Alt Lending Week 23rd July 2021

Bank of England signals concern over Cloud providers dominance in UK financial sector

To be honest I am surprised that it has taken this long for this undoubted issue to surface. Let’s put it this way if all cloud companies were Chinese would we have tolerated the migrations we have had to date? Cloud computing is obviously top heavy with the old lady estimating in 2019 that four firms controlled 65% of the market. The bank seems to have three main issues concentration of sensitive data and resilience are the first two. But  Andrew Bailey, the bank’s governor made the extraordinary claim that he had seen examples of Cloud companies using “ market power” to deny their companies information which allowed them to monitor risk. A bit more digging into exactly what this meant might be appropriate? The reason that Cloud computing exists is because it is cheaper. Add to this the pigs ear that most major banks have of managing their IT estates and it becomes a compelling and profitable way of doing things. The traffic here is only going one way. Nevertheless I suspect that efforts to investigate the developmental integrity of these large companies will yield little benefit. Ultimately a discussion with the major players on how they mitigate the undoubted risks might be a better way of going.


Big banking players need to think hard on geopolitical risk of China

Going back to the previous comment I wonder what we would be thinking now if all cloud provision was owned by the Chinese? President Biden is making it clear that certain practical difficulties are emerging over the increasingly hostile stance taken by China particularly over Hong Kong. From the UK perspective the spotlight falls on HSBC the largest London based Global Bank. It’s performance has been very good up until now largely because of its focus on the buoyant and growing Asian market. However Biden is signalling that those doing business with the Chinese might have to take a hard look at their US operations. HSBC seems to be pursuing a strategy of consolidating its Hong Kong operations despite the obvious growing and accelerating political tensions. HSBC seems to want to have its cake and eat it too but in reality if it wants to keep the Western part of its franchise it will have to be careful. The US has real teeth when it wants to use them. Some of us oldies still remember what it did to Iran just over 40 years ago. HSBC and many others might have to make some really tough choices.

The Debt conundrum is a UXB!

Another must read article from the Daily Telegraph’s City Editor Ben Marlow and he doesn’t pull any punches. He is telling all of us City watchers what we intuitively knew already that there is a toxic mix of inflationary pressures, overvalued assets and a market place tremendously vulnerable to a sharp rise in Interest rates. Nevertheless that is where not just the UK but the whole western world led by the US happens to be. The UK banking sector seem more or less intact at the moment but as pointed out there are red flags all over the place. Government policy during the pandemic has been life support for a lot of businesses how they will cope with financing the expected post COVID bounce from a stretched banking system within both the UK and Continental Europe remains to be seen. Bond defaults are also rising. But the combination of inflationary pressures and economies that cannot take the medicine of higher interest rates is just as it is described here. An unexploded bomb waiting to go off.



Howard Tolman is a well-known banker, technologist and entrepreneur in London,

We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives.

Daily Fintech’s original insight is made available to you for US$143 a year (which equates to $2.75 per week). $2.75 buys you a coffee (maybe), or the cost of a week’s subscription to the global Fintech blog – caffeine for the mind that could be worth $ millions.



Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.