• JP Morgan Chase is working on a rent management tool for owners of multi-family housing buildings.
• The new tool, called Story, will enable landlords to send invoices, receive payments, track payments, view analytics, determine rent prices, and screen potential tenants.
• Story is currently in beta, but is expected to be released to a broad audience in 2023.

JP Morgan Chase is piloting a platform to facilitate rent payments for tenants living in multifamily housing. The new technology, called Story, is a rent management tool for multi-family property owners.

As its core functionality, Story will enable landlords to automate rent invoices and receive rent payments. As not all tenants pay rent on time or in full, Story serves as a platform to help landlords track which tenants have paid and which still owe. Additionally, the new offering will provide property owners with analytics, help them determine rent prices, and will even offer a tool to screen potential new tenants.

As for renters, Story will remind them of upcoming rent payments, offer them multiple payment options, enable autopay, track their previous rent payments, and show a copy of their lease.

The bank has not yet set a price for the tool, but indicated that it will not charge a transaction fee for ACH, debit, or credit card payments for the first year. After that, Chase clients that hold an unspecified minimum balance will receive free ACH payments.

Story, which is currently available in 15 U.S. states, will be released to a broader set of users next year.

I’m always surprised at the lack of property tech (proptech) solutions in the fintech space. During the last decade, tenants’ rent payments totaled $4.5 trillion, and this number is set to increase massively between 2020 and 2030. Aside from insurtech, proptech is one of the last frontiers of fintech to be digitized. Now that we’re seeing a large incumbent like JP Morgan get into the game, it is only a matter of time before we see competing proptech innovations from other traditional banks.

Photo by Kenny Eliason on Unsplash

• FinovateEurope alum nCino announced a partnership with U.K.-based Ashman Bank.
• The alliance will enable Ashman Bank to deploy nCino’s Bank Operating System to better serve its small businss customers in the U.K. property market.
• nCino is a publicly traded company on the NASDAQ under the ticker NCNO. The company has a market capitalization of $3.5 billion.

A new partnership between cloud banking innovator nCino and U.K.-based Ashman Bank is designed to “transform the banking experience” for small and medium-sized businesses in the country’s property market. Ashman Bank, which was awarded its banking license earlier this year, will deploy nCino’s Bank Operating System to support its life cycle property finance solution.

“Partnering with nCino takes us one step closer to being able to transform the banking experience for property SMEs,” Ashman Bank Chief Commercial Officer Caroline Luxmore said. “nCino gives us the best and most efficient platform for us to realize our ambitions as a digital-first bank, and we believe that together we can create a meaningful change in the U.K. real estate market.”

Implementing nCino’s technology will enable Ashman Bank to offer a variety of products and services that will allow SMEs to access the financing they need to support their growth. The bank is scheduled to launch early next year and focuses on providing real estate lending solutions – ranging from commercial mortgages and buy-to-let to development and bridging finance – to “conscientious businesses”. Ashman Bank has made a point of helping businesses become more sustainable by providing them with proprietary digital tools to enable them to understand their environmental and societal impacts.

Ashman Bank is an ambitious new entrant that will provide real estate lending for conscientious businesses in the U.K.,” nCino Managing Director of EMEA, Charlie McIver said. “It is bringing an innovative approach to commercial real estate, and nCino can help the Ashman team execute, grow, and adapt as the bank expands.”

Headquartered in Wilmington, North Carolina, nCino made its Finovate debut at FinovateEurope in 2017. At the conference, the company introduced its Bank Operating System, which leverages the Salesforce platform to provide financial institutions with an end-to-end digital banking solution.

nCino began October with news that Pennsylvania-based independent community financial institution PeoplesBank went live with its Small Business Banking Solution. The bank had previously deployed nCino’s Commercial Banking Solution, and recognizes the new technology as a way to better serve its small business clients. “Our industry is rapidly changing and we’re very proud of our ability to better support small business owners in our community with premier technology offerings,” PeoplesBank SVP and Chief Commercial Banking and Lending Officer Amy Doll said. “Their success relies on being agile and able to scale and, with nCino, we now provide tailored experiences that evolve with our clients as their businesses grow.”

Photo by Kristina Paukshtite

BMO Harris Bank Head of Technology Syed Hasan is focusing on delivering an omnichannel experience for the bank’s business customers with an eye toward digital technologies in 2023.  

The $167 billion Chicago-based bank began leveraging robot process automation (RPA) this year to drive efficiencies within the business to stay ahead of competitors, according to Hasan. 

Bank Automation News recently caught up with Hasan to discuss what the bank’s developers are working on for 2023. What follows is an edited version of that conversation. 

Bank Automation News: BMO recently deployed RPA in an effort to fight fraud. How else is the bank using RPA? 

Syed Hasan: RPA is part of BMO’s digital-first approach  to drive efficiencies in every part of the business. We recently deployed RPA for our business banking line, booking loans to the mainframe system. This allows for all loans under $100,000 to be booked in near real time. The feedback from our frontline teams has been positive, as it enables us to create capacity to focus on higher-value work. 

BAN: What enhancements are you planning for the business onboarding platform BMO Business Xpress (BBX)?  

SH: Our developers are working on the integration of new products and channels for our BBX platform as well as introducing new functionality to enable an omnichannel experience for our business banking customers. This allows more convenience and flexibility for our customers.  

For example, a client can start a lending application in a branch, and later finish the application online. Our developers are also working on enhancing the technology for loan processing of nonprofit entities and innovating the technology currently used to send targeted promotions to customers.  

