financial services – Nioga http://nioga.net/ Sat, 12 Mar 2022 04:44:35 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://nioga.net/wp-content/uploads/2021/10/icon-120x120.jpg financial services – Nioga http://nioga.net/ 32 32 Retail banking IT spend market set to explode: Teradata, HP, Capgemini https://nioga.net/retail-banking-it-spend-market-set-to-explode-teradata-hp-capgemini/ Fri, 11 Mar 2022 13:00:28 +0000 https://nioga.net/retail-banking-it-spend-market-set-to-explode-teradata-hp-capgemini/ Retail banks are spending in emerging technologies such as basic banking, analytical technologies, online banking, mobile banking, channel management and others which are influencing the growth of the market. The rise in cyber attacks has significantly increased the adoption of cloud-based technology, which further propels the growth of the retail banking IT spending market. Retail […]]]>

Retail banks are spending in emerging technologies such as basic banking, analytical technologies, online banking, mobile banking, channel management and others which are influencing the growth of the market. The rise in cyber attacks has significantly increased the adoption of cloud-based technology, which further propels the growth of the retail banking IT spending market.

Retail Banking IT Spending Market research is an intelligence report with meticulous efforts undertaken to study the correct and valuable information. The data that has been reviewed takes into account both existing top players and upcoming competitors. The business strategies of key players and new industries entering the market are studied in detail. A well-explained SWOT analysis, revenue share and contact information are shared in this report analysis. It also provides market information in terms of development and its capabilities.

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Prominent players in the global retail banking IT spend market are constantly investing funds in the research and development of next-generation healthcare IT solutions. These players want to expand their presence in cloud-based retail banking IT expense management solutions.

Some of the major key players in this market are Teradata, HP, Capgemini, Accenture, Unisys, Microsoft, Intel, Fujitsu, Dell, Oracle, Infosys, IBM, FIS, Cisco Systems.

Various factors are responsible for the growth trajectory of the market, which are studied extensively in the report. In addition, the report lists the constraints that threaten the global economy Retail Banking IT Spending Market. This report is a consolidation of primary and secondary research, which provides market size, share, dynamics and forecasts for various segments and sub-segments considering macro and micro environmental factors. It also assesses the bargaining power of suppliers and buyers, the threat of new entrants and product substitutes, and the degree of competition prevailing in the market.

Impact of COVID-19 on Retail Banking IT Spending Market:
COVID-19 is an unprecedented global public health emergency that has affected almost every industry and its long-term impact is expected to impact industry growth over the forecast period. The IT Spending in Retail Banking market reports provide insight into COVID-19, considering changes in consumer behavior and demand, purchasing patterns, rerouting of supply chains, current market dynamics and significant government interventions. The updated study provides insights, analysis, estimates, and forecasts considering the impact of COVID-19 on the market.

Global Retail Banking IT Spending Market Segmentation:

Market Segmentation: By Type

Basic banking services, online banking, mobile banking, channel management, internal operations, analytical technologies, increased internet penetration

Market Segmentation: By Application

Hardware, Software, Services

Global Retail Banking IT Spending Market research report offers:

  • Market definition of the Global Retail Banking IT Spend Market along with the analysis of different influencing factors such as drivers, restraints, and opportunities.
  • In-depth research on the competitive landscape of global retail banking IT spending
  • Identification and analysis of micro and macro factors that have and will have an effect on market growth.
  • A comprehensive list of major market players operating in the global Retail Banking IT Spend Market.
  • Analysis of various market segments such as type, size, applications and end users.
  • It offers a descriptive analysis of the demand-supply chain in the global retail banking IT spend market.
  • Statistical analysis of some significant economic facts
  • Figures, tables, graphs, images to clearly describe the market.

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Major regional markets examined methodically in the research report are North America, Europe, Japan, China, India, and Southeast Asia. North America is expected to account for a substantial share of the market over the forecast period. The region’s growth is primarily driven by the US healthcare IT market, which is one of the largest and most mature markets in the world. Strict regulatory standards and retail banking IT spending incentive policies in the region are driving hospitals and clinics in the region to implement retail banking IT spending solutions.

The cost analysis of the Global IT Spending in Retail Banking Market has been carried out by considering manufacturing expenses, cost of labor and raw materials along with their market concentration rate, suppliers and the price trend. Other factors such as supply chain, downstream buyers, and sourcing strategy have been assessed to provide a comprehensive and in-depth view of the market. Buyers of the report will also be exposed to market positioning study with factors like target customer, brand strategy and pricing strategy taken into consideration.

Key questions answered by the report include:

  • What will be the market size and growth rate by the end of the forecast period?
  • What are the key Retail Banking IT Spending market trends impacting market growth?
  • What are the potential growth opportunities and threats faced by the major market competitors?
  • What are the key findings of Porter’s Five Forces analysis and SWOT analysis of key players operating in the Global Retail Banking IT Spending Market?
  • This report gives all the information regarding the industry overview, analysis and revenue of this market.
  • What are the market opportunities and threats faced by the vendors in the global Retail Banking IT Spending Market?

Contents

Global IT Spending in Retail Banking Market Research Report 2022-2028

Chapter 1 Retail Banking IT Spending Market Overview

Chapter 2 Global Economic Impact on Industry

Chapter 3 Global Market Competition by Manufacturers

Chapter 4 Global Production, Revenue (Value) by Region

Chapter 5 Global Supply (Production), Consumption, Export, Import by Regions

Chapter 6 Global Production, Revenue (Value), Price Trend by Type

Chapter 7 Global Market Analysis by Application

Chapter 8 Manufacturing Cost Analysis

Chapter 9 Industrial Chain, Sourcing Strategy and Downstream Buyers

Chapter 10 Marketing Strategy Analysis, Distributors/Traders

Chapter 11 Market Effect Factors Analysis

Chapter 12 Global Retail Banking IT Spending Market Forecast

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Is the banking system really ready for the “big change”? https://nioga.net/is-the-banking-system-really-ready-for-the-big-change/ Sun, 06 Mar 2022 07:00:36 +0000 https://nioga.net/is-the-banking-system-really-ready-for-the-big-change/ It’s been a busy week in the Irish banking landscape as AIB, Bank of Ireland and Permanent TSB have all released their annual results for 2021. Many angles have emerged – from a return to profits, to the resumption of dividends, and progress on the purchase of new assets, to the reduction of the state’s […]]]>

It’s been a busy week in the Irish banking landscape as AIB, Bank of Ireland and Permanent TSB have all released their annual results for 2021.

Many angles have emerged – from a return to profits, to the resumption of dividends, and progress on the purchase of new assets, to the reduction of the state’s stake in AIB and Bank of Ireland.

