Bankers beware

Fintech companies are the new and nimble startups catering to small and specialized segments in the Finance and Banking space. With employee ages averaging around 24, these companies have usurped specialized banking functions. And that is causing havoc to the banking behemoths.

Citi, ANZ, Stanchart, DBS and Chase have realized the disruptive power of these startups and are working overtime to either partner with these fintechs or absorb them into their overall IT infrastructure.

While 700 sqft room based startups challenge 100 year old banks and question their very revenue model, we are in the most exciting of times in the banking space. IBMs’ mainframe based core banking applications are being spruced up to rise up to the challenge.

Banking industry is set for a revolutionary change. It is either innovate or perish. Exciting, challenging and uncertain times ahead for bankers.

Stay tuned for more on these.

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Why I banged the phone

Phone : Welcome to ABC bank. Please dial 1 if you are a customer. If you are not a customer yet, please dial 2.

Me : 2

Phone : Please enter the card number for your account and press #

Me : ??

Phone : You have exceeded the maximum time. Would you like a survey of this call ? If yes, please dial 1.

Me : 1

Phone : Please enter the card number for your account and press #

Me : Bang bang

Phone : Thank you for calling ABC bank. Have a great day.

Me : ??

Jayant Sinha – a jewel in India’s finance ministry

Jayant Sinha is an IIT and Harvard Business School graduate. He is the Minister of State for Finance in the Modi government.

A silent performer that he is, recently he chaired an informal meeting of CEOs from the following corporates :

  • Siemens India
  • eBay India
  • Shell
  • Novartis Pharma
  • Areva TD

There were other CEOs as well. I don’t remember the names. They discussed about infrastructure development, GST implementation, taxation and capital convertibility. The minister had emphasized the ‘Make in India’ policy of PM Modi and the CEOs discussed the modalities of ‘Make in India’.

The point to note is : At the end of the meeting, the CEOs were very happy that they have, at last, a MoS Finance that is in touch with reality, knows what he is talking about, keen to learn from corporates and implement in government. And the best part was the minister was a keen listener who let the CEOs talk more.

This meeting was a closed door one hosted by a bank. It is heartening to note that an Union Minister of State met with corporate CEOs without any help from bureaucrats and spoke on equal terms with them and spoke about development and infrastructure.

I wholeheartedly welcome this meeting and hope India proceeds in the direction of a country that is run like a company albeit in a benign fashion.

Incidentally, Jayant Sinha is the son of former Union Finance Minister Yashwant Sinha.

Jayant Sinha – a jewel in India's finance ministry

Jayant Sinha is an IIT and Harvard Business School graduate. He is the Minister of State for Finance in the Modi government.

A silent performer that he is, recently he chaired an informal meeting of CEOs from the following corporates :

  • Siemens India
  • eBay India
  • Shell
  • Novartis Pharma
  • Areva TD

There were other CEOs as well. I don’t remember the names. They discussed about infrastructure development, GST implementation, taxation and capital convertibility. The minister had emphasized the ‘Make in India’ policy of PM Modi and the CEOs discussed the modalities of ‘Make in India’.

The point to note is : At the end of the meeting, the CEOs were very happy that they have, at last, a MoS Finance that is in touch with reality, knows what he is talking about, keen to learn from corporates and implement in government. And the best part was the minister was a keen listener who let the CEOs talk more.

This meeting was a closed door one hosted by a bank. It is heartening to note that an Union Minister of State met with corporate CEOs without any help from bureaucrats and spoke on equal terms with them and spoke about development and infrastructure.

I wholeheartedly welcome this meeting and hope India proceeds in the direction of a country that is run like a company albeit in a benign fashion.

Incidentally, Jayant Sinha is the son of former Union Finance Minister Yashwant Sinha.

Alibaba’s banking thieves

Hurray, banks have competition. No, not the shady money lenders, but technology enables lenders that are not banks.

And Alibaba is the new dragon from dragon-land that challenges banks.

Alibaba is the Chinese equivalent of e-Bay. But it allows customers to have a virtual wallet, have digital cash and allows them to transfer funds to their friends. It also has a Money Market account and allows customers to invest. Customers can also perform inter-bank transactions. So the banks are worried.

