Afleveringen
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This month we had the chance to talk about:
* BaaS drama continues, with Piermont and Sutton receiving consent orders
* Chime has HOW MANY customers?
* Trade groups vs. Colorado on DIDMCA, or, where is an online loan âmadeâ?
* Quick takes on the Visa/Mastercard settlement
* And, as always, what we just canât let go of
If you enjoy listening to this podcast and find value in it, please consider supporting me (and finhealth non-profits!) by signing up for a paid subscription. It wouldnât be possible to do what I do without the support of listeners like you!
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In this episode, I had the chance to sit down with Tommy Nicholas, CEO of identity risk solutions platform Alloy, a global, end-to-end identity risk solution for banks and fintechs. Tommy and I had the chance to talk about:
* factors impacting fraud risk today, including the growth of real-time payments and the dawn of the genAI age
* key take aways from Alloyâs 2024 State of Fraud Benchmark Report
* the difference between âfrictionlessâ and âseamlessâ in financial services UX
* public and private efforts to create digital identity solutions
* whatâs on Tommyâs radar in the fraud space in 2024
* and more!
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Zijn er afleveringen die ontbreken?
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In this episode, I spoke with Michal Cieplinski, founder and CEO at CapStack.
CapStack is the first integrated operating system for banks enabling cooperation across banks and other financial services institutions in order to drive profitability and asset diversification. Michal and I had a chance to talk about:
* The importance and challenges of asset/liability management for banks
* The risks that come from asset, geographic, and sectoral concentration, especially with current concerns around commercial real estate
* How CapStack can help banks mitigate these risks
* Moving from manual, Excel-and-email-based processes to technology-powered, automated exchanges for buying and selling loan participation stakes
* and more!
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In this episode, I spoke with Jon Lear, President and cofounder of Fintech Meetup, taking place in Las Vegas March 3-6, 2024 (learn more and get your tickets here.) We had the chance to discuss:
* the crazy year in fintech and banking that was 2023
* looking for silver linings in a challenging operating and fundraising environment
* whatâs in store for 2024
* key themes and topics for next yearâs Fintech Meetup event
* and more!
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In this episode, I spoke with Neal Desai, CEO of lease-to-own startup Kafene. We had the chance to discuss:
* Kafeneâs recently announced Series B extension
* The impact of an uncertain economic environment on Kafeneâs business
* Regulatory activity in the lease-to-own space
* Where Kafene is heading in 2024
* and much, much more!
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Hey all, Jason here.
In this episode, I spoke with David Brear, CEO of challenger banking and fintech consultancy 11FS. We had the chance to discuss:
* The origin story of 11FS, including its âPulseâ and âFoundryâ offerings
* Some of the most interesting client projects David has worked on
* How David and 11FS think about creating stand-out content in an extremely crowded information space
* Where David thinks banking and fintech are headed in 2024
* and much, much more!
Existing subscriber? Please consider supporting this newsletter by upgrading to a paid subscription. New here? Subscribe to get Fintech Business Weekly each Sunday:
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In this episode, I spoke with one-stop money management platform for small businesses Waveâs CEO, Zahir Khoja. We had the chance to discuss:
* Zahirâs fascinating background, including working in Afghanistan and for Grameen Foundation
* Waveâs capabilities and target segments
* How the company thinks about buy vs. build vs. partner & its pricing and cross-sell strategy
* The importance of human advice for important decisions
* and more!
If youâre interested in learning more about or entering the contest that Zahir mentioned in our conversation, you can do so here.
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The last several years have seen quite the rollercoaster of investment-related trends: meme stonks, SPACs, crypto, and now⊠Treasuries? Another emerging trend: generative AI. In this episode, I had the chance to sit down with investing app Publicâs co-CEO Leif Abraham to talk about all of that and more, including:
* How AI for investing is and isnât different than previous trends like PFMs and roboadvisors
* How Public got comfortable deploying user-facing AI capabilities
* Why Public ended payment for order flow (PFOF) and decided to accept âtipsâ
* How Public stands out in a crowded investing market
* and more!
