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 /  News  /  Weekly News Digest 13 Sept 2019

Weekly News Digest 13 September 2019

Bank reflection 4
Weekly News Digest 24 January 2020
US banks' decade| Central bank crypto | PayPal/UPI | UK m-banking
Weekly News Digest 17 January 2020
Visa acquiring Plaid | Credit cards gambling ban in UK | US 4Q results | Marcus app
Weekly News Digest 10 January 2020
US banking concern | Sapphire fee hike | UK repayments rise | Open Banking to S. Korea, but not yet Australia
Fintech image
Weekly News Digest 20 December 2019
FDIC weighs Tech-favouring move | Open Finance | UK overdraft changes | Australian fines mount
Weekly News Digest 13 December 2019
New York contactless boost | Deutsche saving €100m via retail restructure | N26 adapts to US | Hong Kong neobanks mull launches
Weekly News Digest 6th December 2019
EBA advises cuts & mergers | RBC results | Pay.uk hits new high | NZ capital ratios announced
Rural bank
Weekly News Digest 29 November 2019
US rural bank closures | Chinese rural bank risk | Westpac woes | RBS goes digital | Paytm raises $1bn |
Banks Customer Satisfaction
Weekly News Digest 22 November 2019
US bank satisfaction | Amex network surge | TSB outage lessons | Elavon buys Sage Pay | Apple Pay challenge
Golden Gate Bridge
Weekly News Digest 15 November 2019
Bank of Google | Facebook Pay | Apple Card algorithm alarms | Chinese super-apps open up
Credit cards stack 2
Weekly News Digest 8th November 2019
US loan standards tighten | Spain mulls revolving credit regulations | Australian bank results | Wirecard buys AllScore
Glass buildings
Weekly News Digest 1st November 2019
Mastercard transactions soar | Quarterly results from banks worldwide | Uber Money launch | Raisin plans for US
results chart image
Weekly News Digest 25 October 2019
Quarterly results from cards networks | RBS results reveal cards growth | Handelsbanken narrows focus

Banks in the UK are feeling the pinch as the dust settles around the Payment Protection Insurance (PPI) scandal. PPI sounds great in theory – protection that covers loan repayments should the borrower fall ill or become unemployed – and so millions of policies were sold between 1990 and 2010. However, when PPI was identified as being expensive (adding 20-50 percent to the cost of loans); ineffective (approximately only 15 percent of plans paid out); mis-sold (customers weren't told they were buying it, or it was identified as 'essential'); and inefficient (long delays and complicated procedures for claimants), banks were ordered to retrospectively compensate consumers to the tune of a possible $5.7 billion. The August 29th deadline for claims has passed but a huge spike in last minute claims has left many banks with unexpected bills. The Royal Bank of Scotland is to take a hit of $1.1 billion; Clydesdale and Yorkshire Bank has reported an additional loss of $571 million; and both Lloyds Banking Group and Barclays face a payout of $1.5 to $2.3 billion each. The total cost of the PPI scandal is now expected to reach at least twice as much as the initial projections.

Stripe, the American online payments platform, has been making strides recently into the lending service business, made possible by a banking partner that has not yet been revealed. It recently announced that it will permit its e-commerce business customers to borrow money, which will be repaid out of its future sales on the payment platform. Unlike the historic method of relying on the Fair Isaac Corporation (FICO) score employed by banks which can take weeks and months to process, Stripe will make instant decisions using machine learning models with decisions mainly based on transaction activity.And as if one announcement in a week isn't enough, Stripe doubled down in its lending intentions with the announcement of its corporate credit card for its US-based business customers. The card will operate via Visa and cardholders must pay their balance in full each month, resulting in no interest or card fees. Stripe will profit only via interchange fees on each transaction instead. Verisk Financial Research analyst, Lorna Baek, noted that "Stripe's expanding by-product services are a real testament to how a fintech firm can leverage its data to identify consumer needs and fill in the service gaps faster and better than traditional banks."

The Netherlands welcomed the completion of the rollout of 24/7 instant payments this week – with payments taking a mere five seconds to credit the recipient's bank account, twice as fast as the EU average; and where payments are limited to €15,000 per transaction across Europe, the Dutch system has no limitations on transferrable amounts. The rollout has been gradual with all of the major banks – ABN AMRO, ING, Rabobank, de Volksbank and Knab – connecting their online and mobile customers to the system over the past six months, and the project has now been completed on schedule. The results have been impressive with The Netherlands now rising to be the undisputed EU leader in the number of instant payments, as more than a million daily transfers taking place via mobile and online banking are credited instantly.

The Australian Prudential Regulation Authority (APRA) has been active in granting new banking licences, in an effort to introduce more competition to a market that is dominated to an unhealthy extent by the four main institutions. In its most recent licensing move, it granted the neobank, Xinja, the right to accept deposits without restriction. Xinja Bank, 100 percent digital and operating via a mobile app with the physical issuance of a Xinja debit Mastercard, has its sights set on shaking up Australia's banking industry. The bank already has plans to expand into savings immediately with the launch of 'Stash', its savings account, and intends to enter the lending market in 2020. The APRA also granted the same license to 86 400, an Australian fintech, in July; Volt, an Australian neobank, in May 2018; and Judo, an Australian challenger bank focusing on small and medium-sized enterprises, in April 2019.

Data is the new oil, and the Payments System Regulator (PSR) in the U.K is the latest to realise the potential and has laid out its intention to work with Pay.UK, the operator of the BACS, Faster Payments and Cheque and Credit payments system in the targeted development of products and services. The decision was made on the back of the findings of a report on the use of data in the payments industry. It is hoped that by leveraging the use of the massive amounts of data collected by the PSR, opportunities for new products and services can be identified and developed in the UK's new payments architecture (NPA) – the payments system which will take over from current BACS, cheques and Faster Payments infrastructure.

To end, links to some more stories of interest from this week...

The Weekly News Digest from Verisk Financial Research highlights significant developments that have recently occurred in payment cards, digital payments, acquiring, processing, retail banking and consumer credit. Our writers and researchers frame these items in contexts such as historical, sectoral and regional trends, adding a layer of value that is often missing from the rolling news cycle.

About Verisk Financial Research

The market-leading online, interactive database and data dashboards covering the global cards and payments industry in detail, plus a range of data-packed country and regional reports. Leveraging Lafferty Research data going back to 2010 – and forecasts up to 2020 – our unique datasets cover 72 countries around the world and feature more than 250 metrics per market.

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