A women scanned thoroughly, symbolizing know-your-customer procedures

What is KYC: An Overview for Fintech Companies

KYC, meaning Know Your Customer or Know Your Client, refers to the processes conducted to verify the identity of a customer and assess the risk of the business relationship with them. 

KYC is a crucial regulatory requirement for fintech companies and other institutions with financial responsibilities (like banks, credit institutions and insurance providers). Laws and regulations oblige those actors to validate the identity documents their clients provide. That’s equally true if the clients in question are legal entities instead of persons. KYC also requires companies to evaluate the clients’ financial status and monitor their monetary accounts for suspicious transactions. 

The goal: Adhere to Anti-Money Laundering (AML) and Countering the Financing of Terrorism regulations, prevent fraud and constrain the access of users, who don’t fulfil certain standards of credibility.

But Know Your Customer policies are not just boundaries. They also act as competitive factors. KYC yields insightful data on one’s own services and customers.

It thus helps establish a reputation as a secure and trustworthy company as well. And trust is likely the most valuable asset for any financial business today — at least KYC-approved customer bank data is in high demand elsewhere.

So it’s time for a deeper look into the meaning and definition of KYC, its chances and its challenges. 

This Know Your Customer Introduction for Fintechs Contains:

  • A definition of KYC
  • A discussion of key KYC-related concepts such as AML or EDD
  • An overview of legacy KYC procedures and their modern counterparts
  • A list of typical challenges fintech companies face with KYC

Now, shall we? 

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A hand holding a handy, on which a stock market app is running, representing the SPAC investment type

Opinion: What the ICO Hype Can Tell Us About SPACs

Hypes are a good thing. No, think about it: They generate attention for products, activities and ideas. And where there is attention, there is scrutiny, too. The humming of the mainstream buzz makes us turn heads and observe closely where the noise is coming from. 

Matthias Gall, co-founder of trimplement
Matthias Gall, co-founder at trimplement, analyses the potential and possible drawbacks of Special Purpose Acquisition Companies.

For the hype-sensitive stock market, this has proven a boon in many cases. Wall Street is loud, and the more volume an investment trend generates, the more it will catch regulators’ interest – besides that of eager venturers. And currently, one investment trend generating much noise is that of SPACs. 

SPACs (short for Special Purpose Acquisition Companies) stood on the sidelines of the stock markets for a few decades. But in recent years, they made a comeback in the investment mainstream – mostly thanks to the web. And there, I could not help but think of another social-media-driven hype of the 2010s: ICOs. 

In fact, SPACs already show the same signs of overvaluation and ultimately disintegration that have befallen ICOs a few years back. But will SPACs go down the path of the ICO? 

In this article I will try to answer this question and a few more, like: 

  • What are SPACs? 
  • Why are they popular?
  • What are their risks and disadvantages? 
  • Is the SPAC hype comparable to the ICO hype? 

Okay then, here goes: SPACs, the specifics… 

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Opinion: The NFT Craze on the Art Market

Intro

trimplement co-founder Natallia Martchouk
trimplement co-founder Natallia Martchouk shares her thoughts about the NFT-based art

Everyone and his dog have been talking and writing about NFT (non-fungible tokens) in the last couple of months. I don’t know where exactly this hype is currently coming from. NFT is not a new concept, it has been around for a couple of years already. 

Back in February 2019, I wrote an article about different use cases of blockchain technology in art, which also mentions a couple of older non-fungible token projects like Crypto Kitties or Rare Pepe Trading Cards, so-called digital collectibles. In October 2019 we even started our very own NFT project Value Manifesto together with the art historian Timo Niemeyer, mechanical engineer Matthias Frank and producer of Nixie Tubes Dalibor Farny.

So, nothing new under the sun. But suddenly everybody is talking about the NFTs and NFT-based art is being sold for tens of Millions of dollars. It looks like the concept of certification of art ownership on the blockchain is suddenly lightning-fast going mainstream. However, what currently happens in the art market, rather reminds me of the famous dot-com bubble at the end of the 1990s. Let’s have a closer look at the events of the past few months.

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A robot hand holding a vintage ladies' wallet, representing electronic wallets or e-wallets, respectively

What Is An E-Wallet – Definitions and Technical Distinctions

E-wallets are software programs which securely store data. This data is needed to enable the wallet owner to conduct payments online or at points-of-sale. And they do so by use of a specific device.  

That’s as close to an encompassing definition of e-wallets, or electronic wallets respectively, as we will probably get. But it’s also just the surface of what electronic wallets – sometimes also called digital wallets or (obsoletely) cyberwallets – can do. Over the last decade, e-wallet technology has found application to a variety of use cases. This article will cast a light on the term E-wallet, especially in the context of online payments. In the following paragraphs you’ll find: 

  • Definitions of certain types of e-wallets 
  • An overview of their common functionalities 
  • A breakdown of e-wallet-based payment 
  • An outlook on their role in the future of payments and e-commerce
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Two hands with medical gloves handing over a banknote, representing fintech during the corona year of 2020

How 2020 Changed the Fintech Industry – Trends and Developments

What a year… good thing, we have a new one in replacement. 

