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Digital payment momentum slows in Europe - Weekly Roundup: 7 January

Digital payment momentum slows in Europe

The European Central Bank (ECB) has published the results of its latest study on the payment attitudes of consumers in the euro area (SPACE). Despite the trend towards digital payments, the number of cash payments remains significant in 2024, especially for small-value and person-to-person payments.

In terms of number of payments, cash is used at the point of sale in 52% of transactions, down from 59% in 2022. In terms of value, cards are the most dominant payment instrument (with a share of 45%, down from 46%), followed by cash (39%, down from 42%) and mobile apps (7%, up from 4%).

The growing share of digital payments is supported by an increase in online payments; these account for 21% of consumers’ day-to-day payments in number and 36% in value, up from 17% and 28% respectively in 2022. The most frequently used instrument for online payments is cards, accounting for 48% of transactions, followed by other electronic means of payment such as payment wallets and mobile apps, which together account for 29% of transactions.

Consumers’ stated payment preferences have not changed, according to the latest research. In 2024, as in 2022, 55% of consumers prefer paying with cards and other non-cash means in shops, 22% prefer paying with cash and 23% have no clear preference. On average, consumers deem cards faster and easier to use. They consider cash more helpful for managing their expenses and protecting their privacy.

A majority of consumers (62% in 2024, up from 60% in 2022) consider it important to have cash as a payment option. A large majority (87%) are satisfied with their access to cash, finding it very or fairly easy to withdraw cash from an ATM or a bank, even though satisfaction decreased slightly (down from 89% in 2022).

“We are dedicated to ensuring secure, efficient and inclusive payment options,” commented Piero Cipollone, ECB Executive Board member. “By supporting both cash and the development of a digital euro, we want to guarantee people can always choose to pay with public money, now and in the future.”

 

Predicting the top market structure trends for 2025

In what promises to be an unpredictable year ahead for financial markets, there are a few things everyone can count on: Trading will continue going electronic, workflows will continue automating, markets will continue becoming more transparent, and AI will play a growing role in all these developments.

In a new report, Coalition Greenwich examines the biggest market structure trends they will be watching in the new year. Highlights from the report, ‘Top market structure trends to watch in 2025’ include the expectation that US regulations will become more unpredictable: While it’s nearly impossible to predict the regulatory path in 2025, the report notes there are a few things most can agree on: Many of the proposed but unpassed rules at the SEC will die or be reworked - including Treasury and repo clearing rules that will at the very least be delayed. In addition, crypto markets will see a lighter regulatory touch and gain regulatory clarity, and many pending cases against the SEC will be dropped or won by the plaintiff.

This year, incumbents across capital markets might also face relentless pressure from upstarts. The report suggests this pressure will come from a constantly expanding group of upstarts. Alternative trading systems will continue to erode on-exchange market share, non-bank market makers will continue picking up market share (and clients) from big banks, and capital markets fintech firms will continue doing both of those and more. These agile newcomers will leverage cutting-edge technology, innovative business models and a customer-centric approach unencumbered by the burdens of legacy technology and operational complexity.

Additionally, the report suggests that the ETF train will roll on. Asset managers and owners have discovered that ETFs are an incredible distribution tool for almost everything. Private credit, Bitcoin, Ether, CLOs, money markets, munis, Treasury Bills - the list keeps getting longer. This trend will continue in 2025 as managers use ETFs to access new pools of capital with less effort than traditional methods.

Finally, there is a TradFi-DeFi love affair in the air. The boundaries between TradFi and DeFi will weaken in 2025, the report predicts, as investors trade crypto via ETFs (and futures and options), bonds via Ethereum, and other assets through whatever mechanisms work best and can get regulatory approval. Whether or not all of finance moves toward DeFi in the decade ahead or these two worlds ultimately coexist with more seamless linkages is too hard to predict, but the TradFi-DeFi love affair has certainly only just begun.

 

Global economic growth accelerated in December

The rate of global economic expansion improved at the end of 2024, according to the latest data, as growth accelerated to a four-month high and new order intakes strengthened. The upturn was beset by regional and sectoral disparities, however, as a solidly performing service sector offset a renewed downturn in manufacturing while pockets of solid expansion in nations including India and the US contrasted with contraction in the euro area.

The J.P.Morgan Global Composite Purchasing Managers’ Index (PMI Output Index – produced by J.P.Morgan and S&P Global in association with ISM and IFPSM – rose to 52.6 in December, up from 52.4 in November to signal expansion for the fourteenth consecutive month.

