In the news: Credit Scoring Giant FICO Changes Strategy

Shares in credit scoring firm FICO soared last week as the firm announced that it would begin to sells its credit scoring model directly to mortgage re-sellers, bypassing its traditional route of selling to the three major US credit reporting businesses. "Federal House Finance Agency director Bill Pulte said in a post on X that FICO took 'a first step' in 'ensuring a competitive and safe and sound market' to generate creative solutions to help consumers," reports Bloomberg. "The 'mortgage pricing shift should be a big win for FICO,' Needham analyst Kyle Peterson wrote in a note. The move would be 'significantly beneficial for FICO, while also keeping costs stable both for homebuyers and mortgage originators'." FICO's move came after a decision two weeks ago by the US Federal Housing Finance Authority to accept credit scores from Vantage Score, which was founded in 2006 by credit-reporting firms Equifax, Experian and Transunion.

Dirty Tricks in Spain's Takeover Battles

BBVA has accused Spanish competitor and takeover target Sabadell of using 'dirty tricks' to prevent the bid from going ahead. In a complaint to the regulator, it said that Sabadell staff are trying to prevent shareholders from tendering their shares at branches. "With 40 per cent of Sabadell shareholders also customers of the bank, the outcome of the bid hinges in part on what happens in its branches across Spain," the FT writes. "BBVA alleges that some Sabadell branch staff have been telling shareholders they cannot help them tender their shares, claiming that IT systems are down, or charging them to issue documents they need to accept the takeover bid." BBVA chief executive Onur Genç said that shareholders could instead call to BBVA branches to complete the process. Both banks have plastered the streets of Spain with ads to support their positions. A big pop-up ad in the middle of the FT's digital edition warns: 'Sabadell is stronger alone'.

Russia's Crypto Innovations to Evade Sanctions

A7A5 might sound like a chess move but it's now better known as a Russian stablecoin, which we wrote about it a few weeks ago as US authorities tried to limit its use under sanctions against Russia. An FT report suggests that the stablecoin's creators destroyed and re-issued 80 percent of its value after US authorities took down the Garantex exchange, showing how hard it may be to apply restrictions to stablecoins. The destroy-and-reissue method breaks the connection between the old tokens and the new ones, making a sanction trail nearly impossible to follow. "A7A5 is registered in Kyrgyzstan, a jurisdiction Moscow designates as 'friendly', unlike most western countries. The coin's registered issuer is a Kyrgyz company called Old Vector, which was also blacklisted by the US in August. Russian authorities last week granted A7A5 formal digital financial asset status. This allows exporters and importers to use it officially through a platform owned by Promsvyazbank, which backs each token with a rouble, according to the A7A5 issuer." Russia's A7 cross-border payments business, which uses the A7A5 token, says it has opened offices in Lagos and Harare to offer alternatives to Western payments systems. "The bank's chief executive Petr Fradkov last month told Russian President Vladimir Putin 'we are creating a system of cross-border settlements based on A7'," the FT reports. "The network has also received significant loans from Russia's VEB, a state development bank which traditionally supports the Kremlin's priority projects."

Net Zero Membership becomes Zero

The Brazilian city of Belem is preparing to host this year's COP on Climate Change, the 30th edition, next month, but it doesn't yet have a big headline deliverable. Instead, this year's conference will mark the dissolution of the Net Zero Global Alliance established in 2021. "The Net-Zero Banking Alliance is to cease operations after a vote to wind up the group which had already lost many of its members amid allegations from some U.S. lawmakers that membership breached antitrust regulations," reports Reuters. "The alliance, set up in 2021, was the banking industry's main body leading the sector's global effort to cut carbon emissions. An overhaul was proposed in August after many big banks left, to create a 'framework initiative' rather than a membership-based organisation." The major US banks were first to leave, followed by Canada and the EU. As the US goes all in on AI, with its attendant needs for new energy resources, the energy industry has enjoyed a new lease of life, driven this time not by its own champions but by major technology players driving the AI boom. "While noting that the NZBA announcement 'may seem like a setback for global progress,' Gill Lofts, Global Financial Services Sustainable Finance Leader at EY noted that it also presents a new opportunity for banks to drive the net zero transition, reflecting 'a pragmatic and transparent reassessment of the scientific, economic and political realities we face today'. Lofts added: 'This shift is not a retreat from climate action, but a strategic course correction that opens the door to broader global participation, particularly from banks in emerging markets and the global south that were previously unable to meet the commitment. The new framework will foster inclusivity and emphasize implementation through technical capability building and engagement with policymakers – critical foundations for driving real progress'."

