This March, The Fintech Times is shifting its spotlight towards insurtech, exploring the potential impact of blockchain technology on insurance processes and its role in instilling trust in digital transactions.

Navigating the intricacies of regulatory frameworks presents a formidable challenge for insurers operating on a global scale, as regional variations significantly influence their strategies and operations worldwide.

These regulatory disparities dictate product development, distribution methods, capital requirements, risk management practices, and market entry decisions.

To delve deeper into this, we consulted industry experts for their insights on how regional regulations shape insurers’ approaches and activities across diverse markets.

Unified approach

Regional variations in regulatory frameworks have significant impacts on insurtechs and insurers’ strategies and operations worldwide, says Caroline Hanotiau, general counsel at insurtech Qover.

“The operational complexity of managing compliance efforts and monitoring updates and changes in regulations can be resource-intensive. Additionally, stringent regulatory requirements in certain regions may act as a barrier to market entry, limiting potential expansions for insurers.

“Innovation can also be constrained by regulatory requirements in certain regions, which may restrict product development and distribution rules.

“However, at Qover, we have developed a unified API that allows us to navigate these challenges and ensure compliance across all countries, while still innovating and providing consumer protection.”

Central bank regulation

Mustafa Melhem, business development manager for insurance at Eastnets, a global provider of compliance and payment solutions for the financial services sector, addresses the importance of central bank regulation in fostering stability and mitigating fraud in well-regulated insurance markets.

“In many regions, the insurance sector is regulated directly by the central banks through a dependent or independent insurance authority. We consider these regions as well-regulated insurance markets.

“They offer a strong and stable insurance market, empower the local insurance sector, foster better partnerships with the global reinsurance and financial sectors, and protect policy holders and beneficiary rights.

“These markets also offer protection of any third parties’ rights, such as healthcare providers and other insurance service provider. They also empower the insurance companies’ solvency margins and ensure strict control of fraud and money laundering.

“In other regions, where the insurance sector is reporting to different governmental departments or ministries, the central banks are not fully involved and therefore these regions are poorly regulated. So, these markets are lacking the above benefits, which encourages increased fraud.”

Robust IT systems

“Insurers are, and have always been, under enormous pressure to make their products conform to the regulatory needs of every geography they serve,” says Sam A. Shay, creative director at Socotra, which provides a modern enterprise platform  to insurance businesses.

“Even a small insurer that sells only one basic personal auto product in the U.S. has to create a variant of that product for each state, greatly increasing the complexity of doing business across any kind of border. The resulting amount of compliance work, product definition and more that goes into growing into larger regions or offering a more expansive product portfolio can be incredibly cumbersome.

“The insurers best-poised to handle this are the ones that use IT systems with robust insurance product inheritance models that allow them to easily configure each of their products to suit every regulatory environment the product is offered in – rather than offering unique products for every geography.”

Managing compliance

“Regulatory differences significantly shape the strategies and operations of global insurers, influencing product development, distribution methods, capital requirements, risk management, compliance, and market entry, including mergers and acquisitions (M&A),” says Ryan Cox, senior director and head of AI Business at digital transformation consulting firm Synechron.

“Insurers must customise their products to comply with various regulations, align distribution strategies with legal frameworks and maintain adequate capital to meet solvency requirements. They also need region-specific risk management strategies to navigate varying compliance standards and associated costs from one region to another.

“Market entry decisions hinge largely on regulatory landscapes, with insurers preferring markets with more favourable regulations while acknowledging regulatory challenges.

“M&A activities require thorough assessment of regulatory impacts and approvals across jurisdictions. Despite regulatory complexities, insurers can find opportunities by proactively managing compliance, maintaining operational flexibility, and using technology to enhance regulatory processes’ efficiency.”

