Commerzbank releases latest edition of FI.News

Commerzbank has published the latest edition of FI.News, the bank’s newsletter for financial institutions. Featuring various in-depth articles and interviews, the biannual newsletter collects Commerzbank’s latest insights on the challenges and opportunities that lie ahead for financial services in today’s transformational times.

Financial institutions are understandably operating in challenging circumstances. Yet this edition of FI.News keeps its gaze firmly ahead –  exploring the ways that the current situation could be a catalyst for change in a number of areas, including digitalisation, trade finance, African trade and sustainable finance. The newsletter also provides latest news stories and internal updates from the Commerzbank Institutionals division.

Moorgate has produced FI.News since 2013. The latest edition may be found here.

Trust me, I’m a social media company

Facebook’s cryptocurrency Libra will need to gain the trust of the financial community, as well as the social media platform’s one billion active users. Perhaps its aims are too radical, writes Thomas Morris, Senior Partner at Moorgate Finn-Partners.

 

Some recently-announced heavyweight recruitment at Libra Association, the body overseeing Facebook’s stablecoin project, suggests both that the launch of the cryptocurrency is still on the horizon and that the intention remains the same: nothing less than a revolution for the payments industry.

The appointments in May and June this year (Sterling Daines has joined from Credit Suisse as Chief Compliance Officer, Robert Werner has been appointed General Counsel – with a CV that includes HSBC, Goldman Sachs and Bank of America Merrill Lynch – and Stuart Levey has been made CEO, joining from HSBC Holdings where he was Chief Legal Officer) prove that Facebook’s nascent cryptocurrency, Libra, is more than just a PR stunt. Rather, the scale and seriousness of its recent recruits tell a different story: that Facebook is on the brink of attempting a major shift in the global payments industry.

Whether it succeeds, however, may well depend on how the platform’s users now perceive their host.

The idea behind Libra is obvious and rational. There’s little doubt that the “bigtech” companies of Silicon Valley (and increasingly, China) are keen to re-shape the financial services landscape particularly with respect to payments. In fact, Facebook can be seen as a latecomer in this respect. Amazon Pay was launched in 2007 and even that was in the wake of Chinese online retailer Alibaba’s “digital wallet” Alipay, which was launched in 2004 and claims around one billion users. While both retailers – making a foray into the US$2 trillion payments industry highly-logical – it’s the bigtech companies’ data that gives them the edge over the traditional payments providers (i.e. the banks and credit-card companies).

Facebook has thousands of pieces of data – voluntarily submitted – that paint a detailed picture of who its users are friendly with, their tastes, and even their thoughts (well, public ones at least). As one of the world’s biggest advertising platforms it knows how to commercialise this data, and the temptation to add uplift services such as payments (which then feed-back yet more data about users) may be too large to ignore. Yet mining this data for commercial ends is ethically difficult – one not helped by well-documented data indiscretions at Facebook in the recent past. The scale of Libra’s impact will therefore come down to trust in Facebook.

So those new appointees at the arms-length Libra Association are part-and-parcel of Facebook’s attempt to convince clients – consumers and corporates – to swap traditional currency for Facebook’s algorithm-generated and maintained Libra coins. To trust the platform with their money: not just in holding dollars, euros and pounds but in converting their hard-earned post-tax savings into an invented currency (albeit likely backed by hard currency).

Trust – as many PR people will tell you – comes down to “being transparent”. Having clear and published policies – underpinned by strong ethics – and being open when it comes to day-to-day operations and regulatory compliance. Certainly, this is Facebook’s playbook: the Libra Association is nominally independent (like a central bank) and Facebook has doubled-down on trying to build trust: spending time and money updating its policies and products and advertising that fact (even on the old media its spent 16 years undermining).

But such transparency could equally be seen as an attempt to restore lost trust. And that, says “trust expert” Rachel Botsman (author of books such as Who Can You Trust?) makes transparency not quite the silver bullet PR practitioners propagate.

Speaking at Sibos in London in 2019, Botsman said that “if you need for things to be transparent, then you have practically given up on trust. By making everything transparent, you are reducing the need for trust”.

“Trust enables us to navigate uncertainty, place our faith in people and take leaps into the unknown,” says Botsman, which seems to be a long way from Facebook’s position with respect to Libra, despite the heavy investment.

Meanwhile, the purveyors of more traditional forms of payments such as banks and credit card companies – using old-fashioned central-bank issued, government backed currencies – will drive home the security and safety of their age-old method of value exchange.

So, given the above, how should the Libra project position itself? First, it should position itself not as a revolution but as complementary to the existing system. The “fintech disruption” narrative may help win over some customers, but not enough to make the investment viable over the long-term. The most trusted companies, meanwhile, are those that collaborate and cooperate with existing structures. Just as the best – and most trusted – financial institutions are those that don’t communicate fintechs (or even bigtechs) as a threat, but as innovators able to enhance their trusted products and services, so should the best fintechs return the complement. They are not “exploding” or “revolutionising” a particular corner of finance but rather improving it by making it more efficient, more consumer-friendly and (yes) cheaper.

Just as banks should be embracing the idea of Open Banking and welcoming (approved and compliant, of course) fintechs into the fold, so should fintechs embrace the existing payments infrastructure – that generates trust for all its inefficiencies and costs – and seek to enhance it. Win:win communications, in other words, rather than a zero-sum war that will only play well with youthful radicals that have little money to invest.

Given this, Libra’s grand “we’re going to change the world” claims may ultimately result in it doing no such thing.

