Wall Street Journal
Bank of America has joined a slew of financial firms to cut off its information from websites and mobile applications that aggregate consumer financial data. Other major banks that have taken such steps include J.P. Morgan Chase and Wells Fargo. Consumers have begun to use these aggregator sites, such as Mint.com, to monitor their multiple financial accounts. But banks are wary to cede any ground to non-bank startups like these, and as reasoning for blocking the flow of information, they say these sites still need to boost their security protocols to protect consumers' information. Still, the question remains whether banks really own the data, or if it's customers' to share.
Pay up. That's what the FBI is reportedly telling some companies and individuals to do when ransomware becomes part of a hacking. Ransomware is a form of extortion where hackers infiltrate a computer system, encrypt data and then demand payment to decrypt it, usually in a small amount ranging from $200 to $10,000. The encryptions can be so good that they make it impossible for businesses or individuals to access their information unless they have had it securely backed up somewhere. Overall, victims have claimed $18 million in losses due to the scheme. For more on how the financial industry has coped with this trend, check out our coverage in American Banker.
Financial Times
In the first installment of a three-part series, the paper questions how turmoil and decline have come to define the banking industry. The paper notes how regulation and increased competition from non-banks have put a damper on banks' results — even industry leader JPMorgan Chase makes just a 12% return on equity. On top of that, the banks themselves are shrinking — slashing jobs with vigor. The paper offers three theories for the industry's struggles: that it's all regulation's fault; that it's a return to normal given the pre-crisis boom; and that this represents the terminal decline of banking as new technologies and companies emerge. Regardless of which argument you side with — and there is plenty of room for debate on that — it's hard to deny the picture painted is pretty bleak.
And speaking of banks' troubles, the paper also examined what factors have caused the delayed recovery for European banks. Recently, a smattering of banks across the pond have previewed serious troubles, including job cuts at Deutsche Bank and UniCredit and capital raisings at Standard Chartered and Credit Suisse. The foremost factor the paper cites is Europe's slow pace in restructuring the banking industry versus the quick set up of TARP in the U.S., which allowed banks to recover much more quickly. The other big factor they identify: Europe's banks were always weaker than their American counterparts.
HSBC is returning to China with a joint venture. The U.K.-based bank will join forces with Shenzen Qianhai Financial Holdings. The move seems a risky one. Other U.S. and European banks have attempted similar joint ventures in the past with Chinese banks, but found the attempts to be mostly failed experiments. The overseas banks that do this are never granted more than minority ownership, meaning they have little control over business decisions, and the profitability is disappointing. Still, HSBC could stand to gain quite a bit — both in financial terms and in bragging rights — if its attempt proves successful.
New York Times
Victor Fleischer, in his "Standard Deduction" column for the paper, takes a look at what he calls the "executive paycheck myth." Executive compensation in the U.S. has come to be defined by the pay-for-performance model. If a company's doing well, its executives practically stand to make unlimited amounts of money. This model is so far ingrained in American ethos that its tenets are embedded in the tax code. But Fleischer contends this approach is "an old way of thinking" from a time when executives were much more risk-averse than today's pedigree. And with pay-for-performance's basis in short-term thinking, such a strategy could bode poorly for the companies that allow it, while executives rake in the big bucks.
Elsewhere ...
CNBC: A survey finds millennials are not all that different from others when it comes to work. According to the study, 18% of millennials rate work-life balance as important versus 19% of the general population, for instance. And in contrast with their stereotypically whiny perception, millennials were more likely than all adults to be satisfied with their training at work and opportunities for promotion and advancement. But one area where they break with older generations: fewer believe that now is a good time to invest.
