On 21 January 2019, Change Financial Limited (ASX: CCA), an information technology company who develops a digital banking platform for peer-to-peer transfer and other day-to-day banking tool announced that restructuring of its mobile banking business. As a result of this restructuring, there a downfall seen in the share prices of the company by 5.085%.
Through the restructuring in the mobile banking business along with other measures, the company would be able to save its cost. The company has also entered into an agreement with Central Bank of Kansas City (CBKC) effective from 19 January 2019, which is its UK banking partner to eliminate its losses from ChimpChange in the past. Based on the past announcement, the company has worked on the reduction of fees payable by the company to CBKC which is stated in the agreement.
The agreement between CCA and CBKC gives CBKC the right to license ChimpChange to other programs in the CKBC portfolio. The agreement also states that CCA will be holding rights to provide engineering and customer support functions against a fee for its service.
Earlier on 31 October 2018, CCA with its existing card processor partner, negotiated regarding the cost saving of ChimpChange. The company renegotiated on the same this month where it ended the marketing of its ChimpChange to new customers which will reduce the marketing expenses of the product.
Alternatively, on 11 January 2019, CCA monetized its investment in blockchain startup, the Ivy project for US$1.5 million. The details of the Ivy project got covered earlier. Instead of spending on the marketing of ChimpChange, the company has plans to use this money in the development of its enterprise solution and payment processor business. These two were the primary strategic review in late 2018.
Through this strategic review, the company will be able to focus towards its enterprise solution which is a lucrative opportunity for the company. At present, the testing of all the transaction cases in the final stage of the Mastercard’s (NYSE: MA) third-party processor procedure has come to an end. Once the entire procure gets completed, the registration as a Mastercard third-party processor will be done through the company’s payment processing platform.
This enterprise solution will provide ready to use services to approximately 7,000 Federal Deposit Insurance Corporation (FDIC) banks, 6,000 credit unions and 10,000 corporations in the US using innovative techniques at a low cost.
Based on the research of the company, the market size of this enterprise solution will be $50 billion in 2019, and its capital annual growth rate will go up by 60% by the end of 2025. The company will slowly end its mobile banking business and will enter completely into the enterprise solution.
At present, the market price of the shares of the Change Financial Limited is trading at A$0.056 (AEST: 2:31 pm, 21 January 2019) which is 0.003 points below its previous trading day’s closing price with the stock holding a market capitalization of A$5.05 million.
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