Belong, a brand new wealth-building platform has officially launched after securing £2.95million in pre-seed funding – the largest pre-seed round ever raised by female founders in Europe.

Belong offers customers an optional loan to scale up a long-term investment, creating a new low-interest ‘Boost loan’ feature, enabling more money to be invested upfront – magnifying the effect of compounding over time. Customers pay back the Boost loan separately, in small monthly instalments, enabling their investment to continue to grow.

Founded by former investment banker Avion Gray and behavioural economist Samantha Rosenberg, Belong hopes to make forms of wealth-building that have traditionally been the realm of a wealthy few, accessible to a wider demographic.

Originally from Trinidad, Avion Gray recently held the role of head of product and commercialisation at POS systems and merchant service provider Clover and is now CEO of Belong.

Gray commented: “We need two things in order to build long-term wealth – time and money, but we rarely have both of these elements concurrently. Millennials still have the time ahead of us to see any long-term investment we make now compound and pay off before retirement, but we often struggle to get started.

“Whether that’s due to not being able to secure a mortgage, lack of confidence around investing or feeling like we don’t have enough cash available to make it worthwhile – Belong is changing this.

“Historically, despite daily movements, the stock market has shown an upward trajectory over the long term – to the tune of 10 per cent per year. An investment in the broad market is inherently diversified, transparent in value, and accessible. This makes the Boost loan attractive for anyone with excess cash, a steady income, and the mindset to stay the course and be long.”

Millennials missing out on ‘primary wealth-building years’

Belong explained that millennials are the first generation in history to be worse off, financially, than their parents. While they make up the majority of the population (22 per cent), they own less than five per cent of the stock market.

However, Belong estimates that 18 to 44-year-olds in the UK alone have access to an estimated £300billion in cash savings. This tends to sit in low-interest savings or current accounts. As millennials themselves, Belong’s co-founders are on a mission to change this and shake up the investment space.

The positive demand from Belong’s beta customers is early evidence that this product is highly appealing to the target demographic – to date, 84 per cent of customers have opted for a ‘Boost’ loan, with 100 per cent retention and on-time repayments after 15 months.

Raised in South Africa, co-founder and COO Samantha Rosenberg is an economist, specialising in behavioural finance. Rosenberg commented: “The excess money millennials keep in savings accounts or cash ISAs is simply not working hard enough for us. Not investing it, means we are losing out on our primary wealth-building years.

“People like the idea of having easy access to their cash, but this is often due to present bias – the tendency to discount one’s future self in favour of more immediate gratification. Our future self feels like a stranger, and it’s difficult to make sacrifices for that person today.

“Investing is also something that, in the past, was seen as reserved for the rich or finance-savvy, but that’s no longer the case. We want to use what we know about financial decision-making to change perceptions around investing, creating a social movement around ‘being long’ and getting more young people set up for a wealthier future.”

Investing in the future

Other investors to date include Octopus Ventures, Viola Fintech, Connect Ventures and Portage Ventures, along with prominent fintech angel investors, William Todd, co-founder of Nutmeg, a digital wealth manager, UK Economist, John Kay and tech industry maven, Edwina Johnson.

Zihao Xu, fintech partner at Octopus Ventures, also said: “We are proud to be on this journey with Belong and look forward to supporting the company in its quest to be a true pioneer in long-term wealth-building. Samantha and Avion’s shared vision and complementary expertise puts them in a great position to help more people get on the path to a better financial future.”

At launch, Belong users are able to choose from five different broadly diversified index-tracking funds to invest in. This includes the MSCI World, S&P 500, FTSE as well as climate and ESG-focused funds.

The Financial Conduct Authority (FCA), the UK financial regulator, is working to create the right conditions for investment, innovation and sustainable growth in the UK. On its mission to achieve this, the regulator has published findings on its wholesale data market study.

The FCA study examined competition in the markets for credit rating data, benchmarks and market data vendor services. It has ruled out significant intervention because of potential unintended consequences, such as on the availability and quality of data, in a market relied upon by investors worldwide.

However, across all three markets, the FCA identified areas where competition does not work well. Users may be paying higher prices for the data they buy than if the competition was working more effectively.

As a result, the FCA has expressed its intention to take forward ideas to help support wholesale data being available on fair, reasonable and transparent terms. This is a part of its work to ‘repeal and replace’ assimilated EU law.

Sheldon Mills, executive director of consumers and competition, FCA said: “The quality and availability of wholesale data is integral to well-functioning wholesale financial markets. Our market study found that firms can access the data they need to make effective investment decisions.