Last December, when putting together our annual industry recap articles (you can find some of them here if you are in for nostalgia), we could not have guessed that the fintech scene would be on the brink of profound change. Many predictions, fintech and banking experts had made for 2020, did not occur – or did not occur for the reasons that we assumed would provoke them. 

Everything considered, though, the financial industry got off cheaply in 2020, when compared to other industries. Some branches could even step up their game. 

The question now is, if the fintech trends of 2020 will continue in 2021 or if they will “return to form”, once the restrictions in worldwide trade, business and retail loosen again. A look in the rear-view mirror will give us some implications. 

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A banknote forming a roof over a tiny toy house, representing the niche banking industry.

Niche Banks – The Overlooked Financial Player

Imagine a bank. Now, what does it look like to you? 

We assume that most of you reading this would picture it as a building. Perhaps with a sleek, dark blueish glass front. Perhaps with towering pillars reminiscent of classic empires. Definitely with ATMs and clerks giving out cash, taken from underground vaults.

But let’s be honest here: Nothing of that represents modern banking services. Since the introduction of online banking and smartphones, banking is no longer confined to a physical place such as a bank building. And without the need of such branch offices, offering payment and banking services became an attractive option for companies outside of the traditional banking industry. 

In recent years, we have already seen a wave of new players that offer basic banking services. Those new banking players benefit greatly from the web-centric customer habits of today, if they capitalize on them. That’s especially the case with BigTech corporations and platform economy firms, who are pushing into the market. 

But aside from these financial giants, there is still room for smaller, more focussed financial institutions. Some cater to the general, tech-savvy customer, others occupy a specific niche that larger financial houses don’t address as purposefully. But what do those niche banks look like and what will be their role in banking in the future? 

We start with the basics. 

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A close-up photo of a dollar note, representing the traditional financial system and its history

The History of the Financial System

Introduction

trimplement co-founder Natallia Martchouk
trimplement co-founder Natallia Martchouk looks into the history of centralized finance.

We all are used to living in the world of centralized banks and institutions that govern finance – also known as the old economy in the crypto and fintech scene. In fact, many people cannot imagine that the financial system could work differently. They simply take this existing system as the given and best option. 

But is this the case? Or are there good reasons why there is a need for new paradigms like the growing new area of decentralized finance? Let’s talk about some historical milestones in the development of the financial systems of the old economy, before examining its disadvantages.

The Old Economy: History, Status Quo and Risks

Money Makes the World Go Round

Let’s start at the very beginning and go through some basic concepts. The financial story of humankind starts with the invention of money.

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The trimplement co-founders Thijs Reus, Natallia Martchouk und Matthias Gall sitting together and discussing the foundation of their software company trimplement

How to Found a Software Company

Enclosed you will not find the 6 definite steps, instructing you how to found a successful software company.

Bummer, right?

But don’t stop reading, yet. We just wanted to get this out of the way, right at the start.

There are mandatory steps to take when founding and co-founding software companies – like registering the company in the first place. But there is no such thing as a secret recipe for entrepreneurial success on the software development market.

Which does not mean you could not cook up a healthy and successful software business if you gather some specific ingredients. In this article, we will share some entrepreneurial best practices with you. We will give you an overview of what steps we took and what lessons we learned when establishing the trimplement software development company in Germany. (And what better occasion than our 10th anniversary to roll out such a menu?)

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A car's dashboard, with the number 2019 stuck to it, symbolizing the automotive market of the year 2019 in this review article.

2019: The Year in Automotive

Photo of Thijs Reus, co-founder of trimplement
Thijs Reus looks back on the automotive developments of 2019

Sometimes, things take longer than expected. 

In my 2018 review, I have hinted at how PSD2 and GDPR would ring in a new, more dynamic era of fintech, filled with opportunities. And then again it didn’t. The PSD2 deadline has been expanded, as banks and other financial companies have kicked the adaption of their systems and services down the road, so to say.

In the meantime, BigTech companies like Google, Alibaba or Apple cement their market position with their own smart payment solutions.

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2019: The Year in Cryptocurrency

Natallia Martchouck looks back on the cryptocurrency developments of 2019

Another fintech year is over. Even a fintech decade. A lot of things happened last year and in good tradition, I’d like to look back at 2019. In this article, I’ll recap the highlights of the crypto scene from my point of view. It has been a year full of victories and drawbacks, as usual.

The beginning of the crypto year was quite turbulent.

The 51 Percent Attack

Bitcoin, father of the crypto industry and most prominent and popular cryptocurrency, started the year below the 4.000 USD mark, achieved a yearly high in July at approx. 12.000 USD and then fell back to 7.000 USD at the end of the year.

In the meantime, the start of the new year wasn’t much better for Ethereum Classic. The blockchain experienced a 51% attack. The attack began on January 5th, went on for three days, finally ending on January 8th with estimated losses of 1.1 million USD. The attack could be stopped due to the collaboration of blockchain analytics companies and exchanges, who halted the ETC transactions and provided data to the analytics companies. Even though the possibility of a 51% attack on a proof-of-work blockchain was known it was scary to see it becoming reality on a blockchain that ranks in the top 20 crypto assets list.

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