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Home » Daily Briefing » Daily briefing - 02 April 2019

Daily briefing - 02 April 2019

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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 away from cash in some economies, merchant acquiring businesses lately have been turning into multi-billion dollar takeover targets. One of the biggest stories is WorldPay, which was at one stage acquired by RBS through its 2002 takeover of NatWest. RBS was later forced to divest WorldPay as a condition of its £50 billion rescue. WorldPay has changed hands several times since, and its price keeps going up. Now RBS is going back into the acquiring business, doubtless in an effort to tap the new banking push into supporting SME businesses. "Alison Rose, RBS head of commercial and private banking, said 'developing our own merchant acquiring and payments proposition is an important step forward'," reports the FT. "The move is likely to be welcomed by regulators, who are reviewing competition issues in the sector. The Payments Systems Regulator has raised concerns that incumbents have been taking advantage of their dominance to overcharge small businesses." RBS is also launching a digital bank focused on SMEs which is called Mettle.

Metro Bank's cheery demeanour soured a bit this week with weak earnings after some of its biggest customers abandoned the bank following Metro's recent accounting woes. "Metro reported what Investec analyst Ian Gordon described as an 'awful quarter for the bank' after markets closed on Wednesday evening. Metro said news that it had miscategorised large volumes of loans prompted some of its largest customers to pull money out of the bank, driving a four per cent decline in deposits. The stock fell as much as 16 per cent in early trading on Thursday morning, and at publication time shares were down 13 per cent at 674p."

For a lot of banks, blockchain is a big scary monster that was birthed from the dont-even-talk-about-it phenomenon that is bitcoin. But blockchain, as predicted by those who actually understood it, is an enabler of open banking with digital identity at the heart of the system. Say goodbye soon to the atrocious notion of using Facebook or Google to sign in to other services. Five Canadian banks have signed up for SecureKey's blockchain-based digital identity service, reports Bloomberg. "The network is built on collaboration between banks, telecom firms and credit agencies, and SecureKey Chief Executive Officer Greg Wolfond said he expects Verified.Me to be used by consumers to prove their identities to access health records, open accounts at banks and telephone companies, and get government services by the end of this year," reports Bloomberg. "Everything from being able to see your health records in a secure way, being able to open a new bank account, being able to get a new phone -- all this stuff that's so time-consuming and painful is going to get easier for consumers," Wolfond said in an interview. He added that citizens are going to be able to share their data in a secure and trusted way that was previous not possible. The Scandinavian countries are also pushing strongly for digital identity to be bank-led, though are not depending on blockchain.

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