Today’s banking, crypto and fraud, and tomorrow’s jobs of the future (four reports)

I just picked up several interesting reports. The first is McKinsey’s review of Banking 2024. The good news?

“The past two years have been the best for banking since before the Great Recession. Globally, banks generated $7 trillion in revenue and $1.1 trillion in net income, with return on tangible equity (ROTE) reaching 11.7 percent. Banks have returned to healthy levels of capital (12.8 percent common equity tier one capital divided by risk-weighted assets) and liquidity (77.2 percent), which both improved over 2022. In fact, banking generated more total profit than any other sector around the world”.

Woo-hoo! Oh no ...

“Global banking is valued at a price-to-book ratio of 0.9—the lowest of all industries—which suggests the market is expecting the industry will erode economic value as a whole. And this challenge exists across most markets”. There are many potential reasons for it:

• The improvement in returns could be fleeting.
• The wide variations in the industry across subsectors and geographies may skew how certain institutions are viewed relative to others.
• Banks may not be able to count on raising productivity or harnessing scale.
• Improvement in margins may not be able to come from more cost cutting.
• Attackers continue to pressure incumbents.
• Macro uncertainties and industry-level issues also pose challenges.

Definitely worth a read.

Then I got a report on the state of crypto from A16z. Here are the seven biggest takeaways:

1) 𝐂𝐫𝐲𝐩𝐭𝐨 𝐚𝐜𝐭𝐢𝐯𝐢𝐭𝐲 𝐚𝐧𝐝 𝐮𝐬𝐚𝐠𝐞 𝐡𝐢𝐭 𝐚𝐥𝐥-𝐭𝐢𝐦𝐞 𝐡𝐢𝐠𝐡𝐬: there have never been more monthly active addresses at 220 million. Monthly mobile wallet users also hit an all-time high in June of 27 million.

2) 𝐂𝐫𝐲𝐩𝐭𝐨 𝐡𝐚𝐬 𝐛𝐞𝐜𝐨𝐦𝐞 𝐚 𝐤𝐞𝐲 𝐩𝐨𝐥𝐢𝐭𝐢𝐜𝐚𝐥 𝐢𝐬𝐬𝐮𝐞 𝐚𝐡𝐞𝐚𝐝 𝐨𝐟 𝐭𝐡𝐞 𝐔.𝐒. 𝐞𝐥𝐞𝐜𝐭𝐢𝐨𝐧: Google search trends show rising interest in crypto in several swing states.

3) 𝐒𝐭𝐚𝐛𝐥𝐞𝐜𝐨𝐢𝐧𝐬 𝐡𝐚𝐯𝐞 𝐟𝐨𝐮𝐧𝐝 𝐩𝐫𝐨𝐝𝐮𝐜𝐭-𝐦𝐚𝐫𝐤𝐞𝐭 𝐟𝐢𝐭: Stablecoins are one of crypto’s clearest “killer apps.” They did more than double Visa’s transaction volume in Q2 2024.

4) 𝐌𝐚𝐣𝐨𝐫 𝐬𝐜𝐚𝐥𝐢𝐧𝐠 𝐮𝐩𝐠𝐫𝐚𝐝𝐞𝐬 𝐡𝐚𝐯𝐞 𝐝𝐫𝐚𝐬𝐭𝐢𝐜𝐚𝐥𝐥𝐲 𝐫𝐞𝐝𝐮𝐜𝐞𝐝 𝐨𝐧𝐜𝐡𝐚𝐢𝐧 𝐭𝐫𝐚𝐧𝐬𝐚𝐜𝐭𝐢𝐨𝐧 𝐜𝐨𝐬𝐭𝐬: in some cases they have dropped by over 99%. Sending USDC on Coinbase’s Base costs less than a cent on average.

