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 their customers in doing so. Some of these non-bank firms have established digital-only banks, either amongst themselves or in partnership with incumbent banks," the Monetary Authority of Singapore said in response to a query from Reuters on Tuesday. The Authority is studying whether to "admit such digital-only banks with non-bank parentage". Hong Kong has long been controlled by four major players: HSBC, Bank of China Hong Kong, Hang Seng Bank and Standard Chartered.
It's well established that the US has enjoyed a tremendous credit boom in recent years, with soaring auto lending and college debt, and an all-time high in credit card borrowing. It's inevitable then that we're headed into peak season, with banks writing off credit card losses at the highest rate in seven years, according to Bloomberg. This time around though, banks are holding on to the riskiest debt while selling off the rest to investors. "The difference in standards underscores how any future consumer downturn may hit banks more than asset-backed investors. Though losses have been rising for banks and to a lesser extent bonds backed by credit card payments, Barclays isn't alarmed by the numbers now," reports Bloomberg. "While card losses are growing, they're still near post-crisis lows and haven't crimped strong profits in banks' consumer lending divisions. Part of the deterioration can be explained by a surge of lending in the space, as many banks have prioritized growing their credit card businesses, which can generate the highest interest rates of any form of consumer debt, over other areas like auto lending."
Many debates around blockchain revolve around one question: is it private and centralised or public and decentralised? The answer will give you a good basis for understanding the issues. Contrast for instance the approaches of Facebook and Twitter to the question of digital currencies. Facebook is in a panic to reverse direction away from its current unpopularity and boost its privacy while also introducing some kind of Facebook Coin for payments across its network. Facebook's instinct is a private, centralised digital coin, issued by Facebook and there are reports that Zuckerberg is in talks with investors to raise a billion dollars to back its digital currency, including bitcoin bull Tim Draper. There are reports that Facebook will name its coin Libra. Facebook arrived very late to digital assets but has been hiring people who understand banking and payments and people who understand cryptocurrencies. But Facebook, for all its novelty, is a very corporate beast so may only be attracted to the notion of a stablecoin. A stablecoin is a digital asset pegged to fiat currencies such as the dollar to prevent wild swings in value — but it also appeals to the corporate mentality which is scared of bitcoin. Stablecoins include Tether, which was launched by the giant Hong Kong-based Bitfinex exchange, the Gemini Dollar (originated by the Winklevoss brothers), and JPMorgan's JPMCoin, all of which are pegged to the US dollar. Compare and contrast to Jack Dorsey at Twitter, who has supported development of bitcoin and incorporated it into the Square offering. The others look like they are trying to re-invent the wheel.
In other blockchain-related news: Amazon Web Services, the part of Amazon that makes money, is broadening its blockchain-as-a-service offering with the general release of Amazon Managed Blockchain. "Customers want to use blockchain frameworks like Hyperledger Fabric and Ethereum to create blockchain networks so they can conduct business quickly, with an immutable record of transactions, but without the need for a centralized authority. However, they find these frameworks difficult to install, configure, and manage," according to Rahul Pathak, General Manager, Amazon Managed Blockchain at AWS. Microsoft has been also an aggressive player in this market and is teaming up with JPMorgan on its blockchain offering. "Microsoft is to position JPMorgan's private version of ethereum, Quorum, as the cornerstone of its cloud-based enterprise blockchain offering to customers," says Finextra. "Under terms of an MoU signed between the two companies, Quorum will become the first distributed ledger platform available through Azure Blockchain Service, enabling JP Morgan and Microsoft customers to build and scale blockchain networks in the cloud."
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