The war in Ukraine has also drawn other unexpected attention, with the three banks highlighting the challenge it could pose to economic recovery in Ireland and around the world, with subsequent repercussions for their businesses.

But there’s also another huge problem coming quickly on track, which insiders say could pose a substantial challenge for the banking system here.

The corporate decisions taken last year by Ulster Bank and KBC Bank to end their operations in Ireland are now beginning to take shape and take on a consumer dimension.

In a few weeks and probably before the end of March, Ulster Bank is expected to start writing to the owners of over 900,000 current and deposit accounts, asking them to begin the process of finding a new bank.

Of these, Ulster Bank estimates that 360,000 are primary active personal current accounts, which will be seen as the main driver of ‘big change’ as they will need to be moved elsewhere.

70% of these customers are digitally active, which can make the process of moving easier, while another 255,000 have few or no transactions flowing through them and therefore may not need to be reopened in another bank.

Another 300,000 are deposit accounts. Some are linked to current accounts and some are not, but collectively they shouldn’t be as much work when the movement process begins.

Account holders will have six months to complete the process from receipt of their notification letter instructing them to begin.

But since clients will receive these letters over a period of six months, the process should take about a year in total.

Many of KBC’s more than 300,000 customers will also be affected.

Its deposit accounts are to be purchased by Bank of Ireland, provided regulatory approval of the overall deal between the two lenders is granted.

However, his remaining checking accounts will not and will need to be closed or moved elsewhere.

“We will be formally communicating to customers of KBC Bank Ireland Current Accounts in the coming weeks to let them know that although they do not yet need to take any action, they may wish to start looking at their options in terms of a transfer. from their current account”, it said.

“This includes explaining to each customer the options available to them, defining actions customers may need to take and offering our support to implement them if regulatory approval is received.”

Thus, in total, more than one million customer accounts will have to be changed, or closed and then reopened elsewhere over the next few months.

It will be a gigantic undertaking for a system that is already in flux, after a period of restructuring, consolidation and pandemic.

And privately, some industry sources are increasingly worried that it could become a huge mess.

In interviews this week, the CEOs of AIB, Bank of Ireland and Permanent TSB were all asked about their institutions’ readiness for a potentially huge influx of new accounts over the coming months and all offered words of comfort.

“We want to welcome these customers to AIB and we will put the resources in place, we will make the investment, we will have the staff available to ensure that customers who wish to come to AIB as they seek a new banking relationship, that these customers experience as painless and seamless an experience as possible,” AIB chief executive Colin Hunt told RTÉ News.

Colin Hunt (Picture: RollingNews.ie)

The permanent TSB, which is in the process of recruiting 200 new employees for contract positions to cope with the additional workload associated with onboarding new customers, had a similar message.

“We believe around 70% of Ulster Bank customers are single [account] only customers rather than dual customers, and so our digital current account opening allows us to do this remotely without visiting a branch,” said PTSB Managing Director Eamonn Crowley.

“And as a result they will have an active current account. And then the challenge for these customers is that they then have to transfer their direct debits from their existing Ulster account, for example their salary payment, but also if they pay their bills electricity, or telephone, mobile, Sky etc.”

“They will have to go through their different principals to switch from one account to another. And that is probably the biggest challenge.”

This point was echoed by Francesca McDonagh, chief executive of Bank of Ireland, who said there was already movement in the accounts.

“We have invested resources to be able to integrate them well,” she said.

“Obviously the investments we’ve made in our IT system are helping us to have a more scalable model.

“The problem is not just with the bank’s response to changing these current accounts. It’s the whole system.

“So we can open a current account very easily… it’s very simple.

“There’s a residual element there that clients and the larger system need to embrace and support.”

Francesca McDonagh

Banking industry figures agree that issuer of direct debit is going to be a particular challenge, especially if central bank switch code process, which should be supported by banks, is not used .

But back on their doorstep, there is growing official and anecdotal evidence that the various banks themselves are not yet properly prepared for what lies ahead.

On social media and elsewhere, customers are already reporting frustrating delays in getting appointments to begin the process of opening new accounts.

In some branches, they are told that they will have to wait several months before they can meet with a manager to open a current account.

In other cases, heavily promoted digital account opening offers don’t extend to deposit accounts or can handle anything unusual, requiring a visit to a branch instead.

And getting on the phone isn’t always an option either. Some institutions seem to have customer phone numbers well hidden on their websites.

A recent study by the Central Bank also revealed that when calling them, customers are often forced to wait an inordinate amount of time.

The situation recently led the Financial Services Union (FSU) to warn that the sector is not currently equipped to deal with all the problems that will undoubtedly arise from the decision of Ulster Bank and KBC to leave the Irish banking market.

He says realistic deadlines must be set for the exits of the two banks and that the Central Bank must block any proposal to announce their exit before regulatory decisions are made.

The union is concerned about the toll the mounting pressure is already taking and will take on frontline bank staff.

“We are talking to regulators and stakeholders and setting out our very serious concerns about pursuing any proposals at this time,” said FSU General Secretary John O’Connell.

He warned that the receiving system of other financial institutions is not yet able to receive the level of accounts that need to be transferred.

The regulated formal process of the Central Bank Transfer Code is considered by many to be the best way to handle account movements.

But some industry sources question whether it will be favored by banks, as it forces them to do most of the work.

If a client closes an account instead and opens a new one elsewhere, the burden falls on them.

However, an insider pointed out that it is only an issue of time and resources that will prevent the formal switch process from working.

The Central Bank to monitor compliance

The Central Bank said it expects banks to have plans in place to manage the impact on their customers of the significant changes underway.

“This is a priority for us, and we will actively monitor banks’ compliance with our expectations,” he said in a statement.

“It is important to note the responsibilities of retail banks to ensure they put their customers first, ensure fair treatment of customers and that customers understand what the changes mean for them.”

The regulator has engaged with banks before the process begins, impressing on them the need for transparent and clear communications, sufficient notice and the impact the situation will have on vulnerable customers.

“All customers who currently have an account with KBC Bank and Ulster Bank will be advised by their bank, with sufficient notice, to switch accounts and will receive information on how the banks will assist them in doing so,” the central bank said.

“However, customers don’t have to wait for their banks to contact them and can decide to switch to alternative providers at any time.”

Ulster Bank itself holds regular meetings with key stakeholder groups, including those representing vulnerable groups, to ensure that everyone is aware of what is happening and is on the verge of action. to pass.

KBC also said it is “fully aware of its responsibilities” to its customers and will continue to provide “material updates as the process develops”.

“We will communicate with customers well in advance of any actual action or changes that may be taken to their products, in accordance with all legal and regulatory obligations, while also ensuring that customers are given sufficient notice to make an informed decision and take all required actions,” he said.