BAN: Which technologies are on your radar for 2023? 

SH: We are planning to introduce model-based intelligent testing tools that will significantly enhance our quality assurance process. These tools will allow for auto discovery of defects, generation of tests and the streamlining of the defect resolution process. We are also introducing e-signature and optical character recognition (OCR) capabilities to our BBX platform. 

BAN: Are there any new projects currently in development? 

SH: Our developers are working on enhancing the technology for loan processing of nonprofit entities and innovating the technology currently used to send targeted promotions to customers. 

Additionally, BMO is always looking at our technologies and finding ways to update and incorporate new products and offerings into our BBX platform to improve customer experience. 

BAN: What is your favorite piece of leadership advice? 

SH: It’s one thing to digitize, but it’s even more important to humanize. Focus your technology journey on the people — both the people who build the technology and the people who use the technology — to succeed. 

Truist Financial Corp. is launching a new division focused on innovation, the bank announced at Money 20/20 last week. Truist Foundry, the new unit, will function as a startup and will bring together teams from business, design, operations, product risk and technology “to deliver projects and serve the bank’s lines of business,” a Truist spokesperson […]

What a story this has been… First Elon wanted to buy Twitter, but Twitter didn’t want to sell. Then Twitter wanted to sell, but Elon didn’t want to buy. Twitter sued Elon, then Elon wanted to buy, but Twitter didn’t want to sell and kept suing Elon to buy.

Well, now Elon Musk owns Twitter —he finally acquired the company for $44 billion. Immediately after, he fired the CEO and several top executives and tweeted “the bird is freed.”

Beyond firing the company’s top brass, Elon has more plans on his mind and he’s been sharing his thoughts with us through his tweets and documents from the Twitter lawsuit. He’s consistently said that he wants Twitter to be more open and has promised to unban controversial accounts, including former President Trump, and to relax content moderation rules. He’s also tweeted about stopping ads and turning Twitter into “X, the everything app.”

Compared with its rivals, Twitter is a comparatively small platform with around 300 million monthly users, and it has never experienced the exponential growth for example of TikTok or Instagram. But it has a commanding role in news distribution and is considered influential —it is widely used by politicians, thought leaders, and businesses, to share their opinions and comments.

Since going public in 2013, Twitter has occasionally turned a profit. Except for 2018 and 2019 when it made a profit of just over $1 billion, Twitter has posted a net loss every year.

Twitter makes money from selling ads and licensing data. Revenue from ads represents more than 85% of its total revenue and in 2021 Twitter made over $4.3 billion from advertising and $760 million from data licensing.

But, Google, Facebook, and Amazon get the lion’s share of the advertising dollars, leaving little room for anyone else. Elon knows that Twitter cannot become a dominant player in the ads business, even if advertising is how it butters its bread today.

This whole free-speech absolutism runs headlong into making Twitter a viable business from ads, and this in part is why Elon has tweeted that he does not want to run ads.

Advertisers care a lot about “brand safety.” If you running ads for your brand, you don’t want to place them for instance next to a Neo-Nazi tweet. If Elon opens up the platform and lets in a tsunami of bullies, misinformation, and other sludge, advertisers will flee and ad revenue with dissipate.

Elon is a smart guy and he knows all this, which is why we are hearing him talk about his plans for X to make Twitter profitable.

Elon’s inspiration for X is WeChat, used by more than a billion people in China. WeChat allows people to use QR codes to do all manner of tasks, from buying groceries to booking a dentist appointment, hailing a taxi, sharing photos with friends, or playing video games. They can access a government-issued ID card through WeChat too.

Elon Musk is no stranger to the fintech business. In 1999, he founded X.com, an early online bank —customer deposits were insured by the FDIC. In 2000, X.com merged with Confinity, a payments startup led by Peter Thiel, and the resulting entity became PayPal.

Obviously, he’s been thinking about this for a while. Back in 2017, he reacquired the domain name X.com from PayPal for an undisclosed amount.

This new X project sounds to me like Elon wants to revisit the fintech space wearing a crypto mask and taking advantage of Twitter’s global user base. In personal texts that were published as part of legal proceedings in the Twitter case, Elon told his brother, that he had “an idea for a blockchain social media system that does both payments and short text messages and links like Twitter.”

I can understand why Elon is eager to copy WeChat’s model. WeChat made an estimated $17.49 billion in revenue in 2021, largely by taking a cut on transactions it processes for things like games, deliveries, and a thriving market for digital services. More than half a billion people use thousands of mini-apps inside WeChat every day.

But Elon Musk is not alone in the pursuit of building a super app.

Super apps are one of the hottest trends in tech right now and they represent the holy grail of the web3 era. The term super app is nothing new. It was introduced to the world in 2010 by Mike Lazaridis, Blackberry’s founder, and CEO. They are appealing because they solve the issue of choice overload, minimizing the number of apps and digital services consumers need to manage.

Already several fintech have been shifting to support a wider range of consumer needs in the last year and become one-stop shops for consumers’ needs.

Revolut and Klarna stand out, but many others also have super app ambitions (Curve, Wise, Lydia, Argent, Nubank, Douugh, etc)

In the past Revolut forayed outside the realm of finance into hotel bookings with ”Stays” and last week with “Shops,” making another push to become a true multi-vertical super app. In the other geographies, RappiColombia has raised $500 million ($5 billion valuation), PideYummy raised $4 million from Ycombinator and others, and India’s Paytm was the country’s largest-ever IPO in late 2021.

