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Tag: banking sector

  • Reasons Why Nomura saw a loss of $2.3 Billion

    Nomura Holdings which is a Japanese brokerage house has recorded a steep loss for the first quarter of 2021. Nomura had also booked a loss in the previous financial year amidst the Covid pandemic. Let’s look at the reason given by Nomura holdings regarding the loss and the further steps taken by the company.

    About Nomura Holdings
    Reason and Amount of loss
    Past of Archegos Capital Management
    Strategy of Nomura Holdings
    Further Steps
    Risk Management
    FAQ

    About Nomura Holdings

    Nomura Holdings is a Japanese-based financial holding company that is one of the most important members of Nomura Group. The company was established in the year 1925 and has its headquarters located in Tokyo, Japan.

    The company is part of the financial services, consulting and financial management industry. They provide their services to individuals, institutions and government customers on a global basis.

    Some of the services provided by Nomura Holdings are Financial Services, Security Services, Retail Banking, Investment Management, Asset Banking and Asset Management.

    Reason and Amount of loss

    On 27 April 2021, Nomura Holdings has said that its losses from the collapse of a U.S investor Archegos Capital Management would amount up to USD 2.87 billion. This has put the Japanese-based Nomura Holdings under a steep loss.

    In the first quarterly report, the company has recorded a loss of 245.7 billion yen which is related to the transaction with Archegos Capital Management. In relation to the same transaction, the company said that it will further book a loss of up to 62 billion yen in the current fiscal year.

    In the first quarter, the overall loss booked by Nomura Holdings was around 155 billion yen (Around USD 1.4 billion). This is considered to be the first quarterly loss of Nomura Holdings in a year.

    Reasons Why Citibank is leaving Indian consumer banking market
    Citi Bank had recently announced that it will exit retail banking operations inIndia and 12 other countries. The other countries include Australia, Indonesia,Korea, Bahrain, Malaysia, Philippines, Poland, Taiwan, Russia, Thailand andVietnam. Citi bank is one of the largest foreign banks in India.…
    StartupTalkyAlan Joseph

    Past of Archegos Capital Management

    Nomura Holdings was one of the string of banks that were exposed to Archegos which is a New York-based investment company and family office which is run by Bill Hwang.

    On 29 March 2021, Nomura holdings had already warned about the loss of around USD 2 billion which would arise from the transaction of the U.S client. Earlier Credit Suisse has also faced losses worth billions of dollars in regards to the transactions with Archegos.

    Even the rival bank Swiss Bank UBS said on 27 April 2021 that it had lost an amount of up to USD 774 million from the trades which were linked to the same company. The quarterly loss of Nomura Holdings had increased to USD 2.3 billion as there was a decline in the value of the collateral.

    As of 23 April 2021, the company has disposed of 97 % of the positions that are related to Archegos. The loss has occurred at Nomura’s prime brokerage unit through a business dealing with family offices and hedge funds.

    Strategy of Nomura Holdings

    Nomura Holdings has said that the company has reviewed all its positions in the units as well as the loans provided to the investors. The review has not shown any transactions which are problematic compared to Archegos.

    The company said that it would focus on strengthening its framework in regards to the management of its risk by working together with the experts in the industry outside the company.

    The CFO of the company Takumi Kitamura has said that this loss wouldn’t change the focus of the company on developing a business platform globally and doing business with the wealthy and risky investors.

    He added that there wouldn’t be any change in their strategy of doing business especially with the overseas business that includes the trading business as well.

    4 Biggest Banking Blunders of All Time Which Will Surprise You
    Banks are the place where individuals park their money. Bank’s indicate thatyour life’s savings are secure in their lockers or vaults. But as everything isgetting digital, today banks deal with data and most of the transactions areonline with just a click of few buttons and these automations and …
    StartupTalkyAlan Joseph

    Further Steps

    The CEO of Nomura Holdings, Kentaro Okuda had expressed a deep regret in regards to the huge loss faced by the company saying that otherwise, it would have been a great year for Nomura Holdings. He has promised that it wouldn’t be repeated.

    He added on saying that they have created a lot of anxiety for their customers and shareholders and said that they will take the issue very seriously and make sure that such as situation will not repeat in the future by upgrading their risk management.

    Okuda said that his responsibility is to create a platform to manage risk in a better way. The huge loss was recorded after Okuda finished his first year as CEO of the company. He was formerly the head of Nomura’s U.S operations.

    Risk Management

    In order to strengthen the risk management, the company has appointed a new CEO who was the former senior of J.P Morgan. The company stated Christopher Willcox was the new co-CEO and President of Nomura Securities International.

    Willcox has worked with J.P Morgan and is a former CEO of J.P Morgan Asset Management. He has also worked with the Citi group for a term of 15 years.

    FAQ

    Is Nomura a Japanese bank?

    Nomura is a Japanese financial holding company and a principal member of the Nomura Group.

    What are the big 4 investment banks?

    JPMorgan Chase, Goldman Sachs, BofA Securities and Morgan Stanley are the big 4 investment banks.

    What is the meaning of margin call?