Cross-sector work is also being done by the Irish Banking and Payments Federation on how changes will be coordinated and communicated.

Everyone in the sector hopes that the measures taken will be sufficient, but many quietly fear that they will not.

And if that’s not enough, a bumpy road awaits bank customers across the country.

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Singapore Retail Banking Competitor Benchmarking: Financial Performance, Market Share & Cross-Selling – ResearchAndMarkets.com https://nioga.net/singapore-retail-banking-competitor-benchmarking-financial-performance-market-share-cross-selling-researchandmarkets-com/ Mon, 14 Feb 2022 10:23:00 +0000 https://nioga.net/singapore-retail-banking-competitor-benchmarking-financial-performance-market-share-cross-selling-researchandmarkets-com/ DUBLIN–(BUSINESS WIRE)–The “Singapore Retail Banking Competitor Benchmarking – Overview, Financial Performance, Market Share, Other KPIs and Customer Satisfaction” report has been added to from ResearchAndMarkets.com offer. The report benchmarks leading banks in the Singapore retail banking market, comparing their financial performance, market share, and customer satisfaction data, among other key performance indicators. COVID-19 has impacted […]]]>

DUBLIN–(BUSINESS WIRE)–The “Singapore Retail Banking Competitor Benchmarking – Overview, Financial Performance, Market Share, Other KPIs and Customer Satisfaction” report has been added to from ResearchAndMarkets.com offer.

The report benchmarks leading banks in the Singapore retail banking market, comparing their financial performance, market share, and customer satisfaction data, among other key performance indicators.

COVID-19 has impacted the performance of Singaporean financial providers as banks have faced challenges in their financial performance across all retail divisions. 2020 net interest margins fell below pre-pandemic levels, suggesting further pressure in a low interest rate environment on net interest income.

Report Scope:

  • CIMB, POSB, and OCBC have shown the most significant increase in digital adoption among customers who hold their primary bank account with these banks. UOB customers reduced their use of agencies compared to 2020, while their digital adoption remained flat on the year.

  • Banks should take a close look at the current channel approach. Data from our 2021 Financial Services Consumer Survey shows that there is still a need for branches, with many respondents not yet feeling comfortable enough to become fully digital banking users.

  • All major banks in Singapore have customer bases where the majority favor alternative providers for a primary transaction account. Additionally, safety is a concern for Singaporean consumers; customers of four major banks cited security as a reason for preferring alternative providers.

Main topics covered:

  • Summary

  • Financial performance, market share and cross-selling

  • Channel visit trends and digital adoption

  • Client satisfaction

Companies cited

  • CIMB

  • POSB

  • OCBC Bank

  • DBS

  • UOB

  • HSBC

  • City

  • Standard charter

For more information on this report, visit https://www.researchandmarkets.com/r/ih5tgr

About ResearchAndMarkets.com

ResearchAndMarkets.com is the world’s leading source for international market research reports and market data. We provide you with the latest data on international and regional markets, key industries, top companies, new products and the latest trends.

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Gross Non-Performing Assets of Regular Commercial Banks Decreased | Odisha News | Latest news from Odisha https://nioga.net/gross-non-performing-assets-of-regular-commercial-banks-decreased-odisha-news-latest-news-from-odisha/ Tue, 08 Feb 2022 01:55:32 +0000 https://nioga.net/gross-non-performing-assets-of-regular-commercial-banks-decreased-odisha-news-latest-news-from-odisha/ New Delhi: According to Reserve Bank of India (RBI) data on global operations, gross non-performing assets (GNPA) of regular commercial banks (SCB) have decreased from Rs. 9,33,779 crore (GNPA ratio of 9.07%) as of 31.3.2019 to Rs. 8,00,463 crore (GNPA ratio of 6.93%) as of 30.9.2021. This was stated by the Union Minister of State […]]]>

New Delhi: According to Reserve Bank of India (RBI) data on global operations, gross non-performing assets (GNPA) of regular commercial banks (SCB) have decreased from Rs. 9,33,779 crore (GNPA ratio of 9.07%) as of 31.3.2019 to Rs. 8,00,463 crore (GNPA ratio of 6.93%) as of 30.9.2021. This was stated by the Union Minister of State for Finance, Dr Bhagwat Kisanrao Karad in a written response to a question in Lok Sabha today.

Further, the Minister said that the GNPA of Deposits-NBFC and Systemically Important Non-Deposits-NBFC were Rs. 1,91,413 crores (GNPA ratio of 6.87%) as of 30.9.2021.

Giving further details, the Minister said that according to RBI data, the GNPAs of Public Sector Banks (PSBs) as a proportion of those of SCBs decreased from 79.2% as of 31.3.2019 to 75.7% at 31.3.2020 to 73.8% at 31.3.2020. as of 31.3.2021 and then to 72.3% as of 30.9.2021, while NBI of private sector banks (PVB) as a proportion of those of SCBs increased from 19.4% as of 31.3.2019 to 23.0% at 31.3.2020 to 24.2% at 31.3.2021 and then to 24.9% at 30.9.2021.

On the issue of the various remedial measures taken by the government and the RBI, the Minister said that several initiatives have been taken to increase credit penetration in the economy, including the following:

  1. 44.51 crore accounts opened under Pradhanmantri Jan Dhan Yojana (PMJDY), a scheme with a National Mission for Financial Inclusion to ensure access to financial services, namely, a basic savings and deposit account, remittance, credit, insurance, affordable pension;
  2. Limit overdraft facility up to Rs. 10,000 extended to eligible PMJDY account holders;
  3. PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) program launched by the government to help poor street vendors, affected by the COVID-19 pandemic, resume their livelihood activities has enabled 32.69 lakh street vendors to access credit amounting to Rs. 3,364 crores till 31.1.2022;
  4. Operationalization of improved access to credit under the self-employment program Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM) and Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM), under which 78,66,199 and 16,63,704 beneficiaries, respectively, have benefited from credit facilities over the past three years;
  5. Bank credit to non-banking financial institutions (NBFCs) other than NBFCs-micro-finance institutions (MFIs) for on-lending to agriculture, micro and small enterprises and housing has been made eligible to be classified as a priority sector;
  6. Digitization of loans to increase the reach of institutional credit;
    1. Digital loan initiation has been made contactless through PSBloansin59minutes.comto provide online approval in principle of loans to micro, small and medium-sized enterprises (MSMEs), home loans, personal loans and car loans to individuals;
    2. Online bill discounting for MSMEs has been enabled on a competitive basis through the integration of Public Sector Banks (BSP) on the Trade Receivables Discounting System (TReDS) platform;
    3. End-to-end automated digital lending has been introduced in large PSOs for unsecured personal loans (in five PSOs), micro-enterprise loans (“Shishu Mudra”, in five PSOs) and MSME loan renewals (in three PSOs);
    4. Customer-focused, analytics-based credit offerings received a boost, resulting in Rs. 49,777 crore in new retail loan disbursements by the seven largest PSOs in the financial year 2020-2021; and
    5. Establishment of loan management systems and centralized processing centers in public sector banks (PSBs) to improve execution time (TAT).
  1. A specific target of 10% Adjusted Net Bank Credit (ANBC) for small and marginal farmers has been set for all commercial banks, to be implemented gradually over a four-year period between 2020 and 2021 to facilitate the flow of credit from small farmers. and marginal farmers;
  2. Credit awareness program launched by the government on 16.10.2021 to make loans available to eligible borrowers, through special camps across the country by banks under which a total loan amount of Rs. 94,063 crores were sanctioned until 26.11.2021, according to bank data; and
  3. To ensure availability of agricultural credit at reasonable cost/reduced rate, interest subsidy scheme (2%) for short term agricultural loans up to Rs. 3 lakh is being implemented by public sector banks and private sector banks (reimbursement by RBI), regional rural banks and cooperative banks (reimbursement by NABARD).

