Mon, Feb 04, 2019 - Page 15 News List

Cryptocurrencies lose limelight at Paris fintech summit

Bloomberg

Crypto fever seems to have broken. That was a big takeaway last week from the Paris Fintech Forum, one of the biggest annual gatherings of its kind in Europe.

On Tuesday and Wednesday, about 3,000 entrepreneurs, investors, bankers and regulators descended on the neo-classical Palais Brongniart, once home to the stock exchange.

Last year, with bitcoin and its imitators soaring, attendees jammed discussions on blockchain technology.

“I nearly lost my whole team to cryptocurrencies,” said Will Andrich, the chief executive officer of Switzerland’s Thaler.One, which says it creates real-estate-backed digital securities.

No such problem this year.

With the top 10 crypto assets down 80 percent in the past 12 months and skepticism mounting, many fintech professionals said that the technology might not be ready for prime time, especially in a heavily regulated industry.

Instead, the conference was about getting back to banking basics. Sessions on building branchless lenders were standing-room only, investors buzzed about how this year could be a banner dealmaking year and the most controversial moment came at a panel on old-fashioned lending.

With Europe’s new payments law now requiring banks to share customer account data with fintech firms, the prevailing vibe was that there is plenty of action without messing around with crypto.

Perhaps nothing drove that point home more than the face-off between Swift chief executive officer Gottfried Leibbrandt and Brad Garlinghouse, the CEO of San Francisco’s Ripple Labs Inc.

Swift is a 46-year-old cooperative that directs trillions of US dollars in cross-border payments between thousands of banks.

Garlinghouse has repeatedly vowed to leapfrog Swift’s 1970s-conceived system with a faster, cheaper blockchain-like one.

“I look at the dynamic between Ripple and Swift, and I liken it to Amazon and Wal-Mart,” Garlinghouse said on Wednesday to a packed auditorium.

Leibbrandt countered, saying that for two years, Swift’s latest payment standard revitalized its system, letting customers track a payment like a FedEx package and cutting transfer times to hours.

Unlike Ripple, which has struggled to sign up major banks, Leibbrandt said the world’s top 60 lenders are utilizing its technology, which is already embraced by regulators.

“Banks are not ready for a model where you convert into a crypto and then convert back again,” Leibbrandt said. “It’s not clear to us that blockchain is better than what we have today.”

Last week, the hot fintech jargon was “banking as a service.” A more apt moniker might be “bank in a box”: These ventures create digital versions of products ranging from debit cards to money transfer to account-management tools, which customers can rebrand as their own.

Antony Jenkins, the former CEO of Barclays PLC, runs an outfit called 10x, which has made inroads in this space.

“We’re commoditizing everything that a bank does,” said Brad van Leeuwen, head of partnerships at London-based Railsbank Ltd.

Railsbank, whose slogan is “banking in five lines of code,” is taking advantage of the spread of inexpensive open source software and cloud computing.

Things were less rosy in the online lending space. The underwhelming initial public offering and share slump by Funding Circle Holdings PLC, the No. 1 peer-to-peer loans outfit in the UK, cast a pall.

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