Welcome back to the Fintech Files. Normal service will resume from this week onward, after a several-month break.
My name is Ryan Weeks — I’m Financial News’ new fintech correspondent. And where better to start than to pick up on a theme my predecessor Yolanda Bobeldijk wrote about extensively…
The mighty Amazon
The sheer ubiquity of cloud-computing giant Amazon Web Services has, over the past couple of years, raised concerns over whether the company poses a systemic risk. With vast numbers of top-tier banks, asset managers and fintech firms operating on AWS, some have askedwhether the company has become “too big to fail”.
Last week, AWS’s global head of business development for financial services, Scott Mullins, told Financial News: “I don’t think AWS represents a concentration risk at all.” He then explained how the company is laying the foundation for dominance in an emergent niche of financial services: machine learning.
AWS’s machine learning product, Amazon SageMaker, appears to have a notable shortage of financial services clients, based on a review of its customer use cases page, where not a single financial institution is listed.
The list is not exhaustive and a few businesses, such as Santander’s digital bank project Openbank, credit card outfit Capital One and the Singapore-based bank DBS, are experimenting with AWS’s machine learning capability — but it seems the sector’s biggest beasts are yet to deploy the tool.
Breaking into banks?
A new product, AWS Lake Formation, could change that. Announced in November 2018 with a launch planned for this year, it is designed to help companies in financial services and elsewhere to create a data lake, the foundation for machine learning applications.
Mullins told FN: “Most organisations [in financial services] that have developed over the course of decades, they’ve got data in disparate places and different pockets, and it’s not necessarily accessible all at once, it’s not necessarily organised, it’s tucked away in different corners of the organisation. And before you can actually run any effective machine learning or frankly any kind of effective data analytics, you’ve got to organise that data, you’ve got to get it into one central repository.”
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From an established tech giant to an emerging one. Would-be challenger bank Revolut remains very firmly on the back foot, and is now subject to a third government review in Lithuania.
The question being asked is whether the $1.7bn start-up poses a threat to Lithuania’s national security interests. Should these reviews end in Revolut’s Lithuanian banking licence being revoked, which seems possible, it will likely set the firm’s plans back some years. The business intends to apply for a UK banking licence, but that process typically takes 2-3 years to complete; Lithuania, it ain’t.
Fintech sets the bar low
Revolut has not yet had to file a gender pay gap report, but its peers in the fintech sector set the bar feebly low earlier this week, with an average pay disparity between men and women working in the sector of 31.54% – worse even than in the investment banking sector. The sector may well turn things around in the next 12 months, with proactively-published data from Starling Bank already pointing to marked improvements. But that this disruptive sector found itself in this position in the first place will prove a sobering truth for participants.
Elsewhere, Goldman Sachs’s results for the first quarter of 2019 have revealed that Marcus, its standalone lending and savings brand, hopes to increase deposits by more than $10bn a year in the next couple of years, according to an article in the Financial Times.
And the London Stock Exchange has for the first time accepted a blockchain-powered token issue, green lighting an issue by the fintech firm 2030, according to the Telegraph.
And N26 is another fintech up-and-comer that has fallen under regulatory scrutiny, this time in Germany, reports CityAM.
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To contact the author of this story with feedback or news, email Ryan Weeks