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The crypto crackdown is just getting started

KANCHANARA—UNSPLASH

There was much mirth online when the US Justice department announced the arrest of crypto exchange Bitzlato’s founder last week. Unpronounceable, unknown, and unlike any of the far bigger fish (like Binance) getting headlines, Bitzlato looked like a small-fry, a nothingburger. The fact that Bitcoin resumed its march past $21,000 seemed to confirm it.

But this ignores the bigger picture. In the first few weeks of 2023, watchdogs have done a lot. On Jan. 3, a joint statement by US bank regulators warned the industry of crypto risks creeping into the banking system. Then came a $100-million settlement with Coinbase Global, Inc. over weak internal controls, a lawsuit against the Winklevoss twins’ Gemini and broker Genesis for allegedly selling unregistered securities, and a $45-million settlement with lending platform Nexo (which has ceased US operations). Subpoenas are flying.

The wheels of justice turn slowly — the Gemini and Genesis complaint came too late for customers fighting to get back $900 million in trapped funds — but they’re accelerating now. Regulators like the SEC rightly feel vindicated by the past year’s events, which saw a widespread loss of faith in crypto fail to snowball into a wider economic crisis. The collapse of FTX demonstrated the industry’s failings but also the benefits of a tough regulatory line on exchanges, such as when the SEC intervened behind the scenes in 2021 to ward Coinbase off launching its own crypto-lending product. As one official put it last year, the “runway is getting shorter” for unruly platforms.

There may be plenty of debate over whether crypto tokens are more like securities, commodities, shadow banking, or gambling, but the ongoing focus is to ensure crypto’s troubles don’t leak into the financial system. While legislative attempts to craft crypto rules designed to prevent another “Lehman Brothers moment” run into procedural delays and embarrassing revelations about FTX’s history of cozy ties with Capitol Hill, regulators with long memories are keeping an active eye on banks’ crypto exposure as the real risk gauge. Silvergate Capital Corp., already crushed by its exposure to FTX, seems to have gotten the message and written down the value of stablecoin assets it bought from Meta Platforms, Inc.’s Diem — worth almost $200 million at the time — to basically nothing.

The Bitzlato action is part of this push, with the Department of Justice citing the exchange’s inadequate anti-money-laundering controls and “substantial” business with US customers — two examples of the kind of regulatory gaps in the system that missed FTX’s red flags. Carol Van Cleef, a lawyer with a long experience in digital assets, sees a blueprint for future actions, including the US Treasury’s determination that Bitzlato is a “primary money laundering concern,” rendering it effectively an international pariah. This goes beyond the SEC.

Regulation has critics. Some fear overreach; others think it counter-productive to try to build guardrails around digital assets rather than stepping back and letting it “burn.” It’s true that crypto is rife with activity that’s more gambling than investing. And it’s somewhat depressing to see that those at the heart of last year’s crypto collapse already have redemption in mind, from Three Arrows Capital to FTX.

But money laundering, fraud, market manipulation, and tax evasion aren’t risks that just fix themselves. As the European Central Bank’s Fabio Panetta has pointed out, regulators see the costs to society of unregulated digital assets as high and requiring more action. The crackdown is clearly just getting started; those who are keen to dive back into crypto, even having just taken a bath, should take note.

BLOOMBERG OPINION

Dated HR practices could threaten privacy of applicants — security expert

PIXABAY

Human resources (HR) departments should take better care of the personal information that passes through their hands during the hiring process, a data security expert said.

Sensitive documents, such as the resumes of rejected applicants, should be shredded and anonymized by hiring managers instead of being used as scratch paper, said Ernest Richard Ocson of Cosaint Consulting, a company that offers governance, risk, and compliance services.

“The data is still theirs,” he said. “We process their documents, but the data is still theirs.”

HR practices that also need to be reevaluated include selling old documents, such as manuals, for recycling as well as processing a job applicant’s resume without their explicit consent. Neither align with the Data Privacy Act, Mr. Ocson said in a Jan. 13 webinar organized by the Learning Innovation Hub PH.

The Data Privacy Act (DPA) of 2012, or Republic Act 10173, assures the “free flow of information to promote innovation and growth” while protecting an individual’s rights to privacy.

“Integrity is ensuring data privacy is kept throughout the life cycle of that data,” Mr. Ocson said, who also advised verification before disclosure.