The service sector was the driver of the latest expansion, seeing output, new orders, employment and new export business all rise in December. In contrast, manufacturers saw each of these variables contract. Services business activity rose at the quickest pace in four months, led by the strongest growth of the financial services sector since July. Increases in activity were also seen in the business and consumer services categories.

Manufacturing output meanwhile fell back into contraction in December after eking out minor expansions in each of the prior two months. Production volumes fell in the intermediate and investment goods sectors but rose in the consumer goods industry.

Growth of economic activity was registered in ten of the 14 nations for which December data were available. The strongest performers were India, Spain and the US, while China and Japan were among those to also see growth. The lower rankings were dominated by the euro area, with the three largest eurozone economies (Germany, France and Italy) all seeing output contract. Canada was the only other nation to register a lower level of economic activity.

International trade remained in the doldrums during December, as new export business fell for the seventh consecutive month. Furthermore, the rate of decline was faster than in the prior survey month. The US, China, Japan, and the euro area were among those that registered a decrease in new export business. Spain, India, Russia and Ireland were the only nations to signal growth.

 

Global securities lending revenue down 10% in 2024

The global securities finance industry generated $9.64bn in revenue for lenders in 2024, according to DataLend, the market data service of fintech EquiLend. The figure represents a 10.3% decrease from the $10.74bn generated in 2023.

Global broker-to-broker activity, where broker-dealers lend and borrow securities from each other, totalled an additional $2.57bn in revenue for 2024, a 9.9% decrease from 2023.

Equity lending revenues fell 13% globally, with North America revenue declining 15% and EMEA revenue dropping 24%. In North America, the cause for the revenue decline was a 19% decrease in average fees, while in EMEA, fees and balances decreased 16% and 11%, respectively. Equity lending revenues in APAC were largely flat year-over-year.

Global sovereign debt revenue increased by 8% over 2023, with US treasuries making up the lion’s share of the gains. Treasuries were up 16% year-over-year, driven by a 14% growth in balances.

In corporate debt lending, global revenue declined by 21% as a regression from a record 2023 continued. Fees were the main culprit, with a steep 29% decrease driving the year-over-year decline in revenue.

 

When will the German economy bounce back?

Germany's economy faces a series of headwinds in 2025, including trade uncertainty with the US and still-high energy prices that are a drag on the industrial sector, according to Goldman Sachs Research.

Europe's largest economy is forecast to expand 0.3% in 2025, which is slower than the estimate for the euro area of 0.8% and 1.2% for the UK. The country's real (inflation-adjusted) GDP is unchanged since the fourth quarter of 2019.

Germany's economy is also beset by a higher degree of regulation than its peers, according to Jari Stehn, Goldman Sachs Research's chief European economist. China is a key export market, but the Asian giant's economic growth has slowed, and China has also become a major competitor in manufacturing.

For all the challenges, there are signs that Germany is finding ways to adapt. “Even though industrial production is down significantly over the last few years, the amount of value added has actually been much more stable,” Stehn commented. “German companies have been able to respond by moving out of relatively low-margin production in chemicals or paper, and so on, into higher value production. I think the way forward essentially is for German companies to continue to do that.”

 

OCBC offering bespoke tokenised bonds to large corporates in Singapore

OCBC has become the first bank in Singapore to launch the sale of bespoke tokenised bonds to corporate accredited investors (corporate AIs), which are corporations that have net assets exceeding S$10m. The tokenised bonds, which reference investment grade bonds, are structured based on the client’s desired tenor and yield. They are then minted and transferred to the client’s wallet, which is created on OCBC’s asset tokenisation platform.

This is the second commercial use case using OCBC’s blockchain infrastructure, which was developed in 2022. The first commercial use case was a partnership with LTA to pilot a blockchain-based conditional payment solution for construction projects in 2024.

The launch is in line with Singapore’s push to commercialise and scale usage of tokenised assets. Corporate bonds usually have a high minimum transaction size of S$250,000, which could contribute to concentration risk. Tokenisation addresses this as it enables fractional ownership – a corporate AI client can subscribe to tokens at S$1,000 denominations. This in turn facilitates the building of more diversified portfolios with a range of assets. Clients can similarly liquidate investments in S$1,000 denominations to meet cash flow requirements.

