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Banks face ‘extinction phase’ amid new financial technology

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The financial offices of banks, including JPMorgan Chase, Citi, HSBC, and other institutions in the financial district of Canary Wharf, are pictured from Greenwich Park in London on January 17, 2017.

Ben Stansall | AFP | Getty Images

The financial offices of banks, including JPMorgan Chase, Citi, HSBC, and other institutions in the financial district of Canary Wharf, are pictured from Greenwich Park in London on January 17, 2017.

Pedigrees, some stretching back centuries, are of little use to global banks unless they aggressively adapt to new financial technologies.

That’s long been true, but the pace of innovation means financial juggernauts now face what one top executive likened to a mass extinction event.

A revolution in financial technology — often shortened to fintech — has propelled an explosion of new entrants who are shaking up the sector. Established giants, for their part, are fighting to adapt, emphasizing that technology may be changing fast but banking fundamentals are not.

Stephen Bird, CEO for global consumer banking at Citi, said the current changes may be happening on an unprecedented scale, but his bank — established in 1812 — is set to make the transition.

“The benefit of being 200 years old is that we have a survival reinvention DNA and that is core to who we are,” Bird said during a panel discussion Wednesday at the annual Hong Kong FinTech Week conference.

“We think of it as we are living through an extinction phase,” Bird said. “It is not an incremental thing, it’s an epochal shift.”

Given the explosion in new financial players, he said, established banks will need a “tense and deep re-engineering” of processes to enhance speed, convenience and trust and get at what is most important: the customer.

Bird said Citi in the United States, for example, has gained an edge by developing new ways of doing things by actively listening to its customers through “co-creation.” Citi had 20,000 such sessions, which Bird credited with helping Citi achieve what he described as the most rapidly growing mobile base in North America.

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Germany’s Weber wins EPP backing for EU’s top job

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Manfred Weber, German head of the Christian Democrats in the European Parliament, gestures after being selected head of the executive arm of Europes Christian Democrats during the European People's Party congress in Helsinki, Finland, on Thursday, Nov. 8, 2018. 

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Manfred Weber, German head of the Christian Democrats in the European Parliament, gestures after being selected head of the executive arm of Europes Christian Democrats during the European People’s Party congress in Helsinki, Finland, on Thursday, Nov. 8, 2018. 

German EU lawmaker Manfred Weber won the backing of Europe’s centre-right parties on Thursday to stand in the race to become European Commission president next year.

Weber beat former Finnish prime minister Alexander Stubb to become the European People’s Party’s (EPP) top candidate in the European Parliament elections next May, making him frontrunner for the EU’s most influential job, the head of the bloc’s executive overseeing laws and trade deals.

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IMF lowers Europe’s growth outlook due to ‘external turbulence’

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Since its last more bullish forecast in May, trade tensions between the U.S. and China have increased and the tightening of global financial conditions has been thrown into sharp relief — not to mention political upheavals in Europe, slow progress on structural reforms and ongoing Brexit negotiations.

“In the short term, escalating trade tensions and a sharp tightening in global financial conditions could undermine investment and weigh on growth,” the IMF reported in its latest research.

In the medium term, meanwhile, risks stem from delayed fiscal adjustment and structural reforms, demographic challenges, rising inequality, and declining trust in mainstream policies.

Also, a “no-deal” Brexit would lead to high trade and non-trade barriers between the U.K. and the rest of the European Union with negative consequences for growth, the IMF stated. A “no-deal” Brexit is classed as where the country crashes out of the EU without a trade deal, and reverts to WTO rules.

The report comes after the European Commission on Thursday also reported that growth could stall in the 19-country euro zone due to “many interconnected downside risks.” It forecast growth of 1.9 percent in 2019 (like the IMF) and 1.7 percent in 2020.

Europe is expected to see growth moderate along with most major economies. The Fund released its World Economic Outlook report in October in which it cut its global growth forecasts too, forecasting 3.7 percent in 2018 and 2019 — down 0.2 percentage points from an earlier forecast.

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California Energy Commission grant for hydrogen fuel cell station

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The California Energy Commission has voted to approve an $8 million grant for the development of a high-capacity hydrogen fueling station.

In a statement Wednesday the Commission said the fueling station, at the Port of Long Beach, would be used to service and promote the expansion of zero-emission fuel cell electric Class 8 drayage trucks. Drayage trucks are used to take freight from ports to warehouses and other locations, the Commission said.

The Commission added that the promotion of zero-emission vehicles would help to “reduce greenhouse gas emissions and air pollution at the nation’s second busiest container port.”

The station, according to the Commission, will source its hydrogen “from 100 percent renewable biogas.”

Hydrogen is becoming an attractive fuel source for many types of transport.

A fleet of hydrogen fuel cell buses is currently in operation in the Scottish city of Aberdeen. In September, European railway manufacturer Alstom launched what it says is the world’s first hydrogen fuel cell train, which can travel up to 140 kilometers per hour.

The European Commission has described hydrogen as an energy carrier with “great potential for clean, efficient power in stationary, portable and transport applications.”

For its part, the U.S Department of Energy (DOE) states that hydrogen can be utilized in fuel cells to produce power using a chemical reaction instead of combustion. This, the DOE says, means that the only by-products are water and heat.

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