Is Michael Jordaan, former chief executive of FNB, trolling his competitors? This week, he tells MoneyWeb that his new bank will have zero fees and won't do any lending. "There is a massive amount of software that is available for free," Jordaan tells Moneyweb, explaining that his new venture Bank Zero — which he co-founded with former FNB Head of Retail Yatin Narsai — won't even have a website, just an app. "And the hardware costs much less than the existing banks pay to maintain their legacy systems. Our technology costs will be 1% of 1% of the usual tech budgets. This is the challenge that start-ups — not just banks — pose to big established businesses." Mr Jordaan tells Moneyweb that Bank Zero will focus on "business market, individuals, families and communities", leaving corporates to the existing market. Significantly, BankZero will not do lending. "The real need in South Africa is not for more lending. We should all be saving more. We are on a bit of a crusade. So we want to give people the ease of transactability on a smartphone, but with competitive deposit rates." BankZero is expected to launch in mid-2019, bringing more competition to the South African banking market.
Digital credit scoring app Credit Karma is expanding into the UK market through the acquisition of UK credit scoring app Noddle, which claims four million users. Noddle was founded in 2011 and was previously owned by US credit scoring business Transunion. Credit Karma, founded in 2007, has 85 million users in the US. "'We've had a lot of success with our business model in the US and are ready to take that overseas,' Nichole Mustard, cofounder and chief revenue officer of Credit Karma, told Forbes ahead of today's announcement. 'We''ll aggressively scale our technology to provide many of our services that are so popular in the U.S. to our new members in the UK, plus explore more products tailored to their financial needs'".
"If there's a revolving door between Wall Street and Washington, Citigroup's new board member, John Dugan, is on a regular tour," writes The Street. Washinton law firm Covington & Burling was home to Eric Holder, between his stints as Clinton-era Deputy Attorney General and Obama-era Attorney General. Under Obama, he proceeded to implement a policy of not prosecuting financial institutions, declaring them too big to prosecute without imperilling the financial system. He departed government in 2015, back to Covington & Burling, prompting Matt Taibbi of Rolling Stone to pronounce Holder's revolving door as the biggest ever. Well, step aside, Eric. John Dugan moved from the US Treasury Department to become head of the Office of the Comptroller of the Currency under George Bush Jr in 2005, overseeing Citi and other banks that were drilling into the subprime market. He stepped down in 2010 and went on to Covington & Burling. "Then in October of this year, the circle was closed when he was tapped by Citigroup to serve on its board of directors, where he'll get paid about $300,000 annually for attending roughly six meetings a year. That amount is almost twice the $162,900 salary he was making in his full-time job as Comptroller of the Currency. (Profits per partner at Covington & Burling are typically at least $1 million a year, according to the publication Law.com.)"
Citigroup scored three stars in the 2018 Lafferty Banking 500 report. The maximum score is five stars.
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