The Bankwatch

Tracking the consumer evolution of financial services

The implications of weak western reaction to online terrorism from North Korea loom large

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Why does threat from N. Korea produce appeasement, while threats from Islamic terrorists produce resilience? My take

Freed Zakaria asks a deep question here. For years I and millions of others have observed the development of internet, debated privacy and security. We have generally promoted the openness of internet and the advancement that brings to society as a good thing that might even make some shortcuts acceptable.

But the news tonight is conformed that the NSA and others have validated North Korea, a country, actively sought out Sony admins and gained access to the Sony network. This allowed them to gain intelligence on movies, employees and actors information. It was interesting to listen to Fran Townsend (3rd US Homeland Security Secretary) on CNN this evening as she noted Sony’s biggest concern now is class action suits from actors and studios because they dropped the ball on this. North Korea also threaten terrorist action against movie theatres.

But the larger question that Fareed asks is most interesting.

One of the nastiest regimes in the world effectively threatened to launch terrorist attacks in the United States if an artistic work was shown publicly. And, stunningly, almost everyone involved has caved.

Fareed draws an interesting comparison with Hitler in the late 1930’s (just before WWII) when the British Prime Minister Neville Chamberlain’s government wanted to ban the distribution of “the Great Dictator” in Britain. This was a movie satire of Hitler. Needless to say the reality that giving in to a bully never works was amply proven between 1939 and 1945.

Aside from the incompetence displayed by Sony in apparently permitting unfettered access to their network for months, we cannot allow internet to become a weapon of choice for the likes of North Korea. What would be next? Maybe they gain access to newspapers, high schools or banks. What other potential disruption to our society could online terrorists bring.

This one time the privacy advocates should take a deep breath and be pleased we have the NSA/ GCHQ/ etc on our side. The Intercept is particularly quiet on this.

Written by Colin Henderson

December 19, 2014 at 00:59

Posted in Uncategorized

Treatment of Derivatives on US bank balance sheets is swept under the table

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SEC. 629. From the unobligated balances available in the Securities and Exchange Commission Reserve Fund established by section 991 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111– 203), $25,000,000 are rescinded

With that (on P615 of the US Omnibus Spending Bill H.R. 83) the single largest concern from the 2007 banking crisis, which was front and centre in the Dodd Frank legislation is quietly removed. Derivatives.

Banks won a measure easing restrictions on their derivative-trading activities.

The change would affect requirements under the Dodd-Frank law that banks spin off certain derivatives-trading activities into units that don’t enjoy access to the government safety net.

The practical impact is simple. $670 trillion in contingent liabilities of US and foreign operating in US banks, can remain on their balance sheet, which means:

  • any debts that arise as a result of those derivatives are part of the banks’ liabilities and in case of default would benefit from any taxpayer bailout
  • the commercial transaction that derivatives support, such as currency hedging, benefit form the lower cost of funds that on balance sheet funds attract.

The whole thing is swept under the carpet in support of last minute support to keep the US government from running out of funds again.

Written by Colin Henderson

December 13, 2014 at 20:14

Posted in Uncategorized

How not to manage IT failures

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These are not quotes you want to see following a catastrophic IT failure such as hit UK NATS just now.

Traffic control failure hits London flights

  • He added: “We think it’s the whole of the UK,”
  • He added the airport had no idea precisely what caused the problems. “We’ve got no idea how long it’s going to last. We’ve got no further information at the moment.”
  • NATS said its engineers were en route to Swanwick to identify the problem. They would not give any further details but other than that it is a “technical problem” [ed. en-route from where one wonders?]


Written by Colin Henderson

December 12, 2014 at 11:37

Posted in Uncategorized

BBVA acquires big data startup Madiva | Finextra

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BBVA continue on their non-traditional bank approach following their purchase of Simple. This purchase is equally interesting being a company that is engaged in that persona non grata capability for bank regulators … the cloud!

BBVA acquires big data startup Madiva

BBVA has acquired Spanish big data and cloud computing startup Madiva Soluciones as part of its strategy to buy up companies that are developing new technologies and disruptive business models.