If the HR department gets a call from someone supposedly doing background checks on an employee applying for a bank loan, whoever accepts the call shouldn’t “blindly disclose information,” said Mr. Ocson.

“We need to verify the identity of the person calling first,” he added. “If we don’t verify, then we already violated that employee’s rights.”

Coordination is likewise necessary between HR and the information technology department as the company submits its annual security incident report to the National Privacy Commission (NPC).

The definition of a security incidence is relatively broad, Mr. Ocson said. A security breach can mean anything from sending documents to the wrong person, opening files that should not have been opened, visiting links that should not have been visited, losing access to corporate resources, or misplacing identification cards.

Not every company will need to register their data processing systems in compliance with NPC Circular 17-01, Mr. Ocson added. Every company that processes personal information, however, will need to comply with the DPA.

(Per NPC Circular 17-01, an organization that employs fewer than 250 persons is not required to register, unless “the processing it carries out is likely to pose a risk to the rights and freedoms of data subjects, is not occasional, or includes sensitive personal information of at least 1,000 individuals.”)

“Data privacy compliance at the organizational level has business value,” Mr. Ocson said. “The other risks for not complying — apart from penalties and fines — are employee disengagement, operational disruptions, and reputational damage.” — Patricia B. Mirasol

Japan’s finances are becoming increasingly precarious — Suzuki

REUTERS

TOKYO — Japan’s finances are becoming increasingly precarious, Finance Minister Shunichi Suzuki warned on Monday, just as markets test whether the central bank can keep interest rates ultra-low, allowing the government to service its debt.

Japan’s public debt is more than double its annual economic output, by far the heaviest burden in the industrialized world.

The government has been helped by near-zero bond yields, but bond investors have recently sought to break the Bank of Japan’s (BoJ) 0.5% cap on the 10-year bond yield, as inflation runs at 41-year highs, double the central bank’s 2% target.

“Japan’s public finances have increased in severity to an unprecedented degree as we have compiled supplementary budgets to respond to the coronavirus and similar issues,” Mr. Suzuki said in a policy speech starting a session of parliament.

Mr. Suzuki reiterated the government’s aim to achieve an annual budget surplus — excluding new bond sales and debt-servicing costs — in the fiscal year to March 2026. The government, however, has missed budget-balancing targets for a decade.

The Ministry of Finance estimates that every 1-percentage-point rise in interest rates would boost debt service by 3.7 trillion yen ($29 billion) to 32.5 trillion yen ($251 billion) for the 2025/2026 fiscal year.

“The government will strive to stably manage Japanese government bond (JGBs) issuance through close communication with the market,” he said.

“Overall JGB issuance, including rolling over bonds, remain at an extremely high-level worth about 206 trillion yen ($1.6 trillion). “We will step up efforts to keep JGB issuance stable.”

“Public finance is the cornerstone of a country’s trust. We must secure fiscal space under normal circumstances to safeguard trust in Japan and people’s livelihood at a time of emergency.”

Prime Minister Fumio Kishida echoed Mr. Suzuki’s resolve to revive the economy and tackle fiscal reform. He stressed the need for a positive cycle of growth led by corporate profits and private consumption, which accounts for more than half of the economy.

“Wage hikes hold the key to this virtuous cycle,” Mr. Kishida said in his policy speech. He vowed to push labor reform to create a structure that allows sustainable wage growth and overcome the pain of rising living costs.

“First of all, we need to realize wage growth that exceeds price increases,” Mr. Kishida added, pledging to also boost childcare support, and push investment and reform in areas such as green and digital transformation.  — Reuters

Deadly shooting turns Monterey Park’s mass celebration into massacre on Lunar New Year

JANNOON028 — FREEPIK

MONTEREY PARK, Calif.  — The red lanterns bobbed and banners proclaimed “Happy Year of the Rabbit” but Monterey Park’s famous Lunar New Year festivities were brought to an abrupt end by a shooting that left 10 people dead and another 10 wounded.

Vendors dismantled stalls and workers took apart a fairground on Sunday in the normally placid community of 60,000, where thousands from across Southern California gathered on Saturday.

The city on the eastern edge of Los Angeles was holding its first in-person celebration of the Lunar New Year since the COVID-19 pandemic began.