OCBC’s asset tokenisation capability – which streamlines the entire lifecycle from creation and minting to ownership transfers and custody, and redemption through token burning – will be progressively extended beyond fixed income assets. This will enable OCBC to tokenise a range of assets for its clients, including structured products and funds.

OCBC completed its inaugural transaction for a mid-sized manufacturing client in Singapore in November 2024, minting a tokenised bond with a tenor of less than a year. This met the needs of the client as they intended to pivot from fixed deposits and diversify their investment portfolio. Other corporate AIs that have favoured fixed deposits in a high-interest rate environment, may similarly view tokenised bonds as a viable alternative as interest rates fall.

The transaction was settled within the same business day from the debiting of the client’s bank account to the transferring of digital tokens from OCBC to the client’s wallet which is custodised with OCBC. Traditional bond transactions usually take 5 days for settlement. This was the client’s first usage of tokenised assets.

 

Thomson Reuters acquires SafeSend to expand tax automation capabilities

Thomson Reuters Corporation has acquired cPaperless, LLC, doing business as SafeSend), for $600m in cash. SafeSend is a US-based cloud-native provider of technology for tax and accounting professionals. Founded in 2008, SafeSend automates the ‘last mile’ of the tax return, including assembly, review, taxpayer e-signature, and delivery. Its software solves key pain points for customers and their clients by eliminating time-consuming manual tasks. SafeSend’s solutions are used by accounting firms of all sizes across the US, including 70% of the country’s top 500 firms. The company is headquartered in Michigan and has 235 employees. 

Thomson Reuters says that the acquisition supports its vision for tax and accounting professionals, advancing efficiency in workflows for tax preparers and taxpayers across the US. The firm intends to continue to offer SafeSend as a market solution, supporting the ability to interoperate with multiple vendors across a connected tax software ecosystem. 

SafeSend is expected to generate approximately $60 million of revenue in 2025 before the impact of fair value adjustments to acquired deferred revenue and to grow in excess of 25% annually in the next few years. 

“This acquisition underscores our commitment to addressing the evolving challenges faced by tax professionals and taxpayers alike,” said Elizabeth Beastrom, president of Tax, Audit and Accounting Professionals at Thomson Reuters. “By integrating SafeSend’s innovative technology with our existing solutions, we’re simplifying tax preparation workflows and meeting the dynamic demands of businesses we serve to help them thrive in an increasingly complex tax landscape.” 

 

Deutsche Bank helps to finance Global Power Generation Australia’s expansion

Deutsche Bank has supported Global Power Generation Australia (GPG) on its 2.3bn Australian dollar financing facility, to further invest in its renewable energy portfolio. The bank has acted as original lender and hedge counterparty on the transaction.

GPG was established in 2014 by Naturgy Energy Group and the Kuwait Investment Authority. Headquartered in Spain, it is an international developer and manager of power generation assets with principal activities across eight countries.

This financing facility is structured around a portfolio of eight operating assets, six wind farms, one battery storage project and one solar-hybrid with storage, two photovoltaic plants under construction and one solar-plus-battery hybrid project under development. In total, GPG closes 2024 with 1 GW of projects in operation, in addition to 360 MW under construction and 510 MW ready for construction.

This transaction is the bank’s 24th renewable energy asset financed in Australia to-date. Deutsche Bank’s Corporate Bank provides a suite of financing solutions spanning project finance, acquisition finance, corporate finance (and others) across the infrastructure and energy markets. 

“This milestone brings us close to 3.6GW of renewable energy projects financed in 2024 in Australia and demonstrates our commitment towards sustainable finance,” commented Rachel Chia, Deutsche Bank’s Head of Project Finance for Asia Pacific.

 

India’s Federal Bank launches corporate transaction banking platform  

The Indian private sector FI Federal Bank has taken a step forward in its digital transformation journey with the launch of its FedOne platform. This has been achieved by implementing Nucleus Software’s transaction banking platform FinnAxia. The partnership aims to modernise Federal Bank’s corporate banking services, focusing on delivering value to corporate and SME customers.

The implementation was achieved after an intensive 10-month collaboration. Key highlights of the implementation include establishing streamlined processes. Federal Bank is adopting new operational methodologies to enhance efficiency, which should ensure faster turnaround times and better service delivery to its clients.

The bank claims that its platform transforms corporate customers’ treasury functions into dynamic, mature, and profitable operations, addressing their working capital management needs with comprehensive end-to-end support.

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