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Home » Daily Briefing » Daily Briefing - 10 July 2017

Daily Briefing - 10 July 2017

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Institutional investors are beginning to accept the need for benchmarking of non-financial bank data, according to a report in the Financial Times this morning. Andy Griffiths, the executive director of the Investor Forum, said that banks will only regain the trust of investors and customers if they publish more information on non-financial data and reduce their focus on "hard financials". Mr Griffiths said: "We need banks to engage in a race to the top to change their culture. We want to encourage investors to ask more questions on these non-financial issues, [such as] 'what do customers think about what banks are doing?' And we want banks to compete to give more information around these issues." The Investor Forum represents 35 of the biggest investors in British companies, including BlackRock, Fidelity International and Capital Group. The Lafferty Bank Quality Benchmarking project, launched in 2015, uses sets of financial and non-financial metrics to arrive at a picture of a bank's sustainable quality. The underlying metrics used were developed following work on the origins of the last global financial crisis by the Bank of England and the Max Planck Institute in Berlin.

With a mobile payments market 50 times the size of the United States', it's reasonable to expect that China is going to drive innovation in mobile payments. The question is this: how soon will WeChat Pay and Alipay become widely available for non-Chinese users? True, Alibaba and Tencent could just build out global acceptance for Chinese users, but that seems to be missing an opportunity. And, as the Rise conference started this morning in Hong Kong, expect lots of interesting fintech news to emerge in the next day or two.

The Chinese payments behemoths are continuously bringing innovations to market, and are likely to bring more in the coming months and years. How about authentication? Users of the new Samsung G8 may already be familiar with the iris-scanning technology that combines camera shots and screen prompts for biometric accuracy. But even before Samsung's tech team got this in place, 120 million Chinese citizens were using technology from billion-dollar Beijing startup Face++. "In addition to ID verification, Face++ can do other things: analysis of age, race, face comparison, gender detection and identification of emotional expressions. All of that based on just one photo. Looking even deeper, we find another useful ability of the facial recognition app. It can provide automatic access to private property, such as [a] company's offices, for example. In fact, this is one of the most popular and widespread usages of Face++ right now. The app can also monitor people's movements inside a room. That makes this technology quite helpful for banks or big stores." That's just one instance. As we've often noted recently, the vast new market for mobile payments driving innovation in China, along with growing acceptance of Chinese payment methods elsewhere, presents major challenges to Western networks.

Wirecard announced this week that it will provide acceptance for Tencent's WeChat Pay in Europe. "Europe has a new mobile payment method," it announced. It's honestly difficult to keep track of Tencent's payment user numbers, with many outlets confusing WeChat user numbers with WeChat Pay user numbers. Wirecard says that as of 2017, WeChat Pay's mobile monthly users number is now at 600 million. Jörn Leogrande, Executive Vice President Mobile Services at Wirecard, said: "We are proud to be one of the first WeChat Pay partners for POS acceptance in Europe. This collaboration is an additional step for us to offer retailers a whole range of alternative and classical payment methods with just one interface where other payment methods can be added regularly. Thanks to our ConnectedPOS platform we are able to integrate them with minimal intervention in the existing cash register. We are looking forward to expand our business and to offer WeChat Pay for customers all over Europe." At some stage, Europeans are going to see this new Chinese magic at work, and want some for themselves.

Hot on the heels of Wirecard, payment enabler Stripe got in on the act, with an announcement that it had "agreed to global deals with Alipay and WeChat Pay, two digital services that dominate consumer spending in China. Alipay, which is managed by Alibaba affiliate firm Ant Financial, counts over 500 million users, while WeChat Pay — the digital payment feature within China's top chat app WeChat — claims more than 600 million users." The story in TechCrunch adds: "These new deals won't do much for Stripe in China — that isn't the point. Instead, they make it possible for online retailers across the world to accept payment through China's most popular wallet services. Stripe previously had a deal with Alipay that covered the US market, but now its reach is global. The Alipay integration also support recurring payment, which allows for subscription services including Saas and a number of consumer payment plans." If Alipay and WeChat Pay can be linked directly to your bank account, and provide subscriptions, the networks should start getting even more alarmed.

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