The Minister further stated that several measures have been taken to promote regular repayment and prevent these loan accounts from turning into non-performing assets (NPA), which include, among others, the following:

  1. instituting the use of third-party data sources in PSBs for full due diligence between data sources at the sanction stage itself, to mitigate the risks of misrepresentation and fraud;
  2. classification of accounts as Special Mentioned Accounts (SMA) for early detection of signs of incipient stress leading to failure to timely service debt obligations, enabling banks to take timely corrective action to avoid their potential shifts in NPAs;
  3. implementation of comprehensive and automated early warning systems (EWS) in banks, with approximately 80 EWS triggers, using third-party data and workflow for time-limited corrective actions, to proactively detect the stress and reduce slippage in NPAs;
  4. encourage regular repayment by linking eligibility for the next working capital loan cycle to a hardened limit with on-time or early repayment of the existing loan under the PM SVANidhi program; and
  5. repayment behavior of borrowers in their loan accounts is reported to credit information companies (CICs), and banks include this information in the credit assessment and decision-making process for subsequent loan sanctioning to borrowers.

According to RBI entries, bank inspection reports are disclosed by the RBI, under the Right to Information (RTI) Act 2005, after completion of the oversight process regarding the inspection report. inspection of the specific year in accordance with the procedures set out in Section 11 and other relevant provisions of the RTI Act 2005, said the Minister.

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Gross non-performing assets of regular commercial banks declined https://nioga.net/gross-non-performing-assets-of-regular-commercial-banks-declined/ Mon, 07 Feb 2022 15:20:13 +0000 https://nioga.net/gross-non-performing-assets-of-regular-commercial-banks-declined/ Ministry of Finance Gross non-performing assets of regular commercial banks declined Posted on: Feb 07, 2022 8:37 PM by GDP Delhi According to the Reserve Bank of India (RBI) Global Operations data, the Gross Non-Performing Assets (GNPA) of Regular Commercial Banks (SCBs) have decreased from Rs. 9,33,779 […]]]>







Ministry of Finance

Gross non-performing assets of regular commercial banks declined

Posted on: Feb 07, 2022 8:37 PM by GDP Delhi

According to the Reserve Bank of India (RBI) Global Operations data, the Gross Non-Performing Assets (GNPA) of Regular Commercial Banks (SCBs) have decreased from Rs. 9,33,779 crore (GNPA ratio of 9.07%) as of 31.3.2019 to Rs. 8,00,463 crore (GNPA ratio of 6.93%) as of 30.9.2021. This was stated by the Union Minister of State for Finance, Dr Bhagwat Kisanrao Karad in a written response to a question in Lok Sabha today.

Further, the Minister said that the GNPA of Deposits-NBFC and Non-Deposits Systemically Important-NBFC were Rs. 1,91,413 crores (GNPA ratio of 6.87%) as of 30.9.2021.

Giving further details, the Minister said that according to RBI data, the GNPAs of Public Sector Banks (PSBs) as a proportion of those of SCBs decreased from 79.2% as of 31.3.2019 to 75.7% at 31.3.2020 to 73.8% at 31.3.2020. at 31.3.2021 and then to 72.3% at 30.9.2021, while the NBI of Private Sector Banks (PVB) as a proportion of those of SCBs increased from 19.4% at 31.3.2019 to 23.0% at 31.3.2020 to 24.2% at 31.3.2021 and then to 24.9% at 30.9.2021.

On the issue of the various remedial measures taken by the government and the RBI, the Minister said that several initiatives have been taken to increase credit penetration in the economy including the following –

  1. 44.51 crore accounts opened under Pradhanmantri Jan Dhan Yojana(PMJDY), a scheme with a National Mission for Financial Inclusion to provide access to financial services, namely, basic savings and deposit account, remittance, credit, insurance, affordable pension;
  2. Limit overdraft facility up to Rs. 10,000 extended to eligible PMJDY account holders;
  3. PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) program launched by the government to help poor street vendors, affected by the COVID-19 pandemic, resume their livelihood activities has enabled 32.69 lakh street vendors to access credit amounting to Rs. 3,364 crores till 31.1.2022;
  4. Operationalizing improved access to credit under the self-employment program Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM) and Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM), under which 78, 66,199 and 16,63,704 beneficiaries, respectively, have benefited from credit facilities over the past three years;
  5. Bank credit to non-banking financial institutions (NBFCs) other than NBFCs-micro-finance institutions (MFIs) for on-lending to agriculture, micro and small enterprises and housing has been made eligible to be classified as a priority sector;
  6. Digitization of loans to increase the reach of institutional credit;

    1. Digital loan initiation has been made contactless through PSBloansin59minutes.comto provide online approval in principle of loans to micro, small and medium enterprises (MSMEs), home loans, personal loans and car loans to individuals;
    2. Online bill discounting for MSMEs has been enabled on a competitive basis through the integration of Public Sector Banks (BSP) on the Trade Receivables Discounting System (TReDS) platform;
    3. End-to-end automated digital lending has been introduced in large PSOs for unsecured personal loans (in five PSOs), micro-enterprise loans (“Shishu Mudra”, in five PSOs) and MSME loan renewals (in three PSOs);
    4. Customer-focused, analytics-based credit offerings received a boost, resulting in Rs. 49,777 crore in new personal loan disbursements by the seven largest PSOs in the financial year 2020-2021; and
    5. Establishment of loan management systems and centralized processing centers in public sector banks (PSBs) to improve execution time (TAT).
  1. A specific target of 10% Adjusted Net Bank Credit (ANBC) for small and marginal farmers has been set for all commercial banks, to be implemented gradually over a four-year period between 2020 and 2021 to facilitate the flow of credit from small farmers. and marginal farmers;
  2. Credit awareness program launched by the government on 16.10.2021 to make loans available to eligible borrowers, through special camps across the country by banks under which a total loan amount of Rs. 94,063 crores were sanctioned until 26.11.2021, according to bank data; and
  3. To ensure availability of agricultural credit at reasonable cost/reduced rate, interest subsidy scheme (2%) for short term agricultural loans up to Rs. 3 lakh is being implemented by public sector banks and private sector banks (reimbursement by RBI), regional rural banks and cooperative banks (reimbursement by NABARD).

