Innovation in banks: Barklays, RBS, Citi, Standard Chartered

BLOOMBERGVIEW: What kind of chief executive does a big modern bank need? Apparently not a traditionally hypercompetitive investment banker like Anshu Jain, who lost his co-CEO job at Deutsche Bank last month — but evidently not a quiet retail banker like Antony Jenkins, Barclay’s freshly ousted chief, either.

Perhaps the reason it’s so hard to find a leader who can credibly run all the diverse parts of a big universal bank is that such institutions are doomed.

Jain and Jenkins had opposite ideas about which businesses were core to the crisis-racked banking empires they inherited.

True to his high-octane Wall Street personal history, Jain concentrated on investment banking and scorned the retail part. In his April presentation on Deutsche’s strategy, there were four slides titled “Reshape Retail,” but two of them dealt with divesting Postbank, the omnipresent German Main Street lender that Deutsche had acquired in 2010, and one of them focused on making Deutsche’s retail operation more like its investment banking one, turning it into “a leading advisory bank.”

Jenkins, who had only ever worked in retail and corporate banking, declared that the investment bank built up by his flamboyant predecessor Bob Diamond would be “a smaller part of the group going forward.” In an interview last year, he said 85 percent of the assets he wanted to “exit or run off over time” were from the investment bank. The U.K. retail bank remained his favorite, and he took an obvious pleasure in its technological rearmament. So the investment banking part of Barclays’ business struggled, providing 12 percent less net revenue in 2014 than it had in 2013, while the retail and corporate part showed the kind of placid growth this business is capable of, 1 percent in the same period. Read the full article

THE GUARDIAN: Dissatisfaction with the banking sector over the last decade has led to numerous calls for the industry to change. Last month, the governor of the Bank of England spoke of how the UK financial sector bears the scars of a market gone wrong, while others have highlighted how the oligopoly of our big five UK banks are not only too big to fail and too big to jail, but simply too big to compete and unable to serve customers needs.

Transforming the system from within is one way to do bring about change, for example by turning The Royal Bank of Scotland into a network of local banks. In a report published earlier this year, my colleague Tony Greenham demonstrated how doing this would transform the face of UK domestic retail banking and bring significant economic benefits in the process.

But there is also a second transformation picking up speed, one which comes from outside the financial establishment. This transformation is set not only to cut prices for business and consumers, but also to introduce a host of new services and opportunities beyond what even challenger banks – new rivals of the big lenders – can be expected to deliver.

By combining recent technologies with age-old practices that now cover all areas of banking, new practices are emerging that go beyond what was previously possible. It short, it is now possible to bank without banks. Read the full article

NEF: We have a unique opportunity to rebuild public trust in the UK banking sector. Restructuring RBS into a network of local banks with a public service mandate and supervised by citizen stakeholders would transform the face of UK domestic retail banking and bring significant economic benefits.

The total price paid by taxpayers for their majority stake in RBS since it was rescued from bankruptcy by a large injection of public funds in 2008 has now exceeded £45.5 billion. With questions over the future of RBS placing the public interest at stake, the persistent assumption that the bank should be returned to the private sector deserves greater consideration, scrutiny, and debate.

We question whether privatisation is really the best strategy for the future of RBS, and consider an alternative that would create greater economic benefit for the country as a whole, including taxpayers. There are considerable uncertainties about the amount of money that could be raised by the government through a sell-off, how soon it could be raised, and whether it would be possible to avoid making a loss on the sale. But these are not the only grounds on which to question the Chancellor of the Exchequer’s intention to return RBS to private ownership as soon as possible. Read the full article

TECHCRUNCH: In a move that should be of no surprise to anyone familiar with the space, Citibank has admitted to running a test platform for digital currencies and is pondering its own solution, CitiCoin.

According to the International Business Times, Citigroup has built its own digital currency based on bitcoin and the blockchain. This, in itself, isn’t very difficult – anyone can create a cryptocurrency in a few seconds with a bit of programming knowledge. But the fact that Citibank, at least in its R&D arm, is looking into the technology is promising.

The IBT quoted Kenneth Moore, head of Citigroup Innovations Lab:

Moore said: “We have up and running three separate systems withinCiti now that actually deployblockchain distributed ledger technologies. They are all within the labs just now so there is no real money passing through these systems yet, they are at a pre-production level to be clear.”We also have an equivalent to bitcoin up and running, again within the labs, so we can mine what we call a ‘Citicoin’, for want of a better term. It’s in the labs, but it’s to make sure we are at the leading edge of this technology and that we can exploit the opportunities within it.”

Moore also saw this as a way to move money from country to country and foresaw an internal “mining” network that allowed endpoints to generate the work necessary to maintain the ledger. Read the full article

TODAY: There was a time when going to the bank meant gearing up for a long wait — well-used passbook in hand — just to make a deposit, withdraw cash or perform most banking-related tasks. Then came the advent of digital channels and an array of financial innovations.

As banks seek to strengthen their position in the digital space globally, with their sights trained on harnessing future technologies, the biggest changes — from a consumer’s perspective — are mobility and a reduced reliance on physical branches, said Standard Chartered Bank’s first group chief innovation officer Anju Patwardhan.

 “Today, it is all about coming out with applications and processes in making services conveniently available to consumers round the clock, in a fuss-free manner, in a way they want it and on devices of their choice. Banks will have to rapidly evolve accordingly,” she told TODAY. Read the full article