    A margin call is usually an indicator that one or more of the securities held in the margin account has decreased in value. When a margin call occurs, the investor must choose to either deposit more money in the account or sell some of the assets held in their account.

    Conclusion

    The company has decided to focus on providing prime brokerage services to wealthy investors and to continue to do business with family offices. Kitamura added on saying that Family offices will continue to be one of the most important clients for them.

  • Why is Citibank leaving Indian Consumer Banking market

    Citi Bank had recently announced that it will exit retail banking operations in India and 12 other countries. The other countries include Australia, Indonesia, Korea, Bahrain, Malaysia, Philippines, Poland, Taiwan, Russia, Thailand and Vietnam. Citi bank is one of the largest foreign banks in India. Let’s look at the below article to understand why Citi bank is leaving the Indian Consumer banking market.

    About Citibank
    Reasons Why Citibank is leaving Indian consumer banking market
    Other Reasons for the exit from Indian banking market
    Future Plans of Citibank
    FAQ

    About Citibank

    Citibank had entered Indian retail banking in the year 1902. The business of Citi Bank in India consists of Credit Card business, retail banking, wealth management and home loans. The company has around 35 branches across India and around 29 lakh retail customers.

    As of March 2020, Citi bank has around 12 lakh bank accounts and about 22 lakh credit card accounts. The bank has around 5.9% market share in the digital payments and around 6 % market share in credit card spends.

    According to FY2020 Citi bank has a 15.4 % share in the market share of loans among the foreign banks in India. As of 31 March 2020, the total deposits in the bank were around INR 1.57 trillion which includes the deposits from other banks as well as customers.

    It is estimated that around 26% of the foreign portfolio investments are through Citi bank India.

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    Reasons Why Citibank is leaving Indian consumer banking market

    American based banking major Citi bank is reducing its consumer operations as part of a broader strategic review. The new Chief Executive Officer, Jane Fraser is slimming down the operations in order to focus on the wealth management business since Citibank lacks the scale to compete in the retail banking operations.

    Jane Fraser while announcing Citi bank’s quarterly results said that they have decided that they are going to double down on wealth as a result of the ongoing refresh of their strategy. He said that, while all the 13 markets including India have excellent business, Citi Bank doesn’t have the scale they require to compete.

    Jane Fraser added on saying they believe that their capital, investment dollars and other resources are deployed better against the higher returning opportunities which include the wealth management and the institutional businesses in India.

    4 Biggest Banking Blunders of All Time Which Will Surprise You
    Banks are the place where individuals park their money. Bank’s indicate thatyour life’s savings are secure in their lockers or vaults. But as everything isgetting digital, today banks deal with data and most of the transactions areonline with just a click of few buttons and these automations and …
    StartupTalkyAlan Joseph

    Other Reasons for the exit from Indian banking market

    One of the other reasons for the exit from the retail market in India syncs with the trend of full or part exit of foreign banks in India from the year 2009. This is mainly because of the high capital and various other regulatory requirements in India.

    These factors have pushed various foreign banks to retreat into their domestic markets in order to protect their profitability. Certain foreign banks such as Barclays, HSBC, Standard Chartered bank, etc. have curbed their operations in India and other banks such as J.P Morgan, Goldman Sachs, etc. have surrendered their banking licenses.

    In addition to it, foreign banks do not find the small number of profits received from retail banks in India commercially attractive. This is one of the major reasons to exit the retail market when the domestic banks are in the process of finding more retail customers.

    Things You Should Know About Top 10 Banks In India
    The banking sector is the most leading industry in the Indian economy. India’sbanking sector is sufficiently capitalized and well regulated as per the ReserveBank of India. Over the centuries, banks evolved to become a financialinstitution where one could deposit and withdraw money from. A bank’s…
    StartupTalkyYash Gupta

    Future Plans of Citibank

    Citigroup has said that it will now focus on operating its global consumer banking business solely from four markets such as Singapore, Hong Kong, London and the UAE. The company said that it would continue its corporate and institutional banking business in the markets where it is ending planning to end the consumer operations.

    In India, Citigroup will focus on offshoring or global business support rendering its services from major centers in Mumbai, Pune, Bengaluru, Chennai and Gurugram.

    Ashu Khullar who is the CEO of Citi India said that India is a strategic talent hub for Citi and he added on saying that they will continue to tap into the rich talent pool which is available in the country to grow Citi’s five solution centers which are a support for their global footprint.

    He also added that, there was no immediate change to their operations and there wouldn’t be any immediate impact to the colleagues as a result of this announcement.

    Citi is not closing down its business in India but it is changing hands after it gets a requisite regulatory approval and a proper buyer. The bank said that till the time of the sale there will be no impact for their customer as well as their 21,000 employees.

    FAQ

    Does Citibank have branches in India?

    Citibank currently has 35 branches in India with 19,235 employees.

    Is Citi and Citigroup the same?

    Citigroup Inc. or Citi (stylized as citi) is an American multinational investment bank and financial services corporation headquartered in New York City. Citigroup owns Citicorp, the holding company for Citibank, as well as several international subsidiaries.

    Who is the CEO of Citibank India?

    Ashu Khullar is the current CEO of Citibank India.

