Daily briefing - 3 February 2017
Rónán Lynch: 3rd February 2017 9:17am
US president Donald Trump will today begin signing executive orders to start dismantling Dodd-Frank regulations. Among the provisions targeted are the Volcker Rule, which prevents banks from engaging in proprietary trading, and the Consumer Financial Protection Bureau. Steven Mnuchin, who spent 17 years at Goldman Sachs and is now the Treasury Secretary, has pledged to remove the Volcker Rule. According to former Goldman Sachs executive Gary Cohn, chief economic advisor to President Trump: "Americans are going to have better choices and Americans are going to have better products because we're not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year".
Spanish bank BBVA famously committed itself to a future as a software company, but the going is rough. The firm acquired Portland-based startup Simple three years ago for $117 million, but it has now written down almost $90 million of that investment under "goodwill impairment". On a conference call with analysts, BBVA chief executive Carlos Torres Vila said that Simple "is growing very well" and adding more than 30,000 customers a month at what he described as a low cost of acquisition, according to BizJournal.
At the recent Cape Town Lafferty Councils, cybersecurity emerged as the big threat in 2017, with delegates calling on banks to collaborate against the threat. Upcoming legislation will mean that banks will not have the luxury enjoyed by the likes of Yahoo, which declined to inform its hundreds of millions of users that their accounts had been hacked until more than a year after the fact (it remains unclear when the theft was discovered). "Upcoming EU legislation requiring companies to disclose data breaches within 72 hours are likely to upset the rose-tinted perspective of consumers about fortress banking," write Finextra, highlighting a new report from Capgemini that finds one in five bank executives confident about their bank's ability to detect a breach. Consumers however appear to be living in la-la land when it comes to bank security. Finextra comments: "The gap in perception is amplified by the finding that only three percent of consumers believe their own bank has been breached, although one in four of the institutions surveyed admitted to having been the victim of a hack."
JPMorgan analysts have reacted to the publication of the British government's Brexit White Paper with alarm at the lack of substantive detail, adding to an impression that the London is flailing on the issue, according to this piece in Business Insider. Reading the Brexit news through an Irish lens, one gets a sense that Britain is overwhelmed by the detail, where, as the old saying goes, the devil is. When Theresa May visited Ireland earlier this week to reassure the Irish about Brexit, she said that the border between the north and south of the island would in future be "frictionless" and "seamless", leading us to wonder if Mrs May will be sending fintech people across to sort out the problem. It appears that the idea is to use technology, including x-ray scanners, to prevent the return of a 'hard border'. As it currently stands, the return of the border seems inevitable under Brexit, and, although this is an enormous quandary for the Irish, it is relegated to a detail for the British. Read Noel Whelan's view on it in the Irish Times.