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Home » Daily Briefing » Daily Briefing - 02 August 2017

Daily Briefing - 02 August 2017

"Perhaps no modern American pastime is as popular as trolling companies on social media," writes Suman Bhattacharyya over at Tearsheet. "Behind airlines, hating on banks might be the most common." Indeed, savvy consumers advise others that the best way to get a reaction from your bank is to vent on social media. No more emailing your manager and getting a reply back eight days later. Air your grievance on social media with a hashtag alerting the firm, and you'll be listened to. BankMobile, the US digital community bank, has gone from zero to two million customers inside a couple of years and, as a branchless bank, its main avenue of interaction with customers is via call centres and social media. "As customers aggressively troll finance companies on social media, a call that goes wrong can be quickly reported by customers online. To contain reputational risks, banks and insurers are putting more resources behind resolving customer complaints. For branchless BankMobile, spun out of Customers Bank in Pennsylvania, chipping at customer pain points is an important part of building trust with them. 'It's tougher with a mobile bank to create an emotional tie with a customer,' said [CFO Warren] Taylor. 'The only way to keep the customer for life is to offer great service.'"

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Is Kakao the Donnie Darko of bank nightmares?

South Korean online banks are brand new as of 2017, and there's every sign that the Chinese internet giants Alibaba and Tencent are engaged in a proxy war in the country. Kakao Bank was launched on July 27, less than one week ago, and already has one million customers. Traditional banks will be looking on with interest and alarm at the spectacular growth of the new bank, which was launched by KakaoTalk, the most popular Korean messaging app. Its investors include eBay, Kookmin Bank and Tencent. As KakaoTalk has almost 50 million users, there's probably plenty of upside left. "Kakao Bank Co-CEO Yoon Ho-young said that the bank is relatively small in size yet provides every type of banking service from lending and saving to overseas remittance and card," according to local website Pulse. The first internet-only bank in the republic, K Bank, was launched in April this year, with Alibaba as the only Chinese investor. Rest assured that Facebook/Whatsapp and its various competitors around the world are noting this trend with interest, as banks emerge out of social messaging networks, as predicted in Lafferty's Social Media in Banking report.

The Financial Times wonders who will emerge victorious from the Alibaba vs Tencent battle, but it's clear that there is room for both, and that the businesses moreover are far from direct competitors. "Ant Financial, Alibaba's financial services arm, established a fund in 2013 to pool and invest funds sitting idle in Alipay accounts," according to the FT research team. "This was a masterstroke; Yu'E Bao — 'leftover treasure' in Chinese — has grown to Rmb 1.43tn and is now the world's biggest money market fund. Yu'E Bao offers returns of nearly four percent, incentivising users to move funds from their bank accounts, where the equivalent benchmark rate is 1.5 per cent." The paper expects Alibaba's Alipay to be more successful abroad than WeChat Pay: "Its current ambitions are more global in scope; it has been concentrating on emerging markets, where credit cards have low penetration rates and the possibility of leapfrogging is greater."

"The entry point for the PC internet is the search box. The entry point for mobile internet is the QR code." So observed Allen Zhang, founder of WeChat, in a 2012 blog post. But the West missed out on QR codes the first time around. On a weekend hike in the west of Ireland, Lafferty News came across an information board about local birds and wildlife. A lone QR code offered to provide more detail. The Lafferty News iPhone didn't have the appropriate app, and an attempt to download one failed for lack of mobile reception. Clearly the need to read QR codes is almost as rare as sightings of the Moustached laughingthrush around the Atlantic coastline. But how times change. The new iPhone operating system, iOS11, will be able to read QR codes — and if you read yesterday's briefing, you will have noted that Chinese iPhone users are willing to ditch the iPhone because WeChat, not MacWorld, is their new habitat. Is the QR-code and messaging world going to upend the closed Apple ecosystem?

Apple is not alone in it hurry to get with the QR code. "Payments standards body EMVCo has added a specification for QR code payments in merchant-presented mode, following on from a spec for QR code payments in consumer-presented mode that it released in mid-July," reports NFC World. "Both specifications can coexist with existing proprietary QR code solutions, according to EMVCo. Visa et al have been getting out press releases to the same effect. Of course, mVisa and MasterpassQR are already in motion, principally in Africa, as the card schemes adopted the practice, already in place at some Nigerian banks.

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