The Minister further stated that several measures have been taken to promote regular repayment and prevent these loan accounts from turning into Non-Performing Assets (NPA), which include but are not limited to the following –

  1. instituting the use of third-party data sources in PSBs for full due diligence between data sources at the sanction stage itself, to mitigate the risks of misrepresentation and fraud;
  2. classification of accounts as Special Mentioned Accounts (SMA) for early detection of signs of incipient stress leading to failure to timely service debt obligations, allowing banks to take timely corrective action to avoid their potential shifts in NPAs;
  3. implementation of comprehensive and automated early warning systems (EWS) in banks, with approximately 80 EWS triggers, using third-party data and workflow for time-limited corrective actions, to proactively detect the stress and reduce slippage in NPAs;
  4. encourage regular repayment by linking eligibility for the next working capital loan cycle to a hardened limit with on-time or early repayment of the existing loan under the PM SVANidhi program; and
  5. repayment behavior of borrowers in their loan accounts is reported to credit information companies (CICs), and banks include this information in the credit assessment and decision-making process for subsequent loan sanctioning to borrowers.

According to RBI entries, bank inspection reports are disclosed by the RBI, under the Right to Information (RTI) Act 2005, after completion of the oversight process regarding the inspection report. inspection of the specific year in accordance with the procedures set out in Section 11 and other relevant provisions of the RTI Act 2005, said the Minister.

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Welcome to 2022 – a year of stress in retail banking and payments | Hogan Lovells https://nioga.net/welcome-to-2022-a-year-of-stress-in-retail-banking-and-payments-hogan-lovells/ Fri, 04 Feb 2022 22:46:11 +0000 https://nioga.net/welcome-to-2022-a-year-of-stress-in-retail-banking-and-payments-hogan-lovells/ Omnipresent ESG ESG is going to affect every market participant, even if that effect is simply to assess what it means for their business. A significant number of new ESG-related requirements for companies have been announced and/or developed in 2021, which looks set to keep corporate risk and compliance teams busy in the retail banking […]]]>

Omnipresent ESG

ESG is going to affect every market participant, even if that effect is simply to assess what it means for their business. A significant number of new ESG-related requirements for companies have been announced and/or developed in 2021, which looks set to keep corporate risk and compliance teams busy in the retail banking and payments industries for up to in 2022 and beyond. For example, in his Roadmap for green finance (October 2021), the government has indicated that it will require certain companies, including listed companies, to publish transition plans taking into account the government’s net zero commitment or to provide an explanation if they have not do. The government will expect companies to start publishing transition plans in 2023, so to mitigate reputational risk, it would be prudent for companies to start thinking about this in advance.

Don’t forget the “S” and the “G”

So far, the emphasis has been on the “E”; however, the “S” and “G” are equally important – although a little harder to grasp conceptually. In his update ESG Strategy, the FCA stresses that as society and the financial sector “look beyond the climate”, they need to ensure their ability to “provide a cohesive, cohesive and cross-cutting approach to ESG issues more broadly”. PSR’s focus on the importance of the social impact of payment systems and how payment systems are governed (as reflected in its recently released five-year report Strategy), and recent proposals empower HMT to introduce geographic access legislative requirements to ensure that cash access facilities remain close enough to a minimum percentage of the population.

How to win the hearts (and business) of increasingly ethical consumers: could the new duty of consumption hold the key…

It will be interesting to see how the consumer market reacts. In FCAs 2020 Financial Life Survey, nearly two-thirds of participants said they were concerned about the state of the world and felt personally responsible for making a difference, with four in five respondents considering environmental issues important and believing that businesses have a broader responsibility than the mere making of profits. However, historically, customers haven’t exactly been proactive in moving between service providers based on these types of factors. The oft-repeated statement that customers are more likely to switch spouses than bank accounts is no less true simply because it is so hyped. Will companies respond with the products, disclosures and incentives that will empower customers to make progress by putting their money where their heart is?

Consumer obligation certainly focuses on aspects of the financial services industry that could facilitate this:

  • Empower customers to make the best decisions based on their particular financial situation;
  • Target sludge practices to facilitate customer change of supplier;
  • A renewed focus on product design and customer value, with a particular focus on products working the way customers expect…

are all goals that complement an initiative to encourage companies to prioritize ESG-friendly outcomes.

… or be part of the problem?

And yet, there are clear tensions between these two regulatory pillars that arguably occupy many regulatory, compliance and legal teams. For example, if green real estate finance is to be expanded to focus on the ‘E’ of ESG, how should the industry (and individual lenders) manage the risk of leaving behind the most vulnerable, who are more likely to live in properties with poor energy efficiency but least likely to be able to afford upgrades? How does this square with the consumer obligation?

The FCA recently estimated that there are some 47,000 borrowers who could qualify for a cheaper home loan but are currently unable to move. Mortgage and insurance prisoners are not an outcome that one would associate with the entirely honorable intention of wanting to fight climate change. But less choice and increased costs could be an undesirable byproduct.

Similarly, products sold with an ESG angle should be better delivered to ensure that obligations under the consumer obligation to ensure customers get the products they want/expect are met. Failure in this regard (accidental or otherwise) can lead to a flurry of mis-selling claims.
Obviously, both areas require joint thinking between the respective project teams in the consumer banking space.

The race to harness the power of data

But the tension highlights another area of ​​(continuing) development in the world of financial services – the impact of fintech and the importance of data and real-time data. How can we determine if ESG/consumer duty efforts are working? A major challenge for existing players with legacy systems that don’t capture several hundred data points from customer interactions is monitoring the impact of projects, products, and campaigns in the field.

The accelerated digitization of financial services provides a wealth of raw data that businesses can mine. Challenger fintech service providers are well positioned to take advantage of this. However, technology companies are also focusing on supporting the financial services industry. Ask if 2022 sees even more activity in this space.

Crypto: what future for customer relations?

And of course, with more and more countries considering (if not launching) CBDCs, the shift to a more digital economy seems ever closer. There is a certain pleasant irony about central banks exploiting technology that sought to disintermediate them and the next 11-12 months may well see more concrete plans developed in this space.