A year ago, PayPal, launched a redesigned app, that bundles a slew of services, including a shopping hub, a high-yield savings account, and even a fundraising platform. Buy now, pay later (BNPL) providers like Affirm and Klarna have also launched their versions of a super app that integrate their core BNPL solutions with other shopping and financial tools.

Making a super app is hard on many levels, but most of them have nothing to do with technology.

A question that comes to mind is why didn’t Jack Dorsey merge Twitter with Block to create a super app. In one of their conversations, Dorsey wrote to him:
“Yes, a new platform is needed. It can’t be a company. This is why I left. An open-source protocol, funded by a foundation of sorts that doesn’t own the protocol, only advances it.”

Something else not to forget is the lessons from Facebook’s Libra. Governments in the west are wary of monopolies, especially in Europe, and a super app with a lot of data and power could face big problems and eventually be gutted.

I think we can expect to see crypto tightly integrated into Twitter, with possibly a token-based voting system that allows everyone to have a say over the product, peer-to-peer crypto payments, and every tweet and transaction recorded on the blockchain with its ownership verified. All this without a central entity that decides what is right or wrong —no censorship whatsoever. If Elon succeeds, Twitter will become the gateway to the world of X —that world may even be a metaverse.

Think about this for a minute. If you owned a company like Tesla, eventually a fleet of self-driving electric cars that you built and X could power an Uber killer powered by the blockchain (in 2021, Uber made $17.45 billion). Now think about solar, batteries, space, AI, connectivity, and everything else he’s involved with, you’ll come up with some great use cases for Twitter users that want to enter the world of X.

If you’ve ever been to an FAO Schwarz store, I am sure you’ve heard of “Welcome To Our World Of Toys.” This music pops into my head when I think of Elon’s world of X or maybe it is because Christmas is coming and I am just thinking about toys ?

As far as users being interested in super apps, well, we haven’t seen super apps really take off in a meaningful way outside of Asia. Most people in the US use different apps for different things. But research by PYMNTS validates that Elon may be moving in the right direction, as it shows that three-quarters of consumers would be interested in super apps. With the right brand and offering it could be a hit.

For the next decade or so, the trend among consumers and businesses will shift toward super apps. Super apps can and will provide unique experiences based on customer preferences and historical behavior.

Some contenders will succeed and some will fail. The big question is not whether Elon’s new X project will succeed or not. I think he will succeed because he has a strong global brand, a strong personal brand, access to resources, a large user base, and a vision. The question is whether banks understand how they will deliver value in a world dominated by super apps, that are integrated with crypto and Defi, and whether they can move quickly enough to respond before super apps become a super disruption.

by Ilias Louis Hatzis is the founder and CEO of Kryptonio wallet.

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As different countries take different approaches to how they police cryptoassets, there have been calls for more international coordination on crypto regulation. The Financial Stability Board – a global financial markets standard-setter – has now proposed a framework aimed at greater consistency between emerging crypto regimes. The FSB is inviting feedback on its proposals by 15 December 2022.

Concerns around cryptoassets and financial stability

In the overview to its proposals, the FSB observes that the turmoil experienced in the cryptoasset markets earlier this year has highlighted a number of structural vulnerabilities, exposing:

• inappropriate business models,
• significant liquidity and maturity mismatches, 
• extensive use of leverage, and
• a high degree of interconnectedness within crypto markets.

It considers that all of these vulnerabilities were amplified by: 

• a lack of transparency,
• poor governance,
• inadequate consumer and investor protection, and
• weaknesses in risk management.

The FSB concludes that – for now – there has been limited spillover into established financial markets due to relatively low interconnectedness with the wider financial system but warns that this could “change rapidly” as cryptoasset markets recover. In essence, given the speed with which crypto markets are evolving, there is a real possibility that crypto markets could reach a point where they influence global financial stability.

Issues with the current regulatory landscape

The FSB considers that cryptoassets are “predominantly used for speculative purposes” and that many remain non-compliant with or outside the scope of existing regulation. Whether existing financial regulation applies depends on a case-by-case assessment of whether the relevant assets and activities are regulated under each jurisdiction’s laws. The result for cross-border cryptoasset activities is a global patchwork of regulatory frameworks which is becoming more complex as crypto-specific regimes are being developed.

A design for crypto regulation – key takeaways

To help guide consistency between those emerging regimes, the FSB has issued a framework for the regulation of cryptoasset activities for public consultation. Once finalised, this will be delivered to the G20 Finance Ministers and Central Bank Governors and is intended as guidance for national regulators to follow.

In summary, the FSB recommends that national regimes should:

1. Empower regulators to oversee cryptoasset activities and markets, including crypto issuers and service providers
2. Regulate crypto issuers and service providers in a way which is proportionate to the (potential) financial stability risk they pose
3. Facilitate information-sharing between regulators
4. Expect crypto issuers and service providers to have comprehensive governance frameworks in place with clear lines of responsibility
5. Require crypto service providers to have effective risk management frameworks and require issuers to address financial stability risks in their relevant markets
6. Allow for regulatory reporting of relevant data
7. Impose disclosure requirements on crypto issuers and service providers
8. Monitor risks arising from interconnections both within the cryptoasset ecosystem and between the crypto ecosystem and the wider financial system
9. Address risks associated with the combination of functions in a single entity, including requirements to separate certain functions and activities

Some points to note are:

• The FSB does not prescribe how these recommendations should be implemented. In some cases the aims may be achieved through the extension of existing regulation to cryptoassets; in others crypto-specific guidance or regulation may be required.
• The proposals are based on the principle of “same activity, same risk, same regulation”. In other words, (unregulated) cryptoassets performing an equivalent economic function to (regulated) financial instruments should be subject to equivalent rules.
• The recommendations apply very broadly to all cryptoasset activities, issuers and service providers that may pose risks to financial stability. This could present a challenge for countries which have so far chosen not to follow the EU’s approach in pursuing a comprehensive regulatory structure for a wide range of cryptoassets.
• The aim is for regulators to provide effective guardrails around cryptoassets and markets, providing for adequate transparency, accountability, market integrity, investor and consumer protections and AML/CFT defences across the cryptoasset ecosystem.
• The recommendations support rules being imposed on crypto issuers and service providers to, for example, require them to act honestly and fairly with stakeholders, comply with prudential and market conduct standards, and establish effective contingency arrangements and business continuity plans. The recommendations also envisage segregation requirements to make sure that customer assets are safeguarded.
• Many providers offer a wider range of crypto services – such as trading, custody, settlement and lending – from a single entity. The combination of multiple functions in a single provider complicates the provider’s risk profile and introduces conflicts of interest. The FSB suggests regulation could require certain functions and activities to be kept separate.
• The FSB considers that more rigorous regulatory standards should apply to cryptoassets, such as stablecoins, that could be widely used as a means of payments and/or store of value because they could pose significant risks to financial stability.

An update on global stablecoin arrangements

As well as presenting a general framework for regulating crypto, the FSB is also consulting on changes to its recommendations for supervising global stablecoin arrangements. The revisions are a response to recent market and policy developments. The recommendations represent a higher level of regulatory standard for this category of cryptoasset.

Among the changes, the FSB proposes extending the scope of its recommendations to include stablecoins with the potential to become global stablecoins. The revised recommendations also suggest regulators require global stablecoin arrangements to prepare for run scenarios by having comprehensive liquidity risk management practices and contingency funding plans in place.

The most significant changes relate to stabilisation mechanisms. Many stablecoins in today’s market rely on algorithmic protocols and/or arbitrage activities to maintain a stable value. In the wake of the Terra/Luna collapse, the FSB has concluded that relying on algorithms or arbitrage is not an effective stabilisation mechanism. Its revised recommendations call on national regulators to impose robust requirements for the composition of reserve assets, “consisting only of conservative, high quality and highly liquid assets”. Few existing stablecoins would meet this standard.

As well as changes to stabilisation mechanisms, the FSB also calls for improvements to governance, risk management, redemption rights and disclosures relating to global stablecoin arrangements.

Next steps

Feedback on the consultations is requested by 15 December 2022. The FSB then expects to finalise its recommendations by mid-2023. Given that the FSB reports to the G20 nations, any suggestions it makes can be expected to influence the approach being taken by national policymakers and so could have a real impact on crypto market participants. The FSB plans to review progress made on implementing its final recommendations before the end of 2025.

One area which is not covered in detail in these papers is the role of decentralised finance. An annex on DeFi suggests that DeFi protocols purport to rely on decentralised governance but that in practice governance is often concentrated in the hands of the protocol development team and/or a small group of related stakeholders. The FSB says that it will consider in 2023 whether additional policy work focusing on DeFi is needed.

LAS VEGAS – Wells Fargo is increasing its credit decisioning automation in an effort to enhance dealer satisfaction in its auto business.   The bank’s automotive credit decisioning reached 70% automation in 2022, up from 50% in 2021, Head of Wells Fargo Auto Tanya Sanders said at the Auto Finance Summit on Thursday. “We spent the […]

Amazon.com Inc. shares will fall another 28% and take longer to recover from a slump that has already wiped out $560 billion in market value, says BNP Paribas Exane’s Stefan Slowinski, the only analyst with a sell-rating on the e-commerce giant. Slowinski cut the stock’s 12-month price target to $80 per share, the lowest among […]

Capital One is modernizing its tech stack and increasing automation using machine learning (ML) within the bank’s systems.  The $444 billion bank reported a 9% year-over-year increase in communications and data processing spend to $349 million during the third quarter, according to the company’s Q3 earnings presentation. The technology-focused investment will allow Capital One to […]

LAS VEGAS — Bank of America’s volume of direct transactions completed through digital channels has reached 75%, Tim Owens, consumer vehicle lending executive, said Thursday at the Auto Finance Summit in Las Vegas. Customers “love digital car shopping, but when they want to speak to someone … they want to speak to someone in the […]

Pakistan-based embedded finance platform Neem forged a strategic partnership with BPC this week. The first Pakistan fintech to be enabled by BPC, Neem will use the company’s SmartVista platform to power its embedded finance infrastructure.

Neem is targeting the more than 200 million consumers and 3.3 million micro, small, and medium sized enterprises (MSMEs) that are un- or underbanked in Pakistan. Founded in 2019 and headquartered in Karachi, Neem offers both a banking-as-a-service (BaaS) platform and a lending platform.

“In BPC, we have a strong technology partner with a deep understanding of the global trends and local market dynamics,” Neem co-founder Nadeem Shaikh said. “We are building our infrastructure together, firstly for Pakistan and then for the emerging markets.”

Neem’s partnership news comes a month after the company announced a strategic partnership with JS Bank. The alliance will enable Neem to leverage JS Bank’s Open Banking platform to enable Neem’s embedded finance community partners to embed payment services into their platforms. Shaikh said that the partnership takes advantage of the “core strengths” of both companies and will lower the time to market for its financial solutions as well as give un- and underbanked consumers “the trust and credibility of a Tier 1 Bank.”

