237. News: You've got to spend money to make money
On this week's news show, Ross and David are joined by a great pair of guests, Eric Fulwiler and Teana Baker-Taylor to talk about the latest and greatest fintech news stories this week.
Ross and David sit down with Eric Fulwiler, Executive Director of VaynerMedia and Teana Baker-Taylor, Chief Marketing Officer of Coinfloor. The group discuss the latest news hitting the fintech space this week, including:
Challenger bank fury over delays to RBS funding scheme, Revolut reported suspected money laundering, EU wants more competition in fintech, Klarna’s payment card, M-Pesa looks to Ethiopia for expansion, Paypal invests in cross border payments, Payment rules create $1bn in losses for Chinese giants, and Kodak’s bitcoin rigs have had their moment as well as many more stories.
We kick things off with challenger banks getting angry over the extended delays to RBS' £775M fund to boost competition in the small business banking market. Payouts have been delayed due to failure to make senior hires on time.
Several challengers including Santander, Starling, Metro Bank and CYBG have been preparing bids for the cash, but a number have complained of being left in the dark and out of pocket because of the delays. Communication around the scheme has been “threadbare” but challengers are spending a lot of time and money on their applications for a piece of the fund. The panel discusses whether challenger banks should be relying on this funding at all or indeed spending their own money on applications, whether the banks are just desperate for free money and why executive hiring is having any impact on handing out funding.
Next up we move on to the news that Revolut discovering a spate of money laundering on its digital payments system. There are huge implications from a KYC perspective, after HSBC were basically deemed complicit in Mexican money laundering after its KYC was deemed too lax. The panel discusses what this might mean for Revolut especially in regards to their application for a banking license and the larger reputational impact for fintech in general. Then the panel moves on to the EU pushing for more competition in the fintech space. Is the international body behind the times and making unfair assumptions of the industry? How can fintech be more competitive and how old does fintech have to be before it starts to count? The panel discusses all these things and has some interesting takes on the issue.
Moving on to better news for the fintech industry, Klarna is launching a payment card and is preparing for expansion. Klarna’s 2,000 workers have been divided into 250 teams, each focusing on a specific problem for customers and how to solve it. Does this prove that digital is a small team sport? Klarna also faces difficulties breaking into the US and UK, two countries with little history of consumers paying by invoices. So, the question remains, can Klarna make headway in the UK? And calling back to the previous story, the panel examines whether this is creating competition within EU fintech.
Speaking of expansions, M-Pesa looks to move in to Ethiopia. Could M-Pesa transform the Ethiopian economy in the same way as it has in Kenya? The panel discusses the state of fintech in the country which has no transference options in place at all and 'archaic' systems are ready for reform to help the economy. Tieing in seamlessly to the story, the panel looks at Paypal investing in cross border payments with P-PRO, a cross border payment platform for merchants looking to accept payments from other countries. The panel discuss why PayPal is investing so heavily in the payments space, if anyone previously heard of P-PRO, and how it compares to Mastercard enlisting Worldpay to push Vocalink's Pay by Bank app.
Staying international, the panel next looks at losses in revenue from payment rules from the People's Bank of China. Chinese giants Alibaba and Tencent have lost $1BN thanks to these rules, but is $1BN a big deal to Alibaba and Tencent? Is 1.7% of revenue a big loss when your businesses move trillions of dollars? Is this move by the PBOC unprecedented, and is it likely to be rolled out anywhere else? Moving on to the tailend of the show, a scheme to rent out Kodak-branded bitcoin mining rigs has collapsed. The company, Spotlite, has had the scheme blocked by the US financial watchdog. This follows from the scheme being dubbed a scam by some critics, it's worth noting that Kodak and Spotlite had claimed customers would make $375 a month from the rigs but forgotten that mining Bitcoin becomes more difficult over time.
And finally, Prime Day technicial issues resulted in a Prime Fail from 3pm EST when moments beforehand reports came in that Amazon's website wasn't working. Amazon issued a statement to say they were working on it at 5PM and instead of deals people were shown pictures of dogs looking sad. Customers missed out on deals, baskets were unexpectedly emptied and the “view deals” UX was taking people on an endless loop.
All this and so much more on today's episode of Fintech Insider!
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This week's episode was written and produced by Laura Watkins and edited by Holly Blaxill.
Special Guests: Eric Fulwiler and Teana Baker-Taylor.
- Challenger banks angry over delays to £775m RBS funding scheme
- Fintech company Revolut contacted police and regulator over money laundering worries
- EU takes issue with anticompetitive fintech
- Subscribe to read | Financial Times
- Exclusive: Kenya's Safaricom taking M-Pesa to Ethiopia, sources say | Reuters
- PayPal leads $50M round for cross-border payment specialist PPRO
- Mastercard enlists Worldpay to push Vocalink's Pay by Bank app
- Subscribe to read | Financial Times
- The rentable Kodak-branded bitcoin mining rig has failed - Business Insider
- Here Are The Funniest Things People Said About Prime Day's Technical Issues