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Daily briefing - 22 May 2019

Panic is gripping Britain at the prospect of more talking about Brexit. Theresa May has re-emerged from hiding with a new proposal to deliver Brexit by means of a second referendum, and now everyone is completely confused. "Dominic Raab, former Brexit secretary and a leadership contender, said: 'I cannot support legislation that would be the vehicle for a second referendum or customs union. Either option would frustrate rather than deliver Brexit'." The new plan follows several weeks of talks with the opposition Labour Party, which declared it would not support the new plan. "Some Conservative MPs called for Mrs May to resign immediately rather than risk another humiliation in the House of Commons; the prime minister intends to present her revamped deal to MPs in two weeks' time." WB Yeats' great line about the rough beast that "slouches towards Bethlehem" comes to mind. UK bank OakNorth last night congratulated Transferwise for taking away OakNorth's temporary crown as most valuable startup in Europe. "Congrats to the whole team at Transferwise," it tweeted. "We enjoyed being Europe's most valuable #fintech while it lasted." Banks congratulating fintechs? Whatever next? Well, Transferwise, it appears, still has plenty of room to expand. "TransferWise says it now serves 5 million customers worldwide, processing £4 billion every month," notes Techcrunch. "Every year it estimates it saves customers £1 billion in bank fees. The service currently supports 1,600 currency routes, and is available for 49 currencies. The company employs over 1,600 people across twelve global offices and says it will hire 750 more people in the next 12 months. Audited financials for fiscal year ending March 2018 revealed 77 percent revenue growth to £117 million and a net profit of £6.2 million after tax." The business has become so successful and pervasive, it's easy to forget that co-founder Taavet Hinkirus had already created a successful disruptive business as the first employee at Skype — which now sits in the Microsoft stable. German startup Raisin has grabbed hold of a market that didn't excite many others. Germans are great savers but the paltry one percent interest rates on offer didn't excite anyone. In 2013, Raisin stepped in to offer Europeans a way to move money to another country where higher rates are on offer, and the company hasn't looked back since. "A few years back, a key market for Raisin was the German saver stuck with a 1% or lower interest rate on savings, but who could grab a better return in Portugal, or even more outside the eurozone in Bulgaria (3% or more). Its service highlighted a lack of integration in Europe's banking market, which was still mainly run along national lines. Raisin now has 175,000 customers across Europe and more than 75 bank partners." Earlier this year, Raisin pulled the now common fintech trick of buying a bank, and now it's moving to the US where it hopes to gain market share with the assistance of US community banks. "If it catches on, Raisin's deposit brokerage service could help perk up deposits for smaller US lenders. By joining the platform, community banks could reach retail depositors across the country, helping them compete with the nation's mega banks, which can afford to spend heavily on technology and advertising, and have a large branch footprint."Kenyan banks launch app to shake up lending market for small businessWill MIR and UPI step in to fill the gap when Venezuela ditches Visa and Mastercard?

Daily briefing - 21 May 2019

Takeaway delivery services, the type of business once run by underemployed taxi drivers, is now the hottest lossmaking disruptor since the last hottest thing. But visitors to Milan or other great foodie cities will be impressed to see that even Italians famous for their home cooking skills are happy to get food Deliverooed. Now that the Uber IPO is out of the way, investors are throwing buckets of cash into the companies they believe will win the quest to deliver stuff the last mile to consumers. Amazon, in its relentless quest to deliver you stuff all the time, is paying out $575 million for delivery service Deliveroo. It will likely use this money to try to bury Uber Eats and other competitors. But food delivery has a lot of local as well as international players, and that means scale won't be so easy to hit: there's Just Eat in London (and in Ireland), Delivery Hero in Germany, and in Amsterdam. Go to Asia and there's GrabFood, Brazil has iFood, there's Zomato and Careem Now in the Middle East, Mr D Food in South Africa and one can find other nascent lossmakers by searching Google for "the Deliveroo of Africa" or "the Uber Eats of Latin America". "Deliveroo did not disclose what valuation it raised the $575 million at on Friday but reports have suggested that the company thinks it's worth $3 billion -- $4 billion," reports Forbes. "Deliveroo more than doubled its revenues to £277 million ($352 million) in 2017. However, it also saw losses before tax surge to nearly £185 million ($235 million)."Tesco Bank is pulling out of the UK mortgage market and will consider selling off its loan book. "In recent years, challenging market conditions have limited profitable growth opportunities," Tesco Bank's Mr Mallon said. "Our focus is on how we best serve Tesco customers and align our resources effectively to their needs while ensuring that our offer remains sustainable in the long term." He also moved to reassure Tesco's existing mortgage borrowers by saying "our priority in any sale" of the loan book "is to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well."The banking editor of the Financial Times suggested recently that Goldman Sachs should acquire Deutsche Bank and expand its transactional banking activities. And that's not going to happen. Instead Goldman is acquiring Deutsche's competitors, including most recently Elinvar, a Berlin fintech that helps banks transition digital players. Led by former Deutsche Bank employees, Elinvar has also attracted backing from Finleap, the software-focused investor behind such other new German players as Penta and solarisBank. "The three-year-old firm has built a digital platform to enable lenders to offer their services online," says Bloomberg. "Its customers include German banks M.M.Warburg & Co., Donner & Reuschel AG and Fuerstlich Castell'sche Bank, all of which were established more than 200 years ago."

