THE STATE OF digital finance.pdf

THE STATE OF
DIGITAL FINANCE
A Summary of Market Trends and Industry Initiatives from 2022
#WS2022Roundups
JANUARY 2023

@whitesight_ © 2023 | WhiteSight
2
Executive summary
• 2022 saw incumbent banks launch
digital banking subsidiaries on their
own or in partnership with industry
players.
• Challenger banks expanded their
propositions from mono-line offering
of accounts and cards to credit,
investment, insurance and crypto.
▪ Financial institutions partnered
with core banking providers to
speed up their digital
transformation.
▪ The partnerships with modern
banking infrastructure players
were aimed at improving
time-to-market in product
launches and orchestrating
superior customer experiences.
▪ Digital payments evolution
involved launch of A2A
payments, variable recurring
payments, and cross border
payments.
▪ Business payments innovation
included the launch of efficient
payment products for payment
acceptance and payment
disbursements to employees
and suppliers.
Regulatory trends: Regulators around the world provided fintechs and digital banks with the necessary licences for their specific products launches
and digital banking operations. They also closely monitored these institutions through audits, checking for any inaccuracies in statements and making
sure that proper control measures are in place to counter activities such as money laundering.
Digital Finance
Digital banking
Digital
infrastructure
Digital payments
▪ Digital banks expanded their
product offerings by
introducing various credit line
options such as loans,
mortgages, BNPL, and credit
cards.
▪ The launch of credit products
by digital banks was aimed at
improving the unit economics
and accelerating their quest to
become profitable amidst the
looming recession and funding
crunch.
Digital lending

3
Table of Contents
1. Digital Bank Launches 04
2. Digital Finance Use Cases 05
a. Card Programmes 05
b. Digital Payments 06
c. Crypto Trading 07
d. Digital Lending 08
e. Savings Accounts 09
f. Wealth Management 10
3. Digital Banks' Lifestyle and Marketplace Offerings 11
4. Digital Finance Infrastructure Trends 12
5. Regulatory Trends in Digital Finance 14
6. Key Investments in Digital Finance 16
7. Mergers & Acquisitions in Digital Finance 17
8. Noteworthy Partnerships in Digital Finance 18

4
▪ ANZ launched a new digital
banking service - ANZ Plus.
▪ It is expected to provide multi-goal
savings account with better money
management and visibility insights
to aid Australian customers'
financial well-being.
▪ Capital Bank of Jordan and
Codebase technologies
collaborated to launch a digital
only neobank – Blink.
▪ The neobank launch is aimed
towards aiding Capital Bank of
Jordan’s growth and will counter
security threats, high operation
costs, and lack of transparency.
▪ E-commerce company
Bukalapak and Standard
Chartered joined hands to launch
a digital bank platform –
BukaTabungan in Indonesia.
▪ The platform is expected to offer
financial products powered by
Standard Chartered’s banking
licence and is built on Nexus, a
Standard Chartered BaaS
solution.
▪ China’s Ant Group launched a
digital wholesale bank
incorporated in Singapore,
dubbed ANEXT Bank.
▪ The wholly-owned subsidiary of
Ant Group is expected to target
SMEs with its digital banking
services and drive Ant’s
overseas expansion.
Key Takeaways: Incumbent financial institutions led the launch of digital-first banking subsidiaries to exploit the opportunities of digital business
models in a post-pandemic world. Collaborations across various industries emerged as a key trend in digital banking as ecosystem players
partnered together to launch digital banks.
Other notable partnerships dedicated towards digital bank launch in 2022 include:
A ﬂurry of digital-ﬁrst bank propositions launched Digital Bank Launches
partnered together to launch