Also, a big congrats to the Public team on todayâs announcement of their expansion to the UK market!
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Hey all, Jason here.
This Sundayâs note is coming to you from Hilvarenbeek, in the south of the Netherlands, where Iâm camping and attending a music festival.
During last weekâs Money2020, I had the chance to sit down with compliance tech startup Cableâs cofounder and CEO Natasha Vernier. If the company sounds familiar, thatâs probably because her cofounder and I recently gave a âMasterclassâ together during New York Fintech Week.
Natasha and I had the chance to chat about:
* Natashaâs journey building and scaling the financial crime function at UK neobank Monzo
* How those experiences and challenges led Natasha to co-founding Cable
* The process of raising Cableâs recently announced $11 million Series A
* What Natsha is keeping an eye on from a regulatory standpoint
* Her biggest surprise about moving from the UK to the United States
* and more!
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I know itâs hard to remember now, but there was a time when BNPL â buy now, pay later â felt like the bleeding edge of consumer fintech (even if point-of-sale financing has been around for literally generations!)
It has been a wild ride for market leader Klarna, which is rather unique in the space: it was founded in 2005, it is a bank in Europe, and it has historically been profitable.
Klarnaâs Chief Commercial Officer and former head of the US business David Sykes joined to discuss all that and more, including:
* If Klarna thinks of itself as a âBNPL companyâ
* That $46 billion valuation
* How Klarna succeed in the US, when other foreign imports havenât
* The threat from Appleâs BNPL offering, Apple Pay Later
* and more!
Existing subscriber? Please consider supporting this newsletter by upgrading to a paid subscription. New here? Subscribe to get Fintech Business Weekly each Sunday: https://fintechbusinessweekly.substack.com/subscribe
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Hey all, Jason here.
I recently partnered with Cableâs Chief Product Officer Katie Savitz to present a Masterclass at the Empire Fintech Conference during NY Fintech Week. We profiled six recent developments impacting Banking-as-a-Service and how stakeholders can use technology to respond.
If you werenât able to attend (or just need a refresher!), this podcast/post combo is for you!
(And extra great timing, as Cable today announced it raised an $11M Series A to automate effectiveness testing of financial crime controls!)
Six Key Developments in Banking-as-a-Service
The U.S. banking system is experiencing its greatest stress since the 2008 Great Financial Crisis and regulators are seeking to address risks being revealed. BaaS may make the banking system more resilient, but it also introduces new risks. Six recent developments shed light on how BaaS may evolve going forward.
* OCC Office of Financial Technology. One explicit mandate of the OCCâs Office of Financial Technology â recently formally established and led by Prashant Bhardwaj â is to support âhigh-quality supervision of bank-fintech partnerships,â which portends continued regulatory scrutiny, but also opportunity for industry engagement with regulators.
* OCC 2023 Bank Supervision Operating Plan. Further signaling the OCCâs increased focus on BaaS, the agencyâs 2023 supervision operating plan calls for specific focus on third-party risk management and highlights BSA/AML risk.
* Acting Comptroller Hsu 2022 TCH+BPI Conference Remarks. Acting Comptroller Hsuâs speech specifically addressed the growth of BaaS operating models. Hsu expressed concern about the growing complexity associated with BaaS and reiterated the primacy of âsafety and soundnessâ concerns, while acknowledging opportunities from technological innovation.
* November 2022 U.S. Treasury Department Report on Non-Bank Firms in Consumer Finance Markets. The Treasury Department report specifically flagged ânew risks to consumer protection and marketing integrityâ from fintechs and called for enhanced supervision of bank-fintech partnerships.
* CFPB Invokes Dormant Authority to Examine Non-Bank Companies. While the CFPB is focused first and foremost on consumer protection, it has shown a willingness to use its authority to supervise non-bank entities that may pose a risk to consumers, potentially including non-bank fintechs and platforms.
