TFU | Jun. 17-23

Leading Off

Facebook announced its new cryptocurrency, Libra, which brought immediate scrutiny from global lawmakers, including the U.S. Senate Banking Committee; Alipay partnered with six European mobile wallets to implement QR codes in their services; Ripple invested $50M in MoneyGram, which will use Ripple technology to conduct money transfer and settlement; two Nordic banks are trimming compliance staff in favor of AI tools; and Grab is considering applying for a Singaporean banking license.

 

In the News

Facebook announces Libra.  After months of speculation, Facebook officially introduced Libra, its new cryptocurrency. Libra is pegged to a basket of global currencies and managed by the independent Libra Association, a consortium of firms that includes tech and financial services giants. The social media giant released an accompanying white paper [full text] describing Libra, which will go live in 2020.

Congress to hold hearing on Libra.  The U.S. Senate Committee on Banking, Housing, and Urban Affairs will hold a hearing on Facebook’s Libra cryptocurrency in July to discuss financial regulatory and data privacy concerns. Facebook’s announcement immediately received attention from lawmakers, some of whom have called for a halt to the rollout until further investigation can be done.

Alipay extends reach into European mobile wallets.  The Chinese financial services giant partnered with six European firms to implement QR codes in their mobile wallet services, increasing the reach of Alipay’s QR system across 10 EU countries. According to a joint statement by the companies involved, “the collaboration will bring together over 5 million users in Europe and over 190,000 merchants.”

Ripple invests in MoneyGram.  The blockchain-based money transfer network will invest up to $50 million in the global money transfer service, establishing a two-year partnership in which MoneyGram also will use Ripple’s XRP digital currency for cross-border payment and foreign exchange settlement via Ripple’s xRapid network.

Line closes in on Japanese crypto exchange license.  Japan’s largest messaging app is seeking approval from the Financial Services Agency (FSA) for its new BitMax exchange, which would allow its users to buy and trade cryptocurrencies. The approval could come as soon as next month. Line is also seeking a banking license that would “allow deeper integration of cryptocurrencies with its other services.”  

Grab eyes banking licence.  The Singapore-based ride-hailing service, Southeast Asia’s most valuable start-up, is expanding its growth into financial services and preparing to apply for a online-only bank licence if the Monetary Authority of Singapore “decides to open up the sector.” Grab also is reportedly “close to hiring a consultancy to advise it on its banking potential.”

Nordic banks to replace compliance staff with AI.  Nordea and Danske Bank, two of the biggest banks in the Nordic region, are planning to significantly reduce their compliance and financial crime staff, in favor of AI tools. The banks have stated that their recent headcount expansion “will be temporary and will be sizeably reduced due to the greater use of robotics and AI technology.”

FATF rules that crypto exchanges must share customer data.  The intergovernmental Financial Action Task Force (FATF) released a requirement that “virtual asset service providers,” including crypto exchanges, must pass information on their customers to each other when transferring funds between firms. This ‘travel rule’ is a long standing requirement for international banks, but is new to crypto.

BoE sets out priority areas for future of finance.  The Bank of England (BoE) named five priority areas for development as part of its “Future of Finance” report, including building or enhancing strategies for regtech and data management, digital supervision, and the payments system. Launching the initiative, Governor Mark Carney also said the BoE intends to hold funds for payments firms as well as banks.  

Citi CEO: Don’t sleep on the bank branch.  At a finance conference last week, Citi CEO Michael Corbat argued that big banks need a two-pronged approach to survive in the digital age: a broad physical branch network (catering to Baby Boomers) and a robust digital presence (catering to Millennials). While challenger banks will target specific channels, they face stiff hurdles to become bona fide banks.

 

 

 

 

 

 

 

 

 

 

 

 

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