But the festivities turned into bloody mayhem as a man was accused of fatally shooting 10 people at a ballroom dance venue late on Saturday. Officials said at least another 10 people were taken to local hospitals to be treated for wounds.

Video taken by local news media after the shooting showed injured people, many of them appearing to be middle aged, being loaded into ambulances on stretchers.

“Monterey Park should have had a night of joyful celebration of the Lunar New Year. Instead, they were the victims of a horrific and heartless act of gun violence,” California Governor Gavin Newsom said.

Monterey Park is around 7 miles (11 km) from downtown Los Angeles. About two-thirds of its residents are Asian, according to US Census data, and the city is known for its many Chinese restaurants and groceries.

Heading into the planned weekend celebrations, the city said on its official Twitter page that a two-day open street event was going to be held in the downtown area.

“It has always been an exciting and memorable event with thousands of guests and hundreds of vendors joining us for fun activities, shopping and entertainment, and delicious food,” the city said in its Thursday announcement.

The festivities scheduled for Sunday were canceled after the mass shooting.

When police arrived at the shooting scene, people were “pouring out of the location screaming,” said Andrew Meyer, captain of Los Angeles County Sheriff’s Department.

The suspect entered the ballroom dance venue and opened fire. The shooting site was near the Lunar New Year festival.

Police have not named the dance club but were seen going in and out of the Star Ballroom Dance Studio, access to which was blocked off by police tape. The club opened in 1990, and its website features many photographs of past Lunar New Year celebrations showing patrons smiling and dancing in party clothes in its large, brightly lit ballroom.

A flyer posted on the website advertised Saturday night’s new year party, running from 7:30 p.m. to 12:30 a.m. Sunday.

“I was just in this area with my parents and I was celebrating Lunar New Year last night,” said Cindy Phung, who attended the festival celebrations.

Her family left the area before the shooting happened, she said. — Reuters

China’s tourists hit Thailand’s beaches for 1st time in 3 years

REUTERS

PHUKET, Thailand — Hitting the white sand beaches and eating mango sticky rice and seafood, Chinese tourists are returning to Thailand for their first trips abroad since China ended its strict COVID-19 curbs and reopened its borders.

“Because of the pandemic, we hadn’t been out of China for three years,” said tourist and business owner Kiki Hu, 28, in Krabi on  that we can leave and come here for holiday. I feel so happy and emotional”.

With China celebrating the Lunar New Year, Asia’s tourist hotspots have been bracing for the return of Chinese tourists, who spent $255 billion a year globally before the pandemic. Countries from Thailand to Japan had depended on China as their largest source of foreign visitors.

Beijing in December abruptly dropped some of the toughest COVID restrictions on earth, which had battered the world’s second-biggest economy.

Business owner Yoyo Chen, 32, from Yiwu in central China, said returning to Thailand felt like coming home.

“I’m here to eat seafood. Previously, when I was here, I ate mango sticky rice, which was delicious. Back in China I kept thinking about the mango sticky rice here. I’m looking forward to the food, as well as visiting the beaches,” Ms. Chen said.

“Getting visas is very convenient now. The tourism industry is more developed here, there are lots of fun activities and cuisine, and the Thai people are very hospitable,” she said.

The Chinese return was welcomed by businesses, despite some wariness about a huge spike in COVID infections in China after Beijing ended its zero-COVID policy.

“We’re glad that China finally allows their people to travel. At the moment, we’ve received some bookings through March,” said Woranuch Maungtong, 44, manager of Tip-Top Destination on the resort island of Phuket, which provides daily speed boats to nearby islands.

China’s reopening raises hopes for the return of Chinese visitors, who accounted for nearly a third of Thailand’s 40 million foreign tourist arrivals in pre-pandemic 2019.

The Thai government is expecting at least five million Chinese tourist arrivals this year, with some 300,000 coming in the first quarter.  — Reuters

Pakistan suffers major power outage after grid failure

STOCK PHOTO | Image by Uzairmaqbool from Pixabay

ISLAMABAD — Pakistan suffered nationwide power outages on Monday morning due to a “major breakdown” of the national grid, the power ministry said, with factories, hospitals and schools impacted in all its major cities.