“We do not believe the case has been made for significant interventions. However, we will examine ways to help support wholesale data being provided on fair, reasonable and transparent terms.”

The report is part of the FCA’s work to help strengthen the UK’s leading position as a global and vibrant financial centre, by creating the right conditions for investment, innovation and sustainable growth, built on globally respected high standards.

The FCA will continue to consider allegations of anti-competitive conduct in all markets including in wholesale data markets. Additionally, the FCA has powers to tackle this under the Competition Act.

The American Fintech Council (AFC), the industry association representing responsible fintech companies and innovative banks, offered testimony before the Washington State House Committee on Consumer Protection and Business recommending key amendments to legislation recently introduced.

Phil Goldfeder, AFC CEO and former member of the New York State Assembly, appeared in Olympia where he urged legislators to amend legislation. The reasoning behind it, is to better protect Washington families without stifling innovation, competition or access.

“As a former state representative, I understand how pragmatic legislation, when implemented correctly can change the lives of the families we represent but I’ve also seen the unintended consequences,” said Goldfeder.

“Not all fintech is created equal. AFC’s diverse members represent a cross-section of responsible fintech companies that embrace transparency and are rooted in regulatory compliance and consumer protection. They are committed to working with state policymakers and regulators to develop reasonable regulation that balances consumer access to financial services with strong and appropriate consumer protections.”

AFC testified before the committee and commended the inclusion of a 36 per cent interest rate cap on predatory payday loans but offered important suggestions on HB 2083 and HB 1874 specifically related to the proper understanding and nature of the relationship between responsible community banks and their fintech partners. Creating access to credit without compromising on consumer protection or regulatory compliance is critical when drafting, passing, and implementing new state legislation and regulation.

Earned wage access or loan?

In addition, AFC raised concerns related to the expansion of certain lending definitions that would mischaracterise earned wage access (EWA) products as loans.

“EWA is not a loan and should not be regulated as such,” said Goldfeder in his remarks before the committee. “These bills would expand the language related to lending that would inadvertently apply Washington’s lending statute to EWA, and, in turn, limit the ability for EWA providers to offer their products to Washington consumers. We developed standards for the EWA industry and would support robust regulation specifically related to this emerging product.”

EWA services provide employees access to wages they have already earned before arbitrary biweekly or monthly pay periods and serve as an important alternative to predatory high-cost and payday loans.

Additional standards recently released by AFC include strong transparency and disclosures, non-recourse, no interest, late fees or penalties, no debt collection, no credit reporting, no collection activity of any kind, and a requirement that a ‘no cost’ option be offered to all EWA users.

AFC is committed to supporting its members who believe in regulatory standards that balance access to financial services, innovation, and regulatory compliance. Their advocacy is paving the way for the future of financial services.

Latin America (LatAm) has established itself as one of the best regions when it comes to fintech innovation, with many other countries and regions looking to emulate its success. Although the number of innovators and innovations continues to grow, there is not enough capital to accelerate all of their developments – this is where corporate venture capital (CVC) from abroad can become a lifeline.   

Many large corporations want to gain an edge against their competitors. However, trying to gain this edge by testing new products in their most important market can be a risk they do not believe is worth taking. To overcome this, trialling new technologies and solutions in other markets can be a good indication of how consumers in their primary one would respond.

Technological developments are taking place in LatAm primarily due to the need for greater access to finance. The need to change this has enforced open-mindedness in the region, making it a prime location for EU and US-based corporations to test new products.

Challenges in LatAm

Many traditional payment methods are not widely available in certain countries in LatAm. Therefore large companies must be aware of the payment trends taking place in the country they’ve expanded to in order to properly test new products.

Hector Jirau, Ph.D., the executive director of Parallel18, an international startup accelerator focusing on positioning Puerto Rico and Latin America as vibrant hubs for innovation provided an example in Puerto Rico saying: “Although we now have Paypal and Venmo, a few years ago, Puerto Rico only had its local payment method: ATH Movil.”

He explained that corporations must be aware of these local payment methods or they won’t be able to properly integrate their services due to a lack of familiarity with what consumers are used to.

Tension in Chile

One corporation that has allegedly failed to do this in Chile is Walmart Chile. In December 2023, Tenpo, the Chilean digital bank, called out the US corporation for failing to take into account financially inclusive payment methods that were popular among Chileans. According to Tenpo, “prepaid cards exceed seven million and transactions have grown at an annual rate of 233 per cent on average.” However, Walmart Chile does not accept prepaid cards as a payment method.

