WHO’S BEEN SAYING WHAT
IBS Journal September 2016
43
Quality quotes from the banking tech world
“The proposed sale of VocaLink to Mastercard threatens to kill innovation in UK payments… How will giving a monopolistic position to an organisation currently being sued for price fixing, give us any comfort that we won’t be ripped off with sky high charges? One of the major issues raised by PSPs is that they envisage an increase in transactional volume usage fees for end users and a potential increase in direct connectivity costs. Though prices have increased over the years, the rate of increase has been steady. The fear now is that Mastercard could turn that model on its head, if the pricing structure itself is left unregulated.”AccessPay CEO, Anish Kapoor
“In some cases we compete against US banks or tech companies on acquisitions. Their bonuses are not capped, so
we may lose out. If you can design an app so a payment is done in two clicks instead of eight clicks that is valuable but it isn’t putting the bank at risk.”Juan López Carretero, Head, Digital M&A, BBVA
“Former colleagues I have spoken to are still struggling with the same issues, the same conflicts, the same
pressures to achieve no matter what. And this goes back to the structure of the industry. People are required to take risk to generate profit, because yields in the industry are consistently compressed. And if investment banks continue to chase the same level of profitably as they have in the past, the only way to generate those profits is to take more risk. But from a politics angle, the desire is to limit that risk taking, to limit the profitability, but you have these conflicted goals. And where the conflict comes is where people fall into this grey zone, and so I think it can absolutely happen again. Especially as we go into what could be the next phase of the great financial crisis over the next 12 to 24 months.”UBS rogue trader, Kweku Adoboli
“We judge the obstacles
to widespread Bitcoin adoption as insurmountable in aggregate. Additionally, although we recognise the benefits of a permissioned public ledger – it is transparent and could remove the need for a central clearing house (currently fulfilled by Visa and Mastercard) – we see limited risk from blockchain as a technology to replace the existing payment rails. In fact, we think recent developments have solidified the roles of Visa and Mastercard. Specifically, Apple Pay and other “pays”
have in effect all elected to use the existing “rails” and make the networks the “guardians” of the tokenization process. In contrast, the “joint ventures” that attempted to change the way consumers transacted (such as Isis/Softcard and MCX/ CurrentC) have largely failed.
However, in financial service payments, nobody wants to be left out. We believe bank-to- bank payment systems and trade finance products present the lowest-hanging fruit for disruption. These systems, such as SWIFT, are decades old, have very limited flexibility and face growing security threats (note SWIFT’s recent security breaches). They are also slow and costly – with cross-border wire-payments taking days to clear with fees as high as 10%. Enter blockchain – a low-cost, instant, virtually un- hackable, fully automated, end-to-end transaction system built on a private permission-based network. Such a system would not only enable banks to eliminate costly overheads, but would provide a lower-cost money transfer product attractive to large multi-national organisations with high frequent cross-border funding and trade finance demands.”Credit Suisse report
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