Sign In
Lafferty News ServiceNews, research, analysis and opinion

Share this article

Home » Daily Briefing » Daily briefing - 13 Jan 2017

Daily briefing - 13 Jan 2017

The UK's financial authorities have issued a banking licence to ClearBank, the latest enterprise of WorldPay founder Nick Ogden. Mr Ogden spoke at Lafferty's World E-Commerce Summit in London last year, where he challenged the prevailing faith in blockchain and said that existing technologies were more than capable of instant payments. What was needed in the banking sector, he said, was more competition. Mr Ogden will address the Lafferty International Retail Banking Council in Cape Town later this month. According to the FT: "The bank will be headed up by former Royal Bank of Scotland senior manager Charles McManus as chief executive, while Mr Ogden will serve as chairman, according to filings with the Financial Conduct Authority. Mr McManus served as chief financial officer of RBS's Ulster Bank in Ireland until 2012." Although there is little information on the website of CBInfrastructure, the logo shows four squares with one pulling away from the other four. A sign of things to come, perhaps?

Lobby group TheCityUK has shifted gears in its thinking as City of London institutions grapple with the implications of Brexit. As Patrick Jenkins at the FT notes, the issue of passporting dominated thinking about how financial group can continue to do business in Europe. However, in the group's latest missive, the word "passporting" does not appear once. Instead the focus has shifted to "equivalence", meaning that the City can claim British regulations are equivalent to EU regulations. "Clearly they are far more than that at the moment; given the UK's position inside the EU, they are identical," writes Jenkins. "But political rivalry could get in the way of officially recognising that and granting access." A bigger problem perhaps is that the UK would then have to move in lockstep with changes to EU laws and regulations. That may be too big a pill to swallow. Lafferty's Brexit Council will meet for the first time in London on 31 January where these issues will take centre stage.

China's projection of soft power may soon be met with more belligerence now that the US administration is changing hands. Chinese money flowing into Europe is not new, but recent events prompted the FT to write in depth this week about China's expanding sea power, following on from a previous piece about the New Silk Road. But does this new money seek influence? Lenin believed that capital surpluses lead to imperialist adventures, and European countries are getting more picky about what industries they allow Chinese access to. European banks however don't seem particularly troubled about where those surpluses are coming from, as long as they plug the holes below the waterline. Yet, as Bloomberg points out this morning, well-funded direct lenders are now stepping in with billions where banks fear to tread. "The recent bank crises open up new opportunity for funds to take market share," said Drake-Brockman, managing partner at Pemberton. "The ECB is sending signals to the market that it intends to de-risk banks and take incremental steps to encourage them to slow down." The Bloomberg story said that Bain was among a group of funds lining up $50 billion for direct lending to European banks.

It's becoming an annual event: major consultancy finds that tech companies will do banking better than banks. A recent poll conducted by Accenture — a company that prides itself on tech savvy — says that up to one-third of banking customers would switch their accounts if Facebook, Google or Amazon offered banking services. These tech firms "are setting the standards in terms of customer experience and personalization," said Piercarlo Gera, senior managing director at Accenture Financial Services, according to a report in Fortune. "Consumers look at banks and see a gap, Gera said." Accenture fail to point out that these "standards" are obtained by a level of data gathering that's become increasingly worrisome to at least a significant part of the population. There's also a more significant point: scale. Banking is a service industry with a long history. The largest four US banks alone employ over 700,000 people. Google and Facebook are technology companies: Google employs about 60,000 people worldwide, and Facebook employs 12,500. (That means that American banks alone have ten times more employees than Google and Facebook's global numbers.) Whatever way one divides those numbers, tech businesses succeed with scale and automation, and here's where some major contradictions appear in the poll: "68% of respondents said they did not want a robot handling customer complaints, and 61% said they would prefer a human over an automated system for advice about complex products like mortgages."

Finally — some reading for the weekend? In today's Cards, Payments &Mobile Intelligence newsletter, we look at what's happening at the intersection of payments, cars and technology; Fin Keegan writes about Amazon's efforts to capture a growing chunk of the consumer goods market, and David Hickey writes about the resilience of credit cards and their attendant profitability.

Barclays believes people have drawn the wrong conclusions over Trump and Brexit
SWIFT building a blockchain app to optimise global cash liquidity

Add a comment...
Name
Email
 
Message
Enter security letters
Economics Blog
SIGN UP

Subscribe to the Lafferty Daily Briefing

SIGN UP

© 1981-2018 Lafferty Group

CONTACT US

E: enquiries@lafferty.com
Toll-free: +44(0) 800 772 3849
T: +44 (0) 203 633 1630
International House
1-6 Yarmouth Place
Mayfair
London
W1J 7BU

Research    —    Bank Quality Ratings    —    Councils    —    Reports    —    Events    —    Group
LinkedIn    —    Facebook    —    Twitter