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Daily briefing - 22 October 2018

It's fair to say that we've moved from a broadcast work (think television and radio) to a narrowcast world (think email, Youtube and podcasts) and the precision deployment of technology in agriculture is a good example of this. Our recent Retail Banking Council Africa in Lagos brought together several partners working up and down the financing of the agricultural supply chain, with the head of agricultural financing of one of our member banks leading a panel that included the business DroneBeat and the Nigerian partner of Harvesting, the satellite data business. The FT agrees with us that the meeting of precision technology with the fairly old technology of farming could open up opportunities for millions of people in the global south: "[Technology] has caught on more slowly in the developing world, where four-fifths of food is produced by smallholders, because of a shortage of capital as well as lower rates of literacy and mobile telephony use. Yet a cohort of indigenous African companies, as well as multinationals such as the Climate Corporation and institutions such as the World Bank, are exploring ways to adapt and broaden smart farming technologies to bring the precision agriculture revolution to the continent." What we've observed at Lafferty Group is that this deployment of data will feed into better financing of agriculture, but is already meeting blockchain technology and the world of mobile-based digital assets. Don't take your eyes off this space!Most banks have long decided their Brexit strategies, wisely deciding not to wait until negotiations between the EU and the UK start (and then only once a transition agreement is announced) — as it's only then that the issues regarding finance can be worked out. The feared exodus of bankers out of Britain has not yet happened, but the screw is beginning to turn on banking business itself resulting in a drop in cross-border lending out of London. Bloomberg reports that "as the U.K nears the Brexit deadline with no plan for an amicable breakup, some money has started to move. The BIS estimates that in the three months through June, cross-border lending from the U.K. declined by $129 billion (adjusted for currency fluctuations) -- the largest drop in three years." And who benefited? Paris saw a $93 billion boost in its lending, with the Netherlands booking a modest increase also. Is this a solid indicator of future trends?Veteran actors know to avoid working with children and animals. Now add robots to the list. In conference news, it's the return, albeit much diminished because of the Khashoggi killing, of Saudi Arabia's Future Investment Initiative aka 'Davos in the Desert' . Last year's event gave us the infamous interview with Sylvia the robot, who was granted Saudi citizenship, before frightening everyone in attendance with its fearsome grin. But never fear! The USA can do better. It's Money20/20 week in the USA as well, and straight out of the gate comes a Money20/20 interview with Pepper the robot and its handler, HSBC's head of innovation Jeremy Balkin, who discovers why actors prefer not to being upstaged by little people. For maximum amusement, skip forward to around the 1:40 mark as the baffled robot tries to figure out who is talking to it and then smacks its forehead into the reporter's microphone. But, you know, why not let this machine run your bank?

Daily briefing - 19 October 2018

The new Lafferty Banking 500 has some head-turning results on the big US banks: Wells Fargo, Morgan Stanley, Goldman Sachs, JPMorgan and Bank of America each scored 2 stars on our 5-star band, with Citi scoring three stars. Those are the scores of troubled banks, not champions. Ahead of the US midterm elections, the incumbent Republicans are banging the gong that the economy has never been doing so well. We've reported on the increase revenue this quarter by the big US banks, but Bloomberg has helpfully stripped out the one-offs and tax cuts, to show that this year's big leap in improved results may be less impressive than at first sight. "[The] fact that so little of the big banks' earnings increase in the third quarter, just 17 percent, seems to be coming from, say, higher sales or lower costs raises the question of why the nation's largest lenders and financial firms aren't doing better in the best economy in a decade," writes Stephen Gandel for Bloomberg. "But banks are still a central part of the U.S. economic infrastructure, no matter what the Bitcoin believers would like. So if the banks aren't doing as well as they appear, it's likely the economy isn't either."Norway's mobile wallet VIPPS is now producing its own technology solutions that it will offer to other wallet systems via a partnership with Gemalto, which has refashioned itself as a digital security company. VIPPS, which is operated by a consortium of Norwegian banks, has merged with Norway's national payment scheme BankAxept and the bank-backed digital identification system BankID. (We've covered several of these stories separately in RBF2030). "We have seen the success of mobile wallets in China. In Europe, it is picking up nicely. But interoperability between mobile wallets (in different countries) will be the key," Bjørn Skjelbred tells Lafferty News. That interoperability will depend on digital identity solutions, with VIPPS looking to anticipate all the different ways in which users might wish to pay by phone, including NFC proximity payments, QR codes and for e-commerce. VIPPS decided that to be competitive, it needed to develop its own technologies, given Norway's position as a relatively advanced cashless society with wide adoption of mobile payments. "People here don't carry cash. Already we use a card to pay for a newspaper or a coffee and in Norway, nine out of ten in-store payments are done by card or digital payments. And the digital ID is a very important part of the digital value chain. So we decided that we needed to invest in developing those digital technologies." For several years, every second presenter at a finance conference showed a chart saying that Uber owned no cars (and Facebook created no content, Airbnb... reader, you know the story). It's safe to say that almost no one is doing that presentation anymore. But Uber, once again plotting an IPO, is reportedly working on a project dubbed Uber Work, which will supply "on-demand" workers. In a rare case of Hollywood being ahead of Silicon Valley, US director Boots Riley anticipated this phenomenon with the 2018 release Sorry To Bother You. It's useful to remind ourselves of our own folly from time to time.