5) 𝐃𝐞𝐅𝐢 𝐫𝐞𝐦𝐚𝐢𝐧𝐬 𝐩𝐨𝐩𝐮𝐥𝐚𝐫 — 𝐚𝐧𝐝 𝐢𝐭’𝐬 𝐠𝐫𝐨𝐰𝐢𝐧𝐠: after all, in the USA, five big banks control nearly half of all assets

6) 𝐂𝐫𝐲𝐩𝐭𝐨 𝐜𝐨𝐮𝐥𝐝 𝐬𝐨𝐥𝐯𝐞 𝐬𝐨𝐦𝐞 𝐨𝐟 𝐀𝐈’𝐬 𝐦𝐨𝐬𝐭 𝐩𝐫𝐞𝐬𝐬𝐢𝐧𝐠 𝐜𝐡𝐚𝐥𝐥𝐞𝐧𝐠𝐞𝐬 as blockchain networks could help to:

Verify the authenticity of media including deepfakes
Democratize access to compute for developers
Create transparent, user-owned services
Compensate users who contribute data to AI models

7) 𝐌𝐨𝐫𝐞 𝐬𝐜𝐚𝐥𝐚𝐛𝐥𝐞 𝐢𝐧𝐟𝐫𝐚𝐬𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐞 𝐡𝐚𝐬 𝐮𝐧𝐥𝐨𝐜𝐤𝐞𝐝 𝐧𝐞𝐰 𝐨𝐧𝐜𝐡𝐚𝐢𝐧 𝐚𝐩𝐩𝐥𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬: NFTs have shifted from speculation on high-volume secondary markets to low-cost social collecting experiences. New opportunities are also opening across: DeSo [Decentralized Social], DEPIN [Decentralized Physical Infrastructure Networks], Gaming and more.

Another interesting report came in from UK Finance on financial fraud in the UK.

Fraud continues to pose a major threat to the UK with just over £570 million stolen in payment fraud in the first half of 2024. The total number of cases rose by 16 per cent in the first half of this year compared with the same period last year, but with a 1.5 per cent fall in the value of losses. Interestingly Card Not Present fraud is the fastest area of growth. Having said that over £710 million of unauthorised fraud was prevented, an increase of 13 per cent, in the first half of this year.

The UK Finance report coincided with the U.S. Treasury's Office of Payment Integrity analysis of fraud in the USA, which states that by using machine learning they had managed to prevent and recover over $4 billion in fraud and improper payments in the last fiscal year (Oct 2023 — Sept 2024). This represents a huge improvement in fraud prevention from last year's $652.7 million. Out of this amount, $1 billion was recovered through implementation for Treasury check fraud identification.

It made me wonder: what's a check/cheque?

Finally, it is not a report as such, but well worth reading is this thought piece around jobs of the future from Sophie Deen, the founder and CEO of Bright Little Labs – a kids media company backed by Warner Bros Discovery. She reckons that there will be jobs are going to change dramatically in the next few years, such as the role of a Rewilding Strategist.

By 2050:

• 68% of the world's population will live in urban areas
• Climate change will push cities to radically rethink green spaces
• Biodiversity loss will be a top global priority
• 'Smart cities' might include more trees than traffic lights

Now picture this vision of 2050:

• You wake up to birdsong, not traffic.
• Streets are car-free, filled with children playing and wildlife roaming
• Skyscrapers are vertical forests, cleaning the air and housing diverse ecosystems
• Rivers, once buried under concrete, now flow freely, teeming with fish
• Bees, butterflies and other lovely things are all around

This isn't a far-off utopia. It’s the work of a Rewilding Strategist, the rock stars of 2050.

Or take the Baby Gene Designer.

By 2050:

• Gene editing could be commonplace
• 'Designer babies' might be a reality
• Genetic counseling could be as normal as prenatal checkups
• Ethical debates about human enhancement will be at the forefront

In a world where parents can choose their child's traits: Who guides them through this ethical minefield? How do we balance enhancement and humanity?

Or take the Digital Afterlife Manager. By 2050:

• Our digital footprints will be massive
• AI could keep our online presence 'alive' forever
• Digital assets might be as valuable as physical ones
• A huge % of our memories and experiences will be stored online

In a world where our online presence outlives us, who decides what happens to our virtual selves? How do we manage our digital afterlife? Enter the Digital Afterlife Manager. What does a Digital Afterlife Manager do?

• Execute the deceased's digital wishes
• Manage online presence after death
• Handle data privacy and security issues
• Coordinate with families and estate owners
• Creates AI-powered interactive memorials

She also cites the role of the Synthesist, Reality Guardian, Memory Designer, Purpose Coach, Robotic Pet Vet, AI Ethicist and more … well worth checking out.