Also in September, Neem announced that it had secured $2.5 million in seed funding. The investment came from local and international backers including Korean SparkLabs Fintech, Taarah Ventures, My Asia VC, Concept Vines, and Building Capital, among others. The funding will help Neem scale its operations as it pursues a license from the Securities and Exchange Commission of Pakistan (SECP) to operate as a non-banking financial company. This would enable Neem to pursue its lending businesses on its own. The company is currently running its lending operations via licensed partners.

In addition to fintech and MSMEs, Neem’s products and services are used in businesses in agriculture, e-commerce, logistics, and healthcare.

Elsewhere in Pakistan’s fintech ecosystem, payment app SadaPay announced that it was partnering with Verimatrix. The company will deploy Verimatrix XTD (Extended Threat Defense) technologies to help ensure secure transactions for its customers

“SadaPay aims to eliminate the complexity of banking and simplify money through modern technologies and an unmatched, delightful customer experience,” SadaPay CEO and founder Brandon Timinsky said. “We are excited to deploy Verimatrix’s award-winning cybersecurity solutions to safeguard our mobile apps as well as monitor and defend our endpoints against potential attacks.”

SadaPay offers payment apps that enable customers to shop online, send money, pay bills, and withdraw cash for free at any ATM in Pakistan. The company also offers a free, numberless, Mastercard debit card with in-app card controls. With Verimatrix XTD, SadaPay will be able to provide comprehensive mobile app protection including continuous monitoring of apps to identify and stop cyberthreats.

“SadaPay’s mission to help serve the unbanked through distinctly simple and fee-free services is also accompanied by a commitment to protect user information, as well as their money,” Verimatrix VP of Cybersecurity Juha Högmander said.

An American, Timinsky launched SadaPay during a visit to Asia following the acquisition of his previous U.S.-based startup. Upon traveling to Pakistan, Timinsky was struck by the opportunity he saw in the country’s sizable population of smartphone-equipped young people, a relatively unsophisticated legacy banking industry, high cellular and broadband penetration, and a government that was increasingly emphasizing the values of digitization.

SadaPay has raised $20 million in funding, including $10.7 million in seed extension funding secured this spring. The company received the funding news just one day after SadaPay won approval from the State Bank of Pakistan to offer financial services via its app.

Here is our look at fintech innovation around the world.

• Mexican-based digital payments platform Clip earned a spot in Fast Company’s 2022 Brands That Matter roster in the international category.
• The Chilean Congress has approved the Fintech Bill. The legislation – which includes the establishment of an open banking system to exchange customer data – awaits the president’s signature in order to become law.
• Mattilda, a Mexican fintech that helps private schools manage payment collections, raised $10 million in seed funding.

• Uganda-based small business credit and asset financing platform Tugende secured $10 million in combined debt and equity funding.
• African payments company Cellulant teamed up with Mastercard to enable e-commerce payments.
• The Ecobank Fintech Challenge presented its six African fintech finalists, representing Senegal, Togo, Democratic Republic of Congo, South Africa, and Nigeria.

• Schufa, a private credit bureau based in Germany, launched its score simulator to support credit rating transparency.
• Latvian open banking platform Nordigen teamed up with enterprise resource planning solution myCorazon ERP.
• Worldline acquired a majority stake in Polish fintech SoftPoS.

Photo by Aa Dil

Global economic instability has made rough waters, and balancing the books nowadays is a tough job, to say the least. Conventional advice on how organizations should behave in a tumultuous economic environment has been to do everything possible to cut costs across departments and ride out the storm. However, paying little attention to furthering investments in core banking technology is the riskier proposition. 

Arguably, banking infrastructure plays the most central role in providing critical services when the pressure is on. When the COVID-19 pandemic struck, banks quickly innovated back-end technologies so they could provide customers with rapid financial assistance required to keep people’s lives on track and the economy propped up. Faced with the onset of another Great Recession, an entire DevOps movement coalesced when operations and software development communities raised concerns about serious dysfunction in the industry. 

A newer development that serves as a great illustration of today’s potential is intelligent automation. Almost every organization in some way or another is currently engaged in efforts to eliminate rote work in favor of tasks that yield higher-value outcomes. A business degree isn’t needed to understand that speeding up processes and streamlining costs improves bottom-line growth. 

Self-service speed, flexibility

Self-service has historically been seen as a pure cost-cutting measure that often comes at the expense of a poorer user experience. This frame of mind is no longer valid. Multiple studies have proven that customers and banking professionals alike increasingly prefer the speed and flexibility that self-service enables.

Take the ability to ensure enterprise technology strategies meet challenging regulatory, compliance and customer service demands, for example. Speed is so crucial and fundamental to business that all institutions are feeling squeezed to build, deploy and operate their software faster. Approaches popular in the cloud today, such as APIs, managed services and serverless computing exist to increase this speed. Third-party microservices serve to help increase software development velocity significantly. 

Inefficiency in monitoring and troubleshooting, while sometimes unnoticeable at first, may bring it all back down. The cost of unplanned downtime can be rather expensive. Technology and research consultancy Gartner estimates that, on average, downtime can cost a financial institution an excess of $9,000 per minute of outage. 

Automated observability

Smarter technology decisions lead to a competitive advantage, especially in an increasingly complicated regulatory environment. The true cost of ignoring higher standards and changing regulatory demands isn’t solely about fines and sanctions. Noncompliance penalties pale in comparison to actual damage caused by true business disruption and productivity loss.  

