Daily Briefing – Thursday 17 May 2018

Tencent’s Tim Leung presents in ShenzhenThe Lafferty News team reports from Shenzhen on day one of the International Retail Banking-Fintech Forum [livestream], where Tencent’s deputy general manager of Financial Technology (FiT) Tim Leung delivered a talk on how it is approaching fintech. Mr Leung reiterated the company’s stance on banking, maintaining its platform identity: “Banking, we’re not so good on. Customer internet experience is where it’s at.” Mr Leung also added that although Tencent has plans to branch out, any thoughts of global domination are on hold. Tencent views Hong Kong and Malaysia as more reasonable immediate destinations to expand to. DBS’ Sandeep Lal discussed the bank’s desire to pursue “customer delight” as opposed to the standard customer satisfaction. He added that although the bank doesn’t know everything, it can design better CX by testing and iterating always with the customer in mind — touching on digibank as a successful example. Tomorrow, Lafferty News will report on our tour of Tencent’s HQ in Shenzhen.Has Theresa May gotten her way? It is well known that the prime minister favoured Britain staying in the European Union, and Brexiteers have always suspected that she is looking for what they call BINO (Brexit In Name Only). Now it seems that the United Kingdom might stay in the EU Customs Union until 2021 and even beyond. Indeed, the London government has apparently now conceded on most of the points that the Brexiteers opposed, including the payment of a significant sum to the European Union. “Senior EU sources told the Telegraph that the UK would have to agree to temporarily remain in a customs union to secure a breakthrough in talks [Paywall]. This move would keep the whole of the UK within the EU ‘customs territory’ for a temporary period, avoiding placing Northern Ireland under a separate regime. ‘Arguably, the only thing that she needs is a political declaration which is convincing enough that it means that the backstop is not likely to be used,’ said an EU source close to the negotiations.” There’s a sense emerging that Britain remaining temporarily in the Customs Union will pave the way for a ‘max fac’ regime to be put in place.Traditionally dry German banking is set for a shake-up with news that Silicon Valley Bank is coming to Frankfurt. The high-profile firm will first undertake some commercial lending while it replicates its tradition in California of backing start-ups. “We will also lend money to companies that burn money,” said its head of EMEA, Phil Cox, referring (one hopes) to firms that will use any funds they can get their hands on to build market share rather than profits. Silicon Valley Bank will be able to pick up plenty of unemployed investment bankers from Deutsche Bank as it turns to the European start-up scene, once mocked by US West Coast investors. The bank has enjoyed major success in its domestic territory, where it serves about half of existing venture capital-backed tech and life science companies — and also recently secured a bank licence in Canada. In Q1 of this year, Silicon Valley Bank had an average credit volume of $23.9 billion. The firm’s offices and management team are already set up in Frankfurt, with eight employees hired. Mr Cox said that, in its London outpost, the firm has expanded to 200 employees since 2012 and credit volumes have reached $3 billion to date. “I see no reason why we should not reach those volumes in Germany within seven years as well.”Consensus New York 2018 wrapped up yesterday with Jack Dorsey of Twitter and Square defying his peers and sticking to his prediction that bitcoin will be the currency of the internet. It’s been a week of big announcements from Big Tech companies about their newest blockchain projects, all of which hew to the theme of ‘blockchain good, bitcoin bad’. “Dorsey — who counts himself as a fan of the hacker ethos surrounding bitcoin’s rise to fame — claimed that whatever path Square takes to pushing mass adoption of bitcoin payments, it will do so without threatening the openness of the network”, reported Coindesk. “There’s so much openness in the community, and I want to make sure nothing in the corporate world threatens that,” said Mr Dorsey.We cover the major recent Big Tech pronouncements on blockchain in more depth in Cards and Payments Insights, and next week we’re going to take a look at the role of Original Equipment Manufacturers (OEMs), considering that companies such as Bitpesa are focused on the intersection of mobile and cryptocurrency. Even after losing 2,000 smartphone engineers to Google, Taiwanese device maker HTC Corporation is pressing ahead with what it hopes will be a major innovation: a phone with blockchain-based features to be called Exodus, according to its Decentralised Chief Officer [sic] Phil Chen. Despite the uber-marketing title, Mr Chen wants customers to hold their own private keys and to own their own data and identity (aka enjoy ‘self-sovereign identity’), with their phones being the hub — all laudable initiatives. The Exodus development follows recent news that Switzerland-based Sirin Labs is releasing a phone with a mobile OS that incorporates blockchain. Huawei may also use that OS in its planned blockchain phone. Neer Varshney at NextWeb cautions that much of this may be a gimmick: “All of these features can be integrated into any average smartphone with the help of software alone, and trading Bitcoin and other cryptocurrencies will incur mining fees to transfer anyway — whether on regular phones or blockchain phones. Privacy-oriented web browsers and messaging apps can all be installed on any smartphone as well.”SWIFT to play referee over Iran sanctions? [FT paywall]
HSBC to cement lead in Saudi Arabia
UAE and Saudi Arabia will launch digital currency for cross-border trade
FNB wary of new entrants Discovery and Bank Zero
Take a break Punjab Bank: you’ve done enough
When a blockchain sceptic goes to a blockchain conference
US ruling opens way for states-wide sports bettingLafferty BenchmarkingOf the banks mentioned above, HSBC and Deutsche Bank were given two stars in Lafferty’s 2017 Benchmarking Report. The maximum possible is five stars.