5
Key Takeaways: Digital Banks teamed up with ecosystem players to launch various card programs. The launch of virtual payment cards, family
cash cards, credit cards and cards without magnetic strips for business and retail clients were some of the initiatives that captured the headlines
in 2022.
A wide variety of innovative cards oﬀerings by digital banks Use Cases
• OneBanc, an Indian digital
bank, collaborated with Visa
to launch debit and credit
cards without the magnetic
strip.
• The partnership is intended
to enable OneBanc to launch
skim and clone-proof cards
that offer additional security
while transacting online or
offline.
• Neo Financial launched its
credit card with a
customisable reward
feature.
• Customers can choose the
bundle they want their
rewards on and reap
benefits and cashbacks on
purchases.
• Cross River and American
Express collaborated to
expand card issuing for their
fintech clients.
• Cross River’s integration of
the American Express
network is expected to
provide fintechs access to
select American Express
benefits for card issuing and
payment integration using
APIs.
• The family-focused digital
bank Greenlight teamed up
with Mastercard to launch
Greenlight Family Cash
Mastercard.
• The credit card is aimed to
assist parents save for their
children’s education and
other future expenses.
• Starling Bank launched virtual
cards for users using
personal current accounts.
• Customers can have up to
five virtual cards at a time.
Each card is assigned to
specific expenses, such as
travel or groceries, providing
better visibility and tracking
of costs.
Virtual card Family cash card Skim and clone-proof card Customisable reward card Modern card issuance

6
• Adyen partnered with
Block’s Cash App to
integrate it as a payment
method.
• With this partnership,
Adyen is focused on using
Cash App as an integrated
payment method at
checkout, opening up
more options for US
customers to pay.
• N26 integrated Bizum, a
mobile payment solution.
• The integration with Bizum
is directed at enabling N26
customers to use Bizum as
a payment method to pay
at partner merchants.
• Nubank partnered with
Bexs Pay to provide its
Brazilian customers
access to international
products and services.
• The partnership is aimed
at enabling Bexs Pay to
give Nubank customers
access to an additional
payment method when
purchasing from
overseas websites.
• ABN AMRO and Younited
partnered to pilot the
Payday Freelancer Wallet
app.
• The Payday Freelancer
Wallet app, powered by
Younited’s tech, instantly
credits money in the
users account for hours
approved.
• Starling added ‘bulk
payment’ as a product
feature.
• The new service is
designed to support
payroll, supplier payments
or employee expenses
using Starling business
banking. The new service
is a subscription-based
product.
Key Takeaways: : Digital banks collaborated with technology providers to solve the pain points of both merchants and consumers, that resulted in
a number of developments in the payments industry. Innovation in cross-border payments, bulk payment feature, wallets for freelancers, and
integration of various payment methods at POS were some of the common trends witnessed.
Banks & global ﬁntechs drive unique payment innovations Use Cases
Checkout payments Merchant payments International payments Freelancers payout Bulk payments

7
• Nubank launched crypto trading
for all its customers in
collaboration with Paxos.
• Currently the trades are
available in Bitcoin and ETH.
• N26 launched an in-app crypto
trading product – N26 Crypto – in
collaboration with Bitpanda.
• Users can trade for over 200 crypto
currencies. The partnership is
further directed at offering a
competitive new pricing model for
N26 customers.
• Revolut added more
cryptocurrencies and tokens for
trading as well as unveiled a
feature for customers to make
purchases through their crypto
balances.
• The move is intended for Revolut
to further venture the crypto
segment by integrating payments.
• Step, a teen banking platform,
unveiled plans to launch crypto
trading and investment for
children below 18 as well as
young adults.
• The feature is tailored for
parents to oversee their
children’s investment and will
provide educational resources to
encourage investing.
Key Takeaways: Digital banks made significant strides in recognising digital assets as a valuable asset class. This development was particularly
evident in their product launches that focused on facilitating crypto trading and investments.
Crypto-friendly initiatives from digital banks Use Cases
Bitcoin & ETH trading Crypto trading Crypto trading and payments Crypto trading for teens