The trend toward automated observability –– the ability for technology teams to have autonomous self-service –– is the key that will enable banks to successfully ride the waves of volatility. A clean and modern enterprise architecture changes the cadence at which financial institutions conduct business since it can be propped up and functional within hours, not months. 

Having a flexible and elastic infrastructure changes the speed and accuracy with which the overall enterprise can respond. Every aspect of a best-in-class cloud model, from deploying new software to processing client and consumer data, can be automated, remain fully traceable and reduce the human capital cost required to support it. 

Infrastructure automation

Full-stack observability, automated in real time across applications, storage, services, network and computing, may very well be the thing that prevents a future global economic crisis. For a growing number of institutions, infrastructure automation is at the top of the list for transformative technologies. The reason: infrastructure as a service (IaaS) reduces costs, mitigates IT complexity and makes organizations more efficient — all important factors to consider when grappling with survivability.  

Economic downturns are not new and will continue to come and go. Taking a proactive stance is the leading edge to better revenues, though. Financial institutions that prepare for the low points with the right technology can better position themselves competitively and future-proof their business.  

The most viable institutions will invest in digital transformation projects designed to help get businesses back on track faster than ever. The laggards will be the ones with developers that are hampered by the need to keep testing and debugging. Ultimately, industry players with the greatest commitment to transform at their core will take market share and thrive on certainty. 

Headache or opportunity?

The demand on technology departments for instant solutions can be viewed as a headache or an opportunity. The financial institutions that view the current uncertain conditions as a boon for digital innovation, and not a hindrance, will have the last word on how organizations can be more agile, insight-driven and productive over the long term.  

This time, it will be the implementation of observable infrastructure automation that will make up the next wave of leaders that fundamentally move the financial services industry forward. 

Rob Brueckmann is vice president of engineering at Brace Software Inc., where he and his team are responsible for the full-stack buildout of the company’s proprietary platform.

Even the Masters of the Universe can’t break into UK Retail Banking

This is all about Goldman Sach’s somewhat forlorn attempt to break into the UK’s retail banking market with its Marcus initiative. Surely the Masters of the Universe with plenty of brains, deep pockets, plenty of confidence could brush away stuffy old outfits like Barclays and Lloyds. It seems not and Goldman have now sidelined poor Marcus. The point being made here is that there is something fundamental in the British psyche that Prevents newcomers from achieving penetration in this boring and not very profitable market at scale. Wave after wave of digital “disruptors” have tried to wake up punters with their glitzy apps and Android friendly front ends but somehow, they just don’t get the traction. It remains to be seen how the sharply rising interest rates might affect this seemingly impenetrable fortress, but one must ask. If Goldman’s can’t do it, then who can?

Morrisons Sale and Leaseback

One result of the end of cheap money is that it will wake up corporate treasurers to the fact that leverage can be expensive. While the expectations ae that interest rates will stabilise sooner rather than later at around the 5% level more in line with historical cost of money. I think that there are a couple of points to be made here. Firstly, highly leveraged “zombie companies” cannot afford borrowings at this kind of level and secondly banks are going to have to look very closely at their risk premiums if they are going to have to pay much more for their retail and wholesale deposits. There is, after all, a trade off between the rate charged and the ability of borrowers to pay it. Regulation in this area has just not helped. Secondly those outfits that are asset rich do have alternatives and they are increasingly going to have to weigh up the risks and opportunities of using them. Sound like going back to old fashioned banking might be the answer.

The Political Realities of Trussonomics will affect political thinking across the spectrum.

Daily Telegraph 24^th October

Excellent piece by the Daily Telegraph’s Kate Andrew’s in which she points out that rising interest rates are putting pressure on governments everywhere to have a rethink on the wisdom of printing money as a substitute for real economic growth. The market turmoil that followed the sharp increase in gilt yields shone a light on the fact that the pension regulator was asleep at the wheel. Did they not know that leveraged products such as LDI (liability driven investments) contained a mechanism for restoring risk profiles in volatile markets? Did they not know how margin calls work?   Seems not. Truss was going for growth but needed to roll the pitch first. However borrowing money for day to day consumption is not a sustainable strategy now and has never ever been one. The consequences of the pandemic and the hubris of central banks and governments for the last 15 years are going to have to give way to reality and it is the taxpayer that will need to foot the bill in declining living standards, government hand outs and public services. This is why six million people are on NHS waiting lists.

Howard Tolman is a well known London based Banker, entrepreneur and technology specialist.

Demo your latest fintech, finserv, or techfin innovation in front of 1000+ senior decision-makers. Apply by Friday, November 4 and save big on the demo fee. 

For FinovateEurope 2023 (March 14-15, London), we’re selecting ~60 startup, established and public companies to demo over the first day of the event, March 14. And while time on the main stage is at the crux of the demo package, the rest of the demo experience has been carefully curated to give selected companies the best ROI:

• Influential audience – demo in front of hundreds of high-quality attendees, including FI executives, fintech and tech giants, venture capitalists, industry press and analysts, and entrepreneurs.
• 7-minutes demos – get the audience’s undivided attention and show them exactly what you can do. All demos are on the main stage, and there are no other sessions competing for attention.
• Frequent and strategic networking breaks – capitalize on the energy and momentum generated during your demo to connect with attendees and set up meetings through our proprietary networking app.
• Plug and play stands – generate leads at your dedicated stand (table, monitor, power, and signage included).
• Demo videos – use your professionally edited video as a unique sales and marketing tool. Plus year over year, demoing companies have told us they receive business from companies seeing their video on Finovate.com.
• Fandom – stay in the news. We follow you for the rest of time and share your product launches, capital raised, awards earned, acquisitions and expansions made to our hundreds of thousands of followers.