How banks and other participants react to this possible Bank of England foray into crypto will have a huge effect on their relationship with customers. What use would a bank account be to a digitally savvy UK customer if they could simply hold digital currency underwritten by the Bank of England in an e-wallet?

This is part of a broader regulatory focus on “crypto”, with momentum building in recent years to modify the existing regulatory framework to accommodate crypto-assets, reflecting the growing importance of crypto-assets in the UK financial services market (the FCA estimates that 2.3 million consumers hold crypto-assets).

With use and therefore the risk of harm to consumers increasing, the past two years have seen the FCA and HMT consult on what a regulatory regime might look like. 2022 will likely be the year the framework that will apply to crypto-assets will begin to take shape.

But, in the UK at least, all these measures seem intended to be accompanied by regulatory efforts to ensure that cash remains a meaningful alternative to ensure that consumers who are not equipped or do not have the digital minds are not left behind. (see above ‘Don’t forget the “S” and the “G”‘).

So yes – lots of exciting developments in the coming year. All are not necessarily aligned.

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Key lessons from the FCA’s Retail Banking Strategic Review – growing competition, digitalization and innovation https://nioga.net/key-lessons-from-the-fcas-retail-banking-strategic-review-growing-competition-digitalization-and-innovation/ Fri, 04 Feb 2022 19:02:27 +0000 https://nioga.net/key-lessons-from-the-fcas-retail-banking-strategic-review-growing-competition-digitalization-and-innovation/ The long-awaited decision of the Financial Conduct Authority 2022 Strategic Review of Retail Banking Business Models finds that digital innovation and changing consumer behavior are reducing the “legacy advantages” of large retail banks in the UK. The FCA report lays out key changes to competitive dynamics in the retail banking industry, identifies areas for improvement […]]]>

The long-awaited decision of the Financial Conduct Authority 2022 Strategic Review of Retail Banking Business Models finds that digital innovation and changing consumer behavior are reducing the “legacy advantages” of large retail banks in the UK. The FCA report lays out key changes to competitive dynamics in the retail banking industry, identifies areas for improvement and calls for action to address them. We’ve highlighted some of the key takeaways below and how the FCA’s findings are likely to impact future investigations and regulations in the financial services industry.

Fund

The FCA report explores key trends in the retail banking industry in light of the continued advance in digitalisation, increasing attention to consumer protection and Covid. Whereas previous surveys have found the UK retail banking sector to be characterized by stable market shares, a low rate of change and low levels of innovation (see CMA 2016 retail banking market surveyas well as the FCA 2018 Progress report and Strategic review), the FCA’s 2022 report makes it clear that this is no longer the case.

Digitalization and changing consumer behavior increase competition

With persistently low interest rates putting pressure on financial returns, many expected the economic turmoil of recent years to negatively impact smaller banks and reduce their ability to compete with large, traditional banks. However, as the pace of digital innovation has accelerated in the wake of the pandemic, the FCA report confirms that digital challenger banks have in fact been buoyed by the continued influx of new “multi-homing” customers. “, whose money had previously remained in the accounts of their arch rivals. The report estimates that the average UK adult now has around 1.9 personal checking accounts (BCP), with digital challengers holding 8% of this newly expanded market. Interestingly, the pandemic has reversed a similar trend in micro-enterprise lending, with larger banks able to offer larger loans under Covid-related government loan schemes.

The FCA report finds that digital challenger banks have been leading the adoption of digital innovation in PCA banking, forcing major banks to modernize. He confirms that this trend has improved the quality of services and increased innovation, thereby improving outcomes for consumers and SMEs.

The report also finds that an increase in the use of mortgage brokers has benefited mortgage borrowers through lower interest rates. The number of consumers benefiting from standard variable tariffs has decreased, showing the value of intermediaries that enable consumers to compare different products more effectively. However, the FCA considers that there is still room for improvement in competitive conditions in mortgage and consumer lending. Large banks subject to the ring-fencing rules introduced in 2019 have benefited from additional liquidity that can be used for mortgages. Current accounts of digital challengers, on the other hand, are currently less likely to be used as primary accounts, which means lower balances, fewer transactions and less overdraft usage, and therefore funding advantages and revenue from lower commissions.

Look forward:

  • In light of these changing competitive conditions and industry developments in the retail banking sector, the AMC and FCA may need to assess whether remedies and undertakings arising from prior investigations remain necessary or whether some remedies and commitments can now be removed.
  • In all future market studies and surveys, the impact of digitalization and changing consumer behavior are likely to be the primary areas of focus.
  • The FCA report recognizes the positive impact of Open Banking in increasing competition and facilitating innovation by a wide range of players. The focus will now be on advancing open finance to enable easier sharing of consumer data to deliver benefits through personalized products, price comparison and easier switching.

More room for consumer protection improvements

While noting that digitalization and increased competition lead to benefits for consumers such as greater choice and lower prices, the FCA also warned that the changes should not come at the expense of better customer service. high quality : “we know that there is a significant proportion of consumers and businesses for whom competition may not bring the same benefits […] We have a role to play in ensuring that banks continue to have a strong focus on consumer outcomes, especially for users in vulnerable situations.”.

The FCA sets out some key points to consider as policy continues to develop in this area. These include:

  • Diversity of business models: the increased focus on digitization could mean that some consumers are worse off (e.g. due to branch closures). The FCA will continue to monitor business conduct to ensure special attention to the needs of vulnerable consumers. Diversity of business models has therefore been identified as essential to ensure competition in the sector.
  • Consumer protection in micro-enterprise banking: innovation and new entry into micro-enterprise banking must be linked to banks’ obligations to protect consumers and the economy from harm.
  • Regulation: the FCA reiterates in its report that well-designed regulatory intervention can yield concrete results. For example, the FCA points to the significant drop in returns on unarranged overdrafts following a reform of the overdraft market that came into effect in August 2020.
  • The new consumption obligation: the consumer obligation that is under consultation will compel businesses to deliver good results to retail customers and, the FCA hopes, will lead to a higher level of consumer protection. As explained in a previous blog postthe FCA intends to implement a significantly higher standard than the current rules provide, with the aim of finalizing the new rules by July 2022.

It is likely that consumer protection issues will form a key part of future investigations and regulations in the financial services sector. With this in mind, companies should take steps now to design and implement fair value assessments, demonstrate that prices provide fair value to consumers, and develop processes that consider specific categories of consumers (such as vulnerable customers).

What happens next?

Through this report, the FCA has issued a call for further action on outstanding areas for improvement, reaffirming its role in promoting competition in the interests of consumers. It aims to have discussions with banks on its findings and has invited views by March 31, 2022.

Please reach out to your usual Freshfields contact if you would like to contribute to this discussion and/or would like to have a conversation about what this means for your business. You can also learn more about the changing regulatory landscape globally in our Antitrust 10 key topics report.