8
• The Philippines digital bank
Tonik rolled out two new
lending products – Flex Loan
and Big Loan – to further
diversify its current suite of
credit offerings.
• Flex Loan is an unsecured
credit product, while Big
Loan is a home equity loan.
• Mox Bank launched ‘Instant
Clear’, a loan product to pay
off credit balances at other
banks or FIs.
● Instant Clear loan can be
paid in instalments of up to
60 months with 2.8% APR
and 56 days of the
interest-free period.
• Atom Bank launched its
new two-year 75% LTV
mortgage range.
• The launch extended the
already existing portfolio
range offered by Atom,
which can be availed
through their mobile app.
• Revolut rolled out its
BNPL product for users in
Ireland.
• By using open banking
and underwriting for its
Pay Later services,
Revolut is focused on
allowing customers to
make purchases up to
$530 (€499) and track
balances through the app.
• Juni launched a credit
card specifically designed
for business expenses
related to online
marketing and
advertising.
• The card is aimed at
offering flexible credit
lines for specific ad
streams, guaranteed
payment propositions,
and cashback on all
purchases.
Key Takeaways : Digital banks expanded their product offerings by introducing various credit options such as loans, mortgages, BNPL, and credit
cards, thus allowing expansion and generation of more revenue from interest and fees associated with credit products.
Digital lending as the future of digital banking
Unsecured lending & home
equity loan
Loan for credit card balance Digital mortgage BNPL Expense-specific credit card
Use Cases

9
Key Takeaways: Digital banks expanded their offerings in recent years by introducing new savings propositions that offer competitive interest
rates and target the unbanked customers in their respective geographies.
High-yield, automated, and ﬂexible savings propositions Use Cases
• Singapore-based GXS Bank
launched a savings account
with a yearly interest of
0.08% accrued daily.
• The savings account is
designed to enable
customers to create up to
eight distinct pockets, each
designated for specific
financial goals, customisable
with personalised names and
images.
• Revolut launched a Savings
Vault to provide its Revolut
Metal customers with a
savings product that offers a
0.7% interest rate.
intended for offering no
minimum balance feature and
daily interest deposit. The
customers can also round up
their purchases and make
deposits.
• Bunq rolled out Easy Saving
savings account at a 0.9%
interest rate.
branded as an alternative to
traditional savings accounts,
where interest is paid
monthly and takes 5 minutes
for one's onboarding.
• NuBank launched a digital
savings account with debit
card access for Mexican
customers.
• Through this offering, the
digital banking arm of the
neobank, Nu Mexico, is
focused on targeting the
unbanked and rural
populations who lack access
to a traditional savings
account.
• Wise rolled out a new savings
product called ‘Interest’ for
UK customers – with
balances in British pounds,
US dollars and euros – with
plans to expand across
Europe next.
• The cash in the
interest-bearing account will
be used to invest in
government-backed
securities passing on central
bank rates to their savings
customers.
Interest-bearing savings Round-up savings Monthly-interest payouts Digital savings Multi-currency savings

10
• Tinkoff Bank unveiled an online
stock gifting feature.
• The offering is tailored for Tinkoff
customers, enabling them to send a
stock gift to another customer or to
a person who has no account with
Tinkoff Investments.
• GoHenry rolled out Junior ISA
(individual savings account) for minors
to promote early investing and
financial well-being.
• The move is targeted at providing
parents the ability to invest as little as
£1 and up to £9,000 per tax year on
their child’s behalf through monthly
contributions or one-off payments.
• Jupiter rolled no-penalty SIP for
mutual fund investments.
• The feature landed itself importance
in opposition to traditional banks
which charges penalty for failed SIP.
Jupiter skips the SIP when there is
insufficient bank balance available.
• Liv, a digital bank by Emirates NBD,
launched in-app access to digital
subscriptions when applying for IPO in
collaboration with Dubai Financial
Markets.
• The collaboration enabled prospects
to register their interest for upcoming
IPOs covering key highlights, listing
dates and different ways to subscribe
and the ability to complete their
payment journey on the App itself.
Key Takeaways: Digital banks diversified the present range of their product offerings by introducing new investment options tailored to specific
customer segments. These include features such as stock gifting, initial public offering subscriptions, and no penalties for failure in a systematic
investment plan.
Financial wellness, a priority for digital banks Use Cases
Other ﬁrms with notable activities in the wealth management space include:
Online stock gifting Junior individual savings account No-penalty SIP Subscriptions for IPO