Have you noticed that Amazon provides suggestions in Google search even as you start typing a books’ name ? That, strictly, is intrusion. But we don’t protest.

‘When you allow Amazon to be intrusive and allow it to “suggest” products based on customer behavior, you need to allow banks to “suggest” their products to customer when they use these e-payment services’, say the banks.

‘I will lose my profit. I have to maintain a higher capital adequacy ratio but not Alibaba’, protest the banks. but they take care not to sound as a protest. Can’t afford to scratch Beijing at the wrong end, right ?

Looks interesting when banks are left to fend for themselves. Remember the ‘Lehman millionaires’?

Alibaba of yore had 40 thieves. Now there are banks.

Alibaba's banking thieves

Hurray, banks have competition. No, not the shady money lenders, but technology enables lenders that are not banks.

And Alibaba is the new dragon from dragon-land that challenges banks.

Alibaba is the Chinese equivalent of e-Bay. But it allows customers to have a virtual wallet, have digital cash and allows them to transfer funds to their friends. It also has a Money Market account and allows customers to invest. Customers can also perform inter-bank transactions. So the banks are worried.

Have you noticed that Amazon provides suggestions in Google search even as you start typing a books’ name ? That, strictly, is intrusion. But we don’t protest.

‘When you allow Amazon to be intrusive and allow it to “suggest” products based on customer behavior, you need to allow banks to “suggest” their products to customer when they use these e-payment services’, say the banks.

‘I will lose my profit. I have to maintain a higher capital adequacy ratio but not Alibaba’, protest the banks. but they take care not to sound as a protest. Can’t afford to scratch Beijing at the wrong end, right ?

Looks interesting when banks are left to fend for themselves. Remember the ‘Lehman millionaires’?

Alibaba of yore had 40 thieves. Now there are banks.

The Bankster(s)

Dacoity can be condoned even if it is committed by seemingly regular guys. More so when a bank does it. That too an ethic-insisting western bank.

Well, here is the story in short.

French bank BNP Paribas illegally transferred money from Sudan and Cuba. ‘Illegally’ because the countries are in the ‘sanctioned’ list – the countries that should not be either a source or a target of fund transfer using a banking channel. More so, if an American bank is involved.

You might ask, ‘BNP is not an US Bank. So what is the fuss?’.

BNP used a US bank for this purpose without disclosing the source of money.The US bank was JPMorgan Chase, the US behemoth.

Here is what BNP did.

Some satellite banks got funds from Sudan and Cuba. These satellite banks – legitimate banks related to BNP in a circuitous manner – transferred funds to JPMC which in them transferred these to BNP believing these to be genuine transactions. But JPMC got light of this when it detected some Cuba related ‘talk’ from back-office records from the satellite banks. And that ended the relationship with BNP for supposedly ‘Cuban’ accounts.

But BNP still continued with Sudan funds and later that was also found out by JPMC.

How did JPMC come into the picture ? BNP’s criminal mind was again behind this. Prior to JPMC, it used its own branch in New York for these transactions. But when the US increased surveillance, it took an US bank for its illicit fund operations. And JPMC was brought in.

As all movies end, the bad guy, BNP, was found out and fined $ 9 BN.

$ 9 Bn is too huge by any standards. Whose money is it anyways ? Stupid tax payers will finance a bail-out in case there is a need.

Wait a minute. Was JPMC so naive ? Probably it wants the regulators to believe it was naive for it had also been fined  $88.3 Mn in 2011 for its own Cuba, Iran funds.

That completes the story. Two villains make the best friends.

But why are Cuba, Iran and Sudan, ‘sanctioned’? Often cited reasons are that they finance terrorism.

Is Saudi Arabia any nobler ? Who finances the ISIS in Iraq ? Why no sanctions on Saudi ?

I need to sell arms to both Saudi Arabia and Israel at the same time while getting dead-cheap oil from the former and finance for the arms from the latter.

It’s the economy, stupid.

Comical banking ?

You are stupid if you thought banks just do banking. They take part in politics.

