1 Asian banks on ‘burning platform’ (Chia Yan Min in Straits Times) Asian banks are on a “burning platform” but the biggest threat does not come from small fintech firms, says DBS chief executive Piyush Gupta.
Instead, large “platform” companies like Alibaba – which offer a range of banking services from lending to wealth management – are a more significant concern. Fintech firms are “attacking” every part of the banking value chain but very few have managed to scale up successfully, he noted. “Even the ones with a good value proposition or seem to be different are not able to hit the ball out of the park.”
This is because their solutions have yet to be proven – for instance, many fintech firms specialising in lending make use of credit models that have not been tested through troughs in the economic cycle. In addition, it can be extremely costly for fintech firms to build up a customer base from scratch.
Amid these challenges, small fintech companies are not as significant a threat to banks compared with large “platform” companies which are building ecosystems and tapping their existing customer bases to grow. Chinese tech giant Alibaba, for instance, offers payments, lending, wealth management and insurance services and has been growing these at breakneck pace.
The company gave out about 60 million lines of credit during its Singles’ Day shopping festival, Mr Gupta said, adding: “No bank in the world does that in a day. These companies have an installed customer base and so are a far more formidable challenge for banks.”
All is not yet lost for banks but they have to be willing to transform. This means there are opportunities for fintech firms to take part in that transformation, Mr Gupta said. “To be able to accelerate their own transformation, it makes sense for banks to work with fintechs… Banks are realising it’s not necessary to do everything on their own,” he added.
“This transformation will be achieved by only a minority… Some will succeed but many won’t. And when many don’t, there will be a huge opportunity for platforms and other non-bank companies.”
2 Commerzbank to cut 9,600 jobs (BBC) Germany’s second-biggest lender, Commerzbank, is planning to cut 9,600 jobs over the next four years and end dividend payments for the first time. In a statement, the bank said by the end of 2020 it would have “sustainably increased its profitability”.
However, the bank also said it aimed to create 2,300 new posts in areas where its business was growing. Last year, it had about 51,300 employees. The announcement comes amid denials that the German government is working on a rescue plan for Deutsche Bank.
Deutsche Bank, Germany’s biggest bank, is facing a $14bn (£10.8bn; €12.5bn) fine in the US for mis-selling mortgage-backed bonds before the financial crisis of 2008. Commerzbank’s strategy will see it concentrating on its “core” businesses of “private and small business customers” and “corporate clients” and digitising some processes.
Commerzbank is 15% owned by the German government, which took the stake to help the bank in the middle of the financial crisis in 2008. However, critics say that Germany’s banks have been far too slow to deal with the consequences of the credit crunch.
3 When India and Pakistan live by hate (IA Rehman in Dawn) To the people of the older generation in Pakistan and India, the present level of confrontation between their countries, especially the war of words between their media persons, sounds like a steep fall from the standards of mutual understanding and decency with which they used to treat one another not long ago.
There were wars between the two countries that did not rob the soldiers of respect for each other’s interest or dignity. We had a full-scale conflict in 1965, but there was no rupture in diplomatic relations. While tanks collided with tanks, soldiers in rival camps recognised each other as normal human beings and many of them treasured memories of days of comradeship.
Today Pakistani poets, actors and sportsmen are being hounded by Indian gangs. Can we ever forget the competition between Indian immigration staff when they noticed Ghulam Ali in the queue at New Delhi airport? How Nusrat Fateh Ali touched the hearts of India’s music lovers reminds one of the homage paid by Tamil Nadu pundits to Roshan Ara Begum by describing her as an incarnation of Saraswati. The way Abida Parveen won the hearts of a big crowd at the Connaught Place is recent history.
Today an Indian is prosecuted for cheering a Pakistani team and a Pakistani boy is sent to prison for applauding Virat Kohli. This change has not come suddenly. The state agencies have worked energetically for it and media has made the mistake of playing along.
What has gone wrong? The rise of politics of exclusion in both countries is a significant factor. The electronic media’s decision to carry the Kargil conflict into the homes of Indian and Pakistani citizens did a good deal of mischief. The media failed to respect the line that separates nationalism from humanism.
From then on, the media on either side has been losing its capacity to respect the other side’s history and interest of the masses. It gloats over the destructive powers of its military and ignores the failure of the two states to feed, clothe and educate nearly half of their populations.
It is time the Indian and Pakistani media realised the great harm to the people of the Sub-continent caused by their war of words, completely oblivious of the fact that the wounds caused by words take longer to heal than the wounds made by swords.
Modern states are becoming less and less amenable to public opinion. The media alone cannot determine what the states should do, but the world will be a much poorer place for everyone if it surrendered its right to tell them what they should not do.