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Banking As a Service

A trend which is rapidly growing in a gathered pace over the last 18 months or so is BAAS i.e., Banking as a service. Many of us are now familiar with the concept of software as a service ( SaaS ) , which is the licensing and delivery model that allows users to do various activities like subscribing to specific programmers, applications over the internet than just having to buy them outright and install them on their computers. This plug n play method has been proven to be helpful for the software providers too. this banking as a service is one such banking equivalent for the plug and play technology. BaaS is an on demand service which enables users across the world use have access to their financial services over internet form being in any part of the world. It is done by the banks’ offering up their systems to third-party service providers. Such as fintechs (financial-technology firms), that are looking to provide retail-banking offerings, typically through the use of application programming interfaces (APIs). Actually some even name it as “APIficiation” of banking.

Positioning themselves on the top of existing infrastructure of regulated licensed banks, third parties are able to provide numerous banking offerings to their customers. This makes a way for the service providers virtually in any sector to embed a wide range of their financial services into the suite of offerings for the customers and for themselves to conveniently access those financial services despite not necessarily belonging to the underlying bank.  This flexible approach of plug and play to the banking sector is probably one of the best aspects of BaaS. Providers can just pick and mix from a wide variety of products and then personalize it suit the interests of their customers , creating a new financial platform of their own. BaaS is classed as a platform that exists under the umbrella framework of Open Banking and not to be confused with each other, especially while the Open Banking customers are transacting directly with their chosen banks, it is the service provider or the brand entity with which customers interact on BaaS platforms.

Singapore’s Grab, which began as a ride-hailing service similar to Uber, has now joined with payment services and have their own wallet built into their app now. . There is another company, the Dutch payment company called Adyen, which provides e-commerce, mobile and point-of-sale payments through an API-driven platform.

Digital financial-services company 11: FS identifies three key layers that constitute the BaaS stack: Brand: The company that is aiming to embed financial services into its customer offering;

Service provider: The company supplying modular financial services to brands as a service;

License holder: Typically, a licensed bank that partners with providers and rents out its license as service. This enables partner brands to provide complete financial services.

The customers receive best of the both worlds like the convenience of financial services through an on-demand digital platform and the depth and robustness that come from a licensed, regulated banking institution and that is the benefit they look for. Now we are seeing these concepts being embedded in various aspects of our life.

Fintechs provide and continue to promote the democratization of finance, and BaaS will most certainly help in the same direction. It offers a different radical approach to the financial services, the one that remodels the old traditional banking methods and its building blocks are in the hand of a wider range of stake holders.

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Goldman banker hired by the Citi bank

Citigroup has hired Luisa Leyenaar-Huntingford from Goldman Sachs. This new hire is to co-head its global infrastructure franchise. Because, it seeks to win more business from cash-rich investment firms focusing on infrastructure deals. Leyenaar-Huntingford will be based in London. Responsibility will be shared with Todd Guenther in New York.

The pair will work closely with industry teams covering healthcare, industrials, natural resources and clean energy transition (NRCET), technology and communications. Leyenaar-Huntingford helped in the establishment of the Goldman’s infrastructure franchise in her time at the Wall Street bank. They will team up with Citi’s Iberia co-head of banking, capital markets and advisory (BCMA) Jorge Ramos will continue to be a senior member of the global infrastructure franchise.

The infrastructure sector is poised for further growth, according to the memo. The memo was released by Citi’s global co-heads of the alternative assets group Anthony Diamandakis and John Eydenberg, and its EMEA head of BCMA Nacho Gutierrez-Orrantia. There was significant private investment demand across the globe to deal with environmental, energy, transportation, waste, communication, digital and other social needs.

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Banks make slow progress on UK gender pay

Major banks in Britain made a slight dent in their gender pay gaps. Several insurers went backwards. Companies in Britain with more than 250 employees have been required to publish the difference between the pay and bonuses of their male and female employees. They got a reprieve due to the pandemic, last year. The financial services sector has shown one of the largest genders pay gaps in Britain. The lack of women in senior jobs is the main reason.

Pay gap data from 21 major financial institutions showed a narrowing in their average mean gender pay gap. This is just 0.4 percentage points. Banks alone had a pay gap which narrowed by one percentage point. Ann Francke, chief executive of the Chartered Management Institute said that the UK’s financial services industry has often been singled out. It really does have to get its house in order. Goldman Sachs had the widest gender pay gap in the year to April 2020. Goldman posted a gender pay gap of 51.8%. The bank told the staffs that narrowing the gap further was a critical priority. A spokesperson for banking lobby group UK Finance said, that there is clearly more still to be done.

FTSE 100 insurers Prudential, Legal & General and M&G reported a widening in their pay gaps. Prudential’s UK gender pay gap widened to 45.2%. M&G also reported a widening in its pay gap in the most recent year to 30.5%. The M&G spokesperson said that they are determined to narrow their gender pay gap and will do this by achieving better representation of women in all roles at all levels of our organization. Legal & General’s mean gender pay gap widened to 30.8%.

The insurer said that the legal & general is tackling the underlying causes of its pay gap. This is by creating a more diverse workforce and a more inclusive culture through sustained, long-term action. Admiral had a gender pay gap last year of 12.8%. The 21 firms surveyed were Barclays, HSBC, Lloyds, NatWest, Standard Chartered, Bank of America Merrill Lynch, Goldman Sachs International, JPMorgan, Morgan Stanley, UBS, Credit Suisse, Deutsche Bank, PGMS (a Phoenix unit), abrdn, Schroder Investment Management, St James’s Place, Legal & General, Prudential, Admiral Group, Aviva and M&G.

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BOJ to lower inflation target-Japan’s finance minister

Japan’s outgoing finance minister, Taro Aso, said that he had proposed lowering the central bank’s 2% inflation target. This is when the prices took a hit from plunging oil prices. He was the finance minister for nearly nine years. The slump in oil price was among the main reasons the government could not officially declare an end to deflation. In his final news conference as finance minister, Aso said that he proposed to Governor Kuroda that, with oil prices falling this much, it would be hard to achieve 2% inflation. Hence, the target must be lowered at some point. He stated this by referring to Bank of Japan (BOJ) chief Haruhiko Kuroda.

Aso also said that the governor said he would do his best to achieve the target. This is stated by adding that policymakers must scrutinise at some point, why the BOJ’s inflation target of 2% has not been met. The remarks highlight how the government and lawmakers distanced themselves from the BOJ’s target years ago, despite central bank reassurances that achieving the target was possible by maintaining or increasing stimulus.

Aso was deeply involved in negotiations with the BOJ. After Kuroda took over as governor, he deployed a massive asset-buying program. This is for pulling Japan out of deflation. Aso supported the BOJ’s stimulus efforts. He is a member of the cabinet. And also, had raised many doubts that monetary policy alone can reflate the economy out of the doldrums. New Prime Minister Fumio Kishida is set to form a cabinet.

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