The breakdown began at 7:34 am (0234 GMT) when a voltage fluctuation in the grid occurred between the cities of Jamshoro and Dadu in southern Sindh province, power minister Khurrum Dastagir.

“There was a fluctuation in voltage and the systems were shut down one by one. This is not a major crisis,” Mr. Dastagir told Geo TV news channel.

Outages were reported in the southern port city of Karachi, the capital Islamabad, the eastern city of Lahore and Peshawar in the north.

Mohammad Asim, a spokesman for Peshawar’s Lady Reading Hospital, the largest hospital in Khyber Pakhtunkhwa province, said backup generators were used to provide uninterrupted electricity for the emergency ward, intensive care units, and laboratories.

The power ministry issued a statement saying that work was ongoing to revive the system, and the minister said that electricity had been restored in some parts of the country.

Pakistan has enough power installed capacity to meet the demand, especially in winter, when it mostly has a surplus. But the country lacks resources to run its oil and gas-powered plants and the sector is heavily in debt, and inadequate investment in infrastructure and power lines has resulted in the National Grid suffering frequent breakdowns. — Reuters

Australia to speed up purchase of sea mines to shore up maritime defense

SYDNEY — Australia said on Monday it would accelerate plans to buy advanced sea mines to protect its maritime routes and ports from “potential aggressors” amid China’s plans to increase its influence in the Pacific region. 

The so-called smart sea mines are designed to differentiate between military targets and other types of ships, a defense department spokesperson said in a statement. 

“(Australia) is accelerating the acquisition of smart sea mines, which will help to secure sea lines of communication and protect Australia’s maritime approaches,” it said. “A modern sea mining capability is a significant deterrent to potential aggressors.” 

Though the defense department did not specify any further details, a report in the Sydney Morning Herald newspaper on Monday said Canberra would spend up to A$1 billion ($698 million) to procure the high-tech underwater weapons. 

The federal government will soon announce a contract to buy “a substantial number” of sea mines from a European weapons supplier, the report said, citing unidentified defense industry sources. 

Prime Minister Anthony Albanese told ABC television he would not “pre-empt those national security issues.” 

“What we need is to make sure we have the best possible defenses. So we have looked at missile defense, we’re looking at cyber security, we’re looking at all of these issues,” Mr. Albanese said. 

China has plans to step up its presence in the Pacific and entered a security pact with Solomon Islands last year, raising concerns in the United States and Australia, who for decades have seen the region as their sphere of influence. 

Australia has been looking to boost its defense spending over the past few years, including entering into a deal in 2021 to buy nuclear submarines from the United States and Britain. — Reuters

California shooting suspect kills himself after Lunar New Year massacre

Star Ballroom Dance Studio in Monterey Park. — STARDANCELA.COM

MONTEREY PARK, Calif. — A 72-year-old gunman killed himself when approached by police on Sunday, about 12 hours after he had carried out a Lunar New Year massacre at a dance club that left 10 people dead and another 10 wounded. 

The gunman tried to carry out another shooting at a separate club just minutes after the first one on Saturday night, but authorities said two bystanders wrestled the man’s weapon away from him before any shots could be fired. He fled that scene. 

Los Angeles County Sheriff Robert Luna identified the suspect as Huu Can Tran, a septuagenarian he said used a high-capacity magazine pistol to shoot up a ballroom dance venue popular with older patrons in Monterey Park, about 7 miles (11 km) east of downtown Los Angeles. 

Investigators did not yet know a motive, although gun violence is frequent in the United States. Mr. Luna did not identify any of the victims but said the five men and five women appeared to be in their 50s, 60s and beyond. The sheriff said the pistol Tran used appeared to be illegal in California, where state laws ban any magazine holding more than 10 rounds. 

“We want to know, we want to know how something this awful can happen,” Mr. Luna told reporters. 

After police say Tran carried out the shooting in Monterey Park at about 10 p.m. PST Saturday (0600 GMT on Sunday), he was confronted by bystanders at a second dance club in the neighboring city of Alhambra about 20 minutes later, Mr. Luna said. 

“I can tell you that the suspect walked in there, probably with the intent to kill more people, and two brave community members decided they were going to jump into action and disarm him,” Mr. Luna said. 

