Daily briefing - 22 November 2018

Last year, observing the progress of Amazon and Amazon Pay as the e-commerce giant strengthened its run of brick and mortar acquisitions, we wondered how long before the digital wallet also made the leap out of the digital and into the physical. Reports this week suggest that is about to happen, with unnamed sources floating the story in the Wall Street Journal that Amazon Pay will begin working with gas stations and other merchants that won't see Amazon Pay as a direct threat. For many small and medium retailers, Amazon is a direct challenge to their business, even though many also work with the e-commerce behemoth. "The report claims Amazon is particularly interested in offering Amazon Pay in Asia, where digital wallets are popularly used. The sources also claim Amazon is keen on deploying its digital wallet in the United States, hoping to get consumers to adopt its option while competitors are still rarely used by consumers. Assuming the report is accurate, Amazon is reportedly willing to offer merchants lower payment processing fees than competitors, among other things, in hope of luring in customers. Specific stores allegedly targeted by the company weren't disclosed." With Amazon already offering merchant lending, will we now see Amazon extend credit at the point of sale, online and offline?

An almighty rumble is brewing between three financial powerhouses, one a global bank and the other two sovereign wealth funds. Abu Dhabi sovereign wealth fund International Petroleum Investment Company is suing Goldman Sachs, accusing the investment business of bribing its officials. The charges revolve around manipulation of Malaysia's 1MDB fund, which issued around six billions in bonds that were guaranteed by IPIC. When the 1MDB fund defaulted, IPIC was on the hook, and the Malaysia government agreed to refund the IPIC for its losses. A new government then ruled out making the payment. "The long-running 1MDB scandal, in which high-ranking Malaysian officials including former prime minister Najib Razak have been accused of helping loot $4.5bn from the government fund, has spread beyond the country's borders, ensnaring officials and executives around the globe," writes the FT. The IPIC filed the suit in New York on Wednesday. Goldman Sachs denies the charges.

UK challenger bank Monzo is the latest of the new breed to take aim at the underserved UK business banking market. It will join Starling Bank, Metro, CYBG and Santander in competing for a chunk of the £775 million fund that has been set aside as part of the rescue of RBS, under the aegis of the comically-named Banking Competition Remedies. Monzo, which say it has 800,000 customers, has focused to date on consumer banking. "Chief executive Mr Blomfield said Monzo hoped to launch a business account that integrated with payroll systems and accounting software, which would primarily be aimed at digital businesses that did not process large amounts of cash. Monzo would be less likely to refuse to open an account for a business without a good credit history, he added. 'Any business that is newly incorporated has no credit history,' said Mr Blomfield, adding that banks that refused to open accounts for this reason were 'acting as a brake on entrepreneurs'". One part of the fund is available to encourage switching but it appears that part will only go to banks that already offer business banking.

Starling hires Helen Bierton as head of retail banking

LAFFERTY BENCHMARKING

Goldman Sachs scored two stars, and RBS scored three stars, in the 2018 Lafferty Banking 500. The maximum score is five stars.