Fintech revolution in India

Indians are switching to digital payments in droves as payment fintechs are better integrated with banks in India than elsewhere. (The Economist)

The alleys of the 150-year-old Chor (Thieves’) Bazaar, a colourfully named flea market in Mumbai, are crammed with goats, used tyres, speakers, drills and other assorted ephemera. But even in this unlikely place, modern payment methods are gaining a foothold. In stalls abutting the market, bags of sand can be paid for by providing a phone number or scanning a qr(quick response) code. Many countries have seen digital payments take off in the past few years; in India, where little over a decade ago a cheque could take more than two weeks to clear, it feels like a revolution.

It is one that has been shaped, not always intentionally, by government policies. September 2010 saw the arrival of Aadhaar, a system of biometric ids that could be used to open a bank account. After becoming prime minister in 2014, Narendra Modi chivvied bankers to open accounts for everyone. Around 360m basic “Jan Dhan” (people’s wealth) accounts were opened, adding to the 243m accounts already in existence. But many sat empty, or held just a rupee or two put in by banks under government pressure to reduce the number of zero-balance accounts.

Two further developments gave those unused accounts a purpose. The first was the launch in 2016 of the Unified Payments Interface (upi), an interbank money-transfer system. The second was “demonetisation” later that year, when 86% of banknotes in circulation were recalled. That caused economic carnage—but also gave digital payments a galvanic boost. Paytm, India’s largest digital-wallet firm, took out ads thanking Mr Modi for the move.

Paytm now claims 371m users. PhonePe, a subsidiary of Walmart-owned Flipkart, claims more than 150m, and bhim, run by a government-led bank co-operative, 46m. The value of digital transactions has risen more than 50-fold in the past two years, with many more smaller payments (see chart). Even the drivers of Mumbai’s three-wheeled auto-rickshaws have begun accepting payments that go through upito their (presumably new) bank accounts.

China’s giant payment apps, WeChat and Alipay, send transfers between their digital wallets, going through an official clearing house. Cryptocurrencies, which some tout as a possible future for digital money, touch the regulated financial system only when they are bought and sold. By contrast India’s pioneers, which started with digital wallets, are fast becoming interoperable with upi, which sends money directly between bank accounts. The result is both well integrated with the banking system and flexible enough to allow innovation in serving customers.

Regulators are happy with the system, says Saurabh Tripathi of bcg, a consultancy, since it protects deposits, increases financial inclusion and cuts tax evasion from unreported cash deals. It also suits banks, since they get fine-grained information on transactions that can be used for credit analysis and product customisation.

The global tech giants like the look of it, too. Google Pay is already available in India and Amazon Pay plans to launch soon. WhatsApp, which has 300m Indian users, has run a trial of a payments service with 1m of them, though the government’s requests regarding privacy and data-localisation are delaying it going nationwide. The success of other dominant chat apps that have moved into payments, such as WeChat Pay in China and Kakao Pay in South Korea, suggests that whenever its launch happens, it will go with a bang. 

Former Deutsche Bank co-CEO included in cum-ex probe: paper

FRANKFURT (Reuters) - German prosecutors are probing former Deutsche Bank co-Chief Executive Anshu Jain and 78 other current and former bank officials as part of an investigation into a dividend tax-stripping scheme, German daily Handelsblatt reported on Friday. 

Investigators suspect managers at Deutsche and other banks of helping to exploit a loophole which allowed two parties to claim ownership of the same shares, making it possible to claim dividend tax rebates running to billions of euros. 

The scheme, called “cum-ex”, involved several other global banks. 

The Cologne prosecutor’s office is also probing Garth Ritchie, the head of Deutsche Bank’s investment banking arm, as part of the investigation, Sueddeutsche Zeitung reported on Thursday, citing unnamed sources. Ritchie, through a Deutsche Bank spokesman, declined to comment. 

Jain, through a personal spokesman also declined to comment. Deutsche Bank declined to comment on whether Jain, who was co-CEO from June 2012 to June 2015, was included as part of the probe. 

The scam, which for years operated in a legal gray area until prosecutors declared it to be fraudulent, is being investigated by several prosecutors’ offices including by officials in Cologne. 

The Cologne prosecutor could not be reached for comment. 

In a statement, Deutsche Bank confirmed that current and former managers were under investigation, but did not say who they were. 

Deutsche Bank said that the Cologne prosecutor had been investigating two former employees since 2017 in connection with cum-ex transactions on behalf of former clients. 

Deutsche Bank said the lender was not directly involved in the tax scheme. 

“Recently, the prosecutor has initiated investigations against further former and current employees and management board members,” it said in a statement. 

It said the change in approach by the Cologne prosecutor was linked to procedural issues related to the statute of limitations, and did not imply that the prosecutor had changed its view on the facts of the case. 

