Our main stories this week include …
The world is still very confused about bitcoin. For example, some press are still writing the old stories about the phenomena as an investment: Man buys $27 of bitcoin, forgets about them, finds they’re now worth $886k. It makes for a good headline, but reinforces the view that bitcoin is just some basketcase currency, rather than a currency that should put into a basket of currencies. This will change. In fact, some banks are already starting to say bitcoin good, blockchain good, rather than bitcoin bad, blockchain good.
The world changes every day, and some of us feel it changes faster every day. This is evidenced by the rapid cycle change in Fintech where last year’s hardly mentioned thing has become this year’s hot thing. Blockchain is the case in point. However, as pointed out at Fintech Connect this week, most of this start-up furore is just diddly-squat when compared with the massive size of the incumbent financial industry.
So we were having a conversation about rules-based versus principles-based regulation. The UK is an advocate of the latter, which some say caused the global financial crisis. I disagree. The global financial crisis was caused by not having a good view of the risk and connectivity between derivatives and their dependencies. The market and credit risk models were defeated by complex credit default SWAPS and the result was over-extension of credit as illustrated by the trillion dollar losses from Collateralised Mortgage Obligations (CMOs).
I’m often asked how much is being invested in Fintech and where is it going? Based upon a lot of assumptions and studies, the figures this year look like they’re heading near $30 billion invested in Fintech, with most in Silicon Valley. A third is in payments, of which 10% is in blockchain and bitcoin companies; a quarter is going into crowdfunding and social lending ventures, although much of this is supporting the rise of the unicorns; a fifth is going into wealth management and capital markets; and the rest is in a range of areas from data analytics to contextual servicing to personal financial management.
I was recently hired as a keynote for an American client. Those who know me, will know my message. Everything has to be real time and near free, based upon mobile P2P connectivity (real-time) and shared ledger (near free) technologies. This is the theme I use regularly now and I cite examples like an $81 million blockchain transaction taking place on a Sunday morning for virtually no charge and processed in minutes as my illustration
This week’s major news headlines include …
The charts that show London’s economic recovery could pave the way for the next financial crisis – The Independent
Since the financial crisis, London's economy grew by 28.9 per cent – almost twice the rate of Leeds or Cardiff
Rabobank to cut 9,000 more jobs – Financial Times
Dutch co-operative refocuses on domestic lending
Banks with worst savings rates named and shamed – The Telegraph
City watchdog exposes the banks paying the lowest rates of return to customers as it orders lenders to be clear about interest rates
Estonia pulls out of financial transactions tax as George Osborne threatens legal challenge – The Telegraph
Chancellor questions legal status of proposed financial transactions tax as German counterpart threatens court action over plans for more risk sharing in the event of a bank collapse
UK and US Bankers fear cyber attack more than economic crisis – The Independent
The survey found that criminality is now ranked second globally, because of the alarming rise in cybercrime and fraud.
Silicon Valley’s Hometown Bank Booms, But Risks Are on Horizon – Wall Street Journal
Despite rise in shaky loans, tight relationships with technology startups and venture capitalists fuel big profits for lender; a call from Marc Andreessen
Barclays customers stranded after online banking services crash – The Telegraph
Customers could not log on to the bank’s mobile app and online systems, delaying payments and Christmas shopping for a period of several hours today
Jes Staley Said to Mull Deeper Cuts at Barclays Investment Bank – Bloomberg
Less than a week into his new job, Barclays Plc Chief Executive Officer Jes Staley is mulling deeper cuts at the securities unit that could see an additional 20 percent of bankers lose their jobs, according to people with knowledge of the matter.
OnDeck/JPMorgan: Fine tech – Financial Times
The alliance shows that the disrupters need the banks, but the banks need the upstarts too
National Australia Bank pitches Clydesdale flotation to investors – The Telegraph
Bosses want to sell off the Clydesdale and Yorkshire Bank, creating a newly independent British lender which will be listed on both the UK and Australian stock markets
If you like the Finanser, buy Chris Skinner’s latest book: Digital Bank
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