Payments and commerce never sleep, and as last week demonstrated, they aren’t big on extended vacations, either. Everyone caught the highlights. Apple had its annual big show to positive, if not rave, reviews. Google/Android answered back with Google’s latest iteration of a payments play and its cure for the walled garden blues.
However, while the neverending struggle between Apple and Android for all flavors of mobile dominance never fails to make interesting copy, it was only one of many fascinating floor shows on display in the last seven days. So, what else is worth writing home about?
As always, PYMNTS has your guide …
The Bidding War For GE Capital
Everyone is looking for a little piece of GE to call their own.
Luckily, there’s an awful lot of it to go around, as GE Capital is working to actively unload about $275 billion in assets over the next two years. Why, you ask? It’s all an effort to get rid of its designation as a Systemically Important Financial Institution (SIFI).
The financial services and corporate lending unit of General Electric ranked as the nation’s seventh largest bank at the beginning of 2015 — earning it both the SIFI designation and the mountains of additional regulatory oversight that accompanies it. The designation raises GE’s capital requirements and reduces the profits it can feed back to industrial operations or for dividends or share repurchases. Shareholders also view the finance business as too risky after it came close to taking GE down during the financial crisis.
All in, GE Capital is unloading about 75 percent of its financial services assets.
Unsurprisingly, financial players across the globe are lining up to grab up some of the billions of dollars worth of GE Capital assets.
Wells Fargo and the Blackstone Group have collectively spoken for $23 billion in real estate loans. Wells Fargo is additionally said to be interested in acquiring $74 billion worth of middle-market loans. Capital One announced last month it would be buying GE Capital’s health care finance unit for $8.5 billion.
And reports last week indicate that new bidders are entering the market all the time, with several Japanese banks looking to acquire GE’s commercial lending and leasing unit. Now on the ever-expanding list of interested parties are Orix Corp, Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group and Sumotomo Mitsui Trust Holdings.
The assets in play are estimated to be worth $5 billion, and the sale will be handled by Morgan Stanley.
“We have a constructive relationship with our regulators and will continue to work with them as we go through this process,” GE CEO Jeff Immelt said when GE first announced its plans to drastically reduce the scope of its lending business to loans that are directly related to its industrial businesses, such as aircraft engine financing.
When all is said and done, GE expects that more than 90 percent of its earnings will be generated by its industrial businesses by 2018, up from 58 percent in 2014.
There are many ways to count the value of bitcoin. In U.S. dollars, the current price for a single bitcoin is around $230. But bitcoin can also be valued in investor enthusiasm and what sober-minded conservative financial services experts are willing to pour into the blockchain to see it developed for practical mainstream use.
And this week that value is $30 million — the sum that Chain, a San Francisco-based provider of blockchain technology solutions to financial institutions, was able to secure in its latest funding round backed by such high profile players as Visa, Nasdaq, Citi Ventures, Capital One, Fiserv and Orange SA. Beyond major investors, Chain also announced that RRE Ventures Founder Jim Robinson III, the former American Express CEO, has joined its board.
Chain works with banks and financial institutions to determine how the blockchain technology can be harnessed in a way that can make it faster and easier to trade and transfer financial assets.
“Technology relationships and investments, such as Chain, allow Visa to evaluate new technology that has the potential to deliver new payment innovation and support clients’ needs. Chain has built a platform that makes rapid prototyping easier, and the company is focused on finding practical enterprise applications of blockchain technology — a goal that we share in our evaluation of the technology,” Jim McCarthy, EVP and head of global innovation and strategic partnerships at Visa, told PYMNTS.
“We are looking forward to working more closely with Chain and the other financial companies investing in Chain — Capital One, Citi, Fiserv and Orange — to collaborate on what’s possible together with this exciting new technology,” he added.
Chain’s newest partners will also be involved in helping create a Blockchain Working Group in an effort to explore the technology and test it in various markets in order to determine how the technology should be approached. Chain’s business model focuses on working with FIs to design, deploy and operate blockchain networks that are tailored for markets and assets.
“A blockchain is more than a financial technology — it’s a strategy,” said Adam Ludwin, Chain’s CEO. “Applied intelligently, blockchain networks fundamentally improve how assets move between parties, and we are thrilled to be partnering with the organizations we believe are best positioned to capitalize on the inevitable changes in market structure that are on the horizon.”
Chain launched just a year ago, but it’s already gained backing from several major financial institutions. Previous investors include Khosla Ventures, RRE Ventures, Thrive Capital and SV Angel also participated and were joined by former Bank of America CEO David Coulter, X Prize Foundation CEO Peter Diamandis and MongoDB Cofounder Kevin Ryan.
While there are many high-tech ways to find out what consumers really want, for its recent study of consumer mobile habits, MasterCard went with one of mankind’s tried and true methods for determining consumer intention: They listened to them talk.
A lot of them, as it turns out. For its just-released research, MasterCard surveyed 1.6 million unprompted online conversations via social media posts (Twitter, Facebook, Weibo, Instagram, YouTube, etc.) related to shopping and retail, across 61 markets. The goal of the study was to get answers to two questions:
What they found is remarkably similar to the drum we have been beating for quite some time now. For consumers, payments isn’t really about paying at all; it is about the retail experience it enables, or fails to provide.
“Key findings from the study indicated retailers are experiencing a shift in consumer expectations, requiring new and richer experiences, which will enable consumers around the world to shop at the ‘speed of life,’” theMasterCard study concluded.
The three key takeways indicate that when it comes time to pay, a payment method has to provide three main things. First, it has to be easy and convenient — 77 percent of consumers ranked convenience as a primarily important aspect of new digital payment methods.
Rewards and benefits was the most vociferously and positively discussed topic across social media when it came to shopping and retail (38 percent share of coverage of the six aspects measured).
Consumers additionally expressed eagerness for further acceptance of NFC payments allowing them to receive rewards for using them regularly, citing MasterCard’s Fare Free Fridays in London as an example.
Following rewards and benefits, acceptance, as in locations where one has an opportunity to try mobile out, was a primary concern of 21 percent of users polled.
The study also noted where mobile partiality was strong. Fashion-focused shoppers were the most keen to give a “shout-out” to retailers who accepted new methods of payment, including contactless and mobile payment capabilities. Twitter also seemed to be the social media hub of choice for discussion about retail or shopping among users of mobile payments.
So, what did we learn about what’s next in payments and commerce? GE is bowing out, bitcoin is buying in and consumers are still waiting for the experiences to match up to their excitement.
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