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Home » Daily Briefing » Daily briefing - 03 May 2019

Daily briefing - 03 May 2019

A Revolut payment card

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 billion. Mastercard, like rival Visa, has been looking to digitization to drive its business and diversify its customer base. The company recently partnered with Apple Inc and Goldman Sachs for the Apple card, which can be accessed digitally on an iPhone. Mastercard earlier this year dropped its name from its logo to distance itself from the notion it was only focused on 'cards', and suggest it was making a big foray into digital payments."

Mastercard has been disrupting itself, thinking of how it would deal with a big competitor that took control of new rails that bypass cards schemes. This week Global Payments announced that it is to begin offering Mastercard's Pay by Bank app to its UK clients. Pete Bettles, Chief Operating Officer at Global Payments UK noted that the app enables digital processes. "As the number of ecommerce transactions continues to rise, customers need to be 'digital by default' in order to offer a smooth and secure user journey," he said. "We remain committed to delivering software driven cutting-edge payment solutions and our partnership with Mastercard allows our customers to be at the forefront of the next generation in digital payments."

We occasionally track the rise of public relations industry relative to the news media. Public relations is a relatively new field, less than a hundred years old, so let's guess that back in the 1950s and 1960s, there might be one PR person to every few journalists. That kept rising. The ratio of journalists to public relations people back in 2008 was 1 to 3. Today it's one to six. That's an awful lot of flack. Now, for all their care in shepherding funds, fintechs have never been backward about coming forward and the PR business is an essential part of that. As several reports have pointed out, the latest wave of tech IPOs arrive on a flood of hype and PR. Just don't look at the numbers please. Arun Krishnakumar, writing at Daily Fintech, suggests that tech might be the new banking, but not in a good way. He selects OakNorth as a bright spot in Softbank's $100 billion portfolio, where it nestles alongside businesses such as Ping An, Uber and Alibaba. Softbank's bet is on sucking down vast gulps of citizen data and processing that through its machine learning technologies while driving towards a remote-controlled version of the future. But we're not the only ones sceptical about what boosters call "data-driven thinking". Krishnakamur writes: "I am sure Softbank will make handsome multiples when some of these shaky businesses go public. However, the success these firms managed with private money, would be hard to replicate in the stock market. If a few of them fail, that would trigger pain. There is enough negative PR about the tech industry's lack of ethics, diversity and how they manage data monopoly. Creating a bubble, riding it and exiting it before a market crash might just make Tech the New Banking. Softbank might have accelerated that process."

Please note: Lafferty Daily Briefing will return on Tuesday 6 May following the public holiday in the UK and Ireland on 5 May.

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