This resulted in Tenpo starting a campaign against the corporation called #YoElijoComoPago (#IChooseHowIPay). The campaign aims to promote freedom of payment choice popular with locals – ensuring financial inclusion.

There has been a lot of support for the campaign on LinkedIn with members of the industry reposting the hashtag and voicing their opinions. For example, Paola Heresi Herrada, assistant manager at paytech Metropago said: “A real leader does not discriminate… if we want to bring all of Chile closer to the banking industry with all the actors in the world, there are large groups that are stopping this.”

Impact of excluding financial methods won’t be seen for 10 years

We sat down with Jirau to further discuss Walmart Chile’s exclusion of prepaid cards and the impact that a corporation practising financial exclusion can have on an ecosystem. “Corporations focusing on one particular rail will come across barriers. Walmart in Chile is a great example. By not accepting prepaid cards, it is limiting the capacity of the corporation to grow within the country. It creates a big barrier for individuals.”

“Looking at the economy as a whole, there won’t be a visible impact in the short term. However, in the long term, it not only impacts the end user, but the corporation too. The company won’t be able to scale as much and access opportunities. In this case, the access to credit will be extremely limited.”

Jirau did suggest that there could be some reasons underpinning Walmart Chile’s decision not to accept prepaid cards. “They won’t introduce a new financial vertical just because they don’t feel like it or don’t see the demographics. There could be other reasons.”

In 2021, Walmart Chile said cash transactions cost a third of what debit card transactions involve, considering the fees set by Transbank at the time. Should fees remain high, this could be a factor stopping prepaid card acceptance.

Parallel18’s executive director continued: “At the end of the day – corporations’ choices can cause the economy to lag. However, we have to remember that they’re private companies under a capitalist system. They’re mostly there to create profit, not a positive impact. We won’t see this lag take place in an economy for 10 to 20 years though – the negative impact will definitely be felt in the long term.”

Light at the end of the tunnel 

If a corporation can have such a negative impact on an economy, then surely it isn’t a good thing for an emerging market to welcome it? Not necessarily. In fact, corporations can provide a much-needed lifeline for these markets. Jirau explains: “It’s very difficult for an investment firm to allocate capital and create a new ecosystem of knowledge in an emerging market because that’s not their primary line of business.

“They can support a startup and teach it to make more money, but that’s where investment firms’ abilities stop. After all, they are looking to make money themselves. Corporate venture capital actually has the capacity to create.

“It can both support educational and financial inclusion, all the while providing the local economy with opportunities. Not only opportunities in their current and most established line of business, but in new ones too.”

Jirau added that for most corporations, investment is done due to aligning beliefs. However, it can be done as a way to ensure security in the future – making sure they do not fall behind technologically in their primary markets. Furthermore, the corporations are aware of the talent in emerging markets. As such, they are aware of what can be adopted from them.

He concluded that supporting startups and innovators to grow is key. Corporations can provide new jobs and economic developments in a country that otherwise would not happen. They can learn from the startups before they are strong enough to leave of their own accord and go their own ways. In turn, these now-established startups are likely to return to their original communities and reinvest in them themselves.

That is how the positive cycle of financial inclusion can be kickstarted by CVC.

 

Cybersecurity footprints are becoming increasingly complex and businesses need to counteract this to avoid spiralling costs, a global security research report has warned. 

According to Fastly’s new annual global cybersecurity report The Race to Adapt, the financial sector continues to be targeted by financially motivated organised crime, which often takes the form of data breaches, identity-based threats – such as malware, phishing, and social engineering attacks – and hacking, through the use of stolen credentials.

Additionally, financial organisations each suffered an average of 50 known attacks in the last year – more than any other industry. For this reason, financial and fintech professionals we surveyed are overwhelmingly (80 per cent) choosing to increase their security spend to try and secure themselves.

The survey also reveals the hugely damaging effects of financially motivated organised crime, with businesses losing more than 10 per cent of their revenue in the last 12 months. Beyond financial damage, network outages (35 per cent), compromised customer accounts (29 per cent) and data loss (28 per cent) were among the key dangers making up a complicated threat landscape. On top of this, 86 per cent are concerned that remote work is making securing their businesses harder.

Sean Leach, VP technology at Fastly, commented: “Security is at the heart of a financial service provider’s offering. If a customer’s data and money are at risk, the desire to use these businesses’ services disappears. Our data shows that bad actors are having some success in manipulating customers, exploiting open source software and launching API attacks, so prevention can look like a thankless task due to the range of potential threats and incentives for cyber criminals.

