Fintech Update, 11/26 - 12/2
Nov. 26-Dec. 2, 2016
Leading Off
The OCC will move forward with considering applications from fintech firms to become special purpose national banks; the R3 consortium opened the code for its Corda blockchain platform; Uber’s chief rival in Asia announced a new payments platform; Stripe raised $150 million in new funding, bringing its valuation to $9.2 billion; a new HBS paper examines the changing online lending industry and whether it requires additional regulatory oversight; and China rolled out a “social credit” pilot program that rates citizens’ creditworthiness based on digital records of their social and financial actions.
Policy & Regulation
OCC to consider charter applications from fintech firms. In a speech at Georgetown Law [full text], Comptroller of the Currency Thomas Curry confirmed that the OCC will “move forward” with its plan to consider charter applications from fintech firms looking to become special purpose national banks. The OCC also published a related paper discussing important issues associated with the extension of national bank charters to fintech firms [full text].
FIN calls on new administration to develop fintech plan. Financial Innovation Now (FIN), the public policy coalition made up of Amazon, Apple, Google, Intuit and PayPal, sent a letter [full text] to the Trump transition team recommending that the incoming administration develop a “national vision and . . . strategy to promote . . . fintech innovations in financial services.”
Federal court allows IRS to obtain Coinbase records. The Northern District of California granted a “controversial request” from the IRS to obtain potentially millions of records of users of the bitcoin exchange Coinbase. The IRS request sought data on all users who conducted transactions between 2013 and 2015, concerning many advocates who challenged its breadth.
Banking & Markets
Bain’s survey finds mobile growth moderating. Bain’s annual survey revealed that, for the first time, mobile growth in retail banking has started to level off. The survey results revealed that some banks have found that their “digital channels often are not as effective as [they] would like,” and many mobile consumers “wound up visiting a teller or calling a contact center anyway.”
Digital Currency & Blockchain
R3 opens its Corda platform. The distributed ledger consortium released its code to the public, giving developers outside R3 the ability to test, contribute to, and build on top of Corda. R3 CEO David Rutter said open-sourcing Corda would generate value for financial services firms by spurring the creation of applications “based on common, open, interoperable platforms."
IBM working on Indian supply chain blockchain project. IBM will work with the Mahindra Group, one of India’s largest holding companies, to develop a blockchain-based solution aimed at “reinvent[ing] supply chain finance across India.” One of the first projects of its kind in India, the project “will enable all parties involved in the transaction to act on the same shared ledger.”
International News
Narendra Modi wants India to go cashless. Last month, the Indian prime minister announced a controversial plan to remove 500- and 1,000-rupee notes from circulation, invalidating 86% of the country’s cash. Modi’s stated goal was curb “black money” and criminal activities, but Vox notes that it “serves as a natural prompt for India to transition to a cashless society.”
Grab launches digital payments platform. The Singapore-based ride-sharing company, Uber’s chief rival in Southeast Asia, announced that it will launch a payments platform that will allow customers in India and Singapore to store credit on the GrabPay app. Grab plans to expand the new service to Thailand, Malaysia, Vietnam, and the Philippines in the coming months.
Fundraising & Deals
Stripe raises $150 million. The San Francisco-based payments facilitator, which allows companies to quickly add payments tools to their apps and websites with a bit of code, is now valued at $9.2 billion, making it one of the world’s most valuable privately-held fintech companies. Stripe’s success has renewed investor interest in competitors like Paypal and Square.
Company Spotlight
Fintech innovation via “internal” startups. The New York Times profiles Total Rebalance Expert and Oranj, two financial software firms created by industry veterans who developed new solutions to niche problems. Both are examples of fintech products created by professionals with decades of experience rather than “venture capitalists or young hotshots.”
Events
Smart contracts symposium, 12/5. The D.C.-based Chamber of Digital Commerce will host a symposium on smart contracts in New York City on Monday, December 5. The organization recently launched the Smart Contracts Alliance, which aims to promote smart contract technology to a range of financial services firms and governmental and legal entities.
Commentary & Miscellaneous
Do online lenders need more regulation? In a new Harvard Business School working paper [full text], Karen Mills, former head of the Small Business Administration, and Brayden McCarthy, VP of Strategy at marketplace lender Fundera, argue that online lending is maturing into an industry characterized by bank partnerships and an increasing need for regulatory oversight.
JP Morgan executive discusses fintech. The American Banker interviewed Larry Feinsmith, head of global technology strategy, innovation, and partnerships at JP Morgan, about how he works to “connect the [bank] with emerging technology firms as part of CEO Jamie Dimon's vision to make JPMorgan more innovative.”
China dives into ‘Black Mirror’ territory... Hangzhou, China’s fourth-largest city, is piloting a “social credit” program that rates creditworthiness based on “digital records of social and financial behavior,” including actions like “fare cheating, jaywalking and violating family-planning rules.” The Chinese Communist Party hopes to roll-out the program nationwide by 2020.
Have a great weekend!
The Fintech Update