The sheriff said that Tran turned a handgun on himself on Sunday as police approached a white van he was driving in Torrance, about 20 miles (34 km) from the site of the shooting at the Star Ballroom Dance Studio in Monterey Park. Officers heard a single gunshot from the van as they approached, then fell back and called for a SWAT team. 

Of the 10 people injured, seven remained hospitalized Sunday night, with at least one person in critical condition. 

The shooting took place around the location of a two-day Chinese Lunar New Year celebration where many downtown streets are closed for festivities that draw thousands of people from across Southern California. 

A CLOSE-KNIT COMMUNITY
Residents stood gazing at the many blocks sealed off with police tape on Sunday in Monterey Park. Chester Chong, chairman of the Chinese Chamber of Commerce of Los Angeles, described the city of about 60,000 people as a quiet, peaceful, beautiful place where everybody knows each other and helps each other. 

The city has for decades been a destination for immigrants from China. Around 65% of its residents are Asian, according to US Census data, and the city is known for its many Chinese restaurants and groceries. 

“People were calling me last night, they were scared this was a hate crime,” Mr. Chong said at the scene. 

The Star Ballroom Dance Studio opened in 1990, and its website features many photographs of past Lunar New Year celebrations showing patrons smiling and dancing in party clothes in its large, brightly lit ballroom. 

Most of its patrons are middle-aged or seniors, though children also attend youth dance classes, according to a teacher at the studio who asked to not be named. 

“Those are normal working people,” the teacher said. “Some are retired and just looking for an exercise or social interaction.” 

A flyer posted on the website advertised Saturday night’s new year party, running from 7:30 p.m. to 12:30 a.m. Sunday. 

The gunshots were mistaken by some for new year fireworks, according to Tiffany Chiu, 30, who was celebrating at her parents’ home near the ballroom. 

“A lot of older people live here, it’s usually really quiet,” she said. “This is not something you expect here.” 

President Joseph R. Biden, Jr., condemned the killings in a written statement and said he had directed his Homeland Security adviser to mobilize federal support to local authorities. 

The attack in Monterey Park was the deadliest since May 2022, when a gunman killed 19 students and two teachers at a school in Uvalde, Texas. The deadliest shooting in California history was in 1984 when a gunman killed 21 people at a McDonald’s restaurant in San Ysidro, near San Diego. — Reuters

US wants to see quicker progress on World Bank reforms — Yellen

REUTERS

LUSAKA — US Treasury Secretary Janet Yellen on Sunday said the United States wanted to see quicker progress on the World Bank’s plans for expanding its lending capacity to address climate change and other global crises. 

The World Bank’s “evolution roadmap,” reported by Reuters earlier this month, calls for the bank to negotiate with shareholders ahead of April meetings on proposals that include a capital increase and new lending tools. 

It calls for World Bank management to develop specific proposals to change its mission, operating model and financial capacity that could be approved by the joint World Bank and International Monetary Fund (IMF) Development Committee in October. 

The plan marks the start of a negotiation process to alter the bank’s mission and financial resources and shift it away from a country- and project-specific lending model used since its creation at the end of World War Two. 

Ms. Yellen said the bank’s roadmap was a “constructive document” and formed a good basis for discussion, but more work was needed. 

“We do have some concerns,” she told Reuters as she traveled to Zambia from Senegal. “We would like to see some progress on a quicker timeline. And think there are some things that could be done to expand lending given the current capital release.” 

Ms. Yellen said working on the reforms — first of the World Bank and then other multilateral development banks — was one of her biggest priorities this year. 

The United States, the bank’s largest shareholder, worked with other countries to push the World Bank to develop the reform plan, which was discussed by the bank’s board on Jan. 11. 

“2023 is the year to reap specific progress in the short-term with the Spring Meetings (in April) … and lay the foundation for more fundamental/complex reforms by the October meetings,” a senior Treasury official said. 

The United States and other shareholders favor a staged implementation approach, with proposals for certain reforms released in time for the spring meetings of the IMF and World Bank to enable some “quick wins,” the official said. 

These would focus on the World Bank’s vision and mission, stretching its financial capacity … and stepping work on private sector mobilization, the official said. 

More work was also needed to reorient the World Bank’s operational model to focus more on global challenges, its use of incentives and a strengthened framework for the use of concessional, or low-interest resources, the official said. 