11
• Revolut unveiled a holiday home rental
feature as part of its travel services
offering.
• The feature is part of its travel
product called Stays and is designed
to offer cashback on bookings.
• Tandem Bank rolled out Tandem
Marketplace.
• The marketplace is tailored as a
consumer-focused hub providing key
information and resources to help
promote greener living.
• Virgin Money launched a new online
service called Marketplace dedicated
for small business banking customers.
• Marketplace is intended at enabling
customers to access useful services
offered by selected partners to help
them run and manage their business.
Five partner services are available at
launch - Expend, Accelerated
Payments, Superscript, untied and
BrightHR.
• Nubank added Games, Travel, and Pet
to its recently launched in-app
e-commerce vertical.
• The diversification is aimed at
expanding the product portfolio and
to monetise the existing user base.
Key Takeaways: : To become a "super-app," digital banks diversified their services to non-financial sectors and updated their existing product
offerings. This diversification includes services such as travel, games, and mortgage application within the banking app to increase customer
engagement and loyalty.
Expansion to lifestyle products and marketplace oﬀerings Product Launches

12
• BaaS platform provider Solarisbank
chose Snowflake, a data cloud
company to migrate its operations
over the cloud.
• By migrating to Snowflake’s Data
Cloud, Solarisbank is focused on
using data mining and insights to
release better embedded products
and develop its existing BaaS
capabilities.
• SBM Bank and Open Technologies
entered into a strategic
partnership to launch Zwitch – an
end-to-end embedded finance
platform.
• It offers a no-code, low-code and
full-stack API solution that enables
fintechs to build their own
financial products.
• N26 teamed up with payment
infrastructure provider Stripe.
• The partnership is purposed for
Stripe to power up N26’s payments
and make onboarding easier for the
neobank.
• Tonik selected Noname security to
safeguard its digital platform.
• Through the collaboration, Tonik is
geared towards leveraging Noname’s
security to monitor the health of APIs
added to its platform in order to
increase its cybersecurity measures.
Infrastructure modernisation emerged as a top priority
Key Takeaways: Banks and fintechs collaborated with technology providers to embrace modern tech stack components. The objectives of these
strategic partnerships included the launch of embedded platform, cloud banking, payments, and cybersecurity.
Infrastructure
Embedded finance platform Data cloud strategy Payment infrastructure API Security

13
• Garanti BBVA chose Temenos to
modernise its core banking systems.
• With this partnership, Garanti is
expected to move to Temenos
Banking Cloud as a record system for
its retail and corporate business in
the Netherlands and Germany while
leveraging its SaaS platform for core
banking.
• Singapore's Trust bank partnered
with Thought Machine to leverage its
Vault Core solution for building its
core banking tech.
• The partnership is targeted at
accelerating Trust Bank's ability to
scale and launch new products and
features while leveraging real-time
data and analytics.
• Carbon Finance, a microfinance
digital bank, selected Mambu to
launch a full spectrum of banking
products and services.
• With this partnership, Carbon is
focused on leveraging Mambu's
cloud-native banking platform to
disburse instant loans in minutes and
launch its BNPL product – Carbon
Zero.
• UK-based LHV selected Tuum as a
core banking provider for the entirety
of LHV UK’s banking operations.
• By selecting Tuum to handle the core
banking needs, LHV UK is intended to
free up their internal resources to
provide value-added services to its
customers.
Key Takeaways: In 2022, banks and fintechs collaborated with core banking technology providers to fuel digital transformation by unveiling
customer-centric solutions and modernising their existing banking stack.
Banks embraced cloud-native core banking platforms
Other ﬁrms with notable activities in the core banking space include:
Infrastructure