Once you’ve familiarized yourself with the online demo benefits and pricing, submit the (completely confidential) application. As always, applying is completely free. And companies applying by this Friday, November 4 will save $2,000-6,000 on regular pricing when selected to demo.

Not ready to demo yet? Join our Startup Booster Program.

On 15 March, early-stage startups have two hours to network with a room full of investors from across the UK and Europe. And before that, attendees will hear from successful founders, investment insights, tips on how to land your first bank customer, and more. 

On top of this, startups have access to all event content, networking, and meetings for just £600. Learn more.

After more than two years and 130 posts, we are concluding our regular programming on this channel with the following three items, all hailing from XBRL International. Thank you Bernard for providing this platform! Please continue following what’s happening in the world of XBRL by following XBRL International on Twitter and yours truly for tidbits on the epistemology of markets. 

1  XBRL reporting coming soon to Pakistan?

2  Irish Revenue offers advice on tagging errors

We are taking note of this small country’s way of handling corporate tax reporting and hope to see changes in Switzerland in the not too distant future. 

Christian Dreyer CFA is well known in Swiss Fintech circles as an expert in XBRL and financial reporting for investors.

 We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.

 For context on XBRL please read this introduction to our XBRL Week in 2016 and read articles tagged XBRL in our archives. 

 New readers can read 3 free articles.  To  become a member with full access to all that Daily Fintech offers,  the cost is just USD 143 a year (= USD 0.39 per day or USD 2.75 per week). For less than one cup of coffee you get a week full of caffeine for the mind.

The U.S. Consumer Financial Protection Bureau (CFPB), which is tasked to protect consumers from unfair, deceptive, or abusive practices, has had a busy month. The bureau is in the headlines once again this week, this time with an update on the organization’s stance on regulating open banking and open finance.

In an address to the audience at Money20/20, CFPB Director Rohit Chopra laid out the CFPB’s proposal of requirements to protect consumers’ financial data rights. In his keynote, Chopra detailed three aspects of the CFPB’s plan, as well as the organization’s process and timeline to get there.

Requiring financial institutions to set up secure data sharing methods

Chopra said the bureau plans to require financial institutions that offer deposit accounts, credit cards, digital wallets, prepaid cards, and other transaction accounts to set up API-based data sharing. For now, it looks as if this will be limited to organizations that offer the aforementioned financial products, but Chopra made it clear that the CFPB will add the requirement in the future to those offering products not on the list, such as investing and lending.

The purpose of the rule will be to facilitate new approaches to underwriting, payment services, personal financial management, income verification, account switching, and comparison shopping. The requirement will also serve as a “jumping-off point” for a standardized approach to infrastructure allowing consumer-permissioned data sharing.

Screen-scraping is still a common practice in the U.S. and doesn’t offer customers input into which organizations use their data and how they use it. An API-first approach, like the one Chopra is suggesting, would put an end to screen scraping in financial services.

Stopping institutions from improperly restricting consumers’ access to control over their own data

The CFPB said it is looking at “a number of ways” to stop large traditional financial institutions from restricting consumers’ access to their own data. The group wants to ensure that when consumers opt to share their data, it is only used for the purpose the consumer intends.

This rule intends to target not only financial institutions themselves, which may use consumer data for marketing purposes, but also seeks to target those who use consumer data for nefarious purposes.

“While Americans are becoming numb to routine data breaches, including massive ones like the Equifax failure, we know that more needs to be done to stop this underworld from intercepting even more highly sensitive personal data,” said Chopra.

Chopra did not list specifics on how he planned to give consumers meaningful control while limiting bad actors, but he said that when a consumer gives organizations consent to use their data, the firm should not be able to exploit that data for other purposes.

Preventing excessive control or monopolization of the market

The new set of requirements will seek to limit monopolies and oligopolies present in credit reporting, card networks, core processors, and others by creating a decentralized, open system. “It’s critical that no one ‘owns’ critical infrastructure,” Chopra said.

Chopra cited Big Tech firms and incumbents as those who may set standards to rig the system in their own favor, jeopardizing an open ecosystem.

Next steps

Before these rules come into effect, the CFPB must gather a group of small firms representative of the market to provide input on our proposals. The CFPB is moving fast on this and plans to release a discussion guide for small organizations to make their voices heard this week.

After the CFPB culls input from this group, the organization will solicit input from what it is calling “fourth parties,” or intermediaries that facilitate data transfers.

Once this process is complete, the CFPB will publish a report on the input, which it will use to guide in the process of crafting a rule. The CFPB plans to publish its findings in a report in the first quarter of 2023, will issue the rule in late 2023, and will finalize the rule in 2024. The timing of the implementation relies on feedback from the small firms and intermediaries.

In other news

The news comes at an interesting time for the CFPB. The Fifth Circuit Court of Appeals ruled last week that the organization’s funding structure is unconstitutional. A panel of judges determined that the way the bureau is funded, “violates the Constitution’s structural separation of powers.”

“This isn’t an esoteric point of theory; it means the CFPB cannot do anything unless and until Congress appropriates funding for it,” said Former Deputy Assistant Attorney General James Burnham. “That’s a big deal.”

The CFPB is expected to appeal to the Fifth Circuit and then to the Supreme Court. In the meantime, however, the CFPB’s power in the Fifth Circuit region, which includes Texas, Louisiana, and Mississippi, is limited.

