Report to Shareholders for the Year Ended 31st December 2018
As previously advised, the Company is moving its accounting dates to January to December financial year, effective 1st January 2019. However, in order to move the financial reporting calendar, the company has been required to report the 2018 year as January to December 2018 and with comparative period of January to December 2017. An annual report for calendar and financial year 2018 is due post audit by end of March 2019.
- First EU merchant live on unified neobanking and payments platform
- First Bank to Bank transfers via SEPA BIC ISEMCY22XXX
- EU/EEA Visa and Mastercard Tier 1 card acquiring, processing and settlement live
- Discover Card, Diners Club International issues ISXPay Global (non-USA) Card Acquiring License
- Further key Technology Platforms completed inhouse
- Preparations for final APRA audits for Australian ADI license commenced
- AFSL application lodged
- Reserve Bank of Australia Exchange Settlement Account (ESA) opening in progress
- Commenced Deployment of Probanx.com CORE banking Platform for Australian ADI
- Probanx.com CorePlus core banking platform live in the EEA supporting ISX IBAN holders
- Hong Kong's Wanfuteng Bank now live with Probanx CorePlus
The Financial Year and Calendar Year ended 31st of December 2018 was a period of progress and continued business development. The year also presented its share of challenges, as we moved from the reliance on third party partnerships to creating our own Tier 1 banking capabilities.
The second half of the year in particular was used as a period of to conclude key elements of our European Tier 1 infrastrucure build, finalising steps to launch our own services independent from other traditional and neobanks in the New Year. The efforts to complete Tier 1 opportunites created during 2015/16, are now set to deliver the rewards that we believe are possible when we as part of our neobanking strategy.
- The neobanking strategy has been pursued with determination since March 2015, and we have achieved regulatory authorisation, scheme licensing, third party certification and operational capabilities since then, with $10m Institutional Placement completed (issue price of $0.145 per share in October 2018).
The Company has been developing its merchant and business focussed neo-banking capabilities since 2015, commencing initially with its patented identity verification service on the Paydentity(TM) platform, and then progressing to being an EU/EEA authorised eMoney Institution in early 2017.
This was followed by principal member licensing of Visa, Mastercard, JCB, Diners, Discover, China UnionPay and AMEX licensed as payment capabilities, with Eurosystem central banking facilities, deposit taking and IBAN account issuing capabilities, and SEPA transfers live during December quarter.
Strengthening Board Experience and Expertise
In July 2018 the Company was pleased to announce the appointment of Mr. Christakis (Takis) Taoushanis as a nonexecutive director. Mr. Taoushanis brings extensive banking and finance knowledge and experience to our organisation having spent over 30 years in the industry in various senior roles. The board members have met with Australian Prudential Regulation Authority representatives as part of the below Authorised Deposit-Taking Institution (ADI) licensing process.
- The Company has applied for an Australian Authorised Deposit-Taking Institution (ADI) license directly to the Australian Prudential Regulation Authority (APRA), with authorisation anticipated early Q2 2019.
o The Company has already been granted Australian licensing under the Reserve Bank of Australia (RBA) "Card Access Regime" by Mastercard, with Amex, Diners, Discover and China Unionpay also licensed.
o Application for an RBA Exchange Settlement Account (ESA) is in progress.
o Australian Securities and Investment Commission (ASIC) Australian Financial Services License (AFSL) application is in progress.
o Banking Executive Accountability Regime (BEAR) submitted to APRA.
o iSignthis eMoney (AU) Pty Ltd now a member of the Australian Financial Complaints Authority.
- The Company acquired Probanx Information Systems (Cyprus) Ltd, which has developed the CorePlus internet-based core banking platform since 2000 and has been deployed to more than 20 banks globally, including to meet Swiss, UK, Hong Kong, EU, and now Australian regulatory requirements.
- Hong Kong's Wanfuteng Bank is the latest deployment, at their Vanuatu subsidiary.
- APRA requires ADI applicants to install and certify their CORE banking platforms. The Probanx.com system installation has been commenced at an Australian data centre for active/active service, with Azure cloud-based deployment as passive standby.
o Grant Thornton engaged to prepare a report on that the Probanx 'systems maintain fair and true records for financial obligations, systems calculate interest accurately etc' to satisfy APRA. Report completed and submitted to APRA February 2019.
o Secure Centric engaged to review IT security and policies for the draft APRA Prudential Standard CPS234, which takes effect July 2019. The Company seeks to be ahead of the regulatory requirements and meet CPS234 as part of its license submissions. Report completed and submitted to APRA February 2019.