Daily briefing - 18 October 2018

The 2018 Lafferty Banking 500 Benchmarking results are announced today, with eight banks out of 500 achieving the highest score of five stars. Poland stands out in the rankings as the only country to produce two five-star banks, while Australian banks bring up the rear, with the worst overall results by country. Woody 'this machine fights fascists' Guthrie warned that "some will rob you with a six-gun, and some with a fountain pen", a metaphor extended by the likes of William Black for modern times as 'the best way to rob a bank is to own one'. The gap between Australian banks self-celebration and the performance of said banks is colossal, as illustrated by the new Lafferty Global 500 benchmarking study. On a country average, Australia scored last, with an average of 2.5 out of a top score of five. The greatest bank robbery ever?As Australian Financial Review reports this morning, the Australian sector lagged behind its Anglo-Saxon peers as the US overall average 3 stars and the UK averaged 3.5 stars. And while the Australian banks seemed to have escaped the worst of the northern financial crisis, there were other problems simmering away which have come into the spotlight in recent years including money-laundering, bribery, theft, misselling, deceptive practices and a list of scandals that eventually produced an ongoing Royal Commission. "We used to listen to Aussie and Canadian bankers saying 'Thank God we weren't involved in any of this' but they were and somehow they remained uncovered," said Mr Lafferty. Mr Lafferty said in many cases banks were taken over by small groups of investment bankers who paid themselves millions in what he calls the greatest bank robbery in history." He also criticised the culture of installing investment bankers at the helm of banks. "They are not suitable people because they will glorify and promote the culture of excessive risk taking," Mr Lafferty said. The Lafferty benchmarking exercise has always rated culture and strategy as significant — if not the most significant — factors in the operation of a quality bank, and the Australian banks scored dreadfully on these measures. "The strategy statements of all four are fluff and fail to set out credible actions. All score zero for culture. All score zero for digital dependability," Mr Lafferty said.In surprise news, a phalanx of global banks is moving to address the shortfall in trade finance without using the blockchain. Banks including ANZ, Santander, BNP Paribas, Citi, Deutsche Bank, HSBC and Standard Chartered — with a collective star rating well under three out of five — hope to seize a bigger chunk of the $9 trillion trade finance industry through a project to be called the Trade Information Network. The project would give access to all banks and corporations to directly exchange and verify trade information in the hopes of lowering the risks -- and the cost -- of financing smaller companies currently ignored by large banks. "What this platform will do is allow our clients to connect and provide information on to that network, and make it much cheaper and effective to deal with our own clients," said Michael Vrontamitis, head of trade in Europe and the Americas at Standard Chartered, adding that it would also enable the banks to take on new customers.Patrick Collison tweeted yesterday of "a new type of mobile payments", via a new tie-up for their Stripe empire, which will partner with Twilio, the California-based cloud communications company that enables targeted marketing via SMS. According to Stripe: "With Twilio , businesses can now securely collect payment details with an interactive voice response flow, which is useful for automating payment experiences such as bill collection or donations. For a more personalized experience, employees can also walk customers through an order over the phone: when it's time to collect the payment, the agent activates Twilio to let the customer enter payment info using their keypad — agents can follow the customer's progress, but won't see or hear the card details." Developers cheered. Last week in Lagos, we met several people operating businesses that have tagged themselves as 'the Stripe of Africa'. It seems that Stripe is sensing a 'first the rest' moment. UPDATE: Twilio also recently acquired SendGrid, which claims to have routed one in two emails sent last year. Yikes! There is no escape. View the results of the Lafferty Banking 500 here.

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Wednesday 17th October @ 9:46am

More than two years ago, our bank benchmarking service noted that only two banks in a global selection of 100 reviewed made any mention of climate change. That's all about to change. This week, the Bank of England introduces a regime equivalent to the 'responsible manager', but for climate action. On Monday, according to the FT, the bank's Prudential Regulation Authority told boards of banks and insurers to "identify a senior executive to take charge of managing...MORE

Tuesday 16th October @ 2:35pm

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Monday 17th September @ 11:22am

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Friday 15th June @ 12:02pm

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