Snippings

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If every household used AI agents to optimize the return on their cash balances, banks could lose a large share of the cheap deposits they rely on to make loans, which would be a problem for the entire financial system.

From: Is an Agentic Bank Run Coming? | The Daily Spark | Apollo Global Management.

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Financial institutions may use a mobile driver’s license or other government-issued virtual ID as a form of documentary verification for purposes of customer identification program compliance, so long as they maintain the appropriate technology or systems to extract the relevant information from the IDs, according to FAQs published today by the Financial Crimes Enforcement Network and banking agencies.

From: FinCEN, banking agencies release FAQs on digital credentials, customer ID | ABA Banking Journal.

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Key insight: A study found that large language models endorse fintechs for small-business banking far more than they recommend traditional banks. 
What’s at stake: Banks could become invisible to entrepreneurs starting new businesses.
Forward look: Companies can improve their chances of being recommended by an LLM by working on legibility.
Banks, as well as other businesses, have spent decades working on “SEO optimization,” making their websites and online information easily accessible to search engines such as Google and Bing. A new study confirms that they now need to start thinking about “LLM optimization,” making their websites and online information accessible to AI-powered chatbots such as ChatGPT or Gemini.

From: Why AI models favor fintechs over traditional banks | American Banker.

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Germany’s Federal Employment Agency (Bundesagentur für Arbeit) is bringing in the use of ‘SocialCards’ to pay benefits to citizens without a bank account and who, until now, have received government cheques to exchange for cash in Postbank branches.

From: German employment agency brings in payment cards for people without bank accounts.

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Simon Taylor xxx

The current MiCA makes e-money token issuers (stablecoin issuers to you and me) hold at least 30% of reserves as bank deposits (60% for significant tokens). The ECB and all 27 EU national central banks want that gone, in their MiCA review response published today.

Which is. Fascinating.

They’d replace it with a timing rule which says a set share of reserves must turn into cash within one working day and within five, using overnight reverse repo or short-dated government bonds.

Which happens to be how stablecoins tend to work in the US.

The official framing is genius because it has a real worry. Their worry is contagion. A stablecoin run would force the issuer to drain its bank deposits fast, and those banks would inherit a crisis they didn’t create.

The central banks also admit the deposit rule cut issuer revenue. EU reserves can now look like the T-bill book behind a dollar stablecoin.

So this is how you sell “reducing risk” as also being “a better business model for stablecoins” and competing with the US when you’re worried about soverignty.

The regulators still prefer a ban on multi-issuance, so a USDC issued in Europe stays a separate token from one issued in the US. Although they did set out a path to allow it, starting with a test of whether the other country’s rules are equivalent.

Put those together and you get a business model. A global issuer runs a separate EU token whose reserves earn a proper return, and equivalence becomes the route back to one fungible token.

Banks pay for it with a slug of lost wholesale funding. The central banks also want the yield ban stretched to crypto lending and staking, so the return stays with the issuer.

And now it looks a lot like GENIUS no?

The Commission still decides. If you’re an issuer, rerun your EU unit economics now. If you’re a bank, the opportunity moves from holding stablecoin deposits to running repo and custody.
Euro stablecoins at scale become steady buyers of short-dated EU government debt.

Dollar stablecoins lean on one deep market, US Treasuries. Euro issuers pick between Bunds, OATs and BTPs, each with its own credit risk.

The only thing we need now is a Eurobond…

From: Post | LinkedIn.

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Global e-commerce is roughly $6.4tn. If an agent intermediates just 1% of that, that’s $64bn of GMV flowing through the interface. A 1% take rate is $640m of revenue. At 2.5% share, it becomes $1.6bn.

No inventory. No warehouses. No logistics. Just a thin layer sitting between intent and transaction.

That’s what makes Meta’s Muse interesting.

Meta already sits where a huge amount of purchase intent is created – Instagram, Facebook and WhatsApp. Historically it has monetized the journey towards a purchase through advertising. An agent potentially lets it participate in the transaction itself.

But there’s a big difference between influencing a transaction and being trusted to execute one.

For personal agents to become meaningful commerce channels, consumers have to be comfortable delegating purchases. Merchants have to be comfortable letting agents transact on their sites. And the payment ecosystem has to know things it has never really needed to know before:

From: Post | LinkedIn.

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A recent report estimated that some 11mn adults help others manage their money online — that’s one in five UK adults. However, our banking system is not set up to support this. The Hidden Heroes study found more than half of digital helpers lacked formal authority such as a Lasting Power of Attorney (LPA). Instead, many used risky workarounds, such as sharing passwords, security codes or logging into a relative’s account from their own device.

From: Are you the ‘digital PA’ for your parents?.

