Fintech for the Military?

It was not a problem that banks and fintechs saw coming. As NATO members including the UK allocate more funding to meet a pledge of spending 2.5 per cent of GDP on defence, some are running into a problem. ESG ethical finance rules are making it hard for large banks to fund military spending, but the invasion of Ukraine and subsequent rearmament of Europe is now causing plans to change. The EU said in June it would clarify that defence companies complied with ESG criteria and BNP Paribas dropped a clause about funding 'controversial weapons'. "Britain's defence sector is turning to small fintech lenders for funding after struggling to secure backing from traditional banks, highlighting one of the challenges of meeting government targets to raise military spending," writes the FT. "Defence groups will on Monday meet fintechs OakNorth, Funding Circle, Allica Bank, Iwoca, Liberis and Simply Asset Finance, to try to persuade them to invest more and to outline some of the funding challenges they face, according to an email seen by the Financial Times. Luke Charters, the parliamentary private secretary for the Department for Business and Trade, will also attend the meeting, which has been arranged by the fintech trade association, Innovate Finance. Innovate Finance said: "We recognise that SMEs within the defence supply chain are being asked to significantly increase production to support the government's industrial strategy."

Moniepoint goes from strength to strength

Nigerian fintech Moniepoint has raised an additional $90 million for a series C round, with chief executive Tosin Eniolorunda pledging to use the money judiciously in its goal of providing "financial happiness for Africans everywhere". The fintech has 10 million customers and has targeted MSMEs in particular, launching an integrated payments and bookkeeping solution. Investors included Visa, Google's Africa Development Fund, Development Partners International's African Development (ADP) III fund, and impact investor LeapFrog. It has become Nigeria's largest merchant acquirer, powering most of the country's POS transactions. "Since its $110 million initial Series C round, the company has expanded its product to include a remittance product, an inventory product and launched contactless payment cards. In June, it secured approval from the Competition Authority of Kenya (CAK) to acquire a majority stake in Sumac, a Kenyan microfinance bank," writes TechCabal. "When completed, that deal would give Moniepoint a foothold in Kenya's estimated $67.3 billion mobile payments market. The company is also deepening its remittance play. Moniepoint Group earmarked $7.39 million for its London expansion, and so far, it has spent nearly half, according to UK regulatory filings. In April, it launched its first remittance product, MonieWorld, which allows UK residents to send money directly to any Nigerian bank account using a MonieWorld account, British bank cards, or Apple Pay and Google Pay.

David Lindberg to lead HSBC UK

In people news, David Lindberg will take over the leadership at HSBC's UK bank. "David Lindberg, who led NatWest's retail banking until February this year, will take up the role of chief executive of HSBC's ringfenced UK bank in December," notes the FT. "He will replace Ian Stuart, who is set to take up a newly created position as group customer and culture director." Meanwhile, JPMorgan is building its team of private bankers in Spain, with recent hires from Banco Santander, UBS and Citigroup, and now CaixaBank. "Inigo Gomez de Iturriaga joined JPMorgan on Monday as senior banker in the country, a spokesman for the Wall Street firm said in response to questions from Bloomberg News. He joins from CaixaBank's OpenWealth unit, focused on family offices, and had worked for the Spanish lender for 13 years, according to his LinkedIn profile."

BNPL News

Max Levchin has long claimed that the 'secret sauce' of Affirm – the BNPL player he co-founded – is its underwriting algorithm. In an interview with the FT he calls on the industry, which is still largely unregulated, to set a cap on late fees and penalties. "Max Levchin, who founded US-listed Affirm in 2012, said setting limits on the penalties would encourage lenders to focus on refining their underwriting models instead of betting on consumers missing payments. 'If buy now, pay later...€was capping its ability to make money on delinquencies and defaults by regulating fees down, it would motivate the players to just get really, really good at underwriting'." Levchin said Affirm's delinquencies were not rising and he was not worried about consumer resilience. "'The consumer that we serve has not changed in a profound way. They're not in their personal recession, they're not struggling to make their bills on time. They're not telling us, 'I need help'. It just has not changed,' said Levchin." Affirm said it caps its fees at 25 percent of the purchase price or $68. According to Worldpay, BNPL lending rose from $3.2 billion a decade ago to $342 billion this year.

