Banks test wearable payment devices; fintechs charge ahead

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The future of money?
Banks and tech startups in Europe are testing "wearables" – rings, watches, bracelets, key rings, fobs and wristbands – that are linked electronically to debit or credit cards, the latest technology to move payments away from plastic cards and mobile phones. ABN AMRO is testing the technology in the Netherlands, while Barclays is offering stickers to customers in the U.K. that can "turn almost anything into a payment device."

Indeed, Europe is farther ahead of the U.S. when it comes to mobile banking and financial technology in general, and their respective regulatory regimes have a lot to do with it. "While some policymakers in the United States are trying to make it easier to open new banks, progress has been slow," the New York Times reports. "States do not want to cede oversight, and without a license, American financial start-ups must set up partnerships with traditional banks to hold deposits."

By contrast, "support from regulators in Europe has given momentum to companies entering the market there." In the U.K., for example, "officials have been concerned about the power of large banks in the wake of the 2008 financial crisis, and they see the start-ups as weakening the hold of traditional lenders."

It's not just retail banks that need to be worried. "Europe's asset management industry is likely to have an abrupt wake-up call as two of the fastest-growing fintech companies [Revolut and Plum] have their sights set on disrupting the industry with cheap and easy-to-use investments that suit customers traditional managers find hard to attract." Revolut, which has 2.6 million customers in Europe, is in the process of offering exchange traded funds, while Plum, a robo-adviser tool, is rolling out six funds to its customers on Monday. The company counts Vanguard as one of its partners.

Wall Street Journal

Leaving the Fed alone
President Trump's recent nominees to the Federal Reserve indicate that the White House "isn't spoiling for a fight" with the Fed as it continues to raise interest rates. "His selections have mostly been non-ideological, pragmatic policy experts who are well regarded within the Fed rather than central bank antagonists likely to push for a dramatic course change," the Journal notes. "The latest to fit this mold is former veteran Fed economist Nellie Liang," who was nominated last week.

"If the Trump administration wanted greater direct influence over the Federal Reserve, nominating a well-respected former Federal Reserve staff member [like Liang] would not be the way to achieve that objective," said one economist.

Financial Times

Now the real battle begins
Last week's $6.2 billion settlement of the class action lawsuit between the credit card networks and American retailers "may look large, but in the context of the amount spent on cards and the fees merchants pay, it is remarkably small." But it's also not the end of the story for Visa, Mastercard and large U.S. banks, which have been sued by merchants over the swipe fees they charge. The settlement "brings card issuers scant relief," the FT says, and the "main battle over rules imposed on merchants begins next year."

Welcome to the big leagues
Invesco's plan to buy OppenheimerFunds and its $248 billion in assets under management would push the company's aggregate assets under management to more than $1.2 trillion, "placing it in the upper echelons of the global industry along with Fidelity, BlackRock, Vanguard, Capital Group or Amundi." MassMutual put OppenheimerFunds up for sale earlier this year.

Reprimanded
Royal Bank of Scotland and Barclays were called on the carpet by the head of parliament's Treasury select committee after suffering IT disruptions last week. "This is yet another addition to the litany of failures of banking IT systems," Nicky Morgan said. "High street banks justify the closure of their branch networks on the basis that they are providing a seamless online and mobile phone banking service. These justifications carry little weight if their banking apps and websites cannot be relied upon."

Quotable

"The goal is not to be just another medium-size bank — we want to become the Amazon of finance." — Chad West, head of marketing at Revolut, a European fintech company.

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