“This has also not changed the Bank’s assessment of the facts of the case. Deutsche Bank did not participate in an organized cum-ex market, neither as short seller nor as cum-ex purchaser,” Deutsche said. 

Deutsche Bank acted as a leverage provider to clients who were involved in the scam, Handelsblatt reported.

LG Elec's 5G phones in doubt as chip deal with Qualcomm set to expire

SEOUL (Reuters) - Sales of LG Electronics Inc’s new 5G smartphone looked uncertain on Wednesday after the firm said it was unable to narrow differences with Qualcomm Inc to renew a chip license deal that is due to expire this month. 

In a U.S. court filing late on Tuesday, the South Korean firm opposed Qualcomm’s efforts to put a sweeping U.S. antitrust decision against it on hold, arguing setting the ruling aside could force it into signing another unfair deal. 

“If Qualcomm does not participate in negotiations with LGE in accordance with the Court’s Order, LGE will have no option but to conclude license and chipset supply agreements once again on Qualcomm’s terms,” LG’s filing in the federal court in San Jose, California said. 

The lack of clarity over a new license deal raises concerns over the rollout of LG’s newly launched 5G smartphones, crucial for the loss-making handset maker to boost flagging smartphone sales and catch up with Samsung Electronics Co Ltd. 

“If LG Electronics fails to renew its contract with Qualcomm, it is very likely that it will not be able to make any phones since LG does not manufacture chips by itself,” BNK Securities analyst Park Sung-soon said. 

U.S. House panel debates giving local news outlets ‘lifeline’ in ad fight

WASHINGTON (Reuters) - Bipartisan U.S. efforts to give news outlets new tools to collectively negotiate with large tech firms collecting the bulk online advertising revenue won support on Tuesday at a U.S. House Committee hearing on the fate of local journalism. 

U.S. newspapers have cut thousands of jobs as the industry’s ad revenue has fallen 65% to $16.4 billion since 2005, while companies like Alphabet Inc’s Google and Facebook Inc have seen a dramatic jump in online ad revenue. 

The bill, which gives small publishers a four-year safe harbor to band together to negotiate with online platforms, won industry backing at an antitrust subcommittee hearing Tuesday. 

The bill, which would exempt publishers from some antitrust rules, was introduced by the chair of the House Judiciary Committee’s subcommittee on antitrust, David Cicilline, a Democrat, and Representative Doug Collins, the top Republican on the panel. 

At the hearing, Cicilline said local journalism had been pushed “to the verge of extinction” and that the bill would provide “a much-needed lifeline to local publishers who have been crushed by Google and Facebook.”

Facebook to create 500 jobs in new London engineering center

LONDON (Reuters) - Facebook will create 500 new tech jobs in London by the end of 2019, including 100 roles in artificial intelligence, with many working on systems to detect and remove malicious content, fake accounts and harmful behavior, it said on Wednesday. 

The social media giant said it will employ more than 3,000 people in the capital by the end of the year across three sites, including its new engineering center in Soho, central London. 

“These hundreds of new jobs demonstrate not only our commitment to the UK but also our determination to proactively detect and remove malicious content,” Nicola Mendelsohn, Facebook’s vice president for Europe, Middle East and Africa, said at a London Tech Week event. 

Facebook said London was its biggest engineering center outside the United States, with 1,800 people employed in technology and engineering by the end of the year. 



Britain to become first G7 country with net zero emissions target

LONDON (Reuters) - Britain will toughen its climate targets and commit to reaching net zero greenhouse gas emissions by 2050, the government said late on Tuesday, becoming the first G7 nation to set such a goal.

The country currently aims to cut greenhouse gas emissions (GHGs) by 80 percent from 1990 levels by 2050. However, campaigners say this does not go far enough to meet pledges made under the 2015 Paris climate agreement to try to limit a rise in global warming to 1.5 degrees Celsius.

“Now is the time to go further and faster to safeguard the environment for our children,” Prime Minister Theresa May said in a statement.

“Reaching net zero by 2050 is an ambitious target, but it is crucial that we achieve it to ensure we protect our planet for future generations.”

Legislation will be put before parliament on June 12 to amend the existing climate change act to incorporate the new target, the statement said.

Britain’s independent climate advisers, the Committee on Climate Change, last month said that the country should move to the new target, which would require more renewable electricity generation and could require the phasing out of new petrol and diesel cars by at least 2035.

Households would also need to be weaned off natural gas heating and switch to low-carbon alternatives such as hydrogen or heat pumps.

Carolyn Fairbairn, director general of the Confederation of British Industry (CBI), welcomed the move.

“Some sectors will need clear pathways to enable investment in low-carbon technologies, and it is vital that there is cross-government coordination on the policies and regulation needed to deliver a clean future,” she said.

Britain hopes its decision will encourage other countries to adopt more ambitious climate targets and said that a further assessment will take place within five years to confirm whether other countries are taking similar action.

