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Home » Daily Briefing » Daily briefing - 18 October 2018

Daily briefing - 18 October 2018


The 2018 Lafferty Banking 500 Benchmarking results are announced today, with eight banks out of 500 achieving the highest score of five stars. Poland stands out in the rankings as the only country to produce two five-star banks, while Australian banks bring up the rear, with the worst overall results by country. Woody 'this machine fights fascists' Guthrie warned that "some will rob you with a six-gun, and some with a fountain pen", a metaphor extended by the likes of William Black for modern times as 'the best way to rob a bank is to own one'. The gap between Australian banks self-celebration and the performance of said banks is colossal, as illustrated by the new Lafferty Global 500 benchmarking study. On a country average, Australia scored last, with an average of 2.5 out of a top score of five.

The greatest bank robbery ever?

As Australian Financial Review reports this morning, the Australian sector lagged behind its Anglo-Saxon peers as the US overall average 3 stars and the UK averaged 3.5 stars. And while the Australian banks seemed to have escaped the worst of the northern financial crisis, there were other problems simmering away which have come into the spotlight in recent years including money-laundering, bribery, theft, misselling, deceptive practices and a list of scandals that eventually produced an ongoing Royal Commission. "We used to listen to Aussie and Canadian bankers saying 'Thank God we weren't involved in any of this' but they were and somehow they remained uncovered," said Mr Lafferty. Mr Lafferty said in many cases banks were taken over by small groups of investment bankers who paid themselves millions in what he calls the greatest bank robbery in history." He also criticised the culture of installing investment bankers at the helm of banks. "They are not suitable people because they will glorify and promote the culture of excessive risk taking," Mr Lafferty said. The Lafferty benchmarking exercise has always rated culture and strategy as significant — if not the most significant — factors in the operation of a quality bank, and the Australian banks scored dreadfully on these measures. "The strategy statements of all four are fluff and fail to set out credible actions. All score zero for culture. All score zero for digital dependability," Mr Lafferty said.

In surprise news, a phalanx of global banks is moving to address the shortfall in trade finance without using the blockchain. Banks including ANZ, Santander, BNP Paribas, Citi, Deutsche Bank, HSBC and Standard Chartered — with a collective star rating well under three out of five — hope to seize a bigger chunk of the $9 trillion trade finance industry through a project to be called the Trade Information Network. The project would give access to all banks and corporations to directly exchange and verify trade information in the hopes of lowering the risks -- and the cost -- of financing smaller companies currently ignored by large banks. "What this platform will do is allow our clients to connect and provide information on to that network, and make it much cheaper and effective to deal with our own clients," said Michael Vrontamitis, head of trade in Europe and the Americas at Standard Chartered, adding that it would also enable the banks to take on new customers.

Patrick Collison tweeted yesterday of "a new type of mobile payments", via a new tie-up for their Stripe empire, which will partner with Twilio, the California-based cloud communications company that enables targeted marketing via SMS. According to Stripe: "With Twilio , businesses can now securely collect payment details with an interactive voice response flow, which is useful for automating payment experiences such as bill collection or donations. For a more personalized experience, employees can also walk customers through an order over the phone: when it's time to collect the payment, the agent activates Twilio to let the customer enter payment info using their keypad — agents can follow the customer's progress, but won't see or hear the card details." Developers cheered. Last week in Lagos, we met several people operating businesses that have tagged themselves as 'the Stripe of Africa'. It seems that Stripe is sensing a 'first the rest' moment. UPDATE: Twilio also recently acquired SendGrid, which claims to have routed one in two emails sent last year. Yikes! There is no escape.

View the results of the Lafferty Banking 500 here.

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