Apple stays in the payments picture

Apple, good products, horrible company…The EU ruling that Apple must pay over $14 billion in back taxes to Ireland has been hogging the headlines, but the tech giant’s increasingly hostile face off with Australia’s banks is equally as compelling a story. In a nutshell, all of Australia’s big banks (except ANZ which is rolling out Apple Pay) are looking to gain access to the inner workings of the mobile payment platform. If successful, third parties would be able to bypass Apple Pay and create their own apps.

Apple has countered by arguing this would compromise the iPhone’s security, reduce innovation and hamper its entry into the Australian payments market. It told the Australian Competition and Consumer Commission (ACCC) that “allowing the banks to form a cartel to collectively dictate terms to new business models and services would set a troubling precedent and delay the introduction of new, potentially disruptive technologies”.

Forget FinTechs, here come RegTechs!

You’ve just familiarised yourself with FinTech. Now it’s time to take a look at the innovation that rocked London 2016 FinTech Week: RegTech. The ambition: to manage all regulatory aspects, from the determination of ratios to risk mapping and KYC management.

These new players aim to address the following challenges:

Embracing RegTech: Asia Pacific adapts to mounting reporting requirements

Just as global regimes such as the Basel III net stable funding ratio (NSFR) and International Financial Reporting Standard (IFRS) 9 are being rolled out, Asia Pacific’s regional regulators are stepping up the pressure on banks by intensifying reporting requirements and moving more aggressively to address governance failures.

Thankfully, at the same time, emerging technologies, such as RegTech, and business models are equipping institutions with the strategies and capabilities needed to address escalating regulatory reporting requirements, which have become a region-wide reality. For example, the Monetary Authority of Singapore is completely overhauling the key financial position report, MAS 610, for the first time in years to glean more data points and details from banks. The changes will impact all supporting forms and require multiple new attributes, calculations and aggregations.

Rebuilding customer relationships

Banks have grown too large and complex and are struggling to deliver added value to final investment relationships in a world of high fees, frequent financial crises, damage of reputation and zero interest rates.

Banking regulation has stepped up the cost of capital. However, market regulation was also strengthened to foster higher customer protection in the aftermath of the global financial crisis, and enforce full transparency about costs and risks negotiated with taxable investors. This has been a perfect storm for retail and private banks: compliance costs sky-rocket while FinTech competition erodes their profitability.

Why it’s time to embrace the big opportunity of Open Banking

Earlier this month, the Competition and Markets Authority (CMA) published the final report on its retail banking market investigation. By requiring banks to implement Open Banking by early 2018, the report claims it is paving the way for a revolution. While debates rage on about the specifics of the report and how far (or not far enough) it goes, it accelerates and supports the UK’s move to a transformed banking landscape based upon a foundation of Open Banking.

Before I go on, let’s be clear – the CMA’s Open Banking programme is not a new concept. It is based on the HM Treasury initiative, powered by the Open Banking Working Group (OBWG), who are determining the open API standards for Open Banking. The timeline has already been set in the Open Banking Standard. Add to this the API mandate of the European Commission’s upcoming revised Payments Services Directive (PSD2), and it’s clear that a tour de force of regulation aimed at bursting open the banking industry is already on its way.

I’ll have contactless, please, with a side order of cash

"Why I've cut up my contactless bank card...and you should too," says Ross Clark - they are driving up prices and killing off cash. This Daily Mail article has been stirring up a lot of debate here in the UK. I won’t go through its contents in detail (you can find it here). But in a nutshell, Clark was sent a contactless debit card and he immediately cut it up with a pair of scissors because banks and credit card issuers are evil and cash is great.

A tad OTT, yes, and his argument contains numerous holes (without a debit card, how will you withdraw your beloved cash, Ross?) But I agree with him on one crucial point. The man and the woman in the street still like and trust physical money and distrust those who seek to do away with it. It’s unfair to write them off as luddites for this (as often happens within the tech industry).

What can lenders learn from the motor finance sector?

In April, the Bank of England reported that growth in unsecured borrowing, including personal loans, had returned to rates not seen since the financial crisis. With market confidence renewed, lenders are now looking for best practices that can help them make the most of the rising market. Enhancing the customer experience is a good starting point; removing ‘points of friction’ can significantly reduce application drop outs. It’s also something that the motor finance industry is really starting to nail.

Despite economic doubts and stricter compliance requirements, the sector has continued to demonstrate enviable growth. In October 2015, car sales had been rising consecutively for 43 months and, after a brief pause (for new plates to be issued), sales picked up again, and at a faster rate than before. In March 2016, the new car market surged by 5.3%, making it the highest grossing month since 1999. Given that roughly 80% of all new vehicles are bought with finance it’s little wonder that the Finance & Leasing Association (FLA) reported an 11% increase in motor finance lending in Q1 2016.