That is what HSBC did. It ‘downgraded’ HongKong’s securities to ‘underweight’. That meant that the stocks in HongKong were not attractive to buy now. Do you know the reason ? A pro-democracy movement that was underway in HongKong.

Shocked world reacted and immediately HSBC went back on its analysis. Then it put ‘democracy movement’ as the final item in its many other reasons. How did the ‘new’ reasons come about just in a day ? Who was behind these ‘new’ reasons ? More importantly who was behind the ‘old’ reason ?

The truth is plain and simple. Beijing does not take kindly to the democracy protests. It sees such protests as harbingers of freedom in mainland China. Hence exerted pressure on HSBC to ‘downgrade’ its own region.

Later when the twitterati went up in anger, HSBC ‘revised’ the reasons.

I know P.G.Wodehouse worked for HSBC for some years. The bank need not become a comedy just because of that.

When black sheep turned white pigeon

Don’t be intrigued by the title. I am not going to talk about animals and birds for I know nothing of them. But that does not mean I write only about things that I know of. I write about things that I am reasonably knowledgeable about. Here ends the caveat.

The day was exceptionally hot, hotter than many other days if this year. I retired to my desk after lunch and began looking at a mail that spoke about the MAS. Don’t get me wrong. It was not about MAS Selamat. It was about MAS – The Monetary Authority of Singapore.

MAS, as the financial regulator is commonly known, has announced that it would increase the cooperation with other countries in fighting Money Laundering and Terrorism Financing and therefore would be amending the relevant laws for the same. Noble announcements though, I thought.

One of the rules was very typical of Singapore. It said,”.. failure to comply will result in a fine not exceeding $1 million and, in the case of a continuing offence, to a further fine of $100,000 for every day during which the offence continues.” I really liked the ‘fine’ that has become a part and parcel of Singapore’s culture.

Wait a minute. Where is the ‘black sheep’ and how did it turn into a ‘white pigeon’ in this new law ?

Next in the article was an announcement by none other than HSBC bank. It said thus :

“HSBC Singapore continually invests in risk and compliance capabilities to achieve the highest standards in the fight against financial crime, which knows no geography,” said a bank spokeswoman. “As an international bank, we welcome any regulatory proposals that can strengthen the bank’s efforts to combat financial crime,” she said.

Can you imagine this ? HSBC bank coming out voluntarily to accept more regulatory oversight for ‘combating financial crime’? If it sounds like Hitler declaring his love for Mahatma Gandhi, please don’t blame me.

Recently HSBC had apparently assigned Mexico  a lower category of risk. Every small town bank in the world knows about the drug money and un-ethical finance streams in the country. But HSBC had assigned the country a low risk category. So much for ‘fighting financial crime’.

And then it paid USD 1.92 Billion to the US regulator for ‘allowing itself to be used to launder a river of drug money flowing out of Mexico and other banking lapses’.

And in Singapore it says ,’we welcome any regulatory proposals that can strengthen the bank’s efforts to combat financial crime,’

So what is wrong with the title ‘.When black sheep turned white pigeon’? 

Why banks don't sleep

Avariciousness, greed, unhindered lust for money. money at any cost – if any of these sound similar then you are probably reading the case about the ANZ Bank case regarding overcharging credit card accounts.

Here is how it goes. The bank issues you a card. You link the card to a savings account. And there is an automatic debit that happens on your savings account on the day of your card due. The credit card system invokes the auto debit functionality. And on that day the savings account is not adequately funded. Therefore the request is returned.

And the bank charges you the following :

  1. Penalty for Insufficient balance in your savings account.
  2. Penalty for standing instruction dishonour in your savings account.
  3. Late payment charges for your card.
  4. Interest charges for your card.

And you pay for four cases when you could have paid the due directly in the bank branch for your card.

The courts have found that this multiple charging practice to be unethical and illegal and have fined the bank USD 220Mn.

There are other banks who are waiting to be hauled over this credit card fee issue.

And did I hear somebody mention ‘ethical business practice’, ‘compliance’, ‘value the customer’ etc.

Now the others who don’t sleep, who are here for good and the world’s local banks are spending sleepless nights.

You reap as you sow, right ?