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Daily briefing - 04 September 2019

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"It might not have been his intention," writes Jonathan Ford in the FT today, "but Julian Richer recently became a socialist hero. In May this year, the owner of the hi-fi and TV retail chain, Richer Sounds, did something that does not happen very often. He transferred his controlling stake in the business with its 53 stores to a trust for the benefit of its 530 staff." You may imagine FT readers on the tube snorting out their mochaccinos at this sort of stuff but it's always had a sneaking regard for socialist heroes, unlike, say, former prime minster David Cameron. (Remember him?) Cameron once recalled being a fan of 'Eton Rifles', the 1979 song by The Jam. It's an example of the misplaced faith of the British ruling class. Eton Rifles is a working class sneer in the face of the privileged young British elite attending Eton College on their way to Oxford or Cambridge and on to the Spectator magazine or the Telegraph before ending up in the House of Commons. Let's be clear about what's going on here though: the Eton Rifles are willing to shoot the entire country in order to save themselves. Now UK parliamentarians including renegade members of the governing Tory party are battling against a minority Eton Rifle government over ending negotiations with Europe over Brexit. As we noted yesterday, the Financial Times has already decided that the Labour party is the only hope for the UK. A slough of articles about shareholder capitalism today dovetails nicely with the FT slowly realising that it's closer to Jeremy Corbyn on economic matters than it is to Boris 'f*ck business' Johnson. Grab the popcorn.

Digital credit is an unstoppable phenomenon with little regulation yet in play, delivered largely via apps that are downloaded through Google or Apple stores. Word comes this week that Google has decided to limit short-term digital credit apps and will ban apps that require repayment in less than 60 days. (Contrast this for instance with the major Chinese apps which can deliver loans for as short as a few hours, with businesses capable of repayment able to take a number of loans every day.) But because of Google's digital reach as an app gatekeeper, potentially thousands of businesses built on delivering short term credit could dry up overnight - and most borrowers taking short-term loans are on the Android OS, so the Google store is the only option. "Whether you like short-term lenders or not, there can be no disagreement that this action by Google is extraordinary, effectively cutting off one of the largest distribution channels available to these online lenders. Surely these businesses, which fall under the remit of financial regulators, ought to be the arbiter of whether these businesses can or can't distribute their product, not Google?" writes Jessica Ellern in Fintech Daily. "With both companies teasing with financial innovation themselves, is it only a matter of time before other fintechs are in the firing line, with policy and 'morals' providing cover for the tech giants anti-competitive behaviour?"

Germany's fintech ecosystem is not as easy to pin down as the UK's, especially given UK fintech's proximity to the City of London, but it's definitely evolving and with its own locus too. Take Raisin, which started off by focusing on savings accounts, a product hardly of interest to other fintechs. Yet Raisin has now got a banking licence and is starting to tap into the massive retirement and pensions market. Goldman Sachs has been a keen investor in the scene and it doesn't just have its eye on the German capital, Goldman's Jana Yared tells Bloomberg. " 'Digital banking seems to have a strong centre in Berlin', she said, while 'more capital markets focused fintechs are born in Frankfurt. An ecosystem has developed in both cities, attracting talent'. In May, Goldman led a founding round for Berlin-based Elinvar which was founded by former Deutsche Bank AG employees and has built a digital platform to enable lenders to offer their services online. Two month later, it invested 25 million euros in Raisin, an internet platform allowing user to compare bank-savings products."

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