* OCC-Blue Ridge Bank Agreement. The OCCâs formal agreement with Blue Ridge â arguably the first major BaaS enforcement action â provided a wealth of detail about regulatory scrutiny of risks in bank-fintech partnerships, and areas of financial crime compliance tech stacks that may need uplifting.
Increasingly, growth and innovation in the banking industry is happening outside the banking regulatory perimeter and, for BaaS-focused banks, asset size is no longer a good reflection of risk.
With the sectorâs growth now attracting more regulatory attention, to survive, all stakeholders need to adapt.
The era of banks onboarding fintechs with little to no insights is finished.
For bank-fintech partnerships to be sustainable, they must be done in compliance with regulatory requirements. While the knee-jerk response is to throw bodies at the problem, this not only is an expense, but also has scalability limitations. Instead, a new approach enabled by new technology is needed to make these partnerships not only possible, but profitable.
The Compliance Problem for BaaS
Rapid customer growth and disaggregated responsibilities are primary drivers of compliance breakdowns. Both factors are especially prevalent in BaaS.
In BaaS, compliance teams used to managing one institution and their own direct customer pool now have to deal with multiple fintechs, each with their own controls and indirect customer pools.
This demands a whole new level of compliance capabilities. Many banking providers still rely on legacy systems and manual processes, but those are no longer fit for purpose.
As a result, regulators are already focused on this question for bank-fintech relationships: Who is responsible for what when things break?
The Fincrime Tech Stack & Why Effectiveness Matters
Over the last decade in BSA/AML compliance, banks and fintechs have added more controls, with little idea about how effective they are. Over $270 billion is spent worldwide each year on financial crime compliance, with the majority of that spent on people.
Despite this spending, less than 5% of accounts are tested to understand effectiveness. If banks can't even be sure how effective their own controls are, how can they do that for their fintechs?
But this same exact approach is being used in BaaS â partner banks are adding more fintechs with little idea how effective their controls are, even as the compliance challenges multiply.
Increasingly, regulatory pressure is demanding that you be able to âshow, not tellâ that your program is effective. Compliance teams need to ask: What part of your tech stack helps you answer questions about effectiveness?
In BaaS, technology solutions for oversight, monitoring, and assurance are essential. For banks, how do you know everything is working at all levels across their fintechs? And for fintechs, how do you reassure bank partners everything is fine?
How can you understand risk better?
The first key compliance task in BaaS is understanding risk better: banksâ own risk, fintechsâ risk, and how fintech risk impacts banksâ risk. Below are practical tips and steps to achieve this:
Bank risk
* Review your own risk assessment more than annually, as circumstances can change quickly in BaaS.
* Update your risk assessment when control failures are discovered, so that you can discuss priorities with senior management.
* Leverage available risk assessment technology solutions to get out of spreadsheets and onto a smarter platform with better workflows.
Fintech risk
* Banks should require fintechs to perform a risk assessment using the same methodology and should collect standard information and documents from each fintech, in order to compare and understand risk across the bankâs fintech portfolio.
* Fintech risk assessments should also be easily updated for changes in circumstances at the fintech level.
* Consultants can provide templates and methodologies, and technology platforms can help with document collaboration. Cable also offers the ability to collect company information and documents, and conduct the same risk assessment for each fintech.
Bank and fintech risk
* Banks should incorporate their fintechsâ risk into the bankâs own risk.
* Banks also need to understand how each new fintech affects their current risk profile and any impacts to their risk appetite.
* Some compliance teams have built out complicated spreadsheets with the help of consultants to do this. Cable also offers the ability to roll up fintechsâ risk assessments into a bankâs risk assessment.
How can you improve oversight and monitoring?
The second main compliance task in BaaS is oversight and monitoring of controls. Below are practical tips and steps to improve these processes:
Identify controls
* Banks and fintechs should have a shared understanding of the controls in place at each fintech.