Adaptable strategies

Highlighting the dynamic impact of regional regulatory variations on insurers is Javed Akberali, co-founder and managing director of insurtech Wellx, who said:

“Regional variations in regulatory frameworks significantly impact insurers’ strategies and operations worldwide. Differences in data protection laws, licensing requirements, and compliance standards require insurers to adapt their business models and strategies to each jurisdiction.

“This variation necessitates a flexible, informed approach to global insurtech operations, underscoring the importance of understanding and navigating these disparities to succeed on the international stage.”

Cisco has expanded its strategic partnership and signed a Whole Portfolio Agreement (WPA) with BBVA, the global financial services group, providing BBVA with faster access to Cisco’s comprehensive software and Customer Experience (CX) portfolio.

BBVA now becomes the first EMEA-based financial services institution to sign a WPA with Cisco in Europe and Latin America.

The five-year agreement includes solutions in cybersecurity, collaboration, data centre, networking and services. The agreement with BBVA spans operations across multiple countries. It includes proactive services provided by a specialised Cisco team and promotes collaborative innovation.

José Luis Elechiguerra, global head of engineering at BBVA, explained: “BBVA’s alliance with Cisco is more than a supplier-customer relationship. After eight years of strategic partnership working together, BBVA premises and employees worldwide will have access to not only current but future Cisco technological developments.”

The deal also simplifies management by consolidating 3,000 individual contracts into a single unified agreement. This streamlines BBVA’s global IT operations, significantly improving efficiency.

Oliver Tuszik, president of Cisco’s Europe, Middle East and Africa region (EMEA), also discussed the need for the collaboration: “We are proud to support the continued growth of one of the world’s leading financial institutions.

“For over a decade, BBVA has pioneered the digitisation of banking in Spain and globally by putting customer experience at the centre. During the next stage of our strategic partnership, together we will leverage the power of Cisco’s whole portfolio, including the latest AI-driven innovations, to accelerate their transformation.”

Since 2016, BBVA and Cisco’s dedicated team have collaborated to create the bank of the future, leveraging technologies like collaboration, networking, data centre and security. This strategic digital partnership, along with alliances with other leading tech companies, has accelerated BBVA’s transformation. As an early adopter of digitalisation, BBVA is now at the forefront of financial services innovation.

Saldo Bank, the Finnish digital neobank, is starting its operations in Sweden; arriving in the country with high-interest rates on fixed-term deposits.

Saldo Bank offers an interest rate of as much as five per cent for a year’s deposit. According to Saldo CEO, Jarkko Mäensivu, the fintech is all about increasing ‘fairness’ in fixed-term deposits. The digital neobank with a Finnish background also hopes it can lift the interest rate competition of the fixed-term deposits to a new level in Sweden.

The bank, which will start operating in Sweden this month, is looking to offer a drastically more attractive option than other local competitors. According to the comparison website Compricer, the next highest offer sits at 4.4 per cent. This plan has worked before; when the bank started in Finland in October 2023, several Finnish banks had to raise their own interest rates.

Mäensivu explains: “In our opinion, the interest paid on the fixed-term accounts has been very low for a long time. Interest rates paid to customers should reflect at least market interest rates.”

Targeting Sweden is a key plan for the digital bank, which is looking to use local funds to grow its loan portfolio in the country. Ultimately, Saldo Bank is trying to develop into a digital international bank that provides digital banking services to consumers and, eventually, businesses.

Backed by the Lithuanian fintech hub

Currently, Saldo Bank only operates online in Sweden, with no intention of establishing a branch network there. Saldo Bank offers consumers fully automated loan solutions and fixed-term deposit services.

The company’s advanced scoring and analytics system ensures responsible lending, and its own lending system also supports international business growth.

Saldo Bank has a Finnish background. However, the company’s core banking operations are in Lithuania and are supervised by the Bank of Lithuania. In addition, Saldo Bank’s technology development centre is located in Vilnius, after establishing itself in Lithuania in 2021. Saldo Bank also holds a specialised bank licence from the European Central Bank and employs a team of over 60 people.