14
▪ Wise received a Capital
Market service licence from
MAS to launch its
investment product called
Assets.
▪ The diversification of
product portfolio is
targeted to offer Wise the
opportunity to tap the
investment industry.
▪ SoFi received regulatory
approval for Bank Charter
in the US from Federal
Reserve and OCC.
▪ The application was
approved upon the
acquisition of Golden
Pacific Bank and will allow
SoFi to lend at competitive
interest rates and provide
members with
high-yielding interest in
checking and savings.
• The Ministry of Finance in
Malaysia awarded a digital
banking licence to a
consortium involving
MoneyLion and AEON
Financial Service.
• The licence provides the
companies in the consortium
the ability to build a digital
bank and offer services to
promote financial inclusion
for Malaysian customers.
▪ GoTyme Bank was awarded
its Certificate of Authority
to operate as a digital bank
by the Bangko Sentral ng
Pilipinas (BSP).
▪ Fiinu group secured
deposit-taking licence from
the Bank of England. The
group also received bank
licence and authorisation
from the UK’s PRA and FCA.
• Modulr received
electronic-money licence
from De Nederlandsche
Bank (DNB).
• Neobank Juni secured
electronic-money licence to
operate in Sweden.
• Both licences are aimed at
helping the fintechs to serve
and expand across Europe.
Race to acquire digital banking licences
Key Takeaways: 2022 saw regulators across the globe grant digital banking licences to a host of applications. The granting of banking charter,
e-money licence, and approval for investment services garnered attention in the digital banking space.
Capital market service licence Bank charter Digital banking licence Digital banking licence Electronic-money licence
Regulatory Trends

15
▪ Bank of Italy banned N26
from accepting new
customers following an
on-site inspection that
revealed several
shortcomings related to AML.
▪ The move was particularly
focused on restricting entry
of customers in availing
cryptocurrency services.
● Revolut came under
scrutiny from regulators
from Japan’s FSA, UK’s
FRC, and Lithuania’s State
Data Protection
Inspectorate.
● While regulators from
Japan and UK focused on
control measures, Lithuania
was involved to investigate
significant data breach
from Revolut.
• MyBank was charged with a
$3.52M fine for multiple
violations including breaching
credit scoring management
and AML rules.
▪ MyBank was reprimanded
and penalised for not
adhering to the central
bank's KYC regulations and
failing to report suspicious
transactions.
▪ The Competition & Markets
Authority (CMA) criticised
Monzo for not revealing the
highest charges that could
be imposed on a current
account holder who goes
over their credit limit.
▪ The competition regulator
notified Monzo bank of the
violation and stated that they
will keep a close watch on
the bank's adherence to the
regulations in the future.
• Metro Bank PLC was fined
$12M (£10M) by the FCA for
violating the Listing Rules by
releasing incorrect
information to investors.
• The FCA found that two top
executives were aware of
Metro Bank's violation of
Listing Rules and did not take
appropriate action, leading to
a 39% drop in share price.
Key Takeaways: Regulators took strict measures to regulate digital banks and protect customers by imposing fines and penalties for
non-compliance with control, AML, and IT regulations.
Regulatory scrutiny & penalties on the rise Regulatory Trends
AML shortcomings Data breaches Transaction monitoring Fees disclosures Employee misconduct

16
Company
Key Investments in
Digital Finance
Key Takeaways: In 2022, digital banks raised funds to improve their internal infrastructure,
enhance their core offerings and drive growth. This funding also equipped them to hire
additional staff and expand into new geographic regions to tap different customer bases.
Country Key Investors Motive Funding Round
Undisclosed
$300M Series D
Propel VC
The funds will be used to in developing technology,
marketing and products.
$200M Corporate
International Holding Company (IHC)
The funds will be used for its market expansion in the
LatAm.
$131M Series B
Mizuho Bank, Point72 Ventures, iGlobe Partners, Alpha
JWC Ventures, Insignia Venture Partners and others.
The funds will be used to expand the bank’s presence
in Philippines and South Asian markets.
$157M Series D
JTC, Jupiter, Fidelity Management & Research Co., Qatar
Investment Authority
The funding is aimed for growth as well as for
potential acquisitions of other companies.
$206M
Equity &
Debt
Mubadala (equity), TriplePoint Capital (debt)
The funding is aimed at launching the Earthbanc
protocol and web3 platform.
$516M Series D
Tiger Global, TCV, Valar Ventures, Alven, DST Global,
Tencent, European Investment Bank, Insight Partners and
others
The funds will be used to hire new staff and acquire
new clients for expansion purposes.
$145M Series C
Tribe Capital, Altos Ventures, Maple VC, Blank Ventures,
Gaingels and Knollwood Investment Advisory.
The funds will be used to create new products and
expand its team size.
$125M
Private
Equity
BBVA, Toscafund and Infinity Investment Partners
The funds will be allocated to fuel product growth in
lending and mortgage.
$125M Series B
Stripes, GGV Capital, Valar Ventures, Crosslink Capital,
Rainfall Ventures, and BoxGroup.
Funding will be used to build the existing infrastructure
and to add more lending products.
$90M Series C
General Atlantic, Endeavor Catalyst and Acrew Capital
The funds will be used to expand into new markets,
strengthen product in credit and investment.