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The United States stands at a critical tipping point in digital identity. More than 20 states now offer mobile driver’s licenses (mDLs). Georgia leads the nation, mandating law enforcement acceptance by July 1, 2027, and signaling the eventual replacement of the traditional plastic card.

This shift empowers citizens with unprecedented control over their personal data. However, legacy identity verification systems rely entirely on physical cards, which exposes a massive operational gap. As we approach a mobile-first reality, government agencies must proactively modernize how they verify, share and trust identity to balance citizen privacy with public safety.

From: Preparing for a mobile-first future in identity verification – Federal News Network.

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Meta is bringing its hot new AI agent Muse to its smart glasses.

The move, announced Wednesday at its annual Connect conference in Menlo Park, California, gives Meta a new way to put Muse directly in front of users throughout the day.

Muse has become a fast-rising entrant in the increasingly competitive AI agent market: software that can take actions on a person’s behalf, rather than merely answer questions or generate text. Instead of opening an app or sitting down at a computer, people could eventually ask Muse for help through a pair of glasses already on their face.

With a connection to your Muse personal AI agent, Meta’s glasses “offer more ways than ever to help you manage daily life, whether you’re building healthy habits or navigating a busy calendar, all without reaching for your phone,” the company said in an announcement.

At Connect, CEO Mark Zuckerberg said the company will “start upgrading the AI experience on Meta glasses” in the coming weeks.

The announcement makes clear that the company sees its hardware business as important for the agent, which launched earlier this month and quickly rose to the top of the App Store charts, beating rivals like ChatGPT.

Meta’s broader hardware blitz at Connect also included Ray-Ban Meta Audio, a new audio-focused pair of glasses. It said it expects to offer more than 100 styles across Ray-Ban, Oakley, and Meta Glasses by the end of the year. It also announced Meta VR Glasses, which it said will offer a more immersive way to watch movies, play games, and work in virtual reality, and will go on sale next spring.

From: Meta Is Bringing Its Muse AI Agent to Its Smart Glasses – Business Insider.

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A few years ago, back in 2019 in fact, I wrote that there was a revolution coming in financial services not because banks were getting AI but because customers were. I’m glad other people age. For example, Angela Strange, a partner at the noted venture capitalist Andreessen Horowitz, recently said that banks and insurance companies should be “TERRIFIED” by this development (her caps) because “inertia and information asymmetry will no longer be enough to keep customers”. Well, I’m not going to say I told you so, but… well, I did.

I was going to write something about this, even before I saw Angela’s remark, because of something I heard on the radio a few days ago. As you may know, Britain’s Air Traffic Control system keeps falling over. I don’t know why, but I assume it’s because the software was written by people and not AIs, but there you go. Anyway, I was listening to a discussion on the BBC concerning the disruption caused by these air traffic control failures. The specific issue raised was that people who had purchased travel insurance found out that they were not covered. A representative from the insurance industry said that people should choose travel insurance based on their specific needs for a trip and that they should check the policies on offer to see what is covered. At which point someone else mentioned that their inusrance policy document was 80 pages long. Yes: 80 pages. So if you wanted to compare, say, five different policies you would have to 400 pages, which is around two of the early Harry Potter books.

Next time I want to get some travel insurance, I will use AI. There is no point travel insurance companies advertising on TV, sending me junk mail, e-mailing me specific offers or launching targetted campaigns via business partners. I guarantee you I will pay no attention whatsoever so any of these.

Given that, how will a travel insurance company attract my business? What can it offer to my bot other than price? Since I have no idea, I asked an AI. Based on what it told me, here are a few suggeestions:

Machine-readable policies that agents can process without having to read the 80 pages, with the coverage terms published as structured data. It occurs to me that it might be useful to have relevant laws (such as the EU rules about compensation for delays and cancellations in an agent-friendly form too).

Proof of paying out. Verifiable claims data: how often they pay, how fast they pay and what they turn down. I think a lot of commerce is heading this way, frankly, moving us toward a reputation economy that rest of what can be checked, not just claimed. This, of course, links with digital identity which is point I will return to.

Room to negotiate. An API that lets the bot adjust cover to the trip, not choose from three fixed tiers, could be to the insurance companies advantage, because it can tailor its offer more specifically via a richer dialogue with an agent. As a person, it would drive me crazy going back and forth over the cover and the conditions, but this what agents were made for.

Automatic payouts. Cover that pays when a flight is delayed or cancelled, with no need to argue about exclusions. This is the sort of thing that smart contract and stablecoin fans have been talking about forever, and they have a point.

Sharing only what’s needed. Accepting credentials the bot can present, such as age or pre-existing conditions, instead of making you fill in forms. This again highlights the need for digital identity as a fundamental enabler.

What this boils down to it that insurers who want to win will be the ones who are thinking about to market to machines. There is a wholly new science of behavioral econonics for agents wating to be born here.