    Conclusion

    Citi had become one of the largest foreign banks in India over the years and its decision to close down the consumer business in the country marks the end of an era.

  • Things You Should Know About Top 10 Banks In India

    The banking sector is the most leading industry in the Indian economy. India’s banking sector is sufficiently capitalized and well regulated as per the Reserve Bank of India. Over the centuries, banks evolved to become a financial institution where one could deposit and withdraw money from. A bank’s job is to provide customers with financial services that help people manage their lives. As technology advances and competition increases, banks are offering services to stay current and attract customers. Here’s a list of top 10 banks in India 2020. So, let us see the complete insights on the topic- Things You Should Know About Top 10 Banks In India.

    State Bank of India
    HDFC bank
    ICICI Bank
    Punjab National Bank (PNB)
    Axis Bank
    Canara Bank
    Bank of Baroda
    Union Bank of India
    Central Bank of India
    Bank of India ( BOI)

    1. State Bank of India

    Top 10 Banks in India 2020
    Top 10 Banks in India 2020

    The oldest of the Indian Banking sector, SBI is also one of the largest banks in India and now a fortune 500 company. The Corporate Centre is in Mumbai and 14 Local head offices and 57 zonal offices are located at important cities spread throughout the country. It is having more than 26, 340 branches, and over 60,000 ATM facilities. It is headquartered in Mumbai, Maharashtra.

    Its assets are more than 390 billion USD. This bank offers a wide range of services, including corporate banking, consumer banking, investment banking, finance and insurance, credit cards, home loans, car loans, mortgage loans, private banking, savings, securities, private equity, wealth management, and asset management. SBI serves a worldwide audience, with a strong presence both in India and internationally.

    2. HDFC bank

    The Housing Development Finance Corporation ( HDFC) is a well known private bank in India. Established in 1994, it is headquartered in Mumbai. This bank has nearly 4800 branches and more than 1200 ATM’s spread across major parts of the country. HDFC offers personal loans, credit cards, car loans, consumer financial services, and forex cards. Its assets are around 66.7 billion USD.

    3. ICICI Bank

    ICICI Bank is one of the most reputed and top Indian banks in India. Here, it has around 4867 branches and 14367 ATMs across India. It has spread across 17 countries including India. It has a registered office in Vadodara (Gujarat) and has headquarters in Mumbai.

    It has some of the most prominent subsidiaries in the United Kingdom, Canada including branches in the United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar, Oman. It provides services regarding withdrawals and deposits, loans, privilege banking, insurance policies, credit cards, and other services. Its total assets are around $13.5 billion US.

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    4. Punjab National Bank (PNB)

    Top Indian Banks
    Top Indian Banks

    Punjab National Bank was established on April 12, 1985, in Lahore under the leadership of Lala Lajpat Rai as a part of the Swadeshi movement. PNB has its headquarters in New Delhi. There are over 10, 681 ATM centers and 7000 branches of this bank, which includes 62% of the branches set up in semi-urban and rural areas.

    It is a state-owned corporation, this bank has a market capitalization of Rs. 37,411.52 crores. It provides all services relating to banking and finance. Its total assets are around Rs. 789,265.79 crore.

    5. Axis Bank

    Axis bank was founded in 1993 in Ahmedabad as a part of the Unit Trust of India (UTI). It is one of the top trusted banks in India and offers consumer banking, corporate banking, credit cards, finance, and insurance, investment banking, private equity, mortgage loans, wealth management, and more.

    The bank has more than 13,000 ATMs and over 3000 branches in India and 9 international offices. Axis Bank has 30.81% of its market shares that are owned by promoters group while the remaining 69.19% shares are owned by mutual funds, Falls, banks, insurance companies, and other forms of individual investors.

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    6. Canara Bank

    Canara Bank is a state owned commercial bank providing  financial services. Established in 1906, it has its headquarters in Bangalore. The bank has about 3200 branches with over 4000 ATM’s. It has a global presence with branches in Hong Kong, Shanghai, London, New York, Manama, Johannesburg, and Dubai. Its total assets are around Rs. 711,782.81 crores.

    7. Bank of Baroda

    Established in 1908, Bank of Baroda has its headquarters in Vadodara in Gujarat and corporate office in Mumbai. Currently, it has 9,500 branches functioning all over the world including 104 overseas branches and more than 13,400 ATM facility centers across India. Its services include debit and credit card facilities, loans, and wealth management.

    On July 19, 1969, the Bank of Baroda was nationalized by the Indian government, after which the bank came under the category of PSU (profit marketing public sector undertaking). Its total assets are around $100 billion US which’s why it’s considered to be in the top 10 government banks in India.

    8. Union Bank of India

    Established on November 11, 1919 in Mumbai, the Union Bank of India was initially started as a limited company. After nationalization in 1969, the bank turned into a commercial bank. It has more than 4500 branches all over India, including four overseas branches- Dubai, Sydney, and Hong Kong.

    It has more than 4500 branches and 7000 ATM facility centers all over India, including four overseas branches – Dubai, Sydney, Antwerp, and Hong Kong. Its total assets are around Rs. 498,580.54 crore.