Photo by Polina Kovaleva

• Blockchain.com is launching a Visa debit card in partnership with Marqeta today.
• The fee-free card enables users to spend their crypto balance or cash within their Blockchain.com wallet.
• Blockchain.com counts 50,000 sign-ups for the card from users on its waitlist.

Cryptocurrency platform Blockchain.com is making it easier for users to transact using crypto from their Blockchain.com wallet. The company has released the Blockchain.com Visa debit card today, allowing U.S. users to spend their crypto balance or cash within their Blockchain.com wallet to pay for goods and services online or in person.

The new card does not charge fees and pays a reward of 1% back in crypto for all card purchases. Facilitating the launch are Visa, which provides the payment network, and Marqeta, which powers the card issuing process. Marqeta’s Just-in-Time Funding feature is key to Blockchain.com’s card launch. It enables users to spend from their available crypto balance while settling the transaction in fiat currency in the back end.

“As one of the crypto industry’s oldest and most trusted platforms, we’re excited to roll out the natural next step to make crypto easy to use in the real world and accessible to as many people as possible,” said Blockchain.com CEO and Co-Founder Peter Smith. “This is a prime example of digital assets making their mark on the existing financial services industry, as we shape the future of (mainstream) finance.”

At launch, Blockchain.com already has 50,000 sign-ups for the card from users on its waitlist. Once the rollout of the card in the U.S. is complete, Blockchain.com will make the card available to customers in more countries starting next year.

In launching a payment card tied to its crypto wallet, Blockchain.com joins its competitor Coinbase in this effort. The company initially launched a payment card in partnership with The Shift Card in 2015. However, after the debit card company closed up shop in 2019, Coinbase unveiled its own white-labeled Visa debit card issued by Pathward in 2020.

Blockchain.com was founded in 2011 and serves as a platform for users to buy, sell, hold, and trade cryptocurrencies. With 82 million crypto wallets, the company’s 37 million users have made transactions worth over $1 trillion to-date.

Blockchain.com has raised a total of $490 million in funding, including its most recent Series D round earlier this year that valued the company at $14 billion at the time.

Photo by Shubham Dhage on Unsplash

• Experian announced a partnership with digital identity company Prove.
• The partnership will integrate up to four Prove solutions into Experian’s digital identity and fraud risk mitigation platform, CrossCore.
• Experian has been a Finovate alum since 2011. Earlier this month, the company announced a collaboration with U.K.-based NewDay.

A global partnership between information services company Experian and digital identity company Prove Identity is designed to help drive financial inclusion around the world via innovations in identity verification technology. The alliance, announced this week, will help companies bring their financial services to a wider range of customers, including members of un- and underbanked communities. The partnership will also enhance access to “faster, easier, and more secure experiences” for consumers.

As part of the deal, Prove will integrate a number of solutions into Experian’s digital identity and fraud risk mitigation platform, CrossCore. The specific integrations will vary by region, but include:

• Prove Pre-Fill – enables auto-fill of application forms with verified data from authoritative sources
• Prove Identity – validates consumer-provided personal identity information (PII)
• Trust Score – provides a real-time assessment of phone number reputation for identity verification and authentication
• Mobile Auth – provides real-time authentication of a consumer’s status on a mobile network

“At Prove, we believe that all consumers should have access to the digital economy, regardless of whether you already have a credit file or not,” Prove co-founder and Chief Executive Officer Rodger Desai said. “We’re proud to be partnering with Experian, which shares our vision for a more financially inclusive digital world. Together, we are giving more companies across the globe access to advanced identity technology, such as cryptographic authentication, that they can use to verify more consumers in a quick and secure manner.”

Prove specializes in verifying identities for members of un- and underbanked communities, many of whom have little or no traditional credit history. The company’s approach to verification leverages mobile phone-centric identity tokenization and passive cryptographic authentication to ensure security and privacy across digital channels while at the same time keeping friction low. More than 1,000 enterprises use Prove’s platform, processing 20 billion customer requests a year in industries ranging from banking and lending to crypto and payments.

“The rapid surge in demand for digital services and the growth of online accounts has accelerated the need for robust, real-time identity verification solutions with the broadest coverage and greatest inclusion,” Experian SVP of Global Identity & Fraud Marika Vilen said. “Integrating Prove’s industry-leading identity solutions with CrossCore and offering them as part of the CrossCore partner program strengthens our state-of-the-art cloud platform, identity verification, and fraud defense while also enabling our customers to verify more customers.”

A Finovate alum since 2011, Experian made its most recent Finovate appearance at FinovateFall in 2018. The company’s partnership announcement with Prove comes less than a week after Experian reported that it was working with U.K.-based unsecured credit provider NewDay. That partnership is geared toward helping Experian Boost customers access a broader array of credit options.

Be sure to join Experian next month for our webinar presentation, Digital Identity: Fintech’s Key to Unlocking Growth, featuring Chief Innovation Officer for Decision Analytics Kathleen Peters.

Photo by Nataliya Vaitkevich

First Pryority Bank selected Teslar Software to automate workflows as the bank continues on a path of expansion.  The $315 million Pryor Creek, Okla.-based bank will be able to track exceptions, upload documents and automate workflows that previously required manual effort, according to a Teslar release. “Teslar’s technology, starting with pipeline and exceptions management tools, […]

LAS VEGAS — The Consumer Financial Protection Bureau (CFPB) is planning to propose a new rule in 2023 requiring financial institutions to share consumer data upon consumers’ requests, CFPB Director Rohit Chopra said Tuesday at Money 20/20 in Las Vegas. As more financial institutions adopt open banking and data-sharing becomes the norm, a new rule […]