“Security spending is already considerable in this sector, so allocating these resources effectively will be crucial to the commercial viability of fintech services as the threat landscape diversifies.”

Further findings

Recognising the significant financial implications associated with inadequate security infrastructure, financial institutions are reassessing their investments. In the upcoming year, 80 per cent of them are opting to boost their cybersecurity budgets, surpassing other industries in this regard.

Despite this surge in investment, the realm of security remains fraught with uncertainty, as 44 per cent of security experts believe they have overspent on cybersecurity tools in the past 12 months, compared to 15 per cent who feel they’ve underinvested. This ambivalent spending strategy is exemplified by the fact that they fully utilise only 54 per cent of their security tools, suggesting the presence of significant untapped resources in the ongoing battle against cyber threats.

In addition to financial challenges, organisations are grappling with persistent issues concerning the availability of skilled security professionals. A notable 30 per cent of cybersecurity experts in the financial sector attribute security incidents in the past year to a shortage of talent, and 33 per cent foresee this trend continuing in the next 12 months.

Consequently,  56 per cent of financial institutions have augmented their budgets dedicated to talent acquisition in the past year to address these existing challenges.

Moving forward

Leach also added: “Despite now prioritising the resolution of challenges related to the talent pool for the last two years, many businesses continue to try to address these by simply spending more. While this strategy can help businesses to secure the top talent, it ignores the technological developments – and alternative solutions – that can help security teams overcome their personnel challenges.

“Among these, we’ve seen that Managed Security Services (MSS) and Generative AI have been particular focus areas as businesses look to reduce the toil for their in-house security teams by taking time-consuming work off their hands to increase productivity, unlock new opportunities for innovation and ensure businesses are better protected across their attack surface.”

 

The United Kingdom’s global summit on artificial intelligence safety, the AI Safety Summit, concluded on Nov. 2 with a one-on-one chat between U.K. Prime Minister Rishi Sunak and billionaire Elon Musk. 

Musk was one of the many big names to attend the summit, including heads of OpenAI, Meta, Google and its AI division DeepMind, along with leaders from 27 countries. Musk’s nearly hour-long chat with Sunak was one of the main events of the second day.

AI discussion with @RishiSunak
pic.twitter.com/f5FHGQzE4r

— Elon Musk (@elonmusk) November 2, 2023

Their conversation touched on everything from AI risks to China and opened with Elon Musk likening the emerging technology to a “magic genie.”

“It is somewhat of the magic genie problem, where if you have a magic genie that can grant all the wishes, usually those stories don’t end well. Be careful what you wish for.”

Both mentioned these intelligent bots needing a physical “off-switch” and drew parallels to science-fiction movies like The Terminator. “All these movies with the same plot fundamentally all end with the person turning it off,” Sunak said.

Musk commented: 

“It’s both good and bad. One of the challenges in the future will be, how do we find meaning in life if you have a magic genie that can do everything you want?”

This was brought up after governments and AI companies came to an agreement to put new models through official testing before their public release, which Sunak called a “landmark agreement.”

Related: NIST establishes AI Safety Institute Consortium in response to Biden executive order

When asked about AI’s impact on the labor market, Musk called it the most “disruptive force in history” and said the technology will be smarter than the smartest human. 

“There will come a point where no job is needed. You can have a job if you want to have a job for personal satisfaction, but the AI will be able to do everything.”

“I don’t know if that makes people comfortable or uncomfortable,” Musk concluded.

In addition, Musk commented on China’s inclusion in the summit, saying their presence was “essential.” “If they’re not participants, it’s pointless,” he said. 

“If the United States and the UK and China are aligned on safety, then that’s going to be a good thing, because that’s where the leadership is generally.”

Over the last year, the U.S. and China have gone head-to-head in the race to develop and deploy the most advanced AI systems.

When Sunak asked Musk what he believes governments should be doing to mitigate risk, Musk responded:

“I generally think that it is good for the government to play a role when public safety is at risk; for the vast majority of software, public safety is not at risk. But when we talk about digital super intelligence, which does pose a risk to the public, then there is a role for the government to play to safeguard the public.”

He said while there are people in “Silicon Valley” who believe it will crush innovation and slow it down, Musk assured that regulations will “be annoying” but having what he called a “referee” will be a good thing. 

“Government to be a referee to make sure there is sportsmanlike conduct and public safety are addressed because at times I think there is too much optimism about technology.”

Since the rapid emergence of AI into the mainstream, governments worldwide have been rushing to find suitable solutions for regulating the technology. 

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