North Korea steps up measures to prevent spread of African swine fever

SEOUL (Reuters) - North Korea has stepped up measures to prevent the spread of the highly contagious and deadly African swine fever, its main state newspaper said on Wednesday, breaking its silence on the outbreak which was first reported in late May.

In late May, North Korea reported an outbreak of African swine fever (ASF) to the World Organisation for Animal Health (OIE), South Korea’s agriculture ministry said but the North has not made any official comment on its outbreak.

North Korea’s Rodong Sinmun newspaper said on Wednesday nationwide preventive measures are being carried out to contain the virus, quoting North Korean leader Kim Jong Un as saying “prevention is the key to production in livestock industry”.

“Increasing livestock production goes hand in hand with raising farm animals safe from various diseases,” said Kim according to the newspaper.

“Once highly contagious diseases like African swine fever are spread .... herds of farm animals could die.”

Preventative measures include disinfecting farms and restricting sales of pork and processed meat, the newspaper said.

North Korea raises mainly chicken, ducks and rabbits. Its pig population was 2.6 million as of 2017, according to data from Statistics Korea.

In the wake of the North’s outbreak, South Korea has stepped up disinfection measures near the shared border to keep the viral disease spreading to the South.

Uber picks Melbourne as test site for flying taxi service

SYDNEY (Reuters) - Uber Technologies said it will use Australia’s second-largest city, Melbourne, as the first international test site for the group’s planned flying taxi service.

The U.S. ride sharing firm had previously chosen Dubai as the first test site outside the United States for its UberAIR service but reopened its request for proposals last month after launch delays in the Middle Eastern city.

Uber said on Tuesday it will begin test flights of the pilotless aircraft in Melbourne and U.S. cities Dallas and Los Angles in 2020 before commercial operations begin in 2023.

“Australian governments have adopted a forward-looking approach to ridesharing and future transport technology,” Susan Anderson, Regional General Manager for Uber in Australia, New Zealand and North Asia, said in an emailed statement.

“This, coupled with Melbourne’s unique demographic and geospatial factors, and culture of innovation and technology, makes Melbourne the perfect third launch city for UberAir.”

The test flights will transport passengers from one of seven Westfield shopping centers in Melbourne to the city’s main international airport. The 19km journey from the central business district to the airport is expected to take 10 minutes by air, compared with the 25 minutes it usually takes by car.

The electric, on-demand air taxis can be ordered by customers through smartphone apps in the same way Uber’s road-based taxi alternatives are hailed.

Uber’s planned air fleet includes electric jet-powered vehicles - part helicopter, part drone and part fixed-wing aircraft - running multiple small rotors capable of both vertical take-off and landing and rapid horizontal flight.


UK insurer Legal & General picks Amazon for first pensions blockchain deal

LONDON (Reuters) - British insurer Legal & General has teamed up with Amazon to establish what it said is the first blockchain system for corporate pension deals.

The insurer said it would use a managed blockchain system launched by Amazon Web Services (AWS) to handle bulk annuities, which involve Legal & General taking over companies’ defined benefit or final salary pension schemes.

Blockchain suits “the long-term nature of annuities business as it allows data and transactions to be signed, recorded and maintained in a permanent and secure nature over the lifetime of these contracts, which can span over 50 years,” Thomas Olunloyo, CEO of Legal & General Reinsurance said.

Blockchain was originally conceived 10 years ago as the basis for the cryptocurrency bitcoin. It is a shared database that can securely process and settle transactions without the need for third-party checks.

Banks and other financial firms have invested millions of dollars in blockchain systems to cut costs and complexity of unwieldy back- and mid-office processes.

But few projects have been deployed at any scale so far, as questions remain over regulation, reliability and cost.

Tesla is serious about a possible record quarter, not so serious about a submarine car

(Reuters) - Tesla Inc has “a decent shot at a record quarter on every level”, Chief Executive Officer Elon Musk said at the company’s annual shareholder meeting on Tuesday, soothing concerns about weak demand for the electric car maker’s sedans.

Tesla’s stock rose 3.6% to $225 in extended trading, and Musk also said the company was on track to hit its volume production goal by the end of this year.

Musk was treated as a star by investors at the annual meeting, receiving applause as he laid out plans for global expansion and going so far as to tell an inquiring investor that Tesla engineers “actually have a design for a submarine car”. He said making one would be a distraction and have a small market.

Analysts have questioned whether there is global demand for the hundreds of thousands of Model 3 sedans and other vehicles Tesla aims to produce, after deliveries fell 31% in the first quarter. Rivals are stepping up efforts and Tesla continues to invest heavily in expansion.

Musk’s positive comments on Tuesday echoed his forecast last month that the company was on track to hit record deliveries in the second quarter.

Tesla previously said it plans to deliver 90,000 to 100,000 vehicles to customers in the second quarter versus 63,000 vehicles in the first, and is aiming to deliver 360,000 to 400,000 vehicles in 2019.

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