    9. Central Bank of India

    Central Bank of India is one of the oldest and top banks in India. The Bank has its headquarters in Mumbai. It has spread across 29 states and 6 Union Territories of India. At present, the Bank has 4,886 branches, one extension counter, and ten satellite offices operating at different centers all over the India. This bank has its presence in Hong Kong and Nairobi.

    The Bank of Baroda, Bank of India, and Zambian Government enjoy 20%, 20%, and 40% stake respectively in the Central Bank of India as a result of a joint venture entered between them. Its total assets are around Rs. 331,884.64 crore.

    10. Bank of India (BOI)

    Bank of India was established on September 7, 1906, as a result of a partnership between noted businessmen hailing from Mumbai. Initially, the bank was privately owned and controlled but turned into a public sector bank in 1969 after the nationalization of banks. It has more than 5,500 branches operating in 22 countries abroad. The important overseas of this bank are Singapore, Paris, Tokyo, Hong Kong, New York, New Jersey, and London.

    It is from the list of top 10 Indian banks 2020 and has a market capitalization of about Rs. 28,464.06 crores. It is known to be making a profit of 400 million USD. It is also a founding member of SWIFT that uses and assigns each financial organization a unique code and is a messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes. Its total assets are around $96 billion US.

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    Frequently Asked Questions

    Which is biggest bank in India?

    SBI is the biggest bank from the list of India’s top 10 banks 2020 in terms of market capitalisation, branches (22,414), ATMs, offices, revenue generation, and employees (264,041).

    Which bank is safe for FD?

    To get the benefit of high rates, both SBI Bank and ICICI bank have a new FD scheme exclusively for senior citizens. The bank fixed deposits are becoming the first choice of depositors to keep their savings safe.

    Which is best RD or FD?

    The attraction for a fixed deposit and a recurring deposit is the fixed returns with the safety of money invested. But when you compare the two, a fixed deposit scores higher than a recurring deposit. Both FD and RD are fixed income products available from banks.

  • The Biggest Blunders of Banking History

    Banks are the place where individuals park their money. Bank’s indicate that your life’s savings are secure in their lockers or vaults. But as everything is getting digital, today banks deal with data and most of the transactions are online with just a click of few buttons and these automations and convenient banking techniques cause a lot of drawbacks if not used properly. These have created a lot of mistakes in the Industry where the customers and clients have lost their trust in the banks.

    Here are some of the Biggest Blunders of Banking History

    Citi Bank “Biggest blunder in banking history”
    KfW bank “Germany’s dumbest bank
    Deutsche Bank’s 26 Billion Euros Blunder
    PayPal’s USD 92 quadrillion blunder

    Citi Bank “Biggest blunder in banking history”

    Citibank lost $900 million
    Citibank lost $900 million

    Citi Bank was acting as a loan agent between the Cosmetic company Revlon and its creditors. The bank had to pay an amount of USD 8 Million to the lenders. In February 2021 Citi bank paid an amount of USD 900 Million (around INR 6,530 crores) to the lenders. Instead of paying the interest amount to the lenders the bank paid the full loan amount. Citi bank had notified the creditors within 24 hours of the mistake but yet it hadn’t received back around USD 500 Million from around 10 others.

    The bank moved to the court where the Judge said that the issue was in clash between two principles: money which is sent by mistake is supposed to be returned but if the lender is paid back in full, the creditor should not have to worry. Here, the bank had transferred to money to the people whom they owed money and the receiver had no reason to believe that it was an error.

    The Judge also said that Citi group transferred the money on 11 August 2020 when the due date for the payment of interest was on 28 August 2020 and the only way the interest would have been a due on 11 August 2020 only if Revlon was paying the principal amount early.

    As the lenders did not feel that the amount transferred was by mistake Citi Bank would lose around half a Million USD which is considered as the “Biggest Blunder in the Banking History”. The creditors are still not free to use the money as USD 504 Million is still frozen.

    KfW bank “Germany’s dumbest bank

    KfW bank accidently sent around 5 billion Euros (INR 43,966 crores) to accounts with four other banks. The bank has claimed that it was human error as an experienced programmer has committed an error which made their software automatically to transfer the amounts. The Bloomberg news has said that around 6 billion Euros have been transferred. The error was pointed out by the German Central Bank and KfW had claimed that it had immediately rectified the error not causing any financial damage.

    There was a similar incident which had happened during the year 2008 where the bank transferred 320 Million Euros to Lehman brothers on the day, they filed their bankruptcy.

    KfW was termed as “Germany’s dumbest bank” by the mass – market daily Bild.

    Deutsche Bank’s 26 Billion Euros Blunder

    The bank accidently sent 26 Billion Euros to an account in Deutsche Boerse AG’s Eurex clearinghouse in 2018. The bank had claimed that it was an operational error which happened during the movement of the collateral between Deutsche Bank’s principal accounts and Deutsche Bank’s Eurex account. The spokesman of Deutsche bank said that the errors was identified within a matter of minutes and was rectified. He also added that they had taken measures to not repeat the mistakes. This mistake had cost the company’s shares to fall by 25% that year.