“Favourable regulatory environment has been attracting fintechs and other financial companies to Lithuania for some time now. Saldo Bank has also benefited from both the fintech-friendly regulation and the hub of tech knowledge in Vilnius,”  Mäensivu explained last year.

Google Cloud has strategically partnered with Admiral, the financial services company in the UK, to improve its core insurance operations and enhance customer experiences.

Following the agreement, Google Cloud will power Admiral’s core insurance operations, including insurance policy administration and digital systems. Admiral will also use Google Cloud technologies to develop new digital products and services, such as making further improvements to its customer-facing mobile app.

Using its centralised view of data, Admiral will deliver more personalised and seamless digital experiences to its customers, including personalised offers and tailored services. Admiral also plans to use Google Cloud to bolster its digital channels, including its website, mobile app, and contact centre.

Admiral explained that the collaboration will enable it to accelerate time-to-market for new products and services by deploying containerised cloud applications and adopting new software development practices. The firm will also continue to improve operational efficiency using Google Cloud’s data analytics capabilities, and better serve its customers with Google Cloud’s AI and machine learning services.

Committed to upskilling

Alan Patefield-Smith, CIO at Admiral, commented: “With our customers at the heart of everything we do, Admiral is delighted to join forces with Google Cloud to help us achieve our strategic goals. Google Cloud’s cutting-edge tech and expertise allow us to accelerate our digital transformation journey and help us to deliver forward-thinking customer experiences.”

As part of the partnership, Admiral will work with Google Cloud to upskill its employees in cloud computing and data analytics skills. The move comes in an attempt to ensure that Admiral is able to take advantage of the latest cloud technologies and deliver better products and services to its customers.

Helen Kelisky, MD of UKI at Google Cloud, also added: “Admiral is an innovative insurer that has delivered many firsts to the market. We are proud to support its continued commitment to giving its customers the very best products and services across its insurance portfolio. We look forward to strengthening our existing relationship with Admiral to help it accelerate its change strategy and deliver even better experiences.”

Admiral will continue to support external initiatives such as Code First Girls in collaboration with Google Cloud.

Global fintech firm, FIS, has officially completed the sale of a majority stake in paytech solution provider Worldpay, which will now operate as an independent company.

The news comes after FIS committed to monetising the asset to bolster its balance sheet, to ensure greater strategic and operational agility by simplifying operations and driving faster innovation across its portfolio of solutions. The fintech will also retain a 45 per cent non-controlling equity stake in Worldpay; with private equity firm GTCR controlling the remaining 55 per cent.

FIS and Worldpay have entered into commercial agreements that will enable FIS to retain access to Worldpay’s marquee portfolio of commercial clients to continue to offer its fintech solutions and Worldpay to retain access to FIS’ financial institution clients as it continues to scale its bank channel.

FIS received upfront net cash proceeds of over $12billion at closing, which it intends to use to pay down debt and repurchase at least $3billion of shares throughout 2024, while maintaining an investment-grade credit rating.

Following the sale, Stephanie Ferris, CEO and president of FIS, commented: “I am pleased to deliver on the commitment we made in July to partially monetise our Merchant Solutions business at an attractive valuation and provide certainty for all stakeholders. With this strategic milestone, we are simplifying our business and driving greater focus on delivering innovative, next-generation financial technology and software solutions to our clients.

“FIS will continue strong, commercial agreements with Worldpay, creating a joint strategic go-to-market partnership and preserving a key value proposition for clients of both businesses. We will maintain a meaningful minority stake in Worldpay and participate on the Worldpay Board, allowing us to benefit from continued growth in its business.”

Operational changes

Charles Drucker has resumed his former role as CEO of Worldpay and will work to optimise performance and accelerate growth.

Drucker explained: “We will be faster and nimbler while bringing even more value to our clients and partners. The Worldpay team is passionate about payments and their clients, and together we will forge the future of this evolving industry. I’m also pleased to continue a strong partnership with FIS to preserve the end-to-end value proposition that has already benefitted so many of our clients.”