* Banks should request a controls register as part of standard onboarding documentation collection from fintechs.
Assess control effectiveness
* To the effectiveness point, partner banks must sufficiently monitor and test accounts to understand how all the controls are working at the fintech level.
* Key questions to address include: What data is needed by the bank to conduct oversight? How will data be sent or received timely, and in what format? If supplemental data or information is needed, how will the bank get that promptly? What do each of the bank and fintech need to do to facilitate data sharing?
* Both banks and fintechs need to have a team and technology to handle this monitoring, especially as the bank's fintech program scales.
* Technology like Cable offers automated oversight and assurance processes to identify regulatory breaches and control failures in real-time across each fintech.
Fix and report issues
* Banks and fintechs need to quickly remediate and report any issues, promptly after they happen instead of finding issues months later in periodic audits.
* Banks and fintechs should ensure they have shared issue management tools that give visibility to both sides, as fintechs will most often remediate issues.
* Banks and fintechs should define roles and responsibilities, and have shared understandings of issue prioritization, so the right issues receive proper attention.
BaaS is here to stay, but operational work will overwhelm banks and fintechs unless automated effectiveness testing becomes commonplace. Partner banks need to deeply understand their requirements and deploy technology solutions to enjoy the trifecta of full compliance, resource efficiency, and fast onboarding to grow their fintech programs.
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Hey all, Jason here.
Werenât in New York or couldnât make it to this event at Barclays Rise during New York Fintech Week? Youâre in luck!
For this panel discussion tackling the question, What Next for BaaS?, I was joined by:
* Amanda Swoverland, Chief Compliance Officer at Unit
* Walt Cox, Head of Partner Banking at Valley Bank
* Neepa Patel, founder/CEO at Themis
* and Nick Farrow, Head of Bank Partnerships at Modern Treasury
We discussed:
* how to define âbanking-as-a-serviceâ
* how banks/platforms think about selecting what partners to work with
* how stakeholders work together to manage risks and ensure compliance
* whether and how regulation of BaaS could be improved
* and much more!
Many thanks to Valley Bank and Unit for sponsoring the event and to Barclays Rise for hosting us!
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Hey all, Jason here.
Well, there was no shortage of late-breaking news on Friday â like the Fedâs report on SVBâs failure, the FDICâs report on its supervision of Signature, and what appears to be the collapse of troubled First Republic Bank.
Given youâll have no shortage of content covering those developments (and to give me time to read all of them and develop an informed opinion), Iâm bringing you something else entirely this Sunday morning.
While in New York for NY Fintech Week, I had the chance to sit down with Currentâs cofounder and CEO Stuart Sopp. We discussed:
* How Current is differentiating itself in a crowded market
* Currentâs unique marketing activations, including partnership with YouTuber MrBeast
* Whether or not an interchange-dependent business model is sustainable
* Why Current built its own tech stack and the benefits of doing so
* Currentâs plans to launch credit products, beginning with a secured card
* and much more!
Speaking of NY Fintech Week, I had an amazing and productive time in the city. Many thanks to everyone who worked hard to organize events during the week, including Empire Fintech and especially Jon Zanoff.
I had the chance to participate and speak at a number of events, including at Barclays Rise, alongside Walt Cox (Valley Bank), Amanda Swoverland (Unit), Nick Farrow (Modern Treasury), and Neepa Patel (Themis); at Empire Fintech Conference alongside Cableâs Chief Product Officer Katie Savitz; and with Unit21âs Aditya Vempaty and Alex Faivusovich, Bangor Savings Bankâs Diane Porter, and Modern Treasuryâs Jeff Nowicki.
Keep an eye out for some additional podcasts from the events in the coming weeks. Until then, hereâs a couple quick shots wrapping up a great week:
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Welcome back to Fintech Business Podcast. In this episode, I talk to Jesse Silverman, formerly an attorney at the Connecticut Department of Banking and the Consumer Financial Protection Bureau, before working in legal roles at fintechs like LendUp, Steady, Nuula, and his present role at payments platform Highline.