    There was another incident which happened in 2015 where the bank transferred around USD 6 Billion to a client’s account in the hedge fund in U. S, the bank had received back the money the next day. It has told that the transfer of money was made by a junior foreign exchange sales department employee, when the boss was on vacation.

    PayPal’s USD 92 quadrillion blunder

    PayPal accidentally transferred $92 Quadrillion to a man in Delaware
    PayPal accidentally transferred $92 Quadrillion to a man in Delaware

    PayPal the online – money transfer company had accidently transferred an amount of USD 92 quadrillion to a man in Delaware named Chris Reynolds during the year 2013. The man said he was shocked when he received his monthly statement through an e-mail.

    Reynolds was a PayPal customer for the past 10 years and used it to buy and sell items on eBay mostly vintage car parts. He has told that he usually wouldn’t spend more than $100 a month.

    PayPal had admitted the error and paid an amount to Reynold as a compensation which was not disclosed. PayPal had admitted that it was a technical mistake.

    Conclusion

    The above are some important Blunders committed by the banking industry. There are a lot more blunders and with the implementation of technology the blunders have increased. The banks need to train the employees with the new technologies and make sure that the blunders don’t repeat. Updating their security systems and updating their employee’s knowledge on a regular basis will help to an extent to avoid these mistakes.

  • Impact Of Blockchain In Banking Sector

    From early history, the banking industry has been acting as an intermediary to conduct financial transactions. Technology has always had an impact on the banking system. Major banks and financial institutions are realizing that blockchain technology could vastly improve the efficiency of their processes –particularly in cross-border payments – and reduce costs. A Blockchain is a digital, immutable, distributed ledger that chronologically records transactions in near real-time. Blockchain in the banking sector can play a key role in helping Indian banks and financial institutions realize significant benefits. Blockchain proposes a solution for this criticism as well as provides a competitive advantage over the Fintech industry.

    The banking industry represents a major part of the global economy. Banks are the biggest and oldest financial intermediaries around the world. Over time, the technology-facilitated Automated Teller Machine (ATM), electronic fund transfer, electronic clearing service, real-time gross settlement, online banking, debit-credit cards, and mobile banking to the customers. Today, the banking industry is reliant on technology, and therefore, blockchain could prove to be the game-changer in the industry.

    Blockchain
    Blockchain

    Fraud Prevention

    Protection from identity theft and fraud is a constant challenge for everyone involved in buying and selling. Blockchain’s decentralized technology can enable banks and financial institutions to be more effective in the areas of fraud management and money laundering.

    KYC/AML

    Current KYC procedures which are used by leading banks and corporations around the world are completely dependent on human beings and are therefore slow and inefficient. Know Your Customer(KYC) and Anti-money Laundering(AML) is very essential for the identification of clients and also for preventing and tracking crime. Blockchain technology has proved to be very effective and compelling for cryptocurrencies to run successfully but it’s not the only thing that it can be utilized for. Creation of a common KYC & AML registry that could be utilized by various banks & financial institutions. This would drastically increase the process and reduce the expenses of KYC compliances. KYC & AML registry could be utilized for intra-bank purposes also. For KYC document storage, it makes sense for the banks to develop a shared private blockchain.

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    Faster Payments

    The World Economic Forum estimates that 10% of global GDP will be stored using blockchain by 2027. Most of this will be captured within cryptocurrencies. Unlike traditional currencies, cryptocurrencies enable quick transactions, secure, and global. Blockchains are revolutionizing the world of payments by fulfilling the bank’s desire for faster processing. Cryptocurrencies have barely been used for everyday payments and purchasing due to a few complications with regulation and trust. Cryptocurrencies have barely been used for everyday payments and purchasing due to a few complications with regulation and trust.

    Forest is an open-source blockchain platform specially developed for high-speed private payment. This platform integrates a large number of the latest technologies in the field of blockchain technically. The main objective of a payment ecosystem is to use a decentralized network to enhance payments and financial settlement.

    Centralised Payment System
    Centralised Payment System

    Clearance and Settlement systems

    A Distributed Ledger Technology (DLT) like blockchain could enable bank transactions to be settled directly and keep track of them better than existing protocols such as Society for Worldwide Interbank Financial Telecommunication (SWIFT). DLT is viewed by many as having the potential to disrupt payment, clearing, settlement, and related activities. DLT could reduce the traditional reliance on a central ledger managed by a trusted entity for holding and transferring funds and other financial assets.

    Proponents of the technology highlight its ability to transform financial services and markets by:

    • Reducing complexity
    • Improving end-to-end processing speed and thus the availability of assets and funds
    • Decreasing the need for reconciliation across multiple record-keeping infrastructures
    • Increasing transparency and immutability in transaction record-keeping
    • Improving network resilience through distributed data management
    • Reducing operational and financial tasks

    The use of DLT, however, does not come without risks. In most instances, the risks associated with payment, clearing, and settlement activities are the same irrespective of whether the activity occurs on a single central ledger or a synchronized distributed ledger. Which said that DLT may pose new or different risks:

    • Potential uncertainty about operational and security issues arising from the technology
    • The lack of interoperability with existing processes and infrastructures
    • Ambiguity relating to settlement finality
    • Questions regarding the soundness of the legal underpinning for DLT implementations
    • The absence of an effective and robust governance framework
    • Issues related to data integrity, immutability, and privacy

    Fundraising

    Fundraising has been taking place for as long as people have been using money to carry out business transactions. Blockchain is becoming another source of capital for entrepreneurs.

