Our biggest stories of the past week are …
I realised something about this new market of fintech the other day, where banks become financial systems integrators. That realisation was that banks really should think about what they are doing, developing so much core capabilities internally. For example, I can think of hardly any Tier 1 banks that have not developed their own core systems.
After blogging yesterday with my regular beat to get rid of old legacy systems, I then had another thought. Don’t get rid of them. That is a possibility. Maybe you don’t need to replace the core. Maybe you just need to create a new platform that is digital and gradually migrate customers across.
There’s the famous old law of computing observed by Gordon Moore fifty years ago that compute power will double every two years whilst the cost will halve. It’s stayed pretty much true, as evidenced by this chart:
So I cast doubt on a survey published last week that said that PayPal is a bigger challenge to traditional lenders than challenger banks. In the coverage I gave to the survey, I said: “which players are most likely to replace banks, rather than add on to the bank services? I answered this a while ago, and pointed to the P2P players.” So I stand with egg on face in some part today, as the Financial Times reports: PayPal expands lending programme to merchants.
The major general news stories of the past week include …
Ex-teaboy Stephen Catlin in £2.6bn sale talks – The Independent
Stephen Catlin has come a long way since arriving for his first day as an insurance company “tea boy” in a bright blue flared-trouser suit and wing collars.
EU caps debit and credit card fees – Financial Times
Draft law seeks to end protracted battle with payment groups
Swiss interest rates turn negative – BBC
Switzerland's National Bank has brought in a negative interest rate cutting the value of any money left on deposit in the country.
Fears for StanChart, Barclays and HSBC in next stress tests – The Independent
The Bank of England is set to scrutinise the ability of banks to withstand a global shock hailing from so-called “emerging markets” next year, as it announced that state backed Lloyds and Royal Bank of Scotland only just got through the latest round of stress tests.
6 charts that explain why Russia’s economy is in freefall – and what it means for you – The Independent
The Russian central bank raised interest rates to 17 per cent at midnight last night, up from 10.5 per cent previously:
Ex-regulator Sants to join Oliver Wyman – Financial Times
Veteran banker led UK watchdog during financial crisis
City high-flyer banned from working in finance after dodging £42k in train tickets – The Independent
A multimillionaire banker described as “the biggest fare dodger in history” was banned for life from working in financial services yesterday, as he claimed he had failed to pay for train tickets on only “a small number of occasions”.
Australian lender sells UK loans – BBC
National Australia Bank sells nearly $2bn of bad loans in the UK as part of a strategy to exit an unprofitable business.
James Moore: Once bitten, twice shy – unless you are a stress-tested banker, it seems – The Independent
Is the Bank of England’s super-safe approach to regulation choking off the recovery of Britain’s financial industry and handing a gift to London’s rivals?
Banks must grasp nettle and upgrade IT – The Scotsman
When the Banks children in Mary Poppins start a run on the bank, customers take fright because they are worried the institution is going to run out of cash. In the digital age, the critical issue for banks is not really cash but server capacity.
If you like the Finanser, buy Chris Skinner's latest book: Digital Bank
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