accounts, when I would have assumed they could operate at a stablecoin level for their international outflows, while keeping the RAND local for any inflows?

57:28I've probably not articulated that point very well. But I like it, I mean, because that might be what's next. I mean, I think stablecoin is one of those things that's very interesting and growing in traction, but is still overall a very, very tiny percentage of the overall cross-border flows. For WISE, that might be an interesting thing, though, because I would say across the economy, there would be very few South African businesses, for example, or SMEs who would think of stablecoins to make small transfers or remittances in and out of the country. So to David's point, it is a very small percentage.

58:05But specifically for wise who have historically targeted a client base of relatively financially literate, relatively digitally savvy kind of like digital nomads and people who know what they're doing with their money. That might well be an angle that they use to differentiate themselves from the local providers that you mentioned earlier, David, because the local providers are all very cash based. physical infrastructure related, like kind of Western Union versions that exist at the moment. And this could perhaps be a competitive advantage for Vice to say, we could take you all the way from here to there as a value proposition.

58:47The only point I was going to make there was with regards to central banks and stable coins. Not every African region is on the same page with regards to their appetite for allowing stable coins into their country. So just a note on that. Awesome. Right. And on that note, we're going to take a quick pause here and back shortly.

59:12Okay. Now for a quick look at one story we don't have time to cover in full. And this one's from Finextra. Visa and digital wallet push across Europe. Visa is rolling out a new digital wallet initiative across Europe, partnering with BBVA in Spain, Clano in several countries, Vips Mobile Pay in the Nordics, and preparing a pilot with Bankomat in Italy for early 2026. The expansion is enabled by the Digital Markets Act, which now allows third-party wallets to access NFC technology, increasing competition and flexibility in mobile payments. Visa highlights strong demand for mobile payments, noting that 59 % of European e-commerce transactions already use mobile payments, a figure expected to reach 75 % by 2030, with nearly one-third of consumers planning to rely solely on mobile wallets.

59:56Visa Europe's leadership says the initiative is a major step towards giving Europe more choice, competition and innovation in mobile wallets. So as James very kindly pointed out in our little coffee break we had as a team, I think a lot of this is probably due to exactly as it says here, the Digital Markets Act, which is allowing openness to access the actual NFC core technology. So Apple made that change, I think, earlier in the year. And we're just seeing a lot and lots of people develop their own mobile wallets and encourage people to use them because they don't have to pay so many interchange fees.

1:00:29They can get the revenue back for them. And it all makes sense. All right, finally, and this is called FinTech or Cricket. It's time for something a little bit different to wrap up this week's news show. While we usually stick to FinTech headlines and market moves, there's a surprising amount that FinTech and Cricket have in common. Believe it or not, who knew? Who knew these were two things? Not least a shared love of impenetrable acronyms that leave outsiders scratching their heads. So And with the biannual Ashes tournament now underway in Australia, we thought we'd pick a quick round of fintech or cricket.

1:01:02So, can you guess which world these acronyms belong to? I'm not going to start with the first one. Our listeners can't see this, but we have a cricket expert on this panel. So, I'm going to... What about ODI? Cricket. Ah, cricket. This is a nature versus nurture kind of debate for me. Like I'm an Indian and now I'm a FinTech. Yeah, well, yeah. So actually, yeah, this isn't an issue for most of you on this panel. What does ODI stand for? One Day International. Okay. Wow. Okay. DRS, what does that stand for? That is the decision review system in this context, not the drag reduction system of the F1.

1:01:49No, no, no, no. That's a different sport. Lots of FinTech with F1, by the way. James, what is AML? That is anti-money laundering.

1:02:05Is PSD2 position stump? What's the D in cricket? Payment Services Directive. Come on. I'm trying to cricket it, Virginie. I'm trying to cricket it. Come on, you can't. What has to do at the end of it? You can't. Too late? It's your second positive square drive of an innings. Ah, there we go, James. Now make that a thing. All right. We are very much over time. And so thank all of you for attending today. Where can people find out a little bit more about you and your company's addity? LinkedIn is the best place to find me. And the Snowflake website is phenomenal. So please go and look it up. Amazing.

1:02:47And James? I'm also on LinkedIn. You can find more about Nuke from Orbit at our website, nuke.app. And if you're a fintech business that wants to protect your assets, we would love to support you on that journey. Amazing. And Virginie? If you like FinReg memes or memes in general, you can look at my profile on LinkedIn because there's loads of them on there. And you can also look at www.fintechfirebrand.com for our research. Amazing. I am now going to dive into that FinReg meme rabbit hole. And as for me, you can find me on LinkedIn at DavidBG. Thank you so much for listening to today's Fintech Insider.

1:03:23If you like what you've heard, please make sure you follow us on your favorite podcast platform of choice. And if you really like what you've heard, why not share the podcast with a colleague or a friend? As always, if you want to join the conversation, find us on social media. Just search for 11FS or Fintech Insider or email podcast at 11FS.com. Thank you very much and goodbye.