Snippings

The just-published fourth report in the series on The Future of Banking from the IESE Business School identifies payment systems as one of the key challenges for banks moving forwards.

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The digitalisation of financial services presents formidable tests for incumbent financial intermediaries, firms, exchanges and regulators. The fourth report in the series on The Future of Banking examines the growing impact of technology on financial markets and institutions and identifies the key challenges in payment systems, the use of big data and trading in markets.

From Technology and Finance | VOX, CEPR Policy Portal:

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Data can also inhibit competition. Firms obtain data from transactions. More data begets
more activity and still more data, and returns to scale are obtained as firms increase size.
This data feedback loop might create problems for competition since, as a firm becomes
larger, it might monopolise the market. If this happens, the efficiency gains may not be
passed on to consumers, which could be detrimental for welfare. In financial services,
the policy tension is between extending the perimeter of bank regulation to all financial
service providers and thus constraining financial innovation (and implicitly extending
a state protection umbrella to the new entrants) or keeping the new entrants out of the
regulatory perimeter completely and tilting the playing field in their favour.

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But when I check in on the discourse, and I witness people only slightly younger than myself earnestly discussing the merits of action-hero movies that as far as I can tell were generated by AI, or at least by so much market data as to be practically machine-spawned, I honestly think I must be going insane.

From It’s All Over | The Point Magazine:

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But if you charge fees in the hyper competitive world of crypto you will lose market share. So the incentive has always been to play the “delta one” game. I.e. take the proceeds and invest them in assets that will OUTPERFORM the dollar.
You then get to pocket any outperformance for yourself while returning the par value dollar return to the customer. The least risky way to do this is to invest in higher yielding “safe assets” that are highly correlated to the dollar.

From Why financial engineering has gone full circle with Terra – The Blind Spot:

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chipsets launching with Android 13 must support the Identity Credential Hardware Abstraction Layer (HAL) at feature version 202201 or later

From Google is changing how new Android 13 devices should store driver’s licenses.

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Top Opportunities for Trusted Identity Service

eCom Fraud – Mid-Tier merchants with high fraud rates (ex Airlines, Hotels, Auto Rental, AirBnB, Auto supply, …etc) – $2B in US. The top opportunity is for processors to integrate, next is for eCom specialists (Stripe, Shopify, Adyen, …)
Non-FS account opening (government, healthcare, insurance, …etc) – $200M 
Age verification (gaming, car rental, cannibas, alcohol) ($500M)
New Consumer Direct Use Cases – Document Signing – $100M (2 yr view)
Add identity to something else.. commercial contracts, online dating, used car sales,

From Authentify – Bank ID Service – Noyes Payments Blog.

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Huw van Steenis, Co-chair of the Global Future Council on Responsive Financial Systems at The World Economic Forum, and someone who I always take very seriously on such topics, writes from Davos that he met a number “giants of the payment world” who said that the largest stablecoins are now hoping for regulation (and in fact arguing behind the scenes for such).

The just-published fourth report in the series on The Future of Banking from the IESE Business School identifies payment systems as one of the key challenges for banks moving forwards. It similarly reinforces the need for regulation around stablecoins and highlights the issue of whether fintechs have access to central bank accounts. This is because if a digital currency is to be a substitute for commercial bank deposits, then non-bank issuers must commit to guarantee the one-for-one convertibility with public money. The lack of access to central bank accounts and liquidity facility services complicates such a commitment, which threatens to jeopardise the stability of such alternatives.

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The historian Niall Ferguson told me during the global financial crisis that he wished more central bankers and financiers had studied history, not economics. He was right. The decentralized finance world is getting a pacey lesson in the history of finance – whether currency pegs breaking, runs on funds and the mechanisms to build trust in money.

From What I learned at Davos 2022 – from a financial futures expert | World Economic Forum:

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The Age Verification Providers Association (AVPA) is creating a US division, in response to the rapidly growing demand across North America for technology that delivers rigorous digital age checks. Whether it is to create social media accounts on well-known platforms such as Meta, Twitter, TikTok, Instagram or Reddit; to buy age-restricted goods, such as alcohol, vaping products or even marijuana; to access online gambling, as it is rapidly legalized by individual states; or to help websites comply with child safety laws such as the Children’s Online Privacy Protection Act (COPPA), demand for online age verification which goes beyond simply asking a user to check a box or input their date of birth, is soaring.

From New Trade Body Launches, Representing High Quality, Privacy-Preserving Online Age Verification Providers in North America – AU10TIX:

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‘Crypto muggings’: thieves in London target digital investors by taking phones

From ‘Crypto muggings’: thieves in London target digital investors by taking phones | Cryptocurrencies | The Guardian:

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One victim reported they had been trying to order an Uber near London’s Liverpool Street station when muggers forced them to hand over their phone. While the gang eventually gave the phone back, the victim later realised that £5,000-worth of ethereum digital currency was missing from their account with the crypto investing platform Coinbase.