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Cloud computing in the retail banking market is booming worldwide with Amazon Web Services (AWS), Ellie Mae, IBM https://nioga.net/cloud-computing-in-the-retail-banking-market-is-booming-worldwide-with-amazon-web-services-aws-ellie-mae-ibm/ Wed, 02 Feb 2022 15:52:46 +0000 https://nioga.net/cloud-computing-in-the-retail-banking-market-is-booming-worldwide-with-amazon-web-services-aws-ellie-mae-ibm/ Cloud computing would help a bank to be more responsive to its customers and their specific needs, which would result in increased customer satisfaction and loyalty and therefore a higher number of sales. At the same time, cloud computing helps banks become more efficient and therefore reduce costs. In the technological age where everything is […]]]>

Cloud computing would help a bank to be more responsive to its customers and their specific needs, which would result in increased customer satisfaction and loyalty and therefore a higher number of sales. At the same time, cloud computing helps banks become more efficient and therefore reduce costs.

In the technological age where everything is now digitized, companies are adopting cloud computing strategies to transform their market and gain competitive advantage. The heart of the bank remains the same, but with the changing world, the attitude of customers towards the bank has changed a lot.

the Cloud Computing in Retail Banking Market Research Report provides in-depth and comprehensive analysis of the global industry. It contains quantitative and qualitative data on the entire structure of the industry. This Cloud Computing in Retail Banking Market research report provides an overview of the market based on segmentation, allowing the client to easily understand the market. During the forecast period of 2022 to 2028, the markets are expected to rise at a rapid rate. It provides unbiased information about the service industry, enabling the client to make informed decisions that will help them achieve their key business goals.

Get a sample report with an overall industry analysis: https://www.a2zmarketresearch.com/sample-request/596142

Leading companies in this report include:

Amazon Web Services (AWS), Ellie Mae, IBM, Infosys, Intuit, Medidata, Microsoft, Oracle, Salesforce, SAP, TCS, Veeva Systems, Wipro, Workday, BBVA, Bankinter, Intel, Google, Alibaba, Tencent, Kingsoft, Ucloud , Baidu, Huawei, China Telecom, China Unicom,

The report includes vendor information along with the competitive scenario of the market. It gives insights into the major market report vendors along with their growth factors and business strategies. Global Retail Banking Cloud Computing Market is expected to register notable expansion with a good CAGR during the considered period owing to the larger market value in 2021.

Global Cloud Computing in Retail Banking Market Segmentation:

Market Segmentation: By Type

public clouds
Private clouds
Hybrid clouds

Market Segmentation: By Application

Staff
Family
Small and Medium Enterprises (SME)

Report Scope:

Other major elements examined in this research include supply and demand dynamics, industrial procedures, import and export prospects, R&D development activities, and cost structures. In addition, this report estimates consumer demand and supply data, production cost, gross profit margins, and product selling prices.

The conclusion section of the report focuses on the current competitive analysis of the market. We have included industry and customer specific information. All major manufacturers in this research are focused on growing their operations in new areas.

COVID-19 impact analysis:

This Cloud Computing in Retail Banking Market study provides a comprehensive overview of the market. To begin with, it provides an overview of the market, including market size, share, growth, and dynamics. Later, it shows the definition, a review of key market developments, an in-depth aggressive assessment, and budget analysis. The research covers both current and future market conditions.

Classification of the market into several regions:

The global Cloud Computing in Retail Banking market is spread across North America, Europe, Asia-Pacific, Middle East & Africa, and Rest of the World.

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This report provides an in-depth study of the Global Cloud Computing in Retail Banking Market using SWOT (Strength, Weakness, Opportunities and Threat) analysis of the organization. The Cloud Computing in Retail Banking Market report also provides an in-depth investigation of major market players based on the various objectives of an organization such as profiling, product outline, production quantity, required raw material, and the financial health of the organization.

The study objectives of the Cloud Computing in Retail Banking Market report are continuously involved in researching the profile of key players who have been established lately to keep the record updated. To keep the growth rate very steady and stable, the research team carefully reviews the manufacturing company’s development strategy and planning, and then analyzes them to identify growth opportunities.

Report Highlights:

  • Cloud Computing in Retail Banking Market research report includes qualitative and quantitative market value
  • This high quality research report is prepared using primary and secondary sources
  • The research examines the changing elements of the market segment industry
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Blockchain technology for commercial banks https://nioga.net/blockchain-technology-for-commercial-banks/ Tue, 25 Jan 2022 17:02:51 +0000 https://nioga.net/blockchain-technology-for-commercial-banks/ Opportunities Decentralization, distributed accounts, smart contracts and other features of blockchain technology will rebuild the existing centralized financial infrastructure. First, based on the decentralization of blockchain technology, the transaction, clearing and settlement processes in the financial system will directly realize reliable point-to-point exchange of value without a central clearing system, which will directly affect financial […]]]>

Opportunities

Decentralization, distributed accounts, smart contracts and other features of blockchain technology will rebuild the existing centralized financial infrastructure.

First, based on the decentralization of blockchain technology, the transaction, clearing and settlement processes in the financial system will directly realize reliable point-to-point exchange of value without a central clearing system, which will directly affect financial systems. such as payment systems, securities settlement systems and transaction databases.

Second, blockchain technology will change the current way of registering and certifying assets. Registration or certification of collateral and stocks, bonds, financial derivatives and other assets will be digitally recorded in the blockchain, which cannot be altered and can be verified. Tracking and inquiries can effectively resolve issues such as transaction verification and tracking disputes.

The third is to use blockchain “smart contract” technology to implement issuance, circulation, etc. currencies under specific trigger conditions in order to complete the transfer of value according to the schedule, so that only when specific conditions are met will it be automatically executed. For example, the central bank can issue digital currencies for specific purposes, so that these currencies can only be paid out when they enter a specific industry, so that industrial policies can be implemented with precision.

Challenges

1. Challenge the bank’s financial operating model

Today’s banking industry, regardless of its business model or concept of risk control, has been rapidly rolling out investment banking, online banking, and smart banking as part of the economy’s new normal and of finance, but its operating system and logic has not changed significantly or even fundamentally, the traditional business of the banking industry is still the “ballast stone”, and the core is still stable.

In the future, with the widespread application of blockchain technology in the banking sector, its “decentralization” function will fundamentally change the way credit is created, which will not only improve the efficiency and the safety factor of the model bank’s existing business model, but will also improve the efficiency and security of the bank’s existing business model.

Starting from the vision, it will also lead to changes in the way banks operate and major innovations in business models.
In the future, the function of financial intermediary will experience very big changes, and some roles in the existing financial system of banks will no longer be necessary, which will have a great impact on some sectors, some departments will gradually disappear, and new activities l unit can be established in the future.