With the deal now complete, Worldpay has established a new board of directors. Vijay D’Silva and Louise Parent have agreed to serve as directors of Worldpay; while continuing their current terms of service on the FIS Board through the Company’s 2024 Annual Meeting.

Jeffrey A. Goldstein, independent chairman of the FIS Board, also commented: “We are grateful to Vijay and Louise for their contributions throughout their service on the FIS Board.

“Both were instrumental in overseeing the strategic review that resulted in the separation of the Worldpay business, served as key contributors to their individual committees, and provided differentiated perspectives in the boardroom informed by their unique backgrounds and skillsets. Their participation on the Worldpay Board adds significant payment expertise and will serve as an important bridge in our continued commercial partnership.”

Hut 8 has formalized a comprehensive four-year partnership with Ionic Digital Inc., encompassing end-to-end managed services across all of Ionic’s Bitcoin mining operations.

This move was announced on Feb. 1, marking a significant development for Ionic, a mining-focused entity that recently emerged from Celsius’s Chapter 11 bankruptcy. Ionic would be led by the former Chief Commercial Officer of Hut 8, Matt Prusak.

Per the statement, Hut 8 will assume responsibility for maintaining and expanding Ionic’s four existing sites in Midland, Texas, and will also be saddled with the development and operation of Ionic’s Cedarvale site. Additionally, Hut 8 will host 8,500 Ionic miners at its Niagara Falls, New York facility.

Hut 8 CEO Jaime Leverton revealed that Hut 8 has been designing and constructing the Cedarvale site since December. He added:

“Our managed services offering is distinct within the industry and ultimately differentiated Hut 8 as the best partner to manage Celsius’ mining operations through Ionic Digital,” Leverton said.

When the Cedarvale site is completed, Hut 8 will oversee an impressive 127,000 miners, boasting a nameplate hashrate of 12 EH/s and supported by a robust 300 MW energy infrastructure in the first year of the managed services agreement.

Hut 8 anticipates a positive substantial financial impact for its management services. The firm revealed that the deal will generate a projected total cash revenue of $81.5 million during the four years. Its potential earnings could surpass $100 million contingent on meeting key milestones, potentially leading to an extension of the agreement to a five-year term.

Additionally, it stated that it would receive equity compensation from Ionic during the period.

Hut 8 further disclosed that it had acquired a stake in Ionic. The BTC miner acquired  374,261 shares valued at $6.4 million in cash, and another acquisition is slated before May 31. This investment will allow it to secure two board seats at Ionic Digital, with one director being Asher Genoot, the president of Hut 8.

Celsius emerges from bankruptcy.

Defunct crypto lender Celsius emerged from its bankruptcy on Jan. 31, revealing plans to distribute more than $3 billion to its creditors.

The firm said it would utilize payment company PayPal and cryptocurrency exchange Coinbase to distribute the cryptocurrencies to its creditors. It added that it will shutter its mobile and web applications by Feb. 28.

“Please note that because of the volume of distributions and security measures, it will take up to 2 weeks for the Debtors to send all instructions. We know you have all waited a long time, but please be patient,” Celsius said.

First Bank, a family-owned bank in St. Louis, has implemented Backbase’s Engagement Banking Platform to boost its customer experience for retail and business banking customers.

The bank plumped for Backbase to enable the integration of multiple existing technology solutions, such as fraud management and payments, and facilitating seamless integration with new technologies adopted by the bank.

First Bank has a strong focus on full-service banking across its retail, business, wealth and lending services. Through Backbase, First Bank now operates on a unified platform catering so clients can access everything they need in one place, using a single log-in.

“This is the final step in our years-long digital transformation journey,” said Bala Nibhanupudi – EVP, chief technology and operations officer at First Bank.