We had a chance to talk about:
* Our time working together at failed startup LendUp, what we learned, and lessons other companies should take away from it
* Why regulators always seem to be trailing behind innovation in financial services
* Whether or not fintech is actually âexpanding access and inclusionâ or âdemocratizingâ anything
* The CFPB under Director Chopra
* and more!
If youâre interested in sponsoring an episode or appearing as a guest, drop us a line.
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In this episode, I talk to Shmulik Fishman, the founder and CEO at Argyle. Argyle provides payroll connectivity infrastructure that powers solutions like income & employment verification, deposit switching, payroll-linked lending and earned wage access.
We had a chance to talk about:
* Top take aways from last weekâs Fintech Meetup conference in Las Vegas
* Thinking through the fallout from SVB, Signature, First Republic & more
* How payroll data and connectivity can improve lendersâ ability to underwrite
* The differences (and similarities) between âopen bankingâ and payroll connectivity
* The opportunity from achieving improved regulatory clarity
* and more!
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In this episode, I talk to Alex Baydin, founder and CEO of PerformLine, a platform for regulatory and compliance monitoring for brand marketing.
We had a chance to talk about:
* The complexity of managing marketing compliance in todayâs digital advertising ecosystem
* Managing workflows and communication in fintech/Banking-as-a-Service relationships
* Key takeaways from analyzing millions of CFPB complaints
* What Alex is keeping an eye from a regulatory perspective this year
* and more!
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In this episode, I talk to Kurt Lin, cofounder & CEO of Pinwheel, a fintech infrastructure company that enables startups and banks to make sense of real time income and employment data.
We had a chance to talk about:
* Where the âPlaid for payroll dataâ analogy breaks down
* The greater complexity of the payroll and employment data vs. bank account data
* Opportunities and risks for integrating payroll and employment in underwriting and managing credit
* Evolving macroeconomic risks
* and more!
If youâre interested in sponsoring an episode or appearing as a guest, drop us a line.
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In this episode, I talk to Alain Meier, the Head of Identity at Plaid. While I imagine most readers/listeners are pretty familiar with Plaidâs core capabilities, the company moved into the identity verification space through its acquisition of Meierâs startup Cognito about a year ago.
We had a chance to talk about:
* Alainâs experiencing starting and selling Cognito
* Use cases for identity verification outside of financial services
* Emerging identity tech, like mobile driverâs licenses
* The potential and challenge of âself-sovereignâ and decentralized identity
* and more!
If youâre interested in sponsoring an episode or appearing as a guest, drop us a line.
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In this episode, I talk to Michael Sindisitch, EVP & Head of TripActions Liquid, an end-to-end travel, expense, and corporate card solution.
We had a chance to talk about:
* TripActions recent $300 million equity raise & $400 million credit facility
* TripActions unique capabilities vs. others in the travel or expense management spaces
* How TripActions thinks about the competitive landscape
* TripActionsâ experience during COVID and the travel rebound as the pandemic wanes
* and more!
If youâre interested in sponsoring an episode or appearing as a guest, drop us a line.
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In this episode, I talk to Scott Sanborn, CEO of âOGâ fintech LendingClub, which made the transition from being a fintech âpeer-to-peerâ lender to acquiring and becoming a bank.
We had a chance to talk about:
The factors that drove LendingClub to become a bank; what lessons todayâs fintech (and crypto) companies can learn from the challenges LendingClub has navigated; how LendingClub is responding to the changing economic climate; the opportunity and impact of âalternative data,â like cashflow-based underwriting, and novel products, like earned wage access; and more!
Special thanks to episode sponsor TripActions, the end-to-end travel, expense management, and corporate card solution.
If youâre interested in sponsoring an episode or appearing as a guest, drop us a line.
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