Recommended articles for the weekend

1. The implications of trust on the lending activities of banks and fintech firms. Trust in financial products and institutions is widely recognised as being essential for financial markets to function efficiently. This column argues that trust in financial institutions may have a first-order impact on whether non-bank (fintech) firms can survive when competing against traditional banks. When trust is lost and reputation becomes important, the cost of funding rises more for fintech firms than for banks, as financiers see that banks have a stronger reputational incentive to make good loans. So while banks may be able to survive a loss of trust, fintech lenders will be forced to shut down.
2. Open banking’s next wave: Perspectives from three fintech CEOs. The CEOs of Ping Identity, Plaid, and Tink share their views on the prospects for open banking and the pressing need for players to develop a data and customer strategy.
3. Franchise Quality Score: A Metric for Intangibles (keywords: Drivers of Value, Economics, Equity Investments, Performance Measurement & Evaluation, Portfolio Management).
4. The Digital Freedom Pass: Emancipation from digital slavery. Digital identity management is currently undertaken by central identity providers, with users providing their data free to digital networks that own their digital identities. If users leave their digital networks, they must leave all their digital possessions, including their digital identities, behind. This system is analogous to slavery. It is neither efficient nor equitable. Users have no assurance that the value of the free data they provide bears any relation to the value of the free services they receive. The digital networks have overwhelming market power relative to their users. This column argues for reform in the form of a Digital Freedom Pass, – the digital equivalent of a wallet containing verified pieces of an individual’s digital identity. The person can then choose which identification to share, with whom, and when, allowing emancipation from our current digital slavery.
5. Fraud management: Recovering value through next-generation solutions. Card fraud has increased. Here’s what financial institutions need to know to get a grip on fraud management, and improve the customer experience.