Fintech Update, 10/29 - 11/4
Oct. 29 - Nov. 4, 2016
Leading Off
Comptroller of the Currency Thomas Curry spoke in London about fintech regulation and the OCC’s recent innovation initiatives; SoFi partnered with Fannie Mae on a new student loan refi product tied to home equity; Cross River Bank, a frequent fintech partner bank, raised $28 million from prominent Silicon Valley VCs; Mastercard launched a chatbot on Facebook Messenger; and Fortune explored how fintech is helping democratize financial services in Myanmar.
Policy & Regulation
ULC working on model codes for digital currency. The Uniform Law Commission (ULC) hopes to complete a “template for digital currency legislation in the US” by next summer. The ULC aims to “[bring] a degree of harmony, from state to state, when it comes to regulating . . . digital currencies” by providing states with model statutes to adopt or incorporate into their laws.
Comptroller Curry discusses fintech in London. Comptroller of the Currency Thomas Curry spoke at the “Chatham House ‘City Series’ Conference,” discussing fintech and the OCC’s recently released framework on responsible innovation [full text]. Curry stated that he does not support a “safe space” approach to fintech regulation, but affirmed that the OCC is considering whether to grant national bank charters to fintech firms.
Marketplace Lending & Credit
Nonbanks now lend more mortgage dollars than banks. In the third quarter of 2016, nonbank lenders accounted for over 50% of the dollars loaned in the U.S. mortgage market. It is “the first quarter that banks, credit unions and other depository institutions have fallen below [the 50%] threshold in more than 30 years.”
SoFi creates new student loan refi program. Online lender Social Finance (SoFi) will now allow consumers to use “home equity to pay down student loan debt at terms more favorable than a traditional cash-out refi[nancing].” SoFi is working exclusively with Fannie Mae on the product, which “can be used to either reduce or completely pay off the borrower's existing student loans.”
Banking & Markets
A fintech playbook for bank CEOs. As we mentioned several weeks ago, Accenture and the American Bankers Association jointly released a “fintech playbook” designed to help banks “build and execute a strategic plan to leverage new technologies and remain competitive.” The full text of the playbook is available here.
Payments
Banks hope Zelle can outrun Venmo in P2P space. Bank executives behind Zelle, the person-to-person (P2P) payments transfer system formerly known as clearXchange, hope to improve upon the success of Venmo in the P2P space. The banks want to “closely mirror Venmo's current streamlined approach” and establish a service that “consumers will easily recognize and use . . . when it goes live in 2017.”
Digital Currency & Blockchain
Zcash aims to bring more privacy to blockchain transactions. The cryptocurrency, which “allows users to conduct private transactions while maintaining the integrity of the blockchain that supports them,” is designed to appeal to financial institutions that want to engage in blockchain-based transactions without making public certain transaction information.
Personal Finance
Citi adds functionality to its mobile app. Citigroup rolled out several enhancements to its mobile app, including the ability to dispute credit card charges. Among other complaints, customers can now use their phones to challenge the bank for duplicate charges and charges related to damaged goods. Citi called the move part of an effort to "reimagine" mobile banking.
MasterCard launches chatbot. MasterCard unveiled its new chatbot, KAI, a “bot for banks” that allows customers to manage financial activity and shop via Facebook’s Messenger. KAI joins over 30,000 chatbots that have been created and added to Messenger in the six months since Facebook allowed third-party apps on the platform.
International News
Switzerland to weigh new fintech regulations. Switzerland's cabinet proposed new “light-touch” regulations for fintech firms. The cabinet made three proposals: a 60-day deadline for holding cash in settlement accounts; a regulatory sandbox to facilitate collaboration between regulators and industry; and a new fintech license for certain institutions.
Alipay gears up to go global. The Chinese mobile payments giant is forging partnerships with merchants in the U.S., Europe, and Asia to build a “global network of merchants” that could compete with the likes of Visa and MasterCard. Alipay is currently “accepted at more than 80,000 merchants in 70 countries . . . [with] a goal of one million merchants in three years.”
Fundraising & Deals
Cross River Bank raises $28 million. The New Jersey-based bank’s round was led by notable Silicon Valley VC firms Andreessen Horowitz, Ribbit Capital, and Battery Ventures. Cross River Bank originated over $2.4 billion in loans in 2015 for fintech lenders like Affirm, LendingClub, and Upstart. The bank intends to use the new capital to “grow its asset base to between $260 and $300 million over the next 12-24 months.”
Company Spotlight
Ex-Barclays CEO launches fintech firm. Antony Jenkins announced his new startup, 10x Future Technologies, aiming to “modernise the back office technology used by banks.” The company promises to “give banks better access and insights into customers’ data, enabling them to offer products . . . that are far better tailored” and is in "advanced talks” with potential clients.
CEO changeover at Ripple. After running the mobile payments firm for nearly four years, CEO Chris Larsen will become the company’s executive chairman, being replaced as CEO by current COO Brad Garlinghouse. Garlinghouse joined Ripple in April 2015 and is “well-known as an operational executive” who can help Ripple establish new partnerships and grow its network.
BBVA rolls out mobile customer onboarding. The Spanish bank will now allow customers to open accounts by uploading a photo ID and a selfie. The new remote registration service will use facial recognition software to ensure that both images are of the same person before “switching over to a BBVA rep to verify the customer's ID through a video call.”
Commentary & Miscellaneous
On fintech’s important role in Myanmar. Fortune contributor Casey Hynes discusses fintech and the future of Myanmar, a country largely lacking bank services for much of its recent past. Thanks to increasing urbanization, access to online services, mobile phone penetration, and fintech startups, “democratizing financial services” may point to a new way forward in Myanmar.
Have a great weekend!
The Fintech Update Team