The Micropayment Dream

It's almost a decade since we've heard promises that cars will pay their own parking or electric charging through machine-to-machine payments, via blockchain of course, but it hasn't really worked out yet. Micropayments on the internet has proved a similar challenge. Payment specialists might recall that a particular internet protocol (402) was reserved a long time ago for payment messages while in reality people are still making internet payments through Stripe or other payments engines. It appears that people at Coinbase have gone ahead and created a single line of code (take that Stripe, with your seven lines) to allow machine to machine payments. Writing for the payments forum of the Atlanta Federal Reserve, Chris Colson challenges us to think of how easy it is to make a payment at a vending machine. "Now imagine if making small-value payments online was as easy as using a vending machine" he writes. "You insert the exact amount for that item, and the machine instantly delivers--no forms, no monthly snack subscriptions, and no cashier. That's the idea behind the internet protocol x402. It brings that same instant, single-item transaction to the web. Instead of dealing with sign-ups and redirects, the website acts as the 'machine' that instantly tells your digital wallet the price and handles the payment automatically. It's a machine-to-machine exchange, granting you instant access to your content, eliminating friction, and making micropayments feasible and seamless. To understand how x402 works, keep in mind that the internet talks to your computer using codes. You are probably already familiar with one: '404 Not Found', which tells your browser the webpage doesn't exist. Another code, '402 Payment Required', was included in the original internet standards but left 'reserved for future use'. In 2025, that future arrived with the launch of x402, a modern protocol that gives '402' a real-world function." Well, sign us up. Is there a catch? Sure. It currently works for USDC, Circle's dollar stablecoin. More digital assets will apparently be added.

E-Bikes Surge in Africa

Electric motorbike business Spiro has raised $100 million in investment to continue growing its network in six African countries. "Fund for Export Development in Africa, a unit of the African Export-Import Bank, led the investment round with $75 million, while the remaining $25 million came from private equity investors, according to Gagan Gupta, chairman of Equitane, Spiro's holding company," reports Bloomberg. "Spiro has plants in Rwanda, Kenya and Uganda where most of its assembling is done, Gupta said. Other companies are keen on setting up manufacturing operations in Africa and the trend is likely to continue over the next decade, but the current trade tensions globally are 'adding significant tailwinds to our business,' he said." The business operates in Kenya, Uganda, Rwanda, Nigeria, Benin and Togo, and has pilot programs underway in Tanzania and Cameroon. Rather than re-charging batteries, it specialises in battery swapping so riders don't have to wait around. CEO Kashik Burman told TechCrunch that the business model was adapted for realities on the ground. "These drivers spend 10 to 12 hours on the road every day, covering 150 to 200 kilometres while paying high fuel costs. At the end of each day, most barely save anything," Burman said. "That's why electric mobility, especially through a battery-swapping model, fits this segment perfectly. They can't afford downtime and get to save some money."

DeFis get a welcome from the Fed

Re-vamps, re-building and reforms are in US banking news this week. If you heard the word 'defi' in the news this week, it was likely used in a sarcastic manner, after several allegedly decentralised finance businesses went offline at the same time as Amazon Web Services experienced an hours-long blackout. But 'defi' was mentioned in a positive light by the Federal Reserve, which is re-thinking its formerly critical stance on all things crypto. Speaking this week at its first Payment Innovation Conference, Federal Reserve governor Christopher Waller was keen to signal a new relationship between the Fed and 'decentralised finance'. "First, I wanted to have a conference that focused on the new technologies that have come from the defi and crypto worlds and how they are entering the mainstream payments ecosystem," said Waller. "My goal is to have a vibrant discussion about payments between the traditional payment incumbents and the new entrants from the defi world. Second, I wanted to send a message that this is a new era for the Federal Reserve in payments--the defi industry is not viewed with suspicion or scorn." Waller proposed a new 'skinny' master account at the Federal Reserve for payment companies that did not need the full suite of services provided by a master account. He said the proposed 'payment account' would provide basic Fed payment services to legally eligible institutions that conduct payment services primarily through a third-party bank that has a full-fledged master account. "Such accounts are lower risk and therefore would have a streamlined approval process, he said."

JPMorgan: from work at home to work in New York's newest skyscraper

Former president of Citigroup and now chief executive and chair of JPMorgan, Jamie Dimon yesterday cut the ribbon on the bank's new headquarters in New York city. It will house 10,000 employees, and the bank hopes the new building will help it to attract and retain talent. "CEO Jamie Dimon has been a prominent advocate of working from the office rather than at home," said CNBC. "The new headquarters, including revamped workstations, are meant to attract and retain talent. 'We think of the building as a recruitment tool,' said David Arena, head of global real estate at the bank. 'A workplace needs to be a destination, it needs to be commute-worthy. It needs to provide an elevated experience for employees, for clients and for visitors.' The tower has 50% more hospitality space than any previous JPMorgan property, Arena said."