    ‘It’s a brand new way of transmitting money without the need for traditional banking networks, as well as a means to store data in a transparent and unalterable way’. – Sean Williams of Motley Fool

    Blockchain can be used as a source of funding. The main thing is the ‘ICO’ or Initial Coin Offering.

    There are three types of ICO tokens:

    • A currency token is one that has a corresponding ‘fiat’ value. Bitcoin is an example.
    • A utility token is a hybridized token that has a stored value based on the economics of supply and demand. Utility tokens are typically used for things like in-app purchases. An example is Ethereum.
    • A security token represents real-world securities or assets. A security token can be efficiently fractionalized and can represent ownership in a fund. Examples of security tokens include Blockchain Capital (BCAP).

    To gain funding for the project, the developer issues a limited amount of tokens (could be utility or security). The tokens must have a limited amount because:

    • It makes sure that the ICO has a goal to aim for
    • As the demand rises and the supply of tokens diminishes, it makes sure that the value of the tokens will go up. The tokens have a predetermined price which may go up or down depending on the demand.

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    Security in Banking Sector

    Blockchain technology is being used to protect sensitive records and to authenticate the identity of a user. Keyless Security Infrastructure (KSI) stores data hashes on blockchains and runs a hashing algorithm for their verification. Public Key Infrastructure (PKI), an encryption approach that is particularly vulnerable to man-in-the-middle and DDoS attacks. Blockchain has emerged as one of the most disruptive technologies and has minimized the prevailing security issues in financial transactions.

    • Blockchain removes the middleman in asset rights transfers, lowering asset exchange fees, giving access to wider global markets, and reducing the instability of the traditional securities market
    • Moving securities on the blockchain could save $17B to $24B per year in global trade processing costs

    IDC’s most recent five-year forecast, which goes through 2023, indicates that blockchain spending will be led by the banking sector with approximately 30% of the worldwide total.

    Banking Security
    Banking Security

    Loans and Credit

    According to Experian, fintech consumer lending has more than doubled in just four years, growing from a 22.4% share of personal loan originations in 2015 to 49.4% in 2019. Before the rise of banks, loans and repayments took place peer-to-peer. People had to trust each other. Built on a distributed ledger, the very nature of its design is trustless and decentralized. This makes it possible to transfer ownership of an asset from one person to another. The benefits for banks of utilizing blockchain technology are much the same as for individual loan providers, but perhaps even more useful for larger institutions.

    According to a report issued by the World Economic Forum, by the year 2025, 10% of the world’s GDP will be stored on the blockchain.

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    Trade Finance

    Trade Finance in its simplest form can be seen as the financial transactions of both domestic and international trade that take place between a seller and a buyer facilitated by intermediaries such as banks and financial institutions. These trade finance transactions generally include lending, issuing letters of credit, factoring, export credit, and insurance. While blockchain is already being used by many industries ranging from manufacturing, healthcare to real estate, or government application, one of the main industries that can benefit from this technology is trade finance.

    Blockchain Trade Finance procedure:

    • Receiving and classification of trade documents
    • Extraction of data from the recorded documents
    • Generation of valid reports for cross-documentation and transaction
    • Automatically validating the data between documents and generated reports is done
    • Document scrutiny is performed adhering to various rules and regulations

    Digital Identity Verification

    Digital identity arises organically from the use of personal information on the web and the data created by the individual’s actions online. The identity and access management market is expected to grow from $8.09 billion in 2016 to $14.82 billion by 2021, representing a 12.9% CAGR. Managing digital identities done by three Cs – Cumbersome, Costly, and Challenging. Blockchain has evolved significantly from the distributed ledger technology created to track bitcoin ownership. Blockchain can empower users to have greater control over their own identities. Blockchain has facilitated the so-called self-sovereign identity, which is inherently unalterable and more secure than traditional identity systems.

    Users sign up to a self-sovereign identity and data platform to create and register a DID. During this process, the user creates a pair of private and public keys. A decentralized identifier (DID) is a pseudo-anonymous identifier for a person, company, object, etc. Each DID is secured by a private key. Only the private key owner can prove that they own or control their identity.

    In principle, self-sovereign identity would allow users to :

    • Control their identities
    • Access and update information
    • Choose the information that they prefer to keep private
    • Transport the data
    • Delete the identity if that’s what is wanted

  • Citigroup – Serving as a Trusted Partner to the Clients

    Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by the organization it is based on.

    Citigroup Inc. is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers. The Company services include investment banking, retail brokerage, corporate banking, and cash management products and services. Citigroup serves customers globally.

    Citigroup is the third largest banking institution in the United States; alongside JPMorgan Chase, Bank of America, and Wells Fargo, it is one of the Big Four banking institutions of the United States.