Deutsche Bank uses Distributed Ledger Technology to provide global transparency

Deutsche Bank securities services has announced that it has successfully piloted a solution using distributed ledger technology (DLT) to enable further automation of custodial services.

Jeslyn Tan, Global Head of Product Management, Securities Services said of the initiative: “We are very excited about the opportunities that this solution, and the underlying technology, can bring for our future service model. We continue to remain focused on delivering products that increase efficiencies in the value chain, providing relevant and tangible benefits for our clients”

The news has been covered by: Global CustodianAsset Servicing TimesThe BlockchaincryptocryptonewsFinextraPostTrade360, Markets Media, Securities Lending TimesFinancial ITUpcrypto and Fintech Finance

ICC’s Olivier Paul discusses the unintended consequences of regulation on trade finance in Trade Finance Global Podcast

Olivier Paul, Director, Finance for Development at the International Chamber of Commerce (ICC), features in Trade Finance Global’s latest Trade Finance Talks podcast, to discuss the unintended consequences of regulation on trade finance.

Following the release of an ICC report on the topic, the podcast elaborated on the key steps to ensuring that regulation does not hinder the provision of trade finance, including the growing importance of digitalisation.

To listen to the podcast, please click here.

Commerzbank completes first Marco Polo transaction pilot, covered by specialist press

Commerzbank and Landesbank Baden-Württemberg (LBBW) have recently – for the first time – successfully executed the necessary data transfers to complete two commercial transactions via blockchain-based trade finance network Marco Polo.

“The transaction proves that blockchain technology offers our clients state-of-the-art financing for trade transactions,” says Nikolaus Giesbert, divisional board member for Trade Finance & Cash Management at Commerzbank. “We see a valuable opportunity here to work together to develop and bring to the market innovative trade finance solutions.”

News of the transaction was covered by: Banking Technology, Bitcoin Exchange Guide, BlockTribune, CMTFile, Coin Speaker, Coin Telegraph, CoinDesk, Der Treasurer, Disruption Banking, Financialit, FinExtra, Fintech Finance, FinTech Futures, Global Treasurer, Global Trade Review, Ledger Insight, The Paypers, TokenPost, Trade Finance Global, TRF News, TXF, TXF tracker (behind paywall), & Yahoo

Natixis joins blockchain platform for commodities trade finance, komga SA, covered by tier one, specialist press

Natixis has joined a new venture, komgo SA, a blockchain platform set to digitalise the trade and commodities finance sector. The venture, founded by Natixis and 14 of the world’s other largest institutions, aims to build an innovative, open and efficient network within commodity trading, optimising the flow of physical commodity operations.

The platform will be developed in partnership with ConsenSys, the largest formation of technologists and entrepreneurs building applications, infrastructure, and solutions on the Ethereum network.

The news was covered by the Financial Times, BloombergReuters, TXF, Fintech FuturesCoin Telegraph, Block Tribune, Ledger Insights, Coin Rivet, Finextra, Coindesk, Bitcoin Magazine, Crypto Vest, ETH News

RiskFirst quoted in P&I feature examining how evolving technology is key to improving efficiencies in asset servicing

In a special report on AI and technology in operations by P&I, Matthew Seymour, CEO of RiskFirst, describes some of the challenges of technology adoption and standardisation in the asset servicing industry. The report examines how the ongoing development of technologies – such as blockchain and AI – could not only drive efficiencies but also serve as a catalyst, encouraging all market participants to speak the same transactional language.

Seymour noted, however, that “cooperation among major players in the industry isn’t a given”. He said: “The biggest challenge is the vested interest of financial services market participants. Accepting AI will require some to change their businesses. Right now, the collection of data is a real gold mine for some companies. Their concern about maintaining or growing their data businesses, at the same time as AI and blockchain, will make data more accessible to everyone, will make the adoption of new technology more measured while firms assess how this will affect their business models. It’s not just technology adapting to business, but business adapting to technology.”

To read the full article, please click here. (Please note, this article lies behind a paywall).

ANZ and ICC Banking Commission’s Mark Evans quoted on the impact of blockchain on trade finance in The Banker

In an article for The Banker, Mark Evans – member of the International Chamber of Commerce (ICC) Banking Commission Executive Committee and ‎Managing Director, transaction banking, at ANZ – comments on the benefits of blockchain in trade finance.

Evans says that Distributed Ledger Technology (DLT) “enables every participant in the chain to be able to see all transactions or touch points in one ‘block’ of information. This provides a high level of visibility and transparency to the progress of the transaction.”

To read the article in full, please click here.

BNY Mellon’s Dino Sani examines how regtech could impact Latin American banks in BNamericas

In a commentary article for BNamericas, Dino Sani, Head of Treasury Services Latin America, discusses how regulation technology – or “regtech” – can enhance regulatory processes in Latin American banking. He examines the challenges banks are facing due to heightened compliance demands, the growing interest in regtech across the industry, and how regtech tools such as AI and blockchain technology could help to decrease compliance costs and improve efficiency.

To read the full article, please click here (please note, this article lies behind a paywall).

thyssenkrupp trades an FX forward over blockchain with Commerzbank

The first such transaction involving a large German company, Commerzbank’s €500,000 deal was covered by ReutersBanking Technology, The Trade, IBS Intelligence, coindesk, 4-traders, Blockchain News, The Blockchain, CoinShot, Blockshapers, The Paypers, Cypto Currency News, RTT News, coinzdaily, Econotimes Blockchain Revolution, Cryptocy News, Bitnews Today, Coin Telegraph, cryptovest, Finextra and Profit & Loss.