Goldman expands consumer push; HSBC’s blockchain first

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Fighting cybercrime: Capital One has acquired Confyrm, a San Francisco-based digital identity and fraud alert startup, which the credit card company believes will “accelerate its development and implementation of consumer identity services.” Confyrm’s system offers “early notifications of suspicious account activity, in order to mitigate the impact of fraud or account theft for identity providers and consumers alike,” Yahoo Finance said.

While “spending billions of dollars annually” to fight cybercrime has “improved our defenses, it is becoming clear that throwing money at the problem will not be enough to solve it; we need better ideas,” writes Bill Winters, CEO of the U.K.’s Standard Chartered Bank. In an op-ed, he offers three suggestions “that offer a possible breakthrough in how we fight financial crime.”

Meanwhile, Bank of America is in the early stages “of experimenting with how artificial intelligence could help improve fraud detection, but first, executives say they need to understand how the algorithms actually work,” the Wall Street Journal reports. Bank of America tech executive David Reilly discusses the bank's AI experiences.

Blockchain breakthrough: HSBC has completed what the Financial Times is calling “the world’s first commercially viable trade-finance transaction using blockchain, opening the door to mass adoption of the technology in the $9 trillion market for trade finance.” The bank said it processed a letter of credit for Cargill, the big American agribusiness, which shows “the platform [is] ready to be commercially adopted across the industry.”

That’s fine, but most people in the business world are “skeptical, turned off by the hype, but hedging their bets by getting on the learning curve with prototypes and experimentation,” the Wall Street Journal reports.

But one believer is Blythe Masters, the former JPMorgan Chase executive who helped create credit-default swaps, who is now focusing on the “potentially transformative” uses of blockchain. Masters “an early Wall Street convert to cryptocurrencies,” is now CEO of Digital Asset Holdings, “a startup looking to bring blockchain to traditional financial firms like banks and exchanges, before most bankers and traders embraced the technology.”

Wall Street Journal

Flipper: KKR & Co. is increasing its investment in Toorak Capital Partners, a New Jersey-based company that purchases loans to house flippers and other residential rehab specialists. The deal, which raises KKR’s bet to $250 million from $75 million, is “the latest sign that Wall Street firms are aiming to cash in on the risky but lucrative house-flipping market,” which is expected to grow by nearly 25% this year to $15 billon. Toorak, which buys loans from originators in both the U.S. and the U.K., has bought more than $1 billion of loans.

Financial Times

Taking Europe: Goldman Sachs’ Marcus consumer lending unit is planning to launch a savings product in the U.K. next month, followed by consumer loans next year or later and a move into Germany after that, said Richard Gnodde, the head of the bank’s international business. “We’re very focused on the better end of the credit spectrum and that’s where we’ll stay,” he told the paper.

Realignment: The senior management shake-up at Deutsche Bank continues, this time at its corporate and investment banking division, its largest unit. Mark Fedorcik, the head of corporate finance in the U.S., and Ram Nayak, head of fixed-income trading, were named co-presidents of the division. The unit is headed by Garth Ritchie, who was promoted to that role last month.

Fedorcik told the paper the bank will no longer tolerate underperformers “as it tries to emulate Wall Street rivals such as Goldman Sachs,” which routinely sheds the bottom 5% of employees each year.

Turning point: British banking — although the same may be said for its American counterpart — is in “an Uber moment — a sudden, significant shift in customer habits wreaked by new technology,” says Antony Jenkins, a former group chief executive of Barclays and founder of 10x Future Technologies. “In the future, the most significant factor in the battle between challengers and incumbents will be technology, which is driving a fundamental transformation of financial services,” he writes in an op-ed. “Agile, relentlessly customer-focused businesses will triumph over those that rely on their size.”


“The scale and pace of development mean that there’s a real risk that AI can change the nature of the workforce much more quickly than reskilling can take place.” — Cathy Bessant, Bank of America’s chief operations and technology officer.

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