Capitec's Rise Appears Unstoppable

Capitec has added another two million customers to consolidate its position as the largest retail bank in South Africa by customer base. "Net interest income after credit impairments rose by 27% to 7.1 billion rand, reflecting increased earnings from loans relative to interest paid on deposits," reports Reuters. "Net non-interest income rose 19% to 13.4 billion rand. 'Our ability to leverage economies of scale, simplify transaction costs, and innovate across our offerings has made a meaningful difference for our clients while delivering strong financial results,' said Group CEO Graham Lee, who officially succeeded Capitec founder Gerrie Fourie in June 2025. Loan disbursements grew by 40% during the period, supported by a 32% rise in personal banking loans and a 42% increase in business banking loans. Capitec posted a 36% surge in income from value-added services and a 45% increase in net insurance income, driven by higher sales of funeral and life cover policies." Lee said the bank wants to eventually expand internationally but for now the bank's focus will remain on its five core businesses – retail, fintech, business banking, AvaFin and Insurance. AvaFin is its international lending business operating in Mexico, Poland, Latvia, Spain and Czechia. It will also continue to grow its branch network, which Lee says is a source of people then adopting the Capitec app. "While South Africa's other banks are pulling back from their physical presence to focus on digital avenues, Lee said that a physical presence is crucial in growing its digital presence," reports Business Tech.

ChatGPT wants to be everything to everyone

An FT study finds that popular AI tools such as ChatGPT are being widely adopted by consumers but vastly less so at work. So how does usage break down? The largest category is for teaching and training, at 10 percent – with people working out, for instance, how to teach themselves languages. Second is for writing tasks, such as editing and translation. Third is seeking information, with people turning to AI tools rather than search engines. Next is multimedia use, with people creating images or short videos using new tools such as Sora. Following that is technical help such as assistance with coding. Then there's smaller categories which include people seeking advice on relationships. "Ronnie Chatterji, chief economist at OpenAI, said the findings highlighted how ChatGPT was primarily being used to support decision making," writes the FT. "The company found that non-work-related messages have grown to more than 70 per cent of all usage." The revolution has yet to impact work, though an MIT study found a "shadow AI economy" where people covertly use AI tools to automate or improve their work without company knowledge. "Issues embedding AI into existing workflows, a lack of trust in products and limited proof that it works were the main organisational issues for failed integration, according to the study."

Lending on Intangibles

As we cover in our Governance training, there's been a major swing towards the dominance of companies owning intangible assets over tangible assets in the last two decades, and banks are adjusting accordingly. RBS said this week it will launch IP-based loans after a change in Scottish law giving lenders the ability to accept IP as security for loans. "Judith Cruickshank, chair of the Scotland board at NatWest Group, said: 'As more companies invest in AI and digital capabilities, we expect to see an increased demand for technology-driven services which may not have the same tangible assets as more traditional businesses. Our IP-backed loan offering is a key example of how NatWest is supporting Scotland's digital economy, helping IP-rich firms to accelerate investment and facilitate growth without diluting ownership.' RBS was briefly the largest bank in the world ahead of the financial crisis of 2007-2008, but became a case study for exuberance and over-reach.

Malaysia's Digital Banks Are Delivering Firsts

Aspiring superapps Fasset has gained approval to provide banking services in Malaysia. "The license completes Fasset's ability to provide full-service digital banking to its existing global user base of 500,000 within a regulated sandbox for Islamic fintech innovations, establishing Fasset as the world's first stablecoin-powered Islamic digital bank," reports The Digital Banker. "Fasset seeks to become for people in Asia and Africa what NuBank has been for Latin America: a mass-market gateway to financial inclusion. There is already strong demand – the global Islamic financial industry surpassed US$5T in assets in 2025, with projections suggesting this could double by 2030. Yet access to Shariah-compliant financial products remains limited across much of the pan-Islamic belt. Mohammad Raafi Hossain, CEO and Co-Founder of Fasset, said: 'We've been told for years what's 'impossible': that Islamic finance can't go global, that banks can't be built on crypto, that financial freedom isn't for emerging markets. We're here to prove otherwise. We can now combine the credibility of a global banking institution with the innovation of a fintech insurgent that's fully halal'."

UK's Misselling Scandal comes to a head

There was some relief this week at UK banks as the regulator announced a smaller-than-feared compensation scheme for car buyers who were mis-sold car loans. "Britain's motor finance industry is on the hook for 8.2 billion to 9.7 billion pounds ($11 billion-$13 billion) to compensate consumers for unfair car loans, the regulator said on Tuesday, in plans that point to a lower bill than the sector had feared," says Reuters. "The new estimates, outlined by the Financial Conduct Authority in a six-week consultation released after the market close, further cut forecasts of the hit to banks such as Lloyds Banking Group, Close Brothers and Barclays. Many of the car loans, which were packaged up by car dealers, stem from discretionary commission agreements (DCAs), in which lenders allowed car dealerships to earn higher fees by ramping up the interest rates consumers paid on the loans." The Financial Conduct Authority estimated average compensation for buyers at £700. The last major misselling scandal to hit UK banking involved misselling of Payment Protection Insurance in the late 1990s and early 2000s which ended up costing UK banks in the region of £40 billion.