    Citigroup – Company Highlights

    Startup Name Citigroup Inc.
    Headquarters New York, U.S
    Industry Financial services
    Founders Sanford Weill(Travelers Group), Samuel Osgood(Citicorp)
    Founded October 8, 1998
    CEO Michael Corbat
    Website www.citigroup.com

    Citigroup – About and How it works?
    Citigroup – Logo and its meaning
    Citigroup – Founder and History
    Citigroup – Mission
    Citigroup – Business Model
    Citigroup – Revenue and Growth
    Citigroup – Investments
    Citigroup – Acquisitions
    Citigroup – Competitors
    Citigroup – Challenges Faced
    Citigroup – Future Plans

    Citigroup – About and How it works?

    Citigroup Inc. or Citi is an American multinational investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking giant Citicorp and financial conglomerate Travellers Group in 1998; Travellers was subsequently spun off from the company in 2002. Citigroup owns Citicorp, the holding company for Citibank, as well as several international subsidiaries. Citi is incorporated in New York.

    Citigroup is the third largest banking institution in the United States; alongside JPMorgan Chase, Bank of America, and Wells Fargo, it is one of the Big Four banking institutions of the United States. It is a systemically important financial institution and is on the list of systemically important banks that are commonly cited as being too big to fail. It is one of the nine global investment banks in the Bulge Bracket.

    Citigroup is ranked 30th on the Fortune 500 as of 2019. Citigroup has over 200 million customer accounts and does business in more than 160 countries. It has 204,000 employees, although it had 357,000 employees before the financial crisis of 2007–2008, when it was bailed out by a massive stimulus package from the U.S. government.

    Citigroup is the holding company for the following divisions: Bank Handlowy (Poland), Citibank Argentina, Citibank Australia, Citibank Bahrain,  Citibank China, Citibank Europe, Citi Private Bank, Citibank (Hong Kong), Citibank India, Citigroup Global Markets Japan, Citibank Indonesia, Citibank Korea, Citibank Malaysia, Citibank Russia, Citibank Singapore, Citibank Uganda, Citibank United Arab Emirates, and Grupo Financiero Banamex.

    Citigroup – Logo and its meaning

    Logo of Citigroup
    Logo of Citigroup

    In 1812, City Bank of New York was organized. The name Citicorp was adopted in 1967 as an abbreviation of First National City Corporation. By then, the nickname “Citibank” already existed. In fact, it was in use since the 1860s, when it was the bank’s eight-letter wire code address.

    The word “Citigroup” was reduced to “Citi”, a simpler, lighter type. The red umbrella of the old logo transformed into a red curve. The logo was developed by Paula Scher from Pentagram.

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    Citigroup – Founder and History

    Sanford Weill (Travelers Group) and Samuel Osgood (Citicorp) are the founders of Citigroup.

    Citigroup’s origins date to the early 19th century. In 1811 the U.S. Congress refused to renew the charter of the First Bank of the United States—the country’s central bank, which had branches in cities such as New York. Thus, on June 16, 1812, some First Bank’s New York shareholders and other investors secured state incorporation of the City Bank of New York, which was later established in the branch banking rooms of the old First Bank.

    The bank grew as New York City became the nation’s commercial and financial capital, and in 1865 it was chartered under the National Bank Act and renamed the National City Bank of New York. In 1897, it became the first large American bank to open a foreign department and, in 1915, became America’s leading international bank upon the purchase of International Banking Corporation (founded 1902), which had 21 overseas offices in 13 countries and territories.

    Other mergers and acquisitions in the United States and overseas expanded the bank. Notably, in 1931 it acquired the Bank of America, N.A. (another descendant of the First Bank of the United States and no relation to the former California-based bank founded by Amadeo Peter Giannini). In 1955, it merged with the First National Bank of the City of New York (founded 1863). Upon the latter merger, the consolidated company took the name of First National City Bank of New York.

    Citigroup – Mission

    Citigroup’s mission statement,”Citi’s mission is to serve as a trusted partner to our clients by responsibly providing financial services that enable growth and economic progress. Our core activities are safeguarding assets, lending money, making payments and accessing the capital markets on behalf of our clients. We have 200 years of experience helping our clients meet the world’s toughest challenges and embrace its greatest opportunities. We are Citi, the global bank – an institution connecting millions of people across hundreds of countries and cities.”

    Citigroup – Business Model

    Citi provides a broad range of financial and banking services that target a wide range of corporate, institutional, and individual clients around the world.

    The company’s primary customer segments can be listed as follows:

    • General Consumers, comprising the general consumer population across the company’s numerous operating jurisdictions, to which it provides consumer banking and credit services;
    • High-Net Worth Individuals, comprising affluent consumers and family offices to which the company provides specialist wealth management services;
    • Corporations, comprising small, medium, and large business across multiple sectors, to which the company provides a range of retail banking services;
    • Institutions, comprising various non-governmental organizations, charities, and other institutions to which the company provides wealth management and retail banking solutions;
    • Government Bodies, comprising government departments, public sector entities, and other governmental institutions to which the company provides a range of banking services.