17
Digital Banks’ Mergers
& Acquisitions
Key Takeaways: In 2022, the digital finance sector saw a number of mergers and
acquisitions in a bid to expand existing services in payments, payroll, lending, and SME
banking. There was also a focus on acquiring competitors to increase geographic reach.
Acquirer Acquiree Focus Region Objective Deal Amount
Equitable Bank will expand and diversify its services and offerings through the acquisition of the
rival bank.
$370M
$90M
Tyme Bank will extend its product suite to provide lending/funding solutions to SME through this
acquisition.
Starling Bank will diversify and extend its lending portfolio through the acquisition of Masthaven’s
UK Loan Book.
$620M
Lunar will expand its footprint in Norwegian region through the acquisition of Instabank. $140M
Undisclosed
Tonik will integrate TendoPay’s payroll solution into its offerings through this acquisition.
Ualá will diversify its offering and will carry out banking operations through this acquisition.
Tyme Bank will extend its product suite to provide lending/funding solutions to SME through this
acquisition.
Qonto, with this acquisition, will expand in the German SME market by adding Penta's customers
and clients to its product and service portfolio.
Tandem Bank is integrating Oplo's lending portfolio to expand its product offerings and provide more
credit line options to its customers through its mobile app.
UK Loan
Book

18
• Bunq partnered with
MobileExpense to offer
expense management
services.
• This partnership is aimed at
enabling bunq users to
simplify employee expense
management by setting
spending and withdrawal
limit.
• HR management platform
Rippling joined hands with
Brex to expand their services
collaboratively.
• The collaboration enabled
Rippling’s workforce platform
to integrate Brex’s card and
spend management for
corporates which allows
customers to automate their
financial operations.
• Jupiter and RazorpayX
partnered together to offer
payroll platform to
companies.
• The platform is expected to
maintain a single dashboard
for all things related to
salaries and help automate
the processes of salary
calculation, salary disbursal,
managing the provident fund,
gratuity, insurance, and
salary accounts.
• Starling Bank and Settld
teamed up to offer
end-of-life admin services.
• The partnership is aimed
towards streamlining account
administration for those
handling the affairs of a
Starling bank customer who
has died, using Settld.
Noteworthy partnerships in digital ﬁnance
Key Takeaways: Banks and fintechs in 2022 launched value-added services such as expense management, end-of-life admin services, and payroll
automation in an effort to offer a seamless customer experience.
Alliances
• TransUnion partnered
with Fiinu Bank to support
its overdraft solution.
• Fiinu is focused on
leveraging TransUnion's
open banking capabilities
and credit reference data
for eligibility tests when
customers apply for
overdrafts.
Expense management Spend management Payroll platform End-of-life admin services Overdraft solution

@whitesight_
www.whitesight.net
WhiteSight is a FinTech research ﬁrm with a design-oriented and data
intensive approach to research. WhiteSight brings unique and actionable
intelligence to drive strategic growth and innovation agenda for its clients.
This report has been authored by WhiteSight.
To access the underlying data with further
coverage and references, please reach out to us
at hello@whitesight.net

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