Treasury was also looking for more details on how the bank could work with supra-and sub-national entities. — Reuters

French and German leaders gloss over divisions at summit

The Elysée Palace in Paris, France. — ELYSEE.FR

PARIS — The leaders of France and Germany sought at a summit on Sunday to pave over divisions that have dogged Europe’s closest bilateral relation since the war in Ukraine broke out, leaving many of their most vexed issues to be worked out later. 

In a show of pageantry and unity, the two governments marked the 60th anniversary of a friendship treaty signed by France’s Charles de Gaulle and Germany’s Konrad Adenauer with speeches at the Sorbonne University in Paris and a joint cabinet meeting at the Elysee Palace. 

The summit between the two governments, traditionally the driving force behind broader EU policy initiatives, had originally been planned for October, but was postponed amid differences on issues ranging from energy policy to defense procurement. 

“The Franco-German motor is a compromise machine — well oiled, but sometimes loud and needing hard work,” German Chancellor Olaf Scholz said in a speech at the Sorbonne. 

The two governments issued a joint statement flagging plans to press ahead with joint initiatives for a main battle tank, in space programs, and in developing hydrogen production and battery technologies. 

But they also papered over deeper differences. 

French President Emmanuel Macron said the two countries agreed the European Union (EU) needed to find funds to make green investments in the industrial sector in response to US subsidies for green energy under Washington’s $369 billion Inflation Reduction Act (IRA). 

“We have a real convergence in the responses we are bringing,” Mr. Macron said at a news conference with Mr. Scholz, but offered no concrete details. 

German officials say Berlin sees little need for a new sovereign EU fund that France considers necessary to help European industry make investments to remain competitive against US firms benefiting from generous tax credits under the IRA. 

The two governments also committed only vaguely to work on an EU overhaul of the electricity market, on which France wants urgent progress as it prepares a vast nuclear energy push while Berlin is skeptical and does not want to rush into. 

Meanwhile, on defense, Mr. Macron opened the door to French involvement in plans between Germany and more than a dozen other European countries to pool air defense capabilities, saying Paris would weigh risks and possible investments in the “coming weeks and months.” — Reuters

COVID curbs over, China’s tourists hit Thai beaches for first time in 3 years

REUTERS

PHUKET, Thailand — Hitting the white sand beaches and eating mango sticky rice and seafood, Chinese tourists are returning to Thailand for their first trips abroad since China ended its strict coronavirus disease 2019 (COVID-19) curbs and reopened its borders.

“Because of the pandemic, we hadn’t been out of China for three years,” said tourist and business owner Kiki Hu, 28, in Krabi on Thailand’s southwest coast. “Now that we can leave and come here for holiday. I feel so happy and emotional.”

With China celebrating the Lunar New Year, Asia’s tourist hotspots have been bracing for the return of Chinese tourists, who spent $255 billion a year globally before the pandemic. Countries from Thailand to Japan had depended on China as their largest source of foreign visitors.

Beijing in December abruptly dropped some of the toughest COVID restrictions on earth, which had battered the world’s second-biggest economy.

Business owner Yoyo Chen, 32, from Yiwu in central China, said returning to Thailand felt like coming home.

“I’m here to eat seafood. Previously, when I was here, I ate mango sticky rice, which was delicious. Back in China I kept thinking about the mango sticky rice here. I’m looking forward to the food, as well as visiting the beaches,” Chen said.

“Getting visas is very convenient now. The tourism industry is more developed here, there are lots of fun activities and cuisine, and the Thai people are very hospitable,” she said.

The Chinese return was welcomed by businesses, despite some wariness about a huge spike in COVID infections in China after Beijing ended its zero-COVID policy.

“We’re glad that China finally allows their people to travel. At the moment, we’ve received some bookings through March,” said Woranuch Maungtong, 44, manager of Tip-Top Destination on the resort island of Phuket, which provides daily speed boats to nearby islands.

China’s reopening raises hopes for the return of Chinese visitors, who accounted for nearly a third of Thailand’s 40 million foreign tourist arrivals in pre-pandemic 2019.

The Thai government is expecting at least five million Chinese tourist arrivals this year, with some 300,000 coming in the first quarter. — Reuters

Online banking still a rising trend

PHOTO FROM MACROVECTOR/FREEPIK

Newer technological innovations and advances have become the center of our lives for socialization, productivity, and access to our daily needs. Thus, the evolution of traditional banking — from banking activities that can only be done by visiting local branches, to mobile banking where banking activities can be done anywhere and anytime with just a few taps on technological devices — became a huge influence on financial stability as banking activities became more manageable and more convenient.