2. Challenge banks to innovate in their ways of making profits

As the bottom layer of the architecture, blockchain features high reliability, simplified process, transaction traceability and many other rules established by distributed accounting and storage, decentralized structure, timestamping, proof of work, etc. When improving the quality of data and other characteristics, when applied to the financial field, the greatest importance is to open new avenues for banks to innovate and make profits from the perspective of a underlying reconstruction, and to reshape the ecology of the financial sector in many aspects, including traditional financial companies and Internet financial companies.

For example, the multi-server functionality of blockchain dilutes the energy cost of maintaining servers, i.e. the cost of mining, making low-cost micropayments possible. Banks can exploit many users who have not obtained bank accounts in blockchain nodes. Develop new products for this part of potential users and explore new ways to make profit. Having learned too many lessons from the laggards, if banks do not accelerate their search for innovative profit models, develop new financial products and develop markets, not only will they fail to catch up, but they will gradually become a “channel”. Consequently, more and more industry giants have joined forces to invest or partner with blockchain startups, including banks, as well as investment institutions such as Capital one , Citi Venture Capital International and Fiserv Financial Services.

3. Challenge the bank’s data governance mechanism and capacity

The expansion of new areas in the financial industry and the advancement of new technologies are inseparable from information and data, and blockchain technology is a subversive application of data. Therefore, commercial banks should not only do a good job in data management, but also prepare for a distributed management model. To combine with blockchain financial technology, to enhance the ability of enterprise-level big data intensive analysis, transformation and application, through the establishment of unified and clear data standards, data connection is achieved, efficiency is further improved, costs are reduced, and data security and efficiency are ensured, to continuously improve the bank’s forward-looking and intelligent intensification level.

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Why commercial banks are a disaster in the making and what you can do about it https://nioga.net/why-commercial-banks-are-a-disaster-in-the-making-and-what-you-can-do-about-it/ Fri, 21 Jan 2022 23:36:21 +0000 https://nioga.net/why-commercial-banks-are-a-disaster-in-the-making-and-what-you-can-do-about-it/ Abbott and Costello’s famous skit “Who’s first, what’s second, I don’t know is third” encapsulates the current state of hot potatoes in the bond markets. Of course, we know who is the first. Which? Exactly. The Fed. The Fed holds more Treasuries than any other central bank in the world. According to data from the […]]]>

Abbott and Costello’s famous skit “Who’s first, what’s second, I don’t know is third” encapsulates the current state of hot potatoes in the bond markets.

Of course, we know who is the first. Which? Exactly. The Fed. The Fed holds more Treasuries than any other central bank in the world. According to data from the Federal Reserve, as of this month the Fed holds more than $5 trillion in Treasuries, compared to just over $4 trillion held by all other foreign official buyers. As I’ve written before, the Fed also owns nearly 25% of all TIPS (Treasury Inflation-Protected Securities) because it has bought more than the total issuance of TIPS to drive negative real returns over the past few years. years. And we also know that last month, during the Jerome Powell pivot, the Fed basically guaranteed that it wouldn’t buy many more Treasuries in a relatively short period of time; that is, in March, if you own TIPS, you better own them.

What’s second? Commercial banks. The St. Louis Fed’s FRED (“Federal Reserve Economic Data”) database shows that commercial banks hold $4.5 trillion in Treasury and agency securities (here). We also know from the last earnings report that one or two big banks (you know who, right? – sorry for the pun) bought hundreds of billions of these Treasuries . Now, why would the big commercial banks buy all those Treasuries at such deeply negative real yields? One can only speculate, and the reason probably lies somewhere between being forced into it, for various reasons, and because buying the bonds and selling them to the Fed in their “asset purchases” was to money too easy to pass up.

The thing is, now many of these banks are stuck with bags full of low-yielding Treasuries, maybe like that turkey I warned about (here). The non-economic (Fed) buyer will soon stop buying them and, in a few months, will begin to “run off” their existing holdings. Who will intervene and at what cost? Are there enough “big fools” on the market? Is it Thanksgiving for the turkey?

Historically, the marginal buyer of Treasury bills has been a foreign entity; for example from Japan. For nearly a decade, Japan has been able to print money freely and exchange the yen for dollars, among other currencies, which are then recycled into treasury bills of all maturities. You can think of this as an asset-based American “retirement plan” for Japan, funded with their play money. The yield does not matter, only the repayment of the principal account. So the hope would be that if Treasury yields rise a bit more, they will likely rise again to buy them. Belief in the willingness and ability of foreigners to finance at negative real rates of return. Hoping for the return of the greatest madman.

Back to the banks.

Mass holdings of bonds are not their only problem. As the frenzy of trading activity in equities begins to subside, banks that provide “financial services” understandably make less money thanks to the slower speed of transactions. Thus, the increase in yields has been reduced twice – first by reducing the value of holdings, then by chilling animal spirits who want to trade. But aren’t higher yields good for banks because they earn more interest? Not yet, in my opinion. Right now, the immediate effect of rising yields is to damage balance sheets and reduce corporate earnings. Yield income takes time, price losses occur immediately.

Then there are astronomical compensation costs. I’m sure you’ve all read the mind-boggling figures regarding bank bonuses. Part of that is being funded by record earnings amid the COVID-induced trading and trading frenzy, and another part is being funded by record bond issuance at historically low yields and spreads. It is no wonder that bank bond issuance is skyrocketing, and the more bank debt that is issued, the higher the spread, meaning the higher the discount factor applied to future bank earnings. Which means lower stock prices of commercial banks.

Now you wonder who the third one is. Of course, I don’t know. But I guess it’s various types of buyers who don’t pay attention to yield. This group includes passive holders of bond funds that have seen their value skyrocket over the past two decades, foreign private buyers looking for yield, and public pensions that are in an accounting regime where they have to buy bonds without risk to manage liabilities. . There are also systematic momentum traders who buy simply because, at least in recent history, bonds have only gone up, and quantitative investors looking for “risk parity” who elevate bonds to the same risk as the actions. This group could also include you – it certainly includes me and my long-forgotten bond fund. Who knew that “safe” investments could lose so much?

So what can we do?

Like in baseball, the third has no choice but to pay attention to who is first and what is second. And these two are stuck. And because these two players have a much bigger impact on the market, those in the third would be well advised to steal the house before forcing an inevitable implosion of the bond markets. If banks are your thing, look to regional banks – and make sure they (1) aren’t huge owners of treasuries and agencies, (2) aren’t dependent on the volume of transactions to be profitable, (3) have low outstanding debt. You won’t get the proverbial ‘toaster’ to open an account – which is reserved for prime clients – but your investment probably won’t get toasted.

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