“After re-architecting our entire digital ecosystem, including physical infrastructure, a core replacement, moving to the Microsoft Azure cloud, a middleware upgrade, and a CRM upgrade, we’re confidently delivering a customer-first banking experience. Right now with Backbase, the sky’s the limit on what we can do and offer.”

The integration

The Backbase Engagement Platform integrates with third-party applications and allows for customisation of customer journeys and control over the pace of innovation. Currently, 13 different systems are integrated, with additional integrations planned for future customer offerings. First Bank’s in-house developers will use Backbase’s managed hosting services for hosting, ongoing updates and upgrades.

Sam Boggs, executive VP for Backbase mid-market, also commented: “At Backbase, we’re focused on providing our customers with the capabilities to go beyond their legacy systems and point solutions, and in doing so, allow them to bring new products to market faster than ever, speeding the timeline between business decisions and launch. Ultimately, it is about achieving their mission. First Bank is the perfect example of that type of transformational financial institution.”

For a consumer client starting a business, First Bank can now guide them through the entire journey from a centralised point. Furthermore, the bank’s digital-first strategy will also let it extend its customer base nationally, even in areas where it lacks a physical presence.

Binance compliance commitments with the United States Department of Justice (DOJ) were unsealed on Dec. 8, revealing a significant government oversight of the crypto exchange operation and business activities.

In an analysis shared on X (formerly Twitter), John Reed Stark, a former Securities and Exchange Commission (SEC) official, classified the “exhaustive list” of Binance’s new compliance commitments as a “consulting firm’s wish list” that will likely shut down the platform.

Binance’s new obligations are described in an 11-page document and include cooperation to grant authorities access to documents, records and resources at their request, including access to information related to its “former employees, agents, intermediaries, consultants, representatives, distributors, licenses, contractors, suppliers, and joint venture partners,” noted Stark.

Several sections of the DOJ’s criminal division will closely monitor the exchange’s activities, including the section for money laundering and asset recovery; the section for national security; the section for counterintelligence and export control; and the office for the Western District of Washington’s United States Attorney.

Previously disclosed, Binance’s plea deal with the U.S. government also includes five years of oversight by the Financial Crimes Enforcement Network (FinCEN). The unprecedented oversight of its activities will likely cost the exchange millions of dollars. According to Stark:

“Binance’s settlement requires it to offer years of instantaneous access, audit, examination and inspection to DOJ, FinCEN and all types of financial regulators and law enforcement, exposing the company — and its customers — to a 24/7, 365-days-a-year financial colonoscopy.” 

Related: Binance is now ‘totally different’: Interview with CEO Richard Teng

Binance and its former CEO, Changpeng “CZ” Zhao, have admitted to violating U.S. laws around money laundering and terror financing, agreeing to pay $4.3 billion in fines on Nov 21.

SEC points to DOJ evidence to back up case against Binance

Binance’s recently unsealed ​​court records are part of a new filing by the U.S. SEC, incorporating DOJ’s enforcement actions and settlements to strengthen its case against the exchange and Zhao. 

The SEC pressed 13 charges against Binance on June 5, accusing the exchange of unregistered offers and sales of the BNB (BNB) and Binance USD (BUSD) tokens, the Simple Earn and BNB Vault products, and its staking program. The SEC also alleges that Binance failed to register its Binance.com platform as an exchange or broker-dealer clearing agency.

With its latest filing, the regulator is asking the court to take a “judicial notice” of the facts presented in Binance’s settlement. “Which means that the SEC wants the Judge to declare a fact presented as evidence as true without a formal presentation of evidence,” said Stark.

The SEC is using the settlement to challenge Binance’s latest motion to dismiss the case, undermining the exchange’s arguments about its presence and operations in the U.S. over the past years.

Binance had more than three million U.S. customers by March 2018, according to its settlement with the DOJ. Approximately 30% of Binance’s web traffic was originating from the United States as of June 2019.

Magazine: Lawmakers’ fear and doubt drives proposed crypto regulations in US