The birth of online banking started in 1983 as the Nottingham Building Society became the first bank to offer online services, becoming the blueprint for online banking where checking balances, paying bills, transferring money, and applying for loads from home are made possible in Europe. It was soon followed by a French bank, Minitel in 1984.

Trustly Group AB described first bank websites as “online brochures that have product formation, photos, contact numbers, and branch maps but no interaction with the customers.” With international banks starting to invest in online banking, consumers now are starting to see online banking as more beneficial as it has lower fees and better interest rates. With the increased use of modern technology and an internet connection, the establishment of financial technologies had begun.

Yet as online banking continuously grew, not everyone was open to online transactions and banking due to safety and security issues. But in 1995, the first online store was created by Amazon, an American multinational technology company, focusing on e-commerce services that offered a wider selection of products than those in-store with cheaper prices. eBay followed soon after. The increase in e-commerce sites paved the way for the utilization of online banking, boosting usage and acceptance of online financial services in the west, according to Trustly Group AB.

As eBay tries to standardize e-commerce, eBay merchants, especially small business owners, found the card payment method challenging since it only offers card payment which can be impractical on their part. In order to address this issue, an online service called Confinity launched with the aim of making payments online easier, collaborating with PayPal, an online payment platform for business services.

As mobile devices evolved, so did online banking adjust to mobile advancement, thus the development of mobile banking services. With this, Norwegian bank DnB became the first bank in the world to launch mobile banking.

Through mobile banking, checking balance accounts, topping up cell phone credit, and paying bills are made possible within a few taps. On top of the technological advancements, mobile banking services have evolved to include features such as locating ATMs, transferring money, and applying for banking products and services, as well as improving its security from relying on SMS alerts to one-time passwords (OTP) and alerts flagging unusual account activities.

“In short, you could carry your bank account in your pocket wherever you went,” Trustly Group AB said.

With the arrival of the pandemic, the world was greatly affected, causing disruption in society and causing a global economic crisis. Banks took this opportunity to improve the industry’s services by shifting to online, which later became a crucial instrument to attain economic growth and recovery amidst the said crisis.

The shift to online banking received positive outcomes as the world is now continuously maximizing the benefits of the online platform. According to Accenture, the use of online banking during the pandemic has improved the relationship between banks and consumers.

According to Accenture’s 2020 Global Consumer Study, while the banking industry has been increasing digital adoption, consumer trust, which is a vital factor in banking operations, has been decreasing at the same time.

Similarly, Alan McIntyre of Accenture Banking Group pointed out that the shift to online banking became a primary threat to attaining customer trust. It became important for banks to assess the pandemic and digital channels’ effect and changed consumer behaviors.

“The right approach will balance human and machine interactions, blending the convenience of more personalized and digital interactions with human assistance when needed to create more value. This would go a long way forward reinforcing banks’ relationships with their customers, which in turn can build trust, loyalty and benefits for both,” Mr. McIntyre said.

“To forge strong customer connections, banks must reimagine the digital services they provide and make those connections more personal and relevant,” he added.

As we step forward to the new normal, the rising trend of online banking continues in the future. According to Deloitte’s 2022 survey, the accelerated use of online banking services received positive outcomes and is expected to continue doing so in the following years. With the increasing number of online bank users, “online banking is likely to become a permanent fixture in the range of services banks offers,” the company said in a statement.

Nevertheless, as banks offer digital alternatives, competition in the industry grows, and providing digital solutions is not enough. Some banks still lack in digital aspects and some bank customers still prefer going to local branches instead of going digital in terms of their banking activities.

Deloitte encourages the use of hybrid banking services, where banks offer traditional and online banking as an option to make financing easier to bank customers.

“Many customers still want personal in-branch service, in the same way as a majority continue to value local branches. Banks can continue to focus on specific customer segments and offer wholly online banking for those customers who want it, but any bank that wants to expand its customer base beyond ‘digital natives’ is well advised to offer a hybrid service, a mix of online and in-branch services,” Deloitte said. — Angela Kiara S. Brillantes

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