The Daily Fintech Week Ended 23rd. September 2022
The Pound is supposed to have sunk?
What surprises me here is the way this event is reported by the British press. The pound is weak against the dollar and a number of other currencies but it is the strength of the dollar that is the real story. Can the UK do anything about this. Well not really. The Euro is also weak against the almighty greenback and the real story is that sterling has fallen albeit marginally against the single currency where the fundamentals including the once mighty German powerhouse are all going in the wrong directions very quickly. Germany however has a manageable gdp/total debt ratio for now. The ECB is awash with debt and the markets are glibly assuming that when push comes to shove the Germans sensitive as they are to inflation will simply sign the cheques. I am not quite so sure. But the strength of the Dollar is certainly not about economic strength or US government stability. It is more a reflection of the fear stalking western markets across the board.
How overexposed are the German Banks
There have been a few apocalyptic pieces in the British newspapers over the last few days about the major policy failure to wean itself of Putin’s gas. German manufacturing industry is rightly recognized as being the most technically advanced and competitive in the world. My concern is however that the banks supporting this economy are having to do this on the back of several existential threats. A huge increase in energy costs and shortages throughout the winter, a huge downturn in orders and confidence, problems with supply chains and soaring inflation. All this on the back of a rather shaky looking political alliance which looks like it is trying to go both ways at the same time. The German banks wee not that strong to start with. God knows what a stress test analysis would look like now.
Digital Startup Revolut Hacked
Revolut has been hacked in a phishing attach which affected approximately 50k clients. So the story goes there is nothing really to worry about and prima facie that seems to be the case. Revolut’s banking license come from Lithuania but the bank is selling it’s services worldwide. I wonder how much though has gone into what would happen if a truly massive fraud struck one of these minnow banks based in a quite small economy. There was a lot of talk in 2008 about banks being too big to fail. In Lithuania I am pretty sure that Revolut would be too big to fail. No disrespect to lithuania’s banking authorities but it is just a small country. I can’s see anyone riding to the rescue.
Howard Tolman is a well-known banker, technologist and entrepreneur in London, We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information. For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives. Daily Fintech’s original insight is made available to you for US$143 a year (which equates to $2.75 per week). $2.75 buys you a coffee (maybe), or the cost of a week’s subscription to the global Fintech blog – caffeine for the mind that could be worth $ millions.