    Citi serves around 2 million customers across more than 160 countries worldwide. The bulk of the company’s revenue is derived from customers in North America, with the remainder divided between Latin America, Asia, and Europe, the Middle East, and Africa.

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    Citigroup – Revenue and Growth

    | Year | Amount | Percentage change from last year |
    | — | — | — | — |
    | 2020 | $94.702B | -7.61% |
    | 2019 | $103.449B | +6.52% |
    | 2018 | $97.12B | +9.17% |
    | 2017 | $88.962B | +6.79% |

    Citigroup – Investments

    Citigroup has made 86 investments. Their most recent investment was on Oct 15, 2020, when 4G Capital raised KES285M.

    Date Organization Name Round Amount
    Oct 15, 2020 4G Capital Debt Financing KES285M
    Oct 6, 2020 AccessFintech Series B $20M
    Oct 5, 2020 Genesis Global Corporate Round –
    Sep 30, 2020 BioCatch Series C $20M
    Sep 22, 2020 CloudMargin Series B $15M
    Sep 10, 2020 Capitolis Venture Round $11M
    Aug 19, 2020 PadSplit Series A $4.3M
    Aug 18, 2020 Solidatus Corporate Round –
    May 15, 2020 Spark Systems Series B SGD15M

    Citigroup – Acquisitions

    Citigroup has acquired 6 organizations. Their most recent acquisition was The BISYS Group on Aug 1, 2007.

    Aquiree Name Date Amount About Acquiree
    The BISYS Group Aug 1, 2007 – The BISYS Group global outsourcing solutions firm that helped investment firms and insurance companies to more efficiently serve
    Automated Trading Desk Jul 2, 2007 $680M Automated Trading Desk develops automated trading systems for the trading companies, buy and sell-side firms, and financial institutions
    Quilter Cheviot Dec 13, 2006 – Quilter Cheviot operates as an independently owned discretionary investment management firms
    Koram Bank Feb 18, 2004 – KorAm is the sixth largest commercial bank in Korea
    Banamex May 18, 2001 – Banamex offers the best financial products and services: Credit Cards, Mortgage loans, Personal loans, exchange rate
    European American Bank Feb 13, 2001 – European American Bank

    Citigroup – Competitors

    Citi‘s top competitors include State Street, BNP Paribas, Morgan Stanley, RBS, HSBC, Bank of America, Wells Fargo, JPMorgan Chase, CIT and State Bank of India.

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    Citigroup – Challenges Faced

    One issue forces the bank to haemorrhage cash, the other prevents it from returning money to shareholders.

    • Analysts say the bank still has to get rid of dead weight on its balance sheet. That weight takes the form of underperforming, low-return businesses and Citi Holdings, the bank’s cluster of bad assets and businesses put together after the financial crisis.
    • The second issue with Citi analysts want to see cleaned up is the bank’s legal mess in Mexico. Few months ago, regulators accused Citi’s subsidiary, Banamex, of defrauding clients.
    • The New York-based bank slashed jobs across its fixed-income and stock-trading operations over the course of 2019, according to people familiar with the matter. That included at least 100 jobs in the equities unit, which would amount to almost 10% of the division’s workforce.

    Citigroup – Future Plans

    Citi announced its new five-year 2025 Sustainable Progress Strategy to help accelerate the transition to a low-carbon economy. This new strategy includes a $250 Billion Environmental Finance Goal to finance and facilitate climate solutions globally. This builds on Citi’s previous $100 billion goal announced in 2015 and completed last year, more than four years ahead of schedule.

    This new strategy, integrated into Citi’s Environmental and Social Policy Framework, will focus on three key areas over the next five years:

    • Low-Carbon Transition: Citi aims to finance and facilitate an additional $250 billion in low-carbon solutions, in addition to the $164 billion the bank counted toward its $100 Billion Environmental Finance Goal (2014-2019). This new goal includes financing and facilitating activities in renewable energy, clean technology, water quality and conservation, sustainable transportation, green buildings, energy efficiency, circular economy, and sustainable agriculture and land use. Citi will continue to develop innovative financing structures and seek opportunities to scale positive impact in these areas while supporting clients across all sectors in the low-carbon transition.
    • Climate Risk: Measuring, managing and reducing the climate risk and impact of Citi’s client portfolio is a key aspect of a low-carbon transition. Citi has been a leader in climate assessment and disclosure in alignment with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, releasing its first TCFD report in 2018. Citi will further test the resilience of its lending portfolios to transition risks and physical risks related to climate change, and continue to disclose in line with TCFD.
    • Sustainable Operations: This strategy includes fourth generation operational footprint goals focused on GHG emissions, energy, water, waste reduction and sustainable building solutions. Since 2005 we have reduced 3,600 GWh of energy use and avoided 2.4 million MTCO2e, equal to the GHG emissions of over half a million cars on the road for a year (equivalency provided by EPA calculator). While climate science requires global CO2 emissions to be reduced by 45 percent by 2030, Citi is accelerating that timeline with a 45 percent reduction target in CO2 emissions by 2025. Citi expects to meet its goal of sourcing 100 percent renewable electricity to power facilities globally before the end of 2020.