Madiva Soluciones or Grupo Madiva – this from their home page translated by

BBVA has agreed to buy Madiva Solutions, a Spanish-based startup specializing in big data and cloud computing services. The operation is part of the process of transformation of BBVA Group to lead the financial industry in the digital era.

“Big data is a strategic area for BBVA and strengthens our capabilities Madiva immediately,” explains Carlos Torres Vila, Head of Digital Banking BBVA. “Madiva undoubtedly contribute to a better deal for our customers.”

Founded in December 2008 and headquartered in Madrid, Madiva reached profitability in its first year of business with products for companies in sectors such as insurance, banking, real estate and consulting. Their services simplify existing processes and create new business opportunities by processing massive unstructured data and information available online that intersects with other sources. His system for the appraisal of massive property portfolios hours reduced to a process that lasted months earlier. Madiva continue to operate as an independent company after the acquisition, based on BBVA and other customers.

“If a bank that really is betting on big data is BBVA,” said Juan José Divasson, CEO of Madiva. “We wanted to be part of the company that has best understood the potential of what we do.”

Madiva is the second purchase of a digital company after the acquisition of Simple in the US in February this year. Acquisitions of companies that are developing technologies and disruptive business models is an axis more in comprehensive transformation of BBVA to build the best customer experience in the digital era.

Written by Colin Henderson

December 10, 2014 at 23:42

Posted in Uncategorized

Bank-backed QR code-based mobile payments app launches in Belgium | Finextra

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Another interesting payment/ P2P payment play, this time in Belgium. What sets this one aside is the co-operation amongst banks to provide a common standard and method.

Bank-backed QR code-based mobile payments app launches in Belgium

Customers who download the app, pick their bank and add a Bancontact card before creating a six-digit code. To make instore, P2P and online payments, users then enter this code and scan a QR squiggle.

The partners say that, thanks to the six-digit code, and because no data is stored on the phone, security is guaranteed. Card details are no longer stored in the seller’s database when making online or in-app payments.

Written by Colin Henderson

December 8, 2014 at 23:27

Posted in Uncategorized

CIO wanted; major entertainment, gaming company

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It should be a safe bet the current person in that role at Sony, if he wasn’t gone after last weeks fiasco, then todays information about the PlayStation network being hacked and taken down, should do it.

In the land of fintech we have many discussions about security risk, adequacy, potential over-reaction and generally finding the right balance between risk, and cost. Sony are a company highly dependent on technology but do not have the regulatory oversight banks have in the cybersecurity space. Sony do have the oversight however from customers and shareholders, that will ultimately determine their fate.

Sony were almost out of business prior to establishment of Abenomics. In 2011/12 Sony were going out of business financially due to losses. This was a common corporate problem for Japanese companies due to the significantly increased value of the Yen as foreign investors viewed Japan as a ‘safe have’ to park investments.

In simple terms, Abenomics reduced the value of the Yen against currencies which were represented by Sonys markets, and increased Sonys profits by 30%. This unfortunately required to change in anything Sony did so they probably were resting on their laurels, happy to have survived.

Sony needs an overhaul.

Written by Colin Henderson

December 8, 2014 at 11:00

Posted in Uncategorized

More on the UK centralized KYC initiative

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More on previous post and the underlying intention behind the UK governments intentions.

Standardised APIs to be used to facilitate data portability in banking

Anderson also said that the use of standardised APIs in banking would create a much more public source of data about customers and said there would be certain parallels with a ‘know your customer’ (KYC) data sharing initiative that is being developed by the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

Basically what I take from these posts is that UK is supporting the SWIFT initiative to better co-ordinate KYC between banks with a centralized KYC database with free access to all participants. The intention here is to reduce the due diligence effort involved in taking on new customers that have already been onboard into the banking system. This aspect can only be better for consumers, and hopefully reduce bank costs. The latter worries me. This ‘new KYC database’ would only reduce costs, if existing screening efforts were to be eliminated. That would be a harder task.

Written by Colin Henderson

December 7, 2014 at 21:09

Posted in Uncategorized


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