Daily briefing - 20 May 2019

Launching a new currency in the US generally attracts the attention of the security services, which is why the US Senate's Banking Committee wrote to Mark Zuckerberg after the Facebook founder announced the tech company's move into payments earlier this month. Now the new operation is pitching up in Switzerland, but rather than Crypto Valley aka Zug, Facebook is opening its new front in Geneva, where the UN has been exploring blockchains and digital identity as part of its focus on patents and intellectual property. "Facebook, whose social network has more than 2 billion users, did not immediately comment on Libra Networks, which will focus on 'investing, payments, financing, identity management, analytics, big data, blockchain and other technologies'," according to Reuters. The Facebook operation last year acquired the patent for the trademark Libra, which is reportedly the company's cover for developing a stablecoin in order to move value between fiat and cryptocurrencies. When American mercantilism meets Chinese expansionism, the rest of the world suffers. With Google forced into acting as a proxy for the US government and Huawei (along with Alibaba and Tencent) promising that it's got nothing to do with the Chinese government, the tensions of our era are being laid bare — along with the fact that the world relies largely on a software duopoly controlled by Apple's iOS and App Store and Google's Android and Google Play Store. This weekend, Reuters reports that the US is escalating the trade war against China by limiting the availability of Android, which Huawei uses as the operating system on its phones. "The suspension could hobble Huawei's smartphone business outside China as the tech giant will immediately lose access to updates to Google's Android operating system," reports Reuters. "Future versions of Huawei smartphones that run on Android will also lose access to popular services, including the Google Play Store and Gmail and YouTube apps." Huawei said it has a plan B in place, through its own operating system. The commercial sweet spot for some African countries lies where feature phones meet mobile money and ecommerce. That's not just the ecommerce giants that we're talking about, but rather the last mile that can connect local people to local traders. Senegalese startup Comparez started life as a comparison website helping users find low prices, but now it's expanding into ecommerce and offering users the ability to pay with mobile money. "Founded by former Jumia employees, Comparez is already active in Senegal, Ivory Coast, Cameroon, Morocco, Tunisia, Nigeria, Ghana, Kenya and South Africa. According to founder Abdou Dieng, the goal is to allow even unbanked users to access e-commerce platforms," writes Disrupt Africa. Mr Dieng told Disrupt Africa that Comparez will 'give the opportunity for the unbanked to buy an Amazon product using mobile money from our platform, and have it delivered in six days'. He said the platform's usage of USSD opened it up still further."Amazon invests $575 million in Deliveroo

Featured Articles

Friday 17th May @ 8:07am

The EU's competition authority has fined five banks a total of more than one billion dollars for colluding to rig the vast foreign exchange market in the years following the northern financial crisis. "Citigroup was hit with the biggest fine of €311m, followed by RBS with €249m, JPMorgan at €229m, Barclays at €210m and MUFG with €70m," writes the FT. "UBS also participated but

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Thursday 9th May @ 9:50am

The headline reads : 'Visa acquires control of Earthport', and sounds very Star Wars and exciting, and features a planet. Earthport turns out be a UK firm that specialises in cross-border payments. One of the ironies about the "global financial system" is that it doesn't really exist in the way most people imagine. It's a whole lot of different systems stuck together with tape and wire. People still talk about

Singapore by night
Tuesday 7th May @ 10:33am

Despite the general gloom around Brexit, the UK's fintech scene has been receiving admiring looks from other global financial centres including Singapore and Hong Kong. We reported recently that Hong Kong's regulators have begun issuing new licences to digital only banks, and now Singaporean authorities are studying whether to make similar moves. "Technology and other non-bank firms have been making large digital strides, and they have brought substantive value to...MORE

A Revolut payment card
Friday 3rd May @ 10:54am

Is Mastercard stepping ahead of its longtime rival Visa? The company this week announced a 27 percent rise in profits and it saw its price hit an all-time high as the company pivots towards the delivery of value on new digital rails. "The company's stock rose as much as 4.1 percent to $257.4 in morning trade," reported Reuters. "Total net revenue rose 8 percent to $3.9 billion, in the quarter ended March 31, beating the average analyst estimate of $3.86...MORE

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Thursday 2nd May @ 9:53am

What goes around comes around. Back in 2016, Lafferty Group suggested that banks should not rush to dispose of their merchant acquiring businesses. Why? The oversight of customer spending extending into the digital and physical sphere provides companies with a wealth of data useful for serving those customers better, a point well understood by the likes of Apple and Alipay. With a handful of deep-pocketed PE firms consolidating big processing organisations, and the rapid move...MORE

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Wednesday 1st May @ 10:05am

Can someone please explain what banks have against coffee? The future of finance, according to a lot of people in the know, is a banking app that shows you how to save money by, for instance, telling you not to have another coffee. JPMorgan Chase got in on the wheeze on Monday, tweeting advice to its customers in a particularly tone-deaf manner that mimicked a customer and a robot. ("You:


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