The first EU merchant went live with funds processed via ISXPay's Principal member Tier 1 connections. In doing so, iSignthis became the first ASX listed fully authorised EU neobank with inhouse deposit taking and payment capabilities. Unlike almost every other neobank, ISX has built and operates its own Tier 1 network to Visa, Mastercard, JCB and SEPA networks, and does not 'piggy back' on other institutions infrastructure.
The Paydentity platform is:
i) performing the identity verification,
ii) ii) ISXPay is performing the payment processing and settlement, and
iii) iii) Probanx.com is performing the journaling of the settlement deposits from ISXPay, with ISXPay executing outbound transactions.
The first Bank to Bank transfers via BIC: ISEMCY22XXX were completed in the quarter ending 31 December 2018. These facilities allow the Company to offer its customers;
- IBAN based Euro (EUR) denominated eMoney accounts (EMA), in the name of legal or natural persons
- electronic funds transfer from/to any of the ~4300 SEPA scheme connected banks and branches in the EU28, EEA including Norway, Lichtenstein, Monaco, San Marino, Iceland and Switzerland
- zero credit risk facilities to ISXPay depositing customers, under the Eurosystem of central banking
- fast clearing of Euro (EUR) settlements from card and payment schemes
- International SWIFT inbound and outbound transactions by late January 2019
- Corporate EMA facilities are managed from our Cyprus office, via a private banking relationship management, specifically tailored for our customers in the Equities, CFD, and FX industries, and their affiliates.
- The Company is focussed on providing corporate customers with EURO (EUR) denominated eMoney (EMA) services initially, with eMoney accounts in other currency denominations including USD$, GBPGBP, HKD$, SGD$, CAD$, AUD$ and CHF, by Q2 2019.
Our Focus for the Upcoming year
The Company will be focussed on revenue and growth, in addition to reducing its cost of goods through implementation of its own Tier 1 supply chain, releasing several new products to market for additional revenue streams, and completing the transformation to a commercially focussed transactional banking institution.
We have provided market guidance on expected revenues and profit to be achieved in 2019. The delivery of our first profit and the generation of positive cashflows are reasons to be excited about the immediate future of the business created. We look forward to sharing further news and updates as the company develops and builds scale.
About iSignthis Ltd
Australian Securities and Frankfurt Stock Exchange listed iSignthis Ltd (ASX:ISX) (FRA:TA8) is the global RegTech leader in remote identity verification, payment authentication with deposit taking, transactional banking and payment processing capability. iSignthis provides an end-to-end on-boarding service for merchants, with a unified payment and identity service via our Paydentity(TM) and ISXPay(R) solutions.
By converging payments and identity, iSignthis delivers regulatory compliance to an enhanced customer due diligence standard, offering global reach to any of the world's 4.2Bn 'bank verified' card or account holders, that can be remotely on-boarded to meet the Customer Due Diligence requirements of AML regulated merchants in as little as 3 to 5 minutes. Paydentity(TM) has now onboarded and verified more than 1.5m persons to an AML KYC standard.
iSignthis Paydentity(TM) service is the trusted back office solution for regulated entities, allowing merchants to stay ahead of the regulatory curve, and focus on growing their core business. iSignthis' subsidiary, iSignthis eMoney Ltd, trades as ISXPay(R), and is an EEA authorised eMoney Monetary Financial Institution, offering card acquiring in the EEA, and Australia.
ISXPay(R) is a principal member of Visa Inc, Mastercard Inc, Diners, Discover, (China) Union Pay International and JCB International, an American Express aggregator, and provides merchants with access to payments via alternative methods including SEPA, Poli Payments, Sofort, Trustly, WeChat, AliPay and others.
UAB Baltic Banking Service, a wholly owned subsidiary of iSignthis Ltd, provides API based access to SEPA Core, SEPA Instant and SEPA business scheme, for neobanks, banks, credit unions and emoney institutions, and provides a bridge to the Central Bank of Lithuania's CENTROLink service.
Probanx Information Systems Ltd (Probanx(R)), a wholly owned subsidiary of iSignthis Ltd, is an international banking software company which has been serving the banking industry since the year 2000 by developing comprehensive banking software solutions to financial institutions around the globe. Probanx offers web-based banking solutions using the latest technology and international standard business rules. Our customers are located on five continents and supported from our technical centres in Europe and Australia.
iSignthis' Probanx delivers core banking software, including a fully comprehensive and versatile banking solution for retail, corporate and private banks, emoney and payment institutions, offering capabilities that up until now were affordable only by large commercial banks.
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